UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04985
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TEMPLETON EMERGING MARKETS FUND
-----------------------------------------
(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
--------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
---------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
----------------
Date of fiscal year end: 8/31
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Date of reporting period: 2/28/09
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ITEM 1. REPORTS TO STOCKHOLDERS.
FEBRUARY 28, 2009
SEMIANNUAL REPORT
(GRAPHIC)
INTERNATIONAL
TEMPLETON
EMERGING MARKETS FUND
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
FRANKLIN - TEMPLETON - Mutual Series
Contents
SEMIANNUAL REPORT
Templeton Emerging Markets Fund............................................ 1
Performance Summary........................................................ 6
Important Notice to Shareholders........................................... 7
Financial Highlights and Statement of Investments.......................... 8
Financial Statements....................................................... 12
Notes to Financial Statements.............................................. 15
Annual Meeting of Shareholders............................................. 21
Dividend Reinvestment and Cash Purchase Plan............................... 22
Shareholder Information.................................................... 24
Semiannual Report
Templeton Emerging Markets Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Emerging Markets Fund seeks
long-term capital appreciation by investing, under normal market conditions, at
least 80% of its net assets in emerging country equity securities.
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 2/28/09
(BAR CHART)
Asia 54.4%
Latin America & Caribbean 23.5%
Europe 21.5%
Short-Term Investments & Other Net Assets 0.6%
Dear Shareholder:
This semiannual report for Templeton Emerging Markets Fund covers the period
ended February 28, 2009.
PERFORMANCE OVERVIEW
Templeton Emerging Markets Fund had cumulative total returns of -49.00% based on
market price and -47.99% based on net asset value for the six months under
review.
ECONOMIC AND MARKET OVERVIEW
The past six months have been one of the most volatile periods since the Fund's
inception. Extreme risk aversion led to evaporation of liquidity, tight credit
conditions, problems for companies with highly leveraged finance models, and
high volatility in global stock markets. Recognizing the severity of the credit
crunch, governments globally implemented fiscal stimuli and loosened monetary
policies to support their domestic economies and ease liquidity conditions. In
this environment, emerging markets, as represented by the Morgan Stanley Capital
International (MSCI) Emerging Markets (EM) Index, had a -47.21%
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 9.
Semiannual Report | 1
TOP 10 COUNTRIES
Based on Equity Investments 2/28/09
% OF TOTAL
NET ASSETS
----------
Brazil 23.6%
China 17.3%
Turkey 9.9%
Thailand 8.8%
India 8.7%
Russia 7.5%
South Korea 6.2%
Hong Kong 6.0%
Indonesia 3.2%
Taiwan 2.5%
total return in U.S. dollar terms.(1) Part of this decline was due to weakness
in emerging markets currencies as the U.S. dollar benefited from funds seeking a
safer haven. Our experience has led us to believe the recent fall is part of a
natural bull and bear market cycle. In emerging markets we have found that, in
the past, bull markets have lasted longer than bear markets and bull markets
have tended to more than recover the losses of the previous bear markets. Please
remember, historical performance is no guarantee of future results.
Stock markets in Eastern Europe were the weakest emerging market performers
during the reporting period. Concerns intensified about the financial state of
European banks and rising current account deficits in several European
countries, including the Baltic states. Turkey underperformed many of its
emerging market counterparts, in part due to a weaker lira and funding worries
resulting from a deferral of an International Monetary Fund (IMF) loan
agreement.
Asian stock markets, on the other hand, performed better than their emerging
market peers because many countries maintained strong fiscal positions and
stable monetary policies amid easing inflationary pressures. Chinese equities
were among top performers during the period as investor confidence rose in 2009.
Although slowing during the period, China continued to be one of the
fastest-growing major economies, with about US$2 trillion in foreign exchange
reserves, the largest in the world.(2) In addition, we believe the country's
struggling manufacturing sector began to show signs of bottoming in early 2009.
In Latin America, the Brazilian equity market was adversely affected by lower
commodity prices and a weaker real. Based on our analysis, however, we
maintained a positive view on the region's leading economy due to its solid
fiscal management policies, high foreign exchange reserves and vast natural
resources of oil, iron ore and agricultural products.
INVESTMENT STRATEGY
Our investment strategy employs a bottom-up, value-oriented, long-term approach.
We focus on the market price of a company's securities relative to our
evaluation of the company's long-term earnings, asset value and cash flow
potential. As we look for investments, we focus on specific companies and
(1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. The MSCI EM Index is a free float-adjusted, market
capitalization-weighted index designed to measure equity market performance
in global emerging markets. The index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
(2.) Source: Ministry of Commerce, China.
2 | Semiannual Report
undertake in-depth research to construct an action list from which we make our
buy decisions. Before we make a purchase, we look at the company's potential for
earnings and growth over a five-year horizon. During our analysis, we also
consider the company's position in its sector, the economic framework and
political environment.
MANAGER'S DISCUSSION
For the six months under review, Brazil's Petrobras (Petroleo Brasileiro), the
national oil and gas company, and Vale (Companhia Vale do Rio Doce), one of the
world's largest iron ore producers, were among the most significant detractors
from the Fund's absolute performance. Their stocks suffered significant price
declines during the reporting period because of commodity price corrections and
concerns of lower demand in a slowing global growth environment. However, we
held a positive longer-term outlook on commodity companies and on the energy and
metals sectors, which we believe could offer attractively valued investment
opportunities. Despite negative impact from lower commodity prices, many energy
and raw material companies were still profitable at recent price levels.
Although significantly down from their peaks, commodity prices, we believe,
could trend upward over the long term partly because of continued demand for raw
materials and oil and gas from emerging markets and the commodities' relatively
inelastic supply.
