(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 13(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 experts are Ann Torre Bates and David W. Niemiec and they
are "independent" as defined under the relevant Securities and
Exchange Commission Rules and Releases.
Principal Accountant Fees
and Services.
(a) Audit Fees
The
aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant’s annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $50,267 for the fiscal year ended August 31, 2020 and $46,834 for the
fiscal year ended August 31, 2019.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $0 for the fiscal year ended August 31, 2020 and $20,000 for the fiscal year ended August 31, 2019. The services for which these fees were paid included professional fees in connection with tax treatment of equipment lease transactions and professional fees in connection with an Indonesia withholding tax refund claim.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4
were $0 for the fiscal year ended August 31, 2020 and $111 for the fiscal year ended August 31, 2019. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $137,944 for the fiscal year ended August 31, 2020 and $7,700 for the fiscal year ended August 31, 2019. The services for which these fees were paid included the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures, and valuation services related to a fair value engagement.
(e) (1) The registrant’s
audit committee is directly responsible for approving the services to be
provided by the auditors, including:
(i) pre-approval of
all audit and audit related services;
(ii) pre-approval of
all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of
all non-audit related services to be provided to the registrant by the auditors
to the registrant’s investment adviser or to any entity that controls, is
controlled by or is under common control with the registrant’s investment
adviser and that provides ongoing services to the registrant where the
non-audit services relate directly to the operations or financial reporting of
the registrant; and
(iv) establishment by
the audit committee, if deemed necessary or appropriate, as an alternative to
committee pre-approval of services to be provided by the auditors, as required
by paragraphs (ii) and (iii) above, of policies and procedures to permit such
services to be pre-approved by other means, such as through establishment of
guidelines or by action of a designated member or members of the committee;
provided the policies and procedures are detailed as to the particular service
and the committee is informed of each service and such policies and procedures
do not include delegation of audit committee responsibilities, as contemplated
under the Securities Exchange Act of 1934, to management; subject, in the case
of (ii) through (iv), to any waivers, exceptions or exemptions that may be
available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant
were $137,944 for the fiscal year ended August 31, 2020 and $27,811 for the fiscal year ended August 31, 2019.
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Members of the Audit Committee are: Ann Torre Bates, David
W. Niemiec 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 investment manager, Templeton Asset Management Ltd. (Asset
Management)in accordance with the Proxy Voting Policies and Procedures
(Policies) adopted by the investment manager.
The investment manager has delegated its administrative
duties with respect to the voting of proxies for securities 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 investment manager’s instructions and/or
policies. The investment manager votes proxies solely in the best interests of
the Fund and its shareholders.
To assist it in analyzing proxies of equity securities, the
investment manager subscribes to Institutional Shareholder Services, Inc.
(ISS), an unaffiliated third-party corporate governance research service that
provides in-depth analyses of shareholder meeting agendas, vote
recommendations, vote execution services, ballot reconciliation services,
recordkeeping and vote disclosure services. In addition, the investment 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, as well as a limited
subscription to its international research. Also, the investment manager has a
supplemental subscription to Egan-Jones Proxy Services (Egan-Jones), an
unaffiliated third party proxy advisory firm, to receive analyses and vote
recommendations. Although analyses provided by ISS, Glass Lewis, Egan-Jones,
and/or another independent third party proxy service provider (each a Proxy
Service) are thoroughly reviewed and considered in making a final voting
decision, the investment manager does not consider recommendations from a Proxy
Service or any third party to be determinative of the investment manager's
ultimate decision. Rather, the investment manager exercises its independent
judgment in making voting decisions. For most proxy proposals, the investment
manager’s evaluation should result in the same position being taken for all
Funds. In some cases, however, the evaluation may result in a Fund voting
differently, depending upon the nature and objective of the Fund, the
composition of its portfolio and other factors. As a matter of policy, the
officers, directors/trustees and employees of the investment 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 best interests of the investment 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 vote
consistent with the voting recommendation of a Proxy Service; or send the proxy
directly to the Fund's board or a committee of the board with the investment
manager's recommendation regarding the vote for approval.
Where a material conflict of interest has been identified,
but the items on which the investment manager’s vote recommendations differ
from a Proxy Service and relate specifically to (1) shareholder proposals
regarding social or environmental issues, (2) “Other Business” without
describing the matters that might be considered, or (3) items the investment
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
investment manager rather than sending the proxy directly to the Fund's board
or a board committee for approval.
