<PAGE>
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 $8 billion
in emerging markets investments for the Templeton Group of Funds.
J. Mark Mobius, Ph.D.
President
Templeton Emerging
Markets Fund
Your Fund's Objective:
The Templeton Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in emerging country equity securities.
April 15, 1996
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Emerging
Markets Fund for the six months ended February 29, 1996.
During this period, U.S. equities hit all-time highs, interest rates in
developed nations declined, and the pall cast over many developing markets by
the Mexican peso crisis of December 1994 dispersed. Consequently, many
investors took profits out of the developed markets and reinvested the proceeds
in emerging market countries where there appeared to be more potential for
future total returns. In January and February 1996, stocks in emerging markets
realized some of their potential and experienced broad gains. Within this
environment, the Templeton Emerging Markets Fund provided a six-month total
return of 19.91% in market-price terms, and 4.47%
1
<PAGE>
in net asset value terms, as discussed in the Performance Summary on page 5.
In Latin America, several economies benefited from declining inflation.
Brazil's inflation rate fell from an astronomical annual level of 1294% in 1994,
to a more manageable 26% annual average by the second quarter of 1995.
Argentina's inflation rate declined from just over 4% in 1994, to only 3% in
1995. Even Venezuela was on the right track, with the 71% inflation rate of
1994 dampened to 54% by the second half of 1995.
In Europe, Greece weathered a change in political leadership with a smooth
transition from its revered former Prime Minister Papandreou, to new Prime
Minister Simitis, a former finance minister and confirmed reformist. Inflation
fell to single-digit levels for the first time in years, while industrial output
expanded, and the currency held its own against most major European currencies.
Portugal continued its privatization and capital market reform and has enjoyed a
gradually rising gross domestic product, with inflation of less than 4%, for
several consecutive years.
[GRAPH APPEARS HERE]
TEMPLETON EMERGING MARKETS FUND
Geographic Distribution on 2/29/96
Based on Total Net Assets
Asian Stocks 54.5%
Latin American Stocks 24.3%
European Stocks 16.1%
Middle Eastern &
African Stocks 1.1%
Short-Term Obligations &
Other Net Assets 4.0%
Eastern European countries experienced an increase in foreign direct investment
of almost 60% in 1995, injecting much needed capital into industrial
development. The results of several elections in this region favored free-market
candidates, and privatization programs moved towards completion. Most of these
countries also passed new laws regulating their capital markets, which gave
these markets increased international acceptability.
2
<PAGE>
In Asia, the governments of Thailand, Indonesia, and Malaysia took steps to
control inflation by maintaining tight monetary policies, even though their
current account deficits had widened and labor shortages had become more acute.
India's promising reform initiatives were mired in controversy, which also
prevented any move toward creating an urgently needed central depository to
facilitate the registration of shares in that market.
The South African stock market performed well during the period. Although still
new and small relative to Asian bourses, it is the largest and best developed
in Africa.
Lower prices in developing markets during this period allowed us to buy some new
stocks that we considered to be bargains, and we increased our Asian holdings
over the past six months, from 51.2% of total net assets to 54.5%. This
primarily represented an increased weighting of Hong Kong stocks, from 11.9% of
total net assets to 15.7%. We also boosted our position in Southern Europe
(Greece and Portugal), from 12.3% to 15.2% during this period. As of February
29, 1996, our assets were invested in 25 countries, with the largest
allocations in Hong Kong and Brazil (12.2% of total net assets). Among our
largest posi-
[TABLE APPEARS HERE]
<TABLE>
<CAPTION>
TEMPLETON EMERGING MARKETS FUND
Top 10 Holdings as of 2/29/96
Based on Total Net Assets
% of Total
Company; Industry, Country Net Assets
<S> <C>
Philippine Long Distance Telephone Co.;
Telecommunications, Philippines 4.9%
Cheung Kong Holdings Ltd.; Multi-Industry,
Hong Kong 4.7%
Philippine National Bank; Banking,
Philippines 4.1%
Antofagasta Holdings PLC; Metals & Mining,
Chile 3.3%
Banco Comercial Portugues SA;
Banking, Portugal 3.2%
Singapore Bus Service (1978) Ltd., fgn.;
Transportation, Singapore 2.8%
Eletrobras-Centrais Eletricas Brasileiras
SA, B; Utilities -- Electrical & Gas, Brazil 2.7%
Alpha Credit Bank; Banking, Greece 2.5%
Ergo Bank SA; Banking, Greece 2.3%
Telefonos de Mexico SA;
Telecommunications, Mexico 2.3%
</TABLE>
For a complete list of portfolio holdings, see page 9 of this report.
tions, as shown in the chart on this page, were: Cheung Kong Holdings Ltd., a
conglomerate with investments in Hong Kong and China, and interests in property
development, telecommunications, trading, energy and finance; Antofagasta
Holdings, a Chilean company operating in mining, manufacturing,
telecommunications and banking; and Banco Comercial Portugues, which controls a
3
<PAGE>
substantial share of total deposits and assets in Portugal's private banking
sector.
Looking forward, we believe the potential outlook for emerging markets is
considerably brighter than it appeared last year at this time. If yields remain
low in the U.S., Western Europe and Japan, foreign investment may flow toward
the higher potential returns of emerging markets. Of course, investments in
foreign securities involve special risks, such as adverse economic, social and
political developments in the countries where the Fund is invested, as well as
market and currency volatility. Developing markets involve heightened risks
related to the same factors, in addition to risks associated with the relatively
small size and lesser liquidity of these markets. While short-term volatility
can be disconcerting, declines of as much as 40% to 50% are not unusual in
emerging markets. In fact, the Hong Kong market has increased 700% in the last
15 years, but has suffered six declines of more than 20% during that time./1/
This discussion reflects the strategies we employed for the Fund during the past
six-month period, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
and our evaluations, conclusions and decisions regarding portfolio holdings, may
change as new circumstances arise. Although past performance of a specific
investment or sector cannot guarantee future performance, such information can
be useful in analyzing securities we purchase or sell for the fund.
