Preliminary Statement of Annual Results

RNS Number : 3004G

Templeton Emerging Markets IT PLC

04 June 2013

TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC

("TEMIT") (the "Company")

FINANCIAL SUMMARY

2012-2013

		Year ended		Year ended
		31 March		31 March		Change
	Ref.	2013		2012		%
Net Assets and Shareholders' Funds (£ million)		2,302.7		2,098.6		9.7
Net Asset Value (pence per share)		702.3		636.3		10.4
Net Asset Total Return	a	11.1	%	-10.8	%
Highest Net Asset Value (pence per share)		743.2		730.1
Lowest Net Asset Value (pence per share)		556.2		536.5
Benchmark
MSCI Emerging Markets Index Total Return		7.7	%	-8.2	%
Share Price (pence per share)		640.5		588.5		8.8
Share Price Total Return		10.0	%	-10.2	%
Highest Share Price (pence per share)		678.0		684.5
Lowest Share Price (pence per share)		505.0		497.0
Dividend (pence per share)	b	6.25		5.75		8.7
Revenue Earnings (pence per share)	c	8.45		7.91		6.8
Share Price Discount to Net Asset Value at end of the year		8.8	%	7.5	%
Average Share Price Discount to Net Asset Value over the year		8.3	%	6.8	%
Ongoing Charges Ratio		1.30	%	1.31	%

Source: Franklin Templeton Investments and Factset.

^aReturn based on accounting NAV.

^bA dividend of 6.25 pence per share on the Company's profits for the year ended 31 March 2013 has been proposed.

^cThe earnings per share figure is based on the earnings shown in the Revenue column in the Income Statement on page 54 and Note 5 of the Notes to the Financial Statements.

TEN YEAR RECORD

2003-2013

									Total
	Total Net					Earnings			Expense/
	Assets and					per			Ongoing
	Shareholders'			Share		share -	Dividend		Charges
	Funds		NAV	Price	Discount	undiluted	per share		Ratio^f
Year ended	(£m)		(pence)	(pence)	(%)	(pence)	(pence)		(%)
30 Apr 2003	595.5		130.8	107.3	18.0	1.70	2.25		1.49
30 Apr 2004	778.5		171.0	144.0	15.8	2.89	2.25		1.48
30 Apr 2005^a	1,066.0		198.9	167.3	15.9	3.42	2.67		1.50
30 Apr 2006	1,866.2		348.2	310.3	10.9	3.65	2.76		1.41
30 Apr 2007	1,925.5		359.2	327.3	8.9	4.16	3.13		1.32
30 Apr 2008	2,291.4		484.8	438.0	9.6	4.07	3.50		1.33
30 Apr 2009	1,208.3	^b	365.7	340.5	6.9	7.69	3.75	^c	1.34
31 Mar 2010^d	2,046.4		620.3	577.0	7.0	2.88	3.75		1.29
31 Mar 2011	2,368.4		718.0	660.0	8.1	6.14	4.25		1.31
31 Mar 2012	2,098.6		636.3	588.5	7.5	7.91	5.75		1.31
31 Mar 2013	2,302.7		702.3	640.5	8.8	8.45	6.25	^e	1.30

TEN YEAR GROWTH RECORD

(rebased to 100.0 at 30 April 2003)

2003-2013

					MSCI	Earnings
		NAV		Share	Emerging	per
		total	Share	price	Markets Index	share -	Dividend
Year ended	NAV	return^g	Price	total return^g	total return^g	undiluted	per share
30 Apr 2003	100.0	100.0	100.0	100.0	100.0	100.0	100.0
30 Apr 2004	130.7	132.1	134.2	135.5	138.4	170.0	100.0
30 Apr 2005^a	152.1	154.2	155.9	160.0	159.4	201.2	118.7
30 Apr 2006	266.2	273.0	289.2	300.5	272.8	214.7	122.7
30 Apr 2007	274.6	283.7	305.0	320.3	293.1	244.7	139.1
30 Apr 2008	370.6	385.4	408.2	432.4	372.1	239.4	155.6
30 Apr 2009^b	279.6	292.5	317.3	339.2	284.9	452.4	166.7	^c
31 Mar 2010^d	474.2	505.2	537.7	584.8	433.1	169.4	166.7
31 Mar 2011	548.9	587.7	615.1	673.4	486.9	361.2	188.9
31 Mar 2012	486.5	524.2	548.5	604.5	446.8	465.3	255.6
31 Mar 2013	536.9	582.6	596.9	665.2	481.1	497.1	277.8	^e

^a Prior to April 2005 the results have been prepared in accordance with UK GAAP. The results for the year ended 30 April 2005 and subsequent reporting periods have been prepared in accordance with IFRS. The main differences as a result of adopting IFRS are that investments are valued on a bid basis, as opposed to a mid basis, and only dividends paid during the year are reflected in the Financial Statements.

^b The results for the year ended 30 April 2009 reflect £633m returned to the shareholders as a result of the tender offer in 2008.

^c Excludes the special dividend of 2.50p per share in 2009.

^d 11 months to 31 March 2010.

^e A dividend of 6.25 pence per share on the Company's profits for the year ended 31 March 2013 has been proposed. f 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. g Includes dividends re-invested.

CHAIRMAN'S STATEMENT

Key Points

● NAV was 702.3 pence per share, an increase of 11.1% (dividend re-invested) compared to the Benchmark (MSCI Emerging Markets Index) which increased 7.7% (total return in sterling).

● Share price was 640.5 pence, a rise of 8.8%, giving a total return of 10.0% (dividend reinvested).

● Earnings per share of 8.45 pence (up 6.8%)

● Proposed dividend of 6.25 pence per share, an increase of 8.7%

Performance and the investment portfolio

The Eurozone crisis has dominated the global economy for the last two years and emerging markets have not been unaffected. In the first quarter of the accounting year under review, negative sentiment continued to weigh on returns. However, as I reported in the Half Yearly Report, the end of June was a turning point as European governments agreed to recapitalise struggling banks and work towards tighter budgetary and political union. Since then we have witnessed three positive quarters and, as is pointed out in the Manager's Report, there was a large inflow of cash into emerging markets equities. I am pleased to report that the results for the year show a net asset value total return of 11.1% and a share price total return of 10.0%, both of which were, by a good margin, ahead of the benchmark, itself delivering a total return of 7.7%. On 24 May, the latest date for which information was available, the NAV per share and share price had fallen by 0.6% to 698.1 pence and by 2.3% to 626.0 pence respectively.

While an Annual Report necessarily focuses on the year under review, we should remember that TEMIT is managed as a long-term investment vehicle. Over the last ten years, the Company has delivered a total return of 541% (dividends re-invested), which represents a compound growth rate of 20.4% per annum. Over the same period our benchmark, the MSCI Emerging Markets Index, returned 418% (17.9% per annum). Since its launch in 1989 the Company has delivered a total return of 2,530% (dividends re-invested), which represents a compound growth rate of 14.8% per annum, compared with a return of 1,064% (10.9% per annum) by the benchmark.

Peter A Smith (Chairman)

The Investment Manager's investment philosophy is to seek value through a disciplined, yet flexible, long-term approach. This disciplined investment style allows the Investment Manager to look through volatility, short term effects of news, noise and emotion and it is this which has driven the excellent returns which have been generated since 1989. As a consequence, our short term performance may diverge from the benchmark index. The Company remains exposed to currency movements and does not hedge this risk. Indeed, 2.3% of the year's total return of 11.1% arose from the depreciation of sterling against other currencies. The portfolio holdings remain very stable and our total portfolio turnover during the year was only 4.7%.

The Investment Manager runs a concentrated portfolio, with a total of 49 equity investments as at 31 March 2013. The Board and Investment Manager are fully aware of the risks inherent in holding a concentrated portfolio of investments and have in place a number of measures for managing these risks. During the year, the Board and Investment Manager have spent time discussing the investment risk in detail and how this is controlled. Franklin Templeton Investments has, in addition to its portfolio management function, a separate risk management and investment performance team, with substantial resources. We set out on pages 14 and 15 an overview of the investment and risk management functions. The investment and risk teams regularly and thoroughly review all of the investments which we hold, to ensure that the investment case for each holding remains valid. The full report and review of the Investment Manager can be found on pages 16 to 27.

Your Board continually monitors the share price discount to net asset value and exercises its right to buy back shares when the Board considers that it is in shareholders' interests to do so. In November and December of last year, in particular, the demand for the Company's shares weakened and during the financial year under review there were several buy backs, in total amounting to 1,939,460 shares at a cost of £11.1 million. During the year shares traded at discounts between 6.1% and 10.7% of NAV with an average of 8.3% and at the end of the year the discount stood at 8.8%, which compares to 7.5% as at 31 March 2012.

Investment income and the dividend

Although income accumulation and distribution are not investment objectives, income received from our investment portfolio has continued to grow and I am pleased to report a further increase in revenue earnings per share. The Income Statement on page 54 reflects total dividend income earned of £59.5 million in the year to 31 March 2013. This represents an increase of 2.0% over the dividend income received for the year to 31 March 2012. This translates into net earnings of 8.45 pence per share, an increase of 6.8% over the 7.91 pence per share for the year to 31 March 2012.

This year your Board is pleased to propose a further increase in the dividend to 6.25 pence per share which will be fully covered by our earnings per share of 8.45 pence. This represents an increase of 8.7% over last year's dividend.

The flow of dividends from emerging market companies is not always as consistent as it is from, say, UK stocks and the increases in dividend income seen in recent years may not be repeated in the future.

Recent changes to UK taxation and company law permit investment trusts to distribute realised capital profits as dividends. While we welcome this change, the Company has substantial revenue reserves. The Board is not proposing any change to the Company's Articles of Association at this stage.

