UNAUDITED HALF YEARLY REPORT TO 30 SEPTEMBER 2018 · Company Overview 1 Chairman’s Statement 2...

UNAUDITED HALF YEARLY REPORT TO 30 SEPTEMBER 2018

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Company Overview 1

Chairman’s Statement 2

Interim Management Report 4

Portfolio Report 6

Income Statement 22

Balance Sheet 24

Statement of Changes in Equity 25

Cash Flow Statement 26

Notes to the Financial Statements 27

Glossary of Alternative Performance Measures 30

Shareholder Information 31

General Information 32

Contents

This report does not constitute or form part of any offer for shares or an invitation to apply for shares. The price of shares and income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is no guarantee of future performance. Currency fluctuations will affect the value of overseas investments. Emerging markets can be more risky than developed markets. Please consult your professional adviser before deciding to invest.

Company Overview

Launched in 1989, Templeton Emerging Markets Investment Trust PLC (“TEMIT” or the “Company”) is an investment company that invests principally in emerging markets companies with the aim of delivering capital growth to shareholders over the long term. While the majority of the Company’s shareholders are based in the UK, shares are quoted on both the London and New Zealand Stock Exchanges.

The Company is governed by a Board of Directors who are committed to ensuring that shareholders’ best interests are at the forefront of all decisions. Under the guidance of the Chairman, the Board of Directors is responsible for the overall strategy of the Company and monitoring its performance. Only one member of the Board has a connection with Franklin Templeton Investments, with all others being independent.

TEMIT’s research-driven investment approach and strong long-term performance has helped it to grow to be the largest emerging markets investment trust in the UK, with net assets of £2.1 billion as at 30 September 2018.

TEMIT at a glance

For the six months to 30 September 2018Net asset value total return (cum-income)(a)(b)

-1.5%(2017: 11.4%)

Share price total return(a)(b)

-2.2%(2017: 14.5%)

MSCI Emerging Markets Index total return(a)(b)(c)

-1.8%(2017: 7.1%)

Interim dividend for the financial year 2019

5.00p(2018: n/a)(d)

Cumulative Total Return to 30 September 2018 (%)

-200

20

6080

40

100120140160180

Net asset value (cum-income)

Share Price

MSCI Emerging Markets Index

6 Months

-1.5

-2.2

-1.8

3 Year

87.5

88.4

66.6

5 Year

41.9

47.9

51.0

1 Year

-2.8

-0.6

2.4

10 Year

152.0

159.1

139.3

(a) A glossary of alternative performance measures is included on page 30 .(b) For the 6 months ended 30 September 2018 and 2017.(c) Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index, with net dividends reinvested.(d) The 2019 financial year (1 April 2018 to 31 March 2019) interim dividend is the first interim dividend for the Company.

www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 1

Market Overview and Investment PerformanceIn the six months under review investors in emerging markets were confronted with geopolitical uncertainty, particularly in the trading relationship between China and the USA. This uncertainty led many investors to seek the relative safety of developed markets, and particularly the USA where rising interest rates and a strengthening currency attracted capital flows. As a result, your Company’s benchmark MSCI Emerging Markets Index recorded a small decline over the six month period. Against this difficult background, I am able to report a further marginal NAV outperformance of the benchmark by the Investment Manager, as set out in the table on page 1.

Revenue Earnings and Dividend Our reported revenue earnings are set out in the table on page 27.

In the Annual Report for the year to 31 March 2018, I announced that the Company will pay two dividends per accounting year, commencing with the current year. I am pleased to announce the Company’s inaugural interim dividend of 5.0 pence per share, for the six months to 30 September 2018. This dividend was fully covered by net revenues earned over the six month period.

Following feedback received from shareholders, for those shareholders in the UK who are direct holders of registered shares in the Company, we have introduced a Dividend Reinvestment Plan, which provides a means of reinvesting dividends in the Company’s shares at low cost. Further details of this Plan will be sent direct to registered shareholders by the Registrars. Investors who hold shares via online dealing services should be aware that most such services offer a similar feature to their clients.

The Investment ManagerAndrew Ness joined Franklin Templeton on 17 September 2018. He will work alongside TEMIT’s lead portfolio manager Chetan Sehgal. Andrew Ness brings a wealth of investment experience, and the Board believes that his appointment as a portfolio manager, together with Chetan Sehgal’s strong leadership, will further strengthen the team’s investment resources and capabilities and thus position the Company well for the future.

The portfolio managers of TEMIT are further supported by an experienced team of over 90 dedicated emerging markets investment professionals located in 22 offices around the world. The Board believes that the breadth and depth of Franklin Templeton’s in-house resources will be important in a period when there is significant cost pressure on the provision of investment research by third parties.

Managing the Discount During the half year under review, TEMIT’s shares traded at discounts(a) of between 12.0% and 15.5%, and on 30 September 2018 the discount stood at 13.3%.

We have continued to be active in buying back shares and bought back a total of 13,913,569 shares in the six month period at an average discount of 13.4%, all of which were placed into Treasury.

(a) A glossary of alternative performance measures is included on page 30.

Chairman’s Statement

2 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk

Franklin Templeton continues in its efforts to promote TEMIT shares, with active advertising, media relations and an award winning online presence. The Board and Investment Manager will continue in our joint efforts to bear down on the discount by focusing on both demand for and supply of shares.

Asset Allocation and Borrowing On 31 August 2018, the Company entered into an amendment of the 3-year unsecured multi-currency revolving loan facility with The Bank of Nova Scotia, London Branch. Under the amended facility, up to £220 million total (previously £150 million) may be borrowed, with drawings available in pounds sterling, US dollars and Chinese renminbi (CNH). The maximum amount of CNH which may be drawn down is the equivalent of £44 million (previously £30 million). The Company has no other debt. Based on the asset value as at 30 September 2018, this facility allows gearing of up to 10%, which is the maximum gearing allowed under the Company’s investment policy.

The Board has continued to review the merits of the Company borrowing with the aim of increasing investment returns. While the Board and the Investment Manager recognise that gearing increases volatility, after careful consideration we concluded that it may be in shareholders’ interests to increase the Company’s borrowing facility at a time when the long-term outlook for emerging markets remains positive and interest rates are low. The Manager has been granted discretion by the Board to draw down the debt as investment opportunities arise, subject to overall supervision by the Board.

As at 30 September 2018 gearing(a), net of cash in the portfolio, was 4.0% (31 March 2018: 3.3%).

The Board As set out in the Annual Report, Hamish Buchan retired from the Board at this year’s AGM and was succeeded by Beatrice Hollond as Senior Independent Director. I would like to repeat my thanks to Hamish for his contribution to TEMIT since 2008.

Charlie Ricketts was duly elected and joined the Board at the conclusion of this year’s AGM.

Outlook It is unlikely that the trade dispute between the USA and China will dissipate quickly and there are headline-grabbing issues in some emerging markets such as Turkey, Pakistan and Argentina, all of which are serving to unsettle markets. Nevertheless, there are many reasons to be positive about the long term outlook. Emerging markets are diverse with different economic and political drivers. As a general comment, and notwithstanding the market volatility in October and November, your Board believes that emerging markets are in good health and issues in countries such as Turkey, Pakistan and Argentina do not reflect the asset class as a whole, and furthermore those countries are small in comparison with the rest of the emerging markets universe.

Investment in emerging markets is no longer based on the availability of commodities or cheap labour to supply developed markets. Growing GDPs and individual wealth have led to growth in intra-regional trade, while technology and high quality manufacturing have become key drivers of economic growth and hence investment opportunities.

Paul Manduca Chairman 26 November 2018(a) A glossary of alternative performance measures is included on page 30.

Chairman’s Statement (continued)


Principal risksThe Company invests, where possible, directly in the stock markets of emerging markets. The principal risks facing the Company, as determined by your Board, are:

• Investment and concentration;• Market;• Foreigncurrency;• Portfolioliquidity;• Credit;• Operationalandcustody;• Keypersonnel;• Regulatory;and• Cybersecurity.

TheBoardhasprovidedtheInvestmentManagerwithguidelinesandlimitsforthemanagementoftheseprincipalrisks.FurtherinformationonrisksisgivenintheStrategicReportwithintheAnnualReportandAuditedAccounts,whichisavailableontheCompany’swebsite(www.temit.co.uk).There have been no changes to the principalrisksreportedintheAnnualReport,andin theBoard’sview,theseprincipalrisksareequallyapplicableto the remaining six months of the financial year as they were to the six months under review. Althoughnotjudgeda principal risk for the Company, the Board continues to monitor developmentsaroundBrexit.AdditionallytheManagerhasadedicatedworkinggroupassessingthepotentialimpactofBrexit.

