UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06378
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TEMPLETON DEVELOPING MARKETS TRUST
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31/09
--------
ITEM 1. REPORTS TO STOCKHOLDERS.
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 ..................................................... 24
Notes to Financial Statements ............................................ 28
Report of Independent Registered Public Accounting Firm .................. 39
Tax Designation .......................................................... 40
Board Members and Officers ............................................... 42
Shareholder Information .................................................. 47
Shareholder Letter
Dear Shareholder:
Global equity markets entered 2009 at low levels, but in March stocks bottomed
and largely reversed their decline, as credit and economic conditions improved
during the year and rekindled investor confidence. In particular, emerging
markets, which outperformed developed markets, had a record year. The Morgan
Stanley Capital International (MSCI) Emerging Markets (EM) Index delivered a
+79.02% total return in U.S. dollar terms.(1)
Templeton Developing Markets Trust's annual report goes into greater detail
about prevailing conditions during the year under review. In addition, you will
find performance data, financial information and a discussion from the portfolio
manager. Please remember that all securities markets fluctuate, as do mutual
fund share prices.
If you would like more frequent updates, franklintempleton.com provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely articles, and
find helpful financial planning tools. We hope you will take advantage of these
online services.
Historically, patient investors have achieved rewarding results by evaluating
their goals, diversifying their assets globally and maintaining a disciplined
investment program, all hallmarks of the Templeton investment philosophy
(1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. Past performance is no guarantee of future results. The
MSCI EM Index is a free float-adjusted, market capitalization-weighted
index designed to measure equity market performance in global emerging
markets.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the annual report | 1
developed more than 50 years ago. We continue to recommend investors consult
their financial advisors and review their portfolios to design a long-term
strategy and portfolio allocation that meet their individual needs, goals and
risk tolerance. We firmly believe that most people benefit from professional
advice, and that advice is invaluable as investors navigate changing market
environments.
We thank you for investing with Franklin Templeton, welcome your comments, and
look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ Mark Mobius
Mark Mobius
Executive Chairman
Templeton Asset Management Ltd.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF DECEMBER 31, 2009. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE.
2 | Not part of the annual report
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,"
as defined in the Fund's prospectus.
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 (800) 342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 12/31/09
(BAR CHART)
Asia 40.4%
Europe 29.8%
Latin America & Caribbean 23.9%
Middle East & Africa 5.3%
Short-Term Investments & Other Net Assets 0.6%
This annual report for Templeton Developing Markets Trust covers the fiscal year
ended December 31, 2009.
PERFORMANCE OVERVIEW
Templeton Developing Markets Trust -- Class A delivered a +73.92% cumulative
total return for the 12 months ended December 31, 2009. 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 posted total returns of +79.02% and
+81.03% 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 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
After falling dramatically until March, emerging markets experienced a
tremendous surge. Some stock markets doubled in returns and pushed emerging
markets as a whole to a record year. The substantial rally was a result of many
factors but most significantly the rapid increase in money supply and liquidity
supplied by governments globally to prevent an economic depression, which led
(1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. The MSCI EM Index is a free float-adjusted, market
capitalization-weighted index designed to measure equity market performance
in global emerging markets. Regional and country returns are from
subindexes of the MSCI EM Index. 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,
and an index is not 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
TOP 10 COUNTRIES
12/31/09
% OF TOTAL
NET ASSETS
----------
Brazil 19.7%
Russia 14.7%
India 13.4%
China 11.9%
South Korea 5.4%
Turkey 4.2%
U.K. 3.7%
Hungary 3.1%
South Africa 3.1%
Austria 2.8%
to a huge influx of funds in the emerging markets asset class. In 2009, net
inflows were nearly US$83 billion, about 53% more than the record-high US$54
billion in 2007.2 In the past 15 years, net inflows totaled more than US$161
billion, and we think this uptrend could continue.(2)
Another critical factor for emerging market equity strength in 2009 was the
resilience of China and India, the world's two most populous countries. Despite
the global economic downturn's severity, annualized gross domestic product
expanded 7.7% in China and 5.6% in India for the first nine months of 2009.(3)
The year was not without setbacks, but they were few and far between. One was
the Dubai debt crisis, which was set off by an announcement from the Dubai
government-owned conglomerate Dubai World on a debt payment standstill. Fears of
contagion beyond the Gulf region triggered sharp selloffs in global equity
markets, but most markets rebounded quickly after the United Arab Emirates
offered fresh funding to its regional banks and neighboring Abu Dhabi stepped in
with its own liquidity offer. In general, as long as global money supply
continues its upward trend, we believe the bullish investor sentiment
surrounding emerging markets stocks could be sustained.
From a regional perspective, Latin America was the top performing emerging
market in 2009. A rebound in commodity prices from their 2008 lows and stronger
local currencies supported Latin American equity prices. In particular, Brazil's
stocks rallied mainly due to the country's solid economic fundamentals, strong
fiscal and monetary policies, and resilience amid the world financial crisis.
Asia overall delivered a +74.21% return in U.S. dollar terms with India and
Indonesia gaining more than 100%, as measured by the MSCI EM Asia Index, but
nonetheless Asia underperformed its Latin American and Eastern European
counterparts for the year.1 In Eastern Europe, lower interest rates, subsiding
credit crunch worries and what we considered attractive valuations helped stock
markets there stage a strong recovery in the latter part of 2009 after a period
of underperformance earlier in the year, and within that region, Russia and
Turkey were standouts.
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
(2.) Source: EPFR Global.
(3.) Sources: National Bureau of Statistics, China; Central Statistical
Organisation, India. Figures are an average of quarterly year-over-year
growth rates.
4 | Annual Report
of its long-term (typically five years) earnings, asset value and cash flow
potential. We also consider a company's price/cash flow ratio, price/earnings
ratio, profit margins and liquidation value. In choosing investments, we
strongly believe in on-site visits to issuers of prospective investments to
assess critical factors such as management strength and local conditions.
MANAGER's DISCUSSION
During the 12 months under review, among the most significant contributors to
the Fund's absolute performance were Brazil's two resources giants, Petrobras
(Petroleo Brasileiro) in oil and gas, and Vale in iron ore. Rebounding commodity
prices lifted stock prices of energy and metals and mining companies, and we
increased the Fund's positions in Petrobras and Vale largely due to our
expectations of a long-term uptrend in commodity prices. Another key contributor
was India's Tata Consultancy Services, which continued to benefit from the IT
services outsourcing trend. We also increased the Fund's exposure to Tata during
the reporting period.
In contrast, some of the largest detractors from absolute Fund performance were
China Mobile, the country's market leader in wireless services, Telmex
(Telefonos de Mexico), a telecommunications conglomerate, and China Construction
Bank, a major commercial bank. These stocks underperformed their emerging
markets peers, and we eliminated their positions by period-end.
At year-end, our assessment of the energy and commodities sectors remains
positive. Based on our analysis, we believe commodity prices could maintain a
long-term upward trend because of commodities' relatively inelastic supply and
strong demand from emerging markets. In particular, growing energy demand
boosted crude oil prices, and demand for hard commodities such as metals rose
due to ongoing infrastructure development. Moreover, several emerging markets
countries are major suppliers and consumers of various commodities. In line with
our strategy, we considered many commodity-related companies attractive
investment opportunities, and we believe they are well positioned to remain
profitable.
It is also 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
TOP 10 EQUITY HOLDINGS
12/31/09
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Vale SA, ADR, pfd., A 4.6%
METALS & MINING, BRAZIL
Petrobras (Petroleo Brasileiro SA), ADR, pfd. 4.3%
OIL, GAS & CONSUMABLE FUELS, BRAZIL
PetroChina Co. Ltd., H 3.7%
OIL, GAS & CONSUMABLE FUELS, CHINA
Gazprom, ADR 3.5%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
LUKOIL Holdings, ADR 3.0%
OIL, GAS & CONSUMABLE FUELS, RUSSIA
Itau Unibanco Holding SA, ADR 2.8%
COMMERCIAL BANKS, BRAZIL
Tata Consultancy Services Ltd. 2.7%
IT SERVICES, INDIA
OTP Bank Ltd. 2.6%
COMMERCIAL BANKS, HUNGARY
Anglo American PLC 2.5%
METALS & MINING, U.K.
Sesa Goa Ltd. 2.2%
METALS & MINING, INDIA
Annual Report | 5
will increase in value, which can contribute to Fund performance. For the 12
months ended December 31, 2009, 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 predominant investment in securities with non-U.S.
currency exposure. However, one cannot expect the same result in future periods.
During the review period, we increased the Fund's holdings in Russia, India and
South Korea as we searched for attractive investment opportunities. We also made
select purchases in Austria, Brazil and Thailand due to attractive fundamentals
in our view. Among our major purchases, we added to the Fund's existing position
in Russia's Gazprom, the world's largest gas producer, and initiated new
positions in Sesa Goa, India's biggest iron ore exporter, and SK Energy, a major
South Korean oil refiner. By industry, we made key investments in oil and gas,
diversified metals and mining, and construction and engineering companies,
including PetroChina, one of the country's largest oil and gas companies, and GS
Engineering and Construction, South Korea's leading construction company.
Conversely, we reduced the Fund's exposure to South Africa, Mexico and China via
Hong Kong-listed China H and Red Chip shares.(4) Key sales during the period
included ICBC (Industrial and Commercial Bank of China), a major commercial
bank, and MTN Group, a South African cellular telecommunication services
provider. These sales allowed the Fund to focus on stocks we deemed to be
relatively more attractively valued within our investment universe.
Industry-wise, we made large sales of holdings in telecommunication services,
banks and tobacco.
(4.) "China H" denotes shares of China-incorporated, Hong Kong-listed companies
with most businesses in China. "Red Chip" denotes shares of Hong Kong-listed
companies with significant exposure to China. China H and Red Chip shares are
traded on the Hong Kong Stock Exchange.
6 | Annual Report
We thank you for your continued participation in Templeton Developing Markets
Trust and look forward to serving your future investment needs.
(PHOTO OF MARK MOBIUS)
/s/ Mark Mobius
Mark Mobius
Executive Chairman
Templeton Asset Management Ltd.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF DECEMBER 31, 2009, 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 12/31/09
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
that a shareholder would pay on Fund dividends, capital gain distributions, if
any, or any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: TEDMX) CHANGE 12/31/09 12/31/08
- ----------------------- ------ -------- --------
Net Asset Value (NAV) +$9.16 $22.04 $12.88
DISTRIBUTIONS (1/1/09-12/31/09)
Dividend Income $0.3484
CLASS B (SYMBOL: TDMBX) CHANGE 12/31/09 12/31/08
- ----------------------- ------ -------- --------
Net Asset Value (NAV) +$8.97 $21.64 $12.67
DISTRIBUTIONS (1/1/09-12/31/09)
Dividend Income $0.2158
CLASS C (SYMBOL: TDMTX) CHANGE 12/31/09 12/31/08
- ----------------------- ------ -------- --------
Net Asset Value (NAV) +$8.93 $21.54 $12.61
DISTRIBUTIONS (1/1/09-12/31/09)
Dividend Income $0.2279
CLASS R (SYMBOL: TDMRX) CHANGE 12/31/09 12/31/08
- ----------------------- ------ -------- --------
Net Asset Value (NAV) +$9.01 $21.70 $12.69
DISTRIBUTIONS (1/1/09-12/31/09)
Dividend Income $0.3105
ADVISOR CLASS (SYMBOL: TDADX) CHANGE 12/31/09 12/31/08
- ----------------------------- ------ -------- --------
Net Asset Value (NAV) +$9.14 $21.98 $12.84
DISTRIBUTIONS (1/1/09-12/31/09)
Dividend Income $0.3952
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.
