ANNUAL
REPORT
DECEMBER 31, 1998
[PASSPORT GRAPHIC]
TEMPLETON DEVELOPING
MARKETS TRUST
[FRANKLIN TEMPLETON LOGO]
PAGE
[FRANKLIN TEMPLETON 50 YEARS SEAL]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently he devotes all of his time and efforts to the John
Templeton Foundation. A major portion of his assets remain invested in the
Templeton funds which are managed by many of the investment professionals he
selected and trained.
[J. MARK MOBIUS PHOTO APPEARS HERE]
J. MARK MOBIUS, Ph.D.
President
Templeton Developing
Markets Trust
Dr. Mobius, a German citizen, has been living in emerging market countries since
earning his Ph.D. in economics and political science at Massachusetts Institute
of Technology in 1964. During his extensive travels, he has acquired a thorough
knowledge of the business practices and customs unique to developing nations.
PAGE
SHAREHOLDER LETTER
Your Fund's Goal: Templeton Developing Markets Trust seeks long-term capital
appreciation by investing, under normal market conditions, at least 65% of its
total assets in equity securities of developing market issuers.
Dear Shareholder:
This annual report of Templeton Developing Markets Trust covers the 12 months
ended December 31, 1998. During this period, Asia's financial turmoil, coupled
with Russia's economic meltdown, led to major stock market declines in
developing countries. Within this environment, the Fund's Class I shares posted
a -18.72% one-year cumulative total return, as discussed in the Performance
Summary on page 6. During the same period, the Morgan Stanley Capital
International(R) (MSCI) World Index delivered a total return of +24.80% and the
MSCI Emerging Markets Free Index posted a total return of -25.34%.(1)
In early 1998, some signs of economic stability surfaced in Asia, as the
International Monetary Fund (IMF) introduced aid packages to many nations, which
allowed
CONTENTS
Shareholder Letter .................1
Performance Summary ................6
Financial Highlights &
Statement of Investments ..........10
Financial Statements ..............27
Notes to Financial
Statements ........................30
Independent Auditor's Report ......34
Tax Designation ...................35
[PYRAMID GRAPHIC]
1. Source: Standard & Poor's(R) Micropal. Indices are unmanaged and include
reinvested dividends. One cannot invest directly in an index.
You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 13 of
this report.
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
12/31/98
[PIE CHART]
[This chart shows in pie format the geographic distribution breakdown of
securities in Templeton Developing Markets Trust on December 31, 1998, based on
total net assets.]
Asia 47.6%
Latin America 36.6%
Mid-East/Africa 9.0%
Europe 6.7%
New Zealand 0.1%
them to restructure their long-term debt. After receiving the promise of IMF
aid, the Indonesian government started implementing the reforms required to
ensure the aid's delivery. However, when food and fuel subsidies were removed,
soaring prices sent many Indonesians protesting in the streets, and President
Suharto was forced to resign in May. Shortly after, the Japanese yen began to
fall against the U.S. dollar, reducing Japan's demand for regional imports. But
the U.S. and Japanese governments intervened to stabilize the yen in June, and
many Asian stock markets rebounded.
Emerging markets were subjected to another crisis in late summer when Russia's
central bank suspended repayment of foreign debt and devalued the ruble.
Political chaos ensued, and Russian banks purchased U.S. dollars to the point
that ruble trading was temporarily halted. Initially, Russia's catastrophe had a
negative effect on the world's economy, sinking emerging market equities, and
contributing to a major U.S. stock market correction, but it did have at least
one positive side-effect. It prompted the international banking community to
focus attention on the economies of Malaysia and Brazil.
Latin America also had its share of problems. Commodity prices, the driving
force of many Latin American economies, continued to decline during the first
half of 1998 due to lack of demand from Asia. The region's woes were compounded
by the risk of cheaper Asian exports being substituted for Latin
2
PAGE
American products, and most stock markets in the region experienced significant
losses. In spite of the dilemmas the Asian contagion presented, it gave many
Latin American governments an idea of what the future might hold if reforms were
not undertaken. In response, they accelerated privatization efforts and
introduced measures to compensate for dwindling tax revenues. Toward the
period's end, most major Latin American economies were striking a precarious
balance between negative factors abroad and more positive events at home.
Although Brazil was struggling to meet its debt obligations and maintain the
value of the real, we are optimistic about many of the Fund's Brazilian holdings
because they were selected with potential currency devaluation in mind. Some of
these positions include export-oriented companies that have the potential to
benefit from devaluation or could prove to be resistant to such changes.
On December 31, 1998, the Fund owned investments in 34 countries, with Brazil
being the largest country holding (11.5% of total net assets). The Fund's
largest regional holdings were Asia (47.6%), followed by Latin America (36.6%),
Mid-east/Africa (9.0%), and Europe (6.7%). The Fund was fully invested with no
short-term investments and other net assets, down from 25.6% on June 30, 1998.
This reflected a major restructuring of the Fund's holdings during the first
half of the year, and the attractive buying opportunities that we found later in
the year.
Looking forward, we are optimistic about developing markets' long-term prospects
if their governments institute needed
TOP 10 COUNTRIES
12/31/98
[This table shows the top 10 countries represented in Templeton Developing
Markets Trust on December 31, 1998, based on total net assets.]
% OF TOTAL
COUNTRY NET ASSETS
----------------------------
Brazil 11.5%
Mexico 9.6%
Singapore 9.6%
South Africa 7.8%
Thailand 7.8%
South Korea 6.5%
Hong Kong 5.7%
Argentina 5.4%
Turkey 4.4%
Chile 4.4%
3
PAGE
TOP 10 HOLDINGS
12/31/98
[This table lists the top 10 holdings, including industry and country of origin,
of Templeton Developing Markets Trust as of December 31, 1998, based on total
net assets.]
COMPANY % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
--------------------------------------------------
Telefonos de Mexico SA
(Telmex), L, ADR
Telecommunications, Mexico 3.7%
Electricidad de Caracas
SAICA SACA
Utilities Electrical &
Gas, Venezuela 2.6%
Cemex SA
Building Materials &
Components, Mexico 2.4%
Telecomunicacoes
Brasileiras SA (Telebras)
Telecommunications, Brazil 2.2%
Thai Farmers Bank Public
Co. Ltd.
Banking, Thailand 2.1%
Akbank
Banking, Turkey 2.0%
Compania De
Telecomunicaciones De
Chile SA, ADR
Telecommunications, Chile 1.9%
Centrais Eletricas Brasileiras
SA (Electrobras)
Utilities Electrical & Gas, Brazil 1.9%
HSBC Holdings Plc.
Banking, Hong Kong 1.7%
Korea Electric Power Corp.
Utilities Electrical & Gas,
South Korea 1.5%
reforms. In the past, investors generally have tolerated unfair business
practices and abuse of minority shareholder rights in emerging markets. But
after the economic and political turmoil of 1997 and 1998, many investors in
emerging market securities may not be prepared to endure such conditions. In our
opinion, governments that institute reforms that promote fair and equitable
markets may gain a substantial influx of investment within their borders during
1999. Although short-term corrections remain potential risks, we believe
competition between foreign and domestic investors could increase demand and
help to drive equity prices higher in the long-term.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1998, the end of the reporting period. However,
market and economic conditions are changing constantly, which can be expected to
affect our strategies and the Fund's portfolio composition. Although past
performance is not predictive of future results, these insights may help you
understand our investment and management philosophy.
Of course, investing in emerging market securities involves special
considerations, which may include risks related to market and currency
volatility, adverse social, economic and political developments and the
relatively small size and lesser liquidity of these markets. Investing in any
emerging market means accepting a certain amount of volatility and, in some
4
PAGE
cases, severe market corrections. While short-term volatility can be
disconcerting, declines in excess of 50% are not unusual in emerging markets. In
fact, the Hong Kong equity market has increased 1,049% in the last 15 years, but
has suffered five declines of more than 20% during that time.(1) These special
risks and other considerations are discussed in the Fund's prospectus.
Thank you for investing in Templeton Developing Markets Trust. We appreciate
your support and welcome your comments.
Sincerely,
/S/ J. Mark Mobius, Ph.D.
- -------------------------
J. Mark Mobius, Ph.D.
President
Templeton Developing Markets Trust
1. Source: Bloomberg.Based on quarterly percentage price change over 15 years
ended December 31, 1998. Market return is measured in Hong Kong dollars.
5
PAGE
PERFORMANCE SUMMARY AS OF 12/31/98
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
CLASS I:
Subject to the current, maximum 5.75% initial sales charge. On January 1, 1993,
the Fund's Class I shares implemented a Rule 12b-1 plan, which affects
subsequent performance. From October 17, 1991 to December 31, 1992, expense
waivers by the Fund's Manager increased the Fund's total returns. Without these
waivers, the Fund's total returns for Class I shares as shown on the next page
would have been lower.
CLASS II:
Subject to 1% initial sales charge and 1% contingent deferred sales charge for
shares redeemed within 18 months of investment. These shares have higher annual
fees and expenses than Class I shares.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors.
PRICE AND DISTRIBUTION INFORMATION (1/1/98 - 12/31/98)
<TABLE>
<CAPTION>
CLASS I CHANGE 12/31/98 12/31/97
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value ($2.64) $10.30 $12.94
DISTRIBUTIONS
Dividend Income $0.1900
Long-term Capital Gain $0.0500
TOTAL $0.2400
<CAPTION>
CLASS II CHANGE 12/31/98 12/31/97
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value ($2.60) $10.21 $12.81
DISTRIBUTIONS
Dividend Income $0.1136
Long-term Capital Gain $0.0500
TOTAL $0.1636
<CAPTION>
ADVISOR CLASS CHANGE 12/31/98 12/31/97
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value ($2.65) $10.28 $12.93
DISTRIBUTIONS
Dividend Income $0.2332
Long-term Capital Gain $0.0500
TOTAL $0.2832
</TABLE>
Templeton Developing Markets Trust paid distributions derived from long-term
capital gains of 5 cents ($0.0500) per share in March 1998. The Fund hereby
designates such distributions as capital gain dividends per Internal Revenue
Code Section 852 (b)(3).
6 Past performance is not predictive of future results.
PAGE
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS I 1-YEAR 5-YEAR (10/17/91)
- ----------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) (18.72%) (17.24%) +30.80%
Average Annual Total Return(2) (23.39%) (4.85%) +2.95%
Value of $10,000 Investment(3) $7,661 $7,801 $12,328
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
------------------------------------------------
One-Year
Total Return(4) (8.64%) +0.36% +22.51% (9.41%) (18.72%)
<CAPTION>
INCEPTION
CLASS II 1-YEAR 3-YEAR (5/1/95)
- ----------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) (19.20%) (11.68%) (10.18%)
Average Annual Total Return(2) (20.80%) (4.37%) (3.14%)
Value of $10,000 Investment(3) $7,920 $8,744 $8,894
12/31/96 12/31/97 12/31/98
------------------------------------------------
One-Year
Total Return(4) 21.58% (10.10%) (19.20%)
<CAPTION>
INCEPTION
ADVISOR CLASS(5) 1-YEAR 5-YEAR (10/17/91)
- ----------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) (18.47%) (16.83%) +31.53%
Average Annual Total Return(2) (18.47%) (3.61%) +3.88%
Value of $10,000 Investment(3) $8,153 $8,317 $13,153
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
------------------------------------------------
One-Year
Total Return(4) (8.64%) +0.36% +22.51% (9.18%) (18.47%)
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current applicable,
maximum sales charge(s) for that class.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
5. On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Rule 12b-1 fees and other Class I expenses;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable to that
class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was (26.10%).
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
Past performance is not predictive of future results. 7
PAGE
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged indices differ from the Fund in composition, do not pay management
fees or expenses and include reinvested dividends. One cannot invest directly in
an index. Total return represents the change in value of an investment over the
periods shown. It includes the current applicable maximum sales charge(s), Fund
expenses, account fees, and reinvested distributions.
