<PAGE>
Templeton Emerging Markets
Appreciation Fund
- --------------------------------------------------------------------------------
Your Fund's Objective:
The Templeton Emerging Markets Appreciation Fund seeks capital appreciation by
investing substantially all of its assets in a portfolio of equity securities
and debt obligations of issuers in emerging market countries.
- --------------------------------------------------------------------------------
November 15, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Emerging
Markets Appreciation Fund for the period ended September 30, 1995.
The investment environment in many emerging markets, particularly in Latin
America and Asia, improved markedly during this six-month period. The
governments of Mexico, Argentina, and Brazil continued to implement fiscal and
monetary policies aimed at stabilizing their economies and increasing investor
confidence. Problems such as high inflation and bad loans continued to plague
Mexico, but its financial markets rebounded strongly from their March bottom
amid signs of economic stabilization and renewed interest from foreign
investors. Despite rumors that Argentina's finance minister might resign, macro-
economic and corporate fundamentals there remained strong as a combination of
external aid and government action helped the economy recover from a liquidity
crisis in the banking system. Although rising inflation, a deteriorating trade
balance, and uncertainty surrounding Brazil's currency caused many people to
proclaim the demise of the Real Plan (Brazil's
1
<PAGE>
economic program), we believe that actions to restrict credit and quench
consumer demand can effectively slow the Brazilian economy.
In contrast to slower growth in many developed countries, most Asian emerging-
market economies continued to grow rapidly due to booming exports and high
levels of domestic and foreign investment. China's relatively stable economy
contributed to the economic well-being of the region, and lower long-term U.S.
interest rates provided added incentive to dollar-based investors seeking
higher-yielding debt securities in many of these markets. Although many
investors fear that the reversion of Hong Kong to China in 1997 could adversely
affect Hong Kong's thriving economy, we believe stock prices already reflect
these concerns. The Philippines, whose economic development has lagged most
other Asian countries, represents another exciting investment prospect because
of its tremendous growth potential.
Eastern Europe also began to show promising signs during the six months under
review. Economic growth in Poland and the Czech Republic continued to
strengthen. Lower inflation and falling interest rates in Turkey benefited its
stock market, and corporate earnings there are expected to improve further as
the country moves closer to removing trade barriers with the rest of Europe.
- --------------------------------------------------------------------------------
Templeton Emerging Markets
Appreciation Fund
Portfolio Breakdown on 9/30/95
Based on Total Net Assets
[PIE GRAPH APPEARS HERE]
<TABLE>
<S> <C>
Equities 55.3%
Fixed-Income Securities 33.8%
Short-Term Obligations &
Other Net Assets 10.9%
</TABLE>
Turkey's strategic geographic location is a key element of its export business,
allowing it opportunity to take advantage of both the large European and Central
Asian markets. With long-term earnings appearing attractive and valuations
reasonable, we will continue to seek bargains in Turkey.
In searching for bargains, we analyze a company's financial health, as well as
its historical and prospective performance, by looking at scores of financial
indicators. We also assess the company's management and attempt to look from its
perspective at the political, economic, competitive, technological, and social
environment.
2
<PAGE>
By September 30, 1995, 55.3% of the Fund's total net assets were invested in
equities, 33.8% in fixed-income securities, and 10.9% in short-term obligations
and other assets. During the period, we found a large number of bargain stocks
in Latin America and nearly doubled our total exposure there. Although the Fund
had more assets invested in Asia than in any other region, we decreased our
weighting there, from 36.5% to 33.3% of total net assets, because many Asian
stocks appeared expensive. The Fund's largest single-country exposure at the end
of the reporting period was Hong Kong (12.1% of total net assets), followed by
Argentina (9.4%), Brazil (9.4%), Mexico (8.5%), Turkey (6.7%), and Greece
(5.9%). Our largest equity holding was American Depositary Receipts (ADRs)
issued by Telefonos de Mexico SA, representing 2.9% of the Fund's total net
assets at the end of the reporting period.
With regard to the Fund's fixed-income portfolio, we sold our Indonesian rupiah-
denominated securities, expecting short-term volatility as a result of
government efforts to keep that currency competitive on world markets. We also
eliminated our Pakistani fixed-income holdings, prior to their recent credit-
rating downgrade by Moody's. As pressure mounted for Argentina to devalue its
currency, we sold our peso-denominated Bocon Previsionale
- --------------------------------------------------------------------------------
Templeton Emerging Markets
Appreciation Fund
Geographic Distribution on 9/30/95
Based on Total Net Assets
[PIE GRAPH APPEARS HERE]
<TABLE>
<S> <C>
Europe 15.3%
Asia 33.3%
Latin America 36.4%
Mid-East/Africa 4.0%
Short-Term Obligations &
Other Net Assets 11.0%
</TABLE>
holdings. In anticipation of Mexico's continuing economic upheaval, we sold the
Fund's Mexican Par Bonds and a corporate bond of Grupo Mexicano de Desarrolla SA
in favor of new, two-year United Mexican States issues. We also purchased Brady
Bonds in Argentina, Brazil, and Ecuador, all of which have long maturities and,
therefore, relatively high interest-rate sensitivity. Temporary double-digit
rates in Thailand gave us opportunity to enhance the portfolio's yield and
credit exposure, since this country has an "A" credit-quality rating.
