Interim Management Statement

RNS Number : 4021K

Templeton Emerging Markets IT PLC

29 July 2013

 



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

Interim Management Statement

For the three months ended 30 June 2013

The interim management statement relates to the period 1 April 2013 to 30 June 2013 and is the Company's first interim management statement for the financial year 31 March 2014, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.

INVESTMENT OBJECTIVES

Summary of Investment Objective

TEMIT seeks long-term capital appreciation for its investors through investment in companies operating in emerging markets or whose stocks are listed in the stock markets of such countries.

Company Characteristics (as at 30/06/2013)		Pricing Information (as at 30/06/2013)
Launch Date	12/06/1989	NAV (Cum-Income)	618.2p
Benchmark	MSCI Emerging Market (£)	NAV (Ex-Income)	613.3p
Lead Manager	Mark Mobius	Share Price	553.5p
Total Net Assets	£2,019m	Discount to NAV (Cum-Income)	-10.5%
Market Capitalisation	£1,807m	Discount to NAV (Ex-Income)	-9.8%
Gearing	0%	Current Yield (net)	1.0%
Invested Assets	99.9%	For the year to 30 June 2013
Ongoing Charge Ratio (OCR)	1.30%	Highest NAV (Cum- Income)	743.2p
		Lowest NAV (Cum-Income)	556.6p
		Highest Share Price	678.0p
		Lowest Share Price	513.0p

Share price is at the UK market closing mid price.

Net asset value is closing bid prices.  Assets are priced at local close or adjusted for fair value at US market close.  Further information can be found at www.temit.co.uk. 

Ratings

Morningstar^TM Workstation Category: Global Emerging Markets Equity

Morningstar^TM Overall Rating: 

INVESTMENT PERFORMANCE

For the three months to 30 June 2013, TEMIT's share price decreased  by 12.6% compared to the MSCI Emerging Markets Index, which decreased by 7.9%¹. Please note that past performance is not a guide to future performance.

Cumulative Performance (%)¹

30 June 2013

	3 Mths %	6 Mths %	Calendar Year to Date %	1 Year %	3 Years %	5 Years %	10 Years %	*Since 31/07/89 %
TEMIT (Share Price)    - annualised	-12.6	-4.6	-4.6	+5.0	+7.9 +2.6	+44.4 +7.6	+438.6 +18.3	+1,790.6 +13.1
TEMIT (NAV)    - annualised	-10.8	-3.1	-3.1	+8.3	+13.3 +4.3	+49.4 +8.4	+389.1 +17.2	+2,245.8 +14.1
MSCI Emerging Markets Index    - annualised	-7.9	-2.9	-2.9	+6.8	+10.1 +3.2	+30.5 +5.5	+304.0 +15.0	+972.5 +10.4

* The first available NAV was calculated as at 31/07/89.  NAV, share price and index performance are all calculated from this date.

1. Please see end of document for glossary and important information

Discrete Annual Performance (%)¹

To end of June each year

	30/06/12 to 30/06/13	30/06/11 to 30/06/12	30/06/10 to 30/06/11	30/06/09 to 30/06/10	30/06/08 to 30/06/09
TEMIT (Share Price)	+5.0	-17.2	+24.1	+44.5	-7.4
TEMIT (NAV)	+8.3	-16.9	+25.9	+44.5	-8.7
MSCI Emerging Markets Index	+6.8	-13.7	+19.4	+35.9	-12.8

1. Please see end of document for glossary and important information

INVESTMENT MANAGER'S MARKET COMMENTARY AND OUTLOOK

Emerging equity and bond markets experienced increased volatility in the second quarter of 2013, leading to strong fund outflows and a decline in prices. Emerging markets recorded outflows in excess of US$30 billion during the quarter; June alone accounted for more than US$20 billion of the flows. Indications of a moderation in the US Federal Reserve's asset purchase program by Federal Reserve Chairman Ben Bernanke and improved macroeconomic data from the US triggered a sell-off in the bond market, leading market sentiment to turn negative. The rise in volatility in the bond market led to a sharp sell-off across the board in emerging market debt, currencies and equities. Signals from the People's Bank of China that it would not intervene in the market after a sharp spike in a key interbank lending rate in June raised concerns about the stability of the banking sector, further heightening investor concerns. Markets with a high current account deficit, large foreign holdings of local bonds and exposure to China were among the worst affected.