To avoid certain potential conflicts of interest, the
investment manager will employ echo voting or pass-through 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)(F) or (G) of the 1940 Act, the rules
thereunder, or pursuant to a SEC exemptive order thereunder; (2) when the Fund
invests uninvested cash in affiliated money market funds pursuant to the rules
under the 1940 Act or any exemptive orders thereunder (“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
underlying fund's shares. With respect to instances when a Franklin Templeton
U.S. registered investment company invests in an underlying fund in reliance on
any one of Sections 12(d)(1)(F) or (G) of the 1940 Act, the rules thereunder,
or pursuant to an SEC exemptive order thereunder, and there are no other
unaffiliated shareholders also invested in the underlying fund, the investment
manager will vote in accordance with the recommendation of such investment
company’s board of trustees or directors. In addition, to avoid certain
potential conflicts of interest, and where required under a fund’s governing
documents or applicable law, the investment manager will employ pass-through
voting when a Franklin Templeton U.S. registered investment company invests in
an underlying fund in reliance on Section 12(d)(1)(E) of the 1940 Act, the
rules thereunder, or pursuant to an SEC exemptive order thereunder. In
“pass-through voting,” a feeder fund will solicit voting instructions from its
shareholders as to how to vote on the master fund’s proposals.
The recommendation of management on any issue is a factor
that the investment manager considers in determining how proxies should be
voted. However, the investment manager does not consider recommendations from
management to be determinative of the investment 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 investment 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.
Engagement with issuers
.
The investment manager believes that engagement with issuers is important to
good corporate governance and to assist in making proxy voting decisions. The
investment manager may engage with issuers to discuss specific ballot items to
be voted on in advance of an annual or special meeting to obtain further
information or clarification on the proposals. The investment manager may also
engage with management on a range of environmental, social or corporate
governance issues throughout the year.
Investment
manager’s proxy voting policies and principles
The investment 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 investment manager cannot anticipate all
future situations. In all cases, each proxy and proposal (including both
management and shareholder proposals) will be considered based on the relevant
facts and circumstances on a case-by-case basis.
Board of directors.
The investment manager supports an independent, diverse board of
directors, and prefers that key committees such as audit, nominating, and
compensation committees be comprised of independent directors. The investment
manager supports boards with strong risk management oversight. The investment
manager will generally vote against management efforts to classify a board and
will generally support proposals to declassify the board of directors. The
investment 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 investment 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. The
investment manager generally will support non-binding shareholder proposals to
require a majority vote standard for the election of directors; however, if
these proposals are binding, the investment manager will give careful review on
a case-by-case basis of the potential ramifications of such implementation.
In the event of a contested election, the investment
manager will review a number of factors in making a decision including
management’s track record, the company’s financial performance, qualifications
of candidates on both slates, and the strategic plan of the dissidents and/or
shareholder nominees.
Ratification of auditors of portfolio companies.
The investment manager will closely scrutinize the independence,
role and performance of auditors. On a case-by-case basis, the investment
manager will examine proposals relating to non-audit relationships and
non-audit fees. The investment 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 a lack of independence,
accounting irregularities or negligence.
The
investment manager may also consider whether the ratification of auditors has
been approved by an appropriate audit committee that meets applicable
composition and independence requirements.
Management and director compensation.
A company’s equity-based compensation plan should be in alignment
with the shareholders’ long-term interests. The investment manager believes
that executive compensation should be directly linked to the performance of the
company. The investment manager evaluates plans on a case-by-case basis by
considering several factors to determine whether the plan is fair and
reasonable, including the ISS quantitative model utilized to assess such plans
and/or the Glass Lewis evaluation of the plans. The investment 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 investment 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 investment manager will generally oppose
“golden parachutes” that are considered to be excessive. The investment 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.
The investment manager will review non-binding say-on-pay
proposals on a case-by-case basis, and will generally vote in favor of such
proposals unless compensation is misaligned with performance and/or
shareholders’ interests, the company has not provided reasonably clear
disclosure regarding its compensation practices, or there are concerns with the
company’s remuneration practices.
Anti-takeover mechanisms and related issues.
