ANNUAL REPORT
DECEMBER 31, 1999
TEMPLETON DEVELOPING MARKETS TRUST
[FRANKLIN TEMPLETON LOGO]
FRANKLIN TEMPLETON
<PAGE>
[FRANKLIN TEMPLETON 50
CELEBRATING OVER 50 YEARS LOGO]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
[Photo of J. Mark Mobius]
J. MARK MOBIUS, Ph.D.
President
Templeton Developing
Markets Trust
Dr. Mobius 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
business practices and customs unique to developing nations.
RECEIVE A FREE COPY OF DR. MARK MOBIUS' NEW BOOK, PASSPORT TO PROFITS! Simply
call 1-800/342-5236 for this offer to Templeton Developing Markets Trust
shareholders.
<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, 1999. During this period, many emerging markets recovered
substantially despite the war in Kosovo, tensions between China and Taiwan,
military conflicts between India and Pakistan, the near collapse of one of South
Korea's largest conglomerates, the floating of Brazil's currency and earthquakes
in Turkey, Greece and Taiwan.
Political change was also widespread throughout emerging markets as citizens of
Indonesia, South Africa and Argentina elected new leadership, and a military
coup put a new government in charge of Pakistan. The stability of the Polish and
Czech governments was in question for most of the year, and questions about the
future of Boris Yeltsin were not laid to rest until
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ............................................... 1
Performance Summary .............................................. 6
Financial Highlights & Statement of Investments .................. 11
Financial Statements ............................................. 22
Notes to Financial Statements .................................... 25
Independent Auditors' Report ..................................... 30
Change in Independent Auditor .................................... 31
</TABLE>
[PYRAMID GRAPHIC]
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 15 of
this report.
<PAGE>
[PIE CHART]
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
12/31/99
Latin America 38.1%
Asia 37.6%
Mid-East/Africa 14.5%
Europe 9.0%
Short-Term Investments & Other
Net Assets 0.8%
December 31, 1999, when he resigned and handed over control of Russia to
Vladimir Putin.
Asia led the economic recovery, with many Asian nations shifting to economies
led by domestic consumption rather than by trade. Consumers and businesses began
buying again as evidenced by the growth of imports compared with exports.
In Latin America, most economies were relatively weak, but improved commodity
prices contributed to the appearance that these economies were bottoming out.
Brazil's currency devaluation had only moderately adverse effects on inflation
and economic growth. Although the election of a new president in Argentina,
combined with concerns about the currency peg and the level of national debt,
affected the equity market there, the government is expected by many to reduce
the fiscal deficit in the near future. And continued reform in Brazil, coupled
with Venezuela's restructuring and a new government in Chile, led many investors
to conclude that these economies will return to growth in 2000.
Efforts to meet with European Union (E.U.) admission standards proved beneficial
for eastern and southern European economies during the year. Although natural
disasters in Turkey and Greece, along with stalled privatization attempts in
other eastern European countries, hampered economic growth in the region, we
believe the long-term outlook for emerging Europe seems bright due to the
possibility of E.U. membership prompting these countries to reform their
economies.
In South Africa, strengthening gold prices during the year and greater demand
for diamonds and other natural resources helped propel the nation's economy
forward. Ongoing
2
<PAGE>
streamlining of large South African corporations and increased international
demand for their products further fueled economic strength.
Within this environment, the Trust's Class A shares posted a +51.55% one-year
cumulative total return compared with the 66.62% return of the IFC Investable
Composite Index and the 66.41% return of the Morgan Stanley Capital
International (MSCI(R)) Emerging Markets Free Index, the Trust's benchmarks. On
December 31, 1999, the Trust was virtually fully invested, with a cash level of
0.8%. During the fiscal year, the Trust's exposure to eastern Europe, Latin
American, and southern Europe was virtually unchanged. Strong growth in the
South African stock market contributed to an increase in the portfolio's
exposure to Africa, which made up 14.0% of total net assets on December 31,
1999. Because we felt we could find better value elsewhere, we sold a number of
companies located in various emerging countries such as holdings in Ghana,
Zimbabwe, Croatia, Shenzhen (China), New Zealand, Sri Lanka, Ecuador and Jordan.
Our Asian exposure also decreased, principally because we sold a number of
Indian and Malaysian companies.
Varying individual performances and repositioning of the portfolio led to a
substantial change in the Trust's top 10 holdings during the reporting period.
Anglo American PLC (South Africa), PT Telekomunikasi Indonesia (Persero)
(Indonesia), Grupo Financiero Banamex Accival SA de CV (Mexico), South African
Breweries PLC (South Africa), Cheung Kong Holdings Ltd. (Hong Kong), and
Investmentos Itau SA pfd. (Brazil) replaced Telebras (Brazil), HSBC Holdings PLC
(Hong Kong), Thai Farmers Bank Public (Thailand), Compania
TOP 10 COUNTRIES
12/31/99
<TABLE>
<CAPTION>
% OF TOTAL
COUNTRY* NET ASSETS
- -------- ----------
<S> <C>
Brazil 14.7%
South Africa 14.0%
Mexico 12.0%
Singapore 7.5%
Thailand 6.5%
Indonesia 6.0%
Argentina 5.4%
Hong Kong 5.1%
South Korea 4.8%
Turkey 4.3%
</TABLE>
*Hong Kong reverted to a sovereignty of China on July 1, 1997.
3
<PAGE>
de Telecomunicaciones de Chile SA (Chile), Korea Electric Power Corporation
(Korea) and Electricidad de Caracas [SAICA SACA] (Venezuela).
Looking forward, we believe the recovery in emerging market economies has just
begun. Interest rates have fallen in many of these countries, but many markets'
indexes and valuations are still below their all-time highs, and our studies
suggest that bull markets generally last longer than bear markets in most
emerging market countries. The major Asian countries have increased their
foreign exchange reserves, and some emerging market currencies are still
undervalued, which should increase the competitiveness of their exports.
Furthermore, elections in Chile, India, Russia, Mexico, Malaysia, Argentina and
Indonesia may lead to greater political stability, making rapid economic and
social reform more likely going forward. Finally, many emerging markets
countries continue to overhaul their financial systems. A number of banks are
recapitalizing their balance sheets, and many companies are making efforts to
rectify the problem of excessive borrowings as well as streamlining their work
forces in response to the changing economic environment.
In our opinion, rising domestic and international demand should continue to spur
economic growth, and we are enthusiastic about the potential value that emerging
markets may offer to the Trust's shareholders.
Of course, investing in any emerging market securities involves special
considerations, which may include risks related to market and currency
volatility, adverse social, economic and
4
<PAGE>
political developments and the relatively small size and lesser liquidity of
these markets. Investing in any emerging market means accepting a certain amount
of volatility and, in some cases, severe market corrections. While short-term
volatility can be disconcerting, declines in excess of 50% are not unusual in
emerging markets. The Trust's definition of "emerging markets" as used by the
Trust's manager may differ from the definition of the same terms as used in
managing other Franklin Templeton funds. In fact, the Hong Kong equity market
has increased 1,322% in the last 15 years, but has suffered five declines of
more than 20% during that time. These special risks and other considerations are
discussed in the Fund's prospectus.
Thank you for investing in the Templeton Developing Markets Trust. We appreciate
your confidence and welcome your comments.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Developing Markets Trust
TOP 10 HOLDINGS
12/31/99
<TABLE>
<CAPTION>
COMPANY % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- ----------------- ----------
<S> <C>
Telefonos de Mexico
SA (Telmex)
Telecommunications, Mexico 4.2%
Cemex SA
Building Materials
and Components, Mexico 3.9%
Anglo American PLC
Metals and Mining,
South Africa 2.6%
Akbank
Banking, Turkey 2.4%
Centrais Eletricas
Brasileiras SA (Eletrobras)
Utilities Electrical
and Gas, Brazil 2.1%
PT Telekomunikasi Indonesia
Telecommunications, Indonesia 2.1%
Grupo Financiero Banamex
Accival SA de CV
Banking, Mexico 1.9%
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong 1.9%
Investmentos Itau
SA (Itausa)
Multi-Industry, Brazil 1.8%
South African Breweries PLC
Beverages and Tobacco,
South Africa 1.8%
</TABLE>
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1999. Our strategies and the fund's portfolio
composition will change depending on market and economic conditions. Although
historical performance is no guarantee of future results, these insights may
help you understand our investment and management philosophy.
5
<PAGE>
ONE-YEAR PERFORMANCE SUMMARY AS OF 12/31/99
One-year total return does not include sales charges. Distributions will vary
based on earnings of the Fund's portfolio and any profits realized from the sale
of the portfolio's securities, as well as the level of the Fund's operating
expenses. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION
<TABLE>
<S> <C> <C>
CLASS A
One-Year Total Return +51.55%
Net Asset Value (NAV) (12/31/99) $15.61 (12/31/98) $10.30
Change in NAV +$5.31
CLASS B
Aggregate Total Return +50.19%
Net Asset Value (NAV) (12/31/99) $15.47 (1/1/99) $10.30
Change in NAV +$5.17
CLASS C
One-Year Total Return +50.44%
Net Asset Value (NAV) (12/31/99) $15.36 (12/31/98) $10.21
Change in NAV +$5.15
ADVISOR CLASS
One-Year Total Return +51.95%
Net Asset Value (NAV) (12/31/99) $15.62 (12/31/98) $10.28
Change in NAV +$5.34
</TABLE>
CLASS A (formerly Class I):
Subject to the current, maximum 5.75% initial sales charge. On January 1, 1993,
the Fund's Class A shares implemented a Rule 12b-1 plan, which affects
subsequent performance. Past expense reductions by the Fund's Manager increased
the Fund's total returns. Without this reduction, the Fund's total return would
have been lower.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors.