RelatedpartytransactionsThere were no transactions with related partiesduringthesixmonthsended30September2018, other than the fees paid to the Directors. These fees do not have a material effect on the results or the financial position of the Company. Under the StatementofRecommendedPractice(“SORP”) for investment trusts issued by the AssociationofInvestmentCompanies(“AIC”) in November2014and updated in February2018,theFranklinTempletonentitiesarenotclassifiedasrelatedpartiesunderIAS24(asadoptedbytheEU).

Going concernTheCompany’sassetsconsistofequitysharesincompanieslistedonrecognisedstockexchangesandinmostcircumstancesarerealisablewithinashorttimescale.Havingmadesuitableenquiries,includingconsiderationsoftheCompany’sinvestmentobjective,thenatureoftheportfolio,expenditureforecastsandtheprincipalrisksanduncertainties,theDirectorsaresatisfiedthattheCompanyhasadequateresourcestocontinuetooperateasagoing concern for the foreseeable future,beingaperiodofatleast12months, and as such, a going concern basis is appropriateinpreparingtheFinancialStatements.

StatementofDirectors’ResponsibilitiesTheDisclosureandTransparencyRulesoftheUKListingAuthorityrequiretheDirectorstoconfirmtheirresponsibilitiesinrelationtothepreparationandpublicationoftheInterimManagementReportandFinancialStatements.

InterimManagementReport

4 TempletonEmergingMarketsInvestmentTrustPLC www.temit.co.uk

The Directors each confirm that to the best of their knowledge:

(a)the condensed set of financial statementsfortheperiodended30September2018 has been prepared in accordancewiththeapplicableInternationalAccountingStandard(IAS)34‘‘InterimFinancialReporting’’asadoptedbytheEU;and

(b)theHalfYearlyReportincludesafairreviewoftheinformationrequiredby:

(i)DTR4.2.7RoftheDisclosureandTransparencyRules,beinganindicationofimportanteventsthathaveoccurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii)DTR4.2.8RoftheDisclosureandTransparencyRules,beingrelatedpartytransactionsthathavetakenplace in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

TheHalfYearlyReportwasapprovedbytheBoardon26 November 2018 and the above responsibility statement was signed on its behalf by

Paul Manduca Chairman 26 November 2018

InterimManagementReport(continued)

www.temit.co.uk TempletonEmergingMarketsInvestmentTrustPLC 5

Market OverviewEmerging markets equities fell over the six months to 30 September 2018, ceding some ground after a strong run in 2017. The MSCI Emerging Markets Index fell by 1.8% in the half year under review, while TEMIT’s net asset value total return was marginally ahead of this, falling by 1.5% (all figures in sterling). Full details of TEMIT’s performance can be found on page 1.

A combination of rising US interest rates, global trade tensions and issues in some individual countries curbed investor sentiment towards emerging markets throughout the period. Market caution further heightened in August as currency crises in Turkey and Argentina triggered fears that other countries could be affected. However, we saw limited risk of a broader crisis developing during that spell of market volatility. Turkey’s small representation in the emerging markets equity universe, plus Argentina’s absence from it, meant that both countries’ travails were not representative of the health of the asset class as a whole. Collectively, emerging markets continued to post strong economic growth, surpassing that of developed countries(a).

We also found a disconnect between downbeat perceptions among international investors and robust equity fundamentals for companies in emerging markets, demonstrated by higher earnings, rising cash flows, improving capital-allocation discipline (such as buy-backs and dividend payments), reduction of debt levels by companies and lower valuations (compared with developed-market stocks), even though the sharp decline in currencies has meant that in US dollar terms the earnings appear less attractive. Numerous emerging markets companies were able to achieve impressive growth in the period under review. Energy producers, for example, benefitted from rising oil prices. Many other businesses continued to ride on the back of strong structural trends such as technological innovation and increased consumption. In technology, promising fields such as artificial intelligence, autonomous driving and the Internet of Things continued to attract huge investments, signalling strong prospects for the makers of cutting-edge computer chips that drive such applications. Meanwhile, rising incomes continued to lead to increases in consumer spending, not just on basic goods, but also on premium items such as leisure and entertainment.

Nevertheless, trade tensions (especially between the US and China) dominated markets’ attention. Against this backdrop, Chinese stocks declined in value and the yuan fell against the US dollar. By the end of September, the US had imposed tariffs on USD 250 billion worth of Chinese goods, prompting China to respond with tariffs on USD 110 billion of US imports. The trade row coincided with China’s efforts to rein in debt and raised concerns about a slowdown in its economy. Economic indicators were mixed. China’s GDP growth of an annualised 6.7% in the quarter to end-June met market expectations, and industrial output and retail sales rose in August. However, fixed-asset investment increased at a slower pace in the first eight months of 2018. To cushion its economy, China eased monetary conditions and introduced modest fiscal stimulus measures. China was TEMIT’s largest market position at the end of the reporting period and we remain comfortable with the exposure which is a result of our view on the prospects for individual companies rather than a regional allocation. In terms of its outlook, we believe that China has the policy tools to manage economic challenges as it continues with structural reforms. Moreover, it offers an unparalleled range of investment opportunities as rapid digitalisation and growing consumption support growth for companies across different industries, ranging from e-commerce to premium cars.

(a) Source: Developed countries (advanced economies) as classified by the International Monetary Fund, World Economic Outlook Database, October 2018 Edition. ©2018 International Monetary Fund. All rights Reserved.

Portfolio Report


South Korea’s stock market was also dampened by trade conflict with the US, although both countries agreed on a revised free-trade deal in September. There was additional good news on the geopolitical front as South Korea made strides in reducing tensions with North Korea. Peace talks, including an historic meeting between the leaders of the US and North Korea, raised hopes for a denuclearisation of the Korean peninsula. Domestically, South Korea’s economy was largely stable. Corporate governance improvements remained on the agenda, with the country’s national pension fund adopting a stewardship code in July. Better corporate governance could help to enhance the appeal to international investors of South Korean companies, many of which are global leaders in the technology industries. South Korea accounted for the second-largest market position in TEMIT’s portfolio at the end of September.

Some of the world’s leading technology companies can also be found in Taiwan. Taiwan’s stock market delivered strong equity returns in the period under review, helped by a rally in index heavyweight Taiwan Semiconductor Manufacturing Company (TSMC). This chip maker is one of TEMIT’s largest holdings and benefitted from strong demand for its latest high-performance chips. TSMC and several electronic component makers in combination form a substantial part of TEMIT’s overall exposure to Taiwan. Structural trends in advancing technology are supportive of their continued growth.

India’s stock market was another outperformer in Asia. Global trade uncertainty weighed less on the country than on others thanks to its more domestically-oriented economy. Its GDP grew by an annualised 8.2% in the quarter to end-June on the back of stronger manufacturing and consumption, recording its fastest pace of quarterly expansion in more than two years. The ascent of Indian equities was capped, though, by concerns over the country’s increased current account deficit, due in part to higher crude oil prices for a country which is a net importer of oil. The rupee also depreciated against the US dollar. Equity valuations in India are amongst the highest in emerging markets, often meaning that we find better investment cases elsewhere, even though we are quite confident of the long-term prospects of the economy. We are also discerning in identifying companies which show good potential for sustainable earnings growth.

In Latin America, Brazilian stocks retreated amidst economic and political challenges. A nationwide truckers’ strike hit businesses and consumers, leading to subdued GDP growth in the quarter to end-June. Political uncertainty also heightened ahead of a presidential election in October 2018, although the growing popularity of the more market-friendly candidate Bolsonaro in electoral polls provided markets with a dose of relief. Now confirmed as the winner in October, Bolsonaro faces the task of turning Brazil’s economy around and restoring confidence. TEMIT had a considerable position in Brazil during the period under review, underpinned by our positive long-term outlook for the country. We remain optimistic about Brazil’s prospects post election, but will be watching whether market-friendly campaign promises can become policy.

Mexican equities rebounded from initial weakness to close higher. Caution reigned as Mexico and the US discussed revisions to the North American Free Trade Agreement (NAFTA). The two countries eventually arrived at a new trade deal. Meanwhile, uncertainty around the election of a new president in Mexico gave way to greater confidence as his administration vowed to uphold fiscal discipline and maintain an independent central bank. It also indicated that already implemented reforms, including the privatisation of the energy sector, would not be reversed. TEMIT remained selective about its exposure to Mexico in the period under review.

