TEMPLETON DEVELOPING MARKETS TRUST, N-30D, 1998-09-03

TEMPLETON DEVELOPING MARKETS TRUST
N-30D, 1998-09-03

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Semi Annual Report

June 30, 1998

Templeton Developing
Markets Trust

[LOGO](R)
Franklin(R) Templeton(R)

PAGE

Franklin Templeton
50
Celebrating Over 50 Years [LOGO]

Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.

In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently he devotes all of his time and efforts to the John
Templeton Foundation. A major portion of his assets remain invested in the
Templeton funds which are managed by many of the investment professionals he
selected and trained.

[PHOTO OF J. MARK MOBIUS APPEARS HERE]

J. MARK MOBIUS, PH.D.
President
Templeton Developing
Markets Trust

Dr. Mobius, a German citizen, has been living in emerging market countries since
earning his Ph.D. in economics and political science at Massachusetts Institute
of Technology in 1964. During his extensive travels, he has acquired a thorough
knowledge of the business practices and customs that are unique to developing
nations.

PAGE

CONTENTS

Shareholder Letter ........ 1

Performance Summaries
Class I ................ 6
Class II ............... 8
Advisor Class .......... 10

Travel Letter ............. 12

Financial Highlights &
Statement of Investments .. 14

Financial Statements ...... 33

Notes to Financial
Statements ................ 36

Fund Category

[PYRAMID GRAPH]

SHAREHOLDER LETTER

- --------------------------------------------------------------------------------
Your Fund's Objective: Templeton Developing Markets Trust seeks long-term
capital appreciation by investing, under normal market conditions, at least 65%
of its total assets in equity securities of developing market issuers.
- --------------------------------------------------------------------------------

Dear Shareholder:

This semiannual report of Templeton Developing Markets Trust covers the six
months ended June 30, 1998. During this period, the economies of many Asian
countries suffered severely due to continuing currency crises in the region, and
most emerging stock markets around the world performed poorly. Within this
environment, the Fund's Class I shares provided a -17.55% six-month cumulative
total return, as discussed in the Performance Summary on page 6. We understand
that declines such as this are unsettling for many investors, but we urge you
not to lose heart. As you know, we have always recommended that shareholders
focus on the long term, and we remain optimistic about the long-term prospects
for developing markets.

You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 17 of
this report.

PAGE

GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
6/30/98

[PIE CHART APPEARS HERE]

Asia 30.4%
Latin America 29.7%
Europe 10.3%
Mid-East/Africa 4.0%
Short-Term
Investments & Other
Net Assets 25.6%

In Asia, Thailand's stock market declined 19% during the reporting period, as
tight credit conditions and weak Asian demand hurt the country's export sector.
(1) The Korean stock market was adversely affected by increased corporate
bankruptcies and Hong Kong's Hang Seng Index fell 19% as rising unemployment and
falling property prices affected its economy.(2) China's Shanghai "B" and
Shenzhen "B" indices lost 29% and 18%, respectively,(2) as China's government
raised interest rates to avoid a currency devaluation, which could cause renewed
instability in other countries.

The "Asian contagion" also spread to other emerging markets, as many investors
did not appear to discriminate among regions and countries. In Brazil,
uncertainties over the breakup of Telecomunicacoes Brasileiras SA and worries
about the budget deficit contributed to a volatile Bovespa Index. And although
Mexican corporate earnings were positive for the first quarter of 1998,
investors, in general, reacted negatively to falling oil prices and concerns
over the currency crisis' impact on Mexican exports. During the period under
review, the Brazilian and Mexican markets declined 8% and 26%, respectively.(1)
Russia's was one of the world's worst performing stock markets. Many investors
were skeptical about the government's plans to achieve fiscal reform and improve
tax collection practices, and additional Western aid appears necessary to
achieve short-term stabilization.

However, not all emerging stock markets fared poorly. The Greek stock market
climbed to an all-time high as the government's

1. Market return is measured in U.S. dollars and includes reinvested dividends.

2. Market return is measured in U.S. dollars and includes reinvested dividends.
An index is an unmanaged group of securities that is used to measure market
performance. One cannot invest directly in an index.

PAGE

commitment to privatization, and to meeting the requirements for eventual
membership in the European Monetary Union (EMU), contributed to increased market
liquidity and healthy earnings growth. Portugal's stock market also benefited
from the success of strict fiscal policies implemented to join the EMU.

At year-end, the Fund owned investments in 35 countries, with Brazil being the
largest country holding (11.4% of total net assets). Our largest regional
holdings were in Asia (30.4%), followed by Latin America (29.7%), Europe
(10.3%), and the Mid-East/Africa (4.0%). We also held 25.6% of the Fund's total
net assets in short-term investments and other net assets, which should allow us
to take advantage of opportunities the Asian crisis might create to purchase
stocks offering long-term value.

Looking forward, we believe there is good reason for optimism about the future
of emerging markets. Brazil's privatization program is still attracting foreign
investors, and the country's US$71 billion in foreign reserves could help
minimize any future pressure for an abrupt devaluation of the real.(3) And many
Mexican companies could soon begin to report solid corporate earnings growth.

Asia, of course, remains a problem, but the discipline, hard work, high savings
rate, and emphasis on education which helped build many Asian economies are
still present in the region. Thailand is working to create a healthier banking
system by recapitalizing its banks, and Korea is moving toward eliminating
foreign investment

3. Icatu Securities. Brazilian Central Bank statistics for June 1998.

Top 10 Holdings
6/30/98

<TABLE>
<CAPTION>
Company, % of Total
Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Cemex SA, B
Building Materials &
Components, Mexico 3.2%

Telefonos de Mexico SA
(Telmex), ADR, L
Telecommunications, Mexico 3.0%

Telecomunicacoes
Brasileiras SA (Telebras)
Telecommunications, Brazil 2.4%

Akbank
Banking, Turkey 2.3%

HSBC Holdings Plc
Banking, Hong Kong 2.0%

Centrais Eletricas Brasileiras
SA (Eletrobras)
Utilities Electrical & Gas, Brazil 2.0%

Electricidad de Caracas
SAICA SAICA
Utilities Electrical & Gas,
Venezuela 1.8%

Banco Comercial Portugues SA
Banking, Portugal 1.6%

Alpha Credit Bank
Banking, Greece 1.5%

Petroleo Brasileiro SA
(Petrobras), pfd.
Energy Sources, Brazil 1.4%
</TABLE>

PAGE

Top 10 Countries
6/30/98

<TABLE>
<CAPTION>
% of Total
Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Brazil 11.4%
Mexico 9.5%
Turkey 5.7%
Hong Kong 5.3%
India 4.0%
Thailand 3.6%
Singapore 3.3%
Argentina 2.8%
South Africa 2.7%
Greece 2.3%
</TABLE>

restrictions to stimulate merger and acquisition activities and allow companies
to reduce their debt burdens. Hong Kong's long-term prospects appear bright
based on its track record in crisis management, and China's substantial foreign
reserves and current account surplus may be able to absorb temporary export
declines. Of course, there should be no illusions that Asia's deep-rooted
problems will be resolved easily; economic adjustments take time, and
difficulties are bound to arise along the way to recovery.

In conclusion, we believe the current emerging market crisis represents an
opportunity to purchase many stocks at attractive prices. Our strategy will
continue to be to focus on identifying and buying stocks of high-quality
companies at distressed prices for long-term capital appreciation potential.

Please remember, this discussion reflects our views, opinions and portfolio
holdings as of June 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the Fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy. Of course, investing in
emerging markets involves special considerations, which may include risks
related to market and currency volatility, adverse social, economic and
political developments and the relatively small size and lesser liquidity of
these markets. Investing in any emerging market means accepting a certain amount
of volatility and, in some cases,

PAGE

severe market corrections. While short-term volatility can be disconcerting,
declines of as much as 40% to 50% are not unusual in emerging markets. In fact,
the Hong Kong equity market has increased 785% in the last 15 years, but has
suffered six quarterly declines of more than 20% during that time.(4) These
special risks and other considerations are discussed in the Fund's prospectus.

Thank you for investing in Templeton Developing Markets Trust. We appreciate
your support and welcome your comments.

Sincerely,

/s/ J. MARK MOBIUS, PH.D.

J. Mark Mobius, Ph.D.
President
Templeton Developing Markets Trust

4. Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended June 30, 1998. Market returns are measured in Hong Kong dollars.

PAGE

PERFORMANCE SUMMARY

CLASS I

Templeton Developing Markets Trust - Class I produced a -17.55% cumulative total
return for the six-month period ended June 30, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of all
distributions, and does not include the sales charge. The Fund's share price, as
measured by net asset value, decreased $2.36, from $12.94 on December 31, 1997,
to $10.58 on June 30, 1998. During the reporting period, shareholders received
per-share distributions of 6.0 cents ($0.06) in dividend income and 5.0 cents
($0.05) in long-term capital gains. Distributions will vary depending on income
earned by the Fund and any profits realized from the sale of securities in the
portfolio, as well as the level of the Fund's operating expenses.

Past performance is not predictive of future results.

PAGE

CLASS I
Periods ended 6/30/98
<TABLE>
<CAPTION>
Since
Inception
1-Year 5-Year (10/17/91)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -37.83% 14.65% 32.67%
Average Annual Total Return(2) -41.40% 1.56% 3.39%
Value of $10,000 Investment(3) $5,860 $10,804 $12,504
</TABLE>

<TABLE>
<CAPTION>
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) 23.45% 3.07% 14.13% 27.00% -37.83%
</TABLE>

1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.

2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 5.75% initial
sales charge.

3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated and include the maximum 5.75% initial sales
charge.

4. One-year total return represents the change in value of an investment over
the periods ended on the specified dates and does not include the sales charge.

On January 1, 1993, the Fund's Class I shares implemented a Rule 12b-1 plan,
which affects subsequent performance. All calculations assume reinvestment of
distributions at net asset value. From October 17, 1991 to December 31, 1992,
expense waivers by the Fund's Manager increased the Fund's total returns. If the
Fund's Manager had not taken this action, the Fund's total returns would have
been lower.

Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility, and the economic,
social, and political climates of countries where investments are made. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.

Past performance is not predictive of future results.

