N-30D 1 tlemf-s01.txt EMERGING MKTS FUND SEMIANNUAL REPORT SEMI ANNUAL REPORT TEMPLETON EMERGING MARKETS FUND, INC. February 28, 2001 [FRANKLIN TEMPLETON LOGO] PAGE [PHOTO OF MARK MOBIUS] Mark Mobius President Templeton Emerging Markets Fund, Inc. Mark Mobius has been living in emerging market countries 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 business practices and customs unique to developing nations. PAGE SHAREHOLDER LETTER -------------------------------------------------------------------------------- Your Fund's Goal: Templeton Emerging Markets Fund seeks long-term capital appreciation by investing primarily in emerging country equity securities. -------------------------------------------------------------------------------- Dear Shareholder: This semiannual report of Templeton Emerging Markets Fund covers the period ended February 28, 2001. During the six months under review, emerging markets experienced varying levels of economic recovery as their respective governments continued their efforts in stimulating growth, curbing inflation and restoring investor confidence. In Asia, Thailand's economy grew 3.06% in terms of gross domestic product (GDP) in the fourth quarter of 2000, compared with the same quarter in 1999.(1) trade continued to prosper as a weak baht boosted exports. In a bid to enhance economic growth and contain inflation, the government and the central bank decided to keep interest rates low. Despite Dr. Thaksin Shinawatra's indictment for concealing assets, his Thai CONTENTS Shareholder Letter.......................................................... 1 Performance Summary......................................................... 8 Important Notice to Shareholders............................................ 9 Financial Highlights & Statement of Investments............................. 10 Financial Statements........................................................ 18 Notes to Financial Statements............................................... 21
FUND CATEGORY [PYRAMID GRAPHIC] 1. Source: The Bank of Thailand. The dollar value, number of shares or principal value, and complete legal titles of all portfolio holdings are listed in the Fund's Statement of Investments (SOI). The SOI begins on page 11. PAGE GEOGRAPHIC DISTRIBUTION Based on Total Net Assets 2/28/01 [PIE CHART] Asia 42.6% Latin America 23.0% Mid-East/Africa 19.3% Europe 12.6% Short-Term Investments & Other Net Assets 2.5%
Rak Thai Party overwhelmingly won Thailand's elections, which could lead to some degree of political and economic stability going forward. Similarly, South Korea's economy expanded with 4.6% GDP growth in the fourth quarter of 2000 compared with the fourth quarter of 1999.(2) In 2000, South Korea's exports and imports registered double-digit gains and foreign direct investment amounted to a record $15.7 billion as investor confidence improved.(3) Elsewhere in Asia, Turkey underwent a mini-crisis in December, resulting in the government's decision to stress its continuing commitment to its deflation program and implement measures to strengthen the banking system as well as speed up privatization. However, officials differed in their opinions regarding the reform program, which led to uncertainty in the financial markets and a surge in overnight interest rates. On February 21, 2001, the central bank finally abandoned the Turkish lira's peg to the U.S. dollar. During the period under review, Latin American economies generally performed well. Mexico's GDP growth was 6.9%, the fastest growth rate in the past 20 years.(4) The country's exports and imports registered double-digit gains, and government finances benefited from high oil prices. Mexico's economy could slow in 2001 due to decelerating U.S. economic growth and weakening global oil prices. However, we remain positive about Mexico and expect the country to continue its long-term recovery. Supporting this expectation is newly inducted Mexican president Vicente Fox's vow to promote stability, fight 2. Source: The Bank of Korea. 3. Source: Reuters, 1/4/01. 4. Source: The Economist Intelligence Unit Ltd., Mexico: Business Outlook, 3/12/01. 2 PAGE poverty, promote growth and improve the government's fiscal position by boosting tax revenues and implementing tax reforms. Elsewhere in Latin America, Brazil's higher than expected 2000 GDP growth of 4.2% and inflation in line with expectations continued to solidify the country's economic recovery.(5) Brazil also continued its efforts to attract foreign investment by eliminating red-tape restrictions and a tax on foreigners' stock market transactions as well as streamlining foreign exchange laws. In addition, foreigner investors looked favorably on Brazil as a result of Bank of Banespa's successful privatization. In eastern Europe, Poland's monetary policy during the reporting period centered on raising the benchmark intervention rate in a bid to curb inflation. Inflation fell and in January the consumer price index rose by only 7.4%, compared with 8.5% in December.(6) However, higher borrowing costs resulted in falling domestic demand in the second half of 2000. Nevertheless, Poland's 5.1% GDP growth in 2000 was higher than the 4.1% registered in 1999.(7) In the political arena, Polish President Aleksander Kwasniewski was re-elected as widely expected. Political continuity should allow the Polish government to concentrate on reforms. South Africa's economy continued on the road to recovery as South African companies began to reap the benefits of recent efforts to streamline operations and become more internationally competitive. In another positive development, TOP 10 COUNTRIES* 2/28/01
% OF TOTAL COUNTRY NET ASSETS -------------------------------------------------------------------------------- South Africa 16.5% Mexico 11.5% South Korea 8.4% Brazil 8.0% Thailand 7.7% Hong Kong 5.9% Turkey 5.6% Poland 4.9% Indonesia 3.5% Taiwan 3.0%
* Does not include investments in fixed income securities, short-term investments or other net assets. 5. Source: Reuters, 2/15/01. 6. Source: Poland Central Statistical Office. 7. Source: OECD, Developments in Individual OECD Countries, 2000. 3 PAGE TOP 10 EQUITY HOLDINGS* 2/28/01
COMPANY % OF TOTAL SECTOR, COUNTRY NET ASSETS -------------------------------------------------------------------------------- Chueng Kong Holdings Ltd. 4.0% Real Estate, Hong Kong Grupo Financiero Banamex Accival SA de CV 3.9% Banks, Mexico Cemex SA 3.4% Construction Materials, Mexico South African Breweries PLC 3.1% Beverages, South Africa Centrais Electricas Brasileiras SA (Eletrobras), Ord. & B, pfd. 2.9% Electric Utilities, Brazil Anglo American PLC 2.3% Metals & Mining, South Africa Samsung Electronics Co. Ltd. 2.2% Semiconductor Equipment & Products, South Korea Banco Bradesco SA, pfd. 2.1% Banks, Brazil Sasol Ltd. 1.9% Oil & Gas, South Africa PT Telekomunikasi Indonesia (Persero), B 1.6% Diversified Telecommunication Services, Indonesia
