UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number |
811-7686 |
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Western Asset Emerging Markets Income Fund Inc. |
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(Exact name of registrant as specified in charter) |
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55 Water Street, New York, NY |
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10041 |
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(Address of principal executive offices) |
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(Zip code) |
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Robert I. Frenkel, Esq. |
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(Name and address of agent for service) |
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Registrants telephone number, including area code: |
1-800-822-5544 |
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or |
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Institutional Shareholder Services |
1-888-425-6432 |
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Date of fiscal year end: |
May 31 |
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Date of reporting period: |
February 28, 2009 |
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ITEM 1. SCHEDULE OF INVESTMENTS
WESTERN ASSET
FEBRUARY 28, 2009
Western Asset Emerging Markets Income Fund Inc. |
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February 28, 2009 |
Schedule of Investments (unaudited) |
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Face |
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Security |
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Value |
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SOVEREIGN BONDS 46.9% |
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Argentina 1.7% |
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Republic of Argentina: |
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2,000,000 |
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DEM |
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10.250% due 2/6/03 (a)(b) |
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$ |
142,883 |
|
1,000,000 |
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DEM |
|
9.000% due 9/19/03 (a)(b) |
|
71,442 |
|
|
3,500,000 |
|
DEM |
|
7.000% due 3/18/04 (a)(b) |
|
250,045 |
|
|
3,875,000 |
|
DEM |
|
8.500% due 2/23/05 (a)(b) |
|
276,836 |
|
|
5,400,000 |
|
DEM |
|
11.250% due 4/10/06 (a)(b) |
|
385,784 |
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1,000,000 |
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EUR |
|
9.000% due 4/26/06 (a)(b) |
|
139,727 |
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|
550,000 |
|
EUR |
|
9.000% due 7/6/10 (a)(b) |
|
76,850 |
|
|
1,000,000 |
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DEM |
|
11.750% due 5/20/11 (a)(b) |
|
71,442 |
|
|
8,800,000 |
|
DEM |
|
12.000% due 9/19/16 (a)(b) |
|
628,685 |
|
|
950,000 |
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DEM |
|
11.750% due 11/13/26 (a)(b) |
|
67,869 |
|
|
5,165,000 |
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|
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Bonds, 7.000% due 9/12/13 |
|
1,710,906 |
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|
|
|
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GDP Linked Securities: |
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|
|
|
3,800,000 |
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EUR |
|
1.985% due 12/15/35 (b)(c) |
|
108,606 |
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3,195,000 |
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2.280% due 12/15/35 (b)(c) |
|
86,265 |
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20,189,523 |
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ARS |
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2.458% due 12/15/35 (b)(c) |
|
212,208 |
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Medium-Term Notes: |
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|
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6,500,000,000 |
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ITL |
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7.000% due 3/18/04 (a)(b) |
|
469,061 |
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3,000,000,000 |
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ITL |
|
5.002% due 7/13/05 (a)(b) |
|
216,490 |
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1,000,000 |
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EUR |
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10.000% due 2/22/07 (a)(b) |
|
139,727 |
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1,000,000,000 |
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ITL |
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7.625% due 8/11/07 (a)(b) |
|
72,163 |
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625,000 |
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DEM |
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8.000% due 10/30/09 (a)(b) |
|
44,651 |
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Total Argentina |
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5,171,640 |
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Brazil 9.2% |
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Brazil Nota do Tesouro Nacional: |
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8,595,000 |
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BRL |
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10.000% due 1/1/10 |
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3,600,825 |
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38,357,000 |
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BRL |
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10.000% due 7/1/10 |
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16,023,315 |
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19,737,000 |
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BRL |
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10.000% due 1/1/12 |
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8,001,945 |
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1,000 |
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Federative Republic of
Brazil, Collective Action Securities, Notes, |
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1,083 |
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Total Brazil |
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27,627,168 |
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Colombia 3.2% |
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Republic of Colombia: |
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1,632,000 |
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7.375% due 1/27/17 |
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1,649,136 |
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8,701,000 |
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7.375% due 9/18/37 |
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8,004,920 |
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Total Colombia |
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9,654,056 |
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Egypt 0.7% |
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12,530,000 |
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EGP |
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Arab Republic of Egypt, 8.750% due 7/18/12 (b)(d) |
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1,946,625 |
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Gabon 0.5% |
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2,160,000 |
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Gabonese Republic, 8.200% due 12/12/17 (d) |
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1,414,800 |
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Indonesia 1.6% |
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Republic of Indonesia: |
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10,904,000,000 |
