UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06378
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TEMPLETON DEVELOPING MARKETS TRUST
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31/04
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ITEM 1. REPORTS TO STOCKHOLDERS.
DECEMBER 31, 2004
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ANNUAL REPORT AND SHAREHOLDER LETTER | INTERNATIONAL
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WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
TEMPLETON Eligible shareholders can
DEVELOPING MARKETS TRUST sign up for eDelivery at
franklintempleton.com. See
inside for details.
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[LOGO OMITTED]
FRANKLIN[R] TEMPLETON[R]
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE
Franklin Templeton's distinct multi-manager structure combines the specialized
expertise of three world-class investment management groups--Franklin, Templeton
and Mutual Series.
SPECIALIZED EXPERTISE
Each of our portfolio management groups operates autonomously, relying on its
own research and staying true to the unique investment disciplines that underlie
its success.
FRANKLIN. Founded in 1947, Franklin is a recognized leader in fixed income
investing and also brings expertise in growth- and value-style U.S. equity
investing.
TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in
1954, launched what has become the industry's oldest global fund. Today, with
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.
MUTUAL SERIES. Founded in 1949, Mutual Series is dedicated to a unique style of
value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.
TRUE DIVERSIFICATION
Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios covering every major asset class.
RELIABILITY YOU CAN TRUST
At Franklin Templeton Investments, we seek to consistently provide investors
with exceptional risk-adjusted returns over the long term, as well as the
reliable account services that have helped us become one of the most trusted
names in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[PHOTO OMITTED]
Not part of the annual report
Contents
SHAREHOLDER LETTER ........................................... 1
ANNUAL REPORT
Templeton Developing Markets Trust............................ 3
Performance Summary........................................... 7
Your Fund's Expenses.......................................... 12
Financial Highlights and
Statement of Investments...................................... 14
Financial Statements.......................................... 24
Notes to Financial Statements................................. 28
Report of Independent Registered
Public Accounting Firm........................................ 39
Tax Designation............................................... 40
Board Members and Officers.................................... 47
Shareholder Information....................................... 54
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Templeton Developing Markets Trust
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Developing Markets Trust seeks
long-term capital appreciation. Under normal circumstances, the Fund invests at
least 80% of its net assets in securities of developing market countries.
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PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY
DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL
1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE.
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This annual report for Templeton Developing Markets Trust covers the year ended
December 31, 2004.
PERFORMANCE OVERVIEW
Templeton Developing Markets Trust - Class A posted a +25.45% cumulative total
return for the year ended December 31, 2004. The Fund underperformed its
benchmarks, the Morgan Stanley Capital International (MSCI) Emerging Markets
(EM) Index and the Standard & Poor's/International Finance Corporation
Investable (S&P/IFCI) Composite Index, which returned 25.95% and 28.11% during
the same period.1 Please note that the index performance numbers are purely for
reference and that we do not attempt to track the index, but rather undertake
investments on the basis of meticulous fundamental research. You can find the
Fund's long-term performance data in the Performance Summary beginning on page
7.
ECONOMIC AND MARKET OVERVIEW
Economically, 2004 was another positive year for emerging markets. Most Latin
American economies recorded strong economic growth. In Eastern Europe, new
member countries began seeing positive developments in the form of higher
investment inflows as a result of European Union (EU) accession.
On December 26, the largest earthquake in 40 years struck in the Indian Ocean,
just north of Sumatra. The earthquake created monster tidal waves, also known
1. Source: Standard & Poor's Micropal. The MSCI EM Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global emerging markets. The S&P/IFCI Composite Index
measures the total return of equity securities in emerging markets globally.
Securities' weights are adjusted to reflect only the portion of the market
capitalization available to foreign (non-local) investors. Securities included
in the index are weighted according to their adjusted market capitalization
(outstanding investable shares times price). The indexes are unmanaged and
include reinvested dividends. One cannot invest directly in an index, nor is an
index representative of the Fund's portfolio.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 19.
Annual Report | 3
as tsunamis, that devastated coastal areas of Indonesia, Sri Lanka, Thailand,
India and the Maldives. The remoteness of some of these areas complicated aid
relief to the victims. While the tsunamis took a terrible toll on the people in
the region, analysts estimated that their economic impact was quite minimal.
Emerging markets stocks generally performed well during the year under review.
The MSCI EM Index gained 25.95% in U.S. dollar terms as strong share prices and
a sliding U.S. dollar boosted performance in the fourth quarter.1 Latin America
and Eastern Europe outperformed their emerging market counterparts as both
regions continued to attract greater investor interest. In particular, local
stock markets of new EU members such as Poland, the Czech Republic, Hungary and
Slovakia reached all-time highs. Turkey also recorded strong gains as investors
reacted favorably toward the EU's approval to begin formal accession talks for
October 2005 and the Turkish government's new US$10 billion standby agreement
with the International Monetary Fund (IMF).2 However, the Russian market
under-performed as foreign investors remained cautious due to the Russian
government's actions against YUKOS and new tax claims on Vimpelcom.
Despite recording double-digit gains, Asian stock markets did not perform as
well as those in other emerging markets regions as rising interest rates in the
U.S., high commodity prices and concerns over China's overheating economy
continued to affect investor sentiment. In Africa, the South African market
benefited from a strengthening rand, which greatly enhanced that market's
performance in U.S. dollars.
INVESTMENT STRATEGY
We employ a bottom-up, value-oriented, long-term investment approach. We focus
on the market price of a company's securities relative to our evaluation of its
long-term earnings, asset value and cash flow potential. As we look for
investments, we focus on specific companies and perform in-depth research to
construct an "action list" from which we make our investment decisions. Before
we make a purchase, we generally look at a company's potential for earnings and
growth over a five-year horizon. During our analysis, we also consider a
company's position in its sector, economic framework and political environment.
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets as of 12/31/04
[BAR CHART OMITTED]
EDGAR REPRESENTATION OF PLOT POINTS:
Asia 56.8%
Europe 19.9%
Latin America 11.6%
Middle East & Africa 11.1%
Short-Term Investments & Other Net Assets 0.6%
2. Source: The Economist Intelligence Unit Ltd., "Turkey Economy: Plumper,"
12/20/04.
4 | Annual Report
MANAGER'S DISCUSSION
In terms of performance, the Fund derived positive results from its
underweighted position, relative to the MSCI EM Index, in Russia as well as
overweighted positions in Austria and Singapore. The Fund's decision not to hold
YUKOS in Russia helped performance as that company's stock price continued to
tumble mainly due to concerns about the Russian government's treatment of its
assets. In Austria, the strongest contributors to Fund performance were OMV and
Bank Austria Creditanstalt stocks. Both companies were well positioned to
benefit from their large exposure to fast-growing central and Eastern European
economies. However, the Fund's underweighted positions relative to the index in
Brazil, Mexico and South Africa negatively affected relative performance. All
three markets recorded strong U.S. dollar performances in 2004, resulting in
increasingly expensive valuations.
With regard to sectors, the energy sector, whose Fund weighting was about on par
with that of the index, performed well.3 Our overweighted positions in MOL, OMV
and SK Corp. drove the Fund's relative energy sector performance. Our
overweighted positions in the consumer staples and diversified financial
services sectors also reaped significant benefits.4 For example, SABMiller,
Remgro and Ambev stocks contributed the most to relative performance. The Fund's
underweighted position in commercial banks and overweighted exposure to
telecommunication services hampered relative performance during the year. 5
In general, if the value of the U.S. dollar goes up compared with a foreign
currency, an investment traded in that foreign currency will go down in value
because it will be worth fewer U.S. dollars. This can have a negative effect on
Fund performance. Conversely, when the U.S. dollar weakens in relation to a
foreign currency, an investment traded in that foreign currency will increase in
value, which can contribute to Fund performance. For the 12 months ended
December 31, 2004, the U.S. dollar declined in value relative to most non-U.S.
currencies. At the end of the period, the Fund's portfolio was invested
predominantly in securities with non-U.S. currency exposure, which resulted in a
positive effect on Fund performance. However, one cannot expect the same result
in future periods.
In Asia, the Fund's largest purchases were in South Korean and Taiwanese
securities as the Fund increased its exposure to the semiconductors and semi
TOP 10 COUNTRIES
12/31/04
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% OF TOTAL
NET ASSETS
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South Korea 17.6%
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Taiwan 12.6%
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South Africa 11.1%
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China 9.5%
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Brazil 7.8%
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Singapore 7.0%
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Mexico 3.5%
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Hungary 3.4%
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Turkey 3.2%
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India 3.2%
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3. The energy sector comprises energy equipment and services, and oil and gas in
the SOI.
4. The consumer staples sector comprises food and staples retailing, beverages,
food products, tobacco, household products, and personal products in the SOI.
5. The telecommunication services sector comprises diversified telecommunication
services and wireless telecommunication services in the SOI.
Annual Report | 5
TOP 10 EQUITY HOLDINGS
12/31/04
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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Samsung Electronics Co. Ltd. 4.0%
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT, SOUTH KOREA
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SABMiller PLC 2.7%
BEVERAGES, SOUTH AFRICA
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Anglo American PLC 2.6%
METALS & MINING, SOUTH AFRICA
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China Mobile (Hong Kong) Ltd. 2.4%
WIRELESS TELECOMMUNICATION
SERVICES, CHINA
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Remgro Ltd. 2.3%
DIVERSIFIED FINANCIAL SERVICES,
SOUTH AFRICA
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Kimberly Clark de Mexico SA de CV, A 2.3%
HOUSEHOLD PRODUCTS, MEXICO
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Cia de Bebidas das Americas (Ambev),
ADR, pfd. 2.0%
BEVERAGES, BRAZIL
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Inbev 2.0%
BEVERAGES, BELGIUM
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MOL Magyar Olaj-Es Gazipari RT 1.9%
OIL & GAS, HUNGARY
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Taiwan Cellular Corp. 1.9%
WIRELESS TELECOMMUNICATION
SERVICES, TAIWAN
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conductor equipment sector. Key purchases of stock included Samsung Electronics,
one of the world's largest electronics manufacturers, and Taiwan Semiconductor
Manufacturing, a leading global integrated circuit producer. Additional
purchases included shares of Daewoo Shipbuilding & Marine, a major player in the
global shipbuilding industry, and MediaTek, Taiwan's biggest integrated circuit
design company. We reduced our Indonesian position due to strong performance in
2004 as some stocks reached our sell targets.
The Fund invested in several western European-listed companies with significant
business exposure and growth opportunities in emerging markets. They include
Oriflame Cosmetics, a cosmetic company with sales operations in over 50
countries as well as market leadership in more than 30 of them; Inbev, the
product of a merger between Interbrew and Ambev; and HSBC Holdings, one of the
world's largest banking and financial services organizations.
We reduced our Latin American exposure during the reporting period as the Fund
undertook selective sales of stock in Brazil, Mexico and Argentina, and sold its
only holding in Peru. The Fund realized gains through significant sales of
shares such as Grupo Carso and Tenaris. Benefiting from a strengthening rand and
high commodity prices in 2004, the Fund locked in strong U.S. dollar returns
through sales of Anglo American, Sasol and BHP Billiton.
The Fund's definition of "developing markets" as used by the Fund's manager may
differ from the definition of the same term as used in managing other Franklin
Templeton Funds. These special risks and other considerations are discussed in
the Fund's prospectus.
We thank you for your continued participation in Templeton Developing Markets
Trust and look forward to serving your future investment needs.
[PHOTO OF MARK MOBIUS]
/S/Mark Mobius
Mark Mobius
President and Chief Executive Officer -
Investment Management
Templeton Developing Markets Trust
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF DECEMBER 31, 2004, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
6 | Annual Report
Performance Summary as of 12/31/04
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
due on Fund dividends, capital gain distributions, if any, or any realized gains
on the sale of Fund shares. Total return reflects reinvestment of the Fund's
dividends and capital gain distributions, if any, and any unrealized gains or
losses.
PRICE AND DISTRIBUTION INFORMATION
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CLASS A CHANGE 12/31/04 12/31/03
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Net Asset Value (NAV) +$3.58 $18.53 $14.95
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DISTRIBUTIONS (1/1/04-12/31/04)
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Dividend Income $0.2558
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CLASS B CHANGE 12/31/04 12/31/03
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Net Asset Value (NAV) +$3.50 $18.24 $14.74
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DISTRIBUTIONS (1/1/04-12/31/04)
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Dividend Income $0.1656
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CLASS C CHANGE 12/31/04 12/31/03
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Net Asset Value (NAV) +$3.50 $18.22 $14.72
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DISTRIBUTIONS (1/1/04-12/31/04)
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Dividend Income $0.1540
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CLASS R CHANGE 12/31/04 12/31/03
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Net Asset Value (NAV) +$3.54 $18.39 $14.85
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DISTRIBUTIONS (1/1/04-12/31/04)
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Dividend Income $0.2550
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ADVISOR CLASS CHANGE 12/31/04 12/31/03
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Net Asset Value (NAV) +$3.58 $18.51 $14.93
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DISTRIBUTIONS (1/1/04-12/31/04)
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Dividend Income $0.3128
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Annual Report | 7
Performance Summary (CONTINUED)
PERFORMANCE
CLASS A: 5.75% MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES
CHARGE (CDSC) DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER;
CLASS C: 1% CDSC IN FIRST YEAR ONLY; CLASS R: 1% CDSC FOR FIRST 18 MONTHS ONLY.
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURN AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +25.45% +25.45% +72.12%
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Average Annual Total Return 2 +18.27% +3.41% +4.96%
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Value of $10,000 Investment 3 $11,827 $11,826 $16,221
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 +24.70% +21.42% +82.36%
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Average Annual Total Return 2 +20.70% +3.61% +10.43%
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Value of $10,000 Investment 3 $12,070 $11,942 $18,136
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CLASS C 1-YEAR 5-YEAR INCEPTION (5/1/95)
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Cumulative Total Return1 +24.72% +21.48% +64.16%
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Average Annual Total Return 2 +23.72% +3.97% +5.26%
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Value of $10,000 Investment 3 $12,372 $12,148 $16,416
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CLASS R 1-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 +25.28% +93.29%
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Average Annual Total Return 2 +24.28% +24.62%
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Value of $10,000 Investment 3 $12,428 $19,329
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ADVISOR CLASS4 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +25.98% +27.89% +76.56%
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Average Annual Total Return 2 +25.98% +5.04% +5.85%
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Value of $10,000 Investment 3 $12,598 $12,789 $17,656
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PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU
MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY
DIFFER FROM FIGURES SHOWN.
FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
8 | Annual Report
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged indexes include
reinvested dividends. They differ from the Fund in composition and do not pay
management fees or expenses. One cannot invest directly in an index.
