<PAGE>
Templeton Institutional Funds, Inc.
TIFI Emerging Markets Series
SEMI-ANNUAL REPORT
June 30, 1996
[COVER ART APPEARS HERE]
[TEMPLETON LOGO 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
loss of the principal amount invested.
----------------------------------------------------------
Investing in developing markets involves special
considerations, which may include risks related to market
and currency volatility, adverse social and political
developments, and the relatively small size and lesser
liquidity of these markets. These special considerations are
discussed in the Fund's prospectus. The Fund is designed for
the aggressive portion of a well-diversified portfolio.
<PAGE>
June 30, 1996
Dear Shareholder...
Strong performance in emerging market equities so far this year
has been driven by renewed confidence and the return of foreign capital. With
many of the developing markets continuing to recover, the Templeton
Institutional Funds, Inc. Emerging Markets Series (the "Fund") returned 4.5% for
the quarter ended June 30, 1996, compared to the IFC Investable Composite return
of 4.3% for the same period. For the one year period ending June 30, 1996, the
Fund returned 11.7% versus the IFC Investable Composite return of 10.7%. On an
annualized basis, the Fund has had an average return of 9.4% since inception,
versus the IFC return of 13.4% for the same period. During the quarter, our
bottom-up analysis uncovered new opportunities in a number of countries,
including Croatia, Russia, Slovak Republic, Ecuador, Peru, Morocco, and
Zimbabwe.
- --------------------------------------------------------------------------------
Total Returns as of 6/30/96
<TABLE>
<CAPTION>
Cumulative
One-Year Three-Year Since
Average Average Inception/1,3/
Annual/1,2/ Annual/1,2/ (05/03/93)
<S> <C> <C> <C>
TIFI Emerging Markets Series 11.74 9.67 32.70
IFC Investable Composite Index 10.66 12.34 48.85
</TABLE>
/1/Past expense reductions by the Fund's manager increased the Fund's total
returns.
/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.
- --------------------------------------------------------------------------------
We believe that the emerging markets still offer good value over
the long term. Now that the memories of Mexico's peso devaluation have faded,
international investors seem to be prepared to accept the risks that accompany
the potential rewards of investing in developing markets. The main factor
driving the rise in emerging markets is the relative attractiveness of their
earnings and growth potential at a time when developed market investors,
particularly in the United States, are looking for alternative investment
opportunities/options. Many investors are taking profits from phenomenal gains
in the U.S. market and are searching for new investments in which to place their
funds. In addition, portfolios which are overweighted in U.S. investments are
being rebalanced. Both factors have augmented the pool of capital sweeping into
emerging markets. Foreign money pouring into emerging markets in 1996 is
expected to reach US$50 billion. While short of 1993's peak inflows of US$62
billion, this figure would represent a substantial improvement over 1995's US$15
billion inflow. Asia is expected to receive at least 30% of the total inflow.
continued...
[PHOTO OF MARK MOBIUS APPEARS HERE]
Mark Mobius joined Templeton in 1987 as managing director of its Far East
Division in Hong Kong, with responsibility for 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.
continued...
1
<PAGE>
TEMPLETON INSTITUTIONAL FUNDS, INC. EMERGING MARKETS SERIES
letter continued................................................................
GEOGRAPHIC DISTRIBUTION ON 6/30/96
(% of Total Equity)
[PIE CHART APPEARS HERE]
FUND ASSET ALLOCATION ON 6/30/96
[PIE CHART APPEARS HERE]
*Equity includes convertible and preferred stocks
Continued strong economic growth indicates to investors that Asian
companies still have positive earnings potential, especially when competing
markets like Japan and developed European markets are only likely to experience
3% growth this year at best. As Asian countries have the most developed markets
among the emerging markets, foreign investment is concentrated there. The
financial liberalization and market reforms that were initiated in Asia are
paying off, as Asian countries are able to harness the capital of foreign
investors for the productive use of local business development. Given the steady
economic growth and business expansion that characterizes Asian countries over
the past several years, it is no wonder that a considerable portion of the
overseas investment is finding a home in Asia.
The portfolio continued to maintain a large weighting in Hong Kong. We
have a very positive outlook on the prospects of the Hong Kong economy after the
China take-over. In general, we believe that Hong Kong companies should continue
to thrive after 1997, and earnings should continue to rise as a result of rapid
economic growth on the mainland, which should boost trade through Hong Kong and
increase earnings of companies with a presence on the mainland. Of course, past
performance is no guarantee of future results. It is difficult, however, to see
how the Chinese equity markets, in the short and medium term after 1997, could
overshadow those of Hong Kong. There is no replacement for experience and
investor confidence, of which Hong Kong has plenty. The real issue is to what
extent synergies can be found between the markets, and clues to this are already
evident in the guidance that the Hong Kong Stock Exchange has provided to the
Chinese B-share markets on matters such as disclosure. If China and Hong Kong
can maintain equity market cooperation after 1997, there is no reason not to
expect the Hong Kong, Shanghai, and Shenzhen exchanges to all flourish. Most
investors have now acquired a deeper appreciation of the economic realities of
Hong Kong, most importantly that Hong Kong is a rich economy precisely because
of its ties to China. Reunification after 1997 should only enhance the mutually
beneficial economic relationship. Recognizing the professionalism of Hong Kong's
market and its considerable involvement with China already, investors are
anticipating the new business opportunities that will be created by
reunification and perceive it as largely the same game on a bigger playing
field, not the end of the game itself. Based on our experience in Hong Kong and
China, we believe that the incentives exist on all sides to see that the process
is completed successfully. We believe that any short-term wrinkles will be
ironed out through negotiation and consultation, culminating in stronger stock
markets in both Hong Kong and China over the long term.
We continue to consider countries such as Singapore, Hong Kong, Israel,
and United Arab Emirates (U.A.E.) to be emerging rather than developed. In the
case of Israel and U.A.E., there are such extremes in income distribution that
they cannot be viewed as developed. Hong Kong will as of July 1, 1997, be part
of China, itself an emerging market.
2
<PAGE>
................................................................................
Singapore depends heavily on Malaysia for most of its resources and must be seen
as an integral part of this emerging market.
Central and Eastern Europe are other regions that present many
investment opportunities. Although some capital markets in Eastern Europe are
less structured and adhere to less restructive securities regulations than many
Asian countries, companies in these regions tend to have relatively lower
valuations and are generally under-researched. Hungary is one of the most
exciting of the emerging markets to spring from behind the Iron Curtain, and it
has attracted significant attention from foreign investors. Hungary's stock
market, the Budapest Stock Exchange (BSE), reopened in 1990 after a 45 year
hiatus. There are no regulations on entry into or exit from the equity market
for foreign investors, although there is a withholding tax on dividends and
long-term capital gains for listed shares on the BSE. Although Hungary's economy
is only half the size of Poland's, inflows of foreign direct and portfolio
investment into Hungary in 1994 were almost triple those into Poland. In a push
which began in November 1995, Hungary initiated the sale of five gas
distribution companies, which netted the government US$461 million. Despite
Hungary's disproportionate claim on foreign investment capital flowing into the
Central and Eastern European regions, Poland, the Czech Republic, and the Slovak
Republic have also attracted significant foreign investment capital. In Poland,
major privatizations include that of state airline Polskie Lotnicze SA and two
large state banks. Poland's Bank Gdanski became the first Polish company to go
global, when it issued 4.8 million Global Depository Receipt shares in London
back in December of 1995. At the same time, the Mass Privatization Program (MPP)
in Poland is well on its way. Between November 1995 and end of March 1996, 9.1
million vouchers were sold to the Polish public. This represents a 51% stake in
over 500 Polish companies that have been designated as part of the MPP program.
Lately, overall privatization seems to have slowed somewhat. The good news is
that we see most emerging markets moving swiftly towards expanded privatization,
culminating in healthy, variegated stock markets.
We are excited about the prospects for many emerging markets. Of
particular interest at the moment are Russia, India, Brazil, and China. These
emerging market countries are all embarking on rapid structural changes in their
economies, and all are large markets with the potential to become world leaders.
Apart from the 'big-four' emerging markets, the best bargains are likely to be
found in Hong Kong, Philippines, Indonesia, Thailand, Turkey, Greece, Portugal,
Argentina, and Mexico. In the Africa/Middle East region, we are becoming
interested in South Africa, Egypt, and Nigeria. Although Templeton chooses
stocks and not countries or regions, we are excited about prospects in Latin
America, where many countries have shown improving fundamentals in recent years,
including falling inflation and interest rates, and have also moved toward free
market economies.
Industry Diversification on 6/30/96
(% of Total Portfolio)
Banking 19.5%
Multi-industry 10.0%
Telecommunications 7.5%
Real Estate 7.1%
Food & Household Products 5.3%
Energy Sources 5.2%
Building Materials & Components 4.2%
Utilities, Electrical & Gas 3.9%
Chemicals 2.8%
Metals & Mining 2.7%
10 Largest Positions on 6/30/96
(% of Total Portfolio)
Telefonos de Mexico SA 2.9%
New World Development
Company Ltd. 2.0%
Centrais Eletricas Brasileiras SA
(Eletrobras) 2.0%
Banco Comercial Portugues SA
(BCP) 1.9%
Perez Companc SA 1.9%
Sun Hung Kai Properties Ltd. 1.8%
HSBC Holdings PLC 1.7%
Cheung Kong Holdings Ltd. 1.7%
Telecomunicacoes Brasileiras SA 1.7%
Banco de Galicia y Buenos Aires SA
1.4%
3
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
country focus continued.......................................................
