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 811-07866
                                   ----------
                     TEMPLETON EMERGING MARKETS INCOME FUND
                     --------------------------------------
               (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:  8/31
                          ----

Date of reporting period: 8/31/07
                          -------

ITEM 1. REPORTS TO STOCKHOLDERS.


                                [GRAPHIC OMITTED]

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                                                     AUGUST 31, 2007
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--------------------------------------------------------------------------------
                    ANNUAL REPORT                               INCOME
--------------------------------------------------------------------------------

                           TEMPLETON EMERGING MARKETS
                                   INCOME FUND

--------------------------------------------------------------------------------

                                    [LOGO](R)
                               FRANKLIN TEMPLETON
                                   INVESTMENTS

                      Franklin o TEMPLETON o Mutual Series



                              Franklin Templeton Investments

                              GAIN FROM OUR PERSPECTIVE(R)

                              Franklin Templeton's distinct multi-manager
                              structure combines the specialized expertise of
                              three world-class investment management groups--
                              Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE         Each of our portfolio management groups operates
                              autonomously, relying on its own research and
                              staying true to the unique investment disciplines
                              that underlie its success.

                              FRANKLIN. Founded in 1947, Franklin is a
                              recognized leader in fixed income investing and
                              also brings expertise in growth- and value-style
                              U.S. equity investing.

                              TEMPLETON. Founded in 1940, Templeton pioneered
                              international investing and, in 1954, launched
                              what has become the industry's oldest global fund.
                              Today, with offices in over 25 countries,
                              Templeton offers investors a truly global
                              perspective.

                              MUTUAL SERIES. Founded in 1949, Mutual Series is
                              dedicated to a unique style of value investing,
                              searching aggressively for opportunity among what
                              it believes are undervalued stocks, as well as
                              arbitrage situations and distressed securities.

TRUE DIVERSIFICATION          Because our management groups work independently
                              and adhere to different investment approaches,
                              Franklin, Templeton and Mutual Series funds
                              typically have distinct portfolios. That's why our
                              funds can be used to build truly diversified
                              allocation plans covering every major asset class.

RELIABILITY YOU CAN TRUST     At Franklin Templeton Investments, we seek to
                              consistently provide investors with exceptional
                              risk-adjusted returns over the long term, as well
                              as the reliable, accurate and personal service
                              that has helped us become one of the most trusted
                              names in financial services.

--------------------------------------------------------------------------------
 MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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                                [GRAPHIC OMITTED]


Not part of the annual report



Contents

ANNUAL REPORT

Templeton Emerging Markets Income Fund ....................................    1

Performance Summary .......................................................    7

Important Notice to Shareholders ..........................................    8

Financial Highlights and Statement of Investments .........................    9

Financial Statements ......................................................   14

Notes to Financial Statements .............................................   17

Report of Independent Registered Public Accounting Firm ...................   24

Tax Designation ...........................................................   25

Annual Meeting of Shareholders ............................................   27

Dividend Reinvestment and Cash Purchase Plan ..............................   28

Board Members and Officers ................................................   31

Shareholder Information ...................................................   36

--------------------------------------------------------------------------------

Annual Report

Templeton Emerging Markets
Income Fund

YOUR FUND'S GOALS AND MAIN INVESTMENTS: Templeton Emerging Markets Income Fund
seeks high, current income, with a secondary goal of capital appreciation, by
investing, under normal market conditions, at least 80% of its total net assets
in income-producing securities of sovereign or sovereign-related entities and
private sector companies in emerging market countries.

GEOGRAPHIC BREAKDOWN*
Based on Total Net Assets as of 8/31/07

  [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Americas                                             44.6%
Asia                                                 20.5%
Europe                                               14.5%
Middle East & Africa                                  4.5%
Supranational**                                       4.3%
Other Assets, less Liabilities                       11.6%

* The Geographic Breakdown is a snapshot of the Fund on 8/31/07 and may not
reflect ongoing repositioning or reinvestment of cash in the Fund.

** The Fund's supranational investment is denominated in the Mexican peso.

Dear Shareholder:

We are pleased to bring you Templeton Emerging Markets Income Fund's annual
report for the period ended August 31, 2007.

PERFORMANCE OVERVIEW

For the 12 months under review, Templeton Emerging Markets Income Fund posted
cumulative total returns of +8.39% based on market price and +8.65% based on net
asset value. The Fund outperformed the J.P. Morgan (JPM) Emerging Markets Bond
Index Global (EMBIG), which posted a +5.71% cumulative total return in U.S.
dollar terms for the same period. 1 You can find the Fund's long-term
performance data in the Performance Summary on page 7.

1. Source: J.P. Morgan. The JPM EMBIG tracks total returns for U.S.
dollar-denominated debt instruments issued by emerging market sovereign and
quasi-sovereign entities: Brady bonds, loans and Eurobonds. Local and regional
bond market returns are derived from country subindexes of the JPM EMBIG. The
index is unmanaged and includes reinvested interest. One cannot invest directly
in an index, nor is an index representative of the Fund's portfolio.

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 10.


                                                               Annual Report | 1



ECONOMIC AND MARKET OVERVIEW

In spite of a weaker U.S. housing market and moderating U.S. economic growth,
the global economy remained robust for the year under review. The U.S. Federal
Reserve Board (Fed) kept the federal funds target rate at 5.25% throughout the
period, while central banks in Europe and Asia increased rates due to strong
growth conditions and underlying inflation pressures. Amid this global backdrop,
international treasury yield curves outside the U.S. broadly steepened and the
U.S. dollar weakened against its major trading partners. Volatility rose across
asset classes near period-end, as losses originating from the U.S. subprime
mortgage market triggered a liquidity squeeze in money markets. Central banks
injected liquidity into the banking system to stabilize financial markets and
investors' flight to quality drove long-term yields lower. Notably, emerging
market countries were generally in a stronger position than during prior periods
of tightening liquidity conditions given their significant foreign reserve
accumulation and supportive economic policies.

The Fed cut the discount rate 50 basis points (100 basis points equal one
percentage point) in August in reaction to bank funding concerns, but, as
mentioned above, did not change the federal funds target rate during the period.
U.S. gross domestic product (GDP) growth slowed from annualized rates of 3.2% in
second quarter 2006 to 1.9% in second quarter 2007 due to contraction in
residential investment and moderating corporate and consumer spending. In
addition, data released near period-end indicated the labor market may be
softening. Although inflation remained a medium-term concern, the housing market
correction and financial market volatility posed more immediate risks to growth
and raised expectations for the Fed to cut interest rates. Encouragingly, U.S.
exports continued to grow at double-digit rates, suggesting global growth
remained strong. However, the U.S. trade deficit remained large at $59 billion
in July 2007. 2 Additionally, the U.S. trade deficit with Asia widened to record
levels.

In Asia, the widening trade surplus corresponded with continued accumulation of
foreign reserves by Asian central banks. For example, China accumulated $361
billion in foreign reserves from the beginning of the period through June 2007
for a total of $1.333 trillion. 3 Asian economies also maintained stronger
economic growth relative to the U.S. China led the region, posting 11.9%
annualized year-over-year GDP growth in second quarter 2007, followed by

2. Source: U.S. Bureau of Economic Analysis.

3. Source: The People's Bank of China.


2 | Annual Report



India (9.3%), Singapore (8.6%), Malaysia (5.7%) and South Korea (5.0%). 4 Strong
growth and higher food, housing, stock and other asset prices contributed to
inflationary pressures. Some countries, including China, India and South Korea,
sought a more appropriate policy mix between interest rates and currency
appreciation to curb inflation. As a result, the central banks of China, India
and South Korea hiked interest rates 90, 75 and 50 basis points, respectively.

In Europe, interest rate tightening was more aggressive. For example, the
European Central Bank hiked rates 100 basis points. Eurozone unemployment
dropped to 6.9%, the lowest rate since the introduction of the euro as a common
currency in 1999. 5 European labor markets tightened and also became more
dynamic, with increased movement of labor from central and eastern Europe to
western Europe. Wage pressure in western Europe remained contained, but labor
shortages in Scandinavia and central Europe contributed to wage growth in those
areas. In second quarter 2007, eurozone GDP grew 2.5% year-over-year and
continued to provide support to other European economies given the region's high
integration through trade. 5

INVESTMENT STRATEGY

We invest selectively in bonds around the world to generate income for the Fund,
seeking opportunities while monitoring changes in interest rates, currency
exchange rates and credit risk.

