Annual Financial Report

RNS Number : 6689N

Templeton Emerging Markets IT PLC

15 June 2010

 

Preliminary Statement of Annual Results

TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC

("TEMIT") (the "Company")

PERIOD TO 31 MARCH 2010

FINANCIAL SUMMARY

2009-2010

			Period ended		Year ended
			31 March		30 April		Change
	Ref.		2010		2009		%
Net Assets and Shareholders' Funds (£ million)			2,046.4		1,208.3		69.4
Net Asset Value (pence)			620.3		365.7		69.6
Net Asset Total Return			72.8%		-23.5%
Benchmark
MSCI Emerging Markets Index Total Return			52.0%		-23.4%
Share Price (pence)			577.0		340.5		69.5
Share Price Total Return			72.4%		-21.2%
Year - High (pence)			582.5		467.0
Year - Low (pence)			337.3		207.5
Ordinary Dividend (pence)			3.75		3.75
Special Dividend (pence)			-		2.50
Total Dividend (pence)			3.75		6.25
Revenue Earnings (pence)	a		2.88		7.69		-62.6
Share Price Discount to Net Asset Value			7.0%		6.9%
Total Expense Ratio	b		1.29%		1.34%
Total Expense Ratio excluding significant non recurring items			1.29%		1.25%

Source: Franklin Templeton Investments and Datastream.

The Company has prepared its financial statements in accordance with International Financial Reporting Standards ("IFRS") for the eleven month period ended 31 March 2010 and the year ended 30 April 2009.

a	The Earnings per share figure is based on the earnings shown in the "Revenue" column in the Income Statement in the Notes to the Financial Statements.
b	The Total Expense Ratio represents the annualised total expenses of the Company divided by the monthly average trading net assets of the Company for the period.

TEN YEAR RECORD
2000-2010

	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	30 Apr	31 Mar
Period ended	2000	2001	2002	2003	2004	2005*	2006	2007	2008	2009**	2010
Total Net Assets and Shareholders' Funds (£m)	749.9	619.0	666.2	595.5	778.5	1,066.0	1,866.2	1,925.5	2,291.4	1,208.3	2,046.4
NAV Basic (p)	159.3	135.7	146.2	130.8	171.0	198.9	348.2	359.2	484.8	365.7	620.3
NAV Diluted (p)	154.9	135.2	144.0	N/A	164.6	N/A	N/A	N/A	N/A	N/A	N/A
Price - Shares (p)	116.3	113.5	125.0	107.3	144.0	167.3	310.3	327.3	438.0	340.5	577.0
Price - Warrants (p)	22.0	17.0	17.5	3.8	13.3	N/A	N/A	N/A	N/A	N/A	N/A
Discount	27.0%	16.3%	14.5%	18.0%	15.8%	15.9%	10.9%	8.9%	9.6%	6.9%	7.0%
Earnings per share - undiluted (p)	1.34	1.36	1.82	1.70	2.89	3.42	3.65	4.16	4.07	7.69	2.88
Earnings per share - diluted (p)	1.12	1.13	1.51	N/A	2.88	N/A	N/A	N/A	N/A	N/A	N/A
Ordinary dividends per share (p)	1.10	1.25	1.25	2.25	2.25	2.67	2.76	3.13	3.50	3.75	3.75
Special dividends per share (p)	-	-	-	-	-	-	-	-	-	2.50	-
Total Expense Ratio	1.57%	1.61%	1.34%	1.49%	1.48%	1.50%	1.41%	1.32%	1.33%	1.34%	1.29%

*	Prior to April 2005 the results were prepared in accordance with UK GAAP. The results for the year ended 30 April 2005 have been restated in accordance with IFRS.
**	This includes £633m returned to shareholders as a result of the tender offer in 2008.
The main differences as a result of adopting IFRS are:
•	Investments are valued on a bid basis, as opposed to a mid basis; and
•	Only dividends paid during the period are reflected in the Financial Statements. A dividend of 3.75p per share on the Company's profits of 2010 has been proposed.

 

CHAIRMAN'S STATEMENT

Emerging markets rebounded strongly, as investors appreciated their financial strengths.

I am delighted to report on an excellent period for Templeton Emerging Markets Investment Trust PLC ("TEMIT" or the "Company"). The net asset value total return for the eleven months to 31 March 2010 was 72.8%; a rise which was particularly welcome following the market falls in 2008 and 2009. Emerging markets rebounded strongly, as investors appreciated the financial strengths of their economies and the companies in them.

Performance

The net asset value per share increased from 365.7 pence at 30 April 2009 to 620.3 pence on 31 March 2010. Adding in the dividend, this represents a total return of 72.8%, easily outperforming our benchmark, the MSCI Emerging Markets Index, which returned 52.0% (in sterling terms) for the same period. I am sure shareholders will join me in congratulating Mark Mobius and his team on such a fine performance. The Company was launched in June 1989 to seek out long-term value in markets where shareholders were unlikely to have the expertise to do so themselves. Since then, it has returned 2,180% (dividends re-invested), a compound growth rate of 16.3% per annum. The benchmark MSCI Emerging Markets Index has returned 940% (12.0% per annum) in the same period

During the period under review, the share price has traded at a discount of between 4% and 9% to its net asset value, ending almost where it began at 7.0% against 6.9% on 30 April 2009. The discount is continually monitored, and your Board exercises its right to buy back shares when it is considered to be in shareholders' interests to do so. During the period 532,000 shares were bought back at a cost of £2.2 million, modestly enhancing the net asset value per share of the remainder.

