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
---------

TEMPLETON DEVELOPING MARKETS TRUST
----------------------------------
(Exact name of registrant as specified in charter)

500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (954) 527-7500
--------------

Date of fiscal year end: 12/31
-------

Date of reporting period: 12/31/06
----------

ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
DECEMBER 31, 2006
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL REPORT AND SHAREHOLDER LETTER INTERNATIONAL
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------

[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.

- -------------------------------------------------------------------------------
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
- -------------------------------------------------------------------------------

[GRAPHIC OMITTED]

Annual Report

Templeton Developing Markets Trust

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Developing Markets Trust seeks
long-term capital appreciation. Under normal market conditions, the Fund invests
at least 80% of its net assets in securities of developing market countries.

- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 12/31/06

[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]

Asia .................................... 46.7%
Europe .................................. 25.2%
Middle East & Africa .................... 13.9%
Latin America ........................... 12.6%
Short-Term Investments & Other Net Assets 1.6%

- --------------------------------------------------------------------------------

This annual report for Templeton Developing Markets Trust covers the fiscal year
ended December 31, 2006.

PERFORMANCE OVERVIEW

Templeton Developing Markets Trust - Class A posted a +28.29% cumulative total
return for the 12 months ended December 31, 2006. 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 +32.59% and +35.11% for
the same period. 1 Please note that index performance numbers

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 21.

Annual Report | 3

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 9.

ECONOMIC AND MARKET OVERVIEW

During the 12 months under review, strong investor confidence, continuing fund
inflows, robust corporate earnings and a supportive economic environment led
emerging markets to end 2006 at historical highs. After the markets experienced
a healthy correction in May, they recovered as fund flows stabilized, robust
economic data was reported and the U.S. showed signs of an easing monetary
policy. In addition, the interest rate spread on emerging market bonds relative
to U.S. Treasury yields maintained a downward trend during the year, falling
from about 250 basis points (100 basis points equal one percentage point) to
about 170 basis points due to rising liquidity and low inflation. 2 We believe
this signaled greater investor confidence in emerging markets.

Eastern European markets recorded the strongest returns in 2006. Russia
benefited from high commodity prices that supported its exports and from strong
foreign investor participation, while a weaker U.S. dollar enhanced returns in
Poland and the Czech Republic. Turkey was one of the few emerging markets to end
the year with a negative return. Although that market recovered some of the
losses from the correction earlier in the year, investors remained cautious due
to slowing progress for European Union accession talks and expectations of
slower growth after a substantial interest rate increase in the second quarter.

In South Africa, a consumer spending boom, propelled by low borrowing rates and
greater domestic demand, led to higher corporate earnings in related companies.
Foreign investment reached a record high, which boosted returns for South
Africa's markets.

Latin American markets benefited from strong commodity prices, solid domestic
demand and smooth power transitions in the region's key economies. International
confidence in the region, especially in Brazil, remained high. A loosening
monetary policy, growing foreign reserves and repayment of debt to foreign
lenders further supported the Brazilian market.

2. Source: J.P. Morgan.

4 | Annual Report

Asian giants China and India continued to report strong economic growth, which
led to significant fund inflows that pushed markets to record highs. Elsewhere
in the region, Thailand and South Korea struggled with strong local currencies,
which threatened to erode their export competitiveness. North Korea's nuclear
test in October exposed the region to geopolitical tensions. However, the
resumption of six-party talks could yield some positive results in the longer
term. Although a military coup and capital controls in Thailand initially
rattled investor confidence in the nation's financial markets, we continued to
search for opportunities among Thai equities.

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.

MANAGER'S DISCUSSION

During the 12 months under review, relative to the MSCI EM index, the Fund's
performance benefited from underweighted exposure to Israel and exposure to
Croatia (not in the index). Stock selection in South Africa and Taiwan further
enhanced relative performance. In South Africa, the Fund's overweighted exposure
to non-index holdings Anglo American and Remgro benefited the Fund's relative
performance. An underweighted position in Sasol (sold during the period) also
had a positive impact. In Taiwan, the Fund's overweighted positions in
Uni-President Enterprises (sold during the period) and Realtek Semiconductor,
and zero weighting in Chi Mei Optoelectronics, which declined during the year,
benefited the Fund's relative performance. In Israel, the largest contributor to
performance was the Fund's underweighted position in Teva Pharmaceutical
Industries. The Fund only held one Croatian stock, Pliva, which outperformed the
index and contributed to relative performance. At the sector level, stock
selection in the pharmaceuticals and

TOP 10 COUNTRIES
12/31/06

- -------------------------------------------------------------------------------
% OF TOTAL
NET ASSETS
- -------------------------------------------------------------------------------
South Korea 15.2%
- -------------------------------------------------------------------------------
South Africa 13.3%
- -------------------------------------------------------------------------------
Taiwan 11.8%
- -------------------------------------------------------------------------------
China 11.1%
- -------------------------------------------------------------------------------
Brazil 9.8%
- -------------------------------------------------------------------------------
Russia 8.7%
- -------------------------------------------------------------------------------
Turkey 8.2%
- -------------------------------------------------------------------------------
Hungary 3.5%
- -------------------------------------------------------------------------------
Mexico 2.5%
- -------------------------------------------------------------------------------
Thailand 2.4%
- -------------------------------------------------------------------------------

Annual Report | 5

TOP 10 EQUITY HOLDINGS
12/31/06

- -------------------------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- -------------------------------------------------------------------------------
Samsung Electronics Co. Ltd. 4.4%
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT, SOUTH KOREA
- -------------------------------------------------------------------------------
PetroChina Co. Ltd., H, ord. & 144A 4.0%
OIL, GAS & CONSUMABLE FUELS, CHINA
- -------------------------------------------------------------------------------
Petroleo Brasileiro SA, ADR, pfd. 3.3%
OIL, GAS & CONSUMABLE FUELS, BRAZIL
- -------------------------------------------------------------------------------
Gazprom ADR 3.0%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
- -------------------------------------------------------------------------------
Remgro Ltd. 3.0%
DIVERSIFIED FINANCIAL SERVICES,
SOUTH AFRICA
- -------------------------------------------------------------------------------
Akbank TAS 2.8%
COMMERCIAL BANKS, TURKEY
- -------------------------------------------------------------------------------
Old Mutual PLC 2.6%
INSURANCE, SOUTH AFRICA
- -------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing 2.4%
Co. Ltd.
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT, TAIWAN
- -------------------------------------------------------------------------------
Anglo American PLC 2.1%
METALS & MINING, SOUTH AFRICA
- -------------------------------------------------------------------------------
LUKOIL, ADR 2.1%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
- -------------------------------------------------------------------------------

biotechnology, automobiles and components, and diversified financials sectors
contributed to relative Fund performance during the period. 3 The Fund also
benefited from an underweighted position in the technology hardware and
equipment sector, which underperformed the broader MSCI EM Index. 4

It is important to recognize the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar goes up compared with a
foreign currency, an investment traded in that foreign currency will go down in
value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the 12 months
ended December 31, 2006, the U.S. dollar declined in value relative to most
non-U.S. currencies. As a result, the Fund's performance was positively affected
by the portfolio's investment predominantly in securities with non-U.S. currency
exposure. However, one cannot expect the same result in future periods.

Conversely, the Fund's underweighted exposure to India and overweighted exposure
to Turkey detracted from Fund returns relative to the index. The Fund's position
in China also detracted from relative performance mainly due to an underweighted
position in China Life Insurance (sold during the period), which significantly
outperformed the MSCI EM Index. Overweighted positions in Turkish companies
Arcelik, Turkiye Vakiflar Bankasi (Vakifbank) and Tupras-Turkiye Petrol
Rafineleri (Tupras) negatively affected relative performance as these stocks
declined in value during the reporting period. Despite a small decline for the
year under review, the Turkish market actually rebounded more than 20% after a
June correction. Thus, we remained confident of the market's long-term uptrend.
Moreover, we believed these companies' valuations generally remained attractive,
so we increased some of our holdings at lower prices during the year. By sector,
the Fund's positions in the banks, capital goods and insurance sectors had a
negative impact on relative performance partly due to overweighted positions in
stocks such as KOC Holding and Kasikornbank, as well as a position in HSBC
Holdings, which is not an index component. 5

3. The pharmaceuticals and biotechnology sector comprises pharmaceuticals in
the SOI. The automobiles and components sector comprises automobiles in
the SOI. The diversified financials sector comprises consumer finance and
diversified financial services in the SOI.

4. The technology hardware and equipment sector comprises communications
equipment, computers and peripherals, and electronic equipment and
instruments in the SOI.

5. The banks sector comprises commercial banks in the SOI. The capital goods
sector comprises building products, construction and engineering, and
industrial conglomerates in the SOI.

6 | Annual Report

The Fund increased its exposure to Eastern and Southern Europe during the year
under review. More specifically, we increased our allocations in Turkey, Russia,
Hungary and Austria. Turkish investments included major commercial banks Akbank
and Vakifbank; Tupras, the country's largest industrial company, with a dominant
market share in oil refining; and Turkcell Iletisim Hizmetleri, a leading
provider of mobile communications services. Turkey's financial market correction
lowered valuations and provided the Fund with an opportunity to build positions
at what we considered attractive prices. The Fund also purchased MOL Magyar
Olaj-es Gazipari, a Hungarian integrated oil and gas company with large exposure
to Central and Eastern Europe; Russia's Gazprom, the world's largest gas
producer in terms of reserves and production; and Austria's OMV, one of the
leading oil and gas groups in Central and Eastern Europe.

We also significantly increased our investments in South Africa during the
reporting period. The Fund increased its holdings in consumer sectors such as
insurance, wireless telecommunications, banking, home furnishing and retail
clothing. Significant additions included Old Mutual, a major financial services
group involved in life insurance, short-term insurance, asset management and
banking; MTN Group, a dominant wireless telecommunications services provider in
Africa; JD Group, the country's leading furniture retailer; and Edgars
Consolidated Stores, a leading specialty fashion retailer in southern Africa.
Higher disposable incomes and strong consumer demand could lead to greater
consumption of the products and services offered by these sectors of the
economy.

We also undertook selective investments in Israel, Brazil and Pakistan.
Purchases included Petroleo Brasileiro, Brazil's national oil and gas company;
Teva Pharmaceutical, which is among the world's largest generic pharmaceutical
companies; and Pakistan Telecommunications, the country's dominant integrated
telecommunication services provider.

The Fund increased its exposure to the oil, gas and consumable fuels industry.
We believed energy would benefit from greater revenues and earnings due to
relatively higher oil prices in recent years. A correction in commodity prices
during the period provided the Fund with an opportunity to build positions at
lower prices. We believed oil prices would remain firm because of geopolitical
and supply and demand problems. The consumer finance and banking industries also
helped performance. Higher incomes, credit growth and greater demand for
financial services should benefit banks. The Fund also invested in
semiconductors and computer hardware companies in an attempt to benefit from
greater export demand for Asian information technology products.

Annual Report | 7

On the other hand, we substantially reduced the Fund's holdings in Singapore and
India as certain stocks reached their sell targets. Specific sales included
Hindustan Lever, a household products company; Hindustan Petroleum, an oil and
gas refiner and marketer; Singapore Telecommunications, a leading integrated
telecommunication services provider in Singapore; and Fraser and Neave, a
dominant player in the Singapore soft drinks and beer market. One of the largest
sales during the year was Pliva, a Croatian pharmaceutical company. We sold our
Pliva shares after the company was the subject of a takeover battle and the
share price went far above our sell limit. We also sold stocks selectively in
Mexico, Malaysia and China as the Fund continued to realign its exposure seeking
to benefit from the continued economic recovery in emerging markets.

We thank you for your continued participation in Templeton Developing Markets
Trust and look forward to serving your future investment needs.

[PHOTO OMITTED] /s/ Mark Mobius

Mark Mobius
President and Chief Executive Officer -
Investment Management
Templeton Developing Markets Trust

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF DECEMBER 31, 2006, 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.