Between 31 March 2013 and 30 June 2013, the net asset value of the Company decreased by 12.0% to 618.2 pence and returned -10.8% including dividends reinvested. However, the Investment Manager (Templeton Asset Management Ltd.) continues to see emerging markets benefiting from relatively good growth prospects, attractive valuations and solid fundamentals and will continue to monitor the markets for favourable investment opportunities.

Emerging markets are like other markets around the world - they can be volatile and dominated by excessive flows and sudden changes of sentiment, but our long-term focus has enabled our team to take advantage of these markets' volatility. We believe that the strong prospects for growth in many emerging markets are not currently recognised in equity valuations that generally lag those of world markets.

While markets have been weak this year, it is important to note that emerging markets have three outstanding characteristics. First, the growth rates for emerging markets remain well in excess of those for developed markets. We expect an average GDP growth of 5.4% for emerging markets, compared to just 1.1% for developed markets. Second, emerging markets have enormous and growing foreign exchange reserves, which are far greater than that of developed markets. Moreover, unlike developed markets, many emerging and frontier markets still have ample room for fiscal and monetary stimulus. Although weak growth in developed markets could be transmitted to emerging markets, notably through declines in world trade, this influence could continue to be offset in emerging markets by higher investment spending and increased domestic demand. Third, the debt level of emerging markets in relation to their GDP is generally much lower than that of developed markets.

INVESTMENT PORTFOLIO

TEMIT Holdings

10 Largest Equity Issuers²

30 June 2013

Issuer	Sector	Country	Total Assets (%) 30/06/13	Total Assets (%) 31/03/13
Brilliance China Automotive Holdings Ltd.	Consumer Discretionary	Hong Kong/China	9.7	8.9
Tata Consultancy Services Ltd.	Information Technology	India	5.0	5.0
Dairy Farm International Holdings Ltd.	Consumer Staples	Hong Kong/China	4.9	4.4
Siam Commercial Bank PCL, fgn.	Financial	Thailand	4.6	4.4
PT Astra International Tbk	Consumer Discretionary	Indonesia	4.4	4.4
VTech Holdings Ltd.	Information Technology	Hong Kong/China	4.1	2.8
Banco Bradesco SA, ADR, pfd.	Financial	Brazil	4.1	4.7
Itau Unibanco Holding SA, ADR	Financial	Brazil	4.0	4.4
Akbank T.A.S.	Financial	Turkey	3.9	4.5
Kasikornbank Public Co. Ltd, fgn	Financial	Thailand	3.4	3.4

2. Please see end of document for glossary and important information

The securities above used to calculate the NAV have been valued on a bid basis. The valuation of the assets is as at each local market close or, where appropriate, adjusted for changes in the fair value of these assets at US close.

Largest Contributors and Detractors to Performance (% contribution in GBP)

31 March 2013- 30June 2013

Top Security Contributors²

Security	Sector	Country	Contribution (%)
VTech Holdings Ltd.	Information Technology	Hong Kong/China	0.6
MCB Bank Ltd.	Financial	Pakistan	0.3
Guangzhou Automobile Group Co. Ltd.	Consumer Discretionary	Hong Kong/China	0.1
OMV AG.	Energy	Austria	0.1
MOL Hungarian Oil and Gas Nyrt.	Energy	Hungary	0.1

2. Please see end of document for glossary and important information

Top Security Detractors²

Security	Sector	Country	Contribution (%)
Banco Bradesco SA, ADR, pfd.	Financial	Brazil	-1.1
Akbank T.A.S.	Financial	Turkey	-1.0
Itau Unibanco Holding SA, ADR	Financial	Brazil	-0.9
Vale SA, ADR, pfd.	Material	Brazil	-0.9
Compania De Minas Buenaventura SA.	Material	Peru	-0.9

2. Please see end of document for glossary and important information

Investment portfolio updates

The Investment Manager reports the following principal changes in the portfolio:

Purchases

TEMIT undertook six purchases in existing holdings for a total consideration of £72 million during the quarter to 30 June 2013.

