<PAGE>
Templeton Emerging
Markets Income Fund
Your Fund's Objective:
The Templeton Emerging Markets Income Fund seeks high income, with a
secondary objective of capital appreciation, by investing primarily in a
portfolio of high yielding debt obligations of sovereign-related entities and
private sector companies in emerging market countries.
January 16, 1996
Dear Shareholder:
This quarterly update covers the period ended November 30, 1995, and
includes your Fund's long-term performance, a listing of portfolio holdings and
a brief commentary from the Fund's manager regarding the investment environment.
It is one of four reports you will receive during the Fund's fiscal year.
Next quarter, you'll receive the semi-annual report covering the six months
ended February 29, 1996. The semi-annual report provides a more comprehensive
discussion of the financial markets and their impact on the Fund, a summary of
the Fund's performance, and an in-depth manager's discussion and analysis. Also
included are the Fund's unaudited financial statements and complete investment
portfolio. If you have any questions about this quarterly update, you may call
the Franklin Templeton Fund Information Department at 1-800/342-5236.
Templeton Emerging Markets
Income Fund
Cumulative Total Returns*
Periods ended 11/30/95
<TABLE>
<CAPTION>
Since
Inception
One-Year (9/23/93)
<S> <C> <C>
Based on change
in net asset value 8.89% 0.85%
Based on change
in market price 14.03% -9.59%
</TABLE>
*Cumulative total return calculations show the change in value of an
investment over the periods indicated. These calculations assume reinvestment
of all distributions and capital gains, either at net asset value or at market
price on the reinvestment date, in accordance with the dividend reinvestment
plan.
Investments in foreign securities involve special risks, such as market and
currency volatility and adverse economic, social and political developments in
the countries where the Fund is invested. Developing markets involve heightened
risks related to the same factors, in addition to risks associated with the
relatively small size and lesser liquidity of these markets.
The Fund's investment manager and shareholder servicing agent waived a
portion of their fees, which reduced operating expenses and increases total
return to shareholders. Without these reductions, the Fund's total return
would have been lower.
Past performance is not predictive of future results.
1
<PAGE>
Manager's Discussion
The transition from socialism to capitalism in Eastern Europe offers the
possibility of attractive fixed-income opportunities for investors. When such
a shift occurs, price controls are usually lifted and a period of severe
disequilibrium follows, resulting in rapid inflation and depreciation of the
local currencies. Then, a stabilization program is generally adopted involving
high interest rates and currency management, creating a potentially ideal
climate for fixed-income investments. The ultimate goal of this approach is
prudent fiscal management, which reduces inflationary pressures and allows
interest rates to eventually decline. However, typically a time lag occurs
between falling yield premiums (the differential between the interest rates on
debt of emerging market countries and interest rates of countries with strong
financial systems) and credit improvement. This lag creates a favorable
risk/reward relationship due to the market's reluctance to invest in a country
that has had past economic and political troubles.
Russia's Ministry of Finance bonds, which are dollar-denominated government
obligations available in relatively short maturities, typify such a phenomenon.
In November, Russia, with its stabilization program underway, was experiencing
solid economic progress with fiscal restraint on track, declining inflation,
growth in real Gross Domestic Product, and little outstanding foreign debt. At
that time, its Ministry of Finance bonds were offering yields of approximately
22%. Despite the country's political turmoil, we believe that the prospects
for senior debt service are good, and are optimistic about the future
development of bond markets in Russia and Eastern Europe.
Sincerely,
/s/Thomas W. Wilkinson, CFA
Portfolio Manager
Templeton Emerging Markets Income Fund, Inc.