We maintain a positive outlook for emerging markets. Slower U.S. economic growth
in the first half of 1995,
3
<PAGE>
- --------------------------------------------------------------------------------
Templeton Emerging
Markets Appreciation Fund
Top 10 Holdings on 9/30/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Name, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Telmex-Telefonos de Mexico SA, L, ADR;
Telecommunications, Mexico 2.9%
- --------------------------------------------------------------------------------
Government of Brazil, 6.6875%, FRN A,
1/01/01, Government Bond, Brazil 2.4%
- --------------------------------------------------------------------------------
Alpha Credit Bank; Banking, Greece 2.2%
- --------------------------------------------------------------------------------
Cemex SA, B; Building Materials &
Components, Mexico 1.9%
- --------------------------------------------------------------------------------
Akbank; Banking, Turkey 1.9%
- --------------------------------------------------------------------------------
Ergo Bank SA; Banking, Greece 1.5%
- --------------------------------------------------------------------------------
Government of Brazil, 7.25%, FRN, L,
4/15/06 1.5%
- --------------------------------------------------------------------------------
Electrobras-Centrais Electricas Brasileiras
SA, B, pfd.; Telecommunications, Brazil 1.4%
- --------------------------------------------------------------------------------
Cheung Kong Holdings Ltd.; Multi-Industry,
Hong Kong 1.4%
- --------------------------------------------------------------------------------
HSBC Holdings PLC; Banking, Hong Kong 1.4%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 7 of this report.
coupled with subdued inflation, has resulted in lower interest rates in many
global markets. Furthermore, the universe of emerging-market debt continues to
expand as more corporate and sovereign debt issuers enter the market. The
increase in the net asset value of the Fund's shares during the reporting
period, as shown in the Performance Summary on page 5, reinforces our belief in
our bargain-hunting investment strategy and in the enormous potential of
emerging markets. Of course, past performance is not indicative of future
results.
Please remember that investing in emerging 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. While short-term volatility can be
disconcerting, declines of as much as 40% to 50% are not unusual in emerging
markets. For example, the Hong Kong stock market has increased 763% over last 15
years, but has suffered six declines of more than 20% during that time.*
We appreciate your participation in the Templeton Emerging Markets Appreciation
Fund and look forward to serving your investment needs in the years to come.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Portfolio Manager--Equity Securities
Templeton Emerging Markets Appreciation Fund, Inc.
/s/ Tom Wilkinson
Tom Wilkinson, CFA
Portfolio Manager--Fixed-Income Securities
Templeton Emerging Markets Appreciation Fund, Inc.
* Source: Bloomberg. Based on quarterly percentage change over 15 years ended
June 30, 1995.
4
<PAGE>
- --------------------------------------------------------------------------------
Performance Summary
In market-price terms, the Templeton Emerging Markets Appreciation Fund produced
a total return of -4.01% for the six-month period ended September 30, 1995.
Based on the change in actual net asset value (in contrast to market price),
total return was 12.88% for the same period. Both total return figures assume
reinvestment of dividends and capital gains in accordance with the dividend
reinvestment plan.
During the reporting period, the Fund's closing price on the New York Stock
Exchange decreased from $12.875 on March 31, 1995 to $12.125 on September 30,
1995, while the net asset value increased from $12.05 to $13.33 for the same
period. Shareholders received distributions of 17 cents ($0.17) per share in
dividend income and 8 cents ($0.08) per share in short-term capital gains. Of
course, past performance is not predictive of future results, and distributions
will vary depending on income earned by the Fund, as well as any profits
realized from the sale of securities in the portfolio.
- --------------------------------------------------------------------------------
Templeton Emerging Markets Appreciation Fund
Cumulative Total Returns*
Periods Ended September 30, 1995
<TABLE>
<CAPTION>
Since
Inception
Six-Month One-Year (04/29/94)
<S> <C> <C> <C>
Based on change
in net asset value 12.88% -4.40% -0.26%
Based on change
in market price -4.01% -14.81% -14.81%
</TABLE>
*Cumulative total return calculations show the change in value of an investment
over the periods indicated. These calculations assume reinvestment of all
dividend and capital gains distributions, either at net asset value or at market
price on the reinvestment date, in accordance with the dividend reinvestment
plan. Past performance is not predictive of future results.
To reduce the likelihood of a market-price discount occurring and continuing,
the Investment Manager has undertaken to waive one-half of its fee under the
Investment Management Agreement (and, correspondingly, PaineWebber has
undertaken to waive one-half of the fee to be paid to it by the Investment
Manager under the Economic Consulting and Shareholder Servicing Agreement)
during the fiscal quarter following the fiscal period ending May 31, 1994 and
any of the succeeding four full fiscal quarters of the Fund during which the
average closing price of the Fund's shares is less than the $15.00 initial
offering price.
- --------------------------------------------------------------------------------
5
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS APRIL 29, 1994
ENDED (COMMENCEMENT
SEPTEMBER 30, 1995 OF OPERATIONS) TO
(UNAUDITED) MARCH 31, 1995
------------------ -----------------
<S> <C> <C>
Net asset value, beginning of period $ 12.05 $ 14.10
------- --------
Income from investment operations:
Net investment income .44 .48
Net realized and unrealized gain (loss) 1.09 (1.97)
------- --------
Total from investment operations 1.53 (1.49)
------- --------
Underwriting expenses deducted from capi-
tal -- (.15)
------- --------
Distributions:
Dividends from net investment income (.17) (.32)
Distributions from net realized gains (.08) (.09)
------- --------
Total distributions (.25) (.41)
------- --------
Change in net asset value 1.28 (2.05)
------- --------
Net asset value, end of period $ 13.33 $ 12.05
======= ========
TOTAL RETURN *
Based on market value per share (4.01)% (11.25)%
Based on net asset value per share 12.88% (11.64)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $56,422 $ 51,022
Ratio of expenses, inclusive of fee waiv-
er, to average net assets 1.37%** 1.79%**
Ratio of net investment income to average
net assets 6.63%** 3.98%**
Portfolio turnover rate 10.09% 58.79%
</TABLE>
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS: 50.2%
- -------------------------------------------------------------------------------
Appliances & Household Durables: 2.2%
Arcelik AS Tur. 1,528,843 $ 239,279
Bekoteknik AS Tur. 482,282 55,874
Foshan Electrical and Lighting Co.
