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
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31/07
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ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
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DECEMBER 31, 2007
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ANNUAL REPORT AND SHAREHOLDER LETTER INTERNATIONAL
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WANT TO RECEIVE
THIS DOCUMENT
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TEMPLETON
DEVELOPING MARKETS TRUST Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE
Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management
groups--Franklin, Templeton and Mutual Series.
SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.
FRANKLIN. Founded in 1947, Franklin is a
recognized leader in fixed income investing and
also brings expertise in growth- and value-style
U.S. equity investing.
TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched
what has become the industry's oldest global
fund. Today, with offices in over 25 countries,
Templeton offers investors a truly global
perspective.
MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.
TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why
our funds can be used to build truly diversified
allocation plans covering every major asset
class.
RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well
as the reliable, accurate and personal service
that has helped us become one of the most trusted
names in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]
Not part of the annual report
Contents
SHAREHOLDER LETTER ...................................................... 1
ANNUAL REPORT
Templeton Developing Markets Trust ...................................... 3
Performance Summary ..................................................... 8
Your Fund's Expenses .................................................... 13
Financial Highlights and Statement of Investments ....................... 15
Financial Statements .................................................... 26
Notes to Financial Statements ........................................... 30
Report of Independent Registered Public Accounting Firm ................. 40
Tax Designation ......................................................... 41
Board Members and Officers .............................................. 43
Shareholder Information ................................................. 48
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Annual Report
Templeton Developing Markets Trust
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Developing Markets Trust seeks
long-term capital appreciation. Under normal market conditions, the Fund invests
at least 80% of its net assets in securities of developing market countries.
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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
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GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 12/31/07
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asia ............................................ 43.1%
Europe .......................................... 29.5%
Latin America ................................... 20.7%
Middle East & Africa ............................ 5.1%
Short-Term Investments & Other Net Assets ....... 1.6%
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This annual report for Templeton Developing Markets Trust covers the fiscal year
ended December 31, 2007.
PERFORMANCE OVERVIEW
Templeton Developing Markets Trust - Class A posted a +28.77% cumulative total
return for the 12 months ended December 31, 2007. The Fund under-performed 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 +39.78% and +40.28% for
the same period. 1 Please note that index performance is purely for reference
and that we do not attempt to track any index, but
1. Source: Standard & Poor's Micropal. The MSCI EM Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global emerging markets. The S&P/IFCI Composite Index is a
free float-adjusted, market capitalization-weighted index designed to measure
equity performance of global emerging markets. The indexes are unmanaged and
include reinvested dividends. One cannot invest directly in an index, nor is an
index representative of the Fund's portfolio.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 20.
Annual Report | 3
rather undertake investments on the basis of fundamental research. You can find
the Fund's long-term performance data in the Performance Summary beginning on
page 8.
ECONOMIC AND MARKET OVERVIEW
In 2007, emerging markets equities had another positive year. Despite problems
brought on by the U.S. subprime lending crisis, emerging markets registered a
+39.78% gain for the year, bringing cumulative return for the past five years to
+390.79% in U.S. dollar terms, as measured by the MSCI EM Index. 2 Most stock
markets were supported by a robust macroeconomic environment, surging money
supply, rising commodity prices, stronger emerging market currencies, improved
corporate earnings and significant investment inflows. Periods of increased
volatility, however, occurred during the year as nervous investors reacted to
subprime concerns and their impact on the global economy as well as overheating
concerns in China.
In Asia, India and China were among the top performing markets as both economies
continued to benefit from strong economic growth, a large consumer base and vast
foreign reserves. Moreover, Chinese stocks listed in Hong Kong were key
beneficiaries of the expansion of China's Qualified Domestic Institutional
Investor (QDII) program, which allowed domestic fund managers and brokerages to
invest in foreign securities. Neighboring markets in Indonesia, Thailand and
South Korea also recorded respectable gains.
Market returns in Latin America benefited from high commodity prices and
stronger regional currencies. Accelerating economic growth, high foreign
investment flows and lower interest rates pushed the Brazilian stock market to
end the year at record high levels. However, Mexico underperformed its regional
peers as concerns of slowing growth in the U.S. led investors to stay on the
sidelines.
Despite recording double-digit returns, European and African markets
underperformed their emerging market counterparts during the year. Turkey,
however, significantly outperformed global markets as investors responded
favorably to the central bank's adoption of a loosening monetary policy,
improvement in the country's public finances, as well as the completion of
parliamentary and presidential elections. A stronger lira also boosted stock
returns in U.S. dollar terms.
2. Source: Standard & Poor's Micropal. See footnote 1 for a description of the
MSCI EM Index.
4 | Annual Report
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
For the 12 months under review, the Fund's exposure to the materials, energy,
telecommunication services and bank sectors contributed significantly to
absolute performance. 3 Within the materials and energy sectors, holdings in
Chalco (Aluminum Corp. of China), CVRD (Companhia Vale do Rio Doce), Petrobras
(Petroleo Brasileiro) and Tupras (Tupras-Turkiye Petrol Rafinerileri) were among
the largest contributors to performance. Rising oil and commodity prices coupled
with growing demand for oil, coal and metals in China as well as other emerging
markets benefited these companies.
Additional key contributors included Turkcell (Turkcell Iletisim Hizmetleri) and
America Movil in the telecommunication services sector. Turkish and Brazilian
banks, Akbank, Vakifbank (Turkiye Vakiflar Bankasi), Unibanco (Unibanco-Uniao de
Bancos Brasileiros) and Banco Bradesco, also boosted Fund performance during the
period.
Sectors that detracted from Fund performance included retail and real estate. 4
South African stocks Foschini and JD Group declined in value and were the
largest detractors in the retail sector during the period. Over the longer term,
however, we believed that both stocks were well positioned in their respective
markets to benefit from growing demand for their products and services. In the
real estate sector, Beijing Capital Land and Hopson Development Holdings were
detractors during the period.
TOP 10 COUNTRIES
12/31/07
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% OF TOTAL
NET ASSETS
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China 20.0%
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Brazil 15.5%
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Russia 13.3%
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Turkey 9.6%
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South Korea 7.9%
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India 5.4%
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South Africa 4.7%
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Mexico 4.6%
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Taiwan 3.1%
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Thailand 2.5%
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3. The materials sector comprises chemicals, construction materials, metals and
mining, and paper and forest products in the SOI. The energy sector comprises
energy equipment and services; and oil, gas and consumable fuels in the SOI. The
telecommunication services sector comprises diversified telecommunication
services and wireless telecommunication services in the SOI. The bank sector
comprises commercial banks in the SOI.
4. The retail sector comprises specialty retail in the SOI. The real estate
sector comprises real estate management and development in the SOI.
Annual Report | 5
TOP 10 EQUITY HOLDINGS
12/31/07
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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CVRD (Companhia Vale do Rio Doce),
ADR, pfd., A 5.2%
METALS & MINING, BRAZIL
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Petrobras (Petroleo Brasileiro) SA,
ADR, pfd. 4.7%
OIL, GAS & CONSUMABLE FUELS, BRAZIL
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Chalco (Aluminum Corp. of China Ltd.),
H & 144A 3.8%
METALS & MINING, CHINA
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Akbank TAS 3.6%
COMMERCIAL BANKS, TURKEY
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Gazprom OAO, ord. & ADR 3.4%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
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UES (Unified Energy Systems) 3.4%
ELECTRIC UTILITIES, RUSSIA
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SK Energy Co. Ltd. 3.2%
OIL, GAS & CONSUMABLE FUELS,
SOUTH KOREA
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Norilsk Nickel (Mining and Metallurgical
Co. Norilsk Nickel) 3.1%
METALS & MINING, RUSSIA
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PetroChina Co. Ltd., H 2.7%
OIL, GAS & CONSUMABLE FUELS, CHINA
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America Movil SAB de CV, L, ADR 2.5%
WIRELESS TELECOMMUNICATION SERVICES,
MEXICO
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Geographically, investments in Brazil, Turkey and China made noteworthy
contributions to Fund performance. In addition to stocks discussed earlier, THY
(Turk Hava Yollari Anonim Ortakligi), Turkey's national airline; Souza Cruz,
Brazil's leading major tobacco company; Sinopec (China Petroleum and Chemical),
the largest integrated energy company in China; and PetroChina, a dominant
player in the upstream oil and gas sector, also supported performance.
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, 2007, 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 investments predominantly in securities with non-U.S.
currency exposure. However, one cannot expect the same result in future periods.
During the reporting period, we made significant purchases in Russia, India,
Mexico and China (via Hong Kong-listed China H shares). 5 Major investments
included shares of America Movil, UES (Unified Energy Systems), China Telecom
and Sberbank (Savings Bank of Russia). We also made select additions in
Pakistan, Peru and Chile as we continued to search for undervalued stocks
trading at attractive valuations.
From a sector perspective, we increased the Fund's allocations to several
sectors based on what we considered favorable market trends. With commodity
prices expected to stay at relatively high levels amid growing global energy
demand, we increased our investments in coal and diversified metals and mining
companies. 6 Greater global demand for consumer products and services also led
us to increase our allocation to integrated telecommunication services, home
furnishing retail and automobile manufacturing companies. 7 We also increased
the Fund's exposure to the information technology (IT) consulting industry
because of strong demand for outsourcing services. 8 We initiated a position in
Tata Consultancy Services, India's leading IT consulting and outsourcing
services provider.
5. "China H" denotes shares of China-incorporated, Hong Kong-listed companies
with most businesses in China.
6. The coal industry is part of oil, gas and consumable fuels in the SOI. The
diversified metals and mining industry is part of metals and mining in the SOI.
7. The integrated telecommunication services industry is part of diversified
telecommunication services in the SOI. The home furnishing retail industry is
part of household durables in the SOI. The automobile manufacturing industry is
part of automobiles in the SOI.
8. The IT consulting industry is part of IT services in the SOI.
6 | Annual Report
To raise funds for redemptions during the reporting period, we sold a number of
holdings. These sales also allowed the Fund to focus on stocks we considered
relatively more attractively valued within our investment universe. We sold
select positions as stocks reached sale price targets. As a result, the Fund's
exposure to the tobacco, semiconductors, diversified banking, and life and
health insurance industries fell. 9 Major sales included all or part of Remgro,
Old Mutual, Samsung Electronics and Hana Financial Group.
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
Executive Chairman
Templeton Asset Management Ltd.