AVERAGE ANNUAL TOTAL RETURN
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CLASS A 12/31/04
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1-Year +18.27%
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5-Year +3.41%
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10-Year +4.96%
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CLASS A (1/1/95-12/31/04)
[LINE GRAPH OMITTED]
EDGAR REPRESENTATION OF PLOTS POINTS:
This graph compares the performance of Templeton Developing Markets Trust -
Class A as tracked by the growth in value of a $10,000 investment, to that of
the S&P/IFCI Composite Index5 and MSCI Emerging Markets Index5 from 1/1/95 to
12/31/04.
Templeton Developing S&P/IFC Composite MSCI Emerging
Markets Trust Index 5 Markets Index 5
01/01/95 $9,424 $10,000 $10,000
01/31/95 $8,890 $8,665 $8,936
02/28/95 $8,862 $8,555 $8,707
03/31/95 $8,961 $8,530 $8,762
04/30/95 $9,258 $8,888 $9,155
05/31/95 $9,576 $9,224 $9,642
06/30/95 $9,604 $9,277 $9,671
07/31/95 $10,013 $9,572 $9,888
08/31/95 $9,752 $9,315 $9,655
09/30/95 $9,738 $9,244 $9,609
10/31/95 $9,406 $8,895 $9,241
11/30/95 $9,300 $8,851 $9,077
12/31/95 $9,458 $9,159 $9,479
01/31/96 $10,381 $9,939 $10,153
02/29/96 $10,334 $9,708 $9,992
03/31/96 $10,377 $9,848 $10,069
04/30/96 $10,720 $10,246 $10,472
05/31/96 $10,896 $10,156 $10,425
06/30/96 $10,961 $10,275 $10,490
07/31/96 $10,465 $9,601 $9,773
08/31/96 $10,677 $9,898 $10,023
09/30/96 $10,903 $10,044 $10,110
10/31/96 $10,939 $9,828 $9,841
11/30/96 $11,319 $9,973 $10,006
12/31/96 $11,587 $10,017 $10,051
01/31/97 $12,467 $10,725 $10,736
02/28/97 $12,831 $11,249 $11,196
03/31/97 $12,567 $10,972 $10,902
04/30/97 $12,695 $10,786 $10,921
05/31/97 $13,353 $11,153 $11,234
06/30/97 $13,920 $11,635 $11,835
07/31/97 $14,510 $11,747 $12,012
08/31/97 $13,240 $10,247 $10,483
09/30/97 $13,973 $10,580 $10,774
10/31/97 $11,334 $8,840 $9,006
11/30/97 $10,586 $8,421 $8,677
12/31/97 $10,496 $8,541 $8,886
01/31/98 $9,571 $7,979 $8,189
02/28/98 $10,569 $8,793 $9,044
03/31/98 $11,058 $9,138 $9,437
04/30/98 $11,099 $9,161 $9,334
05/31/98 $9,594 $8,018 $8,055
06/30/98 $8,654 $7,199 $7,210
07/31/98 $8,711 $7,486 $7,438
08/31/98 $6,568 $5,382 $5,288
09/30/98 $6,879 $5,641 $5,623
10/31/98 $7,893 $6,290 $6,215
11/30/98 $8,760 $6,763 $6,732
12/31/98 $8,532 $6,661 $6,635
01/31/99 $8,051 $6,500 $6,528
02/28/99 $8,101 $6,615 $6,591
03/31/99 $9,277 $7,387 $7,460
04/30/99 $11,008 $8,394 $8,383
05/31/99 $10,768 $8,244 $8,334
06/30/99 $11,638 $9,143 $9,280
07/31/99 $11,108 $9,012 $9,028
08/31/99 $10,619 $9,109 $9,110
09/30/99 $10,221 $8,856 $8,801
10/31/99 $10,528 $9,006 $8,989
11/30/99 $11,282 $9,816 $9,795
12/31/99 $12,930 $11,131 $11,041
01/31/00 $12,334 $11,130 $11,106
02/29/00 $11,878 $11,121 $11,253
03/31/00 $12,004 $11,281 $11,308
04/30/00 $10,998 $10,114 $10,236
05/31/00 $10,159 $9,844 $9,813
06/30/00 $10,907 $10,126 $10,159
07/31/00 $10,474 $9,638 $9,636
08/31/00 $10,666 $9,676 $9,683
09/30/00 $9,602 $8,811 $8,838
10/31/00 $8,795 $8,095 $8,197
11/30/00 $8,330 $7,382 $7,480
12/31/00 $8,812 $7,596 $7,661
01/31/01 $9,835 $8,572 $8,716
02/28/01 $9,103 $7,911 $8,034
03/31/01 $8,251 $7,229 $7,244
04/30/01 $8,627 $7,658 $7,602
05/31/01 $8,944 $7,890 $7,693
06/30/01 $8,902 $7,747 $7,535
07/31/01 $8,351 $7,217 $7,059
08/31/01 $8,368 $7,119 $6,989
09/30/01 $7,292 $6,016 $5,908
10/31/01 $7,509 $6,389 $6,274
11/30/01 $7,968 $7,137 $6,929
12/31/01 $8,304 $7,731 $7,479
01/31/02 $8,749 $8,007 $7,733
02/28/02 $8,766 $8,161 $7,860
03/31/02 $9,254 $8,730 $8,333
04/30/02 $9,549 $8,811 $8,387
05/31/02 $9,507 $8,659 $8,253
06/30/02 $8,916 $8,041 $7,634
07/31/02 $8,427 $7,532 $7,053
08/31/02 $8,401 $7,630 $7,162
09/30/02 $7,768 $6,782 $6,389
10/31/02 $7,971 $7,218 $6,804
11/30/02 $8,604 $7,718 $7,272
12/31/02 $8,443 $7,426 $7,031
01/31/03 $8,308 $7,433 $7,000
02/28/03 $8,300 $7,213 $6,811
03/31/03 $8,005 $6,948 $6,618
04/30/03 $8,834 $7,657 $7,207
05/31/03 $9,364 $8,190 $7,725
06/30/03 $9,672 $8,697 $8,165
07/31/03 $10,073 $9,165 $8,676
08/31/03 $10,543 $9,826 $9,259
09/30/03 $10,851 $9,933 $9,326
10/31/03 $11,713 $10,740 $10,120
11/30/03 $11,944 $10,878 $10,244
12/31/03 $12,930 $11,671 $10,987
01/31/04 $13,301 $12,070 $11,377
02/29/04 $13,784 $12,651 $11,902
03/31/04 $13,771 $12,887 $12,055
04/30/04 $13,006 $11,913 $11,070
05/31/04 $12,832 $11,751 $10,852
06/30/04 $13,075 $11,752 $10,901
07/31/04 $12,901 $11,510 $10,708
08/31/04 $13,327 $12,024 $11,157
09/30/04 $14,023 $12,718 $11,801
10/31/04 $14,389 $13,086 $12,084
11/30/04 $15,494 $14,223 $13,203
12/31/04 $16,221 $14,952 $13,839
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS B 12/31/04
- --------------------------------------
1-Year +20.70%
- --------------------------------------
5-Year +3.61%
- --------------------------------------
Since Inception (1/1/99) +10.43%
- --------------------------------------
CLASS B (1/1/99-12/31/04)
[LINE GRAPH OMITTED]
EDGAR REPRESENTATION OF PLOTS POINTS:
This graph compares the performance of Templeton Developing Markets Trust -
Class B as tracked by the growth in value of a $10,000 investment, to that of
the S&P/IFCI Composite Index5 and MSCI Emerging Markets Index5 from 1/1/99 to
12/31/04.
Templeton Developing S&P/IFC Composite MSCI Emerging
Markets Trust Index 5 Markets Index 5
01/01/99 $10,000 $10,000 $10,000
01/31/99 $9,417 $9,758 $9,839
02/28/99 $9,476 $9,931 $9,934
03/31/99 $10,835 $11,090 $11,244
04/30/99 $12,854 $12,602 $12,635
05/31/99 $12,563 $12,377 $12,561
06/30/99 $13,573 $13,725 $13,987
07/31/99 $12,942 $13,529 $13,607
08/31/99 $12,369 $13,675 $13,731
09/30/99 $11,893 $13,295 $13,266
10/31/99 $12,233 $13,521 $13,548
11/30/99 $13,107 $14,736 $14,763
12/31/99 $15,019 $16,711 $16,641
01/31/00 $14,311 $16,708 $16,740
02/29/00 $13,777 $16,695 $16,961
03/31/00 $13,916 $16,935 $17,044
04/30/00 $12,739 $15,183 $15,428
05/31/00 $11,756 $14,779 $14,790
06/30/00 $12,622 $15,201 $15,311
07/31/00 $12,116 $14,469 $14,524
08/31/00 $12,330 $14,527 $14,595
09/30/00 $11,094 $13,227 $13,321
10/31/00 $10,160 $12,153 $12,355
11/30/00 $9,615 $11,083 $11,275
12/31/00 $10,160 $11,404 $11,547
01/31/01 $11,347 $12,868 $13,137
02/28/01 $10,481 $11,877 $12,108
03/31/01 $9,498 $10,853 $10,919
04/30/01 $9,926 $11,496 $11,459
05/31/01 $10,286 $11,844 $11,595
06/30/01 $10,228 $11,630 $11,357
07/31/01 $9,595 $10,835 $10,640
08/31/01 $9,605 $10,688 $10,535
09/30/01 $8,369 $9,031 $8,904
10/31/01 $8,613 $9,591 $9,457
11/30/01 $9,138 $10,714 $10,444
12/31/01 $9,518 $11,606 $11,273
01/31/02 $10,015 $12,020 $11,655
02/28/02 $10,034 $12,251 $11,847
03/31/02 $10,589 $13,106 $12,559
04/30/02 $10,922 $13,227 $12,641
05/31/02 $10,863 $13,000 $12,439
06/30/02 $10,188 $12,072 $11,506
07/31/02 $9,620 $11,307 $10,631
08/31/02 $9,591 $11,454 $10,795
09/30/02 $8,857 $10,181 $9,630
10/31/02 $9,082 $10,835 $10,255
11/30/02 $9,806 $11,587 $10,961
12/31/02 $9,611 $11,149 $10,597
01/31/03 $9,464 $11,159 $10,551
02/28/03 $9,444 $10,828 $10,266
03/31/03 $9,095 $10,431 $9,975
04/30/03 $10,030 $11,495 $10,863
05/31/03 $10,631 $12,295 $11,643
06/30/03 $10,975 $13,056 $12,307
07/31/03 $11,418 $13,758 $13,077
08/31/03 $11,950 $14,751 $13,955
09/30/03 $12,294 $14,912 $14,057
10/31/03 $13,269 $16,123 $15,254
11/30/03 $13,515 $16,330 $15,441
12/31/03 $14,624 $17,521 $16,560
01/31/04 $15,040 $18,119 $17,149
02/29/04 $15,575 $18,993 $17,940
03/31/04 $15,559 $19,347 $18,170
04/30/04 $14,680 $17,884 $16,685
05/31/04 $14,480 $17,641 $16,356
06/30/04 $14,750 $17,642 $16,431
07/31/04 $14,540 $17,279 $16,140
08/31/04 $15,010 $18,051 $16,816
09/30/04 $15,789 $19,093 $17,787
10/31/04 $16,188 $19,645 $18,213
11/30/04 $17,426 $21,352 $19,900
12/31/04 $18,136 $22,447 $20,858
Annual Report | 9
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS C 12/31/04
- --------------------------------------
1-Year +23.72%
- --------------------------------------
5-Year +3.97%
- --------------------------------------
Since Inception (5/1/95) +5.26%
- --------------------------------------
CLASS C (5/1/95-12/31/04)
[LINE GRAPH OMITTED]
EDGAR REPRESENTATION OF PLOTS POINTS:
This graph compares the performance of Templeton Developing Markets Trust -
Class C as tracked by the growth in value of a $10,000 investment, to that of
the S&P/IFCI Composite Index5 and MSCI Emerging Markets Index5 from 5/1/95 to
12/31/04.
