UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-08788
-----------

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
-------------------------------------------------
(Exact name of registrant as specified in charter)

500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
-------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-----------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (954) 527-7500
---------------
Date of fiscal year end: 3/31
------

Date of reporting period: 3/31/09
--------

ITEM 1. REPORTS TO STOCKHOLDERS.

MARCH 31, 2009
ANNUAL REPORT

(GRAPHIC)

INTERNATIONAL

TEMPLETON RUSSIA AND
EAST EUROPEAN FUND, INC.

(FRANKLIN TEMPLETON INVESTMENTS (R) LOGO)

Franklin - TEMPLETON - Mutual Series

Contents

ANNUAL REPORT

Templeton Russia and East European Fund, Inc. ............................. 1
Performance Summary ....................................................... 5
Important Notice to Shareholders .......................................... 6
Financial Highlights and Statement of Investments ......................... 7
Financial Statements ...................................................... 10
Notes to Financial Statements ............................................. 13
Report of Independent Registered Public Accounting Firm ................... 20
Tax Designation ........................................................... 21
Annual Meeting of Shareholders ............................................ 23
Dividend Reinvestment and Cash Purchase Plan .............................. 24
Board Members and Officers ................................................ 27
Shareholder Information ................................................... 32

Annual Report

Templeton Russia and East European Fund, Inc.

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Russia and East European Fund
seeks long-term capital appreciation. Under normal market conditions, the Fund
invests at least 80% of its net assets in investments that are tied economically
to Russia or East European countries.

Dear Shareholder:

This annual report for Templeton Russia and East European Fund covers the fiscal
year ended March 31, 2009.

PERFORMANCE OVERVIEW

Templeton Russia and East European Fund had cumulative total returns of -65.07%
based on market price and -73.88% based on net asset value for the 12 months
ended March 31, 2009. However, for the 10-year period ended March 31, 2009, the
Fund delivered cumulative total returns of +280.82% in market price terms and
+267.05% in net asset value terms. Therefore, in line with our long-term
investment strategy, we are pleased with our long-term results. You can find
more of the Fund's performance data in the Performance Summary on page 5.

ECONOMIC AND MARKET OVERVIEW

Eastern European equity markets experienced one of the most volatile periods
since the inception of the Fund. Although Eastern European stocks started the

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 8.

Annual Report | 1

PORTFOLIO BREAKDOWN

Based on Total Net Assets as of 3/31/09

Metals & Mining 16.6%
Oil, Gas & Consumable Fuels 16.1%
Wireless Telecommunication Services 11.1%
Pharmaceuticals 8.8%
Diversified Telecommunication Services 8.5%
Commercial Banks 5.5%
Food Products 4.6%
Energy Equipment & Services 3.3%
Media 3.1%
Independent Power Producers & Energy Traders 0.1%
Short-Term Investments & Other Net Assets 22.3%

reporting period on a positive note, they began a downward trend in June 2008.
Extreme risk aversion led to evaporation of liquidity, tight credit conditions,
problems for companies with highly leveraged finance models, and high volatility
in global stock markets.

Eastern European markets were particularly hard hit as concerns intensified
about the financial state of European banks and their Eastern European
subsidiaries. However, those stocks began to recover in March 2009 and recouped
some of the losses from the earlier part of the reporting period, as investors
appeared to focus more on individual companies' fundamentals and valuations.
Recognizing the severity of the credit crunch, governments globally implemented
fiscal stimuli to support their domestic economies and ease liquidity
conditions. For the 12 months under review, however, Eastern European markets,
as represented by the Morgan Stanley Capital International (MSCI) Emerging
Markets (EM) Eastern Europe Index, were still down 67.47% in U.S. dollar
terms.(1) Part of this decline was due to weakness in Eastern European
currencies as the U.S. dollar benefited from funds seeking a safer haven.

Russia's gross domestic product (GDP) grew 5.6% in 2008, compared to 8.1% in
2007.(2) The global financial crisis coupled with an oil price correction led to
slower economic growth in the latter half of 2008. Russia remained focused on
implementing measures to help the economy weather the crisis, as its central
bank reduced the cash reserve ratio for banks to improve liquidity. Spending on
various measures was expected to total 12% of 2009 GDP and bring the federal
budget deficit to about 8% of GDP, which the government had authorized the use
of its reserve fund to finance.(3) In this environment, however, Russia's
central bank maintained a tightening monetary policy by raising interest rates
for most of the reporting period, first to curb inflationary pressures in the
earlier part of the review period, and second to ease pressure on the ruble.
Foreign exchange reserves remained a respectable US$384 billion, which provided
the government with funds to support the domestic economy.(4) Politically,
President Dmitry Medvedev was inaugurated in May, and his predecessor Vladimir
Putin was appointed prime minister.

(1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. Past performance is no guarantee of future results. The
MSCI EM Eastern Europe Index is a free float-adjusted, market
capitalization-weighted index designed to measure equity market performance
in Eastern Europe. The index consists of the following four emerging
country indexes: Czech Republic, Hungary, Poland and Russia.

(2.) Source: Federal Services of State Statistics, Russia.

(3.) Source: Government of the Russian Federation, 2009.

(4.) Source: Bank of Russia.

2 | Annual Report

INVESTMENT STRATEGY

Our investment strategy employs a company-specific, 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 consider specific companies in the
context of their sector and country. We perform in-depth research to construct
an Action List from which we construct the portfolio. Our emphasis is on value
and not attempting to match or beat an index. During our analysis, we also
consider a company's position in its sector, the economic framework and
political environment.

MANAGER'S DISCUSSION

In an environment where most stocks declined in absolute terms, the largest
detractors from Fund performance during the reporting period included Sberbank
(Savings Bank of Russia), the country's largest bank; Norilsk Nickel (Mining and
Metallurgical Co. Norilsk Nickel), the world's largest nickel and palladium
producer; and VolgaTelecom, one of Russia's leading integrated telecommunication
services providers. A lack of confidence in financial and banking stocks
globally drove Sberbank's decline during the period, while a correction in
commodity prices led investors away from materials stocks such as Norilsk
Nickel. VolgaTelecom's share price was volatile and fell due to tight liquidity
conditions and the slow restructuring process in Svyazinvest, VolgaTelecom's
holding company. Based on our analysis, however, we remained confident in these
companies' prospects based on their strong fundamentals. On a more positive
note, key holdings that contributed to performance included Open Investments, a
Moscow-based real estate development, management and investment company; and
Polyus Gold, Russia's largest gold producer. We sold both stocks to realize
gains by period-end.

During the reporting period, market volatility provided us with opportunities to
buy stocks at what we considered attractive prices. We purchased stocks of major
mobile telecommunication services providers Mobile TeleSystems and
Vimpel-Communications; Mechel, a leading diversified, vertically integrated
mining and steel company; and CTC Media, an operator of one of Russia's most
popular television networks. We also added to the Fund's existing position in
Veropharm, a key pharmaceuticals manufacturer. In addition, we initiated a
position in Ukraine's leading agricultural producer MHP.

On the other hand, we divested from some of the Fund's holdings to remain
focused on stocks that we believed might be better positioned to benefit from
regional developments. We also sold some stocks to focus on what we considered
more attractively valued stocks in our investment universe, as they reached sale

TOP 10 EQUITY HOLDINGS

3/31/09

% OF TOTAL
COMPANY SECTOR/INDUSTRY, COUNTRY NET ASSETS
- -------------------------------- ----------

Mobile TeleSystems 11.1%
WIRELESS TELECOMMUNICATION SERVICES,
RUSSIA
Severstal (Cherepovets Mk Severstal) 9.0%
METALS & MINING, RUSSIA
LUKOIL Holdings, ADR 8.8%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
Gazprom, ADR 7.3%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
Sberbank RF 5.5%
COMMERCIAL BANKS, RUSSIA
Veropharm 4.8%
PHARMACEUTICALS, RUSSIA
Vimpel-Communications, ADR 4.7%
DIVERSIFIED TELECOMMUNICATION SERVICES,
RUSSIA
Egis Nyrt 3.9%
PHARMACEUTICALS, HUNGARY
Kernel Holding SA 3.7%
FOOD PRODUCTS, LUXEMBOURG
Mechel OAO, ADR 3.7%
METALS & MINING, RUSSIA

Annual Report | 3

price targets and as we raised funds for income and capital gains distributions.
In addition to the aforementioned Open Investments and Polyus Gold, we
eliminated the Fund's positions in Southern Telecommunications, a regional
telecommunications operator, and spin-offs of UES (Unified Energy Systems), a
Russian electricity production group that was split into individual companies
due to restructuring in the country's power sector. Geographically, we
eliminated the Fund's exposure to Kazakhstan via the sale of Alliance Bank.

Thank you for your continued participation in Templeton Russia and East European
Fund. We look forward to serving your future investment needs.

Sincerely,

(PHOTO OF MARK MOBIUS)

/s/ Mark Mobius

Mark Mobius
Executive Chairman
Templeton Asset Management Ltd.

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF MARCH 31, 2009, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR
MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.

4 | Annual Report

Performance Summary as of 3/31/09

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. Total return reflects reinvestment of the Fund's dividends and
capital gain distributions, if any, and any unrealized gains or losses. Total
returns do not reflect any sales charges paid at inception or brokerage
commissions paid on secondary market purchases. The performance table does not
reflect any taxes that a shareholder would pay on Fund dividends, capital gain
distributions, if any, or any realized gains on the sale of Fund shares.