- --------------------------------------------------------------------------------
Total Return Index Comparison/1/
$5,000,000 Investment: 05/03/93 - 6/30/96
[LINE GRAPH APPEARS HERE]
Period ended June 30, 1996
Since
Inception
One-Year (05/03/93)
Average Annual Total Return/1,2/ 11.74% 9.37%
Cumulative Total Return/1,3/ 11.74% 32.70%
/1/ Past expense reductions by the Fund's manager increased the Fund's total
returns.
/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.
- --------------------------------------------------------------------------------
Over the next 12 months, Templeton will continue to add depth. We
anticipate hiring more analysts and opening more offices around the world to
make our emerging markets group one of the most extensive emerging market
organizations. We now have offices in Argentina, Russia, Poland, South Africa,
India, Vietnam, Hong Kong, and Singapore. We intend to have offices in the
Middle East, Brazil, and Japan. While Japan is not an emerging market, it
enables us to cover Northeast Asia and companies in Japan, which have
investments in emerging markets. We continue to follow the time-tested Templeton
approach of being patient, long-term investors utilizing a bottom-up process
that we believe will continue to provide incremental value to our clients over
the long term.
Sincerely,
/s/ Donald F. Reed
Donald F. Reed, C.F.A., C.I.C.
President
Templeton Institutional Funds, Inc.
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
Managing Director
Templeton Asset Management Ltd.
For more complete portfolio information, call Templeton Fund Information,
toll-free, at 1-800-362-6243.
4
<PAGE>
................................................................................
The following are Dr. Mobius's thoughts
regarding a recent visit to Portugal
with the emerging markets team.
Country
-----------------------------------------------------------------
FOCUS LISBON, Portugal - It is always a pleasure coming to Portugal
since the people are so hospitable and the general atmosphere
is so genteel. When I first visited the country in 1988, it
was very much a backwater country and was still shaking off
the cobwebs of many years of dictatorship and military rule.
Now the cities and villages around the country are vibrant
with life and activity. Most evident is the growth in modern
retail distribution networks and a wider selection of consumer
goods in the shops.
We started our trip to Portugal with the emerging
markets, in general, experiencing a bull run, and Portugal was
no exception. The Lisbon BVL General Index was up about 15%
from January to May. In fact, the last ten years has seen
rapid expansion in the Portuguese stock market. In 1985, there
were only 24 listed companies on the exchange, yet by 1995,
that number had increased to 169. Although Portugal's economic
growth rate has not been fast compared to the spectacular
rates of growth seen in other emerging market countries,
particularly in Asia, growth here has still topped growth in
many developed countries over the last ten years, fueling the
rapid expansion of the stock market.
The Portuguese economy is being more and more affected
and directed by developments in the rest of Europe, and less
by domestic, political, and economic considerations. Just
prior to my visit, the country had changed to two political
elections, one for the parliament and one for the presidency.
The Socialist Party won the parliamentary elections, though
they fell short of obtaining an absolute majority by four
seats. However, it is clear that whichever party is in
control, the government remains committed to meeting the
Maastricht criteria so that Portugal can participate in the
European Monetary Union (EMU) and eventually share a common
currency with the rest of Europe. Policies are, therefore,
being designed by the new government to ensure that there is a
convergence of inflation, and interest rate levels, towards
the European Union (EU) levels. As such, there is considerable
political will to over-ride other domestic issues, such as
unemployment and the social security budget, that might
sidetrack Portugal from monetary convergence with its EU
neighbors. This political will is reinforced by Portugal's
proximity to its EU neighbor--Spain. It is
5
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
country focus ...............................................................
difficult for Portugal to ignore developments that are
occurring just across its border. For example, a 10%
difference in the value added tax charged on soft drinks
between Portugal and Spain results in large retailers in
Portugal purchasing international brands of soft drinks
from Spain.
There are two factors that should prove
favorable for the continued expansion of Portugal's
stock market. First, and foremost, the government is
looking to boost its privatization program. The proceeds
from privatization are expected to reach 380 billion
escudos in 1996 (approximately US$2.4 billion). The
auction block of companies in the government's
privatization programs include banks, a cement company,
a petroleum company, a shipyard, a power company,
additional shares in Portugal Telecom, two tobacco
companies, a mining company and an agriculture company.
Secondly, significant corporate restructuring has taken
place in recent years in order to cut costs and improve
corporate earnings, and this process is likely to
continue.
In recent years, there has been
considerable consolidation in the banking sector, which
is probably the most important sector in Portugal's
stock market. In 1995, Banco Portugues do Atlantico
(BPA) was purchased by Banco Comercial Portugues (BCP).
Also, Antonio Champalimaud, a Portuguese who returned
from Brazil, reassembled his financial empire, which was
nationalized in the 1970s, and combined Banco Portugues
Sotto Mayor (BPSM), Mundial Confianca, an insurance
company, and Banco Totta & Acores. The move towards the
merging of large groups of insurance and banking
companies has resulted in a number of synergies. One
company told us that they were able to save
significantly in the bulk buying of both supplies and
services, such as security services. By hiring one
security company to pick up cash from different
locations in different branches of their various
subsidiaries, they were able to save money. In another
case, they were also able to reduce their total
telephone bill by 6%. Company restructuring in Portugal,
however, can be an expensive process, due to the high
cost of dismissing workers. If a company fires a worker,
then the cost of dismissal is typically one month's
wages for every year of employment, given as a special
bonus. Although bank margins are good, generally
averaging between 2.5% and 3.7%, taxes are high, and
banks have been trying to reduce their tax burden by
moving some operations to tax havens, such as Madeira.
Another interesting transformation that
is taking place in Portugal is in the retail market.
Over the last decade, traditional retail outlets were
overtaken by large retail organizations. As a result,
hypermarket and supermarket sales now represent over 30%
of the total retail market. The country currently has
about 35 hypermarkets, 680 supermarkets and 280 hardgood
discount markets. Shopping centers are now splattered
across most parts of the country. However, supermarket
operators are being hampered by restrictions on the size
of stores that are allowed. These regulations were
designed to protect small retailers who were gradually
being squeezed out of
6
<PAGE>
................................................................................
the market by the entry of large hypermarkets and supermarkets. One
supermarket and hypermarket operator mentioned that since 1994, stores
of over 2,000 square meters were required to have national licenses that
were difficult to obtain. The company solved this problem by dividing
their large shopping centers into separate units of less than 2,000
square meters each. For example, each complex has separate stores for
hardgoods and furniture, and separate textile shops. They are all run as
a single store, but from a legal and tax point of view, they are
separate.
In the communication sector, the merger of three
government-owned, or government-controlled, telecommunication
companies, including Marconi (which was a listed company), into one
single organization, Portugal Telecom, has transformed the sector.
Portugal Telecom has the exclusive right to operate fixed lines until
the year 2003. As inter-urban and international call tariffs decline, it
is expected that traffic will rise. Before the reorganization, there was
a long waiting list for telephone lines. After the reorganization took
place, the rate at which installations have been made has accelerated.
[MAP OF PORTUGAL APPEARS HERE]
7
<PAGE>
Templeton Institutional Funds, Inc. Emerging Markets Series
spotlight.............................................................
The following are descriptions of several
holdings in the portfolio.
Spotlight
------------------------------------------------------
ON PT Anwar Sierad - The company was established in
CURRENT 1981 as a day-old chick (DOC) producer, and
HOLDINGS started commercial operations in 1983. It has
since grown to become Indonesia's third largest
poultry producer. The main market is Jakarta,
which has the highest purchasing power. Anwar
Sierad used to derive its earnings mainly from
DOC sales. In 1985, Anwar Sierad established
Betara Darma, which manages contract growing
farms, as well as operating a dressing plant and
a fast food restaurant chain called Hook's. In
1989, the company established Sierad Feedmill
which manufactures animal feed. In 1990, the
company established Sierad Corporation, which
distributes poultry equipment to the Group and
its subsidiaries, and trades in raw feed
materials to third parties both inside and
outside the Jabotabek area. Anwar Sierad's
operations are highly integrated, covering feed,
poultry equipment distribution, DOCs, contract
farming, slaughter house, and fast food
retailing. The main objective of the company in
establishing its subsidiaries is to support its
core business - the breeding of DOC final stock.
The company purchases broiler and layer parent
stock chicks, breeds them and hatches their eggs
into day-old final stock. The marketing and
distribution of the company's products are
handled by the marketing division of the company
together with Sierad Corporation. The DOCs are
sold directly to contract farmers or through
poultry shops.
