Templeton Emerging Markets Investment Trust PLC (“TEMIT”)
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ANNUAL REPORT AND FINANCIAL STATEMENTS TO 31 MARCH 2019
ANNUAL REPORT AND AUDITED ACCOUNTS TO 31 MARCH 2019
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
Company Overview1
Strategic Report2
Financial Summary2
Ten Year Record3
Chairman’s Statement5
Strategy and Business Model9
The Investment Manager18
Portfolio Managers18
Investment Process19
Portfolio Report23
Report of the Directors and
Governance
39
Directors’ Report39
Directors’ Remuneration
Report
54
Report of the Audit Committee58
Statement of Directors’
Responsibilities63
Independent Auditor’s Report64
Financial Statements72
Statement of Comprehensive
Income
72
Statement of Financial Position73
Statement of Changes in Equity74
Statement of Cash Flows75
Notes to the Financial
Statements
76
Investor Information91
Notice of Meeting91
Key Dates95
Investor Communications95
General Information96
Shareholder Information97
Glossary of Alternative
Performance Measures98
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 thirty years ago in June 1989, Templeton Emerging Markets Investment Trust PLC (“TEMIT” or
the “Company”) is an investment trust 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, 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 assets of £2.1 billion as at 31 March 2019.
Since launch to 31 March 2019, TEMIT’s net asset value total return was +3,349.4% compared to the
benchmark total return of +1,605.0%.
TEMIT at a glance
For the year to 31 March 2019
Net asset value total return (cum-income) 2019
(a)
1.8%
(2018: 12.4%)
Share price total return 2019
(a)
6.0%
(2018: 13.7%)
MSCI Emerging Markets Index total return 2019
(a)(b)
0.1%
(2018: 11.8%)
Proposed total annual dividend 2019
(c)
16.00p
(2018: 15.00p)
Cumulative Total Return to 31 March 2019 (%)
0
20
60
80
40
100
120
140
160
220
200
180
Net asset value (cum-income)
Share Price
MSCI Emerging Markets Index
3 Years
78.8
69.0
51.2
5 Years
58.6
53.6
56.1
1 Year
6.0
1.8
0.1
10 Years
203.6
200.7
168.0
(a)
A glossary of alternative performance measures is included on page 98.
(b)
Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index, with net dividends reinvested.
(c)
An annual dividend of 16.00 pence per share for the year ended 31 March 2019 has been proposed. This comprises the interim dividend
of 5.00 pence per share paid by the Company on 16 January 2019 and a final dividend of 11.00 pence per share.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 1
Strategic Report
The Directors present the Strategic Report for the year ended 31 March 2019, which incorporates the Chairman’s
Statement, and has been prepared in accordance with the Companies Act 2006.
The aim of the Strategic Report is to provide shareholders with the ability to assess how the Directors have
performed in their duty to promote the success of the Company for shareholders’ collective benefit, by bringing
together in one place key information about the Company’s strategy, the risks it faces, how it is performing and
the outlook.
2018–2019
Notes
Year ended
31 March
2019
Year ended
31 March
2018
Capital
return
%
(a)
Total
return
%
(a)
Total net assets (£ million)2,118.22,300.8
Total net asset value (pence per share)842.5846.0(0.6) 1.8
Highest net asset value (pence per share)868.9918.2
Lowest net asset value (pence per share)740.0743.6
Share price (pence per share)766.0743.0 3.0 6.0
Highest end of day share price (pence per share)769.0825.0
Lowest end of day share price (pence per share)649.0643.0
MSCI Emerging Markets Index(2.7) 0.1
Share price discount to net asset value
(a)
9.1%12.2%
Average share price discount to net asset value over the year12.0%12.3%
Dividend (pence per share)
(b)
16.0015.00
Revenue earnings (pence per share)
(c)
17.2615.90
Capital earnings (pence per share)
(c)
(10.48)73.56
Total earnings (pence per share)
(c)
6.7889.46
Net gearing
(a)
2.4%3.3%
Ongoing charges ratio
(a)
1.02%1.12%
Source: Franklin Templeton and FactSet.
(a)
A glossary of alternative performance measures is included on page 98.
(b)
An annual dividend of 16.00 pence per share for the year ended 31 March 2019 has been proposed. This comprises the interim dividend of
5.00 pence per share paid by the Company on 16 January 2019 and a final dividend of 11.00 pence per share.
(c)
The revenue, capital and total earnings per share figures are shown in the Statement of Comprehensive Income on page 72 and Note 6 of
the Notes to the Financial Statements.
Financial Summary
2 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
2009–2019
Year ended
Total Net
Assets
(£m)
NAV
(pence
per share)
Share
Price
(pence
per share)
Year-end
Discount
(%)
Revenue
earnings
per share
(pence)
Annual
Dividend
per share
(pence)
Ongoing
Charges
Ratio
(a)
(%)
30 Apr 2009
(b)
1,208.3 365.7 340.5 6.9 7.69 3.75
(c)
1.34
31 Mar 2010
(d)
2,046.4 620.3 577.0 7.0 2.88 3.75 1.29
31 Mar 20112,368.4 718.0 660.0 8.1 6.14 4.25 1.31
31 Mar 20122,098.6 636.3 588.5 7.5 7.91 5.75 1.31
31 Mar 20132,302.7 702.3 640.5 8.2 8.45 6.25 1.30
31 Mar 20141,913.6 591.8 527.0 10.9 9.14 7.25 1.30
31 Mar 20152,045.0 641.2 556.0 13.3 9.28 8.25 1.20
31 Mar 20161,562.3 524.2 453.9 13.4 7.05 8.25 1.22
31 Mar 20172,148.1 762.8 661.5 13.3 6.59 8.25 1.20
31 Mar 20182,300.8846.0 743.0 12.2 15.90 15.00 1.12
31 Mar 20192,118.2 842.5 766.0 9.1 17.2616.00
(e)
1.02
Ten Year Growth Record
(rebased to 100.0 at 30 April 2009)
2009–2019
Year endedNAV
NAV total
return
(a)
Share
price
Share
price total
return
(a)
MSCI
Emerging
Markets
Index total
return
(a)
Revenue
earnings
per share
Dividend
per share
30 Apr 2009
(b)
100.0 100.0 100.0 100.0 100.0 100.0 100.0
(c)
31 Mar 2010
(d)
169.6 172.8 169.5 172.4 152.0 37.5 100.0
31 Mar 2011 196.3 201.0 193.8 198.5 170.9 79.8 113.3
31 Mar 2012 174.0 179.2 172.8 178.2 156.8 102.9 153.3
31 Mar 2013 192.0 199.2 188.1 196.1 168.8 109.9 166.7
31 Mar 2014 161.8 170.1 154.8 163.2 152.1 118.9 193.3
31 Mar 2015 175.3 186.5 163.3 174.4 172.2 120.7 220.0
31 Mar 2016 143.3 154.6 133.3 144.7 157.0 91.7 220.0
31 Mar 2017 208.6 228.5 194.3 214.7 212.4 85.7 220.0
31 Mar 2018 231.1 256.8 218.2 244.1 237.3 203.6 400.0
31 Mar 2019 230.4 261.3 225.0 258.8 237.5 224.4426.7
Source: Franklin Templeton and FactSet.
(a)
A glossary of alternative performance measures is included on page 98.
(b)
The results for the year ended 30 April 2009 reflect £633m returned to the shareholders as a result of the tender offer in 2008.
(c)
Excludes the special dividend of 2.50 pence per share in 2009.
(d)
11 months to 31 March 2010.
(e)
An annual dividend of 16.00 pence per share for the year ended 31 March 2019 has been proposed. This comprises the interim dividend of
5.00 pence per share paid by the Company on 16 January 2019 and a final dividend of 11.00 pence per share.
Ten Year Record
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 3
Ten Year Growth Record (continued)
Mar 19Mar 18Mar 17Mar 16Mar 14Mar 15Mar 09Mar 10Mar 11Mar 12Mar 13
50
100
200
250
300
150
350
TEMIT
share price
(b)
301
MSCI Emerging
Markets Index
(b)
268
TEMIT
NAV returns
(b)
304
2009–2019 NAV, share price and benchmark total return
(a)
3.9
2.8
3.5
2.4
12.6
13.1
0.6
1.7
1.9
5.9
29.2
28.8
-2.6
-2.0
-4.7
-6.9
-3.6
-6.3
-8.3
-8.2
2013/142018/192017/182016/172015/162014/152012/132011/122010/112009/10
TEMIT share price relative returnTEMIT NAV relative return
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Annual NAV and share price total return relative to the benchmark total return
(c)
(a)
This graph shows the value of £100 invested on 31 March 2009 at 31 March 2019. The Ten Year Growth Record performance on page 3
differs as it was rebased from the financial year end at 30 April 2009.
(b)
Rebased to 100 at 31 March 2009.
(c)
Periods are TEMIT reporting periods to 31 March.
4 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Market Overview and Investment Performance
Over the financial ye ar, the Company’s Net Asset Value Total Return was 1.8%, which was ahead of a virtually
unchanged benchmark return. These numbers do not, however, tell the full story of a challenging year, with
markets reaching low points in October 2018 and again over the Christmas period. In the context of such
difficult markets, it is encouraging to see that the Investment Manager achieved both a positive return and a
return somewhat better than the benchmark MSCI Emerging Markets Index over the financial year. Share price
total return performance was considerably better as the discount narrowed over the period.
As described further below, the Company is required to hold a continuation vote every five years and will do so
at this year’s Annual General Meeting (“AGM”). While this annual report focuses on the year under review, it is
interesting to look at performance over longer periods, as set out in the table b e l ow.
1 Year
To
31 Mar 19
3 Years
To
31 Mar 19
5 Years
To
31 Mar 19
10 Years
To
31 Mar 19
Launch
To
31 Mar 19
NAV Total Return
(a)
(%)+1.8+69.0+53.6+203.6+3,349.4
Share Price Total Return
(a)
(%)+6.0+78.8+58.6+200.7
+3,095.8
Benchmark Total Return
(a)
(%)+0.1+51.2+56.1+168.0+1,605.0
Over the five year period since the last continuation vote, both the net asset value and share price total returns
were broadly in line with the benchmark index. Again, this set of statistics does not tell the full story. In the early
part of the five year period exposure, in particular to natural resources and some banks, was detrimental. A
recovery since the fourth quarter of 2015 has been the result of a more diversified portfolio focused on investing
in growing companies at reasonable valuations, particularly those benefitting from the effects of rapidly
developing technology and the growing power of the consumer in emerging economies.
Revenue, Earnings and Dividend
The company paid its first ever interim dividend in January 2019 of 5.00 pence per share.
Revenue earnings per share were 17.26 pence, compared with 15.90 pence last year. The Board recommends a final
dividend of 11.00 pence per share which, combined with the interim dividend, will result in a total dividend for the
year of 16.00 pence, compared with 15.00 pence for the last financial ye ar.
The Board recognises that dividends are appreciated by many shareholders and this was the reason that we decided
to pay two dividends per year. However, shareholders should remain aware that the Investment Manager’s primary
focus is on generating capital returns and we do not target a particular level of income.
The Investment Manager
As reported at the half year, Andrew Ness joined Franklin Templeton on 17 September 2018. Andrew Ness
brings a wealth of investment experience, and the Board believes that his appointment as a portfolio manager,
together with lead portfolio manager Chetan Sehgal’s strong leadership, will further strengthen the team’s
investment resources and capabilities and thus position the Company well for the future.
Chairman’s Statement
(a)
A glossary of alternative performance measures is included on page 98.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 5
Franklin Templeton has a large team analysing companies and managing investments in emerging markets. 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.
Asset Allocation and Borrowing
The Investment Manager continued to deploy gearing in a cautious manner over the year under review. As at
31 March 2019, the current bank debt facility was partly drawn down and the level of gearing (net of cash in the
portfolio) was 2.4%. If no cash had been held in the portfolio, based on the net asset value as at close of business
on 31 March 2019, gearing would have been 5.9%.
The Discount
During the year to 31 March 2019, TEMIT’s shares traded at discounts of between 7.9% and 15.2%. As noted in
my half yearly report the discount stood at 13.3% as at 30 September 2018 but narrowed in the second half of the
ye ar, and on 31 March 2019, the discount was 9.1%.
The Board continues to exercise its right to buy back shares when it believes this to be in shareholders’ interests
and with the aim of reducing volatility in the discount. In light of the volatility experienced this year, the
Company was very active in buying back shares, with a total of 20,546,172 shares being bought back, which was
7.55% of the shares in issue at the start of the financial year. The effect of buying back shares at a discount was to
increase the NAV per share for remaining shareholders by 1.0%. The discount was quite wide in the first half of
the financial year but narrowed to finish the year at a relatively lower level.
Over the five accounting years since the last continuation vote, some 71.9 million shares, or over 22% of shares
which were in circulation on 31 March 2014, have been bought back.
As at 31 March 2019, TEMIT held 20,765,179 shares in treasury, which was 8.3% of shares in issue. The key
advantage of shares held in treasury is that they can be reissued quickly and at minimal cost. In order to protect the
interests of existing shareholders, shares held in treasury will only be reissued at a price above the prevailing NAV
per share at the time of reissue.
As well as using share buy backs to help to limit the supply of shares, the Board and Franklin Templeton remain
committed to seeking to stimulate demand for TEMIT’s shares via a comprehensive marketing and media
relations programme, including social media.
Conditional Tender Offer
On 3 May 2019, the Board announced that, subject to the passing of the continuation vote at the 2019 AGM, the
Board will introduce a five-year performance-related conditional tender offer (the “Conditional Tender Offer”).
There will be no tender offer in the event that the Company’s net asset value total return continues to exceed the
benchmark total return (MSCI Emerging Markets Index TR). However, if over the five-year period to 31 March
2024 the Company’s net asset value total return fails to exceed the benchmark total return the Board will put
forward proposals to shareholders to undertake a tender offer for up to 25 per cent of the issued share capital of
the Company at the discretion of the Board. Any such tender offer will be at a price equal to the then prevailing
net asset value less two per cent (less the costs of the tender offer). Any tender offer will also be conditional
Chairman’s Statement (continued)
6 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
on shareholders approving the continuation vote in 2024 and would take place following the Company’s 2024
annual general meeting.
The introduction of the Conditional Tender Offer will not affect the Board’s current approach to discount
management. The Board will continue to exercise its right to buy back shares when it believes this to be in
shareholders’ interests and with the aim of reducing volatility in the discount.
Investor Communications
Our website displays the latest news, price and performance information, portfolio details, updates from the
Investment Manager and a blog discussing topical issues in emerging markets. Via the website you can ask to
have the latest Company information e-mailed directly to you. I encourage all shareholders to register on our
website and make use of the facilities and materials available to help keep you informed about the C omp any.
If you have a Twitter account, you can also follow us via our Twitter handle @TEMIT.
The Board and Investment Manager aim to keep shareholders informed and up-to-date with information about
TEMIT as well as seeking feedback and comment from investors. While the Investment Manager will, in most
cases, be best placed to handle enquiries, I am at your disposal to receive any questions or comments, as is the
Senior Independent Director or any of the other Directors, all of whom may be reached via our brokers whose
contact details are enclosed at the end of this report.
AIFM Fees
With effect from 1 July 2018, the annual management fee was reduced to 1% of net assets up to £1 billion and
0.85% of net assets above £1 billion. Based on net assets as at 31 March 2019, this results in an annual saving to
the Company of £1.5 million. Having reduced fees in both 2017 and 2018, the Board has agreed with Franklin
Templeton that it will maintain fees at the current level for the 2019/2020 financial year.
The Board
As announced last year, Charlie Ricketts joined the Board at the conclusion of last year’s AGM in July, while
Hamish Buchan retired at that time. Following Hamish Buchan’s retirement, Beatrice Hollond is the Senior
Independent Director.
Outlook
At the time of writing, the Company’s Net Asset Value and share price have experienced a substantial recovery
following the volatility experienced in late 2018.
The Board continues to support the Investment Manager in taking a long-term view of investment. We are
encouraged by the resources which Franklin Templeton brings to bear on shareholders’ behalf and on the value
that their analysts and portfolio managers are currently finding in emerging markets. While there will inevitably
be periods of volatility and setbacks along the way, as we consider a continuation vote that will in effect renew
the mandate for the coming five years, the Board remains confident that an investment in TEMIT should prove
rewarding over the long term.
Chairman’s Statement (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 7
Annual General Meeting and Continuation Vote
The Company’s Articles of Association require the Board to seek shareholder’s approval every five years for it
to continue, and a continuation vote is due this year. The continuation vote marks the 30th anniversary of the
launch of TEMIT. As can be seen in the table on page 5, over the long term, investment performance has been
particularly strong and returns have been substantially in excess of the benchmark index, demonstrating the
value of active investment management. In light of the long-term track record and the strength of the investment
management team, the Board unanimously recommends that shareholders vote in favour of continuation.
I would like to invite all shareholders to attend the AGM to be held at The Honourable Artillery Company,
City Road, London, EC1Y 2BQ at 12 noon on Thursday 11 July 2019. There will be an opportunity to meet
the Board and the Portfolio Manager and to hear the latest news on the Company, its investments and the
markets, as well as take part in the formal annual meeting. More details of the meeting can be found on
pages 91 to 94 of this report.
Paul Manduca
Chairman
4 June 2019
Chairman’s Statement (continued)
8 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Strategy and Business Model
Company Objective
The objective of TEMIT is to provide long-term capital appreciation for private and institutional investors
seeking exposure to global emerging markets, supported by both strong customer service and corporate
governance.
Investment Policy
The Company seeks long-term capital appreciation through investment in companies listed in emerging
markets or companies which earn a significant amount of their revenues in emerging markets but are listed
on stock exchanges in developed countries.
It is intended that the Company will normally invest in equity instruments. However, the Investment Manager
may invest in equity-related investments (such as convertibles) where they believe it is advantageous to do
so. The portfolio may frequently be overweight or underweight in certain investments compared with the
MSCI Emerging Markets Index and may be concentrated in a more limited number of sectors, geographical
areas or countries than the benchmark. The Company may also invest a significant proportion of its assets
in the securities of one issuer, securities domiciled in a particular country, or securities within one industry.
No more than 10% of the Company’s assets will be invested in the securities of any one issuer at the time of
investment.
The Board has agreed that TEMIT may borrow up to 10% of its net assets.
Strategy
In setting the Company’s overall strategy, the Directors have taken due note of the requirements of Section
172 of the Companies Act, 2006. This section sets out a duty to promote the overall success of the company,
while taking account of the interests of its various stakeholders. The Company seeks to achieve its objective by
following a strategy focused on the following:
Performance
At the heart of the strategy is the appointment and retention of capable investment management
professionals, who will identify value and achieve superior growth for shareholders. The Investment Manager,
under the leadership of Chetan Sehgal, continues to apply the same core investment philosophy that has
driven TEMIT’s performance since the Company’s launch. The investment team aims to achieve long-term
capital appreciation for shareholders by investing in companies that they believe offer long-term sustainable
growth and good value, combined with strong management and sound governance. See pages 19 to 22 for
details of the Investment process.
Liquidity
The Company is listed on the London and New Zealand Stock Exchanges. The Company has engaged
Winterflood Securities as Financial Adviser and Stockbroker, and to act as a market maker in the shares of
the Company.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 9
Gearing
On 31 January 2017, the Company entered into a three-year £150 million unsecured multi-currency
revolving loan facility with The Bank of Nova Scotia, London Branch. The size of the facility was increased on
3 September 2018 to £220 million. Under the facility, up to £220 million may be borrowed, and drawings are
available in pounds sterling, US dollars and Chinese renminbi. The maximum amount of Chinese renminbi
which may be drawn down is the equivalent of £44 million. 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,
and subject to an overall gearing limit of 10% of NAV.
The Company’s net gearing position was 2.4% (net of cash in the portfolio) at the year end (2018: 3.3%). The
Directors’ Report on page 45 includes further commentary on the gearing facility.
The Board continues to monitor the level of gearing and considers gearing of up to 10% to be appropriate.
Stability
The Company has powers to buy back its shares as a discount control mechanism when it is in the best
interests of the Company’s shareholders. On a daily basis, the Board ensures that the share price discount to
NAV is actively monitored. Discount management is reviewed regularly by the Board to ensure that it remains
effective in the light of prevailing market conditions. This is discussed in more detail in the Directors’ Report
on page 46.
Affirmation of Shareholder Mandate
In accordance with the Company’s Articles of Association, the Board must seek shareholders’ approval for
TEMIT to continue as an investment trust every five years. This allows shareholders the opportunity to decide
on the long-term future of the Company. The last continuation vote took place at the 2014 AGM, when
99.74% of shareholders voted in favour. As noted in the Chairman’s Statement on page 8 a continuation vote
will take place at this year’s AGM on Thursday 11 July.
Communication
We ensure that investors are informed regularly about the performance of TEMIT and emerging markets
through clear communication and updates.
TEMIT seeks to keep you updated on performance and investment strategy through the website
(www.temit.co.uk). Here you will find all of the latest information on the Company, including monthly
factsheets, portfolio holdings information, updates from the Investment Manager on the latest news on
emerging markets and other important documents that will help shareholders understand how their
investment is managed. Last year we also launched @TEMIT on Twitter.
We also hold investor briefings and discussions in order better to understand investor needs.
Strategy and Business Model (continued)
10 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Service Providers
The Board conducts regular reviews of the Company’s primary service providers as discussed on pages 47 and
48, to ensure that the services provided are of the quality expected by TEMIT. The Directors also ensure that
the Company’s primary service providers have adopted an appropriate framework of controls, monitoring
and reporting to enable the Directors to evaluate risk.
Business Model
The Company has no employees and all of its Directors are non-executive. The Company delegates its day-to-
day activities to third parties.
At least quarterly, the Board reviews with Franklin Templeton International Services S.à r.l. (“FTIS”, “AIFM”
or the “Manager”) and the Investment Manager a wide range of risk factors that may impact the Company.
Further analysis of these risks is described on pages 13 and 14. A full risk and internal controls review is held
every September at the Audit Committee meeting.
Due to the nature of the Company’s business, investment risk is a key focus and is reviewed on an ongoing
basis by the Investment Manager as part of every investment decision. Further information on this process is
detailed on page 22.
The Board is responsible for all aspects of the Company’s affairs, including the setting of parameters for
the monitoring of the investment strategy and the review of investment performance and policy. It also has
responsibility for all strategic policy issues, namely dividend, gearing, share issuance and buy backs, share
price and discount/premium monitoring, and corporate governance matters.
Key Performance Indicators
(a)
The Board considers the following as the key performance indicators for the Company:
• Net asset value total return over various periods, compared to its benchmark;
• Share price and discount;
• Dividend and revenue earnings; and
• Ongoing charges ratio.
The 10 year records of the KPIs are shown on pages 3 and 4.
Net asset value performance
Net asset value performance data is presented within the Company Overview on page 1 along with the
10 year record on pages 3 and 4.
The Chairman’s Statement on pages 5 to 8 and the Investment Manager’s Report on pages 18 to 38 include
further commentary on the Company’s performance.
Strategy and Business Model (continued)
(a)
A glossary of alternative performance measures is included on page 98.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 11
Share price and discount
Details of the Company’s share price and discount are presented within the Financial Summary on page 2.
On 22 May 2019, the latest date for which information was available, the discount had widened to 10.3%.
The Company has powers to buy back its shares as a discount control mechanism when it is in the best
interests of the Company’s shareholders. The Company was authorised at its AGM on 12 July 2018 to buy
back up to 14.99% of the Company’s issued share capital on that date. The present authority expires on the
conclusion of the AGM on 11 July 2019. The Directors are seeking to renew this authority at the 2019 AGM,
as further detailed in the Directors’ Report on page 52.
Details on share buy backs in the year can be found on pages 6, 46 and 84.
From 1 April 2019 to 22 May 2019, 1,569,975 shares were bought back and cancelled for a total consideration
of £12,066,408.
Share price discount to NAV
-16
0
-2
-4
-6
-8
-10
-12
-14
-16
0
-2
-4
-6
-8
-10
-12
-14
Mar 14Mar 15Mar 16Mar 19Mar 18Mar 17
TEMIT Share Price Discount, based on a 7 day moving average
Dividend and revenue earnings
Total income earned in the year was £59.7 million (2018: £60.5 million) which translates into net earnings of
17.26p pence per share (2018: 15.90 pence per share), an increase of 8.6% over the prior year.
The Board is proposing a final dividend of 11.00 pence per share, making total dividends for the year 16.00
pence per share.
Strategy and Business Model (continued)
12 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Ongoing charges ratio (“OCR”)
The OCR fell to 1.02% for the year ended 31 March 2019, compared to 1.12% in the prior year. This was due
to the AIFM fee reduction as detailed within the Directors’ Report on page 47.
Costs associated with the purchase and sale of investments are taken to capital and are not included in the
OCR. Transaction costs are disclosed in Note 7 to the Financial Statements on page 83.
Principal Risks
The principal risks facing the Company, as determined by the Board, are summarised in the table below.
Further explanation of the monitoring of risk and uncertainties is covered within the Report of the Audit
Committee on pages 60 and 61. Information on the risks that TEMIT is subject to, including additional
financial and valuation risks, are also detailed in Note 14 of the Notes to the Financial Statements.
