<PAGE> 1
TEMPLETON EMERGING
MARKETS FUND
[PHOTO OF J. MARK MOBIUS]
J. MARK MOBIUS, PH.D.
President
Templeton Emerging
Markets Fund, Inc.
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 $12 billion
in emerging markets investments for the Templeton Group of Funds.
YOUR FUND'S OBJECTIVE:
The Templeton Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in emerging country equity securities.
APRIL 15, 1997
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Emerging
Markets Fund, which covers the six months ended February 28, 1997.
During this period, many emerging markets rallied sharply due to strong economic
growth, improved fiscal and monetary policies, and the increased level of
capital flows into emerging market countries. Within this environment, your Fund
posted a six-month total return of 19.62% in market-price terms, and 23.46% in
net asset value terms, as discussed in the Performance Summary on page 6.
1
<PAGE> 2
TEMPLETON EMERGING MARKETS FUND
Geographic Distribution on 2/28/97
Based on Total Net Assets
[PIE CHART]
<TABLE>
<S> <C>
Asian Stocks 44.6%
Latin American Stocks 26.4%
European Stocks 17.9%
Middle Eastern &
African Stocks 1.1%
Short-Term Obligations
& Other Net Assets 10.0%
</TABLE>
At the end of the period under review, 90.0% of the Fund's total net assets were
invested in equities, with the remaining 10.0% in cash and other liquid assets.
These assets were allocated among 29 emerging markets, with the largest
percentage of our holdings in Brazil (13.6%) and Hong Kong (12.4%). Regionally,
44.6% was invested in Asia (where we found the largest number of stocks we
considered to be bargains), with 26.4% in Latin America and 17.9% in Europe.
In Asia, the growing Chinese economy contributed to strong rallies in the stock
markets of China and Hong Kong. The Hong Kong market was also buoyed by a
recovery in its retail and property sectors and the strong earnings of a number
of companies listed on its exchange. However, the death on February 19, 1997 of
Deng Xiaoping, China's 92-year-old patriarch, could adversely affect both of
these markets. Deng was primarily responsible for the liberalization and rapid
growth of China's economy over the past 20 years, and the ability of these
reforms to endure under new leadership may determine the rate of future Chinese
economic growth.
Some other Asian stock markets also performed relatively well during the
reporting period. Prices of many Malaysian stocks responded positively as
economic conditions improved. And after political concerns had unsettled the
market last summer, the Indonesian stock market rose in an environment of strong
corporate earnings growth. Stock markets in South Korea, Pakistan and Thailand,
however, presented a different picture. The South Korean market fell sharply
during most of 1996 as a result of deteriorating economic
2
<PAGE> 3
conditions, poor corporate earnings, the collapse of the giant steel company
Hanbo, and problems in South Korea's banking system. In Pakistan, where
allegations of corruption toppled the government of Prime Minister Bhutto, share
prices declined at the beginning of the reporting period, but rallied in the
first two months of 1997 following the election of a new president. In Thailand,
a long-running political power struggle, and a sharply slowing economy,
negatively impacted corporate earnings and contributed to its market's decline.
Latin American markets performed strongly during this period, as Mexico's early
repayment of the loans it received in 1995 appeared to boost investor confidence
in the entire region. The Venezuelan Stock Market Capital General Index
increased 45%, Mexico's Bolsa 11%, Brazil's Bovespa 48%, and Argentina's Merval
41%.(1) We believe that the region still offers many potential bargains because
these countries have, in our opinion, continued to make progress in implementing
economic reforms.
1. SOURCE: BLOOMBERG. PRICE CHANGE MEASURED IN U.S. DOLLARS.
TEMPLETON EMERGING MARKETS FUND
Top Ten Holdings on 2/28/97
Based on Total Net Assets
<TABLE>
<CAPTION>
% OF TOTAL
COMPANY, INDUSTRY, COUNTRY NET ASSETS
-------------------------- ----------
<S> <C>
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong 4.6%
Eletrobras-Centrais Eletricas Brasileiras SA, B
Utilities - Electrical & Gas, Brazil 3.7%
Alpha Credit Bank
Banking, Greece 3.4%
Banco Comercial Portugues SA
Banking, Portugal 3.4%
Ergo Bank SA
Banking, Greece 3.3%
Petrobras-Petroleo Brasileiro SA, pfd.
Energy Sources, Brazil 3.2%
Antofagasta Holdings PLC
Metals & Mining, Chile 3.2%
Oriental Holdings BHD
Automobiles, Malaysia 3.0%
Telmex-Telefonos de Mexico SA
Telecommunications, Mexico 2.4%
Telebras-Telecomunicacoes Brasileiras SA
Telecommunications, Brazil 2.4%
</TABLE>
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 12 OF THIS REPORT.
European emerging markets remained popular with foreign investors, and stock
prices in the markets of Hungary, Poland and Russia reached new high levels.
Driven by improving economic fundamentals and a surge in foreign and domestic
investor interest, the Russian market, in particular, experienced phenomenal
growth. Two Russian companies in our
3
<PAGE> 4
TEMPLETON EMERGING MARKETS FUND
Top 10 Countries Represented in the Fund on 2/28/97
As a Percentage of Total Net Assets
<TABLE>
<CAPTION>
% of Total
Country Net Assets
------- ----------
<S> <C>
Brazil 13.6%
Hong Kong 12.4%
Turkey 10.7%
Greece 10.3%
Malaysia 6.8%
Portugal 6.3%
Mexico 5.2%
Philippines 4.3%
Indonesia 4.1%
Chile 3.2%
</TABLE>
portfolio on February 28, 1997 were GUM Trade House, which operates a large
chain of brand-name retail stores in the Moscow area, and Lukoil Holdings, whose
oil and gas reserves are estimated to be the second largest in the world.
Looking forward, we expect that capital flows to emerging market countries
should continue to increase and that economic growth in China could benefit many
Chinese and Hong Kong securities over the long term. However, these markets may
experience volatility, and possibly even decline, during the near term because
of the upcoming handover of sovereignty in Hong Kong and the uncertainty
resulting from Deng's death. Elsewhere, we believe the economic outlook in Latin
America is better than it has been for many years, while favorable estimates
about Russia's economy are partly clouded by its need to devise adequate capital
markets regulations and improve its tax collection system.
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
4
<PAGE> 5
disconcerting, declines of as much as 40% to 50% are not unusual in emerging
markets. In fact, the Hong Kong market has increased 857% in the last 15 years,
but has suffered five declines of more than 20% during that time.(2)
This discussion reflects the strategies we employed for the Fund during the
six-month period under review, 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.