Templeton Developing S&P/IFC Composite MSCI Emerging
Markets Trust Index 5 Markets Index 5
05/01/95 $10,000 $10,000 $10,000
05/31/95 $10,344 $10,378 $10,532
06/30/95 $10,366 $10,438 $10,563
07/31/95 $10,802 $10,769 $10,800
08/31/95 $10,511 $10,480 $10,546
09/30/95 $10,489 $10,400 $10,496
10/31/95 $10,115 $10,008 $10,094
11/30/95 $10,008 $9,958 $9,914
12/31/95 $10,170 $10,304 $10,354
01/31/96 $11,152 $11,182 $11,090
02/29/96 $11,092 $10,923 $10,913
03/31/96 $11,132 $11,080 $10,998
04/30/96 $11,494 $11,528 $11,438
05/31/96 $11,676 $11,426 $11,387
06/30/96 $11,739 $11,560 $11,458
07/31/96 $11,195 $10,802 $10,675
08/31/96 $11,423 $11,136 $10,948
09/30/96 $11,652 $11,300 $11,043
10/31/96 $11,692 $11,057 $10,749
11/30/96 $12,086 $11,221 $10,929
12/31/96 $12,366 $11,270 $10,978
01/31/97 $13,297 $12,067 $11,727
02/28/97 $13,672 $12,656 $12,229
03/31/97 $13,388 $12,344 $11,908
04/30/97 $13,510 $12,135 $11,929
05/31/97 $14,201 $12,548 $12,270
06/30/97 $14,795 $13,090 $12,927
07/31/97 $15,422 $13,216 $13,120
08/31/97 $14,055 $11,529 $11,451
09/30/97 $14,828 $11,903 $11,768
10/31/97 $12,020 $9,946 $9,837
11/30/97 $11,223 $9,475 $9,478
12/31/97 $11,116 $9,609 $9,706
01/31/98 $10,136 $8,977 $8,945
02/28/98 $11,186 $9,893 $9,879
03/31/98 $11,692 $10,280 $10,307
04/30/98 $11,727 $10,306 $10,195
05/31/98 $10,143 $9,021 $8,798
06/30/98 $9,145 $8,099 $7,875
07/31/98 $9,189 $8,422 $8,125
08/31/98 $6,923 $6,055 $5,776
09/30/98 $7,255 $6,347 $6,142
10/31/98 $8,323 $7,076 $6,789
11/30/98 $9,224 $7,609 $7,353
12/31/98 $8,982 $7,494 $7,247
01/31/99 $8,472 $7,313 $7,130
02/28/99 $8,516 $7,443 $7,199
03/31/99 $9,748 $8,311 $8,148
04/30/99 $11,569 $9,444 $9,156
05/31/99 $11,296 $9,275 $9,103
06/30/99 $12,211 $10,286 $10,136
07/31/99 $11,639 $10,139 $9,861
08/31/99 $11,120 $10,249 $9,950
09/30/99 $10,698 $9,963 $9,614
10/31/99 $11,015 $10,133 $9,818
11/30/99 $11,798 $11,044 $10,699
12/31/99 $13,513 $12,524 $12,059
01/31/00 $12,880 $12,522 $12,131
02/29/00 $12,396 $12,512 $12,291
03/31/00 $12,528 $12,692 $12,351
04/30/00 $11,463 $11,379 $11,180
05/31/00 $10,584 $11,076 $10,718
06/30/00 $11,358 $11,392 $11,096
07/31/00 $10,900 $10,844 $10,525
08/31/00 $11,103 $10,887 $10,577
09/30/00 $9,985 $9,913 $9,653
10/31/00 $9,141 $9,108 $8,953
11/30/00 $8,657 $8,306 $8,171
12/31/00 $9,141 $8,546 $8,368
01/31/01 $10,205 $9,644 $9,520
02/28/01 $9,440 $8,901 $8,775
03/31/01 $8,551 $8,134 $7,913
04/30/01 $8,938 $8,615 $8,304
05/31/01 $9,255 $8,876 $8,403
06/30/01 $9,211 $8,716 $8,230
07/31/01 $8,630 $8,120 $7,710
08/31/01 $8,648 $8,010 $7,634
09/30/01 $7,531 $6,768 $6,453
10/31/01 $7,751 $7,188 $6,853
11/30/01 $8,226 $8,030 $7,569
12/31/01 $8,561 $8,698 $8,169
01/31/02 $9,019 $9,008 $8,446
02/28/02 $9,028 $9,182 $8,585
03/31/02 $9,529 $9,822 $9,101
04/30/02 $9,830 $9,913 $9,160
05/31/02 $9,786 $9,742 $9,015
06/30/02 $9,167 $9,047 $8,338
07/31/02 $8,663 $8,474 $7,704
08/31/02 $8,628 $8,584 $7,823
09/30/02 $7,973 $7,630 $6,979
10/31/02 $8,177 $8,120 $7,432
11/30/02 $8,831 $8,684 $7,943
12/31/02 $8,645 $8,355 $7,679
01/31/03 $8,513 $8,363 $7,646
02/28/03 $8,495 $8,115 $7,439
03/31/03 $8,188 $7,817 $7,228
04/30/03 $9,031 $8,615 $7,872
05/31/03 $9,573 $9,215 $8,437
06/30/03 $9,884 $9,785 $8,918
07/31/03 $10,283 $10,311 $9,477
08/31/03 $10,754 $11,055 $10,113
09/30/03 $11,065 $11,175 $10,187
10/31/03 $11,935 $12,083 $11,054
11/30/03 $12,166 $12,238 $11,190
12/31/03 $13,163 $13,131 $12,001
01/31/04 $13,538 $13,579 $12,427
02/29/04 $14,020 $14,234 $13,000
03/31/04 $13,996 $14,499 $13,167
04/30/04 $13,213 $13,403 $12,091
05/31/04 $13,033 $13,221 $11,853
06/30/04 $13,276 $13,221 $11,907
07/31/04 $13,087 $12,949 $11,696
08/31/04 $13,510 $13,528 $12,186
09/30/04 $14,212 $14,309 $12,890
10/31/04 $14,572 $14,723 $13,199
11/30/04 $15,680 $16,002 $14,421
12/31/04 $16,416 $16,822 $15,115
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS R 12/31/04
- --------------------------------------
1-Year +24.28%
- --------------------------------------
Since Inception (1/1/02) +24.62%
- --------------------------------------
CLASS R (1/1/02-12/31/04)
[LINE GRAPH OMITTED]
EDGAR REPRESENTATION OF PLOTS POINTS:
This graph compares the performance of Templeton Developing Markets Trust -
Class R as tracked by the growth in value of a $10,000 investment, to that of
the S&P/IFCI Composite Index5 and MSCI Emerging Markets Index5 from 1/1/02 to
12/31/04.
Templeton Developing S&P/IFC Composite MSCI Emerging
Markets Trust Index 5 Markets Index 5
1/1/2002 $10,000 $10,000 $10,000
1/31/2002 $10,483 $10,357 $10,339
2/28/2002 $10,503 $10,557 $10,509
3/31/2002 $11,097 $11,293 $11,141
4/30/2002 $11,441 $11,397 $11,213
5/31/2002 $11,391 $11,201 $11,034
6/30/2002 $10,683 $10,402 $10,207
7/31/2002 $10,096 $9,743 $9,430
8/31/2002 $10,066 $9,869 $9,576
9/30/2002 $9,307 $8,773 $8,543
10/31/2002 $9,539 $9,336 $9,097
11/30/2002 $10,308 $9,984 $9,723
12/31/2002 $10,096 $9,606 $9,400
1/31/2003 $9,945 $9,615 $9,359
2/28/2003 $9,935 $9,330 $9,106
3/31/2003 $9,563 $8,988 $8,848
4/30/2003 $10,548 $9,905 $9,636
5/31/2003 $11,184 $10,594 $10,328
6/30/2003 $11,553 $11,250 $10,917
7/31/2003 $12,026 $11,855 $11,600
8/31/2003 $12,590 $12,710 $12,379
9/30/2003 $12,949 $12,849 $12,470
10/31/2003 $13,974 $13,892 $13,531
11/30/2003 $14,251 $14,071 $13,697
12/31/2003 $15,429 $15,097 $14,690
1/31/2004 $15,875 $15,613 $15,212
2/29/2004 $16,445 $16,365 $15,914
3/31/2004 $16,428 $16,670 $16,118
4/30/2004 $15,508 $15,410 $14,800
5/31/2004 $15,310 $15,200 $14,509
6/30/2004 $15,592 $15,201 $14,575
7/31/2004 $15,383 $14,888 $14,317
8/31/2004 $15,884 $15,554 $14,917
9/30/2004 $15,429 $16,452 $15,778
10/31/2004 $15,824 $16,928 $16,156
11/30/2004 $17,039 $18,398 $17,653
12/31/2004 $19,329 $19,341 $18,502
10 | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
ADVISOR CLASS 4 12/31/04
- --------------------------------------
1-Year +25.98%
- --------------------------------------
5-Year +5.04%
- --------------------------------------
10-Year +5.85%
- --------------------------------------
ADVISOR CLASS (1/1/95-12/31/04) 4
[LINE GRAPH OMITTED]
EDGAR REPRESENTATION OF PLOTS POINTS:
This graph compares the performance of Templeton Developing Markets Trust -
Advisor Class as tracked by the growth in value of a $10,000 investment, to that
of the S&P/IFCI Composite Index5 and MSCI Emerging Markets Index5 from 1/1/95 to
12/31/04.
Templeton Developing S&P/IFC Composite MSCI Emerging
Markets Trust Index 5 Markets Index 5
01/01/95 $10,000 $10,000 $10,000
01/31/95 $9,434 $8,665 $8,936
02/28/95 $9,404 $8,555 $8,707
03/31/95 $9,509 $8,530 $8,762
04/30/95 $9,823 $8,888 $9,155
05/31/95 $10,161 $9,224 $9,642
06/30/95 $10,191 $9,277 $9,671
07/31/95 $10,625 $9,572 $9,888
08/31/95 $10,348 $9,315 $9,655
09/30/95 $10,333 $9,244 $9,609
10/31/95 $9,981 $8,895 $9,241
11/30/95 $9,868 $8,851 $9,077
12/31/95 $10,036 $9,159 $9,479
01/31/96 $11,016 $9,939 $10,153
02/29/96 $10,965 $9,708 $9,992
03/31/96 $11,011 $9,848 $10,069
04/30/96 $11,375 $10,246 $10,472
05/31/96 $11,561 $10,156 $10,425
06/30/96 $11,631 $10,275 $10,490
07/31/96 $11,104 $9,601 $9,773
08/31/96 $11,329 $9,898 $10,023
09/30/96 $11,569 $10,044 $10,110
10/31/96 $11,608 $9,828 $9,841
11/30/96 $12,010 $9,973 $10,006
12/31/96 $12,295 $10,017 $10,051
01/31/97 $10,070 $10,725 $10,736
02/28/97 $10,024 $11,249 $11,196
03/31/97 $10,066 $10,972 $10,902
04/30/97 $10,399 $10,786 $10,921
05/31/97 $10,569 $11,153 $11,234
06/30/97 $10,633 $11,635 $11,835
07/31/97 $10,151 $11,747 $12,012
08/31/97 $10,357 $10,247 $10,483
09/30/97 $10,576 $10,580 $10,774
10/31/97 $10,612 $8,840 $9,006
11/30/97 $10,980 $8,421 $8,677
12/31/97 $11,240 $8,541 $8,886
01/31/98 $10,249 $7,979 $8,189
02/28/98 $11,319 $8,793 $9,044
03/31/98 $11,851 $9,138 $9,437
04/30/98 $11,886 $9,161 $9,334
05/31/98 $10,283 $8,018 $8,055
06/30/98 $9,274 $7,199 $7,210
07/31/98 $9,335 $7,486 $7,438
08/31/98 $7,039 $5,382 $5,288
09/30/98 $7,381 $5,641 $5,623
10/31/98 $8,477 $6,290 $6,215
11/30/98 $9,406 $6,763 $6,732
12/31/98 $9,164 $6,661 $6,635
01/31/99 $8,647 $6,500 $6,528
02/28/99 $8,700 $6,615 $6,591
03/31/99 $9,967 $7,387 $7,460
04/30/99 $11,830 $8,394 $8,383
05/31/99 $11,580 $8,244 $8,334
06/30/99 $12,516 $9,143 $9,280
07/31/99 $11,946 $9,012 $9,028
08/31/99 $11,419 $9,109 $9,110
09/30/99 $11,000 $8,856 $8,801
10/31/99 $11,322 $9,006 $8,989
11/30/99 $12,142 $9,816 $9,795
12/31/99 $13,925 $11,131 $11,041
01/31/00 $13,282 $11,130 $11,106
02/29/00 $12,792 $11,121 $11,253
03/31/00 $12,934 $11,281 $11,308
04/30/00 $11,849 $10,114 $10,236
05/31/00 $10,951 $9,844 $9,813
06/30/00 $11,758 $10,126 $10,159
07/31/00 $11,301 $9,638 $9,636
08/31/00 $11,517 $9,676 $9,683
09/30/00 $10,359 $8,811 $8,838
10/31/00 $9,499 $8,095 $8,197
11/30/00 $8,996 $7,382 $7,480
12/31/00 $9,516 $7,596 $7,661
01/31/01 $10,634 $8,572 $8,716
02/28/01 $9,831 $7,911 $8,034
03/31/01 $8,917 $7,229 $7,244
04/30/01 $9,332 $7,658 $7,602
05/31/01 $9,676 $7,890 $7,693
06/30/01 $9,631 $7,747 $7,535
07/31/01 $9,034 $7,217 $7,059
08/31/01 $9,053 $7,119 $6,989
09/30/01 $7,895 $6,016 $5,908
10/31/01 $8,130 $6,389 $6,274
11/30/01 $8,636 $7,137 $6,929
12/31/01 $8,998 $7,731 $7,479
01/31/02 $9,482 $8,007 $7,733
02/28/02 $9,502 $8,161 $7,860
03/31/02 $10,041 $8,730 $8,333
04/30/02 $10,362 $8,811 $8,387
05/31/02 $10,317 $8,659 $8,253
06/30/02 $9,683 $8,041 $7,634
07/31/02 $9,150 $7,532 $7,053
08/31/02 $9,131 $7,630 $7,162
09/30/02 $8,443 $6,782 $6,389
10/31/02 $8,672 $7,218 $6,804
11/30/02 $9,380 $7,718 $7,272
12/31/02 $9,196 $7,426 $7,031
01/31/03 $9,058 $7,433 $7,000
02/28/03 $9,049 $7,213 $6,811
03/31/03 $8,726 $6,948 $6,618
04/30/03 $9,632 $7,657 $7,207
05/31/03 $10,220 $8,190 $7,725
06/30/03 $10,566 $8,697 $8,165
07/31/03 $10,995 $9,165 $8,676
08/31/03 $11,518 $9,826 $9,259
09/30/03 $11,854 $9,933 $9,326
10/31/03 $12,805 $10,740 $10,120
11/30/03 $13,058 $10,878 $10,244
12/31/03 $14,136 $11,671 $10,987
01/31/04 $14,552 $12,070 $11,377
02/29/04 $15,080 $12,651 $11,902
03/31/04 $15,076 $12,887 $12,055
04/30/04 $14,238 $11,913 $11,070
05/31/04 $14,057 $11,751 $10,852
06/30/04 $14,323 $11,752 $10,901
07/31/04 $14,142 $11,510 $10,708
08/31/04 $14,609 $12,024 $11,157
09/30/04 $15,381 $12,718 $11,801
10/31/04 $15,781 $13,086 $12,084
11/30/04 $17,001 $14,223 $13,203
12/31/04 $17,656 $14,952 $13,839
ENDNOTES
THE FUND INVESTS IN FOREIGN SECURITIES, WHICH CAN INVOLVE EXPOSURE TO CURRENCY
VOLATILITY AND POLITICAL, ECONOMIC AND REGULATORY UNCERTAINTY. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER SIZE AND LESSER
LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
CLASS B: These shares have higher annual fees and expenses than Class A shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial sales
charge; thus actual total returns would have differed. These shares
have higher annual fees and expenses than Class A shares.
CLASS R: Shares are available to certain eligible investors as described in the
prospectus. These shares have higher annual fees and expenses than
Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include a sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes any current, applicable,
maximum sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include any current, applicable, maximum
sales charge.
4. Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge, but reflecting the effect of
the Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, actual Advisor
Class performance is used reflecting all charges and fees applicable to that
class. Since 1/2/97 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were +43.61% and +4.63%.
5. Source: Standard & Poor's Micropal. The S&P/IFCI Composite Index measures the
total return of equity securities in emerging markets globally. Securities'
weights are adjusted to reflect only the portion of the market capitalization
available to foreign (non-local) investors. Securities included in the index are
weighted according to their adjusted market capitalization (outstanding
investable shares times price). The MSCI Emerging Markets Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global emerging markets.
Annual Report | 11
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs,
sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.
ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table below provides
actual account values and expenses. The "Ending Account Value" is derived from
the Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
12 | Annual Report
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES, IF APPLICABLE. Therefore, the second line for each class is
useful in comparing ongoing costs only, and will not help you compare total
costs of owning different funds. In addition, if transaction costs were
included, your total costs would have been higher. Please refer to the Fund
prospectus for additional information on operating expenses.
- ------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 6/30/04 VALUE 12/31/04 PERIOD* 6/30/04-12/31/04
- ------------------------------------------------------------------------------------------------------
Actual $1,000 $1,240.60 $11.21
- ------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.13 $10.08
- ------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------
Actual $1,000 $1,236.30 $14.84
- ------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.86 $13.35
- ------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------
Actual $1,000 $1,236.50 $14.90
- ------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.81 $13.40
- ------------------------------------------------------------------------------------------------------
CLASS R
- ------------------------------------------------------------------------------------------------------
Actual $1,000 $1,239.70 $12.10
- ------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.33 $10.89
- ------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------
Actual $1,000 $1,243.30 $9.25
- ------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.89 $8.31
- ------------------------------------------------------------------------------------------------------
*Expenses are equal to the annualized expense ratio for each class (A: 1.99%; B:
2.64%; C: 2.65%; R: 2.15%; and Advisor: 1.64%), multiplied by the average
account value over the period, multiplied by 184/366 to reflect the one-half
year period.
