Certified Semi-annual Shareholder Report for Management Investment Companies (n-csrs)
April 26 2022 - 11:55AM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company
Act file number 811-04985
Templeton
Emerging Markets Fund
(Exact name of
registrant as specified in charter)
300 S.E.
2nd Street, Fort Lauderdale, FL 33301-1923
(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
Date of reporting
period: 2/28/22
Item 1. Reports
to Stockholders.
The following is a
copy of the report transmitted to shareholders pursuant to
Rule30e-1 under the Investment Company Act of 1940, as amended (the
“1940 Act”) (17 CFR 270.30e-1.)
A copy of the
notice transmitted to shareholders in reliance on Rule 30e-3 under
the 1940 Act that contains disclosures specified by paragraph
(c)(3) of that rule is included in the Annual Report.
Not
Applicable
.
Templeton
Emerging
Markets
Fund
February
28,
2022
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
Contents
Seminnual
Report
Templeton
Emerging
Markets
Fund
2
Performance
Summary
6
Financial
Highlights
and
Statement
of
Investments
9
Financial
Statements
14
Notes
to
Financial
Statements
17
Important
Information
to
Shareholders
26
Annual
Meeting
of
Shareholders
28
Dividend
Reinvestment
and
Cash
Purchase
Plan
29
Shareholder
Information
31
Visit
franklintempleton.com
for
fund
updates
and
documents,
or
to
find
helpful
financial
planning
tools.
SEMIANNUAL
REPORT
Templeton
Emerging
Markets
Fund
Dear
Shareholder:
This
semiannual
report
for
Templeton
Emerging
Markets
Fund
covers
the
period
ended
February
28
,
2022
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
long-term
capital
appreciation
by
investing,
under
normal
market
conditions,
at
least
80%
of
its
net
assets
in
emerging
country
equity
securities.
Performance
Overview
The
Fund
posted
cumulative
total
returns
of
-11.25%
based
on
market
price
and
-14.54%
based
on
net
asset
value
for
the
six
months
under
review.
The
Fund’s
benchmark,
the
MSCI
Emerging
Markets
(EM)
Index-NR,
posted
a
-9.81%
cumulative
total
return
for
the
same
period.
1
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
on
page
6
.
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.
Economic
and
Market
Overview
Emerging
market
economies
continued
to
grow
during
the
six
months
ended
February
28,
2022,
though
resurgent
COVID-19
outbreaks
and
supply-chain
issues
tempered
growth
in
some
countries.
Several
emerging
market
central
banks
raised
benchmark
interest
rates
to
stem
inflation,
continuing
a
trend
that
started
in
early
2021.
During
the
period,
emerging
market
equities
were
hurt
by
investor
concerns
about
the
global
spread
of
COVID-19
variants,
rising
inflation,
new
Chinese
government
regulations
on
certain
businesses
and
the
Russian
invasion
of
Ukraine.
Regarding
individual
countries,
China’s
year-on-year
growth
rate
moderated
in
2021’s
third
and
fourth
quarters
due
to
supply-chain
issues,
domestic
COVID-19
outbreaks,
power
shortages
and
a
property
market
slowdown.
Taiwan’s
year-
on-year
growth
rate
moderated
in
2021’s
third
quarter
as
private
consumption
was
impacted
by
a
spike
in
infections.
Growth
accelerated
in
the
fourth
quarter
due
to
continued
solid
foreign
demand
for
electronics
and
a
recovery
in
private
spending,
which
was
aided
by
easing
COVID-19-
related
restrictions
and
government
stimulus.
South
Korea’s
year-on-year
growth
rate
moderated
in
the
third
quarter
in
part
due
to
new
restrictions
to
contain
the
Delta
variant,
then
accelerated
slightly
in
the
fourth
quarter
due
to
growth
in
private
and
government
spending.
India’s
year-on-year
growth
rates
moderated
in
2021’s
third
and
fourth
quarters,
but
were
still
robust.
Economic
growth
was
supported
by
progress
in
vaccine
distribution,
which
eased
COVID-19-
related
economic
disruptions,
and
government
stimulus
measures.
Russia’s
year-on-year
growth
rate
moderated
in
the
third
quarter
of
2021,
but
was
still
above
pre-pandemic
levels
due
to
high
commodity
prices.
Brazil’s
year-on-year
growth
rate
moderated
in
2021’s
third
and
fourth
quarters
as
imports
outpaced
exports.
Turning
to
specific
countries’
monetary
policies,
the
People’s
Bank
of
China
lowered
its
benchmark
loan
prime
rate
twice
in
an
effort
to
spur
growth.