Another significant detractor during the reporting period was Akbank, a major
Turkish commercial bank. Akbank's share price suffered because of heightened
investor risk aversion to emerging markets such as Turkey during the global
financial crisis. In our view, the bank's valuation remained attractive and
long-term prospects were solid based on its good asset quality and relatively
strong market position.
On a positive note, key contributors to the Fund's absolute performance during
this review period included Denway Motors and Polnord. China's Denway Motors has
a joint venture with Honda Motor for the production and selling of Honda Accord,
Fit and Odyssey models in the country. The company also manufactures automobile
audio equipment and trades motor vehicles. We increased the Fund's holdings in
Denway Motors during the reporting period, and based on our analysis, we
maintained a positive long-term view on China's automobile sector, where low
market penetration rates could point to considerable growth potential. On the
other hand, we divested from Polnord, a major Polish real estate developer, due
to a weak outlook for the property market amid tight credit conditions.
TOP 10 HOLDINGS
2/28/09
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
------------------------ ----------
Petrobras (Petroleo Brasileiro SA), ADR, pfd. 9.6%
OIL, GAS & CONSUMABLE FUELS, BRAZIL
Vale (Companhia Vale do Rio Doce), ADR, pfd., A 6.9%
METALS & MINING, BRAZIL
PetroChina Co. Ltd., H 5.4%
OIL, GAS & CONSUMABLE FUELS, CHINA
Dairy Farm International Holdings Ltd. 4.7%
FOOD & STAPLES RETAILING, HONG KONG
Akbank TAS 4.4%
COMMERCIAL BANKS, TURKEY
Denway Motors Ltd. 4.3%
AUTOMOBILES, CHINA
Unibanco (Unibanco Uniao De Bancos Brasileiros SA), ADR 3.5%
COMMERCIAL BANKS, BRAZIL
Banco Bradesco SA, ADR, pfd. 3.5%
COMMERCIAL BANKS, BRAZIL
SK Energy Co. Ltd. 3.3%
OIL, GAS & CONSUMABLE FUELS, SOUTH KOREA
Turkcell (Turkcell Iletisim Hizmetleri AS) 3.1%
WIRELESS TELECOMMUNICATION SERVICES, TURKEY
Semiannual Report | 3
It is important to recognize the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar goes up compared with a
foreign currency, an investment traded in that foreign currency will go down in
value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the six months
ended February 28, 2009, the U.S. dollar rose in value relative to most
currencies. As a result, the Fund's performance was negatively affected by the
portfolio's investment predominantly in securities with non-U.S. currency
exposure.
We sold a number of holdings during this review period, as stocks reached sale
price targets and we raised funds for income and capital gains distributions in
2008. As a result of the sales, the Fund's investments in oil and gas,
integrated telecommunication services, and semiconductor companies fell. We also
reduced the Fund's exposure to Poland, Mexico and China via Hong Kong-listed Red
Chip shares.(3) Major sales included shares of China's CNOOC, Poland's PKN Orlen
(Polski Koncern Naftowy Orlen), and Taiwan's TSMC (Taiwan Semiconductor
Manufacturing Co.).
During the reporting period, we added a position in global mining and natural
resources group Anglo American, which has a majority of its operations in
southern Africa. We initiated the position, effectively giving the Fund exposure
to South Africa, after commodity price corrections made the stock's valuation
more attractive in our view. We also made select purchases in India and Brazil,
which continued to display strong economic fundamentals, and in doing so
increased the Fund's exposure to diversified metals and mining, IT consulting,
and diversified banking companies. Key additions included Tata Consultancy
Services, India's leading information technology consulting company, and
Unibanco (Unibanco Uniao De Bancos Brasileiros), one of Brazil's largest
financial conglomerates. Based on our analysis, we believed Tata Consultancy
Services was well positioned to benefit from the outsourcing trend to India and
Unibanco could take advantage of growing demand for financial and banking
services in Latin America.
(3.) "Red Chip" denotes shares of Hong Kong-listed companies with significant
exposure to China. The shares are traded on the Hong Kong Stock Exchange.
4 | Semiannual Report
Thank you for your continued participation in Templeton Emerging Markets Fund.
We look forward to serving your future investment needs.
Sincerely,
(PHOTO OF MARK MOBIUS)
/s/ Mark Mobius
Mark Mobius Executive
Chairman
Templeton Asset Management Ltd.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF FEBRUARY 28, 2009, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
Semiannual Report | 5
Performance Summary as of 2/28/09
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. Total return reflects reinvestment of the Fund's dividends and
capital gain distributions, if any, and any unrealized gains or losses. Total
returns do not reflect any sales charges paid at inception or brokerage
commissions paid on secondary market purchases. The performance table does not
reflect any taxes that a shareholder would pay on Fund dividends, capital gain
distributions, if any, or any realized gains on the sale of Fund shares.
PRICE AND DISTRIBUTION INFORMATION
SYMBOL: EMF CHANGE 2/28/09 8/31/08
----------- ------- ------- -------
Net Asset Value (NAV) -$10.49 $8.62 $19.11
Market Price (NYSE) -$ 9.87 $7.76 $17.63
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.3045
Short-Term Capital Gain $0.0006
Long-Term Capital Gain $1.1385
TOTAL $1.4436
PERFORMANCE
6-MONTH 1-YEAR 5-YEAR 10-YEAR
------- ------ ------ -------
Cumulative Total Return(1)
Based on change in NAV(2) -47.99% -58.36% +14.52% +98.06%
Based on change in market price(3) -49.00% -58.16% +0.01% +57.57%
Average Annual Total Return(1)
Based on change in NAV(2) -47.99% -58.36% +2.75% +7.07%
Based on change in market price(3) -49.00% -58.16% +0.00% +4.65%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN.