Annual Report | 13
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS A 2004 2003 2002 2001 2000
---------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .................. $14.95 $10.00 $9.88 $10.59 $15.61
---------------------------------------------------------------
Income from investment operations:
Net investment income a ............................ .18 .22 .10 .11 .07
Net realized and unrealized gains (losses) ......... 3.66 4.98 .07 (.72) (5.03)
---------------------------------------------------------------
Total from investment operations .................... 3.84 5.20 .17 (.61) (4.96)
---------------------------------------------------------------
Less distributions from net investment income ....... (.26) (.25) (.05) (.10) (.06)
---------------------------------------------------------------
Redemption fees ..................................... --c --c -- -- --
---------------------------------------------------------------
Net asset value, end of year ........................ $18.53 $14.95 $10.00 $9.88 $10.59
---------------------------------------------------------------
Total return b ...................................... 25.45% 53.14% 1.68% (5.76)% (31.85)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ..................... $2,305,376 $1,873,277 $1,168,340 $1,221,011 $1,507,936
Ratios to average net assets:
Expenses ........................................... 2.03% 2.17% 2.24% 2.21% 2.09%
Net investment income ............................. 1.12% 1.85% .96% 1.07% .56%
Portfolio turnover rate ............................. 58.74% 48.60% 49.05% 61.45% 69.37%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
14 | See notes to financial statements. | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS B 2004 2003 2002 2001 2000
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........................... $14.74 $9.82 $9.77 $10.44 $15.47
-----------------------------------------------------------
Income from investment operations:
Net investment income (loss) a .............................. .06 .13 .03 .04 (.02)
Net realized and unrealized gains (losses) .................. 3.61 4.93 .07 (.70) (4.98)
-----------------------------------------------------------
Total from investment operations ............................. 3.67 5.06 .10 (.66) (5.00)
-----------------------------------------------------------
Less distributions from net investment income ................ (.17) (.14) (.05) (.01) (.03)
-----------------------------------------------------------
Redemption fees .............................................. --c --c -- -- --
-----------------------------------------------------------
Net asset value, end of year ................................. $18.24 $14.74 $9.82 $9.77 $10.44
-----------------------------------------------------------
Total return b ............................................... 24.70% 52.17% .98% (6.32)% (32.36)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............................. $36,992 $26,062 $12,377 $11,027 $11,508
Ratios to average net assets:
Expenses .................................................... 2.68% 2.82% 2.88% 2.86% 2.77%
Net investment income (loss) ................................ .47% 1.20% .32% .42% (.13)%
Portfolio turnover rate ...................................... 58.74% 48.60% 49.05% 61.45% 69.37%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
Annual Report | See notes to financial statements. | 15
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS C 2004 2003 2002 2001 2000
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........................... $14.72 $9.79 $9.73 $10.39 $15.36
-----------------------------------------------------------
Income from investment operations:
Net investment income (loss) a .............................. .05 .14 .03 .04 (.01)
Net realized and unrealized gains (losses) .................. 3.60 4.90 .08 (.70) (4.96)
-----------------------------------------------------------
Total from investment operations ............................. 3.65 5.04 .11 (.66) (4.97)
-----------------------------------------------------------
Less distributions from net investment income ................ (.15) (.11) (.05) --d --
-----------------------------------------------------------
Redemption fees .............................................. --c --c -- -- --
-----------------------------------------------------------
Net asset value, end of year ................................. $18.22 $14.72 $9.79 $9.73 $10.39
-----------------------------------------------------------
Total return b ............................................... 24.72% 52.25% .98% (6.34)% (32.36)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............................. $258,365 $208,581 $127,808 $139,099 $188,379
Ratios to average net assets:
Expenses .................................................... 2.69% 2.82% 2.89% 2.86% 2.76%
Net investment income (loss) ................................ .46% 1.20% .31% .43% (.11)%
Portfolio turnover rate ...................................... 58.74% 48.60% 49.05% 61.45% 69.37%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
d Actual distribution from net investment income was $.001.
</FN>
16 | See notes to financial statements. | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
----------------------------------
YEAR ENDED DECEMBER 31,
CLASS R 2004 2003 2002 D
----------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................................. $14.85 $9.98 $9.93
----------------------------------
Income from investment operations:
Net investment income a ........................................... .16 .17 .03
Net realized and unrealized gains ................................. 3.64 4.98 .07
----------------------------------
Total from investment operations ................................... 3.80 5.15 .10
----------------------------------
Less distributions from net investment income ...................... (.26) (.28) (.05)
----------------------------------
Redemption fees .................................................... --c --c --
----------------------------------
Net asset value, end of year ....................................... $18.39 $14.85 $9.98
----------------------------------
Total return b ..................................................... 25.28% 52.82% .96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................................... $5,220 $1,688 $381
Ratios to average net assets:
Expenses .......................................................... 2.18% 2.32% 2.39%e
Net investment income ............................................. .97% 1.70% .81%e
Portfolio turnover rate ............................................ 58.74% 48.60% 49.05%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
d Effective date of Class R shares was January 2, 2002.
e Annualized.
</FN>
Annual Report | See notes to financial statements. | 17
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
---------------------------------------------------------
YEAR ENDED DECEMBER 31,
ADVISOR CLASS 2004 2003 2002 2001 2000
---------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........................... $14.93 $10.01 $9.84 $10.55 $15.62
---------------------------------------------------------
Income from investment operations:
Net investment income a ..................................... .24 .26 .12 .14 .11
Net realized and unrealized gains (losses) .................. 3.65 4.99 .10 (.71) (5.03)
---------------------------------------------------------
Total from investment operations ............................. 3.89 5.25 .22 (.57) (4.92)
---------------------------------------------------------
Less distributions from net investment income ................ (.31) (.33) (.05) (.14) (.15)
---------------------------------------------------------
Redemption fees .............................................. --c --c -- -- --
---------------------------------------------------------
Net asset value, end of year ................................. $18.51 $14.93 $10.01 $9.84 $10.55
---------------------------------------------------------
Total return b ............................................... 25.98% 53.72% 2.20% (5.43)% (31.67)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............................. $199,101 $203,660 $130,459 $81,320 $115,144
Ratios to average net assets:
Expenses .................................................... 1.68% 1.82% 1.89% 1.87% 1.77%
Net investment income ....................................... 1.47% 2.20% 1.31% 1.40% .88%
Portfolio turnover rate ...................................... 58.74% 48.60% 49.05% 61.45% 69.37%
<FN>
a Based on average daily shares outstanding.
b Total return is not annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
18 | See notes to financial statements. | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/WARRANTS/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 93.7%
ARGENTINA .3%
Tenaris SA, ADR ......................... Energy Equipment & Services 166,317 $ 8,132,901
---------------
AUSTRIA 2.5%
Bank Austria Creditanstalt .............. Commercial Banks 572,690 51,679,809
OMV AG .................................. Oil & Gas 63,249 19,027,399
---------------
70,707,208
---------------
BELGIUM 2.0%
Inbev ................................... Beverages 1,412,800 54,715,996
---------------
BRAZIL 2.4%
Centrais Eletricas Brasileiras SA ....... Electric Utilities 538,847,500 7,810,853
Centrais Eletricas Brasileiras SA
(Non-Taxable) ......................... Electric Utilities 218,624,148 3,169,062
Embraer-Empresa Brasileiras de
Aeronautica SA ........................ Aerospace & Defense 4,688,311 27,889,802
Souza Cruz SA (Non-Taxable) ............. Tobacco 1,728,728 23,184,221
Souza Cruz SA (Taxable) ................. Tobacco 17,600 236,036
Unibanco Uniao de
Bancos Brasileiros SA, GDR ............ Commercial Banks 143,700 4,558,164
---------------
66,848,138
---------------
CHINA 9.5%
a Air China Ltd., 144A .................... Airlines 5,068,000 1,956,052
Aluminum Corp. of China Ltd., H ......... Metals & Mining 25,446,000 15,059,129
Anhui Conch Cement Co. Ltd. ............. Construction Materials 8,946,000 9,725,414
Beijing Enterprises Holdings Ltd. ....... Industrial Conglomerates 5,673,555 8,430,625
China Mobile (Hong Kong) Ltd., fgn ...... Wireless Telecommunication Services 20,008,000 67,827,655
China Petroleum & Chemical Corp., H ..... Oil & Gas 29,500,000 12,144,916
China Resources Enterprise Ltd. ......... Distributors 18,812,000 29,405,851
China Travel International Investment
Hong Kong Ltd. ........................ Hotels Restaurants & Leisure 62,680,000 20,160,045
China Unicom Ltd. ....................... Wireless Telecommunication Services 5,120,000 4,051,050
CITIC Pacific Ltd. ...................... Industrial Conglomerates 7,291,764 20,732,295
Denway Motors Ltd. ...................... Automobiles 25,242,386 9,011,890
Huadian Power International Corp. Ltd., H Electric Utilities 32,136,000 9,509,160
Lenovo Group Ltd. ....................... Computers & Peripherals 39,040,689 11,677,851
PetroChina Co. Ltd., H .................. Oil & Gas 34,985,000 18,678,951
Shanghai Industrial Holdings Ltd. ....... Industrial Conglomerates 7,818,000 16,696,532
TCL International Holdings Inc. ......... Household Durables 15,950,000 4,104,055
Travelsky Technology Ltd., H ............ IT Services 8,761,000 7,100,955
---------------
266,272,426
---------------
CROATIA .6%
Pliva D D, GDR, Reg S ................... Pharmaceuticals 1,296,350 16,139,558
---------------
CZECH REPUBLIC .7%
Cesky Telecom AS ........................ Diversified Telecommunication Services 1,167,950 19,335,540
---------------
GREECE 1.2%
Hellenic Telecommunications
Organization SA (OTE) ................. Diversified Telecommunication Services 572,190 10,264,821
---------------
Annual Report | 19
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2004 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/WARRANTS/RIGHTS VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
GREECE (CONT.)
Titan Cement Co. ........................ Construction Materials 798,860 $ 23,632,345
---------------
33,897,166
---------------
HONG KONG 2.8%
Cheung Kong Holdings Ltd. ............... Real Estate 4,054,000 40,421,084
Cheung Kong Infrastructure Holdings Ltd. Electric Utilities 2,658,000 7,677,040
Guoco Group Ltd. ........................ Diversified Financial Services 1,417,000 13,854,981
Henderson Investment Ltd. ............... Real Estate 4,022,000 5,873,006
MTR Corp. Ltd. .......................... Road & Rail 7,276,216 11,654,602
---------------
79,480,713
---------------
HUNGARY 3.4%
Egis RT ................................. Pharmaceuticals 61,134 3,687,662
Gedeon Richter Ltd. ..................... Pharmaceuticals 137,088 17,221,348
Matav RT ................................ Diversified Telecommunication Services 4,384,450 20,988,098
MOL Magyar Olaj-Es Gazipari RT .......... Oil & Gas 764,575 53,778,352
---------------
95,675,460
---------------
INDIA 3.2%
Gail (India) Ltd. ....................... Gas Utilities 2,742,540 14,628,994
Hindustan Lever Ltd. .................... Household Products 7,784,500 25,828,341
Hindustan Petroleum Corp. Ltd. .......... Oil & Gas 3,432,900 31,789,051
Tata Motors Ltd. ........................ Automobiles 387,000 4,520,070
Tata Tea Ltd. ........................... Food Products 1,217,581 13,323,011
---------------
90,089,467
---------------
INDONESIA .2%
PT Bank Danamon ......................... Commercial Banks 4,245,000 2,000,741
PT Perusahaan Gas Negara ................ Gas Utilities 13,249,000 2,711,888
PT Perusahaan Gas Negara, 144A .......... Gas Utilities 351,000 71,845
---------------
4,784,474
---------------
MALAYSIA 1.6%
Kuala Lumpur Kepong Bhd. ................ Food Products 1,193,172 2,166,549
Resorts World Bhd. ...................... Hotels Restaurants & Leisure 7,606,700 20,017,632
SIME Darby Bhd. ......................... Industrial Conglomerates 5,017,700 7,922,684
Tanjong PLC ............................. Hotels Restaurants & Leisure 832,100 3,087,529
YTL Corp. Bhd. .......................... Electric Utilities 4,065,500 5,723,796
YTL Power International Bhd. ............ Water Utilities 10,687,200 5,062,358
---------------
43,980,548
---------------
MEXICO 3.5%
Fomento Economico Mexicano SA
de CV Femsa, ADR ...................... Beverages 406,840 21,403,852
Kimberly Clark de Mexico SA de CV, A .... Household Products 18,507,712 63,991,640
Telefonos de Mexico SA
de CV (Telmex), L, ADR ................ Diversified Telecommunication Services 364,630 13,972,622
---------------
99,368,114
---------------
PHILIPPINES 1.0%
San Miguel Corp., B ..................... Beverages 21,068,488 28,153,882
---------------
20 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2004 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/WARRANTS/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
POLAND 3.2%
Polski Koncern Naftowy Orlen SA ......... Oil & Gas 3,227,556 $ 40,498,462
Telekomunikacja Polska SA ............... Diversified Telecommunication Services 7,425,800 48,806,918
---------------
89,305,380
---------------
RUSSIA .9%
b Lukoil Holdings, ADR .................... Oil & Gas 210,588 25,565,383
---------------
SINGAPORE 6.9%
Comfortdelgro Corp. Ltd. ................ Road & Rail 17,355,000 16,479,967
Dairy Farm International Holdings Ltd. .. Food & Staples Retailing 4,628,754 11,201,585
Fraser & Neave Ltd. ..................... Beverages 5,160,148 51,528,771
Keppel Corp. Ltd. ....................... Industrial Conglomerates 8,983,600 47,331,348
Singapore Press Holdings Ltd. ........... Media 3,882,000 10,939,901
Singapore Technologies Engineering Ltd. . Aerospace & Defense 12,085,000 17,250,536
Singapore Telecommunications Ltd. ....... Diversified Telecommunication Services 24,294,214 35,422,551
a Suntec Real Estate Investment Trust ..... Real Estate 3,691,000 2,509,961
---------------
192,664,620
---------------
SOUTH AFRICA 11.1%
Anglo American PLC ...................... Metals & Mining 3,120,891 73,546,152
Liberty Group Ltd. ...................... Insurance 112,888 1,327,156
Nedcor Ltd. ............................. Commercial Banks 1,561,459 21,444,221
Nedcor Ltd., 144A ....................... Commercial Banks 273,791 3,760,095
Old Mutual PLC .......................... Insurance 10,495,265 26,692,438
Remgro Ltd. ............................. Diversified Financial Services 3,932,890 65,508,826
SABMiller PLC ........................... Beverages 4,532,973 76,376,394
Sappi Ltd. .............................. Paper & Forest Products 1,099,700 16,112,109
Sasol Ltd. .............................. Oil & Gas 1,301,588 27,800,909
---------------
312,568,300
---------------
SOUTH KOREA 17.6%
CJ Corp. ................................ Food Products 429,460 29,371,878
a Daewoo Shipbuilding & Marine
Engineering Co. Ltd. .................. Machinery 2,725,450 40,544,755
a Hite Brewery Co. Ltd. ................... Beverages 334,470 27,624,792
a Hyundai Development Co. ................. Construction & Engineering 2,002,980 31,925,396
a Kangwon Land Inc. ....................... Hotels Restaurants & Leisure 3,062,546 39,790,614
a Kia Motors Corp. ........................ Automobiles 907,000 9,550,135
Korea Gas Corp. ......................... Gas Utilities 425,060 13,180,473
LG Chem Ltd. ............................ Chemicals 607,140 24,192,934
LG Electronics Inc. ..................... Household Durables 463,130 28,677,196
LG Household & Health Care Ltd. ......... Household Products 408,940 10,843,705
a LG International Corp. .................. Trading Companies & Distributors 948,050 7,372,298
a LG Petrochemical Co. Ltd. ............... Chemicals 357,320 8,974,420
POSCO ................................... Metals & Mining 129,540 23,400,290
Samsung Electronics Co. Ltd. ............Semiconductors & Semiconductor Equipment 257,160 111,911,302
Samsung Fine Chemicals Co. Ltd. ......... Chemicals 1,017,790 17,500,639
Samsung Heavy Industries Co. Ltd. ....... Machinery 6,564,220 40,962,965
SK Corp. ................................ Oil & Gas 135,670 7,457,132
SK Telecom Co. Ltd. ..................... Wireless Telecommunication Services 99,930 19,016,818
---------------
492,297,742
---------------
Annual Report | 21
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2004 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/WARRANTS/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
SWEDEN .5%
a Oriflame Cosmetics, IDR ................. Personal Products 583,050 $ 13,515,014
---------------
TAIWAN 12.6%
Acer Inc. ............................... Computers & Peripherals 15,125,098 24,978,536
Chunghwa Telecom Co. Ltd. ............... Diversified Telecommunication Services 12,218,000 24,020,919
D-Link Corp. ............................ Communications Equipment 18,317,358 21,319,354
Delta Electronics Inc. .................. Electronic Equipment & Instruments 19,555,323 34,447,880
Elan Microelectronics Corp. .............Semiconductors & Semiconductor Equipment 12,662,834 7,130,064
Kinpo Electronics Inc. .................. Office Electronics 7,114,280 3,099,490
Lite-on Technology Corp. ................ Computers & Peripherals 20,585,900 21,952,249
MediaTek Inc. ...........................Semiconductors & Semiconductor Equipment 2,581,000 17,536,835
Mega Financial Holdings Co. Ltd. ........ Commercial Banks 33,382,308 22,996,934
Premier Image Technology Corp. .......... Leisure Equipment & Products 3,244,000 3,193,998
President Chain Store Corp. ............. Food & Staples Retailing 8,333,164 13,368,712
Siliconware Precision Industries ..
