<PAGE> 1
TEMPLETON GLOBAL
OPPORTUNITIES TRUST
YOUR FUND'S OBJECTIVE:
The Templeton Global Opportunities Trust seeks long-term capital growth through
a flexible policy of investing in global securities. It invests primarily in
common stock and may also invest in preferred stocks and certain debt
securities, rated or unrated, such as convertible bonds and bonds selling at a
discount.
FEBRUARY 18, 1997
Dear Shareholder:
We are pleased to bring you the annual report of the Templeton Global
Opportunities Trust for the period ended December 31, 1996. During this period,
economies in much of the industrialized world experienced slow growth, moderate
inflation, and declining interest rates. These conditions proved favorable to
many financial markets, and the Templeton Global Opportunities Trust Class I
shares produced a one-year total return of 24.19%, as discussed in the
Performance Summary on page 5. Its benchmark, the Morgan Stanley Capital
International (MSCI)(R)(1) World Index, provided a return of only 14.0% during
the same period. The Fund's performance relative to this index was aided by its
investments in financial, telecommunications and cyclical stocks, and by a lack
of holdings in Japan. The MSCI Emerging Markets Index(2) rose just 6.0%, but our
selection of emerging market stocks performed well and had a positive impact on
the Fund's performance.
1. A REGISTERED TRADEMARK OF MORGAN STANLEY & CO., INC. THE MSCI WORLD INDEX
INCLUDES STOCK MARKETS OF BOTH DEVELOPED AND EMERGING COUNTRIES.
2. THE MSCI EMERGING MARKETS INDEX INCLUDES ONLY THE EMERGING MARKET COMPONENTS
OF THE MSCI WORLD INDEX.
1
<PAGE> 2
Financial stocks were among the best performing in the world during the
reporting period. Our holdings of Merrill Lynch, Morgan Stanley and Alex Brown
Inc. all increased in value due to the high level of trading activity in U.S.
stocks and a huge volume of corporate mergers. Our investments in Nordic banks
responded favorably to recognition by many investors of the inherent value of
these shares, lower interest rates, and increasing speculation concerning
consolidation within this sector. For example, one of the Fund's largest
holdings, the Swedish bank Stadshypotek, received an attractive cash bid, which
pushed its stock price significantly higher.
Although the international telecommunications sector did not perform well, many
individual stocks in this group which were held by the Fund did produce good
returns. Six of our holdings, Telecom Italia, Telebras, Telefonica de Espana,
Nokia, Lucent Technologies, and Newbridge Networks rose substantially. Many
factors, including improved regulatory environments and growing demand for
sophisticated telecommunications equipment, contributed to the relatively strong
performance of these stocks.
Cyclical stocks (those directly affected by the level of economic activity)
performed well early in 1996 as they rebounded sharply from their low price
levels of 1995. However, they lagged the overall market later in the year due to
slow economic growth in the U.S., Europe, and Japan. Nevertheless, cyclical
stocks continued to be prominent in the Fund's portfolio because they remained
among the least expensive we could find based on our long-term estimates of
earnings power.
<TABLE>
<CAPTION>
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Geographic Distribution on 12/31/96
Based on Total Net Assets
<S> <C>
Europe 35.8%
North America 25.0%
Asia 13.7%
Latin America 9.5%
Australia & New Zealand 6.5%
Middle East & Africa 0.5%
Short-Term Obligations &
Other Net Assets 9.0%
</TABLE>
The Japanese stock market was one of the few major markets to lose ground during
1996, producing a one-year total return of -1.8% in yen, and -12.2% when
measured in U.S. dollars. Since we owned no shares in this market, we avoided a
pitfall and improved the
2
<PAGE> 3
Fund's performance relative to the MSCI World Index, which allocates 17.7% of
the index to Japan.
During the year, we realized profits on several U.S. holdings and decreased our
exposure to U.S. stocks from 21.5% of total net assets to 19.2%. Because it
appreciated very sharply during 1995 and 1996, we had difficulty identifying
new, bargain-priced stocks in this market and we increased our holdings in
emerging markets stocks from slightly over 20% on December 31, 1995, to nearly
25% (the limit described in the prospectus) as of December 31, 1996. Emerging
markets had underperformed developed markets during the past three years, and in
our opinion, many of these stocks were undervalued during the latter part of
1996.
Looking forward, it is likely that we will continue our emphasis on cyclical
companies. Since we believe demand for telecommunications equipment should
remain strong, we also expect to retain our telecommunications stocks. However,
Japanese stocks remain the world's most expensive by far, and we do not
anticipate adding any to our portfolio until valuations fall to truly bargain
levels. As we noted in our past letters to shareholders, the Templeton Global
Opportunities Trust should perform well if the economies of the world are able
to grow at a reasonable rate. We believe there is potential for a period of
synchronized global economic growth, and have positioned the portfolio to take
advantage of such developments. We have also endeavored to eliminate holdings in
shares where valuations no longer appear attractive. We are hopeful that this
strategy will yield attractive long-term returns for our investors as it has so
often in the past.
