Registration No. 33-42163 and 811-5914
As filed with the Securities and Exchange Commission on December 30, 1998
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 10 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 12 X
(Check appropriate box or boxes)
TEMPLETON DEVELOPING MARKETS TRUST
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
500 E Broward Blvd., Ft. Lauderdale, Florida 33394
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (954) 527-7500
Barbara J. Green, 500 E Broward Blvd., Ft. Lauderdale, Florida 33394
----------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
X on January 1, 1999 pursuant to paragraph (b) of Rule 485
---------------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
on (date) pursuant to paragraph (a)(1) of Rule 485
75 days after filing pursuant to paragraph (a)(2) of Rule 485
on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART A
CLASS I AND CLASS II PROSPECTUS
<TABLE>
<CAPTION>
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
<S> <C> <C>
1 Cover page Cover Page
2 Synopsis Expense Summary
3 Condensed Financial Financial Highlights";
Information "How Does the Fund
Measure Performance?"
4 General Description "How Is the Fund Organized?";
of Registrant "How Does the Fund Invest Its Assets?";
"What Are the Risks of Investing in
the Fund?"
5 Management of the Fund "Who Manages the Fund?"
5A Management's Discussion Contained in Registrant's Annual
of Fund Performance Report to Shareholders
6 Capital Stock and Other "How is the Fund Organized?"; "Services
Securities to Help You Manage Your Account"; "What
Distributions Might I Receive From the
Fund?"; "How Taxation Affects the Fund and Its
Shareholders"
7 Purchase of Securities "How Do I Buy Shares?"; "May I Exchange
Being Offered Shares for Shares of Another Fund?";
"Transaction Procedures and Special
Requirements"; "Services to Help You Manage
Your Account"; "Who Manages the Fund?" "Useful
Terms and Definitions"
8 Redemption or Repurchase "May I Exchange Shares for Shares of Another
Fund?"; "How Do I Sell Shares?"; "Transaction
Procedures and Special Requirements"? "Services
to Help You Manage Your Account"
9 Pending Legal Procedures Not Applicable
</TABLE>
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART A
ADVISOR CLASS PROSPECTUS
<TABLE>
<CAPTION>
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
<S> <C> <C>
1 Cover page Cover Page
2 Synopsis Expense Summary
3 Condensed Financial "Financial Highlights";
Information "How Does the Fund
Measure Performance?"
4 General Description "How Is the Fund Organized?";
of Registrant "How Does the Fund Invest Its Assets?";
"What Are the Risks of Investing in
the Fund?"
5 Management of the Fund "Who Manages the Fund?"
5A Management's Discussion Contained in Registrant's Annual
of Fund Performance Report to Shareholders
6 Capital Stock and Other "How is the Fund Organized?"; "Services
Securities to Help You Manage Your Account"; "What
Distributions Might I Receive From the
Fund?"; "How Taxation Affects the Fund
and Its Shareholders"
7 Purchase of Securities "How Do I Buy Shares?"; "May I Exchange
Being Offered Shares for Shares of Another Fund?";
"Transaction Procedures and Special
Requirements"; "Services to Help You Manage
Your Account"; "Who Manages the Fund?" "Useful
Terms and Definitions"
8 Redemption or Repurchase "May I Exchange Shares for Shares of Another
Fund?"; "How Do I Sell Shares?"; "Transaction
Procedures and Special Requirements"? "Services
to Help You Manage Your Account"
9 Pending Legal Procedures Not Applicable
</TABLE>
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART B
CLASS I AND CLASS II
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
<S> <C> <C>
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and Not Applicable
History
13 Investment Objectives and "How Does the Fund Invest Its Assets?";
Policies "Investment Restrictions"; "What Are the
Risks of Investing in the Fund?"
14 Management of the "Officers and Trustees"; "Investment
Registrant Management and Other Services"
15 Control Persons and "Officers and Trustees"; "Investment
Principal Holders of Management and Other Services"; "Miscellaneous
Securities Information?"
16 Investment Advisory and "Investment Management and Other Services";
Other Services "The Fund's Underwriter"
17 Brokerage Allocation and "How Does the Fund Buy Securities
Other Practices For Its Portfolio?"
18 Capital Stock and Other "Miscellaneous Information"; See Prospectus
Securities "How Is The Fund Organized?"
19 Purchase, Redemption and "How Do I Buy, Sell and Exchange Shares?";
Pricing of Securities "How Are Fund Shares Valued?";
Being Offered "Financial Statements"
20 Tax Status "Additional Information on Distributions
and Taxes"
21 Underwriters "The Fund's Underwriter"
22 Calculation of Performance "How Does the Fund Measure Performance?"
Data
23 Financial Statements Financial Statements
</TABLE>
===============================================================================
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART B
ADVISOR CLASS
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
<S> <C> <C>
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and Not Applicable
History
13 Investment Objectives and "How Does the Fund Invest Its Assets?";
Policies "Investment Restrictions"; "What Are the
Risks of Investing in the Fund?"
14 Management of the "Officers and Trustees"; "Investment
Registrant Management and Other Services"
15 Control Persons and "Officers and Trustees"; "Investment
Principal Holders of Management and Other Services"; "Miscellaneous
Securities Information?"
16 Investment Advisory and "Investment Management and Other Services";
Other Services "The Fund's Underwriter"
17 Brokerage Allocation and "How Does the Fund Buy Securities
Other Practices For Its Portfolio?"
18 Capital Stock and Other "Miscellaneous Information"; See Prospectus
Securities "How Is The Fund Organized?"
19 Purchase, Redemption and "How Do I Buy, Sell and Exchange Shares?";
Pricing of Securities "How Are Fund Shares Valued?";
Being Offered "Financial Statements"
20 Tax Status "Additional Information on Distributions
and Taxes"
21 Underwriters "The Fund's Underwriter"
22 Calculation of Performance "How Does the Fund Measure Performance?"
Data
23 Financial Statements Financial Statement
</TABLE>
PAGE
PART A
CLASS A, B AND C
PAGE
o 711 *P2
- -------------------------------------------------------------------------------
SHARE CLASS REDESIGNATION
EFFECTIVE JANUARY 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
- -------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
TEMPLETON DEVELOPING MARKETS TRUST
DATED MAY 1, 1998
The prospectus is amended as follows:
I. As of January 1, 1999, the fund offers four classes of shares: Class A,
Class B, Class C and Advisor Class. Before January 1, 1999, Class A
shares were designated Class I and Class C shares were designated Class
II. All references in the prospectus to Class I shares are replaced
with Class A, and all references to Class II shares are replaced with
Class C.
II. The second paragraph on the cover of the prospectus is replaced with
the following:
This prospectus describes the fund's Class A, B and C shares. The fund
currently offers another share class with a different sales charge and
expense structure, which affects performance.
III. The section "Expense Summary" is replaced with the following:
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in
the fund. It is based on the fund's historical expenses for the fiscal
year ended December 31, 1997. The fund's actual expenses may vary.
<TABLE>
<CAPTION>
CLASS A/1/ CLASS B/2/ CLASS C/1/
------------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
A. SHAREHOLDER TRANSACTION EXPENSES/3/
Maximum Sales Charge
(as a percentage of Offering Price) 5.75% 4.00% 1.99%
Paid at time of purchase/4/ 5.75% None 1.00%
Paid at redemption/5/ None 4.00% 0.99%
Exchange Fee (per transaction) None None None
B. ANNUAL FUND OPERATING EXPENSES
PAGE
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 1.25% 1.25% 1.25%
Rule 12b-1 Fees/6/ 0.27% 1.00% 1.00%
Other Expenses 0.44% 0.44% 0.44%
---------- ----------- ----------
Total Fund Operating Expenses 1.96% 2.69% 2.69%
--------- ----------- ----------
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5%, operating expenses are
as described above, and you sell your shares after the number of years
shown. These are the projected expenses for each $10,000 that you
invest in the fund.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------ ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
CLASS A $763/7/ $1,155 $1,571 $2,729
CLASS B
Assuming you sold your shares at
the end of the period $672 $1,135 $1,625 $2,846/8/
Assuming you stayed in the fund $272 $835 $1,425 $2,846/8/
CLASS C $467/9/ $927 $1,511 $3,092
</TABLE>
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE
SHOWN. The fund pays its operating expenses. The effects of these
expenses are reflected in the Net Asset Value or dividends of each
class and are not directly charged to your account.
1. Before January 1, 1999, Class A shares were designated Class I and
Class C shares were designated Class II.
2. The fund began offering Class B shares on January 1, 1999. Annual
fund operating expenses are based on the expenses for Class A and C
for the fiscal year ended December 31, 1997. The Rule 12b-1 fees are
based on the maximum fees allowed under Class B's Rule 12b-1 plan.
3. If your transaction is processed through your Securities Dealer,
you may be charged a fee by your Securities Dealer for this service.
4. There is no front-end sales charge if you invest $1 million or more
in Class A shares. Although Class B and C have a lower front-end sales
charge than Class A, their Rule 12b-1 fees are higher. Over time you
may pay more for Class B and C shares. Please see "How Do I Buy
Shares? - Choosing a Share Class."
5. A Contingent Deferred Sales Charge of 1% may apply to Class A
purchases of $1 million or more if you sell the shares within one year
and to any Class C purchase if you sell the shares within 18 months. A
Contingent Deferred Sales Charge of up to 4% may apply to any Class B
purchase if you sell the shares within six years. A Contingent
Deferred Sales Charge may also apply to purchases by certain
retirement plans that qualify to buy Class A shares without a
front-end sales charge. The charge is based on the value of the shares
sold or the Net Asset Value at the time of purchase, whichever is
less. The number in the table shows the charge as a percentage of
Offering Price. While the percentage for Class C is different
depending on whether the charge is shown based on the Net Asset Value
or the Offering Price, the dollar amount you would pay is the same.
See "How Do I Sell Shares? Contingent Deferred Sales Charge" for
details.
6. These fees may not exceed 0.35% for Class A and 1.00% for Class B
and C. The combination of front-end sales charges and Rule 12b-1 fees
could cause long-term shareholders to pay more than the economic
equivalent of the maximum front-end sales charge permitted under the
NASD's rules.
7. Assumes a Contingent Deferred Sales Charge will not apply.
8. Assumes conversion of Class B shares to Class A shares after eight
years, lowering your annual expenses from that time on.
PAGE
9. For the same Class C investment, you would pay projected expenses
of $369 if you did not sell your shares at the end of the first year.
Your projected expenses for the remaining periods would be the same.
IV. The following information is added to the section "Financial
Highlights":
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
----------------------------
CLASS A CLASS C
-----------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period $12.94 $12.81
-----------------------------
Income from investment operations:
Net investment income .11 .06
Net realized and unrealized gains
(losses) (2.36) (2.31)
------------------------------
Total from investment operations (2.25) (2.25)
------------------------------
Less distributions from:
Net investment income (.06) (.06)
Net realized gains (.05) (.05)
------------------------------
Total distributions (.11) (.11)
==============================
Net asset value, end of period $10.58 $10.45
==============================
Total return* (17.55)% (17.73)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $2,677,076 $348,060
Ratios to average net assets:
Expenses 2.02%** 2.76%**
Net investment income 1.65** .97**
Portfolio turnover rate 5.94% 5.94%
</TABLE>
* Total return does not reflect sales commissions or the Contingent
Deferred Sales Charge and is not annualized.
**Annualized.
V. The following is added under "What Are the Risks of Investing in the
Fund?":
YEAR 2000. When evaluating current and potential portfolio positions,
Year 2000 is one of the factors Asset Management Hong Kong considers.
Asset Management Hong Kong will rely upon public filings and other
statements made by companies about their Year 2000 readiness. Issuers
in countries outside the U.S., particularly in emerging markets, may
not be required to make the same level of disclosure about Year 2000
readiness as is required in the U.S. Asset Management Hong Kong, of
course, cannot audit each company and its major suppliers to verify
their Year 2000 readiness.
PAGE
If a company in which the fund is invested is adversely affected by
Year 2000 problems, it is likely that the price of its security will
also be adversely affected. A decrease in the value of one or more of
the fund's portfolio holdings will have a similar impact on the price
of the fund's shares. Please see "Year 2000 Problem" under "Who
Manages the Fund?" for more information.
EURO RISK. On January 1, 1999, the European Monetary Union (EMU) plans
to introduce a new single currency, the euro, which will replace the
national currency for participating member countries. If the fund
holds investments in countries with currencies replaced by the euro,
the investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting will be impacted.
The process to establish the euro may result in market volatility. It
is not possible to predict the impact of the euro on the business or
financial condition of European issuers or on the fund. The transition
and the elimination of currency risk among EMU countries may change
the economic environment and behavior of investors, particularly in
European markets. To the extent the fund holds non-U.S. dollar (euro
or other) denominated securities, it will still be exposed to currency
risk due to fluctuations in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all
euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to
business activities. While there can be no assurance that the fund
will not be adversely affected, Asset Management Hong Kong and its
affiliated service providers are taking steps that they believe are
reasonably designed to address the euro issue.
VI. In the section "Who Manages the Fund?",
(a) the following is added after the "Administrative Services" section:
YEAR 2000 PROBLEM. The fund's business operations depend on a worldwide
network of computer systems that contain date fields, including
securities trading systems, securities transfer agent operations and
stock market links. Many of the systems currently use a two digit date
field to represent the date, and unless these systems are changed or
modified, they may not be able to distinguish the Year 1900 from the
Year 2000 (commonly referred to as the Year 2000 problem). In addition,
the fact that the Year 2000 is a non-standard leap year may create
difficulties for some systems.
When the Year 2000 arrives, the fund's operations could be adversely
affected if the computer systems used by Asset Management Hong Kong,
its service providers and other third parties it does business with are
PAGE
not Year 2000 ready. For example, the fund's portfolio and operational
areas could be impacted, including securities trade processing,
interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. The fund
could experience difficulties in effecting transactions if any of its
foreign subcustodians, or if foreign broker-dealers or foreign markets
are not ready for Year 2000.
Asset Management Hong Kong and its affiliated service providers are
making a concerted effort to take steps they believe are reasonably
designed to address their Year 2000 problems. Of course, the fund's
ability to reduce the effects of the Year 2000 problem is also very
much dependent upon the efforts of third parties over which the fund
and Asset Management Hong Kong may have no control.
(b) the first sentence under "The Rule 12b-1 Plans" is replaced with
the following:
Each class has a separate distribution or "Rule 12b-1" plan under
which the fund shall pay or may reimburse Distributors or others for
the expenses of activities that are primarily intended to sell shares
of the class.
(c) and the following paragraphs are added to the section "The Rule
12b-1 Plans":
Under the Class B plan, the fund pays Distributors up to 0.75% per
year of Class B's average daily net assets to pay Distributors for
providing distribution and related services and bearing certain Class
B expenses. All distribution expenses over this amount will be borne
by those who have incurred them. Securities Dealers are not eligible
to receive this portion of the Rule 12b-1 fees associated with the
purchase.
The fund may also pay a servicing fee of up to 0.25% per year of Class
B's average daily net assets under the Class B plan. This fee may be
used to pay Securities Dealers or others for, among other things,
helping to establish and maintain customer accounts and records,
helping with requests to buy and sell shares, receiving and answering
correspondence, monitoring dividend payments from the fund on behalf
of customers, and similar servicing and account maintenance
activities. Securities Dealers may be eligible to receive this portion
of the Rule 12b-1 fees from the date of purchase. After 8 years, Class
B shares convert to Class A shares and Securities Dealers may then
receive the Rule 12b-1 fees applicable to Class A.
The expenses relating to the Class B plan are also used to pay
Distributors for advancing the commission costs to Securities Dealers
with respect to the initial sale of Class B shares. Further, the
expenses relating to the Class B plan may be used by Distributors to
pay third party financing entities that have provided financing to
PAGE
Distributors in connection with advancing commission costs to
Securities Dealers.
VII. Under "How Is the Fund Organized?", the first paragraph is replaced
with the following:
The fund is a diversified, open-end management investment company,
commonly called a mutual fund. It was organized as a Massachusetts
business trust on August 9, 1991, and is registered with the SEC. The
fund offers four classes of shares: Templeton Developing Markets Trust
- Class A, Templeton Developing Markets Trust - Class B, Templeton
Developing Markets Trust - Class C and Templeton Developing Markets
Trust - Advisor Class.