8 | Annual Report

Performance Summary as of 12/31/06

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

CLASS A (SYMBOL: TEDMX) CHANGE 12/31/06 12/31/05
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.86 $28.28 $23.42
- --------------------------------------------------------------------------------
DISTRIBUTIONS (1/1/06-12/31/06)
- --------------------------------------------------------------------------------
Dividend Income $0.5318
- --------------------------------------------------------------------------------
Long-Term Capital Gain $1.1737
- --------------------------------------------------------------------------------
TOTAL $1.7055
- --------------------------------------------------------------------------------
CLASS B (SYMBOL: TDMBX) CHANGE 12/31/06 12/31/05
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.75 $27.78 $23.03
- --------------------------------------------------------------------------------
DISTRIBUTIONS (1/1/06-12/31/06)
- --------------------------------------------------------------------------------
Dividend Income $0.3319
- --------------------------------------------------------------------------------
Long-Term Capital Gain $1.1737
- --------------------------------------------------------------------------------
TOTAL $1.5056
- --------------------------------------------------------------------------------
CLASS C (SYMBOL: TDMTX) CHANGE 12/31/06 12/31/05
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.72 $27.72 $23.00
- --------------------------------------------------------------------------------
DISTRIBUTIONS (1/1/06-12/31/06)
- --------------------------------------------------------------------------------
Dividend Income $0.3476
- --------------------------------------------------------------------------------
Long-Term Capital Gain $1.1737
- --------------------------------------------------------------------------------
TOTAL $1.5213
- --------------------------------------------------------------------------------
CLASS R (SYMBOL: TDMRX) CHANGE 12/31/06 12/31/05
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.76 $27.96 $23.20
- --------------------------------------------------------------------------------
DISTRIBUTIONS (1/1/06-12/31/06)
- --------------------------------------------------------------------------------
Dividend Income $0.5011
- --------------------------------------------------------------------------------
Long-Term Capital Gain $1.1737
- --------------------------------------------------------------------------------
TOTAL $1.6748
- --------------------------------------------------------------------------------
ADVISOR CLASS (SYMBOL: TDADX) CHANGE 12/31/06 12/31/05
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.87 $28.27 $23.40
- --------------------------------------------------------------------------------
DISTRIBUTIONS (1/1/06-12/31/06)
- --------------------------------------------------------------------------------
Dividend Income $0.6051
- --------------------------------------------------------------------------------
Long-Term Capital Gain $1.1737
- --------------------------------------------------------------------------------
TOTAL $1.7788
- --------------------------------------------------------------------------------

Annual Report | 9

Performance Summary (CONTINUED)

PERFORMANCE

CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURN AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. 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/ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY
CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.

CLASS A 1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------
Cumulative Total Return 1 +28.29% +221.27% +130.25%
- -------------------------------------------------------------------------------
Average Annual Total Return 2 +20.91% +24.81% +8.06%
- -------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,091 $30,288 $21,700
- -------------------------------------------------------------------------------
CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
- -------------------------------------------------------------------------------
Cumulative Total Return 1 +27.40% +210.88% +195.88%
- -------------------------------------------------------------------------------
Average Annual Total Return 2 +23.40% +25.30% +14.52%
- -------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,340 $30,888 $29,588
- -------------------------------------------------------------------------------
CLASS C 1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------
Cumulative Total Return 1 +27.38% +210.96% +115.29%
- -------------------------------------------------------------------------------
Average Annual Total Return 2 +26.38% +25.47% +7.97%
- -------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,638 $31,096 $21,529
- -------------------------------------------------------------------------------
CLASS R 1-YEAR 3-YEAR INCEPTION (1/1/02)
- -------------------------------------------------------------------------------
Cumulative Total Return 1 +27.99% +105.29% +216.74%
- -------------------------------------------------------------------------------
Average Annual Total Return 2 +27.99% +27.09% +25.96%
- -------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,799 $20,529 $31,674
- -------------------------------------------------------------------------------
ADVISOR CLASS 4 1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------
Cumulative Total Return 1 +28.63% +227.45% +137.61%
- -------------------------------------------------------------------------------
Average Annual Total Return 2 +28.63% +26.77% +9.04%
- -------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,863 $32,745 $23,761
- -------------------------------------------------------------------------------

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.

10 | Annual Report

Performance Summary (CONTINUED)

TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT

Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged indexes include
reinvestment of any income or distributions. They differ from the Fund in
composition and do not pay management fees or expenses. One cannot invest
directly in an index.

CLASS A (1/1/97-12/31/06)

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5

1/1/1997 $9,425 $10,000 $10,000
1/31/1997 $10,141 $10,707 $10,682
2/28/1997 $10,437 $11,230 $11,140
3/31/1997 $10,222 $10,953 $10,847
4/30/1997 $10,326 $10,768 $10,866
5/31/1997 $10,861 $11,134 $11,177
6/30/1997 $11,323 $11,615 $11,775
7/31/1997 $11,802 $11,727 $11,951
8/31/1997 $10,769 $10,230 $10,430
9/30/1997 $11,366 $10,562 $10,719
10/31/1997 $9,219 $8,826 $8,960
11/30/1997 $8,610 $8,407 $8,633
12/31/1997 $8,537 $8,526 $8,841
1/31/1998 $7,785 $7,965 $8,148
2/28/1998 $8,597 $8,778 $8,999
3/31/1998 $8,995 $9,122 $9,389
4/30/1998 $9,028 $9,145 $9,287
5/31/1998 $7,804 $8,005 $8,014
6/30/1998 $7,039 $7,187 $7,173
7/31/1998 $7,085 $7,473 $7,401
8/31/1998 $5,342 $5,372 $5,261
9/30/1998 $5,595 $5,632 $5,595
10/31/1998 $6,420 $6,279 $6,184
11/30/1998 $7,125 $6,751 $6,698
12/31/1998 $6,940 $6,650 $6,601
1/31/1999 $6,549 $6,489 $6,495
2/28/1999 $6,589 $6,604 $6,558
3/31/1999 $7,546 $7,375 $7,422
4/30/1999 $8,954 $8,380 $8,340
5/31/1999 $8,759 $8,230 $8,292
6/30/1999 $9,466 $9,127 $9,233
7/31/1999 $9,035 $8,997 $8,982
8/31/1999 $8,637 $9,094 $9,064
9/30/1999 $8,314 $8,841 $8,757
10/31/1999 $8,563 $8,991 $8,943
11/30/1999 $9,176 $9,799 $9,745
12/31/1999 $10,517 $11,113 $10,985
1/31/2000 $10,032 $11,111 $11,050
2/29/2000 $9,662 $11,102 $11,196
3/31/2000 $9,764 $11,262 $11,251
4/30/2000 $8,946 $10,097 $10,184
5/31/2000 $8,263 $9,828 $9,763
6/30/2000 $8,872 $10,109 $10,107
7/31/2000 $8,520 $9,622 $9,587
8/31/2000 $8,675 $9,660 $9,634
9/30/2000 $7,810 $8,796 $8,793
10/31/2000 $7,154 $8,082 $8,156
11/30/2000 $6,775 $7,370 $7,443
12/31/2000 $7,168 $7,583 $7,622
1/31/2001 $8,000 $8,557 $8,672
2/28/2001 $7,404 $7,898 $7,993
3/31/2001 $6,711 $7,217 $7,208
4/30/2001 $7,017 $7,645 $7,564
5/31/2001 $7,275 $7,876 $7,654
6/30/2001 $7,241 $7,734 $7,497
7/31/2001 $6,793 $7,205 $7,023
8/31/2001 $6,806 $7,107 $6,954
9/30/2001 $5,931 $6,005 $5,878
10/31/2001 $6,107 $6,378 $6,243
11/30/2001 $6,481 $7,125 $6,894
12/31/2001 $6,754 $7,718 $7,442
1/31/2002 $7,117 $7,993 $7,694
2/28/2002 $7,130 $8,147 $7,820
3/31/2002 $7,527 $8,715 $8,290
4/30/2002 $7,768 $8,796 $8,344
5/31/2002 $7,733 $8,645 $8,211
6/30/2002 $7,252 $8,028 $7,595
7/31/2002 $6,854 $7,519 $7,018
8/31/2002 $6,833 $7,617 $7,126
9/30/2002 $6,318 $6,770 $6,357
10/31/2002 $6,483 $7,205 $6,769
11/30/2002 $6,998 $7,705 $7,235
12/31/2002 $6,868 $7,414 $6,995
1/31/2003 $6,758 $7,420 $6,965
2/28/2003 $6,751 $7,201 $6,777
3/31/2003 $6,512 $6,936 $6,584
4/30/2003 $7,186 $7,644 $7,171
5/31/2003 $7,617 $8,176 $7,686
6/30/2003 $7,867 $8,682 $8,124
7/31/2003 $8,193 $9,149 $8,632
8/31/2003 $8,576 $9,809 $9,212
9/30/2003 $8,826 $9,916 $9,279
10/31/2003 $9,528 $10,721 $10,069
11/30/2003 $9,715 $10,859 $10,193
12/31/2003 $10,518 $11,651 $10,932
1/31/2004 $10,819 $12,049 $11,320
2/29/2004 $11,212 $12,630 $11,842
3/31/2004 $11,201 $12,865 $11,994
4/30/2004 $10,579 $11,893 $11,014
5/31/2004 $10,437 $11,731 $10,797
6/30/2004 $10,635 $11,732 $10,846
7/31/2004 $10,494 $11,490 $10,654
8/31/2004 $10,841 $12,004 $11,100
9/30/2004 $11,407 $12,697 $11,741
10/31/2004 $11,704 $13,064 $12,023
11/30/2004 $12,602 $14,199 $13,136
12/31/2004 $13,194 $14,927 $13,769
1/31/2005 $13,130 $14,963 $13,812
2/28/2005 $14,199 $16,219 $15,025
3/31/2005 $13,533 $15,207 $14,035
4/30/2005 $13,095 $14,866 $13,661
5/31/2005 $13,605 $15,423 $14,142
6/30/2005 $14,036 $15,943 $14,630
7/31/2005 $14,797 $17,046 $15,665
8/31/2005 $14,747 $17,039 $15,806
9/30/2005 $15,931 $18,795 $17,280
10/31/2005 $15,027 $17,570 $16,151
11/30/2005 $16,175 $18,996 $17,489
12/31/2005 $16,914 $20,180 $18,525
1/31/2006 $18,597 $22,346 $20,605
2/28/2006 $18,655 $22,360 $20,585
3/31/2006 $18,824 $22,641 $20,770
4/30/2006 $20,096 $24,544 $22,252
5/31/2006 $18,236 $22,113 $19,925
6/30/2006 $17,952 $22,021 $19,883
7/31/2006 $18,359 $22,303 $20,181
8/31/2006 $18,737 $22,961 $20,705
9/30/2006 $18,693 $23,162 $20,879
10/31/2006 $19,580 $24,200 $21,871
11/30/2006 $20,684 $26,087 $23,501
12/31/2006 $21,700 $27,266 $24,561

AVERAGE ANNUAL TOTAL RETURN

- ------------------------------------------------
CLASS A 12/31/06
- ------------------------------------------------
1-Year +20.91%
- ------------------------------------------------
5-Year +24.81%
- ------------------------------------------------
10-Year +8.06%
- ------------------------------------------------

CLASS B (1/1/99-12/31/06)

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM 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
1/31/2006 $25,514 $33,603 $31,214
2/28/2006 $25,584 $33,625 $31,185
3/31/2006 $25,800 $34,047 $31,464
4/30/2006 $27,525 $36,909 $33,709
5/31/2006 $24,969 $33,253 $30,185
6/30/2006 $24,563 $33,114 $30,121
7/31/2006 $25,100 $33,538 $30,572
8/31/2006 $25,608 $34,529 $31,366
9/30/2006 $25,527 $34,831 $31,630
10/31/2006 $26,724 $36,391 $33,133
11/30/2006 $28,215 $39,229 $35,601
12/31/2006 $29,588 $41,002 $37,208

AVERAGE ANNUAL TOTAL RETURN

- ------------------------------------------------
CLASS B 12/31/06
- ------------------------------------------------
1-Year +23.40%
- ------------------------------------------------
5-Year +25.30%
- ------------------------------------------------
Since Inception (1/1/99) +14.52%
- ------------------------------------------------

Annual Report | 11

Performance Summary (CONTINUED)

AVERAGE ANNUAL TOTAL RETURN

- ---------------------------------------------
CLASS C 12/31/06
- ---------------------------------------------
1-Year +26.38%
- ---------------------------------------------
5-Year +25.47%
- ---------------------------------------------
10-Year +7.97%
- ---------------------------------------------

CLASS C (1/1/97-12/31/06)