CLASS A 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- -------
Cumulative Total Return(1) +73.92% +69.77% +112.98%
Average Annual Total Return(2) +63.87% +9.86% +7.22%
Value of $10,000 Investment(3) $16,387 $16,000 $20,076
Total Annual Operating Expenses(4) 1.89%
CLASS B 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- -------
Cumulative Total Return(1) +72.65% +63.77% +101.86%
Average Annual Total Return(2) +68.65% +10.10% +7.28%
Value of $10,000 Investment(3) $16,865 $16,177 $20,186
Total Annual Operating Expenses(4) 2.63%
CLASS C 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- -------
Cumulative Total Return(1) +72.78% +63.84% +99.03%
Average Annual Total Return(2) +71.78% +10.38% +7.13%
Value of $10,000 Investment(3) $17,178 $16,384 $19,903
Total Annual Operating Expenses(4) 2.62%
INCEPTION
CLASS R 1-YEAR 5-YEAR (1/1/02)
- ------- ------- ------- ---------
Cumulative Total Return(1) +73.62% +68.09% +224.90%
Average Annual Total Return(2) +73.62% +10.94% +15.88%
Value of $10,000 Investment(3) $17,362 $16,809 $32,490
Total Annual Operating Expenses(4) 2.13%
ADVISOR CLASS 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- -------
Cumulative Total Return(1) +74.44% +72.23% +120.27%
Average Annual Total Return(2) +74.44% +11.49% +8.22%
Value of $10,000 Investment(3) $17,444 $17,223 $22,027
Total Annual Operating Expenses(4) 1.63%
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 (800) 342-5236.
Annual Report | 9
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR A 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
CLASS A 12/31/09
- ------- --------
1-Year +63.87%
5-Year +9.86%
10-Year +7.22%
CLASS A (1/1/00-12/31/09)
(PERFORMANCE GRAPH)
MSCI
TEMPLETON DEVELOPING S&P/IFCI COMPOSITE EMERGING
DATE MARKETS TRUST - CLASS A INDEX MARKETS INDEX
- ---------- ----------------------- ------------------ -------------
1/1/2000 $ 9,426 $10,000 $10,000
1/31/2000 $ 8,992 $ 9,999 $10,057
2/29/2000 $ 8,659 $ 9,989 $10,194
3/31/2000 $ 8,751 $10,135 $10,252
4/30/2000 $ 8,018 $ 9,100 $ 9,283
5/31/2000 $ 7,406 $ 8,847 $ 8,896
6/30/2000 $ 7,951 $ 9,097 $ 9,197
7/31/2000 $ 7,636 $ 8,660 $ 8,722
8/31/2000 $ 7,776 $ 8,693 $ 8,760
9/30/2000 $ 7,000 $ 7,915 $ 7,995
10/31/2000 $ 6,412 $ 7,275 $ 7,415
11/30/2000 $ 6,073 $ 6,632 $ 6,766
12/31/2000 $ 6,424 $ 6,824 $ 6,929
1/31/2001 $ 7,170 $ 7,700 $ 7,884
2/28/2001 $ 6,636 $ 7,107 $ 7,266
3/31/2001 $ 6,015 $ 6,494 $ 6,553
4/30/2001 $ 6,289 $ 6,879 $ 6,876
5/31/2001 $ 6,520 $ 7,088 $ 6,958
6/30/2001 $ 6,490 $ 6,959 $ 6,816
7/31/2001 $ 6,088 $ 6,484 $ 6,385
8/31/2001 $ 6,100 $ 6,396 $ 6,322
9/30/2001 $ 5,316 $ 5,404 $ 5,343
10/31/2001 $ 5,474 $ 5,739 $ 5,675
11/30/2001 $ 5,809 $ 6,412 $ 6,267
12/31/2001 $ 6,054 $ 6,945 $ 6,765
1/31/2002 $ 6,379 $ 7,193 $ 6,994
2/28/2002 $ 6,391 $ 7,331 $ 7,109
3/31/2002 $ 6,746 $ 7,843 $ 7,537
4/30/2002 $ 6,962 $ 7,915 $ 7,586
5/31/2002 $ 6,931 $ 7,779 $ 7,465
6/30/2002 $ 6,500 $ 7,224 $ 6,905
7/31/2002 $ 6,143 $ 6,766 $ 6,380
8/31/2002 $ 6,125 $ 6,854 $ 6,478
9/30/2002 $ 5,663 $ 6,093 $ 5,779
10/31/2002 $ 5,811 $ 6,484 $ 6,154
11/30/2002 $ 6,272 $ 6,934 $ 6,578
12/31/2002 $ 6,155 $ 6,672 $ 6,359
1/31/2003 $ 6,057 $ 6,678 $ 6,331
2/28/2003 $ 6,051 $ 6,480 $ 6,161
3/31/2003 $ 5,836 $ 6,242 $ 5,986
4/30/2003 $ 6,440 $ 6,879 $ 6,519
5/31/2003 $ 6,827 $ 7,358 $ 6,987
6/30/2003 $ 7,051 $ 7,813 $ 7,385
7/31/2003 $ 7,344 $ 8,233 $ 7,848
8/31/2003 $ 7,686 $ 8,827 $ 8,374
9/30/2003 $ 7,910 $ 8,923 $ 8,436
10/31/2003 $ 8,539 $ 9,648 $ 9,154
11/30/2003 $ 8,708 $ 9,772 $ 9,266
12/31/2003 $ 9,427 $10,485 $ 9,938
1/31/2004 $ 9,697 $10,843 $10,291
2/29/2004 $10,049 $11,366 $10,765
3/31/2004 $10,040 $11,577 $10,904
4/30/2004 $ 9,481 $10,702 $10,012
5/31/2004 $ 9,355 $10,557 $ 9,815
6/30/2004 $ 9,532 $10,557 $ 9,860
7/31/2004 $ 9,405 $10,340 $ 9,686
8/31/2004 $ 9,716 $10,802 $10,091
9/30/2004 $10,224 $11,426 $10,674
10/31/2004 $10,490 $11,756 $10,930
11/30/2004 $11,295 $12,778 $11,942
12/31/2004 $11,826 $13,433 $12,517
1/31/2005 $11,768 $13,465 $12,556
2/28/2005 $12,726 $14,595 $13,659
3/31/2005 $12,130 $13,684 $12,759
4/30/2005 $11,737 $13,377 $12,419
5/31/2005 $12,194 $13,879 $12,856
6/30/2005 $12,580 $14,347 $13,300
7/31/2005 $13,262 $15,340 $14,241
8/31/2005 $13,217 $15,333 $14,369
9/30/2005 $14,279 $16,913 $15,709
10/31/2005 $13,468 $15,811 $14,683
11/30/2005 $14,498 $17,094 $15,899
12/31/2005 $15,160 $18,160 $16,840
1/31/2006 $16,668 $20,109 $18,732
2/28/2006 $16,720 $20,122 $18,714
3/31/2006 $16,872 $20,374 $18,882
4/30/2006 $18,011 $22,087 $20,229
5/31/2006 $16,344 $19,899 $18,114
6/30/2006 $16,090 $19,816 $18,076
7/31/2006 $16,455 $20,070 $18,346
8/31/2006 $16,794 $20,663 $18,823
9/30/2006 $16,755 $20,843 $18,981
10/31/2006 $17,549 $21,777 $19,883
11/30/2006 $18,539 $23,466 $21,364
12/31/2006 $19,449 $24,536 $22,328
1/31/2007 $19,209 $24,255 $22,097
2/28/2007 $18,995 $24,204 $21,969
3/31/2007 $19,743 $25,205 $22,852
4/30/2007 $20,748 $26,473 $23,913
5/31/2007 $21,670 $27,833 $25,104
6/30/2007 $22,338 $29,158 $26,291
7/31/2007 $22,915 $30,637 $27,692
8/31/2007 $22,092 $29,956 $27,113
9/30/2007 $24,687 $33,140 $30,109
10/31/2007 $27,296 $36,738 $33,469
11/30/2007 $25,039 $34,214 $31,099
12/31/2007 $25,044 $34,419 $31,210
1/31/2008 $21,259 $29,996 $27,324
2/29/2008 $23,090 $32,156 $29,351
3/31/2008 $21,226 $30,541 $27,800
4/30/2008 $23,041 $32,922 $30,061
5/31/2008 $23,501 $33,558 $30,627
6/30/2008 $20,914 $30,198 $27,578
7/31/2008 $20,438 $29,137 $26,559
8/31/2008 $18,985 $26,805 $24,447
9/30/2008 $16,490 $22,083 $20,171
10/31/2008 $11,992 $16,007 $14,654
11/30/2008 $11,093 $14,750 $13,552
12/31/2008 $11,543 $15,923 $14,612
1/31/2009 $10,629 $14,856 $13,674
2/28/2009 $10,083 $14,063 $12,905
3/31/2009 $11,221 $16,121 $14,762
4/30/2009 $12,834 $18,911 $17,221
5/31/2009 $15,084 $22,216 $20,173
6/30/2009 $14,895 $21,938 $19,905
7/31/2009 $16,661 $24,309 $22,158
8/31/2009 $16,804 $24,326 $22,084
9/30/2009 $18,233 $26,522 $24,093
10/31/2009 $18,466 $26,467 $24,125
11/30/2009 $19,391 $27,608 $25,162
12/31/2009 $20,076 $28,825 $26,159
AVERAGE ANNUAL TOTAL RETURN
CLASS B 12/31/09
- ------- --------
1-Year +68.65%
5-Year +10.10%
10-Year +7.28%
CLASS B (1/1/00-12/31/09)
(PERFORMANCE GRAPH)
S&P/IFCI
TEMPLETON DEVELOPING COMPOSITE MSCI EMERGING
DATE MARKETS TRUST - CLASS B INDEX MARKETS INDEX
- ---------- ----------------------- --------- -------------
1/1/2000 $10,000 $10,000 $10,000
1/31/2000 $ 9,528 $ 9,999 $10,057
2/29/2000 $ 9,173 $ 9,989 $10,194
3/31/2000 $ 9,266 $10,135 $10,252
4/30/2000 $ 8,482 $ 9,100 $ 9,283
5/31/2000 $ 7,827 $ 8,847 $ 8,896
6/30/2000 $ 8,404 $ 9,097 $ 9,197
7/31/2000 $ 8,067 $ 8,660 $ 8,722
8/31/2000 $ 8,209 $ 8,693 $ 8,760
9/30/2000 $ 7,387 $ 7,915 $ 7,995
10/31/2000 $ 6,765 $ 7,275 $ 7,415
11/30/2000 $ 6,402 $ 6,632 $ 6,766
12/31/2000 $ 6,765 $ 6,824 $ 6,929
1/31/2001 $ 7,555 $ 7,700 $ 7,884
2/28/2001 $ 6,978 $ 7,107 $ 7,266
3/31/2001 $ 6,324 $ 6,494 $ 6,553
4/30/2001 $ 6,609 $ 6,879 $ 6,876
5/31/2001 $ 6,849 $ 7,088 $ 6,958
6/30/2001 $ 6,810 $ 6,959 $ 6,816
7/31/2001 $ 6,389 $ 6,484 $ 6,385
8/31/2001 $ 6,395 $ 6,396 $ 6,322
9/30/2001 $ 5,572 $ 5,404 $ 5,343
10/31/2001 $ 5,734 $ 5,739 $ 5,675
11/30/2001 $ 6,084 $ 6,412 $ 6,267
12/31/2001 $ 6,337 $ 6,945 $ 6,765
1/31/2002 $ 6,668 $ 7,193 $ 6,994
2/28/2002 $ 6,681 $ 7,331 $ 7,109