Ltd., B Chn. 400,000 292,303
Semi-Tech (Global) Co. Ltd. H.K. 111,481 167,978
Turk Demir Dokum, br. Tur. 3,144,000 466,488
----------
1,221,922
- -------------------------------------------------------------------------------
Automobiles: 1.5%
Associated Motorways Ltd. Lka. 72,000 65,778
Ciadea SA Arg. 109,333 426,420
Jardine International Motor Holdings
Ltd. H.K. 152,000 165,138
Otosan Otomobil Sanayii AS Tur. 212,700 55,120
Tofas Turk Otomobil Fabrikasi AS Tur. 944,000 138,146
----------
850,602
- -------------------------------------------------------------------------------
Banking: 13.5%
Akbank Tur. 4,074,000 1,055,762
Alpha Credit Bank Gr. 20,000 1,243,568
Banco Bradesco SA Braz. 16,390,900 137,587
Banco Comercial Portugues SA Port. 37,000 491,705
Banco de Galicia y Buenos Aires SA,
B Arg. 94,050 426,068
Banco Del Sud SA, B Arg. 2,110 12,239
Banco do Brasil SA Braz. 2,705,276 39,172
Banco Espirito Santo e Comercial de
Lisboa Port. 33,800 462,026
Banco Portugues de Investimento SA Port. 11,000 160,265
Banco Totta & Acores SA Port. 12,000 232,046
*Daegu Bank Co. Ltd. Kor. 7,000 121,511
*Daegu Bank Co. Ltd., new Kor. 1,527 25,513
Ergo Bank SA Gr. 18,000 871,827
Espirito Santo Financial Holding SA,
ADR Port. 19,820 232,885
First National Bank Holdings Ltd. S.AF. 40,000 279,318
Grupo Financiero Banamex Accival SA,
B Mex. 72,000 136,552
Grupo Financiero Banamex Accival SA,
L Mex. 3,600 6,387
Grupo Financiero Bancomer SA de CV,
B Mex. 2,046,000 612,517
Grupo Financiero Bancomer SA de CV,
L Mex. 75,777 21,379
Grupo Financiero Serfin SA, B Mex. 40,000 29,467
HSBC Holdings PLC H.K. 56,708 788,457
National Bank of Greece SA Gr. 2,000 101,672
PT Inter-Pacific Bank, fgn. Indo. 9,500 7,548
Turkiye Garanti Bankasi AS Tur. 2,003,400 144,554
----------
7,640,025
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Building Materials & Components: 3.9%
Akcimento Tur. 75,000 $ 25,534
Cemex SA, B Mex. 262,000 1,047,179
Cimentas Izmir Cimento Fabrikasi
Turk AS Tur. 525,250 314,936
Cimsa Cimento Sanayi ve Ticaret AS Tur. 235,000 124,187
Izocam Ticaret ve Sanayii AS, br. Tur. 49,714 6,972
K Wah International Holdings Ltd. H.K. 838,060 126,819
*Royal Ceramic Industry Public Co.
Ltd. Thai. 181,000 346,204
Shanghai Yaohua Pilkington Glass, B Chn. 77,000 81,620
Thai Asahi Glass Public Co. Ltd. Thai. 72,610 143,224
-----------
2,216,675
- -------------------------------------------------------------------------------
Business & Public Services: 0.1%
Sanitary Wares Manufacturing Corp.,
br. Phil. 6,923 2,352
- -------------------------------------------------------------------------------
Chemicals: 0.4%
PT Unggul Indah Corp., fgn. Indo. 68,200 56,444
Shanghai Chlor-Alkali Chemical Co.
Ltd., B Chn. 312,000 89,232
Shenzhen Petrochemical (Group)
Shareholding Co. Ltd., B Chn. 249,600 72,636
-----------
218,312
- -------------------------------------------------------------------------------
Construction & Housing: 0.2%
Hopewell Holdings Ltd. H.K. 201,516 136,834
- -------------------------------------------------------------------------------
Electrical & Electronics: 0.7%
*Dae Duck Electronics Co. Ltd. Kor. 2,000 93,726
Great Wall Electronic International
Ltd. H.K. 566,000 46,119
Netas Northern Electric Telekomunic
Asyon AS Tur. 594,000 229,390
-----------
369,235
- -------------------------------------------------------------------------------
Electronic Components & Instruments: 0.1%
S. Megga International Holdings Ltd. H.K. 494,000 31,307
- -------------------------------------------------------------------------------
Energy Sources: 1.3%
Engen Ltd. S.AF. 25,774 151,747
Transportadora de Gas del Sur SA, B Arg. 81,931 172,064
YPF Sociedad Anonima, ADR Arg. 24,000 432,000
-----------
755,811
- -------------------------------------------------------------------------------
Financial Services: 1.3%
Alpha Leasing SA Gr. 10,000 255,146
Etba Leasing Gr. 12,600 237,736
PT Ficorinvest Bank, fgn. Indo. 112,000 111,234
Sun Hung Kai & Co. Ltd. H.K. 349,000 103,819
-----------
707,935
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Food & Household Products: 2.6%
Chareon Pokphand Feedmill Public Co.
