SEMI
ANNUAL
REPORT
[GRAPHIC OMITTED]
FEBRUARY 28, 2002
TEMPLETON EMERGING
MARKETS FUND, INC.
[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS
[PHOTO OF MARK MOBIUS OMITTED]
MARK MOBIUS
PRESIDENT
TEMPLETON EMERGING
MARKETS FUND, INC.
Mark Mobius has been living in emerging market countries since earning his Ph.D.
in economics and political science at Massachusetts Institute of Technology in
1964. During his extensive travels, he has acquired a thorough knowledge of
business practices and customs unique to developing nations.
SHAREHOLDER LETTER
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YOUR FUND'S GOAL: TEMPLETON EMERGING MARKETS FUND SEEKS LONG-TERM CAPITAL
APPRECIATION BY INVESTING PRIMARILY IN EMERGING COUNTRY EQUITY SECURITIES.
--------------------------------------------------------------------------------
Dear Shareholder:
This semiannual report for Templeton Emerging Markets Fund covers the period
ended February 28, 2002. The global macroeconomic environment throughout the six
months under review was extremely challenging. During the first half of the
period, this was reflected in severe market volatility worldwide and falling
equity valuations in many markets. However, the latter half saw many stock
markets rebound as investors reevaluated their portfolios and began accumulating
shares trading at attractive valuations.
Several characteristics marked the period, including stalled U.S. economic
growth, continued economic anemia in Japan, Argentina's political and economic
upheaval, China's entry into the World Trade Organization (WTO), weak demand for
technology-related products worldwide (especially in the telecommunications and
PC industries), and the September terrorist attacks in the U.S. and military
action in Afghanistan. These factors contributed to a high degree of investor
uncertainty for developed and emerging markets.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 11.
CONTENTS
Shareholder Letter ......... 1
Performance Summary ........ 8
Important Notice
to Shareholders ............ 9
Financial Highlights &
Statement of Investments ... 10
Financial Statements ....... 18
Notes to
Financial Statements ....... 21
[GRAPHIC OF PYRAMID OMITTED]
FUND CATEGORY
Global
Growth
Growth & Income
Income
Tax-Free Income
"MOST ASIAN ECONOMIES BENEFITED FROM LOWER U.S. INTEREST RATES AND IMPROVING
REGIONAL COOPERATION INITIATIVES. ..."
However, market expectations for a U.S. recovery in 2002 and repeated interest
rates cuts by the U.S. Federal Reserve Board led to some recuperation in many
markets during the final quarter of 2001, continuing into early 2002.
Most Asian economies benefited from lower U.S. interest rates and improving
regional cooperation initiatives, and we believe a gradual recovery, along with
active reforms and restructuring, could increase domestic demand as well. For
the six months ended February 28, 2002, the Morgan Stanley Capital International
(MSCI) South Korea Index increased 55.41%, as the country recorded higher growth
than its Asian neighbors, and technology-related stocks experienced substantial
price increases as investors returned to the sector after the 2000 technology
crash. 1 Taiwan's stock market benefited from the island's acceptance into the
WTO, investors seeking to take advantage of relatively cheap technology stocks,
and Taiwan's stabilizing political situation as President Chen Shui-bian's
Democratic Progressive Party replaced the Kuomintang as the largest party in the
legislature. In China, the nation's accession into the WTO, its successful bid
to host the 2008 Olympic Games and the mainland market's opening up led foreign
direct investment into the country to increase 14.9% in 2001 compared with
2000. 2 In addition, China's rapid economic growth further attracted investors.
During the six months under review, Argentina's economic uncertainty affected
most Latin American equity markets. We believe de la Rua's resignation and the
installation of a new government should allow the country to work toward solving
its
1. Source: Standard & Poor's Micropal. The MSCI South Korea Index measures the
total return (dividends are reinvested) of equity securities in South Korea.
Securities included in the index are market capitalization-weighted. One cannot
invest directly in an index, nor is an index representative of the Fund's
portfolio.
2. Source: Ministry of Foreign Trade and Economic Cooperation.
2
problems rather than prolonging them. Longer term, we expect the new government
to focus on reviving the economy as a whole. In Brazil, presidential elections
scheduled for this year may divert attention from the implementation of needed
reforms; however, we believe Brazil will continue working on achieving long-term
economic recovery and attracting foreign investment. Elsewhere in the region,
Mexico's sovereign debt was upgraded to investment-grade status, clearly
underlining the country's financial and economic stability.
As a region, Eastern Europe was the strongest performer, and the MSCI Emerging
Markets Eastern Europe Index gained 21.17% for the six-month period ended
February 28, 2002. 3 Eastern Europe managed to remain relatively unscathed by
the slowing U.S. economy, which gripped Asia and Latin America. In addition,
aspirations of convergence to European Monetary Union (EMU) standards pushed
most markets to strive for positive change. In our opinion, Poland is one of the
region's most interesting countries because its solid economic fundamentals,
high foreign reserves and reforms resulting from its anticipated accession into
the EMU combine to make it an attractive place to invest. In Poland's recent
elections, the Democratic Left Alliance emerged victorious and formed a
coalition government with the Polish Peasant Party and the Labor Union to
establish a majority position. In our opinion, such an agreement could lead to
more stability and greater power to implement policy changes. In Turkey, we
believe increasing cooperation with the U.S. in the war against terrorism could
be working in its favor. Additionally, the International Monetary Fund approved
US$16 billion stand-by credit for the nation. We believe that
3. Source: Standard & Poor's Micropal. The MSCI Emerging Markets Eastern Europe
Index measures the total return (dividends are reinvested) of equity securities
in the emerging markets of Eastern Europe. Securities included in the index are
market capitalization-weighted. One cannot invest directly in an index, nor is
an index representative of the Fund's portfolio.
3
GEOGRAPHIC DISTRIBUTION
BASED ON TOTAL NET ASSETS
2/28/02
[PIE CHART OMITTED]
ASIA 54.2%
LATIN AMERICA 14.1%
MID-EAST/AFRICA 13.6%
EUROPE 12.4%
SHORT-TERM INVESTMENTS & OTHER NET ASSETS 5.7%
Turkey's growing importance to the western world should provide it with
much-needed support to pull itself out of an economic crisis.