Perlis Plantations Berhad - Incorporated in 1968
as a sugar cane plantation company, Perlis
Plantations (PPB) is the diversified flagship of
the Kuok group. It is currently the largest
sugar producer in Malaysia, and its sugar-based
operations command around 70% of the Malaysian
sugar refining market. About 65-70% of its raw
sugar requirements is sourced from Australia on
a long-term basis, 22-27% is purchased from the
open market, and the balance comes from its own
Chuping Plantation. Its fully integrated sugar
business is a 100% subsidiary of Malayan Sugar
Manufacturing and 50% is owned by Kilang Felda.
Through its KLSE-listed subsidiary Federal Flour
Mills Bhd, it is also the largest flour and
animal feed miller and palm oil refiner in
Malaysia. Through its associated company
Shangri-la Hotel, which is also listed on the
KLSE, it offers more than 2,200 rooms in hotels
8
<PAGE>
................................................................................
and resorts, primarily in Kuala Lumpur and
Penang. Shangri-la's wholly-owned Rasa Sayang
Beach Hotel owns and operates four resort hotels
with a total of approximately 1,300 rooms in
Penang. In the property sector, its subsidiary
PPB Hartabina is owner and developer of Taman
Segar in Cheras, Kuala Lumpur. Another
subsidiary Golden Communications owns a chain of
33 cinema houses in Malaysia. PPB is also
engaged in retailing through the Kerry Group.
Other subsidiaries and associated companies
manufacture formalin, adhesive resins, rubber
gloves, and detergent related products.
Daegu Bank - The bank was founded in October
1967 to provide banking services to the
relatively affluent and industrialized city of
Taegu, where Korea's textile industry is based.
The bank currently has a branch network of 139
outlets, three of which are located in Seoul,
two in Pusan, and the others mostly in other
parts of Southeastern Korea. Daegu Bank is
currently the largest of the ten regional banks
in Korea in terms of total assets. Daegu
accounts for over one-third of the total loans
and deposits of the Kyungsanbuk Province, and
8.4% and 6.6% of Korea's total loans and total
deposits, respectively. Approximately 80% of
Daegu Bank's loan portfolio is extended to small
to medium companies which are highly dependent
on the textile industry. The bank has a good
reputation for its conservative lending policy
and its relatively low non-performing loan
ratio. It achieved "A" ratings in 1993 in the
evaluation of its management and financial
performance by the Office of Bank Supervision.
The evaluation took into account the overall
profitability, liquidity, adequacy of internal
reserves, competence of the management, and the
public confidence showed in the bank. Daegu Bank
is expected to benefit from banking
deregulation, including a relaxation of
territorial restrictions on provincial banks by
allowing them to operate more branches in Seoul
and five other major cities. Expected to be
enacted in the near future, banking regulations
may also liberalize interest rates and
commissions, and allow provincial banks to enter
the investment trust business. Daegu Bank has
diversified into non-banking financial services
(through its wholly-owned subsidiary, Daegu
Mutual Savings & Finance Company) and leasing
(through its 57%-owned subsidiary, Daegu Leasing
Company).
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 YEAR ENDED MAY 3, 1993
ENDED DECEMBER 31 (COMMENCEMENT
JUNE 30, 1996 ------------------ OF OPERATIONS) TO
(UNAUDITED) 1995 1994 DECEMBER 31, 1993
------------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.75 $ 11.21 $ 13.22 $ 10.00
---------- -------- -------- --------
Income from investment
operations:
Net investment income .13 .19 .17 .04
Net realized and
unrealized gain (loss) 1.38 (.34) (1.65) 3.25
---------- -------- -------- --------
Total from investment
operations 1.51 (.15) (1.48) 3.29
---------- -------- -------- --------
Distributions:
Dividends from net
investment income (.01) (.17) (.17) (.04)
Distributions from net
realized gains (.02) (.14) (.36) (.03)
---------- -------- -------- --------
Total distributions (.03) (.31) (.53) (.07)
---------- -------- -------- --------
Change in net asset value
for the period 1.48 (.46) (2.01) 3.22
---------- -------- -------- --------
Net asset value, end of
period $ 12.23 $ 10.75 $ 11.21 $ 13.22
========== ======== ======== ========
TOTAL RETURN* 14.06% (1.23)% (11.39)% 32.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000) $1,315,117 $798,515 $582,878 $422,433
Ratio of expenses to
average net assets 1.52%** 1.52% 1.66% 1.60%**
Ratio of expenses, net of
reimbursement, to
average net assets 1.52%** 1.52% 1.60% 1.60%**
Ratio of net investment
income to average net
assets 2.69%** 2.00% 1.59% .91%**
Portfolio turnover rate 3.03% 13.47% 12.51% 9.42%
Average commission rate
paid (per share) $ .0018
</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, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
LONG TERM SECURITIES: 86.7%
- ---------------------------------------------------------------------------------------------
Argentina: 9.8%
Aluar Aluminio
Argentino SA, B Misc Materials & Commodities 294,679 $ 736,970
Astra Cia Argentina de
Petroleo SA Energy Sources 1,312,720 3,112,298
**Atanor Cia Nacional
Para la Industria
Quimica SA, D Chemicals 1,340,303 3,553,118
**Banco Bansud SA, B Banking 451,887 5,266,429
Banco de Galicia y
Buenos Aires SA, B Banking 2,785,449 17,833,472
Banco Frances del Rio
de la Plata SA Banking 710,315 6,736,279
Buenos Aires
Embotelladora SA, ADR Beverages & Tobacco 322,700 4,275,775
Capex SA, A Utilities Electrical & Gas 51,205 414,914
Central Costanera SA, B Utilities Electrical & Gas 506,468 1,864,492
**Ciadea SA Automobiles 443,332 3,126,648
Industrias
Petroquimicas Koppers
(IPAKO) Chemicals 1,257,372 4,653,998
Juan Minetti SA Building Materials & Components 183,913 846,313
Molinos Rio de Plata
SA, B Food & Household Products 1,157,525 12,274,306
Nobleza Piccardo Sdad
Industrial
Comercial y Financial Beverages & Tobacco 104,807 398,414
Perez Companc SA, B Energy Sources 3,755,202 24,643,244
**Quilmes Industrial SA Beverages & Tobacco 529,000 5,422,250
Quilmes Industrial SA,
reg Beverages & Tobacco 44,000 451,000
**Sevel Argentina SA, C Automobiles 1,161,574 3,369,811
**Siderar, A Metals & Mining 111,147 286,865
**Sociedad Comercial
del Plata Cadelplata
Come Multi-Industry 4,431,890 13,699,609
Transportadora de Gas
del Sur SA, B Energy Sources 1,062,647 2,615,079
YPF Sociedad Anonima,
ADR Energy Sources 558,610 12,568,725
**Zanella Hermanos SA Automobiles 743,582 284,153
------------
128,434,162
- ---------------------------------------------------------------------------------------------
Brazil: 9.7%
Banco Bradesco SA Banking 762,798,423 5,461,854
Banco Bradesco SA, pfd. Banking 111,832,898 913,240
**Banco do Brasil SA Banking 633,565,792 5,173,768
**Banco do Brazil SA,
pfd. Banking 374,389,390 2,964,095
**Banespa-Banco do
Estado de Sao Paulo
SA, pfd. Banking 708,897,530 2,647,379
Brasmotor SA, pfd. Multi-Industry 20,198,000 6,315,961
**Cia Mesbla SA, pfd. Merchandising 33,734,000 184,770
Copene-Petroquimica do
Nordeste SA, A, pfd. Chemicals 9,744,700 4,696,845
Duratex SA, pfd. Forest Products & Paper 174,535,900 7,543,552
Eletrobras-Centrais
Eletricas Brasileiras
SA Utilities Electrical & Gas 37,603,000 10,110,850
Eletrobras-Centrais
Eletricas Brasileiras
SA, B, pfd. Utilities Electrical & Gas 56,362,106 16,109,072
Itausa-Investimentos
Itau SA, pfd. Multi-Industry 18,672,704 14,318,560
**Mannesmann SA Machinery & Engineering 10,362,720 1,372,442
**Mannesmann SA, pfd. Machinery & Engineering 1,670,650 224,606
Marcopolo SA, B, pfd. Automobiles 7,243,800 1,558,194
Petrobras-Petroleo
Brasileiro SA, pfd. Energy Sources 111,739,666 13,742,816
Refripar-Refrigeracao
Parana Sa, pfd. Appliances & Household Durables 293,871,000 731,641
Telebras-
Telecomunicacoes
Brasileiras SA Telecommunications 303,867,531 17,854,090
**Telebras-
Telecomunicacoes
Brasileiras SA, pfd. Telecommunications 68,205,968 4,761,478
Telerj-Telecomunicacoes
do Rio de Janeiro
SA, pfd. Telecommunications 3,357,052 377,779
Unibanco-Uniao de
Bancos Brasileiros
SA, pfd. Banking 148,251,168 4,014,290
Vale de Rio Doce, pfd. Metals & Mining 332,941 6,448,943
------------
127,526,225
- ---------------------------------------------------------------------------------------------
Chile: 0.1%
Antofagasta Holdings
PLC Metals & Mining 197,000 988,182
- ---------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------------
China: 2.1%
**China First Pencil
Co. Ltd., B Recreation & Other Consumer Goods 597,400 $ 221,038
China Merchants Shekou
Port Service Co.
