ANNUAL
REPORT
AUGUST 31, 1998
TEMPLETON EMERGING
MARKETS FUND, INC.
[FRANKLIN TEMPLETON LOGO]
PAGE
[FRANKLIN TEMPLETON 50 YEAR LOGO]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
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 the
Templeton funds which are managed by many of the investment professionals he
selected and trained.
[PHOTO OF J. MARK MOBIUS APPEARS HERE]
J. MARK MOBIUS, PH.D.
President
Templeton Emerging
Markets Fund, Inc.
Dr. Mobius, a German citizen, has been living in emerging market countries 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.
PAGE
SHAREHOLDER LETTER
Your Fund's Objective: Templeton Emerging Markets Fund seeks long-term capital
appreciation by investing primarily in emerging country equity securities.
Dear Shareholder:
This annual report for Templeton Emerging Markets Fund covers the fiscal year
ended August 31, 1998, a time of unusually heavy losses for emerging markets
worldwide. During this period, currency devaluation throughout Asia led to
severe declines in emerging market stock prices. Within this environment, the
Fund posted a -54.35% one-year cumulative total return in market-price terms
and a -39.69% one-year cumulative total return in net asset value terms, as
discussed in the Performance Summary on page 6.
At the close of the reporting period, 68.4% of the Fund's total net assets were
invested in stocks, with the remaining 31.6% in cash and other liquid assets.
The portfolio was allocated among 28 emerging markets, with the largest
percentages in Brazil (9.5% of total net assets), South Africa (6.9%) and Mexico
(6.9%). Regionally, Asia represented the largest portion (34.7%), followed by
Latin America (24.8%) and Mid-East/Africa (7.2%).
You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 11 of
this report.
CONTENTS
Shareholder Letter 1
Performance Summary 6
Travel Letter 8
Financial Highlights &
Statement of Investments 10
Financial Statements 22
Notes to Financial
Statements 25
Independent Auditor's Report 28
Tax Designation 31
[GLOBAL PYRAMID LOGO]
PAGE
Geographic Distribution
Based on Total Net Assets
8/31/98
[PIE GRAPH]
Asia 34.7%
Latin America 24.8%
Mid-East/Africa 7.2%
Europe 1.7%
Short-Term
Investments &
Other Net Assets 31.6%
Decline in Value of Asian
Currencies vs. U.S. Dollar*
8/31/97-8/31/98
Chinese renminbi 0.1%
Hong Kong dollar unch.
Indonesian rupiah -73.7%
Japanese yen -13.2%
South Korean won -33.2%
Malaysian ringgit -29.9%
Philippine peso -31.1%
Singapore dollar -14.6%
Taiwan dollar -17.5%
Thai baht -18.3%
*Source: Bloomberg.
Throughout the fiscal year, many investors focused on mainland China and the
Hong Kong Special Administrative Region, whose currencies faced significant
devaluation pressure. Although the Hong Kong dollar's peg to the U.S. dollar
came under fire following the Thai baht's devaluation in 1997, it was sustained
at that time by soaring overnight interest rates. Subsequently, Hong Kong's
property and stock prices fell sharply, and unemployment rose significantly. In
mid-August 1998, the Hong Kong dollar came under fire once again and was
preserved this time by direct government intervention, bringing the continued
existence of the peg into question. On the mainland, China faced massive floods,
rising unemployment and decelerating export growth.
In Europe, the Portuguese and Greek stock markets performed well, but events in
Russia contributed to the crisis in securities markets throughout the world.
Russian financial markets began a steady decline in May 1998, as the country's
soaring government debt, slumping oil prices, speculative currency attacks,
inefficient tax system, and the withholding of International Monetary Fund (IMF)
loans, created seemingly insurmountable problems. Although a temporary solution
was reached in July when the IMF agreed to release funds to Russia, structural
problems in the tax system persisted, and the Russian parliament rejected an
'anti-crisis package' containing tax reform. This forced President Yeltsin to
implement most provisions of the package by presidential decree. Finally, in
August, the ruble's trading range was officially widened and its value
plummeted.
2
PAGE
Latin America was not without problems either. Currency depreciation and weak
commodity prices buffeted the region, and most stock markets there traded within
a narrow range, with uncertainties about the future negating any significant
upward movement. However, toward the end of the 12-month period, the
privatization of Telecomunicacoes Brasileiras (Telebras) SA proceeded after
numerous lawsuits and appeals to block the sale. The companies comprising
Telebras sold for a total of US$19.4 billion, or 63.7% above the minimum asking
price.* The foreign capital expected to be invested over the next few years as a
result of the Telebras sale could aid development in Brazil and in our view help
to restore some level of investor confidence in Latin America.
We believe that a number of companies in emerging markets are becoming
undervalued and are giving rise to some well-placed investment opportunities. In
our opinion, times of crisis can be times of opportunity, especially when viewed
over a long-term horizon. Events such as the sale of Telebras in Brazil, and the
excellent performance of stock markets in Portugal and Greece, bolster our
belief that value can materialize in virtually any market. Nevertheless,
investors should remember that reaping long-term benefits requires patience.
Of course, investing in foreign securities involves special risks, such as
adverse economic, social and political developments in the countries where the
Fund invests, as well as market and currency volatility. Emerging markets
involve heightened risks related to the same factors, in addition to those
associated with their relatively small
*Source: Bloomberg.
Total Return of Asian
Stock Indices,
Measured in U.S. Dollars*
Year ended 8/31/98
China-Shanghai
B Share Index - 67.0%
China-Shenzhen
B Share Index - 62.5%
Hong Kong-Hang Seng Index - 46.3%
Indonesia-Jakarta
Composite Index - 80.6%
Japan-Nikkei 225 Index - 32.2%
South Korea-Composite Index - 70.6%
Malaysia-Kuala Lumpur
Composite Index - 72.7%
Philippines-Composite Index - 59.1%
Singapore-Straits Times Index - 56.6%
Taiwan-TWSE Index - 44.7%
Thailand-Bangkok SET Index - 64.7%
*Source: Bloomberg. An index is an unmanaged group of securities that is used to
measure market performance. Indices include reinvested dividends. One cannot
invest directly in an index.
3
PAGE
Top 10 Holdings*
8/31/98
Company, % of Total
Industry, Country Net Assets
Telefonos de Mexico SA (Telmex),
L, ADR
Telecommunications,
Mexico 3.6%
Antofagasta Holdings Plc.
Metals & Mining, Chile 3.2%
Telecomunicacoes
Brasileiras SA (Telebras)
Telecommunications,
Brazil 2.3%
Itausa - Investimentos SA, pfd.
Multi-Industry, Brazil 2.3%
Akbank
Banking, Turkey 1.8%
Finansbank
Banking, Turkey 1.6%
Centrais Eletricas Brasileiras
SA (Eletrobras), B, pfd.
Utilities Electrical & Gas, Brazil 1.6%
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong** 1.4%
Korea Electric Power Corp.
Utilities Electrical & Gas,
South Korea 1.4%
Transportadora de Gas
del Sur SA, B
Energy Sources, Argentina 1.2%
*Does not include investments in fixed-income securities, and short-term
investments and other assets.
**Hong Kong reverted to the sovereignty of China on July 1, 1997.
size and lesser liquidity. Investing in any emerging market means accepting a
certain amount of volatility and, in some cases, severe market corrections.
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 equity market
increased 785% in the last 15 years, but suffered six declines of more than 20%
during that time.*
Please remember that this discussion reflects our views, opinions and portfolio
holdings as of August 31, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the Fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
better understand our investment and management philosophy.
We thank you for your participation in Templeton Emerging Markets Fund and
welcome your comments and suggestions.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D
President
Templeton Emerging Markets Fund, Inc.
*Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended June 30, 1998. Market returns are measured in Hong Kong dollars.