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
March 31, 1996.
4
<PAGE>
PERFORMANCE SUMMARY
In market-price terms, the Templeton Emerging Markets Fund produced a total
return of 19.91% for the six-month period ended February 29, 1996. Based on the
change in actual net asset value (in contrast to market price), the Fund
delivered a total return of 4.47% 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 510.94% for the period from its
inception on February 26, 1987, to February 29, 1996.
During the reporting period, the Fund's closing price on the New York Stock
Exchange (NYSE) increased from $19.625 on August 31, 1995, to $20.50 on February
29, 1996, while the net asset value decreased from $18.23 to $16.59.
Shareholders received combined distributions totaling $2.425 per share,
including long-term capital gains of $2.145 per share, short-term capital gains
of 1.5 cents ($0.015) per share and dividend income totaling 26.5 cents ($0.265)
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEMPLETON EMERGING MARKETS FUND
Cumulative Total Returns*
Periods Ended 2/29/96
Since
Inception
One-Year Five-Year (2/26/87)
<S> <C> <C> <C>
Based on change
in net asset value 18.17% 224.21% 517.55%
Based on change
in market price 22.24% 205.04% 510.94%
</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. Past performance is not predictive of future results.
5
<PAGE>
THE FOLLOWING LETTER WAS WRITTEN BY DR. MOBIUS AFTER A VISIT TO VENEZUELA.
Caracas is a spectacular city nestled in a valley surrounded by impressive
mountains. The skyline, which bristles with high-rise office buildings, looks
prosperous from afar. But in reality, many of these buildings are just
government-owned, unfinished, concrete shells. This may be the perfect metaphor
for Venezuela's economy -- a seemingly vibrant business section hollowed out
by repeated government intervention, nationalization, and grand development
schemes, which cost the taxpayers an enormous amount of money. Much of this
activity occurred during President Carlos Andres Perez' first term in office
(1974-1979). After his election, Perez went on a nationalization binge covering
the oil, iron, shipbuilding, and steel industries, construction of government-
owned hotels, and the introduction of a vertically integrated aluminium
industry.
During his second term (1989-1993), recognizing the extent of the country's
indebtedness, Perez tried to secure financial assistance from the International
Monetary Fund (IMF). Because IMF terms required removal of government controls
from the economy, Perez began to
[MAP APPEARS HERE]
reduce government's role in business and privatize many companies. However,
before he could accomplish his reforms, he was impeached for misuse of funds.
Although most Latin American governments instituted drastic economic
restructuring programs and moved toward market-oriented economies in the mid
1980s, Venezuela delayed the day of reckoning and is still grappling with high
debt, IMF restructuring demands, and a confused sense of what the public will
bear in terms of reform. Today, President Caldera faces the unenviable task of
transforming a socialist economy into a more business-friendly, market sensitive
one. First elected president in 1969 while a member of Venezuela's reputedly
most right-wing party, he won the office again in 1993 by crafting a coalition
among himself, the Communist Party, the Socialist Party and the Evangelist
Party. Following
6
<PAGE>
his election in 1993, he tried to reduce inflation by instituting a program of
extensive price controls. When it failed, his popularity ratings plunged. In
December 1995, his party won only one of 22 gubernatorial elections, and
garnered less than 3% of the vote in 194 mayoral elections.
Many Venezuelan business executives complain that because the government is
unfamiliar with the needs of business and too "control oriented," it continues
to make policy errors, which prevent it from achieving its goals and also
result in severe disadvantages for local business and the economy. This
dissatisfaction is echoed by international credit-rating analysts who have
expressed misgivings about the severe fiscal problems faced by Venezuela. In my
opinion, the basis of the problem is government spending and the resulting
fiscal deficit, which is estimated to be as high as 10% of gross domestic
product (GDP). Although the government has imposed new indirect taxes and is
contemplating spending cuts to bring this deficit down to 3% of GDP, it is
difficult to be sure of the government's political will to make necessary cuts
in social programs and subsidies.
Despite its economic predicament, Venezuela is a country rich in natural and
human resources. Blessed with spectacular beaches, diamonds, gold, bauxite,
petroleum, natural gas and iron ore, it received a vote of confidence from the
international oil community on January 23, 1996, when several companies pledged
millions of dollars for contracts to operate there. This is just one indication
that Venezuela may have turned the page on a chapter of its history.
Although Venezuelan companies accounted for only about .08% of the Fund's
portfolio on February 29, 1996, we shall continue to search for bargain stocks
there, seeking out competitive, well-run firms with the potential to make money
under even the toughest economic conditions. I believe that Venezuela has many
such companies with potential to be winners as national economic reforms are
implemented.
Sincerely,
/s/
J. Mark Mobius, Ph.D.
President
Templeton Emerging Markets Fund, Inc.