Ltd., B Transportation 600,000 263,540
China Southern Glass
Co. Ltd., B Building Materials & Components 2,554,800 1,501,707
China Textile Machinery
Co. Ltd., B Machinery & Engineering 816,000 110,976
Chiwan Wharf Holdings
Ltd., B Transportation 4,308,000 1,892,220
Foshan Electrical and
Lighting Co. Ltd., B Appliances & Household Durables 400,000 335,885
Guangdong Electric
Power Development Co
Ltd, B, 144A Utilities Electrical & Gas 657,000 420,134
**Guangshen Railway Co.
Ltd., ADR Transportation 140,000 2,677,500
Guangzhou Shipyard
International Co.
Ltd., H Machinery & Engineering 3,523,000 855,633
Luoyang Glass Co. Ltd.,
H Misc Materials & Commodities 445,000 105,778
Shandong Huaneng Power Utilities Electrical & Gas 195,000 1,608,750
Shanghai Chlor-Alkali
Chemical Co. Ltd., B Chemicals 4,831,000 1,178,764
Shanghai Dazhong Taxi
Shareholding Co.
Ltd., B Transportation 700,000 511,000
**Shanghai Erfangji
Textile Machinery Co.
Ltd., B Machinery & Engineering 3,557,400 448,232
**Shanghai Industrial
Sewing Machine Corp. Machinery & Engineering 930,000 128,340
**Shanghai Jin Jiang
Tower Co. Ltd., B Leisure & Tourism 3,129,500 888,778
Shanghai Jinqiao Export
Processing Zone
Development, B Real Estate 2,679,300 1,044,927
**Shanghai Lian Hua
Fibre Corp., B Textiles & Apparel 1,126,560 161,098
**Shanghai Lujiaxui
Finance & Trade Zn
Dev Stock Co Ltd, B Real Estate 4,878,000 3,629,232
**Shanghai Narcissus
Electric Appliances
Co. Ltd., B Appliances & Household Durables 726,000 123,420
Shanghai Pechemical Co.
Ltd., H Chemicals 5,254,000 1,493,240
Shanghai Refrigerator
Compressor Co.
Ltd., B Industrial Components 853,800 394,456
Shanghai Rubber Belt
Co. Ltd., B Industrial Components 41,000 6,642
**Shanghai Shangling
Electric Appliance, B Appliances & Household Durables 497,000 262,416
**Shanghai Steel Tube
Co. Ltd., B Machinery & Engineering 2,257,640 275,432
**Shanghai Tyre &
Rubber Co. Ltd., B Industrial Components 2,690,000 672,500
**Shanghai Vacuum
Electron Devices Co.
Ltd., B Appliances & Household Durables 2,668,335 480,300
Shanghai Wingsung Co.
Ltd., B Recreation & Other Consumer Goods 180,000 38,520
**Shanghai Yaohua
Pilkington Glass, B Building Materials & Components 3,697,500 2,218,500
Shenzhen China Bicycles
Co. (Holdings) Ltd.,
B Recreation & Other Consumer Goods 1,875,000 433,582
Shenzhen Gintian
Industry Co. Ltd., B Multi-Industry 750,080 247,095
Shenzhen Huafa
Electronics Co. Ltd.,
B Appliances & Household Durables 50,000 12,854
Shenzhen Properties &
Resources Develop.
(Group) Ltd., B Real Estate 2,100,560 860,224
Shenzhen Tellus
Machinery &
Electronics Co. Ltd.,
B Multi-Industry 41,800 9,720
Shenzhen Vanke Co.
Ltd., B Real Estate 2,107,300 903,819
Tsann Kuen Enterprise
Co. Ltd., B Appliances & Household Durables 1,520,000 822,763
Zhuhai Sez Lizhu
Pharmaceutical Group
Inc., B Health & Personal Care 858,800 290,677
------------
27,529,692
- -----------------------------------------------------------------------------------------------
Colombia: 1.3%
Banco Ganadero SA, ADR
C Banking 57,000 1,111,500
Cementos Argos SA Building Materials & Components 1,020,919 5,691,568
Cia Colombiana de
Tabacos SA Coltabaco Beverages & Tobacco 335,214 1,005,069
Compania Nacional de
Chocolates SA Food & Household Products 535,453 4,445,071
</TABLE>
12
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -----------------------------------------------------------------------------------------------
Colombia (cont.)
Compania Suramericana
de Seguros Insurance 277,112 $ 4,933,244
Promigas SA Utilities Electrical & Gas 59,705 195,795
------------
17,382,247
- -----------------------------------------------------------------------------------------------
Croatia: 0.1%
**Pliva DD, GDR, 144A Health & Personal Care 18,000 715,500
Pliva DD, GDR, reg S Health & Personal Care 1,000 39,750
------------
755,250
- -----------------------------------------------------------------------------------------------
Czech Republic: 1.6%
**CEZ Utilities Electrical & Gas 850 33,829
**CEZ, GDR Utilities Electrical & Gas 175,030 7,329,381
**CEZ, GDS, 144A Utilities Electrical & Gas 26,000 1,088,750
**Chemopetrol Group AS Chemicals 126,000 5,999,346
**Elektrarny Opatovice
AS Energy Sources 8,001 1,343,533
Komercni Banka AS Banking 7,822 638,258
**SPT Telecom AS Telecommunications 43,000 5,251,336
------------
21,684,433
- -----------------------------------------------------------------------------------------------
Ecuador: 0.1%
La Cemento Nacional CA,
GDR Multi-Industry 2,000 362,000
- -----------------------------------------------------------------------------------------------
Egypt: 0.2%
**Commercial
International Bank
Ltd. Banking 17,762 2,193,162
- -----------------------------------------------------------------------------------------------
Greece: 4.6%
Alpha Credit Bank Banking 319,670 16,877,194
Alpha Leasing SA Financial Services 159,480 3,235,346
Delta Dairy SA Food & Household Products 303,440 3,708,641
Delta Dairy SA, pfd. Food & Household Products 71,544 576,992
Elais Oleaginous Co. Food & Household Products 61,200 1,984,452
Ergo Bank SA Banking 139,500 7,683,953
Etba Leasing Financial Services 103,940 1,469,117
Fourlis Brothers Corp.
SA Appliances & Household Durables 115,250 1,676,886
Hellas Can--Container
Manufacturers Metals & Mining 126,280 2,703,563
**Hellenic
Telecommunications
Organizations OTE Telecommunications 312,910 5,190,234
Hellenic
Telecommunications
Organizations OTE,
144A Telecommunications 500,000 8,293,494
Intracom SA, reg. Electrical & Electronics 50,000 886,094
National Bank of Greece
SA Banking 48,320 2,376,328
Titan Cement Co., reg. Building Materials & Components 60,490 2,989,924
X. Benrubi & Son SA Food & Household Products 182,400 909,915
------------
60,562,133
- -----------------------------------------------------------------------------------------------
Hong Kong: 12.4%
Cheung Kong Holdings
Ltd. Multi-Industry 3,186,000 22,946,032
China Overseas Land &
Investment Ltd. Real Estate 3,496,000 844,559
CNT Group Ltd. Multi-Industry 22,606,934 1,372,639
Cross Harbour Tunnel
Co. Ltd. Transportation 1,097,010 2,175,384
Dairy Farm
International
Holdings Ltd. Merchandising 5,749,823 4,858,600
Dickson Concepts
(International) Ltd. Merchandising 879,000 1,124,193
**East Asiatic Co.
(Hong Kong) Ltd.
(The) Wholesale & International Trade 1,684,000 219,726
**Fu Hui Jewellery Co.
(H.K.) Ltd. Recreation & Other Consumer Goods 3,000,000 75,187
Gold Peak Industries
(Holdings) Ltd. Electrical & Electronics 64,000 36,172
Goldlion Holdings Ltd. Textiles & Apparel 2,158,000 1,853,916
**Great Wall Electronic
International Ltd. Electrical & Electronics 802,000 58,020
Hang Lung Development
Co. Ltd. Real Estate 7,492,000 14,082,434
</TABLE>
13
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------------
Hong Kong (cont.)
Hongkong Electric
Holdings Ltd. Utilities Electrical & Gas 1,852,000 $ 5,646,378
Hopewell Holdings Ltd. Construction & Housing 6,331,000 3,435,093
HSBC Holdings PLC Banking 1,518,858 22,957,257
IMC Holdings Ltd. Transportation 175,000 98,343
Jardine International
Motor Holdings Ltd. Automobiles 1,252,000 1,536,544
Jardine Matheson
Holdings Ltd. Multi-Industry 495,590 3,642,587
Jardine Strategic
Holdings Ltd. Multi-Industry 1,226,250 3,924,000
**Jardine Strategic
Holdings Ltd., wts. Multi-Industry 136,250 42,238
JCG Holdings Ltd. Financial Services 433,000 352,408
Joyce Boutique Holdings
Ltd. Merchandising 2,596,000 871,957
K Wah International
Holdings Ltd. Building Materials & Components 11,478,029 2,120,412
**K Wah International
Holdings Ltd., wts. Building Materials & Components 1,086,860 51,951
Lai Sun Development Co.
