Templeton Emerging Markets Regulatory News (TEM)

Stock Exchange Announcement

Statement of Annual Results

TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC

("TEMIT" or "the Company")

Legal Entity Identifier 5493002NMTB70RZBXO96

Company Overview

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.

TEMIT has a diversified portfolio of around 80 high quality companies, actively selected for their long-term growth potential and sustainable earnings, and with due regard to environmental, social and governance ("ESG") attributes. TEMIT's research-driven investment approach and strong long-term performance has helped it to grow to be the largest emerging markets investment trust in the UK, with assets of £2.1 billion as at 31 March 2022. From its launch to 31 March 2022, TEMIT's net asset value ("NAV") total return was +3,813.9% compared to the benchmark total return of +1,792.0%.

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.

TEMIT at a glance

For the year to 31 March 2022

(a) A glossary of alternative performance measures is included in the full Annual Report.

(b) Source: MSCI. The Company's benchmark is the MSCI Emerging Markets Index, with net dividends reinvested.

(c) An annual ordinary dividend of 3.80 pence per share for the year ended 31 March 2022 has been proposed. This comprises the interim dividend of 1.00 pence per share paid by the Company on 10 January 2022 and the proposed final dividend of 2.80 pence per share.

(d) In addition to the ordinary dividend of 3.80p, a special dividend of 2.00p was paid for the year ended 31 March 2021.

(e) Comparative figures for the year ended 31 March 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.

Strategic Report

The Directors present the Strategic Report for the year ended 31 March 2022, 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

2021-2022

Source: Franklin Templeton and FactSet.

(a) A glossary of alternative performance measures is included in the full Annual Report.

(b) Comparative figures for the year ended 31 March 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.

(c) An annual dividend of 3.80 pence per share for the year ended 31 March 2022 has been proposed. This comprises the interim dividend of 1.00 pence per share paid by the Company on 10 January 2022 and a proposed final dividend of 2.80 pence per share.

(d) The revenue, capital and total earnings per share figures are shown in the Statement of Comprehensive Income in the full Annual Report and Note 7 of the Notes to the Financial Statements.

Ten Year Record

2012-2022

Ten year growth record(e)

2012-2022

Source: Franklin Templeton and FactSet.

(a) Comparative figures for financial years 2012 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 in the full Annual Report.

(c) Excludes the special dividend of 0.52 pence per share for the year ended March 2020 and the special dividend of 2.00 pence per share for the year ended March 2021.

(d) An annual ordinary dividend of 3.80 pence per share for the year ended 31 March 2022 has been proposed. This comprises the interim dividend of 1.00 pence per share paid by the Company on 10 January 2022 and a proposed final dividend of 2.80 pence per share.

(e) Rebased to 100 at 31 March 2012.

Chairman's Statement

I would like to start by expressing the sympathy of the Board and of all of those involved with the management of TEMIT to all victims of the Russian invasion of Ukraine.

Last year I had the pleasure of reporting a fifth consecutive year of out-performance of our benchmark index. The year under review was much more challenging. In the first half of our accounting year news in emerging markets was dominated by pressure on the share prices of some technology companies. This came after an extended period of strong performance and the Chinese government's moves to curtail the activities of some listed companies as it seeks to balance growth, equality and security. Both of these factors had a negative impact on the performance of our portfolio over the 12 months under review. This was followed in February by the Russian invasion of Ukraine. Russian securities were rapidly suspended from trading and at our financial year end the five Russian stocks in TEMIT's portfolio were ascribed a zero value. The combination of events in China and Russia and the weakness of technology stocks led to TEMIT underperforming its benchmark by quite some margin, with a total return of -17.3%.

The Board takes a close interest in the performance of the portfolio and we are naturally disappointed by investment performance in recent months. We meet formally with the Investment Manager at least four times per year and in the first quarter of each year conduct an in-depth review of investment strategy with the portfolio managers and supporting analysts. Franklin Templeton has a large emerging markets team and the Board this year spent time with several regional experts in order better to understand the construction of the portfolio. While we are concerned by recent performance, the Board is reassured by both the quantity of resources and the quality of the insights that the team produces and is confident that performance will turn around in due course.

(a) The share split which was approved by shareholders at the 2021 Annual General Meeting took effect on 26 July 2021 and all of the numbers quoted in this report take account of the fact that each existing share was replaced by five new shares.

There is a growing interest by investors in the various aspects of companies' approaches to the environment, to social matters and to good governance. Effective stewardship of the Company's assets is a key element of the Board's strategy for the Company. Consideration of governance and sustainability issues has long been an integral part of our Investment Manager's approach and information and key disclosures are included in the description of the Investment Manager's process. In order to explain in more detail their approach to this important topic they have published a Stewardship Report for TEMIT, which is available at www.temit.co.uk. This Report sets out the general approach to investing your Company's assets, relevant statistical information and examples of engagement with investee companies. I encourage you to download a copy.

Net revenue earnings for the period under review amounted to 3.44 pence per share. This is marginally lower than earnings for the prior year, adjusted for the stock split and the exceptional Corporation Tax refund received in the prior year. An interim dividend of 1.00 pence per share was paid in January 2022 and the Board recommends a final dividend of 2.80 pence per share, both amounts being unchanged from last year after accounting for the share split. TEMIT has large revenue reserves amounting to 10.01 pence per share and the Board believes that it is appropriate to use a small part of these reserves to maintain the annual ordinary dividend at the same level as last year. As usual, shareholders will be asked to approve the final dividend at the Annual General Meeting ("AGM").

TEMIT has fixed borrowing of £100 million, and a revolving credit facility under which up to £120 million in flexible debt may be drawn down. The Investment Manager has taken a cautious view on borrowing, which has proven correct in difficult markets. Gearing was increased during the year under review as £50 million was drawn down under the revolving credit facility in October 2021.

As at the financial year end, gearing net of cash in the portfolio stood at 1.1%. I would like to remind shareholders that the level of debt deployed is not a result of views on market direction but driven by investment opportunities presented by individual companies.