Regulation

Many shareholders will be aware that the European Union's Alternative Investment Funds Manager's Directive (AIFMD) comes into force on 22 July 2013 and that companies such as TEMIT then have up to a further year, until July 2014, to comply with the Directive. The main thrust of the Directive is one of protecting investors from undue or unexpected risk. As a listed company with an independent Board of Directors and with portfolio management delegated to a large fund management group with robust risk management, we feel that TEMIT already complies with the spirit of the Directive but we are aware that a number of changes will be necessary to the detailed legal structure of our relationship with Franklin Templeton Investments. Your Board is working closely with the Investment Manager and with its own independent legal and other advisors and is confident that the necessary structures will be in place ahead of the deadline in July 2014.

Your Board is also aware of the Foreign Account Tax Compliance Act (FATCA) and will continue to work with Franklin Templeton Investments to monitor the developments with respect to the implementation of the Act and the Inter-Governmental Agreement between the UK and the US authorities.

Asset allocation and gearing

The general policy of the Company is to be fully invested. As at 31 March 2013, 98.8% of TEMIT's net assets were invested in equities (31 March 2012: 99.5%). Your Board regularly reviews its policy on gearing and we continue to take a cautious stance. This caution is borne out by the periods of volatility which are a feature of emerging equity markets and are generally unpredictable in both timing and extent. Our policy, therefore, remains that in exceptional circumstances, and for short periods, TEMIT may borrow up to 10% of its net assets. Borrowing facilities were not used during the two years to 31 March 2013.

The Board

In line with the UK Corporate Governance Code issued by the Financial Reporting Council in June 2010, all Directors are required to retire each year. Each member of the Board is standing for re-election. As part of the annual Board evaluation review, the Remuneration and Nomination Committee considered the skills and contribution of all the Directors and this year recommends re-election in each case. Full details of each of the Directors can be found starting on page 9.

If re-elected, Sir Peter Burt will retire from the Board at the conclusion of the Annual General Meeting in 2014. A search firm will be appointed to assist the Nomination and Remuneration Committee to identify a new independent Non-Executive Director.

Investor communications

The Board aims to keep shareholders informed and up to date with information about the Company. We send out the Annual and Half Yearly Report, as well as notices of any significant Company events to registered shareholders. We also release information through the stock exchange, such as the Interim Management Statements. Our website (www.temit.co.uk) displays the latest news, price and performance information, portfolio details, quarterly web updates from the Investment Manager and a blog dealing with topical issues in emerging markets. Via the website you can also ask to have the latest Company information e-mailed directly to you. I encourage all shareholders to register on our website and make full use of the facilities and materials available to help keep you informed about your Company.

Scottish independence

Your Company is incorporated in Scotland and the Board has taken note of the plans by the current Scottish Government to hold a referendum on independence from the United Kingdom on 18 September 2014. While it is not appropriate for the Board to make political statements, shareholders should be reassured that we will monitor developments and, in particular, any news on the adoption (or otherwise) of current tax and company law which either an independent Scotland, or a Scotland with greater autonomy within the United Kingdom, may pursue and take any appropriate steps to protect shareholders' interests.

Outlook

The rate of economic growth in emerging markets continues to outpace developed markets and, as the Investment Manager's Report states, shows every sign of continuing to do so. This view is supported by the continued growth of wealth in emerging markets, leading to stronger internal and intra-regional demand; and in turn less economic dependence on the developed world. We must, however, show some caution and remind investors that the world, and particularly investment markets, will remain volatile. The recent issues in Cyprus, for example, clearly show that there are pressure points in the world's financial system and experience shows that not every emerging market will perform in the same way. We cannot predict short term movements in share prices and recognise that volatility is a necessary cost of long-term equity investment. Seeing clearly through the background noise is as important as it has ever been. Your Board continues to believe in the efficacy of an investment process which is long-term in nature and seeks opportunities for superior long-term growth at attractive valuations.

AGM

Finally I would like to take this opportunity to invite all shareholders to attend the AGM to be held at Stationers' Hall, Ave Maria Lane, London EC4M 7DD at 12 noon on Friday 12 July 2013. More details of this meeting can be found on page 72 of this report.

Peter A Smith

4 June 2013

Indices above are shown on a total return basis in sterling. Sources: Franklin Templeton Investments and FactSet.

INVESTMENT MANAGER

The Directors engage Templeton Asset Management Ltd. ("TAML") as the Investment Manager of the Company.

TAML, a subsidiary of Franklin Resources, is one of the world's largest asset management companies. TAML is a pioneer of emerging market investment, having created one of the first dedicated emerging market mutual funds more than 25 years ago. As of 31 March 2013, the Templeton Emerging Markets Team managed US$53.8 billion in emerging markets assets for retail, institutional and professional investors across the globe.

The Templeton Emerging Markets Team, headed by Dr. Mark Mobius, is one of the largest of its kind. It includes 53 dedicated emerging markets portfolio managers, analysts and product specialists. Their on-the-ground presence in 18 countries, and years of relevant industry experience, greatly assists their understanding of the companies researched for inclusion in the TEMIT portfolio. Many of the senior members of the TEMIT team, such as Allan Lam, Tom Wu and Dennis Lim have worked alongside Mark Mobius for more than two decades.

MARK MOBIUS, PH.D.

Executive Chairman

Dr. Mobius has spent more than 40 years working in emerging markets all over the world. He joined Franklin Templeton in 1987 as the president of Templeton Emerging Markets Fund, Inc. In 1999, he was appointed joint chairman of the Global Corporate Governance Forum Investor Responsibility Taskforce of the World Bank and Organization for Economic Cooperation and Development.

ALLAN LAM, CPA

Senior Executive Vice President & Senior Managing Director

Allan Lam joined Franklin Templeton in 1987. Mr. Lam manages investment portfolios dedicated to global emerging markets and Asia (ex Japan). He has research responsibilities for companies in the real estate and the oil & gas sector, and also specialises in analysing companies listed in the Philippines. Mr. Lam manages portfolios dedicated to global emerging markets and Asia (ex Japan). Mr. Lam worked for a number of years in the accounting field with Deloitte Touche Tohmatsu CPA and KPMG Peat Marwick CPA. His knowledge of accounting practices became an important tool for his equity analysis.

TOM WU, CPA

Senior Executive Vice President & Senior Managing Director

Tom W.K. Wu joined Franklin Templeton in 1987. Mr. Wu has research responsibilities for companies in Hong Kong and the Philippines, as well as the banking sector. Mr. Wu is also responsible for the financial analysis and research of companies in Hong Kong and the Philippines. He began his career at Vickers da Costa in Hong Kong as an investment analyst and later as an assistant manager before joining the Templeton organisation.

DENNIS LIM

Co-Chief Executive Officer

Dennis Lim joined Franklin Templeton in 1990. Mr. Lim co-manages a number of Templeton's emerging markets funds, including Templeton Developing Markets Trust, Templeton Institutional Funds Inc. and Templeton's BRIC funds. He has research responsibilities for Southeast Asian markets and telecommunications companies in emerging markets. He served as a former engineering service officer for the Ministry of National Development in Singapore.

*Source: Franklin Templeton Investments as at 31 March 2013. CFA^®and Chartered Financial Analysts^®are

trademarks owned by CFA Institute.

INVESTMENT PROCESS

31 MARCH 2013

Investment Philosophy

TAML employs a time-tested investment philosophy built upon a disciplined, yet flexible, long-term approach to value-oriented emerging markets investing which allows the portfolio managers to look beyond short-term news, noise, and emotion.

Value

Our goal is to identify those companies that appear to be trading at a discount to what our estimates indicate to be their projected future intrinsic value which, over time, should produce a strong share price return.

Patience

On a short-term basis, stocks may overreact to news and noise. On a long-term basis, we believe that markets are efficient and patience will reward those who have identified undervalued stocks.

Bottom-up

We identify value through rigorous fundamental analysis, proprietary screens and a worldwide network of experienced research resources. Research is carried out on a company by company basis - in different countries and industries - to determine what we consider the economic worth of a company to be, based on many factors including projected future earnings, cash flow or asset value potential as well as management capability and governance.

The Investment Manager follows a rigorous five step process:


1. Identify Potential Bargains Does this stock meet TAML's criteria of valuation, size and liquidity? Is it a potential bargain within the global universe, its sector and on a historical basis?		All portfolio managers are also research analysts, resulting in a deep and experienced research team. While our philosophy remains unchanged, continual refinement and improvement is part of the TAML culture. TAML is able to leverage off 60+ years of global investing by Franklin Templeton Investments to build an extensive network of local contacts around the world.










2. In Depth Fundamental Analysis Is this stock a candidate for the TAML Action List? Is the stock trading at a substantial discount to what our research indicates the company may be worth over the long-term?		Within the framework of a disciplined, long-term approach, analysts look beyond short-term noise to estimate long term economic worth. Bottom up fundamental analysis, industry knowledge and access to company management drive original research.







3. Review Team Evaluation Has analysis met TAML standards? Does the recommendation pass TAML's Review Team's approval?		A collaborative team culture that leverages the experience of the entire TAML Group produces comprehensive research insights.





4. Allocate Portfolio What do we consider to represent the best combination of stocks for creating a diversified fund with the greatest potential for appreciation?		The Action List is reviewed weekly. Taking into account the investment objective and guidelines, the portfolio is constructed with attention to diversification and risk levels. The process seeks to reduce portfolio turnover. The fund combines the potential of our best ideas with the risk benefits of diversification.









5. Portfolio Evaluation and Attribution Analysis What are the performance contributors/detractors?		Portfolios are subject to weekly review, while a semi- annual review evaluates methodology, resources, themes, country level issues and global trends. TAML's investment process combines the benefits of individual and team portfolio management.