MANAGER'S DISCUSSION

U.S. dollar-denominated emerging market bonds generated strong positive
performance for the year under review, rising +5.71%, as measured by the JPM
EMBIG, which is composed of U.S. dollar-denominated emerging market sovereign
debt. 1 Sovereign interest rate spreads over U.S. Treasuries rose 38 basis
points during the period. 1 Regionally, sovereign debt returned +6.74% in Asia,
+6.66% in central and eastern Europe, +6.62% in Africa, +5.15% in Latin America
and +2.39% in the Middle East. 1 In addition to holding positions denominated in
U.S. dollars and euros, the Fund remained well diversified with selected
positions in local debt markets. This helped mitigate risk associated with
potential U.S. dollar depreciation due to the nation's large current account and
income deficits.

--------------------------------------------------------------------------------
WHAT IS A CURRENT ACCOUNT?
--------------------------------------------------------------------------------
A current account is that part of the balance of payments where all of one
country's international transactions in goods and services are recorded.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHAT IS BALANCE OF PAYMENTS?
--------------------------------------------------------------------------------
Balance of payments is a record of all of a country's exports and imports of
goods and services, borrowing and lending with the rest of the world during a
particular time period. It helps a country evaluate its competitive strengths
and weaknesses and forecast the strength of its currency.
--------------------------------------------------------------------------------

4. Sources: National Bureau of Statistics; India Central Statistical
Organization; Singapore Department of Statistics; Department of Statistics
Malaysia; Bank of Korea.

5. Source: Eurostat.


                                                               Annual Report | 3



--------------------------------------------------------------------------------
CURRENCY BREAKDOWN
8/31/07

                                                                      % OF TOTAL
                                                                      NET ASSETS
--------------------------------------------------------------------------------
AMERICAS                                                                 79.4%

U.S. Dollar                                                              68.2%

Brazilian Real                                                           11.4%

Mexican Peso*                                                            -0.2%
--------------------------------------------------------------------------------
ASIA PACIFIC                                                             14.5%

Indonesian Rupiah                                                        12.8%

Malaysian Ringgit                                                         1.7%
--------------------------------------------------------------------------------
EUROPE                                                                    4.3%

Polish Zloty                                                              2.6%

Euro                                                                      1.7%
--------------------------------------------------------------------------------
MIDDLE EAST & AFRICA                                                      1.8%

Egyptian Pound                                                            1.8%
--------------------------------------------------------------------------------

* Mexican peso = -0.2% because of the Fund's holdings of forward currency
exchange contracts.

LATIN AMERICA

The Fund's Latin American U.S. dollar-denominated holdings performed well during
the period. The Fund's position in Peru contributed to Fund performance as the
country's bond market returned +7.35% during the reporting period. 1 The Fund
also benefited from its lack of exposure to Venezuela's bond market, which fell
10.34% during the period. 1 Additionally, the Fund benefited from local
currency-denominated positions in Latin American countries with improving
fundamentals, such as substantial trade surpluses. For example, the Brazilian
real appreciated 8.97% against the U.S. dollar and helped relative performance,
as the country benefited internally from strong retail sales and industrial
production, and externally from a trade surplus. 6 In addition, Brazil attracted
more than $34 billon in foreign investments during the 12 months ended July 31,
2007, compared with $14 billion for the same period the previous year. 7
Although inflation has risen gradually since the beginning of 2007 due to food
prices, inflation remained below the central bank of Brazil's inflation target
and structural economic improvements allowed the central bank to ease interest
rates. The central bank reduced interest rates 275 basis points due to
contained, demand-oriented inflationary pressures. During the period, Brazilian
sovereign debt, combined with currency gains, returned +26.35% in U.S. dollar
terms, as measured by the JPM Government Bond Index Emerging Markets (GBI-EM)
Broad. 8 The Mexican local bond market gained +9.48% in local currency terms, as
measured by the JPM GBI-EM Broad. 8 Recent volatility in the U.S. may suggest
some vulnerability for the Mexican economy, particularly since worker
remittances into Mexico have already moderated.

EUROPE, MIDDLE EAST AND AFRICA

The Fund's U.S. dollar-denominated debt positioning benefited from a slightly
underweighted position in Russia relative to the JPM EMBIG and was hurt by
exposure to Iraq. Russian bonds returned +5.18%, and slightly underperformed the
broader market. 1 Iraqi sovereign debt had a -3.01% return during the period, on
weakening U.S. congressional support for the U.S. military forces in Iraq and
declining domestic and international support for the current Iraqi coalition
government. 1 The Fund maintained exposure to short-term Egyptian treasury
bills, which generated a positive return due to stable yield and currency
developments as Egypt's central bank accumulated higher U.S. dollar reserves and
lessened pressures for the Egyptian pound to appreciate with strong foreign
direct investment inflows. The Polish zloty appreciated 9.82% against the U.S.
dollar for the period driven by growth outperformance

6. Source: Exshare via Compustat.

7. Source: Banco Central do Brasil.

8. Source: J.P. Morgan. The JPM GBI-EM Broad tracks total returns for liquid,
fixed-rate, local currency emerging market government bonds. Local bond market
returns are from country subindexes of the JPM GBI-EM.


4 | Annual Report



relative to larger European economies, strong balance-of-payment fundamentals
and prospects for short-term interest rates to rise further. 6 The National Bank
of Poland increased interest rates 75 basis points over the period following
increased wage pressure. Since the end of 2003, Poland's unemployment rate has
fallen from 20% to 12% in July 2007 due to significant emigration out of the
country and rising labor demand. 9 Overall, the Polish bond market returned
+5.43% in unhedged U.S. dollar terms, as measured by the JPM GBI Broad. 10

ASIA

The Fund's Asian bond market strategy benefited relative performance during the
period. In Indonesia, inflation remained stabilized and the current account
surplus stayed large due to solid export growth as global commodity prices
continued to be strong. Indonesia's bond market returned +15.78% in U.S. dollar
terms as measured by the HSBC Asian Local Bond Index (ALBI). 11 Indonesia's bond
market returns were driven by interest rate cuts that amounted to a 350 basis
point reduction during the period. 12 The Fund maintained exposure to a basket
of currencies to take advantage of the strong growth environment and a gradual
unwinding of global imbalances that we expect to favor Asian currencies over the
U.S. dollar. Among the Fund's basket of Asian currencies, the Indian rupee
appreciated 13.85% against the U.S. dollar. 6 With demand outstripping supply,
economic growth in India continued to put upward pressure on inflation. The
central bank tightened monetary conditions using interest rate policy and a more
flexible currency. Among other Asian currencies, the Thai baht, Malaysian
ringgit and South Korean won appreciated 15.77%, 5.13% and 2.48%, respectively,
against the U.S. dollar. 6 The Philippines represented the Fund's primary
exposure to Asian U.S. dollar sovereign debt. However, this represented an
underweighted position relative to the JPM EMBIG given our preference for
diversification into other local bond markets. Over the period, the Philippines'
bond market returned +8.78%. 1

TOP 10 COUNTRIES
8/31/07

--------------------------------------------------------------------------------
                                                                    % OF TOTAL
                                                                    NET ASSETS
--------------------------------------------------------------------------------
Brazil                                                                    21.7%
--------------------------------------------------------------------------------
Indonesia                                                                 12.8%
--------------------------------------------------------------------------------
Argentina                                                                 11.2%
--------------------------------------------------------------------------------
Peru                                                                       5.1%
--------------------------------------------------------------------------------
Russia                                                                     4.5%
--------------------------------------------------------------------------------
Mexico                                                                     4.4%
--------------------------------------------------------------------------------
Philippines                                                                4.3%
--------------------------------------------------------------------------------
Supranational                                                              4.3%
--------------------------------------------------------------------------------
Iraq                                                                       4.2%
--------------------------------------------------------------------------------
Ukraine                                                                    3.6%
--------------------------------------------------------------------------------

9. Source: Polish Statistics Office.

10. Source: J.P. Morgan. The JPM GBI Broad is a combination of the JPM GBI
Global and selected other countries launched in 1997 to increase country and
return diversification in international fixed income markets. The JPM GBI Global
tracks total returns for liquid, fixed-rate, domestic government bonds with
maturities greater than one year issued by developed countries globally.