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IDR |
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10.250% due 7/15/22 |
|
682,190 |
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21,720,000,000 |
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IDR |
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11.000% due 9/15/25 |
|
1,388,265 |
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21,034,000,000 |
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IDR |
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10.250% due 7/15/27 |
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1,243,584 |
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25,039,000,000 |
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IDR |
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9.750% due 5/15/37 |
|
1,359,051 |
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Total Indonesia |
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4,673,090 |
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Mexico 5.1% |
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United Mexican States, Medium-Term Notes: |
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1,400,000 |
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5.625% due 1/15/17 |
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1,357,300 |
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See Notes to Schedule of Investments.
1
Western Asset Emerging Markets Income Fund Inc. |
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February 28, 2009 |
Schedule of Investments (unaudited) (continued) |
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Face |
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Security |
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Value |
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Mexico 5.1% (continued) |
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8,525,000 |
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8.000% due 9/24/22 |
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$ |
9,377,500 |
|
5,334,000 |
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6.050% due 1/11/40 |
|
4,410,685 |
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Total Mexico |
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15,145,485 |
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Panama 3.8% |
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Republic of Panama: |
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1,664,000 |
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7.250% due 3/15/15 |
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1,726,400 |
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2,283,000 |
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9.375% due 4/1/29 |
|
2,522,715 |
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8,260,000 |
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6.700% due 1/26/36 |
|
7,268,800 |
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Total Panama |
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11,517,915 |
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Peru 2.2% |
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Republic of Peru: |
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169,000 |
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8.750% due 11/21/33 |
|
192,660 |
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2,725,000 |
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Bonds, 6.550% due 3/14/37 |
|
2,500,187 |
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3,550,000 |
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Senior Bonds, 8.375% due 5/3/16 |
|
3,976,000 |
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Total Peru |
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6,668,847 |
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Russia 5.5% |
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Russian Federation: |
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|
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110,000 |
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11.000% due 7/24/18 (d) |
|
132,088 |
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|
617,000 |
|
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12.750% due 6/24/28 (d) |
|
786,675 |
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|
17,377,360 |
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7.500% due 3/31/30 (d) |
|
15,498,694 |
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|
|
|
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Total Russia |
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16,417,457 |
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Turkey 7.9% |
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Republic of Turkey: |
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|
|
|
3,348,000 |
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11.875% due 1/15/30 |
|
4,243,925 |
|
|
25,804,000 |
|
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Notes, 6.875% due 3/17/36 |
|
19,417,510 |
|
|
|
|
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Total Turkey |
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23,661,435 |
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Venezuela 5.5% |
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Bolivarian Republic of Venezuela: |
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|
|
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8,804,000 |
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8.500% due 10/8/14 |
|
5,106,320 |
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6,802,000 |
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5.750% due 2/26/16 (d) |
|
3,264,960 |
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1,920,000 |
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7.000% due 12/1/18 (d) |
|
849,600 |
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933,000 |
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7.650% due 4/21/25 |
|
408,187 |
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|
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Collective Action Securities: |
|
|
|
|
7,239,000 |
|
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9.375% due 1/13/34 |
|
3,619,500 |
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|
4,600,000 |
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Notes, 10.750% due 9/19/13 |
|
3,197,000 |
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|
|
|
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Total Venezuela |
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16,445,567 |
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TOTAL SOVEREIGN BONDS |
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140,344,085 |
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COLLATERALIZED SENIOR LOANS 0.4% |
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United States 0.4% |
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Ashmore Energy International: |
|
|
|
|
248,796 |
|
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Synthetic Revolving Credit Facility, 3.409% due 3/30/12 (c) |
|
153,010 |
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|
1,991,946 |
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Term Loan, 4.459% due 3/30/14 (c) |
|
1,225,047 |
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TOTAL COLLATERALIZED SENIOR LOANS |
|
1,378,057 |
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CORPORATE BONDS & NOTES 40.8% |
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Brazil 6.3% |
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Globo Communicacoes e Participacoes SA: |
|
|
|
|
2,556,000 |
|
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Bonds, 7.250% due 4/26/22 (d) |
|
2,377,080 |
|
|
110,000 |
|
|
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Senior Bonds, 7.250% due 4/26/22 (d) |
|
102,300 |
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|
See Notes to Schedule of Investments.