RiskMitigation
Investment and concentration
The portfolio will diverge significantly from the MSCI
Emerging Markets Index and may be concentrated in a
more limited number of sectors, geographical areas or
countries. This is consistent with the stated investment
approach of long-term value investment in companies
demonstrating sustainable earnings power at a discount
to their strategic worth.
Where possible, investment will generally be made
directly in the stock markets of emerging countries.
Emerging markets can be subject to greater price
volatility than developed markets.
The Board regularly reviews the portfolio composition /
asset allocation and discusses related developments with
the Investment Manager. The Investment Compliance
team of the Investment Manager monitors concentration
limits and potential breaches are signalled to portfolio
management for remedial action.
Market
Market risk arises from volatility in the prices of the
Company’s investments, from the risk of volatility in
global markets arising from macroeconomic and
geopolitical circumstances and conditions as well as from
the borrowing utilised by TEMIT. Many of the companies
in which TEMIT invests are, by reason of the locations
in which they operate, exposed to the risk of political
or economic change. In addition, exchange control, tax
or other regulations introduced in any country in which
TEMIT invests may affect its income and the value and
marketability of its investments.
The Board regularly reviews and discusses with the
Investment Manager the portfolio and investment
performance of the Company and the execution of the
investment policy against the long-term objectives of
the Company. The Board also regularly reviews risk
management reports from the Manager’s independent
risk team.
Foreign currency
Currency movements may affect TEMIT’s performance. In
general, if the value of sterling increases compared with
a foreign currency, an investment traded in that foreign
currency will decrease in value because it will be worth
less in sterling terms. This can have a negative effect on
the Company’s performance.
The Board monitors currency risk as part of the regular
portfolio and risk management oversight. TEMIT does not
hedge currency risk.
Portfolio liquidity
The Company’s portfolio may include securities with
reduced liquidity. This may impair the ability to sell
assets which could limit the Investment Manager’s ability
to make significant changes to the portfolio.
The closed ended structure of TEMIT reduces the impact to
shareholders of potential illiquidity in the portfolio.
The Board regularly receives and reviews updates on
portfolio liquidity.
Strategy and Business Model (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 13
Strategy and Business Model (continued)
RiskMitigation
Counterparty and Credit
Certain transactions that the Company enters into expose
it to the risk that the counterparty will not deliver an
investment (purchase) or cash (in relation to a sale or
declared dividend) after the Company has fulfilled its
responsibilities.
The Board receives regular reporting and reviews the
approved counterparty list of the Investment Manager on an
annual basis and receives and reviews regular reporting on
counterparty risk from the Manager’s independent risk team.
Operational and custody
Like many other investment trust companies, TEMIT has
no employees. The Company therefore relies upon the
services provided by third parties and is dependent upon
the control systems of the Manager and of the Company’s
other service providers. The security, for example, of the
Company’s assets, dealing procedures, accounting records
and maintenance of regulatory and legal requirements
depends on the effective operation of these systems.
The Manager’s systems are regularly tested and monitored
and an internal controls report, which includes an
assessment of risks together with an overview of procedures
to mitigate such risks, is prepared by the Manager and
reviewed by the Audit Committee annually.
J.P. Morgan Europe Limited is the Company’s depositary.
Its responsibilities include cash monitoring, safe keeping of
the Company’s financial instruments, verifying ownership
and maintaining a record of other assets and monitoring
the Company’s compliance with investment limits and
borrowing requirements. The depositary is liable for any loss
of financial instruments held in custody and will ensure that
the custodian and any sub-custodian segregate the assets of
the Company. The depositary oversees the custody function
performed by JPMorgan Chase Bank. The custodian
provides a report on its key controls and safeguards (SOC 1/
SSAE 16/ISAE 3402) that is independently reported on by
its auditor, PwC.
The Board reviews regular operational risk management
reporting provided by the Investment Manager.
Key personnel
The ability of the Company to achieve its investment
objective is significantly dependent upon the expertise of
the Investment Manager and its ability to attract and retain
suitable staff.
The Manager endeavours to ensure that the principal
members of its management teams are suitably
incentivised, participate in strategic leader programmes
and monitor key succession planning metrics. The Board
regularly discusses this risk with the Manager.
Regulatory
The Company is an Alternative Investment Fund (“AIF”)
under the European Union’s Alternative Investment
Fund Managers Directive. The Company operates in an
increasingly complex regulatory environment and faces a
number of regulatory risks. Breaches of regulations could
lead to a number of detrimental outcomes and reputational
damage.
The Board is active in ensuring that the Company complies
with all applicable laws and regulation and its internal risk
and control framework reduces the likelihood of breaches
happening. As appropriate the Board is assisted by the
Manager in doing this.
Cyber
Failure or breach of information technology systems
of the Company’s service providers may entail risk of
financial loss, disruption to operations or damage to the
reputation of the Company.
The Company benefits from Franklin Templeton’s technology
framework designed to mitigate the risk of a cyber security
breach.
For key third-party providers, the Audit Committee receives
regular independent certifications of their control’s
environment.
14 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Brexit
TEMIT is a company registered in Scotland. At the time of writing, the timing and terms of the United
Kingdom’s exit from the European Union (“Brexit”) are unclear.
TEMIT is regulated as an AIF under UK law, with its AIFM being FTIS, a Luxembourg company. In light of
the recent UK proposal for a Temporary Permissions Regime that would allow up to a three-year extension of
current “passporting” for the AIFM into the UK, we expect that the UK FCA will continue to recognise FTIS
as TEMIT’s AIFM at least for the next three years.
TEMIT invests the majority of its assets outside the EU and the vast majority of shareholders are based in the
UK, New Zealand and the United States. The only material adverse effect of the Brexit process on TEMIT to
date has been the increase in volatility of the value of the British Pound, which affects the value of TEMIT’s
assets in the hands of UK-based shareholders.
While Brexit has created a degree of uncertainty, in light of the nature of TEMIT’s business and the regulatory
arrangements described above, the Board has decided that Brexit is not one of the Principal Risks facing the
C omp any. Nevertheless, the Board and AIFM continue to monitor developments closely.
Environmental, Social and Governance Matters
As an investment trust the Company has no significant direct, environmental, social, community or employee
responsibilities. Its policy is focused on making sure that its assets are properly managed and invested within
guidelines approved by the Board. The Board receives regular reports on the policies and controls in place.
The Investment Manager, Franklin Templeton embeds Environmental, Social and Governance (ESG)
considerations, best practice and analytics in their investment processes.
Recognising the importance of ESG considerations to shareholders, the Investment Manager became a
signatory of the United Nations Principles for Responsible Investing (“PRI”) in 2013. As a signatory, the
Investment Manager reports annually on its progress and in 2018 (the latest statistics available) ranked ahead
of the peer median score in all categories. A link to the PRI Transparency Report and policies relating to
responsible investing are available on the Company’s website – www.temit.co.uk.
The Investment Manager comments on the integral nature of ESG within the investment process and how
they engage with companies to promote ESG best practices on page 20 of this report. They are assisted by
Franklin Templeton’s independent ESG specialists and risk managers.
TEMIT has no greenhouse gas emissions to report from the operations of the Company, as all of its activities
are outsourced to third parties, nor does it have responsibility for any other emissions-producing sources
under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.
Strategy and Business Model (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 15
On 26 March 2015, the Modern Slavery Act 2015 came into force. TEMIT has no employees and is not an
organisation that provides goods or services as defined in the Act and thus the Company considers that the
Act does not apply.
Diversity
The Board supports the principle of diversity. The selection policy of the Board is to appoint the best qualified
person for the job, by considering factors such as diversity of gender, thought, experience and qualification. The
Board currently comprises six Directors, five male and one female.
The Investment Manager has a culture that they consider is founded on diversity, inclusion, and
empowerment. As a global company, Franklin Templeton believe they benefit from the unique skills and
experiences of an inclusive workforce made up of employees who span different generations, genders,
preferences, capabilities and cultural identification. This culture aided Franklin Templeton’s inclusion in the
2019 Bloomberg Gender-Equality Index (GEI), which recognises diverse and equitable workplaces. Franklin
Templeton sponsor thousands of volunteer activities each year through their global Involved programme
which helps to provide better outcomes for local communities. In the UK, they are active sponsors/supporters
of several organisations that promote diversity such as the Diversity Project, Stonewall and Career Ready.
Viability Statement
The Board consider viability as part of their continuing programme of monitoring risk. In preparing the
Viability Statement, in accordance with the UK Corporate Governance Code provision C.2.2, the Directors
have assessed the prospects of the Company over a longer period than the 12 months required by the ‘Going
Concern’ provision.
The Board has considered the Company’s business and investment cycles and are of the view that five years
is a suitable time horizon to consider the continuing viability of the Company, balancing the uncertainties of
investing in listed emerging markets securities against having due regard to viability over the longer term.
In assessing the Company’s viability, the Board has performed a robust assessment of controls over the
principal risks. The Board consider, on an ongoing basis, each of the principal risks as noted above and
set out in Note 14 of the Notes to the Financial Statements. The Board evaluated a number of scenarios of
possible future circumstances including a material increase in expenses and a significant and prolonged fall
in equity markets. The Board monitor income and expense projections for the Company, with the majority
of the expenses being predictable and modest in comparison with the assets of the Company. The Company
sees no issues with meeting the obligations of the gearing facility. A significant proportion of the Company’s
expenses are in ad valorem investment management fees, which would naturally reduce if the market value of
the Company’s assets were to fall.
Taking into account the above considerations, the Board has concluded that there is a reasonable expectation
that, assuming there will be a successful continuation vote at the forthcoming AGM, the Company will be able
to continue to operate and meet its liabilities as they fall due over the next five years.
Strategy and Business Model (continued)
16 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Future Strategy
The Company was founded, and continues to be managed, on the basis of a long-term investment strategy
that seeks to generate superior returns from investments, principally in the shares of carefully selected
companies in emerging markets.
The Company’s results will be affected by many factors including political decisions, economic factors,
the performance of investee companies and the ability of the Investment Manager to choose investments
successfully.
The Board and the Investment Manager continue to believe in investment with a long-term horizon in
companies that are undervalued by stock markets but which are fundamentally strong and growing. It
is recognised that, at times, extraneous political, economic and company-specific factors will affect the
performance of investments, but the Company will continue to take a long-term view in the belief that
patience will be rewarded.
The Company’s overall strategy remains unchanged and is expected to remain consistent with these aims for
the foreseeable future.
By order of the Board
Paul Manduca
4 June 2019
Strategy and Business Model (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 17
The Investment Manager
TEMIT’s Investment Manager is the Franklin Templeton Emerging Markets Equity (FTEME) team. FTEME
has managed the portfolio since TEMIT’s inception and are pioneers in emerging markets equity investing.
They bring more than 30 years of experience and local knowledge from over 80 investment professionals, based
in 16 countries around the world.
The team has a collaborative and team-oriented investment process where all analysts and portfolio managers
are jointly tasked to contribute to investment returns. They meet regularly, both formally and informally, to
debate and exchange ideas, investment themes and enrich their understanding of the markets by drawing on
local insights to build a global perspective and context to their thinking. They also benefit from the broader
resources available throughout Franklin Templeton.
The portfolio managers for TEMIT, Chetan Sehgal (lead) and Andrew Ness are senior executives in FTEME.
Portfolio Managers
Chetan Sehgal, CFA
Chetan is the lead portfolio manager of TEMIT, based in Singapore.
As part of his broader responsibilities within FTEME, Chetan is also the director
of portfolio management. In this capacity, he is responsible for the overall Global
Emerging Markets and Small Cap strategies, providing guidance and thought leadership,
coordinating appropriate resources and coverage, and leveraging the group’s expertise to
add value across products within the strategies.
Chetan joined Franklin Templeton in 1995 from the Credit Rating Information Services
of India, Ltd where he was a senior analyst.
Chetan holds a B.E. Mechanical (Hons) from the University of Bombay and a post-
graduate diploma in management from the Indian Institute of Management in
Bangalore, where he specialised in finance and business policy and graduated as an
institute scholar. Chetan speaks English and Hindi and is a Chartered Financial Analyst
(CFA) charterholder.
Andrew Ness, ASIP
Based in Edinburgh, UK, Andrew Ness is co-portfolio manager of TEMIT.
Prior to joining Franklin Templeton in September 2018, Andrew was a Portfolio
Manager at Martin Currie, an Edinburgh based asset manager. He began his career
at Murray Johnstone in 1994 and worked with Deutsche Asset Management in both
London and New York before joining Scottish Widows Investment Partnership in 2007.
Andrew holds a B.A. (Hons) in Economics and an MSc in business economics from the
University of Strathclyde in the UK. He is an Associate Member of the UK Society of
Investment Professionals and a member of the CFA Institute.
18 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The investment team aims to capture the growth potential of emerging markets economies by employing a
bottom-up stock selection process based on in-depth company research. Through this long-term approach,
they focus on identifying companies with sustainable earnings power at a discount to intrinsic worth.
The team’s information advantage lies in its extensive locally-based emerging markets resource, providing
valuable local access to companies and expertise. This, combined with an investment approach that is robust,
scalable, and continuously refined allows the team to provide investors with access to the most attractive
investment opportunities within emerging markets.
TEMIT’s performance in different market environments
Given TEMIT’s long-term approach and focus on identifying sustainable businesses that are mispriced by the
market, the portfolio is most likely to produce superior returns in market environments that reward patience,
and where company fundamentals are the primary driver of stock returns.
Investment Process
The team’s investment approach is bottom-up, fundamental research-driven with the focus on identifying
companies demonstrating sustainable earnings power at a discount to intrinsic worth. In order to achieve
this, the team has developed a rigorous and transparent investment process, as illustrated below, where risk
management and stewardship is embedded at every stage of the process.
1. IDEA
GENERATION
2. STOCK
RESEARCH
RISK MANAGEMENT
STEWARDSHIP
3. PORTFOLIO
CONSTRUCTION
1. Idea Generation
The key source of idea generation is the team of over 80 country and sector analysts and portfolio managers
located around the globe. Their local presence means that they are best placed to uncover potential
investments that meet the specific stock criteria used to identify sustainable earnings power. In addition, they
can incorporate a deep understanding of the economic, political and cultural environment in their analysis.
Following identification of a potential investment for the portfolio, the analyst, Director of Research or
Portfolio Managers will jointly agree whether a deeper analysis is warranted.
Investment Process
Investment Philosophy and Approach
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 19
2. Stock Research
In carrying out deep fundamental analysis on a stock, the team will look for the following characteristics:
Sustainability — the ability to sustain stable or growing economic profits over time. This is typically driven by a
combination of a sound business model, earnings growth consistency, a sustainable competitive advantage such
as strong growth opportunities, barriers to entry, and management with a strong strategic focus, among other
factors.
At this stage of the investment process, there is also an analysis of a company’s Environmental, Social and
Governance (ESG) practices, and how they might impact the business model. This analysis and its conclusions
are incorporated into the research note that forms the basis of the fundamental research analysis and is stored
and shared on a proprietary research platform.
Earnings Power — the team define earnings power as the ability to generate sustainable economic profit into the
future, including in areas that could be beyond the current scope of operations. A key element of determining
earnings power is therefore assessing the company’s asset quality, financial strength, and management quality.
Discount to intrinsic worth — the intrinsic worth of a company is determined through modelling the
current business characteristics and changes in the business profile over time.
Company Engagement
The team believes that as co-owners of the businesses in which FTEME invests they are responsible for engaging
with companies, on behalf of shareholders, to drive better outcomes. As such, the team regularly communicates
with companies to identify and promote management practices that are conducive to long-term earnings growth
and sustainability.
When potential corporate governance concerns arise, the team work directly with the companies in which they
invest to advise and help strengthen governance. The FTEME team provides guidance to companies facing
management difficulties to help them improve managerial controls and align interests, further enhancing
shareholder value. If necessary, they may actively oppose management if this is believed to be in the best interests
of TEMIT’s shareholders and they may escalate engagement activities to include collaboration with other
investors, public pressure via the media, and even the legal system, if appropriate.
Investment Process (continued)
20 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
3. Portfolio Construction
The Portfolio Managers aim to build a portfolio of between 70 and 100 companies that have been identified as
strong investment opportunities.
Every potential company holding is considered in the context of TEMIT’s full portfolio, including the marginal
risk and return of adding the company to the portfolio.
To ensure diversification and to manage risk effectively, the size of each holding is carefully managed. This
serves to diversify the portfolio across a wide number of investment opportunities—allowing each to contribute
to the performance of the portfolio in a meaningful way—while also limiting the potential downside impact of
any single security. In addition, individual stock weightings are determined by the liquidity in the stock and the
respective market. While the FTEME team is comfortable investing in less liquid companies that meet TEMIT’s
investment criteria, the team also seeks to ensure that there is sufficient liquidity to exit the investment if
fundamentals deteriorate or the investment case changes and fundamentals deteriorate.
While the portfolio will include some overlap with the MSCI Emerging Markets Index, the Portfolio Managers
do not intend to replicate the Index and the portfolio may vary considerably. TEMIT may include some
companies and countries that are not included in the MSCI Emerging Markets Index. Risk considerations are
embedded throughout the team’s fundamental research and they are careful to ensure that the portfolio is not
exposed to any unintentional risks and aim to prevent excessive exposure to any single company, industry sector,
country, investment theme or to excessive volatility.
All holdings are regularly reviewed to ensure that analysts’ recommendations are up-to-date and accurately
reflect any changes in company fundamentals. The team’s ongoing fundamental research and disciplined
approach drives all buy and sell decisions.
Investment Process (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 21
Investment Risk Management
Investment in emerging markets equities inevitably involves risk in a volatile asset class, and portfolios
constructed from the “bottom up” may be exposed to risks that become evident when viewed from the “top
down”. FTEME is one of a number of Investment Management groups within Franklin Templeton (“FT”).
FT uses a comprehensive approach to managing risks within its managed portfolios and this approach is
inherent in all aspects of the investment process. Investment risks are to be identified and intentional. Risk is
to be optimised, not minimised:
Risk management is led first and foremost by experienced portfolio managers. It is integrated within each
step of FTEME’s fundamental, research-driven process, and includes formalised collaboration with F T ’s
independent Investment Risk Management Group. The group consists of over 90 investment risk and
performance professionals in 20 global locations. The group is responsible for the independent preparation
and monitoring of risk management information and for the reporting of any exceptions to senior
management and the Board of the Company. A monthly executive risk summary report is reviewed by FT’s
Executive Investment Risk Committee as an input to the senior management reporting process. The group
also provides regular performance analysis versus the benchmark and peers to identify absolute and relative
performance trends or outliers. Exposure and attribution analysis is another key measure to support the
integration of investment risk insight into each step of the investment process.
The approach
Strong risk management begins with the
portfolio management team’s research
process and the assessment of market and
active risk
No single measure or methodology can
reveal the “truth” about risk. It requires a
mosaic of analytics, oversight protocols and
consultation
The Investment Risk Management Group
reports directly to the FT CEO and serves
multiple stakeholders within FT
Collaboration between portfolio managers
and specialised risk professionals
Begins with portfolio management
Integrated
Risk management
PORTFOLIO
MANAGERS
Independent
Strengthened by an independent risk team
Insightful
Powered by actionable insights
Building from this philosophy and within the boundaries of the overall investment strategy or potential
regulatory restrictions, the portfolio manager and Investment Risk Management Group will agree upon
guidelines that reflect TEMIT’s risk profile.
As part of the ongoing risk management, potential performance in stressed markets or under anticipated
scenarios are assessed and discussed. Using their specific expertise and with an independent view, the
Investment Risk Management Group can provide risk-related information to the Investment Manager that
can provide valuable insight for consideration in the portfolio construction process.
For additional information with respect to the AIFM risk management framework, please read the Investor
Disclosure Document on the website.
Investment Process (continued)
22 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Portfolio Report
Market Overview
Emerging markets equities recovered in the latter part of year under review, offsetting earlier losses to end the
12-month period unchanged. The MSCI Emerging Markets Index returned 0.1% for the year to 31 March 2019,
while TEMIT delivered a net asset value total return of 1.8% (all total return figures in sterling). Full details of
TEMIT’s performance can be found on page 1.
Emerging markets found themselves under a cloud of gloom over most of the reporting year as concerns over
rising US interest rates, heightened global trade tensions—especially between the US and China—and worries
about global economic growth weighed on market sentiment. Fears that contagion from issues in several
individual countries such as Turkey and Argentina could spread to other emerging markets also played a role.
These factors impacted investor sentiment and the market ignored the cheap valuations and solid long-term
fundamentals of emerging markets companies.
Headwinds faced by emerging markets in 2018, however, became tailwinds in early 2019, as markets responded
positively to easing US-China trade tensions and indications the US Federal Reserve (Fed) would slow its pace
of interest-rate increases. The Fed confirmed its dovish stance at its March meeting, following indications of
slowing rate hikes in January, after raising rates in 2018. The pause in rate hikes saw risk appetite return to
emerging markets, contributing to the rally in the first quarter of 2019.
Trade tensions between US and China have simmered over the last few years and had resulted in tariff
introductions before US President Donald Trump’s decision to delay additional tariff hikes following progress
in trade talks between both countries which subsequently boosted expectations of a new trade agreement.
However, in May 2019, the US raised tariffs citing slow progress in trade talks, following which China retaliated
with the announcement of further tariffs on US products. The markets experienced increased volatility as a
result of the increased uncertainty surrounding an eventual trade deal between the two countries.
Despite being underweight versus the benchmark, China was TEMIT’s largest market position at the end of
the reporting period and we remain comfortable with the exposure. Even after a double-digit return in the first
quarter of 2019, Chinese stocks declined over the full reporting year. The trade dispute with the US coincided
with the Chinese government’s efforts to curb borrowing, raising concerns about the prospects for economic
growth. China’s economy grew by 6.4% year-on-year (y-o-y) in the final quarter of 2018, the slowest since 2009,
but in line with market expectations. To cushion its economy, China eased monetary conditions and introduced
fiscal stimulus measures—a trend that we expect to continue as the Chinese government continues to support
the domestic economy, especially in line with the continuing trade tensions. While growth in China has eased
recently, we do not expect a hard landing if the government maintains adequate liquidity and maintains a
positive capital account. The economy is still growing at a robust rate, making the country one of the fastest
growing major economies in the world.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 23
South Korea’s stock market lagged its peers over the year as a trade conflict with the US (a revised free-trade
agreement was reached in September), lacklustre earnings momentum and a worse-than-expected decline in
computer memory prices and demand outlook weighed on investor confidence for most of the year. However,
expectations of a US-China trade deal and an anticipated recovery in the computer memory market in the
latter part of 2018 coupled with undemanding valuations resulted in significant foreign investment inflows
in early 2019. While a historic meeting between the leaders of the US and North Korea in June 2018 raised
hopes for a denuclearisation of the Korean peninsula, a disappointing summit in February 2019 doused
expectations. Domestically, fourth-quarter GDP growth accelerated to 3.1% y-o-y supported by fiscal
stimulus, while consumer sentiment and domestic demand also improved. We continued to witness corporate
governance improvements as companies continue to enhance their shareholder returns, which could help
raise the appeal of South Korean companies to investors globally. South Korea accounted for the second-
largest market position in TEMIT’s portfolio at the end of March.
TEMIT’s exposure to Taiwan was largely attributable to Taiwan Semiconductor Manufacturing Company
(TSMC), one of the portfolio’s largest holdings. TSMC is one of the world’s leading semiconductor makers
and counts major technology companies amongst its clients. The company has built a strong technological
lead and has a large number of marquee clients. We believe that it is well-positioned to benefit from rising
silicon content in smartphones as well as to benefit from strong demand growth due to the rapid development
of artificial intelligence, autonomous driving and the Internet of Things. Additionally, TSMC’s commitment
to delivery of advanced technologies ensures that it maintains its leadership position thereby protecting its
market share and supporting long-term earnings growth. We continue to see technology as a structural driver
of global economic growth and maintained positions in several Taiwanese electronic component makers.
Shares in TSMC ended off their year-high despite a late rebound in the reporting period.
Another key market for TEMIT, Russia, fared significantly better than its peers, ending the year with a
double-digit return, showing resilience in the face of US/EU sanctions and volatile oil prices in the second
half of the year. We remain constructive on the oil price over the medium to long term but recognise that
volatility in prices could lead to elevated earnings risk and therefore we focus on companies with low
production costs and strong balance sheets. We believe that because the Russian economy is less dependent
on the West and is, rather, more self-sustained, it is still possible to find companies that can flourish and do
well. Thus, in addition to energy companies, we also favour companies such as Sberbank and Yandex that are
more exposed to the domestic economy. It is also important to note that the corporate governance practices of
many Russian companies have improved quite significantly. We also saw many companies implement policies,
including share buybacks and increasing dividend pay-outs, to improve shareholder returns which boded well
for investor sentiment in the market. Russian equity valuations were amongst the lowest in emerging markets,
while dividend yields were amongst the highest. TEMIT’s exposure to Russia reflected our conviction in select
companies with strong underlying fundamentals and prospects.