9. The semiconductors industry is part of semiconductors and semiconductor
equipment in the SOI. The diversified banking industry is part of commercial
banks in the SOI. The life and health insurance industry is part of insurance in
the SOI.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF DECEMBER 31, 2007, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
Annual Report | 7
Performance Summary as of 12/31/07
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
that a shareholder would pay on Fund dividends, capital gain distributions, if
any, or any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
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CLASS A (SYMBOL: TEDMX) CHANGE 12/31/07 12/31/06
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Net Asset Value (NAV) +$2.22 $30.50 $28.28
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DISTRIBUTIONS (1/1/07-12/31/07)
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Dividend Income $0.8380
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Short-Term Capital Gain $0.2984
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Long-Term Capital Gain $4.3284
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TOTAL $5.4648
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CLASS B (SYMBOL: TDMBX) CHANGE 12/31/07 12/31/06
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Net Asset Value (NAV) +$2.07 $29.85 $27.78
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DISTRIBUTIONS (1/1/07-12/31/07)
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Dividend Income $0.5991
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Short-Term Capital Gain $0.2984
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Long-Term Capital Gain $4.3284
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TOTAL $5.2259
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CLASS C (SYMBOL: TDMTX) CHANGE 12/31/07 12/31/06
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Net Asset Value (NAV) +$2.04 $29.76 $27.72
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DISTRIBUTIONS (1/1/07-12/31/07)
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Dividend Income $0.6243
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Short-Term Capital Gain $0.2984
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Long-Term Capital Gain $4.3284
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TOTAL $5.2511
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CLASS R (SYMBOL: TDMRX) CHANGE 12/31/07 12/31/06
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Net Asset Value (NAV) +$2.11 $30.07 $27.96
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DISTRIBUTIONS (1/1/07-12/31/07)
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Dividend Income $0.7935
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Short-Term Capital Gain $0.2984
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Long-Term Capital Gain $4.3284
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TOTAL $5.4203
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ADVISOR CLASS (SYMBOL: TDADX) CHANGE 12/31/07 12/31/06
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Net Asset Value (NAV) +$2.21 $30.48 $28.27
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DISTRIBUTIONS (1/1/07-12/31/07)
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Dividend Income $0.9360
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Short-Term Capital Gain $0.2984
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Long-Term Capital Gain $4.3284
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TOTAL $5.5628
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8 | Annual Report
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.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +28.77% +306.86% +227.29%
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Average Annual Total Return 2 +21.34% +30.84% +11.92%
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Value of $10,000 Investment 3 $12,134 $38,347 $30,846
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Total Annual Operating Expenses 4 1.86%
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 +27.82% +293.53% 280.99%
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Average Annual Total Return 2 +23.82% +31.39% +16.02%
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Value of $10,000 Investment 3 $12,382 $39,153 $38,099
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Total Annual Operating Expenses 4 2.58%
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CLASS C 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +27.87% +293.75% +206.22%
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Average Annual Total Return 2 +26.87% +31.54% +11.84%
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Value of $10,000 Investment 3 $12,687 $39,375 $30,622
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Total Annual Operating Expenses 4 2.58%
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CLASS R 1-YEAR 5-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 +28.53% +303.22% +307.11%
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Average Annual Total Return 2 +28.53% +32.16% +26.39%
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Value of $10,000 Investment 3 $12,853 $40,322 $40,711
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Total Annual Operating Expenses 4 2.08%
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ADVISOR CLASS 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +29.12% +313.71% +238.47%
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Average Annual Total Return 2 +29.12% +32.84% +12.97%
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Value of $10,000 Investment 3 $12,912 $41,371 $33,847
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Total Annual Operating Expenses 4 1.58%
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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND
PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
Annual Report | 9
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged indexes include
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.
AVERAGE ANNUAL TOTAL RETURN
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CLASS A 12/31/07
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1-Year +21.34%
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5-Year +30.84%
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10-Year +11.92%
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CLASS A (1/1/98-12/31/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5
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1/1/1998 $ 9,425 $10,000 $10,000
1/31/1998 $ 8,594 $ 9,342 $ 9,216
2/28/1998 $ 9,490 $10,295 $10,178
3/31/1998 $ 9,930 $10,699 $10,619
4/30/1998 $ 9,966 $10,726 $10,504
5/31/1998 $ 8,615 $ 9,388 $ 9,064
6/30/1998 $ 7,770 $ 8,429 $ 8,113
7/31/1998 $ 7,822 $ 8,764 $ 8,371
8/31/1998 $ 5,898 $ 6,301 $ 5,950
9/30/1998 $ 6,177 $ 6,605 $ 6,328
10/31/1998 $ 7,087 $ 7,364 $ 6,994
11/30/1998 $ 7,866 $ 7,918 $ 7,576
12/31/1998 $ 7,661 $ 7,799 $ 7,466
1/31/1999 $ 7,229 $ 7,610 $ 7,346
2/28/1999 $ 7,274 $ 7,746 $ 7,417
3/31/1999 $ 8,330 $ 8,649 $ 8,395
4/30/1999 $ 9,885 $ 9,829 $ 9,433
5/31/1999 $ 9,669 $ 9,653 $ 9,378
6/30/1999 $10,450 $10,705 $10,443
7/31/1999 $ 9,974 $10,552 $10,159
8/31/1999 $ 9,535 $10,665 $10,251
9/30/1999 $ 9,178 $10,369 $ 9,904
10/31/1999 $ 9,453 $10,545 $10,115
11/30/1999 $10,130 $11,493 $11,022
12/31/1999 $11,610 $13,033 $12,424
1/31/2000 $11,075 $13,031 $12,498
2/29/2000 $10,666 $13,021 $12,663
3/31/2000 $10,779 $13,208 $12,725
4/30/2000 $ 9,876 $11,842 $11,519
5/31/2000 $ 9,122 $11,526 $11,043
6/30/2000 $ 9,793 $11,856 $11,431
7/31/2000 $ 9,405 $11,285 $10,844
8/31/2000 $ 9,577 $11,330 $10,897
9/30/2000 $ 8,622 $10,316 $ 9,945
10/31/2000 $ 7,897 $ 9,478 $ 9,224
11/30/2000 $ 7,479 $ 8,644 $ 8,418
12/31/2000 $ 7,912 $ 8,894 $ 8,621
1/31/2001 $ 8,831 $10,036 $ 9,808
2/28/2001 $ 8,174 $ 9,263 $ 9,040
3/31/2001 $ 7,409 $ 8,464 $ 8,152
4/30/2001 $ 7,746 $ 8,966 $ 8,555
5/31/2001 $ 8,031 $ 9,238 $ 8,657
6/30/2001 $ 7,993 $ 9,070 $ 8,479
7/31/2001 $ 7,499 $ 8,450 $ 7,944
8/31/2001 $ 7,514 $ 8,336 $ 7,865
9/30/2001 $ 6,547 $ 7,043 $ 6,648
10/31/2001 $ 6,742 $ 7,480 $ 7,060
11/30/2001 $ 7,154 $ 8,356 $ 7,798
12/31/2001 $ 7,456 $ 9,051 $ 8,417
1/31/2002 $ 7,856 $ 9,375 $ 8,702
2/28/2002 $ 7,871 $ 9,555 $ 8,845
3/31/2002 $ 8,309 $10,222 $ 9,377
4/30/2002 $ 8,575 $10,316 $ 9,438
5/31/2002 $ 8,537 $10,139 $ 9,287
6/30/2002 $ 8,006 $ 9,415 $ 8,591
7/31/2002 $ 7,566 $ 8,819 $ 7,937
8/31/2002 $ 7,544 $ 8,933 $ 8,059
9/30/2002 $ 6,975 $ 7,940 $ 7,190
10/31/2002 $ 7,157 $ 8,451 $ 7,656
11/30/2002 $ 7,726 $ 9,037 $ 8,183
12/31/2002 $ 7,582 $ 8,695 $ 7,912
1/31/2003 $ 7,460 $ 8,703 $ 7,877
2/28/2003 $ 7,453 $ 8,445 $ 7,665
3/31/2003 $ 7,188 $ 8,135 $ 7,447
4/30/2003 $ 7,932 $ 8,966 $ 8,111
5/31/2003 $ 8,408 $ 9,589 $ 8,693
6/30/2003 $ 8,684 $10,183 $ 9,188
7/31/2003 $ 9,045 $10,730 $ 9,763
8/31/2003 $ 9,467 $11,504 $10,419
9/30/2003 $ 9,743 $11,630 $10,495
10/31/2003 $10,518 $12,574 $11,388
11/30/2003 $10,725 $12,736 $11,528
12/31/2003 $11,611 $13,665 $12,364
1/31/2004 $11,944 $14,132 $12,803
2/29/2004 $12,377 $14,813 $13,394
3/31/2004 $12,365 $15,089 $13,566
4/30/2004 $11,678 $13,948 $12,457
5/31/2004 $11,522 $13,759 $12,211
6/30/2004 $11,741 $13,759 $12,267
7/31/2004 $11,584 $13,476 $12,050
8/31/2004 $11,967 $14,078 $12,555
9/30/2004 $12,592 $14,891 $13,280
10/31/2004 $12,920 $15,322 $13,598
11/30/2004 $13,912 $16,653 $14,857
12/31/2004 $14,565 $17,507 $15,573
1/31/2005 $14,494 $17,549 $15,622
2/28/2005 $15,674 $19,022 $16,994
3/31/2005 $14,940 $17,835 $15,874
4/30/2005 $14,456 $17,435 $15,451
5/31/2005 $15,019 $18,088 $15,995
6/30/2005 $15,494 $18,698 $16,547