* Does not include investments in fixed income securities, short-term investments or other net assets. the government announced that it intended to accelerate the privatization of state-owned companies and raise at least $6 billion by 2004 primarily through foreign direct investment. Consumer confidence also improved as indicated by a 4.1% retail sales growth from September through November 2000 compared with the same period a year earlier, while manufacturing output rose 4.5% in 2000.(8) During the first four months of the reporting period, emerging markets generally experienced declines in stock market performance. However, U.S. interest rate cuts in January and February positively affected emerging markets. The Morgan Stanley Capital International (MSCI) Emerging Markets Free Index (in U.S. dollars), a leading indicator of emerging market performance, returned -17.04% for the period under review but rose 4.86% during the first two months of 2001.(9) Within this environment, the Fund posted six-month cumulative total returns of -5.26% in market price terms and -14.47% in net asset value terms, as shown in the Performance Summary on page 8. Attempting to maximize the Fund's return, we made a number of changes to the portfolio during the six months under review. We decreased our exposure to Brazil and Singapore, selling what we considered overvalued stocks, particularly expensive 8. Source: Reuters, 2/6/01. 9. Source: Standard and Poor's Micropal. The unmanaged MSCI Emerging Markets Free Index is a market capitalization-weighted equity index comprising 26 of the 48 countries in the MSCI universe. "Free" denotes investment opportunities in the developing world available to foreign investors. The index includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Fund's portfolio. 4 PAGE telecommunication shares. Technology sector corrections, which led to general selling across most sectors, enabled the Fund to increase its exposure to India and Taiwan. We continue to favor South Africa due to the growth potential of the country's market and South African companies' high quality of management. As of February 28, 2001, the banking industry dominated the portfolio, followed by diversified telecommunication services and oil & gas. Our largest country exposure was to South Africa (16.5% of total net assets), followed by Mexico (11.5%) and South Korea (8.4%). Nevertheless, it is important to keep in mind that we are fundamental investors who focus on companies, not on a top-down analysis of economies or industries. We take into account prospects of industries and economies, but we do not intentionally overweight or underweight any industry or country. The changes listed above, plus changes in the value of individual stocks during the reporting period, led to the replacement of two of the Fund's top 10 holdings. Korean Electric Power (South Korea) and Telefonos de Mexico (Mexico) dropped from the list. Replacing these companies were South African Breweries (South Africa) and PT Telekomunikasi (Indonesia). 5 PAGE Looking forward, we are confident about the long-term prospects for Templeton Emerging Markets Fund. We expect a new mood of optimism to take hold in many emerging markets in the short-term as investors recuperate from the losses experienced in 2000 and begin to take a more aggressive attitude toward investing. We also believe that market expectations of lower U.S. interest rates could boost some markets over the long term, especially those in Asia and Latin America, as well as among interest rate-sensitive industries such as property. In any case, with economic recovery in most regions on its way, we believe that the present discounts on stocks in many of these markets are unwarranted. Thus, we shall continue seeking to take advantage of these opportunities to build positions in many solid companies trading at what we consider appealing prices. Of course, investing in foreign securities involves special risks, such as adverse economic, social and political developments in the countries where the Fund invests, as well as market and currency volatility. Emerging market securities involve heightened risks related to the same factors, in addition to 6 PAGE those associated with the relatively small size and lesser liquidity of these markets. Investing in any emerging market means accepting a certain amount of volatility and, in some cases, severe market corrections. For example, Hong Kong's equity market has appreciated 762.56% in the last 15 years, but has also suffered 5 quarterly declines of more than 20% each during that time.(10) While short-term volatility can be disconcerting, declines in excess of 50% are not unusual in emerging markets. We thank you for your continued participation in Templeton Emerging Markets Fund and welcome your comments and suggestions. Sincerely, /s/ Mark Mobius Mark Mobius President Templeton Emerging Markets Fund, Inc. -------------------------------------------------------------------------------- This discussion reflects our views, opinions and portfolio holdings as of February 28, 2001, the end of the reporting period. The information provided is not a complete analysis of every aspect of any country, industry, security or the Fund. Our strategies and the Fund's portfolio composition will change depending on market and economic conditions. Although historical performance is no guarantee of future results, these insights may help you understand our investment and management philosophy. -------------------------------------------------------------------------------- 10. Source: Hong Kong's Hang Seng Index. Based on quarterly percentage price change over 15 years ended 12/31/00. Market return is measured in U.S. dollars and does not include reinvested dividends. The unmanaged Hang Seng Index is a capitalization-weighted index of 33 companies that represent approximately 70% of the total market capitalization of the Stock Exchange of Hong Kong. The components of the index are divided into four subindexes: Finance, Utilities, Properties and Commerce and Industry. One cannot invest directly in an index, nor is an index representative of the Fund's portfolio. PAGE PERFORMANCE SUMMARY AS OF 2/28/01 Distributions and returns will vary based on earnings of the Fund's portfolio and any profits realized from the sale of the portfolio's securities, as well as the level of the Fund's operating expenses. All total returns include reinvested distributions according to the terms specified in the Fund's dividend reinvestment and cash purchase plan and do not reflect any sales charges paid at inception or brokerage commissions paid on secondary market purchases. PRICE AND DISTRIBUTION INFORMATION
CHANGE 2/28/01 8/31/00 -------------------------------------------------------------------------------- Net Asset Value -$1.78 $9.66 $11.44 Market Price (NYSE) -$0.6025 $8.7100 $9.3125 DISTRIBUTIONS (9/1/00 - 2/28/01) Dividend Income $0.1029
PERFORMANCE
6-MONTH 1-YEAR 5-YEAR 10-YEAR -------------------------------------------------------------------------------- Cumulative Total Return(1) Based on change in net asset value -14.47% -23.91% +11.32% +213.86% Based on change in market price -5.26% -22.44% -19.02% +156.80% Average Annual Total Return(1) Based on change in net asset value -14.47% -23.91% +2.17% +12.12% Based on change in market price -5.26% -22.44% -4.13% +9.89%
