<PAGE>
Templeton Institutional Funds, Inc.
TIFI Emerging Markets Series
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[LOGO OF TEMPLETON June 30, 1995
APPEARS HERE]
<PAGE>
- --------------------------------------------------------------------------------
Mutual funds, annuities, and other investment products:
. are not FDIC insured;
. are not deposits or obligations of, or guaranteed by, any financial
institution;
. are subject to investment risks, including possible 1oss of the
principal amount invested.
- --------------------------------------------------------------------------------
<PAGE>
June 30, 1995
Dear Shareholder...
The Latin American crises in December 1994 and the markets'
subsequent rebound over the last quarter is a good illustration of the need to
take a long-term view when investing in the emerging markets. When a significant
correction takes place, there will normally be global reactions, with
information filtering throughout the world at a rapid pace. As we believe that
these market value adjustments disappear as quickly as they appear, we remained
steadfast in maintaining the fundamentally sound Latin American companies in the
portfolio and did not try to frantically sell many of these securities. As there
are more bargains in South America today, we have added to existing
shareholdings and have picked up new bargains when we determined prices were
attractive. As the price levels have generally gone down in Latin America, we
have maintained weightings in this region by adding to our current positions and
buying new securities.
- --------------------------------------------------------------------------------
Total Returns as of 6/30/95
<TABLE>
<CAPTION>
One-Year Cumulative
Average Annual/1/ Since Inception/2/
<S> <C> <C>
TIFI Emerging Markets Series 2.81 18.76
IFC Investable Composite Index -4.39 34.48
</TABLE>
/1/ Average annual total return figures represent the average annual increase in
value of an investment over the specified periods. The calculations assume
reinvestment of dividends and capital gains distributions.
/2/ The cumulative return shows the change in value of an investment over the
period(s) indicated. The calculations assume reinvestment of dividends and
capital gains distributions.
Investment return and principal value fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost. Past
performance cannot guarantee future results.
We believe President Clinton's remedial package to Mexico will
only solve short-term liquidity problems. Also, despite the International
Monetary Fund's economic targets that need to be met, we believe the Mexican
government should reduce government spending in order to achieve long term
economic growth and prosperity in Mexico. The government should also initiate
more rapid and larger scale privatization programs and the private sector should
reduce their consumption. The Mexican private sector consumption currently
represents 70% of the country's GDP, which is higher than most industrialized
countries. Also, the Mexican government needs to restructure their social
security system and create new vehicles for savings. The gross savings comprise
14% of their GDP which is lower than the world's industrialized and developing
countries. Lastly, the Mexican government should impose stricter reserve
requirements for the banks. Although the initial rebounds in the Latin American
markets over the last quarter was comprised of rallies driven by domestic, not
foreign investors, the external trade in Mexico during June 1995 moved to a
surplus for the first time in
continued...
[PHOTO APPEARS HERE]
Mark Mobius joined Templeton in 1987 as managing director of its Far East
Division in Hong Kong, with responsibility for supporting the Templeton group's
research expertise, principally in emerging markets countries. In this capacity,
he directs the analysts based in Hong Kong, Singapore and manages our emerging
markets portfolios. Dr. Mobius has spent over twenty years working in Asia, and
has extensive experience in economic research and analysis.
Prior to joining Templeton, from 1983 to 1986 he was president of International
Investment Trust Company Ltd. in Taipei, Taiwan - that country's first and
largest investment management firm. Before that, he served as a director at
Vickers da Costa, an international securities firm. Initially, he started in
that firm's Hong Kong office in 1980, and then moved to Taiwan in 1983 to open
that firm's office there and to direct operations in India, Indonesia, Thailand,
the Philippines, and Korea. Before joining Vickers, Dr. Mobius operated his own
consulting firm in Hong Kong for ten years, and was a research scientist for
Monsanto Overseas Enterprises Company in Hong Kong and the American Institute
for Research in Korea and Thailand.
Dr. Mobius holds Bachelors and Masters Degrees from Boston University, and
received his Ph.D. in Economics and Political Science in 1964 from the
Massachusetts Institute of Technology. He also studied at the University of
Wisconsin, University of New Mexico, and Kyoto University in Japan.
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
letter continued.......................................................
four years and Brazil received net positive inflows of foreign investment in the
months of April and May 1995. We are still of the opinion that the long-term
outlook for Latin America remains generally positive.
The currency situation regarding the US dollar has tremendous
implications for the emerging markets, especially Asia. It is not surprising to
note that many of the Asian currencies have weakened against the Japanese yen
more than the US dollar. Over the last 10 years, the Korean won has weakened
considerably against the yen. The Korean authorities are keeping their currency
weak so that exports can be competitive. The emerging markets will benefit
greatly from the strong yen as the Japanese transfer the high end of their
technology to the low labor cost countries. The natural choices for labor
reallocation for the Japanese will be Taiwan, Korea and Hong Kong where the
labor rates are relatively lower and the productivity levels are acceptable.
Hong Kong's property market continues to come under downward
pressure as government measures to cool the property markets have taken their
toll. Developers continue to absorb demand from the residential secondary market
by offering their apartments at or below secondary market prices.
Although we analyze securities on a stock by stock basis, with
Asia's rapid growth, many of these stock markets are expensive. Prices in the
Philippines, for example, were driven to an unattractive level of an average of
20 times their forecasted earnings. The general price levels in many of the more
expensive markets do not reflect the risk factors in Asia, such as lack of full
disclosure by many companies, corporate governance and political risks. These
trends however do not mean that all Asian companies are expensive. There will
always be laggards and companies that have been overlooked and we are attempting
to identify these investment opportunities.
We anticipate that South Korea's economy could remain among the
world's top performers for the rest of the decade. In order to continue the
trajectory of economic growth they currently enjoy, South Koreans need to
deregulate their economy and the government must accept the fact that markets
will ultimately benefit some foreign parties, either in the form of foreign
investment or foreign consumer goods. More must be done by the government to
increase the attractiveness of this market to foreign investors, either through
relaxing their taxation structure for foreign investment, significantly
increasing the foreign ownership limits in the private sector or expediting
privatization of many state controlled enterprises. The opportunities in Korea
are excellent and while we are not newcomers into this market, we have been
somewhat restricted by Korea's foreign ownership limits currently at 12%. We are
excited that this ceiling will be raised to 15% in July 1995.
The long-term case for emerging markets remains strong. As
countries embrace free market reforms as well as fiscal and monetary discipline,
growth in emerging countries should outpace developed nations significantly over
the next decade. As we travel extensively in the emerging
Geographic Distribution on 6/30/95
(% of Total Equity)
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Europe 15.1%
Mid-East/Africa 3.3%
Asia 47.5%
Latin America/Caribbean 34.1%
</TABLE>
Fund Asset Allocation on 6/30/95
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Equity* 78.5%
Short Term & Other 21.5%
</TABLE>
*Equity includes convertible and preferred stocks
2
<PAGE>
................................................................................
markets, we see an increase of up to 40 emerging countries opening up by the end
of this year. When it makes economic sense, we want to be in these markets early
so that we can find the best bargains for our clients. While we continue to be
very selective and careful in picking under-valued stocks, the financial
infrastructure or lack thereof in some of the newer markets, has created major
challenges for us. This requires extensive research, knowledge and diligence to
ensure that we thoroughly understand the differing accounting standards, company
practices, trading, registration, settlement and custodial issues. I recently
visited the Philippines with members of Templeton's emerging markets research
team and have included comments on the Philippines' investment environment.
As always, we would like to thank you for your commitment and
confidence in the Templeton organization.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
Managing Director
Templeton Investment Management (Hong Kong) Ltd.
- --------------------------------------------------------------------------------
Total Return Index Comparison/1/
$5,000,000 Investment: 05/03/93 - 06/30/95
[GRAPH APPEARS HERE SHOWING COMPARISON
BETWEEN TIFI EMERGING MARKETS SERIES,
MSCI WORLD INDEX AND IFC INVESTABLE COMP]
Period ended June 30, 1995
<TABLE>
<CAPTION>
Since
Inception
One-Year (05/03/93)
<S> <C> <C>
Average Annual Total Return/2/ 2.81% 8.29%
Cumulative Total Return/3/ 2.81% 18.76%
</TABLE>
/1/ The Fund's manager is waiving a portion of its managment fees, which
reduces operating expenses. Without these reductions, the Fund's total
return would have been lower. The fee waiver may be discontinued at any
time.