Co. Ltd. ..............................Semiconductors & Semiconductor Equipment 13,080,000 10,779,994
Sunplus Technology Co. Ltd. .............Semiconductors & Semiconductor Equipment 16,762,010 23,516,378
Synnex Technology International Corp. ... Electronic Equipment & Instruments 2,599,400 3,834,912
Taiwan Cellular Corp. ................... Wireless Telecommunication Services 46,924,106 52,400,307
Taiwan Semiconductor Manufacturing Co. ..Semiconductors & Semiconductor Equipment 20,038,000 31,831,362
UNI-President Enterprises Corp. ......... Food Products 49,176,790 25,678,978
Yuanta Core Pacific Securities Co. ...... Capital Markets 16,483,486 12,496,131
---------------
354,583,033
---------------
THAILAND 1.1%
BEC World Public Co. Ltd., fgn. ......... Media 9,964,100 4,024,190
a Kasikornbank Public Co. Ltd., fgn. ...... Commercial Banks 4,750,100 6,842,764
Land and House Public Co. Ltd., fgn. .... Real Estate 8,062,900 2,343,746
Shin Corp. Public Co. Ltd., fgn. ........ Wireless Telecommunication Services 2,076,100 2,122,883
Siam Cement Public Co. Ltd., fgn. ....... Construction Materials 402,800 2,859,824
Thai Airways International
Public Co. Ltd., fgn. ................. Airlines 445,600 555,940
a Thai Military Bank Public Co. Ltd., fgn. Commercial Banks 118,390,400 11,451,045
a True Corp., PLC, rts., 3/28/08 ......... Diversified Telecommunication Services 2,258,595 --
---------------
30,200,392
---------------
TURKEY 3.2%
a Arcelik AS, Br. ......................... Household Durables 4,585,921,500 28,056,250
Migros Turk T.A.S. ...................... Food & Staples Retailing 3,184,512,500 26,449,047
Tupras-Turkiye Petrol Rafineleri AS ..... Oil & Gas 2,026,540,000 20,588,504
a Turk Hava Yollari Anonim
Ortakligi (THY), 144A ................. Airlines 657,605,000 3,876,870
Turkiye Is Bankasi AS, C ................ Commercial Banks 2,161,722,000 11,942,773
---------------
90,913,444
---------------
UNITED KINGDOM 1.7%
HSBC Holdings PLC ....................... Commercial Banks 2,010,904 34,408,480
Provident Financial PLC ................. Consumer Finance 1,005,420 12,968,679
---------------
47,377,159
---------------
TOTAL COMMON STOCKS
(COST $1,830,266,663) ................. 2,626,572,058
---------------
22 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2004 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/WARRANTS/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECT EQUITY INVESTMENTS .3%
HONG KONG .2%
a,b,c,d Mayfair Hanoi Ltd., 30% equity owned
through HEA Holdings Ltd., a wholly
owned investment .................... Real Estate $ 4,380,000
---------------
SINGAPORE .1%
a,b,c,d Indotel Ltd. ......................... Hotels Restaurants & Leisure 900,000 5,156,000
---------------
TOTAL DIRECT EQUITY INVESTMENTS
(COST $13,602,155) ................. 9,536,000
---------------
PREFERRED STOCKS 5.4%
BRAZIL 5.4%
Banco Bradesco SA, ADR, pfd. ......... Commercial Banks 1,960,313 49,125,431
Cia de Bebidas das
Americas (Ambev), ADR, pfd. ........ Beverages 1,995,400 56,529,682
Cia Vale do Rio Doce, A, ADR, pfd. ... Metals & Mining 508,950 12,408,201
Petroleo Brasileiro SA, ADR, pfd. .... Oil & Gas 632,428 22,900,218
Suzano Bahia Sul Papel e Cel, pfd., A Paper & Forest Products 816,960 4,223,216
Usinas Siderurgicas
de Minas Gerais SA, pfd. ........... Metals & Mining 308,410 6,264,578
---------------
151,451,326
---------------
TOTAL PREFERRED STOCKS
(COST $109,517,159) ................ 151,451,326
---------------
--------------------
PRINCIPAL AMOUNT
--------------------
SHORT TERM INVESTMENTS (COST $19,661,576) .7%
e U.S. Treasury Bills, 1/06/05 - 3/31/05 $19,730,000 19,666,031
---------------
TOTAL INVESTMENTS
(COST $1,973,047,553) 100.1% 2,807,225,415
OTHER ASSETS, LESS LIABILITIES (0.1)% (2,172,232)
---------------
NET ASSETS 100.0% .................... $2,805,053,183
---------------
<FN>
a Non-income producing.
b See Note 9 regarding other considerations.
c See Note 8 regarding holdings of 5% voting securities.
d See Note 7 regarding restricted securities.
e Security is traded on a discount basis with no stated coupon rate.
</FN>
Annual Report | See notes to financial statements. | 23
Templeton Developing Markets Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2004
Assets:
Investments in securities:
Cost - Unaffiliated issuers.......................................................... $1,959,445,398
Cost - Non-controlled affiliated issuers............................................. 13,602,155
---------------
Total cost of investments ........................................................... 1,973,047,553
---------------
Value - Unaffiliated issuers ........................................................ 2,797,689,415
Value - Non-controlled affiliated issuers............................................ 9,536,000
---------------
Total value of investments .......................................................... 2,807,225,415
Cash.................................................................................. 2,137
Foreign currency, at value (cost $1,088,135).......................................... 1,069,348
Receivables:
Investment securities sold........................................................... 389,376
Capital shares sold.................................................................. 6,156,675
Dividends and interest............................................................... 3,444,560
Foreign income tax receivable ....................................................... 1,207,703
---------------
Total assets..................................................................... 2,819,495,214
---------------
Liabilities:
Payables:
Investment securities purchased...................................................... 1,767,691
Capital shares redeemed.............................................................. 6,679,649
Affiliates........................................................................... 4,365,654
Deferred tax ......................................................................... 1,206,107
Other liabilities..................................................................... 422,930
---------------
Total liabilities................................................................ 14,442,031
---------------
Net assets, at value........................................................... $2,805,053,183
---------------
Net assets consist of:
Distributions in excess of net investment income ..................................... $ (21,890,502)
Net unrealized appreciation (depreciation)............................................ 833,109,886
Accumulated net realized gain (loss).................................................. (714,517,324)
Capital shares........................................................................ 2,708,351,123
---------------
Net assets, at value........................................................... $2,805,053,183
---------------
24 | See notes to financial statements. | Annual Report
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 2004
CLASS A:
Net assets, at value................................................................. $ 2,305,375,634
----------------
Shares outstanding................................................................... 124,415,626
----------------
Net asset value per share a.......................................................... $18.53
----------------
Maximum offering price per share (net asset value per share / 94.25%)............... $19.66
----------------
CLASS B:
Net assets, at value................................................................. $ 36,992,200
----------------
Shares outstanding................................................................... 2,028,278
----------------
Net asset value and maximum offering price per share a............................... $18.24
----------------
CLASS C:
Net assets, at value................................................................. $ 258,364,536
----------------
Shares outstanding................................................................... 14,177,471
----------------
Net asset value and maximum offering price per share a............................... $18.22
----------------
CLASS R:
Net assets, at value................................................................. $ 5,220,307
----------------
Shares outstanding................................................................... 283,806
----------------
Net asset value and maximum offering price per share a............................... $18.39
----------------
ADVISOR CLASS:
Net assets, at value................................................................. $ 199,100,506
----------------
Shares outstanding................................................................... 10,758,986
----------------
Net asset value and maximum offering price per share a............................... $18.51
----------------
<FN>
a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.
</FN>
Annual Report | See notes to financial statements. | 25
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended December 31, 2004
Investment income:
Dividends (net of foreign taxes of $8,223,584)..................................... $ 75,655,174
Interest (net of foreign taxes of $596)............................................ 718,326
-------------
Total investment income....................................................... 76,373,500
-------------
Expenses:
Management fees (Note 3)........................................................... 29,858,273
Administrative fees (Note 3)....................................................... 2,393,893
Distribution fees (Note 3)
Class A........................................................................... 6,983,651
Class B........................................................................... 294,014
Class C........................................................................... 2,234,220
Class R........................................................................... 15,475
Transfer agent fees (Note 3)....................................................... 5,252,500
Custodian fees (Note 4)............................................................ 2,523,430
Reports to shareholders............................................................ 158,400
Registration and filing fees....................................................... 121,538
Professional fees.................................................................. 188,400
Trustees' fees and expenses........................................................ 135,400
Other.............................................................................. 64,700
-------------
Total expenses................................................................ 50,223,894
Expense reductions (Note 4)................................................... (4,838)
-------------
Net expenses................................................................ 50,219,056
-------------
Net investment income..................................................... 26,154,444
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments (net of foreign taxes of $7,953,334).................................. 253,348,821
Foreign currency transactions..................................................... (2,344,383)
-------------
Net realized gain (loss)...................................................... 251,004,438
Net change in unrealized appreciation (depreciation) on:
Investments....................................................................... 267,109,592
Translation of assets and liabilities denominated in foreign currencies........... 137,452
Deferred taxes ................................................................... 8,634,195
-------------
Net change in unrealized appreciation (depreciation).......................... 275,881,239
-------------
Net realized and unrealized gain (loss)............................................. 526,885,677
-------------
Net increase (decrease) in net assets resulting from operations..................... $553,040,121
-------------
26 | See notes to financial statements. | Annual Report
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended December 31, 2004 and 2003
------------------------------------
2004 2003
------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income .......................................................... $ 26,154,444 $ 31,038,638
Net realized gain (loss) from investments and foreign currency transactions .... 251,004,438 132,586,989
Net change in unrealized appreciation (depreciation) on investments, translation of
assets and liabilities denominated in foreign currencies, and deferred taxes .. 275,881,239 614,215,910
------------------------------------
Net increase (decrease) in net assets resulting from operations ............ 553,040,121 777,841,537
Distributions to shareholders from:
Net investment income:
Class A .................................................................... (33,108,845) (30,016,350)
Class B .................................................................... (315,700) (211,579)
Class C .................................................................... (2,240,910) (1,517,457)
Class R .................................................................... (52,130) (20,109)
Advisor Class .............................................................. (3,739,371) (4,258,934)
------------------------------------
Total distributions to shareholders ............................................. (39,456,956) (36,024,429)
Capital share transactions (Note 2):
Class A .................................................................... 15,356,458 101,510,926
Class B .................................................................... 4,313,113 6,380,974
Class C .................................................................... 994,363 14,799,977
Class R .................................................................... 2,717,669 946,068
Advisor Class .............................................................. (45,241,326) 8,377,033
------------------------------------
Total capital share transactions ................................................ (21,859,723) 132,014,978
Redemption fees ................................................................. 61,365 70,141
------------------------------------
Net increase (decrease) in net assets ...................................... 491,784,807 873,902,227
Net assets:
Beginning of year ............................................................... 2,313,268,376 1,439,366,149
------------------------------------
End of year ..................................................................... $ 2,805,053,183 $2,313,268,376
------------------------------------
Distributions in excess of net investment income included in net assets:
End of year ..................................................................... $ (21,890,502) $ (3,198,042)
------------------------------------
Annual Report | See notes to financial statements. | 27
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Developing Markets Trust (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term capital appreciation by investing, under normal market
conditions, at least 80% of its total assets in equity securities of developing
market issuers. The following summarizes the Fund's significant accounting
policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System, are valued at the last quoted sale price or the official closing price
of the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market.
