Annual Report
March 31, 2000
TEMPLETON VIETNAM
AND SOUTHEAST ASIA FUND, INC.
[Franklin Templeton Logo]
PAGE
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 fund share prices. We appreciate your past support and
look forward to serving your investment needs in the years to come.
[PHOTO OF MARK MOBIUS APPEARS HERE]
MARK MOBIUS
PRESIDENT
TEMPLETON VIETNAM AND
SOUTHEAST ASIA FUND, INC.
Mark Mobius has been living in emerging market countries since earning his Ph.D.
in Economics and Political Science at Massachusetts Institute of Technology in
1964. During his extensive travels, he has acquired a thorough knowledge of
business practices and customs unique to developing nations.
PAGE
SHAREHOLDER LETTER
-------------------------------------------------------------------------------
YOUR FUND'S GOAL: TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND SEEKS LONG-TERM
CAPITAL APPRECIATION. UNDER NORMAL MARKET CONDITIONS, THE FUND INVESTS PRIMARILY
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.
-------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to bring you this annual report for the Templeton Vietnam and
Southeast Asia Fund, which covers the 12 months ended March 31, 2000. During
this time, many Southeast Asian nations instituted political and economic
reforms in efforts to address the region's past financial turmoil. As a result,
many of them enjoyed significant economic recovery and improving equity markets
during the period under review. Contributing to this rise in securities prices
was China's agreement with the U.S. concerning membership in the World Trade
Organization, Hong Kong's decision to build a cyberport, and the announcement by
Disney(R)
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the Fund's Statement of Investments (SOI), which is a complete
listing of the Fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 9.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Shareholder Letter 1
Performance Summary 6
Important Notice
to Shareholders 7
Financial Highlights &
Statement of Investments 8
Financial Statements 13
Notes to Financial
Statements 16
Independent Auditors'
Report 20
</TABLE>
[FUND CATEGORY PYRAMID GRAPH]
Global
Growth
Growth & Income
Income
Tax-Free Incom
PAGE
[GEOGRAPHIC DISTRIBUTION BAR CHART]
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
3/31/00
Thailand 18.9%
Hong Kong 16.1%
Indonesia 14.7%
Vietnam* 12.4%
South Korea 9.3%
China 9.2%
Singapore 7.7%
Philippines 3.0%
United States 1.6%
Taiwan 1.5%
Malaysia 1.0%
India 0.1%
Other Net Assets 4.5%
* These are direct investments made through companies domiciled in Hong Kong and
Singapore.
Corp. of plans to build a theme park there. In Indonesia, the election of
moderate Muslim cleric Abdurrahman Wahid as president was also viewed as an
encouraging development. At the same time, Singapore made progress by
forecasting a budget surplus of U.S. $1.7 billion. Furthermore, Singapore
continued its efforts to establish itself as the premier financial exchange in
Asia outside Japan, by modifying its listing rules in hopes of attracting more
initial public offerings.
For much of the reporting period, Thailand's economy had been recovering more
slowly than the economies of many other Asian countries. However, late in the
period, Thailand's economy seemed poised to start catching up. While there has
been concern about political turmoil and the pace of reform, economic growth
began to exceed expectations, inflation was low, and growing imports indicated a
robust level of domestic consumption. In addition, the Thai government passed
legislation opening up the economy to more foreign economic participation. These
developments culminated in the International Monetary Fund's announcement that
the country will not need to renew its U.S. $17 billion loan package, as
scheduled in June 2000. Not all countries in the region progressed in this
manner. South Korea encountered challenges to its political reform process and
Vietnam's lack of a stock exchange and an exchangeable currency limited that
country's economic development. Although Vietnam plans to hold talks with the
World Trade Organization in June concerning membership in that organization, it
will most likely be a number of years before this takes place.
Within this environment, the Fund produced a +17.12% cumulative total return in
market-price terms for the 12 months ended March 31, 2000, as shown in the
Performance Summary
2
PAGE
on page 6. Based on change in net asset value, the Fund's cumulative total
return for the same period was +34.10%.
At the end of the reporting period, 93.9% of the Fund's total net assets were
invested in equities, with 6.1% in short-term investments and other assets. The
chart to the left illustrates the Fund's geographic exposure. Among the
holdings, 12.4% were direct investments in Vietnam, held through companies
domiciled in Hong Kong and Singapore.
