Artemis Global Emerging Markets Fund

For the period from 8 April 2015 to 31 August 2015 Investment objective and policy The objective of the Artemis Global Emerging Markets Fund (the subfund ) is to achieve positive long-term returns through a combination of capital growth and income. The subfund invests principally in companies listed, quoted and/or traded in emerging market countries and in companies which are headquartered or have a significant part of their activities in emerging markets which are quoted on a regulated market in developed countries. The authorised corporate director ( ACD ) actively manages the portfolio in order to achieve the objective. The ACD will not be restricted in respect of choice of investments either by company size, industry, or the geographical split of the portfolio. The sub-fund may also invest in other transferable securities, fixed interest securities, derivative instruments, units of collective investment schemes, money market instruments, warrants, cash and near cash. The sub-fund may also use derivatives and other techniques for efficient portfolio management. Risk and reward profile Typically lower rewards Lower risk Typically higher rewards Higher risk This indicator is based on historical data and may not be a reliable indication of the future risk profile of the sub-fund. The sub-fund is in the category shown because it invests in the shares of a wide range of companies in emerging markets, which carries a degree of risk. The risk category shown is not guaranteed and may change over time. A risk indicator of 1 does not mean that the investment is risk free. The indicator is not a measure of the possibility of losing your investment. The risks of investing in the sub-fund include: The price of shares, and the income from them, can fall and rise because of stock market and currency movements. Stock market prices, currencies and interest rates can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. The sub-fund s assets will be invested in new, emerging markets. Investment in emerging markets can involve greater risk than that usually associated with more established markets. This means that aboveaverage rises and falls in share prices can be expected. The sub-fund s assets will primarily be invested in a currency other than the sub-fund s accounting currency (sterling). The value of these assets, and the income from them, may decrease if the currency falls in relation to sterling, in which the subfund is valued and priced. Investments in fixed interest securities are subject to market and credit risk and will be impacted by movements in interest rates. Interest rate movements are determined by a number of economic factors, in particular market expectations of future inflation. The sub-fund may hold derivatives with the aim of profiting from falling prices. If the related assets rise in value the sub-fund will lose money. Fund information Launch date 8 April 2015 Share types I distribution GBP I accumulation EUR I accumulation GBP I accumulation USD IA sector IA Global Emerging Markets Historic yield * - Accounting dates 31 August & Last day in February Distribution date 30 April * As it is less than 12 months since the launch of the sub-fund, no historic yield is present. ART/GEM/1015 1