3/31/2002 $ 7,050 $ 7,843 $ 7,537
4/30/2002 $ 7,272 $ 7,915 $ 7,586
5/31/2002 $ 7,233 $ 7,779 $ 7,465
6/30/2002 $ 6,783 $ 7,224 $ 6,905
7/31/2002 $ 6,405 $ 6,766 $ 6,380
8/31/2002 $ 6,386 $ 6,854 $ 6,478
9/30/2002 $ 5,897 $ 6,093 $ 5,779
10/31/2002 $ 6,047 $ 6,484 $ 6,154
11/30/2002 $ 6,529 $ 6,934 $ 6,578
12/31/2002 $ 6,399 $ 6,672 $ 6,359
1/31/2003 $ 6,301 $ 6,678 $ 6,331
2/28/2003 $ 6,288 $ 6,480 $ 6,161
3/31/2003 $ 6,056 $ 6,242 $ 5,986
4/30/2003 $ 6,678 $ 6,879 $ 6,519
5/31/2003 $ 7,078 $ 7,358 $ 6,987
6/30/2003 $ 7,307 $ 7,813 $ 7,385
7/31/2003 $ 7,602 $ 8,233 $ 7,848
8/31/2003 $ 7,956 $ 8,827 $ 8,374
9/30/2003 $ 8,186 $ 8,923 $ 8,436
10/31/2003 $ 8,834 $ 9,648 $ 9,154
11/30/2003 $ 8,998 $ 9,772 $ 9,266
12/31/2003 $ 9,737 $10,485 $ 9,938
1/31/2004 $10,014 $10,843 $10,291
2/29/2004 $10,370 $11,366 $10,765
3/31/2004 $10,359 $11,577 $10,904
4/30/2004 $ 9,774 $10,702 $10,012
5/31/2004 $ 9,641 $10,557 $ 9,815
6/30/2004 $ 9,821 $10,557 $ 9,860
7/31/2004 $ 9,681 $10,340 $ 9,686
8/31/2004 $ 9,994 $10,802 $10,091
9/30/2004 $10,512 $11,426 $10,674
10/31/2004 $10,778 $11,756 $10,930
11/30/2004 $11,603 $12,778 $11,942
12/31/2004 $12,142 $13,433 $12,517
1/31/2005 $12,075 $13,465 $12,556
2/28/2005 $13,054 $14,595 $13,659
3/31/2005 $12,432 $13,684 $12,759
4/30/2005 $12,023 $13,377 $12,419
5/31/2005 $12,486 $13,879 $12,856
6/30/2005 $12,875 $14,347 $13,300
7/31/2005 $13,566 $15,340 $14,241
8/31/2005 $13,513 $15,333 $14,369
9/30/2005 $14,593 $16,913 $15,709
10/31/2005 $13,754 $15,811 $14,683
11/30/2005 $14,802 $17,094 $15,899
12/31/2005 $15,463 $18,160 $16,840
1/31/2006 $16,987 $20,109 $18,732
2/28/2006 $17,034 $20,122 $18,714
3/31/2006 $17,178 $20,374 $18,882
4/30/2006 $18,326 $22,087 $20,229
5/31/2006 $16,624 $19,899 $18,114
6/30/2006 $16,354 $19,816 $18,076
7/31/2006 $16,712 $20,070 $18,346
8/31/2006 $17,050 $20,663 $18,823
9/30/2006 $16,996 $20,843 $18,981
10/31/2006 $17,793 $21,777 $19,883
11/30/2006 $18,786 $23,466 $21,364
12/31/2006 $19,700 $24,536 $22,328
1/31/2007 $19,438 $24,255 $22,097
2/28/2007 $19,211 $24,204 $21,969
3/31/2007 $19,952 $25,205 $22,852
4/30/2007 $20,961 $26,473 $23,913
5/31/2007 $21,875 $27,833 $25,104
6/30/2007 $22,542 $29,158 $26,291
7/31/2007 $23,108 $30,637 $27,692
8/31/2007 $22,267 $29,956 $27,113
9/30/2007 $24,864 $33,140 $30,109
10/31/2007 $27,476 $36,738 $33,469
11/30/2007 $25,183 $34,214 $31,099
12/31/2007 $25,181 $34,419 $31,210
1/31/2008 $21,375 $29,996 $27,324
2/29/2008 $23,216 $32,156 $29,351
3/31/2008 $21,342 $30,541 $27,800
4/30/2008 $23,167 $32,922 $30,061
5/31/2008 $23,629 $33,558 $30,627
6/30/2008 $21,028 $30,198 $27,578
7/31/2008 $20,549 $29,137 $26,559
8/31/2008 $19,088 $26,805 $24,447
9/30/2008 $16,580 $22,083 $20,171
10/31/2008 $12,058 $16,007 $14,654
11/30/2008 $11,153 $14,750 $13,552
12/31/2008 $11,606 $15,923 $14,612
1/31/2009 $10,687 $14,856 $13,674
2/28/2009 $10,138 $14,063 $12,905
3/31/2009 $11,282 $16,121 $14,762
4/30/2009 $12,904 $18,911 $17,221
5/31/2009 $15,166 $22,216 $20,173
6/30/2009 $14,977 $21,938 $19,905
7/31/2009 $16,752 $24,309 $22,158
8/31/2009 $16,896 $24,326 $22,084
9/30/2009 $18,332 $26,522 $24,093
10/31/2009 $18,567 $26,467 $24,125
11/30/2009 $19,497 $27,608 $25,162
12/31/2009 $20,186 $28,825 $26,159
10 | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
CLASS C 12/31/09
- ------- --------
1-Year +71.78%
5-Year +10.38%
10-Year +7.13%
CLASS C (1/1/00-12/31/09)
(PERFORMANCE GRAPH)
TEMPLETON DEVELOPING S&P/IFCI COMPOSITE MSCI EMERGING
DATE MARKETS TRUST - CLASS C INDEX MARKETS INDEX
- ---------- ----------------------- ------------------ -------------
1/1/2000 $10,000 $10,000 $10,000
1/31/2000 $ 9,531 $ 9,999 $10,057
2/29/2000 $ 9,173 $ 9,989 $10,194
3/31/2000 $ 9,271 $10,135 $10,252
4/30/2000 $ 8,483 $ 9,100 $ 9,283
5/31/2000 $ 7,832 $ 8,847 $ 8,896
6/30/2000 $ 8,405 $ 9,097 $ 9,197
7/31/2000 $ 8,066 $ 8,660 $ 8,722
8/31/2000 $ 8,216 $ 8,693 $ 8,760
9/30/2000 $ 7,389 $ 7,915 $ 7,995
10/31/2000 $ 6,764 $ 7,275 $ 7,415
11/30/2000 $ 6,406 $ 6,632 $ 6,766
12/31/2000 $ 6,764 $ 6,824 $ 6,929
1/31/2001 $ 7,552 $ 7,700 $ 7,884
2/28/2001 $ 6,986 $ 7,107 $ 7,266
3/31/2001 $ 6,328 $ 6,494 $ 6,553
4/30/2001 $ 6,615 $ 6,879 $ 6,876
5/31/2001 $ 6,849 $ 7,088 $ 6,958
6/30/2001 $ 6,816 $ 6,959 $ 6,816
7/31/2001 $ 6,387 $ 6,484 $ 6,385
8/31/2001 $ 6,400 $ 6,396 $ 6,322
9/30/2001 $ 5,573 $ 5,404 $ 5,343
10/31/2001 $ 5,736 $ 5,739 $ 5,675
11/30/2001 $ 6,087 $ 6,412 $ 6,267
12/31/2001 $ 6,336 $ 6,945 $ 6,765
1/31/2002 $ 6,674 $ 7,193 $ 6,994
2/28/2002 $ 6,681 $ 7,331 $ 7,109
3/31/2002 $ 7,052 $ 7,843 $ 7,537
4/30/2002 $ 7,274 $ 7,915 $ 7,586
5/31/2002 $ 7,242 $ 7,779 $ 7,465
6/30/2002 $ 6,784 $ 7,224 $ 6,905
7/31/2002 $ 6,411 $ 6,766 $ 6,380
8/31/2002 $ 6,385 $ 6,854 $ 6,478
9/30/2002 $ 5,901 $ 6,093 $ 5,779
10/31/2002 $ 6,051 $ 6,484 $ 6,154
11/30/2002 $ 6,535 $ 6,934 $ 6,578
12/31/2002 $ 6,398 $ 6,672 $ 6,359
1/31/2003 $ 6,300 $ 6,678 $ 6,331
2/28/2003 $ 6,286 $ 6,480 $ 6,161
3/31/2003 $ 6,059 $ 6,242 $ 5,986
4/30/2003 $ 6,683 $ 6,879 $ 6,519
5/31/2003 $ 7,084 $ 7,358 $ 6,987
6/30/2003 $ 7,314 $ 7,813 $ 7,385
7/31/2003 $ 7,610 $ 8,233 $ 7,848
8/31/2003 $ 7,958 $ 8,827 $ 8,374
9/30/2003 $ 8,188 $ 8,923 $ 8,436
10/31/2003 $ 8,832 $ 9,648 $ 9,154
11/30/2003 $ 9,003 $ 9,772 $ 9,266
12/31/2003 $ 9,741 $10,485 $ 9,938
1/31/2004 $10,018 $10,843 $10,291
2/29/2004 $10,375 $11,366 $10,765
3/31/2004 $10,358 $11,577 $10,904
4/30/2004 $ 9,778 $10,702 $10,012
5/31/2004 $ 9,645 $10,557 $ 9,815
6/30/2004 $ 9,825 $10,557 $ 9,860
7/31/2004 $ 9,685 $10,340 $ 9,686
8/31/2004 $ 9,998 $10,802 $10,091
9/30/2004 $10,517 $11,426 $10,674
10/31/2004 $10,784 $11,756 $10,930
11/30/2004 $11,603 $12,778 $11,942
12/31/2004 $12,148 $13,433 $12,517
1/31/2005 $12,075 $13,465 $12,556
2/28/2005 $13,055 $14,595 $13,659
3/31/2005 $12,439 $13,684 $12,759
4/30/2005 $12,029 $13,377 $12,419
5/31/2005 $12,486 $13,879 $12,856
6/30/2005 $12,876 $14,347 $13,300
7/31/2005 $13,568 $15,340 $14,241
8/31/2005 $13,514 $15,333 $14,369
9/30/2005 $14,596 $16,913 $15,709
10/31/2005 $13,756 $15,811 $14,683
11/30/2005 $14,805 $17,094 $15,899
12/31/2005 $15,467 $18,160 $16,840
1/31/2006 $16,993 $20,109 $18,732
2/28/2006 $17,040 $20,122 $18,714
3/31/2006 $17,178 $20,374 $18,882
4/30/2006 $18,328 $22,087 $20,229
5/31/2006 $16,630 $19,899 $18,114
6/30/2006 $16,359 $19,816 $18,076
7/31/2006 $16,718 $20,070 $18,346
8/31/2006 $17,056 $20,663 $18,823
9/30/2006 $17,002 $20,843 $18,981
10/31/2006 $17,800 $21,777 $19,883
11/30/2006 $18,788 $23,466 $21,364
12/31/2006 $19,701 $24,536 $22,328
1/31/2007 $19,445 $24,255 $22,097
2/28/2007 $19,218 $24,204 $21,969
3/31/2007 $19,961 $25,205 $22,852
4/30/2007 $20,964 $26,473 $23,913
5/31/2007 $21,880 $27,833 $25,104
6/30/2007 $22,549 $29,158 $26,291
7/31/2007 $23,109 $30,637 $27,692
8/31/2007 $22,273 $29,956 $27,113
9/30/2007 $24,869 $33,140 $30,109
10/31/2007 $27,487 $36,738 $33,469
11/30/2007 $25,196 $34,214 $31,099
12/31/2007 $25,192 $34,419 $31,210
1/31/2008 $21,374 $29,996 $27,324
2/29/2008 $23,194 $32,156 $29,351
3/31/2008 $21,306 $30,541 $27,800
4/30/2008 $23,118 $32,922 $30,061
5/31/2008 $23,566 $33,558 $30,627
6/30/2008 $20,959 $30,198 $27,578
7/31/2008 $20,460 $29,137 $26,559
8/31/2008 $18,995 $26,805 $24,447
9/30/2008 $16,492 $22,083 $20,171
10/31/2008 $11,990 $16,007 $14,654