PAGE

Class II

Templeton Developing Markets Trust - Class II produced a -17.73% cumulative
total return for the six-month period ended June 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
all distributions, and does not include sales charges. The Fund's share price,
as measured by net asset value, decreased $2.36, from $12.81 on December 31,
1997, to $10.45 on June 30, 1998. During the reporting period, shareholders
received per-share distributions of 6.02 cents ($0.0602) in dividend income and
5.0 cents ($0.05) in long-term capital gains. Distributions will vary depending
on income earned by the Fund and any profits realized from the sale of
securities in the portfolio, as well as the level of the Fund's operating
expenses.

Past performance is not predictive of future results.

PAGE

CLASS II
Periods ended 6/30/98
<TABLE>
<CAPTION>
Since
Inception
1-Year 3-Year (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -38.19% -11.78% -8.55%
Average Annual Total Return(2) -39.78% -4.42% -3.09%
Value of $10,000 Investment(3) $6,022 $8,732 $9,056
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
6/30/96 6/30/97 6/30/98
- --------------------------------------------------------------------------------
One-Year Total Return(4) 13.24% 26.04% -38.19%
</TABLE>

1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include sales charges.

2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.00% initial sales
charge and the 1.00% contingent deferred sales charge applicable to shares
redeemed within 18 months of investment.

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

4. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and does not include sales charges.

All calculations assume reinvestment of distributions at net asset value. Since
markets can go down as well as up, investment return and principal value will
fluctuate with market conditions, currency volatility, and the economic, social,
and political climates of the countries where investments are made. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.

Past performance is not predictive of future results.

PAGE

Advisor Class

Templeton Developing Markets Trust - Advisor Class produced a -17.49% cumulative
total return for the six-month period ended June 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
all distributions. The Fund's share price, as measured by net asset value,
decreased $2.35, from $12.93 on December 31, 1997, to $10.58 on June 30, 1998.
During the reporting period, shareholders received per-share distributions of
5.99 cents ($0.0599) in dividend income, and 5.0 cents ($0.05) in long-term
capital gains. Distributions will vary depending on income earned by the Fund
and any profits realized from the sale of securities in the portfolio, as well
as the level of the Fund's operating expenses.

Past performance is not predictive of future results.

PAGE

ADVISOR CLASS
Periods ended 6/30/98

<TABLE>
<CAPTION>
Since
Inception
1-Year* 5-Year* (10/17/91)*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -37.69% 15.03% 33.11%
Average Annual Total Return(1) -37.69% 2.84% 4.36%
Value of $10,000 Investment(2),* $ 6,231 $ 11,503 $13,311
</TABLE>

<TABLE>
<CAPTION>
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(3),* 23.45% 3.07% 14.13% 27.13% -37.69%
</TABLE>

*On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Class I expenses, including Rule 12b-1 fees;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance including the deduction of all fees and expenses applicable only to
that class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was -25.96%.

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

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

3. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated.

All calculations assume reinvestment of distributions at net asset value. From
October 17, 1991 to December 31, 1992, expense waivers by the Fund's Manager
increased the Fund's total returns. If the Fund's Manager had not taken this
action, the Fund's total returns would have been lower.

Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where investments are made.
Emerging markets involve heightened risks related to the same factors, in
addition to those associated with their relatively small size and lesser
liquidity. You may have a gain or loss when you sell your shares.

Past performance is not predictive of future results.

PAGE

THE FOLLOWING LETTER WAS
WRITTEN BY DR. MOBIUS AFTER
A RECENT TRIP TO KOREA

We write this letter from Seoul, the capital of the Republic of Korea (South
Korea). When I first arrived here in 1963, the country might have been described
as a "basket case." It was still recovering from the Korean War, World War II,
and before that, a long period of domination by Japan. Economic conditions were
bad, and the government required that the white rice loved by Koreans be mixed
with barley or beans to make it go further, and to enrich it with proteins and
vitamins. Even so, many Koreans endured a meager diet and went to bed hungry.

Today, despite the financial crisis gripping the country, standards of living
have risen to heights unimaginable in 1963. Why? Certainly not because of
extensive natural resources. The area's mineral reserves are located mostly in
North Korea, and the country's beautiful forests have been decimated by war and
by desperate people seeking firewood during the bitter winters. The Korean
people did it by pure force of will and determination. They pulled themselves up
"by the bootstraps" and turned Korea into an export powerhouse, covering the
globe with a wide range of electronics goods, automobiles, and some of the
world's most efficiently produced steel. Creating a high technology industrial
"miracle," they matched the Japanese in many fields, despite a much smaller
domestic market.

PAGE

But, built on the basis of state planning, as in Japan, this powerhouse evolved
into an industrial structure where banks favored loans to chaebols (giant
business groups), which leveraged themselves to the hilt and invested heavily in
a wide range of businesses, from shipbuilding to shoes and soup pans. And when
the Thai financial crisis spread throughout Asia in 1997, Korea faced the
biggest challenge to its prosperity since the Korean War.

Its banks faced non-performing loans, its chaebols groaned under unpayable debt,
and its stock market hit new lows. Pessimism became the order of the day.
However, we have noticed the beginnings of recovery as we talk with company
managers during this visit. One banker told us that one-quarter of his bank's
workforce had been laid off with the cooperation of the union. And management
had taken a 15% pay cut to show solidarity with the staff. It is this kind of
determination and discipline which, in our opinion, should put Korea's economy
and stock market back on their feet in the not too distant future.*

Sincerely,

/s/ J. MARK MOBIUS

J. Mark Mobius, Ph.D
President
Templeton Developing Markets Trust

* This letter reflects our opinions as of the close of the period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the Fund's portfolio composition.

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights

<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout
the period)
Net asset value, beginning of
period............................. $12.94 $15.40 $13.01 $13.42 $15.27 $8.86
--------------------------------------------------------------------------------------
Income from investment operations:
Net investment income............... .11 .16 .16 .21 .14 .04
Net realized and unrealized gains
(losses).......................... (2.36) (1.62) 2.75 (.18) (1.44) 6.55
--------------------------------------------------------------------------------------
Total from investment operations..... (2.25) (1.46) 2.91 .03 (1.30) 6.59
--------------------------------------------------------------------------------------
Less distributions from:
Net investment income............... (.06) (.16) (.17) (.20) (.12) (.05)
In excess of net investment
income............................ -- -- (.01) -- -- --
Net realized gains.................. (.05) (.53) (.34) (.24) (.43) (.13)
In excess of net realized gains..... -- (.31) -- -- -- --
--------------------------------------------------------------------------------------
Total distributions.................. (.11) (1.00) (.52) (.44) (.55) (.18)
--------------------------------------------------------------------------------------
Net asset value, end of period....... $10.58 $12.94 $15.40 $13.01 $13.42 $15.27
======================================================================================

Total Return*........................ (17.55)% (9.41)% 22.51% .36% (8.64)% 74.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's).... $2,677,076 $3,444,029 $3,308,753 $2,147,664 $2,009,154 $1,396,392
Ratios to average net assets:
Expenses............................ 2.02%** 1.96% 2.03% 2.10% 2.11% 2.20%
Net investment income............... 1.65%** .99% 1.16% 1.66% 1.08% .57%
Portfolio turnover rate.............. 5.94% 30.06% 12.47% 9.76% 18.57% 16.01%
</TABLE>

*Total return does not reflect sales commissions and is not annualized.
**Annualized.
14

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)

<TABLE>
<CAPTION>
CLASS II
---------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 -----------------------------------
(UNAUDITED) 1997 1996 1995+
------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period....................... $12.81 $15.27 $12.95 $13.10
---------------------------------------------------------
Income from investment operations:
Net investment income..................................... .06 .09 .17 .02
Net realized and unrealized gains (losses)................ (2.31) (1.64) 2.60 .19
---------------------------------------------------------
Total from investment operations........................... (2.25) (1.55) 2.77 .21
---------------------------------------------------------
Less distributions from:
Net investment income..................................... (.06) (.07) (.10) (.18)
In excess of net investment income........................ -- -- (.01) --
Net realized gains........................................ (.05) (.53) (.34) (.18)
In excess of net realized gains........................... -- (.31) -- --
---------------------------------------------------------
Total distributions........................................ (.11) (.91) (.45) (.36)
---------------------------------------------------------
Net asset value, end of period............................. $10.45 $12.81 $15.27 $12.95
=========================================================

Total Return*.............................................. (17.73)% (10.10)% 21.58% 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's).......................... $348,060 $402,542 $226,629 $41,012
Ratios to average net assets:
Expenses.................................................. 2.76%** 2.69% 2.74% 2.73%**
Net investment income..................................... .97%** .21% .33% .19%**
Portfolio turnover rate.................................... 5.94% 30.06% 12.47% 9.76%
</TABLE>

*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 1, 1995 (effective date) to December 31, 1995.
15

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)

<TABLE>
<CAPTION>
ADVISOR CLASS
--------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997+
--------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $12.93 $15.43
--------------------------------------
Income from investment operations:
Net investment income...................................... .13 .17
Net realized and unrealized losses......................... (2.37) (1.63)
--------------------------------------
Total from investment operations............................ (2.24) (1.46)
--------------------------------------
Less distributions from:
Net investment income...................................... (.06) (.20)
Net realized gains......................................... (.05) (.53)
In excess of net realized gains............................ -- (.31)
--------------------------------------
Total distributions......................................... (.11) (1.04)
--------------------------------------
Net asset value, end of period.............................. $10.58 $12.93
======================================
Total Return*............................................... (17.49)% (9.36)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $121,726 $98,101
Ratios to average net assets:
Expenses................................................... 1.75%** 1.69%**
Net investment income...................................... 2.14%** 1.04%**
Portfolio turnover rate..................................... 5.94% 30.06%
</TABLE>

*Total return is not annualized.
**Annualized.
+For the period January 2, 1997 (effective date) to December 31, 1997.
++Based on average weighted shares outstanding.