2. SOURCE: BLOOMBERG. BASED ON QUARTERLY PERCENTAGE CHANGE OVER 15 YEARS ENDED
DECEMBER 31, 1996.
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual
fund families, we're proud to be an innovative industry leader, providing
people like you with an opportunity to invest in companies and governments
around the globe.
In addition, we want to stress that all securities markets move both up and
down. Mixed in with the good years can be some bad years. Accordingly, mutual
fund share prices also move up and down. Every investor should expect such
fluctuations, which can be wide. When markets are going down, as well as up,
we encourage investors to maintain a long-term perspective. We thank you for
your past support and look forward to serving your investment needs in the
years ahead.
5
<PAGE> 6
PERFORMANCE SUMMARY
In market-price terms, the Templeton Emerging Markets Fund produced a total
return of 19.62% for the six-month period ended February 28, 1997. Based on the
change in actual net asset value (in contrast to market price), the Fund
delivered a total return of 23.46% 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 table to the right, based on the change in market price, the Fund
delivered a cumulative total return of 693.23% for the period from inception on
February 26, 1987 through February 28, 1997.
During the reporting period, the Fund's closing price on the New York Stock
Exchange (NYSE) increased by $2.25, from $18.375 on August 31, 1996, to $20.625
on February 28, 1997, while the net asset value increased by $2.75, from $17.26
to $20.01.
Shareholders received combined distributions totaling $1.13 per share, including
short-term capital gains of 3.0 cents ($0.03), long-term capital gains of 88.5
cents ($0.885) and dividend income totaling 21.5 cents ($0.215) 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
Periods Ended 2/28/97
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year (2/26/87)
<S> <C> <C> <C>
Cumulative Total Return(1)
Based on change in
net asset value 28.45% 141.29% 693.23%
Based on change in
market price 7.22% 97.69% 555.17%
Average Annual Total Return(2)
Based on change in
net asset value 28.45% 19.27% 22.99%
Based on change in
market price 7.22% 14.61% 20.66%
</TABLE>
1. CUMULATIVE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE PERIODS INDICATED.
2. AVERAGE ANNUAL TOTAL RETURN REPRESENTS THE AVERAGE ANNUAL CHANGE IN VALUE OF
AN INVESTMENT OVER THE PERIODS INDICATED.
ALL TOTAL RETURN CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, EITHER AT NET ASSET VALUE OR AT MARKET PRICE ON THE REINVESTMENT DATE, IN
ACCORDANCE WITH THE DIVIDEND REINVESTMENT PLAN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE WITH MARKET CONDITIONS, CURRENCIES AND THE POLITICAL AND
ECONOMIC CLIMATES OF THE COUNTRIES WHERE INVESTMENTS ARE MADE. EMERGING MARKETS
INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE
ASSOCIATED WITH THE RELATIVELY SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS.
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE RESULTS.
6
<PAGE> 7
THE FOLLOWING LETTER WAS
WRITTEN BY DR. MOBIUS AFTER A
RECENT TRIP TO SOUTH AFRICA
We arrived in Johannesburg, the largest city in South Africa, after a short
flight from Botswana. Despite a superficial appearance of order, there is a
strong undercurrent of tension in this country of 45 million people. Promises
made by Nelson Mandela's ruling African National Congress party have not been
fulfilled, and in a nation where a majority of the population has been waiting
so long for prosperity, many are understandably impatient.
In my view, South Africa's paramount problem is a shortage of skilled workers
caused by language barriers and lack of education. Four different language
groups (with many variations in each group) exist among its black population,
undermining the mobility of labor and interfering with the ability of
individuals to secure productive work. Despite these language difficulties, many
people have migrated from their tribal lands to Johannesburg, where the
combination of unemployment and feelings of dislocation has resulted in rapidly
increasing crime rates. As you drive through the city, you hear radio broadcasts
advising motorists not to make any sudden moves because hijackers may shoot
nervously if they see the hands of their potential victims moving.
From Johannesburg in the Northeast, we traveled to Cape Town in the Southwest.
Although the Cape Town region is the most spectacular and beautiful part of
South Africa, the slums on the outskirts of the city are a huge conglomeration
of huts built from scraps of wood, tin, and rock. The South African government
faces a monumental task in attempting to alleviate problems of housing,
education, electrification and fresh water in this area.
Despite these issues, South Africa's basic infrastructure is excellent compared
with those of many other parts of the world, as evidenced by the beautifully
built four-lane highway on which we drove. And the opening up of many new
markets following the abolition of apartheid has been a boon to some South
African exporters. In Durban, we visited a major tire producer recently licensed
to sell its product in 70 countries around the world. We also visited a com-
7
<PAGE> 8
pany helping black businessmen get started in the contracting business, which
had established sales centers in Angola, Zimbabwe, Zambia and Namibia.
The key questions for us as investors are: "Is it safe to invest in South
Africa?" and "Does South Africa have a long term future?" Our answer to both
questions is, "Yes." The transition from white minority rule to black majority
rule has been relatively successful and has confounded the critics who predicted
chaos and bloodshed in the streets. The fact that the crime problem is talked
about so much and attacked in the press is evidence that people are concerned
and trying to do something about it. Another sign of progress is that the press
is now quite free to criticize the government.
Although we have a long list of South African stocks that we are interested in
adding to the Fund's portfolio, most did not appear to be bargains as of
February 28, 1997. Since we were also concerned about further depreciation of
the local currency, only 0.5% of our total net assets were invested in South
African equities at that time. However, I feel that the country's future is
bright. In my opinion, it could become one of the major emerging markets in
which we invest, as well as the driving force for strong economic growth in
sub-Saharan Africa.*
[MAP OF SOUTH AFRICA]
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Emerging Markets Fund, Inc.
*THIS LETTER REFLECTS THE STRATEGIES EMPLOYED FOR THE FUND DURING THE PAST SIX
MONTHS 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.
8
<PAGE> 9
Many investors have asked us about the activities of Sir John Templeton, since
his retirement from the funds. We asked Professor Robert Herrmann to update us
on Sir John's current activities and his comments follow.
[PHOTO OF SIR JOHN TEMPLETON]
THE NEW CAREER OF SIR JOHN TEMPLETON
BY PROFESSOR
ROBERT HERRMANN
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently, he devotes all of his time and efforts to the
John Templeton Foundation. A major portion of his assets remain invested in
Templeton funds, managed by many of the investment professionals he selected and
trained. For sentimental reasons, he allows his name to be associated with the
funds, although he knows no more about their management and holdings than any
other investor.
Sir John Templeton established the Templeton Foundation in 1987, to foster the
acquisition of spiritual information through scientific research. Working with
scientists, theologians and others, he strives toward a new science that uses
empirical and statistical scientific methods to discover and test spiritual
knowledge. A crucial ingredient in his research is what Sir John calls "humility
theology," an attitude of humility toward the Creator, combined with
receptiveness to the theological significance of current scientific discoveries.