11. Source: HSBC. The HSBC ALBI tracks total return performance of a bond
portfolio, which consists of local-currency denominated, high quality and liquid
bonds in Asia ex-Japan. Local bond market returns are from country subindexes of
the HSBC ALBI.

12. Source: Bank Indonesia.


                                                               Annual Report | 5



Thank you for your continued participation in Templeton Emerging Markets Income
Fund. We look forward to serving your future investment needs.

Sincerely,

[PHOTO OMITTED]           /s/ Michael Hasenstab

                          Michael Hasenstab, Ph.D.
                          Portfolio Manager
                          Templeton Emerging Markets Income Fund

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF AUGUST 31, 2007, 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.


6 | Annual Report



Performance Summary as of 8/31/07

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: TEI                                                CHANGE         8/31/07          8/31/06
---------------------------------------------------------------------------------------------------
                                                                                
Net Asset Value (NAV)                                      +$0.13          $14.76           $14.63
---------------------------------------------------------------------------------------------------
Market Price (NYSE)                                        +$0.03          $13.52           $13.49
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/06-8/31/07)
---------------------------------------------------------------------------------------------------
Dividend Income                            $1.1167
---------------------------------------------------------------------------------------------------


PERFORMANCE



---------------------------------------------------------------------------------------------------
                                                           1-YEAR          5-YEAR          10-YEAR
---------------------------------------------------------------------------------------------------
                                                                                 
Cumulative Total Return 1
---------------------------------------------------------------------------------------------------
   Based on change in NAV 2                                +8.65%         +95.15%         +155.87%
---------------------------------------------------------------------------------------------------
   Based on change in market price 3                       +8.39%         +82.64%         +163.84%
---------------------------------------------------------------------------------------------------
Average Annual Total Return 1
---------------------------------------------------------------------------------------------------
   Based on change in NAV 2                                +8.65%         +14.31%           +9.85%
---------------------------------------------------------------------------------------------------
   Based on change in market price 3                       +8.39%         +12.80%          +10.19%
---------------------------------------------------------------------------------------------------


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. ALSO, AS A NONDIVERSIFIED INVESTMENT
COMPANY, 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 | 7



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.


8 | Annual Report



Templeton Emerging Markets Income Fund

FINANCIAL HIGHLIGHTS



                                                      ----------------------------------------------------------------------
                                                                                 YEAR ENDED AUGUST 31,
                                                           2007           2006           2005           2004           2003
                                                      ----------------------------------------------------------------------
                                                                                                   
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................   $   14.63      $   13.75      $   13.23      $   12.53      $   11.11
                                                      ----------------------------------------------------------------------
Income from investment operations:
   Net investment income a ........................        1.00           0.89           0.82           0.84           0.93
   Net realized and unrealized gains (losses) .....        0.25           0.90           0.70           0.86           1.61
                                                      ----------------------------------------------------------------------
Total from investment operations ..................        1.25           1.79           1.52           1.70           2.54
                                                      ----------------------------------------------------------------------
Less distributions from net investment income .....       (1.12)         (0.91)         (1.00)         (1.00)         (1.12)
                                                      ----------------------------------------------------------------------
Net asset value, end of year ......................   $   14.76      $   14.63      $   13.75      $   13.23      $   12.53
                                                      ======================================================================
Market value, end of year b .......................   $   13.52      $   13.49      $   13.32      $   12.82      $   12.43
                                                      ======================================================================

Total return (based on market value per share) ....        8.39%          8.71%         11.74%         11.48%         24.44%

RATIOS TO AVERAGE NET ASSETS

Expenses ..........................................        1.17% c        1.22% c        1.21% c        1.24% c        1.17%
Net investment income .............................        6.63%          6.29%          5.97%          6.46%          7.78%

SUPPLEMENTAL DATA

Net assets, end of year (000's) ...................   $ 698,702      $ 692,469      $ 650,806      $ 624,112      $ 591,029
Portfolio turnover rate ...........................       36.26%         23.68%         53.16%         68.25%        142.71%


a Based on average daily shares outstanding.

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

c Benefit of expense reduction rounds to less than 0.01%.


                                                               Annual Report |
  The accompanying notes are an integral part of these financial statements. | 9



Templeton Emerging Markets Income Fund

STATEMENT OF INVESTMENTS, AUGUST 31, 2007



-----------------------------------------------------------------------------------------------------------------------------
                                                                                       PRINCIPAL AMOUNT a           VALUE
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                          
    BONDS 88.4%
    ARGENTINA 11.2%
    Government of Argentina,
  b,c FRN, 5.389%, 8/03/12 .........................................................       126,945,000          $ 69,571,874
    d GDP Linked Security, 12/15/35 ................................................        75,000,000             8,587,500
                                                                                                                -------------
                                                                                                                  78,159,374
                                                                                                                -------------
    BOSNIA AND HERZEGOVINA 1.7%
  b Government of Bosnia & Herzegovina, FRN, 3.50%, 12/11/17 .......................        10,791,234    EUR     12,312,906
                                                                                                                -------------
    BRAZIL 21.7%
    Government of Brazil,
      7.875%, 3/07/15 ..............................................................         1,275,000             1,424,685
      8.00%, 1/15/18 ...............................................................        61,615,000            67,699,481
    b FRN, 11.11%, 6/29/09 .........................................................         2,900,000             3,179,125
    Nota Do Tesouro Nacional,
      9.762%, 1/01/12 ..............................................................            64,080 e  BRL     30,600,756
      9.762%, 1/01/14 ..............................................................            20,000 e  BRL      9,347,731
      9.762%, 1/01/17 ..............................................................            46,400 e  BRL     21,152,982
    f Index Linked, 6.00%, 5/15/15 .................................................             5,600 e  BRL      4,425,460
    f Index Linked, 6.00%, 5/15/45 .................................................            17,820 e  BRL     14,012,960
                                                                                                                -------------
                                                                                                                 151,843,180
                                                                                                                -------------
    COLOMBIA 0.9%
    Government of Colombia, 11.75%, 2/25/20 ........................................         4,255,000             6,059,141
                                                                                                                -------------
    EL SALVADOR 0.4%
  g Government of El Salvador, 144A, 7.65%, 6/15/35 ................................         2,650,000             2,888,500
                                                                                                                -------------
    FIJI 0.8%
    Republic of Fiji, 6.875%, 9/13/11 ..............................................         5,880,000             5,515,011
                                                                                                                -------------
    INDONESIA 12.8%
    Government of Indonesia,
      14.25%, 6/15/13 ..............................................................   209,282,000,000    IDR     27,023,894
      14.275%, 12/15/13 ............................................................   166,215,000,000    IDR     21,675,217
      11.00%, 10/15/14 .............................................................   120,832,000,000    IDR     13,739,360
      9.50%, 6/15/15 ...............................................................     9,450,000,000    IDR        994,690
      10.75%, 5/15/16 ..............................................................    26,870,000,000    IDR      3,022,555
      10.00%, 7/15/17 ..............................................................    18,800,000,000    IDR      2,049,179
      11.50%, 9/15/19 ..............................................................    40,000,000,000    IDR      4,704,144
      11.00%, 11/15/20 .............................................................   132,050,000,000    IDR     14,925,387
      12.90%, 6/15/22 ..............................................................     2,000,000,000    IDR        258,110
      12.00%, 9/15/26 ..............................................................     7,850,000,000    IDR        960,207
                                                                                                                -------------
                                                                                                                  89,352,743
                                                                                                                -------------
    IRAQ 4.2%
  g Government of Iraq, 144A, 5.80%, 1/15/28 .......................................        50,575,000            29,049,016
                                                                                                                -------------



10 | Annual Report



Templeton Emerging Markets Income Fund

STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (CONTINUED)