Templeton Developing Markets Trust paid no distributions during the reporting
period.
Past performance does not guarantee future results.
6
<PAGE>
ADDITIONAL PERFORMANCE
AS OF QUARTER ENDED 12/31/99
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR (10/17/91)
- ------- ------ ------ ----------
<S> <C> <C> <C>
Cumulative Total Return(1) +51.55% +37.20% +98.22%
Average Annual Total Return(2) +42.82% +5.27% +7.91%
Value of $10,000 Investment(3) $14,282 $12,930 $ 18,683
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B 1-YEAR (1/1/99)
- ------- ------ --------
<S> <C> <C>
Cumulative Total Return(1) +50.19% +50.19%
Average Annual Total Return(2) +46.19% +46.19%
Value of $10,000 Investment(3) $14,619 $14,619
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/1/95)
- ------- ------ ------ --------
<S> <C> <C> <C>
Cumulative Total Return(1) +50.44% +9.28% +35.13%
Average Annual Total Return(2) +47.99% +2.67% +6.43%
Value of $10,000 Investment(3) $14,799 $10,822 $13,380
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR (10/17/91)
- -------------- ------ ------ ----------
<S> <C> <C> <C>
Cumulative Total Return(1) +51.95% +38.06% +99.47%
Average Annual Total Return(2) +51.95% +6.66% +8.78%
Value of $10,000 Investment(3) $15,195 $13,806 $19,947
</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. 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
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A 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 and average annual total
returns of Advisor Class shares were +12.29% and +3.94% respectively.
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.
For updated performance figures, see "Prices and Performance" on the Internet at
www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
7
<PAGE>
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charges, Fund
expenses, account fees and reinvested distributions. The unmanaged indexes
differ from the Fund in composition, do not pay management fees or expenses and
include reinvested dividends. One cannot invest directly in an index. The MSCI
Emerging Markets Free Index is composed of approximately 900 companies which
represent the stock markets of 25 countries, including South Korea, Brazil and
South Africa. 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.
[LINE GRAPH]
The following line graph compares the performance of Templeton Developing
Markets Trust's Class A shares to that of the IFC Investable Composite Index,
MSCI Emerging Markets Free Index and MSCI World Index based on a $10,000
investment from 10/17/91 to 12/31/99.*
<TABLE>
<CAPTION>
TEMPLETON
DEVELOPING IFCI MSCI MSCI MSCI
MARKETS TRUST INVESTABLE EMERGING MSCI WORLD IFCI INVESTABLE EMERGING WORLD
- CLASS A COMPOSITE INDEX MARKETS FREE INDEX COMPOSITE INDEX MARKETS FREE INDEX
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/16/91 $9,425 $10,000 $10,000 $10,000
Oct-91 $9,434 $9,977 $9,979 $10,088 -0.23% -0.21% 0.88%
Nov-91 $9,406 $9,996 $9,830 $9,650 0.19% -1.49% -4.34%
Dec-91 $9,458 $11,059 $10,935 $10,355 10.64% 11.24% 7.30%
Jan-92 $9,619 $12,438 $12,201 $10,165 12.46% 11.58% -1.84%
Feb-92 $9,562 $12,755 $12,743 $9,991 2.55% 4.44% -1.71%
Mar-92 $9,364 $12,689 $13,174 $9,522 -0.52% 3.38% -4.69%
Apr-92 $9,468 $12,759 $13,082 $9,656 0.55% -0.69% 1.41%
May-92 $9,628 $12,683 $13,036 $10,042 -0.60% -0.36% 3.99%
Jun-92 $9,609 $11,381 $11,742 $9,707 -10.27% -9.92% -3.33%
Jul-92 $9,392 $11,348 $11,870 $9,734 -0.29% 1.09% 0.28%
Aug-92 $9,137 $10,877 $11,317 $9,973 -4.16% -4.66% 2.45%
Sep-92 $9,033 $10,652 $11,355 $9,883 -2.07% 0.34% -0.90%
Oct-92 $8,788 $11,127 $11,963 $9,617 4.46% 5.35% -2.69%
Nov-92 $8,439 $11,054 $11,834 $9,791 -0.65% -1.08% 1.81%
Dec-92 $8,536 $11,423 $12,182 $9,873 3.33% 2.94% 0.83%
Jan-93 $8,960 $11,370 $12,241 $9,907 -0.47% 0.48% 0.35%
Feb-93 $9,741 $11,656 $12,446 $10,143 2.52% 1.68% 2.38%
Mar-93 $9,591 $12,022 $12,858 $10,734 3.14% 3.31% 5.82%
Apr-93 $10,046 $12,456 $13,153 $11,233 3.61% 2.30% 4.65%
May-93 $10,597 $12,722 $13,520 $11,494 2.13% 2.79% 2.32%
Jun-93 $10,906 $13,078 $13,921 $11,399 2.80% 2.97% -0.83%
Jul-93 $10,868 $13,486 $14,288 $11,636 3.12% 2.64% 2.08%
Aug-93 $11,825 $14,584 $15,495 $12,171 8.14% 8.44% 4.60%
Sep-93 $12,289 $15,175 $16,062 $11,948 4.05% 3.66% -1.83%
Oct-93 $12,792 $16,479 $17,503 $12,279 8.59% 8.97% 2.77%
Nov-93 $13,449 $17,523 $18,277 $11,586 6.34% 4.43% -5.64%
Dec-93 $14,896 $20,517 $21,298 $12,155 17.08% 16.53% 4.91%
Jan-94 $15,198 $20,656 $21,686 $12,960 0.68% 1.82% 6.62%
Feb-94 $14,866 $20,123 $21,300 $12,794 -2.58% -1.78% -1.28%
Mar-94 $14,268 $18,089 $19,373 $12,244 -10.11% -9.05% -4.29%
Apr-94 $13,699 $17,745 $18,985 $12,625 -1.90% -2.00% 3.11%
May-94 $13,689 $18,164 $19,635 $12,660 2.36% 3.42% 0.27%
Jun-94 $13,464 $17,519 $19,094 $12,627 -3.55% -2.76% -0.26%
Jul-94 $13,935 $18,777 $20,281 $12,869 7.18% 6.22% 1.92%
Aug-94 $14,749 $21,192 $22,798 $13,259 12.86% 12.41% 3.03%
Sep-94 $14,887 $21,716 $23,057 $12,913 2.47% 1.14% -2.61%
Oct-94 $14,543 $20,999 $22,641 $13,282 -3.30% -1.80% 2.86%
Nov-94 $14,023 $20,193 $21,464 $12,709 -3.84% -5.20% -4.32%
Dec-94 $13,617 $18,056 $19,740 $12,834 -10.58% -8.03% 0.99%
Jan-95 $12,846 $15,642 $17,640 $12,644 -13.37% -10.64% -1.48%
Feb-95 $12,805 $15,440 $17,187 $12,831 -1.29% -2.56% 1.48%
Mar-95 $12,948 $15,411 $17,297 $13,452 -0.19% 0.64% 4.84%
Apr-95 $13,377 $16,049 $18,073 $13,923 4.14% 4.49% 3.50%
May-95 $13,836 $16,647 $19,034 $14,045 3.73% 5.32% 0.88%
Jun-95 $13,877 $16,745 $19,090 $14,043 0.59% 0.30% -0.01%
Jul-95 $14,469 $17,279 $19,519 $14,749 3.19% 2.24% 5.02%
Aug-95 $14,091 $16,816 $19,059 $14,423 -2.68% -2.36% -2.21%
Sep-95 $14,071 $16,694 $18,969 $14,846 -0.73% -0.47% 2.93%
Oct-95 $13,591 $16,059 $18,243 $14,615 -3.80% -3.83% -1.56%
Nov-95 $13,438 $15,979 $17,917 $15,125 -0.50% -1.78% 3.49%
Dec-95 $13,666 $16,535 $18,712 $15,570 3.48% 4.44% 2.94%
Jan-96 $15,000 $17,943 $20,042 $15,854 8.52% 7.11% 1.82%
Feb-96 $14,931 $17,523 $19,723 $15,953 -2.34% -1.59% 0.63%
Mar-96 $14,995 $17,779 $19,877 $16,222 1.46% 0.78% 1.69%
Apr-96 $15,490 $18,491 $20,672 $16,606 4.00% 4.00% 2.37%
May-96 $15,743 $18,335 $20,579 $16,623 -0.84% -0.45% 0.10%
Jun-96 $15,838 $18,550 $20,708 $16,711 1.17% 0.62% 0.53%
Jul-96 $15,121 $17,333 $19,293 $16,124 -6.56% -6.83% -3.51%
Aug-96 $15,427 $17,869 $19,786 $16,312 3.09% 2.56% 1.17%
Sep-96 $15,754 $18,133 $19,958 $16,954 1.48% 0.87% 3.93%
Oct-96 $15,806 $17,743 $19,426 $17,075 -2.15% -2.67% 0.71%
Nov-96 $16,355 $18,005 $19,751 $18,035 1.48% 1.68% 5.62%
Dec-96 $16,742 $18,085 $19,840 $17,749 0.44% 0.45% -1.58%
Jan-97 $18,014 $19,362 $21,194 $17,965 7.06% 6.82% 1.22%
Feb-97 $18,541 $20,309 $22,101 $18,176 4.89% 4.28% 1.17%
Mar-97 $18,158 $19,809 $21,521 $17,819 -2.46% -2.63% -1.96%
Apr-97 $18,344 $19,471 $21,559 $18,405 -1.70% 0.18% 3.29%
May-97 $19,294 $20,133 $22,176 $19,544 3.40% 2.86% 6.19%
Jun-97 $20,114 $21,003 $23,363 $20,522 4.32% 5.35% 5.00%
Jul-97 $20,966 $21,214 $23,711 $21,470 1.01% 1.49% 4.62%
Aug-97 $19,130 $18,505 $20,694 $20,037 -12.77% -12.72% -6.67%
Sep-97 $20,190 $19,092 $21,267 $21,129 3.18% 2.77% 5.45%
Oct-97 $16,377 $15,967 $17,778 $20,020 -16.37% -16.41% -5.25%
Nov-97 $15,296 $15,203 $17,129 $20,377 -4.79% -3.65% 1.78%
Dec-97 $15,166 $15,419 $17,542 $20,629 1.43% 2.41% 1.23%