At 31 March 2010, your Company had total assets of £2,046 million, compared with £1,208 million at 30 April 2009.

On 4 June, the NAV per share had fallen by 7.7% to 572.7 pence since 31 March. The share price had fallen by 6.5% to 539.5 pence.

Investment income and the dividend

Shareholders will notice that, despite the strong growth in the portfolio's assets, investment income is down 43% from the previous year. In part this reflects the change of our year-end, since April is traditionally a strong month for dividend income, and in part the caution of investee companies during the financial crisis, some of whom chose to protect their balance sheets and cut their dividends. Your Board proposes to pay the same 3.75 pence dividend for the eleven months to 31 March 2010 as was paid for the year to 30 April 2009 by drawing on the revenue reserves built up in prior years. This represents an effective increase of 9.1%.

Asset allocation

The general policy of the Board is to be fully invested in equities. At 31 March 2010, 99.4% of the Company's net assets were invested in equities (30 April 2009: 98.0%) .

Continuation vote

As I previously reported, at the AGM held in July 2009 shareholders voted in favour of the Company continuing to operate as an investment trust for a further five years.

The Board

There have been no changes to the membership of the Board during the period. Gregory Johnson and I are due to retire at the AGM and offer ourselves for re-election. The Board regularly evaluates its performance and following the annual Directors' appraisal process, and with the endorsement of the Nomination and Remuneration Committee, the Board is recommending our re-election to shareholders.

Investor communications

The Board aims to keep shareholders informed and up to date with information about the Company. We recognise that shareholders, especially those who hold their shares through nominee accounts, can find it difficult to find out the most up-to date news about TEMIT. We send out the annual and half year report and accounts and notices of any significant company events. We also release information through the stock exchanges, such as Interim Management Statements.

Our website (www.temit.co.uk) displays the latest news, price and performance information, portfolio details and quarterly web updates with the Investment Manager. On 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.

Finally, I am pleased to report that TEMIT won the Investment Week Investment Trust of the Year Award 2009 in the emerging markets category for the second consecutive year. The Company was also awarded the Best Emerging Markets Trust in the Moneywise 2010 awards and won Best Large Trust in 2009 award from Investment Trusts Magazine.

Outlook

Over the last year markets moved out of a period of recession and spent the first few months of 2010 in broadly positive territory.

However, the effect of large fiscal support packages by governments to stimulate their economies has caused concerns of overheating in some emerging markets and may result in a tightening of monetary policy, including raising interest rates, to help control inflationary pressures.

Investors have also become increasingly nervous about the weak fiscal positions of some Eurozone countries, particularly Greece, and the impact this is having on the wider market, as well as concerns that China's growth may be tempered by the need to control money flows and property prices.

We believe markets may remain fragile over the short term with investors reacting to any further negative news.

However, even if the exceptional performance experienced by emerging markets in 2009 is not repeated in 2010, we believe that the long term outlook for emerging markets remains positive. In this type of environment, the Franklin Templeton Emerging Markets Equity Team is confident that their active bottom-up fund management and detailed time-tested investment process leaves them well placed to uncover the best undervalued investment opportunities for investors.

The Company's AGM will take place on 23 July 2010.

AGM

I would like to take this opportunity to invite all shareholders to attend the AGM to be held in the Mountbatten Room, The Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS at 12 noon on Friday 23 July 2010.

Peter A Smith

15 June 2010

Indices above are shown on a total return basis in GBP. Sources: Franklin Templeton Investments and Standard & Poors.

MANAGER'S REPORT & PORTFOLIO REVIEW
31 MARCH 2010

MANAGEMENT COMPANY
The Directors have appointed Templeton Asset Management Ltd. (''TAML'') as Investment Manager of the Company.

TAML is part of Franklin Templeton Investments, 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 over 20 years ago. Today, TAML's Templeton Emerging Markets Team manages US$37 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 39 dedicated emerging markets portfolio managers, analysts and product specialists. Their on-the-ground presence in 15 locations, 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, including Allan Lam, Tom Wu, Dennis Lim, Carlos Hardenberg, and Grzegorz Konieczny have worked alongside Mark Mobius for a number of years.

TAML's Emerging Markets Team receives support from the employees of Franklin Resources Inc., its ultimate parent company and its subsidiaries.

MARK MOBIUS, PH.D.

Executive Chairman

Dr. Mobius has spent more than 30 years working in emerging markets all over the world. He joined Franklin Templeton Investments in 1987 as president of the 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 Organisation for Economic Cooperation and Development.

ALLAN LAM, CPA

Senior Executive Vice President & Senior Managing Director

Mr. Lam joined the Templeton organisation in 1987 and his research responsibilities include the real estate and oil & gas sectors as well as analysis of companies 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

Senior Executive Vice President & Senior Managing Director

Mr. Wu joined the Templeton organisation in 1987 and his research responsibilities include 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

Mr. Lim joined Templeton in 1990 and has research responsibilities for Southeast Asian markets. Mr. Lim is a specialist on building regulations and urban planning requirements in Singapore and the ASEAN region. He specialises in researching companies in the telecommunications sector. He served as a former engineering service officer for the Ministry of National Development in Singapore.

MARKET OVERVIEW

In the last eleven months, emerging market equity prices surged as markets continued the recovery that began in March 2009. The MSCI Emerging Markets Index produced a total return of 52.0% in the period. The surge in prices was spearheaded by the rapid increase in liquidity, resulting from expansionary monetary policies and huge stimulus packages implemented by governments and central banks globally to pull economies out of recession and return to sustainable growth. Higher commodity prices and stronger emerging market currencies also supported markets. Over the longer-term, we expect this upward trend to continue albeit with some corrections along the way.

