SEMI ANNUAL REPORT
TEMPLETON VIETNAM
AND SOUTHEAST ASIA FUND, INC.
SEPTEMBER 30, 1998
[FRANKLIN TEMPLETON LOGO]
PAGE
[FRANKLIN TEMPLETON -- CELEBRATING OVER 50 YEARS GRAPHIC]
Thank you for investing with Franklin Templeton. We encourage our
investors to maintain a long-term perspective and remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping
investors manage their money. Currently he devotes all of his time and efforts
to the John Templeton Foundation. A major portion of his assets remain invested
in the Templeton funds which are managed by many of the investment professionals
he selected and trained.
[PICTURE OF J. MARK MOBIUS, PH.D.]
J. MARK MOBIUS, PH.D.
President
Templeton Vietnam and
Southeast Asia Fund, Inc.
Dr. Mobius, a German citizen, 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 Objective: Templeton Vietnam and Southeast Asia Fund, Inc. seeks
long-term capital appreciation by investing in the equity and debt securities of
Region Country Issuers. Region Countries currently include Vietnam, China, Hong
Kong, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, South
Korea, Taiwan, and Thailand. On April 23, 1998, shareholders approved a change
in the Fund's name and investment policies. These changes are described in more
detail later in this report. Before that date, the Fund's name was Templeton
Vietnam Opportunities Fund, Inc.
Dear Shareholder:
This semiannual report of Templeton Vietnam and Southeast Asia Fund covers the
six months ended September 30, 1998. As noted above, on April 23, 1998,
shareholders approved changes to the Fund's name and investment policies. During
the period under review, continued economic turmoil in Asian markets negatively
impacted Vietnam's economy. To keep labor and export prices competitive,
Vietnam, although somewhat insulated from the rest of Asia, devalued its
currency in early 1998 and again in August. The second devaluation occurred as
the country recorded annualized
You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 11 of
this report.
CONTENTS
Shareholder Letter ............... 1
Performance Summary .............. 8
Financial Highlights &
Statement of Investments ......... 10
Financial Statements ............. 15
Notes to Financial Statements .... 18
[FUND CATEGORY PYRAMID GRAPHIC]
PAGE
PORTFOLIO BREAKDOWN
Based on Total Net Assets
9/30/98
[PIE CHART GRAPHIC]
Equities 86.0%
Short-Term Investments & Other Net Assets 14.0%
economic growth of between 6% and 7%, appreciably less than the government's
target rate of 9.0%.1 Within this environment, the Fund posted a -37.09%
six-month cumulative total return in market-price terms, and -32.86% in terms
of net asset value, as discussed in the Performance Summary on page 8.
During the reporting period, Asia's economic problems sent stock prices
plummeting, which allowed us to purchase shares of several quality companies at
what we considered deep discounts. On September 30, 1998, equity investments
represented 86.0% of the Fund's total net assets, with the remaining 14.0% in
short-term investments and other net assets. Vietnam was the Fund's largest
country weighting, representing 24.9% of total net assets, followed by Thailand
(21.2%) and Hong Kong (15.6%).
In recent years, Vietnam has financed its debt domestically. But, as the
reporting period began, it finished restructuring its debt, allowing it to more
easily tap sources of foreign capital. Although Vietnam moved a step closer to
"Most Favored Nation" trade status with the U.S. during the six months under
review, a detailed trade agreement has yet to be negotiated.
In July, Vietnam's Prime Minister approved the Decree on Securities Markets,
which contains most of the regulations required for the 1999 opening of
securities trading floors in Hanoi and Ho Chi Minh City. Although this was much
later than originally scheduled, the Vietnamese government has taken steps to
encourage more direct foreign investment and to allow existing investors greater
freedom to restructure businesses. For example, it has attempted to ease the
1. Source: Bloomberg.
2
PAGE
licensing process by simplifying and decentralizing the issuance of investment
licenses. It has also tried to make it easier for foreign investors to convert
existing joint ventures into completely foreign-owned companies.
In our opinion, the greatest economic risk facing Vietnam is the possibility of
increased trade deficits and reduced levels of foreign direct investment.
However, because Vietnam's credit markets are relatively undeveloped, the risk
of credit contraction may not be as significant to Vietnam as to its neighbors.
Although regional conditions could hurt Vietnam's economy, we draw encouragement
from the fact that, during the six months under review, Vietnam was a growing
country during a time of regional recession. We believe that easing of
restrictions should help speed foreign investment in the country, and that
implementation of a proposed visa-on-arrival process could increase business and
tourist interest in Vietnam. In our opinion, Vietnam could benefit greatly from
a recovery in Asia while remaining relatively insulated from the worst of the
region's present crisis.
Please remember that this discussion reflects our views, opinions and portfolio
holdings as of September 30, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the Fund's portfolio composition. Although historical
performance is no guarantee of future results, these insights may help you
better understand our investment and management philosophy.
Investing in Vietnam and Southeast Asia involves special considerations
including risks relating to direct investments, as well as the risks
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
9/30/98
[BAR GRAPH]
Vietnam 24.9%*
Thailand 21.2%
Hong Kong 15.6%
Singapore 9.5%
Malaysia 4.3%
China 4.2%
Philippines 3.2%
Other Countries 3.1%
Short-Term Investments
& Other Net Assets 14.0%
- -----------
*These are direct investments made through companies domiciled in Hong Kong and
Singapore.