Additional series and classes of shares may be offered in the future.
VIII. The second step in the section "How Do I Buy Shares? - Opening Your
Account" is replaced with the following:
2. Determine how much you would like to invest. The fund's minimum
investments are:
/bullet/ To open a regular, non-retirement account $1,000
/bullet/ To open an IRA, IRA Rollover, Roth IRA,
or Education IRA $ 250*
/bullet/ To open a custodial account for a minor
(an UGMA/UTMA account) $ 100
/bullet/ To open an account with an automatic
investment plan $ 50**
/bullet/ To add to an account $ 50***
* For all other retirement accounts, there is no minimum investment
requirement.
** $25 for an Education IRA.
*** For all retirement accounts except IRAs, IRA Rollovers, Roth IRAs,
or Education IRAs, there is no minimum to add to an account.
For purchases by broker-dealers, registered investment advisors or
certified financial planners who have entered into an agreement with
Distributors for clients participating in comprehensive fee programs,
the minimum initial investment is $250. The minimum initial investment
is $100 for officers, trustees, directors and full-time employees of
the Franklin Templeton Funds or the Franklin Templeton Group, and their
family members, consistent with our then-current policies.
We reserve the right to change the amount of these minimums from time
to time or to waive or lower these minimums for certain purchases. We
also reserve the right to refuse any order to buy shares.
IX. The sections "Choosing a Share Class" and "Purchase Price of Fund
Shares," found under "How Do I Buy Shares?", are replaced with the
following:
CHOOSING A SHARE CLASS
PAGE
Each class has its own sales charge and expense structure, allowing you
to choose the class that best meets your situation. Your investment
representative can help you decide.
<TABLE>
<CAPTION>
CLASS A* CLASS B* CLASS C*
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
/bullet/ Front-end sales charge of /bullet/ No front-end sales charge /bullet/ Front-end sales charge of 1%
5.75% or less
/bullet/ Contingent Deferred Sales /bullet/ Contingent Deferred Sales Charge /bullet/ Contingent Deferred Sales Charge
Charge of 1% on purchases of 4% or less on shares you sell of 1% on shares you sell within
of $1 million or more sold within six years 18 months
within one year
/bullet/ Lower annual expenses than /bullet/ Higher annual expenses than Class /bullet/ Higher annual expenses than
Class B or C due to lower A (same as Class C) due to higher Class A (same as Class B) due
Rule 12b-1 fees Rule 12b-1 fees. Automatic to higher Rule 12b-1 fees. No
conversion to Class A shares conversion to Class A shares,
after eight years, reducing future so annual expenses do not
annual expenses. decrease.
/bullet/ No maximum purchase amount /bullet/ Maximum purchase amount of /bullet/ Maximum purchase amount of
$249,999. We invest any $999,999. We invest any
investment of $250,000 or more investment of $1 million or
in Class A shares, since a more in Class A shares, since
reduced front-end sales charge there is no front-end sales
is available and Class A's charge and Class A's annual
annual expenses are expenses are lower.
lower.
</TABLE>
*Before January 1, 1999, Class A shares were designated Class I and
Class C shares were designated Class II. The fund began offering Class
B shares on January 1, 1999. Class B shares are not available to all
retirement plans. Class B shares are only available to IRAs (of any
type), Trust Company 403(b) plans, and Trust Company qualified plans
with participant or earmarked accounts.
PURCHASE PRICE OF FUND SHARES
For Class A shares, the sales charge you pay depends on the dollar
amount you invest, as shown in the table below. The sales charge for
Class C shares is 1% and, unlike Class A, does not vary based on the
size of your purchase. There is no front-end sales charge for Class B
shares.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
AS A PERCENTAGE OF AMOUNT PAID TO
---------------------------- DEALER AS A
AMOUNT OF PURCHASE OFFERING NET AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A
Under $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 2.80%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.60%
$1,000,000 or more* None None None
CLASS B* None None None
CLASS C
Under $1,000,000* 1.00% 1.01% 1.00%
</TABLE>
PAGE
*A Contingent Deferred Sales Charge of 1% may apply to Class A
purchases of $1 million or more and any Class C purchase. A Contingent
Deferred Sales Charge of up to 4% may apply to any Class B purchase.
Please see "How Do I Sell Shares? - Contingent Deferred Sales Charge."
Please also see "Other Payments to Securities Dealers" below for a
discussion of payments Distributors may make out of its own resources
to Securities Dealers for certain purchases.
X. In the section "Sales Charge Waivers," found under "How Do I Buy
Shares? - Sales Charge Reductions and Waivers,"
(a) the first paragraph is replaced with the following:
SALES CHARGE WAIVERS. If one of the following sales charge waivers
applies to you or your purchase of fund shares, you may buy shares of
the fund without a front-end sales charge or a Contingent Deferred
Sales Charge. All of the sales charge waivers listed below apply to
purchases of Class A shares only, except for items 1 and 2 which also
apply to Class B and C purchases.
(b) the second waiver category is replaced with the following:
2. Redemption proceeds from the sale of shares of any Franklin
Templeton Fund. The proceeds must be reinvested in the same class
of shares, except proceeds from the sale of Class B shares will
be reinvested in Class A shares.
If you paid a Contingent Deferred Sales Charge when you sold your
Class A or C shares, we will credit your account with the amount
of the Contingent Deferred Sales Charge paid but a new Contingent
Deferred Sales Charge will apply. For Class B shares reinvested
in Class A, a new Contingent Deferred Sales Charge will not
apply, although your account will not be credited with the amount
of any Contingent Deferred Sales Charge paid when you sold your
Class B shares. If you own both Class A and B shares and you
later sell your shares, we will sell your Class A shares first,
unless otherwise instructed.
PAGE
Proceeds immediately placed in a Franklin Bank CD also may be
reinvested without a front-end sales charge if you reinvest them
within 365 days from the date the CD matures, including any
rollover.
This waiver does not apply to shares you buy and sell under our
exchange program. Shares purchased with proceeds from a money
fund may be subject to a sales charge.
(c) the following new category 8 is added to the end of the first list
of sales charge waiver categories:
8. Redemption proceeds from a repurchase of shares of Franklin
Floating Rate Trust, if the shares were continuously held for at
least 12 months.
If you immediately placed your redemption proceeds in a Franklin
Bank CD or a Franklin Templeton money fund, you may reinvest them
as described above. The proceeds must be reinvested within 365
days from the date the CD matures, including any rollover, or the
date you redeem your money fund shares.
(d) and the following new category 12 is added to the end of the second
list of sales charge waiver categories:
12. Qualified registered investment advisors who buy through a
broker-dealer or service agent who has entered into an agreement
with Distributors
XI. The section "How Do I Buy Shares in Connection with Retirement Plans?",
found under "How Do I Buy Shares?", is replaced with the following:
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in the
fund. Plan documents are required for all retirement plans. Trust
Company can provide the plan documents for you and serve as custodian
or trustee.
Trust Company can provide you with brochures containing important
information about its plans. These plans require separate applications
and their policies and procedures may be different than those described
in this prospectus. For more information, including a free retirement
plan brochure or application, please call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan. Your investment representative or advisor
can help you make investment decisions within your plan.
PAGE
XII. The section "How Do I Buy Shares? - Other Payments to Securities
Dealers" is replaced with the following:
OTHER PAYMENTS TO SECURITIES DEALERS
The payments described below may be made to Securities Dealers who initiate
and are responsible for Class B and C purchases and certain Class A
purchases made without a sales charge. The payments are subject to the sole
discretion of Distributors, and are paid by Distributors or one of its
affiliates and not by the fund or its shareholders.
1. Class A purchases of $1 million or more - up to 1% of the amount
invested.
2. Class B purchases - up to 4% of the amount invested.
3. Class C purchases - up to 1% of the purchase price.
4. Class A purchases made without a front-end sales charge by certain
retirement plans described under "Sales Charge Reductions and Waivers -
Retirement Plans" above - up to 1% of the amount invested.
5. Class A purchases by trust companies and bank trust departments,
Eligible Governmental Authorities, and broker-dealers or others on behalf
of clients participating in comprehensive fee programs - up to 0.25% of the
amount invested.
6. Class A purchases by Chilean retirement plans - up to 1% of the amount
invested.
A Securities Dealer may receive only one of these payments for each
qualifying purchase. Securities Dealers who receive payments in connection
with investments described in paragraphs 1, 3 or 6 above or a payment of up
to 1% for investments described in paragraph 4 will be eligible to receive
the Rule 12b-1 fee associated with the purchase starting in the thirteenth
calendar month after the purchase.
FOR BREAKPOINTS THAT MAY APPLY AND INFORMATION ON ADDITIONAL COMPENSATION
PAYABLE TO SECURITIES DEALERS IN CONNECTION WITH THE SALE OF FUND SHARES,
PLEASE SEE "HOW DO I BUY, SELL AND EXCHANGE SHARES? - OTHER PAYMENTS TO
SECURITIES DEALERS" IN THE SAI.
XIII. The second and third paragraphs under "May I Exchange Shares for Shares
of Another Fund?" are replaced with the following:
PAGE
If you own Class A shares, you may exchange into any of our money funds
except Franklin Templeton Money Fund. Franklin Templeton Money Fund is
the only money fund exchange option available to Class B and C
shareholders. Unlike our other money funds, shares of Franklin
Templeton Money Fund may not be purchased directly and no drafts
(checks) may be written on Franklin Templeton Money Fund accounts.
Before making an exchange, please read the prospectus of the fund you
are interested in. This will help you learn about the fund, its
investment goal and policies, and its rules and requirements for
exchanges. For example, some Franklin Templeton Funds do not accept
exchanges and others may have different investment minimums. Some
Franklin Templeton Funds do not offer Class B or C shares.
XIV. The first paragraph under "May I Exchange Shares for Shares of
Another Fund? - Will Sales Charges Apply to My Exchange?" is replaced
with the following:
You generally will not pay a front-end sales charge on exchanges. If
you have held your shares less than six months, however, you will pay
the percentage difference between the sales charge you previously paid
and the applicable sales charge of the new fund, if the difference is
more than 0.25%. If you have never paid a sales charge on your shares
because, for example, they have always been held in a money fund, you
will pay the fund's applicable sales charge no matter how long you
have held your shares. These charges may not apply if you qualify to
buy shares without a sales charge.
XV. In the section "Contingent Deferred Sales Charge," found under "May I
Exchange Shares for Shares of Another Fund? - Will Sales Charges
Apply to My Exchange?",
(a) the following sentence is added to the end of the first paragraph:
The purchase price for determining a Contingent Deferred Sales Charge
on exchanged shares will be the price you paid for the original
shares.
(b) and the third paragraph is replaced with the following:
If you exchange Class A shares into one of our money funds, the time
your shares are held in that fund will not count towards the
completion of any Contingency Period. If you exchange your Class B or
C shares for the same class of shares of Franklin Templeton Money
Fund, however, the time your shares are held in that fund will count
towards the completion of any Contingency Period.
XVI. In the section "Exchange Restrictions," found under "May I Exchange
Shares for Shares of Another Fund?",
(a) the first and second bulleted items are replaced with the
following:
/bullet/ You may only exchange shares within the same class, except
as noted below. If you exchange your Class B shares for the
same class of shares of another Franklin Templeton Fund,
the time your shares are held in that fund will count
towards the eight year period for automatic conversion to
Class A shares.
PAGE
/bullet/ Generally exchanges may only be made between identically
registered accounts, unless you send written instructions
with a signature guarantee. You may, however, exchange
shares from a fund account requiring two or more signatures
into an identically registered money fund account requiring
only one signature for all transactions. PLEASE NOTIFY US
IN WRITING IF YOU DO NOT WANT THIS OPTION TO BE AVAILABLE
ON YOUR ACCOUNT. Additional procedures may apply. Please
see "Transaction Procedures and Special Requirements."
(b) and the following new item is added:
/bullet/ You must meet the applicable minimum investment amount of
the fund you are exchanging into, or exchange 100% of your
fund shares.
XVII. In the "By Phone" section of the chart under "How Do I Sell Shares?",
(a) the first bulleted item is replaced with the following:
/bullet/ If the request is $100,000 or less. Institutional accounts
may exceed $100,000 by completing a separate agreement.
Call Institutional Services to receive a copy.
(b) and the third bulleted item is deleted.
XVIII. In the section "Contingent Deferred Sales Charge," found under
"How Do I Sell Shares?",
(a) the following is added after the second paragraph:
For Class B shares, there is a Contingent Deferred Sales Charge if you
sell your shares within six years, as described in the table below.
The charge is based on the value of the shares sold or the Net Asset
Value at the time of purchase, whichever is less.
<TABLE>
<CAPTION>
IF YOU SELL YOUR CLASS B SHARES THIS % IS DEDUCTED FROM YOUR PROCEEDS AS
WITHIN THIS MANY YEARS AFTER BUYING THEM A CONTINGENT DEFERRED SALES CHARGE
------------------------------------------ -------------------------------------------
<S> <C>
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
</TABLE>
(b) and the section "Waivers" is replaced with the following:
WAIVERS. We waive the Contingent Deferred Sales Charge for:
PAGE
/bullet/ Account fees
/bullet/ Sales of Class A shares purchased without a front-end sales
charge by certain retirement plan accounts if (i) the
account was opened before May 1, 1997, or (ii) the
Securities Dealer of record received a payment from
Distributors of 0.25% or less, or (iii) Distributors did not
make any payment in connection with the purchase, or (iv)
the Securities Dealer of record has entered into a
supplemental agreement with Distributors
/bullet/ Redemptions by the fund when an account falls below the
minimum required account size
/bullet/ Redemptions following the death of the shareholder or
beneficial owner
/bullet/ Redemptions through a systematic withdrawal plan set up
before February 1, 1995
/bullet/ Redemptions through a systematic withdrawal plan set up on
or after February 1, 1995, up to 1% monthly, 3% quarterly,
6% semiannually or 12% annually of your account's Net Asset
Value depending on the frequency of your plan
/bullet/ Redemptions by Trust Company employee benefit plans or
employee benefit plans serviced by ValuSelect(R) (not
applicable to Class B)
/bullet/ Distributions from IRAs due to death or disability or upon
periodic distributions based on life expectancy (for Class
B, this applies to all retirement plan accounts, not only
IRAs)
/bullet/ Returns of excess contributions (and earnings, if
applicable) from retirement plan accounts
/bullet/ Participant initiated distributions from employee benefit
plans or participant initiated exchanges among investment
choices in employee benefit plans (not applicable to Class
B)
XIX. The second paragraph under "What Distributions Might I Receive From
the Fund?" is replaced with the following:
Dividends and capital gains are calculated and distributed the same
way for each class. The amount of any income dividends per share will
differ, however, generally due to the difference in the Rule 12b-1
fees of each class.
XX. Distribution option 3 and the paragraph following it in the section
"What Distributions Might I Receive From the Fund? - Distribution
Options" is replaced with the following:
PAGE
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive capital gain
distributions, dividend distributions, or both in cash. If you have the
money sent to another person or to a checking or savings account, you
may need a signature guarantee. If you send the money to a checking or
savings account, please see "Electronic Fund Transfers" under "Services
to Help You Manage Your Account."
Distributions may be reinvested only in the same class of shares,
except as follows: (i) Class C shareholders who chose to reinvest their
distributions in Class A shares of the fund or another Franklin
Templeton Fund before November 17, 1997, may continue to do so; and
(ii) Class B and C shareholders may reinvest their distributions in
shares of any Franklin Templeton money fund.
XXI. Under "Transaction Procedures and Special Requirements,"
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the
fund accepts written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone.
For all other transactions and changes, all registered owners must sign
the instructions.
Please keep in mind that if you have previously told us that you do not
want telephone exchange or redemption privileges on your account, then
we can only accept written instructions to exchange or redeem shares if
they are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) the section "Trust Company Retirement Plan Accounts," found under
"Telephone Transactions," is deleted.
(d) and the section "Keeping Your Account Open" is replaced with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may
close your account if the value of your shares is less than $250, or
less than $50 for employee accounts and custodial accounts for minors.