-----------------------------------------------------------------------------------------------------------------------------
                                                                                       PRINCIPAL AMOUNT a           VALUE
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                          
    BONDS (CONTINUED)
    MALAYSIA 0.6%
    Government of Malaysia,
       3.569%, 2/14/08 .............................................................         2,230,000    MYR   $    636,997
       3.17%, 5/15/08 ..............................................................         9,410,000    MYR      2,679,993
       6.45%, 7/01/08 ..............................................................         1,560,000    MYR        455,832
       7.00%, 3/15/09 ..............................................................         1,660,000    MYR        498,024
                                                                                                                -------------
                                                                                                                   4,270,846
                                                                                                                -------------
    MEXICO 4.4%
    Government of Mexico,
       8.00%, 12/17/15 .............................................................         1,775,000 h  MXN     16,265,431
       10.00%, 12/05/24 ............................................................         1,315,000 h  MXN     14,361,750
                                                                                                                -------------
                                                                                                                  30,627,181
                                                                                                                -------------
    NETHERLANDS 2.1%
    Rabobank Nederland, senior note, 8.75%, 1/24/17 ................................       157,900,000    MXN     14,505,139
                                                                                                                -------------
    PAKISTAN 1.8%
  g Government of Pakistan, 144A, 6.875%, 6/01/17 ..................................        15,000,000            12,900,000
                                                                                                                -------------
    PANAMA 0.9%
    Government of Panama, 6.70%, 1/26/36 ...........................................         6,639,000             6,622,403
                                                                                                                -------------
    PERU 5.1%
    Government of Peru,
       9.875%, 2/06/15 .............................................................         4,255,000             5,260,244
       7.35%, 7/21/25 ..............................................................        10,520,000            11,588,306
       8.75%, 11/21/33 .............................................................        12,550,000            15,832,452
  g Peru Enhanced Pass-Through Finance Ltd., senior secured bond, A-1, 144A,
       zero cpn., 5/31/18 ..........................................................         4,764,000             3,168,060
                                                                                                                -------------
                                                                                                                  35,849,062
                                                                                                                -------------
    PHILIPPINES 4.3%
    Government of the
    Philippines,
       9.00%, 2/15/13 ..............................................................        21,460,000            24,024,470
       8.875%, 3/17/15 .............................................................         1,650,000             1,849,897
     i Reg S, 8.75%, 10/07/16 ......................................................         3,750,000             4,207,875
                                                                                                                -------------
                                                                                                                  30,082,242
                                                                                                                -------------
    POLAND 2.6%
    Government of Poland,
       6.00%, 5/24/09 ..............................................................        32,600,000    PLN     11,751,327
       6.25%, 10/24/15 .............................................................        15,380,000    PLN      5,646,652
       5.75%, 9/23/22 ..............................................................         2,000,000    PLN        708,264
                                                                                                                -------------
                                                                                                                  18,106,243
                                                                                                                -------------



                                                              Annual Report | 11



Templeton Emerging Markets Income Fund

STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (CONTINUED)



-----------------------------------------------------------------------------------------------------------------------------
                                                                                       PRINCIPAL AMOUNT a           VALUE
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                          
    BONDS (CONTINUED)
    RUSSIA 4.5%
    Government of Russia,
     i Reg S, 11.00%, 7/24/18 ......................................................        12,670,000          $ 17,673,383
     i Reg S, 12.75%, 6/24/28 ......................................................         6,566,000            11,654,978
  i Lukoil International Finance BV, Reg S,  6.356%, 6/07/17 .......................         2,300,000             2,166,002
                                                                                                                -------------
                                                                                                                  31,494,363
                                                                                                                -------------
    SOUTH AFRICA 0.4%
b,i Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 7.395%, 6/15/14 .......         2,100,000    EUR      2,524,868
                                                                                                                -------------
  j SUPRANATIONAL 4.3%
    Inter-American Development Bank, senior note, 7.50%, 12/05/24 ..................       355,000,000    MXN     29,749,304
                                                                                                                -------------
    UKRAINE 3.6%
  g Government of the Ukraine,144A,
       7.65%, 6/11/13 ..............................................................        11,948,000            12,605,140
    b FRN, 8.693%, 8/05/09 .........................................................        11,660,000            12,257,575
                                                                                                                -------------
                                                                                                                  24,862,715
                                                                                                                -------------
    VIETNAM 0.1%
  b Government of Vietnam, FRN, 6.125%, 3/12/16 ....................................           854,609               855,720
                                                                                                                -------------
    TOTAL BONDS (COST $594,164,865)                                                                              617,629,957
                                                                                                                -------------
    SHORT TERM INVESTMENTS 10.3%
    FOREIGN GOVERNMENT AND AGENCY SECURITIES 2.8%
    EGYPT 1.7%
  k Egypt Certificate of Deposit, 9/12/07 ..........................................         2,000,000    EGP        352,838
  k Egypt Treasury Bills, 9/25/07 - 8/05/08 ........................................        70,225,000    EGP     11,864,263
                                                                                                                -------------
                                                                                                                  12,217,101
                                                                                                                -------------
    MALAYSIA 1.1%
  k Malaysia Treasury Bills, 11/01/07 - 12/21/07 ...................................        26,350,000    MYR      7,451,524
                                                                                                                -------------
    TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $19,767,811) ..............                              19,668,625
                                                                                                                -------------
    TOTAL INVESTMENTS BEFORE MONEY MARKET FUND (COST $613,932,676) .................                             637,298,582
                                                                                                                -------------



12 | Annual Report



Templeton Emerging Markets Income Fund

STATEMENT OF INVESTMENTS, AUGUST 31, 2007 (CONTINUED)



-----------------------------------------------------------------------------------------------------------------------------
                                                                                              SHARES                VALUE
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                          
    MONEY MARKET FUND (COST $52,324,752) 7.5%
    UNITED STATES 7.5%
  l Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.98% ................   52,324,752          $ 52,324,752
                                                                                                                -------------
    TOTAL SHORT TERM INVESTMENTS (COST $72,092,563) .....................................                         71,993,377
                                                                                                                -------------
    TOTAL INVESTMENTS (COST $666,257,428) 98.7% .........................................                        689,623,334
    NET UNREALIZED LOSS ON FORWARD EXCHANGE CONTRACTS 0.0% m ............................                              1,292
    OTHER ASSETS, LESS LIABILITIES 1.3% .................................................                          9,077,147
                                                                                                                -------------

    NET ASSETS 100.0% ...................................................................                       $698,701,773
                                                                                                                =============


CURRENCY ABBREVIATIONS

BRL  - Brazilian Real
EGP  - Egyptian Pound
EUR  - Euro
IDR  - Indonesian Rupiah
MXN  - Mexican Peso
MYR  - Malaysian Ringgit
PLN  - Polish Zloty

SELECTED PORTFOLIO ABBREVIATIONS

FRN  - Floating Rate Note
GDP  - Gross Domestic Product

a The principal amount is stated in U.S. dollars unless otherwise indicated.

b The coupon rate shown represents the rate at period end.

c The principal amount is stated in original face, and scheduled paydowns are
reflected in the market price on ex-date.

d Securities are linked to the Argentine GDP and do not pay principal over the
life of the security or at expiration. Securities 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 securities.

e Principal amount is stated in 1,000 Brazilian Real Units.

f Redemption price at maturity is adjusted for inflation. See Note 1(e).

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 August 31, 2007, the aggregate value of these
securities was $72,868,291, representing 10.43% of net assets.

h Principal amount is stated in 100 Mexican Peso Units.

i 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
August 31, 2007, the aggregate value of these securities was $38,227,106,
representing 5.47% of net assets.

j A supranational organization is an entity formed by two or more central
governments through international treaties.

k The security is traded on a discount basis with no stated coupon rate.

l 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.

m Rounds to less than 0.1% of net assets.


                                                              Annual Report |
 The accompanying notes are an integral part of these financial statements. | 13



Templeton Emerging Markets Income Fund

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
August 31, 2007


                                                                                  
Assets:
   Investments in securities:
      Cost - Unaffiliated issuers ................................................   $  613,932,676
      Cost - Sweep Money Fund (Note 7) ...........................................       52,324,752
                                                                                     ---------------
      Total cost of investments ..................................................   $  666,257,428
                                                                                     ===============
      Value - Unaffiliated issuers ...............................................   $  637,298,582

      Value - Sweep Money Fund (Note 7) ..........................................       52,324,752
                                                                                     ---------------
      Total value of investments .................................................      689,623,334
   Foreign currency, at value (cost $254,592) ....................................          254,365
   Receivables:
      Investment securities sold .................................................           81,165
      Interest ...................................................................        9,831,422
   Unrealized gain on forward exchange contracts (Note 8) ........................          474,674
                                                                                     ---------------
         Total assets ............................................................      700,264,960
                                                                                     ---------------
Liabilities:
   Payables:
      Affiliates .................................................................          578,557
   Unrealized loss on forward exchange contracts (Note 8) ........................          473,382
   Accrued expenses and other liabilities ........................................          511,248
                                                                                     ---------------
         Total liabilities .......................................................        1,563,187
                                                                                     ---------------
            Net assets, at value .................................................   $  698,701,773
                                                                                     ===============
Net assets consist of:
   Paid-in capital ...............................................................   $  661,133,577
   Undistributed net investment income ...........................................       22,653,423
   Net unrealized appreciation (depreciation) ....................................       23,222,466
   Accumulated net realized gain (loss) ..........................................       (8,307,693)
                                                                                     ---------------
            Net assets, at value .................................................   $  698,701,773
                                                                                     ===============
Shares outstanding ...............................................................       47,338,848
                                                                                     ===============
Net asset value per share ........................................................   $        14.76
                                                                                     ===============



