SEMI ANNUAL REPORT
TEMPLETON EMERGING
MARKETS FUND, INC.
FEBRUARY 29, 2000
[FRANKLIN TEMPLETON LOGO]
FRANKLIN TEMPLETON
<PAGE>
[PHOTO]
J. MARK MOBIUS, Ph.D.
President
Templeton Emerging
Markets Fund, Inc.
Dr. 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 six months
ended February 29, 2000, a period of relatively strong economic performance for
many emerging market countries. Hong Kong's recession officially ended when the
government reported two consecutive quarters of economic growth, as property
prices stabilized, tourism picked up and retail sales improved. The announcement
of two large construction projects and a multi-billion dollar project designed
to attract information technology and multimedia investment also boosted Hong
Kong's stock market. In addition, the Chinese government divested some of the
holdings acquired in 1998 when it made substantial purchases to support the Hong
Kong stock market.
Thailand's economy grew fairly significantly during the period, and the
International Monetary Fund (IMF)
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ........................................................ 1
Performance Summary ....................................................... 6
Important Notice to Shareholders .......................................... 7
Financial Highlights & Statement of Investments ........................... 9
Financial Statements ...................................................... 18
Notes to the Financial Statements ......................................... 21
</TABLE>
[PYRAMID GRAPH]
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the Fund's Statement of Investments (SOI), a complete listing of
the Fund's portfolio holdings, including dollar value and number of shares or
principal amount. The SOI begins on page 10.
<PAGE>
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets 2/29/00
[PIECHART]
Asia 35.6%
Latin American 34.6%
Middle East & Africa 14.5%
Europe 10.2%
Short-Term Investments & Other Net Assets 5.1%
reported that the country no longer needed to renew its $17.2 billion loan
package scheduled to expire in June 2000 -- most likely a positive indication of
Thailand's improving economic health. With economic growth exceeding many
analysts' expectations, a lower-than-expected inflation rate and a surge in
imports indicating domestic consumption seems to be back on track, Thailand
appears to be on its way to recovery. Elsewhere in Asia, political events helped
support a more positive environment during the period. Stability in the
Malaysian and Indian governments increased investor confidence there, and an
election brought in a new, more progressive government in Indonesia.
Latin American markets generally performed well during the six months under
review due largely to rising commodity prices and regional governments' efforts
to restructure their economies. In Brazil, figures released on February 8, 2000
showed its economy grew by 3.1% between October and December 1999, compared with
the same period a year earlier. This growth, combined with a stable currency,
enabled the nation to regain investors' favor during the reporting period.
Argentina's newly elected president, Fernando de la Rua, promised to invigorate
his country's economy by cutting the deficit and reducing unemployment. His
government also signed an agreement for a higher-than-expected $7.4 billion
Standby Fund with the IMF, fueling improved investor confidence in Argentina.
2
<PAGE>
In Mexico, the ruling Partido Revolucionario Institucional party held its first
primary election in over half a century, with former Interior Minister Francisco
Labastida emerging as the party's next presidential candidate. The election's
results, the release of stronger-than-expected third-quarter economic growth
numbers, plus the approval of a $1 billion "Fund to Strengthen the State" and
plans to invest almost $15 billion in Mexico's energy sector helped to raise
investor confidence in the country. Reflecting the improving environment,
Moody's Investors Service raised its Mexico credit outlook from stable to
positive in February 2000.(1)
In Europe, the European Union (EU) played a dominant role in the economic and
political development of many Eastern European countries. Efforts to meet EU
admission requirements proved beneficial for Poland, Slovakia, Hungary and the
Czech Republic, whose economies performed well during the reporting period.
The EU also signed a free trade agreement with South Africa, contributing in
part to that country's growth during the period. Stronger gold prices, greater
demand for diamonds and other natural resources, and the restructurings of
several large South African companies also helped propel the nation's economy
forward. Despite the uncertainty of elections in Russia and international
concerns about Chechnya, which led to the imposition of sanctions by the EU, the
Russian stock market posted a gain of 77.8% in U.S.-dollar terms for the six
months under review. Russia's fiscal condition quickly improved when oil
TOP 10 COUNTRIES*
Equity Investments Based on
Total Net Assets
2/29/00
<TABLE>
<CAPTION>
% OF TOTAL
COUNTRY NET ASSETS
- ----------------------------------------------------------------------------------
<S> <C>
Brazil 13.6%
Mexico 11.0%
South Africa 10.9%
Thailand 7.4%
Hong Kong 5.7%
Argentina 5.2%
Indonesia 4.6%
Turkey 4.4%
South Korea 4.1%
Singapore 3.8%
</TABLE>
*Does not include investments in fixed-income securities, short-term investments
or other net assets.
(1) Source: Moody's Investors Service.
3
<PAGE>
TOP 10 HOLDINGS*
2/29/00
<TABLE>
<CAPTION>
COMPANY % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- -----------------------------------------------------------------------------------
<S> <C>
Telefonos de Mexico
SA (Telmex), ADR
Telecommunications, Mexico 5.3%
Anglo American PLC
Metals & Mining, South Africa 2.2%
Telecomunicacoes de
Sao Paulo SA, ADR
Telecommunications, Brazil 2.1%
Grupo Financiero Banamex
Accival SA de CV
Banking, Mexico 2.1%
Cia Vale do Rio Doce, A, pfd
Metals & Mining, Brazil 2.1%
Telecom Argentina
Stet-France SA (Teco), B, ADR
Telecommunications, Argentina 2.1%
Korea Electric Power Corp.
Utilities Electrical & Gas,
South Korea 2.1%
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong** 2.0%
PT Telekomunikasi Indonesia
(Persero), B
Telecommunications, Indonesia 1.9%
Akbank Banking, Turkey 1.9%
</TABLE>
*Does not include investments in fixed-income securities, short-term investments
or other net assets.