16 See Notes to Financial Statements.

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES 74.4%
ARGENTINA 2.8%
Aluar Aluminio Argentino SA, B................... Misc Materials & Commodities 32,701 $ 121,660
*Atanor Cia Nacional Para la Industria Quimica
SA, D.......................................... Chemicals 3,507,414 3,121,911
Banco de Galicia y Buenos Aires SA, B............ Banking 1,022,163 4,600,195
Banco Frances del Rio de la Plato SA............. Banking 26,098 197,321
*Buenos Aires Embotelladora SA, ADR.............. Beverages & Tobacco 746,000 7,460
Capex SA, A...................................... Utilities Electrical & Gas 221,604 820,017
Central Costanera SA, B.......................... Utilities Electrical & Gas 172,043 498,975
+Garovaglio Y Zorraquin SA....................... Chemicals 1,555,631 3,142,689
Molinos Rio de Plata SA, B....................... Food & Household Products 6,709,464 14,695,196
Nobleza Piccardo Sdad Industrial Comercial y
Financial...................................... Beverages & Tobacco 333,130 1,349,311
Perez Companc SA, B.............................. Energy Sources 3,765,719 18,905,800
Quilmes Industrial SA............................ Beverages & Tobacco 931,200 9,079,200
Renault Argentina SA............................. Automobiles 271,576 540,490
Siderca, A....................................... Metals & Mining 254,434 432,582
Sociedad Comercial del Plata Cadelplata Come..... Multi-Industry 9,563,380 10,520,770
Transportadora de Gas del Sur SA, B.............. Energy Sources 703,011 1,574,902
Transportadora de Gas del Sur SA, B, ADR......... Energy Sources 59,900 688,850
YPF Sociedad Anonima, ADR........................ Energy Sources 564,318 16,964,810
*Zanella Hermanos SA............................. Automobiles 805,494 76,530
--------------
87,338,669
--------------
BRAZIL 11.4%
Aracruz Celulose SA, ADR......................... Forest Products & Paper 1,422,200 16,266,412
Banco Bradesco SA................................ Banking 1,850,341,854 14,798,255
Banco Bradesco SA, pfd. ......................... Banking 3,111,389,522 25,959,631
Banco do Brasil SA............................... Banking 1,118,641,792 9,226,909
Banco do Brazil SA, pfd. ........................ Banking 327,666,120 3,654,585
Brasmotor SA, pfd. .............................. Multi-Industry 53,613,231 4,913,542
Centrais Eletricas Brasileiras SA
(Electrobras).................................. Utilities Electrical & Gas 646,461,000 19,003,695
Centrais Eletricas Brasileiras SA (Electrobras),
B, pfd. ....................................... Utilities Electrical & Gas 1,471,870,470 44,285,918
*Centrais Geradoras Do Sul Do Brasil SA
(Gerasul)...................................... Utilities Electrical & Gas 646,461,000 883,113
*Centrais Geradoras Do Sul Do Brasil SA
(Gerasul), pfd. ............................... Utilities Electrical & Gas 1,489,070,470 2,150,050
*Cia Mesbla SA, pfd. ............................ Merchandising 75,117,000 0
*Cia Vale do Rio Doce, A, pfd. .................. Metals & Mining 444,477 8,838,813
Companhia Siderurgica Nacional Sid Nacional
CSN............................................ Metals & Mining 346,356,000 8,678,365
Copene-Petroquimica do Nordeste SA, A, pfd. ..... Chemicals 33,300,844 7,370,756
+Duratex SA, pfd. ............................... Forest Products & Paper 473,191,600 18,410,533
Investimentos Itau SA, pfd. ..................... Multi-Industry 64,824,179 40,914,448
*Mannesmann SA................................... Machinery & Engineering 22,762,510 2,607,671
*Mannesmann SA, pfd. ............................ Machinery & Engineering 4,950,562 584,257
Marcopolo SA, pfd. .............................. Automobiles 363,213 621,790
Petrobras-Petroleo Brasileiro SA, pfd. .......... Energy Sources 242,905,333 45,153,594
Telecomunicacoes Brasileiras SA (Telebras)....... Telecommunications 738,109,194 58,711,781
Telecomunicacoes Brasileiras SA (Telebras),
pfd. .......................................... Telecommunications 160,199,973 17,424,483
Unibanco Uniao de Bamncos Brasileiros SA, unit... Banking 119,331,186 7,057,110
--------------
357,515,711
--------------
</TABLE>

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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
CHILE 1.0%
Antofagasta Holdings Plc. ....................... Metals & Mining 811,668 $ 3,419,531
Compania De Telecomunicaciones De Chile SA,
Sponsored ADR.................................. Telecommunications 748,109 15,195,964
Empresa Nacional de Electricidad SA, ADR......... Electrical & Electronics 489,900 6,981,075
Enersis SA, ADR.................................. Utilities Electrical & Gas 187,000 4,569,813
Quinenco SA, ADR................................. Multi-Industry 208,900 1,880,100
--------------
32,046,483
--------------
CHINA 1.2%
China First Pencil (Group) Co. Ltd. ............. Recreation & Other Consumer Goods 512,107 82,961
China Southern Glass Co. Ltd., B................. Building Materials & Components 8,770,913 1,697,903
*China Vanke Co. Ltd., B......................... Real Estate 9,918,642 5,696,249
Chiwan Wharf Holdings Ltd., B.................... Transportation 11,593,800 2,618,428
Guangshen Railway Co. Ltd., ADR.................. Transportation 457,300 3,115,356
Guangshen Railway Co. Ltd., H.................... Transportation 11,960,000 1,589,810
*Luoyang Glass Co. Ltd., H....................... Misc Materials & Commodities 8,077,000 375,257
Shandong Huaneng Power Development Co. Ltd.,
ADR............................................ Utilities Electrical & Gas 618,600 3,324,975
Shanghai Chlor-Alkali Chemical Co. Ltd., B....... Chemicals 11,145,530 1,426,628
*Shanghai Dazhong Taxi Shareholding Co. Ltd.,
B.............................................. Transportation 1,286,500 702,429
*Shanghai Erfangji Textile Machinery Co. Ltd.,
B.............................................. Machinery & Engineering 7,480,887 673,280
*Shanghai Jin Jiang Tower Co. Ltd., B............ Leisure & Tourism 7,749,954 1,092,744
*Shanghai Jinqiao Export Processing Zone
Development, B................................. Real Estate 2,967,273 830,836
*Shanghai Lujiaxui Finance & Trade Zone
Development Stock Co Ltd, B.................... Real Estate 11,888,189 5,349,685
Shanghai New Asia Group Co. Ltd., B.............. Food & Household Products 4,868,580 1,032,139
Shanghai Petrochemical Co. Ltd., H............... Chemicals 26,416,000 2,965,945
*Shanghai Refrigerator Compressor Co. Ltd., B.... Industrial Components 1,380,913 218,184
*Shanghai Rubber Belt Co. Ltd., B................ Industrial Components 504,352 67,583
*Shanghai Steel Tube Co. Ltd., B................. Machinery & Engineering 1,071,900 83,608
*Shanghai Tyre & Rubber Co. Ltd., B.............. Industrial Components 5,035,500 815,751
*Shanghai Vacuum Electron Devices Co. Ltd., B.... Appliances & Household Durables 1,839,500 334,789
*Shanghai Wingsung Co. Ltd., B................... Recreation & Other Consumer Goods 451,442 70,425
Shanghai Yaohua Pilkington Glass, B.............. Building Materials & Components 7,503,450 975,449
Shenzhen Konka Electronic Group Co. Ltd., B...... Appliances & Household Durables 903,327 811,393
*Shenzhen Properties & Resources Development
Ltd., B........................................ Real Estate 788,056 97,635
*Zhuhai Sez Lizhu Pharmaceutical Group Inc., B... Health & Personal Care 168,386 34,987
--------------
36,084,429
--------------
COLOMBIA 1.8%
Banco Ganadero SA, C, pfd., ADR.................. Banking 172,400 3,038,550
Bancolombia SA................................... Banking 1,482,000 3,187,399
Bavaria SA....................................... Beverages & Tobacco 217,062 1,266,018
Cementos Argos SA................................ Building Materials & Components 3,615,735 12,131,357
Cia Colombiana de Tabacos SA..................... Beverages & Tobacco 2,600,150 3,886,140
Compania Nacional de Chocolates SA............... Food & Household Products 2,263,520 10,149,056
Compania Suramericana de Inversiones SA.......... Insurance 6,453,272 20,230,873
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
HONG KONG (CONT.)
Hong Kong & Shanghai Hotels Ltd. ................ Leisure & Tourism 147,000 $ 73,513
Hong Kong Electric Holdings Ltd. ................ Utilities Electrical & Gas 120,400 372,919
HSBC Holdings Plc. .............................. Banking 2,618,871 64,047,190
IMC Holdings Ltd. ............................... Transportation 98,000 11,130
Jardine International Motor Holdings Ltd. ....... Automobiles 2,335,000 858,833
Jardine Matheson Holdings Ltd. .................. Multi-Industry 1,482,996 4,004,089
Jardine Strategic Holdings Ltd. ................. Multi-Industry 3,399,062 6,458,218
Joyce Boutique Holdings Ltd. .................... Merchandising 1,666,000 26,876
K Wah International Holdings Ltd. ............... Building Materials & Components 17,487,811 1,218,726
Lai Sun Development Co. Ltd. .................... Real Estate 689,800 86,352
Lai Sun Garment International Ltd. .............. Multi-Industry 1,466,000 315,956
New World Development Co. Ltd. .................. Real Estate 6,471,807 12,528,341
Semi-Tech Co. Ltd. .............................. Appliances & Household Durables 14,226,391 706,858
Sun Hung Kai & Co. Ltd. ......................... Financial Services 31,400 1,945
*Sun Hung Kai & Co. Ltd, wts. ................... Financial Services 1,753,360 20,139
Sun Hung Kai Properties Ltd. .................... Real Estate 1,505,948 6,394,147
Tungtex (Holdings) Co. Ltd. ..................... Textiles & Apparel 1,000 102
Wheelock and Company Ltd. ....................... Multi-Industry 9,126,000 5,388,257
*Wo Kee Hong Holdings Ltd. ...................... Merchandising 4,332,200 56,469
Yue Yuen Industrial (Holdings) Ltd. ............. Recreation & Other Consumer Goods 1,762,800 3,150,863
--------------
167,874,797
--------------
HUNGARY .8%
Borsodchem RT.................................... Chemicals 600 17,538
Borsodchem RT, GDR............................... Chemicals 35,300 1,015,757
Egis RT.......................................... Multi-Industry 32,952 1,159,751
Fotex First Hungarian American Photo Service
Co. ........................................... Multi-Industry 2,872,089 2,310,484
**Fotex First Hungarian American Photo Service
Co., conv., 5/11/00, 12.00%.................... Multi-Industry 32,000HUF 32,000
*Ibusz RT........................................ Leisure & Tourism 115,646 391,160
Inter-Europa Bank RT............................. Banking 8,816 539,969
*Inter-Europa Bank RT, new....................... Banking 2,204 122,400
Pick Szeged RT................................... Food & Household Products 9,076 530,588
Pick Szeged RT, GDR.............................. Food & Household Products 152,150 1,778,955
Tiszai Vegyi Kombinat RT......................... Chemicals 149,558 2,908,718
Tiszai Vegyi Kombinat RT, GDR, 144A.............. Chemicals 571,000 11,248,700
Tiszai Vegyi Kombinat RT, GDR, Reg S............. Chemicals 152,000 2,994,400
--------------
25,050,420
--------------
INDIA 4.0%
Aban Loyd Chiles Offshore Ltd. .................. Energy Sources 222,300 199,349
*Andhra Valley Power Supply Co. Ltd. ............ Utilities Electrical & Gas 59,100 114,016
*Arvind Mills Ltd. .............................. Textiles & Apparel 1,772,300 1,773,346
*ATV Projects India Ltd. ........................ Machinery & Engineering 1,615,000 76,224
Bajaj Auto Ltd. ................................. Automobiles 251,650 3,396,904
Bank of Baroda................................... Banking 428,700 838,178
*Bharat Petroleum Corporation, Ltd. ............. Energy Sources 1,202,400 9,952,609
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
INDIA (CONT.)
Bombay Dyeing & Manufacturing Co. Ltd. .......... Chemicals 309,350 $ 511,021
BSES Ltd. ....................................... Utilities Electrical & Gas 46,300 170,450
*Cochin Refineries Ltd. ......................... Energy Sources 200 1,038
Essar Shipping Ltd. ............................. Transportation 540,250 107,731
Ganesh Benzoplast Ltd. .......................... Chemicals 52,400 16,199
Garden Silk Mills Ltd. .......................... Textiles & Apparel 209,000 62,885
Grasim Industries Ltd. .......................... Multi-Industry 1,078,550 9,105,635
Great Eastern Shipping Co. Ltd. ................. Transportation 7,166,700 5,225,983
Gujarat Ambuja Cements Ltd. ..................... Building Materials & Components 868,700 5,354,677
Gujarat Industries Power Ltd. ................... Energy Equipment & Services 424,400 244,875
Gujarat Narmada Valley Fertilizers Co. Ltd. ..... Chemicals 1,724,600 899,437
Gujarat Narmada Valley Fertilizers Co. Ltd.,
ADR............................................ Chemicals 341,000 818,400
Hindalco Industries Inc. ........................ Metals & Mining 145,725 2,295,491
Hindustan Organic Chemicals Ltd. ................ Chemicals 838,600 197,900
*Hindustan Petroleum Corporation Ltd. ........... Energy Sources 757,900 6,984,306
India Cements Ltd. .............................. Building Materials & Components 451,800 533,097
India Cements Ltd., GDR.......................... Building Materials & Components 552,910 729,841
Indian Aluminium Co. Ltd. ....................... Metals & Mining 246,300 436,510
*Indian Petrochemicals Corp. Ltd. ............... Chemicals 4,784,900 5,815,277
Indian Rayon & Industries Ltd. .................. Multi-Industry 551,700 2,668,991
Indian Rayon & Industries Ltd., GDR.............. Multi-Industry 183,309 586,589
Indo Gulf Fertilisers & Chemicals Corp. Ltd. .... Chemicals 3,926,100 3,279,857
Indo Gulf Fertilisers & Chemicals Corp. Ltd.,
GDR............................................ Chemicals 64,150 46,509
Industrial Credit & Inv. Corp. of India
(ICICI)........................................ Financial Services 6,643,800 12,135,224
Industrial Development Bank of India............. Banking 2,255,500 3,443,796
Larsen & Toubro Ltd. ............................ Multi-Industry 2,271,500 12,291,562
Madras Cements Ltd. ............................. Building Materials & Components 7,255 612,074
Mahanagar Telephone Nigam Ltd. .................. Telecommunications 526,000 2,214,476
National Aluminium Co. Ltd. ..................... Metals & Mining 3,169,600 1,570,775
Oriental Bank of Commerce........................ Banking 3,860,200 4,290,629
Reliance Industries Ltd. ........................ Chemicals 2,267,200 7,667,015
Shipping Corporation of India Ltd. .............. Transportation 1,896,200 1,738,463
State Bank of India.............................. Banking 76,000 378,969
Steel Authority of India Ltd. ................... Metals & Mining 1,087,000 230,867
Steel Authority of India Ltd., GDR, Reg S........ Metals & Mining 349,000 867,265
Steel Authority of India Ltd., GDR, 144A......... Metals & Mining 62,000 154,070
Sterlite Industries Ltd. ........................ Metals & Mining 210 871
Tamil Nadu Newsprint & Papers Ltd. .............. Forest Products & Paper 17,900 7,350
Tata Chemicals Ltd. ............................. Chemicals 1,030,000 3,048,071
Tata Engineering & Locomotive Co. Telco.......... Machinery & Engineering 2,465,900 9,689,023
Tata Hydro-Electric Power Co. ................... Utilities Electrical & Gas 210,900 429,265
Tata Iron & Steel Co., Ltd. ..................... Metals & Mining 1,062,750 3,157,527
Thermax Ltd. .................................... Energy Equipment & Services 75,600 234,962
Wockhardt........................................ Health & Personal Care 162,200 778,177
--------------
127,383,756
--------------
</TABLE>