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
VOLATILITY, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS 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.
(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.
(2.) Assumes reinvestment of distributions based on net asset value.
(3.) Assumes reinvestment of distributions based on the dividend reinvestment
and cash purchase plan.
6 | Semiannual Report
Important Notice to Shareholders
SHARE REPURCHASE PROGRAM
The Fund's Board previously authorized management to implement an open-market
share repurchase program pursuant to which the Fund may purchase Fund shares,
from time to time, in open-market transactions, at the discretion of management.
This authorization remains in effect.
Semiannual Report | 7
Templeton Emerging Markets Fund
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2009 -----------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
----------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $ 19.11 $ 23.14 $ 20.56 $ 17.98 $ 13.40 $ 10.82
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income(a) ........................ 0.06 0.30 0.37 0.33 0.32 0.22
Net realized and unrealized gains (losses) ...... (9.11) (2.16) 7.47 4.25 4.51 2.59
-------- -------- -------- -------- -------- --------
Total from investment operations ................... (9.05) (1.86) 7.84 4.58 4.83 2.81
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income ........................... (0.30) (0.34) (0.64) (0.39) (0.25) (0.23)
Net realized gains .............................. (1.14) (1.83) (4.62) (1.61) -- --
-------- -------- -------- -------- -------- --------
Total distributions ................................ (1.44) (2.17) (5.26) (2.00) (0.25) (0.23)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ..................... $ 8.62 $ 19.11 $ 23.14 $ 20.56 $ 17.98 $ 13.40
-------- -------- -------- -------- -------- --------
Market value, end of period(b) ..................... $ 7.76 $ 17.63 $ 20.56 $ 18.94 $ 18.31 $ 14.24
======== ======== ======== ======== ======== ========
Total return (based on market value per share)(c) .. (49.00)% (6.16)% 41.62% 15.01% 30.66% 22.62%
RATIOS TO AVERAGE NET ASSETS(d)
Expenses(e) ........................................ 1.55% 1.55% 1.55% 1.58% 1.57% 1.63%
Net investment income .............................. 0.99% 1.28% 1.86% 1.66% 2.00% 1.70%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $155,723 $345,403 $418,213 $366,549 $318,240 $236,848
Portfolio turnover rate ............................ 8.60% 9.33% 33.15% 43.03% 36.04% 67.63%
(a) Based on average daily shares outstanding.
(b) Based on the last sale on the New York Stock Exchange.
(c) Total return is not annualized for periods less than one year.
(d) Ratios are annualized for periods less than one year.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
8 | Semiannual Report
Templeton Emerging Markets Fund
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED)
INDUSTRY SHARES VALUE
---------------------------------------- ---------- ------------
COMMON STOCKS 79.4%
AUSTRIA 1.5%
OMV AG................................................... Oil, Gas & Consumable Fuels 89,020 $ 2,350,895
------------
BRAZIL 3.5%
Unibanco Uniao De Bancos Brasileiros SA, ADR............. Commercial Banks 105,300 5,510,349
------------
CHINA 17.3%
Aluminum Corp. of China Ltd., H.......................... Metals & Mining 9,792,000 4,671,786
(a) Brilliance China Automotive Holdings Ltd................. Automobiles 23,846,000 1,337,564
China Petroleum and Chemical Corp., H.................... Oil, Gas & Consumable Fuels 7,136,000 3,726,659
Chiwan Wharf Holdings Ltd., B............................ Transportation Infrastructure 1,918,967 1,813,766
Denway Motors Ltd........................................ Automobiles 22,188,730 6,666,504
PetroChina Co. Ltd., H................................... Oil, Gas & Consumable Fuels 11,688,000 8,334,415
Win Hanverky Holdings Ltd................................ Textiles, Apparel & Luxury Goods 8,252,000 441,588
------------
26,992,282
------------
HONG KONG 6.0%
Dairy Farm International Holdings Ltd.................... Food & Staples Retailing 1,658,100 7,378,545
Victory City International Holdings Ltd.................. Textiles, Apparel & Luxury Goods 28,152,000 1,415,740
VTech Holdings Ltd....................................... Communications Equipment 123,500 482,525
------------
9,276,810
------------
HUNGARY 0.9%
MOL Hungarian Oil and Gas Nyrt........................... Oil, Gas & Consumable Fuels 36,075 1,358,930
------------
INDIA 8.7%
National Aluminium Co. Ltd............................... Metals & Mining 665,030 2,687,240
Oil & Natural Gas Corp. Ltd.............................. Oil, Gas & Consumable Fuels 270,795 3,669,443
Sesa Goa Ltd............................................. Metals & Mining 2,716,280 4,303,018
Tata Consultancy Services Ltd............................ IT Services 302,000 2,845,627
------------
13,505,328
------------
INDONESIA 3.2%
PT Astra International Tbk............................... Automobiles 2,195,000 2,070,409
PT Bank Central Asia Tbk................................. Commercial Banks 15,134,500 2,968,788
------------
5,039,197
------------
PAKISTAN 1.7%
Faysal Bank Ltd.......................................... Commercial Banks 6,702,800 1,194,317
MCB Bank Ltd............................................. Commercial Banks 882,950 1,409,066
------------
2,603,383
------------
RUSSIA 7.5%
Gazprom, ADR............................................. Oil, Gas & Consumable Fuels 241,722 3,077,121
LUKOIL Holdings, ADR..................................... Oil, Gas & Consumable Fuels 101,006 3,195,830
LUKOIL Holdings, ADR (London Exchange)................... Oil, Gas & Consumable Fuels 36,510 1,170,876
