TEMPLETON EMERGING MARKETS APPRECIATION FUND INC, DEF 14A, 1998-07-17

TEMPLETON EMERGING MARKETS APPRECIATION FUND INC
DEF 14A, 1998-07-17

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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the registrant [ X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for use
of the Commission only (as
[ X ] Definitive proxy statement permitted Rule 14a-6(e)(2)

[ ] Definitive additional materials

[ ] Soliciting material pursuant to 240.14a-11(c) or 240.14a-12

TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC.
---------------------------------------------------
(Name of Registrant as Specified in Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[ X ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
O-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(Set forth the amount on
which the filing fee is calculated and state how it was
determined.)

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary material.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identifying the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:

<PAGE>

[GRAPHIC OMITTED]

TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC.

IMPORTANT SHAREHOLDER INFORMATION

This document announces the date, time and location of the annual shareholders
meeting, identifies the proposals to be voted on at the meeting, and contains
your proxy statement and proxy card. A proxy card is, in essence, a ballot.
When you vote your proxy, it tells us how you wish to vote on important issues
relating to your fund. If you complete and sign the proxy, we'll vote it
exactly as you tell us. If you simply sign the proxy, we'll vote it in
accordance with the Directors' recommendations on page 2 of the proxy
statement.

We urge you to spend a few minutes with the proxy statement, reviewing the
proposals at hand. Then, fill out your proxy card and return it to us. When
shareholders return their proxies promptly, the Fund may be able to save money
by not having to conduct additional mailings. We want to know how you would
like to vote and welcome your comments. Please take a few minutes with these
materials and return your proxy to us. If you have any questions, call Fund
Information at 1-800/DIAL BEN (R).

- --------------------------------------------------------------------------------

TELEPHONE AND INTERNET VOTING

For your convenience, you may be able to vote by telephone or through the
internet, 24 hours a day. If your account is eligible, a control number and
separate instructions are enclosed.

- --------------------------------------------------------------------------------

<PAGE>

[GRAPHIC OMITTED]

TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC.

NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS

TheAnnual Meeting ("Meeting") of shareholders of Templeton Emerging Markets
Appreciation Fund, Inc. (the "Fund") will be held at 500 East Broward Boulevard,
12th Floor, Ft. Lauderdale, Florida 33394-3091 on Tuesday, September 29, 1998 at
10:00 a.m. (EDT).

During the Meeting, shareholders of the Fund will vote on three proposals:

1. The election of Directors of the Fund to hold office for the terms specified;

2. The ratification or rejection of the selection of McGladrey & Pullen, LLP as
independent auditors of the Fund for the fiscal year ending March 31, 1999;
and

3. The transaction of any other business that may properly come before the
Meeting.

By order of the Board of Directors,

Barbara J. Green
Secretary
July 17, 1998

- --------------------------------------------------------------------------------

Many shareholders hold shares in more than one Templeton fund and will
receive proxy material for each fund owned. Please sign and promptly return
each proxy card in the self-addressed envelope regardless of the number of
shares you own.

- --------------------------------------------------------------------------------

<PAGE>

TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC.

PROXY STATEMENT

* INFORMATION ABOUT VOTING

WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on July 10, 1998 are entitled
to be present and to vote at the Meeting or any adjourned Meeting. Each share
of record is entitled to one vote on each matter presented at the Meeting. The
Notice of Meeting, the proxy card, and the proxy statement were mailed to
shareholders of record on or about July 17, 1998.

ON WHAT ISSUES AM I BEING ASKED TO VOTE?

You are being asked to vote on three proposals:

1. The election of five nominees to the position of Director;

2. The ratification or rejection of the selection of McGladrey & Pullen, LLP
as independent auditors of the Fund for the fiscal year ending March 31,
1999; and

3. The transaction of any other business that may properly come before the
Meeting.

<PAGE>

HOW DO THE FUND'S DIRECTORS RECOMMEND THAT I VOTE?

The Directors unanimously recommend that you vote:

1. FOR the election of nominees;

2. FOR the ratification of the selection of McGladrey & Pullen, LLP as
independent auditors of the Fund; and

3. FOR the proxyholders to vote, in their discretion, on any other business
that may properly come before the Meeting.

HOW DO I ENSURE THAT MY VOTE IS ACCURATELY RECORDED?

You may attend the Meeting and vote in person or you may complete and return
the attached proxy card. If you are eligible to vote by telephone or through
the internet, separate instructions are enclosed.

Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote for any of the
Proposals 1 through 3, your proxy will be voted as you indicated. If you simply
sign and date the proxy card, but don't specify a vote for any of the Proposals
1 through 3, your shares will be voted IN FAVOR of the nominees for Director
(Proposal 1), IN FAVOR of ratifying the selection of McGladrey & Pullen, LLP as
independent auditors (Proposal 2), and/or IN ACCORDANCE with the discretion of
the persons named in the proxy card as to any other matters that legally may
come before the Meeting (Proposal 3).

CAN I REVOKE MY PROXY?

You may revoke your proxy at any time before it is voted by (1) delivering a
written revocation to the Secretary of the Fund, (2) forwarding to the Fund a
later-dated proxy that is received by the Fund at or prior to the Meeting, or
(3) attending the Meeting and voting in person.

<PAGE>

* THE PROPOSALS

PROPOSAL 1: ELECTION OF DIRECTORS

HOW ARE NOMINEES SELECTED?

The Board of Directors of the Fund (the "Board") established a Nominating and
Compensation Committee (the "Committee") consisting of Andrew H. Hines, Jr.,
Edith E. Holiday and Gordon S. Macklin. The Committee is responsible for the
selection, nomination for appointment and election of candidates to serve as
Directors of the Fund. The Committee will review shareholders' nominations to
fill vacancies on the Board, if these nominations are in writing and addressed
to the Committee at the Fund's offices. However, the Committee expects to be
able to identify from its own resources an ample number of qualified
candidates.

WHO ARE THE NOMINEES AND DIRECTORS?

The Board is divided into three classes, each class having a term of three
years. Each year the term of office of one class expires. This year, the terms
of four Directors are expiring. Harris J. Ashton, Nicholas F. Brady, Frank J.
Crothers, and S. Joseph Fortunato have been nominated for terms set to expire
at the 2001 annual meeting of shareholders. Constantine D. Tseretopoulos has
been nominated for a two-year term, set to expire at the 2000 annual meeting
of shareholders. These terms continue, however, until successors are duly
elected and qualified. With the exception of Mr. Tseretopoulos, all of the
nominees are currently members of the Board. In addition, all of the current
nominees and Directors are also directors or trustees of other investment
companies in the Franklin Group of Funds- and the Templeton Group of Funds
(the "Franklin Templeton Group of Funds").

Certain Directors of the Fund hold director and/or officer positions with
Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are
Charles B. Johnson and Rupert H. Johnson, Jr., who own approximately 19% and
15%, respectively, of its outstanding shares. Resources is primarily engaged,
through various subsidiaries, in providing investment management, share
distribution, transfer agent and administrative services to a family of
investment companies. Resources is a New York Stock Exchange, Inc. ("NYSE")
listed holding company (NYSE: BEN). Charles E. Johnson, a vice president of
the Fund, is the son and nephew, respectively,

<PAGE>

of brothers Charles B. Johnson, the chairman of the Board and a vice president
of the Fund, and Rupert H. Johnson, Jr., a Director and vice president of the
Fund.

Each nominee is currently available and has consented to serve if elected. If
any of the nominees should become unavailable, the persons named in the proxy
card will vote in their discretion for another person or other persons who may
be nominated as Directors.

<TABLE>
Listed below, for each nominee and current Director, is a brief description of
recent professional experience.

<CAPTION>
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
FUND SHARES TEMPLETON
OWNED BENEFICIALLY GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING ON FUND) AS OF
WITH THE FUND YEARS AND AGE JUNE 19, 1998 JUNE 16, 1998
- ------------------------ ------------------------------------- -------------------- ---------------
<S> <C> <C> <C>
NOMINEES TO SERVE UNTIL 2001 ANNUAL MEETING OF SHAREHOLDERS:

HARRIS J. ASHTON Director, RBC Holdings, Inc. (a 500(**) 861,572
Director since 1994 bank holding company) and Bar-S
Foods (a meat packing company);
director or trustee, as the case may
be, of 49 of the investment
companies in the Franklin
Templeton Group of Funds; and
FORMERLY, President, Chief
Executive Officer and Chairman of
the Board, General Host
Corporation (nursery and craft
centers). Age 66.