3
PAGE
TOP 10 HOLDINGS
9/30/98
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
<S> <C>
Mayfair Hanoi, Ltd., 30% equity
interest owned through
HEA Holdings Ltd.,
Real Estate, Vietnam
(direct investment) 14.7%
Indotel Ltd.,
Leisure & Tourism, Vietnam
(direct investment) 10.2%
Siam Cement Public Co. Ltd., fgn. & loc.,
Building Materials &
Components, Thailand 5.3%
Hutchison Whampoa Ltd.,
Multi-Industry, Hong Kong* 3.8%
Sun Hung Kai Properties Ltd.,
Real Estate, Hong Kong* 3.6%
China Resources Enterprises Ltd.,
Multi-Industry, China 3.6%
Citic Pacific Ltd.,
Multi-Industry, Hong Kong* 3.1%
Natsteel Ltd.,
Metals & Mining, Singapore 2.8%
Rothmans Industries Ltd.,
Beverages & Tobacco, Singapore 2.4%
Siam Makro Public Company Ltd., fgn.,
Merchandising, Thailand 1.9%
</TABLE>
*Hong Kong reverted to the sovereignty of China on July 1, 1997.
associated with investing in an emerging market. These risks include adverse
economic, social and political developments, the absence of an organized stock
exchange in Vietnam, reduced liquidity of emerging markets, and greater currency
volatility. Investing in emerging markets also means accepting a certain amount
of market volatility and, in some cases, severe market corrections. While
short-term volatility can be disconcerting, declines of as much as 40% to 50%
are not unusual in emerging markets. For example, the Hong Kong equity market
has increased 939% in the last 15 years, but has suffered five declines of more
than 20% during that time.(2) Investment in the Fund should be considered
speculative.
Thank you for investing in Templeton Vietnam and Southeast Asia Fund. We
appreciate your support, welcome your comments, and look forward to serving you
in the future.
Sincerely,
/s/ J. Mark Mobius, Ph.D.
J. Mark Mobius, Ph.D.
President
Templeton Vietnam and Southeast Asia Fund, Inc.
2. Source: Bloomberg. Based on quarterly percentage price change over the 15
years ended September 30, 1998. Market returns are measured in Hong Kong
dollars.
4
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RECENT CHANGES AFFECTING THE FUND'S OPERATIONS
CHANGE OF NAME AND INVESTMENT POLICIES. At the Annual Meeting of Shareholders
convened on March 31, 1998 and adjourned on April 23, 1998, the shareholders of
the Fund approved a proposal to change the name of the Fund from "Templeton
Vietnam Opportunities Fund, Inc." to "Templeton Vietnam and Southeast Asia Fund,
Inc." and to amend the Fund's investment policies to enable the Fund to invest
more broadly in countries located in Southeast Asia, while continuing to focus
its investment program, to the extent feasible, on Vietnam. These changes were
implemented effective April 24, 1998.
The Fund's investment objective is long-term capital appreciation. As recently
revised with the approval of shareholders, the Fund's investment policies, under
normal market conditions, are to invest at least 65 percent of its assets in
equity and debt securities of companies (i) that are organized under the laws
of, or have a principal office in, Vietnam or other Southeast Asian countries
(the "Region Countries"); (ii) for which the principal equity securities trading
market is a Region Country; or (iii) that derive at least 50 percent of their
revenues or profits from goods produced or sold, investments made, or services
performed in a Region Country, or have at least 50 percent of their assets
invested in a Region Country (collectively, "Region Country Issuers"). For
purposes of these investment policies, Region Countries include Vietnam, China,
Hong Kong, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore,
South Korea, Taiwan and Thailand, as well as any other countries in the same
geographic region that may be approved for investment by the Board of Directors
in the future.
The Fund invests in equity and debt securities of Region Country Issuers as
appropriate opportunities arise. In seeking to invest at least 65 percent of its
assets in Region Country Issuers, the Fund's focus is to invest in equity and
debt securities of Vietnam Issuers to the extent attractive investment
opportunities are available. A "Vietnam Issuer" is a company (i) that is
organized under the laws of, or has a principal office in, Vietnam; (ii) for
which the principal equity securities trading market is in Vietnam; or (iii)
that derives at least 50 percent of its revenues or profits from goods produced
or sold, investments made, or services performed in Vietnam or that has at least
50 percent of it assets invested in Vietnam. To the extent that the Investment
Manager is unable to find Vietnam Issuers that it considers attractive
investment opportunities for the Fund, the Fund's assets will be invested in
equity and debt securities of other Region Country Issuers. The amount invested
in any one Region Country at any time will depend on market conditions and the
Investment Manager's assessment of available investments. The Fund will not be
limited in the percentage of its assets that can be invested in any one Region
Country. It is anticipated, but there can be no assurance, that the Fund may
eventually have a significant portion of its assets invested in securities of
Vietnam Issuers.
