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Dear Shareholder:

We are pleased to bring you Templeton Emerging Markets Fund’s annual report for the fiscal year ended August 31, 2017.

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 delivered cumulative total returns of +33.10% based on market price and +33.40% based on net asset value for the 12 months under review. You can find the Fund’s long-term performance data in the Performance Summary beginning 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 in general continued to grow faster than developed market economies during the 12 months under review. China’s economy grew faster in the first half of 2017 compared to the prior-year period, driven by solid growth in industrial production, services, fixed-asset investment, retail sales, and imports and exports. India’s economy grew at a slower pace during the period, with the June 2017 quarter pressured by slower consumer spending and export growth. In the second quarter, Russia’s economy grew at the fastest annualized rate in nearly five years, driven by growth in wholesale and retail trade, mining, manufacturing, and construction. Brazil’s economy grew in the first two quarters of 2017 compared to the prior-year periods, following the recession in 2015–2016. After two quarterly declines, South Africa’s gross domestic product grew in 2017’s second quarter, driven by agriculture, forestry and fishing growth. Among other emerging markets, South Korea’s, Taiwan’s and Hungary’s economies continued to grow.

Geographic Composition

Based on Total Net Assets as of 8/31/17

Several central banks, including those of Mexico and Turkey, raised their benchmark interest rates to control inflation, while some, including those of South Africa and Chile, lowered their benchmark interest rates to promote economic growth. The Bank of Russia reduced its key interest rate several times, noting at its July meeting that it still has the capacity to reduce rates over the next two quarters. Brazil’s central bank cut its benchmark interest rate several times during the period to spur economic growth. India’s central bank reduced its benchmark interest rate in August due to slower inflation growth, after keeping it unchanged throughout most of the period. China’s central bank left its benchmark interest rate unchanged during the period.

Emerging market stocks rose significantly during the 12 months under review, as corporate earnings growth and encouraging economic data from China and other emerging market countries helped offset investor concerns about lower commodity prices and geopolitical tensions in the Korean peninsula and other regions. Further supporting stocks were emerging market currencies’ overall strength against the US dollar, subsiding concerns about the potential for a protectionist US trade policy, and investment inflows into emerging market equity funds. In this environment, emerging market stocks, as

measured by the MSCI Emerging Markets Index, generated a +24.99% total return for the 12 months ended August 31, 2017.¹

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 12 months under review, key contributors to the Fund’s absolute performance included investments in Brilliance China Automotive Holdings, Samsung Electronics and Taiwan Semiconductor Manufacturing Co. (TSMC).

Brilliance China Automotive manufactures and sells automobiles to the Chinese domestic market, predominantly through its joint venture with German luxury car manufacturer BMW. The company reported solid revenue and earnings growth for the first half of 2017, driven by strong sales volume growth. Brilliance China’s plans to establish a new joint venture with French automobile manufacturer Renault and positive management guidance also drove its share price performance. Expectations for a continuation of strong sales momentum, supported by new vehicle launches, resilient luxury car demand and the continued rise of China’s upper middle class further supported investor sentiment in the stock.

Samsung Electronics is a major South Korea-based manufacturer of consumer electronics. It is one of the world’s largest manufacturers of mobile phones, smartphones, tablets and televisions. The company is also a leading supplier of memory chips for high-end phones and is a key provider of OLED (organic light-emitting diodes) displays. Samsung Electronics reported strong first-half 2017 corporate results, with record-high operating profits in the second quarter, driven by the semiconductors division. Proposed share buybacks, the announcement of a cancelation of all existing Treasury shares

Top 10 Countries

8/31/17

and strong demand for its new smartphones also supported investor sentiment.

TSMC is the world’s largest independent integrated circuit foundry. Based in Taiwan, it produces a wide variety of semiconductors on an outsourced basis for other companies in the technology hardware and equipment industry. Its products are used in computers and other consumer electronics, including iPhones. High expectations for the upcoming iPhone models drove investor sentiment in the stock despite reports of a decline in second-quarter 2017 revenues. The development of emerging memory technologies to reduce power consumption and process costs also led investors to adopt a positive view on the company.

In contrast, key detractors from the Fund’s absolute performance included positions in IMAX, Hyundai Development Co.–Engineering & Construction and Tata Motors.

IMAX is one of the world’s premier entertainment technology companies, specializing in immersive motion picture technologies. The US-based company combines proprietary software, theater architecture and equipment to create high quality motion picture experiences. Its systems are used globally, including a notable market position in China. Disappointing corporate results over the first two quarters of 2017 pressured its shares. Revenues and gross profit margin declined in the second quarter compared to the prior-year period. First-quarter gross margin was also down from the prior-year period, as box-office figures in early 2016 were helped by a stronger movie slate. The company announced a

cost-cutting program and proposed further share buybacks during the reporting period.

Hyundai Development is one of South Korea’s leading residential property developers. With its strong IPARK brand name, the company is one of the largest participants in the country’s residential construction business. Its share price was relatively volatile during the period as investors reacted to quarterly company earnings reports. Below-consensus fourth-quarter 2016 operating profits, mainly due to higher expenses, weighed on investor sentiment. However, solid gross profit margins across various business segments resulted in higher-than-expected first-quarter 2017 operating earnings, leading to a share-price rebound. Its shares ended the reporting year on a low note, however, after second-quarter earnings missed the market’s optimistic expectations.