11/30/2008 $11,080 $14,750 $13,552
12/31/2008 $11,520 $15,923 $14,612
1/31/2009 $10,606 $14,856 $13,674
2/28/2009 $10,049 $14,063 $12,905
3/31/2009 $11,182 $16,121 $14,762
4/30/2009 $12,789 $18,911 $17,221
5/31/2009 $15,009 $22,216 $20,173
6/30/2009 $14,818 $21,938 $19,905
7/31/2009 $16,562 $24,309 $22,158
8/31/2009 $16,699 $24,326 $22,084
9/30/2009 $18,109 $26,522 $24,093
10/31/2009 $18,320 $26,467 $24,125
11/30/2009 $19,226 $27,608 $25,162
12/31/2009 $19,903 $28,825 $26,159
AVERAGE ANNUAL TOTAL RETURN
CLASS R 12/31/09
- ------- ---------
1-Year +73.62%
5-Year +10.94%
Since Inception (1/1/02) +15.88%
CLASS R (1/1/02-12/31/09)
(PERFORMANCE GRAPH)
MSCI
S&P/IFCI EMERGING
TEMPLETON DEVELOPING COMPOSITE MARKETS
DATE MARKETS TRUST - CLASS R INDEX INDEX
- ---------- ----------------------- --------- --------
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 $11,035
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 $15,201 $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 $22,088 $21,051
8/31/2005 $21,579 $22,079 $21,241
9/30/2005 $23,318 $24,353 $23,222
10/31/2005 $21,993 $22,767 $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 $28,899 $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 $31,357 $29,391
11/30/2006 $30,196 $33,789 $31,581
12/31/2006 $31,674 $35,330 $33,006
1/31/2007 $31,277 $34,925 $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 $44,114 $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 $49,265 $45,970
12/31/2007 $40,711 $49,560 $46,134
1/31/2008 $34,551 $43,192 $40,391
2/29/2008 $37,516 $46,302 $43,387
3/31/2008 $34,484 $43,975 $41,095
4/30/2008 $37,421 $47,404 $44,436
5/31/2008 $38,166 $48,321 $45,273
6/30/2008 $33,955 $43,482 $40,765
7/31/2008 $33,170 $41,954 $39,260
8/31/2008 $30,800 $38,597 $36,137
9/30/2008 $26,756 $31,797 $29,817
10/31/2008 $19,461 $23,049 $21,661
11/30/2008 $17,991 $21,238 $20,032
12/31/2008 $18,713 $22,928 $21,600
1/31/2009 $17,239 $21,391 $20,214
2/28/2009 $16,339 $20,250 $19,077
3/31/2009 $18,197 $23,213 $21,821
4/30/2009 $20,807 $27,230 $25,455
5/31/2009 $24,434 $31,989 $29,820
6/30/2009 $24,125 $31,589 $29,424
7/31/2009 $26,986 $35,002 $32,754
8/31/2009 $27,207 $35,028 $32,645
9/30/2009 $29,514 $38,189 $35,614
10/31/2009 $29,883 $38,109 $35,661
11/30/2009 $31,374 $39,753 $37,195
12/31/2009 $32,490 $41,505 $38,668
Annual Report | 11
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
ADVISOR CLASS 12/31/09
- ------------- --------
1-Year +74.44%
5-Year +11.49%
10-Year +8.22%
ADVISOR CLASS (1/1/00-12/31/09)
(PERFORMANCE GRAPH)
TEMPLETON DEVELOPING
MARKETS TRUST - S&P/IFCI MSCI EMERGING
DATE CLASS ADVISOR COMPOSITE INDEX MARKETS INDEX
- ---------- -------------------- --------------- --------------
1/1/2000 $10,000 $10,000 $10,000
1/31/2000 $ 9,539 $ 9,999 $10,057
2/29/2000 $ 9,187 $ 9,989 $10,194
3/31/2000 $ 9,289 $10,135 $10,252
4/30/2000 $ 8,509 $ 9,100 $ 9,283
5/31/2000 $ 7,865 $ 8,847 $ 8,896
6/30/2000 $ 8,445 $ 9,097 $ 9,197
7/31/2000 $ 8,116 $ 8,660 $ 8,722
8/31/2000 $ 8,271 $ 8,693 $ 8,760
9/30/2000 $ 7,440 $ 7,915 $ 7,995
10/31/2000 $ 6,822 $ 7,275 $ 7,415
11/30/2000 $ 6,461 $ 6,632 $ 6,766
12/31/2000 $ 6,833 $ 6,824 $ 6,929
1/31/2001 $ 7,637 $ 7,700 $ 7,884
2/28/2001 $ 7,060 $ 7,107 $ 7,266
3/31/2001 $ 6,404 $ 6,494 $ 6,553
4/30/2001 $ 6,702 $ 6,879 $ 6,876
5/31/2001 $ 6,949 $ 7,088 $ 6,958
6/30/2001 $ 6,917 $ 6,959 $ 6,816
7/31/2001 $ 6,488 $ 6,484 $ 6,385
8/31/2001 $ 6,501 $ 6,396 $ 6,322
9/30/2001 $ 5,670 $ 5,404 $ 5,343
10/31/2001 $ 5,838 $ 5,739 $ 5,675
11/30/2001 $ 6,202 $ 6,412 $ 6,267
12/31/2001 $ 6,462 $ 6,945 $ 6,765
1/31/2002 $ 6,810 $ 7,193 $ 6,994
2/28/2002 $ 6,823 $ 7,331 $ 7,109
3/31/2002 $ 7,211 $ 7,843 $ 7,537
4/30/2002 $ 7,442 $ 7,915 $ 7,586
5/31/2002 $ 7,409 $ 7,779 $ 7,465
6/30/2002 $ 6,954 $ 7,224 $ 6,905
7/31/2002 $ 6,571 $ 6,766 $ 6,380
8/31/2002 $ 6,558 $ 6,854 $ 6,478
9/30/2002 $ 6,063 $ 6,093 $ 5,779
10/31/2002 $ 6,228 $ 6,484 $ 6,154
11/30/2002 $ 6,736 $ 6,934 $ 6,578
12/31/2002 $ 6,604 $ 6,672 $ 6,359
1/31/2003 $ 6,505 $ 6,678 $ 6,331
2/28/2003 $ 6,499 $ 6,480 $ 6,161
3/31/2003 $ 6,267 $ 6,242 $ 5,986
4/30/2003 $ 6,917 $ 6,879 $ 6,519
5/31/2003 $ 7,340 $ 7,358 $ 6,987
6/30/2003 $ 7,588 $ 7,813 $ 7,385
7/31/2003 $ 7,896 $ 8,233 $ 7,848
8/31/2003 $ 8,271 $ 8,827 $ 8,374
9/30/2003 $ 8,513 $ 8,923 $ 8,436
10/31/2003 $ 9,196 $ 9,648 $ 9,154
11/30/2003 $ 9,377 $ 9,772 $ 9,266
12/31/2003 $10,152 $10,485 $ 9,938
1/31/2004 $10,450 $10,843 $10,291
2/29/2004 $10,830 $11,366 $10,765
3/31/2004 $10,827 $11,577 $10,904
4/30/2004 $10,225 $10,702 $10,012
5/31/2004 $10,095 $10,557 $ 9,815
6/30/2004 $10,286 $10,557 $ 9,860
7/31/2004 $10,156 $10,340 $ 9,686
8/31/2004 $10,492 $10,802 $10,091
9/30/2004 $11,046 $11,426 $10,674
10/31/2004 $11,333 $11,756 $10,930
11/30/2004 $12,209 $12,778 $11,942
12/31/2004 $12,789 $13,433 $12,517
1/31/2005 $12,727 $13,465 $12,556
2/28/2005 $13,770 $14,595 $13,659
3/31/2005 $13,125 $13,684 $12,759
4/30/2005 $12,707 $13,377 $12,419
5/31/2005 $13,201 $13,879 $12,856
6/30/2005 $13,626 $14,347 $13,300
7/31/2005 $14,372 $15,340 $14,241
8/31/2005 $14,323 $15,333 $14,369
9/30/2005 $15,480 $16,913 $15,709
10/31/2005 $14,602 $15,811 $14,683
11/30/2005 $15,730 $17,094 $15,899
12/31/2005 $16,451 $18,160 $16,840
1/31/2006 $18,081 $20,109 $18,732
2/28/2006 $18,144 $20,122 $18,714
3/31/2006 $18,309 $20,374 $18,882
4/30/2006 $19,553 $22,087 $20,229
5/31/2006 $17,751 $19,899 $18,114
6/30/2006 $17,475 $19,816 $18,076
7/31/2006 $17,878 $20,070 $18,346
8/31/2006 $18,253 $20,663 $18,823
9/30/2006 $18,210 $20,843 $18,981
10/31/2006 $19,080 $21,777 $19,883
11/30/2006 $20,161 $23,466 $21,364
12/31/2006 $21,160 $24,536 $22,328
1/31/2007 $20,898 $24,255 $22,097
2/28/2007 $20,674 $24,204 $21,969
3/31/2007 $21,487 $25,205 $22,852
4/30/2007 $22,589 $26,473 $23,913
5/31/2007 $23,600 $27,833 $25,104
6/30/2007 $24,335 $29,158 $26,291
7/31/2007 $24,962 $30,637 $27,692
8/31/2007 $24,082 $29,956 $27,113
9/30/2007 $26,907 $33,140 $30,109
10/31/2007 $29,762 $36,738 $33,469
11/30/2007 $27,305 $34,214 $31,099
12/31/2007 $27,322 $34,419 $31,210
1/31/2008 $23,199 $29,996 $27,324
2/29/2008 $25,206 $32,156 $29,351
3/31/2008 $23,172 $30,541 $27,800
4/30/2008 $25,153 $32,922 $30,061
5/31/2008 $25,664 $33,558 $30,627
6/30/2008 $22,840 $30,198 $27,578
7/31/2008 $22,320 $29,137 $26,559
8/31/2008 $20,742 $26,805 $24,447
9/30/2008 $18,019 $22,083 $20,171
10/31/2008 $13,118 $16,007 $14,654
11/30/2008 $12,127 $14,750 $13,552
12/31/2008 $12,627 $15,923 $14,612
1/31/2009 $11,633 $14,856 $13,674
2/28/2009 $11,034 $14,063 $12,905
3/31/2009 $12,282 $16,121 $14,762
4/30/2009 $14,062 $18,911 $17,221
5/31/2009 $16,521 $22,216 $20,173
6/30/2009 $16,314 $21,938 $19,905
7/31/2009 $18,261 $24,309 $22,158
8/31/2009 $18,419 $24,326 $22,084
9/30/2009 $19,986 $26,522 $24,093
10/31/2009 $20,243 $26,467 $24,125
11/30/2009 $21,257 $27,608 $25,162
12/31/2009 $22,027 $28,825 $26,159
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. 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 IS DESIGNED FOR THE AGGRESSIVE PORTION OF A WELL-DIVERSIFIED
PORTFOLIO. 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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
(5.) Source: (C) 2009 Morningstar. 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 of global emerging markets.