7
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 29, 1996 ------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.23 $ 22.77 $ 17.94 $ 18.74 $ 18.16 $ 15.40
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income .01 .23 .10 .29 .41 .21
Net realized and unrealized gain (loss) .78 (1.62) 5.87 4.93 4.21 4.43
-------- -------- -------- -------- -------- --------
Total from investment operations .79 (1.39) 5.97 5.22 4.62 4.64
-------- -------- -------- -------- -------- --------
Distributions:
Dividends from net investment income (.27) (.10) (.29) (.39) (.08) (.24)
Distributions from net realized gains (2.16) (3.05) (.85) (5.63) (3.96) (1.64)
-------- -------- -------- -------- -------- --------
Total distributions (2.43) (3.15) (1.14) (6.02) (4.04) (1.88)
-------- -------- -------- -------- -------- --------
Change in net asset value (1.64) (4.54) 4.83 (.80) .58 2.76
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 16.59 $ 18.23 $ 22.77 $ 17.94 $ 18.74 $ 18.16
-------- -------- -------- -------- -------- --------
TOTAL RETURN*
Based on market value per share 19.91% (16.94)% 26.11% 44.30% 34.90% 57.92%
Based on net asset value per share 4.47% (8.53)% 33.39% 34.30% 24.09% 36.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $272,652 $294,962 $363,760 $285,407 $243,261 $210,579
Ratio of expenses to average net assets 1.68%** 1.73% 1.78% 1.84% 1.91% 1.91%
Ratio of net investment income to average net assets .10%** 1.28% .46% 2.07% 2.34% 1.43%
Portfolio turnover rate 6.24% 27.58% 6.50% 21.55% 53.45% 33.53%
Average commission rate paid (per share) $ .0006
</TABLE>
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
LONG TERM SECURITIES: 96.0%
- --------------------------------------------------------------------------------------------------------------------------
Argentina: 2.9%
*Astra Cia Argentina de Petroleo SA Energy Sources 126,300 $ 217,334
*Atanor Cia Nacional Para la Industria Quimica SA, D Chemicals 41,000 86,139
Banco de Galicia y Buenos Aires SA, B Banking 335,430 1,896,033
Capex SA, A Utilities Electrical & Gas 13,000 97,544
Central Costanera SA, B Utilities Electrical & Gas 36,280 112,519
*Central Termoelectricia Buenos Aires SA Utilities Electrical & Gas 4,987 6,386
*Ciadea SA Automobiles 60,666 273,122
Industrias Petroquimicas Koppers (IPAKO) Chemicals 176,191 652,200
Molinos Rio de Plata SA, B Food & Household Products 24,671 212,266
Perez Companc SA, B Energy Sources 168,889 841,444
*Sociedad Comercial del Plata Cadelplata Come Multi-Industry 912,370 2,601,425
Transportadora de Gas del Sur SA, B Energy Sources 52,354 126,230
YPF Sociedad Anonima, ADR Energy Sources 39,000 755,625
------------
7,878,267
- --------------------------------------------------------------------------------------------------------------------------
Brazil: 12.2%
Banco Bradesco SA Banking 138,111,477 1,248,228
*Banco Bradesco SA, new Banking 3,229,324 29,166
*Banco Bradesco SA, PN. Banking 134,528,816 1,523,225
Banco Bradesco SA, PN. new Banking 3,145,554 35,597
*Banco do Brasil SA Banking 693,000 9,149
*Banco do Brasil SA, PN. Banking 21,000,000 292,155
*Banespa-Banco do Estado de Sao Paulo SA, PN. Banking 172,796,000 851,039
Cemig-Cia Energetica de Minas Gerais, PN. Utilities Electrical & Gas 122,441,093 3,108,431
*Cia Mesbla SA, PN. Merchandising 6,825,690 110,902
Copene-Petroquimica do Nordeste SA, A, PN. Chemicals 5,861,800 3,166,771
Duratex SA, PN. Forest Products & Paper 8,887,800 429,430
Eletrobras-Centrais Eletricas Brasileiras SA, B, PN. Utilities Electrical & Gas 26,820,977 7,462,755
Itausa-Investimentos Itau SA, PN. Multi-Industry 7,947,346 5,084,365
Mannesmann SA Machinery & Engineering 31,968 4,902
Mannesmann SA, PN. Machinery & Engineering 2,085,844 317,722
Petrobras-Petroleo Brasileiro SA, PN. Energy Sources 51,584,966 5,736,028
Telebras-Telecomunicacoes Brasileiras SA Telecommunications 83,151,950 3,504,246
*Telerj-Telecomunicacoes do Rio de Janeiro SA, PN. Telecommunications 196,399 14,280
Unibanco-Uniao de Bancos Brasileiros SA, PN. Banking 7,223,468 293,413
------------
33,221,804
- --------------------------------------------------------------------------------------------------------------------------
Chile: 3.3%
Antofagasta Holdings PLC Metals & Mining 1,585,000 9,059,086
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- --------------------------------------------------------------------------------------------------------------------------------
China: 0.9% China Southern Glass Co. Ltd., B Building Materials & Components 559,000 $ 262,475
Chiwan Wharf Holdings Ltd., B Transportation 846,000 317,350
*Foshan Electrical and Lighting Co. Ltd., B Appliances & Household Durables 400,000 290,005
Shandong Huaneng Power Utilities Electrical & Gas 24,000 231,000
Shanghai Chlor-Alkali Chemical Co. Ltd., B Chemicals 1,088,000 278,528
*Shanghai Erfangji Textile Machinery Co. Ltd., B Machinery & Engineering 303,600 43,718
Shanghai Industrial Sewing Machine Corp. Machinery & Engineering 190,000 29,260
Shanghai Jin Jiang Tower Co. Ltd., B Leisure & Tourism 573,000 157,002
Shanghai Jinqiao Export Processing Zone
Development, B Real Estate 108,000 40,392
Shanghai Lian Hua Fibre Corp., B Textiles & Apparel 73,560 13,829
Shanghai Lujiaxui Finance & Trade Zn Dev
Stock Co Ltd, B Real Estate 181,000 104,980
Shanghai Steel Tube Co. Ltd., B Machinery & Engineering 499,400 69,916
Shanghai Tyre & Rubber Co. Ltd., B Industrial Components 173,000 41,866
*Shanghai Vacuum Electron Devices Co. Ltd. Appliances and Household Durables 941,600 239,166
Shanghai Yaohua Pilkington Glass, B Building Materials & Components 97,000 97,000
Shenzhen Gintian Industrial Co. Ltd., B Multi-Industry 64,800 31,851
Shenzhen Properties & Resources Develop.