We remain active in promoting TEMIT's shares to a wide variety of existing and potential investors, particularly private investors. The Board believes that promoting the Company to new investors is good for its long-term health, while the demand created also helps to exert pressure on the discount. We have a substantial marketing budget, which is also supported by a financial contribution from Franklin Templeton and by their marketing resources. As we noted in our half year report for the second consecutive year we won the award in the "Emerging Markets Equity - Active" category in the prestigious AJ Bell Fund and Investment Trust Awards 2021. This award is made on the basis of voting from private investors from a short list of open-ended funds, ETFs and investment trusts drawn up by investment experts. TEMIT also won the prestigious Best Campaign Award at the AIC Shareholder Awards 2022 in recognition of the quality of the "Your future is emerging" campaign undertaken to attract new shareholders. The innovative use of broadcast media has helped to increase TEMIT's profile, advertise the benefits of the Company and communicate the growth story of emerging markets to a wider audience.

The Board continues to regard share buybacks as a key tool in managing the balance between supply and demand for the shares. Trading in the shares is very closely monitored and the Board receives a daily report from our broker, Winterflood Securities, as well as regular summaries of market conditions focused on investor demand for global emerging markets funds. Based on the detailed information that we receive, the Board continues to believe that we have ample evidence that the driver of changes in the discount is the balance between supply and demand for the shares. In the Chairman's Statement at the half year stage I noted that the discount had been narrow and in the event we made only one buyback in the first 11 months of our financial year, that being in September 2021. The situation changed dramatically following the Russian invasion of Ukraine and we stepped in on a number of occasions to buy back shares in March 2022 and have continued to do so after the year end.

In total over the year, £3.6 million was spent on share buybacks and, as all buybacks were at a discount to the prevailing NAV, this resulted in an increase to the NAV of 0.03% to the benefit of remaining shareholders.

As reported last year, Magdalene Miller was appointed as a non-executive Director of the Company with effect from 10 May 2021.

Beatrice Hollond will retire from the Board at this year's AGM. On behalf of all the Directors, I would like to record our thanks to Beatrice for her advice and wise contributions to our discussions over the last eight years.

After Beatrice retires, Simon Jeffreys will take on role of Senior Independent Director. The search for a replacement Director is in progress bearing in mind gender diversity and we plan to make an announcement shortly.

We announced in November 2021 that the Board has agreed with Franklin Templeton that with effect from 1 July 2022 the AIFM fee will reduce to:

• 1.0% on the first £1 billion of net assets;

• 0.75% on net assets between £1 billion and £2 billion; and

• 0.5% on net assets over £2 billion.

This compares with the current fee structure of 1.0% on the first £1 billion of assets and 0.80% on assets above £1 billion. Based on net assets as at 31 March 2022, this results in an annual saving to the Company of £0.8 million.

The management fee rate has gradually been reduced over recent years and the Board is mindful of the balance between controlling costs and incentivising the Investment Manager to continue to invest in their team.

Having been obliged to hold the last two years' AGMs behind closed doors, I am pleased to be able to invite all shareholders to attend our AGM in person on 14 July 2022 at Barber-Surgeons' Hall in London. We look forward to welcoming shareholders at the meeting. While we hope that shareholders will be able to attend, the Directors are aware that Government guidance and regulation relating to the COVID-19 pandemic may change. If we are obliged to change the arrangements for the AGM after publishing this document, details will be published via Stock Exchange announcements in London and New Zealand and our website. Shareholders who plan to attend the AGM are encouraged to check the website before travelling.

If you 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. Any questions that we receive will be considered and responses will be provided on our website www.temit.co.uk.

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 ensures that your votes will be counted if restrictions preventing attendance at the AGM are introduced at short notice.

These are difficult times for investment managers. At the time of writing the war in Ukraine appears likely to continue for some time and while active hostilities will, we hope, end shortly, the ramifications are likely to be felt for some considerable time. From the perspective of investors the major issues will be the extent to which commodity prices remain elevated and the effect that this has on broader inflation around the world. Higher inflation generally leads to higher interest rates and this affects the market value of assets, particularly high growth companies for which values are derived from expectations of earnings over the longer term. The COVID-19 pandemic is still present in parts of the world. In particular, the Chinese government continues to pursue a policy of lockdowns to control outbreaks of the virus and this can have serious economic consequences. We also remain concerned about the extent to which the Chinese government will continue to intervene in the affairs of companies.

Against this difficult background, your Board remains optimistic for the long term despite recent setbacks. Our Investment Manager deploys a large team with staff around the world and their process has demonstrated its effectiveness over the long term. Countries making up the emerging markets currently contribute around 2/3 of the world's economic growth. We believe that this growth advantage will continue because emerging markets enjoy many structural advantages - relatively young and growing populations, growing wealth, expanding economies, and companies that in some cases are world leading.

14 June 2022

The Investment Manager

TEMIT's Investment Manager is the Franklin Templeton Emerging Markets Equity ("FTEME") team. FTEME has managed the portfolio since TEMIT's inception and are pioneers in emerging markets equity investing. They bring more than 30 years of experience and local knowledge from over 70 investment professionals, based in 13 countries around the world.

The team has a collaborative investment process where all analysts and portfolio managers work together to contribute to investment returns. They meet regularly, both formally and informally, to debate and exchange ideas, investment themes and enrich their understanding of the markets by drawing on local insights to build a global perspective and context to their thinking. They also benefit from the broader resources available throughout Franklin Templeton.

The portfolio managers for TEMIT, Chetan Sehgal (lead) and Andrew Ness are senior executives in FTEME.

Portfolio Managers

Chetan Sehgal, CFA

Chetan is the lead portfolio manager of TEMIT and is based in Singapore.

As part of his broader responsibilities within FTEME, Chetan is also the director of portfolio management. In this capacity, he is responsible for the overall Global Emerging Markets and Small Cap strategies, providing guidance and thought leadership, coordinating appropriate resources and coverage, and leveraging the group's expertise to add value across products within the strategies.

Chetan joined Franklin Templeton in 1995 from the Credit Rating Information Services of India Ltd, where he was a senior analyst.

Chetan holds a B.E. Mechanical (Hons) from the University of Bombay and a postgraduate diploma in Management from the Indian Institute of Management in Bangalore, where he specialised in finance and business policy and graduated as an institute scholar. Chetan speaks English and Hindi and is a Chartered Financial Analyst ("CFA") Charterholder.

Andrew Ness, ASIP

Andrew Ness is a portfolio manager of TEMIT and is based in Edinburgh.

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.