/2/ Average annual total return figures represent the average annual
increase in value of an investment over the specified periods. The
calculations assume reinvestment of dividends and capital gains
distributions.
/3/ The cumulative return shows the change in value of an investment over
the period(s) indicated. The calculations assume reinvestment of
dividends and capital gains distributions.
Investment return and principal value fluctuate, so that your shares,
when redeemed, may be worth more or less than their original cost. Past
performance cannot guarantee future results.
- --------------------------------------------------------------------------------
For more complete portfolio information, call Templeton Fund Information,
toll-free, at 1-800-362-6243.
3
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
country focus...................................................................
A Closer Look at the Philippines
Country
FOCUS -------------------------------------------------------------------------
Almost everything people had to say about the
Philippines was negative when we started investing there for our
emerging markets fund in 1987. The talk then was of power outages,
natural disasters, poor telephone services and political
instability. For example, when I told my Philippine friends that I
was going to invest in the Philippine Long Distance Telephone
Company (PLDT), the nation's main provider of telephone services,
they expressed horror that we would invest in what was then an
inefficient and bureaucratic organization which kept applicants
for telephone installations waiting for many years. At that time,
the standard joke about PLDT was: "About 10% of the Philippine
people have telephones and of that 10%, 90% are still waiting for
a dial tone."
All this and more was keeping the country's economic
development well behind its Southeast Asian neighbours, despite
its strong natural resource base and well-educated, English-
speaking business class eager to do business with the outside
world. But there has been a transformation, and this country,
which for so long had been heavily dependent on costly foreign
borrowings and foreign aid to cover chronic balance of payment
deficits, now wins praise from many multilateral financial
organizations for its astute monetary policy. The Philippines
seems to be rightly taking its place with the other Asian
"tigers."
Since taking office in 1992, President Fidel V. Ramos
has given the country strong democratic leadership, much-needed
political stability and a set of pro-business economic reforms
that have turned it into one of the world's most exciting emerging
markets. At last, the Philippines is starting to reach its vast
potential, and with its fully convertible currency and stable
exchange rates, the investment outlook for its many strong
companies looks solid for the years ahead.
Although Philippine GNP was shrinking in real terms in
1991, in 1995 the economy appears to be on target to exceed 5%
growth for the second consecutive year. Within five years,
inflation has fallen from about 18% to below 10%, and local banks'
nominal lending rates have declined from 24% to about 16%. The
latter is especially important for earnings growth, because it
means companies can borrow money for expansion more cheaply and
can devote less of their cash flow to interest payments. This more
favourable business climate has brought unemployment down from 11%
to 8% since 1991.
4
<PAGE>
................................................................................
The world has noticed this good news, and has poured
private capital into the Philippines in record amounts. The July
1992 Brady Agreement restructuring the country's external
commercial debt service ratios, which were by far the highest of
the developing Pacific Rim nations, was a key turning point. By
early 1993, the government was able to resume sovereign borrowing
in international capital markets. Key companies like PLDT and the
Philippine National Bank then launched corporate borrowing
programs in the Euromarkets in 1994. Since 1993, well over $1.4
billion of Philippine sovereign and corporate international bonds
have been issued. In the process, the local equity market has also
turned into a hotbed of activity. 1995 could be the second
straight year in which Philippine companies collectively raised
about $1 billion via initial public offerings, global depository
receipts and rights issues. Although a substantial, domestic
shareholder class is emerging, foreign investors have grown
confident enough to let their capital play a major role in
fuelling the market's growth. In terms of both market
capitalization and daily trading volume, the Philippine Stock
Exchange (PSE) is now comparable to, or even slightly bigger than,
its counterpart in neighbouring Indonesia, where the population
and overall economy are much larger.
The establishment of the PSE in March 1994 through the
unification of the Manila and Makati exchanges was a major
achievement. These two exchanges had been fierce rivals, and a
great deal of persuasion and gentle arm-twisting was necessary to
bring them together. The merger was many years in the making,
requiring extensive negotiations between brokers determined to
defend their traditional turf. In the past, the lack of computer
links and harmonized operations were hindrances that added
considerably to foreign investors' cost of doing business. Now
there is a computerized "one market, two floors" system that is
far more efficient than its predecessor.
This fall the PSE expects to install a depository system
with advanced technology that should meet "T+3" standards for a
three-day settlement period. It will shorten the time needed for
payment and delivery of securities, and is exactly the kind of
thing that I have long recommended to emerging market securities
regulators world-wide. The challenge, now, for the Philippines is
to reach the next level of capital market development in Asia. I
believe it can happen. Remember that since 1983, market
capitalization has risen from $22.7 billion to $205 billion in
Malaysia and from $1.5 billion to $127.9 billion in Thailand.
Privatization is presenting many opportunities in the
Philippines, as it is in other emerging markets. Last summer the
Ramos government raised $373 million by selling one billion shares
in Petron, its giant oil refinery and distribution company, to
investors at home and abroad. It was the largest equity offering
in Philippine history, and put another stock on the market in the
same league as traditional heavyweights like PLDT and San Miguel
Corp., the food and beverage industry leader. Now there are plans
to sell sizeable pieces of government holdings in such firms as
the Philippine National Bank, the Development Bank of the
Philippines, National Steel Corporation, National Power
Corporation and Philippine
- --------------------------------------------------------------------------------
Industry Diversification on 6/30/95
(% of Total Portfolio)
Banking 20.8%
Multi-Industry 9.5%
Telecommunications 8.2%
Real Estate 5.1%
Food & Household Products 5.0%
Utilities Electrical & Gas 3.7%
Energy Sources 3.2%
Building Materials & Components 3.0%
Textiles & Apparel 2.5%
Forest Products & Paper 2.1%
10 Largest Positions on 6/30/95
(% of Total Portfolio)
Telefonos de Mexico SA, Adr. 4.6%
Banco Comercial Portugues SA 2.4%
Cheung Kong Holdings Ltd. 2.2%
Philippine Long Distance
Telephone Co. 2.0%
Centrais Eletricas Brasileiras SA 1.6%
Alpha Credit Bank 1.9%
HSBC Holdings PLC 1.8%
P T Barito Pacific Timber, fgn 1.8%
Cia Naviera Perez Companc SA 1.5%
Telebras-Telecomunicacoes
Brasileiras SA 1.4%
- --------------------------------------------------------------------------------
5
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
country focus continued.........................................................
National Oil Company. Since other private companies will probably
be lining up to do initial public offerings in Manila, there
should be many more securities to choose from soon, just as there
are many more now than there were a few years ago when we began
buying there.
There is, however, one big obstacle to this country's
economic goals: physical infrastructure. The roads, airports,
electric power and other facilities the Ramos administration
inherited were grossly inadequate, suffering from years of
official neglect and heavy use by a fast-growing population. The
government didn't have enough money to meet the reconstruction
needs, and has, wisely, I believe, rewritten its investment and
regulatory codes to help attract private foreign capital for the
top priority area of power generation. Its track record in this
regard is impressive, with 35 contracts signed with private power
developers, which should increase the present installed capacity
by about 75% by the end of the decade. Every effort is now being
made to attract investors into the Philippines for private toll
roads, ports, railroads, mass transit systems and
telecommunications projects. Given the current lack of a local,
long-term debt market, this won't be easy. But the government,
realizing its need to attract $50 billion in new private
infrastructure investment over the next ten years in an effort to
reach development goals, is working closely with the World Bank
and others to accomplish this. In the process, we could see many
new opportunities in the Philippines for our clients.
When I look at the Philippines, I see a country with
sustained economic growth led by booming foreign investment and
strong international demand for its increasingly competitive
export projects. The outlook is positive for increased corporate
earnings in this exciting, new environment. Industries like
manufacturing, electronics and agroprocessing are all coming
alive, but finding the best investment bargains will be
challenging. The market's aggregate P/E is high, at 18.7 times,
but you can count on us to continue to search for the best values
we can find for our clients.
