-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vi2G5Nqpj7hjBfZ0kmTq7wIOqlTK2c3EuNNqg379JRcuO5QFqonZKiOUx1aJHHxw 46PgLdstwZ3RE8x9zoA64A== 0000950109-95-004375.txt : 19951101 0000950109-95-004375.hdr.sgml : 19951101 ACCESSION NUMBER: 0000950109-95-004375 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951031 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON EMERGING MARKETS FUND INC CENTRAL INDEX KEY: 0000809708 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04985 FILM NUMBER: 95585883 BUSINESS ADDRESS: STREET 1: 700 CENTRAL AVE STREET 2: BOX 33030 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138238712 N-30D 1 ANNUAL REPORT Templeton Emerging Markets Fund - --------------------- PHOTO OF J. MARK MOBIUS, PH.D. APPEARS HERE] - --------------------- J. Mark Mobius, Ph.D. President Templeton Emerging Markets Fund - --------------------- Dr. Mobius has been living overseas since earning his Ph.D. in economics and political science at Massachusetts Institute of Technology in 1964. During his extensive travels, he has acquired a thorough knowledge of the business practices and customs that are unique to developing nations. Together with his team of Templeton analysts, Dr. Mobius currently oversees more than $6 billion in emerging markets investments for the Templeton Group of Funds. - -------------------------------------------------------------------------------- Your Fund's Objectives: The Templeton Emerging Markets Fund seeks long-term capital appreciation by primarily investing in emerging country equity securities. - -------------------------------------------------------------------------------- October 16, 1995 Dear Shareholder: During the fiscal year ended August 31, 1995, emerging markets experienced normal corrections, which resulted in the Templeton Emerging Markets Fund declining by -8.53% in net asset value terms and -16.94% in market-price terms, as shown in the Performance Summary on page 5. However, we have always maintained a long-term perspective in managing the Fund, and we urge shareholders to view their investments in the same manner. During the period from the Fund's inception on February 26, 1987 to August 31, 1995, the Fund provided a cumulative total return of 411.60%. The first six months of the fiscal year were difficult for investors in emerging markets. In Latin America, 1 excessive consumption, failure to invest foreign capital in hard assets, a large deficit, and an unfavorable trade balance devastated the Mexican economy. After the Secretary General of the governing Partido Revolucionario Institucional (PRI) was assassinated in September 1994, foreign investment started leaving the country. In December, the government attempted to defend the peso, but was unsuccessful, and within one month, devalued it by 43%. As a result, the Mexican stock market plummeted. Some investors sold shares in other Latin American markets to cover losses in Mexico, others feared that Argentina's dollarized currency might also face devaluation, and ripple effects were felt in emerging markets around the world. In Asia, the threat of a trade war between China and the U.S., and the uncertain health of Chinese leader Deng Xiao Ping, adversely affected the Chinese stock market. Hong Kong's economy (closely linked to conditions in China) slowed, and its stock market plunged due to rising interest rates, weakening residential property prices, and concerns about China's takeover of Hong Kong in 1997. And Turkey was struck by a recession. However, the second half of the fiscal year presented a different picture. The reduction of U.S. interest rates improved prospects for the economies of Mexico and - -------------------------------------------------------------------------------- Templeton Emerging Markets Fund Geographic Distribution on 8/31/95 Based on Total Net Assets [PIE CHART APPEARS HERE] Latin American Stocks 26.5% European Stocks 13.0% Asian Stocks 51.2% Other Stocks 0.9% Short-Term Obligations & Other Net Assets 8.4%
Argentina. The International Monetary Fund's efforts to stabilize the Mexican peso were successful, Mexico's interest rates eased, and it was able to compete again in international markets. Those South American countries suffering from the so-called "tequila effect" of the Mexican Peso crisis recovered, as investors realized that these countries' economic fundamentals had not changed overnight. Also encouraging was the fact that after experiencing strong growth in the first half of the fiscal year, Brazil's economy showed signs of slowing. The economic picture was brighter in Asia. The impending trade war between China and the U.S. was averted on February 26, 1995, when China agreed to increase its protection of copyrighted works by establishing courts to 2 prosecute trademark pirates. China's political arena became less confused as Deng's influence waned and President Jiang Zemin became more secure in his position. By August 31, 1995, Chinese real economic growth stood at about 10% and inflation dropped to 20% from 25.2% in October 1994, after the government tightened credit and imposed price controls. In addition, property values rose in Hong Kong, and its stock market rebounded. At the end of the fiscal year, 91.6% of the Fund's total net assets were invested in equities, with the remaining 8.4% in cash and other liquid assets. As reported in the Investment Portfolio section on page 11, these assets were allocated across 25 emerging markets. The largest portion was invested in Asia (51.2%), where we found the largest number of bargain stocks, followed by Latin America (26.5%), and Europe (13%). Looking ahead, we are optimistic about opportunities for the Templeton Emerging Markets Fund. China's emerging-market economy and Japan's mature economy are fueling growth throughout Asia, making it an exciting area for investment. The Chinese economy is prospering, and the Japanese are increasingly investing in Asia, as they seek to lower their manufacturing costs. Although the Fund does not invest in Japan, that country's - -------------------------------------------------------------------------------- Templeton Emerging Markets Fund Top 10 Holdings on 8/31/95 Based on Total Net Assets
