## Annual Report and Accounts ## to 31 March 2024 ## Introducing TEMIT Launched 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 traded on both the London and New Zealand stock exchanges. From its launch to 31 March 2024, TEMIT’s net asset value (‘NAV’) total return was +4,155.4% compared to the benchmark total return of +1,752.0%. The Company is governed by a Board of Directors who are committed to ensuring that shareholders’ best interests, considering the wider community of stakeholders, 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. Winner 2023 and 2024 ## Your future is emerging ## TEMIT offers you easy access to the dynamic growth ## potential of emerging markets. | Access to | 35-year track | | --- | --- | | growth markets | record | | TEMIT offers investors a simple way | TEMIT is the first emerging markets | | to invest in the growth potential of | investment trust and has delivered a | | dynamic economies in Asia, Latin | NAV total return of +4,155.4% over its | | America, the Middle East and | 35-year life. It is also the largest with | | Europe. Emerging markets currently | £2.0 billion assets under | | generate 65% of global growth and | management. | (a) that is forecast to increase . | Best | Investment | | --- | --- | | ideas portfolio | expertise | | TEMIT’s portfolio is diversified across | With over 70 investment | | approximately 80 high quality | professionals spread across | | companies that include the very best | 14countries our Investment | | investment opportunities. | Managers can identify investment | opportunities beyond the mainstream, often before they are recognised by the broader market. ### ESG Shareholder- ### analysis friendly features Structured analysis of Environmental, As a stock market listed investment Social and Governance (‘ESG’) trust, this offers additional features factors is part of the research and benefits for shareholders process but is not binding on stock including, potentially, dividends, selection. gearing, and independent board governance. (a) Source: IMF WEO, October 2023, the latest available. All other data sourced: Franklin Templeton as at 31 March 2024. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 3 # Financial highlights | | 2024 | 2023 | 3 Years Cumulative | 5 Years Cumulative | 10 Years Cumulative | | --- | --- | --- | --- | --- | --- | | Net Assets Value Total Return (cum-income)^{(a)} | 7.9% | 0.8% | (10.0)% | 23.4% | 89.5% | | Share Price Total Return^{(a)} | 4.9% | 0.5% | (16.9)% | 16.5% | 84.7% | | MSCI Emerging Markets Index^{(a)(b)} | 5.9% | (4.9)% | (6.5)% | 15.1% | 76.5% | | Proposed Total Ordinary Dividend^{(c)} | 5.00_{p} | 5.00_{p} | | | | ![img-0.jpeg](img-0.jpeg) (a) A glossary of alternative performance measures is included on pages 115 and 116. (b) Source: MSCI. The Company's benchmark is the MSCI Emerging Markets (Net Dividends) Index. (c) An annual ordinary dividend of 5.00 pence per share for the year ended 31 March 2024 has been proposed. This comprises the interim dividend of 2.00 pence per share paid by the Company on 26 January 2024 and the proposed final dividend of 3.00 pence per share. 4 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk ## Contents ### 01. Strategic Report Strategic report 7 10 year record 8 Chairman’s statement 9 The investment managers 13 The investment managers’ report 14 The investment managers’ process 30 Business review 39 ### 02. Governance Directors’ report 51 Directors’ remuneration report 62 Report of the audit and risk committee 67 Statement of directors’ responsibilities 73 ### 03. Financial Review Independent auditor’s report 75 Statement of comprehensive income 83 Statement of financial position 84 Statement of changes in equity 85 Statement of cash flows 86 Notes to the financial statements 88 Securities financing transactions - unaudited 106 ### 04. Investor Information Notice of meeting 109 Shareholder communications 112 General information 113 Shareholder information 114 India Glossary of alternative performance measures 115 ## 01. ## Strategic ## Report 6 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report # Strategic report The Directors present the Strategic Report for the year ended 31 March 2024, 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, and having regard for the interests of all stakeholders, by bringing together in one place key information about the Company's strategy, the risks it faces, how it is performing and the outlook. ## Financial Summary 2023–2024 | | Year Ended 31 March 2024 | Year Ended 31 March 2023 | Change | | --- | --- | --- | --- | | Net Asset Value Total Return (Cum-Income)^{(a)} | 7.9% | 0.8% | | | Share Price Total Return^{(a)} | 4.9% | 0.5% | | | MSCI Emerging Markets (Net Dividends) Index Total Return^{(a)} | 5.9% | (4.9)% | | | Total Net Assets (£ millions) | 2,034.9 | 2,017.5 | 0.9% | | Net Asset Value (Pence per Share) | 182.5 | 174.1 | 4.8% | | Share Price (Pence per Share) | 154.4 | 152.2 | 1.4% | | Share Price Discount to Net Asset Value at Year End^{(a)} | 15.4% | 12.6% | | | Average Share Price Discount to Net Asset Value Over the Year^{(a)} | 13.9% | 13.0% | | | Ordinary Dividend^{(b)} (Pence per Share) | 5.00 | 5.00 | | | Revenue Earnings^{(c)} (Pence per Share) | 5.18 | 5.72 | | | Net Gearing^{(c)} | 0.0% | 0.0% | | | Ongoing Charges Ratio^{(a)} | 0.97% | 0.98% | | Source: Franklin Templeton and FactSet. (a) A glossary of alternative performance measures is included on pages 115 and 116. (b) An annual ordinary dividend of 5.00 pence per share for the year ended 31 March 2024 has been proposed. This comprises the interim dividend of 2.00 pence per share (2023: 2.00 pence per share) paid by the Company on 26 January 2024 and a proposed final dividend of 3.00 pence per share (2023: 3.00 pence per share). (c) The revenue earnings per share figures are shown in the Statement of Comprehensive Income on page 83 and Note 7 of the Notes to the Financial Statements. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 7 01. Strategic Report # 10 year record 2014-2024 | Year Ended | Total Net Assets (£m) | NAV^{(a)} (Pence per Share) | Share Price^{(a)} (Pence per Share) | Year-End Discount^{(b)} (%) | Revenue Earnings^{(a)} (Pence per Share) | Annual Dividend^{(a)} (Pence per Share) | Ongoing Charges Ratio^{(b)} (%) | | --- | --- | --- | --- | --- | --- | --- | --- | | 31 March 2014 | 1,913.6 | 118.4 | 105.4 | 10.9 | 1.83 | 1.45 | 1.30 | | 31 March 2015 | 2,045.0 | 128.2 | 111.2 | 13.3 | 1.86 | 1.65 | 1.20 | | 31 March 2016 | 1,562.3 | 104.8 | 90.8 | 13.4 | 1.41 | 1.65 | 1.22 | | 31 March 2017 | 2,148.1 | 152.6 | 132.3 | 13.3 | 1.32 | 1.65 | 1.20 | | 31 March 2018 | 2,300.8 | 169.2 | 148.6 | 12.2 | 3.18 | 3.00 | 1.12 | | 31 March 2019 | 2,118.2 | 168.5 | 153.2 | 9.1 | 3.45 | 3.20 | 1.02 | | 31 March 2020 | 1,775.7 | 146.5 | 131.4 | 10.3 | 4.88 | 3.80^{(c)} | 1.02 | | 31 March 2021 | 2,591.3 | 219.4 | 202.4 | 7.7 | 5.73 | 3.80^{(c)} | 0.97 | | 31 March 2022 | 2,100.4 | 178.2 | 156.4 | 12.2 | 3.44 | 3.80 | 0.97 | | 31 March 2023 | 2,017.5 | 174.1 | 152.2 | 12.6 | 5.72 | 5.00 | 0.98 | | 31 March 2024 | 2,034.9 | 182.5 | 154.4 | 15.4 | 5.18 | 5.00^{(d)} | 0.97 | ## 10 Year Performance 2014-2024 NAV, Share Price and Benchmark Total Return$^{(a)}$ ![img-1.jpeg](img-1.jpeg) Source: Franklin Templeton and FactSet. (a) Comparative figures for financial years 2014 to 2021 have been retrospectively adjusted following the sub-division of each existing ordinary share of 25 pence into five ordinary shares of 5 pence each on 26 July 2021. (b) A glossary of alternative performance measures is included on pages 115 and 116. (c) Excludes the special dividend of 0.52 pence per share for the year ended 31 March 2020 and the special dividend of 2.00 pence per share for the year ended 31 March 2021. (d) An annual ordinary dividend of 5.00 pence per share for the year ended 31 March 2024 has been proposed. This comprises the interim dividend of 2.00 pence per share paid by the Company on 26 January 2024 and a proposed final dividend of 3.00 pence per share. (e) Rebased to 100 at 31 March 2014. 8 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report # Chairman's statement ![img-2.jpeg](img-2.jpeg) ![img-3.jpeg](img-3.jpeg) **'Over the year under review, our Investment Managers produced a commendable +7.9% NAV total return, which was 2.0 percentage points higher than the benchmark index.'** **Angus Macpherson** Chairman It is a great pleasure to deliver to you my first statement since assuming the role of Chairman in January. All of the Board members would like to thank my predecessor Paul Manduca for his excellent contribution in leading the Board and steering the Company over the last nine years. We wish Paul well in his current and future endeavours. I have been involved with emerging markets for most of my career. During that time, I have considered Templeton Emerging Markets Investment Trust, your Company, as a pioneer of the asset class and the most widely recognised and admired investment vehicle of its type. Its achievements speak for themselves: from its launch 35 years ago, it has provided a NAV total return of +4,155.4% compared to a benchmark total return over the same period of only +1,752.0%. At the moment, some of the forces that drove this performance – globalisation, free trade and geopolitical stability following the fall of the Berlin wall – are under threat. China, the largest and most successful emerging market, is a cause of increasing alarm to western governments. This has translated into less compelling returns for the asset class. Since 2000 emerging market equities have returned more to shareholders than world stock markets overall, but most of that outperformance occurred in the first decade of the 21st century and in the most recent ten years this trend has reversed. Your Manager and Board are optimistic about emerging markets in the longer term but acknowledge that significant challenges are adversely impacting the appetite of investors for emerging market equities as an asset class at this time. ## Performance(a) Over the year under review, our Investment Managers produced a commendable +7.9% NAV total return, which was 2.0 percentage points higher than the benchmark index. The share price performance of the Company did not reflect this positive performance, delivering a total return of only +4.9%, as the discount the shares trade to their underlying net asset value widened from 12.6% to 15.4%. We believe that this mainly reflects investor appetite for emerging markets. ## Share price rating This discount is extremely unsatisfactory and of considerable concern to the Board. Your Company is not alone in experiencing such a discount: at the end of March 2024 the average investment trust discount was 15.6%, compared with 3.2% three years previously(b). This does not alter the fact that investors have recently only been willing to buy £1 of emerging market equities for around 85p. While the cause is evidently a lack of buyers for the Company's shares, the solution is harder to achieve. (a) See Glossary of Alternative Performance Measures on pages 115 and 116. (b) Source: Winterflood (data provided by Refinitiv). TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 9 01. Strategic Report The Board believes that there are three important factors which can narrow the discount: renewed investor enthusiasm for emerging market equities after a period in the doldrums (investor psychology is notoriously cyclical); a company structure with investment performance that makes it attractive relative to other investment vehicles; and an enhanced profile through marketing that increases awareness amongst new investors. Two of these three factors, the performance of the Company and its marketing efforts, have been strong. The Portfolio Managers, Chetan Sehgal and Andrew Ness, have delivered outperformance. This year, the Company received an Income and Growth award rating from Kepler Investment Trust Intelligence. Kepler's annual ratings are intended to highlight investment trusts that have demonstrated attractive and consistent performance over the long term, using the unique advantages of the investment trust structure to benefit shareholders. Our Manager has also been active in promoting TEMIT's shares to existing and potential investors via a variety of traditional and online channels. In recent years they have made great advances particularly in digital marketing. Additionally, our Portfolio Managers participate in a range of activities, including presentations to investor groups and meetings with key journalists. The Board was pleased again to be recognised by the AIC in its awards for shareholder communication in September 2023, for the second consecutive year. So the missing factor to a natural and positive re-rating for our shares is a return to favour for emerging markets more generally. We cannot influence this but our objective is to continue to lay the foundations through appropriate structural mechanisms, strong performance and ongoing marketing, so that the Company can enjoy the benefit of buying interest when sentiment towards emerging markets improves. ## Shareholder returns There are a number of levers at the disposal of the Board which have been put in place to make the shares of the Company relatively more attractive: a commitment to at least maintain the dividend; a share buyback programme for up to £200.0 million; a further conditional tender offer; and amendments to the Company's management fee arrangements. ## Dividends An interim dividend of 2.00 pence per share was paid at the half year stage and the Board is proposing an unchanged final dividend of 3.00 pence per share, taking the total for the year to 5.00 pence per share. The proposed full year dividend yield will amount to 3.2%, based on the share price as at 31 March 2024. This compares with net revenue earnings for the year under review of 5.18 pence per share, which was a little lower than the preceding year. Over the course of the last five years, including this year's proposed final dividend, the Company has paid aggregated dividends$^{(a)}$ of £249.0 million or 23.92 pence per share to shareholders. Over five years, we will then have returned circa 15.6% of the share price on 31 March 2019 to shareholders in dividends. The Company has accumulated significant distributable reserves over the years and the Board intends to at least maintain the dividend at the current level of 5.00 pence per share for next five years and will, if necessary, use reserves to do so. This equates to a total minimum distribution over the next five years of £278.7 million on the basis of the number of shares in issue as at 31 March 2024, and equivalent to 16.2% of the Company's market capitalisation as at 31 March 2024. ![img-4.jpeg](img-4.jpeg) (a) Includes special dividends of 0.52 pence per share for the year ended 31 March 2020 and 2.00 pence per share for the year ended 31 March 2021 which related respectively to an extraordinary distribution from Brilliance China Automotive and a tax reclaim. 10 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ## Share buybacks The Board does not believe that share buybacks narrow the discount to NAV in anything other than the short term. However, the Board remains steadfast in its view that share buybacks are important in providing liquidity to shareholders and enhancing returns. In the Board's view an investment manager needs a very high level of conviction to purchase a new holding when shares of the Company can be purchased at a wide discount to NAV. In total over the last year, £65.9 million was allocated to share buybacks, representing 3.8% of the outstanding share capital. All buybacks were executed at a discount to the prevailing NAV and this resulted in an increase in the NAV of 0.54% to the benefit of continuing shareholders. Over the past five years, the Company has purchased 142.3 million(1) shares for £218.2 million. In aggregate these share buybacks resulted in an increase in the NAV of 1.5% to the benefit of continuing shareholders. In view of the wide discount that the shares are trading to their underlying NAV the Board has decided that it will substantially increase the rate of share buybacks and, if the discount persists, intends to repurchase up to £200.0 million of shares at open market value over the next 12 to 24 months and continue at a suitable rate as required thereafter. This should enhance returns for continuing shareholders and provide improved liquidity for those wishing to realise their investment. ## Conditional tender offer 31 March 2024 also marked the point at which we measured performance over five years for our conditional tender offer. In 2019, the Board announced that if the NAV total return over five years did not exceed that of the benchmark index, then the Company would implement a conditional tender offer for up to 25% of the issued share capital at a price equal to the net asset value less two per cent (less the costs of the tender offer). The Board is pleased to report that the NAV total return over the period was +23.4%, which was 8.3 percentage points higher than that of the benchmark index, representing annualised outperformance of over 1.6% per annum. As a result, the conditions for triggering the tender offer were not met. The Board and Manager believe in active management to generate excess return. As a consequence, we have decided to offer a new conditional tender. If over the five-year period from 31 March 2024 to 31 March 2029 the Company's net asset value total return fails to exceed the benchmark total return then the Board will put forward proposals to shareholders to undertake a tender offer for up to 25 per cent of the outstanding share capital 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). As with the previous conditional tender offer, any tender offer will also be conditional on shareholders approving the continuation vote in 2029 and would take place following the Company's 2029 annual general meeting ('AGM'). (a) Adjusted for the sub-division of each share into five shares on 26 July 2021. ## Fees The Board recognises the commitment of its Manager to provide on-the-ground presence across global emerging markets. It also recognises the industry-wide pressure on management fees. The Board's measured response is a phased change in fees between now and mid-2026. Current fee rates: - 1% of the first £1 billion of net assets; - 0.75% of net assets between £1 billion and £2 billion; and - 0.5% of net assets over £2 billion. With effect from 1 July 2024 and 1 July 2025, the middle rate band for net assets between £1 billion and £2 billion will reduce to 0.7% and then 0.6% respectively. With effect from 1 July 2026: - 1% of the first £1 billion of net assets; - 0.5% of net assets over £1 billion. Based on the current net asset value of approximately £2 billion, this will result in the blended fee rate reducing from approximately 0.875% today to 0.75% in 2026. Over the last five years in aggregate £467.2 million has been returned to shareholders through dividends and share buybacks, some 22.1% of net assets at the start of the five-year period. If the tender offer had been triggered and taken up this would have risen to £965.7 million or the equivalent of some 45.6% of net assets at the start of the period. Going forward, we believe that the Investment Managers are well positioned to deploy capital in emerging market equities to the benefit of Company shareholders. The Board believes that the measures announced above represent an even greater commitment over the next five years to underpin the returns to shareholders through dividends, a more aggressive buyback programme, a new conditional tender offer, and lower fees. ## Gearing The Board believes that gearing is one of tools that closed ended investment vehicles like TEMIT can use to differentiate themselves from open ended vehicles. At times of high conviction market exposure can be increased through increasing gearing. The Board is currently reviewing our approach to gearing with Franklin Templeton. Historically, TEMIT had two facilities: a fixed rate loan of £100.0 million at an attractive rate of interest which is set to mature in January 2025 and a £120.0 million revolving credit facility. When the latter facility matured in January 2024 the Board opted not to renew it because at the time the Investment Managers were not using the facility and interest rates had risen substantially since the facility was first set up. The Board and Investment Managers are TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 11 01. Strategic Report exploring alternative forms of gearing such as Contracts for does not preclude you attending the meeting or changing your Difference and other derivatives. We will communicate with vote if you do subsequently decide to attend the AGM. If you shareholders when this review is concluded. have any questions, please send these by email to temitcosec@franklintempleton.com or via www.temit.co.uk./ investor/contact-us in advance of the meeting. You are also ### Stewardship welcome to use these contact details should you have a question at any other time. Any questions that we receive will be Since TEMIT was launched in the late 1980s, our Investment considered and, if appropriate, responses will be provided on our Managers have had a strong focus on the corporate governance website www.temit.co.uk. of investee companies, which we believe has helped many companies to understand and attract international investors. Details of the Investment Managers’ process are included in this ### Outlook – risks and opportunities report starting on page 30, along with a summary of the approach to Environmental, Social and Governance (‘ESG’) While there has been a significant deterioration in the considerations. While sustainability has garnered increasing geopolitical environment, the Board considers that the equity attention in recent years, it has always represented one element markets in which TEMIT invests are less expensive than those of of a multi-faceted investment process. To comprehensively developed markets, while the prospects for economic growth in illustrate the wide range of analysis and activities undertaken, emerging markets are superior. Those two factors should make two years ago the Investment Managers started to produce an emerging market equities very appealing for long-term annual dedicated Stewardship Report for TEMIT, and this investment. initiative continues to receive a favourable response from The most immediate challenge is China, which is around 25% of shareholders and industry experts. This year’s report was our benchmark index. The combination of increasing tensions published simultaneously with this Annual Report and is available with the US, changes in domestic policy and the poor to download at www.temit.co.uk. performance of the Chinese economy are together causing concerns about the wisdom of investment in China. ### The Board Given the significant exposure of our portfolio to China the Following my appointment the Board comprises four men and Board met in China and Hong Kong in March 2024 with some of two women, a composition that we recognise falls below best the analysts who assist our Portfolio Managers. Franklin practice in gender diversity. We intend to address this as Templeton has extensive and impressive research resources in Directors retire in due course, prioritising the enhancement of the region and provided the Board with deep insights into the the Board’s diversity while remaining attentive to the best range of investment opportunities that they are considering. The interests of our shareholders. Our aim is to ensure that the Board Investment Managers’ view, which we share, is that while these maintains a robust blend of skills, knowledge, and experience. risks are very real, asset prices are substantially discounted for them. ### Annual General Meeting and continuation vote Additionally, the Board and Investment Managers believe that China is probably too integrated into the global economy for I am pleased to extend an invitation to all shareholders to join us economic sanctions to profit any party. However, the risks, while for our AGM on 11 July 2024 at Stationers’ Hall in London. We look remote, are large and it would be imprudent to ignore them. forward to welcoming those shareholders who are able to come to the meeting. At the point investors perceive these risks to have moderated, it is reasonable to assume that shareholders will once again be The Company’s Articles of Association stipulate that the Board rewarded with the returns they used to earn from investing in the must seek shareholders’ approval every five years for its most exciting, fastest growing economies in the world. continuation, and a continuation vote is scheduled for this year’s th AGM. This vote coincides with the 35 anniversary of TEMIT’s launch. As mentioned in the discussion of the conditional tender offer above, performance over the last five-yearly cycle has been strong. Furthermore, over the 35 years since TEMIT’s inception returns have been exceptional. The NAV total return has been Angus Macpherson over 40-fold, compared with a 17-fold return for our benchmark Chairman index. In light of the long-term track record and the strength of the investment management team, the Board unanimously 7 June 2024 recommends that shareholders vote in favour of continuation. Whether you intend to attend the meeting in person or not, you are strongly encouraged to submit your votes on the AGM resolutions in advance of the meeting. Submitting votes by proxy 12 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ## The investment managers ### TEMIT’s Investment Management is ### delegated to Franklin Templeton Investment ### Portfolio Managers ### Management Limited (‘FTIML’) and Templeton ### Asset Management Ltd (‘TAML’) (together, the ### ‘Investment Managers’). Portfolio Managers ### from FTIML and TAML form part of the wider Chetan Sehgal ### Franklin Templeton Emerging Markets Equity CFA ### group (‘FTEME’). FTEME have managed the Chetan is the lead Portfolio Manager of TEMIT and is based ### portfolio since TEMIT’s inception and are in Singapore. ### pioneers in emerging markets equity As part of his broader responsibilities within FTEME, Chetan ### investing. They bring more than 35 years of is also the director of portfolio management. In this capacity, he is responsible for the overall Global Emerging Markets ### experience and local knowledge from over strategies, providing guidance and thought leadership, ### 70investment professionals, based in co-ordinating appropriate resources and coverage, and ### 14countries around the world. leveraging the group’s expertise to add value across products within the strategies. ### The team has a collaborative investment Chetan joined Franklin Templeton in 1995 from Credit Rating ### process where all analysts and portfolio Information Services of India Ltd, where he was a senior analyst. ### managers work together to contribute to Chetan holds a B.E. Mechanical (Hons) from the University of Bombay and a postgraduate diploma in Management from the ### investment returns. They meet regularly, Indian Institute of Management in Bangalore, where he ### both formally and informally, to debate and specialised in finance and business policy and graduated ### exchange ideas, investment themes and as an institute scholar. Chetan speaks English and Hindi and is a Chartered Financial Analyst (‘CFA’) Charterholder. ### 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 Andrew Ness ### available throughout Franklin Templeton. ASIP ### The Portfolio Managers for TEMIT, Chetan Andrew Ness is a Portfolio Manager of TEMIT and is based ### Sehgal (lead) and Andrew Ness, are senior in Edinburgh. ### executives in FTEME. Prior to joining Franklin Templeton in September 2018, Andrew was a Portfolio Manager at Martin Currie. 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 13 01. Strategic Report ## The investment managers’ report (a) ### Review of performance Emerging markets advanced over the 12 months ended 31 March 2024. The macroeconomic environment, however, has been challenging, given ongoing geopolitical conflicts and high interest rates. The information technology sector was one of the key drivers of returns during the period, led by expectations of a recovery in demand. The emergence of widely-available artificial intelligence (‘AI’) has been a catalyst for growth in certain segments of the emerging markets economies such as South Korea and Taiwan. The MSCI Emerging Markets Index returned +5.9% for the 12-month period under review, while (b) TEMIT delivered a net asset value total return of +7.9% (all figures are net total return in pounds sterling) . Full details of TEMIT’s performance can be found on page 4. By region, emerging markets in Latin America produced positive returns and, overall, fared better than markets in Asia and EMEA (Europe, the Middle East and Africa). Latin America saw an improvement in its general economic environment, giving rise to interest-rate cuts by central banks. Equities in the EMEA region also rose. While higher oil prices, driven by supply concerns, provided some support to Middle Eastern equities, concerns about the Israel-Hamas conflict and a higher-for-longer interest-rate environment in the United States limited gains. Emerging market Asia also advanced, but at a much slower pace than its above-mentioned peers. A slower-than-expected recovery in the information technology sector featured for most of 2023, impacting the technology-heavy countries of South Korea and Taiwan, but optimistic growth projections due to AI spurred investor interest. India logged gains amid improving macroeconomic indicators and robust corporate earnings, but concerns over China’s recovery continued to weigh on the region. ### China/Hong Kong TEMIT’s largest allocation by country was in stocks listed in China or Hong Kong, although the allocation was lower than the proportion of China/Hong Kong in the benchmark index. Chinese equities fell by almost 19% in sterling terms over the 12-month period. Concerns about the country’s slow consumption recovery and geopolitical tensions between China and the West impacted investor sentiment. Its property sector woes, plagued by liquidity worries and a lack of demand, also featured heavily during the reporting period. A downgrade of China’s credit outlook and lack of strong stimulus from the China Economic Work Conference and National People’s Congress pressured Chinese equities further. Government efforts to stabilise the equity markets and regulatory intervention to shore up investor sentiment were insufficient to reverse the losses that the Chinese equity market had suffered. While being alert to the risks of investing in China we do, however, still see the potential for positive returns in China and opportunities in Chinese equities. In particular the internet industry, to which the portfolio has sizeable exposure, has adjusted to the new operating environment as China eased its regulatory crackdown on the industry. The potential for the Chinese government’s policies to support their economy is now more evident, and we believe that this may be a driver of performance. ### South Korea TEMIT’s second-largest market position was South Korea, where the portfolio had a higher allocation than the benchmark. South Korean equities rose by more than 11% during the reporting period, as the technology-heavy market’s earlier struggles due to weakening demand for technology products were quickly overturned by a rally in the information technology sector. Expectations of a recovery in the semiconductor cycle and an improving outlook for technology stocks, particularly from increased interest and enduring optimism around AI, propelled gains. A short-selling ban and the country’s Corporate Value-Up Programme, which plans to encourage and support companies to return more capital to shareholders and improve governance to reduce the valuation discount for South Korean companies, also supported the outperformance of the country’s equity market. South Korea is less exposed to geopolitical risks as compared to China, and the country is home to several companies that are broadly expected to benefit from the secular trends of digitalisation and decarbonisation, such as technology-related companies, and firms in the value chain of electric vehicle (‘EV’) production. (a) All benchmark performance as per the MSCI Emerging Markets (Net Dividends) Index. (b) See Glossary of Alternative Performance Measures on pages 115 and 116. 14 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ### Taiwan The Taiwanese market also performed well, ending the reporting period with a gain of more than 25%. The technology-heavy and export-oriented country experienced a recovery in its technology exports, which lifted performance together with AI-induced growth expectations. However, Taiwan’s central bank went against global trends and raised benchmark interest rates in March 2024. TEMIT’s allocation to Taiwan is marginally higher than the benchmark, with a difference of less than 1%. The portfolio’s exposure to the country is largely attributable to its semiconductor industry and TEMIT’s largest portfolio holding, Taiwan Semiconductor Manufacturing Company (‘TSMC’). Besides being an essential component of electronic devices used in various sectors and industries, the emergence of AI should drive further demand for TSMC’s advanced chips. We maintain a positive long-term view on Taiwan’s semiconductor industry. ### India India was TEMIT’s fourth-largest exposure at the end of March 2024. Indian equities rose by nearly 34% over the 12-month period, benefitting from reducing inflation, improving economic indicators and strong corporate earnings. Favourable results for the incumbent government in state elections and expectations of relatively high gross domestic product (‘GDP’) and corporate earnings growth also boosted the country’s equity market. India has two growth drivers: strong domestic consumption and infrastructure investments. While higher energy prices remain a risk to India’s near-term outlook, the diversification of its power sources should eventually ease pressure from imported energy and inflation in the long term. India also stands to benefit from rising geopolitical tensions, where the United States, the European Union and Japan are adopting a ‘derisking’ strategy by realigning their supply chains and strengthening bilateral relations with their allies. India is itself a solution to manufacturers in developed markets seeking to diversify their supply chains, underpinned by its sizeable and youthful population and positive government policies leading to infrastructure investments (thus attracting more foreign direct investments). ### Brazil Equities in Brazil experienced some volatility within the 12 months under review but ultimately finished the reporting period with gains of more than 24%. For the first six months of the period, Brazilian equities reacted favourably to improvements in the country’s macroeconomic environment, where inflation reached a new 12-month low and the country experienced stronger-than-expected GDP growth. While these two datapoints continued to improve thereafter, the country’s inflation rose slightly more than consensus expectations in February 2024, and sequential GDP growth in the last quarter for 2023 stagnated. However, the Brazilian government displayed confidence in the country’s macroeconomic outlook, expecting economic growth to exceed 2% in 2024 with inflation moderating to the midpoint of the central bank’s target range. The approval of the country’s new fiscal framework and the subsequent commencement of the central bank’s interest rate easing cycle overcame some negativity stemming from concerns about changes to the country’s taxation regulations, which could potentially impact corporate earnings. Interest-rate cuts also helped to drive the performance of the country’s equity market. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 15 01. Strategic Report ## Investment strategy, portfolio changes and performance attribution The following sections show how TEMIT's exposure to individual stocks, to regions and to countries accounted for its investment performance over the period. We continue to emphasise that our investment process 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. 