Vale (existing holding) is one of the world's largest iron ore producers. These companies are beneficiaries of the strong demand growth in emerging markets and the long-term uptrend in commodity prices. 

Impala Platinum (existing holding) is one of the leading platinum producers in the world.

Gazprom (existing holding) is the largest producer of gas in the world by reserves and production. TEMIT increased its exposure to the company because of its attractive valuations, huge reserve base and growing energy demand in emerging markets.

Compania De Minas Buenaventura SA (existing holding) is the largest precious metals company in Peru and a major holder of mining rights in the country.

 Infosys (existing holding) is a leading IT consulting company. We believe that IT outsourcing is an attractive and growing industry and that the company is a well placed to benefit from this growth.

Anglo American Plc (existing holding) is one of the largest diversified mining companies in the world.

Sales

During the quarter to 30 June 2013, TEMIT undertook two sales for a total consideration of £62 million.

Polski Koncern Naftowy Orlen SA (complete disposal) is a Polish oil company, and TEMIT sold off its entire holdings during the period.

Bank Central Asia (partial sale)is an Indonesian bank and sales were undertaken during the period, allowing TEMIT to realise gains.

Performance Attribution for the period 1 April 2013 to 30 June 2013

Overweight positions in VTech Holdings in Hong Kong, MCB Bank in Pakistan and Brilliance China Automotive in China were among the key performance contributors relative to the benchmark MSCI Emerging Markets Index. In terms of sectors, superior stock selection in technology hardware and equipment, and capital goods were among the largest contributors. An overweight exposure to the automobiles and components also supported performance.  Geographically, the leading contributors to performance were the portfolio's overweight position in Pakistan and good stock selection in Hong Kong. Conversely, the top three stock detractors were the result of overweight positions in Buenaventura in Peru, Akbank in Turkey and Banco Bradesco in Brazil. By sector, the banking and materials sectors resulted in the largest negative attribution effects. A zero exposure to telecommunication services also detracted. In our geographic analysis, a zero exposure to Taiwan detracted from performance. Moreover, investments in Brazil, Turkey and Peru underperformed.

Portfolio Turnover Rate³

12 months to 30 June 2013

	Turnover Rate (%)
Portfolio Turnover Rate (annualised)	10.0

3. Please see end of document for glossary and important information

Market Capitalisation Breakdown (%)³

As at 30 June 2013

	Less than £1.5bn	£1.5bn to £5bn	Greater than £5bn
Market Capitalisation	6.9	30.4	62.7

3. Please see end of document for glossary and important information

Split Between Markets⁴

30 June 2013

		% Split
Emerging Markets	95.7	Frontier Markets	3.1	Developed Markets*	1.2

4. Please see end of document for glossary and important information

*Developed markets exposure represented by Austria

Sector Information                                                                                

Sector Weightings vs. Benchmark (%)⁴                                                                    Sector Overweights/Underweights vs. Benchmark (%)⁴

As at 30 June 2013                                                                   As at 30 June 2013

Sector	TEMIT (%)	MSCI Emerging Markets Index (%)		Sector	Under Benchmark (%)	Over Benchmark (%)
Financial	30.1	27.7		Energy	8.7
Energy	20.1	11.4		Consumer Discretionary	8.7
Consumer Discretionary	17.0	8.3		Materials	2.5
Materials	12.0	9.5		Financial	2.4
Information Technology	10.1	14.5		Healthcare		-1.5
Consumer Staples	7.8	9.4		Consumer Staples		-1.7
Industrials	2.8	6.3		Utilities		-3.3
Healthcare	0.0	1.5		Industrials		-3.5
Telecommunications Services	0.0	7.9		Information Technology		-4.4
Utilities	0.0	3.3		Telecommunications Services		-7.9