The
central
banks
of
Taiwan
and
India
left
their
benchmark
interest
rates
unchanged.
In
contrast,
the
central
banks
of
South
Korea
and
Brazil
raised
their
respective
benchmark
interest
rates
multiple
times
to
combat
rising
inflation.
The
central
bank
of
Russia
also
raised
its
benchmark
interest
rate
multiple
times,
including
more
than
doubling
the
rate
in
late
February
2022
to
offset
ruble
devaluation
caused
by
sanctions
imposed
against
Russia
in
response
to
its
invasion
of
Ukraine.
Geographic
Composition
2/28/22
%
of
Total
Net
Assets
Asia
86.4%
Latin
America
&
Caribbean
11.6%
Europe
3.6%
North
America
3.1%
Middle East & Africa
1.2%
Short-Term
Investments
&
Other
Net
Assets
-5.9%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
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
10
.
Templeton
Emerging
Markets
Fund
In
this
environment,
emerging
market
stocks,
as
measured
by
the
MSCI
EM
Index-NR,
posted
a
-9.81%
total
return
for
the
six
months
ended
February
28,
2022.
1
Chinese
equities
fell
during
the
period
due
to
new
government
regulations
targeting
internet
companies,
strict
lockdowns
to
suppress
COVID-19
outbreaks
and
a
slowing
property
market.
Taiwanese
equities
fell
slightly
during
the
period,
with
the
country’s
strong
technology
export
sector
limiting
losses
in
an
overall
negative
environment
for
equities.
Russian
equities
plummeted
after
countries
across
the
world
imposed
stiff
sanctions
in
response
to
the
Russian
invasion
of
Ukraine.
The
government
halted
stock
market
trading
and
the
ruble
weakened
significantly.
Brazilian
equities
fell
modestly,
with
higher
commodity
prices
and
encouraging
economic
data
late
in
the
period
helping
reverse
some
earlier
losses
caused
by
investor
concerns
about
rising
inflation,
mounting
debt
levels
and
increased
interest
rates.
Investment
Strategy
Our
investment
strategy
employs
a
fundamental,
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
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
During
the
six
months
under
review,
key
contributors
to
the
Fund’s
absolute
performance
included
MediaTek,
Longshine
Technology
Group
and
Kasikornbank.
Taiwan-based
MediaTek
is
a
major
chip
designer
in
the
semiconductor
industry
and
develops
chips
for
smartphones
and
other
technology
devices.
Upbeat
growth
expectations
for
the
semiconductor
industry
buoyed
shares
of
the
company.
MediaTek
reported
better-than-expected
fourth-
quarter
2021
corporate
results,
with
solid
year-on-year
revenue
and
earnings
growth
as
well
as
higher
profit
margins.
Management
also
voiced
strong
revenue
growth
and
above-consensus
profitability
expectations
for
2022.
Signaling
commitment
to
enhancing
shareholder
returns,
a
special
dividend
payment
from
2021-2024
was
also
announced.
Investors
were
also
optimistic
about
demand
for
the
company’s
new
chip
for
5G
smartphones.
China-based
Longshine
Technology
is
an
information
technology
business
that
provides
customized
software
for
the
state
power
grid,
as
well
as
public
utilities
payment
solutions
and
internet
television
services
for
consumers.
Shares
rallied
due
to
solid
third-quarter
2021
revenue
and
net
profit
growth,
along
with
growth
opportunities
as
energy
digitalization
gains
pace
in
China
amid
the
country’s
decarbonization
efforts.
The
company
also
announced
preliminary
attributable
profits
for
2021,
which
registered
double-digit
year-on-year
growth.
Investors
expect
growth
in
digital
grid
investments
and
reforms
in
the
power
market,
Top
10
Countries
2/28/22
a
%
of
Total
Net
Assets
a
a
China
29.6%
South
Korea
24.4%
Taiwan
18.6%
India
10.0%
Brazil
9.3%
United
States
3.1%
Thailand
2.1%
Mexico
1.8%
United
Kingdom
1.6%
Russia
1.3%
Top
10
Holdings
2/28/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
12.7%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Samsung
Electronics
Co.
Ltd.
11.8%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
ICICI
Bank
Ltd.
5.9%
Banks,
India
Alibaba
Group
Holding
Ltd.
5.6%
Internet
&
Direct
Marketing
Retail,
China
MediaTek
,
Inc.
4.3%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Tencent
Holdings
Ltd.
4.2%
Interactive
Media
&
Services,
China
NAVER
Corp.
3.7%
Interactive
Media
&
Services,
South
Korea
China
Merchants
Bank
Co.
Ltd.
3.0%
Banks,
China
Guangzhou
Tinci
Materials
Technology
Co.