Finally, on the African continent, expansionary fiscal policies in the form of
lower taxes and increased government investment could help South Africa's gross
domestic product growth remain higher than the global average. In addition, a
strengthening economy should further support the country's recovery. In our
opinion, South Africa's market is highly regarded because of its sound judicial
and regulatory structures, as well as the adherence of the listed companies to
accepted codes of corporate governance.
Within this environment, the MSCI Emerging Markets Free Index returned 12.45% in
U.S. dollar terms for the six months ended February 28, 2002. 4 During the same
time, Templeton Emerging Markets Fund posted a +4.52% cumulative total return in
market-price terms and +15.28% in net asset value terms, as shown in the
Performance Summary on page 8. We attribute the Fund's performance largely to
our fundamental investment approach, focusing on companies and not on top-down
analysis of economies or sectors.
We increased our Asian exposure during the reporting period, as we believe Asian
economies stand to benefit from growing demand for exports. During the period,
we made substantial purchases in Taiwan. The technology crash and reduced export
demand for electronics, especially from the U.S., led many share prices to fall
substantially, and the Fund increased its exposure to what we consider strong
companies with
4. Source: Standard & Poor's Micropal. The unmanaged MSCI Emerging Markets Free
Index measures the total return (dividends are reinvested) of equity securities
in emerging markets globally. Only securities available to foreign (non-local)
investors are included. Securities included in the index are market
capitalization-weighted. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
4
superior technology at attractive prices. We increased our holdings in China Red
Chip companies, as we believe many of them are well-positioned to benefit from
China's accession into the WTO and the subsequent implementation of reforms. We
also added a number of what we believed were attractively priced South Korean
stocks, which in our opinion combine solid technological and production
expertise with improving financial management skills and attractive valuations.
In Latin America, the Fund's exposure to Mexico was decreased as a general
economic slowdown impacted corporate earnings. During the six-month period, we
found several Mexican stocks trading at what we believed were attractive
valuations. We increased our Brazilian exposure, as we believe that Brazil's
improving trade and fiscal accounts combined with moderate impact from
Argentina's situation could allow the country to benefit from greater capital
inflows. During the reporting period, the Fund's exposure to South Africa fell
slightly due to the country's weakening currency. Over the long-term, however,
we believe the Fund should benefit from its South African holdings, and as a
result we made some additional purchases during the period. The uncertainty over
the Middle East peace process and the technology sector correction provided us
with an attractive entry point into Israel, in our opinion, and we took the
opportunity to purchase shares of companies trading at what were in our view
appealing valuations. Furthermore, we expect the Fund to benefit over the long
term from its investments in Turkey.
Due to the portfolio activity mentioned above and changes in value of individual
stocks during the reporting period, Mexico's Cemex and Telmex and Hong Kong's
Cheung Kong Holdings fell out of the Fund's top 10 list. Poland's PKN, Turkey's
Akbank
TOP 10 COUNTRIES
Based on Equity Investments
2/28/02
% OF TOTAL
NET ASSETS
-----------------------------
South Africa 12.9%
Taiwan 10.4%
South Korea 7.3%
Mexico 6.8%
Hong Kong 6.7%
Brazil 6.0%
Thailand 5.6%
Turkey 5.5%
China 5.1%
Singapore 4.1%
5
and Brazil's Centrais Eletricas Brasileiras replaced them as of February 28,
2002.
Looking forward, we are optimistic about the long-term prospects for emerging
markets in general and for Templeton Emerging Markets Fund. Repeated interest
rate cuts by the U.S. Federal Reserve Board helped many markets. Many observers
expect the U.S. economy to recover in the second half of 2002, and we are
already seeing signs of a pick-up in a number of markets where we have
investments. Recent reports indicate a gradual recovery of semiconductor prices
and improving profit margins in cyclical industries, which we expect to
continue. We believe that the discipline imposed by our bottom-up, value
orientation has guided us well, and we expect this strategy to bring long-term
benefits to our shareholders.
It is important to note that investing in foreign securities involves special
risks, such as adverse economic, social and political developments in the
countries where the Fund invests, as well as market and currency volatility.
Emerging markets securities involve heightened risks related to the same
factors, in addition to those associated with their relatively small size and
lesser liquidity. Investing in any emerging market means accepting a certain
amount of volatility and, in some cases, the consequences of severe market
corrections. For example, Hong Kong's equity market has increased 491% in the
last 15 calendar years, but has suffered 12 quarterly declines of more than 15%
each during that time. 5 While short-term volatility can be disconcerting,
declines exceeding 50% are not unusual in emerging markets.
5. Source: Hong Kong's Hang Seng Index. Based on quarterly percentage price
change over 15 years ended 12/31/01. Market return is measured in U.S. dollars
and does not include reinvested dividends. The unmanaged Hang Seng Index is a
capitalization-weighted index of 33 companies that represent approximately 70%
of the total market capitalization of the Stock Exchange of Hong Kong. The
components of the index are divided into four sub-indexes: Finance, Utilities,
Properties and Commerce & Industry.
TOP 10 EQUITY HOLDINGS
2/28/02
COMPANY
SECTOR/INDUSTRY, % OF TOTAL
COUNTRY NET ASSETS
---------------------------------------------
South African Breweries PLC 3.3%
BEVERAGES, SOUTH AFRICA
Kimberly Clark
de Mexico SA de CV, A 2.7%
PAPER & FOREST PRODUCTS,
MEXICO
Samsung Electronics Co. Ltd. 2.4%
SEMICONDUCTOR EQUIPMENT &
PRODUCTS, SOUTH KOREA
PT Telekomunikasi Indonesia
(Persero) TBK, B 2.1%
DIVERSIFIED TELECOMMUNICATION
SERVICES, INDONESIA
Banco Bradesco SA, pfd. 1.9%
BANKS, BRAZIL
Centrais Eletricas Brasileiras SA
(Eletrobras), common & pfd. 1.7%
ELECTRIC UTILITIES, BRAZIL
Polski Koncern Naftowy
Orlen SA 1.6%
OIL & GAS, POLAND
Remgro Ltd. 1.6%
INDUSTRIAL CONGLOMERATES,
SOUTH AFRICA
Akbank 1.6%
BANKS, TURKEY
Fraser & Neave Ltd. 1.5%
BEVERAGES, SINGAPORE
6
Thank you for your continued participation in Templeton Emerging Markets Fund.
We welcome your comments and suggestions.