Jan-98 $13,830 $14,404 $16,166 $21,207 -6.58% -7.84% 2.80%
Feb-98 $15,271 $15,873 $17,853 $22,645 10.20% 10.44% 6.78%
Mar-98 $15,979 $16,495 $18,628 $23,605 3.92% 4.34% 4.24%
Apr-98 $16,038 $16,538 $18,425 $23,839 0.26% -1.09% 0.99%
May-98 $13,863 $14,476 $15,900 $23,544 -12.47% -13.70% -1.24%
Jun-98 $12,504 $13,000 $14,232 $24,106 -10.19% -10.49% 2.39%
Jul-98 $12,587 $13,514 $14,684 $24,070 3.95% 3.17% -0.15%
Aug-98 $9,490 $9,716 $10,438 $20,864 -28.11% -28.91% -13.32%
Sep-98 $9,939 $10,177 $11,100 $21,237 4.75% 6.34% 1.79%
Oct-98 $11,405 $11,355 $12,269 $23,161 11.58% 10.53% 9.06%
Nov-98 $12,658 $12,208 $13,289 $24,542 7.52% 8.32% 5.96%
Dec-98 $12,328 $12,022 $13,097 $25,744 -1.53% -1.45% 4.90%
Jan-99 $11,633 $11,732 $12,885 $26,312 -2.41% -1.61% 2.20%
Feb-99 $11,705 $11,943 $13,011 $25,615 1.80% 0.97% -2.65%
Mar-99 $13,405 $13,322 $14,726 $26,685 11.55% 13.18% 4.18%
Apr-99 $15,906 $15,153 $16,547 $27,741 13.75% 12.37% 3.96%
May-99 $15,559 $14,879 $16,451 $26,731 -1.81% -0.58% -3.64%
Jun-99 $16,816 $16,505 $18,318 $27,982 10.93% 11.35% 4.68%
Jul-99 $16,050 $16,265 $17,821 $27,902 -1.45% -2.72% -0.28%
Aug-99 $15,344 $16,444 $17,983 $27,856 1.10% 0.91% -0.16%
Sep-99 $14,769 $15,989 $17,374 $27,590 -2.77% -3.38% -0.96%
Oct-99 $15,212 $16,266 $17,744 $29,028 1.73% 2.13% 5.21%
Nov-99 $16,301 $17,721 $19,335 $29,848 8.95% 8.97% 2.82%
DEC-99 $18,683 $20,096 $21,794 $32,268 13.40% 12.72% 8.11%
</TABLE>
*Sources: Morgan Stanley Capital International and International Finance
Corporation.
AVERAGE ANNUAL TOTAL RETURN
12/31/99
CLASS A
<TABLE>
<S> <C>
1-Year +42.82%
5-Year +5.27%
</TABLE>
Since Inception (10/17/91)+7.91%
*Sources: Morgan Stanley Capital International and International Finance
Corporation.
Past performance does not guarantee future results.
8
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
12/31/99
CLASS B
- -------
1-YEAR +46.19%
SINCE INCEPTION (1/1/99) +46.19%
CLASS B(1/1/99 - 12/31/99)
The following line graph compares the performance of Templeton Developing
Markets Trust's Class B shares to that of the IFC Investable Composite Index,
MSCI Emerging Markets Free Index and MSCI World Index based on a $10,000
investment from 10/17/91 to 12/31/99.*
<TABLE>
<CAPTION>
Templeton IFCI MSCI MSCI IFCI MSCI MSCI
Developing Investable Emerging World Investable Emerging World
Markets Composite Markets Index Composite Markets Index
Trust - Index Free Index Free
Class B
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-99 $10,000 $10,000 $10,000 $10,000
Jan-99 $9,417 $9,789 $9,859 $10,191 -2.11% -1.41% 1.91%
Feb-99 $9,476 $9,965 $9,955 $9,921 1.80% 0.97% -2.65%
Mar-99 $10,835 $11,116 $11,267 $10,336 11.55% 13.18% 4.18%
Apr-99 $12,854 $12,644 $12,661 $10,745 13.75% 12.37% 3.96%
May-99 $12,563 $12,415 $12,587 $10,354 -1.81% -0.58% -3.64%
Jun-99 $13,573 $13,772 $14,015 $10,838 10.93% 11.35% 4.68%
Jul-99 $12,942 $13,572 $13,635 $10,807 -1.45% -2.72% -0.28%
Aug-99 $12,369 $13,722 $13,759 $10,790 1.10% 0.91% -0.16%
Sep-99 $11,893 $13,341 $13,293 $10,686 -2.77% -3.38% -0.96%
Oct-99 $12,233 $13,572 $13,576 $11,243 1.73% 2.13% 5.21%
Nov-99 $13,107 $14,787 $14,793 $11,561 8.95% 8.97% 2.82%
Dec-99 $14,619 $16,769 $16,675 $12,498 13.40% 12.72% 8.11%
</TABLE>
*Sources: Morgan Stanley Capital International and International Finance
Corporation.
<PAGE>
Average Annual Total Return
12/31/99
Class C
- -------
1-Year +47.99%
3-Year +2.67%
Since Inception (5/1/95) +6.43%
The following line graph compares the performance of Templeton Developing
Markets Trust's Class C shares to that of the IFC Investable Composite Index,
MSCI Emerging Markets Free Index and MSCI World Index based on a $10,000
investment from 5/1/95 to 12/31/99.*
<TABLE>
<CAPTION>
Templeton IFCI MSCI MSCI IFCI MSCI World
Developing Investable Emerging World Investable Emerging Index
Markets Composite Markets Index Composite Markets MSCI
Trust - Index Free Index Free
Class C
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
5/1/95 $9,902 $10,000 $10,000 $10,000
5/95 $10,242 $10,360 $10,532 $10,085 3.60% 5.32% 0.85%
6/95 $10,265 $10,421 $10,563 $10,083 0.59% 0.30% -0.01%
7/95 $10,695 $10,754 $10,800 $10,590 3.19% 2.24% 5.02%
8/95 $10,408 $10,466 $10,546 $10,356 -2.68% -2.36% -2.21%
9/95 $10,385 $10,390 $10,496 $10,660 -0.73% -0.47% 2.93%
10/95 $10,015 $9,995 $10,094 $10,494 -3.80% -3.83% -1.56%
11/95 $9,909 $9,945 $9,914 $10,860 -0.50% -1.78% 3.49%
12/95 $10,070 $10,291 $10,354 $11,180 3.48% 4.44% 2.94%
1/96 $11,042 $11,167 $11,090 $11,384 8.52% 7.11% 1.82%
2/96 $10,983 $10,906 $10,913 $11,455 -2.34% -1.59% 0.63%
3/96 $11,022 $11,065 $10,998 $11,648 1.46% 0.78% 1.69%
4/96 $11,381 $11,508 $11,438 $11,924 4.00% 4.00% 2.37%
5/96 $11,561 $11,411 $11,387 $11,936 -0.84% -0.45% 0.10%
6/96 $11,623 $11,545 $11,458 $11,999 1.17% 0.62% 0.53%
7/96 $11,085 $10,787 $10,675 $11,577 -6.56% -6.83% -3.51%
8/96 $11,311 $11,121 $10,948 $11,713 3.09% 2.56% 1.17%
9/96 $11,538 $11,285 $11,043 $12,173 1.48% 0.87% 3.93%
10/96 $11,577 $11,043 $10,749 $12,260 -2.15% -2.67% 0.71%
11/96 $11,967 $11,206 $10,929 $12,950 1.48% 1.68% 5.62%
12/96 $12,244 $11,256 $10,978 $12,745 0.44% 0.45% -1.58%
1/97 $13,166 $12,050 $11,727 $12,900 7.06% 6.82% 1.22%
2/97 $13,538 $12,640 $12,229 $13,051 4.89% 4.28% 1.17%
3/97 $13,256 $12,328 $11,908 $12,795 -2.46% -2.63% -1.96%
4/97 $13,377 $12,118 $11,929 $13,215 -1.70% 0.18% 3.29%
5/97 $14,062 $12,530 $12,270 $14,034 3.40% 2.86% 6.19%
6/97 $14,650 $13,071 $12,927 $14,735 4.32% 5.35% 5.00%
7/97 $15,271 $13,203 $13,120 $15,416 1.01% 1.49% 4.62%
8/97 $13,917 $11,517 $11,451 $14,388 -12.77% -12.72% -6.67%
9/97 $14,682 $11,882 $11,768 $15,171 3.18% 2.77% 5.45%
10/97 $11,902 $9,937 $9,837 $14,375 -16.37% -16.41% -5.25%
11/97 $11,112 $9,462 $9,478 $14,632 -4.79% -3.65% 1.78%
12/97 $11,007 $9,596 $9,706 $14,812 1.43% 2.41% 1.23%
1/98 $10,036 $8,965 $8,945 $15,228 -6.58% -7.84% 2.80%
2/98 $11,076 $9,879 $9,879 $16,260 10.20% 10.44% 6.78%
3/98 $11,577 $10,266 $10,307 $16,949 3.92% 4.34% 4.24%
4/98 $11,612 $10,293 $10,195 $17,117 0.26% -1.09% 0.99%
5/98 $10,043 $9,009 $8,798 $16,905 -12.47% -13.70% -1.24%
6/98 $9,056 $8,091 $7,875 $17,309 -10.19% -10.49% 2.39%
7/98 $9,099 $8,411 $8,125 $17,283 3.95% 3.17% -0.15%
8/98 $6,854 $6,047 $5,776 $14,981 -28.11% -28.91% -13.32%
9/98 $7,184 $6,334 $6,142 $15,249 4.75% 6.34% 1.79%
10/98 $8,241 $7,067 $6,789 $16,630 11.58% 10.53% 9.06%
11/98 $9,134 $7,598 $7,353 $17,622 7.52% 8.32% 5.96%
12/98 $8,894 $7,482 $7,247 $18,486 -1.53% -1.45% 4.90%
1/99 $8,389 $7,301 $7,130 $18,893 -2.41% -1.61% 2.20%
2/99 $8,432 $7,433 $7,199 $18,392 1.80% 0.97% -2.65%
3/99 $9,652 $8,291 $8,148 $19,161 11.55% 13.18% 4.18%
4/99 $11,455 $9,431 $9,156 $19,919 13.75% 12.37% 3.96%
5/99 $11,185 $9,260 $9,103 $19,194 -1.81% -0.58% -3.64%
6/99 $12,091 $10,272 $10,136 $20,092 10.93% 11.35% 4.68%
7/99 $11,525 $10,123 $9,861 $20,035 -1.45% -2.72% -0.28%
8/99 $11,011 $10,234 $9,950 $20,002 1.10% 0.91% -0.16%
9/99 $10,593 $9,951 $9,614 $19,811 -2.77% -3.38% -0.96%
10/99 $10,906 $10,123 $9,818 $20,843 1.73% 2.13% 5.21%
11/99 $11,682 $11,029 $10,699 $21,432 8.95% 8.97% 2.82%
12/99 $13,380 $12,507 $12,059 $23,170 13.40% 12.72% 8.11%
</TABLE>
*Sources: Morgan Stanley Capital International and International Finance
Corporation.