<TABLE>
<CAPTION>
TEMPLETON GLOBAL
OPPORTUNITIES TRUST
Top 10 Industries on 12/31/96
As a Percentage of Total Net Assets
% of Total
Industry Net Assets
- -------- ----------
<S> <C>
Banking 11.8%
Forest Products & Paper 11.5%
Telecommunications 9.6%
Financial Services 7.3%
Metals & Mining 6.9%
Insurance 6.5%
Energy Sources 5.9%
Utilities - Electrical & Gas 5.0%
Electrical & Electronics 3.3%
Multi-Industry 3.2%
</TABLE>
This discussion reflects the strategies we employed for the Fund during the past
fiscal year, and includes our opinions as of the close of the period. Since
economic
3
<PAGE> 4
and market conditions are constantly changing, our strategies, evaluations,
conclusions and decisions regarding portfolio holdings may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the Fund.
<TABLE>
<CAPTION>
TEMPLETON GLOBAL
OPPORTUNITIES TRUST
Top 10 Holdings on 12/31/96
As a Percentage of Total Net Assets
% of Total
Company, Industry, Country Net Assets
- -------------------------- ----------
<S> <C>
Peregrine Investments Holdings Ltd.
Financial Services, Hong Kong 2.3%
Ace Limited
Insurance, Bermuda 1.9%
PT Bimantara Citra, fgn.
Multi-Industry, Indonesia 1.9%
Stadshypotek AS, A, 144a
Banking, Sweden 1.8%
Banco Nacional de Mexico SA, 7.00%, conv., 12/15/99
Bonds, Mexico 1.6%
Sparbanken Sverige AB, A, 144a
Banking, Sweden 1.6%
Softe SA, 4.25%, conv., 7/30/98, 144a
Bonds, Italy 1.6%
National Mutual Asia Ltd.
Insurance, Hong Kong 1.5%
Wascana Energy Inc.
Energy Sources, Canada 1.4%
Nokia AB, A
Telecommunications, Finland 1.4%
</TABLE>
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 11 OF THIS REPORT.
There are, of course, special risks involved with global investing related to
market, currency, economic, social, political and other factors. Developing
markets involve heightened risks related to the same factors, in addition to
those associated with the relatively small size and lesser liquidity of these
markets. These risks are discussed in the Fund's prospectus. While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. For example, the Hong Kong market has increased
857% in the last 15 years, but has suffered five declines of more than 20%
during that time.(3)
We thank you for the trust you have placed in us and look forward to helping you
meet your financial objectives in the years to come.
Sincerely,
/s/ Martin L. Flanagan
MARTIN L. FLANAGAN
President
Templeton Global Opportunities Trust
/s/ Howard J. Leonard
HOWARD J. LEONARD
Portfolio Manager
Templeton Global Opportunities Trust
3. SOURCE: BLOOMBERG. BASED ON QUARTERLY PERCENTAGE CHANGE OVER 15 YEARS ENDED
DECEMBER 31, 1996.
4
<PAGE> 5
PERFORMANCE SUMMARY
CLASS I
The Templeton Global Opportunities Trust - Class I reported a cumulative total
return of 24.19% for the one-year period ended December 31, 1996. Cumulative
total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains distributions, and does not include
the initial sales charge. We always maintain a long-term perspective when
managing the Fund, and we encourage shareholders to view their investments in a
similar manner. As you can see from the chart on page 6, the Fund delivered a
cumulative total return of more than 142% since inception on January 19, 1990.
The price of the Fund's shares, as measured by net asset value, increased by
$2.05, from $12.57 on December 31, 1995, to $14.62 on December 31, 1996. During
this time, shareholders received distributions of 35.5 cents ($0.355) per share
in income dividends, 1.0 cent ($0.01) in short-term capital gains, and 57.0
cents ($0.57) in long-term capital gains. Of course, past performance is not
predictive of future results, and distributions will vary depending on income
earned by the Fund, as well as any profits realized from the sale of securities
in the portfolio.
The graph on page 6 shows how a $10,000 investment in the Templeton Global
Opportunities Trust - Class I, during most of the time from inception on January
19, 1990 through December 31, 1996, has kept your purchasing power ahead of
inflation, as measured by the Consumer Price Index (CPI). It also shows that the
Fund has generally outperformed the unmanaged MSCI World Index, which tracks 22
equity markets worldwide. Please remember that the Fund's performance differs
from that of the index, because, among other things, the index does not contain
cash (the Fund generally carries a certain percentage of cash at any given
time), is not managed according to any investment strategy and includes no sales
charges or management expenses. Of course, one cannot invest directly in an
index.