RISK MANAGEMENT

31 MARCH 2013

Investment in emerging markets equities inevitably involves risk in a volatile asset class, and portfolios constructed from the "bottom up" may be exposed to risks that become evident when viewed from the "top down". Franklin Templeton Investments uses a comprehensive approach to managing risks within our portfolios. The goal of our investment risk management process is not to avoid risk, but to ensure that risks are "understood, intended and compensated". This philosophy is integrated into each step of the investment process: Risk management is led first and foremost by experienced portfolio managers. It is integrated within each step of our fundamental, research-driven process, and includes regular interaction with our independent Portfolio Analysis and Investment Risk (PAIR) team. The PAIR team consists of over 90 investment risk and performance professionals located in 15 different countries around the world. PAIR's mission is to integrate investment risk insight and information into each step of the investment process. This is accomplished via regular meetings with the Emerging Markets investment team:

Weekly engagement in the weekly call, and weekly performance & risk summary sent out to TAML

Monthly summary of latest TEMIT performance and risk profile sent to portfolio and senior management

Quarterly in-depth review meetings on the performance of TEMIT, Index and Peers

Risk Management		Our approach
Recognised · Identify and understand risk at the security, portfolio and operational level	PORTFOLIO MANAGERS	Dedicated Risk Management Specialists · Provides robust analytics and critical, unbiased insight · Locally positioned to work consultatively with portfolio teams around the globe





Rational · Affirm that identified risks are an intended and rational part of each portfolio's strategy		Oversight Committees Focuses on most complex risk factors: · Counterparty Risk · Pricing and Liquidity · Complex Securities · Global Products



Rewarded · Verify that every risk provides the potential for a commensurate long-term reward		Tools and Platforms Centrally supported, best-in-class platforms for: · Data Analytics and Modelling · Portfolio Compliance · Trade Monitoring and Execution

MARKET OVERVIEW

The global economy grew at a moderate but uneven pace during the 12 month period under review as fiscal stimulus and monetary easing measures undertaken by many global governments and central banks gained traction. Solid growth in many emerging market economies, including China and Indonesia, offset weaknesses in several developed market economies, particularly the Eurozone. Europe's recurring sovereign debt problems and global growth concerns led global financial markets to experience a sharp sell-off in May. After reaching a period-low in early June, emerging markets embarked upon an upward trend, recuperating losses and ending the reporting period with gains. The MSCI Emerging Markets Index produced a total return of 7.7% in sterling terms in the year to 31 March 2013.

The effects of stimulus packages were evident during the year as financial markets remained awash with liquidity. Inflows into emerging markets equities totalled more than US$60 billion* during the 12-month period. This compared to net inflows of just US$2 billion in the prior 12 month period. Asian markets were among the top performers as strong economic growth, robust consumption and substantial fund inflows supported equity prices.

In addition to measures by major developed markets, emerging economies such as Brazil, China, South Korea and India also announced fiscal and monetary easing measures. Brazil unveiled a US$65 billion economic programme, China announced a package to fund infrastructure projects, South Korea followed its June stimulus announcement with another package in September, and India announced a series of reforms to boost investor confidence.

Several emerging market countries including China, Brazil, Thailand, India, South Korea and Turkey also cut interest rates during the 12 month period.

*Source: EPFR Global

PERFORMANCE ATTRIBUTION ANALYSIS

PERFORMANCE ATTRIBUTION (%)
Year to 31 March 2013

NAV Total Return (Net)¹		11.1
Expenses²		1.3
NAV Total Return (Gross)³		12.4
MSCI Emerging Markets Index Total Return⁴		7.7
Return in excess of Index⁵		4.7
Sector Allocation		-1.1
Stock Selection		4.0
Currency		2.3
Residual⁶		-0.5
Total Portfolio Manager Contribution		4.7

Notes

¹NAV Total Return (Net) is the NAV return inclusive of dividends reinvested.

²These are the expenses incurred by TEMIT during the year.

³NAV Total Return (Gross) is NAV Total Return (Net) plus Expenses. Gross of fee performance is preferable for attribution and other value-added reporting as it evaluates the contribution of the manager.

⁴MSCI Emerging Markets (Total Return) Index, inclusive of dividends reinvested. Indices are comparable to gross returns as they include no expenses.

⁵Return in excess of Index is the difference between the gross return of the portfolio and the return of benchmark.

⁶The "Residual" represents the difference between the actual excess return and the excess return explained by the attribution model. This amount results from several factors, most significantly timing differences between the actual trade price of securities included in actual performance and the end of day price used to calculate attribution.

Source: FactSet and Franklin Templeton Investments

At the company level, the top three contributors to relative performance were overweight positions in Akbank in Turkey, Siam Commercial Bank in Thailand and Tata Consultancy Services in India.

The Turkish stock market significantly outperformed its emerging market counterparts, with the MSCI Turkey Index returning close to 50% in sterling terms. One of the driving forces behind this performance was Fitch's decision to upgrade Turkey's credit rating to investment grade. Another key factor was strong economic growth. Akbank is well positioned to benefit from the country's economic growth and growing demand for financial and banking services. With its strong franchise in retail banking and a major market share in mortgages and credit cards in Thailand, Siam Commercial Bank remains well positioned to benefit from the rising demand for financial services and products driven by Thailand's strong GDP growth and rising per capita income. The company also benefited from the withdrawal of European banks during the financial crisis, creating competitive advantage for local lenders during the recovery phase.

Tata Consultancy Services is a leading Indian information technology (IT) consulting company. We believe that IT outsourcing is an attractive and growing industry and that the company is well placed to benefit from this growth. The company participated in a notable rally among IT services businesses as results for the December quarter came in significantly ahead of market expectations, with guidance from management on prospects for 2013 also helping sentiment.

The three largest detractors against the Index were overweight positions in Vale in Brazil, Sesa Goa in India and the fact that TEMIT did not have any exposure to the outperforming Samsung Electronics in South Korea.

Vale is a major Brazilian iron ore mining business with an exceptional portfolio of attractive and low cost assets. We believe that the company will be a prime beneficiary of rising demand for steel in emerging markets, particularly in China. The share price came under pressure during the period due to uncertainty regarding iron ore prices, the suspension of a potash mining venture in Argentina and fears that Brazil might impose a special participation tax on mining companies, similar to the measures imposed on energy businesses. However, shares remain well placed to benefit from Chinese economic growth.

Sesa Goa is one of the biggest miners of iron ore in India and it will be merged with other interests of its parent company the Vedanta Group. The company's share price fell as the iron ore division in Goa remained shut, resulting in a loss reported for the final quarter of 2012. Taking a long-term view, however, Sesa Goa is well positioned to benefit from a long-term uptrend in iron ore prices and the on-going consolidation of the global mining sector. Samsung Electronics is one of the world's largest electronics manufacturers. However, TEMIT does not hold this company because the Manager believes that other investment opportunities are more appealing in the long-term.

LARGEST COMPANY RELATIVE CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

	Relative		MSCI Emerging			Relative	MSCI Emerging
	Contribution		Markets Index		Contribution		Markets Index
Top Contributors	to Portfolio		Total Return	Top Detractors	to Portfolio		Total Return
Akbank TAS		1.3	42.2	Samsung Electronics
Siam Commercial Bank				Co. Ltd.*		-0.9	28.0
Public Co. Ltd, fgn.		1.1	42.5	Vale SA, ADR, pfd., A		-0.8	-18.7
Tata Consultancy Services Ltd.		1.0	35.6	Sesa Goa Ltd.		-0.7	-20.4
Kasikornbank Public Co. Ltd, fgn.		1.0	52.4	Anglo American PLC†		-0.6	-
Brilliance China Automotive				Taiwan Semiconductor
Holdings Ltd.		0.9	14.3	Manufacturing Co. Ltd.^#		-0.4	27.5

*Company not held by TEMIT.

†Company not held by the MSCI Emerging Markets Index.

^#TEMIT sold out of this company during the year.

10 LARGEST SECURITIES VS BENCHMARK (%)

	TEMIT	MSCI EMERGING MARKETS INDEX
Brilliance China Automotive Holdings Ltd.	8.9	0.1
Tata Consultancy Services Ltd.	5.0	0.4
Banco Bradesco SA, ADR, pfd	4.7	0.9
Akbank TAS	4.5	0.3
Siam Commercial Bank Public Co. Ltd, fgn.	4.4	0.3
Itau Unibanco Holding SA, ADR	4.4	1.1
Dairy Farm International Holdings Ltd.	4.4	0.4
PT Astra International Tbk	4.4	0.4
Vale SA, ADR, pfd., A	3.5	0.9
Kasikornbank Public Co. Ltd, fgn.	3.4	0.1

PORTFOLIO CHANGES & INVESTMENT STRATEGIES

			Amount
Security	Country		(£m)
Buenaventura	Peru	NH	24
Arab Potash	Jordan	NH	2
Polnord	Poland	IH	3
Impala Platinum	South Africa	IH	1
Vale	Brazil	IH	1
Taiwan Semiconductor	Taiwan	TS	(7	)
Brilliance China	China	PS	(14	)
Siam Cement	Thailand	PS	(33	)
NH = New holding	IH = Increased holding
TS = Total sale	PS = Partial sale

The addition of Buenaventura initiated exposure to Peru. The company is the largest precious metals company in Peru and a major holder of mining rights in the country. It is engaged in the mining, processing, development and exploration of primarily gold and silver, as well as zinc, lead and copper. Its appealing valuation, strong balance sheet, high profit margins and return on equity contribute to the stock's attractiveness.

Arab Potash is a Jordanian potash producer which extracts potash from the mineral rich waters of the Dead Sea using solar panels. High cash flow generations, a solid balance sheet, world class assets and interesting expansion initiatives make the company an attractive investment.

Polnord is one of the largest real estate developers in Poland's residential and commercial property markets. Additions were made due to the company's attractive valuations.

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 well positioned to benefit from expected increases in commodity prices over the long-term.

Vale is one of the world's largest iron ore producers and is also engaged in various mining activities. The company is a beneficiary of the strong demand growth in emerging markets and the long-term uptrend in commodity prices.

Taiwan Semiconductor is one of the world's largest independent integrated circuit foundries. TEMIT sold its holdings when the shares successfully reached our analysts' target price, thereby eliminating our exposure to the Taiwan stock market.