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 and active approach to help us to find companies that have high standards of corporate governance, respect their shareholders and also allow us to 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. Our well-resourced, locally based teams remain a key competitive advantage. This local presence allows us to understand business models, competitive dynamics, and supply chain issues. We have also managed to get insights into regulatory conversations and management capabilities, which are factored into our analysis. We view our locally based teams, which are armed with vast knowledge of the respective countries' macroeconomic issues and views on the ground as vital sources of input into the investment process. This complements our global presence, which allows us to analyse short-term uncertainties and determine if these are reflective of cyclical or structural trends. In the portfolio, we remain positioned in long-term growth themes including consumption of premium goods and services and the use of digital devices, health care and technology. We focus on companies reflecting our philosophy of owning good quality businesses, with long-term sustainable earnings power and share prices at a discount to intrinsic worth. We see high levels of leverage as a risk and continue to avoid companies with weak balance sheets. ### Performance Attribution Analysis % Year to 31 March | | 2024 | 2023 | 2022 | 2021 | 2020 | | --- | --- | --- | --- | --- | --- | | Net Asset Value Total Return^{(a)} | 7.9 | 0.8 | (17.3) | 54.5 | (11.2) | | Expenses Incurred | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | | Gross Total Return^{(a)} | 8.9 | 1.8 | (16.3) | 55.5 | (10.2) | | Benchmark Total Return^{(a)} | 5.9 | (4.9) | (7.1) | 42.3 | (13.5) | | **Excess return^{(a)}** | **3.0** | **6.7** | **(9.2)** | **13.2** | **3.3** | | Stock Selection | 0.3 | 7.3 | (10.2) | 6.0 | (2.0) | | Sector Allocation | 2.1 | (0.4) | 0.8 | 6.5 | 3.3 | | Currency | 0.3 | (0.2) | 0.2 | 0.6 | 1.8 | | Share Buyback Impact | 0.5 | 0.2 | 0.0 | 0.3 | 0.4 | | Residual Return^{(a)} | (0.2) | (0.2) | – | (0.2) | (0.2) | | **Total Contribution** | **3.0** | **6.7** | **(9.2)** | **13.2** | **3.3** | This table sets out the results of a detailed analysis of the returns produced by the TEMIT portfolio, how this compares with the theoretical returns available from the benchmark index and factors affecting the comparison with the returns of the benchmark index. Source: FactSet and Franklin Templeton. (a) A glossary of alternative performance measures is included on pages 115 and 116. 16 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report # Top 10 Contributors and Detractors to Relative Performance by Security (%)(a) | | Top Contributors | Contribution to portfolio relative to MSCI Emerging Markets Index | Top Detractors | Contribution to portfolio relative to MSCI Emerging Markets Index | | --- | --- | --- | --- | --- | | **Overweight** (TEMIT holds more than the index weight) | TSMC | 1.3 | Guangzhou Tinci Materials Technology | (1.2) | | | Petroleo Brasileiro | 1.3 | Alibaba | (1.0) | | | Samsung Life Insurance | 1.1 | WuXi Biologics | (0.8) | | | MediaTek | 0.8 | Samsung SDI | (0.7) | | | Brilliance China Automotive | 0.8 | Genpact | (0.6) | | | Zomato | 0.7 | Prosus | (0.6) | | | Itaú Unibanco | 0.6 | One97 Communications | (0.5) | | | ICICI Bank | 0.6 | Baidu | (0.5) | | | Techtronic Industries | 0.5 | Daqo New Energy | (0.5) | | | | | NAVER | (0.4) | | **Underweight** (TEMIT has no holding or a holding smaller than the index weight) | POSCO | 0.8 | | | This table sets out the results of a detailed analysis of the returns produced by individual securities in the TEMIT portfolio, and how this has affected the overall returns produced by the portfolio compared with theoretical returns available from the benchmark index. **TSMC** is the world's largest semiconductor foundry company. Its chips are used in a wide variety of solutions including personal computers, automotive and industrial equipment, and smartphones. An optimistic outlook coupled with in-line or better-than-expected sales and earnings data released during the period supported TSMC's share price. Expectations of healthy revenue growth driven by demand from AI applications, as well as recovery in the demand for smartphones and personal computers, further supported sentiment in the stock. Finishing higher over the 12-month period were the shares of **Petroleo Brasileiro ('Petrobras')**. Its shares generally remained on an upward trend over most of the period. The company announced a new shareholder return policy and raised gasoline and diesel prices, which alleviated some investor concerns regarding its capital allocation and pricing policy. An increase in crude oil prices and improving investor confidence regarding policy risks continued to support its share price well. However, dividends in March 2024 missed consensus expectations, which led to a moderate fall in the share price. We continue to favour Petrobras in the oil and gas industry, given its large cash generation and high dividend yields. The shares of **Samsung Life Insurance** also performed well over the period, logging most of its gains in the first quarter of 2024. Samsung Life Insurance is the leading life insurance company in South Korea and owns a meaningful stake in Samsung Electronics. Its share price rallied in the latest quarter amid the country's Corporate Value-Up Programme and hopes that this would lead to better shareholder return policy. **Guangzhou Tinci Materials Technology**, a China-based producer of electrolytes for EV batteries, saw its stock price fall over the period. Earnings for the company have been impacted due to an oversupply in the industry and declining lithium prices. Slower growth in EV demand as well as an increase in industry capacity for electrolytes have led to higher competition for the company. The company remains among the lowest cost producers in the industry. The shares of **Alibaba**, a Chinese e-commerce company, also declined and rendered it a key detractor. Investor concerns about a slower demand recovery, higher competition, and the lack of strategic clarity after the company cancelled and/or delayed plans for a spinoff and initial public offering ('IPO') of some of its key businesses drove its share price lower. While the stock has seen significant derating over the past couple of years, the company continues to generate significant cash flows. The company has a strong buyback policy and we expect returns from here to be supported by such corporate actions. **WuXi Biologics** is a Chinese specialist biotechnology contract development and manufacturing organisation. The share price declined in the later part of last year after the company made a downward revision to its guidance. The release of a draft US Senate bill, which aims to sanction WuXi AppTec (not a portfolio holding) and related companies led to a further decline in the share price. The company has denied the allegations and is engaging with various stakeholders. While there is uncertainty, we believe there is a pathway to avoid sanctions and are engaged with the company. (a) For the period 31 March 2023 to 31 March 2024. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 17 01. Strategic Report (a) Contributors and Detractors to Relative Performance by Sector (%) | | | | Contribution to | | Contribution to | | --- | --- | --- | --- | --- | --- | | | | | portfolio relative | | portfolio relative | | | | to MSCI Emerging | | to MSCI Emerging | | | | Top Contributors | | Markets Index Top Detractors | | Markets Index | | Overweight | Information Technology 1.5 Health Care (0.4) | | | | | (TEMIT holds more than the index weight) Communication Services 0.4 Financials 0.3 Industrials 0.1 Underweight Energy 0.6 Utilities (0.3) (TEMIT has no holding or Real Estate 0.2 Materials (0.1) a holding smaller than the index weight) Consumer Discretionary 0.1 Consumer Staples 0.0 This table sets out the results of a detailed analysis of the In contrast, holdings in the materials, health care and returns produced by the industrial sectors of the holdings in utilities sectors detracted from relative performance, the TEMIT portfolio, and how this has affected the overall alongside an underweight allocation in utilities and materials. returns produced by the portfolio compared with theoretical While the weakness in the materials sector was largely due to returns available from the benchmark index. an overweight allocation in Guangzhou Tinci (described above), a weak property market in China also affected several A favourable overweight allocation in the information related China-based portfolio holdings such as Beijing technology sector added to TEMIT’s performance relative to Oriental Yuhong Waterproof Technology, a producer of its benchmark index during the 12-month period under review. waterproof materials and engineering solutions used in real TSMC (described above) and MediaTek (a Taiwan-based chip estate and China Resources Building Materials Technology, designer for smartphones and other technology devices) are which is engaged in the production and sales of cement and examples of companies that aided relative returns. Holdings in aggregates. In the health care sector, WuXi Biologics was a key the energy sector were also a source of TEMIT’s laggard (described above). outperformance of its benchmark, with Petrobras providing notable strength within the sector. Stock selection in the communication services sector also contributed to relativeresults. (a) For the period 31 March 2023 to 31 March 2024. 18 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report (a) Contributors and Detractors to Relative Performance by Country (%) | | | | Contribution to | | Contribution to | | --- | --- | --- | --- | --- | --- | | | | | portfolio relative | | portfolio relative | | | | to MSCI Emerging | | to MSCI Emerging | | | | Top Contributors | | Markets Index Top Detractors | | Markets Index | | Overweight | Taiwan 2.2 United States (0.4) | | | | | (TEMIT holds more than the index weight) South Korea 1.8 Cambodia (0.2) Brazil 1.4 Russia 0.4 Underweight South Africa 0.2 India (2.4) (TEMIT has no holding or Poland (0.3) a holding smaller than the index weight) China/Hong Kong (0.2) This table sets out the results of a detailed analysis of the Russia also contributed to relative returns. All Russian returns produced by the country of risk of the holdings in the securities have been valued at zero since 4 March 2022. TEMIT portfolio, and how this has affected the overall returns However, during the first six months of the financial year, an produced by the portfolio compared with theoretical returns opportunity arose to dispose of TEMIT’s holding in Yandex available from the benchmark index. (Russia’s largest search engine, which also offers a wide range of other online services in areas such as e-commerce) via an By markets, holdings in Taiwan, South Korea and Brazil were over-the-counter trade, which led to Russia being a top beneficial, adding on to the positive contribution from contributor to relative performance. The two remaining Russian overweight allocations. Once again, TSMC and MediaTek securities, LUKOIL and Sberbank of Russia, continue to be fair aided relative returns in Taiwan. While Samsung Life Insurance valued at zero throughout the year. provided great support to South Korea’s relative performance, steel product manufacturer POSCO played a supporting role. Conversely, India was the top detractor from relative returns POSCO’s share price rallied amid investor optimism about the due to a combination of stock selection and an underweight company’s increased longer-term targets for its battery exposure. Financial companies such as One97 materials business. In Brazil, besides Petrobras, retail-focused Communications and HDFC Bank were among reasons for the bank Itaú Unibanco also helped relative performance due to relative underperformance. Guangzhou Tinci, Alibaba, and financial results that were generally in-line or exceeded WuXi Biologics (all discussed above) were large drags on consensus expectations for its first to third fiscal quarters returns in China. An off-benchmark allocation in the of 2023. United States dragged performance lower by a decline in the share price of Genpact, a US-listed technology services company that derives much of its earnings from services provided from India. (a) For the period 31 March 2023 to 31 March 2024. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 19 01. Strategic Report ## Top 10 Holdings As at 31 March 2024 | Holding | Portfolio | | Benchmark % | Over/(Under) weight % | | --- | --- | --- | --- | --- | | | £'000 | % | | | | **TSMC**^{(a)} TSMC is the world's largest semiconductor foundry company based in Taiwan. The emergence of AI and expectations of a recovery in the demand for technology products contributed to a turnaround in TSMC's stock price. Driven by structural growth in demand for computing and the company's technology leadership, we remain confident in the resilience of the TSMC business model. | 252,050 | 12.6 | 8.3 | 4.3 | | **Samsung Electronics** Samsung Electronics is one of the largest memory semiconductor manufacturers in the world. It also manufactures a wide range of consumer and industrial electronics and equipment. The memory sector is currently seeing an upturn in its fortunes driven by the rapid increase in demand for high bandwidth memory which is used in AI applications. With the migration to more complex technologies required for the more advanced products, the industry has also seen supply curtailment which augurs well for the prospects of commodity memory products as well. We continue to believe that memory companies will be a significant beneficiary of the AI revolution and that Samsung Electronics will remain a leader in this industry. | 133,737 | 6.7 | 4.6 | 2.1 | | **ICICI Bank** ICICI Bank is a leading India-based private sector bank, it was the portfolio's third largest holding. The share price has seen sustained appreciation over the past years and the bank has been a key contributor to overall fund performance. This highlights the value of our longer-term, fundamentally driven investment process, which we continue to employ. The bank with its strong franchise remains well positioned to benefit from the India growth story. | 102,879 | 5.2 | 0.9 | 4.3 | | **Alibaba** Alibaba is the leading e-commerce company in China. While intensified competition and weak macroeconomic performance in China has impacted the growth outlook for its e-commerce business, its other businesses such as cloud, fintech, local commerce and international e-commerce have significant potential. These could offer either growth opportunities or the possibility for improvement in profitability. While the stock has experienced a significant derating over the past couple of years, the company continues to generate significant cash flows. The company has a strong buyback policy and we expect returns from here to be supported by corporate actions. | 78,403 | 3.9 | 2.0 | 1.9 | | **Tencent** Tencent is the largest gaming, communication, and social entertainment platform in China. It has a major presence in online games, digital advertising, video, music and live-streaming, fintech and other businesses such as cloud computing. The company should be a key beneficiary of AI across its business segments. The company seems to have adjusted well to the changing regulatory environment and slowing Chinese economy and continues to deliver strong cash flows, albeit at a much slower rate of growth. Tencent has also significant public and private investments in China and globally. Trading at attractive valuations, the company has been proactively undertaking share buybacks, which further enhances earnings per share. | 76,441 | 3.8 | 3.6 | 0.2 | | **Prosus** Prosus is a leading global investment company and the largest shareholder of Tencent, a Chinese technology company. We see Prosus as a good proxy for Tencent exposure and is available at a discount to its net asset value ('NAV'). The company also has holdings in leading food delivery platforms globally. Management's effort to narrow the share price discount to NAV via buybacks should also support returns. | 63,881 | 3.2 | – | 3.2 | (a) At time of investment this holding was less than 12% of the Company's assets. 20 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Portfolio | | | Benchmark | | Over/(Under) | | | --- | --- | --- | --- | --- | --- | | | | | % | | weight %Holding £’000 % | | Samsung Life Insurance | 59,216 3.0 0.1 2.9 | | | | | Samsung Life Insurance is the largest life insurance company in South Korea and is growing in the field of health insurance. With the increase in interest rates in the recent past and the steady move to more health-related products the company has been able to improve its profitability. It also owns a majority stake in the credit card business of the Samsung Group and has smaller stakes in the securities and the fire and marine businesses. Most notably it has a significant stake in Samsung Electronics, a world leading company which is currently benefitting from an upswing in the prospects of its main memory business. The Corporate Value-Up programme initiated by the South Korean government should provide incentives to improve distributions to shareholders. Petrobras 59,136 3.0 0.9 2.1 Petrobras is a leading oil and gas company in Brazil, recognised worldwide for its oil exploration in ultra-deep waters. It is a low-cost producer and has long life oil reserves. It remains our preferred pick in the oil and gas industry globally, given its large cash generation and high dividend yield. NAVER 53,165 2.7 0.3 2.4 NAVER is a South Korean internet search and advertising company. It also has business interests in e-commerce, financial services, and entertainment content. We believe that NAVER is in a good position to build a thriving ecosystem integrating e-commerce, payments and digital content based on its solid foundation in search and advertising. Its leadership position in AI solutions in South Korea should also provide the company with additional cost efficiencies and growth opportunities. MediaTek 51,090 2.6 0.8 1.8 MediaTek, listed in Taiwan, is a world-leading chip designer for smartphones and other technology devices. It should be a key beneficiary from growth in demand for chips from IoT (‘Internet of Things’), automotive, industrial, and wi-fi applications. It should also be a beneficiary of the proliferation of new AI applications in various technology devices, which could require on-device AI computing. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 21 01. Strategic Report # Portfolio Changes by Country | Country | 31 March 2023 Market Value £m | Purchase £m | Sales £m | Market Movement £m | 31 March 2024 Market Value £m | Total Return in Sterling | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | TEMIT % | MSCI Emerging Markets Index % | | China/Hong Kong | 616 | 148 | (126) | (148) | 490 | (21.0) | (18.8) | | South Korea | 398 | 107 | (140) | 61 | 426 | 18.2 | 11.8 | | Taiwan | 316 | 32 | (91) | 101 | 358 | 41.7 | 25.6 | | India | 226 | 66 | (87) | 42 | 247 | 17.3 | 33.9 | | Brazil | 155 | 24 | (26) | 33 | 186 | 36.8 | 24.3 | | United States | 67 | 15 | (16) | (4) | 62 | (5.8) | – | | Thailand | 49 | 10 | – | (10) | 49 | (16.7) | (18.2) | | Mexico | 30 | 34 | (25) | 9 | 48 | 17.5 | 16.2 | | Hungary | 20 | 11 | (3) | 2 | 30 | 20.7 | 44.2 | | South Africa | 13 | 12 | – | (5) | 20 | (24.6) | (7.6) | | Other | 103 | 5 | (42) | 13 | 79 | – | – | | **Total Investments** | **1,993** | **464** | **(556)** | **94** | **1,995** | | | ![img-5.jpeg](img-5.jpeg) 22 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Geographic Asset Allocation As at 31 March 2024 (a) Country Weightings vs Benchmark (%) 0 25.2 24. 5 25 21.6 20 17.9 17.7 17.5 15 12.8 12.3 10 9.3 5.2 5 3.1 2.5 2.8 2.7 2.4 1.6 1.9 1.5 | | | 1.0 | | | | | | | | 1.2 | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 0.9 | | 0.9 | | | | | | | | | | | | | | | | | 0.5 | | 0.5 | 0.5 | 0.6 | 0.4 | | 0.4 | | | | | | | - | 0.2 | | | | - | | | | | | | 0.2 | 0.2 - | 0.0 | - | 0.0 - | 0 (b) (b) (b) (b) (b)(c) India Chile Peru Brazil China/ Taiwan United Mexico United States Kenya Thailand Hungary Emirates Indonesia Russia Kingdom Philippines Hong Kong South Korea South Africa United Arab Cambodia TEMIT  MSCI Emerging Markets Index Sector Asset Allocation As at 31 March 2024 Sector Weightings vs Benchmark (%) 3 31. 8 30 25.4 25 23.7 35 22.4 0 15 12.4 11.5 10 8.7 8.6 8.1 | 2 | | 7.0 | | 7.2 | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | 5.3 | | 5.6 | | | | 5 | | 4.5 | | | | | | | | | | | | | | | 3.6 | 3.5 | 3.3 | | | | | | | | | | | | | | | 2.4 | | 2.8 | 1.5 0.4 0.3 0 Information Financials Industrials Materials Health Care Energy Consumer Consumer Communication Utilities Real Technology Discretionary Services Staples Estate TEMIT n MSCI Emerging Markets Index (a) Other countries included in the benchmark are Colombia, Czech Republic, Egypt, Greece, Kuwait, Malaysia, Poland, Qatar, Romania, Saudi Arabia and Turkey. (b) Countries not included in the MSCI Emerging Markets Index. (c) All companies held by TEMIT in this country are valued at zero. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 23 n  01. Strategic Report Portfolio by Fair Value Holding Sector Fair Value £’000 % of Portfolio Brazil (a) Petrobras Energy 59,136 3.0 (a)(b) Itaú Unibanco Financials 44,608 2.2 (a)(b) Banco Bradesco Financials 33,418 1.7 Vale Materials 25,890 1.3 Oncoclinicas do Brasil Servicos Medicos Health Care 8,132 0.4 Hypera Health Care 8,122 0.4 TOTVS Information Technology 7,032 0.3 186,338 9.3 Cambodia NagaCorp Consumer Discretionary 3,772 0.2 3,772 0.2 Chile (b) Banco Santander Chile Financials 18,105 0.9 18,105 0.9 China/Hong Kong (c) Alibaba Consumer Discretionary 78,403 3.9 Tencent Communication Services 76,441 3.8 (d) Prosus Consumer Discretionary 63,881 3.2 Techtronic Industries Industrials 39,071 2.0 China Merchants Bank Financials 37,137 1.9 Baidu Communication Services 28,067 1.4 Guangzhou Tinci Materials Technology Materials 20,220 1.0 Ping An Insurance Financials 16,424 0.8 Uni-President China Consumer Staples 15,115 0.8 Brilliance China Automotive Consumer Discretionary 14,774 0.7 NetEase Communication Services 14,749 0.7 Meituan Consumer Discretionary 12,547 0.6 (b) Daqo New Energy Information Technology 11,999 0.6 Wuxi Biologics Health Care 11,254 0.6 Haier Smart Home Consumer Discretionary 9,072 0.5 Ping An Bank Financials 8,259 0.4 24 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Holding Sector Fair Value £’000 % of Portfolio China/Hong Kong H&H Group Consumer Staples 6,979 0.3 Beijing Oriental Yuhong Waterproof Technology Materials 4,507 0.2 COSCO SHIPPING Ports Industrials 4,453 0.2 (e) China Resources Building Materials Technology Materials 3,582 0.2 China Resources Land Real Estate 3,412 0.2 Chervon Holdings Consumer Discretionary 2,526 0.1 Greentown Service Group Real Estate 2,390 0.1 BAIC Motor Consumer Discretionary 2,072 0.1 Weifu High-Technology Consumer Discretionary 1,684 0.1 JD.com Consumer Discretionary 1,255 0.1 490,273 24.5 Hungary Gedeon Richter Health Care 21,486 1.1 Wizz Air Holdings Industrials 8,979 0.5 30,465 1.6 India ICICI Bank Financials 102,879 5.2 HDFC Bank Financials 44,499 2.2 Infosys Technologies Information Technology 21,760 1.1 Bajaj Holdings & Investments Financials 17,004 0.8 Federal Bank Financials 15,183 0.8 ACC Materials 14,455 0.7 Zomato Consumer Discretionary 13,450 0.7 One97 Communications Financials 12,376 0.6 Hindalco Industries Materials 4,981 0.2 246,587 12.3 Indonesia Astra International Industrials 10,459 0.5 10,459 0.5 Kenya East African Breweries Consumer Staples 592 0.0 592 0.0 TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 25 01. Strategic Report Holding Sector Fair Value £’000 % of Portfolio Mexico Grupo Financiero Banorte Financials 44,681 2.2 Nemak Consumer Discretionary 3,541 0.2 Grupo Aeroportuario del Centro Industrials 0.0 0.0 48,222 2.4 Peru Intercorp Financial Services Financials 8,150 0.4 8,150 0.4 Philippines BDO Unibank Financials 10,247 0.5 10,247 0.5 Russia (f) LUKOIL Energy 0.0 0.0 (f) Sberbank of Russia Financials 0.0 0.0 0.0 0.0 South Africa Netcare Health Care 13,324 0.7 Discovery Financials 6,774 0.3 20,098 1.0 South Korea Samsung Electronics Information Technology 133,737 6.7 Samsung Life Insurance Financials 59,216 3.0 NAVER Communication Services 53,165 2.7 LG Industrials 43,201 2.2 Samsung SDI Information Technology 38,948 2.0 SK Hynix Information Technology 33,054 1.7 Doosan Bobcat Industrials 22,419 1.1 Soulbrain Materials 17,790 0.9 Fila Consumer Discretionary 11,068 0.6 LegoChem Biosciences Health Care 7,500 0.4 Hankook Tire Consumer Discretionary 4,865 0.2 KT Skylife Communication Services 1,444 0.1 426,407 21.6 26 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report | Holding | Sector | Fair Value £'000 | % of Portfolio | | --- | --- | --- | --- | | **Taiwan** | | | | | TSMC | Information Technology | 252,050 | 12.6 | | MediaTek | Information Technology | 51,090 | 2.6 | | Hon Hai Precision Industry | Information Technology | 42,316 | 2.1 | | Yageo | Information Technology | 12,789 | 0.6 | | | | **358,245** | **17.9** | | **Thailand** | | | | | Kasikornbank | Financials | 23,534 | 1.2 | | Thai Beverage | Consumer Staples | 7,514 | 0.4 | | Star Petroleum Refining | Energy | 6,346 | 0.3 | | Kiatnakin Phatra Bank | Financials | 6,319 | 0.3 | | Minor International | Consumer Discretionary | 5,062 | 0.3 | | | | **48,775** | **2.5** | | **United Arab Emirates** | | | | | Emirates Central Cooling Systems | Utilities | 8,577 | 0.4 | | | | **8,577** | **0.4** | | **United Kingdom** | | | | | Unilever^{(a)} | Consumer Staples | 17,821 | 0.9 | | | | **17,821** | **0.9** | | **United States** | | | | | Genpact^{(a)} | Industrials | 31,600 | 1.6 | | Cognizant Technology Solutions^{(a)} | Information Technology | 30,499 | 1.5 | | | | **62,099** | **3.1** | | **Total Investments** | | **1,995,232** | **100.0** | (a) Preferred shareholders are entitled to dividends before ordinary shareholders. (b) US listed American Depository Receipt. (c) TEMIT holds shares in this company listed on the Hong Kong stock exchange and American Depository Receipts listed on the New York stock exchange. (d) This company is listed in the Netherlands. The classification of China/Hong Kong is due to most of its revenue coming from its holding in Tencent. (e) 'China Resources Cement' was renamed to 'China Resources Building Materials Technology'. (f) This company is fair valued at zero as a result of its trading being suspended on international stock exchanges. (g) This company, listed on a stock exchange in a developed market, has significant exposure to operations from emerging markets. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 27 01. Strategic Report Less than £1.5bn to £5bn to Greater than Market Capitalisation Breakdown % £1.5bn £5bn £25bn £25bn 31 March 2024 4.6 12.6 23.3 59.5 31 March 2023 5.2 11.3 23.1 60.4 (a) Split Between Markets % 31 March 2024 31 March 2023 Emerging Markets 95.8 94.5 (b) Developed Markets 4.0 5.0 Frontier Markets 0.2 0.5 In investing, a developed market is a country that is most of a developed market, but does not fully meet its standards. developed in terms of its economy and capital markets. To be This includes markets that may become developed markets in classified as a developed market, the country must be high the future or were in the past. The term ‘frontier market’ is used income, but this also includes openness to foreign ownership, for developing countries with smaller, riskier, or more illiquid ease of capital movement, and efficiency of market institutions. capital markets than ‘emerging’. An emerging market is a market that has some characteristics Brazil Source: FactSet Research System, Inc. (a) Geographic split between ‘Emerging markets’, ‘Frontier markets’, ‘Developed markets’ are as per MSCI index classifications. (b) Developed market exposure represented by companies listed in United Kingdom and United States which have significant exposure to operations in emerging markets. 28 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ### Outlook for emerging markets and we remain underweight in China. Most of our exposure is to the internet-related names in China where companies The first quarter of 2024 has seen a recovery after a period of continue to generate cash and have elevated shareholder volatility. We believe that the current investment backdrop is return policies. conducive for emerging market equities. Potential interest rate cuts and better earnings growth for 2024 are expected to be It is an interesting time to look at emerging markets. Despite tailwinds for emerging markets when they are implemented. the dynamic nature of emerging markets, we believe that several enduring themes persist. First, we believe their While interest rates are expected to be higher for longer, we structural growth potential remains superior, driven by an believe that they will eventually moderate as goods inflation expanding and diverse investment universe with appealing has started declining in most markets. Our overweight valuations. Second, while navigating challenges such as the positions in Latin America—especially Brazil, where real rates COVID-19 pandemic and geopolitical risks, emerging remain high—reflect our view on interest rates. economies have demonstrated remarkable resilience, AI has seen a boom led by the development of large language emphasising the potential for robust growth. Finally, strategic models. This has been facilitated by the advancement in policy decisions, ongoing reforms, and innovation will shape semiconductor chips. New applications have emerged. We the future of these markets, offering what we believe are expect growth in this sector to be structural, driven by the significant opportunities for economic progress and adoption of Al solutions in both enterprise and consumer investment gains in the years ahead. In summary, emerging applications. This should benefit the Al supply chain. Many of markets have evolved, embracing innovation, technology, and the semiconductor and hardware companies catering to the diversification. As pivotal players in the global trade map, their Alindustry are based in emerging markets and we remain adaptability and growth trajectory position them as key drivers overweight in that sector. We also remain overweight in of the world economy, making them, in our opinion compelling South Korea and are well-invested in Taiwan to play investment opportunities for investors globally. these megatrends. Meanwhile, the EV supply chain is currently experiencing a Chetan Sehgal material slowdown in growth expectations as many consumers Lead Portfolio Manager and governments have yet to fully embrace the advantages of their deployment. Although we remain aligned with the 7 June 2024 longer-term growth outlook for EVs, we have lowered our exposure to the EV value chain. India and Middle Eastern countries have continued to see good economic growth. India is holding General Elections this year, and we expect political stability to continue. Valuations in many of the sectors in India remain elevated and we are currently underweight in that market, with most of our exposure being to the private sector banks. We remain opportunistic in our deployment of capital to the Middle East region, taking advantage of the boom in the IPO market in many of those countries. The Chinese economy seems to have stabilised with signs of policy support, even though the property sector and government finances are still very feeble. In addition, we continue to see the western countries reduce their dependence on Chinese supply chains. All these factors continue to impinge on valuations in the China equity market TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 29 01. Strategic Report ## The investment managers’ process India ### Investment philosophy and approach This can also be the case when the market is overly short-term oriented, and rewards companies driven by what FTEME views FTEME’s long-term approach is driven by the 3 S’s, seeking as unsustainable factors such as short-term demand/supply Structural growth opportunities in emerging markets, imbalances or inorganic growth. investing in businesses with Sustainable earnings power at a discount to intrinsic worth, and believing in responsible Stewardship of client capital. FTEME seeks to capture the ### Investment process growth potential of emerging market companies and believes The three broad stages of FTEME’s investment process that this is best achieved by employing a bottom-up and comprise: idea generation, stock research, and portfolio fundamental security selection process. FTEME conducts construction and management; with governance and in-depth proprietary company research with a long-term and sustainability considerations and risk management fully independent perspective. FTEME believes in the responsible integrated at all stages. stewardship of clients’ capital and that governance and sustainability issues create risks and opportunities for companies. ESG analysis is therefore integrated as a key ### Idea generation element of fundamental bottom-up analysis. ## 1 The key source of idea generation is FTEME’s team of over 70 analysts and portfolio managers located around ### TEMIT’s performance in different the globe. Their experience and expertise allow them to ### market environments identify trends which they may want to explore further FTEME’s approach aims for outperformance over the long through company research. In addition, FTEME’s local term. The investment strategy tends to produce stronger presence, network and understanding of local dynamics performance when company fundamentals are the primary may help to identify trends and opportunities that other driver for stock returns, where a focus on stock selection market participants may filter out through standard should produce superior results. Performance may be less quantitative screens. FTEME analysts speak the local strong in highly sentiment-driven market environments, when language and are part of the local culture and fabric of investors focus more on the overall economic picture rather the countries where they conduct research. than company fundamentals. 30 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ### Stock research Portfolio construction ## 2 3 FTEME analysts conduct rigorous analysis to assess FTEME seeks to build a high-conviction stock-centric whether a company has sustainable earnings power, and portfolio that is primarily driven by company-specific to establish a proprietary estimate of its intrinsic worth. factors and focused on the long term. A bottom-up By integrating ESG analysis with traditional business and approach to stock selection is used, with country and financial analysis, FTEME seeks to gain insights into the sector allocations a residual of this process. quality and risks of companies. FTEME’s research platform currently has coverage of over 700 companies Portfolio style and characteristics across emerging markets using a proprietary and The strategy typically displays the following rigorous bottom-up research approach, along with characteristics: extensive knowledge of the wider investment universe. Core style FTEME’s research analysts form detailed views of The strategy aims to deliver outperformance companies by collecting and analysing a variety of irrespective of market direction. The portfolio information. The team conducts detailed quantitative construction process leads to the majority of financial analysis by building in-depth company models active risk being focused. to evaluate financial strength and profitability, and to project future earnings and cash flow. Industry demand Quality and growth but not at excessive valuation levels and supply models are incorporated in the analysis, as The philosophy typically leads to a portfolio well as country and currency macro considerations. with higher quality and growth than the FTEME has a strong emphasis on qualitative assessment. aggregate of the benchmark index. The assessment of ability to sustain stable or growing economic profits over time is typically driven by a combination of factors, including (i) sound business High conviction portfolio models; (ii) sustainable competitive advantages; (iii) The top-10 holdings typically account management foresight; and (iv) low debt levels. Earnings for over 40% of the portfolio which power is the demonstrable ability to generate overall is well-diversified across the market sustainable economic profit into the future in areas cap spectrum. which could be beyond the current scope of operations. The analysts look for real earnings growth by focusing on Low turnover economic earnings and cash flows rather than reported FTEME’s high conviction and long-term earnings, and differentiating between operational approach means that the typical annual earnings and financial earnings. They evaluate internal portfolio turnover is less than 20%. versus external drivers to earnings and prefer companies with earnings which can be affected through management action. Buy and sell discipline A key element of earnings power is therefore quality, as FTEME’s buy discipline is primarily designed to ensure signified by (i) products and services with low regulatory that the portfolio managers buy when they have both and macro risk; (ii) financial strength; and (iii) conviction in a business and it is trading below its intrinsic management strength. value; FTEME’s sell discipline is designed to capture the opposite. All holdings are regularly reviewed to ensure Each research recommendation may incorporate several that analyst recommendations are up to date and valuation methods extending typically over a three to accurately reflect any changes in company fundamentals. five-year horizon. FTEME aims to clarify the risk/reward In this way, ongoing fundamental research drives all buy balance of a company by conducting sensitivity analysis, and sell decisions. stress-testing, and scenario analysis. It seeks to identify what the market consensus expectations are for a stock and how the team’s fundamental views may differ. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 31 01. Strategic Report ### Investment risk management Investment in emerging markets equities inevitably involves risk in a volatile asset class. Franklin Templeton uses a comprehensive approach to managing risks within its portfolios and this approach is inherent in all aspects of the investment process. Investment risks are to be identified and intentional, not minimised. Risk management is embedded through all stages of the investment process, in collaboration with dedicated resources from Franklin Templeton’s Investment Risk Management Group of over 80 risk management professionals, which is independent from the portfolio management team. Various risk management tools are used to predict and decompose the portfolio’s active risk in order to understand and manage the portfolio’s active risk profile. For additional information with respect to the AIFM risk management framework, please read the Investor Disclosure Document on our website Being responsible stewards of our clients’ capital is reflected in: (www.temit.co.uk). How we act as investors ## • ESG research integration ### TEMIT’s approach to stewardship ## • Company engagement and proxy voting TEMIT’s research process includes a structured analysis of ## governance and sustainability issues. • Policy advocacy TEMIT seeks to capture growth potential of emerging markets How we treat our clients companies by employing a bottom-up security selection ## • Putting clients first process with a long-term perspective. We aim to be a ## responsible steward of our clients’ capital—that is why we • Being responsible fiduciaries of our clients’ capital integrate Environmental, Social and Governance (‘ESG’) factors How we behave as a business into our investment research process, as a key element of fundamental, bottom-up analysis, to understand the risks and Building relationships ## • opportunities that stem from governance and sustainability ## • Working with integrity issues. Responsible stewardship is not a single act but a continuous process that includes engagement and voting. Integrating ESG factors Whilst governance and sustainability issues are analysed in our Analyses of governance and sustainability issues are research, the findings are not binding on the stock selection embedded components of our rigorous fundamental process. TEMIT does not pursue any sustainable targets bottom-up research. This allows us to identify those business (e.g., carbon reduction) or objectives. models most likely to resist competitive pressure and understand management’s ability to generate sustainable returns. 32 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Please find below a case study of a company’s intentionality to ### Our proprietary three-pillar ESG research manage the ESG footprint of its operating model from the full ### framework is an assessment tool that has Stewardship Report for TEMIT to give shareholders a snapshot ### further enhanced our approach to of the typical intentionality analysis undertaken. Case studies of alignment and transition can also be found in the full ### sustainability and is codified within our Stewardship Report for TEMIT. ### analytical database. Grupo Financiero Banorte Offers financial services to individuals and corporates in Mexico. ## 3 Pillars ESG Topic Cybersecurity ### Intentionality Materiality and Risk Assessing companies’ intentionality toward managing material The safeguarding of personal customer data is a critical aspect of ESG factors with our proprietary scoring system and linking digital banking activities. Data breach and cyberattacks may ESG factors into our valuation models. disrupt operations and impact customer loyalty, affecting market share and long-term growth. Cybersecurity issues may also incur penalties, liabilities and compliance costs. Amid a rapidly ### Alignment expanding digital ecosystem, the protection of customers’ personal Mapping the alignment of companies’ products and services identifiable information is a key ESG factor for the banking sector. to positive social and environmental outcomes and UN Analysis Sustainable Development Goals (‘SDGs’). ## • Banorte created a dedicated cyber-crisis management team. ## Transition • Integrity Committee and the Cyber Risk Subcommittee meet regularly to monitor the central mitigation systems. Identifying companies’ transition potential and monitoring their incremental progress, using our on-the-ground capabilities and • The company has formed a strategic alliance with Google Cloud to strengthen its cybersecurity ecosystem. experience as active owners to foster positive change. ## • Regular employee training and system drills are conducted to raise awareness and address audit requirements. ## • Reflecting its efforts, the company has earned various certifications, such as the Normalización y Certificación (‘NYCE’) personal data protection certification and the International Organization for Standardization and the International Electrotechnical Commission (‘ISO’ and ‘IEC’) 27001:2013 standard. ESG Thesis Amid a push for digital transformation, Banorte has established procedures and policies for cybersecurity and other key ESG issues–such as climate change, human capital, and corporate governance–that are overseen by the board and executive team, ensuring effective integration into its core business strategy (2023-2025 priority plan in place). Banorte is also aligned with national and international sustainability initiatives, such as the (a) Equator Principles and Principles for Responsible Investment . (a) Banorte: https://investors.banorte.com/en/sustainability/sustainability-strategy/ sustainable-finances TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 33 01. Strategic Report ### TEMIT’s research process includes a structured analysis of governance and sustainability ### issues. Whilst governance and sustainability issues are analysed in our research, the ### findings are not binding on the stock selection process. TEMIT does not pursue any ### sustainable targets (e.g., carbon reduction) or objectives. Nature and biodiversity In 2023, the threat of ‘biodiversity loss and ecosystem collapse’ continued to rise up the economic agenda and was identified as (a) the third most severe perceived risk to economies and societies over the next 10 years by the World Economic Forum . | 1 | Extreme weather events | 6 | Adverse outcomes of AI technologies | | --- | --- | --- | --- | | 2 | Critical change to Earth systems | 7 | Involuntary migration | | 3 | Biodiversity loss and ecosystem collapse | 8 | Cyber insecurity | | 4 | Natural resource shortages | 9 | Societal polarisation | | 5 | Misinformation and disinformation | 10 | Pollution | TechnologicalRisk categories: Economic Environmental Geopolitical Societal As nature loss presents a significant risk to corporate and Where material, TEMIT integrates climate change/carbon financial stability, it is a key area for us as active managers to analysis into its bottom-up research process, focusing on promote a direct dialogue with those businesses materially assessing the impact on long-term business values. This is part of exposed. the holistic approach of integrating ESG analysis with traditional financial analysis so that we can gain valuable insights into the We view the biodiversity challenge as a natural extension of quality and risks of businesses in which TEMIT invests. our climate efforts. A deep understanding of the rapid changes taking place in the Earth’s physical systems, and the impact The investment team looks at climate risks and opportunities these changes will have on the economy, will prove vital to the closely for relevant sectors and geographies where climate successful allocation of capital today and into the future. Since change plays an important role. This includes integrating last year’s report, we have developed a framework to formalise climate related factors into estimates, models and valuations for the integration of nature and biodiversity-related those businesses materially exposed to the issue. considerations into our investment process. This will help us to In the full Stewardship Report for TEMIT available on our deepen our research, learn more about our investee website (www. temit.co.uk) we profile companies exposed to companies most exposed to nature and biodiversity loss, and climate opportunities and climate risks. be additive to our engagement process. More details on this can be found in the full Stewardship Report for TEMIT. Climate opportunities Climate change Within emerging markets, the landscape varies considerably, The transportation sector is still a major contributor to ranging from countries that have announced meaningful greenhouse gas (GHG) emissions, accounting for 20% of global carbon targets to those that have yet to declare any significant (b) CO2 emissions in 2023 . Electric Vehicles (EV) offer a cleaner policies. TEMIT does not pursue a climate change objective. alternative, and their batteries rely heavily on electrolytes. Structured analysis of ESG factors, including climate Battery electric passenger vehicles (BEV) sales continue to considerations, are part of TEMIT’s research process but are grow and are on track to post 13.3 million units worldwide in not binding on stock selection. Our objective is to understand (c) 2024, compared with an estimated 9.6 million in 2023 . the climate commitments of investee companies incorporating Global risks ranked by severity over the long term (10 years): ## • Guangzhou Tinci Materials Technology manufactures fine both local and global perspectives, recognising that the pace chemicals and new materials, including Li-ion battery of decarbonisation and the associated strategies will differ across countries and cultures. materials. It is the world’s largest electrolyte supplier for EV batteries, with over 40% market share in China in 2022. (a) World Economic Forum Global Risks Perception Survey 2023-2024 (b) Statista, 18/12/23 - https://www.statista.com/topics/7476/transportation-emissions-worldwide/#topicOverview (c) SPGlobal, 20/12/23 - https://www.spglobal.com/mobility/en/research-analysis/2024-ev-forecast-the-supply-chain-charging-network-and-battery.html#:~:text=S%26P%20Global%2Mobility’s%20 2024%20global,%2C%20for%2012%25%20market%20share. 34 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report - Guangzhou Tinci has made great advances in developing independent new additives and formulations. These products are widely used in new energy vehicles to solve key battery problems such as achieving a longer range, and the ability to withstand high and low temperatures. Guangzhou Tinci also has a battery-recycling business, focusing on the recovery of lithium iron phosphate batteries. - As a result, the company has built a circular production model. By-products in one process are reused as raw materials in another. This not only solves the environmental problem of hazardous chemicals and by-products, but also greatly reduces the cost of procuring and disposing of raw materials. # Climate risks We do not rule out investing in companies in carbon-intensive sectors, such as the metals and mining industry. Focus on metals and mining: Clean energy infrastructure requires substantial material inputs. Demand for each of the five key critical minerals—lithium, cobalt, nickel, copper and neodymium—is expected to increase 1.5 to 7 times by 2030 in the Net Zero Emissions by 2050 Scenario ('NZE') as clean technology deployment soars¹⁶. While energy transition minerals have relatively high emission intensities, there are ways to minimise these emissions through switching fuel sources, using low-carbon electricity and making efficiency improvements. Integrating environmental concerns in the early stages of project planning can help ensure sustainable practices throughout the project life cycle. - Hindalco Industries, one of India's largest non-ferrous metals companies, and an industry leader in aluminium and copper, has adopted Internal Carbon Pricing ('ICP') to monitor the cost of carbon, in preparation for regulations, emissions trading, and low-carbon growth initiatives. - The company aims to reduce specific energy consumption and GHG emissions by 25% by 2025, as part of its target to achieve carbon neutrality by 2050⁸⁴. - Coal is one of its primary energy sources for its Indian operations. Replacing that with a renewable energy source is difficult due to the challenges in reliability. While challenges persist, we recognise Hindalco's efforts to address climate-related risks and move towards its carbon net neutral goal. The company has set up interim targets and provides regular disclosures through periodic reports and quarterly conference calls. Our portfolio managers also seek to understand the carbon risk profile at a portfolio level to understand its carbon risk exposures. This includes carbon exposure broken down by sector and stock. The data helps with the engagement agenda. # TEMIT Carbon Footprint vs. MSCI Emerging Markets Index As at 31 March 2024 TEMIT's Portfolio Carbon Emissions are 15% lower (31 March 2023: 23% lower) than the MSCI Emerging Markets Index, Carbon Intensity is 8% lower (31 March 2023: 10% lower) and Weighted Average Carbon Intensity is 41% lower (31 March 2023: 38% lower). ![img-6.jpeg](img-6.jpeg) Source: MSCI ESG as at 5 April 2024, portfolio coverage 99% (95% reported, 4% estimated, 1% no data). MSCI Emerging Markets coverage 100% (90% reported, 10% estimated, 0% no data). Carbon emissions include scope 1 and 2 and estimations use MSCI's proprietary carbon estimation model. Carbon Emissions – Measures the portfolio's normalised carbon footprint per $1 million invested. Carbon Intensity – Measures the portfolio's efficiency in terms of the level of carbon emissions per dollar of sales generated by a company. Weighted Average Carbon Intensity ('WACI') – Measures the portfolio's exposure to carbon-intensive companies. ¹⁶ IEA: https://www.iea.org/reports/energy-technology-perspectives-2023/mining-and-materials-production ⁸⁴ Hindalco, Natural Capital: https://www.hindalco.com/integrated-annual-report/2022-23/pdf/natural-capital.pdf TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 35 01. Strategic Report ## To determine the portfolio’s exposure to carbon related risks, • China Resources Building Materials Technology and ACC we assess the WACI metric—which measures carbon intensity have the largest carbon intensities in TEMIT’s portfolio, on a normalised basis for better comparison among representing 0.9% of the portfolio but accounting for 43.4% companies. With that, we observe the following: of the portfolio WACI. ## • TSMC’s carbon intensity is low. However, since it represents ## • TEMIT’s portfolio carbon risk is concentrated among a small 12.6% of the portfolio, it is the second highest in terms of number of companies, with the top five companies in terms contribution to the portfolio WACI, after ACC. of carbon intensity representing 2.0% of the portfolio and accounting for 59.2% of the portfolio WACI. Over the 1-year period, the portfolio’s carbon footprint ## • In sector terms, 47.7% of the portfolio WACI contribution remained stable and specifically WACI has been consistently comes from the materials sector; on a relative basis, the below the benchmark. The interim variability is caused by effect is neutral. The utilities sector is the largest positive changes in both positioning as well as updates in emissions contributor to WACI relative to the benchmark, as TEMIT is data. underweight in this high emitting sector. Weighted Average Carbon Intensity (tons CO e/US$M sales) 2 322 322 326 320 319 272 223 216 197 188 -33.9% -41.1% -38.4% -30.9% -15.6% March 2023 June 2023 September 2023 December 2023 March 2024 | |  | Portfolio |  | Benchmark | Diff | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Weighted Average Carbon Intensity (tons CO | | | | | | 2 e/US$ sales) | | | | The reduction in ending weight for China Resources Building | | | | | | emissions data (previously not covered) for Emirates Central | | | Materials Technology, the sale of POSCO and a change in | | | | | | Cooling Systems and a change from estimated to reported | | | methodology in emissions calculation for LG Corp led to a | | | | | | emissions data for Daqo New Energy by MSCI offset some of | | | decline in the portfolio WACI. The purchase of ACC, the | | | | | | the decline in the portfolio WACI. | purchase of and subsequent update by MSCI to estimated 36 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Active ownership Engagement statistics As investors with a significant presence in emerging markets, Our analysts are in continual dialogue with companies on a our active ownership efforts are a key part of our overall range of topics, ranging from operational performance, approach to stewardship. Our analysts conduct almost competition landscape, business outlook, company financials, 2,000company meetings a year, and this year 377 with TEMIT to name a few. There are also companies we identify where holdings, using our industry-leading research footprint across dedicated discussion on ESG topics is necessary and we report emerging markets, where we seek to gain a number of the nature and outcome of these meetings. For the 12months fundamental and sustainability insights. We believe that our ended 31 March 2024, there were 34 tagged ESG interactions engagement efforts are key to developing a detailed by type where detailed discussions were conducted with an understanding of companies and improving outcomes for investee company. These are summarised below: shareholders as well as stakeholders more broadly. | | | | ESG Issue | Objectives and Process | | | | | | Outcome | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Identify material ESG issues and | | | Set goal and/or rationale for the | | | | Review outcomes, next steps and | | | | | | rationale for engagement | | engagement and approach | | | | | investment thesis | | | | | | | | Number of | | Percentage of | | | | | ESG Discussion by Engagement Type | | | | | Interactions | | Interactions | | | | |  Environmental | | | | | | 7 20.6% | | | | | |  Carbon Risk and Climate Change | | | | | | 4 11.8% | | | | | |  Environmental Consideration | | | | | | 3 8.8% | | | | | |  Social | | | | | | 6 17.6% | | | | | |  Human and Social Capital | | | | | | 6 17.6% | | | | | |  Governance | | | | | | 21 61.8% | | | | | |  Corporate Governance | | | | | | 11 32.4% | | | | | |  Strategic Risk and Communication | | | | | | 10 29.4% | | | | | Total 34 100% Note: Engagement statistics refer to 12 months ended 31 March 2024. Number of Percentage of ESG Discussion Outcome Interactions Interactions Contact made by FTEME 5 15% Contact acknowledged by entity 8 23% Dialogue taking place between FTEME and entity 10 29% Plan formulated 6 18% Plan implemented by entity 3 9% Measured and validated outcome 2 6% No progress 0 0% Total 34 100% TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 37 01. Strategic Report Below is an ESG engagement example with an investee We view votes against proposals as a formal way to company in China. communicate our views to management, and we undertake them based on our investment team’s assessment of each Ping An Insurance motion in line with clients’ best interests. A financial conglomerate offering insurance, banking, brokerage and other financial services. For 85.1% Against 14.4% Other 0.5% ‘Other’ votes were cast on proposals such as say-on-pay ESG Engagement Social – human and social capital Topic frequency. Additionally, we have abstained or withheld a vote due to a lack of company disclosure. Objectives The number of resolutions proposed by shareholders is ## • We were concerned that Ping An’s staff turnover rate was high, at increasing around the world, particularly on environmental and 28%. A stable and competent workforce is key to sustaining social issues, although they remain relatively uncommon in strategic growth, service quality, innovations and customer loyalty. emerging markets. We will continue to closely examine the ## • Therefore, we engaged with Ping An to better understand the merits of views raised by fellow shareholders and vote reasons behind the turnover, and to discuss ways to improve accordingly. turnover stability over time. Outcome Effective engagement for the year ahead As we strive for continuous improvement in our investment ## • Ping An explained that the turnover rate was relatively high in the process, we have been improving our platform for more telesales team. Excluding this factor, the overall turnover would be more normal, at 10-15%. effective engagement, seeking to: enhance our practice and outcomes; build more consistency and transparency; and ## • Technology is a major differentiator for Ping An versus industry improve reporting to our clients. peers, but it also means Ping An faces tough competition for tech talent, resulting in higher turnover. Looking ahead, we are enhancing our existing engagement • We discussed with the company how to improve its turnover rate recording infrastructure, focusing on our proprietary Emerging with better hiring practices and staff training. We will continue to Markets Research Database (‘EMDB’), which houses our monitor for improvements. research and the three-pillar framework. Given our longstanding heritage and local presence across emerging Proxy voting markets, our engagement efforts extend beyond companies to In the year ended 31 March 2024, we voted on over policymakers—we are enhancing EMDB to capture these 870 management proposals at annual and special general interactions as well. To coordinate and oversee the meetings for TEMIT. engagement efforts of our broader platform of 70+ investment professionals across 14 countries, we also created an FTEME Of the voteable management proposals, we voted ‘For’ Engagement Group comprising 7 regional coordinators from proposals 85% of the time and ‘Against’ in another 14%. By the research analyst team. This group includes a proposal category, as a percentage of votes within each representative from each key region that will bring cross- category and where we had a total of 10 votes or more, our border perspectives and provide guidance on best practices. votes against were largely concentrated on management compensation, capital structure, strategic transactions and We encourage you to download the full Stewardship Report for director-related proposals. TEMIT from www.temit.co.uk for further, detailed information. 38 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ## Business review ### Strategy and business model In accordance with the Listing Rules, the Company will not make any material change to its published investment policy Company purpose and objective without the prior approval of the UK’s Financial Conduct TEMIT’s purpose is to provide both private and institutional Authority (‘FCA’) and the approval of its shareholders by investors with the opportunity for capital appreciation via ordinary resolution. Any material change would be announced a professionally managed vehicle focused on listed equity by the Company through the London Stock Exchange. investments in emerging markets. The objective of TEMIT is to provide long-term capital Distribution policy appreciation via exposure to global emerging markets, The Company will ensure that its total annual dividends will be supported by a culture of both strong customer service and paid out of the profits available for distribution under the corporate governance. provisions of the relevant laws and regulations and will be at least sufficient to enable it to qualify as an investment trust Investment policy under the Corporation Tax Act 2010 and the ongoing The Company seeks long-term capital appreciation through requirements of The Investment Trust (Approved Company) investment in companies listed in emerging markets or (Tax) Regulations 2011. If the Company has received an companies which earn a significant amount of their revenues exceptional level of income in any accounting year, the Board in emerging markets but are domiciled in, or listed on, stock may elect to pay a special dividend. The primary focus of the exchanges in developed countries (‘Emerging Markets investment policy is on generating capital returns, the Companies’). Company does not target a particular level of income and there is no guarantee that dividend levels will be maintained It is expected that the majority of investments will be in listed from one year to the next. equities. However, up to 10% of the Company’s assets may be invested in unlisted securities. In addition, while it is intended The Company will normally pay two dividends per year, that the Company will normally invest in equity instruments, an interim dividend declared at the time when the half yearly the Investment Managers may invest in equity-related results are announced, and a final dividend proposed at the investments (such as convertibles or derivatives) where they time when the annual results are announced. The final believe that it is advantageous to do so. dividend will be subject to shareholder approval at the AGM each year. The portfolio may frequently be overweight or underweight in certain investments compared with the MSCI Emerging The Company may also distribute capital by means of share Markets (Net Dividends) Index (the ‘Benchmark’) and may be buybacks when the Board believes that it is in the best interests concentrated in a more limited number of sectors or of shareholders to do so. The share buyback programme will be geographical areas than the Benchmark. Investments may be subject to shareholder approval at each AGM. made in Emerging Markets Companies outside the Benchmark that meet the investment criteria. Business model The Company has no employees and all of its Directors are Whilst there are no specific restrictions on investment in any non-executive. The Company delegates its day-to-day one sector or geographic area, the portfolio will be managed activities to third parties. in a way which aims to spread investment risk. The portfolio may contain between 50 and 100 individual stocks but may, at Since 1 October 2021, Franklin Templeton Investment Trust times, contain fewer or more than this range. No more than 12% Management Limited (‘FTITML’, ‘AIFM’ or the ‘Manager’) has of the Company’s assets will be invested in the securities of been the Company’s AIFM and Company Secretary. any one issuer at the time of investment, save that any The Board is responsible for all aspects of the Company’s investment in unlisted securities of any one issuer will be affairs, including the setting of parameters for the monitoring limited to no more than 2% of the Company’s assets, measured of the investment strategy and the review of investment at the time of investment. performance and policy. It also has responsibility for The maximum borrowing will be limited to 20% of the overseeing all strategic policy issues, namely dividend, Company’s net assets, measured at the time of borrowing. gearing, share issuance and buybacks, share price and discount/premium monitoring, corporate governance matters No more than 10%, in aggregate, of the value of the and engagement with all the Company’s stakeholders. Company’s assets will be invested in other listed closed-ended investment funds. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 39 01. Strategic Report ## Strategy 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, whose aim is to identify value and achieve superior long-term growth for shareholders. FTEME, 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 seeking exposure to global emerging markets by investing in companies that they believe offer long-term sustainable growth and good value, combined with strong management and sound governance. ### Investment Process and Environmental, Social and Governance ('ESG') Considerations As part of TEMIT's stock research process, ESG factors are researched alongside other important factors, such as company earnings power, competitive positioning and management quality. These factors are likely to materially impact the operating performance or financial conditions of a company. This deepens our understanding of the companies we research; it also guides us in our engagement activities over a range of issues, better informing our research insights, as we strive to protect shareholder value. As TEMIT is an investment trust, the key ESG consideration is the stewardship of its portfolio of investments. The Board has reviewed and fully supports FTEME's approach to stewardship, which is described under 'TEMIT's approach to stewardship' starting on page 32 of this report. It receives regular reports on Franklin Templeton's policies and controls. TEMIT has no greenhouse gas emissions to report from the operations of the Company, as all of its activities are outsourced to third parties. While as an investment trust TEMIT is exempt from disclosures recommended by the Task Force on Climate-related Financial Disclosures ('TCFD'), Franklin Templeton continues to develop metrics for our carbon footprint. Further information on our approach to climate change can be found under 'TEMIT's approach to stewardship' above and in more detail in the full Stewardship Report, available on our website (www.temit.co.uk). TEMIT has no employees and is not an organisation that provides goods or services as defined in the Modern Slavery Act 2015 and thus the Company considers that the Act does not apply. The Company's own supply chain consists predominantly of professional services advisers. ### Culture and Values The Board believes in a culture of openness and constructive challenge in its interactions with the Manager and other service providers. The Board aims to maintain open and regular communication with shareholders, as set out under Communication on page 42. The Company is committed to acting professionally, fairly and with integrity in all of its business dealings and relationships. The Board has a zero-tolerance policy towards bribery and looks to ensure that its service providers and associated persons have effective policies and procedures designed to actively prevent bribery which are proportionate, and risk based. In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to any facilitation of tax evasion whether under UK law or under the law of any foreign country. The Board notes that the Manager has a robust whistleblowing policy in place. Information on the Company's approach to Diversity is set out in the Directors' Report on pages 54 and 55. ### Liquidity The shares issued by the Company are traded 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. ### Gearing #### Fixed Term Loan On 31 January 2020, the Company entered into a five-year £100 million loan at a fixed rate of 2.089% with Scotiabank Europe plc. The fixed term loan is denominated in pounds sterling and will remain in place until 31 January 2025. Full details of the loan are set out in Note 10 of the Notes to the Financial Statements on page 96. #### Revolving Credit Facility On 31 January 2020, the Company entered into a three-year £120 million unsecured multi-currency revolving loan facility with The Bank of Nova Scotia, London Branch. Drawings may be in sterling, US dollars or Chinese renminbi ('CNH'). The facility matured on 30 January 2024 and the undrawn commitment was not renewed. Further details of the facility are set out in Note 10 of the Notes to the Financial Statements on pages 96 and 97. The Company has no other debt as at 31 March 2024 except for the £100 million fixed term loan. The net gearing position was 0.0% (net of cash in the portfolio) at the year-end (2023: 0.0%) which means that the cash held by the Company is equal to or higher than the total bank loans. The Board continues to monitor the level of gearing and currently considers borrowing of up to 20% of net assets to be appropriate, measured at the time of borrowing. #### Affirmation of Shareholder Mandate In accordance with the Company's Articles of Association, the Board must seek shareholders' approval every five years for TEMIT to continue as an investment trust. This allows shareholders the opportunity to decide on the long-term future of the Company. The last continuation vote took place at the 2019 AGM, when 99.95% of the votes cast were registered as votes in favour. The next continuation vote will take place at this year's AGM on Thursday 11 July 2024 and the Board unanimously recommends that shareholders vote in favour of continuation. 40 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ## Stability – Share Buybacks and Conditional Tender Offer The Company has powers to buy back its shares as a discount control mechanism and when this is in the best interests of the Company's shareholders and in 2019 introduced a Conditional Tender Offer. The share price discount to net asset value is discussed under Key Performance Indicators on page 46. Under the Conditional Tender Offer, if over the five-year period from 31 March 2019 to 31 March 2024 the Company's net asset value total return had failed to exceed the benchmark total return, the Board would have 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. The net asset value total return over the five years to 31 March 2024 exceeded that of the benchmark and so the Conditional Tender Offer introduced in 2019 was not triggered. The Board has agreed to run a further Conditional Tender Offer such that if over the five-year period from 31 March 2024 to 31 March 2029 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 (and less the costs of the tender offer). There will be no tender offer if the Company's net asset value total return exceeds the benchmark total return (MSCI Emerging Markets (Net Dividends) Index) over the five-year period. Any tender offer would take place following the Company's 2029 AGM and will also be conditional on shareholders approving the continuation vote in 2029 which is described under 'Affirmation of Shareholder Mandate' above. A key point in the Investment Managers' 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 Managers 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 and that the Company should continue its active share buyback programme. A less volatile discount, and hence share price, is seen as important to investors. For this reason, TEMIT uses share buybacks selectively with the intention of limiting volatility in the share price and where buybacks are in the best interests of shareholders. Details of the share buybacks are included in the following table. All shares bought back in the year were cancelled, with none being placed in treasury. As at 31 March 2024, the Company held 103,825,895 shares in treasury (2023: 103,825,895 shares in treasury). Discount management is reviewed regularly by the Board to ensure that it remains effective in the light of prevailing market conditions. The Conditional Tender Offer will not affect the Board's current approach to discount management. The Board will continue to exercise the Company's right to buy back shares when it believes this to be in shareholders' interests and with the aim of reducing volatility in the discount. | | 2024 | 2023 | | --- | --- | --- | | Shares Bought Back and Cancelled During the Year | 44,319,755 | 19,758,613 | | Proportion of Share Capital Bought Back and Cancelled | 3.8% | 1.7% | | Total Cost of Share Buybacks | £65.9m | £29.2m | | The Benefit to NAV | £10.6m | £4.6m | | The Percentage Benefit to NAV | 0.54% | 0.23% | ## Share Price Discount to NAV ![img-7.jpeg](img-7.jpeg) — TEMIT Share Price Discount, based on a 7 day moving average TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 41 01. Strategic Report Communication The Board and Manager aim to ensure that investors are kept updated The Board encourages registration to our monthly email that keeps regularly about the performance of TEMIT and of emerging markets subscribers appraised of the latest performance, insights and through clear communication and updates as detailed in this section. announcements. The Board is fully committed to TEMIT’s marketing programme. There TEMIT has an active public relations programme. Our Investment is a substantial annual marketing and communication budget, and Managers provide comments to journalists, host media briefings and expenditure by TEMIT is matched by a contribution to costs from the publish articles on issues relevant to investing in emerging markets. Manager. The Investment Managers meet regularly with professional investors TEMIT has received AIC Shareholder Communication awards for its and analysts and host interactive webinars. At each AGM the ‘Your Future is Emerging’ campaigns in both 2022 and 2023. Through Investment Managers make a presentation with the opportunity for all innovative use of broadcast media, TEMIT’s profile has been elevated, shareholders to ask questions. showcasing the Company’s benefits and conveying the dynamic The Chairman regularly meets major shareholders to discuss growth story of emerging markets to a wider audience. Additionally, in investment performance and developments in corporate governance. January 2022, TEMIT unveiled a fresh corporate identity, establishing We try to engage with a wide spectrum of our shareholders and aim to a unique brand for the Company for the first time. address their concerns as far as practically possible. Shareholders are TEMIT seeks to keep shareholders updated on performance and welcome to contact the Chairman or the Senior Independent Director investment strategy through its Annual and Half Yearly Reports, along at any time via temitcosec@frankl intempleton.com. with monthly factsheets and manager commentaries, which are available on the Company’s website - temit.co.uk - offering a wealth of updates, stock story videos, articles, portfolio details, and essential documents. Connect with @TEMIT on Twitter / X for ongoing updates and announcements as we expand our social media presence. United Arab Emirates 42 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ### Section 172 Report – Promoting the success of the Company The Companies (Miscellaneous Reporting) Regulations 2018 require directors to explain how they have discharged their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of ‘members as a whole’ and having regard for all stakeholders. Section 172 Matter 1. The likely consequences of any decision in the long term. 2. The interests of the Company’s employees. 