While political uncertainty and concerns that labour strikes could impact economic activity weighed
on the Brazilian market, equity prices rallied in the latter part of the year on expectations for, and the
subsequent victory of, a more market-friendly candidate in presidential elections. Optimism surrounding the
government’s economic agenda including the key social security reform, has resulted in a more favourable
Portfolio Report (continued)
24 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Portfolio Report (continued)
climate where higher consumer and business confidence could lead to an acceleration in domestic economic
activity. Looking forward, we believe that this should be positive for earnings growth and for the Brazilian
equity market generally. The local market is trading at what we view to be reasonable price-earnings ratios
and should have more scope for improvement as the economic situation improves.
We continue to have a favourable view on domestic-oriented themes including financials and consumer-related
sectors. TEMIT had a considerable position in Brazil, supported by our positive outlook for the country.
Investment Strategy, Portfolio Changes and Performance
The 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 is our major focus in achieving our stated objectives.
Our investment style is centred on finding companies with sustainable earnings power and whose shares trade
at a discount relative to their intrinsic worth 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 which have high
standards of corporate governance, respect their shareholder base and 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 conduct detailed analyses of potential returns versus risks with a time horizon
of typically five years or more.
We believe that technology will continue to reshape the global economy and transform industrial landscapes.
E-commerce continues to accelerate, and companies continue to embrace technology and innovation in order to
remain competitive and relevant.
The transformation of the emerging markets consumer is another key theme for us as favourable demographics
and urbanisation dynamics coupled with an underleveraged emerging markets consumer brings opportunities
to tap into a growing domestic consumer market.
As such, we continue to build positions in companies that provide exposures to these key themes of
consumption and technology, where we have confidence in management’s ability to deliver sustainable growth,
and where we believe the market may be mispricing opportunities.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 25
Portfolio Report (continued)
Performance Attribution Analysis %
Year to 31 March20192018201720162015
Net asset value total return
(a)
1.8 12.447.8(17.1)9.6
Expenses incurred 1.0 1.11.21.21.2
Gross total return
(a)
2.8 13.549.0(15.9)10.8
Benchmark total return
(a)
0.1 11.835.2(8.8)13.2
Excess return
(a)
2.7 1.713.8(7.1)(2.4)
Stock selection 1.8 1.313.7(11.4)(0.1)
Sector allocation (0.6)(0.3)0.12.0(7.8)
Currency 1.0 0.40.21.56.0
Residual
(a)
0.5 0.3(0.2)0.8(0.5)
Total portfolio manager contribution 2.7 1.713.8(7.1)(2.4)
Source: FactSet and Franklin Templeton.
(a)
A glossary of alternative performance measures is included on page 98.
Contributors and detractors by security
Top contributors to relative performance by security (%)
(a)
Top contributorsCountrySector
Share price
total return
Relative contribution
to portfolio
ICICI BankIndiaFinancials 46.5 1.1
LUKOIL, ADRRussiaEnergy 47.2 0.7
Bank Danamon IndonesiaIndonesiaFinancials 40.8 0.7
Buenaventura, ADRPeruMaterials 22.9 0.6
NagaCorp
(b)
CambodiaConsumer Discretionary 52.1 0.5
HDC Holdings
(c)
South KoreaIndustrials 25.3 0.4
Unilever
(b)
United KingdomConsumer Staples 14.8 0.4
CNOOCChina/Hong KongEnergy 43.0 0.3
Cia.Hering
(b)
BrazilConsumer Discretionary 53.1 0.3
NaspersSouth AfricaConsumer Discretionary 5.7 0.3
(a)
For the period 31 March 2018 to 31 March 2019.
(b)
Security not included in the MSCI Emerging Markets Index.
(c)
Security no longer held by TEMIT as at 31 March 2019.
ICICI Bank is one of the largest private-sector banks in India and is well positioned to benefit from the
country’s growing financial needs. The resolution of senior management transition issues and improvement in
asset quality drove returns. The bank also reported solid fourth-quarter 2018 operating results. Hopes for the
central bank to improve liquidity and ease lending rules in the banking system also played a role. The Indian
banking system is one of the fastest growing banking systems in the world. Private-sector banks have a market
26 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
share of around 30%, while state-owned banks make up the rest. India’s private-sector banks have demonstrated
competitiveness, leading us to expect private-sector banks to grow faster and gain market share. We favour ICICI
Bank as it continues to build its strong retail franchise and extensive network. A turnaround in its corporate
business could further drive positive sentiment in the stock.
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. Rebounding oil prices benefited Lukoil
in the earlier part of the year under review, driving sharply higher sales and earnings for the quarters ended
June and September. Despite a correction in oil prices during the final quarter in 2018, Lukoil reported strong
corporate results for the final quarter of 2018 supported by solid cost controls and lower-than-expected capex
expenditure. Lukoil also started a USD3 billion share buyback programme and approved the cancellation of
100 million shares of treasury stock, as it looked to improve shareholder value and corporate governance.
Lukoil’s attractiveness stems from its vast and low-cost reserves, which allows the company to remain profitable
even during periods of lower oil prices. The company also boasts a healthy balance sheet and strong free cash
flow generation. Additionally, the company’s progressive dividend policy and share buyback programme are
positives for the stock.
Bank Danamon Indonesia is one of the country’s ten largest banks in terms of assets and loans. Shares in the
bank rose as its shareholder Mitsubishi UFJ Financial Group (MUFG) moved closer towards gaining a majority
stake in the lender. Shareholders approved a merger between Danamon and a local peer, in which MUFG is also
invested, which was a prerequisite for MUFG to obtain the regulatory waiver required to exceed 40% ownership
in Danamon. The move could eventually pave the way for MUFG to increase its stake in Danamon to over
70%. The deal will bolster its position as one of Indonesia’s leading banks. Danamon reported higher earnings
supported by declining provisions and improving asset quality in 2018. We accepted MUFG’s offer as we viewed
it to be a fair offer and in April our holding was divested.
Top detractors to relative performance by security (%)
(a)
Top detractorsCountrySector
Share price
total return
Relative contribution
to portfolio
Brilliance China AutomotiveChina/Hong KongConsumer Discretionary (48.3) (2.7)
Massmart
(b)
South AfricaConsumer Staples (55.6) (0.6)
Catcher TechnologyTaiwanInformation Technology (29.6) (0.3)
HDC Hyundai DevelopmentSouth KoreaIndustrials (17.8) (0.3)
Hon Hai Precision IndustryTaiwanInformation Technology (31.1) (0.3)
Mail.Ru, GDR
(b)
RussiaCommunication Services (23.8) (0.3)
Reliance IndustriesIndiaEnergy 57.5 (0.3)
Samsung ElectronicsSouth KoreaInformation Technology (5.5) (0.3)
Sberbank Of Russia, ADRRussiaFinancials (15.6) (0.2)
Petroleo Brasileiro, ADR
(c)
BrazilEnergy 24.0 (0.2)
(a)
For the period 31 March 2018 to 31 March 2019.
(b)
Security not included in the MSCI Emerging Markets Index.
(c)
Security no longer held by TEMIT as at 31 March 2019.
Portfolio Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 27
Brilliance China Automotive manufactures and sells automobiles for the Chinese domestic market,
predominantly through its joint venture (JV) with German luxury car maker BMW. BMW’s plans to increase
its JV stake to 75% from 50% was poorly received by investors in October 2018 on concerns around certain
aspects of the proposed deal terms, Brilliance’s reduced stake in the JV and the potential impact on earnings.
The sale of a 25% stake in the partnership to BMW was subsequently approved by Brilliance’s shareholders in
early 2019. However, completion is pending approval from the Chinese regulators in 2022, when the change
in regulations on foreign ownership comes into effect. While the stock remains a significant holding, we
decreased our position to reduce portfolio risk.
Massmart is a leading South African distributor and retailer of food products, general merchandise, alcohol,
home improvement equipment and supplies as well as a wholesaler. US-based Walmart, the world’s largest
retailer, owns a controlling stake in Massmart. Disappointing 2018 corporate results from the company
resulted in a reduction in the share price. 2018 earnings declined largely due to weak sales growth and a
contraction in the operating margin in two divisions. A reduction in dividends further impacted sentiment.
An increase in petrol prices and value added tax (VAT) coupled with high unemployment and weak economic
growth weighed on consumer demand in South Africa. Taking a longer-term view, we remain confident
that the Massmart management should be able to turn the operations around and benefit from a recovery in
the domestic economy and consumer demand, which could ensue if the new Government in South Africa
continues to carry forward its agenda of reform and reduction in corruption as mandated by the people.
Catcher Technology is among the world’s largest light metal casing manufacturers in the 3C (Computer,
Communication and Consumer) industry. Catcher operates four plants in China and is headquartered in
Taiwan. The company has a significant market share in the notebook and handset metal casing sectors and
counts Apple, Dell, HP and Sony among its key clients. Weak fourth-quarter 2018 corporate results and
indications from management that weak smartphone demand will provide challenges for 2019, impacted
the share price. Catcher Technology, however, is well positioned to benefit from the rising rate of metal
casing adoption in 3C products. We prefer Catcher over its competitors due to its economies of scale, higher
efficiency and better yield, but are mindful of the challenges that the environment poses.
Top contributors and detractors to relative performance by sector (%)
(a)(b)
Top Contributors
MSCI
Emerging
Markets Index
sector total
return
Relative
contribution
to portfolioTop detractors
MSCI
Emerging
Markets Index
sector total
return
Relative
contribution
to portfolio
Financials
1.7 1.7
Consumer Discretionary (2.7) (1.1)
Health Care (17.5) 0.8
Information Technology (2.4) (0.2)
Industrials (1.0) 0.6
Utilities 5.0 (0.2)
Energy 18.4 0.5
Real Estate 6.1 (0.1)
Materials 1.6 0.3
Communication Services (5.1) 0.3
Consumer Staples
(1.1) 0.0
(a)
For the period 31 March 2018 to 31 March 2019.
(b)
The sectors reflect changes in the Global Industry Classification Standard (‘GICS’) with effect from 28 September 2018.
Portfolio Report (continued)
28 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Favourable stock selection in the financials, health care and industrials sectors added to TEMIT’s performance
relative to the benchmark index in the review period. Asian banks, in particular, performed well. During the
period, we added to our holdings in the financials sector, as part of our ‘transformation in the emerging markets
consumer’ theme in the portfolio. Financials are a good way tap into a country’s growing economy, as economic
expansion helps boost incomes and demand for financial services. We reduced investments in some industrial
companies to raise funds for other attractive investment opportunities. Conversely, the consumer discretionary,
information technology and utilities sectors negatively impacted relative returns. We continue to maintain an
underweight position in utilities relative to the benchmark index as we find better opportunities in other sectors.
Top contributors and detractors to relative performance by country (%)
(a)
Top Contributors
MSCI
Emerging
Markets Index
country total
return
Relative
contribution
to portfolioTop detractors
MSCI
Emerging
Markets Index
country total
return
Relative
contribution
to portfolio
Indonesia 10.3 0.7
China/Hong Kong 1.1 (1.4)
South Korea (9.8) 0.7
Taiwan 2.0 (0.8)
Peru 10.0 0.6
Qatar
(b)
31.6 (0.2)
Brazil 3.1 0.6
Pakistan (31.2) (0.2)
South Africa (11.4) 0.6
Russia 11.0 (0.2)
Cambodia
(c)
– 0.5
Philippines 10.1 (0.2)
United Kingdom
(c)
– 0.4
Kenya
(c)
– (0.1)
India 14.9 0.4
Argentina
(c)
– (0.1)
Turkey
(b)
(35.3) 0.3
Colombia
(b)
13.5 (0.1)
United States
(c)
– 0.3
United Arab Emirates
(b)
9.1 (0.1)
(a)
For the period 31 March 2018 to 31 March 2019.
(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 Indonesia, South Korea and Peru, were among the major contributors to TEMIT’s
returns relative to the benchmark index. An overweight exposure in Indonesia and Peru further strengthened the
relative contribution from those markets, as they outperformed their emerging markets peers over the period. The
Indonesian market benefited from solid economic growth coupled with expectations of the president’s re-election in
April 2019. An acceleration in reforms including infrastructure development further supported market sentiment.
Healthy macroeconomic data including strong 2018 GDP growth data and improving trade numbers supported
investor confidence in Peru. Industrials stocks in South Korea were key performance drivers, benefitting from a
recovery in the domestic property market and a low interest rate environment. While we reduced our holdings in
all three markets during the reporting period, we continue to maintain a significant position in South Korea and
overweight positions in Indonesia and Peru. In contrast, relative performance was hurt by stock selection in China
and Taiwan. A zero exposure to Qatar, where we do not find attractive opportunities, also weighed on relative
performance. We added to holdings in China during the reporting period. As discussed above, TEMIT’s position in
Brilliance China Automotive largely accounted for the negative contribution from our Chinese holdings.
Our resulting portfolio is listed by size of holding on pages 32 to 36.
Portfolio Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 29
Portfolio changes by Sector
(a)
Total Return in sterling
Sector
31 March 2018
Market Value
(a)
£m
Purchases
£m
Sales
£m
Market
Movement
£m
31 March 2019
Market Value
£m
TEMIT
%
MSCI Emerging
Markets Index
%
Financials 529 94 62 24 585 7.6 1.7
Consumer Discretionary538 34 82 (42) 448 (5.5) (2.7)
Information Technology443 62 65 (21) 419 (2.9) (2.4)
Communication Services247 26 42 (4) 227 (3.9) (5.1)
Energy 184 3 52 28 163 23.5 18.4
Consumer Staples 167 12 23 (4) 152 0.0 (1.1)
Materials 139 10 84 1 66 5.6 1.6
Industrials 67 19 44 10 52 21.2 (1.0)
Health Care 38 3 1 2 42 9.0 (17.5)
Real Estate 14 – 7 1 8 14.1 6.1
Utilities 5 – 4 (1) – (7.2) 5.0
Net current Liabilities
(b)
(70)–– 26 (44) – –
Total2,301263466 20 2,118
Sector Asset Allocation
As at 31 March 2019
14.6
19.8
12.3
10.6
7.7
8.1
7.3
6.4
3.1
7.4
2.5
5.4
3.2
0.4
2.0
2.6
2.5
0.0
27.6
24. 1
21.1
13.4
TEMIT
Financials
Consumer Discretionary
Utilities
MSCI Emerging Markets Index
051015203025
Sector Asset Allocation
As at 31 March 2019
Communication Services
Consumer Staples
Information Technology
Energy
Industrials
Health Care
Real Estate
Materials
Sector weightings vs benchmark (%)
(a)
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 28 September 2018. The 31 March
2018 figures have been re-classified according to these changes.
(b)
The Company's net current liabilities per the Statement of Financial Position on page 73.
Portfolio Report (continued)
30 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Portfolio Report (continued)
Portfolio changes by Country
Total return in sterling
Country
31 March 2018
Market Value
£m
Purchases
£m
Sales
£m
Market
Movement
£m
31 March 2019
Market Value
£m
TEMIT
%
MSCI Emerging
Markets Index
%
China/Hong Kong506 99 65 (28) 512 (4.1) 1.1
South Korea353 48 88 (24) 289 (6.1) (9.8)
Taiwan 231 33 39 (19) 206 (4.9) 2.0
Russia213 11 31 (4) 189 3.0 11.0
Brazil212 – 33 2 181 5.5 3.1
India 117 16 4 33 162 26.8 14.9
South Africa 160 11 17 (6) 148 (3.9) (11.4)
Thailand 116 – 29 3 90 7.5 0.6
Other 463 45 160 37 385 – –
Net Current Liabilities
(a)
(70) – – 26 (44)
Total 2,301 263 466 20 2,118
Geographic Asset Allocation
As at 31 March 2019
TEMIT
South Korea
China/Hong Kong
Russia
Taiwan
South Africa
Brazil
Thailand
Peru
Mexico
Hungary
Kenya
(c)
Pakistan
Philippines
Argentina
(c)
Nigeria
(c)
Cambodia
(c)
United States
(c)
United Kingdom
(c)
Indonesia
India
MSCI Emerging Markets Index
05101520353025
Country weightings vs benchmark (%)
(b)
9.6
11.3
8.6
7.2
8.9
3.8
4.2
2.3
7.0
5.7
2.2
3.5
2.7
2.4
0.0
1.3
0.4
1.2
0.3
0.9
0.0
0.9
0.0
0.8
0.2
0.5
1.1
0.5
0.0
0.0
0.2
0.0
7.7
9.2
0.0
3.2
2.7
0.0
24.3
33.0
13.7
13.0
Czech Republic
(a)
The Company's net current liabilities per the Statement of Financial Position on page 73.
(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.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 31
Portfolio Investments by Fair Value
As at 31 March 2019
HoldingCountrySector
(a)
Trading
(b)
Fair Value
£’000
% of net
assets
Samsung ElectronicsSouth Korea Information TechnologyPS 154,737 7.3
Taiwan Semiconductor
Manufacturing
Taiwan Information TechnologyIH 139,856 6.6
NaspersSouth Africa Consumer DiscretionaryPS 129,027 6.1
Alibaba, ADR
(c)
China/Hong Kong Consumer DiscretionaryNT 107,755 5.1
ICICI BankIndia FinancialsNT 75,436 3.6
Brilliance China AutomotiveChina/Hong Kong Consumer DiscretionaryIH 72,212 3.4
Unilever
(d)
United Kingdom Consumer StaplesPS 67,294 3.2
TencentChina/Hong Kong Communication servicesPS 62,387 2.9
LUKOIL, ADR
(c)
Russia EnergyPS 58,843 2.8
Banco Bradesco, ADR
(c)(e)
Brazil FinancialsNT 50,945 2.4
TOP 10 LARGEST INVESTMENTS918,492 43.4
Itaú Unibanco, ADR
(c)
Brazil FinancialsNT 48,662 2.3
Bank Danamon Indonesia Indonesia FinancialsPS 47,018 2.2
Sberbank Of Russia, ADR
(c)
Russia FinancialsIH 44,334 2.1
China Construction Bank China/Hong Kong FinancialsNH 40,337 1.9
Banco Santander Mexico, ADR
(c)
Mexico FinancialsIH 38,168 1.8
Cognizant Technology Solutions
(d)
United States Information TechnologyNH 37,690 1.8
NAVER South Korea Communication ServicesIH 34,581 1.6
CNOOC China/Hong Kong EnergyPS 33,658 1.6
Ping An Bank China/Hong Kong FinancialsIH 32,381 1.5
China Mobile China/Hong Kong Communication ServicesPS 30,447 1.4
TOP 20 LARGEST INVESTMENTS1,305,768 61.6
Portfolio Report (continued)
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 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.
32 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Portfolio Report (continued)
HoldingCountrySector
(a)
Trading
(b)
Fair Value
£’000
% of net
assets
YandexRussia Communication ServicesNT 30,070 1.4
LGSouth Korea IndustrialsIH 28,531 1.3
Astra InternationalIndonesia Consumer DiscretionaryPS 27,598 1.3
NagaCorpCambodia Consumer DiscretionaryPS 27,464 1.3
KasikornbankThailand FinancialsNT 27,457 1.3
Gazprom, ADR
(c)
Russia EnergyPS 26,712 1.3
Infosys TechnologiesIndia Information TechnologyIH 22,036 1.1
Kiatnakin BankThailand FinancialsPS 21,966 1.0
POSCOSouth Korea MaterialsNT 21,497 1.0
Ping An Insurance GroupChina/Hong Kong FinancialsPS 20,562 1.0
TOP 30 LARGEST INVESTMENTS1,559,661 73.6
Lojas AmericanasBrazil Consumer DiscretionaryNT 20,077 1.0
Gedeon RichterHungary Health CareIH 19,767 0.9
Thai BeveragesThailand Consumer StaplesNT 19,442 0.9
Mail.Ru, GDR
(f)
Russia Communication ServicesPS 19,003 0.9
IMAX
(d)
United States Communication ServicesPS 18,895 0.9
Glenmark PharmaceuticalsIndia Health CareIH 18,771 0.9
BM&F BovespaBrazil FinancialsPS 18,389 0.9
Buenaventura, ADR
(c)
Peru MaterialsPS 17,319 0.8
Bajaj Holdings & InvestmentsIndia FinancialsIH 16,813 0.8
HDC Hyundai DevelopmentSouth Korea IndustrialsNH 16,730 0.8
TOP 40 LARGEST INVESTMENTS 1,744,867 82.4
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 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 markets has significant exposure to operations from emerging markets.
(f )
UK listed Global Depositary Receipt.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 33
HoldingCountrySector
(a)
Trading
(b)
Fair Value
£’000
% of net
assets
TOTVSBrazil Information TechnologyNT 16,583 0.8
China Petroleum and ChemicalChina/Hong Kong EnergyPS 16,321 0.8
Catcher TechnologyTaiwan Information TechnologyNT 15,097 0.7
MCB BankPakistan FinancialsPS 14,572 0.7
Hon Hai Precision IndustryTaiwan Information TechnologyPS 14,319 0.7
Uni-President ChinaChina/Hong Kong Consumer StaplesPS 14,274 0.7
MassmartSouth Africa Consumer StaplesIH 14,230 0.7
MGM ChinaChina/Hong Kong Consumer DiscretionaryNT 11,825 0.6
NetEase, ADR
(c)
China/Hong Kong Communication ServicesPS 11,713 0.6
China Merchants BankChina/Hong Kong FinancialsNH 11,108 0.5
TOP 50 LARGEST INVESTMENTS1,884,909 89.2
CTBC Financial HoldingTaiwan FinancialsNH 10,922 0.5
Moneta Money BankCzech Republic Financials
NT
10,635 0.5
Baidu, ADR
(c)
China/Hong Kong Communication servicesNT 10,351 0.5
Tata ChemicalsIndia MaterialsIH 10,027 0.5
China Resources Cement HoldingsChina/Hong Kong MaterialsNH 9,996 0.5
Intercorp Financial ServicesPeru FinancialsNT 8,904 0.4
M. Dias BrancoBrazil Consumer StaplesNT 8,822 0.4
Siam Commercial BankThailand FinancialsPS 8,654 0.4
Land and HousesThailand Real EstatePS 8,372 0.4
B2W DigitalBrazil Consumer DiscretionaryPS 8,249 0.4
TOP 60 LARGEST INVESTMENTS1,979,841 93.7
Portfolio Report (continued)
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 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.
34 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
HoldingCountrySector
(a)
Trading
(b)
Fair Value
£’000
% of net
assets
SK InnovationSouth Korea EnergyPS 7,806 0.4
H&H GroupChina/Hong Kong Consumer StaplesNH 7,679 0.4
East African BreweriesKenya Consumer StaplesNT 7,409 0.3
PChome OnlineTaiwan Consumer DiscretionaryNT 7,309 0.3
Largan PrecisionTaiwan Information TechnologyPS 7,232 0.3
FIT Hon TengTaiwan Information TechnologyNT 7,157 0.3
Coal IndiaIndia EnergyIH 7,091 0.3
KCB GroupKenya FinancialsPS 6,991 0.3
BDO UnibankPhilippines FinancialsNT 6,736 0.3
Hanon SystemsSouth Korea Consumer DiscretionaryPS 6,227 0.3
TOP 70 LARGEST INVESTMENTS2,051,478 96.9
Equity GroupKenya FinancialsPS 6,211 0.3
NemakMexico Consumer DiscretionaryPS 6,190 0.3
Hite JinroSouth Korea Consumer StaplesNT 6,050 0.3
Hankook TireSouth Korea Consumer DiscretionaryNH 5,699 0.3
Dairy FarmChina/Hong Kong Consumer StaplesPS 5,504 0.3
COSCO PacificChina/Hong Kong IndustrialsPS 5,392 0.3
Norilsk Nickel, ADR
(c)
Russia MaterialsPS 5,285 0.2
Reliance IndustriesIndia EnergyPS 5,240 0.2
BAIC MotorChina/Hong Kong Consumer DiscretionaryNH 5,112 0.2
MultiChoice GroupSouth Africa Communication servicesNT 5,094 0.2
TOP 80 LARGEST INVESTMENTS2,107,255 99.5
Portfolio Report (continued)
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 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.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 35
HoldingCountrySector
(a)
Trading
(b)
Fair Value
£’000
% of net
assets
MAHLE Metal LeveBrazil Consumer DiscretionaryNT 5,0170.2
TMK, GDR
(f)
Russia EnergyNT 4,901 0.2
KT SkylifeSouth Korea Communication servicesNT 4,470 0.2
Wiz Soluções e CorretagemBrazil FinancialsNT 4,438 0.2
Primax ElectronicsTaiwan Information TechnologyPS 4,420 0.2
Crédit RealMexico FinancialsPS 4,307 0.2
Security BankPhilippines FinancialsNT 3,966 0.2
BioconIndia Health CareNT 3,723 0.2
BBVA Banco Francés, ADR
(c)
Argentina FinancialsIH 3,703 0.2
Tata MotorsIndia Consumer DiscretionaryNT 3,084 0.1
TOP 90 LARGEST INVESTMENTS2,149,284101.4
Weifu High-TechnologyChina/Hong Kong Consumer DiscretionaryNT 2,887 0.1
PTT Exploration and ProductionThailand EnergyPS 2,802 0.1
InterparkSouth Korea Consumer DiscretionaryNT 1,756 0.1
Industrias PeñolesMexico MaterialsNT 1,674 0.1
United BankPakistan FinancialsNT 1,472 0.1
iMarketKoreaSouth Korea IndustrialsPS 1,181 0.1
Univanich Palm OilThailand Consumer StaplesNT 1,163 0.1
Nigerian BreweriesNigeria Consumer StaplesNT 216 –
TOTAL INVESTMENTS 2,162,435102.1
OTHER NET LIABILITIES (44,287) (2.1)
TOTAL NET ASSETS 2,118,148100.0
Portfolio Report (continued)
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 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.
