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)
CRAIG S. TYLE, 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: 12/31/05
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ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
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DECEMBER 31, 2005
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ANNUAL REPORT AND SHAREHOLDER LETTER INTERNATIONAL
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WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
TEMPLETON
DEVELOPING MARKETS TRUST Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
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[LOGO](R)
FRANKLIN TEMPLETON
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 offices in over 25 countries,
Templeton offers investors a truly global
perspective.
MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.
TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why our
funds can be used to build truly diversified
allocation plans 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, accurate and personal service
that has 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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[GRAPHIC OMITTED]
Not part of the annual report
CONTENTS
SHAREHOLDER LETTER ........................................................ 1
ANNUAL REPORT
Templeton Developing Markets Trust ........................................ 3
Performance Summary ....................................................... 8
Your Fund's Expenses ...................................................... 13
Financial Highlights and Statement of Investments ......................... 15
Financial Statements ...................................................... 26
Notes to Financial Statements ............................................. 30
Report of Independent Registered Public Accounting Firm ................... 39
Tax Designation ........................................................... 40
Board Members and Officers ................................................ 47
Shareholder Information ................................................... 53
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ANNUAL REPORT
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 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 fiscal year
ended December 31, 2005.
PERFORMANCE OVERVIEW
Templeton Developing Markets Trust - Class A posted a +28.20% cumulative total
return for the 12 months ended December 31, 2005. 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 +34.54% and +35.19% during
the same period.(1) Please note that index performance numbers are purely for
reference and that we do not attempt to track any index, but rather undertake
investments on the basis of fundamental research. You can find the Fund's
long-term performance data in the Performance Summary beginning on page 8.
ECONOMIC AND MARKET OVERVIEW
During the year under review, most Asian economies recorded robust growth,
particularly those of China and India, which attracted new investment. China had
a record year with new equity issuance, while India experienced record foreign
fund inflows in 2005. In Latin America, market sentiment was positive as the
region's risk profile improved, economies' financial positions improved, and
governments reduced interest rates in light of subdued inflation and sustained
economic recovery.
(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 is a
free float-adjusted, market capitalization-weighted index designed to measure
equity performance of global emerging markets. 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 20.
Annual Report | 3
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 12/31/05
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Asia 59.2%
Europe 16.0%
Latin America 13.3%
Middle East & Africa 9.4%
North America 0.4%
Short-Term Investments & Other Net Assets 1.7%
Eastern Europe experienced greater integration with Western Europe, implemented
reforms, and had benign inflation and falling interest rates, which contributed
to a favorable investment environment. Russia's market was one of the strongest
emerging markets performers as the MSCI Russia Index returned +73.77% in
2005.(2) High commodity prices, especially for oil, provided a boost to the
Russian economy. In Turkey, European Union accession talks, robust gross
domestic product growth, implementation of key reforms, and International
Monetary Fund support provided investors with reasons to remain confident.
In this environment, emerging markets had another strong year in 2005, as
measured by the MSCI EM Index. Latin America and Eastern Europe led emerging
markets performance, while emerging Asian markets, although experiencing
double-digit returns, lagged the overall index. Rising U.S. interest rates
seemed to lead investors to adopt a more cautious stance toward investing in
Asia. However, in 2005's fourth quarter, Asian markets experienced higher
returns relative to Latin American and Eastern European markets largely due to
the U.S. Federal Reserve Board's signaling a possible halt to raising interest
rates in the near future. High commodity prices and market stability allowed
South Africa's stock prices to continue their upward trend during the year,
while positive developments in Turkey led the country's equity market to end
2005 up significantly.
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 (typically five years) earnings, asset value and cash flow potential.
We also consider a company's price/earnings ratio, profit margins and
liquidation value. 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. In choosing investments, we strongly believe in onsite
visits to issuers of prospective investments to assess critical factors such as
management strength and local conditions.
(2) Source: Standard & Poor's Micropal. The MSCI Russia Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in Russia.
4 | Annual Report
MANAGER'S DISCUSSION
In terms of performance relative to the MSCI EM Index, the Fund benefited from
underweighted exposure to and stock selection in Taiwan and Malaysia. The Fund's
exposure to South Korea, which was roughly in line with the index, also helped
performance due to the Fund's overweighted positions in strong performing stocks
such as Hyundai Development, Samsung Heavy Industries, and Daewoo Shipbuilding &
Marine Engineering. On the other hand, the Fund's stock selection in and
underweighted exposure to Mexico and Russia hindered results relative to the
index. The Fund's U.K. holdings hurt relative performance; however, we believed
those companies were well positioned in their respective areas to benefit from
growing demand for financial and banking services in emerging markets.
At the sector level, stock selection in the capital goods sector benefited
performance relative to the MSCI EM Index.(3) Our underweighted allocations in
the insurance and technology hardware and equipment sectors also helped
performance, as these sectors underperformed the overall index.(4) In contrast,
the Fund's overweighted exposure to Taiwan Mobile hurt relative performance. In
addition, our lack of holdings in America Movil and Orascom Telecom hindered the
Fund's relative results. We did not own those two stocks due to expensive
valuations and the availability of what we considered more attractively valued
telecommunications stocks in other markets. Similarly, our stock selection and
underweighted position in energy sector stocks and our stock selection in the
food, beverage and tobacco sector hindered performance during the period.5
During the year under review, the Fund's exposure to Asia increased as we found
stocks trading at what we considered attractive valuations. We made the largest
purchases in Taiwan, Thailand and China H shares (Hong Kong-listed companies),
while also adding significant investments in Malaysia and India. Key purchases
included initiating positions in Maxis Communications, one of Malaysia's
prominent integrated telecommunication services providers, and China
Construction Bank, a major commercial bank in China. We also added to existing
positions in PetroChina, a dominant participant in China's oil and gas sector;
Mega Financial Holding, a leading financial holding company in Taiwan; and Siam
Cement Public, one of Thailand's oldest and largest industrial
TOP 10 COUNTRIES
12/31/05
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% OF TOTAL
NET ASSETS
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South Korea 19.7%
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Taiwan 13.0%
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China 10.4%
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South Africa 9.4%
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Brazil 9.3%
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Russia 4.0%
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Mexico 3.7%
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Thailand 3.6%
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Singapore 3.6%
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India 3.3%
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(3) The capital goods sector comprises aerospace and defense, building
products, chemicals, construction and engineering, industrial
conglomerates, and machinery in the SOI.
(4) The technology hardware and equipment sector comprises communications
equipment, computers and peripherals, electronic equipment and
instruments, and office electronics in the SOI.
(5) The energy sector comprises oil, gas and consumable fuels in the SOI; the
food, beverage and tobacco sector comprises beverages, food products and
tobacco in the SOI.
Annual Report | 5
TOP 10 EQUITY HOLDINGS
12/31/05
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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Samsung Electronics Co. Ltd. 4.2%
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT, SOUTH KOREA
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China Mobile (Hong Kong) Ltd. 2.6%
WIRELESS TELECOMMUNICATION
SERVICES, CHINA
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PetroChina Co. Ltd., H, common
& restricted 2.4%
OIL, GAS & CONSUMABLE FUELS, CHINA
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Petroleo Brasileiro SA, ADR, pfd 2.2%
OIL, GAS & CONSUMABLE FUELS, BRAZIL
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Remgro Ltd. 2.2%
DIVERSIFIED FINANCIAL SERVICES,
SOUTH AFRICA
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Anglo American PLC 1.9%
METALS & MINING, SOUTH AFRICA
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Banco Bradesco SA, ADR, pfd 1.9%
COMMERCIAL BANKS, BRAZIL
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Kimberly Clark de Mexico SA de CV, A 1.6%
HOUSEHOLD PRODUCTS, MEXICO
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Old Mutual PLC 1.5%
INSURANCE, SOUTH AFRICA
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HSBC Holdings PLC 1.5%
COMMERCIAL BANKS, U.K
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groups. Conversely, we reduced exposure to Singapore and Hong Kong as we sold
some shares when selective stocks reached our sale price targets.
In Latin America, we increased our allocations to Brazil and Mexico, while
eliminating exposure to Argentina via the sale of Tenaris. Brazil and Mexico
benefited from greater investor interest and fund inflows during 2005.
Significant purchases included adding to Petroleo Brasileiro (Petrobras),
Brazil's national oil and gas company with activities in the exploration,
production, refining, transportation and distribution of oil and its byproducts;
Companhia Vale do Rio Doce, a Brazilian producer of iron ore that is among the
world's largest; and Telefonos de Mexico, Mexico's nationwide provider of
fixed-line telephone services and the leading Internet and local and long-
distance services provider. We also initiated exposure to Panama during the
period.
The Fund's largest sales were in Europe as some stock valuations grew
increasingly expensive due to the region's strong market performances.
Significant sales included stocks from Austria, Belgium, Greece and Poland. As
we searched for undervalued stocks in the region, in line with our strategy, we
made selective purchases in Russia, Finland and the U.K. Key purchases included
initiating positions in Mining and Metallurgical Co. Norilsk Nickel, one of the
world's largest precious metals companies; Mobile Telesystems, one of Eastern
Europe's and Russia's largest mobile telecommunication services providers; and
Nokian Renkaat, a well-known Finnish tire manufacturer with significant exposure
to Russia's market. We also added to our positions in HSBC Holdings, one of the
world's largest banking and financial services organizations; and Provident
Financial, a consumer finance company with exposure to Central and Eastern
Europe, as well as Latin America. In addition, we increased the number of South
African holdings during the period as the country continued to experience
positive developments.
6 | Annual Report
We thank you for your continued participation in Templeton Developing Markets
Trust and look forward to serving your future investment needs.
/s/ Mark Mobius
Mark Mobius
[PHOTO OMITTED] 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, 2005, 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.
Annual Report | 7
PERFORMANCE SUMMARY AS OF 12/31/05
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
that a shareholder would pay 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 (SYMBOL: TEDMX) CHANGE 12/31/05 12/31/04
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Net Asset Value (NAV) +$4.89 $23.42 $18.53
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DISTRIBUTIONS (1/1/05-12/31/05)
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Dividend Income $0.2893
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CLASS B (SYMBOL: TDMBX) CHANGE 12/31/05 12/31/04
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Net Asset Value (NAV) +$4.79 $23.03 $18.24
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DISTRIBUTIONS (1/1/05-12/31/05)
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Dividend Income $0.1581
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CLASS C (SYMBOL: TDMTX) CHANGE 12/31/05 12/31/04
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Net Asset Value (NAV) +$4.78 $23.00 $18.22
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DISTRIBUTIONS (1/1/05-12/31/05)
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Dividend Income $0.1680
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CLASS R (SYMBOL: TDMRX) CHANGE 12/31/05 12/31/04
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Net Asset Value (NAV) +$4.81 $23.20 $18.39
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DISTRIBUTIONS (1/1/05-12/31/05)
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Dividend Income $0.2864
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ADVISOR CLASS (SYMBOL: TDADX) CHANGE 12/31/05 12/31/04
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Net Asset Value (NAV) +$4.89 $23.40 $18.51
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DISTRIBUTIONS (1/1/05-12/31/05)
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Dividend Income $0.3527
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8 | Annual Report
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) +28.20% +135.98% +119.86%
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Average Annual Total Return(2) +20.82% +17.33% +7.56%
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Value of $10,000 Investment(3) $12,082 $22,234 $20,727
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return(1) +27.35% +128.59% +132.24%
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Average Annual Total Return(2) +23.35% +17.77% +12.79%
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Value of $10,000 Investment(3) $12,335 $22,659 $23,224
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CLASS C 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return(1) +27.31% +128.65% +105.50%
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Average Annual Total Return(2) +26.31% +17.99% +7.47%
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Value of $10,000 Investment(3) $12,631 $22,865 $20,550
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CLASS R 1-YEAR 3-YEAR INCEPTION (1/1/02)
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Cumulative Total Return(1) +28.03% +145.10% +147.46%
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Average Annual Total Return(2) +27.03% +34.83% +25.46%
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Value of $10,000 Investment(3) $12,703 $24,510 $24,746
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ADVISOR CLASS(4) 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return(1) +28.63% +140.74% +126.30%
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Average Annual Total Return(2) +28.63% +19.21% +8.51%
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Value of $10,000 Investment(3) $12,863 $24,074 $22,630
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PERFORMANCE DATA 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.