The adoption of these policies does not lower the Fund's risk profile. The risks
of investing in the Southeast Asia region are similar in many respects to the
risks of investing in Vietnam. The markets in which the Fund will invest are
volatile, and the Fund's investments will be subject to the risk of currency
fluctuation and local political, economic and social conditions. Recent currency
and economic crises in several Asian countries have had a severe impact on many
Asian stock markets. The Fund will continue to be subject to the risks of
investing in foreign markets generally,
5
PAGE
and to the added risks of investing in emerging markets. Additional risks of
investment in emerging markets include: (i) a lower level of social, political
and economic stability; (ii) the smaller size and lower volume of trading in the
securities markets in such countries, which may result in a lack of liquidity
and in greater price volatility; (iii) certain foreign national policies that
may restrict the Fund's investment opportunities, including restrictions on
investments in issuers or industries deemed sensitive to national interests, or
expropriation or confiscation of assets or property, which could result in the
Fund's loss of its entire investment in that market; (iv) less developed legal
structures governing private or foreign investment or allowing for judicial
redress for injury to private property; (v) higher rates of inflation; (vi)
differences in, or lack of, auditing and financial reporting standards which may
result in unavailability of material information about certain issuers; (vii)
the fact that statistical information regarding the economy of certain countries
may be inaccurate or not comparable to statistical information regarding the
U.S. or other economies; (viii) less extensive regulation of securities markets;
and (ix) risks regarding the maintenance of Fund portfolio securities and cash
with foreign subcustodians and depositories. An investment in the Fund should
continue to be viewed as speculative.
VOLUNTARY MANAGEMENT FEE WAIVER. In the light of the changes to the Fund's
investment policies and its reduced asset level, the Investment Manager has put
into effect a voluntary fee waiver that reduces the Fund's investment management
fee from 1.5% to 1.35% of the Fund's average weekly net assets, effective August
1, 1998. This fee waiver may be terminated upon notice to the Board of
Directors. The Fund's total return will benefit to the extent of such voluntary
fee waiver so long as it remains in effect.
6
PAGE
IMPORTANT NOTICE TO SHAREHOLDERS
INTRODUCTION OF THE EURO. On January 1, 1999, the European Monetary Union (EMU)
plans to introduce a new single currency, the Euro, which will replace the
national currency for participating member countries. If the Fund holds
investments in countries with currencies replaced by the Euro, the investment
process, including trading, foreign exchange, payments, settlements, cash
accounts, custody and accounting will be impacted.
The process to establish the Euro may result in market volatility. It is not
possible to predict the impact of the Euro on the business or financial
condition of European issuers or on the Fund. The transition and the elimination
of currency risk among EMU countries may change the economic environment and
behavior of investors, particularly in European markets. To the extent the Fund
holds non-U.S. dollar (Euro or other) denominated securities, it will still be
exposed to currency risk due to fluctuations in those currencies versus the U.S.
dollar.
Franklin Resources, Inc. has created an interdepartmental team to handle all
Euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to business
activities. While there can be no assurance that the Fund will not be adversely
affected, the manager and its affiliated service providers are taking steps that
they believe are reasonably designed to address the Euro issue.
THE YEAR 2000 ISSUE. The Fund's business operations use a worldwide network of
computer systems. Many of them have date fields that use two digits to represent
the date and these systems must be replaced or modified, so that they can
distinguish the year 1900 from the year 2000 (commonly referred to as the Year
2000 bug).
When the year 2000 arrives, the Fund's operations could be affected if the
computer systems used by the manager, its service providers and other third
parties it does business with are not Year 2000 ready. For example, the Fund's
portfolio and operational areas could be impacted, including securities trade
processing, interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. The Fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker/dealers or foreign markets are not ready for
the year 2000.
The Fund's manager and its affiliated service providers are making a concerted
effort to take steps they believe are reasonably designed to get ready for Year
2000. Of course, the Fund's ability to reduce the effects of Year 2000 issues is
also very much dependent upon the efforts of third parties.
In evaluating current and potential portfolio positions, Year 2000 is one of the
factors that the Fund's manager takes into consideration. It will rely upon
public filings and other statements made by companies regarding their Year 2000
readiness. Issuers in countries outside the U.S., and in particular in emerging
markets, may not be required to make the level of disclosure regarding Year 2000
readiness that is required in the U.S. Like with many other matters, the
manager, of course, cannot audit each portfolio company and its major suppliers,
and so cannot verify their Year 2000 readiness. If the value of a Fund
investment is adversely affected by a Year 2000 problem, the net asset value of
the Fund will be affected as well.
7
PAGE
PERFORMANCE SUMMARY
In market-price terms, Templeton Vietnam and Southeast Asia Fund posted a
- -37.09% cumulative total return for the six-month period ended September 30,
1998. Based on the change in net asset value (in contrast to market price), the
Fund posted a -32.86% cumulative total return for the same period. Both total
return figures assume reinvestment of distributions, if any, in accordance with
the dividend reinvestment plan.
During the reporting period, the Fund's closing price on the New York Stock
Exchange decreased $3.0625 per share, from $8.25 on March 31, 1998, to $5.1875
on September 30, 1998, while the net asset value decreased $2.98 per share, from
$9.07 to $6.09.