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5

1/1/1997 $10,000 $10,000 $10,000
1/31/1997 $10,753 $10,707 $10,682
2/28/1997 $11,057 $11,230 $11,140
3/31/1997 $10,827 $10,953 $10,847
4/30/1997 $10,925 $10,768 $10,866
5/31/1997 $11,485 $11,134 $11,177
6/30/1997 $11,965 $11,615 $11,775
7/31/1997 $12,472 $11,727 $11,951
8/31/1997 $11,366 $10,230 $10,430
9/30/1997 $11,991 $10,562 $10,719
10/31/1997 $9,721 $8,826 $8,960
11/30/1997 $9,076 $8,407 $8,633
12/31/1997 $8,990 $8,526 $8,841
1/31/1998 $8,197 $7,965 $8,148
2/28/1998 $9,046 $8,778 $8,999
3/31/1998 $9,455 $9,122 $9,389
4/30/1998 $9,484 $9,145 $9,287
5/31/1998 $8,203 $8,005 $8,014
6/30/1998 $7,396 $7,187 $7,173
7/31/1998 $7,431 $7,473 $7,401
8/31/1998 $5,598 $5,372 $5,261
9/30/1998 $5,867 $5,632 $5,595
10/31/1998 $6,731 $6,279 $6,184
11/30/1998 $7,460 $6,751 $6,698
12/31/1998 $7,264 $6,650 $6,601
1/31/1999 $6,851 $6,489 $6,495
2/28/1999 $6,887 $6,604 $6,558
3/31/1999 $7,883 $7,375 $7,422
4/30/1999 $9,356 $8,380 $8,340
5/31/1999 $9,135 $8,230 $8,292
6/30/1999 $9,875 $9,127 $9,233
7/31/1999 $9,413 $8,997 $8,982
8/31/1999 $8,993 $9,094 $9,064
9/30/1999 $8,651 $8,841 $8,757
10/31/1999 $8,908 $8,991 $8,943
11/30/1999 $9,541 $9,799 $9,745
12/31/1999 $10,928 $11,113 $10,985
1/31/2000 $10,416 $11,111 $11,050
2/29/2000 $10,025 $11,102 $11,196
3/31/2000 $10,131 $11,262 $11,251
4/30/2000 $9,270 $10,097 $10,184
5/31/2000 $8,559 $9,828 $9,763
6/30/2000 $9,185 $10,109 $10,107
7/31/2000 $8,815 $9,622 $9,587
8/31/2000 $8,979 $9,660 $9,634
9/30/2000 $8,075 $8,796 $8,793
10/31/2000 $7,392 $8,082 $8,156
11/30/2000 $7,001 $7,370 $7,443
12/31/2000 $7,392 $7,583 $7,622
1/31/2001 $8,253 $8,557 $8,672
2/28/2001 $7,634 $7,898 $7,993
3/31/2001 $6,915 $7,217 $7,208
4/30/2001 $7,228 $7,645 $7,564
5/31/2001 $7,485 $7,876 $7,654
6/30/2001 $7,449 $7,734 $7,497
7/31/2001 $6,979 $7,205 $7,023
8/31/2001 $6,994 $7,107 $6,954
9/30/2001 $6,090 $6,005 $5,878
10/31/2001 $6,268 $6,378 $6,243
11/30/2001 $6,652 $7,125 $6,894
12/31/2001 $6,924 $7,718 $7,442
1/31/2002 $7,294 $7,993 $7,694
2/28/2002 $7,301 $8,147 $7,820
3/31/2002 $7,706 $8,715 $8,290
4/30/2002 $7,949 $8,796 $8,344
5/31/2002 $7,914 $8,645 $8,211
6/30/2002 $7,413 $8,028 $7,595
7/31/2002 $7,006 $7,519 $7,018
8/31/2002 $6,977 $7,617 $7,126
9/30/2002 $6,448 $6,770 $6,357
10/31/2002 $6,613 $7,205 $6,769
11/30/2002 $7,142 $7,705 $7,235
12/31/2002 $6,991 $7,414 $6,995
1/31/2003 $6,884 $7,420 $6,965
2/28/2003 $6,870 $7,201 $6,777
3/31/2003 $6,621 $6,936 $6,584
4/30/2003 $7,303 $7,644 $7,171
5/31/2003 $7,742 $8,176 $7,686
6/30/2003 $7,993 $8,682 $8,124
7/31/2003 $8,316 $9,149 $8,632
8/31/2003 $8,697 $9,809 $9,212
9/30/2003 $8,948 $9,916 $9,279
10/31/2003 $9,652 $10,721 $10,069
11/30/2003 $9,839 $10,859 $10,193
12/31/2003 $10,645 $11,651 $10,932
1/31/2004 $10,948 $12,049 $11,320
2/29/2004 $11,338 $12,630 $11,842
3/31/2004 $11,319 $12,865 $11,994
4/30/2004 $10,686 $11,893 $11,014
5/31/2004 $10,540 $11,731 $10,797
6/30/2004 $10,737 $11,732 $10,846
7/31/2004 $10,584 $11,490 $10,654
8/31/2004 $10,926 $12,004 $11,100
9/30/2004 $11,494 $12,697 $11,741
10/31/2004 $11,785 $13,064 $12,023
11/30/2004 $12,680 $14,199 $13,136
12/31/2004 $13,276 $14,927 $13,769
1/31/2005 $13,196 $14,963 $13,812
2/28/2005 $14,267 $16,219 $15,025
3/31/2005 $13,593 $15,207 $14,035
4/30/2005 $13,145 $14,866 $13,661
5/31/2005 $13,645 $15,423 $14,142
6/30/2005 $14,071 $15,943 $14,630
7/31/2005 $14,827 $17,046 $15,665
8/31/2005 $14,768 $17,039 $15,806
9/30/2005 $15,951 $18,795 $17,280
10/31/2005 $15,033 $17,570 $16,151
11/30/2005 $16,178 $18,996 $17,489
12/31/2005 $16,902 $20,180 $18,525
1/31/2006 $18,570 $22,346 $20,605
2/28/2006 $18,622 $22,360 $20,585
3/31/2006 $18,772 $22,641 $20,770
4/30/2006 $20,029 $24,544 $22,252
5/31/2006 $18,173 $22,113 $19,925
6/30/2006 $17,877 $22,021 $19,883
7/31/2006 $18,269 $22,303 $20,181
8/31/2006 $18,639 $22,961 $20,705
9/30/2006 $18,580 $23,162 $20,879
10/31/2006 $19,452 $24,200 $21,871
11/30/2006 $20,531 $26,087 $23,501
12/31/2006 $21,529 $27,266 $24,561

AVERAGE ANNUAL TOTAL RETURN

- ---------------------------------------------
CLASS R 12/31/06
- ---------------------------------------------
1-Year +27.99%
- ---------------------------------------------
3-Year +27.09%
- ---------------------------------------------
Since Inception (1/1/02) +25.96%
- ---------------------------------------------

CLASS R (1/1/02-12/31/06)

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5

1/1/2002 $10,000 $10,000 $10,000
1/31/2002 $10,536 $10,357 $10,339
2/28/2002 $10,557 $10,557 $10,509
3/31/2002 $11,154 $11,293 $11,141
4/30/2002 $11,500 $11,397 $11,213
5/31/2002 $11,449 $11,201 $11,034
6/30/2002 $10,737 $10,402 $10,207
7/31/2002 $10,147 $9,743 $9,430
8/31/2002 $10,117 $9,869 $9,576
9/30/2002 $9,354 $8,773 $8,543
10/31/2002 $9,588 $9,336 $9,097
11/30/2002 $10,361 $9,984 $9,723
12/31/2002 $10,147 $9,606 $9,400
1/31/2003 $9,995 $9,615 $9,359
2/28/2003 $9,985 $9,330 $9,106
3/31/2003 $9,611 $8,988 $8,848
4/30/2003 $10,601 $9,905 $9,636
5/31/2003 $11,241 $10,594 $10,328
6/30/2003 $11,612 $11,250 $10,917
7/31/2003 $12,086 $11,855 $11,600
8/31/2003 $12,653 $12,710 $12,379
9/30/2003 $13,014 $12,849 $12,470
10/31/2003 $14,046 $13,892 $13,531
11/30/2003 $14,324 $14,071 $13,697
12/31/2003 $15,507 $15,097 $14,690
1/31/2004 $15,955 $15,613 $15,212
2/29/2004 $16,528 $16,365 $15,914
3/31/2004 $16,511 $16,670 $16,118
4/30/2004 $15,587 $15,410 $14,800
5/31/2004 $15,387 $15,200 $14,509
6/30/2004 $15,671 $15,201 $14,575
7/31/2004 $15,461 $14,888 $14,317
8/31/2004 $15,965 $15,554 $14,917
9/30/2004 $16,805 $16,452 $15,778
10/31/2004 $17,236 $16,928 $16,156
11/30/2004 $18,559 $18,398 $17,653
12/31/2004 $19,427 $19,341 $18,502
1/31/2005 $19,331 $19,388 $18,561
2/28/2005 $20,907 $21,016 $20,191
3/31/2005 $19,919 $19,704 $18,861
4/30/2005 $19,269 $19,262 $18,358
5/31/2005 $20,015 $19,984 $19,004
6/30/2005 $20,655 $20,658 $19,660
7/31/2005 $21,774 $22,087 $21,051
8/31/2005 $21,688 $22,078 $21,241
9/30/2005 $23,436 $24,353 $23,222
10/31/2005 $22,104 $22,766 $21,704
11/30/2005 $23,788 $24,614 $23,501
12/31/2005 $24,871 $26,148 $24,894
1/31/2006 $27,326 $28,954 $27,689
2/28/2006 $27,412 $28,973 $27,663
3/31/2006 $27,653 $29,337 $27,911
4/30/2006 $29,518 $31,803 $29,902
5/31/2006 $26,790 $28,653 $26,776
6/30/2006 $26,358 $28,533 $26,719
7/31/2006 $26,952 $28,898 $27,119
8/31/2006 $27,512 $29,752 $27,824
9/30/2006 $27,437 $30,012 $28,057
10/31/2006 $28,731 $31,356 $29,391
11/30/2006 $30,349 $33,802 $31,581
12/31/2006 $31,674 $35,330 $33,006

12 | Annual Report

Performance Summary (CONTINUED)

