Templeton Developing Markets Trust Class C (TDMTX)
Filed: 20 Mar 02, 12:00am
Filing by Templeton Developing
Markets Trust
Pursuant to Rule 425 under the
Securities Act of 1933
Subject Company: Templeton
Emerging Markets Appreciation
Fund, Inc.
Commission File No. 811-08362
TEMPLETON EMERGING MARKETS
APPRECIATION FUND, INC.
TEMPLETON DEVELOPING MARKETS TRUST
TEMPLETON EMERGING MARKETS FUND, INC.
Broward Financial Centre
FRANKLIN(R)TEMPLETON(R) 500 E. Broward Blvd.
INVESTMENTS Suite 2100
Ft. Lauderdale, FL 33394-3091
Tel 954-527-7500
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FOR IMMEDIATE RELEASE:
For more information, please contact Franklin Templeton Investments at
1-800-342-5236. Members of the media should contact Franklin Templeton Corporate
Communications at 650-312-3395.
TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC. AND
TEMPLETON DEVELOPING MARKETS TRUST ANNOUNCE PROPOSED
REORGANIZATION
TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC. AND
TEMPLETON EMERGING MARKETS FUND, INC. ANNOUNCE THAT
PROPOSED REORGANIZATION WILL NOT PROCEED
MARCH 19, 2002 -- PRESS RELEASE Q's AND A's
Q: What actions did the Boards of Directors/Trustees take on March 19, 2002?
A: (1) Boards Approved Emerging Markets Appreciation Fund (TEA)-- Developing
Markets Trust Reorganization.
The Board of Directors of TEA and the Board of Trustees of Developing
Markets Trust have approved a proposal providing for the reorganization of
TEA into Developing Markets Trust. The proposal will be submitted to
shareholders of TEA for their approval. In the transaction, Developing
Markets Trust would acquire substantially all of the assets of TEA in
exchange for Advisor Class shares of Developing Markets Trust, which shares
would then be distributed to TEA's shareholders. After completion of the
reorganization, TEA shareholders would become Advisor Class shareholders of
Developing Markets Trust, and TEA would cease to exist. The transaction is
expected to be tax-free.
(2) TEA Board Affirmed Discontinuance of Open-Market Share Repurchase
Program.
On January 4, 2002, TEA's Board discontinued its open-market share
repurchase program in connection with a proposed reorganization of TEA into
Templeton Emerging Markets Fund, Inc. (EMF). In connection with the
proposed merger of TEA into Developing Markets Trust, the TEA's Board has
determined that the discontinuation of the open-market share repurchase
program remains appropriate.
(3) Boards Announced That TEA--Templeton Emerging Markets Fund (EMF)
Reorganization Will Not Proceed.
The Boards of Directors of TEA and EMF, also a closed-end fund, determined
that the previously announced proposal to reorganize TEA into EMF will not
proceed.
TEA--DEVELOPING MARKETS TRUST REORGANIZATION
Q: Why did the Boards of TEA and Developing Markets Trust take action
proposing the reorganization?
A: TEA. The Board of Directors of TEA considered a number of factors, and took
these actions in the best interests of its shareholders. Among the factors
considered by the Board were:
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(1) The trading discount of TEA over the past several years. Since January
2001, TEA has traded at a discount to net asset value that has ranged from
-23.75% on September 21, 2001 to - 2.08% on March 18, 2002. A merger of TEA
with an open-end fund, such as Developing Markets Trust, would eliminate
any trading discount and would permit those shareholders who wish to redeem
their shares at net asset value to do so, less a redemption fee of up to 2%
if redeemed within six months to help defray the costs associated with
redeeming.
(2) The similarity of investment policies and the compatibility of portfolio
holdings. A merger with Developing Markets Trust, which mainly invests in
emerging market securities including most of the countries that TEA invests
in, also would allow those longer term shareholders who wish to remain in
an investment product focused on emerging market investments to do so in a
tax-free transaction. Country and asset allocations for TEA as of December
31, 2001 are attached.
