SEMI ANNUAL REPORT
Templeton Vietnam
and Southeast Asia Fund, Inc.
September 30, 2000
[FRANKLIN TEMPLETON LOGO]
PAGE
[PHOTO OF MARK MOBIUS]
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, Inc. 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:
This report of Templeton Vietnam and Southeast Asia Fund covers the six months
ended September 30, 2000. During this time, many Asian economies continued to
recover from Asia's recent financial crisis. Developments contributing to this
economic growth include: the U.S. granting permanent normal trading relations
with China, North and South Korea's agreement to cooperate, the signing of a
bilateral trade agreement between Vietnam and the U.S. and the official launch
of the Vietnamese stock market. The region's economic picture also seemed to
brighten as the Thai government introduced a public sector reform program aimed
at improving transparency
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ................ 1
Performance Summary ............... 6
Important Notice
to Shareholders ................... 7
Financial Highlights &
Statement of Investments .......... 8
Financial Statements .............. 14
Notes to Financial
Statements ........................ 17
</TABLE>
[PYRAMID GRAPHIC]
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 9.
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
9/30/00
<TABLE>
<S> <C>
Vietnam* 17.4%
South Korea 16.7%
Singapore 15.0%
Thailand 15.0%
Hong Kong 10.2%
Indonesia 9.5%
Philippines 4.1%
China 1.3%
Taiwan 1.3%
Malaysia 1.1%
India 0.3%
Short-Term Investments
& Other Net Assets 8.1%
</TABLE>
* These are direct investments made through companies domiciled in Hong Kong and
Singapore.
and accountability, and Moody's Investors Service upgraded the country's credit
rating to investment grade.
Although many economies in the region displayed healthier economic fundamentals,
some lagged due to persistent political and financial turmoil. Investigations
into alleged corruption charges against President Wahid of Indonesia, and the
trial of former President Suharto, had an adverse impact upon that nation's
economy, and a powerful explosion rocked the Jakarta Stock Exchange and led to
its closure for two days. In Vietnam, an unreliable foreign exchange, a limited
number of listed securities with poor liquidity and restricted price movements,
and inadequate corporate governance standards, hindered the country's economic
development. The region's equity markets experienced strong volatility as rising
oil prices kept many investors on the sidelines, and the decline of U.S.
technology stock prices contributed to heavy corrections in stock markets around
the world.
Within this environment, Templeton Vietnam and Southeast Asia Fund produced a
-25.38% cumulative total return in market-price terms for the six months ended
September 30, 2000, as shown in the Performance Summary on page 6. Based on
change in net asset value, the Fund's cumulative total return for the same
period was -25.86%.
At the end of the reporting period, 91.9% of the Fund's total net assets were
invested in equities, with 8.1% in short-term investments and other net assets.
Although we take into account political and economic events in various
countries, we are
2
PAGE
bottom-up value investors and our main focus is on individual company value.
Some of the most important criteria that we use to select investments for our
portfolios are attractive fundamental valuations, reliable and responsible
management, good growth prospects and profit margins, adherence to sound
corporate governance policies, and respect for minority shareholder rights.
During the reporting period, the Fund was invested predominantly in real estate,
diversified telecommunication services, and leisure equipment and products.
Although telecommunications remained one of our major sector exposures, we did
reduce the Fund's telecommunications holdings, liquidating our positions in
China Mobile (formerly known as China Telecom) and Cable & Wireless HKT. Due to
changes in our holdings and in the value of shares owned by the Fund, our top 10
holdings changed appreciably during the six months under review. Hutchison
Whampoa, Neptune Orient Lines, Cheung Kong Holdings and San Miguel replaced
Citic Pacific, Natsteel, PT Gudang Garamm and China Mobile in the Fund's top 10
holdings list. We initiated a position in Neptune Orient Lines, one of the
world's largest shipping companies, and purchased additional shares of Hutchison
Whampoa, in our opinion one of the best-managed and most profitable
conglomerates in Hong Kong.