During the reporting period, shareholders did not receive any distributions.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities or other investments in the portfolio, as
well as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
8
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND
Periods ended 9/30/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 3-YEAR (9/8/94)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1)
Based on change in net asset value -52.50% -51.99% -52.87%
Based on change in market price -53.95% -58.80% -62.24%
Average Annual Total Return(2)
Based on change in net asset value -52.50% -21.68% -16.90%
Based on change in market price -53.95% -25.57% -21.31%
</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.
All calculations assume reinvestment of distributions, either at net asset value
or at market price on the reinvestment date, in accordance with the dividend
reinvestment plan, and do not reflect any sales charges paid at inception or
brokerage commissions paid on secondary market purchases.
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.
Effective August 1, 1998, the Fund's Investment Manager has agreed to reduce its
fees to 1.35% of the Fund's average weekly net assets. This fee waiver may be
terminated at any time upon notice to the Fund's Board of Directors. From
October 1, 1994 through September 30, 1995, fee waivers by the Fund's Investment
Manager increased the Fund's total return. If the Investment Manager had not
taken this action, the Fund's total return would have been lower.
As a non-diversified investment company, the Fund may invest in a relatively
small number of issuers and, as a result, be subject to greater risk of loss
with respect to its portfolio securities. In addition, the Fund's direct equity
investments may involve a high degree of business and financial risk, as well as
risks posed by the illiquidity of these investments due to the absence of a
public trading market.
Past performance is not predictive of future results.
9
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 1998 --------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995+
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period........... $9.07 $14.05 $13.91 $13.09 $14.10
--------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss).................. (.02) .09 .29 .36 .13
Net realized and unrealized gains (losses).... (2.96) (4.86) .21 .91 (1.00)
--------------------------------------------------------------------------
Total from investment operations............... (2.98) (4.77) .50 1.27 (.87)
--------------------------------------------------------------------------
Underwriting expenses deducted from capital.... -- -- -- -- (.09)
Tender offer expenses deducted from capital.... -- (.04) -- -- --
Less distributions from:
Net investment income......................... -- (.13) (.31) (.38) (.05)
Net realized gains............................ -- (.03) (.05) (.07) --
Tax return of capital......................... -- (.01) -- -- --
--------------------------------------------------------------------------
Total distributions............................ -- (.17) (.36) (.45) (.05)
--------------------------------------------------------------------------
Net asset value, end of period................. $6.09 $9.07 $14.05 $13.91 $13.09
==========================================================================
Total Return*
Based on market value per share............... (37.09)% (25.14)% (10.87)% 22.11% (26.33)%
Based on net asset value per share............ (32.86)% (34.10)% 4.03% 9.80% (6.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's).............. $28,502 $42,437 $113,214 $112,073 $105,306
Ratios to average net assets:
Expenses...................................... 3.22%** 2.23% 1.82% 1.47% 1.72%**
Expenses, excluding waiver and payments by
affiliate................................... 3.23%** 2.23% 1.82% 1.47% 1.72%**
Net investment income (loss).................. (.58)%** .91% 2.04% 2.62% 1.81%**
Portfolio turnover rate........................ 4.44% 89.42% 20.16% 4.01% 11.77%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period September 8, 1994 (commencement of operations) to March 31,
1995.
See Notes to Financial Statements.
10
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 61.1%
AUTOMOBILES .7%
Cycle & Carriage Ltd. ...................................... Singapore 1,000 $ 1,620
Oriental Holdings Bhd. ..................................... Malaysia 111,000 106,617
Qingling Motors Co. Ltd., H................................. China 402,000 77,822
-----------
186,059
-----------
BANKING 8.4%
Bangkok Bank Public Co. Ltd. ............................... Thailand 795,800 468,058
Bank of Ayudhya Public Co. Ltd., fgn. ...................... Thailand 133,000 18,841
Overseas Chinese Banking Corp. Ltd., fgn. .................. Singapore 40,000 100,671
Philippine Commercial International Bank Inc. .............. Philippines 100,000 224,000
Philippine National Bank.................................... Philippines 75,000 52,286
Public Bank Bhd., fgn. ..................................... Malaysia 1,112,000 244,439
Siam Commercial Bank Ltd., fgn. ............................ Thailand 1,603,480 415,777
Siam Commercial Bank Ltd., loc. ............................ Thailand 299,986 75,888
Thai Farmers Bank Public Co. Ltd. .......................... Thailand 960,000 534,278
Thai Military Bank Ltd., fgn. .............................. Thailand 1,223,900 147,066
United Overseas Bank Ltd., fgn. ............................ Singapore 41,000 119,736
-----------
2,401,040
-----------
BEVERAGES & TOBACCO 5.9%
Asia Pacific Breweries Ltd. ................................ Singapore 31,000 55,019
British American Tobacco Co. Ltd. .......................... Singapore 235,000 401,733
Carnaudmetalbox Asia Ltd. .................................. Singapore 170,000 135,721
Fraser and Neave Ltd. ...................................... Singapore 1,000 2,149
PT Gudang Garamm............................................ Indonesia 695,000 371,857
Rothmans Industries Ltd. ................................... Singapore 163,000 691,785
