<PAGE>
Templeton Emerging
Markets Fund
- ---------------------
PHOTO OF
J. MARK MOBIUS, PH.D.
APPEARS HERE]
- ---------------------
J. Mark Mobius, Ph.D.
President
Templeton Emerging
Markets Fund
- ---------------------
Dr. Mobius has been living overseas since earning his Ph.D. in economics and
political science at Massachusetts Institute of Technology in 1964. During his
extensive travels, he has acquired a thorough knowledge of the business
practices and customs that are unique to developing nations. Together with his
team of Templeton analysts, Dr. Mobius currently oversees more than $6 billion
in emerging markets investments for the Templeton Group of Funds.
- --------------------------------------------------------------------------------
Your Fund's Objectives:
The Templeton Emerging Markets Fund seeks long-term capital appreciation by
primarily investing in emerging country equity securities.
- --------------------------------------------------------------------------------
October 16, 1995
Dear Shareholder:
During the fiscal year ended August 31, 1995, emerging markets experienced
normal corrections, which resulted in the Templeton Emerging Markets Fund
declining by -8.53% in net asset value terms and -16.94% in market-price terms,
as shown in the Performance Summary on page 5. However, we have always
maintained a long-term perspective in managing the Fund, and we urge
shareholders to view their investments in the same manner. During the period
from the Fund's inception on February 26, 1987 to August 31, 1995, the Fund
provided a cumulative total return of 411.60%.
The first six months of the fiscal year were difficult for investors in emerging
markets. In Latin America,
1
<PAGE>
excessive consumption, failure to invest foreign capital in hard assets, a large
deficit, and an unfavorable trade balance devastated the Mexican economy. After
the Secretary General of the governing Partido Revolucionario Institucional
(PRI) was assassinated in September 1994, foreign investment started leaving the
country. In December, the government attempted to defend the peso, but was
unsuccessful, and within one month, devalued it by 43%. As a result, the Mexican
stock market plummeted. Some investors sold shares in other Latin American
markets to cover losses in Mexico, others feared that Argentina's dollarized
currency might also face devaluation, and ripple effects were felt in emerging
markets around the world.
In Asia, the threat of a trade war between China and the U.S., and the uncertain
health of Chinese leader Deng Xiao Ping, adversely affected the Chinese stock
market. Hong Kong's economy (closely linked to conditions in China) slowed, and
its stock market plunged due to rising interest rates, weakening residential
property prices, and concerns about China's takeover of Hong Kong in 1997. And
Turkey was struck by a recession.
However, the second half of the fiscal year presented a different picture. The
reduction of U.S. interest rates improved prospects for the economies of Mexico
and
- --------------------------------------------------------------------------------
Templeton Emerging Markets Fund
Geographic Distribution on 8/31/95
Based on Total Net Assets
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Latin American Stocks 26.5%
European Stocks 13.0%
Asian Stocks 51.2%
Other Stocks 0.9%
Short-Term Obligations &
Other Net Assets 8.4%
</TABLE>
Argentina. The International Monetary Fund's efforts to stabilize the Mexican
peso were successful, Mexico's interest rates eased, and it was able to compete
again in international markets. Those South American countries suffering from
the so-called "tequila effect" of the Mexican Peso crisis recovered, as
investors realized that these countries' economic fundamentals had not changed
overnight. Also encouraging was the fact that after experiencing strong growth
in the first half of the fiscal year, Brazil's economy showed signs of slowing.
The economic picture was brighter in Asia. The impending trade war between China
and the U.S. was averted on February 26, 1995, when China agreed to increase its
protection of copyrighted works by establishing courts to
2
<PAGE>
prosecute trademark pirates. China's political arena became less confused as
Deng's influence waned and President Jiang Zemin became more secure in his
position. By August 31, 1995, Chinese real economic growth stood at about 10%
and inflation dropped to 20% from 25.2% in October 1994, after the government
tightened credit and imposed price controls. In addition, property values rose
in Hong Kong, and its stock market rebounded.
At the end of the fiscal year, 91.6% of the Fund's total net assets were
invested in equities, with the remaining 8.4% in cash and other liquid assets.
As reported in the Investment Portfolio section on page 11, these assets were
allocated across 25 emerging markets. The largest portion was invested in Asia
(51.2%), where we found the largest number of bargain stocks, followed by Latin
America (26.5%), and Europe (13%).
Looking ahead, we are optimistic about opportunities for the Templeton Emerging
Markets Fund. China's emerging-market economy and Japan's mature economy are
fueling growth throughout Asia, making it an exciting area for investment. The
Chinese economy is prospering, and the Japanese are increasingly investing in
Asia, as they seek to lower their manufacturing costs. Although the Fund does
not invest in Japan, that country's
- --------------------------------------------------------------------------------
Templeton Emerging Markets Fund
Top 10 Holdings on 8/31/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Philippine Long Distance Telephone Co.,
Telecommunications, Philippines 4.8%
- --------------------------------------------------------------------------------
Telefonos de Mexico SA,
Telecommunications, Mexico 4.6%
- --------------------------------------------------------------------------------
P T Barito Pacific Timber,
Forest Products & Paper, Indonesia 4.0%
- --------------------------------------------------------------------------------
Cheung Kong Holdings Ltd., Multi-Industry,
Hong Kong 3.1%
- --------------------------------------------------------------------------------
Telebras-Telecomunicacoes Brasileiras SA,
Telecommunications, Brazil 2.9%
- --------------------------------------------------------------------------------
Philippine National Bank, Banking,
Philippines 2.8%
- --------------------------------------------------------------------------------
Antofagasta Holdings PLC, Metals & Mining,
Chile 2.7%
- --------------------------------------------------------------------------------
Banco Comercial Portugues SA,
Banking, Portgual 2.7%
- --------------------------------------------------------------------------------
Electrobras-Centrais Electricas Brasileiras SA,
Utilities, Electrical & Gas, Brazil 2.5%
- --------------------------------------------------------------------------------
Arcelik A S,
Appliances & Household Durables, Turkey 2.3%
- --------------------------------------------------------------------------------
</TABLE>
For a detailed listing of portfolio holdings, see page 11 of this report.
influence on the growth of the region's emerging markets cannot be ignored. Also
encouraging is Turkey's recent recovery from its recession. Although inflation
there was high, its current account was in surplus on August 31, 1995.