1. Total returns represent the cumulative or average annual change in value of an investment over the periods indicated. Six-month return has not been annualized. -------------------------------------------------------------------------------- Ongoing stock market volatility can dramatically change the Fund's short-term performance; current results may differ. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, currency volatility, and the economic, social and political climates of countries where the Fund invests. Emerging markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. You may have a gain or loss when you sell your shares. -------------------------------------------------------------------------------- For updated performance figures, please call Franklin Templeton Investments at 1-800/342-5236. Past performance does not guarantee future results. 8 PAGE IMPORTANT NOTICE TO SHAREHOLDERS -------------------------------------------------------------------------------- SHARE REPURCHASE PROGRAM: On November 28, 2000, the Board of Directors of the Fund authorized management to implement an open-market share repurchase program pursuant to which the Fund may purchase, from time to time, shares of the Fund's common stock in open-market transactions, at the discretion of management. -------------------------------------------------------------------------------- 9 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Financial Highlights
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 28, 2001 -------------------------------------------------------- (UNAUDITED) 2000 1999 1998 1997 1996 ----------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE+ (For a share outstanding throughout the period) Net asset value, beginning of period...... $11.44 $11.60 $10.85 $20.67 $17.26 $18.23 ----------------------------------------------------------------------------- Income from investment operations: Net investment income.................... .03 .13 .13 .26 .27 .25 Net realized and unrealized gains (losses)............................... (1.71) (.16) 5.17 (7.64) 4.27 1.20 ----------------------------------------------------------------------------- Total from investment operations.......... (1.68) (.03) 5.30 (7.38) 4.54 1.45 ----------------------------------------------------------------------------- Less distributions from: Net investment income.................... (.10) (.10) (.29) (.26) (.21) (.26) Net realized gains....................... -- (.03) (4.26) (2.18) (.92) (2.16) ============================================================================= Total distributions....................... (.10) (.13) (4.55) (2.44) (1.13) (2.42) ----------------------------------------------------------------------------- Net asset value, end of period............ $9.66 $11.44 $11.60 $10.85 $20.67 $17.26 ============================================================================= Total Return* Based on market value per share.......... (5.26)% (23.10)% 99.91% (54.35)% 33.81% 7.45% Based on net asset value per share....... (14.47)% (.24)% 60.34% (39.69)% 27.34% 8.69% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's)......... $170,524 $201,965 $204,804 $182,352 $342,002 $283,678 Ratios to average net assets: Expenses................................. 1.63%** 1.68% 1.63% 1.70% 1.67% 1.71% Net investment income.................... .58%** 1.09% 1.18% 1.58% 1.38% 1.51% Portfolio turnover rate................... 34.85% 81.66% 45.00% 40.51% 12.60% 8.83%
*Total return is not annualized. **Annualized. +Based on average weighted shares outstanding effective year ended August 31, 1999. See Notes to Financial Statements. 10 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS 97.5% ARGENTINA 2.2% *Capex SA, A...................................... Electric Utilities 42,214 $ 167,184 *Molinos Rio de la Plata SA, B.................... Food Products 103,832 160,956 Perez Companc SA, B............................... Oil & Gas 625,842 920,080 Quilmes Industrial SA, ADR, pfd. ................. Beverages 83,110 831,100 Telecom Argentina Stet-France Telecom SA, B, ADR............................................. Diversified Telecommunication Services 97,988 1,586,426 ------------ 3,665,746 ------------ AUSTRIA 2.8% Austria Tabak AG.................................. Tobacco 6,592 419,490 BBAG Oesterreichische Brau-Beteiligungs AG........ Beverages 4,757 192,480 Erste Bank Der Oester Sparkassen AG............... Banks 34,970 1,800,870 Mayr-Melnhof Karton AG............................ Containers & Packaging 11,660 563,254 OMV AG............................................ Oil & Gas 22,245 1,801,808 ------------ 4,777,902 ------------ BRAZIL 8.0% Banco Bradesco SA, pfd. .......................... Banks 624,063,710 3,511,981 *Banco Bradesco SA, new, pfd. .................... Banks 17,727,291 99,762 Brasil Telecom SA, pfd. .......................... Diversified Telecommunication Services 83,390,026 588,889 Centrais Eletricas Brasileiras SA (Eletrobras).... Electric Utilities 91,495,000 1,792,290 Centrais Eletricas Brasileiras SA (Eletrobras), B, pfd. ........................................... Electric Utilities 175,816,770 3,140,353 Cia Energetica de Minas Gerais, pfd. ............. Electric Utilities 54,208,000 814,380 Companhia Paranaense de Energia-Copel, B, pfd. ... Electric Utilities 142,037,000 1,306,726 Copene-Petroquimica do Nordeste SA, A, pfd. ...... Chemicals 1,678,800 513,466 Duratex SA, pfd. ................................. Building Products 9,056,910 263,707 Eletropaulo Metropolitana SA, pfd. ............... Electric Utilities 10,015,906 531,747 Embraer-Empresa Brasileira de Aeronautica SA...... Aerospace & Defense 73,600 560,059 Unibanco Uniao de Bancos Brasileiros SA, GDR...... Banks 23,826 570,633 ------------ 13,693,993 ------------ *CHILE .2% Cia de Telecomunicaciones de Chile SA, ADR........ Diversified Telecommunication Services 11,100 161,061 Madeco Manufacturera de Cobre SA, ADR............. Metals & Mining 27,960 145,392 ------------ 306,453 ------------ CHINA .6% Beijing Datang Power Generation Co. Ltd., H....... Electric Utilities 42,000 13,327 China Everbright Ltd. ............................ Diversified Financials 184,000 214,669 *China Petroleum & Chemical Corp., H.............. Oil & Gas 430,000 68,911 PetroChina Co. Ltd., H............................ Oil & Gas 4,308,000 800,856 ------------ 1,097,763 ------------