Ltd., fgn. Thai. 13,000 $ 60,092
Del Monte Royal Foods Ltd S.AF. 5,800 8,338
Elais Oleaginous Co. Gr. 8,800 287,925
Hellas Can--Container Manufacturers Gr. 18,270 357,252
PT Anwar Sierad, fgn. Indo. 102,000 56,279
PT Charoen Pokphand Indonesia, fgn. Indo. 46,000 98,731
PT Cipendawa Farm Enterprises, fgn. Indo. 65,000 69,935
PT Japfa Comfeed Indonesia, fgn. Indo. 67,000 36,968
PT Multibreeder Adirama, fgn. Indo. 193,500 106,765
Vitro SA Mex. 156,000 414,207
----------
1,496,492
- -------------------------------------------------------------------------------
Health & Personal Care: 0.2%
Hankook Cosmetics Co. Ltd. Kor. 3,000 111,690
- -------------------------------------------------------------------------------
Industrial Components: 0.6%
Marshall Boya ve Vernik Sanayii AS Tur. 1,620,528 181,157
*Shanghai Rubber Belt Co. Ltd., B Chn. 549,000 89,487
Shanghai Tyre & Rubber Co. Ltd., B Chn. 169,000 52,728
----------
323,372
- -------------------------------------------------------------------------------
Insurance: 0.1%
Anadolu Anonim Turk Sigorta Sirketi Tur. 152,960 24,872
- -------------------------------------------------------------------------------
Leisure & Tourism: 0.5%
Hinds Hotels International Ltd. Sing. 129,000 149,578
Shangri-La Hotels (Malaysia) Bhd. Mal. 141,000 145,378
----------
294,956
- -------------------------------------------------------------------------------
Machinery & Engineering: 0.6%
Keppel Philippine Holdings Inc., B Phil. 212,500 97,870
Shanghai Erfangji Textile Machinery
Co. Ltd., B Chn. 323,400 54,978
Shanghai Industrial Sewing Machine
Corp. Chn. 192,000 35,328
Shanghai Steel Tube Co. Ltd., B Chn. 249,700 35,457
*Tubos de Acero de Mexico SA Mex. 21,654 132,368
----------
356,001
- -------------------------------------------------------------------------------
Merchandising: 0.8%
Cifra SA, C Mex. 10,000 11,599
Dickson Concepts (International) Ltd. H.K. 227,000 164,414
Wo Kee Hong Holdings Ltd. H.K. 1,010,000 232,523
Yaohan Hongkong Corp. Ltd. H.K. 460,000 29,748
----------
438,284
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Metals & Mining: 0.6%
Antofagasta Holdings PLC Chil. 34,000 $ 181,516
Philex Minning Corp., B Phil. 1,103,300 143,973
----------
325,489
- -------------------------------------------------------------------------------
Multi-Industry: 4.8%
Cheung Kong Holdings Ltd. H.K. 146,000 794,987
Clal Industries Ltd. Isr. 10,000 65,779
*Comercial de Plata SA Arg. 151,000 354,868
Dairy Farm International Holdings
Ltd. H.K. 126,693 110,223
DESC SA, B Mex. 3,033 11,409
Jardine Strategic Holdings Ltd. H.K. 28,125 82,125
*Jardine Strategic Holdings Ltd.,
wts. H.K. 3,125 1,125
Koc Holding AS Tur. 577,840 103,353
*Koc Holding AS, rts. Tur. 233,000 19,208
Koc Yatirim ve Sanayii Mamullesi
Pazarlanca AS Tur. 876,800 249,496
Lai Sun Garment International Ltd. H.K. 163,000 166,548
Perlis Plantations Bhd., fgn. Mal. 60,000 191,083
Rembrandt Group Ltd. S.AF. 20,000 167,043
Shenzhen Gintian Industrial Co. Ltd.,
B Chn. 208,800 93,980
Stelux International Holdings Ltd. H.K. 473,254 125,480
Transarchipel Shipping Ltd., TSL Zmbe. 700,000 186,402
----------
2,723,109
- -------------------------------------------------------------------------------
Real Estate: 3.9%
Bangkok Land Co. Ltd., fgn. Thai. 118,000 179,857
Hang Lung Development Co. Ltd. H.K. 300,000 483,076
*Hang Lung Development Co. Ltd., wts. H.K. 30,000 4,811
Lai Sun Development Co. Ltd. H.K. 1,178,000 138,647
New World Development Co. Ltd. H.K. 110,379 435,423
PT Duta Anggada Realty, fgn. Indo. 162,000 113,518
PT Summarecon Agung, fgn. Indo. 153,000 108,056
Shanghai Jinqiao Export Processing
Zone Development, B Chn. 115,000 65,550
Shenzhen Properties & Resources
Develop.(Group) Ltd., B Chn. 209,000 44,872
Sun Hung Kai Properties Ltd. H.K. 65,000 527,536
Tian An China Investments Co. Ltd. H.K. 768,000 108,271
----------
2,209,617
- -------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Recreation, Other Consumer Goods: 1.1%
China First Pencil Co. Ltd., B Chn. 372,000 $ 110,856
*Fu Hui Jewellery Co. (H.K.) Ltd. H.K. 1,572,000 66,079
Shanghai Wingsung Stationery Co.
Ltd., B Chn. 297,000 68,310
Shenzhen China Bicycles Co.
(Holdings) Ltd., B Chn. 116,000 38,258
Yue Yuen Industrial (Holdings) Ltd. H.K. 1,236,000 343,702
----------
627,205
- -------------------------------------------------------------------------------
Telecommunications: 3.2%
Telebras-Telecomunicacoes Brasileiras
SA Braz. 4,525,000 181,370
Telmex-Telefonos de Mexico SA, L, ADR Mex. 51,800 1,644,650
----------
1,826,020
- -------------------------------------------------------------------------------
Textiles & Apparel: 2.8%
Goldlion Holdings Ltd. H.K. 519,000 285,287
Hua Thai Manufacturing Public Co.
Ltd. Thai. 16,000 41,443
*Laws International Holdings Ltd. H.K. 438,000 57,783
PT Eratex Djaja, fgn. Indo. 144,000 55,617
PT Ganda Wangsa Utama, fgn. Indo. 275,600 97,321
PT Hadtex Indosyntec, fgn. Indo. 114,000 61,642
PT Polysindo Eka Perkasa, fgn. Indo. 796,000 456,764
Saha Union Public Co. Ltd., fgn. Thai. 80,000 104,802
Shanghai Lian Hua Fibre Corp., B Chn, 248,400 56,635
Thai Rayon Public Co. Ltd. Thai. 17,000 136,840
Thai Wacoal Public Co. Ltd., fgn. Thai. 12,500 95,637
Tungtex (Holdings) Co. Ltd. H.K. 1,364,000 153,482
----------
1,603,253
- -------------------------------------------------------------------------------
Transportation: 1.4%
Chiwan Wharf Holdings Ltd., B Chn, 170,000 80,254
Malaysian International Shipping
Corp. Bhd., fgn. Mal. 229,333 689,277
----------
769,531
- -------------------------------------------------------------------------------
Utilities Electrical & Gas: 1.6%
Central Costanera SA, B Arg. 120,000 312,016
Central Termoelectricia de Buenos
Aires Arg. 17,709 20,366
CEZ, GDR Csk. 8,000 333,000
CEZ, GDS, 144a Csk. 6,000 249,750
----------
915,132
- -------------------------------------------------------------------------------
Wholesale & International Trade: 0.2%
East Asiatic Co. (Hong Kong) Ltd.