Investment review Fund dropped 19.9%*, versus a fall of 20.8%* in the benchmark. Volatility will bring opportunities. Performance A tough start Since its launch on 8 April 2015, the fund has fallen in absolute terms, although it has outperformed the market. The net asset value dropped by 19.9%* versus a decline in the MSCI Emerging Markets Index of 20.8%* (see charts below). This places the fund in the second quartile of funds investing in emerging markets during the period. 1,000 950 900 850 800 750 Artemis Global Emerging Markets (class I accumulation GBP shares) MSCI Emerging Markets Index May 2015 Aug 2015 Fund relative to benchmark index 103 102 101 100 99 98 97 96 Artemis Global Emerging Markets Fund Apr May Jun Jul Aug SmartGARP Evidence-based investing The Artemis Global Emerging Markets Fund is one of a number of funds which rely heavily on our proprietary stock screening tool. SmartGARP scrutinises a global universe of 6,500 stocks for those whose valuation appears out of line with their growth prospects and which have a catalyst that might cause investors to re-appraise their views about the company. SmartGARP helps us both by singling out potentially undervalued stocks, but also by monitoring whether the reasons for investing in our existing holdings are still valid. We have used this tool to manage funds for 11 years. In that time, we have found emerging markets to be a particularly fertile hunting ground for our process. So we launched the Artemis Global Emerging Markets Fund to capitalise on this. Review Regretful but (somewhat) reassured The launch of the fund coincided with a period of renewed interest in emerging markets among investors. Signs of a reversal in performance relative to developed markets and increasing asset flows into the region s equity markets provided a welcome backdrop. But, in April, it also led to sharply higher volatility. The night before our launch, for instance, Chinese equities jumped by 6%, with a quarter of the members of the Hang Seng China Enterprises Index rising by 10% or more. Considering we were planning to invest significantly in China, this was a cause for regret. But the extent of the valuation discounts on offer in many parts of the market persuaded us to proceed and we placed just under 30% of the fund s assets there. Our investments in China were wide-ranging, from banks to utilities, (railway) construction and telecoms. They included Chongqing Rural Commercial Bank, trading on a price-earnings (p/e) ratio of 6.0, with a return on equity of 16%, and yielding 4.6%; Huadian Power International (p/e of 10.1, ROE of 16.3% and dividend yield of 3.7%); and China Mobile (p/e of 14.8, ROE of 13.5% and dividend yield of 2.9%). Investors enthusiasm for emerging markets in general, and for China in particular, proved short-lived, however. As evidence accumulated that the Chinese economy was slowing more quickly than expected, sentiment quickly shifted from bullish to bearish. From their relative peak in late April, emerging markets went on to underperform global equities by 20% by the end of the period under review. On a relative basis, this same period from May to August turned out to be the most successful for the fund. We outperformed the MSCI Emerging Markets Index by 2.0%*. The principal drivers were our big underweight in the (poorly performing) technology sector and effective stock-picking in the energy and food & beverage sectors. Examples here include KT&G (up 10% during the period), Polish agricultural commodity producer Kernel (+4%) and Polish oil refiner Polski Koncem Naftowy Orlen (+11%). Transactions Swapping technology for energy As both economic and corporate newsflow in China deteriorated during the second quarter, we reduced our exposure to Chinese equities. More generally there was a marked shift in the fund out of Asia and into Europe and South America. At the sector level, we increased our underweight position in technology increased from 4% to 10%: already a well-liked sector among our peers, uninspiring updates on earnings from SK Hynix, Lenovo and Taiwan Semiconductor Manufacturing prompted us to sell our holdings. Similarly, having started with * Source: Lipper Limited, class I accumulation GBP shares, mid to mid in sterling with net income reinvested to 31 August 2015. Benchmark is MSCI Emerging Markets Index (GBP). 2

a 5% underweight position in banks, disappointing results prompted us to cut our exposure even further. Bank of China, Itau Unibanco of Brazil and Standard Bank of South Africa all left the portfolio and we ended the period with a 9% underweight. On the positive side, we used the capital freed up by these sales to bottom fish in the energy sector buying Sasol (South Africa) and Tupras (Turkey). We also added to our holdings in food & beverages, with KT&G (South Korea) and Brazilian brewer Ambev. After these changes, the fund s principal geographic exposures are overweight positions in Turkey and Taiwan, and underweights in India and South Africa. At the sectoral level, we prefer industrials, utilities and energy to technology and banks. Outlook Volatility as opportunity The volatility witnessed recently in emerging market equities does not worry us unduly. As investors who focus on the facts (as in the financial characteristics of companies), we rather think that higher volatility increases the potential to add value by being more rigorous and less emotional. But if it remains high, or even turns into outright panic, there will be an increase in the volatility of the fund s relative performance: it is inevitable for a fund like ours, whose overlap with its benchmark is typically between 10% and 20%, and must be accepted as a fact of life. Having said that, we are encouraged by the fund s portfolio s excellent financial characteristics. It trades on a p/e ratio of a mere 9.3x compared with 10.6x for the market. It also offers a dividend yield some 17% higher than its benchmark. We therefore remain confident about the fund s prospects. Peter Saacke and Raheel Altaf Fund managers 3