**Hong Kong reverted to the sovereignty of China on July 1, 1997.
prices almost tripled from their lows in early 1999, and the ruble's devaluation
made domestically produced goods more competitive in the world's markets,
enhancing business prospects for the country's manufacturers.
Within this environment, the Fund posted a -6.08% six-month cumulative total
return in market price terms and a +12.13% return in net asset value terms, as
shown in the Performance Summary on page 6.
Attempting to maximize returns during the period, we actively repositioned the
portfolio, leading to substantial changes in its composition. We sold our
holdings in China's Shenzhen B Share markets to take advantage of bargains in
Estonia, Croatia, Greece and Malaysia. And due to advances in Latin American
stock markets, we increased the Fund's overall exposure to Latin America from
28.2% of total net assets at the beginning of the period to 34.6% on February
29, 2000, while reducing the Fund's Asian exposure from 45.4% to 35.6%.
Looking forward, we are optimistic about investment opportunities in emerging
market countries. We believe positive political and economic developments may
continue to propel emerging markets along the path to recovery. Believing that
improved economic efficiencies and better corporate governance could benefit
stock prices, we will continue to favor those countries and companies most
actively engaged in reform.
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
4
<PAGE>
currency volatility. Emerging market securities involve heightened risks related
to the same factors, in addition to 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 increased 1,322% in the
last 15 years, but has suffered 5 quarterly declines of more than 20% each
during that time.(2) While short-term volatility can be disconcerting, declines
in excess of 50% are not unusual in emerging markets.
Thank you for your continued support. We 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 29, 2000, 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.
(2) Source: Hang Seng Index. Based on quarterly percentage price change over 15
years ended December 31, 1999. Market return is measured in U.S. dollar terms
and does not include reinvested dividends.
5
<PAGE>
SIX-MONTH PERFORMANCE SUMMARY
AS OF 2/29/00
Distributions 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. Past distributions are not indicative of
future trends. 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.
PERFORMANCE
<TABLE>
<S> <C> <C>
Six-Month Total Return +12.13% (Based on change in Net Asset Value)
-6.08% (Based on change in Market Price)
Net Asset Value (NAV) $12.86 (2/29/00) $11.60 (8/31/99)
Change in NAV +$1.26
Market Price (NYSE) $11.375 (2/29/00) $12.250 (8/31/99)
Change in Market Price -$0.875
Distributions (9/1/99 - 2/29/00) Dividend Income $0.1031
Long-Term Capital Gain $0.0311
---------------------------------
Total $0.1342
</TABLE>
Templeton Emerging Markets Fund paid distributions derived from long-term
capital gains of 3.11 cents ($0.0311) per share in October 1999. The Fund hereby
designates such distributions as capital gain dividends per Internal Revenue
Code Section 852 (b)(3).
ADDITIONAL PERFORMANCE
AS OF 3/31/00
<TABLE>
<CAPTION>
INCEPTION
1-YEAR 5-YEAR 10-YEAR (2/26/87)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1)
Based on change in
net asset value +33.01% +69.67% +437.74% +807.35%
Based on change in
market price +1.22% +24.99% +294.60% +508.54%
Average Annual Total Return(2)
Based on change in
net asset value +33.01% +11.15% +18.32% +18.35%
Based on change in
market price +1.22% +4.56% +14.71% +14.79%
</TABLE>
(1) Cumulative total return represents the change in value of an investment over
the periods indicated.
(2) Average annual total return represents the average annual change in value of
an investment over the periods indicated.
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 at
1-800/342-5236.
Past performance does not guarantee future results.
6
<PAGE>
IMPORTANT NOTICE TO SHAREHOLDERS
ADOPTION OF DEFINITIONS OF "EMERGING MARKET" AND "EMERGING MARKET COMPANY." The
Fund uses the following definitions of "emerging market" and "emerging market
company" to reflect the dynamic nature of what constitutes an "emerging market"
or an "emerging market company." The following definitions generally will be
used in managing the Fund's portfolio:
"Emerging market" countries are (i) countries that are generally considered low
or middle income countries by the International Bank of Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation; or (ii) countries that are classified by the United Nations or
otherwise regarded by their authorities as developing or (iii) countries with a
stock market capitalization of less than 3% of the Morgan Stanley Capital
International(R) World Index.
"Emerging market companies" are (i) companies whose principal securities trading
markets are in emerging market countries or (ii) companies that derive a
significant share of their total revenue from either goods or services produced
or sales made in emerging market countries or (iii) companies that have a
significant portion of their assets in emerging market countries or (iv)
companies that are linked to currencies of emerging market countries or (v)
companies that are organized under the laws of or with principal offices in
emerging market countries.
These definitions as used by the Fund's manager may differ from the definition
of the same terms as used in managing other Franklin Templeton funds. The Board
of Directors may change these definitions without shareholder approval.
EURO RISK. On January 1, 1999, the European Economic and Monetary Union (EMU)
introduced a new single currency called the euro. By July 1, 2002, the euro,
which will be implemented in stages, will have replaced the national currencies
of the following member countries: Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
Currently, the exchange rate of the currencies of each of these countries is
fixed to the euro. The euro trades on currency exchanges and is available for
non-cash transactions. The participating countries currently issue sovereign
debt exclusively in euro. By July 1, 2002, euro-denominated bills and coins will
replace the bills and coins of the above countries.
The new European Central Bank has control over each country's monetary policies.
Therefore, the participating countries no longer control their own monetary
policies by directing independent interest rates for their currencies. The
national governments of each of the participating countries, however, has
retained the authority to set its own tax and spending policies and public debt
levels.
The change to the euro as a single currency is new and untested. It is uncertain
how eleven different economies will adjust to a unified monetary system and the
loss of exchange rate flexibility. In the first six months of the euro's
existence, the exchange rates of the euro versus many of the world's major
currencies steadily declined. In this environment, U.S. and other foreign
investors experienced erosion of their investment returns on their
euro-denominated securities.