</TABLE>
4

<PAGE>

</TABLE>
5

<PAGE>

S. JOSEPH FORTUNATO Member of the law firm of Pitney, 100(**) 359,946
Director since 1994 Hardin, Kipp & Szuch; director or
trustee, as the case may be, of 51
of the investment companies in the
Franklin Templeton Group of
Funds; and FORMERLY, Director,
General Host Corporation
(nursery and craft centers).
Age 65.

NOMINEE TO SERVE UNTIL 2000 ANNUAL MEETING OF SHAREHOLDERS:

CONSTANTINE DEAN Physician, Lyford Cay Hospital 0 75,334
TSERETOPOULOS (1987-present); director of various
nonprofit organizations; director or
trustee, as the case may be, of 5 of
the investment companies in the
Franklin Templeton Group of
Funds; and FORMERLY, Cardiology
Fellow, University of Maryland
(1985-1987) and Internal Medicine
Intern, Greater Baltimore Medical
Center (1982-1985). Age 44.
</TABLE>
6

<PAGE>

MARTIN L. FLANAGAN* Senior Vice President and Chief 0 2,803
Director and Vice President Financial Officer, Franklin
since 1994 Resources, Inc.; Executive Vice
President and Director, Templeton
Worldwide, Inc.; Executive Vice
President, Chief Operating Officer
and Director, Templeton
Investment Counsel, Inc.;
Executive Vice President and
Chief Financial Officer, Franklin
Advisers, Inc.; Chief Financial
Officer, Franklin Advisory
Services, Inc. and Franklin
Investment Advisory Services, Inc.;
President and Director, Franklin
Templeton Services, Inc.; Senior
Vice President and Chief Financial
Officer, Franklin/Templeton
Investor Services, Inc.; officer
and/or director of some of the
other subsidiaries of Franklin
Resources, Inc.; and officer and/or
director or trustee, as the case may
be, of 53 of the investment
companies in the Franklin
Templeton Group of Funds.
Age 38.
</TABLE>
7

<PAGE>

JOHN WM. GALBRAITH President, Galbraith Properties, 1,176(**) 1,243,462
Director since 1995 Inc. (personal investment
company); Director, Gulf West
Banks, Inc. (bank holding
company) (1995-present); director
or trustee, as the case may be, of
20 of the investment companies in
the Franklin Templeton Group of
Funds; and FORMERLY, Director,
Mercantile Bank (1991-1995), Vice
Chairman, Templeton, Galbraith &
Hansberger Ltd. (1986-1992), and
Chairman, Templeton Funds
Management, Inc. (1974-1991).
Age 76.

RUPERT H. Executive Vice President and 0 18,253,246
JOHNSON, JR* Director, Franklin Resources, Inc.
Director since 1994 and and Franklin Templeton
Vice President since 1996 Distributors, Inc.; President and
Director, Franklin Advisers, Inc.;
Senior Vice President and
Director, Franklin Advisory
Services, Inc. and Franklin
Investment Advisory Services, Inc.;
Director, Franklin/Templeton
Investor Services, Inc.; and officer
and/or director or trustee, as the
case may be, of most of the other
subsidiaries of Franklin Resources,
Inc. and of 53 of the investment
companies in the Franklin
Templeton Group of Funds.
Age 57.
</TABLE>
11

<PAGE>

GORDON S. MACKLIN Director, Fund American 2,000(**) 458,864
Director since 1994 Enterprises Holdings, Inc., MCI
Communications Corporation,
MedImmune, Inc. (biotechnology),
Spacehab, Inc. (aerospace services)
and Real 3D (software); director
or trustee, as the case may be, of
49 of the investment companies in
the Franklin Templeton Group of
Funds; and FORMERLY, Chairman,
White River Corporation (financial
services) and Hambrecht and
Quist Group (investment banking)
and President, National
Association of Securities Dealers,
Inc. Age 70.
</TABLE>
12