Annual Report | 9
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 12/31/05
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1-Year +20.82%
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5-Year +17.33%
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10-Year +7.56%
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CLASS A (1/1/96 - 12/31/05)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
TEMPLETON S&P 500/IFCI
DEVELOPING MARKETS INVESTABLE MSCI EMERGING
DATE TRUST - CLASS A COMPOSITE INDEX(5) MARKETS INDEX(5)
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1/1/1996 $9,428 $10,000 $10,000
1/31/1996 $10,348 $10,852 $10,711
2/29/1996 $10,300 $10,600 $10,541
3/31/1996 $10,344 $10,753 $10,623
4/30/1996 $10,686 $11,187 $11,047
5/31/1996 $10,860 $11,089 $10,998
6/30/1996 $10,926 $11,219 $11,067
7/31/1996 $10,431 $10,483 $10,310
8/31/1996 $10,642 $10,807 $10,574
9/30/1996 $10,868 $10,967 $10,666
10/31/1996 $10,904 $10,731 $10,381
11/30/1996 $11,282 $10,889 $10,555
12/31/1996 $11,550 $10,937 $10,603
1/31/1997 $12,427 $11,710 $11,326
2/28/1997 $12,790 $12,282 $11,811
3/31/1997 $12,526 $11,980 $11,501
4/30/1997 $12,654 $11,777 $11,521
5/31/1997 $13,310 $12,177 $11,851
6/30/1997 $13,875 $12,703 $12,485
7/31/1997 $14,463 $12,826 $12,672
8/31/1997 $13,197 $11,189 $11,059
9/30/1997 $13,928 $11,552 $11,366
10/31/1997 $11,298 $9,653 $9,501
11/30/1997 $10,552 $9,195 $9,154
12/31/1997 $10,462 $9,325 $9,375
1/31/1998 $9,540 $8,711 $8,639
2/28/1998 $10,535 $9,601 $9,541
3/31/1998 $11,023 $9,977 $9,955
4/30/1998 $11,064 $10,002 $9,847
5/31/1998 $9,563 $8,755 $8,497
6/30/1998 $8,626 $7,860 $7,606
7/31/1998 $8,683 $8,173 $7,847
8/31/1998 $6,547 $5,876 $5,578
9/30/1998 $6,857 $6,160 $5,932
10/31/1998 $7,868 $6,867 $6,557
11/30/1998 $8,732 $7,384 $7,102
12/31/1998 $8,504 $7,273 $6,999
1/31/1999 $8,025 $7,097 $6,886
2/28/1999 $8,075 $7,223 $6,953
3/31/1999 $9,247 $8,066 $7,870
4/30/1999 $10,973 $9,165 $8,843
5/31/1999 $10,733 $9,002 $8,792
6/30/1999 $11,600 $9,982 $9,790
7/31/1999 $11,072 $9,840 $9,524
8/31/1999 $10,585 $9,946 $9,610
9/30/1999 $10,188 $9,669 $9,285
10/31/1999 $10,494 $9,834 $9,483
11/30/1999 $11,245 $10,718 $10,333
12/31/1999 $12,888 $12,154 $11,647
1/31/2000 $12,294 $12,152 $11,717
2/29/2000 $11,840 $12,143 $11,871
3/31/2000 $11,965 $12,317 $11,929
4/30/2000 $10,963 $11,043 $10,798
5/31/2000 $10,126 $10,749 $10,352
6/30/2000 $10,872 $11,056 $10,717
7/31/2000 $10,441 $10,523 $10,166
8/31/2000 $10,631 $10,565 $10,216
9/30/2000 $9,571 $9,620 $9,324
10/31/2000 $8,767 $8,839 $8,648
11/30/2000 $8,303 $8,061 $7,891
12/31/2000 $8,783 $8,294 $8,082
1/31/2001 $9,804 $9,359 $9,195
2/28/2001 $9,074 $8,638 $8,475
3/31/2001 $8,225 $7,893 $7,643
4/30/2001 $8,599 $8,361 $8,020
5/31/2001 $8,915 $8,614 $8,116
6/30/2001 $8,873 $8,458 $7,949
7/31/2001 $8,324 $7,880 $7,447
8/31/2001 $8,341 $7,773 $7,374
9/30/2001 $7,268 $6,568 $6,232
10/31/2001 $7,484 $6,975 $6,619
11/30/2001 $7,942 $7,793 $7,310
12/31/2001 $8,277 $8,441 $7,890
1/31/2002 $8,721 $8,742 $8,158
2/28/2002 $8,738 $8,911 $8,292
3/31/2002 $9,224 $9,532 $8,790
4/30/2002 $9,519 $9,620 $8,848
5/31/2002 $9,477 $9,455 $8,707
6/30/2002 $8,887 $8,780 $8,053
7/31/2002 $8,399 $8,224 $7,441
8/31/2002 $8,374 $8,330 $7,556
9/30/2002 $7,743 $7,405 $6,740
10/31/2002 $7,945 $7,881 $7,178
11/30/2002 $8,576 $8,427 $7,672
12/31/2002 $8,416 $8,109 $7,417
1/31/2003 $8,282 $8,116 $7,385
2/28/2003 $8,273 $7,875 $7,185
3/31/2003 $7,980 $7,586 $6,982
4/30/2003 $8,806 $8,361 $7,603
5/31/2003 $9,334 $8,942 $8,149
6/30/2003 $9,640 $9,496 $8,614
7/31/2003 $10,041 $10,006 $9,153
8/31/2003 $10,509 $10,728 $9,767
9/30/2003 $10,816 $10,845 $9,839
10/31/2003 $11,676 $11,726 $10,676
11/30/2003 $11,906 $11,877 $10,807
12/31/2003 $12,889 $12,743 $11,591
1/31/2004 $13,258 $13,178 $12,003
2/29/2004 $13,740 $13,814 $12,556
3/31/2004 $13,727 $14,071 $12,718
4/30/2004 $12,964 $13,007 $11,678
5/31/2004 $12,790 $12,830 $11,448
6/30/2004 $13,033 $12,831 $11,500
7/31/2004 $12,860 $12,567 $11,297
8/31/2004 $13,285 $13,129 $11,770
9/30/2004 $13,978 $13,887 $12,449
10/31/2004 $14,342 $14,288 $12,748
11/30/2004 $15,444 $15,530 $13,928
12/31/2004 $16,169 $16,326 $14,599
1/31/2005 $16,090 $16,365 $14,645
2/28/2005 $17,400 $17,739 $15,931
3/31/2005 $16,584 $16,632 $14,882
4/30/2005 $16,048 $16,259 $14,485
5/31/2005 $16,672 $16,868 $14,995
6/30/2005 $17,200 $17,437 $15,513
7/31/2005 $18,133 $18,644 $16,610
8/31/2005 $18,071 $18,636 $16,760
9/30/2005 $19,523 $20,556 $18,322
10/31/2005 $18,414 $19,217 $17,125
11/30/2005 $19,822 $20,776 $18,543
12/31/2005 $20,727 $22,071 $19,642
Total Returns 107.27% 120.71% 96.42%
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
Class B 12/31/05
- -------------------------------------
1-Year +23.35%
- -------------------------------------
5-Year +17.77%
- -------------------------------------
Since Inception (1/1/99) +12.79%
- -------------------------------------
CLASS B (1/1/99 - 12/31/05)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
TEMPLETON S&P 500/IFCI
DEVELOPING MARKETS INVESTABLE MSCI EMERGING
DATE TRUST - CLASS B COMPOSITE INDEX(5) MARKETS INDEX(5)
- --------------------------------------------------------------------------------
1/1/1999 $10,000 $10,000 $10,000
1/31/1999 $9,417 $9,758 $9,839
2/28/1999 $9,476 $9,931 $9,934
3/31/1999 $10,835 $11,090 $11,244
4/30/1999 $12,854 $12,602 $12,635
5/31/1999 $12,563 $12,377 $12,561
6/30/1999 $13,573 $13,725 $13,987
7/31/1999 $12,942 $13,529 $13,607
8/31/1999 $12,369 $13,675 $13,731
9/30/1999 $11,893 $13,295 $13,266
10/31/1999 $12,233 $13,521 $13,548
11/30/1999 $13,107 $14,736 $14,763
12/31/1999 $15,019 $16,711 $16,641
1/31/2000 $14,311 $16,708 $16,740
2/29/2000 $13,777 $16,695 $16,961
3/31/2000 $13,916 $16,935 $17,044
4/30/2000 $12,739 $15,183 $15,428
5/31/2000 $11,756 $14,779 $14,790
6/30/2000 $12,622 $15,201 $15,311
7/31/2000 $12,116 $14,469 $14,524
8/31/2000 $12,330 $14,527 $14,595
9/30/2000 $11,094 $13,227 $13,321
10/31/2000 $10,160 $12,153 $12,355
11/30/2000 $9,615 $11,083 $11,275
12/31/2000 $10,160 $11,404 $11,547
1/31/2001 $11,347 $12,868 $13,137
2/28/2001 $10,481 $11,877 $12,108
3/31/2001 $9,498 $10,853 $10,919
4/30/2001 $9,926 $11,496 $11,459
5/31/2001 $10,286 $11,844 $11,595
6/30/2001 $10,228 $11,630 $11,357
7/31/2001 $9,595 $10,835 $10,640
8/31/2001 $9,605 $10,688 $10,535
9/30/2001 $8,369 $9,031 $8,904
10/31/2001 $8,613 $9,591 $9,457
11/30/2001 $9,138 $10,714 $10,444
12/31/2001 $9,518 $11,606 $11,273
1/31/2002 $10,015 $12,020 $11,655
2/28/2002 $10,034 $12,251 $11,847
3/31/2002 $10,589 $13,106 $12,559
4/30/2002 $10,922 $13,227 $12,641
5/31/2002 $10,863 $13,000 $12,439
6/30/2002 $10,188 $12,072 $11,506
7/31/2002 $9,620 $11,307 $10,631
8/31/2002 $9,591 $11,454 $10,795
9/30/2002 $8,857 $10,181 $9,630
10/31/2002 $9,082 $10,835 $10,255
11/30/2002 $9,806 $11,587 $10,961
12/31/2002 $9,611 $11,149 $10,597
1/31/2003 $9,464 $11,159 $10,551
2/28/2003 $9,444 $10,828 $10,266
3/31/2003 $9,095 $10,431 $9,975
4/30/2003 $10,030 $11,495 $10,863
5/31/2003 $10,631 $12,295 $11,643
6/30/2003 $10,975 $13,056 $12,307
7/31/2003 $11,418 $13,758 $13,077
8/31/2003 $11,950 $14,751 $13,955
9/30/2003 $12,294 $14,912 $14,057
10/31/2003 $13,269 $16,123 $15,254
11/30/2003 $13,515 $16,330 $15,441
12/31/2003 $14,624 $17,521 $16,560
1/31/2004 $15,040 $18,119 $17,149
2/29/2004 $15,575 $18,993 $17,940
3/31/2004 $15,559 $19,347 $18,170
4/30/2004 $14,680 $17,884 $16,685
5/31/2004 $14,480 $17,641 $16,356
6/30/2004 $14,750 $17,642 $16,431
7/31/2004 $14,540 $17,279 $16,140
8/31/2004 $15,010 $18,051 $16,816
9/30/2004 $15,789 $19,093 $17,787
10/31/2004 $16,188 $19,645 $18,213
11/30/2004 $17,426 $21,352 $19,900
12/31/2004 $18,236 $22,447 $20,858
1/31/2005 $18,136 $22,501 $20,924
2/28/2005 $19,607 $24,390 $22,761
3/31/2005 $18,672 $22,867 $21,262
4/30/2005 $18,057 $22,354 $20,695
5/31/2005 $18,753 $23,192 $21,424
6/30/2005 $19,338 $23,974 $22,163
7/31/2005 $20,376 $25,634 $23,732
8/31/2005 $20,295 $25,623 $23,945
9/30/2005 $21,919 $28,263 $26,178
10/31/2005 $20,658 $26,422 $24,468
11/30/2005 $22,231 $28,566 $26,494
12/31/2005 $23,224 $30,346 $28,063
Total Returns 132.24% 203.46% 180.63%
10 | Annual Report
PERFORMANCE SUMMARY (CONTINUED)
CLASS C (1/1/96 - 12/31/05)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
TEMPLETON S&P 500/IFCI
DEVELOPING MARKETS INVESTABLE MSCI EMERGING
DATE TRUST - CLASS C COMPOSITE INDEX(5) MARKETS INDEX(5)
- --------------------------------------------------------------------------------
1/1/1996 $10,000 $10,000 $10,000
1/31/1996 $10,965 $10,852 $10,711
2/29/1996 $10,907 $10,600 $10,541
3/31/1996 $10,945 $10,753 $10,623
4/30/1996 $11,302 $11,187 $11,047
5/31/1996 $11,480 $11,089 $10,998
6/30/1996 $11,542 $11,219 $11,067
7/31/1996 $11,007 $10,483 $10,310
8/31/1996 $11,232 $10,807 $10,574
9/30/1996 $11,457 $10,967 $10,666
10/31/1996 $11,496 $10,731 $10,381
11/30/1996 $11,883 $10,889 $10,555
12/31/1996 $12,158 $10,937 $10,603
1/31/1997 $13,074 $11,710 $11,326
2/28/1997 $13,443 $12,282 $11,811
3/31/1997 $13,163 $11,980 $11,501
4/30/1997 $13,283 $11,777 $11,521
5/31/1997 $13,964 $12,177 $11,851
6/30/1997 $14,548 $12,703 $12,485
7/31/1997 $15,164 $12,826 $12,672
8/31/1997 $13,819 $11,189 $11,059
9/30/1997 $14,580 $11,552 $11,366
10/31/1997 $11,819 $9,653 $9,501
11/30/1997 $11,035 $9,195 $9,154
12/31/1997 $10,930 $9,325 $9,375
1/31/1998 $9,966 $8,711 $8,639
2/28/1998 $10,998 $9,601 $9,541
3/31/1998 $11,496 $9,977 $9,955
4/30/1998 $11,531 $10,002 $9,847
5/31/1998 $9,973 $8,755 $8,497
6/30/1998 $8,992 $7,860 $7,606
7/31/1998 $9,035 $8,173 $7,847
8/31/1998 $6,807 $5,876 $5,578