11 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) COLOMBIA .4% Cementos Argos SA................................. Construction Materials 255,128 $ 546,663 Compania Nacional de Chocolates SA................ Food Products 65,124 174,067 ------------ 720,730 ------------ CROATIA .5% Pliva D D, GDR, Reg S............................. Pharmaceuticals 77,600 929,260 ------------ CZECH REPUBLIC .7% *CEZ AS........................................... Electric Utilities 449,150 1,221,293 Philip Morris CR AS............................... Tobacco 35 5,840 ------------ 1,227,133 ------------ EGYPT 1.5% *Al Ahram Beverages Co., GDR...................... Beverages 41,407 519,658 Commercial International Bank Ltd. ............... Banks 112,185 1,022,884 *Orascom Telecom.................................. Wireless Telecommunication Services 41,250 365,380 *Orascom Telecom, GDR, Reg S...................... Wireless Telecommunication Services 26,000 109,200 *Suez Cement Co. ................................. Construction Materials 61,450 565,039 ------------ 2,582,161 ------------ ESTONIA .4% Hansabank Ltd. ................................... Banks 72,750 612,327 ------------ FINLAND .1% Hartwall OYJ, A................................... Beverages 17,300 254,545 ------------ GREECE .6% Hellenic Telecommunications Organization SA....... Diversified Telecommunication Services 68,440 956,648 ------------ HONG KONG 5.9% Cheung Kong Holdings Ltd. ........................ Real Estate 560,000 6,784,702 Citic Pacific Ltd. ............................... Industrial Conglomerates 77,000 276,414 Hang Lung Development Co. Ltd. ................... Real Estate 934,000 1,011,846 HSBC Holdings PLC................................. Banks 26,812 360,935 Hutchison Whampoa Ltd. ........................... Diversified Financials 96,700 1,146,778 Smartone Telecommunications Holdings Ltd. ........ Wireless Telecommunication Services 81,000 128,252 Swire Pacific Ltd., A............................. Diversified Financials 54,500 373,819 ------------ 10,082,746 ------------ HUNGARY 1.1% Egis RT........................................... Pharmaceuticals 6,312 212,748 Gedeon Richter Ltd. .............................. Pharmaceuticals 11,460 649,975 Matav RT.......................................... Diversified Telecommunication Services 209,100 693,580 Mol Magyar Olay-Es Gazipari RT.................... Oil & Gas 15,400 253,279 ------------ 1,809,582 ------------
12 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) INDIA 1.4% Bharat Heavy Electricals Ltd. .................... Electrical Equipment 22,000 $ 76,484 BSES Ltd. ........................................ Electric Utilities 8,400 39,830 *Colgate-Palmolive (INDIA) Ltd. .................. Household Products 21,759 85,040 Gas Authority of India Ltd., GDR.................. Gas Utilities 6,500 46,313 Grasim Industries Ltd. ........................... Industrial Conglomerates 77,300 531,993 Hero Honda Motors Ltd. ........................... Automobiles 7,030 122,744 Hindalco Industries Inc. ......................... Metals & Mining 4,400 72,850 Hindustan Petroleum Corporation Ltd. ............. Oil & Gas 45,939 174,461 Mahanagar Telephone Nigam Ltd. ................... Diversified Telecommunication Services 118,000 374,112 Satyam Computers Services Ltd. ................... IT Consulting & Services 6,800 50,684 SSI Ltd. ......................................... IT Consulting & Services 17,250 471,480 Videsh Sanchar Nigam Ltd. ........................ Diversified Telecommunication Services 31,900 219,781 Zee Telefilms Ltd. ............................... Media 42,200 155,230 ------------ 2,421,002 ------------ INDONESIA 3.5% *PT Barito Pacific Timber TBK..................... Paper & Forest Products 5,823,500 62,062 PT Gudang Garamm.................................. Tobacco 251,500 356,095 PT Hanjaya Mandala Sampoerna...................... Tobacco 101,500 146,803 *PT Indah Kiat Pulp & Paper Corp. TBK............. Paper & Forest Products 3,155,800 145,739 *PT Indocement Tunggal Prakarsa................... Construction Materials 747,000 89,087 *PT Indofoods Sukses Makmur TBK................... Food Products 10,582,750 993,559 PT Indosat TBK.................................... Diversified Telecommunication Services 973,500 1,037,478 PT Semen Gresik TBK............................... Construction Materials 569,111 366,796 PT Telekomunikasi Indonesia (Persero), B.......... Diversified Telecommunication Services 8,930,460 2,651,266 PT Timah TBK...................................... Metals & Mining 1,014,000 182,680 PT Tjiwi Kimia TBK................................ Paper & Forest Products 221,500 7,082 ------------ 6,038,647 ------------ ISRAEL 1.2% Elbit Systems Ltd. ............................... Aerospace & Defense 9,431 135,515 Elron Electronic Industries Ltd. ................. Electronic Equipment & Instruments 28,523 605,412 *Formula Systems Ltd. ............................ Software 13,259 403,282 *Fundtech Ltd. ................................... Software 17,110 158,268 *Gilat Satellite Networks Ltd. ................... Communications Equipment 4,640 162,980 *Magic Software Enterprises Ltd. ................. Software 11,350 29,084 *Makhteshim-Agan Industries Ltd. ................. Chemicals 205,121 469,290 *Sapiens International Corp. ..................... Software 20,400 22,950 *Tecnomatix Technologies Ltd. .................... Software 7,568 43,989 *Vocaltec Communications Ltd. .................... Software 11,400 52,013 ------------ 2,082,783 ------------
13 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) MALAYSIA .7% Genting Bhd. ..................................... Hotels Restaurants & Leisure 317,200 $ 859,779 IOI Corp. Bhd. ................................... Food Products 284,454 180,404 Resorts World Bhd. ............................... Hotels Restaurants & Leisure 96,000 181,895 ------------ 1,222,078 ------------ MEXICO 11.5% Alfa SA de CV, A.................................. Industrial Conglomerates 22,200 28,822 *America Movil SA de CV, L, ADR................... Wireless Telecommunication Services 51,102 914,726 Cemex SA.......................................... Construction Materials 1,399,257 5,865,201 DESC SA de CV DESC, B............................. Industrial Conglomerates 471,900 206,654 Grupo Bimbo SA de CV, A........................... Food Products 831,900 1,011,481 *Grupo Carso SA de CV............................. Industrial Conglomerates 23,000 54,508 Grupo Financiero Banamex Accival SA de CV......... Banks 3,657,382 6,685,415 *Grupo Financiero Bancomer SA de CV............... Banks 991,500 664,065 *Grupo Mexico SA de CV, B......................... Metals & Mining 216,700 638,601 Kimberly Clark de Mexico SA de CV, A.............. Paper & Forest Products 693,800 1,808,670 Telefonos de Mexico SA de CV (Telmex), ADR........ Diversified Telecommunication Services 51,102 1,648,551 ------------ 19,526,694 ------------ PAKISTAN 1.0% *Hub Power Co. Ltd. .............................. Electric Utilities 2,602,000 928,821 Pakistan Telecommunications Corp., A.............. Diversified Telecommunication Services 2,589,000 842,127 ------------ 1,770,948 ------------ PHILIPPINES 1.8% *Philippine National Bank......................... Banks 1,059,860 1,020,362 San Miguel Corp., B............................... Beverages 1,664,900 2,016,494 ------------ 3,036,856 ------------ POLAND 4.9% Bank Rozwoju Eksportu SA.......................... Banks 28,180 862,902 Bank Slaski SA W Katowicach....................... Banks 15,900 875,590 *Elektrim SA...................................... Electrical Equipment 197,050 1,644,719 Impexmetal SA..................................... Metals & Mining 1,003 5,449 *Orbis SA......................................... Hotels Restaurants & Leisure 51,900 290,932 Polski Koncern Naftowy Orlen SA................... Oil & Gas 474,600 2,092,014 Telekomunikacja Polska SA......................... Diversified Telecommunication Services 435,021 2,524,508 ------------ 8,296,114 ------------ RUSSIA 1.6% GUM Trade House................................... Multiline Retail 27,000 34,695 Lukoil-Holdings................................... Oil & Gas 2,268 21,546 Lukoil-Holdings, ADR.............................. Oil & Gas 35,940 1,379,018 Mosenergo, ADR.................................... Electric Utilities 92,840 301,730 Mosenergo, GDR.................................... Electric Utilities 9,800 32,443 Rostelecom, ADR................................... Diversified Telecommunication Services 148,770 758,727