(Group) Ltd., B Real Estate 462,000 93,226
Shenzhen Vanke Co. Ltd., B Real Estate 100,000 35,572
Zhuhai Sez Lizhu Pharmaceutical, B Health & Personal Care 250,000 80,844
------------
2,457,980
- --------------------------------------------------------------------------------------------------------------------------------
Czech Republic: 0.1%
*CEZ, GDR Utilities Electrical & Gas 2,000 72,500
*CEZ, GDS, 144A Utilities Electrical & Gas 4,000 145,000
------------
217,500
- --------------------------------------------------------------------------------------------------------------------------------
Greece: 8.6%
Alpha Credit Bank Banking 97,620 6,853,688
Delta Dairy SA, PN. Food & Household Products 5,676 74,991
Elais Oleaginous Co. Food & Household Products 28,290 927,079
Ergo Bank SA Banking 134,800 6,332,642
Fourlis Brothers Corp. SA Appliances & Household Durables 134,030 2,015,426
Hellas Can--Container Manufacturers Metals & Mining 12,000 268,802
Hellenic Bottling Co. SA Food & Household Products 43,572 1,557,111
Intracom SA Electrical & Electronics 6,000 154,561
National Bank of Greece SA Banking 11,940 708,267
Titan Cement Co., reg. Building Materials & Components 91,996 4,483,980
------------
23,376,547
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ------------------------------------------------------------------------------------------------------------------------------
Hong Kong: 15.7%
Cheung Kong Holdings Ltd. Multi-Industry 1,838,000 $ 12,778,913
Cross Harbour Tunnel Co. Ltd. Transportation 12,000 23,516
Dairy Farm Int'l Holdings Ltd., 6.50%, conv., PN. Corporate Bond 29,000** 24,288
Dairy Farm International Holdings Ltd. Merchandising 260,241 253,735
Hang Lung Development Co. Ltd. Real Estate 3,179,000 5,941,941
Hongkong Electric Holdings Ltd. Utilities Electrical & Gas 131,000 443,959
Hopewell Holdings Ltd. Construction & Housing 2,491,553 1,820,910
HSBC Holdings PLC Banking 332,443 5,332,229
Jardine International Motor Holdings Ltd. Automobiles 488,000 675,419
Jardine Matheson Holdings Ltd. (Singapore) Multi-Industry 117,672 941,376
Jardine Strategic Holdings Ltd. (Singapore) Multi-Industry 242,500 824,500
*Jardine Strategic Holdings Ltd., wts.,
expire 5/02/98 Multi-Industry 12,500 5,313
K Wah International Holdings Ltd. Building Materials & Components 2,264,003 360,207
*K Wah International Holdings Ltd., wts.,
expire 12/01/97 Building Materials & Components 214,379 8,735
Lai Sun Development Co. Ltd. Real Estate 100,000 18,756
Lai Sun Garment International Ltd. Multi-Industry 97,000 117,942
New World Development Co. Ltd. Real Estate 1,109,505 5,410,539
Stelux International Holdings Ltd. Multi-Industry 585,133 142,293
Sun Hung Kai Properties Ltd. Real Estate 582,000 5,194,479
Swire Pacific Ltd., B Multi-Industry 460,000 663,442
Tian An China Investments Co. Ltd. Real Estate 6,201,000 866,274
Wai Kee Holdings Ltd. Construction & Housing 269,557 64,505
Wheelock & Co. Ltd. Multi-Industry 342,000 696,749
*Yaohan Hongkong Corp. Ltd. Merchandising 3,244,000 159,454
------------
42,769,474
- ------------------------------------------------------------------------------------------------------------------------------
Hungary: 0.5%
Chinoin Pharmaceutical & Chemical Works
Co. Ltd. Health & Personal Care 2,000 502,026
*Fotex First Hungarian- American Photo-Service Multi-Industry 973,000 828,045
*Ibusz Leisure & Tourism 800 4,719
*Ibusz, new Leisure & Tourism 266 1,464
------------
1,336,254
- ------------------------------------------------------------------------------------------------------------------------------
India: 2.0%
ATV Project India Ltd. Machinery & Engineering 200,000 132,660
Bharat Petroleum Corp., Ltd. Energy Sources 92,000 756,164
Bombay Dyeing & Manufacturing Co. Ltd. Chemicals 41,000 347,628
Bses Ltd. Utilities Electrical & Gas 46,650 219,292
</TABLE>
11
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------
India (cont.)