9/30/1998 $7,134 $6,160 $5,932
10/31/1998 $8,183 $6,867 $6,557
11/30/1998 $9,070 $7,384 $7,102
12/31/1998 $8,832 $7,273 $6,999
1/31/1999 $8,330 $7,097 $6,886
2/28/1999 $8,373 $7,223 $6,953
3/31/1999 $9,584 $8,066 $7,870
4/30/1999 $11,375 $9,165 $8,843
5/31/1999 $11,107 $9,002 $8,792
6/30/1999 $12,007 $9,982 $9,790
7/31/1999 $11,444 $9,840 $9,524
8/31/1999 $10,934 $9,946 $9,610
9/30/1999 $10,519 $9,669 $9,285
10/31/1999 $10,830 $9,834 $9,483
11/30/1999 $11,600 $10,718 $10,333
12/31/1999 $13,287 $12,154 $11,647
1/31/2000 $12,664 $12,152 $11,717
2/29/2000 $12,188 $12,143 $11,871
3/31/2000 $12,318 $12,317 $11,929
4/30/2000 $11,271 $11,043 $10,798
5/31/2000 $10,406 $10,749 $10,352
6/30/2000 $11,167 $11,056 $10,717
7/31/2000 $10,718 $10,523 $10,166
8/31/2000 $10,917 $10,565 $10,216
9/30/2000 $9,818 $9,620 $9,324
10/31/2000 $8,988 $8,839 $8,648
11/30/2000 $8,512 $8,061 $7,891
12/31/2000 $8,988 $8,294 $8,082
1/31/2001 $10,034 $9,359 $9,195
2/28/2001 $9,282 $8,638 $8,475
3/31/2001 $8,408 $7,893 $7,643
4/30/2001 $8,789 $8,361 $8,020
5/31/2001 $9,100 $8,614 $8,116
6/30/2001 $9,057 $8,458 $7,949
7/31/2001 $8,486 $7,880 $7,447
8/31/2001 $8,503 $7,773 $7,374
9/30/2001 $7,405 $6,568 $6,232
10/31/2001 $7,621 $6,975 $6,619
11/30/2001 $8,088 $7,793 $7,310
12/31/2001 $8,418 $8,441 $7,890
1/31/2002 $8,868 $8,742 $8,158
2/28/2002 $8,876 $8,911 $8,292
3/31/2002 $9,370 $9,532 $8,790
4/30/2002 $9,665 $9,620 $8,848
5/31/2002 $9,622 $9,455 $8,707
6/30/2002 $9,013 $8,780 $8,053
7/31/2002 $8,518 $8,224 $7,441
8/31/2002 $8,483 $8,330 $7,556
9/30/2002 $7,840 $7,405 $6,740
10/31/2002 $8,040 $7,881 $7,178
11/30/2002 $8,683 $8,427 $7,672
12/31/2002 $8,500 $8,109 $7,417
1/31/2003 $8,370 $8,116 $7,385
2/28/2003 $8,353 $7,875 $7,185
3/31/2003 $8,050 $7,586 $6,982
4/30/2003 $8,880 $8,361 $7,603
5/31/2003 $9,412 $8,942 $8,149
6/30/2003 $9,718 $9,496 $8,614
7/31/2003 $10,111 $10,006 $9,153
8/31/2003 $10,574 $10,728 $9,767
9/30/2003 $10,879 $10,845 $9,839
10/31/2003 $11,735 $11,726 $10,676
11/30/2003 $11,962 $11,877 $10,807
12/31/2003 $12,942 $12,743 $11,591
1/31/2004 $13,311 $13,178 $12,003
2/29/2004 $13,785 $13,814 $12,556
3/31/2004 $13,762 $14,071 $12,718
4/30/2004 $12,992 $13,007 $11,678
5/31/2004 $12,815 $12,830 $11,448
6/30/2004 $13,054 $12,831 $11,500
7/31/2004 $12,868 $12,567 $11,297
8/31/2004 $13,284 $13,129 $11,770
9/30/2004 $13,974 $13,887 $12,449
10/31/2004 $14,328 $14,288 $12,748
11/30/2004 $15,417 $15,530 $13,928
12/31/2004 $16,141 $16,326 $14,599
1/31/2005 $16,044 $16,365 $14,645
2/28/2005 $17,346 $17,739 $15,931
3/31/2005 $16,527 $16,632 $14,882
4/30/2005 $15,983 $16,259 $14,485
5/31/2005 $16,590 $16,868 $14,995
6/30/2005 $17,108 $17,437 $15,513
7/31/2005 $18,028 $18,644 $16,610
8/31/2005 $17,956 $18,636 $16,760
9/30/2005 $19,394 $20,556 $18,322
10/31/2005 $18,278 $19,217 $17,125
11/30/2005 $19,670 $20,776 $18,543
12/31/2005 $20,550 $22,071 $19,642
Total Returns 105.50% 120.71% 96.42%
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS C 12/31/05
- --------------------------------------
1-Year +26.31%
- --------------------------------------
5-Year +17.99%
- --------------------------------------
10-Year +7.47%
- --------------------------------------
CLASS R (1/1/02 - 12/31/05)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
TEMPLETON S&P 500/IFCI
DEVELOPING MARKETS INVESTABLE MSCI EMERGING
DATE TRUST - CLASS R COMPOSITE 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 $10,504 $10,557 $10,509
3/31/2002 $11,098 $11,293 $11,141
4/30/2002 $11,442 $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 $9,540 $9,336 $9,097
11/30/2002 $10,309 $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 $11,554 $11,250 $10,917
7/31/2003 $12,025 $11,855 $11,600
8/31/2003 $12,589 $12,710 $12,379
9/30/2003 $12,949 $12,849 $12,470
10/31/2003 $13,975 $13,892 $13,531
11/30/2003 $14,252 $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 $15,509 $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 $15,885 $15,554 $14,917
9/30/2004 $16,720 $16,452 $15,778
10/31/2004 $17,149 $16,928 $16,156
11/30/2004 $18,466 $18,398 $17,653
12/31/2004 $19,329 $19,341 $18,502
1/31/2005 $19,234 $19,388 $18,561
2/28/2005 $20,802 $21,016 $20,191
3/31/2005 $19,819 $19,704 $18,861
4/30/2005 $19,172 $19,262 $18,358
5/31/2005 $19,914 $19,984 $19,004
6/30/2005 $20,551 $20,658 $19,660
7/31/2005 $21,664 $22,087 $21,051
8/31/2005 $21,579 $22,078 $21,241
9/30/2005 $23,318 $24,353 $23,222
10/31/2005 $21,993 $22,766 $21,704
11/30/2005 $23,668 $24,614 $23,501
12/31/2005 $24,746 $26,148 $24,894
Total Returns 147.46% 161.48% 148.94%
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS R 12/31/05
- --------------------------------------
1-Year +27.03%
- --------------------------------------
3-Year +34.83%
- --------------------------------------
Since Inception (1/1/02) +25.46%
- --------------------------------------
Annual Report | 11
PERFORMANCE SUMMARY (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------
ADVISOR CLASS(4) 12/31/05
- ------------------------------------
1-Year +28.63%
- ------------------------------------
5-Year +19.21%
- ------------------------------------
10-Year +8.51%
- ------------------------------------
ADVISOR CLASS (1/1/96 - 12/31/05)(4)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
TEMPLETON S&P 500/IFCI
DEVELOPING MARKETS INVESTABLE MSCI EMERGING
DATE TRUST - CLASS ADVISOR COMPOSITE INDEX(5) MARKETS INDEX(5)
- --------------------------------------------------------------------------------
1/1/1996 $10,000 $10,000 $10,000
1/31/1996 $10,976 $10,852 $10,711
2/29/1996 $10,926 $10,600 $10,541
3/31/1996 $10,972 $10,753 $10,623
4/30/1996 $11,335 $11,187 $11,047
5/31/1996 $11,520 $11,089 $10,998
6/30/1996 $11,589 $11,219 $11,067
7/31/1996 $11,065 $10,483 $10,310
8/31/1996 $11,288 $10,807 $10,574
9/30/1996 $11,528 $10,967 $10,666
10/31/1996 $11,566 $10,731 $10,381
11/30/1996 $11,967 $10,889 $10,555
12/31/1996 $12,251 $10,937 $10,603
1/31/1997 $13,156 $11,710 $11,326
2/28/1997 $13,541 $12,282 $11,811
3/31/1997 $13,269 $11,980 $11,501
4/30/1997 $13,405 $11,777 $11,521
5/31/1997 $14,099 $12,177 $11,851
6/30/1997 $14,705 $12,703 $12,485
7/31/1997 $15,328 $12,826 $12,672
8/31/1997 $13,987 $11,189 $11,059
9/30/1997 $14,769 $11,552 $11,366
10/31/1997 $11,985 $9,653 $9,501
11/30/1997 $11,194 $9,195 $9,154
12/31/1997 $11,104 $9,325 $9,375
1/31/1998 $10,125 $8,711 $8,639
2/28/1998 $11,181 $9,601 $9,541
3/31/1998 $11,708 $9,977 $9,955
4/30/1998 $11,743 $10,002 $9,847
5/31/1998 $10,158 $8,755 $8,497
6/30/1998 $9,162 $7,860 $7,606
7/31/1998 $9,223 $8,173 $7,847
8/31/1998 $6,954 $5,876 $5,578
9/30/1998 $7,292 $6,160 $5,932
10/31/1998 $8,375 $6,867 $6,557
11/30/1998 $9,292 $7,384 $7,102
12/31/1998 $9,053 $7,273 $6,999
1/31/1999 $8,542 $7,097 $6,886
2/28/1999 $8,595 $7,223 $6,953
3/31/1999 $9,846 $8,066 $7,870
4/30/1999 $11,687 $9,165 $8,843
5/31/1999 $11,440 $9,002 $8,792
6/30/1999 $12,365 $9,982 $9,790
7/31/1999 $11,801 $9,840 $9,524
8/31/1999 $11,282 $9,946 $9,610
9/30/1999 $10,868 $9,669 $9,285
10/31/1999 $11,185 $9,834 $9,483
11/30/1999 $11,995 $10,718 $10,333
12/31/1999 $13,756 $12,154 $11,647
1/31/2000 $13,122 $12,152 $11,717
2/29/2000 $12,638 $12,143 $11,871
3/31/2000 $12,778 $12,317 $11,929
4/30/2000 $11,705 $11,043 $10,798
5/31/2000 $10,820 $10,749 $10,352
6/30/2000 $11,617 $11,056 $10,717
7/31/2000 $11,165 $10,523 $10,166
8/31/2000 $11,378 $10,565 $10,216
9/30/2000 $10,235 $9,620 $9,324
10/31/2000 $9,384 $8,839 $8,648
11/30/2000 $8,888 $8,061 $7,891
12/31/2000 $9,401 $8,294 $8,082
1/31/2001 $10,506 $9,359 $9,195
2/28/2001 $9,712 $8,638 $8,475
3/31/2001 $8,809 $7,893 $7,643
4/30/2001 $9,220 $8,361 $8,020
5/31/2001 $9,559 $8,614 $8,116
6/30/2001 $9,514 $8,458 $7,949
7/31/2001 $8,925 $7,880 $7,447
8/31/2001 $8,943 $7,773 $7,374
9/30/2001 $7,800 $6,568 $6,232
10/31/2001 $8,031 $6,975 $6,619
11/30/2001 $8,532 $7,793 $7,310
12/31/2001 $8,890 $8,441 $7,890
1/31/2002 $9,369 $8,742 $8,158
2/28/2002 $9,387 $8,911 $8,292
3/31/2002 $9,920 $9,532 $8,790
4/30/2002 $10,238 $9,620 $8,848
5/31/2002 $10,192 $9,455 $8,707
6/30/2002 $9,566 $8,780 $8,053
7/31/2002 $9,039 $8,224 $7,441
8/31/2002 $9,021 $8,330 $7,556
9/30/2002 $8,341 $7,405 $6,740
10/31/2002 $8,567 $7,881 $7,178
11/30/2002 $9,266 $8,427 $7,672
12/31/2002 $9,085 $8,109 $7,417
1/31/2003 $8,949 $8,116 $7,385
2/28/2003 $8,940 $7,875 $7,185
3/31/2003 $8,621 $7,586 $6,982
4/30/2003 $9,516 $8,361 $7,603
5/31/2003 $10,097 $8,942 $8,149
6/30/2003 $10,438 $9,496 $8,614
7/31/2003 $10,862 $10,006 $9,153
8/31/2003 $11,379 $10,728 $9,767
9/30/2003 $11,710 $10,845 $9,839
10/31/2003 $12,651 $11,726 $10,676
11/30/2003 $12,900 $11,877 $10,807
12/31/2003 $13,965 $12,743 $11,591
1/31/2004 $14,376 $13,178 $12,003
2/29/2004 $14,899 $13,814 $12,556
3/31/2004 $14,894 $14,071 $12,718
4/30/2004 $14,066 $13,007 $11,678
5/31/2004 $13,887 $12,830 $11,448
6/30/2004 $14,150 $12,831 $11,500
7/31/2004 $13,972 $12,567 $11,297
8/31/2004 $14,433 $13,129 $11,770
9/30/2004 $15,195 $13,887 $12,449
10/31/2004 $15,591 $14,288 $12,748
11/30/2004 $16,795 $15,530 $13,928
12/31/2004 $17,593 $16,326 $14,599
1/31/2005 $17,507 $16,365 $14,645
2/28/2005 $18,943 $17,739 $15,931
3/31/2005 $18,055 $16,632 $14,882
4/30/2005 $17,480 $16,259 $14,485
5/31/2005 $18,161 $16,868 $14,995
6/30/2005 $18,745 $17,437 $15,513
7/31/2005 $19,770 $18,644 $16,610
8/31/2005 $19,704 $18,636 $16,760
9/30/2005 $21,294 $20,556 $18,322
10/31/2005 $20,087 $19,217 $17,125
11/30/2005 $21,639 $20,776 $18,543
12/31/2005 $22,630 $22,071 $19,642
Total Returns 126.30% 120.71% 96.42%
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 +84.72% and +7.06%.