Tsingtao Brewey Co., H...................................... China 156,000 17,717
-----------
1,675,981
-----------
BUILDING MATERIALS & COMPONENTS 5.3%
Siam Cement Public Co. Ltd., loc. .......................... Thailand 224,900 1,308,550
Siam Cement Public Co. Ltd., fgn. .......................... Thailand 22,200 213,408
-----------
1,521,958
-----------
CHEMICALS 1.4%
PT Unggul Indah Corp. ...................................... Indonesia 3,449,600 169,256
Reliance Industries Ltd., GDR............................... India 10,600 57,240
Shanghai Petrochemical Co. Ltd., H.......................... China 836,000 85,235
Thai Petrochemical Industry Public Co. Ltd., fgn. .......... Thailand 1,138,000 86,365
-----------
398,096
-----------
</TABLE>
11
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CONSTRUCTION & HOUSING 2.0%
Italian-Thai Development Public Co. Ltd., fgn. ............. Thailand 409,900 $ 217,756
*Sino-Thai Engineering & Construction Public Co., fgn. ..... Thailand 101,500 10,271
YTL Corp. Bhd. ............................................. Malaysia 473,000 336,788
-----------
564,815
-----------
ELECTRICAL & ELECTRONICS
Samsung Display Devices Ltd. ............................... South Korea 200 4,674
Samsung Display Devices Ltd., rts. ......................... South Korea 34 232
-----------
4,906
-----------
FOOD & HOUSEHOLD PRODUCTS 3.3%
Boustead Holdings Bhd. ..................................... Malaysia 8,000 4,052
Charoen Pokphand Feedmill Public Co. Ltd. .................. Thailand 171,663 117,250
Charoen Pokphand Feedmill Public Co. Ltd., fgn. ............ Thailand 135,737 97,004
Golden Resources Development International Ltd. ............ Hong Kong 5,749,000 274,522
Ng Fung Hong Ltd. .......................................... Hong Kong 40,000 33,813
PT Indofoods Sukses Makmurr................................. Indonesia 350,000 52,336
Saha Pathanapibul Co. Ltd. ................................. Thailand 71,100 61,154
San Miguel Corp., B......................................... Philippines 188,000 242,789
Serm Suk Public Co. Ltd. ................................... Thailand 15,700 54,412
-----------
937,332
-----------
FOREST PRODUCTS & PAPER .1%
Asia Pulp & Paper Co. Ltd., ADR............................. Indonesia 2,600 13,813
-----------
INSURANCE .5%
Bangkok Insurance Public Co. Ltd. BKI....................... Thailand 55,000 141,918
-----------
LEISURE & TOURISM 1.8%
Dusit Thani Public Company Ltd., fgn. ...................... Thailand 529,000 388,085
Genting Bhd. ............................................... Malaysia 50,400 84,898
Resorts World Bhd. ......................................... Malaysia 38,000 30,870
-----------
503,853
-----------
MERCHANDISING 1.9%
*Siam Makro Public Company Ltd., fgn. ...................... Thailand 342,000 536,403
-----------
METALS & MINING 3.2%
Hindalco Industries Inc., GDR............................... India 5,700 63,128
Natsteel Ltd. .............................................. Singapore 1,102,000 811,112
PT Timah TBK................................................ Indonesia 98,000 42,818
-----------
917,058
-----------
MISC MATERIALS & COMMODITIES
Golden Hope Plantations Bhd. ............................... Malaysia 5,000 2,831
-----------
</TABLE>
12
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MULTI-INDUSTRY 14.1%
Ayala Corp., B.............................................. Philippines 1,023,000 $ 115,745
China Resources Enterprises Ltd. ........................... China 1,114,000 1,013,577
Citic Pacific Ltd. ......................................... Hong Kong 510,000 895,141
Hong Leong Industries Bhd. ................................. Malaysia 102,000 45,331
Hutchison Whampoa Ltd. ..................................... Hong Kong 206,000 1,084,700
Jardine Matheson Holdings Ltd. ............................. Hong Kong 175,000 358,750
Larsen and Toubro Ltd., GDR reg S........................... India 7,700 63,140
Perlis Plantations Bhd. .................................... Malaysia 416,000 333,973
*Saha Union Public Co. Ltd. ................................ Thailand 1,000 304
*Saha Union Public Co. Ltd., fgn. .......................... Thailand 339,000 105,053
Sembawang Corp. Ltd. ....................................... Singapore 1,000 1,668
-----------
4,017,382
-----------
REAL ESTATE 8.4%
Belle Corp. ................................................ Philippines 14,404,000 263,387
China Overseas Land & Investment Ltd. ...................... Hong Kong 2,290,000 227,567
City Developments Ltd. ..................................... Singapore 27,500 60,397
First Capital Corp. Ltd. ................................... Singapore 40,000 11,872
Henderson China Holdings Ltd. .............................. Hong Kong 10,000 2,872
Lim Kah Ngam Ltd. .......................................... Singapore 1,150,000 252,567
New World Development Co. Ltd. ............................. Hong Kong 398,000 534,194
Sun Hung Kai Properties Ltd. ............................... Hong Kong 291,000 1,030,903
United Industrial Corporation Ltd. ......................... Singapore 1,000 291
United Overseas Land Ltd. .................................. Singapore 1,000 404
-----------
2,384,454
-----------
RECREATION & OTHER CONSUMER GOODS .1%
*KTP Holdings Ltd., wts. ................................... Hong Kong 101,250 131
Tanjong Plc. ............................................... Malaysia 38,000 33,776
-----------
33,907
-----------
TELECOMMUNICATIONS 1.6%
Jasmine International Public Co. Ltd., fgn. ................ Thailand 500,000 170,756
PT Indosat.................................................. Indonesia 95,000 51,273
PT Telekomunikasi Indonesia (Persero), B.................... Indonesia 99,000 14,110
Total Access Communication Public Co. Ltd. ................. Thailand 180,000 119,700
United Communications Industries, fgn. ..................... Thailand 315,500 97,771
-----------
453,610
-----------
TEXTILES & APPAREL 1.3%
*Hua Thai Manufacturing Public Co. Ltd. .................... Thailand 259,400 380,602
-----------
TRANSPORTATION 1.1%
Keppel Corp., Ltd. ......................................... Singapore 46,000 54,336