% of Total Company, Industry, Country Net Assets - -------------------------------------------------------------------------------- Philippine Long Distance Telephone Co., Telecommunications, Philippines 4.8% - -------------------------------------------------------------------------------- Telefonos de Mexico SA, Telecommunications, Mexico 4.6% - -------------------------------------------------------------------------------- P T Barito Pacific Timber, Forest Products & Paper, Indonesia 4.0% - -------------------------------------------------------------------------------- Cheung Kong Holdings Ltd., Multi-Industry, Hong Kong 3.1% - -------------------------------------------------------------------------------- Telebras-Telecomunicacoes Brasileiras SA, Telecommunications, Brazil 2.9% - -------------------------------------------------------------------------------- Philippine National Bank, Banking, Philippines 2.8% - -------------------------------------------------------------------------------- Antofagasta Holdings PLC, Metals & Mining, Chile 2.7% - -------------------------------------------------------------------------------- Banco Comercial Portugues SA, Banking, Portgual 2.7% - -------------------------------------------------------------------------------- Electrobras-Centrais Electricas Brasileiras SA, Utilities, Electrical & Gas, Brazil 2.5% - -------------------------------------------------------------------------------- Arcelik A S, Appliances & Household Durables, Turkey 2.3% - --------------------------------------------------------------------------------
For a detailed listing of portfolio holdings, see page 11 of this report. influence on the growth of the region's emerging markets cannot be ignored. Also encouraging is Turkey's recent recovery from its recession. Although inflation there was high, its current account was in surplus on August 31, 1995. Even though we currently have no holdings in Russia, we believe that its plentiful natural resources offer 3 tremendous incentive for investment. Unfortunately, Russia's social, political and economic environments are gripped by problems. Inflation runs in triple figures, unemployment is rising, and we feel that President Boris Yeltsin's credibility is being eroded by his poor health and increasingly authoritarian style. We will continue, however, to monitor investment opportunities in Russia. In our opinion, Latin American countries have greater economic dynamism and growth potential than the developed world, and offer many untapped opportunities. However, domestically generated financial resources are weak in Latin America, partly because of low savings rates. Although we continue to be attracted to many individual Latin American investments, our enthusiasm is tempered by the knowledge that there may be better bargains in other emerging markets. In seeking to provide our shareholders with the best investment opportunities, we shall continue to search the world for companies that are not just "cheap," but that we believe are genuine bargains. Of course, investors should remember that investing in emerging markets involves special considerations, including 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 market has increased 763% in the last 15 years, but has suffered six declines of more than 20% during that time./1/ In closing, we would like to mention that, although Sir John Templeton has not been involved in investment management of the Templeton funds since October 1992, we were saddened by his recent decision to step down as Chairman and Director of the U.S.-registered Templeton funds. The Fund's Board of Directors has elected John Wm. Galbraith, former vice chairman of Templeton, Galbraith & Hansberger, Ltd. to succeed him. The investment manager will continue to use the investment philosophies and principals established by Sir John. We thank you for your participation in the Templeton Emerging Markets Fund and welcome your comments and suggestions. 1. Source: Bloomberg. Based on quarterly percentage change over 15 years ended June 30, 1995. 4 - -------------------------------------------------------------------------------- Performance Summary In market-price terms, the Templeton Emerging Markets Fund produced a total return of -16.94% for the one-year period ended August 31, 1995. Based on the change in actual net asset value (in contrast to market price), total return was -8.53% for the same period. Both total return figures assume reinvestment of dividends and capital gains in accordance with the dividend reinvestment plan. We have always maintained a long-term perspective when managing the Fund, and we encourage shareholders to view their investments in a similar manner. As you can see from the chart to the right, based on the change in market price, the Fund delivered a cumulative total return of 411.60% for the period from its inception on February 26, 1987, to August 31, 1995. The Fund's closing price on the New York Stock Exchange decreased from $27.00 on August 31, 1994 to $19.625 on August 31, 1995, while the net asset value decreased from $22.77 to $18.23 for the same period. Shareholders received combined distributions totaling $3.155 per share, including long-term capital gains of $2.98, short-term capital gains of 7.5 cents ($0.075) and dividend income totaling 10 cents ($0.10) per share. Distributions will vary, however, depending on income earned by the Fund and any profits realized from the sale of securities in the portfolio. Past performance is not predictive of future results. - -------------------------------------------------------------------------------- Templeton Emerging Markets Fund Cumulative Total Returns* Periods Ended August 31, 1995
Since Inception One-Year Five-Year (02/26/87) Based on change in net asset value -8.53% 176.70% 411.60% Based on change in market price -16.94% 222.00% 420.53%
*Cumulative total return calculations show the change in value of an investment over the periods indicated. These calculations assume reinvestment of all distributions and capital gains, 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. - -------------------------------------------------------------------------------- 5 The following letter was written by Dr. Mobius after a recent visit to Lebanon. Beirut, Lebanon -- Visitors can't help but be struck by the beautiful setting of this ancient Mediterranean city. During my time here, I've thought not so much about the horrors of the recent past as the bright prospects of the present and future. Today the city is fast rebuilding from the damage of the bloody 15-year civil war that ended in 1990. It is clearly intent on taking back its historic place as the commercial and financial hub of the Middle East and, as the regional peace process intensifies, we should see many investment opportunities develop here. It's easy to sense that the country and its capital are coming back to life through the world-famous energy of Lebanese businessmen and women. Construction is under way everywhere in the once-devastated downtown business district, so it's no surprise that these businesses are busy in an economy whose real gross domestic product (GDP) grew by 8.5 percent last year and is due to grow by 6 percent this year. The cement and glass industries, which will need to raise capital through public listings to fuel their expansion, are expected to be well represented when the planned Beirut Stock Exchange reopening takes place later this year. Early indications are that the Lebanese authorities may allow foreign participation from the outset on the revived exchange. They also are taking the important step of requiring tough disclosure standards such as a minimum of three years of audited financial statements from firms wanting to list. Early French and British technical assistance is helping put the market and its regulators on solid footing, and there will not be, fortunately, foreign exchange restrictions. We have also been glad to see that a modern custody and settlement system called MIDCLEAR is being created in advance of the market's reopening. Given these positive steps and the traditional vibrancy of the private sector, I believe that Lebanon's market capitalization may grow in a few years to become larger than Morocco, Egypt and Jordan. 