Elsewhere, Russia’s stock market advanced, showing resilience in the face of fresh US sanctions against the country. Rising oil prices were a tailwind for energy companies. Brent crude oil touched USD 80 per barrel

Portfolio Report (continued)


amidst concerns that US sanctions on Iran would cut the latter’s oil supplies to global markets. TEMIT’s exposure to Russia reflected our conviction in select companies with strong fundamentals. Equity valuations in Russia were also amongst the lowest in emerging markets.

Investment Strategy, Portfolio Changes and PerformanceThe following sections show how different investment factors (stocks, sectors and geographies) accounted for the Company’s performance over the period. We continue to emphasise our investment process that selects companies based on their individual attributes and ability to generate risk-adjusted returns for investors, rather than taking a high-level view of sectors, countries or geographic regions to determine our investment allocations.

While we do consider macroeconomic and political events, a fundamental focus on individual companies and their earnings can often play the major role in achieving our stated objectives.

Our investment style is centred on finding good value. We see long-term value in companies which have sustainable earnings power and whose shares trade at a discount relative to their prospects and to other investment opportunities in the market. We also pay close attention to risks.

We continue to utilise our research-based, active approach to help us to find companies with high standards of corporate governance, which respect their shareholder base and which understand the local intricacies that may determine consumer trends and habits. Utilising our large team of analysts, we aim to maintain close contact with the board and senior management of existing and potential investments and believe in engaging constructively with our investee companies.

All of these factors require us to look beyond traditional measures of value such as price-earnings ratio and to conduct detailed analyses of potential returns versus risks with a time horizon of typically five years or more.

Performance Attribution Analysis %6 Months to 30 September 2018 2017 2016 2015 2014

Net asset value total return(a) (1.5) 11.4 29.6 (28.0) 8.2

Expenses incurred 0.6 0.6 0.6 0.6 0.6

Gross total return(a) (0.9) 12.0 30.2 (27.4) 8.8

Benchmark Total return(a) (1.8) 7.1 21.7 (18.8) 6.1

Excess return(a) 0.9 4.9 8.5 (8.6) 2.7

Stock selection (0.2) 1.8 0.2 1.2 (1.3)

Sector allocation (0.5) 2.7 7.9 (12.7) 3.0

Currency 1.1 0.1 0.4 2.6 1.2

Residual(a) 0.5 0.3 – 0.3 (0.2)

Total Portfolio Manager Contribution 0.9 4.9 8.5 (8.6) 2.7

Source: FactSet and Franklin Templeton Investments.(a) A glossary of alternative performance measures is included on page 30.



Contributors and Detractors by Security

Top Contributors to Relative Performance by Security (%)(a)

Top Contributors

Share Price

Total Return

Relative Contribution to

Portfolio

CNOOC 51.2 0.5

LUKOIL, ADR 23.0 0.4

IMAX(b) 44.6 0.4

Banco Santander Mexico, ADR(b) 18.9 0.4

Taiwan Semiconductor Manufacturing 13.2 0.3

Unilever(b) 8.3 0.3

China Petroleum and Chemical 34.2 0.3

Uni-President China 35.4 0.3

Tencent (14.7) 0.2

Cia De Bebidas Das Americas (AMBEV)(c) (31.2) 0.2

(a) For the period 31 March 2018 to 30 September 2018.(b) Security not included in the MSCI Emerging Markets Index.(c) Security not held by TEMIT.

CNOOC is a leading offshore oil and gas producer in China. The group mainly engages in the exploration, development, production and sale of crude oil and natural gas. CNOOC reported a sharp increase in earnings in the first half of 2018 compared to a year earlier, as robust oil prices provided a positive backdrop for its businesses. Successful cost-cutting measures further supported CNOOC’s profitability. The company also announced a long-term strategic plan to increase its gas reserves by 50% by 2025, as it renewed efforts to focus on gas, given the demand in China. A significant increase in dividends and new discoveries in offshore China further supported sentiment.

LUKOIL is one of Russia’s largest vertically integrated (where the supply chain is owned by the company) energy companies, as well as one of the biggest globally, in terms of reserves. The company is engaged in exploration, development, production and refining of crude oil, as well as the marketing and distribution of crude oil and products. A rebound in oil prices benefited the company, which reported significantly higher first- and second-quarter sales and earnings compared to a year earlier. LUKOIL also announced a USD 3 billion share buyback programme and the cancellation of 100 million of its treasury shares, as it looked to improve shareholder value and corporate governance. The firm’s progressive dividend policy further drove investor confidence in the stock.

IMAX, which is listed in the US but has significant exposure to emerging markets, is one of the world’s leading entertainment technology companies, specialising in immersive motion picture technologies. The company’s principal businesses are the design and manufacture of premium theatre systems and the digital re-mastering and showing of films in the IMAX format. IMAX theatre systems are in over 1300 theatres globally with most growth in its majority-held IMAX China Holdings. The company’s first-quarter corporate results exceeded market expectations on higher than expected system sales, strong box office revenue growth, as well as lower than expected operating expenses. Good second-quarter results further supported the upward trend in the share price.



Top Detractors to Relative Performance by Security (%)(a)

Top DetractorsShare Price

Total ReturnRelative Contribution

to Portfolio

Brilliance China Automotive (16.6) (0.8)

Massmart(b) (42.2) (0.4)

Banco Bradesco, ADR (28.8) (0.3)

Hyundai Development (32.7) (0.3)

Itaú Unibanco, ADR (22.9) (0.3)

Sberbank Of Russia, ADR (23.2) (0.3)

Vale(c) 30.5 (0.2)

Lojas Americanas (25.1) (0.2)

Reliance Industries 37.4 (0.2)

MGM China(b) (33.3) (0.2)

(a) For the period 31 March 2018 to 30 September 2018.(b) Security not included in the MSCI Emerging Markets Index.(c) Security not held by TEMIT.

Brilliance China Automotive manufactures and sells automobiles for the Chinese market, predominantly through its joint venture with German luxury car maker BMW. Shares of Brilliance China were held back by China’s plans to open up its auto industry further by removing foreign ownership limits and reducing import tariffs. The potential changes raised questions around the future of Brilliance China’s partnership with BMW. Nevertheless, Brilliance China’s business remained strong. First-half net profit rose sharply as growth in sales volume and cost controls together led to higher margins. In October, after the end of the reporting period, the share price declined again after BMW announced that they would increase their stake to 75%. We are closely monitoring the situation and will act in the best interests of our shareholders.

Massmart is a leading South African distributor and retailer of consumer goods, general merchandise, alcohol, home improvement equipment and supplies as well as a wholesaler of basic foods. US-based Walmart, the world’s largest retailer, owns a controlling stake in Massmart. A disappointing trading update and profit warning from the company resulted in a sharp fall in the share price. First-half earnings declined substantially largely due to weak sales growth and a contraction in operating margin, primarily due to trading losses in two divisions. An increase in petrol prices and VAT coupled with high unemployment and weak economic growth weighed on consumer demand. Taking a longer-term view, however, we believe that Massmart is well-placed to benefit from a recovery in the domestic economy and consumer demand.

Banco Bradesco is one of Brazil’s largest financial conglomerates. It operates in a wide range of segments, including asset management, insurance, wholesale banking, retail operations, credit card and general corporate and personal lending. Shares declined largely due to weak sentiment in the Brazilian market in general, driven by volatility ahead of the forthcoming presidential elections, weakness in the real, as well as concerns that labour



strikes could impact economic activity. The bank, however, continued to report solid operating results, with an acceleration in loan growth, improvement in asset quality, and decline in provisioning and non-performing loans in the second quarter. We believe that the bank’s extensive retail presence, strong insurance franchise and solid balance sheet put it in a favourable position to benefit from the country’s longer-term economic recovery and easing of the political uncertainty surrounding the presidential elections.

Top Contributors and Detractors to Relative Performance by Sector (%)(a)(b)

Top Contributors

MSCI Emerging

Markets Index Sector Total

Return

Relative Contribution

to Portfolio Top Detractors

MSCIEmerging

Markets Index Sector Total

Return


to Portfolio

Energy 17.5 0.7 Materials 6.4 (0.8)

Communication Services (6.4) 0.4 Consumer Discretionary (9.2) (0.5)

Real Estate (9.6) 0.3 Financials (4.5) (0.2)

Information Technology 2.0 0.3 Consumer Staples (1.7) (0.2)

Health Care (5.1) 0.3 Utilities (2.9) (0.0)

Industrials (1.7) 0.0

(a) For the period 31 March 2018 to 30 September 2018.(b) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018.