ADVISOR CLASS (1/1/97-12/31/06) 4

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5

1/1/1997 $10,000 $10,000 $10,000
1/31/1997 $10,739 $10,707 $10,682
2/28/1997 $11,052 $11,230 $11,140
3/31/1997 $10,831 $10,953 $10,847
4/30/1997 $10,942 $10,768 $10,866
5/31/1997 $11,508 $11,134 $11,177
6/30/1997 $12,004 $11,615 $11,775
7/31/1997 $12,512 $11,727 $11,951
8/31/1997 $11,418 $10,230 $10,430
9/30/1997 $12,055 $10,562 $10,719
10/31/1997 $9,783 $8,826 $8,960
11/30/1997 $9,138 $8,407 $8,633
12/31/1997 $9,064 $8,526 $8,841
1/31/1998 $8,265 $7,965 $8,148
2/28/1998 $9,127 $8,778 $8,999
3/31/1998 $9,557 $9,122 $9,389
4/30/1998 $9,585 $9,145 $9,287
5/31/1998 $8,292 $8,005 $8,014
6/30/1998 $7,479 $7,187 $7,173
7/31/1998 $7,528 $7,473 $7,401
8/31/1998 $5,676 $5,372 $5,261
9/30/1998 $5,952 $5,632 $5,595
10/31/1998 $6,836 $6,279 $6,184
11/30/1998 $7,585 $6,751 $6,698
12/31/1998 $7,391 $6,650 $6,601
1/31/1999 $6,973 $6,489 $6,495
2/28/1999 $7,016 $6,604 $6,558
3/31/1999 $8,037 $7,375 $7,422
4/30/1999 $9,539 $8,380 $8,340
5/31/1999 $9,338 $8,230 $8,292
6/30/1999 $10,093 $9,127 $9,233
7/31/1999 $9,633 $8,997 $8,982
8/31/1999 $9,209 $9,094 $9,064
9/30/1999 $8,871 $8,841 $8,757
10/31/1999 $9,130 $8,991 $8,943
11/30/1999 $9,791 $9,799 $9,745
12/31/1999 $11,229 $11,113 $10,985
1/31/2000 $10,711 $11,111 $11,050
2/29/2000 $10,316 $11,102 $11,196
3/31/2000 $10,430 $11,262 $11,251
4/30/2000 $9,555 $10,097 $10,184
5/31/2000 $8,832 $9,828 $9,763
6/30/2000 $9,482 $10,109 $10,107
7/31/2000 $9,113 $9,622 $9,587
8/31/2000 $9,287 $9,660 $9,634
9/30/2000 $8,354 $8,796 $8,793
10/31/2000 $7,660 $8,082 $8,156
11/30/2000 $7,255 $7,370 $7,443
12/31/2000 $7,673 $7,583 $7,622
1/31/2001 $8,575 $8,557 $8,672
2/28/2001 $7,927 $7,898 $7,993
3/31/2001 $7,190 $7,217 $7,208
4/30/2001 $7,526 $7,645 $7,564
5/31/2001 $7,803 $7,876 $7,654
6/30/2001 $7,767 $7,734 $7,497
7/31/2001 $7,285 $7,205 $7,023
8/31/2001 $7,300 $7,107 $6,954
9/30/2001 $6,367 $6,005 $5,878
10/31/2001 $6,556 $6,378 $6,243
11/30/2001 $6,964 $7,125 $6,894
12/31/2001 $7,256 $7,718 $7,442
1/31/2002 $7,647 $7,993 $7,694
2/28/2002 $7,662 $8,147 $7,820
3/31/2002 $8,097 $8,715 $8,290
4/30/2002 $8,357 $8,796 $8,344
5/31/2002 $8,320 $8,645 $8,211
6/30/2002 $7,809 $8,028 $7,595
7/31/2002 $7,379 $7,519 $7,018
8/31/2002 $7,364 $7,617 $7,126
9/30/2002 $6,809 $6,770 $6,357
10/31/2002 $6,993 $7,205 $6,769
11/30/2002 $7,564 $7,705 $7,235
12/31/2002 $7,415 $7,414 $6,995
1/31/2003 $7,305 $7,420 $6,965
2/28/2003 $7,297 $7,201 $6,777
3/31/2003 $7,037 $6,936 $6,584
4/30/2003 $7,768 $7,644 $7,171
5/31/2003 $8,242 $8,176 $7,686
6/30/2003 $8,520 $8,682 $8,124
7/31/2003 $8,867 $9,149 $8,632
8/31/2003 $9,288 $9,809 $9,212
9/30/2003 $9,559 $9,916 $9,279
10/31/2003 $10,327 $10,721 $10,069
11/30/2003 $10,529 $10,859 $10,193
12/31/2003 $11,400 $11,651 $10,932
1/31/2004 $11,735 $12,049 $11,320
2/29/2004 $12,161 $12,630 $11,842
3/31/2004 $12,157 $12,865 $11,994
4/30/2004 $11,482 $11,893 $11,014
5/31/2004 $11,335 $11,731 $10,797
6/30/2004 $11,550 $11,732 $10,846
7/31/2004 $11,405 $11,490 $10,654
8/31/2004 $11,781 $12,004 $11,100
9/30/2004 $12,404 $12,697 $11,741
10/31/2004 $12,726 $13,064 $12,023
11/30/2004 $13,710 $14,199 $13,136
12/31/2004 $14,361 $14,927 $13,769
1/31/2005 $14,291 $14,963 $13,812
2/28/2005 $15,463 $16,219 $15,025
3/31/2005 $14,738 $15,207 $14,035
4/30/2005 $14,268 $14,866 $13,661
5/31/2005 $14,824 $15,423 $14,142
6/30/2005 $15,301 $15,943 $14,630
7/31/2005 $16,138 $17,046 $15,665
8/31/2005 $16,084 $17,039 $15,806
9/30/2005 $17,382 $18,795 $17,280
10/31/2005 $16,396 $17,570 $16,151
11/30/2005 $17,663 $18,996 $17,489
12/31/2005 $18,472 $20,180 $18,525
1/31/2006 $20,303 $22,346 $20,605
2/28/2006 $20,374 $22,360 $20,585
3/31/2006 $20,559 $22,641 $20,770
4/30/2006 $21,956 $24,544 $22,252
5/31/2006 $19,932 $22,113 $19,925
6/30/2006 $19,623 $22,021 $19,883
7/31/2006 $20,075 $22,303 $20,181
8/31/2006 $20,496 $22,961 $20,705
9/30/2006 $20,448 $23,162 $20,879
10/31/2006 $21,424 $24,200 $21,871
11/30/2006 $22,639 $26,087 $23,501
12/31/2006 $23,761 $27,266 $24,561

AVERAGE ANNUAL TOTAL RETURN

- --------------------------------------------
ADVISOR CLASS 4 12/31/06
- --------------------------------------------
1-Year +28.63%
- --------------------------------------------
5-Year +26.77%
- --------------------------------------------
10-Year +9.04%
- --------------------------------------------

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.

2. Average annual total return represents the average annual change in value
of an investment over the periods indicated.

3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated.

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 +137.61% and +9.04%.

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.

Annual Report | 13

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 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.

14 | Annual Report

Your Fund's Expenses (CONTINUED)

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. 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 7/1/06 VALUE 12/31/06 PERIOD* 7/1/06-12/31/06
- ------------------------------------------------------------------------------------------------------------------------

Actual $1,000 $1,208.70 $10.52
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.68 $ 9.60
- ------------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,204.60 $14.56
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.00 $13.29
- ------------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,204.30 $14.50
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.05 $13.24
- ------------------------------------------------------------------------------------------------------------------------
CLASS R
- ------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,207.70 $11.74
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.57 $10.71
- ------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,210.90 $8.92
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.14 $ 8.13
- ------------------------------------------------------------------------------------------------------------------------

* Expenses are equal to the annualized expense ratio for each class (A:
1.89%; B: 2.62%; C: 2.61%; R: 2.11%; and Advisor: 1.60%), multiplied by
the average account value over the period, multiplied by 184/365 to
reflect the one-half year period.

Annual Report | 15

Templeton Developing Markets Trust

FINANCIAL HIGHLIGHTS

-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS A 2006 2005 2004 2003 2002
-----------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......... $ 23.42 $ 18.53 $ 14.95 $ 10.00 $ 9.88
-----------------------------------------------------------------------
Income from investment operations a:

Net investment income b .................... 0.36 0.28 0.18 0.22 0.10

Net realized and unrealized gains (losses) . 6.20 4.90 3.66 4.98 0.07
-----------------------------------------------------------------------
Total from investment operations ............ 6.56 5.18 3.84 5.20 0.17
-----------------------------------------------------------------------
Less distributions from:

Net investment income ...................... (0.53) (0.29) (0.26) (0.25) (0.05)

Net realized gains ......................... (1.17) -- -- -- --
-----------------------------------------------------------------------
Total distributions ......................... (1.70) (0.29) (0.26) (0.25) (0.05)
-----------------------------------------------------------------------
Redemption fees ............................. -- d -- d -- d -- d --
-----------------------------------------------------------------------
Net asset value, end of year ................ $ 28.28 $ 23.42 $ 18.53 $ 14.95 $ 10.00
=======================================================================

Total return c .............................. 28.29% 28.20% 25.45% 53.14% 1.68%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............. $4,876,035 $3,395,151 $2,305,376 $1,873,277 $1,168,340

Ratios to average net assets:

Expenses ................................... 1.86% e 1.97% e 2.03% e 2.17% 2.24%

Net investment income ...................... 1.39% 1.36% 1.12% 1.85% 0.96%

Portfolio turnover rate ..................... 51.95% 34.76% 58.74% 48.60% 49.05%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the
timing of sales and repurchase of the Fund shares in relation to income
earned and/or fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.

d Amount rounds to less than $0.01 per share.

e Benefit of expense reduction rounds to less than 0.01%.

16 | The accompanying notes are an integral part of these financial statements.
| Annual Report

Templeton Developing Markets Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS B 2006 2005 2004 2003 2002
-------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......... $ 23.03 $ 18.24 $ 14.74 $ 9.82 $ 9.77
-------------------------------------------------------------
Income from investment operations a:

Net investment income b .................... 0.17 0.15 0.06 0.13 0.03

Net realized and unrealized gains (losses) . 6.08 4.80 3.61 4.93 0.07
-------------------------------------------------------------
Total from investment operations ............ 6.25 4.95 3.67 5.06 0.10
-------------------------------------------------------------
Less distributions from:

Net investment income ...................... (0.33) (0.16) (0.17) (0.14) (0.05)

Net realized gains ......................... (1.17) -- -- -- --
-------------------------------------------------------------
Total distributions ......................... (1.50) (0.16) (0.17) (0.14) (0.05)
-------------------------------------------------------------
Redemption fees ............................. -- d -- d -- d -- d --
-------------------------------------------------------------
Net asset value, end of year ................ $ 27.78 $ 23.03 $ 18.24 $ 14.74 $ 9.82
=============================================================

Total return c .............................. 27.40% 27.35% 24.70% 52.17% 0.98%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............. $ 54,991 $ 46,965 $ 36,992 $ 26,062 $ 12,377

Ratios to average net assets:

Expenses ................................... 2.58% e 2.62% e 2.68% e 2.82% 2.88%

Net investment income ...................... 0.67% 0.71% 0.47% 1.20% 0.32%

Portfolio turnover rate ..................... 51.95% 34.76% 58.74% 48.60% 49.05%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.

d Amount rounds to less than $0.01 per share.

e Benefit of expense reduction rounds to less than 0.01%.

Annual Report |
The accompanying notes are an integral part of these financial statements. | 17

Templeton Developing Markets Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS C 2006 2005 2004 2003 2002
-------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......... $ 23.00 $ 18.22 $ 14.72 $ 9.79 $ 9.73
-------------------------------------------------------------
Income from investment operations a:

Net investment income b .................... 0.17 0.14 0.05 0.14 0.03

Net realized and unrealized gains (losses) . 6.07 4.81 3.60 4.90 0.08
-------------------------------------------------------------
Total from investment operations ............ 6.24 4.95 3.65 5.04 0.11
-------------------------------------------------------------
Less distributions from:

Net investment income ...................... (0.35) (0.17) (0.15) (0.11) (0.05)

Net realized gains ......................... (1.17) -- -- -- --
-------------------------------------------------------------
Total distributions ......................... (1.52) (0.17) (0.15) (0.11) (0.05)
-------------------------------------------------------------
Redemption fees ............................. -- d -- d -- d -- d --
-------------------------------------------------------------
Net asset value, end of year ................ $ 27.72 $ 23.00 $ 18.22 $ 14.72 $ 9.79
=============================================================

Total return c .............................. 27.38% 27.31% 24.72% 52.25% 0.98%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............. $489,722 $364,355 $258,365 $208,581 $127,808

Ratios to average net assets:

Expenses ................................... 2.58% e 2.63% e 2.69% e 2.82% 2.89%

Net investment income ...................... 0.67% 0.70% 0.46% 1.20% 0.31%

Portfolio turnover rate ..................... 51.95% 34.76% 58.74% 48.60% 49.05%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.

d Amount rounds to less than $0.01 per share.

e Benefit of expense reduction rounds to less than 0.01%.

18 | The accompanying notes are an integral part of these financial statements.
| Annual Report

Templeton Developing Markets Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS R 2006 2005 2004 2003 2002 f
---------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......... $ 23.20 $ 18.39 $ 14.85 $ 9.98 $ 9.93
---------------------------------------------------------------
Income from investment operations a:

Net investment income b .................... 0.29 0.20 0.16 0.17 0.03

Net realized and unrealized gains (losses) . 6.14 4.90 3.64 4.98 0.07
---------------------------------------------------------------
Total from investment operations ............ 6.43 5.10 3.80 5.15 0.10
---------------------------------------------------------------
Less distributions from:

Net investment income ...................... (0.50) (0.29) (0.26) (0.28) (0.05)

Net realized gains ......................... (1.17) -- -- -- --
---------------------------------------------------------------
Total distributions ......................... (1.67) (0.29) (0.26) (0.28) (0.05)
---------------------------------------------------------------
Redemption fees ............................. -- d -- d -- d -- d --
---------------------------------------------------------------
Net asset value, end of year ................ $ 27.96 $ 23.20 $ 18.39 $ 14.85 $ 9.98
===============================================================

Total return c .............................. 27.99% 28.03% 25.28% 52.82% 0.96%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............. $ 40,779 $ 16,183 $ 5,220 $ 1,688 $ 381

Ratios to average net assets:

Expenses ................................... 2.08% e 2.13% e 2.18% e 2.32% 2.39% g

Net investment income ...................... 1.17% 1.20% 0.97% 1.70% 0.81% g

Portfolio turnover rate ..................... 51.95% 34.76% 58.74% 48.60% 49.05%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable and is not annualized for periods less than
one year.

d Amount rounds to less than $0.01 per share.

e Benefit of expense reduction rounds to less than 0.01%.

f For the period January 2, 2002 (effective date) to December 31, 2002.

g Annualized.