7/31/2005 $16,335 $19,992 $17,718
8/31/2005 $16,279 $19,984 $17,878
9/30/2005 $17,587 $22,043 $19,545
10/31/2005 $16,588 $20,607 $18,268
11/30/2005 $17,856 $22,279 $19,780
12/31/2005 $18,672 $23,668 $20,952
1/31/2006 $20,530 $26,208 $23,305
2/28/2006 $20,593 $26,225 $23,283
3/31/2006 $20,780 $26,554 $23,491
4/30/2006 $22,184 $28,786 $25,168
5/31/2006 $20,131 $25,935 $22,536
6/30/2006 $19,818 $25,827 $22,489
7/31/2006 $20,267 $26,157 $22,825
8/31/2006 $20,684 $26,930 $23,418
9/30/2006 $20,636 $27,165 $23,615
10/31/2006 $21,615 $28,382 $24,737
11/30/2006 $22,834 $30,595 $26,580
12/31/2006 $23,955 $31,979 $27,779
1/31/2007 $23,659 $31,611 $27,492
2/28/2007 $23,396 $31,545 $27,332
3/31/2007 $24,316 $32,850 $28,431
4/30/2007 $25,555 $34,503 $29,752
5/31/2007 $26,690 $36,274 $31,233
6/30/2007 $27,513 $38,002 $32,710
7/31/2007 $28,223 $39,929 $34,453
8/31/2007 $27,210 $39,042 $33,732
9/30/2007 $30,406 $43,191 $37,460
10/31/2007 $33,620 $47,881 $41,640
11/30/2007 $30,839 $44,591 $38,691
12/31/2007 $30,846 $44,858 $38,829
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
CLASS B 12/31/07
- -------------------------------------------------
1-Year +23.82%
- -------------------------------------------------
5-Year +31.39%
- -------------------------------------------------
Since Inception (1/1/99) +16.02%
- -------------------------------------------------
CLASS B (1/1/99-12/31/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5
- --------------------------------------------------------------------------------
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
1/31/2007 $29,221 $40,532 $36,822
2/28/2007 $28,897 $40,446 $36,609
3/31/2007 $30,032 $42,120 $38,081
4/30/2007 $31,561 $44,239 $39,849
5/31/2007 $32,962 $46,510 $41,833
6/30/2007 $33,978 $48,725 $43,812
7/31/2007 $34,854 $51,196 $46,146
8/31/2007 $33,603 $50,059 $45,181
9/30/2007 $37,551 $55,379 $50,174
10/31/2007 $41,520 $61,392 $55,773
11/30/2007 $38,087 $57,174 $51,823
12/31/2007 $38,099 $57,517 $52,008
10 | Annual Report
Performance Summary (CONTINUED)
CLASS C (1/1/98-12/31/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5
- --------------------------------------------------------------------------------
12/31/2003 $11,841 $13,665 $12,364
1/31/2004 $12,178 $14,132 $12,803
2/29/2004 $12,612 $14,813 $13,394
3/31/2004 $12,591 $15,089 $13,566
4/30/2004 $11,886 $13,948 $12,457
5/31/2004 $11,724 $13,759 $12,211
6/30/2004 $11,943 $13,759 $12,267
7/31/2004 $11,773 $13,476 $12,050
8/31/2004 $12,154 $14,078 $12,555
9/30/2004 $12,785 $14,891 $13,280
10/31/2004 $13,109 $15,322 $13,598
11/30/2004 $14,105 $16,653 $14,857
12/31/2004 $14,768 $17,507 $15,573
1/31/2005 $14,678 $17,549 $15,622
2/28/2005 $15,870 $19,022 $16,994
3/31/2005 $15,121 $17,835 $15,874
4/30/2005 $14,623 $17,435 $15,451
5/31/2005 $15,178 $18,088 $15,995
6/30/2005 $15,652 $18,698 $16,547
7/31/2005 $16,493 $19,992 $17,718
8/31/2005 $16,428 $19,984 $17,878
9/30/2005 $17,743 $22,043 $19,545
10/31/2005 $16,722 $20,607 $18,268
11/30/2005 $17,996 $22,279 $19,780
12/31/2005 $18,801 $23,668 $20,952
1/31/2006 $20,657 $26,208 $23,305
2/28/2006 $20,714 $26,225 $23,283
3/31/2006 $20,881 $26,554 $23,491
4/30/2006 $22,279 $28,786 $25,168
5/31/2006 $20,215 $25,935 $22,536
6/30/2006 $19,886 $25,827 $22,489
7/31/2006 $20,322 $26,157 $22,825
8/31/2006 $20,733 $26,930 $23,418
9/30/2006 $20,667 $27,165 $23,615
10/31/2006 $21,638 $28,382 $24,737
11/30/2006 $22,839 $30,595 $26,580
12/31/2006 $23,948 $31,979 $27,779
1/31/2007 $23,637 $31,611 $27,492
2/28/2007 $23,361 $31,545 $27,332
3/31/2007 $24,264 $32,850 $28,431
4/30/2007 $25,484 $34,503 $29,752
5/31/2007 $26,598 $36,274 $31,233
6/30/2007 $27,411 $38,002 $32,710
7/31/2007 $28,092 $39,929 $34,453
8/31/2007 $27,075 $39,042 $33,732
9/30/2007 $30,231 $43,191 $37,460
10/31/2007 $33,413 $47,881 $41,640
11/30/2007 $30,629 $44,591 $38,691
12/31/2007 $30,622 $44,858 $38,829
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
CLASS C 12/31/07
- -------------------------------------------------
1-Year +26.87%
- -------------------------------------------------
5-Year +31.54%
- -------------------------------------------------
10-Year +11.84%
- -------------------------------------------------
CLASS R (1/1/02-12/31/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH 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 $10,483 $10,357 $10,339
2/28/2002 $10,504 $10,557 $10,509
3/31/2002 $11,098 $11,293 $11,141
4/30/2002 $11,442 $11,397 $11,213
5/31/2002 $11,391 $11,201 $11,034
6/30/2002 $10,683 $10,402 $10,207
7/31/2002 $10,096 $ 9,743 $ 9,430
8/31/2002 $10,066 $ 9,869 $ 9,576
9/30/2002 $ 9,307 $ 8,773 $ 8,543
10/31/2002 $ 9,540 $ 9,336 $ 9,097
11/30/2002 $10,309 $ 9,984 $ 9,723
12/31/2002 $10,096 $ 9,606 $ 9,400
1/31/2003 $ 9,945 $ 9,615 $ 9,359
2/28/2003 $ 9,935 $ 9,330 $ 9,106
3/31/2003 $ 9,563 $ 8,988 $ 8,848
4/30/2003 $10,548 $ 9,905 $ 9,636
5/31/2003 $11,184 $10,594 $10,328
6/30/2003 $11,554 $11,250 $10,917
7/31/2003 $12,025 $11,855 $11,600
8/31/2003 $12,589 $12,710 $12,379
9/30/2003 $12,949 $12,849 $12,470
10/31/2003 $13,975 $13,892 $13,531
11/30/2003 $14,252 $14,071 $13,697
12/31/2003 $15,429 $15,097 $14,690
1/31/2004 $15,875 $15,613 $15,212
2/29/2004 $16,445 $16,365 $15,914
3/31/2004 $16,428 $16,670 $16,118
4/30/2004 $15,509 $15,410 $14,800
5/31/2004 $15,310 $15,200 $14,509
6/30/2004 $15,592 $15,201 $14,575
7/31/2004 $15,383 $14,888 $14,317
8/31/2004 $15,885 $15,554 $14,917
9/30/2004 $16,720 $16,452 $15,778
10/31/2004 $17,149 $16,928 $16,156
11/30/2004 $18,466 $18,398 $17,653
12/31/2004 $19,329 $19,341 $18,502
1/31/2005 $19,234 $19,388 $18,561
2/28/2005 $20,802 $21,016 $20,191
3/31/2005 $19,819 $19,704 $18,861
4/30/2005 $19,172 $19,262 $18,358
5/31/2005 $19,914 $19,984 $19,004
6/30/2005 $20,551 $20,658 $19,660
7/31/2005 $21,664 $22,087 $21,051
8/31/2005 $21,579 $22,078 $21,241
9/30/2005 $23,318 $24,353 $23,222
10/31/2005 $21,993 $22,766 $21,704
11/30/2005 $23,668 $24,614 $23,501
12/31/2005 $24,746 $26,148 $24,894
1/31/2006 $27,189 $28,954 $27,689
2/28/2006 $27,274 $28,973 $27,663
3/31/2006 $27,514 $29,337 $27,911
4/30/2006 $29,370 $31,803 $29,902
5/31/2006 $26,655 $28,653 $26,776
6/30/2006 $26,225 $28,533 $26,719
7/31/2006 $26,816 $28,898 $27,119
8/31/2006 $27,374 $29,752 $27,824
9/30/2006 $27,299 $30,012 $28,057
10/31/2006 $28,586 $31,356 $29,391
11/30/2006 $30,196 $33,802 $31,581
12/31/2006 $31,674 $35,330 $33,006
1/31/2007 $31,277 $34,924 $32,664
2/28/2007 $30,926 $34,851 $32,474
3/31/2007 $32,134 $36,293 $33,780
4/30/2007 $33,767 $38,119 $35,349
5/31/2007 $35,263 $40,076 $37,109
6/30/2007 $36,340 $41,984 $38,864
7/31/2007 $37,268 $44,113 $40,935
8/31/2007 $35,934 $43,134 $40,078
9/30/2007 $40,141 $47,718 $44,507
10/31/2007 $44,383 $52,899 $49,474
11/30/2007 $40,697 $49,264 $45,970
12/31/2007 $40,711 $49,560 $46,134
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
CLASS R 12/31/07
- -------------------------------------------------
1-Year +28.53%
- -------------------------------------------------
5-Year +32.16%
- -------------------------------------------------
Since Inception (1/1/02) +26.39%
- -------------------------------------------------
Annual Report | 11
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
ADVISOR CLASS 12/31/07
- -------------------------------------------------
1-Year +29.12%
- -------------------------------------------------
5-Year +32.84%
- -------------------------------------------------
10-Year +12.97%
- -------------------------------------------------
ADVISOR CLASS (1/1/98-12/31/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Templeton Developing S&P/IFCI
Date Markets Trust Composite Index 5 MSCI EM Index 5
- --------------------------------------------------------------------------------
1/1/1998 $10,000 $10,000 $10,000
1/31/1998 $ 9,118 $ 9,342 $ 9,216
2/28/1998 $10,070 $10,295 $10,178
3/31/1998 $10,544 $10,699 $10,619
4/30/1998 $10,575 $10,726 $10,504
5/31/1998 $ 9,148 $ 9,388 $ 9,064
6/30/1998 $ 8,251 $ 8,429 $ 8,113
7/31/1998 $ 8,306 $ 8,764 $ 8,371
8/31/1998 $ 6,262 $ 6,301 $ 5,950
9/30/1998 $ 6,567 $ 6,605 $ 6,328
10/31/1998 $ 7,541 $ 7,364 $ 6,994
11/30/1998 $ 8,368 $ 7,918 $ 7,576
12/31/1998 $ 8,153 $ 7,799 $ 7,466
1/31/1999 $ 7,693 $ 7,610 $ 7,346
2/28/1999 $ 7,741 $ 7,746 $ 7,417
3/31/1999 $ 8,867 $ 8,649 $ 8,395
4/30/1999 $10,524 $ 9,829 $ 9,433
5/31/1999 $10,302 $ 9,653 $ 9,378
6/30/1999 $11,135 $10,705 $10,443
7/31/1999 $10,628 $10,552 $10,159
8/31/1999 $10,160 $10,665 $10,251
9/30/1999 $ 9,787 $10,369 $ 9,904
10/31/1999 $10,072 $10,545 $10,115
11/30/1999 $10,802 $11,493 $11,022
12/31/1999 $12,388 $13,033 $12,424
1/31/2000 $11,817 $13,031 $12,498
2/29/2000 $11,381 $13,021 $12,663
3/31/2000 $11,507 $13,208 $12,725
4/30/2000 $10,541 $11,842 $11,519
5/31/2000 $ 9,743 $11,526 $11,043
6/30/2000 $10,462 $11,856 $11,431
7/31/2000 $10,055 $11,285 $10,844
8/31/2000 $10,246 $11,330 $10,897
9/30/2000 $ 9,217 $10,316 $ 9,945
10/31/2000 $ 8,451 $ 9,478 $ 9,224
11/30/2000 $ 8,004 $ 8,644 $ 8,418
12/31/2000 $ 8,465 $ 8,894 $ 8,621
1/31/2001 $ 9,460 $10,036 $ 9,808
2/28/2001 $ 8,746 $ 9,263 $ 9,040
3/31/2001 $ 7,933 $ 8,464 $ 8,152
4/30/2001 $ 8,303 $ 8,966 $ 8,555
5/31/2001 $ 8,609 $ 9,238 $ 8,657
6/30/2001 $ 8,568 $ 9,070 $ 8,479
7/31/2001 $ 8,037 $ 8,450 $ 7,944
8/31/2001 $ 8,054 $ 8,336 $ 7,865
9/30/2001 $ 7,024 $ 7,043 $ 6,648
10/31/2001 $ 7,233 $ 7,480 $ 7,060
11/30/2001 $ 7,683 $ 8,356 $ 7,798
12/31/2001 $ 8,006 $ 9,051 $ 8,417
1/31/2002 $ 8,437 $ 9,375 $ 8,702
2/28/2002 $ 8,453 $ 9,555 $ 8,845
3/31/2002 $ 8,933 $10,222 $ 9,377
4/30/2002 $ 9,219 $10,316 $ 9,438
5/31/2002 $ 9,179 $10,139 $ 9,287
6/30/2002 $ 8,615 $ 9,415 $ 8,591
7/31/2002 $ 8,141 $ 8,819 $ 7,937
8/31/2002 $ 8,124 $ 8,933 $ 8,059
9/30/2002 $ 7,511 $ 7,940 $ 7,190
10/31/2002 $ 7,716 $ 8,451 $ 7,656