*Cochin Refineries Ltd. Energy Sources 17,850 $ 80,820
DCW Ltd. Chemicals 12,500 13,609
Essar Shipping Ltd. Transportation 59,250 49,553
Garden Silk Mills Ltd. Textiles & Apparel 85,700 74,146
Grasim Industries Ltd Multi-Industry 17,000 303,965
Gujarat Ambuja Cements
Ltd. Building Materials & Components 12,000 114,895
Gujarat Narmada Valley
Fertilizers Co. Ltd. Chemicals 36,600 52,776
Hindustan Petroleum
Corp. Ltd. Energy Sources 12,000 114,203
Indian Petrochemicals
Corp. Ltd. Chemicals 104,500 452,055
Indian Rayon and
Industries Ltd. Multi-Industry 18,500 274,766
Industrial Credit &
Investment Corp. of
India Ltd. Financial Services 439,600 1,236,078
Mahanagar Telephone
Nigam Ltd. Telecommunications 23,000 116,741
Oriental Bank of
Commerce Banking 14,200 25,861
Reliance Industries
Ltd. Chemicals 84,000 515,386
*Tata Chemicals Ltd. Chemicals 34,000 210,815
Tata Iron & Steel Co.
Ltd. Metals & Mining 34,000 190,469
Videocon International
Ltd. Appliances & Household Durables 90,000 172,603
------------
5,454,485
- -----------------------------------------------------------------------------------------
Indonesia: 4.5%
PT Anwar Sierad, fgn. Food & Household Products 245,500 182,814
PT Astra International,
fgn. Multi-Industry 41,100 68,308
PT Barito Pacific
Timber, fgn. Forest Products & Paper 5,531,500 4,835,436
PT Charoen Pokphand
Indonesia, fgn. Food & Household Products 500,000 1,084,610
PT Dharmala Intiland,
fgn. Real Estate 224,000 135,377
PT Duta Anggada Realty,
fgn. Real Estate 440,000 232,679
PT Duta Pertiwi
Nusantara Chemicals 409,750 101,708
PT Eratex Djaja, fgn. Textiles & Apparel 283,000 97,734
PT Gadjah Tunggal, fgn. Automobiles 83,000 56,432
PT Hadtex Indosyntec,
fgn. Textiles & Apparel 953,000 565,670
PT Intan Wijaya
Chemical Industry,
fgn. Chemicals 526,000 130,563
PT Japfa Comfeed
Indonesia, fgn. Food & Household Products 539,000 290,848
PT Metrodata
Electronic, fgn. Electrical & Electronics 347,000 224,692
PT Multipolar Corp.,
fgn. Electrical & Electronics 39,000 31,567
PT Polysindo Eka
Perkasa, fgn. Textiles & Apparel 6,348,000 3,562,443
PT Pudjiadi Prestige
Ltd., fgn. Real Estate 451,500 294,795
*PT Sinar Mas Multi
Artha, fgn. Financial Services 222,500 220,915
PT Sumalindo Lestari
Jaya, fgn. Forest Products & Paper 90,000 88,388
------------
12,204,979
- -----------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------
Israel: 0.3%
Clal Industries Ltd. Multi-Industry 54,200 $ 324,670
Discount Investment
Corp. Multi-Industry 6,000 449,702
The First International
Bank of Israel Banking 977 117,449
------------
891,821
- -----------------------------------------------------------------------------------------
Korea (South): 1.3%
Central Investment &
Finance Corp. Financial Services 3,630 67,261
*Dae Duck Electronics
Co. Ltd. Electrical & Electronics 4,120 143,204
Daegu Bank Co. Ltd. Banking 52,613 853,049
Daehan Synthetic Fiber
Co. Ltd. Textiles & Apparel 2,410 234,363
Dongkuk Steel Mill Co.
Ltd. Metals & Mining 4,000 78,206
Hae In Corp. Ltd. Merchandising 1,531 93,908
Hankook Cosmetics Co.
Ltd. Health & Personal Care 8,700 235,691
Korea Kumho
Petrochemical Chemicals 5,000 46,642
Kyung Dong Boiler Co
Ltd Energy Equipment & Services 8,154 282,376
Saehan Precision Co Ltd Electrical & Electronics 8,400 300,556
Ssangyong Oil Refining
Co Ltd Energy Equipment & Services 34,000 821,162
Tong Yang Investment
and Finance Co. Ltd. Financial Services 8,000 152,323
Yuhwa Textiles & Apparel 3,580 209,525
------------
3,518,266
- -----------------------------------------------------------------------------------------
Malaysia: 6.2%
Aokam Perdana Bhd. Multi-Industry 61,000 102,923
Berjaya Singer Bhd. Appliances & Household Durables 80,000 78,164
Federal Flour Mills
Bhd. Food & Household Products 974,998 2,410,236
Hong Leong Industries
Bhd. Multi-Industry 18,000 91,819
Malayawata Steel Bhd.,
fgn. Metals & Mining 738,000 1,216,245
Malaysian International
Shipping Corp. Bhd.,
fgn. Transportation 1,930,666 5,378,744
Oriental Holdings Bhd. Automobiles 988,200 5,040,848
Perlis Plantations Bhd. Multi-Industry 626,879 2,164,620
Perlis Plantations
Bhd., fgn. Multi-Industry 66,000 227,899
Renong Bhd. Multi-Industry 67,000 106,737
------------
16,818,235
- -----------------------------------------------------------------------------------------
Mexico: 5.1%
Cemex SA, B Building Materials & Components 322,250 1,204,160
*Cifra SA, C Merchandising 1,031,043 1,176,095
*DESC SA, A Multi-Industry 138,000 522,905
*DESC SA, B Multi-Industry 1,000 3,881
*Grupo Financiero
Banamex Accival SA, B Banking 613,000 1,179,866
*Grupo Financiero
Banamex Accival SA, L Banking 30,650 53,528
</TABLE>
13
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------
Mexico (cont.)