3. The need to foster the Company’s business relationships with suppliers, customers and others. 4. The impact of the Company’s operations on the community and the environment. 5. The desirability of the Company maintaining a reputation for high standards of business conduct. 6. The need to act fairly between members of the Company. Board’s Statement 1. The Board is focused on promoting the long-term success of the Company and regularly reviews the Company’s long-term strategic objectives, including consideration of the impact of the Investment Managers’ actions on the marketability and reputation of the Company and the likely impact on the Company’s stakeholders of the Company’s strategy. 2. The Company has no direct employees. 3. The Board’s approach to its key stakeholders is set out below. 4. The Board’s approach is set out in the section on Investment Process and ESG Considerations under Strategy and Business Model on page 40. 5. The Board’s approach is set out in ‘Culture and Values’ on page 40. 6. The Board’s approach to its key stakeholders is set out below. In addition to the primary focus of the Board, and with due regard to its obligations under Section 172 of the Companies Act 2006, the following important matters were considered at Board meetings during the year: ## • Recruitment of Angus Macpherson as a non-executive Director and Chairman; • Changes to the risk matrix, monitoring such changes carefully and introducing alternative mitigating controls where necessary and practicable to support the operation of an effective control environment; ## • Review of the marketing plan with the Manager; ## • Review of the share buyback programme; ## • Review of the dividend policy; and ## • Review of the gearing facility and in particular the decision not to renew the revolving credit facility. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 43 01. Strategic Report The Board considers the main stakeholders in the Company to be its shareholders and its service providers, the principal one of which is its Manager, along with its investee companies. A summary of the key areas of engagement undertaken by the Board with its main stakeholders in the year under review and how Directors have acted upon this to promote the long-term success of the Company are set out in the following table. | Stakeholders | Area of Engagement | Consideration Engagement Outcome | | | | --- | --- | --- | --- | --- | | Shareholders | Company Objective Delivering on the | | The Company’s objective and | The Investment Managers’ | | and Potential | | Company’s objective to | investment policy are set out | commentary commencing on | | Investors | | shareholders over the | on page 39. | page 13 gives a full commentary | | | | long term. | | on the Company’s portfolio as | The Company’s performance well as on the approach and against its objective is considerations undertaken by the regularly reviewed by the Investment Managers for stock Board, taking account of views selection within the portfolio. expressed by shareholders. | | | | The Company holds | A continuation vote took place at | | --- | --- | --- | --- | --- | | | | | a continuation vote every five | the 2019 AGM, with 99.95% of | | | | | years to allow shareholders to | votes cast in favour. The next | | | | | decide on the long-term | continuation vote is taking place | | | | | future of the Company. | at this year’s AGM. | | Shareholders | Dividend The objective of the | | The Board reviews regularly | Dividend payments are | | and Potential | | Company is to provide | the level of dividends, taking | discussed in the Chairman’s | | Investors | | long term capital | account of the income | Statement on page 10. | | | | appreciation, however, | generated by the Company’s | | | | | the Board recognises the | portfolio and the availability | | | | | importance of dividend | of reserves. | | income to many In considering the shareholders. sustainability of the dividend and of the Company, the Board reviews the models supporting the going concern assessment and viability statement. | Shareholders | Communication with | The Board understands | Working closely with the | Full details of all Board and | | --- | --- | --- | --- | --- | | and Potential | Shareholders | the importance of | Manager, the Board ensures | Manager communication are | | Investors | | communication with its | that there is a variety of | included on page 112. | | | | shareholders and | regular communication | | Shareholders are invited to maintains open channels with shareholders. submit questions for the Board to of communication with address at the Company’s AGM. shareholders. 44 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report | Stakeholders | Area of Engagement | Consideration Engagement Outcome | | | | --- | --- | --- | --- | --- | | Shareholders | Discount | To smooth the volatility | The Board monitors the | TEMIT continues to adopt | | and Potential | Management | in the discount. | discount closely and discusses | an active buy back policy and has | | Investors | | | discount strategy with the | a Conditional Tender Offer. | | | | | Investment Managers and the | Details of these can be found | | | | | Company’s stockbroker at | under ‘Stability – Share Buybacks | | | | | every regular Board meeting. | and Conditional Tender Offer’ on | | | | | The stockbroker provides | page 41. | a summary of the discount and Further details of the current market conditions to the Board discount and discount and Investment Managers at management are detailed the close of each trading day in the Chairman’s Statement in London. The Board also under ‘Share price rating’ on meets with the Investment pages 9 and 10. Managers to discuss the Company’s marketing strategy to ensure effective communication with existing shareholders and to consider strategies to create additional demand for the Company’s shares. Manager Communication The Board’s oversight of The Manager attends all Board The Board operates in Between the Board the Manager is very meetings where it reviews and a supportive and open manner, and the Manager important. discusses performance challenging the activity of the reports, changes in the Manager and its results. The portfolio composition and risk Board believes that the Company matrix. The Board receives is well managed and the Board timely and accurate places great value on the information from the Manager experience of the Investment and engages with the Managers to deliver superior Investment Managers and the long-term returns from Company Secretary between investments and on the other meetings as well as with other functions of the Manager to fulfil representatives of the their roles effectively. Manager as and when it is deemed necessary. Third-party Engagement with The Board acknowledges As an investment company The Manager maintains the Service Service Providers the importance of all services are outsourced overall day-to-day relationship Providers ensuring that the to third-party providers. with the service providers and Company’s service The Board considers the the Board undertakes an annual providers are delivering support delivered by service review of the performance of the a suitable level of service, providers including the quality Company’s service providers. that the service level is of the service, succession This review also includes the level sustainable and that they planning and any potential of fees paid. The Board meets are fairly remunerated for interruption of service or with service providers as and their service. other potential risks. when considered necessary. Investee Engagement The relationship between On behalf of the Company The Investment Managers have Companies with Investee the Company and the the Investment Managers a dedicated research team Companies investee companies is engage with investee that is employed in making very important. companies implementing investment decisions and when corporate governance voting at shareholder meetings of principles and discuss the investee companies. portfolio with the Board on a quarterly basis. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 45 01. Strategic Report ## Key performance indicators The Board considers the following to be the key performance indicators ('KPIs') for the Company: - Net asset value and share price total return over various periods, compared to its benchmark; - Share price discount to net asset value; - Dividend and revenue earnings; and - Ongoing charges ratio. The 10 Year Record of the KPIs is shown on page 8. ### Net asset value and share price total return(a) Net asset value and share price total return data is presented within the Financial Highlights on page 4 along with the 10 Year Record on page 8. The Chairman's Statement on pages 9 to 12 and the Investment Managers' Report on pages 14 to 29 include further commentary on the Company's performance. Performance of the Company's portfolio is measured in pounds sterling (GBP) against the MSCI Emerging Markets (Net Dividends) Index. In previous Annual and Half Yearly Reports, performance data has been presented using the version of the MSCI Emerging Markets Index calculated on the basis that gross dividends (that is, without assuming the deduction of any local taxes) were reinvested. In this Annual Report, performance data is presented using the version of the MSCI Emerging Markets Index which assumes that dividends net of local taxes are reinvested and we will use that version of the index, which we refer to as the MSCI Emerging Markets (Net Dividends) Index, in all publications from now on. We believe that this change will make the performance of TEMIT more comparable with similar investment trusts that use a 'Net Dividend' benchmark. This also better reflects the potential tax treatment of TEMIT as the MSCI Emerging Markets (Net Dividends) Index takes account of the local taxes that are charged on dividends included in the index. For the avoidance of doubt, the change in benchmark described above will not affect the investment decision-making process of the Investment Managers. ### Share price discount to net asset value(a) Details of the Company's share price discount to net asset value are presented within the Financial Summary on page 7. On 23 May 2024, the latest practicable date for which information was available, the discount was 14.3%. 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 and has a Conditional Tender Offer mechanism. These are described under 'Stability – Share Buybacks and Conditional Tender Offer' on page 41. ### Dividend and revenue earnings Total income earned in the year was £71.9 million (2023: £80.6 million) which translates into net revenue earnings of 5.18 pence per share (2023: 5.72 pence per share), a decrease of 10.8% over the prior year. The Company paid an interim dividend of 2.00 pence per share on 26 January 2024. The Board is proposing a final dividend of 3.00 pence per share, making total ordinary dividends for the year of 5.00 pence per share. ### Ongoing charges ratio(a) ('OCR') The OCR reduced to 0.97% for the year ended 31 March 2024, compared to 0.98% in the prior year. The OCR has been calculated in line with the Association of Investment Companies ('AIC') recommended methodology. 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 8 of the Notes to the Financial Statements on page 95. (a) A glossary of alternative performance measures is included on pages 115 and 116. 46 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report ### Principal and emerging risks At least quarterly, the Board reviews with the AIFM and the Investment Managers a wide range of risk factors that may impact the Company. A full review of risks and internal controls is held every September by the Audit and Risk Committee. These reviews include a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. These are summarised in the table below. Further explanation of the monitoring of risk and uncertainties is covered within the Report of the Audit and Risk Committee on page 72. 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. 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 Managers as part of every investment decision. Further information on this process is detailed on page 32. Principal Risk Mitigation Market and Market risk arises from volatility in the prices of the The Board reviews regularly and discusses with the Geopolitical Company’s investments, from the risk of volatility in Investment Managers the portfolio, the Company’s global markets arising from macroeconomic and investment performance and the execution of the geopolitical circumstances and conditions. Many of investment policy against the long-term objectives of the companies in which TEMIT invests are, by reason the Company. The Manager’s independent risk team of the locations in which they operate, exposed to the performs systematic risk analysis, including country risk of political or economic change. In addition, and industry specific risk monitoring, as well as stress sanctions, exchange controls, tax or other regulations testing of the portfolio’s resilience to geopolitical introduced in any country in which TEMIT invests may shocks. The Manager’s legal and compliance team affect its income and the value and the marketability of monitors sanctions. Where TEMIT is affected, its investments. Emerging markets can be subject to adherence to all sanctions and restrictions is ensured greater price volatility than developed markets. by this team. The Board also regularly reviews reports from the Manager’s risk, legal and compliance teams. Geopolitical risk was highlighted by the Russian war on Ukraine, the escalating trade war between the United States and China and military tensions over the Taiwan Strait, and the conflict between Israel and Hamas which broke out in October 2023. All of these factors have depressed investor sentiment and the Russian invasion of Ukraine has impacted global trade posed by supply shocks, sanctions, higher levels of inflation and volatility in asset prices. Technology Failure or breach of the security of information The Company benefits from Franklin Templeton’s technology systems of the Company’s service technology framework designed to mitigate the risk of providers may entail risk of financial loss, disruption a cyber security breach. to operations or damage to the reputation For key third-party providers, the Audit and Risk of the Company. Committee receives regular independent reports on their technology control environment. Concentration Concentration risk arises from investing in relatively The Board reviews regularly the portfolio composition/ few holdings, few sectors or a restricted geographic asset allocation and discusses related developments area. Performance may be more volatile than with with the Investment Managers and the independent a greater number of securities. risk management team. The Investment Compliance team of the Investment Managers monitors concentration limits and highlights any concerns to portfolio management for remedial action. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 47 01. Strategic Report Principal Risk Mitigation Sustainability and The Company’s portfolio, and also the Company’s The Investment Managers consider that sustainability Climate Change service providers and the Investment Managers, are risks are relevant to the returns of the Company. exposed to risks arising from governance and The Manager has implemented a policy in respect of sustainability issues, including climate change. To the the integration of sustainability and climate change extent that such a risk occurs, or occurs in a manner risks in its investment decision making process. The that is not anticipated by the Investment Managers, Board receives regular reports on the policies and there may be a sudden, material negative impact on controls in place on ESG considerations. The Board has the value of an investment, and the operations or reviewed and fully supports the Franklin Templeton reputation of the Investment Managers. Stewardship Statement and its Sustainable Investing Principles and Policies. Foreign Currency Currency exchange rate movements may affect The Board monitors currency risk as part of the regular TEMIT’s performance. In general, if the value of sterling portfolio and risk management oversight. TEMIT does increases compared with a foreign currency, an not hedge currency risk. investment traded in that foreign currency will be worth less in sterling terms. This can have a negative effect on the Company’s performance. Discount Risk The discount/premium at which the Company’s shares The Board monitors the level of discount/premium at trade relative to its net asset value can change. The which the shares trade and has an active investor risk of a widening discount, and/or related volatility, relations programme. The Company has authority to could reduce shareholder returns and confidence buy back its existing shares when deemed by the Board in the Company. to be in the best interests of the Company and its shareholders. Operational Like many other investment trust companies, TEMIT The Manager’s systems are regularly tested and and Custody has no employees. The Company therefore relies upon monitored and an internal controls report, which the services provided by third parties and is includes an assessment of risks together with an dependent upon the control systems of the overview of procedures to mitigate such risks, is Investment Managers and of the Company’s other prepared by the Manager and reviewed by the Audit service providers. The security, for example, of the and Risk Committee. Company’s assets, dealing procedures, accounting J.P. Morgan Europe Limited is the Company’s records and maintenance of regulatory and legal depositary. Its responsibilities include cash monitoring, requirements depends on the effective operation of safe keeping of the Company’s financial instruments, these systems. 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-custodians 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 Managers. 48 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 01. Strategic Report Principal Risk Mitigation Key Personnel The ability of the Company to achieve its objective is The Manager endeavours to ensure that the principal significantly dependent upon the expertise of the members of its management teams are suitably Investment Managers and their ability to attract and incentivised, participate in strategic leader programmes retain suitable staff. and monitor key succession planning metrics. The Board discusses this risk regularly with the Manager. Regulatory The Company is an Alternative Investment Fund The Board, with the assistance of the Manager, ensures (‘AIF’) and is listed on both the London and New that the Company complies with all applicable laws and Zealand stock exchanges. The Company operates in regulation and its internal risk and control framework an increasingly complex regulatory environment and reduces the likelihood of breaches happening. faces numerous regulatory risks. Breaches of regulations could lead to a number of detrimental outcomes and reputational damage. Emerging risks The Company foresees no issues with meeting interest The key emerging risk faced by the Company during the year payments and current liabilities relating to the £100 million under review was the possible effects of the conflict between fixed term loan which matures on 31 January 2025. A Israel and Hamas on stability in the Middle East and wider significant proportion of the Company’s expenses is the ad world. The Board and Investment Managers continue to valorem AIFM fee, which would naturally reduce if the market monitor the investment strategy response, along with the value of the Company’s assets were to fall. continuing ramifications of the Russian invasion of Ukraine, Considering the above, and with careful consideration given and tensions between the United States and China, as noted to the current market situation, the ramifications of continuing under the market and geopolitical risk above. The Board also geopolitical tensions and the challenges posed by climate continues to monitor the potential risks on the portfolio and change, the Board has concluded that there is a reasonable investee companies posed by the dramatic progress of expectation that, assuming that there will be a successful Artificial Intelligence (‘AI’). continuation vote at the 2024 AGM in July, the Company will ### Viability statement be able to continue to operate and meet its liabilities as they fall due over the next five years. The Board considers viability as part of its continuing programme of monitoring risk. In preparing the Viability ### Future strategy Statement, in accordance with the UK Corporate Governance Code and the AIC Corporate Governance The Company was founded, and continues to be managed, Code, the Directors have assessed the prospects of the based on a long-term investment strategy that seeks to Company over a longer period than the 12 months required generate superior returns from investments, principally in the by the ‘Going Concern’ provision. shares of carefully selected companies in emerging markets. The Board has considered the Company’s business and The Company’s results will be affected by many factors investment cycles and is of the view that five years is a suitable including political decisions, economic factors, the time horizon to consider the continuing viability of the performance of investee companies and the ability of the Company, balancing the uncertainties of investing in emerging Investment Managers to choose investments successfully as markets securities against having due regard to viability over well as the current challenges. the longer term. The Board and the Investment Managers continue to believe In assessing the Company’s viability, the Board has performed in investment with a long-term horizon in companies that are a robust assessment of controls over the principal risks. The undervalued by stock markets, but which are fundamentally Board considers, on an ongoing basis, each of the principal strong and growing. It is recognised that, at times, extraneous and emerging risks as noted above and set out in Note 14 of political, economic and company-specific and other factors the Notes to the Financial Statements. The Board evaluated will affect the performance of investments, but the Company various scenarios of possible future circumstances including will continue to take a long-term view in the belief that a material increase in expenses and a continued significant patience will be rewarded. and prolonged fall in emerging equity markets. The Board also considered the latest assessment of the portfolio’s liquidity. By order of the Board The Board monitors income and expense projections for the Company, with the majority of the expenses being predictable Angus Macpherson and modest in comparison with the assets of the Company. 7 June 2024 TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 49 ## 02. ## Governance 50 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Directors’ report ### The Board is responsible for framing and executing the Company’s strategy and for monitoring ### risks closely. The Board endeavours to run the Company in a manner which is responsible, ### honest, transparent and fully accountable. In the Board’s view, good governance means ### managing the Company’s business well and engaging effectively with investors and other ### stakeholders. The Board considers the practice of good governance to be an integral part of the ### way that it manages the Company and it is committed to maintaining the highest standards of ### financial reporting, transparency and business integrity. ### The Directors submit their Annual Report, together with the Financial Statements of the ### Company, for the year ended 31 March 2024. Board of Directors Angus is chief executive of Noble and Company (UK) Limited, an independent boutique Scottish corporate finance business. He was based in Asia between 1995 and 2004 in Singapore and Hong Kong, latterly as head of capital markets and financing for Merrill Lynch for Asia. He was previously Chairman of Pacific Horizon Investment Trust and of Henderson Diversified Income Trust. Angus brings to the Board extensive experience in corporate finance in Europe and in Asia and is an experienced chairman Angus Macpherson of investment trusts. (Chairman of Board, Chairman of Other Current Appointments: Management Engagement Committee and ## Chairman of Nomination and Remuneration • Schroder Japan Growth Fund plc (Non-Executive Director) Committee: 1 January 2024) ## • Hampden & Co PLC (Non-Executive Director) Date of appointment: 6 October 2023 ## • Noble and Company (UK) Limited (Chief Executive) Angus is an independent Director. Simon has extensive experience in audit and he has a wide-ranging understanding of the business. He draws on previous experience across internal audit, finance and compliance, as well as technical knowledge, relevant to his role. 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 Simon Jeffreys Operating Officer of The Wellcome Trust. Simon was Chair of the Audit Committee and (Chairman of the Audit and Risk a member of the Remuneration, Nominations and Risk Committees of St James’s Place Committee: 13 July 2017, Senior Independent plc until 18 May 2023 and Chair of the Audit and Risk Committee of SimCorp A/S until | Director: 14 July 2022) | 3 November 2023. | | | --- | --- | --- | | Date of appointment: 15 July 2016 | Other Current Appointments: | | | | • | Amlin Underwriting Limited (Chairman of the Board) | | | • | Crown Prosecution Service (Chair of Audit and Risk Committee) | | | • | Post Office Limited (Chair of Audit, Risk and Compliance Committee) | Simon is an independent Director. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 51 02. Governance Board of Directors David is a Chartered Accountant whose career was in investment management, firstly as an Asian fund manager with Lazard 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 David Graham contributes extensive experience of Asia and other emerging markets. Date of appointment: 1 September 2016 Other Current Appointments: ## • Fidelity Japan Trust (Chairman) ## • JPMorgan China Growth & Income plc (Chair of the Audit Committee) ## • DSP India Investment Fund (Non-Executive Director) ## • DSP India Fund (Non-Executive Director) David is an independent Director. Magdalene is a former investment director who specialised in investments in global emerging markets. Based in London and Edinburgh, she spent 32 years managing listed equity portfolios, investing in Japanese, Asian Pacific and UK markets. Born in Hong Kong, Magdalene is fluent in Cantonese and Mandarin and has travelled extensively in China and Asia over the course of her career. She currently serves as a trustee for an educational endowment fund and participates in volunteering work. Magdalene Miller Other Current Appointments: Date of appointment: 10 May 2021 ## • Baillie Gifford China Growth Trust (Non-Executive Director) Magdalene is an independent Director. 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. Charlie was previously a non-executive director of Asia Dragon Trust plc. Since stepping down from Cenkos in 2014 he has pursued several business and charitable interests. Charlie has a wide-ranging understanding of the business Charlie Ricketts and draws on previous experience across finance, corporate communication and risk Date of appointment: 12 July 2018 management, as well as technical knowledge. Charlie is an independent Director. Abigail has over 20 years of investment experience, most recently as the Investment Director at Snowball Impact Management, a sustainable and impact-focused asset manager. Previously Abigail has managed retail and institutional Asia Pacific portfolios in Hong Kong and London for Schroders, HSBC Asset Management Hong Kong and Colombia Threadneedle Investments. She is a CFA Charterholder and has experience in manager selection, sustainability, and impact measurement. Abigail Rotheroe Other Current Appointments: Date of appointment: 1 November 2022 ## • Baillie Gifford Shin Nippon plc (Non-Executive Director) ## • HydrogenOne Capital Growth plc (Non-Executive Director) ## • Greencoat UK Wind (Non-Executive Director) Abigail is an independent Director. Details of the fees earned by each Director can be found on page 64. The Directors’ interests in the Company’s shares are noted on page 66. 52 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ### Appointment and re-election of Directors Board evaluation The Board undertakes an annual evaluation of its own Directors are initially appointed by the Board after a rigorous performance and that of its Committees and individual selection process and each Director is then subject to annual Directors including the Chairman. The Board has also re-election by the shareholders. At the first AGM following considered the independence of each Director, including appointment a Director is subject to election by the the Chairman. shareholders. Thereafter, a Director’s reappointment is subject to a performance evaluation carried out each year and the As required under corporate governance best practice of approval of shareholders at each AGM, in accordance with FTSE 350 companies a formal performance evaluation of the corporate governance best practice. When making a Board, its Committees and the individual Directors is recommendation, the Board considers the ongoing undertaken with an external agency every third year. In the requirements of the UK Corporate Governance Code year under review, the annual performance process was (the‘Code’), including the need to refresh the Board and its facilitated by Lintstock Ltd (‘Lintstock’). The process included Committees. the completion of questionnaires prepared by Lintstock and interviews with each Director facilitated by Lintstock. Lintstock The terms and conditions of the Directors’ appointments are prepared summary reports which were discussed by the set out in their Letters of Appointment, which are available for Directors. The independence of each Director was checked inspection on request at the registered office of the Company considering the provisions of the Code. The experience, and at the AGM. The terms of appointment provide that a balance of skills, diversity, time commitment, tenure of each Director will be subject to re-election at each AGM. A Director director, openness, spirit of debate and knowledge of the may be removed from office following three months’ notice. Board were considered as well as Board effectiveness, role The Board has agreed that the independent Directors should and structure. stand down after nine years from their initial appointment other than in exceptional circumstances. Directors are prepared to The Chairman confirms that, following the annual performance resign or take steps that could lead to a loss of office at any evaluation, each Director’s performance continues to be time in the interests of long-term shareholder value. The effective, demonstrating commitment to their role and each continuation of an appointment is contingent on satisfactory independent Director is recommended for re-election at the annual performance evaluation. A Director may resign by AGM. Angus Macpherson is subject to election by notice in writing to the Board at any time and there is no notice shareholders as this is the first AGM of the Company since his period for resignation. appointment on 6 October 2023. The Chairman also confirms that each Committee’s performance continues to be effective in fulfilling its responsibilities and duties. Formal Board ### The Board performance evaluations will continue to take place at least The primary focus of the Directors at regular Board meetings annually with the appointment of an external facilitator every is the consideration of investment performance and outlook, three years. market activity, discount management mechanisms including share buybacks, gearing, marketing, shareholder register analysis, investor relations, peer group information, top risks and investment risk management, regulatory updates, corporate governance and industry issues. The Board has reviewed the effectiveness of the Company’s system of internal controls for the year ended 31 March 2024. During its review the Board has not identified or been advised of any significant failings or weaknesses relating to the Company. Further details of the Directors’ responsibilities can be found in the Statement of Directors’ Responsibilities on page 73. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 53 02. Governance ## Diversity • At least 40% of individuals on the Board are women; TEMIT’s aim is to have an appropriate level of diversity in the ## • At least one senior Board position (chairman, chief boardroom. executive officer (‘CEO’), senior independent director or chief financial officer (‘CFO’)) is held by a woman; and The Board acknowledges and welcomes the recommendations from the Hampton-Alexander Review on gender diversity and At least one individual on the Board is from a minority ethnic ## • the Parker Review on ethnic representation. The Nomination background, defined to include those from an ethnic group and Remuneration Committee considers diversity generally other than a white ethnic group, as specified in categories when making recommendations for appointments to the Board, recommended by the Office for National Statistics. considering gender, social and ethnic backgrounds, thought, experience and qualification. The prime responsibility, however, As required by the Listing Rules the reporting for TEMIT against is the strength of the Board and the overriding aim in making these targets is set out in the tables below in the prescribed any new appointments is always to select the best candidate format. The data was collected on a self-identifying basis. The based on objective criteria and merit. Board notes that as at 31 March 2024 it does not currently meet the targets in relation to the number of women on the Board or In all the Board’s activities, there has been and will be no the number of senior Board positions which should be held by discrimination on the grounds of gender, race, ethnicity, a woman and will be considering the targets when future Board religion, sexual orientation, age or physical ability. appointments are made. The Board confirms that it has not met these targets but for continuity and succession planning the The Board has made a commitment to consider diversity when Directors will always select the best candidate based on reviewing the composition of the Board and notes the new objective criteria and merit. The Board notes that as an Listing Rules requirements (LR9.8.7 R) regarding the targets on externally managed investment trust there is no CEO or CFO board diversity: and the Board considers the Chairman of the Company, the Chairman of any of the Company’s Committees and the Senior Independent Director to be senior positions. Number of Percentage of Number of Senior Sex Board Members the Board Positions on the Board Men 4 67% 2 Women 2 33% – Not Specified/Prefer Not to Say – – – Number of Percentage of Number of Senior Ethnic Background Board Members the Board Positions on the Board White British or Other White (Including Minority White Groups) 5 83% 2 Mixed/Multiple Ethnic Groups – – – Asian/Asian British 1 17% – Black/African/Caribbean/Black British – – – Other Ethnic Group, Including Arab – – – Not Specified/Prefer Not to Say – – – 54 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance Diversity at the Manager The recruitment process which led to the appointment of The Board also takes a close interest in diversity, equity and Angus Macpherson was led by Simon Jeffreys as Senior inclusion (‘DEI’) at the Manager. Franklin Templeton has a Independent Director and commenced in January 2023, the culture which embraces individual differences and the wealth process was facilitated by Odgers Berndtson as the appointed of perspectives brought by DEI. As a global company, Franklin external agency. Odgers Berndtson does not undertake any Templeton believes that it benefits from the unique skills and other services for TEMIT and has no connection with any of experiences of a diverse workforce made up of employees the Directors. The list of candidates identified was discussed who span across generations, genders, preferences, by the Nomination and Remuneration Committee and capabilities and cultural identification. It also believes that an thepreferred candidates were invited for interviews. inclusive culture can drive innovation and allows the firm to PaulManduca did not take part in the search for his successor. deliver better client outcomes. To support the firm’s DEI efforts, The Nomination and Remuneration Committee recommended dedicated resources have been allocated, as well as the that the Board appoint Angus Macpherson after assessing the establishment of a global governance structure and research- candidates against objective criteria and with due regard to based DEI policies and procedures. the benefits of diversity (including gender, social, ethnic backgrounds) as well as cognitive and personal strengths and Franklin Templeton has three overarching goals related to its time available to discharge his responsibilities fully and approach on DEI: 1) to be the employer of choice, 2) the effectively. Angus Macpherson was appointed as a business partner of choice and 3) the industry of choice. In non-executive Director of the Company, with effect from 2023, the firm established corporate DEI people goals as part 6October 2023 and took on the role of Chairman from of a broad range of measures to track its DEI progress. It also 1January 2024. continued to localise its global DEI strategy and approach through the work of three regional executive DEI councils in The succession plan agreed by the Nomination and the Americas, EMEA and APAC. Remuneration Committee includes an emergency succession plan identifying contingency arrangements. In the UK, new partnerships have been fostered with DEI organisations like Black Professionals Scotland and the The Nomination and Remuneration Committee also reviews Business Disability Forum, the leading business membership and recommends to the Board the reappointment of the organisation in disability inclusion. It also remains an active Directors. The recommendation is not automatic and will follow partner and supporter of several organisations that promote a process of evaluation of each Director’s performance and inclusion and social mobility in the UK such as the Diversity consideration of the Director’s independence. The Nomination Project, 10,000 Black Interns, the Robertson Trust, Leonard and Remuneration Committee also considers the mix of skills Cheshire and Career Ready. In 2022, Franklin Templeton was and experience of the current Board members. also pleased to earn a top score of 100 percent on the Human Rights Campaign (‘HRC’) Foundation’s 2023 Corporate Meetings and committees Equality Index (‘CEI’) which measures corporate policies and The Board delegates certain responsibilities and functions to practices related to LGBTQ+ workplace equality, for the committees. Five Directors are members of all committees. The seventh consecutive year. The firm was also awarded a bronze Chairman is not a member of the Audit and Risk Committee, achievement award in Stonewall’s 2022 Workplace Equality but he attends the Audit and Risk Committee meetings by Index. Franklin Templeton sponsors thousands of volunteer invitation. activities each year through its global Involved programme The table below details the number of Board and Committee which helps to provide better outcomes for local communities. meetings attended by each Director. During the year, there were five Board meetings, three Audit and Risk Committee Succession planning and recruitment meetings, one Management Engagement Committee meeting, When considering succession planning, the Nomination one formal Nomination and Remuneration Committee and Remuneration Committee bears in mind the tenure, meeting, and one ad-hoc Nomination and Remuneration balance of skills, knowledge, experience and diversity existing Committee meeting chaired by the Senior Independent on the Board. Director to discuss the appointment of Angus Macpherson as a Director of the Company. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 55 02. Governance Management Nomination and Audit and Engagement Remuneration Board Risk Committee Committee Committee David Graham 5/5 3/3 1/1 1/1 Simon Jeffreys 5/5 3/3 1/1 1/1 (a) Angus Macpherson 2/2 1/1 1/1 1/1 Magdalene Miller 5/5 3/3 1/1 1/1 Charlie Ricketts 5/5 3/3 1/1 1/1 Abigail Rotheroe 5/5 3/3 1/1 1/1 (b) Paul Manduca 4/4 3/3 – – The Audit and Risk Committee is chaired by Simon Jeffreys. of the Company. The role of the Nomination and Remuneration The formal Report of the Audit and Risk Committee is on pages Committee is to regularly review the Board structure, size and 67 to 72. composition and make recommendations to the Board with regard to any adjustments that seem appropriate, to consider The Management Engagement Committee is chaired by the the rotation and renewal of the Board, approve the candidate Chairman of the Board and all Directors are members of the specification for all Board appointments, approve the process committee. The primary role of the committee is to review the by which suitable candidates are identified and short-listed, performance of, and the contractual arrangements with, the and to nominate candidates for consideration by the full Manager. The Management Engagement Committee held one Board, whose responsibility it is to make appointments. The meeting during the year and undertook a formal review of the Nomination and Remuneration Committee also considers Manager and of the Investment Managers. theeffectiveness of individual Directors and makes recommendations to the Board in respect of re-elections. The review considered investment strategy, investment TheNomination and Remuneration Committee keeps process, performance and risk, and was carried out through underreview the balance of skills, independence, knowledge meetings between the Management Engagement Committee of the Company and experience and length of service of and members of the investment and risk management teams theDirectors. of the Manager. When assessing the performance of the Manager and of the Investment Managers, the committee During the year under review, the Nomination and believes that it is appropriate to make this assessment over Remuneration Committee managed the recruitment process a medium to long-term timeframe, which is in accordance with which led to the appointment of Angus Macpherson. the long-term approach taken to investment. As a result of the evaluation process performed by the Management The Nomination and Remuneration Committee annually Engagement Committee, the Board confirms that it is satisfied reviews the level of fees paid to the Chairman, the Chairman of that the continuing appointment of the Manager is in the the Audit and Risk Committee, the Senior Independent interests of shareholders as a whole. Director and other Directors relative to other comparable companies and in the light of the Directors’ responsibilities. The Nomination and Remuneration Committee is chaired The Committee may engage independent external advisors if by the Chairman of the Board and all Directors are members of it considers this to be necessary. the committee. The Nomination and Remuneration Committee held one formal meeting during the year and discussed the The terms of reference for the Audit and Risk Committee, annual evaluation process for the Board, the individual Management Engagement Committee and Nomination and Directors and the Chairman and succession planning. The Remuneration Committee are available to shareholders on the Nomination and Remuneration Committee also held one TEMIT website (www.temit.co.uk) or upon request via email to ad-hoc meeting chaired by the Senior Independent Director to temitcosec@franklintempleton.com. discuss the appointment of Angus Macpherson as a Director (a) Appointed to the Board on 6 October 2023. Attended one meeting of the Audit and Risk Committee by invitation when the Half Yearly Report was being drafted. (b) Stepped down from the Board on 31 December 2023. Attended three meetings of the Audit and Risk Committee by invitation including when the Annual Report and Half Yearly Report were being drafted and the Company’s risk matrix was being reviewed. 56 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Conflicts of interest The Company maintains a register of Directors' interests which has been disclosed to, and approved by, the Board. The list of interests of each Director is reviewed at every Board meeting. Directors who have potential conflicts of interest will not take part in any discussions which relate to that particular conflict. The Board confirms that at 31 March 2024 and the date of this report there were no conflicts of interest. ## 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 Companies Act 2006. The Company maintains appropriate insurance cover in respect of legal action against the Directors. ## The Company ### Principal activity and investment company status in the UK 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. ## Results and dividends The capital profit for the year was £81.5 million (2023: loss of £64.3 million) and the revenue profit was £58.9 million (2023: £66.9 million). The full results for the Company are disclosed in the Statement of Comprehensive Income on page 83. The Directors propose a final ordinary dividend of 3.00 pence per share. Including the interim dividend of 2.00 pence per share, which was paid by the Company on 26 January 2024, this represents an annual ordinary dividend of 5.00 pence per share (2023: 5.00 pence per share) and, if approved by shareholders at the AGM on 11 July 2024, the final dividend will be payable on 26 July 2024 to shareholders on the register at close of business on 21 June 2024. ## Financial ### Share capital and gearing Changes in the share capital of the Company are set out in Note 11 of the Notes to the Financial Statements. As part of the Company's objective and current investment policy, the Company may borrow up to 20% of its net assets. The current gearing is discussed in the Business Review on page 40. ### Share buybacks The Board is again seeking shareholder permission to continue its programme of share buybacks as outlined under 'Stability – Share Buybacks and Conditional Tender Offer' on page 41. ## Auditor Ernst & Young LLP was appointed in 2019 as the Company's auditor. Ernst & Young LLP has expressed a willingness to continue in office as auditor and a resolution proposing its reappointment will be submitted at the AGM. Further details on the assessment of the auditor can be found within the Report of the Audit and Risk Committee on page 70. 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 apprised 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 57 02. Governance ## Substantial shareholdings As at 23 May 2024, 31 March 2024 and 31 March 2023, the Company had been notified that the following were interested in 3% or more of the issued share capital of the Company. | Name | 23 May 2024 Number of Shares | % | 31 March 2024 Number of Shares | % | 31 March 2023 Number of Shares | % | | --- | --- | --- | --- | --- | --- | --- | | City of London Investment Management Company Limited | 282,714,027 | 25.6 | 278,767,061 | 25.0 | 278,947,968 | 24.1 | | Lazard Asset Management LLC Group | 97,872,005 | 8.9 | 108,523,992 | 9.7 | 108,822,695 | 9.4 | | Allspring Global Investments, LLC | 77,574,353 | 7.0 | 79,262,342 | 7.1 | 63,527,818 | 5.5 | | Investec Wealth & Investment Limited (formerly Rensburg Sheppards) | 64,902,503 | 5.9 | 61,700,274 | 5.5 | 74,370,335 | 6.4 | | RBC Brewin Dolphin | 44,937,794 | 4.1 | 49,814,378 | 4.5 | 35,371,979 | 3.1 | | Quilter Cheviot Investment Management (previously Old Mutual Plc) | 40,393,918 | 3.7 | 41,942,497 | 3.8 | 55,516,380 | 4.8 | ## Principal service providers ### Alternative Investment Fund Manager, Secretary and Administrator FTITML is the Alternative Investment Fund Manager, Secretary and Administrator with the role of investment management delegated to FTITML and TAML. Portfolio Managers from FTITML and TAML form part of the wider FTEME as mentioned on page 13. The main secretarial duties involve compliance with statutory and regulatory obligations which the Company must observe. All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all governance matters. The appointment of the Company Secretary was discussed and approved by the Board and the secretarial activity is reviewed on an annual basis. With effect from 1 July 2022 the annual fee rate for the services provided by FTITML, including investment management, risk management, secretarial and administration services, has been: - 1% of the first £1 billion of net assets; - 0.75% of net assets between £1 billion and £2 billion; and - 0.5% of net assets over £2 billion. The agreement between the Company and FTITML may be terminated by either party giving one year's notice, but in certain circumstances the Company may be required to pay compensation to FTITML 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. 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. In the opinion of the Directors, the continuing appointment of FTITML is in the best interests of the shareholders as a whole. ### Depository and custodian J.P. Morgan Europe Limited performs the role of depository 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 113. 58 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Corporate governance • The Company relies on the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2021, The Company is committed to high standards of corporate issued by the New Zealand Financial Markets Authority, governance. The Board is accountable to the shareholders for which exempts it from certain financial reporting obligations good governance and this statement describes how under the Financial Markets Conduct Act 2013; and governance principles have been applied. ## • The Company relies on the Financial Markets Conduct Association of investment companies code of (Climate-related Disclosures for Foreign Listed Issuers) corporate governance Exemption Notice 2023, which exempts it from Part 7A of The Board has considered the Principles and Provisions of the the New Zealand Financial Markets Conduct Act 2013 such 2019 AIC Code of Corporate Governance (‘AIC Code’). The that the Company is exempt from climate-related disclosure AIC Code addresses the Principles and Provisions set out in requirements under New Zealand law. Any climate the 2018 UK Corporate Governance Code (the UK Code), as statements prepared by the Company from time to time are well as setting out additional provisions on issues that are of made available, free of charge, on the Company’s website specific relevance to the Company as an investment company. at www.temit.co.uk. The Board considers that reporting against the Principles and ### Provisions of the AIC Code, which has been endorsed by the Schedule of Reserved Matters FRC, provides the relevant information to shareholders. The Board has formally adopted a Schedule of Reserved Matters, which details the matters which the Board has agreed The Company has complied with the Principles and are specifically reserved for its collective decision. These Provisions of the AIC Code which also meets the obligations matters include, inter alia, approval of the Half Yearly and under the UK Code (and associated disclosure requirements Annual Financial Statements, the approval of interim and under paragraph 9.8.6 of the Listing Rules). The AIC Code is special dividends, recommendation of the final dividend, available on the AIC website (www.theaic.co.uk). It includes approval of any preliminary results announcements of the an explanation of how the AIC Code adapts the Principles and Company, approval of any proposed changes to the Provisions set out in the UK Code to make them relevant for Company’s objective and/or investment policy, appointment investment companies. or removal of the Company’s Manager or Investment A statement explaining TEMIT’s compliance with the AIC Code Managers, gearing, Board membership and Board committee principles can be found at www.temit.co.uk. membership and any major changes to the objective, philosophy or investment policy of the Company, other than any such changes delegated to the Investment Managers ### Additional information for New Zealand under the Investment Management Agreement. ### shareholders The day-to-day investment management of the portfolio of the As a result of a requirement for Overseas Issuers listed on the Company is delegated to the Investment Managers, who New Zealand Stock Exchange, the following should be noted manage the portfolio in accordance with the objectives of the by New Zealand shareholders: Company as set by the Board. ## • The corporate governance rules and principles in TEMIT’s home exchange jurisdiction of the United Kingdom may ### Articles of association materially differ from the New Zealand Stock Exchange The Company may change its Articles of Association by (‘NZX’) corporate governance rules and the principles of the special resolution of its shareholders. NZX Corporate Governance Code; ## • Investors may find more information about the corporate ### governance and principles of TEMIT’s home exchange in Internal control the United Kingdom in the above Corporate Governance Details of the Company’s system of internal controls can be statement and online at www.frc.org.uk/corporate/ found on page 72. ukcgcode.cfm; TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 59 02. Governance ## Annual General Meeting The AGM will be held on Thursday 11 July 2024 at Stationers' Hall, Ave Maria Lane, London, EC4M 7DD. Further details regarding the AGM are set out in the Notice of Meeting on page 109. Whether you intend to attend the meeting in person or not, you are strongly encouraged to submit your votes on the AGM resolutions in advance of the meeting. Submitting votes by proxy does not preclude you attending the meeting or changing your vote if you attend the AGM, but your votes will be counted if restrictions preventing attendance at the AGM are introduced at short notice. ### Ordinary business The formal business of the Meeting will begin with resolution 1 which seeks shareholders' approval to receive and adopt the Directors' and Auditor's Reports and Financial Statements for the year ended 31 March 2024. Resolution 2 seeks shareholders' approval of the Directors' Remuneration Report for the year ended 31 March 2024. Approval of the Directors' Remuneration Report is sought at each AGM and this year's report is set out in full on pages 62 to 66 of the 2024 Annual Report. Resolution 3 seeks shareholders' approval to declare a final ordinary dividend of 3.00 pence per share, payable on 26 July 2024 to shareholders on the register as at close of business on 21 June 2024. Resolutions 4.1 to 4.5 seek shareholders' approval to re-elect Abigail Rotheroe, Charlie Ricketts, David Graham, Magdalene Miller and Simon Jeffreys as Directors. The Board recommends that each director is re-elected, as set out under Board Evaluation on page 53. Resolution 4.6 seeks shareholders' approval to elect Angus Macpherson as a Director. In accordance with the provisions of the UK Corporate Governance Code, all independent Directors will offer themselves for election at the first AGM following their appointment and for re-election at each subsequent AGM. Resolutions 5 and 6 seek shareholders' approval to re-appoint Ernst & Young LLP as auditor of the Company, and to authorise the Directors to determine the auditor's remuneration. Following the recommendation of the Company's Audit and Risk Committee, shareholders will be asked to approve the re-appointment of Ernst & Young LLP as the Company's auditor, to hold office until the conclusion of the Company's 2025 Annual General Meeting. Shareholders will be asked to grant authority to the Board to determine the remuneration of the auditor. ### Special business The Special Business to be dealt with at the AGM is: #### (i) Continuation vote Resolution 7 deals with the continuation of the Company as an investment trust for the period expiring at the end of the AGM of the Company to be held in 2029. The last continuation vote took place in 2019. #### (ii) Authority for the Allotment of New Shares The resolutions to allot shares are set out in resolutions 8 (ordinary resolution) and 9 (special resolution) 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 £2,761,000 (being an amount equal to 5% of the issued share capital of the Company as at 23 May 2024) 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 8 and 9 will continue until the AGM of the Company in 2025 and your Directors envisage seeking the renewal of this authority in 2025 and in each succeeding year. Such authorities will only be used when your Directors believe that it would be in the best interests of the Company to do so and only at a price which is at or above the prevailing NAV per share at the time of issue. #### (iii) Authority to Purchase Own Shares At the AGM of the Company held on 14 July 2023, a Special Resolution was passed authorising the Company to purchase its shares in the market, limited to a maximum of 14.99% of the shares in issue on 14 July 2023 equivalent to 172,199,281 shares. The present authority expires at the conclusion of the AGM on 11 July 2024. Under Resolution 10, the Directors are seeking renewal of the authority to purchase the Company's shares in the market, limited to a maximum of 14.99% of the Company's issued ordinary share capital, excluding treasury shares, at the date of the passing of this resolution (equivalent to 165,577,439 ordinary shares of 5 pence per share as at 23 May 2024). This is set out in resolution 10 of the notice of the AGM. 60 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance 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, provided that: (a) the maximum price which may be paid is the higher of: - 5% above the average market value of the shares for the five business days before the purchase is made; - the higher of the last independent trade price and the highest current independent bid price on the London Stock Exchange; (b) the minimum price payable for the shares will be the nominal value of 5 pence per share; and (c) shares will only be purchased at a price which is at a discount to the prevailing net asset value per share at the time of purchase. 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 flexibility in the management of its capital base. Whilst in treasury, no dividends are payable on, or voting rights attach to, these shares. 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 FCA. As at the date of this report, there are no warrants or options outstanding to subscribe for equity shares in the Company. The Directors envisage seeking the renewal of the relevant authority in 2025 and in each succeeding year. (iv) Notice period for general meetings At the AGM of the Company held on 14 July 2023, 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 2024. The Directors are seeking renewal under Resolution 11 of the authority to call general meetings (other than Annual General Meetings) on 14 days' clear notice. This resolution is required to reflect the 2006 Act which requires that all general meetings must be held with at least 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 in the best interests of the shareholders as a whole. The approval will be effective until the Company's AGM in 2025, 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 clear days' notice. Recommendation The Directors believe that all 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 the resolutions. The results of the votes on the resolutions at the AGM will be published on the Company's website. 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 objective, the nature of the portfolio, net current assets, current liabilities relating to the £100 million fixed term loan which matures 31 January 2025, expenditure forecasts, the compliance with loan covenants, the principal and emerging risks and uncertainties described within the Annual Report and the continuation vote in July 2024, the Directors are satisfied that the Company has adequate resources to continue to operate as a going concern for the period to 31 March 2026, which is at least 12 months from the date of approval of these Financial Statements, and are satisfied that the going concern basis is appropriate in preparing the Financial Statements. By order of the Board Angus Macpherson 7 June 2024 TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 61 02. Governance ## Directors’ remuneration report ### This report has been prepared in accordance with the requirements of Section 420-422 of the ### Companies Act 2006, with subsequent amendments. The Directors’ Remuneration Policy is ### subject to a triennial binding shareholder vote and the Directors’ Remuneration Report is ### subject to an annual shareholder vote, both 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 ### its report on pages 75 to 82. ### 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 53, ### details of the Directors’ terms of appointment. ### The Company has no employees. Details of the Nomination and Remuneration Committee can ### be found on page 56 within the Directors’ Report. United Kingdom 62 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Directors' remuneration policy This Policy provides details of the remuneration policy for the Directors of the Company. A resolution proposing the approval of the Directors' remuneration policy was put to the shareholders at the 2023 AGM and passed by 748,951,673 (99.95%) of shareholders voting in favour of the resolution, 404,878 (0.05%) voting against and 156,977 abstaining from voting. The Policy as set out below will apply until 14 July 2026 (being three years from the date of shareholder approval of the policy) unless renewed, varied or revoked by shareholders at a general meeting. The Board's policy, which has been designed to support the Company's strategy and promote long-term sustainable success, is that the remuneration of non-executive Directors should reflect the responsibilities of the Board, Directors' time spent on the Company's business, 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 objective. The Chairman of the Board, Chairman of the Audit and Risk Committee (who is also the Senior Independent Director) are paid higher fees than the other Directors, reflecting the greater amount of time spent on the Company's business. 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. The Company has no Chief Executive Officer and no employees and therefore there was no consultation of employees and there is no employee comparative data to provide, in relation to the setting of the remuneration policy for Directors. 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 independent non-executive Directors are entitled to reclaim reasonable expenses incurred to perform their duties as non-executive Directors for the Company. Directors are not entitled to payment for loss of office and may be removed from office by the Company on three months' notice. The Nomination and Remuneration Committee considers any comments received from shareholders on remuneration policy on an ongoing basis and takes account of those views. ## Directors' remuneration implementation report The Directors' Remuneration Report, which includes details of the Directors' Remuneration Policy and its implementation, is subject to an annual shareholders' vote and an ordinary resolution to approve the Remuneration Policy will be put to shareholders at the forthcoming AGM. A review was carried out during the financial year to 31 March 2024 and this review recommended increases in fees as set out in the table below for the forthcoming financial year. These changes to remuneration are in line with the Directors' Remuneration Policy as set out above. The involvement of remuneration consultants has not been deemed necessary as part of this year's review. | Role | Current Annual Fee | Proposed Annual Fee | | --- | --- | --- | | Chairman | £73,000 | £74,500 | | Chairman of the Audit and Risk Committee and Senior Independent Director | £58,500 | £61,500 | | Independent Directors | £41,000 | £42,000 | TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 63 02. Governance ### Directors’ fees for the year Fees paid to each Director for the financial year to 31 March 2024 are set out below. A non-binding ordinary resolution proposing adoption of the Directors’ Remuneration Report was put to shareholders at the Company’s AGM held on 14 July 2023 and was passed by 748,562,823 (99.89%) of shareholders voting in favour of the resolution, 793,728 (0.11%) voting against and 156,977 abstaining from voting. The Directors who served during the year received the following fees, which represented their total remuneration from the Company: 2024 2023 Annual Taxable Annual Taxable (a) (a) Audited Information Fee £ Benefits £ Total £ Fee £ Benefits £ Total £ David Graham 41,000 – 41,000 40,000 – 40,000 (b) Simon Jeffreys 58,500 357 58,857 55,287 1,405 56,692 (c) Angus Macpherson 27,943 – 27,943 – – – Magdalene Miller 41,000 2,747 43,747 40,000 3,377 43,377 Charlie Ricketts 41,000 2,755 43,755 40,000 7,497 47,497 (d) Abigail Rotheroe 41,000 241 41,241 16,667 – 16,667 (e) Paul Manduca 54,750 277 55,027 71,000 473 71,473 (f) Beatrice Hollond – – – 12,242 368 12,610 Total 305,193 6,377 311,570 275,196 13,120 288,316 ### Annual percentage change in Directors’ fees The table below shows the annual percentage change in Directors’ fees over the four financial years preceding the year to 31 March 2024: | | % Change | % Change | | % Change | | % Change | | | --- | --- | --- | --- | --- | --- | --- | --- | | | from 2023 | from 2022 | | from 2021 | | from 2020 | | | Component 2024 £ | to 2024 2023 £ | | to 2023 2022 £ | | to 2022 2021 £ | | to 2021 2020 £ | Independent Directors Annual fee 41,000 2.5 40,000 2.6 39,000 2.6 38,000 2.7 37,000 Chairman Additional fee 32,000 3.2 31,000 3.3 30,000 3.4 29,000 3.6 28,000 Chairman of the Audit Additional fee 15,000 11.1 13,500 3.8 13,000 4.0 12,500 4.2 12,000 and Risk Committee Senior Independent Additional fee 2,500 – 2,500 – 2,500 100 – – – Director (a) Taxable benefits relate to the reimbursement of expenses incurred in connection with the performance of the Directors’ duties and attendance at Board and Committee meetings. The figures are shown gross of relevant taxes. (b) Chairman of the Audit and Risk Committee and appointed Senior Independent Director effective 14 July 2022. (c) Joined the Board on 6 October 2023 and took over as Chairman on 1 January 2024. (d) Joined the Board on 1 November 2022. (e) Retired from the Board on 31 December 2023. Chairman of the Board up to date of retirement. (f) Retired from the Board on 14 July 2022. Senior Independent Director up to date of retirement. 64 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Performance graph$^{(a)}$ The line graph below details TEMIT's share price total return against TEMIT's benchmark, the MSCI Emerging Markets (Net Dividends) Index total return over the past 10 years. ![img-8.jpeg](img-8.jpeg) ## Relative cost of Directors' fees The table below shows the Company's expenditure on Directors' fees compared to distributions to shareholders: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Directors' Remuneration^{(b)} | 333 | 303 | | Distribution to Shareholders: | | | | Dividends | 55,613^{(c)} | 57,823 | | Share Buybacks | 65,929 | 29,207 | The items detailed in the above table are as required by the Large and Medium-size Companies and Groups (Accounts and Reports) 2013. (a) Figures rebased to 100 at 31 March 2014. (b) Directors' Remuneration comprises Directors' fees of £305,193 and Employer National Insurance Contributions of £28,158 for the financial year 2024 (2023: £275,196 and £27,594 respectively). (c) Based on a proposed final dividend of 3.00 pence per share calculated using shares in issue as at 23 May 2024 and the interim dividend of 2.00 pence per share paid 26 January 2024. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 65 02. Governance ## Statement of Directors' shareholdings The Directors' interests (including any family interests) existing as at 31 March in the Company's shares were as follows: | Audited Information | 2024 Number of Shares | 2023 Number of Shares | | --- | --- | --- | | David Graham | 109,180 | 107,755 | | Simon Jeffreys | 26,960 | 26,960 | | Angus Macpherson | 68,000 | n/a | | Magdalene Miller | 7,000 | 7,000 | | Charlie Ricketts | 25,000 | 25,000 | | Abigail Rotheroe | 27,110 | 27,110 | | Paul Manduca | n/a | 25,000 | The Company has not received any notifications of changes in the above interests as at 23 May 2024. ## Approval The Directors' Remuneration Report was approved by the Board of Directors on 7 June 2024. **Angus Macpherson** 7 June 2024 66 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Report of the audit and risk committee ### As Chairman of the Audit and Risk Committee, I am pleased to present this report to shareholders. The ### report contains details of the Audit and Risk Committee’s activities and responsibilities along with the ### evaluation of effectiveness of the external and internal audit process for the year ended 31 March 2024. ## Composition • Monitored, reviewed and confirmed the effectiveness of the internal financial controls and internal controls and risk As of 31 March 2024, the Audit and Risk Committee comprised management systems on which the Company is reliant; Simon Jeffreys (Chairman), David Graham, Magdalene Miller, ## Charlie Ricketts and Abigail Rotheroe, all independent • Reviewed the effectiveness of the internal audit function non-executive Directors. of Franklin Templeton and its reports, and was satisfied with the results; The Board considers that the members of the Audit and ## Risk Committee have sufficient recent and relevant financial • Reviewed the internal and external audit plans experience for it to perform its functions effectively, noting in and the findings of the audits, including the external particular that the Audit and Risk Committee Chairman is Auditor’s Report; a Chartered Accountant and former senior audit partner. ## • Reviewed and confirmed that the value and quality David Graham is also a Chartered Accountant. The Directors’ of services provided to the Company by third parties biographies are given on pages 51 and 52. were satisfactory; ## • Reviewed in detail the contents of the Company’s risk ### Role and responsibilities matrix; The Audit and Risk Committee plays an important role in the ## • Received regular updates from the Manager’s tax team on appraisal and supervision of key aspects of the Company’s ongoing claims for recoverable taxes; and business. The Committee carried out the following activities to ## • Reviewed other ad hoc items referred to the Audit and accomplish its principal objectives and reported to the Board Risk Committee by the Board. on how it discharged its responsibilities: ## • Provided advice to the Board on whether the Annual Report and Financial Statements, 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; ## • Monitored the integrity of the Financial Statements including the review of and agreeing the appropriateness of the Company’s accounting policies, accounting estimates and judgements, treatment and disclosures of tax, alternative performance measures and compliance with the appropriate reporting requirements; ## • Oversaw the relationship with the external auditor, including monitoring of any non-audit services in accordance with the policy; ## • Reviewed and monitored the external auditor’s effectiveness, objectivity and independence, and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements; TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 67 02. Governance ### Activities during the year The Committee maintains a programme of agenda items to ensure that its workload is balanced across the year and that The Committee met formally three times during the year. matters are addressed at appropriate times. In addition, some members of the Committee visited Edinburgh twice in the year to meet with the external auditor and representatives of the Manager’s internal audit, financial ### Performance evaluation reporting, taxation and risk departments. Also, while in The Board undertakes an annual evaluation of performance of Hong Kong, the Committee visited Franklin Templeton’s office the Audit and Risk Committee and of its individual Directors, and met with representatives of the portfolio, research and further details of this review can be found on page 53. The dealing teams. Board is satisfied with the performance and effectiveness of The Chairman and other members of the Committee, also: the Audit and Risk Committee. ## • Reviewed and challenged the scenarios presented by the Manager to support the use of the going concern basis and the ongoing viability assessment. Upon review and discussion with the Manager the Committee concluded that the scenarios were appropriate to support the use of the going concern basis and the ongoing viability statement; ## • Met with the Manager to discuss its approach to ESG considerations including the implementation of the Stewardship Report for TEMIT; ## • Held meetings with the Manager to discuss with those responsible all relevant matters relating to financial reporting, company secretarial, taxation, internal audit and risk and control framework; ## • Discussed with the investment and risk teams the ongoing geopolitical tensions and their impacts on the portfolio as well as the potential restrictions on the ability to invest in certain companies; ## • Challenged the Manager on the valuation basis for the Russian securities. Following discussions with the Manager, the Committee concluded that the valuations applied are reasonable and appropriate given the circumstances and information available; ## • Discussed with the Manager the classification of the special dividend of £6.6 million received from Brilliance China Automotive as a revenue or capital item in the Statement of Comprehensive Income. Considering that the special dividend represented a second pay out of net proceeds from the disposal of a 25% equity interest in Brilliance China Automotive’s joint venture with BMW, the Committee concluded that the treatment as a capital item in the Statement of Comprehensive Income is appropriate and therefore no significant judgement was required; and ## • Challenged the Manager on the appropriate recognition of recoverable taxes and concluded that the accounting treatment was appropriate. 68 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Annual Report and Financial Statements A primary responsibility of the Audit and Risk 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 receive regular portfolio reports, liquidity information and presentations from the Manager and the Investment Managers. The Committee reviews valuation reports from the Manager and is satisfied that valuations are compliant with the accounting policies commencing on page 88. In particular, the Committee challenged the Manager on the basis of valuation for the valuation of Russian securities. | | --- | --- | | **Misappropriation of Assets and Counterparty Risk** | The Committee considers the risk of counterparty failure. The Company has appointed an independent custodian (JPMorgan Chase Bank) to hold its investments. The Manager reconciles the investment portfolio to the custodian's records on a regular basis and any material variances are reported to the Committee. In addition, the Committee receives from the Manager an annual review evaluating JPMorgan Chase Bank's global custody and sub-custody network including the results of an ISAE 3402 report by PricewaterhouseCoopers. The results were satisfactory. | | **Going Concern and Viability** | The Committee considers that the Company's assets consist of equity shares in companies listed on recognised stock exchanges which in most circumstances are realisable within a short timescale. Having made suitable enquiries, including consideration of the Company's objective, the nature of the portfolio, net current assets, current liabilities relating to the £100 million fixed term loan which matures 31 January 2025, expenditure forecasts, the compliance with loan covenants, the principal and emerging risks and uncertainties described within the Annual Report and the continuation vote in July 2024, the Committee is satisfied that the Company has adequate resources to continue to operate as a going concern for the period to 31 March 2026, which is at least 12 months from the date of approval of these Financial Statements. The Committee therefore concludes that it is appropriate to prepare the Financial Statements on a going concern basis, and makes its recommendations to the Board. The scenarios considered include the liquidity of the portfolio, a sustained increase in the value of the portfolio (which would result in an increase in running costs, particularly the AIFM fee), a significant drop in value of the assets and a similar decrease in dividend income, and confirms that the Company could continue as a going concern. The Committee also considers such scenarios over a five-year period to support the Company's ongoing viability as noted in the Viability Statement on page 49. | | **Recognition of Investment Income** | Each quarter the Committee receives and reviews annual income forecast reports which detail 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. The Committee is satisfied with these analyses. | | **Compliance with Section 1158 of the Corporation Tax Act 2010** | 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 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. | TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 69 02. Governance ### Areas of audit focus External auditor The Committee reviewed and agreed the external audit plan Assessment of effectiveness and independence including the level of audit materiality which it challenged and of the external audit process concluded was appropriate. The external auditor determined To assess the effectiveness and independence of the external the scope of their work and the Committee also discussed with audit process, the auditor is asked, on an annual basis, to set them key matters which they wanted to be covered and which out the steps that it has taken to ensure objectivity and included the following: independence. The auditor’s performance, behaviour and effectiveness during the exercise of its duties are monitored ## • Ownership and valuation of the portfolio given that the during the year by the Audit and Risk Committee. The Audit majority of the Company’s assets are invested in its and Risk Committee considered an annual independent Audit portfolio companies. The external auditor validated the Quality Review report by the FRC, that monitors audit quality of ownership and valuations to its independent sources and the major audit firms in the UK and discussed with the external concluded that the results of their procedures did not auditor the results of its own quality control review and 2023 identify any material misstatements; Transparency Report. Ernst & Young LLP presented its detailed ## • Income recognition to confirm that income has been audit plan for the 2024 financial year end at the December correctly recorded and received. The external auditor 2023 Audit and Risk Committee meeting. The Audit and Risk recalculated all dividend income from independent sources Committee also reviewed Ernst & Young LLP’s policies and and tested a sample to bank statements and concluded procedures including quality assurance procedures and that the results of their procedures did not identify any independence and concluded that they were satisfactory. material misstatements; and The outcome of these reviews and discussions with the Senior ## • Although not a key audit matter as determined by the Statutory Auditor were that the Committee is satisfied that external auditor the Committee focused on Compliance Ernst & Young LLP has a suitable culture, control environment with S1158 regulations in order to ensure that the Company and risk framework to enable it to deliver a high-quality audit. is meeting its minimum distribution obligations. The external auditor concluded that the Company was in compliance In assessing the quality of the audit, the Committee with S1158 regulations as at the balance sheet date. considered areas where the auditor had demonstrated professional scepticism and challenged management. The Committee notes that there was no significant accounting They noted that this had been demonstrated around the judgement required in relation to the classification of special valuation of the Russian assets and how the auditor had dividends received. challenged management with the Committee noting these Further information on these key audit matters and the discussions and concluding that a zero valuation was external auditor’s observations reported to the Committee are appropriate. In addition, the Committee held meetings with detailed within their audit report on pages 76 to 78. The the external auditor in private and worked closely with the Committee reviewed and were satisfied with the conclusions Manager during the audit process. presented by the external auditor for each of these matters. Taking into consideration all the above and its review and discussions with the key parties the Committee concluded Conclusion that the external auditor had delivered a quality audit for the As a result of the work undertaken by the Committee as noted financial year ended 31 March 2024. on page 69 and from the conclusions presented by the external auditor, the Committee has concluded that the Financial Statements for the year ended 31 March 2024, 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 73. 70 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance Auditor rotation Non-audit services The regulations on mandatory auditor rotation require an audit Performance of any non-audit services by the external auditor tender to take place every ten years. An audit tender took must be approved in advance by the Committee and must place during 2019 and shareholders approved the comply with the guidelines set out in the FRC’s Revised Ethical appointment of Ernst & Young LLP as the Company’s external Standard 2019. The Committee concluded that the non-audit auditor at the Annual General Meeting held on 11 July 2019. service fees were appropriate relative to fees paid for audit The year ended 31 March 2024 was the second year for which services. An engagement letter is issued for all non-audit work Ashley Coups (Senior Statutory Auditor) has served. and is reviewed by the Committee to ensure that the independence and objectivity of the auditor is safeguarded. During the year, Ernst & Young LLP was engaged to perform a review of the Half Yearly Report. This is assurance related and the Committee believes that Ernst & Young LLP is best placed to provide this service for the shareholders. The fees paid to the Auditor in the year were as follows: Audited Information 2024 2023 Audit Services £54,600 £52,000 Non-Audit Services Review of Half Yearly Report £10,500 £10,000 Percentage of Audit Services 19.2% 19.2% 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 71 02. Governance ### Internal control Other areas Internal audit is carried out by the internal audit department of TEMIT is able to rely on the Financial Markets Conduct Franklin Templeton. (Overseas FMC Reporting Entities) Exemption Notice 2021, that exempts it from requirements to prepare audited Financial The Committee monitors the risk management and system Statements in accordance with the New Zealand Financial of internal controls on an ongoing basis and engages Market Conduct Act 2013. This exemption recognises that Franklin Templeton’s internal audit function to carry out companies with a primary listing in the United Kingdom a review of specific areas that the Audit and Risk Committee prepare Financial Statements and are audited in accordance considers appropriate. with UK requirements. This exempts TEMIT from the New Zealand requirement that firms be audited by a New Zealand The Committee met representatives of the Manager and unlimited liability entity. Investment Managers, including its internal auditor, risk manager and its compliance officer, who reported as to TEMIT is in compliance with the provisions of ‘The Statutory the proper conduct of business in accordance with the Audit Services for Large Companies Market Investigation’ regulatory environment in which both the Company and the (Mandatory Use of Competitive Tender Processes and Audit Manager operate. Certain meetings held with the internal Committee Responsibilities) Order 2014 as issued by the auditors are conducted on a private basis, with no Competition & Markets Authority. representation from the Manager. The Committee reviewed the Company’s risk matrix that explains in detail the key risks identified by the Company, Simon Jeffreys assessing the likelihood of each risk materialising and the Audit and Risk Committee Chairman impact that this would have on the Company. The Committee 7 June 2024 also confirmed the effectiveness of the key operational procedures and oversight by the Manager and the Board. 72 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 02. Governance ## Statement of directors’ responsibilities | In respect of the Annual Report and | Responsibility statement | | --- | --- | | the Financial Statements | Each of the Directors, who are listed on pages 51 and 52, | | The Directors are responsible for preparing the Annual Report | confirms that to the best of their knowledge: | and the Financial Statements in accordance with applicable ## • The Financial Statements, which have been prepared in law and regulations. Details of the Directors and members of accordance with UK adopted International Accounting the committees are reported on pages 51 to 56. Standards, give a true and fair view of the assets, liabilities, Company law requires the Directors to prepare Financial financial position and profit or loss of the Company for the Statements for each financial year. Under that law the Directors year ended 31 March 2024; and are required to prepare the Financial Statements in accordance ## • The Chairman’s Statement, Strategic Report and the Report with UK adopted International Accounting Standards. of the Directors include a fair review of the information Under company law the Directors must be satisfied that the required by 4.1.8R to 4.1.11R of the FCA’s Disclosure Financial Statements give a true and fair view of the state of Guidance and Transparency Rules; and affairs of the Company and of the profit or loss of the Company ## • The Annual Report and Audited Financial Statements, for the period. taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders In preparing these Financial Statements, International to assess the Company’s position and performance, Accounting Standard 1 requires that Directors: business model and strategy, and include a description of the principal risks and uncertainties. ## • Properly select and apply accounting policies; ## • Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and | | understandable information; | By order of the Board | | | --- | --- | --- | --- | | • | Provide additional disclosures when compliance with the | Angus Macpherson | | | | specific requirements of UK adopted International | | 7 June 2024 | Accounting Standards 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 ## • Assess 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 73 ## 03. ## Financial ## Review 74 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## Independent auditor’s report ### to the members of Templeton Emerging Markets Investment Trust plc ### Opinion Conclusions relating to going concern We have audited the Financial Statements of Templeton In auditing the Financial Statements, we have concluded that Emerging Markets Investment Trust Plc (the ‘Company’) for the the Directors’ use of the going concern basis of accounting in year ended 31 March 2024 which comprise the Statement of the preparation of the Financial Statements is appropriate. Our Comprehensive Income, Statement of Financial Position, evaluation of the Directors’ assessment of the Company’s Statement of Changes in Equity, Statement of Cash Flows and ability to continue to adopt the going concern basis of the related notes 1 to 20 to the Financial Statements, including accounting included: material accounting policy information. ## • Confirming our understanding of the Company’s going The financial reporting framework that has been applied in concern assessment process by engaging with the their preparation is applicable law and UK adopted Directors and the Company Secretary to determine if all key International Accounting Standards. factors were considered in their assessment. In our opinion, the Financial Statements: ## • Inspecting the Directors’ assessment of going concern, including the revenue forecast, for the period to 31 March ## • give a true and fair view of the Company’s affairs as at 2026 which is at least 12 months from the date the Financial 31March 2024 and of its profit for the year then ended; Statements were authorised for issue. In preparing the revenue forecast, the Company has concluded that it is ## • have been properly prepared in accordance with UK able to continue to meet its ongoing costs as they fall due. adopted International Accounting Standards; and ## • Reviewing the factors and assumptions, including the ## • have been prepared in accordance with the requirements impact of the current economic environment, as applied to of the Companies Act 2006. the revenue forecast and the liquidity assessment of the investments. We considered the appropriateness of the ### Basis for opinion methods used to calculate the revenue forecast and the liquidity assessment and determined, through testing of the We conducted our audit in accordance with International methodology and calculations, that the methods, inputs Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our and assumptions utilised were appropriate to be able to responsibilities under those standards are further described in make an assessment for the Company. the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We believe that the audit In relation to the Company’s borrowing arrangements, ## • evidence we have obtained is sufficient and appropriate to inspecting the Directors’ assessment of the level of gearing. provide a basis for our opinion. We recalculated the Company’s compliance with debt covenants and performed stress testing to assess the likelihood of the Company breaching the financial ### Independence covenants as a result of a reduction in the value of the We are independent of the Company in accordance with the Company’s portfolio. ethical requirements that are relevant to our audit of the ## • Assessment of the impact of the continuation vote at the Financial Statements in the UK, including the FRC’s Ethical AGM to be held in July 2024 on the going concern basis of Standard as applied to listed public interest entities, and we preparation, by considering the current and historical have fulfilled our other ethical responsibilities in accordance performance of the Company, reviewing minutes from the with these requirements. Broker’s and advisor’s discussions with certain shareholders The non-audit services prohibited by the FRC’s Ethical about their current intentions in relation to the continuation Standard were not provided to the Company and we remain vote and assessing the Directors’ analysis of the responses independent of the Company in conducting the audit. the Broker received. ## • Reviewing the Company’s going concern disclosures included in the Annual Report in order to assess that the disclosures were appropriate and in conformity with the reporting standards. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 75 03. Financial Review Based on the work we have performed, we have not identified Climate change any material uncertainties relating to events or conditions that, Stakeholders are increasingly interested as to how climate individually or collectively, may cast significant doubt on the change will impact companies. The Company has determined Company’s ability to continue as a going concern for a period that the impact of climate change could affect the Company’s assessed by the Directors, being the period to 31 March 2026 portfolio. This is explained in the principal and emerging risks which is at least 12 months from when the Financial Statements section on page 48, which forms part of the ‘Other information’, were authorised for issue. rather than the audited Financial Statements. Our procedures on these disclosures therefore consisted solely of considering In relation to the Company’s reporting on how they have whether they are materially inconsistent with the Financial applied the UK Corporate Governance Code, we have nothing Statements or our knowledge obtained in the course of the material to add or draw attention to in relation to the Directors’ audit or otherwise appear to be materially misstated. statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going Our audit effort in considering climate change was focused on concern basis of accounting. the adequacy of the Company’s disclosures in the Financial Statements as set out in note 1(a) and conclusion that there Our responsibilities and the responsibilities of the Directors was no further impact of climate change to be taken into with respect to going concern are described in the relevant account as the investments are valued based on market sections of this report. However, because not all future events pricing as required by UK adopted International Accounting or conditions can be predicted, this statement is not a Standards. In line with UK adopted International Accounting guarantee as to the Company’s ability to continue as a going Standards, investments are valued at fair value, which for the concern. Company are quoted bid prices for investments in active markets. Investments which are designated as level 3 are priced using market-based valuation approaches. All ### Overview of our audit approach investments therefore reflect the market participants’ view of Key audit matters climate change on risk on the investments held by the Company. We also challenged the Directors’ considerations of ## • Risk of incomplete or inaccurate revenue climate change in their assessment of viability and associated recognition, including the classification of disclosures. special dividends as revenue or capital items in the Statement of Comprehensive Income. Key audit matters ## • Risk of incorrect valuation or ownership of the investment portfolio. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Materiality Financial Statements of the current period and include the ## • Overall materiality of £20.35m (2023: most significant assessed risks of material misstatement £20.18m) which represents 1% (2023: 1%) of (whether or not due to fraud) that we identified. These matters shareholders’ funds. 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 our opinion thereon, and we do ### An overview of the scope of our audit not provide a separate opinion on these matters. Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. This enables us to form an opinion on the Financial Statements. We take into account size, risk profile, the organisation of the Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing the level of work to be performed. All audit work was performed directly by the audit engagement team. 76 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review Key observations communicated to the Risk Our response to the risk Audit and Risk Committee Incomplete or inaccurate revenue We have performed the following The results of our procedures identified recognition, including classification of procedures: no material misstatement in relation to special dividends as revenue or capital the risk of incomplete or inaccurate We obtained an understanding of the items in the Statement of Comprehensive revenue recognition, including incorrect processes and controls surrounding revenue Income (as described on page 70 in the classification of special dividends as recognition, including the classification of Report of the Audit and Risk Committee and revenue or capital items in the Statement special dividends by performing walkthrough as per the accounting policy set out on of Comprehensive Income. procedures. page89). For 100% of dividends received and accrued, The total income for the year to 31 March we recalculated the income by multiplying 2024 was £78.45m (2023: £88.98m), the investment holdings at the ex-dividend consisting primarily of dividend income from date, traced from the accounting records, by listed investments. the dividend per share, which was agreed to | The Company received special dividends | an independent data vendor. We also agreed | | --- | --- | | amounting to £8.20m (2023: £11.00m) of | all exchange rates to an independent data | | which £6.56m (2023: £8.43) was classified as | vendor and agreed all dividends received and | | capital and £1.64m (2023: £2.57m) was | accrued to bank statements, where paid. | classified as revenue. For 100% of dividends accrued, we reviewed | There is a risk of incomplete or inaccurate | the investee company announcements to | | --- | --- | | revenue recognition through the failure to | assess whether the dividend entitlements | | recognise proper income entitlements or to | arose prior to 31 March 2024. | apply an appropriate accounting treatment. To test completeness of recorded income, we In addition, the Directors may be required to verified that expected dividends for each exercise judgement in determining whether investee company held during the year had income receivable in the form of special been recorded as income with reference to dividends should be classified as ‘revenue’ or investee company announcements obtained ‘capital’ in the Statement of Comprehensive from an independent data vendor. Income. As such, there is a potential manual For all investments held during the year, we and judgemental element in classifying special reviewed the type of dividends paid with dividends between revenue and capital. reference to an external data vendor to identify those which were special and compared those identified to management’s special dividend listing. Based on the work performed, we identified four special dividends received during the year, one classified as capital and three classified as revenue. This is consistent with the special dividends recognised by the Company. For the two special dividends above our testing threshold, we assessed the appropriateness of management’s classification as revenue or capital by reviewing the underlying rationale for the distributions. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 77 03. Financial Review Key observations communicated to the Risk Our response to the risk Audit and Risk Committee Incorrect valuation or ownership of the We performed the following procedures: The results of our procedures identified investment portfolio (as described on no material misstatement in relation to We obtained an understanding of the page 70 in the Report of the Audit and Risk the risk of incorrect valuation or Administrator’s processes and controls Committee and as per the accounting policy ownership of the investment portfolio. surrounding investment pricing and legal title set out on pages 90 and 91). by performing walkthrough procedures. The valuation of the portfolio at 31 March For each of the level 1 investments, we verified 2024 was £1,995.23m (2023: £1,992.78m) the market prices and exchange rates to an consisting of level 1 listed investments, and independent pricing vendor and recalculated two nil valued Russian securities designated the investment valuations as at the year-end. as level 3 investments (2023: three nil valued Russian securities). For each of the level 3 investments, we assessed the reasonableness and The valuation of the assets held by the appropriateness of the valuation method Company is the key driver of the Company’s used by the Manager with reference to the net asset value and total return. Incorrect Company’s accounting policies, UK adopted investment pricing, or a failure to maintain International Accounting Standards and the proper legal title of the investments held by International Private Equity and Venture the Company could have a significant impact Capital Valuation (IPEV) Guidelines and on net asset value and the return generated assessed whether the assumptions used to for shareholders. estimate fair value were appropriate. The fair value of listed investments is For each of the level 1 investments, we determined using quoted market bid prices at inspected the security price movement close of business on the last business day of reports produced by the Administrator to the year. identify prices that have not changed within five days from year end and verified whether the listed price is a valid fair value through review of trading activity. Our testing identified no prices which had not changed within five days of the year end. We compared the Company’s investment holdings at 31 March 2024 to independent confirmations received directly from the Company’s Depositary and Custodian. There have been no changes to the areas of audit focus raised in the above risk table from prior year. 78 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. ### Materiality *The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the Financial Statements. Materiality provides a basis for determining the nature and extent of our audit procedures.* We determined materiality for the Company to be £20.35m (2023: £20.18m), which is 1% (2023: 1%) of shareholders' funds. We believe that shareholders' funds provides us with materiality aligned to the key measurement of the Company's performance. ### Performance materiality *The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.* On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 75% (2023: 75%) of our planning materiality, namely £15.26m (2023: £15.13m). We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected. Given the importance of the distinction between revenue and capital for investment trusts we also applied a separate testing threshold for the revenue column of the Statement of Comprehensive Income of £3.21m (2023: £3.62m) being 5% of profit before tax. ## Reporting threshold *An amount below which identified misstatements are considered as being clearly trivial.* We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of £1.02m (2023: £1.01m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. ### Other information The other information comprises the information included in the Annual Report other than the Financial Statements and our auditor's report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. 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 course of 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 this gives rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 79 03. Financial Review ### Opinions on other matters prescribed by the Corporate Governance Statement ### Companies Act 2006 We have reviewed the Directors’ statement in relation to going In our opinion the part of the Directors’ remuneration report to concern, longer-term viability and that part of the Corporate be audited has been properly prepared in accordance with Governance Statement relating to the Company’s compliance the Companies Act 2006. with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules. In our opinion, based on the work undertaken in the course of the audit: Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with ## • the information given in the strategic report and the the Financial Statements or our knowledge obtained during Directors’ report for the financial year for which the the audit: Financial Statements are prepared is consistent with the Financial Statements; and ## • Directors’ statement with regards to the appropriateness of ## • the strategic report and Directors’ report have been adopting the going concern basis of accounting and any prepared in accordance with applicable legal requirements. material uncertainties identified set out on page 61; ## • Directors’ explanation as to its assessment of the ### Matters on which we are required to report Company’s prospects, the period this assessment covers ### by exception and why the period is appropriate set out on page 49; In the light of the knowledge and understanding of the Director’s statement on whether it has a reasonable ## • Company and its environment obtained in the course of the expectation that the group will be able to continue in audit, we have not identified material misstatements in the operation and meets its liabilities set out on page 61; strategic report or Directors’ report. ## • Directors’ statement on fair, balanced and understandable We have nothing to report in respect of the following matters set out on page 73; in relation to which the Companies Act 2006 requires us to ## • Board’s confirmation that it has carried out a robust report to you if, in our opinion: assessment of the emerging and principal risks set out on pages 47 to 49; ## • adequate accounting records have not been kept, or ## • The section of the Annual Report that describes the review returns adequate for our audit have not been received from of effectiveness of risk management and internal control branches not visited by us; or systems set out on page 72; and ## • the Financial Statements and the part of the Directors’ ## • The section describing the work of the Audit and Risk Remuneration Report to be audited are not in agreement Committee set out on pages 67 and 68. with the accounting records and returns; or ## • certain disclosures of Directors’ remuneration specified by law are not made; or ## • we have not received all the information and explanations we require for our audit. 80 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### Responsibilities of Directors However, the primary responsibility for the prevention and detection of fraud rests with both those charged with As explained more fully in the Directors’ responsibilities governance of the Company and management. statement set out on page 73, the Directors are responsible for the preparation of the Financial Statements and for being ## • We obtained an understanding of the legal and regulatory satisfied that they give a true and fair view, and for such frameworks that are applicable to the Company and internal control as the Directors determine is necessary to determined that the most significant are UK Adopted enable the preparation of Financial Statements that are free International Accounting Standards, the Companies Act from material misstatement, whether due to fraud or error. 