4
PAGE
IMPORTANT NOTICE TO SHAREHOLDERS
INTRODUCTION OF THE EURO. On January 1, 1999, the European Monetary Union (EMU)
plans to introduce a new single currency, the Euro, which will replace the
national currency for participating member countries. If the Fund holds
investments in countries with currencies replaced by the Euro, the investment
process, including trading, foreign exchange, payments, settlements, cash
accounts, custody and accounting will be impacted.
The process to establish the Euro may result in market volatility. It is not
possible to predict the impact of the Euro on the business or financial
condition of European issuers or on the Fund. The transition and the elimination
of currency risk among EMU countries may change the economic environment and
behavior of investors, particularly in European markets. To the extent the Fund
holds non-U.S. dollar (Euro or other) denominated securities, it will still be
exposed to currency risk due to fluctuations in those currencies versus the U.S.
dollar.
Franklin Resources, Inc. has created an interdepartmental team to handle all
Euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to business
activities. While there can be no assurance that the Fund will not be adversely
affected, the manager and its affiliated service providers are taking steps that
they believe are reasonably designed to address the Euro issue.
YEAR 2000. The Fund's business operations use a worldwide network of computer
systems. Many of them have date fields that use two digits to represent the date
and these systems must be replaced or modified, so that they can distinguish the
Year 1900 from the Year 2000 (commonly referred to as the Year 2000 bug.)
When the year 2000 arrives, the Fund's operations could be affected if the
computer systems used by the manager, its service providers and other third
parties it does business with are not Year 2000 ready. For example, the Fund's
portfolio and operational areas could be impacted, including securities trade
processing, interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. The Fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker/dealers or foreign markets are not ready for
year 2000.
The Fund's manager and its affiliated service providers are making a concerted
effort to take steps they believe are reasonably designed to get ready for Year
2000. Of course, the Fund's ability to reduce the effects of Year 2000 issues is
also very much dependent upon the efforts of third parties.
In evaluating current and potential portfolio positions, Year 2000 is one of the
factors that the Fund's manager takes into consideration. It will rely upon
public filings and other statements made by companies regarding their Year 2000
readiness. Issuers in countries outside of the U.S., and in particular in
emerging markets, may not be required to make the level of disclosure regarding
Year 2000 readiness that is required in the U.S. Like with many other matters,
the manager, of course, cannot audit each portfolio company and its major
suppliers, and so cannot verify their Year 2000 readiness. If the value of a
Fund investment is adversely affected by a Year 2000 problem, the net asset
value of the Fund will be affected as well.
5
PAGE
PERFORMANCE SUMMARY
In market-price terms, Templeton Emerging Markets Fund produced a -54.35%
cumulative total return for the one-year period ended August 31, 1998. Based on
the change in net asset value (in contrast to market price), the Fund delivered
a -39.69% cumulative total return for the same period. Both total return
figures assume reinvestment of distributions in accordance with the dividend
reinvestment and cash purchase plan.
While we expect market volatility in the short term, 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 on the
following page, based on the change in market price, the Fund delivered a
231.89% cumulative total return for the period from its inception on February
26, 1987, through August 31, 1998.
During the reporting period, the Fund's closing price on the New York Stock
Exchange decreased $13.9375 per share, from $23.125 on August 31, 1997, to
$9.1875 on August 31, 1998, while the net asset value decreased $9.82 per share,
from $20.67 to $10.85.
Past performance is not predictive of future results.
6
PAGE
Shareholders received per-share distributions of $2.115 in long-term capital
gains, 6 cents ($0.060) in short-term capital gains, and 26.5 cents ($0.265) in
income dividends. Distributions will vary depending on income earned by the Fund
and any profits realized from the sale of securities in the portfolio, as well
as the level of the Fund's operating expenses.
TEMPLETON EMERGING MARKETS FUND
Periods ended 8/31/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (2/26/87)
<S> <C> <C> <C> <C>
Cumulative Total Return(1)
Based on change in net asset value -39.69% 1.85% 309.20% 320.35%
Based on change in market price -54.35% -31.25% 311.74% 231.89%
Average Annual Total Return(2)
Based on change in net asset value -39.69% 0.37% 16.94% 13.28%
Based on change in market price -54.35% -7.22% 17.02% 10.98%
</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 calculations assume reinvestment of distributions, either at net asset value
or at market price on the reinvestment date, in accordance with the dividend
reinvestment and cash purchase plan, and do not reflect any sales charges paid
at inception, or brokerage commissions paid on secondary market purchases. Since
markets can go down as well as up, investment return and principal value will
fluctuate with market conditions, currency volatility, and the economic, social
and political climates of countries where the Fund invests. Emerging markets
involve heightened risks related to the same factors, in addition to those
associated with their relatively small size and lesser liquidity. You may have a
gain or loss when you sell your shares.
Past performance is not predictive of future results.
7
PAGE
THE FOLLOWING LETTER WAS WRITTEN BY DR. MOBIUS AFTER A TRIP TO KOREA.
We write this letter from Seoul, the capital of the Republic of Korea (South
Korea). When I first arrived here in 1963, the country might have been described
as a "basket case." It was still recovering from the Korean War, World War II,
and before that, a long period of domination by Japan. Economic conditions were
bad, and the government required that the white rice loved by Koreans be mixed
with barley or beans to make it go further, and to enrich it with proteins and
vitamins. Even so, many Koreans endured a meager diet and went to bed hungry.
Today, despite the financial crisis gripping the country, standards of living
have risen to heights unimaginable in 1963. Why? Certainly not because of
extensive natural resources. The area's mineral reserves are located mostly in
North Korea, and the country's beautiful forests have been decimated by war and
by desperate people seeking firewood during the bitter winters. The Korean
people did it by pure force of will and determination. They pulled themselves up
"by the bootstraps" and turned Korea into an export powerhouse, covering the
globe with a wide range of electronics goods, automobiles, and some of the
world's most efficiently produced steel. Creating a high technology industrial
"miracle," they matched the Japanese in many fields, despite a much smaller
domestic market.
8
PAGE
But, built on the basis of state planning, as in Japan, this powerhouse evolved
into an industrial structure where banks favored loans to chaebol (giant
business groups), which leveraged themselves to the hilt and invested heavily in
a wide range of businesses, from shipbuilding to shoes and soup pans. And when
the Thai financial crisis spread throughout Asia in 1997, Korea faced the
biggest challenge to its prosperity since the Korean War.
Its banks faced non-performing loans, its chaebol groaned under unpayable debt,
and its stock market hit new lows. Pessimism became the order of the day.
However, we have noticed the beginnings of recovery as we talk with company
managers during this visit. One banker told us that one-quarter of his bank's
workforce had been laid off with the cooperation of the union. And management
had taken a 15% pay cut to show solidarity with the staff. It is this kind of
determination and discipline which, in our opinion, should put Korea's economy
and stock market back on their feet in the not too distant future.*
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D
President
Templeton Emerging Markets Fund, Inc.
*This letter reflects our opinions as of the close of the period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the Fund's portfolio composition.
9
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year......................... $20.67 $17.26 $18.23 $22.77 $17.94
--------------------------------------------------------
Income from investment operations:
Net investment income..................................... .26 .27 .25 .23 .10
Net realized and unrealized gains (losses)................ (7.64) 4.27 1.20 (1.62) 5.87
--------------------------------------------------------
Total from investment operations........................... (7.38) 4.54 1.45 (1.39) 5.97
--------------------------------------------------------
Less distributions from:
Net investment income..................................... (.26) (.21) (.26) (.10) (.29)
Net realized gains........................................ (2.18) (.92) (2.16) (3.05) (.85)
--------------------------------------------------------
Total distributions........................................ (2.44) (1.13) (2.42) (3.15) (1.14)
--------------------------------------------------------
Net asset value, end of year............................... $10.85 $20.67 $17.26 $18.23 $22.77
--------------------------------------------------------
Total Return
Based on market value per share........................... (54.35)% 33.81% 7.45% (16.94)% 26.11%
Based on net asset value per share........................ (39.69)% 27.34% 8.69% (8.53)% 33.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................ $182,352 $342,002 $283,678 $294,962 $363,760
Ratios to average net assets:
Expenses.................................................. 1.70% 1.67% 1.71% 1.73% 1.78%
Net investment income..................................... 1.58% 1.38% 1.51% 1.28% .46%
Portfolio turnover rate.................................... 40.51% 12.60% 8.83% 27.58% 6.50%
</TABLE>
See Notes to Financial Statements.