Even though we currently have no holdings in Russia, we believe that its
plentiful natural resources offer
3
<PAGE>
tremendous incentive for investment. Unfortunately, Russia's social, political
and economic environments are gripped by problems. Inflation runs in triple
figures, unemployment is rising, and we feel that President Boris Yeltsin's
credibility is being eroded by his poor health and increasingly authoritarian
style. We will continue, however, to monitor investment opportunities in Russia.
In our opinion, Latin American countries have greater economic dynamism and
growth potential than the developed world, and offer many untapped
opportunities. However, domestically generated financial resources are weak in
Latin America, partly because of low savings rates. Although we continue to be
attracted to many individual Latin American investments, our enthusiasm is
tempered by the knowledge that there may be better bargains in other emerging
markets.
In seeking to provide our shareholders with the best investment opportunities,
we shall continue to search the world for companies that are not just "cheap,"
but that we believe are genuine bargains. Of course, investors should remember
that investing in emerging markets involves special considerations, including
risks related to market and currency volatility, adverse social and political
developments, and the relatively small size and lesser liquidity of these
markets. 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 763% in the last 15 years, but has suffered six declines of
more than 20% during that time./1/
In closing, we would like to mention that, although Sir John Templeton has not
been involved in investment management of the Templeton funds since October
1992, we were saddened by his recent decision to step down as Chairman and
Director of the U.S.-registered Templeton funds. The Fund's Board of Directors
has elected John Wm. Galbraith, former vice chairman of Templeton, Galbraith &
Hansberger, Ltd. to succeed him. The investment manager will continue to use the
investment philosophies and principals established by Sir John.
We thank you for your participation in the Templeton Emerging Markets Fund and
welcome your comments and suggestions.
1. Source: Bloomberg. Based on quarterly percentage change over 15 years ended
June 30, 1995.
4
<PAGE>
- --------------------------------------------------------------------------------
Performance Summary
In market-price terms, the Templeton Emerging Markets Fund produced a total
return of -16.94% for the one-year period ended August 31, 1995. Based on the
change in actual net asset value (in contrast to market price), total return
was -8.53% 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 to the right, based on the change in market price, the Fund
delivered a cumulative total return of 411.60% for the period from its inception
on February 26, 1987, to August 31, 1995.
The Fund's closing price on the New York Stock Exchange decreased from $27.00 on
August 31, 1994 to $19.625 on August 31, 1995, while the net asset value
decreased from $22.77 to $18.23 for the same period. Shareholders received
combined distributions totaling $3.155 per share, including long-term capital
gains of $2.98, short-term capital gains of 7.5 cents ($0.075) and dividend
income totaling 10 cents ($0.10) per share. Distributions will vary, however,
depending on income earned by the Fund and any profits realized from the sale of
securities in the portfolio. Past performance is not predictive of future
results.
- --------------------------------------------------------------------------------
Templeton Emerging Markets Fund
Cumulative Total Returns*
Periods Ended August 31, 1995
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year (02/26/87)
<S> <C> <C> <C>
Based on change
in net asset value -8.53% 176.70% 411.60%
Based on change
in market price -16.94% 222.00% 420.53%
</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>
The following letter was
written by Dr. Mobius after
a recent visit to Lebanon.
Beirut, Lebanon --
Visitors can't help but be struck by the beautiful setting of this ancient
Mediterranean city. During my time here, I've thought not so much about the
horrors of the recent past as the bright prospects of the present and future.
Today the city is fast rebuilding from the damage of the bloody 15-year civil
war that ended in 1990. It is clearly intent on taking back its historic place
as the commercial and financial hub of the Middle East and, as the regional
peace process intensifies, we should see many investment opportunities develop
here.
It's easy to sense that the country and its capital are coming back to life
through the world-famous energy of Lebanese businessmen and women. Construction
is under way everywhere in the once-devastated downtown business district, so
it's no surprise that these businesses are busy in an economy whose real gross
domestic product (GDP) grew by 8.5 percent last year and is due to grow by 6
percent this year. The cement and glass industries, which will need to raise
capital through public listings to fuel their expansion, are expected to be well
represented when the planned Beirut Stock Exchange reopening takes place later
this year.
Early indications are that the Lebanese authorities may allow foreign
participation from the outset on the revived exchange. They also are taking the
important step of requiring tough disclosure standards such as a minimum of
three years of audited financial statements from firms wanting to list. Early
French and British technical assistance is helping put the market and its
regulators on solid footing, and there will not be, fortunately, foreign
exchange restrictions. We have also been glad to see that a modern custody and
settlement system called MIDCLEAR is being created in advance of the market's
reopening. Given these positive steps and the traditional vibrancy of the
private sector, I believe that Lebanon's market capitalization may grow in a few
years to become larger than Morocco, Egypt and Jordan.
6
<PAGE>
[MAP APPEARS HERE]
The bulk of the listings will, of course, be local, but there is also
interesting talk of making Beirut a regional market with many cross listings
from other Middle Eastern countries. In time, this city may become an Arab Hong
Kong, acting as both the regional financial nucleus of, and the window into, a
much larger economy that has historically been under rigid state control and off
limits to most foreign investors. Syria, which has four times the population of
Lebanon, could benefit substantially from close interaction with the Western
financial markets that Beirut will be developing in the years ahead. The Syrian
government has recently been making initial moves towards privatization and
other market-friendly reforms, and could see its ability to attract foreign
investment brighten considerably if it follows the Palestinians and Jordan in
signing a comprehensive peace treaty with Israel.
The reopening of the Beirut market should be only the latest in a string of
impressive developments on the Lebanese investment scene. In early July, for
example, Prime Minister Rafik Hariri's government successfully placed its second
Eurobond issue -- an unrated US$300 million, five-year bond. The first issue
came last October, raising US$400 million. It all adds up to an impressive sign
of investor confidence in this shrewd businessman and the stability he has
brought since coming to power in October 1992.