Annual Report |
The accompanying notes are an integral part of these financial statements. | 19

Templeton Developing Markets Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
ADVISOR CLASS 2006 2005 2004 2003 2002
-------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......... $ 23.40 $ 18.51 $ 14.93 $ 10.01 $ 9.84
-------------------------------------------------------------
Income from investment operations a:

Net investment income b .................... 0.43 0.32 0.24 0.26 0.12

Net realized and unrealized gains (losses) . 6.22 4.92 3.65 4.99 0.10
-------------------------------------------------------------
Total from investment operations ............ 6.65 5.24 3.89 5.25 0.22
-------------------------------------------------------------
Less distributions from:

Net investment income ...................... (0.61) (0.35) (0.31) (0.33) (0.05)

Net realized gains ......................... (1.17) -- -- -- --
-------------------------------------------------------------
Total distributions ......................... (1.78) (0.35) (0.31) (0.33) (0.05)
-------------------------------------------------------------
Redemption fees ............................. -- c -- c -- c -- c --
-------------------------------------------------------------
Net asset value, end of year ................ $ 28.27 $ 23.40 $ 18.51 $ 14.93 $ 10.01
=============================================================

Total return ................................ 28.63% 28.63% 25.98% 53.72% 2.20%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............. $460,225 $343,823 $199,101 $203,660 $130,459

Ratios to average net assets:

Expenses ................................... 1.58% d 1.63% d 1.68% d 1.82% 1.89%

Net investment income ...................... 1.67% 1.70% 1.47% 2.20% 1.31%

Portfolio turnover rate ..................... 51.95% 34.76% 58.74% 48.60% 49.05%

b Based on average daily shares outstanding.

c Amount rounds to less than $0.01 per share.

d Benefit of expense reduction rounds to less than 0.01%.

20 | The accompanying notes are an integral part of these financial statements.
| Annual Report

Templeton Developing Markets Trust

STATEMENT OF INVESTMENTS, DECEMBER 31, 2006

- ---------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ---------------------------------------------------------------------------------------------------------------------

LONG TERM INVESTMENTS 98.4%
COMMON STOCKS AND RIGHTS 90.1%
AUSTRIA 0.8%
OMV AG ................................. Oil, Gas & Consumable Fuels 299,320 $ 16,986,095
Wienerberger AG ........................ Building Products 474,999 28,216,008
-------------
45,202,103
-------------
BRAZIL 1.6%
Centrais Eletricas Brasileiras SA ...... Electric Utilities 1,501,895,648 35,914,740
CPFL Energia SA ........................ Electric Utilities 1,477,832 20,751,210
Souza Cruz SA .......................... Tobacco 2,160,017 38,468,826
-------------
95,134,776
-------------
CHINA 11.1%
Aluminum Corp. of China Ltd., H ........ Metals & Mining 97,284,000 90,041,302
a,b China Coal Energy Co., H, 144A ......... Oil, Gas & Consumable Fuels 3,893,000 2,527,223
China Mobile Ltd. ...................... Wireless Telecommunication Services 6,873,924 59,380,227
China Petroleum and Chemical Corp., H .. Oil, Gas & Consumable Fuels 71,856,000 66,506,392
China Shenhua Energy Co. Ltd., H ....... Oil, Gas & Consumable Fuels 3,013,500 7,251,785
Citic Pacific Ltd. ..................... Industrial Conglomerates 3,163,764 10,919,839
CNOOC Ltd. ............................. Oil, Gas & Consumable Fuels 122,205,000 116,091,725
Denway Motors Ltd. ..................... Automobiles 68,846,386 27,877,868
PetroChina Co. Ltd., H ................. Oil, Gas & Consumable Fuels 142,499,000 201,865,111
b PetroChina Co. Ltd., H, 144A ........... Oil, Gas & Consumable Fuels 26,450,000 37,469,261
Shanghai Industrial Holdings Ltd. ...... Industrial Conglomerates 12,001,000 25,547,336
Travelsky Technology Ltd., H ........... IT Services 7,583,000 11,560,952
-------------
657,039,021
-------------
CZECH REPUBLIC 0.2%
Philip Morris CR AS .................... Tobacco 24,511 12,752,543
-------------
HONG KONG 1.2%
Cheung Kong (Holdings) Ltd. ............ Real Estate 2,249,000 27,681,912
Cheung Kong Infrastructure Holdings Ltd. Electric Utilities 2,447,000 7,596,595
Dairy Farm International Holdings Ltd. . Food & Staples Retailing 1,734,654 5,897,824
Hopewell Holdings Ltd. ................. Transportation Infrastructure 2,412,000 8,464,627
MTR Corp. Ltd. ......................... Road & Rail 8,439,349 21,220,013
-------------
70,860,971
-------------
HUNGARY 3.5%
a Magyar Telekom PLC ..................... Diversified Telecommunication Services 10,455,479 58,084,470
MOL Magyar Olaj-es Gazipari Rt ......... Oil, Gas & Consumable Fuels 632,010 71,681,672
OTP Bank Ltd. .......................... Commercial Banks 1,110,570 51,025,165
Richter Gedeon Nyrt .................... Pharmaceuticals 114,888 26,205,648
-------------
206,996,955
-------------
INDIA 1.6%
Gail India Ltd. ........................ Gas Utilities 2,775,840 16,457,462
Indian Oil Corp. Ltd. .................. Oil, Gas & Consumable Fuels 2,211,859 22,564,823
Oil & Natural Gas Corp. Ltd. ........... Oil, Gas & Consumable Fuels 2,257,206 44,517,332
b Oil & Natural Gas Corp. Ltd., 144A ..... Oil, Gas & Consumable Fuels 579,360 11,426,321
Tata Chemicals Ltd. .................... Chemicals 208,583 1,019,156
-------------
95,985,094
-------------

Annual Report | 21

Templeton Developing Markets Trust

STATEMENT OF INVESTMENTS, DECEMBER 31, 2006 (CONTINUED)

- -----------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- -----------------------------------------------------------------------------------------------------------------

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
INDONESIA 0.3%
PT Astra International Tbk ........... Automobiles 9,294,000 $ 16,224,584
------------
ISRAEL 0.6%
a Taro Pharmaceutical Industries Ltd. .. Pharmaceuticals 1,112,123 11,121,230
Teva Pharmaceutical Industries Ltd.,
ADR ................................ Pharmaceuticals 746,490 23,200,909
------------
34,322,139
------------
MALAYSIA 1.3%
Maxis Communications Bhd ............. Wireless Telecommunication Services 17,565,900 50,756,992
Sime Darby Bhd ....................... Industrial Conglomerates 11,662,700 23,787,943
------------
74,544,935
------------
MEXICO 2.5%
Grupo Bimbo SA de CV, A .............. Food Products 2,267,438 11,334,304
Kimberly Clark de Mexico SA de CV, A . Household Products 18,473,712 85,333,663
Telefonos de Mexico SA de CV, L, ADR . Diversified Telecommunication Services 1,719,540 48,594,201
------------
145,262,168
------------
PAKISTAN 0.2%
Pakistan Telecommunications Corp., A . Diversified Telecommunication Services 19,961,524 14,546,727
------------
PANAMA 0.2%
Banco Latinoamericano de Exportaciones
SA, E .............................. Commercial Banks 718,800 12,190,848
------------
PERU 0.1%
Compania de Minas Buenaventura SA,
ADR ................................ Metals & Mining 210,500 5,906,630
------------
PHILIPPINES 0.6%
San Miguel Corp., B .................. Beverages 22,727,236 35,909,496
------------
POLAND 0.7%
a Grupa Lotos SA ....................... Oil, Gas & Consumable Fuels 313,126 5,317,091
Polski Koncern Naftowy Orlen SA ...... Oil, Gas & Consumable Fuels 2,318,128 38,085,870
------------
43,402,961
------------
RUSSIA 8.7%
b Evraz Group SA, GDR, 144A ............ Metals & Mining 186,800 4,735,380
Gazprom .............................. Oil, Gas & Consumable Fuels 2,282,330 26,246,795
Gazprom, ADR ......................... Oil, Gas & Consumable Fuels 3,316,066 152,539,036
LUKOIL, ADR .......................... Oil, Gas & Consumable Fuels 743,832 65,085,300
LUKOIL, ADR (London Exchange) ........ Oil, Gas & Consumable Fuels 645,346 56,338,706
Mining and Metallurgical Co.
Norilsk Nickel ..................... Metals & Mining 472,823 74,233,211
Mobile Telesystems, ADR .............. Wireless Telecommunication Services 499,330 25,061,373
a,b OAO TMK, 144A ........................ Energy Equipment & Services 664,868 5,518,404
TNK-BP ............................... Oil, Gas & Consumable Fuels 5,936,000 15,403,920
Unified Energy Systems ............... Electric Utilities 75,300,700 81,324,756
a ZAO Polyus Gold Co. .................. Metals & Mining 192,132 9,472,107
------------
515,958,988
------------

22 | Annual Report

Templeton Developing Markets Trust

STATEMENT OF INVESTMENTS, DECEMBER 31, 2006 (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
SINGAPORE 1.0%
ComfortDelGro Corp. Ltd. .............. Road & Rail 21,755,000 $ 22,841,012
Fraser and Neave Ltd. ................. Industrial Conglomerates 11,585,980 33,999,746
------------
56,840,758
------------
SOUTH AFRICA 13.3%
Anglo American PLC .................... Metals & Mining 2,607,198 127,221,219
Edgars Consolidated Stores Ltd. ....... Specialty Retail 9,005,423 50,123,282
a Imperial Holdings Ltd. ................ Air Freight & Logistics 2,369,617 55,444,051
JD Group Ltd. ......................... Specialty Retail 2,996,971 34,015,915
Massmart Holdings Ltd. ................ Food & Staples Retailing 2,564,629 25,687,456
MTN Group Ltd. ........................ Wireless Telecommunication Services 6,654,500 80,988,600
Nedbank Group Ltd. .................... Commercial Banks 3,527,324 67,187,123
Old Mutual PLC ........................ Insurance 45,314,944 154,633,827
Remgro Ltd. ........................... Diversified Financial Services 6,920,180 175,760,477
Standard Bank Group Ltd. .............. Commercial Banks 1,387,716 18,710,777
------------
789,772,727
------------
SOUTH KOREA 15.2%
GS Holdings Corp. ..................... Oil, Gas & Consumable Fuels 988,400 31,990,151
Hana Financial Group Inc. ............. Commercial Banks 1,776,569 93,413,144
a Hite Brewery Co. Ltd. ................. Beverages 120,296 15,457,389
a Hyundai Development Co. ............... Construction & Engineering 937,670 57,268,447
a Kangwon Land Inc. ..................... Hotels, Restaurants & Leisure 4,585,936 99,608,503
LG Card Co. Ltd. ...................... Consumer Finance 1,308,630 87,101,287
LG Corp. .............................. Industrial Conglomerates 335,000 10,752,419
Lotte Shopping Co. Ltd. ............... Multiline Retail 132,953 55,182,643
Samsung Electronics Co. Ltd. .......... Semiconductors & Semiconductor Equipment 397,971 262,318,519
Samsung Fine Chemicals Co. Ltd. ....... Chemicals 55,560 1,391,987
a Shinhan Financial Group Co. Ltd. ...... Commercial Banks 1,191,000 60,830,645
SK Corp. .............................. Oil, Gas & Consumable Fuels 837,100 65,707,850
SK Telecom Co. Ltd. ................... Wireless Telecommunication Services 256,567 61,382,965
------------
902,405,949
------------
SWEDEN 0.9%
Oriflame Cosmetics SA, SDR ............ Personal Products 1,285,184 52,899,038
------------
TAIWAN 11.8%
Asustek Computer Inc. ................. Computers & Peripherals 20,675,100 56,597,174
Chunghwa Telecom Co. Ltd. ............. Diversified Telecommunication Services 18,082,560 33,629,067
D-Link Corp. .......................... Communications Equipment 25,131,582 32,932,900
Lite-On Technology Corp. .............. Computers & Peripherals 35,828,643 48,434,916
MediaTek Inc. ......................... Semiconductors & Semiconductor Equipment 2,839,100 29,362,489
Mega Financial Holding Co. Ltd. ....... Commercial Banks 92,289,308 67,832,712
President Chain Store Corp. ........... Food & Staples Retailing 12,672,164 30,606,086
Realtek Semiconductor Corp. ........... Semiconductors & Semiconductor Equipment 32,010,922 55,111,638
Siliconware Precision Industries Co. .. Semiconductors & Semiconductor Equipment 19,033,134 29,906,290
Sunplus Technology Co. Ltd. ........... Semiconductors & Semiconductor Equipment 34,576,201 42,179,039
Synnex Technology International Corp. . Electronic Equipment & Instruments 17,335,064 21,918,203
Taiwan Mobile Co. Ltd. ................ Wireless Telecommunication Services 54,608,106 56,644,284

Annual Report | 23

Templeton Developing Markets Trust

STATEMENT OF INVESTMENTS, DECEMBER 31, 2006 (CONTINUED)