Portfolio Report

Overview of markets

Emerging markets collectively declined over the 12 months under review. Although progress in vaccination campaigns and businesses reopening, along with ongoing monetary and fiscal stimulus, aided economic recovery in several parts of the world, others struggled with new COVID-19 variant outbreaks. An accelerated tightening in United States ("US") monetary policy suppressed investors' risk appetite. Higher inflation amidst a spike in commodity prices raised investor concerns as rebounding consumer demand alongside continued supply-chain disruptions drove inflation in many countries to reach the highest levels in decades. Towards the end of the period under review, Russia's invasion of Ukraine further tested financial markets, triggering a series of international sanctions on Russia. The MSCI Emerging Markets Index returned -6.8% in the 12-month period under review, whilst TEMIT delivered a net asset value total return of -17.3% (all figures are total return in sterling). Full details of TEMIT's performance can be found in the full Annual Report.

By region, Latin America outperformed its peers in EMEA (Europe, Middle East and Africa) and Asia. Latin America, replete with natural resources and relatively insulated from supply interruptions related to Russia's war with Ukraine, benefitted from higher prices for energy and other commodities. Although the EMEA region lost ground on contagion from Russia's invasion of Ukraine and subsequent sanctions from Western governments, resource-rich South Africa and oil- producing nations in the Middle East benefitted from higher commodity prices. Declines in China were largely responsible for Asia's lagging performance, overshadowing solid returns in India and Taiwan.

China was TEMIT's largest market exposure, although the portfolio remained underweight relative to the benchmark. China was amongst the weakest emerging markets, losing 29% in sterling terms over the 12-month period. Chinese equities retreated under pressure from concerns relating to the impact of additional regulations, particularly in the internet industry, a property market slowdown and new COVID-19 outbreaks, even as the central bank cut key lending rates to support the economy. The government enacted new regulations in a number of industries, including internet and education, which caused considerable investor concern. The regulatory changes in China were announced at a time when the country was seeing a slowdown in its economy and resurgence in COVID-19 cases, which further weighed on equity performance. Equities sharply rebounded near the end of the period after assurances of stock market stability from China's state council.

While regulatory changes in China have elevated market volatility and investor fears of policy risks in the country, we would like to stress that the policies do not have a uniform effect on all companies within a given sector. Therefore, it is crucial to assess the impact of regulatory changes on the long-term earnings power and intrinsic value of companies individually. Other factors, including a resurgence of COVID-19 and rising coal and gas prices, will also be likely to have an impact on economic growth this year. Additionally, we have seen a slowdown in consumption. However, we believe that China's policy makers have multiple and flexible policy tools to underpin the economy. China's increased emphasis on its domestic market and self-sufficiency should support sustainable longer-term growth. China has directed its policies towards developing industries that are likely to benefit broader society-the "greening" of the economy, for example, is likely to be a tailwind for industries related to electric vehicles and renewable energy. We also expect digitalization to remain an important theme in China.

TEMIT's second-largest market position was in South Korea, where the portfolio was overweight versus the benchmark. South Korean equities declined by 14% during the reporting period. The resurgence of COVID-19, stricter social distancing measures and weak market sentiment surrounding technology stocks weighed on equity prices. South Korea ended the period near a historically low unemployment rate of under 3% largely due to government spending. The country is an export powerhouse, and several South Korean exporters are of global importance, supplying vital hardware. However, rising commodity prices and supply chain bottlenecks have put pressure on the semiconductor and battery makers that comprise South Korea's growth sectors. Uncertain global economic issues could lead to a slower-than-expected recovery in key macroeconomic indicators. Concerns about regulations also remain, whilst geopolitical tension with North Korea and the possibility of future COVID-19 outbreaks warrant close attention.

The Taiwanese market outperformed the wider benchmark, ending the reporting period with a return of nearly 12%. TEMIT's overweight allocation to Taiwan was largely attributable to exposure to the island's semiconductor industry. Technology's role as a key economic engine has only strengthened during the pandemic. Moreover, semiconductor chips have become a growing part of almost all consumer goods with the semiconductor industry experiencing a cyclical and secular boom as growing digitalisation powers a surge in demand. Some of Taiwan's manufacturers are counted amongst the largest and most advanced foundries in the world and partner with and produce chips for clients globally, with few competitors able to progress to the next level of technology. Despite increased market concerns that Russia's invasion of Ukraine could potentially increase cross-strait geopolitical risk between China and Taiwan, we expect the current status quo situation to remain unchanged.

Equities in Brazil rose sharply in the final three months of the reporting period to end the 12-month period with double-digit gains. Brazil's monetary policy has been amongst the most aggressive in emerging markets. In the second half of 2021, fiscal uncertainties, depreciation in the real, increased political noise, rising inflation and pockets of commodity weakness weighed on the Brazilian market. However, higher commodity prices, a stronger real and undemanding valuations led to renewed fund inflows in 2022. However, political uncertainty and fiscal challenges created volatility in the equity market, as did concerns that rising inflation and a tighter monetary policy could hinder the overall economy. Brazil's long-term growth recovery and business environment could be further supported by the continuation of economic reforms, privatisations and concessions, all of which the government has been focusing on but remain difficult to materialize ahead of presidential elections in October 2022. As the world's fourth-largest commodity exporter, the commodity price surge amidst global supply concerns from Russia's invasion of Ukraine has been beneficial for Brazil's commodity exports, economy and market. We also believe that Brazil's economic growth could surprise on the upside, aided by efficiencies arising from a thriving internet economy.

India was TEMIT's fifth largest exposure at the end of March 2022. The Indian market remained on an upward trend over the majority of the 12-month period. Stocks, however, declined in early 2022, as rising oil prices weighed on the economic outlook for the country as it is a major oil importer. A moderation in oil prices and expectations of policy continuity with the ruling government party's election in key states in March led equities to rebound off their 2022 low, to end the reporting period with double-digit gains. Digitalisation in India has been advancing at a rapid pace since 2016, due to government initiatives, inexpensive mobile data and a significant step-up of venture capital and private equity funding. Companies related to the internet and digital economy have also been gaining prominence on Indian stock exchanges, providing exciting investment opportunities and diversifying the overall market. Over the longer-term, we expect to see continued growth in Indian earnings due to positive demographics, continued private sector penetration in segments like finance and health care, digitalisation from a low base, and supply-chain diversification supported by government policy. We believe that long-term fundamentals remain robust in view of increasing consumer penetration, growing formalisation of the economy, a reform push and a stable government.