We are replacing the MSCI World Index with the MSCI Emerging Markets Free Index
as the Fund's benchmark because we believe its composition provides a more
appropriate comparison to the Fund's current and past portfolio. Approximately
900 companies are included in the MSCI Emerging Markets Free Index, which
represents the stock markets of 25 countries, including South Korea, Brazil and
South Africa. The MSCI World Index, which may be excluded from next year's
report, includes approximately 1,500 companies representing the stock markets of
22 countries, including the U.S., Australia, and several countries in Europe and
Asia, but excludes emerging markets. The International Finance Corporation's
(IFC) Investable Composite Index was designed to reflect the performance of
emerging market investments and includes approximately 2,000 companies that
foreigners can buy in 30 countries, including Mexico, South Korea, and Turkey.
[GRAPH OF CLASS I (10/17/91 - 12/31/98)]
The following line graph compares the performance of Templeton Developing
Markets Trust Class I shares with the International Finance Corporation (IFC)
Investable Composite Index, the Morgan Stanley Capital International (MSCI)
Emerging Markets Free Index and the MSCI World Index based on a $10,000
investment from 10/17/91 to 12/31/98. *Source: MSCI and IFC.
Templeton IFC MSCI MSCI World Index
Developing Investable Emerging
Markets Trust Composite Markets Free
- Class I Index
--------------------------------------------------------------
10/17/91 $9,425 $10,000 $10,000 $10,000
Oct-91 $9,434 $9,977 $9,979 $10,088
Nov-91 $9,406 $9,996 $9,830 $9,650
Dec-91 $9,458 $11,059 $10,935 $10,355
Jan-92 $9,619 $12,438 $12,201 $10,165
Feb-92 $9,562 $12,755 $12,743 $9,991
Mar-92 $9,364 $12,689 $13,174 $9,522
Apr-92 $9,468 $12,759 $13,082 $9,656
May-92 $9,628 $12,683 $13,036 $10,042
Jun-92 $9,609 $11,381 $11,742 $9,707
Jul-92 $9,392 $11,348 $11,870 $9,734
Aug-92 $9,137 $10,877 $11,317 $9,973
Sep-92 $9,033 $10,652 $11,355 $9,883
Oct-92 $8,788 $11,127 $11,963 $9,617
Nov-92 $8,439 $11,054 $11,834 $9,791
Dec-92 $8,536 $11,423 $12,182 $9,873
Jan-93 $8,960 $11,370 $12,241 $9,907
Feb-93 $9,741 $11,656 $12,446 $10,143
Mar-93 $9,591 $12,022 $12,858 $10,734
Apr-93 $10,046 $12,456 $13,153 $11,233
May-93 $10,597 $12,722 $13,520 $11,494
Jun-93 $10,906 $13,078 $13,921 $11,399
Jul-93 $10,868 $13,486 $14,288 $11,636
Aug-93 $11,825 $14,584 $15,495 $12,171
Sep-93 $12,289 $15,175 $16,062 $11,948
Oct-93 $12,792 $16,479 $17,503 $12,279
Nov-93 $13,449 $17,523 $18,277 $11,586
Dec-93 $14,896 $20,517 $21,298 $12,155
Jan-94 $15,198 $20,656 $21,686 $12,960
Feb-94 $14,866 $20,123 $21,300 $12,794
Mar-94 $14,268 $18,089 $19,373 $12,244
Apr-94 $13,699 $17,745 $18,985 $12,625
May-94 $13,689 $18,164 $19,635 $12,660
Jun-94 $13,464 $17,519 $19,094 $12,627
Jul-94 $13,935 $18,777 $20,281 $12,869
Aug-94 $14,749 $21,192 $22,798 $13,259
Sep-94 $14,887 $21,716 $23,057 $12,913
Oct-94 $14,543 $20,999 $22,641 $13,282
Nov-94 $14,023 $20,193 $21,464 $12,709
Dec-94 $13,617 $18,056 $19,740 $12,834
Jan-95 $12,846 $15,642 $17,640 $12,644
Feb-95 $12,805 $15,440 $17,187 $12,831
Mar-95 $12,948 $15,411 $17,297 $13,452
Apr-95 $13,377 $16,049 $18,073 $13,923
May-95 $13,836 $16,647 $19,034 $14,045
Jun-95 $13,877 $16,745 $19,090 $14,043
Jul-95 $14,469 $17,279 $19,519 $14,749
Aug-95 $14,091 $16,816 $19,059 $14,423
Sep-95 $14,071 $16,694 $18,969 $14,846
Oct-95 $13,591 $16,059 $18,243 $14,615
Nov-95 $13,438 $15,979 $17,917 $15,125
Dec-95 $13,666 $16,535 $18,712 $15,570
Jan-96 $15,000 $17,943 $20,042 $15,854
Feb-96 $14,931 $17,523 $19,723 $15,953
Mar-96 $14,995 $17,779 $19,877 $16,222
Apr-96 $15,490 $18,491 $20,672 $16,606
May-96 $15,743 $18,335 $20,579 $16,623
Jun-96 $15,838 $18,550 $20,708 $16,711
Jul-96 $15,121 $17,333 $19,293 $16,124
Aug-96 $15,427 $17,869 $19,786 $16,312
Sep-96 $15,754 $18,133 $19,958 $16,954
Oct-96 $15,806 $17,743 $19,426 $17,075
Nov-96 $16,355 $18,005 $19,751 $18,035
Dec-96 $16,742 $18,085 $19,840 $17,749
Jan-97 $18,014 $19,362 $21,194 $17,965
Feb-97 $18,541 $20,309 $22,101 $18,176
Mar-97 $18,158 $19,809 $21,521 $17,819
Apr-97 $18,344 $19,471 $21,559 $18,405
May-97 $19,294 $20,133 $22,176 $19,544
Jun-97 $20,114 $21,003 $23,363 $20,522
Jul-97 $20,966 $21,214 $23,711 $21,470
Aug-97 $19,130 $18,505 $20,694 $20,037
Sep-97 $20,190 $19,092 $21,267 $21,129
Oct-97 $16,377 $15,967 $17,778 $20,020
Nov-97 $15,296 $15,203 $17,129 $20,377
Dec-97 $15,166 $15,419 $17,542 $20,629
Jan-98 $13,830 $14,404 $16,166 $21,207
Feb-98 $15,271 $15,873 $17,853 $22,645
Mar-98 $15,979 $16,495 $18,628 $23,605
Apr-98 $16,038 $16,538 $18,425 $23,839
May-98 $13,863 $14,476 $15,900 $23,544
Jun-98 $12,504 $13,000 $14,232 $24,106
Jul-98 $12,587 $13,514 $14,684 $24,070
Aug-98 $9,490 $9,716 $10,438 $20,864
Sep-98 $9,939 $10,177 $11,100 $21,237
Oct-98 $11,405 $11,355 $12,269 $23,161
Nov-98 $12,658 $12,208 $13,289 $24,542
Dec-98 $12,328 $12,022 $13,097 $25,744
[TABLES]
AVERAGE ANNUAL TOTAL RETURN
12/31/98
[This table shows the average annual total returns for Templeton Deveoping
Markets Trust Class I shares as of December 31, 1998.]
CLASS I
- ----------------------------------
1-Year (23.39%)
5-Year (4.85%)
Since Inception (10/17/91) +2.95%
8 Past performance is not predictive of future results.
PAGE
[GRAPH OF CLASS II (5/1/95 - 12/31/98)]
[The following line graph compares the performance of Templeton Developing
Markets Trust Class II shares with the International Finance Corporation (IFC)
Investable Composite Index, the Morgan Stanley Capital International (MSCI)
Emerging Markets Free Index and the MSCI World Index based on a $10,000
investment from 5/1/95 to 12/31/98. *Source: MSCI and IFC.]
Templeton IFC MSCI MSCI World
Developing Investable Emerging Index
Markets Trust Composite Markets Free
- Class II Index
--------------------------------------------------------
5/1/95 $9,902 $10,000 $10,000 $10,000
5/95 $10,242 $10,360 $10,532 $10,085
6/95 $10,265 $10,421 $10,563 $10,083
7/95 $10,695 $10,754 $10,800 $10,590
8/95 $10,408 $10,466 $10,546 $10,356
9/95 $10,385 $10,390 $10,496 $10,660
10/95 $10,015 $9,995 $10,094 $10,494
11/95 $9,909 $9,945 $9,914 $10,860
12/95 $10,070 $10,291 $10,354 $11,180
1/96 $11,042 $11,167 $11,090 $11,384
2/96 $10,983 $10,906 $10,913 $11,455
3/96 $11,022 $11,065 $10,998 $11,648
4/96 $11,381 $11,508 $11,438 $11,924
5/96 $11,561 $11,411 $11,387 $11,936
6/96 $11,623 $11,545 $11,458 $11,999
7/96 $11,085 $10,787 $10,675 $11,577
8/96 $11,311 $11,121 $10,948 $11,713
9/96 $11,538 $11,285 $11,043 $12,173
10/96 $11,577 $11,043 $10,749 $12,260
11/96 $11,967 $11,206 $10,929 $12,950
12/96 $12,244 $11,256 $10,978 $12,745
1/97 $13,166 $12,050 $11,727 $12,900
2/97 $13,538 $12,640 $12,229 $13,051
3/97 $13,256 $12,328 $11,908 $12,795
4/97 $13,377 $12,118 $11,929 $13,215
5/97 $14,062 $12,530 $12,270 $14,034
6/97 $14,650 $13,071 $12,927 $14,735
7/97 $15,271 $13,203 $13,120 $15,416
8/97 $13,917 $11,517 $11,451 $14,388
9/97 $14,682 $11,882 $11,768 $15,171
10/97 $11,902 $9,937 $9,837 $14,375
11/97 $11,112 $9,462 $9,478 $14,632
12/97 $11,007 $9,596 $9,706 $14,812
1/98 $10,036 $8,965 $8,945 $15,228
2/98 $11,076 $9,879 $9,879 $16,260
3/98 $11,577 $10,266 $10,307 $16,949
4/98 $11,612 $10,293 $10,195 $17,117
5/98 $10,043 $9,009 $8,798 $16,905
6/98 $9,056 $8,091 $7,875 $17,309
7/98 $9,099 $8,411 $8,125 $17,283
8/98 $6,854 $6,047 $5,776 $14,981
9/98 $7,184 $6,334 $6,142 $15,249
10/98 $8,241 $7,067 $6,789 $16,630
11/98 $9,134 $7,598 $7,353 $17,622
12/98 $8,894 $7,482 $7,247 $18,486
AVERAGE ANNUAL TOTAL RETURN
12/31/98
[This table shows the average annual total returns for Templeton Deveoping
Markets Trust Class II shares as of December 31, 1998.]
CLASS II
- ----------------------------------
1-Year (20.80%)
3-Year (4.37%)
Since Inception (5/1/95) (3.14%)
[GRAPH OF ADVISOR CLASS
(10/17/91 - 12/31/98)**]
The following line graph compares the performance of Templeton Developing
Markets Trust Advisor Class shares with the International Finance Corporation
(IFC) Investable Composite Index, the Morgan Stanley Capital International
(MSCI) Emerging Markets Free Index and the MSCI World Index based on a $10,000
investment from 10/17/91 to 12/31/98. *Source: MSCI and IFC.