Universal spiritual laws, or "laws of life," are among the areas of
investigation. In his recent book, Worldwide Laws of Life, Sir John compiles 200
laws and proverbs from nearly all religions, and deeply embedded in human
history. For example, the Golden Rule taught by Jesus in the Sermon on the
Mount, states "Do unto others as you would have others do unto you," and is
affirmed by all major religions as an acceptable, universal law of life. Other
books which Sir John has authored or co-authored during the past few years
include: The Humble Approach, Is God the Only Reality, Evidence of Purpose,
Who's Who in Theology and Science and The God Who Would Be Known.
With an annual budget of more than $30 million, the Templeton Foundation
sponsors 60 programs focusing on spiritual progress and the benefits of freedom.
Sir John's first sizable investment in the programs was the Templeton Prize for
Progress in Religion. A panel of nine judges gives the annual award which now
exceeds $1.2 million to individuals who have shown extraordinary originality in
furthering the world's understanding of God or spirituality.
Recipients of the prize include Professor Paul Davies, author of The Mind of
God; the Right Honorable Lord Jacobovits, former Chief Rabbi of Great Britain
and The Commonwealth; the Reverend Dr. Billy Graham, world-renowned preacher and
presidential inauguration speaker; Mr. Nikkyo Nimano, founder of the World
Conference on Religion and Peace; and Sir Sarepalli Radhakrishnan, former
President of India, and Oxford professor of Eastern Religions and Ethics.
To encourage young people's and their parents' appreciation of spiritual laws of
life, Sir John established an essay contest for teenagers in his home county of
Franklin, Tennessee. Students submit essays about the spiritual life principles
they plan to follow, and prizes are offered semiannually. In 1996, more than 800
youth participated. Twenty-six similar programs
9
<PAGE> 10
have been launched in various locations, with the support of generous local
donors.
The Foundation also sponsors a worldwide program that awards college-level
faculty who teach courses integrating science and religion. During the program's
first two years, more than 200 courses were created. The Foundation maintains an
extensive program of research and education on the health benefits of
spirituality, including prizes for medical schools providing courses on
spirituality in medicine. Lastly, the Foundation publishes a newsletter with
over 2,000 subscribers. Free subscriptions are available to Templeton
shareholders by writing to the Foundation.
To contact Sir John Templeton or receive the free
newsletter subscription, please write to:
The John Templeton Foundation
2 Radnor Corporate Center #320
100 Matsonford Road
Radnor, PA 19087
10
<PAGE> 11
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1997 ---------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.26 $ 18.23 $ 22.77 $ 17.94 $ 18.74 $ 18.16
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) (.01) .25 .23 .10 .29 41
Net realized and unrealized gain (loss) 3.89 1.20 (1.62) 5.87 4.93 4.21
-------- -------- -------- -------- -------- --------
Total from investment operations 3.88 1.45 (1.39) 5.97 5.22 4.62
-------- -------- -------- -------- -------- --------
Distributions:
Dividends from net investment income (.21) (.26) (.10) (.29) (.39) (.08)
Distributions from net realized gains (.92) (2.16) (3.05) (.85) (5.63) (3.96)
-------- -------- -------- -------- -------- --------
Total distributions (1.13) (2.42) (3.15) (1.14) (6.02) (4.04)
-------- -------- -------- -------- -------- --------
Change in net asset value 2.75 (.97) (4.54) 4.83 (.80) .58
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 20.01 $ 17.26 $ 18.23 $ 22.77 $ 17.94 $ 18.74
======== ======== ======== ======== ======== ========
TOTAL RETURN*
Based on market value per share 19.62% 7.45% (16.94)% 6.11% 44.30% 34.90%
Based on net asset value per share 23.46% 8.69% (8.53)% 33.39% 34.30% 24.09%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $ 331,043 $283,678 $294,962 $363,760 $285,407 $243,261
Ratio of expenses to average net assets 1.69%** 1.71% 1.73% 1.78% 1.84% 1.91%
Ratio of net investment income (loss) to
average net assets (.08)%** 1.51% 1.28% .46% 2.07% 2.34%
Portfolio turnover rate 2.90% 8.83% 27.58% 6.50% 21.55% 53.45%
Average commission rate paid (per share) $ .0010 $ .0080
</TABLE>
* NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
** ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- --------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS: 90.0%
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA: 2.9%
Astra Cia Argentina de Petroleo SA Energy Sources 154,900 $ 280,492
*Atanor Cia Nacional Para la Industria
Quimica SA, D Chemicals 57,964 98,582
Banco de Galicia y Buenos Aires SA, B Banking 398,447 2,403,693
Capex SA, A Utilities Electrical & Gas 12,400 116,611
*Ciadea SA Automobiles 55,813 287,564
*Garovaglio Y Zorraquin SA Chemicals 176,191 608,127
Molinos Rio de Plata SA, B Food & Household Products 116,957 438,782
Perez Companc SA, B Energy Sources 168,888 1,294,252
Quilmes Industrial SA Beverages & Tobacco 10,000 112,500
Sociedad Comercial del Plata Cadelplata
Come Multi-Industry 912,370 2,920,869
YPF Sociedad Anonima, ADR Energy Sources 39,000 1,043,250
------------
9,604,722
- --------------------------------------------------------------------------------------------------------------------------
BRAZIL: 13.6%
Banco Bradesco SA Banking 212,011,201 1,694,395
Banco Bradesco SA, pfd. Banking 206,511,555 1,729,034
*Banco do Brasil SA Banking 693,000 6,132
*Banco do Brasil SA, wts., A Banking 4,388,600 7,182
*Banco do Brasil SA, wts., B Banking 6,507,900 10,774
*Banco do Brasil SA, wts., C Banking 10,846,500 17,131
*Banco do Brazil SA, pfd. Banking 21,000,000 171,828
*Banespa-Banco do Estado de Sao Paulo SA,
pfd. Banking 172,796,000 690,494
Copene-Petroquimica do Nordeste SA, A, pfd. Chemicals 5,861,800 2,155,545
Duratex SA, pfd. Forest Products & Paper 8,887,800 414,265
Eletrobras-Centrais Eletricas Brasileiras
SA, B, pfd. Utilities Electrical & Gas 26,820,977 12,172,214
Itausa-Investimentos Itau SA, pfd. Multi-Industry 7,947,346 6,805,206
*Mannesmann SA Machinery & Engineering 31,968 4,410
*Mannesmann SA, pfd. Machinery & Engineering 2,085,844 307,603
Petrobras-Petroleo Brasileiro SA, pfd. Energy Sources 51,584,966 10,552,084
Telebras-Telecomunicacoes Brasileiras SA Telecommunications 83,151,950 7,870,974
Unibanco-Uniao de Bancos Brasileiros SA,
pfd. Banking 14,446,936 577,300
------------
45,186,571
- --------------------------------------------------------------------------------------------------------------------------
CHILE: 3.2%
Antofagasta Holdings, PLC Metals & Mining PLC 1,585,000 10,429,500
- --------------------------------------------------------------------------------------------------------------------------
CHINA: 0.9%
China Southern Glass Co. Ltd., B Building Materials & Components 726,700 473,912
Chiwan Wharf Holdings Ltd., Transportation 1,084,000 740,519
</TABLE>
12
<PAGE> 13
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CHINA (cont.)