Perhaps an even better indicator is the estimated US$4 billion in returned
flight capital that expatriate Lebanese have poured back into their country in
the last two years. That means a lot in a country as small as this, and
estimates are that there may be up to ten times that amount still being held
abroad. We will be watching for signs that it is on its way home, joining the
estimated 200,000 expatriate Lebanese who have returned to their homeland from
abroad in the past two years. No one knows the
7
<PAGE>
investment climate in an emerging market better than its own people, and I have
yet to watch one of these countries take off before its own money returned from
the safer haven it had sought overseas when times were tough at home.
Services have always been the strength of Lebanon's economy, currently
accounting for about 70 percent of GDP. Tourism and financial services are two
of the largest growth areas in this sector. Despite the legacy of war, a
flourishing private banking industry has, fortunately, survived intact, as has
the beautiful beaches, mountains, ancient ruins, and other tourist sites. They
should start drawing increasing revenues from domestic, regional and even some
European visitors in the near future and be the source of considerable new
development.
There have also been signs of strength on the equity markets. Chief of these was
the US$650 million public offering in late 1993 for shares in SOLIDERE, a US$1.8
billion public-private company created to manage the rebuilding of downtown
Beirut, one of the Middle East's biggest construction projects. This heavily
oversubscribed offering was restricted to Lebanese and other Arab investors.
Eighteen months after the offering the shares were trading on Beirut's new
secondary market at about a 30 percent premium to their offering price.
SOLIDERE's management is putting the US$650 million it raised into an ambitious
25-year infrastructure campaign to rehabilitate the city's central district. It
is targeting 1.9 million square meters of new residential units and another 1.5
million square meters in office space.
Meanwhile, the government is also embarking on a second, more broadly defined
program to rebuild the national infrastructure. Known as Horizon 2000, it
envisions total expenditures from both public and private sources of at least
US$14.3 billion by the year 2002. The World Bank has already begun supporting
the program with loans totaling more than US$100 million for irrigation
rehabilitation and solid waste management and has others in preparation worth a
cumulative US$170 million planned for power sector restructuring, road
rehabilitation, and upgrading water supply systems. The European Investment
Bank, Arab aid institutions funded by the wealthy Gulf states, and other
official sources are also channeling funds into the early stages of the program.
It certainly should provide ample growth opportunities for all sides of the
Lebanese construction industry in the coming years.
If SOLIDERE is included in the initial set of companies traded on the new stock
exchange, Beirut's market could soon become one of the most active in the Middle
East --
8
<PAGE>
a region that is fast catching the eye of foreign portfolio investors worldwide.
Performance in the Middle East markets has been good so far this year. For
example, as of late July, the Jordanian market showed 18 percent gains in US
dollar terms for the year. That made it the fourth best in the developing world.
The leader was Turkey, with 32.1 percent gains for the year. North Africa is
also coming on strong, with financial markets in Morocco and Egypt attracting
attention, and Tunisia in the process of opening its bourse to foreign
investment.
Common ties of language, religion and culture may offer new opportunities for
business cooperation among these countries and others in the Arab world, as
governments follow the global trend and become more private-sector oriented.
Even more exciting as a growing theme are the new political openings for the
thriving Israeli business community to partner with Arab companies to make
common use of the region's abundant financial, human and natural resources.
Still, many uncertainties mark the future of Lebanon. There will probably
continue to be political questions, at least until the next Lebanese
presidential election. A Syrian-Israeli peace treaty would also be a big help to
the business climate in a country that still has 35,000 Syrian troops present
and a volatile Israeli-occupied security zone in the south. And on the economic
side, we also need to watch the recent trends towards falling central bank
foreign exchange reserves and balance of payments deficits, which could put
pressure on the local currency if the government spends as much as it intends to
on infrastructure rehabilitation.
Risks such as these are inherent in emerging markets, and investors who cannot
tolerate short-term fluctuations in search of potential long-term gains should
not be involved in them. But we see Lebanon as an exciting story that should
provide many opportunities for the Fund's shareholders in the coming years, and
we will be there with the same disciplined, value-oriented approach that we use
in all the other countries we visit.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Emerging Markets Fund, Inc.
9
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 22.77 $ 17.94 $ 18.74 $ 18.16 $ 15.40
-------- -------- -------- -------- --------
Income from investment
operations:
Net investment income .23 .10 .29 .41 .21
Net realized and unrealized
gain (loss) (1.62) 5.87 4.93 4.21 4.43
-------- -------- -------- -------- --------
Total from investment
operations (1.39) 5.97 5.22 4.62 4.64
-------- -------- -------- -------- --------
Distributions:
Dividends from net
investment income (.10) (.29) (.39) (.08) (.24)
Distributions from net
realized gains (3.05) (.85) (5.63) (3.96) (1.64)
-------- -------- -------- -------- --------
Total distributions (3.15) (1.14) (6.02) (4.04) (1.88)
-------- -------- -------- -------- --------
Change in net asset value (4.54) 4.83 (.80) .58 2.76
-------- -------- -------- -------- --------
Net asset value, end of year $ 18.23 $ 22.77 $ 17.94 $ 18.74 $ 18.16
======== ======== ======== ======== ========
TOTAL RETURN
Based on market value per
share (16.94)% 26.11% 44.30% 34.90% 57.92%
Based on net asset value per