<TABLE>
<CAPTION>
Templeton IFCI MSCI Emerging MSCI World
Developing Markets Investable Markets Free Index
Trust - Advisor Composite Index
Class
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/17/91 $10,000 $10,000 $10,000 $10,000
10/91 $10,010 $9,977 $9,979 $10,088
11/91 $9,980 $9,996 $9,830 $9,650
12/91 $10,035 $11,059 $10,935 $10,355
1/92 $10,205 $12,438 $12,201 $10,165
2/92 $10,145 $12,755 $12,743 $9,991
3/92 $9,935 $12,689 $13,174 $9,522
4/92 $10,045 $12,759 $13,082 $9,656
5/92 $10,215 $12,683 $13,036 $10,042
6/92 $10,195 $11,381 $11,742 $9,707
7/92 $9,965 $11,348 $11,870 $9,734
8/92 $9,695 $10,877 $11,317 $9,973
9/92 $9,584 $10,652 $11,355 $9,883
10/92 $9,324 $11,127 $11,963 $9,617
11/92 $8,953 $11,054 $11,834 $9,791
12/92 $9,057 $11,423 $12,182 $9,873
1/93 $9,507 $11,370 $12,241 $9,907
2/93 $10,335 $11,656 $12,446 $10,143
3/93 $10,176 $12,022 $12,858 $10,734
4/93 $10,659 $12,456 $13,153 $11,233
5/93 $11,243 $12,722 $13,520 $11,494
6/93 $11,572 $13,078 $13,921 $11,399
7/93 $11,531 $13,486 $14,288 $11,636
8/93 $12,546 $14,584 $15,495 $12,171
9/93 $13,039 $15,175 $16,062 $11,948
10/93 $13,572 $16,479 $17,503 $12,279
11/93 $14,270 $17,523 $18,277 $11,586
12/93 $15,804 $20,517 $21,298 $12,155
1/94 $16,125 $20,656 $21,686 $12,960
2/94 $15,773 $20,123 $21,300 $12,794
3/94 $15,139 $18,089 $19,373 $12,244
4/94 $14,535 $17,745 $18,985 $12,625
5/94 $14,524 $18,164 $19,635 $12,660
6/94 $14,285 $17,519 $19,094 $12,627
7/94 $14,785 $18,777 $20,281 $12,869
8/94 $15,649 $21,192 $22,798 $13,259
9/94 $15,795 $21,716 $23,057 $12,913
10/94 $15,430 $20,999 $22,641 $13,282
11/94 $14,878 $20,193 $21,464 $12,709
12/94 $14,448 $18,056 $19,740 $12,834
1/95 $13,630 $15,642 $17,640 $12,644
2/95 $13,587 $15,440 $17,187 $12,831
3/95 $13,738 $15,411 $17,297 $13,452
4/95 $14,193 $16,049 $18,073 $13,923
5/95 $14,680 $16,647 $19,034 $14,045
6/95 $14,723 $16,745 $19,090 $14,043
7/95 $15,351 $17,279 $19,519 $14,749
8/95 $14,951 $16,816 $19,059 $14,423
9/95 $14,929 $16,694 $18,969 $14,846
10/95 $14,420 $16,059 $18,243 $14,615
11/95 $14,258 $15,979 $17,917 $15,125
12/95 $14,500 $16,535 $18,712 $15,570
1/96 $15,915 $17,943 $20,042 $15,854
2/96 $15,842 $17,523 $19,723 $15,953
3/96 $15,909 $17,779 $19,877 $16,222
4/96 $16,435 $18,491 $20,672 $16,606
5/96 $16,704 $18,335 $20,579 $16,623
6/96 $16,804 $18,550 $20,708 $16,711
7/96 $16,043 $17,333 $19,293 $16,124
8/96 $16,368 $17,869 $19,786 $16,312
9/96 $16,715 $18,133 $19,958 $16,954
10/96 $16,771 $17,743 $19,426 $17,075
11/96 $17,352 $18,005 $19,751 $18,035
12/96 $17,763 $18,085 $19,840 $17,749
1/97 $19,113 $19,362 $21,194 $17,965
2/97 $19,671 $20,309 $22,101 $18,176
3/97 $19,277 $19,809 $21,521 $17,819
4/97 $19,474 $19,471 $21,559 $18,405
5/97 $20,483 $20,133 $22,176 $19,544
6/97 $21,364 $21,003 $23,363 $20,522
7/97 $22,268 $21,214 $23,711 $21,470
8/97 $20,321 $18,505 $20,694 $20,037
9/97 $21,457 $19,092 $21,267 $21,129
10/97 $17,411 $15,967 $17,778 $20,020
11/97 $16,263 $15,203 $17,129 $20,377
12/97 $16,133 $15,419 $17,542 $20,629
1/98 $14,710 $14,404 $16,166 $21,207
2/98 $16,245 $15,873 $17,853 $22,645
3/98 $17,010 $16,495 $18,628 $23,605
4/98 $17,060 $16,538 $18,425 $23,839
5/98 $14,758 $14,476 $15,900 $23,544
6/98 $13,311 $13,000 $14,232 $24,106
7/98 $13,399 $13,514 $14,684 $24,070
8/98 $10,103 $9,716 $10,438 $20,864
9/98 $10,594 $10,177 $11,100 $21,237
10/98 $12,166 $11,355 $12,269 $23,161
11/98 $13,500 $12,208 $13,289 $24,542
12/98 $13,153 $12,022 $13,097 $25,744
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
12/31/98
[This table shows the average annual returns for Templeton Developing Markets
Trust Advisor Class shares as of December 31, 1998. ]
- ----------------------------------
ADVISOR CLASS
1-Year (18.47%)
5-Year (3.61%)
Since Inception (10/17/91) +3.88%
*Source: MSCI and IFC.
**On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Rule 12b-1 fees and other Class I expenses;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable to that
class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was (26.10%).
Past performance is not predictive of future results. 9
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights
<TABLE>
<CAPTION>
CLASS I
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year................... $12.94 $15.40 $13.01 $13.42 $15.27
------------------------------------------------------------------
Income from investment operations:
Net investment income............................... .17 .16 .16 .21 .14
Net realized and unrealized gains (losses).......... (2.57) (1.62) 2.75 (.18) (1.44)
------------------------------------------------------------------
Total from investment operations..................... (2.40) (1.46) 2.91 .03 (1.30)
------------------------------------------------------------------
Less distributions from:
Net investment income............................... (.19) (.16) (.17) (.20) (.12)
In excess of net investment income.................. -- -- (.01) -- --
Net realized gains.................................. (.05) (.53) (.34) (.24) (.43)
In excess of net realized gains..................... -- (.31) -- -- --
------------------------------------------------------------------
Total distributions.................................. (.24) (1.00) (.52) (.44) (.55)
------------------------------------------------------------------
Net asset value, end of year......................... $10.30 $12.94 $15.40 $13.01 $13.42
------------------------------------------------------------------
------------------------------------------------------------------
Total Return*........................................ (18.72)% (9.41)% 22.51% .36% (8.64)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)...................... $2,172,954 $3,444,029 $3,308,753 $2,147,664 $2,009,154
Ratios to average net assets:
Expenses............................................ 2.11% 1.96% 2.03% 2.10% 2.11%
Net investment income............................... 1.40% .99% 1.16% 1.66% 1.08%
Portfolio turnover rate.............................. 37.51% 30.06% 12.47% 9.76% 18.57%
</TABLE>
*Total return does not reflect sales commissions.
10
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS II
-------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1998 1997 1996 1995+
-------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $12.81 $15.27 $12.95 $13.10
-------------------------------------------------
Income from investment operations:
Net investment income...................................... .07 .09 .17 .02
Net realized and unrealized gains (losses)................. (2.51) (1.64) 2.60 .19
-------------------------------------------------
Total from investment operations............................ (2.44) (1.55) 2.77 .21
-------------------------------------------------
Less distributions from:
Net investment income...................................... (.11) (.07) (.10) (.18)
In excess of net investment income......................... -- -- (.01) --
Net realized gains......................................... (.05) (.53) (.34) (.18)
In excess of net realized gains............................ -- (.31) -- --
-------------------------------------------------
Total distributions......................................... (.16) (.91) (.45) (.36)
-------------------------------------------------
Net asset value, end of year................................ $10.21 $12.81 $15.27 $12.95
-------------------------------------------------
-------------------------------------------------
Total Return*............................................... (19.20)% (10.10)% 21.58% 1.70%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $294,588 $402,542 $226,629 $41,012
Ratios to average net assets:
Expenses................................................... 2.78% 2.69% 2.74% 2.73%**
Net investment income...................................... .76% .21% .33% .19%**
Portfolio turnover rate..................................... 37.51% 30.06% 12.47% 9.76%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 1, 1995 (effective date) to December 31, 1995.
11
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
------------------------
YEAR ENDED DECEMBER 31,
------------------------
1998 1997+
------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $12.93 $15.43
------------------------
Income from investment operations:
Net investment income...................................... .23 .17
Net realized and unrealized losses......................... (2.60) (1.63)
------------------------
Total from investment operations............................ (2.37) (1.46)
------------------------
Less distributions from:
Net investment income...................................... (.23) (.20)
Net realized gains......................................... (.05) (.53)
In excess of net realized gains............................ -- (.31)
------------------------
Total distributions......................................... (.28) (1.04)
------------------------
Net asset value, end of year................................ $10.28 $12.93
------------------------
------------------------
Total Return*............................................... (18.47)% (9.36)%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $115,494 $98,101
Ratios to average net assets:
Expenses................................................... 1.78% 1.69%**
Net investment income...................................... 1.82% 1.04%**
Portfolio turnover rate..................................... 37.51% 30.06%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period January 2, 1997 (effective date) to December 31, 1997. Based on
average weighted shares outstanding.
See Notes to Financial Statements.
12
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES 101.0%
ARGENTINA 5.4%
Aluar Aluminio Argentino SA, B.................. Misc Materials & Commodities 20,560 $ 51,446
Astra Cia Argentina de Petroleo SA.............. Energy Sources 1,333,000 1,574,357
*Atanor Cia Nacional Para la Industria Quimica
SA, D......................................... Chemicals 3,467,239 1,978,107
Banco de Galicia y Buenos Aires SA, B........... Banking 1,029,178 4,532,464
Banco Frances SA................................ Banking 950,000 6,751,076
*Buenos Aires Embotelladora SA, B, ADR.......... Beverages & Tobacco 746,000 7,460
*Capex SA, A.................................... Utilities Electrical & Gas 221,604 1,270,935
Central Costanera SA, B......................... Utilities Electrical & Gas 172,000 421,780
+*Garovaglio Y Zorraquin SA..................... Chemicals 1,500,356 1,892,152
Juan Minetti SA................................. Building Materials & Components 278,000 765,189
Molinos Rio de la Plata SA, B................... Food & Household Products 6,709,464 15,781,444
Nobleza Piccardo Sdad Industrial Comercial y
Financial..................................... Beverages & Tobacco 453,079 1,541,856
Perez Companc SA, B............................. Energy Sources 5,305,949 22,464,382
Quilmes Industrial SA, ADR...................... Beverages & Tobacco 1,221,500 11,375,220
Siderca SA, A................................... Metals & Mining 4,662,876 5,320,467
*Sociedad Comercial del Plata Cadelplata Come... Multi-Industry 8,191,210 5,780,005
Telecom Argentina Stet-France SA, ADR........... Telecommunications 256,500 7,053,750
Telefonica de Argentina SA, B, ADR.............. Telecommunications 470,760 13,151,858
Transportadora de Gas del Sur SA, B............. Utilities Electrical & Gas 841,972 1,668,606
Transportadora de Gas del Sur SA, B, ADR........ Utilities Electrical & Gas 1,257,800 12,735,225
YPF Sociedad Anonima, ADR....................... Energy Sources 795,218 22,216,403
*Zanella Hermanos SA............................ Automobiles 805,494 76,591
--------------
138,410,773
--------------
BRAZIL 11.5%
Aracruz Celulose SA, ADR........................ Forest Products & Paper 1,689,000 13,512,000
Banco Bradesco SA............................... Banking 1,820,341,854 9,521,672
*Banco Bradesco SA BBD, rts. ................... Banking 76,695,081 19,551
*Banco Bradesco SA BBD, rts., pfd. ............. Banking 152,202,555 86,667
Banco Bradesco SA, pfd. ........................ Banking 3,672,031,522 20,362,186
Banco do Brasil SA.............................. Banking 1,008,741,792 5,593,685
Banco do Brazil SA, pfd. ....................... Banking 216,266,120 1,449,829
Brasmotor SA, pfd. ............................. Multi-Industry 44,353,231 4,405,038
Centrais Eletricas Brasileiras SA
(Electrobras)................................. Utilities Electrical & Gas 667,461,000 11,490,328
Centrais Eletricas Brasileiras SA (Electrobras),
B, pfd. ...................................... Utilities Electrical & Gas 1,973,153,470 37,887,159
*Centrais Geradoras Do Sul Do Brasil SA, B,
pfd. ......................................... Utilities Electrical & Gas 2,380,068,470 2,954,771
Cia Cervejaria Brahma........................... Beverages & Tobacco 2,000,000 877,302
Cia Cervejaria Brahma, pfd. .................... Beverages & Tobacco 5,668,000 2,476,891
Cia Energetica de Minas Gerais Cemig, br.,
pfd. ......................................... Utilities Electrical & Gas 679,860,000 12,941,676
*Cia Mesbla SA, pfd. ........................... Merchandising 73,017,000 18,130
*Cia Mesbla SA, rts. ........................... Merchandising 144,991,889 7,200
*Cia Vale do Rio Doce, A, pfd. ................. Metals & Mining 852,777 10,939,825
*Companhia Energetica do Ceara, pfd. ........... Utilities Electrical & Gas 410,872,000 1,020,166
Companhia Paranaense De Energia-Copel, ADR...... Utilities Electrical & Gas 246,000 1,752,750
Companhia Siderurgica Nacional Sid Nacional
CSN........................................... Metals & Mining 368,901,000 8,243,598
Copene-Petroquimica do Nordeste SA, A, pfd. .... Chemicals 36,169,844 4,131,131
+Duratex SA, pfd. .............................. Forest Products & Paper 477,100,800 13,030,686
</TABLE>
13
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
BRAZIL (CONT.)