2006, the Listing Rules, the UK Corporate Governance In preparing the Financial Statements, the Directors are Code, the Statement of Recommended Practice for the responsible for assessing the Company’s ability to continue as Financial Statements of Investment Trust Companies as a going concern, disclosing, as applicable, matters related to issued by the Association of Investment Companies, going concern and using the going concern basis of Section 1158 of the Corporation Tax Act 2010, and The accounting unless the Directors either intend to liquidate the Companies (Miscellaneous Reporting) Regulations 2018. Company or to cease operations, or have no realistic ## • We understood how the Company is complying with those alternative but to do so. frameworks by through discussions with the Audit and Risk Committee and Company Secretary, review of the board and committee minutes and review of papers provided to ### Auditor’s responsibilities for the audit of the the Audit and Risk Committee. ### Financial Statements ## • We assessed the susceptibility of the Company’s Financial Our objectives are to obtain reasonable assurance about Statements to material misstatement, including how fraud whether the Financial Statements as a whole are free from might occur by considering the key risks impacting the material misstatement, whether due to fraud or error, and to Financial Statements. We identified a fraud risk with respect issue an auditor’s report that includes our opinion. Reasonable to the incomplete or inaccurate revenue recognition assurance is a high level of assurance, but is not a guarantee through incorrect classification of special dividends as that an audit conducted in accordance with ISAs (UK) will revenue or capital items in the Statement of always detect a material misstatement when it exists. Comprehensive Income. Further discussion of our Misstatements can arise from fraud or error and are approach is set out in the section on key audit matters considered material if, individually or in the aggregate, they above. could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Based on this understanding we designed our audit ## • Statements. procedures to identify non-compliance with such laws and regulations. Our procedures involved review of the reporting to the Directors with respect to the application of ### Explanation as to what extent the audit was the documented policies and procedures and review of the ### considered capable of detecting Financial Statements to ensure compliance with the ### irregularities, including fraud reporting requirements of the Company. Irregularities, including fraud, are instances of non-compliance A further description of our responsibilities for the audit of the with laws and regulations. We design procedures in line with Financial Statements is located on the Financial Reporting our responsibilities, outlined above, to detect irregularities, Council’s website at https://www.frc.org.uk/auditorsresponsibilities. including fraud. The risk of not detecting a material This description forms part of our auditor’s report. misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 81 03. Financial Review ### Other matters we are required to address Use of our report ## • Following the recommendation from the Audit and Risk This report is made solely to the Company’s members, as a Committee, we were appointed by the Company on 11 July body, in accordance with Chapter 3 of Part 16 of the 2019 to audit the Financial Statements for the year ending Companies Act 2006. Our audit work has been undertaken so 31 March 2020 and subsequent financial periods. 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 The period of total uninterrupted engagement including no other purpose. To the fullest extent permitted by law, we do previous renewals and reappointments is five years, not accept or assume responsibility to anyone other than the covering the years ending 31 March 2020 to 31 March 2024. Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. ## • The audit opinion is consistent with the additional report to the Audit and Risk Committee. Ashley Coups (Senior Statutory Auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 7 June 2024 India 82 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review # Statement of comprehensive income For the year ended 31 March 2024 | | Note | Year Ended 31 March 2024 | | | Year Ended 31 March 2023 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Net Gains/(Losses) on Investments and Foreign Exchange** | | | | | | | | | Net Gains/(Losses) on Investments at Fair Value | 8 | – | 94,636 | 94,636 | – | (54,645) | (54,645) | | Net Losses on Foreign Exchange | | – | (817) | (817) | – | (442) | (442) | | **Income** | | | | | | | | | Dividends | 2 | 65,350 | 6,560 | 71,910 | 77,463 | 8,431 | 85,894 | | Other Income | 2 | 6,536 | – | 6,536 | 3,088 | – | 3,088 | | | | **71,886** | **100,379** | **172,265** | **80,551** | **(46,656)** | **33,895** | | **Expenses** | | | | | | | | | AIFM Fee | 3 | (5,130) | (11,970) | (17,100) | (5,232) | (12,209) | (17,441) | | Other Expenses | 4 | (1,774) | – | (1,774) | (1,979) | – | (1,979) | | | | **(6,904)** | **(11,970)** | **(18,874)** | **(7,211)** | **(12,209)** | **(19,420)** | | **Profit/(Loss) Before Finance Costs and Taxation** | | **64,982** | **88,409** | **153,391** | **73,340** | **(58,865)** | **14,475** | | Finance Costs | 5 | (751) | (1,747) | (2,498) | (962) | (2,239) | (3,201) | | **Profit/(Loss) Before Taxation** | | **64,231** | **86,662** | **150,893** | **72,378** | **(61,104)** | **11,274** | | Tax Expense | 6 | (5,366) | (5,201) | (10,567) | (5,520) | (3,232) | (8,752) | | **Profit/(Loss) for the Year** | | **58,865** | **81,461** | **140,326** | **66,858** | **(64,336)** | **2,522** | | **Profit/(Loss) Attributable to Equity Holders of the Company** | | **58,865** | **81,461** | **140,326** | **66,858** | **(64,336)** | **2,522** | | **Earnings per Share** | 7 | **5.18p** | **7.17p** | **12.35p** | **5.72p** | **(5.50)p** | **0.22p** | - 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 88 to 105 are an integral part of the Financial Statements. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 83 03. Financial Review # Statement of financial position As at 31 March 2024 | | Note | As at 31 March 2024 £'000 | As at 31 March 2023 £'000 | | --- | --- | --- | --- | | **Non-Current Assets** | | | | | Investments at Fair Value Through Profit or Loss | 8 | **1,995,232** | **1,992,775** | | **Current Assets** | | | | | Trade and Other Receivables | 9 | 10,759 | 7,886 | | Cash and Cash Equivalents | | 145,736 | 132,988 | | **Total Current Assets** | | **156,495** | **140,874** | | **Current Liabilities** | | | | | Bank Loan | | (100,000) | – | | Other Payables | | (6,401) | (6,402) | | **Total Current Liabilities** | 10 | **(106,401)** | **(6,402)** | | **Net Current Assets** | | **50,094** | **134,472** | | **Non-Current Liabilities** | | | | | Capital Gains Tax Provision | 6 | (10,463) | (9,744) | | Other Payables Falling Due After More than One Year | | – | (100,000) | | **Total Assets Less Liabilities** | | **2,034,863** | **2,017,503** | | **Share Capital and Reserves** | | | | | Equity Share Capital | 11 | 60,932 | 63,148 | | Capital Redemption Reserve | 1(j) | 21,737 | 19,521 | | Capital Reserve | 1(j) | 1,388,186 | 1,372,654 | | Special Distributable Reserve | 1(j) | 433,546 | 433,546 | | Revenue Reserve | 1(j) | 130,462 | 128,634 | | **Equity Shareholders' Funds** | | **2,034,863** | **2,017,503** | | Net Asset Value Pence per Share^{(a)} | | 182.5 | 174.1 | The Financial Statements of Templeton Emerging Markets Investment Trust plc (company registration number SC118022) on pages 83 to 105 were approved for issue by the Board and signed on 7 June 2024. **Angus Macpherson** Chairman **Simon Jeffreys** Director (a) Based on shares in issue excluding shares held in treasury. 84 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## Statement of changes in equity ### For the year ended 31 March 2024 | | | | | Capital | | | Special | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Equity Share | | Redemption | | Capital | Distributable | | Revenue | | | | | | Capital | | Reserve | Reserve | | Revenue | Reserve | | Total | | Note | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | £’000 | Balance at 31 March 2022 64,136 18,533 1,466,197 433,546 117,978 2,100,390 (Loss)/Profit for the Year – – (64,336) – 66,858 2,522 Equity Dividends 12 – – – – (56,202) (56,202) Purchase and Cancellation of Own Shares 11 (988) 988 (29,207) – – (29,207) Balance at 31 March 2023 63,148 19,521 1,372,654 433,546 128,634 2,017,503 Profit for the Year – – 81,461 – 58,865 140,326 Equity Dividends 12 – – – – (57,037) (57,037) Purchase and Cancellation of Own Shares 11 (2,216) 2,216 (65,929) – – (65,929) Balance at 31 March 2024 60,932 21,737 1,388,186 433,546 130,462 2,034,863 The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 85 03. Financial Review ## Statement of cash flows ### For the year ended 31 March 2024 For the Year to 31 March 2024 For the Year to 31 March 2023 Note £’000 £’000 Cash Flows From Operating Activities Profit Before Taxation 150,893 11,274 Adjustments to Reconcile Profit Before Taxation to Cash Used in Operations: Bank and Deposit Interest Income Recognised (6,518) (3,082) Dividend Income Recognised (71,910) (85,894) Finance Costs 2,498 3,201 Net (Gains)/Losses on Investments at Fair Value 8 (94,636) 54,645 Net Losses on Foreign Exchange 817 442 (Increase)/Decrease in Debtors (23) 12 Decrease in Creditors (29) (310) Cash Used in Operations (18,908) (19,712) Bank and Deposit Interest Received 6,434 3,082 Dividends Received 71,024 86,727 Bank Overdraft Interest Paid (2) (2) Tax Paid (9,945) (5,971) Net Realised (Losses)/Gains on Foreign Currency Cash and Cash (435) 179 Equivalents Net Cash Inflow From Operating Activities 48,168 64,303 Cash Flows From Investing Activities Purchases of Non-Current Financial Assets (463,750) (465,539) Sales of Non-Current Financial Assets 553,641 548,504 Net Cash Inflow From Investing Activities 89,891 82,965 Cash Flows From Financing Activities Equity Dividends Paid 12 (57,037) (56,202) Purchase and Cancellation of Own Shares (65,784) (30,453) Repayment of Revolving Credit Facility – (50,000) Interest and Fees Paid on Bank Loans (2,490) (3,457) Net Cash Outflow From Financing Activities (125,311) (140,112) | Net Increase in Cash | 12,748 7,156 | | | --- | --- | --- | | Cash at the Start of the Year | 132,988 125,855 | | | Net Unrealised Losses on Foreign Currency Cash and Cash Equivalents | | 0 (23) | | Cash at the End of the Year | 145,736 132,988 | | The accompanying notes on pages 88 to 105 are an integral part of the Financial Statements. 86 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review Reconciliation of Liabilities Arising From Bank Loans | | Liabilities as | | | | | | | Liabilities as | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | at 31 March 2023 | | | Cash Flows | | Profit & Loss | | at 31 March 2024 | | | | | | £’000 | | £’000 | | £’000 | | | £’000 | Revolving Credit Facility – – – – - Fees Payable – (401) 401 – Fixed Term Loan 100,000 – – 100,000 - Interest and Fees Payable 343 (2,089) 2,095 349 Total Liabilities From Bank Loans 100,343 (2,490) 2,496 100,349 | | Liabilities as | | | | | | | Liabilities as | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | at 31 March 2022 | | | Cash Flows | | Profit & Loss | | at 31 March 2023 | | | | | | £’000 | | £’000 | | £’000 | | | £’000 | Revolving Credit Facility 50,000 (50,000) – – - Interest and Fees Payable 249 (1,351) 1,102 – Fixed Term Loan 100,000 – – 100,000 - Interest and Fees Payable 352 (2,106) 2,097 343 Total Liabilities From Bank Loans 150,601 (53,457) 3,199 100,343 TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 87 03. Financial Review ## Notes to the financial statements ### As at 31 March 2024 ### Accounting Policies Adoption of new and revised Accounting Standards ## 1 At the date of authorisation of these Financial ### (a) Basis of preparation Statements, the following standards were assessed to be The Financial Statements of the Company have been relevant and are effective for annual periods beginning prepared in accordance with UK adopted International on or after 1 January 2023: Accounting Standards. The Financial Statements have ## also been prepared in accordance with the Statement of • IAS 1 Amendments: Disclosure of Accounting Policies. Recommended Practice (‘SORP’) for investment trusts This amendment is to help preparers decide which issued by the Association of Investment Companies accounting policies to disclose in their Financial (‘AIC’) and updated in July 2022 insofar as the SORP is Statements. compatible with International Accounting Standards. ## • IAS 8 Amendments: Definition of Accounting Estimates. This amendment is designed to clarify the The Financial Statements have been prepared on the distinction between changes in accounting historical cost basis, except for the measurement at fair estimates and changes in accounting policies and value of certain financial instruments. All financial assets the correction of errors. and financial liabilities are recognised (or derecognised) on the date of the transaction using ‘trade date The amendments listed above did not have any accounting’. The principal accounting policies adopted impact on the amounts recognised in the current are set out below. reporting period. 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: Accounting Standards Effective Date for Annual Periods Beginning On or After IAS 1 Amendments: Non-current Liabilities with Covenants 1 January 2024 The Directors expect that the amendments listed above will have either no impact or that any impact will not be material to the Financial Statements of the Company in the next reporting periods. 88 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### Going concern The Directors have a reasonable expectation that, assuming that there will be a successful continuation vote at the AGM in July 2024, the Company has sufficient resources to continue in operational existence for the period to 31 March 2026, which is at least 12 months from the date of the approval of these Financial Statements. The Directors reviewed income forecasts covering the next two financial years, including interest and fees arising from the debt facility. The Directors considered the principal and emerging risks and uncertainties disclosed on pages 47 to 49. At 31 March 2024, the Company had net current assets of £50,094,000 (31 March 2023: net current assets of £134,472,000). In addition, the Company holds a portfolio of largely liquid assets that, if required, can be sold to maintain adequate cash balances to meet its expected cash flows, including current liabilities relating to the £100 million fixed term loan which matures 31 January 2025. The Directors also reviewed scenarios of a significant drop in value of the assets and noted that in those scenarios they would still be significantly higher than the Company's liabilities. They have also confirmed the resiliency of the Company's key service providers and are satisfied that their contingency plans and working arrangements are sustainable. The Board has established a framework of prudent and effective controls performed periodically by the Audit and Risk Committee, which enable risks to be assessed and managed. Therefore, the going concern basis has been adopted in preparing the Company's Financial Statements. The Going Concern statement is set out on page 61. ### Functional currency 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. ### Estimates, assumptions and judgements There have been no significant estimates, assumptions or judgements for the year. In preparing these Financial Statements, the Directors have considered the impact of climate change as a principal risk as set out on page 48 and have concluded that there was no further impact of climate change to be considered as the investments are valued based on market pricing. In line with UK adopted International Accounting Standards the investments are valued at fair value, which for the Company are the bid prices quoted on the relevant stock exchange at the date of the Statement of Financial Position and therefore reflect market participants' views of climate change risk on the investments held. ### (b) Presentation of statement of comprehensive income 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) Income 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 revenue column of the Statement of Comprehensive Income. Any excess in the value of the shares received over the amount of the cash dividend forgone is recognised in the capital column of the Statement of Comprehensive Income. Special dividends receivable are treated as repayment of capital or as revenue depending on the facts of each particular case. Interest on bank deposits is recognised on an accrual basis. Stock lending income is shown gross of associated costs and recognised in revenue as earned. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 89 03. Financial Review Expenses This is subject to deferred tax assets only being ### (d) recognised to the extent that it is probable that taxable All expenses are accounted for on an accrual basis profit will be available against which the deductible and are charged through the revenue and capital temporary difference can be utilised. Deferred tax assets sections of the Statement of Comprehensive Income and liabilities are measured at the rates applicable to the according to the Directors’ expectation of future returns legal jurisdictions in which they arise. except as follows: Due to the Company’s status as an investment trust ## • Expenses relating to the purchase or disposal of an company, and its intention to continue to meet the investment are treated as capital. Details of eligibility conditions of Section 1158 of the Corporation transaction costs on purchases and sales of Tax Act 2010 and the ongoing requirements of The investments are disclosed in Note 8; and Investment Trust (Approved Company) (Tax) Regulations ## • Expenses are treated as capital where a connection 2011, the Company has not provided deferred tax in with the maintenance or enhancement of the value respect of UK corporation tax on any capital gains and of the investments can be demonstrated. 70% of losses arising on the revaluation or disposal of the annual AIFM fee has been allocated to the investments. Where appropriate, the Company provides capital account. for deferred tax in respect of overseas taxes on any capital gains arising on the revaluation of investments. ### (e) Finance costs The carrying amount of deferred tax assets is reviewed Finance costs relating to bank loans are accounted for at each year-end date and reduced to the extent on an accrual basis using the effective interest method that it is no longer probable that sufficient taxable in the Statement of Comprehensive Income according profits will be available to allow all or part of the asset to the Directors’ expectations of future returns. Finance to be recovered. costs relate to interest and fees on bank loans and overdrafts. 70% of the finance costs, except for interest ### (g) Investments held at fair value and fees on overdrafts, have been allocated to the through profit or loss capital account. The Company classifies its equity investments based on their contractual cash flow characteristics and the ### (f) Taxation Company’s business model for managing the assets. The tax expense represents the sum of current and The Company’s business is investing in financial assets deferred tax. Tax receivables will be recognised when it with a view to profiting from their total return in the is probable that the benefit will flow to the entity and the form of revenue and capital growth. This portfolio of benefit can be reliably measured. In line with the financial assets is managed, and its performance recommendations of the SORP, the allocation method evaluated on a fair value basis, in accordance with used to calculate tax relief on expenses presented a documented investment strategy, and information against capital returns in the supplementary information about the portfolio is provided internally on that basis to in the Statement of Comprehensive Income is the the Company’s Directors and other key management ‘marginal basis’. Under this basis, if taxable income is personnel. Equity investments do not meet the capable of being offset entirely by expenses presented contractual cash flows test so are measured at fair value. in the revenue return column of the Statement of Accordingly, upon initial recognition, all the Company’s Comprehensive Income, then no tax relief is transferred non-current asset investments are held at ‘fair value to the capital return column. through profit or loss’. They are included initially at fair value, which is taken to be their cost excluding expenses Deferred taxation is recognised in respect of all taxable incidental to the acquisition. temporary differences that have originated but not reversed at the year-end date, where transactions or Subsequently, the investments are valued at ‘fair value’, events that result in an obligation to pay more tax in the which is measured as follows: future or rights to pay less tax in the future have occurred at the year-end date. 90 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### The fair value of financial instruments at the year-end (j) Share capital and reserves date is, ordinarily, based on the latest quoted bid price Equity Share Capital – represents the nominal value of at, or before, the US market close (without deduction for the issued share capital. This reserve is undistributable. any of the estimated future selling costs), if the instrument is held in active markets. This represents a Capital Redemption Reserve – represents the nominal Level 1 classification under IFRS 13. For all financial value of shares repurchased and cancelled. This reserve instruments not traded in an active market or where is undistributable. market price is not deemed representative of fair value, Capital Reserve – gains and losses on realisation of valuation techniques are employed to determine fair investments; changes in fair value of investments which value. Valuation techniques include the market are readily convertible to cash, without accepting approach (i.e. using recent arm’s length market adverse terms; realised exchange differences of transactions adjusted as necessary and reference to the a capital nature; changes in the fair value of investments market value of another instrument that is substantially that are not readily convertible to cash, without the same) and the income approach (i.e., discounted accepting adverse terms; and the amounts by which cash flow analysis making use of available and other assets and liabilities valued at fair value differ from supportable market data as possible). their book value are within this reserve. Gains and losses arising from changes in fair value are Additionally, 70% of the annual AIFM fee and finance included in the net profit or loss for the period as a costs are charged to this reserve in accordance with capital item in the Statement of Comprehensive Income. accounting policies 1(d) and 1(e). ### (h) Foreign currencies Purchases of the Company’s own shares are funded Transactions involving foreign currencies are translated from the realised component of the Capital Reserve. to sterling (the Company’s functional currency) at the The Company’s Articles of Association preclude it spot exchange rates ruling on the date of the from making any distribution of capital profits by way transactions. Assets and liabilities in foreign currencies of dividend. are translated at the rates of exchange at the year-end date. Foreign currency gains and losses are included in If treasury shares are subsequently cancelled, the the Statement of Comprehensive Income and allocated nominal value is transferred out of Equity Share Capital as capital or income depending on the nature of the and into the Capital Redemption Reserve. transaction giving rise to the gain or loss. Special Distributable Reserve – reserve created upon the balance transfer of the Share Premium Account and ### (i) Financial instruments Capital Redemption Reserve in December 2008. This Cash comprises cash in hand and demand deposits. reserve is fully distributable. Cash equivalents are short-term, highly liquid investments that are readily convertible to known Revenue Reserve – represents net income earned that amounts of cash that are subject to an insignificant risk has not been distributed to shareholders. This reserve is of changes in value. fully distributable. Bank loans are classified as financial liabilities at Income recognised in the Statement of Comprehensive amortised cost. They are initially measured as the Income is allocated to applicable reserves in the proceeds net of direct issue costs and subsequently Statement of Changes in Equity. measured at amortised cost. Interest payable on the bank loan is accounted for on an accrual basis in the Statement of Comprehensive Income. The amortisation of direct issue costs is accounted for on an accrual basis in the Statement of Comprehensive Income using the effective interest method. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 91 03. Financial Review ## 2 | Income | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Dividends**^{(a)} | | | | | | | | International Dividends | 64,489 | 6,560 | 71,049 | 76,287 | 8,431 | 84,718 | | UK Dividends | 861 | – | 861 | 1,176 | – | 1,176 | | | **65,350** | **6,560** | **71,910** | **77,463** | **8,431** | **85,894** | | **Other Income** | | | | | | | | Bank and Deposit Interest | 6,518 | – | 6,518 | 3,082 | – | 3,082 | | Stock Lending Income | 18 | – | 18 | 6 | – | 6 | | | **6,536** | **–** | **6,536** | **3,088** | **–** | **3,088** | | **Total** | **71,886** | **6,560** | **78,446** | **80,551** | **8,431** | **88,982** | ## 3 | AIFM Fee | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **AIFM Fee** | **5,130** | **11,970** | **17,100** | **5,232** | **12,209** | **17,441** | The AIFM fee is paid monthly and based on the month end total net assets of the Company. From 1 July 2022, the AIFM fee was reduced to 1% of the first £1 billion of net assets, 0.75% of net assets between £1 billion and £2 billion, and 0.50% of net assets over £2 billion. The previous fee structure was 1% of net assets up to £1 billion and 0.80% of net assets above £1 billion. 70% of the annual AIFM fee has been allocated to the capital account. (a) The Company received special dividends amounting to £8.2 million (2023: £11.0 million) of which £6.6 million (2023: £8.4 million) was classified as capital and £1.6 million (2023: £2.6 million) was classified as revenue. 92 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## 4 | Other Expenses | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Custody Fees | 432 | 526 | | Marketing Fees | 344 | 321 | | Directors' Remuneration | 333 | 303 | | Membership Fees | 171 | 180 | | Depository Fees | 166 | 148 | | Registrar Fees | 117 | 86 | | Auditor's Remuneration | | | | - Audit of the Annual Financial Statements | 55 | 52 | | - Review of the Half Yearly Report | 10 | 10 | | Broker Fees | 40 | 36 | | Printing and Postage Fees | 17 | 13 | | (Tax Advisory Fees Net of Refund)/Tax Advisory Fees | (98) | 187 | | Other Expenses | 187 | 117 | | **Total** | **1,774** | **1,979** | ## 5 | Finance Costs | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Fixed Term Loan | 629 | 1,466 | 2,095 | 629 | 1,468 | 2,097 | | Revolving Credit Facility | 120 | 281 | 401 | 331 | 771 | 1,102 | | Bank Overdraft Interest | 2 | – | 2 | 2 | – | 2 | | **Total** | **751** | **1,747** | **2,498** | **962** | **2,239** | **3,201** | TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 93 03. Financial Review ## 6 | Tax on Ordinary Activities | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Irrecoverable Overseas Withholding Tax | 5,366 | – | 5,366 | 5,520 | – | 5,520 | | Capital Gains Tax Paid | – | 4,482 | 4,482 | – | 2,693 | 2,693 | | **Total Current Tax** | **5,366** | **4,482** | **9,848** | **5,520** | **2,693** | **8,213** | | Capital Gains Tax Provision | – | 719 | 719 | – | 539 | 539 | | **Total** | **5,366** | **5,201** | **10,567** | **5,520** | **3,232** | **8,752** | | | | | 2024 £'000 | | | 2023 £'000 | | Profit Before Taxation | | | 150,893 | | | 11,274 | | Theoretical Tax at UK Corporation Tax Rate of 25% (2023: 19%) | | | 37,723 | | | 2,142 | | Effects of: | | | | | | | | - Capital Element of (Profit)/Loss | | | (25,095) | | | 8,865 | | - Irrecoverable Overseas Withholding Tax | | | 5,366 | | | 5,520 | | - Excess Management Expenses | | | 2,224 | | | 2,539 | | - Overseas Capital Gains Tax Paid | | | 4,482 | | | 2,693 | | - Dividends Not Subject to Corporation Tax | | | (14,421) | | | (13,152) | | - Movement in Overseas Capital Gains Tax Liability | | | 719 | | | 539 | | - UK Dividends | | | (215) | | | (224) | | - Overseas Tax Expensed | | | (216) | | | (170) | | **Actual Tax Charge** | | | **10,567** | | | **8,752** | As at 31 March 2024 the Company had unutilised management expenses and non-trade deficits of £304.4 million carried forward (2023: £295.5 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 of £76.1 million (2023: £73.9 million) based on a prospective corporation tax rate of 25% (2023: 25%). The UK corporation tax rate is currently 25% with effect from 1 April 2023. ### Movement in Provision for Capital Gains Tax$^{(a)}$ | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Balance Brought Forward | 9,744 | 9,205 | | Charge For the Year | 5,201 | 3,232 | | Capital Gains Tax Paid | (4,482) | (2,693) | | **Balance Carried Forward** | **10,463** | **9,744** | (a) A provision for deferred capital gains tax has been recognised in relation to unrealised gains for holdings in India. 94 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## 7 | Earnings per Share | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Earnings** | 58,865 | 81,461 | **140,326** | 66,858 | (64,336) | **2,522** | | | 2024 | | | 2023 | | | | | Revenue pence | Capital pence | Total pence | Revenue pence | Capital pence | Total pence | | **Earnings per Share** | 5.18 | 7.17 | **12.35** | 5.72 | (5.50) | **0.22** | The earnings per share is based on the profit attributable to equity holders and on the weighted average number of shares in issue, excluding shares held in treasury, during the year of 1,136,517,365 (year to 31 March 2023: 1,169,095,903). ## 8 | Financial Assets – Investments | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **Opening Investments** | | | | Book Cost | 1,705,635 | 1,732,693 | | Net Unrealised Gains | 287,140 | 391,837 | | **Opening Fair Value** | **1,992,775** | **2,124,530** | | **Movements In the Year** | | | | Additions at Cost | 463,628 | 466,037 | | Disposals Proceeds | (555,807) | (543,147) | | Net Gains/(Losses) on Investments at Fair Value | 94,636 | (54,645) | | | **1,995,232** | **1,992,775** | | **Closing Investments** | | | | Book Cost | 1,740,112 | 1,705,635 | | Net Unrealised Gains | 255,120 | 287,140 | | **Closing Investments** | **1,995,232** | **1,992,775** | All investments have been recognised at fair value with gains and losses recorded through the Statement of Comprehensive Income. Transaction costs for the year on purchases were £546,000 (2023: £638,000) and transaction costs for the year on sales were £1,210,000 (2023: £1,068,000). The aggregate transaction costs for the year were £1,756,000 (2023: £1,706,000). | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **Net Gains/(Losses) on Investments at Fair Value Comprise:** | | | | Net Realised Gains on Sale of Investments at Fair Value | 126,656 | 50,052 | | Net Movement in Unrealised Losses | (32,020) | (104,697) | | **Net Gains/(Losses) on Investments at Fair Value** | **94,636** | **(54,645)** | TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 95 03. Financial Review ## 9 Trade and Other Receivables | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Dividends Receivable | 8,277 | 7,391 | | Sales Awaiting Settlement | 1,783 | – | | Overseas Tax Recoverable | 516 | 419 | | Other Debtors | 183 | 76 | | **Total** | **10,759** | **7,886** | ## 10 Current Payables | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Bank Loan | 100,000 | – | | Purchase of Investments for Future Settlement | 3,667 | 3,790 | | AIFM Fee | 1,369 | 1,396 | | Accrued Expenses | 554 | 556 | | Amounts Owed for Share Buybacks | 462 | 317 | | Interest and Fees on Fixed Term Loan | 349 | 343 | | **Total** | **106,401** | **6,402** | ### Fixed term loan On 31 January 2020, the Company entered into a term loan (the 'term loan') for a period of five years with Scotiabank Europe plc for £100 million. With effect from 28 September 2022, the term loan was transferred by novation from Scotiabank Europe plc to The Bank of Nova Scotia, London Branch. All other contractual terms and conditions remain the same. The term loan bears interest at the fixed rate of 2.089%. Under the conditions of the term loan, the net assets shall not be less than £1,015 million and the adjusted net asset coverage to all borrowings shall not be less than 3.5:1. The facility is shown at amortised cost. Interest costs are charged to capital (70%) and revenue (30%) in accordance with the Company's accounting policies. ### Revolving credit facility On 31 January 2020, the Company entered into a £120 million multi-currency unsecured revolving credit facility (the 'facility') for an initial period of three years with The Bank of Nova Scotia, London Branch, subsequently this was extended for one year to 30 January 2024. The undrawn commitment was not renewed and expired on 30 January 2024. 96 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review From 31 January 2023, the commitment fee on unutilised commitments was a flat fee of 0.40% per annum. The previous fee structure was 0.40% per annum charged on undrawn balances in excess of £60 million and 0.35% per annum on any undrawn portion below £60 million. Under the facility balances could be drawn down in GBP, USD or CNH. From 31 January 2023, the interest margin was 1.20% as follows: USD drawdowns bore interest at 1.20% per annum over the daily secured overnight financing rate ('SOFR') administered by the Federal Reserve Bank of New York, while any GBP drawdowns bore interest at 1.20% per annum over the daily sterling overnight index average ('SONIA') published by the Bank of England. The rate for any CNH drawdowns was 1.20% per annum over the Hong Kong Interbank Offered Rate. The previous fee structure was 1.125% per annum over the daily SOFR for USD drawdowns, 1.125% per annum over the daily SONIA for GBP drawdowns and 1.125% per annum over the Hong Kong Interbank Offered Rate for CNH drawdowns. GBP drawdowns were also charged a credit adjustment spread, which was removed following the amendment of the agreement on 31 January 2023. Under the terms of the facility, the net assets would not be less than £1,015 million and the adjusted net asset coverage to all borrowings would not be less than 3.5:1. There were no drawdowns on the revolving credit facility during the year (2023: £50 million was repaid). Any facility drawdown was shown at amortised cost and revalued for exchange rate movements. Any gain or loss arising from changes in exchange rates was included in the capital reserves and shown in the capital column of the Statement of Comprehensive Income. Interest costs were charged to capital (70%) and revenue (30%) in accordance with the Company's accounting policies. ## 11 Equity Share Capital | Ordinary Shares In Issue | 2024 | | 2023 | | | --- | --- | --- | --- | --- | | | £'000 | Number | £'000 | Number | | Opening Ordinary Shares of 5 Pence | 57,957 | 1,159,138,372 | 58,945 | 1,178,896,985 | | Purchase and Cancellation of Own Shares | (2,216) | (44,319,755) | (988) | (19,758,613) | | **Closing Ordinary Shares of 5 Pence** | **55,741** | **1,114,818,617** | **57,957** | **1,159,138,372** | | Ordinary Shares Held In Treasury | 2024 | | 2023 | | | --- | --- | --- | --- | --- | | | £'000 | Number | £'000 | Number | | Opening Ordinary Shares of 5 Pence | 5,191 | 103,825,895 | 5,191 | 103,825,895 | | Closing Ordinary Shares of 5 Pence | 5,191 | 103,825,895 | 5,191 | 103,825,895 | | **Total Ordinary Shares In Issue and Held In Treasury at the End of the Year** | **60,932** | **1,218,644,512** | **63,148** | **1,262,964,267** | 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, 44,319,755 shares were bought back for cancellation at a cost of £65,929,000 (2023: 19,758,613 shares were bought back for cancellation at a cost of £29,207,000). All shares bought back in the year were cancelled, with none being placed in treasury (2023: no shares were placed into treasury). TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 97 03. Financial Review ## 12 | Dividends | | 2024 | | 2023 | | | --- | --- | --- | --- | --- | | | Rate (pence) | £'000 | Rate (pence) | £'000 | | **Declared and Paid in the Financial Year** | | | | | | Dividend on Shares: | | | | | | Final Dividends for the Years Ended 31 March 2023 and 31 March 2022 | 3.00 | 34,562 | 2.80 | 32,941 | | Interim Dividends for the Six-Month Periods Ended 30 September 2023 and 30 September 2022 | 2.00 | 22,475 | 2.00 | 23,261 | | **Total** | **5.00** | **57,037** | **4.80** | **56,202** | | **Proposed for Approval at the Company's AGM** | | | | | | Dividend on Shares: | | | | | | **Final Dividend for the Year Ended 31 March 2024** | **3.00** | **33,138** | | | 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 from shareholders at the AGM. The proposed final dividend of 3.00 pence per share will be funded from the revenue reserve and the payment of this dividend will not threaten the going concern or viability of the Company. 