2
Western Asset Emerging Markets Income Fund Inc. |
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February 28, 2009 |
Schedule of Investments (unaudited) (continued) |
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Face |
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Security |
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Value |
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Brazil 6.3% (continued) |
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|
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GTL Trade Finance Inc.: |
|
|
|
|
1,090,000 |
|
|
|
7.250% due 10/20/17 (d) |
|
$ |
1,007,161 |
|
2,093,000 |
|
|
|
7.250% due 10/20/17 (d) |
|
1,930,437 |
|
|
1,900,000 |
|
|
|
Odebrecht Finance Ltd., 7.500% due 10/18/17 (d) |
|
1,781,250 |
|
|
|
|
|
|
Vale Overseas Ltd., Notes: |
|
|
|
|
2,436,000 |
|
|
|
8.250% due 1/17/34 |
|
2,416,151 |
|
|
10,660,000 |
|
|
|
6.875% due 11/21/36 |
|
9,237,956 |
|
|
|
|
|
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Total Brazil |
|
18,852,335 |
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Chile 1.0% |
|
|
|
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2,894,000 |
|
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Enersis SA, Notes, 7.375% due 1/15/14 |
|
3,005,627 |
|
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China 0.3% |
|
|
|
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1,040,000 |
|
|
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Galaxy Entertainment Finance Co. Ltd., 7.323% due 12/15/10 (c)(d) |
|
785,200 |
|
|
Colombia 0.5% |
|
|
|
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|
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EEB International Ltd.: |
|
|
|
|
720,000 |
|
|
|
8.750% due 10/31/14 (d) |
|
655,200 |
|
|
1,120,000 |
|
|
|
Senior Bonds, 8.750% due 10/31/14 (d) |
|
1,019,200 |
|
|
|
|
|
|
Total Colombia |
|
1,674,400 |
|
|
India 0.2% |
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|
|
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|
ICICI Bank Ltd., Subordinated Bonds: |
|
|
|
|
570,000 |
|
|
|
6.375% due 4/30/22 (c)(d) |
|
306,116 |
|
|
454,000 |
|
|
|
6.375% due 4/30/22 (c)(d) |
|
246,516 |
|
|
|
|
|
|
Total India |
|
552,632 |
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|
Kazakhstan 2.8% |
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|
|
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|