Favourable stock selection in the energy, communication services and real estate sectors added to TEMIT’s performance relative to the benchmark index in the review period. Higher oil prices proved favourable for the portfolio’s marginal overweight position in energy companies. We reduced investments in some energy companies to lock in gains and raise funds for other attractive investment opportunities. During the period we added to our holdings in the communication services sector, which is a significant theme in the portfolio. We continue to maintain an underweight position in real estate relative to the benchmark index. We preferred to invest elsewhere as we saw risks of over-borrowing and regulation in this area. Conversely, the materials, consumer discretionary and financials sectors pressured relative returns. Investments in the financials sector were increased, while those in the consumer discretionary and materials sectors were reduced during the period.



Top Contributors and Detractors to Relative Performance by Country (%)(a)

Top Contributors

MSCI Emerging

Markets Index Country Total

Return


to Portfolio Top Detractors

MSCI Emerging

Markets Index Country Total

Return


to Portfolio

China/Hong Kong (3.9) 1.1 Brazil (15.9) (1.0)

Thailand 4.1 0.4 Russia 8.0 (0.3)

United States(c) (9.7) 0.4 Taiwan 8.3 (0.3)

Turkey(b) (36.5) 0.3 Kenya(c) – (0.2)

United Kingdom(c) 16.4 0.3 South Korea (1.5) (0.2)

Indonesia (3.7) 0.2 Qatar(b) 25.7 (0.2)

Cambodia(c) – 0.2 Philippines (3.4) (0.1)

South Africa (12.4) 0.1 Poland(b) 5.6 (0.1)

Saudi Arabia(c) – 0.1 Argentina(c) – (0.1)

Chile(b) (6.1) 0.0 Peru 1.9 (0.1)

(a) For the period 31 March 2018 to 30 September 2018.(b) No companies held by TEMIT in this country.(c) No companies included in the MSCI Emerging Markets Index in this country.

Our selection of stocks in China/Hong Kong and Thailand were among the major contributors to TEMIT’s returns relative to the benchmark index. An underweight exposure to China/Hong Kong further strengthened the relative contribution from that market, as it underperformed its emerging markets peers over the period. China’s efforts to reduce debt and the deepening trade row with the United States weighed on the outlook for its economy. We increased our exposure to China/Hong Kong during the reporting period. The passage of two key laws required for the 2019 general elections and a solid macroeconomic environment drove investment sentiment in Thailand. While we reduced our holdings in Thailand, allowing us to realise gains, we continue to maintain an overweight exposure to the market. In contrast, relative performance was hurt by stock selection in Brazil, Russia and Taiwan. An overweight position in Russia, however, offset some of the detraction from that market. We trimmed our investments in Russia during the reporting period.

Our resulting portfolio is listed by size of holding on pages 15 to 18.



Portfolio changes by Sector(a)

Sector

31 March 2018Market Value(a)

£mPurchases

£mSales

£m

Market Movement

£m

30 September 2018Market Value

£m

Total Return in sterling

TEMIT%

MSCI EmergingMarkets Index

%

Financials 529 56 32 (43) 510 (5.8) (4.5)

Information Technology 442 4 27 6 425 2.5 2.0

Communication Services 384 17 27 (16) 358 (3.7) (6.4)

Consumer Discretionary 402 16 28 (38) 352 (9.0) (9.2)

Energy 184 – 22 35 197 25.3 17.5

Consumer Staples 167 – 21 (7) 139 (3.9) (1.7)

Materials 139 – 13 (6) 120 (4.1) 6.4

Industrials 67 – 23 6 50 (1.1) (1.7)

Health Care 38 2 1 1 40 6.2 (5.1)

Real Estate 14 – 7 2 9 20.4 (9.6)

Utilities 5 – 4 (1) – (7.2) (2.9)

Net current liabilities(b) (70) – – (11) (81) – –

Total 2,301 95 205 (72) 2,119

Sector Asset AllocationAs at 30 September 2018

15.820.0

10.616.7

9.2 8.2

6.56.6

5.77.9

2.3 5.4

2.80.4

1.9 3.0

0.0 2.4

24.2 23.2

16.9 14.1

TEMIT

Financials

Information Technology

UtilitiesMSCI Emerging Markets Index

0 5 10 15 20 353025

Sector weightings vs benchmark (%)(a)

Consumer Discretionary

Consumer Staples

Communication Services

Energy

Industrials

Health Care

Real Estate

Materials

(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018. The 31 March 2018 figures have been reclassified according to these changes.

(b) The Company’s net current liabilities per the Balance Sheet on page 24.



Portfolio changes by Country

Country

31 March 2018Market Value

£mPurchases

£mSales

£m

MarketMovement

£m

30 September 2018Market Value

£m

Total Return in sterling

TEMIT%

MSCI EmergingMarkets Index

%

China/Hong Kong 506 46 21 (8) 523 (0.4) (3.9)South Korea 353 19 57 (3) 312 (3.1) (1.5)Taiwan 231 16 11 9 245 (24.2) 8.3Russia 213 5 18 (10) 190 5.9 8.0Brazil 212 – – (54) 158 (1.6) (15.9)South Africa 160 4 – (17) 147 (10.1) (12.4)India 117 2 2 9 126 6.9 4.5Thailand 116 – 24 6 98 11.5 4.1Other 463 3 72 7 401 – –Net current liabilities(a) (70) – – (11) (81)

Total 2,301 95 205 (72) 2,119

Geographic Asset AllocationAs at 30 September 2018

12.3%11.5%

3.7%9.0%

6.1%7.5%

2.5%4.7%

8.5%5.9%

3.5%0.4%

2.8%3.2%

1.1%0.0%

1.0%0.1%

0.9%0.3%

0.9%0.0%

0.9%0.0%

0.6%0.0%

0.5%0.2%

0.0%0.0%

0.0%0.1%

1.0%0.4%

5.9%6.9%

3.3%2.0%

0.1%3.0%

31.0%24.4%

14.9%14.9%South Korea

China/Hong Kong

India

South Africa

Kenya(c)

United States(c)

Cambodia(c)

Czech Republic

Philippines

Argentina(c)

Nigeria(c)

Hungary

Pakistan

United Kingdom(c)

Peru

Indonesia

�ailand

Taiwan

Brazil

Russia

Mexico

Saudi Arabia(c)

0 5 10 15 20 353025

Country weightings vs benchmark (%)(b)

TEMITMSCI Emerging Markets Index

(a) The Company’s net current liabilities per Balance Sheet on page 24.(b) Other countries included in the benchmark are Chile, Colombia, Egypt, Greece, Malaysia, Poland, Qatar, Turkey and the United Arab

Emirates.(c) Countries not included in the MSCI Emerging Markets Index.



(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018.(b) Trading activity during the year: (NH) New Holding, (IH) Increased Holding, (PS) Partial Sale and (NT) No Trading.(c) US listed American Depositary Receipt.(d) This company, listed on a stock exchange in a developed market, has significant exposure to operations from emerging markets.(e) Preferred Shares.