11/30/2002 $ 8,345 $ 9,037 $ 8,183
12/31/2002 $ 8,181 $ 8,695 $ 7,912
1/31/2003 $ 8,059 $ 8,703 $ 7,877
2/28/2003 $ 8,051 $ 8,445 $ 7,665
3/31/2003 $ 7,764 $ 8,135 $ 7,447
4/30/2003 $ 8,570 $ 8,966 $ 8,111
5/31/2003 $ 9,093 $ 9,589 $ 8,693
6/30/2003 $ 9,400 $10,183 $ 9,188
7/31/2003 $ 9,782 $10,730 $ 9,763
8/31/2003 $10,247 $11,504 $10,419
9/30/2003 $10,546 $11,630 $10,495
10/31/2003 $11,393 $12,574 $11,388
11/30/2003 $11,617 $12,736 $11,528
12/31/2003 $12,576 $13,665 $12,364
1/31/2004 $12,946 $14,132 $12,803
2/29/2004 $13,417 $14,813 $13,394
3/31/2004 $13,413 $15,089 $13,566
4/30/2004 $12,667 $13,948 $12,457
5/31/2004 $12,506 $13,759 $12,211
6/30/2004 $12,743 $13,759 $12,267
7/31/2004 $12,582 $13,476 $12,050
8/31/2004 $12,997 $14,078 $12,555
9/30/2004 $13,684 $14,891 $13,280
10/31/2004 $14,040 $15,322 $13,598
11/30/2004 $15,125 $16,653 $14,857
12/31/2004 $15,843 $17,507 $15,573
1/31/2005 $15,766 $17,549 $15,622
2/28/2005 $17,059 $19,022 $16,994
3/31/2005 $16,259 $17,835 $15,874
4/30/2005 $15,742 $17,435 $15,451
5/31/2005 $16,354 $18,088 $15,995
6/30/2005 $16,881 $18,698 $16,547
7/31/2005 $17,804 $19,992 $17,718
8/31/2005 $17,744 $19,984 $17,878
9/30/2005 $19,176 $22,043 $19,545
10/31/2005 $18,089 $20,607 $18,268
11/30/2005 $19,487 $22,279 $19,780
12/31/2005 $20,380 $23,668 $20,952
1/31/2006 $22,399 $26,208 $23,305
2/28/2006 $22,478 $26,225 $23,283
3/31/2006 $22,682 $26,554 $23,491
4/30/2006 $24,223 $28,786 $25,168
5/31/2006 $21,990 $25,935 $22,536
6/30/2006 $21,649 $25,827 $22,489
7/31/2006 $22,148 $26,157 $22,825
8/31/2006 $22,612 $26,930 $23,418
9/30/2006 $22,559 $27,165 $23,615
10/31/2006 $23,637 $28,382 $24,737
11/30/2006 $24,976 $30,595 $26,580
12/31/2006 $26,214 $31,979 $27,779
1/31/2007 $25,890 $31,611 $27,492
2/28/2007 $25,611 $31,545 $27,332
3/31/2007 $26,619 $32,850 $28,431
4/30/2007 $27,984 $34,503 $29,752
5/31/2007 $29,236 $36,274 $31,233
6/30/2007 $30,147 $38,002 $32,710
7/31/2007 $30,924 $39,929 $34,453
8/31/2007 $29,834 $39,042 $33,732
9/30/2007 $33,333 $43,191 $37,460
10/31/2007 $36,870 $47,881 $41,640
11/30/2007 $33,826 $44,591 $38,691
12/31/2007 $33,847 $44,858 $38,829
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. Figures are as stated in the Fund's prospectus current as of the date of this
report.
5. Source: Standard & Poor's Micropal. The S&P/IFCI Composite Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
performance of global emerging markets. The MSCI EM Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global emerging markets.
12 | Annual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.
ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
Annual Report | 13
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.
- ----------------------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 7/1/07 VALUE 12/31/07 PERIOD* 7/1/07-12/31/07
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,121.10 $ 9.62
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.13 $ 9.15
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,117.10 $13.50
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.45 $12.83
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,117.20 $13.50
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.45 $12.83
- ----------------------------------------------------------------------------------------------------------------------------
CLASS R
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,120.30 $10.90
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.92 $10.36
- ----------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,122.80 $ 8.19
- ----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.49 $ 7.78
- ----------------------------------------------------------------------------------------------------------------------------
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.80%; B: 2.53%; C: 2.53%; R: 2.04%; and Advisor:
1.53%), multiplied by the average account value over the period, multiplied by
184/365 to reflect the one-half year period.
14 | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS A 2007 2006 2005 2004 2003
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 28.28 $ 23.42 $ 18.53 $ 14.95 $ 10.00
-------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ............................. 0.55 0.36 0.28 0.18 0.22
Net realized and unrealized gains (losses) .......... 7.14 6.20 4.90 3.66 4.98
-------------------------------------------------------------------------
Total from investment operations ....................... 7.69 6.56 5.18 3.84 5.20
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.84) (0.53) (0.29) (0.26) (0.25)
Net realized gains .................................. (4.63) (1.17) -- -- --
-------------------------------------------------------------------------
Total distributions .................................... (5.47) (1.70) (0.29) (0.26) (0.25)
-------------------------------------------------------------------------
Redemption fees ........................................ -- d -- d -- d -- d -- d
-------------------------------------------------------------------------
Net asset value, end of year ........................... $ 30.50 $ 28.28 $ 23.42 $ 18.53 $ 14.95
=========================================================================
Total return c ......................................... 28.77% 28.29% 28.20% 25.45% 53.14%
RATIOS TO AVERAGE NET ASSETS
Expenses ............................................... 1.83% e 1.86% e 1.97% e 2.03% e 2.17%
Net investment income .................................. 1.74% 1.39% 1.36% 1.12% 1.85%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $4,647,893 $4,876,035 $ 3,395,151 $2,305,376 $1,873,277
Portfolio turnover rate ................................ 92.26% f 51.95% 34.76% 58.74% 48.60%
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%.
f Excludes the value of portfolio securities delivered as a result of
redemptions in-kind. See Note 11.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 15
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
CLASS B 2007 2006 2005 2004 2003
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 27.78 $ 23.03 $ 18.24 $ 14.74 $ 9.82
-------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ............................. 0.30 0.17 0.15 0.06 0.13
Net realized and unrealized gains (losses) .......... 7.00 6.08 4.80 3.61 4.93
-------------------------------------------------------------------------
Total from investment operations ....................... 7.30 6.25 4.95 3.67 5.06
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.60) (0.33) (0.16) (0.17) (0.14)
Net realized gains .................................. (4.63) (1.17) -- -- --
-------------------------------------------------------------------------
Total distributions .................................... (5.23) (1.50) (0.16) (0.17) (0.14)
-------------------------------------------------------------------------
Redemption fees ........................................ -- d -- d -- d -- d -- d
-------------------------------------------------------------------------
Net asset value, end of year ........................... $ 29.85 $ 27.78 $ 23.03 $ 18.24 $ 14.74
=========================================================================
Total return c ......................................... 27.82% 27.40% 27.35% 24.70% 52.17%
RATIOS TO AVERAGE NET ASSETS
Expenses ............................................... 2.55% e 2.58% e 2.62% e 2.68% e 2.82%
Net investment income .................................. 1.02% 0.67% 0.71% 0.47% 1.20%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $ 53,396 $ 54,991 $ 46,965 $ 36,992 $ 26,062
Portfolio turnover rate ................................ 92.26% f 51.95% 34.76% 58.74% 48.60%
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%.
f Excludes the value of portfolio securities delivered as a result of
redemptions in-kind. See Note 11.
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 C 2007 2006 2005 2004 2003
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 27.72 $ 23.00 $ 18.22 $ 14.72 $ 9.79
-------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ............................. 0.29 0.17 0.14 0.05 0.14
Net realized and unrealized gains (losses) .......... 7.00 6.07 4.81 3.60 4.90
-------------------------------------------------------------------------
Total from investment operations ....................... 7.29 6.24 4.95 3.65 5.04
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.62) (0.35) (0.17) (0.15) (0.11)
Net realized gains .................................. (4.63) (1.17) -- -- --
-------------------------------------------------------------------------
Total distributions .................................... (5.25) (1.52) (0.17) (0.15) (0.11)
-------------------------------------------------------------------------
Redemption fees ........................................ -- d -- d -- d -- d -- d
-------------------------------------------------------------------------
Net asset value, end of year ........................... $ 29.76 $ 27.72 $ 23.00 $ 18.22 $ 14.72
=========================================================================
Total return c ......................................... 27.87% 27.38% 27.31% 24.72% 52.25%
RATIOS TO AVERAGE NET ASSETS
Expenses ............................................... 2.55% e 2.58% e 2.63% e 2.69% e 2.82%
Net investment income .................................. 1.02% 0.67% 0.70% 0.46% 1.20%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $ 578,419 $ 489,722 $ 364,355 $ 258,365 $ 208,581
Portfolio turnover rate 92.26% f 51.95% 34.76% 58.74% 48.60%
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%.
f Excludes the value of portfolio securities delivered as a result of
redemptions in-kind. See Note 11.