Ltd.
2.9%
Chemicals,
China
LG
Corp.
2.4%
Industrial
Conglomerates,
South
Korea
Templeton
Emerging
Markets
Fund
amid
a
growing
requirement
for
upgraded
power
trading
and
settlement
systems,
to
further
drive
Longshine
Technology’s
revenues.
The
company’s
platform
supporting
electric
vehicle
(EV)
charging
services
also
makes
it
a
beneficiary
of
the
rising
adoption
of
EVs.
Kasikornbank
is
one
of
Thailand's
five
largest
banks
in
terms
of
assets.
The
bank
reported
better-than-expected
fourth-quarter
2021
profit
on
lower
provisioning
and
strong
loan
and
net
interest
income
growth.
Management
also
guided
for
stable
improvement
in
loan
growth,
credit
cost
and
asset
quality
for
2022.
The
Thai
economy
returned
to
growth
ahead
of
expectations
in
2021’s
fourth
quarter
due
to
robust
exports,
a
recovery
in
domestic
activity
and
reopening
of
borders
to
tourists,
all
of
which
boosted
expectations
of
recoveries
in
Kasikornbank’s
key
business
areas
such
as
corporate
and
small-
and
medium-sized
enterprise
lending.
A
gradual
reduction
was
also
seen
in
the
bank’s
large,
restructured
loan
book
in
the
fourth
quarter
as
borrowers
exited
from
loan
relief
programs.
Conversely,
major
detractors
from
absolute
performance
included
Alibaba
Group
Holding,
NAVER
and
several
Russian
holdings,
including
Sberbank
of
Russia,
LUKOIL
and
Yandex.
Alibaba
is
the
leading
e-commerce
company
in
China.
Weakening
consumption
trends
amid
repeated
COVID-19
outbreaks
and
concerns
about
intensified
competition
in
the
domestic
e-commerce
market
weighed
on
sentiment
in
the
stock.
An
organizational
restructure
in
late
2021,
following
the
launch
of
several
strategic
initiatives,
suggested
management
had
been
actively
seeking
solutions
to
challenges
faced
by
the
company.
Alibaba
reported
mixed
fourth-quarter
2021
corporate
results
with
above-consensus
earnings,
but
slightly
lower-than-expected
revenue.
News
of
the
Chinese
government
monitoring
domestic
banks’
exposure
to
Alibaba’s
financial
technology
arm
Ant
Group
also
weighed
on
investor
sentiment.
We
remain
confident
in
the
strength
of
Alibaba’s
e-commerce
ecosystem.
The
company
has
also
been
pursuing
a
multi-engine
growth
strategy
for
the
longer
term,
which
includes
building
up
its
cloud
and
international
e-commerce
businesses.
NAVER
operates
South
Korea’s
largest
search
engine
and
offers
e-commerce,
financial
technology,
digital
content,
cloud
and
other
services.
The
company’s
share
price
has
fallen
sharply
since
September
2021
due
to
market
concerns
over
policymakers’
plans
to
potentially
regulate
technology
platforms’
financial
technology
businesses
and
overall
market
dominance.
Although
NAVER
reported
above-consensus
fourth-quarter
2021
revenue
growth,
earnings
missed
market
expectations
on
higher
development
and
operating
costs.
Concerns
that
expansion
into
unprofitable
new
businesses
in
an
uncertain
macroeconomic
environment
further
impacted
market
sentiment.
However,
we
believe
that
NAVER
is
in
a
good
position
to
build
a
thriving
ecosystem
integrating
e-commerce,
payments,
digital
content
and
other
services
based
on
its
foundation
in
search
and
advertising.
We
see
longer-term
monetization
and
growth
opportunities
for
the
company.
Before
Russia’s
invasion
of
Ukraine,
we
had
maintained
our
position
in
Russian
stocks
including
Sberbank,
one
of
the
biggest
banks
in
the
country,
LUKOIL,
a
major
Russian
oil
producer,
and
Yandex,
Russia’s
largest
search
engine,
given
the
belief
that
diplomacy
could
resolve
the
issue.
After
the
invasion,
stock
prices
declined
significantly.
We
trimmed
the
Fund’s
holding
in
Sberbank
as
a
risk
mitigation
measure.
At
the
time
of
writing,
in
addition
to
the
closure
of
the
Russian
market,
trading
in
Russian
companies
whose
shares
are
traded
using
American
and
Global
Depositary
Receipts
(ADRs/GDRs)
listed
in
international
exchanges
has
also
been
suspended.