- ---------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
TAIWAN (CONTINUED)
Taiwan Semiconductor Manufacturing
Co. Ltd. ................................ Semiconductors & Semiconductor Equipment 69,330,045 $ 143,617,555
United Microelectronics Corp. ............. Semiconductors & Semiconductor Equipment 66,977,000 41,622,963
a Yageo Corp. ............................... Electronic Equipment & Instruments 19,092,000 8,905,889
--------------
699,301,205
--------------
THAILAND 2.4%
Kasikornbank Public Co. Ltd., fgn ......... Commercial Banks 22,642,900 39,920,486
PTT Public Co. Ltd., fgn .................. Oil, Gas & Consumable Fuels 3,192,000 18,908,886
Siam Cement Public Co. Ltd., fgn .......... Construction Materials 5,068,113 36,313,137
Siam Commercial Bank Public Co.
Ltd., fgn ............................... Commercial Banks 11,354,300 18,576,852
a Thai Airways International Public Co.
Ltd., fgn ............................... Airlines 14,177,700 17,797,113
Thai Beverages Co., Ltd., fgn ............. Beverages 8,972,000 1,579,732
b Thai Beverages Co., Ltd., 144A ............ Beverages 52,273,000 9,203,893
a True Corp. Public Co. Ltd., fgn., rts.,
3/28/08 ................................. Diversified Telecommunication Services 2,258,595 --
--------------
142,300,099
--------------
TURKEY 8.2%
Akbank TAS ................................ Commercial Banks 27,105,772 164,683,602
Anadolu Efes Biracilik Ve Malt Sanayii
AS ...................................... Beverages 44,136 1,364,147
Arcelik AS, Br ............................ Household Durables 8,601,829 50,741,980
a KOC Holding AS ............................ Industrial Conglomerates 2,862,075 11,120,743
a Migros Turk TAS ........................... Food & Staples Retailing 223,847 2,893,960
Tupras-Turkiye Petrol Rafineleri AS ....... Oil, Gas & Consumable Fuels 4,740,040 81,037,773
a Turk Hava Yollari Anonim Ortakligi ........ Airlines 1,896,000 8,170,682
a,b Turk Hava Yollari Anonim Ortakligi,
144A .................................... Airlines 5,903,000 25,438,573
Turkcell Iletisim Hizmetleri AS ........... Wireless Telecommunication Services 13,426,257 67,818,960
Turkiye Vakiflar Bankasi T.A.O ............ Commercial Banks 14,762,919 69,355,995
--------------
482,626,415
--------------
UNITED KINGDOM 2.1%
HSBC Holdings PLC ......................... Commercial Banks 4,008,402 73,478,224
Provident Financial PLC ................... Consumer Finance 3,714,808 51,033,378
--------------
124,511,602
--------------
TOTAL COMMON STOCKS AND RIGHTS
(COST $3,774,899,828) ................... 5,332,898,732
--------------
DIRECT EQUITY INVESTMENTS
(COST $4,447,586) 0.1%
HONG KONG 0.1%
a,c,d,e,f Mayfair Hanoi, Ltd., 30% equity owned
through HEA Holdings Ltd., a wholly owned
investment ............................. Real Estate 4,847,692
--------------

24 | Annual Report

Templeton Developing Markets Trust

STATEMENT OF INVESTMENTS, DECEMBER 31, 2006 (CONTINUED)

- -----------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- -----------------------------------------------------------------------------------------------------------------------

LONG TERM INVESTMENTS (CONTINUED)
PREFERRED STOCKS 8.2%
BRAZIL 8.2%
Banco Bradesco SA, ADR, pfd ........... Commercial Banks 2,435,898 $ 98,288,484
Companhia Vale do Rio Doce, ADR,
pfd., A .............................. Metals & Mining 4,585,900 120,379,875
Petroleo Brasileiro SA, ADR, pfd ...... Oil, Gas & Consumable Fuels 2,125,941 197,202,287
Unibanco - Uniao de Bancos Brasileiros
SA, GDR, pfd ......................... Commercial Banks 759,800 70,630,904
--------------
TOTAL PREFERRED STOCKS
(COST $248,164,873) .................. 486,501,550
--------------
TOTAL LONG TERM INVESTMENTS
(COST $4,027,512,287) ................ 5,824,247,974
--------------

----------------
PRINCIPAL AMOUNT
----------------
SHORT TERM INVESTMENTS 1.5%
UNITED STATES 1.5%

g Federal Farm Credit Bank, 7/09/07 ..... $ 10,000,000 9,739,500
g Federal Home Loan Bank, 1/02/07 ....... 58,056,000 58,056,000
g Federal Home Loan Mortgage Association,
2/05/07 .............................. 4,225,000 4,205,227
g Federal National Mortgage Association,
1/19/07 - 1/22/07 .................... 19,020,000 18,970,363
--------------
TOTAL SHORT TERM INVESTMENTS
(COST $90,927,727) ................... 90,971,090
--------------
TOTAL INVESTMENTS
(COST $4,118,440,014) 99.9% .......... 5,915,219,064
OTHER ASSETS, LESS LIABILITIES 0.1% ... 6,532,638
--------------
NET ASSETS 100.0% ..................... $5,921,751,702
==============

SELECTED PORTFOLIO ABBREVIATIONS

ADR - American Depository Receipt
GDR - Global Depository Receipt
SDR - Swedish Depository Receipt

a Non-income producing for the twelve months ended December 31, 2006.

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, 2006,
the value of these securities was $96,319,055, representing 1.63% of net
assets.

c Security has been deemed illiquid because it may not be able to be sold
within seven days. At December 31, 2006, the value of this security was
$4,847,692, representing 0.08% of net assets.

d See Note 8 regarding restricted securities.

e See Note 9 regarding holdings of 5% voting securities.

f See Note 10 regarding other considerations - security board member.

g The security is traded on a discount basis with no stated coupon rate.

Annual Report |
The accompanying notes are an integral part of these financial statements. | 25

Templeton Developing Markets Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006

Assets:
Investments in securities:
Cost - Unaffiliated issuers ............................ $ 4,113,992,428
Cost - Controlled affiliated issuers (Note 9) .......... 4,447,586
----------------
Total cost of investments .............................. $ 4,118,440,014
================
Value - Unaffiliated issuers ........................... $ 5,910,371,372
Value - Controlled affiliated issuers (Note 9) ......... 4,847,692
----------------
Total value of investments ............................. 5,915,219,064
Foreign currency, at value (cost $5,648,329) ............ 5,076,961
Receivables:
Investment securities sold ............................. 34,816,039
Capital shares sold .................................... 15,086,175
Dividends .............................................. 14,860,830
Foreign tax ............................................ 668,328
----------------
Total assets ..................................... 5,985,727,397
----------------
Liabilities:
Payables:
Investment securities purchased ........................ 4,879,394
Capital shares redeemed ................................ 42,280,966
Affiliates ............................................. 10,738,853
Funds advanced by custodian ............................. 3,034,880
Deferred tax ............................................ 556,871
Accrued expenses and other liabilities .................. 2,484,731
----------------
Total liabilities ................................ 63,975,695
----------------
Net assets, at value .......................... $ 5,921,751,702
================
Net assets consist of:
Paid-in capital ......................................... $ 4,121,530,847
Distributions in excess of net investment income ........ (60,218,762)
Net unrealized appreciation (depreciation) .............. 1,795,943,365
Accumulated net realized gain (loss) .................... 64,496,252
----------------
Net assets, at value .......................... $ 5,921,751,702
================

26 | The accompanying notes are an integral part of these financial statements.
| Annual Report

Templeton Developing Markets Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 2006

CLASS A:

Net assets, at value ................................................ $4,876,034,909
==============
Shares outstanding .................................................. 172,405,425
==============
Net asset value per share a ......................................... $ 28.28
==============
Maximum offering price per share (net asset value per share / 94.25%) $ 30.01
==============
CLASS B:
Net assets, at value ................................................ $ 54,990,973
==============
Shares outstanding .................................................. 1,979,814
==============
Net asset value and maximum offering price per share a .............. $ 27.78
==============
CLASS C:
Net assets, at value ................................................ $ 489,721,961
==============
Shares outstanding .................................................. 17,665,406
==============
Net asset value and maximum offering price per share a .............. $ 27.72
==============
CLASS R:
Net assets, at value ................................................ $ 40,778,763
==============
Shares outstanding .................................................. 1,458,363
==============
Net asset value and maximum offering price per share a .............. $ 27.96
==============
ADVISOR CLASS:
Net assets, at value ................................................ $ 460,225,096
==============
Shares outstanding .................................................. 16,281,164
==============
Net asset value and maximum offering price per share a .............. $ 28.27
==============

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 |
The accompanying notes are an integral part of these financial statements. | 27

Templeton Developing Markets Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended December 31, 2006

Investment income:
Dividends (net of foreign taxes of $13,248,039) ........................ $ 162,487,868
Interest (net of foreign taxes of $1,160) .............................. 5,724,817
Other income (Note 11) ................................................. 614,038
----------------
Total investment income ......................................... 168,826,723
----------------
Expenses:
Management fees (Note 3a) .............................................. 62,692,564
Administrative fees (Note 3b) .......................................... 4,470,657
Distribution fees (Note 3c)
Class A ............................................................... 12,028,877
Class B ............................................................... 518,106
Class C ............................................................... 4,310,124
Class R ............................................................... 140,569
Transfer agent fees (Note 3e) .......................................... 8,468,316
Custodian fees (Note 4) ................................................ 5,192,727
Reports to shareholders ................................................ 618,880
Registration and filing fees ........................................... 240,995
Professional fees ...................................................... 83,556
Trustees' fees and expenses ............................................ 201,018
Other .................................................................. 124,788
----------------
Total expenses .................................................. 99,091,177
Expense reductions (Note 4) ..................................... (40,796)
----------------
Net expenses ................................................. 99,050,381
----------------
Net investment income ....................................... 69,776,342
----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments (net of foreign taxes $456,463) ........................... 612,574,695
Foreign currency transactions ......................................... (397,944)
----------------
Net realized gain (loss) ........................................ 612,176,751
----------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................... 550,786,452
Translation of assets and liabilities denominated in foreign currencies (194,287)
Change in deferred taxes on unrealized appreciation (depreciation) ..... (129,204)
----------------
Net unrealized appreciation (depreciation) ...................... 550,462,961
----------------
Net realized and unrealized gain (loss) ................................. 1,162,639,712
----------------
Net increase (decrease) in net assets resulting from operations ......... $ 1,232,416,054
================

28 | The accompanying notes are an integral part of these financial statements.
| Annual Report

Templeton Developing Markets Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
2006 2005
-----------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ............................................................. $ 69,776,342 $ 43,272,512
Net realized gain (loss) from investments and foreign currency transactions ....... 612,176,751 400,601,203
Net change in unrealized appreciation (depreciation) on investments, translation of
assets and liabilities denominated in foreign currencies, and deferred taxes ... 550,462,961 412,370,518
-----------------------------------
Net increase (decrease) in net assets resulting from operations ............. 1,232,416,054 856,244,233
-----------------------------------
Distributions to shareholders from:
Net investment income:
Class A ..................................................................... (86,444,909) (39,094,297)
Class B ..................................................................... (667,578) (328,927)
Class C ..................................................................... (5,833,695) (2,418,452)
Class R ..................................................................... (607,853) (140,866)
Advisor Class ............................................................... (9,377,163) (4,529,261)
Net realized gains:
Class A ..................................................................... (193,859,398) --
Class B ..................................................................... (2,227,596) --
Class C ..................................................................... (19,753,179) --
Class R ..................................................................... (1,594,768) --
Advisor Class ............................................................... (18,263,555) --
-----------------------------------
Total distributions to shareholders ................................................ (338,629,694) (46,511,803)
-----------------------------------
Capital share transactions: (Note 2)
Class A ..................................................................... 750,165,076 422,960,064
Class B ..................................................................... (1,115,846) 357,601
Class C ..................................................................... 49,305,869 34,935,377
Class R ..................................................................... 19,666,403 8,554,551
Advisor Class ............................................................... 43,404,176 84,841,579
-----------------------------------
Total capital share transactions ................................................... 861,425,678 551,649,172
-----------------------------------
Redemption fees .................................................................... 63,707 41,172
-----------------------------------
Net increase (decrease) in net assets ....................................... 1,755,275,745 1,361,422,774
Net assets:
Beginning of year .................................................................. 4,166,475,957 2,805,053,183
-----------------------------------
End of year ........................................................................ $ 5,921,751,702 $ 4,166,475,957
===================================
Distributions in excess of net investment income included in net assets:
End of year ........................................................................ $ (60,218,762) $ (27,554,092)
===================================

Annual Report |
The accompanying notes are an integral part of these 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 amended, (the 1940 Act) as a diversified, open-end
investment company. The Fund offers five classes of shares: Class A, Class B,
Class C, Class R, and Advisor Class. 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.