The investment manager generally opposes anti-takeover measures
since they tend to reduce shareholder rights. However, as with all proxy issues,
the investment manager conducts an independent review of each anti-takeover
proposal. On occasion, the investment 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 investment 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 investment manager will generally vote against any proposal to
issue stock that has unequal or subordinate voting rights. The investment
manager generally opposes any supermajority voting requirements as well as the
payment of “greenmail.” The investment manager generally supports “fair price”
provisions and confidential voting. The investment manager will review a
company’s proposal to reincorporate to a different state or country on a
case-by-case basis taking into consideration financial benefits such as tax
treatment as well as comparing corporate governance provisions and general
business laws that may result from the change in domicile.
Changes to capital structure.
The investment 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 investment manager will review, on a case-by-case
basis, proposals by companies to increase authorized shares and the purpose for
the increase. The investment 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 investment 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. The
investment manager will review proposals seeking preemptive rights on a
case-by-case basis.
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 investment 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.
Environmental and social issues.
The investment manager considers environmental and social issues
alongside traditional financial measures to provide a more comprehensive view
of the value, risk and return potential of an investment. Companies may face
significant financial, legal and reputational risks resulting from poor
environmental and social practices, or negligent oversight of environmental or
social issues. Franklin Templeton’s “Responsible Investment Principles and
Policies” describes the investment manager’s approach to consideration of
environmental, social and governance issues within the investment manager’s
processes and ownership practices.
The investment manager will review shareholder proposals on
a case-by-case basis and may support those that serve to enhance value or
mitigate risk, are drafted appropriately, and do not disrupt the course of
business or require a disproportionate or inappropriate use of company
resources. In the investment manager’s experience, those companies that are
managed well are often effective in dealing with the relevant environmental and
social issues that pertain to their business. As such, the investment manager
will generally give management discretion with regard to environmental and
social issues. However, in cases where management and the board have not
demonstrated adequate efforts to mitigate material environmental or social
risks, have engaged in inappropriate or illegal conduct, or have failed to
adequately address current or emergent risks that threaten shareholder value,
the investment manager may choose to support well-crafted shareholder proposals
that serve to promote or protect shareholder value. This may include seeking
appropriate disclosure regarding material environmental and social issues.
The investment manager will consider supporting a
shareholder proposal seeking disclosure and greater board oversight of lobbying
and corporate political contributions if the investment manager believes that
there is evidence of inadequate oversight by the company’s board, if the
company’s current disclosure is significantly deficient, or if the disclosure
is notably lacking in comparison to the company’s peers.
Governance matters.
The investment manager generally supports the right of
shareholders to call special meetings and act by written consent. However, the
investment manager will review such shareholder proposals on a case-by-case
basis in an effort to ensure that such proposals do not disrupt the course of
business or require a disproportionate or inappropriate use of company
resources.
Proxy access.
In cases where the investment manager is satisfied with company
performance and the responsiveness of management, it will generally vote
against shareholder proxy access proposals not supported by management. In
other instances, the investment manager will consider such proposals on a
case-by-case basis, taking into account factors such as the size of the
company, ownership thresholds and holding periods, nomination limits (e.g.,
number of candidates that can be nominated), the intentions of the shareholder
proponent, and shareholder base.
Global corporate governance.
Many of the tenets discussed above are applied to the investment
manager's proxy voting decisions for international investments. However, the
investment manager must be flexible in these worldwide markets. Principles of
good corporate governance may vary by country, given the constraints of a
country’s laws and acceptable practices in the markets. As a result, it is on
occasion difficult to apply a consistent set of governance practices to all
issuers. As experienced money managers, the investment manager's analysts are
skilled in understanding the complexities of the regions in which they specialize
and are trained to analyze proxy issues germane to their regions.