Brilliance China is a major automobile manufacturer in China with a joint venture with BMW for the production of BMW 3-series and 5-series. It is also TEMIT's largest holding.

Siam Cement is the largest cement, petrochemicals and industrial paper producer in ASEAN (The Association of Southeast Asian Nations). It is also the largest industrial conglomerate in Thailand.

Holdings in both Brilliance China and Siam Cement were trimmed following a rise in the share price to take some profits.

TEMIT also switched into the global depository shares of Russian stock OAO TMK from ordinary shares due to the narrowing discount between the two share types and the relatively low liquidity of the ordinary shares. OAO TMK is one of the world's leading manufacturers of value-added pipe products for the oil and gas industry. Its valuation and attractive growth prospects lead us to maintain a positive view on the company.

Currency Exposure

TEMIT has exposure to currency risk because investments are made in currencies other than sterling. As a matter of policy, the Board has decided that it is not appropriate to hedge the currency risk - it is an inherent risk from investing in emerging markets. Consequently in any given period, TEMIT will show gains and losses resulting from currencies moving against sterling. In the current period, TEMIT gained from the relative strength of the Thai baht and the Hong Kong dollar but lost value on the South African rand.

LARGEST SECTOR RELATIVE CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

Relative

MSCI Emerging

Factors

Relative

MSCI Emerging

Factors

Top

Contribution

Markets Index

affecting

Top

Contribution

Markets Index

affecting

Contributors

to Portfolio

Total Return

performance

Detractors

to Portfolio

Total Return

performance

Financials

4.1

18.1

Strong stock selection

Materials

-1.5

6.4

Underweight

and overweight

Energy

1.3

-6.9

Strong stock selection

Consumer

-0.3

19.5

Underweight

Staples

Consumer

0.8

6.8

Strong stock selection

Health Care*

-0.2

25.4

Sector not

Discretionary

held in TEMIT

Industrials

0.4

3.1

Strong stock selection

and underweight

Utilities*

0.3

1.8

Sector not held in TEMIT

*No companies held by TEMIT in these sectors.

SECTOR WEIGHTINGS VS BENCHMARK (%)

	TEMIT	MSCI EMERGING MARKETS INDEX
Financials	32.2	27.7
Energy	21.6	12.0
Consumer Discretionary	15.7	7.8
Materials	11.4	10.7
Information Technology	8.3	14.1
Consumer Staples	7.2	9.1
Industrials	2.4	6.4

LARGEST COUNTRY RELATIVE CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

Relative

MSCI Emerging

Factors

Relative

MSCI Emerging

Factors

Top

Contribution

Markets Index

affecting

Top

Contribution

Markets Index

affecting

Contributors

to Portfolio

Total Return

performance

Detractors

to Portfolio

Total Return

performance

Thailand

3.4

29.1

Strong stock selection

Mexico

-0.9

24.6

Underweight

and overweight

Turkey

1.3

47.7

Overweight

Russia

-0.5

-1.7

Stock selection

Indonesia

1.2

20.7

Strong stock selection

South Africa

-0.5

2.6

Underweight

and overweight

Brazil

0.3

-8.0

Currency exposure to

Philippines*

-0.3

51.9

Not held

US dollars through ADRs

by TEMIT

India

0.3

7.6

Strong stock selection

Hungary

-0.1

-1.7

Weak stock

and overweight

selection and

overweight

*No companies held by TEMIT in this country.

10 LARGEST RELATIVE COUNTRY WEIGHTINGS VS BENCHMARK (%)

	TEMIT	MSCI EMERGING MARKETS INDEX
Hong Kong/China	24.9	18.1
Thailand	14.4	2.8
Brazil	14.3	12.7
Indonesia	10.3	3.0
India	9.1	6.6
Turkey	7.0	2.0
South Korea	4.3	14.9
Russia	3.7	5.9
Mexico	2.3	5.5
Pakistan	2.1	-

COMMENTARY ON BRIC ECONOMIES AND MARKETS

TEMIT's exposure to companies in BRIC economies amounted to 52% of net assets as at 31 March 2013.

The Investment Manager selects individual companies based on the long-term value proposition using a wide range of determining factors. In this bottom-up portfolio construction, we are nevertheless mindful of what is happening in the wider economy. BRIC economies currently appear out-of-favour with investors. However, we believe that their economies generally have remained healthier than those of many developed countries and thus could outperform in the longer term. It also should be noted that within the constituent members of the BRIC economies there were notable differences in growth in the last year.

			2012/13 2012/13				at		at
	2012		Index		Index		31/3/13		31/3/13
	GDP		Return		Return		TEMIT		MSCI
	Growth		(local)		(GBP)		Exposure Exposure
Brazil	0.9	%	(3.4	%)	(8.0	%)	14.3	%	13.0	%
Russia	3.4	%	(2.1	%)	(1.7	%)	3.7	%	6.1	%
India	4.0	%	9.1	%	7.6	%	9.1	%	6.6	%
China	7.8	%	6.9	%*	12.5	%*	24.9	%*	18.1	%*

*Figures are for China & Hong Kong combined.

The Brazilian economy grew 0.9% in 2012 despite the implementation of stimulus measures and record-low interest rates. Weak investment, high inflation and interventionist government policies dampened investor confidence in equities and along with lower commodity prices and depreciation in the Brazilian real led to the MSCI Brazil Index losing 8% in sterling terms, making it the worst BRIC performer for the year ended March 2013.

The Russian stock market, which is heavily dependent on commodities, was adversely affected by lower oil and metal prices, weaker investor confidence and a depreciating ruble. Valuations, however, remain extremely attractive at a low single digit price to earnings ratio, making it one of the cheapest markets in the global investment universe.

While the Indian Government's unexpected announcement of a series of reforms boosted investor confidence in equities in the latter part of 2012, reduced economic growth forecasts, persistent high inflation and a lack of hoped-for commitments to economic reform in the state budget led investors to shun the market in early 2013.

At the other end of the spectrum, China was the strongest BRIC performer as solid economic growth and a recovery in exports and industrial production helped equity prices. The implementation of tightening measures in the property sector and higher inflation, however, led Chinese equities to end off their year high.

We continue to find many attractive investment opportunities in the BRIC countries, among businesses serving the expanding group of middle class consumers as well as industrial and commodity businesses benefiting from strong on-going investment and infrastructure spending.

OUTLOOK FOR EMERGING MARKETS

Emerging market equities have provided outstanding long-term performance against developed markets. The major factor underpinning our confidence in emerging markets is their much higher rates of growth in GDP when compared with developed markets. We believe that this growth has become increasingly self-sustaining as levels of trade with emerging markets start to dominate overall trading patterns and rising consumer wealth within the emerging market economies stimulates domestic demand. The finances of emerging market countries as a group, as measured by factors such as foreign reserves and debt-to-GDP levels, appear stronger to those of many developed markets, while demographic factors in emerging nations today are also much more favourable. In spite of these positive factors, current valuations of emerging market companies have tended to be lower than those in developed markets. While high economic growth does not necessarily convert into high earnings and valuation growth, we believe that it offers the potential for superior returns.

In terms of our investment strategy, we continue to invest with a long-term horizon in companies that we believe are undervalued, fundamentally strong and growing. We remain positive on our key investment themes - consumer and commodities - and remain diligent and disciplined in our stock selection.

TEN LARGEST INVESTMENTS

IN ORDER OF MARKET VALUE AS AT 31 MARCH 2013

Brilliance China Automotive Holdings Ltd.

	% of		Fair value
Country	net assets		£'000
Hong Kong/China	8.9	%	205,849

Brilliance China is one of the leading automotive manufacturers in China through its subsidiaries, associated companies and joint ventures in China. The Group's wholly owned activities primarily concern the manufacture and sale of minibuses and automotive components. Its commercial vehicle brands include "JinBei" and "Granse" minibuses. In 2003, the Group established a joint venture with BMW to produce BMW 3-series and 5-series cars in China. The X1 SUV was recently added to the product list. The Group is also engaged in the manufacture of diesel and gasoline engines for use in minibuses, sedans, SUV and light duty trucks and automotive components.

The BMW joint venture recently opened a second plant which has significantly increased its production capacity, with the company forecasting that production will eventually grow to 400,000 vehicles per year.

Web site: www.brillianceauto.com

Tata Consultancy Services Ltd.

	% of		Fair value
Country	net assets		£'000
India	5.0	%	114,136

Tata Consultancy Services (TCS) is an Indian multinational IT services, business solutions and outsourcing services company headquartered in Mumbai, with a global client base. TCS is a subsidiary of the Tata Group, one of India's largest industrial conglomerates and most respected brands, and is listed on the Bombay Stock Exchange and the National Stock Exchange of India. It is one of India's most valuable companies and is the largest India-based IT services company by 2012 revenues.

In 2012, TCS employed over 254,000 IT consultants in 44 countries. It provides a full range of IT and related activities, including: Application Development & Maintenance, Business Intelligence, Enterprise Solutions, Assurance Services, Engineering & Industrial Services, IT Infrastructure Services, Business Process Outsourcing, Consulting, Mobility, Connected Marketing, Social Computing, Big Data and Cloud. The company provides its services to a wide range of commercial and industrial sectors around the world.

Web site: www.tcs.com

Banco Bradesco SA

	% of		Fair value
Country	net assets		£'000
Brazil	4.7	%	107,401

Banco Bradesco is one of the biggest banking and financial services companies in Brazil. Bradesco is headquartered in Osasco, serves over 72 million customers, has over 4,500 branches, over 3,700 Service Branches and over 43,000 "Bradesco Expresso" units through partnerships with supermarkets, drugstores, department stores and other retail chains. It is the largest insurance company in Latin America.

Bradesco offers internet banking, insurance, pension plans, annuities, credit card services (including football club affinity cards for football fans) for customers and savings bonds. The bank also provides personal and commercial loans, as well as leasing services. It utilises leading edge technology, for example its ATM biometric reading system "Segurança Bradesco na Palma da Mão" (Bradesco Security in the Palm of Your Hand, in English), which enable customers to be identified using the vascular pattern of their hands.