TEMIT had maintained an overweight exposure to Russia relative to the benchmark prior to Russia's invasion of Ukraine. Equity prices were on an upward trend in the first seven months of the reporting year, returning over 25% in sterling terms. Despite its strong market performance, however, Russia remained one of the most undervalued markets in Europe as well as globally. Rising oil prices, appreciation in the rouble and a faster-than-expected economic recovery buoyed the stock market. Brewing tensions with Ukraine however, started weighing on equity prices in Russia. We remained generally positive in our outlook on investment opportunities in Russia, given the belief that diplomacy could resolve the issue. We believed that Russia's internally focused economy and policy flexibility (given twin surpluses in its fiscal and current accounts) continued to provide a conducive environment for companies operating domestically.

Post the invasion and the implementation of extensive sanctions from the West, stock prices and the Russian rouble declined sharply. Russia's resilience to financial shocks has also been affected by the freeze of some of its central bank's international reserves. Index compilers MSCI and FTSE dropped Russia from their benchmarks in early March at a zero-value, due to non-fulfilment of market accessibility requirements. Although trading in the domestic market resumed in late-March, following a trading suspension on 28 February, foreigners remained barred from selling, while trading in Russian American and Global Depositary Receipts (ADRs/GDRs) listed in international exchanges also remained suspended at the time of writing. Given these facts, on 4 March 2022, Russian company securities were fair valued at zero by the Franklin Templeton Valuation Committee. In concluding upon a zero value, the continued uncertainty in the market, restrictions on trading the shares both onshore and offshore, and a lack of any price discovery mechanism to provide indications of residual value were all considered.

Investment strategy, portfolio changes and performance

The following sections show how different investment factors (stocks, sectors and geographies) accounted for TEMIT's performance over the period. We continue to emphasise our investment process which is described in more detail in the full Annual Report and that selects companies based on their individual attributes and ability to generate risk-adjusted returns for investors, rather than taking a high-level view of sectors, countries or geographic regions to determine our investment allocations.

In the portfolio, we remain positioned in long-term themes including consumption premiumisation, digitalisation and technology. We focus on companies reflecting our philosophy of owning superior quality businesses, with long-term sustainable earnings power and share prices at a discount to intrinsic worth. We see elevated levels of leverage as a risk and continue to avoid companies with weak balance sheets.

Whilst the immediate outlook may be volatile, this approach should help us best navigate the ongoing pandemic and geopolitical instability. Over time, we expect the long-term fundamentals of our holdings to remain intact and to produce attractive returns for investors.

Performance attribution analysis %

Source: FactSet and Franklin Templeton.

(a) A glossary of alternative performance measures is included in the full Annual Report.

(b) The share buyback impact has been presented separately from the residual figure.

Top 10 contributors to relative performance by security (%)(a)

(a) For the period 31 March 2021 to 31 March 2022.

(b) Security not held by TEMIT as at 31 March 2022.

(c) Security not included in the MSCI Emerging Markets Index as at 31 March 2022.

Finishing higher over the 12-month period were shares of ICICI Bank, India's second largest private sector bank. In its most recent fiscal quarter ended in December 2021, the bank posted robust loan growth amidst increasing economic activity as pandemic restrictions eased. The bank has a wide presence across retail banking products, as well as corporate and commercial banking. The bank has strong franchises and competitive asset management, insurance, and retail brokerage subsidiaries.

Brazilian bank Itaú Unibanco was a top contributor during the period. Its shares rebounded from a decline in the latter part of 2021, as Brazilian equities benefitted from renewed investor inflows amidst higher commodity prices, improving macroeconomic data and undemanding valuations. Rising interest rates further benefitted the bank. The large-scale bank benefits from low penetration of financial products and a strong distribution network. Loan activity increased in 2021, and expense control supported strong margins.

Shares of Taiwan Semiconductor Manufacturing ("TSMC") gained during the period. The chip maker's strong quarterly earnings growth, upbeat full year outlook and larger capital expenditure plan boosted investor confidence in the stock, although risks of a slowdown in consumer spending led to volatility in the semiconductor industry late in the period. We expect TSMC to benefit from a structural increase in chip demand, driven by smartphones, high-performance computing and other advanced applications. We are positive on its technology leadership and its dominance in developing cutting-edge chips.

Top 10 detractors to relative performance by security (%)(a)

(a) For the period 31 March 2021 to 31 March 2022.

(b) Security not held by TEMIT as at 31 March 2022.

(c) Security not included in the MSCI Emerging Markets Index as at 31 March 2022.

Alibaba's stock fell over the period as the Chinese e-commerce company came under pressure from increased regulatory scrutiny from its government. Additionally, weakening consumption trends amidst repeated COVID-19 outbreaks and intensified competition in the domestic e-commerce market weighed on sentiment. We remain positive on the relative strength of Alibaba's e-commerce ecosystem. It has also been pursuing a multi-engine growth strategy for the longer term, which includes building up its cloud and international e-commerce businesses.

LUKOIL, a major Russian oil producer, Yandex, Russia's largest search engine and Sberbank of Russia, one of the biggest banks in Russia were top detractors in the final quarter of the period. Before Russia's invasion of Ukraine, we had maintained our positions in Russian stocks in the belief that diplomacy could resolve the issue. Post the invasion, share prices of Russian equities declined significantly. As mentioned above, with effect from 4 March 2022, Russian company stocks were fair valued at zero.

Top contributors and detractors to relative performance by sector (%)(a)

(a) For the period 31 March 2021 to 31 March 2022.

An overweight position and favourable stock selection in the information technology sector added to TEMIT's performance relative to the benchmark index in the review period. Tata Consultancy Services, an India-based IT services firm, and Cognizant Technology Solutions, a US listed technology services company that derives much of its earnings from services provided in India, were both examples of information technology companies that aided relative returns. Stock selection and an underweight in real estate also aided relative performance, as the poorly performing sector for the benchmark contributed to relative returns in the portfolio. The portfolio did not invest in several Chinese real estate stocks that weighed on the sector in the benchmark amidst a slowdown in the Chinese real estate sector. However, Chinese real estate company China Resources Land was an overweight in the portfolio and rose during the period. Stock selection and an underweight exposure to the health care sector was another positive contributor to relative returns.