6
<PAGE>
................................................................................
[MAP OF THE PHILIPPINES APPEARS HERE]
7
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
spotlight.......................................................................
The following are descriptions
of several holdings in your portfolio.
Spotlight
ON ------------------------------------------------------------------------
CURRENT
HOLDINGS Banco Espirito Santo e Comercial de Lisboa S.A. - The history of
Banco Espirito Santo (BES) can be traced to 1884 when Mr. Jose
Maria de Espirito Santo Silva founded a bank in Lisbon, Portugal,
which later adopted the present name. After the second world war,
BES expanded steadily and became one of the largest commercial
banks in Portugal. In 1975, the banking industry, including BES,
was nationalized by the Portuguese government. Being deprived of
their Portuguese base, the Espirito Santo family began operations
anew outside the country. Commercial banking operations were
established in France, Switzerland and Brazil. In 1986, when the
Portuguese government enacted legislation which once again
permitted private ownership of financial services companies, the
group resumed its banking operations in Portugal by establishing
Banco Internacional de Credito S.A. (BIC), a commercial bank, and
Banco ESSI, an investment bank which is primarily engaged in
domestic project financing, corporate restructuring, privatization
schemes and securities underwriting. In 1990, Espirito Santo,
together with Caisse Nationale de Credit Agricole, a French
banking group, re-acquired its controlling interest in
Tranquilidade through a privatization process. One year later, the
group re-acquired BES in another privatization. BES has a network
of 260 branches throughout Portugal, along with five foreign
branches and six representative offices. Its banking activities
have extended to Spain and Florida, U.S.A. BES provides a full
range of banking services including deposit taking, advances and
loans, guarantees and sureties, documentary credits and trade
finance factoring, foreign exchange, remittance, securities
custody, investment funds, securities operations and banking
insurance products. Currently the bank has approximately 5,860
employees.
Banco Chemical (Portugal) S.A. - Established in 1987, Banco
Chemical is a foreign bank in Portugal which is licensed to
provide full banking services. It was initially a subsidiary of
Manufacturers Hanover Trust Company (MHTC) of the United States.
The bank adopted its present name to reflect the merger of MHTC
with Chemical Bank in 1992. Since it concentrates on wholesale
banking, Banco Chemical only has five branches in addition to its
head office in Lisbon. The bank targets high net-worth individuals
and corporate clients with high levels of annual sales. Its
8
<PAGE>
................................................................................
gradual expansion in recent years called for the relocation of its
headquarters to a new office building and the opening of five
branches in Lisbon, Porto, Aveiro, Guimaraes and Viseu. Since its
dependence on lending gradually declined, the bank changed its
strategy in order to improve its competitiveness in new areas,
such as capital markets and other value-added financial services.
As part of its diversification program, Banco Chemical established
a wholly-owned fund management subsidiary, Chemical Fundos, in
1990. In 1991, the bank diversified into providing factoring
services by establishing a wholly-owned subsidiary, Chemical
Factoring. These non-banking activities are still insignificant in
terms of earnings contribution. The bank's major operating
earnings are derived from investment profits, corporate lending,
fee-based banking services and securities trading.
Arcelik A.S. - Founded in 1955, Arcelik was the first white goods
manufacturer in Turkey which produces and distributes a wide
variety of durable household goods. In 1993, the company
manufactured and sold approximately 515,000 refrigerators, 610,000
automatic washing machines, 247,000 dishwashers and 340,000 vacuum
cleaners. It produces white good products under a licensing
agreement with Bosch-Siemens of Germany. The company's capacity
for refrigerators under Bosch-Siemens reached 700,000 units per
annum. Arcelik is presently one of the largest manufacturers of
household appliances in Europe. In addition to domestic sales, the
company exports to the United States, Europe, North Africa and the
Middle East. The company also distributes televisions and
electronic audio products for a sister company, Bekoteknik A.S.
The Arcelik brand is very well respected and recognized throughout
Turkey, so much so that their products command prices equal to
similar imports. Compared with importers, Arcelik has a
competitive edge in terms of an extensive distribution and after
sales service network. With some 450 service centres and a
distribution network spanning 1,350 retailers nation-wide, Arcelik
holds the largest share of the domestic market for most of its
products. The company's main competitors in Turkey are PEG
Profilio and Vestel. Arcelik products are known for their quality,
design and reliability. The company has established its own
research and development department. Labour cost accounts for
approximately 12% of total production costs as compared with 20%
in other Eastern European companies. The company is presently a
52%-owned subsidiary of the Koc group, Turkey's largest business
conglomerate which is involved in manufacturing, automobiles,
building materials, retailing, banking and financial services.
9
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS MAY 3, 1993
ENDED (COMMENCEMENT
JUNE 30, 1995 YEAR ENDED OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1994 DECEMBER 31, 1993
------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning
of period $ 11.21 $ 13.22 $ 10.00
-------- -------- --------
Income from investment
operations:
Net investment income .15 .17 .04
Net realized and unrealized
gain (loss) (.06) (1.65) 3.25
-------- -------- --------
Total from investment
operations .09 (1.48) 3.29
-------- -------- --------
Distributions:
Dividends from net
investment income -- (.17) (.04)
Distributions from net
realized gains (.02) (.36) (.03)
-------- -------- --------
Total distributions (.02) (.53) (.07)
-------- -------- --------
Change in net asset value
for the period .07 (2.01) 3.22
-------- -------- --------
Net asset value, end of
period $ 11.28 $ 11.21 $ 13.22
======== ======== ========
TOTAL RETURN * 0.82% (11.39)% 32.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000) $693,550 $582,878 $422,433
Ratio of expenses to average
net assets 1.59%** 1.66% 1.60%**
Ratio of expenses, net of
reimbursement, to average
net assets 1.59%** 1.60% 1.60%**
Ratio of net investment
income to average net
assets 3.10%** 1.59% 0.91%**
Portfolio turnover rate 8.57% 12.51% 9.42%
</TABLE>
*NOT ANNUALIZED FOR PERIOD LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
LONG TERM SECURITIES: 78.5%
- ----------------------------------------------------------------------------------------------
Argentina: 6.8%
Banco de Galicia y
Buenos Aires SA, B Banking 2,000,550 $ 7,944,170
Banco Del Sud SA, B Banking 200,000 1,240,310
Banco Frances del Rio
de la Plata SA Banking 711,000 4,267,067
Ciadea SA Automobiles 370,000 1,794,948
**Comercial de Plata SA Multi-Industry 2,726,710 6,763,932
Compania Naviera Perez
Compano SA, B Energy Sources 2,481,211 10,423,693
**Industrias
Petroquimicas Koppers Chemicals 953,106 3,813,377
**Molinos Rio de Plata
SA, B Food & Household Products 903,147 5,158,259
Nobleza Piccardo Sdad
Industrial Comercial
y Financial Multi-Industry 47,543 194,975
Sevel Argentina SA, C Automobiles 721,174 1,334,506
Transportadora de Gas
del Sur SA, B Energy Sources 1,041,530 2,135,670
YPF Sociedad Anonima,
ADR Energy Sources 115,000 2,170,625
Zanella Hermanos SA Automobiles 743,583 174,786
------------
47,416,318
- ----------------------------------------------------------------------------------------------
Bolivia: 0.3%
Compania Boliviana de
Energia Electricas SA Utilities--Electrical & Gas 68,700 2,043,825
- ----------------------------------------------------------------------------------------------
Brazil: 8.1%
Banco Bradesco SA Banking 350,030,592 2,604,790
**Banco Bradesco SA,
ord., rts. Banking 6,320,857 343
Banco Bradesco SA, pfd. Banking 71,559,619 606,372
**Banco Bradesco SA,
rts. Banking 1,292,224 1,404
Banco do Brasil SA Banking 56,664,200 603,269
Banco do Brazil SA,
pfd. Banking 240,849,390 2,878,157
Banespa-Banco de Estado
de Sao Paulo SA, pfd. Banking 365,401,530 2,024,495
Brasmotor SA, pfd. Multi-Industry 4,000,000 738,729
**Cia Mesbla SA, pfd. Merchandising 33,734,000 2,015,611
Copene-Petroquimica de
Nordeste SA, A, pfd. Chemicals 716,700 560,591
Duratex SA, pfd. Forest Products & Paper 14,489,100 708,321
Eletrobras-Centrais
Eletricas Brasileiras
SA, B, pfd. Utilities--Electrical & Gas 50,086,106 13,494,138
Itausa-Investimentos
Itau SA, pfd. Multi-Industry 15,133,804 8,516,361
Mannesmann SA Machinery & Engineering 190,720 49,933
Mannesmann SA, pfd. Machinery & Engineering 339,650 88,966
Marcopolo SA, B, pfd. Automobiles 5,243,800 882,872
Petrobras-Petroleo
Brasileiro SA, pfd. Energy Sources 41,491,366 3,515,835
**Refripar-Refrigeracao
Parana Sa, pfd. Appliances & Household Durables 293,871,000 571,460
**Telebras-
Telecomunicacoes
Brasileiras SA Telecommunications 190,532,583 5,397,287
**Telebras-
Telecomunicacoes
Brasileiras SA, pfd. Telecommunications 132,783,968 4,428,536
Telecomunicacoes de Rio
de Janeiro SA, pfd. Telecommunications 11,355,544 567,469
Unibanco-Uniao de
Bancos Brasileiros
SA, pfd. Banking 75,226,584 1,799,554
Vale de Rio Doce, pfd. Metals & Mining 29,909,650 4,484,011
------------
56,538,504
- ----------------------------------------------------------------------------------------------
Chile: 0.1%
Antofagasta Holdings
PLC Metals & Mining 150,000 770,356
- ----------------------------------------------------------------------------------------------
China: 2.1%
China First Pencil Co.