Looking forward, we are optimistic about prospects for Templeton Vietnam and
Southeast Asia Fund. We believe that the current wave of economic and political
reforms currently
TOP 10 SECTORS
9/30/00
<TABLE>
<CAPTION>
% OF TOTAL
SECTORS NET ASSETS
---------------------------------------
<S> <C>
Real Estate 14.4%
Diversified
Telecommunication Services 9.1%
Leisure Equipment &
Products 7.7%
Diversified Financials 7.0%
Banks 6.7%
Beverages 5.1%
Food Products 5.0%
Semiconductor Equipment &
Products 4.9%
Electric Utilities 4.8%
Construction Materials 3.8%
</TABLE>
3
PAGE
TOP 10 EQUITY HOLDINGS*
9/30/00
<TABLE>
<CAPTION>
COMPANY % OF TOTAL
SECTOR, COUNTRY NET ASSETS
--------------------------------------------
<S> <C>
Mayfair Hanoi, Ltd. 9.7%
Real Estate, Vietnam
Indotel Ltd. 7.7%
Leisure Equipment &
Products, Vietnam
Hutchison Whampoa Ltd. 4.7%
Diversified Financials,
Hong Kong
Korea Electric Power Corp. 4.0%
Electric Utilities, South Korea
PT Telekomunikasi Indonesia
(Persero), B 3.9%
Diversified Telecommunication
Services, Indonesia
Samsung Electronics Co. Ltd. 3.5%
Semiconductor Equipment &
Products, South Korea
Neptune Orient Lines Ltd. 2.9%
Marine, Singapore
Siam Cement Public Co. Ltd.,
Ord & fgn. 2.4%
Construction Materials,
Thailand
Cheung Kong Holdings Ltd. 2.3%
Real Estate, Hong Kong
San Miguel Corp., B 2.2%
Beverages, Philippines
</TABLE>
* Does not include investments in fixed income securities and short-term
investments and other assets.
sweeping across Asia may result in better companies that might command higher
market valuations over the long term. We believe that economic recovery in the
region may continue to be driven by countries that proactively engage in reform,
and that although Asian markets may continue to experience short-term volatility
due to high global oil prices, this alone should not derail the markets from
continuing on their path to recovery. We will continue to keep a watchful eye on
events in the markets and strive to invest in companies with the potential to
provide attractive returns for the Fund's shareholders.
Of course, investing in Vietnam and Southeast Asia involves special
considerations, including risks related to direct investments, as well as the
risks associated with investing in an emerging market. These risks include
adverse economic, social and political developments, reduced liquidity of
emerging markets, and greater currency volatility. For example, Taiwan's equity
market increased 1,026% in the last 15 years, but has suffered 11 quarterly
declines of more than 15% 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.
(1) Source: Taiwan Weighted Index. Based on quarterly percentage price change
over 15 years ended September 30, 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.
4
PAGE
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 continuing
to serve you in the future.
Sincerely,
/s/ Mark Mobius
Mark Mobius
President
Templeton Vietnam and Southeast Asia Fund, Inc.
--------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
September 30, 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.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
SIX-MONTH PERFORMANCE SUMMARY
AS OF 9/30/00
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>
SIX-MONTH TOTAL RETURN - 25.86% Based on change in Net Asset Value
- 25.38% Based on change in Market Price on
the New York Stock Exchange (NYSE)
Net Asset Value (NAV) $8.63 (9/30/00) $11.64 (3/31/00)
Change in NAV - $3.01
Market Price (NYSE) $6.0625 (9/30/00) $8.1250 (3/31/00)
Change in Market Price - $2.0625
</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
NAV - 18.51% - 32.40% - 33.70%
Based on change in
market price - 29.71% - 48.16% - 55.94%
Average Annual Total Return(2)
Based on change in NAV - 18.51% - 7.53% - 6.58%
Based on change in
market price - 29.71% - 12.31% - 12.69%
</TABLE>
For updated performance figures, please call Franklin Templeton at
1-800/342-5236.
Past performance does not guarantee future results.
6
PAGE
IMPORTANT NOTICE TO SHAREHOLDERS
SHARE REPURCHASE PROGRAM
On May 17, 2000, the Board of Directors of the Fund authorized management to
implement an open-market share repurchase program pursuant to which the Fund may
purchase, from time to time, shares of the Fund's common stock in open-market
transactions, at the discretion of management.