In contrast, stock selection in the communication services sector was a key detractor from relative performance. Yandex was a leading detractor as Russian stocks were fair valued at zero, as discussed above. Tencent was another key detractor in the sector. In addition to new rules in China's internet sector, concerns of a freeze on new video game approvals also impacted sentiment in the company. Stock selection in energy also detracted from relative performance, owing to Russia's LUKOIL, which was fair valued at zero, as discussed above. Additionally, not holding India-based Reliance Industries, which has energy and telecommunications operations, held back returns as its shares advanced. Stock selection in financials, due to the write down of Sberbank of Russia, hindered performance relative to the benchmark, overshadowing the contribution of an overweight position as the sector was positive for the benchmark.

Top contributors and detractors to relative performance by country (%)(a)

(a) For the period 31 March 2021 to 31 March 2022.

(b) No companies included in the MSCI Emerging Markets Index in this country as at 31 March 2022.

(c) All companies held by TEMIT in this country are valued at zero as at 31 March 2022.

(d) No companies held by TEMIT in this country as at 31 March 2022.

An overweight position and stock selection in Brazil aided relative performance amidst the surge in commodity prices and strength in the financial sector. Stock selection in Brazilian financials, including banks Itaú Unibanco and Banco Bradesco, and Brazil's leading financial market infrastructure company B3, helped relative returns. Off-benchmark exposure in the United States was another key contributor to TEMIT's returns relative to the index, as a position in Cognizant Technologies Solutions, with high earnings exposure to India, was a key contributor. Thailand was another resource rich country that benefitted from a surge in commodity prices, and our stock selection in the country aided relative performance.

Russia was the top detractor from relative performance. As mentioned above, with effect from 4 March 2022, Russian company stocks were fair valued at zero. An overweight exposure to Naspers, which has a sizeable interest in Tencent, was largely responsible for South Africa's inclusion in the list of top market detractors from relative performance. We exited Naspers during the reporting period. A lack of exposure to Saudi Arabia and several of its well-performing oil companies detracted from relative performance. As a major oil exporter, the country benefitted from prices that climbed throughout the period, a rise that accelerated in the first three months of 2022.

Portfolio changes by sector

Portfolio changes by country

Portfolio investments by fair value

As at 31 March 2022

(a) Trading activity during the year: (NH) New Holding, (IH) Increased Holding, (PS) Partial Sale and (NT) No Trading.

(b) US listed American Depository Receipt.

(c) Preferred Shares.

(d) This company, listed on a stock exchange in a developed market, has significant exposure to operations from emerging markets.

(e) 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.

(f) Holding name has been changed from B2W Digital as the result of a merger between B2W Digital and Americanas.

(g) Subscription receipts on the back of a rights issuance converted into ordinary shares on 1 April 2022.

(h) This company has been fair valued at zero as a result of its trading being suspended.

(i) UK listed Global Depository Receipt.

(j) Holding name has been changed from Mail.Ru to VK as a result of rebranding.

Portfolio summary

As at 31 March 2022

All figures are a % of the net assets

(a) The Company's net liabilities are the total of net current assets plus non-current liabilities per the Statement of Financial Position in the full Annual report.

Source: FactSet Research System, Inc.

(a) The Company's net liabilities are the total of net current assets plus non-current liabilities per the Statement of Financial Position in the full Annual report.

(b) Geographic split between "Emerging markets", "Frontier markets", "Developed markets" are as per MSCI index classifications.

(c) Developed market exposure represented by companies listed in Germany, United Kingdom and United States which have significant exposure to operations in emerging markets.

Outlook for markets

The current down cycle has been driven by the aftereffects of the unprecedented fiscal stimulus, the spike in commodity prices, post COVID-19 supply chain issues impacting inflation, China's zero COVID policy, and Russia's invasion of Ukraine impacting investor risk appetite. An aversion to holding risky assets currently prevails amongst many investors; what started with investors selling Russian equities has spread to China and other emerging markets. In such circumstances, we believe that having a long-term perspective is valuable.

The start of the US Federal Reserve's withdrawal of support has also heightened market volatility. Higher US interest rates could also trigger a strengthening of the US dollar, this would be potentially negative for emerging markets with macro vulnerabilities, although there are much fewer significant emerging economies in this situation today than in past cycles.

Whilst the current period of increased market volatility and declining equity markets is unnerving, we believe that it is also creating attractive investment opportunities for long-term investors. We continue to search for companies that have sustainable earnings growth, trade at a discount to intrinsic worth and have competitive advantages which are persistent and repeatable over time. In the current market decline, we observe many companies with these characteristics. This is creating opportunities for investors to increase exposure to these companies in preparation for the eventual recovery.

Emerging markets have seen many changes over the past two decades, and the opportunity set for investors has similarly evolved and expanded. Emerging markets generally have youthful and digital-savvy populations with growing needs. In India, for example, there are about 800 million people under the age of 35. As investors, that creates opportunities not only in technology companies, but also in areas like financial services and aspirational products like education and luxury goods.

As a whole, emerging market economic fundamentals have improved in the past decade, and we believe that they are in a stronger position today to cope with any market volatility. Our overall outlook for emerging markets remains positive, with long-term investment opportunities underpinned by emerging markets' structural strengths and the competitiveness of their companies.

Moreover, we think that the COVID-19 pandemic period has catalysed change, innovation, and brought a greater focus on technology. It is an interesting time to be looking at the emerging world today. We believe that the breadth of opportunity, the growth, the innovation, the sustainability of the business models, and the much stronger institutional resilience compared to decades past when considered together create an attractive future for emerging markets.

Lead Portfolio Manager

14 June 2022

The Investment Manager's Process

Investment philosophy and approach

FTEME's long-term approach is driven by the 3 S's, seeking Structural growth opportunities in emerging markets, 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 growth potential of emerging market companies and believes this is best achieved by employing a bottom-up and fundamental security selection process. FTEME conducts in-depth proprietary company research with a long-term and independent perspective. FTEME believes in the responsible stewardship of clients' capital and that governance and sustainability factors create risks and opportunities for companies. ESG analysis is therefore integrated alongside fundamental bottom-up analysis.

TEMIT's performance in different market environments

FTEME's approach aims for outperformance over the long term. The investment strategy tends to produce stronger performance when company fundamentals are the primary driver for stock returns, where a focus on stock selection should produce superior results. Performance may be less strong in highly sentiment-driven market environments, when investors focus more on the overall economic picture rather than company fundamentals. This can also be the case when the market is overly short-term oriented, and rewards companies driven by what FTEME views as unsustainable factors such as short-term demand/supply imbalances or inorganic growth.

Investment process

The three broad stages of FTEME's investment process comprise: idea generation, stock research, and portfolio construction and management; with governance and sustainability considerations and risk management fully integrated at all stages.