10
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1998
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES 68.4%
ARGENTINA 2.0%
*Atanor Cia Nacional Para la Industria Quimica SA,
D................................................. Chemicals 57,964 $ 34,206
Capex SA, A......................................... Utilities Electrical & Gas 45,400 164,381
Central Costanera SA, B............................. Utilities Electrical & Gas 11,601 23,787
Garovaglio Y Zorraquin SA........................... Chemicals 176,191 167,415
Molinos Rio de Plata SA, B.......................... Food & Household Products 113,321 156,414
Nobleza Piccardo Sdad Industrial Comercial y
Financial......................................... Beverages & Tobacco 20,760 53,987
Quilmes Industrial SA............................... Beverages & Tobacco 7,900 55,795
Siderca SA, A....................................... Metals & Mining 35,000 34,482
*Sociedad Comercial del Plata Cadelplata Come....... Multi-Industry 1,176,430 635,399
Transportadora de Gas del Sur SA, B................. Energy Sources 167,738 317,088
Transportadora de Gas del Sur SA, B, ADR............ Energy Sources 200,500 1,904,750
YPF Sociedad Anonima, ADR........................... Energy Sources 8,575 189,722
------------
3,737,426
------------
BRAZIL 9.5%
Banco Bradesco SA................................... Banking 197,300,741 1,099,748
*Banco Bradesco SA BBD, rts. ....................... Banking 5,425,369 553
Banco Bradesco SA, pfd. ............................ Banking 161,422,504 905,250
*Banco Bradesco SA BBD, rts., pfd. ................. Banking 4,438,790 490
Banco do Brasil SA.................................. Banking 224,000 1,494
Banco do Brazil SA, pfd. ........................... Banking 8,190,000 73,069
Centrais Eletricas Brasileiras SA (Electrobras), B,
pfd. ............................................. Utilities Electrical & Gas 186,927,770 2,858,951
*Centrais Geradoras Do Sul Do Brasil SA (Gerasul),
pfd. ............................................. Utilities Electrical & Gas 189,527,770 191,637
*Cia Mesbla SA, pfd. ............................... Merchandising 6,825,690 2,320
Copene-Petroquimica do Nordeste SA, A, pfd. ........ Chemicals 5,742,800 976,017
Duratex SA, pfd..................................... Forest Products & Paper 8,687,800 243,604
Itausa-Investimentos SA, pfd. ...................... Multi-Industry 7,947,346 4,186,723
*Mannesmann SA...................................... Machinery & Engineering 1,468 123
*Mannesmann SA, pfd. ............................... Machinery & Engineering 1,951,344 152,556
Petroleo Brasileiro SA (Petrobras), pfd. ........... Energy Sources 20,839,966 2,124,901
++Receipts of Telebras Stock........................ Telecommunications 83,151,950 4,239,202
Unibanco Uniao de Bancos Brasileiros SA, unit....... Banking 7,223,468 220,957
------------
17,277,595
------------
CHILE 3.3%
Antofagasta Holdings Plc. .......................... Metals & Mining 1,847,181 5,876,930
Empresa Nacional de Electricidad SA, ADR............ Electrical & Electronics 21,600 195,750
------------
6,072,680
------------
CHINA .6%
China Resources Enterprises Ltd. ................... Real Estate 332,000 239,922
China Southern Glass Co. Ltd., B.................... Building Materials & Components 483,092 54,237
China Vanke Co. Ltd., B............................. Real Estate 130,328 37,000
Chiwan Wharf Holdings Ltd., B....................... Transportation 1,058,000 143,357
Guangshen Railway Co. Ltd., ADR..................... Transportation 12,700 53,181
</TABLE>
11
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
CHINA (CONT.)
Guangshen Railway Co. Ltd., H....................... Transportation 834,000 $ 77,489
*Luoyang Glass Co. Ltd., H.......................... Misc Materials & Commodities 71,000 1,842
Shandong Huaneng Power Development Co. Ltd., ADR.... Utilities Electrical & Gas 29,000 105,125
*Shanghai Chlor-Alkali Chemical Co. Ltd., B......... Chemicals 990,800 75,301
*Shanghai Jin Jiang Tower Co. Ltd., B............... Leisure & Tourism 597,360 52,568
*Shanghai New Asia Group Co. Ltd., B................ Food & Household Products 102,362 13,102
Shanghai Petrochemical Co. Ltd., H.................. Chemicals 524,000 28,062
*Shanghai Steel Tube Co. Ltd., B.................... Machinery & Engineering 388,400 25,634
*Shanghai Tyre & Rubber Co. Ltd., B................. Industrial Components 675,730 75,682
*Shanghai Vacuum Electron Devices Co. Ltd., B....... Appliances & Household Durables 710,432 89,514
Shanghai Yaohua Pilkington Glass, B................. Building Materials & Components 179,250 17,925
------------
1,089,941
------------
COLOMBIA 1.3%
Bavaria SA.......................................... Beverages & Tobacco 92,400 355,609
Cementos Argos SA................................... Building Materials & Components 556,528 1,350,468
Cia Colombiana de Tabacos SA........................ Beverages & Tobacco 70,000 82,747
Compania Nacional de Chocolates SA.................. Food & Household Products 79,955 238,366
Compania Suramericana de Inversiones SA............. Insurance 155,540 235,087
Valores Bavaria SA.................................. Financial Services 20,000 22,657
------------
2,284,934
------------
CZECH REPUBLIC .1%
*CEZ AS............................................. Utilities Electrical & Gas 15,600 283,139
*SPT Telecom AS..................................... Telecommunications 5,000 55,988
------------
339,127
------------
GHANA
Ashanti Goldfields Co. Ltd., GDR.................... Metals & Mining 23,638 147,738
------------
HONG KONG 6.6%
CDL Hotel International Ltd. ....................... Leisure & Tourism 61,025 14,008
Cheung Kong Holdings Ltd. .......................... Multi-Industry 671,000 2,597,688
Citic Pacific Ltd. ................................. Multi-Industry 543,000 693,710
CLP Holdings Ltd. .................................. Utilities Electrical & Gas 15,500 65,207
Dairy Farm International Holdings Ltd. ............. Merchandising 254,116 241,410
Hang Lung Development Co. Ltd. ..................... Real Estate 2,531,000 1,959,686
HSBC Holdings Plc. ................................. Banking 93,046 1,975,180
Hutchison Whampoa Ltd. ............................. Multi-Industry 238,000 1,031,952
Jardine Matheson Holdings Ltd. ..................... Multi-Industry 214,686 382,141
Jardine Strategic Holdings Ltd. .................... Multi-Industry 124,500 145,665
Lai Sun Garment International Ltd. ................. Multi-Industry 19,000 2,820
New World Development Co. Ltd. ..................... Real Estate 1,669,605 1,799,050
</TABLE>
12
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
HONG KONG (CONT.)