4. Please see end of document for glossary and important information

Largest Contributors and Detractors to Performance⁵ (% contribution in GBP)

31 March 2013- 30 June 2013

Top Sector Contributors                        Top Sector Detractors        

Sector	Contribution (%)		Sector	Contribution (%)
Information Technology	0.1		Financial	-4.2
			Materials	-3.0
			Energy	-2.2
			Consumer Discretionary	-0.6
			Consumer Staples	-0.3

5. Please see end of document for glossary and important information

Geographic Information

10 Largest Company Weightings vs. Benchmark (%)⁴                            Regional Weightings vs. Benchmark (%)⁴

As at 30 June 2013                                                                    As at 30 June 2013

Country	TEMIT (%)	MSCI Emerging Markets Index (%)		Region	TEMIT (%)	MSCI Emerging Markets Index (%)
Hong Kong / China	27.6	18.2		Asia	68.4	62.5
Thailand	14.9	2.8		L. America/Caribbean	17.0	20.3
Brazil	12.8	11.3		Europe	12.4	9.7
India	9.7	6.8		Mid-East/Africa	2.2	7.5
Indonesia	8.9	3.2
Turkey	6.3	1.9
South Korea	4.3	14.6
Russia	3.7	5.8
Pakistan	3.0	0.0
Mexico	2.2	5.4

4. Please see end of document for glossary and important information

Largest Contributor and Detractors to Performance⁵ (% contribution in GBP)

31 March 2013- 30 June 2013

Top Country Contributors                      Top Country Detractors

Country	Contribution (%)		Country	Contribution (%)
Pakistan	0.4		Brazil	-3.2
Austria	0.1		Turkey	-1.3
Hungary	0.1		Indonesia	-1.0
			India	-1.0
			Thailand	-1.0

5. Please see end of document for glossary and important information

Statistics

(Please refer to the glossary at the end of the document for definitions of these items)

Fundamental Portfolio Characteristics⁶

30 June 2013

	Price to Earnings	Price to Book Value	Price to Cash Flow	Dividend Yield	Average Market Cap (Millions)
TEMIT (Weighted Average)	11.4x	1.5x	7.2x	2.8%	£16,162
MSCI Emerging Markets Index (Weighted Average)	11.4x	1.5x	5.9x	2.9%	£26,811

6. Please see end of document for glossary and important information

Risk Statistics - TEMIT Market Value Total Return vs MSCI Emerging Markets Index ⁷ (in GBP)

30 June 2013

Risk Statistics	1 Year	3 Years (annualised)		Risk Statistics	1 Year	3 Years (annualised)		Risk Statistics	1 Year	3 Years
Alpha	-2.77	-0.64		R2	0.82	0.90		Maximum Gain	23.83	29.32
Beta	1.24	1.13		Sharpe Ratio	0.33	0.11		Maximum Loss	-15.19	-22.87
Annualised Downside Risk	4.51	4.16		Annualised Tracking Error	6.56	6.34		Negative Months	5	17
Information Ratio (Relative)	-0.26	-0.11		Annualised Volatility	14.25	19.35		Positive Months	7	19

7. Please see end of document for glossary and important information

Investment Style

•     The Investment Manager and his group use in-depth company research to find securities in any emerging market country or industry sector, regardless of company size, that they believe are undervalued by the market, but have the potential to increase in value over time.

•     TEMIT is actively managed, aiming to invest in those securities that the Investment Manager believes have the best potential to grow in value over a five year period. Although performance is measured against the MSCI Emerging Markets Index for reporting purposes, there is no requirement for the Investment Manager to invest in the same companies or in the same amount as the index. TEMIT's performance or portfolio positioning may therefore be very different to the index.