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|
ATF Capital BV: |
|
|
|
|
860,000 |
|
|
|
9.250% due 2/21/14 (d) |
|
391,051 |
|
|
2,610,000 |
|
|
|
Senior Notes, 9.250% due 2/21/14 (d) |
|
1,187,550 |
|
|
|
|
|
|
HSBK Europe BV: |
|
|
|
|
200,000 |
|
|
|
9.250% due 10/16/13 (d) |
|
83,000 |
|
|
2,040,000 |
|
|
|
7.250% due 5/3/17 (d) |
|
724,200 |
|
|
369,000 |
|
|
|
Senior Notes, 9.250% due 10/16/13 (d) |
|
164,157 |
|
|
7,070,000 |
|
|
|
KazMunaiGaz Finance Sub B.V., Senior Notes, 8.375% due 7/2/13 (d) |
|
4,994,542 |
|
|
|
|
|
|
TuranAlem Finance BV, Bonds: |
|
|
|
|
2,333,000 |
|
|
|
8.250% due 1/22/37 (d) |
|
454,935 |
|
|
1,930,000 |
|
|
|
8.250% due 1/22/37 (d) |
|
299,150 |
|
|
|
|
|
|
Total Kazakhstan |
|
8,298,585 |
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|
Mexico 7.6% |
|
|
|
|||||
3,160,000 |
|
|
|
America Movil SAB de CV, Senior Notes, 5.625% due 11/15/17 |
|
2,953,668 |
|
|
|
|
|
|
Axtel SAB de CV, Senior Notes: |
|
|
|
|
230,000 |
|
|
|
11.000% due 12/15/13 |
|
198,950 |
|
|
8,540,000 |
|
|
|
7.625% due 2/1/17 (d) |
|
6,020,700 |
|
|
2,156,000 |
|
|
|
7.625% due 2/1/17 (d) |
|
1,514,590 |
|
|
320,000 |
|
|
|
Kansas City Southern de Mexico, Senior Notes, 9.375% due 5/1/12 |
|
315,200 |
|
|
16,371,000 |
|
|
|
Pemex Project Funding Master Trust, Senior Bonds, 6.625% due 6/15/35 |
|
11,638,258 |
|
|
130,000 |
|
|
|
Petroleos Mexicanos, 8.000% due 5/3/19 (d) |
|
128,375 |
|
|
|
|
|
|
Total Mexico |
|
22,769,741 |
|
|
Russia 17.7% |
|
|
|
|||||
|
|
|
|
Evraz Group SA, Notes: |
|
|
|
|
4,810,000 |
|
|
|
8.875% due 4/24/13 (d) |
|
2,910,050 |
|
|
2,265,000 |
|
|
|
8.875% due 4/24/13 (d) |
|
1,371,186 |
|
|
2,020,000 |
|
|
|
9.500% due 4/24/18 (d) |
|
1,040,300 |
|
|
See Notes to Schedule of Investments.
3
Western Asset Emerging Markets Income Fund Inc. |
|
|
|
|
February 28, 2009 |
Schedule of Investments (unaudited) (continued) |
|
|
Face |
|
|
|
Security |
|
Value |
|
|
Russia 17.7% (continued) |
|
|
|
|||||
|
|
|
|
Gaz Capital SA: |
|
|
|
|
7,110,000 |
|
|
|
Notes, 8.625% due 4/28/34 (d) |
|
$ |
5,722,462 |
|
3,100,000 |
|
|
|
Senior Secured Notes, 7.288% due 8/16/37 (d) |
|
1,736,000 |
|
|
1,140,000 |
|
|
|
Gazprom, Loan Participation Notes, 6.212% due 11/22/16 (d) |
|
769,500 |
|
|
|
|
|
|
LUKOIL International Finance BV: |
|
|
|
|
1,459,000 |
|
|
|
6.356% due 6/7/17 (d) |
|
1,072,365 |
|
|
5,216,000 |
|
|
|