5
<PAGE> 6
TEMPLETON GLOBAL
OPPORTUNITIES TRUST - CLASS I
Total Return Index Comparison
$10,000 Investment (1/19/90 - 12/31/96)
[LINE GRAPH]
<TABLE>
<CAPTION>
TEMPLETON
GLOBAL
OPPORTUNITIES MSCI
TRUST - I* WORLD CPI
<C> <C> <C> <C> <C> <C>
1/19/90 $ 9,428 $10,000 $10,000 MS World GD$ C P I $
Jan-90 $ 9,428 $ 9,820 $10,040 -1.80% 0.40%
Feb-90 $ 9,428 $ 9,401 $10,087 -4.27% 0.47%
Mar-90 $ 9,418 $ 8,835 $10,143 -6.02% 0.55%
Apr-90 $ 9,168 $ 8,709 $10,159 -1.42% 0.16%
May-90 $ 9,940 $ 9,628 $10,182 10.55% 0.23%
Jun-90 $ 9,930 $ 9,561 $10,237 -0.70% 0.54%
Jul-90 $10,261 $ 9,650 $10,276 0.93% 0.38%
Aug-90 $ 9,278 $ 8,748 $10,371 -9.34% 0.92%
Sep-90 $ 8,395 $ 7,827 $10,458 -10.53% 0.84%
Oct-90 $ 8,385 $ 8,560 $10,521 9.36% 0.60%
Nov-90 $ 8,646 $ 8,421 $10,544 -1.62% 0.22%
Dec-90 $ 8,646 $ 8,599 $10,544 2.11% 0.00%
Jan-91 $ 9,101 $ 8,915 $10,607 3.68% 0.60%
Feb-91 $ 9,878 $ 9,742 $10,623 9.27% 0.15%
Mar-91 $ 9,930 $ 9,456 $10,639 -2.93% 0.15%
Apr-91 $10,189 $ 9,532 $10,655 0.80% 0.15%
May-91 $10,666 $ 9,749 $10,687 2.28% 0.30%
Jun-91 $10,117 $ 9,149 $10,718 -6.16% 0.29%
Jul-91 $10,957 $ 9,582 $10,734 4.74% 0.15%
Aug-91 $11,092 $ 9,554 $10,765 -0.30% 0.29%
Sep-91 $11,206 $ 9,806 $10,812 2.64% 0.44%
Oct-91 $11,372 $ 9,967 $10,829 1.64% 0.15%
Nov-91 $10,947 $ 9,534 $10,860 -4.34% 0.29%
Dec-91 $11,526 $10,230 $10,868 7.30% 0.07%
Jan-92 $11,663 $10,043 $10,884 -1.83% 0.15%
Feb-92 $12,158 $ 9,871 $10,923 -1.71% 0.36%
Mar-92 $12,069 $ 9,408 $10,979 -4.69% 0.51%
Apr-92 $12,368 $ 9,541 $10,994 1.41% 0.14%
May-92 $12,933 $ 9,922 $11,009 4.00% 0.14%
Jun-92 $12,560 $ 9,592 $11,049 -3.33% 0.36%
Jul-92 $12,421 $ 9,618 $11,072 0.27% 0.21%
Aug-92 $12,079 $ 9,854 $11,103 2.45% 0.28%
Sep-92 $11,898 $ 9,765 $11,134 -0.90% 0.28%
Oct-92 $11,845 $ 9,502 $11,173 -2.69% 0.35%
Nov-92 $12,058 $ 9,674 $11,189 1.81% 0.14%
Dec-92 $12,316 $ 9,754 $11,181 0.83% -0.07%
Jan-93 $12,625 $ 9,789 $11,236 0.35% 0.49%
Feb-93 $12,957 $10,023 $11,275 2.39% 0.35%
Mar-93 $13,404 $10,606 $11,315 5.82% 0.35%
Apr-93 $13,771 $11,099 $11,346 4.65% 0.28%
May-93 $14,023 $11,357 $11,362 2.32% 0.14%
Jun-93 $13,920 $11,263 $11,378 -0.82% 0.14%
Jul-93 $14,344 $11,498 $11,378 2.08% 0.00%
Aug-93 $15,455 $12,027 $11,410 4.60% 0.28%
Sep-93 $15,420 $11,807 $11,434 -1.83% 0.21%
Oct-93 $16,360 $12,134 $11,481 2.77% 0.41%
Nov-93 $15,753 $11,449 $11,489 -5.64% 0.07%
Dec-93 $17,011 $12,011 $11,489 4.91% 0.00%
Jan-94 $17,952 $12,805 $11,520 6.61% 0.27%
Feb-94 $17,352 $12,641 $11,559 -1.28% 0.34%
Mar-94 $16,273 $12,099 $11,598 -4.29% 0.34%
Apr-94 $16,478 $12,475 $11,615 3.11% 0.14%
May-94 $16,593 $12,509 $11,623 0.27% 0.07%
Jun-94 $16,005 $12,475 $11,662 -0.27% 0.34%
Jul-94 $16,810 $12,715 $11,694 1.92% 0.27%
Aug-94 $17,462 $13,099 $11,741 3.02% 0.40%
Sep-94 $17,386 $12,757 $11,772 -2.61% 0.27%
Oct-94 $17,373 $13,123 $11,781 2.87% 0.07%
Nov-94 $16,580 $12,556 $11,796 -4.32% 0.13%
Dec-94 $16,329 $12,680 $11,796 0.99% 0.00%
Jan-95 $15,888 $12,493 $11,843 -1.48% 0.40%
Feb-95 $16,315 $12,678 $11,890 1.48% 0.40%
Mar-95 $16,399 $13,291 $11,930 4.84% 0.33%
Apr-95 $17,053 $13,758 $11,969 3.51% 0.33%
May-95 $17,706 $13,878 $11,993 0.87% 0.20%
Jun-95 $18,165 $13,876 $12,017 -0.01% 0.20%
Jul-95 $18,930 $14,573 $12,017 5.02% 0.00%
Aug-95 $18,430 $14,251 $12,048 -2.21% 0.26%
Sep-95 $18,916 $14,668 $12,072 2.93% 0.20%
Oct-95 $18,054 $14,439 $12,112 -1.56% 0.33%
Nov-95 $18,193 $14,943 $12,104 3.49% -0.07%
Dec-95 $18,415 $15,383 $12,095 2.94% -0.07%
Jan-96 $19,352 $15,664 $12,167 1.83% 0.59%
Feb-96 $19,649 $15,763 $12,205 0.63% 0.32%
Mar-96 $19,872 $16,028 $12,269 1.68% 0.52%
Apr-96 $20,588 $16,407 $12,317 2.37% 0.39%
May-96 $20,871 $16,424 $12,340 0.10% 0.19%
Jun-96 $20,692 $16,509 $12,348 0.52% 0.06%
Jul-96 $19,678 $15,928 $12,371 -3.52% 0.19%
Aug-96 $20,379 $16,115 $12,395 1.17% 0.19%
Sep-96 $20,990 $16,748 $12,434 3.93% 0.32%
Oct-96 $21,303 $16,868 $12,474 0.72% 0.32%
Nov-96 $22,541 $17,816 $12,498 5.62% 0.19%
Dec-96 $22,870 $17,535 $12,498 -1.58% 0.00%
</TABLE>
Templeton Global MSCI World Consumer
Opportunities Index(2) Price Index(3)
Trust-Class I(1)
1. INCLUDES ALL SALES CHARGES AND REPRESENTS THE CHANGE IN VALUE OF AN
INVESTMENT OVER THE PERIOD SHOWN. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