14 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) RUSSIA (CONT.) Rostelecom, pfd. ................................. Diversified Telecommunication Services 95,500 $ 34,141 Unified Energy Systems............................ Electric Utilities 900,000 85,320 ------------ 2,647,620 ------------ SINGAPORE 2.9% Cycle & Carriage Ltd. ............................ Specialty Retail 80,047 164,279 First Capital Corp. Ltd. ......................... Real Estate 140,000 98,716 Fraser and Neave Ltd. ............................ Beverages 431,700 1,818,961 *Golden Agri-Resources Ltd. ...................... Food Products 218,000 16,871 Keppel Corp. Ltd. ................................ Diversified Financials 1,118,000 2,217,542 Sembcorp Industries Ltd. ......................... Industrial Conglomerates 391,096 417,014 Sembcorp Marine Ltd. ............................. Machinery 38,000 16,992 United Industrial Corp. Ltd. ..................... Real Estate 363,000 191,447 ------------ 4,941,822 ------------ *SLOVAK REPUBLIC Slovnaft AS....................................... Oil & Gas 8,000 77,196 ------------ SOUTH AFRICA 16.5% *African Bank Investments Ltd. ................... Diversified Financials 493,800 447,398 Anglo American PLC................................ Metals & Mining 59,320 3,912,694 Barloworld Ltd. .................................. Industrial Conglomerates 344,044 2,435,828 *Comparex Holdings Ltd. .......................... IT Consulting & Services 30,800 42,855 *Datatec Ltd. .................................... Communications Equipment 10,700 33,446 Fedsure Holdings Ltd. ............................ Insurance 188,663 783,857 Firstrand Ltd. ................................... Banks 312,000 309,335 *Imperial Holdings Ltd............................ Specialty Retail 66,798 570,627 Iscor Ltd. ....................................... Metals & Mining 350,738 907,942 Johnnic Holdings Ltd. ............................ Diversified Financials 8,200 75,144 Kersaf Investments Ltd. .......................... Hotels Restaurants & Leisure 91,175 418,938 Liberty Group Ltd. ............................... Insurance 114,459 921,479 *MIH Holdings Ltd. ............................... Internet Software & Services 14,000 38,416 Nedcor Ltd. ...................................... Banks 17,792 361,551 Old Mutual PLC.................................... Insurance 1,063,760 2,481,585 Palabora Mining Co. Ltd. ......................... Metals & Mining 27,000 164,251 Remgro Ltd. ...................................... Industrial Conglomerates 232,000 1,576,495 Reunert Ltd. ..................................... Electronic Equipment & Instruments 122,000 225,019 Sanlam Ltd. ...................................... Insurance 953,000 1,152,086 Sappi Ltd. ....................................... Paper & Forest Products 48,217 399,416 Sasol Ltd. ....................................... Oil & Gas 415,000 3,276,599 South African Breweries PLC....................... Beverages 692,348 5,224,423 Tiger Brands Ltd. ................................ Food Products 207,333 1,636,981 Tongaat-Hulett Group Ltd. ........................ Food Products 98,681 541,558 Venfin Ltd. ...................................... Wireless Telecommunication Services 103,316 260,764 ------------ 28,198,687 ------------
15 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) SOUTH KOREA 8.4% Cheil Jedang Corp. ............................... Food Products 19,780 $ 694,768 Hana Bank......................................... Banks 20,650 128,435 Hyundai Motor Co. Ltd. ........................... Automobiles 64,230 819,456 Kookmin Bank...................................... Banks 38,800 559,987 Korea Electric Power Corp. ....................... Electric Utilities 111,240 2,279,617 Korea Telecom Corp. .............................. Diversified Telecommunication Services 1,652 86,018 Korea Telecom Corp., ADR.......................... Diversified Telecommunication Services 8,483 254,490 LG Chemical Ltd. ................................. Chemicals 25,500 284,666 Samsung Corp. .................................... Trading Companies & Distributors 36,800 209,808 Samsung Electro-Mechanics Co. .................... Electronic Equipment & Instruments 2,862 99,957 Samsung Electronics Co. Ltd. ..................... Semiconductor Equipment & Products 25,577 3,813,810 Samsung Heavy Industries Co. Ltd. ................ Machinery 503,588 2,184,450 Samsung SDI Co. Ltd. ............................. Electronic Equipment & Instruments 33,966 1,736,082 SK Corp. ......................................... Oil & Gas 91,980 1,092,817 SK Global......................................... Trading Companies & Distributors 20,318 148,242 ------------ 14,392,603 ------------ TAIWAN 3.0% *Accton Technology Corp. ......................... Computers & Peripherals 459,000 815,968 *Advanced Semiconductor Engineering Inc. ......... Semiconductor Equipment & Products 279,000 269,986 Advantech Co. Ltd. ............................... Computers & Peripherals 70,000 280,260 *China Development Industrial Bank................ Banks 169,000 178,170 *China Motor Co. Ltd. ............................ Automobiles 140,000 142,402 *Compal Electronics Inc. ......................... Computers & Peripherals 205,000 323,234 Elan Microelectronics Corp. ...................... Software 36,000 97,944 *Procomp Informatics Co. Ltd. .................... Machinery 18,000 57,041 *Ritek Corp. ..................................... Computers & Peripherals 86,000 204,730 *Siliconware Precision Industries Co. Ltd. ....... Semiconductor Equipment & Products 210,000 178,544 *Taiwan Semiconductor Manufacturing Co. .......... Semiconductor Equipment & Products 649,000 1,805,843 UNI-President Enterprises Corp. .................. Food Products 147,840 91,414 *United Epitaxy Co. Ltd. ......................... Electronic Equipment & Instruments 8,722 8,602 *United Microelectronics Corp. ................... Semiconductor Equipment & Products 244,000 399,815 *Yageo Corp. ..................................... Electronic Equipment & Instruments 122,000 171,996 ------------ 5,025,949 ------------ THAILAND 7.7% *American Standard Sanitaryware Public Co. Ltd., fgn. ........................................... Building Products 13,300 49,419 *Bangkok Bank Public Co. Ltd. .................... Banks 700 683 *Bangkok Bank Public Co. Ltd., fgn. .............. Banks 734,800 981,212 BEC World Public Co. Ltd., fgn. .................. Media 32,460 174,889 Charoen Pokphand Foods Public Co. Ltd., fgn. ..... Food Products 309,096 308,665 *Charoen Pokphand Foods Public Co. Ltd., fgn., wts., 4/29/02................................... Food Products 166,998 13,186 *Dusit Thani Public Co. Ltd., fgn. ............... Hotels Restaurants & Leisure 74,500 47,146 Electricity Generating Public Co. Ltd............. Electric Utilities 122,100 110,588 *Jasmine International Public Co. Ltd., fgn. ..... Diversified Telecommunication Services 930,900 221,591 *Land and House Public Co. Ltd., fgn. ............ Household Durables 399,749 213,521