7
<PAGE>
It is not possible to predict the impact of the euro on currency values or on
the business or financial condition of European countries and issuers and
issuers in other regions whose securities the Fund may hold, or the impact, if
any, on Fund performance. The transition and the elimination of currency risk
among EMU countries may change the economic environment and behavior of
investors, particularly in European markets. The Fund's non-U.S. dollar (euro or
other) denominated investments will still be exposed to currency risk due to
fluctuations among those currencies and versus the U.S. dollar.
While the implementation of the euro could have a negative effect on the Fund,
the Fund's manager and its affiliated service providers are taking steps they
believe are reasonably designed to address the euro issue.
8
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 --------------------------------------------------------
(UNAUDITED)+ 1999+ 1998 1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period...... $11.60 $10.85 $20.67 $17.26 $18.23 $22.77
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income.................... .05 .13 .26 .27 .25 .23
Net realized and unrealized gains
(losses)............................... 1.34 5.17 (7.64) 4.27 1.20 (1.62)
-----------------------------------------------------------------------------
Total from investment operations.......... 1.39 5.30 (7.38) 4.54 1.45 (1.39)
-----------------------------------------------------------------------------
Less distributions from:
Net investment income.................... (.10) (.29) (.26) (.21) (.26) (.10)
Net realized gains....................... (.03) (4.26) (2.18) (.92) (2.16) (3.05)
-----------------------------------------------------------------------------
Total distributions....................... (.13) (4.55) (2.44) (1.13) (2.42) (3.15)
-----------------------------------------------------------------------------
Net asset value, end of period............ $12.86 $11.60 $10.85 $20.67 $17.26 $18.23
=============================================================================
Total Return*
Based on market value per share.......... (6.08)% 99.91% (54.35)% 33.81% 7.45% (16.94)%
Based on net asset value per share....... 12.13% 60.34% (39.69)% 27.34% 8.69% (8.53)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)......... $227,071 $204,804 $182,352 $342,002 $283,678 $294,962
Ratios to average net assets:
Expenses................................. 1.63%** 1.63% 1.70% 1.67% 1.71% 1.73%
Net investment income.................... .75%** 1.18% 1.58% 1.38% 1.51% 1.28%
Portfolio turnover rate................... 26.13% 45.00% 40.51% 12.60% 8.83% 27.58%
</TABLE>
*Total return is not annualized.
**Annualized.
+Based on average weighted shares outstanding.
See Notes to Financial Statements.
9
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES 94.9%
ARGENTINA 5.2%
Banco Frances SA................................... Banking 12,510 $ 110,481
*Capex SA, A....................................... Utilities Electrical & Gas 40,849 224,703
*Molinos Rio de la Plata SA, B..................... Food & Household Products 134,437 299,839
*PC Holdings SA, B................................. Financial Services 1,189,842 2,451,442
Quilmes Industrial SA, ADR......................... Beverages & Tobacco 34,350 369,263
Telecom Argentina Stet-France SA (Teco), B, ADR.... Telecommunications 113,308 4,723,527
Telefonica de Argentina SA, ADR.................... Telecommunications 55,815 2,550,048
Transportadora de Gas del Sur SA, B, ADR........... Utilities Electrical & Gas 113,000 1,045,250
------------
11,774,553
------------
AUSTRIA 1.4%
Austria Tabak AG................................... Beverages & Tobacco 13,112 522,617
Bank Austria AG.................................... Banking 38,540 1,677,120
Mayr-Melnhof Karton AG............................. Forest Products & Paper 600 32,972
OMV AG............................................. Energy Sources 13,345 1,044,664
------------
3,277,373
------------
BRAZIL 13.6%
Banco Bradesco SA, pfd. ........................... Banking 58,779,291 422,201
*Banco Bradesco SA, pfd., new...................... Banking 5,273,968 37,882
Centrais Eletricas Brasileiras SA (Electrobras), B,
pfd. ............................................ Utilities Electrical & Gas 219,886,770 4,019,970
Cia Cervejaria Brahma, pfd. ....................... Beverages & Tobacco 164,400 101,269
Cia Energetica de Minas Gerais, pfd. .............. Utilities Electrical & Gas 11,978,000 197,050
Cia Vale do Rio Doce, A, pfd. ..................... Metals & Mining 178,700 4,746,482
Companhia Paranaense de Energia-Copel, B, pfd. .... Utilities Electrical & Gas 300,000 2,747
Copene-Petroquimica do Nordeste SA, A, pfd. ....... Chemicals 4,502,800 1,547,162
Duratex SA, pfd. .................................. Forest Products & Paper 7,320,800 241,613
Embratel Participacoes SA, pfd. ................... Telecommunications 27,845,000 670,357
*Empresa Brasileira de Aeronautica SA.............. Aerospace & Military Tech 10,600 49,481
*Itausa-Investimentos SA, pfd., new................ Multi-Industry 160,757 144,904
*Itausa-Investimentos SA, pfd., new, NPV........... Multi-Industry 2,883,854 2,672,800
Petroleo Brasileiro SA, pfd. ...................... Energy Sources 5,901,000 1,534,027
Tele Centro Sul Participacoes SA, pfd. ............ Telecommunications 190,797,000 2,760,329
Tele Norte Leste Participacoes SA, pfd. ........... Telecommunications 142,897,000 3,678,417
Tele Sudeste Celular Participacoes SA, pfd. ....... Telecommunications 234,298,000 2,608,460
Telecomunicacoes de Sao Paulo SA, ADR.............. Telecommunications 142,380 4,867,616
Unibanco Uniao de Bancos Brasileiros SA, GDR....... Banking 20,246 589,665
------------
30,892,432
------------
CHILE 1.2%
Cia de Telecomunicaciones de Chile SA, ADR......... Telecommunications 91,000 1,820,000
Empresa Nacional de Electricidad SA, ADR........... Electrical & Electronics 29,204 346,798
Enersis SA, ADR.................................... Utilities Electrical & Gas 24,320 474,240
Madeco Manufacturera de Cobre SA, ADR.............. Industrial Components 4,000 53,750
------------
2,694,788