3. SOURCE: U.S. BUREAU OF LABOR STATISTICS.
<TABLE>
<CAPTION>
TEMPLETON GLOBAL
OPPORTUNITIES TRUST - CLASS I
Periods Ended December 31, 1996
Since
Inception
One-Year Three-Year Five-Year (1/19/90)
<S> <C> <C> <C> <C>
Cumulative
Total Return(1) 24.19% 34.44% 98.42% 142.57%
Average Annual
Total Return(2) 17.03% 8.21% 13.33% 12.64%
Value of $10,000
Investment(3) $11,703 $12,673 $18,697 $22,870
</TABLE>
<TABLE>
<CAPTION>
One-Year Total Return(4)
<S> <C> <C> <C> <C>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
6.85% 38.13% -4.09% 12.87% 24.19%
</TABLE>
1. CUMULATIVE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE PERIODS INDICATED AND DOES NOT INCLUDE THE SALES CHARGE. SEE NOTE BELOW.
2. AVERAGE ANNUAL TOTAL RETURN REPRESENTS THE AVERAGE ANNUAL CHANGE IN VALUE OF
AN INVESTMENT OVER THE PERIODS INDICATED AND INCLUDES THE MAXIMUM 5.75% INITIAL
SALES CHARGE. SEE NOTE BELOW.
3. THESE FIGURES REPRESENT THE VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE
FUND OVER THE PERIODS INDICATED AND INCLUDE THE MAXIMUM 5.75% INITIAL SALES
CHARGE. SEE NOTE BELOW.
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 THE SALES
CHARGE.
NOTE: PRIOR TO JULY 1, 1992, CLASS I SHARES WERE OFFERED AT A HIGHER SALES
CHARGE. THUS, ACTUAL TOTAL RETURN WOULD HAVE BEEN SOMEWHAT LOWER THAN NOTED
ABOVE. ALL TOTAL RETURN CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS DISTRIBUTIONS WHEN PAID.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET CONDITIONS,
CURRENCIES AND THE ECONOMIC, SOCIAL, AND POLITICAL CLIMATES OF THE COUNTRIES
WHERE INVESTMENTS ARE MADE. DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED
TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THE RELATIVELY SMALL
SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOUR SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR INITIAL COST. PAST PERFORMANCE IS NOT PREDICTIVE
OF FUTURE RESULTS.
6
<PAGE> 7
PERFORMANCE SUMMARY
CLASS II
The Templeton Global Opportunities Trust - Class II reported a cumulative total
return of 23.28% for the one-year period ended December 31, 1996. Cumulative
total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains distributions, and does not include
sales charges. We always maintain a long-term perspective when managing the
Fund, and we encourage shareholders to view their investments in a similar
manner.
The price of the Fund's shares, as measured by net asset value, increased by
$1.99, from $12.53 on December 31, 1995, to $14.52 on December 31, 1996. During
this time, shareholders received distributions of 29.47 cents ($0.2947) per
share in income dividends, 1.0 cent ($0.01) in short-term capital gains, and
57.0 cents ($0.57) in long-term capital gains. Of course, past performance is
not predictive of future results, and distributions will vary depending on
income earned by the Fund, as well as any profits realized from the sale of
securities in the portfolio.
The graph on page 8 shows how a $10,000 investment in the Templeton Global
Opportunities Trust - Class II, from inception on May 1, 1995, through December
31, 1996, has kept your purchasing power ahead of inflation, as measured by the
Consumer Price Index (CPI). It also shows that the Fund has generally
outperformed the unmanaged MSCI World Index, which tracks 22 equity markets
worldwide. Please remember that the Fund's performance differs from that of the
index, because, among other things, the index does not contain cash (the Fund
generally carries a certain percentage of cash at any given time), is not
managed according to any investment strategy and includes no sales charges or
management expenses. Of course, one cannot invest directly in an index.