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. The investment manager monitors price movements
following the close of trading in foreign stock markets through a

30 | Annual Report

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. SECURITY VALUATION (CONTINUED)

series of country specific market proxies (such as baskets of American
Depository Receipts, futures contracts and exchange traded funds). These price
movements are measured against established trigger thresholds for each specific
market proxy to assist in determining if an event has occurred. 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.

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.

Annual Report | 31

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. INCOME AND DEFERRED TAXES

No provision has been made for U.S. income taxes because the Fund intends 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.

Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.

The Fund may be 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.

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 accounting principles generally accepted in the United States.
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. Differences in class-level
expenses may result in payment of different per share distributions by 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.

32 | Annual Report

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. 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. Currently, the Fund expects the
risk of loss to be remote.

2. SHARES OF BENEFICIAL INTEREST

At December 31, 2006, 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,
2006 2005
-----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------

CLASS A SHARES:
Shares sold ................. 75,390,588 $ 1,976,178,201 62,784,335 $ 1,280,942,613
Shares issued in reinvestment
of distributions ........... 8,843,430 242,813,868 1,592,210 33,794,108
Shares redeemed ............. (56,794,665) (1,468,826,993) (43,826,099) (891,776,657)
-----------------------------------------------------------------
Net increase (decrease) ..... 27,439,353 $ 750,165,076 20,550,446 $ 422,960,064
=================================================================
CLASS B SHARES:
Shares sold ................. 320,132 $ 8,140,448 346,641 $ 6,913,076
Shares issued in reinvestment
of distributions ........... 98,115 2,642,216 15,252 297,644
Shares redeemed ............. (477,650) (11,898,510) (350,954) (6,853,119)
-----------------------------------------------------------------
Net increase (decrease) ..... (59,403) $ (1,115,846) 10,939 $ 357,601
=================================================================
CLASS C SHARES:
Shares sold ................. 4,986,758 $ 127,231,831 4,078,278 $ 82,118,609
Shares issued in reinvestment
of distributions ........... 771,265 20,741,944 100,801 1,982,771
Shares redeemed ............. (3,933,841) (98,667,906) (2,515,326) (49,166,003)
-----------------------------------------------------------------
Net increase (decrease) ..... 1,824,182 $ 49,305,869 1,663,753 $ 34,935,377
=================================================================

Annual Report | 33

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SHARES OF BENEFICIAL INTEREST (CONTINUED)

----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2006 2005
----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------

CLASS R SHARES:
Shares sold ................. 1,117,472 $ 28,707,815 561,492 $ 11,503,248
Shares issued in reinvestment
of distributions ........... 79,447 2,160,569 6,460 138,829
Shares redeemed ............. (436,201) (11,201,981) (154,113) (3,087,526)
----------------------------------------------------------------
Net increase (decrease) ..... 760,718 $ 19,666,403 413,839 $ 8,554,551
================================================================
ADVISOR CLASS SHARES:
Shares sold ................. 6,580,284 $ 171,573,920 7,573,075 $ 161,924,074
Shares issued in reinvestment
of distributions ........... 643,066 17,659,742 131,387 2,828,459
Shares redeemed ............. (5,632,960) (145,829,486) (3,772,674) (79,910,954)
----------------------------------------------------------------
Net increase (decrease) ..... 1,590,390 $ 43,404,176 3,931,788 $ 84,841,579
================================================================

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

34 | Annual Report

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

B. ADMINISTRATIVE FEES

The Fund pays an administrative fee to FT Services based on the 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 for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate.
Under the Class A reimbursement distribution plan, costs exceeding the maximum
for the current plan year cannot be reimbursed in subsequent periods.

In addition, under the Fund's Class B, C, and R compensation distribution plans,
the Fund pays Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate
for each class.

The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:

Class A ..................................... 0.35%
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:

Sales charges retained net of commissions paid to
unaffiliated broker/dealers ................................ $873,040
Contingent deferred sales charges retained .................. $116,555

E. TRANSFER AGENT FEES

The Fund paid transfer agent fees of $8,468,316 of which $4,564,895 was retained
by Investor Services.

Annual Report | 35

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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, 2006, the
custodian fees were reduced as noted in the Statement of Operations.

5. INCOME TAXES

At December 31, 2006, the Fund had tax basis capital losses which may be carried
over to offset future capital gains, if any. At December 31, 2006, the Fund had
remaining tax basis capital losses of $7,033,412 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,
2006, the fund utilized $300,676,093 of capital loss carryforwards, which
included $3,962,284 from the merged Fund. At December 31, 2006, capital loss
carryforwards were as follows:

Capital loss carryovers expiring in:
2008 ......................................... $3,805,280
2009 ......................................... 3,228,132
----------
$7,033,412
==========

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, 2006, the Fund deferred realized currency losses of
$639,119.

The tax character of distributions paid during the years ended December 31, 2006
and 2005, was as follows:

--------------------------------
2006 2005
--------------------------------
Distributions paid from:
Ordinary income .................. $102,931,198 $46,511,803
Long term capital gain ........... 235,698,496 --
--------------------------------
$338,629,694 $46,511,803
================================

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.

36 | Annual Report

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)

At December 31, 2006, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long term
capital gains for income tax purposes were as follows:

Cost of investments ..................................... $ 4,233,099,455
================

Unrealized appreciation ................................. $ 1,707,780,574
Unrealized depreciation ................................. (25,660,965)
----------------
Net unrealized appreciation (depreciation) .............. $ 1,682,119,609
================

Undistributed ordinary income ........................... $ 48,677,939
Undistributed long term capital gains ................... 78,368,897
----------------
Distributable earnings .................................. $ 127,046,836
================

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
year ended December 31, 2006, aggregated $3,203,350,766 and $2,639,728,142,
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 fluctuating
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.

8. RESTRICTED SECURITIES

The Fund may invest in securities that are restricted under the Securities Act
of 1933 (the 1933 Act) or which are subject to legal, contractual, or other
agreed upon restrictions on resale. Restricted securities are often purchased in
private placement transactions, and cannot be sold without prior registration
unless the sale is pursuant to an exemption under the 1933 Act. Disposal of
these securities may require greater effort and expense, and prompt sale at an
acceptable price may be difficult.

At December 31, 2006, the Fund held an investment in a restricted security,
excluding 144A securities deemed to be liquid, valued in accordance with
procedures approved by the Fund's Board of Trustees as reflecting fair value, as
listed below. The sale or transfer of this restricted security may only be made
pursuant to the terms of the organizational documents of the company.

Annual Report | 37

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. RESTRICTED SECURITIES (CONTINUED)

- --------------------------------------------------------------------------------------------------------
ACQUISITION
SHARES ISSUER DATE COST VALUE
- --------------------------------------------------------------------------------------------------------

Mayfair Hanoi, Ltd., 30% equity owned through
HEA Holdings, Ltd. (0.08% OF NET ASSETS) ............ 10/31/96 $4,447,586 $4,847,692
==========

9. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES

The 1940 Act 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 for the year ended December
31, 2006 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)
- ------------------------------------------------------------------------------------------------------------------------------------

CONTROLLED AFFILIATES a
Mayfair Hanoi, Ltd., 30% equity
owned through HEA
Holdings, Ltd.
(0.08% OF NET ASSETS) ......... -- -- -- -- $4,847,692 $ -- $ --
===================================

a Issuer in which the fund owns 25% or more of the outstanding voting
securities.

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. 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. The
securities have been identified on the accompanying Statement of Investments.

11. REGULATORY MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), 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 ("marketing support"), 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 SEC, among others, concerning market
timing and marketing support.

38 | Annual Report

Templeton Developing Markets Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. REGULATORY MATTERS (CONTINUED)

On June 23, 2006, the SEC approved the proposed plan of distribution for the
marketing support settlement, and disbursement of the settlement monies to the
designated funds, in accordance with the terms and conditions of that settlement
and plan, was completed in September 2006, and is recorded as other income.

The plan of distribution for the market timing settlement is currently under
review by the SEC staff. After publication of notice of the plan and a 30-day
comment period, the proposed plan of distribution will be submitted to the SEC
for approval. Following the SEC's approval of the plan of distribution, with
modifications as appropriate, distribution of the settlement monies will begin
in accordance with the terms and conditions of the settlement and plan.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and 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.). The lawsuits relate to the industry
practices referenced above, as well as to allegedly excessive commissions and
advisory and distribution fees.

The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend 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.

12. NEW ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions taken or expected to be taken in a
tax return. FIN 48 provides guidance on the measurement, recognition,
classification and disclosure of tax positions, along with accounting for the
related interest and penalties. FIN 48 is effective for fiscal years beginning
after December 15, 2006, and is to be applied to all open tax years as of the
date of effectiveness. On December 22, 2006, the Securities and Exchange
Commission extended the implementation date to no later than the last net asset
value calculation in the first semi-annual reporting period in 2007.The Fund is
currently evaluating the impact, if any, of applying the various provisions of
FIN 48.

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The Fund
believes the adoption of SFAS 157 will have no material impact on its financial
statements.

Annual Report | 39

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, 2006, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2006 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
February 22, 2007

40 | Annual Report

Templeton Developing Markets Trust

TAX DESIGNATION (UNAUDITED)

Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $314,067,393 as a long
term capital gain dividend for the fiscal year ended December 31, 2006.

Under Section 854(b)(2) of the Code, the Fund designates 0.16% of the ordinary
income dividends as income qualifying for the dividends received deduction for
the fiscal year ended December 31, 2006.

Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $88,233,533 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
December 31, 2006. In January 2007, shareholders will receive Form 1099-DIV
which will include their share of qualified dividends distributed during the
calendar year 2006. 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 $5,434,081 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, 2006.

At December 31, 2006, 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 table
below, the Fund designates to shareholders the foreign source income and foreign
taxes paid, pursuant to Section 853 of the Code. This designation will allow
shareholders of record on December 14, 2006, to treat their proportionate share
of foreign taxes paid by the Fund as having been paid directly by them. The
shareholder shall consider these amounts as foreign taxes paid in the tax year
in which they receive the Fund distribution.

The following tables provide a detailed analysis, by country, of foreign tax
paid, foreign source income, and foreign qualified dividends as designated by
the Fund to Class A, Class B, Class C, Class R, and Adviser Class shareholders
of record.

Annual Report | 41

Templeton Developing Markets Trust

TAX DESIGNATION (UNAUDITED) (CONTINUED)

- --------------------------------------------------------------------------------
CLASS A
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Argentina ......... $0.0000 $0.0001 $0.0001
Austria ........... 0.0007 0.0021 0.0021
Brazil ............ 0.0086 0.0443 0.0043
China ............. 0.0000 0.0492 0.0262
Croatia ........... 0.0000 0.0017 0.0000
Czech Republic .... 0.0001 0.0004 0.0004
Finland ........... 0.0003 0.0010 0.0010
Hong Kong ......... 0.0000 0.0100 0.0000
Hungary ........... 0.0000 0.0055 0.0055
India ............. 0.0025 0.0102 0.0088
Indonesia ......... 0.0012 0.0034 0.0034
Israel ............ 0.0001 0.0001 0.0001
Malaysia .......... 0.0000 0.0081 0.0000
Mexico ............ 0.0000 0.0228 0.0225
Pakistan .......... 0.0000 0.0002 0.0002
Panama ............ 0.0000 0.0029 0.0029
Peru .............. 0.0000 0.0003 0.0003
Philippines ....... 0.0006 0.0011 0.0011
Poland ............ 0.0041 0.0118 0.0118
Portugal .......... 0.0002 0.0006 0.0006
Russia ............ 0.0042 0.0308 0.0283
Singapore ......... 0.0000 0.0056 0.0000
South Africa ...... 0.0000 0.0489 0.0155
South Korea ....... 0.0118 0.0310 0.0293
Sweden ............ 0.0000 0.0031 0.0000
Taiwan ............ 0.0274 0.0633 0.0000
Thailand .......... 0.0028 0.0122 0.0118
Turkey ............ 0.0034 0.0250 0.0250
United Kingdom .... 0.0000 0.0113 0.0000
--------------------------------------------------
TOTAL ............. $0.0680 $0.4070 $0.2012
==================================================