2
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Investment Portfolio, November 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
COUNTRY LOCAL CURRENCY* VALUE
- ---------------------------------------------------------------------------------
LONG TERM SECURITIES: 89.3%
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Algeria: 0.3%
Banque National
D'Algerie, FRN,
12/19/94 U.S. 4,666,667 $ 1,773,333
- ---------------------------------------------------------------------------------
Argentina:
12.9%
Argentina Domestic
Securities Trust,
(Morgan Stanley),
14.75%, 9/01/02 U.S. 11,800,000 9,971,000
Argentina Local Market
Securities Trust 1994-I
(Goldman Sachs Group,
L.P.), 13.375%, 8/15/01 U.S. 12,500,000 12,531,250
Bridas Corp., Yankee,
12.50%, 11/18/99 U.S. 12,180,000 11,845,050
Republic of Argentina:
6.813%, FRN, 3/31/05 U.S. 43,600,000 28,612,500
6.875%, FRN, 3/31/23 U.S. 15,000,000 9,112,500
------------
72,072,300
- ---------------------------------------------------------------------------------
Brazil: 17.1%
Abril SA, 12.00%,
10/25/03, 144a U.S. 5,525,000 5,531,906
Bombril SA, 8.00%,
8/26/98 U.S. 2,200,000 1,952,500
Brazil C-Bond, 8.00%,
4/15/14 U.S. 11,673,288 6,226,077
Centrais Electricas
Brasileiras SA, 10.00%,
10/30/98, 144a U.S. 5,550,000 5,563,875
Companhia Suzano Papel,
10.25%, 10/06/01 U.S. 6,000,000 5,700,000
Copene-Petroquimica
Nordeste SA, 9.50%,
10/19/01, 144a U.S. 14,150,000 13,088,750
Government of Brazil:
6.688%, FRN, A, 1/01/01 U.S. 19,095,000 16,278,488
6.813%, EI, FRN, L,
4/15/06 U.S. 32,450,000 21,457,563
6.875%, FRN, L, 4/15/12 U.S. 26,825,000 14,552,563
Iochpe-Maxion SA,
12.375%, 11/08/02, 144a U.S. 6,050,000 5,233,250
------------
95,584,972
- ---------------------------------------------------------------------------------
Bulgaria: 2.6%
Republic of Bulgaria,
IAB, 6.75%, FRN,
7/28/24 U.S. 33,250,000 14,837,813
- ---------------------------------------------------------------------------------
Chile: 1.1%
Compania Sud Americana
de Vapores SA,
7.375%, 12/08/03 U.S. 6,620,000 6,388,300
- ---------------------------------------------------------------------------------
China: 0.8%
Guangdong Enterprises
Holdings Ltd.,
8.75%, 12/22/03, 144a U.S. 5,000,000 4,400,000
- ---------------------------------------------------------------------------------
Colombia: 1.2%
Banco Ganadero SA,
9.75%, 8/26/99, 144a U.S. 5,580,000 5,635,800
Empresa Colombiana de
Petroleos, 7.25%,
7/08/98 U.S. 1,000,000 997,500
------------
6,633,300
- ---------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Investment Portfolio, November 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
COUNTRY LOCAL CURRENCY* VALUE
- ---------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Costa Rica:
2.1%
Banco Central de Costa
Rica, A, 6.25%, 5/21/10 U.S. 16,900,000 $ 9,971,000
Instituto Costarricense
de Electricidad,
8.375%, 1/27/97 U.S. 1,900,000 1,871,500
------------
11,842,500
- ---------------------------------------------------------------------------------
Czech Republic: 3.4%
Ceskoslovenska Obchodni
Banka, 11.125%, 8/26/97 Csk. 144,580,000 5,459,974
CEZ, AS, 14.375%,
1/27/01 Csk. 122,770,000 4,946,498
Skofin, 11.625%,
2/09/98, 144a Csk. 230,750,000 8,781,312
------------
19,187,784
- ---------------------------------------------------------------------------------
Ecuador: 3.7%
Republic of Ecuador:
6.75%, FRN, 12/21/04,
144a U.S. 2,350,725 1,363,421
6.813%, FRN, 2/27/15 U.S. 31,365,000 10,350,450
6.813%, FRN, 2/27/15,
144a U.S. 10,607,000 3,500,310
6.813%, FRN, 2/28/25,
144a U.S. 10,999,999 5,431,250
------------
20,645,431
- ---------------------------------------------------------------------------------
Guatemala: 2.0%
Associacion Nacional del
Cafe, 11.00%, 8/31/98 U.S. 10,910,000 11,073,650
- ---------------------------------------------------------------------------------
Hungary: 1.6%
National Bank of
Hungary, 7.95%,
11/01/03 U.S. 9,600,000 8,724,000
- ---------------------------------------------------------------------------------
India: 1.7%
Essar Gujarat Ltd., FRN,
7/15/99, 144a U.S. 5,300,000 5,280,125
Morgan Stanley Group,
(principal and interest
is linked to the change
in the Indian Rupee to
U.S. Dollar foreign
exchange rate between
issue date (31.41
Rupee/U.S. Dollar) and
maturity date) 13.25%,
6/26/96 U.S. 5,230,000 4,370,188
------------
9,650,313
- ---------------------------------------------------------------------------------
Indonesia: 5.6%
PT Astra International,
9.75%, 4/29/01 U.S. 6,150,000 6,488,250
PT Indah Kiat Pulp &
Paper Corp., 8.875%,