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 R 2007 2006 2005 2004 2003
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 27.96 $ 23.20 $ 18.39 $ 14.85 $ 9.98
-------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ............................. 0.44 0.29 0.20 0.16 0.17
Net realized and unrealized gains (losses) .......... 7.09 6.14 4.90 3.64 4.98
-------------------------------------------------------------------------
Total from investment operations ....................... 7.53 6.43 5.10 3.80 5.15
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.79) (0.50) (0.29) (0.26) (0.28)
Net realized gains .................................. (4.63) (1.17) -- -- --
-------------------------------------------------------------------------
Total distributions .................................... (5.42) (1.67) (0.29) (0.26) (0.28)
-------------------------------------------------------------------------
Redemption fees ........................................ -- d -- d -- d -- d -- d
-------------------------------------------------------------------------
Net asset value, end of year ........................... $ 30.07 $ 27.96 $ 23.20 $ 18.39 $ 14.85
=========================================================================
Total return c ......................................... 28.53% 27.99% 28.03% 25.28% 52.82%
RATIOS TO AVERAGE NET ASSETS
Expenses ............................................... 2.06% e 2.08% e 2.13% e 2.18% e 2.32%
Net investment income .................................. 1.51% 1.17% 1.20% 0.97% 1.70%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $ 68,502 $ 40,779 $ 16,183 $ 5,220 $ 1,688
Portfolio turnover rate ................................ 92.26% f 51.95% 34.76% 58.74% 48.60%
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%.
f Excludes the value of portfolio securities delivered as a result of
redemptions in-kind. See Note 11.
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,
ADVISOR CLASS 2007 2006 2005 2004 2003
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ..................... $ 28.27 $ 23.40 $ 18.51 $ 14.93 $ 10.01
-------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ............................. 0.62 0.43 0.32 0.24 0.26
Net realized and unrealized gains (losses) .......... 7.16 6.22 4.92 3.65 4.99
-------------------------------------------------------------------------
Total from investment operations ....................... 7.78 6.65 5.24 3.89 5.25
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.94) (0.61) (0.35) (0.31) (0.33)
Net realized gains .................................. (4.63) (1.17) -- -- --
-------------------------------------------------------------------------
Total distributions .................................... (5.57) (1.78) (0.35) (0.31) (0.33)
-------------------------------------------------------------------------
Redemption fees ........................................ -- c -- c -- c -- c -- c
-------------------------------------------------------------------------
Net asset value, end of year ........................... $ 30.48 $ 28.27 $ 23.40 $ 18.51 $ 14.93
=========================================================================
Total return ........................................... 29.12% 28.63% 28.63% 25.98% 53.72%
RATIOS TO AVERAGE NET ASSETS
Expenses ............................................... 1.56% d 1.58% d 1.63% d 1.68% d 1.82%
Net investment income .................................. 2.01% 1.67% 1.70% 1.47% 2.20%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ........................ $ 793,791 $ 460,225 $ 343,823 $ 199,101 $ 203,660
Portfolio turnover rate ................................ 92.26% 51.95% 34.76% 58.74% 48.60%
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 Amount rounds to less than $0.01 per share.
d Benefit of expense reduction rounds to less than 0.01%.
e Excludes the value of portfolio securities delivered as a result of
redemptions in-kind. See Note 11.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 19
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS 98.4%
COMMON STOCKS AND RIGHTS 84.5%
AUSTRIA 1.0%
Erste Bank der oesterreichischen
Sparkassen AG ......................... Commercial Banks 132,600 $ 9,385,225
a IMMOEAST AG ............................. Real Estate Management & Development 299,660 3,222,966
a Meinl European Land Ltd. ................ Real Estate Management & Development 291,470 4,011,114
OMV AG .................................. Oil, Gas & Consumable Fuels 440,164 35,599,221
Wienerberger AG ......................... Building Products 210,000 11,624,160
---------------
63,842,686
---------------
BRAZIL 1.9%
AES Tiete SA ............................ Independent Power Producers & Energy Traders 499,597,365 22,173,140
Companhia de Bebidas das Americas
(AmBev) ............................... Beverages 101,144 7,102,809
b Companhia Energetica de Minas Gerais .... Electric Utilities 116,896 2,219,054
Energias do Brasil SA ................... Electrical Equipment 428,669 6,959,851
c Marfrig Frigorificos e Comercio De
Alimentos SA, 144A .................... Food Products 1,488,489 12,752,504
Natura Cosmeticos SA .................... Personal Products 809,112 7,727,474
Porto Seguro SA ......................... Insurance 267,400 9,914,831
Souza Cruz SA ........................... Tobacco 1,717,849 46,517,035
---------------
115,366,698
---------------
CHINA 20.0%
Air China Ltd., H ....................... Airlines 16,383,000 24,412,416
Aluminum Corp. of China Ltd., H ......... Metals & Mining 107,496,675 221,938,224
c Aluminum Corp. of China Ltd., H, 144A ... Metals & Mining 6,154,000 12,705,582
Beijing Capital Land Ltd., H ............ Real Estate Management & Development 11,860,000 7,208,987
China Construction Bank Corp., H ........ Commercial Banks 23,667,000 20,061,152
China International Marine Containers
(Group) Co. Ltd., B ................... Machinery 5,663,542 10,509,156
China Mobile Ltd. ....................... Wireless Telecommunication Services 7,197,500 127,279,113
China Netcom Group Corp. (Hong Kong)
Ltd. .................................. Diversified Telecommunication Services 12,264,000 36,879,599
China Petroleum and Chemical Corp., H ... Oil, Gas & Consumable Fuels 97,512,710 147,305,077
China Shenhua Energy Co. Ltd., H ........ Oil, Gas & Consumable Fuels 4,102,500 24,515,779
China Telecom Corp. Ltd., H ............. Diversified Telecommunication Services 151,926,606 120,791,597
CNOOC Ltd. .............................. Oil, Gas & Consumable Fuels 54,638,307 93,047,886
Denway Motors Ltd. ...................... Automobiles 89,031,474 57,199,534
Dongfeng Motor Corp., H ................. Automobiles 44,504,000 31,388,672
a Hidili Industry International
Development ........................... Metals & Mining 18,113,000 27,826,489
a,c Hidili Industry International
Development, 144A ..................... Metals & Mining 2,972,000 4,565,799
Huaneng Power International Inc., H ..... Independent Power Producers & Energy Traders 7,310,000 7,696,118
Industrial and Commercial Bank of China,
H ..................................... Commercial Banks 4,311,000 3,095,831
Jiangxi Copper Co. Ltd., H .............. Metals & Mining 10,386,000 25,491,856
Nine Dragons Paper Holdings Ltd. ........ Paper & Forest Products 2,591,000 6,552,176
PetroChina Co. Ltd., H .................. Oil, Gas & Consumable Fuels 93,894,902 167,366,299
Shanghai Industrial Holdings Ltd. ....... Industrial Conglomerates 7,390,136 32,221,262
20 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
CHINA (CONTINUED)
a Soho China Ltd. ......................... Real Estate Management & Development 10,239,000 $ 10,569,748
a,c Soho China Ltd., 144A ................... Real Estate Management & Development 3,479,500 3,591,897
Travelsky Technology Ltd., H ............ IT Services 2,661,000 2,828,854
---------------
1,227,049,103
---------------
EGYPT 0.2%
Orascom Construction Industries ......... Construction & Engineering 94,131 9,794,743
Telecom Egypt ........................... Diversified Telecommunication Services 1,078,539 4,092,241
---------------
13,886,984
---------------
HONG KONG 1.4%
Citic Pacific Ltd. ...................... Industrial Conglomerates 2,902,000 16,206,781
Dairy Farm International Holdings Ltd. .. Food & Staples Retailing 3,123,362 13,617,858
GOME Electrical Appliances Holdings
Ltd. .................................. Specialty Retail 12,606,000 32,007,643
Hopson Development Holdings Ltd. ........ Real Estate Management & Development 2,582,000 7,135,341
Hutchison Whampoa Ltd. .................. Industrial Conglomerates 1,223,000 13,871,885
VTech Holdings Ltd. ..................... Communications Equipment 706,000 5,069,953
---------------
87,909,461
---------------
HUNGARY 1.6%
Magyar Telekom PLC ...................... Diversified Telecommunication Services 3,305,344 17,159,723
MOL Hungarian Oil and Gas Nyrt. ......... Oil, Gas & Consumable Fuels 506,606 71,581,183
OTP Bank Ltd. ........................... Commercial Banks 154,527 7,835,097
---------------
96,576,003
---------------
INDIA 5.4%
Ashok Leyland Ltd. ...................... Machinery 7,997,677 10,553,970
a Bharti Airtel Ltd. ...................... Wireless Telecommunication Services 561,198 14,164,179
Dr. Reddy's Laboratories Ltd. ........... Pharmaceuticals 328,985 6,139,300
Gail India Ltd. ......................... Gas Utilities 2,374,840 32,667,987
Grasim Industries Ltd. .................. Construction Materials 2,925 271,055
Hindalco Industries Ltd. ................ Metals & Mining 4,674,127 25,484,994
Hindustan Unilever Ltd. ................. Household Products 2,824,100 15,329,907
Maruti Suzuki India Ltd. ................ Automobiles 222,373 5,587,118
National Aluminium Co. Ltd. ............. Metals & Mining 1,780,415 22,236,550
Oil & Natural Gas Corp. Ltd. ............ Oil, Gas & Consumable Fuels 2,627,981 82,464,116
Reliance Industries Ltd. ................ Oil, Gas & Consumable Fuels 339,700 24,836,764
Satyam Computer Services Ltd. ........... IT Services 581,000 6,622,412
Tata Chemicals Ltd. ..................... Chemicals 927,875 9,715,550
Tata Consultancy Services Ltd. .......... IT Services 1,785,701 49,093,749
Tata Motors Ltd. ........................ Machinery 240,800 4,534,899
Tata Steel Ltd. ......................... Metals & Mining 1,050,000 24,909,022
---------------
334,611,572
---------------
INDONESIA 0.4%
PT Bank Central Asia Tbk ................ Commercial Banks 11,765,500 9,144,333