•     TEMIT invests in emerging markets; these markets can experience significant and sudden changes in price and can carry a higher degree of risk than developed markets. An investment in TEMIT should be considered as long-term.

The Investment Manager takes a long-term investment view, evaluating a company's potential for earnings and growth over a five-year horizon. The investment process includes continual in-person company visits and extensive fundamental research to model a company's potential future earnings, cash flow and asset value relative to its stock price, reviewing the portfolio's stock selection and risk management on an on-going basis. 

Investment Manager and Group

Mark Mobius, Ph.D., Executive Chairman, Templeton Emerging Markets Group.

The Templeton Emerging Markets Group is one of the pioneers of emerging market investing. Established in 1987, the Group has over 25 years of experience and now manages £35.3 billion in emerging markets assets for retail, institutional and professional investors across the globe (as at 31/03/13).

The Templeton Emerging Markets Group is one of the largest of its kind and has a presence in 18 offices around the world.

The Group includes 53 dedicated emerging markets portfolio managers, analysts and product specialists; senior members of the Group include Allan Lam, Tom Wu and Dennis Lim. Together on average, each of the Group's investment professionals has over 12 years of relevant industry experience, and has been with the company for over 9 years. Between them, the group speak 27 different languages (as at 31/03/13).

Investor Suitability

TEMIT may be appropriate for investors who want to invest in emerging markets and are willing to take some risk for the potential of strong capital growth over the long-term.

Emerging market companies can be more volatile than developed markets and an investment in TEMIT could occasionally change in value significantly over the short-term. Shareholders in TEMIT should therefore consider it as a long-term financial commitment.

Please refer to the latest annual report for more details of the risks associated with an investment in TEMIT.

COMPANY NEWS AND OTHER INFORMATION

Share Buy Backs

During the period, the Company bought back and cancelled 1,325,000 shares which amount to 0.2% of the issued share capital for a total consideration of £7,695,000.

Dividend

On 4 June 2013 the Company announced a proposed ordinary dividend of 6.25 pence per share which was approved at the AGM held on 12 July 2013 and paid on 17 July 2013.

AGM

At the Company's AGM, held on 12 July 2013, all the resolutions were passed and details of voting have been posted on the Company's website.

Communication with shareholders

In addition to the Annual Report which was sent to investors in June, the Company has continued its efforts to keep shareholders informed about their investment in TEMIT. On a monthly basis, a factsheet and an investment commentary are posted to the Company's website - www.temit.co.uk and a link is emailed to all subscribers to the TEMIT email service. The Interim Management Statement for the end of December was released to the London Stock Exchange on 11^th February 2013 and, along with the audio reports from the Investment Manager, was posted to the TEMIT website. A link to the report was also sent to those who have subscribed to the Company's email service. The website is also updated daily with the latest Stock Exchange announcements, share prices and any Company news.

Other than described above, the Board is not aware of any events during the period from 1 April 2013 to the date of this statement which would have had a material impact on the financial position of the Company.

This Interim Management Statement has been produced solely to provide additional information to shareholders of the Company 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.

Issued on behalf of the Board
Sara A MacIntosh
for and behalf of Franklin Templeton Investment Management Limited
Secretary

Date: 29 July 2013

End of interim management statement

For further information please contact Client Dealer Services at Franklin Templeton Investment Management Limited on UK freephone 0800 305 306 or [phone] for overseas investors.

GLOSSARY OF TERMS

Alpha - Alpha measures the difference between a portfolio's actual returns and its expected performance, given its level of risk (as measured by beta). A positive alpha means that the portfolio has over performed, a negative alpha means the portfolio has underperformed; for example, an alpha of 1.0 means the portfolio outperformed the market 1.0% (On a Risk adjusted basis).

Beta - Beta is a measure of a portfolio's sensitivity to market movements. It measures the relationship between a portfolio's excess return over an investment in a risk-free investment such as cash and the excess return of the benchmark index. For TEMIT, this is the MSCI Emerging Markets Index. By definition, the beta of the benchmark (in this case, an index) is 1.00. Accordingly, a portfolio with a 1.10 beta has performed 10% better (after deducting the cash rate) than the index in up markets and 10% worse in down markets, assuming all other factors remain constant. A portfolio with a high beta will tend to move more than the benchmark, a portfolio with a low beta will tend to move less.