Sincerely,
/S/ MARK MOBIUS
Mark Mobius
President
Templeton Emerging Markets Fund, Inc.
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This discussion reflects our views, opinions and portfolio holdings as of
February 28, 2002, 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.
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7
PERFORMANCE SUMMARY AS OF 2/28/02
DISTRIBUTIONS AND RETURNS WILL VARY BASED ON EARNINGS OF THE FUND'S PORTFOLIO
AND ANY PROFITS REALIZED FROM THE SALE OF THE PORTFOLIO'S SECURITIES, AS WELL AS
THE LEVEL OF THE FUND'S OPERATING EXPENSES. ALL TOTAL RETURNS INCLUDE REINVESTED
DISTRIBUTIONS ACCORDING TO THE TERMS SPECIFIED IN THE FUND'S DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN AND DO NOT REFLECT ANY SALES CHARGES PAID AT
INCEPTION OR BROKERAGE COMMISSIONS PAID ON SECONDARY MARKET PURCHASES. THE
PERFORMANCE TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER
WOULD PAY ON FUND DISTRIBUTIONS OR THE SALE OF FUND SHARES.
PRICE AND DISTRIBUTION INFORMATION
CHANGE 2/28/02 8/31/01
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Net Asset Value (NAV) +$0.27 $9.13 $8.86
Market Price (NYSE) +$1.14 $9.49 $8.35
DISTRIBUTIONS (9/1/01-2/28/02)
Dividend Income $0.1073
PERFORMANCE
6-MONTH 1-YEAR 5-YEAR 10-YEAR
------------------------------------------------------------------
Cumulative Total Return 1
Based on change in
net asset value +4.52% -4.14% -16.90% +82.28%
Based on change in
market price +15.28% +10.51% -16.20% +68.37%
Average Annual Total Return 1
Based on change in
net asset value +4.52% -4.14% -3.64% +6.19%
Based on change in
market price +15.28% +10.51% -3.47% +5.35%
1. Total return calculations represent the cumulative and average annual changes
in value of an investment over the periods indicated. Six-month return has not
been annualized.
--------------------------------------------------------------------------------
Ongoing stock market volatility can dramatically change the Fund's short-term
performance; current results may differ. Since markets can go down as well as
up, investment return and principal value will fluctuate with market conditions,
currency volatility and the economic, social and political climates of countries
where the Fund invests. Emerging markets involve heightened risks related to the
same factors, in addition to those associated with their relatively small size
and lesser liquidity. You may have a gain or loss when you sell your shares.
--------------------------------------------------------------------------------
For updated performance figures, please call Franklin Templeton Investments at
1-800/342-5236.
Past performance does not guarantee future results.
8
IMPORTANT NOTICE TO SHAREHOLDERS
--------------------------------------------------------------------------------
NAMES RULE. The U.S. Securities and Exchange Commission adopted new Rule 35d-1
under the Investment Company Act of 1940, as amended (the "Names Rule"),
requiring a fund with a name suggesting a focus in a particular type of
investment, in a particular industry, or in a particular geographic region, to
invest, under normal circumstances, at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in the type of investment,
industry or geographic region suggested by its name.
Consistent with the Names Rule, in July 2001, the Fund's Board of Directors
adopted a non-fundamental investment policy to invest, under normal
circumstances, at least 80% of the Fund's net assets in "emerging country equity
securities," effective July 31, 2002. In accordance with the Names Rule, the
Fund has also adopted a non-fundamental policy to provide shareholders with 60
days' advance notice of any change to the foregoing 80% investment policy. The
Fund's current non-fundamental investment policy is to invest at least 75% of
its total assets in "emerging country equity securities."
SHARE REPURCHASE PROGRAM. On November 28, 2000, the Board of Directors of the
Fund authorized management to implement an open-market share repurchase program
pursuant to which the Fund may purchase, from time to time, shares of the Fund's
common stock in open-market transactions, at the discretion of management. This
authorization remains in effect.
ANNUAL MEETING. On February 8, 2002, Templeton Emerging Markets Fund, Inc.,
announced that its 2002 Annual Meeting of Shareholders is currently scheduled to
be held on August 26, 2002.
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9
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Highlights
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2002 ------------------------------------------------
(UNAUDITED) 2001 2000 1999 1998 1997
--------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE+
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $8.86 $11.44 $11.60 $10.85 $20.67 $17.26
------------------------------------------------------------
Income from investment operations:
Net investment income .......................... .04 .12 .13 .13 .26 .27
Net realized and unrealized gains (losses) ..... .34 (2.60) (.16) 5.17 (7.64) 4.27
------------------------------------------------------------
Total from investment operations ................ .38 (2.48) (.03) 5.30 (7.38) 4.54
Less distributions from:
Net investment income .......................... (.11) (.10) (.10) (.29) (.26) (.21)
Net realized gains ............................. -- -- (.03) (4.26) (2.18) (.92)
------------------------------------------------------------
(.11) (.10) (.13) (4.55) (2.44) (1.13)
------------------------------------------------------------
Net asset value, end of period .................. $9.13 $8.86 $11.44 $11.60 $10.85 $20.67
------------------------------------------------------------
Market value, end of period a ................... $9.4900 $8.3500 $9.3125 $12.2500 $9.1875 $23.1250
------------------------------------------------------------
Total return (based on market value per share)* . 15.28% (9.17)% (23.10)% 99.91% (54.35)% 33.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ...............$161,275 $156,378 $201,965 $204,804 $182,352 $342,002
Ratios to average net assets:
Expenses ....................................... 1.61%** 1.67% 1.68% 1.63% 1.70% 1.67%
Net investment income .......................... .95%** 1.28% 1.09% 1.18% 1.58% 1.38%
Portfolio turnover rate ......................... 34.52% 63.64% 81.66% 45.00% 40.51% 12.60%
*Total return is not annualized.
**Annualized.
+Based on average weighted shares outstanding effective year ended August 31,
1999.
a Based on the last sale on the New York Stock Exchange.
See notes to financial statements.