<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
FUND SHARES TEMPLETON
OWNED BENEFICIALLY GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING ON FUND) AS OF
WITH THE FUND YEARS AND AGE JUNE 19, 1998 JUNE 16, 1998
- ------------------------ ------------------------------------ -------------------- ---------------
<S> <C> <C> <C>
FRED R. MILLSAPS Manager of personal investments 0 700,551
Director since 1994 (1978-present); director of various
business and nonprofit
organizations; director or trustee,
as the case may be, of 22 of the
investment companies in the
Franklin Templeton Group of
Funds; and FORMERLY, Chairman
and Chief Executive Officer,
Landmark Banking Corporation
(1969-1978), Financial Vice
President, Florida Power and Light
(1965-1969), and Vice President,
Federal Reserve Bank of Atlanta
(1958-1965). Age 69.
<FN>
------------------------
* Nicholas F. Brady, Martin L. Flanagan, Charles B. Johnson, and Rupert H.
Johnson are "interested persons" as defined by the Investment Company Act
of 1940, as amended (the "1940 Act"). The 1940 Act limits the percentage
of interested persons that can comprise a fund's board of directors.
Charles B. Johnson and Rupert H. Johnson are interested persons due to
their ownership interest in Resources. Martin L. Flanagan is an interested
person due to his employment affiliation with Resources, whereas Nicholas
F. Brady's status as an interested person results from his business
affiliations with Resources and Templeton Global Advisors Limited. Mr.
Brady and Resources are both limited partners of Darby Overseas Partners,
L.P. ("Darby Overseas"). Mr. Brady is Chairman and shareholder of Darby
Emerging Markets Investments LDC, which is the corporate general partner of
Darby Overseas. In addition, Darby Overseas and Templeton Global Advisors
Limited are limited partners of Darby Emerging Markets Fund, L.P. The
remaining nominees and Directors are not interested persons of the Fund
(the "Independent Directors").
** Less than 1%.
</FN>
</TABLE>

HOW OFTEN DO THE DIRECTORS MEET AND WHAT ARE THEY PAID?

The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of
shareholders. The Directors anticipate meeting at least five times during
the current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Directors also oversee the services furnished
to the Fund by Templeton Asset Management Ltd.-Hong Kong branch, the Fund's
investment

<PAGE>

manager (the "Investment Manager"), and various other service providers.
The Fund currently pays the Independent Directors and Mr. Brady a fee of
$100 per Board meeting attended. Directors serving on the audit committee
of the Fund and other investment companies in the Franklin Templeton Group
of Funds receive a flat fee of $2,000 per audit committee meeting attended,
a portion of which is allocated to the Fund. Members of the Nominating and
Compensation Committee are not compensated for any committee meeting that
is held in conjunction with a Board meeting.

During the fiscal year ended March 31, 1998, there were four meetings of
the Board, one meeting of the Audit Committee, and two meetings of the
Nominating and Compensation Committee. Each of the Directors then in office
attended at least 75% of the total number of meetings of the Board. There
was 100% attendance at all committee meetings during the fiscal year.

Certain Directors and Officers of the Fund are shareholders of Resources
and may receive indirect remuneration due to their participation in
management fees and other fees received from the Franklin Templeton Group
of Funds by the Investment Manager and its affiliates. The Investment
Manager or its affiliates pay the salaries and expenses of the Officers. No
pension or retirement benefits are accrued as part of Fund expenses.

<TABLE>
The following table shows the compensation paid to Directors by the Fund
and by the Franklin Templeton Group of Funds:

<CAPTION>
AGGREGATE NUMBER OF BOARDS WITHIN THE TOTAL COMPENSATION FROM
COMPENSATION FRANKLIN TEMPLETON GROUP OF THE FRANKLIN TEMPLETON
NAME OF DIRECTOR FROM THE FUND* FUNDS ON WHICH DIRECTOR SERVES** GROUP OF FUNDS***
- ------------------------- ---------------- ---------------------------------- ------------------------
<S> <C> <C> <C>
Harris J. Ashton $1,400 49 $344,642
Nicholas F. Brady 1,400 21 119,675
Frank J. Crothers 1,050 5 35,300
S. Joseph Fortunato 1,400 51 361,562
John Wm. Galbraith 1,384 20 117,675
Andrew H. Hines, Jr. 1,484 22 144,175
Edith E. Holiday 1,400 25 72,875
Betty P. Krahmer 1,400 21 119,675
Gordon S. Macklin 1,400 49 337,292
Fred R. Millsaps 1,484 22 144,175

<FN>
-------------------------
* Compensation received for the fiscal year ended March 31, 1998, which was
prior to the adoption of the current fee compensation referred to above.
** We base the number of boards on the number of registered investment
companies in the Franklin Templeton Group of Funds. This number does not
include the total number of series or funds within each investment
company for which the Board members are responsible. The Franklin
Templeton Group of Funds currently includes 55 registered investment
companies, with approximately 170 U.S. based funds or series.
*** For the calendar year ended December 31, 1997.
</FN>
</TABLE>

<PAGE>

The table above indicates the total fees paid to Directors by all of the
funds in the Franklin Templeton Group of Funds and by the Fund
individually. These Directors also serve as directors or trustees of other
investment companies in the Franklin Templeton Group of Funds, many of
which hold meetings at different dates and times. The Directors and the
Fund's management believe that having the same individuals serving on the
boards of many of the funds in the Franklin Templeton Group of Funds
enhances the ability of each fund to obtain, at a relatively modest cost to
each separate fund, the services of high caliber, experienced and
knowledgeable Independent Directors who can more effectively oversee the
management of the funds.

WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?

<TABLE>
Officers of the Fund are appointed by the Directors and serve at the
pleasure of the Board. Listed below, for each Executive Officer, is a brief
description of recent professional experience:

<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- ------------------------------ ----------------------------------------------------------------
<S> <C>
CHARLES B. JOHNSON See Proposal 1, "Election of Directors."
Chairman since 1995 and
Vice President since 1994

J. MARK MOBIUS Portfolio Manager of various Templeton advisory affiliates;
President since 1994 Managing Director of Templeton Asset Management Ltd.;
officer of 8 of the investment companies in the Franklin
Templeton Group of Funds; and FORMERLY, President,
International Investment Trust Company Limited (investment
manager of Taiwan R.O.C. Fund) (1986-1987) and Director,
Vickers da Costa, Hong Kong (1983-1986). Age 61.

RUPERT H. JOHNSON, JR. See Proposal 1, "Election of Directors."
Director since 1994 and
Vice President since 1996

HARMON E. BURNS Executive Vice President and Director, Franklin Resources,
Vice President since 1996 Inc., Franklin Templeton Distributors, Inc. and Franklin
Templeton Services, Inc.; Executive Vice President, Franklin
Advisers, Inc.; Director, Franklin/Templeton Investor
Services, Inc.; officer and/or director or trustee, as the case
may be, of most of the other subsidiaries of Franklin
Resources, Inc. and of 53 of the investment companies in the
Franklin Templeton Group of Funds. Age 53.
</TABLE>
15

<PAGE>

<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- ------------------------------- -----------------------------------------------------------------
<S> <C>
CHARLES E. JOHNSON Senior Vice President and Director, Franklin Resources, Inc.;
Vice President since 1996 Senior Vice President, Franklin Templeton Distributors, Inc.;
President and Director, Templeton Worldwide, Inc.; President,
Chief Executive Officer, Chief Investment Officer and
Director, Franklin Institutional Services Corporation;
Chairman and Director, Templeton Investment Counsel, Inc.;
Vice President, Franklin Advisers, Inc.; officer and/or director
of some of the other subsidiaries of Franklin Resources, Inc.;
and officer and/or director or trustee, as the case may be, of
34 of the investment companies in the Franklin Templeton
Group of Funds. Age 42.

DEBORAH R. GATZEK Senior Vice President and General Counsel, Franklin
Vice President since 1996 Resources, Inc.; Senior Vice President, Franklin Templeton
Services, Inc. and Franklin Templeton Distributors, Inc.;
Executive Vice President, Franklin Advisers, Inc.; Vice
President, Franklin Advisory Services, Inc.; Vice President,
Chief Legal Officer and Chief Operating Officer, Franklin
Investment Advisory Services, Inc.; and officer of 53 of the
investment companies in the Franklin Templeton Group of
Funds. Age 49.

MARK G. HOLOWESKO President and Chief Investment Officer, Templeton Global
Vice President since 1994 Advisors Limited; Executive Vice President and Director,
Templeton Worldwide, Inc.; officer of 21 of the investment
companies in the Franklin Templeton Group of Funds; and
FORMERLY, Investment Administrator, RoyWest Trust
Corporation (Bahamas) Limited (1984-1985). Age 38.