Thai Airways International Public Co. Ltd., fgn. ........... Thailand 326,600 268,518
-----------
322,854
-----------
</TABLE>
13
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS
Korea Electric Power Corp. ................................. South Korea 400 $ 5,551
-----------
TOTAL COMMON STOCKS (COST $41,115,415)...................... 17,404,423
-----------
DIRECT EQUITY INVESTMENTS 24.9%
REAL ESTATE 14.7%
(R)+*Mayfair Hanoi, Ltd., 30% equity interest owned through
HEA Holdings Ltd., a wholly owned investment acquired
10/31/96.................................................. Vietnam 4,200,625
-----------
LEISURE & TOURISM 10.2%
(R)+*Indotel Ltd., acquired 11/22/96........................ Vietnam 900,000 2,899,980
-----------
TOTAL DIRECT EQUITY INVESTMENTS (COST $14,702,155).......... 7,100,605
-----------
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $4,188,000) 14.7%
U.S. Treasury Bills, 4.51% to 5.09% with maturities to
1/7/99.................................................... United States $ 4,215,000 4,192,096
-----------
TOTAL INVESTMENTS (COST $60,005,570) 100.7%................. 28,697,124
OTHER ASSETS, LESS LIABILITIES (.7%)........................ (194,803)
-----------
TOTAL NET ASSETS 100.0%..................................... $28,502,321
===========
</TABLE>
*Non-Income producing.
**Securities traded in U.S. dollars.
+See note 6 regarding Holdings of 5% voting Securities.
(R)See note 7 regarding restricted securities.
See Notes to Financial Statements.
14
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $60,005,570)..... $ 28,697,124
Cash....................................................... 86,487
Receivables:
Investment securities sold................................ 187,749
Dividends................................................. 34,905
------------
Total assets.......................................... 29,006,265
------------
Liabilities:
Payables:
Investment securities purchased........................... 2,850
To affiliates............................................. 28,657
Accrued expenses........................................... 472,437
------------
Total liabilities..................................... 503,944
------------
Net assets, at value........................................ $ 28,502,321
============
Net assets consist of:
Distributions in excess of net investment income........... $ (95,418)
Net unrealized depreciation................................ (31,308,446)
Accumulated net realized loss.............................. (26,323,099)
Capital shares............................................. 86,229,284
------------
Net assets, at value........................................ $ 28,502,321
============
Net asset value per share ($28,500,771 / 4,681,173 shares
outstanding).............................................. $6.09
============
</TABLE>
See Notes to Financial Statements.
15
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $42,769)
Dividends.................................................. $ 169,290
Interest................................................... 266,967
-----------
Total investment income............................... $ 436,257
------------
Expenses:
Management fees (Note 3)................................... 244,571
Administrative fees (Note 3)............................... 54,797
Custodian fees............................................. 5,000
Reports to shareholders.................................... 80,000
Registration and filing fees............................... 9,000
Professional fees.......................................... 129,500
Directors' fees and expenses............................... 4,000
Amortization of organization costs......................... 2,196
Other...................................................... 4,161
-----------
Total expenses........................................ 533,225
Expenses waived/paid by affiliate (Note 3)............ (1,550)
------------
Net expenses...................................... 531,675
------------
Net investment income........................... (95,418)
------------
Realized and unrealized losses:
Net realized loss from:
Investments............................................... (5,878,829)
Foreign currency transactions............................. (42,192)
-----------
Net realized loss..................................... (5,921,021)
Net unrealized depreciation on Investments............ (7,918,386)
------------
Net realized and unrealized loss............................ (13,839,407)
------------
Net decrease in net assets resulting from operations........ $(13,934,825)
------------
------------
</TABLE>
See Notes to Financial Statements.
16
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 1998 YEAR ENDED
(UNAUDITED) MARCH 31, 1998
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss).............................. $ (95,418) $ 811,473
Net realized loss from investments and foreign currency
transactions............................................ (5,921,021) (20,388,614)
Net unrealized depreciation on investments................ (7,918,386) (23,246,973)
---------------------------------------
Net decrease in net assets resulting from operations.... (13,934,825) (42,824,114)
Distributions to shareholders from:
Net investment income..................................... -- (1,021,093)
Net realized gains........................................ -- (257,328)
Return of capital......................................... -- (131,834)
Capital share transactions (Note 2)........................ -- (26,542,633)
---------------------------------------
Net decrease in net assets.............................. (13,934,825) (70,777,002)
Net assets:
Beginning of period........................................ 42,437,146 113,214,148
---------------------------------------
End of period.............................................. $ 28,502,321 $ 42,437,146
---------------------------------------
---------------------------------------
Distributions in excess of net investment income included in
net assets:
End of period.............................................. $ (95,418) $ --
---------------------------------------
---------------------------------------
</TABLE>
See Notes to Financial Statements.