share (8.53)% 33.39% 34.30% 24.09% 36.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $294,962 $363,760 $285,407 $243,261 $210,579
Ratio of expenses to average
net assets 1.73% 1.78% 1.84% 1.91% 1.91%
Ratio of net investment
income to average net
assets 1.28% .46% 2.07% 2.34% 1.43%
Portfolio turnover rate 27.58% 6.50% 21.55% 53.45% 33.53%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES:
91.6%
- --------------------------------------------------------------------------------------
Argentina: 1.9%
Banco de Galicia y
Buenos Aires SA, B Banking 284,263 $ 1,308,329
Central Costanera SA, B Utilities Electrical & Gas 33,800 88,943
Central Costanera SA,
rts. Utilities Electrical & Gas 33,800 8,135
Ciadea SA Automobiles 110,667 453,983
Comercial de Plata SA Multi-Industry 875,630 2,050,102
Compania Naviera Perez
Companc SA, B Energy Sources 96,540 452,056
*Industrias
Petroquimicas Koppers Chemicals 176,191 775,667
Molinos Rio de Plata
SA, B Food & Household Products 12,608 79,474
Transportadora de Gas
del Sur SA, B Energy Sources 42,354 87,722
YPF Sociedad Anonima,
ADR Energy Sources 23,000 405,375
------------
5,709,786
- --------------------------------------------------------------------------------------
Brazil: 13.7%
Banco Bradesco SA Banking 138,111,477 1,185,163
Banco Bradesco SA, new Banking 2,386,232 22,849
Banco Bradesco SA, PN. Banking 132,142,584 1,266,120
Banco do Brasil SA Banking 693,000 9,858
Banco do Brazil SA, PN. Banking 21,000,000 336,088
Banespa-Banco do Estado
de Sao Paulo SA, PN. Banking 88,262,600 659,820
Cia Energetica de Minas
Gerais, PN. Utilities Electrical & Gas 122,441,093 2,758,873
*Cia Mesbla SA, PN. Merchandising 6,825,690 221,282
Copene-Petroquimica do
Nordeste SA, A, PN. Chemicals 5,861,800 3,857,462
Duratex SA, PN. Forest Products & Paper 8,887,800 467,621
Eletrobras-Centrais
Eletricas Brasileiras
SA, B, PN. Utilities Electrical & Gas 26,820,977 7,398,890
Itausa-Investimentos
Itau SA, PN. Multi-Industry 7,947,346 5,196,422
Mannesmann SA Machinery & Engineering 31,968 8,752
Mannesmann SA, PN. Machinery & Engineering 2,085,844 647,902
*Marcopolo SA, B, PN. Automobiles 2,248,100 398,847
Petrobras-Petroleo
Brasileiro SA, PN. Energy Sources 51,584,966 4,899,146
Refripar-Refrigeracao Appliances & Household
Parana SA, PN. Durables 92,807,000 225,727
Telebras-
Telecomunicacoes
Brasileiras SA Telecommunications 83,151,950 3,073,054
Telebras-
Telecomunicacoes
Brasileiras SA, PN. Telecommunications 128,676,643 5,561,649
*Telerj-
Telecomunicacoes do
Rio de Janeiro SA, PN. Telecommunications 858,999 64,578
Unibanco-Uniao de
Bancos Brasileiros SA,
PN. Banking 9,150,468 313,125
Vale de Rio Doce, PN. Metals & Mining 12,292,000 1,896,055
------------
40,469,283
- --------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- --------------------------------------------------------------------------------------
Chile: 2.7%
Antofagasta Holdings
PLC Metals & Mining 1,585,000 $ 7,943,691
- --------------------------------------------------------------------------------------
China: 0.8%
China Southern Glass
Co. Ltd., B Multi-Industry 325,000 183,471
Chiwan Wharf Holdings
Ltd., B Transportation 846,000 402,181
Foshan Electrical and Appliances & Household
Lighting Co. Ltd., B Durables 400,000 294,536
Shandong Huaneng Power Utilities Electrical & Gas 24,000 201,000
Shanghai Chlor-Alkali
Chemical Co. Ltd., B Chemicals 1,088,000 341,632
Shanghai Erfangji
Textile Machinery Co.
Ltd., B Machinery & Engineering 303,600 52,826
Shanghai Industrial
Sewing Machine Corp. Machinery & Engineering 190,000 35,340
Shanghai Jin Jiang
Tower Co. Ltd., B Leisure & Tourism 573,000 194,820
Shanghai Jinqiao Export
Processing Zone
Development, B Real Estate 108,000 61,776
Shanghai Lian Hua Fibre
Corp., B Textiles & Apparel 73,560 17,654
Shanghai Steel Tube Co.
Ltd., B Machinery & Engineering 499,400 78,905
Shanghai Tyre & Rubber
Co. Ltd., B Industrial Components 173,000 60,204
Shanghai Vacuum
Electron Devices Co. Appliances & Household
Ltd., B Durables 525,600 135,605
Shanghai Yaohua Building Materials &
Pilkington Glass, B Components 97,000 104,760
Shenzhen Gintian
Industrial Co. Ltd., B Multi-Industry 64,800 29,131
Shenzhen Properties &
Resources Develop.
(Group) Ltd., B Real Estate 462,000 128,317
Zhuhai Sez Lizhu
Pharmaceutical, B Chemicals 250,000 96,887
------------
2,419,045
- --------------------------------------------------------------------------------------
Czech Republic: 0.1%
*CEZ, GDS, 144a Utilities Electrical & Gas 4,000 156,000
- --------------------------------------------------------------------------------------
Greece: 7.2%
Alpha Credit Bank Banking 97,620 5,773,982
Delta Dairy SA, PN. Food & Household Products 5,676 92,949
Elais Oleaginous
Products SA Food & Household Products 28,290 915,751
Ergo Bank SA Banking 134,800 6,196,848
Fourlis Brothers Corp. Appliances & Household
SA Durables 134,030 1,526,166
Hellas Can-Container
Manufacturers SA Food & Household Products 12,000 220,151
Hellenic Bottling Co.,
SA Food & Household Products 69,572 2,231,421
Intracom SA Electrical & Electronics 6,000 162,698
National Bank of Greece
SA Banking 11,940 660,944
Building Materials &
Titan Cement Co., SA Components 91,996 3,508,025
------------
21,288,935
- --------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- --------------------------------------------------------------------------------------
Hong Kong: 11.9%
Cheung Kong Holdings
Ltd. Multi-Industry 1,838,000 $ 9,117,582
Cross Harbour Tunnel
Co. Ltd. Transportation 12,000 23,563
Dairy Farm Int'l
Holdings Ltd., 6.50%,
conv., PN. Food & Household Products 29,000 21,968
Dairy Farm
International Holdings
Ltd. Multi-Industry 260,241 242,024
Fairwood Holdings Ltd. Food & Household Products 378,000 31,740
Goldlion Holdings Ltd. Textiles & Apparel 500,000 251,905
Hang Lung Development
Co. Ltd. Real Estate 3,179,000 4,928,045
*Hang Lung Development
Co. Ltd., wts. Real Estate 317,900 49,280
Hongkong Electric
Holdings Ltd. Utilities Electrical & Gas 200,000 693,709
Hopewell Holdings Ltd. Construction & Housing 2,436,062 1,762,298
HSBC Holdings PLC Banking 329,011 4,420,249
Jardine International
Motor Holdings Ltd. Automobiles 536,000 560,858
Jardine Matheson
Holdings Ltd. Multi-Industry 116,362 837,806
Jardine Strategic
Holdings Ltd. Multi-Industry 242,500 761,450
Jardine Strategic
Holdings Ltd., wts. Multi-Industry 12,500 5,688
K Wah International Building Materials &
Holdings Ltd. Components 2,143,796 348,945
Lai Sun Development Co.