Mining and Metallurgical Co. Norilsk Nickel.............. Metals & Mining 44,679 2,077,573
Semiannual Report | 9
Templeton Emerging Markets Fund
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED)(CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------- ---------- ------------
COMMON STOCKS (CONTINUED)
RUSSIA (CONTINUED)
Mobile TeleSystems, ADR.................................. Wireless Telecommunication Services 77,300 $ 1,831,237
OAO TMK.................................................. Energy Equipment & Services 234,548 234,548
------------
11,587,185
------------
SOUTH KOREA 6.2%
Avista Inc............................................... Textiles, Apparel & Luxury Goods 274,480 715,980
Hyundai Development Co................................... Construction & Engineering 165,470 3,086,140
Neopharm Co. Ltd......................................... Personal Products 302,793 668,398
SK Energy Co. Ltd........................................ Oil, Gas & Consumable Fuels 109,364 5,170,622
------------
9,641,140
------------
TAIWAN 2.5%
MediaTek Inc............................................. Semiconductors & Semiconductor Equipment 454,194 3,945,563
------------
THAILAND 8.8%
Amata Corp. Public Co. Ltd., fgn......................... Real Estate Management & Development 6,915,000 669,040
Hemaraj Land and Development Public Co. Ltd., fgn........ Real Estate Management & Development 23,231,900 327,526
Kasikornbank Public Co. Ltd., fgn........................ Commercial Banks 2,251,200 2,769,272
Kiatnakin Bank Public Co. Ltd., fgn...................... Consumer Finance 7,554,400 2,130,059
Land and Houses Public Co. Ltd., fgn..................... Real Estate Management & Development 8,291,232 623,418
PTT Exploration and Production Public Co. Ltd., fgn...... Oil, Gas & Consumable Fuels 1,226,600 3,017,758
PTT Public Co. Ltd., fgn................................. Oil, Gas & Consumable Fuels 578,000 2,492,550
Siam Cement Public Co. Ltd., fgn......................... Construction Materials 608,620 1,665,608
------------
13,695,231
------------
TURKEY 9.9%
Akbank TAS............................................... Commercial Banks 2,952,231 6,807,097
Tupras-Turkiye Petrol Rafinerileri AS.................... Oil, Gas & Consumable Fuels 427,186 3,894,702
Turkcell Iletisim Hizmetleri AS.......................... Wireless Telecommunication Services 957,217 4,757,652
------------
15,459,451
------------
UNITED KINGDOM 1.7%
Anglo American PLC....................................... Metals & Mining 189,200 2,645,242
------------
TOTAL COMMON STOCKS
(COST $183,512,690)................................... 123,610,986
------------
PREFERRED STOCKS 20.0%
BRAZIL 20.0%
Banco Bradesco SA, ADR, pfd.............................. Commercial Banks 624,222 5,443,216
Companhia Vale do Rio Doce, ADR, pfd., A................. Metals & Mining 966,300 10,774,245
Petroleo Brasileiro SA, ADR, pfd......................... Oil, Gas & Consumable Fuels 670,320 15,001,762
------------
TOTAL PREFERRED STOCKS
(COST $18,224,142).................................... 31,219,223
------------
TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS
(COST $201,736,832).................................... 154,830,209
------------
10 | Semiannual Report
Templeton Emerging Markets Fund
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED)(CONTINUED)
SHARES VALUE
---------- ------------
SHORT TERM INVESTMENTS (COST $541,147) 0.4%
MONEY MARKET FUNDS 0.4%
UNITED STATES 0.4%
(b) Franklin Institutional Fiduciary Trust Money
Market Portfolio, 0.25%.......................................................................... 541,147 $ 541,147
------------
TOTAL INVESTMENTS (COST $202,277,979) 99.8%......................................................... 155,371,356
OTHER ASSETS, LESS LIABILITIES 0.2%................................................................. 351,353
------------
NET ASSETS 100.0%................................................................................... $155,722,709
============
See Abbreviations on page 20.
(a) Non-income producing for the twelve months ended February 28, 2009.
(b) See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.
Semiannual Report | 11
Templeton Emerging Markets Fund
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 2009 (unaudited)
Assets:
Investments in securities:
Cost - Unaffiliated issuers .............. $201,736,832
Cost - Sweep Money Fund (Note 7) ......... 541,147
------------
Total cost of investments ................ $202,277,979
------------
Value - Unaffiliated issuers ............. $154,830,209
Value - Sweep Money Fund (Note 7) ........ 541,147
------------
Total value of investments ............... 155,371,356
Foreign currency, at value (cost $29) ....... 27
Receivables:
Dividends ................................ 942,579
Foreign tax .............................. 11,321
------------
Total assets .......................... 156,325,283
------------
Liabilities:
Payables:
Affiliates ............................... 179,091
Custodian fees ........................... 58,384
Deferred tax ................................ 285,915
Accrued expenses and other liabilities ...... 79,184
------------
Total liabilities ..................... 602,574
------------
Net assets, at value ............... $155,722,709
============
Net assets consist of:
Paid-in capital ............................. $212,251,815
Undistributed net investment income ......... 407,637
Net unrealized appreciation (depreciation) .. (47,218,999)
Accumulated net realized gain (loss) ........ (9,717,744)
------------
Net assets, at value ............... $155,722,709
------------
Shares outstanding ............................. 18,073,033
------------
Net asset value per share ...................... $ 8.62
------------
The accompanying notes are an integral part of these financial statements.