Contributor -The amount an individual stock, country or sector has added to the performance of the entire portfolio for a given period.

Cumulative Performance -The percentage increase or decrease of a portfolio's share price or NAV over a given time period, with net income (dividends) reinvested. The fund's performance is usually benchmarked against either a relevant index or sector.

Detractor - The amount an individual stock, country or sector has subtracted from the performance of the entire portfolio for a given period.

Discrete Annual Performance -The percentage increase or decrease of a portfolio's share price or NAV over a complete 12 month period, with net income (dividends) reinvested. The fund's performance is usually benchmarked against either a relevant index or sector.

Dividend Yield - The yield a company pays out to its shareholders in the form of dividends. It is calculated by the dividends paid per share over a year divided by the stock's price. For a vehicle like TEMIT, which invests in a number of companies, this figure represents the weighted average annual dividend paid by all of the companies in which it invests. Because of share types, fees and other considerations, the dividend yield quoted here should not be used as an indication of the income to be received from this portfolio.

Downside Risk - Downside risk is shown as the semi-deviation of monthly return below the target return, which has been set as the monthly benchmark return.

Gearing - Gearing (sometimes described as leverage)- a term used to describe the process of borrowing money for investment purposes in the expectation that the returns on the investments purchased using the borrowings exceeds the costs of those borrowings. It illustrates the effect that current prior charges may have on the value of the shareholder funds if the total assets were to rise or fall. A figure of 115 means that the shareholder funds are 15% geared and indicates the extra amount by which the shareholder funds would rise or fall if the total assets were to rise or fall. A figure of 100 means there is no gearing.

Information Ratio - The Information Ratio represents the excess of the annualised portfolio return over the annualised benchmark return, divided by the Tracking Error, or standard deviation of excess monthly return.

Market Capitalisation - The total market value of a company's shares. For a vehicle like TEMIT, which invests in a number of companies, this is calculated by the share price on a certain date multiplied by the number of shares in issue.

Market Cap (average) - The weighted average of all the companies in which it invests.

MSCI Emerging Markets Index ("MSCI") - The MSCI is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets

NAV - Net Asset Value, or the total value of the portfolio at any one time, including all shares and cash, divided by the number of shares in issue.

Ongoing Charges Ratio ("OCR")  - From the year ending 31 March 2012, the Ongoing Charges Ratio ("OCR") replaces the Total Expense Ratio. Prior year numbers have not been restated as the ratios are not materially different. The OCR represents the annualised ongoing charges of the Company divided by the average daily net asset values of the Company for the year, and has been prepared in accordance with the AIC's recommended methodology.

Portfolio Turnover Rate- The frequency with which assets within a portfolio are bought and sold by the manager. Portfolio turnover is calculated by taking either the total amount of new securities purchased or the amount of securities sold - whichever is less - over a particular period, divided by the total Net Asset Value (NAV) of the portfolio. The measurement for a 12-month time period.  

Price to Book (P/B) - The price per share of a stock divided by its book value (i.e. net worth) per share. For a portfolio, the ratio is the weighted harmonic average price/book ratio of the stocks it holds.

Price to Cash Flow (P/CF)- Supplements price/earnings ratio as a measure of relative value; it represents a weighted harmonic average of the price/cash flow ratios for the underlying portfolio holdings.

Price to Earnings (P/E) - The share price of a stock, divided by its per-share earnings over the past year. For a portfolio, it is the weighted harmonic average P/E ratio of the stocks in the portfolio. P/E is a good indicator of market expectations about a company's prospects; the higher the P/E, the greater the expectations for a company's future growth in earnings.