Ltd. Real Estate 100,000 11,885
Lai Sun Garment
International Ltd. Multi-Industry 97,000 100,245
New World Development
Co. Ltd. Real Estate 1,084,480 3,950,696
Stelux International
Holdings Ltd. Multi-Industry 585,133 168,185
Sun Hung Kai Properties
Ltd. Real Estate 582,000 4,229,105
Swire Pacific Ltd., B Multi-Industry 500,000 594,238
Tian An China
Investments Co. Ltd. Real Estate 6,201,000 913,208
Vitasoy International
Holdings Ltd. Food & Household Products 272,000 109,805
Wai Kee Holdings Ltd. Construction & Housing 264,000 36,150
Wheelock & Co. Ltd. Multi-Industry 342,000 519,119
Yaohan Hongkong Corp.
Ltd. Merchandising 3,244,000 226,296
------------
34,916,042
- --------------------------------------------------------------------------------------
Hungary: 0.5%
Chinoin Pharmaceutical
& Chemical Works
Co. Ltd. Health & Personal Care 2,000 569,340
Fotex First Hungarian-
American Photo-Service Multi-Industry 793,000 998,499
Ibusz Leisure & Tourism 800 5,579
*Ibusz, new Leisure & Tourism 267 1,754
------------
1,575,172
- --------------------------------------------------------------------------------------
India: 0.8%
ATV Project India Ltd. Machinery & Engineering 200,000 213,467
Bharat Petroleum Corp.,
Ltd. Energy Sources 35,200 308,297
</TABLE>
13
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- --------------------------------------------------------------------------------------
India (cont.)
DCW Ltd. Chemicals 12,500 $ 20,797
Essar Shipping Ltd. Transportation 59,250 78,120
Garden Silk Mills Ltd. Textiles & Apparel 85,700 104,922
Grasim Industries Ltd
Ord INR10 Multi-Industry 11,000 213,404
Indian Rayon and
Industries Ltd. Multi-Industry 10,500 154,261
Industrial Credit &
Investment Corp. of
India Ltd. Financial Services 308,700 910,934
Oriental Bank of
Commerce Banking 14,200 23,648
Videocon International Appliances & Household
Ltd. Durables 90,000 279,705
------------
2,307,555
- --------------------------------------------------------------------------------------
Indonesia: 6.6%
PT Anwar Sierad,fgn. Food & Household Products 245,500 132,688
PT Astra International,
fgn. Multi-Industry 41,100 82,055
PT Barito Pacific
Timber, fgn. Forest Products & Paper 11,000,000 11,890,580
PT Charoen Pokphand
Indonesia, fgn. Food & Household Products 500,000 1,108,537
PT Duta Anggada Realty,
fgn. Real Estate 440,000 315,464
PT Duta Pertiwi
Nusantara Chemicals 409,750 117,510
PT Eratex Djaja, fgn. Textiles & Apparel 283,000 109,254
PT Gadjah Tunggal, fgn. Industrial Components 83,000 60,424
PT Hadtex Indosyntec,
fgn. Textiles & Apparel 953,000 504,567
PT Intan Wijaya
Chemical Industry,
fgn. Chemicals 526,000 139,246
PT Japfa Comfeed
Indonesia, fgn. Food & Household Products 539,000 326,991
PT Metrodata
Electronic, fgn. Electrical & Electronics 347,000 252,614
PT Multipolar Corp.,
fgn. Electrical & Electronics 39,000 20,649
PT Polysindo Eka
Perkasa, fgn. Textiles & Apparel 6,348,000 3,220,913
PT Pudjiadi Prestige
Ltd., fgn. Real Estate 451,500 313,749
PT Unggul Indah Corp.,
fgn. Chemicals 1,190,200 997,741
------------
19,592,982
- --------------------------------------------------------------------------------------
Israel: 0.3%
Bank Hapoalim BM Banking 33,148 55,556
Clal Industries Ltd. Multi-Industry 40,000 259,106
Discount Investment
Corp. Multi-Industry 6,000 387,635
The First International
Bank of Israel Banking 977 119,312
------------
821,609
- --------------------------------------------------------------------------------------
Korea (South): 1.1%
Dae Duck Electronics
Co. Ltd. Electrical & Electronics 4,000 184,687
Dae Yu Co. Textiles & Apparel 350 6,926
*Dae Yu Co. Ltd., new Textiles & Apparel 924 17,567
</TABLE>
14
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- --------------------------------------------------------------------------------------
Korea (South) (cont.)
Daegu Bank Co. Ltd. Banking 43,190 $ 692,090
Daegu Bank Co. Ltd.,
new Banking 9,423 144,904
Daehan Synthetic Fiber
Co. Ltd. Textiles & Apparel 2,420 309,855
Hae In Corp. Ltd. Merchandising 4,951 356,149
Hankook Cosmetics Co.
Ltd. Health & Personal Care 8,700 311,679
Kyung Dong Boiler Co
Ltd Energy Equipment & Services 7,030 340,953
Saehan Precision Co Ltd Electrical & Electronics 8,000 303,156
Ssangyong Oil Refining
Co Ltd Energy Equipment & Services 10,000 265,132
Yuhwa Corp. Textiles & Apparel 3,580 226,528
------------
3,159,626
- --------------------------------------------------------------------------------------
Malaysia: 5.7%
Federal Flour Mills
Bhd. Food & Household Products 779,999 2,500,999
Malayawata Steel Bhd.,
fgn. Metals & Mining 738,000 1,449,379
Malaysian International
Shipping Corp.