Investimentos Itau SA, pfd. .................... Multi-Industry 68,618,179 $ 38,050,221
*Mannesmann SA.................................. Machinery & Engineering 22,480,874 1,395,461
*Mannesmann SA, pfd. ........................... Machinery & Engineering 4,725,562 226,843
Petroleo Brasileiro SA, pfd. ................... Energy Sources 265,325,333 30,084,478
Souza Cruz SA................................... Beverages & Tobacco 349,200 2,254,302
*Telecomunicacoes Brasileiras SA, unit.......... Telecommunications 738,109,194 32,988,120
*Telecomunicacoes Brasileiras SA, unit, pfd. ... Telecommunications 339,307,973 24,881,181
Unibanco Uniao de Bancos Brasileiros SA, unit... Banking 119,331,186 4,148,074
--------------
296,750,921
--------------
CHILE 4.4%
Antofagasta Holdings Plc. ...................... Metals & Mining 811,668 2,396,990
Cia Cervecerias Unidas SA, ADR.................. Beverages & Tobacco 106,450 2,049,163
Compania De Telecomunicaciones De Chile SA,
ADR........................................... Telecommunications 2,394,809 49,542,611
Empresa Nacional de Electricidad SA, ADR........ Electrical & Electronics 2,592,200 29,486,275
Enersis SA, ADR................................. Utilities Electrical & Gas 798,350 20,607,409
Madeco Manufacturera de Cobre SA, ADR........... Industrial Components 103,900 870,163
Masisa SA, ADR.................................. Forest Products & Paper 56,400 359,550
Quinenco SA, ADR................................ Multi-Industry 755,400 6,043,200
Sociedad Quimica y Minera de Chile SA, ADR...... Chemicals 47,000 1,583,313
--------------
112,938,674
--------------
CHINA 1.0%
China Resources Enterprises Ltd. ............... Multi-Industry 2,096,000 3,273,626
*China Southern Glass Co. Ltd., B............... Building Materials & Components 8,770,913 803,814
+China Vanke Co. Ltd., B........................ Real Estate 10,910,506 2,999,694
+Chiwan Wharf Holdings Ltd., B.................. Transportation 11,593,800 1,197,204
Guangshen Railway Co. Ltd., H................... Transportation 26,618,000 3,092,220
Guangshen Railway Co. Ltd., H, ADR.............. Transportation 457,300 2,743,800
Shandong Huaneng Power Development Co. Ltd.,
ADR........................................... Utilities Electrical & Gas 641,500 2,926,844
*Shanghai Chlor-Alkali Chemical Co. Ltd., B..... Chemicals 8,121,030 552,230
*Shanghai Dazhong Taxi Shareholding Co. Ltd.,
B............................................. Transportation 1,129,514 476,655
+*Shanghai Jin Jiang Tower Co. Ltd., B.......... Leisure & Tourism 7,497,954 659,820
*Shanghai Lujiaxui Finance & Trade Zn Dev Stock
Co Ltd., B.................................... Real Estate 11,588,189 3,731,397
*Shanghai New Asia Group Co. Ltd., B............ Food & Household Products 6,329,154 810,132
Shanghai Petrochemical Co. Ltd., H.............. Chemicals 26,416,000 2,386,808
*Shanghai Tyre & Rubber Co. Ltd., B............. Industrial Components 5,292,050 529,205
Shanghai Yaohua Pilkington Glass, B............. Building Materials & Components 7,380,450 627,338
Shenzhen Konka Electronic Group Co. Ltd., B..... Appliances & Household Durables 657,627 331,901
--------------
27,142,688
--------------
COLOMBIA 1.7%
Banco Ganadero SA, C, ADR, pfd. ................ Banking 134,400 1,218,000
Bancolombia SA.................................. Banking 1,526,005 1,429,859
Bavaria SA...................................... Beverages & Tobacco 405,612 2,044,442
Cementos Argos SA............................... Building Materials & Components 3,553,464 10,126,511
</TABLE>
14
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
COLOMBIA (CONT.)
Cia Colombiana de Tabacos SA.................... Beverages & Tobacco 2,550,068 $ 4,943,589
Compania Nacional de Chocolates SA.............. Food & Household Products 2,194,520 9,501,314
Compania Suramericana de Inversiones SA......... Insurance 6,486,272 14,045,556
Promigas SA..................................... Utilities Electrical & Gas 221,959 860,585
Valores Bavaria SA.............................. Financial Services 345,100 356,808
--------------
44,526,664
--------------
CROATIA
Pliva D D, GDR, Reg S........................... Health & Personal Care 56,400 936,240
--------------
CZECH REPUBLIC 2.0%
*CEZ AS......................................... Utilities Electrical & Gas 964,025 21,305,431
*Komercni Banka AS, GDR......................... Banking 224,300 930,845
*SPT Telecom AS................................. Telecommunications 1,348,428 20,564,751
Tabak AS........................................ Beverages & Tobacco 13,786 3,851,505
Unipetrol....................................... Chemicals 2,839,511 5,105,844
--------------
51,758,376
--------------
ECUADOR .1%
La Cemento Nacional SA, GDR, 144A............... Multi-Industry 4,510 487,080
La Cemento Nacional SA, GDR, Reg S.............. Multi-Industry 14,400 1,555,200
--------------
2,042,280
--------------
EGYPT .2%
Commercial International Bank Ltd. ............. Banking 124,345 982,727
Eastern Tobacco Co. ............................ Beverages & Tobacco 184,711 4,251,061
--------------
5,233,788
--------------
GHANA .5%
Ashanti Goldfields Co. Ltd., GDR, Reg S......... Metals & Mining 1,477,635 13,852,828
--------------
GREECE
Alpha Credit Bank............................... Banking 4 421
National Bank of Greece SA...................... Banking 1 180
--------------
601
--------------
HONG KONG 5.7%
CDL Hotel International Ltd. ................... Leisure & Tourism 4,465,858 1,147,124
Cheung Kong Holdings Ltd. ...................... Multi-Industry 5,219,000 37,556,456
Citic Pacific Ltd. ............................. Multi-Industry 2,513,000 5,417,032
Dairy Farm International Holdings Ltd. ......... Merchandising 7,973,116 9,169,083
Hang Lung Development Co. Ltd. ................. Real Estate 9,724,000 10,417,835
HSBC Holdings Plc. ............................. Banking 1,803,860 44,937,876
Hutchison Whampoa Ltd. ......................... Multi-Industry 899,000 6,353,254
IMC Holdings Ltd. .............................. Transportation 66,000 6,389
Jardine Matheson Holdings Ltd. ................. Multi-Industry 1,156,743 2,984,397
Jardine Strategic Holdings Ltd. ................ Multi-Industry 1,921,687 2,786,446
</TABLE>
15
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
HONG KONG (CONT.)
New World Development Co. Ltd. ................. Real Estate 9,491,807 $ 23,891,098
*Semi-Tech Co. Ltd. ............................ Appliances & Household Durables 11,676,030 482,282
Wheelock and Company Ltd. ...................... Multi-Industry 2,776,231 2,221,773
--------------
147,371,045
--------------
HUNGARY 2.0%
Borsodchem RT................................... Chemicals 210,681 5,479,986
Borsodchem RT, GDR, Reg S....................... Chemicals 157,000 4,085,925
*Danubius Hotel and Spa RT...................... Leisure & Tourism 58,357 1,222,463
Egis RT......................................... Multi-Industry 91,638 2,085,632
Fotex First Hungarian American Photo Service
Co. .......................................... Multi-Industry 2,872,089 1,507,448
**Fotex First Hungarian American Photo Service
Co., cvt., 12.00%, 5/11/00.................... Multi-Industry 32,000 32,000
Gedeon Richter Ltd. ............................ Health & Personal Care 258,007 10,995,212
+*Ibusz RT...................................... Leisure & Tourism 111,639 430,388
Inter-Europa Bank RT............................ Banking 10,220 493,685
Mol Magyar Olay - Es Gazipari RT................ Energy Sources 163,000 4,470,680
OTP Bank........................................ Banking 31,900 1,598,741
Pannonplast Plastic Industries Plc. ............ Industrial Components 4,274 120,997
Pick Szeged RT, GDR............................. Food & Household Products 152,150 1,312,294
Tiszai Vegyi Kombinat RT........................ Chemicals 460,308 6,200,298
Tiszai Vegyi Kombinat RT, GDR, 144A............. Chemicals 571,000 7,737,050
Tiszai Vegyi Kombinat RT, GDR, Reg S............ Chemicals 219,000 2,967,450
Zwack Unicum Ltd. .............................. Beverages & Tobacco 948 24,438
--------------
50,764,687
--------------
INDIA 3.7%
Aban Loyd Chiles Offshore Ltd. ................. Energy Sources 6,200 4,960
Andhra Valley Power Supply Co. Ltd. ............ Utilities Electrical & Gas 59,100 102,913
Arvind Mills Ltd. .............................. Textiles & Apparel 1,774,300 1,613,712
*ATV Projects India Ltd. ....................... Machinery & Engineering 1,602,600 37,712
Bajaj Auto Ltd. ................................ Automobiles 304,150 3,730,640
*Bharat Petroleum Corp. Ltd. ................... Energy Sources 1,252,300 6,872,050
Bombay Dyeing & Manufacturing Co. Ltd. ......... Chemicals 309,350 421,845
*Bses Ltd. ..................................... Utilities Electrical & Gas 100 333
Cochin Refineries Ltd. ......................... Energy Sources 100 312
Cummins India Ltd. ............................. Machinery & Engineering 58,000 419,684
Essar Shipping Ltd. ............................ Transportation 68,000 11,201
*Garden Silk Mills Ltd. ........................ Textiles & Apparel 204,600 47,183
Grasim Industries Ltd. ......................... Multi-Industry 1,078,550 4,575,994
Great Eastern Shipping Co. Ltd. ................ Transportation 7,166,700 3,887,224
Gujarat Ambuja Cements Ltd. .................... Building Materials & Components 583,125 3,569,040
Gujarat Ambuja Cements Ltd., GDR, Reg S......... Building Materials & Components 285,500 1,884,300
Gujarat Industries Power Ltd. .................. Energy Equipment & Services 424,400 247,172
Gujarat Narmada Valley Fertilizers Co. Ltd. .... Chemicals 1,724,600 754,833
Gujarat Narmada Valley Fertilizers Co. Ltd.,
GDR........................................... Chemicals 141,000 303,150
</TABLE>
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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
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INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
INDIA (CONT.)