6 [MAP APPEARS HERE] The bulk of the listings will, of course, be local, but there is also interesting talk of making Beirut a regional market with many cross listings from other Middle Eastern countries. In time, this city may become an Arab Hong Kong, acting as both the regional financial nucleus of, and the window into, a much larger economy that has historically been under rigid state control and off limits to most foreign investors. Syria, which has four times the population of Lebanon, could benefit substantially from close interaction with the Western financial markets that Beirut will be developing in the years ahead. The Syrian government has recently been making initial moves towards privatization and other market-friendly reforms, and could see its ability to attract foreign investment brighten considerably if it follows the Palestinians and Jordan in signing a comprehensive peace treaty with Israel. The reopening of the Beirut market should be only the latest in a string of impressive developments on the Lebanese investment scene. In early July, for example, Prime Minister Rafik Hariri's government successfully placed its second Eurobond issue -- an unrated US$300 million, five-year bond. The first issue came last October, raising US$400 million. It all adds up to an impressive sign of investor confidence in this shrewd businessman and the stability he has brought since coming to power in October 1992. Perhaps an even better indicator is the estimated US$4 billion in returned flight capital that expatriate Lebanese have poured back into their country in the last two years. That means a lot in a country as small as this, and estimates are that there may be up to ten times that amount still being held abroad. We will be watching for signs that it is on its way home, joining the estimated 200,000 expatriate Lebanese who have returned to their homeland from abroad in the past two years. No one knows the 7 investment climate in an emerging market better than its own people, and I have yet to watch one of these countries take off before its own money returned from the safer haven it had sought overseas when times were tough at home. Services have always been the strength of Lebanon's economy, currently accounting for about 70 percent of GDP. Tourism and financial services are two of the largest growth areas in this sector. Despite the legacy of war, a flourishing private banking industry has, fortunately, survived intact, as has the beautiful beaches, mountains, ancient ruins, and other tourist sites. They should start drawing increasing revenues from domestic, regional and even some European visitors in the near future and be the source of considerable new development. There have also been signs of strength on the equity markets. Chief of these was the US$650 million public offering in late 1993 for shares in SOLIDERE, a US$1.8 billion public-private company created to manage the rebuilding of downtown Beirut, one of the Middle East's biggest construction projects. This heavily oversubscribed offering was restricted to Lebanese and other Arab investors. Eighteen months after the offering the shares were trading on Beirut's new secondary market at about a 30 percent premium to their offering price. SOLIDERE's management is putting the US$650 million it raised into an ambitious 25-year infrastructure campaign to rehabilitate the city's central district. It is targeting 1.9 million square meters of new residential units and another 1.5 million square meters in office space. Meanwhile, the government is also embarking on a second, more broadly defined program to rebuild the national infrastructure. Known as Horizon 2000, it envisions total expenditures from both public and private sources of at least US$14.3 billion by the year 2002. The World Bank has already begun supporting the program with loans totaling more than US$100 million for irrigation rehabilitation and solid waste management and has others in preparation worth a cumulative US$170 million planned for power sector restructuring, road rehabilitation, and upgrading water supply systems. The European Investment Bank, Arab aid institutions funded by the wealthy Gulf states, and other official sources are also channeling funds into the early stages of the program. It certainly should provide ample growth opportunities for all sides of the Lebanese construction industry in the coming years. If SOLIDERE is included in the initial set of companies traded on the new stock exchange, Beirut's market could soon become one of the most active in the Middle East -- 8 a region that is fast catching the eye of foreign portfolio investors worldwide. Performance in the Middle East markets has been good so far this year. For example, as of late July, the Jordanian market showed 18 percent gains in US dollar terms for the year. That made it the fourth best in the developing world. The leader was Turkey, with 32.1 percent gains for the year. North Africa is also coming on strong, with financial markets in Morocco and Egypt attracting attention, and Tunisia in the process of opening its bourse to foreign investment. Common ties of language, religion and culture may offer new opportunities for business cooperation among these countries and others in the Arab world, as governments follow the global trend and become more private-sector oriented. Even more exciting as a growing theme are the new political openings for the thriving Israeli business community to partner with Arab companies to make common use of the region's abundant financial, human and natural resources. Still, many uncertainties mark the future of Lebanon. There will probably continue to be political questions, at least until the next Lebanese presidential election. A Syrian-Israeli peace treaty would also be a big help to the business climate in a country that still has 35,000 Syrian troops present and a volatile Israeli-occupied security zone in the south. And on the economic side, we also need to watch the recent trends towards falling central bank foreign exchange reserves and balance of payments deficits, which could put pressure on the local currency if the government spends as much as it intends to on infrastructure rehabilitation. Risks such as these are inherent in emerging markets, and investors who cannot tolerate short-term fluctuations in search of potential long-term gains should not be involved in them. But we see Lebanon as an exciting story that should provide many opportunities for the Fund's shareholders in the coming years, and we will be there with the same disciplined, value-oriented approach that we use in all the other countries we visit. Sincerely, /s/ J. Mark Mobius J. Mark Mobius, Ph.D. President Templeton Emerging Markets Fund, Inc. 9 Templeton Emerging Markets Fund, Inc. Financial Highlights - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the year)