MARTIN L. FLANAGAN See Proposal 1, "Election of Directors."
Director and Vice President
since 1994

SAMUEL J. FORESTER, JR. Vice President of 10 of the investment companies in the
Vice President since 1994 Franklin Templeton Group of Funds; and FORMERLY, President,
Templeton Global Bond Managers, a division of Templeton
Investment Counsel, Inc., Founder and Partner, Forester,
Hairston Investment Management, Inc. (1989-1990),
Managing Director (Mid-East Region), Merrill Lynch, Pierce,
Fenner & Smith Inc. (1987-1988), and Advisor for Saudi
Arabian Monetary Agency (1982-1987). Age 50.
</TABLE>
16

<PAGE>

<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- ------------------------------ -----------------------------------------------------------------
<S> <C>
DOUGLAS LEMPEREUR Managing Director, Global Corporate Development,
Vice President since 1994 Templeton Worldwide, Inc. and officer of 3 of the investment
companies in the Franklin Templeton Group of Funds; and
FORMERLY, Senior Vice President, Templeton Global Bond
Managers, a division of Templeton Investment Counsel, Inc.,
Vice President and Assistant Director of Research, Colonial
Management Associates (1985-1988), Vice President and
Director, Standish, Ayer & Wood (investment management
firm) (1977-1985), and Securities Analyst, The First National
Bank of Chicago (1974-1977). Age 49.

JOHN R. KAY Vice President and Treasurer, Templeton Worldwide, Inc.;
Vice President since 1994 Assistant Vice President, Franklin Templeton Distributors,
Inc.; officer of 25 of the investment companies in the Franklin
Templeton Group of Funds; and FORMERLY, Vice President and
Controller, Keystone Group, Inc. Age 57.

ELIZABETH M. KNOBLOCK General Counsel, Secretary and Senior Vice President,
Vice President-Compliance Templeton Investment Counsel, Inc.; Senior Vice President,
since 1996 Templeton Global Investors, Inc.; officer of 21 of the
investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, Vice President and Associate General
Counsel, Kidder Peabody & Co. Inc. (1989-1990), Assistant
General Counsel, Gruntal & Co., Inc. (1988), Vice President
and Associate General Counsel, Shearson Lehman Hutton
Inc. (1988), Vice President and Assistant General Counsel,
E.F. Hutton & Co. Inc. (1986-1988), and Special Counsel of
the Division of Investment Management, U.S. Securities and
Exchange Commission (1984-1986). Age 43.

BARBARA J. GREEN Senior Vice President, Templeton Worldwide, Inc. and
Secretary since 1996 Templeton Global Investors, Inc.; officer of 21 of the
investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, Deputy Director of the Division of
Investment Management, Executive Assistant and Senior
Advisor to the Chairman, Counselor to the Chairman, Special
Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995), Attorney, Rogers & Wells, and
Judicial Clerk, U.S. District Court (District of Massachusetts).
Age 50.
</TABLE>
17

<PAGE>

<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- ------------------------- ------------------------------------------------------------
<S> <C>
JAMES R. BAIO Certified Public Accountant; Treasurer, Franklin Mutual
Treasurer since 1994 Advisers, Inc.; Senior Vice President, Templeton Worldwide,
Inc., Templeton Global Investors, Inc. and Templeton Funds
Trust Company; officer of 22 of the investment companies in
the Franklin Templeton Group of Funds; and FORMERLY, Senior
Tax Manager, Ernst & Young (certified public accountants)
(1977-1989). Age 44.
</TABLE>

PROPOSAL 2: RATIFICATION OR REJECTION OF INDEPENDENT AUDITORS

HOW ARE INDEPENDENT AUDITORS SELECTED?

The Board has a standing Audit Committee consisting of Messrs. Galbraith,
Hines and Millsaps, all of whom are Independent Directors. The Audit
Committee reviews the maintenance of the Fund's records and the safekeeping
arrangements of the Fund's custodian, reviews both the audit and non-audit
work of the Fund's independent auditors, and submits a recommendation to
the Board as to the selection of independent auditors.

WHICH INDEPENDENT AUDITORS DID THE BOARD SELECT?

For the current fiscal year, the Board selected as auditors the firm of
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017.
McGladrey & Pullen, LLP has been the auditors of the Fund since its
inception in 1994, and has examined and reported on the fiscal year-end
financial statements, dated March 31, 1998, and certain related Securities
and Exchange Commission filings. Neither the firm of McGladrey & Pullen,
LLP nor any of its members have any material direct or indirect financial
interest in the Fund.

Representatives of McGladrey & Pullen, LLP are not expected to be present
at the Meeting, but have been given the opportunity to make a statement if
they wish, and will be available should any matter arise requiring their
presence.

<PAGE>

PROPOSAL 3: OTHER BUSINESS

The Directors know of no other business to be presented at the Meeting.
However, if any additional matters should be properly presented, proxies will
be voted or not voted as specified. Proxies reflecting no specification will
be voted in accordance with the judgment of the persons named in the proxy.