Ltd. Real Estate 17,979,000 3,669,776
**Lai Sun Development
Co. Ltd., wts. Real Estate 1,146,700 75,550
Lai Sun Garment
International Ltd. Multi-Industry 1,122,000 1,348,009
**Laws International
Holdings Ltd. Textiles & Apparel 3,128,000 355,604
Leefung-Asco Printers
Holdings Ltd. Broadcasting & Publishing 462,000 59,684
**Luks Industrial Co.
Ltd. Appliances & Household Durables 700,000 77,770
New World Development
Co. Ltd. Real Estate 5,751,183 26,672,799
NG Fund Hong Ltd. Food & Household Products 1,500,000 692,762
**S. Megga
International
Holdings Ltd. Electronic Components & Instruments 1,626,000 64,067
Semi-Tech (Global) Co.
Ltd. Appliances & Household Durables 1,506,362 2,325,489
**South Sea Development
Co. Ltd. Real Estate 1,845,000 50,053
Stelux International
Holdings Ltd. Multi-Industry 5,477,881 1,224,266
Sun Hung Kai & Co. Ltd. Financial Services 5,952,000 2,152,970
Sun Hung Kai Properties
Ltd. Real Estate 2,315,000 23,401,964
Swire Pacific Ltd., B Multi-Industry 215,000 295,805
Tian An China
Investments Co. Ltd. Real Estate 2,451,000 332,468
Tungtex (Holdings) Co.
Ltd. Textiles & Apparel 2,972,000 264,920
Wheelock & Co. Ltd. Multi-Industry 1,228,000 2,427,207
Wing Shan International
Ltd. Utilities Electrical & Gas 544,000 74,494
Wo Kee Hong Holdings
Ltd. Merchandising 5,148,000 665,052
**Wo Kee Hong Holdings
Ltd., wts. Merchandising 1,029,600 30,592
**Yaohan Hongkong Corp.
Ltd. Merchandising 4,702,000 230,825
Yue Yuen Industrial
(Holdings) Ltd. Recreation & Other Consumer Goods 9,839,000 2,796,344
------------
163,614,500
- -------------------------------------------------------------------------------------------------
Hungary: 0.6%
Chinoin Pharmaceutical
& Chemical Works Co.
Ltd. Health & Personal Care 2,031 811,670
Egis RT Multi-Industry 2,350 140,482
Egis RT Multi-Industry 29,000 1,733,606
**Fotex First
Hungarian-American
Photo-Service Multi-Industry 1,784,000 1,616,742
**Gedeon Richter Ltd. Multi-Industry 15,000 750,000
**Ibusz Leisure & Tourism 38,280 197,775
**Ibusz, new Leisure & Tourism 12,760 61,037
Inter-Europa Bank RT Banking 1,408 342,305
OTP Bank, GDR Banking 75,000 1,183,934
Pannonplast Plastic
Industries PLC Industrial Components 23,402 631,286
Pick Szeged RT Food & Household Products 20,000 865,887
Pick Szeged RT, GDR Food & Household Products 10,910 472,342
------------
8,807,066
- -------------------------------------------------------------------------------------------------
India: 0.2%
Arvind Mills Ltd. Textiles & Apparel 68,000 270,224
Bombay Dyeing &
Manufacturing Co.
Ltd. Chemicals 8,300 52,950
Grasim Industries Ltd
Ord INR10 Multi-Industry 11,300 183,549
</TABLE>
14
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------
India (cont.)
Indo Gulf Fertilisers &
Chemicals Corp. Ltd. Chemicals 162,000 $ 228,768
ITC Bhadrachalam
Paperboards Ltd. Forest Products & Paper 28,000 84,246
Steel Authority of
India Ltd. Metals & Mining 644,400 603,611
**Steel Authority of
India Ltd, GDR, reg S Metals & Mining 45,000 663,750
**Steel Authority of
India Ltd., GDR, 144A Metals & Mining 62,000 914,500
------------
3,001,598
- ---------------------------------------------------------------------------------------
Indonesia: 5.2%
**Asia Pulp & Paper Co.
Ltd., ADR Forest Products & Paper 81,700 1,000,825
PT Anwar Sierad, fgn. Food & Household Products 1,092,500 1,032,653
**PT Aqua Golden
Mississippi, fgn. Beverages & Tobacco 179,400 173,426
PT Astra International,
fgn. Multi-Industry 1,772,500 2,570,220
PT Bank Dagang Nasional
Indonesia, fgn. Banking 1,153,000 965,994
PT Bank PDFCI, fgn. Banking 243,000 227,078
PT Barito Pacific
Timber, fgn. Forest Products & Paper 16,669,500 10,922,014
PT BBL Dharmala
Finance, fgn. Financial Services 1,433,000 2,000,967
PT Bimantara Citra,
fgn. Multi-Industry 2,557,500 3,214,044
PT Branta Mulia, fgn. Automobiles 349,200 206,294
PT Charoen Pokphand
Indonesia, fgn. Food & Household Products 4,362,000 8,433,512
PT Dharmala Intiland,
fgn. Real Estate 2,624,000 2,029,302
PT Duta Anggada Realty,
fgn. Real Estate 1,076,000 739,678
PT Duta Pertiwi
Nusantura, fgn. Chemicals 59,813 19,274
PT Eratex Djaja, fgn. Textiles & Apparel 328,000 98,647
PT Ficorinvest Bank,
fgn. Banking 83,000 69,538
PT Gadjah Tunggal, fgn. Automobiles 7,070,500 3,493,480
PT Gajah Surya Multi
Finance, fgn. Financial Services 1,294,000 569,860
**PT Ganda Wangsa
Utama, fgn. Textiles & Apparel 463,600 139,429
PT Hotel Prapatan, fgn. Leisure & Tourism 32,500 23,040
PT Intan Wijaya
Chemical Industry,
fgn. Chemicals 141,000 54,522
PT Inter-Pacific Bank,
fgn. Banking 589,500 392,578
**PT Jakarta
International Hotel &
Development rts.,
fgn. Real Estate 1,363,500 307,556
PT Jakarta
International Hotel &
Development, fgn. Real Estate 909,000 781,096
PT Japfa Comfeed
Indonesia, fgn. Food & Household Products 1,661,000 963,416
PT Metrodata
Electronic, fgn. Electrical & Electronics 45,000 52,202
PT Multibreeder
Adirama, fgn. Food & Household Products 221,250 81,988
PT Pabrik Kertas Tjiwi
Kimia, fgn. Forest Products & Paper 969,000 988,776
PT Panasia Indosyntec,
fgn. Textiles & Apparel 3,969,000 1,065,789
PT Polysindo Eka
Perkasa, fgn. Textiles & Apparel 7,007,500 3,311,815
PT Polysindo Eka
Perkasa, rts., fgn. Textiles & Apparel 7,007,500 1,806,445
**PT Pudjiadi Prestige
Ltd., fgn. Real Estate 612,000 525,886
+PT Sarasa Nugraha,
fgn. Textiles & Apparel 2,890,000 713,963
PT Sinar Mas Agro
Resources &
Technology Corp.,
fgn. Food & Household Products 2,150,000 1,570,354
**PT Sinar Mas Multi
Artha, fgn. Financial Services 4,476,000 5,480,816
PT Sumalindo Lestari
Jaya, fgn. Forest Products & Paper 1,601,000 1,926,015
PT Summarecon Agung,
fgn. Real Estate 854,137 477,069
PT Tambang Timah
(Persero), fgn. Metals & Mining 250,500 462,793
PT Ultra Jaya Milk,
fgn. Food & Household Products 1,688,800 961,401
PT Unggul Indah Corp.,
fgn. Chemicals 2,937,000 3,028,485
PT United Tractors,
fgn. Machinery & Engineering 3,675,500 5,803,421
------------
68,685,661
- ---------------------------------------------------------------------------------------
Israel: 0.9%
Agis Industries Ltd. Health & Personal Care 19,316 134,486
Bank Hapoalim BM Banking 1,795,548 2,633,046
Clal Industries Ltd. Multi-Industry 788,808 4,063,267
</TABLE>
15
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------
Israel (cont.)
Discount Investment
Corp. Multi-Industry 66,433 $ 4,482,117
The First International
Bank of Israel Banking 9,612 1,066,049
------------
12,378,965
- ---------------------------------------------------------------------------------------------
Korea (South): 2.4%
Asia Cement Co. Ltd. Building Materials & Components 37,190 1,370,785
Boram Bank Co. Ltd. Banking 301,510 3,568,166
**Boram Bank Co. Ltd.,
rts. Banking 50,049 107,971
BYC Co. Ltd. Textiles & Apparel 3,730 459,813
**Central Investment &
Finance Corp. Financial Services 187,091 3,321,142
Dae Duck Electronics
Co. Ltd. Electrical & Electronics 16,120 588,205
Daegu Bank Co. Ltd. Banking 162,272 2,396,073
Daehan Synthetic Fiber
Co. Ltd. Textiles & Apparel 9,790 941,346
Dongkuk Steel Mill Co.