Past performance does not guarantee future results.
9
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
12/31/99
Advisor Class**
- ---------------
1-YEAR +51.95%
5-YEAR +6.66%
SINCE INCEPTION (10/17/91) +8.78%
The following line graph compares the performance of Templeton Developing
Markets Trust's Advisor Class shares to that of the IFC Investable Composite
Index, MSCI Emerging Markets Free Index and MSCI World Index based on a $10,000
investment from 10/17/91 to 12/31/99.*,**
<TABLE>
<CAPTION>
IFCI MSCI MSCI IFC MSCI MSCI
Templeton Investable Emerging World Investable Emerging World
Developing Composite Markets Index Composite Markets Index
Markets Trust Index Free Index Free
Advisor Class
<S> <C> <C> <C> <C> <C> <C> <C>
10/16/91 $10,000 $10,000 $10,000 $10,000
10/91 $10,010 $9,977 $9,979 $10,088 -0.21% 0.88% -0.23%
11/91 $9,980 $9,996 $9,830 $9,650 -1.49% -4.34% 0.19%
12/91 $10,035 $11,059 $10,935 $10,355 11.24% 7.30% 10.64%
1/92 $10,205 $12,438 $12,201 $10,165 11.58% -1.84% 12.46%
2/92 $10,145 $12,755 $12,743 $9,991 4.44% -1.71% 2.55%
3/92 $9,935 $12,689 $13,174 $9,522 3.38% -4.69% 0.52%
4/92 $10,045 $12,759 $13,082 $9,656 -0.69% 1.41% 0.55%
5/92 $10,215 $12,683 $13,036 $10,042 -0.36% 3.99% -0.60%
6/92 $10,195 $11,381 $11,742 $9,707 -9.92% -3.33% 10.27%
7/92 $9,965 $11,348 $11,870 $9,734 1.09% 0.28% -0.29%
8/92 $9,695 $10,877 $11,317 $9,973 -4.66% 2.45% -4.16%
9/92 $9,584 $10,652 $11,355 $9,883 0.34% -0.90% -2.07%
10/92 $9,324 $11,127 $11,963 $9,617 5.35% -2.69% 4.46%
11/92 $8,953 $11,054 $11,834 $9,791 -1.08% 1.81% -0.65%
12/92 $9,057 $11,423 $12,182 $9,873 2.94% 0.83% 3.33%
1/93 $9,507 $11,370 $12,241 $9,907 0.48% 0.35% -0.47%
2/93 $10,335 $11,656 $12,446 $10,143 1.68% 2.38% 2.52%
3/93 $10,176 $12,022 $12,858 $10,734 3.31% 5.82% 3.14%
4/93 $10,659 $12,456 $13,153 $11,233 2.30% 4.65% 3.61%
5/93 $11,243 $12,722 $13,520 $11,494 2.79% 2.32% 2.13%
6/93 $11,572 $13,078 $13,921 $11,399 2.97% -0.83% 2.80%
7/93 $11,531 $13,486 $14,288 $11,636 2.64% 2.08% 3.12%
8/93 $12,546 $14,584 $15,495 $12,171 8.44% 4.60% 8.14%
9/93 $13,039 $15,175 $16,062 $11,948 3.66% -1.83% 4.05%
10/93 $13,572 $16,479 $17,503 $12,279 8.97% 2.77% 8.59%
11/93 $14,270 $17,523 $18,277 $11,586 4.43% -5.64% 6.34%
12/93 $15,804 $20,517 $21,298 $12,155 16.53% 4.91% 17.08%
1/94 $16,125 $20,656 $21,686 $12,960 1.82% 6.62% 0.68%
2/94 $15,773 $20,123 $21,300 $12,794 -1.78% -1.28% -2.58%
3/94 $15,139 $18,089 $19,373 $12,244 -9.05% -4.29% -10.11%
4/94 $14,535 $17,745 $18,985 $12,625 -2.00% 3.11% -1.90%
5/94 $14,524 $18,164 $19,635 $12,660 3.42% 0.27% 2.36%
6/94 $14,285 $17,519 $19,094 $12,627 -2.76% -0.26% -3.55%
7/94 $14,785 $18,777 $20,281 $12,869 6.22% 1.92% 7.18%
8/94 $15,649 $21,192 $22,798 $13,259 12.41% 3.03% 12.86%
9/94 $15,795 $21,716 $23,057 $12,913 1.14% -2.61% 2.47%
10/94 $15,430 $20,999 $22,641 $13,282 -1.80% 2.86% -3.30%
11/94 $14,878 $20,193 $21,464 $12,709 -5.20% 4.32% -3.84%
12/94 $14,448 $18,056 $19,740 $12,834 -8.03% 0.99% -10.58%
1/95 $13,630 $15,642 $17,640 $12,644 -10.64% -1.48% -13.37%
2/95 $13,587 $15,440 $17,187 $12,831 -2.56% 1.48% -1.29%
3/95 $13,738 $15,411 $17,297 $13,452 0.64% 4.84% -0.19%
4/95 $14,193 $16,049 $18,073 $13,923 4.49% 3.50% 4.14%
5/95 $14,680 $16,647 $19,034 $14,045 5.32% 0.88% 3.73%
6/95 $14,723 $16,745 $19,090 $14,043 0.30% -0.01% 0.59%
7/95 $15,351 $17,279 $19,519 $14,749 2.24% 5.02% 3.19%
8/95 $14,951 $16,816 $19,059 $14,423 -2.36% -2.21% -2.68%
9/95 $14,929 $16,694 $18,969 $14,846 -0.47% 2.93% -0.73%
10/95 $14,420 $16,059 $18,243 $14,615 -3.83% -1.56% -3.80%
11/95 $14,258 $15,979 $17,917 $15,125 -1.78% 3.49% -0.50%
12/95 $14,500 $16,535 $18,712 $15,570 4.44% 2.94% 3.48%
1/96 $15,915 $17,943 $20,042 $15,854 7.11% 1.82% 8.52%
2/96 $15,842 $17,523 $19,723 $15,953 -1.59% 0.63% -2.34%
3/96 $15,909 $17,779 $19,877 $16,222 0.78% 1.69% 1.46%
4/96 $16,435 $18,491 $20,672 $16,606 4.00% 2.37% 4.00%
5/96 $16,704 $18,335 $20,579 $16,623 -0.45% 0.10% -0.84%
6/96 $16,804 $18,550 $20,708 $16,711 0.62% 0.53% 1.17%
7/96 $16,043 $17,333 $19,293 $16,124 -6.83% -3.51% -6.56%
8/96 $16,368 $17,869 $19,786 $16,312 2.56% 1.17% 3.09%
9/96 $16,715 $18,133 $19,958 $16,954 0.87% 3.93% 1.48%
10/96 $16,771 $17,743 $19,426 $17,075 -2.67% 0.71% -2.15%
11/96 $17,352 $18,005 $19,751 $18,035 1.68% 5.62% 1.48%
12/96 $17,763 $18,085 $19,840 $17,749 0.45% -1.58% 0.44%
1/97 $19,076 $19,362 $21,194 $17,965 6.82% 1.22% 7.06%
2/97 $19,633 $20,309 $22,101 $18,176 4.28% 1.17% 4.89%
3/97 $19,240 $19,809 $21,521 $17,819 -2.63% -1.96% -2.46%
4/97 $19,436 $19,471 $21,559 $18,405 0.18% 3.29% -1.70%
5/97 $20,443 $20,133 $22,176 $19,544 2.86% 6.19% 3.40%
6/97 $21,322 $21,003 $23,363 $20,522 5.35% 5.00% 4.32%
7/97 $22,224 $21,214 $23,711 $21,470 1.49% 4.62% 1.01%
8/97 $20,279 $18,505 $20,694 $20,037 -12.72% -6.67% -12.77%
9/97 $21,413 $19,092 $21,267 $21,129 2.77% 5.45% 3.18%
10/97 $17,377 $15,967 $17,778 $20,020 -16.41% -5.25% -16.37%
11/97 $16,232 $15,203 $17,129 $20,377 -3.65% 1.78% -4.79%
12/97 $16,100 $15,419 $17,542 $20,629 2.41% 1.23% 1.43%
1/98 $14,680 $14,404 $16,166 $21,207 -7.84% 2.80% -6.58%
2/98 $16,211 $15,873 $17,853 $22,645 10.44% 6.78% 10.20%
3/98 $16,975 $16,495 $18,628 $23,605 4.34% 4.24% 3.92%
4/98 $17,026 $16,538 $18,425 $23,839 -1.09% 0.99% 0.26%
5/98 $14,727 $14,476 $15,900 $23,544 -13.70% -1.24% -12.47%
6/98 $13,284 $13,000 $14,232 $24,106 -10.49% 2.39% -10.19%
7/98 $13,372 $13,514 $14,684 $24,070 3.17% -0.15% 3.95%
8/98 $10,082 $9,716 $10,438 $20,864 -28.91% -13.32% -28.11%
9/98 $10,572 $10,177 $11,100 $21,237 6.34% 1.79% 4.75%
10/98 $12,142 $11,355 $12,269 $23,161 10.53% 9.06% 11.58%
11/98 $13,473 $12,208 $13,289 $24,542 8.32% 5.96% 7.52%
12/98 $13,127 $12,022 $13,097 $25,744 -1.45% 4.90% -1.53%
1/99 $12,386 $11,732 $12,885 $26,312 -1.61% 2.20% -2.41%
2/99 $12,463 $11,943 $13,011 $25,615 0.97% -2.65% 1.80%
3/99 $14,277 $13,322 $14,726 $26,685 13.18% 4.18% 11.55%
4/99 $16,945 $15,153 $16,547 $27,741 12.37% 3.96% 13.75%
5/99 $16,587 $14,879 $16,451 $26,731 -0.58% -3.64% -1.81%
6/99 $17,928 $16,505 $18,318 $27,982 11.35% 4.68% 10.93%
7/99 $17,110 $16,265 $17,821 $27,902 -2.72% -0.28% -1.45%
8/99 $16,357 $16,444 $17,983 $27,856 0.91% -0.16% 1.10%