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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
INDONESIA 1.3%
Asia Pulp & Paper Co. Ltd., ADR.................. Forest Products & Paper 740,100 $ 8,326,125
*PT Bank International Indonesia, fgn. .......... Banking 21,096,500 427,632
PT Barito Pacific Timber TBK..................... Forest Products & Paper 47,707,500 805,870
*PT BBL Dharmala Finance, fgn. .................. Financial Services 3,295,000 289,426
PT BDNI Capital Corporation, fgn. ............... Financial Services 2,372,400 32,059
+PT Charoen Pokphand Indonesia................... Food & Household Products 21,812,250 386,873
PT Ciputra Dev. ................................. Real Estate 11,535,500 116,914
PT Dharmala Intiland TBK......................... Real Estate 11,065,600 93,459
PT Gadjah Tunggal................................ Automobiles 57,279,000 387,020
PT Gudang Garam.................................. Beverages & Tobacco 500,000 293,919
PT Hanjaya Mandala Sampoerna..................... Beverages & Tobacco 2,322,500 317,774
PT Indah Kiat Pulp & Paper Corp. ................ Forest Products & Paper 29,936,050 5,714,145
*PT Indah Kiat Pulp & Paper Corp. TBK, wts. ..... Forest Products & Paper 1,175,920 137,456
PT Indocement Tunggal Prakarsa................... Building Materials & Components 19,108,000 5,164,324
PT Indofoods Sukses Makmur....................... Food & Household Products 8,789,480 861,131
PT Indosat....................................... Telecommunications 2,043,000 2,374,297
PT Inter-Pacific Bank, fgn. ..................... Banking 738,000 62,331
PT Jakarta International Hotel & Development..... Real Estate 6,280,750 180,359
PT Kalbe Farma................................... Health & Personal Care 2,846,500 76,932
*PT Lippo Life Insurance TBK..................... Insurance 10,389,000 193,039
*PT Metrodata Electronic......................... Electrical & Electronics 368,533 50,424
*PT Modern Photo Film Co. ....................... Multi-Industry 319,500 17,810
PT Pakuwon Jati.................................. Real Estate 11,993,500 40,519
*PT Semen Cibinong, loc. ........................ Building Materials & Components 20,630,500 557,581
PT Semen Gresik.................................. Building Materials & Components 6,952,500 3,946,014
*PT Sinar Mas Agro Resources & Technology
Corp. ......................................... Food & Household Products 7,221,400 683,105
PT Sinar Mas Multi Artha, fgn. .................. Financial Services 6,602,700 1,695,288
PT Sumalindo Lestari Jaya TBK.................... Forest Products & Paper 4,059,500 89,144
PT Summarecon Agung.............................. Real Estate 858,031 11,595
PT Tambang Timah (Persero)....................... Metals & Mining 9,263,000 4,146,444
PT Telekomunikasi Indonesia (Persero), B......... Telecommunications 494,000 139,355
PT Tempo Scan Pacific............................ Health & Personal Care 11,904,000 180,973
PT Tjiwi Kimia TBK............................... Forest Products & Paper 23,904,330 2,988,041
*PT Tjiwi Kimia TBK, wts. ....................... Forest Products & Paper 1,553,725 85,035
PT Ultra Jaya Milk............................... Food & Household Products 4,655,000 345,980
PT Unggul Indah Corp. ........................... Chemicals 2,820,400 276,323
*PT United Tractors.............................. Machinery & Engineering 5,587,000 169,875
--------------
41,664,591
--------------
ISRAEL .7%
Clal Industries Ltd. ............................ Multi-Industry 1,253,468 6,767,843
First International Bank of Israel............... Banking 40 313
Koor Industries Ltd. ............................ Multi-Industry 126,541 14,616,065
--------------
21,384,221
--------------
JORDAN
Jordan Cement Factories Ltd. .................... Building Materials & Components 222,750 648,513
--------------
</TABLE>