Tata Motors is one of India’s largest automobile companies, producing both commercial and passenger vehicles. It manufactures and sells products under the Tata brand, and it is also the owner of Jaguar Land Rover (JLR). The group also provides financing services for the vehicles it sells. Volatile earnings at Tata Motors during the period weighed on investor sentiment. However, infrastructure improvements and spending initiatives boosted demand for construction vehicles, leading some investors to remain positive on the longer-term outlook for the stock. Most recently, Tata Motors reported weaker-than-expected second-quarter 2017 corporate results, mainly due to disappointing JLR results. Lower volumes and gross profit margins, as well as higher expenses in areas such as marketing and new product launches, impacted earnings at JLR.

It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the US 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 US dollars. This can have a negative effect on Fund performance. Conversely, when the US 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 12 months ended August 31, 2017, the US dollar rose in value relative to many currencies in which the Fund’s investments were traded. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities with non-US currency exposure.

Top 10 Holdings

8/31/17

During the period, our continued search for investments with fundamentals we considered attractive led us to increase the Fund’s investments in Mexico, South Africa, Taiwan and South Korea. In sector terms, we made purchases in information technology (IT), health care, financials and utilities.² Key purchases included additional investments in Naspers, a South African media conglomerate with a portfolio of emerging market assets in the field of internet services and online advertising, and Alibaba Group Holding, China’s biggest e-commerce company. We also initiated investment in Grupo Financiero Santander Mexico, one of Mexico’s largest financial services companies.

Conversely, we conducted some sales in Brazil, Hong Kong, Thailand and India to raise funds for income distribution, realize gains and seek to take advantage of opportunities we considered to be more attractively priced. In sector terms, we made some sales in consumer discretionary and reduced

holdings in energy, consumer staples and industrials.³ Key sales included closing the Fund’s position in Indian oil and gas company Oil & Natural Gas. We also reduced holdings in the aforementioned Brilliance China Automotive and in Dairy Farm International Holdings, a Hong Kong-based regional supermarket, drugstore and convenience store operator.

Thank you for your continued participation in Templeton Emerging Markets Fund. We look forward to serving your future investment needs.

Sincerely,

The foregoing information reflects our analysis, opinions and portfolio holdings as of August 31, 2017, 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.

Share Repurchase Program

The Fund’s Board previously authorized the Fund to repurchase up to 10% of the Fund’s outstanding shares in open-market transactions, at the discretion of management. This authorization remains in effect.

In exercising its discretion consistent with its portfolio management responsibilities, the investment manager will take into account various other factors, including, but not limited to, the level of the discount, the Fund’s performance, portfolio holdings, dividend history, market conditions, cash on hand, the availability of other attractive investments and whether the sale of certain portfolio securities would be undesirable because of liquidity concerns or because the sale might subject the Fund to adverse tax consequences. Any repurchases would be made on a national securities exchange at the prevailing market price, subject to exchange requirements, Federal securities laws and rules that restrict repurchases, and the terms of any outstanding leverage or borrowing of the Fund. If and when the Fund’s 10% threshold is reached, no further repurchases could be completed until authorized by the Board. Until the 10% threshold is reached, Fund management will have the flexibility to commence share repurchases if and when it is determined to be appropriate in light of prevailing circumstances.

In the Notes to Financial Statements section, please see note 2 (Shares of Beneficial Interest) for additional information regarding shares repurchased.

Changes to Portfolio Management Team

Effective April 3, 2017, Chetan Sehgal, CFA, director of Global Emerging Markets/Small Cap Strategies for Templeton Emerging Markets Group (TEMG), assumed the role of lead portfolio manager for Templeton Emerging Markets Fund, replacing its four co-lead portfolio managers, Dr. Mobius, Allan Lam, director of Asia Strategy, Dennis Lim, emerging markets strategist, and Tom Wu, deputy director of research. While they have relinquished their portfolio management roles on the Fund, Mr. Lam and Mr. Wu continue in their current roles with TEMG, and Dr. Mobius remains as executive chairman for TEMG, contributing investment ideas and research for the group. Mr. Lim retired from the firm.

1.   Organization and Significant Accounting

Policies

Templeton Emerging Markets Fund (Fund) is registered under the Investment Company Act of 1940 (1940 Act) as a closed-end management investment company and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP).

The following summarizes the Fund’s significant accounting policies.

a.   Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Fund’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an 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. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities 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. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Investments in open-end mutual funds are valued at the closing NAV.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Fund’s business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC 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 Depositary 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 that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

1.   Organization and Significant Accounting Policies (continued)

a.   Financial Instrument Valuation (continued)

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

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. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. 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. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. 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 Board.

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 in 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.   Participatory Notes

The Fund invests in Participatory Notes (P-Notes). P-Notes are promissory notes that are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow the Fund to gain exposure to common stocks in markets where direct investment is not allowed. Income received from P-Notes is recorded as dividend income in the Statement of Operations. P-Notes may contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract. These securities may be more volatile and less liquid than other investments held by the Fund.

d.   Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of August 31, 2017, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

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 for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. 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 U.S. GAAP 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.