B Shandong Huaneng Power Utilities Electrical & Gas 24,000 $ 249,000
Shanghai Chlor-Alkali Chemical Co. Ltd., B Chemicals 1,088,000 345,984
*Shanghai Erfangji Textile Machinery Co.
Ltd., B Machinery & Engineering 333,960 60,781
*Shanghai Industrial Sewing Machine Corp. Machinery & Engineering 190,000 31,160
*Shanghai Jin Jiang Tower Co. Ltd., B Leisure & Tourism 630,300 176,484
Shanghai Jinqiao Export Processing Zone
Development, B Real Estate 108,000 55,296
Shanghai New Asia Group Co. Ltd., B Food & Household Products 96,000 38,016
*Shanghai Shangling Electric Appliance, B Appliances & Household Durables 10,000 3,700
*Shanghai Steel Tube Co. Ltd., B Machinery & Engineering 499,400 91,890
*Shanghai Tyre & Rubber Co. Ltd., B Industrial Components 649,000 298,540
*Shanghai Vacuum Electron Devices Co. Ltd.,
B Appliances & Household Durables 1,035,760 188,508
*Shanghai Yaohua Pilkington Glass, B Building Materials & Components 251,250 105,023
Shenzhen Properties & Resources
Develop.(Group) Ltd., B Real Estate 290,200 144,281
Shenzhen Vanke Co. Ltd., B Real Estate 110,000 89,776
------------
3,092,870
- -------------------------------------------------------------------------------------------------------------------------
COLOMBIA: 0.1%
Cia Colombiana de Tabacos SA Coltabaco Beverages & Tobacco 50,000 178,605
Compania Suramericana de Seguros Insurance 12,000 248,930
------------
427,535
- -------------------------------------------------------------------------------------------------------------------------
CZECH REPUBLIC: 0.2%
*CEZ Utilities Electrical & Gas 6,000 248,291
*CEZ, GDR Utilities Electrical & Gas 2,000 84,000
*CEZ, GDS, 144A Utilities Electrical & Gas 4,000 168,000
------------
500,291
- -------------------------------------------------------------------------------------------------------------------------
GHANA: 0.1%
Ashanti Goldfields Co. Ltd., GDR Metals & Mining 14,000 211,750
- -------------------------------------------------------------------------------------------------------------------------
GREECE: 10.3%
Alpha Credit Bank Banking 130,160 11,328,978
Delta Dairy SA, pfd. Food & Household Products 5,676 54,602
Elais Oleaginous Co. Food & Household Products 28,290 812,685
Ergo Bank SA Banking 134,800 7,946,046
*Ergo Bank, new Banking 51,673 2,887,758
Fourlis Brothers Corp. SA Appliances & Household Durables 129,880 1,472,785
Hellas Can - Container Manufacturers Metals & Mining 12,000 189,870
Hellenic Bottling Co. SA Food & Household Products 43,572 1,441,091
</TABLE>
13
<PAGE> 14
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GREECE (cont.)
Hellenic Telecommunications Organizations
OTE Telecommunications 15,000 $ 328,848
Intracom SA, reg. Electrical & Electronics 6,000 204,112
National Bank of Greece SA Banking 11,940 1,227,578
Titan Cement Co., reg. Building Materials & Components 91,996 6,189,631
------------
34,083,984
- -------------------------------------------------------------------------------------------------------------------------
HONG KONG: 12.4%
Cheung Kong Holdings Ltd. Multi-Industry 1,578,000 15,079,613
Dairy Farm Int'l Holdings Ltd., 6.50%,
conv., pfd. Merchandising 29,000 21,895
Dairy Farm International Holdings Ltd. Merchandising 262,555 203,480
Hang Lung Development Co. Ltd. Real Estate 2,907,000 5,856,270
Hopewell Holdings Ltd. Construction & Housing 962,553 574,894
HSBC Holdings PLC Banking 222,468 5,429,763
Jardine Matheson Holdings Ltd. Multi-Industry 29,412 177,943
Jardine Strategic Holdings Ltd. Multi-Industry 204,500 670,760
K Wah International Holdings Ltd. Building Materials & Components 634,929 147,587
Lai Sun Garment International Ltd. Multi-Industry 45,000 65,666
New World Development Co. Ltd. Real Estate 1,079,494 6,691,338
Sun Hung Kai Properties Ltd. Real Estate 479,000 5,536,178
Tian An China Investments Co. Ltd. Real Estate 5,403,000 634,933
*Yaohan Hongkong Corp. Ltd. Merchandising 3,244,000 108,920
------------
41,199,240
- -------------------------------------------------------------------------------------------------------------------------
HUNGARY: 0.2%
*Fotex First Hungarian-American
Photo-Service Multi-Industry 973,000 737,525
*Ibusz RT Leisure & Tourism 1,066 4,830
------------
742,355
- -------------------------------------------------------------------------------------------------------------------------
INDIA: 1.4%
ATV Project India Ltd. Machinery & Engineering 200,000 34,838
Bharat Petroleum Corp., Ltd. Energy Sources 92,200 950,780
Bombay Dyeing & Manufacturing Co. Ltd. Chemicals 41,000 155,407
Bses Ltd. Utilities Electrical & Gas 29,700 198,041
Cochin Refineries Ltd. Energy Sources 37,850 123,424
DCW Ltd. Chemicals 12,500 7,839
Essar Shipping Ltd. Transportation 59,250 28,073
Garden Silk Mills Ltd. Textiles & Apparel 85,700 40,605
Grasim Industries Ltd. Ord. Multi-Industry 17,000 192,127
Gujarat Narmada Valley Fertilizers Co. Ltd. Chemicals 43,600 29,528
Hindustan Organic Chemicals Ltd. Chemicals 2,000 1,784
</TABLE>
14
<PAGE> 15
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDIA (cont.)