16 PAGE TEMPLETON EMERGING MARKETS FUND, INC. STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE ---------------------------------------------------------------------------------------------------------------------------- LONG TERM INVESTMENTS (CONT.) THAILAND (CONT.) PTT Exploration & Production Public Co. Ltd., fgn. ........................................... Oil & Gas 332,700 $ 834,454 Saha Union Public Co. Ltd., fgn. ................. Textiles & Apparel 3,900 1,223 *Shin Corporations Public Company Ltd., fgn. ..... Wireless Telecommunication Services 263,000 1,258,198 *Siam Cement Public Co. Ltd. ..................... Construction Materials 70,165 482,323 *Siam Cement Public Co. Ltd., fgn. ............... Construction Materials 106,615 1,010,193 *Siam Commercial Bank, 5.25%, fgn., cvt. pfd. .... Banks 3,366,300 2,247,588 Siam Makro Public Co. Ltd., fgn. ................. Multiline Retail 286,500 409,191 *Telecomasia Corp. Public Co. Ltd., fgn. ......... Diversified Telecommunication Services 785,700 451,604 *Thai Airways International Public Co. Ltd., fgn. ........................................... Airlines 347,300 260,112 *Thai Farmers Bank Public Co. Ltd. ............... Banks 130,400 75,708 *Thai Farmers Bank Public Co. Ltd., fgn. ......... Banks 3,610,700 2,389,804 *Total Access Communication Public Co. Ltd. ...... Diversified Telecommunication Services 253,100 921,284 *United Communications Industry Public Co. Ltd., fgn. ........................................... Communications Equipment 621,000 634,556 ------------ 13,097,138 ------------ TURKEY 5.6% Akbank............................................ Banks 535,936,722 1,999,349 Akcansa Cimento Sanayi Ve Ticaret AS.............. Construction Materials 7,515,000 44,389 *Anadolu Efes Biracilik Ve Malt Sanayii AS........ Beverages 3,985,000 175,505 Arcelik AS, Br. .................................. Household Durables 71,429,000 762,403 Haci Omer Sabanci Holding AS...................... Diversified Financials 100,662,000 453,761 *Haci Omer Sabanci Holding AS, new................ Diversified Financials 33,553,996 147,777 *KOC Holding AS................................... Diversified Financials 31,744,000 1,036,203 *Tupras-Turkiye Petrol Rafineleri AS.............. Oil & Gas 84,548,200 2,409,405 *Turkcell Iletisim Hizmetleri AS.................. Wireless Telecommunication Services 81,790,000 1,631,562 *Yapi Ve Kredi Bankasi AS......................... Banks 264,200,000 848,725 ------------ 9,509,079 ------------ VENEZUELA .8% Compania Anonima Nacional Telefonos de Venezuela, ADR............................................. Diversified Telecommunication Services 61,740 1,331,114 ------------ TOTAL LONG TERM INVESTMENTS (COST $189,276,120)... 166,333,319 ------------ SHORT TERM INVESTMENTS (COST $3,888,775) 2.3% Franklin Institutional Fiduciary Trust Money Market Portfolio................................ 3,888,775 3,888,775 ------------ TOTAL INVESTMENTS (COST $193,164,895) 99.8%....... 170,222,094 OTHER ASSETS, LESS LIABILITIES .2%................ 302,259 ------------ TOTAL NET ASSETS 100.0%........................... $170,524,353 ============
*Non-income producing. See Notes to Financial Statements. 17 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Financial Statements STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 2001 (UNAUDITED) Assets: Investments in securities, at value (cost $193,164,895).... $170,222,094 Cash....................................................... 108,012 Receivables: Investment securities sold................................ 1,016,797 Dividends and interest.................................... 330,098 ------------ Total assets.......................................... 171,677,001 ------------ Liabilities: Payables: Investment securities purchased........................... 740,156 To affiliates............................................. 191,325 Accrued expenses........................................... 221,167 ------------ Total liabilities..................................... 1,152,648 ------------ Net assets, at value........................................ $170,524,353 ============ Net assets consist of: Undistributed net investment income........................ $ 416,996 Net unrealized depreciation................................ (22,942,801) Accumulated net realized loss.............................. (11,743,653) Capital shares............................................. 204,793,811 ------------ Net assets, at value........................................ $170,524,353 ============ Net asset value per share ($170,524,353 / 17,656,437 shares outstanding).............................................. $9.66 ============
See Notes to Financial Statements. 18 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Financial Statements (continued) STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 (UNAUDITED) Investment Income: (net of foreign taxes of $176,877) Dividends.................................................. $ 1,502,286 Interest................................................... 423,040 ----------- Total investment income............................... $ 1,925,326 Expenses: Management fees (Note 3)................................... 1,091,258 Administrative fees (Note 3)............................... 131,079 Transfer agent fees........................................ 9,500 Custodian fees............................................. 105,500 Registration and filing fees............................... 15,300 Professional fees.......................................... 34,600 Directors' fees and expenses............................... 20,400 Other...................................................... 11,500 ----------- Total expenses........................................ 1,419,137 ------------ Net investment income........................... 506,189 ------------ Realized and unrealized losses: Net realized loss from: Investments............................................... (6,940,764) Foreign currency transactions............................. (182,647) ----------- Net realized loss..................................... (7,123,411) Net unrealized depreciation on investments............ (23,006,549) ------------ Net realized and unrealized loss............................ (30,129,960) ------------ Net decrease in net assets resulting from operations........ $(29,623,771) ============