9/99 $15,757 $15,989 $17,374 $27,590 -3.38% -0.96% -2.77%
10/99 $16,217 $16,266 $17,744 $29,028 2.13% 5.21% 1.73%
11/99 $17,391 $17,721 $19,335 $29,848 8.97% 2.82% 8.95%
12/99 $19,947 $20,096 $21,794 $32,268 12.72% 8.11% 13.40%
</TABLE>
*Sources: Morgan Stanley Capital International and International Finance
Corporation.
**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
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A 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 Advisor Class
shares.
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1999++ 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.................. $10.30 $12.94 $15.40 $13.01 $13.42
------------------------------------------------------------------
Income from investment operations:
Net investment income.............................. .06 .17 .16 .16 .21
Net realized and unrealized gains (losses)......... 5.25 (2.57) (1.62) 2.75 (.18)
------------------------------------------------------------------
Total from investment operations.................... 5.31 (2.40) (1.46) 2.91 .03
------------------------------------------------------------------
Less distributions from:
Net investment income.............................. -- (.19) (.16) (.17) (.20)
In excess of net investment income................. -- -- -- (.01) --
Net realized gains................................. -- (.05) (.53) (.34) (.24)
In excess of net realized gains.................... -- -- (.31) -- --
------------------------------------------------------------------
Total distributions................................. -- (.24) (1.00) (.52) (.44)
------------------------------------------------------------------
Net asset value, end of year........................ $15.61 $10.30 $12.94 $15.40 $13.01
==================================================================
Total Return*....................................... 51.55% (18.72)% (9.41)% 22.51% .36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)..................... $2,958,324 $2,172,954 $3,444,029 $3,308,753 $2,147,664
Ratios to average net assets:
Expenses........................................... 2.02% 2.11% 1.96% 2.03% 2.10%
Net investment income.............................. .45% 1.40% .99% 1.16% 1.66%
Portfolio turnover rate............................. 45.82% 37.51% 30.06% 12.47% 9.76%
</TABLE>
*Total return does not reflect sales commissions.
++Based on average weighted shares outstanding.
11
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
------------------
YEAR ENDED
December 31, 1999+
------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $10.30
------------
Income from investment operations:
Net investment loss........................................ (.06)
Net realized and unrealized gains.......................... 5.23
------------
Total from investment operations............................ 5.17
------------
Net asset value, end of year................................ $15.47
============
Total Return*............................................... 50.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $13,862
Ratios to average net assets:
Expenses................................................... 2.76%**
Net investment loss........................................ (.47)%**
Portfolio turnover rate..................................... 45.82%
</TABLE>
*Total return does not reflect the contingent deferred sales charge and is not
annualized.
**Annualized.
+Effective date of Class B shares was January 1, 1999. Based on average weighted
shares outstanding.
12
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1999++ 1998 1997 1996 1995+
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.................... $10.21 $12.81 $15.27 $12.95 $13.10
---------------------------------------------------------------
Income from investment operations:
Net investment income (loss)......................... (.03) .07 .09 .17 .02
Net realized and unrealized gains (losses)........... 5.18 (2.51) (1.64) 2.60 .19
---------------------------------------------------------------
Total from investment operations...................... 5.15 (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.......................... $15.36 $10.21 $12.81 $15.27 $12.95
===============================================================
Total Return*......................................... 50.44% (19.20)% (10.10)% 21.58% 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)....................... $385,584 $294,588 $402,542 $226,629 $41,012
Ratios to average net assets:
Expenses............................................. 2.73% 2.78% 2.69% 2.74% 2.73%**
Net investment income (loss)......................... (.26)% .76% .21% .33% .19%**
Portfolio turnover rate............................... 45.82% 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.
++Based on average weighted shares outstanding.
13
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------
1999++ 1998 1997+
-------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $10.28 $12.93 $15.43
-------------------------------------
Income from investment operations:
Net investment income...................................... .09 .23 .17
Net realized and unrealized gains (losses)................. 5.25 (2.60) (1.63)
-------------------------------------
Total from investment operations............................ 5.34 (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................................ $15.62 $10.28 $12.93
=====================================
Total Return*............................................... 51.95% (18.47)% (9.36)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $190,341 $115,494 $98,101
Ratios to average net assets:
Expenses................................................... 1.74% 1.78% 1.69%**
Net investment income...................................... .72% 1.82% 1.04%**
Portfolio turnover rate..................................... 45.82% 37.51% 30.06%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period January 1, 1997 (effective date) to December 31, 1997. Based on
average weighted shares outstanding.
++Based on average weighted shares outstanding.
See Notes to Financial Statements.