Ng Fung Hong Ltd. .................................. Food & Household Products 132,000 $ 71,969
Sun Hung Kai Properties Ltd. ....................... Real Estate 358,204 1,100,146
------------
12,080,632
------------
HUNGARY .9%
Borsodchem RT....................................... Chemicals 16,972 374,583
Borsodchem RT, GDR.................................. Chemicals 19,500 430,950
Fotex First Hungarian-American Photo-Service Co. ... Multi-Industry 973,000 446,848
Graboplast Textil Es Muborgyarto RT................. Textiles & Apparel 15,450 234,216
Tiszai Vegyi Kombinat RT............................ Chemicals 19,250 240,325
------------
1,726,922
------------
INDIA 2.5%
Arvind Mills Ltd. .................................. Textiles & Apparel 42,300 32,829
*ATV Projects India Ltd. ........................... Machinery & Engineering 200,000 6,350
Bharat Petroleum Corporation, Ltd. ................. Energy Sources 86,100 507,852
Bombay Dyeing & Manufacturing Co. Ltd. ............. Chemicals 25,550 28,903
Garden Silk Mills Ltd. ............................. Textiles & Apparel 79,000 22,295
Grasim Industries Ltd. ............................. Multi-Industry 27,050 101,851
*Grasim Industries Ltd., GDR........................ Multi-Industry 500 1,725
Great Eastern Shipping Co. Ltd. .................... Transportation 63,500 32,631
Gujarat Narmada Valley Fertilizers Co. Ltd. ........ Chemicals 23,600 9,214
Hindalco Industries Inc., GDR....................... Metals & Mining 10,000 92,000
Hindustan Organic Chemicals Ltd. ................... Chemicals 2,000 407
Hindustan Petroleum Corporation Ltd. ............... Energy Sources 21,000 138,238
India Cements Ltd. ................................. Building Materials & Components 26,300 29,071
*India Cements Ltd., GDR............................ Building Materials & Components 61,890 68,079
*Indian Petrochemicals Corp. Ltd. .................. Chemicals 63,500 62,574
*Indian Rayon & Industries Ltd. .................... Multi-Industry 27,750 77,533
Indian Rayon & Industries Ltd., GDR................. Multi-Industry 8,700 21,315
Indo Gulf Fertilisers & Chemicals Corp. Ltd. ....... Chemicals 54,000 40,640
Industrial Credit & Inv. Corp. of India............. Financial Services 439,600 719,054
Industrial Credit & Inv. Corp. of India, GDR........ Financial Services 10,400 93,600
Larsen & Toubro Ltd. ............................... Multi-Industry 179,150 730,588
Larsen and Toubro Ltd., GDR reg S................... Multi-Industry 49,900 364,270
Madras Cements Ltd. ................................ Building Materials & Components 905 92,416
Mahanagar Telephone Nigam Ltd. ..................... Telecommunications 42,000 198,344
National Aluminium Co. Ltd. ........................ Metals & Mining 211,100 89,365
Reliance Industries Ltd. ........................... Chemicals 75,400 190,983
Reliance Industries Ltd., GDR....................... Chemicals 81,900 374,693
Tata Chemicals Ltd. ................................ Chemicals 52,800 123,618
Tata Engineering & Locomotive Co. (Telco)........... Machinery & Engineering 33,100 100,732
Tata Iron & Steel Co., Ltd. ........................ Metals & Mining 600 1,271
Wockhardt........................................... Health & Personal Care 31,700 187,650
------------
4,540,091
------------
</TABLE>
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STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
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INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
INDONESIA 1.7%
*Asia Pulp & Paper Co. Ltd., ADR.................... Forest Products & Paper 137,700 $ 714,319
*PT Barito Pacific Timber TBK....................... Forest Products & Paper 6,233,500 155,132
*PT BBL Dharmala Finance, fgn. ..................... Financial Services 163,000 19,176
*PT Charoen Pokphand Indonesia...................... Food & Household Products 1,828,000 16,543
*PT Ciputra Dev. ................................... Real Estate 732,000 8,281
*PT Indah Kiat Pulp & Paper Corp. TBK............... Forest Products & Paper 343,300 85,437
*PT Indah Kiat Pulp & Paper Corp. TBK, wts. ........ Forest Products & Paper 25,920 3,519
PT Indocement Tunggal Prakarsa...................... Building Materials & Components 1,016,000 301,122
*PT Indofoods Sukses Makmurr........................ Food & Household Products 422,250 58,274
PT Indosat.......................................... Telecommunications 80,000 54,299
*PT Jakarta International Hotel & Development....... Real Estate 294,500 4,664
*PT Kalbe Farma..................................... Health & Personal Care 141,500 4,162
PT Lippo Life Insurance TBK......................... Insurance 872,500 13,818
*PT Metrodata Electronic............................ Electrical & Electronics 740,267 63,576
*PT Modern Photo Film Co. .......................... Multi-Industry 17,500 693
*PT Pakuwon Jati.................................... Real Estate 232,000 525
*PT Semen Cibinong, loc. ........................... Building Materials & Components 4,587,500 103,790
PT Semen Gresik..................................... Building Materials & Components 394,000 270,095
*PT Sinar Mas Agro Resources & Technology Corp. .... Food & Household Products 92,400 14,215
*PT Sinar Mas Multi Artha, fgn. .................... Financial Services 67,050 20,176
*PT Sumalindo Lestari Jaya TBK...................... Forest Products & Paper 123,000 4,592
PT Telekomunikasi Indonesia (Persero), B............ Telecommunications 4,246,500 903,102
*PT Tempo Scan Pacific.............................. Health & Personal Care 207,000 3,747
PT Timah TBK........................................ Metals & Mining 413,000 194,353
*PT Tjiwi Kimia TBK................................. Forest Products & Paper 1,205,000 169,027
*PT United Tractors................................. Machinery & Engineering 85,000 2,115
------------
3,188,752
------------
ISRAEL .2%
Clal Industries Ltd. ............................... Multi-Industry 62,649 326,839
First International Bank of Israel.................. Banking 40 237
------------
327,076
------------
MALAYSIA 3.4%
AMMB Holdings Bhd. ................................. Financial Services 234,000 81,070
Berjaya Singer Bhd. ................................ Appliances & Household Durables 57,000 10,759
Boustead Holdings Bhd. ............................. Food & Household Products 254,000 108,634
Edaran Otomobil Nasional Bhd. ...................... Automobiles 3,000 2,580
Federal Flour Mills Bhd. ........................... Food & Household Products 994,998 523,026
Genting Bhd. ....................................... Leisure & Tourism 296,000 544,579
Golden Hope Plantations Bhd. ....................... Misc Materials & Commodities 37,000 21,217
Hong Leong Industries Bhd. ......................... Multi-Industry 51,800 30,694
Hong Leong Industries Bhd., wts. ................... Multi-Industry 4,500 247
Hong Leong Properties Bhd., fgn. ................... Real Estate 248,000 18,666
Island & Peninsula Bhd. ............................ Real Estate 45,000 16,934
</TABLE>
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<TABLE>
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- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
MALAYSIA (CONT.)