YEAR ENDED AUGUST 31 ------------------------------------------------ 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- Net asset value, beginning of year $ 22.77 $ 17.94 $ 18.74 $ 18.16 $ 15.40 -------- -------- -------- -------- -------- Income from investment operations: Net investment income .23 .10 .29 .41 .21 Net realized and unrealized gain (loss) (1.62) 5.87 4.93 4.21 4.43 -------- -------- -------- -------- -------- Total from investment operations (1.39) 5.97 5.22 4.62 4.64 -------- -------- -------- -------- -------- Distributions: Dividends from net investment income (.10) (.29) (.39) (.08) (.24) Distributions from net realized gains (3.05) (.85) (5.63) (3.96) (1.64) -------- -------- -------- -------- -------- Total distributions (3.15) (1.14) (6.02) (4.04) (1.88) -------- -------- -------- -------- -------- Change in net asset value (4.54) 4.83 (.80) .58 2.76 -------- -------- -------- -------- -------- Net asset value, end of year $ 18.23 $ 22.77 $ 17.94 $ 18.74 $ 18.16 ======== ======== ======== ======== ======== TOTAL RETURN Based on market value per share (16.94)% 26.11% 44.30% 34.90% 57.92% Based on net asset value per share (8.53)% 33.39% 34.30% 24.09% 36.08% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000) $294,962 $363,760 $285,407 $243,261 $210,579 Ratio of expenses to average net assets 1.73% 1.78% 1.84% 1.91% 1.91% Ratio of net investment income to average net assets 1.28% .46% 2.07% 2.34% 1.43% Portfolio turnover rate 27.58% 6.50% 21.55% 53.45% 33.53%
SEE NOTES TO FINANCIAL STATEMENTS. 10 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES: 91.6% - -------------------------------------------------------------------------------------- Argentina: 1.9% Banco de Galicia y Buenos Aires SA, B Banking 284,263 $ 1,308,329 Central Costanera SA, B Utilities Electrical & Gas 33,800 88,943 Central Costanera SA, rts. Utilities Electrical & Gas 33,800 8,135 Ciadea SA Automobiles 110,667 453,983 Comercial de Plata SA Multi-Industry 875,630 2,050,102 Compania Naviera Perez Companc SA, B Energy Sources 96,540 452,056 *Industrias Petroquimicas Koppers Chemicals 176,191 775,667 Molinos Rio de Plata SA, B Food & Household Products 12,608 79,474 Transportadora de Gas del Sur SA, B Energy Sources 42,354 87,722 YPF Sociedad Anonima, ADR Energy Sources 23,000 405,375 ------------ 5,709,786 - -------------------------------------------------------------------------------------- Brazil: 13.7% Banco Bradesco SA Banking 138,111,477 1,185,163 Banco Bradesco SA, new Banking 2,386,232 22,849 Banco Bradesco SA, PN. Banking 132,142,584 1,266,120 Banco do Brasil SA Banking 693,000 9,858 Banco do Brazil SA, PN. Banking 21,000,000 336,088 Banespa-Banco do Estado de Sao Paulo SA, PN. Banking 88,262,600 659,820 Cia Energetica de Minas Gerais, PN. Utilities Electrical & Gas 122,441,093 2,758,873 *Cia Mesbla SA, PN. Merchandising 6,825,690 221,282 Copene-Petroquimica do Nordeste SA, A, PN. Chemicals 5,861,800 3,857,462 Duratex SA, PN. Forest Products & Paper 8,887,800 467,621 Eletrobras-Centrais Eletricas Brasileiras SA, B, PN. Utilities Electrical & Gas 26,820,977 7,398,890 Itausa-Investimentos Itau SA, PN. Multi-Industry 7,947,346 5,196,422 Mannesmann SA Machinery & Engineering 31,968 8,752 Mannesmann SA, PN. Machinery & Engineering 2,085,844 647,902 *Marcopolo SA, B, PN. Automobiles 2,248,100 398,847 Petrobras-Petroleo Brasileiro SA, PN. Energy Sources 51,584,966 4,899,146 Refripar-Refrigeracao Appliances & Household Parana SA, PN. Durables 92,807,000 225,727 Telebras- Telecomunicacoes Brasileiras SA Telecommunications 83,151,950 3,073,054 Telebras- Telecomunicacoes Brasileiras SA, PN. Telecommunications 128,676,643 5,561,649 *Telerj- Telecomunicacoes do Rio de Janeiro SA, PN. Telecommunications 858,999 64,578 Unibanco-Uniao de Bancos Brasileiros SA, PN. Banking 9,150,468 313,125 Vale de Rio Doce, PN. Metals & Mining 12,292,000 1,896,055 ------------ 40,469,283 - --------------------------------------------------------------------------------------
11 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - -------------------------------------------------------------------------------------- Chile: 2.7% Antofagasta Holdings PLC Metals & Mining 1,585,000 $ 7,943,691 - -------------------------------------------------------------------------------------- China: 0.8% China Southern Glass Co. Ltd., B Multi-Industry 325,000 183,471 Chiwan Wharf Holdings Ltd., B Transportation 846,000 402,181 Foshan Electrical and Appliances & Household Lighting Co. Ltd., B Durables 400,000 294,536 Shandong Huaneng Power Utilities Electrical & Gas 24,000 201,000 Shanghai Chlor-Alkali Chemical Co. Ltd., B Chemicals 1,088,000 341,632 Shanghai Erfangji Textile Machinery Co. Ltd., B Machinery & Engineering 303,600 52,826 Shanghai Industrial Sewing Machine Corp. Machinery & Engineering 190,000 35,340 Shanghai Jin Jiang Tower Co. Ltd., B Leisure & Tourism 573,000 194,820 Shanghai Jinqiao Export Processing Zone Development, B Real Estate 108,000 61,776 Shanghai Lian Hua Fibre Corp., B Textiles & Apparel 73,560 17,654 Shanghai Steel Tube Co. Ltd., B Machinery & Engineering 499,400 78,905 Shanghai Tyre & Rubber Co. Ltd., B Industrial Components 173,000 60,204 Shanghai Vacuum Electron Devices Co. Appliances & Household Ltd., B Durables 525,600 135,605 Shanghai Yaohua Building Materials & Pilkington Glass, B Components 97,000 104,760 Shenzhen Gintian Industrial Co. Ltd., B Multi-Industry 64,800 29,131 Shenzhen Properties & Resources Develop. (Group) Ltd., B Real Estate 462,000 128,317 Zhuhai Sez Lizhu Pharmaceutical, B Chemicals 250,000 96,887 ------------ 2,419,045 - -------------------------------------------------------------------------------------- Czech Republic: 0.1% *CEZ, GDS, 144a Utilities Electrical & Gas 4,000 156,000 - -------------------------------------------------------------------------------------- Greece: 7.2% Alpha Credit Bank Banking 97,620 5,773,982 Delta Dairy SA, PN. Food & Household Products 5,676 92,949 Elais Oleaginous Products SA Food & Household Products 28,290 915,751 Ergo Bank SA Banking 134,800 6,196,848 Fourlis Brothers Corp. Appliances & Household SA Durables 134,030 1,526,166 Hellas Can-Container Manufacturers SA Food & Household Products 12,000 220,151 Hellenic Bottling Co., SA Food & Household Products 69,572 2,231,421 Intracom SA Electrical & Electronics 6,000 162,698 National Bank of Greece SA Banking 11,940 660,944 Building Materials & Titan Cement Co., SA Components 91,996 3,508,025 ------------ 21,288,935 - --------------------------------------------------------------------------------------