PRICE AND DISTRIBUTION INFORMATION

SYMBOL: TRF CHANGE 3/31/09 3/31/08
- ----------- ------- ------- -------

Net Asset Value (NAV) -$52.89 $7.48 $60.37
Market Price (NYSE) -$48.25 $8.90 $57.15
DISTRIBUTIONS (4/1/08-3/31/09)
Dividend Income $0.2374
Short-Term Capital Gain $0.5194
Long-Term Capital Gain $8.4306
Tax Return of Capital $0.0220
TOTAL $9.2094

PERFORMANCE

1-YEAR 5-YEAR 10-YEAR
------ ------ -------

Cumulative Total Return(1)
Based on change in NAV(2) -73.88% -24.92% +267.05%
Based on change in market price(3) -65.07% -18.76% +280.82%
Average Annual Total Return(1)
Based on change in NAV(2) -73.88% -5.57% +13.88%
Based on change in market price(3) -65.07% -4.07% +14.30%

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN.

ENDNOTES

SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
VOLATILITY, ECONOMIC INSTABILITY, AND SOCIAL AND POLITICAL DEVELOPMENTS OF
COUNTRIES WHERE THE FUND INVESTS. EMERGING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR
RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. INVESTMENTS IN RUSSIAN AND EAST
EUROPEAN SECURITIES INVOLVE SIGNIFICANT ADDITIONAL RISKS, INCLUDING POLITICAL
AND SOCIAL UNCERTAINTY (FOR EXAMPLE, REGIONAL CONFLICTS AND RISK OF WAR),
CURRENCY EXCHANGE RATE VOLATILITY, PERVASIVENESS OF CORRUPTION AND CRIME IN THE
RUSSIAN AND EAST EUROPEAN ECONOMIC SYSTEMS, DELAYS IN SETTLING PORTFOLIO
TRANSACTIONS, AND RISK OF LOSS ARISING OUT OF THE SYSTEM OF SHARE REGISTRATION
AND CUSTODY USED IN RUSSIA AND EAST EUROPEAN COUNTRIES. ALSO, AS A
NON-DIVERSIFIED INVESTMENT COMPANY INVESTING IN RUSSIA AND EAST EUROPEAN
COUNTRIES, THE FUND MAY INVEST IN A RELATIVELY SMALL NUMBER OF ISSUERS AND, AS A
RESULT, BE SUBJECT TO GREATER RISK OF LOSS WITH RESPECT TO ITS PORTFOLIO
SECURITIES.

(1.) Total return calculations represent the cumulative and average annual
changes in value of an investment over the periods indicated.

(2.) Assumes reinvestment of distributions based on net asset value.

(3.) Assumes reinvestment of distributions based on the dividend reinvestment
and cash purchase plan.

Annual Report | 5

Important Notice to Shareholders

SHARE REPURCHASE PROGRAM

The Fund's Board previously authorized management to implement an open-market
share repurchase program pursuant to which the Fund may purchase Fund shares,
from time to time, in open-market transactions, at the discretion of management.
This authorization remains in effect.

REVISED SECTION 19(A) NOTICE

The Fund's previous estimate of the sources from which a dividend of $0.2594 per
share was declared on December 3, 2008, has been revised to reflect that $0.2374
of such amount represented a distribution of net investment income; $0.0000 of
such amount represented gain from the sale of securities; and $0.0220
represented a return of capital for tax purposes.

6 | Annual Report

Templeton Russia and East European Fund, Inc.

FINANCIAL HIGHLIGHTS

YEAR ENDED MARCH 31,
------------------------------------------------------
2009 2008 2007 2006 2005
------- -------- -------- -------- --------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................. $ 60.37 $ 67.48 $ 60.92 $ 40.59 $ 39.89
------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss)(a) ................. 0.23 (0.11) (0.24) (0.26) (0.01)
Net realized and unrealized gains (losses) ...... (43.91) 2.90 20.90 29.51 4.28
------- -------- -------- -------- --------
Total from investment operations ................... (43.68) 2.79 20.66 29.25 4.27
------- -------- -------- -------- --------
Less distributions from:
Net investment income ........................... (0.24) (0.50) (0.95) -- --
Net realized gains .............................. (8.95) (9.40) (13.15) (8.92) (3.57)
Tax return of capital ........................... (0.02) -- -- -- --
------- -------- -------- -------- --------
Total distributions ................................ (9.21) (9.90) (14.10) (8.92) (3.57)
------- -------- -------- -------- --------
Net asset value, end of year ....................... $ 7.48 $ 60.37 $ 67.48 $ 60.92 $ 40.59
------- -------- -------- -------- --------
Market value, end of year(b) ....................... $ 8.90 $ 57.15 $ 70.41 $ 76.06 $ 39.30
======= ======== ======== ======== ========
Total return (based on market value per share) ..... (65.07)% (6.78)% 14.07% 130.61% (5.15)%
RATIOS TO AVERAGE NET ASSETS
Expenses before expense reduction .................. 1.82% 1.73% 1.85% 1.84% 1.80%
Expenses net of expense reduction .................. 1.82% 1.73% 1.84% 1.84% 1.80%
Net investment income (loss) ....................... 0.69% (0.17)% (0.39)% (0.55)% (0.02)%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................... $42,953 $331,860 $368,832 $330,324 $218,577
Portfolio turnover rate ............................ 30.83% 10.26% 8.36% 15.73% 7.65%

(a) Based on average daily shares outstanding.

(b) Based on the last sale on the New York Stock Exchange.

The accompanying notes are an integral part of these financial statements.

Annual Report | 7

Templeton Russia and East European Fund, Inc.

STATEMENT OF INVESTMENTS, MARCH 31, 2009

COUNTRY SHARES VALUE
------------- ----------- -----------

COMMON STOCKS 77.7%
COMMERCIAL BANKS 5.5%
Sberbank RF ..................................... Russia 3,845,370 $ 2,374,516
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES 8.5%
Sibirtelecom .................................... Russia 41,437,906 501,399
Uralsvyazinform ................................. Russia 59,201,000 592,010
Vimpel-Communications, ADR ...................... Russia 308,960 2,020,598
VolgaTelecom .................................... Russia 731,835 519,603
-----------
3,633,610
-----------
ENERGY EQUIPMENT & SERVICES 3.3%
OAO TMK ......................................... Russia 393,550 448,422
OAO TMK, GDR .................................... Russia 210,000 987,000
-----------
1,435,422
-----------
FOOD PRODUCTS 4.6%
(a) Kernel Holding SA ............................... Luxembourg 362,000 1,605,460
(a, b) MHP SA, GDR, 144A ............................... Ukraine 137,200 367,696
-----------
1,973,156
-----------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 0.1%
(a) TGC-5 JSC ....................................... Russia 517,838,821 56,962
-----------
MEDIA 3.1%
(a) CTC Media Inc. .................................. United States 295,400 1,347,024
-----------
METALS & MINING 16.6%
Cherepovets Mk Severstal ........................ Russia 1,071,370 3,883,716
Mechel OAO, ADR ................................. Russia 383,105 1,597,548
Mining and Metallurgical Co. Norilsk Nickel ..... Russia 25,600 1,561,600
(a) South-Ural Nickel Factory ....................... Russia 1,050 87,675
-----------
7,130,539
-----------
OIL, GAS & CONSUMABLE FUELS 16.1%
Gazprom, ADR .................................... Russia 210,500 3,136,450
LUKOIL Holdings, ADR ............................ Russia 100,200 3,777,540
-----------
6,913,990
-----------
PHARMACEUTICALS 8.8%
Egis Nyrt ....................................... Hungary 34,331 1,682,769
(a) Veropharm ....................................... Russia 166,412 2,080,150
-----------
3,762,919
-----------
WIRELESS TELECOMMUNICATION SERVICES 11.1%
Mobile TeleSystems .............................. Russia 1,120,000 4,760,000
-----------
TOTAL COMMON STOCKS (COST $69,353,306) .......... 33,388,138
-----------

8 | Annual Report

Templeton Russia and East European Fund, Inc.

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)

COUNTRY SHARES VALUE
------------- ----------- -----------

SHORT TERM INVESTMENTS (COST $7,384,287) 17.2%
MONEY MARKET FUNDS 17.2%
(c) Franklin Institutional Fiduciary Trust Money
Market Portfolio, 0.13% ...................... United States 7,384,287 $ 7,384,287
-----------
TOTAL INVESTMENTS (COST $76,737,593) 94.9% ...... 40,772,425
OTHER ASSETS, LESS LIABILITIES 5.1% ............. 2,180,338
-----------
NET ASSETS 100.0% ............................... $42,952,763
===========

See Abbreviations on page 19.

(a) Non-income producing.

(b) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under the
Securities Act of 1933. This security has been deemed liquid under
guidelines approved by the Fund's Board of Directors. At March 31, 2009,
the value of this security was $367,696, representing 0.86% of net assets.

(c) See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.

The accompanying notes are an integral part of these financial statements.