PT Telekomunikasi Indonesia, B .......... Diversified Telecommunication Services 16,466,000 17,793,974
---------------
26,938,307
---------------
Annual Report | 21
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
ISRAEL 0.2%
a,b Taro Pharmaceutical Industries Ltd. ..... Pharmaceuticals 1,342,656 $ 10,338,451
---------------
MEXICO 4.6%
Alfa SAB de CV .......................... Industrial Conglomerates 1,009,300 6,517,876
America Movil SAB de CV, L, ADR ......... Wireless Telecommunication Services 2,549,272 156,499,808
Cemex SAB de CV, CPO, ADR ............... Construction Materials 233,460 6,034,941
Consorcio ARA SAB de CV ................. Household Durables 1,924,389 2,150,549
Fomento Economico Mexicano SAB de CV,
ADR ................................... Beverages 192,700 7,355,359
Grupo Televisa SA ....................... Media 5,637,850 26,900,761
Kimberly Clark de Mexico SAB de CV, A ... Household Products 11,827,694 51,635,788
Telefonos de Mexico SAB de CV (Telmex),
L, ADR ................................ Diversified Telecommunication Services 698,540 25,734,213
---------------
282,829,295
---------------
PAKISTAN 1.0%
MCB Bank Ltd. ........................... Commercial Banks 4,330,012 28,090,646
Oil & Gas Development Co. Ltd. .......... Oil, Gas & Consumable Fuels 4,731,000 9,166,552
Pakistan Telecommunications Corp., A .... Diversified Telecommunication Services 34,262,419 23,369,582
---------------
60,626,780
---------------
PERU 0.4%
Compania de Minas Buenaventura SA,
ADR ................................... Metals & Mining 418,410 23,682,006
---------------
PHILIPPINES 0.5%
San Miguel Corp., B ..................... Beverages 19,599,836 28,284,993
---------------
POLAND 0.6%
a Polski Koncern Naftowy Orlen SA ......... Oil, Gas & Consumable Fuels 1,852,728 38,947,136
---------------
RUSSIA 13.3%
Bank Of Moscow .......................... Commercial Banks 91,075 4,758,669
Fifth Power Generation Co. .............. Electric Utilities 4,270,457 748,184
Gazprom OAO ............................. Oil, Gas & Consumable Fuels 3,119,000 43,946,710
Gazprom OAO, ADR ........................ Oil, Gas & Consumable Fuels 1,150,836 65,252,401
Gazprom, ADR ............................ Oil, Gas & Consumable Fuels 1,812,800 101,788,720
LUKOIL, ADR ............................. Oil, Gas & Consumable Fuels 669,879 57,643,088
LUKOIL, ADR (London Exchange) ........... Oil, Gas & Consumable Fuels 259,498 22,420,627
Mining and Metallurgical Co. Norilsk
Nickel ................................ Metals & Mining 718,273 190,342,345
OAO TMK, GDR ............................ Energy Equipment & Services 149,000 6,630,500
Sberbank RF ............................. Commercial Banks 15,395,900 64,970,698
TGC-5 JSC ............................... Independent Power Producers & Energy Traders 140,965,043 127,573
TNK-BP .................................. Oil, Gas & Consumable Fuels 22,205,470 49,518,198
a Unified Energy Systems .................. Electric Utilities 157,245,900 206,621,113
---------------
814,768,826
---------------
22 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
SINGAPORE 0.8%
ComfortDelGro Corp. Ltd. ................ Road & Rail 9,940,586 $ 12,620,120
Fraser and Neave Ltd. ................... Industrial Conglomerates 7,738,071 31,672,704
Keppel Corp. Ltd. ....................... Industrial Conglomerates 460,000 4,148,601
---------------
48,441,425
---------------
SOUTH AFRICA 4.7%
Barloworld Ltd. ......................... Industrial Conglomerates 519,515 8,150,294
Foschini Ltd. ........................... Specialty Retail 4,245,962 29,873,265
a Freeworld Coatings Ltd. ................. Specialty Retail 519,515 798,381
Imperial Holdings Ltd. .................. Air Freight & Logistics 1,239,341 18,843,760
JD Group Ltd. ........................... Specialty Retail 2,764,815 20,539,777
Lewis Group Ltd. ........................ Specialty Retail 3,880,378 25,972,814
MTN Group Ltd. .......................... Wireless Telecommunication Services 3,928,384 73,280,241
Remgro Ltd. ............................. Diversified Financial Services 2,305,134 66,675,959
Standard Bank Group Ltd. ................ Commercial Banks 1,397,258 20,369,640
Tiger Brands Ltd. ....................... Food Products 956,797 23,414,697
---------------
287,918,828
---------------
SOUTH KOREA 7.9%
a Daewoo Shipbuilding & Marine
Engineering Co. Ltd. .................. Machinery 312,170 17,208,453
GS Holdings Corp. ....................... Oil, Gas & Consumable Fuels 517,380 32,113,432
a Kangwon Land Inc. ....................... Hotels, Restaurants & Leisure 1,455,974 38,263,939
b POSCO ................................... Metals & Mining 50,050 30,744,885
Samsung Electronics Co. Ltd. ............ Semiconductors & Semiconductor Equipment 67,685 40,203,899
a,b Samsung Heavy Industries Co. Ltd. ....... Machinery 578,530 24,845,795
b SK Energy Co. Ltd. ...................... Oil, Gas & Consumable Fuels 1,005,700 194,467,924
a SK Holdings Co. Ltd. .................... Industrial Conglomerates 361,149 76,392,823
a SKC Co. Ltd. ............................ Household Durables 94,380 2,823,182
a,b Woori Finance Holdings Co. Ltd. ......... Commercial Banks 1,354,000 27,266,599
---------------
484,330,931
---------------
SWEDEN 1.2%
Oriflame Cosmetics SA, SDR .............. Personal Products 1,127,297 72,006,691
---------------
TAIWAN 3.1%
Compal Communications Inc. .............. Communications Equipment 3,869,000 9,603,901
MediaTek Inc. ........................... Semiconductors & Semiconductor Equipment 1,119,000 14,526,642
Novatek Microelectronics Corp. Ltd. ..... Semiconductors & Semiconductor Equipment 7,138,979 27,296,744
President Chain Store Corp. ............. Food & Staples Retailing 23,544,164 61,855,158
Siliconware Precision Industries Co. .... Semiconductors & Semiconductor Equipment 22,496,377 40,442,145
Sunplus Technology Co. Ltd. ............. Semiconductors & Semiconductor Equipment 9,051,243 13,564,305
Taiwan Semiconductor Manufacturing Co.
Ltd. .................................. Semiconductors & Semiconductor Equipment 12,374,421 23,657,542
---------------
190,946,437
---------------
Annual Report | 23
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS AND RIGHTS (CONTINUED)
THAILAND 2.5%
Kasikornbank Public Co. Ltd., fgn. ...... Commercial Banks 13,088,587 $ 33,998,853
a PTT Aromatics & Refining Public Co. Ltd.,
fgn. .................................. Oil, Gas & Consumable Fuels 5,378,334 6,865,619
PTT Public Co. Ltd., fgn. ............... Oil, Gas & Consumable Fuels 2,498,000 27,883,271
Siam Cement Public Co. Ltd., fgn. ....... Construction Materials 6,649,079 46,189,238
Siam Commercial Bank Public Co. Ltd.,
fgn. .................................. Commercial Banks 3,357,761 8,672,264
c Thai Beverages Co. Ltd., 144A, fgn. ..... Beverages 45,186,863 7,993,791
Thai Beverages Co. Ltd., fgn. ........... Beverages 118,239,735 20,917,224
a True Corp. Public Co. Ltd., fgn., rts.,
3/28/08 ............................... Diversified Telecommunication Services 2,258,595 --
---------------
152,520,260
---------------
TURKEY 9.6%
Akbank TAS .............................. Commercial Banks 29,635,863 220,793,841
Anadolu Efes Biracilik Ve Malt Sanayii
AS .................................... Beverages 1,741,459 20,728,992
Arcelik AS, Br. ......................... Household Durables 8,149,277 56,875,707
Tupras-Turkiye Petrol Rafineleri AS ..... Oil, Gas & Consumable Fuels 3,546,395 104,015,439
a Turk Hava Yollari Anonim Ortakligi ...... Airlines 1,253,369 9,230,549
a,c Turk Hava Yollari Anonim Ortakligi,
144A .................................. Airlines 4,767,107 35,107,789
Turkcell Iletisim Hizmetleri AS ......... Wireless Telecommunication Services 7,713,428 84,548,815
Turkiye Vakiflar Bankasi T.A.O., D ...... Commercial Banks 17,037,327 60,402,084
---------------
591,703,216
---------------
UNITED KINGDOM 2.2%
Anglo American PLC ...................... Metals & Mining 2,004,094 121,156,459
HSBC Holdings PLC ....................... Commercial Banks 709,600 11,984,242
---------------
133,140,701
---------------
TOTAL COMMON STOCKS AND RIGHTS
(COST $3,536,320,709) ................. 5,186,666,790
---------------
DIRECT EQUITY INVESTMENTS
(COST $4,447,586) 0.1%
HONG KONG 0.1%
a,d,e,f,g Mayfair Hanoi, Ltd., 37.5% equity owned
through HEA Holdings Ltd., a wholly
owned investment ...................... Real Estate 5,507,295
---------------
PREFERRED STOCKS 13.8%
BRAZIL 13.6%
Banco Bradesco SA, ADR, pfd. ............ Commercial Banks 2,724,294 87,177,408
Companhia Vale do Rio Doce, ADR, pfd.,
A ..................................... Metals & Mining 11,516,746 322,238,553
Itausa - Investimentos Itau SA, pfd. .... Commercial Banks 1,066,400 7,039,438
Metalurgica Gerdau SA, pfd. ............. Metals & Mining 539,610 21,523,770
Petroleo Brasileiro SA, ADR, pfd. ....... Oil, Gas & Consumable Fuels 3,029,838 291,531,012
24 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2007 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES/RIGHTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS (CONTINUED)
PREFERRED STOCKS (CONTINUED)
BRAZIL (CONTINUED)
Unibanco - Uniao de Bancos Brasileiros
SA, GDR, pfd. ......................... Commercial Banks 508,736 $ 71,039,895
Usinas Siderurgicas de Minas Gerais SA,
pfd., A ............................... Metals & Mining 817,948 37,450,967
---------------
838,001,043
---------------
CHILE 0.2%
Embotelladora Andina SA, pfd., A ........ Beverages 4,522,225 12,169,458
---------------
TOTAL PREFERRED STOCKS
(COST $348,289,016) ................... 850,170,501
---------------
TOTAL LONG TERM INVESTMENTS
(COST $3,889,057,311) ................. 6,042,344,586
---------------
------------------
PRINCIPAL AMOUNT
------------------
SHORT TERM INVESTMENTS 1.8%
U.S. GOVERNMENT AND AGENCY SECURITIES 1.8%
h FHLB, 1/02/08 ........................... $ 24,185,000 $ 24,185,000
h FHLMC, 3/31/08 - 4/25/08 ................ 10,310,000 10,180,648
h FNMA, 1/04/08 - 8/01/08 ................. 79,063,000 77,565,576
---------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(COST $111,850,013) ................... 111,931,224
---------------
TOTAL INVESTMENTS
(COST $4,000,907,324) 100.2% .......... 6,154,275,810
OTHER ASSETS, LESS LIABILITIES
(0.2)% ................................ (12,274,155)
---------------
NET ASSETS 100.0% ....................... $6,142,001,655
===============
SELECTED PORTFOLIO ABBREVIATIONS
ADR - American Depository Receipt
CPO - Certificates of Ordinary Participation
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corp.