Ltd. Metals & Mining 105,880 2,258,042
Hae In Corp. Ltd. Merchandising 5,500 287,475
Hankook Cosmetics Co.
Ltd. Health & Personal Care 14,940 405,178
Korea First Bank Banking 91,000 804,215
Korea Iron & Steel
Works Co. Ltd. Metals & Mining 3,000 484,467
Korea Kumho
Petrochemical Chemicals 256,000 2,234,320
Kyong Nam Bank Banking 103,010 1,333,340
Kyung Dong Boiler Co.
Ltd. Energy Equipment & Services 27,573 880,351
Moon Bae Steel Co. Ltd. Metals & Mining 9,000 291,790
Shinsung Industries Co.
Ltd. Electrical & Electronics 14,000 438,363
Ssangyong Oil Refining
Co. Ltd. Energy Equipment & Services 308,000 7,138,067
**Tong Yang Investment
and Finance Co. Ltd. Financial Services 100,890 1,741,198
Yuhwa Textiles & Apparel 5,440 348,047
------------
31,398,354
- ---------------------------------------------------------------------------------------------
Malaysia: 3.3%
Aokam Perdana Bhd. Multi-Industry 2,169,000 3,634,564
Berjaya Singer Bhd. Appliances & Household Durables 2,189,000 2,264,029
Berjaya Singer Bhd.,
fgn. Appliances & Household Durables 222,000 229,609
Boustead Holdings Bhd.,
fgn. Food & Household Products 449,000 980,978
Federal Flour Mills
Bhd. Food & Household Products 957,500 2,552,566
Hong Leong Industries
Bhd. Multi-Industry 474,000 2,299,218
IOI Corp. Bhd. Misc Materials & Commodities 341,000 472,985
Island & Peninsula BHD,
fgn. Real Estate 259,000 731,990
Leader Universal
Holdings Bhd. Industrial Components 344,000 972,219
Malayawata Steel Bhd.,
fgn. Metals & Mining 1,139,000 1,954,267
Malaysian International
Shipping Corp. Bhd.,
fgn. Transportation 2,051,333 6,373,153
MBF Capital Bhd. Financial Services 2,782,000 3,836,472
Oriental Holdings Bhd.,
fgn. Automobiles 662,000 4,325,757
Perlis Plantations Bhd. Multi-Industry 10,000 37,916
Perlis Plantations
Bhd., fgn. Multi-Industry 1,565,400 6,024,390
Renong Bhd. Multi-Industry 3,096,000 4,939,699
**Renong Bhd., wts. Multi-Industry 32,750 5,252
Renong, 4%, conv., pfd. Multi-Industry 52,400 19,746
Shangri-La Hotels
(Malaysia) Bhd. Leisure & Tourism 1,832,000 1,902,137
------------
43,556,947
- ---------------------------------------------------------------------------------------------
Mexico: 9.7%
Cemex SA, B Building Materials & Components 4,480,875 17,693,106
**Cifra SA, C Merchandising 12,115,602 17,282,902
Coca Cola Femsa SA de
CV, ADR Beverages & Tobacco 92,700 2,653,538
**Controladora
Comercial Mexicana
SA, B Merchandising 260,000 243,375
Cydea SA de CV Chemicals 1,100,231 2,738,611
</TABLE>
16
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------
Mexico (cont.)
**DESC SA, A Multi-Industry 104,000 $ 553,250
**DESC SA, B Multi-Industry 548,544 2,957,871
**DESC SA, C Multi-Industry 128,946 671,504
Fomento Economico
Mexicano SA de CV, B Beverages & Tobacco 834,000 2,396,994
**Grupo Carso SA de CV Multi-Industry 74,285 526,900
**Grupo Financiero
Banamex Accival SA, B Banking 3,704,000 7,696,116
**Grupo Financiero
Banamex Accival SA, L Banking 4,916,519 9,333,931
**Grupo Financiero
Bancomer SA de CV, B Banking 15,276,934 6,646,524
**Grupo Financiero
Bancomer SA de CV, L Banking 4,083,219 1,361,970
**Grupo Financiero
Serfin SA, B Banking 8,185,114 5,007,110
Grupo Industrial Alfa
SA, A Multi-Industry 849,759 3,837,079
Grupo Industrial Maseca
SA de CV, ADR B Food & Household Products 10,000 157,500
Grupo Industrial Maseca
SA de CV, B Food & Household Products 880,093 918,963
Telmex-Telefonos de
Mexico SA, L Telecommunications 181,000 306,399
Telmex-Telefonos de
Mexico SA, L, ADR Telecommunications 1,138,500 38,139,750
Vitro SA Food & Household Products 3,086,693 7,162,267
------------
128,285,660
- ---------------------------------------------------------------------------------------------
Morocco: 0.1%
**Banque Marocaine de
Commerce Exterieur,
GDR, 144A Banking 65,550 934,088
- ---------------------------------------------------------------------------------------------
Pakistan: 0.8%
**Bank of Punjab Banking 690,040 389,324
**DG Khan Cement Co. Building Materials & Components 1,156,400 459,190
Engro Chemical Chemicals 261,100 1,208,347
Fauji Fertilizer Co.
Ltd. Chemicals 176,000 452,507
Khadim Ali Sham Bukhari
& Co. Ltd. Financial Services 219,120 118,934
**National Development
Leasing Corp. Financial Services 273,375 115,192
**Pakistan Electron
Ltd. Appliances & Household Durables 110,000 103,699
**Pakistan
International
Airlines Corp. Transportation 82,800 21,170
**Pakistan Telecom
Corp. PTC, GDR Telecommunications 10,000 1,180,000
**Pakistan Telecom
Corp. PTC Telecommunications 5,676,100 6,486,045
**Union Bank Ltd. Banking 530,878 202,463
------------
10,736,871
- ---------------------------------------------------------------------------------------------
Peru: 0.1%
Telefonica de Peru, B Telecommunications 46,000 93,393
- ---------------------------------------------------------------------------------------------
Philippines: 1.9%
**Belle Corp. Real Estate 30,059,000 7,227,928
Keppel Philippine
Holdings Inc., B Machinery & Engineering 687,500 170,563
**Philex Minning Corp.,
B Metals & Mining 8,192,610 1,047,528
Philippine Long
Distance Telephone
Co., ADR Telecommunications 164,405 9,556,041
**Philippine National
Bank Banking 177,309 2,960,790
RFM Corp. Food & Household Products 18,290,100 3,699,906
Sime Darby Pilipinas
Inc. Industrial Components 956,400 784,832
------------
25,447,588
- ---------------------------------------------------------------------------------------------
Poland: 2.0%
**Agros Holding SA, C Food & Household Products 32,206 829,624
Bank Gdanski SA Banking 138,000 1,716,494
**Bank Inicjatyw
Gospodarczch SA, G Banking 2,496,862 3,124,064
**Bank Przemyslowo-
Handlowy SA Banking 49,491 3,569,675
**Debica SA, A Automobiles 11,000 267,167
Elektrim Towarzystwo
Handlowe SA Utilities Electrical & Gas 50,000 410,319
</TABLE>
17
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------------
Poland (cont.)
Farm Food SA Food & Household Products 24,369 $ 286,968
Huta Olawa SA Metals & Mining 20,221 126,502
**Mostostal Export SA Construction & Housing 268,050 917,371
**Mostostal-Export S A,
rts. Construction & Housing 268,050 16,177
Polifarb Ceiszyu SA Chemicals 312,886 1,588,955
**Raciborska Fabryka
Kotlow SA Energy Equipment & Services 97,732 579,041
+**Rolimpex SA Wholesale & International Trade 200,625 10,225,422
Warta SA Insurance 21,000 432,767
Wielkopolski Bank
Kredytowy SA Banking 159,622 863,488
**Zaklady Cementowo
Wapiennicze Gorazdze
Chorula Building Materials & Components 40,899 1,068,606
------------
26,022,640
- -------------------------------------------------------------------------------------------------
Portugal: 5.3%
Banco Chemical
(Portugal) Banking 92,370 956,447
**Banco Comercial
Portugues SA Banking 1,463,114 17,290,073
Banco Comercial
Portugues SA, new Banking 342,148 3,901,208
Banco Comercial
Portugues, 8.75%,
conv., 5/21/02 Corporate Bond 3,000,000* 3,896,711
Banco Espirito Santo e
Comercial de Lisboa Banking 992,255 15,934,392
Banco Totta & Acores SA Banking 593,219 11,606,706
BPI Socieda de Gestora
de Participacoes
Socias SA Banking 641,655 8,135,964
Cel-Cat Fabrica
Nacional de
Conductores
Electricos SA Electronic Components & Instruments 9,522 167,266
+Compta-Equipamentos e
Servicos de
Informatica SA Business & Public Services 75,240 668,052
Espirito Santo
Financial Holding SA,
ADR Banking 383,420 4,888,605
Portucel Industrial
Empresa Product de
Celulose SA Forest Products & Paper 278,000 1,781,118
**Sociedade Portuguesa
de Celulose SA Forest Products & Paper 47,510 1,047,921
------------
70,274,463
- -------------------------------------------------------------------------------------------------
Russia: 0.2%
**Chernogorneft Energy Sources 57,000 558,600
**GUM Trade House Merchandising 15,000 307,500
**Lukoil-Holdings Multi-Industry 91,000 964,600
**Purneftegaz Energy Sources 69,000 196,650
------------
2,027,350
- -------------------------------------------------------------------------------------------------
Singapore: 2.2%
**Acer Computer
International Ltd. Electrical & Electronics 574,000 1,113,560
Acma Ltd. Electrical & Electronics 72,000 210,234
Acma Ltd., fgn. Electrical & Electronics 260,600 760,930
British American
Tobacco Ltd. Beverages & Tobacco 44,000 173,069
Chemical Industries
(Far East) Ltd. Chemicals 822,500 2,086,853
First Capital Corp.