Annual Report | 9

Templeton Russia and East European Fund, Inc.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

March 31, 2009

Assets:
Investments in securities:
Cost - Unaffiliated issuers ....................... $ 69,353,306
Cost - Sweep Money Fund (Note 7) .................. 7,384,287
------------
Total cost of investments ......................... $ 76,737,593
============
Value - Unaffiliated issuers ...................... $ 33,388,138
Value - Sweep Money Fund (Note 7) ................. 7,384,287
------------
Total value of investments ........................ 40,772,425
Cash .................................................... 4,491
Receivables:
Investment securities sold ........................ 2,375,111
Dividends ......................................... 24,020
------------
Total assets ................................... 43,176,047
------------
Liabilities:
Payables:
Affiliates ........................................ 55,036
Custodian fees .................................... 129,770
Reports to shareholders ........................... 24,512
Accrued expenses and other liabilities ............... 13,966
------------
Total liabilities .............................. 223,284
------------
Net assets, at value ........................ $ 42,952,763
============
Net assets consist of:
Paid-in capital ...................................... $ 84,939,951
Distributions in excess of net investment income ..... (1,047,012)
Net unrealized appreciation (depreciation) ........... (35,965,168)
Accumulated net realized gain (loss) ................. (4,975,008)
------------
Net assets, at value ........................ $ 42,952,763
============
Shares outstanding ................................... 5,745,174
============
Net asset value per share ............................ $ 7.48
============

The accompanying notes are an integral part of these financial statements.

10 | Annual Report

Templeton Russia and East European Fund, Inc.

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS

for the year ended March 31, 2009

Investment income:
Dividends: (net of foreign taxes of $533,429)
Unaffiliated issuers ............................................ $ 4,268,549
Sweep Money Fund (Note 7) ....................................... 449,475
-------------
Total investment income ...................................... 4,718,024
-------------
Expenses:
Management fees (Note 3a) .......................................... 2,286,970
Administrative fees (Note 3b) ...................................... 378,900
Transfer agent fees ................................................ 121,304
Custodian fees (Note 4) ............................................ 379,621
Reports to shareholders ............................................ 99,760
Registration and filing fees ....................................... 25,143
Professional fees .................................................. 92,896
Directors' fees and expenses ....................................... 29,470
Other .............................................................. 14,290
-------------
Total expenses ................................................ 3,428,354
Expense reductions (Note 4 ................................... (1,130)
-------------
Net expenses .............................................. 3,427,224
-------------
Net investment income .................................. 1,290,800
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ..................................................... 748,168
Foreign currency transactions ................................... (306,317)
-------------
Net realized gain (loss) ............................... 441,851
-------------
Net change in unrealized appreciation (depreciation) on investments ... (241,851,482)
-------------
Net realized and unrealized gain (loss) ............................... (241,409,631)
-------------
Net increase (decrease) in net assets resulting from operations ....... $(240,118,831)
=============

The accompanying notes are an integral part of these financial statements.

Annual Report | 11

Templeton Russia and East European Fund, Inc.

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

YEAR ENDED MARCH 31,
-----------------------------
2009 2008
------------- -------------

Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................................................. $ 1,290,800 $ (624,693)
Net realized gain (loss) from investments and foreign currency transactions .. 441,851 81,875,669
Net change in unrealized appreciation (depreciation) on investments .......... (241,851,482) (66,168,424)
------------- ------------
Net increase (decrease) in net assets resulting from operations ........... (240,118,831) 15,082,552
------------- ------------
Distributions to shareholders from:
Net investment income ........................................................ (1,305,452) (2,750,279)
Net realized gains ........................................................... (49,199,209) (51,438,970)
Tax return of capital ........................................................ (121,129) --
------------- ------------
Total distributions to shareholders ................................................ (50,625,790) (54,189,249)
------------- ------------
Capital share transactions (Note 2) ............................................. 1,837,643 2,134,598
------------- ------------
Net increase (decrease) in net assets ..................................... (288,906,978) (36,972,099)
Net assets:
Beginning of year ............................................................... 331,859,741 368,831,840
------------- ------------
End of year ..................................................................... $ 42,952,763 $331,859,741
============= ============
Distributions in excess of net investment income included in net assets:
End of year ..................................................................... $ (1,047,012) $ (6,549,126)
============= ============

The accompanying notes are an integral part of these financial statements.

12 | Annual Report

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Russia and East European Fund, Inc. (Fund) is registered under the
Investment Company Act of 1940, as amended, (1940 Act) as a closed-end
investment company.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.

Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.

The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of American Depository
Receipts, futures contracts and exchange traded funds). These price movements
are measured against established trigger thresholds for each specific market
proxy to assist in determining if an event has occurred. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services. All security valuation
procedures are approved by the Fund's Board of Directors.

Annual Report | 13

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. FOREIGN CURRENCY TRANSLATION

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Directors.

The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

C. FOREIGN CURRENCY CONTRACTS

When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate at a future date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.

The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.

D. INCOME TAXES

No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.

The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of March 31, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.

14 | Annual Report

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. INCOME TAXES (CONTINUED)

Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.

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.
Interest income and estimated expenses are accrued daily. Dividend income is
recorded on the ex-dividend date except that certain dividends from foreign
securities are recognized as soon as the Fund is notified of the ex-dividend
date. Distributions to shareholders are recorded on the ex-dividend date and are
determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with accounting principles generally accepted in the United States of
America. These differences may be permanent or temporary. Permanent differences
are reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.

F. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.

G. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and directors 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.

Annual Report | 15

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. CAPITAL STOCK

At March 31, 2009, there were 100 million shares authorized ($0.01 par value).
Transactions in the Fund's shares were as follows:

YEAR ENDED MARCH 31,
------------------------------------------
2009 2008
-------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------ ----------

Shares issued in reinvestment of
distributions ............... 247,995 $1,837,643 31,002 $2,134,598

The Fund's Board of Directors previously authorized an open-market share
repurchase program pursuant to which the Fund may purchase, from time to time,
Fund shares in open-market transactions, at the discretion of management. This
authorization remains in effect. During the years ended March 31, 2009 and March
31, 2008, there were no shares repurchased.

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
directors of the Fund are also officers and/or directors of the following
subsidiaries:

SUBSIDIARY AFFILIATION
- ---------- ----------------------

Templeton Asset Management Ltd. (TAML) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager

A. MANAGEMENT FEES

The Fund pays an investment management fee to TAML based on the average weekly
net assets of the Fund as follows:

ANNUALIZED
FEE RATE NET ASSETS
- ---------- -------------------------------------------------

1.250% Up to and including $1 billion
1.200% Over $1 billion, up to and including $5 billion
1.150% Over $5 billion, up to and including $10 billion
1.100% Over $10 billion, up to and including $15 billion
1.050% Over $15 billion, up to and including $20 billion
1.000% In excess of $20 billion

B. ADMINISTRATIVE FEES

The Fund pays an administrative fee to FT Services of 0.20% per year of the
average weekly net assets of the Fund.

16 | Annual Report

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. EXPENSE OFFSET ARRANGEMENT

The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended March 31, 2009, the
custodian fees were reduced as noted in the Statement of Operations.

5. INCOME TAXES

For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At March 31, 2009, the Fund had tax basis capital losses of
$1,519,201 expiring in 2017.

For tax purposes, realized capital losses and realized currency losses occurring
subsequent to October 31, may be deferred and treated as occurring on the first
day of the following fiscal year. At March 31, 2009, the Fund deferred realized
capital losses and realized currency losses of $2,426,224 and $320,969,
respectively.

The tax character of distributions paid during the years ended March 31, 2009
and 2008, was as follows:

2009 2008
----------- -----------

Distributions paid from:
Ordinary income ................ $ 4,160,584 $ 3,073,586
Long term capital gain ......... 46,344,077 51,115,663
----------- -----------
50,504,661 54,189,249
Return of capital .............. 121,129 --
----------- -----------
$50,625,790 $54,189,249
=========== ===========

The return of capital at fiscal year end resulted from distributions made in
December 2008 in compliance with the requirements of the excise tax rules. The
excise tax distribution requirements differ from the fiscal year distribution
requirements under Subchapter M of the Internal Revenue Code.

At March 31, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:

Cost of investments ............................. $ 78,493,220
============
Unrealized appreciation ......................... $ 8,560,558
Unrealized depreciation ......................... (46,281,353)
------------
Net unrealized appreciation (depreciation) ...... $(37,720,795)
============

Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions and
corporate actions adjustments.

Annual Report | 17

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, passive foreign investment company shares, and corporate actions
adjustments.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
year ended March 31, 2009, aggregated $51,255,593 and $68,459,605, respectively.

7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (Sweep Money Fund), an open-end investment company managed by Franklin
Advisers, Inc. (an affiliate of the investment manager). Management fees paid by
the Fund are reduced on assets invested in the Sweep Money Fund, in an amount
not to exceed the management and administrative fees paid by the Sweep Money
Fund.

8. CONCENTRATION OF RISK

Investing in equity securities of Russian companies may include certain risks
not typically associated with investing in countries with more developed
securities markets, such as political, economic and legal uncertainties, delays
in settling portfolio transactions and the risk of loss from Russia's
underdeveloped systems of securities registration and transfer. At March 31,
2009, the Fund had 66.1% of its net assets invested in Russia.

9. FAIR VALUE MEASUREMENTS

The Fund adopted Financial Accounting Standards Board (FASB) Statement No. 157,
"Fair Value Measurement" (SFAS 157), on April 1, 2008. SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The Fund has determined that the implementation
of SFAS 157 did not have a material impact on the Fund's financial statements.

18 | Annual Report

Templeton Russia and East European Fund, Inc.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. FAIR VALUE MEASUREMENTS (CONTINUED)

SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:

- Level 1 - quoted prices in active markets for identical securities

- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)

- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.