7
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 2000 --------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the
period)
Net asset value, beginning of period...... $11.64 $8.68 $9.07 $14.05 $13.91 $13.09
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)............. (.01) (.07) (.08) .09 .29 .36
Net realized and unrealized gains
(losses)............................... (3.07) 3.03 (.31) (4.86) .21 .91
------------------------------------------------------------------------------
Total from investment operations.......... (3.08) 2.96 (.39) (4.77) .50 1.27
------------------------------------------------------------------------------
Capital share repurchases................. .07 -- -- -- -- --
------------------------------------------------------------------------------
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 period............ $8.63 $11.64 $8.68 $9.07 $14.05 $13.91
==============================================================================
Total Return*
Based on market value per share......... (25.38)% 17.12% (15.88)% (25.14)% (10.87)% 22.11%
Based on net asset value per share...... (25.86)% 34.10% (4.30)% (34.10)% 4.03% 9.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)......... $39,377 $54,508 $40,615 $42,437 $113,214 $112,073
Ratios to average net assets:
Expenses................................. 1.88%** 2.15% 3.12% 2.23% 1.82% 1.47%
Expenses, excluding waiver and payments
by affiliate........................... 2.03%** 2.30% 3.22% 2.23% 1.82% 1.47%
Net investment income (loss)............. (.09)%** (.58)% (1.06)% .91% 2.04% 2.62%
Portfolio turnover rate................... 40.97% 68.98% 20.56% 89.42% 20.16% 4.01%
</TABLE>
*Total return is not annualized.
**Annualized.
+Based on average weighted shares outstanding effective year ended March 31,
2000.
See Notes to Financial Statements.
8
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
COUNTRY WARRANTS VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 73.1%
AIRLINES .5%
*Thai Airways International Public Co. Ltd., fgn. .......... Thailand 240,600 $ 196,722
-----------
AUTOMOBILES .2%
Hyundai Motor Co. Ltd. ..................................... South Korea 4,780 62,153
-----------
BANKS 6.7%
*Bangkok Bank Public Co. Ltd. .............................. Thailand 11,000 5,735
*Bangkok Bank Public Co. Ltd., fgn. ........................ Thailand 2,600 1,926
DBS Group Holdings Ltd. .................................... Singapore 17,489 192,949
Hana Bank................................................... South Korea 32,940 194,955
Oversea Chinese Banking Corp. Ltd. ......................... Singapore 134,550 850,457
*Philippine National Bank................................... Philippines 780,400 658,779
*Siam Commercial Bank, fgn., wts., 6/22/04.................. Thailand 166,666 15,405
*Thai Farmers Bank Public Co. Ltd. ......................... Thailand 250,100 118,545
*Thai Farmers Bank Public Co. Ltd., fgn. ................... Thailand 930,332 474,040
United Overseas Bank Ltd. .................................. Singapore 16,000 114,923
-----------
2,627,714
-----------
BEVERAGES 5.1%
Fraser and Neave Ltd. ...................................... Singapore 240,100 827,788
San Miguel Corp., B......................................... Philippines 806,480 864,086
*Serm Suk Public Co. Ltd. .................................. Thailand 14,500 25,773
Tsingtao Brewey Co. Ltd., H................................. China 948,000 285,731
-----------
2,003,378
-----------
CHEMICALS .1%
LG Chemical Ltd. ........................................... South Korea 4,600 57,338
-----------
COMMUNICATIONS EQUIPMENT .3%
*United Communications Industry Public Co. Ltd., fgn. ...... Thailand 171,200 137,950
-----------
COMPUTERS & PERIPHERALS 2.1%
*Accton Technology Corp. ................................... Taiwan 191,000 368,832
*Korea Data Systems......................................... South Korea 40,500 157,257
*Natsteel Electronics Ltd. ................................. Singapore 120,000 310,291
-----------
836,380
-----------
CONSTRUCTION MATERIALS 3.8%
Cheung Kong Infrastructure Holdings Ltd. ................... Hong Kong 128,000 210,136
*PT Indocement Tunggal Prakarsa............................. Indonesia 524,500 90,555
PT Semen Gresik (Persero)................................... Indonesia 340,127 236,054
*Siam Cement Public Co. Ltd. ............................... Thailand 123,019 769,689
*Siam Cement Public Co. Ltd., fgn. ......................... Thailand 21,781 172,410
-----------
1,478,844
-----------
</TABLE>
9
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
COUNTRY WARRANTS VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
DIVERSIFIED FINANCIALS 7.0%
Hutchison Whampoa Ltd. ..................................... Hong Kong 138,700 $ 1,841,186