Ltd., B Recreation, Other Consumer Goods 608,400 152,100
China Southern Glass
Co. Ltd., B Multi-Industry 496,000 314,094
China Textile Machinery
Co. Ltd., B Machinery & Engineering 816,000 106,080
Chiwan Wharf Holdings
Ltd., B Transportation 2,132,000 1,060,792
Guangzhou Shipyard
International Co.
Ltd., H Machinery & Engineering 2,438,000 1,023,999
</TABLE>
11
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------------
China (cont.)
**Luoyang Glass Co.
Ltd., H Miscellaneous Materials & Commodities 503,000 $ 255,147
Shandong Huaneng Power Utilities--Electrical & Gas 192,400 1,467,050
Shanghai Chlor-Alkali
Chemical Co. Ltd., B Chemicals 3,831,000 888,792
Shanghai Erfangji
Textile Machinery Co.
Ltd., B Machinery & Engineering 2,940,000 435,120
**Shanghai Industrial
Sewing Machine Corp. Machinery & Engineering 930,000 171,120
Shanghai Jin Jiang
Tower Co. Ltd., B Leisure & Tourism 680,000 217,600
Shanghai Jinqiao Export
Processing Zone
Development, B Real Estate 1,829,300 878,064
Shanghai Lian Hua Fibre
Corp., B Textiles & Apparel 1,126,560 270,374
**Shanghai Lujiaxui
Finance & Trade Zn
Dev Stock Co Ltd, B Real Estate 1,194,000 838,188
**Shanghai Narcissus
Electric Appliances
Co. Ltd., B Appliances & Household Durables 660,000 171,600
Shanghai Refrigerator
Compressor Co.
Ltd., B Industrial Components 160,000 57,280
**Shanghai Rubber Belt
Co. Ltd., B Industrial Components 41,000 5,904
**Shanghai Steel Tube
Co. Ltd., B Machinery & Engineering 2,257,640 383,799
Shanghai Tyre & Rubber
Co. Ltd., B Industrial Components 1,106,000 331,800
Shanghai Vacuum
Electron Devices Co.
Ltd., B Appliances & Household Durables 1,593,759 325,127
Shanghai Wingsung
Stationery Co. Ltd.,
B Recreation, Other Consumer Goods 180,000 35,100
Shanghai Yaohua
Pilkington Glass, B Building Materials & Components 2,183,000 2,183,000
Shenzhen China Bicycles
Co. (Holdings) Ltd.,
B Recreation, Other Consumer Goods 1,562,500 504,827
Shenzhen Gintian
Industrial Co. Ltd.,
B Multi-Industry 625,067 258,499
Shenzhen Huafa
Electronics Co. Ltd.,
B Appliances & Household Durables 50,000 10,016
Shenzhen Properties &
Resources Develop.
(Group) Ltd., B Real Estate 1,659,600 546,923
Shenzhen Tellus
Machinery &
Electronics Co. Ltd.,
B Multi-Industry 38,000 7,907
Shenzhen Vanke Co.
Ltd., B Real Estate 1,702,000 593,890
Tsann Kuen Enterprise
Co. Ltd., B Electrical & Electronics 1,520,000 384,037
**Zhuhai Sez Lizhu
Pharmaceutical, B Chemicals 856,800 377,586
------------
14,255,815
- ---------------------------------------------------------------------------------------------------
Colombia: 0.1%
Promigas SA Multi-Industry 29,706 77,867
- ---------------------------------------------------------------------------------------------------
Czech Republic: 0.4%
**CEZ, GDR Utilities--Electrical & Gas 49,000 1,813,000
**CEZ, GDS Utilities--Electrical & Gas 26,000 962,000
------------
2,775,000
- ---------------------------------------------------------------------------------------------------
Greece: 5.3%
Alpha Credit Bank Banking 239,753 13,318,426
Alpha Leasing SA Financial Services 102,480 2,506,849
Delta Dairy SA, pfd. Food & Household Products 71,544 1,376,213
Elais Oleaginous Co. Food & Household Products 61,200 1,985,652
Ergo Bank SA Banking 119,220 5,488,023
Etba Leasing Financial Services 103,940 1,909,234
Fourlis Brothers Corp.
SA Appliances & Household Durables 115,450 1,463,407
Hellas Can--Container
Manufacturers Food & Household Products 102,580 1,939,001
Hellenic Bottling Co.
SA Food & Household Products 36,120 1,073,126
Intracom SA Electrical & Electronics 9,000 248,176
National Bank of Greece
SA Banking 46,150 2,520,557
Titan Cement Co., SA Building Materials & Components 57,310 2,176,781
X. Benrubi & Son SA Food & Household Products 182,470 1,128,061
------------
37,133,506
- ---------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------------
Hong Kong: 13.2%
C.P. Pokphand Co. Ltd. Food & Household Products 4,794,000 $ 1,688,290
Cheung Kong Holdings
Ltd. Multi-Industry 3,036,000 15,027,372
China Overseas Land &
Investment Ltd. Real Estate 3,496,000 700,302
CNT Group Ltd. Multi-Industry 21,987,000 1,505,998
Cross Harbour Tunnel
Co. Ltd. Transportation 799,010 1,538,583
Dairy Farm
International
Holdings Ltd. Multi-Industry 1,846,513 1,588,001
Dickson Concepts
International Ltd. Merchandising 1,325,000 791,973
East Asiatic Co. Ltd. Wholesale & International Trade 1,684,000 235,044
**Fu Hui Jewellery Co.
Ltd. Recreation, Other Consumer Goods 3,000,000 174,468
Gold Peak Industries
Ltd. Electrical & Electronics 253,000 107,899
Goldlion Holdings Ltd. Textiles & Apparel 4,114,000 1,302,605
Great Wall Electronic
International Ltd. Electrical & Electronics 802,000 69,444
Hang Lung Development
Co. Ltd. Real Estate 5,201,000 8,267,505
**Hang Lung Development
Co. Ltd., wts. Real Estate 418,600 71,950
Hongkong Electric
Holdings Ltd. Utilities Electrical & Gas 376,000 1,277,986
HSBC Holdings PLC Banking 981,562 12,590,146
IMC Holdings Ltd. Transportation 145,000 95,570
Jardine International
Motor Holdings Ltd. Automobiles 1,372,000 1,347,566
Jardine Matheson
Holdings Ltd. Multi-Industry 190,210 1,398,044
Jardine Strategic
Holdings Ltd. Multi-Industry 1,226,250 3,948,525
**Jardine Strategic
Holdings Ltd., wts. Multi-Industry 136,250 59,950
JCG Holdings Ltd. Banking 636,000 419,189
Joyce Boutique Holdings
Ltd. Merchandising 5,474,000 1,181,418
K Wah International
Holdings Ltd. Building Materials & Components 10,868,602 1,924,318
Lai Sun Development Co.