The following is a summary of the inputs used as of March 31, 2009, in valuing
the Fund's assets carried at fair value:

LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- -------- ------- -----------

ASSETS:
Investments in Securities ... $40,404,729 $367,696 $-- $40,772,425

10. NEW ACCOUNTING PRONOUNCEMENTS

In April 2009, FASB issued FASB Staff Position FSP FAS 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
FAS 157-4) which provides additional guidance when the volume and level of
activity for the asset or liability measured at fair value have significantly
decreased. Additionally, FSP FAS 157-4 amends SFAS 157, and expanding disclosure
requirements by reporting entities surrounding the major categories of assets
and liabilities carried at fair value. FSP FAS 157-4 is effective for interim
and annual periods ending after June 15, 2009. The Fund is currently evaluating
the impact, if any, of applying FSP FAS 157-4.

In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund believes applying the various provisions of
SFAS 161 will not have a material impact on its financial statements.

ABBREVIATIONS

SELECTED PORTFOLIO

ADR - American Depository Receipt
GDR - Global Depository Receipt

Annual Report | 19

Templeton Russia and East European Fund, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF TEMPLETON RUSSIA AND EAST EUROPEAN
FUND, INC.

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Templeton Russia and East European
Fund, Inc. (the "Fund") at March 31, 2009, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at March 31, 2009 by correspondence with the
custodian, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
May 20, 2009

20 | Annual Report

Templeton Russia and East European Fund, Inc.

TAX DESIGNATION (UNAUDITED)

Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $46,344,077 as a long
term capital gain dividend for the fiscal year ended March 31, 2009.

Under Section 871(k)(2)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $2,855,132 as a short term capital gain dividend for
purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended March 31, 2009.

Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $4,705,772 as qualified dividends for purposes of the
maximum rate under Section 1(h)(11) of the Code for the fiscal year ended March
31, 2009. In January 2010, shareholders will receive Form 1099-DIV which will
include their share of qualified dividends distributed during the calendar year
2009. Shareholders are advised to check with their tax advisors for information
on the treatment of these amounts on their individual income tax returns.

Under Section 871(k)(1)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $105,412 as interest related dividends for purposes
of the tax imposed under Section 871(a)(1)(A) of the Code for the fiscal year
ended March 31, 2009.

At March 31, 2009, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from income paid to the Fund on these investments. As shown in the table below,
the Fund designates to shareholders the foreign source income and foreign taxes
paid, pursuant to Section 853 of the Code. This designation will allow
shareholders of record on December 16, 2008, to treat their proportionate share
of foreign taxes paid by the Fund as having been paid directly by them. The
shareholder shall consider these amounts as foreign taxes paid in the tax year
in which they receive the Fund distribution.

The following table provides a detailed analysis of foreign tax paid, foreign
source income, and foreign qualified dividends as designated by the Fund A
shareholders of record.

RECORD DATE: 12/16/2008

FOREIGN TAX FOREIGN SOURCE FOREIGN QUALIFIED
PAID PER SHARE INCOME PER SHARE DIVIDENDS PER SHARE
-------------- ---------------- -------------------

Total ........... $0.1066 $0.4918 $0.4906

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you,
as a tax credit (assuming you held your shares in the Fund for a minimum of 16
days during the 31-day period beginning 15 days before the ex-dividend date of
the Fund's distribution to which the foreign taxes relate), or, as a tax
deduction.

Annual Report | 21

Templeton Russia and East European Fund, Inc.

TAX DESIGNATION (UNAUDITED) (CONTINUED)

Foreign Source Income Per Share (Column 2) is the amount per share of income
dividends paid to you that is attributable to foreign securities held by the
Fund, plus any foreign taxes withheld on these dividends. The amounts reported
include foreign source qualified dividends that have not been adjusted for the
rate differential applicable to such dividend income.(1)

Foreign Qualified Dividends Per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund.(1)

In January 2009, shareholders received Form 1099-DIV which included their share
of taxes paid and foreign source income distributed during the calendar year
2008. The Foreign Source Income reported on Form 1099-DIV has not been adjusted
for the rate differential on foreign source qualified dividend income.
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their 2008 individual income tax returns.

(1) Qualified dividends are taxed at a maximum rate of 15% (5% for those in the
10% and 15% income tax bracket). In determining the amount of foreign tax
credit that may be applied against the U.S. tax liability of individuals
receiving foreign source qualified dividends, adjustments may be required
to the foreign tax credit limitation calculation to reflect the rate
differential applicable to such dividend income. The rules however permit
certain individuals to elect not to apply the rate differential adjustments
for capital gains and/or dividends for any taxable year. Please consult
your tax advisor and the instructions to Form 1116 for more information.

22 | Annual Report

Templeton Russia and East European Fund, Inc.

ANNUAL MEETING OF SHAREHOLDERS, AUGUST 22, 2008

The Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 East Broward Boulevard, Fort Lauderdale, Florida, on August 22, 2008. The
purpose of the meeting was to elect four Directors of the Fund (Proposal 1) and
to approve an Agreement and Plan of Reorganization that provides for the
reorganization of the Fund from a Maryland corporation to a Delaware statutory
trust (Proposal 2). The meeting was adjourned to September 26, 2008, October 9,
2008 and October 17, 2008 with respect to Proposal 2. At the meeting held on
August 22, 2008, the following persons were elected by the shareholders to serve
as Directors of the Fund: Harris J. Ashton, Ann Torre Bates, Larry D. Thompson,
and Constantine D. Tseretopoulos.* The Agreement and Plan of Reorganization that
provided for the reorganization of the Fund from a Maryland corporation to a
Delaware statutory trust was not approved by shareholders. No other business was
transacted at the meeting.

The results of the voting on Proposal 1 at the Meeting held on August 22, 2008
are as follows:

Proposal 1: The election of four Directors:

% OF % OF
SHARES SHARES
% OF PRESENT % OF PRESENT
OUTSTANDING AND OUTSTANDING AND
TERM EXPIRING 2011 FOR SHARES VOTING WITHHELD SHARES VOTING
- ------------------ --------- ----------- ------- -------- ----------- -------

Harris J. Ashton .............. 4,400,552 80.05% 97.83% 97,484 1.77% 2.17%
Larry D. Thompson ............. 4,410,842 80.24% 98.06% 87,194 1.59% 1.94%
Constantine D. Tseretopoulos .. 4,399,077 80.02% 97.80% 98,959 1.80% 2.20%

% OF % OF
SHARES SHARES
% OF PRESENT % OF PRESENT
OUTSTANDING AND OUTSTANDING AND
TERM EXPIRING 2009 FOR SHARES VOTING WITHHELD SHARES VOTING
- ------------------ --------- ----------- ------- -------- ----------- -------

Ann Torre Bates ............... 4,398,554 80.01% 97.79% 99,482 1.81% 2.21%

* Frank J. Crothers, Edith E. Holiday, Charles B. Johnson, Gregory E.
Johnson, David W. Niemiec, Frank A. Olson and Robert E. Wade are Directors
of the Fund who are currently serving and whose terms of office continued
after the Annual Meeting of Shareholders.

The results of the voting on proposal 2 at the Meeting held on October 17, 2008
are as follows:

Proposal 2: The approval of an Agreement and Plan of Reorganization that
provides for the reorganization of the Fund from a Maryland
corporation to a Delaware statutory trust:

% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
------------ ----------- ------

For ................. 2,433,975 44.28% 51.42%
Against ............. 158,240 2.88% 3.34%
Abstain ............. 74,217 1.35% 1.57%
Broker Non-Votes .... 2,830,746 51.49% 0.00%

Annual Report | 23

Templeton Russia and East European Fund, Inc.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with
the following features:

If shares of the Fund are held in the shareholder's name, the shareholder will
automatically be a participant in the Plan unless he elects to withdraw. If the
shares are registered in the name of a broker-dealer or other nominee (i.e., in
"street name"), the broker-dealer or nominee will elect to participate in the
Plan on the shareholder's behalf unless the shareholder instructs them
otherwise, or unless the reinvestment service is not provided by the
broker-dealer or nominee.

Participants should contact BNY Mellon Shareowner Services, P.O. Box 358035,
Pittsburgh, PA 15252-8035, to receive the Plan brochure.

To receive dividends or distributions in cash, the shareholder must notify The
Bank of New York Mellon (the "Plan Administrator") at the address above or the
institution in whose name the shares are held. The Plan Administrator must
receive written notice within ten business days before the record date for the
distribution.

Whenever the Fund declares dividends in either cash or common stock of the Fund,
if the market price is equal to or exceeds net asset value at the valuation
date, the participant will receive the dividends entirely in stock at a price
equal to the net asset value, but not less than 95% of the then current market
price of the Fund's shares. If the market price is lower than net asset value or
if dividends and/or capital gains distributions are payable only in cash, the
participant will receive shares purchased on the New York Stock Exchange or
otherwise on the open market.

A participant has the option of submitting additional cash payments to the Plan
Administrator, in any amounts of at least $100 each, up to a maximum of $5,000
per month, for the purchase of Fund shares for his or her account. These
payments shall be made by check or money order payable to The Bank of New York
Mellon and sent to BNY Mellon Shareowner Services, P.O. Box 382009, Pittsburgh,
PA, 15252-8009, Attention: Templeton Russia and East European Fund, Inc. The
Plan Administrator shall apply such payments (less a $5.00 service charge and
less a pro rata share of trading fees) to purchases of Fund shares on the open
market.

The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.

Whenever shares are purchased on the New York Stock Exchange or otherwise on the
open market, each participant will pay a pro rata portion of trading fees.
Trading fees will be deducted from amounts to be invested. The Plan
Administrator's fee for a sale of shares through the Plan is $15.00 per
transaction plus a $0.12 per share trading fee.