(5) Source: Standard & Poor's Micropal. The S&P/IFCI Composite Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity performance of global emerging markets. The MSCI EM Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity market performance in global emerging markets.
12 | Annual Report
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.
Annual Report | 13
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. 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 7/1/05 VALUE 12/31/05 PERIOD* 7/1/05-12/31/05
- -----------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,205.10 $10.84
- -----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.38 $ 9.91
- -----------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,201.00 $14.54
- -----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.00 $13.29
- -----------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,201.20 $14.54
- -----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.00 $13.29
- -----------------------------------------------------------------------------------------------------------------
CLASS R
- -----------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,204.20 $11.78
- -----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.52 $10.76
- -----------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- -----------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,207.30 $ 9.01
- -----------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.04 $ 8.24
- -----------------------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio for each class (A:
1.95%; B: 2.62%; C: 2.62%; R: 2.12%; and Advisor: 1.62%), multiplied by
the average account value over the period, multiplied by 184/365 to
reflect the one-half year period.
14 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS A 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 18.53 $ 14.95 $ 10.00 $ 9.88 $ 10.59
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) .................. 0.28 0.18 0.22 0.10 0.11
Net realized and unrealized gains (losses) 4.90 3.66 4.98 0.07 (0.72)
--------------------------------------------------------------------------------
Total from investment operations ............ 5.18 3.84 5.20 0.17 (0.61)
--------------------------------------------------------------------------------
Less distributions from net investment income (0.29) (0.26) (0.25) (0.05) (0.10)
--------------------------------------------------------------------------------
Redemption fees ............................. --(c) --(c) --(c) -- --
--------------------------------------------------------------------------------
Net asset value, end of year ................ $ 23.42 $ 18.53 $ 14.95 $ 10.00 $ 9.88
================================================================================
Total return(b) ............................. 28.20% 25.45% 53.14% 1.68% (5.76)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $3,395,151 $2,305,376 $1,873,277 $1,168,340 $1,221,011
Ratios to average net assets:
Expenses .................................. 1.97% 2.03% 2.17% 2.24% 2.21%
Net investment income ..................... 1.36% 1.12% 1.85% 0.96% 1.07%
Portfolio turnover rate ..................... 34.76% 58.74% 48.60% 49.05% 61.45%
(a) Based on average daily shares outstanding.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge.
(c) Amount is less than $0.01 per share.
Annual Report | See notes to financial statements. | 15
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS B 2005 2004 2003 2002 2001
-----------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 18.24 $ 14.74 $ 9.82 $ 9.77 $ 10.44
-----------------------------------------------------------------
Income from investment operations:
Net investment income(a) .............................. 0.15 0.06 0.13 0.03 0.04
Net realized and unrealized gains (losses) ............ 4.80 3.61 4.93 0.07 (0.70)
-----------------------------------------------------------------
Total from investment operations ....................... 4.95 3.67 5.06 0.10 (0.66)
-----------------------------------------------------------------
Less distributions from net investment income .......... (0.16) (0.17) (0.14) (0.05) (0.01)
-----------------------------------------------------------------
Redemption fees ........................................ --(c) --(c) --(c) -- --
-----------------------------------------------------------------
Net asset value, end of year ........................... $ 23.03 $ 18.24 $ 14.74 $ 9.82 $ 9.77
=================================================================
Total return(b) ........................................ 27.35% 24.70% 52.17% 0.98% (6.32)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $46,965 $36,992 $26,062 $12,377 $11,027
Ratios to average net assets:
Expenses .............................................. 2.62% 2.68% 2.82% 2.88% 2.86%
Net investment income (loss) .......................... 0.71% 0.47% 1.20% 0.32% 0.42%
Portfolio turnover rate ................................ 34.76% 58.74% 48.60% 49.05% 61.45%
(a) Based on average daily shares outstanding.
(b) Total return does not reflect the contingent deferred sales charge.
(c) Amount is less than $0.01 per share.
16 | See notes to financial statements. | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS C 2005 2004 2003 2002 2001
-----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 18.22 $ 14.72 $ 9.79 $ 9.73 $ 10.39
-----------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ............................ 0.14 0.05 0.14 0.03 0.04
Net realized and unrealized gains (losses) .......... 4.81 3.60 4.90 0.08 (0.70)
-----------------------------------------------------------------------
Total from investment operations ..................... 4.95 3.65 5.04 0.11 (0.66)
-----------------------------------------------------------------------
Less distributions from net investment income ........ (0.17) (0.15) (0.11) (0.05) --(d)
-----------------------------------------------------------------------
Redemption fees ...................................... --(c) --(c) --(c) -- --
-----------------------------------------------------------------------
Net asset value, end of year ......................... $ 23.00 $ 18.22 $ 14.72 $ 9.79 $ 9.73
=======================================================================
Total return(b) ...................................... 27.31% 24.72% 52.25% 0.98% (6.34)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................... $364,355 $258,365 $208,581 $127,808 $139,099
Ratios to average net assets:
Expenses ............................................ 2.63% 2.69% 2.82% 2.89% 2.86%
Net investment income (loss) ........................ 0.70% 0.46% 1.20% 0.31% 0.43%
Portfolio turnover rate .............................. 34.76% 58.74% 48.60% 49.05% 61.45%
(a) Based on average daily shares outstanding.
(b) Total return does not reflect the contingent deferred sales charge.
(c) Amount is less than $0.01 per share.
(d) Actual distribution from net investment income was $.001.
Annual Report | See notes to financial statements. | 17
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
----------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS R 2005 2004 2003 2002(d)
----------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 18.39 $14.85 $ 9.98 $ 9.93
----------------------------------------------------
Income from investment operations:
Net investment income(a) .............................. 0.20 0.16 0.17 0.03
Net realized and unrealized gains ..................... 4.90 3.64 4.98 0.07
----------------------------------------------------
Total from investment operations ....................... 5.10 3.80 5.15 0.10
----------------------------------------------------
Less distributions from net investment income .......... (0.29) (0.26) (0.28) (0.05)
----------------------------------------------------
Redemption fees ........................................ --(c) --(c) --(c) --
----------------------------------------------------
Net asset value, end of year ........................... $ 23.20 $18.39 $14.85 $ 9.98
====================================================
Total return(b) ........................................ 28.03% 25.28% 52.82% 0.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $16,183 $5,220 $1,688 $ 381
Ratios to average net assets:
Expenses .............................................. 2.13% 2.18% 2.32% 2.39%(e)
Net investment income ................................. 1.20% 0.97% 1.70% 0.81%(e)
Portfolio turnover rate ................................ 34.76% 58.74% 48.60% 49.05%
(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 $0.01 per share.
(d) For the period January 2, 2002 (effective date) to December 31, 2002.
(e) Annualized.
18 | See notes to financial statements. | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
ADVISOR CLASS 2005 2004 2003 2002 2001
--------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 18.51 $ 14.93 $ 10.01 $ 9.84 $ 10.55
--------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ............................ 0.32 0.24 0.26 0.12 0.14
Net realized and unrealized gains (losses) .......... 4.92 3.65 4.99 0.10 (0.71)
--------------------------------------------------------------------
Total from investment operations ..................... 5.24 3.89 5.25 0.22 (0.57)
--------------------------------------------------------------------
Less distributions from net investment income ........ (0.35) (0.31) (0.33) (0.05) (0.14)
--------------------------------------------------------------------
Redemption fees ...................................... --(b) --(b) --(b) -- --
--------------------------------------------------------------------
Net asset value, end of year ......................... $ 23.40 $ 18.51 $ 14.93 $ 10.01 $ 9.84
=====================================================================
Total return ......................................... 28.63% 25.98% 53.72% 2.20% (5.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................... $343,823 $199,101 $203,660 $130,459 $81,320
Ratios to average net assets:
Expenses ............................................ 1.63% 1.68% 1.82% 1.89% 1.87%
Net investment income ............................... 1.70% 1.47% 2.20% 1.31% 1.40%
Portfolio turnover rate .............................. 34.76% 58.74% 48.60% 49.05% 61.45%
(a) Based on average daily shares outstanding.
(b) Amount is less than $0.01 per share.