The investment manager will generally attempt to process
every proxy it receives for all domestic and foreign securities. However, there
may be situations in which the investment manager may be unable to successfully
vote a proxy, or may choose not to vote a proxy, such as where: (i) a proxy
ballot was not received from the custodian bank; (ii) a meeting notice was
received too late; (iii) there are fees imposed upon the exercise of a vote and
it is determined that such fees outweigh the benefit of voting; (iv) there are
legal encumbrances to voting, including blocking restrictions in certain
markets that preclude the ability to dispose of a security if the investment
manager votes a proxy or where the investment manager is prohibited from voting
by applicable law, economic or other sanctions, or other regulatory or market
requirements, including but not limited to, effective Powers of Attorney; (v)
additional documentation or the disclosure of beneficial owner details is
required; (vi) the investment manager held shares on the record date but has
sold them prior to the meeting date; (vii) a proxy voting service is not
offered by the custodian in the market; (viii) due to either system error or
human error, the investment manager’s intended vote is not correctly submitted;
(ix) the investment manager believes it is not in the best interest of the Fund
or its shareholders to vote the proxy for any other reason not enumerated
herein; or (x) a security is subject to a securities lending or similar program
that has transferred legal title to the security to another person.
In some non-U.S. jurisdictions, even if the investment
manager uses reasonable efforts to vote a proxy on behalf of the Fund, such
vote or proxy may be rejected because of (a) operational or procedural issues
experienced by one or more third parties involved in voting proxies in such
jurisdictions; (b) changes in the process or agenda for the meeting by the
issuer for which the investment manager does not have sufficient notice; or (c)
the exercise by the issuer of its discretion to reject the vote of the
investment manager. In addition, despite the best efforts of the Proxy Group
and its agents, there may be situations where the investment manager's votes
are not received, or properly tabulated, by an issuer or the issuer's agent.
The investment manager or its affiliates may, on behalf of
one or more of the proprietary registered investment companies advised by the
investment manager or its affiliates, determine to use its best efforts to
recall any security on loan where the investment manager or its affiliates (a)
learn of a vote on a material event that may affect a security on loan and (b)
determine that it is in the best interests of such proprietary registered
investment companies to recall the security for voting purposes.
Procedures for meetings involving fixed income securities
& privately held issuers.
From time to time, certain custodians may process events for fixed
income securities through their proxy voting channels rather than corporate
action channels for administrative convenience. In such cases, the Proxy Group
will receive ballots for such events on the ISS voting platform. The Proxy
Group will solicit voting instructions from the investment manager for each
Fund involved. If the Proxy Group does not receive voting instructions from the
investment manager, the Proxy Group will take no action on the event. The
investment manager may be unable to vote a proxy for a fixed income security,
or may choose not to vote a proxy, for the reasons described above.
In the rare instance where there is a vote for a privately
held issuer, the decision will generally be made by the relevant portfolio
managers or research analysts.
The Proxy Group will monitor such meetings involving fixed
income securities or privately held issuers for conflicts of interest in
accordance with these procedures. If a fixed income or privately held issuer is
flagged as a potential conflict of interest, the investment manager may
nonetheless vote as it deems in the best interests of the Fund. The investment
manager will report such decisions on an annual basis to the Fund board as may
be required.
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, 300 S.E.
2nd Street, Fort Lauderdale, FL 33301-1923, 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.
(a)(1) As of October 27, 2020,
the portfolio manager of the Fund is as follows:
Chetan Sehgal CFA,
Director of Global Emerging Markets/Small Cap
Strategies of the Templeton Emerging Markets Group and portfolio manager of
Asset Management
Mr. Sehgal has been a
portfolio manager of the emerging markets equity portion of the Fund since
March 2017. He has primary responsibility for the investments of the Fund. He
has final authority over all aspects of the Fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio risk assessment, and the management of daily cash balances in accordance
with anticipated investment management requirements. The degree to which he may
perform these functions, and the nature of these functions, may change from
time to time. He joined Franklin Templeton Investments in 1995.
CFA and Chartered Financial Analyst
are trademarks owned by CFA Institute.
(a)(2) This section reflects
information about the portfolio manager as of the fiscal year ended August 31,
2020.
The following table shows the
number of other accounts managed by each portfolio manager and the total assets
in the accounts managed within each category:
|
Number of Other Registered
Investment Companies Managed1
|
Assets of Other Registered
Investment Companies Managed
|
Number of Other Pooled
Investment Vehicles Managed1
|
Assets of Other Pooled
Investment Vehicles Managed
|
Number of Other Accounts
Managed1
|
Assets of Other Accounts
Managed
|
|
|
|
|
|
|
|
The
various pooled investment vehicles and accounts listed are managed by a team of
investment professionals. Accordingly, the individual manager listed would not
be solely responsible for managing such listed amounts.