36 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Portfolio Report (continued)
Portfolio Summary
As at 31 March 2019
(a)
All figures are in %
Communication ServicesConsumer DiscretionaryConsumer StaplesEnergyFinancialsHealth CareIndustrialsInformation TechnologyMaterialsReal EstateUtilitiesTotal EquitiesOther Net Liabilities
(b)
31 March 2019 Total31 March 2018 Total
(a)
Argentina – – – – 0.2 – – – – – – 0.2 – 0.2 0.2
Brazil – 1.6 0.4 – 5.8 – – 0.8 – – – 8.6 – 8.6 9.2
Cambodia – 1.3 – – – – – – – – – 1.3 – 1.3 0.9
China/Hong Kong 5.4 9.4 1.4 2.4 4.9 – 0.3 – 0.5 – – 24.3 – 24.3 22.0
Czech Republic – – – – 0.5 – – –
–
– – 0.5 – 0.5 0.5
Hungary – – – – – 0.9 – – – – – 0.9 – 0.9 0.9
India – 0.1 – 0.5 4.4 1.1 – 1.1 0.5 – – 7.7 – 7.7 5.1
Indonesia – 1.3 – – 2.2 – – – – – – 3.5 – 3.5 3.8
Kenya – – 0.3 – 0.6 – – – – – – 0.9 – 0.9 1.7
Mexico – 0.3 – – 2.0 – – – 0.1 – – 2.4 – 2.4 2.2
Nigeria – 0.0 – – – – – – – – – 0.0 – 0.0 0.0
Pakistan – – – – 0.8 – – – – – – 0.8 – 0.8 1.2
Peru – – – – 0.4 – – – 0.8 – – 1.2 – 1.2 3.5
Philippines – – – – 0.5 – – –
–
– – 0.5 – 0.5 0.5
Russia 2.3 – – 4.3 2.1 – – – 0.2 – – 8.9 – 8.9
9.3
Saudi Arabia – – – – – – – – – –
–
– – – 0.5
South Africa 0.2 6.1 0.7 – – – – – – – – 7.0 – 7.0 7.0
South Korea 1.8 0.7 0.3 0.4 – – 2.2 7.3 1.0 – – 13.7 – 13.7 15.3
Taiwan – 0.3 – – 0.5 – – 8.8 – – – 9.6 – 9.6 10.1
Thailand – – 1.0 0.1 2.7 – – – – 0.4 – 4.2 – 4.2 5.1
United Kingdom – – 3.2 – – – – – – – – 3.2 – 3.2 3.2
United States 0.9 – – – – – – 1.8 – – – 2.7 – 2.7 0.9
Other Net Liabilities – – – – – – – – – – – – (2.1) (2.1) (3.1)
31 March 2019
Total
10.6 21.1 7.3 7.7 27.6 2.0 2.5 19.8 3.1 0.4 – 102.1 (2.1)100.0 –
31 March 2018
Total
(a)
10.723.57.38.0 23.0 1.72.919.26.0 0.6 0.2 103.1 (3.1) – 100.0
(a)
The sectors reflect changes in the Global Industry Classification Standard ('GICS') with effect from 28 September 2018. The 31 March
2018 figures have been re-classified according to these changes.
(b)
Other Net Liabilities represent the Company's net current liabilities per the Statement of Financial Position on page 73.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 37
Market Capitalisation Breakdown
(a)
(%)
Less than
£1.5bn
£1.5bn to
£5bn
Greater than
£5bn
Other Net
Liabilities
(b)
31 March 20198.219.174.8 (2.1)
31 March 2018 8.0 15.4 79.7 (3.1)
Split Between Markets
(c)
(%)31 March 201931 March 2018
Emerging Markets93.896.2
Frontier Markets2.42.8
Developed Markets
(d)
5.94.1
Other Net Liabilities
(b)
(2.1) (3.1)
(a)
A glossary of alternative performance measures is included on page 98.
(b)
Other Net Liabilities represent the Company’s net current liabilities per the Statement of Financial Position on page 73.
(c)
Geographic split between “Emerging Markets”, “Frontier Markets” and “Developed Markets” are as per MSCI index classifications.
(d)
Developed markets exposure in companies listed in the United Kingdom and United States.
Source: FactSet Research System, Inc.
Market Outlook
We continue to maintain a positive view on emerging markets. Market sentiment towards the asset class
improved significantly in early 2019, as the headwinds in 2018 eased. A conciliatory stance by the Fed and
advances in trade talks between the US and China were among the key drivers of this renewed optimism in
emerging markets. While indications that the Federal Reserve will no longer raise interest rates in 2019 is
supportive of this trend, the possibility that a trade agreement is not eventually reached remains a major risk. We
believe that for the market rally to be sustainable, earnings need to improve. Improved corporate governance in
emerging markets could also provide a basis for a longer-term rerating.
We believe that confidence in emerging markets could strengthen further based on several factors: economic
growth differentials between emerging and developed markets are widening in the former’s favour, emerging
markets currencies appear undervalued despite balance of payment surpluses in many markets, ongoing reforms,
solid underlying fundamentals, a robust emerging markets earnings outlook and undemanding valuations.
Emerging markets valuations have become increasingly attractive due to weakened confidence and performance
in 2018, while cash flows and earnings generally remain resilient. Emerging markets earnings growth is expected
to match or exceed that of the US and developed markets in 2019, resuming the trend witnessed in 2017. These
conditions, when paired with improving corporate governance that includes dividend pay-outs and buybacks,
present an increasingly attractive long-term buying opportunity and should contribute to renewed confidence in
the emerging markets asset class.
With our experienced research team and rigorous investment process, we believe that TEMIT is well-positioned
to benefit from the continued growth of emerging markets.
Chetan Sehgal
Lead Portfolio Manager
4 June 2019
Portfolio Report (continued)
38 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Report of the Directors and Governance
Directors’ Report
Paul Manduca (Chairman)
Paul Manduca was appointed to the Board and the Management Engagement Committee on 1 August 2015.
Paul took over as Chairman on 20 November 2015. He was appointed to the Nomination and Remuneration
Committee on 22 February 2016 and is Committee Chairman. He is currently Chairman of Prudential plc, one
of the world’s leading financial services groups with significant emerging market exposure. Paul has had a long
and successful career in asset management, both as a fund manager and as chief executive of fund management
groups.
He is an independent Director.
Length of service: 3 years and 9 months
Attendance Record: Board 4/4, Nomination and Remuneration Committee 1/1 and Management Engagement
Committee 1/1.
The Directors submit their Annual Report, together with the Financial Statements of the Company, for the
year ended 31 March 2019.
Board of Directors
David Graham
David Graham joined the TEMIT Board and Audit Committee on 1 September 2016. He was appointed to the
Management Engagement Committee on this date and was appointed to the Nomination and Remuneration
Committee on 12 July 2018.
David is a Chartered Accountant whose career was in investment management, firstly as an Asian fund
manager with Lazards and then building businesses across Asia Pacific, Europe, Middle East and Africa for
BlackRock and predecessor firms (Merrill Lynch Investment Managers and Mercury Asset Management.)
David has worked in Hong Kong, Tokyo and Sydney and has been a Representative Director in domestic,
joint venture, fund management companies in India, China, Thailand and Taiwan.
David is also non-executive Director on the boards of the JPMorgan Chinese Investment Trust, Fidelity Japan
Trust, DSP India Investment Fund and DSP India Fund.
He is an independent Director.
Length of service: 2 years and 8 months
Attendance Record: Board 4/4, Audit Committee 3/3, Management Engagement Committee 1/1 and
Nomination and Remuneration Committee 1/1.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 39
Simon Jeffreys
Simon Jeffreys joined the TEMIT Board on 15 July 2016 and became Chairman of the Audit Committee
on 13 July 2017. He was appointed to the Management Engagement Committee on 15 July 2016 and to the
Nomination and Remuneration Committee on 25 February 2019.
Simon has been Chairman of Aon UK Ltd since November 2015; he chaired the Audit Committee from 2009
to 2015.
Simon has been a non-executive Director of St James Place plc since 2014 and is Chair of their Audit
Committee and a member of their Remuneration, Nomination and Risk Committees. Simon is on the Board
of Directors and chairs the audit committees of SimCorp A/S (since 2011), and the Crown Prosecution
Service (since 2018), and is Chairman of Henderson International Income Investment Trust.
He was a senior audit partner in PricewaterhouseCoopers for most of his professional career, where
he was the global leader of the firm’s investment management and real estate practice. Simon was the
Chief Administrative Officer for Fidelity International, and then the Chief Operating Officer of The
Wellcome Trust.
He is an independent Director.
Length of service: 2 years and 10 months
Attendance Record: Board 4/4, Audit Committee 3/3 and Management Engagement Committee 1/1.
Directors’ Report (continued)
Beatrice Hollond
Beatrice Hollond joined the TEMIT Board and the Audit Committee on 1 April 2014. She was also appointed
to the Management Engagement Committee on this date and to the Nomination and Remuneration
Committee on 22 February 2016. Beatrice was appointed Senior Independent Director on 12 July 2018.
Beatrice Hollond is a non-executive Director of M&G Group Limited, a main Board Director and Chair
of Remco (US) and Chairman of International Advisory Board (UK) of Brown Advisory. She is senior
independent non-executive Director and Chairman of the Audit Committee of The Henderson Smaller
Companies Investment Trust plc. Beatrice is a non-executive Director of Telecom Plus PLC, Chair-Elect of
Foreign & Colonial Investment Trust PLC, adviser to a private family office and a member of the Advisory
Board of Hambro Perks Limited. She had a long career in the investment industry, starting as UK equity
analyst at Morgan Grenfell, before spending 16 years at Credit Suisse Asset Management. Beatrice has
experience as a fund manager, as well as 13 years as a non-executive Director in the investment trust sector.
She is the Senior Independent Director.
Length of service: 5 years and 1 month
Attendance Record: Board 4/4, Audit Committee 2/3, Nomination and Remuneration Committee 1/1 and
Management Engagement Committee 1/1.
40 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Directors’ Report (continued)
Gregory E Johnson
Gregory Johnson was appointed to the Board on 12 December 2007. He is the Chairman of the Board and
Director of Franklin Resources, Inc., and serves as the Chief Executive Officer of the company. Mr. Johnson
serves as a trustee, director or officer on a number of Franklin Resources subsidiaries and fund boards. He
joined Franklin Resources in 1986 and has held numerous roles within the company.
Length of service: 11 years and 5 months
Attendance Record: Board 4/4.
Charlie Ricketts
Charlie Ricketts joined the TEMIT Board on 12 July 2018. He was also appointed to the Management
Engagement Committee on this date and to the Nomination and Remuneration Committee on 25 February 2019.
With over 30 years’ experience in the investment trust sector, Charlie brings a wealth of experience to the
Board. He was Head of Investment Funds at Cenkos Securities for 8 years and prior to that was Managing
Director, Head of Investment Companies at UBS Investment Bank. Since stepping down from Cenkos in
2014 he has pursued a number of business and charitable interests. Charlie is a non-executive director of
Edinburgh Dragon Trust plc.
He is an independent director.
Length of service: 10 months
Attendance Record: Board 3/3, Audit Committee 3/3 and Management Engagement Committee 1/1.
Details of the fees earned by each Director in the year can be found on page 55. The Directors’ interest in the
Company’s shares are noted on page 57.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 41
Directors’ Report (continued)
The terms and conditions of the Directors’ appointments are set out in their Letters of Appointment, which
are available for inspection on request at the registered office of the Company and at the AGM.
Board Changes and Succession Planning
Hamish Buchan, retired at the conclusion of the 2018 AGM, Beatrice Hollond was appointed as the Senior
Independent Director following the conclusion of the 2018 AGM.
Charlie Ricketts joined the Board at the following shareholder approval at the AGM on 12 July 2018. He is
an experienced investment professional with a wealth of investment management, marketing and corporate
brokering experience.
As noted below the Nomination and Remuneration Committee considers succession planning as part of its
responsibilities, making Recommendations to the Board when required.
Board Committees
The Audit Committee comprises Simon Jeffreys (Chairman), David Graham, Beatrice Hollond and Charlie
Ricketts. The formal Report of the Audit Committee is on pages 58 to 62.
The Management Engagement Committee comprises Paul Manduca (Chairman), David Graham, Beatrice
Hollond, Simon Jeffreys and Charlie Ricketts. The role of the Committee is to review the performance of,
and the contractual arrangements with the Manager. The Management Engagement Committee undertook
a formal review of TEMIT’s portfolio management and risk management during the year. The review
considered investment strategy, investment process, performance and risk, and was carried out through
meetings between the Management Engagement Committee and members of the investment and risk
management teams of the Manager.
In February 2019, the Nomination Committee changed name to the Nomination and Remuneration
Committee and comprises Paul Manduca (Chairman), David Graham, Beatrice Hollond, Simon Jeffreys and
Charlie Ricketts. The role of the Committee is to review regularly the Board structure, size and composition
and make recommendations to the Board with regard to any adjustments that seem appropriate, to consider
the rotation and renewal of the Board, approve the candidate specification for all Board appointments,
approve the process by which suitable candidates are identified and short-listed, and to nominate candidates
for consideration by the full Board, whose responsibility it is to make appointments. The Committee also
considers the effectiveness of individual Directors and makes recommendations to the Board in respect
of re-elections. The Committee keeps under review the balance of skills, independence, knowledge of the
Company and experience and length of service of the Directors. When the composition of the Board requires
review, female candidates will be encouraged to apply, and progress will be actively monitored in relation
to diversity. An external search consultant will be used to assist with the selection of candidates for all new
appointments.
42 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The Committee periodically reviews the level of Directors’ fees relative to other comparable companies and
in the light of the Directors’ responsibilities. The Chairman of the Nomination and Remuneration Committee
attends the Company’s AGM and is prepared to respond to questions which may be raised by shareholders on
matters within the Nomination and Remuneration Committee’s responsibilities.
A copy of the terms of reference for the Audit Committee, Management Engagement Committee and
Nomination and Remuneration Committee are available to shareholders on the TEMIT website (www.temit.
co.uk) or upon request via Client Dealer Services using the contact details provided on the inside back cover
of this report.
The Board
The primary focus of the Directors at regular Board meetings is the consideration of investment performance
and outlook, market activity, discount management mechanisms including share buy-backs, gearing,
marketing, shareholder register analysis, investor relations, peer group information, review of top risks and
investment risk reporting, regulatory updates, corporate governance and industry issues.
Further details of the Directors’ responsibilities can be found in the Statement of Directors’ Responsibilities
on page 63.
In addition to the primary focus of the Board, the following important matters were considered at Board
meetings during the year:
• Succession plan for Portfolio team;
• Review of three-year marketing plan and contribution to marketing costs from the Manager;
• Agreement reached with the Manager on a revised management fee;
• Approval of interim dividends;
• Introduction of stock lending; and
• Consideration of the conditional tender offer.
Board Evaluation
The Board undertakes an annual evaluation of its own performance and that of its Committees and individual
Directors including the Chairman. The Board has also considered the independence of each Director,
including the Chairman.
In the last year, the Chairman led the evaluation process which included the completion of questionnaires
and discussions between the Chairman and each Director. The experience, balance of skills, diversity and
knowledge of the Board was considered as well as Board effectiveness, role and structure. An evaluation of the
Chairman by his fellow Directors was facilitated by Beatrice Hollond, the Senior Independent Director, who
met with the Chairman to discuss its content.
The Chairman confirms that, following performance evaluation, each Director’s performance continues to be
effective, demonstrating commitment to their role and each Director is recommended for re-election at the
AGM. The Chairman also confirms that each Committee’s performance continues to be effective in fulfilling
its responsibilities and duties.
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 43
Directors’ Report (continued)
Formal performance evaluations will continue to take place at least annually with the appointment of an
external facilitator every three years. The next appointment of an external facilitator is due to be made
in 2021.
Directors’ Conflicts of Interest
The Company’s Articles give the Directors authority to approve conflicts and potential conflicts with the Company’s
interests, where appropriate.
There are safeguards which apply when Directors decide whether to authorise a conflict or potential conflict and
these have been operated effectively. Firstly, only Directors who have no interest in the matter being considered can
make the relevant decision, and secondly, in taking the decision the Directors must act in a way that they consider,
in good faith, will be most likely to promote the Company’s success. The Directors can impose limits or conditions
when giving authorisation if they think that this is appropriate.
The Company maintains a register of Directors’ conflicts of interest which has been disclosed and approved by the
other Directors. Directors are reminded at each Board meeting to disclose any conflicts not previously disclosed.
Gregory Johnson is not present when the performance of the Manager and Investment Manager are considered.
Indemnification and Insurance
The Company has entered into deeds of indemnity with each of the Directors. These are qualifying third-
party indemnity provisions and are in force as at the date of this report. This information is disclosed in
accordance with Sections 236(2) and 236(3) of the 2006 Act. The Company maintains appropriate insurance
cover in respect of legal action against the Directors.
44 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The Company
Principal Activity and Investment Company Status
The Company is a public limited company in terms of the Companies Act 2006 and is an investment company
under Section 833 of the Companies Act 2006.
The Company has been accepted as an approved investment trust by HM Revenue & Customs for accounting
periods commencing on or after 1 April 2012, subject to continuing to meet the eligibility conditions of
Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of The Investment Trust
(Approved Company) (Tax) Regulations 2011. The Directors are satisfied that the Company intends to direct
its affairs to ensure its continued approval as an investment trust.
The Company is an AIF under the European Union’s Alternative Investment Fund Managers Directive.
Results and Dividends
The capital loss for the year was £27.3 million (2018: gain of £204.2 million) and the revenue profit was £44.9 million
(2018: £44.1 million).
The full results for the Company are disclosed in the Statement of Comprehensive Income on page 72.
The Directors propose a final ordinary dividend of 11.00 pence per share. Including the interim dividend of 5.00
pence per share, this represents and annual dividend of 16.00 pence per share (2018: 15.00 pence per share) and,
if approved by shareholders at the AGM on 11 July 2019, the final dividend will be payable on 18 July 2019 to
shareholders on the register at close of business on 14 June 2019.
Gearing
As part of the Company’s investment objective and policy, the Company may borrow up to 10% of its net assets.
On 31 January 2017, the Company entered into a three-year unsecured, multi-currency, revolving loan facility
with The Bank of Nova Scotia, London Branch. During the year, the agreement was amended allowing the
Company to borrow up to £220m with drawings available in pounds sterling, US dollars and Chinese renminbi
(CNH). The maximum amount of CNH that may be drawn down is the equivalent of £44 million.
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.
At the year end, £117.0 million and USD 10.0 million (£7.7 million) had been drawn down and are repayable
within one year (2018: £49.5 million and USD 133.3 million (£95.1 million)). The Company has no other debt.
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 45
Directors’ Report (continued)
Financial
Share Capital
Changes in the share capital of the Company are set out in Note 11 of the Notes to the Financial Statements.
Share Buy Backs
The Board is again seeking shareholder permission to continue its programme of share buy backs as outlined
on page 52. A key point in the Investment Manager’s mandate is to take a long-term view of investments and
one of the advantages of a closed end fund is that the portfolio structure is not disrupted by large inflows or
outflows of cash. However, the Board and the Investment Manager recognise that the returns experienced
by shareholders are in the form of movements in the share price, which are not directly linked to NAV
movements, and the shares may trade at varying discounts or premiums to NAV. Many shareholders, both
professional and private investors, have expressed a view that a high level of volatility in the discount is
undesirable. A less volatile discount, and hence share price, is seen as important to investors. For this reason,
TEMIT uses share buy backs selectively with the intention of limiting volatility and where it is in the interests
of shareholders.
20192018
Shares bought back and cancelled during the year5,737,6043,705,033
Proportion of share capital bought back and cancelled2.1%1.3%
Shares bought back and placed into treasury during the year14,808,5685,956,611
Proportion of share capital bought back and placed into treasury5.5%2.1%
Total share capital bought back20,546,1729,661,644
Total cost of share buy backs£147.5m£72.5m
The benefit to NAV£21.1m£10.3m
The percentage benefit to NAV1.0%0.4%
Auditor
The Audit Committee has recommended that Ernst & Young LLP be appointed as the Company’s auditor.
Ernst & Young LLP has expressed a willingness to accept office as auditor and a resolution proposing their
appointment will be submitted at the AGM. Further details on the assessment of the auditor can be found
within the Report of the Audit Committee on page 62.
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they
are each aware, there is no relevant information of which the Company’s auditor was unaware and that each
Director had taken all steps that they ought to have taken as a Director to make themselves appraised of any
relevant audit information and to establish that the Company’s auditor was notified of that information. This
confirmation is given, and should be interpreted in accordance with, the provisions of Section 418 of the
Companies Act 2006.
46 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Substantial Shareholdings
As at 22 May 2019 and 31 March 2019, the Company had been notified that the following were interested in
3% or more of the issued share capital of the Company.
NameNumber of shares22 May 2019 %
City of London Investment Management Company Limited34,966,25314.00
Lazard Asset Management LLC Group23,064,5349.23
Investec Wealth & Investment Limited15,942,8176.38
Quilter Investors13,424,6125.37
Rathbone Brothers PLC 10,206,200 4.08
Equiniti Investment Account 7,243,025 2.90
NameNumber of shares31 March 2019 %
City of London Investment Management Company Limited35,447,74914.10
Lazard Asset Management LLC Group25,368,50410.09
Investec Wealth & Investment Limited17,233,8876.85
Quilter Investors13,343,118 5.31
Rathbone Brothers PLC10,396,8844.14
Equiniti Investment Account7,936,6843.16
Principal Service Providers
Alternative Investment Fund Manager, Secretary and Administrator
FTIS is the Alternative Investment Fund Manager, Secretary and Administrator with the role of investment
management delegated to Templeton Asset Management Ltd. (“TAML”) and Franklin Templeton Investment
Management Limited (“FTIML”). Portfolio Managers from TAML and FTIML form part of the wider
Franklin Templeton Emerging Markets Equity group (“FTEME”).
The main secretarial duties involve compliance with statutory and regulatory obligations which the Company
must observe.
The annual ad valorem fee rate for the services provided by FTIS, including investment management, risk
management, secretarial and administration services, was 1% of net assets up to £2 billion and 0.85% of net
assets above £2 billion to 30 June 2018. With effect from 1 July 2018, the annual AIFM fee was reduced to 1%
of net assets up to £1 billion and 0.85% of net assets above £1 billion. The agreement between the Company
and FTIS may be terminated by either party, given one year’s notice, but in certain circumstances the
Company may be required to pay compensation to FTIS of an amount up to one year’s fee in lieu of notice.
No compensation is payable if at least one year’s notice of termination is given.
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 47
Directors’ Report (continued)
Details of the Remuneration Policy of the AIFM and amounts attributable to the Company are available to
existing shareholders upon request at the registered office of the Company.
The Board considers the arrangements for the provision of investment management services to the Company
on an ongoing basis, and a formal review is conducted annually by the Management Engagement Committee,
which consists solely of Directors independent of Franklin Templeton. Gregory Johnson is not present when
the Manager’s and Investment Manager’s performance is reviewed. When assessing the performance of
the Manager and Investment Manager, the Board believes it is appropriate to make this assessment over a
medium to long-term timeframe, which is in accordance with the long-term approach taken to investment.
In the opinion of the Directors, the continuing appointment of FTIS is in the best interests of the shareholders
as a whole.
Depositary and Custodian
J.P Morgan Europe Limited performs the role of depositary and JPMorgan Chase Bank performs the role of
custodian. The agreements in place may be terminated by either party giving the other 90 days’ notice.
A detailed list of service providers, along with addresses, can be found in the General Information section on
page 96.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board is accountable to the
shareholders for good governance and this statement describes how governance principles have been applied.
Association of Investment Companies Code of Corporate Governance (the “AIC Code”)
The Board considers that reporting against the principles of the Code issued by Association of Investment
Companies (the “AIC”), and by reference to the AIC Guide (that incorporates the UK Corporate Governance
Code), will provide helpful information to the shareholders.
Throughout the year ended 31 March 2019, the Company complied with the provisions of the AIC Guide and
AIC Code. In February 2019, the AIC published the new Corporate Governance Code. The Board has started
the process of implementing the new Code during 2019.
A statement explaining TEMIT’s compliance with the AIC Code principles can be found at www.temit.co.uk.
48 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Additional Information for New Zealand Shareholders
As a result of a requirement for Overseas Issuers listed on the New Zealand Stock Exchange, the following
should be noted by New Zealand shareholders:
• The corporate governance rules and principles in TEMIT’s home exchange jurisdiction of the United
Kingdom may materially differ from the New Zealand Stock Exchange (“NZX”) corporate governance rules
and the principles of the NZX Corporate Governance Code;
• Investors may find more information about the corporate governance and principles of TEMIT’s
home exchange in the United Kingdom in the above Corporate Governance statement and online at
www.frc.org.uk/corporate/ukcgcode.cfm; and
• The Company relies on the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption
Notice 2016, issued by the New Zealand Financial Markets Authority, which exempts it from certain
financial reporting obligations under the Financial Markets Conduct Act 2013.