Kian Joo Can Factory Bhd. .......................... Industrial Components 140,000 $ 99,349
Leader Universal Holdings Bhd. ..................... Industrial Components 195,000 19,336
Malayawata Steel Bhd. .............................. Metals & Mining 1,095,000 160,250
Malaysian Airlines System Bhd. ..................... Transportation 220,000 80,951
Malaysian International Shipping Corp., fgn. ....... Transportation 1,430,666 1,408,361
MBF Capital Bhd. ................................... Financial Services 34,000 2,965
Oriental Holdings Bhd. ............................. Automobiles 1,515,408 1,455,574
Perlis Plantations Bhd. ............................ Multi-Industry 963,348 801,016
Perusahaan Otomobil Nasional Bhd., fgn. ............ Automobiles 1,000 483
Public Finance Bhd., fgn. .......................... Financial Services 140,000 24,419
*Renong Bhd. ....................................... Multi-Industry 266,000 21,609
Resorts World Bhd. ................................. Leisure & Tourism 626,000 481,625
Shangri-La Hotels (Malaysia) Bhd. .................. Leisure & Tourism 145,000 27,890
Tanjong Plc. ....................................... Recreation & Other Consumer Goods 208,000 184,878
Technology Resources Industries Bhd. ............... Multi-Industry 117,000 16,494
------------
6,143,606
------------
MEXICO 6.9%
Alfa SA de CV, A.................................... Multi-Industry 642,000 1,448,919
*Altos Hornos de Mexico SA.......................... Metals & Mining 3,000 2,949
Cemex SA............................................ Building Materials & Components 15,427 30,948
Cemex SA, B......................................... Building Materials & Components 514,250 1,263,767
*Cifra SA, C........................................ Merchandising 686,543 757,508
DESC SA de CV DESC, A............................... Multi-Industry 108,000 397,573
*Grupo Financiero Banamex Accival SA, B............. Banking 461,000 388,425
*Grupo Financiero Banamex Accival SA, L............. Banking 719,459 519,595
*Grupo Financiero Bancomer SA de CV, B.............. Banking 1,185,000 145,012
*Grupo Financiero Bancomer SA de CV, L.............. Banking 2,669,370 293,190
*Grupo Financiero Serfin SA de CV, B................ Banking 1,007,411 54,567
Telefonos de Mexico SA (Telmex), L, ADR............. Telecommunications 185,700 6,627,169
Vitro SA............................................ Food & Household Products 501,355 629,617
------------
12,559,239
------------
PAKISTAN .7%
*DG Khan Cement Co. ................................ Building Materials & Components 26,000 1,640
Engro Chemical Pakistan Ltd. ....................... Chemicals 155,135 190,681
Fauji Fertilizer Co. Ltd. .......................... Chemicals 67,000 63,706
National Development Leasing Corp. ................. Financial Services 75,927 5,622
Pakistan Telecommunications Corp., PTC, A........... Telecommunications 2,477,000 1,056,976
------------
1,318,625
------------
PERU 1.0%
Telefonica Del Peru SA, B, ADR...................... Telecommunications 136,400 1,756,150
------------
</TABLE>
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STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
PHILIPPINES 2.0%
*A Soriano Corp. ................................... Multi-Industry 1,059,000 $ 18,738
Ayala Corp., B...................................... Multi-Industry 171,400 24,262
*Digital Telecommunications Philippines Inc. ....... Telecommunications 360,000 5,178
Filinvest Development Corp. ........................ Real Estate 1,066,000 35,533
*Keppel Philippine Holdings Inc., B................. Machinery & Engineering 723,975 12,727
*Metro Pacific Corp. MDI............................ Multi-Industry 502,740 7,461
*Petron Corporation................................. Energy Sources 949,000 57,417
*Philex Mining Corp., B............................. Metals & Mining 8,231,008 56,377
Philippine Long Distance Telephone Co., ADR......... Telecommunications 124,706 1,948,531
*Philippine National Bank........................... Banking 550,430 320,456
RFM Corp. .......................................... Food & Household Products 5,713,100 691,311
+RFM Corporation, 10.00%, cvt., pfd. ............... Food & Household Products 1,049,109PHP 117,366
Sime Darby Pilipinas Inc. .......................... Industrial Components 560,286 268,630
------------
3,563,987
------------
POLAND .2%
Elektrim SA......................................... Multi-Industry 13,750 114,430
Gorazdze SA......................................... Building Materials & Components 2,625 25,158
*Impexmetal SA, A................................... Metals & Mining 1,603 6,283
Mostostal Export SA................................. Construction & Housing 109,463 82,281
*Orbis SA........................................... Leisure & Tourism 3,696 22,821
Polifarb Cieszyn Wroclaw SA......................... Chemicals 29,698 39,066
*Rolimpex SA........................................ Wholesale & International Trade 823 1,083
Warta SA............................................ Insurance 2,566 45,465
*Zaklady Plyt Wiorowych Grajewo AS.................. Forest Products & Paper 1,800 20,295
------------
356,882
------------
RUSSIA .3%
Aeroflot............................................ Transportation 300 6,000
GUM Trade House..................................... Merchandising 30,000 25,500
Irkutskenergo....................................... Utilities Electrical & Gas 439,500 12,086
Mosenergo........................................... Utilities Electrical & Gas 3,443,000 51,645
Norilsk Nickel...................................... Metals & Mining 36,100 31,927
Red October......................................... Food & Household Products 22,000 117,370
*Rostelekom......................................... Telecommunications 11,000 6,710
*Rostelekom, pfd. .................................. Telecommunications 138,400 66,432
*Saint Petersburg City Telephone Network, pfd., A... Telecommunications 46,000 8,400
*Tyumen Aviatrans................................... Telecommunications 530,000 8,321
Unified Energy System............................... Utilities Electrical & Gas 7,183,900 251,437
Unified Energy System, pfd. ........................ Utilities Electrical & Gas 1,260,000 25,263
------------
611,091
------------
SINGAPORE 4.3%
Acer Computer International Ltd. ................... Electrical & Electronics 13,000 2,210
Acma Ltd. .......................................... Electrical & Electronics 416,000 132,342
</TABLE>
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STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SINGAPORE (CONT.)
Asia Pacific Breweries Ltd. ........................ Beverages & Tobacco 24,000 $ 39,865
City Developments Ltd. ............................. Construction & Housing 658,000 1,155,946
Cycle & Carriage Ltd. .............................. Automobiles 203,000 269,752
Delgro Corp. ....................................... Transportation 1,819,200 880,919
First Capital Corp. Ltd. ........................... Real Estate 180,000 32,939
Fraser and Neave Ltd. .............................. Beverages & Tobacco 372,000 592,770
G P Batteries International Ltd. ................... Electrical & Electronics 26,000 28,401
*G P Batteries International Ltd., wts. ............ Electrical & Electronics 8,750 3,695
*Hai Sun Hup Group Ltd. ............................ Transportation 375,000 42,230
*Hai Sun Hup Group Ltd., wts. ...................... Transportation 33,600 851
*Hong Leong Finance Ltd., fgn. ..................... Financial Services 270,000 159,628
*Inchcape Marketing Services Ltd., fgn. ............ Broadcasting & Publishing 40,000 9,459
Inchcape Motores Ltd., fgn. ........................ Wholesale & International Trade 40,000 14,077
*Jaya Holdings Ltd. ................................ Transportation 331,500 69,996
*Jaya Holdings Ltd., wts. .......................... Transportation 36,780 518
Jurong Shipyard Ltd., fgn. ......................... Machinery & Engineering 17,000 72,748
Keppel Corp., Ltd. ................................. Transportation 662,000 540,484
MCL Land Ltd. ...................................... Real Estate 161,000 33,088
Metro Holdings Ltd. ................................ Wholesale & International Trade 40,000 10,248
Natsteel Ltd. ...................................... Metals & Mining 162,000 100,338
*Neptune Orient Lines Ltd. ......................... Transportation 8,000 1,599
*Osprey Maritime Ltd. .............................. Transportation 320,000 95,496
*Osprey Maritime Ltd., cvt., pfd. .................. Transportation 66,960 22,056
Overseas Chinese Banking Corp. Ltd., fgn. .......... Banking 378,000 974,797
Overseas Union Enterprise Ltd. ..................... Leisure & Tourism 57,400 63,993