Annual Report | See notes to financial statements. | 19
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 91.5%
AUSTRIA 0.5%
Wienerberger AG ............................. Building Products 466,021 $ 18,647,425
-------------
BRAZIL 2.6%
Centrais Eletricas Brasileiras
SA (Non Taxable) .......................... Electric Utilities 1,251,948,148 20,345,560
Centrais Eletricas Brasileiras
SA (Taxable) .............................. Electric Utilities 538,847,500 8,756,875
Companhia de Bebidas das Americas
(AmBev) ................................... Beverages 43,162,000 13,880,949
Embraer-Empresa Bras de Aeronautica SA ...... Aerospace & Defense 4,321,411 33,265,791
Souza Cruz SA (Non Taxable) ................. Tobacco 2,734,534 33,914,162
Souza Cruz SA (Taxable) ..................... Tobacco 17,600 218,278
-------------
110,381,615
-------------
CHINA 10.4%
Aluminum Corp. of China Ltd., H ............. Metals & Mining 50,672,000 38,557,944
Anhui Conch Cement Co. Ltd., H .............. Construction Materials 13,076,000 16,105,421
(a)China Construction Bank, H .................. Commercial Banks 2,700,000 940,202
(a),(b)China Construction Bank, H, 144A ............ Commercial Banks 82,545,000 28,744,075
China International Marine
Containers (Group), Co. Ltd., B ........... Machinery 5,286,522 4,261,317
China Mobile (Hong Kong) Ltd. ............... Wireless Telecommunication Services 23,314,000 110,351,099
China Resources Enterprise Ltd. ............. Distributors 17,914,000 31,998,981
China Travel International Investment
Hong Kong Ltd. ............................ Hotels, Restaurants & Leisure 31,342,000 7,518,539
Chongqing Changan
Automobile Co. Ltd., B .................... Automobiles 7,544,109 2,130,816
CITIC Pacific Ltd. .......................... Industrial Conglomerates 4,883,764 13,510,636
Denway Motors Ltd. .......................... Automobiles 71,630,386 23,788,570
GOME Electrical Appliances Holdings Ltd. .... Specialty Retail 7,788,000 5,273,259
Huadian Power International
Corp. Ltd., H ............................. Independent Power Producers & Energy Traders 36,596,000 9,345,286
Huaneng Power International, Inc., H ........ Independent Power Producers & Energy Traders 12,006,000 7,897,003
PetroChina Co. Ltd., H ...................... Oil, Gas & Consumable Fuels 94,327,000 77,250,901
(b)PetroChina Co. Ltd., H, 144A ................ Oil, Gas & Consumable Fuels 26,450,000 21,661,734
Shanghai Industrial Holdings Ltd. ........... Industrial Conglomerates 11,552,000 24,061,545
TCL Multimedia Technology
Holdings Ltd. ............................. Household Durables 15,801,386 2,282,480
Travelsky Technology Ltd., H ................ IT Services 10,016,000 9,236,218
-------------
434,916,026
-------------
CROATIA 0.6%
Pliva d.d., GDR, Reg S ...................... Pharmaceuticals 1,983,950 25,850,868
-------------
CZECH REPUBLIC 0.1%
Philip Morris CR AS ......................... Tobacco 3,201 2,377,528
-------------
FINLAND 0.4%
Nokian Renkaat OYJ .......................... Auto Components 1,456,070 18,358,134
-------------
20 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HONG KONG 2.0%
Cheung Kong (Holdings) Ltd. ................. Real Estate 4,054,000 $ 41,592,760
Cheung Kong Infrastructure
Holdings Ltd. ............................. Electric Utilities 2,658,000 8,364,474
Dairy Farm International Holdings Ltd. ...... Food & Staples Retailing 4,643,154 16,808,217
MTR Corp. Ltd. .............................. Road & Rail 7,510,585 14,771,936
------------
81,537,387
------------
HUNGARY 2.4%
BorsodChem Rt ............................... Chemicals 755,166 8,140,234
Gedeon Richter Ltd. ......................... Pharmaceuticals 137,088 24,616,988
Magyar Telekom Ltd. ......................... Diversified Telecommunication Services 6,785,079 30,368,611
MOL Magyar Olaj-Es Gazipari Rt. ............. Oil, Gas & Consumable Fuels 191,175 17,874,777
OTP Bank .................................... Commercial Banks 600,033 19,592,398
------------
100,593,008
------------
INDIA 3.3%
Bharat Petroleum Corp. Ltd. ................. Oil, Gas & Consumable Fuels 303,048 2,924,401
Gail India Ltd. ............................. Gas Utilities 2,742,540 16,201,070
(a),(b)Himatsingka Seide Ltd., GDR, 144A ........... Textiles Apparel & Luxury Goods 2,403,000 6,877,386
Hindalco Industries Inc. .................... Metals & Mining 2,968,000 9,459,078
Hindustan Lever Ltd. ........................ Household Products 7,153,000 31,357,467
Hindustan Petroleum Corp. Ltd. .............. Oil, Gas & Consumable Fuels 4,540,646 33,175,628
Indian Oil Corp. Ltd. ....................... Oil, Gas & Consumable Fuels 492,200 6,091,378
National Aluminum Co. Ltd. .................. Metals & Mining 284,173 1,388,182
Oil & Natural Gas Corp. Ltd. ................ Oil, Gas & Consumable Fuels 434,000 11,332,999
Ranbaxy Laboratories Ltd. ................... Pharmaceuticals 486,000 3,913,815
Tata Tea Ltd. ............................... Food Products 775,631 16,347,809
------------
139,069,213
------------
INDONESIA 0.6%
PT Astra International Tbk .................. Automobiles 17,464,000 18,121,343
PT Bank Danamon Indonesia Tbk ............... Commercial Banks 16,986,500 8,208,126
------------
26,329,469
------------
MALAYSIA 2.0%
Kuala Lumpur Kepong Bhd. .................... Food Products 2,256,972 5,016,157
Maxis Communications Bhd. ................... Wireless Telecommunication Services 11,442,000 25,430,031
Resorts World Bhd. .......................... Hotels, Restaurants & Leisure 7,606,700 22,541,352
Sime Darby Bhd. ............................. Industrial Conglomerates 10,888,900 17,718,411
Tanjong PLC ................................. Hotels, Restaurants & Leisure 1,718,300 6,592,234
YTL Corp. Bhd. .............................. Multi-Utilities 312,533 442,400
YTL Power International Bhd. ................ Water Utilities 11,114,688 6,587,353
------------
84,327,938
------------
MEXICO 3.7%
Fomento Economico Mexicano
SA de CV (Femsa), ADR ..................... Beverages 463,310 33,594,608
Grupo Bimbo SA de CV, A ..................... Food Products 2,166,438 7,542,527
(a)Grupo Televisa SA ........................... Media 2,316,947 9,265,608
Kimberly Clark de Mexico SA de CV, A ........ Household Products 18,507,712 66,176,717
Annual Report | 21
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEXICO (CONTINUED)
Telefonos de Mexico SA de CV
(Telmex), L, ADR .......................... Diversified Telecommunication Services 1,534,240 $ 37,865,043
------------
154,444,503
------------
PANAMA 0.3%
Banco Latinoamericano de
Exportaciones SA, E ....................... Commercial Banks 699,100 12,793,530
------------
PHILIPPINES 0.9%
San Miguel Corp., B ......................... Beverages 22,847,236 38,128,991
------------
POLAND 1.6%
Polski Koncern Naftowy Orlen SA ............. Oil, Gas & Consumable Fuels 1,540,257 29,728,833
Telekomunikacja Polska SA ................... Diversified Telecommunication Services 5,218,100 37,587,668
------------
67,316,501
------------
PORTUGAL 0.2%
(a)Jeronimo Martins SGPS SA .................... Food & Staples Retailing 521,950 7,847,464
------------
RUSSIA 4.0%
Lukoil Holdings, ADR ........................ Oil, Gas & Consumable Fuels 967,632 57,477,341
Mining and Metallurgical Co.
Norilsk Nickel ............................ Metals & Mining 514,300 45,566,980
Mobile Telesystems, ADR ..................... Wireless Telecommunication Services 843,000 29,505,000
(b)Novolipetsk Steel, 144A ..................... Metals & Mining 7,437,500 10,635,625
Unified Energy Systems ...................... Electric Utilities 52,254,600 22,155,950
------------
165,340,896
------------
SINGAPORE 3.6%
ComfortDelGro Corp. Ltd. .................... Road & Rail 21,755,000 20,931,477
DBS Group Holdings Ltd. ..................... Commercial Banks 1,474,000 14,625,214
Fraser and Neave Ltd. ....................... Industrial Conglomerates 4,516,148 50,241,281
Keppel Corp. Ltd. ........................... Industrial Conglomerates 2,352,600 15,561,863
Singapore Press Holdings Ltd. ............... Media 2,862,000 7,400,463
Singapore Technologies Engineering Ltd. ..... Aerospace & Defense 5,465,000 9,398,900
Singapore Telecommunications Ltd. ........... Diversified Telecommunication Services 20,649,214 32,408,941
------------
150,568,139
------------
SOUTH AFRICA 9.4%
Anglo American PLC .......................... Metals & Mining 2,396,893 80,950,776
Edgars Consolidated Stores Ltd. ............. Specialty Retail 2,498,150 13,881,463
(a)Imperial Holdings Ltd. ...................... Air Freight & Logistics 1,048,728 23,303,225
JD Group Ltd. ............................... Specialty Retail 174,611 2,115,201
Nampak Ltd. ................................. Containers & Packaging 2,432,295 6,473,307
Nedbank Group Ltd. .......................... Commercial Banks 3,251,216 51,382,315
(b)Nedbank Group Ltd., 144A .................... Commercial Banks 277,129 4,379,755
Old Mutual PLC .............................. Insurance 22,599,844 64,057,931
Remgro Ltd. ................................. Diversified Financial Services 4,683,130 90,295,039
SABMiller PLC ............................... Beverages 735,279 13,682,987
Sappi Ltd. .................................. Paper & Forest Products 3,299,095 37,805,986
(a)Steinhoff International Holdings Ltd. ....... Household Durables 867,500 2,570,624
------------
390,898,609
------------
22 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SOUTH KOREA 19.7%
CJ Corp. .................................... Food Products 430,960 $ 44,700,069
(a)Daewoo Shipbuilding & Marine
Engineering Co. Ltd. ...................... Machinery 2,268,350 62,027,834
Hana Financial Group Inc. ................... Commercial Banks 1,276,569 58,538,463
(a)Hite Brewery Co. Ltd. ....................... Beverages 142,030 20,300,069
(a)Hyundai Development Co. ..................... Construction & Engineering 1,175,730 53,447,577
(a)Kangwon Land Inc. ........................... Hotels, Restaurants & Leisure 2,378,766 48,519,743
Korea Gas Corp. ............................. Gas Utilities 387,860 12,761,845
(a)LG Card Co. Ltd. ............................ Consumer Finance 792,010 39,698,764
LG Chem Ltd. ................................ Chemicals 607,140 34,349,360
(a)LG Corp. .................................... Industrial Conglomerates 1,316,000 41,276,030
LG Electronics Inc. ......................... Household Durables 411,430 36,467,195
LG Household & Health Care Ltd. ............. Household Products 87,360 4,769,032
(a)LG Petrochemical Co. Ltd. ................... Chemicals 406,400 10,165,042
(a)LG Philips LCD Co. Ltd. ..................... Electronic Equipment & Instruments 289,320 12,333,791
POSCO ....................................... Metals & Mining 129,500 25,964,268
Samsung Electronics Co. Ltd. ................ Semiconductors & Semiconductor Equipment 266,590 174,374,998
Samsung Fine Chemicals Co. Ltd. ............. Chemicals 870,070 28,714,469
Samsung Heavy Industries Co. Ltd. ........... Machinery 1,037,100 18,271,489
Shinhan Financial Group Co. Ltd. ............ Commercial Banks 553,000 22,531,663
SK Corp. .................................... Oil, Gas & Consumable Fuels 699,360 36,165,415
SK Telecom Co. Ltd. ......................... Wireless Telecommunication Services 186,043 33,423,110
-------------
818,800,226
-------------
SWEDEN 0.8%
Oriflame Cosmetics SA, SDR .................. Personal Products 1,104,600 31,836,058
-------------
TAIWAN 13.0%
Acer Inc. ................................... Computers & Peripherals 5,821,523 14,630,730
(a)AU Optronics Corp. .......................... Electronic Equipment & Instruments 3,568,000 5,325,941
BenQ Corp. .................................. Computers & Peripherals 10,800,000 10,445,829
Chinatrust Financial Holding Co. Ltd. ....... Commercial Banks 24,440,809 19,358,172
Chunghwa Telecom Co. Ltd. ................... Diversified Telecommunication Services 17,166,000 29,702,490
D-Link Corp. ................................ Communications Equipment 22,846,893 26,169,198
Delta Electronics Inc. ...................... Electronic Equipment & Instruments 6,268,421 12,851,347
Lite-On Technology Corp. .................... Computers & Peripherals 26,303,658 35,857,880
MediaTek Inc. ............................... Semiconductors & Semiconductor Equipment 4,411,000 52,002,407
Mega Financial Holding Co. Ltd. ............. Commercial Banks 76,166,308 49,537,742
Premier Image Technology Corp. .............. Leisure Equipment & Products 16,605,660 22,283,196
President Chain Store Corp. ................. Food & Staples Retailing 10,528,164 22,065,638
Realtek Semiconductor Corp. ................. Semiconductors & Semiconductor Equipment 23,487,450 27,475,304
Siliconware Precision Industries Co. Ltd. ... Semiconductors & Semiconductor Equipment 11,130,258 15,613,860
Sunplus Technology Co. Ltd. ................. Semiconductors & Semiconductor Equipment 19,916,866 25,240,023
Synnex Technology International Corp. ....... Electronic Equipment & Instruments 12,939,240 15,944,199
Taiwan Mobile Co. Ltd. ...................... Wireless Telecommunication Services 52,816,106 46,176,785
Taiwan Semiconductor Manufacturing
Co. Ltd. .................................. Semiconductors & Semiconductor Equipment 29,509,843 56,185,252
Uni-President Enterprises Corp. ............. Food Products 76,924,790 36,556,646
Yang Ming Marine Transport Corp. ............ Marine 1,382,000 898,838
Yuanta Core Pacific Securities Co. .......... Capital Markets 24,440,232 17,012,453
-------------
541,333,930
-------------
Annual Report | 23
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
THAILAND 3.6%
Aromatics (Thailand) Public Co. Ltd., fgn ... Chemicals 1,032,400 $ 759,987
Bangkok Bank Public Co. Ltd., fgn ........... Commercial Banks 5,919,500 16,593,358
BEC World Public Co. Ltd., fgn .............. Media 14,133,500 4,719,780
Kasikornbank Public Co. Ltd., fgn ........... Commercial Banks 18,745,700 34,270,018
Land and House Public Co. Ltd., fgn ......... Household Durables 31,917,838 6,924,284
Shin Corp. Public Co. Ltd., fgn ............. Wireless Telecommunication Services 16,264,700 16,750,362
Siam Cement Public Co. Ltd., fgn ............ Construction Materials 4,392,213 28,264,332
Siam Commercial Bank
Public Co. Ltd., fgn ...................... Commercial Banks 11,391,000 14,438,318
Siam Makro Public Co. Ltd., fgn ............. Food & Staples Retailing 1,304,700 2,350,209
(a)Thai Airways International
Public Co. Ltd., fgn ...................... Airlines 4,733,100 5,076,329
(a)TMB Bank Public Co. Ltd., fgn ............... Commercial Banks 206,445,800 21,638,439
(a)True Corp. Public Co. Ltd., rts., 3/28/08 ... Diversified Telecommunication Services 2,258,595 --
--------------
151,785,416
--------------
TURKEY 3.2%
(a)Arcelik AS, Br .............................. Household Durables 4,722,447 32,870,049
KOC Holding AS .............................. Industrial Conglomerates 4,550,250 21,395,104
Migros Turk TAS ............................. Food & Staples Retailing 2,199,904 21,339,313
(a)Petkim Petrokimya Holding AS ................ Chemicals 401,854 2,335,842
Tupras-Turkiye Petrol Rafineleri AS ......... Oil, Gas & Consumable Fuels 1,973,540 36,241,238
Turkiye Is Bankasi, C ....................... Commercial Banks 2,308,466 19,999,298
--------------
134,180,844
--------------
UNITED KINGDOM 2.2%
HSBC Holdings PLC ........................... Commercial Banks 3,936,824 63,213,401
Provident Financial PLC ..................... Consumer Finance 3,072,420 28,940,548
--------------
92,153,949
--------------
UNITED STATES 0.4%
Avon Products Inc. .......................... Personal Products 613,000 17,501,150
--------------
TOTAL COMMON STOCKS
(COST $2,689,807,119) ..................... 3,817,318,817
--------------
DIRECT EQUITY INVESTMENTS
(COST $4,447,586) 0.1%
HONG KONG 0.1%
(a),(c),(d),(e)Mayfair Hanoi, Ltd., 30% equity owned through
HEA Holdings Ltd., a wholly owned
investment ................................ Real Estate 4,379,795
--------------
PREFERRED STOCKS 6.7%
BRAZIL 6.7%
Banco Bradesco SA, ADR, pfd ................. Commercial Banks 2,685,598 78,285,182
Companhia Vale do Rio Doce,
ADR, pfd., A .............................. Metals & Mining 1,505,450 54,572,563
Klabin SA, pfd .............................. Containers & Packaging 65,337 115,960
Petroleo Brasileiro SA, ADR, pfd ............ Oil, Gas & Consumable Fuels 1,442,641 92,862,801
24 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (CONTINUED)
BRAZIL (CONTINUED)
Suzano Bahia Sul Papel e Celulose SA,
pfd., A ............................................... Paper & Forest Products 1,845,868 $ 9,291,308
Unibanco Uniao de Bancos
Brasileiros SA, GDR, pfd .............................. Commercial Banks 321,900 20,463,183
Usinas Siderurgicas de Minas Gerais SA,
pfd., A ............................................... Metals & Mining 742,138 17,646,526
Votorantim Celulose e Papel SA,
ADR, pfd .............................................. Paper & Forest Products 144,500 1,775,905
--------------
TOTAL PREFERRED STOCKS
(COST $156,490,203) ................................... 275,013,428
--------------
----------------
PRINCIPAL AMOUNT
----------------
SHORT TERM INVESTMENTS (COST $95,449,284) 2.3%
UNITED STATES 2.3%
(f)U.S. Treasury Bills, 1/05/06 - 3/30/06 .................. $ 96,013,000 95,474,750
--------------
TOTAL INVESTMENTS
(COST $2,946,194,192)
100.6% ................................................ 4,192,186,790
OTHER ASSETS, LESS LIABILITIES
(0.6)% ................................................ (25,710,833)
--------------
NET ASSETS 100.0% ....................................... $4,166,475,957
==============
SELECTED PORTFOLIO ABBREVIATIONS
ADR - American Depository Receipt
GDR - Global Depository Receipt
SDR - Swedish Depository Receipt
(a) Non-income producing.