Portfolio Investments by Fair ValueAs at 30 September 2018

Holding Country Sector(a) Trading(b)

Fair Value£’000

% of netassets

Samsung Electronics South Korea Information Technology PS 175,112 8.3

Naspers South Africa Communication Services IH 133,843 6.3

Taiwan Semiconductor Manufacturing Taiwan Information Technology IH 131,948 6.2

Brilliance China Automotive China/Hong Kong Consumer Discretionary IH 99,009 4.7

Alibaba, ADR(c) China/Hong Kong Consumer Discretionary NT 97,235 4.6

Buenaventura, ADR(c) Peru Materials PS 66,072 3.1

Unilever(d) United Kingdom Consumer Staples PS 63,955 3.0

Tencent China/Hong Kong Communication Services NT 63,776 3.0

LUKOIL, ADR(c) Russia Energy NT 58,266 2.7

ICICI Bank India Financials NT 55,099 2.6

TOP 10 LARGEST INVESTMENTS 944,315 44.5

Banco Santander Mexico, ADR(c) Mexico Financials IH 43,442 2.0

CNOOC China/Hong Kong Energy NT 41,312 1.9

Hon Hai Precision Industry Taiwan Information Technology NT 40,638 1.9

Itaú Unibanco, ADR(c) Brazil Financials NT 40,453 1.9

Sberbank Of Russia, ADR(c) Russia Financials IH 37,111 1.8

Astra International Indonesia Consumer Discretionary PS 35,070 1.7

Gazprom, ADR(c) Russia Energy NT 34,442 1.6

Bank Danamon Indonesia Indonesia Financials PS 33,920 1.6

Banco Bradesco, ADR(c)(e) Brazil Financials NT 32,977 1.6

Kasikornbank Thailand Financials NT 30,961 1.5

TOP 20 LARGEST INVESTMENTS 1,314,641 62.0




Fair Value£’000

% of netassets

China Mobile China/Hong Kong Communication Services NT 30,580 1.4

NAVER South Korea Communication Services IH 30,503 1.4

China Construction Bank China/Hong Kong Financials NH 30,489 1.4

Ping An Insurance Group China/Hong Kong Financials NT 29,449 1.4

Yandex Russia Communication Services NT 28,791 1.4

China Petroleum and Chemical China/Hong Kong Energy PS 28,351 1.3

Ping An Bank China/Hong Kong Financials IH 25,935 1.2

POSCO South Korea Materials NT 25,594 1.2

Kiatnakin Bank Thailand Financials PS 23,348 1.1

NagaCorp Cambodia Consumer Discretionary NT 23,264 1.1


Catcher Technology Taiwan Information Technology NT 21,706 1.0

Mail.Ru, GDR(f) Russia Communication Services PS 20,628 1.0

BM&F Bovespa Brazil Financials NT 20,211 1.0

MCB Bank Pakistan Financials PS 19,364 0.9

IMAX(d) United States Communication Services PS 19,048 0.9

Gedeon Richter Hungary Health Care PS 18,842 0.9

Glenmark Pharmaceuticals India Health Care IH 17,458 0.8

Lojas Americanas Brazil Consumer Discretionary NT 17,386 0.8

Daelim Industrial South Korea Industrials PS 17,168 0.8

Infosys Technologies India Information Technology NT 15,619 0.7


Thai Beverages Thailand Consumer Staples NT 15,594 0.7

Uni-President China China/Hong Kong Consumer Staples PS 15,515 0.7

Hyundai Development South Korea Industrials PS 14,387 0.7

Baidu, ADR(c) China/Hong Kong Communication Services NT 14,357 0.7

Cia.Hering Brazil Consumer Discretionary NT 13,526 0.6

Massmart South Africa Consumer Staples NT 13,195 0.6

CTBC Financial Holding Taiwan Financials NH 12,435 0.6

Siam Commercial Bank Thailand Financials PS 12,216 0.6

SABIC, Participatory Note Saudi Arabia Materials PS 12,036 0.6

Moneta Money Bank Czech Republic Financials NT 11,284 0.5


(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018.(b) Trading activity during the year: (NH) New Holding, (IH) Increased Holding, (PS) Partial Sale and (NT) No Trading.(c) US listed American Depositary Receipt.(d) This company, listed on a stock exchange in a developed market, has significant exposure to operations from emerging markets.(f) UK listed Global Depositary Receipt.



(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018.(b) Trading activity during the year: (NH) New Holding, (IH) Increased Holding, (PS) Partial Sale and (NT) No Trading.(c) US listed American Depositary Receipt.(f) UK listed Global Depositary Receipt.


Fair Value£’000

% of netassets

NetEase, ADR(c) China/Hong Kong Communication Services PS 11,197 0.5

LG South Korea Industrials NT 10,434 0.5

TOTVS Brazil Information Technology NT 10,221 0.5

Largan Precision Taiwan Information Technology PS 10,085 0.5

Tata Chemicals India Materials NT 10,016 0.5

SK Innovation South Korea Energy PS 9,558 0.5

MGM China China/Hong Kong Consumer Discretionary NT 8,935 0.4

Bajaj Holdings & Investments India Financials NT 8,857 0.4

Land and Houses Thailand Real Estate PS 8,754 0.4

Dairy Farm China/Hong Kong Consumer Staples NT 8,305 0.4


Nemak Mexico Consumer Discretionary PS 8,012 0.4

PChome Online Taiwan Consumer Discretionary NT 7,880 0.4

M. Dias Branco Brazil Consumer Staples NT 7,843 0.4

Hankook Tire South Korea Consumer Discretionary NH 7,811 0.4

Intercorp Financial Services Peru Financials NT 7,725 0.4

Pegatron Taiwan Information Technology NT 7,626 0.4

Hanon Systems South Korea Consumer Discretionary PS 7,461 0.4

FIT Hon Teng Taiwan Information Technology NT 7,305 0.3

COSCO Pacific China/Hong Kong Industrials NT 7,046 0.3

East African Breweries Kenya Consumer Staples NT 6,829 0.3


B2W Digital Brazil Consumer Discretionary NT 6,553 0.3

KCB Group Kenya Financials PS 6,352 0.3

BAIC Motor China/Hong Kong Consumer Discretionary NH 6,253 0.3

TMK, GDR(f) Russia Energy NT 6,033 0.3

Coal India India Energy NT 5,980 0.3

Equity Group Kenya Financials PS 5,945 0.3

PTT Exploration and Production Thailand Energy PS 5,932 0.3

BDO Unibank Philippines Financials NT 5,857 0.3

Hite Jinro South Korea Consumer Staples NT 5,646 0.3

KT Skylife South Korea Communication Services NT 5,414 0.3





Fair Value£’000

% of netassets

Crédit Real Mexico Financials NT 5,380 0.3

Primax Electronics Taiwan Information Technology NT 4,895 0.2

MAHLE Metal Leve Brazil Consumer Discretionary NT 4,822 0.2

Reliance Industries India Energy PS 4,597 0.2

Norilsk Nickel, ADR(c) Russia Materials PS 4,330 0.2

Tata Motors India Consumer Discretionary NT 4,008 0.2

Biocon India Health Care NT 3,994 0.2

Wiz Soluções e Corretagem Brazil Financials NT 3,933 0.2

Security Bank Philippines Financials NT 3,504 0.1

Weifu High-Technology China/Hong Kong Consumer Discretionary NT 2,670 0.1


BBVA Banco Francés, ADR(c) Argentina Financials NT 2,454 0.1

Industrias Peñoles Mexico Materials NT 2,307 0.1

Inner Mongolia Yitai Coal China/Hong Kong Energy PS 2,115 0.1

Interpark South Korea Consumer Discretionary NT 1,885 0.1

United Bank Pakistan Financials NT 1,848 0.1

Univanich Palm Oil Thailand Consumer Staples NT 1,397 0.1

iMarketKorea South Korea Industrials PS 898 0.0

Nigerian Breweries Nigeria Consumer Staples NT 323 0.0

TOTAL INVESTMENTS 2,200,145 103.8

Net current liabilities(d) (81,179) (3.8)

TOTAL NET ASSETS 2,118,966 100.0

(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018.(b) Trading activity during the year: (NH) New Holding, (IH) Increased Holding, (PS) Partial Sale and (NT) No Trading.(c) US listed American Depositary Receipt.(d) The Company’s net current liabilities per Balance Sheet on page 24.



Portfolio Summary

As at 30 September 2018(a)

All figures are in %

Com

mun

icat

ion

Serv

ices

Con

sum

er

Dis

cret

iona

ry

Con

sum

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tapl

es

Ener

gy

Fina

ncia

ls

Hea

lth C

are

Indu

stri

als

Info

rmat

ion

Tech

nolo

gy

Mat

eria

ls

Rea

l Est

ate

Util

ities

Tota

l Equ

ities

Net

curr

ent

liabi

litie

s(b)

30 S

epte

mbe

r 20

18 T

otal

31 M

arch

20

18 T

otal

(a)

Argentina – – – – 0.1 – – – – – – 0.1 – 0.1 0.2 Brazil – 1.9 0.4 – 4.7 – – 0.5 – – – 7.5 – 7.5 9.2 Cambodia – 1.1 – – – – – – – – – 1.1 – 1.1 0.9 China/Hong Kong 5.6 10.1 1.1 3.3 4.0 – 0.3 – – – – 24.4 – 24.6 22.0