During the 12 months under review, we sold our positions in China's Shanghai and
Shenzhen B share markets to take advantage of what we believed were bargains in
that country's telecommunications sector. In early May, we began acquiring stock
in China Telecom (Hong Kong) because we believed it offered an inexpensive
exposure to the vast and relatively closed Chinese mobile communications market.
By the end of the reporting period, it had become the Fund's largest holding. We
also added to the Fund's position in Citic Pacific, the Hong Kong-listed
subsidiary of China's state-owned China International Trust and Investment
Corporation. Citic Pacific invests in infrastructure (aviation, civil
engineering, power generation and telecommunications) as well as real estate.
In Taiwan, the combination of natural disasters and political tension
temporarily depressed some stock prices to valuations we believed were
attractive. We therefore increased our exposure to that country by purchasing
shares in computer maker Compal Electronics, chip maker Via Technologies Inc.
and uninterruptible power supply component manufacturer Phoenixtec Power Co.
Ltd.
We also purchased additional shares of Telekomunikasi, one of Indonesia's
domestic phone operators. The rise in value of
TOP 10 INDUSTRIES
3/31/00
% OF TOTAL
INDUSTRY NET ASSETS
-------- ----------
Telecommunications 19.9%
Multi-Industry 13.8%
Real Estate 7.9%
Banking 7.1%
Leisure & Tourism 6.3%
Electrical & Electronics 5.4%
Building Materials &
Components 5.3%
Food & Household Products 4.6%
Metals & Mining 4.2%
Beverages & Tobacco 4.0%
3
PAGE
TOP 10 EQUITY HOLDINGS*
3/31/00
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
----------------- ----------
China Telecom HK Ltd.
Telecommunications, China 8.1%
Mayfair Hanoi, Ltd.
Real Estate, Vietnam 7.1%
Citic Pacific Ltd.
Multi-Industry, Hong Kong 6.3%
Indotel Ltd.
Leisure & Tourism, Vietnam 5.3%
Siam Cement Public
Co. Ltd.
Building Materials &
Components, Thailand 4.6%
PT Telekomunikasi
Indonesia (Persero), B
Telecommunications, Indonesia 4.1%
Samsung Electronics Co. Ltd.
Electrical & Electronics,
South Korea 4.1%
Korea Electric Power Corp.
Utilities Electrical & Gas,
South Korea 3.9%
Natsteel Ltd.
Metals & Mining, Singapore 3.5%
PT Gudang Garamm
Beverages & Tobacco,
Indonesia 3.2%
* Does not include investments in fixed-income securities and short-term
investments and other assets.
China Telecom's stock, along with Telekomunikasi's advance into the Fund's top
10 holdings, helped make telecommunications the Fund's largest sector. At the
end of the 12-month period, telecommunications composed 19.9% of total net
assets, followed by multi-industry (13.8%), real estate (7.9%) and banking
(7.1%).
On the sell side, we reduced the Fund's holdings of Thai banks Bangkok Bank and
Siam Commercial Bank because of the relatively slow pace of banking reforms,
which delayed the sector's return to profitability.
Looking forward, we believe Southeast Asia is taking positive steps toward
economic recovery. The conclusion of Taiwanese presidential elections may
encourage the development of talks between Taiwan and China, and reduce regional
political uncertainties. We are optimistic about the region's investment
possibilities, and intend to focus on those companies and countries that have
been the most proactive in reform. We anticipate that the potential for improved
corporate governance and economic efficiency could benefit stock prices of
companies in these countries over the long term.
Of course, investing in Vietnam and Southeast Asia involves special
considerations including risks relating to direct investments, as well as the
risks 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. For example, Taiwan's equity market
4
PAGE
has increased 1,576% in the last 15 years, but has suffered six declines of more
than 20% during that time.(1) Investing in any emerging market means accepting a
certain amount of market volatility and, in some cases, the consequences of
severe market corrections. While short-term volatility can be disconcerting,
declines in excess of 50% are not unusual in emerging markets. Investment in the
Fund should be considered speculative.
Because the Fund invests a significant amount of its assets in Vietnam and
Southeast Asia, it may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
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\MARK MOBIUS
Mark Mobius
President
Vietnam and Southeast Asia Fund, Inc.