11/01/00, 144a U.S. 4,840,000 4,525,400
PT Inti Indorayon Utama,
9.125%, 10/15/00 U.S. 6,830,000 6,283,600
PT Polysindo Eka Perkasa
Global, 13.00%, 6/15/01 U.S. 5,000,000 5,150,000
Tjiwi Kimia Int'l
Finance Co., BV,
13.25%, 8/01/01 U.S. 8,000,000 8,600,000
------------
31,047,250
- ---------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Investment Portfolio, November 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
COUNTRY LOCAL CURRENCY* VALUE
- ---------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Jordan: 1.9%
Kingdom of Jordan:
Collateralized FRN,
12/23/05 U.S. 1,866,331 $ 1,362,422
Collateralized FRN,
12/23/23 U.S. 5,706,250 3,395,219
Collateralized Par
Bonds, 4.00%, 12/23/23 U.S. 13,325,332 5,996,399
------------
10,754,040
- ---------------------------------------------------------------------------------
Mexico: 5.7%
Bancomer S.A., 8.00%,
7/07/98 U.S. 11,100,000 10,045,500
United Mexican States:
FRN, 7/20/97, 144a U.S. 13,000,000 13,178,750
8.50%, 9/15/02 U.S. 10,585,000 8,785,550
------------
32,009,800
- ---------------------------------------------------------------------------------
Morocco: 3.7%
Kingdom of Morocco Loan
Participation,
FRN, 1/01/09 U.S. 32,000,000 20,440,000
- ---------------------------------------------------------------------------------
Nicaragua: 0.4%
Nicaragua Loan
Participation U.S. 25,000,000 2,125,000
- ---------------------------------------------------------------------------------
Panama: 1.0%
Republic of Panama, FRN,
5/10/02 U.S. 7,000,000 5,792,500
- ---------------------------------------------------------------------------------
Peru: 0.8%
Guaranteed Capital Corp.
Ltd., 11.00%, 3/21/97 U.S. 4,380,000 4,248,600
- ---------------------------------------------------------------------------------
Philippines:
4.2%
National Power Corp.,
7.625%, 11/15/00, 144a U.S. 10,000,000 9,800,000
Philippine Long Distance
Telephone Co.,
10.625%, 6/02/04 U.S. 5,500,000 5,940,000
Subic Power Corp.,
9.50%, 12/28/08, 144a U.S. 8,472,414 7,921,707
------------
23,661,707
- ---------------------------------------------------------------------------------
Poland: 1.3%
Government of Poland:
FRN, 20 year bond,
10/27/14 U.S. 5,000,000 3,228,125
FRN, 30 year bond,
10/27/24 U.S. 5,000,000 3,809,375
Republic of Poland,
2.75%, VRN, 10/27/24 U.S. 17,000 8,118
------------
7,045,618
- ---------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Investment Portfolio, November 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
COUNTRY LOCAL CURRENCY* VALUE
- ---------------------------------------------------------------------------------
LONG TERM SECURITIES (CONT.)
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Russia: 4.4%
Bank Foreign Economic
Affairs:
7.00%, 3/29/96 Ger. 13,000,000 $ 8,886,412
7.50%, 9/27/96 Ger. 3,000,000 2,048,636
Russia, 3.00%, 5/14/99 U.S. 23,000,000 13,639,000
------------
24,574,048
- ---------------------------------------------------------------------------------
Thailand: 2.7%
ABN Amro Bank (THB),
9.10%, 8/05/97, CD Thai. 250,000,000 9,717,309
Thailand Military Bank:
11.125%, 6/03/96 Thai. 70,000,000 2,763,275
11.00%, 6/05/96 Thai. 60,000,000 2,372,814
------------
14,853,398
- ---------------------------------------------------------------------------------
Trinidad and Tobago: 0.9%
Sei Holdings IX Inc.,
11.00%, 11/30/00, 144a U.S. 5,210,000 5,327,225
- ---------------------------------------------------------------------------------
Turkey: 1.6%
Republic of Turkey:
Series 4, 6.563%,
2/21/96 U.S. 1,000,000 1,000,000
Series 5, 6.813%,
2/21/97 U.S. 7,730,000 7,691,350
------------
8,691,350
- ---------------------------------------------------------------------------------
Uruguay: 0.7%
Government of Uruguay,
A, 6.75%, 2/19/21 U.S. 6,000,000 3,960,000
- ---------------------------------------------------------------------------------
Venezuela: 3.9%
Bariven SA, 10.625%,
3/17/02 U.S. 15,650,000 14,554,500
Electricidad de Caracas,
FRN, 9/30/03 U.S. 2,702,546 1,118,178
Produvisa Capital Corp.,
9.50%, 11/29/96 U.S. 6,750,000 6,075,000
------------
21,747,678
------------
TOTAL LONG TERM SECURITIES 499,091,910
- ---------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Investment Portfolio, November 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
COUNTRY LOCAL CURRENCY* VALUE
- --------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 7.3%
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Bangkok Bank, 11.50%,
5/16/96 Thai. 50,000,000 $ 1,981,085
Federal Farm Credit
Bank: 3,500,000 3,500,000
5.61%, 12/01/95 U.S.