(b) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under
the Securities Act of 1933. These securities have been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At December 31, 2005,
the aggregate value of these securities was $72,298,575, representing
1.74% of net assets.
(c) See Note 10 regarding other considerations.
(d) See Note 8 regarding restricted and illiquid securities.
(e) See Note 9 regarding holdings of 5% voting securities.
(f) The security is traded on a discount basis with no stated coupon rate.
Annual Report | See notes to financial statements. | 25
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
Assets:
Investments in securities:
Cost - Unaffiliated issuers ............................. $ 2,941,746,606
Cost - Non-controlled affiliated issuers (Note 9) ....... 4,447,586
---------------
Total cost of Investments ............................... 2,946,194,192
===============
Value - Unaffiliated issuers ............................ 4,187,806,995
Value - Non-controlled affiliated issuers (Note 9) ...... 4,379,795
---------------
Total value of Investments .............................. 4,192,186,790
Cash ..................................................... 2,442
Foreign currency, at value (cost $3,697,521) ............. 3,491,053
Receivables:
Investment securities sold .............................. 6,281,582
Capital shares sold ..................................... 15,452,984
Dividends ............................................... 5,683,726
Foreign income tax receivable ........................... 1,207,703
---------------
Total assets ........................................ 4,224,306,280
---------------
Liabilities:
Payables:
Investment securities purchased ......................... 5,073,462
Capital shares redeemed ................................. 43,581,536
Affiliates .............................................. 7,440,767
Deferred tax ............................................. 427,667
Accrued expenses and other liabilities ................... 1,306,891
---------------
Total liabilities ................................... 57,830,323
---------------
Net assets, at value .............................. $ 4,166,475,957
===============
Net assets consist of:
Paid-in capital .......................................... $ 3,260,041,461
Distributions in excess of net investment income ......... (27,554,092)
Net unrealized appreciation (depreciation) ............... 1,245,480,404
Accumulated net realized gain (loss) ..................... (311,491,816)
---------------
Net assets, at value .............................. $ 4,166,475,957
===============
26 | See notes to financial statements. | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 2005
CLASS A:
Net assets, at value ........................................................ $3,395,150,586
==============
Shares outstanding .......................................................... 144,966,072
==============
Net asset value per share(a) ................................................ $ 23.42
==============
Maximum offering price per share (net asset value per share / 94.25%) ....... $ 24.85
==============
CLASS B:
Net assets, at value ........................................................ $ 46,965,407
==============
Shares outstanding .......................................................... 2,039,217
==============
Net asset value and maximum offering price per share(a) ..................... $ 23.03
==============
CLASS C:
Net assets, at value ........................................................ $ 364,354,581
==============
Shares outstanding .......................................................... 15,841,224
==============
Net asset value and maximum offering price per share(a) ..................... $ 23.00
==============
CLASS R:
Net assets, at value ........................................................ $ 16,182,662
==============
Shares outstanding .......................................................... 697,645
==============
Net asset value and maximum offering price per share(a) ..................... $ 23.20
==============
ADVISOR CLASS:
Net assets, at value ........................................................ $ 343,822,721
==============
Shares outstanding .......................................................... 14,690,774
==============
Net asset value and maximum offering price per share(a) ..................... $ 23.40
==============
(a) Redemption price is equal to net asset value less contingent deferred
sales charges, if applicable, and redemption fees retained by the Fund.
Annual Report | See notes to financial statements. | 27
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended December 31, 2005
Investment income:
Dividends (net of foreign taxes of $9,608,839) ................................... $ 104,768,924
Interest (net of foreign taxes of $220) .......................................... 4,133,938
Other income (Note 11) ........................................................... 350,581
-------------
Total investment income ..................................................... 109,253,443
-------------
Expenses:
Management fees (Note 3a) ........................................................ 39,894,278
Administrative fees (Note 3b) .................................................... 3,037,143
Distribution fees (Note 3c)
Class A ......................................................................... 9,143,385
Class B ......................................................................... 397,349
Class C ......................................................................... 2,901,973
Class R ......................................................................... 45,105
Transfer agent fees (Note 3e) .................................................... 6,116,150
Custodian fees (Note 4) .......................................................... 3,324,461
Reports to shareholders .......................................................... 555,200
Registration and filing fees ..................................................... 170,350
Professional fees ................................................................ 205,457
Trustees' fees and expenses ...................................................... 115,857
Other ............................................................................ 83,850
-------------
Total expenses .............................................................. 65,990,558
Expense reductions (Note 4) ................................................. (9,627)
-------------
Net expenses .............................................................. 65,980,931
-------------
Net investment income ................................................... 43,272,512
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments
Unaffiliated issuers (net of foreign taxes of $264,105) ........................ 408,156,106
Non-controlled affiliated issuers (Note 9) ..................................... (4,744,569)
Foreign currency transactions ................................................... (2,810,334)
-------------
Net realized gain (loss) .................................................... 400,601,203
-------------
Net change in unrealized appreciation (depreciation) on:
Investments ..................................................................... 411,814,736
Translation of assets and liabilities denominated in foreign currencies ......... (222,658)
Change in deferred taxes on unrealized appreciation ............................. 778,440
-------------
Net change in unrealized appreciation (depreciation) ........................ 412,370,518
-------------
Net realized and unrealized gain (loss) ........................................... 812,971,721
-------------
Net increase (decrease) in net assets resulting from operations ................... $ 856,244,233
-------------
28 | See notes to financial statements. | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
2005 2004
-----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................... $ 43,272,512 $ 26,154,444
Net realized gain (loss) from investments and foreign currency transactions ............. 400,601,203 251,004,438
Net change in unrealized appreciation (depreciation) on investments, translation of
assets and liabilities denominated in foreign currencies, and deferred taxes .......... 412,370,518 275,881,239
-----------------------------------
Net increase (decrease) in net assets resulting from operations ..................... 856,244,233 553,040,121
Distributions to shareholders from:
Net investment income:
Class A .............................................................................. (39,094,297) (33,108,845)
Class B .............................................................................. (328,927) (315,700)
Class C .............................................................................. (2,418,452) (2,240,910)
Class R .............................................................................. (140,866) (52,130)
Advisor Class ........................................................................ (4,529,261) (3,739,371)
-----------------------------------
Total distributions to shareholders ....................................................... (46,511,803) (39,456,956)
-----------------------------------
Capital share transactions: (Note 2)
Class A .............................................................................. 422,960,064 15,356,458
Class B .............................................................................. 357,601 4,313,113
Class C .............................................................................. 34,935,377 994,363
Class R .............................................................................. 8,554,551 2,717,669
Advisor Class ........................................................................ 84,841,579 (45,241,326)
-----------------------------------
Total capital share transactions .......................................................... 551,649,172 (21,859,723)
-----------------------------------
Redemption fees ........................................................................... 41,172 61,365
-----------------------------------
Net increase (decrease) in net assets ................................................ 1,361,422,774 491,784,807
Net assets:
Beginning of year ......................................................................... 2,805,053,183 2,313,268,376
-----------------------------------
End of year ............................................................................... $ 4,166,475,957 $ 2,805,053,183
===================================
Distributions in excess of net investment income included in net assets:
End of year ............................................................................... $ (27,554,092) $ (21,890,502)
===================================
Annual Report | See notes to financial statements. | 29
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 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.
Government securities generally trade in the over-the-counter market rather than
on a securities exchange. The Fund 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 Fund'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. 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 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.
The Fund 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. 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. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. 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 Fund's Board of
Trustees.
30 | 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 Fund'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, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.
D. INCOME AND DEFERRED TAXES
No provision has been made for U.S. income taxes because the Fund's policy is to
continue to qualify as a regulated investment company under the Internal Revenue
Code and to distribute to shareholders substantially all of its taxable income
and net realized gains.
The Fund is subject to a tax imposed on net realized gains on securities of
certain foreign countries. The Fund records an estimated deferred tax liability
for net unrealized gains on these securities in an amount that would be payable
if the securities were disposed of on the valuation date.
Annual Report | 31
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME AND DEFERRED TAXES (CONTINUED)
Foreign securities held by the Fund may be subject to foreign taxation. Foreign
taxes, if any, are recorded based on the tax regulations and rates that exist in
the foreign markets in which the Fund invests.
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 is
recorded on the ex-dividend date except that certain dividends from foreign
securities are recognized as soon as the Fund is notified of the ex-dividend
date. Distributions to shareholders are recorded on the ex-dividend date and are
determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with generally accepted accounting principles. These differences may
be permanent or temporary. Permanent differences are reclassified among capital
accounts to reflect their tax character. These reclassifications have no impact
on net assets or the results of operations. Temporary differences are not
reclassified, as they may reverse in subsequent periods.
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
A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date (30 days or less prior to June 1, 2004). The
redemption fee is 2% of the amount redeemed. Such fees are retained by the Fund
and accounted for as an addition to paid-in capital.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified by the Fund against certain liabilities 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.