Ltd. Real Estate 11,467,000 1,407,848
Lai Sun Garment
International Ltd. Multi-Industry 1,122,000 1,167,270
Laws International
Holdings Ltd. Textiles & Apparel 3,128,000 545,737
Leefung-Asco Printers
Holdings Ltd. Broadcasting & Publishing 470,000 75,926
Luks Industrial Co.
Ltd. Appliances & Household Durables 700,000 75,086
Ming Pao Enterprise
Corp. Ltd. Broadcasting & Publishing 1,940,000 1,027,941
New World Development
Co. Ltd. Real Estate 2,766,491 9,206,382
S. Megga International
Holdings Ltd. Electronic Components & Instruments 1,626,000 109,271
Semi-Tech Co. Ltd. Appliances & Household Durables 941,207 1,514,387
South Sea Development
Co. Ltd. Broadcasting & Publishing 1,845,000 90,607
Stelux International
Holdings Ltd. Multi-Industry 5,477,881 1,610,558
Sun Hung Kai & Co. Ltd. Financial Services 5,952,000 2,230,712
Sun Hung Kai Properties
Ltd. Real Estate 1,255,000 9,285,424
Swire Pacific Ltd., B Multi-Industry 240,000 291,556
Tian An China
Investments Co. Ltd. Real Estate 2,451,000 380,108
Tungtex (Holdings) Co.
Ltd. Textiles & Apparel 2,972,000 556,928
Vitasoy International
Holdings Ltd. Food & Household Products 694,000 275,795
Wai Kee Holdings Ltd. Construction & Housing 386,000 73,331
Wheelock & Co. Ltd. Multi-Industry 1,228,000 2,039,313
Wing Shan International
Ltd. Utilities Electrical & Gas 544,000 73,116
Wo Kee Hong Holdings
Ltd. Merchandising 4,054,000 943,059
Yaohan Hongkong Corp.
Ltd. Merchandising 4,702,000 382,830
Yue Yuen Industrial
Holdings Ltd. Recreation, Other Consumer Goods 4,969,000 1,207,284
------------
91,882,615
- -------------------------------------------------------------------------------------------------
Hungary: 0.3%
Chinoin Pharmaceutical
& Chemical Works Co.
Ltd. Health & Personal Care 2,000 605,765
Fotex First Hungarian-
American
Photo-Service Multi-Industry 572,000 836,858
**Ibusz Leisure & Tourism 38,280 322,275
------------
1,764,898
- -------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ----------------------------------------------------------------------------------------
Indonesia: 5.0%
PT Anwar Sierad, fgn. Food & Household Products 1,023,500 $ 643,422
PT Aqua Golden
Mississippi, fgn. Beverages & Tobacco 138,000 127,032
PT Astra International,
fgn. Multi-Industry 4,500 7,982
PT Bank International
Indonesia, fgn. Financial Services 88,800 285,101
PT Bank PDFCI, fgn. Financial Services 243,000 147,306
PT Barito Pacific
Timber, fgn. Forest Products & Paper 8,446,000 12,136,147
PT BBL Dharmala
Finance, fgn. Financial Services 833,000 991,221
PT Branta Mulia, fgn. Industrial Components 349,200 544,890
PT Charoen Pokphand
Indonesia, fgn. Food & Household Products 431,000 936,639
PT Duta Anggada Realty,
fgn. Multi-Industry 837,500 676,920
PT Duta Pertiwi
Nusantura, fgn. Chemicals 59,813 20,815
PT Eratex Djaja, fgn. Textiles & Apparel 328,000 147,283
PT Ficorinvest Bank,
fgn. Financial Services 140,000 81,724
PT Gajah Surya Multi
Finance, fgn. Financial Services 1,294,000 697,261
PT Ganda Wangsa Utama,
fgn. Textiles & Apparel 463,600 161,334
PT Hadtex Indosyntec,
fgn. Textiles & Apparel 1,417,500 922,934
PT Hotel Prapatan, fgn. Leisure & Tourism 32,500 21,526
PT Intan Wijaya
Chemical Industry,
fgn. Chemicals 141,000 47,485
PT Inter-Pacific Bank,
fgn. Financial Services 589,500 393,750
PT Jakarta
International Hotel &
Development, fgn. Real Estate 502,000 631,163
PT Japfa Comfeed
Indonesia, fgn. Food & Household Products 1,661,000 1,156,062
PT Metrodata
Electronic, fgn. Electrical & Electronics 45,000 33,341
**PT Multibreeder
Adirama, fgn. Food & Household Products 221,250 268,242
PT Multipolar Corp.,
fgn. Electrical & Electronics 141,000 85,474
PT Polysindo Eka
Perkasa, fgn. Textiles & Apparel 8,312,000 4,665,468
**PT Pudjiadi Prestige
Ltd., fgn. Real Estate 612,000 405,344
+*PT Sarasa Nugraha,
fgn. Textiles & Apparel 2,890,000 3,244,275
PT Sinar Mas Multi
Artha, fgn. Multi-Industry 2,000,000 2,110,463
PT Summarecon Agung,
fgn. Real Estate 854,138 613,660
PT Ultra Jaya Milk,
fgn. Food & Household Products 1,800 1,617
PT Unggul Indah Corp.,
fgn. Chemicals 2,937,000 2,637,628
------------
34,845,509
- ----------------------------------------------------------------------------------------
Israel: 0.6%
**Bank Hapoalim BM Banking 267,348 420,193
Clal Industries Ltd. Multi-Industry 151,778 900,735
**Discount Investment
Corp. Multi-Industry 34,783 2,217,030
**The First
International Bank of
Israel Banking 3,192 394,270
------------
3,932,228
- ----------------------------------------------------------------------------------------
Korea (South): 0.8%
Central Investment &
Finance Corp. Financial Services 86,251 1,967,876
Dae Yu Co. Textiles & Apparel 348 7,619
**Dae Yu Co. Ltd., new Textiles & Apparel 919 19,381
Daegu Bank Co. Ltd. Banking 79,700 955,454
**Daegu Bank Co. Ltd.,
new Banking 15,272 173,012
Daehan Synthetic Fiber
Co. Ltd. Textiles & Apparel 6,000 989,120
Hae In Corp. Ltd. Merchandising 3,500 228,487
Hankook Cosmetics Co.
Ltd. Health & Personal Care 14,940 571,395
Samseong Publishing Co.
Ltd. Business & Public Services 10,550 224,009
Yuhwa Textiles & Apparel 5,440 294,151
------------
5,430,504
- ----------------------------------------------------------------------------------------
Malaysia: 2.7%
Federal Flour Mills
Bhd. Food & Household Products 766,000 2,537,100
Malayawata Steel Bhd.,
fgn. Metals & Mining 1,139,000 2,279,869
Malaysian International
Shipping Corp.
Bhd., fgn. Transportation 1,943,333 5,699,275
Oriental Holdings Bhd.,
fgn. Automobiles 657,000 3,503,281
</TABLE>
14
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------------
Malaysia (cont.)