------------
</TABLE>
10
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
CHINA .9%
*China Everbright Ltd. ............................ Financial Services 92,000 $ 65,015
China Resources Enterprises Ltd. .................. Multi-Industry 89,000 114,927
*China Telecom HK Ltd. ............................ Telecommunications 186,000 1,708,768
Shandong Huaneng Power Development Co. Ltd., ADR... Utilities Electrical & Gas 27,800 97,300
------------
1,986,010
------------
COLOMBIA .9%
Bavaria SA......................................... Beverages & Tobacco 65,800 282,084
Cementos Argos SA.................................. Building Materials & Components 536,328 1,211,574
Cia Colombiana de Tabacos SA....................... Beverages & Tobacco 60,549 68,391
Compania Nacional de Chocolates SA................. Food & Household Products 74,155 285,541
Compania Suramericana de Inversiones SA............ Insurance 150,840 178,119
------------
2,025,709
------------
CROATIA .1%
Pliva D D, GDR, Reg S.............................. Health & Personal Care 8,450 124,215
------------
CZECH REPUBLIC .7%
*Cesky Telecom AS.................................. Telecommunications 11,653 244,297
*CEZ AS............................................ Utilities Electrical & Gas 390,450 1,299,792
Tabak AS........................................... Beverages & Tobacco 80 15,156
------------
1,559,245
------------
EGYPT .2%
Commercial International Bank Ltd. ................ Banking 35,500 396,228
Suez Cement Co. ................................... Building Materials & Components 6,300 89,619
------------
485,847
------------
ESTONIA .1%
*Hansabank Ltd. ................................... Banking 33,050 275,062
------------
GREECE
Hellenic Telecommunications Organization SA........ Telecommunications 1,510 44,856
------------
HONG KONG 5.7%
Cable & Wireless HKT Ltd. ......................... Telecommunications 29,654 98,875
Cheung Kong Holdings Ltd. ......................... Multi-Industry 334,000 4,441,718
Cheung Kong Infrastructure Holdings Ltd. .......... Multi-Industry 66,000 90,315
*China Overseas Land & Investment Ltd. ............ Real Estate 162,000 21,231
Citic Pacific Ltd. ................................ Multi-Industry 457,000 2,301,794
Dairy Farm International Holdings Ltd. ............ Merchandising 634,304 358,382
Hang Lung Development Co. Ltd. .................... Real Estate 599,000 465,636
Henderson China Holdings Limited................... Real Estate 2,000 1,054
Hong Kong Land Holdings Ltd. ...................... Real Estate 245,800 312,166
HSBC Holdings PLC.................................. Banking 102,366 1,173,892
Hutchison Whampoa Ltd. ............................ Multi-Industry 161,000 2,523,770
Jardine Matheson Holdings Ltd. .................... Multi-Industry 257,523 901,331
</TABLE>
11
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
HONG KONG (CONT.)
Jardine Strategic Holdings Ltd. ................... Multi-Industry 107,500 $ 169,850
New World Development Co. Ltd. .................... Real Estate 8,130 11,700
Shangri-La Asia Ltd. .............................. Leisure & Tourism 8,888 7,138
------------
12,878,852
------------
HUNGARY 2.7%
Borsodchem RT...................................... Chemicals 31,472 1,250,574
Egis RT............................................ Multi-Industry 822 38,826
*Fotex First Hungarian-American Photo Service
Co. ............................................. Multi-Industry 837,000 439,271
Gedeon Richter Ltd. ............................... Health & Personal Care 17,120 1,200,120
*Graphisoft NV..................................... Data Processing & Reproduction 350 7,009
Mol Magyar Olay-Es Gazipari RT..................... Energy Sources 73,590 1,395,882
OTP Bank........................................... Banking 18,780 1,072,197
Tiszai Vegyi Kombinat RT........................... Chemicals 41,260 757,887
------------
6,161,766
------------
INDIA .6%
*Gas Authority of India Ltd., GDR.................. Energy Sources 11,600 113,100
Hindustan Petroleum Corporation Ltd. .............. Energy Sources 4,600 14,930
*Mahanagar Telephone Nigam Ltd. ................... Telecommunications 54,000 352,767
Reliance Industries Ltd. .......................... Chemicals 114,000 814,132
Tata Engineering & Locomotive Co. ................. Machinery & Engineering 30,000 116,426
------------
1,411,355
------------
INDONESIA 4.6%
*Asia Pulp & Paper Co. Ltd., ADR................... Forest Products & Paper 161,880 930,810
*Asia Pulp & Paper Co. Ltd., ADR, wts., 7/27/00.... Forest Products & Paper 18,349 4,587
*PT Barito Pacific Timber TBK...................... Forest Products & Paper 6,233,500 440,753
PT Gudang Garamm................................... Beverages & Tobacco 77,000 128,333
*PT Indah Kiat Pulp & Paper Corp. TBK.............. Forest Products & Paper 1,926,800 531,978
*PT Indocement Tunggal Prakarsa.................... Building Materials & Components 1,019,000 391,131
*PT Indofoods Sukses Makmurr TBK................... Food & Household Products 1,712,750 1,418,641
PT Indosat TBK..................................... Telecommunications 565,500 1,020,566
PT Semen Gresik TBK................................ Building Materials & Components 546,611 618,388
*PT Sinar Mas Agro Resources & Technology Corp. ... Food & Household Products 73,400 28,915
PT Telekomunikasi Indonesia (Persero), B........... Telecommunications 8,795,460 4,323,694
PT Timah TBK....................................... Metals & Mining 1,130,000 525,051
*PT Tjiwi Kimia TBK................................ Forest Products & Paper 810,000 190,909
------------
10,553,756
------------
ISRAEL 3.4%
*Clal Industries Ltd. ............................. Multi-Industry 4,300 55,060
ECI Telecom Ltd. .................................. Telecommunications 760 25,080
*Elron Electronic Industries Ltd. ................. Data Processing & Reproduction 14,745 787,294
*Formula Systems Ltd. ............................. Data Processing & Reproduction 12,400 996,193
*Fundtech Ltd. .................................... Data Processing & Reproduction 32,710 1,255,246
</TABLE>
12
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
ISRAEL (CONT.)