R² - R² or R squared, is an indication of how closely aligned the portfolio and the benchmark index are. R² ranges between 0 and 1, with 0 indicating a lot of difference and 1 indicating a perfect match. A value of 0.7 and upwards generally suggests that a portfolio's performance is very closely linked to the performance of the benchmark index.

Share Price - The cost of a unit of ownership in a company as purchased through the stock exchange.

Sharpe Ratio - Sharpe Ratio judges whether the relationship between a portfolio's risk and its return is good or bad. The underlying assumption is that a portfolio manager could invest in a riskless asset (such as cash), therefore the return of the risk free asset is deducted from the annualised average return. This net return is then divided by the total risk (annualised volatility). The higher the ratio the better the return for investors for the risk taken.

Total Net Assets - The total value of a company's shares. For a vehicle like TEMIT, which invests in a number of companies, this is calculated by the Net Asset Value (NAV) on a certain date multiplied by the number of shares in issue.

Tracking Error - Tracking Error measures the volatility of the portfolio's excess return relative to the benchmark index. The lower the tracking error of the portfolio, the more it resembles the benchmark in terms of risk and return characteristics.

Trust - A Trust, or Investment Trust, is a closed ended vehicle investing in a wide variety of underlying investments. Investment Trusts are traded in exactly the same way as any other equity on the London Stock Exchange. The price at which they are traded (share price) depends on the demand for the shares in the investment trust and is often at a variance with the value of their underlying holdings (or NAV).

Volatility - This is a statistical measure of the amount of movement in the price of a share or portfolio over a given period of time. If a portfolio's share price hardly moves over time, it is said to have a low volatility. Volatility is a simple measure of the consistency of returns

IMPORTANT INFORMATION

1.     Source for NAV Performance: Franklin Templeton Investments as at 30/06/13. NAV Performance is calculated NAV-NAV, GBP, net of fund management fees. Source for share price and index is ©Morningstar as at 30/06/13. Performance is calculated in GBP net of UK basic rate tax. Past performance is not a guide to future performance. Emerging markets can carry a higher degree of risk than developed markets.

2.     For the "10 Largest Equity Issuers", please note that top ten equity holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. Holdings of the same issuers have been combined. The information provided is not a recommendation to purchase, sell, or hold any particular security. The securities identified do not represent TEMIT's entire holdings and in the aggregate may represent only a small percentage of such holdings. There is no assurance that securities purchased will remain in TEMIT, or that securities sold will not be repurchased.In addition, it should not be assumed that any securities mentioned were or will prove to be profitable. Stocks mentioned in this report are not a solicitation to purchase those stocks, and are for example purposes only.
The portfolio manager for TEMIT reserves the right to withhold release of information with respect to holdings that would otherwise be included in a top 10 holdings list.
"Top Security Contributors" and "Top Security Detractors" are holdings based on the last 3 months period and are calculated gross of investment management fees. These securities do not represent all the securities purchased, sold or recommended, and the reader should not assume that investment in the security listed was or will be profitable. Holdings are subject to change, holdings of the same issuer have been combined. The information provided is not a recommendation to purchase, sell or hold any particular security.
Source for "Top Security Contributors" and "Top Security Detractors": FactSet Research System, Inc. three months as at 30/06/13. Profile data is calculated as a percentage of total. Holdings of the same issuer have been combined.

3.     Source for "Portfolio Turnover Rate" and "Market Capitalisation Breakdown": Franklin Templeton Investments as at 30/06/13.

4.     Source for the Company's "Split Between Markets", "Geographic Information" and "Sector Information": Franklin Templeton Investments as at 30/06/13. Holdings of the same issuer have been combined. Weightings as percent of total. Source for the benchmark's "Geographic Information" and "Sector Information", MSCI, as at 30/06/13. Geographic split between "Emerging Markets", "Frontier Markets" and "Other" are as per MSCI index classifications. The MSCI Index, the primary benchmark for TEMIT, is an equity index calculated by Morgan Stanley Capital International (MSCI). The index measures the total return (gross dividends are reinvested) of equity securities available to foreign (nonlocal) investors in the relevant geographic region as reflected in the name of the index or as defined by MSCI. Securities included in the index are weighted according to their Free Float adjusted market capitalisation (Price*Shares outstanding*Foreign Inclusion Factor). Percentage may not equal 100% due to rounding.

