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: 5/31/06
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ITEM 1. SCHEDULE OF INVESTMENTS.
Templeton Emerging Markets Income Fund
QUARTERLY STATEMENT OF INVESTMENTS
MAY 31, 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, MAY 31, 2006 (UNAUDITED)
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PRINCIPAL AMOUNT h VALUE
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BONDS 89.5%
ARGENTINA 11.6%
a,b Government of Argentina, FRN, 4.889%, 8/03/12 ............................ 96,145,000 $ 77,783,204
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BOSNIA AND HERZEGOVINA 1.8%
b Government of Bosnia & Herzegovina, FRN, 3.50%, 12/11/17 ................. 11,135,636 EUR 12,381,432
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BRAZIL 11.2%
Government of Brazil,
7.875%, 3/07/15 ........................................................ 1,275,000 1,317,840
12.50%, 1/05/16 ........................................................ 15,000,000 BRL 6,115,984
8.00%, 1/15/18 ......................................................... 61,615,000 64,233,638
b FRN, 10.71%, 6/29/09 ................................................... 2,900,000 3,316,875
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74,984,337
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COLOMBIA 3.4%
Government of Colombia,
10.50%, 7/09/10 ........................................................ 1,528,000 1,757,964
10.75%, 1/15/13 ........................................................ 12,450,000 15,002,250
11.75%, 2/25/20 ........................................................ 4,255,000 5,797,437
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22,557,651
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INDONESIA 14.3%
Government of Indonesia,
10.00%, 7/15/07 ........................................................ 18,800,000,000 IDR 1,757,104
10.00%, 10/15/11 ....................................................... 1,690,000,000 IDR 167,311
11.00%, 12/15/12 ....................................................... 3,650,000,000 IDR 371,211
11.00%, 10/15/14 ....................................................... 120,832,000,000 IDR 12,174,585
9.50%, 6/15/15 ......................................................... 9,450,000,000 IDR 867,909
10.75%, 5/15/16 ........................................................ 26,870,000,000 IDR 2,645,628
11.50%, 9/15/19 ........................................................ 40,000,000,000 IDR 4,165,316
11.00%, 11/15/20 ....................................................... 129,550,000,000 IDR 12,689,047
c Reg S, 7.50%, 1/15/16 .................................................. 3,300,000 3,399,000
Indonesia Recapital Bonds,
13.15%, 3/15/10 ........................................................ 11,830,000,000 IDR 1,324,564
15.425%, 9/15/10 ....................................................... 2,800,000,000 IDR 335,818
14.25%, 6/15/13 ........................................................ 234,282,000,000 IDR 27,718,934
14.275%, 12/15/13 ...................................................... 166,215,000,000 IDR 19,665,628
d,e,f PT Indah Kiat Finance Mauritius Ltd.,
b FRN, 4.19%, 4/29/15 .................................................... 3,155,909 1,175,892
b FRN, 4.19%, 4/29/18 .................................................... 8,284,051 3,086,637
zero cpn., 4/29/25 ..................................................... 5,370,423 2,001,020
d,e,f Tjiwi Kimia Finance Mauritius, secured note, 144A,
b FRN, 4.19%, 4/29/15 .................................................... 1,184,694 351,499
b FRN, 4.19%, 4/29/18 .................................................... 3,049,247 904,712
zero cpn., 4/29/25 ..................................................... 3,927,195 1,165,199
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95,967,014
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IRAQ 4.3%
g Government of Iraq, 144A, 5.80%, 1/15/28 ................................. 42,075,000 28,768,781
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MEXICO 0.2%
c Government of Mexico, Reg S, 7.50%, 3/08/10 .............................. 1,110,000 EUR 1,581,402
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Quarterly Statement of Investments | 3
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
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PRINCIPAL AMOUNT h VALUE
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BONDS (CONTINUED)
PANAMA 0.9%
Government of Panama, 6.70%, 1/26/36 ..................................... 6,639,000 $ 6,280,494
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PERU 7.7%
Government of Peru,
9.875%, 2/06/15 ........................................................ 4,255,000 5,004,944
9.91%, 5/05/15 ......................................................... 51,975,000 PEN 18,007,088
7.84%, 8/12/20 ......................................................... 485,000 PEN 145,378
7.35%, 7/21/25 ......................................................... 10,520,000 10,257,000
8.75%, 11/21/33 ........................................................ 9,050,000 10,068,125
Series 7, 8.60%, 8/12/17 ............................................... 24,910,000 PEN 8,035,916
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51,518,451
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PHILIPPINES 4.6%
Government of the Philippines,
9.00%, 2/15/13 ......................................................... 11,460,000 12,606,000
8.875%, 3/17/15 ........................................................ 2,100,000 2,330,370