24 | Annual Report

Templeton Russia and East European Fund, Inc.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)

The participant may withdraw from the Plan without penalty at any time by
written notice to the Plan Administrator sent to BNY Mellon Shareowner Services,
P.O. Box 358035, Pittsburgh, PA 15252-8035. Upon withdrawal, the participant
will receive, without charge, stock certificates issued in the participant's
name for all full shares held by the Plan Administrator; or, if the participant
wishes, the Plan Administrator will sell the participant's shares and send the
proceeds to the participant, less a service charge of $15.00 and less trading
fees of $0.12 per share, to the participant.

DIRECT DEPOSIT SERVICE FOR REGISTERED SHAREHOLDERS

Cash distributions can now be electronically credited to a checking or savings
account at any financial institution that participates in the Automated Clearing
House ("ACH") system. The Direct Deposit service is provided for registered
shareholders at no charge.

To enroll in the service, access your account online by going to
https://vault.bnymellon.com/isd or dial 1-800-416-5585 (toll free) and follow
the instructions. Direct Deposit will begin with the next scheduled distribution
payment date following enrollment in the service.

Annual Report | 25

Templeton Russia and East European Fund, Inc.

TRANSFER AGENT
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
1-800-416-5585
www.bnymellon.com

DIRECT REGISTRATION

If you are a registered shareholder of the Fund, purchases of shares of the Fund
can be electronically credited to your Fund account at BNY Mellon Shareowner
Services through Direct Registration. This service provides shareholders with a
convenient way to keep track of shares through book entry transactions, to
electronically move book-entry shares between broker-dealers, transfer agents
and DRS eligible issuers, and eliminates the possibility of lost certificates.
For additional information, please contact BNY Mellon Shareowner Services at
1-800-416-5585.

SHAREHOLDER INFORMATION

Shares of Templeton Russia and East European Fund, Inc. are traded on the New
York Stock Exchange under the symbol "TRF." Information about the net asset
value and the market price is published each Monday in the WALL STREET JOURNAL,
weekly in BARRON'S and each Saturday in THE NEW YORK TIMES and other newspapers.
Daily market prices for the Fund's shares are published in "New York Stock
Exchange Composite Transactions" section of newspapers.

For current information about distributions and shareholder accounts, call
1-800-416-5585. Registered shareholders can now access their Fund account
on-line with INVESTOR SERVICEDIRECT(R). For information go to BNY Mellon
Shareowner Services' web site at https://vault.bnymellon.com/isd and follow the
instructions.

The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information after 7
a.m. Pacific time any business day at 1-800/DIAL BEN(R) (1-800-342-5236). The
Fund's net asset value and dividends are also listed on the NASDAQ Stock Market,
Inc.'s Mutual Fund Quotation Service ("NASDAQ MFQS").

Shareholders not receiving copies of the reports to shareholders because their
shares are registered in the name of a broker or a custodian can request that
they be added to the Fund's mailing list by writing Templeton Russia and East
European Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL
33733-8030.

26 | Annual Report

Templeton Russia and East European Fund, Inc.

BOARD MEMBERS AND OFFICERS

The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Fund, principal occupations
during the past five years and number of U.S. registered portfolios overseen in
the Franklin Templeton Investments fund complex are shown below. Generally, each
board member serves a three-year term that continues until that person's
successor is elected and qualified.

INDEPENDENT BOARD MEMBERS

NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------- --------------- ------------------- -------------- -----------------------------------

HARRIS J. ASHTON (1932) Director Since 1994 136 Bar-S Foods (meat packing company).
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).

ANN TORRE BATES (1958) Director Since 2008 30 SLM Corporation (Sallie Mae) and
500 East Broward Blvd. Allied Capital Corporation
Suite 2100 (financial services).
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Independent strategic and financial consultant; and FORMERLY, Executive Vice
President and Chief Financial Officer, NHP Incorporated (manager of multifamily
housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until
1995).

FRANK J. CROTHERS (1944) Director Since 1998 23 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Victory Nickel Inc.
Suite 2100 (mineral exploration) and ABACO
Fort Lauderdale, FL 33394-3091 Markets Limited (retail
distributors).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director and Vice Chairman, Caribbean Utilities Company, Ltd. and director of
various other private business and nonprofit organizations.

EDITH E. HOLIDAY (1952) Lead Director since 136 Hess Corporation (exploration and
500 East Broward Blvd. Independent 1996 and Lead refining of oil and gas), H.J.
Suite 2100 Director Independent Heinz Company (processed foods and
Fort Lauderdale, FL 33394-3091 Director since allied products), RTI International
2007 Metals, Inc. (manufacture and
distribution of titanium), Canadian
National Railway (rail-road) and
White Mountains Insurance Group,
Ltd. (holding company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director or Trustee of various companies and trusts; and FORMERLY, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and Public
Liaison-United States Treasury Department (1988-1989).

Annual Report | 27

DAVID W. NIEMIEC (1949) Director Since 2005 23 Emeritus Corporation (assisted
500 East Broward Blvd. living) and OSI Pharmaceuticals,
Suite 2100 Inc. (pharmaceutical products).
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Advisor, Saratoga Partners (private equity fund); and FORMERLY, Managing
Director, Saratoga Partners (1998-2001) and SBC Warburg Dillon Read (investment
banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment
banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc.
(1982-1997).

FRANK A. OLSON (1932) Director Since 2003 136 Hess Corporation (exploration and
500 East Broward Blvd. refining of oil and gas) and
Suite 2100 Sentient Jet (private jet service).
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of
the Board (1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY,
Chairman of the Board, President and Chief Executive Officer, UAL Corporation
(airlines).

LARRY D. THOMPSON (1945) Director Since 2005 143 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (credit card provider)
(1997-2001); Senior Fellow of The Brookings Institution (2003-2004); Visiting
Professor, University of Georgia School of Law (2004); and Deputy Attorney
General, U.S. Department of Justice (2001-2003).

CONSTANTINE D. TSERETOPOULOS Director Since 1997 23 None
(1954)
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Physician, Lyford Cay Hospital (1987-present); director of various nonprofit
organizations; and FORMERLY, Cardiology Fellow, University of Maryland
(1985-1987) and Internal Medicine Resident, Greater Baltimore Medical Center
(1982-1985).

ROBERT E. WADE (1946) Director Since 2006 37 El Oro Ltd. (investments).
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Retired, former practicing attorney.

28 | Annual Report

INTERESTED BOARD MEMBERS AND OFFICERS

**CHARLES B. JOHNSON (1933) Director, Director and Vice 136 None
One Franklin Parkway Chairman of President since
San Mateo, CA 94403-1906 the Board and 1994 and
Vice President Chairman of the
Board since 1995

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman of the Board, Member - Office of the Chairman and Director, Franklin
Resources, Inc.; Director, Templeton Worldwide, Inc.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 42 of the investment companies in Franklin
Templeton Investments.

**GREGORY E. JOHNSON (1961) Director Since 2006 90 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, President and Chief Executive Officer, Franklin Resources, Inc.;
President, Templeton Worldwide, Inc.; Director, Templeton Asset Management Ltd.;
and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 33 of the investment companies
in Franklin Templeton Investments.

JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since
San Mateo, CA 94403-1906 Officer and 2004 and Vice
Vice President President - AML
- AML Compliance since
Compliance 2006

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, Global Compliance, Franklin Resources, Inc.; officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Director of
Compliance, Franklin Resources, Inc. (1994-2001).

LAURA F. FERGERSON (1962) Chief Executive Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Officer -
San Mateo, CA 94403-1906 Finance and
Administration

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice President, Franklin Templeton Services, LLC; officer of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Director
and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004);
Assistant Treasurer of most of the investment companies in Franklin Templeton
Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).

EDWARD L. GEARY (1962) Vice President Since March 2009 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Vice President, Franklin Templeton Services, LLC; director of some of the
other subsidiaries of Franklin Resources, Inc.; and officer of 46 of the
investment companies in Franklin Templeton Investments.

Annual Report | 29

ALIYA S. GORDON (1973) Vice President Since March 2009 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Associate General Counsel, Franklin Templeton Investments; officer of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Litigation
Associate, Steefel, Levitt & Weiss, LLP (2000-2004).

DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Associate General Counsel, Franklin Templeton Investments; officer and/or
director, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton
Investments.

RUPERT H. JOHNSON, JR. (1940) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources,
Inc.; Director, Franklin Advisers, Inc. and Templeton Worldwide, Inc.; Senior
Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 44 of the investment companies in Franklin Templeton
Investments.

MARK MOBIUS (1936) President and President since Not Applicable Not Applicable
17th Floor, Chief Executive 1994 and Chief
The Chater House Officer - Executive Officer -
8 Connaught Road Investment Investment
Central, Hong Kong Management Management
since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Portfolio Manager of various Templeton advisory affiliates; Executive Chairman,
Templeton Asset Management Ltd.; and officer and/or director, as the case may
be, of some of the other subsidiaries of Franklin Resources, Inc. and of six of
the investment companies in Franklin Templeton Investments; and FORMERLY,
President, International Investment Trust Company Limited (investment manager of
Taiwan R.O.C. Fund) (1986-1987); and Director, Vickers da Costa, Hong Kong
(1983-1986).

MARK H. OTANI (1968) Treasurer, Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Chief Financial
San Mateo, CA 94403-1906 Officer and
Chief
Accounting
Officer

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, Global Fund Accounting Operations, Franklin Templeton Investments; and
officer of 14 of the investment companies in Franklin Templeton Investments.

30 | Annual Report

ROBERT C. ROSSELOT (1960) Secretary Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Associate General Counsel, Franklin Templeton Investments; Assistant
Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton
Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary
Trust International of the South; and officer of 14 of the investment companies
in Franklin Templeton Investments.

CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

General Counsel and Executive Vice President, Franklin Resources, Inc.; officer
of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Partner,
Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).

* We base the number of portfolios on each separate series of the registered
investment companies comprising the Franklin Templeton Investments fund
complex. These portfolios have a common investment manager or affiliated
investment managers.

** Charles B. Johnson is considered to be an interested person of the Fund
under the federal securities laws due to his position as officer and
director and major shareholder of Franklin Resources, Inc. (Resources),
which is the parent company of the Fund's investment manager. Gregory E.
Johnson is considered to be an interested person of the Fund under the
federal securities laws due to his position as officer and director of
Resources.

Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.

Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT
COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL
EXPERT WITHIN THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED EACH OF ANN TORRE BATES AND DAVID W. NIEMIEC AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MS. BATES AND MR. NIEMIEC QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MS. BATES HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2008. SHE
CURRENTLY SERVES AS A DIRECTOR OF SLM CORPORATION AND ALLIED CAPITAL CORPORATION
AND WAS FORMERLY THE EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF NHP
INCORPORATED AND VICE PRESIDENT AND TREASURER OF US AIRWAYS, INC. MR. NIEMIEC
HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2005, CURRENTLY SERVES
AS AN ADVISOR TO SARATOGA PARTNERS AND WAS FORMERLY ITS MANAGING DIRECTOR FROM
1998 TO 2001. MR. NIEMIEC IS A DIRECTOR OF EMERITUS CORPORATION AND OSI
PHARMACEUTICALS, INC., AND WAS FORMERLY MANAGING DIRECTOR OF SBC WARBURG DILLON
READ FROM 1997 TO 1998, AND WAS VICE CHAIRMAN FROM 1991 TO 1997 AND CHIEF
FINANCIAL OFFICER FROM 1982 TO 1997 OF DILLON, READ & CO. INC. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD BELIEVES THAT MS. BATES AND MR.
NIEMIEC HAVE EACH ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES
IN CONNECTION WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND
ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL
OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND,
AS WELL AS AN UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL
REPORTING AND AN UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MS. BATES AND MR.
NIEMIEC ARE INDEPENDENT BOARD MEMBERS AS THAT TERM IS DEFINED UNDER THE
APPLICABLE U.S. SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES OR THE
LISTING STANDARDS APPLICABLE TO THE FUND.

Annual Report | 31

Templeton Russia and East European Fund, Inc.

SHAREHOLDER INFORMATION

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held February 24, 2009, the Board of Directors (Board), including a
majority of non-interested or independent Directors, approved renewal of the
investment management agreement for Templeton Russia and East European Fund,
Inc. (Fund). In reaching this decision, the Board took into account information
furnished throughout the year at regular Board meetings, as well as information
prepared specifically in connection with the annual renewal review process.
Information furnished and discussed throughout the year included reports on the
Fund, the share price premium or discount to net asset value, the results of
investment performance and related financial information for the Fund, as well
as periodic reports on legal, compliance, pricing, brokerage commissions and
execution and other services provided by the Investment Manager (Manager) and
its affiliates. Information furnished specifically in connection with the
renewal process included a report prepared by Lipper, Inc. (Lipper), an
independent organization, as well as additional material, including a Fund
profitability analysis report prepared by management. The Lipper report compared
the Fund's investment performance and expenses with those of other mutual funds
deemed comparable to the Fund as selected by Lipper. The Fund profitability
analysis report discussed the profitability to Franklin Templeton Investments
from its overall U.S. fund operations, as well as on an individual fund-by-fund
basis. Included with such profitability analysis report was information on a
fund-by-fund basis listing portfolio managers and other accounts they manage, as
well as information on management fees charged by the Manager and its affiliates
including management's explanation of differences where relevant, and a
three-year expense analysis with an explanation for any increase in expense
ratios. Additional material accompanying such report was a memorandum prepared
by management describing project initiatives and capital investments relating to
the services provided to the Fund by the Franklin Templeton Investments
organization, as well as a memorandum relating to economies of scale. Such
material also discussed some of the actions taken by management in coping with
problems arising out of the past year's financial upheaval.

In considering such materials, the independent Directors received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment management agreement for the Fund, the Board,
including a majority of independent Directors, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.

NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed below, the Board's opinion was based, in part, upon periodic
reports furnished them showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically
furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin

32 | Annual Report

Templeton Russia and East European Fund, Inc.

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

Templeton fund complex, the adherence to fair value pricing procedures
established by the Board, and the accuracy of net asset value calculations.
Favorable consideration was given to management's continuous efforts and
expenditures in establishing back-up systems and recovery procedures to function
in the event of a natural disaster, it being noted that such systems and
procedures had functioned smoothly during the Florida hurricanes and blackouts
experienced in recent years. Among other factors taken into account by the Board
were the Manager's best execution trading policies, including a favorable report
by an independent portfolio trading analytical firm. Consideration was also
given to the experience of the Fund's portfolio management team, the number of
accounts managed and general method of compensation. In this latter respect, the
Board noted that a primary factor in management's determination of the level of
a portfolio manager's bonus compensation was the relative investment performance
of the funds he or she managed and that a portion of such bonus was required to
be invested in a predesignated list of funds within such person's fund
management area so as to be aligned with the interests of Fund shareholders.
Particular attention was given to the overall performance and actions taken by
the Manager and its affiliates in response to problems arising out of the market
turmoil and financial crisis experienced during the past year. In this respect,
the Board noted that management's independent credit analysis and diligent risk
management procedures had prevented any structured investment products or other
volatile instruments from being held in the portfolios of any of the money
market funds within the Franklin Templeton complex, including the sweep money
fund utilized by the Fund as part of its cash management. The Board took into
account, among other things, the strong financial position of the Manager's
parent company and its commitment to the fund business. The Board also noted
that during the past year Franklin Templeton Investments, like many other fund
managers, had announced a hiring freeze and implemented employee reductions, and
the Board discussed with management the nature of such reductions and steps
being taken to minimize any negative impact on the nature and quality of
services being provided the Fund.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings during the year, particular attention in assessing
performance was given to the Lipper reports furnished for the agreement renewal.
The Lipper report prepared for the Fund showed its investment performance during
2008 and the previous 10 years ended December 31, 2008, within a Lipper
performance universe consisting of the Fund and all other non-leveraged
closed-end emerging markets funds as selected by Lipper. Such report considers
total return on a net asset value basis without regard to market discounts or
premiums to accurately reflect investment performance. Consistent with the
market declines that occurred in 2008, the Fund and all other funds within such
performance universe experienced losses during the past year. The Lipper report
showed the Fund's total return to be the lowest within its performance universe
and its total return performance on an annualized basis to be in the lowest
performing quintile of such universe for the previous three- and five-year
periods, but to be the highest within its performance universe for the previous
10-year period. In

Annual Report | 33

Templeton Russia and East European Fund, Inc.

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

evaluating such performance, the Board took into consideration the particularly
bad performance in 2008 of the stock markets in Russia and the Eastern European
countries as measured by country specific stock market indices. In that context,
the Board noted the limitations of the Lipper comparative performance analysis
due to the inclusion in the Lipper performance universe of funds with no or
limited investments in Russia and Eastern Europe. The Board also noted that the
Fund's underperformance for the annualized three- and five-year periods
primarily reflects its 2008 performance with the Lipper report showing the
Fund's return exceeding 20% during each of the previous five years and being the
highest within its performance universe in 2006 and the second highest within
such universe in 2005. The Board discussed the reasons for the Fund's 2008
performance with management but did not believe its recent underperformance as
shown in the Lipper report warranted any change in the Fund's investment
strategy or portfolio management.

COMPARATIVE EXPENSES. Consideration was given to a Lipper report analysis of the
management fees and total expense ratios of the Fund compared with an expense
group consisting of the Fund and 10 other funds selected by Lipper as its
appropriate Lipper expense group. Lipper expense data is based upon historical
information taken from the Fund's most recent annual report and, as a result of
the severe decline in fund industry assets during the last quarter of 2008, is
based on asset levels that are higher than the level currently existing for most
funds. While recognizing the limitations inherent in Lipper's methodology and
recognizing that current expense ratios may increase as assets decline, the
Board believed that the independent analysis conducted by Lipper remained an
appropriate measure of comparative expenses. In reviewing comparative costs,
Lipper provides information on the Fund's contractual investment management fee
in comparison with the contractual investment management fee that would have
been charged by other funds within its Lipper expense group assuming they were
similar in size to the Fund, as well as the actual total expense ratio of the
Fund in comparison with those of such expense group. The Lipper contractual
investment management fee analysis considers administrative fees to be part of
management fees. The results of such expense comparisons showed the Fund's
contractual investment management fee to be the highest in its expense group
being 35 basis points above the expense group median and its actual total
expense ratio to be the second highest in its expense group, being approximately
41 basis points above the expense group median. The Board found such expenses to
be acceptable in view of the Fund's historical performance and factors relating
to the Fund's operations, such as the quality and experience of the Fund's
portfolio managers and research staff and the Manager's geographical presence
and coverage of markets in which the Fund invests.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
the Fund during the 12-month period ended September 30, 2008, being the most
recent fiscal year end for Franklin Resources, Inc., the Manager's parent.
During such period, the assets of the

34 | Annual Report

Templeton Russia and East European Fund, Inc.