14| The accompanying notes are an integral part of these financial statements.
  | Annual Report



Templeton Emerging Markets Income Fund

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended August 31, 2007


                                                                                  
Investment income:
   Dividends:
      Unaffiliated issuers .......................................................   $      468,368
      Sweep Money Fund (Note 7) ..................................................        1,846,908
   Interest (net of foreign taxes of $1,504,002) .................................       53,344,714
                                                                                     ---------------
         Total investment income .................................................       55,659,990
                                                                                     ---------------
Expenses:
   Management fees (Note 3a) .....................................................        5,938,006
   Administrative fees (Note 3b) .................................................        1,070,567
   Transfer agent fees ...........................................................          818,611
   Custodian fees (Note 4) .......................................................          281,565
   Reports to shareholders .......................................................           92,240
   Registration and filing fees ..................................................           44,201
   Professional fees .............................................................           47,931
   Trustees' fees and expenses ...................................................           49,826
   Other .........................................................................           30,387
                                                                                     ---------------
         Total expenses ..........................................................        8,373,334
         Expense reductions (Note 4) .............................................          (18,389)
                                                                                     ---------------
            Net expenses .........................................................        8,354,945
                                                                                     ---------------
               Net investment income .............................................       47,305,045
                                                                                     ---------------
Realized and unrealized gains (losses):
   Net realized gain (loss) from:
      Investments ................................................................       42,822,458
      Foreign currency transactions ..............................................        2,801,934
                                                                                     ---------------
            Net realized gain (loss) .............................................       45,624,392
                                                                                     ---------------
   Net change in unrealized appreciation (depreciation) on:
      Investments ................................................................      (33,739,997)
      Translation of assets and liabilities denominated in foreign currencies ....          (92,896)
                                                                                     ---------------
            Net change in unrealized appreciation (depreciation) .................      (33,832,893)
                                                                                     ---------------
Net realized and unrealized gain (loss) ..........................................       11,791,499
                                                                                     ---------------
Net increase (decrease) in net assets resulting from operations ..................   $   59,096,544
                                                                                     ===============



                                                              Annual Report |
 The accompanying notes are an integral part of these financial statements. | 15



Templeton Emerging Markets Income Fund

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS



                                                                                                --------------------------------
                                                                                                     YEAR ENDED AUGUST 31,
                                                                                                     2007             2006
                                                                                                --------------------------------
                                                                                                           
Increase (decrease) in net assets:
   Operations:
      Net investment income .................................................................   $   47,305,045   $   42,077,183
      Net realized gain (loss) from investments and foreign currency transactions ...........       45,624,392       33,368,331
      Net change in unrealized appreciation (depreciation) on investments and translation of
         assets and liabilities denominated in foreign currencies ...........................      (33,832,893)       9,295,371
                                                                                                --------------------------------
            Net increase (decrease) in net assets resulting from operations .................       59,096,544       84,740,885
                                                                                                --------------------------------
   Distributions to shareholders from net investment income .................................      (52,863,292)     (43,078,352)
                                                                                                --------------------------------
            Net increase (decrease) in net assets ...........................................        6,233,252       41,662,533
Net assets:
   Beginning of year ........................................................................      692,468,521      650,805,988
                                                                                                --------------------------------
   End of year ..............................................................................   $  698,701,773   $  692,468,521
                                                                                                ================================
Undistributed net investment income included in net assets:
   End of year ..............................................................................   $   22,653,423   $    5,636,772
                                                                                                ================================



16 | The accompanying notes are an integral part of these financial statements.
   | Annual Report



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Emerging Markets Income Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, (the 1940 Act) as a non-diversified,
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.

Corporate debt securities and government securities generally trade in the
over-the-counter market rather than on a securities exchange. The Fund may
utilize independent pricing services, quotations from bond dealers, and
information with respect to bond and note transactions, to assist in determining
a current market value for each security. The Fund's pricing services may use
valuation models or matrix pricing which considers information with respect to
comparable bond and note transactions, quotations from bond dealers, or by
reference to other securities that are considered comparable in such
characteristics as rating, interest rate and maturity date, option adjusted
spread models, prepayment projections, interest rate spreads and yield curves,
to determine current value.

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. 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
Trustees.


                                                              Annual Report | 17



Templeton Emerging Markets Income Fund

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 Trustees.

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 Fund may also enter into forward exchange contracts to hedge against
fluctuations in foreign exchange rates or to gain exposure to certain foreign
currencies. These contracts are valued daily by the Fund and the unrealized
gains or losses on the contracts, as measured by the difference between the
contractual forward foreign exchange rates and the forward rates at the
reporting date, are included in the Statement of Assets and Liabilities.
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.


18 | Annual Report



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

Foreign securities held by the Fund may be subject to foreign taxation on
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. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Dividend income is recorded on 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.

Inflation-indexed bonds provide an inflation hedge through periodic increases in
the security's interest accruals and principal redemption value, by amounts
corresponding to the current rate of inflation. Any such adjustments, including
adjustments to principal redemption value, are recorded as interest income.

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 trustees 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 | 19



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SHARES OF BENEFICIAL INTEREST

At August 31, 2007, there were an unlimited number of shares authorized (without
par value). During the year ended August 31, 2007, there were no share
transactions; all reinvested distributions were satisfied with previously issued
shares purchased in the open market.

The Fund's Board of Trustees 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. Through August 31, 2007, the Fund had
repurchased a total of 610,500 shares. During the years ended August 31, 2006
and 2007, there were no share repurchases.

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
trustees of the Fund are also officers and/or directors of the following
subsidiaries:

--------------------------------------------------------------------------------
SUBSIDIARY                                           AFFILIATION
--------------------------------------------------------------------------------
Franklin Advisers, Inc. (Advisers)                   Investment manager
Franklin Templeton Services, LLC (FT Services)       Administrative manager

A. MANAGEMENT FEES

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

--------------------------------------------------------------------------------
ANNUALIZED FEE RATE   NET ASSETS
--------------------------------------------------------------------------------
       0.850%         Up to and including $1 billion
       0.830%         Over $1 billion, up to and including $5 billion
       0.810%         Over $5 billion, up to and including $10 billion
       0.790%         Over $10 billion, up to and including $15 billion
       0.770%         Over $15 billion, up to and including $20 billion
       0.750%         In excess of $20 billion

B. ADMINISTRATIVE FEES

The Fund pays an administrative fee to FT Services of 0.15% per year of the
average daily net assets of the Fund.

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 August 31, 2007, the
custodian fees were reduced as noted in the Statement of Operations.


20 | Annual Report



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At August 31, 2007, the fund had tax basis capital losses of
$8,179,569 expiring in 2011. During the year ended August 31, 2007, the Fund
utilized $20,671,529 of capital loss carryforwards.

The tax character of distributions paid during the years ended August 31, 2007
and 2006, was as follows:

                                             --------------------------
                                                 2007          2006
                                             --------------------------
Distributions paid from:
   Ordinary income .......................   $52,863,292    $43,078,352

At August 31, 2007, the cost of investments, net unrealized appreciation
(depreciation), and undistributed ordinary income for income tax purposes were
as follows:

Cost of investments                                        $669,929,942
                                                           =============

Unrealized appreciation                                    $ 34,231,674
Unrealized depreciation                                     (14,538,282)
                                                           -------------
Net unrealized appreciation (depreciation)                 $ 19,693,392
                                                           =============

Distributable earnings - undistributed ordinary income     $ 26,742,119
                                                           =============

Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions, passive
foreign investment companies and bond discounts and premiums.

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 companies and bond discounts and
premiums.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
year ended August 31, 2007, aggregated $234,149,182 and $244,158,551,
respectively.

7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund), an open-end investment company managed by
Advisers. 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.