Bhd., fgn. Transportation 1,930,666 5,532,770
Oriental Holdings Bhd. Automobiles 988,200 5,148,938
Perlis Plantations Bhd. Multi-Industry 626,879 2,060,284
Perlis Plantations
Bhd., fgn. Multi-Industry 50,000 164,329
------------
16,856,699
- --------------------------------------------------------------------------------------
Mexico: 7.5%
Building Materials &
Cemex SA, B Components 268,250 1,233,309
Cifra SA, C Merchandising 503,000 601,195
DESC SA, A Multi-Industry 138,000 491,522
DESC SA, B Multi-Industry 1,000 4,080
Grupo Financiero
Banamex Accival SA, B Banking 613,000 1,248,469
Grupo Financiero
Banamex Accival SA, L Banking 30,650 61,153
Grupo Financiero
Bancomer SA de CV, B Banking 1,576,000 627,888
Grupo Financiero
Bancomer SA de CV, L Banking 2,488,370 931,900
*Grupo Financiero
Serfin SA, B Banking 659,000 562,907
Grupo Industrial Alfa
SA, A Multi-Industry 151,000 2,069,482
Telefonos de Mexico SA,
L, ADR Telecommunications 410,700 13,450,425
Tubos de Acero de
Mexico SA Machinery & Engineering 9,334 63,962
Vitro SA Food & Household Products 208,800 628,896
------------
21,975,188
- --------------------------------------------------------------------------------------
Pakistan: 0.2%
National Development
Leasing Corp Rts Financial Services 11,000 5,713
National Development
Leasing Corp. Financial Services 137,500 115,357
*Pakistan Telecom Corp.
PTC Telecommunications 530,000 599,641
------------
720,711
- --------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- ------------------------------------------------------------------------------------
Philippines: 9.9%
Keppel Philippine
Holdings Inc., B Machinery & Engineering 232,545 $ 112,146
Philex Minning Corp., B Metals & Mining 5,187,339 680,438
Philippine Commercial
International Bank
Inc. Banking 437,786 3,834,005
Philippine Long
Distance Telephone
Co., ADR Telecommunications 223,753 14,068,470
Philippine National
Bank Banking 783,556 8,313,188
RFM Corp. Food & Household Products 5,962,500 1,633,247
Sanitary Wares
Manufacturing Corp.,
br. Business & Public Services 6,923 2,564
Sime Darby Pilipinas
Inc. Industrial Components 573,286 608,232
----------
29,252,290
- ------------------------------------------------------------------------------------
Poland: 0.1%
Bank Slaski SA W
Katowicach Banking 5,000 283,229
- ------------------------------------------------------------------------------------
Portugal: 5.1%
Banco Chemical Portugal
SA Banking 9,800 97,711
Banco Comercial
Portugues SA Banking 633,896 7,842,098
Banco Espirito Santo e
Comercial de Lisboa Banking 45,500 605,274
Banco Portugues de
Investimento SA Banking 226,860 3,348,213
Banco Totta & Acores SA Banking 101,000 1,947,786
Espirito Santo
Financial Holding SA,
ADR Banking 114,000 1,268,250
----------
15,109,332
- ------------------------------------------------------------------------------------
Singapore: 3.2%
G.P. Batteries
International Ltd. Electrical & Electronics 35,000 94,500
Jaya Holdings Ltd. Transportation 492,500 655,049
Jaya Holdings Ltd.,
3.00%, conv., 8/31/98 Transportation 15,900** 25,735
*Jaya Holdings Ltd.,
wts. Transportation 30,051 29,607
*Jaya Holdings Ltd.,
wts. Transportation 36,780 34,166
Prima Ltd. Food & Household Products 530,000 2,032,723
Singapore Bus Service
Ltd., fgn. Transportation 903,600 6,295,313
TIBS Holdings Ltd. Transportation 134,600 361,838
TIBS Holdings Ltd.,
wts. Transportation 40,380 27,138
----------
9,556,069
- ------------------------------------------------------------------------------------
South Africa: 0.5%
Del Monte Royal Foods
Ltd. Food & Household Products 315,825 373,591
Engen Ltd. Energy Sources 109,341 680,344
First National Bank
Holdings Ltd. Banking 28,900 183,774
Rembrandt Group Ltd. Multi-Industry 33,400 267,200
----------
1,504,909
- ------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- --------------------------------------------------------------------------------------
Sri Lanka: 0.2%
Aitken Spence & Co.
Ltd. Textiles & Apparel 50,000 $ 182,962
Building Materials &
Lanka Ceramic Ltd. Components 162,000 172,507
Building Materials &
Lanka Walltile Ltd. Components 27,300 32,771
United Motor Lanka Ltd. Automobiles 158,600 82,908
------------
471,148
- --------------------------------------------------------------------------------------
Thailand: 0.3%
American Standard
Sanitaryware (THB) Co.
Ltd., fgn Health & Personal Care 12,000 199,202
Asia Fibre Public Co.
Ltd., fgn. Textiles & Apparel 233,600 177,111
Charoen Pokphand
Feedmill Public Co.
Ltd. Food & Household Products 64,000 326,895
Kian Gwan (Thailand)
Co. Ltd., fgn. Real Estate 26,000 81,445
Padaeng Industry Co.
Ltd., fgn. Metals & Mining 35,100 37,117
Thai Rayon Public Co.
Ltd. Textiles & Apparel 4,100 34,030
Thai Wah Public Co.