Latin American markets were the strongest performers in the emerging market asset class during the reporting period. Higher commodity prices and stronger domestic currencies supported equity prices in Latin America. Brazil's resilient macroeconomic fundamentals, strong fiscal and monetary policies and resilience to the global financial crisis led stock prices to rebound significantly. Its market returned 65.0% during the reporting period.

In Eastern Europe, markets also performed strongly, due to lower interest rates subsiding credit crunch worries and attractive valuations. Hungary was the top performer, returning 115.6% . Equity prices in Turkey also outperformed peers with a return of 78.0% . Higher commodity prices and a stronger rouble also supported equity prices in Russia, which ended the period with a 65.6% return. In Asia, significant fund inflows, relatively high growth in major markets such as China and India and stronger regional currencies drove performances in Asian markets. Top regional performers, with returns in excess of 70%, included India, Indonesia and Thailand.

PERFORMANCE ATTRIBUTION ANALYSIS

Period to 31 March 2010	%
NAV total return for the period	72.8
MSCI Index total return	52.0
Relative return	20.8
Sector allocation	3.9
Stock selection	22.5
Total equities	26.4
Currency	-5.6
Buybacks	-
Relative performance	20.8

Source: Factset and Franklin Templeton

Geographically, the largest contributor to the Company's performance, relative to the MSCI Emerging Markets Index, was an overweight position and superior stock selection in India. Overweight exposures to Brazil, Indonesia, Thailand and Turkey and an underweight position in Taiwan also had a positive impact on relative performance. Good stock selection in China, Brazil and Indonesia further enhanced relative performance. Conversely, holdings in South Korea detracted from performance. The Company's relatively higher cash position in the earlier part of the reporting period also had some negative attribution effects in times of rising markets. Cash levels were reduced from 2.0% at the beginning of the period to 0.6% as at end March 2010.

LARGEST COUNTRY CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

Top Contributors	Contribution		Top Detractors	Contribution
India	8.1		South Korea	-1.4
Hong Kong/China	2.9		Russia	-0.3
Indonesia	2.7		Austria	-0.2
Taiwan	2.6		Colombia	-0.1
Brazil	2.3

By sector, good stock selection in materials and information technology sectors and overweight positions in materials and financials supported performance. An underweight exposure to information technology and telecommunication services providers also had positive attribution effects. Conversely, stock selection in the consumer staples and industrials sectors hurt the performance.

LARGEST SECTOR CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

Top Contributors	Contribution		Top Detractors	Contribution
Materials	8.6		Consumer Staples	-0.7
Information Technology	4.2		Industrials	-0.6
Financials	3.7		Energy	-0.2
Consumer Discretionary	3.1
Telecommunication Services	3.0

At the company level, the top three contributors to relative performance were overweight positions in Sesa Goa, Brilliance China and Tata Consultancy. Sesa Goa is a beneficiary of firm iron ore prices and the ongoing consolidation of the global mining sector. The company is well positioned to benefit from the demand from emerging markets as well as the positive long-term trend in commodity prices. Brilliance China is a major automobile manufacturer in China with a joint venture with BMW for the production and selling of BMW 3-series and 5-series in China. The company is a beneficiary of the growth in demand for automobiles and government stimulus measures in the sector. Tata Consultancy is a major IT consulting company in India. Its share price was buoyed by an improving market and sound fundamentals. Moreover, we believe that it is well positioned to benefit from the outsourcing trend of services to Indian consulting companies.

Conversely, the three largest detractors were Hyundai Development, Dairy Farm and Denway Motors. Despite exhibiting double-digit returns, all three stocks underperformed the wider MSCI Emerging Markets benchmark index. Hyundai Development is a leading construction firm and residential property developer in South Korea. Hyundai's share price lagged due to sluggish property sales during 2009. Dairy Farm's core businesses consist of supermarkets, hypermarkets as well as health & beauty, convenience and home furnishing stores. The company remains a long term hold as it is a beneficiary of Asia's economic recovery and higher consumer demand. The company is also exposed to fast growing markets such as China, Vietnam and India. Denway Motors is a major manufacturer and distributor of passenger cars in China. In addition to its own brand, Denway has formed a joint venture with Honda Motor for the production and selling of Honda Accord sedans, Jazz, Fit and Odyssey MPV models. The company's share price underperformed because of the lack of new models last year, uncertainties surrounding the IPO listing of its parent company and the related group restructuring. However, over the longer-term, we are confident that Denway will benefit from the growing demand for automobiles in China.

A major performance detractor during the period was exposure to a weaker US dollar through investments in Brazilian and Russian ADR (American Depositary Receipt) listings. Superior stock selection in both markets was largely overshadowed by a weak US dollar. The Company held ADRs as opposed to the underlying ordinary shares because of the generally better liquidity.

We continue to remain positive on the long-term outlook for emerging markets.