Keppel Corp., Ltd. ......................................... Singapore 402,600 818,942
Swire Pacific Ltd., A....................................... Hong Kong 16,000 99,733
-----------
2,759,861
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES 9.1%
*Jasmine International Public Co. Ltd., fgn. ............... Thailand 1,172,000 238,872
Korea Telecom Corp. ........................................ South Korea 519 31,089
Korea Telecom Corp., ADR.................................... South Korea 10,341 347,716
Philippine Long Distance Telephone Co., ADR................. Philippines 5,380 92,132
PT Indosat.................................................. Indonesia 284,500 231,004
PT Telekomunikasi Indonesia (Persero), B.................... Indonesia 4,839,680 1,533,255
*Telecomasia Corp. Public Co. Ltd., fgn. ................... Thailand 930,900 623,247
*Total Access Communication Public Co. Ltd. ................ Thailand 143,600 482,496
-----------
3,579,811
-----------
ELECTRIC UTILITIES 4.8%
Electricity Generating Public Co. Ltd., fgn. ............... Thailand 95,400 99,481
*Huaneng Power International Inc., H........................ China 518,000 217,581
Korea Electric Power Corp. ................................. South Korea 60,160 1,569,884
-----------
1,886,946
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS 1.1%
Dae Duck Electronics Co. Ltd. .............................. South Korea 7,310 65,552
Hon Hai Precision Industry Co. Ltd. ........................ Taiwan 13,000 85,477
Samsung SDI Co. Ltd. ....................................... South Korea 7,100 280,778
-----------
431,807
-----------
FOOD & DRUG RETAILING .6%
Dairy Farm International Holdings Ltd. ..................... Hong Kong 591,900 254,517
-----------
FOOD PRODUCTS 5.0%
Charoen Pokphand Foods Public Co. Ltd., fgn. ............... Thailand 626,508 692,284
*Charoen Pokphand Foods Public Co. Ltd., fgn., wts.,
4/28/02................................................... Thailand 331,854 33,819
Cheil Jedang Corp. ......................................... South Korea 1,380 49,995
*Golden Agri-Resources Ltd. ................................ Singapore 1,287,000 210,765
Golden Hope Plantations Bhd. ............................... Malaysia 163,000 150,989
IOI Corp. Bhd. ............................................. Malaysia 232,000 177,053
*PT Indofoods Sukses Makmurr................................ Indonesia 4,297,500 416,282
*Tong Yang Confectionery Co. ............................... South Korea 7,780 207,904
UNI-President Enterprises Corp. ............................ Taiwan 21,600 15,237
-----------
1,954,328
-----------
GAS UTILITIES .3%
Gas Authority of India Ltd., GDR............................ India 22,400 126,560
-----------
</TABLE>
10
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
COUNTRY WARRANTS VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
HOTELS RESTAURANTS & LEISURE 2.1%
*Dusit Thani Public Company Ltd., fgn. ..................... Thailand 529,000 $ 342,261
Genting Bhd. ............................................... Malaysia 36,600 93,426
Hong Kong & Shanghai Hotels Ltd. ........................... Hong Kong 90,500 54,844
*Hotel Shilla Co. .......................................... South Korea 78,100 329,166
Resorts World Bhd. ......................................... Malaysia 4,000 6,474
-----------
826,171
-----------
HOUSEHOLD DURABLES .8%
*Land and House Public Co. Ltd., fgn. ...................... Thailand 437,100 165,745
LG Electronics Inc. ........................................ South Korea 7,580 147,501
-----------
313,246
-----------
INDUSTRIAL CONGLOMERATES 2.2%
*China Aerospace International Holdings Ltd. ............... Hong Kong 354,800 39,135
Natsteel Ltd. .............................................. Singapore 524,000 617,250
Sembcorp Industries Ltd. ................................... Singapore 240,000 223,410
-----------
879,795
-----------
MACHINERY 1.3%
*Hyundai Heavy Industries................................... South Korea 11,660 209,120
*Procomp Informatics Co. Ltd. .............................. Taiwan 5,000 23,779
*Samsung Heavy Industries Co. Ltd. ......................... South Korea 79,260 267,600
-----------
500,499
-----------
MARINE 2.9%
*Neptune Orient Lines Ltd. ................................. Singapore 1,256,000 1,125,875
-----------
MEDIA .6%
Asia Satellite Telecommunications Hldgs. Ltd. .............. Hong Kong 83,000 202,261
BEC World Public Co. Ltd., fgn. ............................ Thailand 4,160 21,295
-----------
223,556
-----------
METALS & MINING 1.1%
*Korea Zinc Co. ............................................ South Korea 9,900 163,350
PT Timah TBK................................................ Indonesia 1,516,000 278,149
-----------
441,499
-----------
MULTILINE RETAIL 1.1%
Siam Makro Public Company Ltd., fgn. ....................... Thailand 354,200 432,310