Web site: www.bradesco.com.br

Siam Commercial Bank Public Co. Ltd.

	% of		Fair value
Country	net assets		£'000
Thailand	4.4	%	103,202

Siam Commercial Bank was Thailand's first indigenous bank, established in 1906 under Royal Charter. According to unconsolidated financial information filed with the Bank of Thailand, the Bank was Thailand's third largest commercial bank in terms of total assets, deposits and loans as at 31 December 2012. The Bank provides a full range of financial services, including corporate and personal lending, retail and wholesale banking, foreign currency operations, international trade financing, cash management, custodial services, credit and charge card services and investment banking services, through its head office and its extensive branch network.

Web site: www.scb.co.th

Akbank TAS

	% of		Fair value
Country	net assets		£'000
Turkey	4.5	%	102,630

Having been formed as a bank for local cotton growers in Adana in 1948, by 2013, Akbank was named the "Most Valuable Banking Brand in Turkey". Now headquartered in Istanbul, it has over 950 branches, over 16,000 employees, 4,000 ATMs and 300,000 POS terminals. It also has an extensive branch network in Turkey and branches in key locations with strong Turkish connections: Germany, Malta and Dubai. The bank provides a full range of traditional banking services to individuals and corporate customers, along with trade financing, foreign exchange, capital markets and investment services. It has a strong IT base, with the largest operations centre by transaction capacity in Turkey.

The bank is an innovator, for example it has pioneered the Loan Machine and Mobile Loan, which allow customers to obtain loans without having to visit a bank branch and has embraced internet banking with its Akbank Direct brand.

Web site: www.akbank.com

PT Astra International Tbk

	% of		Fair value
Country	net assets		£'000
Indonesia	4.4	%	101,451

With extensive distribution and service networks, Astra is one of the market leaders in Indonesia's motor vehicle industry, with alliances with manufacturers such as Toyota, Honda, Peugeot, BMW, Isuzu and Daihatsu. It also maintains a strong market position in heavy equipment in the distribution of Komatsu products. Astra is currently engaged in several business lines: Automotive, Financial Services, Heavy Equipment, Mining & Energy, Agribusiness, Logistics and Information Technology / Infrastructure.

The company has exposure both to the domestic economy, particularly via its automotive business, and to the broader regional economy in heavy equipment and mining.

Web site: www.astra.co.id

Dairy Farm International Holdings Ltd.

	% of		Fair value
Country	net assets		£'000
Hong Kong/China	4.4	%	101,095

Dairy Farm International is a leading pan-Asian retailer which processes food, wholesales food and personal hygiene products in the Pacific region and in China. At the end of 2012, the Group had over 5,600 outlets; employed over 90,000 people and had total annual sales exceeding US$11 billion.

The company describes its mission as "bringing to Asian consumers the benefits of modern retailing" and its strategy as offering "consumers value-for-money through efficient, low-cost distribution of high-quality fresh foods as well as consumer and durable goods in our supermarkets, hypermarkets, health and beauty stores, convenience stores and home furnishings stores".

Web site: www.dairyfarmgroup.com

Itau Unibanco Holding S.A.

	% of		Fair value
Country	net assets		£'000
Brazil	4.4	%	100,339

Itau Unibanco is the largest Latin American bank and one of the largest banks in the world, with approximately 100,000 employees and operations in 20 countries throughout the Americas, Asia and Europe. It is a universal bank with a range of services and products serving a varied client profile - both individuals and companies of all sizes, from major transnational groups to local micro-entrepreneurs. In Brazil, Itau has nearly 5,000 full-service branches and 28,000 ATMs. As at 31 December 2012 it was the 16th largest bank in the world by market capitalisation.

During 2012, Itau announced a series of initiatives: a three year investment programme to upgrade internet banking services, extended and more convenient opening hours in the branch network and a new, competitively priced, credit card, "Itaucard 2.0". Internet banking has become the bank's most popular channel with its clients.

Web site: www.itau.com

Vale SA

	% of		Fair value
Country	net assets		£'000
Brazil	3.5	%	80,744

Vale is one of the three largest metals and mining companies and one of the largest publicly traded companies in the world. It is the world's largest producer of iron ore and iron ore pellets, key raw materials for steelmaking, and the world's second largest producer of nickel, which is used to produce stainless steel and metal alloys employed in the production of aircraft, autos, mining and energy equipment mobile phones, batteries, special batteries for hybrid electric vehicles and several other products.

The company also produces manganese, ferroalloys, thermal and coking coal, copper, cobalt, platinum group metals, and fertiliser nutrients, which are important raw materials for the global industrial and food production industries. Vale has a global presence, with locations in South America, North America, Europe, Africa, Asia and Oceania.

Web site: www.vale.com

Kasikornbank Public Co. Ltd.

	% of		Fair value
Country	net assets		£'000
Thailand	3.4	%	78,695

Kasikornbank is a leading bank in Thailand. The company describes itself as customer-centric with an overall strategy "to be the customer's main bank". Kasikornbank provides banking services to private individuals, small companies and larger corporate clients in Thailand. It has over 850 branches and over 17,000 employees.

From a strong domestic base, it expects to develop its international business with both Thai companies' international operations and foreign companies with operations in Thailand.

Web site: www.kasikornbank.com

PORTFOLIO SUMMARY

PORTFOLIO DISTRIBUTION AS AT 31 MARCH 2013 AND

31 MARCH 2012

All figures are in %

	Austria	Brazil	Hong Kong/China	Hungary	India	Indonesia	Jordan	Mexico	Pakistan	Peru	Poland	Russia	South Africa	South Korea	Taiwan	Thailand	Turkey Liquid	Assets 2013	Total	2012 Total
Consumer Discretionary	-	-	11.3	-	-	4.4	-	-	-	-	-	-	-	-	-	-	-	-	15.7	16.3
Consumer Staples	-	-	4.4	-	-	-	-	2.3	-	-	-	-	-	-	-	0.5	-	-	7.2	6.9
Energy	1.0	1.7	4.7	0.8	1.3	-	-	-	-	-	1.5	2.2	-	2.6	-	3.3	2.5	-	21.6	23.2
Financial	-	9.1	-	-	0.2	5.9	-	-	2.1	-	-	-	-	-	-	10.4	4.5	-	32.2	27.4
Industrials	-	-	0.6	-	-	-	-	-	-	-	0.1	-	-	1.7	-	-	-	-	2.4	2.4
Information Technology	-	-	2.8	-	5.5	-	-	-	-	-	-	-	-	-	-	-	-	-	8.3	8.1
Materials	-	3.5	1.1	-	2.1	-	0.1	-	-	1.1	-	1.5	1.8	-	-	0.2	-	-	11.4	15.2
Total Equities	1.0	14.3	24.9	0.8	9.1	10.3	0.1	2.3	2.1	1.1	1.6	3.7	1.8	4.3	-	14.4	7.0	-	98.8	99.5
Liquid Assets	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	1.2	1.2	0.5
2013 Total	1.0	14.3	24.9	0.8	9.1	10.3	0.1	2.3	2.1	1.1	1.6	3.7	1.8	4.3	-	14.4	7.0	1.2	100.0	100.0
2012 Total	0.8	17.0	25.8	1.0	9.2	9.2	-	2.5	2.0	-	1.3	4.8	2.6	4.4	0.3	12.8	5.8	0.5	100.0	100.0

INVESTMENT CHANGES - GEOGRAPHICAL

								Movement in year
	31 Mar 12				Market		31 Mar 13			MSCI Emerging
	Market Value	Additions	Sales		Movement		Market Value	TEMIT		Markets Index
Country	£m's	£m's	£m's		£m's		£m's	%		%
Hong Kong/China	540	-	(14	)	48		574	9.1		12.5
Thailand	268	5	(33	)	98		338	40.8		29.0
Brazil	356	1	-		(28	)	329	(7.8	)	(8.0	)
Indonesia	194	-	-		41		235	21.1		20.7
India	193	-	-		17		210	8.8		7.6
Other	537	41	(16	)	30		592	-		-
Other Assets	11	-	-		14		25	-		-
Total	2,099	47	(63	)	220		2,303

INVESTMENT CHANGES - SECTOR

								Movement in year
	31 Mar 12				Market		31 Mar 13			MSCI Emerging
	Market Value	Additions	Sales		Movement		Market Value	TEMIT		Markets Index
Sector	£m's	£m's	£m's		£m's		£m's	%		%
Financials	628	-	-		114		742	18.2		18.1
Energy	488	16	(9	)	2		497	0.4		(6.9	)
Consumer Discretionary	288	-	(14	)	87		361	31.8		6.9
Materials	318	28	(33	)	(51	)	262	(16.3	)	(6.4	)
Information Technology	171	-	(7	)	28		192	17.1		13.2
Other	195	3	-		26		224	-		-
Other Assets	11	-	-		14		25	-		-
Total	2,099	47	(63	)	220		2,303

PORTFOLIO HOLDINGS BY GEOGRAPHY

Geographical analysis (by country of incorporation)