(The) H.K. 945,000 114,891
----------
TOTAL COMMON STOCKS (cost $31,737,637) 28,310,924
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------
PREFERRED STOCKS: 5.1%
- -----------------------------------------------------------------------------
Banco do Brazil SA, pfd. Braz. 20,000,000 $ 329,469
*Banespa-Banco do Estado de Sao
Paulo SA, pfd. Braz. 1,924,200 12,922
*Cia Mesbla SA, pfd. Braz. 2,465,000 40,348
Eletrobras-Centrais Eletricas
Brasileiras SA, B, pfd. Braz. 2,613,000 806,067
Petrobras-Petroleo Brasileiro SA,
pfd. Braz. 7,347,000 774,748
Telebras-Telecomunicacoes
Brasileiras SA, pfd. Braz. 15,533,000 739,938
Vale de Rio Doce, pfd. Braz. 1,000,000 168,406
----------
TOTAL PREFERRED STOCKS (cost $3,347,611) 2,871,898
- -----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
IN LOCAL
CURRENCY**
- -----------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS CORPORATE: 8.3%
- -----------------------------------------------------------------------------
Bariven SA, 10.625%, 3/17/02 U.S. 330,000 310,200
Bridas Corp., Yankee, 12.50%,
11/18/99 U.S. 460,000 443,900
CEZ AS, 14.375%, 1/27/01 U.S. 15,590,000 634,064
Essar Gujarat Ltd., 8.4%, FRN,
7/15/99, 144a U.S. 210,000 209,213
Guaranteed Capital Corp. Ltd.,
11.00%, 3/21/97 U.S. 225,000 218,250
Henderson Capital International
Ltd., 4.25%, 10/27/96 U.S. 550,000 555,500
Industrias Klabin Papel Celulose,
12.125%, 12/28/02, 144a U.S. 210,000 211,575
Iochpe--Maxion SA, 12.375%,
11/08/02, 144a U.S. 250,000 210,000
Philippine Long Distance Telephone
Co., 10.625%, 6/02/04 U.S. 500,000 531,688
PIV Investment Finance (Cayman)
Ltd., 4.50%, conv., 12/01/00 U.S. 330,000 267,300
Produvisa Capital Corp., 9.50%,
11/29/96 U.S. 350,000 322,000
PT Polysindo Eka Perkasa Global,
13.00%, 6/15/01 U.S. 500,000 520,000
Tjiwi Kimia International Finance
Co. BV, 13.25%, 8/01/01 U.S. 250,000 272,500
----------
TOTAL BONDS--CORPORATE (cost $4,707,820) 4,706,190
- -----------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
IN LOCAL
INDUSTRY ISSUE COUNTRY CURRENCY** VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
BONDS--GOVERNMENT & GOVERNMENT AGENCIES: 25.5%
- -------------------------------------------------------------------------------
Argentina Domestic Securities
Trust (Morgan Stanley), 14.75%,
9/01/02 U.S. 430,000 $ 326,800
Argentina Local Markets Securities
Trust 1994-1
(Goldman Sachs Group, L.P.),
13.375%, 8/15/01 Arg. 750,000 703,125
Associacion Nacional del Cafe,
11.00%, 8/31/98 U.S. 460,000 464,600
Banco Central de Costa Rica, A,
6.25%, 5/21/10 U.S. 400,000 226,000
Banco Ganadero SA, 9.75%, 8/26/99,
144a U.S. 200,000 203,500
Bank Foreign Economic Affairs
Russia, 7.00%, 3/29/96 Ger. 1,000,000 693,492
Ceskoslovenska Obchodni Banka,
11.125%, 8/26/97 Csk. 5,420,000 206,410
Government of Brazil:
6.6875%, FRN A, 1/01/01 U.S. 1,567,500 1,329,436
7.25%, EI, FRN, L, 4/15/06 U.S. 1,290,000 857,850
conv., L, 7.3125%, FRN, 4/15/12 U.S. 1,200,000 696,000
Government of Uruguay, A, 6.75%,
2/19/21 U.S. 250,000 167,500
Kingdom of Jordan, 6.6875%, FRN,
12/23/05 U.S. 700,000 490,000
Kingdom of Morocco Loan Partn.,
5.9375%, FRN, 1/01/09 U.S. 1,500,000 935,625
National Bank of Hungary, 7.95%,
11/01/03 U.S. 200,000 178,500
Phillippine Pars, B, 5.75%, FRN,
12/01/17 U.S. 500,000 370,938
Poland, disc. 7.125%, FRN,
10/27/24 U.S. 619,000 478,951
Poland, PDI, 3.25%, FRN, 10/27/14 U.S. 347,000 219,478
PT Astra International, 9.75%,
4/29/01 U.S. 175,000 182,000
Rep. Turkey Public Partn. Auth.:
ser. 4, 6.5625%, 2/21/96 U.S. 40,000 39,700
ser. 5, 6.8125%, 2/21/97 U.S. 295,000 293,156
Republic of Argentina:
6.8125%, FRN, 3/31/05 U.S. 965,000 598,300
6.875%, FRN, 3/31/23 U.S. 300,000 175,500
Republic of Bulgaria, IAB, 6.75%,
FRN, 7/28/24 U.S. 1,000,000 450,000
Republic of Ecudaor:
7.25%, FRN, 2/28/25, 144a U.S. 825,000 406,312
6.75%, FRN, 12/21/04, 144a U.S. 172,575 100,525
6.8125%, FRN, 2/27/15, 144a U.S. 1,870,341 610,199
Republic of Panama, 7.125%, FRN,
5/10/02 U.S. 500,000 403,750
Republic of Venezuela:
9.00%, 5/27/96 U.S. 75,000 74,812
9.125%, 3/11/96 U.S. 150,000 150,375
Sei Holdings IX Inc., 11%,
11/30/00, 144a U.S. 210,000 211,313
Telefonica de Argentina SA,
11.875%, 11/01/04 U.S. 450,000 448,875
Thailand Military Bank, CD 11%,
6/05/96 U.S. 10,000,000 398,167
United Mexican States:
11.1875%, FRN, 7/20/97, 144a U.S. 750,000 763,125
8.50%, 9/15/02 U.S. 295,000 255,912
Vnesheconombank Loan Participation U.S. 750,000 254,062
-----------
TOTAL BONDS--GOVERNMENT & GOVERNMENT AGENCIES
(cost $14,147,346) 14,364,288
- -------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
IN LOCAL
INDUSTRY ISSUE COUNTRY CURRENCY** VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
INDEXED SECURITIES: 0.9%
- -------------------------------------------------------------------------------
Morgan Stanley Group, IDR
(principal and interest is linked
to the change in the Indian
Rupees to U.S. Dollar foreign
exchange rate between issue date
31.41 Rupee/U.S. Dollar) and
maturity date), 14.00%, 6/26/96 Ind. 210,000 $ 190,974
National Westminister Bank PLC
(principal and interest is linked
to the change in the Indian Rupee
to U.S. Dollar foreign exchange
rate between issue date (31.42
Rupee/U.S. Dollar and maturity
date), 14.00%, 4/24/96 U.S. 350,000 318,990
-----------
TOTAL INDEXED SECURITIES (cost $560,000) 509,964
- -------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 8.9%
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.,
5.57%, 10/27/95 U.S. 515,000 512,997
U.S. Treasury Bills, 5.16% to
5.385%, with
maturities to 11/24/95 U.S. 4,556,000 4,529,559
-----------
TOTAL SHORT TERM OBLIGATIONS (cost
$5,042,428) 5,042,556
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 98.9% (cost $59,542,842) 55,805,820
UNREALIZED GAIN IN FORWARD EXCHANGE CON-
TRACTS: 0.1% 32,256
OTHER ASSETS, LESS LIABILITIES: 1.0% 583,941
-----------