Hindustan Petroleum Corp. Ltd. Energy Sources 32,500 $ 351,449
*India Cements Ltd. Building Materials & Components 44,000 100,864
India Cements Ltd., GDR Building Materials & Components 87,000 206,625
Indian Petrochemicals Corp. Ltd. Chemicals 63,500 249,098
Indian Rayon and Industries Ltd. Multi-Industry 18,500 172,213
Indo Gulf Fertilisers & Chemicals Corp.
Ltd. Chemicals 55,000 52,118
Industrial Credit & Investment Corp. of
India Financial Services 439,600 796,377
Mahanagar Telephone Nigam Ltd. Telecommunications 2,600 18,587
National Aluminium Co. Ltd. Metals & Mining 64,000 70,457
Reliance Industries Ltd. Chemicals 52,000 420,290
Steel Authority of India Ltd. Metals & Mining 100,000 61,315
Tata Chemicals Ltd. Chemicals 34,000 170,569
Tata Iron & Steel Co. Ltd. Metals & Mining 35,000 194,607
Videocon International Ltd. Appliances & Household Durables 90,000 102,216
------------
4,729,231
- -------------------------------------------------------------------------------------------------------------------------
INDONESIA: 4.1%
*Asia Pulp & Paper Co. Ltd., ADR Forest Products & Paper 7,400 85,100
PT Barito Pacific Timber, fgn. Forest Products & Paper 5,620,500 5,098,889
PT Charoen Pokphand Indonesia, fgn. Food & Household Products 580,000 677,372
PT Duta Pertiwi Nusantara Chemicals 409,750 205,089
PT Eratex Djaja, fgn. Textiles & Apparel 185,500 58,029
PT Gadjah Tunggal, fgn. Automobiles 83,000 39,812
PT Jakarta International Hotel & Develop-
ment, fgn. Real Estate 112,000 102,774
PT Japfa Comfeed Indonesia, fgn. Food & Household Products 539,000 415,912
PT Kalbe Farma, fgn. Health & Personal Care 74,000 93,368
PT Metrodata Electronic, fgn. Electrical & Electronics 347,000 521,043
PT Panasia Indosyntec, fgn. Textiles & Apparel 862,400 242,803
PT Polysindo Eka Perkasa, fgn. Textiles & Apparel 8,009,000 4,259,218
PT Pudjiadi Prestige Ltd., fgn. Real Estate 1,264,200 448,204
PT Semen Cibinong, fgn. Building Materials & Components 1,500 4,552
PT Sinar Mas Agro Resources & Technology
Corp., fgn. Food & Household Products 77,000 64,234
PT Sinar Mas Multi Artha, fgn. Financial Services 708,050 841,686
PT Sumalindo Lestari Jaya, fgn. Forest Products & Paper 123,000 115,433
PT Tambang Timah (Persero), fgn. Metals & Mining 82,000 141,084
------------
13,414,602
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ISRAEL: 0.3%
Clal Industries Ltd. Multi-Industry 87,000 $ 450,797
Discount Investment Corp. Multi-Industry 6,000 439,063
First International Bank of Israel Banking 195 134,690
------------
1,024,550
- -------------------------------------------------------------------------------------------------------------------------
KOREA (SOUTH): 0.8%
Central Banking Corp. Financial Services 3,856 52,217
Dae Duck Electronics Co. Ltd. Electrical & Electronics 4,326 221,808
Daegu Bank Co. Ltd. Banking 55,243 562,047
Dongkuk Steel Mill Co. Ltd. Metals & Mining 3,000 68,750
Hae In Corp. Ltd. Merchandising 1,531 76,196
Hankook Cosmetics Co. Ltd. Health & Personal Care 8,700 236,632
Korea Kumho Petrochemical Chemicals 5,000 33,565
Kyung Dong Boiler Co Ltd. Energy Equipment & Services 8,154 231,219
*Saehan Precision Co Ltd. Electrical & Electronics 11,840 346,704
Ssangyong Oil Refining Co Ltd. Energy Equipment & Services 34,000 747,685
Tong Yang Merchant Bank Financial Services 8,333 93,553
------------
2,670,376
- -------------------------------------------------------------------------------------------------------------------------
MALAYSIA: 6.8%
Berjaya Singer Bhd. Appliances & Household Durables 80,000 212,646
Boustead Holdings Bhd., fgn. Food & Household Products 54,000 144,623
Federal Flour Mills Bhd. Food & Household Products 974,998 2,454,183
*Hong Leong Industries Bhd., wts., fgn. Multi-Industry 4,500 5,691
Hong Leong Industries Bhd. Multi-Industry 28,800 98,590
Leader Universal Holdings Bhd. Industrial Components 35,000 74,708
Malayawata Steel Bhd., fgn. Metals & Mining 738,000 1,456,383
Malaysian International Shipping Corp.
Bhd., fgn. Transportation 1,930,666 5,092,977
MBF Capital Bhd. Financial Services 100,000 205,397
Oriental Holdings Bhd. Automobiles 1,088,880 9,823,162
Perlis Plantations Bhd. Multi-Industry 783,599 2,430,008
Perlis Plantations Bhd., fgn. Multi-Industry 78,750 244,211
Renong Bhd. Multi-Industry 67,000 121,965
*Renong Bhd., wts. expire 11/21/00 Multi-Industry 8,375 6,172
Renong, 4%, conv., 9/9/01 Multi-Industry 13,400 5,936
------------
22,376,652
- -------------------------------------------------------------------------------------------------------------------------
MEXICO: 5.2%
Cementos Mexicanos SA de CV (Cemex), B
Building Materials & Components 418,252 1,824,313
</TABLE>
16
<PAGE> 17
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEXICO (cont.)