98 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ## 13 | Related Party Transactions There were no transactions with related parties, other than the fees paid to the Directors and the AIFM during the financial years ended 31 March 2024 and 31 March 2023 respectively, which have a material effect on the results or the financial position of the Company. Details of fees paid to the Directors are included on page 64 and details of the fee paid to the AIFM are included on page 92. ## 14 | Risk Management In pursuing the Company's objective, as set out on page 39 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 investment and concentration risk, market risk (which comprises market price risk, foreign currency risk and interest rate risk), liquidity risk and counterparty and credit risk. The objectives, policies and processes for managing these risks, and the methods used to measure the risks, 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 of a particular country, or securities within one sector. As a result, there is the potential for an 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. Investment risk and a certain degree of concentration risk is a known and necessary effect of the stated investment approach in line with the investment policy. The Directors regularly review the portfolio composition and asset allocation and discuss related developments with the Investment Managers. Security, country, and sector concentrations are monitored by the Manager's risk and compliance teams on a regular basis and any concerns are highlighted to the Investment Managers for remedial action and brought to the attention of the Directors. ### 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 and to discuss the risks associated with particular securities, countries or sectors. The Investment Managers select securities in the portfolio in accordance with the investment policy, and the overall asset allocation parameters described above, and seek to ensure that individual stocks also meet the intended risk/reward profile. The Company does not use derivative instruments to hedge the investment portfolio against market price risk. 100% (2023: 100%) of the Company's investment portfolio is listed on stock exchanges. If share prices as at 31 March 2024 had decreased by 30% (2023: 30% decrease) 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 £598,570,000 (2023: £597,833,000). A 30% increase (2023: 30% 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 Managers have 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 99 03. Financial Review 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 items denominated in a foreign currency as at 31 March are shown below: 2024 Investments at | | | Trade and | | | | Trade, Bank Loans, | | Total Net Foreign | | Fair Value Through | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Other Receivables | | | Cash at Bank | | and Other Payables | | Currency Exposure | | | Profit or Loss | | | Currency | | | £’000 | | £’000 | | £’000 | | £’000 | | | £’000 | Korean Won – – – – 426,407 Hong Kong Dollar 1,783 1 – 1,784 371,454 Taiwan Dollar 516 – – 516 358,245 Indian Rupee – – – – 246,587 US Dollar – – – – 183,034 Other – 99 (3,667) (3,568) 382,705 2023 Investments at | | | Trade and | | | | Trade, Bank Loans, | | Total Net Foreign | | Fair Value Through | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Other Receivables | | | Cash at Bank | | and Other Payables | | Currency Exposure | | | Profit or Loss | | | Currency | | | £’000 | | £’000 | | £’000 | | £’000 | | | £’000 | Hong Kong Dollar – – (1,786) (1,786) 421,688 Korean Won 5,561 – (1,834) 3,727 397,800 Taiwan Dollar 1,494 98 – 1,592 316,317 US Dollar 420 – – 420 232,164 Indian Rupee – – – – 226,039 Other 320 4,680 (72) 4,928 366,798 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. As at 31 March 2024, 69.3% (2023: 68.8%) of the investments shown as US dollar and Hong Kong dollar are Chinese companies with exposure to the Chinese yuan. The total exposure to Chinese yuan was £490.3 million (2023: £616.3 million), out of which £33.0 million (2023: £109.4 million) were investments denominated in Chinese yuan. 100 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### Foreign currency sensitivity The following table illustrates the foreign currency sensitivity on the revenue and capital return. The revenue return impact represents the impact on total income (which is mainly comprised of dividend income) had sterling strengthened relative to all currencies by 10% throughout the year. The capital return impact represents the impact of the financial assets and liabilities of the Company 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. | | 2024 | | 2023 | | | --- | --- | --- | --- | --- | | | Revenue Return £'000 | Capital Return £'000 | Revenue Return £'000 | Capital Return £'000 | | Korean Won | 853 | 42,641 | 1,008 | 40,153 | | Hong Kong Dollar | 655 | 37,324 | 657 | 41,990 | | Taiwan Dollar | 1,253 | 35,876 | 1,226 | 31,791 | | Indian Rupee | 237 | 24,659 | 241 | 22,604 | | US Dollar | 789 | 18,303 | 917 | 23,258 | | Other | 2,663 | 37,914 | 3,580 | 37,173 | | **Total** | **6,450** | **196,717** | **7,629** | **196,969** | A 10% weakening of sterling against all currencies would have resulted in an equal and opposite effect on the above amounts. ### Interest rate risk The Company is permitted to invest in interest bearing securities. Any change to the interest rates relevant to particular securities may result in income either increasing or decreasing, or the Investment Managers 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. The fixed term loan incurs a fixed rate of interest and is carried at amortised cost rather than fair value. Hence, movements in interest rates will not affect net asset values, as reported under the Company's accounting policies. ### Interest rate risk profile The exposure of the financial assets and liabilities to floating interest rate risks at 31 March is shown below: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Cash | 145,736 | 132,988 | | **Net Exposure at Year End** | **145,736** | **132,988** | 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 101 03. Financial Review Interest rate sensitivity If the above level of cash was maintained for a year and interest rates were 100 basis points higher or lower, the net profit after taxation would be impacted by the following amounts: 2024 2023 | 100 Basis Points | | 100 Basis Points | | 100 Basis Points | | 100 Basis Points | | | --- | --- | --- | --- | --- | --- | --- | --- | | Increase in Rate | | Decrease in Rate | | Increase in Rate | | Decrease in Rate | | | | £’000 | | £’000 | | £’000 | | £’000 | Revenue 1,457 (1,457) 1,330 (1,330) Total 1,457 (1,457) 1,330 (1,330) Liquidity risk The Company’s assets comprise mainly 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 to meet its obligations associated with financial liabilities 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 Managers review liquidity at the time of making each investment decision and monitor the evolving liquidity profile of the portfolio regularly. The below table details the maturity profile of the Company’s financial liabilities as at 31 March 2024, based on the earliest date on which payment can be required and current exchange rates as at the balance sheet date: | | | More Than One Year | | More Than Two Years | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | In One Year | and Not Later Than | | | and Not Later Than | | More Than | | As at 31 March 2024 | or Less £’000 | | Two Years £’000 | | Three Years £’000 | Three Years £’000 Total £’000 | | Fixed Term Loan 102,095 – – – 102,095 Revolving Credit Facility – – – – – Other Payables 6,052 – – – 6,052 Total 108,147 – – – 108,147 | | | More Than One Year | | More Than Two Years | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | In One Year | and Not Later Than | | | and Not Later Than | | More Than | | As at 31 March 2023 | or Less £’000 | | Two Years £’000 | | Three Years £’000 | Three Years £’000 Total £’000 | | Fixed Term Loan 2,089 102,095 – – 104,184 Revolving Credit Facility 401 – – – 401 Other Payables 6,059 – – – 6,059 Total 8,549 102,095 – – 110,644 102 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review Counterparty and credit risk employed by TEMIT has appropriate controls in place to Certain transactions in securities that the Company enters into mitigate those risks, and that these controls are consistent with expose it to the risk that the counterparty will not deliver the recommended industry practices and standards. investment (purchase) or cash (in relation to sale or declared Securities held in custody are held in the Company’s name or dividend) after the Company has fulfilled its responsibilities. to its accounts. Details of holdings are received and The Company only buys and sells through brokers which have reconciled monthly. Cash is actively managed by Franklin been approved by the Investment Managers as an acceptable Templeton and is typically invested in overnight time deposits counterparty. Limits are set as to the maximum exposure to in the name of TEMIT with an approved list of counterparties. any individual broker that may exist at any time. Total exposure Any excess cash not invested will remain in a JPMorgan Chase is compared to monetary limits that vary based on the size and interest bearing account. There is no significant risk on debtors creditworthiness of the counterparty. Counterparty spreads and accrued income or tax at the year end. and capital ratios are reviewed periodically. The amounts under trade and other receivables and cash and cash During the year, the Company participated in a securities equivalents shown in the Statement of Financial Position lending programme through JPMorgan as the lending agents. represent the maximum credit risk exposure at the year end. All securities on loan are Level 1 financial instruments, and their value is determined by reference to the trading prices on The Company has an ongoing contract with its custodian the stock market. As at 31 March 2024, the market value of the (JPMorgan Chase Bank) for the provision of custody services. securities on loan and the corresponding collateral received As part of the annual risk and custody review, the Company were as follows: 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 31 March 2024 31 March 2023 | | Market Value of | | Market Value of | | Market Value of | | Market Value of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Securities on | | Collateral | | Securities on | | Collateral | | Counterparty | | Loan £’000 | Received £’000 | | | Loan £’000 | Received £’000 | | Merrill Lynch International 3,831 5,082 543 739 UBS 211 276 – – Citigroup – – 17 22 Total 4,042 5,358 560 761 The maximum aggregate value of securities on loan at any time during the year was £5,892,895 (2013: £9,470,125). Full details of the collateral received is noted on page 106. Fair value Fair values are derived as follows: ## • Where assets are denominated in a foreign currency, they are converted into the sterling amount using period-end rates of exchange; ## • Investments held by the Company on the basis set out in the accounting policies included in Note 1; and ## • Other financial assets and liabilities at the carrying value which is a reasonable approximation of the fair value. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 103 03. Financial Review The tables below analyse financial instruments carried at fair value by valuation method. The different levels have been defined as follows: ### Level 1. Quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2. Inputs other than quoted prices included with level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and ### Level 3. Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The hierarchy valuation of listed investments through profit and loss is shown below: 31 March 2024 31 March 2023 | | Level 1 | Level 2 | Level 3 | | | Total | Level 1 | Level 2 | Level 3 | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | £’000 | £’000 | £’000 | | | £’000 | £’000 | £’000 | £’000 | | | £’000 | | | | | | (a) | | | | | | (a) | | | | Listed Investments 1,995,232 – – | | | | | 1,995,232 | | 1,992,775 – – | | | | 1,992,775 | | The following table presents the movement in Level 3 investments for the year ended: 31 March 2024 31 March 2023 £’000 £’000 Opening Balance – 20,803 Transfers From Level 3 Into Level 1 – (17,734) (b) (c) Disposal Proceeds – Sale of Level 3 Assets (7,766) (1,613) Net Gains/(Losses) on Investments at Fair Value 7,766 (1,456) Level 3 Closing Balance – – The fixed term loan is shown at amortised cost within the Statement of Financial Position. If the fixed term loan was shown at fair value the impact would be: 31 March 2024 31 March 2023 £’000 £’000 Fixed Term Loan at Amortised Cost 100,000 100,000 Fixed Term Loan at Fair Value 96,770 94,470 Increase in Net Assets 3,230 5,530 The fair value of the fixed term loan included in the table above is calculated by aggregating the expected future cash flows which are discounted at a rate comprising the sum of the SONIA rate plus a spread. The fixed term loan at fair value is classed as Level 2. (a) As at 31 March 2024 investments in Russian securities, LUKOIL and Sberbank of Russia, continue to be fair valued at zero and classified as Level 3 due to the inability of the Company to access the local Moscow equity markets and the very limited access to the over-the-counter market. The fair value of these investments is based on a liquidity discount of 100% to the last traded price for an exit price of zero. As at 31 March 2023, the Company’s holding in Yandex was also fair valued at zero and subsequently sold on 23 May 2023. (b) Represents the sale of the holding in Yandex on 23 May 2023 for £7,766,000. (c) Represents the sale of the holdings in Gazprom on 25 April 2022 for £617,000, and the sale of VK on 9 March 2023 for £996,000. 104 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### Significant Holdings in Investee Undertakings ## 15 As at 31 March 2024, TEMIT held 3% or more of the issued class of security in the following portfolio holding whose shares are admitted to trading: 31 March 2024 31 March 2023 | | | % of Issued | | | | % of Issued | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Security Class | | Fair Value | | Security Class | | Fair Value | | | Holding | Held by TEMIT | | | £’000 | Held by TEMIT | | | £’000 | Haier Smart Home 3.0 9,072 – – | | Contingent Liabilities | | Events After the Reporting Period | | --- | --- | --- | --- | | 16 | | 20 | | | | No contingent liabilities existed as at 31 March 2024 | | The only material post balance sheet event is in | | | or 31 March 2023. | | respect of the proposed final dividend, which is | disclosed in Note 12. ### Contingent Assets ## 17 No contingent assets existed as at 31 March 2024 or 31 March 2023. ### Financial Commitments ## 18 No financial commitments existed as at 31 March 2024 or 31 March 2023. ### Capital Management Policies ## 19 ### and Procedures The Company’s objective is to provide long-term capital appreciation for private and institutional investors seeking exposure to global emerging markets, supported by a culture of both strong customer service and corporate governance. The Board monitors and regularly reviews the structure of the Company’s capital on an ongoing basis. This review includes the investment performance and outlook, discount management mechanisms including share buybacks, gearing and the extent to which revenue in excess of that which is required to be distributed under the investment trust rules should be retained. The Company’s investment policy allows borrowing of up to 20% of net assets, measured at the time of borrowing. As at 31 March 2024, the Company had share capital and reserves of £2,034,863,000 (31 March 2023: £2,017,503,000). The Company’s policies and procedures for managing capital are consistent with the previous year. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 105 03. Financial Review # Securities financing transactions – unaudited The Company engages in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015/2365) as a result of its stock lending programme. In accordance with Article 13 of the Regulation, the Company's involvement in and exposures related to SFT for the accounting period ended 31 March 2024 are detailed below. ## Amount of securities on loan The total value of securities on loan as a proportion of the Company's total lendable assets, as at the balance sheet date, is 0.2%. Total lendable assets represent the aggregate value of assets forming part of the Company's securities lending programme. ## Collateral The following table sets out details of the non-cash collateral received by the Company by way of title transfer collateral arrangements in securities lending transactions as at the balance sheet date: | Issuer | Type and Quality of Collateral^{(a)} | Currency | Maturity Tenor | 31 March 2024 £000 | 31 March 2023 £000 | | --- | --- | --- | --- | --- | --- | | Commonwealth of Australia | Sovereigns | Australian dollar | More than 1 year | – | 739 | | Kingdom of Belgium Government | Sovereigns | Euro | More than 1 year | 276 | – | | United Kingdom Government | Sovereigns | Sterling | More than 1 year | 5,082 | – | | United States Treasury | Treasury bonds | US dollar | More than 1 year | – | 22 | | **Total Non-Cash Collateral Received** | | | | **5,358** | **761** | ## Re-use of collateral Non-cash collateral received by way of title transfer collateral arrangements in relation to securities lending transactions cannot be sold, re-invested or pledged. The Company has the right to sell or re-pledge non-cash collateral received in circumstances such as default. ## Collateral received All collateral received by the Company in respect of securities lending transactions is held at the Company's custodian, JPMorgan Chase Bank. ## Counterparties The following table provides details of the counterparties (based on gross volume of outstanding transactions) in respect of securities lending transactions as at the balance sheet date and their country of incorporation. | Counterparty | Country of Incorporation | 31 March 2024 £000 | 31 March 2023 £000 | | --- | --- | --- | --- | | Merrill Lynch International | United Kingdom | 3,831 | 543 | | UBS | Switzerland | 211 | – | | Citigroup | United States | – | 17 | | **Total Gross Volume of Outstanding Transactions** | | **4,042** | **560** | (a) Quality of collateral pertaining to bond instruments has been assessed and reported in accordance with whether they are considered investment grade or below investment grade. Investment grade securities are those issued by an entity with a minimum investment grade credit rating from at least one globally recognised credit rating agency. 106 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 03. Financial Review ### Maturity tenor of securities on loan The following table provides an analysis of the maturity tenor of securities on loan outstanding as at the balance sheet date. 31 March 2024 31 March 2023 £’000 £’000 Open Maturity 4,042 560 Total Securities on Loan 4,042 560 The above maturity tenor analysis has been based on the respective transaction contractual maturity date. Open maturity transactions are those transactions that are recallable or terminable on a daily basis. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 107 ## 04. ## Investor ## Information 108 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 04. Investor Information # Notice of meeting Notice is hereby given that the Annual General Meeting ('AGM') will be held on Thursday 11 July 2024 at 12 noon at Stationers' Hall, Ave Maria Lane, London, EC4M 7DD. The AGM will transact the following business: To consider and, if thought fit, to pass the following resolutions. Resolutions 1 to 8 will be proposed as ordinary resolutions and resolutions 9 to 11 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 2024. 2. To approve the Directors' Remuneration Report for the year ended 31 March 2024. 3. To declare a final dividend of 3.00 pence per share for the year ended 31 March 2024. 4. To appoint the Directors: 4.1. To re-elect Abigail Rotheroe as a Director. 4.2. To re-elect Charlie Ricketts as a Director. 4.3. To re-elect David Graham as a Director. 4.4. To re-elect Magdalene Miller as a Director. 4.5. To re-elect Simon Jeffreys as a Director. 4.6. To elect Angus Macpherson as a Director. 5. To re-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. 6. To authorise the Directors to determine the auditor's remuneration. ## Special Business Ordinary Resolutions 7. 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 AGM of the Company to be held in 2029. 8. 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 £2,761,000 (being an amount equal to 5% of the existing issued share capital of the Company as at 23 May 2024, 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 on 30 September 2025 or, if earlier, the conclusion of the Company's AGM to be held in 2025 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. ## Special Resolutions 9. That, in substitution for any existing authority, subject to the passing of resolution 8, 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 8, 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) 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; TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 109 04. Investor Information (b) any such allotment and/or sale, otherwise than pursuant to sub paragraph (a) above, of ordinary shares having an aggregate nominal value, not exceeding the sum of £2,761,000 (being an amount equal to 5% of the existing issued share capital of the Company as at 23 May 2024, being the latest practicable date before the date of this notice); and (c) any allotment pursuant to sub-paragraph (b) above being at a price which is at or above the prevailing NAV per share at the time of issue. The power granted by this resolution will expire on 30 September 2025 or, if earlier, at the conclusion of the Company's AGM to be held in 2025 (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. 10. 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 shares in issue, provided that: (i) the maximum number of ordinary shares hereby authorised to be purchased shall not exceed 14.99% of the Company's issued ordinary share capital, excluding treasury shares, at the date of the passing of this resolution; (ii) the minimum price which may be paid for a share shall be the nominal value of an ordinary share (excluding expenses); (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 for the ordinary 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 trading venue where the purchase is carried out; (iv) unless renewed, the authority hereby conferred shall expire 15 months after the date of passing of this resolution or, if earlier, at the conclusion of the Company's AGM to be held in 2025, 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; and (v) shares will only be purchased at a price which is at a discount to the prevailing NAV per share at the time of purchase. 11. That a general meeting, other than an AGM, may be called on not less than 14 clear days' notice, such authority to expire at the conclusion of the AGM in 2025. **By order of the Board** **Angus Macpherson** 7 June 2024 Registered Office: 5 Morrison Street, 110 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 04. Investor Information # 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 2024 shall be entitled to vote at the annual general meeting (the 'Meeting'). 4. A member of the Company entitled to vote at the Meeting may appoint a proxy or proxies to vote thereat instead of him. A proxy need not be a member of the Company. 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, Lancaster, 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 with copies of this Report which are sent to registered shareholders. 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, Lancaster, West Sussex BN99 6DA to arrive not later than 12 noon on 9 July 2024. New Zealand registered shareholders must return a proxy form to 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 5.00pm on 8 July 2024 (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 23 May 2024, the Company's issued share capital was 1,104,585,987 shares of 5 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 23 May 2024 was 1,104,585,987. 11. Copies of the letters of appointment of the Directors of the Company and the Articles of Association are available for inspection at the Company's registered office at 5 Mormson Street, Edinburgh, EH3 8BH, and online at www.termit.co.uk until the close of the meeting 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 (RAIN) by the latest time(s) for receipt of appointments specified in the Notice of Meeting or, in the event of an adjournment of the Meeting, 48 hours before the adjournment 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 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 2003. 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.shareview.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 2024. 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.investorsoute.co.nz, and enter the Control Number to be provided by Computershare 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 2024. 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@bankintempleton.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 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. The answers to questions raised by shareholders will be provided on our website. 17. 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.termit.co.uk. 18. 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. TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 111 04. Investor Information ## Shareholder communications ### Our website The Board and Manager aim to keep shareholders informed and release the following information on the Company’s website www.temit.co.uk. The website offers a wealth of information and updates on TEMIT and emerging markets and is a comprehensive resource for shareholders: ## • Factsheets and commentary ## • Portfolio Manager updates ## • Stock story videos ## • Latest research ## • Investment performance ## • Useful insights and guides ## • Corporate announcements Subscribe to our monthly newsletter Follow us Receive all the latest information direct to your email Twitter / X twitter.com/temit inbox every month. Our newsletter provides you with all the updates, announcements and information on emerging LinkedIn www.linkedin.com/company/franklin-templeton/ markets like our stock story and manager update videos, factsheets and insights. YouTube Templeton Emerging Markets Investment Trust (TEMIT) Website www.temit.co.uk ### Join our mailing list at ### www.temit.co.uk today 112 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 04. Investor Information ## General information | REGISTERED OFFICE | SOLICITOR | | --- | --- | | 5 Morrison Street | CMS Cameron McKenna Nabarro Olswang LLP | | Edinburgh | Saltire Court | | EH3 8BH UK | 20 Castle Terrace | | (Registered No. SC118022) | Edinburgh | EH1 2EN UK www.temit.co.uk SOLICITOR REGISTRAR – UK Buddle Findlay Equiniti Limited HSBC Tower Aspect House Level 18, 188 Quay Street Spencer Road PO Box 1433 Lancing Auckland 1140 West Sussex New Zealand BN99 6DA UK www.shareview.co.uk CUSTODIAN Tel +44 (0)371 384 2505 JPMorgan Chase Bank 25 Bank Street London REGISTRAR – NEW ZEALAND E14 5JP UK Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna Auckland 0622 DEPOSITARY New Zealand J.P. Morgan Europe Limited 25 Bank Street enquiry@computershare.co.nz London Tel +649 488 8777 E14 5JP UK ALTERNATIVE INVESTMENT AUDITOR FUND MANAGER AND COMPANY SECRETARY Ernst & Young LLP Franklin Templeton Investment Trust 25 Churchill Place Management Limited Canary Wharf 5 Morrison Street London Edinburgh E14 5EY UK EH3 8BH UK FINANCIAL ADVISER AND STOCKBROKER Winterflood Securities Limited Riverbank House 2 Swan Lane London EC4R 3GA UK TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 113 04. Investor Information # Shareholder information ## How to invest There are three 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. There are a number of companies that offer these services and may also allow you to include TEMIT as an investment in an Individual Savings Account ('ISA') or Self-Invested Pension Plan ('SIPP'). Some of the most popular include Hargreaves Lansdown, Interactive Investor, Fidelity, Charles Stanley Direct and AJ Bell. 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. The Association of Investment Companies ('AIC') provides an independent analysis of platform costs and charges on their website in the 'Ready to Invest' section. 2. Directly through the stock market. You can invest directly in TEMIT by purchasing shares in the stock market through a stockbroker or authorised Financial Adviser. 3. Through Equiniti, the Registrar, which offers an online or telephone service where you can buy shares in TEMIT as part of an Investment Account or an ISA. ## 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 | Ticker | TEM | | --- | --- | | ISIN | GB00BKPG0S09 | | SEDOL | BKPG0S0 | ## 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 application forms through Equiniti's secure website www.shareview.co.uk/info/drip or you can contact Equiniti by phone on +44 (0)371 384 2505. If you invest through a nominee or investment platform and wish to reinvest dividends you will need to contact them directly to find out what arrangements they offer. ## Financial calendar | Final Dividend Ex-Date | 20 June 2024 | | --- | --- | | Final Dividend Record Date | 21 June 2024 | | AGM | 11 July 2024 | | Final Dividend Payment Date | 26 July 2024 | | Half Year End | 30 September 2024 | | Half Yearly Report Published | December 2024 | | Interim Dividend Record Date | December 2024 | | Year End | 31 March 2025 | 114 Templeton Emerging Markets Investment Trust plc TEMIT.co.uk 04. Investor Information # Glossary of alternative performance measures ## Net asset value total return A measure showing how the net asset value ('NAV') per share has performed over a period of time, considering 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 yield 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 4). The NAVs include income for the current period ('cum-income') and the debt at fair value to be consistent with the daily NAV released to the stock exchange and with common market practice and the requirements of statistics agencies. | NAV Total Return Calculation | 2024 | 2023 | | --- | --- | --- | | a) Opening NAV (As at 31 March 2023/2022) (see following table) | 174.5 | 178.1 | | b) Closing NAV (As at 31 March 2024/2023) (see following table) | 182.8 | 174.5 | | c) Dividends Paid^{(a)} | 5.0 | 4.8 | | d) Effect of Dividend Reinvestment | 0.4 | 0.3 | | e) Adjusted Closing NAV e = (b+c+d) | 188.2 | 179.6 | | **NAV Total Return (e-a)/a** | **7.9%** | **0.8%** | The following table sets out the difference between NAV with debt at cost and NAV with debt at fair value: | | 2024 £'000 | 2023 £'000 | 2022 £'000 | | --- | --- | --- | --- | | a) Net Assets per the Statement of Financial Position | 2,034,863 | 2,017,503 | 2,100,390 | | b) Difference Between Debt at Cost and Debt at Fair Value (Note 14) | 3,230 | 5,530 | (390) | | c) Number of Ordinary Shares in Issue | 1,114,818,617 | 1,159,138,372 | 1,178,896,985 | | **NAV Pence per Share with Debt at Fair Value (a+b)/c** | **182.8** | **174.5** | **178.1** | ## Share price total return A measure showing how the share price has performed over a period of time, considering 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 yield 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 4). | Share Price Total Return Calculation | 2024 | 2023 | | --- | --- | --- | | a) Opening Share Price (as at 31 March 2023/2022) | 152.2 | 156.4 | | b) Closing Share Price (as at 31 March 2024/2023) | 154.4 | 152.2 | | c) Dividends Paid^{(a)} | 5.0 | 4.8 | | d) Effect of Dividend Reinvestment | 0.3 | 0.2 | | e) Adjusted Closing Share Price e = (b+c+d) | 159.7 | 157.2 | | **Share Price Total Return (e-a)/a** | **4.9%** | **0.5%** | ## Share price discount to net asset value ('NAV') A measure showing the relationship between the share price and the NAV (cum-income), which is expressed as a percentage of the NAV per share (see page 7). As at 31 March 2024 the Company's share price was 154.4 pence and the NAV per share was 182.5 pence, therefore the discount was (154.4 - 182.5)/182.5 = 15.4% (31 March 2023: 12.6%). 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. The average share price discount to NAV over the year is calculated using the daily NAV and market close share price. (a) Dividends assumed to be reinvested on ex-date. Final dividend of 3.00p relating to financial year 2023 first traded ex-dividend on 22 June 2023 (2023: final dividend of 2.80p related to financial year 2022 first traded ex-dividend on 30 June 2022). Interim dividend of 2.00p for financial year 2024 first traded ex-dividend 14 December 2023 (2023: interim dividend of 2.00p for financial year 2022 first traded ex-dividend 15 December 2022). TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 115 04. Investor Information ## 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 7). A net gearing figure of 0.0% means that the cash held in the Company is equal to or higher than the total bank loans. | Net Gearing Calculation | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | a) Bank Loans | 100,000 | 100,000 | | b) Cash Held | 145,736 | 132,988 | | c) Net Assets (Excluding Loans) | 2,134,863 | 2,117,503 | | **Total Gearing (a-b)/c** | **0.0%** | **0.0%** | ## 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. As at 31 March 2024 the OCR was 0.97% (31 March 2023: 0.98%). | Ongoing Charges Calculation | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | a) Total AIFM Fee and Other Expenses | 18,874 | 19,420 | | b) Average Net Assets | 1,954,521 | 1,991,068 | | **Ongoing Charges (a/b)** | **0.97%** | **0.98%** | ## Gross total return Gross total return is net asset value total return before the deduction of expenses (see page 16). ## Excess return The difference between the gross total return of TEMIT and the benchmark total return (see page 16). ## Residual return 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 by the benchmark indices and hence to calculate attribution (see page 16). ## Benchmark return The Company's benchmark is the MSCI Emerging Markets (Net Dividends) 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 material divergence between the Company's performance and that of the benchmark. Although not an alternative performance measure, total return of the benchmark is calculated on a closing market value to closing market value basis, assuming that all dividends net of local taxes received were reinvested into the shares of the relevant companies at the time at which the shares were quoted ex-dividend (see page 4). Returns are converted by the index provider into pounds sterling at prevailing exchange rates. Benchmark performance source: MSCI. 116 | Templeton Emerging Markets Investment Trust plc TEMIT.co.uk ## Notes TEMIT.co.uk Templeton Emerging Markets Investment Trust plc 117 Templeton Emerging Markets Investment Trust plc 5 Morrison Street, Edinburgh, EH3 8BH, UK temitcosec@franklintempleton.com www.temit.co.uk EMEA_EUK_2466005_2366005 © 2024 Franklin Templeton. All rights reserved. TEMIT ANNUAL REPORT 03/24