14
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES 99.2%
ARGENTINA 5.4%
Banco de Galicia y Buenos Aires SA de CV,
B.......................................... Banking 21,980 $ 109,258
Banco Frances SA............................. Banking 1,040,830 8,223,708
*Molinos Rio de la Plata SA, B............... Food & Household Products 9,454,511 23,261,354
Perez Companc SA, B.......................... Energy Sources 7,661,397 39,231,845
Quilmes Industrial SA, ADR................... Beverages & Tobacco 1,604,200 19,150,138
*Sociedad Comercial del Plata Cadelplata
Come....................................... Multi-Industry 4,160 1,194
Telecom Argentina Stet-France Telecom SA,
ADR........................................ Telecommunications 1,452,106 49,734,631
Telefonica de Argentina SA, ADR.............. Telecommunications 1,547,360 47,774,740
Transportadora de Gas del Sur SA, B, ADR..... Utilities Electrical & Gas 516,400 4,744,425
--------------
192,231,293
--------------
AUSTRIA 1.7%
Austria Tabak AG............................. Beverages & Tobacco 174,290 8,422,350
Bank Austria AG.............................. Banking 568,250 32,036,646
OMV AG....................................... Energy Sources 211,770 20,573,649
--------------
61,032,645
--------------
BRAZIL 14.7%
Aracruz Celulose SA, ADR..................... Forest Products & Paper 1,050,300 27,570,375
Banco Bradesco SA, pfd. ..................... Banking 1,152,578,077 9,040,704
*Banco Bradesco SA, pfd., rts., 2/09/00...... Banking 74,841,611 297,047
Banco do Brasil SA........................... Banking 815,351,792 3,791,284
Brasmotor SA, pfd. .......................... Multi-Industry 35,826,231 5,023,407
Centrais Eletricas Brasileiras SA
(Electrobras), B, pfd. .................... Utilities Electrical & Gas 3,136,370,470 74,828,435
Cia Cervejaria Brahma, pfd. ................. Beverages & Tobacco 19,672,000 14,374,227
Cia Energetica de Minas Gerais, pfd. ........ Utilities Electrical & Gas 685,997,000 15,379,396
Cia Vale do Rio Doce, A, pfd. ............... Metals & Mining 2,151,177 59,539,912
Copene-Petroquimica do Nordeste SA, A,
pfd. ...................................... Chemicals 29,901,844 9,898,313
Duratex SA, pfd. ............................ Forest Products & Paper 417,685,800 13,063,519
Embratel Participacoes SA, pfd. ............. Telecommunications 666,928,973 17,167,007
Investimentos Itau SA, pfd. ................. Multi-Industry 61,520,179 63,682,665
Investimentos Itau SA, pfd., new............. Multi-Industry 2,810,432 2,800,320
*Mannesmann SA............................... Machinery & Engineering 8,425,874 583,025
Petroleo Brasileiro SA, pfd. ................ Energy Sources 32,921,000 8,382,873
Tele Centro Sul Participacoes SA, pfd. ...... Telecommunications 2,807,189,973 51,264,433
Tele Norte Leste Participacoes SA, pfd. ..... Telecommunications 1,667,508,973 44,768,439
Tele Sudeste Celular Participacoes SA,
pfd. ...................................... Telecommunications 3,510,889,973 25,945,409
Telecomunicacoes de Sao Paulo SA, ADR,
pfd. ...................................... Telecommunications 2,277,700 55,661,294
Telesp Celular Participacoes SA, pfd. ....... Telecommunications 206,778,973 3,662,844
Unibanco Uniao de Bancos Brasileiros SA,
GDR........................................ Banking 433,362 13,055,030
--------------
519,779,958
--------------
</TABLE>
15
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
CHILE 2.6%
Cia de Telecomunicaciones de Chile SA, ADR... Telecommunications 2,619,209 $ 47,800,564
Empresa Nacional de Electricidad SA, ADR..... Electrical & Electronics 1,771,000 25,126,063
Enersis SA, ADR.............................. Utilities Electrical & Gas 799,412 18,786,182
--------------
91,712,809
--------------
CHINA .5%
China Resources Enterprises Ltd. ............ Multi-Industry 1,054,000 1,688,081
*China Telecom HK Ltd. ...................... Telecommunications 1,972,000 12,328,964
Guangshen Railway Co. Ltd., H................ Transportation 21,870,000 2,447,662
Shandong Huaneng Power Development Co. Ltd.,
ADR........................................ Utilities Electrical & Gas 641,500 2,766,469
--------------
19,231,176
--------------
COLOMBIA .7%
Cementos Argos SA............................ Building Materials & Components 3,457,564 8,851,364
Cia Colombiana de Tabacos SA................. Beverages & Tobacco 2,309,727 3,064,854
Compania Nacional de Chocolates SA........... Food & Household Products 1,967,120 7,448,828
Compania Suramericana de Inversiones SA...... Insurance 6,051,851 6,778,073
--------------
26,143,119
--------------
CZECH REPUBLIC 1.5%
*Cesky Telecom AS............................ Telecommunications 1,270,428 20,508,515
*CEZ AS...................................... Utilities Electrical & Gas 11,599,910 28,671,751
Tabak AS..................................... Beverages & Tobacco 13,776 2,778,670
--------------
51,958,936
--------------
EGYPT .1%
Commercial International Bank Ltd. .......... Banking 209,032 3,053,520
Suez Cement Co. ............................. Building Materials & Components 34,480 574,541
--------------
3,628,061
--------------
HONG KONG 5.1%
Cheung Kong Holdings Ltd. ................... Multi-Industry 5,211,000 66,197,498
Citic Pacific Ltd. .......................... Multi-Industry 2,085,000 7,845,404
Dairy Farm International Holdings Ltd. ...... Merchandising 12,497,704 11,247,934
Hang Lung Development Co. Ltd. .............. Real Estate 7,616,000 8,621,702
Hong Kong Land Holdings Ltd. ................ Real Estate 2,075,800 3,072,184
HSBC Holdings PLC............................ Banking 2,155,405 30,223,084
Hutchison Whampoa Ltd. ...................... Multi-Industry 2,421,000 35,193,028
Jardine Matheson Holdings Ltd. .............. Multi-Industry 2,568,691 10,120,643
Jardine Strategic Holdings Ltd. ............. Multi-Industry 1,718,187 3,419,192
New World Development Co. Ltd. .............. Real Estate 2,033,589 4,578,093
Shangri-La Asia Ltd. ........................ Leisure & Tourism 864,582 989,873
--------------
181,508,635
--------------
</TABLE>
16
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
HUNGARY 2.8%
Borsodchem RT................................ Chemicals 340,681 $ 13,942,461
Egis RT...................................... Multi-Industry 87,438 3,457,414
*Fotex First Hungarian American Photo Service
Co. ....................................... Multi-Industry 2,872,088 1,044,809
**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 297,597 19,557,383
Mol Magyar Olay-Es Gazipari RT............... Energy Sources 1,108,300 23,007,414
OTP Bank..................................... Banking 177,429 10,379,842
+Tiszai Vegyi Kombinat RT.................... Chemicals 1,475,759 28,126,368
--------------
99,547,691
--------------
INDIA .6%
Grasim Industries Ltd. ...................... Multi-Industry 200,459 1,880,167
ICICI Ltd. .................................. Financial Services 35,121 74,279
*Mahanagar Telephone Nigam Ltd. ............. Telecommunications 1,259,000 5,585,908
*NIIT Ltd. .................................. Data Processing & Reproduction 57,250 4,363,569
Reliance Industries Ltd. .................... Chemicals 1,743,550 9,367,072
--------------
21,270,995
--------------
INDONESIA 6.0%
*Asia Pulp & Paper Co. Ltd., ADR............. Forest Products & Paper 2,405,290 18,941,659
*PT Barito Pacific Timber TBK................ Forest Products & Paper 47,707,500 4,267,218
PT Gudang Garamm............................. Beverages & Tobacco 3,503,500 9,426,233
*PT Indah Kiat Pulp & Paper Corp. ........... Forest Products & Paper 87,940,550 34,609,877
*PT Indocement Tunggal Prakarsa.............. Building Materials & Components 17,097,500 7,585,295
*PT Indofoods Sukses Makmurr................. Food & Household Products 16,428,480 20,572,336
PT Indosat................................... Telecommunications 8,213,500 18,337,116
PT Semen Gresik (Persero).................... Building Materials & Components 7,278,263 11,535,852
*PT Sinar Mas Agro Resources & Technology
Corp. ..................................... Food & Household Products 6,094,900 3,445,418
PT Tambang Timah............................. Metals & Mining 10,687,500 7,456,395
PT Telekomunikasi Indonesia (Persero), B..... Telecommunications 128,152,360 72,902,416
*PT Tjiwi Kimia.............................. Forest Products & Paper 16,142,330 5,255,642
--------------
214,335,457
--------------
ISRAEL .4%
Bank Hapoalim BM............................. Financial Services 136,000 423,568
Discount Investment Corp. ................... Financial Services 12,743 647,149
*Formula Systems Ltd. ....................... Data Processing & Reproduction 126,050 5,315,288
Koor Industries Ltd. ........................ Multi-Industry 93,603 9,349,486
--------------
15,735,491
--------------
MALAYSIA .1%
Resorts World Bhd. .......................... Leisure & Tourism 766,000 2,197,211
--------------
</TABLE>
17
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
MEXICO 12.0%
Cemex SA..................................... Building Materials & Components 24,496,376 $ 137,024,584
*Cifra SA de CV, V........................... Merchandising 8,465,836 16,976,347
*DESC SA de CV DESC, B....................... Multi-Industry 4,293,870 3,534,795
Fomento Economico Mexicano SA de CV Femsa.... Beverages & Tobacco 233,000 10,368,500
*Grupo Carso SA de CV........................ Multi-Industry 1,372,000 6,834,660
*Grupo Financiero Banamex Accival Sa de CV... Banking 17,227,571 69,092,105
*Grupo Financiero Bancomer SA de CV.......... Banking 39,392,187 16,463,648
*Grupo Televisa SA de CV, CPO................ Broadcasting & Publishing 194,400 6,565,488
Telefonos de Mexico SA (Telmex), ADR......... Telecommunications 1,313,400 147,757,500
Vitro SA de CV, A............................ Food & Household Products 4,905,388 9,267,171
--------------
423,884,798
--------------
PAKISTAN .2%
Pakistan Telecommunications Corp., A......... Telecommunications 14,587,300 6,109,127
--------------
PERU .5%
Telefonica del Peru SA, ADR.................. Telecommunications 1,397,300 18,688,888
--------------
PHILIPPINES 1.8%
*A Soriano Corp. ............................ Multi-Industry 23,343,980 347,553
Philippine Long Distance Telephone Co.,
ADR........................................ Telecommunications 1,437,304 37,190,241
*Philippine National Bank.................... Banking 3,194,256 7,529,884
RFM Corp. ................................... Food & Household Products 25,962,166 2,705,735
San Miguel Corp., B.......................... Food & Household Products 11,290,400 15,969,052
--------------
63,742,465
--------------
POLAND 1.2%
Bank Rozwoju Eksportu SA..................... Banking 45,768 1,449,966
Bank Slaski SA W Katowicach.................. Banking 111,982 7,609,901
Impexmetal SA................................ Metals & Mining 287,100 1,402,520
Prokom Software SA........................... Data Processing & Reproduction 180,800 5,596,711
Telekomunikacja Polska SA.................... Telecommunications 2,994,974 19,628,487
Warta SA..................................... Insurance 234,936 6,761,157
--------------
42,448,742
--------------
RUSSIA 1.7%
Aeroflot - Russia International Airlines..... Transportation 8,960,900 1,297,090
GAZ Auto Works............................... Automobiles 19,960 698,600
*GUM Trade House............................. Merchandising 500,000 375,000
Irkutskenergo................................ Utilities Electrical & Gas 10,233,490 1,023,349
Lukoil Holdings, ADR......................... Energy Sources 251,600 13,083,200
*Mosenergo, GDR.............................. Utilities Electrical & Gas 748,427 1,932,664
*Red October................................. Food & Household Products 195,000 931,125
*Rostelecom, ADR............................. Telecommunications 1,121,680 18,928,350
*Rostelecom, pfd. ........................... Telecommunications 3,459,900 2,871,717
*Tyumenaviatrans............................. Transportation 3,330,000 33,300
Unified Energy Systems....................... Utilities Electrical & Gas 69,337,400 8,320,488
</TABLE>
18
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
RUSSIA (CONT.)