Ltd., fgn. Food & Household Products 8,450 11,802
United Standard
Terminal Public Co. Wholesale & International
Ltd., fgn. Trade 44,000 86,034
------------
953,636
- --------------------------------------------------------------------------------------
Turkey: 10.5%
Akbank TAS Banking 25,246,986 6,433,189
Building Materials &
Akcimento Ticaret AS Components 1,656,000 576,973
Alcatel Teletas
Endustri Tic AS Telecommunications 152,000 42,683
Appliances & Household
Arcelik AS Durables 44,223,330 6,807,127
Bagfas Bandirma Gubre
Fabrikalari AS Chemicals 2,805,790 1,225,618
Appliances & Household
Bekoteknik AS Durables 6,779,957 916,687
Celik Halat ve Sanayii Building Materials &
ve Ticaret AS Components 2,749,000 383,116
Cimentas Izmir Cimento Building Materials &
Fabrikasi TAS Components 1,497,250 825,317
Cimsa Cimento Sanayi ve Building Materials &
Ticaret AS Components 640,000 379,407
Compagnie Financiere
Ottomane SA Banking 37,000 1,449,618
Cukurova Elektrik AS Utilities Electrical & Gas 890,033 361,012
Eregli Demir ve Celik
Fabrikalari AS Metals & Mining 15,429,250 2,150,306
Finans Bank AS, br. Banking 25,244,455 2,310,465
Izocam Ticaret ve Building Materials &
Sanayii AS, br. Components 2,786,527 463,697
Koc Holding AS Multi-Industry 646,000 450,151
Koc Yatirim AS Multi-Industry 3,725,532 1,046,171
Marshall Boya AS New
Ord Industrial Components 3,746,736 362,399
Marshall Boya AS Industrial Components 2,081,520 225,146
Otosan Otomobil Sanayii
AS Automobiles 6,322,932 1,808,431
Tekstil Bankasi AS, br. Banking 1,277,509 69,090
Building Materials &
Trakya Cam Sanayii AS Components 2,400,000 249,610
Appliances & Household
Turk Demir Dokum, br. Durables 10,191,364 1,907,900
</TABLE>
17
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES
(CONT.)
- ---------------------------------------------------------------------------------------
Turkey (cont.)
Turkiye Garanti Bankasi
AS Banking 5,581,814 $ 499,257
Vakif Finansal Kiralama
AS Financial Services 1,872,600 132,436
------------
31,075,806
- ---------------------------------------------------------------------------------------
Venezuela: 0.7%
Ceramica Carabobo CA, Building Materials &
A, ADR Components 130,000 102,794
Building Materials &
Consolidada Carabobo, B Components 1,680,000 56,842
Electricidad de Caracas Utilities Electrical & Gas 936,160 721,476
Manufacturera de Appliances & Household
Aparatos Domesticos SA Durables 36,000 63,158
Mavesa SA, ADR Food & Household Products 193,000 599,800
Siderurgica Venezolana
Sivensa SA Metals & Mining 1,455,440 466,908
Siderurgica Venezolana
Sivensa Saica ADR Metals & Mining 21,750 34,887
Venezolana
Prerreducidos Caroni
Venprecar CA,
GDS, 144a Metals & Mining 1,764 9,878
------------
2,055,743
- ---------------------------------------------------------------------------------------
Zimbabwe: 0.1%
Transarchipel Shipping
Ltd.--TSL Multi-Industry 700,000 184,011
- ---------------------------------------------------------------------------------------
TOTAL LONG TERM SECURITIES (cost $199,266,114 ) 270,358,497
- ---------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 9.2% (cost $27,054,721 )
- ---------------------------------------------------------------------------------------
U.S. Treasury Bills,
5.28% to 5.41% with
maturities to 10/19/95 U.S. 27,187,000 27,058,694
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 100.8% (cost $226,320,835) 297,417,191
OTHER ASSETS, LESS LIABILITIES: (0.8)% (2,454,988)
------------
TOTAL NET ASSETS: 100.0% $294,962,203
============
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $226,320,835) $297,417,191
Cash 611,512
Receivables:
Investment securities sold 969,944
Dividends and interest 665,911
------------
Total assets 299,664,558
------------
Liabilities:
Payables for investment securities purchased 3,909,934
Accrued expenses 792,421
------------
Total liabilities 4,702,355
------------
Net assets, at value $294,962,203
============
Net assets consist of:
Undistributed net investment income $ 3,770,191
Net unrealized appreciation 71,096,356
Accumulated net realized gain 33,505,093
Net capital paid in on shares of capital stock 186,590,563
------------
Net assets, at value $294,962,203
============
Shares outstanding 16,184,253
============
Net asset value per share ($294,962,203 / 16,184,253 ) $ 18.23
============
</TABLE>
STATEMENT OF OPERATIONS
for the year ended August 31,1995
<TABLE>
<S> <C> <C>
Investment income:
(net of $615,449 foreign taxes withheld)
Dividends $ 6,448,608
Interest 2,544,559
------------
Total income $ 8,993,167
Expenses:
Management fees (Note 3) 3,742,219
Administrative fees (Note 3) 449,069
Transfer agent fees 41,000
Custodian fees 624,000
Reports to shareholders 182,000
Audit fees 34,000
Legal fees (Note 3) 36,500
Registration and filing fees 14,600
Directors' fees and expenses 35,000
Other 10,045
------------
Total expenses 5,168,433
------------
Net investment income 3,824,734
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 34,891,965
Foreign currency transactions (909,176)
------------
33,982,789
------------
Net unrealized appreciation (depreciation) on:
Investments (60,913,063)
Foreign currency translation of other assets and
liabilities 73,085
------------
(60,839,978)
------------
Net realized and unrealized loss (26,857,189)
------------
Net decrease in net assets resulting from
operations $(23,032,455)
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 3,824,734 $ 1,542,948
Net realized gain on investment and foreign
currency transactions 33,982,789 51,099,159
Net unrealized appreciation (depreciation) (60,839,978) 42,443,010
------------ ------------
Net increase (decrease) in net assets resulting
from operations (23,032,455) 95,085,117
Distributions to shareholders:
From net investment income (1,597,491) (4,645,083)
From net realized gain (48,808,530) (13,503,973)
Capital share transactions (Note 2) 4,640,626 1,417,186
------------ ------------
Net increase (decrease) in net assets (68,797,850) 78,353,247
Net assets:
Beginning of year 363,760,053 285,406,806
------------ ------------
End of year $294,962,203 $363,760,053
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Templeton Emerging Markets Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Emerging Markets Fund, Inc. (the Fund) is a closed-end, 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 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 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.
