FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07866
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TEMPLETON EMERGING MARKETS INCOME FUND
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 08/31
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Date of reporting period: 11/30/06
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ITEM 1. SCHEDULE OF INVESTMENTS.
Templeton Emerging Markets Income Fund
QUARTERLY STATEMENT OF INVESTMENTS
NOVEMBER 30, 2006
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CONTENTS
Statement of Investments ................................................... 3
Notes to Statement of Investments .......................................... 7
[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Quarterly Statement of Investments | 1
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Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2006 (UNAUDITED)
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PRINCIPAL AMOUNT e VALUE
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LONG TERM INVESTMENTS 91.5%
BONDS 90.2%
ARGENTINA 10.0%
a,b Government of Argentina, FRN, 5.59%, 8/03/12 ........................... 100,985,000 $ 71,003,266
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BOSNIA AND HERZEGOVINA 1.8%
b Government of Bosnia & Herzegovina, FRN, 3.00%, 12/11/17 ............... 11,020,835 EUR 12,623,151
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BRAZIL 16.5%
Government of Brazil,
7.875%, 3/07/15 ...................................................... 1,275,000 1,423,474
8.00%, 1/15/18 ....................................................... 61,615,000 68,768,501
b FRN, 11.117%, 6/29/09 ................................................ 2,900,000 3,302,375
Nota Do Tesouro Nacional,
9.762%, 1/01/12 ...................................................... 67,500 j BRL 27,552,770
9.762%, 1/01/14 ...................................................... 20,000 j BRL 7,869,746
Index Linked, 6.00%, 11/15/09 ........................................ 5,100 j BRL 3,549,743
Index Linked, 6.00%, 5/15/15 ......................................... 5,600 j BRL 3,604,492
Vale Overseas Ltd., 6.25%, 1/23/17 ..................................... 1,900,000 1,925,882
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117,996,983
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COLOMBIA 2.6%
Government of Colombia,
12.00%, 10/22/15 ..................................................... 23,931,000,000 COP 12,132,325
11.75%, 2/25/20 ...................................................... 4,255,000 6,111,244
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18,243,569
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EL SALVADOR 0.4%
c Government of El Salvador, 144A, 7.65%, 6/15/35 ........................ 2,650,000 2,981,250
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INDONESIA 13.5%
Government of Indonesia,
10.00%, 10/15/11 ..................................................... 1,690,000,000 IDR 182,910
11.00%, 12/15/12 ..................................................... 3,650,000,000 IDR 409,453
11.00%, 10/15/14 ..................................................... 120,832,000,000 IDR 13,531,335
9.50%, 6/15/15 ....................................................... 9,450,000,000 IDR 970,601
10.75%, 5/15/16 ...................................................... 26,870,000,000 IDR 2,956,662
10.00%, 7/15/17 ...................................................... 18,800,000,000 IDR 1,968,717
11.50%, 9/15/19 ...................................................... 40,000,000,000 IDR 4,590,428
11.00%, 11/15/20 ..................................................... 132,050,000,000 IDR 14,606,896
12.90%, 6/15/22 ...................................................... 2,000,000,000 IDR 251,407
12.00%, 9/15/26 ...................................................... 7,850,000,000 IDR 925,041
d Reg S, 7.50%, 1/15/16 ................................................ 3,300,000 3,582,563
Indonesia Recapital Bonds,
15.425%, 9/15/10 ..................................................... 2,800,000,000 IDR 358,473
14.25%, 6/15/13 ...................................................... 234,282,000,000 IDR 30,133,234
14.275%, 12/15/13 .................................................... 166,215,000,000 IDR 21,579,411
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96,047,131
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IRAQ 4.6%
c Government of Iraq, 144A, 5.80%, 1/15/28 ............................... 50,575,000 33,126,625
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Quarterly Statement of Investments | 3
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2006 (UNAUDITED) (CONTINUED)
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PRINCIPAL AMOUNT e VALUE
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LONG TERM INVESTMENTS (CONTINUED)
BONDS (CONTINUED)
MEXICO 3.8%
Government of Mexico,
8.00%, 12/17/15 ...................................................... 1,375,000 k MXN $ 12,705,161
10.00%, 12/05/24 ...................................................... 1,315,000 k MXN 14,434,146
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27,139,307
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PANAMA 1.0%
Government of Panama, 6.70%, 1/26/36 ................................... 6,639,000 6,848,129
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PERU 8.7%
Government of Peru,
9.875%, 2/06/15 ...................................................... 4,255,000 5,355,981
9.91%, 5/05/15 ....................................................... 51,975,000 PEN 19,725,316
7.84%, 8/12/20 ....................................................... 485,000 PEN 165,899
7.35%, 7/21/25 ....................................................... 10,520,000 11,677,200
8.75%, 11/21/33 ...................................................... 12,550,000 16,220,875