Czech Republic – – – – 0.5 – – – – – – 0.5 – 0.5 0.5 Hungary – – – – – 0.9 – – – – – 0.9 – 0.9 0.9 India – 0.2 – 0.5 3.0 1.0 – 0.7 0.5 – – 5.9 – 5.9 5.1 Indonesia – 1.7 – – 1.6 – – – – – – 3.3 – 3.3 3.8 Kenya – – 0.3 – 0.6 – – – – – – 0.9 – 0.9 1.7 Mexico – 0.4 – – 2.3 – – – 0.1 – – 2.8 – 2.8 2.2 Nigeria – 0.0 – – – – – – – – – 0.0 – 0.0 0.0 Pakistan – – – – 1.0 – – – – – – 1.0 – 1.0 1.2 Peru – – – – 0.4 – – – 3.1 – – 3.5 – 3.5 3.5 Philippines – – – – 0.4 – – – – – – 0.4 – 0.4 0.5 Russia 2.4 – – 4.6 1.8 – – – 0.2 – – 9.0 – 9.0 9.3 Saudi Arabia – – – – – – – – 0.6 – – 0.6 – 0.6 0.5 South Africa 6.3 – 0.6 – – – – – – – – 6.9 – 6.9 7.0 South Korea 1.7 0.9 0.3 0.5 – – 2.0 8.3 1.2 – – 14.9 – 14.7 15.3 Taiwan – 0.4 – – 0.6 – – 10.5 – – – 11.5 – 11.5 10.1 Thailand – – 0.8 0.3 3.2 – – – – 0.4 – 4.7 – 4.7 5.1 United Kingdom – – 3.0 – – – – – – – – 3.0 – 3.0 3.2 United States 0.9 – – – – – – – – – – 0.9 – 0.9 0.9 Net current liabilities – – – – – – – – – – – – (3.8) (3.8) (3.1)

30 September 2018 Total 16.9 16.7 6.5 9.2 24.2 1.9 2.3 20.0 5.7 0.4 – 103.8 (3.8) 100.0 –

31 March 2018 Total(a) 16.7 17.5 7.3 8.0 23.0 1.7 2.9 19.2 6.0 0.6 0.2 103.1 (3.1) – 100.0

(a) The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) as at 28 September 2018. The 31 March 2018 figures have been reclassified according to these changes.

(b) The Company’s net current liabilities per the Balance Sheet on page 24.



Market Capitalisation Breakdown(a) (%)Less than

£1.5bn£1.5bn to

£5bnGreater than

£5bnNet current liabilities(b)

30 September 2018 7.4 18.6 77.8 (3.8)31 March 2018 8.0 15.4 79.7 (3.1)

Split Between Markets(c) (%) 30 September 2018 31 March 2018

Emerging Markets 97.8 96.2Frontier Markets 2.1 2.8Developed Markets(d) 3.9 4.1Net current liabilities(b) (3.8) (3.1)(a) A glossary of alternative performance measures is included on page 30.(b) The Company’s net current liabilities per the Balance Sheet on page 24.(c) Geographic split between “Emerging Markets”, “Frontier Markets” and “Developed Markets” are as per MSCI index classifications.(d) Developed markets exposure represented by companies listed in the United Kingdom and United States.Source: FactSet Research System, Inc.

Market OutlookWhile investor sentiment and markets continued to be volatile after the reporting period, with further declines in October and into November, our view is that valuations reflect a more pessimistic scenario than we currently envisage for emerging markets over the medium-term. We remain positive on emerging markets, even as challenges in some countries dominate the headlines. The asset class is broad and diverse, comprising countries with differing economic drivers and levels of political risk. We believe that weaknesses in markets such as Turkey and Argentina are not likely to result in macroeconomic contagion, and we think that contagion fears should be seen in the perspective of the overall health of emerging markets.

Collectively, emerging markets show stable fundamentals. They are still widely expected to achieve faster economic growth than developed markets in the years ahead, extending a trend that has been evident for some time. Within emerging markets, new areas of growth are driving economies.

The much-vaunted demographics of emerging countries are at play too. Numerous companies are poised to benefit from increased market penetration as a young and growing middle class spends more on goods and services. Rising affluence should also continue to drive the “premiumisation” trend that is spurring demand for high-end products.

We still see many investment opportunities in Asia, including China. US trade tariffs on China have come at a challenging time, when its labour-cost advantage is fading and it is embarking on the process of reducing debt. However, we believe reducing debt and supply-side reforms could help to ease structural risks. Meanwhile, China’s shift towards innovation, technology and consumption as new drivers of growth supports more sustainable corporate earnings.

In the last decade, China has outgrown the United States to become a more important export market for most large emerging economies—not least due to its burgeoning consumer market—and, accordingly, trade growth now predominantly comes from rising demand from other emerging markets. Rising protectionism in the West may further pivot the focus towards regional agreements.




Latin America also offers interesting investment opportunities. We believe that Brazil’s new president is likely to press on with reforms, and this should bolster the country’s long-term prospects. Corporate earnings have also been resilient, as many companies underwent adjustments and reduced costs to weather the previous recession. In Mexico, if the new administration can deliver on its promises and preserve solid economic fundamentals, we could see healthy growth this year and in 2019.

Meanwhile, Russia remains home to companies that have fared well despite macroeconomic and geopolitical challenges. The country’s energy producers are some of the largest in the world and enjoy cost advantages in an environment of robust oil prices. Rapid growth in e-commerce and other internet services has turned local internet firms into global leaders. We are also seeing signs of an increased focus on corporate governance in the country.

As value-oriented and long-term investors, we continue to seek companies that demonstrate sustainable earnings power and trade at a discount relative to their potential and to other investments available in the market. With our rigorous research and investment processes, we believe that TEMIT is well-positioned to benefit from the continued dynamism of emerging markets, notwithstanding the bouts of market volatility.

Chetan SehgalLead Portfolio Manager26 November 2018


(a) A glossary of alternative performance measures is included in Shareholder Information on page 30.

Under the Company’s Articles of Association the capital element of return is not distributable.

The total column of this statement represents the profit and loss account of the Company.

70% of the annual Alternative Investment Fund Manager (“AIFM”) fee and 70% of the finance costs have been allocated to the capital account.

From 1 July 2018, the annual AIFM fee was reduced from 1% of net assets up to £2 billion and 0.85% of net assets above that level to 1% of net assets up to £1 billion and 0.85% above that level.

Income StatementFor the six months to 30 September 2018

For the six months to 30 September 2018 (unaudited)


Year ended 31 March 2018 (audited)

NoteRevenue

£’000 Capital

£’000 Total £’000

Revenue £’000

Capital £’000

Total £’000

Revenue £’000

Capital £’000

Total £’000

Gains/(losses) on investments and foreign exchangeGains/(losses) on investments at fair value 6 – (60,271) (60,271) – 210,139 210,139 – 213,924 213,924 Gains/(losses) on foreign exchange – (5,994) (5,994) – 6,646 6,646 – 10,220 10,220 RevenueDividends 43,136 – 43,136 40,680 – 40,680 60,319 – 60,319 Bank and deposit interest 157 – 157 40 – 40 168 – 168

43,293 (66,265) (22,972) 40,720 216,785 257,505 60,487 224,144 284,631 ExpensesAIFM fee (3,133) (7,311) (10,444) (3,730) (8,702) (12,432) (7,049) (16,449) (23,498)Other expenses (986) – (986) (1,113) – (1,113) (2,087) – (2,087)

(4,119) (7,311) (11,430) (4,843) (8,702) (13,545) (9,136) (16,449) (25,585)Profit/(loss) before finance costs and taxation 39,174 (73,576) (34,402) 35,877 208,083 243,960 51,351 207,695 259,046 Finance costs (636) (1,488) (2,124) (591) (1,380) (1,971) (1,161) (2,703) (3,864)Profit/(loss) before taxation 38,538 (75,064) (36,526) 35,286 206,703 241,989 50,190 204,992 255,182 Tax expense 5 (4,777) (507) (5,284) (3,963) (596) (4,559) (6,047) (770) (6,817)Profit/(loss) for the period 33,761 (75,571) (41,810) 31,323 206,107 237,430 44,143 204,222 248,365 Profit/(loss) attributable to equity holders of the Company 33,761 (75,571) (41,810) 31,323 206,107 237,430 44,143 204,222 248,365 Earnings per share 2 12.73p (28.50)p (15.77)p 11.19p 73.67p 84.86p 15.90p 73.56p 89.46p Ongoing charges ratio(a) 0.98% 1.12% 1.12%


Income StatementFor the six months to 30 September 2018



Year ended 31 March 2018 (audited)