Prima Ltd. ......................................... Food & Household Products 511,000 417,202
Republic Hotels & Resorts Ltd. ..................... Leisure & Tourism 98,000 20,968
Robinson & Co., Ltd. ............................... Merchandising 5,000 11,261
Rothmans Industries Ltd. ........................... Beverages & Tobacco 1,000 3,998
SBS Bus Service Ltd., fgn. ......................... Transportation 1,032,100 363,211
Sembawang Corp. Ltd. ............................... Multi-Industry 385,000 463,908
Singapore Petroleum Company, fgn. .................. Chemicals 44,000 9,414
Tibs Holdings Ltd. ................................. Transportation 140,700 41,988
Times Publishing Ltd. .............................. Broadcasting & Publishing 26,000 27,815
United Industrial Corporation Ltd. ................. Real Estate 693,000 158,032
United Overseas Bank Ltd., fgn. .................... Banking 305,000 721,284
United Overseas Land Ltd. .......................... Real Estate 421,000 132,748
WBL Corp. Ltd. ..................................... Multi-Industry 114,000 38,514
------------
7,760,788
------------
SLOVAK REPUBLIC .2%
Nafta Gbely AS...................................... Utilities Electrical & Gas 5,662 65,269
Slovnaft AS......................................... Chemicals 8,000 151,853
Vychodoslovenske Zeleziarne AS...................... Metals & Mining 5,000 58,911
------------
276,033
------------
</TABLE>
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<TABLE>
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INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH AFRICA 6.9%
Aeci Ltd. .......................................... Chemicals 84,000 $ 258,854
Alpha Ltd. ......................................... Building Materials & Components 7,000 65,912
Anglo American Industrial Corp. Ltd. ............... Multi-Industry 56,263 612,958
Anglo American Corp of South Africa Ltd. ........... Metals & Mining 80,000 2,017,042
Anglovaal Industried Ltd. .......................... Multi-Industry 231,825 198,442
Barlow Ltd. ........................................ Multi-Industry 331,144 1,198,257
Bonnita Holdings Ltd. .............................. Food & Household Products 80,000 33,244
CG Smith Ltd. ...................................... Multi-Industry 709,500 1,325,085
De Beers Centenary Linked Units, Reg. .............. Misc Materials & Commodities 43,900 530,879
*Del Monte Royal Foods Ltd. ........................ Food & Household Products 517,825 128,948
Dunlop Africa Ltd. ................................. Industrial Components 61,000 9,494
Edgars Stores Ltd. ................................. Textiles & Apparel 19,725 69,073
Engen Ltd. ......................................... Energy Sources 156,324 468,346
Iscor Ltd. ......................................... Metals & Mining 1,290,738 255,124
Kersaf Investments Ltd. ............................ Leisure & Tourism 15,000 38,520
Malbak Ltd. ........................................ Multi-Industry 105,500 36,123
+McCarthy Retail Ltd., cvt., zero coupon, 9/30/03... Multi-Industry 38,833ZAR 24,175
Palabora Mining Co. Ltd. ........................... Metals & Mining 39,500 149,080
Plate Glass & Shatterprufe Industries Ltd. ......... Building Materials & Components 14,480 60,847
Polifin Ltd. ....................................... Chemicals 159,800 111,918
*Rainbow Chicken Ltd. .............................. Food & Household Products 1,093,000 45,930
Rembrandt Group Ltd. ............................... Multi-Industry 191,700 859,260
Reunert Ltd. ....................................... Electrical & Electronics 97,000 67,935
*Sappi Ltd. ........................................ Forest Products & Paper 178,000 555,449
Sasol Ltd. ......................................... Energy Sources 422,500 1,775,417
South African Breweries Ltd. ....................... Beverages & Tobacco 71,152 1,002,180
Sun International (South Africa) Ltd. .............. Leisure & Tourism 79,200 13,189
Tongaat-Hulett Group Ltd. .......................... Multi-Industry 92,081 617,671
Toyota South Africa Limited......................... Automobiles 12,000 30,816
------------
12,560,168
------------
SOUTH KOREA 3.5%
Daegu Bank Co. Ltd. ................................ Banking 74,484 79,972
*Daewoo Electronics Co. ............................ Electrical & Electronics 20,200 44,124
Dongkuk Steel Mill Co. Ltd. ........................ Metals & Mining 15,700 46,850
Hae In Corp. Ltd. .................................. Merchandising 15,310 66,886
Hankook Cosmetics Co. Ltd. ......................... Health & Personal Care 8,700 54,113
Korea Electric Power Corp. ......................... Utilities Electrical & Gas 198,200 2,553,632
Kyung Dong Boiler Co. Ltd. ......................... Energy Equipment & Services 8,154 56,755
LG Electronics Inc. ................................ Electrical & Electronics 139,760 1,117,666
Saehan Precision Co. Ltd. .......................... Electrical & Electronics 16,785 185,187
Samsung Display Devices Ltd. ....................... Electrical & Electronics 64,438 1,669,996
Samsung Electronics Co. Ltd. ....................... Multi-Industry 1,625 54,026
*Samsung Electronics Co. Ltd., rts. ................ Multi-Industry 156 1,802
*Samsung Heavy Industries Co. Ltd. ................. Machinery & Engineering 11,000 54,491
</TABLE>
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<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH KOREA (CONT.)
*Samsung Heavy Industries Co. Ltd., rts. ........... Machinery & Engineering 4,960 $ 1,543
Shin Poong Paper Manufacturing Co. Ltd. ............ Forest Products & Paper 2,000 13,032
Shin Young Wocoal Inc. ............................. Textiles & Apparel 1,610 45,004
Ssangyong Oil Refining Co. Ltd. .................... Energy Equipment & Services 29,710 223,292
*Tong Yang Merchant Bank............................ Financial Services 10,399 30,031
------------
6,298,402
------------
SRI LANKA .1%
Aitken Spence & Co. Ltd. ........................... Multi-Industry 46,533 65,890
United Motor Lanka Ltd. ............................ Automobiles 108,320 46,095
------------
111,985
------------
THAILAND 3.8%
Advanced Info Service Ltd., fgn. ................... Telecommunications 134,000 543,675
American Standard Sanitaryware Public Co. Ltd.,
fgn. ............................................. Building Materials & Components 17,000 104,374
*Asia Fibre Public Co. Ltd., fgn. .................. Textiles & Apparel 134,500 4,494
Ayudhya Insurance Public Co. Ltd., fgn. ............ Insurance 15,000 46,002
Bangkok Bank Public Co. Ltd. ....................... Banking 84,500 47,393
Bangkok Bank Public Co. Ltd., fgn. ................. Banking 161,000 113,353
Bangkok Insurance Public Co. Ltd. BKI............... Insurance 19,800 48,673
Bangkok Insurance Public Co. Ltd. BKI, fgn. ........ Insurance 4,900 21,050
Banpu Public Co. Ltd. .............................. Energy Sources 84,800 103,217
*Charoen Pokphand Feedmill Public Co. Ltd. ......... Food & Household Products 61,100 39,372
*Charoen Pokphand Feedmill Public Co. Ltd., fgn. ... Food & Household Products 82,700 52,304
*Dusit Thani Public Company Ltd., fgn. ............. Leisure & Tourism 74,500 56,897
*Hana Microelectronics Co. Ltd., fgn. .............. Electrical & Electronics 203,700 391,357
Industrial Finance Corp. of Thailand................ Financial Services 242,700 29,541
Industrial Finance Corp. of Thailand, fgn. ......... Financial Services 721,700 87,844
*Italian-Thai Development Public Co. Ltd., fgn. .... Construction & Housing 269,900 97,428
*Jasmine International Public Co. Ltd., fgn. ....... Telecommunications 914,000 185,418
*Land and House Public Co. Ltd. .................... Real Estate 494,336 90,845
*Land and House Public Co. Ltd., fgn................ Real Estate 154,300 29,461
*National Petrochemical Public Company Ltd.,
fgn. ............................................. Chemicals 741,100 132,655
*Phatra Thanakit Public Co. Ltd., fgn. ............. Financial Services 1,132,332 118,908
Regional Container Lines Public Co. Ltd. ........... Transportation 400 286
Regional Container Lines Public Co. Ltd., fgn. ..... Transportation 139,000 99,523
Saha Union Public Co. Ltd. ......................... Multi-Industry 400,000 100,239
*Sanyo Universal Electric Public Co Ltd., fgn. ..... Appliances & Household Durables 6,000 558
*Serm Suk Public Co. Ltd. .......................... Food & Household Products 85,700 309,870
*Serm Suk Public Co. Ltd., fgn. .................... Food & Household Products 4,900 27,599
*SG Asia Credit Public Co. Ltd. .................... Financial Services 7,000 1,136
*Shinawatra Computer & Communications Public Co.