TOTAL NET ASSETS: 100.0% $56,422,017
===========
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $59,542,842) $55,805,820
Cash 4,530
Receivables:
Investment securities sold 332,160
Dividends and interest 647,747
Unrealized gain on forward exchange contracts (note 5) 32,256
Unamortized organization costs 14,053
-----------
Total assets 56,836,566
-----------
Liabilities:
Payable for investment securities purchased 242,736
Accrued expenses 171,813
-----------
Total liabilities 414,549
-----------
Net assets, at value $56,422,017
===========
Net assets consist of:
Undistributed net investment income $ 1,830,436
Net unrealized depreciation (3,705,828)
Accumulated net realized loss (765,728)
Net capital paid in on shares of
capital stock 59,063,137
-----------
Net assets, at value $56,422,017
===========
Shares outstanding 4,233,248
===========
Net asset value per share
($56,422,017 / 4,233,248) $ 13.33
===========
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended September 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $46,114
foreign taxes withheld)
Dividends $ 737,913
Interest 1,487,105
----------
Total income $2,225,018
Expenses:
Management fees (Note 3) 202,288
Administrative fees (Note 3) 69,288
Transfer agent fees 19,779
Custodian fees 17,754
Reports to shareholders 14,919
Audit fees 22,000
Legal fees (Note 3) 6,686
Registration and filing fees 8,419
Directors' fees and expenses 8,166
Amortization of organization costs 1,955
Other 10,248
----------
Total expenses 381,502
----------
Net investment income 1,843,516
Realized and unrealized
gain (loss):
Net realized loss on:
Investments (482,371)
Foreign currency transactions (85,203)
----------
(567,574)
----------
Net unrealized appreciation on:
Investments 5,138,169
Foreign currency
translation of other
assets and liabilities 44,188
----------
5,182,357
----------
Net realized and unrealized gain 4,614,783
----------
Net increase in net assets
resulting from operations $6,458,299
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS APRIL 29, 1994
ENDED (COMMENCEMENT OF
SEPTEMBER 30, 1995 OPERATIONS) TO
(UNAUDITED) MARCH 31, 1995
------------------ ----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 1,843,516 $ 2,039,681
Net realized gain (loss) on investment
and foreign currency transactions (567,574) 542,555
Net unrealized appreciation (deprecia-
tion) 5,182,357 (8,888,185)
----------- -----------
Net increase (decrease) in net assets
resulting from operations 6,458,299 (6,305,949)
Distributions to shareholders:
From net investment income (719,652) (1,333,109)
From net realized gain (338,660) (402,049)
Capital share transactions (Note 2) -- 58,963,126
----------- -----------
Net increase in net assets 5,399,987 50,922,019
Net assets:
Beginning of period 51,022,030 100,011
----------- -----------
End of period $56,422,017 $51,022,030
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Emerging Markets Appreciation Fund, Inc. (the Fund) was organized as
a Maryland corporation on February 16, 1994 and commenced operations on April
29, 1994 as a closed-end, non-diversified management investment company regis-
tered 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 Exchange Contracts:
The Fund may enter into forward exchange contracts and currency option con-
tracts in order to hedge against foreign exchange risks.
(i) Forward Exchange Contracts: These contracts are valued daily and the Fund's
equity therein, representing unrealized gain or loss on the contracts, is
included in the Statement of Assets and Liabilities. Realized and
unrealized gains and losses are included in the Statement of Operations.
(ii) Currency Option Contracts: Options purchased are recorded as investments:
options written (sold) are accounted for as liabilities. When an option
expires, the premium (original option value) is realized as a gain if the
option was written or realized as a loss if the option was purchased. When
the exercise of an option results in a cash settlement, the difference be-
tween the premium and the settlement proceeds is realized as a gain or
loss. When securities are acquired or delivered upon exercise of an op-
tion, the acquisition cost or sale proceeds are adjusted by the amount of
the premium. When an option is closed, the difference between the premium
and the cost to close the position is realized as a gain or loss.
c. Indexed Securities:
The Fund may invest in debt instruments in which the principal and/or interest
is dependent on another factor such as a yield curve, currency exchange rates
or commodity prices. The Fund's objective in holding these notes, commonly
called structured notes, is to tailor the Fund's investment based on specific
risk and returns it wishes to assume while avoiding unwanted risk or change the
Fund's exposure to a particular foreign exchange rate or the spread between two
foreign exchange rates.
d. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into 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 investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
17
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
e. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
f. 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 from foreign secu-
rities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
g. Unamortized Organization Costs:
Organization costs are being amortized on a straight line basis over five
years.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
On April 29, 1994, the fund completed the initial public offering of 4,000,000
shares of its common stock; proceeds paid to the Fund amounted to $55,776,685,
after deduction of underwriting commissions and expenses of $623,315. On June
17, 1994, the Fund completed a subsequent offering of 225,000 shares of its
common stock; proceeds paid to the Fund amounted to $3,172,500.