32 | 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 are only offered to
existing Class B shareholders in the form of reinvested distributions and
certain exchanges from other Franklin Templeton Class B shares. 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, 2005, 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,
2005 2004
---------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------
CLASS A SHARES:
Shares sold ............................... 62,784,335 $1,280,942,613 54,386,792 $864,979,010
Shares issued in reinvestment
of distributions ........................ 1,592,210 33,794,108 1,727,121 28,781,307
Shares redeemed ........................... (43,826,099) (891,776,657) (56,970,066) 878,403,859)
---------------------------------------------------------------------
Net increase (decrease) ..................... 20,550,446 $ 422,960,064 (856,153) $ 15,356,458
=====================================================================
CLASS B SHARES:
Shares sold ............................... 346,641 $ 6,913,076 618,760 $ 9,770,977
Shares issued in reinvestment
of distributions ........................ 15,252 297,644 18,114 291,562
Shares redeemed ........................... (350,954) (6,853,119) (376,813) (5,749,426)
---------------------------------------------------------------------
Net increase (decrease) ..................... 10,939 $ 357,601 260,061 $ 4,313,113
=====================================================================
CLASS C SHARES:
Shares sold ............................... 4,078,278 $ 82,118,609 2,969,639 $ 46,493,499
Shares issued in reinvestment
of distributions ........................ 100,801 1,982,771 118,864 1,900,231
Shares redeemed ........................... (2,515,326) (49,166,003) (3,081,786) (47,399,367)
---------------------------------------------------------------------
Net increase (decrease) ..................... 1,663,753 $ 34,935,377 6,717 $ 994,363
=====================================================================
CLASS R SHARES:
Shares sold ............................... 561,492 $ 11,503,248 230,036 $ 3,659,861
Shares issued in reinvestment
of distributions ........................ 6,460 138,829 3,101 51,961
Shares redeemed ........................... (154,113) (3,087,526) (62,944) (994,153)
---------------------------------------------------------------------
Net increase (decrease) ..................... 413,839 $ 8,554,551 170,193 $ 2,717,669
=====================================================================
ADVISOR CLASS SHARES:
Shares sold ............................... 7,573,075 $ 161,924,074 1,555,426 $ 24,799,500
Shares issued in reinvestment
of distributions ........................ 131,387 2,828,459 140,492 2,357,106
Shares redeemed ........................... (3,772,674) (79,910,954) (4,577,426) (72,397,932)
---------------------------------------------------------------------
Net increase (decrease) ................... 3,931,788 $ 84,841,579 (2,881,508) $(45,241,326)
=====================================================================
Annual Report | 33
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:
- --------------------------------------------------------------------------------------------------
SUBSIDIARY 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 average daily
net assets of the Fund 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% In excess of $20 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets of the Fund 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% In excess of $1.2 billion
C. DISTRIBUTION FEES
The Fund's Board of Trustees has adopted distribution plans for each share
class, with the exception of Advisor class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors up to 0.35% per year of Class A's average daily net
assets for costs incurred in connection with the sale and distribution of the
Fund's shares. Under the Class A reimbursement distribution plan, costs
exceeding the maximum for the current plan year could be reimbursed in
subsequent periods. Effective November 1, 2005, the plan was amended to
discontinue the reimbursement of excess plan year costs in subsequent periods.
34 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES (CONTINUED)
Under the Fund's compensation distribution plans, the Fund pays Distributors for
costs incurred in connection with the sale and distribution of the Fund's shares
up to a certain percentage per year of its average daily net assets of each
class as follows:
Class B............................................... 1.00%
Class C............................................... 1.00%
Class R............................................... 0.50%
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(a)......................... $482,353
Contingent deferred sales charges retained............ $104,640
(a) Net of commissions paid to unaffiliated broker/dealers.
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $6,116,150, of which $3,495,421 was
retained by 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, 2005, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At December 31, 2005, the Fund had tax basis capital losses which may be carried
over to offset future capital gains, if any. At December 31, 2005, the Fund had
remaining tax basis capital losses of $10,995,696 from the merged Templeton
Vietnam and Southeast Asia Fund and Templeton Emerging Markets Appreciation Fund
which may be carried over to offset future capital gains, subject to certain
limitations under the Internal Revenue Code. During the year ended December 31,
2005, the Fund utilized $400,905,992 of capital loss carryforwards, which
included $10,185,906 from the merged Funds. At December 31, 2005, capital loss
carryforwards were as follows:
Capital loss carryovers expiring in:
2008 ............................................. $ 7,422,048
2009 ............................................. 159,105,818
2010 ............................................. 141,181,639
------------
$307,709,505
============
Annual Report | 35
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
For tax purposes, realized currency losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At December 31, 2005, the Fund deferred realized currency losses of
$868,511.
The tax character of distributions paid during the years ended December 31, 2005
and 2004, was as follows:
--------------------------
2005 2004
--------------------------
Distributions paid from - ordinary income ........ $46,511,803 $39,456,956
Net investment income 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 gains (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.
At December 31, 2005, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:
Cost of investments ........................................ $ 3,005,840,522
---------------
Unrealized appreciation .................................... $ 1,218,365,446
Unrealized depreciation .................................... (32,019,178)
---------------
Net unrealized appreciation (depreciation) ................. $ 1,186,346,268
===============
Distributable earnings - undistributed ordinary income ..... $ 29,485,058
===============
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended December 31, 2005, aggregated $1,578,721,467 and $1,099,122,497,
respectively.
7. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuation
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
36 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. RESTRICTED AND ILLIQUID SECURITIES
At December 31, 2005, investments in securities included issues that are
restricted and illiquid. Restricted securities are often purchased in private
placement transactions, and cannot be sold without prior registration under the
Securities Act of 1933, unless the sale is pursuant to an exemption under the
1933 Act. The Fund has registration rights for all restricted securities held at
period end. The issuer generally incurs all registration costs.
A security may 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,
2005, the Fund held investments in restricted and illiquid securities, valued in
accordance with procedures approved by the Fund's Board of Trustees as
reflecting fair value, as follows:
- ----------------------------------------------------------------------------------------------------------------------
ACQUISITION
SHARES ISSUER DATE COST VALUE
- ----------------------------------------------------------------------------------------------------------------------
Mayfair Hanoi, Ltd., 30% equity owned through
HEA Holdings Ltd. (0.12% of Net Assets).............. 10/31/96 $ 4,447,586 $4,379,795
----------
9. 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, 2005 were as shown below.
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES REALIZED
HELD AT GROSS GROSS HELD AT VALUE AT INVESTMENT CAPITAL
NAME OF ISSUER BEGINNING OF YEAR ADDITIONS REDUCTIONS END OF YEAR END OF YEAR INCOME GAIN (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
Indotel Ltd. .................. 900,000 -- 900,000 -- $ -- $ -- $(4,744,569)
Mayfair Hanoi, Ltd., 30% equity
owned through HEA
Holdings Ltd. ................. -- -- -- -- 4,379,795 -- --
--------------------------------------
TOTAL AFFILIATED SECURITIES (0.12% of Net Assets) ..................... $4,379,795 $ -- $(4,744,569)
======================================
10. OTHER CONSIDERATIONS
Directors or employees of TAML, as the Fund's Investment Manager, may serve as
members on the board of directors of certain companies in which the Fund invests
and/or may represent the Fund in certain corporate negotiations. At December 31,
2005, such individuals serve in one or more of these capacities for HEA Holdings
Ltd. and Mayfair Hanoi, Ltd. As a result of this involvement, such individuals
may be in possession of 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.
Annual Report | 37
TEMPLETON DEVELOPING MARKETS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. REGULATORY MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, 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 (collectively, the "Company"), entered into
settlements with certain of those regulators.
Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop a plan for distribution of the
respective settlement monies. The CAGO approved the distribution plan under the
CAGO Settlement and, in accordance with the terms and conditions of that
settlement, the monies were disbursed to the relevant funds and are recorded as
other income in the current period. The SEC has not yet approved the
distribution plan pertaining to the December 13, 2004 SEC Order. When approved,
disbursements of settlement monies will be made promptly to the relevant funds,
in accordance with the terms and conditions of that order. The IDC continues to
develop the plan of distribution under the August 2, 2004 SEC Order that
resolved the SEC's market timing investigation.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices referenced above,
as well as to allegedly excessive advisory fees, commissions, and/or 12b-1 fees.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.
The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced above are without merit and intends to defend
against them vigorously. The Company cannot predict with certainty the eventual
outcome of these lawsuits, nor whether they will have a material negative impact
on the Company. If it is determined that the Company bears responsibility for
any unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.
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 Templeton Developing Markets Trust
(the "Fund") at December 31, 2005, 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 five years in the
period then ended, 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, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 10, 2006
Annual Report | 39
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED)
Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund designates
the maximum amount allowable but no less than $38,986,686 as qualified dividends
for purposes of the maximum rate under Section 1(h)(11) of the Code for the
fiscal year ended December 31, 2005. In January 2006, shareholders will receive
Form 1099-DIV which will include their share of qualified dividends distributed
during the calendar year 2005. Shareholders are advised to check with their tax
advisors for information on the treatment of these amounts on their individual
income tax returns.
Under Section 871(k)(1)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $4,132,249 as interest-related dividends for purposes
of the tax imposed under Section 871(a)(1)(A) of the Code for the fiscal year
ended December 31, 2005.
At December 31, 2005, more than 50% of the Fund'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 designates to shareholders the foreign source income and foreign
taxes paid as allowed, pursuant to Section 853 of the Code. This designation
will allow shareholders of record on December 15, 2005, 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, and foreign source income, and foreign qualified dividends as designated
by the Fund to Class A, Class B, Class C, Class R, and Advisor Class
shareholders of record.
40 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
Record Date:12/15/2005
- ----------------------------------------------------------------------------------------------------------
CLASS A
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Austria......................................... 0.0009 0.0028 0.0028
Belgium......................................... 0.0003 0.0010 0.0010
Bermuda......................................... 0.0000 0.0001 0.0000
Brazil.......................................... 0.0054 0.0373 0.0010
China........................................... 0.0000 0.0191 0.0075
Croatia......................................... 0.0000 0.0019 0.0000
Greece.......................................... 0.0000 0.0007 0.0007
Hong Kong....................................... 0.0000 0.0188 0.0000
Hungary......................................... 0.0013 0.0052 0.0052
India........................................... 0.0015 0.0075 0.0075
Indonesia....................................... 0.0002 0.0005 0.0005
Malaysia........................................ 0.0000 0.0048 0.0000
Mexico.......................................... 0.0000 0.0125 0.0125
Panama.......................................... 0.0000 0.0015 0.0015
Philippines..................................... 0.0008 0.0015 0.0015
Poland.......................................... 0.0015 0.0045 0.0045
Russia.......................................... 0.0019 0.0071 0.0071
Singapore....................................... 0.0000 0.0191 0.0000
South Africa.................................... 0.0009 0.0316 0.0073
South Korea..................................... 0.0130 0.0358 0.0356
Sweden.......................................... 0.0000 0.0023 0.0000
Taiwan.......................................... 0.0265 0.0553 0.0000
Thailand........................................ 0.0013 0.0058 0.0058
Turkey.......................................... 0.0000 0.0145 0.0145
United Kingdom.................................. 0.0000 0.0030 0.0000
================================================
TOTAL........................................... $0.0555 $0.2942 $0.1165
================================================
Annual Report | 41
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------------------------------
CLASS B
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- -------------------------------------------------------------------------------------------------------
Austria ......................................... 0.0009 0.0016 0.0016
Belgium ......................................... 0.0003 0.0006 0.0006
Bermuda ......................................... 0.0000 0.0001 0.0000
Brazil .......................................... 0.0054 0.0213 0.0006
China ........................................... 0.0000 0.0109 0.0043
Croatia ......................................... 0.0000 0.0011 0.0000
Greece .......................................... 0.0000 0.0004 0.0004
Hong Kong ....................................... 0.0000 0.0108 0.0000
Hungary ......................................... 0.0013 0.0030 0.0030
India ........................................... 0.0015 0.0043 0.0043
Indonesia ....................................... 0.0002 0.0003 0.0003
Malaysia ........................................ 0.0000 0.0028 0.0000
Mexico .......................................... 0.0000 0.0071 0.0071
Panama .......................................... 0.0000 0.0008 0.0008
Philippines ..................................... 0.0008 0.0009 0.0009
Poland .......................................... 0.0015 0.0026 0.0026
Russia .......................................... 0.0019 0.0041 0.0041
Singapore ....................................... 0.0000 0.0109 0.0000
South Africa .................................... 0.0009 0.0181 0.0042
South Korea ..................................... 0.0130 0.0204 0.0203
Sweden .......................................... 0.0000 0.0013 0.0000
Taiwan .......................................... 0.0265 0.0313 0.0000
Thailand ........................................ 0.0013 0.0033 0.0033
Turkey .......................................... 0.0000 0.0083 0.0083
United Kingdom .................................. 0.0000 0.0017 0.0000
------------------------------------------------
TOTAL ........................................... $0.0555 $0.1680 $0.0667
================================================
42 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------
CLASS C
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- ------------------------------------------------------------------------------------------------------------------
Austria .......................................... 0.0009 0.0017 0.0017
Belgium .......................................... 0.0003 0.0006 0.0006
Bermuda .......................................... 0.0000 0.0001 0.0000
Brazil ........................................... 0.0054 0.0225 0.0006
China ............................................ 0.0000 0.0115 0.0045
Croatia .......................................... 0.0000 0.0011 0.0000
Greece ........................................... 0.0000 0.0004 0.0004
Hong Kong ........................................ 0.0000 0.0113 0.0000
Hungary .......................................... 0.0013 0.0032 0.0032
India ............................................ 0.0015 0.0045 0.0045
Indonesia ........................................ 0.0002 0.0003 0.0003