Developing Markets Trust. The Board of Trustees of Developing Markets Trust
considered a number of factors, and took these actions in the best
interests of its shareholders. Among the factors considered were
(1) The similarity of investment policies and the compatibility of portfolio
holdings.
(2) The fact that the transaction would result in an increase in the assets of
Developing Markets Trust.
(3) The transaction would not result in a dilution of Developing Markets
Trust's outstanding shares.
As stated in the March 19, 2002 press release, TEA and Developing Markets
Trust intend to file relevant materials with the U.S. Securities and
Exchange Commission, including a proxy statement by TEA and registration
statement by Developing Markets Trust that contains a prospectus. These
materials will include detailed information regarding the transactions, the
Boards' considerations and the Boards' recommendations and will be provided
to shareholders in accordance with federal securities laws. It is
anticipated that these materials will be available in the Summer of 2002.
Q: Will the reorganization result in Developing Markets Trust receiving cash
that will need to be invested, and will this adversely impact management of
Developing Markets Trust?
A: No, we do not anticipate any material adverse impact on the management of
Developing Markets Trust because the Trust will primarily receive portfolio
securities in the reorganization. The proposed transaction will be
structured as a reorganization. Developing Markets Trust will acquire
substantially all of the assets of TEA in exchange for Advisor Class shares
of Developing Markets Trust.
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Q: When will TEA shareholders be asked to vote on the reorganization?
A: It is expected that TEA's shareholders will be asked to approve the
proposed reorganization at the next Annual Meeting of Shareholders,
currently scheduled for August 26, 2002.
Any solicitation of proxies in connection with the proposed reorganization
will be made only pursuant to separate prospectus/proxy materials filed
under federal securities laws.
Q: If the reorganization is approved, how many shares of Developing Markets
Trust will each TEA shareholder receive?
A: If the proposed reorganization is approved, the number of shares to be
received by a TEA shareholder will be determined based upon the relative
net asset values of TEA and Advisor Class shares of Developing Markets
Trust immediately prior to the reorganization. A TEA shareholder will
receive Advisor Class shares of Developing Markets Trust equal, on a net
asset value basis, to the aggregate net asset value of the shareholder's
TEA shares immediately prior to the reorganization. The number of Advisor
Class shares of Developing Markets Trust received may be more or less than
the number of TEA shares exchanged, but the aggregate net asset value of
each shareholder's holdings immediately before and after the transaction
will be the same.
Q: Are there restrictions on the Developing Markets Trust shares that will be
distributed to TEA shareholders if the proposed reorganization is approved?
A: Yes. The Advisor Class shares of Developing Markets Trust that are received
by shareholders of TEA in the reorganization will be subject to a
redemption fee of up to 2% if the shareholder sells the shares within 6
months of the reorganization. If a shareholder holds the Advisor Class
shares of Developing Markets Trust received in the reorganization for at
least 6 months, the shares will not be subject to the redemption fee, but
will be subject to any other restrictions described in the Developing
Markets Trust's prospectus, including restrictions on the exchange of
Advisor Class shares into other Franklin Templeton Funds.
Q: What is the purpose of the redemption fee applicable to shares received in
the reorganization?
A: The redemption fee is charged to help Developing Markets Trust defray the
costs of a redemption of Advisor Class shares received in the
reorganization. The fee is charged only on Advisor Class shares that are
sold within 6 months following the completion of the transaction. The fee
will be in an amount reasonably related to the anticipated costs expected
to be incurred in honoring redemption requests. The fee is paid to, and
retained by, Developing Markets Trust.
The fee is intended to protect the longer-term investors in Developing
Markets Trust by preventing those shareholders from bearing the entire cost
of redemptions by shareholders that acquire shares in the reorganization.
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Q: What are TEA's investment goal and principal strategies?
A: TEA is designed for investors seeking capital appreciation. Under normal
market conditions, TEA invests substantially all of its assets in a
portfolio of equity securities and debt obligations of issuers in emerging
market countries.