Hindalco Industries Inc., GDR, Reg S............ Metals & Mining 102,400 $ 1,200,640
Hindustan Organic Chemicals Ltd. ............... Chemicals 838,600 155,895
Hindustan Petroleum Corp. Ltd. ................. Energy Sources 758,100 4,194,000
ICICI Ltd. ..................................... Financial Services 6,549,800 7,251,654
India Cements Ltd. ............................. Building Materials & Components 444,800 338,601
India Cements Ltd., GDR......................... Building Materials & Components 552,910 414,683
Indian Aluminium Co. Ltd. ...................... Metals & Mining 246,300 526,839
Indian Petrochemicals Corp. Ltd. ............... Chemicals 4,769,500 6,430,976
*Indian Rayon & Industries Ltd. ................ Multi-Industry 551,700 1,460,511
Indian Rayon & Industries Ltd., GDR............. Multi-Industry 109,172 275,659
Indo Gulf Corp. Ltd. ........................... Chemicals 3,926,100 2,582,216
Indo Gulf Corp. Ltd., GDR....................... Chemicals 64,150 40,094
Industrial Development Bank of India............ Banking 2,255,500 1,934,594
L & T Ltd. ..................................... Multi-Industry 1,584,864 5,985,720
Larsen & Toubro Ltd. ........................... Multi-Industry 485,902 1,835,157
Larsen and Toubro Ltd., GDR, Reg S.............. Multi-Industry 105,367 808,692
Madras Cements Ltd. ............................ Building Materials & Components 7,255 693,255
Mahanagar Telephone Nigam Ltd. ................. Telecommunications 603,000 2,599,514
National Aluminium Co. Ltd. .................... Metals & Mining 3,436,600 1,524,368
Oriental Bank of Commerce....................... Banking 3,860,200 3,392,734
Reliance Industries Ltd. ....................... Chemicals 1,614,000 4,549,983
Reliance Industries Ltd., GDR................... Chemicals 326,600 1,828,960
Satyam Computers Services Ltd. ................. Data Processing & Reproduction 28,400 486,184
*Shipping Corporation Of India Ltd. ............ Transportation 1,877,600 927,837
State Bank of India............................. Banking 76,000 280,957
Steel Authority of India Ltd., GDR, 144A........ Metals & Mining 62,000 122,450
Steel Authority of India Ltd., GDR, Reg S....... Metals & Mining 199,000 393,025
Sterlite Industries Ltd. ....................... Metals & Mining 210 717
Tata Chemicals Ltd. ............................ Chemicals 935,650 2,230,350
Tata Engineering & Locomotive Co. Telco......... Machinery & Engineering 2,192,100 8,408,090
*Tata Hydro-Electric Power Company.............. Utilities Electrical & Gas 210,900 395,038
Tata Iron & Steel Co., Ltd. .................... Metals & Mining 362,750 1,002,132
Thermax Ltd. ................................... Energy Equipment & Services 75,600 254,394
Videsh Sanchar Nigam Ltd., GDR.................. Telecommunications 140,400 1,719,900
Wockhardt....................................... Health & Personal Care 162,200 1,001,149
--------------
95,731,226
--------------
INDONESIA 3.8%
*Asia Pulp & Paper Co. Ltd., ADR................ Forest Products & Paper 2,277,400 18,646,213
*PT Barito Pacific Timber TBK................... Forest Products & Paper 47,707,500 2,100,330
*PT BBL Dharmala Finance TBK, fgn. ............. Financial Services 3,295,000 580,252
*PT BDNI Capital Corp., fgn. ................... Financial Services 2,366,400 52,091
*PT Ciputra Development......................... Real Estate 3,000,000 47,170
PT Gudang Garamm................................ Beverages & Tobacco 2,254,500 3,303,764
*PT Indah Kiat Pulp & Paper Corp. .............. Forest Products & Paper 34,107,050 9,331,174
*PT Indocement Tunggal Prakarsa................. Building Materials & Components 17,071,000 6,817,664
*PT Indofoods Sukses Makmurr.................... Food & Household Products 11,592,480 5,905,603
</TABLE>
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STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
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LONG TERM SECURITIES (CONT.)
INDONESIA (CONT.)
PT Indosat...................................... Telecommunications 3,076,000 $ 4,033,623
*PT Inter-Pacific Bank, fgn. ................... Banking 922,500 23,208
*PT Metrodata Electronic........................ Electrical & Electronics 730,157 73,475
*PT Semen Cibinong.............................. Building Materials & Components 19,715,500 743,981
PT Semen Gresik (Persero)....................... Building Materials & Components 9,337,500 9,748,585
*PT Sinar Mas Agro Resources & Technology
Corp. ........................................ Food & Household Products 7,221,400 1,544,199
*PT Sinar Mas Multi Artha, fgn. ................ Financial Services 374,700 78,946
*PT Summarecon Agung............................ Real Estate 846,031 15,963
PT Telekomunikasi Indonesia (Persero), B........ Telecommunications 55,983,000 19,013,094
*PT Tempo Scan Pacific.......................... Health & Personal Care 11,354,000 606,975
PT Timah........................................ Metals & Mining 12,430,500 8,404,269
*PT Tjiwi Kimia................................. Forest Products & Paper 23,904,330 6,239,180
*PT Ultra Jaya Milk............................. Food & Household Products 1,481,500 116,470
--------------
97,426,229
--------------
ISRAEL .5%
*Clal Industries Ltd. .......................... Multi-Industry 625,172 3,050,646
Koor Industries Ltd. ........................... Multi-Industry 113,667 9,918,300
--------------
12,968,946
--------------
JORDAN
Jordan Cement Factories Ltd. ................... Building Materials & Components 222,750 969,838
--------------
KAZAKHSTAN
*Kazkommertsbank, ADR, 144A..................... Banking 117,660 411,810
--------------
MALAYSIA 2.9%
AMMB Holdings Bhd............................... Financial Services 2,759,400 2,596,946
Boustead Holdings Bhd........................... Food & Household Products 4,683,000 2,931,640
Cement Industries of Malaysia Bhd............... Building Materials & Components 271,000 127,523
Cosway Corporation Bhd.......................... Appliances & Household Durables 4,124,000 1,308,175
Federal Flour Mills Bhd......................... Food & Household Products 2,506,250 1,958,563
Genting Bhd..................................... Leisure & Tourism 5,137,000 8,902,946
Golden Hope Plantations Bhd..................... Misc Materials & Commodities 398,000 342,797
Hong Leong Industries Bhd....................... Multi-Industry 5,454,800 2,738,716
Hong Leong Industries Bhd., wts................. Multi-Industry 332,000 34,872
Hong Leong Properties Bhd....................... Real Estate 7,674,000 1,273,559
Island & Peninsula Bhd.......................... Real Estate 3,997,000 2,552,572
Kian Joo Can Factory Bhd........................ Industrial Components 1,803,000 2,121,065
*Leader Universal Holdings Bhd.................. Industrial Components 18,134,000 3,999,937
Malayawata Steel Bhd............................ Metals & Mining 4,539,000 934,451
Malaysian Airlines System Bhd................... Transportation 6,783,000 2,963,844
Malaysian International Shipping Corp., fgn. ... Transportation 2,311,000 2,427,394
*MBF Capital Bhd................................ Financial Services 3,603,000 647,144
Oriental Holdings Bhd........................... Automobiles 3,241,598 3,983,688
Perlis Plantations Bhd.......................... Multi-Industry 6,283,250 5,147,771
Perusahaan Otomobil Nasional Bhd................ Automobiles 1,335,000 1,612,573
</TABLE>
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STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
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LONG TERM SECURITIES (CONT.)
MALAYSIA (CONT.)
Public Bank Bhd................................. Banking 3,037,000 $ 1,275,983
Public Bank Bhd., fgn. ......................... Banking 4,080,600 1,585,864
Public Finance Bhd., fgn. ...................... Financial Services 3,194,000 1,127,235
Renong Bhd...................................... Multi-Industry 22,656,000 4,378,661
Resorts World Bhd............................... Leisure & Tourism 12,504,000 11,505,177
Shangri La Hotels (Malaysia) Bhd................ Leisure & Tourism 4,835,202 1,289,997
Tanjong Plc. ................................... Recreation & Other Consumer Goods 2,842,000 3,223,948
Technology Resources Industries Bhd............. Multi-Industry 1,811,000 753,276
YTL Corp. Bhd................................... Construction & Housing 751,000 779,358
--------------
74,525,675
--------------
MEXICO 9.6%
Alfa SA de CV, A................................ Multi-Industry 361,768 1,018,730
*Altos Hornos de Mexico SA...................... Metals & Mining 8,109,700 7,281,510
Cemex SA........................................ Building Materials & Components 999,802 2,158,319
Cemex SA, B..................................... Building Materials & Components 23,994,750 60,290,145
*Cifra SA de CV, C.............................. Merchandising 11,026,824 13,602,351
*Cifra SA de CV, V.............................. Merchandising 3,267,000 3,964,005
Coca Cola Femsa SA de CV, L, ADR................ Beverages & Tobacco 827,100 10,959,075
DESC SA de CV DESC, A........................... Multi-Industry 1,970,000 2,079,555
DESC SA de CV DESC, B........................... Multi-Industry 4,290,870 3,679,128
DESC SA de CV DESC, C........................... Multi-Industry 1,000,675 945,026
*Grupo Financiero Banamex Accival SA de CV, B... Banking 4,317,000 5,674,520
*Grupo Financiero Banamex Accival SA de CV, L... Banking 14,779,422 17,035,936
Grupo Financiero Bancomer SA de CV, B........... Banking 14,072,066 3,016,459
Grupo Financiero Bancomer SA de CV, L........... Banking 42,279,593 5,984,978
*Grupo Financiero Serfin SA de CV, B............ Banking 30,428,987 2,707,534
*Grupo Industrial Maseca SA de CV, B............ Food & Household Products 692,000 559,757
Hylsamex SA de CV, partn. cert., B.............. Metals & Mining 4,000 4,975
Panamerican Beverages Inc., A................... Food & Household Products 278,200 6,068,238
Telefonos de Mexico SA (Telmex), L, ADR......... Telecommunications 1,950,500 94,964,969
Vitro SA De CV.................................. Food & Household Products 4,114,388 6,032,217
--------------
248,027,427
--------------
NEW ZEALAND .1%
Brierley Investments Ltd. ...................... Multi-Industry 9,167,000 2,082,265
--------------
PAKISTAN .7%
*Bank of Punjab................................. Banking 2,466,615 503,239
*DG Khan Cement Co. ............................ Building Materials & Components 2,485,563 179,860
Engro Chemical Pakistan Ltd. ................... Chemicals 2,130,795 3,852,563
Fauji Fertilizer Co. Ltd. ...................... Chemicals 1,897,500 1,746,844
Khadim Ali Sham Bukhari & Co. Ltd. ............. Financial Services 218,309 65,822
National Development Leasing Corp. ............. Financial Services 839,131 60,721
*Pakistan Electron Ltd. ........................ Appliances & Household Durables 366,146 25,759
*Pakistan International Airlines Corp., A....... Transportation 16,500 1,343
Pakistan Telecom Corp., GDR..................... Telecommunications 21,000 724,500
</TABLE>
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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
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<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
PAKISTAN (CONT.)