As at 31 March 2013

		Fair value**	MSCI Index^#	% of issued	% of net
Country	Sector	£'000	weighting	share class	assets
AUSTRIA
OMV AG^‡	Energy	22,216	N/A	0.2	1.0
		22,216			1.0
BRAZIL
Banco Bradesco SA, ADR, pfd.*†	Financial	107,401	0.9	0.5	4.7
Itau Unibanco Holding SA, ADR*	Financial	100,339	1.1	0.4	4.4
Petroleo Brasileiro SA, ADR, pfd.*†	Energy	40,348	1.0	0.1	1.7
Vale SA, ADR, pfd., A*†	Materials	80,744	0.9	0.4	3.5
		328,832			14.3
HONG KONG/CHINA
Aluminum Corp. of China Ltd., H	Materials	26,174	-	2.6	1.1
Brilliance China Automotive Holdings Ltd.	Consumer Discretionary	205,849	0.1	5.3	8.9
China International Marine Containers
(Group) Co. Ltd., B	Industrials	13,847	-	0.9	0.6
China Petroleum and Chemical Corp., H	Energy	38,988	0.6	0.3	1.7
Dairy Farm International Holdings Ltd.	Consumer Staples	101,095	N/A	0.9	4.4
Guangzhou Automobile Group Co. Ltd., H	Consumer Discretionary	43,554	0.1	3.5	1.9
PetroChina Co. Ltd., H	Energy	67,412	0.7	0.4	3.0
Victory City International Holdings Ltd.	Consumer Discretionary	9,745	N/A	6.9	0.5
VTech Holdings Ltd.	Information Technology	66,923	N/A	3.3	2.8
		573,587			24.9
HUNGARY
MOL Hungarian Oil and Gas Nyrt.	Energy	18,474	0.1	0.4	0.8
		18,474			0.8
INDIA
Infosys Technologies Ltd.	Information Technology	10,794	0.6	0.1	0.5
National Aluminium Co. Ltd.	Materials	8,392	N/A	0.8	0.4
Oil & Natural Gas Corp. Ltd.	Energy	29,877	0.1	0.1	1.3
Peninsula Land Ltd.	Financial	6,901	N/A	5.6	0.2
Sesa Goa Ltd.	Materials	39,608	-	2.4	1.7
Tata Consultancy Services Ltd.	Information Technology	114,136	0.4	0.3	5.0
		209,708			9.1

^**Fair value represents the bid value of a security as required by International Financial Reporting Standards (IFRS).

^#Stocks marked N/A are not held by the MSCI Emerging Markets Index. Stocks showing a nil holding are included in the MSCI Emerging Markets Index, but have a nominal holding.

^‡This Austrian company has significant exposure to operations in emerging markets.

^*US listed stocks.

^†pfd: preferred shares.

PORTFOLIO HOLDINGS BY GEOGRAPHY

CONTINUED

		Fair value**	MSCI Index^#	% of issued	% of net
Country	Sector	£'000	weighting	share class	assets
INDONESIA
PT Astra International Tbk	Consumer Discretionary	101,451	0.4	0.5	4.4
PT Bank Central Asia Tbk	Financial	74,161	0.4	0.4	3.4
PT Bank Danamon Indonesia Tbk	Financial	58,940	0.1	1.4	2.5
		234,552			10.3
JORDAN
Arab Potash Co. PLC.	Materials	1,840	N/A	0.1	0.1
		1,840			0.1
MEXICO
Wal-Mart de Mexico SAB de CV, V	Consumer Staples	53,036	0.5	0.1	2.3
		53,036			2.3
PAKISTAN
Faysal Bank Ltd.	Financial	2,687	N/A	5.0	0.1
MCB Bank Ltd.	Financial	44,785	N/A	3.5	2.0
		47,472			2.1
PERU
Compania De Minas Buenaventura SA	Materials	24,486	0.1	0.5	1.1
		24,486			1.1
POLAND
Polnord SA	Industrials	3,640	N/A	10.6	0.1
Polski Koncern Naftowy Orlen SA	Energy	33,891	0.1	0.8	1.5
		37,531			1.6
RUSSIA
Gazprom, ADR*	Energy	40,695	1.2	0.1	1.8
Mining and Metallurgical Co. Norilsk Nickel	Materials	8,130	0.2	0.0	0.4
Mining and Metallurgical Co. Norilsk
Nickel, ADR*	Materials	26,703	0.2	0.1	1.1
OAO TMK GDR^~	Energy	9,400	-	0.5	0.4
		84,928			3.7

^**Fair value represents the bid value of a security as required by International Financial Reporting Standards (IFRS).

^#Stocks marked N/A are not held by the MSCI Emerging Markets Index. Stocks showing a nil holding are included in the MSCI Emerging Markets Index, but have a nominal holding.

^*US listed stocks.

^~UK listed stock.

	Fair value**	MSCI Index^#	% of issued	% of net
Country	Sector	£'000	weighting	share class	assets
SOUTH AFRICA
Anglo American PLC	Materials	27,664	N/A	0.1	1.2
Impala Platinum Holdings Ltd.	Materials	13,569	0.2	0.2	0.6
		41,233			1.8
SOUTH KOREA
Hyundai Development Co.	Industrials	39,992	-	3.5	1.7
SK Innovation Co. Ltd.	Energy	59,778	0.2	0.7	2.6
		99,770			4.3
THAILAND
Kasikornbank Public Co. Ltd, fgn.	Financial	78,695	0.1	0.7	3.4
Kiatnakin Bank Public Co. Ltd, fgn.	Financial	34,830	N/A	2.7	1.5
Land and Houses Public Co. Ltd, fgn.	Financial	27,783	N/A	1.0	1.1
PTT Exploration and Production Public
Co. Ltd, fgn.	Energy	38,457	0.2	0.3	1.7
PTT Public Co. Ltd, fgn.	Energy	38,284	0.3	0.2	1.6
Siam Cement Public Co. Ltd, fgn.	Materials	4,707	0.1	0.0	0.2
Siam Commercial Bank Public Co. Ltd, fgn.	Financial	103,202	0.3	0.8	4.4
Univanich Palm Oil Public Co. Ltd, fgn.	Consumer Staples	11,662	N/A	5.0	0.5
		337,620			14.4
TURKEY
Akbank TAS	Financial	102,630	0.3	0.7	4.5
Tupras-Turkiye Petrol Rafinerileri AS	Energy	59,550	0.1	1.2	2.5
		162,180			7.0
TOTAL INVESTMENTS		2,277,465			98.8
LIQUID NET ASSETS		25,255			1.2
TOTAL NET ASSETS		2,302,720			100.0

^**Fair value represents the bid value of a security as required by International Financial Reporting Standards (IFRS).

^#Stocks marked N/A are not held by the MSCI Emerging Markets Index. Stocks showing a nil holding are included in the MSCI Emerging Markets Index, but have a nominal holding.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

IN RESPECT OF THE ANNUAL REPORT

AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, International Accounting Standard 1 requires that Directors:

· properly select and apply accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· make an assessment of the Company's ability to continue as a going concern.

· The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (www.temit.co.uk). Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the business review, which is incorporated into the Directors' report, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

By Order of the Board

Peter Smith

Chairman

4 June 2013

INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2013

		Year ended						Year ended
		31 March 2013						31 March 2012
		Revenue		Capital		Total		Revenue		Capital		Total
	Note	£' 000		£' 000		£' 000		£' 000		£' 000		£' 000
Gains/(losses) on investments
and exchange
Gains/(losses) on investments at fair value	6	-		206,127		206,127		-		(281,275	)	(281,275	)
Gains/(losses) on foreign exchange		-		155		155		-		(221	)	(221	)
Revenue
Dividends	1	59,546		-		59,546		58,366		-		58,366
Bank and deposit interest	1	67		-		67		57		-		57
		59,613		206,282		265,895		58,423		(281,496	)	(223,073	)
Expenses
Investment management fee	2	(20,796	)	-		(20,796	)	(21,237	)	-		(21,237	)
Other expenses	3	(6,043	)	-		(6,043	)	(6,445	)	-		(6,445	)
Profit/(loss) before taxation		32,774		206,282		239,056		30,741		(281,496	)	(250,755	)
Tax expense	4	(4,949	)	-		(4,949	)	(4,662	)	-		(4,662	)
Profit/(loss) for the year		27,825		206,282		234,107		26,079		(281,496	)	(255,417	)
Profit/(loss) attributable to equity
holders of the Company		27,825		206,282		234,107		26,079		(281,496	)	(255,417	)
Earnings per share	5	8.45	p	62.67	p	71.12	p	7.91	p	(85.35)	p	(77.44)	p
Ongoing Charges Ratio						1.30	%					1.31	%

The capital element of return is not distributable.

The total column is the Income Statement of the Company.

The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

There is no other income for this year and therefore no separate statement of comprehensive income has been presented.

The Ongoing Charges Ratio (OCR) represents the annualised ongoing charges of the Company divided by the average of the daily net assets of the Company for the year, and has been prepared in accordance with the AIC's recommended methodology, issued in May 2012.

Dividend Policy

In accordance with the Company's stated policy, no interim dividend is declared for the year.

An ordinary dividend of 6.25 pence per share is proposed at a cost of £20,492,000.

(An ordinary dividend of 5.75 pence per share was paid for the year ended 31 March 2012 at a cost of £18,964,000).

Further details can be found in Note 11 on page 66.

BALANCE SHEET

AS AT 31 MARCH 2013

		As at		As at
		31 March 2013		31 March 2012
	Note	£' 000		£' 000
ASSETS
Non-current assets
Investments at fair value through profit or loss	6	2,277,465		2,087,608
Current Assets
Trade and other receivables	7	8,807		6,335
Cash		20,255		7,024
		29,062		13,359
Current Liabilities
Trade and other payables	8	(3,807	)	(2,327	)
		(3,807	)	(2,327	)
NET ASSETS		2,302,720		2,098,640

ISSUED SHARE CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY SHAREHOLDERS
Equity Share Capital	9	81,969		82,453
Capital Redemption Reserve		700		216
Special Distributable Reserve		433,546		433,546
Capital Reserve		1,697,011		1,501,792
Revenue Reserve		89,494		80,633
EQUITY SHAREHOLDERS' FUNDS		2,302,720		2,098,640

Net Asset Value per share (in pence)	10	702.3		636.3

These Financial Statements of Templeton Emerging Markets Investment Trust PLC (company registration number SC118022) were approved for issue by the Board and signed on the 4 June 2013.