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

Franklin Templeton U.S. fund business were significantly higher than those
currently existing, and to such extent the profitability analysis does not
reflect current fund operations. While taking this into account in assessing the
significance of the Fund profitability analysis, the Board recognized such
analysis was made at a given point in time and that the decline in assets and
effect on profitability would be reflected in the profitability analysis
covering Franklin Resources' 2009 fiscal year period. In reviewing the analysis,
attention was given to the methodology followed in allocating costs to the Fund,
it being recognized that allocation methodologies are inherently subjective and
various allocation methodologies may each be reasonable while producing
different results. In this respect, the Board noted that, while being
continuously refined and reflecting changes in the Manager's own cost
accounting, the cost allocation methodology was consistent with that followed in
profitability report presentations made in prior years and that the Fund's
independent registered public accounting firm had been engaged by the Manager to
perform certain procedures on a biennial basis, specified and approved by the
Manager and the Fund's Board solely for their purposes and use in reference to
the profitability analysis. In reviewing and discussing such analysis,
management discussed with the Board its belief that costs incurred in
establishing the infrastructure necessary for the type of fund operations
conducted by the Manager and its affiliates may not be fully reflected in the
expenses allocated to the Fund in determining its profitability, as well as the
fact that the level of profits, to a certain extent, reflected operational cost
savings and efficiencies initiated by management. In addition, the Board
considered a third-party study comparing the profitability of the Manager's
parent on an overall basis as compared to other publicly held managers broken
down to show profitability from management operations exclusive of distribution
expenses, as well as profitability including distribution expenses. The Board
also considered the extent to which the Manager and its affiliates might derive
ancillary benefits from fund operations, as well as potential benefits resulting
from allocation of fund brokerage and the use of commission dollars to pay for
research. Based upon its consideration of all these factors, the Board
determined that the level of profits realized by the Manager and its affiliates
from providing services to the Fund was not excessive in view of the nature,
quality and extent of services provided.

ECONOMIES OF SCALE. The Board also considered whether the Manager realizes
economies of scale as the Fund grows larger and the extent to which any such
benefit is shared with the Fund and its shareholders. The Board believed that a
Manager's ability to realize economies of scale and the sharing of such benefit
is a more relevant consideration in the case of an open-end fund whose size
increases as a result of the continuous sale of its shares. A closed-end
investment company such as the Fund does not continuously offer shares, and
growth following its initial public offering will primarily result from market
appreciation, which benefits its shareholders. While believing economies of
scale to be less of a factor in the context of a closed-end fund, the Board
believes at some point an increase in size may lead to economies of scale that
should be shared with the Fund and its shareholders and intends to monitor
future growth of the Fund accordingly, noting that it had previously added a
breakpoint to the Fund's investment advisory fee at the $1 billion level.

Annual Report | 35

Templeton Russia and East European Fund, Inc.

SHAREHOLDER INFORMATION (CONTINUED)

PROXY VOTING POLICIES AND PROCEDURES

The Fund's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Fund uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Fund's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling (800)
SEC-0330.

CERTIFICATIONS

The Fund's Chief Executive Officer - Finance and Administration is required by
the New York Stock Exchange's Listing Standards to file annually with the
Exchange a certification that she is not aware of any violation by the Fund of
the Exchange's Corporate Governance Standards applicable to the Fund. The Fund
has filed such certification.

In addition, the Fund's Chief Executive Officer - Finance and Administration and
Chief Financial Officer and Chief Accounting Officer are required by the rules
of the U.S. Securities and Exchange Commission to provide certain certifications
with respect to the Fund's Form N-CSR and Form N-CSRS (which include the Fund's
annual and semiannual reports to shareholders) that are filed semiannually with
the Commission. The Fund has filed such certifications with its Form N-CSRS for
the six months ended September 30, 2008. Additionally, the Fund expects to file,
on or about May 29, 2009, such certifications with its Form N-CSR for the year
ended March 31, 2009.

36 | Annual Report

(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) 100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030

ANNUAL REPORT

TEMPLETON RUSSIA AND
EAST EUROPEAN FUND, INC.

INVESTMENT MANAGER

Templeton Asset Management Ltd.

TRANSFER AGENT

BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
Toll free number: (800) 416-5585
Hearing Impaired phone number: (800) 231-5469
Foreign Shareholders phone number: (201) 680-6578
www.melloninvestor.com/isd

FUND INFORMATION

(800) 342-5236

Investors should be aware that the value of investments made for the Fund may go
down as well as up. Like any investment in securities, the value of the Fund's
portfolio will be subject to the risk of loss from market, currency, economic,
political and other factors. The Fund and its investors are not protected from
such losses by the investment manager. Therefore, investors who cannot accept
this risk should not invest in shares of the Fund.

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

TLTRF A2009 05/09

ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a
copy of its code of ethics that applies to its principal executive
officers and principal financial and accounting officer.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.

(2) The audit committee financial expert is David W. Niemiec and he is
"independent" as defined under the relevant Securities and Exchange
Commission Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(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 $41,015 for the fiscal year ended March 31, 2009 and $70,357 for the fiscal
year ended March 31, 2008.

(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.

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 $4,000 for the fiscal year ended
March 31, 2009 and $0 for the fiscal year ended March 31, 2008. The services for
which these fees were paid included tax compliance and advice.

(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 $248 for the fiscal year ended March 31, 2009
and $0 for the fiscal year ended March 31, 2008. 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 other than
services reported in paragraphs (a)-(c) of Item 4 were $283,829 for the fiscal
year ended March 31, 2009 and $0 for the fiscal year ended March 31, 2008. 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.

(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 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 $288,077 for the fiscal year ended March 31, 2009 and $0 for the
fiscal year ended March 31, 2008.

(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.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Members of the Audit Committee are: Ann Torre Bates, Frank J. Crothers, 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 directors of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Templeton Asset Management Ltd. in accordance with the Proxy Voting Policies and
Procedures (Policies) adopted by the manager.

The manager has delegated its administrative duties with respect to the voting
of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy
Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All
proxies received by the Proxy Group will be voted based upon the manager's
instructions and/or policies.

To assist it in analyzing proxies, the manager subscribes to RiskMetrics Group
(RiskMetrics), an unaffiliated third party corporate governance research service
that provides in-depth analyses of shareholder meeting agendas, vote
recommendations, recordkeeping and vote disclosure services. In addition, the
manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated
third party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies.
Although RiskMetrics' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from RiskMetrics, Glass Lewis or any other third party to be
determinative of the manager's ultimate decision. The manager votes proxies
solely in the interests of the Fund and its shareholders. As a matter of policy,
the officers, directors/trustees and employees of the Fund, the manager and the
Proxy Group will not be influenced by outside sources whose interests conflict
with the interests of the Fund and its shareholders. Efforts are made to resolve
all conflicts in the interests of the manager's clients. Material conflicts of
interest are identified by the Proxy Group based upon analyses of client, broker
and vendor lists, information periodically gathered from directors and officers,
and information derived from other sources, including public filings. In
situations where a material conflict of interest is identified, the Proxy Group
may defer to the voting recommendation of RiskMetrics, Glass Lewis or those of
another independent third party provider of proxy services; or send the proxy
directly to the Fund with a recommendation regarding the vote for approval. If
the conflict is not resolved by the Fund, the Proxy Group may refer the matter,
along with the recommended course of action by the manager to an
interdepartmental Proxy Review Committee (which may include portfolio managers
and/or research analysts employed by the manager), for evaluation and voting
instructions. The Proxy Review Committee may defer to the voting recommendation
of RiskMetrics, Glass Lewis or those of another independent third party provider
of proxy services; or send the proxy directly to the Fund. Where the Proxy Group
or the Proxy Review Committee refers a matter to the Fund, it may rely upon the
instructions of a representative of the Fund, such as the board of directors or
a committee of the board.

Where a material conflict of interest has been identified, but the items on
which the manager's vote recommendations differ from Glass Lewis, RiskMetrics,
or another independent third party provider of proxy services relate
specifically to (1) shareholder proposals regarding social or environmental
issues or political contributions, (2) "Other Business" without describing the
matters that might be considered, or (3) items the manager wishes to vote in
opposition to the recommendations of an issuer's management, the Proxy Group may
defer to the vote recommendations of the manager rather than sending the proxy
directly to the Fund for approval.

To avoid certain potential conflicts of interest, the manager will employ echo
voting, if possible, in the following instances: (1) when the Fund invests in an
underlying fund in reliance on Sections 12(d)(1) of the 1940 Act, or pursuant to
an SEC exemptive order; (2) when the Fund invests uninvested cash in affiliated
money market funds pursuant to an SEC exemptive order ("cash sweep
arrangement"); or (3) when required pursuant to the Fund's governing documents
or applicable law. Echo voting means that the Investment Manager will vote the
shares in the same proportion as the vote of all of the other holders of the
fund's shares.

The recommendation of management on any issue is a factor which the manager
considers in determining how proxies should be voted, but is not determinative
of the manager's ultimate decision. As a matter of practice, the votes with
respect to most issues are cast in accordance with the position of the company's
management. Each issue, however, is considered on its own merits, and the
manager will not support the position of the company's management in any
situation where it deems that the ratification of management's position would
adversely affect the investment merits of owning that company's shares.

MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES The manager has adopted general
proxy voting guidelines, which are summarized below. These guidelines are not an
exhaustive list of all the issues that may arise and the manager cannot
anticipate all future situations. In all cases, each proxy will be considered
based on the relevant facts and circumstances.