We will only do this if the value of your account fell below this
amount because you voluntarily sold your shares and your account has
been inactive (except for the reinvestment of distributions) for at
least six months. Before we close your account, we will notify you and
give you 30 days to increase the value of your account to $1,000, or
$100 for employee accounts and custodial accounts for minors. These
minimums do not apply to IRAs and other retirement plan accounts or to
accounts managed by the Franklin Templeton Group.
PAGE
XXII. Under "Services to Help You Manage Your Account,"
(a) the second sentence in the section "Automatic Investment Plan" is
replaced with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the fund each month to buy additional
shares.
(b) the second paragraph under "Systematic Withdrawal Plan" is replaced
with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the account
application included with this prospectus and indicate how you would
like to receive your payments. You may choose to direct your payments
to buy the same class of shares of another Franklin Templeton Fund or
have the money sent directly to you, to another person, or to a
checking or savings account. If you choose to have the money sent to a
checking or savings account, please see "Electronic Fund Transfers"
below. Once your plan is established, any distributions paid by the
fund will be automatically reinvested in your account.
(c) the following new section is added after the section "Systematic
Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or
payments under a systematic withdrawal plan sent directly to a checking
or savings account. If the account is with a bank that is a member of
the Automated Clearing House, the payments may be made automatically by
electronic funds transfer. If you choose this option, please allow at
least fifteen days for initial processing. We will send any payments
made during that time to the address of record on your account.
(d) the third bulleted item in the section "TeleFACTS(R)" is replaced
with the following:
/bullet/ exchange shares (within the same class) between identically
registered Franklin Templeton Class A, B or C accounts; and
(e) and the last sentence is replaced with the following:
The code number is 711 for Class A, 991 for Class B and 791 for Class
C.
XXIII. In the "Useful Terms and Definitions" section,
(a) the definition of "Class I, Class II and Advisor Class" is replaced
with the following:
PAGE
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - The fund offers four
classes of shares, designated "Class A," "Class B," "Class C" and
"Advisor Class." The four classes have proportionate interests in the
fund's portfolio. They differ, however, primarily in their sales charge
and expense structures.
(b) and the following definitions are revised:
CONTINGENCY PERIOD - For Class A shares, the 12 month period during
which a Contingent Deferred Sales Charge may apply. The contingency
period is six years for Class B shares and 18 months for Class C
shares. The holding period begins on the day you buy your shares. For
example, if you buy shares on the 18th of the month, they will age one
month on the 18th day of the next month and each following month.
CONTINGENT DEFERRED SALES CHARGE (CDSC) - A sales charge of 1% that may
apply if you sell your Class A or C shares within the Contingency
Period. For Class B, the maximum CDSC is 4% and declines to 0% after
six years.
OFFERING PRICE - The public offering price is based on the Net Asset
Value per share of the class and includes the front-end sales charge.
The maximum front-end sales charge is 5.75% for Class A and 1% for
Class C. There is no front-end sales charge for Class B. We calculate
the offering price to two decimal places using standard rounding
criteria.
Please keep this supplement for future reference.
PAGE
PART A
ADVISOR CLASS
PAGE
O 711 *PA2
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
TEMPLETON DEVELOPING MARKETS TRUST - ADVISOR CLASS
DATED MAY 1, 1998
The prospectus is amended as follows:
I. As of January 1, 1999, the fund offers four classes of shares: Class A,
Class B, Class C and Advisor Class. Before January 1, 1999, Class A
shares were designated Class I and Class C shares were designated Class
II. All references in the prospectus to Class I shares are replaced
with Class A.
II. The following is added under "What Are the Risks of Investing in the
Fund?":
YEAR 2000. When evaluating current and potential portfolio positions,
Year 2000 is one of the factors Asset Management Hong Kong considers.
Asset Management Hong Kong will rely upon public filings and other
statements made by companies about their Year 2000 readiness. Issuers
in countries outside the U.S., particularly in emerging markets, may
not be required to make the same level of disclosure about Year 2000
readiness as is required in the U.S. Asset Management Hong Kong, of
course, cannot audit each company and its major suppliers to verify
their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by
Year 2000 problems, it is likely that the price of its security will
also be adversely affected. A decrease in the value of one or more of
the fund's portfolio holdings will have a similar impact on the price
of the fund's shares. Please see "Year 2000 Problem" under "Who Manages
the Fund?" for more information.
EURO RISK. On January 1, 1999, the European Monetary Union (EMU) plans
to introduce a new single currency, the euro, which will replace the
national currency for participating member countries. If the fund holds
investments in countries with currencies replaced by the euro, the
investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting will be impacted.
The process to establish the euro may result in market volatility. It
is not possible to predict the impact of the euro on the business or
financial condition of European issuers or on the fund. The transition
and the elimination of currency risk among EMU countries may change the
economic environment and behavior of investors, particularly in
PAGE
European markets. To the extent the fund holds non-U.S. dollar (euro or
other) denominated securities, it will still be exposed to currency
risk due to fluctuations in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all
euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to
business activities. While there can be no assurance that the fund will
not be adversely affected, Asset Management Hong Kong and its
affiliated service providers are taking steps that they believe are
reasonably designed to address the euro issue.
III. Under "Who Manages the Fund?", the following is added after the
"Administrative Services" section:
YEAR 2000 PROBLEM. The fund's business operations depend on a worldwide
network of computer systems that contain date fields, including
securities trading systems, securities transfer agent operations and
stock market links. Many of the systems currently use a two digit date
field to represent the date, and unless these systems are changed or
modified, they may not be able to distinguish the Year 1900 from the
Year 2000 (commonly referred to as the Year 2000 problem). In addition,
the fact that the Year 2000 is a non-standard leap year may create
difficulties for some systems.
When the Year 2000 arrives, the fund's operations could be adversely
affected if the computer systems used by Asset Management Hong Kong,
its service providers and other third parties it does business with are
not Year 2000 ready. For example, the fund's portfolio and operational
areas could be impacted, including securities trade processing,
interest and dividend payments, securities pricing, shareholder account
services, reporting, custody functions and others. The fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker-dealers or foreign markets are not
ready for Year 2000.
Asset Management Hong Kong and its affiliated service providers are
making a concerted effort to take steps they believe are reasonably
designed to address their Year 2000 problems. Of course, the fund's
ability to reduce the effects of the Year 2000 problem is also very
much dependent upon the efforts of third parties over which the fund
and Asset Management Hong Kong may have no control.
IV. Under "How Is the Fund Organized?", the first paragraph is replaced
with the following:
The fund is a diversified, open-end management investment company,
commonly called a mutual fund. It was organized as a Massachusetts
business trust on August 9, 1991, and is registered with the SEC. The
PAGE
fund offers four classes of shares: Templeton Developing Markets Trust
- Class A, Templeton Developing Markets Trust - Class B, Templeton
Developing Markets Trust - Class C and Templeton Developing Markets
Trust - Advisor Class. Additional series and classes of shares may be
offered in the future.
V. In step 2 under "How Do I Buy Shares? - Opening Your Account," the
minimum investment to add to your account is changed from $25 to $50.
VI. Under "May I Exchange Shares for Shares of Another Fund? - Exchange
Restrictions":
(a) the second item is replaced with the following:
/bullet/ Generally exchanges may only be made between identically
registered accounts, unless you send written instructions
with a signature guarantee. You may, however, exchange
shares from a fund account requiring two or more signatures
into an identically registered money fund account requiring
only one signature for all transactions. PLEASE NOTIFY US IN
WRITING IF YOU DO NOT WANT THIS OPTION TO BE AVAILABLE ON
YOUR ACCOUNT. Additional procedures may apply. Please see
"Transaction Procedures and Special Requirements."
(b) and the following new item is added:
/bullet/ You must meet the applicable minimum investment amount of the
fund you are exchanging into, or exchange 100% of your fund
shares.
VII. In the "By Phone" section of the chart under "How Do I Sell Shares?",
the first bulleted item is replaced with the following:
/bullet/ If the request is $100,000 or less. Institutional accounts
may exceed $100,000 by completing a separate agreement. Call
Institutional Services to receive a copy.
VIII. Distribution option 3 in the section "What Distributions Might I
Receive From the Fund? - Distribution Options" is replaced with the
following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive dividends, or both
dividend and capital gain distributions in cash. If you have the money
sent to another person or to a checking or savings account, you may
need a signature guarantee. If you send the money to a checking or
savings account, please see "Electronic Fund Transfers" under "Services
to Help You Manage Your Account."
PAGE
IX. Under "Transaction Procedures and Special Requirements,"
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the
fund accepts written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone.
For all other transactions and changes, all registered owners must sign
the instructions.
Please keep in mind that if you have previously told us that you do not
want telephone exchange or redemption privileges on your account, then
we can only accept written instructions to exchange or redeem shares if
they are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) and the section "Keeping Your Account Open" is replaced with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may
close your account if the value of your shares is less than $250, or
less than $50 for employee accounts. We will only do this if the value
of your account fell below this amount because you voluntarily sold
your shares and your account has been inactive (except for the
reinvestment of distributions) for at least six months. Before we close
your account, we will notify you and give you 30 days to increase the
value of your account to $1,000, or $100 for employee accounts. These
minimums do not apply to IRAs, accounts managed by the Franklin
Templeton Group, the Franklin Templeton Profit Sharing 401(k) Plan, or
the series of Franklin Templeton Fund Allocator Series.
X. Under "Services to Help You Manage Your Account,"
(a) the second sentence in the section "Automatic Investment Plan" is
replaced with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the fund each month to buy additional
shares.
(b) the second paragraph under "Systematic Withdrawal Plan" is replaced
with the following:
PAGE
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the account
application included with this prospectus and indicate how you would
like to receive your payments. You may choose to direct your payments
to buy the same class of shares of another Franklin Templeton Fund or
have the money sent directly to you, to another person, or to a
checking or savings account. If you choose to have the money sent to a
checking or savings account, please see "Electronic Fund Transfers"
below. Once your plan is established, any distributions paid by the
fund will be automatically reinvested in your account.
(c) and the following new section is added after the section
"Systematic Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or
payments under a systematic withdrawal plan sent directly to a checking
or savings account. If the account is with a bank that is a member of
the Automated Clearing House, the payments may be made automatically by
electronic funds transfer. If you choose this option, please allow at
least fifteen days for initial processing. We will send any payments
made during that time to the address of record on your account.
XI. In the "Useful Terms and Definitions" section, the definition of "Class
I, Class II and Advisor Class" is replaced with the following:
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - The fund offers four
classes of shares, designated "Class A," "Class B," "Class C" and
"Advisor Class." The four classes have proportionate interests in the
fund's portfolio. They differ, however, primarily in their sales charge
and expense structures.
Please keep this supplement for future reference.
PAGE
PART B
CLASS A, B & C
PAGE
711 *SA
- -------------------------------------------------------------------------------
SHARE CLASS REDESIGNATION
EFFECTIVE JANUARY 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
- -------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
TEMPLETON DEVELOPING MARKETS TRUST
DATED MAY 1, 1998
The Statement of Additional Information is amended as follows:
I. As of January 1, 1999, the fund offers four classes of shares: Class A,
Class B, Class C and Advisor Class. Before January 1, 1999, Class A shares
were designated Class I and Class C shares were designated Class II. All
references in the Statement of Additional Information to Class I shares are
replaced with Class A, and all references to Class II shares are replaced
with Class C.
II. The first sentence of the second paragraph on the cover is revised to read:
This SAI describes the fund's Class A, B and C shares.
III. The following is added to the "Officers and Trustees" section:
As of December 7, 1998, the officers and Board members, as a group, owned
of record and beneficially the following shares of the fund: approximately
32,145 Class A shares and 30,381 Advisor Class shares, or less than 1%,
respectively, of the total outstanding Class A and Advisor Class shares of
the fund.
IV. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is replaced
with the following:
If you request the exchange of the total value of your account, declared
but unpaid income dividends and capital gain distributions will be
reinvested in the fund and exchanged into the new fund at Net Asset Value
when paid.
V. In the section "The Rule 12b-1 Plans," found under "The Fund's
Underwriter,"
(a) the first sentence is replaced with the following:
PAGE
Each class has a separate distribution or "Rule 12b-1" plan that was
adopted pursuant to Rule 12b-1 of the 1940 Act.
(b) the following paragraphs are added after the section "The Class I
Plan":
THE CLASS B PLAN. Under the Class B plan, the fund pays Distributors up to
0.75% per year of the class' average daily net assets, payable quarterly,
to pay Distributors or others for providing distribution and related
services and bearing certain expenses. All distribution expenses over this
amount will be borne by those who have incurred them. The fund may also pay
a servicing fee of up to 0.25% per year of the class' average daily net
assets, payable quarterly. This fee may be used to pay Securities Dealers
or others for, among other things, helping to establish and maintain
customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend
payments from the fund on behalf of customers, and similar servicing and
account maintenance activities.
The expenses relating to the Class B plan are also used to pay Distributors
for advancing the commission costs to Securities Dealers with respect to
the initial sale of Class B shares. Further, the expenses relating to the
Class B plan may be used by Distributors to pay third party financing
entities that have provided financing to Distributors in connection with
advancing commission costs to Securities Dealers.
(c) and the section "The Class I and Class II Plans" is renamed "The Class
A, B and C Plans."
VI. The following performance figures are added under "How Does the Fund
Measure Performance? - Total Return":
The average annual total return for Class A for the one- and five- year
periods ended June 30, 1998, and for the period from inception (October 17,
1991) through June 30, 1998, was -41.40%, 1.56% and 3.39%, respectively.
The average annual total return for Class C for the one-year period ended
June 30, 1998, and for the period from inception (May 1, 1995) through June
30, 1998, was -39.78% and -3.09%, respectively.
The cumulative total return for Class A for the one- and five-year periods
ended June 30, 1998, and for the period from inception (October 17, 1991)
through June 30, 1998, was -41.40%, 8.04% and 25.04%, respectively.
The cumulative total return for Class C for the one-year period ended June
30, 1998, and for the period from inception (May 1, 1995) through June 30,
1998, was -39.78% and -9.44%, respectively.
PAGE
VII. Under the section "Miscellaneous Information," the following is added:
The Information Services & Technology division of Resources established a
Year 2000 Project Team in 1996. This team has already begun making
necessary software changes to help the computer systems that service the
fund and its shareholders to be Year 2000 compliant. After completing these
modifications, comprehensive tests are conducted in one of Resources' U.S.
test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
As of December 7, 1998, the principal shareholders of the Fund,
beneficial or of record, were as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
----------------------------------------------------------------------------
ADVISOR CLASS
<S> <C> <C>
FTTC TTEE For ValuSelect 1,041,052.939 9.85%
Franklin Templeton 401k
Attn: Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
</TABLE>
VIII. The following is added to the section "Financial Statements":
The unaudited financial statements contained in the Semiannual Report to
Shareholders of the fund, for the six-month period ended June 30, 1998, are
incorporated herein by reference.
IX. In the "Useful Terms and Definitions" section, the definitions of "Class I,
Class II and Advisor Class" and "Offering Price" are replaced with the
following:
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - The fund offers four classes
of shares, designated "Class A," "Class B," "Class C" and "Advisor Class."
The four classes have proportionate interests in the fund's portfolio. They
differ, however, primarily in their sales charge and expense structures.
OFFERING PRICE - The public offering price is based on the Net Asset Value
per share of the class and includes the front-end sales charge. The maximum
front-end sales charge is 5.75% for Class A and 1% for Class C. There is no
front-end sales charge for Class B. We calculate the offering price to two
decimal places using standard rounding criteria.
Please keep this supplement for future reference.
PAGE
PART B
ADVISOR CLASS
PAGE
o 711 *SAA
SUPPLEMENT DATED JANUARY 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
TEMPLETON DEVELOPING MARKETS TRUST - ADVISOR CLASS
DATED MAY 1, 1998
The Statement of Additional Information is amended as follows:
I. As of January 1, 1999, the fund offers four classes of shares: Class A,
Class B, Class C and Advisor Class. Before January 1, 1999, Class A
shares were designated Class I. All references in the Statement of
Additional Information to Class I shares are replaced with Class A.
II. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is
replaced with the following:
If you request the exchange of the total value of your account,
declared but unpaid income dividends and capital gain distributions
will be reinvested in the fund and exchanged into the new fund at Net
Asset Value when paid.
III. Under the section "Miscellaneous Information," the following is
added:
The Information Services & Technology division of Resources
established a Year 2000 Project Team in 1996. This team has already
begun making necessary software changes to help the computer systems
that service the fund and its shareholders to be Year 2000 compliant.
After completing these modifications, comprehensive tests are
conducted in one of Resources' U.S. test labs to verify their
effectiveness. Resources continues to seek reasonable assurances from
all major hardware, software or data-services suppliers that they will
be Year 2000 compliant on a timely basis. Resources is also beginning
to develop a contingency plan, including identification of those
mission critical systems for which it is practical to develop a
contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to
use of normal systems, especially mission critical systems, or
supplies of electricity or long distance voice and data lines are
limited.
PAGE
IV. In the "Useful Terms and Definitions" section, the definition of "Class
I, Class II and Advisor Class" is replaced with the following:
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - The fund offers four
classes of shares, designated "Class A," "Class B," "Class C" and
"Advisor Class." The four classes have proportionate interests in the
fund's portfolio. They differ, however, primarily in their sales charge
and expense structures.
Please keep this supplement for future reference.
PAGE
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) 1. FINANCIAL STATEMENTS: Incorporated by reference from
Registrant's 1997 Annual Report:
Independent Auditor's Report
Investment Portfolio as of December 31, 1997
Statement of Assets and Liabilities as of
December 31, 1997
Statement of Operations for the year ended
December 31, 1997
Statement of Changes in Net Assets for the years
ended December 31, 1997 and 1996
Notes to Financial Statements
2. Unaudited Financial Statements incorporated herein,
by reference to Registrant's Semiannual Report to
shareholders dated June 30, 1998 as filed with the
SEC on September 3, 1998.
(b) EXHIBITS
(1) (a) Amended and Restated Declaration of Trust/2/
(c) Establishment and Designation of Classes of Shares
of Beneficial Interest/2/
(d) Establishment and Designation of Classes
of Shares of Beneficial Interest/4/
(2) By-Laws/3/
(3) Not Applicable
(4) Specimen Security/1/
(5) (a) Amended and Restated Investment Management
Agreement/3/
(b) Addendeum to the Investment Management Agreement
dated December 2, 1998
(6) (a) Distribution Agreement/3/
(b) Form of Dealer Agreement between Registrant and
Franklin Templeton Distributors, Inc. and Securities
Dealers dated March 1, 1998
(c) Amendment of Dealer Agreement dated May 15, 1998
(7) Not Applicable
(8) (a) Custody Agreement/3/
(b) Amendment dated March 2, 1998 to the Custody
Agreement
(c) AmendmentNo. 2 dated July 23, 1998 to the Custody
Agreement
(9) (a) Amended and Restated Transfer Agent Agreement/5/
(b) Fund Administration Agreement/4/
(c) Shareholder Sub-Accounting Services Agreement/3/
(d) Sub-Transfer Agent Services Agreement/3/
(10) Opinion and Consent of Counsel/6/
(11) Consent of Independent Public Accountants
(12) Not Applicable
PAGE
(13) (a) Letter concerning initial capital/1/
(b) Investment Letter/2/
(14) Not Applicable
(15) (a) Distribution Plan-Class A Shares/2/
(b) Distribution Plan-Class C Shares/2/
(c) Form of Distribution Plan-Class B Shares
(16) Schedule showing computation of performance quotations
provided in response to Item 22 (unaudited) 4
(17) Powers of Attorney dated December 11, 1998
(18) (a) Form of Multiclass Plan 1
(b) Form of Multiclass Plan-Class B Shares
(27) Financial Data Schedule
- ---------------
1 Previously filed with Pre-Effective Amendment No. 1 to the Registration
Statement on September 19, 1991.
2 Previously filed with Post-Effective Amendment No. 4 to the Registration
Statement on April 28, 1995.
3 Previously filed with Post-Effective Amendment No. 5 to the Registration
Statement on April 29, 1996.
4 Previously filed with Post-Effective Amendment No. 7 to the Registration
Statement on December 31, 1996.
5 Previously filed with Post-Effective Amendment No. 8 to the Registration
Statement on April 30, 1997.
6 Previously filed with Post-Effective Amendment No. 9 to the Registration
Statement on February 27, 1998.
PAGE
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF RECORD HOLDERS
Shares of Beneficial Interest, par value $0.01 per share - Class A:
243,119 Shareholders as of November 30, 1998
Shares of Beneficial Interest, par value $0.01 per share - Class C:
46,567 Shareholders as of November 30, 1998
Shares of Beneficial Interest, par value $0.01 per share - Advisor
Class: 1,989 Shareholders as of November 30, 1998
ITEM 27. INDEMNIFICATION.
Reference is made to Article IV of the Registrant's Declaration of
Trust, which is filed herewith.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to
the Declaration of Trust or otherwise, the Registrant is aware that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and,
therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by trustees, officers or
controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such
trustees, officers or controlling persons in connection with the
shares being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND ITS OFFICERS
AND DIRECTORS
(a) Templeton Asset Management Ltd.
The officers and Directors of the Registrant's manager also serve as
officers and/or directors for (1) the manager's corporate parent,
Franklin Resources, Inc., and/or (2) other investment companies in the
Franklin Templeton Group of Funds.
For additional information please see Part A and Schedules A and D of
Form ADV of the Fund's Investment Manager (SEC File #801-46997),
incorporated herein by reference, which sets forth the officers and
directors of the investment manager and information as to any
business, profession, vocation or employment of a substantial nature
engaged in by those officers and directors during the past two years.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Franklin Templeton Distributors, Inc. also acts as
principal underwriter of shares of:
Templeton American Trust, Inc.
Templeton Capital Accumulator Fund, Inc.
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
Templeton Variable Products Series Fund
Franklin Asset Allocation Fund
Franklin California Tax Free Income Fund, Inc.
Franklin California Tax Free Trust
Franklin Custodian Funds, Inc.
Franklin Equity Fund
Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund
Franklin Floating Rate Trust
Franklin Gold Fund
Franklin High Income Trust
Franklin Investors Securities Trust
Franklin Managed Trust
Franklin Money Fund
Franklin Mutual Series Fund, Inc.
Franklin Municipal Securities Trust
Franklin New York Tax-Free Income Fund
Franklin New York Tax-Free Trust
Franklin Real Estate Securities Fund
Franklin Strategic Mortgage Portfolio
Franklin Strategic Series
Franklin Tax Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund
Trust Franklin Value Investors Trust
Institutional Fiduciary Trust
PAGE
(b) The information required by the Item 29 with respect to each director
and officer of Distributors is incorporated by reference to Part B
of this Form N-1A and Schedule A of Form BD filed by Distributors
with the Securities and Exchange Commission pursuant to the
Securities Act of 1934 (SEC File No. 8-5889)
(c) Registrant's principal underwriter is an affiliated person of
Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Certain accounts, books, and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company Act
of 1940 and rules thereunder are locataed 500 East Broward Blvd., Fort
Lauderdale, Florida 33394. Other records are maintained at the offices
of Franklin Templeton Investor Services, Inc., 100 Fountain Parkway,
St. Petersburg, Florida 33716 and Franklin Resources, Inc., 777
Mariners Island Blvd., San Mateo, California 94404.
PAGE
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS.
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to call a meeting of Shareholders or the
purpose of voting upon the question of removal of a Trustee or
Trustee when requested to do so by the holders of at least 10% of
the Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the shareholder
communications provisions of Section 16(c) of the Investment
Company Act of 1940.
(d) Registrant undertakes to furnish to each person to whom its
Prospectus is provided a copy of its latest Annual Report, upon
request and without charge.
PAGE
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of the Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Post-Effective Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Ft. Lauderdale, Florida, on the 30th
day of December, 1998.
TEMPLETON DEVELOPING MARKETS TRUST
By:
J. Mark Mobius, President*
*By: /s/BARBARA J. GREEN
-----------------------
Barbara J. Green
as attorney-in-fact**
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
____________________ President (Chief December 30, 1998
J. Mark Mobius* Executive Officer)
____________________ Treasurer (Chief December 30, 1998
James R. Baio* Financial and
Accounting Officer)
____________________ Trustee December 30, 1998
Charles B. Johnson*
____________________ Trustee December 30, 1998
Charles E. Johnson*
____________________ Trustee December 30, 1998
Nicholas F. Brady*
____________________ Trustee December 30, 1998
Fred R. Millsaps*
</TABLE>
PAGE
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
_____________________ Trustee December 30, 1998
Betty P. Krahmer*
____________________ Trustee December 30, 1998
Constantine Dean
Tseretopoulos*
____________________ Trustee December 30, 1998
Frank J. Crothers*
____________________ Trustee December 30, 1998
Harris J. Ashton*
____________________ Trustee December 30, 1998
S. Joseph Fortunato*
____________________ Trustee December 30, 1998
Andrew H. Hines, Jr.*
____________________ Trustee December 30, 1998
John Wm. Galbraith*
_____________ Trustee December 30, 1998
Edith E. Holiday*
____________________ Trustee December 30, 1998
Gordon S. Macklin*
</TABLE>
*By: /s/BARBARA J. GREEN
---------------------
Barbara J. Green**
as attorney-in-fact
- -------------------
** Powers of Attorney are filed herewith.
PAGE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
FILED WITH
POST-EFFECTIVE AMENDMENT NO. 10 TO
REGISTRATION STATEMENT
ON
FORM N-1A
TEMPLETON DEVELOPING MARKETS TRUST
PAGE
EXHIBIT LIST
Exhibit Number Name of Exhibit
(5)(b) Addendum dated December 2, 1997 to the Investment Management
Agreement
(6)(b) Form of Dealer Agreement between Registrant and Franklin
Templeton Distributors, Inc. and Securities Dealers dated
March 1, 1998
(c) Amendment of Dealer Agreement dated May 15, 1998
(8)(b) Amendment dated March 2, 1998 to the Custody Agreement
(c) Amendment No. 2 dated July 23, 1998 to the Custody Agreement
(11) Consent of Independent Public Accountant
(15)(c) Form of Distribution Plan - Class B
(17) Powers of Attorney dated December 11, 1998
(18)(b) Form of Multiclass Plan - Class B
(27) Financial Data Schedules
ADDENDUM PURSUANT TO SECTION 6.2 OF THE CODE OF CONDUCT OF
THE HONG KONG SECURITIES & FUTURES COMMISSION (THE "SFC")
This Addendum (the "Addendum") is made and entered into as of this 2nd
day of December, 1997 by the Templeton Developing Markets Trust (the "Trust")
and Templeton Asset Management Ltd. (the "Investment Manager").
WHEREAS, the Trust and the Investment Manager are parties to the
Investment Management Agreement dated as of the 30th day of October, 1992, and
amended and restated as of the 25th day of February, 1994 and the 23rd day of
November, 1995 (the "Investment Management Agreement"); and
WHEREAS, Section 6.2 of the SFC's Code of Conduct for Persons
Registered with the Securities and Futures Commission (the "Code") requires that
certain additional information be included in the Investment Management
Agreement.
NOW THEREFORE, the parties hereto agree that, pursuant to Section 6.2
of the Code, the following information is included in the Investment Management
Agreement:
SECTION 1. UNDERTAKINGS. Each party undertakes to notify the other
party in the event of any material change to the information provided in the
Investment Management Agreement.
SECTION 2. CERTAIN INFORMATION ABOUT THE INVESTMENT MANAGER.
(a) The Investment Manager's full name and address is:
Templeton Asset Management Ltd. Templeton Asset Management Ltd.
7 Temasek Boulevard Two Exchange Square
#38-03 Suntec Tower One Suite 3905-08
Singapore 038987 Connaught Road, Central
Hong Kong
(b) The Investment Manager's registration status with the SFC
is active.
SECTION 3. CERTAIN INFORMATION ABOUT THE TRUST. The Trust's full name
and verified address is:
Templeton Developing Markets Trust
500 East Broward Boulevard
Fort Lauderdale, Florida 33394
PAGE
IN WITNESS WHEREOF, the parties hereto have caused this
Addendum to be duly executed by their respective duly authorized
officers and their respective corporate seals to be hereunto duly
affixed and attested.
TEMPLETON DEVELOPING MARKETS TRUST
By:/s/JOHN R. KAY
------------------------------
John R. Kay
Vice President
TEMPLETON ASSET MANAGEMENT LTD.
By:/s/GREGORY E. MCGOWAN
------------------------------
Gregory E. McGowan
Director
DEALER AGREEMENT
Effective: March 1, 1998
Dear Securities Dealer:
Franklin/Templeton Distributors, Inc. ("we" or "us") invites you to participate
in the distribution of shares of the Franklin Templeton investment companies
(the "Funds") for which we now or in the future serve as principal underwriter,
subject to the terms of this Agreement. We will notify you from time to time of
the Funds which are eligible for distribution and the terms of compensation
under this Agreement. This Agreement supersedes any prior dealer agreements
between us, as stated in Section 18, below.
1. LICENSING.
(a) You represent that you are (i) a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
are presently licensed to the extent necessary by the appropriate regulatory
agency of each jurisdiction in which you will offer and sell shares of the
Funds, or (ii) a broker, dealer or other company licensed, registered or
otherwise qualified to effect transactions in securities in a country (a
"foreign country") other than the United States of America (the "U.S.") where
you will offer or sell shares of the Funds. You agree that termination or
suspension of such membership with the NASD, or of your license to do business
by any regulatory agency having jurisdiction, at any time shall terminate or
suspend this Agreement forthwith and shall require you to notify us in writing
of such action. If you are not a member of the NASD but are a broker, dealer or
other company subject to the laws of a foreign country, you agree to conform to
the Conduct Rules of the NASD. This Agreement is in all respects subject to the
Conduct Rules of the NASD, particularly Conduct Rule 2830 of the NASD, which
shall control any provision to the contrary in this Agreement.
(b) You agree to notify us immediately in writing if at
any time you are not a member in good standing of the Securities Investor
Protection Corporation ("SIPC").
2. SALES OF FUND SHARES. You may offer and sell shares of each
Fund and class of each Fund only at the public offering price which shall be
applicable to, and in effect at the time of, each transaction. The procedures
relating to all orders and the handling of them shall be subject to the terms of
the applicable then current prospectus and statement of additional information
(hereafter, the "prospectus") and new account application, including amendments,
for each such Fund and each class of such Fund, and our written instructions
from time to time. This Agreement is not exclusive, and either party may enter
into similar agreements with third parties.
3. DUTIES OF DEALER: You agree:
(a) To act as principal, or as agent on behalf of your
customers, in all transactions in shares of the Funds except as provided in
Section 4 hereof. You shall not have any authority to act as agent for the
issuer (the Funds), for the Principal Underwriter, or for any other dealer in
any respect, nor will you represent to any third party that you have such
authority or are acting in such capacity.
(b) To purchase shares only from us or from your
customers.
(c) To enter orders for the purchase of shares of the
Funds only from us and only for the purpose of covering purchase orders you have
already received from your customers or for your own bona fide investment.
(d) To maintain records of all sales, redemptions and
repurchases of shares made through you and to furnish us with copies of such
records on request.
(e) To distribute prospectuses and reports to your
customers in compliance with applicable legal requirements, except to the extent
that we expressly undertake to do so on your behalf.
PAGE
(f) That you will not withhold placing customers'
orders for shares so as to profit yourself as a result of such withholding or
place orders for shares in amounts just below the point at which sales charges
are reduced so as to benefit from a higher sales charge applicable to an amount
below the breakpoint.
(g) That if any shares confirmed to you hereunder are
repurchased or redeemed by any of the Funds within seven business days after
such confirmation of your original order, you shall forthwith refund to us the
full concession, allowed to you on such orders, including any payments we made
to you from our own resources as provided in Section 6(b) hereof with respect to
such orders. We shall forthwith pay to the appropriate Fund the share, if any,
of the sales charge we retained on such order and shall also pay to such Fund
the refund of the concession we receive from you as herein provided (other than
the portion of such concession we paid to you from our own resources as provided
in Section 6(b) hereof). We shall notify you of such repurchase or redemption
within a reasonable time after settlement. Termination or suspension of this
Agreement shall not relieve you or us from the requirements of this subsection.
