Interim Management Statement

RNS Number : 1492Y

Templeton Emerging Markets IT PLC

27 August 2009

 



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

Interim Management Statement

For the three months ended 31 July 2009

This interim management statement relates to the period 1 May 2009 to 31 July 2009 and is the Company's first interim management statement for the eleven month financial period ending 31 March 2010, 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 Jul 2009 (unaudited)	As at  30 Apr 2009
Total assets (Cum-income)	£1,430m	£1,208m
Total assets (Ex-income)	£1,423m	£1,180m
Net asset value (Cum-income)	433.2p	365.7p
Net asset value (Ex-income)	431.0p	357.2p
Share price	398.0p	340.5p
Discount (Cum-income)	8.1%	6.9%
Discount (Ex-income)	7.7%	4.7%

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

Performance to 31/07/09 Share price Net asset value MSCI Emerging Market Index S&P/IFCI Composite Index

1 Month % +8.2 +11.1 +10.6 +10.1

3 Months % +18.1 +19.0 +15.0 +14.9

1 Year % +3.3 +1.9 -0.3 -0.3

3 Years % +16.5 +13.8 +10.8 +10.9

5 Years % +25.6 +23.1 +20.2 +20.9

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

Year to 31 Jul 2009 % +3.3 +1.9 -0.3 -0.3

Year to 31 Jul 2008 % +0.2 -0.2 -1.6 -2.4

Year to 31 Jul 2007 % +52.7 +45.2 +38.7 +40.3

Year to 31 Jul 2006 % +24.6 +26.4 +21.5 +23.4

Year to 31 Jul 2005 % +58.7 +51.6 +51.9 +53.2

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 AND OUTLOOK

     Market volatility eased in the three-month period ended July 2009 as a return of confidence in emerging markets equities led to significant fund inflows into the asset class during the period.  Templeton Asset Management Limited (the Investment Manager) believes that the longer-term outlook for emerging markets remains positive due to their relatively strong fundamental characteristics and faster growth than their developed counterparts. While some emerging economies contracted in early 2009, most are expected to return to positive growth by the end of 2009 or 2010.  In the face of the global economic slowdown, the major markets of China and India continue to record exceptionally robust growth rates. The accumulation of foreign exchange reserves also puts emerging economies in a much stronger position to weather external shocks. Moreover, an important and strong contributor to growth in emerging markets has been the growing middle class. Emerging markets account for more than 80% of the world's population, providing them with a strong purchasing power and the ability to spend their way into growth.  At the forefront are markets such as China, India and Brazil. Another area that is poised to support economic growth in emerging markets is investment, particularly in infrastructure. This is another area in which we have seen governments boost public spending in markets such as China and India.

Between 1 May 2009 and 31 July 2009, the net asset value (Cum-income) of the Company increased by 18.5% to 433.2 pence. 

MATERIAL EVENTS AND TRANSACTIONS

ANNUAL GENERAL MEETING

This year the Company's Annual General Meeting took place on Friday 17 July 2009. It is the Company's intention to hold future AGMs in July. The Company's accounting year end has been changed to 31 March with effect from 31 March 2010.

At the AGM the following resolutions were approved by shareholders, either by Proxy or in Person:

• The Directors' and Auditors' Reports and Financial Statements and the Directors' Remuneration Report for the year ended 30 April 2009 were received and adopted.

• Neil A Collins and Gregory E Johnson were reappointed as Directors.

• Deloitte LLP were appointed as the Company's Auditors.

• Both an ordinary and a special dividend were approved.

• Directors were given the authority to determine the Auditors' remuneration.

Shareholders also voted in favour of the Company continuing as an investment trust for the next five years (in accordance with the Articles of Association). They also gave the Company the authority to make market purchases of up to 14.99 percent of the Company's shares in issue as at the date of the AGM as appropriate and to maintain the minimum notification period for general meetings at 14 days.

SHARE BUY BACKS

During the three month period to 31 July 2009, the Company bought back and cancelled 287,000 shares (0.08% of the issued share capital) for a total consideration of £1 million.

DIVIDEND

The Company's Ordinary Shares went XD on 17 June 2009. Shareholder approval of the proposed dividends was received at the AGM and the Company paid a final ordinary dividend of 3.75 pence per ordinary share and a special dividend of 2.50 pence per ordinary share on 22 July 2009.

    INVESTMENT PORTFOLIO UPDATES AND OTHER COMPANY NEWS

The Company has continued its efforts to keep shareholders informed about their investments in TEMIT. The Investment Manager held quarterly portfolio update calls on Monday 27 April and Friday 31 July 2009. Recordings and written transcripts of these calls are available from the Company's website - www.temit.co.uk.