Schedule of Reserved Matters
The Board has formally adopted a Schedule of Reserved Matters, which details the matters which the Board
has agreed are specifically reserved for their collective decision. These matters include, inter alia, approval
of the Half-Yearly and Annual Financial Statements, recommendation of the dividend, approval of any
preliminary results announcements of the Company, approval of any proposed changes to the Company’s
investment objective and/or policy, appointment or removal of the Company’s Manager or Investment
Manager, gearing, Board membership and Board committee membership and any major changes to the
investment objective, philosophy or policy of the Company, other than any such changes delegated to the
Investment Manager under the Investment Management Agreement.
The day to day investment management of the portfolio of the Company is delegated to the Investment
Manager, who manages the portfolio in accordance with the investment objectives of the Company as set by
the Board.
Environmental, Social and Governance
Details of the Company’s approach to environmental, social and governance issues can be found on pages 15
and 16.
Activities in the Field of Research and Development
The Company does not undertake activities in the field of research and development.
Disclosures in Strategic Report
The Company has chosen, in accordance with section 414C(11) of the Companies Act 2016, to include in the
Strategic report likely future developments in the Company’s business as well as information relating to the
Company’s greenhouse gas emissions, diversity, and the Modern Slavery Act 2015.
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 49
Directors’ Report (continued)
Institutional Shareholder Voting and Engagement
As an institutional investor, the Company recognises its responsibility that the companies in which it invests
should aspire to appropriate levels of corporate governance. As a matter of policy, the Company aims to
utilise its votes in shares held in the relevant underlying portfolio companies at the general meetings of these
companies.
The Directors discussed with the Investment Manager the approach to the Stewardship Code (“the Code”).
The Company and the Investment Manager generally support the Principles of the Code as outlined below.
On-going monitoring of investee companies and dialogue with management are fundamental to the
Investment Manager’s investment approach. The strategy on intervention with investee companies is
dealt with on a case-by-case basis and is usually a judgement made by the Investment Manager based on
the research done on each investee company for the investment decision making process. In all cases, the
Investment Manager holds regular review meetings with the senior management of investee companies.
At the same time, there may be instances in which “activism” is not consistent with the Investment Manager’s
fiduciary duty. For example, in the process of company research and monitoring, a significant problem or risk
may be identified, and the Investment Manager may decide that it is better to sell a position than to seek to
undertake a lengthy engagement with management.
The Investment Manager has adopted proxy voting policies and procedures which cover voting guidelines,
processing and maintenance of proxy records and conflicts of interest.
Summary information on the exercise of proxies is reviewed quarterly by the Board. Voting records for the
Company detailing the proxies voted for investee companies are not currently published. The Company
considers that there is limited demand for such detailed disclosure and therefore the administrative burden
and expense is not justified.
Risk Management Objectives and Policy
The Company invests in equities and other investments for the long term to achieve its objective, as stated
on page 9. This creates potential exposure to the risks as stated on pages 13 and 14. Further details on the
AIFMD risk disclosures can be found on the Company’s website.
Internal Control
Details of the Company’s system of internal controls can be found on pages 60 and 61.
50 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Annual General Meeting
The AGM will be held on Thursday 11 July 2019 at The Honourable Artillery Company, City Road, London,
EC1Y 2BQ.
Only those members registered on the Company’s register at 6:30 pm on 9 July 2019 or their duly authorised
proxies are entitled to attend the meeting. Please note that, as the meeting venue is a secure site, shareholders
or their proxies will be required to provide identification before being allowed into the meeting venue. Any
shareholder or proxy who fails to provide satisfactory identification will not be allowed into the meeting venue.
If shareholders wish to bring a guest to the meeting, they should contact the Registrars in advance of the
meeting and arrange for the guest to be invited to the meeting.
Ordinary business
It is proposed to receive and adopt the Directors’ and Auditor’s Report and Financial Statements for the year
ended 31 March 2019.
It is proposed to approve the Directors’ Remuneration Report for the year ended 31 March 2019.
It is proposed to declare a final ordinary dividend of 11.00 pence per share, payable on 18 July 2019 to
shareholders on the register as at close of business on 14 June 2019.
It is proposed to re-elect all Directors.
It is proposed to appoint Ernst & Young LLP as auditor of the Company, and to authorise the Directors to
determine the auditor’s remuneration.
Special business
The Special Business to be dealt with at the forthcoming AGM of the Company is:
(i) Continuation vote
The resolution for the continuation in being as an Investment Trust for the period expiring at the end of the
annual general meeting of the Company to be held in 2024. The last continuation vote took place in 2014.
(ii) Authority for the Allotment of New Shares
The resolutions to allot shares are set out in resolutions 13 and 14 in the Notice of Annual General Meeting.
These resolutions, if passed, will give your Directors power to allot for cash equity securities of the Company
and/or to sell equity securities held as treasury shares up to a maximum aggregate nominal amount of
£3,123,077 (being an amount equal to 5% of the issued share capital of the Company as at 22 May 2019) as if
Section 561 of the Companies Act 2006 (“the 2006 Act”) did not apply (this section requires, when shares are
to be allotted for cash or shares held as treasury shares are sold, that such shares first be offered to existing
shareholders in proportion to their existing holdings of shares, this entitlement being known as “pre-emption
rights”). The authorities contained in resolutions 13 and 14 will continue until the AGM of the Company in
2020 and your Directors envisage seeking the renewal of this authority in 2020 and in each succeeding year.
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 51
(iii) Authority to Purchase Own Shares
At the AGM of the Company held on 12 July 2018, a Special Resolution was passed authorising the Company
to purchase its shares in the market, a maximum of 14.99% of the shares in issue on 12 July 2018 or
40,222,277 shares, whichever is lower, up to the conclusion of the AGM in 2019. The present authority expires
at the end of the AGM on 11 July 2019.
The Directors are seeking renewal of the authority to purchase the Company’s shares in the market, being a
maximum of 14.99% of the shares in issue on 11 July 2019 or 37,451,945 shares, whichever is the lower, at the
2019 AGM. This is set out in resolution 15 of the notice of the AGM.
Any shares purchased pursuant to this authority may be cancelled or held in treasury pursuant to the
Companies (Acquisition of own shares) (Treasury Shares) Regulations 2003. Purchases will only be made
for cash at a cost which is below the prevailing net asset value per share. Under the rules of the UK Listing
Authority, the maximum price which may be paid is the higher of:
(a) 5% above the average market value of the shares for the five business days before the purchase is made;
(b) the higher of the last independent trade price and the highest current independent bid price on the
London Stock Exchange; and
(c) The minimum price payable for the shares will be the nominal value of 25 pence per share.
The authority to purchase shares (whether for cancellation or to be held in treasury) will only be exercised if
to do so would be in the best interests of shareholders generally and would result in an increase in net asset
value per share for the remaining shareholders. The purpose of holding some shares in treasury is to allow
the Company to re-issue those shares quickly and cost-effectively, thus providing the Company with greater
flexibility in the management of its capital base. Whilst in treasury, no dividends are payable on, or voting
rights attach to, these shares. Other than in accordance with a dispensation from the UK Listing Authority,
no shares will be purchased by the Company during periods when the Company would be prohibited from
making such purchases by the rules of the UK Listing Authority.
The Directors envisage seeking the renewal of the relevant authority in 2020 and in each succeeding year.
(iv) Notice period for general meetings
At the AGM of the Company held on 12 July 2018, a Special Resolution was passed authorising the Company
to call general meetings (other than Annual General Meetings) on 14 days’ clear notice, up to the conclusion
of the AGM in 2019. The Directors are seeking renewal of the authority to call general meetings (other than
Annual General Meetings) on 14 days’ clear notice, up to the conclusion of the Annual General Meeting in
2020. This is set out in resolution 16 of the notice of the AGM.
This resolution is required to reflect the implementation of the EU Shareholder Rights Directive which
requires that all general meetings must be held on 21 days’ notice, unless shareholders agree to a shorter
notice period.
The Directors only intend to call a general meeting on less than 21 days’ notice where the proposals are time
sensitive and the short notice would clearly be an advantage to the shareholders as a whole.
Directors’ Report (continued)
52 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The approval will be effective until the Company’s next AGM, when it is intended that a similar resolution
will be proposed. The Company will also be required to meet the requirements for electronic voting under the
Directive before it can call a general meeting on 14 days’ notice.
Recommendation
The Directors believe that all of the resolutions proposed are in the best interests of the Company and the
shareholders as a whole, and recommend that all shareholders vote in favour of all of the resolutions.
The results of the votes on the resolutions at the AGM will be published on the Company’s website
(www.temit.co.uk).
Going Concern
The Company’s assets consist of equity shares in companies listed on recognised stock exchanges and in
most circumstances are realisable within a short timescale. Having made suitable enquiries, including
considerations of the Company’s investment objective, the nature of the portfolio, net current liabilities,
expenditure forecasts and the principal risks and uncertainties described within the Annual Report, the
Directors are satisfied that the Company has adequate resources to continue to operate as a going concern for
a period of at least 12 months from the date of approval of the Financial Statements and for the foreseeable
future and, as such, the going concern basis is appropriate in preparing the Financial Statements.
By order of the Board
Paul Manduca
4 June 2019
Directors’ Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 53
This report has been prepared in accordance with the requirements of Section 420-422 of the Companies
Act 2006. Following amendments to the Companies Act 2006, effective from 30 September 2013, the
Remuneration Report comprises a Directors’ Remuneration Policy and a Directors’ Remuneration Report.
The Directors’ Remuneration Policy is subject to a triennial binding shareholder vote and the Directors’
Remuneration Report will be subject to an annual shareholder vote, as ordinary resolutions.
The law requires the Company’s auditor to audit certain of the disclosures provided. Where disclosures have
been audited, they are indicated as such. The auditor’s opinion is included in their report on pages 64 to 71.
All Directors are Non-Executive, appointed under the terms of Letters of Appointment, and none has a
service contract. These letters are available for inspection by shareholders at the Company’s registered address
or at the AGM. The Directors’ Report includes, on page 42, details of the Directors’ terms of appointments.
The Company has no employees.
Details on the Nomination and Remuneration Committee can be found on page 42 and 43 within the
Directors’ Report.
Directors’ Remuneration Policy
This Policy provides details of the remuneration policy for the Directors of the Company. It was approved at
the 2017 AGM and will be subject to shareholder approval at the 2020 AGM.
The Board’s policy is that the remuneration of Non-Executive Directors should reflect the responsibilities of
the Board, Directors’ time commitments, the experience of the Board as a whole, and be fair and comparable
to that of other investment trusts similar in size, capital structure and investment objective. To this end, the
Nomination and Remuneration Committee may engage independent external advisors to provide a formal
review of Directors’ remuneration. Any changes to fee levels as a result of this review will be subject to an
annual review.
The review process involves an analysis of fees paid to Directors of other companies having similar profiles
to that of the Company. This review is submitted to the Nomination and Remuneration Committee and the
Directors’ fees are agreed for the next year subject to approval by the shareholders at the relevant AGM. A
review was carried out this year that recommended no increase in fees for the forthcoming financial year.
Directors’ and Officers’ liability insurance cover is maintained by the Company, at its expense.
Directors’ remuneration is not linked to the performance of the Company and Directors are not eligible for
bonuses, pension benefits, share options, long-term incentive schemes or other benefits. The Directors are
entitled to reclaim reasonable expenses incurred in order to perform their duties as Non-Executive Directors
for the Company. Directors are not entitled to payment for loss of office.
Directors’ Remuneration Report
54 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Current Directors’ Remuneration
ComponentDirectorAnnual FeeDetermination
Annual FeeAll Independent Directors£37,000Set by the Nomination and Remuneration Committee
Additional FeeChairman£28,000Set by the Nomination and Remuneration Committee
Additional Fee
Chairman of the Audit
Committee
£12,000Set by the Nomination and Remuneration Committee
ExpensesAll Independent Directorsn/aReimbursement upon submission of appropriate receipts
The Chairman of the Board and Chairman of the Audit Committee are paid higher fees than the other
Directors, reflecting the greater amount of time spent on the Company’s business.
Directors’ Fees for the Year
Directors’ fees for the financial year to 31 March 2019 are set out below. A non-binding ordinary resolution
proposing adoption of the Remuneration Report was put to shareholders at the Company’s AGM held on 12 July
2018, and was passed by 139,316,036 (99.7%) of shareholders voting in favour of the resolution, 226,361 (0.2%)
voting against and 124,640 (0.1%) abstaining from voting.
A resolution proposing the approval of the Directors’ Remuneration Policy was put to the shareholders at the 2017
AGM and passed by 137,595,848 (99.8%) of shareholders voting in favour of the resolution, 189,890 (0.1%) voting
against and 104,617 (0.1%) abstaining from voting.
The Directors who served during the year received the following fees, which represented their total remuneration:
(audited information)
2019
£
2018
£
Paul Manduca
(a)
65,00063,000
Simon Jeffreys
(b)
49,00044,700
David Graham37,00036,000
Beatrice Hollond37,00036,000
Charlie Ricketts
(c)
26,711–
Hamish N Buchan
(d)
10,44136,000
Peter O Harrison
(e)
–13,700
Christopher D Brady
(f)
–10,300
Gregory E Johnson
(g)
––
Total225,152239,700
(a)
Chairman of the Board.
(b)
Joined the Board on 15 July 2016 and was appointed Chairman of the Audit Committee on 13 July 2017.
(c)
Joined the Board on 12 July 2018.
(d)
Retired from the Board on 12 July 2018.
(e)
Chairman of the Audit Committee until retirement from the Board on 13 July 2017.
(f )
Retired from the Board on 13 July 2017.
(g)
Compensated in his capacity as Chairman and Chief Executive Officer of Franklin Resources, Inc.
Directors’ Remuneration Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 55
Directors’ Remuneration Report (continued)
Performance Graph
(a)
The line graph below details TEMIT’s share price total return against TEMIT’s benchmark, the MSCI
Emerging Markets Index total return.
TEMIT share price total returns
Mar 09Mar 10Mar 11Mar 12Mar 13Mar 14Mar 15Mar 19Mar 18Mar 17Mar 16
350
250
200
300
150
100
50
350
200
250
300
100
50
MSCI Emerging Markets Index
150
Relative Cost of Directors’ Fees
The table below shows the Company’s expenditure on Directors’ fees compared to distributions to
shareholders:
2019
£’000
2018
£’000
Directors’ Remuneration
(a)
247262
Distribution to shareholders:
Dividends40,237
(b)
39,982
Share buy back147,500 72,513
The items detailed in the above table are as required by the Large and Medium-size Companies and Groups
(Accounts and Reports) 2013.
(a)
Directors’ Remuneration comprises Directors’ fees of £225,000 and Employer National Insurance Contributions of £22,000 for the
financial year 2019 (2018: £240,000 and £22,000 respectively).
(b)
Based on a proposed final dividend of 11.00 pence per share calculated using shares in issue as at 22 May 2019 and the interim dividend
of 5.00 pence per share paid 16 January 2019.
56 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Statement of Directors’ Shareholdings
The Directors’ interests (including any family interests) existing as at 31 March 2019 in the Company’s shares
were as follows:
(audited information)
31 March
2019
31 March
2018
David Graham14,0009,298
Beatrice Hollond6,2506,250
Simon Jeffreys5,3925,392
Paul Manduca5,0005,000
Charlie Ricketts5,000–
The Company has not received notifications of any changes in the above interests as at 22 May 2019.
Approval
The Directors’ Remuneration Report was approved by the Board of Directors on 4 June 2019.
Paul Manduca
4 June 2019
Directors’ Remuneration Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 57
Report of the Audit Committee
As Chairman of the Audit Committee, I am pleased to present the Company’s report of the Audit Committee
to the shareholders. This report contains details of the Audit Committee’s activities and responsibilities along
with the effectiveness of the external and internal audit process for the year ended 31 March 2019.
Composition of the Audit Committee
The Audit Committee comprises Simon Jeffreys (Chairman), David Graham, Beatrice Hollond and Charlie
Ricketts. Hamish Buchan served on the Committee until he retired on 12 July 2018, with Charlie Ricketts
appointed on that date.
The Board considers that the members of the Audit Committee have sufficient recent and relevant financial
experience in order for it to perform its functions effectively, noting in particular that the Audit Committee
Chairman is a Chartered Accountant and former senior audit partner. The Directors’ biographies are given on
pages 39 to 41 of the Annual Report.
Role and Responsibilities of the Audit Committee
The Audit Committee plays an important role in the appraisal and supervision of key aspects of the Company’s
business. The Audit Committee carried out the following activities to accomplish its principal objectives:
• Reviewed and recommended to the Board for approval the Annual and Half Yearly Reports of the Company;
• Reviewed and agreed the appropriateness of the Company’s accounting policies;
• Reviewed and agreed the accounting estimates;
• Reviewed and was satisfied with compliance with appropriate reporting standards and corporate
governance requirements;
• Considered that the Annual Report, taken as a whole, is fair, balanced and understandable;
• Monitored, reviewed and confirmed the effectiveness of the controls and risk management systems on
which the Company is reliant;
• Oversaw the relationship with the external auditor;
• Reviewed and was satisfied with the quality and content of the Auditor’s Report;
• Reviewed and reported below on the external auditor’s effectiveness and independence, and the
effectiveness of the audit process;
• Reviewed the effectiveness of the internal audit function of Franklin Templeton and their reports, and was
satisfied with the results; and
• Reviewed other ad hoc items referred to the Audit Committee by the Board.
During the year the Audit Committee, also:
• Visited the Management Company, FTIS, in Luxembourg and met with key Management Company
personnel including Conducting Officers and the head of Risk Management;
• Visited the Management Company in Edinburgh to have additional discussions with those responsible for
financial reporting, company secretarial, taxation, internal audit and risk.
• Held a tender process for the selection of the Company’s external auditor. Please see page 62 for further
details;
• Held two training sessions covering developments in financial reporting and corporate governance.
58 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The terms of reference of the Audit Committee reflect the recommendations of the UK Corporate
Governance Code. A copy of the terms of reference of the Audit Committee is available to shareholders on the
TEMIT website (www.temit.co.uk) or upon request via Client Dealer Services at Franklin Templeton using
the contact details provided on the inside back cover of this report.
Meetings
The Committee met formally three times during the year. Additionally, in the year under review, the
Chairman, usually with other members of the Committee, met with representatives of the Manager on
separate occasions to discuss the Company’s risk and controls framework and to review the Annual Report.
On these visits he also met with the Company’s external auditor.
The Committee maintains a forward agenda to ensure that its workload is balanced across the year and that
matters are addressed at appropriate times.
The Audit Committee Chairman will attend the Company’s AGM on 11 July 2019 and will be prepared
to respond to questions which may be raised by shareholders on matters within the Audit Committee’s
responsibilities.
Performance Evaluation
The Board undertakes an annual evaluation of performance of the Audit Committee and its individual
Directors, further details of this review can be found on pages 43 and 44.
Annual Report and Financial Statements
A primary responsibility of the Audit Committee is to review the appropriateness of the Annual and Half
Yearly Reports.
During the year, the work of the Committee included the following significant activities in relation to the
Financial Statements:
Portfolio Valuation
The Directors received regular portfolio reports, liquidity information and presentations from the Manager
and the Investment Manager. The Manager employs global pricing policy procedures compliant with current
regulations as disclosed in the accounting policies on pages 78 and 79.
Misappropriation of Assets
The Company has appointed an independent custodian (JPMorgan Chase Bank) to hold its investments. The
Manager reconciles the investment portfolio to the custodian records on a regular basis, and regular satisfactory
reports were provided to the Committee.
Report of the Audit Committee (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 59
Report of the Audit Committee (continued)
Going Concern
The Committee considered the nature of the portfolio, the investment objective, income and expenditure, the
principal risks of the Company and the continuation vote in July 2019, and confirmed that it was appropriate
to prepare the Financial Statements on a going concern basis, and made its recommendations to the Board.
Recognition of Investment Income
The Committee received quarterly income forecast reports which detailed the income received and the
estimated income due to be received in the financial year. These forecasts included details of material
variances compared with prior forecasts.
Compliance with Section 1158
The Company has been accepted as an approved investment trust by HM Revenue and Customs for
accounting periods commencing on or after 1 April 2012, subject to continuing to meet the eligibility
conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of The Investment
Trust (Approved Company) (Tax) Regulations 2011. The Committee is satisfied that the Company complies
with these conditions and intends to direct its affairs to ensure its continued approval as an investment trust.
External Audit
The Committee reviewed and agreed the audit plan and audit materiality, asking the external auditors to pay
particular attention to the ownership and valuation of the portfolio, income recognition and to compliance
with S1158 regulations. The Committee reviewed and challenged the results of the audit with the external
auditors noting that there were no disagreements with Management. The Committee held a number of
meetings with the external auditor in private.
Conclusion
As a result of the work undertaken, the Committee has concluded that the Financial Statements for the year
ended 31 March 2019, taken as a whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s position and performance, business model and strategy,
and has reported on these findings to the Board. The Board’s conclusions in this respect are set out in the
Statement of Directors’ Responsibilities on page 63.
Internal Control
The Company does not have an internal audit function of its own because it has no employees. The Company
relies on the internal audit department of Franklin Templeton to report any material failings or weaknesses.
The Committee monitors the risk management and system of internal controls on an ongoing basis and also
engages Franklin Templeton’s internal audit function to carry out a review of specific areas that the Audit
Committee deems necessary. This year the internal auditors were asked in particular to consider any changes
in the control systems and to report on the overall effectiveness of internal controls.
60 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The Committee met representatives of the Manager and Investment Manager, including their internal auditors,
risk manager and their compliance officer, who reported as to the proper conduct of business in accordance
with the regulatory environment in which both the Company and the Manager operate. Certain meetings held
with the internal auditors are conducted on a private basis, with no representation from the Manager.
The Committee reviewed the Company’s risk map that explains in detail the key risks identified by the
Company, assessing the likelihood of each risk materialising and the impact that this would have on the
Company. It also confirmed the effectiveness of the key operational procedures and oversight by the Manager
and the Board.
During the year, the Committee also reviewed the following significant items:
Counterparty Credit Oversight
The review considered the risk that the Company’s counterparties default on payment or delivery of portfolio
and cash transactions. This included a review of the primary and mitigating controls implemented by the
Manager and Investment Manager.
Global Custody Review
This annual review evaluated JPMorgan Chase Bank’s global custody and sub-custody network including the
results of the ISAE 3402 report by PricewaterhouseCoopers.
Key Service Providers
This review confirmed the value and quality of services provided to the Company by third parties.
External Auditor Assessment and Independence
To assess the effectiveness of the external audit process, the auditor is asked, on an annual basis, to set out
the steps that they have taken to ensure objectivity and independence. The auditor’s performance, behaviour
and effectiveness during the exercise of its duties are monitored during the year by the Committee. The
Committee considered an annual independent Audit Quality Review report by the Financial Reporting
Council, that monitors audit quality of the major audit firms in the UK, and discussed with the external
auditor the results of their own quality control review. The results of these reviews were satisfactory.
Deloitte presented their detailed audit plan for the 2019 financial year end at the November 2018 Audit
Committee meeting. The Committee also reviewed Deloitte’s policies and procedures including quality
assurance procedures and independence, and concluded that they were satisfactory.
Non-Audit Services
Performance of any non-audit services by the external auditor must be approved in advance by the
Committee and must comply with the guidelines set out in the FRC’s Revised Ethical Standard 2016. The
Committee concluded that the non-audit service fees were appropriate relative to fees paid for audit services.
An engagement letter is issued for all non-audit work and is reviewed by the Committee to ensure that the
independence and objectivity of the auditor is safeguarded.
Report of the Audit Committee (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 61
During the year, Deloitte were engaged to perform a review of the Half Yearly Report. This is assurance
related and the Committee believes that Deloitte are best placed to provide this service on a cost effective
basis for the shareholders.
The fees paid to Deloitte in the year were as follows:
20192018
Audit Services£33,075£31,500
Non Audit Services:
Review of Half Yearly Report£5,500£5,250
Percentage of Audit Services16.6%16.7%
The Committee therefore confirms that the non-audit work undertaken by the auditor satisfies and does not
compromise the tests of the auditor’s independence, objectivity, effectiveness, resources and qualification.
Audit Tender and Appointment of New Auditor
TEMIT’s external auditor, Deloitte LLP, has been the Company’s auditor since 27 August 2009. Stuart McLaren is
the Senior Statutory Auditor, he has held this position since 2018.
The EU regulations on mandatory auditor rotation require an audit tender to take place after ten years. As a
result, an audit tender took place during the year. Members of the Committee undertook a robust selection
process that included written proposals from a number of large and medium sized firms followed by face
to face meetings with the proposed Senior Statutory Auditors and senior teams from a selected shortlist of
candidates. Following the tender process, the Committee recommends that Ernst & Young LLP be appointed
as the Company’s external auditor at the forthcoming annual general meeting. Sue Dawe will be appointed
Senior Statutory Auditor for the 2020 audit.