U.S. Government securities, generally trade in the over-the-counter market
rather than on a securities exchange. The Trust may utilize independent pricing
services, quotations from bond dealers, and information with respect to bond and
note transactions, to assist in determining a current market value for each
security. The Trust's pricing services may use valuation models or matrix
pricing which considers information with respect to comparable bond and note
transactions, quotations from bond dealers, or by reference to other securities
that are considered comparable in such characteristics as rating, interest rate
and maturity date, option adjusted spread models, prepayment projections,
interest rate spreads and yield curves, to determine current value.
Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. The value is then converted into its U.S. dollar equivalent at the
foreign exchange rate in effect at the close of the NYSE on the day that the
value of the foreign security is determined. If no sale is reported at that
time, the foreign security will be valued within the range of the most recent
quoted bid and ask prices.
The Trust has procedures to determine the fair value of individual securities
and other assets for which market prices are not readily available or which may
not be reliably priced. Some methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Occasionally, events occur between the
time at which trading in a security is completed and the close of the NYSE that
might call into question the availability (including the reliability) of the
value of a portfolio security held by the Fund. If such an event occurs, the
securities may be valued using fair value procedures, which may include the use
of independent pricing services. All security valuation procedures are approved
by the Trust's Board of Trustees.
28 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Trust's Board of Trustees.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
C. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts.
D. INCOME AND DEFERRED TAXES
No provision has been made for U.S. income taxes because the Fund's policy is to
qualify as a regulated investment company under Sub Chapter M of the Internal
Revenue Code and to distribute substantially all of its taxable income. Fund
distributions to shareholders are determined on an income tax basis and may
differ from net investment income and realized gains for financial reporting
purposes.
Annual Report | 29
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME AND DEFERRED TAXES (CONTINUED)
The Fund is subject to a tax imposed on net realized gains of securities of
certain foreign countries. When the Fund invests in these securities, the Fund
records an estimated deferred tax liability for net unrealized gains.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
G. REDEMPTION FEES
Redemptions and exchanges of Fund shares held five trading days or less (30 days
or less prior to June 1, 2004 and 90 days or less prior to January 1, 2004) may
be subject to the Fund's redemption fee, which is 2% of the amount redeemed.
Such fees are retained by the Fund and accounted for as additional paid in
capital as noted in the Statements of Changes in Net Assets.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified by the Fund against certain liability arising out of the performance
of their duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.
30 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
The Fund offers five classes of shares: Class A, Class B, Class C, Class R and
Advisor Class. Effective March 1, 2005, Class B shares will no longer be offered
except to existing Class B shareholders through reinvested distributions or
exchanges into other Franklin Templeton funds' Class B shares, as permitted by
the applicable fund prospectus. Each class of shares differs by its initial
sales load, contingent deferred sales charges, distribution fees, voting rights
on matters affecting a single class and its exchange privilege.
At December 31, 2004, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
2004 2003
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
CLASS A SHARES:
Shares sold .................. 54,386,792 $ 864,979,010 159,452,859 $ 1,836,033,832
Shares issued in reinvestment
of distributions ............. 1,727,121 28,781,307 2,268,784 26,723,452
Shares redeemed .............. (56,970,066) (878,403,859) (153,338,794) (1,761,246,358)
-------------------------------------------------------------------
Net increase (decrease) ...... (856,153) $ 15,356,458 8,382,849 $ 101,510,926
-------------------------------------------------------------------
CLASS B SHARES:
Shares sold .................. 618,760 $ 9,770,977 696,226 $ 8,515,051
Shares issued in reinvestment
of distributions ............. 18,114 291,562 16,201 196,754
Shares redeemed .............. (376,813) (5,749,426) (204,709) (2,330,831)
-------------------------------------------------------------------
Net increase (decrease) ...... 260,061 $ 4,313,113 507,718 $ 6,380,974
-------------------------------------------------------------------
CLASS C SHARES:
Shares sold .................. 2,969,639 $ 46,493,499 3,930,724 $ 46,951,553
Shares issued in reinvestment
of distributions.............. 118,864 1,900,231 110,962 1,323,339
Shares redeemed .............. (3,081,786) (47,399,367) (2,932,454) (33,474,915)
-------------------------------------------------------------------
Net increase (decrease) ...... 6,717 $ 994,363 1,109,232 $ 14,799,977
-------------------------------------------------------------------
CLASS R SHARES:
Shares sold .................. 230,036 $ 3,659,861 131,034 $ 1,512,727
Shares issued in reinvestment
of distributions.............. 3,101 51,961 1,591 19,974
Shares redeemed .............. (62,944) (994,153) (57,204) (586,633)
-------------------------------------------------------------------
Net increase (decrease) ...... 170,193 $ 2,717,669 75,421 $ 946,068
-------------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold .................. 1,555,426 $ 24,799,500 5,375,459 $ 64,110,884
Shares issued in reinvestment
of distributions ............. 140,492 2,357,106 230,577 2,632,513
Shares redeemed .............. (4,577,426) (72,397,932) (4,997,309) (58,366,364)
-------------------------------------------------------------------
Net increase (decrease) ...... (2,881,508) $ (45,241,326) 608,727 $ 8,377,033
-------------------------------------------------------------------
Annual Report | 31
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Fund are also officers or directors of the
following entities:
- ---------------------------------------------------------------------------------------
ENTITY AFFILIATION
- ---------------------------------------------------------------------------------------
Templeton Asset Management Ltd. (TAML) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin/Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin/Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES
The Fund pays an investment management fee to TAML based on the Fund's average
daily net assets as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
1.250% Up to and including $1 billion
1.200% Over $1 billion, up to and including $5 billion
1.150% Over $5 billion, up to and including $10 billion
1.100% Over $10 billion, up to and including $15 billion
1.050% Over $15 billion, up to and including $20 billion
1.000% Over $20 billion
Prior to May 1, 2004, the Fund paid an investment management fee to TAML of
1.25% per year of the average daily net assets of the Fund.
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.150% Up to and including $200 million
0.135% Over $200 million, up to and including $700 million
0.100% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
C. DISTRIBUTION FEES
The Fund reimburses Distributors up to 0.35%, 1.00%, 1.00%, and 0.50% per year
of the average daily net assets of Class A, Class B, Class C, and Class R,
respectively, for costs incurred in marketing the Fund's shares under a Rule
12b-1 plan.
Under the Class A distribution plan, costs exceeding the maximum for the current
plan year may be reimbursed in subsequent periods. At December 31, 2004,
Distributors advised the Fund that unreimbursed costs were $1,870,939.
32 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the year:
Net sales charges received............................ $212,406
Contingent deferred sales charges retained............ $ 93,205
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $5,252,500, of which $3,311,488 was paid to
Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended December 31, 2004, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At December 31, 2004, the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
2007 ............................................. $217,795,285
2008 ............................................. 36,476,765
2009 ............................................. 313,161,808
2010 ............................................. 141,181,639
------------
$708,615,497
------------
At December 31, 2004, the Fund had deferred currency losses occurring subsequent
to October 31, 2004 of $391,998. For tax purposes, such losses will be reflected
in the year ending December 31, 2005.
Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions, passive
foreign investment company shares, and foreign taxes paid on net realized gains.
Net realized losses differ for financial statement and tax purposes primarily
due to differing treatments of wash sales, foreign currency transactions,
passive foreign investment company shares and foreign taxes paid on net realized
gains.
Annual Report | 33
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
At December 31, 2004, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:
Cost of investments ................................... $2,023,862,774
--------------
Unrealized appreciation ............................... $ 800,938,655
Unrealized depreciation ............................... (17,576,014)
--------------
Net unrealized appreciation (depreciation) ............ $ 783,362,641
--------------
Distributable earnings -- undistributed ordinary income. $ 23,667,364
--------------
The tax character of distributions paid during the years ended December 31, 2004
and 2003, was as follows:
---------------------------
2004 2003
---------------------------
Distributions paid from-- ordinary income .. $39,456,956 $36,024,429
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term securities) for the
year ended December 31, 2004 aggregated $1,428,885,202 and $1,388,138,174,
respectively.
7. RESTRICTED SECURITIES
At December 31, 2004, investments in securities included issues that are
restricted and illiquid. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. At December 31, 2004, the Fund
held investments in restricted and illiquid securities that were valued under
approved methods by the Board of Trustees, as follows:
- ----------------------------------------------------------------------------------------------------------------------
ACQUISITION
SHARES ISSUER DATE COST VALUE
- ----------------------------------------------------------------------------------------------------------------------
900,000 Indotel Ltd................................... 11/22/96 $9,154,569 $5,156,000
Mayfair Hanoi, Ltd., 30% equity interest
owned through HEA Holdings Ltd.............. 10/31/96 4,447,586 4,380,000
-----------
TOTAL RESTRICTED SECURITIES (.29% OF NET ASSETS).............. $9,536,000
-----------
34 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" to include
investments in portfolio companies in which a fund owns 5% or more of the
outstanding voting securities. Investments in "affiliated companies" for the
Fund at December 31, 2004 were as shown below.
- --------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES VALUE AT REALIZED
HELD AT BEGINNING GROSS GROSS HELD AT END END OF INVESTMENT CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR YEAR INCOME GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------
Indotel Ltd. ...... 900,000 -- -- 900,000 $5,156,000 $-- $--
Mayfair Hanoi, Ltd.,
30% equity interest
owned through
HEA Holdings Ltd. -- -- -- -- 4,380,000 -- --
------------------------------------
TOTAL AFFILIATED SECURITIES (.29% OF NET ASSETS) ...... $9,536,000 $-- $--
------------------------------------
9. OTHER CONSIDERATIONS
Certain members of the Fund's Portfolio Management team may serve as a member on
the board of directors of certain companies in which the Fund invests and may
represent the Fund in certain corporate negotiations. At December 31, 2004,
these members serve in one or more of these capacities for HEA Holdings Ltd.,
(which owns a 30% equity interest in Mayfair Hanoi, Ltd.), Indotel Ltd., Lukoil
Holdings, and Mayfair Hanoi Ltd. As a result of this involvement, the Portfolio
Manager could receive certain material non-public information which, pursuant to
the Fund's policies and the requirements of the federal securities laws, could
prevent the Fund from trading in the securities of such companies for limited or
extended periods of time.
10. REGULATORY MATTERS
INVESTIGATIONS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), the California Attorney General's Office ("CAGO"), and the
National Association of Securities Dealers, Inc. ("NASD"), relating to certain
practices in the mutual fund industry, including late trading, market timing and
marketing support payments to securities dealers who sell fund shares, Franklin
Resources, Inc. and certain of its subsidiaries (as used in this section,
together, the "Company"), as well as certain current or former executives and
employees of the Company, received subpoenas and/or requests for documents,
information and/or testimony. The Company and its current employees provided
documents and information in response to those requests and subpoenas.
SETTLEMENTS
Beginning in August 2004, the Company entered into settlements with certain
regulators investigating the mutual fund industry practices noted above. The
Company believes that settlement of each of the matters described in this
section is in the best interest of the Company and shareholders of the Franklin,
Templeton, and Mutual Series mutual funds (the "funds").
Annual Report | 35
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REGULATORY MATTERS (CONTINUED)
SETTLEMENTS (CONTINUED)
On August 2, 2004, Franklin Resources, Inc. announced that its subsidiary,
Franklin Advisers, Inc., reached an agreement with the SEC that resolved the
issues resulting from the SEC investigation into market timing activity. In
connection with that agreement, the SEC issued an "Order Instituting
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and
203(k) of the Investment Advisers Act of 1940 and Sections 9(b) and 9(f) of the
Investment Company Act of 1940, Making Findings and Imposing Remedial Sanctions
and a Cease-and-Desist Order" (the "Order"). The SEC's Order concerned the
activities of a limited number of third parties that ended in 2000 and those
that were the subject of the first Massachusetts administrative complaint
described below.
Under the terms of the SEC's Order, pursuant to which Franklin Advisers, Inc.
neither admitted nor denied any of the findings contained therein, Franklin
Advisers, Inc. agreed to pay $50 million, of which $20 million is a civil
penalty, to be distributed to shareholders of certain funds in accordance with a
plan to be developed by an independent distribution consultant. At this time, it
is unclear which funds or which shareholders of any particular fund will receive
distributions. The Order also required Franklin Advisers, Inc. to, among other
things, enhance and periodically review compliance policies and procedures.
On September 20, 2004, Franklin Resources, Inc. announced that two of its
subsidiaries, Franklin Advisers, Inc. and Franklin Templeton Alternative
Strategies, Inc. ("FTAS"), reached an agreement with the Securities Division of
the Office of the Secretary of the Commonwealth of Massachusetts (the "State of
Massachusetts") related to its administrative complaint filed on February 4,
2004, concerning one instance of market timing that was also a subject of the
August 2, 2004 settlement that Franklin Advisers, Inc. reached with the SEC, as
described above.
Under the terms of the settlement consent order issued by the State of
Massachusetts, Franklin Advisers, Inc. and FTAS consented to the entry of a
cease-and-desist order and agreed to pay a $5 million administrative fine to the
State of Massachusetts (the "Massachusetts Consent Order"). The Massachusetts
Consent Order included two different sections: "Statements of Fact" and
"Violations of Massachusetts Securities Laws." Franklin Advisers, Inc. and FTAS
admitted the facts in the Statements of Fact.
On October 25, 2004, the State of Massachusetts filed a second administrative
complaint, alleging that Franklin Resources, Inc.'s Form 8-K filing (in which it
described the Massachusetts Consent Order and stated that "Franklin did not
admit or deny engaging in any wrongdoing") failed to state that Franklin
Advisers, Inc. and FTAS admitted the Statements of Fact portion of the
Massachusetts Consent Order (the "Second Complaint"). Franklin Resources, Inc.
reached a second agreement with the State of Massachusetts on November 19, 2004,
resolving the Second Complaint. As a result of the November 19, 2004 settlement,
Franklin Resources, Inc. filed a new Form 8-K. The terms of the Massachusetts
Consent Order did not change and there was no monetary fine associated with this
second settlement.
36 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REGULATORY MATTERS (CONTINUED)
SETTLEMENTS (CONTINUED)
On November 17, 2004, Franklin Resources, Inc. announced that Franklin/Templeton
Distributors, Inc. ("FTDI") reached an agreement with the CAGO, resolving the
issues resulting from the CAGO's investigation concerning sales and marketing
support payments. Under the terms of the settlement, FTDI neither admitted nor
denied the allegations in the CAGO's complaint and agreed to pay $2 million to
the State of California as a civil penalty, $14 million to the funds, to be
allocated by an independent distribution consultant to be paid for by FTDI, and
$2 million to the CAGO for its investigative costs.