10
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED)
INDUSTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 89.2%
ARGENTINA 1.0%
*BBVA Banco Frances SA, ADR ...................... Banks 9,600 $ 26,496
*Capex SA, GDR, 144A ............................. Electric Utilities 12,757 42,016
*Molinos Rio de la Plata SA, B ................... Food Products 170,259 335,832
Perez Companc SA, B, ADR ........................ Oil & Gas 32,200 312,340
Quilmes Industrial SA, ADR ...................... Beverages 78,635 872,849
-----------
1,589,533
-----------
AUSTRIA 3.0%
BBAG Oesterreichische Brau-Beteiligungs AG ...... Beverages 7,907 361,812
Erste Bank der Oester Sparkassen AG ............. Banks 30,170 1,644,635
Mayr-Melnhof Karton AG .......................... Containers & Packaging 9,400 543,964
OMV AG .......................................... Oil & Gas 26,708 2,250,175
-----------
4,800,586
-----------
BRAZIL 1.7%
Centrais Eletricas Brasileiras SA (Eletrobras) .. Electric Utilities 94,818,000 1,688,154
Embraer-Empresa Brasileira de Aeronautica SA .... Aerospace & Defense 25,800 135,945
Embraer-Empresa Brasileira de Aeronautica SA, ADR Aerospace & Defense 19,778 434,127
Unibanco Uniao de Bancos Brasileiros SA, GDR .... Banks 21,100 510,620
-----------
2,768,846
-----------
*CHILE
Quinenco SA, ADR ................................ Industrial Conglomerates 5,200 30,420
-----------
CHINA 5.1%
China Eastern Airline Corp. Ltd., H ............. Airlines 4,846,000 695,902
China Everbright Ltd. ........................... Diversified Financials 728,000 471,379
*China Mobile (Hong Kong) Ltd. ...................Wireless Telecommunication Services 326,000 940,475
China Petroleum & Chemical Corp., H ............. Oil & Gas 11,200,000 1,737,603
China Resources Enterprise Ltd. ................. Distributors 1,366,000 1,269,802
China Shipping Development Co. Ltd., H .......... Marine 942,000 202,912
*China Southern Airlines Co. Ltd., H ............. Airlines 210,000 72,026
*China Unicom Ltd. ...............................Wireless Telecommunication Services 1,852,000 1,780,940
Guangshen Railway Co. Ltd., H ................... Road & Rail 424,000 77,197
PetroChina Co. Ltd., H .......................... Oil & Gas 1,688,000 313,825
Qingling Motors Co. Ltd., H ..................... Automobiles 1,188,000 214,774
Sinopec Shanghai Petrochemical Co. Ltd. ......... Chemicals 2,216,000 323,908
Sinopec Zhenhai Refining & Chemical Co. Ltd., H.. Oil & Gas 148,000 30,552
TCL International Holdings Inc. ................. Household Durables 158,000 29,172
-----------
8,160,467
-----------
COLOMBIA .1%
Compania Nacional de Chocolates SA .............. Food Products 58,337 151,794
-----------
CROATIA .5%
Pliva D D, GDR, Reg S ........................... Pharmaceuticals 63,600 788,640
-----------
11
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
CZECH REPUBLIC .8%
CEZ AS ............................................ Electric Utilities 468,150 $ 942,949
Philip Morris CR AS ............................... Tobacco 1,695 371,559
-----------
1,314,508
-----------
EGYPT .6%
*Al Ahram Beverages Co., GDR ....................... Beverages 42,747 264,604
Commercial International Bank Ltd. ................ Banks 115,385 724,814
-----------
989,418
-----------
*ESTONIA .5%
Hansabank Ltd. .................................... Banks 62,850 736,649
-----------
GREECE .6%
Coca-Cola Hellenic Bottling Company SA ............ Beverages 34,000 457,031
Hellenic Telecommunications Organization SA .... Diversified Telecommunication Services 30,100 443,662
-----------
900,693
-----------
HONG KONG 6.7%
Beijing Enterprises Holdings Ltd. ................. Industrial Conglomerates 570,000 646,793
Cheung Kong Holdings Ltd. ......................... Real Estate 195,000 1,625,156
Cheung Kong Infrastructure Holdings Ltd. .......... Construction Materials 98,000 154,553
China Merchants Holdings International Co. Ltd. ... Industrial Conglomerates 1,867,000 1,388,416
China Travel International Investment Hong Kong Ltd. Hotels Restaurants & Leisure 528,000 114,411
Citic Pacific Ltd. ................................ Industrial Conglomerates 1,048,000 2,035,734
Cosco Pacific Ltd. ................................ Transportation Infrastructure 2,406,000 1,395,923
*Dairy Farm International Holdings Ltd. ............ Food & Drug Retailing 81,600 56,712
Giordano International Ltd. ....................... Specialty Retail 640,000 326,185
Hang Lung Development Co. Ltd. .................... Real Estate 421,000 361,663
Henderson Investment Ltd. ......................... Real Estate 280,000 227,971
Hutchison Whampoa Ltd. ............................ Industrial Conglomerates 66,000 537,359
Jiangsu Expressway Co. Ltd. ....................... Transportation Infrastructure 586,000 139,000
Legend Holdings Ltd. .............................. Computers & Peripherals 1,098,000 464,583
MTR Corp. Ltd. .................................... Road & Rail 274,500 373,074
Shanghai Industrial Holdings Ltd. ................. Industrial Conglomerates 417,000 823,387
Sun Hung Kai Properties Ltd. ...................... Real Estate 18,000 128,666
Television Broadcasts Ltd. ........................ Media 9,000 40,389
-----------
10,839,975
-----------
HUNGARY 2.2%
Egis RT ........................................... Pharmaceuticals 4,121 188,001
Gedeon Richter Ltd. ............................... Pharmaceuticals 18,660 1,136,895
Matav RT ........................................Diversified Telecommunication Services 231,639 757,265
Mol Magyar Olaj-Es Gazipari RT .................... Oil & Gas 82,130 1,545,010
-----------
3,627,171
-----------
12
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
INDIA 3.5%
Bajaj Auto Ltd. ................................... Automobiles 3,127 $ 29,367
Grasim Industries Ltd. ............................ Industrial Conglomerates 151,885 901,554
Gujarat Ambuja Cements Ltd. ....................... Construction Materials 35,670 174,580
Hindalco Industries Inc. .......................... Metals & Mining 7,449 118,300
Hindustan Petroleum Corporation Ltd. .............. Oil & Gas 18,091 106,252