Portfolio managers that
provide investment services to the Fund may also provide services to a variety
of other investment products, including other funds, institutional accounts and
private accounts. The advisory fees for some of such other products and
accounts may be different than that charged to the Fund and may include performance
based compensation (as noted, in the chart above, if any). This may result in
fees that are higher (or lower) than the advisory fees paid by the Fund. As a
matter of policy, each fund or account is managed solely for the benefit of the
beneficial owners thereof. As discussed below, the separation of the trading
execution function from the portfolio management function and the application
of objectively based trade allocation procedures help to mitigate potential
conflicts of interest that may arise as a result of the portfolio managers
managing accounts with different advisory fees.
Conflicts.
The management of multiple funds, including
the Fund, and accounts may also give rise to potential conflicts of interest if
the funds and other accounts have different objectives, benchmarks, time
horizons, and fees as the portfolio manager must allocate his or her time and
investment ideas across multiple funds and accounts. The investment manager
seeks to manage such competing interests for the time and attention of
portfolio managers by having portfolio managers focus on a particular
investment discipline. Most other accounts managed by a portfolio manager are
managed using the same investment strategies that are used in connection with
the management of the Fund. Accordingly, portfolio holdings, position sizes,
and industry and sector exposures tend to be similar across similar portfolios,
which may minimize the potential for conflicts of interest. As noted above, the
separate management of the trade execution and valuation functions from the
portfolio management process also helps to reduce potential conflicts of
interest. However, securities selected for funds or accounts other than the
Fund may outperform the securities selected for the Fund. Moreover, if a
portfolio manager identifies a limited investment opportunity that may be
suitable for more than one fund or other account, the Fund may not be able to
take full advantage of that opportunity due to an allocation of that
opportunity across all eligible funds and other accounts. The investment
manager seeks to manage such potential conflicts by using procedures intended
to provide a fair allocation of buy and sell opportunities among funds and
other accounts.
The structure of a portfolio manager’s compensation may
give rise to potential conflicts of interest. A portfolio manager’s base pay
and bonus tend to increase with additional and more complex responsibilities
that include increased assets under management. As such, there may be a
relationship between a portfolio manager’s marketing or sales efforts and his
or her bonus.
Finally, the management of personal accounts by a
portfolio manager may give rise to potential conflicts of interest. While the
funds and the manager have adopted a code of ethics which they believe contains
provisions reasonably necessary to prevent a wide range of prohibited
activities by portfolio managers and others with respect to their personal
trading activities, there can be no assurance that the code of ethics addresses
all individual conduct that could result in conflicts of interest.
The manager and the Fund have
adopted certain compliance procedures that are designed to address these, and
other, types of conflicts. However, there is no guarantee that such procedures
will detect each and every situation where a conflict arises.
Compensation.
The investment manager seeks
to maintain a compensation program that is competitively positioned to attract,
retain and motivate top-quality investment professionals. Portfolio managers
receive a base salary, a cash incentive bonus opportunity, an equity
compensation opportunity, and a benefits package. Portfolio manager
compensation is reviewed annually and the level of compensation is based on
individual performance, the salary range for a portfolio manager’s level of
responsibility and Franklin Templeton guidelines. Portfolio managers are
provided no financial incentive to favor one fund or account over another. Each
portfolio manager’s compensation consists of the following three elements:
Base salary
Each portfolio manager is paid a base salary.
Annual bonus
Annual bonuses are structured to align the interests
of the portfolio manager with those of the Fund’s shareholders. Each portfolio
manager is eligible to receive an annual bonus. Bonuses generally are split
between cash and equity which vest over a three-year period. The deferred
equity-based compensation is intended to build a vested interest of the
portfolio manager in the mutual funds they advise. The bonus plan seeks to
provide a competitive level of annual bonus compensation, commensurate with the
portfolio manager’s consistently strong investment performance. In accordance
with Franklin Templeton guidelines, the Chief Investment Officer and/or other
officers of the portfolio manager who also bear responsibility for the account,
have discretion in the granting of annual bonuses. The following factors are
generally considered when determining bonuses:
Stock selection.
The quality and
success of a portfolio manager’s purchase and sale recommendations are
considered when granting bonus awards.
Investment performance.
Primary
consideration is given to the performance of their portfolios relative to
those portfolios with similar objectives and restrictions.
Non-investment performance.