-------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of March
31, 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.
-------------------------------------------------------------------------------
(1) Source: Taiwan Weighted Index. Based on quarterly percentage price change
over 15 years ended March 31, 2000. Return is measured in U.S. dollars and does
not include reinvested dividends. One cannot invest directly in an index, nor is
an index representative of the Fund's portfolio.
5
PAGE
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
over the periods indicated.
-------------------------------------------------------------------------------
Effective August 1, 1998, the Fund's Investment Manager 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, additional fee waivers increased
the Fund's total returns. Without these reductions, the Fund's total returns
would have been lower.
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. Also, 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 heightened 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. You may have a gain or loss when you sell your
shares.
-------------------------------------------------------------------------------
ONE-YEAR PERFORMANCE SUMMARY
AS OF 3/31/00
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>
One-Year Total Return +34.10% (Based on change in Net Asset Value)
+17.12% (Based on change in Market Price)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Net Asset Value (NAV) $11.64 (3/31/00) $8.68 (3/31/99)
Change in NAV +$2.96
Market Price (NYSE) $8.1250 (3/31/00) $6.9375 (3/31/99)
Change in Market Price +$1.1875
</TABLE>
ADDITIONAL PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
1-YEAR 5-YEAR (9/8/94)
------ ------ --------
<S> <C> <C> <C>
Cumulative Total Return (1)
Based on change in
net asset value +34.10% -3.40% -9.91%
Based on change in
market price +17.12% -19.85% -40.95%
Average Annual Total Return (2)
Based on change in
net asset value +34.10% -0.69% -1.86%
Based on change in
market price +17.12% -4.33% -9.07%
</TABLE>
Past performance is not predictive of future results.
6
PAGE
IMPORTANT NOTICE TO SHAREHOLDERS
-------------------------------------------------------------------------------
INVESTMENT OF CASH BALANCES. The U.S. Securities and Exchange Commission granted
the Franklin Templeton Funds an order that allows the funds, including Templeton
Vietnam and Southeast Asia Fund, to invest their uninvested cash balances in
affiliated Franklin Templeton money market funds. Among the conditions of the
SEC order are that the funds will not pay sales loads or distribution fees and
that there will be no layering of investment advisory fees, with regard to their
investments in the Franklin Templeton money market funds. Subject to these and
other conditions of the SEC order, the Fund may invest cash balances in Franklin
Templeton money market funds. The Board of Directors of the Fund has approved a
change in the Fund's policy limiting investments in affiliated funds in order to
allow the Fund to do so.
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.
--------------------------------------------------------------------------------
7
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------
2000+ 1999 1998 1997 1996
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $8.68 $9.07 $14.05 $13.91 $13.09
-------------------------------------------------------
Income from investment operations:
Net investment income (loss)............................... (.07) (.08) .09 .29 .36
Net realized and unrealized gains (losses)................. 3.03 (.31) (4.86) .21 .91
-------------------------------------------------------
Total from investment operations............................ 2.96 (.39) (4.77) .50 1.27
-------------------------------------------------------
Tender offer expenses deducted from capital................. -- -- (.04) -- --
-------------------------------------------------------
Less distributions from:
Net investment income...................................... -- -- (.13) (.31) (.38)
Net realized gains......................................... -- -- (.03) (.05) (.07)
Tax return of capital...................................... -- -- (.01) -- --
-------------------------------------------------------
Total distributions......................................... -- -- (.17) (.36) (.45)
-------------------------------------------------------
Net asset value, end of year................................ $11.64 $8.68 $9.07 $14.05 $13.91
=======================================================
Total Return
Based on market value per share............................ 17.12% (15.88)% (25.14)% (10.87)% 22.11%
Based on net asset value per share......................... 34.10% (4.30)% (34.10)% 4.03% 9.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $54,508 $40,615 $42,437 $113,214 $112,073
Ratios to average net assets:
Expenses................................................... 2.15% 3.12% 2.23% 1.82% 1.47%
Expenses, excluding waiver and payments by affiliate....... 2.30% 3.22% 2.23% 1.82% 1.47%
Net investment income (loss)............................... (.58)% (1.06)% .91% 2.04% 2.62%
Portfolio turnover rate..................................... 68.98% 20.56% 89.42% 20.16% 4.01%
</TABLE>
+Based on average weighted shares outstanding.