LARGEST COMPANY CONTRIBUTORS AND DETRACTORS TO PERFORMANCE (%)

Top Contributors	Contribution		Top Detractors	Contribution
Sesa Goa Ltd.	6.4		Hyundai Development Co.	-2.3
Brilliance China Automotive Holdings Ltd.	2.1		Dairy Farm International Holdings Ltd.	-1.2
Tata Consultancy Services Ltd.	2.0		Denway Motors Ltd.	-0.9
Vale SA	1.6		SK Energy Co. Ltd.	-0.7
Astra International	1.6		China Petroleum & Chemical Corp.	-0.6

PORTFOLIO CHANGES & INVESTMENT STRATEGIES

The Company's search for undervalued stocks trading at attractive valuations led to selective investments and concentrated in the diversified banking, precious metals & minerals and oil & gas sectors. Companies in the energy and metals sectors remain well-positioned to benefit from the long-term uptrend in commodity prices and continued demand for oil, gas and metals. We believe that commodity companies should remain profitable and constitute attractive investment opportunities. Taking a long-term view, we continue to like these sectors. The continued liberalisation of the financial sector in emerging markets could unlock hidden value and allow banks to benefit from the growing financial needs of consumers in these regions. Selective additions were also made in consumer-related sectors such as food retail, real estate management & development and automobile manufacturing. The long-term outlook for consumerism remains attractive due to relatively higher per capita income growth and continued demand for consumer goods and services.

Key purchases included Wal-Mart de Mexico (Walmex), MCB and Impala Platinum. Walmex is the largest retailing chain in Mexico and 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. MCB is the fourth largest bank in Pakistan. The Company increased its exposure to the bank because of its attractive valuation and relatively high return on equity. Impala Platinum is one of the leading platinum producers in the world and is responsible for approximately a quarter of the 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.

The availability of more attractive stocks elsewhere in the investment universe and the attainment of target prices led to selective sales during the reporting period. This reduced the Company's investments in Taiwan, Turkey and Russia. These sales also reduced the Company's exposure to wireless telecommunication services, semiconductors and communications equipment companies. Major sales included Mediatek, Mobile Telesystems, Compal Communications and Siam Cement.

Mediatek is the largest integrated circuit design company in Taiwan. Exposure to Mediatek was eliminated due to a share price rally ahead of the good quarterly results giving us the opportunity to switch into cheaper stocks. Mobile Telesystems is the dominant mobile services provider in Russia. The Company divested its holdings in the company because of the execution risks associated with the company's penetration into overseas markets. The largest handset manufacturer in Taiwan, Compal Communications, was eliminated due to intensive competition and the weakening market position of one of its major customers. 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.

OUTLOOK

Emerging markets have rallied over the past eleven months and some investors might be tempted to take profits, which could lead to short-term market corrections. However, we expect these kinds of corrections in emerging markets and rather than focusing on when a correction might happen, we focus on buying and adding to investments that in our view have dropped to compelling valuations as a result.

Our optimism remains founded on:

·		growing investor confidence in equities, generally and emerging markets specifically;
·		strong fund inflows into emerging markets;
·		the search for higher returns in the face of low bank interest rates;
·		relatively higher GDP growth in emerging markets;
·		the accumulation of foreign exchange reserves which puts emerging economies in a much stronger position to weather external shocks;
·		the relatively lower debt levels of emerging market countries; and,
·		the high level of money supply growth globally.
Overall, we continue to remain positive on the long-term outlook for emerging markets.

J Mark Mobius, Ph.D.

Templeton Asset Management Ltd.

15 June 2010

*	All returns are in Sterling terms.

STATEMENT OF DIRECTORS' RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT
AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare the financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with IFRS as adopted by the EU.

The financial statements are required by law and IFRS as adopted by the EU to present fairly the financial position of the Company and the performance for that period. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

In preparing the financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgments and estimates that are reasonable and prudent;

·      state whether the financial statements have been prepared in accordance with IFRS, as adopted by the EU; and

·      prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are also responsible for the system of internal control, for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and the Corporate Governance Statement that comply with that law and those regulations. The Annual Report is available on the Company's website (www.temit.co.uk).

Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.

The Directors confirm that to the best of their knowledge:

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

·      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
15 June 2010

PORTFOLIO HOLDINGS

Geographical analysis (by country of incorporation)

As at 31 March 2010

		Fair Value**
Country	Sector	£'000
AUSTRIA
OMV AG‡	Energy	17,784
		17,784
BRAZIL
Banco Bradesco SA, ADR, pfd.†*	Financial	96,250
Itau Unibanco Holding SA, ADR*	Financial	124,074
Petroleo Brasileiro SA, ADR, pfd.†*	Energy	88,131
Vale SA, ADR, pfd., A†*	Materials	134,403
		442,858
HONG KONG/CHINA
Aluminum Corp. of China Ltd., H	Materials	52,375
Brilliance China Automotive Holdings Ltd.	Consumer Discretionary	54,021
China International Marine Containers (Group) Co. Ltd., B	Industrials	11,815
China Petroleum and Chemical Corp., H	Energy	27,166
Dairy Farm International Holdings Ltd.	Consumer Staples	54,101
Denway Motors Ltd.	Consumer Discretionary	57,397
PetroChina Co. Ltd., H	Energy	60,222
Victory City International Holdings Ltd.	Consumer Discretionary	16,240
VTech Holdings Ltd.	Information Technology	59,187
		392,524
HUNGARY
MOL Hungarian Oil and Gas Nyrt.	Energy	26,905
		26,905
INDIA
Infosys Technologies Ltd.	Information Technology	11,837
National Aluminium Co. Ltd.	Materials	29,024
Oil & Natural Gas Corp. Ltd.	Energy	31,933
Peninsula Land Ltd.	Financials	11,714
Sesa Goa Ltd.	Materials	141,185
Tata Consultancy Services Ltd.	Information Technology	68,896
		294,589