(h) That if payment for the shares purchased is not
received within the time customary or the time required by law for such payment,
the sale may be canceled without notice or demand and without any responsibility
or liability on our part or on the part of the Funds, or at our option, we may
sell the shares which you ordered back to the Funds, in which latter case we may
hold you responsible for any loss to the Funds or loss of profit suffered by us
resulting from your failure to make payment as aforesaid. We shall have no
liability for any check or other item returned unpaid to you after you have paid
us on behalf of a purchaser. We may refuse to liquidate the investment unless we
receive the purchaser's signed authorization for the liquidation.
(i) That you shall assume responsibility for any loss
to the Funds caused by a correction made subsequent to trade date, provided such
correction was not based on any error, omission or negligence on our part, and
that you will immediately pay such loss to the Funds upon notification.
(j) That if on a redemption which you have ordered,
instructions in proper form, including outstanding certificates, are not
received within the time customary or the time required by law, the redemption
may be canceled forthwith without any responsibility or liability on our part or
on the part of any Fund, or at our option, we may buy the shares redeemed on
behalf of the Fund, in which latter case we may hold you responsible for any
loss to the Fund or loss of profit suffered by us resulting from your failure to
settle the redemption.
(k) To obtain from your customers all consents required
by applicable privacy laws to permit us, any of our affiliates or the Funds to
provide you either directly or through a service established for that purpose
with confirmations, account statements and other information about your
customers' investments in the Funds.
4. DUTIES OF DEALER: RETIREMENT ACCOUNTS. In connection with
orders for the purchase of shares on behalf of an Individual Retirement Account,
Self-Employed Retirement Plan or other retirement accounts, by mail, telephone,
or wire, you shall act as agent for the custodian or trustee of such plans
(solely with respect to the time of receipt of the application and payments),
and you shall not place such an order until you have received from your customer
payment for such purchase and, if such purchase represents the first
contribution to such a plan, the completed documents necessary to establish the
plan and enrollment in the plan. You agree to indemnify us and Franklin
Templeton Trust Company and/or Templeton Funds Trust Company as applicable for
any claim, loss, or liability resulting from incorrect investment instructions
received from you which cause a tax liability or other tax penalty.
5. CONDITIONAL ORDERS; CERTIFICATES. We will not accept from
you any conditional orders for shares of any of the Funds. Delivery of
certificates or confirmations for shares purchased shall be made by the Funds
only against constructive receipt of the purchase price, subject to deduction
for your concession and our portion of the sales charge, if any, on such sale.
No certificates for shares of the Funds will be issued unless specifically
requested.
PAGE
6. DEALER COMPENSATION.
(a) On each purchase of shares by you from us, the
total sales charges and your dealer concessions shall be as stated in each
Fund's then current prospectus, subject to NASD rules and applicable laws. Such
sales charges and dealer concessions are subject to reductions under a variety
of circumstances as described in the Funds' prospectuses. For an investor to
obtain these reductions, we must be notified at the time of the sale that the
sale qualifies for the reduced charge. If you fail to notify us of the
applicability of a reduction in the sales charge at the time the trade is
placed, neither we nor any of the Funds will be liable for amounts necessary to
reimburse any investor for the reduction which should have been effected.
(b) In accordance with the Funds' prospectuses, we or
our affiliates may, but are not obligated to, make payments to you from our own
resources as compensation for certain sales which are made at net asset value
("Qualifying Sales"). If you notify us of a Qualifying Sale, we may make a
contingent advance payment up to the maximum amount available for payment on the
sale. If any of the shares purchased in a Qualifying Sale are repurchased or
redeemed within twelve months of the month of purchase, we shall be entitled to
recover any advance payment attributable to the repurchased or redeemed shares
by reducing any account payable or other monetary obligation we may owe to you
or by making demand upon you for repayment in cash. We reserve the right to
withhold advances to you, if for any reason we believe that we may not be able
to recover unearned advances from you. Termination or suspension of this
Agreement shall not relieve you or us from the requirements of this subsection.
7. REDEMPTIONS OR REPURCHASES. Redemptions or repurchases of
shares of the Funds will be made at the net asset value of such shares, less any
applicable deferred sales or redemption charges, in accordance with the
applicable prospectuses. Except as permitted by applicable law, you agree not to
purchase any shares from your customers at a price lower than the net asset
value of such shares next computed by the Funds after the purchase (the
"Redemption/Repurchase Price"). You shall, however, be permitted to sell shares
of the Funds for the account of the record owner to the Funds at the
Redemption/Repurchase Price for such shares.
8. EXCHANGES. Telephone exchange orders will be effective only
for uncertificated shares or for which share certificates have been previously
deposited and may be subject to any fees or other restrictions set forth in the
applicable prospectuses. Exchanges from a Fund sold with no sales charge to a
Fund which carries a sales charge, and exchanges from a Fund sold with a sales
charge to a Fund which carries a higher sales charge may be subject to a sales
charge in accordance with the terms of the applicable Fund's prospectus. You
will be obligated to comply with any additional exchange policies described in
the applicable Fund's prospectus, including without limitation any policy
restricting or prohibiting "Timing Accounts" as therein defined.
9. TRANSACTION PROCESSING. All orders are subject to acceptance
by us and by the Fund or its transfer agent, and become effective only upon
confirmation by us. If required by law, each transaction shall be confirmed in
writing on a fully disclosed basis and if confirmed by us, a copy of each
confirmation shall be sent simultaneously to you if you so request. All sales
are made subject to receipt of shares by us from the Funds. We reserve the right
in our discretion, without notice, to suspend the sale of shares of the Funds or
withdraw the offering of shares of the Funds entirely. Orders will be effected
at the price(s) next computed on the day they are received if, as set forth in
the applicable Fund's current prospectus, the orders are received by us, an
agent appointed by us or the Funds prior to the time the price of the Fund's
shares is calculated. Orders received after that time will be effected at the
price(s) computed on the next business day. All orders must be accompanied by
payment in U.S. Dollars. Orders payable by check must be drawn payable in U.S.
Dollars on a U.S. bank, for the full amount of the investment.
10. MULTIPLE CLASSES. We may from time to time provide to you
written compliance guidelines or standards relating to the sale or distribution
of Funds offering multiple classes of shares (each, a "Class") with different
sales charges and distribution related operating expenses. In addition, you will
PAGE
be bound by any applicable rules or regulations of government agencies or
self-regulatory organizations generally affecting the sale or distribution of
shares of investment companies offering multiple classes of shares.
11. RULE 12B-1 PLANS. You are invited to participate in all
distribution plans (each, a "Plan") adopted for a Class of a Fund or for a Fund
that has only a single Class (each, a "Plan Class") pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act").
To the extent you provide administrative and other services,
including, but not limited to, furnishing personal and other services and
assistance to your customers who own shares of a Plan Class, answering routine
inquiries regarding a Fund or Class, assisting in changing account designations
and addresses, maintaining such accounts or such other services as a Fund may
require, to the extent permitted by applicable statutes, rules, or regulations,
we shall pay you a Rule 12b-1 servicing fee. To the extent that you participate
in the distribution of Fund shares that are eligible for a Rule 12b-1
distribution fee, we shall also pay you a Rule 12b-1 distribution fee. All Rule
12b-1 servicing and distribution fees shall be based on the value of shares
attributable to customers of your firm and eligible for such payment, and shall
be calculated on the basis and at the rates set forth in the compensation
schedule then in effect for the applicable Plan (the "Schedule"). Without prior
approval by a majority of the outstanding shares of a particular Class of a Fund
which has a Plan, the aggregate annual fees paid to you pursuant to such Plan
shall not exceed the amounts stated as the "annual maximums" in such Plan Class'
prospectus, which amount shall be a specified percent of the value of such Plan
Class' net assets held in your customers' accounts which are eligible for
payment pursuant to this Agreement (determined in the same manner as such Plan
Class uses to compute its net assets as set forth in its effective prospectus).
You shall furnish us and each Fund that has a Plan Class
(each, a "Plan Fund") with such information as shall reasonably be requested by
the Board of Directors, Trustees or Managing General Partners (hereinafter
referred to as "Directors") of such Plan Fund with respect to the fees paid to
you pursuant to the Schedule of such Plan Fund. We shall furnish to the Boards
of Directors of the Plan Funds, for their review on a quarterly basis, a written
report of the amounts expended under the Plans and the purposes for which such
expenditures were made.
Each Plan and the provisions of any agreement relating to such
Plan must be approved annually by a vote of the Directors of the Fund that has
such Plan, including such persons who are not interested persons of such Plan
Fund and who have no financial interest in such Plan or any related agreement
("Rule 12b-1 Directors"). Each Plan or the provisions of this Agreement relating
to such Plan may be terminated at any time by the vote of a majority of the Rule
12b-1 Directors, or by a vote of a majority of the outstanding shares of the
Class that has such Plan, on sixty (60) days' written notice, without payment of
any penalty. A Plan or the provisions of this Agreement may also be terminated
by any act that terminates the Underwriting Agreement between us and the Fund
that has such Plan, and/or the management or administration agreement between
Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and such Plan Fund. In the event of the termination of a Plan for any
reason, the provisions of this Agreement relating to such Plan will also
terminate.
Continuation of a Plan and provisions of this Agreement
relating to such Plan are conditioned on Rule 12b-1 Directors being ultimately
responsible for selecting and nominating any new Rule 12b-1 Directors. Under
Rule 12b-1, Directors of any of the Plan Funds have a duty to request and
evaluate, and persons who are party to any agreement related to a Plan have a
duty to furnish, such information as may reasonably be necessary to an informed
determination of whether the Plan or any agreement should be implemented or
continued. Under Rule 12b-1, a Plan Fund is permitted to implement or continue a
Plan or the provisions of this Agreement relating to such Plan from year-to-year
only if, based on certain legal considerations, the Board of Directors of such
Plan Fund is able to conclude that such Plan will benefit the Plan Class. Absent
such yearly determination, such Plan and the provisions of this Agreement
relating to such Plan must be terminated as set forth above. In addition, any
obligation assumed by a Fund pursuant to this Agreement shall be limited in all
cases to the assets of such Fund and no person shall seek satisfaction thereof
from shareholders of a Fund. You agree to waive payment of any amounts payable
PAGE
to you by us under a Fund's Plan until such time as we are in receipt of such
fee from the Fund.
The provisions of the Plans between the Plan Funds and us
shall control over the provisions of this Agreement in the event of any
inconsistency.
12. REGISTRATION OF SHARES. Upon request, we shall notify you of
the states or other jurisdictions in which each Fund's shares are currently
noticed, registered or qualified for offer or sale to the public. We shall have
no obligation to make notice filings of, register or qualify, or to maintain
notice filings of, registration of or qualification of, Fund shares in any state
or other jurisdiction. We shall have no responsibility, under the laws
regulating the sale of securities in any U.S. or foreign jurisdiction, for the
registration, qualification or licensed status of persons offering or selling
Fund shares or for the manner of offering or sale of Fund shares. If it is
necessary to file notice of, register or qualify Fund shares in any foreign
jurisdictions in which you intend to offer the shares of any Funds, it will be
your responsibility to arrange for and to pay the costs of such notice filing,
registration or qualification; prior to any such notice filing, registration or
qualification, you will notify us of your intent and of any limitations that
might be imposed on the Funds, and you agree not to proceed with such notice
filing, registration or qualification without the written consent of the
applicable Funds and of ourselves. Except as stated in this section, we shall
not, in any event, be liable or responsible for the issue, form, validity,
enforceability and value of such shares or for any matter in connection
therewith, and no obligation not expressly assumed by us in this Agreement shall
be implied. Nothing in this Agreement shall be deemed to be a condition,
stipulation or provision binding any person acquiring any security to waive
compliance with any provision of the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, the rules and regulations of the U.S. Securities and Exchange
Commission, or any applicable laws or regulations of any government or
authorized agency in the U.S. or any other country having jurisdiction over the
offer or sale of shares of the Funds, or to relieve the parties hereto from any
liability arising under such laws, rules and regulations.
13. CONTINUOUSLY OFFERED CLOSED-END FUNDS. This Section 13
relates solely to shares of Funds that represent a beneficial interest in the
Franklin Floating Rate Trust and shares issued by any other continuously offered
closed-end investment company registered under the 1940 Act for which we or an
affiliate of ours serve as principal underwriter and that periodically
repurchases its shares (each, a "Trust"). Shares of a Trust that are offered to
the public will be registered under the 1933 Act, and are expected to be offered
during an offering period that may continue indefinitely ("Continuous Offering
Period"). There is no guarantee that such a continuous offering will be
maintained by a Trust. The Continuous Offering Period, shares of a Trust and
certain of the terms on which such shares are offered shall be as described in
the prospectus of the Trust.
As set forth in a Trust's then current prospectus, we may, but
are not obligated to, provide you with appropriate compensation for selling
shares of the Trust. In addition, you may be entitled to a fee for servicing
your clients who are shareholders in a Trust, subject to applicable law and NASD
Conduct Rules. You agree that any repurchases of shares of a Trust that were
originally purchased as Qualifying Sales shall be subject to Subsection 6(b)
hereof.
You expressly acknowledge and understand that, notwithstanding
anything to the contrary in this Agreement:
(a) No Trust has a Rule 12b-1 Plan and in no event will
a Trust pay, or have any obligation to pay, any compensation directly or
indirectly to you.
(b) Shares of a Trust will not be repurchased by either
the Trust (other than through repurchase offers by the Trust from time to time,
if any) or by us and no secondary market for such shares exists currently, or is
expected to develop. Any representation as to a repurchase or tender offer by a
Trust, other than that set forth in the Trust's then current prospectus,
notification letters, reports or other related material provided by the Trust,
is expressly prohibited.
PAGE
(c) An early withdrawal charge payable by shareholders
of a Trust to us may be imposed on shares accepted for repurchase by the Trust
that have been held for less than a stated period, as set forth in the Trust's
then current Prospectus.
(d) In the event your customer cancels his or her order for
shares of a Trust after confirmation, such shares will not be repurchased,
remarketed or otherwise disposed of by or though us.
14. FUND INFORMATION. No person is authorized to give any
information or make any representations concerning shares of any Fund except
those contained in the Fund's then current prospectus or in materials issued by
us as information supplemental to such prospectus. We will supply reasonable
quantities of prospectuses, supplemental sales literature, sales bulletins, and
additional information as issued by the Fund or us. You agree not to use other
advertising or sales material relating to the Funds except that which (a)
conforms to the requirements of any applicable laws or regulations of any
government or authorized agency in the U.S. or any other country having
jurisdiction over the offering or sale of shares of the Funds, and (b) is
approved in writing by us in advance of such use. Such approval may be withdrawn
by us in whole or in part upon notice to you, and you shall, upon receipt of
such notice, immediately discontinue the use of such sales literature, sales
material and advertising. You are not authorized to modify or translate any such
materials without our prior written consent.
15. INDEMNIFICATION. You agree to indemnify, defend and hold
harmless us, the Funds, and the respective officers, directors and employees of
the Funds and us from any and all losses, claims, liabilities and expenses
arising out of (1) any alleged violation of any statute or regulation (including
without limitation the securities laws and regulations of the U.S. or any state
or foreign country) or any alleged tort or breach of contract, in or related to
the offer or sale by you of shares of the Funds pursuant to this Agreement
(except to the extent that our negligence or failure to follow correct
instructions received from you is the cause of such loss, claim, liability or
expense), (2) any redemption or exchange pursuant to telephone instructions
received from you or your agents or employees, or (3) the breach by you of any
of the terms and conditions of this Agreement. This Section 15 shall survive the
termination of this Agreement.
16. TERMINATION; SUCCESSION; ASSIGNMENT; AMENDMENT. Each party
to this Agreement may terminate its participation in this Agreement by giving
written notice to the other parties. Such notice shall be deemed to have been
given and to be effective on the date on which it was either delivered
personally to the other parties or any officer or member thereof, or was mailed
postpaid or delivered by electronic transmission to the other parties' chief
legal officers at the addresses shown herein or in the most recent NASD Manual.