TEMIT is able to rely on the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption
Notice 2016, issued on 4 November 2016 that exempts it from requirements to prepare audited financial
statements in accordance with the New Zealand Financial Market Conduct Act 2013. This exemption
recognises that companies with a primary listing in the United Kingdom prepare Financial Statements and are
audited in accordance with UK requirements. This exempts TEMIT from the New Zealand requirement that
firms be audited by a New Zealand unlimited liability entity.
TEMIT is in Compliance with the provisions of “The Statutory Audit Services for Large Companies Market
Investigation” (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities)
Order 2014 as issued by the Competition & Markets Authority.
Simon Jeffreys
Audit Committee Chairman
4 June 2019
Report of the Audit Committee (continued)
62 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance
with applicable law and regulations. Details of the Directors and members of the committees are reported on
pages 39 to 41.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law
the Directors are required to prepare the Financial Statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
Under company law the Directors must be satisfied that the Financial Statements give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company for the period.
In preparing these Financial Statements, International Accounting Standard 1 requires that Directors:
• Properly select and apply accounting policies;
• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable
and understandable information;
• Provide additional disclosures when compliance with the specific requirements of IFRSs are insufficient
to enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
• Make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website (www.temit.co.uk). Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
Responsibility Statement
Each of the Directors, who are listed on pages 39 to 41, confirms that to the best of their knowledge:
• The Financial Statements, which have been prepared in accordance with IFRS, give a fair, balanced and
understandable view of the assets, liabilities, financial position and profit or loss of the Company for the
year ended 31 March 2019; and
• The Chairman’s Statement, Strategic Report and the Report of the Directors include a fair review of the
information required by 4.1.8R to 4.1.11R of the FCA’s Disclosure and Transparency Rules; and
• The Annual Report and Audited Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary to assess the Company’s position and performance,
business model and strategy, and include a description of principal risks and uncertainties.
By order of the Board
Paul Manduca
4 June 2019
Statement of Directors’ Responsibilities
In Respect of the Annual Report and the Financial Statements
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 63
Independent Auditor’s Report
to the Members of Templeton Emerging Markets Investment Trust Plc
Report on the audit of the financial statements
OpinionIn our opinion the financial statements of Templeton Emerging Markets Investment
Trust plc (the ‘company’):
• give a true and fair view of the state of the company’s affairs as at 31 March
2019 and of its return for the year then ended;
• have been properly prepared in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union, the Statement
of Recommended Practice: ‘Financial Statements of Investment Trust
Companies and Venture Capital Trusts’ (AIC SORP) issued by the Association of
Investment Companies in November 2014; and
• have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements which comprise:
• statement of comprehensive income;
• statement of financial position;
• the statement of changes in equity;
• statement of cash flows and
• the related notes 1 to 18.
The financial reporting framework that has been applied in their preparation is
applicable law and IFRSs as adopted by the European Union.
Basis for opinionWe conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the auditor’s responsibilities for the audit of
the financial statements section of our report.
We are independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We confirm
that the non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the company.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Summary of our audit approachKey audit matters
The key audit matters that we identified in the current year were:
• Valuation and ownership of quoted investments
• Revenue recognition; completeness of dividend income
Within this report, any new key audit matters are identified with and any
key audit matters which are the same as the prior year identified with .
Materiality
The materiality that we used in the current year was £21.18m which was
determined on the basis of 1% of net assets at 31 March 2019
Scoping
Audit work to respond to the risks of material misstatement was performed
directly by the audit engagement team.
Significant changes in our approach
No significant changes in our approach.
64 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Conclusions relating to going concern,
principal risks and viability statement
Going concern
We have reviewed the directors’ statement in note 1a to the financial
statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them and their identification of
any material uncertainties to the company’s ability to continue to do so over
a period of at least twelve months from the date of approval of the financial
statements.
We considered as part of our risk assessment the nature of the company,
its business model and related risks including where relevant the impact of
Brexit, the requirements of the applicable financial reporting framework and
the system of internal control. We evaluated the directors’ assessment of
the company’s ability to continue as a going concern, including challenging
the underlying data and key assumptions used to make the assessment, and
evaluated the directors’ plans for future actions in relation to their going
concern assessment.
We are required to state whether we have anything material to add or draw
attention to in relation to that statement required by Listing Rule 9.8.6R(3)
and report if the statement is materially inconsistent with our knowledge
obtained in the audit.
We confirm that we have nothing material to report, add or draw attention to in
respect of these matters.
Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether
they were consistent with the knowledge we obtained in the course of the
audit, including the knowledge obtained in the evaluation of the directors’
assessment of the company’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention
to in relation to:
• the disclosures on pages 13-14 that describe the principal risks and
explain how they are being managed or mitigated;
• the directors’ confirmation on page 16 that they have carried out a robust
assessment of the principal risks facing the company, including those
that would threaten its business model, future performance, solvency or
liquidity; or
• the directors’ explanation on page 16 as to how they have assessed the
prospects of the company, over what period they have done so and why
they consider that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the company will be
able to continue in operation and meet its liabilities as they fall due over
the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to report whether the directors’ statement relating to the
prospects of the company required by Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained in the audit.
We confirm that we have nothing material to report, add or draw attention to in
respect of these matters.
Independent Auditor’s Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 65
Key audit mattersKey audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Valuation and ownership of quoted investments
Key audit matter descriptionThe quoted investments of the Company of £2,162m (2018: £2,370m) make
up 102.1% (2018: 103.1%) of the total assets of the Company at 31 March
2019. See the accounting policy in note 1g of the Financial Statements and
also see note 7 of the Financial Statements.
Investments are valued at the closing bid price at the year end.
There is a risk that quoted investments within the portfolio may not be valued
correctly.
As the quoted investments of the Company make up 102.1% of total net
assets (“NAV”) as at 31 March 2019 and the NAV is the key driver of the
management fee paid Franklin Templeton International Services S.à r.l.
(“FTIS”), we have considered that there is a potential risk of fraud in this area.
This key audit matter was included as a significant issue in the Audit
Committee Report on page 60.
How the scope of our audit responded to
the key audit matter
We have performed the following procedures to test the valuation and
ownership of quoted investments at 31 March 2019:
• evaluated the design and implementation of the controls at the
administrator, Franklin Templeton International Services S.à r.l. (“FTIS”)
(“the Manager”), relating to the valuation of investments;
• agreed 100% of the portfolio of quoted investments to confirmations
received directly from the custodian; and
• agreed 100% of the valuation of the quoted investments at the year end to
the closing bid prices published by an independent pricing source.
Key observationsNo misstatements were identified which required reporting to those charged
with governance.
Revenue recognition: completeness of dividend income
Key audit matter descriptionFor the year ended 31 March 2019 income from investments is £59.23m
(2018: £60.32m). Please see Accounting Policy 1c and Note 2.
The Company invests in emerging markets where there is a risk that not all
dividend information is captured in a timely manner and, as a result, revenue
may be incomplete or recognised in the incorrect period
This key audit matter was included as a significant issue in the Audit
Committee Report on page 60.
Independent Auditor’s Report (continued)
66 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
How the scope of our audit responded to
the key audit matter
We have performed the following procedures to test the completeness of
dividend income at 31 March 2019:
• evaluated the design and implementation of controls over revenue
recognition at the administrator, Franklin Templeton Services S.à r.l.
(“FTIS”);
• for 100% of quoted investments, obtained ex-dividend dates and rates
for dividends declared during the year and agreed the amounts recorded
within the general ledger to confirm that dividend income is complete; and
• agreed a sample of dividend income receipts to bank statements.
Key observationsNo misstatements were identified which required reporting to those charged
with governance.
Our application of materialityWe define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality
both in planning the scope of our audit work and in evaluating the results of
our work.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Materiality
£21.18m (2018: £22.99m)
Basis for determining materiality
1% of net assets as at the year end. This basis was also used in the prior year.
Rationale for the benchmark applied
Net assets has been chosen as a benchmark as it is considered the most
relevant benchmark for investors and is the key driver of shareholder value.
We agreed with the Audit Committee that we would report to the Committee
all audit differences in excess of £423,640 (2018: £459,747), as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the
financial statements.
Independent Auditor’s Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 67
An overview of the scope of our auditThere were no changes to the scope of our audit since prior year. Our audit
was scoped by obtaining an understanding of the entity and its environment,
including internal control, and assessing the risks of material misstatement.
Audit work designed to respond to the risks of material misstatement was
performed directly by the audit engagement team.
As part of our audit we evaluated the controls in place at the administrator
who prepares the financial statements of the Company by reviewing controls
in place over the key audit matters.
Other informationThe directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
In this context, matters that we are specifically required to report to you as
uncorrected material misstatements of the other information include where we
conclude that:
• Fair, balanced and understandable – the statement given by the directors
that they consider the annual report and financial statements taken as a
whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the company’s position and
performance, business model and strategy, is materially inconsistent with
our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit
committee does not appropriately address matters communicated by us to
the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance
Code – the parts of the directors’ statement required under the Listing
Rules relating to the company’s compliance with the UK Corporate
Governance Code containing provisions specified for review by the auditor
in accordance with Listing Rule 9.8.10R(2) do not properly disclose a
departure from a relevant provision of the UK Corporate Governance Code.
We have nothing to report in respect of these matters.
Independent Auditor’s Report (continued)
68 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Responsibilities of directorsAs explained more fully in the statement of directors’ responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Details of the extent to which the audit was considered capable of detecting
irregularities, including fraud are set out below.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at: www.frc.
org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was
considered capable of detecting
irregularities, including fraud
We identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, and then design and perform audit
procedures responsive to those risks, including obtaining audit evidence that
is sufficient and appropriate to provide a basis for our opinion.
Identifying and assessing potential
risks related to irregularities
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
our procedures included the following:
• enquiring of management, the administrator and the audit committee,
including obtaining and reviewing supporting documentation, concerning
the company’s policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks related to fraud or
non-compliance with laws and regulations;
• discussing among the engagement team regarding how and where fraud
might occur in the financial statements and any potential indicators of
fraud. As part of this discussion, we identified potential for fraud in the
following areas: valuation and ownership of quoted investments due to the
incentive for the Manager to manipulate the NAV to increase management
fees. If the Company does well the Manager benefits with a higher income,
which provides the incentive to manipulate the NAV balance; and
• obtaining an understanding of the legal and regulatory framework that
the company operates in, focusing on those laws and regulations that
had a direct effect on the financial statements or that had a fundamental
effect on the operations of the company. The key laws and regulations
we considered in this context included the Companies Act 2006 and UK
Listing Rules, as well as the Company qualification as an Investment Trust
under UK tax legislation.
Independent Auditor’s Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 69
Audit response to risks identifiedAs a result of performing the above, we identified valuation and ownership
of quoted investments as a key audit matter. The key audit matter section of
our report explains the matter in more detail and also describes the specific
procedures we performed in response to the key audit matter.
In addition to the above, our procedures to respond to risks identified
included the following:
• reviewing the financial statement disclosures and testing to supporting
documentation to assess compliance with relevant laws and regulations
discussed above;
• enquiring of management and the audit committee concerning actual and
potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to
fraud;
• reading minutes of meetings of those charged with governance; and
• in addressing the risk of fraud through management override of controls,
testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and evaluating the business rationale of
any significant transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout
the audit.
Report on other legal and regulatory requirements
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has
been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified any
material misstatements in the strategic report or the directors’ report.
Matters on which we are required to
report by exception
Adequacy of explanations received
and accounting records
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
• we have not received all the information and explanations we require for
our audit; or
• adequate accounting records have not been kept, or returns adequate for
our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
Independent Auditor’s Report (continued)
70 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Directors’ remunerationUnder the Companies Act 2006 we are also required to report if in our opinion
certain disclosures of directors’ remuneration have not been made or the part
of the directors’ remuneration report to be audited is not in agreement with
the accounting records and returns.
We have nothing to report in respect of these matters.
Other matters
Auditor tenureFollowing the recommendation of the audit committee, we were appointed
by the shareholders at the Annual General Meeting on 17 July 2009 to audit
the financial statements for the year ending 31 March 2019 and subsequent
financial periods. The period of total uninterrupted engagement including
previous renewals and reappointments of the firm is 10 years, covering the
years ending 31 March 2010 to 31 March 2019.
Consistency of the audit report with
the additional report to the audit
committee
Our audit opinion is consistent with the additional report to the audit
committee we are required to provide in accordance with ISAs (UK).
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Stuart McLaren (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
4 June 2019
Independent Auditor’s Report (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 71
Financial Statements
Statement of Comprehensive Income
For the Year Ended 31 March 2019
Year ended
31 March 2019
Year ended
31 March 2018
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains/(losses) on investments and
foreign exchange
Gains/(losses) on investments at
fair value
7 – (3,892) (3,892)
– 213,924 213,924
Gains/(losses) on foreign exchange – (6,184) (6,184) – 10,220 10,220
Revenue
Dividends2 59,230 – 59,230 60,319 – 60,319
Bank and deposit interest2 439 – 439 168 – 168
59,669 (10,076) 49,593 60,487 224,144 284,631
Expenses
AIFM fee3 (5,954) (13,892) (19,846) (7,049) (16,449) (23,498)
Other expenses4 (1,935) – (1,935) (2,087) – (2,087)
(7,889) (13,892) (21,781) (9,136) (16,449) (25,585)
Profit/(loss) before finance costs
and taxation
51,780 (23,968) 27,812 51,351 207,695 259,046
Finance costs (1,111) (2,603) (3,714) (1,161) (2,703) (3,864)
Profit/(loss) before taxation 50,669 (26,571) 24,098 50,190 204,992 255,182
Tax expense5 (5,798) (692) (6,490) (6,047) (770) (6,817)
Profit/(loss) for the year 44,871 (27,263) 17,608 44,143 204,222 248,365
Profit/(loss) attributable to equity
holders of the Company
44,871 (27,263) 17,608 44,143 204,222 248,365
Earnings per share617.26p(10.48)p6.78p 15.90p 73.56p 89.46p
Ongoing charges ratio
(a)
1.02%1.12%
(a)
A glossary of alternative performance measures is included in Shareholder Information on page 98.
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.
The accompanying notes on pages 76 to 90 are an integral part of the Financial Statements.
72 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Statement of Financial Position
As at 31 March 2019
Note
As at
31 March 2019
£’000
As at
31 March 2018
£’000
Non-current assets
Investments at fair value through profit or loss7 2,162,435 2,370,346
Current assets
Trade and other receivables8 11,612 9,002
Cash and cash equivalents 73,213 67,843
Total current assets 84,825 76,845
Current liabilities
Bank loans9 (124,844) (144,690)
Trade and other payables10 (2,654) (762)
Capital gains tax provision5 (1,578) (927)
Total liabilities (129,076) (146,379)
Net current liabilities (44,251) (69,534)
Total assets less current liabilities 2,118,184 2,300,812
Share capital and reserves
Equity Share Capital11 68,045 69,480
Capital Redemption Reserve 14,624 13,189
Capital Reserve 1,492,845 1,667,608
Special Distributable Reserve 433,546 433,546
Revenue Reserve 109,124 116,989
Equity Shareholders’ Funds 2,118,184 2,300,812
Net Asset Value pence per share
(a)
842.5 846.0
(a)
Based on shares in issue excluding shares held in treasury.
The Financial Statements on pages 72 to 90 were approved for issue by the Board and signed on 4 June 2019.
Paul Manduca Simon Jeffreys
Chairman Director
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 73
Statement of Changes in Equity
For the Year Ended 31 March 2019
Equity Share
Capital
Capital
Redemption
Reserve
Capital
Reserve
Special
Distributable
Reserve
Revenue
ReserveTotal
Note£’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 dividends12 – – – – (23,137) (23,137)
Purchase and cancellation
of own shares11 (926) 926 (26,198) – – (26,198)
Purchase of shares into
Treasury11 – – (46,315) – – (46,315)
Balance at 31 March 2018 69,480 13,189 1,667,608 433,546 116,989 2,300,812
Profit for the year – – (27,263) – 44,871 17,608
Equity dividends12 – – – – (52,736) (52,736)
Purchase and cancellation
of own shares11 (1,435) 1,435 (41,386) – – (41,386)
Purchase of shares into Treasury11 – – (106,114) – – (106,114)
Balance at 31 March 2019 68,045 14,624 1,492,845 433,546 109,124 2,118,184
74 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Statement of Cash Flows
For the Year Ended 31 March 2019
Note
For the year to
31 March 2019
£000
For the year to
31 March 2018
£000
Cash flows from operating activities
Profit before finance costs and taxation 27,812 259,046
Adjustments for:
(Gains)/losses on investments at fair value7 3,892 (213,924)
(Gains)/losses on foreign exchange 6,184 (10,220)
Stock dividends received in period (511) (157)
(Increase)/Decrease in debtors 287 (2,737)
Increase/(Decrease) in creditors 1,670 (2,017)
Cash generated from operations 39,334 29,991
Tax paid (5,839) (6,380)
Net cash inflow from operating activities 33,495 23,611
Cash flows from investing activities
Purchases of non-current financial assets (262,622) (381,286)
Sales of non-current financial assets 458,308 398,826
Net cash inflow from investing activities 195,686 17,540
Cash flows from financing activities
Equity dividends paid12 (52,736) (23,137)
Purchase and cancellation of own shares (40,972) (26,644)
Repurchase of shares into treasury (106,543) (45,886)
Movement in bank loans outstanding (19,872) 61,161
Bank loan interest and fees paid (3,688) (4,067)
Net cash outflow from financing activities (223,811) (38,573)
Net increase in cash 5,370 2,578
Cash at the start of the year 67,843 65,265
Cash at the end of the year 73,213 67,843
Reconciliation of Liabilities Arising from Financing Activities
Non-cash movements
Liability
as at
31 March
2018
£000
Cash flows
£000
FX
movement
£000
Profit &
Loss
£000
Liability
as at
31 March
2019
£000
Bank Loan 144,551 (25,957) 6,085 – 124,679
Interest and fees 139 (3,707) 19 3,714 165
Total liabilities from financing activities 144,690 (29,664) 6,104 3,714 124,844
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 75
1 Accounting Policies
(a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (“IASB”) and interpretations
as issued by the IFRS Interpretations Committee of the IASB and adopted by the European Union (together
“IFRS”). The Financial Statements have also been prepared in accordance with the Statement of Recommended
Practice (“SORP”) for investment trusts issued by the Association of Investment Companies (“AIC”) in
November 2014 and updated in February 2018 insofar as the SORP is compatible with IFRS.
The costs of repurchasing shares into treasury, including related costs, are charged to the Capital Reserve.
If treasury shares are subsequently cancelled, the nominal value is transferred out of Equity Share Capital and
into the Capital Redemption Reserve.
Adoption of new and revised Accounting Standards
The following amendments and new IFRSs were adopted for the year ended 31 March 2019:
• IFRS 9: Financial Instruments
• IFRS 15: Revenue from Contracts with Customers
IFRS 9 and IFRS 15 have not had an effect on the measurement or disclosure of amounts recognised within the
Financial Statements of the Company.
At the date of authorisation of these Financial Statements, the following standards and interpretations which
have not been applied in these Financial Statements were in issue but not yet applicable (and in some cases had
not yet been adopted by the EU):
International Accounting Standards
Effective date for
accounting periods
beginning on or after
IFRIC 23: Uncertainty over Income Statement Treatments1 January 2019
IFRS 16: Leases1 January 2019
The Directors expect that the adoption of the standards listed above will have either no impact or that any
impact will not be material on the Financial Statements of the Company in future periods.
The Financial Statements have been prepared on the historical cost basis, except for the measurement at fair
value of certain financial instruments. The principal accounting policies adopted are set out below.
At 31 March 2019, the Company had net current liabilities of £44,251,000 (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. Therefore, the going concern basis has been adopted in preparing the
Company’s Financial Statements. The Going Concern statement is set out on page 53.
All financial assets and financial liabilities are recognised (or derecognised) on the date of the transaction by
the use of “trade date accounting”.
Notes to the Financial Statements
For the Year Ended 31 March 2019
76 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
As the Company is a UK investment trust, whose share capital is issued in the UK and denominated in
sterling, the Directors consider that the functional currency of the Company is sterling.
There have been no significant judgements, estimates or assumptions for the year.
(b) Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in accordance with guidance issued
by the AIC, supplementary information which analyses the Statement of Comprehensive Income between
items of a revenue and capital nature has been presented within the Statement of Comprehensive Income. In
accordance with the Company’s Articles of Association, net capital profits may not be distributed by way of
dividend. Additionally, the net revenue is the measure that the Directors believe appropriate in assessing the
Company’s compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010.
(c) Revenue
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no
ex-dividend date is available, dividends are recognised on their due date. Provision is made for any dividends not
expected to be received.
Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the
amount of the cash dividend is recognised in the income section of the Statement of Comprehensive Income.
Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital
section of the Statement of Comprehensive Income.
Special dividends receivable are treated as repayment of capital or as income depending on the facts of each
particular case. Interest receivable on bank deposits is recognised on an accruals basis.
(d) Expenses
Transaction costs arising on the purchase of investments are included in the capital section of the Statement
of Comprehensive Income. All other operating expenses are accounted for on an accruals basis and are
charged through the revenue and capital sections of the Statement of Comprehensive Income according to the
Directors’ expectation of future returns except as follows:
• Expenses relating to the disposal of an investment are deducted from the sale proceeds and thus treated as
capital. Details of transaction costs on purchases and sales of investments are disclosed in Note 7; and
• Expenses are treated as capital where a connection with the maintenance or enhancement of the value of
the investments can be demonstrated. With effect from 1 April 2017, 70% of the annual AIFM fee has been
allocated to the capital account.
(e) Finance costs
Finance costs are accounted for on an accruals basis using the effective interest method in the Statement
of Comprehensive Income. Finance costs are charged through the revenue and capital sections of the
Statement of Comprehensive Income according to the Directors expectations of future returns. With effect
from 1 April 2017, 70% of the finance costs have been allocated to the capital account.
Notes to the Financial Statements (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 77
(f ) Taxation
The tax expense represents the sum of current and deferred tax.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses
presented against capital returns in the supplementary information in the Statement of Comprehensive Income
is the “marginal basis”. Under this basis, if taxable income is capable of being offset entirely by expenses
presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is
transferred to the capital return column.
Deferred taxation is recognised in respect of all taxable temporary differences that have originated but not
reversed at the year-end date, where transactions or events that result in an obligation to pay more tax in the
future or rights to pay less tax in the future have occurred at the year-end date. This is subject to deferred tax
assets only being recognised to the extent that it is probable that taxable profit will be available against which
the deductible temporary difference can be utilised. Deferred tax assets and liabilities are measured at the rates
applicable to the legal jurisdictions in which they arise.
Due to the Company’s status as an investment trust company, and its intention to continue to meet the eligibility
conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of The Investment
Trust (Approved Company) (Tax) Regulations 2011, the Company has not provided deferred tax in respect of
UK corporation tax on any capital gains and losses arising on the revaluation or disposal of investments. Where
appropriate, the Company provides for deferred tax in respect of overseas taxes on any capital gains arising on
the revaluation or disposal of investments.
The carrying amount of deferred tax assets is reviewed at each year-end date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
(g) Investments held at fair value through profit or loss
The Company’s business is investing in financial assets with a view to profiting from their total return in
the form of income and capital growth. This portfolio of financial assets is managed, and its performance
evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the
portfolio is provided internally on that basis to the Company’s Directors and other key management personnel.
Accordingly, upon initial recognition, all of the Company’s non-current asset investments are designated as
being “at fair value through profit or loss”. They are included initially at fair value, which is taken to be their cost
excluding expenses incidental to the acquisition.
Subsequently, the investments are valued at “fair value”, which is measured as follows:
The fair value of financial instruments at the year-end date is, ordinarily, based on the latest quoted bid price at,
or before, the US market close (without deduction for any of the estimated future selling costs), if the instrument
is held in active markets. This represents a Level 1 classification under s48A of IFRS 9.
For all financial instruments not traded in an active market or where market price is not deemed representative
of fair value, valuation techniques are employed to determine fair value. Valuation techniques include market
approach (i.e. using recent arm’s length market transactions adjusted as necessary and reference to the market
Notes to the Financial Statements (continued)
78 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
value of another instrument that is substantially the same) and the income approach (i.e. discounted cash flow
analysis making use of available and supportable market data as possible). Where no reliable fair value can be
estimated for such instruments, they are carried at cost subject to any provision for impairment.
Gains and losses arising from changes in fair value are included in the net profit or loss for the period as a capital
item in the Statement of Comprehensive Income.
(h) Foreign currencies
Transactions involving foreign currencies are translated to sterling (the Company’s functional currency) at
the spot exchange rates ruling on the date of the transactions. Assets and liabilities in foreign currencies are
translated at the rates of exchange at the year-end date. Foreign currency gains and losses are included in
the Statement of Comprehensive Income and allocated as capital or income depending on the nature of the
transaction giving rise to the gain or loss.
(i) Financial instruments
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash that are subject to an insignificant risk of changes in value.
