Templeton Emerging Markets Income Fund (“TEI” or the “Fund”) Announces Distribution

Rhea-AI Summary

Templeton Emerging Markets Income Fund (TEI) declares a monthly distribution of $0.0475 per share from net investment income, aiming to narrow the discount between market price and NAV. Shareholders may receive long-term capital gains or return of capital if income is insufficient. The Fund's Board can modify or end the distribution plan, potentially impacting share prices.

Financial Analyst

The announcement of Templeton Emerging Markets Income Fund's monthly distribution is a significant event for shareholders and potential investors. The fixed rate distribution of $0.0475 per share provides a predictable income stream, which can be particularly attractive in volatile markets. However, it's crucial to understand the source of these distributions. The Fund's strategy to prioritize net ordinary income and short-term capital gains aligns with conservative investment approaches, aiming to minimize risk while providing regular returns.

From a financial standpoint, the managed distribution plan seeks to narrow the discount between market price and NAV. This could potentially enhance shareholder value by making the Fund's shares more appealing to investors who perceive discounts as a buying opportunity. However, the use of long-term capital gains or return of capital as a supplement to maintain the distribution rate could signal that the Fund is not generating enough income from its investments. This could be a red flag for investors looking for sustainable income sources, as return of capital may reduce the Fund's assets over time, impacting future distributions and performance.

Market Research Analyst

The managed distribution plan's impact on the market price of the Fund's common shares is a key consideration. By providing consistent monthly distributions, the Fund may appeal to income-focused investors, potentially increasing demand for its shares. However, if the distributions are frequently supplemented by return of capital, the market may adjust its valuation of the shares, potentially leading to price volatility. Investors must be cautious and evaluate the sustainability of the distributions.

The Board's discretionary power to amend or terminate the Plan could introduce uncertainty, which the market typically disfavors. The yearly review of the fixed rate distribution also adds a layer of unpredictability, as adjustments could affect investor sentiment and the attractiveness of the Fund. Market participants will closely monitor these reviews and any changes to the Plan, as they could have immediate and long-term implications for the Fund's market price and investment attractiveness.

Tax Advisor

When analyzing the tax implications of the Fund's distributions, it is crucial to differentiate between ordinary income, capital gains and return of capital. Ordinary income and short-term capital gains are generally taxed at higher rates than qualified dividends and long-term capital gains. For tax-sensitive investors, the nature of the distributions can significantly affect after-tax returns. A return of capital is not taxed immediately; instead, it reduces the cost basis of the investment, potentially resulting in higher capital gains when the shares are sold.

Investors should also consider the impact of capital loss carryovers, which can offset current year capital gains and reduce taxable income. This can be advantageous in the short term but may also indicate that the Fund has experienced significant losses in the past. The tax consequences of any amendments to the Plan or its termination should be evaluated, as these changes could affect the tax treatment of future distributions and the overall tax efficiency of the investment.

FORT LAUDERDALE, Fla.--(BUSINESS WIRE)-- Templeton Emerging Markets Income Fund [NYSE: TEI] today announced a monthly distribution from net investment income of $0.0475 per share, payable on March 28, 2024, to shareholders of record on March 19, 2024 (Ex-Dividend Date: March 18, 2024).

The Fund’s Board of Trustees (the “Board”) has authorized a managed distribution plan (the “Plan”) pursuant to which the Fund makes monthly distributions to shareholders at the fixed rate of $0.0475 per share. The Plan is intended to provide shareholders with consistent distributions each month and is intended to narrow the discount between the market price and the net asset value (“NAV”) of the Fund’s common shares, but there can be no assurance that the Plan will be successful in doing so. The Fund is managed with a goal of generating as much of the distribution as possible from net ordinary income and short-term capital gains, that is consistent with the Fund’s investment strategy and risk profile. To the extent that sufficient distributable income is not available on a monthly basis, the Fund will distribute long-term capital gains and/or return of capital in order to maintain its managed distribution rate. A return of capital may occur, for example, when some or all of the money that was invested in the Fund is paid back to shareholders. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. Even though the Fund may realize current year capital gains, such gains may be offset, in whole or in part, by the Fund’s capital loss carryovers from prior years.

The Board may amend the terms of the Plan or terminate the Plan at any time without prior notice to the Fund’s shareholders. The amendment or termination of the Plan could have an adverse effect on the market price of the Fund’s common shares. The Plan will be subject to the periodic review by the Board, including a yearly review of the fixed rate to determine if an adjustment should be made.

Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Plan. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send a Form 1099-DIV to shareholders for the calendar year that will describe how to report the Fund’s distributions for federal income tax purposes.

For further information on Templeton Emerging Markets Income Fund, please visit our web site at: www.franklintempleton.com

Franklin Resources, Inc. is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,400 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and approximately $1.6 trillion in assets under management as of January 31, 2024. For more information, please visit franklintempleton.com.

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Franklin Templeton at 1-800-342-5236

Source: Franklin Templeton

What is the monthly distribution amount declared by Templeton Emerging Markets Income Fund (TEI)?

The monthly distribution amount declared by TEI is $0.0475 per share.

When will the distribution be payable to shareholders of Templeton Emerging Markets Income Fund (TEI)?

The distribution will be payable on March 28, 2024.

What is the Ex-Dividend Date for the distribution by Templeton Emerging Markets Income Fund (TEI)?

The Ex-Dividend Date is March 18, 2024.

How does Templeton Emerging Markets Income Fund (TEI) aim to narrow the discount between market price and NAV?

TEI aims to narrow the discount by providing consistent monthly distributions.

What happens if sufficient distributable income is not available for Templeton Emerging Markets Income Fund (TEI) on a monthly basis?

TEI may distribute long-term capital gains and/or return of capital to maintain the distribution rate.

Can the Board of Templeton Emerging Markets Income Fund (TEI) change or end the distribution plan?

Yes, the Board can amend or terminate the distribution plan at any time.

How often will the fixed rate of the distribution plan of Templeton Emerging Markets Income Fund (TEI) be reviewed?

The fixed rate will be reviewed yearly by the Board to determine if adjustments are needed.