Perlis Plantations
Bhd., fgn. Multi-Industry 847,400 $ 2,815,398
Shangri-La Hotels
(Malaysia) Bhd. Leisure & Tourism 1,741,000 1,999,508
------------
18,834,431
- -------------------------------------------------------------------------------------------------
Mexico: 10.0%
Cemex SA, B Building Materials & Components 1,252,875 4,520,373
Cifra SA, C Merchandising 4,172,000 5,500,365
DESC Sociedad de
Fomento Industrial
SA, A Multi-Industry 104,000 346,112
DESC Sociedad de
Fomento Industrial
SA, B Multi-Industry 548,544 1,821,166
DESC Sociedad de
Fomento Industrial
SA, C Multi-Industry 113,000 370,640
Grupo Financiero
Banamex Accival SA, B Banking 3,704,000 5,630,080
Grupo Financiero
Banamex Accival SA, L Banking 1,964,950 2,986,724
Grupo Financiero
Bancomer SA de CV, B Banking 15,276,934 4,424,200
Grupo Financiero
Bancomer SA de CV, L Banking 2,083,219 549,970
**Grupo Financiero
Serfin SA de CV, rts. Banking 537,000 1,140
Grupo Financiero Serfin
SA, B Banking 537,000 374,611
Grupo Industrial Alfa
SA, A Multi-Industry 449,262 5,455,838
Telmex-Telefonos de
Mexico SA, L Telecommunications 181,000 267,011
Telmex-Telefonos de
Mexico SA, L, ADR Telecommunications 1,056,500 31,298,813
Transportacion Maritima
Mexicana SA de CV,
ADR, A Transportation 15,200 76,000
**Tubos de Acero de
Mexico SA Metals & Mining 294,357 1,436,462
Vitro SA Food & Household Products 1,417,200 4,031,651
------------
69,091,156
- -------------------------------------------------------------------------------------------------
Pakistan: 0.2%
**Bank of Punjab Banking 530,800 406,937
Khadim Ali Sham Bukhari
& Co. Ltd. Financial Services 199,000 229,648
National Development
Leasing Corp. Financial Services 253,125 220,613
**National Development
Leasing Corp, rts. Financial Services 20,250 11,112
+*Pakistan Telecom
Corp. PTC Telecommunications 360,000 383,486
**Union Bank Ltd. Banking 383,625 278,626
------------
1,530,422
- -------------------------------------------------------------------------------------------------
Philippines: 3.4%
Keppel Philippine
Holdings Inc., B Machinery & Engineering 195,810 93,918
Philex Minning Corp., B Metals & Mining 6,594,610 942,456
Philippine Long
Distance Telephone
Co. Telecommunications 193,105 13,855,284
Philippine National
Bank Banking 236,310 2,752,635
RFM Corp. Food & Household Products 18,967,500 4,975,812
Sime Darby Pilipinas
Inc. Industrial Components 959,500 1,014,350
------------
23,634,455
- -------------------------------------------------------------------------------------------------
Portugal: 5.8%
Banco Chemical Portugal Banking 89,970 904,620
Banco Comercial
Portugues SA Banking 959,214 12,693,358
Banco Espirito Santo e
Comercial de Lisboa Banking 407,600 6,809,121
Banco Portugues de
Investimento SA Banking 476,300 8,318,158
Banco Totta & Acores SA Banking 153,451 3,251,525
BCP Bank & Trust Co.
Ltd., 8.75%,
conv., 5/21/02 Corporate Bond 3,000,000* 4,187,964
Cel-Cat Fabrica
Nacional de
Conductores
Electricos SA Electronic Components & Instruments 9,522 222,267
+Compta-Equipamentos e
Servicos de
Informatica SA Business & Public Services 62,700 716,143
Espirito Santo
Financial Holding SA,
ADR Banking 274,420 3,190,133
------------
40,293,289
- -------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ----------------------------------------------------------------------------------------------
Singapore: 1.5%
Acma Ltd. Electrical & Electronics 60,000 $ 190,626
Acma Ltd., fgn. Electrical & Electronics 288,000 915,005
Chemical Industries
(Far East) Ltd. Chemicals 589,000 2,170,555
First Capital Corp.
Ltd., fgn. Real Estate 55,000 170,018
G.P. Batteries
International Ltd. Electrical & Electronics 37,000 90,650
Hai Sun Hup Group Ltd. Transportation 276,000 165,896
**Hai Sun Hup Group
Ltd., new Transportation 276,000 161,946
Hinds Hotels
International Ltd. Leisure & Tourism 268,000 306,834
Hinds Hotels
International Ltd.,
fgn. Leisure & Tourism 188,000 215,242
**Hotel Properties
Ltd., fgn. Leisure & Tourism 120,000 212,093
Inchcape Bhd., fgn. Wholesale & International Trade 186,000 606,912
Isetan (Singapore)
Ltd., fgn. Merchandising 61,000 124,837
Jaya Holdings Ltd. Transportation 1,881,000 1,669,009
Jaya Holdings Ltd.,
3.50%, conv., 9/7/97 Corporate Bond 376,200* 228,143
Jaya Holdings Ltd.,
3.00%, conv., 8/31/98 Corporate Bond 80,400* 94,927
**Jaya Holdings Ltd.,
wts. Transportation 75,240 48,455
**Osprey Maritime Ltd. Transportation 132,000 260,040
Prima Ltd. Food & Household Products 105,000 390,698
Singapore Bus Service
Ltd., fgn. Transportation 249,600 1,745,860
TIBS Holdings Ltd. Transportation 100,000 271,914
**Tibs Holdings Ltd.,
wts. Transportation 30,000 20,394
Wing Tai Holdings Ltd.,
fgn. Real Estate 124,000 238,683
------------
10,298,737
- ----------------------------------------------------------------------------------------------
South Africa: 2.0%
Amalgamated Banks of
South Africa Ltd. Banking 569,238 2,175,980
BTR Dunlop Ltd. Industrial Components 284,500 465,528
Del Monte Royal Foods
Ltd. Food & Household Products 393,800 530,662
Engen Ltd. Energy Sources 620,791 3,755,903
First National Bank
Holdings Ltd. Banking 479,300 3,064,620
Nedcor Ltd. Banking 234,137 2,833,146
Rembrandt Group Ltd. Multi-Industry 188,800 1,298,041
------------
14,123,880
- ----------------------------------------------------------------------------------------------
Sri Lanka: 0.1%
Associated Motorways
Ltd. Automobiles 100,512 101,820
**Ceylon Holiday
Resorts Ltd. Recreation, Other Consumer Goods 185,000 208,995
**Kelani Tyres Ltd. Industrial Components 700 233
Lanka Walltile Ltd. Multi-Industry 34,000 41,871
United Motor Lanka Ltd. Automobiles 112,000 54,504
------------
407,423
- ----------------------------------------------------------------------------------------------
Thailand: 2.4%
American Standard
Sanitaryware Public
Co. Ltd., fgn. Health & Personal Care 53,000 880,292
Asia Fibre Public Co.
Ltd., fgn. Textiles & Apparel 669,500 589,898
Ayudhya Insurance
Public Co. Ltd., fgn. Insurance 150,900 1,127,853
Bangkok Bank Public Co.
Ltd. Banking 336,000 2,940,085
Bangkok Land Co. Ltd.,
fgn. Real Estate 572,000 967,430
Bank of Ayudhya Ltd. Banking 66,000 312,822
Bank of Ayudhya Ltd.,
fgn. Banking 242,400 1,188,187
Chareon Pokphand
Feedmill Public
Co. Ltd., fgn. Food & Household Products 66,000 401,053
Charoen Pokphand
Feedmill Public
Co. Ltd. Food & Household Products 71,000 422,807
Hua Thai Manufacturing
Public Co. Ltd. Textiles & Apparel 51,000 136,358
Karat Sanitaryware
Public Co. Ltd., fgn. Building Materials & Components 148,800 581,697
**Kian Gwan (Thailand)
Public Co. Ltd., fgn. Real Estate 104,000 320,194
**Royal Ceramic
Industry Public Co.
Ltd., fgn. Building Materials & Components 206,700 498,224
</TABLE>
16
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------------
Thailand (cont.)
Saha Pathanapibul Co
Ltd., fgn. Health & Personal Care 593,000 $ 1,135,072
Saha Union Public Co.
Ltd., fgn. Textiles & Apparel 1,130,300 1,820,110
Thai Asahi Glass Public
Co. Ltd. Building Materials & Components 94,910 207,622
Thai Asahi Glass Public
Co. Ltd., fgn. Building Materials & Components 32,000 70,002
Thai Farmers Bank
Public Co. Ltd. Banking 150,600 1,092,056
Thai Rayon Public Co.