Peter Smith Peter Harrison

Chairman Director

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2013

	Equity		Capital	Special
	Share		Redemption	Distributable	Capital		Revenue
	Capital		Reserve	Reserve	Reserve		Reserve		Total
	£' 000		£' 000	£' 000	£' 000		£' 000		£' 000
Balance at 31 March 2011	82,466		203	433,546	1,783,604		68,573		2,368,392
Profit/(loss) for the year	-		-	-	(281,496	)	26,079		(255,417	)
Equity dividends	-		-	-	-		(14,019	)	(14,019	)
Purchase and cancellation
of own shares	(13	)	13	-	(316	)	-		(316	)
Balance at 31 March 2012	82,453		216	433,546	1,501,792		80,633		2,098,640
Profit for the year	-		-	-	206,282		27,825		234,107
Equity dividends	-		-	-	-		(18,964	)	(18,964	)
Purchase and cancellation
of own shares	(484	)	484	-	(11,063	)	-		(11,063	)
Balance at 31 March 2013	81,969		700	433,546	1,697,011		89,494		2,302,720

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2013

	For the year to		For the year to
	31 March 2013		31 March 2012
	£' 000		£' 000
Cash flows from operating activities
Profit/(loss) before taxation	239,056		(250,755	)
Adjustments for:
(Gains)/losses on investments at fair value	(206,127	)	281,275
Realised (gains)/losses on foreign exchange	(155	)	221
Stock dividends received in year	(393	)	(212	)
Decrease in debtors	(2,515	)	(1,153	)
Decrease in accrued income	1		1
Increase/(decrease) in creditors	1,513		(273	)
Cash generated from operations	31,380		29,104
Taxation paid	(4,940	)	(5,078	)
Net cash inflow from operating activities	26,440		24,026

Cash flows from investing activities
Purchases of non-current financial assets	(46,729	)	(59,208	)
Sales of non-current financial assets	63,547		45,513
	16,818		(13,695	)
Cash flows from financing activities
Equity dividends paid (Note 11)	(18,964	)	(14,019	)
Purchase and cancellation of own shares	(11,063	)	(316	)
	(30,027	)	(14,335	)
Net increase/(decrease) in cash	13,231		(4,004	)

Cash at the start of the year	7,024		11,025
Exchange gain on cash	-		3
Cash at the end of the year	20,255		7,024

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2013

1	Income	2013	2012
		£' 000	£' 000
Income from investments
UK dividends		-	731
Other EU dividends		1,184	705
Other overseas dividends		57,969	56,718
Stock dividends		393	212
		59,546	58,366
Other income
Bank and deposit interest		67	57
Total other income		67	57
Total income comprises:
Dividends		59,546	58,366
Interest		67	57
		59,613	58,423
Income from investments
Listed overseas		59,546	57,635

2	Investment management fee	2013	2012
		£' 000	£' 000
Variable Expense
Investment management fee		20,796	21,237

The Company's Investment Manager is Templeton Asset Management Ltd ("TAML").

The contract between the Company and TAML may be terminated at any date by either party giving one year's notice of termination. TAML receives a fee paid monthly in arrears, at an annual rate of 1.00% of the monthly trading total net assets of the Company. As at 31 March 2013, £1,940,000 (31 March 2012: £1,752,000) in fees were payable and outstanding to TAML. In addition to the investment management fee above, the Company obtains secretarial and administration services from Franklin Templeton Investment Management Limited ("FTIML") pursuant to a secretarial and administration agreement (which is terminable by either party giving one year's notice to the other). The fee in respect of secretarial and administration services are recorded within other expenses (Note 3).

3	Other expenses	2013		2012
		£' 000		£' 000
Variable expenses
Secretarial and administration expenses		4,160		4,247
Custody fees		1,017		1,136
Fixed expenses
Directors' emoluments		271		264
Auditor's remuneration:
	Fees payable to the Company's auditor for the audit of the annual financial statements	27		26
	Fees payable to the Company's auditor and its associates for other services
	- Other services pursuant to legislation: half yearly financial report	4		4
	- Other services pursuant to legislation: non-audit work*	14		-
Registrar fees		182		203
VAT		(36	)	(36	)
Bank overdraft interest		1		-
Other administration expenses		403		601
		866		1,062
Total other expenses		6,043		6,445

Fees in respect of services as Directors are paid by the Company only to those Directors who are independent of Franklin Templeton Investments. Included within these costs are Employer National Insurance contributions.

As at 31 March 2013, £388,000 (31 March 2012 : £350,000), in fees were payable and outstanding to FTIML for secretarial and administration services.

* Fee in respect of advice in relation to the New Zealand Dual Listed Issuers Exemption as discussed on page 43.

4	Tax on ordinary activities	2013		2012
		£' 000		£' 000
Overseas tax		4,940		5,078
Adjustment in respect of prior periods		9		(416	)
Current tax		4,949		4,662

Taxation		2013		2012
		£' 000		£' 000
Profit/(loss) before taxation		239,056		(250,755	)
Theoretical tax at UK corporation tax rate of 24% (2012: 26%)		57,373		(65,196	)
Effects of:
-	Capital element of Profit	(49,508	)	73,189
-	Prior period adjustments to tax	9		(416	)
-	Non taxable income	9		39
-	UK dividends not subject to corporation tax	-		(190	)
-	Irrecoverable overseas tax	4,940		5,078
-	Excess management expenses	3,386		2,905
-	Dividends not subject to corporation tax	(10,531	)	(10,523	)
-	Income taxable in different periods	(729	)	(224	)
Actual tax charge		4,949		4,662

As at 31 March 2013, the Company had unutilised management expenses of £44.9 million carried forward (2012:
£30.8 million). These balances have been generated because a large part of the Company's income is derived from dividends which are no longer taxable. Based on current UK tax law, the Company is not expected to generate taxable income in a future period in excess of deductible expenses for that period and, accordingly, is unlikely to be able to reduce future tax liabilities by offsetting these excess management expenses. These excess management expenses are therefore not recognised as a deferred tax asset.

5	Earnings per share
			2013			2012
		Revenue	Capital	Total	Revenue	Capital		Total
		£' 000	£' 000	£' 000	£' 000	£' 000		£' 000
		27,825	206,282	234,107	26,079	(281,496	)	(255,417	)
Earnings per share
			2013			2012
		Revenue	Capital	Total	Revenue	Capital		Total
		pence	pence	pence	pence	pence		pence
		8.45	62.67	71.12	7.91	(85.35	)	(77.44	)

The earnings per share is based on the profit/(loss) on ordinary activities after tax and on the weighted average number of shares in issue during the year of 329,135,381 (year to 31 March 2012: 329,825,964).

6	Financial assets - investments	2013		2012
		£' 000		£' 000
Opening investments		2,087,608		2,354,802
Movements in year:
Additions		47,122		59,819
Sales		(63,392	)	(45,738	)
Realised profits		47,593		10,708
Net appreciation/(depreciation)		158,534		(291,983	)
Closing investments		2,277,465		2,087,608

All investments have been recognised at fair value through the Income Statement.

Transaction costs for the year on purchases were £71,000 (2012: £120,000) and transaction costs for the year on sales were £183,000 (2012: £63,000). The aggregate transaction costs for the year were £254,000 (2012: £183,000).

Realised and unrealised gains on investments comprise of:
Realised gain based on carrying value at 31 March 2013	47,593	10,708
Net movement in unrealised appreciation/(depreciation)	158,534	(291,983	)
Realised and unrealised gains/(losses) on investments	206,127	(281,275	)

7	Trade and other receivables	2013	2012
		£' 000	£' 000
Dividends receivable		8,619	6,052
Overseas tax recoverable		179	257
Other debtors		9	16
Corporation tax recoverable		-	9
Accrued income		-	1
		8,807	6,335

8	Trade and other payables	2013	2012
		£' 000	£' 000
Accrued expenses		2,813	2,327
Purchase of investments for future settlement		994	-
		3,807	2,327

9	Called-up share capital	2013				2012
		Allotted, issued &				Allotted, issued &
		fully paid				fully paid
		£' 000		Number		£' 000		Number
Shares of 25p each
Opening balance		82,453		329,814,352		82,466		329,864,352
Shares repurchased during the year		(484	)	(1,939,460	)	(13	)	(50,000	)
Closing balance		81,969		327,874,892		82,453		329,814,352

The Company's shares have unrestricted voting rights at all general meetings, are entitled to all of the profits available for distribution by way of dividend, and are entitled to repayment of all of the Company's capital on winding up.

During the year, 1,939,460 shares were bought back for cancellation at a cost of £11,100,000 (2012: 50,000 shares were bought back for cancellation at a cost of £300,000).

10 Net asset value per share	Net asset value		Net asset value
	per share		attributable
	2013	2012	2013	2012
	pence	pence	£' 000	£'000
Shares	702.3	636.3	2,302,720	2,098,640

11 Dividend	2013		2012
	Rate (pence)	£' 000	Rate (pence)	£'000
Declared and paid in the year
Dividend on shares:
Final dividend for year	5.75	18,964	4.25	14,019
		18,964		14,019
Proposed for approval at the Company's AGM
Dividend on shares:
Final dividend for the year ended 31 March 2013
(31 March 2012: 5.75p)	6.25	20,492
		20,492

Dividends are recognised when the shareholders right to receive the payment is established. In the case of the final dividend, this means that it is not recognised until approval is received by shareholders at the Annual General Meeting.

12 Related party transactions

The following are considered to be related parties:

- Templeton Asset Management Ltd ("TAML")

- Franklin Templeton Investment Management Limited ("FTIML")

- The Directors of the Company

All material related party transactions, as set out in International Accounting Standard 24 Related Party, have been disclosed in the Directors' Report, Note 2 and Note 3. Details of the remuneration of all Directors can be found on
page 49.

Other funds managed by TAML may be investors in the same securities as the Company.

13 Risk management

In pursuing the investment objectives set out on page 33 of this Report the Company holds a number of financial instruments which are exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction of the profits available for dividends.

The main risks arising from the Company's financial instruments are market risk (which comprises market price risk, foreign currency risk and interest rate risk), other price risk, liquidity risk and credit risk.