10.625%, 3/16/25 ....................................................... 2,500,000 3,135,938
9.50%, 2/02/30 ......................................................... 5,400,000 6,278,580
7.75%, 1/14/31 ......................................................... 500,000 492,500
c Reg S, 9.125%, 2/22/10 ................................................. 160,000 EUR 233,013
c Reg S, 8.75%, 10/07/16 ................................................. 5,450,000 5,930,281
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31,006,682
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POLAND 4.7%
Government of Poland,
8.50%, 11/12/06 ........................................................ 20,000,000 PLN 6,641,288
8.50%, 5/12/07 ......................................................... 33,300,000 PLN 11,259,485
6.00%, 5/24/09 ......................................................... 23,000,000 PLN 7,760,956
6.25%, 10/24/15 ........................................................ 15,380,000 PLN 5,344,844
5.75%, 9/23/22 ......................................................... 2,000,000 PLN 673,564
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31,680,137
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RUSSIA 8.7%
c Aries Vermogen, Reg S, 9.60%, 10/25/14 ................................. 24,000,000 29,618,400
c Government of Russia,Reg S,
11.00%, 7/24/18 ........................................................ 12,670,000 17,694,428
12.75%, 6/24/28 ........................................................ 6,566,000 11,184,787
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58,497,615
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SOUTH AFRICA 0.5%
Government of South Africa, 5.25%, 5/16/13 ............................... 2,390,000 EUR 3,177,829
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SOUTH KOREA 4.8%
Government of Korea,
6.90%, 1/16/07 ......................................................... 10,000,000,000 KRW 10,731,120
4.75%, 3/12/08 ......................................................... 20,465,000,000 KRW 21,656,501
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32,387,621
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4| Quarterly Statement of Investments
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
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PRINCIPAL AMOUNT h VALUE
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BONDS (CONTINUED)
THAILAND 2.3%
Bank of Thailand Bond, 3.25%, 5/19/07 .................................... 17,165,000 THB $ 442,088
Government of Thailand,
8.00%, 12/08/06 ........................................................ 244,500,000 THB 6,511,689
4.125%, 2/12/08 ........................................................ 98,000,000 THB 2,522,168
8.50%, 12/08/08 ........................................................ 11,000,000 THB 310,708
4.80%, 4/09/10 ......................................................... 212,000,000 THB 5,461,150
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15,247,803
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UKRAINE 3.6%
g Government of the Ukraine, 144A,
7.65%, 6/11/13 ......................................................... 11,948,000 12,186,960
b FRN, 8.235%, 8/05/09 ................................................... 11,660,000 12,286,725
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24,473,685
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VENEZUELA 4.8%
Government of Venezuela, 9.25%, 9/15/27 .................................. 26,984,000 32,414,530
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VIETNAM 0.1%
b Government of Vietnam, FRN, 5.875%, 3/12/16 .............................. 949,565 947,653
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TOTAL BONDS (COST $559,474,924) .......................................... 601,656,321
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SHARES/PRINCIPAL
AMOUNT h
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SHORT TERM INVESTMENTS 6.7%
FOREIGN GOVERNMENT SECURITIES 3.8%
EGYPT 1.1%
i Egypt Treasury Bills, 6/20/06 - 11/21/06 ................................. 44,200,000 EGP 7,539,516
THAILAND 2.7%
i Thailand Treasury Bills, 7/27/06 - 10/12/06 .............................. 705,500,000 THB 18,195,268
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TOTAL FOREIGN GOVERNMENT SECURITIES (COST $24,615,043) ................... 25,734,784
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MONEY MARKET FUND (COST $19,710,099) 2.9%
UNITED STATES 2.9%
j Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.71% ..... 19,710,099 19,710,099
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TOTAL SHORT TERM INVESTMENTS (COST $44,325,142) .......................... 45,444,883
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TOTAL INVESTMENTS (COST $603,800,066) 96.2% .............................. 647,101,204
OTHER ASSETS, LESS LIABILITIES 3.8% ...................................... 25,338,083
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NET ASSETS 100.0% ........................................................ $ 672,439,287
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Quarterly Statement of Investments | 5
Templeton Emerging Markets Income Fund
STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
CURRENCY ABBREVIATIONS
BRL - Brazilian Real
EGP - Egyptian Pound
EUR - Euro
IDR - Indonesian Rupiah
KRW - Korean Won
PEN - Peru 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 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 May 31, 2006, the aggregate
value of these securities was $69,641,311, representing 10.36% of net
assets.