                                                              Annual Report | 21



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. FORWARD EXCHANGE CONTRACTS

At August 31, 2007, the Fund had the following forward exchange contracts
outstanding:



-------------------------------------------------------------------------------------------------
                                               CONTRACT    SETTLEMENT   UNREALIZED   UNREALIZED
                                                AMOUNT        DATE         GAIN         LOSS
-------------------------------------------------------------------------------------------------
                                                                         
CONTRACTS TO SELL
 34,649,958   Mexican Peso ...............   $ 3,081,914     9/12/07    $       --   $  (56,840)
 13,012,157   Mexican Peso ...............     1,153,918     9/14/07            --      (24,675)
 74,700,583   Mexican Peso ...............     6,663,151    11/26/07            --      (76,711)
 40,428,962   Mexican Peso ...............     3,603,455     1/25/08            --      (30,130)
  1,918,025   Euro .......................     2,643,422     5/02/08        17,693           --
167,925,352   Mexican Peso ...............    15,000,031     5/06/08        19,181           --
 61,513,239   Mexican Peso ...............     5,471,735     5/16/08            --      (11,761)
 69,355,929   Mexican Peso ...............     6,011,609     5/20/08            --     (169,124)
 42,706,994   Mexican Peso ...............     3,701,742     5/20/08            --     (104,141)
345,894,250   Mexican Peso ...............    31,260,212     5/21/08       437,800           --
                                                                        -------------------------
Unrealized gain (loss) on forward exchange contracts ................      474,674     (473,382)
                                                                        -------------------------
   Net unrealized gain (loss) on forward exchange contracts .........   $    1,292
                                                                        ----------


9. CREDIT RISK

The Fund has 70.84% of its portfolio invested in below investment grade and
comparable quality unrated high yield securities, which tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.

10. CONCENTRATION OF RISK

Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.

11. REGULATORY AND LITIGATION MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support payments to
securities dealers who sell fund shares ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.


22 | Annual Report



Templeton Emerging Markets Income Fund

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. REGULATORY AND LITIGATION MATTERS (CONTINUED)

On June 23, 2006, the SEC approved the proposed plan of distribution for the
marketing support settlement, and disbursement of the settlement monies to the
designated funds, in accordance with the terms and conditions of that settlement
and plan, was completed in September 2006. The Fund did not participate in that
settlement.

On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, in accordance with the terms and conditions of the settlement and plan.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and employees, have been named in private lawsuits (styled as
shareholder class actions, or as derivative actions on behalf of either the
named funds or Franklin Resources, Inc.). The lawsuits relate to the industry
practices referenced above.

The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.

12. NEW ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions taken or expected to be taken in a
tax return. FIN 48 provides guidance on the measurement, recognition,
classification and disclosure of tax positions, along with accounting for the
related interest and penalties. FIN 48 is effective for fiscal years beginning
after December 15, 2006, and is to be applied to all open tax years as of the
date of effectiveness. On December 22, 2006, the Securities and Exchange
Commission extended the implementation date to no later than the last net asset
value calculation in the first semi-annual reporting period beginning after
December 15, 2006. The Fund believes the adoption of FIN 48 will have no
material impact on its financial statements.

In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. SFAS 157 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The Fund believes the adoption of SFAS 157
will have no material impact on its financial statements.


                                                              Annual Report | 23



Templeton Emerging Markets Income Fund

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON EMERGING MARKETS INCOME
FUND

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 Emerging Markets Income
Fund (the "Fund") at August 31, 2007, 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 August 31, 2007 by correspondence with the
custodian, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
October 18, 2007


24 | Annual Report



Templeton Emerging Markets Income Fund

TAX DESIGNATION (UNAUDITED)

Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $1,613,351 as interest
related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of
the Code for the fiscal year ended August 31, 2007.

At August 31, 2007, more than 50% of the Templeton Emerging Markets Income
Fund's total assets were invested in securities of foreign issuers. In most
instances, foreign taxes were withheld from dividends 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 September 28, 2007,
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, by country, of foreign tax
paid, foreign source income, and foreign qualified dividends as designated by
the Fund, to shareholders of record.

RECORD DATE: 9/28/2007

--------------------------------------------------------------------------------
                               FOREIGN TAX      FOREIGN            FOREIGN
                                   PAID      SOURCE INCOME   QUALIFIED DIVIDENDS
COUNTRY                         PER SHARE      PER SHARE          PER SHARE
--------------------------------------------------------------------------------
Argentina ..................     $0.0000        $0.1464            $0.0000
Bosnia & Herzegowina .......      0.0000         0.0134             0.0000
Brazil .....................      0.0000         0.2214             0.0000
Cayman Islands .............      0.0000         0.0001             0.0000
Colombia ...................      0.0000         0.0181             0.0000
Egypt ......................      0.0000         0.0173             0.0000
El Salvador ................      0.0000         0.0038             0.0000
Fiji .......................      0.0000         0.0037             0.0000
Indonesia ..................      0.0227         0.1879             0.0000
Iraq .......................      0.0000         0.0716             0.0000
Malaysia ...................      0.0000         0.0023             0.0000
Mexico .....................      0.0000         0.0361             0.0000
Netherlands ................      0.0000         0.0074             0.0000
Pakistan ...................      0.0000         0.0048             0.0000
Panama .....................      0.0000         0.0083             0.0000
Peru .......................      0.0000         0.0620             0.0000
Philippines ................      0.0000         0.0442             0.0000
Poland .....................      0.0000         0.0232             0.0000
Russia .....................      0.0000         0.0695             0.0000
South Africa ...............      0.0000         0.0004             0.0000
South Korea ................      0.0032         0.0099             0.0000
Thailand ...................      0.0000         0.0144             0.0000
Ukraine ....................      0.0000         0.0362             0.0000
Venezuela ..................      0.0000         0.0178             0.0000
Vietnam ....................      0.0000         0.0013             0.0000
                               -------------------------------------------------
TOTAL ......................     $0.0259        $1.0215            $0.0000
                               =================================================

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 | 25



Templeton Emerging Markets Income Fund

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 2008, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2007. 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 2007 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 brackets). 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.


26 | Annual Report



Templeton Emerging Markets Income Fund

ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 23, 2007 (UNAUDITED)

The Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 East Broward Blvd., Fort Lauderdale, Florida, on February 23, 2007. The
purpose of the meeting was to elect five Trustees of the Fund. At the meeting,
the following persons were elected by the shareholders to serve as Trustees of
the Fund: Frank J. Crothers, Charles B. Johnson, Gregory E. Johnson, Frank A.
Olson and Robert E. Wade.* No other business was transacted at the meeting.

The results of the voting at the Annual Meeting are as follows:

The election of five (5) Trustees:



--------------------------------------------------------------------------------------------------------------
                                                                     % OF                                % OF
                                                                    SHARES                             SHARES
                                                        % OF       PRESENT                   % OF      PRESENT
                                                    OUTSTANDING      AND                 OUTSTANDING     AND
TERM EXPIRING 2010                         FOR         SHARES       VOTING    WITHHELD      SHARES     VOTING
--------------------------------------------------------------------------------------------------------------
                                                                                      
Frank J. Crothers ..................   41,221,444      87.08%       98.63%     571,832      1.21%       1.37%
Charles B. Johnson .................   41,146,148      86.92%       98.45%     647,128      1.37%       1.55%
Gregory E. Johnson .................   41,177,863      86.99%       98.53%     615,413      1.30%       1.47%
Frank A. Olson .....................   41,125,012      86.87%       98.40%     668,264      1.41%       1.60%

--------------------------------------------------------------------------------------------------------------
TERM EXPIRING 2009
--------------------------------------------------------------------------------------------------------------
Robert E. Wade .....................   41,215,918      87.07%       98.62%     577,358      1.22%       1.38%


* Harris J. Ashton, Edith E. Holiday, David W. Niemiec, Larry D. Thompson and
Constantine D. Tseretopoulos are Trustees of the Fund who are currently serving
and whose terms of office continued after the Annual Meeting of Shareholders.


                                                              Annual Report | 27



Templeton Emerging Markets Income Fund

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 Mellon Investor 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
Mellon Investor Services (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 shares 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 shares 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, 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 "Mellon Bank, N.A." and sent to
Mellon Investor Services, P.O. Box 382009, Pittsburgh, PA 15250-8009, Attention:
Templeton Emerging Markets Income Fund. 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 the Fund's 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 fees for a sale of shares through the Plan are $15.00 per
transaction plus a $0.12 per share trading fee.