See Notes to Financial Statements. 19 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Financial Statements (continued) STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, 2001 YEAR ENDED (UNAUDITED) AUGUST 31, 2000 --------------------------------------- Increase (decrease) in net assets: Operations: Net investment income..................................... $ 506,189 $ 2,344,394 Net realized gain (loss) from investments and foreign currency transactions.................................... (7,123,411) 6,673,232 Net unrealized depreciation on investments................ (23,006,549) (9,487,022) --------------------------------------- Net decrease in net assets resulting from operations.... (29,623,771) (469,396) Distributions to shareholders from: Net investment income..................................... (1,816,847) (1,820,379) Net realized gains........................................ -- (549,115) --------------------------------------- Total distributions to shareholders........................ (1,816,847) (2,369,494) Net decrease in net assets.............................. (31,440,618) (2,838,890) Net assets: Beginning of period........................................ 201,964,971 204,803,861 --------------------------------------- End of period.............................................. $170,524,353 $201,964,971 ======================================= Undistributed net investment income included in net assets: End of period.............................................. $ 416,996 $ 1,727,654 =======================================
See Notes to Financial Statements. 20 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Notes to Financial Statements (unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Templeton Emerging Markets Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940 as a closed-end, diversified investment company. The Fund seeks long-term capital appreciation by investing primarily in emerging country equity securities. The following summarizes the Fund's significant accounting policies. a. SECURITY VALUATION: Securities listed or traded on a recognized national exchange or NASDAQ are valued at the latest reported sales price. Over-the-counter securities and listed securities for which no sale is reported are valued within the range of the latest quoted bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined by management in accordance with procedures established by the Board of Directors. b. FOREIGN CURRENCY TRANSLATION: Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities and income items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. When the Fund purchases or sells foreign securities it will customarily enter into a foreign exchange contract to minimize foreign exchange risk from the trade date to the settlement date of such transactions. The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign currency denominated assets and liabilities other than investments in securities held at the end of the reporting period. c. INCOME TAXES: No provision has been made for income taxes because the Fund's policy is to qualify as a regulated investment company under the Internal Revenue Code and to distribute all of its taxable income. d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS: Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Certain income from foreign securities is recorded as soon as 21 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Notes to Financial Statements (unaudited) (continued) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.) d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.) information is available to the Fund. Interest income and estimated expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. e. ACCOUNTING ESTIMATES: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expense during the reporting period. Actual results could differ from those estimates. 2. CAPITAL SHARES On November 29, 2000, the Board of Directors of the Fund authorized management to implement an open-market share repurchase program pursuant to which the Fund may purchase, from time to time, shares of the Fund's common stock in open-market transactions, at the discretion of management. At February 28, 2001, there were 30 million shares authorized ($0.01 par value). During the period ended February 28, 2001 and the year ended August 31, 2000, there were no share transactions. 3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Certain officers of the Fund are also officers or directors of Templeton Asset Management Ltd. (TAML) and Franklin Templeton Services, LLC (FT Services), the Fund's investment manager and administrative manager, respectively. The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market Portfolio (the Sweep Money Fund) which is managed by Franklin Advisers Inc. The Fund pays an investment management fee to TAML of 1.25% per year of the average daily net assets of the Fund. Management fees were reduced on assets invested in the Sweep Money Fund. The Fund pays an administrative fee monthly to FT Services based on the rate of 0.15% per year of the Fund's average daily net assets. 22 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Notes to Financial Statements (unaudited) (continued) 4. INCOME TAXES At February 28, 2001, the net unrealized depreciation based on the cost of investments for income tax purposes of $195,978,722 was as follows: Unrealized appreciation..................................... $ 18,448,839 Unrealized depreciation..................................... (44,205,467) ------------ Net unrealized depreciation................................. $(25,756,628) ============
Net investment income and net realized capital gains differ for financial statement and tax purposes primarily due to differing treatments of wash sales and losses realized subsequent to October 31 on the sale of foreign currencies. At August 31, 2000, the Fund had deferred currency losses occurring subsequent to October 31, 1999 of $281,029. For tax purposes, such losses will be reflected in the year ending August 31, 2001. At August 31, 2000, the Fund had tax basis capital losses of $985,226 which may be carried over to offset future capital gains. Such losses expire August 31, 2008. 5. INVESTMENT TRANSACTIONS Purchases and sales of securities (excluding short-term securities) for the period ended February 28, 2001 aggregated $56,772,989 and $57,418,639, respectively. 23 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Annual Meeting of Shareholders, February 26, 2001 An Annual Meeting of Shareholders of the Fund was held at the Tower Club, Bank of America Building, One Financial Plaza, Ft. Lauderdale, Florida, on February 26, 2001. The purpose of the meeting was to elect four Directors of the Fund; to ratify the selection of PricewaterhouseCoopers LLP as the Fund's independent auditors for the fiscal year ending August 31, 2001; and to authorize the proxyholders, in their discretion, to vote upon such other matters that may properly come before the meeting or any adjournments of the meeting. At the meeting, the following persons were elected by the shareholders to serve as Directors of the Fund: Harmon E. Burns, Andrew H. Hines, Jr., Charles B. Johnson and Constantine D. Tseretopoulos.* Shareholders also ratified the selection of PricewaterhouseCoopers LLP to serve as the Fund's independent auditors for the fiscal year ending August 31, 2001. No other business was transacted at the meeting. The results of the voting at the Annual Meeting are as follows: 1. The election of four (4) Directors:
% OF % OF % OF TERM EXPIRING 2004: FOR OUTSTANDING SHARES VOTED SHARES WITHHELD OUTSTANDING SHARES ---------------------------------------------------------------------------------------------------------------------- Harmon E. Burns........... 14,536,196 82.33% 97.37% 393,052 2.22% Andrew H. Hines, Jr....... 14,534,689 82.32% 97.36% 394,559 2.23% Charles B. Johnson........ 14,563,296 82.48% 97.55% 365,952 2.07% Constantine D. Tseretopoulos........... 14,542,080 82.36% 97.41% 387,168 2.19% % OF TERM EXPIRING 2004: VOTED SHARES -------------------------- Harmon E. Burns........... 2.63% Andrew H. Hines, Jr....... 2.64% Charles B. Johnson........ 2.45% Constantine D. Tseretopoulos........... 2.59%
2. The ratification of the selection of PricewaterhouseCoopers LLP as independent auditors of the Fund for the fiscal year ending August 31, 2001:
SHARES % OF % OF VOTED OUTSTANDING SHARES VOTED SHARES -------------------------------------------------------------------------------- For....................... 14,680,345 83.14% 98.33% Against................... 158,944 0.90% 1.07% Abstain................... 89,959 0.51% 0.60% -------------------------------------------------------------------------------- Total..................... 14,929,248 84.55% 100.00%
3. The transaction of any other business that may properly come before the meeting or any adjournments thereof:
SHARES % OF % OF VOTED OUTSTANDING SHARES VOTED SHARES -------------------------------------------------------------------------------- For....................... 13,206,104 74.79% 88.45% Against................... 913,207 5.17% 6.12% Abstain................... 809,937 4.59% 5.43% -------------------------------------------------------------------------------- Total..................... 14,929,248 84.55% 100.00%
*Harris J. Ashton, Nicholas F. Brady, Frank J. Crothers, S. Joseph Fortunato, Edith E. Holiday, Betty P. Krahmer, Gordon S. Macklin and Fred R. Millsaps, are Directors of the Fund who are currently serving and whose terms of office continued after the Annual Meeting of Shareholders. 24 PAGE TEMPLETON EMERGING MARKETS FUND, INC. Dividend Reinvestment and Cash Purchase Plan The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with the following features: Shareholders must affirmatively elect to participate in the Plan; Stock dividends and capital gains distributions will be reinvested automatically; Mellon Investor Services LLC, P.O. Box 3338, South Hackensack, NJ 07606-1938, will provide additional Plan information upon request. Whenever the Fund declares 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, the participant 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 or if dividends and/or capital gains distributions are payable only in cash, the participant will receive shares purchased on the New York Stock Exchange or otherwise on the open market. A participant has the option of submitting additional payments to Mellon Securities Trust Company (the "Plan Agent"), in any amounts of at least $100, up to a maximum of $5,000 per month, for the purchase of Fund shares for his or her account. These payments shall be made by check or money order payable to "Mellon Securities Trust Co." and sent to Mellon Investor Services LLC, P.O. Box 382009, Pittsburgh, PA 15250-8009, Attn: Templeton Emerging Markets Fund, Inc. The Plan Agent shall apply such payments (less a $5.00 service charge and less a pro rata share of trading fees) to purchases of Fund shares on the open market. The automatic reinvestment of dividends and/or capital gains does not relieve the participant of any income tax that may be payable on dividends or distributions. The participant may withdraw from the Plan without penalty at any time by written notice to the Plan Agent sent to Mellon Investor Services LLC, P.O. Box 3338, South Hackensack, NJ 07606-1938. Upon withdrawal, the participant will receive, without charge, stock certificates issued in the participant's name for all full shares held by the Plan Agent; or, if the participant wishes, the Plan Agent will sell the participant's shares and send the proceeds, less a service charge of $5.00 and less trading fees. 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 trading fees. Trading fees will be deducted from amounts to be invested. 25 PAGE TEMPLETON EMERGING MARKETS FUND, INC. SHAREHOLDER INFORMATION Shares of Templeton Emerging Markets Fund, Inc. are traded on the New York Stock Exchange under the symbol "EMF." The Fund's shares are also listed and traded on the Pacific Exchange. Information about the net asset value and the market price is published each Monday in the Wall Street Journal, weekly in Barron's and each Saturday in The New York Times and other newspapers. Daily market prices for the Fund's shares are published in the New York Stock Exchange Composite Transactions section of newspapers. For current information about dividends and shareholder accounts, call 1-800/416-5585. Registered shareholders can now access their Fund account on-line with Investor ServiceDirect(SM). For information go to Mellon Investor Services' web site at https://vault.mellon-investor.com/isd and follow the instructions. The daily closing net asset value as of the previous business day may be obtained when available by calling Franklin Templeton Fund Information after 7 a.m. pacific time any business day at 1-800/DIAL BEN(R) (1-800/342-5236). The Fund's net asset value and dividends are also listed on the NASDAQ Stock Market, Inc.'s Mutual Fund Quotation Service ("NASDAQ MFQS"). Shareholders not receiving copies of the Reports to Shareholders because their shares are registered in the name of a broker or a custodian can request that they be added to the Fund's mailing list, by writing Templeton Emerging Markets Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030. 26 PAGE SEMIANNUAL REPORT TEMPLETON EMERGING MARKETS FUND, INC. 100 Fountain Parkway P.O. Box 33030 St. Petersburg, FL 33733-8030 TRANSFER AGENT Mellon Investor Services LLC 85 Challenger Road Overpeck Centre Ridgefield Park, NJ 07660 1-800/416-5585 www.mellon-investor.com FUND INFORMATION 1-800/342-5236 Investors should be aware that the value of investments made for the Fund may go down as well as up. Like any investment in securities, the value of the Fund's portfolio will be subject to the risk of loss from market, currency, economic, political and other factors. The Fund and its investors are not protected from such losses by the Investment Manager. Therefore, investors who cannot accept this risk 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 S01 04/01 [LOGO] Printed on recycled paper