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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
KAZAKHSTAN .1%
*Kazkommertsbank, ADR, 144A...................... Banking 117,660 $ 2,529,690
--------------
MALAYSIA 2.3%
AMMB Holdings Bhd. .............................. Financial Services 3,689,400 1,939,214
Berjaya Singer Bhd. ............................. Appliances & Household Durables 4,150,000 1,030,621
Boustead Holdings Bhd. .......................... Food & Household Products 4,683,000 2,867,949
Cement Industries of Malaysia Bhd. .............. Building Materials & Components 275,000 141,893
Federal Flour Mills Bhd. ........................ Food & Household Products 2,506,250 1,867,224
Genting Bhd...................................... Leisure & Tourism 3,576,600 6,467,631
Golden Hope Plantations Bhd. .................... Misc Materials & Commodities 398,000 364,653
Hong Leong Industries Bhd. ...................... Multi-Industry 5,454,800 4,050,822
*Hong Leong Industries Bhd., wts. ............... Multi-Industry 332,000 27,216
Hong Leong Properties Bhd. ...................... Real Estate 7,674,000 1,091,660
Island & Peninsula Bhd. ......................... Real Estate 3,997,000 1,667,224
Kian Joo Can Factory Bhd. ....................... Industrial Components 1,803,000 1,651,935
Leader Universal Holdings Bhd. .................. Industrial Components 18,134,000 2,710,809
Malayawata Steel Bhd. ........................... Metals & Mining 4,539,000 1,116,282
Malaysian Airlines System Bhd. .................. Transportation 6,783,000 2,240,557
Malaysian International Shipping Corp., fgn. .... Transportation 2,398,000 3,497,987
MBF Capital Bhd. ................................ Financial Services 18,938,000 3,173,456
Oriental Holdings Bhd. .......................... Automobiles 3,241,598 5,392,894
Perlis Plantations Bhd. ......................... Multi-Industry 6,283,250 5,453,816
Perusahaan Otomobil Nasional Bhd. ............... Automobiles 1,335,000 852,984
Public Bank Bhd. ................................ Banking 3,037,000 900,665
Public Bank Bhd., fgn. .......................... Banking 4,080,600 1,229,837
Public Finance Bhd., fgn. ....................... Financial Services 3,211,000 778,072
*Renong Bhd. .................................... Multi-Industry 27,744,000 4,615,638
**Renong, 4.00%, cvt., 5/22/01................... Multi-Industry 128,600MYR 5,891
Resorts World Bhd. .............................. Leisure & Tourism 9,781,000 10,753,794
Shangri La Hotels (Malaysia) Bhd. ............... Leisure & Tourism 4,835,202 1,154,153
Tanjong Plc. .................................... Recreation & Other Consumer Goods 1,475,000 2,044,907
Technology Resources Industries Bhd. ............ Multi-Industry 1,811,000 1,244,448
YTL Corp. Bhd.................................... Construction & Housing 751,000 564,948
--------------
70,899,180
--------------
MEXICO 9.5%
Alfa SA de CV, A................................. Multi-Industry 300,768 1,248,458
*Altos Hornos de Mexico SA....................... Metals & Mining 8,109,700 8,573,575
Cemex SA, B...................................... Building Materials & Components 22,576,750 99,241,222
*Cifra SA, C..................................... Merchandising 10,489,824 14,568,552
Coca Cola Femsa SA de CV, ADR.................... Beverages & Tobacco 266,500 4,630,437
Cydea SA de CV................................... Multi-Industry 548,463 903,322
DESC SA de CV DESC, A............................ Multi-Industry 394,000 1,929,223
DESC SA de CV DESC, B............................ Multi-Industry 858,174 4,373,956
DESC SA de CV DESC, C............................ Multi-Industry 200,135 979,962
*Grupo Financiero Banamex Accival SA, B.......... Banking 3,937,000 7,667,205
*Grupo Financiero Banamex Accival SA, L.......... Banking 14,949,422 24,621,795
Grupo Financiero Bancomer SA de CV, B............ Banking 24,316,000 9,065,057
</TABLE>

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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
MEXICO (CONT.)
Grupo Financiero Bancomer SA de CV, L............ Banking 44,462,593 $ 10,860,827
*Grupo Financiero Serfin SA de CV, B............. Banking 30,548,187 3,467,522
Panamerican Beverages Inc., A.................... Food & Household Products 148,400 4,665,325
Telefonos de Mexico SA (Telmex), ADR, L.......... Telecommunications 1,950,200 93,731,488
Vitro SA De CV................................... Food & Household Products 3,710,388 7,845,245
--------------
298,373,171
--------------
NEW ZEALAND .1%
Brierley Investments Ltd. ....................... Wholesale & International Trade 9,167,000 4,568,249
--------------
PAKISTAN .5%
*Bank of Punjab.................................. Banking 2,466,615 369,150
*DG Khan Cement Co. ............................. Building Materials & Components 2,485,950 248,029
Engro Chemical Pakistan Ltd. .................... Chemicals 2,130,795 2,287,699
Fauji Fertilizer Co. Ltd. ....................... Chemicals 1,897,500 2,057,803
*Khadim Ali Sham Bukhari & Co. Ltd. ............. Financial Services 218,309 99,436
National Development Leasing Corp. .............. Financial Services 839,121 72,801
*Pakistan Electron Ltd. ......................... Appliances & Household Durables 370,146 32,113
*Pakistan International Airlines Corp. .......... Transportation 16,500 1,253
Pakistan Telecom Corp. PTC....................... Telecommunications 21,000 724,500
Pakistan Telecommunications Corp., PTC, A........ Telecommunications 30,765,300 10,810,061
*Trust Modaraba.................................. Financial Services 972,080 115,962
*Union Bank Ltd. ................................ Banking 1,049,978 159,415
--------------
16,978,222
--------------
PERU 1.1%
Telefonica Del Peru SA, ADR B.................... Telecommunications 1,755,600 35,880,075
--------------
PHILIPPINES 1.1%
*A Soriano Corp.................................. Multi-Industry 121,821,903 3,271,955
Ayala Corp., B................................... Multi-Industry 3,654,320 942,061
*Belle Corp. .................................... Real Estate 65,368,000 1,661,633
*Digital Telecommunications Philippines Inc. .... Telecommunications 2,560,000 79,808
Filinvest Development Corp. ..................... Real Estate 15,775,000 794,424
*Keppel Philippine Holdings Inc., B.............. Machinery & Engineering 863,552 20,709
*Metro Pacific Corp. MDI......................... Multi-Industry 30,617,500 697,521
*Petron Corporation.............................. Energy Sources 6,291,000 663,799
*Philex Mining Corp., B.......................... Metals & Mining 43,260,142 778,060
Philippine Commercial International Bank Inc. ... Banking 1,478,150 5,387,981
Philippine Long Distance Telephone Co., ADR...... Telecommunications 564,150 12,763,894
*Philippine National Bank........................ Banking 1,768,328 2,099,094
RFM Corp. ....................................... Food & Household Products 27,782,750 3,997,518
RFM Corporation, 10.00%, cvt., pfd. ............. Food & Household Products 5,112,318 735,585
Sime Darby Pilipinas Inc. ....................... Industrial Components 646,658 457,468
*Southeast Asia Cement Holdings Inc. ............ Building Materials & Components 64,711,000 543,138
--------------
34,894,648
--------------
</TABLE>