d Non-income producing.
e See Note 2 regarding restricted securities.
f See Note 3 regarding other considerations.
g 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 May 31, 2006, the
aggregate value of these securities was $53,242,466, representing 7.92% of
net assets.
h The principal amount is stated in U.S. dollars unless otherwise indicated.
i The security is traded on a discount basis with no stated coupon rate.
j The Franklin Institutional Trust Money Market Portfolio is managed by the
Fund's investment manager. The rate shown is the annualized seven-day
yield at period end.
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 May 31, 2006, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ......................................... $ 606,511,365
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Unrealized appreciation ..................................... $ 46,399,743
Unrealized depreciation ..................................... (5,809,904)
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Net unrealized appreciation (depreciation) .................. $ 40,589,839
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2. RESTRICTED SECURITIES
At May 31, 2006, the Fund held investments in restricted securities, valued in
accordance with procedures approved by the Fund's Board of Trustees as
reflecting fair value, as follows:
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PRINCIPAL ACQUISITION
AMOUNT ISSUER DATE COST VALUE
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$ 3,155,909 PT Indah Kiat Finance Mauritius Ltd., FRN, 4.19%, 4/29/15 ..... 4/29/05 $ 1,208,050 $ 1,175,892
8,284,051 PT Indah Kiat Finance Mauritius Ltd., FRN, 4.19%, 4/29/18 ..... 4/29/05 3,171,052 3,086,637
5,370,423 PT Indah Kiat Finance Mauritius Ltd., zero cpn., 4/29/25 ...... 4/29/05 2,055,744 2,001,020
1,184,694 Tjiwi Kimia Finance Mauritius, secured note, 144A,
FRN, 4.19%, 4/29/15 ......................................... 4/29/05 361,095 351,499
3,049,247 Tjiwi Kimia Finance Mauritius, secured note, 144A,
FRN, 4.19%, 4/29/18 ......................................... 4/29/05 929,410 904,712
3,927,195 Tjiwi Kimia Finance Mauritius, secured note,
zero cpn., 4/29/25 .......................................... 4/29/05 1,197,009 1,165,199
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TOTAL RESTRICTED SECURITIES (1.29% of Net Assets) $ 8,684,959
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3. OTHER CONSIDERATIONS
Subject to certain terms and conditions, the Fund has agreed to sell its
holdings in PT Indah Kiat Finance Mauritius Ltd. and Tjiwi Kimia International
Finance in November 2006. Until the completion of the sale, the transaction is
being accounted for as a secured borrowing with a pledge of collateral and any
preliminary sales proceeds or other interest and cash distributions received are
deferred until the completion of the transaction and are recorded as part of the
net sales proceeds.
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 July 27, 2006
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 July 27, 2006
By /s/GALEN G. VETTER
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Galen G. Vetter
Chief Financial Officer
Date July 27, 2006