**	Fair value represents the bid value of a security as required by International Financial Reporting Standards.
‡	This Austrian company has significant exposure to operations in emerging markets.
*	US listed stocks
†	pfd: preferred shares

			Fair Value**
Country	Sector		£'000
INDONESIA
PT Astra International Tbk	Consumer Discretionary		57,937
PT Bank Central Asia Tbk	Financial		32,015
PT Bank Danamon Indonesia Tbk	Financial		44,674
			134,626
MEXICO
Wal-Mart de Mexico SAB de CV, V	Consumer Staples		41,391
			41,391
PAKISTAN
Faysal Bank Ltd.	Financial		4,065
MCB Bank Ltd.	Financial		22,326
			26,391
POLAND
Polnord SA	Industrials		8,965
Polski Koncern Naftowy Orlen SA	Energy		29,224
			38,189
RUSSIA
Gazprom, ADR*	Energy		33,113
LUKOIL Holdings, ADR*	Energy		33,551
Mining and Metallurgical Co. Norilsk Nickel	Materials		9,980
Mining and Metallurgical Co. Norilsk Nickel, ADR*	Materials		32,794
OAO TMK	Energy		16,114
			125,552
SOUTH AFRICA
Anglo American PLC	Materials		46,138
Impala Platinum Holdings Ltd.	Materials		11,141
			57,279
SOUTH KOREA
Hyundai Development Co.	Industrials		50,679
SK Energy Co. Ltd.	Energy		58,168
			108,847

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

*     US listed stocks 

			Fair Value**
Country	Sector		£'000
TAIWAN
Taiwan Semiconductor Manufacturing Co. Ltd.	Information Technology		5,080
			5,080
THAILAND
Kasikornbank Public Co. Ltd., fgn.	Financial		34,662
Kiatnakin Bank Public Co. Ltd., fgn.	Financial		12,584
Land and Houses Public Co. Ltd., fgn.	Financial		12,017
PTT Exploration and Production Public Co. Ltd., fgn.	Energy		29,254
PTT Public Co. Ltd., fgn.	Energy		27,893
Siam Cement Public Co. Ltd., fgn.	Materials		18,575
Siam Commercial Bank Public Co. Ltd., fgn.	Financial		47,820
			182,805
TURKEY
Akbank TAS	Financial		95,166
Tupras-Turkiye Petrol Rafinerileri AS	Energy		44,136
			139,302
TOTAL INVESTMENTS			2,034,122
LIQUID NET ASSETS			12,281
TOTAL NET ASSETS			2,046,403

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

TEN LARGEST INVESTMENTS

IN ORDER OF MARKET VALUE AS AT 31 MARCH 2010

Sesa Goa Ltd.

	% of Total		Fair Value
Country	Net Assets		£' 000
India	6.9 %		141,185

One of the biggest exporters of iron ore in India.

Vale SA, ADR, pfd., A

	% of Total		Fair Value
Country	Net Assets		£' 000
Brazil	6.6 %		134,403

This Brazilian-based company is one of the world's largest iron ore producers that is also engaged in various mining activities.

Itau Unibanco Holding SA, ADR

	% of Total		Fair Value
Country	Net Assets		£' 000
Brazil	6.1 %		124,074

One of Brazil's largest commercial banks providing a full range of banking and financial services. This was formed by a recent merger between Banco Itau and Unibanco.

Banco Bradesco SA, ADR, pfd.

	% of Total		Fair Value
Country	Net Assets		£' 000
Brazil	4.7 %		96,250

One of Brazil's largest financial conglomerates, providing a full range of banking and financial services.

Akbank TAS

	% of Total		Fair Value
Country	Net Assets		£' 000
Turkey	4.6 %		95,166

One of Turkey's largest privately owned commercial banks, providing a full range of banking and financial services.

Petroleo Brasileiro SA, ADR, pfd.

	% of Total		Fair Value
Country	Net Assets		£' 000
Brazil	4.3 %		88,131

Brazil's national oil and gas company that specializes in off-shore exploration and production and maintains a substantial proven reserve of crude oil and natural gas.

Tata Consultancy Services Ltd.

	% of Total		Fair Value
Country	Net Assets		£' 000
India	3.4 %		68,896

A major IT consulting company in India.

PetroChina Co. Ltd., H

	% of Total		Fair Value
Country	Net Assets		£' 000
China	2.9 %		60,222

China's largest oil and gas company in terms of reserves. The company has gradually been diversifying into marketing and downstream activities.

VTech Holdings Ltd.

	% of Total		Fair Value
Country	Net Assets		£' 000
Hong Kong	2.9 %		59,187

The company is a market leader in the cordless phone market.

SK Energy Co. Ltd.

	% of Total		Fair Value
Country	Net Assets		£' 000
South Korea	2.8 %		58,168

A major company in South Korea's refining market.

INCOME STATEMENT
FOR THE PERIOD ENDED 31 MARCH 2010

		11 months ended			Year ended
		31 March 2010			30 April 2009
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments and foreign exchange
Gains/(losses) on investments at fair value	6	-	851,388	851,388	-	(489,246)	(489,246)
Gains on foreign exchange		-	60	60	-	2,262	2,262
Revenue
Dividends	1	29,988	-	29,988	53,565	-	53,565
Bank interest	1	19	-	19	2,453	-	2,453
		30,007	851,448	881,455	56,018	(486,984)	(430,966)
Expenses
Investment management fee	2	(15,219)	-	(15,219)	(12,547)	-	(12,547)
Other expenses	3	(4,224)	-	(4,224)	(5,262)	-	(5,262)
Profit/(loss) before taxation		10,564	851,448	862,012	38,209	(486,984)	(448,775)
Tax expense	4	(1,058)	-	(1,058)	(10,105)	-	(10,105)
Profit/(loss) for the period		9,506	851,448	860,954	28,104	(486,984)	(458,880)
Profit/(loss) attributable to equity
holders of the Company		9,506	851,448	860,954	28,104	(486,984)	(458,880)
Basic earnings per share	5	2.88p	257.94p	260.82p	7.69p	(133.28)p	(125.59)p
Annualised Expense Ratio				1.29%			1.34%

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 period and therefore no separate statement of comprehensive income has been presented.