Unified Energy Systems, pfd. ................ Utilities Electrical & Gas 2,883,000 $ 144,150
*Vimpel Communications, ADR.................. Telecommunications 222,755 9,940,442
--------------
59,579,475
--------------
SINGAPORE 7.5%
City Developments Ltd. ...................... Real Estate 1,897,500 11,108,151
Cycle & Carriage Ltd. ....................... Automobiles 619,000 1,914,050
DBS Group Holdings Ltd. ..................... Banking 457,234 7,494,739
First Capital Corp. Ltd. .................... Real Estate 4,137,000 5,514,344
Fraser and Neave Ltd. ....................... Beverages & Tobacco 7,767,650 28,682,707
*Golden Agri-Resources Ltd. ................. Misc Materials & Commodities 13,566,000 5,294,446
Jurong Shipyard Ltd. ........................ Machinery & Engineering 2,873,000 14,403,813
Keppel Corp., Ltd. .......................... Transportation 11,865,000 31,060,583
MCL Land Ltd. ............................... Real Estate 4,095,000 3,786,431
Natsteel Ltd. ............................... Metals & Mining 10,125,000 20,183,128
Oversea Chinese Banking Corp. Ltd. .......... Banking 3,517,500 32,313,269
Overseas Union Enterprise Ltd. .............. Leisure & Tourism 2,696,350 9,066,082
Sembcorp Industries Ltd. .................... Multi-Industry 13,884,986 18,924,598
Singapore Airlines Ltd. ..................... Transportation 313,000 3,551,906
Singapore Telecommunications Ltd. ........... Telecommunications 2,628,000 5,427,992
United Industrial Corporation Ltd. .......... Multi-Industry 34,963,000 19,732,945
United Overseas Bank Ltd. ................... Banking 4,782,624 42,212,292
United Overseas Land Ltd. ................... Real Estate 4,120,000 3,859,021
--------------
264,530,497
--------------
SLOVAK REPUBLIC .1%
Nafta Gbely AS............................... Utilities Electrical & Gas 118,216 1,015,392
*Slovnaft AS................................. Chemicals 247,604 3,524,989
*Vychodoslovenske Zeleziarne AS.............. Metals & Mining 134,435 459,329
--------------
4,999,710
--------------
SOUTH AFRICA 14.0%
Anglo American PLC........................... Metals & Mining 1,438,591 92,789,704
Barlow Ltd. ................................. Multi-Industry 6,014,900 43,291,644
BOE Ltd. .................................... Financial Services 4,276,000 4,168,319
CG Smith Ltd. ............................... Multi-Industry 14,260,300 57,342,392
Comparex Holdings Ltd. ...................... Data Processing & Reproduction 474,000 3,319,155
De Beers Centenary AG........................ Misc Materials & Commodities 516,100 15,009,245
Edgars Consolidated Stores Ltd. ............. Textiles & Apparel 567,363 7,245,285
Firstrand Ltd. .............................. Insurance 9,751,500 13,942,031
Iscor Ltd. .................................. Metals & Mining 7,094,848 26,857,833
Johnnies Industrial Corporation Ltd. ........ Multi-Industry 940,100 10,997,108
Liberty International PLC.................... Insurance 17,391 130,680
Liberty Life Association of Africa Ltd. ..... Insurance 2,638,830 30,439,794
Palabora Mining Co. Ltd. .................... Metals & Mining 358,900 2,609,387
Rembrandt Group Ltd. ........................ Multi-Industry 2,654,870 25,276,260
</TABLE>
19
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
SOUTH AFRICA (CONT.)
Sanlam Ltd. ................................. Financial Services 696,600 $ 973,316
Sappi Ltd. .................................. Forest Products & Paper 2,381,479 23,524,602
Sasol Ltd. .................................. Energy Sources 6,591,623 54,724,929
South African Breweries PLC.................. Beverages & Tobacco 6,434,498 65,442,661
Standard Bank Investment Corp. Ltd. ......... Financial Services 2,250,487 9,341,988
Tongaat-Hulett Group Ltd. ................... Multi-Industry 1,103,490 9,322,743
--------------
496,749,076
--------------
SOUTH KOREA 4.8%
Hana Bank.................................... Banking 1,773,871 13,825,415
Korea Electric Power Corp. .................. Utilities Electrical & Gas 1,719,190 53,294,133
LG Electronics Inc. ......................... Electrical & Electronics 93,372 3,864,803
Samsung Electronics Co. Ltd. ................ Electrical & Electronics 233,422 54,680,979
*Samsung Heavy Industries Co. Ltd. .......... Machinery & Engineering 4,250,402 20,550,160
Samsung SDI Co. Ltd. ........................ Electrical & Electronics 596,746 24,805,294
--------------
171,020,784
--------------
TAIWAN .2%
China Steel Corp. ........................... Metals & Mining 886,000 654,937
Mitac International Corp. ................... Data Processing & Reproduction 403,000 617,630
*Silicon Integrated Systems Co. Ltd. ........ Electrical & Electronics 656,000 2,215,581
*Siliconware Precision Industries Co. Electronic Components &
Ltd. ...................................... Instruments 451,000 1,149,594
*Sunplus Technology Company Ltd. ............ Electrical & Electronics 129,000 616,537
UNI-President Enterprises Corp. ............. Food & Household Products 1,023,000 808,361
--------------
6,062,640
--------------
THAILAND 6.5%
Advanced Info Service Public Co. Ltd.,
fgn. ...................................... Telecommunications 614,200 10,343,043
American Standard Sanitaryware Public Co.
Ltd., fgn. ................................ Building Materials & Components 284,300 1,515,055
Ayudhya Insurance Public Co. Ltd., fgn. ..... Insurance 163,800 432,086
*Bangkok Bank Public Co. Ltd. ............... Banking 5,782,371 9,398,471
BEC World Public Co. Ltd., fgn. ............. Telecommunications 766,700 5,434,111
*Charoen Pokphand Feedmill Public Co. Ltd.,
fgn. ...................................... Food & Household Products 2,539,728 7,443,914
*Hana Microelectronics Co. Ltd., fgn. ....... Electrical & Electronics 1,379,900 6,691,761
Hua Thai Manufacturing Public Co. Ltd.,
fgn. ...................................... Textiles & Apparel 84,800 124,274
*Jasmine International Public Co. Ltd.,
fgn. ...................................... Telecommunications 7,822,100 5,418,988
*Land and House Public Co. Ltd., fgn. ....... Real Estate 627,745 597,972
*Serm Suk Public Co. Ltd. ................... Food & Household Products 423,400 1,534,303
*Shin Corporations Public Company Ltd.,
fgn. ...................................... Electrical & Electronics 1,496,700 14,197,314
*Siam Cement Public Co. Ltd. ................ Building Materials & Components 1,234,350 24,338,369
Siam Cement Public Co. Ltd., fgn. ........... Building Materials & Components 854,300 28,499,430
*Siam Commercial Bank, cvt., 144A, 5.25%,
fgn., pfd. ................................ Banking 6,718,600 8,234,895
Siam Makro Public Company Ltd., fgn. ........ Merchandising 4,212,900 5,949,473
*Telecomasia Corp. Public Co. Ltd., fgn. .... Telecommunications 3,588,600 4,685,356
*Thai Airways International Public Co. Ltd.,
fgn. ...................................... Transportation 4,036,700 6,130,879
*Thai Farmers Bank Public Co. Ltd. .......... Banking 33,176,882 38,012,415
</TABLE>
20
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM SECURITIES (CONT.)
THAILAND (CONT.)
*Thai Farmers Bank Public Co. Ltd., fgn. .... Banking 12,400,118 $ 20,815,546
*Total Access Communication Public Co.
Ltd. ...................................... Telecommunications 6,651,400 26,206,516
*United Communications Industries, fgn. ..... Telecommunications 4,952,200 4,948,242
--------------
230,952,413
--------------
TURKEY 4.3%
Akbank....................................... Banking 2,932,493,680 86,504,239
Arcelik AS, Br. ............................. Appliances & Household Durables 673,888,224 44,105,885
*Dogan Sirketler Grubu Holding AS............ Multi-Industry 428,521,000 12,640,738
*Ford Otomotiv Sanayi AS..................... Automobiles 24,007,000 1,062,257
Koc Holding AS............................... Multi-Industry 43,395,000 8,000,553
Yapi Ve Kredi Bankasi AS..................... Banking 40,260,000 1,243,280
--------------
153,556,952
--------------
VENEZUELA 2.2%
Compania Anonima Nacional Telefonos de
Venezuela, ADR............................. Telecommunications 912,800 22,477,700
+Electricidad de Caracas SAICA SACA, ADR..... Utilities Electrical & Gas 3,574,858 56,481,379
--------------
78,959,079
--------------
TOTAL LONG TERM SECURITIES (COST
$2,810,735,851)............................ 3,521,598,123
--------------
<CAPTION>
PRINCIPAL
AMOUNT**
--------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $23,743,129) .7%
U.S. Treasury Bills, 5.06% to 5.42%, with
maturities to 5/18/00...................... $ 24,136,000 23,761,141
--------------
TOTAL INVESTMENTS (COST $2,834,478,980)
99.9%...................................... 3,545,359,264
OTHER ASSETS, LESS LIABILITIES .1%........... 2,751,932
--------------
TOTAL NET ASSETS 100.0%...................... $3,548,111,196
==============
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
+The Investment Company Act of 1940 defines "affiliated persons" 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, 1999,
were $84,607,747.