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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
POLAND 1.8%
Bank Handlowy W Warszawie SA..................... Banking 38,200 $ 728,506
Bank Handlowy W Warszawie SA, 144A............... Banking 170,000 3,242,042
Bank Przemyslowo-Handlowy SA..................... Banking 108,970 7,812,590
Bank Rozwoju Eksportu SA......................... Banking 39,033 1,057,820
*Bank Rozwoju Eksportu SA (BRE), rts. ........... Banking 7,806 2,239
Big Bank Gdanski SA, G........................... Banking 11,530,367 15,376,027
Big Bank Gdanski SA, GDR......................... Banking 216,867 4,207,213
*Elektrim SA..................................... Multi-Industry 165,250 2,014,088
Farm Food SA..................................... Food & Household Products 74,761 546,718
*Gorazdze SA..................................... Building Materials & Components 97,889 1,782,607
*Huta Olawa SA................................... Metals & Mining 45,442 115,983
*Impexmetal SA, A................................ Metals & Mining 290,016 2,170,754
Mostostal Export SA.............................. Construction & Housing 1,216,947 1,884,575
*Orbis SA........................................ Leisure & Tourism 40,646 361,350
Polifarb Cieszyn Wroclaw SA...................... Chemicals 936,296 2,416,594
*Raciborska Fabryka Kotlow SA.................... Energy Equipment & Services 98,536 272,691
*Rolimpex SA..................................... Wholesale & International Trade 397,803 684,490
Warta SA......................................... Insurance 217,814 3,872,804
Wielkopolski Bank Kredytowy SA................... Banking 1,000,944 7,750,355
Zaklady Piwowarskie W Zywcu SA................... Beverages & Tobacco 2,720 327,617
*Zaklady Plyt Wiorowych Grajewo AS............... Forest Products & Paper 12,493 313,489
--------------
56,940,552
--------------
PORTUGAL 2.3%
Banco Comercial Portugues SA..................... Banking 1,292,355 36,695,550
*Banco Comercial Portugues SA, new............... Banking 469,051 13,077,158
*Banco Espirito Santo E Comercial De Lisboa...... Banking 283,187 8,273,929
BPI Socieda de Gestora de Participacoes Socias
SA............................................. Banking 491,143 15,849,412
--------------
73,896,049
--------------
RUSSIA 1.1%
Aeroflot......................................... Transportation 25,900 1,774,150
*Chelyabenergo................................... Telecommunications 2,020,000 182,810
GUM Trade House.................................. Merchandising 500,000 712,500
Irkutskenergo.................................... Utilities Electrical & Gas 6,179,100 605,552
*JSC Chernogorneft............................... Energy Sources 17,000 55,250
*Kamaz........................................... Automobiles 879,392 479,269
*Krasnoyarsk Aluminum Plant...................... Metals & Mining 63,192 758,304
Lukoil-Holdings.................................. Energy Sources 141,000 1,184,400
Mosenergo........................................ Utilities Electrical & Gas 45,621,000 2,281,050
Norilsk Nickel................................... Metals & Mining 332,000 688,900
Norilsk Nickel, pfd. ............................ Metals & Mining 20,000 32,700
*Novorosissk Sea Shipping........................ Transportation 1,528,000 320,880
*Noyabrskneftegaz................................ Energy Sources 122,930 162,882
*Primorsk Sea Shipping........................... Transportation 150,850 256,445
*Purneftegaz..................................... Energy Sources 152,000 372,400
+*Red October.................................... Food & Household Products 195,000 1,067,625
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
RUSSIA (CONT.)
*Rostelekom...................................... Telecommunications 4,236,000 $ 9,594,540
Rostelekom, pfd. ................................ Telecommunications 3,459,900 3,840,489
*Saint Petersburg City Telephone Network, pfd.,
A.............................................. Telecommunications 1,063,000 260,435
*St. Petersburg International Telephone.......... Telecommunications 184,940 125,759
*St. Petersburg MMT, pfd. ....................... Telecommunications 229,800 143,625
*Tyumen Aviatrans................................ Telecommunications 3,330,000 116,550
Unified Energy System............................ Utilities Electrical & Gas 69,337,400 8,944,525
Unified Energy System, pfd. ..................... Utilities Electrical & Gas 13,160,000 815,920
*Uralmash Zavody................................. Machinery & Engineering 70,418 457,717
--------------
35,234,677
--------------
SINGAPORE 3.3%
Acer Computer International Ltd. ................ Electrical & Electronics 1,791,000 626,850
*Acer Computer International Ltd., wts. ......... Electrical & Electronics 144,400 8,664
Acma Ltd. ....................................... Electrical & Electronics 3,835,400 2,315,542
*Acma Ltd., wts. ................................ Electrical & Electronics 173,600 11,303
Asia Pacific Breweries Ltd. ..................... Beverages & Tobacco 149,000 334,247
British American Tobacco Co. (Singapore) Ltd. ... Beverages & Tobacco 119,000 274,697
*Chemical Industries (Far East) Ltd. ............ Chemicals 454,100 564,433
*Chemical Industries (Far East) Ltd., wts. ...... Chemicals 137,850 18,562
City Developments Ltd. .......................... Construction & Housing 1,366,000 3,816,230
Cycle & Carriage Ltd. ........................... Automobiles 2,331,000 5,684,356
Delgro Corp. .................................... Transportation 1,160,900 831,423
First Capital Corp. Ltd. ........................ Real Estate 6,311,000 2,147,869
Fraser and Neave Ltd. ........................... Beverages & Tobacco 2,817,000 7,569,802
GP Batteries International Ltd. ................. Electrical & Electronics 67,000 122,143
*GP Batteries International Ltd., wts. .......... Electrical & Electronics 8,250 4,297
Hai Sun Hup Group Ltd. .......................... Transportation 14,016,000 3,276,898
*Hai Sun Hup Group Ltd., wts. ................... Transportation 2,434,300 100,859
Hinds Hotels International Ltd. ................. Leisure & Tourism 712,000 442,498
Hong Leong Finance Ltd., fgn. ................... Financial Services 2,117,000 1,729,186
Hour Glass Ltd. ................................. Merchandising 1,436,000 254,987
*Inchcape Marketing Services Ltd. ............... Broadcasting & Publishing 3,418,000 819,349
Inchcape Motores Ltd. ........................... Wholesale & International Trade 3,363,000 2,309,015
Isetan (Singapore) Ltd. ......................... Merchandising 218,500 206,278
Jaya Holdings Ltd. .............................. Transportation 2,272,400 538,005
**Jaya Holdings Ltd., cvt., 3.00%, 8/31/98....... Transportation 327,100 189,735
*Jaya Holdings Ltd., wts., expire 8/31/98........ Transportation 89,071 923
*Jaya Holdings Ltd., wts., expire 10/09/99....... Transportation 164,760 3,169
Jurong Shipyard Ltd. ............................ Machinery & Engineering 2,874,000 13,863,924
Keppel Corp., Ltd. .............................. Transportation 5,442,000 8,181,521
Lim Kah Ngam Ltd. ............................... Real Estate 949,000 249,959
MCL Land Ltd. ................................... Real Estate 8,677,000 3,107,183
Metro Holdings Ltd. ............................. Wholesale & International Trade 2,012,000 1,214,703
Natsteel Ltd. ................................... Metals & Mining 5,324,000 5,168,014
*Neptune Orient Lines Ltd. ...................... Transportation 7,992,000 2,767,280
*Osprey Maritime Ltd. ........................... Transportation 3,244,000 1,497,674
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SINGAPORE (CONT.)
Osprey Maritime Ltd., cvt., pfd. ................ Transportation 459,810 $ 163,294
*Overseas Union Enterprise Ltd. ................. Leisure & Tourism 3,199,350 4,715,230
Prima Ltd. ...................................... Food & Household Products 945,000 1,490,633
Republic Hotels & Resorts Ltd. .................. Leisure & Tourism 2,077,000 860,550
Robinson & Co., Ltd. ............................ Merchandising 243,000 618,467
SBS Bus Service Ltd., fgn. ...................... Transportation 513,200 211,112
Sembawang Corp. Ltd. ............................ Multi-Industry 6,581,600 7,752,225
Sembawang Resources Ltd. ........................ Building Materials & Components 534,750 314,931
Singapore Petroleum Company, fgn................. Chemicals 928,900 332,634
Tibs Holdings Ltd. .............................. Transportation 1,218,100 475,848
Times Publishing Ltd. ........................... Broadcasting & Publishing 755,600 1,252,252
United Industrial Corporation Ltd. .............. Real Estate 36,797,000 10,563,211
United Overseas Land Ltd. ....................... Real Estate 6,002,000 3,232,803
*Van Der Horst Ltd. ............................. Machinery & Engineering 3,880,000 688,961
WBL Corp. Ltd. .................................. Multi-Industry 466,000 303,403
--------------
103,227,132
--------------
SLOVAK REPUBLIC .3%
Nafta Gbely AS................................... Utilities Electrical & Gas 152,454 2,169,608
Slovakofarma AS.................................. Health & Personal Care 719 69,538
Slovnaft AS...................................... Chemicals 247,604 4,862,719
Vychodoslovenske Zeleziarne AS................... Metals & Mining 134,435 1,109,642
--------------
8,211,507
--------------
SOUTH AFRICA 2.7%
Aeci Ltd. ....................................... Chemicals 256,000 1,018,012
Alpha Ltd. ...................................... Building Materials & Components 183,600 1,349,774
Anglo American Industrial Corp. Ltd. ............ Multi-Industry 567,284 9,383,645
Anglo-American Corp of South Africa Ltd. ........ Metals & Mining 14,000 467,836
Anglovaal Industried Ltd. ....................... Multi-Industry 2,600,766 2,824,558
Bonnita Holdings Ltd. ........................... Food & Household Products 1,379,200 587,629
BTR Dunlop Ltd. ................................. Industrial Components 2,122,100 751,688
CG Smith Ltd. ................................... Multi-Industry 1,865,000 5,079,281
De Beers/Centenary Linked Units, Reg. ........... Misc Materials & Commodities 40,700 708,595
*Del Monte Royal Foods Ltd. ..................... Food & Household Products 8,489,050 3,829,647
Edgars Stores Ltd. .............................. Textiles & Apparel 628,762 5,515,456
Engen Ltd. ...................................... Energy Sources 4,452,952 12,201,907
Kersaf Investments Ltd. ......................... Leisure & Tourism 574,800 2,593,083
Malbak Ltd. ..................................... Multi-Industry 3,806,825 2,544,244
McCarthy Retail Ltd. ............................ Multi-Industry 1,571,010 1,443,702
**McCarthy Retail Ltd., cvt., zero coupon,
9/30/03........................................ Multi-Industry 146,833ZAR 165,601
Palabora Mining Co. Ltd. ........................ Metals & Mining 483,800 2,546,316
Plate Glass & Shatterprufe Industries Ltd. ...... Building Materials & Components 20 190
Polifin Ltd. .................................... Chemicals 397,610 352,102
*Rainbow Chicken Ltd. ........................... Food & Household Products 600,769 40,152
Rembrandt Group Ltd. ............................ Multi-Industry 66,270 409,689
Reunert Ltd. .................................... Electrical & Electronics 5,074,900 5,681,175
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH AFRICA (CONT.)
*Sappi Ltd. ..................................... Forest Products & Paper 2,492,279 $ 9,265,365
Sasol Ltd. ...................................... Energy Sources 21,823 125,250
South African Breweries Ltd. .................... Beverages & Tobacco 228,888 4,665,720
South African Iron & Steel Industrial Corp.
Ltd. .......................................... Metals & Mining 42,609,987 7,973,799
Sun International (South Africa) Ltd. ........... Leisure & Tourism 8,382,942 2,787,311
Tongaat-Hulett Group Ltd. ....................... Multi-Industry 39,900 295,000