-----------
OIL & GAS 1.0%
PTT Exploration & Production Public Co. Ltd., fgn. ......... Thailand 28,400 72,018
SK Corp. ................................................... South Korea 19,720 334,222
-----------
406,240
-----------
</TABLE>
11
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
COUNTRY WARRANTS VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
PAPER & FOREST PRODUCTS 2.1%
*Asia Pulp & Paper Co. Ltd., ADR............................ Indonesia 160,180 $ 280,315
*PT Indah Kiat Pulp & Paper Corp. .......................... Indonesia 2,077,000 276,933
PT Tjiwi Kimia.............................................. Indonesia 2,504,000 255,394
-----------
812,642
-----------
REAL ESTATE 4.7%
Cheung Kong Holdings Ltd. .................................. Hong Kong 76,000 918,704
*Filinvest Development Corp. ............................... Philippines 582,000 12,597
First Capital Corp. Ltd. ................................... Singapore 619,000 533,529
Hang Lung Development Co. Ltd. ............................. Hong Kong 158,000 159,077
Henderson China Holdings Ltd. .............................. Hong Kong 12,500 4,609
Hong Kong Land Holdings Ltd. ............................... Hong Kong 119,000 218,960
-----------
1,847,476
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS 4.9%
*Hyundai Electronics Industries Co. ........................ South Korea 39,090 559,105
Samsung Electronics Co. Ltd. ............................... South Korea 7,627 1,381,567
-----------
1,940,672
-----------
SPECIALTY RETAIL .2%
Cycle & Carriage Ltd. ...................................... Singapore 44,000 88,490
-----------
TEXTILES & APPAREL .1%
Saha Union Public Co. Ltd., fgn. ........................... Thailand 200,300 49,844
-----------
TOBACCO .3%
PT Gudang Garamm............................................ Indonesia 105,000 125,462
-----------
TRADING COMPANIES & DISTRIBUTORS .5%
Samsung Corp. .............................................. South Korea 25,810 178,215
-----------
WIRELESS TELECOMMUNICATION SERVICES .5%
*Shin Corporations Public Company Ltd., fgn. ............... Thailand 61,300 210,652
-----------
TOTAL COMMON STOCKS (COST $38,426,873)...................... 28,796,953
-----------
PREFERRED STOCKS (COST $1,236,493) 1.4%
*Siam Commercial Bank, 5.25%, fgn., cvt. pfd. .............. Thailand 1,384,000 533,002
-----------
DIRECT EQUITY INVESTMENTS 17.4%
REAL ESTATE 9.7%
(R)+*Mayfair Hanoi, Ltd., 30% equity interest owned through
HEA Holdings Ltd., a wholly owned investment acquired
10/31/96.................................................. Vietnam 3,817,873
LEISURE EQUIPMENT & PRODUCTS 7.7%
(R)+*Indotel Ltd., acquired 11/22/96........................ Vietnam 900,000 3,033,999
-----------
TOTAL DIRECT EQUITY INVESTMENTS (COST $14,702,155).......... 6,851,872
-----------
</TABLE>
12
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT** VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $2,318,272) 5.9%
U.S. Treasury Bills, 5.965% to 6.140% with maturities to
12/28/00.................................................. United States $2,339,000 $ 2,319,179
-----------
TOTAL INVESTMENTS (COST $56,683,793) 97.8%.................. 38,501,006
OTHER ASSETS, LESS LIABILITIES 2.2%......................... 875,619
-----------
TOTAL NET ASSETS 100.0%..................................... $39,376,625
===========
</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.
13
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $56,683,793)..... $ 38,501,006
Cash....................................................... 1,657
Receivables:
Investment securities sold................................ 1,136,312
Dividends and interest.................................... 12,966
------------
Total assets.......................................... 39,651,941
------------
Liabilities:
Payables:
Investment securities purchased........................... 21,831
To affiliates............................................. 48,237
Accrued expenses........................................... 205,248
------------
Total liabilities..................................... 275,316
------------
Net assets, at value........................................ $ 39,376,625
============
Net assets consist of:
Accumulated net investment loss............................ $ (21,582)
Net unrealized depreciation................................ (18,182,787)
Accumulated net realized loss.............................. (26,867,674)
Capital shares............................................. 84,448,668
------------
Net assets, at value........................................ $ 39,376,625
============
Net asset value per share ($39,376,625 / 4,559,673 shares
outstanding).............................................. $8.63
============
</TABLE>
See Notes to Financial Statements.