Bank Loans are classified as financial liabilities at amortised cost. They are initially measured at the proceeds
net of direct issue costs and subsequently measured at amortised cost. Interest payable on the bank loan is
accounted for on an accruals basis in the Statement of Comprehensive Income. The amortisation of direct issue
costs is accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest
method.
(j) Share capital and reserves
Equity Share Capital – represents the nominal value of the issued share capital.
Capital Redemption Reserve – represents the nominal value of shares repurchased and cancelled.
Capital Reserve – gains and losses on realisation of investments; changes in fair value of investments which are
readily convertible to cash, without accepting adverse terms; realised exchange differences of a capital nature;
changes in the fair value of investments that are not readily convertible to cash, without accepting adverse terms;
and the amounts by which other assets and liabilities valued at fair value differ from their book value are within
this reserve.
Special Distributable Reserve – reserve created upon the cancellation of the Share Premium Account and Capital
Redemption Reserve.
Purchases of the Company’s own shares are also funded from this reserve. The Company’s Articles of
Association preclude it from making any distribution of capital profits.
Revenue Reserve – represents net income earned that has not been distributed to shareholders.
Income recognised in the Statement of Comprehensive Income is allocated to applicable reserves in the
Statement of Changes in Equity.
Notes to the Financial Statements (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 79
2 Revenue
2019
£’000
2018
£’000
Income from investments
Non EU dividends 55,690 56,168
UK dividends 1,666 2,443
Other EU dividends 1,363 1,562
Stock dividends 511 146
59,230 60,319
Other revenue
Bank and deposit interest 439 168
Total other income 59,669 60,487
3 AIFM fees
20192018
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
AIFM fee 5,954 13,892 19,846 7,049 16,449 23,498
The Company has a contract with FTIS as alternative investment fund manager.
The contract between the Company and FTIS, its AIFM and provider of Secretarial and Administration Services,
may be terminated at any date by either party giving one year’s notice of termination.
The AIFM fee is paid monthly and based on the monthly trading total net assets of the Company. From 1 July 2018,
the AIFM fee was reduced from 1% of net assets up to £2 billion and 0.85% of net assets above £2 billion to 1% of
net assets up to £1 billion and 0.85% of net assets above £1 billion.
70% of the annual AIFM fee has been allocated to the capital account.
Notes to the Financial Statements (continued)
80 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes to the Financial Statements (continued)
4 Other expenses
2019
£’000
2018
£’000
Custody fees 803 881
Directors’ remuneration 247 262
Shareholder communications and marketing 206 135
Depositary fees 173 194
Membership fees 144 118
Registrar fees 81 74
Printing and postage costs 37 81
Auditor’s remuneration
Audit of the annual financial statements 33 32
Half Yearly financial report 6 5
Broker fees3016
Legal Fees 6 33
Other expenses169256
Total other expenses 1,935 2,087
Fees in respect of services as Directors are paid by the Company only to those Directors who are independent of
Franklin Templeton. Included within these costs are Employer National Insurance contributions.
5 Tax on ordinary activities
20192018
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Overseas withholding tax 5,798 – 5,798 6,047 – 6,047
Overseas capital tax
–
41 41
–
333 333
Prior period adjustments – – – – – –
Total current tax 5,798 41 5,839 6,047 333 6,380
Deferred tax – 651 651 – 437 437
Total tax 5,798 692 6,490 6,047 770 6,817
Taxation
2019
£’000
2018
£’000
Profit before taxation 24,098 255,182
Theoretical tax at UK corporation tax rate of 19% (2018: 19%) 4,579 48,484
Effects of:
– Capital element of profit 1,914 (42,587)
– Irrecoverable overseas tax 5,798 6,047
– Excess management expenses 3,093 3,642
– Overseas Capital Gains Tax 41 333
– Income taxable in different periods (27) 54
– Dividends not subject to corporation tax (8,900) (8,844)
– Movement in overseas capital gains tax liability 651 437
– UK dividends (414) (464)
– Overseas tax expensed (245) (285)
Actual tax charge 6,490 6,817
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 81
As at 31 March 2019 the Company had unutilised management expenses of £132.4 million carried forward
(2018: £116.1 million). These balances have been generated because a large part of the Company’s income is
derived from dividends which are not taxed. 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.
Movement in provision for deferred tax
2019
£’000
2018
£’000
Balance brought forward 927 490
Charge for the year 651 437
Balance carried forward 1,578 927
Provision consists of:
– Overseas capital gains tax liability 1,578 927
1,578 927
A provision for deferred capital gains tax has been recognised in relation to unrealised gains on Indian holdings.
6 Earnings per share
20192018
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Earnings 44,871 (27,263) 17,608 44,143 204,222 248,365
20192018
Revenue
pence
Capital
pence
Total
pence
Revenue
pence
Capital
pence
Total
pence
Earnings per share17.26 (10.48)6.78 15.90 73.56 89.46
The earnings per share is based on the profit attributable to equity holders and on the weighted average number
of shares in issue during the year of 259,970,471 (year to 31 March 2018: 277,618,959).
7 Financial assets – investments
2019
£’000
2018
£’000
Opening investments 2,370,346 2,165,950
Movements in year:
Additions 263,370 378,953
Disposals (467,389) (388,481)
Realised profits 137,574 194,428
Net (depreciation)/appreciation (141,466) 19,496
Closing investments 2,162,435 2,370,346
All investments have been recognised at fair value through the Statement of Comprehensive Income.
Notes to the Financial Statements (continued)
82 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes to the Financial Statements (continued)
Transaction costs for the year on purchases were £478,000 (2018: £923,000) and transaction costs for the
year on sales were £999,000 (2018: £1,026,000). The aggregate transaction costs for the year were £1,477,000
(2018: £1,949,000).
2019
£’000
2018
£’000
Realised and unrealised gains on investments comprise:
Realised gain based on carrying value at 31 March 137,574 194,428
Net movement in unrealised (depreciation)/appreciation (141,466) 19,496
Realised and unrealised (losses)/gains on investments (3,892) 213,924
8 Trade and other receivables
2019
£’000
2018
£’000
Dividends receivable 5,721 6,916
Sales awaiting settlement 3,124 227
Overseas tax recoverable 2,727 1,838
Other debtors 40 21
11,612 9,002
9 Bank loans
2019
£’000
2018
£’000
Bank loan repayable 124,679 144,551
Interest and fees 165 139
124,844 144,690
10 Trade and other payables
2019
£’000
2018
£’000
Accrued expenses 2,003 333
Amounts owed for share buy backs 414 429
Purchase of investments for future settlement 237 –
2,654 762
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 83
11 Equity Share Capital
20192018
Allotted, issued & fully paidAllotted, issued & fully paid
£’000
Number£’000 Number
Shares of 25p each
Opening balance 69,480 271,962,342 70,406 281,623,986
Purchase and cancellation of own shares (1,435) (5,737,604) (926) (3,705,033)
Purchase of shares into treasury– (14,808,568)– (5,956,611)
Closing balance 68,045 251,416,170 69,480 271,962,342
The Company’s shares (except those held in treasury) have unrestricted voting rights at all general meetings, are
entitled to all of the profits available for distribution by way of dividend and are entitled to repayment of all of the
Company’s capital on winding up.
During the year, 5,737,604 shares were bought back for cancellation at a cost of £41,386,000 (2018: 3,705,033 shares
were bought back for cancellation at a cost of £26,198,000). Additionally, the Company bought back 14,808,568
shares and placed them in treasury for a total consideration of £106,114,000 (2018: 5,956,611 shares were placed
into treasury for a total consideration of £46,315,000).
As at 31 March 2019 the Company held 20,765,179 shares in treasury (2018: 5,956,611 shares).
12 Dividend
20192018
Rate (pence)£’000 Rate (pence) £’000
Declared and paid in the year
Dividend on shares:
Final dividends for the years ended
31 March 2018 and 31 March 2017
15.00 39,982 8.25 23,137
Interim dividend for the period 1 April
2018 to 30 September 2018
5.00 12,754 n/a n/a
Proposed for approval at the Company’s AGM
Dividend on shares:
Final dividend for the year ended 31 March
2019
11.0027,483
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.
Notes to the Financial Statements (continued)
84 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes to the Financial Statements (continued)
13 Related party transactions
The Directors consider that, under the classification of related party transactions outlined in the Association
of Investment Companies SORP, issued November 2014 and updated in February 2018, Franklin Templeton
entities are not classified as related parties under IAS 24 (as adopted by the EU).
Accordingly, there were no transactions with related parties, other than the fees paid to the Directors during the
year ended 31 March 2019, which have a material effect on the results or the financial position of the Company.
14 Risk management
In pursuing the Company Objective, set out on page 9 of this Annual 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 in 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 counterparty and credit risk.
The objectives, policies and processes for managing these risks, and the methods used to measure the risk, are
set out below. These policies have remained unchanged since the beginning of the year to which these financial
statements relate.
Investment and concentration risk
The Company may invest a greater portion of its assets than the benchmark in the securities of one issuer,
securities domiciled in a particular country, or securities within one industry group than other types of fund
investments. As a result, there is the potential for increased concentration of exposure to economic, business,
political or other changes affecting similar issues or securities, which may result in greater fluctuation in the
value of the portfolio.
Market price risk
Market risk arises mainly from uncertainties about future prices of financial instruments held. It represents the
potential loss that 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 Company does not use derivative instruments to hedge the investment portfolio against market price risk
as, in the Investment Manager’s opinion, the cost of such a process could result in an unacceptable level of cost
and/or a reduction in the potential for capital growth.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 85
100% (2018: 100%) of the Company’s investment portfolio is listed on stock exchanges. If share prices had
decreased by 10% with all other variables remaining constant, the Statement of Comprehensive Income capital
return and the net assets attributable to equity shareholders would have decreased by £216,243,540 (2018:
£237,034,635). The analysis for last year assumes a share price decrease of 10%.
A 10% increase (10% increase) in share prices would have resulted in a proportionate equal and opposite effect
on the above amounts, on the basis that all other variables remain constant.
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 on which 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. However, it 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 are shown below:
2019
Currency
Trade
and other
receivables
£’000
Cash
at bank
£’000
Trade, bank
and loans
and other
payables
£’000
Total net
foreign currency
exposure
£’000
Investments at
fair value
through
profit or loss
£’000
US dollar 147
–
(7,704) (7,557) 548,757
Hong Kong dollar
3,091 –
– 3,091 347,148
Korean won
4,279 69
(82) 4,266 289,265
Taiwan dollar
2,265 –
– 2,265 199,155
Indian rupee
175 –
(1,578) (1,403) 162,221
Other
1,615 155
(156) 1,614 548,595
Notes to the Financial Statements (continued)
86 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes to the Financial Statements (continued)
2018
Currency
Trade and
other
receivables
£’000
Cash
at bank
£’000
Trade, bank
and loans
and other
payables
£’000
Total net
foreign currency
exposure
£’000
Investments at
fair value
through
profit or loss
£’000
US dollar 317
–
(95,137)
(94,820)
609,128
Korean won
4,942 –
– 4,942 353,108
Hong Kong dollar
– –
– – 336,312
Taiwan dollar
1,454 –
– 1,454 225,094
South African rand
– –
– – 159,959
Other
2,268 (21)
(928) 1,319 612,161
The above tables are based on the currencies of the country where shares are listed rather than the underlying
currencies of the countries where the companies earn revenue.
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit after taxation for the year and of the equity in regard
to the Company’s monetary financial assets and liabilities and its equity if sterling had strengthened by 10%
relative to all currencies on the reporting date, with all other variables held constant, the revenue and capital
return would have decreased by the below amounts.
20192018
Financial Assets and Liabilities
Revenue
£’000
Capital
Return
£’000
Revenue
£’000
Capital
Return
£’000
US dollar 1,566 54,876 1,526 60,913
Hong Kong dollar1,01534,715 487 33,631
Korean won83228,92780335,311
Taiwan dollar 735 19,916 825 22,509
Indian rupee 181 16,222 175 11,749
4,329 154,656 3,816 164,113
A 10% weakening of sterling against the above currencies would have resulted in an equal and opposite effect on
the above amounts.
Interest rate risk
The Company is permitted to invest in fixed rate securities. Any change to the interest rates relevant to
particular securities may result in income either increasing or decreasing, or the Investment Manager being
unable to secure similar returns on the expiry of contracts or the sale of securities. In addition, changes to
prevailing rates or changes in expectations of future rates may result in an increase or decrease in the value of
the securities held and the interest payable on bank loans when interest rates are reset.
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 87
Interest rate risk profile
The exposure of the financial assets and liabilities to interest rate risks at 31 March is shown below:
Within
one year
2019
£’000
Within
one year
2018
£’000
Bank loans (124,844) (144,690)
Cash73,21367,843
Net exposure at year end (51,631) (76,847)
Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Company.
Cash balances are held on call deposit and earn interest at the bank’s daily rate. The Company’s net assets are
sensitive to changes in interest rates on borrowings. There was no exposure to fixed interest investment securities
during the year or at the year end.
Interest rate sensitivity
If the above level of cash was maintained for a year, a 1.0% increase or decrease in interest rates would impact
the net profit after taxation by the following amounts:
20192018
1.0%
increase in
rate
£’000
1.0%
decrease in
rate
£’000
1.0%
increase in
rate
£’000
1.0%
decrease in
rate
£’000
Profit/(loss) for the year
Revenue 358 (358) 244 (244)
Capital (874) 874 (1,013)1,013
Total (516) 516 (769) 769
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future
exposure to interest rate changes due to fluctuations in the level of cash balances and amounts drawn down on
the Company’s loan facilities.
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 a significant period to sell. As a closed
ended investment trust, liquidity risks attributable to the Company are less significant than for an open ended fund.
The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be
significant, given the large number of quoted investments held in the portfolio and the liquid nature of the
portfolio of investments.
The Investment Manager reviews liquidity at the time of making each investment decision and monitors the
evolving liquidity profile of the portfolio regularly.
Notes to the Financial Statements (continued)
88 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes to the Financial Statements (continued)
Investments held by the Company are valued in accordance with the accounting policies at bid price. Other
financial assets and liabilities of the Company are included in the Statement of Financial Position at fair value.
Counterparty and Credit risk
Certain transactions in securities that the Company enters into expose it to the risk that the counterparty 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 counterparty. 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 the interest rate risk profile and
represents the maximum credit risk at the year-end date.
The Company has an ongoing contract with its custodian (JPMorgan Chase Bank) for the provision of custody
services.
As part of the annual risk and custody review, the Company reviewed the custody services provided by JPMorgan
Chase Bank and concluded that, while there are inherent custody risks in investing in emerging markets, the
custody network employed by TEMIT has appropriate controls in place to mitigate those risks, and that these
controls are consistent with recommended industry practices and standards.
Securities held in custody are held in the Company’s name or to its accounts. Details of holdings are received
and reconciled monthly. Cash is actively managed by Franklin Templeton’ s Trading Desk in Edinburgh and is
typically invested in overnight time deposits in the name of TEMIT with an approved list of counterparties. Any
excess cash not invested by the Trading Desk will remain in a JPMorgan Chase interest bearing account. There is
no significant risk on debtors and accrued income or tax at the year end.
Fair Value
Fair values are derived as follows:
• Where assets are denominated in a foreign currency, they are converted into the sterling amount using year-
end rates of exchange;
• Non-current financial assets – on the basis set out in the accounting policies; and
• 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).
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 89
Valuation hierarchy fair value through profit and loss
31 March 201931 March 2018
Level 1 Level 2Level 3TotalLevel 1Level 2Level 3Total
£000£000£000£000£000£000£000£000
Listed investments2,115,417–47,018
(a)
2,162,435 2,370,346 –– 2,370,346
(a)
The fair value of the Company’s holding in Bank Danamon Indonesia as at 31 March 2019 was £47,018,000. Prior to year-end, the
Company accepted a tender offer from MUFG for the entire holding. Due to the tender offer, the market price was not deemed
representative of fair value and, in accordance with accounting policy 1(g), the company valued the investment using the income
approach. The year-end balance comprises of £45,556,000 transferred out of level 1 into level 3 and an unrealised gain of £1,462,000
resulting from the valuation technique applied.
The unobservable inputs used in this technique were the stated offer price and payment date as per the tender document and the
Company’s weighted average cost of capital applied as the discount rate. The valuation is not considered sensitive to these inputs as the
Company received full payment of the tender offer on 29 April 2019.
15 Significant holdings
As at 31 March 2019 and 2018, TEMIT held 3% or more of the issued class of capital in the following holdings in
the portfolio:
31 March 201931 March 2018
Name
Issued share
capital held
by TEMIT
(a)
%
Fair
Value
£’000
Issued share
capital held
by TEMIT
(a)
%
Fair
Value
£’000
SABIC, Participatory Note –– 12.1 10,643
(a)
This is the percentage of the class of security held by TEMIT.
16 Contingent liabilities
No contingent liabilities existed as at 31 March 2019 or 31 March 2018.
17 Financial commitments
There were no financial commitments as at 31 March 2019 or 31 March 2018.
18 Events after the reporting period
There were three material events after the reporting period:
– the proposed final dividend, which has been disclosed in Note 12;
– the conditional tender announcement, which has been disclosed in the Chairman’s Statement on
pages 6 and 7.
– On 15 May 2019, TEMIT entered into a securities lending agreement with JPMorgan Chase Bank, to enable
TEMIT to lend its securities to an approved list of borrowers.
Notes to the Financial Statements (continued)
90 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Investor Information
Notice of Meeting
NOTICE IS HEREBY GIVEN that the annual general meeting of Templeton Emerging Markets Investment
Trust Public Limited Company (the “Company”) will be held at The Honourable Artillery Company, City Road,
London, EC1Y 2BQ on 11 July 2019 at 12 noon to transact the following business:
To consider and, if thought fit, to pass the following resolutions. Resolutions 1 to 13 will be proposed as ordinary
resolutions and resolutions 14 to 16 will be proposed as special resolutions.
Ordinary Business:
1. To receive and adopt the Directors’ and Auditor’s Reports and financial statements for the year ended
31 March 2019.
2. To approve the Directors’ Remuneration Report for the year ended 31 March 2019.
3. To declare a final dividend of 11.00 pence per share for the year ended 31 March 2019.
4. To re-elect Paul Manduca as a Director.
5. To re-elect Beatrice Hollond as a Director.
6. To re-elect Charlie Ricketts as a Director.
7. To re-elect David Graham as a Director.
8. To re-elect Gregory E Johnson as a Director.
9. To re-elect Simon Jeffreys as a Director.
10. To appoint Ernst & Young LLP as auditor of the Company, to act until the conclusion of the next general
meeting of the Company at which audited accounts are laid before the members.
11. To authorise the Directors to determine the auditor’s remuneration.
Special Business
12. That, pursuant to Article 153.1 of the articles of association of the Company, the Company shall continue
in being as an Investment Trust for the period expiring at the end of the annual general meeting of the
Company to be held in 2024.
13. That, in substitution for any existing authority, the Directors be generally and unconditionally authorised
to allot equity securities (as defined in Section 560 of the Companies Act 2006 (the “Act”)) pursuant to
Section 551 of the Act, up to an aggregate nominal amount of £3,123,077 (being an amount equal to 5%
of the existing issued share capital of the Company as at 22 May 2019, being the latest practicable date
before the date of this notice), provided that this authority shall, unless renewed, varied or revoked by the
Company, expire at the conclusion of the annual general meeting of the Company to be held in 2020 save
that the Company may, before such expiry, make offers or agreements which would or might require equity
securities to be allotted and the Directors may allot equity securities in pursuance of such offer or agreement
notwithstanding that the authority conferred by this resolution has expired.
14. That, in substitution for any existing authority, subject to the passing of resolution 13, the Directors be
given the general power pursuant to sections 570 and 573 of the Act to allot equity securities (as defined by
Section 560 of the Act) for cash pursuant to the authority conferred by resolution 13, and/or to sell equity
securities held as treasury shares for cash pursuant to Section 727 of the Act, in each case as if Section 561(1)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 91
Notice of Meeting (continued)
of the Act did not apply to any such allotment or sale, provided that this power shall be limited to: (a) any
such allotment and/or sale of equity securities in connection with an offer or issue by way of rights or other
pre-emptive offer or issue, open for acceptance for a period fixed by the directors, to holders of ordinary
shares (other than the Company) on the register on any record date fixed by the directors in proportion
(as nearly as may be) to the respective number of ordinary shares deemed to be held by them, subject to
such exclusions or other arrangements as the directors may deem necessary or expedient in relation to
fractional entitlements, legal or practical problems arising in any overseas territory, the requirements of any
regulatory body or stock exchange or any other matter whatsoever; and (b) any such allotment and/or sale,
otherwise than pursuant to sub-paragraph (a) above, of equity securities having, in the case of ordinary
shares, an aggregate nominal value or, in the case of other equity securities, giving the right to subscribe for
or convert into ordinary shares having an aggregate nominal value, not exceeding the sum of £3,123,077
(being an amount equal to 5% of the existing issued share capital of the Company as at 22 May 2019, being
the latest practicable date before the date of this notice). The power granted by this resolution will expire
on conclusion of the annual general meeting of the Company to be held in 2020 (unless renewed, varied or
revoked by the Company prior to or on such date) save that the Company may, before such expiry, make
offers or agreements which would or might require equity securities to be allotted or equity securities held
as treasury shares to be sold after such expiry and the Directors may allot and/or sell equity securities held
as treasury shares in pursuance of any such offer or agreement notwithstanding that the power conferred by
this resolution has expired.
15. That, in substitution for any existing authority, the Company be and is hereby authorised in accordance with
Section 701 of the Companies Act 2006 to make market purchases (within the meaning of Section 693(4) of
the Companies Act 2006), of its ordinary of shares of 25 pence each in the capital of the Company (“shares”)
provided that:
(i) the maximum number of shares hereby authorised to be purchased shall not exceed 14.99 per cent of
the shares in issue on 11 July 2019, or 37,451,945 shares, whichever is lower;
(ii) the minimum price which may be paid for a share shall be 25 pence;
(iii) the maximum price which may be paid (excluding expenses) for a share shall not be more than the
higher of: (a) an amount equal to 105 per cent of the average of the closing mid-market price of shares
(as derived from the daily Official List of the London Stock Exchange) for the five business days
immediately preceding the date of purchase; and (b) the higher of the last independent trade price and
the highest current independent purchase bid price on the London Stock Exchange; and
(iv) unless renewed, the authority hereby conferred shall expire on the conclusion of the annual general
meeting of the Company to be held in 2020, save that the Company may, and prior to such expiry, enter
into a contract to purchase shares which will or may be completed wholly or partly after such expiry.
16. That a general meeting, other than an annual general meeting, may be called on not less than 14 clear days’
notice.
By Order of the Board
Paul Manduca
4 June 2019
Registered Office: 5 Morrison Street, Edinburgh, EH3 8BH
92 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Notes:
1. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action
you should take, you are recommended to seek your own financial advice from your stockbroker or other independent financial adviser
authorised under the Financial Services and Markets Act 2000.
2. If you have sold or transferred all of your shares in the Company, please forward this document, together with the accompanying
documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so that they can pass
these documents to the person who now holds the shares.
3. The Company specifies that only those members registered on the Company’s register of members at 6.30 pm on 9 July 2019 shall be
entitled to attend and vote at the annual general meeting (the “Meeting”).
4. A member of the Company entitled to attend and vote at the Meeting may appoint a proxy or proxies to attend, to speak and vote thereat
instead of him. A proxy need not be a member of the Company. Appointment of a proxy will not preclude a member from attending
and voting in person. Please note that, as the meeting venue is a secure site, shareholders or their proxies will be required to provide
identification before being allowed into the meeting. Any shareholder or proxy who fails to provide satisfactory identification will not be
allowed into the meeting venue. If shareholders wish to bring a guest to the meeting, they should contact the Registrars in advance of the
meeting and arrange for the guest to be invited to the meeting.
5. A member may appoint more than one proxy provided that each proxy is appointed to exercise rights attached to different shares held
by that member. A member may not appoint more than one proxy to exercise rights attached to one share. Please contact the Company’s
registrar Equiniti, at Aspect House, Lancing, West Sussex BN99 6DA to appoint more than one proxy. In the case of joint holders, the vote
of the senior holder who tenders a vote shall be accepted to the exclusion of the votes of the other joint holders. Seniority is determined
by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first
named being the most senior).
6. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been
nominated to receive communications from the Company in accordance with Section 146 of the Companies Act 2006 (“nominated
persons”). Nominated persons may have a right under an agreement with the registered shareholder who holds the shares on their behalf
to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not
wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of
voting rights.
7. A proxy form is enclosed. A member can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
8. A proxy form must be returned to the Company’s registrar, Equiniti, Aspect House, Lancing, West Sussex BN99 6DA to arrive not later
than 12 noon on 9 July 2019. New Zealand registered shareholders must return a proxy form to Computershare, Private Bag 92119,
Auckland 1142, New Zealand to arrive not later than 5.00pm on 8 July 2019 (New Zealand time).
9. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all of its powers as a
member provided that no more than one corporate representative exercises powers over the same share.
10. As at 22 May 2019, the Company’s issued share capital was 249,846,195 shares of 25 pence each. Each share carries the right to vote at an
annual general meeting of the Company and, therefore, the total number of voting rights in the Company as at 22 May 2019 was 249,846,195.