Ltd. Real Estate 753,000 1,867,824
First Capital Corp.
Ltd., fgn. Real Estate 462,000 1,145,996
G.P. Batteries
International Ltd. Electrical & Electronics 37,000 108,780
**GP Batteries
International Ltd.,
wts. Electrical & Electronics 9,250 7,863
Hai Sun Hup Group Ltd. Transportation 1,778,000 1,348,306
Hinds Hotels
International Ltd. Leisure & Tourism 268,000 313,395
Hinds Hotels
International Ltd.,
fgn. Leisure & Tourism 188,000 219,844
Hour Glass Ltd. Merchandising 320,000 281,219
Inchcape Bhd., fgn. Wholesale & International Trade 917,000 2,924,522
Isetan (Singapore)
Ltd., fgn. Merchandising 97,000 215,861
Jaya Holdings Ltd. Transportation 748,000 694,458
</TABLE>
18
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------
Singapore (cont.)
Jaya Holdings Ltd.,
3.00%, conv. ln.
stk., 8/31/98 Transportation 80,400 $ 103,705
**Jaya Holdings Ltd.,
wts. Transportation 75,240 38,260
Jurong Shipyard, fgn. Machinery & Engineering 852,000 4,317,364
Natsteel Ltd., fgn. Metals & Mining 954,000 1,893,125
Natsteel Ltd., fgn. Metals & Mining 1,489,000 2,954,784
Osprey Maritime Ltd. Transportation 165,000 291,225
Prima Ltd. Food & Household Products 100,000 354,359
Sembawang Corp. Ltd. Multi-Industry 612,000 3,036,145
Singapore Bus Service
(1978) Ltd., fgn. Transportation 249,600 1,768,958
TIBS Holdings Ltd. Transportation 78,000 183,529
WBL Corp. Ltd. Multi-Industry 647,000 1,531,524
------------
29,945,692
- ---------------------------------------------------------------------------------------------
Slovak Republic: 0.1%
**Slovakofarma AS Health & Personal Care 299 27,047
**Slovnaft AS Chemicals 10 291
------------
27,338
- ---------------------------------------------------------------------------------------------
South Africa: 2.4%
Anglo American
Industrial Corp. Ltd. Multi-Industry 46,587 1,870,791
Anglo American Platinum
Corp. Ltd. Metals & Mining 42,901 267,327
Anglovaal Industried
Ltd. Metals & Mining 61,100 296,123
BTR Dunlop Ltd. Industrial Components 1,079,200 1,457,032
Del Monte Royal Foods
Ltd. Food & Household Products 2,477,450 2,973,169
Engen Ltd. Energy Sources 1,430,791 9,741,134
First National Bank
Holdings Ltd. Banking 380,300 2,742,759
Malbak Ltd. Multi-Industry 294,700 1,462,278
Nedcor Ltd. Banking 103,366 1,562,537
Palabora Mining Co.
Ltd. Metals & Mining 136,700 2,145,303
Potgietersrust
Platinums Ltd. Metals & Mining 65,000 326,275
**Rainbow Chicken Ltd. Food & Household Products 334,500 111,165
Rembrandt Group Ltd. Multi-Industry 185,370 1,741,186
Sappi Ltd. Forest Products & Paper 34,000 375,860
Sasol Ltd. Energy Sources 29,091 315,550
South African Iron &
Steel Industrial
Corp. Ltd. Metals & Mining 3,439,430 2,690,900
Sun International
(South Africa) Ltd. Leisure & Tourism 1,176,428 1,262,495
------------
31,341,884
- ---------------------------------------------------------------------------------------------
Sri Lanka: 0.1%
Aitken Spence & Co.
Ltd. Multi-Industry 50,000 136,024
Associated Motorways
Ltd. Automobiles 100,512 74,245
Ceylon Holiday Resorts
Ltd. Leisure & Tourism 185,000 96,658
Lanka Walltile Ltd. Building Materials & Components 34,000 26,034
National Develpoment
Bank of Sri Lanka Banking 70,000 245,924
United Motor Lanka Ltd. Automobiles 134,400 64,167
------------
643,052
- ---------------------------------------------------------------------------------------------
Thailand: 1.7%
American Standard
Sanitaryware (THB)
Public Co. Ltd., fgn. Building Materials & Components 180,200 2,853,332
Asia Fibre Public Co.
Ltd., fgn. Textiles & Apparel 669,500 263,707
Ayudhya Insurance
Public Co. Ltd., fgn. Insurance 179,600 1,344,100
Bangkok Land Public Co.
Ltd., fgn. Real Estate 815,000 1,027,257
Chareon Pokphand
Feedmill Public
Co. Ltd., fgn. Food & Household Products 66,000 350,953
Charoen Pokphand
Feedmill Public
Co. Ltd. Food & Household Products 402,500 1,648,810
</TABLE>
19
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------------------
Thailand (cont.)
Hua Thai Manufacturing
Public Co. Ltd. Textiles & Apparel 125,100 $ 267,318
Karat Sanitaryware
Public Co. Ltd. Building Materials & Components 100 288
Karat Sanitaryware
Public Co. Ltd., fgn. Building Materials & Components 161,600 466,252
Kian Gwan (Thailand)
Public Co. Ltd., fgn. Real Estate 104,000 275,484
Regional Container
Lines Public Co.
Ltd., fgn. Transportation 51,400 753,143
**Royal Ceramic
Industry Public Co.
Ltd., fgn. Building Materials & Components 206,700 232,037
Saha Pathanapibul
Public Co Ltd., fgn. Food & Household Products 593,000 1,535,755
Saha Pathanapibul
Public Co. Ltd. Food & Household Products 100 244
Saha Union Public Co.
Ltd. Multi-Industry 1,080,400 1,489,444
Saha Union Public Co.
Ltd., fgn. Multi-Industry 1,269,300 1,987,343
Sanyo Universal
Electric Public Co
Ltd., fgn. Appliances & Household Durables 184,600 610,777
Sanyo Universal
Electric Public Co.
Ltd. Appliances & Household Durables 189,900 658,232
Siam Cement Co. Ltd.
(The), fgn. Building Materials & Components 17,600 863,778
Sino-Thai Engineering &
Construction
Public Co. Construction & Housing 805,600 3,680,857
Thai Asahi Glass Public
Co. Ltd. Building Materials & Components 94,910 220,564
Thai Asahi Glass Public
Co. Ltd., fgn. Building Materials & Components 32,000 74,366
Thai Rayon Public Co.
Ltd. Textiles & Apparel 34,000 175,437
Thai Rayon Public Co.
Ltd., fgn. Textiles & Apparel 37,660 210,640
Thai Wacoal Public Co.
Ltd., fgn. Textiles & Apparel 236,550 1,567,652
Thai Wah Public Co.
Ltd., fgn. Multi-Industry 8,450 8,071
United Motor Works
(Siam) Public Co.