Series 7, 8.60%, 8/12/17 ............................................. 24,910,000 PEN 8,924,948
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62,070,219
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PHILIPPINES 4.7%
Government of the Philippines,
9.00%, 2/15/13 ....................................................... 21,460,000 24,705,825
8.875%, 3/17/15 ...................................................... 2,100,000 2,450,490
d Reg S, 9.125%, 2/22/10 ............................................... 160,000 EUR 239,946
d Reg S, 8.75%, 10/07/16 ............................................... 5,450,000 6,369,279
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33,765,540
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POLAND 2.6%
Government of Poland,
8.50%, 5/12/07 ....................................................... 33,300,000 PLN 11,763,636
6.25%, 10/24/15 ...................................................... 15,380,000 PLN 5,747,423
5.75%, 9/23/22 ....................................................... 2,000,000 PLN 727,960
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18,239,019
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RUSSIA 8.7%
d Aries Vermogen, Reg S, 9.60%, 10/25/14 ................................. 24,000,000 31,275,000
d Government of Russia,
Reg S, 11.00%, 7/24/18 ............................................... 12,670,000 18,456,389
Reg S, 12.75%, 6/24/28 ............................................... 6,566,000 11,974,775
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61,706,164
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SOUTH KOREA 1.6%
Government of Korea,
6.90%, 1/16/07 ....................................................... 6,500,000,000 KRW 7,010,722
4.75%, 3/12/08 ....................................................... 3,965,000,000 KRW 4,259,744
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11,270,466
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THAILAND 2.3%
Bank of Thailand Bond, 3.25%, 5/19/07 .................................. 17,165,000 THB 474,974
Government of Thailand,
8.00%, 12/08/06 ...................................................... 244,500,000 THB 6,812,964
4.125%, 2/12/08 ...................................................... 98,000,000 THB 2,710,568
4 | Quarterly Statement of Investments
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2006 (UNAUDITED) (CONTINUED)
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PRINCIPAL AMOUNT e VALUE
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LONG TERM INVESTMENTS (CONTINUED)
BONDS (CONTINUED)
THAILAND (CONTINUED)
Government of Thailand, (continued)
8.50%, 12/08/08 ...................................................... 11,000,000 THB $ 328,536
4.80%, 4/09/10 ....................................................... 212,000,000 THB 5,928,375
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16,255,417
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UKRAINE 3.5%
c Government of Ukraine, 144A,
7.65%, 6/11/13 ....................................................... 11,948,000 12,903,840
b FRN, 8.903%, 8/05/09 ................................................. 11,660,000 12,374,175
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25,278,015
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VENEZUELA 3.8%
Government of Venezuela, 9.25%, 9/15/27 ................................ 21,684,000 27,023,685
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VIETNAM 0.1%
b Government of Vietnam, FRN, 4.063%, 3/12/16 ............................ 902,087 906,157
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TOTAL BONDS (COST $579,730,065) ........................................ 642,524,093
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WARRANTS (COST $7,140,043) 1.3%
ARGENTINA 1.3%
f Government of Argentina, wts., 12/15/35 ................................ 75,000,000 9,225,375
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TOTAL LONG TERM INVESTMENTS (COST $586,870,108) ........................ 651,749,468
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SHORT TERM INVESTMENTS 5.7%
GOVERNMENT AND AGENCY SECURITIES 2.4%
EGYPT 1.2%
g Egypt Treasury Bills, 6/19/07-11/20/07 ................................. 51,750,000 EGP 8,473,281
THAILAND 1.2%
g Thailand Treasury Bill, 10/04/07 ....................................... 323,015,000 THB 8,602,033
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TOTAL GOVERNMENT AND AGENCY SECURITIES (COST $16,771,548) .............. 17,075,314
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SHARES
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MONEY MARKET FUND (COST $23,774,118) 3.3%
UNITED STATES 3.3%
h Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.97% ... 23,774,118 23,774,118
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TOTAL SHORT TERM INVESTMENTS (COST $40,545,666) ........................ 40,849,432
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TOTAL INVESTMENTS (COST $627,415,774) 97.2% ............................ 692,598,900
NET UNREALIZED GAIN ON FORWARD EXCHANGE CONTRACTS 0% i ................. 144,106
OTHER ASSETS, LESS LIABILITIES 2.8% .................................... 20,034,583
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NET ASSETS 100.0% ...................................................... $ 712,777,589
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Quarterly Statement of Investments | 5
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, NOVEMBER 30, 2006 (UNAUDITED) (CONTINUED)
CURRENCY ABBREVIATIONS
BRL - Brazil Real
COP - Colombian Peso
EGP - Egyptian Pound
EUR - Euro
IDR - Indonesian Rupiah
KRW - South Korean Won
MXN - Mexican Peso
PEN - Peruvian Nuevo Sol
PLN - Polish Zloty
THB - Thailand Baht
SELECTED PORTFOLIO ABBREVIATION
FRN - Floating Rate Note
a The principal amount is stated in original face, and scheduled paydowns
are reflected in the market price on ex-date.