12 | Annual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases; and
- - 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.
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
VALUE 7/1/09 VALUE 12/31/09 PERIOD* 7/1/09-12/31/09
----------------- -------------- -----------------------
CLASS A
Actual $1,000 $1,347.80 $11.13
Hypothetical (5% return before expenses) $1,000 $1,015.73 $ 9.55
CLASS B
Actual $1,000 $1,343.70 $15.42
Hypothetical (5% return before expenses) $1,000 $1,012.05 $13.24
CLASS C
Actual $1,000 $1,343.30 $15.47
Hypothetical (5% return before expenses) $1,000 $1,012.00 $13.29
CLASS R
Actual $1,000 $1,346.70 $12.55
Hypothetical (5% return before expenses) $1,000 $1,014.47 $10.77
ADVISOR CLASS
Actual $1,000 $1,350.10 $ 9.60
Hypothetical (5% return before expenses) $1,000 $1,017.04 $ 8.24
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.88%; B: 2.61%; C: 2.62%; R: 2.12%; and
Advisor: 1.62%), multiplied by the average account value over the period,
multiplied by 184/365 to reflect the one-half year period.
14 | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
CLASS A 2009 2008 2007 2006 2005
- ------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 12.88 $ 30.50 $ 28.28 $ 23.42 $ 18.53
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ...................... 0.23 0.29 0.55 0.36 0.28
Net realized and unrealized gains (losses) .... 9.28 (16.42) 7.14 6.20 4.90
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 9.51 (16.13) 7.69 6.56 5.18
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ......................... (0.35) (0.60) (0.84) (0.53) (0.29)
Net realized gains ............................ -- (0.89) (4.63) (1.17) --
---------- ---------- ---------- ---------- ----------
Total distributions .............................. (0.35) (1.49) (5.47) (1.70) (0.29)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 22.04 $ 12.88 $ 30.50 $ 28.28 $ 23.42
========== ========== ========== ========== ==========
Total return(e) .................................. 73.92% (53.91)% 28.77% 28.29% 28.20%
RATIOS TO AVERAGE NET ASSETS
Expenses(f) ...................................... 1.90% 1.87% 1.83% 1.86% 1.97%
Net investment income ............................ 1.38% 1.22% 1.74% 1.39% 1.36%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $2,338,884 $1,491,693 $4,647,893 $4,876,035 $3,395,151
Portfolio turnover rate .......................... 46.77% 66.61% 92.26%(g) 51.95% 34.76%
(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 repurchases 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(f) Benefit of expense reduction rounds to less than 0.01%.
(g) Excludes the value of portfolio securities delivered as a result of a
redemption in-kind.
The accompanying notes are an integral part of these financial statements.
Annual Report | 15
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
CLASS B 2009 2008 2007 2006 2005
- ------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 12.67 $ 29.85 $ 27.78 $ 23.03 $ 18.24
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ...................... 0.11 0.11 0.30 0.17 0.15
Net realized and unrealized gains (losses) .... 9.08 (16.01) 7.00 6.08 4.80
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 9.19 (15.90) 7.30 6.25 4.95
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ......................... (0.22) (0.39) (0.60) (0.33) (0.16)
Net realized gains ............................ -- (0.89) (4.63) (1.17) --
---------- ---------- ---------- ---------- ----------
Total distributions .............................. (0.22) (1.28) (5.23) (1.50) (0.16)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 21.64 $ 12.67 $ 29.85 $ 27.78 $ 23.03
========== ========== ========== ========== ==========
Total return(e) .................................. 72.65% (54.26)% 27.82% 27.40% 27.35%
RATIOS TO AVERAGE NET ASSETS
Expenses(f) ...................................... 2.63% 2.61% 2.55% 2.58% 2.62%
Net investment income ............................ 0.65% 0.48% 1.02% 0.67% 0.71%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 22,799 $ 15,987 $ 53,396 $ 54,991 $ 46,965
Portfolio turnover rate .......................... 46.77% 66.61% 92.26%(g) 51.95% 34.76%
(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 repurchases 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(f) Benefit of expense reduction rounds to less than 0.01%.
(g) Excludes the value of portfolio securities delivered as a result of a
redemption in-kind.
The accompanying notes are an integral part of these financial statements.
16 | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
CLASS C 2009 2008 2007 2006 2005
- ------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 12.61 $ 29.76 $ 27.72 $ 23.00 $ 18.22
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ...................... 0.10 0.11 0.29 0.17 0.14
Net realized and unrealized gains (losses) .... 9.06 (15.96) 7.00 6.07 4.81
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 9.16 (15.85) 7.29 6.24 4.95
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ......................... (0.23) (0.41) (0.62) (0.35) (0.17)
Net realized gains ............................ -- (0.89) (4.63) (1.17) --
---------- ---------- ---------- ---------- ----------
Total distributions .............................. (0.23) (1.30) (5.25) (1.52) (0.17)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 21.54 $ 12.61 $ 29.76 $ 27.72 $ 23.00
========== ========== ========== ========== ==========
Total return(e) .................................. 72.78% (54.27)% 27.87% 27.38% 27.31%
RATIOS TO AVERAGE NET ASSETS
Expenses(f) ...................................... 2.64% 2.60% 2.55% 2.58% 2.63%
Net investment income ............................ 0.64% 0.49% 1.02% 0.67% 0.70%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 324,243 $ 200,454 $ 578,419 $ 489,722 $ 364,355
Portfolio turnover rate .......................... 46.77% 66.61% 92.26%(g) 51.95% 34.76%
(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 repurchases 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(f) Benefit of expense reduction rounds to less than 0.01%.
(g) Excludes the value of portfolio securities delivered as a result of a
redemption in-kind.
The accompanying notes are an integral part of these financial statements.
Annual Report | 17
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
CLASS R 2009 2008 2007 2006 2005
- ------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 12.69 $ 30.07 $ 27.96 $ 23.20 $ 18.39
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ...................... 0.19 0.23 0.44 0.29 0.20
Net realized and unrealized gains (losses) .... 9.13 (16.17) 7.09 6.14 4.90
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 9.32 (15.94) 7.53 6.43 5.10
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ......................... (0.31) (0.55) (0.79) (0.50) (0.29)
Net realized gains ............................ -- (0.89) (4.63) (1.17) --
---------- ---------- ---------- ---------- ----------
Total distributions .............................. (0.31) (1.44) (5.42) (1.67) (0.29)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 21.70 $ 12.69 $ 30.07 $ 27.96 $ 23.20
========== ========== ========== ========== ==========
Total return(e) .................................. 73.62% (54.03)% 28.53% 27.99% 28.03%
RATIOS TO AVERAGE NET ASSETS
Expenses(f) ...................................... 2.14% 2.11% 2.06% 2.08% 2.13%
Net investment income ............................ 1.14% 0.98% 1.51% 1.17% 1.20%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 46,873 $ 30,147 $ 68,502 $ 40,779 $ 16,183
Portfolio turnover rate .......................... 46.77% 66.61% 92.26%(g) 51.95% 34.76%
(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 repurchases 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(f) Benefit of expense reduction rounds to less than 0.01%.
(g) Excludes the value of portfolio securities delivered as a result of a
redemption in-kind.
The accompanying notes are an integral part of these financial statements.
18 | Annual Report
Templeton Developing Markets Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
ADVISOR CLASS 2009 2008 2007 2006 2005
- ------------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 12.84 $ 30.48 $ 28.27 $ 23.40 $ 18.51
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ...................... 0.27 0.32 0.62 0.43 0.32
Net realized and unrealized gains (losses) .... 9.27 (16.40) 7.16 6.22 4.92
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 9.54 (16.08) 7.78 6.65 5.24
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ......................... (0.40) (0.67) (0.94) (0.61) (0.35)
Net realized gains ............................ -- (0.89) (4.63) (1.17) --
---------- ---------- ---------- ---------- ----------
Total distributions .............................. (0.40) (1.56) (5.57) (1.78) (0.35)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 21.98 $ 12.84 $ 30.48 $ 28.27 $ 23.40
========== ========== ========== ========== ==========
Total return ..................................... 74.44% (53.79)% 29.12% 28.63% 28.63%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) ...................................... 1.64% 1.61% 1.56% 1.58% 1.63%
Net investment income ............................ 1.64% 1.48% 2.01% 1.67% 1.70%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 297,925 $ 193,590 $ 793,791 $ 460,225 $ 343,823
Portfolio turnover rate .......................... 46.77% 66.61% 92.26%(f) 51.95% 34.76%
(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 repurchases 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) Effective September 1, 2008, the redemption fee was eliminated.
(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 a
redemption in-kind.
The accompanying notes are an integral part of these financial statements.