28 | Annual Report



Templeton Emerging Markets Income Fund

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)

A participant may withdraw from the Plan without penalty at any time by written
notice to the Plan Administrator sent to Mellon Investor Services, P. O. Box
358035, Pittsburgh, PA, 15252-8035. Upon withdrawal, the participant will
receive, without charge, share 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 shares and send the proceeds to the
participant, less a service charge of $15.00 and less trading fees of $0.12 per
share.

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
www.melloninvestor.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 | 29



Templeton Emerging Markets Income Fund

TRANSFER AGENT

Mellon Investor Services LLC
P.O. Box 358015
Pittsburgh, PA 15252-8015
1-800-416-5585
www.melloninvestor.com

DIRECT REGISTRATION

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

SHAREHOLDER INFORMATION

Shares of Templeton Emerging Markets Income Fund are traded on the New York
Stock Exchange under the symbol "TEI." 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 the "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 access their Fund account on-line
with Investor ServiceDirect(R). For information go to Mellon Investor Services'
web site at https://vault.melloninvestor.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 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 Emerging Markets
Income Fund, 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL
33733-8030.


30 | Annual Report



Templeton Emerging Markets Income Fund

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
NAME, YEAR OF BIRTH                              LENGTH OF         FUND COMPLEX OVERSEEN
AND ADDRESS                    POSITION          TIME SERVED       BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   
HARRIS J. ASHTON (1932)        Trustee           Since 1993        139                         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).
------------------------------------------------------------------------------------------------------------------------------------
FRANK J. CROTHERS (1944)       Trustee           Since 1999        19                          Fortis, Inc. (utility holding
500 East Broward Blvd.                                                                         company), Nuinsco Resources Limited
Suite 2100                                                                                     (mineral exploration), Fidelity
Fort Lauderdale, FL 33394-3091                                                                 Merchant Bank & Trust (Cayman)
                                                                                               Limited (financial services), C.A.
                                                                                               Bancorp Inc. (financial services),
                                                                                               Victory Nickel Inc. (mineral
                                                                                               exploration), ABACO Markets Limited
                                                                                               (retail distributors), and Belize
                                                                                               Electricity Limited (electric
                                                                                               utility).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Company Ltd.; Director, Provo Power
Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power
Ltd. (1977-2003).
------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952)        Trustee           Since 1996        139                         Hess Corporation (exploration and
500 East Broward Blvd.                                                                         refining of oil and gas), H.J.
Suite 2100                                                                                     Heinz Company (processed foods and
Fort Lauderdale, FL 33394-3091                                                                 allied products), RTI International
                                                                                               Metals, Inc. (manufacture and
                                                                                               distribution of titanium), Canadian
                                                                                               National Railway (railroad) 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 | 31





------------------------------------------------------------------------------------------------------------------------------------
                                                                   NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                              LENGTH OF         FUND COMPLEX OVERSEEN
AND ADDRESS                    POSITION          TIME SERVED       BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   
David W. Niemiec (1949)        Trustee           Since 2005        19                          Emeritus Corporation (assisted
500 East Broward Blvd.                                                                         living) and OSI Pharmaceuticals, Inc.
Suite 2100                                                                                     (pharmaceutical products).
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Advisor, Saratoga Partners (private equity fund); Director, various private companies; 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)           Trustee           Since 2003        139                         Hess Corporation (exploration and
500 East Broward Blvd.                                                                         refining of oil and gas) and Sentient
Suite 2100                                                                                     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)       Trustee           Since 2005        139                         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   Trustee           Since 1999        19                          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)          Trustee           Since 2006        33                          El Oro and Exploration Co., p.l.c.
500 East Broward Blvd.                                                                         (investments) and ARC Wireless
Suite 2100                                                                                     Solutions, Inc. (wireless components
Fort Lauderdale, FL 33394-3091                                                                 and network products).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Practicing attorney.
------------------------------------------------------------------------------------------------------------------------------------



32 | Annual Report



INTERESTED BOARD MEMBERS AND OFFICERS



------------------------------------------------------------------------------------------------------------------------------------
                                                                   NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                              LENGTH OF         FUND COMPLEX OVERSEEN
AND ADDRESS                    POSITION          TIME SERVED       BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   
**CHARLES B. JOHNSON (1933)    Trustee,          Trustee and       139                         None
One Franklin Parkway           Chairman of       Chairman of the
San Mateo, CA 94403-1906       the Board and     Board since 1995
                               Vice President    and Vice
                                                 President since
                                                 1993

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)    Trustee           Since             91                          None
One Franklin Parkway                             February 2007
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).
------------------------------------------------------------------------------------------------------------------------------------
JEFFREY A. EVERETT (1964)      Vice President    Since 2001        Not Applicable              Not Applicable
PO Box N-7759
Lyford Cay, Nassau, Bahamas

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman, President and Director, Templeton Global Advisors Limited; and officer of 14 of the investment companies in Franklin
Templeton Investments.
------------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947)        Senior Vice       Since 2002        Not Applicable              Not Applicable
500 East Broward Blvd.         President and
Suite 2100                     Chief Executive
Fort Lauderdale, FL 33394-3091 Officer -
                               Finance and
                               Administration

PRINCIPAL OCCUPATION DURING PA ST 5 YEARS:

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



                                                              Annual Report | 33





------------------------------------------------------------------------------------------------------------------------------------
                                                                   NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                              LENGTH OF         FUND COMPLEX OVERSEEN
AND ADDRESS                    POSITION          TIME SERVED       BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   
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 director of one of the subsidiaries of Franklin
Resources, Inc.; and officer 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.
------------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (1940)             Vice President    Since 1994        Not Applicable              Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice President, Templeton Worldwide, Inc.; Senior Vice President, Franklin Templeton Services, LLC; and officer of some of the other
subsidiaries of Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice
President and Controller, Keystone Group, Inc.
------------------------------------------------------------------------------------------------------------------------------------
CHRISTOPHER J. MOLUMPHY (1962) President and     Since 2002        Not Applicable              Not Applicable
One Franklin Parkway           Chief Executive
San Mateo, CA 94403-1906       Officer -
                               Investment
                               Management

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director and Executive Vice President, Franklin Advisers, Inc.; and officer of some of the other subsidiaries of Franklin Resources,
Inc. and of six of the investment companies in Franklin Templeton Investments.
------------------------------------------------------------------------------------------------------------------------------------
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
Assistant 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.
------------------------------------------------------------------------------------------------------------------------------------



34 | Annual Report





------------------------------------------------------------------------------------------------------------------------------------
                                                                   NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                              LENGTH OF         FUND COMPLEX OVERSEEN
AND ADDRESS                    POSITION          TIME SERVED       BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   
GREGORY R. SEWARD (1956)       Treasurer         Since 2004        Not Applicable              Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice President, Franklin Templeton Services, LLC; officer of 16 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
------------------------------------------------------------------------------------------------------------------------------------
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).
------------------------------------------------------------------------------------------------------------------------------------
GALEN VETTER (1951)            Chief Financial   Since 2004        Not Applicable              Not Applicable
500 East Broward Blvd.         Officer and
Suite 2100                     Chief
Fort Lauderdale, FL 33394-3091 Accounting
                               Officer

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Vice President, Franklin Templeton Services, LLC; officer of 46 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and
1991-2004).
------------------------------------------------------------------------------------------------------------------------------------


* We base the number of portfolios on each separate series of the U.S.
registered investment companies within 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.

Note 3: Prior to August 31, 2007, Harmon E. Burns ceased to be a trustee of the
Fund.

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 OF TRUSTEES
HAS DETERMINED THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT
COMMITTEE AND HAS DESIGNATED EACH OF FRANK A. OLSON AND DAVID W. NIEMIEC AS AN
AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. OLSON AND
NIEMIEC QUALIFY AS SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND
AND EXPERIENCE. MR. OLSON HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2003. HE CURRENTLY SERVES AS CHAIRMAN EMERITUS OF THE HERTZ CORPORATION
AND WAS FORMERLY ITS CHAIRMAN OF THE BOARD FROM 1980 TO 2000 AND ITS CHIEF
EXECUTIVE OFFICER FROM 1977 TO 1999. MR. OLSON IS ALSO A DIRECTOR AND AUDIT
COMMITTEE MEMBER OF HESS CORPORATION, A FORMER DIRECTOR AND AUDIT COMMITTEE
MEMBER OF WHITE MOUNTAINS INSURANCE GROUP, LTD. AND FORMER CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER OF UAL CORPORATION. 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
VARIOUS PRIVATE COMPANIES, 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 OF TRUSTEES BELIEVES THAT MR. OLSON
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. MESSRS.
OLSON AND NIEMIEC ARE INDEPENDENT TRUSTEES 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 | 35



Templeton Emerging Markets Income Fund

SHAREHOLDER INFORMATION

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held May 22, 2007, the Board of Trustees (Board), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for the 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 investment performance reports on the Fund,
information on its share price discount to net asset value, and other related
financial information, 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 a Fund
profitability analysis report prepared by management. The Lipper reports
compared the Fund's investment performance and expenses with those of other
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.

