Interim Management Statement

RNS Number : 8789D

Templeton Emerging Markets IT PLC

19 September 2008

 

Templeton Emerging Markets Investment Trust PLC ("the Company")

Interim Management Statement

for the three months ended 31 July 2008

This interim management statement relates to the period 1 May 2008 to 31 July 2008 and is the Company's first interim management statement for the financial year ending 30 April 2009, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.

OBJECTIVE

The Company's investment objective is to provide long term capital appreciation for its investors through investment in companies operating in emerging markets or whose stocks are listed on the stock markets of such countries.

FINANCIAL POSITION

	As at 31 July 2008 (unaudited)	As at 30 April 2008
Total assets (Cum-income)	£1,428m	£2,291m
Total assets (Ex-income)	£1,394m	£2,271m
Net asset value (Cum-income)	431.67p	484.77p
Net asset value (Ex-income)	421.39p	480.70p
Share price	393.00p	438.00p
Discount (Cum-income)	9.0%	9.6%
Discount (Ex-income)	6.7%	9.0%

Share price is at the UK market closing mid price.

Net asset value is at closing bid prices. Assets are priced at local close or adjusted for fair value at US Eastern market close.

Further information can be found at www.temit.co.uk.

FINANCIAL PERFORMANCE

Share price Net asset value MSCI Emerging Market Index S&P/IFCI Composite Index

1 Month % -3.6 -1.7 -3.2 -3.1

3 Months % -10.3 -12.4 -11.7 -10.3

1 Year % +0.1 -2.0 -1.6 +0.2

3 Years % +87.4 +73.4 +65.8 +90.7

5 Years % +217.6 +183.5 +174.7 +231.5

All figures are calculated in Sterling on a total return basis i.e. with net dividends reinvested 

Source: Franklin Templeton Investments / (Copyright - © 2008 Morningstar, Inc. All rights reserved).

MARKET VOLATILITY

2008 has seen significant increased market volatility due to widespread concerns over the continued impact on the world economy of the credit crisis in global financial markets. Whilst the sub-prime issue and other uncertainties have had an impact on emerging markets, and between 31 July 2008 and 17 September 2008, the net asset value of the Company fell by 22.1% to 336.16p, the Investment Manager (Templeton Asset Management Ltd) continues to see emerging markets benefiting from increased growth prospects and stronger fundamentals and will continue to monitor these for favourable investment opportunities.

MATERIAL EVENTS AND TRANSACTIONS

BOARD CHANGES

On 26 June 2008 Peter Godsoe retired as a Director of the Company and Hamish Buchan was appointed to the Board and as a member of the Audit Committee.

SHARE BUY BACKS

At the EGM held on the 13 June 2008, the proposal for a tender offer to purchase up to 30 % of the Company's Share Capital was approved.

The total number of shares successfully tendered at the price of 426.83p per share and subsequently cancelled was 141.8 million leaving 330.9 million shares in issue after the tender proposals were implemented.

            ANNUAL REPORT

The Annual Report to 30 April 2008 was approved by the Board on 26 June 2008 and released to the market on that date.

DIVIDEND

The Company's Ordinary Shares went XD on 27 August 2008. Subject to shareholder approval at the AGM on 25 September 2008, the Company will pay a final dividend of 3.50 pence per share on 1 October 2008.

ANNUAL GENERAL MEETING

The Board invites and would encourage shareholders to attend the forthcoming Annual General Meeting on 25 September 2008 at 12 noon at Stationer's Hall, Ave Maria Lane, London EC4M 7DD.

            INVESTMENT PORTFOLIO UPDATES

The Board is committed to providing shareholders with enhanced information regarding how the Investment Manager is managing the portfolio and current market views. By the end of September, the Company's website will have the facility for shareholders to request an email alert of the latest portfolio information updates and stock exchange announcements. Announcements of any other investment information will be also be made on the website - www.temit.co.uk.

NET ASSET VALUE RELEASE

In accordance with AIC recommendations and in order to provide greater clarity to the Market regarding the basis of the Net Asset Value ("NAV") calculation, the Company took the decision, with effect 19 June 2008 to show both the Cum Income and Ex Income NAV in the daily stock exchange announcements.

PORTFOLIO CHANGES

The Manager reports the following principal changes in the portfolio:

Top Purchases

Vtech Holdings- Hong Kong - Communications equipment

Vtech is one of the world's major manufacturers and distributors of cordless telephones and other telecommunication products based in Hong Kong. The company is steadily gaining market share in cordless phones and electronic learning products.

Sesa Goa - India - Steel

Sesa Goa is one of the biggest exporters of iron ore in India. The company is a beneficiary of firm iron ore prices and the ongoing consolidation of the global mining sector.

Tata Consultancy - India - IT consultancy & other services

Tata Consultancy Services is India's oldest and largest IT consulting and services firm. Tata Consultancy is one of the most efficient IT consulting firms globally and is well positioned to benefit from the increasing outsourcing activities from abroad. 