Dividend Policy

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

An ordinary dividend of 3.75 pence per share is proposed.

(An ordinary dividend of 3.75 pence per share and a special dividend of 2.50 pence per share were paid for the year ended 30 April 2009).

BALANCE SHEET
AS AT 31 MARCH 2010

		As at	As at
		31 March 2010	30 April 2009
	Note	£'000	£'000
ASSETS
Non-current assets
Investments at fair value through profit or loss	6	2,034,122	1,183,896
Current assets
Trade and other receivables	7	5,643	5,394
Cash		9,309	29,671
		14,952	35,065
Current liabilities
Trade and other payables	8	(2,188)	(3,947)
Current tax payable		(483)	(5,865)
		(2,671)	(9,812)
Non-current liabilities
Deferred tax liabilities	9	-	(856)
NET ASSETS		2,046,403	1,208,293
ISSUED SHARE CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY SHAREHOLDERS
Equity Share Capital	10	82,478	82,611
Special Distributable Reserve		433,546	433,546
Capital Redemption Reserve		191	58
Capital Reserve		1,469,502	620,245
Revenue Reserve		60,686	71,833
EQUITY SHAREHOLDERS' FUNDS		2,046,403	1,208,293
Net Asset Value per share (in pence)	11	620.3	365.7

The Financial Statements of Templeton Emerging Markets Investment Trust PLC (company registration number SC118022) were approved for issue by the Board and signed on 15 June 2010.

Peter Smith	Peter Harrison
Chairman	Director

STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2010

			Capital	Special
	Share	Share	Redemption	Distributable	Capital	Revenue
	Capital	Premium*	Reserve*	Reserve	Reserve	Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2008	118,170	375,327	22,718	-	1,719,870	55,310	2,291,395
Profit/(loss) for the period	-	-	-	-	(486,984)	28,104	(458,880)
Equity dividends (note 12)	-	-	-	-	-	(11,581)	(11,581)
Purchase and cancellation of
own shares (note 10)	(35,559)	-	35,559	-	(612,641)	-	(612,641)
Transfer to capital reserves*	-	(375,327)	(58,219)	433,546	-	-	-
Balance at 30 April 2009	82,611	-	58	433,546	620,245	71,833	1,208,293
Profit for the period	-	-	-	-	851,448	9,506	860,954
Equity dividends (note 12)	-	-	-	-	-	(20,653)	(20,653)
Purchase and cancellation of
own shares (note 10)	(133)	-	133	-	(2,191)	-	(2,191)
Balance at 31 March 2010	82,478	-	191	433,546	1,469,502	60,686	2,046,403

*The balances on the Share Premium Account and the Capital Redemption Reserve as at 25 September 2008 were cancelled on 5 December 2008 and a Special Distributable Reserve set up.

CASH FLOW STATEMENT

FOR THE PERIOD ENDED 31 MARCH 2010

		For the		For the
		period ended		year ended
		31 March 2010		30 April 2009
		£'000		£'000
Cash flows from operating activities
Profit/(loss) before taxation		862,012		(448,775	)
Adjustments for:
(Gains)/losses on investments at fair value		(851,388	)	489,246
Realised gains on foreign exchange		(60	)	(2,262	)
Stock dividend		(3	)	-
Increase in debtors		590		4,883
Decrease in accrued income		3		74
Decrease in creditors		(742	)	(5,522	)
Cash generated from operations		10,412		37,644
Taxation paid		(7,297	)	(7,399	)
Net cash inflow from operating activities		3,115		30,245
Cash flows from investing activities
Purchases of non-current financial assets		(44,901	)	(225,530	)
Sales of non-current financial assets		44,091		826,592
		(810	)	601,062
Cash flows from financing activities
Equity dividends paid		(20,653	)	(11,581	)
Purchase of shares for cancellation		(2,191	)	(612,641	)
		(22,844	)	(624,222	)
Net (decrease)/increase in cash and cash equivalents		(20,539	)	7,085
Cash at start of period		29,671		22,605
Exchange gain/(loss) on cash		177		(19	)
Cash and cash equivalents at end of period		9,309		29,671

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 MARCH 2010

1              Income		2010		2009
		£'000		£'000
Income from investments
UK Dividends		-		130
Other EU dividends		645		3,959
Other overseas dividends		29,340		49,448
Scrip dividends		3		28
		29,988		53,565
Other income
Deposit income		19		2,453
Total income		30,007		56,018
Total income comprises:
Dividends		29,988		53,565
Interest		19		2,453
		30,007		56,018
Income from investments
Listed overseas		29,988		53,435

2              Investment management fee		2010		2009
		£'000		£'000
Variable Expense
Investment management fee		15,219		12,547

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 2010, £1.6 million (30 April 2009: £1.5 million) in fees were payable and outstanding to TAML. In addition to the investment management fee above, the Company obtains secretarial and administration services from 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 is recorded within other expenses (note 3).