FNMA - Federal National Mortgage Association
GDR - Global Depository Receipt
SDR - Swedish Depository Receipt
a Non-income producing for the twelve months ended December 31, 2007.
b A portion or all of the securities purchased on a when-issued or delayed
delivery basis. See Note 1(c).
c 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, 2007, the aggregate value of these
securities was $76,717,362, representing 1.25% of net assets.
d See Note 9 regarding holdings of 5% voting securities.
e See Note 8 regarding restricted securities.
f Security has been deemed illiquid because it may not be able to be sold within
seven days. At December 31, 2007, the value of this security was $5,507,295,
representing 0.09% of net assets.
g See Note 10 regarding other considerations - security board member.
h 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, 2007
Assets:
Investments in securities:
Cost - Unaffiliated issuers ........................ $ 3,996,459,738
Cost - Controlled affiliates (Note 9) .............. 4,447,586
----------------
Total cost of investments .......................... $ 4,000,907,324
================
Value - Unaffiliated issuers ....................... $ 6,148,768,515
Value - Controlled affiliates (Note 9) ............. 5,507,295
----------------
Total value of investments ......................... 6,154,275,810
Foreign currency, at value (cost $12,168,457) ......... 12,179,512
Receivables:
Investment securities sold ......................... 30,231,353
Capital shares sold ................................ 10,113,782
Dividends .......................................... 12,011,917
Foreign tax ........................................ 690,386
----------------
Total assets .................................... 6,219,502,760
----------------
Liabilities:
Payables:
Investment securities purchased .................... 47,461,227
Capital shares redeemed ............................ 14,013,096
Affiliates ......................................... 10,331,261
Funds advanced by custodian ........................... 22,360
Deferred tax .......................................... 2,341,302
Accrued expenses and other liabilities ................ 3,331,859
----------------
Total liabilities ............................. 77,501,105
----------------
Net assets, at value ..................... $ 6,142,001,655
================
Net assets consist of:
Paid-in capital ....................................... $ 3,953,258,175
Distributions in excess of net investment income....... (46,986,131)
Net unrealized appreciation (depreciation) ............ 2,151,084,235
Accumulated net realized gain (loss) .................. 84,645,376
----------------
Net assets, at value ..................... $ 6,142,001,655
================
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, 2007
CLASS A:
Net assets, at value .................................................... $ 4,647,893,249
================
Shares outstanding ...................................................... 152,384,739
================
Net asset value per share a ............................................. $ 30.50
================
Maximum offering price per share (net asset value per share / 94.25%) ... $ 32.36
================
CLASS B:
Net assets, at value .................................................... $ 53,396,435
================
Shares outstanding ...................................................... 1,789,049
================
Net asset value and maximum offering price per share a .................. $ 29.85
================
CLASS C:
Net assets, at value .................................................... $ 578,418,929
================
Shares outstanding ...................................................... 19,438,916
================
Net asset value and maximum offering price per share a .................. $ 29.76
================
CLASS R:
Net assets, at value .................................................... $ 68,501,675
================
Shares outstanding ...................................................... 2,278,425
================
Net asset value and maximum offering price per share a .................. $ 30.07
================
ADVISOR CLASS:
Net assets, at value .................................................... $ 793,791,367
================
Shares outstanding ...................................................... 26,045,106
================
Net asset value and maximum offering price per share a .................. $ 30.48
================
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, 2007
Investment income:
Dividends (net of foreign taxes of $14,140,311) ............................... $ 205,648,540
Interest (net of foreign taxes of $13,840) .................................... 12,880,009
----------------
Total investment income ............................................... 218,528,549
----------------
Expenses:
Management fees (Note 3a) ..................................................... 73,370,690
Administrative fees (Note 3b) ................................................. 5,164,393
Distribution fees (Note 3c)
Class A .................................................................... 13,036,011
Class B .................................................................... 532,426
Class C .................................................................... 5,244,288
Class R .................................................................... 276,043
Transfer agent fees (Note 3e) ................................................. 10,062,201
Custodian fees (Note 4) ....................................................... 5,500,163
Reports to shareholders ....................................................... 530,343
Registration and filing fees .................................................. 239,306
Professional fees ............................................................. 388,000
Trustees' fees and expenses ................................................... 133,349
Other ......................................................................... 156,763
----------------
Total expenses ........................................................ 114,633,976
Expense reductions (Note 4) ........................................... (73,625)
----------------
Net expenses ..................................................... 114,560,351
----------------
Net investment income ......................................... 103,968,198
----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments (net of foreign taxes of $599,859 and including gain from
redemptions in-kind of $111,257,407 - Note 11) ........................ 1,017,892,636
Foreign currency transactions .............................................. (5,664,588)
Swap Agreements ............................................................ (405,280)
----------------
Net realized gain (loss) .............................................. 1,011,822,768
----------------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................................ 356,589,436
Translation of assets and liabilities denominated in foreign currencies .... 335,865
Change in deferred taxes on unrealized appreciation (depreciation) ............ (1,784,431)
----------------
Net change in unrealized appreciation (depreciation) .................. 355,140,870
----------------
Net realized and unrealized gain (loss) .......................................... 1,366,963,638
----------------
Net increase (decrease) in net assets resulting from operations .................. $ 1,470,931,836
================
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,
----------------------------------
2007 2006
----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................. $ 103,968,198 $ 69,776,342
Net realized gain (loss) from investments, foreign currency transactions, and swap
agreements .......................................................................... 1,011,822,768 612,176,751
Net change in unrealized appreciation (depreciation) on investments, translation of
assets and liabilities denominated in foreign currencies, and deferred taxes ........ 355,140,870 550,462,961
----------------------------------
Net increase (decrease) in net assets resulting from operations ................. 1,470,931,836 1,232,416,054
----------------------------------
Distributions to shareholders from:
Net investment income:
Class A ............................................................................ (119,782,375) (86,444,909)
Class B ............................................................................ (1,019,709) (667,578)
Class C ............................................................................ (10,672,975) (5,833,695)
Class R ............................................................................ (1,463,391) (607,853)
Advisor Class ...................................................................... (20,739,845) (9,377,163)
Net realized gains:
Class A ............................................................................ (629,506,866) (193,859,398)
Class B ............................................................................ (7,441,868) (2,227,596)
Class C ............................................................................ (78,249,563) (19,753,179)
Class R ............................................................................ (8,852,009) (1,594,768)
Advisor Class ...................................................................... (104,138,795) (18,263,555)
----------------------------------
Total distributions to shareholders ...................................................... (981,867,396) (338,629,694)
----------------------------------
Capital share transactions: (Note 2)
Class A ............................................................................ (622,200,255) 750,165,076
Class B ............................................................................ (6,130,838) (1,115,846)
Class C ............................................................................ 49,112,499 49,305,869
Class R ............................................................................ 24,082,343 19,666,403
Advisor Class ...................................................................... 286,241,307 43,404,176
----------------------------------
Total beneficial share transactions ...................................................... (268,894,944) 861,425,678
----------------------------------
Redemption fees .......................................................................... 80,457 63,707
----------------------------------
Net increase (decrease) in net assets ........................................... 220,249,953 1,755,275,745
Net assets:
Beginning of year ........................................................................ 5,921,751,702 4,166,475,957
----------------------------------
End of year .............................................................................. $ 6,142,001,655 $ 5,921,751,702
==================================
Distributions in excess of net investment income included in net assets:
End of year .............................................................................. $ (46,986,131) $ (60,218,762)
==================================
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 (Fund) is registered under the Investment
Company Act of 1940, as amended, (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.
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 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.
30 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
C. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
The Fund may purchase securities on a when-issued or delayed delivery basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund will generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. Sufficient
assets have been segregated for these securities.
D. 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 at a future 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)
E. TOTAL RETURN SWAPS
The Fund may enter into total return swaps. A total return swap is an agreement
between the Fund and a counterparty to exchange a market linked return for a
floating rate payment, both based on a notional principal amount. Total return
swaps are marked to market daily based upon quotations from the market makers
and the change in value, if any, is recorded as an unrealized gain or loss in
the Statement of Operations. Payments received or paid are recorded as a
realized gain or loss. The risks of entering into a total return swap include
the unfavorable fluctuation of interest rates or the price of the underlying
security or index, as well as the potential inability of the counterparty to
fulfill their obligations under the swap agreement.
F. INCOME AND DEFERRED TAXES
No provision has been made for U.S. income taxes because it is the Fund's policy
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.
G. 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 of
America. 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 per share
distributions, by class, are generally due to differences in class specific
expenses.
32 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. 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.
I. 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.
J. 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, 2007, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
2007 2006
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS A SHARES:
Shares sold ......................... 37,285,682 $ 1,162,545,150 75,390,588 $ 1,976,178,201
Shares issued in reinvestment
of distributions ................. 22,920,149 657,330,261 8,843,430 242,813,868
Shares redeemed in-kind
(Note 11) ........................ (11,489,267) (339,622,741) -- --
Shares redeemed ..................... (68,737,250) (2,102,452,925) (56,794,665) (1,468,826,993)
---------------------------------------------------------------
Net increase (decrease) ............. (20,020,686) $ (622,200,255) 27,439,353 $ 750,165,076
===============================================================
CLASS B SHARES:
Shares sold ......................... 159,201 $ 5,149,716 320,132 $ 8,140,448
Shares issued in reinvestment
of distributions ................. 274,966 7,720,298 98,115 2,642,216
Shares redeemed ..................... (624,932) (19,000,852) (477,650) (11,898,510)
---------------------------------------------------------------
Net increase (decrease) ............. (190,765) $ (6,130,838) (59,403) $ (1,115,846)
===============================================================
Annual Report | 33
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
2007 2006
-----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
CLASS C SHARES:
Shares sold ............................ 3,103,553 $ 93,927,906 4,986,758 $ 127,231,831
Shares issued in reinvestment
of distributions .................... 2,597,066 72,815,274 771,265 20,741,944
Shares redeemed ........................ (3,927,109) (117,630,681) (3,933,841) (98,667,906)
-----------------------------------------------------------
Net increase (decrease) ................ 1,773,510 $ 49,112,499 1,824,182 $ 49,305,869
===========================================================
CLASS R SHARES:
Shares sold ............................ 1,366,811 $ 42,058,022 1,117,472 $ 28,707,815
Shares issued in reinvestment
of distributions .................... 346,329 9,826,080 79,447 2,160,569
Shares redeemed ........................ (893,078) (27,801,759) (436,201) (11,201,981)
-----------------------------------------------------------
Net increase (decrease) ................ 820,062 $ 24,082,343 760,718 $ 19,666,403
===========================================================
ADVISOR CLASS SHARES:
Shares sold ............................ 13,704,826 $ 412,287,369 6,580,284 $ 171,573,920
Shares issued in reinvestment
of distributions .................... 2,426,800 69,817,046 643,066 17,659,742
Shares redeemed ........................ (6,367,684) (195,863,108) (5,632,960) (145,829,486)
-----------------------------------------------------------
Net increase (decrease) ................ 9,763,942 $ 286,241,307 1,590,390 $ 43,404,176
===========================================================
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 ...................................... $638,350
Contingent deferred sales charges retained .......................... $ 86,300
E. TRANSFER AGENT FEES
For the year ended December 31, 2007, the Fund paid transfer agent fees of
$10,062,201, of which $4,603,389 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, 2007, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
The Fund has reviewed the tax positions taken on federal income tax returns, for
each of the open tax years and as of December 31, 2007 and has determined that
no provision for income tax is required in the Fund's financial statements.