7
<PAGE> 8
TEMPLETON GLOBAL
OPPORTUNITIES TRUST - CLASS II
Total Return Index Comparison
$10,000 Investment (5/1/95 - 12/31/96)
[LINE GRAPH]
<TABLE>
<CAPTION>
TEMPLETON
GLOBAL
OPPORTUNITIES MSCI
TRUST - II* WORLD CPI
<C> <C> <C> <C> <C> <C>
5/1/95 $ 9,903 $10,000 $10,000 MS World GD$ C P I $
May-95 $10,275 $10,087 $10,020 0.87% 0.20%
Jun-95 $10,533 $10,086 $10,040 -0.01% 0.20%
Jul-95 $10,969 $10,592 $10,040 5.02% 0.00%
Aug-95 $10,679 $10,358 $10,066 -2.21% 0.26%
Sep-95 $10,953 $10,662 $10,086 2.93% 0.20%
Oct-95 $10,452 $10,495 $10,120 -1.56% 0.33%
Nov-95 $10,517 $10,862 $10,112 3.49% -0.07%
Dec-95 $10,639 $11,181 $10,105 2.94% -0.07%
Jan-96 $11,174 $11,386 $10,165 1.83% 0.59%
Feb-96 $11,346 $11,457 $10,198 0.63% 0.32%
Mar-96 $11,467 $11,650 $10,251 1.68% 0.52%
Apr-96 $11,864 $11,926 $10,291 2.37% 0.39%
May-96 $12,020 $11,938 $10,310 0.10% 0.19%
Jun-96 $11,916 $12,000 $10,316 0.52% 0.06%
Jul-96 $11,329 $11,578 $10,336 -3.52% 0.19%
Aug-96 $11,717 $11,713 $10,356 1.17% 0.19%
Sep-96 $12,063 $12,173 $10,389 3.93% 0.32%
Oct-96 $12,236 $12,261 $10,422 0.72% 0.32%
Nov-96 $12,945 $12,950 $10,442 5.62% 0.19%
Dec-96 $13,116 $12,745 $10,442 -1.58% 0.00%
</TABLE>
TOTAL RETURNS WITHOUT SALES CHARGES FOR EACH OF THE LAST 5 YEARS ENDED 12/31
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLASS I 6.85% 38.13% -4.01% 12.77% 24.19%
</TABLE>
VALUE OF $10,000 INVESTMENT (INCLUDES ALL SALES CHARGES)
<TABLE>
<CAPTION>
1-YEAR 5-YEAR INCEPTION
------ ------ ---------
<S> <C> <C> <C>
CLASS I $11,703 $18,697 $22,870
CLASS II $12,102 n/a $13,116
</TABLE>
Templeton Global Opportunities Trust - Class II (1)
MSCI World Index (2)
Consumer Price Index (3)
1. INCLUDES ALL SALES CHARGES AND REPRESENTS THE CHANGE IN VALUE OF AN
INVESTMENT OVER THE PERIOD SHOWN. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
3. SOURCE: U.S. BUREAU OF LABOR STATISTICS.
<TABLE>
<CAPTION>
TEMPLETON GLOBAL
OPPORTUNITIES TRUST - CLASS II
Periods Ended December 31, 1996
Since
Inception
One-Year (5/1/95)
<S> <C> <C>
Cumulative Total Return(1) 23.28% 32.44%
Average Annual Total Return(2) 21.02% 17.63%
Value of $10,000 Investment(3) $12,102 $13,116
</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 MAXIMUM 1.00% INITIAL
SALES CHARGE AND THE 1.00% CONTINGENT DEFERRED SALES CHARGE (CDSC) APPLICABLE TO
SHARES REDEEMED WITHIN 18 MONTHS OF PURCHASE.
3. THESE FIGURES REPRESENT THE VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE
FUND OVER THE PERIODS INDICATED AND INCLUDE ALL SALES CHARGES.
ALL TOTAL RETURN CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS WHEN PAID. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE
WITH MARKET CONDITIONS, CURRENCIES AND THE ECONOMIC, SOCIAL, AND POLITICAL
CLIMATES OF THE COUNTRIES WHERE INVESTMENTS ARE MADE. DEVELOPING MARKETS INVOLVE
HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED
WITH THE RELATIVELY SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOUR
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR INITIAL COST. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE> 9
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE--CLASS I
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.57 $ 11.84 $ 14.46 $ 10.75 $ 10.94
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income .30 .16 .09 .12 .14
Net realized and unrealized gain (loss) 2.69 1.33 (.63) 3.97 .61
-------- -------- -------- -------- --------
Total from investment operations 2.99 1.49 (.54) 4.09 .75
-------- -------- -------- -------- --------
Distributions:
Dividends from net investment income (.30) (.16) (.09) (.11) (.14)
Amount in excess of net investment income (.06) -- -- -- --
Distributions from net realized gains (.58) (.60) (1.99) (.27) (.65)
Amount in excess of net realized gains -- -- -- -- (.15)
-------- -------- -------- -------- --------
Total distributions (.94) (.76) (2.08) (.38) (.94)
-------- -------- -------- -------- --------
Change in net asset value 2.05 .73 (2.62) 3.71 (.19)
-------- -------- -------- -------- --------
Net asset value, end of year $ 14.62 $ 12.57 $ 11.84 $ 14.46 $ 10.75
======== ======== ======== ======== ========
TOTAL RETURN* 24.19% 12.87% (4.09)% 38.13% 6.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000) $634,478 $510,777 $476,822 $410,747 $248,807
Ratio of expenses to average net assets 1.45% 1.52% 1.53% 1.51% 1.63%
Ratio of net investment income to average net assets 2.10% 1.19% .71% 1.07% 1.36%
Portfolio turnover rate 18.54% 15.54% 37.31% 40.56% 22.03%
Average commission rate paid (per share) $ .0028
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS.