6.656% due 6/7/22 (d) |
|
3,625,120 |
|
|
8,020,000 |
|
|
|
Morgan Stanley Bank AG for OAO Gazprom, Loan Participation Notes, 9.625% due 3/1/13 (d) |
|
7,318,250 |
|
|
|
|
|
|
RSHB Capital, Loan Participation Notes: |
|
|
|
|
|
|
|
|
Secured Notes: |
|
|
|
|
3,414,000 |
|
|
|
7.175% due 5/16/13 (d) |
|
2,574,156 |
|
|
6,060,000 |
|
|
|
7.125% due 1/14/14 (d) |
|
4,266,482 |
|
|
3,750,000 |
|
|
|
7.125% due 1/14/14 (d) |
|
2,602,875 |
|
|
|
|
|
|
Senior Secured Notes: |
|
|
|
|
2,630,000 |
|
|
|
7.175% due 5/16/13 (d) |
|
2,017,342 |
|
|
3,563,000 |
|
|
|
6.299% due 5/15/17 (d) |
|
2,066,540 |
|
|
|
|
|
|
TNK-BP Finance SA: |
|
|
|
|
2,387,000 |
|
|
|
6.625% due 3/20/17 (d) |
|
1,318,818 |
|
|
218,000 |
|
|
|
7.875% due 3/13/18 (d) |
|
125,350 |
|
|
|
|
|
|
Senior Notes: |
|
|
|
|
2,105,000 |
|
|
|
7.500% due 3/13/13 (d) |
|
1,662,950 |
|
|
4,650,000 |
|
|
|
7.500% due 7/18/16 (d) |
|
2,813,250 |
|
|
2,110,000 |
|
|
|
7.500% due 7/18/16 (d) |
|
1,276,550 |
|
|
830,000 |
|
|
|
7.875% due 3/13/18 (d) |
|
477,250 |
|
|
2,567,000 |
|
|
|
UBS Luxembourg SA for OJSC Vimpel Communications, Loan Participation Notes, 8.250% due 5/23/16 (d) |
|
1,514,530 |
|
|
|
|
|
|
Vimpel Communications, Loan Participation Notes: |
|
|
|
|
2,080,000 |
|
|
|
8.375% due 4/30/13 (d) |
|
1,404,000 |
|
|
5,017,000 |
|
|
|
Secured Notes, 8.375% due 4/30/13 (d) |
|
3,444,361 |
|
|
|
|
|
|
Total Russia |
|
53,129,687 |
|
|
Thailand 1.1% |
|
|
|
|||||
|
|
|
|
True Move Co., Ltd.: |
|
|
|
|
200,000 |
|
|
|
10.750% due 12/16/13 (d) |
|
79,327 |
|
|
3,070,000 |
|
|
|
10.375% due 8/1/14 (d) |
|
1,181,950 |
|
|
4,950,000 |
|
|
|
Notes, 10.750% due 12/16/13 (d) |
|
1,955,250 |
|
|
|
|
|
|
Total Thailand |
|
3,216,527 |
|
|
United Kingdom 3.2% |
|
|
|
|||||
56,805,000 |
|
RUB |
|
HSBC Bank PLC, Credit-Linked Notes (Russian Agricultural Bank), 8.900% due 12/20/10 (c)(d) |
|
845,698 |
|
|
209,880,000 |
|
RUB |
|
JPMorgan Chase Bank, Credit-Linked Notes (Russian Agricultural Bank), 9.500% due 2/11/11 (b)(c)(d) |
|
4,467,609 |
|
|
6,200,000 |
|
|
|
Vedanta Resources PLC, Senior Notes, 8.750% due 1/15/14 (d) |
|
4,371,000 |
|
|
|
|
|
|
Total United Kingdom |
|
9,684,307 |
|
|
United States 0.1% |
|
|
|
|||||
310,000 |
|
|
|
Freeport-McMoRan Copper & Gold Inc., Senior Notes, 8.375% due 4/1/17 |
|
267,746 |
|
|
|
|
|
|
TOTAL CORPORATE BONDS & NOTES |
|
122,236,787 |
|
|
See Notes to Schedule of Investments.