Ltd. Textiles & Apparel 35,000 306,259
Thai Rayon Public Co.
Ltd., fgn. Textiles & Apparel 36,660 326,353
Thai Wacoal Public Co.
Ltd., fgn. Textiles & Apparel 157,700 1,284,088
United Motor Works
Public Co. Ltd. Machinery & Engineering 2,100 9,698
------------
16,618,160
- ---------------------------------------------------------------------------------------------------
Turkey: 5.9%
Akbank Banking 19,450,780 4,949,028
**Akbank, new Banking 8,649,890 2,103,049
Akcimento Ticaret AS Building Materials & Components 2,346,000 994,855
Aksigorta AS Insurance 5,370,000 1,044,487
Alcatel Teletas
Endustri Tic AS Telecommunications 1,687,000 591,394
Anadolu Anonim Turk
Sigorta Sirketi Insurance 654,000 144,955
Arcelik AS Appliances & Household Durables 17,447,261 5,327,107
Bagfas Bandirma Gubre
Fabrikalari AS Chemicals 3,162,000 1,466,041
Bekoteknik AS Appliances & Household Durables 15,428,758 2,023,901
Borusan AS Industrial Components 1,599,000 623,832
Celik Halat ve Sanayii
ve Ticaret AS Building Materials & Components 749,000 132,132
**Cimentas Izmir
Cimento Fabrikasi TAS Building Materials & Components 3,961,250 2,553,333
Cimsa Cimento Sanayi ve
Ticaret AS Building Materials & Components 2,000,000 1,424,856
Compagnie Financiere
Ottomane SA Banking 38,000 1,782,392
Cukurova Elektrik AS Utilities Electrical & Gas 6,000 2,816
Dardanel Onentas Food & Household Products 412,000 1,024,992
Finans Bank AS, br. Banking 11,303,031 1,482,700
**Izocam Ticaret ve
Sanayii AS, br. Building Materials & Components 1,563,795 367,827
Kartonsan Forest Products & Paper 3,781,500 1,475,311
**Kartonsan Karton San
Ve Tic AS, rts. Forest Products & Paper 2,521,000 463,262
Koc Holding AS Multi-Industry 1,032,000 1,015,312
Koc Yatirim ve Sanayii
Mamullesi Pazarlanca
AS Multi-Industry 5,022,984 1,562,050
Marshall Boya ve Vernik
Sanayii AS Industrial Components 2,538,060 373,117
**Marshall Boya Ve
Vernik Sanayii AS,
New Ord. Industrial Components 3,299,478 444,010
**Marshall Boya Ve
Vernik Sanayii AS,
rts. Industrial Components 2,538,060 157,857
Netas Northern Electric
Telekomunic Asyon AS Electrical & Electronics 169,000 58,289
Otosan Otomobil Sanayii
AS Automobiles 4,481,000 1,646,868
Tekstil Bankasi
Tekstilbank AS, br. Banking 757,160 52,230
Tofas Turk Otomobil
Fabrikasi AS Automobiles 634,000 559,222
**Trakya Cam Sanayii AS Miscellaneous Materials & Commodities 892,896 113,089
**Trakya Cam Sanayii
AS, new Miscellaneous Materials & Commodities 4,055,896 614,599
**Trakya Cam Sanayii
AS, rts. Miscellaneous Materials & Commodities 4,948,792 102,972
Turk Demir Dokum, br. Appliances & Household Durables 5,428,132 908,474
**Turkiye Demir Dokum,
rts. Appliances & Household Durables 4,071,201 196,432
Turkiye Garanti Bankasi
AS Banking 19,560,642 2,654,390
Vakif Finansal Kiralama
AS Financial Services 4,263,250 457,999
------------
40,895,180
- ---------------------------------------------------------------------------------------------------
Venezuela: 1.4%
Banco Venezolano de
Credito Banking 9,654 289,128
Ceramica Carabobo CA, A Building Materials & Components 234,000 164,211
Ceramica Carabobo CA,
A, ADR Building Materials & Components 130,000 91,228
Ceramica Carabobo CA, B Building Materials & Components 1,312,000 868,090
Consolidada Carabobo, A Building Materials & Components 2,488,000 233,835
</TABLE>
17
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------------
Venezuela (cont.)
Consolidada Carabobo, B Building Materials & Components 3,314,000 $ 307,313
Electricidad de Caracas Utilities--Electrical & Gas 4,653,764 4,137,068
Fabrica Nacional de
Cementos CA Building Materials & Components 285,995 23,654
H.L. Boulton & Co. SA Multi-Industry 12,712,011 366,385
Industrias Ventane Utilities--Electrical & Gas 280,000 87,158
Manufacturera de
Aparatos Domesticos
SA Appliances & Household Durables 180,613 316,865
Mavesa SA, ADR Food & Household Products 365,875 1,082,036
Siderurgica Venezolana
Sivensa Saica Svs Metals & Mining 147,569 41,793
Siderurgica Venezolana
Sivensa Saica Svs,
ADR Metals & Mining 201,550 285,403
Vencemos de Cementos SA Building Materials & Components 816,223 981,922
Venezolana de Cementos-
Vencemos Building Materials & Components 309,920 340,213
Venezolana De
Prerreducidos Caroni
Venprecar CA Metals & Mining 118 714
------------
9,617,016
------------
TOTAL LONG TERM
SECURITIES (cost
$566,030,590) 544,211,094
- -----------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 22.6% (cost $156,711,072)
- -----------------------------------------------------------------------------------------------
U S Treasury Bills,
5.27% to 5.65% with
maturities to 8/24/95 U.S. $157,495,000 156,813,327
- -----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS:
101.1% (cost
$722,741,662) 701,024,421
OTHER ASSETS, LESS
LIABILITIES: (1.1%) (7,474,499)
------------
TOTAL NET ASSETS: 100.0% $693,549,922
============
</TABLE>
*PRINCIPAL AMOUNT IN CURRENCY OF COUNTRY INDICATED.
**NON-INCOME PRODUCING.
+SEE NOTE 5.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities,
at value (identified
cost $722,741,662) $701,024,421
Cash 530,565
Receivables:
Investment securities
sold 759,419
Capital shares sold 5,052,004
Dividends and interest 2,644,910
Unamortized organization
costs 9,142
------------
Total assets 710,020,461
------------
Liabilities:
Payables:
Investment securities
purchased 14,598,048
Capital shares redeemed 7,326
Accrued expenses 1,865,165
------------
Total liabilities 16,470,539
------------
Net assets, at value $693,549,922
============
Net assets consist of:
Undistributed net invest-
ment income $ 9,343,761
Unrealized depreciation on
investments (21,717,241)
Accumulated net realized
gain 1,957,470
Net capital paid in on
shares of capital stock 703,965,932
------------
Net assets, at value $693,549,922
============
Shares outstanding 61,486,541
============
Net asset value per share
($693,549,922 / 61,486,541) $ 11.28
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
for the six months ended June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of $662,349 foreign taxes
withheld)
Dividends $ 9,574,867
Interest 4,553,773
-----------
Total income $14,128,640
Expenses:
Management fees (Note 3 ) 3,764,222
Administrative fees (Note 3) 323,377
Transfer agent fees (Note 3) 5,000
Custodian fees 570,000
Reports to shareholders 17,500
Audit fees 18,000
Legal fees 6,500
Registration and filing fees 50,000
Directors' fees and expenses 24,000
Amortization of organization costs 706
Other 5,574
-----------
Total expenses 4,784,879
-----------
Net investment income 9,343,761
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 3,025,650
Foreign currency transactions (910,715)
-----------
2,114,935
Net unrealized depreciation on investments (2,592,178)
-----------
Net realized and unrealized (loss) (477,243)
-----------
Net increase in net assets resulting from operations $ 8,866,518
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 9,343,761 $ 8,480,304
Net realized gain from security and foreign
currency transactions 2,114,935 13,497,874
Net unrealized depreciation (2,592,178) (88,281,405)
------------ ------------
Net increase (decrease) in net assets re-
sulting from operations 8,866,518 (66,303,227)
Distributions to shareholders:
From net investment income -- (8,480,304)
From net realized gain (1,107,139) (16,581,020)
Capital share transactions (Note 2) 102,912,261 251,809,430
------------ ------------
Net increase in net assets 110,671,640 160,444,879
Net assets:
Beginning of period 582,878,282 422,433,403
------------ ------------
End of period $693,549,922 $582,878,282
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Notes to Financial Statements (unaudited)
- -------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Emerging Markets Series (the Fund) is a separate series of Templeton Institu-
tional Funds, Inc. (the Company) which is an open-end, diversified management
investment company registered under the Investment Company Act of 1940. The
following summarizes the Fund's significant accounting policies.
a. Securities Valuations:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal ex-
change on which the securities are traded. Over-the-counter securities and
listed securities for which no sale is reported are valued at the mean between
the last current bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
and approved in good faith by the Board of Directors.
b. Foreign Currency Translations:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into foreign exchange contracts to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from invest-
ments.