Ltd. ............................................. Electrical & Electronics 18,500 36,647
*Siam Cement Public Co. Ltd. ....................... Building Materials & Components 128,065 574,611
*Siam Cement Public Co. Ltd., fgn. ................. Building Materials & Components 59,135 378,238
Siam Makro Public Company Ltd., fgn. ............... Merchandising 437,100 586,799
</TABLE>
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<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
THAILAND (CONT.)
*Sino-Thai Engineering & Construction Public Co.,
fgn. ............................................. Construction & Housing 8,900 $ 765
Thai Airways International Public Co. Ltd., fgn. ... Transportation 405,800 312,340
*Thai Engine Manufacturing Public Company Ltd. ..... Machinery & Engineering 193,000 23,031
*Thai Farmers Bank Public Co. Ltd. ................. Banking 481,100 200,937
*Thai Farmers Bank Public Co. Ltd., fgn. ........... Banking 2,575,000 1,106,205
*Thai Petrochemical Industry Public Co. Ltd.,
fgn. ............................................. Chemicals 1,327,100 53,844
Thai Plastic and Chemical Co. Ltd., fgn. ........... Chemicals 2,800 2,740
Thai Rayon Public Co. Ltd. ......................... Textiles & Apparel 17,300 9,238
*Thai Telephone & Telecommunication Public Co. Ltd.,
fgn. ............................................. Telecommunications 800,400 63,039
*Tipco Asphalt Public Co. Ltd., fgn. ............... Building Materials & Components 169,000 92,769
*Total Access Communication Public Co. Ltd. ........ Telecommunications 374,000 196,350
*United Communications Industry Public Co. Ltd.,
fgn. ............................................. Telecommunications 1,151,000 274,702
*United Communications Industry Public Co. Ltd.,
loc. ............................................. Telecommunications 10,000 1,981
*United Standard Terminal Public Co. Ltd., fgn. .... Wholesale & International Trade 88,000 49,356
------------
6,847,064
------------
TURKEY 5.5%
Akbank.............................................. Banking 175,109,932 3,217,193
Arcelik AS.......................................... Appliances & Household Durables 42,560,541 996,590
Beko Elektronik AS.................................. Appliances & Household Durables 12,748,077 181,400
*Cimentas Izmir Cimento Fabrikasi Turk AS........... Building Materials & Components 11,979,407 604,171
Erciyas Biracilik................................... Food & Household Products 354,000 28,375
*Eregli Demir ve Celik Fabrikalari AS............... Metals & Mining 16,777,250 1,435,425
Finansbank.......................................... Banking 392,190,215 2,966,964
Izocam Ticaret ve Sanayii AS, br. .................. Building Materials & Components 9,879,173 97,870
*Netas Northern Electric Telekomunic Asyon AS....... Electrical & Electronics 201,000 6,879
*Netas Northern Electric Telekomunic Asyon AS,
new............................................... Electrical & Electronics 844,200 25,455
Turk Demir Dokum, br. .............................. Appliances & Household Durables 21,338,804 276,738
*Turkiye Garanti Bankasi AS......................... Banking 7,561,060 177,048
Vakif Finansal Kiralama AS.......................... Financial Services 11,892,643 74,974
------------
10,089,082
------------
VENEZUELA .8%
Ceramica Carabobo CA, A, ADR........................ Building Materials & Components 20,973 21,622
Electricidad de Caracas............................. Utilities Electrical & Gas 3,168,977 762,290
*International Briquettes Holdings.................. Metals & Mining 588 2,977
*Manufacturera de Aparatos Domesticos SA............ Appliances & Household Durables 36,000 7,423
Mavesa SA, ADR...................................... Food & Household Products 222,900 585,113
Siderurgica Venezolana Sivensa Saica Svs., A........ Metals & Mining 2,386,918 133,289
------------
1,512,714
------------
</TABLE>
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TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1998 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
ZIMBABWE .1%
Delta Corp. ........................................ Multi-Industry 227,341 $ 70,269
Meikles Africa Ltd. ................................ Multi-Industry 37,000 26,825
Transarchipel Shipping Ltd. ........................ Multi-Industry 587,000 45,893
Zimbabwe Sun Ltd. .................................. Multi-Industry 106,688 7,759
------------
150,746
------------
TOTAL LONG TERM SECURITIES (COST $213,124,579)...... 124,729,476
------------
SHORT TERM INVESTMENTS (COST $57,070,938) 31.3%
+U.S. Treasury Bills, 4.89% to 5.13%, with
maturities to 12/17/98............................ 57,769,000 57,119,227
------------
TOTAL INVESTMENTS (COST $270,195,517) 99.7%......... 181,848,703
OTHER ASSETS, LESS LIABILITIES .3%.................. 503,037
------------
TOTAL NET ASSETS 100.0%............................. $182,351,740
============
</TABLE>
CURRENCY ABBREVIATIONS:
<TABLE>
<S> <C>
PHP -- Philippine Peso
ZAR -- South African Rand
</TABLE>
*Non-income producing.
+Designates debt securities that are traded in U.S. dollars unless otherwise
indicated.
++Receipts of Telebras stock represent a basket of twelve new holding companies
to be received in conjunction with the "split-up" of Telecomunicacoes
Brasileiras SA (Telebras).
See Notes to Financial Statements.
21
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $270,195,517).... $181,848,703
Cash....................................................... 19,659
Receivables:
Investment securities sold................................ 137,989
Dividends and interest.................................... 847,664
------------
Total assets.......................................... 182,854,015
------------
Liabilities:
Payables:
Investment securities purchased........................... 18,483
To affiliates............................................. 246,863
Accrued liabilities........................................ 236,929
------------
Total liabilities..................................... 502,275
------------
Net assets, at value........................................ $182,351,740
============
Net assets consist of:
Undistributed net investment income........................ $ 4,795,230
Net unrealized depreciation................................ (88,346,814)
Accumulated net realized gain.............................. 68,912,900
Capital shares............................................. 196,990,424
------------
Net assets, at value........................................ $182,351,740
============
Net asset value per share ($182,351,740 / 16,800,338 shares
outstanding).............................................. $10.85
============
</TABLE>
See Notes to Financial Statements.
22
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $437,182)
Dividends.................................................. $ 7,399,728
Interest................................................... 1,565,470
-----------
Total investment income............................... $ 8,965,198
Expenses:
Management fees (Note 3)................................... 3,417,069
Administrative fees (Note 3)............................... 410,048
Transfer agent fees........................................ 22,000
Custodian fees............................................. 469,206
Reports to shareholders.................................... 174,000
Registration and filing fees............................... 28,500
Professional fees.......................................... 91,106
Directors' fees and expenses............................... 30,000
Other...................................................... 11,678
-----------
Total expenses........................................ 4,653,607
-------------
Net investment income........................... 4,311,591
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 79,000,250
Foreign currency transactions............................. (813,615)
-----------
Net realized gain..................................... 78,186,635
Net unrealized depreciation on investments............ (205,907,624)
-------------
Net realized and unrealized loss............................ (127,720,989)
-------------
Net decrease in net assets resulting from operations........ $(123,409,398)
=============
</TABLE>
See Notes to Financial Statements.
23
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 4,311,591 $ 4,470,808
Net realized gain from investments and foreign currency
transactions............................................ 78,186,635 34,714,170
Net unrealized appreciation (depreciation) on
investments.............................................. (205,907,624) 35,709,116
--------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (123,409,398) 74,894,094
Distributions to shareholders from:
Net investment income..................................... (4,385,151) (3,534,016)
Net realized gains........................................ (36,081,159) (15,067,265)
Capital share transactions (Note 2)........................ 4,225,187 2,031,444
--------------------------------
Net increase (decrease) in net asset.................... (159,650,521) 58,324,257
Net assets:
Beginning of year.......................................... 342,002,261 283,678,004
--------------------------------
End of year................................................ $ 182,351,740 $342,002,261
================================
Undistributed net investment income included in net assets:
End of year................................................ $ 4,795,230 $ 4,351,887
================================
</TABLE>
See Notes to Financial Statements.