42 | Annual Report

Record Date: 12/14/2006

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
- --------------------------------------------------------------------------------
Argentina ......... $0.0000 $0.0000 $0.0000
Austria ........... 0.0007 0.0011 0.0011
Brazil ............ 0.0086 0.0234 0.0023
China ............. 0.0000 0.0260 0.0138
Croatia ........... 0.0000 0.0009 0.0000
Czech Republic .... 0.0001 0.0002 0.0002
Finland ........... 0.0003 0.0005 0.0005
Hong Kong ......... 0.0000 0.0053 0.0000
Hungary ........... 0.0000 0.0029 0.0029
India ............. 0.0025 0.0054 0.0047
Indonesia ......... 0.0012 0.0018 0.0018
Israel ............ 0.0001 0.0001 0.0001
Malaysia .......... 0.0000 0.0043 0.0000
Mexico ............ 0.0000 0.0121 0.0119
Pakistan .......... 0.0000 0.0001 0.0001
Panama ............ 0.0000 0.0015 0.0015
Peru .............. 0.0000 0.0002 0.0002
Philippines ....... 0.0006 0.0006 0.0006
Poland ............ 0.0041 0.0063 0.0063
Portugal .......... 0.0002 0.0003 0.0003
Russia ............ 0.0042 0.0163 0.0150
Singapore ......... 0.0000 0.0029 0.0000
South Africa ...... 0.0000 0.0259 0.0082
South Korea ....... 0.0118 0.0164 0.0155
Sweden ............ 0.0000 0.0016 0.0000
Taiwan ............ 0.0274 0.0334 0.0000
Thailand .......... 0.0028 0.0064 0.0062
Turkey ............ 0.0034 0.0132 0.0132
United Kingdom .... 0.0000 0.0060 0.0000
--------------------------------------------------
TOTAL ............. $0.0680 $0.2151 $0.1064
==================================================

Annual Report | 43

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
- --------------------------------------------------------------------------------
Argentina ......... $0.0000 $0.0000 $0.0000
Austria ........... 0.0007 0.0012 0.0012
Brazil ............ 0.0086 0.0250 0.0025
China ............. 0.0000 0.0278 0.0148
Croatia ........... 0.0000 0.0010 0.0000
Czech Republic .... 0.0001 0.0002 0.0002
Finland ........... 0.0003 0.0005 0.0005
Hong Kong ......... 0.0000 0.0057 0.0000
Hungary ........... 0.0000 0.0031 0.0031
India ............. 0.0025 0.0058 0.0050
Indonesia ......... 0.0012 0.0019 0.0019
Israel ............ 0.0001 0.0001 0.0001
Malaysia .......... 0.0000 0.0046 0.0000
Mexico ............ 0.0000 0.0129 0.0127
Pakistan .......... 0.0000 0.0001 0.0001
Panama ............ 0.0000 0.0016 0.0016
Peru .............. 0.0000 0.0002 0.0002
Philippines ....... 0.0006 0.0006 0.0006
Poland ............ 0.0041 0.0067 0.0067
Portugal .......... 0.0002 0.0004 0.0004
Russia ............ 0.0042 0.0174 0.0160
Singapore ......... 0.0000 0.0032 0.0000
South Africa ...... 0.0000 0.0277 0.0088
South Korea ....... 0.0118 0.0176 0.0167
Sweden ............ 0.0000 0.0017 0.0000
Taiwan ............ 0.0274 0.0357 0.0000
Thailand .......... 0.0028 0.0069 0.0067
Turkey ............ 0.0034 0.0142 0.0142
United Kingdom .... 0.0000 0.0064 0.0000
--------------------------------------------------
TOTAL ............. $0.0680 $0.2302 $0.1140
=================================================

44 | Annual Report

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
- --------------------------------------------------------------------------------
Argentina ......... $0.0000 $0.0001 $0.0001
Austria ........... 0.0007 0.0020 0.0020
Brazil ............ 0.0086 0.0410 0.0040
China ............. 0.0000 0.0456 0.0243
Croatia ........... 0.0000 0.0016 0.0000
Czech Republic .... 0.0001 0.0003 0.0003
Finland ........... 0.0003 0.0009 0.0009
Hong Kong ......... 0.0000 0.0093 0.0000
Hungary ........... 0.0000 0.0051 0.0051
India ............. 0.0025 0.0095 0.0082
Indonesia ......... 0.0012 0.0032 0.0032
Israel ............ 0.0001 0.0001 0.0001
Malaysia .......... 0.0000 0.0075 0.0000
Mexico ............ 0.0000 0.0212 0.0209
Pakistan .......... 0.0000 0.0002 0.0002
Panama ............ 0.0000 0.0027 0.0027
Peru .............. 0.0000 0.0003 0.0003
Philippines ....... 0.0006 0.0010 0.0010
Poland ............ 0.0041 0.0110 0.0110
Portugal .......... 0.0002 0.0006 0.0006
Russia ............ 0.0042 0.0285 0.0262
Singapore ......... 0.0000 0.0052 0.0000
South Africa ...... 0.0000 0.0454 0.0144
South Korea ....... 0.0118 0.0288 0.0273
Sweden ............ 0.0000 0.0028 0.0000
Taiwan ............ 0.0274 0.0583 0.0000
Thailand .......... 0.0028 0.0113 0.0109
Turkey ............ 0.0034 0.0232 0.0232
United Kingdom .... 0.0000 0.0105 0.0000
-------------------------------------------------
TOTAL ............. $0.0680 $0.3772 $0.1869
=================================================

Annual Report | 45

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
- --------------------------------------------------------------------------------
Argentina ......... $0.0000 $0.0001 $0.0001
Austria ........... 0.0007 0.0025 0.0025
Brazil ............ 0.0086 0.0519 0.0051
China ............. 0.0000 0.0577 0.0307
Croatia ........... 0.0000 0.0020 0.0000
Czech Republic .... 0.0001 0.0004 0.0004
Finland ........... 0.0003 0.0011 0.0011
Hong Kong ......... 0.0000 0.0117 0.0000
Hungary ........... 0.0000 0.0064 0.0064
India ............. 0.0025 0.0120 0.0104
Indonesia ......... 0.0012 0.0040 0.0040
Israel ............ 0.0001 0.0002 0.0002
Malaysia .......... 0.0000 0.0095 0.0000
Mexico ............ 0.0000 0.0268 0.0265
Pakistan .......... 0.0000 0.0002 0.0002
Panama ............ 0.0000 0.0034 0.0034
Peru .............. 0.0000 0.0003 0.0003
Philippines ....... 0.0006 0.0013 0.0013
Poland ............ 0.0041 0.0139 0.0139
Portugal .......... 0.0002 0.0008 0.0008
Russia ............ 0.0042 0.0361 0.0332
Singapore ......... 0.0000 0.0066 0.0000
South Africa ...... 0.0000 0.0574 0.0182
South Korea ....... 0.0118 0.0364 0.0344
Sweden ............ 0.0000 0.0036 0.0000
Taiwan ............ 0.0274 0.0738 0.0000
Thailand .......... 0.0028 0.0143 0.0138
Turkey ............ 0.0034 0.0294 0.0294
United Kingdom .... 0.0000 0.0133 0.0000
------------------------------------------------
TOTAL ............. $0.0680 $0.4771 $0.2363
================================================

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

46 | Annual Report

Templeton Developing Markets Trust

TAX DESIGNATION (UNAUDITED) (CONTINUED)

In January 2007, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2006. 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 2006 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.

Annual Report | 47

Templeton Developing Markets Trust

BOARD MEMBERS AND OFFICERS

The name, date 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 142 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.; and director of various other business and nonprofit organizations and FORMERLY, Chairman, Atlantic Equipment &
Power Ltd. (1977-2003).
- -----------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952) Trustee Since 1996 143 Director, Hess Corporation (formerly
500 East Broward Blvd. Amerada Hess Corporation) (explo-
Suite 2100 ration and refining of oil and gas),
Fort Lauderdale, FL 33394-3091 H.J. Heinz Company (processed foods
and allied products), RTI International
Metals, Inc. (manufacture and distri-
bution 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).
- -----------------------------------------------------------------------------------------------------------------------------------

48 | Annual Report

DAVID W. NIEMIEC (1949) Trustee Since 2005 20 Director, Emeritus Corporation (assist-
500 East Broward Blvd. ed living) and OSI Pharmaceuticals,
Suite 2100 Inc. (pharmaceutical products).
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) and 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 103 Director, Hess Corporation (formerly
500 East Broward Blvd. Amerada Hess Corporation) (explo-
Suite 2100 ration and refining of oil and gas) and
Fort Lauderdale, FL 33394-3091 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 (car rental),
Pacific Southwest Airlines, The RCA
Corporation, Unicom (formerly
Commonwealth Edison), UAL
Corporation (airlines) and White
Mountains Insurance Group, Ltd.
(holding company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (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.
- -----------------------------------------------------------------------------------------------------------------------------------
LARRY D. THOMPSON (1945) Trustee Since 2005 20 None
500 East Broward Blvd.
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
Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S.
Department of Justice (2001-2003).
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 49

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).
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT E. WADE (1946) Trustee Since March 30 Director, El Oro and Exploration Co.,
500 East Broward Blvd 2006 p.l.c. (investments) and ARC Wireless
Suite 2100 Solutions, Inc. (wireless components
Fort Lauderdale, FL 33394-3091 and network products).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Practicing attorney.
- -----------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS

**NICHOLAS F. BRADY (1930) Trustee Since 1993 10 Director, Hess Corporation (formerly
500 East Broward Blvd. Amerada Hess Corporation) (exploration
Suite 2100 and 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 142 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board and Board since
Vice President 1995 and
Vice President
since 1992

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Templeton Worldwide,
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 41 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------

50 | Annual Report

- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN OTHER
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------

JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President President - AML
- AML Compliance since
Compliance February 2006

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources, Inc. and
of 46 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 some of the other
subsidiaries of Franklin Resources, Inc. and of 46 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 Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 46 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
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 Institutional, LLC, Franklin Templeton Investor Services, LLC, Franklin
Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and Templeton/Franklin
Investment Services, Inc.; Vice President, Templeton Global Advisors Limited; and officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 46 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).
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 51

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.; Director, Franklin Advisers, Inc. and
Templeton Worldwide, 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 44 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.; 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.
- -----------------------------------------------------------------------------------------------------------------------------------
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.; and officer
and/or director, as the case may be, of some of the other 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:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President
and Assistant Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary Trust
International of the South; and officer of 14 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------

52 | Annual Report

CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 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 46 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 manager or
affiliated investment managers.

** 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 investment manager 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 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

Note 2: Prior to December 31, 2006, S. Joseph Fortunato and Gordon S. Macklin
ceased to be a trustee of the Trust.

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.

Annual Report | 53

Templeton Developing Markets Trust

SHAREHOLDER INFORMATION

PROXY VOTING POLICIES AND PROCEDURES

The Trust has established Proxy Voting Policies and Procedures ("Policies") that
the Trust uses to determine how to vote proxies relating to portfolio
securities. Shareholders may view the Trust'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 1-954/527-7678 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 Trust'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 Trust 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.

54 | Annual Report

This page intentionally left blank.

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 BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund 1

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 Balanced Fund
Franklin Blue Chip Fund 1
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 Global Real Estate 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

RETIREMENT TARGET FUNDS

Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund

INCOME

Franklin Adjustable U.S. Government
Securities Fund 4
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund 5
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 6

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 7

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 Michigan 7
Arizona Minnesota 7
California 8 Missouri
Colorado New Jersey
Connecticut New York 8
Florida 8 North Carolina
Georgia Ohio 7
Kentucky Oregon
Louisiana Pennsylvania
Maryland Tennessee
Massachusetts 7 Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products Trust 9

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. Effective 10/1/06, Franklin's AGE High Income Fund changed its name to
Franklin High Income Fund. The fund's investment goal and strategy
remained the same.

6. For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are
generally taxable.

7. Portfolio of insured municipal securities.

8. 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).

9. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

01/07 Not part of the annual report

[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906

o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.

ANNUAL REPORT AND SHAREHOLDER LETTER

TEMPLETON
DEVELOPING MARKETS TRUST

INVESTMENT MANAGER

Templeton Asset Management Ltd.

PRINCIPAL UNDERWRITER

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES

1-800/632-2301

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors. The Fund and its investors are not
protected from such losses by the investment manager. Therefore, investors who
cannot accept this risk should not invest in shares of the Fund. The prospectus
contains this and other information; please read it carefully before investing.

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

711 A2006 02/07

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.

(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. Niemiec 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 $90,456 for the fiscal year ended December 31, 2006 and $78,817 for the
fiscal year ended December 31, 2005.

(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.

There were no 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.

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 $3,961 for the fiscal year ended
December 31, 2006 and $4,955 for the fiscal year ended December 31, 2005. 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 $2,740 for the fiscal year ended December 31,
2006 and $0 for the fiscal year ended December 31, 2005. 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 $173,121 for the fiscal year ended December
31, 2006 and $5,492 for the fiscal year ended December 31, 2005. 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 $179,822 for the fiscal year ended December 31, 2006 and $10,447
for the fiscal year ended December 31, 2005.

(h) The registrant's audit committee of the board 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 COMPANIES. 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 27, 2007

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 27, 2007

By /s/GALEN G. VETTER
-------------------
Galen G. Vetter
Chief Financial Officer
Date February 27, 2007