14
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $45,894)
Dividends.................................................. $ 299,702
Interest................................................... 115,235
----------
Total investment income............................... $ 414,937
Expenses:
Management fees (Note 3)................................... 348,286
Administrative fees (Note 3)............................... 52,819
Transfer agent fees........................................ 7,500
Custodian fees............................................. 25,500
Reports to shareholders.................................... 18,000
Registration and filing fees............................... 7,350
Professional fees.......................................... 9,000
Directors' fees and expenses............................... 3,000
----------
Total expenses........................................ 471,455
Expenses waived/paid by affiliate (Note 3)............ (34,936)
------------
Net expenses...................................... 436,519
------------
Net investment loss............................. (21,582)
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 2,870,398
Foreign currency transactions............................. (23,638)
----------
Net realized gain..................................... 2,846,760
Net unrealized depreciation on investments............ (17,090,605)
------------
Net realized and unrealized loss............................ (14,243,845)
------------
Net decrease in net assets resulting from operations........ $(14,265,427)
============
</TABLE>
See Notes to Financial Statements.
15
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (21,582) $ (313,348)
Net realized gain (loss) from investments and foreign
currency transactions.................................... 2,846,760 (2,297,647)
Net unrealized appreciation (depreciation) on
investments.............................................. (17,090,605) 16,504,326
---------------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (14,265,427) 13,893,331
Capital share transactions (Note 2)........................ (865,840) --
---------------------------------------
Net increase (decrease) in net assets................... (15,131,267) 13,893,331
Net assets:
Beginning of period........................................ 54,507,892 40,614,561
---------------------------------------
End of period.............................................. $ 39,376,625 $54,507,892
=======================================
Accumulated net investment loss included in net assets:
End of period.............................................. $ (21,582) $ --
=======================================
</TABLE>
See Notes to Financial Statements.
16
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 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. 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. 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.
17
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
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
On May 17, 2000, the Board of Directors of the Fund authorized management to
implement an open-market share repurchase program pursuant to which the Fund may
purchase, from time to time, shares of the Fund's common stock in open-market
transactions, at the discretion of management.
At September 30, 2000, there were 100,000,000 shares authorized ($0.01 par
value). During the six months ended September 30, 2000, 121,500 shares were
repurchased for $865,840. The weighted average discount of market price to net
asset value of shares repurchased during the period ended September 30, 2000 was
28%. During the year ended March 31, 2000, there were no share transactions; all
reinvested distributions were satisfied with previously issued shares purchased
in the open market. Through September 30, 2000, the Fund had repurchased a total
of 121,500 shares.
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.
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.
18
PAGE
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES (CONT.)
At September 30, 2000, the net unrealized depreciation based on the cost of
investments for income tax purposes of $58,227,626 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 1,560,083
Unrealized depreciation..................................... (21,286,703)
------------
Net unrealized depreciation................................. $(19,726,620)
============
</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:
Capital loss carryovers expiring in:
<TABLE>
<S> <C>
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 had 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 six
months ended September 30, 2000 aggregated $17,180,169 and $15,702,793,
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 September 30, 2000, the fund had investments
in "affiliated persons" valued at $6,851,872.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD GROSS GROSS SHARES HELD VALUE DIVIDEND INCOME
NAME OF ISSUER MARCH 31, 2000 ADDITIONS REDUCTIONS SEPT. 30, 2000 SEPT. 30, 2000 4/01/00-9/30/00
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mayfair Hanoi Ltd., 30%
equity interest owned
through HEA Holdings
Ltd. .................. -- -- -- -- $3,817,873 --
Indotel Ltd............. 900,000 -- -- 900,000 3,033,999 --
--------------------------------
TOTAL AFFILIATES........ $6,851,872 $ --
================================
<CAPTION>
REALIZED
CAPITAL
NAME OF ISSUER GAINS/(LOSSES)
-----------------------------------------
<S> <C>
Mayfair Hanoi Ltd., 30%
equity interest owned
through HEA Holdings
Ltd. .................. --
Indotel Ltd............. --
--------------
TOTAL AFFILIATES........ $ --
==============
</TABLE>
19
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 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 $6,851,872 (17.4% of net
assets) at September 30, 2000.
20
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.
21
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.
22
PAGE
[FRANKLIN TEMPLETON LOGO]
Templeton Vietnam and Southeast Asia Fund, Inc.
100 Fountain Parkway, P.O. Box 33030
St. Petersburg, FL 33733-8030
SEMIANNUAL REPORT
TEMPLETON VIETNAM
AND SOUTHEAST ASIA FUND, INC.
TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
1-800/416-5585
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 S00 11/00 [LOGO] Printed on recycled paper