Annual Report | 19
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2009
INDUSTRY SHARES VALUE
-------------------------------------------- ----------- --------------
COMMON STOCKS 87.5%
ARGENTINA 0.5%
Tenaris SA, ADR ........................... Energy Equipment & Services 347,570 $ 14,823,860
--------------
AUSTRIA 2.8%
Erste Group Bank AG ....................... Commercial Banks 749,723 27,967,358
(a) IMMOEAST AG ............................... Real Estate Management & Development 2,634,150 14,517,019
OMV AG .................................... Oil, Gas & Consumable Fuels 739,394 32,493,052
Raiffeisen International Bank Holding AG .. Commercial Banks 182,952 10,344,523
--------------
85,321,952
--------------
BRAZIL 8.6%
AES Tiete SA .............................. Independent Power Producers & Energy Traders 2,379,728 23,483,260
Companhia de Bebidas das Americas
(AmBev) ................................ Beverages 774,209 65,516,826
Itau Unibanco Holding SA, ADR ............. Commercial Banks 3,692,972 84,347,481
Natura Cosmeticos SA ...................... Personal Products 2,855,146 59,478,113
Souza Cruz SA ............................. Tobacco 799,129 26,481,750
--------------
259,307,430
--------------
CHINA 11.9%
(a) Aluminum Corp. of China Ltd., H ........... Metals & Mining 31,470,675 34,702,693
Angang Steel Co. Ltd., H .................. Metals & Mining 8,516,000 18,803,142
China Coal Energy Co., H .................. Oil, Gas & Consumable Fuels 26,703,000 49,041,196
China Dongxiang Group Co. ................. Textiles, Apparel & Luxury Goods 9,678,000 7,489,070
China Molybdenum Co. Ltd., H .............. Metals & Mining 13,720,287 11,041,772
China Petroleum and Chemical Corp., H ..... Oil, Gas & Consumable Fuels 4,944,710 4,406,664
China Shipping Development Co. Ltd., H .... Marine 14,730,000 22,150,947
CNOOC Ltd. ................................ Oil, Gas & Consumable Fuels 12,598,307 19,822,710
Denway Motors Ltd. ........................ Automobiles 47,804,521 30,456,986
(a) Hidili Industry International Development
Ltd. ................................... Metals & Mining 35,426,000 44,638,304
Lonking Holdings Ltd. ..................... Machinery 11,660,000 8,105,472
PetroChina Co. Ltd., H .................... Oil, Gas & Consumable Fuels 92,042,902 110,636,192
--------------
361,295,148
--------------
HONG KONG 1.5%
Dairy Farm International Holdings Ltd. .... Food & Staples Retailing 4,222,262 25,291,349
(a) GOME Electrical Appliances Holdings Ltd. .. Specialty Retail 8,579,000 3,120,160
VTech Holdings Ltd. ....................... Communications Equipment 1,891,000 18,120,549
--------------
46,532,058
--------------
HUNGARY 3.1%
(a) MOL Hungarian Oil and Gas Nyrt. ........... Oil, Gas & Consumable Fuels 187,322 16,847,286
(a) OTP Bank Ltd. ............................. Commercial Banks 2,683,604 77,461,345
--------------
94,308,631
--------------
INDIA 13.4%
GAIL India Ltd. ........................... Gas Utilities 3,520,539 31,336,666
Grasim Industries Ltd. .................... Construction Materials 87,692 4,681,630
Hindalco Industries Ltd. .................. Metals & Mining 12,340,552 42,743,885
Infosys Technologies Ltd. ................. IT Services 554,455 31,124,626
National Aluminium Co. Ltd. ............... Metals & Mining 1,913,621 17,237,433
Oil & Natural Gas Corp. Ltd. .............. Oil, Gas & Consumable Fuels 2,092,240 53,085,913
20 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2009 (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------------- ----------- --------------
COMMON STOCKS (CONTINUED)
INDIA (CONTINUED)
(a) Oil India Ltd. ............................ Oil, Gas & Consumable Fuels 544,616 $ 14,549,497
Sesa Goa Ltd. ............................. Metals & Mining 7,572,064 66,999,958
Steel Authority of India Ltd. ............. Metals & Mining 4,402,953 22,830,654
Tata Chemicals Ltd. ....................... Chemicals 2,931,371 20,350,953
Tata Consultancy Services Ltd. ............ IT Services 5,142,381 83,074,772
Tata Steel Ltd. ........................... Metals & Mining 1,334,500 17,758,828
--------------
405,774,815
--------------
INDONESIA 2.0%
PT Astra International Tbk ................ Automobiles 11,513,000 42,387,384
PT Bank Central Asia Tbk .................. Commercial Banks 37,254,500 19,170,751
--------------
61,558,135
--------------
ISRAEL 0.6%
(a, b) Taro Pharmaceutical Industries Ltd. ....... Pharmaceuticals 2,155,198 19,138,158
--------------
MEXICO 2.8%
America Movil SAB de CV, L, ADR ........... Wireless Telecommunication Services 1,117,470 52,498,741
Grupo Televisa SA ......................... Media 3,637,054 15,133,481
Kimberly Clark de Mexico SAB de CV, A ..... Household Products 3,562,422 15,950,391
--------------
83,582,613
--------------
PAKISTAN 1.1%
MCB Bank Ltd. ............................. Commercial Banks 7,413,929 19,281,486
Oil & Gas Development Co. Ltd. ............ Oil, Gas & Consumable Fuels 10,560,200 13,800,830
--------------
33,082,316
--------------
PERU 0.3%
Credicorp Ltd. ............................ Commercial Banks 125,200 9,642,904
--------------
QATAR 0.5%
Qatar National Bank ....................... Commercial Banks 379,250 15,443,887
--------------
RUSSIA 14.7%
(a) Bank of Moscow ............................ Commercial Banks 18,195 487,697
Gazprom, ADR .............................. Oil, Gas & Consumable Fuels 3,102,300 77,712,615
Gazprom, ADR (London Exchange) ............ Oil, Gas & Consumable Fuels 1,150,836 29,449,893
LUKOIL Holdings, ADR ...................... Oil, Gas & Consumable Fuels 392,879 22,158,375
LUKOIL Holdings, ADR (London Exchange) .... Oil, Gas & Consumable Fuels 1,189,579 68,162,877
(a) Mining and Metallurgical Co. Norilsk
Nickel, ADR ............................ Metals & Mining 4,122,100 59,152,135
Mobile TeleSystems ........................ Wireless Telecommunication Services 2,517,800 18,413,284
Mobile TeleSystems, ADR ................... Wireless Telecommunication Services 674,400 32,971,416
Rosneft Oil Co., GDR ...................... Oil, Gas & Consumable Fuels 2,549,150 21,871,707
(a) RusHydro .................................. Electric Utilities 11,243,744 422,102
Sberbank RF ............................... Commercial Banks 19,960,300 56,068,483
TNK-BP .................................... Oil, Gas & Consumable Fuels 20,839,920 35,948,862
(a, c) Uralkali, GDR, Reg S ...................... Chemicals 633,800 13,379,518
(a) Wimm-Bill-Dann Foods ...................... Food Products 185,300 8,307,279
--------------
444,506,243
--------------
SINGAPORE 0.4%
Fraser and Neave Ltd. ..................... Industrial Conglomerates 4,013,617 11,993,733
--------------
Annual Report | 21
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2009 (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------------- ----------- --------------
COMMON STOCKS (CONTINUED)
SOUTH AFRICA 3.1%
Lewis Group Ltd. .......................... Specialty Retail 1,094,121 $ 7,825,697
Naspers Ltd., N ........................... Media 852,546 34,516,032
Remgro Ltd. ............................... Diversified Financial Services 2,184,297 26,294,102
Standard Bank Group Ltd. .................. Commercial Banks 1,857,716 25,571,799
--------------
94,207,630
--------------
SOUTH KOREA 5.4%
CJ Internet Corp. ......................... Media 385,710 4,564,713
GS Engineering & Construction Corp. ....... Construction & Engineering 422,479 39,310,483
(a) Hyundai Development Co. ................... Construction & Engineering 477,870 15,470,353
Samsung Electronics Co. Ltd. .............. Semiconductors & Semiconductor Equipment 59,662 40,880,679
(a) Shinhan Financial Group Co. Ltd. .......... Commercial Banks 765,198 28,348,566
SK Energy Co. Ltd. ........................ Oil, Gas & Consumable Fuels 348,875 35,154,525
--------------
163,729,319
--------------
SWEDEN 1.3%
Oriflame Cosmetics SA, SDR ................ Personal Products 661,514 39,590,870
--------------
TAIWAN 2.0%
MediaTek Inc. ............................. Semiconductors & Semiconductor Equipment 563,705 9,832,679
President Chain Store Corp. ............... Food & Staples Retailing 15,614,114 37,143,922
Taiwan Semiconductor Manufacturing Co.
Ltd. ................................... Semiconductors & Semiconductor Equipment 7,305,343 14,729,435
--------------
61,706,036
--------------
THAILAND 2.5%
Kasikornbank Public Co. Ltd., fgn. ........ Commercial Banks 2,900,000 7,562,950
PTT Exploration and Production Public Co.
Ltd., fgn. ............................. Oil, Gas & Consumable Fuels 2,677,700 11,799,217
PTT Public Co. Ltd., fgn. ................. Oil, Gas & Consumable Fuels 4,257,000 31,391,547
Thai Beverages Co. Ltd., fgn. ............. Beverages 145,701,598 25,398,002
--------------
76,151,716
--------------
TURKEY 4.2%
Akbank TAS ................................ Commercial Banks 8,644,664 54,599,702
Anadolu Efes Biracilik Ve Malt Sanayii
AS ..................................... Beverages 541,246 6,077,351
Tupras-Turkiye Petrol Rafinerileri AS ..... Oil, Gas & Consumable Fuels 2,063,136 41,022,788
Turkcell Iletisim Hizmetleri AS ........... Wireless Telecommunication Services 3,356,919 23,782,477
--------------
125,482,318
--------------
UNITED ARAB EMIRATES 1.1%
DP World Ltd. ............................. Transportation Infrastructure 5,407,100 2,325,053
(a) Emaar Properties PJSC ..................... Real Estate Management & Development 29,736,353 31,250,718
--------------
33,575,771
--------------
UNITED KINGDOM 3.7%
(a) Anglo American PLC ........................ Metals & Mining 1,737,388 74,909,324
Antofagasta PLC ........................... Metals & Mining 2,292,783 36,793,456
--------------
111,702,780
--------------
TOTAL COMMON STOCKS
(COST $1,747,575,187) .................. 2,652,458,323
--------------
22 | Annual Report
Templeton Developing Markets Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2009 (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------------- ----------- --------------
DIRECT EQUITY INVESTMENTS
(COST $2,706,336) 0.2%
VIETNAM 0.2%
(a, b, d, e) Mayfair Hanoi, Ltd., 37.5%, equity owned
through HEA Holdings Ltd., a wholly
owned investment ....................... Real Estate Management & Development -- $ 4,834,975
--------------
PREFERRED STOCKS 11.7%
BRAZIL 11.1%
Banco Bradesco SA, ADR, pfd. .............. Commercial Banks 1,679,341 36,727,188
Itausa - Investimentos Itau SA, pfd. ...... Commercial Banks 4,431,557 30,128,486
Petroleo Brasileiro SA, ADR, pfd. ......... Oil, Gas & Consumable Fuels 3,072,040 130,223,775
Vale SA, ADR, pfd., A ..................... Metals & Mining 5,574,411 138,356,881
--------------
335,436,330
--------------
CHILE 0.6%
Embotelladora Andina SA, pfd., A .......... Beverages 6,840,893 19,277,716
--------------
TOTAL PREFERRED STOCKS
(COST $148,868,127) .................... 354,714,046
--------------
TOTAL INVESTMENTS BEFORE SHORT TERM
INVESTMENTS
(COST $1,899,149,650) .................. 3,012,007,344
--------------
SHORT TERM INVESTMENTS
(COST $10,229,448) 0.3%
MONEY MARKET FUNDS 0.3%
UNITED STATES 0.3%
(f) Institutional Fiduciary Trust Money Market
Portfolio, 0.00% ....................... 10,229,448 10,229,448
--------------
TOTAL INVESTMENTS
(COST $1,909,379,098) 99.7% ............ 3,022,236,792
OTHER ASSETS, LESS LIABILITIES 0.3% ....... 8,487,389
--------------
NET ASSETS 100.0% ......................... $3,030,724,181
==============
See Abbreviations on page 38.
(a) Non-income producing.
(b) See Note 10 regarding holdings of 5% voting securities.
(c) Security was purchased pursuant to Regulation S under the Securities Act of
1933, which exempts from registration securities offered and sold outside
of the United States. Such a security cannot be sold in the United States
without either an effective registration statement filed pursuant to the
Securities Act of 1933, or pursuant to an exemption from registration. This
security has been deemed liquid under guidelines approved by the Trust's
Board of Trustees. At December 31, 2009, the value of this security was
$13,379,518, representing 0.44% of net assets.
(d) See Note 9 regarding restricted securities.
(e) See Note 11 regarding other considerations.
(f) See Note 7 regarding investments in the Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
Annual Report | 23
Templeton Developing Markets Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2009
Assets:
Investments in securities:
Cost - Unaffiliated issuers ............................. $ 1,874,571,194
Cost - Controlled affiliated issuers (Note 10) .......... 2,706,336
Cost - Non-controlled affiliated issuers (Note 10) ...... 21,872,120
Cost - Sweep Money Fund (Note 7) ........................ 10,229,448
---------------
Total cost of investments ............................... $ 1,909,379,098
===============
Value - Unaffiliated issuers ............................ $ 2,988,034,211
Value - Controlled affiliated issuers (Note 10) ......... 4,834,975
Value - Non-controlled affiliated issuers (Note 10) ..... 19,138,158
Value - Sweep Money Fund (Note 7) ....................... 10,229,448
---------------
Total value of investments .............................. 3,022,236,792
Cash ....................................................... 3,444,938
Foreign currency, at value (cost $385) ..................... 397
Receivables:
Investment securities sold .............................. 26,184,717
Capital shares sold ..................................... 2,436,654
Dividends ............................................... 7,921,048
Foreign tax ............................................. 901,960
Other assets ............................................... 303
---------------
Total assets ......................................... 3,063,126,809
---------------
Liabilities:
Payables:
Capital shares redeemed ................................. 14,278,672
Affiliates .............................................. 5,226,579
Deferred tax ............................................... 10,831,411
Accrued expenses and other liabilities ..................... 2,065,966
---------------
Total liabilities .................................... 32,402,628
---------------
Net assets, at value .............................. $ 3,030,724,181
---------------
Net assets consist of:
Paid-in capital ............................................ $ 2,595,622,198
Distributions in excess of net investment income ........... (11,224,648)
Net unrealized appreciation (depreciation) ................. 1,101,909,790
Accumulated net realized gain (loss) ....................... (655,583,159)
---------------
Net assets, at value .............................. $ 3,030,724,181
===============
The accompanying notes are an integral part of these financial statements.