*Galileo Technology Ltd. .......................... Electronic Components & Instruments 78,090 $ 1,498,352
Koor Industries Ltd. .............................. Multi-Industry 580 57,206
*Orbotech Ltd. .................................... Electrical & Electronics 7,300 672,056
*Sapiens International Corp. ...................... Data Processing & Reproduction 6,600 130,763
*Technomatix Technologies Ltd. .................... Data Processing & Reproduction 5,705 261,717
Teva Pharmaceutical Industries Ltd., ADR........... Health & Personal Care 8,170 352,331
*Tower Semiconductor Ltd. ......................... Electrical & Electronics 14,940 401,513
*TTI Team Telecom International Ltd. .............. Telecommunications 2,240 89,600
*Vocaltec Communications Ltd. ..................... Data Processing & Reproduction 26,150 1,248,663
------------
7,831,074
------------
MALAYSIA .3%
Genting Bhd. ...................................... Leisure & Tourism 39,000 172,421
Golden Hope Plantations Bhd. ...................... Misc Materials & Commodities 37,000 32,911
Resorts World Bhd. ................................ Leisure & Tourism 93,000 337,737
Telekom Malaysia Bhd. ............................. Telecommunications 5,000 21,184
*YTL Corp. Bhd. ................................... Construction & Housing 67,000 123,421
------------
687,674
------------
MEXICO 11.0%
Cemex SA........................................... Building Materials & Components 914,261 3,952,559
Coca Cola Femsa SA de CV, L, ADR................... Beverages & Tobacco 17,510 335,973
*DESC SA de CV DESC, B............................. Multi-Industry 379,900 251,428
Fomento Economico Mexicano SA de CV Femsa.......... Beverages & Tobacco 15,200 675,450
*Grupo Carso SA de CV.............................. Multi-Industry 88,800 345,986
*Grupo Financiero Banamex Accival SA de CV......... Banking 1,114,294 4,751,926
*Grupo Financiero Bancomer SA de CV................ Banking 2,118,500 1,044,777
Telefonos de Mexico SA (Telmex), ADR............... Telecommunications 183,960 12,095,370
Tubos de Acero de Mexico SA........................ Machinery & Engineering 100 1,376
*TV Azteca SA de CV, ADR........................... Telecommunications 2,000 27,875
Vitro SA de CV, A.................................. Food & Household Products 399,355 579,764
*Wal-Mart de Mexico SA de CV, V.................... Merchandising 405,763 970,228
------------
25,032,712
------------
PAKISTAN .5%
*Hub Power Co. Ltd. ............................... Energy Sources 613,000 326,020
Pakistan Telecommunications Corp., A............... Telecommunications 1,268,000 784,330
------------
1,110,350
------------
PERU .7%
Telefonica del Peru SA, ADR........................ Telecommunications 78,180 1,534,283
------------
PHILIPPINES 2.8%
*Filinvest Development Corp. ...................... Real Estate 892,000 37,874
Philippine Long Distance Telephone Co., ADR........ Telecommunications 142,508 3,099,549
*Philippine National Bank.......................... Banking 1,073,860 1,729,496
</TABLE>
13
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
PHILIPPINES (CONT.)
RFM Corp. ......................................... Food & Household Products 5,635,803 $ 440,082
San Miguel Corp., B................................ Food & Household Products 932,400 1,092,123
------------
6,399,124
------------
POLAND 3.3%
*Bank Polska Kasa Opieki Grupa Pekao SA............ Banking 31,300 451,652
Bank Rozwoju Eksportu SA........................... Banking 19,180 543,395
Bank Slaski SA W Katowicach........................ Banking 15,720 977,546
Elektrim SA........................................ Multi-Industry 38,500 554,622
Impexmetal SA...................................... Metals & Mining 1,603 9,045
Optimus SA, D...................................... Data Processing & Reproduction 1,800 125,114
*Orbis SA.......................................... Leisure & Tourism 27,900 261,918
Prokom Software SA................................. Data Processing & Reproduction 35,403 2,337,533
Telekomunikacja Polska SA.......................... Telecommunications 238,121 2,172,533
Warta SA........................................... Insurance 2,566 95,493
------------
7,528,851
------------
RUSSIA 1.8%
Aeroflot........................................... Transportation 95,300 15,705
*GUM Trade House................................... Merchandising 28,000 20,720
*Irkutskenergo..................................... Utilities Electrical & Gas 395,550 27,609
Lukoil Holdings, ADR............................... Energy Sources 21,720 890,520
Mosenergo, ADR..................................... Utilities Electrical & Gas 27,210 137,411
*Mosenergo, GDR.................................... Utilities Electrical & Gas 33,400 167,211
*Red October....................................... Food & Household Products 22,000 93,500
*Rostelecom, ADR................................... Telecommunications 68,930 1,206,275
*Rostelecom, pfd. ................................. Telecommunications 138,400 128,712
*Tyumenaviatrans................................... Transportation 530,000 7,553
Unified Energy Systems............................. Utilities Electrical & Gas 7,183,900 1,022,987
Unified Energy Systems, pfd. ...................... Utilities Electrical & Gas 252,000 15,120
*Vimpel Communications, ADR........................ Telecommunications 6,094 261,661
------------
3,994,984
------------
SINGAPORE 3.8%
City Developments Ltd. ............................ Real Estate 201,000 816,267
Creative Technology Ltd. .......................... Electrical & Electronics 4,450 96,812
DBS Group Holdings Ltd. ........................... Banking 37,304 460,971
First Capital Corp. Ltd. .......................... Real Estate 159,000 118,994
Fraser and Neave Ltd. ............................. Beverages & Tobacco 370,700 1,032,291
*Golden Agri-Resources Ltd. ....................... Misc Materials & Commodities 360,000 87,718
Keppel Corp., Ltd. ................................ Transportation 681,000 1,525,010
MCL Land Ltd. ..................................... Real Estate 34,000 20,317
Natsteel Ltd. ..................................... Metals & Mining 206,000 408,725
Oversea Chinese Banking Corp. Ltd. ................ Banking 244,500 1,546,122
Overseas Union Enterprise Ltd. .................... Leisure & Tourism 48,400 124,110
Sembcorp Industries Ltd. .......................... Multi-Industry 340,096 317,662
</TABLE>
14
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SINGAPORE (CONT.)