12 | Semiannual Report
Templeton Emerging Markets Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended February 28, 2009 (unaudited)
Investment income:
Dividends: (net of foreign taxes $180,030)
Unaffiliated issuers ........................................................ $ 2,501,789
Sweep Money Fund (Note 7) ................................................... 76,799
-------------
Total investment income .................................................. 2,578,588
-------------
Expenses:
Management fees (Note 3a) ...................................................... 1,256,407
Administrative fees (Note 3b) .................................................. 153,227
Transfer agent fees ............................................................ 25,085
Custodian fees (Note 4) ........................................................ 63,718
Reports to shareholders ........................................................ 15,668
Registration and filing fees ................................................... 11,315
Professional fees .............................................................. 20,251
Trustees' fees and expenses .................................................... 19,540
Other .......................................................................... 9,356
-------------
Total expenses ........................................................... 1,574,567
Expense reductions (Note 4) .............................................. (373)
-------------
Net expenses .......................................................... 1,574,194
-------------
Net investment income .............................................. 1,004,394
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................................. (9,227,662)
Foreign currency transactions ............................................... (11,205)
-------------
Net realized gain (loss) .............................................. (9,238,867)
-------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................................... (155,077,836)
Translation of other assets and liabilities denominated in foreign currencies .. 2,927
Change in deferred taxes on unrealized appreciation (depreciation) ............. (280,678)
-------------
Net change in unrealized appreciation (depreciation) .................. (155,355,587)
-------------
Net realized and unrealized gain (loss) ........................................... (164,594,454)
-------------
Net increase (decrease) in net assets resulting from operations ................... $(163,590,060)
=============
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 13
Templeton Emerging Markets Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28, 2009 YEAR ENDED
(UNAUDITED) AUGUST 31, 2008
----------------- ---------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................................. $ 1,004,394 $ 5,447,035
Net realized gain (loss) from investments and foreign currency
transactions ........................................................ (9,238,867) 29,939,997
Net change in unrealized appreciation (depreciation) on investments,
translation of other assets and liabilities denominated in foreign
currencies and deferred taxes ....................................... (155,355,587) (69,032,553)
------------- ------------
Net increase (decrease) in net assets resulting from operations ..... (163,590,060) (33,645,521)
------------- ------------
Distributions to shareholders from:
Net investment income .................................................. (5,503,239) (6,088,805)
Net realized gains ..................................................... (20,586,992) (33,075,457)
------------- ------------
Total distributions to shareholders ....................................... (26,090,231) (39,164,262)
------------- ------------
Net increase (decrease) in net assets ............................... (189,680,291) (72,809,783)
Net assets:
Beginning of period ....................................................... 345,403,000 418,212,783
------------- ------------
End of period ............................................................. $ 155,722,709 $345,403,000
------------- ------------
Undistributed net investment income included in net assets:
End of period ............................................................. $ 407,637 $ 4,906,482
------------- ------------
The accompanying notes are an integral part of these financial statements.
14 | Semiannual Report
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Emerging Markets Fund (Fund) is registered under the Investment
Company Act of 1940, as amended, (1940 Act) as a closed-end investment company.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.
Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of American Depository
Receipts, futures contracts and exchange traded funds). These price movements
are measured against established trigger thresholds for each specific market
proxy to assist in determining if an event has occurred. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services. All security valuation
procedures are approved by the Fund's Board of Trustees.
Semiannual Report | 15
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.
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 on the
Statement of Operations.
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 at a future date. Realized and unrealized gains and losses on these
contracts 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, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.
D. INCOME AND DEFERRED TAXES
No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of February 28, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.
16 | Semiannual Report
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME AND DEFERRED TAXES (CONTINUED)
Foreign securities held by the Fund may be subject to foreign taxation on
dividend income received. Foreign taxes, if any, are recorded based on the tax
regulations and rates that exist in the foreign markets in which the Fund
invests.
The Fund may be subject to a tax imposed on net realized gains on securities of
certain foreign countries. The Fund records an estimated deferred tax liability
for net unrealized gains on these securities in an amount that would be payable
if the securities were disposed of on the valuation date.
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.
Estimated expenses are accrued daily. Dividend income is recorded on the
ex-dividend date except that certain dividends from foreign securities are
recognized as soon as the Fund is notified of the ex-dividend date.
Distributions to shareholders are recorded on the ex-dividend date and are
determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with accounting principles generally accepted in the United States of
America. These differences may be permanent or temporary. Permanent differences
are reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.
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 expenses during the reporting period. Actual results could differ from those
estimates.
G. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. Currently, the Fund expects the
risk of loss to be remote.
Semiannual Report | 17
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
At February 28, 2009, there were an unlimited number of shares authorized
(without par value). During the periods ended February 28, 2009 and August 31,
2008, there were no shares issued; all reinvested distributions were satisfied
with previously issued shares purchased in the open market.
The Fund's Board of Trustees previously authorized an open-market share
repurchase program pursuant to which the Fund may purchase, from time to time,
Fund shares in open-market transactions, at the discretion of management. This
authorization remains in effect. During the periods ended February 28, 2009 and
August 31, 2008, there were no shares repurchased.
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
---------- -----------
Templeton Asset Management Ltd. (TAML) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
A. MANAGEMENT FEES
The Fund pays an investment management fee to TAML based on the average daily
net assets of the Fund as follows:
ANNUALIZED
FEE RATE NET ASSETS
---------- ----------
1.250% Up to and including $1 billion
1.200% Over $1 billion, up to and including $5 billion
1.150% Over $5 billion, up to and including $10 billion
1.100% Over $10 billion, up to and including $15 billion
1.050% Over $15 billion, up to and including $20 billion
1.000% In excess $20 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services of 0.15% per year of the
average daily net assets of the Fund.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended February 28, 2009, the
custodian fees were reduced as noted in the Statement of Operations.