17
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Vietnam and Southeast Asia Fund, Inc. (the Fund) is registered under
the Investment Company Act of 1940 as a closed-end, non-diversified investment
company. The Fund formerly sought long-term capital appreciation by investing in
the equity and debt securities of Vietnam companies and Vietnam-Related
Companies, as defined in the Fund's prospectus. On April 23, 1998, the
shareholders voted to modify the Fund's investment policies to require at least
65% of the Fund's total assets to be invested in equity and debt securities of
Vietnam and other Southeast Asian countries and to change the name of the Fund
to Templeton Vietnam and Southeast Asia Fund, Inc. 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.
18
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
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 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 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 STOCK
On January 20, 1998, the Fund completed a tender offer of 3,377,430 shares of
its common stock. The cost of the shares tendered and related offering expenses
of $26,242,633 and $300,000, respectively, were charged to capital shares.
During the six months ended September 30, 1998, there were no share
transactions.
At September 30, 1998, there were 100,000,000 shares authorized ($0.01 par
value).
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also directors or officers 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 1.5% per year of the
average weekly net assets of the Fund. From its investment management fee, TAML
pays a shareholder servicing agent fee to Paine Webber of 0.10% per year of the
average daily net assets of the Fund. The Fund pays FT Services an
administrative fee of 0.15% per year of the Fund's average weekly net assets.
Effective August 1, 1998, TAML agreed to reduce its investment management fee to
an annual rate of 1.35% of the Fund's average weekly net assets, as reflected in
the Statement of Operations. This fee waiver may be terminated at any time upon
notice to the Fund's Board of Directors.
Legal fees of $107,500 were paid to a law firm in which a partner is an officer
of the Fund.
Three individuals have brought actions against the Fund's investment manager and
certain of its affiliates, Fund officers and directors seeking to recover
damages in connection with the Fund's tender offer and certain investments of
the Fund. The Fund has been named as a nominal defendant in these actions;
however, no damages are being sought against the Fund. The investment manager
and its affiliates strongly believe that the claims made in these actions are
without merit and intend to vigorously defend against these actions.
19
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES
At September 30, 1998, the net unrealized depreciation based on the cost of
investments for income tax purposes of $66,380,478 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 408,585
Unrealized depreciation..................................... (38,091,939)
------------
Net unrealized depreciation................................. $(37,683,354)
============
</TABLE>
At March 31, 1998 the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire in:
<TABLE>
<S> <C>
2006........................................................ $ 501,487
2007........................................................ 13,411,556
-----------
$13,913,043
===========
</TABLE>
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing tax treatments of wash sales and losses realized on
the sale of securities subsequent to October 31.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended August 31, 1998 aggregated $9,903,969 and $1,077,342, respectively.
6. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as investments
in portfolio companies in which the Fund owns 5% or more of the outstanding
voting securities. Investments in "affiliated companies" at September 30, 1998
were $7,100,605.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD GROSS GROSS SHARES HELD VALUE DIVIDEND INCOME
NAME OF ISSUER MAR. 31, 1998 ADDITIONS REDUCTIONS SEPT. 30, 1998 SEPT. 30, 1998 3/31/98-9/30/98
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mayfair Hanoi, Ltd., 30%
equity interest owned
through HEA Holdings
Ltd. ...................... -- -- -- -- $4,200,625 --
Indotel Ltd.................. 900,000 -- -- 900,000 2,899,980 --
--------------------------------
TOTAL AFFILIATES............. $7,100,605 $--
--------------------------------
--------------------------------
<CAPTION>
REALIZED
CAPITAL
NAME OF ISSUER GAINS
- -----------------------------
<S> <C>
Mayfair Hanoi, Ltd., 30%
equity interest owned
through HEA Holdings
Ltd. ...................... --
Indotel Ltd.................. --
------
TOTAL AFFILIATES............. $--
======
</TABLE>
20
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited) (continued)
7. DIRECT INVESTMENTS IN VIETNAM VENTURES
The Fund may, to the extent consistent with its investment policies invest up to
65% of its total net assets in direct equity investments. These investments
typically take the form of a business corporation contract, joint venture
company established in Vietnam or a wholly owned foreign company established in
Vietnam. Since these securities are not publicly traded, and may be restricted
as to resale, they may be less liquid than securities traded in active markets.
Direct investments in Vietnam ventures include certain risks not typically
associated with investing in countries with developed securities markets, such
as political, economic, and legal uncertainties. Readily available market
quotations cannot be obtained for these securities. The fair value of these
securities is estimated using methods approved by the Board. However, because of
the inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market for
the securities existed, and the differences could be material. The total value
of direct equity investments was $7,100,605 (24.9% of net assets) at September
30, 1998.
21
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
(formerly known as Templeton Vietnam Opportunities Fund, Inc.)