Sembcorp Marine Ltd. .............................. Machinery & Engineering 56,000 $ 44,184
Singapore Telecommunications Ltd. ................. Telecommunications 158,500 257,469
United Industrial Corporation Ltd. ................ Multi-Industry 489,000 212,769
United Overseas Bank Ltd. ......................... Banking 238,648 1,509,116
United Overseas Land Ltd. ......................... Real Estate 193,000 135,482
------------
8,714,019
------------
SLOVAK REPUBLIC .1%
Nafta Gbely AS..................................... Utilities Electrical & Gas 5,662 43,244
*Slovnaft AS....................................... Chemicals 8,000 114,023
*Vychodoslovenske Zeleziarne AS.................... Metals & Mining 5,000 13,897
------------
171,164
------------
SOUTH AFRICA 10.9%
Anglo American PLC................................. Metals & Mining 113,244 5,076,141
Barlow Ltd. ....................................... Multi-Industry 353,444 2,590,374
BOE Ltd. .......................................... Financial Services 429,400 402,011
CG Smith Ltd. ..................................... Multi-Industry 845,900 13,332
Comparex Holdings Ltd. ............................ Data Processing & Reproduction 36,700 255,958
De Beers Centenary AG.............................. Misc Materials & Commodities 55,800 1,222,469
Del Monte Royal Foods Ltd. ........................ Food & Household Products 422,925 323,291
Edgars Consolidated Stores Ltd. ................... Textiles & Apparel 7,495 76,785
Fedsure Holdings Ltd. ............................. Insurance 4,500 28,583
Firstrand Ltd. .................................... Insurance 423,500 529,317
Illovo Sugar Ltd. ................................. Food & Household Products 274,273 250,727
Iscor Ltd. ........................................ Metals & Mining 350,924 981,748
Johnnies Industrial Corporation Ltd. .............. Multi-Industry 12,800 213,848
Kersaf Investments Ltd. ........................... Leisure & Tourism 37,575 125,552
Liberty Life Association of Africa Ltd. ........... Insurance 132,260 1,284,093
Nampak Ltd. ....................................... Forest Products & Paper 499,076 1,293,962
Palabora Mining Co. Ltd. .......................... Metals & Mining 30,000 172,585
Rembrandt Group Ltd. .............................. Multi-Industry 171,800 1,489,275
Sanlam Ltd. ....................................... Financial Services 50,800 64,053
Sappi Ltd. ........................................ Forest Products & Paper 138,100 1,142,725
Sasol Ltd. ........................................ Energy Sources 302,600 1,936,350
South African Breweries PLC........................ Beverages & Tobacco 384,648 2,970,629
Standard Bank Investment Corp. Ltd. ............... Financial Services 92,264 359,183
Tiger Brands Ltd. ................................. Food & Household Products 136,834 1,466,529
Tongaat-Hulett Group Ltd. ......................... Multi-Industry 84,381 458,831
------------
24,728,351
------------
SOUTH KOREA 4.1%
*Korea Data Systems................................ Data Processing & Reproduction 7,130 102,118
Korea Electric Power Corp. ........................ Utilities Electrical & Gas 187,200 4,683,703
*LG Information & Communication Ltd. .............. Telecommunications 1,530 169,759
Samsung Electronics Co. Ltd. ...................... Electrical & Electronics 11,767 2,663,194
</TABLE>
15
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH KOREA (CONT.)
*Samsung Heavy Industries Co. Ltd. ................ Machinery & Engineering 166,158 $ 605,223
*Samsung SDI Co. Ltd. ............................. Electrical & Electronics 39,626 1,152,586
------------
9,376,583
------------
TAIWAN .5%
China Steel Corp. ................................. Metals & Mining 52,000 40,273
*Hon Hai Precision Industry Co. Ltd. .............. Electrical & Electronics 30,000 279,206
Mitac International Corp. ......................... Data Processing & Reproduction 80,000 129,645
*Sunplus Technology Company Ltd. .................. Electrical & Electronics 12,000 57,403
UNI-President Enterprises Corp. ................... Food & Household Products 404,000 370,739
*WUS Printed Circuit Co. Ltd. ..................... Electronic Components & Instruments 95,000 150,553
------------
1,027,819
------------
THAILAND 7.4%
Advanced Info Service Public Co. Ltd., fgn. ....... Telecommunications 42,200 655,448
American Standard Sanitaryware Public Co. Ltd.,
fgn. ............................................ Building Materials & Components 13,300 69,789
Ayudhya Insurance Public Co. Ltd., fgn. ........... Insurance 10,100 23,319
*Bangkok Bank Public Co. Ltd. ..................... Banking 17,200 17,825
*Bangkok Bank Public Co. Ltd., fgn. ............... Banking 143,000 230,736
*Bangkok Insurance Public Co. Ltd. BKI............. Insurance 12,740 38,105
BEC World Public Co Ltd., fgn. .................... Telecommunications 39,600 297,143
*Charoen Pokphand Feedmill Public Co. Ltd.,
fgn. ............................................ Food & Household Products 169,598 609,601
Dusit Thani Public Company Ltd., fgn. ............. Leisure & Tourism 74,500 66,066
*Hana Microelectronics Co. Ltd., fgn. ............. Electrical & Electronics 185,700 1,373,932
Italian-Thai Development Public Co. Ltd., fgn. .... Construction & Housing 116,400 58,788
*Jasmine International Public Co. Ltd., fgn. ...... Telecommunications 873,100 475,320
*Land and House Public Co. Ltd., fgn. ............. Real Estate 390,449 181,831
*Saha Union Public Co. Ltd. ....................... Multi-Industry 88,214 27,194
Saha Union Public Co. Ltd., fgn. .................. Multi-Industry 30,286 9,336
*Serm Suk Public Co. Ltd. ......................... Food & Household Products 81,900 229,917
Serm Suk Public Co. Ltd., fgn. .................... Food & Household Products 1,300 5,457
*Shin Corporations Public Company Ltd., fgn. ...... Electrical & Electronics 148,800 1,179,000
*Siam Cement Public Co. Ltd. ...................... Building Materials & Components 106,265 1,249,028
*Siam Cement Public Co. Ltd., fgn. ................ Building Materials & Components 66,915 1,207,858
*Siam Commercial Bank, 144A, 5.25%, fgn., cvt.