*Grupo Financiero
Bancomer SA de CV, B Banking 1,576,000 $ 590,974
*Grupo Financiero
Bancomer SA de CV, L Banking 2,730,370 966,566
*Grupo Financiero
Serfin SA, B Banking 752,000 453,547
Grupo Industrial Alfa
SA, A Multi-Industry 39,404 467,558
Grupo Industrial Maseca
SA de CV, B Food & Household Products 347,093 259,398
Telefonos de Mexico SA,
L, ADR Telecommunications 204,700 6,243,350
Vitro SA Food & Household Products 503,355 890,952
------------
14,012,780
- -----------------------------------------------------------------------------------------
Pakistan: 0.4%
*DG Khan Cement Co. Building Materials & Components 110,000 81,622
National Development
Leasing Corp. Financial Services 148,500 75,621
*Pakistan Telecom Corp.
PTC Telecommunications 748,000 816,223
------------
973,466
- -----------------------------------------------------------------------------------------
Philippines: 10.0%
*Keppel Philippine
Holdings Inc., B Machinery & Engineering 476,928 136,760
*Philex Minning Corp.,
B Metals & Mining 5,187,339 614,825
Philippine Commercial
International Bank
Inc. Banking 66,786 727,739
Philippine Long
Distance Telephone
Co., ADR Telecommunications 223,753 13,229,396
*Philippine National
Bank Banking 783,554 11,084,496
RFM Corp. Food & Household Products 5,914,500 1,175,890
Sime Darby Pilipinas
Inc. Industrial Components 573,286 419,197
------------
27,388,303
- -----------------------------------------------------------------------------------------
Poland: 0.4%
*Agros Holding SA, C Food & Household Products 12,000 145,369
Bank Slaski SA W
Katowicach Banking 5,000 377,100
Debica SA, A Automobiles 6,000 141,852
*Mostostal Export SA Construction & Housing 81,000 243,728
*Polifarb Ceiszyu SA Chemicals 10,272 50,176
*Rolimpex SA Wholesale & International Trade 1,581 46,645
------------
1,004,870
- -----------------------------------------------------------------------------------------
Portugal: 6.5%
Banco Chemical
(Portugal) Banking 9,800 108,447
Banco Comercial
Portugues SA Banking 633,896 8,846,219
Banco Espirito Santo e
Comercial de Lisboa Banking 45,500 715,158
Banco Portugues do
Investimento SA, new Banking 124,482 1,499,852
Banco Totta & Acores SA Banking 101,000 1,952,106
*Banco Totta & Acores
SA, new Banking 9,181 165,418
</TABLE>
14
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------
Portugal (cont.)
*BPI Socieda de Gestora
de Participacoes
Socias SA Banking 226,860 $ 2,882,012
Espirito Santo
Financial Holding SA,
ADR Banking 114,000 1,339,500
*Portucel Industrial
Empresa Product de
Celulose SA Forest Products & Paper 39,000 216,170
*Sociedade Portuguesa
de Celulose SA Forest Products & Paper 6,500 135,851
------------
17,860,733
- -----------------------------------------------------------------------------------------
Singapore: 3.9%
First Capital Corp.
Ltd., fgn. Real Estate 21,000 65,430
G.P. Batteries
International Ltd. Electrical & Electronics 35,000 86,450
*GP Batteries
International Ltd.,
wts., expire 11/15/00 Electrical & Electronics 8,750 6,300
Jaya Holdings Ltd. Transportation 356,500 393,811
Jaya Holdings Ltd.,
3.00%, conv. ln. stk.,
8/31/98 Corporate Bond 15,900** 25,896
*Jaya Holdings Ltd.,
wts., expire 8/31/98 Transportation 30,051 21,918
*Jaya Holdings Ltd.,
wts., expire 10/09/99 Transportation 36,780 26,565
*Osprey Maritime Ltd. Transportation 37,000 84,175
Prima Ltd. Food & Household Products 511,000 1,990,157
Singapore Bus Service
(1978) Ltd., fgn. Transportation 903,600 7,614,247
TIBS Holdings Ltd. Transportation 105,600 273,684
*TIBS Holdings Ltd.,
wts., expire 4/17/00 Transportation 380 347
WBL Corp. Ltd. Multi-Industry 43,000 101,090
------------
10,690,070
- -----------------------------------------------------------------------------------------
South Africa: 0.7%
Del Monte Royal Foods
Ltd Food & Household Products 387,825 490,728
Engen Ltd. Energy Sources 109,341 769,411
First National Bank
Holdings Ltd. Banking 28,900 250,006
Rembrandt Group Ltd. Multi-Industry 33,400 325,591
------------
1,835,736
- -----------------------------------------------------------------------------------------
Sri Lanka: 0.1%
Aitken Spence & Co.
Ltd. Multi-Industry 50,000 175,095
*Lanka Ceramic Ltd. Building Materials & Components 162,000 120,704
Lanka Walltile Ltd. Building Materials & Components 27,300 26,952
United Motor Lanka Ltd. Automobiles 158,600 90,105
------------
412,856
- -----------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------
Thailand: 0.4%
American Standard
Sanitaryware (THB)
Public Co. Ltd., fgn Building Materials & Components 17,000 $ 289,290
Asia Fibre Public Co.
Ltd., fgn. Textiles & Apparel 233,600 122,777
Ayudhya Insurance
Public Co. Ltd., fgn. Insurance 15,000 98,770
Charoen Pokphand
Feedmill Public Co.