This Agreement shall terminate immediately upon the appointment of a Trustee
under the Securities Investor Protection Act or any other act of insolvency by
you. The termination of this Agreement by any of the foregoing means shall have
no effect upon transactions entered into prior to the effective date of
termination. A trade placed by you subsequent to your voluntary termination of
this Agreement will not serve to reinstate the Agreement. Reinstatement, except
in the case of a temporary suspension of a dealer, will be effective only upon
written notification by us to you. This Agreement will terminate automatically
in the event of its assignment by us. For purposes of the preceding sentence,
the word "assignment" shall have the meaning given to it in the 1940 Act. This
Agreement may not be assigned by you without our prior written consent. This
Agreement may be amended by us at any time by written notice to you and your
placing of an order or acceptance of payments of any kind after the effective
date and receipt of notice of any such Amendment shall constitute your
acceptance of such Amendment.
17. SETOFF; DISPUTE RESOLUTION. Should any of your concession
accounts with us have a debit balance, we may offset and recover the amount owed
to us or the Funds from any other account you have with us, without notice or
demand to you. In the event of a dispute concerning any provision of this
Agreement, either party may require the dispute to be submitted to binding
arbitration under the commercial arbitration rules of the NASD or the American
Arbitration Association. Judgment upon any arbitration award may be entered by
any court having jurisdiction. This Agreement shall be construed in accordance
PAGE
with the laws of the State of California, not including any provision that would
require the general application of the law of another jurisdiction.
18. ACCEPTANCE; CUMULATIVE EFFECT. This Agreement is cumulative
and supersedes any agreement previously in effect. It shall be binding upon the
parties hereto when signed by us and accepted by you. If you have a current
dealer agreement with us, your first trade or acceptance of payments from us
after your receipt of this Agreement, as it may be amended pursuant to Section
16, above, shall constitute your acceptance of its terms. Otherwise, your
signature below shall constitute your acceptance of its terms.
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By /s/ GREG JOHNSON
Greg Johnson, President
777 Mariners Island Blvd.
San Mateo, CA 94404
Attention: Chief Legal Officer (for legal notices only)
415/312-2000
700 Central Avenue
St. Petersburg, Florida 33701-3628
813/823-8712
Dealer: If you have NOT previously signed a Dealer Agreement with us, please
complete and sign this section and return the original to us.
DEALER NAME:
By _________________
(Signature)
Name:
Title:
Address:
Telephone:
NASD CRD #
Franklin Templeton Dealer #
(Internal Use Only)
May 15, 1998
Re: Amendment of Dealer Agreement - Notice Pursuant to Section 16
Dear Securities Dealer:
This letter constitutes notice of amendment of the current Dealer Agreement (the
"Agreement") between Franklin/Templeton Distributors, Inc. ("we" or "us") and
you pursuant to Section 16 of the Agreement. The Agreement is hereby amended as
follows:
1. Defined terms in this amendment have the meanings as stated
in the Agreement unless otherwise indicated.
2. Section 6 is modified to add a subsection 6(c), as follows:
(c) The following limitations apply with respect to
shares of each Trust as described in Section 13 of this Agreement.
(1) Consistent with the NASD Conduct Rules, the total
compensation to be paid to us and selected dealers and their affiliates,
including you and your affiliates, in connection with the distribution of shares
of a Trust will not exceed the underwriting compensation limitation prescribed
by NASD Conduct Rule 2710. The total underwriting compensation to be paid to us
and selected dealers and their affiliates, including you and your affiliates,
may include: (i) at the time of purchase of shares a payment to you or another
securities dealer of 1% of the dollar amount of the purchased shares by the
Distributor; and (ii) a quarterly payment at an annual rate of .50% to you or
another securities dealer based on the value of such remaining shares sold by
you or such securities dealer, if after twelve (12) months from the date of
purchase, the shares sold by you or such securities dealer remain outstanding.
(2) The maximum compensation shall be no more
than as disclosed in the section "Payments to Dealers" of the prospectus of the
applicable Trust.
Pursuant to Section 16 of the Agreement, your placement of an order or
acceptance of payments of any kind after the effective date and receipt of
notice of this amendment shall constitute your acceptance of this amendment.
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By /s/GREG JOHNSON
Greg Johnson, President
777 Mariners Island Blvd.
San Mateo, CA 94404
Attention: Chief Legal Officer (for legal notices only)
650/312-2000
100 Fountain Parkway
St. Petersburg, FL 33716
813/299-8712
AMENDMENT, dated March 2, 1998 to the custody agreements (each an
"Agreement"), between the Templeton funds listed on Schedule A hereto (each a
"Fund"), with each having a place of business at 500 East Broward Blvd., Ft.
Lauderdale, FL 33394 and The Chase Manhattan Bank ("Chase"), having a place of
business at 270 Park Ave., New York, NY 10017-2070.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended as follows:
Delete all of Section 2 of the Agreement after subsection (B.) thereof, and
insert, in lieu thereof, the following:
(C.) Fund's board of directors (or equivalent body) (hereinafter "Board")
hereby delegates to Chase, and Chase hereby accepts the delegation to it, of the
obligation to perform as Fund's "Foreign Custody Manager" (as that term is
defined in SEC rule 17f-5(a)(2)), both for the purpose of selecting Eligible
Foreign Custodians (as that term is defined herein) to hold Securities and Cash
and of evaluating the contractual arrangements with such Eligible Foreign
Custodians (as set forth in SEC rule 17f-5(c)(2)); provided that, the term
Eligible Foreign Custodian shall not include any "Compulsory Depository." A
Compulsory Depository shall mean a Foreign Securities Depository or clearing
agency the use of which is compulsory because: (1) its use is required by law or
regulation, (2) securities cannot be withdrawn from the depository, or (3)
maintaining securities outside the depository is not consistent with prevailing
custodial practices in the country which the depository serves.
PAGE
Compulsory Depositories used by Chase as of the date hereof are set forth in
Appendix 1-A hereto, and as the same may be amended on notice to Fund from time
to time.
(i) In connection with the foregoing, Chase shall:
(1) provide written reports notifying Fund's Board of the placement of
Securities and Cash with particular Eligible Foreign Custodians and of
any material change in the arrangements with such Eligible Foreign
Custodians, with such reports to be provided to Fund's Board at such
times as the Board deems reasonable and appropriate based on the
circumstances of Fund's foreign custody arrangements;
(2) exercise such reasonable care, prudence and diligence in performing
as Fund's Foreign Custody Manager as a person having responsibility for
the safekeeping of Securities and Cash would exercise;
(3) in selecting an Eligible Foreign Custodian, first have determined
that Securities and Cash placed and maintained in the safekeeping of
such Eligible Foreign Custodian shall be subject to reasonable care,
based on the standards applicable to custodians in the relevant market,
after having considered all factors relevant to the safekeeping of such
Securities and Cash, including, without limitation, those factors set
forth in SEC rule 17f-5(c)(1)(i)-(iv);
(4) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is a
non-Compulsory Depository or clearing agency, such contract, the rules
or established practices or procedures of the Depository, or any
combination of the foregoing) requires that the Eligible Foreign
Custodian will provide reasonable care for Securities and Cash based on
the standards applicable to custodians in the relevant market; and
2
PAGE
(5) have established a system to monitor the continued appropriateness
of maintaining Securities and Cash with particular Eligible Foreign
Custodians and of the governing contractual arrangements. Chase shall
also monitor Compulsory Depositories and shall advise Fund of any
material negative change in the performance of, or arrangements with,
any Compulsory Depository as the same would adversely affect the
custody of assets.
Subject to (i)(1)-(5) above, Chase is hereby authorized to place and maintain
Securities and Cash on behalf of Fund with Eligible Foreign Custodians pursuant
to a written contract deemed appropriate by Chase.
(ii) Except as expressly provided herein, Fund shall be solely responsible
to assure that the maintenance of Securities and Cash hereunder complies with
the rules, regulations, interpretations and exemptive orders promulgated by or
under the authority of the SEC.
(iii) Chase represents to Fund that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Fund represents to Chase that: (1) the Securities and Cash being
placed and maintained in Chase's custody are subject to the Investment Company
Act of 1940, as amended (the "1940 Act"), as the same may be amended from time
to time; (2) its Board has determined that it is reasonable to rely on Chase to
perform as Fund's Foreign Custody Manager; and (3) its Board or its investment
adviser shall have determined that Fund may maintain Securities and Cash in each
country in which Fund's Securities and Cash shall be held hereunder and
determined to accept the risks arising therefrom (including, but not limited to,
a country's financial infrastructure (and including any Compulsory Depository
operating in such country), prevailing custody and settlement practices, laws
applicable to the safekeeping and recovery of Securities and Cash held in
custody, and the likelihood of nationalization, currency controls and the like)
(collectively ("Country Risk")). Nothing contained herein shall require Chase to
make any selection that would entail consideration of Country Risk.
3
PAGE
(iv) Chase shall assist Fund in monitoring Country Risk by furnishing such
information relating to the Country Risk as is specified in Appendix 1-B hereto.
Fund hereby acknowledges that: (1) such information is solely designed to inform
Fund of market conditions and procedures and is not intended as a recommendation
to invest or not invest in particular markets; and (2) Chase has gathered the
information from sources it considers reliable, but that Chase shall have no
responsibility for inaccuracies or incomplete information except to the extent
negligently obtained by Chase.
Section 3. Add the following at the end of Section 3(d):
and which shall be limited to Eligible Foreign Custodians as defined in
(i)-(ii) and (v) of the definition of Eligible Foreign Custodians contained
herein; provided that, for purposes of the sections of this Agreement
addressing Chase liability (including, but not limited to, Sections 7, 10,
14, and 16-17), Foreign Bank shall not include any Foreign Bank as to which
Chase has not acted as Foreign Custody Manager.
Section 4. Add the following at the end of Section 3(e):
and which shall be limited to Eligible Foreign Custodians as
defined in (iii) and (iv)-(v) of the definition of Eligible
Foreign Custodians contained herein; provided that, for
purposes of the sections of this Agreement addressing Chase
liability (including, but not limited to, Sections 7, 10, 14,
and 16-17) the term Foreign Securities Depository shall not
include any Compulsory Depository or any non-compulsory
depository as to which Chase has not acted as Foreign Custody
Manager.
Section 5. Add the following definitions in appropriate alphabetic sequence
to Section 3 of the Agreement:
4
PAGE
(1) a "U.S. Bank," shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7).
(2) an "Eligible Foreign Custodian," shall mean (i) a banking institution
or trust company, incorporated or organized under the laws of a country
other than the United States, that is regulated as such by that country's
government or an agency thereof, (ii) a majority-owned direct or indirect
subsidiary of a U.S. Bank or bank holding company which subsidiary is
incorporated or organized under the laws of a country other than the United
States; (iii) a securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States, that
acts as a system for the central handling of securities or equivalent
book-entries in that country and that is regulated by a foreign financial
regulatory authority as defined under section 2(a)(50) of the 1940 Act,
(iv) a securities depository or clearing agency organized under the laws of
a country other than the United States when acting as a transnational
system ("Transnational Depository") for the central handling of securities
or equivalent book-entries, and (v) any other entity that shall have been
so qualified by exemptive order, rule or other appropriate action of the
SEC.
Section 6. Delete existing Section 5 of the Agreement and, insert, in lieu
thereof, the following:
At the request of Fund, Chase may, but need not, add an Eligible
Foreign Custodian that is a U.S. Bank, a Foreign Bank or Foreign
Securities Depository where Chase has not acted as Foreign Custody
Manager with respect to the selection thereof; provided that, any such
entities shall not be included for purposes of the sections of this
Agreement addressing Chase liability (including, but not limited to,
Sections 7, 10, 14, and 16-17). Chase shall notify Fund in the event
that it elects to add any such entity.
*********************
5
PAGE
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
TEMPLETON THE CHASE MANHATTAN BANK
By:/s/BARBARA J. GREEN By:/s/LENORE VANDEN HANDEL
----------------------- -------------------------------
Name: Barbara J. Green Name: Lenore Vanden Handel
Title: Secretary Title: Vice President
6
PAGE
Appendix 1-A
LIST OF COMPULSORY DEPOSITORIES APPROVED BY THE BOARD
PAGE
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Fund's board in its determinations regarding Country Risk,
Chase shall furnish board annually and upon the initial placing of Securities
and Cash into a country the following information (check items applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access
afforded Fund's independent public accountants to books and
records kept by an eligible foreign custodian located in that
country.
___ ii. Whether applicable foreign law would restrict the Fund's ability
to recover its assets in the event of the bankruptcy of an
Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict the Fund's ability
to recover assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
B. Written information concerning:
___ i. The likelihood of expropriation, nationalization, freezes, or
confiscation of Fund's assets.
2
PAGE
___ ii. Whether difficulties in converting Fund's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) compulsory depositories (including
depository evaluation).
2. To aid Fund's board in monitoring Country Risk, Chase shall furnish
board the following additional information:
As more fully described in the FCM procedures, market flashes,
including with respect to changes in the information in market reports.
3
PAGE
Schedule A
TEMPLETON U.S. FUNDS
As of February 28, 1998
TEMPLETON GROWTH FUND, INC. ("TGF") - 12/31/86
TEMPLETON FUNDS, INC. ("TFI") - 2/11/86
Templeton World Fund
Templeton Foreign Fund
TEMPLETON GLOBAL SMALLER COMPANIES FUND, INC. ("TGSCF") - 5/15/96
TEMPLETON INCOME TRUST ("TIT") - 5/15/96
Templeton Global Bond Fund
TEMPLETON GLOBAL REAL ESTATE FUND ("TGREF") - 5/15/96
TEMPLETON CAPITAL ACCUMULATOR FUND, INC. ("TCAF") - 1/14/91
TEMPLETON DEVELOPING MARKETS TRUST ("TDMT") - 10/16/91
TEMPLETON AMERICAN TRUST, INC. ("TAT") - 2/26/91
TEMPLETON INSTITUTIONAL FUNDS, INC. ("TIFI") - 1/29/96
Templeton Foreign Equity Series
Templeton Growth Series
Templeton Emerging Markets Series
Templeton Emerging Fixed Income Series
TEMPLETON GLOBAL OPPORTUNITIES TRUST ("TGOT") - 1/18/90
TEMPLETON GLOBAL INVESTMENT TRUST ("TGIT") - 5/7/95
Templeton Growth and Income Fund
Templeton Global Infrastructure Fund
Templeton Americas Government Securities Fund
Templeton Greater European Fund
Templeton Latin America Fund
TEMPLETON EMERGING MARKETS FUND, INC. ("TEMF") - 2/1/87
TEMPLETON GLOBAL INCOME FUND, INC. ("TGIF") - 2/29/88
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST ("TGG") - 10/22/88
TEMPLETON EMERGING MARKETS INCOME FUND, INC. ("TEMIF") - 9/17/93
TEMPLETON CHINA WORLD FUND, INC. ("TCWF") - 9/7/93
TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC. ("TEMAF") - 4/22/94
TEMPLETON DRAGON FUND, INC. ("TDF") - 8/30/94
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. ("TVF") - 9/15/94
TEMPLETON RUSSIA FUND, INC. ("TRF") - 6/15/95
TEMPLETONVARIABLE PRODUCTS SERIES FUND ("TVPSF") - 8/31/88 (amended & restated
2/23/96)
Templeton Money Market Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Templeton International Fund
Templeton Developing Markets Fund
Mutual Discovery Investments Fund
Mutual Shares Investments Fund
Franklin Growth Investments Fund
Franklin Small Cap Investments Fund
FRANKLIN/TEMPLETON JAPAN FUND - 6/24/94
TEMPLETON VARIABLE ANNUITY FUND - 1/27/88
4
AMENDMENT No. 2, dated July 23, 1998 to the custody agreements (each an
"Agreement"), between each of the Templeton finds listed on Schedule A hereto
(each a "Fund"), with each having a place of business at 500 East Broward Blvd.,
Ft. Lauderdale, FL 33394, and The Chase Manhattan Bank ("Chase"), having a place
of business at 270 Park Ave., New York, NY 10017-2070.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement. This Amendment supersedes in all
respects the Amendment between the parties, dated March 2, 1998, which shall
have no further force or effect as of the date hereof.