*Cifra SA, C Merchandising 1,131,043 $ 1,726,306
*DESC SA, A Multi-Industry 138,000 881,662
*DESC SA, B Multi-Industry 1,000 6,364
*DESC SA, C Multi-Industry 2,895 18,750
*Grupo Financiero Banamex Accival SA, B Banking 613,000 1,434,206
*Grupo Financiero Banamex Accival SA, L Banking 49,959 104,847
*Grupo Financiero Bancomer SA de CV, B Banking 1,576,000 611,251
*Grupo Financiero Bancomer SA de CV, L Banking 2,730,370 860,202
*Grupo Financiero Serfin SA, B Banking 1,020,411 409,855
Telmex-Telefonos de Mexico SA, L, ADR Telecommunications 204,700 7,957,713
Vitro SA Food & Household Products 553,355 1,534,975
------------
17,370,444
- -------------------------------------------------------------------------------------------------------------------------
PAKISTAN: 0.3%
*DG Khan Cement Co. Building Materials & Components 110,000 45,285
Fauji Fertilizer Co. Ltd. Chemicals 67,000 132,061
National Development Leasing Corp. Financial Services 148,500 52,798
*Pakistan Telecom Corp. PTC Telecommunications 873,000 651,267
------------
881,411
- -------------------------------------------------------------------------------------------------------------------------
PHILIPPINES: 4.3%
*Keppel Philippine Holdings Inc., B Machinery & Engineering 572,313 69,552
*Philex Mining Corp., B Metals & Mining 5,187,339 620,554
Philippine Long Distance Telephone Co., ADR Telecommunications 101,353 5,878,474
*Philippine National Bank Banking 425,564 4,969,748
RFM Corp. Food & Household Products 5,770,100 1,533,931
*RFM Corporation, conv., pfd. Food & Household Products 1,049,109 186,462
Sime Darby Pilipinas Inc. Industrial Components 573,286 892,647
------------
14,151,368
- -------------------------------------------------------------------------------------------------------------------------
POLAND: 0.2%
Mostostal Export SA Construction & Housing 82,620 216,088
Polifarb Ceiszyu SA Chemicals 25,000 155,292
Rolimpex SA Wholesale & International Trade 1,910 12,863
Zaklady Cementowo Wapiennicze Gorazdze
Chorula Building Materials & Components 4,000 119,003
------------
503,246
- -------------------------------------------------------------------------------------------------------------------------
PORTUGAL: 6.3%
Banco Comercial Portugues SA Banking 782,132 11,240,524
Banco Espirito Santo e Comercial de Lisboa Banking 44,500 845,020
Banco Totta & Acores SA Banking 108,181 1,608,967
</TABLE>
17
<PAGE> 18
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTUGAL (cont.)
*BPI Socieda de Gestora de Participacoes
Socias SA Banking 260,642 $ 3,881,117
BPI Socieda de Gestora de Participacoes
Socias, new Banking 99,043 1,416,402
Espirito Santo Financial Holding SA, ADR Banking 114,000 1,596,000
Portucel Industrial Empresa Product de
Celulose SA Forest Products & Paper 39,000 233,443
*Sociedade Portuguesa de Celulose SA Forest Products & Paper 6,500 191,661
------------
21,013,134
- -------------------------------------------------------------------------------------------------------------------------
RUSSIA: 0.7%
GUM Trade House Merchandising 4,000 116,000
Irkutskenergo Utilities Electrical & Gas 1,000,000 270,000
Lukoil-Holdings Energy Sources 21,000 315,000
Mosenergo Utilities Electrical & Gas 300,000 417,900
*Norilsk Nickel Metals & Mining 62,000 426,560
*Unified Energy System Utilities Electrical & Gas 3,000,000 684,000
------------
2,229,460
- -------------------------------------------------------------------------------------------------------------------------
SINGAPORE: 2.5%
First Capital Corp. Ltd., fgn. Real Estate 107,000 321,263
G.P. Batteries International Ltd. Electrical & Electronics 35,000 104,300
*GP Batteries International Ltd., wts.
expire 11/15/00 Electrical & Electronics 8,750 9,450
Hai Sun Hup Group Ltd. Transportation 112,000 83,283
Inchcape Bhd., fgn. Wholesale & International Trade 20,000 69,870
Jaya Holdings Ltd. Transportation 356,500 287,601
Jaya Holdings Ltd., 3.00%, conv. ln. stk.,
8/31/98 Transportation 15,900 12,939
*Jaya Holdings Ltd., wts. expire 8/31/98 Transportation 30,051 14,441
*Jaya Holdings Ltd., wts. expire 10/9/99 Transportation 36,780 17,932
Natsteel Ltd., fgn. Metals & Mining 1,000 2,455
Osprey Maritime Ltd. Transportation 124,000 206,159
Prima Food & Household Products Ltd. 511,000 1,785,184
Sembawang Corp. Ltd. Multi-Industry 40,000 218,871
Singapore Bus Service (1978) Ltd., fgn. Transportation 903,600 4,849,204
TIBS Holdings Ltd. Transportation 105,600 192,606
*TIBS Holdings Ltd., wts. expire 4/17/00 Transportation 380 209
WBL Corp. Ltd. Multi-Industry 43,000 117,643
------------
8,293,410
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOUTH AFRICA: 0.5%
Anglo American Industrial Corp. Ltd. Multi-Industry 2,000 $ 79,902
Anglovaal Industried Ltd. Multi-Industry 15,825 65,341
BTR Dunlop Ltd. Industrial Components 61,000 73,519
CG Smith Ltd. Multi-Industry 15,000 87,044
Del Monte Royal Foods Ltd. Food & Household Products 467,825 323,682
Engen Ltd. Energy Sources 85,724 514,669
Palabora Mining Co. Ltd. Metals & Mining 3,500 61,321
Rembrandt Group Ltd. Multi-Industry 2,100 21,560
Reunert Ltd. Electrical & Electronics 20,000 53,565
South African Breweries Ltd. Beverages & Tobacco 9,000 269,166
Sun International (South Africa) Ltd. Leisure & Tourism 74,000 49,548
------------
1,599,317
- -------------------------------------------------------------------------------------------------------------------------
SRI LANKA: 0.1%
Aitken Spence & Co. Ltd. Multi-Industry 50,000 88,261
*Lanka Ceramic Ltd. Building Materials & Components 162,000 84,522
Lanka Walltile Ltd. Building Materials & Components 27,300 12,463
United Motor Lanka Ltd. Automobiles 190,320 95,987
------------
281,233
- -------------------------------------------------------------------------------------------------------------------------
TAIWAN: 0.0%
*United Microelectronics Corp. Electronic Components & Instruments 62,000 100,705
- -------------------------------------------------------------------------------------------------------------------------
THAILAND: 0.3%
American Standard Sanitaryware (THB) Pub-
lic Co. Ltd., fgn. Building Materials & Components 17,000 239,622
Asia Fibre Public Co. Ltd., fgn. Textiles & Apparel 233,600 75,777
Ayudhya Insurance Public Co. Ltd., fgn. Insurance 15,000 115,852
Bangkok Insurance, fgn. Insurance 4,900 66,702
Charoen Pokphand Feedmill Public Co. Ltd. Food & Household Products 64,000 165,592
Karat Sanitaryware Public Co. Ltd., fgn. Building Materials & Components 150 130
Kian Gwan (Thailand) Public Co. Ltd., fgn. Real Estate 26,000 67,774
Land and House Public Co. Ltd. Multi-Industry 11,000 62,444
Padaeng Industry Public Co. Ltd., fgn. Metals & Mining 52,650 16,062
Regional Container Lines Public Co. Ltd.,
fgn. Transportation 20,000 164,511
*Saha Union Public Co. Ltd. Multi-Industry 79,000 54,914
*Sanyo Universal Electric Public Co Ltd.,
fgn. Appliances & Household Durables 6,000 12,165
Thai Rayon Public Co. Ltd. Textiles & Apparel 4,100 13,142
Thai Wah Public Co. Ltd., fgn. Multi-Industry 8,450 4,895
United Standard Terminal Public Co. Ltd.,
fgn. Wholesale & International Trade 44,000 79,861
------------
1,139,443
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURKEY: 10.7%