5.     Source for Country and Sector "Largest Contributors and Detractors to Performance", FactSet Research System, Inc. as at 30/06/13. Profile data is calculated as a percentage of total. Holdings of the same issuer have been combined.

6.     Source for "Fundamental Portfolio Characteristics": FactSet Research System, Inc. as at 30/06/13. The Price to Earnings, Price to Cash Flow and Price to Book Value calculations shown herein use harmonic means. Market capitalisation statistics are indicated in the base currency for the portfolio presented.

7.     Source for "Risk Statistics": Franklin Templeton Investments as at 30/06/13. Total return, annualised ratios (30/06/13). "Downside Risk" measure used is annualised downside deviation relative to the benchmark (MSCI Emerging Markets Index)

Copyright © 2013 Franklin Templeton Investments. All rights reserved.

© 2013 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

All MSCI data is provided "as is." The portfolio described herein is not sponsored or endorsed by MSCI. In no event shall MSCI, its affiliates or any MSCI data provider have any liability of any kind in connection with the MSCI data or the portfolio described herein. Copying or redistributing the MSCI data is strictly prohibited.

The price of shares in TEMIT and income from them can go down as well as up and you may not get back the full amount that you invested.  Past performance is not a guide to future performance. Currency fluctuations will affect the value of overseas investments. When investing in a fund denominated in a currency other than sterling, your performance may also be affected by currency fluctuations. In emerging markets, the risks can be greater than in developed markets. TEMIT primarily invests in equities, which may result in the returns being more volatile than other investments such as cash or bonds.

This document does not constitute or form part of an offer for shares or an invitation to apply for shares. An investment in TEMIT entails risks which are described in the current Annual Report document. Please consult your professional adviser before deciding to invest. Performance figures are not based on audited financial statements and, unless indicated otherwise, assume reinvestment of interest and dividends. Data from third party sources may have been used in its preparation and Franklin Templeton Investments has not independently verified, validated or audited such data. A copy of the latest annual report and semi-annual report, if published thereafter can be obtained, free of charge, from Franklin Templeton Investments, The Adelphi,
1-11 John Adam Street, London, WC2N 6HT.

References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. The performance of the index does not include the deduction of expenses and does not represent the performance of any Franklin Templeton fund. The indices include a greater number of securities than those held in the portfolio.

Due to data limitations all equity holdings are assumed to be the primary equity issue (usually the ordinary or common shares) of each security's issuing company. This methodology may cause small differences between portfolio's reported characteristics and the portfolio's actual characteristics. In practice, Franklin Templeton's portfolio managers invest in the class or type of security which they believe is most appropriate at the time of purchase. The market capitalisation figures for both the portfolio and the benchmark are at the security level, not aggregated up to the main issuer. The dividend yield quoted here should not be used as an indication of the income to be received from this portfolio.

When comparing the performance of TEMIT with the benchmark index, it is important to note that the securities in which TEMIT invests may be substantially different than those represented by the benchmark index. Furthermore, an investment in TEMIT represents an investment in a managed investment company in which certain charges and expenses, including management fees, are applicable. These charges and expenses are not applicable to indices. Lastly, please note that indices are unmanaged and are not available for direct investment. Certain data and other information shown have been supplied by outside sources. While we consider that information to be reliable, we give no assurance that such data and information is accurate or complete.

For more information, UK investors should contact: Franklin Templeton Investments, The Adelphi, 1-11 John Adam Street, London WC2N 6HT.  Telephone: [phone], Email: [e-mail]. Issued by Franklin Templeton Investment Management Limited (FTIML). FTIML is authorised and regulated by the Financial Conduct Authority.

 

END

 

 

IMSKMGZNKLVGFZM