Annual Meeting of Shareholders, April 23, 1998
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 East Broward Boulevard, Ft. Lauderdale, Florida, on April 23, 1998. The
purpose of the meeting was to elect four Directors of the Fund; to approve or
reject (i) an amendment to the Fund's investment policies to enable the Fund to
invest more broadly in other countries located in Southeast Asia, while
continuing to focus its investment program on Vietnam, and (ii) a corresponding
amendment to the Fund's Articles of Incorporation to change the Fund's name to
"Templeton Vietnam and Southeast Asia Fund, Inc."; to ratify the selection of
McGladrey & Pullen, LLP, as the Fund's independent auditors for the fiscal year
ending March 31, 1998; and in their discretion, to authorize the proxyholders to
vote upon other such matters that may legally come before the meeting or any
adjournment of the meeting. At the meeting, the following persons were elected
by the shareholders to serve as Directors of the Fund: Harris J. Ashton,
Nicholas F. Brady, S. Joseph Fortunato and Edith E. Holiday.* Shareholders
approved (i) the amendment to the Fund's investment policies to enable the Fund
to invest more broadly in other countries located in Southeast Asia, while
continuing to focus its investment program on Vietnam, and (ii) the
corresponding amendment to the Fund's Articles of Incorporation to change the
Fund's name to "Templeton Vietnam and Southeast Asia Fund, Inc." Shareholders
ratified the selection of McGladrey & Pullen, LLP, to serve as the Fund's
independent auditors for the fiscal year ending March 31, 1998. 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
OUTSTANDING OUTSTANDING
TERM EXPIRING 2000: FOR SHARES WITHHELD SHARES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harris J. Ashton............................................ 3,037,355 64.88% 146,810 3.14%
Nicholas F. Brady........................................... 3,032,090 64.77% 152,075 3.25%
S. Joseph Fortunato......................................... 3,036,286 64.86% 147,879 3.16%
Edith E. Holiday............................................ 3,032,217 64.77% 151,948 3.25%
</TABLE>
2. The approval or rejection of (i) an amendment to the Fund's investment
policies to enable the Fund to invest more broadly in other countries located in
Southeast Asia, while continuing to focus its investment program on Vietnam, and
(ii) a corresponding amendment to the Fund's Articles of Incorporation to change
the Fund's name to "Templeton Vietnam and Southeast Asia Fund, Inc.":
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING BROKER NON- OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES VOTES SHARES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2,441,921 52.17% 53,423 1.14% 72,588 1.55% 616,233 13.16%
</TABLE>
3. The ratification or rejection of the selection of McGladrey & Pullen, LLP, as
independent auditors for the Fund for the fiscal year ending March 31, 1998:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING BROKER NON- OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES VOTES SHARES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3,045,018 65.05% 22,863 0.49% 116,282 2.48% 2 0.00%
</TABLE>
*Harmon E. Burns, Martin L. Flanagan, John Wm. Galbraith, Andrew H. Hines, Jr.,
Charles B. Johnson, 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.
22
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Dividend Reinvestment Plan
The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following
features:
If shares of the Fund are held in the shareholder's name, the shareholder will
automatically be a participant in the Plan unless he elects to withdraw. If the
shares are registered in the name of a broker-dealer or other nominee (i.e., in
"street name"), the broker-dealer or nominee will elect to participate in the
Plan on the shareholder's behalf unless the shareholder instructs them
otherwise, or unless the reinvestment service is not provided by the
broker-dealer or nominee.
Participants should contact ChaseMellon Shareholder Services, Investor Services,
P.O. Box 3338, South Hackensack, NJ 07606-1938, to receive the Plan brochure.
To receive dividends or distributions in cash, the shareholder must notify
Mellon Securities Trust Company (the "Plan Agent") at the address above or the
institution in whose name the shares are held. The Plan Agent must receive
written notice within 10 business days before the record date for the
distribution.
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 the 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.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax which may be payable on dividends or
distributions.
The participant may withdraw from the Plan without penalty at any time by
written notice to the Plan Agent. 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.
23
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
TRANSFER AGENT
ChaseMellon Shareholder Services
450 West 33rd Street
New York, New York 10001
1-800/416-5585
SHAREHOLDER INFORMATION
Shares of Templeton Vietnam and Southeast Asia Fund, Inc. are traded daily on
the New York Stock Exchange under the symbol "TVF." 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 distributions 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).
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 Vietnam and
Southeast Asia Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg,
FL 33733-8030.
24
PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. 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.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
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Target Fund
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Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
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Franklin Floating Rate Trust
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona**
Arkansas***
California**
Colorado
Connecticut
Florida**
Georgia
Hawaii***
Indiana
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan**
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
Washington***
VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
+Portfolio of insured municipal securities.
++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
09/98
PAGE
TEMPLETON VIETNAM AND
SOUTHEAST ASIA FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, Florida 33733-8030
TRANSFER AGENT
ChaseMellon Shareholders Services
450 West 33rd Street
New York, New York 10001
1-800/416-5585
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, and that the Investment Manager may make errors in selecting
securities for the Fund's portfolio. 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 the risk of such losses should not invest in shares of the
Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded, and accessed. These calls can be
determined by the presence of a regular beeping tone.
TLTVF S98 11/98 [RECYCLE LOGO] Printed on recycled paper