4
Western Asset Emerging Markets Income Fund Inc. |
|
|
|
|
February 28, 2009 |
Schedule of Investments (unaudited) (continued) |
|
|
Warrants |
|
|
|
Security |
|
Value |
|
|
WARRANTS 0.1% |
|
|
|
|||||
11,500 |
|
|
|
Bolivarian Republic of Venezuela, Oil-linked payment obligations, Expires 4/15/20 (b) (Cost - $356,500) |
|
$ |
201,250 |
|
|
|
|
|
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS |
|
264,160,179 |
|
|
Face |
|
|
|
|
|
|
|
|
SHORT-TERM INVESTMENTS 7.8% |
|
|
|
|||||
U.S. Government Agency 3.8% |
|
|
|
|||||
11,300,000 |
|
|
|
Federal Home Loan Mortgage Corp. (FHLMC), Discount Notes, 0.471% due 6/15/09 (e)(f) (Cost - $11,284,510) |
|
11,290,282 |
|
|
Repurchase Agreement 4.0% |
|
|
|
|||||
12,000,000 |
|
|
|
Morgan Stanley tri-party
repurchase agreement dated 2/27/09, 0.220% due 3/2/09; Proceeds at maturity -
$12,000,220; (Fully collateralized by U.S. government agency obligations,
5.000% due 6/11/09; |
|
12,000,000 |
|
|
|
|
|
|
TOTAL SHORT-TERM INVESTMENTS |
|
23,290,282 |
|
|
|
|
|
|
TOTAL INVESTMENTS 96.0% (Cost $377,366,417#) |
|
287,450,461 |
|
|
|
|
|
|
Other Assets in Excess of Liabilities 4.0% |
|
11,843,945 |
|
|
|
|
|
|
TOTAL NET ASSETS 100.0% |
|
$ |
299,294,406 |
|
|
Face amount denominated in U.S. dollars, unless otherwise noted. |
(a) |
Security is currently in default. |
(b) |
Security is valued in good faith at fair value by or under the direction of the Board of Directors (See Note 1). |
(c) |
Variable rate security. Interest rate disclosed is that which is in effect at February 28, 2009. |
(d) |
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors, unless otherwise noted. |
(e) |
On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae and Freddie Mac into Conservatorship. |
(f) |
Rate shown represents yield-to-maturity. |
# |
Aggregate cost for federal income tax purposes is substantially the same. |
|
|
|
Abbreviations used in this schedule: |
|
ARS - Argentine Peso |
|
BRL - Brazilian Real |
|
DEM - German Mark |
|
EGP - Egyptian Pound |
|
EUR - Euro |
|
GDP - Gross Domestic Product |
|
IDR - Indonesian Rupiah |
|
ITL - Italian Lira |
|
OJSC - Open Joint Stock Company |
|
RUB - Russian Ruble |
See Notes to Schedule of Investments.
5
Notes to Schedule of Investments (unaudited)
1. Organization and Significant Accounting Policies
Western Asset Emerging Markets Income Fund Inc. (formerly known as Western Asset Emerging Markets Income Fund II Inc.) (the Fund) was incorporated in Maryland and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the 1940 Act). The Funds primary investment objective is to seek high current income. As a secondary objective, the Fund seeks capital appreciation. In pursuit of these objectives, the Fund under normal conditions invests at least 80% of its net assets, plus any borrowings for investment purposes, in debt securities of government and government related issuers located in emerging market countries (including participations in loans between governments and financial institutions), and of entities organized to restructure the outstanding debt of such issuers, and in debt securities of corporate issuers located in emerging market countries.
The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (GAAP).
(a) Investment Valuation. Debt securities are valued at the mean between the last quoted bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various other relationships between securities. Publicly traded foreign government debt securities are typically traded internationally in the over-the-counter market, and are valued at the mean between the last quoted bid and asked prices as of the close of business of that market. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund may value these securities at fair value as determined in accordance with the procedures approved by the Funds Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates fair value.
Effective June 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 (FAS 157). FAS 157 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Funds investments, and requires additional disclosure about fair value. The hierarchy of inputs is summarized below.