Section 2. The Agreement is amended as follows:
Delete all of Section 2 of the Agreement after subsection (B.) thereof, and
insert, in lieu thereof, the following:
(C.) Fund's board of directors (or equivalent body) (hereinafter "Board")
hereby delegates to Chase, and Chase hereby accepts the delegation to it of, the
obligation to perform as Fund's "Foreign Custody Manager" (as that term is
defined in Securities and Exchange Commission ("SEC") rule 17f-5(a)(2)), both
for the purpose of selecting Eligible Foreign Custodians (as that term is
defined herein) to hold Securities and Cash and of evaluating the contractual
arrangements with such Eligible Foreign Custodians (as set forth in SEC rule
17f-5(c)(2)); provided that, the term Eligible Foreign Custodian shall not
include any "Compulsory Depository." A Compulsory Depository shall mean a
Foreign Securities Depository or clearing agency the use of which is compulsory
because: (1) its use is required by law or regulation, (2) securities cannot be
withdrawn from the depository, or (3) maintaining securities outside the
depository is not consistent with prevailing custodial practices in the country
which the depository serves. Compulsory Depositories used by Chase as of the
date hereof are set forth in Appendix 1-A hereto, and as the same may be amended
on notice to Fund from time to time.
(i) In connection with the foregoing, Chase shall:
PAGE
(1) provide written reports notifying Fund's Board of the placement of
Securities and Cash with particular Eligible Foreign Custodians and of any
material change in the arrangements with such Eligible Foreign Custodians,
with such reports to be provided to Fund's Board at such times as the Board
deems reasonable and appropriate based on the circumstances of Fund's
foreign custody arrangements;
(2) exercise such reasonable care, prudence and diligence in performing as
Fund's Foreign Custody Manager as a person having responsibility for the
safekeeping of Securities and Cash would exercise;
(3) in selecting an Eligible Foreign Custodian, first have determined that
Securities and Cash placed and maintained in the safekeeping of such
Eligible Foreign Custodian shall be subject to reasonable care, based on
the standards applicable to custodians in the relevant market, after having
considered all factors relevant to the safekeeping of such Securities and
Cash, including, without limitation, those factors set forth in SEC rule
17f-5(c)(1)(i)-(iv);
(4) determine that the written contract with the Eligible Foreign Custodian
requires that the Eligible Foreign Custodian will provide reasonable care
for Securities and Cash based on the standards applicable to custodians in
the relevant market; provided that, in the case of an Eligible Foreign
Custodian that is a non-Compulsory Depository or clearing agency, such
determination shall only be made to the extent required by SEC rule 17f-5
as in effect from time to time and where so required shall be made based on
such contract, the rules or established practices or procedures of the
Depository, or any combination thereof; and
(5) have established a system to monitor the continued appropriateness of
maintaining Securities and Cash with particular Eligible Foreign Custodians
and of the governing contractual arrangements. Chase shall also monitor
Compulsory Depositories and shall advise Fund of any material negative
change in the performance of, or arrangements with, any Compulsory
Depository as the same would adversely affect the custody of assets. With
respect to monitoring Compulsory Depositories, Chase shall use its
reasonable efforts to obtain the information with respect to the factors
set forth on Schedule 1-C hereto: (i) by November 20, 1998 with respect to
any Compulsory Depository in a country in which Securities are held as of
the date hereof; (ii)
PAGE
to the extent feasible in light of the circumstances then prevailing in a
given country in which Securities are held, no later than 90 days after the
establishment of, or a determination by Chase that a depository has become,
a Compulsory Depository in such country; and (iii) to the extent feasible
in light of the circumstances then prevailing in a given country, no later
than 90 days after the first placement of Securities after the date hereof
with a Subcustodian where such country has a Compulsory Depository. Chase
shall advise Fund when, to Chase's knowledge based on such reasonable
efforts, there is a negative answer with respect to a Compulsory Depository
as to any of such factors. In connection with the foregoing: (i) Fund
acknowledges and agrees that Chase's agreements with Eligible Foreign
Custodians do not, as of the date hereof, comply with factor (i) on
Schedule 1-C and that Chase shall not amend such agreements to so comply
unless Rule 17f-5 is amended or interpreted by the Securities and Exchange
Commission to incorporate such a factor into the Rule with respect to
Compulsory Depositories; and (ii) to the extent that Rule 17f-5 is amended
or interpreted by the Securities and Exchange Commission to incorporate
materially one or more of (i)-(viii), Chase shall be obligated to obtain
the relevant information on such incorporated factors rather than being
limited only to using its reasonable efforts to do so.
In the event that the SEC adopts standards or criteria different from those
set forth in Schedule 1-C, the above provisions and Schedule 1-C shall be
deemed to be amended to conform to the standards or criteria adopted by the
SEC, it being understood that the time within which Chase must furnish the
required information shall be a reasonable time in light of such
differences.
Subject to (i)(1)-(4) and the first sentence of (5) above, Chase is hereby
authorized to place and maintain Securities and Cash on behalf of Fund with
Eligible Foreign Custodians pursuant to a written contract deemed appropriate by
Chase.
(ii) Except as expressly provided herein, Fund shall be responsible to
assure that the maintenance of Securities and Cash hereunder complies with the
rules, regulations, interpretations and exemptive orders promulgated by or under
the authority of the SEC.
(iii) Chase represents to Fund that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Fund represents to Chase that: (1) the Securities and Cash being
placed and maintained in Chase's custody are subject to the Investment Company
Act of 1940, as amended (the "1940 Act"), as the same may be amended from time
PAGE
to time; (2) its Board has determined that it is reasonable to rely on Chase to
perform as Fund's Foreign Custody Manager; and (3) its Board or its investment
adviser shall have determined that Fund may maintain Securities and Cash in each
country in which Fund's Securities and Cash shall be held hereunder and
determined to accept the risks arising therefrom (including, but not limited to,
a country's financial infrastructure (and including any Compulsory Depository
operating in such country), prevailing custody and settlement practices, laws
applicable to the safekeeping and recovery of Securities and Cash held in
custody, and the likelihood of nationalization, currency controls and the like)
(collectively ("Country Risk")). Nothing contained herein shall require Chase to
make any selection that would entail consideration of Country Risk.
(iv) Chase shall assist Fund in monitoring Country Risk by furnishing such
information relating to the Country Risk as is specified in Appendix 1-B hereto.
Fund hereby acknowledges that: (1) such information is solely designed to inform
Fund of market conditions and procedures and is not intended as a recommendation
to invest or not invest in particular markets; and (2) Chase has gathered the
information from sources it considers reliable, but that Chase shall have no
responsibility for inaccuracies or incomplete information except to the extent
negligently obtained by Chase.
Section 3. Add the following at the end of Section 3(d):
and which shall be limited to Eligible Foreign Custodians as defined in
(i)-(ii) and (v) of the definition of Eligible Foreign Custodians contained
herein; provided that, for purposes of the sections of this Agreement
addressing Chase liability (including, but not limited to, Sections 7, 10,
14, and 16-17), Foreign Bank shall not include any Foreign Bank as to which
Chase has not acted as Foreign Custody Manager.
Section 4. Add the following at the end of Section 3(e):
and which shall be limited to Eligible Foreign Custodians as defined
in (iii) and (iv)-(v) of the definition of Eligible Foreign Custodians
contained herein; provided that, for purposes of the sections of this
Agreement addressing Chase liability (including, but not limited to,
Sections 7, 10, 14, and 16-17) the term Foreign Securities Depository
shall not include any Compulsory Depository or any non-compulsory
depository as to which Chase has not acted as Foreign Custody Manager.
PAGE
Section 5. Add the following definitions in appropriate alphabetic sequence
to Section 3 of the Agreement:
(1) a "U.S. Bank," shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7).
(2) an "Eligible Foreign Custodian," shall mean (i) a banking
institution or trust company, incorporated or organized under the laws
of a country other than the United States, that is regulated as such
by that country's government or an agency thereof, (ii) a
majority-owned direct or indirect subsidiary of a U.S. Bank or bank
holding company which subsidiary is incorporated or organized under
the laws of a country other than the United States; (iii) a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, that acts as a system
for the central handling of securities or equivalent book-entries in
that country and that is regulated by a foreign financial regulatory
authority as defined under section 2(a)(50) of the 1940 Act, (iv) a
securities depository or clearing agency organized under the laws of a
country other than the United States when acting as a transnational
system ("Transnational Depository") for the central handling of
securities or equivalent book-entries, and (v) any other entity that
shall have been so qualified by exemptive order, rule or other
appropriate action of the SEC.
Section 6. Delete existing Section 5 of the Agreement and, insert, in lieu
thereof, the following:
At the request of Fund, Chase may, but need not, add an Eligible
Foreign Custodian that is a U.S. Bank, a Foreign Bank or Foreign
Securities Depository where Chase has not acted as Foreign Custody
Manager with respect to the selection thereof; provided that, any such
entities shall not be included for purposes of the sections of this
Agreement addressing Chase liability (including, but not limited to,
Sections 7, 10, 14, and 16-17). Chase shall notify Fund in the event
that it elects to add any such entity.
*********************
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
PAGE
TEMPLETON THE CHASE MANHATTAN BANK
(on behalf of each of the Funds
listed on Schedule A hereto)
By:/s/ BARBARA J. GREEN By:/s/LENORE VANDEN HANDEL
-------------------------- -------------------------------
Name: Barbara J. Green Name: Lenore Vanden Handel
Title: Secretary Title: Vice President
PAGE
Schedule A
TEMPLETON U.S. FUNDS
As of June 30, 1998
TEMPLETON GROWTH FUND, INC. ("TGF") - 12/31/86
TEMPLETON FUNDS, INC. ("TFI") - 2/11/86
Templeton World Fund
Templeton Foreign Fund
TEMPLETON GLOBAL SMALLER COMPANIES FUND, INC. ("TGSCF") - 5/15/96
TEMPLETON INCOME TRUST ("TIT") - 5/15/96
Templeton Global Bond Fund
TEMPLETON GLOBAL REAL ESTATE FUND ("TGREF") - 5/15/96
TEMPLETON CAPITAL ACCUMULATOR FUND, INC. ("TCAF") - 1/14/91
TEMPLETON DEVELOPING MARKETS TRUST ("TDMT") - 10/16/91
TEMPLETON AMERICAN TRUST, INC. ("TAT") - 2/26/91
TEMPLETON INSTITUTIONAL FUNDS, INC. ("TIFI") - 1/29/96
Templeton Foreign Equity Series
Templeton Growth Series
Templeton Emerging Markets Series
Templeton Emerging Fixed Income Series
TEMPLETON GLOBAL OPPORTUNITIES TRUST ("TGOT") - 1/18/90
TEMPLETON GLOBAL INVESTMENT TRUST ("TGIT") - 5/7/95
Templeton Growth and Income Fund
Templeton Global Infrastructure Fund
Templeton Americas Government Securities Fund
Templeton Greater European Fund
Templeton Latin America Fund
TEMPLETON EMERGING MARKETS FUND, INC. ("TEMF") - 2/1/87
TEMPLETON GLOBAL INCOME FUND, INC. ("TGIF") - 2/29/88
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST ("TGG") - 10/22/88
TEMPLETON EMERGING MARKETS INCOME FUND, INC. ("TEMIF") - 9/17/93
TEMPLETON CHINA WORLD FUND, INC. ("TCWF") - 9/7/93
TEMPLETON EMERGING MARKETS APPRECIATION FUND, INC. ("TEMAF") - 4/22/94
TEMPLETON DRAGON FUND, INC. ("TDF") - 8/30/94
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. ("TVF") - 9/15/94
TEMPLETON RUSSIA FUND, INC. ("TRF") - 6/15/95
TEMPLETON VARIABLE PRODUCTS SERIES FUND ("TVPSF") - 8/31/88 (amended & restated
2/23/96)
Templeton Money Market Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Templeton International Fund
Templeton Developing Markets Fund
Mutual Discovery Investments Fund
Mutual Shares Investments Fund
Franklin Growth Investments Fund
Franklin Small Cap Investments Fund
PAGE
Appendix 1-A
LIST OF COMPULSORY DEPOSITORIES APPROVED BY THE BOARD
PAGE
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Fund's board in its determinations regarding Country Risk,
Chase shall furnish board annually and upon the initial placing of Securities
and Cash into a country the following information (check items applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access
afforded Fund's independent public accountants to books and
records kept by an eligible foreign custodian located in that
country.
___ ii. Whether applicable foreign law would restrict the Fund's ability
to recover its assets in the event of the bankruptcy of an
Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict the Fund's ability
to recover assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
B. Written information concerning:
___ i. The likelihood of expropriation, nationalization, freezes, or
confiscation of Fund's assets.
___ ii. Whether difficulties in converting Fund's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
PAGE
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) compulsory depositories (including
depository evaluation).
2. To aid Fund in monitoring Country Risk, Chase shall furnish the
following additional information:
As more fully described in the Foreign Custody Manager procedures,
market flashes, including with respect to changes in the information in market
reports.
PAGE
Appendix 1-C
FACTORS REGARDING COMPULSORY DEPOSITORIES
(i) Whether the Eligible Foreign Custodian which is participating in
the Compulsory Depository has undertaken to adhere to the roles,
practices and procedures of such Compulsory Depository;
(ii) Whether no regulatory authority with oversight responsibility for
the Compulsory Depository has issued a public notice that the
Compulsory Depository is not in compliance with any material capital,
solvency, insurance or other similar financial strength requirements
imposed by such authority or, in the case of such notice having been
issued, that such notice has been withdrawn or the remedy of such
noncompliance has been publicly announced by the Compulsory
Depository;
(iii) Whether no regulatory authority with oversight responsibility
over the Compulsory Depository has issued a public notice that the
Compulsory Depository is not in compliance with any material internal
controls requirement imposed by such authority or, in the case of such
notice having been issued, that such notice has been withdrawn or the
remedy of such noncompliance has been publicly announced by the
Compulsory Depository;
(iv) Whether the Compulsory Depository maintains Fund's assets
deposited with the Compulsory Depository by the Eligible Foreign
Custodian participant under no less favorable safekeeping conditions
than those that apply generally to other participants in the
Compulsory Depository;
(v) Whether the Compulsory Depository maintains records that segregate
the Compulsory Depository's own assets from the assets of participants
in the Compulsory Depository;
PAGE
(vi) Whether the Compulsory Depository maintains records that identify
the assets of each of its participants;
(vii) Whether the Compulsory Depository provides periodic reports to
its participants with respect to the safekeeping of assets maintained
by the Compulsory Depository including by way of example, notification
of any transfer to or from participant accounts; and
(viii) Whether the Compulsory Depository is subject to periodic
review, such as audits by independent accountants or inspections by
regulatory authorities.
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated January 30, 1998 on the
financial statements of Templeton Developing Markets Trust referred to therein,
which appears in the 1997 Annual Report to Shareholders, and which is
incorporated herein by reference, in Post-Effective Amendment No.10 to the
Registration Statement on Form N-1A, File No. 33-42163 as filed with the
Securities and Exchange Commission.
We also consent to the reference to our firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the caption "Independent Accountants".
/s/McGladrey & Pullen, LLP
New York, New York
December 29, 1998
CLASS B DISTRIBUTION PLAN
I. Investment Company: Templeton Developing Markets Trust
II. Fund: Templeton Developing Markets Trust
III. Maximum Per Annum Rule 12b-1 Fees for Class B Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.75% equity
B. Service Fee: 0.25% equity
PREAMBLE TO CLASS B DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class B shares
(the "Class") of each Fund named above ("Fund"), which Plan shall take effect as
of the date Class B shares are first offered (the "Effective Date of the Plan").