See Notes to Financial Statements.
8
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2000
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 80.3%
BANKING 5.9%
*Bangkok Bank Public Co. Ltd................................ Thailand 249,500 $ 257,353
DBS Group Holdings Ltd...................................... Singapore 8,489 112,161
Hana Bank................................................... South Korea 7,300 44,583
HSBC Holdings PLC........................................... Hong Kong 1,200 14,024
Oversea Chinese Banking Corp. Ltd........................... Singapore 84,550 523,958
Overseas Union Bank Ltd..................................... Singapore 29,000 130,547
*Philippine National Bank................................... Philippines 325,000 537,321
*Siam Commercial Bank, fgn., wts., 6/22/04.................. Thailand 396,666 96,518
*Thai Farmers Bank Public Co. Ltd. ......................... Thailand 1,298,700 1,176,421
*Thai Farmers Bank Public Co. Ltd., fgn. ................... Thailand 75,532 83,403
United Overseas Bank Ltd.................................... Singapore 37,864 232,430
-----------
3,208,719
-----------
BEVERAGES & TOBACCO 4.0%
Fraser and Neave Ltd........................................ Singapore 149,100 425,377
PT Gudang Garamm............................................ Indonesia 906,000 1,729,419
*Tsingtao Brewey Co. Ltd., H................................ China 168,000 34,090
-----------
2,188,886
-----------
BUILDING MATERIALS & COMPONENTS 5.3%
*PT Indocement Tunggal Prakarsa............................. Indonesia 677,000 250,410
PT Semen Gresik (Persero) TBK............................... Indonesia 136,627 156,119
*Siam Cement Public Co. Ltd................................. Thailand 141,149 1,963,617
*Siam Cement Public Co. Ltd., fgn. ......................... Thailand 21,651 526,816
-----------
2,896,962
-----------
CONSTRUCTION & HOUSING .4%
*Italian-Thai Development Public Co. Ltd., fgn. ............ Thailand 200,700 145,973
*YTL Corp. Bhd. ............................................ Malaysia 30,000 56,842
-----------
202,815
-----------
DATA PROCESSING & REPRODUCTION .7%
Compal Electronics Inc...................................... Taiwan 36,000 149,655
*Korea Data Systems......................................... South Korea 17,960 196,622
Legend Holdings Ltd......................................... Hong Kong 16,000 24,966
-----------
371,243
-----------
ELECTRICAL & ELECTRONICS 5.4%
Creative Technology Ltd..................................... Singapore 4,600 146,028
*Phoenixtec Power Co. Ltd................................... Taiwan 4,000 9,201
Samsung Electronics Co. Ltd................................. South Korea 7,367 2,232,929
Samsung SDI Co. Ltd......................................... South Korea 4,410 163,592
*Shin Corporations Public Company Ltd., fgn. ............... Thailand 28,800 210,230
*Sunplus Technology Company Ltd............................. Taiwan 26,000 165,757
-----------
2,927,737
-----------
</TABLE>
9
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ELECTRONIC COMPONENTS & INSTRUMENTS 1.3%
*Advantech Co. Ltd.......................................... Taiwan 27,000 $ 236,017
*China Aerospace International Holdings Ltd................. Hong Kong 443,000 140,811
*Great Wall Technology Co. Ltd.............................. China 70,000 70,571
*Opto Technology Corp....................................... Taiwan 19,000 35,902
*Via Technologies Inc....................................... Taiwan 16,000 239,238
-----------
722,539
-----------
ENERGY SOURCES .5%
*Electricity Generating Public Co. Ltd., fgn. .............. Thailand 91,000 107,101
*Gas Authority Of India Ltd., GDR........................... India 5,700 43,035
*PTT Exploration & Production Public Co. Ltd., fgn. ........ Thailand 3,200 16,504
SK Corp..................................................... South Korea 3,650 84,212
-----------
250,852
-----------
FINANCIAL SERVICES
*China Everbright Ltd....................................... China 10,000 8,091
-----------
FOOD & HOUSEHOLD PRODUCTS 4.6%
Charoen Pokphand Foods Public Co. Ltd., fgn. ............... Thailand 362,054 1,378,889
*PT Indofoods Sukses Makmurr................................ Indonesia 449,000 341,050