18 | Semiannual Report
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. INCOME TAXES
For tax purposes, realized currency losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At August 31, 2008, the Fund deferred realized currency losses of
$297,000.
At February 28, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ......................... $203,479,290
============
Unrealized appreciation ..................... $ 17,818,646
Unrealized depreciation ..................... (65,926,580)
------------
Net unrealized appreciation (depreciation) .. $(48,107,934)
============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions and passive foreign
investment company shares.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions and passive foreign investment company shares.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended February 28, 2009, aggregated $17,825,873 and $28,270,702,
respectively.
7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (Sweep Money Fund), an open-end investment company managed by Franklin
Advisers, Inc. (an affiliate of the investment manager). Management fees paid by
the Fund are reduced on assets invested in the Sweep Money Fund, in an amount
not to exceed the management and administrative fees paid by the Sweep Money
Fund.
8. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
Semiannual Report | 19
Templeton Emerging Markets Fund
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
9. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), on September 1, 2008.
SFAS 157 defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. The Fund has determined
that the implementation of SFAS 157 did not have a material impact on the Fund's
financial statements.
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of February 28, 2009, in
valuing the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
------------ ------- ------- ------------
ASSETS:
Investments in Securities ....... $155,371,356 $-- $-- $155,371,356
10. NEW ACCOUNTING PRONOUNCEMENTS
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund believes applying the various provisions of
SFAS 161 will not have a material impact on its financial statements.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
20 | Semiannual Report
Templeton Emerging Markets Fund
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 20, 2009 (UNAUDITED)
The Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Fort Lauderdale, Florida, on February 20, 2009. The
purpose of the meeting was to elect four Trustees of the Fund. At the meeting,
the following persons were elected by the shareholders to serve as Trustees of
the Fund: Ann Torre Bates, David W. Niemiec, Larry D. Thompson and Robert E.
Wade.* No other business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
The election of four Trustees:
% OF % OF
SHARES SHARES
% OF PRESENT % OF PRESENT
OUTSTANDING AND OUTSTANDING AND
TERM EXPIRING 2012 FOR SHARES VOTING WITHHELD SHARES VOTING
------------------ ---------- ----------- ------- -------- ----------- -------
Ann Torre Bates ...... 14,146,699 78.28% 93.98% 905,556 5.01% 6.02%
David W. Niemiec ..... 14,162,041 78.36% 94.09% 890,214 4.93% 5.91%
Larry D. Thompson .... 14,135,519 78.21% 93.91% 916,736 5.07% 6.09%
Robert E. Wade ....... 14,149,904 78.29% 94.01% 902,351 4.99% 5.99%
* Charles B. Johnson, Gregory E. Johnson, Harris J. Ashton, Frank J.
Crothers, Edith E. Holiday, Frank A. Olson, and Constantine D.
Tseretopoulos are Trustees of the Fund who are currently serving and whose
terms of office continued after the Annual Meeting of Shareholders.
Semiannual Report | 21
Templeton Emerging Markets Fund
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. If you decide
to use their service, share dividends and capital gains distributions will be
reinvested automatically in shares of the Fund for your account. BNY Mellon
Shareowner Services, P.O. Box 358035, Pittsburgh, PA 15252-8035, will provide
additional Plan information upon request.
Whenever the Fund declares dividends in either cash or shares 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 shares 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 cash payments to the Plan
Administrator, 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 "The Bank of New York Mellon"
and sent to BNY Mellon Shareowner Services, P.O. Box 382009, Pittsburgh, PA
15250-8009, Attention: Templeton Emerging Markets Fund. The Plan Administrator
will apply such payments (less a $5.00 service charge and less a pro rata share
of trading fees) to purchases of Fund shares on the open market.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.
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. The Plan
Administrator's fee for a sale of shares through the Plan is $15.00 per
transaction plus a $0.12 per share trading fee.
A participant may withdraw from the Plan without penalty at any time by written
notice to the Plan Administrator sent to BNY Mellon Shareowner Services, P.O.
Box 358035, Pittsburgh, PA 15252-8035. Upon withdrawal, the participant will
receive, without charge, share certificates issued in the participant's name for
all full shares held by the Plan Administrator; or, if the participant wishes,
the Plan Administrator will sell the shares and send the proceeds to the
participant, less a service charge of $15.00 and less trading fees of $0.12 per
share.
DIRECT DEPOSIT SERVICE FOR REGISTERED SHAREHOLDERS
Cash distributions can now be electronically credited to a checking or saving
account at any financial institution that participates in the Automated Clearing
House ("ACH") system. The Direct Deposit service is provided for registered
shareholders at no charge. To enroll in the service, access your account online
by going to http://vault.bnymellon.com/isd or dial 1-800-416-5585 (toll free)
and follow the instructions. Direct Deposit will begin with the next scheduled
distribution payment date following enrollment in the service.
22 | Semiannual Report
Templeton Emerging Markets Fund
TRANSFER AGENT
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
1-800-416-5585
www.bnymellon.com
DIRECT REGISTRATION
If you are a registered shareholder of the Fund, purchases of shares of the Fund
can be electronically credited to your Fund account at BNY Mellon Shareowner
Services through Direct Registration. This service provides shareholders with a
convenient way to keep track of shares through book entry transactions, to
electronically move book-entry shares between broker-dealers, transfer agents
and DRS eligible issuers, and eliminates the possibility of lost certificates.
For additional information, please contact BNY Mellon Shareowner Services at
1-800-416-5585.