· Level 1 quoted prices in active markets for identical investments
· Level 2 other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
· Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Funds assets carried at fair value:
|
|
February 28, 2009 |
|
Quoted Prices |
|
Other Significant |
|
Significant |
|
|
|
|
|
|
|
|
|
|
|
Investments in Securities |
|
$287,450,461 |
|
|
|
$281,841,852 |
|
$5,608,609 |
|
6
Notes to Schedule of Investments (unaudited) (continued)
Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
|
|
Investments |
|
|
Balance as of May 31, 2008 |
|
|
|
|
Accrued Premiums/Discounts |
|
|
|
|
Realized Gain (Loss) |
|
|
|
|
Change in unrealized appreciation (depreciation) |
|
$ |
108,105 |
(1) |
Net purchases (sales) |
|
|
|
|
Transfers in and/or out of Level 3 |
|
5,500,504 |
|
|
Balance as of February 28, 2009 |
|
$ |
5,608,609 |
|
Net unrealized appreciation (depreciation) for Investments in Securities still held at the reporting date |
|
$ |
(5,395,079 |
)(1) |
(1) Change in unrealized appreciation (depreciation) includes net unrealized appreciation (depreciation) resulting from changes in investment values during the reporting period and the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.
(b) Repurchase Agreements. When entering into repurchase agreements, it is the Funds policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which, at all times, at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults, and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.
(c) Reverse Repurchase Agreements. The Fund may enter into a reverse repurchase agreement in which the Fund sells a portfolio security at a specified price with an agreement to purchase the same or substantially the same security from the same counterparty at a fixed or determinable price at a future date. When entering into reverse repurchase agreements, the Funds custodian delivers to the counterparty liquid assets, the market value of which, at the inception of the transaction, at least equals the repurchase price (including accrued interest). The Fund pays interest on amounts obtained pursuant to reverse repurchase agreements. Reverse repurchase agreements are considered to be borrowings, which may create leverage risk to the Fund.
(d) Foreign Currency Translation. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(e) Credit and Market Risk. The Fund invests in high-yield and emerging market instruments that are subject to certain credit and market risks. The yields of high-yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Funds investment in securities rated below investment grade typically involves risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Fund. The Funds investment in non-U.S. dollar denominated securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.
(f) Security Transactions. Security transactions are accounted for on a trade date basis.
7
Notes to Schedule of Investments (unaudited) (continued)
2. Investments
At February 28, 2009, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
Gross unrealized appreciation |
|
$ |
1,757,961 |
|
Gross unrealized depreciation |
|
(91,673,917 |
) |
|
Net unrealized depreciation |
|
$ |
(89,915,956 |
) |
Transactions in reverse repurchase agreements for the Fund during the period ended February 28, 2009 were as follows:
Average |
|
Weighted |
|
Maximum |
|
Daily |
|
Average |
|
Amount |
|
Balance * |
|
Interest Rate * |
|
Outstanding |
|
$9,763,293 |
|
2.225% |
|
$15,321,199 |
|
* Average based on the number of days that the Fund had reverse repurchase agreements outstanding.
Interest rates on reverse repurchase agreements ranged from 1.250% to 3.000% during the period ended February 28, 2009. Interest expense incurred on reverse repurchase agreements totaled $77,226.
At February 28, 2009, the Fund did not have any open reverse repurchase agreements.
3. Recent Accounting Pronouncement
In March 2008, FASB issued the Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161). FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about the Funds derivative and hedging activities, including how such activities are accounted for and their effect on the Funds financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Funds financial statements and related disclosures.
8
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrants principal executive officer and principal financial officer have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the 1940 Act)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrants last fiscal quarter that have materially affected, or are likely to materially affect the registrants internal control over financial reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.
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.
Western Asset Emerging Markets Income Fund Inc.
By |
/s/ R. Jay Gerken |
|
|
|
R. Jay Gerken |
|
|
||
Chief Executive Officer |
|
|
||
|
|
|
||
Date: |
April 28, 2009 |
|
|
|
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/ R. Jay Gerken |
|
|
|
R. Jay Gerken |
|
|
||
Chief Executive Officer |
|
|
||
|
|
|
||
Date: |
April 28, 2009 |
|
|
|
By |
/s/ Kaprel Ozsolak |
|
|
|
Kaprel Ozsolak |
|
|
||
Chief Financial Officer |
|
|
||
|
|
|
||
Date: |
April 28, 2009 |
|
|
|