12 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - -------------------------------------------------------------------------------------- Hong Kong: 11.9% Cheung Kong Holdings Ltd. Multi-Industry 1,838,000 $ 9,117,582 Cross Harbour Tunnel Co. Ltd. Transportation 12,000 23,563 Dairy Farm Int'l Holdings Ltd., 6.50%, conv., PN. Food & Household Products 29,000 21,968 Dairy Farm International Holdings Ltd. Multi-Industry 260,241 242,024 Fairwood Holdings Ltd. Food & Household Products 378,000 31,740 Goldlion Holdings Ltd. Textiles & Apparel 500,000 251,905 Hang Lung Development Co. Ltd. Real Estate 3,179,000 4,928,045 *Hang Lung Development Co. Ltd., wts. Real Estate 317,900 49,280 Hongkong Electric Holdings Ltd. Utilities Electrical & Gas 200,000 693,709 Hopewell Holdings Ltd. Construction & Housing 2,436,062 1,762,298 HSBC Holdings PLC Banking 329,011 4,420,249 Jardine International Motor Holdings Ltd. Automobiles 536,000 560,858 Jardine Matheson Holdings Ltd. Multi-Industry 116,362 837,806 Jardine Strategic Holdings Ltd. Multi-Industry 242,500 761,450 Jardine Strategic Holdings Ltd., wts. Multi-Industry 12,500 5,688 K Wah International Building Materials & Holdings Ltd. Components 2,143,796 348,945 Lai Sun Development Co. Ltd. Real Estate 100,000 11,885 Lai Sun Garment International Ltd. Multi-Industry 97,000 100,245 New World Development Co. Ltd. Real Estate 1,084,480 3,950,696 Stelux International Holdings Ltd. Multi-Industry 585,133 168,185 Sun Hung Kai Properties Ltd. Real Estate 582,000 4,229,105 Swire Pacific Ltd., B Multi-Industry 500,000 594,238 Tian An China Investments Co. Ltd. Real Estate 6,201,000 913,208 Vitasoy International Holdings Ltd. Food & Household Products 272,000 109,805 Wai Kee Holdings Ltd. Construction & Housing 264,000 36,150 Wheelock & Co. Ltd. Multi-Industry 342,000 519,119 Yaohan Hongkong Corp. Ltd. Merchandising 3,244,000 226,296 ------------ 34,916,042 - -------------------------------------------------------------------------------------- Hungary: 0.5% Chinoin Pharmaceutical & Chemical Works Co. Ltd. Health & Personal Care 2,000 569,340 Fotex First Hungarian- American Photo-Service Multi-Industry 793,000 998,499 Ibusz Leisure & Tourism 800 5,579 *Ibusz, new Leisure & Tourism 267 1,754 ------------ 1,575,172 - -------------------------------------------------------------------------------------- India: 0.8% ATV Project India Ltd. Machinery & Engineering 200,000 213,467 Bharat Petroleum Corp., Ltd. Energy Sources 35,200 308,297
13 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - -------------------------------------------------------------------------------------- India (cont.) DCW Ltd. Chemicals 12,500 $ 20,797 Essar Shipping Ltd. Transportation 59,250 78,120 Garden Silk Mills Ltd. Textiles & Apparel 85,700 104,922 Grasim Industries Ltd Ord INR10 Multi-Industry 11,000 213,404 Indian Rayon and Industries Ltd. Multi-Industry 10,500 154,261 Industrial Credit & Investment Corp. of India Ltd. Financial Services 308,700 910,934 Oriental Bank of Commerce Banking 14,200 23,648 Videocon International Appliances & Household Ltd. Durables 90,000 279,705 ------------ 2,307,555 - -------------------------------------------------------------------------------------- Indonesia: 6.6% PT Anwar Sierad,fgn. Food & Household Products 245,500 132,688 PT Astra International, fgn. Multi-Industry 41,100 82,055 PT Barito Pacific Timber, fgn. Forest Products & Paper 11,000,000 11,890,580 PT Charoen Pokphand Indonesia, fgn. Food & Household Products 500,000 1,108,537 PT Duta Anggada Realty, fgn. Real Estate 440,000 315,464 PT Duta Pertiwi Nusantara Chemicals 409,750 117,510 PT Eratex Djaja, fgn. Textiles & Apparel 283,000 109,254 PT Gadjah Tunggal, fgn. Industrial Components 83,000 60,424 PT Hadtex Indosyntec, fgn. Textiles & Apparel 953,000 504,567 PT Intan Wijaya Chemical Industry, fgn. Chemicals 526,000 139,246 PT Japfa Comfeed Indonesia, fgn. Food & Household Products 539,000 326,991 PT Metrodata Electronic, fgn. Electrical & Electronics 347,000 252,614 PT Multipolar Corp., fgn. Electrical & Electronics 39,000 20,649 PT Polysindo Eka Perkasa, fgn. Textiles & Apparel 6,348,000 3,220,913 PT Pudjiadi Prestige Ltd., fgn. Real Estate 451,500 313,749 PT Unggul Indah Corp., fgn. Chemicals 1,190,200 997,741 ------------ 19,592,982 - -------------------------------------------------------------------------------------- Israel: 0.3% Bank Hapoalim BM Banking 33,148 55,556 Clal Industries Ltd. Multi-Industry 40,000 259,106 Discount Investment Corp. Multi-Industry 6,000 387,635 The First International Bank of Israel Banking 977 119,312 ------------ 821,609 - -------------------------------------------------------------------------------------- Korea (South): 1.1% Dae Duck Electronics Co. Ltd. Electrical & Electronics 4,000 184,687 Dae Yu Co. Textiles & Apparel 350 6,926 *Dae Yu Co. Ltd., new Textiles & Apparel 924 17,567
14 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - -------------------------------------------------------------------------------------- Korea (South) (cont.) Daegu Bank Co. Ltd. Banking 43,190 $ 692,090 Daegu Bank Co. Ltd., new Banking 9,423 144,904 Daehan Synthetic Fiber Co. Ltd. Textiles & Apparel 2,420 309,855 Hae In Corp. Ltd. Merchandising 4,951 356,149 Hankook Cosmetics Co. Ltd. Health & Personal Care 8,700 311,679 Kyung Dong Boiler Co Ltd Energy Equipment & Services 7,030 340,953 Saehan Precision Co Ltd Electrical & Electronics 8,000 303,156 Ssangyong Oil Refining Co Ltd Energy Equipment & Services 10,000 265,132 Yuhwa Corp. Textiles & Apparel 3,580 226,528 ------------ 3,159,626 - -------------------------------------------------------------------------------------- Malaysia: 5.7% Federal Flour Mills Bhd. Food & Household Products 779,999 2,500,999 Malayawata Steel Bhd., fgn. Metals & Mining 738,000 1,449,379 Malaysian International Shipping Corp. Bhd., fgn. Transportation 1,930,666 5,532,770 Oriental Holdings Bhd. Automobiles 988,200 5,148,938 Perlis Plantations Bhd. Multi-Industry 626,879 2,060,284 Perlis Plantations Bhd., fgn. Multi-Industry 50,000 164,329 ------------ 16,856,699 - -------------------------------------------------------------------------------------- Mexico: 7.5% Building Materials & Cemex SA, B Components 268,250 1,233,309 Cifra SA, C Merchandising 503,000 601,195 DESC SA, A Multi-Industry 138,000 491,522 DESC SA, B Multi-Industry 1,000 4,080 Grupo Financiero Banamex Accival SA, B Banking 613,000 1,248,469 Grupo Financiero Banamex Accival SA, L Banking 30,650 61,153 Grupo Financiero Bancomer SA de CV, B Banking 1,576,000 627,888 Grupo Financiero Bancomer SA de CV, L Banking 2,488,370 931,900 *Grupo Financiero Serfin SA, B Banking 659,000 562,907 Grupo Industrial Alfa SA, A Multi-Industry 151,000 2,069,482 Telefonos de Mexico SA, L, ADR Telecommunications 410,700 13,450,425 Tubos de Acero de Mexico SA Machinery & Engineering 9,334 63,962 Vitro SA Food & Household Products 208,800 628,896 ------------ 21,975,188 - -------------------------------------------------------------------------------------- Pakistan: 0.2% National Development Leasing Corp Rts Financial Services 11,000 5,713 National Development Leasing Corp. Financial Services 137,500 115,357 *Pakistan Telecom Corp. PTC Telecommunications 530,000 599,641 ------------ 720,711 - --------------------------------------------------------------------------------------