NoteRevenue

£’000 Capital

£’000 Total £’000

Revenue £’000

Capital £’000

Total £’000

Revenue £’000

Capital £’000

Total £’000

Gains/(losses) on investments and foreign exchangeGains/(losses) on investments at fair value 6 – (60,271) (60,271) – 210,139 210,139 – 213,924 213,924 Gains/(losses) on foreign exchange – (5,994) (5,994) – 6,646 6,646 – 10,220 10,220 RevenueDividends 43,136 – 43,136 40,680 – 40,680 60,319 – 60,319 Bank and deposit interest 157 – 157 40 – 40 168 – 168

43,293 (66,265) (22,972) 40,720 216,785 257,505 60,487 224,144 284,631 ExpensesAIFM fee (3,133) (7,311) (10,444) (3,730) (8,702) (12,432) (7,049) (16,449) (23,498)Other expenses (986) – (986) (1,113) – (1,113) (2,087) – (2,087)

(4,119) (7,311) (11,430) (4,843) (8,702) (13,545) (9,136) (16,449) (25,585)Profit/(loss) before finance costs and taxation 39,174 (73,576) (34,402) 35,877 208,083 243,960 51,351 207,695 259,046 Finance costs (636) (1,488) (2,124) (591) (1,380) (1,971) (1,161) (2,703) (3,864)Profit/(loss) before taxation 38,538 (75,064) (36,526) 35,286 206,703 241,989 50,190 204,992 255,182 Tax expense 5 (4,777) (507) (5,284) (3,963) (596) (4,559) (6,047) (770) (6,817)Profit/(loss) for the period 33,761 (75,571) (41,810) 31,323 206,107 237,430 44,143 204,222 248,365 Profit/(loss) attributable to equity holders of the Company 33,761 (75,571) (41,810) 31,323 206,107 237,430 44,143 204,222 248,365 Earnings per share 2 12.73p (28.50)p (15.77)p 11.19p 73.67p 84.86p 15.90p 73.56p 89.46p Ongoing charges ratio(a) 0.98% 1.12% 1.12%

Income Statement (continued)


Balance SheetAs at 30 September 2018

Note

As at 30 September

2018 £’000

(unaudited)

As at 30 September

2017 £’000

(unaudited)

As at 31 March

2018 £’000

(audited)

Non-current assets

Investments at fair value through profit or loss 7 2,200,145 2,356,353 2,370,346

Current assets

Trade and other receivables 7,299 5,466 9,002

Cash and cash equivalents 41,213 99,165 67,843

Total current assets 48,512 104,631 76,845

Current liabilities

Bank loans (124,769) (123,799) (144,690)

Trade and other payables (3,488) (2,741) (762)

Capital gains tax provision (1,434) (753) (927)

Total current liabilities (129,691) (127,293) (146,379)

Net current liabilities (81,179) (22,662) (69,534)

Total assets less current liabilities 2,118,966 2,333,691 2,300,812

Share capital and reserves

Equity Share Capital 69,480 69,480 69,480

Capital Redemption Reserve 13,189 13,189 13,189

Capital Reserve 1,491,983 1,713,307 1,667,608

Special Distributable Reserve 433,546 433,546 433,546

Revenue Reserve 110,768 104,169 116,989

Equity Shareholders’ Funds 2,118,966 2,333,691 2,300,812

Net Asset Value pence per share(a) 821.1 840.7 846.0

(a) Based on shares in issue excluding shares held in Treasury.


Statement of Changes in Equity For the six months to 30 September 2018 (unaudited)

Equity Share Capital

Capital Redemption

ReserveCapital Reserve

Special Distributable

ReserveRevenue Reserve Total

£’000 £’000 £’000 £’000 £’000 £’000

Balance at 31 March 2017 70,406 12,263 1,535,899 433,546 95,983 2,148,097

Profit for the year – – 204,222 – 44,143 248,365

Equity dividends – – – – (23,137) (23,137)

Purchase and cancellation of own shares (926) 926 (26,198) – – (26,198)

Purchase of shares into Treasury – – (46,315) – – (46,315)

Balance at 31 March 2018 69,480 13,189 1,667,608 433,546 116,989 2,300,812

Profit/(loss) for the period – – (75,571) – 33,761 (41,810)

Equity dividends – – – – (39,982) (39,982)

Purchase and cancellation of own shares – – – – – –

Purchase of shares into Treasury – – (100,054) – – (100,054)

Balance at 30 September 2018 69,480 13,189 1,491,983 433,546 110,768 2,118,966


Cash Flow StatementFor the six months to 30 September 2018

For the six months to 30 September

2018 £’000

(unaudited)

For the six months to 30 September

2017 £’000

(unaudited)

For the year to

31 March 2018

£’000 (audited)

Cash flows from operating activities

Profit/(loss) before finance costs and taxation (34,402) 243,960 259,046

Adjustments for:

(Gains)/losses on investments at fair value 60,271 (210,139) (213,924)

Realised (gains)/losses on foreign exchange 5,994 (6,646) (10,220)

Stock dividends received in period – (74) (157)

Increase/(decrease) in debtors 1,897 571 (2,737)

(Increase)/decrease in creditors 1,694 382 (2,017)

Cash generated from operations 35,454 28,054 29,991

Tax paid (4,777) (4,296) (6,380)

Net cash inflow from operating activities 30,677 23,758 23,611

Cash flows from investing activities

Purchases of non-current financial assets (94,577) (221,207) (381,286)

Sales of non-current financial assets 198,319 245,525 398,826

Net cash inflow from investing activities 103,742 24,318 17,540

Cash flows from financing activities

Purchase and cancellation of own shares – (26,644) (26,644)

Repurchase of shares into treasury (99,022) (2,491) (45,886)

Equity dividends paid (39,982) (23,137) (23,137)

Movement in bank loans outstanding (19,878) 40,145 61,161

Bank loan interest and fees paid (2,167) (2,049) (4,067)

Net cash outflow from financing activities (161,049) (14,176) (38,573)

Net increase/(decrease) in cash (26,630) 33,900 2,578

Cash at the start of the period 67,843 65,265 65,265

Cash at the end of the year 41,213 99,165 67,843

Reconciliation of Liabilities Arising from Financing ActivitiesNon-cash movements

Liabilityas at

31 March 2018

£’000Cash flows

£’000

FX movement

£’000

Profit & Loss

£’000

Liability as at

30 September 2018

£’000Bank Loan 144,551 (25,963) 6,085 – 124,673 Interest and fees 139 (2,167) – 2,124 96 Cash generated from operations 144,690 (28,130) 6,085 2,124 124,769


Notes to the Financial StatementsFor the six months to 30 September 2018

1 Basis of preparationThe Half Yearly Report for the period ended 30 September 2018 has been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and applied in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”.

The Company has adopted the Statement of Recommended Practice (“SORP”) for investment trusts issued by the Association of Investment Companies (“AIC”) issued in November 2014 and updated in February 2018 insofar as the SORP is compatible with IFRS. The accounting policies applied in these half yearly accounts are consistent with those applied in the accounts for the twelve months ended 31 March 2018.

The financial information contained in this interim statement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 September 2018 and 30 September 2017 has not been audited. The figures and financial information for the year ended 31 March 2018 are extracted from the published accounts and do not constitute the statutory accounts for that period. Those accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors, which was unqualified and did not include a statement under sections 498(2) or 498(3) of the Companies Act 2006.

As at 30 September 2018, the Company had net current liabilities of £81,179,000 (31 March 2018: £69,534,000). The Directors have a reasonable expectation that the Company has sufficient resources to continue in operational existence for the foreseeable future. Accordingly the financial statements have been prepared on a going concern basis.

2 Earnings per shareFor the six months to

30 September 2018

£’000

For the six months to

30 September 2017

£’000

For the year to 31 March

2018 £’000

Revenue profit 33,761 31,323 44,143

Capital profit/(loss) (75,571) 206,107 204,222

Total (41,810) 237,430 248,365

Weighted average number of shares in issue 265,126,333 279,764,494 277,618,959

Revenue profit per share 12.73p 11.19p 15.90p

Capital profit/(loss) per share (28.50p) 73.67p 73.56p

Total profit/(loss) per share (15.77p) 84.86p 89.46p


3 Equity share capitalDuring the period to 30 September 2018, the Company bought back 13,913,569 shares and placed them in Treasury for a total consideration of £100,054,000.

In the six months to 30 September 2017, the Company bought back 3,705,033 shares for cancellation for a total consideration of £26,198,000. Additionally the Company bought back 328,521 shares and placed them in Treasury for a total consideration of £2,501,000.