The Brazilian Government has exercised and may continue to exercise substantial
influence over exchange of its currency. Under current Brazilian law, whenever
there occurs a serious imbalance of Brazil's balance of payments or serious
reasons to foresee the imminence of such an imbalance, Brazil's National Mone-
tary Council may, for a limited period, impose restrictions of foreign capital
remittances abroad. Exchange control regulations may restrict repatriation of
investment income, capital, or the proceeds of securities sales by foreign in-
vestors. The Fund has investments in Brazilian companies with a value of ap-
proximately $40 million as of August 31, 1995.
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 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 estimated expenses are accrued daily. Distributions 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 August 31, 1995 there were 30,000,000 shares of capital stock authorized
($0.01 par value). During the years ended August 31, 1995 and 1994, 209,342
shares were issued for $4,640,626 and 62,769 shares were issued for $1,417,186
from reinvested distributions, respectively.
21
<PAGE>
Templeton Emerging Markets Fund, Inc.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton In-
vestment Management (Hong Kong) Limited (TIML) and Templeton Global Investors,
Inc. (TGII), the Fund's investment manager and administrative manager, respec-
tively. The Fund pays monthly an investment management fee to TIML equal, on an
annual basis, to 1.25% of the average daily net assets of the Fund. Effective
September 29, 1995, TIML has been reorganized as the Hong Kong office of Tem-
pleton Investment Management (Singapore) Pte Ltd., an indirect wholly owned
subsidiary of Franklin Resources, Inc. The Fund pays TGII monthly a fee com-
puted at an annual rate of 0.15% of the Fund's average daily net assets.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $36,500 for the year ended August 31,
1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
year ended August 31, 1995 aggregated $74,226,185 and $70,274,078, respective-
ly. The cost of securities for federal income tax purposes is $226,409,492. Re-
alized gains and losses are reported on an identified cost basis.
At August 31, 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 $ 85,772,336
Unrealized depreciation (14,764,637)
------------
Net unrealized appreciation $ 71,007,699
============
</TABLE>
5. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE
NET GAIN (LOSS) (DECREASE)
ON INVESTMENT 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 $1,859,722 $.11 $ 394,240 $ .02 $(65,913,697) $(4.03) $(65,519,457) $(4.01)
February 28, 1995 1,093,348 .07 (155,490) (.01) 11,509,953 .70 11,354,463 .69
May 31, 1995 3,522,176 .22 2,309,599 .14 27,929,114 1.73 30,238,713 1.87
August 31, 1995 2,517,921 .16 1,276,385 .08 (382,559) (.02) 893,826 .06
---------- ---- ----------- ----- ------------ ------ ------------ ------
$8,993,167 $.56 $ 3,824,734 $ .23 $(26,857,189) $(1.62) $(23,032,455) $(1.39)
========== ==== =========== ===== ============ ====== ============ ======
1994
For the quarter ended:
November 30, 1993 $1,415,389 $.09 $ 7,920 -- $ 56,121,216 $ 3.53 $ 56,129,136 $ 3.53
February 28, 1994 436,384 .03 (1,102,585) $(.07) 37,933,221 2.38 36,830,636 2.31
May 31, 1994 3,373,504 .15 1,945,571 .12 (47,278,826) (2.96) (45,333,255) (2.84)
August 31, 1994 2,249,677 .10 692,042 .05 46,766,558 2.92 47,458,600 2.97
---------- ---- ----------- ----- ------------ ------ ------------ ------
$7,474,954 $.37 $ 1,542,948 $ .10 $ 93,542,169 $ 5.87 $ 95,085,117 $ 5.97
========== ==== =========== ===== ============ ====== ============ ======
</TABLE>
22
<PAGE>
Templeton Emerging Markets Fund, Inc.
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Templeton Emerging Markets Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio of Templeton Emerging Markets Fund, Inc. as of August
31, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the respon-
sibility of the Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Au-
gust 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Tem-
pleton Emerging Markets Fund, Inc. as of August 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
September 29, 1995
23
<PAGE>
Templeton Emerging Markets Fund, Inc.
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DIVIDEND REINVESTMENT PLAN
The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following
features: .Shareholders must affirmatively elect to participate in the Plan;
Stock dividends will be reinvested automatically; Chemical Mellon Shareholder
Services, Shareholder Investment Services, P.O. Box 750, Pittsburgh, PA 15230,
will provide additional Plan information upon request. .Whenever the Fund de-
clares 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, partici-
pants 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 divi-
dends and/or capital gains distributions are payable only in cash, the partici-
pant will receive shares purchased on the New York Stock Exchange or otherwise
on the open market. .The reinvestment of dividends and/or capital gains, even
though no cash has been received, may be taxable. .The participant may withdraw
from the Plan without penalty at any time by written notice to Mellon Securi-
ties Trust Company. Upon withdrawal, the participant will receive, without
charge, stock certificates issued in the participant's name for all full
shares; or, if the participant's wishes, Mellon Securities Trust Company will
sell the participant's shares and send the proceeds, less a service fee of
$2.50 and less brokerage commissions. .Whenever shares are purchased on the New
York Stock Exchange or otherwise on the open market, each participant will pay
a pro rata portion of brokerage commissions. Brokerage commissions will be de-
ducted from amounts to be invested. .The Plan does not offer a cash purchase
plan option.
SHAREHOLDER INFORMATION
Weekly comparative net asset value and market price information about Templeton
Emerging Markets Fund, Inc. shares is published each Monday in The Wall Street
Journal, weekly in Barron's and each Saturday in The New York Times and other
newspapers in a table called "Publicly Traded Funds." Daily market prices for
the Fund's shares are published in the New York Stock Exchange Composite Trans-
actions section of newspapers under the designation "TempltnEFd." The Fund's
New York Stock Exchange trading symbol is EMF. The Fund's shares are also
listed and traded on the Pacific Stock Exchange.
For current information about the net asset value, call 1-800-292-9293.
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 Emerging Markets Fund, Inc., 700 Central Avenue, St.
Petersburg, FL 33701.
24
<PAGE>
Notes
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<PAGE>
Notes
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<PAGE>
Notes
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<PAGE>
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TEMPLETON EMERGING
MARKETS FUND, INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
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.
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TLEMF A95 10/95
[RECYCLED PAPER LOGO APPEARS HERE]
TEMPLETON
EMERGING
MARKETS
FUND, INC.
Annual Report
August 31, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