Saha Pathanapibul Public Co. Ltd., fgn. .................... Thailand 19,700 24,228
San Miguel Corp., B......................................... Philippines 631,480 744,634
*Serm Suk Public Co. Ltd.................................... Thailand 14,500 41,801
-----------
2,530,602
-----------
FOREST PRODUCTS & PAPER 2.0%
*Asia Pulp & Paper Co. Ltd., ADR............................ Indonesia 62,480 460,790
*PT Indah Kiat Pulp & Paper Corp............................ Indonesia 927,000 306,143
*PT Tjiwi Kimia............................................. Indonesia 1,441,000 342,642
-----------
1,109,575
-----------
LEISURE & TOURISM 1.0%
*Dusit Thani Public Company Ltd., fgn. ..................... Thailand 529,000 321,793
Genting Bhd. ............................................... Malaysia 10,000 41,579
*Hong Kong & Shanghai Hotels Ltd. .......................... Hong Kong 25,500 13,018
*Hotel Shilla Co............................................ South Korea 7,500 45,126
Resorts World Bhd. ......................................... Malaysia 36,500 121,026
Shangri-La Asia Ltd. ....................................... Hong Kong 6,000 6,742
-----------
549,284
-----------
MACHINERY & ENGINEERING .4%
*Samsung Heavy Industries Co. Ltd........................... South Korea 59,900 218,409
-----------
</TABLE>
10
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MERCHANDISING 1.5%
Dairy Farm International Holdings Ltd. ..................... Hong Kong 573,000 $ 366,720
Siam Makro Public Company Ltd., fgn. ....................... Thailand 377,000 482,592
-----------
849,312
-----------
METALS & MINING 4.2%
Natsteel Ltd. .............................................. Singapore 806,000 1,884,829
PT Timah TBK................................................ Indonesia 950,000 389,036
-----------
2,273,865
-----------
MISC MATERIALS & COMMODITIES .4%
*Golden Agri-Resources Ltd.................................. Singapore 306,000 66,191
Golden Hope Plantations Bhd. ............................... Malaysia 101,000 94,621
IOI Corp. Bhd. ............................................. Malaysia 56,000 40,674
-----------
201,486
-----------
MULTI-INDUSTRY 13.8%
Cheung Kong Holdings Ltd.................................... Hong Kong 54,000 807,937
China Everbright Technology Ltd............................. Hong Kong 64,000 8,384
China Resources Enterprises Ltd............................. China 363,000 498,825
*China Travel International Investment Hong Kong Ltd........ Hong Kong 8,000 1,736
Citic Pacific Ltd........................................... Hong Kong 566,000 3,430,964
Hutchison Whampoa Ltd....................................... Hong Kong 87,000 1,569,832
Jardine Matheson Holdings Ltd............................... Hong Kong 200,657 778,549
Jardine Strategic Holdings Ltd.............................. Hong Kong 76,500 156,060
Saha Union Public Co. Ltd., fgn. ........................... Thailand 200,300 59,597
Sembcorp Industries Ltd. ................................... Singapore 84,000 85,449
SIME Darby Bhd. ............................................ Malaysia 94,000 122,695
-----------
7,520,028
-----------
REAL ESTATE .8%
*China Overseas Land & Investment Ltd....................... Hong Kong 237,000 26,785
*Filinvest Development Corp. ............................... Philippines 225,000 9,081
First Capital Corp. Ltd. ................................... Singapore 6,000 5,121
Hang Lung Development Co. Ltd. ............................. Hong Kong 12,000 9,863
Henderson China Holdings Limited............................ Hong Kong 21,500 10,216
Hong Kong Land Holdings Ltd. ............................... Hong Kong 119,000 165,410
*Land and House Public Co. Ltd., fgn. ...................... Thailand 340,800 196,043
MCL Land Ltd................................................ Singapore 12,000 7,366
-----------
429,885
-----------
RECREATION & OTHER CONSUMER GOODS 2.7%
*PT Matahari Putra Prima TBK................................ Indonesia 11,075,500 1,499,655
-----------
TELECOMMUNICATIONS 19.9%
Asia Satellite Telecommunications Hldgs. Ltd................ Hong Kong 94,000 368,201
BEC World Public Co Ltd., fgn............................... Thailand 4,760 34,998
</TABLE>
11
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TELECOMMUNICATIONS (CONT.)