Malaysia ......................................... 0.0000 0.0029 0.0000
Mexico ........................................... 0.0000 0.0075 0.0075
Panama ........................................... 0.0000 0.0009 0.0009
Philippines ...................................... 0.0008 0.0009 0.0009
Poland ........................................... 0.0015 0.0027 0.0027
Russia ........................................... 0.0019 0.0043 0.0043
Singapore ........................................ 0.0000 0.0115 0.0000
South Africa ..................................... 0.0009 0.0191 0.0044
South Korea ...................................... 0.0130 0.0215 0.0214
Sweden ........................................... 0.0000 0.0014 0.0000
Taiwan ........................................... 0.0265 0.0334 0.0000
Thailand ......................................... 0.0013 0.0035 0.0035
Turkey ........................................... 0.0000 0.0088 0.0088
United Kingdom ................................... 0.0000 0.0018 0.0000
----------------------------------------------------
TOTAL ............................................ $0.0555 $0.1774 $0.0702
====================================================
Annual Report | 43
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
CLASS R
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------------
Austria ............................................. 0.0009 0.0028 0.0028
Belgium ............................................. 0.0003 0.0010 0.0010
Bermuda ............................................. 0.0000 0.0001 0.0000
Brazil .............................................. 0.0054 0.0370 0.0010
China ............................................... 0.0000 0.0190 0.0074
Croatia ............................................. 0.0000 0.0019 0.0000
Greece .............................................. 0.0000 0.0007 0.0007
Hong Kong ........................................... 0.0000 0.0186 0.0000
Hungary ............................................. 0.0013 0.0052 0.0052
India ............................................... 0.0015 0.0075 0.0075
Indonesia ........................................... 0.0002 0.0005 0.0005
Malaysia ............................................ 0.0000 0.0048 0.0000
Mexico .............................................. 0.0000 0.0123 0.0123
Panama .............................................. 0.0000 0.0015 0.0015
Philippines ......................................... 0.0008 0.0015 0.0015
Poland .............................................. 0.0015 0.0045 0.0045
Russia .............................................. 0.0019 0.0070 0.0070
Singapore ........................................... 0.0000 0.0189 0.0000
South Africa ........................................ 0.0009 0.0313 0.0072
South Korea ......................................... 0.0130 0.0354 0.0352
Sweden .............................................. 0.0000 0.0023 0.0000
Taiwan .............................................. 0.0265 0.0545 0.0000
Thailand ............................................ 0.0013 0.0057 0.0057
Turkey .............................................. 0.0000 0.0144 0.0144
United Kingdom ...................................... 0.0000 0.0030 0.0000
--------------------------------------------------
TOTAL ............................................... $0.0555 $0.2914 $0.1154
==================================================
44 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------------------------------------
Austria .............................................. 0.0009 0.0034 0.0034
Belgium .............................................. 0.0003 0.0012 0.0012
Bermuda .............................................. 0.0000 0.0001 0.0000
Brazil ............................................... 0.0054 0.0451 0.0012
China ................................................ 0.0000 0.0231 0.0090
Croatia .............................................. 0.0000 0.0023 0.0000
Greece ............................................... 0.0000 0.0008 0.0008
Hong Kong ............................................ 0.0000 0.0227 0.0000
Hungary .............................................. 0.0013 0.0063 0.0063
India ................................................ 0.0015 0.0091 0.0091
Indonesia ............................................ 0.0002 0.0006 0.0006
Malaysia ............................................. 0.0000 0.0058 0.0000
Mexico ............................................... 0.0000 0.0150 0.0150
Panama ............................................... 0.0000 0.0018 0.0018
Philippines .......................................... 0.0008 0.0018 0.0018
Poland ............................................... 0.0015 0.0055 0.0055
Russia ............................................... 0.0019 0.0086 0.0086
Singapore ............................................ 0.0000 0.0230 0.0000
South Africa ......................................... 0.0009 0.0382 0.0088
South Korea .......................................... 0.0130 0.0432 0.0430
Sweden ............................................... 0.0000 0.0028 0.0000
Taiwan ............................................... 0.0265 0.0667 0.0000
Thailand ............................................. 0.0013 0.0070 0.0070
Turkey ............................................... 0.0000 0.0175 0.0175
United Kingdom ....................................... 0.0000 0.0037 0.0000
--------------------------------------------------
TOTAL ................................................ $0.0555 $0.3553 $0.1406
==================================================
Foreign Tax Paid per Share (Column 1) is the amount per share available to you,
as a tax credit (assuming you held your shares in the Fund for a minimum of 16
days during the 31-day period beginning 15 days before the ex-dividend date of
the Fund's distribution to which the foreign taxes relate), or as a tax
deduction.
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 that have not been adjusted for the
rate differential applicable to such dividend income.(1)
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.(1)
Annual Report | 45
TEMPLETON DEVELOPING MARKETS TRUST
TAX DESIGNATION (UNAUDITED) (CONTINUED)
In January 2006, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2005. The Foreign Source Income reported on Form 1099-DIV has not
been adjusted for the rate differential on foreign source qualified dividend
income. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their 2005 individual income
tax returns.
(1) Qualified dividends are taxed at a maximum rate of 15% (5% for those in the
10% and 15% income tax brackets). In determining the amount of foreign tax
credit that may be applied against the U.S. tax liability of individuals
receiving foreign source qualified dividends, adjustments may be required to the
foreign tax credit limitation calculation to reflect the rate differential
applicable to such dividend income. The rules however permit certain individuals
to elect not to apply the rate differential adjustments for capital gains and/or
dividends for any taxable year. Please consult your tax advisor and the
instructions to Form 1116 for more information.
46 | Annual Report
TEMPLETON DEVELOPING MARKETS TRUST
BOARD MEMBERS AND OFFICERS
The name, year of birth 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
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1992 140 Director, Bar-S Foods (meat packing
500 East Broward Blvd. 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 (1944) Trustee Since 1991 20 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Ltd.; Director, Provo Power Company
Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (1932) Trustee Since 1992 141 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 (1952) Trustee Since 1996 136 Director, Amerada Hess Corporation
500 East Broward Blvd. (exploration and refining of oil and
Suite 2100 gas), H.J. Heinz Company (processed
Fort Lauderdale, FL 33394-3091 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
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (1928) Trustee Since 1993 140 Director, Martek Biosciences
500 East Broward Blvd. Corporation, MedImmune, Inc.
Suite 2100 (biotechnology), and Overstock.com
Fort Lauderdale, FL 33394-3091 (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).
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID W. NIEMIEC (1949) Trustee Since October 17 Director, Emeritus Corporation
500 East Broward Blvd. 2005 (assisted living).
Suite 2100
Fort Lauderdale, FL 33394-3091
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Advisor, Saratoga Partners (private equity fund); Director, various private companies; and FORMERLY, Managing Director, Saratoga
Partners (1998-2001); Managing Director, SBC Warburg Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co.
Inc. (investment banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc (1982-1997).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (1932) Trustee Since 2003 101 Director, White Mountains Insurance
500 East Broward Blvd. Group, Ltd. (holding company),
Suite 2100 Amerada Hess Corporation (exploration
Fort Lauderdale, FL 33394-3091 and refining of oil and gas) and
Sentient Jet (private jet service);
and FORMERLY, Director, Becton
Dickinson and Company (medical
technology), Cooper Industries, Inc.
(electrical products and tools and
hardware), Health Net, Inc.
(formerly, Foundation Health)
(integrated managed care), 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).
- ------------------------------------------------------------------------------------------------------------------------------------
LARRY D. THOMPSON (1945) Trustee Since October 16 None
500 East Broward Blvd. 2005
Suite 2100
Fort Lauderdale, FL 33394-3091
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp (1997-2001); Senior Fellow of the Brookings Institute
(2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice
(2001-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
48 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTANTINE D. TSERETOPOULOS Trustee Since 1991 20 None
(1954)
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
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
**NICHOLAS F. BRADY (1930) Trustee Since 1993 15 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas), and
Fort Lauderdale, FL 33394-3091 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) and Total Logistics,
Inc. (operating and investment
business) (until 2005).
- ------------------------------------------------------------------------------------------------------------------------------------
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 (1933) Trustee, Trustee and 140 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board and Board since 1995
Vice President 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 42 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 49
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (1945) 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.; and officer and/or director or trustee, as the case
may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Since 2004 Not Applicable Not Applicable
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
JEFFREY A. EVERETT (1964) Vice President Since 2001 Not Applicable Not Applicable
P.O. Box N-7759
Lyford Cay, Nassau, Bahamas
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Templeton Global Advisors Limited; and officer of 14 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief Executive
Fort Lauderdale, FL 33394-3091 Officer -
Finance and
Administration
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 47 of the investment
companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) 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 47 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 (1947) 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, LLC,
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 47 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).
- ------------------------------------------------------------------------------------------------------------------------------------
50 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (1940) 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.; 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 45 of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (1940) 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 32 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Vice President and Controller, Keystone Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (1937) 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, Franklin Templeton Institutional
Suisse S.A., 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 45 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
MARK MOBIUS (1936) President and President since Not Applicable Not Applicable
17th Floor, The Chater House Chief Executive 1991 and Chief
8 Connaught Road Officer - Executive Officer -
Central Hong Kong Investment 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 (1960) Secretary Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
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 14 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Assistant General Counsel, The Prudential Insurance Company of America (1997-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 51
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
GREGORY R. SEWARD (1956) Treasurer Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 16 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
CRAIG S. TYLE (1960) Vice President Since October Not Applicable Not Applicable
One Franklin Parkway 2005
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (1951) Chief Financial Since 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:
Senior Vice President, Franklin Templeton Services, LLC; officer of 47 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and
1991-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
* 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 FRANK A. OLSON AND DAVID W. NIEMIEC AS AN
AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. OLSON AND
NIEMIEC QUALIFY AS SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND
AND EXPERIENCE. MR. OLSON HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2003. HE CURRENTLY SERVES AS CHAIRMAN EMERITUS OF THE HERTZ CORPORATION
AND WAS FORMERLY ITS CHAIRMAN OF THE BOARD FROM 1980 TO 2000 AND ITS CHIEF
EXECUTIVE OFFICER FROM 1977 TO 1999. MR. OLSON IS ALSO 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. MR. NIEMIEC HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2005, CURRENTLY SERVES AS AN ADVISOR TO SARATOGA PARTNERS AND WAS FORMERLY
ITS MANAGING DIRECTOR FROM 1998 TO 2001. MR. NIEMIEC IS A DIRECTOR OF EMERITUS
CORPORATION AND VARIOUS PRIVATE COMPANIES, AND WAS FORMERLY MANAGING DIRECTOR OF
SBC WARBURG DILLON READ FROM 1997 TO 1998, AND WAS VICE CHAIRMAN FROM 1991 TO
1997 AND CHIEF FINANCIAL OFFICER FROM 1982 TO 1997 OF DILLON, READ & CO. INC. AS
A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT
MR. OLSON AND MR. NIEMIEC 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. OLSON AND NIEMIEC 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.
52 | Annual Report
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 U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. 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.
Annual Report | 53
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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 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 MidCap Value Fund
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
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(4)
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund(4)
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(4)
Templeton Global Bond Fund
Templeton Income Fund
TAX-FREE INCOME(5)
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(6)
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(7)
Colorado
Connecticut
Florida(7)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(6)
Michigan(6)
Minnesota(6)
Missouri
New Jersey
New York(7)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(8)
(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) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(5) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are
generally taxable.
(6) Portfolio of insured municipal securities.
(7) 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).
(8) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
09/05 Not part of the annual report
[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
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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 A2005 02/06
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 12(a)(1), 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 David W. Niemeic 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 $71,099 for the fiscal year ended December 31, 2005 and $70,000 for the
fiscal year ended December 31, 2004.
(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 $0 for the fiscal year ended December 31, 2005 and $48,579 for the fiscal
year ended December 31, 2004. 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.
The aggregate 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 were $22,571 for the fiscal year ended
December 31, 2005 and $0 for the fiscal year ended December 31, 2004. The
services for which these fees were paid included tax compliance and advice.
(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 $0 for the fiscal year ended December 31, 2005
and $1,622 for the fiscal year ended December 31, 2004. 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 $4,789 for the fiscal year ended December
31, 2005 and $158,378 for the fiscal year ended December 31, 2004. 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
the review of the 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 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 $27,360 for the fiscal year ended December 31, 2005 and $208,579
for the fiscal year ended December 31, 2004.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. 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 11. 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 12. EXHIBITS.
(A)(1) Code of Ethics
(A) (2) 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) 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 21, 2006
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 21, 2006
By /s/GALEN G. VETTER
-----------------------------
Galen G. Vetter
Chief Financial Officer
Date: February 21, 2006