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 substan-
tial influence over exchange of their currency. Under Brazilian law, whenever
there occurs a serious imbalance, Brazil's National Monetary Council may, for
a limited period, impose restrictions on foreign capital remittances abroad.
Exchange control regulations may restrict repatriation of investment income,
capital or the proceeds of securities sales by foreign investors.
c. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Reve-
nue Code applicable to regulated investment companies and to distribute all
its taxable income to its shareholders. Therefore, no provision has been made
for federal income taxes.
d. Unamortized Organization Costs:
Organization costs are being amortized on a straight line basis over a five
year period.
e. 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 secu-
rities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to sharehold-
ers, which are determined in accordance with income tax regulations, are re-
corded on the ex-dividend date.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At June 30, 1995, there were 520 million shares of capital stock authorized
($0.01 par value) of which 200 million shares have been classified as Fund
shares. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 13,666,882 $146,244,186 21,165,430 $266,579,142
Shares issued on
reinvestment of
distributions 184,653 1,977,091 1,798,076 21,032,117
Shares redeemed (4,362,876) (45,309,016) (2,916,467) (35,801,829)
---------- ------------ ---------- ------------
Net increase 9,488,659 $102,912,261 20,047,039 $251,809,430
========== ============ ========== ============
</TABLE>
22
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Company are also directors or officers of Templeton In-
vestment Management (Hong Kong) Limited (TIML), Templeton Global Investors,
Inc. (TGII), Franklin Templeton Distributors, Inc. (FTD), and Franklin Temple-
ton Investor Services, Inc. (FTIS), the Fund's investment manager, administra-
tive manager, principal underwriter and transfer agent, respectively. The Fund
pays monthly an investment management fee to TIML equal, on an annual basis, to
1.25% of the average daily net assets of the Fund. The Fund pays TGII monthly
its allocated share of an administrative fee of 0.15% per annum on the first
$200 million of the Company's aggregate average daily net assets, 0.135% of the
next $500 million, 0.10% of the next $500 million and 0.075% per annum of such
average net assets in excess of $1.2 billion. TGII has voluntarily agreed to
limit the total expenses of the Fund to an annual rate of 1.60% of the Fund's
average net assets through December 31, 1995. For the six months ended June 30,
1995, no such reimbursement was necessary. For the six months ended June 30,
1995, FTD did not receive any commissions from the sale of the Fund's shares
and FTIS received fees of $5,000.
An officer of the Company is a partner of Dechert Price & Rhoads, legal counsel
for the Company, which received fees of $6,500 for the six months ended June
30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended June 30, 1995 aggregated $157,148,435 and $38,884,968, respective-
ly. The cost of securities for federal income tax purposes is the same as that
shown in the investment portfolio. Realized gains and losses are reported on an
identified cost basis.
At June 30, 1995, the aggregate gross unrealized appreciation and depreciation
of portfolio securities based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 59,927,568
Unrealized depreciation (81,644,809)
------------
Net unrealized depreciation $(21,717,241)
============
</TABLE>
5. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as invest-
ments in portfolio companies in which the Fund owns 5% or more of the outstand-
ing voting securities. Investments in "affiliated companies" at June 30, 1995
amounted to $4,343,904. For the six months ended June 30, 1995, dividend income
from affiliated companies was $17,710.
23
<PAGE>
Templeton Institutional Funds, Inc.
Special Meeting of Shareholders, May 4, 1995
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on May 4, 1995. The purpose of the
meeting was to elect twelve directors of the Fund. At the meeting, the follow-
ing persons were elected by the shareholders to serve as directors of the Fund:
John Wm. Galbraith, Charles B. Johnson, Nicholas F. Brady, Betty P. Krahmer,
Constantine D. Tseretopoulos, Frank J. Crothers, Fred R. Millsaps, S. Joseph
Fortunato, Harris J. Ashton, Andrew H. Hines, Jr., John G. Bennett, Jr., and
Gordon S. Macklin.
The results of the voting at the Special Meeting are as follows:
1. Election of twelve (12) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED AGAINST % ABSTAIN SHARES
---------- ----------- ------ ------- --- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John Wm. Galbraith* 92,515,630 53.41% 99.98% 0 0 15,858 0.01%
Charles B. Johnson 92,515,630 53.41 99.98 0 0 15,858 0.01
Nicholas F. Brady 92,515,630 53.41 99.98 0 0 15,858 0.01
Betty P. Krahmer 92,515,630 53.41 99.98 0 0 15,858 0.01
Constantine D.
Tseretopoulos 92,515,630 53.41 99.98 0 0 15,858 0.01
Frank J. Crothers 92,515,630 53.41 99.98 0 0 15,858 0.01
Fred R. Millsaps 92,515,630 53.41 99.98 0 0 15,858 0.01
S. Joseph Fortunato 92,515,630 53.41 99.98 0 0 15,858 0.01
Harris J. Ashton 92,515,630 53.41 99.98 0 0 15,858 0.01
Andrew H. Hines Jr. 92,515,630 53.41 99.98 0 0 15,858 0.01
John G. Bennett Jr.** 92,515,630 53.41 99.98 0 0 15,858 0.01
Gordon S. Macklin 92,515,630 53.41 99.98 0 0 15,858 0.01
</TABLE>
* AFTER HIS NOMINATION AND THE MAILING OF THE PROXY FOR THE SPECIAL MEETING,
SIR JOHN TEMPLETON STEPPED DOWN AS CHAIRMAN AND DIRECTOR OF THE U.S.
REGISTERED TEMPLETON FUNDS, EFFECTIVE APRIL 16, 1995, AND DECLINED TO STAND
FOR RE-ELECTION. CONSEQUENTLY, PURSUANT TO DISCRETIONARY AUTHORITY GRANTED IN
THE PROXIES, THE PROXY HOLDERS CAST THE PROXIES FOR JOHN WM. GALBRAITH,
FORMER VICE CHARIMAN OF TEMPLETON, GALBRAITH & HANSBERGER LTD.
** SUBSEQUENT TO THE SPECIAL MEETING, MR. JOHN G. BENNETT, JR., RESIGNED FROM
ALL OF THE TEMPLETON FUNDS, EFFECTIVE MAY 19, 1995.
24
<PAGE>
This report must be preceded or accompanied by the prospectus of the Templeton
Institutional Funds, Inc.
Investors should be aware that the value of investments made for the Fund may go
up as well as down and that the Investment Manager may make errors in selecting
the securities for the Fund's portfolio. Like any investment in securities, the
Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors. The Fund and Fund investors are not
protected from such losses by the Investment Manager. Therefore, investors who
cannot accept the risk of such losses should not invest in shares of the Fund.
Principal Underwriter:
FRANKLIN TEMPLETON
DISTRIBUTORS, INC.
700 Central Avenue
St. Petersburg, Florida 33701-3628
[RECYCLING PAPER LOGO Account Service: 1-800-684-4001
APPEARS HERE] Fund Information: 1-800-362-6243
ZT456 S 08/95