Cable & Wireless HKT Ltd. .................................. Hong Kong 307,200 $ 804,839
*China Telecom HK Ltd. ..................................... China 502,000 4,400,116
*Jasmine International Public Co. Ltd., fgn. ............... Thailand 1,172,000 751,679
Philippine Long Distance Telephone Co., ADR................. Philippines 15,920 349,245
PT Indosat.................................................. Indonesia 158,500 270,099
PT Telekomunikasi Indonesia (Persero), B.................... Indonesia 4,607,680 2,236,886
Singapore Telecommunications Ltd. .......................... Singapore 4,000 5,706
Smartone Telecommunications Holdings Ltd. .................. Hong Kong 19,500 71,248
*Telecomasia Corp. Public Co. Ltd., fgn. ................... Thailand 406,800 672,441
Telekom Malaysia Bhd. ...................................... Malaysia 17,000 69,790
*Total Access Communication Public Co. Ltd. ................ Thailand 161,800 517,760
*United Communications Industries, fgn. .................... Thailand 271,500 296,201
-----------
10,849,209
-----------
TRANSPORTATION 1.6%
Keppel Corp., Ltd. ......................................... Singapore 246,600 579,557
*Thai Airways International Public Co. Ltd., fgn. .......... Thailand 232,500 270,563
-----------
850,120
-----------
UTILITIES ELECTRICAL & GAS 3.9%
Korea Electric Power Corp. ................................. South Korea 73,910 2,106,460
-----------
TOTAL COMMON STOCKS (COST $36,663,660)...................... 43,765,734
-----------
PREFERRED STOCKS (COST $926,215) 1.2%
*Siam Commercial Bank, 5.25%, cvt. pfd., fgn. .............. Thailand 841,000 672,845
-----------
DIRECT EQUITY INVESTMENTS 12.4%
REAL ESTATE 7.1%
(R)+*Mayfair Hanoi, Ltd., 30% equity interest owned through
HEA Holdings Ltd., a wholly owned investment acquired
10/31/96.................................................. Vietnam 3,850,925
LEISURE & TOURISM 5.3%
(R)+*Indotel Ltd., acquired 11/22/96........................ Vietnam 900,000 2,909,997
-----------
TOTAL DIRECT EQUITY INVESTMENTS (COST $14,702,155).......... 6,760,922
-----------
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $873,011) 1.6%
U.S. Treasury Bills, 5.32% to 5.92% with maturities to
6/29/00................................................... United States $ 881,000 873,358
-----------
TOTAL INVESTMENTS (COST $53,165,041) 95.5%.................. 52,072,859
OTHER ASSETS, LESS LIABILITIES 4.5%......................... 2,435,033
-----------
TOTAL NET ASSETS 100.0%..................................... $54,507,892
-----------
</TABLE>
*Non-income producing.
**Securities denominated 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.
12
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $53,165,041)..... $ 52,072,859
Cash....................................................... 2,838,960
Receivables:
Investment securities sold................................ 91,638
Dividends and interest.................................... 267,614
------------
Total assets.......................................... 55,271,071
------------
Liabilities:
Payables:
Investment securities purchased........................... 468,621
To affiliates............................................. 63,747
Accrued expenses........................................... 230,811
------------
Total liabilities..................................... 763,179
------------
Net assets, at value........................................ $ 54,507,892
============
Net assets consist of:
Net unrealized depreciation................................ $ (1,092,182)
Accumulated net realized loss.............................. (29,714,434)
Capital shares............................................. 85,314,508
------------
Net assets, at value........................................ $ 54,507,892
============
Net asset value per share ($54,507,892 / 4,681,173 shares
outstanding).............................................. $11.64
============
</TABLE>
See Notes to Financial Statements.