Q: What are Developing Markets Trust's investment goal and principal
strategies?
A: Developing Markets Trust is designed for investors seeking long-term
capital appreciation. Under normal market conditions, Developing Markets
Trust invests its assets mainly in equity securities of developing markets
companies. Shareholders of TEA should review the prospectus for Developing
Markets Trust for more information about the Fund's investment strategies
and risks.
Q: How do the Funds compare in size?
A: As of March 19, 2002, TEA had total assets of approximately $48 million and
Developing Markets Trust had total assets of approximately $1.5 billion.
Q: As a shareholder of TEA, am I being asked to take any action at this time?
A: No. Shareholders of TEA are not being asked to take any action at the
present time, but are being advised that the Board of Directors has
approved a proposed reorganization that will be submitted to shareholders
for consideration and a vote at the next Annual Meeting of Shareholders,
currently scheduled for August 26, 2002.
TEA--EMF REORGANIZATION
Q: Why did the Board of TEA decide not to proceed with the previously proposed
reorganization with EMF?
A: The Board of Directors of TEA determined that a reorganization of TEA into
Developing Markets Trust, an open-end fund, would better address the
discount of market value of TEA shares to its net asset value.
* * * * *
In connection with the proposed reorganization transaction, TEA and Developing
Markets Trust intend to file relevant materials with the U.S. Securities and
Exchange Commission ("SEC"), including a proxy statement by TEA and a
registration statement on Form N-14 by Developing Markets Trust that contains a
prospectus. Because those documents contain important information, shareholders
of TEA are urged to read them, if and when they become available. When filed
with the SEC, they will be available for free at the SEC's website, www.sec.gov.
Shareholders can also obtain copies of these documents and other
transaction-related documents, when available, for free by calling TEA at
1-800-342-5236.
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TEA, its directors and executive officers and certain other persons, may be
deemed to be participants in TEA's solicitation of proxies from its shareholders
in connection with the proposed transaction. Information about the directors is
set forth in the proxy statement for TEA's 2001 annual meeting of shareholders.
Participants in TEA's solicitation may also be deemed to include the following
executive officers or other persons whose interests in TEA may not be described
in the proxy statement for TEA's 2001 annual meeting: Mark Mobius (President);
Charles B. Johnson (Vice President); Rupert H. Johnson, Jr. (Vice President);
Harmon E. Burns (Vice President); Charles E. Johnson (Vice President); Martin L.
Flanagan (Vice President); Jeffrey A. Everett (Vice President); John R. Kay
(Vice President); Murray L. Simpson (Vice President and Asst. Secretary);
Barbara J. Green (Vice President and Secretary); David P. Goss (Vice President
and Asst. Secretary); Bruce S. Rosenberg (Treasurer); Holly Gibson Brady
(Director of Corporate Communications - Franklin Resources, Inc.).
As of the date of this communication, none of the foregoing participants
individually beneficially owns in excess of 1% of TEA's common stock. To the
knowledge of TEA, none of its directors or executive officers has any interest,
direct or indirect, by security holdings or otherwise, in TEA, except as set
forth in the proxy statement for TEA's 2001 Annual Meeting of Shareholders or as
otherwise disclosed above.
Shareholders may obtain additional information regarding the interests of the
participants by reading the proxy statement of TEA and the prospectus of
Developing Markets Trust if and when they become available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
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TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC.