24 | Annual Report
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 2009
CLASS A:
Net assets, at value .................................................... $2,338,884,388
==============
Shares outstanding ...................................................... 106,130,836
==============
Net asset value per share(a) ............................................ $ 22.04
==============
Maximum offering price per share (net asset value per share / 94.25%) ... $ 23.38
==============
CLASS B:
Net assets, at value .................................................... $ 22,798,600
==============
Shares outstanding ...................................................... 1,053,370
==============
Net asset value and maximum offering price per share(a) ................. $ 21.64
==============
CLASS C:
Net assets, at value .................................................... $ 324,243,428
==============
Shares outstanding ...................................................... 15,052,486
==============
Net asset value and maximum offering price per share(a) ................. $ 21.54
==============
CLASS R:
Net assets, at value .................................................... $ 46,872,951
==============
Shares outstanding ...................................................... 2,159,964
==============
Net asset value and maximum offering price per share .................... $ 21.70
==============
ADVISOR CLASS:
Net assets, at value .................................................... $ 297,924,814
==============
Shares outstanding ...................................................... 13,552,468
==============
Net asset value and maximum offering price per share .................... $ 21.98
==============
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
Annual Report | 25
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended December 31, 2009
Investment income:
Dividends: (net of foreign taxes of $6,868,234)
Unaffiliated issuers ............................................................ $ 79,405,605
Sweep Money Fund (Note 7) ....................................................... 46,894
Interest ........................................................................... 11,983
--------------
Total investment income ...................................................... 79,464,482
--------------
Expenses:
Management fees (Note 3a) .......................................................... 29,406,448
Administrative fees (Note 3b) ...................................................... 2,389,297
Distribution fees: (Note 3c)
Class A ......................................................................... 4,949,605
Class B ......................................................................... 187,356
Class C ......................................................................... 2,495,038
Class R ......................................................................... 180,815
Transfer agent fees (Note 3e) ...................................................... 4,834,957
Custodian fees (Note 4) ............................................................ 1,400,592
Reports to shareholders ............................................................ 434,823
Registration and filing fees ....................................................... 115,310
Professional fees .................................................................. 266,818
Trustees' fees and expenses ........................................................ 156,099
Excise tax ......................................................................... 500,862
Other .............................................................................. 97,093
--------------
Total expenses ............................................................... 47,415,113
Expense reductions (Note 4) .................................................. (1,481)
--------------
Net expenses .............................................................. 47,413,632
--------------
Net investment income .................................................. 32,050,850
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ..................................................................... (145,740,293)
Foreign currency transactions ................................................... (436,333)
--------------
Net realized gain (loss) ............................................... (146,176,626)
--------------
Net change in unrealized appreciation (depreciation) on:
Investments ..................................................................... 1,465,126,209
Translation of other assets and liabilities denominated in foreign currencies ... 13,625
Change in deferred taxes on unrealized appreciation ................................ (10,831,411)
--------------
Net change in unrealized appreciation (depreciation) ................... 1,454,308,423
--------------
Net realized and unrealized gain (loss) ............................................... 1,308,131,797
--------------
Net increase (decrease) in net assets resulting from operations ....................... $1,340,182,647
==============
The accompanying notes are an integral part of these financial statements.
26 | Annual Report
Templeton Developing Markets Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
---------------------------------
2009 2008
--------------- ---------------
Increase (decrease) in net assets:
Operations:
Net investment income ......................................................... $ 32,050,850 $ 46,355,318
Net realized gain (loss) from investments and foreign currency transactions ... (146,176,626) (351,483,663)
Net change in unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in foreign
currencies, and deferred taxes ............................................. 1,454,308,423 (2,503,482,868)
-------------- ---------------
Net increase (decrease) in net assets resulting from operations ......... 1,340,182,647 (2,808,611,213)
-------------- ---------------
Distributions to shareholders from:
Net investment income:
Class A .................................................................... (37,121,291) (68,005,557)
Class B .................................................................... (229,845) (498,387)
Class C .................................................................... (3,412,864) (6,497,298)
Class R .................................................................... (663,157) (1,255,850)
Advisor Class .............................................................. (5,320,227) (10,235,209)
Net realized gains:
Class A .................................................................... -- (111,274,827)
Class B .................................................................... -- (1,220,304)
Class C .................................................................... -- (15,205,505)
Class R .................................................................... -- (2,097,185)
Advisor Class .............................................................. -- (13,584,100)
-------------- ---------------
Total distributions to shareholders .............................................. (46,747,384) (229,874,222)
-------------- ---------------
Capital share transactions: (Note 2)
Class A .................................................................... (162,843,393) (818,508,474)
Class B .................................................................... (3,235,008) (11,829,237)
Class C .................................................................... (8,257,655) (69,312,600)
Class R .................................................................... (2,404,480) 2,905,635
Advisor Class .............................................................. (17,841,400) (274,951,817)
-------------- ---------------
Total capital share transactions ................................................. (194,581,936) (1,171,696,493)
-------------- ---------------
Redemption fees .................................................................. -- 51,127
-------------- ---------------
Net increase (decrease) in net assets ................................... 1,098,853,327 (4,210,130,801)
Net assets:
Beginning of year ................................................................ 1,931,870,854 6,142,001,655
-------------- ---------------
End of year ...................................................................... $3,030,724,181 $ 1,931,870,854
============== ===============
Distributions in excess of net investment income included in net assets:
End of year ...................................................................... $ (11,224,648) $ (32,126,960)
============== ===============
The accompanying notes are an integral part of these financial statements.
Annual Report | 27
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 an 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
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value.
Foreign equity 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 equity 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 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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.
28 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. The Fund may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. 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. 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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of December 31, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.
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.
Annual Report | 29
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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.
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, not
including 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.
E. 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.
F. REDEMPTION FEES
A short term trading redemption fee was imposed, with some exceptions, on any
fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the fund and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
G. 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.
30 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
At December 31, 2009, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2009 2008
--------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
CLASS A SHARES:
Shares sold ................. 20,346,860 $ 344,644,361 23,404,228 $ 543,215,981
Shares issued in reinvestment
of distributions ......... 1,408,899 30,020,046 9,023,640 153,032,031
Shares redeemed ............. (31,471,494) (537,507,800) (68,966,036) (1,514,756,486)
----------- ------------- ----------- ---------------
Net increase (decrease) ..... (9,715,735) $(162,843,393) (36,538,168) $ (818,508,474)
=========== ============= =========== ===============
CLASS B SHARES:
Shares sold ................. 162,580 $ 2,649,148 97,728 $ 2,292,162
Shares issued in reinvestment
of distributions ......... 10,274 212,989 91,600 1,568,804
Shares redeemed ............. (381,279) (6,097,145) (716,582) (15,690,203)
----------- ------------- ----------- ---------------
Net increase (decrease) ..... (208,425) $ (3,235,008) (527,254) $ (11,829,237)
=========== ============= =========== ===============
CLASS C SHARES:
Shares sold ................. 2,644,802 $ 44,736,855 1,967,099 $ 43,072,369
Shares issued in reinvestment
of distributions ......... 140,956 2,915,606 1,068,378 18,152,048
Shares redeemed ............. (3,626,095) (55,910,116) (6,581,570) (130,537,017)
----------- ------------- ----------- ---------------
Net increase (decrease) ..... (840,337) $ (8,257,655) (3,546,093) $ (69,312,600)
=========== ============= =========== ===============
CLASS R SHARES:
Shares sold ................. 1,201,486 $ 20,065,279 1,384,913 $ 31,904,673
Shares issued in reinvestment
of distributions ......... 29,679 621,728 188,877 3,127,566
Shares redeemed ............. (1,446,991) (23,091,487) (1,476,425) (32,126,604)
----------- ------------- ----------- ---------------
Net increase (decrease) ..... (215,826) $ (2,404,480) 97,365 $ 2,905,635
=========== ============= =========== ===============
ADVISOR CLASS SHARES:
Shares sold ................. 3,459,308 $ 58,198,741 5,332,978 $ 111,511,547
Shares issued in reinvestment
of distributions ......... 198,000 4,213,954 1,206,141 19,765,836
Shares redeemed ............. (5,184,696) (80,254,095) (17,504,369) (406,229,200)
----------- ------------- ----------- ---------------
Net increase (decrease) ..... (1,527,388) $ (17,841,400) (10,965,250) $ (274,951,817)
=========== ============= =========== ===============
Annual Report | 31
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ---------- -----------
Templeton Asset Management Ltd. (TAML) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES
Effective May 1, 2009, 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 $3 billion
1.150% Over $3 billion, up to and including $4 billion
1.100% Over $4 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
Prior to May 1, 2009, the Fund paid fees 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 $7.5 billion
1.125% Over $7.5 billion, up to and including $10 billion
1.100% Over $10 billion, up to and including $15 billion
1.050% Over $15 billion, up to and including $20 billion
1.000% In excess of $20 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets 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
32 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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%
Effective February 1, 2009, the Board of Trustees has set the current rate at
0.30% per year for Class A shares until further notice and approval by the
Board.
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 ...... $250,959
Contingent deferred sales charges retained .. $ 27,913
E. TRANSFER AGENT FEES
For the year ended December 31, 2009, the Fund paid transfer agent fees of
$4,834,957, of which $3,229,722 was retained by Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended December 31, 2009, the
custodian fees were reduced as noted in the Statement of Operations.
Annual Report | 33
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At December 31, 2009, the Fund had tax basis capital losses of
$641,835,405 expiring in 2017.
The tax character of distributions paid during the years ended December 31, 2009
and 2008, was as follows:
2009 2008
----------- ------------
Distributions paid from:
Ordinary income .......... $46,747,384 $119,676,929
Long term capital gain ... -- 110,197,293
----------- ------------
$46,747,384 $229,874,222
=========== ============
At December 31, 2009, the cost of investments, net unrealized appreciation
(depreciation), and undistributed ordinary income for income tax purposes were
as follows:
Cost of investments ....................................... $1,949,038,509
==============
Unrealized appreciation ................................... $1,138,043,067
Unrealized depreciation ................................... (64,844,784)
--------------
Net unrealized appreciation (depreciation) ................ $1,073,198,283
==============
Distributable earnings -- undistributed ordinary income ... $ 14,687,008
==============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, passive foreign
investment company shares, corporate actions, and non-deductible excise tax
expense.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, passive foreign investment company shares, and corporate actions.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended December 31, 2009, aggregated $1,102,480,906 and $1,351,942,830,
respectively.
34 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Institutional Fiduciary Trust Money Market Portfolio
(Sweep Money Fund), an open-end investment company managed by Franklin Advisers,
Inc. (an affiliate of the investment manager). Pursuant to a SEC exemptive order
specific to the Fund's investment in the Sweep Money Fund, management fees are
reduced on assets invested in the Sweep Money Fund, in an amount not to exceed
the management and administrative fees paid by the Sweep Money Fund.
8. 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.
9. 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, 2009, 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.
TOTAL RESTRICTED SECURITIES (0.16% of Net Assets) ............. 10/31/96 $2,706,336 $4,834,975
==========
Annual Report | 35
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. 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, 2009, were as shown below.