Shares of 25p each


30 September 2018


30 September 2017


2018 Opening Balance 271,962,342 281,623,986 281,623,986

Purchase and cancellation of own shares – (3,705,033) (3,705,033)

Purchase of shares into Treasury (13,913,569) (328,521) (5,956,611)

Closing balance 258,048,773 277,590,432 271,962,342

4 DividendsOn 26 November 2018 the Board declared an interim dividend of 5 pence per share payable on 16 January 2019 to shareholders on the register at 7 December 2018. This dividend has not been accrued in the financial statements for the six months ended 30 September 2018, as under IFRS dividends are not recognised until paid. Dividends are debited directly to reserves.

5 TaxationThe total tax expense of £5.3m consists of a revenue tax expense of £4.8m and a capital tax expense of £0.5m. The revenue tax expense relates to irrecoverable overseas tax on dividends. The capital tax expense relates to an increase in the provision for deferred tax on unrealised gains on Indian holdings.

6 Costs of Investment TransactionsDuring the period, expenses were incurred in acquiring or disposing of investments. The following costs of transactions are included in the gains/(losses) on investments at fair value:


30 September 2018

£’000


30 September 2017

£’000


2018 £’000

Purchase expenses 245 542 923

Sales expenses 515 667 1,026

760 1,209 1,949

Notes to the Financial Statements (continued)


Notes to the Financial Statements (continued)

7 Fair ValueFair values are derived as follows:

– Where assets are denominated in a foreign currency, they are converted into sterling using period end rates of exchange;

– Non-current financial assets on the basis set out in the accounting policies in the 2018 Annual Report; and

– Cash at face value.

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); and

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

Valuation hierarchy fair value through profit and loss30 September 2018Listed investments

£’000

30 September 2017Listed investments

£’000

31 March 2018Listed investments

£’000

Level 1 2,200,145 2,356,353 2,370,346

Level 2 – – –

Level 3 – – –

Total 2,200,145 2,356,353 2,370,346


Net asset value total return A measure showing how the net asset value (“NAV”) per share has performed over a period of time, taking into account both capital returns and dividends paid to shareholders in sterling terms.To calculate total return, it is assumed that dividends are reinvested into the assets of the Company at the prevailing NAV on the day that the shares first trade ex-dividend. Total return is calculated using the NAV per share published daily to the London and New Zealand Stock Exchanges.

Share price total return A measure showing how the share price has performed over a period of time, taking into account both capital returns and dividends paid to shareholders in sterling terms.To calculate total return, it is assumed that dividends are reinvested into the shares of the Company at the prevailing share price on the day that the shares first trade ex-dividend.

Benchmark returnThe Company’s benchmark is the MSCI Emerging Markets Index.The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company’s investment universe. The Company’s investment strategy does not track this index and consequently, there will be a divergence between the Company’s performance and that of the benchmark. Total return of the benchmark is calculated in sterling terms on a closing market value to closing market value basis, assuming that all dividends received were reinvested into the shares of the relevant companies at the time at which the shares were quoted ex-dividend.

Share price discount or premium to net asset value (“NAV”)A measure showing the relationship between the share price and the NAV, which is expressed as a percentage of the NAV per share.

Gearing/net gearingA term used to describe the process of borrowing money for investment purposes in the expectation that the returns on the investments purchased using the borrowings will exceed the costs of those borrowings. For example, a figure of 5% means that the shareholders’ funds are exposed to NAV returns by an additional 5%, positive or negative, as a result of borrowings.

Ongoing charges ratioThe OCR represents the annualised ongoing charges divided by the average daily net asset values of the Company for the period, and has been prepared in accordance with the AIC’s recommended methodology. Ongoing charges reflect expenses likely to recur in the foreseeable future and therefore primarily as a result of the reduction in AIFM fee, the OCR has reduced to 0.98% (31 March 2018: 1.12%).

Excess returnThe difference between the gross total return of TEMIT and the benchmark total return.

ResidualA measure representing the difference between the actual excess return and the excess return explained by the attribution model. This amount results from several factors, most significantly the difference between the actual trade price of securities included in actual performance and the end of day price used to calculate attribution.

Market capitalisationThe total market value of a company’s shares. This is calculated by multiplying the share price on a certain date by the number of shares in issue.

Glossary of Alternative Performance Measures


Board of DirectorsPaul Manduca(a) (Chairman); Hamish N Buchan(a) (retired 12 July 2018); David Graham(a); Beatrice Hollond(a); Simon Jeffreys(a); Gregory E Johnson; Charlie Ricketts(a) (appointed 12 July 2018).(a) Independent non-executive

How to InvestThere are two main ways to invest in TEMIT:1. Through an investment platform. A number of fund supermarkets or investment platforms allow you to

buy, hold and sell shares in investment trusts such as TEMIT quickly and easily at a low cost. Many have no minimum investment requirements.

Equiniti, the Registrar, offers an online or telephone service where you can buy shares in TEMIT as part of an Investment Account or an Individual Savings Account. There are a number of other companies that offer similar services and may also allow you to include TEMIT as an investment in your Self-Invested Pension Plan. Some of the most popular include Hargreaves Lansdown, Charles Stanley Direct, AJ Bell, the Share Centre and Interactive Investor.

If you haven’t already chosen a provider, there are a number of independent comparison websites available which may assist you in making your selection.

Please note that this is not a complete list of ISA or SIPP providers and you should not consider this list to be a recommendation of the services which these providers offer.

2. Directly through the stock market. You can invest directly in Templeton Emerging Markets Investment Trust PLC by purchasing shares in the stock market through a stockbroker or authorised Financial Adviser.

Financial AdviceWe strongly recommend that you take independent financial advice before making any investment. If you have a financial adviser then they will advise you on the best way to invest in TEMIT. If you currently do not have a financial adviser, there are a number of resources online to help you. For investors based in the UK, websites such as www.unbiased.co.uk or www.vouchedfor.co.uk will provide you with details of financial advisers in your area.

NAV Publication and Reference Codes The NAV is released every London Stock Exchange business day through the London and New Zealand Stock Exchanges. It is also published on our website: www.temit.co.uk and published in the Financial Times.Codes

Ticker TEM LNISIN GB0008829292SEDOL 882929

Dividend Reinvestment Plan (DRIP)If you are a UK shareholder and your shares are held in your own name on the Company’s share register, you can request that any dividend payments are used to purchase further shares in the Company. You can download and complete the relevant applications forms through Equiniti’s secure website www.shareview.co.uk/info.drip or you can contact Equiniti by phone on 0371 384 2505. If you are telephoning from outside the UK, please ring +44 121 415 7047.

If you invest through a nominee or investment platform and wish to reinvest dividends you will need to contact them directly to find out what arrangements they offer.

Shareholder Information


General Information

REGISTERED OFFICE

5 Morrison Street Edinburgh EH3 8BHUK(Registered No. SC118022)

REGISTRAR – UK

Equiniti Limited Aspect House Spencer Road LancingWest Sussex BN99 6DAUKwww.equiniti.comTel (UK) 0371 384 2505Tel (overseas) +44 121 415 7047

REGISTRAR – NEW ZEALAND

Computershare Investor Services Limited159 Hurstmere RoadTakapunaAuckland 0622NEW ZEALANDwww.computershare.co.nzTel +649 488 8777

ALTERNATIVE INVESTMENT FUND MANAGER, SECRETARY AND ADMINISTRATOR

Franklin Templeton International Services S.à r.l. 8a rue Albert BorschetteL-1246 LUXEMBOURG

FINANCIAL ADVISER AND STOCKBROKER

Winterflood Securities Limited The Atrium BuildingCannon Bridge House 25 Dowgate Hill LondonEC4R 2GA UK

SOLICITOR

CMS Cameron McKenna Nabarro Olswang LLP Saltire Court20 Castle Terrace Edinburgh EH1 2ENUK

CUSTODIAN

JPMorgan Chase Bank 25 Bank Street LondonE14 5JP UK

DEPOSITARY

J.P. Morgan Europe Limited 25 Bank StreetLondon E14 5JPUK

AUDITOR

Deloitte LLP Hill House1 Little New Street LondonEC4A 3TR UK


Client Dealer Servicesfreephone 0800 305 306tel +44 (0)20 7073 8690fax +44 (0)20 7073 [email protected]

© 2018 Franklin Templeton Investments. All rights reserved. TEMIT HYREP 09/18

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