Pakistan Telecommunications Corp., A............ Telecommunications 30,765,300 $ 11,749,562
*Trust Modaraba................................. Financial Services 972,080 73,272
*Union Bank Ltd. ............................... Banking 1,049,978 232,156
--------------
19,215,641
--------------
PERU 1.0%
Telefonica Del Peru SA, B, ADR.................. Telecommunications 2,031,100 25,769,581
--------------
PHILIPPINES 2.0%
*A Soriano Corp. ............................... Multi-Industry 121,341,903 2,589,043
Ayala Corp. .................................... Multi-Industry 6,837,320 2,416,790
Bank of Philippine Islands...................... Banking 843,000 1,787,853
*Belle Corp. ................................... Real Estate 65,368,000 3,596,080
*Filinvest Development Corp. ................... Real Estate 4,809,000 158,240
*Keppel Philippine Holdings Inc., B............. Machinery & Engineering 736,552 13,254
*Petron Corp. .................................. Energy Sources 16,636,000 1,817,558
*Philex Mining Corp., B......................... Metals & Mining 34,110,142 271,829
Philippine Commercial International Bank
Inc. ......................................... Banking 857,210 3,569,872
Philippine Long Distance Telephone Co., ADR..... Telecommunications 961,550 24,940,203
*Philippine National Bank....................... Banking 1,473,128 2,272,177
RFM Corp. ...................................... Food & Household Products 32,895,068 5,073,789
San Miguel Corp., B............................. Food & Household Products 714,500 1,377,571
*Southeast Asia Cement Holdings Inc. ........... Building Materials & Components 68,593,660 846,400
--------------
50,730,659
--------------
POLAND 1.8%
Bank Handlowy W Warszawie SA, GDR, Reg S........ Banking 114,500 1,482,775
Bank Przemyslowo-Handlowy SA.................... Banking 138,770 8,223,407
Bank Rozwoju Eksportu SA........................ Banking 32,124 741,323
Bank Slaski SA W Katowicach..................... Banking 35,100 1,820,000
Big Bank Gdanski SA, G.......................... Banking 15,238,667 13,675,727
Big Bank Gdanski SA, GDR, Reg S................. Banking 216,867 2,938,543
Farm Food SA.................................... Food & Household Products 54,000 180,000
Gorazdze SA..................................... Building Materials & Components 97,889 1,645,428
*Impexmetal SA.................................. Metals & Mining 290,016 1,107,184
Mostostal Export SA............................. Construction & Housing 1,216,947 1,282,822
*Orbis SA....................................... Leisure & Tourism 20,434 160,678
Polifarb Cieszyn Wroclaw SA..................... Chemicals 936,296 2,227,371
*Raciborska Fabryka Kotlow SA................... Energy Equipment & Services 98,536 193,703
*Rolimpex SA.................................... Wholesale & International Trade 397,803 646,005
Warta SA........................................ Insurance 234,936 4,819,200
Wielkopolski Bank Kredytowy SA.................. Banking 1,000,944 6,302,240
Zaklady Piwowarskie W Zywcu SA.................. Beverages & Tobacco 2,720 325,470
--------------
47,771,876
--------------
</TABLE>
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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
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- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
RUSSIA .6%
Aeroflot - Russia International Airlines........ Transportation 25,900 $ 621,600
*Chelyabenergo.................................. Utilities Electrical & Gas 2,020,000 80,800
GUM Trade House................................. Merchandising 500,000 242,500
Irkutskenergo................................... Utilities Electrical & Gas 6,179,100 276,515
Irkutskenergo, ADR.............................. Utilities Electrical & Gas 96,950 216,926
*JSC Chernogorneft.............................. Energy Sources 17,000 36,125
*JSC Gorkovsky Augomobile Plant................. Automobiles 19,960 364,270
*Kamaz, B....................................... Automobiles 879,392 197,775
Krasnoyarsk Aluminum Plant...................... Metals & Mining 63,192 221,172
Lukoil Holdings................................. Energy Sources 141,000 571,050
Lukoil Holdings, ADR............................ Energy Sources 34,580 560,196
Mosenergo....................................... Utilities Electrical & Gas 77,103,400 1,542,068
Mosenergo, ADR.................................. Utilities Electrical & Gas 45,700 85,688
Norilsk Nickel.................................. Metals & Mining 332,000 176,790
Norilsk Nickel, pfd. ........................... Metals & Mining 20,000 6,500
*Novorosissk Sea Shipping....................... Transportation 1,528,000 114,600
*Noyabrskneftegaz............................... Energy Sources 122,930 187,468
Primorsk Sea Shipping........................... Transportation 150,850 90,133
*Purneftegaz.................................... Energy Sources 152,000 258,932
Red October..................................... Food & Household Products 195,000 1,277,250
Rostelekom...................................... Telecommunications 4,236,000 3,092,280
Rostelecom, ADR................................. Telecommunications 217,760 911,870
Rostelekom, pfd. ............................... Telecommunications 3,459,900 1,003,371
Saint Petersburg City Telephone Network, pfd.,
A............................................. Telecommunications 1,063,000 175,395
St. Petersburg International Telephone.......... Telecommunications 184,940 83,408
St. Petersburg MMT, pfd. ....................... Telecommunications 229,800 73,743
*Tyumen Aviatrans............................... Transportation 3,330,000 21,645
Unified Energy Systems.......................... Utilities Electrical & Gas 69,337,400 2,114,791
Unified Energy Systems, ADR..................... Utilities Electrical & Gas 208,500 639,887
Unified Energy Systems, pfd. ................... Utilities Electrical & Gas 13,160,000 180,950
*Uralmash Zavody................................ Machinery & Engineering 70,418 40,385
*Vimpel Communications, ADR..................... Telecommunications 78,100 1,010,419
--------------
16,476,502
--------------
SINGAPORE 9.6%
Acma Ltd. ...................................... Electrical & Electronics 2,621,800 1,152,003
Asia Pacific Breweries Ltd. .................... Beverages & Tobacco 61,000 126,437
Chemical Industries (Far East) Ltd. ............ Chemicals 429,100 436,902
*Chemical Industries (Far East) Ltd., wts....... Chemicals 137,850 19,633
City Developments Ltd. ......................... Real Estate 5,826,000 25,246,000
Cycle & Carriage Ltd. .......................... Automobiles 2,468,000 8,451,030
Delgro Corp. ................................... Transportation 1,160,900 1,505,652
First Capital Corp. Ltd. ....................... Real Estate 4,570,000 3,046,667
Fraser and Neave Ltd. .......................... Beverages & Tobacco 6,917,650 20,207,923
Hai Sun Hup Group Ltd. ......................... Transportation 12,048,000 3,030,255
Hind Hotels International Ltd. ................. Leisure & Tourism 712,000 487,612
*Hong Leong Finance Ltd., fgn. ................. Financial Services 2,117,000 4,054,376
</TABLE>
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STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
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- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SINGAPORE (CONT.)
*Inchcape Marketing Services Ltd. .............. Broadcasting & Publishing 3,418,000 $ 1,864,364
Inchcape Motors Ltd. ........................... Wholesale & International Trade 2,509,000 2,904,358
Isetan (Singapore) Ltd. ........................ Merchandising 81,500 74,090
Jaya Holdings Ltd. ............................. Transportation 2,207,400 688,976
Jurong Shipyard Ltd. ........................... Machinery & Engineering 2,874,000 12,628,182
Keppel Corp., Ltd. ............................. Transportation 9,890,000 26,493,212
MCL Land Ltd. .................................. Real Estate 5,677,000 4,094,321
Metro Holdings Ltd. ............................ Wholesale & International Trade 1,884,000 1,769,818
Natsteel Ltd. .................................. Metals & Mining 9,794,000 10,743,721
*Neptune Orient Lines Ltd. ..................... Transportation 10,449,000 3,356,345
*Osprey Maritime Ltd. .......................... Transportation 3,244,000 1,002,691
Overseas Chinese Banking Corp. Ltd., fgn. ...... Banking 5,050,000 34,278,788
Overseas Union Enterprise Ltd. ................. Leisure & Tourism 3,040,350 6,043,847
Prima Ltd. ..................................... Food & Household Products 945,000 1,308,682
Republic Hotels & Resorts Ltd. ................. Leisure & Tourism 2,077,000 981,855
Sembawang Resources Ltd. ....................... Building Materials & Components 115,000 89,911
*Sembawang Resources Ltd., wts.................. Building Materials & Components 69,750 8,032
*Sembcorp Industries Ltd. ...................... Multi-Industry 19,875,986 22,646,578
Singapore Petroleum Company, fgn. .............. Chemicals 218,000 89,844
*Tibs Holdings Ltd. ............................ Transportation 1,131,100 699,225
Times Publishing Ltd. .......................... Broadcasting & Publishing 755,600 1,181,484
United Industrial Corporation Ltd. ............. Real Estate 35,840,000 14,336,000
United Overseas Bank Ltd., fgn. ................ Banking 4,449,000 28,581,455
United Overseas Land Ltd. ...................... Real Estate 4,528,000 3,073,552
--------------
246,703,821
--------------
SLOVAK REPUBLIC .2%
Nafta Gbely AS.................................. Utilities Electrical & Gas 118,216 1,027,267
Slovakofarma AS................................. Health & Personal Care 309 14,936
Slovnaft AS..................................... Chemicals 247,604 4,437,709
Vychodoslovenske Zeleziarne AS.................. Metals & Mining 134,435 653,465
--------------
6,133,377
--------------
SOUTH AFRICA 7.8%
Aeci Ltd. ...................................... Chemicals 228,800 291,700
Amalgamated Banks of South Africa Ltd. ......... Banking 669,300 3,174,276
Anglo American Gold Investment Co. Ltd. ........ Metals & Mining 3,000 112,192
Anglo American Industrial Corp. Ltd. ........... Multi-Industry 901,984 13,722,760
Anglo American Corp of South Africa Ltd. ....... Metals & Mining 738,000 20,799,864
Anglovaal Industried Ltd. ...................... Multi-Industry 826,330 1,046,476
Barlow Ltd. .................................... Multi-Industry 2,518,400 9,675,040
CG Smith Ltd. .................................. Multi-Industry 10,023,700 22,747,252
De Beers/Centenary Linked Units................. Misc Materials & Commodities 1,209,100 15,414,984
Edgars Stores Ltd. ............................. Textiles & Apparel 643,297 1,941,018
Iscor Ltd. ..................................... Metals & Mining 50,619,987 9,121,106
Liberty Life Association of Africa Ltd. ........ Insurance 777,600 10,706,829
</TABLE>
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TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
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- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH AFRICA (CONT.)