15 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - ------------------------------------------------------------------------------------ LONG TERM SECURITIES (CONT.) - ------------------------------------------------------------------------------------ Philippines: 9.9% Keppel Philippine Holdings Inc., B Machinery & Engineering 232,545 $ 112,146 Philex Minning Corp., B Metals & Mining 5,187,339 680,438 Philippine Commercial International Bank Inc. Banking 437,786 3,834,005 Philippine Long Distance Telephone Co., ADR Telecommunications 223,753 14,068,470 Philippine National Bank Banking 783,556 8,313,188 RFM Corp. Food & Household Products 5,962,500 1,633,247 Sanitary Wares Manufacturing Corp., br. Business & Public Services 6,923 2,564 Sime Darby Pilipinas Inc. Industrial Components 573,286 608,232 ---------- 29,252,290 - ------------------------------------------------------------------------------------ Poland: 0.1% Bank Slaski SA W Katowicach Banking 5,000 283,229 - ------------------------------------------------------------------------------------ Portugal: 5.1% Banco Chemical Portugal SA Banking 9,800 97,711 Banco Comercial Portugues SA Banking 633,896 7,842,098 Banco Espirito Santo e Comercial de Lisboa Banking 45,500 605,274 Banco Portugues de Investimento SA Banking 226,860 3,348,213 Banco Totta & Acores SA Banking 101,000 1,947,786 Espirito Santo Financial Holding SA, ADR Banking 114,000 1,268,250 ---------- 15,109,332 - ------------------------------------------------------------------------------------ Singapore: 3.2% G.P. Batteries International Ltd. Electrical & Electronics 35,000 94,500 Jaya Holdings Ltd. Transportation 492,500 655,049 Jaya Holdings Ltd., 3.00%, conv., 8/31/98 Transportation 15,900** 25,735 *Jaya Holdings Ltd., wts. Transportation 30,051 29,607 *Jaya Holdings Ltd., wts. Transportation 36,780 34,166 Prima Ltd. Food & Household Products 530,000 2,032,723 Singapore Bus Service Ltd., fgn. Transportation 903,600 6,295,313 TIBS Holdings Ltd. Transportation 134,600 361,838 TIBS Holdings Ltd., wts. Transportation 40,380 27,138 ---------- 9,556,069 - ------------------------------------------------------------------------------------ South Africa: 0.5% Del Monte Royal Foods Ltd. Food & Household Products 315,825 373,591 Engen Ltd. Energy Sources 109,341 680,344 First National Bank Holdings Ltd. Banking 28,900 183,774 Rembrandt Group Ltd. Multi-Industry 33,400 267,200 ---------- 1,504,909 - ------------------------------------------------------------------------------------
16 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - -------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - -------------------------------------------------------------------------------------- Sri Lanka: 0.2% Aitken Spence & Co. Ltd. Textiles & Apparel 50,000 $ 182,962 Building Materials & Lanka Ceramic Ltd. Components 162,000 172,507 Building Materials & Lanka Walltile Ltd. Components 27,300 32,771 United Motor Lanka Ltd. Automobiles 158,600 82,908 ------------ 471,148 - -------------------------------------------------------------------------------------- Thailand: 0.3% American Standard Sanitaryware (THB) Co. Ltd., fgn Health & Personal Care 12,000 199,202 Asia Fibre Public Co. Ltd., fgn. Textiles & Apparel 233,600 177,111 Charoen Pokphand Feedmill Public Co. Ltd. Food & Household Products 64,000 326,895 Kian Gwan (Thailand) Co. Ltd., fgn. Real Estate 26,000 81,445 Padaeng Industry Co. Ltd., fgn. Metals & Mining 35,100 37,117 Thai Rayon Public Co. Ltd. Textiles & Apparel 4,100 34,030 Thai Wah Public Co. Ltd., fgn. Food & Household Products 8,450 11,802 United Standard Terminal Public Co. Wholesale & International Ltd., fgn. Trade 44,000 86,034 ------------ 953,636 - -------------------------------------------------------------------------------------- Turkey: 10.5% Akbank TAS Banking 25,246,986 6,433,189 Building Materials & Akcimento Ticaret AS Components 1,656,000 576,973 Alcatel Teletas Endustri Tic AS Telecommunications 152,000 42,683 Appliances & Household Arcelik AS Durables 44,223,330 6,807,127 Bagfas Bandirma Gubre Fabrikalari AS Chemicals 2,805,790 1,225,618 Appliances & Household Bekoteknik AS Durables 6,779,957 916,687 Celik Halat ve Sanayii Building Materials & ve Ticaret AS Components 2,749,000 383,116 Cimentas Izmir Cimento Building Materials & Fabrikasi TAS Components 1,497,250 825,317 Cimsa Cimento Sanayi ve Building Materials & Ticaret AS Components 640,000 379,407 Compagnie Financiere Ottomane SA Banking 37,000 1,449,618 Cukurova Elektrik AS Utilities Electrical & Gas 890,033 361,012 Eregli Demir ve Celik Fabrikalari AS Metals & Mining 15,429,250 2,150,306 Finans Bank AS, br. Banking 25,244,455 2,310,465 Izocam Ticaret ve Building Materials & Sanayii AS, br. Components 2,786,527 463,697 Koc Holding AS Multi-Industry 646,000 450,151 Koc Yatirim AS Multi-Industry 3,725,532 1,046,171 Marshall Boya AS New Ord Industrial Components 3,746,736 362,399 Marshall Boya AS Industrial Components 2,081,520 225,146 Otosan Otomobil Sanayii AS Automobiles 6,322,932 1,808,431 Tekstil Bankasi AS, br. Banking 1,277,509 69,090 Building Materials & Trakya Cam Sanayii AS Components 2,400,000 249,610 Appliances & Household Turk Demir Dokum, br. Durables 10,191,364 1,907,900
17 Templeton Emerging Markets Fund, Inc. Investment Portfolio, August 31, 1995 (cont.) - --------------------------------------------------------------------------------