See Notes to Financial Statements.
21
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$2,834,478,980)........................................... $3,545,359,264
Cash....................................................... 3,730,283
Receivables:
Investment securities sold................................ 8,893,532
Fund shares sold.......................................... 11,068,895
Dividends and interest.................................... 8,952,154
Other assets............................................... 25,860
--------------
Total assets.......................................... 3,578,029,988
--------------
Liabilities:
Payables:
Investment securities purchased........................... 7,986,433
Fund shares redeemed...................................... 12,865,814
To affiliates............................................. 6,989,810
Accrued expenses........................................... 2,076,735
--------------
Total liabilities..................................... 29,918,792
--------------
Net assets, at value........................................ $3,548,111,196
==============
Net assets consist of:
Undistributed net investment income........................ $ 5,930,357
Net unrealized appreciation................................ 710,880,284
Accumulated net realized loss.............................. (722,536,479)
Beneficial shares.......................................... 3,553,837,034
--------------
Net assets, at value........................................ $3,548,111,196
==============
CLASS A:
Net asset value per share ($2,958,324,349 / 189,481,055
shares outstanding)...................................... $15.61
==============
Maximum offering price per share ($15.61 / 94.25%)......... $16.56
==============
CLASS B:
Net asset value and maximum offering price per share
($13,862,234 / 895,872 shares outstanding)*............... $15.47
==============
CLASS C:
Net asset value per share ($385,583,659 / 25,098,697 shares
outstanding)*............................................. $15.36
==============
Maximum offering price per share ($15.36 / 99.00%)......... $15.52
==============
ADVISOR CLASS:
Net asset value and maximum offering price per share
($190,340,954 /12,187,808 shares outstanding)............. $15.62
==============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
22
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $7,269,633)
Dividends.................................................. $ 71,439,253
Interest................................................... 1,759,847
-------------
Total investment income............................... $ 73,199,100
Expenses:
Management fees (Note 3)................................... 37,123,994
Administrative fees (Note 3)............................... 2,802,440
Distribution fees (Note 3)
Class A................................................... 6,958,363
Class B................................................... 57,440
Class C................................................... 3,204,736
Transfer agent fees (Note 3)............................... 7,173,000
Custodian fees............................................. 3,314,800
Reports to shareholders.................................... 847,073
Registration and filing fees............................... 146,600
Professional fees.......................................... 111,000
Trustees' fees and expenses................................ 196,600
-------------
Total expenses........................................ 61,936,046
--------------
Net investment income........................... 11,263,054
--------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments (net of foreign taxes of $3,011,243).......... (505,121,727)
Foreign currency transactions............................. (3,589,488)
-------------
Net realized loss..................................... (508,711,215)
Net unrealized appreciation on investments............ 1,731,873,282
--------------
Net realized and unrealized gain............................ 1,223,162,067
--------------
Net increase in net assets resulting from operations........ $1,234,425,121
==============
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 11,263,054 $ 43,691,812
Net realized loss from investments and foreign currency
transactions............................................. (508,711,215) (109,871,525)
Net unrealized appreciation (depreciation) on
investments.............................................. 1,731,873,282 (707,091,116)
------------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ 1,234,425,121 (773,270,829)
Distributions to shareholders from:
Net investment income:
Class A.................................................. -- (43,371,538)
Class B.................................................. -- --
Class C.................................................. -- (3,527,590)
Advisor Class............................................ -- (2,350,466)
In excess of net investment income:
Class A.................................................. -- (814,661)
Class B.................................................. -- --
Class C.................................................. -- (66,260)
Advisor Class............................................ -- (44,150)
Net realized gains:
Class A.................................................. -- (13,098,049)
Class B.................................................. -- --
Class C.................................................. -- (1,659,062)
Advisor Class............................................ -- (534,895)
Beneficial share transactions (Note 2):
Class A.................................................. (254,980,071) (555,757,624)
Class B.................................................. 11,547,988 --
Class C.................................................. (41,139,850) (16,513,221)
Advisor Class............................................ 15,221,576 49,372,708
------------------------------------
Net increase (decrease) in net assets................... 965,074,764 (1,361,635,637)
Net assets:
Beginning of year.......................................... 2,583,036,432 3,944,672,069
------------------------------------
End of year................................................ $ 3,548,111,196 $2,583,036,432
====================================
Undistributed net investment income/(Distributions in excess
of net investment income) included in net assets:
End of year................................................ $ 5,930,357 $ (925,071)
====================================
</TABLE>
See Notes to Financial Statements.
24
<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
or emerging 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, 1999, the Fund has investments with a value of approximately
$8.3 million in countries with restrictions on the repatriation of their
currencies or formal exchange controls currently in place.
25
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. 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.
d. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
The Fund offers four classes of shares; Class A, Class B, Class C, 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, 1999, 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,
-----------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold....................................... 197,849,068 $ 2,524,193,132 89,591,968 $ 996,558,996
Shares issued on reinvestment of distributions.... -- -- 4,360,232 50,316,889
Shares redeemed................................... (219,369,270) (2,779,173,203) (149,082,542) (1,602,633,509)
-----------------------------------------------------------------------
Net decrease...................................... (21,520,202) $ (254,980,071) (55,130,342) $ (555,757,624)
=======================================================================
</TABLE>
26
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999+
-------------------------------
SHARES AMOUNT
-----------------------
<S> <C> <C>
CLASS B SHARES:
Shares sold....................................... 928,527 $ 11,967,245
Shares redeemed................................... (32,655) (419,257)
-------------------------------
Net increase...................................... 895,872 $ 11,547,988
===============================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold....................................... 8,925,949 $ 112,803,533 10,915,747 $ 124,293,106
Shares issued on reinvestment of distributions.... -- -- 365,154 4,366,838
Shares redeemed................................... (12,679,609) (153,943,383) (13,849,038) (145,173,165)
-----------------------------------------------------------------------
Net decrease...................................... (3,753,660) $ (41,139,850) (2,568,137) $ (16,513,221)
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold....................................... 7,552,205 $ 96,653,070 12,540,225 $ 138,875,712
Shares issued on reinvestment of distributions.... -- -- 238,176 2,645,549
Shares redeemed................................... (6,601,479) (81,431,494) (9,129,829) (92,148,553)
-----------------------------------------------------------------------
Net increase...................................... 950,726 $ 15,221,576 3,648,572 $ 49,372,708
=======================================================================
</TABLE>
+Effective date of Class B shares was January 1, 1999.
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.
27
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
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 for costs incurred in marketing the Fund's
shares up to 0.35%, 1.00% and 1.00% per year of the average daily net assets of
Class A, Class B, and Class C shares, respectively. Under the Class A
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At December 31, 1999, there were no unreimbursed costs. Distributors
received net commissions from sales of the Fund's shares and received contingent
deferred sales charges for the period of $512,560 and $243,308, respectively.
4. 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.
At December 31, 1999, the net unrealized appreciation based on cost of
investments for income tax purposes of $2,921,998,236 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 952,758,986
Unrealized depreciation..................................... (329,397,958)
-------------
Net unrealized appreciation................................. $ 623,361,028
=============
</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 and wash sales, and losses realized subsequent to October 31 on the
sales of securities and foreign currencies.
At December 31, 1999, the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:
<TABLE>
<S> <C>
Capital loss carryovers expiring in:
2006...................................................... $ 44,971,158
2007...................................................... 548,121,432
------------
$593,092,590
============
</TABLE>
28
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Notes to Financial Statements (continued)
4. INCOME TAXES (CONT.)
At December 31, 1999, the Fund had deferred capital losses occurring subsequent
to October 31, 1998 of $46,586,222. For tax purposes, such losses will be
reflected in the year end December 31, 2000.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended December 31, 1999 aggregated $1,336,354,425 and $1,653,767,026,
respectively.
6. CREDIT FACILITY
Certain Franklin Templeton Funds, including Templeton Developing Markets Trust,
are participants in a $750 million senior unsecured credit agreement for
temporary borrowing purposes. The termination date of the agreement is March 1,
2000. Interest is calculated on the Fund's borrowings at market rates. At
December 31, 1999, the Trust had not utilized this credit facility.
29
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees and Shareholders of
Templeton Developing Markets Trust
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Templeton Developing Markets Trust
at December 31, 1999, and the results of its operations, the changes in its net
assets and the financial highlights for the year then ended, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above. The financial statements for the year
ended December 31, 1998 including the financial highlights for each of the four
years in the period then ended were audited by other independent accountants
whose report dated January 28, 1999 expressed an unqualified opinion on those
financial statements.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
January 28, 2000
30
<PAGE>
TEMPLETON DEVELOPING MARKETS TRUST
Change in Independent Auditor
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund. McGladrey resigned pursuant to their agreement to sell
their investment company practice to PricewaterhouseCoopers LLP (PwC). The
McGladrey partners and professionals previously serving the Fund, have joined
PwC and performed the December 31, 1999 audit.
None of the reports of McGladrey on the financial statements of the Fund,
including those of the past two fiscal years have ever contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
During the period McGladrey served the Fund, including the two most recent
fiscal years and subsequent interim period, there were no disagreements with
McGladrey on any matter of accounting principle or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of McGladrey would have caused it to make
reference to the subject matter of disagreement in connection with its report.
On October 21, 1999, the Fund, with the approval of its Board of Trustees and
its Audit Committee, engaged PwC as its independent auditors.
31
<PAGE>
ANNUAL REPORT
AUDITORS
PricewaterhouseCoopers LLP
333 Market Street
San Francisco, California 94105
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
www.franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
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. 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 A99 2/00 [RECYCLING LOGO] Printed on recycled paper