The more
qualitative contributions of a portfolio manager to the company’s business
and the investment management team, such as superior client service, are
evaluated in determining the amount of any bonus award.
Responsibilities.
The characteristics
and complexity of accounts managed by the portfolio manager are factored
in the manager’s appraisal.
Research.
Where the
portfolio management team also has research responsibilities, each
portfolio manager is evaluated on productivity and quality of recommendations
over time.
Additional long-term equity-based compensation
Portfolio
managers may also be awarded restricted shares or units of Resources stock or
restricted shares or units of one or more mutual funds. Awards of such deferred
equity-based compensation typically vest over time, so as to create incentives
to retain key talent.
Benefits
Portfolio managers
also participate in benefit plans and programs available generally to all
employees of the investment manager.
Ownership
of Fund shares.
The
investment manager has a policy of encouraging portfolio managers to invest in
the funds they manage. Exceptions arise when, for example, a fund is closed to
new investors or when tax considerations or jurisdictional constraints cause
such an investment to be inappropriate for the portfolio manager. The
following is the dollar range of Fund shares beneficially owned by each
portfolio manager (such amounts may change from time to time):
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Dollar Range of Fund Shares Beneficially Owned
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Note:
Because the portfolio managers are all foreign nationals, they do not hold
shares in this U.S. registered Fund; however they own shares in other similar
Franklin Templeton funds managed by them, registered offshore and appropriate
for foreign nationals.
Item 9. Purchases of
Equity Securities by Closed-End Management Investment Company and Affiliated
Purchasers.
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|
|
|
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Total Number of Shares
Purchased
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Average Price Paid per
Share
|
Total Number of Shares Purchased
as Part of Publicly Announced Plans or Program
|
Maximum Number (or
Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans
or Programs
|
Month #1 (3/1/20 - 3/31/20)
|
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Month #2 (4/1/20 - 4/30/20)
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Month #3 (5/1/20 - 5/31/20)
|
|
|
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Month #4 (6/1/20 - 6/30/20)
|
|
|
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Month #5 (7/1/20 - 7/31/20)
|
|
|
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Month #6 (8/1/20 - 8/31/20)
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|
|
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The Board 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. Effective December 13, 2018, the Board approved a
modification to its existing open-market share repurchase program to authorize
the Fund to repurchase an additional 10% of the Fund’s shares outstanding in
open market transactions, at the discretion of management. Since the inception
of the program, the Fund had repurchased a total of 1,831,864 shares.
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 provide reasonable
assurance that information required to be disclosed in the Registrant’s filings
under the Securities Exchange Act of 1934, as amended, 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: During the period covered by this report, a
third-party service provider commenced performing certain accounting and
administrative services for the Registrant that are subject to Franklin
Templeton’s oversight.
Item 12. Disclosure of
Securities Lending Activities for Closed-End Management Investment Company.
Securities
lending agent
The board of trustees
has approved the Fund’s participation in a securities lending program. Under the
securities lending program, JP Morgan Chase Bank serves as the Fund’s
securities lending agent.
For
the fiscal year ended August 31, 2020, the income earned by the Fund as well as
the fees and/or compensation paid by the Fund in dollars pursuant to a
securities lending agreement between the Trust with respect to the Fund and the
Securities Lending Agent were as follows (figures may differ from those shown
in shareholder reports due to time of availability and use of estimates):
Gross income
earned by the Fund from securities lending activities
|
|
Fees and/or
compensation paid by the Fund for securities lending activities and related
services
|
|
Fees paid to Securities Lending Agent from revenue split
|
|
Fees paid for any cash collateral management service (including
fees deducted from a pooled cash collateral reinvestment vehicle) not
included in a revenue split
|
|
Administrative fees not included in a revenue split
|
|
Indemnification fees not included in a revenue split
|
|
Rebate (paid to borrower)
|
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Other fees not included above
|
|
Aggregate
fees/compensation paid by the Fund for securities lending activities
|
|
Net income
from securities lending activities
|
|
(a)(2)
Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer -
Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and
Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer -
Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and
Chief Accounting Officer
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\MATTHEW T. HINKLE ____
Chief Executive Officer -
Finance
and Administration
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\MATTHEW T. HINKLE ____
Chief Executive Officer -
Finance
and Administration
By _S\ROBERT G.
KUBILIS______
Chief Financial Officer
and