The Plan has been approved by a majority of the Board of Directors or Trustees
of the Investment Company (the "Board"), including a majority of the Board
members who are not interested persons of the Investment Company and who have no
direct, or indirect financial interest in the operation of the Plan (the
"non-interested Board members"), cast in person at a meeting called for the
purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Templeton Asset Management Limited (the "Adviser") and the terms of the
Underwriting Agreement between the Investment Company and Franklin/Templeton
Distributors, Inc. ("Distributors"). The Board concluded that the compensation
of the Adviser, under the Management Agreement, and of Distributors, under the
Underwriting Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
The Board recognizes that Distributors has entered into an arrangement
with a third party in order to finance the distribution activities of the Class,
and further recognizes that it has an obligation to act in good faith and in the
best interests of the Fund and its shareholders when considering the
continuation or termination of the Plan and any payments to be made thereunder.
PAGE
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a quarterly fee not to exceed the
above-stated maximum distribution fee per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund shall
pay (i) to Distributors for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Fund's Board from time to time, as a service fee
pursuant to servicing agreements which have been approved from time to time by
the Board, including the non-interested Board members.
2. (a) Distributors shall use the monies paid to it pursuant to Paragraph
1(a) above to compensate it for amounts advanced to securities dealers or their
firms or others selling shares of the Class who have executed an agreement with
the Investment Company, Distributors or its affiliates, which form of agreement
has been approved from time to time by the Board, including the non-interested
Board members, with respect to the sale of Class shares. In addition, such
monies may be used to assist in the distribution and promotion of shares of the
Class. Payments made to Distributors under the Plan may be used for, among other
things, the printing of prospectuses and reports used for sales purposes,
expenses of preparing and distributing sales literature and related expenses,
advertisements, and other distribution-related expenses, including a pro-rated
portion of Distributors' overhead expenses attributable to the distribution of
Class shares, as well as for additional distribution fees paid to securities
dealers or their firms or others who have executed agreements with the
Investment Company, Distributors or its affiliates, which form of agreement has
been approved from time to time by the Board, including the non-interested Board
members.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be used
to pay dealers or others for, among other things, furnishing personal services
and maintaining shareholder accounts, which services include, among other
things, assisting in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; arranging for bank wires;
monitoring dividend payments from the Fund on behalf of customers; forwarding
certain shareholder communications from the Fund to customers; receiving and
answering correspondence; and aiding in maintaining the investment of their
respective customers in the Class. Any amounts paid under this paragraph 2(b)
shall be paid pursuant to a servicing or other agreement, which form of
agreement has been approved from time to time by the Board.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, the Adviser,
Distributors or other parties on behalf of the Fund, the Adviser or Distributors
make payments that are deemed to be payments by the Fund for the financing of
any activity primarily intended to result in the sale of Class shares issued by
the Fund within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to have been made pursuant to the Plan.
PAGE
In no event shall the aggregate asset-based sales charges which include
payments specified in paragraphs 1 and 2, plus any other payments deemed to be
made pursuant to the Plan under this paragraph, exceed the amount permitted to
be paid pursuant to Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies reimbursed to it and to others under the
Plan, and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. (a) The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan.
(b) In determining whether there is a reasonable likelihood that the
continuation of the Plan will benefit the Fund and its shareholders, the Board
may, but is not obligated to, consider that Distributors has entered into an
arrangement with a third party in order to finance the distribution activities
for the Class. In this regard, in the event that the Plan is terminated by the
action of the Board in accordance with Paragraph 6 hereof, the Board may, but is
not obligated to, determine that it is appropriate to authorize the Fund to
continue making payments under the Plan to Distributors with respect to the
shares of the Class sold prior to the termination of the Plan.
6. The Plan, and any agreements entered into pursuant to this Plan, may be
terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Class of the Fund or by vote of a majority
of the non-interested Board members, on not more than sixty (60) days' written
notice, or by Distributors on not more than sixty (60) days' written notice, and
shall terminate automatically in the event of any act that constitutes an
assignment of the Management Agreement between the Fund and the Adviser.
7. The Plan, and any agreements entered into pursuant to this Plan, may not
be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the outstanding
voting securities of the Class of the Fund.
8. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
9. So long as the Plan is in effect, the selection and nomination of the
Fund's non-interested Board members shall be committed to the discretion of such
non-interested Board members.
PAGE
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and Distributors as evidenced by their
execution hereof.
Date: January 1, 1999
Templeton Developing Markets Trust
By:
John R. Kay
Vice President
Franklin/Templeton Distributors, Inc.
By:
Peter D. Jones
Executive Vice President
POWER OF ATTORNEY
The undersigned Officers and Trustees of TEMPLETON DEVELOPING MARKETS TRUST
(the "Registrant") hereby appoint Allan S. Mostoff, Jeffrey L. Steele, Mark H.
Plafker, Bruce G. Leto, Deborah R. Gatzek, Barbara J. Green, Larry L. Greene,
and Leiann Nuzum (with full power to each of them to act alone) his/her
attorney-in-fact and agent, in all capacities, to execute, and to file any of
the documents referred to below relating to Post-Effective Amendments to the
Registrant's registration statement on Form N-1A under the Investment Company
Act of 1940, as amended, and under the Securities Act of 1933, as amended,
covering the sale of shares by the Registrant under prospectuses becoming
effective after this date, including any amendment or amendments increasing or
decreasing the amount of securities for which registration is being sought, with
all exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority. Each of the undersigned grants to each of said
attorneys, full authority to do every act necessary to be done in order to
effectuate the same as fully, to all intents and purposes as he/she could do if
personally present, thereby ratifying all that said attorneys-in-fact and
agents, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which shall be deemed to be
a single document.
The undersigned Officers and Trustees hereby execute this Power of Attorney
as of the 11th day of December, 1998.
<TABLE>
<S> <C>
/s/HARRIS J. ASHTON /s/CHARLES E. JOHNSON
- --------------------------------- ------------------------------------
Harris J. Ashton, Trustee Charles E. Johnson, Trustee
/s/NICHOLAS F. BRADY /s/BETTY P. KRAHMER
- --------------------------------- -------------------------------------
Nicholas F. Brady, Trustee Betty P. Krahmer, Trustee
/s/FRANK J. CROTHERS /s/GORDON S. MACKLIN
- --------------------------------- -------------------------------------
Frank J. Crothers, Trustee Gordon S. Macklin, Trustee
/s/S. JOSEPH FORTUNATO /s/FRED R. MILLSAPS
- --------------------------------- -------------------------------------
S. Joseph Fortunato, Trustee Fred R. Millsaps, Trustee
/s/JOHN WM. GALBRAITH /s/CONSTANTINE D. TSERETOPOULOS
- --------------------------------- -------------------------------------
John Wm. Galbraith, Trustee Constantine D. Tseretopoulos, Trustee
/s/ANDREW H. HINES, JR. /s/J. Mark Mobius
- --------------------------------- -------------------------------------
Andrew H. Hines, Jr., Trustee J. Mark Mobius, President
/s/EDITH E. HOLIDAY /s/JAMES R. BAIO
- --------------------------------- -------------------------------------
Edith E. Holiday, Trustee James R. Baio, Treasurer
/s/CHARLES B. JOHNSON
- ---------------------------------
Charles B. Johnson, Trustee
</TABLE>
MULTIPLE CLASS PLAN
ON BEHALF OF
TEMPLETON DEVELOPING MARKETS TRUST
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of Templeton Developing Markets Trust (the "Fund"). The
Board has determined that the Plan, including the expense allocation, is in the
best interests of each class of the Fund and the Investment Company as a whole.
The Plan sets forth the provisions relating to the establishment of multiple
classes of shares of the Fund, and supersedes any Plan previously adopted for
the Fund.
1. The Fund shall offer four classes of shares, to be known as
Class A Shares, Class B Shares, Class C Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging
from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of
1.00%. Class B Shares and the Advisor Class Shares shall not be subject to any
front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of 1.00%
of the lesser of the then-current net asset value or the original net asset
value at the time of purchase applies to redemptions of those investments within
the contingency period of 12 months from the calendar month following their
purchase. The CDSC is waived in certain circumstances, as described in the
Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
PAGE
4. The distribution plan adopted by the Investment Company
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended,
(the "Rule 12b-1 Plan") associated with the Class A Shares may be used to
reimburse Franklin/Templeton Distributors, Inc. (the "Distributor") or others
for expenses incurred in the promotion and distribution of the Class A Shares.
Such expenses include, but are not limited to, the printing of prospectuses and
reports used for sales purposes, expenses of preparing and distributing sales
literature and related expenses, advertisements, and other distribution-related
expenses, including a prorated portion of the Distributor's overhead expenses
attributable to the distribution of the Class A Shares, as well as any
distribution or service fees paid to securities dealers or their firms or others
who have executed a servicing agreement with the Investment Company for the
Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be retained by
Distributor to compensate Distributor for amounts advanced to securities dealers
or their firms or others with respect to the sale of Class B Shares. In
addition, such payments may be retained by the Distributor to be used in the
promotion and distribution of Class B Shares in a manner similar to that
described above for Class A Shares. The second component is a shareholder
servicing fee to be paid to securities dealers or others who provide personal
assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class
Shares and, therefore, the Advisor Class Shares shall not be subject to
deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Asociation of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B,
Class C, and Advisor Class Shares shall relate to differences in Rule 12b-1 plan
expenses, as described in the applicable Rule 12b-1 Plans; however, to the
extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule
12b-1 Plan expenses of another Class, such classes shall be subject to the same
expenses.
6. There shall be no conversion features associated with the
Class A, Class C, and Advisor Class Shares. Each Class B Share, however, shall
be converted automatically, and without any action or choice on the part of the
holder of the Class B Shares, into Class A Shares on the conversion date
specified, and in accordance with the terms and conditions approved by the
Templeton Developing Markets Trust's Board of Trustees and as described, in each
PAGE
fund's prospectus relating to the Class B Shares, as such prospectus may be
amended from time to time; provided, however, that the Class B Shares shall be
converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B, Class C and Advisor Class may be
exchanged for shares of another investment company within the Franklin Templeton
Group of Funds according to the terms and conditions stated in each fund's
prospectus, as it may be amended from time to time, to the extent permitted by
the Investment Company Act of 1940 and the rules and regulations adopted
thereunder.
8. Each class will vote separately with respect to any Rule
12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their
fiduciary responsibilities under the Investment Company Act of 1940 and
otherwise, will monitor the Fund for the existence of any material conflicts
between the Board members interests of the various classes of shares. The Board
members, including a majority of the independent Board members, shall take such
action as is reasonably necessary to eliminate any such conflict that may
develop. Templeton Asset Management Ltd. and Franklin/Templeton Distributors,
Inc. shall be responsible for alerting the Board to any material conflicts that
arise.
10. All material amendments to this Plan must be approved by a
majority of the Board members, including a majority of the Board members who are
not interested persons of the Investment Company.
11. I, Barbara J. Green, Secretary of the U.S. Templeton Funds,
do hereby certify that this Multiple Class Plan was adopted by Templeton
Developing Markets Trust, by a majority of the Trustees of the Fund on October
17, 1998.
-------------------------------
Barbara J. Green
Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Developing Markets Trust Fund, June 30, 1998 semi-annual report
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000878087
<NAME> TEMPLETON DEVELOPING MARKETS TRUST
<SERIES>
<NUMBER>001
<NAME>TEMPLETON DEVELOPING MARKETS TRUST - CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 4223999132
<INVESTMENTS-AT-VALUE> 3071821017
<RECEIVABLES> 115506782
<ASSETS-OTHER> 3717083
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3191044882
<PAYABLE-FOR-SECURITIES> 22266919
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21916307
<TOTAL-LIABILITIES> 44183226
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4261176991
<SHARES-COMMON-STOCK> 252959911
<SHARES-COMMON-PRIOR> 266131599
<ACCUMULATED-NII-CURRENT> 14612822
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23249958
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1152178115)
<NET-ASSETS> 3146861656
<DIVIDEND-INCOME> 56837045
<INTEREST-INCOME> 13807913
<OTHER-INCOME> 0
<EXPENSES-NET> (40049198)
<NET-INVESTMENT-INCOME> 30595760
<REALIZED-GAINS-CURRENT> 129962468
<APPREC-INCREASE-CURRENT> (838276233)
<NET-CHANGE-FROM-OPS> (677718005)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16219745)
<DISTRIBUTIONS-OF-GAINS> (13516454)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47882132
<NUMBER-OF-SHARES-REDEEMED> (63020395)
<SHARES-REINVESTED> 1966575
<NET-CHANGE-IN-ASSETS> (797810413)
<ACCUMULATED-NII-PRIOR> 2826387
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (90981028)
<GROSS-ADVISORY-FEES> (23965673)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (40049198)
<AVERAGE-NET-ASSETS> 3328642185
<PER-SHARE-NAV-BEGIN> 12.94
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> (2.36)
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 2.02<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Expanse ratio is annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Developing Markets Trust Fund, June 30, 1998 semi-annual report
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000878087
<NAME> TEMPLETON DEVELOPING MARKETS TRUST
<SERIES>
<NUMBER>002
<NAME>TEMPLETON DEVELOPING MARKETS TRUST - CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 4223999132
<INVESTMENTS-AT-VALUE> 3071821017
<RECEIVABLES> 115506782
<ASSETS-OTHER> 3717083
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3191044882
<PAYABLE-FOR-SECURITIES> 22266919
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21916307
<TOTAL-LIABILITIES> 44183226
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4261176991
<SHARES-COMMON-STOCK> 33315059
<SHARES-COMMON-PRIOR> 31420494
<ACCUMULATED-NII-CURRENT> 14612822
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23249958
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1152178115)
<NET-ASSETS> 3146861656
<DIVIDEND-INCOME> 56837045
<INTEREST-INCOME> 13807913
<OTHER-INCOME> 0
<EXPENSES-NET> (40049198)
<NET-INVESTMENT-INCOME> 30595760
<REALIZED-GAINS-CURRENT> 129962468
<APPREC-INCREASE-CURRENT> (838276233)
<NET-CHANGE-FROM-OPS> (677718005)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2009465)
<DISTRIBUTIONS-OF-GAINS> (1668990)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7112240
<NUMBER-OF-SHARES-REDEEMED> (5451648)
<SHARES-REINVESTED> 233973
<NET-CHANGE-IN-ASSETS> (797810413)
<ACCUMULATED-NII-PRIOR> 2826387
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (90981028)
<GROSS-ADVISORY-FEES> (23965673)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (40049198)
<AVERAGE-NET-ASSETS> 412872195
<PER-SHARE-NAV-BEGIN> 12.81
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> (2.31)
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.45
<EXPENSE-RATIO> 2.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Expense ratio is annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Developing Markets Trust Fund, June 30, 1998 semi-annual report
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000878087
<NAME> TEMPLETON DEVELOPING MARKETS TRUST
<SERIES>
<NUMBER>003
<NAME>TEMPLETON DEVELOPING MARKETS TRUST - ADVISOR CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 4223999132
<INVESTMENTS-AT-VALUE> 3071821017
<RECEIVABLES> 115506782
<ASSETS-OTHER> 3717083
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3191044882
<PAYABLE-FOR-SECURITIES> 22266919
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21916307
<TOTAL-LIABILITIES> 44183226
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4261176991
<SHARES-COMMON-STOCK> 11501123
<SHARES-COMMON-PRIOR> 7588510
<ACCUMULATED-NII-CURRENT> 14612822
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23249958
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1152178115)
<NET-ASSETS> 3146861656
<DIVIDEND-INCOME> 56837045
<INTEREST-INCOME> 13807913
<OTHER-INCOME> 0
<EXPENSES-NET> (40049198)
<NET-INVESTMENT-INCOME> 30595760
<REALIZED-GAINS-CURRENT> 129962468
<APPREC-INCREASE-CURRENT> (838276233)
<NET-CHANGE-FROM-OPS> (677718005)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (580115)
<DISTRIBUTIONS-OF-GAINS> (546038)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6548747
<NUMBER-OF-SHARES-REDEEMED> (2709767)
<SHARES-REINVESTED> 73633
<NET-CHANGE-IN-ASSETS> (797810413)
<ACCUMULATED-NII-PRIOR> 2826387
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (90981028)
<GROSS-ADVISORY-FEES> (23965673)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (40049198)
<AVERAGE-NET-ASSETS> 124770955
<PER-SHARE-NAV-BEGIN> 12.93
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> (2.39)
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Expense retio is annualized.
</FN>
</TABLE>