3              Other expenses		2010		2009
		£'000		£'000
Variable expenses
Secretarial and administration expenses		3,044		2,608
Custody fees		939		782
Fixed expenses
Directors' emoluments		212		224
Auditors' remuneration*
Fees payable to the Company's auditor for the audit of the annual financial statements		24		33
Fees payable to the Company's auditor and its associates for other services
- Other services: half yearly financial report		4		3
- Other services pursuant to legislation: 31 March 2008 Accounts		-		4
- Services relating to corporate finance transactions: assistance with the capital restructuring proposals		-		28
Registrar fees		192		241
Tender offer costs		-		1,279
VAT		(617	)	(981	)
Bank overdraft interest		1		24
Other administration expenses		425		1,017
		241		1,872
Total other expenses		4,224		5,262

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 2010, £0.3 million (30 April 2009: £0.3 million), in fees were payable and outstanding to FTIML.

The figure of £617,000 for VAT in 2010 includes a £482,000 repayment for timing differences in relation to expenses paid on the June 2008 tender offer that were processed after the 30 April 2009 year end. Also included is a one off repayment of £147,000 received in 2010 which represented VAT charged by FTIML on management fees in a prior period at the point when those fees became exempt.

*Auditors' remuneration for the period ending 31 March 2010 relates to Deloitte LLP.

4              Tax on ordinary activities		2010		2009
		£'000		£'000
Corporation tax charged at 28%		-		10,435
Double taxation relief		-		(2,800	)
		-		7,635
Overseas tax		1,914		2,851
Current tax		1,914		10,486
Deferred tax - current period (note 9)		(856	)	(381	)
		1,058		10,105
Taxation		2010		2009
		£'000		£'000
Profit before taxation		862,012		(448,775	)
Theoretical tax at UK corporation tax rate		241,363		(125,657	)
Effects of:
- Capital element of profit		(238,405	)	136,356
- Non taxable income		15		18
- Stock dividends		(1	)	(8	)
- Non deductible expenses		-		358
- Dividends not subject to Corporation Tax		(4,433	)	(1,146	)
- Irrecoverable overseas tax		1,914		184
- Excess management expenses		1,513		-
- Income taxable in different periods		(908	)	-
Actual tax charge		1,058		10,105

From 1 July 2009, new legislation treats foreign and UK distributions in the same way. This means that overseas dividend income will generally be exempt provided it falls into an exempt class and anti avoidance provisions do not apply. As a result of this the Company had no UK corporation tax liability for the period ended 31 March 2010.

There has been no ruling relating to the taxation of overseas dividends received before 1 July 2009 and the Company has not, at this stage, recognised the potential refund of UK corporation tax from treating this income as non-taxable.

As at 31 March 2010, the Company had unutilised management expenses of £5.4 million carried forward (2009: Nil). 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

Earnings per share has been calculated on the following earnings:

			2010						2009
	Revenue		Capital		Total		Revenue		Capital		Total
	£'000		£'000		£'000		£'000		£'000		£'000
	9,506		851,448		860,954		28,104		(486,984	)	(458,880	)
Earnings per share
			2010						2009
	Revenue		Capital		Total		Revenue		Capital		Total
	£'000		£'000		£'000		£'000		£'000		£'000
	2.88		257.94		260.82		7.69		(133.28	)	(125.59	)

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 period 330,099,504 (year to 30 April 2009: 365,378,384).

6              Financial assets - investments	2010		2009
	£'000		£'000
Opening investments	1,183,896		2,264,926
Movements in period
Additions	43,046		221,178
Sales	(44,208	)	(812,962	)
Realised profits	10,244		414,652
Net appreciation/(depreciation)	841,144		(903,898	)
Closing investments	2,034,122		1,183,896

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

Transaction costs for the period on purchases were £118,000 (2009: £571,000) and transaction costs for the period on sales were £147,000 (2009: £665,000). The aggregate transaction costs for the period were £265,000 (2009: £1,236,000).

Realised and unrealised gains on investments comprise of:
Realised gain based on carrying value		10,244		414,652
Net movement in unrealised appreciation/(depreciation)		841,144		(903,898	)
Realised and unrealised gains/(losses) on investments		851,388		(489,246	)

7              Trade and other receivables			2010		2009
			£'000		£'000
Dividends receivable			5,464		5,277
Overseas tax recoverable			178		113
Accrued income			1		4
			5,643		5,394

8              Trade and other payables			2010		2009
			£'000		£'000
Accrued expenses			2,188		2,092
Purchase of investments for future settlement			-		1,855
			2,188		3,947

9              Deferred tax			2010		2009
			£'000		£'000
Deferred tax provided
Accrued income taxable on receipt			-		856
The movement in the provision is as follows:
Provision at start of period			856		1,237
Deferred tax debit in Income Statement			(856	)	(381	)
			-		856

Any changes in the provision for deferred tax have been recognised in the Income Statement under tax expense (see Note 4).

10           Called-up share capital			2010					2009
			Allotted, issued &					Allotted, issued &
			fully paid					fully paid
			£'000			Number		£'000			Number
Shares of 25p each
Opening balance			82,611		330,446,352			118,170			472,681,216
Shares repurchased during the period			133	)	(532,000		)	(35,559	)		(142,234,864	)
Closing balance			82,478		329,914,352			82,611			330,446,352

The authorised share capital of the Company as at 31 March 2010 was made up of 1,362,419,566 shares of 25 pence each (£340,605,000).