The objectives, policies and processes for managing these risks, and the methods used to measure the risk, are set out below. These policies have remained unchanged since the beginning of the year to which these financial statements relate.

Investment and Concentration risk

The Company may invest a greater portion of its assets in the securities of one issuer, securities domiciled in a particular country, or securities within one industry group than other types of fund investments. As a result, there is the potential for increased concentration of exposure to economic, business, political or other changes affecting similar issues or securities, which may result in greater fluctuation in the value of the portfolio.

Market price risk

Market risk arises mainly from uncertainties about future prices of financial instruments held. It represents the potential loss the Company might suffer through holding market positions in the face of price movements.

The Directors meet quarterly to consider the asset allocation of the portfolio in order to minimise the risk associated with particular countries or industry sectors whilst continuing to follow the investment objectives. The Investment Manager has responsibility for monitoring the existing portfolio selected in accordance with the overall asset allocation parameters described above and seeks to ensure that individual stocks also meet the risk/reward profile on an ongoing basis.

The Investment Manager does not use derivative instruments to hedge the investment portfolio against market price risk, as in its opinion, the cost of such a process would result in an unacceptable reduction in the potential for capital growth.

Foreign currency risk

Currency translation movements can significantly affect the income and capital value of the Company's investments as the majority of the Company's assets and income are denominated in currencies other than sterling, which is the Company's functional currency.

The Investment Manager has identified three principal areas where foreign currency risk could affect the Company:

- movements in rates affect the value of investments;

- movements in rates affect short-term timing differences; and

- movements in rates affect the income received.

The Company does not hedge the sterling value of investments that are priced in other currencies.

The Company may be subject to short-term exposure to exchange rate movements, for instance where there is a difference between the date an investment purchase or sale is entered into and the date on which it is settled.

The Company receives income in currencies other than sterling and the sterling values of this income can be affected by movements in exchange rates. The Company converts all receipts of income into sterling on or near the date of receipt; it, however, does not hedge or otherwise seek to avoid rate movement risk on income accrued but not received.

13 Risk management (continued)

The fair value of the Company's monetary items that have foreign currency exposure at 31 March are shown below:

2013	Trade and		Trade and		Total net	Investments at
	other	Cash	other		foreign currency	fair value through
	receivables	at bank	payables		exposure	profit or loss
Currency	£' 000	£' 000	£' 000		£' 000	£' 000
US dollar	2,311	957	(994	)	2,274	539,341
Hong Kong dollar	-	-	-		-	472,492
Thai baht	2,024	-	-		2,024	337,620
Indonesian rupiah	43	-	-		43	234,552
Indian rupee	574	-	-		574	209,708
Turkish lira	1,314	-	-		1,314	162,180
Other	2,533	-	-		2,533	321,572

2012	Trade and		Trade and		Total net	Investments at
	other	Cash	other		foreign currency	fair value through
	receivables	at bank	payables		exposure	profit or loss
Currency	£' 000	£' 000	£' 000		£' 000	£' 000
US dollar	1,529	-	-		1,529	540,328
Hong Kong dollar	-	-	-		-	457,295
Thai baht	1,591	-	-		1,591	267,749
Indonesian rupiah	110	-	-		110	193,555
Indian rupee	231	-	-		231	193,464
Turkish lira	-	-	-		-	120,839
Other	2,848	39	-		2,887	314,378

Sensitivity

The following table illustrates the sensitivity of the profit after taxation for the year and the equity in regard to the Company's monetary financial assets and liabilities and its equity if sterling had strengthened by 10% relative to all currencies on the reporting date, with all other variables held constant.

	2013		2012
		Capital		Capital
	Revenue	Return	Revenue	Return
Financial Assets and Liabilities	£' 000	£' 000	£' 000	£' 000
US dollar	1,785	53,934	2,141	54,033
Hong Kong dollar	1,115	47,249	966	45,729
Thai bhat	903	33,762	855	26,775
Indonesian rupiah	434	23,455	415	19,356
Indian rupee	383	20,971	454	19,346
Turkish lira	679	16,218	361	12,084
	5,299	195,589	5,192	177,323

A 10% weakening of the sterling against the above currencies would have resulted in an equal and opposite effect on the above amounts.

Interest rate risk

The Company is permitted to invest in fixed rate securities. Any change to the interest rates relevant to particular securities may result in either income increasing or decreasing, or the Investment Manager being unable to secure similar returns on the expiry of contracts or the sale of securities. In addition, changes to prevailing rates or changes in expectations of future rates may result in an increase or decrease in the value of the securities held.

Interest rate risk profile

The majority of the Company's financial assets are non-interest bearing equity investments.

The carrying amount, by the earlier of contractual re-pricing or maturity date, of the Company's financial instruments was as follows:

	Within	Within
	one year	one year
	2013	2012
	£' 000	£' 000
Cash flow interest rate risk
Cash	20,255	7,024

Exposures vary throughout the year as a consequence of changes in the make up of the net assets of the Company.

Cash balances are held on call deposit and earn interest at the bank's daily rate.

There were no exposure to fixed interest investment securities during the year or at the year end.

Liquidity risk

The Company's assets comprise mainly of securities listed on the stock exchanges of emerging economies. Liquidity can vary from market to market and some securities may take longer to sell. As a closed ended investment trust, liquidity risks attributable to the Company are less significant than for an open ended fund.

The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given the large number of quoted investments held in the portfolio and the liquid nature of the portfolio of investments.

The Investment Manager reviews liquidity at the time of making each investment decision and monitors the evolving liquidity profile of the portfolio regularly.

Investments held by the Company are valued in accordance with the accounting policies at bid price. Other financial assets and liabilities of the Company are included in the balance sheet at fair value.

13 Risk management (continued)

Credit risk

Certain transactions in securities that the Company enters into expose it to the risk that the counter-party will not deliver the investment (purchase) or cash (in relation to sale or declared dividend) after the Company has fulfilled its responsibilities. The Company only buys and sells through brokers which have been approved by the Investment Manager as an acceptable counter-party. In addition, limits are set as to the maximum exposure to any individual broker that may exist at any time. These limits are reviewed regularly.

The amount of credit risk that the Company is exposed to is disclosed under interest rate risk profile and represents the maximum credit risk at the Balance Sheet date.

The Company has an ongoing contract with its custodian (JPMorgan Chase Bank) for the provision of custody services.

As part of the annual risk and custody review, the Company reviewed the custody services provided by JPMorgan Chase Bank and concluded that while there are inherent custody risks in investing in emerging markets, the custody network employed by TEMIT has appropriate controls in place to mitigate those risks, and that these controls are consistent with recommended industry practices and standards.

Securities held in custody are held in the Company's name or to its accounts. Details of holdings are received and reconciled monthly. Cash is actively managed by Franklin Templeton Investment's Trading Desk in Edinburgh and is typically invested in overnight time deposits in the name of TEMIT with an approved list of counterparties. Any excess cash not invested by the Trading Desk will remain in a JPMorgan Chase Bank interest bearing account. There is no significant risk on debtors and accrued income (or tax) at the year end.

Fair value

Fair values are derived as follows:

- Where assets are denominated in a foreign currency, they are converted into the sterling amount using year-end rates of exchange.

- Non-current financial assets - on the basis set out in the accounting policies.

- Cash - at the face value of the account.

The tables below analyse financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2 Inputs other than quoted prices included with level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices).

Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Valuation hierarchy fair value through profit and loss

		31 March 2013				31 March 2012
£' 000	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Listed investments	2,277,465	-	-	2,277,465	2,087,608	-	-	2,087,608

14 Significant holdings in investee undertakings

As at 31 March 2013 the Company held 3% or more in the issued share class of the following companies:

	% of issued	Fair	% of issued	Fair
	share class	value	share class	value
Name	2013	£' 000	2012	£' 000
Brilliance China Automotive Holdings Ltd.	5.3	205,849	5.6	190,949
VTech Holdings Ltd.	3.3	66,923	3.3	66,825
MCB Bank Ltd.	3.5	44,785	3.5	39,007
Guangzhou Automobile Group Co. Ltd., H	3.5	43,554	3.5	48,116
Hyundai Development Co.	3.5	39,992	3.5	36,197
Univanich Palm Oil PCL, fgn.	5.0	11,662	5.0	9,666
Victory City International Holdings Ltd.	7.0	9,745	6.9	6,379
Peninsula Land Ltd.	5.6	6,901	5.6	6,239
Polnord SA	10.6	3,640	4.4	3,165
Faysal Bank Ltd.	5.0	2,687	5.0	3,718

15 Contingent liabilities

No contingent liabilities existed as at 31 March 2013 or 31 March 2012.

16 Financial commitments

There were no financial commitments at 31 March 2013 or 31 March 2012.

17 Post balance sheet events

The only material post balance sheet event is in respect of the proposed dividend, which has been disclosed in Note 11.

This preliminary statement was approved by the Board on 4 June 2013. The financial information set out above does not constitute the Company's statutory accounts. This Preliminary Statement has been prepared on the basis of the accounting policies as set out in the most recently published set of annual financial statements.

The statutory accounts for the financial period ended 31^st March 2012 have been delivered to the Registrar of Companies, received an audit report which was unqualified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) and (3) of the Companies Act 2006.

The statutory accounts for the period ended 31 March 2013 received an audit report which was unqualified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section section 498(2) and (3) of the Companies Act 2006, and will be delivered to the Registrar of Companies.

The Annual Report and Accounts will be mailed to Shareholders shortly. Copies will be posted to the website www.temit.co.uk and may also be requested during normal business hours from Client Dealer Services at Franklin Templeton Investment Management Limited on freephone 0800 305 306.

For information please contact Client Dealer Services on freephone 0800 305 306 or Jane Lewis or Matthew Wilson at Winterflood Investment Trusts (Corporate Broker) on 020 3100 0000.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UGUQGQUPWGMC

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Templeton Emerging Markets Inv Trust (TEM)

Tuesday, 28th January 2025

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