1. Idea generation

The key source of idea generation is FTEME's team of over 70 analysts and portfolio managers located around the globe. Their experience and expertise allow them to identify trends which they may want to explore further through company research. In addition, FTEME's local presence, network and understanding of local dynamics may help to identify trends and opportunities that other market participants may filter out through standard quantitative screens. FTEME analysts speak the local language and are part of the local culture and fabric of the countries where they conduct research.

2. Stock research

FTEME analysts conduct rigorous analysis to assess whether a company has sustainable earnings power, and to establish a proprietary estimate of its intrinsic worth. By integrating ESG analysis with traditional business and financial analysis, FTEME seeks to gain insights into the quality and risks of companies. FTEME's research platform currently has coverage of over 700 companies across emerging markets using a proprietary and rigorous bottom-up research approach, along with extensive knowledge of the wider universe.

FTEME's research analysts form detailed views of companies by collecting and analysing a variety of information. The team conducts detailed quantitative financial analysis by building in-depth company models to evaluate financial strength and profitability, and to project future earnings and cash flow. Industry demand and supply models are incorporated in the analysis, as well as country and currency macro considerations. FTEME has a strong emphasis on qualitative assessment.

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 models; (ii) sustainable competitive advantages; (iii) management foresight; and (iv) low debt levels. Earnings power is the demonstrable ability to generate sustainable economic profit into the future in areas which could be beyond the current scope of operations. The analysts look for real earnings growth by focusing on economic earnings and cash flows rather than reported earnings, and differentiating between operational earnings and financial earnings. They evaluate internal versus external drivers to earnings and prefer companies with earnings which can be affected through management action. A key element of earnings power is therefore quality, as signified by (i) products and services with low regulatory and macro risk; (ii) financial strength; and (iii) management strength.

Each research recommendation may incorporate several valuation methods extending typically over a three- to five-year horizon. FTEME aims to clarify the risk/reward balance of a company by conducting sensitivity analysis, 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.

3. Portfolio construction

FTEME seeks to build a high-conviction stock-centric portfolio that is primarily driven by company- specific factors and focused on the long term. A bottom-up approach to stock selection is used, with country and sector allocations a residual of this process.

The strategy typically displays the following characteristics:

• Core style: The strategy aims to deliver outperformance irrespective of market direction. The portfolio construction process leads to the majority of active risk being focused

• Quality and growth but not at excessive valuation levels: The philosophy typically leads to a portfolio with higher quality and growth than the aggregate of the benchmark index, but not at excessive valuation levels

• High conviction portfolio: The top-10 holdings typically account for over 40% of the portfolio which overall is well-diversified portfolio across the market cap spectrum.

• Low turnover: FTEME's high conviction and long-term approach means that the typical annual portfolio turnover is less than 20%.

FTEME's buy discipline is primarily designed to ensure that the portfolio managers buy when they have both conviction in a business and it is trading below its intrinsic value; FTEME's sell discipline is designed to capture the opposite. All holdings are regularly reviewed to ensure that analyst recommendations are up to date and accurately reflect any changes in company fundamentals. In this way, ongoing fundamental research drives all buy and sell decisions.

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 managed 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 (www.temit.co.uk).

FTEME's approach to stewardship

FTEME's focus is on a total sustainability approach including business, economic, environmental and social sustainability. How FTEME monitors and manages client assets is not just about focusing on governance and sustainability factors. It demands a holistic approach incorporating proactive long-term engagement with the managers of the companies which FTEME invests in on behalf of TEMIT and its other clients.

Part of being a responsible steward of clients' assets is acknowledging that governance and sustainability factors create risks and opportunities for companies. It therefore makes sense to integrate these factors alongside fundamental bottom-up analysis and engage with companies as active owners on behalf of clients. Responsible stewardship is not a single act but a continuous process that includes engagement and voting. Being responsible stewards of our client's capital is reflected in:

Analyses of governance and sustainability factors are embedded components of our rigorous fundamental bottom-up research. The driving factors of the decision to purchase or sell a stock centre on the following:

• Its sustainable earnings power and whether its price is at a discount to intrinsic worth; and

• The sustainability of its business model, which is critical to maintaining its competitive positioning.

Within emerging markets, the landscape varies considerably, ranging from countries that have announced meaningful carbon targets to those that have yet to declare any significant policies. FTEME's objective is to understand the climate commitments of investee companies incorporating both local and global perspectives, recognising that the pace of decarbonisation and the associated strategies will differ across countries and cultures.

Where material, FTEME integrates climate change/carbon analysis into its bottom-up research process, focusing on assessing the impact on long-term business values. This is part of the holistic approach of integrating ESG analysis with traditional financial analysis so that FTEME can gain valuable insights into the quality and risks of businesses which FTEME invests in.

FTEME's analysts and portfolio managers look at climate risks and opportunities closely for relevant sectors and geographies where climate change plays a very important role. FTEME closely tracks climate related factors into estimates, models and valuations for those businesses materially exposed to the issue.

Our portfolio managers also seek to understand the carbon risk profile at a portfolio level to understand its carbon risk exposures. The data presented in the full Annual Report very much helps with the engagement agenda.

TEMIT's portfolio carbon risk is concentrated amongst a small number of companies, with the top five companies in terms of carbon intensity representing 6.8% of the portfolio and accounting for 74.2% of the total portfolio Weighted Average Carbon Intensity ("WACI"). From a sector perspective, 66.2% of the total portfolio WACI contributions come from the materials sector. On a relative basis, portfolio holdings in materials and industrials contribute negatively to WACI and the utilities sector contributes positively, as TEMIT does not hold any investments in the sector. Cement manufacturers, China Resources Cement and ACC, exhibit the largest carbon intensities in TEMIT's portfolio, representing 1.3% of the portfolio and accounting for 51.9% of the portfolio WACI. TSMC's carbon intensity is low, however due to it representing 12.3% of the portfolio, it is second in terms of contribution to WACI.

We emphasise that the data does not always fully represent the actual carbon risk of the portfolio. Some of the data is estimated where carbon emissions are not disclosed by portfolio companies. WACI is measured against sales, however, in production orientated industries this is not always an accurate measure. Finally, the reported data is a snapshot at a point in time and does not represent the forward-looking nature of our approach to analysing investee companies. Below we provide a short summary of FTEME's analysis of China Resources Cement and ACC.