b The coupon rate shown represents the rate at period end.
c 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. These securities have been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At November 30, 2006,
the aggregate value of these securities was $61,385,890, representing
8.61% of net assets.
d Security was purchased pursuant to Regulation S under the Securities Act
of 1933, which exempts from registration securities offered and sold
outside of the United States. Such a security cannot be sold in the United
States without either an effective registration statement filed pursuant
to the Securities Act of 1933, or pursuant to an exemption from
registration. These securities have been deemed liquid under guidelines
approved by the Fund's Board of Trustees. At November 30, 2006, the
aggregate value of these securities was $71,897,952, representing 10.09%
of net assets.
e The principal amount is stated in U.S. dollars unless otherwise indicated.
f Warrants are linked to the Argentine Republic Gross Domestic Product (GDP)
and do not pay principal over life of security or at expiration. Warrants
entitle the holder to receive only variable income payments, subject to
certain conditions, which are based on growth of the Argentine GDP and the
principal or "notional" value of these GDP linked warrants.
g The security is traded on a discount basis with no stated coupon rate.
h The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by the Fund's investment manager. The rate shown is the annualized
seven-day yield at period end.
i Rounds to less than 0.1% of net assets.
j Principal is stated in 100 Real units.
k Principal is stated in 100 Peso units.
6 | See Notes to Statement of Investments. | Quarterly Statement of Investments
Templeton Emerging Markets Income Fund
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)
Templeton Emerging Markets Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end investment
company.
1. INCOME TAXES
At November 30, 2006, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ................................. $ 633,244,340
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Unrealized appreciation ............................. $ 61,692,972
Unrealized depreciation ............................. (2,338,412)
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Net unrealized appreciation (depreciation) .......... $ 59,354,560
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2. FORWARD EXCHANGE CONTRACTS
At November 30, 2006, the Fund had the following forward exchange contracts
outstanding:
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CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO SELL AMOUNT DATE GAIN (LOSS)
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61,513,239 Mexican Peso ............................ $ 5,568,321 8/16/07 $ 49,453
42,706,994 Mexican Peso ............................ 3,882,807 8/20/07 52,175
69,355,929 Mexican Peso ............................ 6,287,081 8/21/07 66,548
74,700,583 Mexican Peso ............................ 6,663,151 11/26/07 8,330
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UNREALIZED GAIN ON FORWARD EXCHANGE CONTRACTS ................................. $ 176,506
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CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO SELL AMOUNT DATE GAIN (LOSS)
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34,649,958 Mexican Peso ............................ $ 3,081,914 9/12/07 $ (21,174)
13,012,157 Mexican Peso ............................ 1,153,918 9/14/07 (11,226)
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UNREALIZED LOSS ON FORWARD EXCHANGE CONTRACTS ................................. (32,400)
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NET UNREALIZED GAIN (LOSS) ON FORWARD EXCHANGE CONTRACTS ................. $ 144,106
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For information on the Fund's policy regarding valuation of investments and
other significant accounting policies, please refer to the Fund's most recent
semiannual or annual shareholder report.
Quarterly Statement of Investments | 7
ITEM 2. 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 Quarterly Schedule of Portfolio
Holdings on Form N-Q, 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 Quarterly Schedule of
Portfolio Holdings on Form N-Q.
ITEM 3. EXHIBITS.
(a) Certifications pursuant to Section 30a-2 of the Investment Company Act of
1940 of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration,
and Galen G. Vetter, Chief Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON EMERGING MARKETS INCOME FUND
By /s/JIMMY D. GAMBILL
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Jimmy D. Gambill
Chief Executive Officer -
Finance and Administration
Date January 25, 2007
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/JIMMY D. GAMBILL
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Jimmy D. Gambill
Chief Executive Officer -
Finance and Administration
Date January 25, 2007
By /s/GALEN G. VETTER
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Galen G. Vetter
Chief Financial Officer
Date January 25, 2007