SHARES/PRINCIPAL IN INDUSTRY LOCAL CURRENCY** VALUE - --------------------------------------------------------------------------------------- LONG TERM SECURITIES (CONT.) - --------------------------------------------------------------------------------------- Turkey (cont.) Turkiye Garanti Bankasi AS Banking 5,581,814 $ 499,257 Vakif Finansal Kiralama AS Financial Services 1,872,600 132,436 ------------ 31,075,806 - --------------------------------------------------------------------------------------- Venezuela: 0.7% Ceramica Carabobo CA, Building Materials & A, ADR Components 130,000 102,794 Building Materials & Consolidada Carabobo, B Components 1,680,000 56,842 Electricidad de Caracas Utilities Electrical & Gas 936,160 721,476 Manufacturera de Appliances & Household Aparatos Domesticos SA Durables 36,000 63,158 Mavesa SA, ADR Food & Household Products 193,000 599,800 Siderurgica Venezolana Sivensa SA Metals & Mining 1,455,440 466,908 Siderurgica Venezolana Sivensa Saica ADR Metals & Mining 21,750 34,887 Venezolana Prerreducidos Caroni Venprecar CA, GDS, 144a Metals & Mining 1,764 9,878 ------------ 2,055,743 - --------------------------------------------------------------------------------------- Zimbabwe: 0.1% Transarchipel Shipping Ltd.--TSL Multi-Industry 700,000 184,011 - --------------------------------------------------------------------------------------- TOTAL LONG TERM SECURITIES (cost $199,266,114 ) 270,358,497 - --------------------------------------------------------------------------------------- SHORT TERM OBLIGATIONS: 9.2% (cost $27,054,721 ) - --------------------------------------------------------------------------------------- U.S. Treasury Bills, 5.28% to 5.41% with maturities to 10/19/95 U.S. 27,187,000 27,058,694 - --------------------------------------------------------------------------------------- TOTAL INVESTMENTS: 100.8% (cost $226,320,835) 297,417,191 OTHER ASSETS, LESS LIABILITIES: (0.8)% (2,454,988) ------------ TOTAL NET ASSETS: 100.0% $294,962,203 ============
*NON-INCOME PRODUCING. **CURRENCY OF COUNTRIES INDICATED. SEE NOTES TO FINANCIAL STATEMENTS. 18 Templeton Emerging Markets Fund, Inc. Financial Statements - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES August 31, 1995 Assets: Investments in securities, at value (identified cost $226,320,835) $297,417,191 Cash 611,512 Receivables: Investment securities sold 969,944 Dividends and interest 665,911 ------------ Total assets 299,664,558 ------------ Liabilities: Payables for investment securities purchased 3,909,934 Accrued expenses 792,421 ------------ Total liabilities 4,702,355 ------------ Net assets, at value $294,962,203 ============ Net assets consist of: Undistributed net investment income $ 3,770,191 Net unrealized appreciation 71,096,356 Accumulated net realized gain 33,505,093 Net capital paid in on shares of capital stock 186,590,563 ------------ Net assets, at value $294,962,203 ============ Shares outstanding 16,184,253 ============ Net asset value per share ($294,962,203 / 16,184,253 ) $ 18.23 ============
STATEMENT OF OPERATIONS for the year ended August 31,1995 Investment income: (net of $615,449 foreign taxes withheld) Dividends $ 6,448,608 Interest 2,544,559 ------------ Total income $ 8,993,167 Expenses: Management fees (Note 3) 3,742,219 Administrative fees (Note 3) 449,069 Transfer agent fees 41,000 Custodian fees 624,000 Reports to shareholders 182,000 Audit fees 34,000 Legal fees (Note 3) 36,500 Registration and filing fees 14,600 Directors' fees and expenses 35,000 Other 10,045 ------------ Total expenses 5,168,433 ------------ Net investment income 3,824,734 Realized and unrealized gain (loss): Net realized gain (loss) on: Investments 34,891,965 Foreign currency transactions (909,176) ------------ 33,982,789 ------------ Net unrealized appreciation (depreciation) on: Investments (60,913,063) Foreign currency translation of other assets and liabilities 73,085 ------------ (60,839,978) ------------ Net realized and unrealized loss (26,857,189) ------------ Net decrease in net assets resulting from operations $(23,032,455) ============
SEE NOTES TO FINANCIAL STATEMENTS. 19 Templeton Emerging Markets Fund, Inc. Financial Statements (cont.) - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS for the years ended August 31, 1995 and 1994
1995 1994 ------------ ------------ Increase (decrease) in net assets: Operations: Net investment income $ 3,824,734 $ 1,542,948 Net realized gain on investment and foreign currency transactions 33,982,789 51,099,159 Net unrealized appreciation (depreciation) (60,839,978) 42,443,010 ------------ ------------ Net increase (decrease) in net assets resulting from operations (23,032,455) 95,085,117 Distributions to shareholders: From net investment income (1,597,491) (4,645,083) From net realized gain (48,808,530) (13,503,973) Capital share transactions (Note 2) 4,640,626 1,417,186 ------------ ------------ Net increase (decrease) in net assets (68,797,850) 78,353,247 Net assets: Beginning of year 363,760,053 285,406,806 ------------ ------------ End of year $294,962,203 $363,760,053 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 20 Templeton Emerging Markets Fund, Inc. Notes to Financial Statements - -------------------------------------------------------------------------------- 1. SUMMARY OF ACCOUNTING POLICIES Templeton Emerging Markets Fund, Inc. (the Fund) is a closed-end, diversified management investment company registered under the Investment Company Act of 1940. The following summarizes the Fund's significant accounting policies. a. Securities Valuations: Securities listed or traded on a recognized national or foreign stock exchange or NASDAQ are valued at the last reported sales prices on the principal ex- change on which the securities are traded. Over-the-counter securities and listed securities for which no sale is reported are valued at the mean between the last current bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Directors. b. Foreign Currency 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 a foreign exchange contract 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 security transactions, the differences between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at the end of the fiscal period, resulting from changes in the exchange rates. The Brazilian Government has exercised and may continue to exercise substantial influence over exchange of its currency. Under current Brazilian law, whenever there occurs a serious imbalance of Brazil's balance of payments or serious reasons to foresee the imminence of such an imbalance, Brazil's National Mone- tary Council may, for a limited period, impose restrictions of foreign capital remittances abroad. Exchange control regulations may restrict repatriation of investment income, capital, or the proceeds of securities sales by foreign in- vestors. The Fund has investments in Brazilian companies with a value of ap- proximately $40 million as of August 31, 1995. c. 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 its taxable income to its shareholders. Therefore, no provision has been made for income taxes. d. Security Transactions, Investment Income, Distributions and Expenses: Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Certain dividend income on foreign securi- ties is recorded as soon as information is available to the Fund. Interest in- come 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. 