As investors with a significant presence in emerging markets, FTEME's active ownership efforts are a key part of the overall approach to stewardship. FTEME analysts conduct almost 2,000 company meetings a year across the investment platform using its industry-leading research footprint across emerging markets, where FTEME seek to gain a number of fundamental and sustainability insights. We believe that our engagement efforts are key to developing a detailed understanding of companies and improving outcomes for shareholders as well as stakeholders more broadly.

FTEME's analysts are in a continual dialogue with companies on a range of topics including sustainability and governance. There are also companies that FTEME identify where dedicated discussion on ESG topics are necessary. Active engagements with companies in the TEMIT portfolio for the year ended 31 March 2022 are summarised below:

In the year ended 31 March 2022, FTEME voted on over 900 management proposals at annual and special general meetings for TEMIT. Most of the proposals which FTEME voted on related to companies' director appointments, routine business proposals and capital structures. Of the voteable management proposals, FTEME voted FOR proposals 80% of the time.

FTEME voted against management proposals in 12% of cases, our votes against were largely concentrated on capital structure, non-salary compensation, and director related management proposals. FTEME views votes against proposals as a formal way to communicate our views to management, and FTEME undertakes them based on the investment team's assessment of each motion in line with clients' best interests.

Where "Other" votes were cast, these were mainly director related votes in Brazil, where FTEME abstained from voting they were not supportive of the candidates put forward for election, or where the company bundled several proposals into one, preventing voting on individual items.

The number of resolutions proposed by shareholders is increasing around the world, particularly on environmental and social issues, although they remain relatively uncommon in emerging markets. FTEME will continue closely to examine the merits of views raised by fellow shareholders.

We encourage you to download the full TEMIT Stewardship report from www.temit.co.uk for further, detailed information.

Business Review

Strategy and Business Model

Company purpose and objective

TEMIT's purpose is to provide both private and institutional investors with the opportunity for capital appreciation via a professionally managed vehicle focused on listed equity investments in emerging markets.

The objective of TEMIT is to provide long-term capital appreciation via exposure to global emerging markets, supported by a culture of both strong customer service and corporate governance.

Investment policy

The current investment policy was approved at the Company's AGM on 8 July 2021.

The Company seeks long-term capital appreciation through investment in companies listed in emerging markets or companies which earn a significant amount of their revenues in emerging markets but are domiciled in, or listed on, stock exchanges in developed countries ("Emerging Markets Companies").

It is expected that the majority of investments will be in listed equities. However, up to 10% of the Company's assets may be invested in unlisted securities. In addition, while it is intended that the Company will normally invest in equity instruments, the Investment Manager may invest in equity-related investments (such as convertibles or derivatives) where it believes that it is advantageous to do so.

The portfolio may frequently be overweight or underweight in certain investments compared with the MSCI Emerging Markets Index (the "Benchmark") and may be concentrated in a more limited number of sectors or geographical areas than the Benchmark. Investments may be made in Emerging Markets Companies outside the Benchmark that meet the investment criteria.

Whilst there are no specific restrictions on investment in any one sector or geographic area, the portfolio will be managed in a way which aims to spread investment risk. The portfolio will typically contain between 50 and 100 individual stocks but may, at times, contain fewer or more than this range. No more than 12% of the Company's assets will be invested in the securities of any one issuer at the time of investment, save that any investment in unlisted securities of any one issuer will be limited to no more than 2% of the Company's assets, measured at the time of investment.

The maximum borrowing will be limited to 20% of the Company's net assets, measured at the time of borrowing.

No more than 10%, in aggregate, of the value of the Company's assets will be invested in other listed closed-ended investment funds.

In accordance with the Listing Rules, the Company will not make any material change to its published investment policy without the prior approval of the FCA and the approval of its shareholders by ordinary resolution.

Distribution policy

The Company will ensure that its total annual dividends will be paid out of the profits available for distribution under the provisions of the relevant laws and regulations and will be at least sufficient to enable it to qualify as an investment trust under the UK Income and Corporation Taxes Act. If the Company has received an exceptional level of income in any accounting year, the Board may elect to pay a special dividend. The primary focus of the investment policy is on generating capital returns, the Company does not target a particular level of income and there is no guarantee that dividend levels will be maintained from one year to the next.

The Company will normally pay two dividends per year, an interim dividend declared at the time when the half yearly results are announced, and a final dividend declared at the time when the annual results are announced. The final dividend will be subject to shareholder approval at the AGM each year.

Dividends will be paid by cheque or by direct transfer to a shareholder's bank account. For UK shareholders holding shares in their own name on the Company's main register, the dividend payments can be used to purchase further shares in the Company under the Dividend Reinvestment Plan

The Company may also distribute capital by means of share buybacks when the Board believes that it is in the best interests of shareholders to do so. The share buyback programme will be subject to shareholder approval at each AGM.

Business model

The Company has no employees and all of its Directors are non-executive. The Company delegates its day-to-day activities to third parties.

On 1 October 2021, Franklin Templeton Investment Trust Management Limited ("FTITML", "AIFM" or the "Manager") replaced Franklin Templeton International Services S.à r.l ("FTIS") as the Company's AIFM and company secretary.

The Board is responsible for all aspects of the Company's affairs, including the setting of parameters for the monitoring of the investment strategy and the review of investment performance and policy. It also has responsibility for overseeing all strategic policy issues, namely dividend, gearing, share issuance and buybacks, share price and discount/premium monitoring, corporate governance matters and engagement with all of the Company's stakeholders.

Strategy

The Company seeks to achieve its objective by following a strategy focused on the following:

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. The Investment Manager, under the leadership of Chetan Sehgal, continues to apply the same core investment philosophy that has driven TEMIT's performance since the Company's launch. The investment team aims to achieve long-term capital appreciation for shareholders 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.

The Investment Manager comments on the integral nature of ESG matters within the investment process and how it engages with companies to promote ESG best practice of this report. In addition, Franklin Templeton recently published a detailed Stewardship Report for TEMIT and this can be downloaded from our website www.temit.co.uk.

As an institutional investor, the Company recognises its responsibility that the companies in which it invests should aspire to appropriate levels of corporate governance. As a matter of policy, the Company aims to utilise its votes in shares held in the relevant underlying portfolio companies at the general meetings of those companies.

Further details of the Investment Manager's approach to responsible investing and of votes cast at investee companies' general meetings in 2021 can be accessed on Franklin Templeton's UK web site under "Sustainable Investing" at www.franklintempleton.co.uk/about-us/our-company/sustainable- investing.

