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 -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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 ---------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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