11. Copies of the letters of appointment of the Directors of the Company are available for inspection at the Company’s registered office at 5
Morrison Street, Edinburgh, EH3 8BH, and at the Meeting (for 15 minutes prior to the Meeting and during the Meeting).
12. Electronic proxy appointment for CREST members (for UK only). CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the Meeting and any adjournment(s) thereof by using the procedures
described in the CREST Manual which can be viewed at www.euroclear.com. CREST Personal Members or other CREST sponsored
members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made
using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s (“EUI”) specifications and must contain the information required for such instructions,
as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to
the instruction given to a previously appointed proxy, must in order to be valid, be transmitted so as to be received by the issuer’s agent
(RA19) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting, or in the event of an adjournment of the
Meeting, 48 hours before the adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service
providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings
Notice of Meeting (continued)
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 93
and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
13. Electronic proxy appointment for non-CREST members (for UK only). Shareholders who prefer to register the appointment of their
proxy electronically via the Internet can do so through the Equiniti website at www.sharevote.co.uk where full instructions on the
procedure are given. The personal Voting ID, Task ID and Shareholder Reference Number printed in the voting pack will be required to
use this electronic proxy appointment system. Alternatively, shareholders who have already registered with Equiniti’s on-line portfolio
service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk using their user ID and
password. Once logged in, click “View” on the “My Investments” page, click on the link to vote then follow the on screen instructions. A
proxy appointment made electronically will not be valid if sent to any address other than those provided or if received after 12 noon on
9 July 2019. Please note that any electronic communication found to contain a computer virus will not be accepted.
14. Electronic proxy appointment for New Zealand registered shareholders. New Zealand registered investors who prefer to register the
appointment of their proxy electronically via the Internet can do so through the Computershare website at www.investorvote.co.nz, and
enter the Control Number 102532, where full instructions on the procedure are given. Your CSN (Common Shareholder Number) and
postal code will be required to use this electronic proxy appointment system. A proxy appointment made electronically will not be valid if
sent to any address other than that provided or if received after 5.00pm (New Zealand time) on 8 July 2019. Please note that any electronic
communication found to contain a computer virus will not be accepted. New Zealand registered investors cannot appoint more than one
proxy when registering the appointment of their proxy electronically.
15. A member of the Company may make a request in accordance with Section 527 of the Companies Act 2006 to have a statement published
on the Company’s website setting out an audit concern. This allows a member or members having a right to vote at the Meeting and
holding at least 5% of the total voting rights of the Company, or at least 100 members having a right to vote at the Meeting and holding, on
average, at least £100 of the paid up share capital, to make a request so that the Company must publish on its website a statement setting
out any matter that such members propose to raise at the Meeting relating to the audit of the Company’s accounts (including the auditor’s
report and the conduct of the audit) that are to be laid before the Meeting. Where the Company is required to publish such a statement
on its website: (i) it may not require the members making the request to pay any expenses incurred by the Company in complying with
the request; (ii) it must forward the statement to the Company’s auditor no later than the time at which the statement is made available
on the Company’s website; and (iii) the statement may be dealt with as part of the business of the Meeting. A member wishing to request
publication of such a statement on the Company’s website must send the request to the Company in hard copy form to the Company
Secretary or by email to enquiries@franklintempleton.co.uk. The request must either set out the statement in full or, if supporting a
statement sent by another member, clearly identify the statement which is being supported and be received by the Company at least one
week before the Meeting. Please note that any electronic communication found to contain a computer virus will not be accepted.
16. Any member attending the Meeting has the right to ask questions. Pursuant to Section 319A of the Companies Act 2006, the Company
must provide an answer to any question which is put by a member relating to the business being considered, except if a response would
not be in the interests of the Company or for the good order of the Meeting or if to do so would involve the disclosure of confidential
information. The Company may, however, elect to provide an answer to a question within a reasonable period of days after the conclusion
of the Meeting.
18. In accordance with Section 311A of the Companies Act 2006, the contents of this notice of meeting, details of the total number of shares
in respect of which members are entitled to exercise voting rights at the Meeting and, if applicable, any members’ statements, members’
resolutions or members’ matters of business received by the Company after the date of this notice will be available on the Company’s
website, www.temit.co.uk.
19. You may not use any electronic address provided either in this Notice of Meeting or any related documents (including the Form of Proxy)
to communicate with the Company for any purposes other than those expressly stated.
Notice of Meeting (continued)
94 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
The Company’s thirtieth Annual General Meeting will be held on Thursday 11 July 2019. Notice of this meeting
is given on pages 91 to 94.
Significant events in the Company’s year are expected normally to occur as follows:
July 2019
Annual General Meeting held. Final dividend paid.
November 2019
Half Yearly results announced.
Half Yearly Report for the period to 30 September 2019 published.
Interim dividend paid January 2020.
Investor Communications
The Board and Manager aim to keep shareholders informed and release the following information on the
Company’s website:
Daily
• Daily net asset value
Monthly
• Factsheet
• Investment Manager commentary
• Portfolio breakdowns
• Performance details
Quarterly
• Portfolio holdings
• Portfolio report released on quarter ends out-with financial reporting cycles
Ad hoc
• Emerging markets updates
• PRIIPS Key Information Document (KID)
(a)
You can also download important documents such as the latest Investor Disclosure Document and Company
Policies.
You can also subscribe to have the latest updates sent directly to your email account.
(a) Packaged Retail and Insurance-based Investment Products Regulation (the ‘PRIIPs Regulation’) require that the Manager prepare a Key
Information Document (KID) in respect of the Company. Investors should note that the basis for calculating potential returns, costs and
risks are prescribed by the law and the Board is not responsible for the information contained in the KID. Investment returns stated in the
KID may not be those expected of the Company and are not guaranteed.
Key Dates
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 95
General Information
REGISTERED OFFICE
5 Morrison Street
Edinburgh
EH3 8BH
UK
(Registered No. SC118022)
REGISTRAR – UK
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
UK
www.equiniti.com
Tel (UK) 0371 384 2505
Tel (overseas) +44 121 415 7047
REGISTRAR – NEW ZEALAND
Computershare Investor Services Limited
159 Hurstmere Road
Takapuna
Auckland 0622
NEW ZEALAND
www.computershare.co.nz
Tel +649 488 8777
ALTERNATIVE INVESTMENT FUND MANAGER,
SECRETARY AND ADMINISTRATOR
Franklin Templeton International Services S.à r.l.
8a rue Albert Borschette
L-1246
LUXEMBOURG
FINANCIAL ADVISER AND STOCKBROKER
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London
EC4R 2GA
UK
SOLICITOR
CMS Cameron McKenna Nabarro Olswang LLP
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EN
UK
CUSTODIAN
JPMorgan Chase Bank
25 Bank Street
London
E14 5JP
UK
DEPOSITARY
J.P. Morgan Europe Limited
25 Bank Street
London
E14 5JP
UK
AUDITOR
Deloitte LLP
Hill House
1 Little New Street
London
EC4A 3TR
UK
96 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Board of Directors
Paul Manduca
(a)
(Chairman); 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 Invest
There 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
Tr u s t PLC by purchasing shares in the stock market through a stockbroker or authorised Financial Adviser.
Financial Advice
We 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
TickerTEM LN
ISINGB0008829292
SEDOL882929
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 con-
tact them directly to find out what arrangements they offer.
Shareholder Information
www.temit.co.uk Templeton Emerging Markets Investment Trust PLC 97
Glossary of Alternative Performance Measures
Net asset value 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. Total return measures allow
shareholders to compare performance between investment
trusts where the dividend paid may differ.
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
(see page 1). Total return is calculated using published
daily NAVs.
To calculate capital return, revenue earnings are excluded
(see page 2).
Share price 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. Total return measures allow shareholders to
compare performance between investment trusts where
the dividend paid may differ.
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 (see page 1).
To calculate capital return, revenue earnings are excluded
(see page 2).
Benchmark return
The 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 may be some divergence between the
Company’s performance and that of the benchmark.
Total return on the benchmark is calculated 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 which time the shares were quoted
ex-dividend in sterling terms (see page 1).
Capital return on the benchmark is calculated the same
way as total return, but with no dividend reinvestment
(see page 2).
Benchmark performance source: MSCI.
Share price discount 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 (see page 2). As at 31 March 2019
the Company’s share price was 766.0 pence and the NAV
per share was 842.5 pence, therefore the discount was
(842.5 – 766.0)/842.5 = 9.1% (31 March 2018: 12.2%).
If the share price is lower than the NAV per share, the
shares are said to be trading at a discount. If the share price
is higher than the NAV per share, the shares are said to be
trading at a premium.
Gearing/net gearing
A term used to describe the process of borrowing money
for investment purposes in the expectation that the returns
on the investments purchased using the borrowings will
exceed the costs of those borrowings. For example, a figure
of 5% means that the shareholder funds are exposed to
NAV returns by an additional 5%, positive or negative, as a
result of borrowings (see page 2).
Ongoing charges ratio
The OCR represents the annualised ongoing charges
(excluding finance costs, transaction costs and taxation)
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 1.02%
(31 March 2108: 1.12%).
Gross total return
Gross total return is net asset value total return before the
deduction of expenses (see page 26).
Excess return
The difference between the gross total return of TEMIT
and the benchmark total return (see page 26).
Residual
A 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 (see page 26).
Market capitalisation
The 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 (see page 38).
98 Templeton Emerging Markets Investment Trust PLC www.temit.co.uk
Client Dealer Services
freephone 0800 305 306
tel +44 (0)20 7073-8690
fax +44 (0)20 7073-8701
enquiries@franklintempleton.co.uk
www.temit.co.uk
ANNUAL REPORT AND AUDITED ACCOUNTS TO 31 MARCH 2019
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
© 2019 Franklin Templeton Investments. All rights reserved. TEMIT ANNRP 03/19
---
Please tick here if this proxy appointment is one of multiple appointments being made. For the appointment of more than one proxy please
refer to Note 4 below.
or failing him/her, the Chairman of the meeting, as my/our proxy to attend, speak and vote on my/our behalf as indicated below at the Annual
General Meeting of the Company to be held on 11 July 2019 at 12 noon at The Honourable Artillery Company, City Road, London EC1Y 2BQ
and at any adjournment thereof.
Please indicate with an ‘‘X’’ in the spaces below how you wish your votes to be cast on the resolutions or if you wish to abstain from voting. Subject
to any voting instructions so given the proxy will vote, or may abstain from voting, on any of the resolutions and any other business conducted
at the meeting as they may think fit.
FORM OF PROXY FOR USE AT THE ANNUAL GENERAL MEETING OF TEMPLETON
EMERGING MARKETS INVESTMENT TRUST PLC TO BE HELD ON 11 JULY 2019
For use by ordinary shareholders only
The following information will be required should you elect to appoint your proxy via the Internet.
Shareholder Reference Number
This Form of Proxy should only be completed if you do not intend to use the option of electronic proxy appointment (see Notes 12 and 13 –
for UK registered investors only, see Note 14 – for New Zealand registered investors only).
I/We being a member/s of Templeton Emerging Markets Investment Trust PLC (the “Company”) hereby appoint the following person
Number of shares
RESOLUTIONS FOR AGAINST ABSTAIN
1. To receive and adopt the Directors’ and Auditor’s Reports and financial statements for the year
ended 31 March 2019.
2. To approve the Directors’ Remuneration Report for the year ended 31 March 2019.
3. To declare a final dividend of 11.00 pence per share for the year ended 31 March 2019.
4. To re-elect Paul Manduca as a Director.
5. To re-elect Beatrice Hollond as a Director.
6. To re-elect Charlie Ricketts as a Director.
7. To re-elect David Graham as a Director.
8. To re-elect Gregory E Johnson as a Director.
9. To re-elect Simon Jeffreys as a Director.
10. To appoint Ernst & Young LLP as auditor of the Company, to act until the conclusion of the
next general meeting of the Company at which audited accounts are laid before the members.
11. To authorise the Directors to determine the auditor’s remuneration.
12. To authorise the Company to continue in being as an Investment Trust for the period
expiring at the end of the annual general meeting of the Company to be held in 2024.
13. To authorise the Directors to allot shares.
14. To disapply pre-emption rights in relation to the allotment of shares by the Directors.
15. To authorise the Company to purchase its own shares.
16. That a general meeting, other than an annual general meeting, may be called on not less than
14 clear days’ notice.
Dated Signature
(For Corporates please add full name and designation)
+
+
+
+
TEMIT_NZ_Proxy
746354 NZ Proxy.indd 107/06/2019 11:27:45
Notes:
1. As a member of the Company registered on the register of members at 5.00pm on 8 July 2019 (NZ time) you are entitled to appoint a proxy
to exercise all or any of your rights to attend, speak and vote at an Annual General Meeting of the Company. You can only appoint a proxy
using the procedures set out in these notes and the notes to the notice of the Annual General Meeting.
2. A proxy or proxies need not be a member(s) of the Company but must attend the meeting to represent you. To appoint as your proxy a
person other than the Chairman of the meeting, insert their full name in the box. If you sign and return this Form of Proxy with no name
inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone other than
the Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions.
3. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend
the meeting in person, your proxy appointment will automatically be terminated.
4. UK registered investors may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
You may not appoint more than one proxy to exercise rights attached to any one share. Please contact the Company’s Registrar, Equiniti
Limited at Aspect House, Lancing, West Sussex BN99 6DA to appoint more than one proxy.
5. To direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. To abstain from voting on a resolution, select the
relevant ‘‘Abstain’’ box. A vote abstained is not a vote in law, which means that the vote will not be counted in the calculation of votes for or
against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will
vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.
6. For UK registered investors, this Form of Proxy must be completed and signed and lodged with the Company’s Registrar, Equiniti, Aspect
House, Lancing, West Sussex BN99 6DA to arrive not later than 12 noon on 9 July 2019 (UK time). For New Zealand registered investors,
this Form of Proxy must be completed and signed and lodged with the Company’s New Zealand Registrar, Computershare, Private Bag
92119, Victoria Street West, Auckland 1142, New Zealand (if sent by post) or to Computershare, Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622, New Zealand (if delivered in person or by courier) to arrive not later than 5.00 pm on 8 July 2019 (New Zealand time).
7. In the case of a corporation, this Form of Proxy must be executed under its common seal or under the hand of an attorney or officer duly
authorised.
8. Any power of attorney or any other authority under which this Form of Proxy is signed (or a duly certified copy of such power or authority)
must be included with this Form of Proxy, along with a certificate of non-revocation relating to the Power of Attorney for New Zealand
registered investors.
9. In the case of joint holders, the signature of any one joint holder is sufficient. If more than one of the joint holders purports to appoint a
proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names
of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).
10. Any alterations to this Form of Proxy should be initialled.
11. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take
precedence.
12. Electronic proxy appointment for non-CREST members (for UK registered investors only)
Shareholders who prefer to register the appointment of their proxy electronically via the Internet can do so through the Equiniti website
at www.sharevote.co.uk where full instructions on the procedure are given. The personal Voting ID, Task ID and Shareholder Reference
Number printed on this Form of Proxy will be required to use this electronic proxy appointment system.
Alternatively, shareholders who have already registered with Equiniti’s online portfolio service, Shareview, can appoint their proxy
electronically by logging on to their portfolio at www.shareview.co.uk and clicking on ‘‘Company Meetings’’. A proxy appointment made
electronically will not be valid if sent to any address other than those provided or if received after 12 noon on 9 July 2019 (UK time). Please
note that any electronic communication found to contain a computer virus will not be accepted.
13. Electronic proxy appointment for CREST members (for UK registered investors only)
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the
Annual General Meeting and any adjournments thereof by using the procedures described in the CREST Manual which can be viewed at
www.euroclear.com. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action
on their behalf. Further details regarding electronic proxy appointment for CREST members (for UK registered investors only) are contained
in Note 12 to the Notice of Meeting on page 91 of the Company’s Annual Report and Audited Accounts, 31 March 2019. To be valid, the
appropriate CREST message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to
a previously appointed proxy, must be transmitted so as to be received by our agent Equiniti, CREST participant ID RA19, by 12 noon on
9 July 2019.
14. Electronic proxy appointment (for New Zealand registered investors only)
Shareholders who prefer to register the appointment of their proxy electronically via the Internet can do so through the Computershare
website at www.investorvote.co.nz, and enter the Control Number 102532, full instructions on the procedure are given. You will need your
CSN/Shareholder Number and postcode or country of residence (if outside New Zealand) to securely access InvestorVote and then follow
the prompts lodge your vote or appoint your proxy online. A proxy appointment made electronically will only be valid if registered on the
web address provided and if received by 5.00 pm on 8 July 2019 (NZ time). Please note that any electronic communication found to contain
a computer virus will not be accepted. New Zealand registered shareholders cannot appoint more than one proxy when registering the
appointment of their proxy electronically.
15. You may not use any electronic address provided in this Form of Proxy to communicate with the Company for any purpose other than those
expressly stated.
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NZ June 2019
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC (“TEMIT”
and the “Company”) Your Guide to Voting
The aim of this document is to provide a simple guide to completing your Form of Proxy by addressing the questions the
Company is most frequently asked about the voting procedure.
When does the Form of Proxy need to be received by?
Your correctly completed Form of Proxy, together with any other required information, must be received (New Zealand time):
By 5.00pm on 8 July 2019 to Computershare Investor Services Limited, Private Bag 92119, Victoria Street West,
Auckland 1142, New Zealand, or emailed to corporateactions@computershare.co.nz.
By 5.00pm on 8 July 2019 to Computershare Investor Services Limited, Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622, New Zealand for deliveries in person or by courier.
By 5.00pm on 8 July 2019 for sending your instructions online via the Computershare website.
www.investorvote.co.nz and enter the Control Number 102532.
How can I find out the number of shares I hold?
The number of shares you hold should appear on your recent Securities Transaction Statement or you can contact the New
Zealand Registrar, Computershare on 09 488 8777 (New Zealand only) or +64 9 488 8777 (for outside New Zealand).
What is a Proxy and why do I need it?
Many people find it difficult to attend a meeting in person to make their wishes known. To overcome this they provide a
written authorisation for someone, a “Proxy” to attend, speak and vote at the meeting on their behalf.
You can choose anybody to act as your Proxy. They do not need to be involved with TEMIT, but they must be present at
the meeting. In most instances, and particularly because of the need to be present at the meeting, shareholders choose to
appoint the Chairman of the Meeting to act as their Proxy.
How do I appoint a Proxy?
You can appoint a Proxy by post, by completing the Form of Proxy enclosed in this pack or through the Internet. (See “Can I
register a proxy online” below.) Please note you do not need to complete the paper Form of Proxy if you are voting online but
you will need some of the information contained on it.
Can I appoint more than one Proxy?
No, each shareholder can only appoint one Proxy and joint holders are counted as one shareholder in this instance.
Do I need to tell you if I am coming to the meeting?
You do not have to tell us if you are attending the meeting in person, you can just turn up. It is, however, very helpful if we
know in advance the number of people who may wish to attend so we can ensure we have enough capacity and copies of
documentation. The meeting will be held on 11 July 2019 at 12 noon (British Summer Time) at, The Honourable Artillery
Company, City Road, London EC1Y 2BQ.
If you have appointed a Proxy but later decide to attend the meeting in person, your Proxy appointment will be cancelled.
What happens if the shares are held in joint names?
Only one shareholder needs to attend the meeting or sign the Form of Proxy. If more than one shareholder wants to appoint
a Proxy for the shares, we will take our instructions from the first-named holder on the Company register.
What parts of the form do I need to complete?
When you complete the form you need to make sure that you indicate how you would like your vote to be cast by putting
a cross (“X”) in the “for”, “against” or “abstain” boxes next to each resolution. You may only choose one option for each
resolution. If none of the boxes next to a resolution are marked your Proxy may vote or abstain from the voting as he/she
thinks fit.
If you are appointing someone other than the Chairman of the meeting to act as your Proxy you also need to add the full
name of your chosen Proxy in block capitals in the box next to the number of shares.
What do I do if I make a mistake on the form?
If you make a mistake, simply cross the mistake out and initial it. If the mistake is crossed out but not initialled we will not be
able to accept your instruction.
Voting Guide_NZ 744193
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NZ June 2019
How do I vote if I am acting under an authority like a power of attorney?
Complete the form in the usual way; however, when you return it you must attach the Power of Attorney and a non-
revocation certificate relating to that Power of Attorney, (or certified copies of those documents) that have been used to
support your signature on the form.
Who can certify a copy of the authority documents?
A solicitor or notary public can provide the certification required.
Who can vote on behalf of shares held by the company?
If the shares are held on behalf of a company, the Form of Proxy must be signed on its behalf by an officer of the company, an
attorney for the company or executed under its common seal. The signer’s name must be printed in capital letters underneath
the signature, along with the capacity under which they signed the form, including job title.
What happens if I do not send my form back?
If you do not send the form back and do not attend the AGM to vote in person, you forego your right to influence the
direction TEMIT takes in future. You will not lose any shares owned by you if you do not exercise your right to vote.
What do I do once I have completed the form?
You should send/deliver your completed, signed Form of Proxy, along with any authority under which it is signed, to the
Company’s registrars, Computershare Investor Services Limited, Private Bag 92119, Victoria Street West, Auckland 1142,
New Zealand. The form must arrive by 5.00pm (New Zealand time) on 8 July 2019 for your instructions to be taken into
consideration.
If you are delivering the Form by hand or courier, please deliver it to: Computershare, Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622, New Zealand by 5.00pm (New Zealand time) on 8 July 2019.
Can I register a proxy online?
Yes, if you prefer you can register your Proxy via the Computershare website: www.investorvote.co.nz and enter the Control
Number 102532. You will however need your CSN (Common Shareholder Number) to use this electronic Proxy appointment
system. It is printed on your personalised Form of Proxy included in this pack. You will also need your postal code. Please
contact Computershare on 09 488 8777 (New Zealand only) or +64 9 488 8777 (for outside New Zealand) for assistance.
Your electronic Proxy instructions will only be valid if registered on the web address provided and received by 5.00pm
(New Zealand time) on 8 July 2019. Please note any electronic communication found to contain a computer virus will not
be accepted.
Where can I get more information about the resolutions I am voting on?
You should refer to the Annual Report enclosed in this pack or speak to your independent financial adviser.
744193 Guide NZ.indd 207/06/2019 10:08:52
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TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
Directors:
Paul Manduca (Chairman)
David Graham
Beatrice Hollond
Simon Jeffreys
Gregory E Johnson
Charlie Ricketts
5 Morrison Street
Edinburgh EH3 8BH
Client Dealer Services
Freephone: 0800 305 306
Tel: +44 (0) 20 7073 8690
Fax: +44 (0) 20 7073 8701
E-mail: enquiries@franklintempleton.co.uk
www.franklintempleton.co.uk
www.temit.co.uk
11 June 2019
Templeton Emerging Markets Investment Trust PLC (“TEMIT”) – 2019 Annual Report
Dear Shareholder
The TEMIT Annual Report for the year to 31 March 2019 is now available on Franklin Templeton’s website
www.temit.co.uk. The report explains how TEMIT has performed during the reporting period, includes the
audited accounts for the financial year to 31 March 2019 and also provides commentary on the Investment
Managers’ outlook.
Annual General Meeting (“AGM”)
I would like to take this opportunity to invite all shareholders to attend TEMIT’s AGM. The meeting will be held
atThe Honourable Artillery Company, City Road, London EC1Y 2BQ at 12 noon on Thursday 11 July
2019.More details of this meeting can be found on page 91 of this Report.
We welcome all shareholders to attend the meeting in person and encourage all shareholders to vote on the
resolutions under consideration. Only those members registered on the Company’s register at 5.00 pm on 8 July
2019 or their duly authorised proxies are entitled to attend the meeting. Please note that, as the meeting venue is a
secure site, shareholders or their proxies will be required to provide identification before being allowed into the
meeting venue. Any shareholder or proxy who fails to provide satisfactory identification will not be allowed into
the meeting venue. If shareholders wish to bring a guest to the meeting, they should contact the Registrars in
advance of the meeting and arrange for the guest to be invited to the meeting.
Shareholders may appoint a proxy to vote on your behalf by visiting www.investorvote.co.nz and entering the
control number 102532 or by mailing a completed proxy form to Computershare Investor Services Limited,
Private Bag 92119, Auckland 1142 or to Computershare Investor Services Limited, Level 2, 159 Hurstmere
Road, Takapuna,Auckland 0622, New Zealand for deliveries in person or by courier.All proxy votes must be
received by 5.00 pm on 8 July 2019 (New Zealand Time).
More Information?
If you have any questions about the Annual Report, please email enquiries@franklintempleton.co.uk.
If you have any questions about the shares you hold in TEMIT please contact Computershare by calling
09 488 8777 or by email to enquiry@computershare.co.nz
If you wish to discuss your investment options more generally, we recommend that you consult an authorised
professional financial adviser.
Yours sincerely
Paul Manduca
Chairman
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
REGISTERED IN SCOTLAND, NO. SC 118022
REGISTERED OFFICE: 5 MORRISON STREET, EDINBURGH EH3 8BH
AN INVESTMENT COMPANY WITHIN THE MEANING OF SECTION 833 OF THE COMPANIES ACT 2006
TEMIT_NZ_LETTER
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.