The Board receives regular reports on Franklin Templeton's policies and controls. The Board has reviewed and fully supports the Franklin Templeton Stewardship Statement and its Sustainable Investing Principles and Policies.

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 "FTEME's approach to stewardship" above and in more detail in our 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.

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.

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.

Information on the Company's approach to Diversity is set out in the Directors' Report in the full Annual Report.

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.

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, and a three-year £120 million unsecured multi-currency revolving loan facility with The Bank of Nova Scotia, London Branch. The £100 million fixed term loan is denominated in pounds sterling. Drawings under the £120 million revolving credit facility may be in sterling, US dollars or Chinese renminbi ("CNH"). The total amount which may be drawn down in CNH is 45% of the combined limit of the fixed rate loan and of the revolving loan facility. The fixed rate loan was drawn down on 31 January 2020 and will remain in place until 31 January 2025. On 18 October 2021, the Company drew down £50 million from the revolving credit facility repayable within six months (2021: revolving credit facility was not utilised). Subsequent to the year end, the Investment Manager rolled forward the £50 million and took this borrowing out for a further six months. The Company has no other debt. The Investment Manager has been granted discretion by the Board to draw down the revolving loan facility as investment opportunities arise, subject to overall supervision by the Board, and subject to the overall gearing limit in TEMIT's investment policy.

The Company's net gearing position was 1.1% (net of cash in the portfolio) at the year-end (2021: 0.5%).

The Board continues to monitor the level of gearing and currently considers gearing of up to 20% to be appropriate, measured at the time of borrowing.

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 the 2024 AGM.

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 in the full Annual Report.

Under the Conditional Tender Offer, if over the five year period 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 in the event that the Company's net asset value total return exceeds the benchmark total return (MSCI Emerging Markets Index total return) over the five year period from 31 March 2019 to 31 March 2024. Any tender offer would take place following the Company's 2024 AGM and will also be conditional on shareholders approving the continuation vote in 2024 which is described under "Affirmation of shareholder mandate" above.

A key point in the Investment Manager's mandate is to take a long-term view of investments and one of the advantages of a closed end fund is that the portfolio structure is not disrupted by large inflows or outflows of cash. However, the Board and the Investment Manager recognise that the returns experienced by shareholders are in the form of movements in the share price, which are not directly linked to NAV movements, and the shares may trade at varying discounts or premiums to NAV. Many shareholders, both professional and private investors, have expressed a view that a high level of volatility in the discount is undesirable 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 2022, the Company held 103,825,895 shares in treasury (2021: 103,825,895 shares in treasury(a)).

(a) Comparative figures for the year ended 31 March 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.

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.

The Board works to ensure that investors are informed regularly about the performance of TEMIT and of emerging markets through clear communication and updates. The Board is fully committed to TEMIT's marketing programme. There is a substantial annual marketing and communication budget and expenditure by TEMIT is matched by a contribution to costs from the Manager.

TEMIT won the prestigious Best Campaign Award at the AIC Shareholder Awards 2022 in recognition of the quality of the "Your future is emerging" campaign undertaken to attract new shareholders. The innovative use of broadcast media has helped to increase TEMIT's profile, advertise the benefits of the Company and communicate the growth story of emerging markets to a wider audience.

A new corporate identity was launched in January 2022 providing TEMIT with a unique brand for the first time.

TEMIT seeks to keep shareholders updated on performance and investment strategy through its regular annual and half yearly reports, along with monthly factsheets and commentaries. These are available on the TEMIT website (www.temit.co.uk) which also contains portfolio holdings information, updates from the Investment Manager and other important documents that will help shareholders to understand how their investment is managed. We also communicate via @TEMIT on Twitter and continue to develop the Company's presence across social media platforms. The Board encourages registration to our monthly email that keeps subscribers appraised of the latest performance, insights and announcements.

TEMIT has an active public relations programme. Our Investment Manager provides comments to journalists, hosts media briefings and publishes articles on issues relevant to investing in emerging markets.

The Investment Manager meets regularly with professional investors and analysts and hosts interactive webinars. At each AGM the Investment Manager makes a presentation with the opportunity for all shareholders to ask questions.

The Chairman regularly meets major shareholders to discuss investment performance and developments in corporate governance. We try to engage with a wide spectrum of our shareholders and aim to address their concerns as far as practically possible. Shareholders are welcome to contact the Chairman or the Chairman of the Audit and Risk Committee at any time via temitcosec@franklintempleton.com.

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.

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 non-routine matters were considered at Board meetings during the year:

• Recruitment of Magdalene Miller as a non-executive Director;

• 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;

• Pandemic risks affecting the Company's investments and business operations;

• Risks resulting from the Russian invasion of Ukraine and the valuation of Russian assets;

• Review of the marketing plan with the Manager;

• Review of the share buyback programme; and

• Review of the gearing facility.

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.

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 Ten Year Record of the KPIs is shown in the full Annual Report.

Net asset value and share price total return data is presented within the Company Overview along with the Ten -Year Record are shown in in the full Annual Report.

The Chairman's Statement in the full Annual Report and the Portfolio Report in the full Annual Report include further commentary on the Company's performance.

Details of the Company's share price discount to net asset value is presented within the Financial Summary in the full Annual Report. On 31 May 2022, the latest date for which information was available, the discount was 12.3%.

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" in the full Annual Report.

Total income earned in the year was £54.3 million (2021: £59.9 million) which translates into net revenue earnings of 3.44 pence per share (2021: 3.50 pence per share, adjusted for the stock split and the extra-ordinary Corporation Tax refund), a decrease of 2% over the prior year.

The Company paid an interim dividend of 1.00 pence per share on 10 January 2022. The Board is proposing a final dividend of 2.80 pence per share, making total ordinary dividends for the year of 3.80 pence per share.

The OCR remained constant at 0.97% for the year ended 31 March 2022, compared to the prior year.

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 in the full Annual Report.

(a) A glossary of alternative performance measures is included in the full Annual Report.

Principal and emerging risks

At least quarterly, the Board reviews with the AIFM and the Investment Manager 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. The Board has carried out 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 in the full Annual Report. Information on the risks that TEMIT is subject to, including additional financial and valuation risks, are also detailed in Note 15 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 Manager as part of every investment decision. Further information on this process is detailed in the full Annual Report.