Hughes Software Systems Ltd. ...................... IT Consulting & Services 23,140 155,208
ITC Ltd. .......................................... Tobacco 68,000 1,041,839
Mahanagar Telephone Nigam Ltd. ..................Diversified Telecommunication Services 135,000 409,876
Satyam Computers Services Ltd. .................... IT Consulting & Services 168,232 923,671
*Tata Engineering & Locomotive Co. ................. Automobiles 136,963 399,815
Tata Power Co. Ltd. ............................... Electric Utilities 66,755 163,428
Videsh Sanchar Nigam Ltd. .......................Diversified Telecommunication Services 53,224 185,623
Zee Telefilms Ltd. ................................ Media 344,250 1,018,339
-----------
5,627,852
-----------
INDONESIA 3.9%
*PT Gudang Garam TBK ............................... Tobacco 418,500 451,485
PT Hanjaya Mandala Sampoerna TBK .................. Tobacco 467,500 207,266
*PT Indocement Tunggal Prakarsa TBK ................ Construction Materials 240,806 20,166
PT Indofoods Sukses Makmur TBK .................... Food Products 10,582,750 781,977
PT Indosat (Persero) TBK .......................Diversified Telecommunication Services 1,440,500 1,419,212
PT Semen Gresik (Persero) TBK ..................... Construction Materials 99,111 67,864
PT Telekomunikasi Indonesia (Persero) TBK, B ...Diversified Telecommunication Services 9,315,460 3,326,950
PT Timah TBK ...................................... Metals & Mining 400,000 29,557
-----------
6,304,477
-----------
*ISRAEL .1%
Ectel Ltd. .....................................Diversified Telecommunication Services 5,500 78,375
Lumenis Ltd. .....................................Health Care Equipment & Supplies 15,000 109,500
-----------
187,875
-----------
MALAYSIA .8%
Genting Bhd. ...................................... Hotels Restaurants & Leisure 388,693 1,268,367
SIME Darby Bhd. ................................... Industrial Conglomerates 7,000 9,174
-----------
1,277,541
-----------
MEXICO 6.8%
Cemex SA .......................................... Construction Materials 403,261 1,952,837
DESC SA de CV DESC, B ............................. Industrial Conglomerates 278,100 130,928
Fomento Economico Mexicano SA de CV Femsa ......... Beverages 42,840 1,705,032
*Grupo Carso SA de CV .............................. Industrial Conglomerates 325,000 1,160,015
*Grupo Financiero Banorte SA de CV, O .............. Banks 62,000 145,268
Kimberly Clark de Mexico SA de CV, A .............. Paper & Forest Products 1,393,600 4,333,305
*Organizacion Soriana SA de CV, B .................. Multiline Retail 44,800 122,135
Telefonos de Mexico SA de CV (Telmex), L, ADR ...Diversified Telecommunication Services 31,632 1,211,189
*Tubos de Acero de Mexico SA, ADR .................. Energy Equipment & Services 31,670 274,724
-----------
11,035,433
-----------
13
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
PERU .2%
Credicorp Ltd. .................................... Banks 25,800 $ 251,550
-----------
PHILIPPINES 1.3%
San Miguel Corp., B ............................... Beverages 1,769,090 2,174,686
-----------
POLAND 2.0%
Bank Rozwoju Eksportu SA .......................... Banks 8,897 289,359
Polski Koncern Naftowy Orlen SA ................... Oil & Gas 551,850 2,571,449
*Telekomunikacja Polska SA .......................Diversified Telecommunication Services 101,428 358,666
-----------
3,219,474
-----------
RUSSIA 2.7%
GUM Trade House ................................... Multiline Retail 27,000 44,280
Lukoil Holdings, ADR .............................. Oil & Gas 34,549 1,672,172
Mosenergo, ADR .................................... Electric Utilities 100,660 392,574
Rostelecom, ADR .................................Diversified Telecommunication Services 76,925 523,090
Unified Energy Systems ............................ Electric Utilities 11,144,600 1,671,690
-----------
4,303,806
-----------
SINGAPORE 4.1%
Cycle & Carriage Ltd. ............................. Distributors 84,870 208,486
Datacraft Asia Ltd. ............................... Communications Equipment 66,000 150,480
DBS Group Holdings Ltd. ........................... Banks 30,000 221,088
Fraser & Neave Ltd. ............................... Beverages 560,700 2,356,847
Keppel Corp. Ltd. ................................. Diversified Financials 745,000 1,675,574
Sembcorp Marine Ltd. .............................. Machinery 20,000 9,880
Singapore Airlines Ltd. ........................... Airlines 113,000 838,933
Singapore Press Holdings Ltd. ..................... Media 36,000 430,385
Singapore Telecommunications Ltd. ...............Diversified Telecommunication Services 798,000 705,713
-----------
6,597,386
-----------
SLOVAK REPUBLIC .1%
Slovnaft AS ....................................... Oil & Gas 6,600 101,491
-----------
SOUTH AFRICA 12.9%
ABSA Group Ltd. ................................... Banks 47,000 112,270
Alexander Forbes Ltd. ............................. Diversified Financials 54,500 67,477
Anglo American PLC ................................ Metals & Mining 8,880 154,465
Barloworld Ltd. ................................... Industrial Conglomerates 366,044 2,037,003
Firstrand Ltd. .................................... Banks 1,109,011 753,534
Gold Fields Ltd. .................................. Metals & Mining 87,400 755,561
Impala Platinum Holdings Ltd. ..................... Metals & Mining 6,600 343,030
Imperial Holdings Ltd. ............................ Specialty Retail 120,633 506,651
Johnnic Holdings Ltd. ...........................Wireless Telecommunication Services 17,964 67,589
Liberty Group Ltd. ................................ Insurance 204,559 1,034,541
Nampak Ltd. ....................................... Containers & Packaging 124,000 119,348
Nedcor Ltd. ....................................... Banks 1,000 107,623
Old Mutual PLC .................................... Insurance 1,023,310 1,360,534
Remgro Ltd. ....................................... Industrial Conglomerates 457,000 2,559,160
14
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
SOUTH AFRICA (CONT.)