24
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Emerging Markets Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940 as a closed-end, non-diversified investment
company. The Fund seeks long-term capital appreciation by investing primarily in
emerging country equity securities. The following summarizes the Fund's
significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
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 and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
Certain countries in which the Fund invests have imposed restrictions on the
repatriation of their currencies. Other countries have previously instituted
currency exchange controls in the past during periods of serious imbalance in
their balance of payments or upon the occurrence of other destabilizing events.
Exchange control regulations may restrict the Fund's ability to convert
investment income, capital, or the proceeds of securities into U.S. dollars. As
of August 31, 1998, the Fund has investments with a value of approximately $6.2
million in countries with restrictions on the repatriation of their currencies
or formal exchange controls currently in place.
25
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders 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.
2. CAPITAL SHARES
At August 31, 1998, there were 30 million shares authorized ($0.01 par value).
During the years ended August 31, 1998 and 1997, 252,599 shares were issued for
$4,225,187 and 112,244 shares were issued for $2,031,444 from reinvested
distributions, respectively.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Assets
Management Ltd. (TAML) and Franklin Templeton Services, Inc. (FT Services), the
Fund's investment manager and administrative manager, respectively.
The Fund pays an investment management fee to TAML of 1.25% per year of the
average daily net assets of the Fund. The Fund pays an administrative fee
monthly to FT Services based on the rate of 0.15% per year of the Fund's average
daily net assets.
Legal fees of $35,219 were paid to a law firm in which a partner is an officer
of the Fund.
26
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (continued)
4. INCOME TAXES
At August 31, 1998, the net unrealized depreciation based on the cost of
investments for income tax purposes of $271,650,139 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 13,373,458
Unrealized depreciation..................................... (103,174,894)
-------------
Net unrealized depreciation................................. $ (89,801,436)
=============
</TABLE>
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing treatments of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 1998 aggregated $97,982,983 and $153,737,419, respectively.
27
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Independent Auditor's Report
THE BOARD OF DIRECTORS AND SHAREHOLDERS
TEMPLETON EMERGING MARKETS FUND, INC.
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Templeton Emerging Markets Fund, Inc. as of
August 31, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Emerging Markets Fund, Inc. as of August 31, 1998, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/McGladrey & Pullen, LLP
New York, New York
September 29, 1998
28
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Annual Meeting of Shareholders, February 17, 1998
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 East Broward Boulevard, Ft. Lauderdale, Florida, on February 17, 1998. The
purpose of the meeting was to elect three Directors of the Fund, to ratify the
selection of McGladrey & Pullen, LLP, as the Fund's independent auditors for the
fiscal year ending August 31, 1998, and in their discretion, to authorize the
proxyholders to vote upon other such matters that may legally come before the
meeting or any adjournment of the meeting. At the meeting, the following persons
were elected by the shareholders to serve as Directors of the Fund: Harmon E.
Burns, Andrew H. Hines, Jr. and Charles B. Johnson.* The shareholders ratified
the selection of McGladrey & Pullen, LLP, to serve as the Fund's independent
auditors for the fiscal year ending August 31, 1998. No other business was
transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. The election of three (3) Directors for the term set forth below:
<TABLE>
<CAPTION>
% OF % OF
OUTSTANDING OUTSTANDING
TERM EXPIRING 2001: FOR SHARES WITHHELD SHARES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harmon E. Burns............................................. 12,399,904 74.03% 215,824 1.29%
Andrew H. Hines, Jr. ....................................... 12,417,807 74.14% 197,921 1.18%
Charles B. Johnson.......................................... 12,444,967 74.30% 170,761 1.02%
</TABLE>
2. The ratification or rejection of the selection of McGladrey & Pullen, LLP, as
independent auditors for the Fund for the fiscal year ending August 31, 1998:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12,245,304 73.10% 76,465 0.46% 293,959 1.76%
</TABLE>
*Harris J. Ashton, Nicholas F. Brady, S. Joseph Fortunato, John Wm. Galbraith,
Edith E. Holiday, Betty P. Krahmer, Gordon S. Macklin and Fred R. Millsaps are
Directors of the Fund who are currently serving and whose terms of office
continued after the Annual Meeting of Shareholders.
29
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with
the following features: -- Shareholders must affirmatively elect to participate
in the Plan; Stock dividends and capital gain distributions will be reinvested
automatically; ChaseMellon Shareholder Services, Investor Services, P.O. Box
3338, South Hackensack, NJ 07606-1938, 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, the participant 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 or 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. -- A participant has the option of
submitting additional payments to Mellon Securities Trust Company (the "Plan
Agent"), in any amounts of at least $100, up to a maximum of $5,000 per month,
for the purchase of Fund shares for his or her account. These payments shall be
made by check or money order payable to "Mellon Securities Trust Co." and sent
to ChaseMellon Shareholder Services, Investor Services, P.O. Box 382009,
Pittsburgh, PA 15250-8009, Attn: Templeton Emerging Markets Fund, Inc. The Plan
Agent shall apply such payments (less a $5.00 service charge and less a pro rata
share of trading fees) to purchases of Fund shares in the open market. -- The
automatic reinvestment of dividends and/or capital gains does not relieve the
participant of any income tax which may be payable on dividends or
distributions. -- The participant may withdraw from the Plan without penalty at
any time by written notice to the Plan Agent sent to ChaseMellon Shareholder
Services, Investor Services, P.O. Box 3338, South Hackensack, NJ 07606-1938.
Upon withdrawal, the participant will receive, without charge, stock
certificates issued in the participant's name for all full shares held by the
Plan Agent; or, if the participant wishes, the Plan Agent will sell the
participant's shares and send the proceeds, less a service charge of $5.00 and
less trading fees. -- 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 trading fees. Trading fees will be deducted from amounts to be
invested.
SHAREHOLDER INFORMATION
Shares of Templeton Emerging Markets Fund, Inc. are traded daily on the New York
Stock Exchange under the symbol "EMF". The Fund's shares are also listed and
traded on the Pacific Exchange. Information about the net asset value and the
market price is published each Monday in the Wall Street Journal, weekly in
Barron's and each Saturday in The New York Times and other newspapers. Daily
market prices for the Fund's shares are published in the New York Stock Exchange
Composite Transactions section of newspapers.
For current information about dividends and shareholder accounts, call
1-800-416-5585.
The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information after 7
a.m. Pacific Time any business day at 1-800-DIAL BEN(R) (1-800-342-5236).
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 request that his or her name be added to the Fund's mailing list, by
writing Templeton Emerging Markets Fund, Inc., 100 Fountain Parkway, P.O. Box
33030, St. Petersburg, FL 33733-8030.
30
PAGE
TEMPLETON EMERGING MARKETS FUND, INC.
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates the following amounts as capital gain dividends for the fiscal year
ended August 31, 1998:
<TABLE>
<S> <C>
28% Rate Gain............................................... $ 695,978
20% Rate Gain............................................... 77,724,977
-----------
Total....................................................... $78,420,955
===========
</TABLE>
31
PAGE
This page intentionally left blank
PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. 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.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery 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
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
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
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 Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
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 Bond Fund
Franklin Floating Rate Trust
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
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)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**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. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
09/98
PAGE
TEMPLETON EMERGING
MARKETS FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, Florida 33733-8030
TRANSFER AGENT
Chase Mellon Shareholder Services
450 West 33rd Street
New York, New York 10001
1-800/416-5585
FUND INFORMATION
1-800/342-5236
Investors should be aware that the value of investments made for the Fund may go
down as well as up, and that the Investment Manager may make errors in selecting
securities for the Fund's portfolio. Like any investment in securities, the
value of Fund's portfolio will be subject to the risk of loss from market,
currency, economic, political and other factors. The Fund and its 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.
[RECYCLE LOGO] Printed on recycled paper
TLEMF A98 10/98