Ltd. Food & Household Products 64,000 309,718
Karat Sanitaryware
Public Co. Ltd. Building Materials & Components 100 406
Kian Gwan (Thailand)
Public Co. Ltd., fgn. Real Estate 26,000 68,326
*Padaeng Industry
Public Co. Ltd., fgn. Metals & Mining 35,100 28,194
Regional Container
Lines Public Co. Ltd.,
fgn. Transportation 300 3,570
Sanyo Universal
Electric Public Co
Ltd., fgn. Appliances & Household Durables 6,000 23,681
Thai Rayon Public Co.
Ltd. Textiles & Apparel 4,100 30,331
Thai Wah Public Co.
Ltd., fgn. Multi-Industry 8,450 9,385
United Standard
Terminal Public Co.
Ltd., fgn. Wholesale & International Trade 44,000 80,504
------------
1,064,952
- -----------------------------------------------------------------------------------------
Turkey: 9.1%
Akbank Banking 14,122,986 4,024,407
Akcimento Building Materials & Components 1,556,000 1,466,140
*Alcatel Teletas
Endustri Tic AS Telecommunications 152,000 73,921
Arcelik AS Appliances & Household Durables 22,222,463 2,465,410
Bagfas Chemicals 2,805,790 1,151,312
Bekoteknik AS Appliances & Household Durables 6,779,957 710,968
*Celik Halat ve Sanayii
ve Ticaret AS Building Materials & Components 5,499,374 534,894
Cimentas Izmir Cimento
Fabrikasi Turk AS Building Materials & Components 1,667,250 937,511
Cimsa Cimento Sanayi ve
Ticaret AS Building Materials & Components 608,000 429,666
Compagnie Financiere
Ottomane SA Banking 37,000 1,303,995
Eregli Demir ve Celik
Fabrikalari AS Metals & Mining 25,961,250 2,919,654
Finans Bank AS, br. Banking 33,658,431 2,148,410
Izocam Ticaret ve
Sanayii AS, br. Building Materials & Components 2,786,529 359,962
Koc Holding AS Multi-Industry 2,793,000 551,809
*Koc Yatirim ve Sanayii
Mamullesi Pazarlanca
AS Multi-Industry 4,656,915 1,220,848
Marshall Boya ve Vernik
Sanayii AS Industrial Components 5,828,256 602,312
*Otosan Otomobil
Sanayii AS Automobiles 6,322,932 1,465,421
Tekstil Bankasi AS, br. Banking 1,277,509 40,772
Tofas Turk Otomobil
Fabrikasi AS Automobiles 961,000 106,616
Trakya Cam Sanayii AS Building Materials & Components 2,400,000 328,267
Turk Demir Dokum, br. Appliances & Household Durables 10,191,362 1,285,537
Turkiye Garanti Bankasi
AS Banking 5,581,813 500,497
Vakif Finansal Kiralama
AS Financial Services 4,161,357 167,593
------------
24,795,922
- -----------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Templeton Emerging Markets Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
INDUSTRY LOCAL CURRENCY** VALUE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------
Venezuela: 0.8%
Ceramica Carabobo CA,
A, ADR Building Materials & Components 130,000 $ 233,584
Consolidada Carabobo, B Building Materials & Components 1,680,000 101,831
Electricidad de Caracas Utilities Electrical & Gas 1,054,743 663,994
*Manufacturera de
Aparatos Domesticos SA Appliances & Household Durables 36,000 19,907
Mavesa SA, ADR Food & Household Products 193,000 632,126
Siderurgica Venezolana
Sivensa Saica Svs Metals & Mining 1,455,440 430,264
Siderurgica Venezolana
Sivensa Saica SVS, ADR Metals & Mining 21,750 32,149
*Venezolana
Prerreducidos Caroni
Venprecar CA, GDS,
144A Metals & Mining 1,764 6,968
------------
2,120,823
- -------------------------------------------------------------------------------------------
Zimbabwe: 0.1%
Transarchipel Shipping
Ltd.--TSL Multi-Industry 700,000 203,354
- -------------------------------------------------------------------------------------------
TOTAL LONG TERM
SECURITIES (cost
$183,512,678) 261,568,563
- -------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 4.2% (cost $11,572,663)
- -------------------------------------------------------------------------------------------
U.S. Treasury Bills,
4.53% to 4.95% with
maturities to 5/02/96 11,614,000 11,573,949
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS:
100.2% (cost
$195,085,341) 273,142,512
OTHER ASSETS, LESS
LIABILITIES: (0.2)% (490,037)
------------
TOTAL NET ASSETS: 100.0% $272,652,475
============
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost
$195,085,341) $273,142,512
Cash 33,646
Receivables:
Investment securities sold 26,383
Dividends and interest 168,298
------------
Total assets 273,370,839
------------
Liabilities:
Payable for investment securities purchased 161,886
Accrued expenses 556,478
------------
Total liabilities 718,364
------------
Net assets, at value $272,652,475
============
Net assets consist of:
Distributions in excess of net investment income $ (397,904)
Net unrealized appreciation 78,003,281
Accumulated net realized gain 4,319,763
Net capital paid in on shares of capital stock 190,727,335
------------
Net assets, at value $272,652,475
============
Shares outstanding 16,435,101
------------
Net asset value per share ($272,652,475 / 16,435,101) $ 16.59
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
for the six months ended February 29, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $180,906 foreign taxes withheld)
Dividends $1,797,121
Interest 546,103
----------
Total income $ 2,343,224
Expenses:
Management fees (Note 3) 1,652,398
Administrative fees (Note 3) 198,275
Transfer agent fees 1,000
Custodian fees 238,000
Reports to shareholders 75,000
Audit fees 19,500
Legal fees (Note 3) 1,000
Registration and filing fees 6,500
Directors' fees and expenses 16,000
Other 7,615
----------
Total expenses 2,215,288
-----------
Net investment income 127,936
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 5,848,898
Foreign currency transactions (57,030)
----------
5,791,868
----------
Net unrealized appreciation (depreciation) on:
Investments 6,960,815
Foreign currency translation of other assets and
liabilities (53,890)
----------
6,906,925
----------
Net realized and unrealized gain 12,698,793
-----------
Net increase in net assets resulting from operations $12,826,729
===========
</TABLE>
18
<PAGE>
Templeton Emerging Markets Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 29, 1996 YEAR ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 127,936 $ 3,824,734