13
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $99,575)
Dividends.................................................. $ 781,915
Interest................................................... 65,665
-----------
Total investment income............................... $ 847,580
-----------
Expenses:
Management fees (Note 3)................................... 810,784
Administrative fees (Note 3)............................... 115,560
Transfer agent fees........................................ 29,400
Custodian fees............................................. 57,400
Reports to shareholders.................................... 59,900
Registration and filing fees............................... 13,100
Professional fees.......................................... 150,900
Directors' fees and expenses............................... 4,700
Other...................................................... 1,394
-----------
Total expenses........................................ 1,243,138
Expenses waived/paid by affiliate (Note 3)............ (82,210)
-----------
Net expenses....................................... 1,160,928
-----------
Net investment loss............................. (313,348)
-----------
Realized and unrealized gains (losses): Net realized loss from:
Investments (net of foreign taxes $60,257)................ (2,217,884)
Foreign currency transactions............................. (79,763)
-----------
Net realized loss..................................... (2,297,647)
Net unrealized appreciation on investments............ 16,504,326
-----------
Net realized and unrealized gain............................ 14,206,679
-----------
Net increase in net assets resulting from operations........ $13,893,331
===========
</TABLE>
See Notes to Financial Statements.
14
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-----------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (313,348) $ (387,118)
Net realized loss from investments and foreign currency
transactions............................................. (2,297,647) (7,229,019)
Net unrealized appreciation on investments................ 16,504,326 5,793,552
-----------------------------
Net increase (decrease) in net assets resulting from
operations............................................ 13,893,331 (1,822,585)
Net assets:
Beginning of year.......................................... 40,614,561 42,437,146
-----------------------------
End of year................................................ $54,507,892 $40,614,561
=============================
Accumulated net investment loss included in net assets:
End of year................................................ $ -- $ --
=============================
</TABLE>
See Notes to Financial Statements.
15
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements
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, under
normal market conditions, that at least 65% of the Fund's total assets to be
invested in equity and debt securities of Region Company Issuers 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.
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 March 31, 2000, the Fund has investments with a value of approximately
$500,000 in countries with restrictions on the repatriation of their currencies
or formal exchange controls currently in place.
16
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (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 STOCK
At March 31, 2000, there were 100,000,000 shares authorized ($0.01 par value).
During the years ended March 31, 2000 and March 31, 1999, there were no share
transactions; all reinvested distributions were satisfied with previously issued
shares purchased in the open market.
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 weekly 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.
Three individuals have brought an action against the Fund, its investment
manager and certain of the Fund's officers, directors and other affiliates,
seeking to recover damages in connection with the Fund's tender offer on January
20, 1998 and certain investments of the Fund. The Fund, its 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.
17
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (continued)
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 March 31, 2000, the net unrealized depreciation based on the cost of
investments for income tax purposes of $56,136,729 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 11,451,281
Unrealized depreciation..................................... (15,515,151)
------------
Net unrealized depreciation................................. $ (4,063,870)
============
</TABLE>
At March 31, 2000 the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:
<TABLE>
<S> <C>
Capital loss carryovers expiring in:
2006........................................................ $ 501,487
2007........................................................ 19,331,627
2008........................................................ 5,602,511
-----------
$25,435,625
===========
</TABLE>
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing tax treatments of wash sales, passive foreign
investment companies, and losses realized subsequent to October 31 on the sales
of securities and foreign currencies.
At March 31, 2000, the Fund has deferred capital and currency losses occurring
subsequent to October 31, 1999 of $1,307,121. For tax purposes, such losses will
be reflected in the year ending March 31, 2001.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 2000 aggregated $35,835,113 and $38,559,085, respectively.
6. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated persons" to include any
person, such as the Fund, that owns 5% or more of the outstanding voting
securities of another person. As of March 31, 2000, the fund had investments in
"affiliated persons" valued at $6,760,922.
18
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (continued)
6. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES (CONT.)
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD GROSS GROSS SHARES HELD VALUE DIVIDEND INCOME
NAME OF ISSUER MARCH 31, 1999 ADDITIONS REDUCTIONS MARCH 31, 2000 MARCH 31, 2000 4/01/99-3/31/00
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mayfair Hanoi Ltd., 30%
equity interest owned
through HEA Holdings Ltd.... -- -- -- -- $3,850,925 --
Indotel Ltd.................. 900,000 -- -- 900,000 2,909,997 --
--------------------------------
TOTAL AFFILIATES............. $6,760,922 $ --
================================
<CAPTION>
REALIZED
CAPITAL
NAME OF ISSUER GAIN/(LOSSES)
------------------------------------------------
<S> <C>
Mayfair Hanoi Ltd., 30%
equity interest owned
through HEA Holdings Ltd.... --
Indotel Ltd.................. --
-------------
TOTAL AFFILIATES............. $ --
=============
</TABLE>
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 are 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 by Management 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 $6,760,922 (12.4% of net
assets) at March 31, 2000.