Reunert Ltd. ....................................Electronic Equipment & Instruments 211,000 $ 339,705
Sanlam Ltd. ....................................... Insurance 1,215,500 856,154
Sasol Ltd. ........................................ Oil & Gas 229,500 2,241,032
South African Breweries PLC ....................... Beverages 783,148 5,262,672
Tiger Brands Ltd. ................................. Food Products 256,333 1,309,841
Tongaat-Hulett Group Ltd. ......................... Food Products 128,681 692,454
*Venfin Ltd. .....................................Wireless Telecommunication Services 94,000 151,749
-----------
20,832,393
-----------
SOUTH KOREA 7.3%
Cheil Jedang Corp. ................................ Food Products 26,220 1,176,424
*Daelim Industrial Co. ............................. Construction & Engineering 56,180 678,964
*Hankook Tire Co. Ltd. ............................. Auto Components 103,080 244,872
Honam Petrochemical Corp. ......................... Chemicals 3,020 49,957
*Hyundai Development Co. ........................... Construction & Engineering 29,000 230,002
Hyundai Motor Co. Ltd. ............................ Automobiles 18,330 503,975
*Jahwa Electronics Co. Ltd. ......................Electronic Equipment & Instruments 13,870 130,958
Kangwon Land Inc. ................................. Hotels Restaurants & Leisure 6,819 932,275
Kookmin Bank ...................................... Banks 360 15,744
Kookmin Credit Card Co. Ltd. ...................... Diversified Financials 11,157 455,078
Korea Electric Power Corp. ........................ Electric Utilities 44,822 743,140
*KT Freetel ......................................Wireless Telecommunication Services 14,040 444,351
LG Household & Health Care Ltd. ................... Household Products 9,090 267,777
Samsung Electro-Mechanics Co. ...................Electronic Equipment & Instruments 9,350 415,273
Samsung Electronics Co. Ltd. ....................Semiconductor Equipment & Products 14,939 3,870,441
*Samsung Fine Chemicals ............................ Chemicals 23,030 342,693
Samsung SDI Co. Ltd. ............................Electronic Equipment & Instruments 5,376 278,972
Samsung Securities Co. Ltd. ....................... Diversified Financials 9,180 356,411
SK Telecom Co. Ltd. .............................Wireless Telecommunication Services 3,396 666,939
-----------
11,804,246
-----------
TAIWAN 10.4%
Acer Communications & Multimedia Inc. ............. Computers & Peripherals 378,000 742,971
Advantech Co. Ltd. ................................ Computers & Peripherals 183,000 474,377
Asustek Computer Inc. ............................. Computers & Peripherals 189,000 915,254
*Bank Sinopac ...................................... Banks 935,000 368,886
China Motor Co. Ltd. .............................. Automobiles 399,000 279,601
Chinatrust Commercial Bank ........................ Banks 767,000 530,924
Chunghwa Telcom Co. Ltd. ........................Diversified Telecommunication Services 274,000 388,697
CMC Magnetics Corp. ............................... Computers & Peripherals 1,079,000 774,556
Compal Electronics Inc. ........................... Computers & Peripherals 299,000 391,796
*Compeq Manufacturing Co. Ltd. ..................... Computers & Peripherals 698,000 878,838
D-Link Corp. ...................................... Communications Equipment 327,000 582,182
*DBTEL Incorporated ..............................Electronic Equipment & Instruments 139,000 88,298
Elan Microelectronics Corp. ....................... Software 249,000 272,372
Formosa Plastic Corp. ............................. Chemicals 656,000 824,088
*Fubon Group Co. Ltd. .............................. Diversified Financials 370,725 359,056
15
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
TAIWAN (CONT.)
Giant Manufacturing Co. ........................... Leisure Equipment & Products 425,000 $ 366,828
International Commercial Bank of China ............ Banks 1,275,000 711,864
*Pacific Electric Wire & Cable Co. Ltd. ............ Electrical Equipment 1,726,000 378,584
Phoenixtec Power Co. Ltd. ......................... Electrical Equipment 520,000 423,643
*Pou Chen Corp. .................................... Textiles & Apparel 374,000 271,671
*Procomp Informatics Co. Ltd. ...................... Machinery 623,000 940,578
Ritek Corp. ....................................... Computers & Peripherals 1,117,000 1,126,387
*Siliconware Precision Industries Co. Ltd. .......Semiconductor Equipment & Products 1,033,000 791,560
Sunplus Technology Company Ltd. .................Semiconductor Equipment & Products 52,000 179,234
*Taiwan Cellular Corp. ............................. Communications Equipment 232,000 277,567
*Taiwan Cement Corp. ............................... Construction Materials 1,209,000 275,516
Taiwan Glass Industrial Corp. ..................... Building Products 377,000 222,302
UNI-President Enterprises Corp. ................... Food Products 1,295,000 450,050
*Walsin Lihwa Corp. ................................ Electrical Equipment 1,182,000 279,465
Walsin Technology ...............................Electronic Equipment & Instruments 243,000 220,815
*Wintek Corp. ....................................Electronic Equipment & Instruments 632,000 536,493
*Yageo Corp. .....................................Electronic Equipment & Instruments 1,005,000 781,555
*Yuanta Core Pacific Securities Co. ................ Diversified Financials 990,000 690,927
-----------
16,796,935
-----------
THAILAND 4.8%
*Bangkok Bank Public Co. Ltd., fgn. ................ Banks 614,200 948,707
Electricity Generating Public Co. Ltd., fgn. ...... Electric Utilities 92,100 86,410
Hana Microelectronics Co. Ltd., fgn. ............Electronic Equipment & Instruments 92,100 173,873
PTT Exploration & Production Public Co. Ltd., fgn. Oil & Gas 332,700 883,140
*PTT Public Co. Ltd., fgn. ......................... Oil & Gas 206,000 164,988
*Shin Corporation Public Co. Ltd., fgn. ..........Wireless Telecommunication Services 3,184,000 1,318,773
*Siam Cement Public Co. Ltd. ....................... Building Products 41,115 707,517
Siam Cement Public Co. Ltd., fgn. ................. Construction Materials 90,865 1,838,093
*Thai Farmers Bank Public Co. Ltd., fgn. ........... Banks 2,482,100 1,632,961
-----------
7,754,462
-----------
TURKEY 5.5%
Akbank ............................................ Banks 987,998,755 2,549,679
Arcelik AS, Br. ................................... Household Durables 113,993,500 919,303
*Dogan Sirketler Grubu Holding AS .................. Diversified Financials 51,880,000 72,520
*Haci Omer Sabanci Holding AS ...................... Diversified Financials 167,315,996 683,657
KOC Holding AS .................................... Diversified Financials 55,931,332 1,162,730
Migros Turk T.A.S. ................................ Food & Drug Retailing 1,300,000 83,871
*Tofas Turk Otomobil Fabrikasi AS .................. Automobiles 22,062,000 72,749
Tupras-Turkiye Petrol Rafineleri AS ............... Oil & Gas 332,281,470 2,096,113
*Vestel Electronik Sanayi ve Ticaret AS ............ Household Durables 104,320,000 239,300
*Yapi ve Kredi Bankasi AS .......................... Banks 402,000,000 965,376
-----------
8,845,298
-----------
TOTAL COMMON STOCKS (COST $143,086,104) ........... 143,813,605
-----------
16
TEMPLETON EMERGING MARKETS FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2002 (UNAUDITED) (CONT.)
INDUSTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS 5.1%
Aracruz Celulose SA, ADR, pfd. .................... Paper & Forest Products 8,180 $ 170,144
Banco Bradesco SA, pfd. ........................... Banks 516,470,001 3,021,317
Centrais Eletricas Brasileiras SA (Eletrobras), B, pfd. Electric Utilities 69,906,770 1,070,086
Cia de Bebidas Das Americas (Ambev), ADR, pfd. .... Beverages 4,590,000 932,009
Cia Vale do Rio Doce, A, pfd. ..................... Metals & Mining 16,950 431,115
Companhia Paranaense de Energia-Copel, B, pfd. Electric Utilities 83,961,000 640,652
Duratex SA, pfd. .................................. Building Products 7,606,910 159,555
Embotelladora Andina SA, A, pfd. .................. Beverages 15,100 121,555
Petroleo Brasileiro SA, pfd. ...................... Oil & Gas 14,000 332,938
*Siam Commercial Bank, 5.25%, fgn., cvt. pfd. ...... Banks 2,283,300 1,397,672
------------
TOTAL PREFERRED STOCKS (COST $8,707,686) .......... 8,277,043
------------
a SHORT TERM INVESTMENTS (COST $6,142,512) 3.8%
Franklin Institutional Fiduciary Trust Money Market Portfolio 6,142,512 6,142,512
------------
TOTAL INVESTMENTS (COST $157,936,302) 98.1% ....... 158,233,160
OTHER ASSETS, LESS LIABILITIES 1.9% ............... 3,041,358
------------
TOTAL NET ASSETS 100.0% ........................... $161,274,518
============
*Non-income producing.
a The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by Franklin Advisers Inc., an affiliate of Franklin Resources Inc.
See notes to financial statements.
17
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2002 (UNAUDITED)
Assets:
Investments in securities, at value (cost $157,936,302) ............................... $158,233,160
Cash .................................................................................. 347,734
Receivables:
Investment securities sold ........................................................... 4,073,492
Dividends and interest ............................................................... 280,635
------------
Total assets ..................................................................... 162,935,021
------------
Liabilities:
Payables:
Investment securities purchased ...................................................... 1,349,956
To affiliates ........................................................................ 172,097
Accrued expenses ...................................................................... 138,450
------------
Total liabilities ................................................................ 1,660,503
------------
Net assets, at value ................................................................... $161,274,518
============
Net assets consist of:
Undistributed net investment income ................................................... $ 479,309
Net unrealized appreciation ........................................................... 296,858
Accumulated net realized loss ......................................................... (44,295,460)
Capital shares ........................................................................ 204,793,811
------------
Net assets, at value ................................................................... $161,274,518
============
Net asset value per share ($161,274,518 / 17,656,437 shares outstanding) ............... $9.13
============
See notes to financial statements.
18
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (CONTINUED)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 (UNAUDITED)
Investment Income:
(net of foreign taxes of $156,826)
Dividends ................................................................. $ 1,891,656
Interest .................................................................. 15,187
-----------
Total investment income .............................................. $ 1,906,843
Expenses:
Management fees (Note 3) .................................................. 901,545
Administrative fees (Note 3) .............................................. 111,786
Transfer agent fees ....................................................... 35,500
Custodian fees ............................................................ 77,300
Reports to shareholders ................................................... 13,500
Registration and filing fees .............................................. 33,250
Professional fees ......................................................... 4,800
Directors' fees and expenses .............................................. 22,500
Other ..................................................................... 1,700
-----------
Total expenses ....................................................... 1,201,881
-----------
Net investment income ............................................ 704,962
-----------
Realized and unrealized gains (losses):
Net realized loss from:
Investments .............................................................. (11,257,619)
Foreign currency transactions ............................................ (218,376)
-----------
Net realized loss .................................................... (11,475,995)
Net unrealized appreciation on:
Investments .............................................................. 17,491,495
Translation of assets and liabilities denominated in foreign currencies .. 70,733
-----------
Net unrealized appreciation on investments ........................... 17,562,228
-----------
Net realized and unrealized gain ........................................... 6,086,233
-----------
Net increase in net assets resulting from operations ....................... $ 6,791,195
===========
See notes to financial statements.
19
TEMPLETON EMERGING MARKETS FUND, INC.
Financial Statements (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 (UNAUDITED)
AND THE YEAR ENDED AUGUST 31, 2001
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2002 AUGUST 31, 2001
---------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................................. $ 704,962 $ 2,150,761
Net realized loss from investments and foreign currency transactions ... (11,475,995) (28,591,908)
Net unrealized appreciation (depreciation) on investments and
translation of ........................................................
assets and liabilities denominated in foreign currencies ................ 17,562,228 (17,329,118)
----------------------------
Net increase (decrease) in net assets resulting from operations .... 6,791,195 (43,770,265)
Distributions to shareholders from net investment income ................. (1,894,536) (1,816,847)
----------------------------
Net increase (decrease) in net assets .............................. 4,896,659 (45,587,112)
Net assets:
Beginning of period ..................................................... 156,377,859 201,964,971
----------------------------
End of period ........................................................... $161,274,518 $156,377,859
============================
Undistributed net investment income included in net assets:
End of period ........................................................... $ 479,309 $ 1,668,883
============================
See notes to financial statements.
20
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Emerging Markets Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940 as a closed-end, diversified investment company.
The Fund seeks long-term capital appreciation by investing mainly in emerging
country equity securities. The following summarizes the Fund's significant
accounting policies.
A. SECURITY VALUATION
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.
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 denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
C. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses are included
in the Statement of Operations.
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts.
D. 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.
21
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (unaudited) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
E. 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.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expense during the reporting period. Actual results could differ from those
estimates.
