nq_tei-053111.htm - Generated by SEC Publisher for SEC Filing

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-07866

Templeton Emerging Markets Income Fund

(Exact name of registrant as specified in charter)

300 S.E. 2^nd Street, Fort Lauderdale, FL 33301-1923

(Address of principal executive offices) (Zip code)

Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant's telephone number, including area code: (954) 527-7500

Date of fiscal year end: 8/31

Date of reporting period: _05/31/11_

Item 1. Schedule of Investments.

Quarterly Statement of Investments See Notes to Statements of Investments

^*The principal amount is stated in U.S. dollars unless otherwise indicated.
^aNon-income producing.
^bSecurity is linked to the Argentine GDP and does not pay principal over the life of the security or at expiration. The holder is entitled to receive only variable payments, subject
to certain conditions, which are based on growth of the Argentine GDP and the principal or "notional" value of this GDP linked security.
^cThe coupon rate shown represents the rate at period end.
^dThe principal amount is stated in original face, and scheduled paydowns are reflected in the market price on ex-date.
^ePrincipal amount is stated in 1,000 Brazilian Real Units.
^fRedemption price at maturity is adjusted for inflation.
^gSecurity 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, 2011, the aggregate value of these securities was $313,789,084, representing 39.2% of net assets.
^hSecurity 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, 2011, the aggregate value of these
securities was $19,958,975, representing 2.49% of net assets.
ⁱPrincipal amount is stated in 100 Mexican Peso Units.
^jA supranational organization is an entity formed by two or more central governments through international treaties.
^kThe security is traded on a discount basis with no stated coupon rate.
^lThe Institutional Fiduciary Trust Money Market Portfolio is managed by the Fund's investment manager.

Templeton Emerging Markets Income Fund
Statement of Investments, May 31, 2011 (unaudited) (continued)

ABBREVIATIONS

Currency

BRL - Brazilian Real
DEM - Deutsche Mark
EUR - Euro
GHS - Ghanaian Cedi
IDR - Indonesian Rupiah
LKR - Sri Lankan Rupee
MXN - Mexican Peso
UAH - Ukraine Hryvnia
Selected Portfolio

FRN - Floating Rate Note
GDP - Gross Domestic Product
MTN - Medium Term Note

Counterparty
BZWS - Barclays Bank PLC
CITI - Citibank, Inc.
DBAB - Deutsche Bank AG
HSBK - HSBC Bank PLC
JPHQ - JPMorgan Chase & Co.
UBSW - UBS AG

Templeton Emerging Markets Income Fund
Notes to Statement of Investments (unaudited)

1. ORGANIZATION

Templeton Emerging Markets Income Fund (Fund) is registered under the Investment Company Act of
1940, as amended, as a closed-end investment company.

2. FINANCIAL INSTRUMENT VALUATION

The Fund's investments in securities and other financial investments are carried at fair value daily. Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants on the measurement date. Under procedures approved by the
Fund’s Board of Trustees, the Fund may utilize independent pricing services, quotations from securities
and financial instrument dealers, and other market sources to determine fair value.

Debt securities generally trade in the over-the-counter market rather than on a securities exchange. The
Fund's pricing services use multiple valuation techniques to determine fair value. In instances where
sufficient market activity exists, the pricing services may utilize a market-based approach through which
quotes from market makers are used to determine fair value. In instances where sufficient market activity
may not exist or is limited, the pricing services also utilize proprietary valuation models which may
consider market characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads,
estimated default rates, coupon rates, anticipated timing of principal repayments, underlying collateral, and
other unique security features in order to estimate the relevant cash flows, which are then discounted to
calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar
equivalent at the foreign exchange rate in effect at the close of the NYSE on the date that the values of the
foreign debt securities are determined. Derivative financial instruments (derivatives) listed on an exchange
are valued at the official closing price of the day. Investments in open-end mutual funds are valued at the
closing net asset value.

Certain derivatives trade in the over-the-counter market. The Fund’s pricing services use various
techniques including industry standard option pricing models and proprietary discounted cash flow models
to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative
contract, as measured by the fair market value of the contract, is included in net assets.

The Fund has procedures to determine the fair value of securities and other financial instruments for which
market prices are not readily available or which may not be reliably priced. Under these procedures, the
Fund primarily employs a market-based approach which may use related or comparable assets or liabilities,
recent transactions, market multiples, book values, and other relevant information for the investment to
determine the fair value of the investment. The Fund may also use an income-based valuation approach in
which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts
may also be applied due to the nature or duration of any restrictions on the disposition of the investments.
Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly
from the values that would have been used had an active market existed.

Trading in securities on foreign securities stock exchanges and over-the-counter markets may be completed
before the daily close of business on the NYSE. Occasionally, events occur between the time at which
trading in a foreign security is completed and the close of the NYSE that might call into question the
reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between
the value of the Fund’s portfolio securities as determined at the foreign market close and the latest
indications of value at the close of the NYSE. In order to minimize the potential for these differences, 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 that may
call into question the reliability of the values of the foreign securities held by the Fund. If such an event
occurs, the securities may be valued using fair value procedures, which may include the use of independent
pricing services.

3. DERIVATIVE FINANCIAL INSTRUMENTS

The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or
markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial
investment or an initial net investment that is smaller than would normally be required to have a similar
response to changes in market factors, and require or permit net settlement. Derivatives contain various
risks including the potential inability of the counterparty to fulfill their obligations under the terms of the
contract, the potential for an illiquid secondary market, and/or the potential for market movements.

The Fund entered into financial futures contracts primarily to manage interest rate risk. A futures contract is
an agreement between the Fund and a counterparty to buy or sell a security for a specific price on a future
date. Required initial margin deposits of cash or securities are pledged by the Fund. Subsequent payments,
known as variation margin, are made or received by the Fund, depending on fluctuations in the value of the
underlying security. Such variation margin is accounted for as unrealized appreciation or depreciation until
the contract is closed, at which time the gains or losses are realized.

The Fund entered into forward exchange contracts primarily to manage and/or gain exposure to certain
foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to
buy or sell a foreign currency for a specific exchange rate on a future date. Pursuant to the terms of the
forward exchange contracts, cash or securities may be required to be deposited as collateral. Unrestricted
cash may be invested according to the Fund’s investment objectives.

The Fund entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate
swap is an agreement between the Fund and a counterparty to exchange cash flows based on the difference
between two interest rates, applied to a notional principal amount. Over the term of the contract,
contractually required payments to be paid and to be received are accrued daily and recorded as unrealized
depreciation and appreciation until the payments are made, at which time they are realized. Pursuant to the
terms of the interest rate swap contract, cash or securities may be required to be deposited as collateral.
Unrestricted cash may be invested according to the Fund’s investment objectives.

4. INCOME TAXES

At May 31, 2011, the cost of investments and net unrealized appreciation (depreciation) for income tax
purposes were as follows:

5. FAIR VALUE MEASUREMENTS

The Fund follows 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:

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) Certification pursuant to Section 30a-2 under the Investment Company Act of 1940 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.