Aluminum Corporation of China (Chalco) - China - Aluminium

Chalco is China's leading producer of alumina and primary aluminium products. Despite short-term setbacks due to the recent snow storm and electricity shortages, the company is well positioned to benefit from the ongoing sector consolidation and continuing demand growth.

Mediatek - Taiwan - Semiconductors

Mediatek is a premier integrated circuit design company in Taiwan which specialises in wireless communications and digital media solutions. Mediatek is well positioned to benefit from strong demand growth and steadily improving efficiency.

Top Sales

Yanzhou Coal Mining - China - Coal and consumable fuels

Yanzhou is the largest coal producer in Eastern China. It is also the biggest coal exporter as well as one of the most profitable coal producers in China.  There may be regulatory risks to the average selling prices and shares were sold.

Copel - Brazil - Independent power producers

An integrated electric utility in Brazil that serves the Parana region. The company has assets in the generation, transmission and distribution areas.  Shares were sold to realise gains and reduce the high country weighting.

SK Holdings - South Korea - Oil & Gas refining & marketing

SK Holdings is the holding company of South Korea's SK Group.  The Investment Manager prefers its listed subsidiary, SK Energy, as further restructuring seems limited in SK Holding.

Souza Cruz - Brazil - Tobacco

A leading tobacco company in Brazil. Shares were sold to realise gains and reduce the high country weighting.

Eletrobras - Brazil - Electric Utilities

A principal electricity utility in Brazil, Eletrobras derives earnings from power generation and transmission. Shares were sold to realise gains and reduce the high country weighting.

 Country Allocation

	% of net assets as at 31 July 2008
LATIN AMERICA
Brazil (including US listings)	24.4
Mexico (including US listings)	0.1
ASIA
China	16.8
South Korea	8.3
Thailand	7.9
India	7.2
Indonesia	3.1
Taiwan	1.6
Pakistan	1.1
EUROPE
Russia (including US listings)	10.0
Turkey	9.2
Poland	3.0
Hungary	2.4
Austria	1.8
Sweden	0.3
AFRICA (SUB-SAHARA)
South Africa	1.2
TEMIT's other current assets:-	1.6
	100.0

Sector Analysis

	% of net assets as at 31 July 2008
Integrated Oil & Gas	24.2
Diversified Banks	22.3
Diversified Metals & Mining	11.4
Oil & Gas Refining & Marketing	8.4
Construction & Engineering	4.6
Aluminium	4.4
Automobile Manufacturers	3.7
Wireless Telecommunication	3.4
Oil & Gas Exploration & Production	3.1
Food Retail	2.2
Communication Equipment	2.1
Steel	1.8
IT Consulting & Other Services	1.3
Casinos & Gaming	1.1
Semiconductors	1.0
Construction Materials	0.9
Homebuilding	0.5
Consumer Finance	0.4
Personal Products	0.3
Tobacco	0.3
Oil & Gas Equipment & Services	0.2
Apparel Accessories & Luxury Goods	0.2
Electric Utilities	0.2
Industrial Machinery	0.2
Household Products	0.1
Real Estate Management & Developement	0.1
TEMIT's other current assets:-	1.6
	100.0

Top Ten Holdings

Country	Security	Industry	% of net assets as at 31 July 2008
Brazil	Companhia Vale do Rio Doce	Diversified Metals & Mining	6.8
Brazil	Unibanco - Uniao de	Diversified Banks	6.3
	Bancos Brasileiros SA, GDR
Brazil	Petroleo Brasileiro SA, ADR	Integrated Oil & Gas	5.5
Brazil	Banco Bradesco SA, ADR	Diversified Banks	5.4
Turkey	Akbank	Diversified Banks	4.4
South	Hyundai Development Co.	Construction	4.4
Korea		& Engineering
China	China Petroleum and Chemical Corp	Integrated Oil & Gas	4.0
China	PetroChina Co Ltd	Integrated Oil & Gas	3.6
Russia	Gazprom	Integrated Oil & Gas	3.6
Turkey	Tupras-Turkiye Petrol Rafineleri	Oil & Gas	2.8
		Refining & Marketing

The securities used to calculate the percentage of total assets figures in the above Country, Sector and Top Ten tables have all been valued on a bid price basis.

This Interim Management Statement has been produced solely to provide additional information to shareholders of the Company as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purposes. In addition, the views, information and data in this publication should not be deemed as a financial promotion or recommendation.

Other than described above, the Board is not aware of any events during the period from 1 May 2008 to the date of this statement, which would have had a material impact on the financial position of the Company.
 
Issued on behalf of the Board
Sara A MacIntosh
for and behalf of Franklin Templeton Investment Management Limited
Secretary 
Date: 19 September 2008

End of interim management statement

For further information please contact Client Dealer Services at Franklin Templeton Investment Management Limited on freephone 0800 305 306 or Joe Winkley at UBS Limited 0207 567 8000.

 

END

 

 

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