Given
these
facts,
on
March
4,
2022,
the
Russian
company
securities
that
are
halted
on
all
tradeable
exchanges
were
fair
valued
at
zero
by
the
Franklin
Templeton
Valuation
Committee,
representing
unrealized
depreciation
of
$3,298,993
from
the
Fund
value
as
of
February
28,
2022.
In
concluding
upon
a
zero
value,
we
took
into
account
the
continued
uncertainty
in
the
market,
restrictions
to
trade
the
shares
both
onshore
and
offshore,
and
a
lack
of
any
price
discovery
mechanism
to
provide
indications
of
residual
value.
In
the
past
six
months,
we
increased
the
Fund’s
holdings
in
Brazil,
South
Korea
and
U.S.-listed
companies
with
significant
exposure
to
emerging
markets
due
to
the
availability
of
attractive
investment
opportunities.
In
terms
of
sectors,
additions
were
made
in
the
materials,
consumer
discretionary
and
energy.
We
initiated
exposure
to
several
new
investments
as
we
continued
to
identify
companies
with
sustainable
earnings
power
trading
at
a
discount
to
their
intrinsic
worth.
Key
additions
included
Genpact,
a
U.S.-listed
technology
services
company
with
significant
exposure
to
India,
Petroleo
Brasileiro,
Brazil’s
national
oil
and
gas
company,
and
LG
Chem,
a
South
Korean
petrochemicals
company
that
also
owns
a
majority
stake
in
a
newly
listed
EV
battery
maker.
Exposure
to
Germany
was
also
initiated
via
the
addition
of
Delivery
Hero,
a
German-listed
delivery
company
with
significant
exposure
to
South
Korea,
Saudi
Arabia
and
other
emerging
markets.
Additionally,
we
added
to
our
existing
high-conviction
portfolio
holdings
with
purchases
in
Guangzhou
Tinci
Materials
Technology,
which
produces
electrolytes
for
EV
batteries,
the
aforementioned
Alibaba,
and
POSCO,
a
South
Korean
steel
manufacturer.
Templeton
Emerging
Markets
Fund
In
contrast,
the
Fund
reduced
its
investments
in
Taiwan,
China
and
South
Africa
in
favor
of
opportunities
we
found
more
compelling.
Sectors
which
experienced
the
largest
sales
were
communication
services,
information
technology
and
real
estate.
In
terms
of
key
sales,
we
reduced
positions
in
several
holdings,
including
Taiwanese
semiconductor
company
Taiwan
Semiconductor
Manufacturing
Co.,
South
Korean
diversified
electronics
company
Samsung
Electronics
and
Chinese
internet
services
provider
Tencent
Holdings,
allowing
the
Fund
to
realign
its
portfolio
and
raise
funds
for
new
opportunities.
Thank
you
for
your
continued
participation
in
Templeton
Emerging
Markets
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Sincerely,
Chetan
Sehgal,
CFA
Andrew
Ness,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
February
28,
2022,
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.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
February
28,
2022
Templeton
Emerging
Markets
Fund
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
and
graph
do
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.
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.
Performance
as
of
2/28/22
1
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.
Cumulative
Total
Return
2
Average
Annual
Total
Return
2
Based
on
NAV
3
Based
on
market
price
4
Based
on
NAV
3
Based
on
market
price
4
6-Month
-14.54%
-11.25%
-14.54%
-11.25%
1-Year
-19.39%
-19.28%
-19.39%
-19.28%
5-Year
+38.96%
+48.63%
+6.80%
+8.25%
10-Year
+28.26%
+32.32%
+2.52%
+2.84%
See
page
8
for
Performance
Summary
footnotes.
Templeton
Emerging
Markets
Fund
Performance
Summary
See
page
8
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
9/1/11–8/31/21
Templeton
Emerging
Markets
Fund
Performance
Summary
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
volatility,
economic
instability,
and
social
and
political
developments
of
countries
where
the
Fund
invests.
Emerging
markets,
of
which
frontier
markets
are
a
subset,
are
subject
to
all
of
the
risks
of
foreign
investing
generally
and
have
additional
heightened
risks
due
to
these
markets'
smaller
size
and
lesser
liquidity,
and
lack
of
established
legal,
political,
business
and
social
frameworks
to
support
securities
markets.
The
risks
of
investing
in
traditional
emerging
markets
are
magnified
in
frontier
markets
countries
because
they
generally
have
smaller
economies
and
even
less
developed
capital
markets
than
in
traditional
emerging
markets.