NUMBER OF SHARES NUMBER OF SHARES VALUE AT REALIZED
HELD AT BEGINNING GROSS GROSS HELD AT END END OF INVESTMENT CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR YEAR INCOME GAIN (LOSS)
- -------------- ----------------- --------- ---------- ---------------- ----------- ---------- -----------
CONTROLLED AFFILIATES(a)
Mayfair Hanoi, Ltd., 37.5%
equity owned through
HEA Holdings Ltd. ..... -- -- --(b) -- $ 4,834,975 $-- $--
NON-CONTROLLED AFFILIATES
Taro Pharmaceutical
Industries Ltd. ....... 1,380,656 774,542 -- 2,155,198 19,138,158 $-- $--
----------- --- ---
TOTAL AFFILIATED SECURITIES (0.79% of Net Assets) ..................................... $23,973,133 $-- $--
=========== === ===
(a) Issuer in which the Fund owns 25% or more of the outstanding voting
securities.
(b) During the year, the issuer redeemed a portion of the investment in the
amount of $1,741,250.
11. 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.
12. CREDIT FACILITY
The Fund, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a joint syndicated senior unsecured credit facility totaling $725
million (Global Credit Facility) to provide a source of funds to the Borrowers
for temporary and emergency purposes, including the ability to meet future
unanticipated or unusually large redemption requests. Effective January 22,
2010, the Fund renewed the Global Credit Facility, for a total of $750 million,
maturing January 21, 2011.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statement of
Operations. During the year ended December 31, 2009, the Fund did not utilize
the Global Credit Facility.
36 | Annual Report
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of December 31, 2009, in
valuing the Fund's assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------- ------- ---------- --------------
ASSETS:
Investments in Securities
Equity Investments:(a)
Vietnam ................ $ -- $-- $4,834,975 $ 4,834,975
All other Equity
Investments(b) ...... 3,007,172,369 -- -- 3,007,172,369
Short Term Investments .... 10,229,448 -- -- 10,229,448
-------------- --- ---------- --------------
Total Investments in
Securities ....... $3,017,401,817 $-- $4,834,975 $3,022,236,792
============== === ========== ==============
(a) Includes common and preferred stock as well as other equity investments.
(b) For detailed industry descriptions, see the accompanying Statement of
Investments.
At December 31, 2009, the reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value, is as
follows:
NET CHANGE
NET CHANGE IN UNREALIZED
IN APPRECIATION
NET UNREALIZED NET TRANSFER (DEPRECIATION)
BEGINNING REALIZED APPRECIATION PURCHASES IN (OUT) OF ENDING ON ASSETS HELD
BALANCE GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3 BALANCE AT YEAR END
---------- ----------- -------------- ----------- ----------- ---------- --------------
ASSETS:
Investments in Securities:
Equity Investments:
Hong Kong ............. $6,182,235 $-- $393,990 $(1,741,250) $-- $4,834,975 $ 393,990
---------- --- -------- ----------- --- ---------- -----------
Total Investments
in Securities ...... $6,182,235 $-- $393,990 $(1,741,250) $-- $4,834,975 $ 393,990
========== === ======== =========== === ========== ===========
Annual Report | 37
Templeton Developing Markets Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
14. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board issued Accounting
Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND DISCLOSURES
(TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS. ASU No. 2010-6
enhances and clarifies existing fair value measurement disclosure requirements
and is effective for interim and annual periods beginning after December 15,
2009. The Fund is currently evaluating the impact, if any, of applying the
provisions of ASU No. 2010-6.
15. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through February 19, 2010, the issuance
date of the financial statements and determined that no events have occurred
that require disclosure.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
GDR - Global Depository Receipt
SDR - Swedish Depository Receipt
38 | Annual Report
Templeton Developing Markets Trust
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON DEVELOPING MARKETS TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Templeton Developing Markets Trust
(the "Fund") at December 31, 2009, 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, 2009 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 19, 2010
Annual Report | 39
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED)
Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund designates
the maximum amount allowable but no less than $45,893,948 as qualified dividends
for purposes of the maximum rate under Section 1(h)(11) of the Code for the
fiscal year ended December 31, 2009. Distributions, including qualified dividend
income, paid during calendar year 2009 will be reported to shareholders on Form
1099-DIV in January 2010. 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 $21,812 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, 2009.
At December 31, 2009, 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, 2009, 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 Fund, to
Class A, Class B, Class C, Class R and Advisor Class shareholders of record.
FOREIGN TAX PAID FOREIGN SOURCE INCOME FOREIGN QUALIFIED
CLASS PER SHARE PER SHARE DIVIDENDS PER SHARE
- ----- ---------------- --------------------- -------------------
Class A ............ $0.0473 $0.3813 $0.2105
Class B ............ $0.0473 $0.2646 $0.1461
Class C ............ $0.0473 $0.2743 $0.1515
Class R ............ $0.0473 $0.3474 $0.1917
Advisor Class ...... $0.0473 $0.4229 $0.2335
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)
40 | Annual Report
Templeton Developing Markets Trust
TAX DESIGNATION (UNAUDITED) (CONTINUED)
Foreign Qualified Dividends Per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund.(1)
In January 2010, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2009. 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 2009 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.
Annual Report | 41
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 Fund, 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 133 Bar-S Foods (meat packing company).
500 East Broward Blvd.
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).
ANN TORRE BATES (1958) Trustee Since 2008 31 SLM Corporation (Sallie Mae) and
500 East Broward Blvd. Allied Capital Corporation (financial
Suite 2100 services).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Independent strategic and financial consultant; and FORMERLY, Executive Vice President and Chief Financial Officer, NHP Incorporated
(manager of multifamily housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995).
FRANK J. CROTHERS (1944) Trustee Since 1991 23 Fortis, Inc. (utility holding company)
500 East Broward Blvd. and AML Foods Limited (retail
Suite 2100 distributors).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director and Vice Chairman, Caribbean Utilities Company, Ltd. and director of various other private business and nonprofit
organizations.
EDITH E. HOLIDAY (1952) Lead Trustee since 133 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 products), RTI International Metals,
since 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).
42 | 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
- ------------------------------ --------------- ------------------ ----------------------- --------------------------------------
J. MICHAEL LUTTIG (1954) Trustee Since 133 Boeing Capital Corporation (aircraft
500 East Broward Blvd. December 2009 financing).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President, General Counsel and member of Executive Counsel, The Boeing Company; and FORMERLY, Federal Appeals Court
Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).
DAVID W. NIEMIEC (1949) Trustee Since 2005 23 Emeritus Corporation (assisted living)
500 East Broward Blvd. and OSI Pharmaceuticals, Inc. (phar-
Suite 2100 maceutical products).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Advisor, Saratoga Partners (private equity fund); 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 133 Hess Corporation (exploration and
500 East Broward Blvd. refining of oil and gas).
Suite 2100
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 23 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 38 El Oro Ltd. (investments).
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney at law.
Annual Report | 43
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 133 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board and Board sice 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 41
of the investment companies in Franklin Templeton Investments.
**GREGORY E. JOHNSON (1961) Trustee Since 2007 89 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.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 32 of the investment
companies in Franklin Templeton Investments.
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since
San Mateo, CA 94403-1906 Officer and 2004 and Vice
Vice President President - AML
- AML Compliance
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
45 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin Resources, Inc.
(1994-2001).
LAURA F. FERGERSON (1962) Chief Executive Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Officer -
San Mateo, CA 94403-1906 Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 45 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant
Treasurer of most of the investment companies in Franklin Templeton Investments (1997-2003); and Vice President, Franklin Templeton
Services, LLC (1997-2003).
ALIYA S. GORDON (1973) Vice President Since March 2009 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Templeton Investments; officer of 45 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Litigation Associate, Steefel, Levitt & Weiss, LLP (2000-2004).
44 | 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
- ------------------------------ --------------- ------------------ ----------------------- --------------------------------------
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/or director, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
STEVEN J. GRAY (1955) Vice President Since August 2009 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; Vice President, Franklin Templeton Distributors, Inc.; and officer
of 45 of the investment companies in Franklin Templeton Investments.
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 43 of the investment companies in Franklin
Templeton Investments.
MARK MOBIUS (1936) President and President since Not Applicable Not Applicable
17th Floor, Chater House Chief Executive 1994 and Chief
8 Connaught Road Central Officer - Executive Officer
Hong Kong Investment - Investment
Management Management since
2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Portfolio Manager of various Templeton advisory affiliates; Executive Chairman, 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.
MARK H. OTANI (1968) Treasurer, Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Chief Financial
San Mateo, CA 94403-1906 Officer and
Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Fund Accounting Operations, Franklin Templeton Investments; and officer of 14 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
- ------------------------------ --------------- ------------------ ----------------------- --------------------------------------
ROBERT C. ROSSELOT (1960) Secretary and Secretary since Not Applicable Not Applicable
500 East Broward Blvd. Vice President 2004 and Vice
Suite 2100 President since
Fort Lauderdale, FL 33394-3091 August 2009
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 45 of the investment companies in Franklin Templeton Investments.
KAREN L. SKIDMORE (1952) Vice President Since August 2009 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; and officer of 45 of the investment companies in Franklin
Templeton Investments.
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 45 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).
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers.
** Charles B. Johnson is considered to be an interested person of the Fund
under the federal securities laws due to his position as officer and
director and major shareholder of Franklin Resources, Inc. (Resources),
which is the parent company of the Fund's investment manager. Gregory E.
Johnson is considered to be an interested person of the Fund under the
federal securities laws due to his position as an 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.
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 EACH OF ANN TORRE BATES AND DAVID W. NIEMIEC AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MS. BATES AND MR. NIEMIEC QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MS. BATES HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2008. SHE
CURRENTLY SERVES AS A DIRECTOR OF SLM CORPORATION AND ALLIED CAPITAL CORPORATION
AND WAS FORMERLY THE EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF NHP
INCORPORATED AND VICE PRESIDENT AND TREASURER OF US AIRWAYS, INC. 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 MS. BATES AND MR. NIEMIEC HAVE EACH ACQUIRED AN UNDERSTANDING OF GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL APPLICATION
OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND
RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT PRESENT A
BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO
THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL CONTROLS AND
PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT COMMITTEE
FUNCTIONS. MS. BATES AND MR. NIEMIEC ARE INDEPENDENT BOARD MEMBERS 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 (800) DIAL BEN/(800) 342-5236 TO REQUEST THE SAI.
46 | Annual Report
Templeton Developing Markets Trust
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager 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 (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 (800)
SEC-0330.
Annual Report | 47
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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 $49,027 for the fiscal year ended December 31, 2009 and $54,955 for the
fiscal year ended December 31, 2008.
(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
The aggregate 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 were $1,250 for the fiscal year ended December 31, 2009
and $1,290 for the fiscal year ended December 31, 2008. The services for which
these fees were paid included tax compliance and advice.
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 $2,762 for the fiscal year ended
December 31, 2009 and $4,000 for the fiscal year ended December 31, 2008. 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, 2009
and $3,700 for the fiscal year ended December 31, 2008. The services for which
these fees were paid include 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, 2009 and $280,377 for the fiscal year ended December 31,
2008. The services for which these fees were paid include review of materials
provided to the fund Board in connection 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 $4,012 for the fiscal year ended December 31, 2009 and $289,367
for the fiscal year ended December 31, 2008.
(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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
(B) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, 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/LAURA F. FERGERSON
-----------------------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date February 25, 2010
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/LAURA F. FERGERSON
-----------------------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date February 25, 2010
By /s/MARK H. OTANI
------------------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date February 25, 2010