Toyota South Africa Limited...................... Automobiles 129,300 464,486
Voltex Holdings Ltd. ............................ Electrical & Electronics 487,030 179,025
--------------
85,250,238
--------------
SOUTH KOREA 1.9%
Asia Cement Manufacturing Company Ltd. .......... Building Materials & Components 147,390 697,768
*Boram Bank Co. Ltd. ............................ Banking 1,204,657 2,123,285
BYC Co. Ltd. .................................... Textiles & Apparel 12,070 329,661
*Cho Hung Bank Co. Ltd. ......................... Banking 1,204,000 732,221
*Cho Hung Bank Co. Ltd., GDR, Reg S.............. Banking 1,500,000 937,500
*Cho Hung Bank Co. Ltd., GDR, 144A............... Banking 1,300,000 812,500
+*Choil Aluminium Mfg. Co. Ltd. ................. Metals & Mining 237,556 519,059
*Daegu Bank Co. Ltd. ............................ Banking 1,211,815 1,279,775
Daewoo Electric Components Co. Ltd. ............. Electronic Components & Instruments 189,000 316,606
*Daewoo Electronics Co. ......................... Electrical & Electronics 2,213,300 5,803,263
Dongbu Steel Co. Ltd. ........................... Metals & Mining 286,000 572,833
Dongkuk Steel Mill Co. Ltd. ..................... Metals & Mining 313,700 1,096,693
Hae In Corp. Ltd. ............................... Merchandising 255,480 1,025,269
Hana Bank........................................ Banking 343,034 1,236,721
Hana Bank, GDR................................... Banking 2,048,455 7,272,015
Hankook Cosmetics Co. Ltd. ...................... Health & Personal Care 52,400 286,235
*Hotel Shilla Co. ............................... Leisure & Tourism 428,750 1,408,349
Korea Electric Power Corp. ...................... Utilities Electrical & Gas 610,670 6,515,889
*Kyong Nam Bank.................................. Banking 798,170 685,973
Kyung Dong Boiler Co. Ltd. ...................... Energy Equipment & Services 36,029 186,312
LG Electronics Inc............................... Electrical & Electronics 427,000 3,498,725
LG Industrial Systems Ltd. ...................... Electrical & Electronics 474,000 1,156,519
Moon Bae Steel Co. Ltd. ......................... Metals & Mining 15,480 64,378
Saehan Precision Co. Ltd. ....................... Electrical & Electronics 57,011 610,382
Samsung Display Devices Ltd. .................... Electrical & Electronics 106,964 2,921,449
Samsung Electronics Co. Ltd. .................... Multi-Industry 92,320 2,857,684
*Samsung Heavy Industries Co. Ltd. .............. Machinery & Engineering 1,362,980 6,800,009
Seah Steel Corp. ................................ Metals & Mining 44,880 183,050
Shin Poong Paper Manufacturing Co. Ltd. ......... Forest Products & Paper 118,055 782,445
Shin Young Wocoal Inc............................ Textiles & Apparel 8,580 296,207
Ssangyong Oil Refining Co. Ltd. ................. Energy Equipment & Services 639,110 4,329,004
+*Tong Yang Merchant Bank........................ Financial Services 751,674 1,844,968
--------------
59,182,747
--------------
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SRI LANKA .1%
Aitken Spence & Co. Ltd. ........................ Multi-Industry 151,733 $ 220,408
Associated Motorways Ltd. ....................... Automobiles 91,678 53,969
*Ceylon Holiday Resorts Inc...................... Leisure & Tourism 66,600 28,514
Colombo Dock Yard Ltd. .......................... Transportation 30,000 6,766
Lanka Orix Leasing Co. Ltd. ..................... Financial Services 982 953
National Development Bank of Sri Lanka........... Banking 820,000 1,567,278
United Motor Lanka Ltd. ......................... Automobiles 139,808 68,942
--------------
1,946,830
--------------
THAILAND 3.6%
Advanced Info Service Ltd., fgn. ................ Telecommunications 1,212,000 5,157,447
American Standard Sanitaryware Public Co. Ltd.,
fgn. .......................................... Building Materials & Components 361,200 1,443,092
*Asia Fibre Public Co. Ltd., fgn. ............... Textiles & Apparel 607,500 20,106
Ayudhya Insurance Public Co. Ltd., fgn. ......... Insurance 302,600 1,101,664
Bangkok Bank Public Co. Ltd. .................... Banking 17,033,112 17,516,321
Bangkok Bank Public Co. Ltd., fgn. .............. Banking 20,596 25,319
Bangkok Insurance Public Co. Ltd. BKI............ Insurance 195,200 899,858
Bangkok Insurance Public Co. Ltd. BKI, fgn. ..... Insurance 8,000 60,520
Bank of Ayudhya Public Co. Ltd., fgn. ........... Banking 28,191,400 3,665,548
Banpu Public Co. Ltd. ........................... Energy Sources 796,400 771,924
Banpu Public Co. Ltd., fgn. ..................... Energy Sources 121,600 198,355
*Charoen Pokphand Feedmill Public Co. Ltd. ...... Food & Household Products 1,009,500 739,823
*Charoen Pokphand Feedmill Public Co. Ltd.,
fgn. .......................................... Food & Household Products 1,217,300 1,021,611
*Dusit Thani Public Company Ltd., fgn. .......... Leisure & Tourism 296,000 285,504
*Hana Microelectronics Co. Ltd., fgn. ........... Electrical & Electronics 1,524,700 3,892,851
*Hua Thai Manufacturing Public Co. Ltd. ......... Textiles & Apparel 175,000 239,953
Industrial Finance Corp. of Thailand............. Financial Services 2,075,869 412,229
Industrial Finance Corp. of Thailand, fgn. ...... Financial Services 14,528,831 2,988,199
*Italian-Thai Development Public Co. Ltd. ....... Construction & Housing 30,000 15,248
*Italian-Thai Development Public Co. Ltd.,
fgn. .......................................... Construction & Housing 1,339,200 680,681
*Jasmine International Public Co. Ltd., fgn. .... Telecommunications 10,229,000 3,325,030
*Karat Sanitaryware Public Co. Ltd., fgn. ....... Building Materials & Components 466,800 69,523
Kian Gwan (Thailand) Public Co. Ltd., fgn. ...... Real Estate 96,000 112,340
*Land and House Public Co. Ltd. ................. Real Estate 6,274,897 1,112,570
*Land and House Public Co. Ltd., fgn. ........... Real Estate 3,582,028 846,815
*National Petrochemical Public Company Ltd.,
fgn. .......................................... Chemicals 711,400 197,611
*Phatra Thanakit Public Co. Ltd., fgn. .......... Financial Services 11,200,279 1,006,172
Regional Container Lines Public Co. Ltd. ........ Transportation 225,000 175,532
Regional Container Lines Public Co. Ltd.,
fgn. .......................................... Transportation 1,166,600 1,103,168
Saha Pathanapibul Public Co. Ltd., fgn. ......... Food & Household Products 284,500 237,924
Saha Union Public Co. Ltd. ...................... Multi-Industry 8,387,870 4,808,649
Saha Union Public Co. Ltd., fgn. ................ Multi-Industry 2,314,410 1,408,890
*Sanyo Universal Electric Public Co Ltd.,
fgn. .......................................... Appliances & Household Durables 1,449,200 274,080
*Serm Suk Public Co. Ltd. ....................... Food & Household Products 622,900 2,945,154
*Serm Suk Public Co. Ltd., fgn. ................. Food & Household Products 12,000 85,106
*SG Asia Credit Public Co. Ltd. ................. Financial Services 147,400 29,271
*SG Asia Credit Public Co. Ltd., fgn. ........... Financial Services 373,268 130,158
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
THAILAND (CONT.)
*Siam Cement Public Co. Ltd. .................... Building Materials & Components 1,434,750 $ 6,105,318
*Siam Cement Public Co. Ltd., fgn. .............. Building Materials & Components 819,850 3,953,887
Siam Commercial Bank Ltd., fgn. ................. Banking 6,800,358 2,170,327
Siam Commercial Bank Ltd., loc................... Banking 4,263,579 1,310,320
Siam Makro Public Company Ltd., fgn. ............ Merchandising 3,472,200 4,760,936
*Sino-Thai Engineering & Construction Public Co.,
fgn. .......................................... Construction & Housing 1,280,200 142,244
*Textile Prestige Public Co. Ltd., fgn. ......... Textiles & Apparel 99,000 11,819
Thai Airways International Public Co. Ltd.,
fgn. .......................................... Transportation 5,438,900 4,532,417
*Thai Asahi Glass Public Co. Ltd. ............... Building Materials & Components 40,700 3,368
*Thai Asahi Glass Public Co. Ltd., fgn. ......... Building Materials & Components 32,000 2,648
*Thai Engine Manufacturing Public Company
Ltd. .......................................... Machinery & Engineering 1,051,000 366,483
Thai Farmers Bank Public Co. Ltd. ............... Banking 22,701,641 16,368,796
Thai Farmers Bank Public Co. Ltd., fgn. ......... Banking 259 228
*Thai Investments and Securities Ltd. ........... Financial Services 3,044,300 359,846
Thai Military Bank Ltd., fgn. ................... Banking 12,267,500 1,508,061
*Thai Petrochemical Industry Public Co. Ltd.,
fgn. .......................................... Chemicals 16,064,740 1,139,343
Thai Plastic and Chemical Co. Ltd., fgn. ........ Chemicals 2,500 4,639
Thai Rayon Public Co. Ltd. ...................... Textiles & Apparel 108,500 147,488
Thai Rayon Public Co. Ltd., fgn. ................ Textiles & Apparel 11,400 15,496
*Thai Telephone & Telecommunication Public Co.
Ltd. .......................................... Telecommunications 97,900 11,341
*Thai Telephone & Telecommunication Public Co.
Ltd., fgn. .................................... Telecommunications 3,583,500 448,996
Thai Wacoal Public Co. Ltd. ..................... Textiles & Apparel 121,276 295,306
Thai Wacoal Public Co. Ltd., fgn. ............... Textiles & Apparel 168,224 409,623
*Thai Wah Public Co. Ltd., fgn. ................. Multi-Industry 198,900 9,404
*Tipco Asphalt Public Co. Ltd., fgn. ............ Building Materials & Components 3,219,600 3,653,447
*Total Access Communication Public Co. Ltd. ..... Telecommunications 3,570,400 3,820,328
*United Communications Industry Public Co. Ltd.,
fgn. .......................................... Telecommunications 5,524,800 2,612,199
*United Communications Industry Public Co. Ltd.,
loc............................................ Telecommunications 465,200 129,222
United Motor Works (Siam) Public Co. Ltd. ....... Machinery & Engineering 30,400 20,123
*United Standard Terminal Public Co. Ltd.,
fgn. .......................................... Wholesale & International Trade 311,200 169,210
--------------
113,487,109
--------------
TURKEY 5.7%
Akbank........................................... Banking 1,403,418,610 45,305,555
*Akbank, new..................................... Banking 921,730,076 26,295,570
Alarko Sanayii ve Ticaret SA..................... Appliances & Household Durables 8,639,999 543,243
*Anadolu Anonim Turk Sigorta Sirketi, br. ....... Insurance 66,656,000 1,138,456
Arcelik AS....................................... Appliances & Household Durables 320,618,390 15,043,994
Beko Elektronik AS............................... Appliances & Household Durables 97,855,075 2,571,267
Borusan AS....................................... Industrial Components 13,163,000 543,517
*Cimentas Izmir Cimento Fabrikasi Turk AS........ Building Materials & Components 41,113,133 2,314,929
Erciyas Biracilik................................ Food & Household Products 94,319,000 14,339,002
*Eregli Demir ve Celik Fabrikalari AS............ Metals & Mining 93,703,750 14,597,222
Finansbank....................................... Banking 332,910,192 4,748,686
*Finansbank, new................................. Banking 233,205,812 2,713,731
Izocam Ticaret ve Sanayii AS, br. ............... Building Materials & Components 63,972,956 1,008,583
Kartonsan........................................ Forest Products & Paper 52,684,250 4,103,566
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT** VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $729,982,161) 23.2%
U.S. Treasury Bills, 4.935% to 5.130% with
maturities to 12/17/98......................... $742,563,000 $ 730,229,728
--------------
TOTAL INVESTMENTS (COST $4,223,999,132) 97.6%.... 3,071,821,017
OTHER ASSETS, LESS LIABILITIES 2.4%.............. 75,040,639
--------------
TOTAL NET ASSETS 100.0%.......................... $3,146,861,656
==============
</TABLE>