Some
of
these
heightened
risks
may
include
political
and
social
uncertainty
(for
example,
regional
conflicts
and
risk
of
war);
pervasiveness
of
corruption
and
crime
in
these
countries’
economic
systems;
delays
in
settling
portfolio
securities
transactions;
risk
of
loss
arising
out
of
the
system
of
share
registration
and
custody
used
in
these
countries;
greater
sensitivity
to
interest-rate
changes;
currency
and
capital
controls;
currency
exchange
rate
volatility;
and
inflation,
deflation
or
currency
devaluation.
The
Fund
is
actively
managed
but
there
is
no
guarantee
that
the
manager’s
investment
decisions
will
produce
the
desired
results.
The
Fund
may
invest
in
eligible
China
A
shares
(“Stock
Connect
Securities”)
listed
and
traded
on
the
Shanghai
Stock
Exchange
through
the
Shanghai-Hong
Kong
Stock
Connect
program,
as
well
as
eligible
China
A
shares
listed
and
traded
on
the
Shenzhen
Stock
Exchange
through
the
Shenzhen-Hong
Kong
Stock
Connect
program
(collectively,
“Stock
Connect”)
and
may
invest
in
China
Interbank
bonds
traded
on
the
China
Interbank
Bond
Market
(“CIBM”)
through
the
China-Hong
Kong
Bond
Connect
program
(“Bond
Connect”).
Trading
through
Stock
Connect
is
subject
to
a
number
of
restrictions
that
may
affect
the
Fund’s
investments
and
returns.
For
example,
investors
in
Stock
Connect
Securities
are
generally
subject
to
Chinese
securities
regulations
and
the
listing
rules
of
the
respective
Exchange,
among
other
restrictions.
In
addition,
Stock
Connect
Securities
generally
may
not
be
sold,
purchased
or
otherwise
transferred
other
than
through
Stock
Connect
in
accordance
with
applicable
rules.
While
Stock
Connect
is
not
subject
to
individual
investment
quotas,
daily
and
aggregate
investment
quotas
apply
to
all
Stock
Connect
participants,
which
may
restrict
or
preclude
the
Fund’s
ability
to
invest
in
Stock
Connect
Securities.
Trading
in
the
Stock
Connect
program
is
subject
to
trading,
clearance
and
settle-
ment
procedures
that
are
untested
in
China,
which
could
pose
risks
to
the
Fund.
Finally,
the
withholding
tax
treatment
of
dividends
and
capital
gains
payable
to
overseas
investors
currently
is
unsettled.
In
China,
the
Hong
Kong
Monetary
Authority
Central
Money
Markets
Unit
holds
Bond
Connect
securities
on
behalf
of
ultimate
investors
(such
as
the
Fund)
in
accounts
maintained
with
a
China-based
custodian
(either
the
China
Central
Depository
&
Clearing
Co.
or
the
Shanghai
Clearing
House).
This
recordkeeping
system
subjects
the
Fund
to
various
risks,
including
the
risk
that
the
Fund
may
have
a
limited
ability
to
enforce
rights
as
a
bondholder
and
the
risks
of
settlement
delays
and
counterparty
default
of
the
Hong
Kong
sub-custodian.
In
addition,
enforcing
the
ownership
rights
of
a
beneficial
holder
of
Bond
Connect
securities
is
untested
and
courts
in
China
have
limited
experience
in
applying
the
concept
of
beneficial
ownership.
Bond
Connect
uses
the
trading
infrastructure
of
both
Hong
Kong
and
China
and
is
not
available
on
trading
holidays
in
Hong
Kong.
As
a
result,
prices
of
securities
purchased
through
Bond
Connect
may
fluctuate
at
times
when
a
Fund
is
unable
to
add
to
or
exit
its
position.
Securities
offered
through
Bond
Connect
may
lose
their
eligibility
for
trading
through
the
program
at
any
time.
If
Bond
Connect
securities
lose
their
eligibility
for
trading
through
the
program,
they
may
be
sold
but
can
no
longer
be
purchased
through
Bond
Connect.
The
application
and
interpretation
of
the
laws
and
regulations
of
Hong
Kong
and
China,
and
the
rules,
policies
or
guidelines
published
or
applied
by
relevant
regulators
and
exchanges
in
respect
of
the
Stock
Connect
and
Bond
Connect
programs,
are
uncertain,
and
they
may
have
a
detrimental
effect
on
the
Fund’s
investments
and
returns.
Russia’s
regional
conflicts,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
imposed
broad-ranging
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
regional
conflicts.
The
United
States
and
other
countries
have
also
imposed
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
regional
conflicts.
These
sanctions,
as
well
as
any
other
consequences
related
to
the
regional
conflicts,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
sanctions
related
to
the
regional
conflicts.
To
the
extent
that
the
Fund
has
exposure
to
Russian
investments
or
investments
in
countries