At September 30, 1995, there were 100,000,000 shares of capital stock autho-
rized ($0.01 par value).
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton In-
vestment Management (Singapore) Pte. Ltd., (TIMPL), Templeton Investment Coun-
sel, Inc. (TICI) and Templeton Global Investors, Inc. (TGII), the Fund's in-
vestment manager, sub-advisor and administrative manager, respectively.
The Fund pays monthly an investment management fee to TIMPL equal, on an annual
basis, to 1.25% of the average daily net assets of the Fund. Templeton Invest-
ment Management (Hong Kong) Limited acted as the Fund's investment manager,
prior to its reorganization as the Hong Kong office of TIMPL on September 30,
1995. TIMPL has entered into a sub-advisory agreement with TICI, whereby TICI
manages the debt component of the Fund's portfolio. For its services TIMPL pays
to TICI a fee equal, on an annual basis, to 0.30% of the Fund's average daily
net assets. TIMPL pays monthly an economic consulting and shareholder servicing
fee to Paine Webber (formerly Kidder, Peabody & Co.) equal, on an annual basis,
to 0.10% of the average daily net assets of the Fund. TIMPL and Paine Webber
have agreed to reduce their fee by one half during the quarter following the
fiscal period ending May 31, 1994 and any succeeding four full fiscal quarters
in which the average closing price of the Fund's shares on the New York Stock
Exchange is less than the $15 initial offering price. Such reduction in fees
for TIMPL and Paine Webber amounted to $144,150 and $11,564, respectively, for
the period ended September 30, 1995. The Fund pays TGII monthly a fee of 0.25%
per annum of the Fund's average daily net assets of which 0.20% is paid to
Princeton Administrators L.P., an affiliate of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, for sub-administration services.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $6,686 for the six months ended Sep-
tember 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended September 30, 1995 aggregated $7,924,496 and $4,725,005, respec-
tively. The cost of securities for federal income tax purposes is $59,542,842.
Realized gains and losses are reported on an identified cost basis.
18
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
At September 30, 1995, the gross unrealized appreciation and depreciation of
portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 3,373,933
Unrealized depreciation (7,110,955)
-----------
Net unrealized depreciation $(3,737,022)
===========
</TABLE>
5. FINANCIAL INSTRUMENTS
During the period ended September 30, 1995, the Fund has been a party to finan-
cial instruments with off-balance-sheet risks, primarily forward exchange con-
tracts, in order to minimize the risk to the Fund, with respect to its portfo-
lio transactions, from adverse changes in the relationship between the U.S.
dollar and foreign currencies and interest rates. These instruments involve
market risk in excess of the amount recognized on the Statement of Assets and
Liabilities; some of these risks have been minimized by offsetting contracts.
Risks arise from the possible inability of counterparties to meet the terms of
their contracts, future movement in currency values and interest rates and con-
tract positions that are not exact offsets. The contract amount indicates the
extent of the Fund's involvement in such contracts.
Forwards: A forward exchange contract is an agreement between two parties to
exchange different currencies at a specific rate at an agreed future date.
At September 30, 1995, the Fund had outstanding forward exchange contracts for
the sale of currencies as set out below. These contracts are reported in the
financial statements at the Fund's net equity, as measured by the difference
between the forward exchange rates at the reporting date and the forward ex-
change rates at the date of entry into the contract:
<TABLE>
<S> <C>
Net unrealized gain in forward exchange contract to sell
1,700,000 Deutschemarks for 1,222,582 U.S. dollars, October 12,
1995 $32,256
=======
</TABLE>
6. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE
NET GAIN (LOSS) (DECREASE)
ON INVESTMENT AND IN NET ASSETS
INVESTMENT NET INVESTMENT FOREIGN CURRENCY RESULTING FROM
INCOME INCOME TRANSACTIONS OPERATIONS
---------------- ---------------- ------------------- -------------------
PER PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
---------- ----- ---------- ----- ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996
For the quarter ended:
June 30, 1995 $1,366,960 $.32 $1,132,201 $.27 $ 3,736,719 $ .88 $ 4,868,920 $ 1.15
September 30, 1995 858,058 .20 711,315 .17 878,064 .21 1,589,379 .38
---------- ---- ---------- ---- ----------- ------ ----------- ------
$2,225,018 $.52 $1,843,516 $.44 $ 4,614,783 $ 1.09 $ 6,458,299 $ 1.53
========== ==== ========== ==== =========== ====== =========== ======
1995
For the quarter ended:
June 30, 1994 $ 426,842 $.10 $ 236,441 $.05 $(1,152,308) $ (.27) $ (915,867) $ (.22)
September 30, 1994 858,573 .20 539,556 .13 3,412,377 .80 3,951,933 .93
December 31, 1994 878,186 .21 608,449 .15 (7,059,694) (1.67) (6,451,245) (1.52)
March 31, 1995 792,291 .19 655,235 .16 (3,546,005) (.84) (2,890,770) (.68)
---------- ---- ---------- ---- ----------- ------ ----------- ------
$2,955,892 $.70 $2,039,681 $.49 $(8,345,630) $(1.98) $(6,305,949) $(1.49)
========== ==== ========== ==== =========== ====== =========== ======
</TABLE>
19
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
Annual Meeting of Shareholders, July 26, 1995
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on July 26, 1995. The purpose of
the meeting was to elect thirteen directors of the Fund, to ratify the selec-
tion of McGladrey & Pullen, LLP, as the Fund's independent public accountants
for the fiscal year ending March 31, 1996, and in their discretion, to autho-
rize the Proxyholders to vote upon such other matters which may legally come
before the meeting or any other adjournment thereof. At the meeting the follow-
ing persons were elected by the Shareholders to serve as directors of the Fund:
Harris J. Ashton, Nicholas F. Brady, F. Bruce Clarke, Martin L. Flanagan, S.