SHAREHOLDER INFORMATION
Shares of Templeton Emerging Markets Fund are traded on the New York Stock
Exchange under the symbol "EMF." Information about the net asset value and the
market price is published each Monday in the WALL STREET JOURNAL, weekly in
BARRON'S and each Saturday in THE NEW YORK TIMES and other newspapers. Daily
market prices for the Fund's shares are published in the "New York Stock
Exchange Composite Transactions" section of newspapers.
For current information about dividends and shareholder accounts, call
1-800-416-5585. Registered shareholders can access their Fund account on-line
with INVESTOR SERVICEDIRECT(R). For information go to BNY Mellon Shareowner
Services' web site at https://vault.bnymellon.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 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, 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
Semiannual Report | 23
Templeton Emerging Markets Fund
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Fund's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Fund uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Fund's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling (800)
SEC-0330.
CERTIFICATIONS
The Fund's Chief Executive Officer - Finance and Administration is required by
the New York Stock Exchange's Listing Standards to file annually with the
Exchange a certification that she is not aware of any violation by the Fund of
the Exchange's Corporate Governance Standards applicable to the Fund. The Fund
has filed such certification.
In addition, the Fund's Chief Executive Officer - Finance and Administration and
Chief Financial Officer and Chief Accounting Officer are required by the rules
of the U.S. Securities and Exchange Commission to provide certain certifications
with respect to the Fund's Form N-CSR and Form N-CSRS (which include the Fund's
annual and semiannual reports to shareholders) that are filed semiannually with
the Commission. The Fund has filed such certifications with its Form N-CSR for
the year ended August 31, 2008. Additionally, the Fund expects to file, on or
about April 30, 2009, such certifications with its Form N-CSRS for the six
months ended February 28, 2009.
24 | Semiannual Report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) 100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030
SEMIANNUAL REPORT
TEMPLETON EMERGING MARKETS FUND
INVESTMENT MANAGER
Templeton Asset Management Ltd.
TRANSFER AGENT
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
Toll free number: (800) 416-5585
Hearing Impaired phone number: (800) 231-5469
Foreign Shareholders phone number: (201) 680-6578
www.melloninvestor.com/isd
FUND INFORMATION
(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 S2009 04/09
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a
copy of its code of ethics that applies to its principal executive
officers and principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is David W. Niemiec and he is
"independent" as defined under the relevant Securities and Exchange
Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Members of the Audit Committee are: Frank J. Crothers, David W. Niemiec, Ann
Torre Bates and Constantine D. Tseretopoulos.
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The board of trustees of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and
Procedures (Policies) adopted by the manager.
The manager has delegated its administrative duties with respect to the voting
of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy
Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All
proxies received by the Proxy Group will be voted based upon the manager's
instructions and/or policies. The manager votes proxies solely in the interests
of the Fund and its shareholders.
To assist it in analyzing proxies, the manager subscribes to RiskMetrics Group
(RiskMetrics), an unaffiliated third party corporate governance research service
that provides in-depth analyses of shareholder meeting agendas, vote
recommendations, recordkeeping and vote disclosure services. In addition, the
manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated
third party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies.
Although RiskMetrics' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from RiskMetrics, Glass Lewis or any other third party to be
determinative of the manager's ultimate decision. As a matter of policy, the
officers, directors/trustees and employees of the manager and the Proxy Group
will not be influenced by outside sources whose interests conflict with the
interests of the Fund and its shareholders. Efforts are made to resolve all
conflicts in the interests of the manager's clients. Material conflicts of
interest are identified by the Proxy Group based upon analyses of client,
distributor, broker dealer and vendor lists, information periodically gathered
from directors and officers, and information derived from other sources,
including public filings. In situations where a material conflict of interest is
identified, the Proxy Group may defer to the voting recommendation of
RiskMetrics, Glass Lewis or those of another independent third party provider of
proxy services; or send the proxy directly to the Fund with the manager's
recommendation regarding the vote for approval. If the conflict is not resolved
by the Fund, the Proxy Group may refer the matter, along with the recommended
course of action by the manager, if any, to an interdepartmental Proxy Review
Committee (which may include portfolio managers and/or research analysts
employed by the manager), for evaluation and voting instructions. The Proxy
Review Committee may defer to the voting recommendation of RiskMetrics, Glass
Lewis or those of another independent third party provider of proxy services; or
send the proxy directly to the Fund. Where the Proxy Group or the Proxy Review
Committee refers a matter to the Fund, it may rely upon the instructions of a
representative of the Fund, such as the board of directors or a committee of the
board.
Where a material conflict of interest has been identified, but the items on
which the manager's vote recommendations differ from Glass Lewis, RiskMetrics,
or another independent third party provider of proxy services relate
specifically to (1) shareholder proposals regarding social or environmental
issues or political contributions, (2) "Other Business" without describing the
matters that might be considered, or (3) items the manager wishes to vote in
opposition to the recommendations of an issuer's management, the Proxy Group may
defer to the vote recommendations of the manager rather than sending the proxy
directly to the Fund for approval.
To avoid certain potential conflicts of interest, the manager will employ echo
voting, if possible, in the following instances: (1) when the Fund invests in an
underlying fund in reliance on any one of Sections 12(d)(1)(E), (F), or (G) of
the 1940 Act, or pursuant to an SEC exemptive order; (2) when the Fund invests
uninvested cash in affiliated money market funds pursuant to an SEC exemptive
order ("cash sweep arrangement"); or (3) when required pursuant to the Fund's
governing documents or applicable law. Echo voting means that the investment
manager will vote the shares in the same proportion as the vote of all of the
other holders of the Fund's shares.