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At December 31, 2007, the Fund had remaining tax basis capital
losses of $1,902,640 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, 2007, the Fund utilized
$3,607,200 of capital loss carryforwards.
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, 2007, the Fund deferred realized currency losses of
$2,862,094.
The tax character of distributions paid during the years ended December 31, 2007
and 2006, was as follows:
---------------------------
2007 2006
---------------------------
Distributions paid from:
Ordinary income ............................... $206,278,621 $102,931,198
Long term capital gain ........................ 775,588,776 235,698,496
---------------------------
$981,867,397 $338,629,694
===========================
At December 31, 2007, 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 .......................................... $4,076,959,679
===============
Unrealized appreciation ...................................... $2,191,351,533
Unrealized depreciation ...................................... (114,035,402)
---------------
Net unrealized appreciation (depreciation) ................... $2,077,316,131
===============
Undistributed ordinary income ................................ $ 42,243,918
Undistributed long term capital gains ........................ 76,860,350
---------------
Distributable earnings ....................................... $ 119,104,268
===============
36 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions, passive
foreign investment company shares, and foreign taxes paid on net realized gains.
Net realized 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, gains and losses
realized on in-kind shareholder redemptions, and foreign taxes paid on net
realized gains.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended December 31, 2007, aggregated $5,560,343,481 and $6,402,175,167,
respectively. Sales of investments exclude $339,622,741 of an in-kind
redemption.
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 (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. The Fund may have registration rights for
restricted securities. The issuer generally incurs all registration costs.
At December 31, 2007, the Fund held investments in restricted securities,
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
follows:
- ------------------------------------------------------------------------------------------------------------------
ACQUISITION
SHARES ISSUER DATE COST VALUE
- ------------------------------------------------------------------------------------------------------------------
- -- Mayfair Hanoi, Ltd., 37.5% equity owned through
HEA Holdings, Ltd. (0.09% OF NET ASSETS) .............. 10/31/96 $4,447,586 $5,507,295
==========
Annual Report | 37
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2007, 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., 37.5%
equity owned through
HEA Holdings, Ltd. ........ -- -- -- -- $ 5,507,295 $ -- $ --
=====================================
TOTAL AFFILIATED SECURITIES (0.09% OF NET ASSETS)
a Issuer in which the Fund owns 25% or more of the outstanding voting
securities.
10. OTHER CONSIDERATIONS
Officers, directors or employees of the Fund's Investment Manager may serve from
time to time as members of boards of directors of companies in which the Fund
invests. Such participation may result in the possession by the Investment
Manager of material non-public information which, pursuant to the Fund's
policies and the requirements of applicable securities laws, could prevent the
Fund from trading in the securities of such companies for limited or extended
periods of time.
11. REDEMPTIONS IN-KIND
During the year ended December 31, 2007, the Fund realized $111,257,407 of net
gains resulting from a redemption in-kind in which a shareholder redeemed Fund
shares for securities held by the Fund rather than for cash. Because such gains
are not taxable to the Fund, and are not distributed to shareholders, they have
been reclassified from accumulated net realized gains to paid-in capital.
12. REGULATORY AND LITIGATION 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 and governmental
entities. 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)
12. REGULATORY AND LITIGATION MATTERS (CONTINUED)
On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, 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.
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 Trust, it is
committed to making the Trust or its shareholders whole, as appropriate
13. NEW ACCOUNTING PRONOUNCEMENT
In September 2006, 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, 2007, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 20, 2008
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 $774,080,229 as a long
term capital gain dividend for the fiscal year ended December 31, 2007.
Under Section 871(k)(2)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $84,221,976 as a short term capital gain dividend for
purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended December 31, 2007.
Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $134,388,346 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
December 31, 2007. In January 2008, shareholders will receive Form 1099-DIV
which will include their share of qualified dividends distributed during the
calendar year 2007. 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 $12,930,830 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, 2007.
At December 31, 2007, 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, 2007, 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, and Class R, and Adviser Class
shareholders of record.
At December 31, 2007, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from income 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, 2007, 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 table provides a detailed analysis, of foreign tax paid, foreign
source income, and foreign qualified dividends as designated by the Funds, to
Class A, Class B, Class C, Class R, and Advisor Class shareholders of record.
Annual Report | 41
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
Record Date: 12/14/2007
- --------------------------------------------------------------------------------------------------
FOREIGN TAX PAID FOREIGN SOURCE INCOME FOREIGN QUALIFIED DIVIDENDS
CLASS PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------------------------
Class A ................ $0.0794 $0.7418 $0.4606
Class B ................ $0.0794 $0.5609 $0.3481
Class C ................ $0.0794 $0.5801 $0.3601
Class R ................ $0.0794 $0.7078 $0.4394
Advisor Class .......... $0.0794 $0.8163 $0.5069
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
In January 2008, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2007. 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 2007 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 bracket). 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.
42 | Annual Report
Templeton Developing Markets Trust
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of U.S. registered portfolios overseen in
the Franklin Templeton Investments fund complex are shown below. Generally, each
board member serves 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 141 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 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Nuinsco Resources Limited
Suite 2100 (mineral exploration), Royal Fidelity
Fort Lauderdale, FL 33394-3091 Merchant Bank & Trust Limited
(financial services), C.A. Bancorp
Inc. (financial services), Victory
Nickel Inc. (mineral exploration),
ABACO Markets Limited (retail
distributors) and Belize Electricity
Limited (electric utility).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Company Ltd.; Director, Provo Power
Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power
Ltd. (1977-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952) Lead Trustee since 141 Hess Corporation (exploration and
500 East Broward Blvd. Independent 1996 and Lead refining of oil and gas), H.J. Heinz
Suite 2100 Trustee Independent Company (processed foods and allied
Fort Lauderdale, FL 33394-3091 Trustee since products), RTI International Metals,
December 2007 Inc. (manufacture and distribution of
titanium), Canadian National Railway
(railroad) and White Mountains
Insurance Group, Ltd. (holding
company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 43
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID W. NIEMIEC (1949) Trustee Since 2005 20 Emeritus Corporation (assisted
500 East Broward Blvd. living) and OSI Pharmaceuticals, Inc.
Suite 2100 (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 141 Hess Corporation (exploration and
500 East Broward Blvd. refining of oil and gas) and Sentient
Suite 2100 Jet (private jet service).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- ------------------------------------------------------------------------------------------------------------------------------------
LARRY D. THOMPSON (1945) Trustee Since 2005 141 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. (credit card provider) (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).
- ------------------------------------------------------------------------------------------------------------------------------------
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 2006 34 El Oro and Exploration Co., p.l.c.
500 East Broward Blvd (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.
- ------------------------------------------------------------------------------------------------------------------------------------
44 | Annual Report
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (1933) Trustee, Trustee and 141 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board and Board since 1995
Vice President and Vice President
since 1992
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; 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 42 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
**GREGORY E. JOHNSON (1961) Trustee Since April 2007 92 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.; Director,
Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 33 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Compliance Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Officer and Vice Officer since
San Mateo, CA 94403-1906 President - AML 2004 and Vice
Compliance President - AML
Compliance since
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).
- ------------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 45
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (1940) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; 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, Chief Executive 1991 and Chief
The Chater House Officer - Executive
8 Connaught Road Investment Officer -
Central, Hong Kong Management Investment
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 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 18 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
46 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
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 Accounting
Fort Lauderdale, FL 33394-3091 Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin Resources, Inc. and
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 Trust under
the federal securities laws due to his position as officer, director and major
shareholder of Franklin Resources, Inc. (Resources), which is the parent company
of the Trust's investment manager and distributor. Gregory E. Johnson is
considered to be an interested person of the Trust under the federal securities
laws due to his position as officer and director of Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
Note 3: Prior to December 31, 2007, Nicholas F. Brady 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 HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED DAVID W. NIEMIEC AS AN AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. NIEMIEC QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE. 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 OSI PHARMACEUTICALS, INC. 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 BELIEVES THAT MR. NIEMIEC HAS 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. MR. NIEMIEC IS AN INDEPENDENT BOARD
MEMBER 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 | 47
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.
48 | Annual Report
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 FUNDS
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 1
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Growth Opportunities Fund 2
Franklin Small Cap Growth Fund II 3
Franklin Small-Mid Cap Growth Fund
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund 1
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 4
Mutual Shares Fund
BLEND
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Focused Core Equity Fund
Franklin Growth Fund
Franklin Rising Dividends 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(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
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 5
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund 5
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund
Templeton Income Fund
Templeton International Bond 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
Arizona
California 8
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust 9
1. The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
2. Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to
Franklin Growth Opportunities Fund. The fund's investment goal and strategy
remained the same.
3. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
4. 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.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
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. The fund invests primarily in 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.
12/07 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 A2007 02/08
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is David W. Niemiec and he is
"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 $90,959 for the fiscal year ended December 31, 2007 and $91,216 for the
fiscal year ended December 31, 2006.
(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.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $46,000 for the fiscal year ended
December 31, 2007 and $3,961 for the fiscal year ended December 31, 2006. The
services for which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended December 31, 2007
and $2,740 for the fiscal year ended December 31, 2006. 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 other than
services reported in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year
ended December 31, 2007 and $173,121 for the fiscal year ended December 31,
2006. The services for which these fees were paid included review of materials
provided to the fund Board in connect with the investment management contract
renewal process.
(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 $46,000 for the fiscal year ended December 31, 2007 and $179,822
for the fiscal year ended December 31, 2006.
(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 Galen G. Vetter, Chief Executive Officer - Finance and Administration, and
Laura Fergerson, Chief Financial Officer and Chief Accounting Officer
(B) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura
Fergerson, Chief Financial Officer and Chief Accounting 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/GALEN G. VETTER
--------------------------------
Galen G. Vetter
Chief Executive Officer -
Finance and Administration
Date February 27, 2008
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/GALEN G. VETTER
-------------------------------
Galen G. Vetter
Chief Executive Officer -
Finance and Administration
Date February 27, 2008
By /s/LAURA FERGERSON
- ---------------------------------
Laura Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date February 27, 2008