Templeton Emerging Markets Income Fund (“TEI” or the “Fund”) Notification of Sources of Distributions
- None.
- None.
Insights
The announcement from Templeton Emerging Markets Income Fund regarding its distribution sources provides a snapshot into the fund's current financial health. Notably, the significant portion of the distribution, 92% for the March monthly distribution, comes from net investment income, which is a positive indicator of the fund's ability to generate revenue through its investments. However, the absence of net realized short-term and long-term capital gains in the cumulative fiscal year-to-date allocations could suggest a lack of profitable investment sales or a conservative strategy in realizing gains.
Furthermore, the disclosure of a cumulative loss in undistributed net realized and unrealized capital gains and losses is critical. This figure, especially the $1.3768 per share in unrealized depreciation, may raise concerns about the fund's asset valuation and portfolio performance. Investors should consider the potential for future distributions to be affected by these unrealized losses, as they may eventually need to be realized, impacting the fund's ability to maintain its current level of distributions.
From a tax perspective, the composition of the fund's distributions can have significant implications for shareholders. The predominance of the distribution being classified as net investment income could be more favorable for shareholders, as it may be taxed at different rates compared to capital gains, depending on individual tax situations. The lack of capital gains distributions could also mean that shareholders will not be subject to taxes on capital gains in the current period, which could be advantageous for tax planning purposes.
It's important to note that the return of capital component of the distribution is zero for both the March distribution and fiscal year-to-date. This suggests that the fund is not returning any principal to shareholders but is instead paying out from its income. While this can be a sign of a fund's operational efficiency, it also means that shareholders' cost basis is not being reduced, which could have tax implications upon the sale of shares.
Investors often look at the source of fund distributions to gauge the sustainability of income streams. In this case, the fund's reliance on net investment income rather than capital gains to support its distributions signals a strategy that may prioritize income-generating investments over capital appreciation. This could resonate with income-focused investors, particularly during volatile market periods where stable income is prized.
However, the reported cumulative loss hints at potential underlying issues with the fund's investment strategy or market conditions that have negatively impacted the portfolio. Investors might be cautious and seek further clarity on the fund's long-term strategy and how management plans to address the unrealized depreciation of portfolio securities. The ability of the fund to navigate these challenges will be instrumental in maintaining investor confidence and ensuring the sustainability of future distributions.
Notification of Sources of Distributions Pursuant to Section 19(a) of the Investment Company Act of 1940 |
The Fund’s estimated sources of the distribution to be paid on March 28, 2024, and for the fiscal year 2024 year-to-date are as follows:
Estimated Allocations for March Monthly Distribution as of February 29, 2024:
Distribution Per Share |
Net Investment Income |
Net Realized Short-Term Capital Gains |
Net Realized Long-Term Capital Gains |
Return of Capital |
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Cumulative Estimated Allocations fiscal year-to-date as of February 29, 2024, for the fiscal year ending December 31, 2024:
Distribution Per Share |
Net Investment Income |
Net Realized Short-Term Capital Gains |
Net Realized Long-Term Capital Gains |
Return of Capital |
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|
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|
|
|
|
|
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The Fund has experienced a cumulative loss in undistributed net realized and unrealized capital gains and losses totaling
Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Plan. TEI estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of the TEI distribution to shareholders may be a return of capital. A return of capital may occur, for example, when some or all of the money that a shareholder invested in a Fund is paid back to them. A return of capital distribution does not necessarily reflect TEI’s investment performance and should not be confused with ‘yield’ or ‘income’. 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.
Average Annual Total Return (in relation to the change in net asset value (NAV) for the 5-year period ended on 2/29/2024)1 |
Annualized Distribution Rate (as a percentage of NAV for the current fiscal period through 2/29/2024)2 |
Cumulative Total Return (in relation to the change in NAV for the fiscal period through 2/29/2024)3 |
Cumulative Fiscal Year-To-Date Distribution Rate (as a percentage of NAV as of 2/29/2024)4 |
-3.83 |
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Fund Performance and Distribution Rate Information:
- Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ended through February 29, 2024. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid.
- The Annualized Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV through February 29, 2024.
- Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2023 through February 29, 2024, assuming reinvestment of distributions paid.
- The Cumulative Fiscal Year-To-Date Distribution Rate is the dollar value of distributions for the fiscal period December 31, 2023 through February 29, 2024, as a percentage of the Fund’s NAV as of February 29, 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
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.
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
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Franklin Templeton
1-800-342-5236
Source: Franklin Templeton
FAQ
What is the distribution per share for March 2024 for Templeton Emerging Markets Income Fund (TEI)?
What are the estimated sources of distributions for Templeton Emerging Markets Income Fund (TEI) for the fiscal year 2024 year-to-date?
What is the cumulative loss in undistributed net realized and unrealized capital gains and losses per share for Templeton Emerging Markets Income Fund (TEI)?