* INFORMATION ABOUT THE FUND

The Fund's last audited financial statements and annual report, dated March
31, 1998, are available free of charge. To obtain a copy, please call
1-800/DIAL BEN- or forward a written request to Franklin/Templeton Investor
Services, Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030.

As of July 10, 1998, the Fund had 4,384,710 shares outstanding and net assets
of $52,046,768. The Fund's shares are listed on the NYSE (Symbol: TEA). From
time to time, the number of shares held in "street name" accounts of various
securities dealers for the benefit of their clients may exceed 5% of the total
shares outstanding. To the knowledge of the Fund's management, as of June 16,
1998, there were no other entities holding beneficially or of record more than
5% of the Fund's outstanding shares.

In addition, to the knowledge of the Fund's management, as of June 19, 1998,
no nominee or Director of the Fund owned 1% or more of the outstanding shares
of the Fund, and the Officers and Directors of the Fund owned, as a group,
less than 1% of the outstanding shares of the Fund.

<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. U.S. securities laws
require that the Fund's Directors, Officers and shareholders owning more than
10% of outstanding shares, as well as affiliated persons of its Investment
Manager, report their ownership of the Fund's shares and any changes in that
ownership. Specific due dates for these reports have been established, and the
Fund is required to report in this proxy statement any failure to file by
these dates during the fiscal year ended March 31, 1998. To the best of the
Fund's knowledge, all of these filing requirements were met.

THE INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton Asset
Management Ltd.-Hong Kong branch ("Asset Management Hong Kong"), a Singapore
company with a branch office at Two Exchange Square, Hong Kong. Pursuant to an
investment management agreement, Asset Management Hong Kong manages the
investment and reinvestment of Fund assets. Asset Management Hong Kong has
entered into a sub-advisory agreement with Templeton Investment Counsel, Inc.
("Investment Counsel"), Broward Financial Centre, Suite 2100, Ft. Lauderdale,
Florida 33394-3091. Investment Counsel, acting through its Templeton Global
Bond Managers division, is responsible for managing the debt component of the
Fund's portfolio. Asset Management Hong Kong and Investment Counsel are
indirect, wholly-owned subsidiaries of Resources.

THE ADMINISTRATOR. The administrator of the Fund is Franklin Templeton
Services, Inc. ("FT Services"), with offices at 777 Mariners Island Boulevard,
San Mateo, California 94403-7777. FT Services is an indirect, wholly-owned
subsidiary of Resources. Pursuant to an administration agreement, FT Services
performs certain administrative functions for the Fund. In addition, FT
Services and the Fund have entered into a sub-administration agreement with
Princeton Administrators, L.P. ("Princeton"), pursuant to which Princeton
performs, subject to FT Services' supervision, various administrative
functions for the Fund. Princeton is an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Inc., an initial underwriter of the Fund's shares, and
Princeton's address is P.O. Box 9011, Princeton, New Jersey 08543-9011.

THE TRANSFER AGENT. The transfer agent, registrar and dividend disbursement
agent for the Fund is ChaseMellon Shareholder Services, L.L.C., 120 Broadway,
New York, New York 10271.

THE CUSTODIAN. The custodian for the Fund is The Chase Manhattan Bank, 1 Chase
Manhattan Plaza, New York, New York 10081.

<PAGE>

* FURTHER INFORMATION ABOUT VOTING AND
THE SHAREHOLDERS MEETING

SOLICITATION OF PROXIES. The cost of soliciting proxies, including the fees of a
proxy soliciting agent, are borne by the Fund. The Fund reimburses brokerage
firms and others for their expenses in forwarding proxy material to the
beneficial owners and soliciting them to execute proxies. The Fund does not
reimburse Directors and Officers of the Fund, and regular employees and agents
of the Investment Manager involved in the solicitation of proxies.

VOTING BY BROKER-DEALERS. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers and clients, will request voting instructions from their customers,
clients and beneficial owners. If these instructions are not received by the
date specified in the broker-dealer firms' proxy solicitation materials, the
Fund understands that NYSE Rules permit the broker-dealers to vote on the items
to be considered at the Meeting on behalf of their customers, clients, and the
beneficial owners. Certain broker-dealers may exercise discretion over shares
held in their name for which no instructions are received by voting these shares
in the same proportion as they vote shares for which they received instructions.