CURRENCY ABBREVIATIONS:

<TABLE>
<S> <C>
HUF -- Hungary Fornit
MYR -- Malaysia Ringget
ZAR -- South Africa C Rand
</TABLE>

*Non-income producing.
**Securities traded in U.S. dollars unless otherwise indicated.
+The Investment Company Act of 1940 defines "affiliated companies" as
investments in portfolio companies in which the Fund owns 5% or more of the
outstanding voting securities. Investments in "affiliated companies" at June 30,
1998 were $25,371,747.

See Notes to Financial Statements.
32

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)

<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$4,223,999,132)........................................... $ 3,071,821,017
Cash....................................................... 3,717,083
Receivables:
Investment securities sold................................ 89,657,829
Fund shares sold.......................................... 8,531,073
Dividends and interest.................................... 17,317,880
---------------
Total assets.......................................... 3,191,044,882
---------------
Liabilities:
Payables:
Investment securities purchased........................... 22,266,919
Fund shares redeemed...................................... 12,834,600
To affiliates............................................. 6,477,689
Accrued liabilities........................................ 2,604,018
---------------
Total liabilities..................................... 44,183,226
---------------
Net assets, at value........................................ $ 3,146,861,656
===============

Net assets consist of:
Undistributed net investment income........................ $ 14,612,822
Net unrealized depreciation................................ (1,152,178,115)
Accumulated net realized gain.............................. 23,249,958
Beneficial shares.......................................... 4,261,176,991
---------------
Net assets, at value........................................ $ 3,146,861,656
===============

CLASS I:
Net asset value per share ($2,677,075,918 / 252,959,911
shares outstanding)...................................... $10.58
---------------
Maximum offering price per share ($10.58 / 94.25%)......... $11.23
===============

CLASS II:
Net asset value per share ($348,059,978 / 33,315,059 shares
outstanding)*............................................ $10.45
---------------
Maximum offering price per share ($10.45 / 99.00%)......... $10.56
===============
- -
ADVISOR CLASS:
Net asset value and maximum offering price per share
($121,725,760 / 11,501,123 shares outstanding)............ $10.58
===============

</TABLE>

*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
33

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)

<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $3,161,675)
Dividends.................................................. $ 56,837,045
Interest................................................... 13,807,913
------------
Total investment income............................... $ 70,644,958
Expenses:
Management fees (Note 3)................................... 23,965,673
Administrative fees (Note 3)............................... 1,723,077
Distribution fees (Note 3)
Class I................................................... 4,359,506
Class II.................................................. 2,048,546
Transfer agent fees (Note 3)............................... 3,342,600
Custodian fees............................................. 3,497,070
Reports to shareholders.................................... 670,000
Registration and filing fees............................... 250,700
Professional fees.......................................... 65,000
Trustees' fees and expenses................................ 89,053
Other...................................................... 37,973
------------
Total expenses........................................ 40,049,198
-------------
Net investment income............................. 30,595,760
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 132,975,978
Foreign currency transactions............................. (3,013,510)
------------
Net realized gain..................................... 129,962,468
Net unrealized depreciation on investments............ (838,276,233)
-------------
Net realized and unrealized loss............................ (708,313,765)
-------------
Net decrease in net assets resulting from operations........ $(677,718,005)
=============
</TABLE>

See Notes to Financial Statements.
34

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 30,595,760 $ 42,248,481
Net realized gain from investments and foreign currency
transactions............................................ 129,962,468 135,718,049
Net unrealized depreciation on investments................ (838,276,233) (743,217,777)
----------------------------------------
Net decrease in net assets resulting from operations.... (677,718,005) (565,251,247)
Distributions to shareholders from:
Net investment income:
Class I.................................................. (16,219,745) (39,274,553)
Class II................................................. (2,009,465) (1,913,743)
Advisor Class............................................ (580,115) (1,069,766)
Net realized gains:
Class I.................................................. (13,516,454) (131,568,835)
Class II................................................. (1,668,990) (14,713,519)
Advisor Class............................................ (546,038) (2,542,361)
In excess of net realized gains:
Class I.................................................. -- (79,901,425)
Class II................................................. -- (9,361,096)
Advisor Class............................................ -- (1,718,507)
Beneficial share transactions (Note 2):
Class I.................................................. (160,273,806) 853,998,736
Class II................................................. 24,839,851 280,828,480
Advisor Class............................................ 49,882,354 121,778,243
----------------------------------------
Net increase (decrease) in net assets................... (797,810,413) 409,290,407
Net assets:
Beginning of period........................................ 3,944,672,069 3,535,381,662
----------------------------------------
End of period.............................................. $3,146,861,656 $3,944,672,069
========================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 14,612,822 $ 2,826,387
========================================
</TABLE>

See Notes to Financial Statements.
35

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Developing Markets Trust (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term capital appreciation by investing, under normal market
conditions, at least 65% of its total assets in equity securities of developing
market issuers. The following summarizes the Fund's significant accounting
policies.

a. SECURITY VALUATION:

Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.

b. FOREIGN CURRENCY TRANSLATION:

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.

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.

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, 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.

The Brazilian government has exercised and may continue to exercise substantial
influence over the exchange of Brazilian currency. Under current Brazilian law,
whenever there occurs a serious imbalance of Brazil's balance of payments or
serious reasons to foresee the imminence of such an imbalance, Brazil's National
Monetary Council may, for a limited period, impose restrictions on foreign
capital remittances abroad. Exchange control regulations may restrict
repatriation of investment income, capital, or the proceeds of securities sales
by foreign investors. The Fund has investments in Brazilian companies with a
value of approximately $358 million as of June 30, 1998.

c. INCOME TAXES:

No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (unaudited) (continued)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)

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.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.

Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.

e. ACCOUNTING ESTIMATES:

The preparation of financial statements in accordance with generally accepted
accounting principles 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 expense during the reporting
period. Actual results could differ from those estimates.

2. BENEFICIAL SHARES

The Fund offers three classes of shares: Class I, Class II and Advisor Class
shares. The shares differ by their initial sales load, distribution fees, voting
rights on matters affecting a single class of shares, and the exchange privilege
of each class.

At June 30, 1998, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold........................................... 47,882,132 $ 593,383,135 101,497,736 $ 1,720,171,397
Shares issued on reinvestment of distributions........ 1,966,575 25,805,582 16,789,330 214,448,966
Shares redeemed....................................... (63,020,395) (779,462,523) (67,019,990) (1,080,621,627)
-------------------------------------------------------------------
Net increase (decrease)............................... (13,171,688) $(160,273,806) 51,267,076 $ 853,998,736
====================================================================
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold........................................... 7,112,240 $ 88,071,951 19,937,056 $ 336,719,829
Shares issued on reinvestment of distributions........ 233,973 3,034,453 1,673,980 21,068,086
Shares redeemed....................................... (5,451,648) (66,266,553) (5,035,752) (76,959,435)
-------------------------------------------------------------------
Net increase.......................................... 1,894,565 $ 24,839,851 16,575,284 $ 280,828,480
====================================================================
</TABLE>

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (unaudited) (continued)

2. BENEFICIAL SHARES (CONT.)

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold............................................... 6,548,747 $ 81,738,032 10,481,151 $167,153,596
Shares issued on reinvestment of distributions............ 73,633 963,922 388,246 4,881,386
Shares redeemed........................................... (2,709,767) (32,819,600) (3,280,887) (50,256,739)
-------------------------------------------------------------
Net increase.............................................. 3,912,613 $ 49,882,354 7,588,510 $121,778,243
=============================================================
</TABLE>

*Effective date of Advisor Class shares was January 2, 1997.

3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

Certain Officers of the Fund are also officers or directors of Templeton Asset
Management Ltd. (TAML), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors) and Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.

The Fund pays an investment management fee to TAML of 1.25% per year of the
average daily net assets of the fund. The Fund pays an administrative fee to FT
Services based on the Fund's average daily net assets as follows:

<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- --------------------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>

The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At June 30, 1998, there were no unreimbursed costs. Distributors
received net commissions from sales of the Fund's shares, and received
contingent deferred sales charges for the period of $553,092 and $229,070,
respectively.

Legal fees of $38,780 were paid to a law firm in which a partner is an officer
of the Fund.

PAGE

TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (unaudited) (continued)

4. INCOME TAXES

At June 30, 1998, the net unrealized depreciation based on the cost of
investments for income tax purposes of $4,334,952,269 was as follows:

<TABLE>
<S> <C>
Unrealized appreciation.................................... $ 377,077,178
Unrealized depreciation.................................... (1,640,208,430)
---------------
Net unrealized depreciation................................ $(1,263,131,252)
===============
</TABLE>

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 1998 aggregated $195,271,107 and $745,992,063,
respectively.

PAGE

This page intentionally left blank

PAGE

LITERATURE REQUEST

For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.

FRANKLIN TEMPLETON GROUP

GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global
Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund

GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund

GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund

GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund

GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial
Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.

FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund

INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund

FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund

FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME

Alabama
Arizona**
Arkansas***
California**
Colorado
Connecticut
Florida**
Georgia
Hawaii***
Indiana
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan**
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
Washington***

VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)

*These funds are now closed to new accounts, with the exception of retirement
plan accounts.

**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).

***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.

+Portfolio of insured municipal securities.

++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
07/98

PAGE

TEMPLETON DEVELOPING
MARKETS TRUST

PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585

SHAREHOLDER SERVICES
1-800-632-2301

FUND INFORMATION
1-800-342-5236

This report must be preceded or accompanied by the current prospectus of the
Templeton Developing Markets Trust, which contains more complete information
including risk factors, charges and expenses. Like any investment in securities,
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors, as well as investment decisions by the
Investment Manager which will not always be profitable or wise. The Fund and
Fund investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses should not invest
in shares of the Fund.

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

711 S98 08/98 [LOGO] Printed on recycled paper