On December 13, 2004, Franklin Resources, Inc. announced that its subsidiaries
FTDI and Franklin Advisers, Inc. reached an agreement with the SEC, resolving
the issues resulting from the SEC's investigation concerning marketing support
payments to securities dealers who sell fund shares. In connection with that
agreement, the SEC issued an "Order Instituting Administrative and
Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions
Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940,
Sections 9(b) and 9(f) of the Investment Company Act of 1940, and Section 15(b)
of the Securities Exchange Act of 1934" (the "Second Order").
Under the terms of the Second Order, in which FTDI and Franklin Advisers, Inc.
neither admitted nor denied the findings contained therein, they agreed to pay
the funds a penalty of $20 million and disgorgement of $1 (one dollar). FTDI and
Franklin Advisers, Inc. also agreed to implement certain measures and
undertakings relating to marketing support payments to broker-dealers for the
promotion or sale of fund shares, including making additional disclosures in the
funds' Prospectuses and Statements of Additional Information. The Second Order
further requires the appointment of an independent distribution consultant, at
the Company's expense, who shall develop a plan for the distribution of the
penalty and disgorgement to the funds.
OTHER LEGAL PROCEEDINGS
The Trust, in addition to the Company and other funds, and certain current and
former officers, employees, and directors have been named in multiple lawsuits
in different federal courts in Nevada, California, Illinois, New York and
Florida, alleging violations of various federal securities laws and seeking,
among other relief, monetary damages, restitution, removal of fund trustees,
directors, advisers, administrators, and distributors, rescission of management
contracts and 12b-1 Plans, and/or attorneys' fees and costs. Specifically, the
lawsuits claim breach of duty with respect to alleged arrangements to permit
market timing and/or late trading activity, or breach of duty with respect to
the valuation of the portfolio securities of certain Templeton funds managed by
Franklin Resources, Inc. subsidiaries, resulting in alleged market timing
activity. The majority of these lawsuits duplicate, in whole or in part, the
allegations asserted in the February 4, 2004 Massachusetts administrative
complaint and the findings in the SEC's August 2, 2004 Order, as described
above. The lawsuits are styled as class actions, or derivative actions on behalf
of either the named funds or Franklin Resources, Inc.
Annual Report | 37
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REGULATORY MATTERS (CONTINUED)
OTHER LEGAL PROCEEDINGS (CONTINUED)
In addition, the Company, as well as certain current and former officers,
employees, and directors, have been named in multiple lawsuits alleging
violations of various securities laws and pendent state law claims relating to
the disclosure of directed brokerage payments and/or payment of allegedly
excessive advisory, commission, and distribution fees, and seeking, among other
relief, monetary damages, restitution, rescission of advisory contracts,
including recovery of all fees paid pursuant to those contracts, an accounting
of all monies paid to the named advisers, declaratory relief, injunctive relief,
and/or attorneys' fees and costs. These lawsuits are styled as class actions or
derivative actions brought on behalf of certain funds.
The Company's management strongly believes that the claims made in each of the
lawsuits identified above are without merit and intends to vigorously defend
against them. The Company cannot predict with certainty, however, the eventual
outcome of the remaining governmental investigations or private lawsuits, nor
whether they will have a material negative impact on the Company. Public trust
and confidence are critical to the Company's business and any material loss of
investor and/or client confidence could result in a significant decline in
assets under management by the Company, which would have an adverse effect on
the Company's future financial results. If the Company finds that it bears
responsibility for any unlawful or inappropriate conduct that caused losses to
the Trust, it is committed to making the Trust or their shareholders whole, as
appropriate. The Company is committed to taking all appropriate actions to
protect the interests of its funds' shareholders.
38 | Annual Report
Templeton Developing Markets Trust
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON DEVELOPING MARKETS TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Developing Markets
Trust (the "Fund") at December 31, 2004, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2004 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 9, 2005
Annual Report | 39
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED)
Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund hereby
designates up to a maximum of $33,405,881 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
December 31, 2004. In January 2005, shareholders will receive Form 1099-DIV
which will include their share of qualified dividends distributed during the
calendar year 2004. Shareholders are advised to check with their tax advisors
for information on the treatment of these amounts on their individual income tax
returns.
At December 31, 2004, more than 50% of the Templeton Developing Markets Trust's
total assets were invested in securities of foreign issuers. In most instances,
foreign taxes were withheld from dividends paid to the Fund on these
investments. As shown in the tables below, the Fund hereby designates to
shareholders the foreign source income and foreign taxes paid, pursuant to
Section 853 of the Code. This designation will allow shareholders of record on
December 09, 2004, to treat their proportionate share of foreign taxes paid by
the Fund as having been paid directly by them. The shareholder shall consider
these amounts as foreign taxes paid in the tax year in which they receive the
Fund distribution.
The following tables provide a detailed analysis, by country, of foreign tax
paid, foreign source income, foreign qualified dividends, and adjusted foreign
source income as designated by the Fund, to Class A, Class B, Class C, Class R
and Advisor Class shareholders of record. As a service to individual
shareholders filing Form 1116, "Adjusted Foreign Source Income per Share" in
column 4 below reports foreign source income with the required adjustments to
foreign source qualified dividends. This information is provided to simplify
your reporting of foreign source income for line 1 of Form 1116.
40 | Annual Report
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS A
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Austria ................................... 0.0012 0.0035 0.0035 0.0015
Belgium ................................... 0.0004 0.0011 0.0011 0.0005
Brazil .................................... 0.0034 0.0224 0.0012 0.0217
China ..................................... 0.0000 0.0080 0.0045 0.0054
Croatia ................................... 0.0000 0.0019 0.0000 0.0019
Czech Republic ............................ 0.0008 0.0021 0.0021 0.0009
Egypt ..................................... 0.0000 0.0010 0.0010 0.0004
Greece .................................... 0.0000 0.0032 0.0032 0.0014
Hong Kong ................................. 0.0000 0.0236 0.0000 0.0236
Hungary ................................... 0.0020 0.0058 0.0058 0.0025
India ..................................... 0.0529 0.0096 0.0096 0.0041
Indonesia ................................. 0.0002 0.0006 0.0006 0.0003
Luxembourg ................................ 0.0000 0.0014 0.0014 0.0006
Malaysia .................................. 0.0023 0.0035 0.0000 0.0035
Mexico .................................... 0.0000 0.0136 0.0132 0.0061
Philippines ............................... 0.0009 0.0015 0.0015 0.0006
Poland .................................... 0.0008 0.0022 0.0022 0.0009
Russia .................................... 0.0007 0.0020 0.0020 0.0009
Singapore ................................. 0.0075 0.0314 0.0000 0.0314
South Africa .............................. 0.0021 0.0257 0.0097 0.0202
South Korea ............................... 0.0100 0.0250 0.0250 0.0107
Spain ..................................... 0.0004 0.0010 0.0010 0.0004
Taiwan .................................... 0.0216 0.0392 0.0000 0.0392
Thailand .................................. 0.0002 0.0034 0.0034 0.0015
Turkey .................................... 0.0001 0.0005 0.0005 0.0002
United Kingdom ............................ 0.0001 0.0004 0.0004 0.0002
----------------------------------------------------------
TOTAL ..................................... $0.1076 $0.2336 $0.0929 $0.1806
----------------------------------------------------------
Annual Report | 41
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS B
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Austria ................................... 0.0012 0.0022 0.0022 0.0009
Belgium ................................... 0.0004 0.0007 0.0007 0.0003
Brazil .................................... 0.0034 0.0139 0.0007 0.0135
China ..................................... 0.0000 0.0050 0.0028 0.0034
Croatia ................................... 0.0000 0.0012 0.0000 0.0012
Czech Republic ............................ 0.0008 0.0013 0.0013 0.0006
Egypt ..................................... 0.0000 0.0006 0.0006 0.0003
Greece .................................... 0.0000 0.0020 0.0020 0.0009
Hong Kong ................................. 0.0000 0.0146 0.0000 0.0146
Hungary ................................... 0.0020 0.0036 0.0036 0.0015
India ..................................... 0.0529 0.0059 0.0059 0.0025
Indonesia ................................. 0.0002 0.0004 0.0004 0.0002
Luxembourg ................................ 0.0000 0.0009 0.0009 0.0004
Malaysia .................................. 0.0023 0.0022 0.0000 0.0022
Mexico .................................... 0.0000 0.0085 0.0083 0.0038
Philippines ............................... 0.0009 0.0009 0.0009 0.0004
Poland .................................... 0.0008 0.0014 0.0014 0.0006
Russia .................................... 0.0007 0.0012 0.0012 0.0005
Singapore ................................. 0.0075 0.0195 0.0000 0.0195
South Africa .............................. 0.0021 0.0159 0.0060 0.0125
South Korea ............................... 0.0100 0.0155 0.0155 0.0066
Spain ..................................... 0.0004 0.0006 0.0006 0.0003
Taiwan .................................... 0.0216 0.0241 0.0000 0.0241
Thailand .................................. 0.0002 0.0021 0.0021 0.0009
Turkey .................................... 0.0001 0.0003 0.0003 0.0001
United Kingdom ............................ 0.0001 0.0002 0.0002 0.0001
----------------------------------------------------------
TOTAL ..................................... $0.1076 $0.1447 $0.0576 $0.1119
----------------------------------------------------------
42 | Annual Report
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS C
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Austria ................................... 0.0012 0.0020 0.0020 0.0009
Belgium ................................... 0.0004 0.0006 0.0006 0.0003
Brazil .................................... 0.0034 0.0128 0.0007 0.0124
China ..................................... 0.0000 0.0046 0.0026 0.0031
Croatia ................................... 0.0000 0.0011 0.0000 0.0011
Czech Republic ............................ 0.0008 0.0012 0.0012 0.0005
Egypt ..................................... 0.0000 0.0006 0.0006 0.0003
Greece .................................... 0.0000 0.0018 0.0018 0.0008
Hong Kong ................................. 0.0000 0.0134 0.0000 0.0134
Hungary ................................... 0.0020 0.0033 0.0033 0.0014
India ..................................... 0.0529 0.0055 0.0055 0.0024
Indonesia ................................. 0.0002 0.0003 0.0003 0.0001
Luxembourg ................................ 0.0000 0.0008 0.0008 0.0003
Malaysia .................................. 0.0023 0.0020 0.0000 0.0020
Mexico .................................... 0.0000 0.0078 0.0076 0.0035
Philippines ............................... 0.0009 0.0008 0.0008 0.0003
Poland .................................... 0.0008 0.0013 0.0013 0.0006
Russia .................................... 0.0007 0.0011 0.0011 0.0005
Singapore ................................. 0.0075 0.0179 0.0000 0.0179
South Africa .............................. 0.0021 0.0146 0.0055 0.0115
South Korea ............................... 0.0100 0.0143 0.0143 0.0061
Spain ..................................... 0.0004 0.0006 0.0006 0.0003
Taiwan .................................... 0.0216 0.0223 0.0000 0.0223
Thailand .................................. 0.0002 0.0019 0.0019 0.0008
Turkey .................................... 0.0001 0.0003 0.0003 0.0001
United Kingdom ............................ 0.0001 0.0002 0.0002 0.0001
----------------------------------------------------------
TOTAL ..................................... $0.1076 $0.1331 $0.0530 $0.1030
----------------------------------------------------------
Annual Report | 43
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS R
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Austria ................................... 0.0012 0.0035 0.0035 0.0015
Belgium ................................... 0.0004 0.0011 0.0011 0.0005
Brazil .................................... 0.0034 0.0223 0.0012 0.0216
China ..................................... 0.0000 0.0080 0.0045 0.0054
Croatia ................................... 0.0000 0.0019 0.0000 0.0019
Czech Republic ............................ 0.0008 0.0021 0.0021 0.0009
Egypt ..................................... 0.0000 0.0010 0.0010 0.0004
Greece .................................... 0.0000 0.0032 0.0032 0.0014
Hong Kong ................................. 0.0000 0.0235 0.0000 0.0235
Hungary ................................... 0.0020 0.0058 0.0058 0.0025
India ..................................... 0.0529 0.0096 0.0096 0.0041
Indonesia ................................. 0.0002 0.0006 0.0006 0.0003
Luxembourg ................................ 0.0000 0.0014 0.0014 0.0006
Malaysia .................................. 0.0023 0.0035 0.0000 0.0035
Mexico .................................... 0.0000 0.0136 0.0132 0.0061
Philippines ............................... 0.0009 0.0015 0.0015 0.0006
Poland .................................... 0.0008 0.0022 0.0022 0.0009
Russia .................................... 0.0007 0.0020 0.0020 0.0009
Singapore ................................. 0.0075 0.0313 0.0000 0.0313
South Africa .............................. 0.0021 0.0256 0.0097 0.0201
South Korea ............................... 0.0100 0.0249 0.0249 0.0107
Spain ..................................... 0.0004 0.0010 0.0010 0.0004
Taiwan .................................... 0.0216 0.0389 0.0000 0.0389
Thailand .................................. 0.0002 0.0034 0.0034 0.0015
Turkey .................................... 0.0001 0.0005 0.0005 0.0002
United Kingdom ............................ 0.0001 0.0004 0.0004 0.0002
-----------------------------------------------------------
TOTAL ..................................... $0.1076 $0.2328 $0.0928 $0.1799
-----------------------------------------------------------
44 | Annual Report
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
ADVISOR CLASS
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Austria ................................... 0.0012 0.0043 0.0043 0.0018
Belgium ................................... 0.0004 0.0014 0.0014 0.0006
Brazil .................................... 0.0034 0.0278 0.0015 0.0269
China ..................................... 0.0000 0.0099 0.0056 0.0067
Croatia ................................... 0.0000 0.0024 0.0000 0.0024
Czech Republic ............................ 0.0008 0.0026 0.0026 0.0011
Egypt ..................................... 0.0000 0.0013 0.0013 0.0006
Greece .................................... 0.0000 0.0040 0.0040 0.0017
Hong Kong ................................. 0.0000 0.0293 0.0000 0.0293
Hungary ................................... 0.0020 0.0072 0.0072 0.0031
India ..................................... 0.0529 0.0119 0.0119 0.0051
Indonesia ................................. 0.0002 0.0007 0.0007 0.0003
Luxembourg ................................ 0.0000 0.0018 0.0018 0.0008
Malaysia .................................. 0.0023 0.0044 0.0001 0.0043
Mexico .................................... 0.0000 0.0169 0.0164 0.0075
Philippines ............................... 0.0009 0.0018 0.0018 0.0008
Poland .................................... 0.0008 0.0027 0.0027 0.0012
Russia .................................... 0.0007 0.0024 0.0024 0.0010
Singapore ................................. 0.0075 0.0390 0.0000 0.0390
South Africa .............................. 0.0021 0.0319 0.0120 0.0250
South Korea ............................... 0.0100 0.0311 0.0311 0.0133
Spain ..................................... 0.0004 0.0013 0.0013 0.0006
Taiwan .................................... 0.0216 0.0486 0.0000 0.0486
Thailand .................................. 0.0002 0.0042 0.0042 0.0018
Turkey .................................... 0.0001 0.0006 0.0006 0.0003
United Kingdom ............................ 0.0001 0.0004 0.0004 0.0002
----------------------------------------------------------
TOTAL ..................................... $0.1076 $0.2899 $0.1153 $0.2240
----------------------------------------------------------
Foreign Tax Paid per Share (Column 1) is the amount per share available to you,
as a tax credit or deduction (assuming you held your shares in the Fund for a
minimum of 16 days during the 30-day period beginning 15 days before the
ex-dividend date of the Fund's distribution to which the foreign taxes relate).