2. TRANSACTIONS IN SHARES OF CAPITAL STOCK At August 31, 1995 there were 30,000,000 shares of capital stock authorized ($0.01 par value). During the years ended August 31, 1995 and 1994, 209,342 shares were issued for $4,640,626 and 62,769 shares were issued for $1,417,186 from reinvested distributions, respectively. 21 Templeton Emerging Markets Fund, Inc. Notes to Financial Statements (cont.) - -------------------------------------------------------------------------------- 3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Certain officers of the Fund are also directors or officers of Templeton In- vestment Management (Hong Kong) Limited (TIML) and Templeton Global Investors, Inc. (TGII), the Fund's investment manager and administrative manager, respec- tively. The Fund pays monthly an investment management fee to TIML equal, on an annual basis, to 1.25% of the average daily net assets of the Fund. Effective September 29, 1995, TIML has been reorganized as the Hong Kong office of Tem- pleton Investment Management (Singapore) Pte Ltd., an indirect wholly owned subsidiary of Franklin Resources, Inc. The Fund pays TGII monthly a fee com- puted at an annual rate of 0.15% of the Fund's average daily net assets. An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel for the Fund, which firm received fees of $36,500 for the year ended August 31, 1995. 4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities (excluding short-term securities) for the year ended August 31, 1995 aggregated $74,226,185 and $70,274,078, respective- ly. The cost of securities for federal income tax purposes is $226,409,492. Re- alized gains and losses are reported on an identified cost basis. At August 31, 1995, the aggregate gross unrealized appreciation and deprecia- tion of portfolio securities, based on cost for federal income tax purposes, was as follows Unrealized appreciation $ 85,772,336 Unrealized depreciation (14,764,637) ------------ Net unrealized appreciation $ 71,007,699 ============
5. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
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 ---------- ----- ----------- ----- ------------ ------ ------------ ------ 1995 For the quarter ended: November 30, 1994 $1,859,722 $.11 $ 394,240 $ .02 $(65,913,697) $(4.03) $(65,519,457) $(4.01) February 28, 1995 1,093,348 .07 (155,490) (.01) 11,509,953 .70 11,354,463 .69 May 31, 1995 3,522,176 .22 2,309,599 .14 27,929,114 1.73 30,238,713 1.87 August 31, 1995 2,517,921 .16 1,276,385 .08 (382,559) (.02) 893,826 .06 ---------- ---- ----------- ----- ------------ ------ ------------ ------ $8,993,167 $.56 $ 3,824,734 $ .23 $(26,857,189) $(1.62) $(23,032,455) $(1.39) ========== ==== =========== ===== ============ ====== ============ ====== 1994 For the quarter ended: November 30, 1993 $1,415,389 $.09 $ 7,920 -- $ 56,121,216 $ 3.53 $ 56,129,136 $ 3.53 February 28, 1994 436,384 .03 (1,102,585) $(.07) 37,933,221 2.38 36,830,636 2.31 May 31, 1994 3,373,504 .15 1,945,571 .12 (47,278,826) (2.96) (45,333,255) (2.84) August 31, 1994 2,249,677 .10 692,042 .05 46,766,558 2.92 47,458,600 2.97 ---------- ---- ----------- ----- ------------ ------ ------------ ------ $7,474,954 $.37 $ 1,542,948 $ .10 $ 93,542,169 $ 5.87 $ 95,085,117 $ 5.97 ========== ==== =========== ===== ============ ====== ============ ======
22 Templeton Emerging Markets Fund, Inc. Independent Auditor's Report - -------------------------------------------------------------------------------- The Board of Directors and Shareholders Templeton Emerging Markets Fund, Inc. We have audited the accompanying statement of assets and liabilities, including the investment portfolio of Templeton Emerging Markets Fund, Inc. as of August 31, 1995, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the respon- sibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial high- lights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of Au- gust 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement pre- sentation. We believe that our audits provide a reasonable basis for our opin- ion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tem- pleton Emerging Markets Fund, Inc. as of August 31, 1995, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. /s/ McGladrey & Pullen, LLP New York, New York September 29, 1995 23 Templeton Emerging Markets Fund, Inc. - -------------------------------------------------------------------------------- DIVIDEND REINVESTMENT PLAN The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following features: .Shareholders must affirmatively elect to participate in the Plan; Stock dividends will be reinvested automatically; Chemical Mellon Shareholder Services, Shareholder Investment Services, P.O. Box 750, Pittsburgh, PA 15230, will provide additional Plan information upon request. .Whenever the Fund de- clares dividends in either cash or common stock of the Fund, if the market price is equal to or exceeds net asset value at the valuation date, partici- pants 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 divi- dends and/or capital gains distributions are payable only in cash, the partici- pant will receive shares purchased on the New York Stock Exchange or otherwise on the open market. .The reinvestment of dividends and/or capital gains, even though no cash has been received, may be taxable. .The participant may withdraw from the Plan without penalty at any time by written notice to Mellon Securi- ties Trust Company. Upon withdrawal, the participant will receive, without charge, stock certificates issued in the participant's name for all full shares; or, if the participant's wishes, Mellon Securities Trust Company will sell the participant's shares and send the proceeds, less a service fee of $2.50 and less brokerage commissions. .Whenever shares are purchased on the New York Stock Exchange or otherwise on the open market, each participant will pay a pro rata portion of brokerage commissions. Brokerage commissions will be de- ducted from amounts to be invested. .The Plan does not offer a cash purchase plan option. SHAREHOLDER INFORMATION Weekly comparative net asset value and market price information about Templeton Emerging Markets Fund, Inc. 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 Trans- actions section of newspapers under the designation "TempltnEFd." The Fund's New York Stock Exchange trading symbol is EMF. 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. 24 Notes ----- Notes ----- Notes ----- - -------------------------------------------------------------------------------- TEMPLETON EMERGING MARKETS FUND, INC. 700 Central Avenue St. Petersburg, Florida 33701-3628 Auditors McGladrey & Pullen, LLP 555 Fifth Avenue New York, New York 10017-2416 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. - -------------------------------------------------------------------------------- TLEMF A95 10/95 [RECYCLED PAPER LOGO APPEARS HERE] TEMPLETON EMERGING MARKETS FUND, INC. Annual Report August 31, 1995 [LOGO OF FRANKLIN TEMPLETON APPEARS HERE] -----END PRIVACY-ENHANCED MESSAGE-----