BOARD OF DIRECTORS. The manager supports an independent board of directors, and
prefers that key committees such as audit, nominating, and compensation
committees be comprised of independent directors. The manager will generally
vote against management efforts to classify a board and will generally support
proposals to declassify the board of directors. The manager may withhold votes
from directors who have attended less than 75% of meetings without a valid
reason. While generally in favor of separating Chairman and CEO positions, the
manager will review this issue as well as proposals to restore or provide for
cumulative voting on a case-by-case basis, taking into consideration factors
such as the company's corporate governance guidelines or provisions and
performance.

RATIFICATION OF AUDITORS OF PORTFOLIO COMPANIES. In light of several high
profile accounting scandals, the manager will closely scrutinize the role and
performance of auditors. On a case-by-case basis, the manager will examine
proposals relating to non-audit relationships and non-audit fees. The manager
will also consider, on a case-by-case basis, proposals to rotate auditors, and
will vote against the ratification of auditors when there is clear and
compelling evidence of accounting irregularities or negligence.

MANAGEMENT AND DIRECTOR COMPENSATION. A company's equity-based compensation plan
should be in alignment with its shareholders' long-term interests. The manager
believes that executive compensation should be directly linked to the
performance of the company. The manager evaluates plans on a case-by-case basis
by considering several factors to determine whether the plan is fair and
reasonable, including the RiskMetrics quantitative model utilized to assess such
plans and/or the Glass Lewis evaluation of the plans. The manager will generally
oppose plans that have the potential to be excessively dilutive, and will almost
always oppose plans that are structured to allow the repricing of underwater
options, or plans that have an automatic share replenishment "evergreen"
feature. The manager will generally support employee stock option plans in which
the purchase price is at least 85% of fair market value, and when potential
dilution is 10% or less.

Severance compensation arrangements will be reviewed on a case-by-case basis,
although the manager will generally oppose "golden parachutes" that are
considered to be excessive. The manager will normally support proposals that
require a percentage of directors' compensation to be in the form of common
stock, as it aligns their interests with those of shareholders. The manager will
review on a case-by-case basis any shareholder proposals to adopt policies on
expensing stock option plans.

ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. On
occasion, the manager may vote with management when the research analyst has
concluded that the proposal is not onerous and would not harm the Fund or its
shareholders' interests. The manager generally supports proposals that require
shareholder rights' plans ("poison pills") to be subject to a shareholder vote
and will closely evaluate such plans on a case-by-case basis to determine
whether or not they warrant support. The manager will generally vote against any
proposal to issue stock that has unequal or subordinate voting rights. The
manager generally opposes any supermajority voting requirements as well as the
payment of "greenmail." The manager generally supports "fair price" provisions
and confidential voting.

CHANGES TO CAPITAL STRUCTURE. The manager will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase and proposals seeking preemptive rights. The manager will generally not
vote in favor of dual-class capital structures to increase the number of
authorized shares where that class of stock would have superior voting rights.
The manager will generally vote in favor of the issuance of preferred stock in
cases where the company specifies the voting, dividend, conversion and other
rights of such stock and the terms of the preferred stock issuance are deemed
reasonable.

MERGERS AND CORPORATE RESTRUCTURING. Mergers and acquisitions will be subject to
careful review by the research analyst to determine whether each will be
beneficial to shareholders. The manager will analyze various economic and
strategic factors in making the final decision on a merger or acquisition.
Corporate restructuring and reincorporation proposals are also subject to a
thorough examination on a case-by-case basis.

SOCIAL AND CORPORATE POLICY ISSUES. The manager will generally give management
discretion with regard to social, environmental and ethical issues, although the
manager may vote in favor of those that are believed to have significant
economic benefits or implications for the Fund and its shareholders.

GLOBAL CORPORATE GOVERNANCE. Many of the tenets discussed above are applied to
proxy voting decisions for international companies. However, the manager must be
more flexible in these instances and must be mindful of the varied market
practices of each region.

The manager will attempt to process every proxy it receives for all domestic and
foreign issuers. However, there may be situations in which the manager cannot
process proxies, for example, where a meeting notice was received too late, or
sell orders preclude the ability to vote. If a security is on loan, the manager
may determine that it is not in the best interests of the Fund to recall the
security for voting purposes. Also, the manager may abstain from voting under
certain circumstances or vote against items such as "Other Business" when the
manager is not given adequate information from the company.

Shareholders may view the complete Policies online at franklintempleton.com.
Alternatively, shareholders may request copies of the Policies free of charge by
calling the Proxy Group collect at 1-954/527-7678 or by sending a written
request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite
1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's
proxy voting records are available online at franklintempleton.com and posted on
the SEC website at WWW.SEC.GOV. The proxy voting records are updated each year
by August 31 to reflect the most recent 12-month period ended June 30.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANY AND
AFFILIATED PURCHASERS.

(a)(1) As of May 29, 2009, the portfolio managers of the Fund are as follows:

MARK MOBIUS, PH.D, MANAGING DIRECTOR OF ASSET MANAGEMENT

Dr. Mobius has been a lead portfolio manager of the Fund since inception. He has
primary responsibility for the investments of the Fund, and 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 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 1987.

DENNIS LIM, CO-CHIEF EXECUTIVE OFFICER AND DIRECTOR OF ASSET MANAGEMENT
Based in Singapore, Mr. Lim has been a portfolio manager of the Fund since 2000,
providing research and advice on the purchases and sales of individual
securities, and portfolio risk assessment. He joined Franklin Templeton
Investments in 1990.

TOM WU, DIRECTOR OF ASSET MANAGEMENT

Based in Hong Kong, Mr. Wu has been a portfolio manager of the Fund since
inception, providing research and advice on the purchases and sales of
individual securities, and portfolio risk assessment. He joined Franklin
Templeton Investments in 1987.

(a)(2) This section reflects information about the portfolio managers as of the
fiscal year ended March 31, 2009.

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:

- -------------------------------------------------------------------------------------------------------------
ASSETS ASSETS OF
NUMBER OF OTHER OTHER POOLED ASSETS OF
OF OTHER REGISTERED NUMBER OF INVESTMENTS OTHER
REGISTERED INVESTMENT OTHER POOLED VEHICLES NUMBER OF ACCOUNTS
INVESTMENT COMPANIES INVESTMENT MANAGED OTHERS MANAGED
COMPANIES MANAGED VEHICLES (X $1 ACCOUNTS (X $1
NAME MANAGED (x $1 MILLION) MANAGED/1 MILLION)/1 MANAGED/1 MILLION)/1
- --------------------------------------------------------------------------------------------------------------

Mark Mobius 9 5,405.1 26 9,642.7 7 920.4
- --------------------------------------------------------------------------------------------------------------
Dennis Lim 6 3,806.9 4 702.7 1 183.9
- --------------------------------------------------------------------------------------------------------------
Tom Wu 6 10,401.8 4 2,502.5 1 352.1
- --------------------------------------------------------------------------------------------------------------

1. The various pooled investment vehicles and accounts listed are managed by a
team of investment professionals. Accordingly, the individual managers 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. 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 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
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 an indirect 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 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 (50% to 65%) and restricted shares of
a Franklin Templeton fund which vest over a three-year period (17.5% to
25%) and other mutual fund shares (17.5% to 25%). The deferred
equity-based compensation is intended to build a vested interest of the
portfolio manager in the financial performance of both Resources and
mutual funds advised by the manager. The bonus plan is intended to
provide a competitive level of annual bonus compensation that is tied
to the portfolio manager achieving consistently strong investment
performance, which aligns the financial incentives of the portfolio
manager and Fund shareholders. The Chief Investment Officer of the
manager and/or other officers of the manager, with responsibility for
the Fund, have discretion in the granting of annual bonuses to
portfolio managers in accordance with Franklin Templeton guidelines.
The following factors are generally used in determining bonuses under
the plan:

|X| INVESTMENT PERFORMANCE. Primary consideration is given to the
historic investment performance over the 1, 3 and 5 preceding
years of all accounts managed by the portfolio manager. The
pre-tax performance of each fund managed is measured relative to a
relevant peer group and/or applicable benchmark as appropriate.

|X| NON-INVESTMENT PERFORMANCE. The more qualitative contributions of
a portfolio manager to the manager's business and the investment
management team, including business knowledge, contribution to
team efforts, mentoring of junior staff, and contribution to the
marketing of the Fund, are evaluated in determining the amount of
any bonus award.

|X| RESEARCH. Where the portfolio management team also has research
responsibilities, each portfolio manager is evaluated on the
number and performance of recommendations over time.

|X| RESPONSIBILITIES. The characteristics and complexity of funds
managed by the portfolio manager are factored in the manager's
appraisal.

ADDITIONAL LONG-TERM EQUITY-BASED COMPENSATION Portfolio managers may
also be awarded restricted shares or units of one or more mutual funds,
and options to purchase common shares of a Franklin Templeton fund.
Awards of such deferred equity-based compensation typically vest over
time, so as to create incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available
generally to all employees of the manager.

OWNERSHIP OF FUND SHARES. The 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):

----------------------------------------------------------------------
PORTFOLIO MANAGER DOLLAR RANGE OF FUND SHARES
BENEFICIALLY OWNED
----------------------------------------------------------------------
Mark Mobius None
----------------------------------------------------------------------
Dennis Lim None
----------------------------------------------------------------------
Tom Wu None
----------------------------------------------------------------------

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Directors that would require disclosure
herein.

ITEM 11. CONTROLS AND PROCEDURES.

(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.

(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 12. EXHIBITS.

(A)(1) Code of Ethics

(A)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer

(B) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.

By /s/LAURA F. FERGERSON
----------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date May 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By /s/LAURA F. FERGERSON
----------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date May 27, 2009

By /s/MARK H. OTANI
---------------------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date May 27, 2009