At the AGM, the Investment Management team gave a presentation to shareholders.  In addition, meetings were set up with professional financial advisers and journalists in a continued effort to raise interest in TEMIT.

Stock Exchange Announcements, Quarterly Managers Report's, Factsheets and Investment Manager's Commentaries are sent to subscribers to the email service on the Company website. The website is also updated daily with the latest prices and Company news.

   PORTFOLIO CHANGES

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

Top Purchases (total value £22.9m)

Wal-Mart de Mexico - Mexico - Food Retail

Wal-Mart de Mexico (Walmex) is the largest retailing chain in Mexico. Walmex is in a strong position to benefit from continued demand for its staple products, food and clothing. The company also has a solid growth potential based on good demographics and market share gains.

Impala Platinum - South Africa - Precious Metals & Minerals

Impala Platinum is one of the leading platinum producers in the world and is responsible for approximately a quarter of global platinum production. As one of the most efficient and lowest cost producers in the world, it is also well positioned to benefit from the longer-term up trend in commodity prices.

Peninsula Land - India - Real Estate Management & Development

Peninsula Land is an Indian real estate developer based in the major city of Mumbai. Given the scarce supply of commercial space in the Central and Southern Mumbai business districts, the group's commercial projects have been well received. The company remains attractive due to its share price discount to net book value.

Polnord - Poland - Real Estate Management & Development

A real estate developer in Poland, Polnord has the largest and most diversified land bank in the country. Holdings were increased because of the large share price discount to the net asset value per share.

Top Sales (total value £40.5m)

Mediatek - Taiwan - Semiconductors

Mediatek is the largest integrated circuit design company in Taiwan. Exposure to Mediatek was eliminated due to the recent share price rally ahead of the good quarterly results and thus the opportunity to switch into cheaper stocks.

Mobile Telesystems - Russia - Wireless Telecommunications Services

Mobile Telesystems is the dominant mobile services provider in Russia. The Company divested its holdings in the Mobile Telesystems because of the execution risks associated with its penetration into overseas markets. 

Compal Communications - Taiwan - Communications Equipment

The largest handset manufacturer in Taiwan, exposure to Compal Communications was reduced due to intensive competition and the weakening market position of one of its major customers. 

Siam Cement - Thailand - Industrial Conglomerates

Siam Cement is the largest industrial conglomerate in Thailand. Holdings were decreased because the pending expansion of petrochemical production in the Middle East may drive product prices lower.

Geographic Allocation

	% of net assets as at 31 Jul 2009	% of net assets as at 30 Apr 2009
LATIN AMERICA
Brazil (including US listings)	20.6	21.7
Mexico	1.7	0.9
ASIA
China / Hong Kong	21.7	21.2
India	11.6	8.6
Thailand	9.2	9.1
South Korea	6.8	8.3
Indonesia	6.0	5.2
Pakistan	0.7	1.0
Taiwan	0.5	2.2
EUROPE
Turkey	6.9	6.5
Russia (including US listings)	5.6	7.4
Poland	1.7	1.8
Hungary	1.2	1.1
Austria	1.2	1.3
AFRICA (SUB-SAHARA)
South Africa	2.7	2.0
TEMIT's other current assets	1.9	1.7
	100.0	100.0

Sector Allocation

	% of net assets as at 31 Jul 2009	% of net assets as at 30 Apr 2009
Financial	25.4	24.5
Energy	21.4	24.0
Materials	19.8	17.3
Consumer Discretionary	11.0	8.0
Utilities	5.7	6.0
Industrials	4.9	5.4
Information Technology	3.6	4.3
Consumer Staples	3.6	4.8
Telecommunication Services	2.7	4.0
TEMIT's other current assets	1.9	1.7
	100.0	100.0

Top Ten Holdings

Country	Security	Sector	% of net assets as at  31 Jul 2009	% of net assets as at  30 Apr 2009
Brazil	Itau Unibanco Banco Multiplo SA, ADR	Financial	5.8	6.0
Turkey	Akbank TAS	Financial	5.3	4.9
Brazil	Companhia Vale do Rio Doce ADR	Materials	5.3	5.7
Brazil	Petroleo Brasileiro SA, ADR	Energy	4.8	5.1
Brazil	Banco Bradesco SA, ADR	Financial	4.7	5.0
India	Sesa Goa Ltd.	Materials	4.3	2.6
South Korea	Hyundai Development Co.	Industrials	3.9	4.6
China	Aluminium Corp. of China Ltd., H	Materials	3.8	3.3
China	PetroChina Co Ltd., H	Energy	3.8	3.8
Hong Kong	Dairy Farm International Holdings Ltd.	Consumer Staples	3.6	3.8

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

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.

Other than described above, the Board is not aware of any events during the period from 1 May 2009 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: 27th August 2009

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.

 

END

 

 

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