</TABLE>
9
<PAGE> 10
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE--CLASS II
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 1, 1995+
YEAR ENDED THROUGH
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period $ 12.53 $ 12.26
------- -------
Income from investment operations:
Net investment income .24 .02
Net realized and unrealized gain 2.63 .88
------- -------
Total from investment operations 2.87 .90
------- -------
Distributions:
Dividends from net investment income (.24) (.12)
Amount in excess of net investment income (.06) --
Distributions from net realized gains (.58) (.51)
------- -------
Total distributions (.88) (.63)
------- -------
Change in net asset value 1.99 .27
------- -------
Net asset value, end of year $ 14.52 $ 12.53
======= =======
TOTAL RETURN* 23.28% 7.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000) $ 11,622 $ 2,264
Ratio of expenses to average net assets 2.20% 2.22%**
Ratio of net investment income to average net assets 1.12% (.01)%**
Portfolio turnover rate 18.54% 15.54%
Average commission rate paid (per share) $ .0028
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE CONTINGENT DEFERRED SALES CHARGE. NOT ANNUALIZED FOR PERIODS OF LESS
THAN ONE YEAR.
** ANNUALIZED.
+ COMMENCEMENT OF OFFERING OF SALES.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 80.3%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUTOMOBILES: 1.3%
* Ciadea SA Arg. 47,099 $ 223,760
Volvo AB, B Swe. 384,000 8,474,087
------------
8,697,847
- ---------------------------------------------------------------------------------------------------------------------
BANKING: 9.0%
Banco Ganadero SA, ADR C Col. 85,000 1,827,500
Banco Popular Espanol SA Sp. 35,000 6,874,639
BPI Socieda de Gestora de Participacoes Socias
SA Port. 85,000 1,058,046
* BPI Socieda de Gestora de Participacoes Socias,
new Port. 32,300 381,225
Ergo Bank SA Gr. 50,050 2,536,886
Fokus Bank AS Nor. 1,000,000 6,867,357
Korea Long Term Credit Bank Kor. 24,899 438,656
National Australia Bank Ltd. Aus. 424,214 4,990,356
Shinhan Bank Co. Ltd. Kor. 76,935 1,231,586
Sparbanken Sverige AB, A Swe. 40,400 693,094
Sparbanken Sverige AB, A, 144A Swe. 601,700 10,322,646
Stadsyhpotek AS, A, 144A Swe. 426,600 11,697,354
Union Bank of Norway, Primary Capital Cert. Nor. 124,800 3,903,669
Union Bank of Norway, Primary Capital Cert. 144A Nor. 175,200 5,480,151
------------
58,303,165
- ---------------------------------------------------------------------------------------------------------------------
BROADCASTING & PUBLISHING: 0.1%
Sing Tao Holdings Ltd. H.K. 1,911,800 834,227
- ---------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS: 0.1%
Pioneer International Ltd. Aus. 100,000 298,069
- ---------------------------------------------------------------------------------------------------------------------
BUSINESS & PUBLIC SERVICES: 1.2%
Hyder PLC U.K. 79,780 1,016,145
Laidlaw Inc., B Can. 600,000 6,987,697
------------
8,003,842
- ---------------------------------------------------------------------------------------------------------------------
CHEMICALS: 0.9%
Akzo Nobel NV Neth. 2,000 273,385
Borsodchem RT, GDR, 144A Hun. 11,700 294,255
European Vinyls Corp. EVC International NV Neth. 117,400 3,726,337
Gujarat Narmada Valley Fertilizers Co. Ltd.,
GDR, 144A Ind. 517,600 1,423,400
Gujarat Narmanda Valley Fertilizers Co. Ltd.,
ADR Ind. 83,600 229,900
------------
5,947,277
- ---------------------------------------------------------------------------------------------------------------------
CONSTRUCTION & HOUSING: 0.2%
Kaufman & Broad Home Corp. U.S. 77,000 991,375
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DATA PROCESSING & REPRODUCTION: 2.1%
* Bay Networks Inc. U.S. 300,000 $ 6,262,500
* Newbridge Networks Corp. Can. 256,000 7,232,000
* Optical Data Systems U.S. 12,400 148,800
------------
13,643,300
- ---------------------------------------------------------------------------------------------------------------------
ELECTRICAL & ELECTRONICS: 3.2%
ABB AG, br. Swtz. 7,248 9,016,003
* DSC Communications Corp. U.S. 139,000 2,484,625
Motorola Inc. U.S. 10,000 613,750
Philips Electronics NV Neth. 135,000 5,473,501
Scitex Corp. Ltd. ISREL 360,000 3,420,000
------------
21,007,879
- ---------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS & INSTRUMENTS: 1.0%
Intel Corp. U.S. 48,000 6,285,000
- ---------------------------------------------------------------------------------------------------------------------
ENERGY SOURCES: 5.9%
Amerada Hess Corp. U.S. 50,000 2,893,750
* Rao Gazprom, ADR, 144A RUSS 390,300 6,888,795
Repsol SA Sp. 25,000 958,983
Societe Elf Aquitane SA Fr. 55,000 5,009,932