Akbank Banking 42,264,958 $ 7,391,082
*Akcansa Cimento Building Materials & Components 10,077,523 1,618,863
*Alcatel Teletas Endustri Tic AS Telecommunications 760,000 97,361
Arcelik AS Appliances & Household Durables 33,333,694 5,558,101
Bagfas Chemicals 2,805,790 730,288
Beko Elektronik AS Appliances & Household Durables 10,169,935 1,406,230
Celik Halat ve Sanayii ve Ticaret AS Building Materials & Components 2,393,035 161,553
Cimentas Izmir Cimento Fabrikasi Turk AS Building Materials & Components 4,802,763 742,222
Cimsa Cimento Sanayi ve Ticaret AS Building Materials & Components 2,841,000 433,273
Eregli Demir ve Celik Fabrikalari AS Metals & Mining 25,961,250 4,487,182
Finans Bank AS, br. Banking 84,146,077 2,532,356
Izocam Ticaret ve Sanayii AS, br. Building Materials & Components 4,179,793 416,466
Koc Holding AS Multi-Industry 4,654,999 1,344,117
Koc Yatirim ve Sanayii Mamullesi Pazarlanca
AS Multi-Industry 6,519,681 1,935,568
Marshall Boya ve Vernik Sanayii AS Industrial Components 5,828,256 675,527
Netas Northern Electric Telekomunic Asyon
AS Electrical & Electronics 364,000 106,584
Otosan Otomobil Sanayii AS Automobiles 3,791,932 2,220,660
*Petkim Petrokimya Holding AS Chemicals 170,000 82,964
*Sasa Sun'i Sente Chemicals 1,000,000 83,777
*Tekstil Bankasi A S, rts. Banking 2,171,764 33,906
Tekstil Bankasi AS, br. Banking 2,464,952 66,162
*Tofas Turk Otomobil Fabrikasi AS Automobiles 1,681,750 116,270
Turk Demir Dokum, br. Appliances & Household Durables 15,287,042 1,771,852
Turkiye Garanti Bankasi AS Banking 12,559,078 1,123,672
Vakif Finansal Kiralama AS Financial Services 4,993,628 264,009
------------
35,400,045
- -------------------------------------------------------------------------------------------------------------------------
VENEZUELA: 1.4%
Ceramica Carabobo CA, A, ADR Building Materials & Components 190,667 146,690
Consolidada Carabobo, B Building Materials & Components 1,618,630 59,565
Electricidad de Caracas Utilities Electrical & Gas 1,230,533 1,352,079
*Manufacturera de Aparatos Domesticos SA Appliances & Household Durables 36,000 39,593
Mavesa SA, ADR Food & Household Products 289,500 1,917,938
Siderurgica Venezolana Sivensa Saica SVS Metals & Mining 2,910,880 971,052
Siderurgica Venezolana Sivensa Saica SVS,
ADR Metals & Mining 21,750 72,557
</TABLE>
20
<PAGE> 21
TEMPLETON EMERGING MARKETS FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)(cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
INDUSTRY IN LOCAL CURRENCY** VALUE
- ---------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA (cont.)
Siderurgica Venezolana Sivensa SAICA SVS.,
ADR, B, new Metals & Mining 28,440 $ 88,648
Venezolana Prerreducidos Caroni Venprecar
CA, GDS, 144A Metals & Mining 1,764 8,291
------------
4,656,413
- ---------------------------------------------------------------------------------------------------------------------
ZIMBABWE: 0.2%
*Meikles Africa Ltd. Multi-Industry 63,000 153,720
Transarchipel Shipping Ltd.- TSL Multi-Industry 587,000 357,110
------------
510,830
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS (cost $171,851,846) 297,824,688
- ---------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 9.7% (cost $32,029,508)
- ---------------------------------------------------------------------------------------------------------------------
U. S. Treasury Bills, 4.78% to 5.02% with
maturities to 5/22/97 U.S. 32,244,000 32,042,403
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.7% (cost $203,881,354) 329,867,091
OTHER ASSETS, LESS LIABILITIES: 0.3% 1,175,500
------------
TOTAL NET ASSETS: 100.0% $331,042,591
============
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 22
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997 (unaudited)
Assets:
Investments in securities, at value
(identified cost $203,881,354) $329,867,091
Cash 928,341
Receivables:
Investment securities sold 997,192
Dividends and interest 116,198
------------
Total assets 331,908,822
------------
Liabilities:
Payable for investment securities
purchased 215,274
Accrued expenses 650,957
------------
Total liabilities 866,231
------------
Net assets, at value $331,042,591
============
Net assets consist of:
Distribution in excess of net
investment income $ (81,677)
Net unrealized appreciation 125,985,737
Accumulated net realized gain 12,373,294
Net capital paid in on shares of
capital stock 192,765,237
------------
Net assets, at value $331,042,591
============
Shares outstanding $ 16,547,739
============
Net asset value per share
($331,042,591 / 16,547,739) $ 20.01
============
STATEMENT OF OPERATIONS
for the six months ended February 28, 1997 (unaudited)
Investment income:
(net of $88,340 foreign
taxes withheld)
Dividends $ 1,794,850
Interest 584,266
-----------
Total income $ 2,379,116
Expenses:
Management fees (Note 3) 1,860,499
Administrative fees (Note 3) 222,060
Transfer agent fees 8,000
Custodian fees 285,000
Reports to shareholders 91,000
Audit fees 14,800
Legal fees 1,000
Registration and filing fees 2,000
Directors' fees
and expenses 13,100
Other 4,248
-----------
Total expenses 2,501,707
-----------
Net investment loss (122,591)
Realized and unrealized
gain:
Net realized gain on:
Investments 19,871,737
Foreign currency
transactions 51,235
-----------
19,922,972
Net unrealized appreciation
on investments 44,134,043
-----------
Net realized and
unrealized gain 64,057,015
-----------
Net increase in net assets
resulting from operations $63,934,424
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 23
TEMPLETON EMERGING MARKETS FUND INC.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ (122,591) $ 4,136,036
Net realized gain on investment and foreign currency transactions 19,922,972 8,954,426
Net unrealized appreciation 44,134,043 10,755,338
-------------- --------------
Net increase in net assets resulting from operations 63,934,424 23,845,800
Distributions to shareholders:
From net investment income (3,534,015) (4,331,298)
From net realized gain (15,067,266) (34,941,931)
Capital share transactions (Note 2) 2,031,444 4,143,230
-------------- --------------
Net increase (decrease) in net assets 47,364,587 (11,284,199)
Net assets:
Beginning of period 283,678,004 294,962,203
-------------- --------------
End of period $ 331,042,591 $ 283,678,004
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 24
TEMPLETON EMERGING MARKETS FUND
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
significant accounting policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange on
which the securities are traded. Over-the-counter securities and listed
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 in good faith by
management and approved 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 currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into 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
foreign currencies, currency gains or losses realized between the trade and
settlement 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 the 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
Monetary 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 investors. The Fund has investments in Brazilian companies with a
value of approximately $45 million as of February 28, 1997.