Foreign Source Income per Share (Column 2) is the amount per share of income
dividends paid to you that is attributable to foreign securities held by the
Fund, plus any foreign taxes withheld on these dividends. The amounts reported
include foreign source qualified dividends without adjustment for the lower U.S.
tax rates. Generally, this is the foreign source income to be reported by
certain trusts and corporate shareholders.
Annual Report | 45
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
Foreign Qualified Dividends per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund. If you are an individual shareholder who
does not meet the qualified dividend holding period requirements, you may find
this information helpful to calculate the foreign source income adjustment
needed to complete line 1 of Form 1116.
Adjusted Foreign Source Income per Share (Column 4) is the adjusted amount per
share of foreign source income the Fund paid to you. These amounts reflect the
Foreign Source Income reported in column 2 adjusted for the tax rate
differential on foreign source qualified dividends that may be required for
certain individual shareholders pursuant to Internal Revenue Code 904(b)(2)(B).
If you are an individual shareholder who meets the qualified dividend holding
period requirements, generally, these Adjusted Foreign Source Income amounts may
be reported directly on line 1 of Form 1116 without additional adjustment.
In January 2005, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2004. The Foreign Source Income reported on Form 1099-DIV has been
reduced to take into account the tax rate differential on foreign source
qualified dividend income pursuant to Internal Revenue Code 904(b)(2)(B).
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their 2004 individual income tax returns.
46 | Annual Report
Board Members and Officers
The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Trust, principal occupations during the
past five years and number of U.S. registered portfolios overseen in the
Franklin Templeton Investments fund complex are shown below. Each board member
will serve until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (72) Trustee Since 1992 142 Director, Bar-S Foods (meat
500 East Broward Blvd. packing company).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and
President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- -----------------------------------------------------------------------------------------------------------------------------------
FRANK J. CROTHERS (60) Trustee Since 1991 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holding Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Limited; Director, Provo Power
Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment &
Power Ltd. (1977-2003).
- -----------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (72) Trustee Since 1992 143 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant (2003)).
- -----------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (52) Trustee Since 1996 98 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas); H.J.
Fort Lauderdale, FL 33394-3091 Heinz Company (processed foods
and allied products); RTI
International Metals, Inc.
(manufacture and distribution
of titanium); Canadian
National Railway (railroad);
and White Mountains Insurance
Group, Ltd. (holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and
Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to
the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Report | 47
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (76) Trustee Since 1993 142 Director, Martek Biosciences
500 East Broward Blvd. Corporation; MedImmune, Inc.
Suite 2100 (biotechnology); and
Fort Lauderdale, FL 33394-3091 Overstock.com (Internet
services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently
known as MCI WorldCom, Inc.
and WorldCom, Inc.)
(communications services)
(1988-2002), White Mountains
Insurance Group Ltd. (holding
company) (1987-2004) and
Spacehab, Inc. (aerospace
services) (1994-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company)
(2001-2004); Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group (investment
banking) (1987-1992); and President, National Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------
FRED R. MILLSAPS (75) Trustee Since 1992 28 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various business and nonprofit organizations; manager of personal investments (1978-present); and FORMERLY,
Chairman and Chief Executive Officer, Landmark Banking Corporation (1969-1978); Financial Vice President, Florida Power and
Light (1965-1969); and Vice President, Federal Reserve Bank of Atlanta (1958-1965).
- -----------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (72) Trustee Since 2003 21 Director, White Mountains
500 East Broward Blvd. Insurance Group Ltd. (holding
Suite 2100 company); Amerada Hess
Fort Lauderdale, FL 33394-3091 Corporation (exploration and
refining of oil and gas); and
Sentient Jet (private jet
service); and FORMERLY,
Director, Becton Dickinson and
Co. (medical technology),
Cooper Industries (electrical
products and tools and
hardware), Health Net
(formerly, Foundation Health),
The Hertz Corporation, Pacific
Southwest Airlines, The RCA
Corporation, Unicom (formerly,
Commonwealth Edison) and UAL
Corporation (airlines).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive
Officer (1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- -----------------------------------------------------------------------------------------------------------------------------------
48 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTANTINE D. TSERETOPOULOS (50) Trustee Since 1991 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and FORMERLY, Cardiology Fellow,
University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985).
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
**NICHOLAS F. BRADY (74) Trustee Since 1993 18 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas);
Fort Lauderdale, FL 33394-3091 Total Logistics, Inc.
(formerly C2, Inc.) (operating
and investment business); and
Weatherford International, Ltd
(oilfield products and
servicing) (2004-present); and
FORMERLY, Director, H.J. Heinz
Company (processed foods and
allied products) (1987-1988;
1993-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Darby Overseas Investments, Ltd., Darby Technology Ventures Group, LLC (investment firms) and Franklin Templeton
Investment Funds (1994-present); Director, Templeton Capital Advisors Ltd.; and FORMERLY, Chairman, Darby Emerging Markets
Investments LDC (until 2004) and Templeton Emerging Markets Investment Trust PLC (until 2003); Secretary of the United
States Department of the Treasury (1988-1993); Chairman of the Board, Dillon, Read & Co., Inc. (investment banking) (until
1988); and U.S. Senator, New Jersey (April 1982-December 1982).
- ------------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (71) Trustee, Trustee and 142 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board and Board since
Vice President 1995 and Vice
President since
1992
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin
Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as
the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in
Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 49
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (59) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory
Services, Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (52) Chief Since July 2004 Not Applicable Not Applicable
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Director, Global Compliance, Franklin
Resources, Inc.; and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
JEFFREY A. EVERETT (40) Vice President Since 2001 Not Applicable Not Applicable
PO Box N-7759
Lyford Cay, Nassau, Bahamas
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Templeton Global Advisors Limited; officer of 15 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Investment Officer, First Pennsylvania Investment Research (until 1989).
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (44) Vice President Since 1991 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer,
Franklin Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.;
Executive Vice President and Chief Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin
Advisers, Inc.; Executive Vice President, Franklin Investment Advisory Services, Inc. and Franklin Templeton Investor
Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC; Chairman, Franklin Templeton Services, LLC; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of
49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (57) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
50 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (57) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief
Executive Officer and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ------------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (57) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President,
Templeton Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory
Services, Inc., Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor
Services, LLC, Franklin Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC,
and Templeton/Franklin Investment Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc.
and of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of
Investment Management, Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel
and Attorney Fellow, U.S. Securities and Exchange Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and
Judicial Clerk, U.S. District Court (District of Massachusetts) (until 1979).
- ------------------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (64) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (64) Vice President Since 1994 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Templeton Worldwide, Inc.; Assistant Vice President, Franklin Templeton Distributors, Inc.; Senior Vice
President, Franklin Templeton Services, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and
of 35 of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice President and Controller, Keystone
Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (67) Vice President- Since 2002 Not Applicable Not Applicable
600 Fifth Avenue AML
Rockefeller Center Compliance
New York, NY 10020-2302
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, FTI Banque, Arch
Chemicals, Inc. and Lingnan Foundation; and officer and/or director, as the case may be, of some of the other subsidiaries
of Franklin Resources, Inc. and of 48 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 51
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
MARK MOBIUS (68) President and President since Not Applicable Not Applicable
17th Floor, Chief 1991 and Chief
The Chater House Executive Executive Officer -
8 Connaught Road Officer - Investment
Central Hong Kong Investment Management
Management since 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Portfolio Manager of various Templeton advisory affiliates; Managing Director, Templeton Asset Management Ltd.; Executive
Vice President and Director, Templeton Global Advisors Limited; and officer and/or director, as the case may be, of some of
the subsidiaries of Franklin Resources, Inc. and of six of the investment companies in Franklin Templeton Investments; and
FORMERLY, President, International Investment Trust Company Limited (investment manager of Taiwan R.O.C. Fund) (1986-1987);
and Director, Vickers da Costa, Hong Kong (1983-1986).
- ------------------------------------------------------------------------------------------------------------------------------------
ROBERT C. ROSSELOT (44) Secretary Since December Not Applicable Not Applicable
500 East Broward Blvd. 2004
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel and Assistant Secretary, Franklin Resources, Inc.; Vice President and Assistant Secretary,
Templeton Investment Counsel, LLC and Fiduciary Trust International of the South; officer of 15 of the investment companies
in Franklin Templeton Investments; and FORMERLY, Assistant General Counsel, The Prudential Insurance Company of America
(1997-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
GREGORY R. SEWARD (48) Treasurer Since October Not Applicable Not Applicable
500 East Broward Blvd. 2004
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 15 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (67) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some
of the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000);
and Director, Templeton Asset Management Ltd. (until 1999).
- ------------------------------------------------------------------------------------------------------------------------------------
52 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (53) Chief Financial Since May 2004 Not Applicable Not Applicable
500 East Broward Blvd. Officer and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Senior Vice President, Franklin Templeton
Services, LLC; and FORMERLY, Managing Director, RSM McGladrey, Inc.; and Partner, McGladrey & Pullen, LLP.
- ------------------------------------------------------------------------------------------------------------------------------------
*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.
**Charles B. Johnson is considered to be an interested person of the Fund under
the federal securities laws due to his position as officer and director and
major shareholder of Franklin Resources, Inc. (Resources), which is the parent
company of the Fund's adviser and distributor. Nicholas F. Brady is considered
to be an interested person of the Fund under the federal securities laws due to
his ownership interest in a subsidiary of Resources, as well as his director
positions with such company and certain other related companies.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT
COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL
EXPERT WITHIN THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES
HAS DETERMINED THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT
COMMITTEE AND HAS DESIGNATED EACH OF FRED R. MILLSAPS AND FRANK A. OLSON AS AN
AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. MILLSAPS AND
OLSON QUALIFY AS SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND
AND EXPERIENCE. MR. MILLSAPS, WHO IS CURRENTLY A DIRECTOR OF VARIOUS BUSINESS
AND NONPROFIT ORGANIZATIONS, HAS SERVED AS A MEMBER AND CHAIRMAN OF THE FUND
AUDIT COMMITTEE SINCE 1992 AND WAS FORMERLY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
OF LANDMARK BANKING CORPORATION AND FINANCIAL VICE PRESIDENT OF FLORIDA POWER
AND LIGHT. MR. OLSON, WHO HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2003, CURRENTLY SERVES AS CHAIRMAN EMERITUS OF THE HERTZ CORPORATION AND
WAS FORMERLY CHAIRMAN FROM 1980-2000 AND ITS CHIEF EXECUTIVE OFFICER FROM 1977
TO 1999, IS A DIRECTOR AND AUDIT COMMITTEE MEMBER OF AMERADA HESS CORPORATION
AND WHITE MOUNTAINS INSURANCE GROUP, LTD., AND A FORMER CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF UAL CORPORATION. AS A RESULT OF SUCH BACKGROUND AND
EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. MILLSAPS AND MR. OLSON HAVE
EACH ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MESSRS. MILLSAPS AND OLSON ARE
INDEPENDENT TRUSTEES AS THAT TERM IS DEFINED UNDER THE APPLICABLE U.S.
SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
Annual Report | 53
Templeton Developing Markets Trust
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the Securities and Exchange Commission's
website at sec.gov and reflect the 12-month period beginning July 1, 2003, and
ending June 30, 2004.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.
54 | Annual Report
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Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN[R] (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF
SERVICE, WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR
SERVICE DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR
BEEPING TONE.
FRANKLIN TEMPLETON INVESTMENTS
INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund
GLOBAL
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1
VALUE
Franklin Balance Sheet
Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 2
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund
BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 4
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund
ASSET ALLOCATION
Franklin Templeton Corefolio
Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund 5
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 3
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund 5, 6
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund
TAX-FREE INCOME 7
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 8
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term
Tax-Free Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
New York Intermediate-Term
Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California 9
Colorado
Connecticut
Florida 9
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 8
Michigan 8
Minnesota 8
Missouri
New Jersey
New York 9
North Carolina
Ohio 8
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust 10
1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
2. The fund is only open to existing shareholders and select retirement plans.
3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
4. Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. Formerly Franklin Short-Intermediate U.S. Government Securities Fund.
Effective 9/1/04, the fund's name changed; its investment goal and strategy
remained the same.
7. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
8. Portfolio of insured municipal securities.
9. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
10. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
11/04 Not part of the annual report
[LOGO OMITTED]
FRANKLIN[R] TEMPLETON[R] One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON
DEVELOPING MARKETS TRUST
INVESTMENT MANAGER
Templeton Asset Management Ltd.
PRINCIPAL UNDERWRITER
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors. The Fund and its investors are not
protected from such losses by the Investment Manager. Therefore, investors who
cannot accept this risk should not invest in shares of the Fund. The prospectus
contains this and other information; please read it carefully before investing.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
711 A2004 02/05
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 11(a), the Registrant is attaching as an exhibit a copy of
its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial experts are Fred R. Millsaps and Frank A.
Olson and they are "independent" as defined under the relevant Securities and
Exchange Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $65,327 for the fiscal year ended December 31, 2004 and $81,041 for the
fiscal year ended December 31, 2003.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial statements
were $48,949 for the fiscal year ended December 31, 2004 and $3,134 for the
fiscal year ended December 31, 2003. The services for which these fees were paid
included attestation services.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $970 for the fiscal year ended December 31,
2004 and $0 for the fiscal year ended December 31, 2003. The services for which
these fees were paid included review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $99,030 for the fiscal year ended December
31, 2004 and $12,000 for the fiscal year ended December 31, 2003. The services
for which these fees were paid included review of materials provided to the fund
Board in connection with the investment management contract renewal process and
a review of an ICI transfer agent survey.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the
Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to the
registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were pre-approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $148,949 for the fiscal year ended December 31, 2004 and $15,134
for the fiscal year ended December 31, 2003.
(h) No disclosures are required by this Item 4(h).
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the registrant's Board of Trustees that would require disclosure
herein.
ITEM 10. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes
in the Registrant's internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of their
evaluation in connection with the preparation of this Shareholder Report on Form
N-CSR.
ITEM 11. EXHIBITS.
(A) Code of Ethics
(B)(1) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(B)(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON DEVELOPING MARKETS TRUST
By /s/JIMMY D. GAMBILL
------------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date: February 18, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By /s/JIMMY D. GAMBILL
------------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date: February 18, 2005
By /s/GALEN G. VETTER
----------------------------
Galen G. Vetter
Chief Financial Officer
Date: February 18, 2005