19
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of
Templeton Vietnam and Southeast Asia Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Templeton Vietnam and Southeast
Asia Fund, Inc. at March 31, 2000, and the results of its operations, the
changes in its net assets and the financial highlights for the year then ended,
in conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at March 31, 2000 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above. The
financial statements for the year ended March 31, 1999, including the financial
highlights for each of the four years in the period then ended were audited by
other independent accountants whose report dated April 30, 1999 expressed an
unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
April 28, 2000
20
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Annual Meeting of Shareholders, December 14, 1999
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Ft. Lauderdale, Florida, on December 14, 1999. The purpose
of the meeting was to elect three Directors of the Fund; to ratify the selection
of PricewaterhouseCoopers LLP, as the Fund's independent auditors for the fiscal
year ending March 31, 2000; and in their discretion, to authorize the
proxyholders to vote upon such other matters that may properly 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: Martin L.
Flanagan, Andrew H. Hines, Jr. and Charles B. Johnson.* Shareholders ratified
the selection of PricewaterhouseCoopers LLP, to serve as the Fund's independent
auditors for the fiscal year ending March 31, 2000. No other business was
transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. The election of three (3) Directors:
<TABLE>
<CAPTION>
% OF % OF
OUTSTANDING OUTSTANDING
TERM EXPIRING 2002: FOR SHARES WITHHELD SHARES
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Martin L. Flanagan.......................................... 2,607,666 55.71% 343,504 7.34%
Andrew H. Hines, Jr. ....................................... 2,606,600 55.68% 344,570 7.36%
Charles B. Johnson.......................................... 2,615,063 55.86% 336,107 7.18%
</TABLE>
2. The ratification of the selection of PricewaterhouseCoopers LLP, as
independent auditors of the Fund for the fiscal year ending March 31, 2000:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING BROKER OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES NON-VOTES SHARES
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2,910,719 62.18% 20,152 0.43% 20,299 0.43% -- --
</TABLE>
3. The transaction of any other business that may properly come before the
meeting:
<TABLE>
<CAPTION>
% OF % OF
NO. OF OUTSTANDING SHARES
SHARES SHARES VOTED
---------------------------------------
<S> <C> <C> <C>
For......................................................... 2,476,332 52.90% 83.91%
Against..................................................... 435,906 9.31% 14.77%
Abstain..................................................... 38,932 0.83% 1.32%
Broker Non-Votes............................................ -- -- --
--------- ------ -------
TOTAL....................................................... 2,951,170 63.04% 100.00%
</TABLE>
*Harris J. Ashton, Nicholas F. Brady, Harmon E. Burns, S. Joseph Fortunato, John
Wm. Galbraith, Edith E. Holiday, Betty P. Krahmer, Gordon S. Macklin and Fred R.
Millsaps are Directors of the Fund who are currently serving and whose terms of
office continued after the Annual Meeting of Shareholders.
21
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
The Fund offers a Dividend Reinvestment and Cash Purchase 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.
A participant has the option of submitting additional payments to 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 Vietnam and Southeast Asia Fund, Inc.
The Plan Agent shall apply such payments (less a $5.00 service charge and less a
pro rata share of trading fees) to purchases of Fund shares on the open market.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.
The participant may withdraw from the Plan without penalty at any time by
written notice to the Plan Agent sent to 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.
22
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800/416-5585
www.chasemellon.com
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 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 Vietnam and
Southeast Asia Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg,
FL 33733-8030.
23
PAGE
[Franklin Templeton Logo]
Templeton Vietnam and Southeast Asia Fund, Inc.
100 Fountain Parkway, P.O. Box 33030
St. Petersburg, FL 33733-8030
ANNUAL REPORT
TEMPLETON VIETNAM
AND SOUTHEAST ASIA FUND, INC.
AUDITORS
PricewaterhouseCoopers LLP
333 Market Street
San Francisco, California 94105
TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 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
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 A00 05/00