Net realized gain on investment and for-
eign currency transactions 5,791,868 33,982,789
Net unrealized appreciation (deprecia-
tion) 6,906,925 (60,839,978)
------------ ------------
Net increase (decrease) in net assets
resulting from operations 12,826,729 (23,032,455)
Distributions to shareholders:
From net investment income (4,296,031) (1,597,491)
From net realized gain (34,977,198) (48,808,530)
Capital share transactions (Note 2) 4,136,772 4,640,626
------------ ------------
Net decrease in net assets (22,309,728) (68,797,850)
Net assets:
Beginning of period 294,962,203 363,760,053
------------ ------------
End of period $272,652,475 $294,962,203
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Templeton Emerging Markets Fund, Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 Fund seeks long-term capital appreciation by primarily investing in
emerging country equity securities. The following summarizes the Fund's signif-
icant accounting policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed se-
curities for which no sale is reported are valued at the mean between the last
current bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and ap-
proved in good faith by the Board of Directors.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
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 $33,221,804 as of February 29, 1996.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign securi-
ties is recorded as soon as information is available to the Fund. Interest in-
come and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
E. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
20
<PAGE>
Templeton Emerging Markets Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
As of February 29, 1996, there were 30,000,000 shares of capital stock autho-
rized ($0.01 par value). During the six months ended February 29, 1996 and the
year ended August 31, 1995, 250,848 shares were issued for $4,136,772 and
209,342 shares were issued for $4,640,626 from reinvested distributions, re-
spectively.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton Asset
Management Ltd. (TAML) and Templeton Global Investors, Inc. (TGII), the Fund's
investment manager and administrative manager, respectively. The Fund pays
monthly an investment management fee to TAML equal, on an annual basis, to
1.25% of the average daily net assets of the Fund. The Fund pays TGII monthly a
fee computed at an annual rate of 0.15% of the Fund's average daily net assets.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $1,000 for the six months ended Feb-
ruary 29, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 29, 1996 aggregated $15,571,425 and $37,184,386, respec-
tively. The cost of securities for federal income tax purposes is $195,173,998.
Realized gains and losses are reported on an identified cost basis.
At February 29, 1996, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $ 94,214,868
Unrealized depreciation (16,246,354)
------------
Net unrealized appreciation $ 77,968,514
============
</TABLE>
21
<PAGE>
Templeton Emerging Markets Fund, Inc.
Annual Meeting of Shareholders, February 20, 1996
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on February 20, 1996. The purpose
of the meeting was to elect five directors of the Fund and to ratify the selec-
tion of McGladrey & Pullen, LLP, as the Fund's independent public accountants
for the fiscal year ending August 31, 1996. At the meeting, the following per-
sons were elected by the shareholders to serve as directors of the Fund: Harris
J. Ashton, Nicholas F. Brady,
S. Joseph Fortunato, John Wm. Galbraith and Charles B. Johnson. In addition,
the shareholders ratified the selection of McGladrey & Pullen, LLP, to serve as
the Fund's independent public accountants for the fiscal year ending August 31,
1996. No other business was transacted at the Annual Meeting.
The results of the voting at the Annual Meeting are as follows:
1. Election of five (5) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED WITHHOLD SHARES
---------- ----------- ------ -------- -----------
<S> <C> <C> <C> <C> <C>
Term expiring 1999:
Harris J. Ashton 12,203,293 74.30% 98.36% 203,225 1.24%
Nicholas F. Brady 12,155,310 74.01% 97.98% 251,208 1.53%
S. Joseph Fortunato 12,181,892 74.17% 98.19% 224,626 1.37%
Term expiring 1998:
Charles B. Johnson 12,154,902 74.01% 97.97% 251,616 1.53%
Term expiring 1997:
John Wm. Galbraith 12,180,407 74.16% 98.18% 226,111 1.38%
2. Ratification of the selection of McGladrey & Pullen, LLP as independent
public accountants of the Fund for the fiscal year ending August 31, 1996:
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES
---------- ----------- ------ -------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
12,191,559 74.23% 98.27 78,469 .48% 136,490 .83%
</TABLE>
22
<PAGE>
Templeton Emerging Markets Fund, Inc.
- --------------------------------------------------------------------------------
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.
23
<PAGE>
- --------------------------------------------------------------------------------
Templeton Emerging Markets
FUND, INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be aware that the value of investments made for the Fund may go
up as well as down and that the Investment Manager may make errors in selecting
securities for the Fund's portfolio. Like any investment in securities, the
Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors. The Fund and Fund investors are not
protected from such losses by the Investment Manager. Therefore, investors who
cannot accept the risk of such losses should not invest in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded, and accessed. These calls can be
determined by the presence of a regular beeping tone.
[RECYCLED PAPER LOGO APPEARS HERE]
TLEMF S96 04/96
TEMPLETON
EMERGING
MARKETS
FUND, INC.
Semi-Annual Report
February 29, 1996
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
