Templeton Emerging Markets Investment Trust : Annual Report to 31 March 2024

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 growth markets

TEMIT offers investors a simple way to invest in the growth potential of dynamic economies in Asia, Latin America, the Middle East and Europe. Emerging markets currently generate 65% of global growth and that is forecast to increase(a).

Best

ideas portfolio

TEMIT's portfolio is diversified across approximately 80 high quality companies that include the very best investment opportunities.

ESG analysis

Structured analysis of Environmental, Social and Governance ('ESG') factors is part of the research process but is not binding on stock selection.

35-year track record

TEMIT is the first emerging markets investment trust and has delivered a NAV total return of +4,155.4% over its 35-year life. It is also the largest with £2.0 billion assets under management.

Investment expertise

With over 70 investment professionals spread across

14 countries our Investment Managers can identify investment opportunities beyond the mainstream, often before they are recognised by the broader market.

Shareholder- friendly features

As a stock market listed investment trust, this offers additional features and benefits for shareholders including, potentially, dividends, 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.

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Financial highlights

Net Assets Value Total Return (cum-income)(a)

Share Price Total Return(a)

MSCI Emerging Markets Index(a)(b)

Proposed Total Ordinary Dividend(c)

2024

7.9%

4.9%

5.9%

5.00p

2023

0.8%

0.5%

(4.9)%

5.00p

3 Years Cumulative

(10.0)%

(16.9)%

(6.5)%

5 Years Cumulative

10 Years Cumulative

23.4% 89.5%

16.5% 84.7%

15.1%

76.5%

China

1. A glossary of alternative performance measures is included on pages 115 and 116.
2. Source: MSCI. The Company's benchmark is the MSCI Emerging Markets (Net Dividends) Index.
3. 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.

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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
India	Shareholder information	114
Glossary of alternative performance measures	115

01.

Strategic Report

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
Net Asset Value Total Return (Cum-Income)(a)	7.9%
Share Price Total Return(a)	4.9%
MSCI Emerging Markets (Net Dividends) Index Total Return(a)	5.9%
Total Net Assets (£ millions)	2,034.9
Net Asset Value (Pence per Share)	182.5
Share Price (Pence per Share)	154.4
Share Price Discount to Net Asset Value at Year End(a)	15.4%
Average Share Price Discount to Net Asset Value Over the Year(a)	13.9%
Ordinary Dividend(b) (Pence per Share)	5.00
Revenue Earnings(c) (Pence per Share)	5.18
Net Gearing(a)	0.0%
Ongoing Charges Ratio(a)	0.97%

Year Ended

31 March 2023

0.8%

0.5%

(4.9)%

2,017.5

174.1

152.2

12.6%

13.0%

5.00

5.72

0.0%

0.98%

Change

0.9%

4.8%

1.4%

Source: Franklin Templeton and FactSet.

1. A glossary of alternative performance measures is included on pages 115 and 116.
2. 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).
3. 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.

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01. Strategic Report

10 year record

2014-2024

						Revenue	Annual
			NAV(a)	Share Price(a)		Earnings(a)	Dividend(a)	Ongoing
		Total Net	(Pence	(Pence	Year-End	(Pence	(Pence	Charges
Year Ended	Assets (£m)	per Share)	per Share)	Discount(b) (%)	per Share)	per Share)	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(e)

250

200
150
100
50
March	'15	'16	'17	'18	'19	'20	'21	'22	'23	'24
2014
TEMIT NAV Total Return	TEMIT Share Price Total Return	MSCI Emerging Markets (Net Dividends) Index Total Return

Source: Franklin Templeton and FactSet.

1. 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.
2. A glossary of alternative performance measures is included on pages 115 and 116.
3. 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.
4. 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.
5. Rebased to 100 at 31 March 2014.

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01. Strategic Report

Chairman's statement

South Korea

'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.

1. See Glossary of Alternative Performance Measures on pages 115 and 116.
2. Source: Winterflood (data provided by Refinitiv).

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.

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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.

Taiwan

1. 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.

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