Malbak Ltd. .................................... Multi-Industry 3,289,825 $ 1,481,966
**McCarthy Retail Ltd., cvt., 9/30/03........... Multi-Industry 146,833ZAR 84,864
Nedcor Ltd. .................................... Financial Services 41,300 703,457
Palabora Mining Co. Ltd. ....................... Metals & Mining 482,700 2,666,738
Power Technologies Ltd. ........................ Utilities Electrical & Gas 45,829 28,045
Rembrandt Group Ltd. ........................... Multi-Industry 2,504,870 15,328,770
Reunert Ltd. ................................... Electrical & Electronics 3,395,400 4,732,868
Sappi Ltd. ..................................... Forest Products & Paper 3,255,779 12,590,875
Sasol Ltd. ..................................... Energy Sources 6,020,723 22,771,848
South African Breweries Ltd. ................... Beverages & Tobacco 1,559,393 26,269,321
Tongaat-Hulett Group Ltd. ...................... Multi-Industry 833,690 5,456,133
Toyota South Africa Limited..................... Automobiles 129,300 296,723
Voltex Holdings Ltd. ........................... Electrical & Electronics 38,300 13,021
--------------
201,178,126
--------------
SOUTH KOREA 6.5%
Asia Cement Manufacturing Co. Ltd. ............. Building Materials & Components 100,640 1,138,215
Cheil Jedang Corp. ............................. Food & Household Products 17,080 776,945
Cho Hung Bank Co. Ltd., GDR, 144A............... Banking 1,300,000 1,235,000
*Cho Hung Bank Co. Ltd., GDR, Reg S............. Banking 1,500,000 1,425,000
*Choil Aluminium Manufacturing Co. Ltd. ........ Metals & Mining 185,496 816,028
*Daegu Bank Co. Ltd. ........................... Banking 904,291 3,233,639
Daewoo Electric Components Co. Ltd. ............ Electronic Components & Instruments 189,000 785,863
*Daewoo Electronics Co. ........................ Electrical & Electronics 1,813,300 8,519,871
Dongkuk Steel Mill Co. Ltd. .................... Metals & Mining 110,210 779,031
Hae In Co. Ltd. ................................ Merchandising 255,480 1,487,202
Hana Bank....................................... Banking 343,034 3,794,056
Hana Bank, GDR, Reg S........................... Banking 1,844,222 23,191,092
Hankook Cosmetics Co. Ltd. ..................... Health & Personal Care 52,400 592,632
*Hotel Shilla Co. .............................. Leisure & Tourism 617,028 3,643,159
Korea Electric Power Corp. ..................... Utilities Electrical & Gas 1,614,910 40,020,223
LG Electronics Inc. ............................ Electrical & Electronics 562,252 6,826,511
LG Industrial Systems Ltd. ..................... Electrical & Electronics 393,000 2,271,393
Saehan Precision Co. Ltd. ...................... Electrical & Electronics 57,011 900,790
Samsung Display Devices Ltd. ................... Electrical & Electronics 567,846 28,002,718
Samsung Electronics Co. Ltd. ................... Electrical & Electronics 101,212 6,792,356
*Samsung Heavy Industries Co. Ltd. ............. Machinery & Engineering 2,942,342 16,736,482
+Shin Poong Paper Manufacturing Co. Ltd. ....... Forest Products & Paper 118,055 976,834
Shin Young Wocoal Inc. ......................... Textiles & Apparel 8,580 315,373
Sindo Ricoh Co. ................................ Appliances & Household Durables 25,100 899,634
Ssangyong Oil Refining Co. Ltd. ................ Chemicals 439,110 8,398,778
*Tong Yang Merchant Bank........................ Financial Services 674,384 3,835,997
--------------
167,394,822
--------------
</TABLE>
23
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SRI LANKA .1%
Associated Motorways Ltd. ...................... Automobiles 91,678 $ 59,954
*Ceylon Holiday Resorts Inc. ................... Leisure & Tourism 66,600 22,385
National Development Bank of Sri Lanka.......... Banking 820,000 1,533,830
--------------
1,616,169
--------------
THAILAND 7.8%
Advanced Info Service Public Co. Ltd., fgn. .... Telecommunications 1,265,000 7,520,022
*American Standard Sanitaryware Public Co. Ltd.,
fgn. ......................................... Building Materials & Components 361,200 2,708,876
Ayudhya Insurance Public Co. Ltd., fgn. ........ Insurance 274,100 961,821
*Bangkok Bank Public Co. Ltd. .................. Banking 17,134,112 24,521,091
*Bangkok Bank Public Co. Ltd., fgn. ............ Banking 2,445,996 5,048,843
*Bangkok Expressway Public Co. Ltd., fgn. ...... Transportation 3,063,200 3,077,110
Bangkok Insurance Public Co. Ltd. .............. Insurance 182,800 679,180
Bangkok Insurance Public Co. Ltd., fgn. ........ Insurance 8,000 38,585
BEC World Public Co. Ltd., fgn. ................ Telecommunications 353,100 1,943,581
*Charoen Pokphand Feedmill Public Co. Ltd.,
fgn. ......................................... Food & Household Products 2,156,800 2,641,464
*Dusit Thani Public Company Ltd., fgn. ......... Leisure & Tourism 198,700 209,883
*Hana Microelectronics Co. Ltd., fgn. .......... Electrical & Electronics 1,524,700 3,692,682
*Hua Thai Manufacturing Public Co. Ltd.,
fgn. ......................................... Textiles & Apparel 175,000 291,386
Industrial Finance Corp. of Thailand, fgn. ..... Financial Services 18,549,700 7,657,782
*Italian-Thai Development Public Co. Ltd.,
fgn. ......................................... Construction & Housing 1,369,200 2,750,835
*Jasmine International Public Co. Ltd., fgn. ... Telecommunications 7,847,500 1,965,385
*Karat Sanitaryware Public Co. Ltd., fgn. ...... Building Materials & Components 117,050 12,886
*Land and House Public Co. Ltd. ................ Real Estate 163,365 103,410
Regional Container Lines Public Co. Ltd.,
fgn. ......................................... Transportation 1,166,600 577,922
Saha Pathanapibul Public Co. Ltd., fgn. ........ Food & Household Products 260,800 265,573
*Saha Union Public Co. Ltd. .................... Multi-Industry 7,020,470 2,849,922
Saha Union Public Co. Ltd., fgn. ............... Multi-Industry 1,316,010 552,337
*Serm Suk Public Co. Ltd., loc.................. Food & Household Products 622,900 3,180,073
*Serm Suk Public Co. Ltd., fgn. ................ Food & Household Products 7,800 43,363
*SG Asia Credit Public Co. Ltd. ................ Financial Services 31,800 10,502
*SG Asia Credit Public Co. Ltd., fgn. .......... Financial Services 374,268 123,606
*Siam Cement Public Co. Ltd. ................... Building Materials & Components 1,434,750 22,112,564
*Siam Cement Public Co. Ltd., fgn. ............. Building Materials & Components 760,450 17,245,378
Siam Makro Public Company Ltd., fgn. ........... Merchandising 4,356,200 8,512,184
*Thai Airways International Public Co. Ltd.,
fgn. ......................................... Transportation 5,609,900 7,256,510
*Thai Asahi Glass Public Co. Ltd., loc.......... Building Materials & Components 35,700 6,288
*Thai Asahi Glass Public Co. Ltd., fgn. ........ Building Materials & Components 32,000 5,636
*Thai Engine Manufacturing Public Company
Ltd. ......................................... Machinery & Engineering 1,051,000 263,220
*Thai Farmers Bank Public Co. Ltd. ............. Banking 25,930,941 38,180,964
*Thai Farmers Bank Public Co. Ltd., fgn. ....... Banking 8,537,059 15,037,066
*Thai Petrochemical Industry Public Co. Ltd.,
fgn. ......................................... Chemicals 4,607,840 760,893
Thai Rayon Public Co. Ltd. ..................... Textiles & Apparel 108,500 106,753
Thai Rayon Public Co. Ltd., fgn. ............... Textiles & Apparel 11,400 11,216
Thai Wacoal Public Co. Ltd. .................... Textiles & Apparel 59,110 68,326
Thai Wacoal Public Co. Ltd., fgn. .............. Textiles & Apparel 165,890 196,320
*Tipco Asphalt Public Co. Ltd., fgn. ........... Building Materials & Components 2,219,600 3,604,139
</TABLE>
24
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
THAILAND (CONT.)
*Total Access Communication Public Co. Ltd. .... Telecommunications 6,019,400 $ 10,353,368
*United Communications Industries, fgn. ........ Telecommunications 5,386,200 2,890,626
*United Standard Terminal Public Co. Ltd.,
fgn. ......................................... Wholesale & International Trade 311,200 154,165
--------------
200,193,736
--------------
TURKEY 4.4%
Akbank.......................................... Banking 2,604,831,840 52,856,448
*Alcatel Teletas................................ Telecommunications 25,729,000 1,080,879
*Anadolu Anonim Turk Sigorta Sirketi, Br. ...... Insurance 66,656,000 771,384
Arcelik AS, Br. ................................ Appliances & Household Durables 439,641,390 12,684,644
Beko Elektronik AS.............................. Appliances & Household Durables 100,721,075 1,325,277
Borusan AS...................................... Industrial Components 4,673,000 127,360
Erciyas Biracilik............................... Food & Household Products 73,220,000 4,875,143
*Eregli Demir ve Celik Fabrikalari AS........... Metals & Mining 87,603,750 3,610,808
Finansbank, Br. ................................ Banking 499,656,771 3,643,661
Haci Omer Sabanci Holding AS, 144A, ADR......... Multi-Industry 1,995,250 7,482,188
Kartonsan Karton San ve TIC AS.................. Forest Products & Paper 58,549,250 2,041,984
Koc Holding AS.................................. Multi-Industry 35,743,831 3,116,536
*Netas Northern Electric Telekomunic Asyon AS... Electrical & Electronics 46,494,400 855,002
Petkim Petrokimya Holding AS.................... Chemicals 2,876,000 1,299,398
Tat Konserve Sanayii AS......................... Food & Household Products 28,469,432 1,015,476
*Tofas Turk Otomobil Fabrikasi AS............... Automobiles 281,152,865 2,540,538
*Turkiye Garanti Bankasi AS..................... Banking 578,464,676 14,305,721
*Turkiye Is Bankasi AS, C....................... Banking 45,314,000 1,178,107
--------------
114,810,554
--------------
VENEZUELA 3.4%
Ceramica Carabobo CA, A......................... Building Materials & Components 415,404 34,954
Ceramica Carabobo CA, A, ADR.................... Building Materials & Components 45,806 38,544
Ceramica Carabobo CA, B......................... Building Materials & Components 1,863,813 141,972
Compania Anonima Nacional Telefonos de
Venezuela, ADR................................ Telecommunications 398,400 7,096,500
Corporacion Industrial Carabobo Saca SIC, B..... Building Materials & Components 19,139,447 152,572
+Electricidad de Caracas SAICA SACA............. Utilities Electrical & Gas 157,005,368 67,780,105
Industrias Ventane IVE.......................... Utilities Electrical & Gas 15,816,656 1,064,708
*Manufacturera de Aparatos Domesticos Madoda SA,
A............................................. Appliances & Household Durables 527,478 185,947
Mavesa SA, ADR.................................. Food & Household Products 1,411,325 5,292,469
Siderurgica Venezolana Sivensa Saica Services,
A, ADR........................................ Metals & Mining 291,878 1,366,309
Venezolana de Cementos-Vencemos, #1............. Building Materials & Components 2,524,625 1,654,746
Venezolana de Cementos-Vencemos, #2............. Building Materials & Components 2,908,063 1,931,823
--------------
86,740,649
--------------
</TABLE>
25
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
SHARES/
INDUSTRY PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
ZIMBABWE
Zimbabwe Sun Ltd. .............................. Multi-Industry 10,314,567 $ 582,020
--------------
TOTAL INVESTMENTS (COST $3,630,183,512)
101.0%........................................ 2,609,190,514
OTHER ASSETS, LESS LIABILITIES (1.0%)........... (26,154,082)
--------------
TOTAL NET ASSETS 100.0%......................... $2,583,036,432
--------------
--------------
</TABLE>
CURRENCY ABBREVIATIONS:
ZAR -- South Africa C Rand
*Non-income producing.
**Securities traded in U.S. dollars unless otherwise indicated.
+The Investment Company Act of 1940 defines "affiliated companies" as
investments in portfolio companies in which the Fund owns 5% or more of the
outstanding voting securities. Investments in affiliated companies at December
31, 1998, were $88,966,883.
See Notes to Financial Statements.
26
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$3,630,183,512)........................................... $ 2,609,190,514
Receivables:
Investment securities sold................................ 9,794,888
Fund shares sold.......................................... 7,332,613
Dividends and interest.................................... 16,573,391
---------------
Total assets.......................................... 2,642,891,406
---------------
Liabilities:
Payables:
Fund shares redeemed...................................... 30,556,731
To affiliates............................................. 5,577,822
Funds advanced by custodian................................ 22,440,037
Accrued expenses and other................................. 1,280,384
---------------
Total liabilities..................................... 59,854,974
---------------
Net assets, at value........................................ $ 2,583,036,432
---------------
---------------
Net assets consist of:
Distributions in excess of net investment income........... $ (925,071)
Net unrealized depreciation................................ (1,020,992,998)
Accumulated net realized loss.............................. (218,232,890)
Beneficial shares.......................................... 3,823,187,391
---------------
Net assets, at value........................................ $ 2,583,036,432
---------------
---------------
CLASS I:
Net asset value per share ($2,172,954,298 / 211,001,257
shares outstanding)...................................... $10.30
---------------
---------------
Maximum offering price per share ($10.30 / 94.25%)......... $10.93
---------------
---------------
CLASS II:
Net asset value per share ($294,588,259 / 28,852,357 shares
outstanding)*............................................ $10.21
---------------
---------------
Maximum offering price per share ($10.21 / 99.00%)......... $10.31
---------------
---------------
ADVISOR CLASS:
Net asset value and maximum offering price per share
($115,493,875 / 11,237,082 shares outstanding)............ $10.28
---------------
---------------
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
27
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $7,035,900)
Dividends.................................................. $ 89,510,469
Interest................................................... 24,723,250
------------
Total investment income............................... $ 114,233,719
Expenses:
Management fees (Note 3)................................... 40,577,627
Administrative fees (Note 3)............................... 3,009,659
Distribution fees (Note 3)
Class I................................................... 9,279,496
Class II.................................................. 3,539,975
Transfer agent fees........................................ 6,815,000
Custodian fees............................................. 4,960,000
Reports to shareholders.................................... 1,695,000
Registration and filing fees............................... 250,700
Professional fees.......................................... 145,000
Trustees' fees and expenses................................ 199,000
Other...................................................... 70,450
------------
Total expenses........................................ 70,541,907
-------------
Net investment income........................... 43,691,812
-------------
Realized and unrealized losses:
Net realized loss from:
Investments............................................... (105,056,168)
Foreign currency transactions............................. (4,815,357)
------------
Net realized loss..................................... (109,871,525)
Net unrealized depreciation on investments............ (707,091,116)
-------------
Net realized and unrealized loss............................ (816,962,641)
-------------
Net decrease in net assets resulting from operations........ $(773,270,829)
-------------
-------------
</TABLE>
See Notes to Financial Statements.