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
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
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.
24
<PAGE> 25
TEMPLETON EMERGING MARKETS FUND
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
As of February 28, 1997, there were 30,000,000 shares of capital stock
authorized ($0.01 par value). During the six month ended February 28, 1997 and
the year ended August 31, 1996, 12,244 shares were issued for $2,031,444 and
251,242 shares were issued for $4,143,230 from reinvested distributions,
respectively.
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 Franklin Templeton Services, Inc. (FTSI), 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 FTSI 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 for the six months ended February 28, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1997 aggregated $7,992,078 and $36,645,633,
respectively. The cost of securities for federal income tax purposes is
$204,193,348. Realized gains and losses are reported on an identified cost
basis.
At February 28, 1997, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $139,157,518
Unrealized depreciation (13,483,775)
------------
Net unrealized appreciation $125,673,743
============
</TABLE>
25
<PAGE> 26
TEMPLETON EMERGING MARKETS FUND, INC.
Annual Meeting of Shareholders, February 25, 1997
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Ft. Lauderdale, Florida, on February 25, 1997. The purpose
of the meeting was to elect five directors of the Fund, to ratify the selection
of McGladrey & Pullen, LLP, as the Fund's independent public accountants for the
fiscal year ending August 31, 1997 and in their discretion, to authorize the
proxyholders to vote upon such other matters which may legally come before the
meeting or any other adjournment thereof. At the meeting, the following persons
were elected by the shareholders to serve as directors of the Fund: John Wm.
Galbraith, Betty P. Krahmer, Gordon S. Macklin, Fred R. Millsaps and Edith E.
Holiday. 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, 1997. No other business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. Election of five (5) Directors for the terms set forth below:
<TABLE>
<CAPTION>
% OF % OF
OUTSTANDING OUTSTANDING
FOR SHARES WITHHELD SHARES
----------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Term expiring 2000:
John Wm. Galbraith 11,795,340 71.43% 158,362 0.96%
Betty P. Krahmer 11,811,107 71.53% 142,595 0.86%
Gordon S. Macklin 11,810,545 71.52% 143,157 0.87%
Fred R. Millsaps 11,771,446 71.29% 182,256 1.10%
Term Expiring 1999:
Edith E. Holiday 11,722,942 70.99% 230,760 1.40%
</TABLE>
2. Ratification of the selection of McGladrey & Pullen, LLP, as independent
public accountants of the Fund for the fiscal year ending August 31, 1997:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES
----------- ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C>
11,750,278 71.16% 50,592 0.31% 152,832 0.92%
</TABLE>
26
<PAGE> 27
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
declares dividends in either cash or common stock of the Fund, if the market
price is equal to or exceeds net asset value at the valuation date, participants
will receive the dividends entirely in stock at a price equal to the net asset
value, but not less than 95% of the then current market price of the Fund's
shares. If the market price is lower than net asset value and if dividends
and/or capital gains distributions are payable only in cash, the participant
will receive shares purchased on the 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 Securities
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 deducted 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
Transactions 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
because 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.
27
<PAGE> 28
NOTES
--------
<PAGE> 29
NOTES
--------
<PAGE> 30
NOTES
--------
<PAGE> 31
FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST - Call 1-800/DIAL BEN (1-800/342-5236) today for a free
descriptive brochure and prospectus on any of the funds listed below. The
prospectus contains more complete information, including fees, charges and
expenses, and should be read carefully before investing or sending money.
GLOBAL GROWTH
Franklin Global Health Care Fund
Franklin Templeton Japan Fund
Templeton Developing Markets
Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global Infrastructure
Fund
Templeton Global
Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller
Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German
Government Bond Fund
Franklin Templeton
Global Currency Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High
Income Currency Fund
Templeton Americas
Government Securities Fund
GROWTH
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap Growth Fund
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund
Franklin Convertible Securities
Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities
Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES:
Franklin Templeton
Conservative Target Fund
Franklin Templeton
Moderate Target Fund
Franklin Templeton
Growth Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Investment
Grade Income Fund
Franklin Short-Intermediate U.S.
Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FOR NON-U.S. INVESTORS:
Franklin Tax-Advantaged
High Yield Securities Fund
Franklin Tax-Advantaged
International Bond Fund
Franklin Tax-Advantaged U.S.
Government Securities Fund
FOR CORPORATIONS:
Franklin Corporate Qualified
Dividend Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan*
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee**
Texas
Virginia
Washington**
VARIABLE ANNUITIES+
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*TWO OR MORE FUND OPTIONS AVAILABLE: LONG-TERM PORTFOLIO, INTERMEDIATE-TERM
PORTFOLIO, A PORTFOLIO OF INSURED MUNICIPAL SECURITIES, AND/OR A HIGH YIELD
PORTFOLIO (CA) AND A MONEY MARKET PORTFOLIO (CA AND NY).
**THE FUND MAY INVEST UP TO 100% OF ITS ASSETS IN BONDS THAT PAY INTEREST
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX.
***PORTFOLIO OF INSURED MUNICIPAL SECURITIES.
+FRANKLIN VALUEMARK AND FRANKLIN TEMPLETON VALUEMARK INCOME PLUS ARE ISSUED BY
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA OR BY ITS WHOLLY OWNED
SUBSIDIARY, PREFERRED LIFE INSURANCE COMPANY OF NEW YORK, AND DISTRIBUTED BY
NALAC FINANCIAL PLANS, LLC. FGF 02/97
<PAGE> 32
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.
[GRAPHIC]
TEMPLETON
EMERGING
MARKETS
FUND, INC.
Semi-Annual Report
February 28, 1997
[FRANKLIN TEMPLETON 50 YEAR STAMP]
[RECYCLE LOGO] [FRANKLIN TEMPLETON LOGO]