Total SA, B Fr. 100,000 8,138,862
Valero Energy Corp. U.S. 161,400 4,620,075
* Wascana Energy Inc. Can. 810,000 9,344,675
------------
37,855,072
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: 7.3%
Alex Brown Inc. U.S. 40,000 2,900,000
Federal National Mortgage Assn. U.S. 220,000 8,195,000
London Pacific Group Ltd. U.K. 1,243,900 4,464,266
Merrill Lynch & Co. Inc. U.S. 100,000 8,150,000
Morgan Stanley Group U.S. 151,000 8,625,875
Peregrine Investments Holdings Ltd. H.K. 8,550,000 14,647,036
* Peregrine Investments Holdings Ltd., wts. H.K. 775,000 247,996
------------
47,230,173
- ---------------------------------------------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS: 0.5%
Amway Asia Pacific Ltd. U.S. 10,600 449,175
Cafe de Coral Holdings Ltd. H.K. 7,599,000 2,038,648
* Grupo Embotellador de Mexico SA, B Mex. 370,200 540,816
------------
3,028,639
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREST PRODUCTS & PAPER: 11.5%
* Asia Pacific Resources International, A Indo. 1,099,300 $ 6,183,562
Assidomaen AB Swe. 234,900 6,544,279
Boise Cascade Corp. U.S. 100,000 3,175,000
Bowater Inc. U.S. 180,000 6,772,500
Carter Holt Harvey Ltd. N.Z. 3,084,890 7,000,556
* Empaques Ponderosa SA de CV, B Mex. 3,000,000 1,855,945
* Enso OY, R Fin. 625,000 5,067,935
Fletcher Challenge Ltd., Forestry Division N.Z. 4,559,850 7,639,884
Georgia-Pacific Corp. U.S. 75,000 5,400,000
International Paper Co. U.S. 120,000 4,845,000
Mead Corp. U.S. 90,000 5,231,250
Portucel Industrial Empresa Product Celulose,
ADR, 144A Port. 1,094,800 6,354,853
PT Barito Pacific Timber, fgn. Indo. 3,884,000 2,384,335
Rayonier Inc. U.S. 155,000 5,948,125
------------
74,403,224
- ---------------------------------------------------------------------------------------------------------------------
HEALTH & PERSONAL CARE: 1.9%
Astra AB, B Swe. 100,000 4,824,153
Medeva PLC U.K. 988,516 4,326,684
Windmere-Durable Holdings Inc. U.S. 225,000 2,896,875
------------
12,047,712
- ---------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS: 1.2%
Goodyear Tire & Rubber Co. U.S. 150,000 7,706,250
- ---------------------------------------------------------------------------------------------------------------------
INSURANCE: 5.7%
Ace Ltd. Bmu. 203,000 12,205,375
American International Group Inc. U.S. 50,000 5,412,500
GIO Austrailia Holdings Ltd. Aus. 2,000,000 5,118,830
National Mutual Asia Ltd. H.K. 10,338,000 9,824,074
Presidential Life Corp. U.S. 375,000 4,523,437
------------
37,084,216
- ---------------------------------------------------------------------------------------------------------------------
LEISURE & TOURISM: 1.4%
Kuoni Reisen Holding AG, B Swtz. 3,660 8,886,814
- ---------------------------------------------------------------------------------------------------------------------
MACHINERY & ENGINEERING: 2.5%
Rauma, ADS Fin. 353,700 7,250,850
VA Technologie AG, br., 144A Aust. 57,300 8,991,399
------------
16,242,249
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MERCHANDISING: 0.6%
* Cifra SA, B Mex. 501,000 $ 610,976
* Waban Inc. U.S. 140,000 3,640,000
------------
4,250,976
- ---------------------------------------------------------------------------------------------------------------------
METALS & MINING: 6.9%
Aluminum Co. of America U.S. 70,000 4,462,500
Boehler Uddeholm AG, 144A Aust. 58,500 4,186,095
Companhia Siderurgica Nacional Braz. 151,111,000 4,290,034
Elkem AS Nor. 501,000 8,247,883
* Inmet Mining Corp. Can. 561,000 2,723,997
Outokumpu OY, A Fin. 341,775 5,832,465
Pechiney SA, A Fr. 103,125 4,323,891
Trelleborg AB, B Swe. 324,500 4,306,143
Vale do Rio Doce, ADR Braz. 330,000 6,351,650
------------
44,724,658
- ---------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY: 2.3%
BTR PLC U.K. 602,800 2,932,730
PT Bimantara Citra, fgn. Indo. 8,975,000 11,969,200
------------
14,901,930
- ---------------------------------------------------------------------------------------------------------------------
REAL ESTATE: 0.8%
PT Jaya Properties, fgn. Indo. 3,598,000 5,026,842
- ---------------------------------------------------------------------------------------------------------------------
RECREATION & OTHER CONSUMER GOODS: 0.7%
Yue Yuen Industrial (Holdings) Ltd. H.K. 12,268,000 4,679,113
- ---------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: 4.1%
Cpt-Telefonica Del Peru SA, ADR B PER. 162,300 3,063,412
Lucent Technologies Inc. U.S. 121,000 5,596,250
Nokia AB, "A" Fin. 160,000 9,286,957
Teledanmark AS, B Den. 9,500 524,283
Telefonica de Espana SA Sp. 340,000 7,896,014
------------
26,366,916
- ---------------------------------------------------------------------------------------------------------------------