In considering such materials, the independent Trustees 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 Trustees, 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 later, 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 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


36 | Annual Report



Templeton Emerging Markets Income Fund

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

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. 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.

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
renewals. The Lipper report for the Fund showed its investment performance for
the one-year period ended February 28, 2007, as well as the previous 10 years
ended that date in respect to a universe consisting of the Fund and all other
closed-end emerging market debt funds as selected by Lipper. Such report
considered the Fund's income return and total return on a net asset value basis
without regard to market discounts or premiums to accurately reflect investment
performance. The Lipper report showed the Fund's income return to be in the
highest quintile of such performance universe for the one-year period, and on an
annualized basis in the middle quintile for the previous three- and five-year
periods and in the lowest quintile for the previous 10-year period. Such report
showed the Fund's total return to be in the highest quintile for the one-year
period of such performance universe, and on an annualized basis to be in the
middle quintile for the previous three-year period, the lowest quintile for the
previous five-year period and the second-lowest quintile for the previous
10-year period of such performance universe. The Board was satisfied with such
investment performance noting the high level of actual income and total return
as shown in the Lipper report, which were 9.65% and 10.58%, respectively, for
the 10-year annualized period.

COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with a group of
other funds selected by Lipper as constituting its appropriate Lipper expense
group. Prior to making such comparison, the Board relied upon a survey showing
that the scope of management advisory services covered under the Fund's
investment management agreement was similar to those provided by fund managers
to other fund groups. In reviewing comparative costs, emphasis was given to the
Fund's contractual investment management fee in comparison with the contractual
investment management fee that would have been charged by the other five funds
within the Lipper expense group assuming they were similar in size to the Fund,
as well as the actual total expenses of the Fund in comparison with those of the
other five funds. The Lipper contractual investment management fee analysis
considers administrative fees to be part of management fees and the results of
such


                                                              Annual Report | 37



Templeton Emerging Markets Income Fund

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

expense comparison showed the Fund's contractual investment management fee rate
to be in the least expensive quintile of such group, with its total actual
expenses being in the middle quintile of such group. The Board was satisfied
with the Fund's contractual investment management fee and expenses in comparison
to those of the expense group.

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. Specific 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 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. 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


38 | Annual Report



Templeton Emerging Markets Income Fund

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

shared with the Fund and its shareholders and intends to monitor future growth
of the Fund accordingly. The Board also noted that it had previously added a
breakpoint to the Fund's investment advisory fee at the $1 billion level.

PROXY VOTING POLICIES AND PROCEDURES

The Fund 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 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 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
1-800/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 he 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 February 28, 2007. Additionally, the Fund expects to file,
on or about October 30, 2007, such certifications with its Form N-CSR for the
year ended August 31, 2007.


                                                              Annual Report | 39



                       This page intentionally left blank.



Literature Request

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. To ensure the highest quality of
service, we may monitor, record and access telephone calls to or from our
service departments. These calls can be identified by the presence of a regular
beeping tone.

FRANKLIN TEMPLETON FUNDS

INTERNATIONAL

Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund 1

GLOBAL

Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund

GROWTH

Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small Cap Growth Fund II 2
Franklin Small-Mid Cap Growth Fund

VALUE

Franklin Balance Sheet Investment Fund 1
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund

BLEND

Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund

SECTOR

Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund

ASSET ALLOCATION

Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund

INCOME

Franklin Adjustable U.S. Government Securities Fund 4
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund 5
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund 4
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 4
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME 6

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 7

LIMITED-TERM FUNDS

California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund

INTERMEDIATE-TERM FUNDS

California Intermediate-Term Tax-Free Income
Fund Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC

Alabama
Arizona
California 8
Colorado
Connecticut
Florida 8
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products Trust 9

1. The fund is open only to existing shareholders and select retirement plans.

2. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.

3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.

4. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

5. Effective 10/1/06, Franklin's AGE High Income Fund changed its name to
Franklin High Income Fund. The fund's investment goal and strategy remained the
same.

6. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.

7. The fund invests primarily in insured municipal securities.

8. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).

9. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.


05/07                                              Not part of the annual report



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

ANNUAL REPORT

TEMPLETON EMERGING MARKETS
INCOME FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

TRANSFER AGENT

Mellon Investor Services LLC
P.O. Box 358015
Pittsburgh, PA 15252-8015
Toll free number: 1-800/416-5585
Hearing Impaired phone number: 1-800/231-5469
Foreign Shareholders phone number: 201/680-6578
www.melloninvestor.com/isd

FUND INFORMATION

1-800/342-5236

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.


TLTEI A2007 10/07


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.

(c)   N/A

(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 experts are David W. Niemiec and Frank
         A. Olson, they are "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 $41,223 for the fiscal year ended August 31, 2007 and $48,586 for the
fiscal year ended August 31, 2006.

(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.

(c)  Tax Fees

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 $46,000 for the fiscal year ended
August 31, 2007 and $0 for the fiscal year ended August 31, 2006. 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 $0 for the fiscal year ended August 31, 2007
and $386 for the fiscal year ended August 31, 2006. 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 not reported
in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended August 31,
2007 and $175,222 for the fiscal year ended August 31, 2006. 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 non-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 $46,386 for the fiscal year ended August 31, 2007 and $175,861
for the fiscal year ended August 31, 2006.

(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:  Frank J. Crothers, David W. Niemiec,
Frank A. Olson 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 trustees of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Franklin Advisers, Inc. 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
will 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 with a recommendation regarding the vote for approval. Where 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 trustees or a
committee of the board.

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 October 30, 2007, the portfolio managers of the Fund are as
follows:

MICHAEL HASENSTAB PH.D, Senior Vice President OF FRANKLIN ADVISERS, INC.
Mr. Hasenstab has been a manager of the Fund since 2002. He 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 1995.

(a)(2) This section reflects information about the portfolio managers as of the
fiscal year ended August 31, 2007.

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:

-------------------------------------------------------------------------------
NAME       NUMBER     ASSETS     NUMBER     ASSETS       NUMBER       ASSETS
           OF OTHER   OF OTHER   OF OTHER   OF OTHER     OF           OF
           REGISTERED REGISTERED POOLED     POOLED       OTHER        OTHER
           INVESTMENT INVESTMENT INVESTMENT INVESTMENT   ACCOUNTS     ACCOUNTS
           COMPANIES  COMPANIES  VEHICLES   VEHICLES     MANAGED/1    MANAGED
           MANAGED    MANAGED    MANAGED/1  MANAGED                  (X $1
                      (X $1                 (X $1                    MILLION)/1
                      MILLION)              MILLION)/1
-------------------------------------------------------------------------------
Michael      9        9,284.8      20       14,357.6        0           N/A
Hasenstab
---------------------------------------------------------------- --------------
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 helps 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
         Franklin Resources stock (17.5% to 25%) and 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 Franklin 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 professional knowledge, productivity,
              responsiveness to client needs and communication, are evaluated in
              determining the amount of any bonus award.

         |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 Franklin Resources stock
         or restricted shares or units of one or more mutual funds, and options
         to purchase common shares of Franklin Resources stock. 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):


                                              Dollar Range of Fund
                                              Shares Beneficially
               Portfolio Manager                    Owned
         ----------------------------------------------------------------------
           Michael Hasenstab                         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 Trustees 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 Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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
   -------------------
   Jimmy D. Gambill
   Chief Executive Officer - Finance and Administration
   Date:  October 26, 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
   -------------------
   Jimmy D. Gambill
   Chief Executive Officer - Finance and Administration
   Date:  October 26, 2007

By /s/GALEN G. VETTER
   ------------------
   Galen G. Vetter
   Chief Financial Officer
   Date:  October 26, 2007