Investment information Portfolio split 31 August 2015 Valuation % of net assets South Korea 14.78 Cayman Islands 11.79 China 10.25 Taiwan 7.62 Brazil 6.18 Hong Kong 5.74 South Africa 5.57 Turkey 5.06 Netherlands 4.71 Mexico 3.72 Thailand 3.41 Russia 3.39 Malaysia 2.44 Philippines 2.18 Poland 1.67 Luxembourg 1.10 United Arab Emirates 0.83 Oman 0.78 Hungary 0.67 Jersey 0.66 Czech Republic 0.60 Indonesia 0.40 Net other assets 6.45 Net assets 100.00 Ten largest long equity positions Investment 31 August 2015 Valuation % of net assets China Mobile Ltd. 2.62 KT&G Corp. 1.91 Sasol Ltd. 1.67 Korea Electric Power Corp., ADR 1.61 Gazprom PAO, ADR 1.54 Korea Investment Holdings Co. Ltd. 1.50 Siam Cement PCL (The) 1.44 BOC Hong Kong Holdings Ltd. 1.44 Ambev SA 1.43 Gruma SAB de CV class B 1.40 4

Comparative tables Fund sizes & net asset values Date Net asset value of sub-fund ( ) Net asset value per share Shares in issue 31 August 2015 18,025,206 I distribution GBP 80.01p 134,130 I accumulation EUR 79.41c 10,000 I accumulation GBP 80.01p 22,381,207 I accumulation USD 82.39c 10,000 Net revenue distribution & share price range Year Net revenue per share Highest price Lowest price I distribution GBP 2015* - 101.30p 74.76p I accumulation EUR 2015* - 102.21c 74.40c I accumulation GBP 2015* - 101.30p 74.77p I accumulation USD 2015* - 101.17c 78.64c Net revenue includes all amounts paid and payable in each calendar year. * From 8 April 2015 to 31 August 2015. Ongoing charges Class 31 August 2015 I distribution GBP 1.00% I accumulation EUR 1.00% I accumulation GBP 1.00% I accumulation USD 1.00% Ongoing charges shows the current operating expenses of each share class as a percentage of the net assets of that class. Fund performance Since launch * 3 months Artemis Global Emerging Markets Fund (19.9) (15.9) MSCI Emerging Markets Index (GBP) (20.8) (17.9) Sector average (19.5) (17.0) Position in sector 26/51 18/51 Quartile 2 2 * Data from 8 April 2015. Source: Lipper Limited, class I accumulation GBP shares, mid to mid in sterling with net income reinvested to 31 August 2015. All performance figures show total return percentage growth. Sector is IA Global Emerging Markets, universe of funds is those reporting net of UK taxes. Value of 1,000 invested at launch to 31 August 2015 1,050 1,000 MSCI Emerging Markets Index 950 900 850 Artemis Global Emerging Markets Fund (class I accumulation GBP shares) 800 750 Apr 2015 May 2015 Jun 2015 Jul 2015 Aug 2015 5

General information Report & accounts This document is the Short Report of the Artemis Global Emerging Markets Fund for the period from 8 April 2015 to 31 August 2015. The Half-Yearly Report for Artemis Investment Funds ICVC can be obtained from the ACD s website artemis.co.uk, by contacting the Client Services team on 0800 092 2051 or by writing to the ACD s address below. Authorised Corporate Director Artemis Fund Managers Limited * Cassini House 57 St James s Street London SW1A 1LD Dealing information: Unit Trust Department Artemis Fund Managers Limited PO Box 9688 Chelmsford CM99 2AE Telephone: 0800 092 2051 Website: artemis.co.uk Investment adviser Artemis Investment Management LLP * Cassini House 57 St James s Street London SW1A 1LD Depositary National Westminster Bank Plc 135 Bishopgate London EC2M 3UR Registrar International Financial Data Services (UK) Limited * IFDS House, St Nicholas Lane Basildon Essex SS15 5FS Auditor Ernst & Young LLP Ten George Street Edinburgh EH2 2DZ * Authorised and regulated by the Financial Conduct Authority (FCA), 25 The North Colonnade, Canary Wharf, London E14 5HS. Authorised by the Prudential Regulation Authority (PRA), 20 Moorgate, London EC2R 6DA and regulated by the PRA and the FCA. 6

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