AS OF DECEMBER 31, 2001
TOTAL ASSETS: $46,533,244
NET ASSET VALUE PER SHARE: $11.20
PERCENT PERCENT
ASSET ALLOCATION OF TOTAL TEN LARGEST POSITIONS OF TOTAL
- ---------------- -------- --------------------- ----------
SHORT TERM & OTHER 4.2% SOUTH AFRICAN BREWERIES PLC 2.0%
FIXED INCOME 33.2% KIMBERLY-CLARKE DE MEXICO SA DE CV 1.6%
EQUITY* 62.6% SAMSUNG ELECTRONICS CO LTD 1.4%
--------------- AKBANK 1.2%
100.0% P T TELEKOMUNIKASI INDONESIA TBK 1.2%
CENTRAIS ELETRICAS BRASILEIRAS SA (ELETROBRAS) 1.1%
BANCO BRADESCO SA 1.1%
TUPRAS-TURKIYE PETROL RAFINELERI AS 1.1%
POLSI KONCERN NAFTOWY ORLEN SA 1.0%
REMGRO LTD 1.0%
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12.7%
PERCENT PERCENT
INTERNATIONAL ALLOCATION OF TOTAL INDUSTRY ALLOCATION OF TOTAL
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EUROPE 8.2% CONSUMER DISCRETIONARY 3.5%
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AUSTRIA 1.8% AUTOMOBILES & COMPONENTS 0.6%
CROATIA 0.3% CONSUMER DURABLES & APPAREL 0.7%
CZECH REPUBLIC 0.7% HOTELS RESTAURANT & LEISURE 0.6%
ESTONIA 0.2% MEDIA 0.7%
FINLAND 0.2% RETAILING 0.8%
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GREECE 0.3% CONSUMER STAPLES 8.5%
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HUNGARY 1.3% FOOD & DRUG RETAILING 0.3%
POLAND 1.5% FOOD BEVERAGE & TOBACCO 8.1%
RUSSIA 1.7% HOUSEHOLD & PERSONAL PRODUCTS 0.1%
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SLOVAK REPUBLIC 0.2% ENERGY 6.8%
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ASIA 37.3% ENERGY 6.8%
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CHINA 3.9% FINANCIALS 12.1%
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HONG KONG 6.5% BANKS 6.7%
INDIA 2.0% DIVERSIFIED FINANCIALS 2.6%
INDONESIA 2.3% INSURANCE 1.1%
MALAYSIA 0.5% REAL ESTATE 1.6%
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PHILIPPINES 0.7% HEALTH CARE 0.8%
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SINGAPORE 2.8% HEALTH CARE EQUIPMENT & SERVICES 0.2%
SOUTH KOREA 4.1% PHARMACEUTICALS & BIOTECHNOLOGY 0.7%
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TAIWAN 7.7% INDUSTRIALS 8.7%
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THAILAND 2.5% CAPITAL GOODS 7.1%
TURKEY 4.3% TRANSPORTATION 1.6%
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LATIN AMERICA 8.8% INFORMATION TECHNOLOGY 7.8%
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ARGENTINA 0.8% SOFTWARE & SERVICES 0.8%
BRAZIL 3.6% TECHNOLOGY HARDWARE & EQUIPMENTS 7.1%
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CHILE 0.1% MATERIALS 4.8%
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MEXICO 4.2% MATERIALS 4.8%
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PERU 0.1% TELECOMMUNICATION SERVICES 6.4%
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MID-EAST/AFRICA 8.3% TELECOMMUNICATION SERVICES 6.4%
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EGYPT 0.4% UTILITIES 3.2%
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ISRAEL 0.3% UTILITIES 3.2%
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SOUTH AFRICA 7.6% TOTAL EQUITY* 62.6%
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TOTAL EQUITY* 62.6%
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You may request a copy of the Fund's current Report to Shareholders by
contacting Fund Information at 1-800/DIAL BEN(R)(1-800-342-5236). Since markets
can go down as well as up, investment return and principal value will fluctuate
with market conditions, currency volatility, and the economic, social and
political climates of countries where the Fund invests. Emerging markets involve
heightened risks related to the same factors, in addition to those associated
with their relatively small size and lesser liquidity. You may have a gain or
loss when you sell your shares. The industry allocation uses MSCI's industry
definitions for the convenience of comparison. The information provided is as of
the date shown. The Fund's portfolio is managed and investment allocations can
be expected to change.
* EQUITY INCLUDES CONVERTIBLE AND PREFERRED SECURITIES.
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