pfd. ............................................ Banking 834,800 503,749
Siam Makro Public Company Ltd., fgn. .............. Merchandising 318,300 369,951
*Telecomasia Corp. Public Co. Ltd., fgn. .......... Telecommunications 574,000 798,163
*Thai Airways International Public Co. Ltd.,
fgn. ............................................ Transportation 306,000 289,020
*Thai Farmers Bank Public Co. Ltd. ................ Banking 695,200 592,785
*Thai Farmers Bank Public Co. Ltd., fgn. .......... Banking 3,485,800 3,292,373
*Total Access Communication Public Co. Ltd. ....... Telecommunications 390,000 1,505,400
*United Communications Industries, fgn. ........... Telecommunications 1,067,000 1,336,724
------------
16,693,858
------------
</TABLE>
16
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
TURKEY 4.4%
Akbank............................................. Banking 206,853,861 $ 4,228,484
Akcansa Cimento Sanayi Ve Ticaret AS............... Building Materials & Components 900,000 19,963
Arcelik AS, Br. ................................... Appliances & Household Durables 59,169,865 3,499,957
*Dogan Sirketler Grubu Holding AS.................. Multi-Industry 28,636,000 846,924
*Ford Otomotiv Sanayi AS........................... Automobiles 1,188,000 56,837
Haci Omer Sabanci Holding AS....................... Multi-Industry 9,779,000 450,841
Haci Omer Sabanci Holding AS, ADR, 144A............ Multi-Industry 460 5,371
Koc Holding AS..................................... Multi-Industry 761,000 145,633
*Tansas Izmir Buyuksehir Belediyesi Ic Ve Dis...... Merchandising 314,000 62,822
*Turkiye Garanti Bankasi AS........................ Banking 22,296,000 333,587
Yapi Ve Kredi Bankasi AS........................... Banking 9,338,000 276,176
------------
9,926,595
------------
VENEZUELA 2.0%
Compania Anonima Nacional Telefonos de Venezuela,
ADR.............................................. Telecommunications 72,750 2,423,484
Electricidad de Caracas Saica Saca, ADR............ Utilities Electrical & Gas 133,456 1,934,583
Mavesa SA, ADR..................................... Food & Household Products 105,260 289,465
------------
4,647,532
------------
TOTAL LONG TERM SECURITIES (COST $180,980,373)..... 215,550,792
------------
<CAPTION>
PRINCIPAL
AMOUNT**
----------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $4,971,681) 2.2%
U.S. Treasury Bills, 4.960% to 5.695%, with
maturities to 6/15/00............................ $ 5,042,000 4,972,001
------------
TOTAL INVESTMENTS (COST $185,952,054) 97.1%........ 220,522,793
OTHER ASSETS, LESS LIABILITIES 2.9%................ 6,548,273
------------
TOTAL NET ASSETS 100.0%............................ $227,071,066
============
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
See Notes to Financial Statements.
17
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $185,952,054).... $220,522,793
Cash....................................................... 1,837,737
Receivables:
Investment securities sold................................ 7,073,636
Dividends and interest.................................... 955,961
------------
Total assets.......................................... 230,390,127
------------
Liabilities:
Payables:
Investment securities purchased........................... 2,837,638
To affiliates............................................. 265,284
Accrued expenses........................................... 216,139
------------
Total liabilities..................................... 3,319,061
------------
Net assets, at value........................................ $227,071,066
============
Net assets consist of:
Undistributed net investment income........................ $ 288,418
Net unrealized appreciation................................ 34,570,739
Accumulated net realized loss.............................. (12,585,044)
Capital shares............................................. 204,796,953
------------
Net assets, at value........................................ $227,071,066
============
Net asset value per share ($227,071,066 / 17,656,437 shares
outstanding).............................................. $12.86
============
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $220,051)
Dividends.................................................. $ 2,502,485
Interest................................................... 105,162
-----------
Total investment income............................... $ 2,607,647
Expenses:
Management fees (Note 3)................................... 1,375,048
Administrative fees (Note 3)............................... 165,006
Transfer agent fees........................................ 16,900
Custodian fees............................................. 104,000
Reports to shareholders.................................... 85,000
Professional fees.......................................... 20,400
Directors' fees and expenses............................... 19,700
Other...................................................... 2,045
-----------
Total expenses........................................ 1,788,099
-----------
Net investment income........................... 819,548
-----------
Realized and unrealized gains (losses): Net realized loss from:
Investments............................................... (1,133,962)
Foreign currency transactions............................. (68,856)
-----------
Net realized loss..................................... (1,202,818)
Net unrealized appreciation on investments............ 25,019,969
-----------
Net realized and unrealized gain............................ 23,817,151
-----------
Net increase in net assets resulting from operations........ $24,636,699
===========
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 819,548 $ 2,243,372
Net realized loss from investments and foreign currency
transactions............................................. (1,202,818) (9,036,810)
Net unrealized appreciation on investments................ 25,019,969 97,897,584
---------------------------------------
Net increase in net assets resulting from operations.... 24,636,699 91,104,146
Distributions to shareholders from:
Net investment income..................................... (1,820,379) (4,872,098)
Net realized gains........................................ (549,115) (71,586,456)
Capital share transactions (Note 2)........................ -- 7,806,529
---------------------------------------
Net increase in net assets.............................. 22,267,205 22,452,121
Net assets:
Beginning of period........................................ 204,803,861 182,351,740
---------------------------------------
End of period.............................................. $227,071,066 $204,803,861
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 288,418 $ 1,289,249
=======================================
</TABLE>
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.