Joseph Fortunato, John Wm. Galbraith, Andrew H. Hines, Jr., Charles B. Johnson,
Rupert H. Johnson, Jr., Betty P. Krahmer, Gordon S. Macklin, Fred R. Millsaps
and Hasso-G Von Diergardt-Naglo. The Shareholders ratified the selection of
McGladrey & Pullen, LLP, to serve as the Fund's independent public accountants
for the fiscal year ending March 31, 1996. No other business was transacted at
the meeting
The results of the voting at the Annual Meeting are as follows:
1. ELECTION OF THIRTEEN (13) DIRECTORS FOR THE TERMS SET FORTH BELOW:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN %
--------- ----------- ------ ------- ----------- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
TERM EXPIRING 1998:
Harris J. Ashton 2,692,227 63.60% 97.45% 70,424 1.66% -- --
Nicholas F. Brady 2,692,127 63.59% 97.45% 70,524 1.67% -- --
S. Joseph Fortunato 2,693,627 63.63% 97.50% 69,024 1.63% -- --
Hasso-G Von Diegardt-
Naglo 2,690,761 63.56% 97.40% 71,890 1.70% -- --
TERM EXPIRING 1997:
F. Bruce Clarke 2,688,830 63.52% 97.33% 73,821 1.74% -- --
Martin L. Flanagan 2,693,727 63.63% 97.51% 68,924 1.63% -- --
Andrew H. Hines, Jr. 2,693,677 63.63% 97.50% 68,974 1.63% -- --
Charles B. Johnson 2,693,294 63.62% 97.49% 69,357 1.64% -- --
TERM EXPIRING 1996:
John Wm. Galbraith 2,691,938 63.59% 97.44% 70,713 1.67% -- --
Betty P. Krahmer 2,696,466 63.70% 97.60% 66,185 1.56% -- --
Gordon S. Macklin 2,692,727 63.61% 97.47% 69,924 1.65% -- --
Rupert J. Johnson, Jr. 2,693,244 63.62% 97.49% 69,407 1.64% -- --
Fred R. Millsaps 2,692,694 63.61% 97.47% 69,957 1.65% -- --
</TABLE>
2. RATIFICATION OF THE SELECTION OF MCGLADREY & PULLEN, LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE FUND FOR THE FISCAL YEAR ENDING MARCH 31, 1996:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES
--------- ----------- ------ ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
2,708,382 63.98% 98.04% 20,319 0.48% 33,950 0.80%
</TABLE>
20
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following
features: .If shares of the Fund are held in the shareholder's name, the share-
holder will automatically be a participant in the Plan unless he elects to
withdraw. If the shares are registered in the name of a broker-dealer or other
nominee (i.e., in "street name"), the broker-dealer or nominee will elect to
participate in the Plan on the shareholder's behalf unless the shareholder in-
structs them otherwise, or unless the reinvestment service is not provided by
the broker-dealer or nominee. .Participants should contact Chemical Mellon Se-
curities Trust Company, Dividend Reinvestment Services, P.O. Box 750, Pitts-
burgh, PA 15230, to receive the Plan brochure. .To receive dividends or distri-
butions in cash, the shareholder must notify Chemical Mellon Securities Trust
Company ("Mellon") or the institution in whose name the shares are held. Mellon
must receive written notice within 10 business days before the record date for
the distribution. .Whenever the Fund declares dividends in either cash or com-
mon stock of the Fund, if the market price is equal to or exceeds net asset
value at the valuation date, participants will receive the dividends entirely
in stock at a price equal to the net asset value but not less than 95% of the
then current market price of the Fund's shares. If the market price is lower
than net asset value and if dividends and/or capital gains distributions are
payable only in cash, the participant will receive shares purchased on the New
York Stock Exchange. .The automatic reinvestment of dividends and/or capital
gains does not relieve the participant of any income tax which may be payable
on dividends or distributions. .The participant may withdraw from the Plan
without penalty at any time by written notice to Mellon. Upon withdrawal, the
participant will receive, without charge, stock certificates issued and in the
participant's name for all full shares; or, if the participant's wishes, Mellon
will sell the participant's shares and send the proceeds, net of any brokerage
commissions. A $5.00 fee is charged by Mellon upon any cash withdrawal or ter-
mination. .Whenever shares are purchased on the New York Stock Exchange, each
participant will pay a pro rata portion of brokerage commissions. Brokerage
commissions will be deducted from amounts to be invested.
21
<PAGE>
Templeton Emerging Markets Appreciation Fund, Inc.
- --------------------------------------------------------------------------------
TRANSFER AGENT
Chemical Mellon Shareholder Services
Securities Transfer Services
450 West 33rd
Street, 15th Floor New York, NY 10001
800-526-0801
SHAREHOLDER INFORMATION
Weekly comparative net asset value and market price information about Templeton
Emerging Markets Appreciation Fund shares is published each Monday in The Wall
Street Journal, weekly in Barron's and each Saturday in The New York Times and
other newspapers in a table called "Publicly Traded Funds". Daily market prices
for the Fund's shares are published in the New York Stock Exchange Composite
Transactions section of newspapers under the designation "TempltnTEA". The
Fund's New York Stock Exchange trading symbol is TEA. The Fund's shares are
also listed and traded on the Pacific Stock Exchange.
For current information about the net asset value, call 1-800-292-9293.
If any shareholder is not receiving copies of the Reports to Shareholders be-
cause shares are registered in a broker's name or in a custodian's name, he or
she can write and request that his or her name be added to the Fund's mailing
list, by writing Templeton Emerging Markets Fund, Inc., 700 Central Avenue, St.
Petersburg, FL 33701.
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Notes
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TEMPLETON EMERGING MARKETS
APPRECIATION FUND, INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be aware that the value of investments made for the Fund may
go up as well as down and that the Investment Manager may make errors in
selecting securities for the Fund's portfolio. Like any investment in
securities, the Fund's portfolio will be subject to the risk of loss from
market, currency, economic, political, and other factors. The Fund and Fund
investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses should not
invest in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our
service departments may be monitored, recorded, and accessed. These calls can
be determined by the presence of a regular beeping tone.
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TLTEA S95 11/95
[RECYCLED PAPER LOGO APPEARS HERE]
TEMPLETON
EMERGING
MARKETS
APPRECIATION
FUND, INC.
Semi-Annual Report
September 30, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