QUORUM. A majority of the shares entitled to vote--present in person or
represented by proxy--constitutes a quorum at the Meeting. The shares over which
broker-dealers have discretionary voting power, the shares that represent
"broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), and the shares whose proxies reflect an
abstention on any item are all counted as shares present and entitled to vote
for purposes of determining whether the required quorum of shares exists.

METHODS OF TABULATION. Proposal 1, the election of Directors, requires the
affirmative vote of the holders of a plurality of the Fund's shares present and
voting on the Proposal at the Meeting. Proposal 2, ratification of the selection
of the independent auditors, requires the affirmative vote of a majority of the
Fund's shares present and voting on the Proposal at the Meeting. Proposal 3, the
transaction of any other business, requires the affirmative vote of a majority
of the Fund's shares present and voting on the Proposal at the Meeting.
Abstentions and broker non-votes will be treated as votes not cast and,
therefore, will not be counted for purposes of obtaining approval of Proposals
1, 2, and 3.

<PAGE>

SIMULTANEOUS MEETINGS. The Meeting is to be held at the same time as the meeting
of Templeton Russia Fund, Inc. It is anticipated that both meetings will be held
simultaneously. If any shareholder at the Meeting objects to the holding of a
simultaneous meeting and moves for an adjournment of the Meeting to a time
promptly after the simultaneous meeting, the persons named as proxies will vote
in favor of such adjournment.

ADJOURNMENT. In the event that a quorum is not present at the Meeting, the
Meeting will be adjourned to permit further solicitation of proxies. In the
event that a quorum is present, but sufficient votes have not been received to
approve one or more of the proposals, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies with respect to those proposals. The persons named as proxies will vote
in their discretion on questions of adjournment those shares for which proxies
have been received that grant discretionary authority to vote on other matters
that may properly come before the Meeting.

SHAREHOLDER PROPOSALS. The Fund anticipates that its next annual meeting will be
held in September, 1999. Shareholder proposals to be presented at the next
annual meeting must be received at the Fund's offices, 500 East Broward
Boulevard, Ft. Lauderdale, Florida 33394-3091, no later than March 19, 1999.

By order of the Board of Directors,

Barbara J. Green
Secretary

July 17, 1998

PAGE

PROXY

TEMPLETON RUSSIA FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 29, 1998

The undersigned hereby appoints BARBARA J. GREEN, JAMES R. BAIO and JOHN R.
KAY, and each of them, proxies of the undersigned with full power of
substitution to vote for share of Templeton Russia Fund, Inc. (the "Fund") which
the undersigned is entitled to vote at the Fund's Annual Meeting to be held at
500 East Broward Blvd., 12th Floor, Ft. Lauderdale, Florida at 10:00 a.m.., EDT,
on the 29th day of September 1998, including any adjournment thereof, upon the
matters set forth below and evokes all previous proxies for his shares.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED FOR PROPOSALS
1 (INCLUDING ALL NOMINEES FOR DIRECTORS) AND 2, AND WITHIN THE DISCRETION OF THE
PROXYHOLDERS AS TO ANY OTHER MATTER PURSUANT TO PROPOSAL 3.

CONTINUED AND TO SIGN ON REVERSE SIDE SEE REVERSE SIDE

FOLD AND DETACH HERE

PAGE

X PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE

1 - Election of Directors
Nominees: Frank J. Crothers, Martin L. Flanagan, John Wm. Galbraith, Andrew H.
Hines, Jr., Edith E.Holiday and Charles B. Johnson.

FOR all nominees WITHHOLD
listed (except as AUTHORITY
marked to the right) to vote for all
nominees listed
above
[ ] [ ]

To withhold authority to vote for any indivdual nominee, write that nominee's
name on the line below.

------------------------------------------------------------------------

2 - Ratification of the selection of McGladrey & Pullen, LLP, as independent
auditors for the Fund for the fiscal year ending March 31, 1999.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

3- In their descretion, the Proxyholders are authorized to vote upon such other
matters which may legally come before the Meeting or any adjournments thereof.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

YES NO
I PLAN TO ATTEND THE MEETING. [ ] [ ]

Signature(s): Date: ,1998
------------------------------------------------ --------
Please sign exactly as your name appears on the proxy. If signing for estates,
trusts or corporations, title or capacity should be stated. If shares are held
jointly, each holders must sign.

FOLD AND DETACH HERE