The recommendation of management on any issue is a factor that the manager
considers in determining how proxies should be voted. However, the manager does
not consider recommendations from management to be determinative of the
manager's ultimate decision. As a matter of practice, the votes with respect to
most issues are cast in accordance with the position of the company's
management. Each issue, however, is considered on its own merits, and the
manager will not support the position of the company's management in any
situation where it deems that the ratification of management's position would
adversely affect the investment merits of owning that company's shares.
MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES The manager has adopted general
proxy voting guidelines, which are summarized below. These guidelines are not an
exhaustive list of all the issues that may arise and the manager cannot
anticipate all future situations. In all cases, each proxy will be considered
based on the relevant facts and circumstances.
BOARD OF DIRECTORS. The manager supports an independent board of directors, and
prefers that key committees such as audit, nominating, and compensation
committees be comprised of independent directors. The manager will generally
vote against management efforts to classify a board and will generally support
proposals to declassify the board of directors. The manager will consider
withholding votes from directors who have attended less than 75% of meetings
without a valid reason. While generally in favor of separating Chairman and CEO
positions, the manager will review this issue as well as proposals to restore or
provide for cumulative voting on a case-by-case basis, taking into consideration
factors such as the company's corporate governance guidelines or provisions and
performance.
RATIFICATION OF AUDITORS OF PORTFOLIO COMPANIES. The manager will closely
scrutinize the role and performance of auditors. On a case-by-case basis, the
manager will examine proposals relating to non-audit relationships and non-audit
fees. The manager will also consider, on a case-by-case basis, proposals to
rotate auditors, and will vote against the ratification of auditors when there
is clear and compelling evidence of accounting irregularities or negligence.
MANAGEMENT AND DIRECTOR COMPENSATION. A company's equity-based compensation plan
should be in alignment with the shareholders' long-term interests. The manager
believes that executive compensation should be directly linked to the
performance of the company. The manager evaluates plans on a case-by-case basis
by considering several factors to determine whether the plan is fair and
reasonable, including the RiskMetrics quantitative model utilized to assess such
plans and/or the Glass Lewis evaluation of the plans. The manager will generally
oppose plans that have the potential to be excessively dilutive, and will almost
always oppose plans that are structured to allow the repricing of underwater
options, or plans that have an automatic share replenishment "evergreen"
feature. The manager will generally support employee stock option plans in which
the purchase price is at least 85% of fair market value, and when potential
dilution is 10% or less.
Severance compensation arrangements will be reviewed on a case-by-case basis,
although the manager will generally oppose "golden parachutes" that are
considered to be excessive. The manager will normally support proposals that
require a percentage of directors' compensation to be in the form of common
stock, as it aligns their interests with those of shareholders.
ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. However, as
with all proxy issues, the manager conducts an independent review of each
anti-takeover proposal. On occasion, the manager may vote with management when
the research analyst has concluded that the proposal is not onerous and would
not harm the Fund or its shareholders' interests. The manager generally supports
proposals that require shareholder rights' plans ("poison pills") to be subject
to a shareholder vote and will closely evaluate such plans on a case-by-case
basis to determine whether or not they warrant support. In addition, the manager
will generally vote against any proposal to issue stock that has unequal or
subordinate voting rights. The manager generally opposes any supermajority
voting requirements as well as the payment of "greenmail." The manager generally
supports "fair price" provisions and confidential voting.
CHANGES TO CAPITAL STRUCTURE. The manager realizes that a company's financing
decisions have a significant impact on its shareholders, particularly when they
involve the issuance of additional shares of common or preferred stock or the
assumption of additional debt. The manager will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase. The manager will generally not vote in favor of dual-class capital
structures to increase the number of authorized shares where that class of stock
would have superior voting rights. The manager will generally vote in favor of
the issuance of preferred stock in cases where the company specifies the voting,
dividend, conversion and other rights of such stock and the terms of the
preferred stock issuance are deemed reasonable.
MERGERS AND CORPORATE RESTRUCTURING. Mergers and acquisitions will be subject to
careful review by the research analyst to determine whether they would be
beneficial to shareholders. The manager will analyze various economic and
strategic factors in making the final decision on a merger or acquisition.
Corporate restructuring proposals are also subject to a thorough examination on
a case-by-case basis.
SOCIAL AND CORPORATE POLICY ISSUES. The manager will generally give management
discretion with regard to social, environmental and ethical issues, although the
manager may vote in favor of those that are believed to have significant
economic benefits or implications for the Fund and its shareholders.
GLOBAL CORPORATE GOVERNANCE. Many of the tenets discussed above are applied to
the manager's proxy voting decisions for international investments. However, the
manager must be flexible in these instances and must be mindful of the varied
market practices of each region.
The manager will attempt to process every proxy it receives for all domestic and
foreign issuers. However, there may be situations in which the manager cannot
process proxies, for example, where a meeting notice was received too late, or
sell orders preclude the ability to vote. If a security is on loan, the manager
may determine that it is not in the best interests of the Fund to recall the
security for voting purposes. Also, the manager may abstain from voting under
certain circumstances or vote against items such as "Other Business" when the
manager is not given adequate information from the company.
Shareholders may view the complete Policies online at franklintempleton.com.
Alternatively, shareholders may request copies of the Policies free of charge by
calling the Proxy Group collect at (954)527-7678 or by sending a written request
to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500,
Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's proxy
voting records are available online at franklintempleton.com and posted on the
SEC website at www.sec.gov. The proxy voting records are updated each year by
August 31 to reflect the most recent 12-month period ended June 30.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees that would require disclosure
herein.
ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON EMERGING MARKETS FUND
By /s/LAURA F. FERGERSON
--------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance
and Administration
Date: April 27, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/LAURA F. FERGERSON
--------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance
and Administration
Date: April 27, 2009
By /s/MARK H. OTANI
--------------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date: April 27, 2009