28
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 43,691,812 $ 42,248,481
Net realized gain (loss) from investments and foreign
currency transactions................................... (109,871,525) 135,718,049
Net unrealized depreciation on investments................ (707,091,116) (743,217,777)
------------------------------------
Net decrease in net assets resulting from operations.... (773,270,829) (565,251,247)
Distributions to shareholders from:
Net investment income:
Class I.................................................. (43,371,538) (39,274,553)
Class II................................................. (3,527,590) (1,913,743)
Advisor Class............................................ (2,350,466) (1,069,766)
In excess of net investment income:
Class I.................................................. (814,661) --
Class II................................................. (66,260) --
Advisor Class............................................ (44,150) --
Net realized gains:
Class I.................................................. (13,098,049) (131,568,835)
Class II................................................. (1,659,062) (14,713,519)
Advisor Class............................................ (534,895) (2,542,361)
In excess of net realized gains:
Class I.................................................. -- (79,901,425)
Class II................................................. -- (9,361,096)
Advisor Class............................................ -- (1,718,507)
Beneficial share transactions (Note 2):
Class I.................................................. (555,757,624) 853,998,736
Class II................................................. (16,513,221) 280,828,480
Advisor Class............................................ 49,372,708 121,778,243
------------------------------------
Net increase (decrease) in net assets................... (1,361,635,637) 409,290,407
Net assets:
Beginning of year.......................................... 3,944,672,069 3,535,381,662
------------------------------------
End of year................................................ $ 2,583,036,432 $3,944,672,069
------------------------------------
------------------------------------
Undistributed net investment income/(Distributions in excess
of net investment income) included in net assets:
End of year................................................ $ (925,071) $ 2,826,387
------------------------------------
------------------------------------
</TABLE>
See Notes to Financial Statements.
29
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Developing Markets Trust (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term capital appreciation by investing, under normal market
conditions, at least 65% of its total assets in equity securities of developing
market issuers. The following summarizes the Fund's significant accounting
policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the recorded amounts of
dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
Certain countries in which the Fund invests have imposed restrictions on the
repatriation of their currencies. Other countries have previously instituted
currency exchange controls in the past during periods of serious imbalance in
their balance of payments or upon the occurrence of other destabilizing events.
Exchange control regulations may restrict the Fund's ability to convert
investment income, capital, or the proceeds of securities into U.S. dollars. As
of December 31, 1998, the Fund has investments with a value of approximately $75
million in countries with restrictions on the repatriation of their currencies
or formal exchange controls currently in place.
30
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
e. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
During the year ended December 31, 1998 the Templeton Developing Markets Trust
offered three classes of shares; Class I, Class II and Advisor Class. Effective
January 1, 1999, Class I and Class II were renamed Class A and Class C,
respectively, and a fourth class of shares, Class B, was established. The Shares
differ by their initial sales load, distribution fees, voting rights on matters
affecting a single class and the exchange privilege of each class.
At December 31, 1998, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1998 1997
----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold........................................ 89,591,968 $ 996,558,996 101,497,736 $ 1,720,171,397
Shares issued on reinvestment of distributions..... 4,360,232 50,316,889 16,789,330 214,448,966
Shares redeemed.................................... (149,082,542) (1,602,633,509) (67,019,990) (1,080,621,627)
----------------------------------------------------------------------
Net increase (decrease)............................ (55,130,342) $ (555,757,624) 51,267,076 $ 853,998,736
----------------------------------------------------------------------
----------------------------------------------------------------------
</TABLE>
31
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold............................................. 10,915,747 $ 124,293,106 19,937,056 $336,719,829
Shares issued on reinvestment of distributions.......... 365,154 4,366,838 1,673,980 21,068,086
Shares redeemed......................................... (13,849,038) (145,173,165) (5,035,752) (76,959,435)
---------------------------------------------------------------
Net increase (decrease)................................. (2,568,137) $ (16,513,221) 16,575,284 $280,828,480
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997*
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold............................................. 12,540,225 $ 138,875,712 10,481,151 $167,153,596
Shares issued on reinvestment of distributions.......... 238,176 2,645,549 388,246 4,881,386
Shares redeemed......................................... (9,129,829) (92,148,553) (3,280,887) (50,256,739)
---------------------------------------------------------------
Net increase............................................ 3,648,572 $ 49,372,708 7,588,510 $121,778,243
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain Officers of the Fund are also officers or directors of Templeton Asset
Management Ltd. (TAML), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors) and Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.
The Fund pays an investment management fee to TAML of 1.25% per year of the
average daily net assets of the Fund. The Fund pays an administrative fee to FT
Services based on the Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- --------------------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At December 31, 1998,
32
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
there were no unreimbursed costs. Distributors received net commissions from
sales of the Fund's shares, and received contingent deferred sales charges for
the year of $834,223 and $491,803, respectively.
Legal fees of $75,700 were paid to a law firm in which a partner is an officer
of the Fund.
4. INCOME TAXES
At December 31, 1998, the net unrealized depreciation based on cost of
investments for income tax purposes of $3,724,776,597 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $ 230,721,815
Unrealized depreciation.................................... (1,346,307,898)
---------------
Net unrealized depreciation................................ $(1,115,586,083)
===============
</TABLE>
Net investment income and net realized gains differ for financial statement and
tax purposes primarily due to differing treatments of passive foreign investment
companies, wash sales, and losses realized subsequent to October 31 on the sales
of securities and foreign currencies.
At December 31, 1998, the Fund had tax basis capital losses of $45,000,000 which
may be carried over to offset future capital gains. Such losses expire December
31, 2006.
At December 31, 1998, the Fund has deferred capital losses occurring subsequent
to October 31, 1998 of $78,523,423. For tax purposes, such losses will be
reflected in the year ending December 31, 1999.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended December 31, 1998 aggregated $1,056,891,480 and $1,233,009,183,
respectively.
33
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Shareholders
Templeton Developing Markets Trust
We have audited the accompanying statement of assets and liabilities, including
the Statement of Investments, of Templeton Developing Markets Trust as of
December 31, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Developing Markets Trust as of December 31, 1998, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
January 28, 1999
34
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Tax Designation
At December 31, 1998, more than 50% of the Templeton Developing Markets Trust
total assets were invested in securities of foreign issuers. In most instances,
foreign taxes were withheld from dividends paid to the Fund on these
investments. As in prior years, the Fund intends to make an election under
Section 853 of the Internal Revenue Code. This election will allow shareholders
to treat their proportionate share of foreign taxes paid by the Fund as having
been paid directly by them.
In January 1999, shareholders will receive Form 1099-DIV, which will include
their share of taxes withheld and foreign source income distributed during the
calendar year 1998.
35
PAGE
TEMPLETON DEVELOPING MARKETS TRUST
Tax Designation (continued)
The following table provides a breakdown by country of foreign source income and
foreign taxes paid to Class I, Class II, and Advisor Class shareholders in
December 1998.
<TABLE>
<CAPTION>
CLASS I CLASS II ADVISOR CLASS
--------------------------------------------------------------------------------------------------
FOREIGN TAXES FOREIGN SOURCE FOREIGN TAXES FOREIGN SOURCE FOREIGN TAXES
COUNTRY WITHHELD PER SHARE INCOME PER SHARE WITHHELD PER SHARE INCOME PER SHARE WITHHELD PER SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina............ $0.0000 $0.0048 $0.0000 $0.0029 $0.0000
Brazil............... 0.0088 0.0377 0.0088 0.0231 0.0088
Chile................ 0.0005 0.0008 0.0005 0.0005 0.0005
China................ 0.0000 0.0017 0.0000 0.0010 0.0000
Colombia............. 0.0001 0.0044 0.0001 0.0027 0.0001
Czech Republic....... 0.0002 0.0007 0.0002 0.0004 0.0002
Ecuador.............. 0.0000 0.0003 0.0000 0.0002 0.0000
Egypt................ 0.0000 0.0001 0.0000 0.0001 0.0000
Ghana................ 0.0000 0.0002 0.0000 0.0001 0.0000
Greece............... 0.0000 0.0079 0.0000 0.0048 0.0000
Hong Kong............ 0.0000 0.0160 0.0000 0.0098 0.0000
Hungary.............. 0.0002 0.0009 0.0002 0.0006 0.0002
India................ 0.0000 0.0091 0.0000 0.0056 0.0000
Indonesia............ 0.0002 0.0005 0.0002 0.0003 0.0002
Israel............... 0.0003 0.0006 0.0003 0.0004 0.0003
Jordan............... 0.0000 0.0001 0.0000 0.0000 0.0000
Malaysia............. 0.0024 0.0042 0.0024 0.0026 0.0024
Mexico............... 0.0000 0.0110 0.0000 0.0068 0.0000
Pakistan............. 0.0010 0.0029 0.0010 0.0017 0.0010
Panama............... 0.0000 0.0001 0.0000 0.0001 0.0000
Peru................. 0.0000 0.0015 0.0000 0.0009 0.0000
Philippines.......... 0.0002 0.0004 0.0002 0.0002 0.0002
Poland............... 0.0006 0.0016 0.0006 0.0010 0.0006
Portugal............. 0.0018 0.0045 0.0018 0.0028 0.0018
Russia............... 0.0004 0.0012 0.0004 0.0007 0.0004
Singapore............ 0.0045 0.0086 0.0045 0.0053 0.0045
Slovak Republic...... 0.0002 0.0006 0.0002 0.0004 0.0002
South Africa......... 0.0000 0.0111 0.0000 0.0068 0.0000
South Korea.......... 0.0006 0.0016 0.0006 0.0010 0.0006
Sri Lanka............ 0.0001 0.0002 0.0001 0.0001 0.0001
Thailand............. 0.0003 0.0012 0.0003 0.0007 0.0003
Turkey............... 0.0000 0.0145 0.0000 0.0089 0.0000
United Kingdom....... 0.0000 0.0004 0.0000 0.0002 0.0000
Venezuela............ 0.0000 0.0049 0.0000 0.0030 0.0000
Zimbabwe............. 0.0000 0.0002 0.0000 0.0001 0.0000
--------------------------------------------------------------------------------------------------
TOTAL................ $0.0224 $0.1565 $0.0224 $0.0958 $0.0224
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
<CAPTION>
ADVISOR CLASS
----------------
FOREIGN SOURCE
COUNTRY INCOME PER SHARE
- --------------------- ----------------
<S> <C>
Argentina............ $0.0059
Brazil............... 0.0459
Chile................ 0.0010
China................ 0.0020
Colombia............. 0.0053
Czech Republic....... 0.0008
Ecuador.............. 0.0003
Egypt................ 0.0001
Ghana................ 0.0002
Greece............... 0.0096
Hong Kong............ 0.0195
Hungary.............. 0.0011
India................ 0.0111
Indonesia............ 0.0006
Israel............... 0.0007
Jordan............... 0.0001
Malaysia............. 0.0051
Mexico............... 0.0135
Pakistan............. 0.0035
Panama............... 0.0002
Peru................. 0.0018
Philippines.......... 0.0004
Poland............... 0.0019
Portugal............. 0.0055
Russia............... 0.0014
Singapore............ 0.0105
Slovak Republic...... 0.0007
South Africa......... 0.0136
South Korea.......... 0.0020
Sri Lanka............ 0.0002
Thailand............. 0.0015
Turkey............... 0.0177
United Kingdom....... 0.0004
Venezuela............ 0.0059
Zimbabwe............. 0.0003
-------
TOTAL................ $0.1903
=======
</TABLE>
36
PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Fund Allocator Series
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin Strategic Income Fund
Franklin U.S. Government
Securities Fund
Franklin Federal Money Fund
Franklin Money Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona**
California**
Colorado
Connecticut
Florida**
Georgia
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan+
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
+Portfolio of insured municipal securities.
++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
01/99
PAGE
TEMPLETON DEVELOPING
MARKETS TRUST
ANNUAL REPORT
AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017-2416
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
1-800/DIAL-BEN(R)
www.franklin-templeton.com
SHAREHOLDER SERVICES
1-800/632-2301
Fund Information
1-800/342-5236
This report must be preceded or accompanied by the current Templeton Developing
Markets Trust prospectus, which contains more complete information including
risk factors, charges and expenses. Like any investment in securities, the
Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors, as well as investment decisions by the
Investment Manager, which will not always be profitable or wise. The Fund and
its investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses should not invest
in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
711 A98 02/99 [RECYCLE LOGO] Printed on recycled paper