Ltd. Machinery & Engineering 2,100 8,851
------------
22,574,692
- ---------------------------------------------------------------------------------------------
Turkey: 4.3%
Akbank Banking 36,173,670 4,360,927
**Akbank, new Banking 72,885,340 8,786,713
Akcimento Building Materials & Components 14,354,000 1,293,468
Aksigorta AS Insurance 2,256,500 494,605
Alarko Sanayii ve
Ticaret SA Appliances & Household Durables 1,704,000 264,564
**Alcatel Teletas
Endustri Tic AS Telecommunications 18,500,000 1,216,512
Anadolu Anonim Turk
Sigorta Sirketi Insurance 5,504,000 184,316
Arcelik AS Appliances & Household Durables 49,180,286 4,551,512
Bagfas Chemicals 3,302,000 894,660
Bekoteknik AS Appliances & Household Durables 23,143,137 1,465,469
Borusan AS Industrial Components 4,898,000 405,582
**Celik Halat ve
Sanayii ve Ticaret AS Building Materials & Components 2,307,496 109,586
Cimentas Izmir Cimento
Fabrikasi Turk AS Building Materials & Components 12,099,450 2,652,096
Cimsa Cimento Sanayi ve
Ticaret AS Building Materials & Components 2,656,000 1,520,117
Compagnie Financiere
Ottomane SA Banking 38,000 2,626,103
Erciyas Biracilik Food & Household Products 5,000,000 2,831,223
Eregli Demir ve Celik
Fabrikalari AS Metals & Mining 42,157,000 4,671,562
Finans Bank AS, br. Banking 37,675,827 768,473
Izocam Ticaret ve
Sanayii AS, br. Building Materials & Components 5,761,194 491,091
Kartonsan Forest Products & Paper 13,481,000 1,181,968
Koc Holding AS Multi-Industry 3,296,000 802,728
Koc Yatirim ve Sanayii
Mamullesi
Pazarlanca AS Multi-Industry 13,065,962 2,108,183
Marshall Boya ve Vernik
Sanayii AS Industrial Components 7,106,568 614,426
Netas Northern Electric
Telekomunic Asyon AS Electrical & Electronics 2,177,000 516,945
Otosan Otomobil Sanayii
AS Automobiles 6,186,500 2,109,377
Tat Konserve Sanayii AS Food & Household Products 2,725,540 638,902
**Tat Konserve Sanayii
AS, rts. Food & Household Products 2,044,666 303,083
Tekstil Bankasi AS, br. Banking 1,287,171 21,160
Tofas Turk Otomobil
Fabrikasi AS Automobiles 50,597,750 2,433,769
Trakya Cam Sanayii AS Building Materials & Components 12,250,470 671,299
Turk Demir Dokum, br. Appliances & Household Durables 17,357,996 1,056,868
</TABLE>
20
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Investment Portfolio, June 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL IN
COUNTRY/ISSUE INDUSTRY LOCAL CURRENCY VALUE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- -------------------------------------------------------------------------------------------------
Turkey (cont.)
**Turkiye Garanti
Bankasi AS Banking 68,913,212 $ 4,699,391
Vakif Finansal Kiralama
AS Financial Services 9,473,942 449,931
--------------
57,196,609
- -------------------------------------------------------------------------------------------------
Venezuela: 1.2%
Banco Provincial SAICA Banking 92,920 155,088
Banco Venezolano de
Credito Banking 3,444 124,067
Ceramica Carabobo CA, A Building Materials & Components 257,400 266,107
Ceramica Carabobo CA,
A, ADR Building Materials & Components 143,000 147,838
Ceramica Carabobo CA, B Building Materials & Components 1,443,199 1,476,639
Consolidada Carabobo, A Building Materials & Components 2,488,000 88,567
Consolidada Carabobo, B Building Materials & Components 9,116,000 320,623
Electricidad de Caracas Utilities--Electrical & Gas 6,884,354 5,723,143
Fabrica Nacional de
Cementos CA Building Materials & Components 285,995 54,867
H.L. Boulton & Co. SA Multi-Industry 12,680,131 608,153
Industrias Ventane Utilities--Electrical & Gas 280,000 122,354
**Manufacturera de
Aparatos Domesticos
SA Appliances & Household Durables 180,613 127,434
Mavesa SA, ADR Food & Household Products 661,313 2,621,962
Siderurgica Venezolana
Sivensa Saica Svs. Metals & Mining 341,648 225,760
Siderurgica Venezolana
Sivensa Saica Svs.,
ADR Metals & Mining 362,630 1,198,125
Venezolana de Cementos-
Vencemos, #1 Building Materials & Components 1,116,222 2,129,514
Venezolana de Cementos-
Vencemos, #2 Building Materials & Components 309,920 529,162
Venezolana
Prerreducidos Caroni
Venprecar CA, GDS,
144A Metals & Mining 118 625
--------------
15,920,028
- -------------------------------------------------------------------------------------------------
Zimbabwe: 0.0%
Ta Holdings Multi-Industry 25,000 3,669
--------------
TOTAL LONG TERM SECURITIES (cost $1,082,043,289) 1,140,335,594
- -------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 13.5% (cost $177,858,557)
- -------------------------------------------------------------------------------------------------
U S Treasury Bills,
4.83% to 5.09% with
maturities to 9/12/96 U.S. $179,021,000* 177,902,889
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 100.2% (cost $1,259,901,846) 1,318,238,483
OTHER ASSETS, LESS
LIABILITIES: (0.2%) (3,121,626)
--------------
TOTAL NET ASSETS: 100.0% $1,315,116,857
==============
</TABLE>
*PRINCIPAL AMOUNT IN CURRENCY OF COUNTRY INDICATED.
**NON-INCOME PRODUCING.
+SEE NOTE 5.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (identified cost
$1,259,901,846) $1,318,238,483
Cash 237,537
Receivables:
Investment securities sold 1,145,714
Capital shares sold 3,661,633
Dividends and interest 5,211,049
Unamortized organization costs 7,691
--------------
Total assets 1,328,502,107
--------------
Liabilities:
Payable for investment securities purchased 11,376,056
Accrued expenses 2,009,194
--------------
Total liabilities 13,385,250
--------------
Net assets, at value $1,315,116,857
==============
Net assets consist of:
Undistributed net investment income $ 15,190,083
Unrealized appreciation on investments 58,336,637
Accumulated net realized gain 4,168,428
Net capital paid in on shares of capital stock 1,237,421,709
--------------
Net assets, at value $1,315,116,857
==============
Shares outstanding 107,563,190
==============
Net asset value per share ($1,315,116,857 / 107,563,190) $ 12.23
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
for the six months ended June 30, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of $1,209,978 foreign taxes
withheld)
Dividends $ 17,580,260
Interest 5,101,042
------------
Total income $ 22,681,302
Expenses:
Management fees (Note 3) 6,704,909
Administrative fees (Note 3) 488,502
Transfer agent fees (Note 3) 2,500
Custodian fees 822,808
Reports to shareholders 13,500
Audit fees 15,000
Legal fees (Note 3) 1,200
Registration and filing fees 120,000
Directors' fees and expenses 18,000
Amortization of organization costs 710
Other 9,043
------------
Total expenses 8,196,172
------------
Net investment income 14,485,130
Realized and unrealized gain:
Net realized gain (loss) on:
Investments 6,491,967
Foreign currency transactions (840,858)
------------
5,651,109
------------
Net unrealized appreciation on:
Investments 106,624,634
Foreign currency translations of other assets and
liabilities 205,647
------------
106,830,281
------------
Net realized and unrealized gain 112,481,390
------------
Net increase in net assets resulting from opera-
tions $126,966,520
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
Templeton Institutional Funds, Inc.
Emerging Markets Series
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 14,485,130 $ 13,593,275
Net realized gain on investments and for-
eign currency transactions 5,651,109 9,381,337
Net unrealized appreciation (depreciation) 106,830,281 (29,368,581)
-------------- ------------
Net increase (decrease) in net assets re-
sulting from operations $ 126,966,520 $ (6,393,969)
Distributions to shareholders:
From net investment income (433,339) (12,454,983)
From net realized gain (2,166,047) (9,647,645)
Capital share transactions (Note 2) 392,234,659 244,133,379
-------------- ------------
Net increase in net assets 516,601,793 215,636,782
Net assets:
Beginning of period 798,515,064 582,878,282
-------------- ------------
End of period $1,315,116,857 $798,515,064
============== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<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
Fund seeks to achieve long-term capital growth by investing in securities of
issuers of countries having emerging markets. 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 Brazilian currency. Under Brazilian law, when-
ever 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.
f. 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 report-
ing period. Actual results could differ from those estimates.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At June 30, 1996, there were 700 million shares of the Company's ($0.01 par
value) capital stock authorized of which 200 million shares have been classi-
fied as Fund shares. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 35,281,428 $415,344,147 25,584,150 $278,958,676
Shares issued on
reinvestment of
distributions 214,859 2,520,291 2,003,414 21,146,824
Shares redeemed (2,194,855) (25,629,779) (5,323,688) (55,972,121)
---------- ------------ ---------- ------------
Net increase 33,301,432 $392,234,659 22,263,876 $244,133,379
========== ============ ========== ============
</TABLE>
25
<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 As-
set Management Ltd. (TAML), Templeton Global Investors, Inc. (TGII), Franklin
Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor Services,
Inc. (FTIS), the Fund's investment manager, administrative manager, principal
underwriter and transfer agent, respectively.
The Fund pays monthly an investment management fee to TAML equal, on an annual
basis, to 1.25% of the average daily net assets of the Fund. The Fund pays TGII
monthly 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. For the six months ended
June 30, 1996, FTD did not receive any commissions from the sale of the Fund's
shares and FTIS received fees of $2,500.
An officer of the Company is a partner of Dechert Price & Rhoads, legal counsel
for the Company, which received fees of $1,200 for the six months ended June
30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended June 30, 1996 aggregated $398,199,940 and $26,827,452, 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, 1996, 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 $ 169,142,892
Unrealized depreciation (110,806,255)
-------------
Net unrealized appreciation $ 58,336,637
=============
</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, 1996
amounted to $11,607,437. For the six months ended June 30, 1996, dividend in-
come from affiliated companies was $23,704.
26
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FRANKLIN TEMPLETON DISTRIBUTORS, INC.
[COVER ART APPEARS HERE]