2. CAPITAL SHARES
On November 29, 2000, the Board of Directors of the Fund authorized management
to implement an open-market share repurchase program pursuant to which the Fund
may purchase, from time to time, shares of the Fund's common stock in
open-market transactions, at the discretion of management.
At February 28, 2002, there were 30 million shares authorized ($0.01 par value).
During the period ended February 28, 2002 and the year ended August 31, 2001,
there were no share transactions.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Asset
Management Ltd. (TAML) and Franklin Templeton Services, LLC (FT Services), the
Fund's investment manager and administrative manager, respectively.
The Fund pays an investment management fee to TAML of 1.25% per year of the
Fund's average daily net assets. Management fees were reduced on assets invested
in the Franklin Institutional Fiduciary Trust Money Market Portfolio (the Sweep
Money Fund) in an amount not to exceed the management fees paid by the Sweep
Money Fund. The Fund pays an administrative fee monthly to FT Services at an
annual rate of 0.15% per year of the Fund's average daily net assets.
22
TEMPLETON EMERGING MARKETS FUND, INC.
Notes to Financial Statements (unaudited) (CONTINUED)
4. INCOME TAXES
At February 28, 2002, the cost of investments and net unrealized depreciation
for income tax purposes were as follows:
Cost of investments ...................... $159,453,876
-------------
Unrealized appreciation .................. 18,651,656
Unrealized depreciation .................. (19,872,372)
-------------
Net unrealized depreciation .............. $ (1,220,716)
=============
Net investment income and net realized capital gains differ for financial
statement and tax purposes primarily due to differing treatments of passive
foreign investment companies, wash sales, foreign currency transactions and
losses realized subsequent to October 31 on the sale of securities and foreign
currencies.
At August 31, 2001, the Fund had deferred capital and currency losses occurring
subsequent to October 31, 2000 of $25,355,976 and $299,663 respectively. For tax
purposes, such losses will be reflected in the year ending August 31, 2002.
At August 31, 2001, 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:
2008 ............................. $1,056,614
2009 ............................. 2,373,131
----------
$3,429,745
==========
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended February 28, 2002 aggregated $68,039,128 and $45,727,722,
respectively.
23
TEMPLETON EMERGING MARKETS FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with
the following features:
Shareholders must affirmatively elect to participate in the Plan; Stock
dividends and capital gains distributions will be reinvested automatically;
Mellon Investor Services LLC, P.O. Box 3338, South Hackensack, NJ 07606-1938,
will provide additional Plan information upon request.
Whenever the Fund declares dividends in either cash or common stock of the Fund,
if the market price is equal to or exceeds net asset value at the valuation
date, the participant will receive the dividends entirely in stock at a price
equal to the net asset value, but not less than 95% of the then current market
price of the Fund's shares. If the market price is lower than net asset value or
if dividends and/or capital gains distributions are payable only in cash, the
participant will receive shares purchased on the New York Stock Exchange or
otherwise on the open market.
A participant has the option of submitting additional payments to Mellon
Securities Trust Company (the "Plan Agent"), in any amounts of at least $100, up
to a maximum of $5,000 per month, for the purchase of Fund shares for his or her
account. These payments shall be made by check or money order payable to "Mellon
Securities Trust Company" and sent to Mellon Investor Services LLC, P.O. Box
382009, Pittsburgh, PA 15250-8009, Attn: Templeton Emerging Markets Fund, Inc.
The Plan Agent shall apply such payments (less a $5.00 service charge and less a
pro rata share of trading fees) to purchases of the Fund's shares on the open
market.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.
The participant may withdraw from the Plan without penalty at any time by
written notice to the Plan Agent sent to Mellon Investor Services LLC, P.O. Box
3338, South Hackensack, NJ 07606-1938. Upon withdrawal, the participant will
receive, without charge, stock certificates issued in the participant's name for
all full shares held by the Plan Agent; or, if the participant wishes, the Plan
Agent will sell the participant's shares and send the proceeds, less a service
charge of $5.00 and less trading fees.
Whenever shares are purchased on the New York Stock Exchange or otherwise on the
open market, each participant will pay a pro rata portion of trading fees.
Trading fees will be deducted from amounts to be invested.
24
TEMPLETON EMERGING MARKETS FUND, INC.
TRANSFER AGENT
Mellon Investor Services LLC
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800-416-5585
www.melloninvestor.com
SHAREHOLDER INFORMATION
Shares of Templeton Emerging Markets Fund, Inc. are traded on the New York Stock
Exchange under the symbol "EMF." The Fund's shares are also listed and traded on
the Pacific Exchange. Information about the net asset value and the market price
is published each Monday in the WALL STREET JOURNAL, weekly in BARRON'S and each
Saturday in THE NEW YORK TIMES and other newspapers. Daily market prices for the
Fund's shares are published in the New York Stock Exchange Composite
Transactions section of newspapers.
For current information about distributions and shareholder accounts, call
1-800-416-5585. Registered shareholders can now access their Fund account
on-line with INVESTOR SERVICEDIRECT(SM). For information go to Mellon Investor
Services' web site at https://vault.melloninvestor.com/isd and follow the
instructions.
The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information after 7
a.m. pacific time any business day at 1-800-DIAL BEN(R) (1-800-342-5236). The
Fund's net asset value and dividends are also listed on the NASDAQ Stock Market,
Inc.'s Mutual Fund Quotation Service ("NASDAQ MFQS").
Shareholders not receiving copies of the reports to shareholders because their
shares are registered in the name of a broker or a custodian can request that
they be added to the Fund's mailing list by writing Templeton Emerging Markets
Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
25
[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R) 100 Fountain Parkway
INVESTMENTS P.O. Box 33030
St. Petersburg, FL 33733-8030
SEMIANNUAL REPORT
TEMPLETON EMERGING MARKETS FUND, INC.
TRANSFER AGENT
Mellon Investor Services LLC
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800/416-5585
www.melloninvestor.com
FUND INFORMATION
1-800/342-5236
Investors should be aware that the value of investments made for the Fund may go
down as well as up. Like any investment in securities, the value of the Fund's
portfolio will be subject to the risk of loss from market, currency, economic,
political and other factors. The Fund and its investors are not protected from
such losses by the Investment Manager. Therefore, investors who cannot accept
this risk should not invest in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
TLEMF S2002 04/02 [LOGO OMITTED] Printed on recycled paper