5.61%, 12/07/95 U.S. 3,500,000 3,496,640
Federal Home Loan Bank,
5.59%, 1/08/96 U.S. 4,895,000 4,866,071
National Westminster
Bank PLC, (principal
and interest is linked
to the change in the
Indian Rupee to U.S.
Dollar foreign
exchange rate between
issue date (31.42
Rupee/U.S. Dollar and
maturity date),
14.00%, 4/24/96 U.S. 8,720,000 7,437,288
U.S. Treasury Bills,
5.18% to 5.63% with
maturities to 12/21/95 U.S. 19,413,000 19,362,811
------------
TOTAL SHORT TERM OBLIGATIONS 40,643,895
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS: 96.6% 539,735,805
UNREALIZED GAIN IN FORWARD EXCHANGE CON-
TRACTS: 0.1% 550,226
OTHER ASSETS, LESS LIABILITIES: 3.3% 18,184,886
------------
TOTAL NET ASSETS: 100.0% $558,470,917
============
</TABLE>
* CURRENCY OF COUNTRIES INDICATED.
7
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
Financial Highlights, November 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
-------------------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value:
Beginning of period, September
1, 1995 $548,448,010 $ 11.52
Net investment income $ 15,946,937 $ .33
Distribution from net invest-
ment income (14,757,785) (.31)
Net realized and unrealized
gain from security transac-
tions 8,833,755 .19
------------ -------
Net increase in net asset value 10,022,907 .21
------------ --------
End of period, November 30, 1995 $558,470,917 $ 11.73
============ ========
</TABLE>
- ---
This report is sent to the shareholders of Templeton Emerging Markets Income
Fund, Inc. for their information. It is not a prospectus, circular, or repre-
sentation intended for use in the purchase or sale of shares of the Fund or of
any securities mentioned in the report.
8
<PAGE>
Templeton Emerging Markets Income Fund, Inc.
- --------------------------------------------------------------------------------
TRANSFER AGENT
Chemical Mellon Shareholder Services
Securities Transfer Services
450 West 33rd Street
New York, NY 10001
800-526-0801
SHAREHOLDER INFORMATION
Weekly comparative net asset value and market price information about Templeton
Emerging Markets Income Fund, Inc. shares is published each Monday in The Wall
Street Journal, weekly in Barron's and each Saturday in The New York Times and
other newspapers in a table called "Publicly Traded Funds." The Fund's New York
Stock Exchange trading symbol is TEI.
For current information about the net asset value, call 1-800-292-9293.
If any shareholder is not receiving copies of the Reports to Shareholders be-
cause shares are registered in a broker's name or in a custodian's name, he or
she can write and request that his or her name be added to the Fund's mailing
list, by writing Templeton Emerging Markets Income Fund, Inc., 700 Central Ave-
nue, St. Petersburg, FL 33701.
9
<PAGE>
Notes
-----
<PAGE>
Notes
-----
<PAGE>
- --------------------------------------------------------------------------------
TEMPLETON EMERGING MARKETS
INCOME FUND, INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be aware that the value of investments made for the Fund may
go up as well as down and that the Investment Manager may make errors in
selecting securities for the Fund's portfolio. Like any investment in
securities, the Fund's portfolio will be subject to the risk of loss from
market, currency, economic, political, and other factors. The Fund and Fund
investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses 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 determined by the presence of a regular beeping tone.
- --------------------------------------------------------------------------------
[RECYCLING LOGO APPEARS HERE] TLTEI Q95 01/96
TEMPLETON
EMERGING
MARKETS
INCOME
FUND, INC.
First Quarter Report
November 30, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