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 period, 532,000 shares were bought back for cancellation at a cost of £2.2 million (2009: 142,234,864 shares were bought back for cancellation at a cost of £609.7 million). No shares were cancelled between 1 April 2010 and 4 June 2010.

11           Net asset value per share			Net asset value				Net asset value
			per share				attributable
			2010		2009		2010		2009
			p		p		£'000		£'000
Shares			620.3		365.7		2,046,403		1,208,293

12           Dividend				2010				2009
				Rate (p)		£'000		Rate (p)		£' 000
Declared and paid in the period
Dividend on shares:
Final dividend for period			3.75			12,392		3.50		11,581
Special dividend for the period			2.50			8,261		-		-
						20,653				11,581

Proposed for approval at the Company's AGM
Dividend on shares:
Final dividend for period ended 31 March 2010 (30 April 2009: 3.75p)	3.75		12,372
			12,372

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.

13           Related party transactions

The following are considered to be related parties:

Templeton Asset Management Ltd ("TAML")

Franklin Templeton Investment Management Limited ("FTIML")

All material related party transactions, as set out in International Accounting Standard 24 Related Party Disclosures, have been disclosed in the Directors' Report, Note 2 and Note 3.

14           Risk management 

In pursuing the investment objectives set out in 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 period to which these financial statements relate.

Investment 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, it may be more sensitive 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.

The fair value of the Company's monetary items that have foreign currency exposure at 31 March 2010 are shown below:

2010	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	1,041		3,903		-		4,944		622,511
Hong Kong Dollar	-		-		-		-		338,422
Indian Rupee	-		-		-		-		294,589
Thai Baht	715		-		-		715		182,805
Turkish Lira	1,748		-		-		1,748		139,302
Indonesian Rupiah	-		-		-		-		134,626
Other	2,137		891		-		3,028		321,867

2009	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	4,804		1,775		(127	)	6,452		396,806
Hong Kong Dollar	-		-		-		-		209,330
Indian Rupee	-		-		-		-		103,726
Thai Baht	474		-		-		474		109,348
Turkish Lira	-		-		-		-		78,752
Indonesian Rupiah	-		-		(89	)	(89	)	62,593
Other	114		914		(1,639	)	(611	)	223,340

Sensitivity

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

	2010				2009
			Capital				Capital
	Revenue		Return		Revenue		Return
Financial Assets and Liabilities	£'000		£'000		£'000		£'000
US Dollar	1,169		62,251		1,444		39,681
Hong Kong Dollar	662		33,842		891		20,933
Indian Rupee	248		29,459		189		10,373
Thai Bhat	257		18,281		485		10,935
Turkish Lira	176		13,930		1,207		7,875
	2,512		157,763		4,216		89,797

A 10% weakening of the pound 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 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.

In general, if interest rates rise the income potential of the Company also rises, but the value of fixed rate securities will decline. A decline in interest rates will have the opposite effect.

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
	2010		2009
	£'000		£'000
Cash flow interest rate risk
Cash	9,309		29,671

Exposures vary throughout the period as a consequence of changes in the make up of the net assets of the Company arising from out of the investment and risk management process.

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

There was no exposure to fixed interest securities during the period or at the period 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 portfolio manager reviews liquidity at the time of making each investment decision and monitors the evolving liquidity profile of the portfolio regularly.

Securities held by the Company are valued at Bid price. Other financial assets and liabilities of the Company are included in the Balance Sheet at fair value.

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 (JP Morgan Chase Bank) for the provision of custody services. Securities held in custody are held in the Company's name or to its account. Details of holdings are received and reconciled monthly. Cash is either held in a floating rate deposit account whose rate is determined by reference to rates supplied by the custodian or is placed on deposit in the name of JP Morgan Chase Bank Cash Trade Executive Product. Cash is held with these counter parties as monies belonging to clients of JP Morgan Chase Bank, and so ring-fenced from any JP Morgan Chase Bank default. There is no significant risk on debtors and accrued income (or tax) at the period 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 period-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 2010				30 April 2009
£000	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Listed investments	2,034,122	-	-	2,034,122	1,183,896	-	-	1,183,896

15           Significant holdings in investee undertakings

As at 31 March 2010 the Company held 3% or more in the issued share capital of the following companies:

Name	% of issued share capital 2010	Fair value £'000	% of issued  share capital 2009	Fair value £'000
Victory City International Holdings Ltd.	9.32%	16,240	9.67%	4,416
Brilliance China Automotive Holdings Ltd.	5.80%	54,021	6.96%	12,477
Faysal Bank Ltd.	4.99%	4,065	4.99%	2,817
Polnord SA	4.71%	8,965	3.81%	4,594
Kiatnakin Bank Public Co. Ltd., fgn.	4.14%	12,585	3.72%	5,293
Peninsula Land Ltd.	3.89%	11,714	2.71%	3,606
Hyundai Development Co.	3.50%	50,678	3.50%	55,786
VTech Holdings Ltd.	3.38%	59,187	3.39%	28,393

16           Contingent liabilities

No contingent liabilities existed as at 31 March 2010 or 30 April 2009.

17           Financial commitments

There are no financial commitments at 31 March 2010 or 30 April 2009.

18           Post balance sheet events

The only material post balance sheet event is in respect of the proposed dividend, which has been disclosed in Note 12.

This preliminary statement, which has been agreed with the Auditors, was approved by the Board on 15 June 2010. The financial information set out above does not constitute the company's statutory accounts.   

 The statutory accounts for the financial year ended 30 April 2009  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 financial year ended 31 March 2010  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.  

 

END

 

 

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