Certain countries in which the Fund invests have imposed restrictions on the
repatriation of their currencies. Other countries have previously instituted
currency exchange controls in the past during periods of serious imbalance in
their balance of payments or upon the occurrence of other destabilizing events.
Exchange control regulations may restrict the Fund's ability to convert
investment income, capital, or the proceeds of securities into U.S. dollars. As
of February 29, 2000, the Fund has investments with a value of approximately
$1.8 million in countries with restrictions on the repatriation of their
currencies or formal exchange controls currently in place.
21
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. 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 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.
d. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL SHARES
At February 29, 2000, there were 30 million shares authorized ($0.01 par value).
During the period ended February 29, 2000, there were no share transactions and
for the year ended August 31, 1999, 856,099 shares were issued for $7,806,529
from reinvested distributions, respectively.
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, Inc. (FT Services), the
Fund's investment manager and administrative manager, respectively.
The Fund pays an investment management fee to TAML of 1.25% per year of the
average daily net assets of the 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.
4. 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.
At February 29, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $187,216,024 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 64,066,237
Unrealized depreciation..................................... (30,759,468)
------------
Net unrealized appreciation................................. $ 33,306,769
============
</TABLE>
22
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES (CONT.)
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 securities and
foreign currencies.
At August 31, 1999, the Fund had deferred capital and currency losses occurring
subsequent to October 31, 1998 of $10,700,000. For tax purposes, such losses
will be reflected in the year ending August 31, 2000.
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates $1,261,259 as a capital gain dividend for the fiscal year ended
August 31, 1999.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended February 29, 2000 aggregated $57,722,088 and $55,237,154,
respectively.
23
<PAGE>
TEMPLETON EMERGING MARKETS FUND, INC.
Annual Meeting of Shareholders, March 7, 2000
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Ft. Lauderdale, Florida, on March 7, 2000. 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, 2000, to approve the amendment of the Fund's fundamental
investment restriction regarding diversification of its investments; 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: John Wm. Galbraith, Betty P. Krahmer, Gordon S. Macklin
and Fred R. Millsaps.* Shareholders also ratified the selection of
PricewaterhouseCoopers LLP, to serve as the Fund's independent auditors for the
fiscal year ending August 31, 2000 and approved the amendment of the Fund's
fundamental investment restriction regarding diversification of its investments.
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:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING VOTED OUTSTANDING
TERM EXPIRING 2003: FOR SHARES SHARES WITHHELD SHARES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John Wm. Galbraith.................................. 9,481,212 53.70% 97.07% 286,276 1.62%
Betty P. Krahmer.................................... 9,460,507 53.58% 96.86% 306,981 1.74%
Gordon S. Macklin................................... 9,480,687 53.70% 97.06% 286,801 1.62%
Fred R. Millsaps.................................... 9,403,463 53.26% 96.27% 364,025 2.06%
</TABLE>
2. The ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors of the Fund for the fiscal year ending August 31, 2000:
<TABLE>
<CAPTION>
% OF % OF % OF % OF % OF
OUTSTANDING VOTED OUTSTANDING OUTSTANDING BROKER OUTSTANDING
FOR SHARES SHARES AGAINST SHARES ABSTAIN SHARES NON-VOTES SHARES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9,473,131 53.65% 96.99% 108,014 0.61% 186,343 1.06% -- --
</TABLE>
3. The amendment of the Fund's fundamental investment restriction regarding
diversification of its investments:
<TABLE>
<CAPTION>
% OF % OF % OF % OF % OF
OUTSTANDING VOTED OUTSTANDING OUTSTANDING BROKER OUTSTANDING
FOR SHARES SHARES AGAINST SHARES ABSTAIN SHARES NON-VOTES SHARES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7,106,307 40.25% 72.75% 293,646 1.66% 228,662 1.30% 2,138,873 12.11
</TABLE>
4. The transaction of any other business that may properly come before the
meeting or any adjournments thereof:
<TABLE>
<CAPTION>
% OF % OF % OF % OF % OF
OUTSTANDING VOTED OUTSTANDING OUTSTANDING BROKER OUTSTANDING
FOR SHARES SHARES AGAINST SHARES ABSTAIN SHARES NON-VOTES SHARES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8,826,686 49.99% 90.37% 498,030 2.82% 442,772 2.51% -- --
</TABLE>
*Harris J. Ashton, Nicholas F. Brady, Harmon E. Burns, Frank J. Crothers, S.
Joseph Fortunato, Andrew H. Hines, Jr., Edith E. Holiday, Charles B. Johnson and
Constantine D. Tseretopoulos 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;
ChaseMellon Shareholder Services, Investor Services, 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 ChaseMellon Shareholder Services, Investor
Services, 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 in 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 ChaseMellon Shareholder Services,
Investor Services, 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 daily 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.
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
SEMIANNUAL REPORT
TEMPLETON EMERGING
MARKETS FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, Florida 33733-8030
TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800/416-5585
www.chasemellon.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 S00 04/00 [RECYCLED LOGO] Printed on recycled paper