TEXTILES & APPAREL: 0.3%
* Dhan Fibres, 144A Pak. 13,575,000 1,693,492
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996 (cont.)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION: 2.4%
Airborne Freight Corp. U.S. 200,000 $ 4,675,000
Caliber Systems Inc. U.S. 7,200 138,600
*Guangshen Railway Co. Ltd., ADR CHINA 163,200 3,366,000
Qantas Airways Ltd., ADR, 144A Aus. 182,100 2,981,888
Railtrack Group PLC U.K. 301,600 2,002,090
Shanghai Hai Xing Shipping Co., H CHINA 20,611,000 2,398,332
------------
15,561,910
- -----------------------------------------------------------------------------------------------------------------------
UTILITIES ELECTRICAL & GAS: 5.0%
*British Energy Ltd., 144A U.K. 2,942,800 7,410,690
Cia Energetica de Minas Gerais, ADR Braz. 225,000 7,665,287
Consolidated Electric Power Asia Ltd., ADR, 144A H.K. 295,000 6,858,750
Electricidad de Caracas Venz. 1,522,242 1,543,801
Iberdrola SA Sp. 610,000 8,643,487
------------
32,122,015
- -----------------------------------------------------------------------------------------------------------------------
WHOLESALE & INTERNATIONAL TRADE: 0.2%
Sime Darby Hongkong Ltd. H.K. 1,127,000 1,420,680
------------
TOTAL COMMON STOCKS (cost $395,505,299) 519,244,862
- -----------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: 5.7%
- -----------------------------------------------------------------------------------------------------------------------
ABN Amro NV, conv., pfd. Neth. 45,500 2,822,502
Banco Bradesco SA, pfd. Braz. 72,680,000 526,687
Cementos Diamante, ADR, pfd., 144A Col. 174,000 2,305,500
Cia de Inversiones en Telecomunicaciones SA,
7.00%, pfd. Arg. 138,707 7,282,117
Jardine Strategic Holdings Ltd., 7.50%, conv.,
pfd. H.K. 5,054,000 6,039,530
Nacional Financiera SA, 11.25%, conv., pfd. Mex. 226,050 7,685,700
Philippine Long Distance Telephone Co., 7.00%,
cnv., pfd. ser3 Phil. 105,000 5,355,000
Telebras-Telecomunicacoes Brasileiras SA, ADR,
pfd. Braz. 65,000 4,972,500
------------
TOTAL PREFERRED STOCKS (cost $31,417,126) 36,989,536
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Investment Portfolio, December 31, 1996 (cont.)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS: 4.9%
- -----------------------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7.00%, conv.,
12/15/99 Mex. 10,910,000 $ 10,364,500
Brierley Investments Ltd., 9.00%, conv., 6/30/98 N.Z. 849,949 708,058
Credit Suisse Group, 4.875%, conv., 11/19/02 Swtz. 2,800,000 4,396,000
Italy Govt., 5.00%, conv., 6/28/01 Itl. 5,235,000 5,169,562
Sasib International, 9.25%, conv., 12/31/97 Itl. 1,775,000,000 626,402
Softe SA, 4.25%, conv., 7/30/98, 144A Itl. 8,980,000,000 10,129,156
------------
TOTAL BONDS (cost $28,220,140) 31,393,678
- -----------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 9.1% (cost $58,627,435)
- -----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 4.78% to 5.01% with
maturities to 3/27/97 U.S. 59,026,000 58,641,640
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 100.0% (cost $513,770,000) 646,269,716
OTHER ASSETS, LESS LIABILITIES: (170,124)
------------
TOTAL NET ASSETS: 100.0% $646,099,592
============
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 17
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $513,770,000) $646,269,716
Cash 59,382
Receivables:
Investment securities sold 18,829,556
Fund shares sold 702,524
Dividends and interest 1,327,446
-----------
Total assets 667,188,624
-----------
Liabilities:
Payables:
Investment securities purchased 19,432,008
Fund shares redeemed 376,968
Accrued expenses 1,280,056
-----------
Total liabilities 21,089,032
-----------
Net assets, at value $646,099,592
===========
Net assets consist of:
Distributions in excess of net
investment income $ (2,559,436)
Net unrealized appreciation 132,499,716
Accumulated net realized gain 11,166,506
Net capital paid in on shares of
beneficial interest 504,992,806
-----------
Net assets, at value $646,099,592
===========
Class I
Net asset value per share
($634,477,661 / 43,399,931 shares
outstanding) $ 14.62
===========
Maximum offering price
($14.62 / 94.25%) $ 15.51
===========
Class II
Net asset value per share
($11,621,931 / 800,226 shares
outstanding) $ 14.52
===========
Maximum offering price
($14.52 / 99.0%) $ 14.67
===========
</TABLE>
STATEMENT OF OPERATIONS
for the year ended December 31, 1996
<TABLE>
<S> <C> <C>
Investment income:
(net of $1,426,590 foreign
taxes withheld)
Dividends $15,768,527
Interest 4,704,920
-----------
Total income $ 20,473,447
Expenses:
Management fees (Note 3) 4,616,385
Administrative fees
(Note 3) 809,015
Distribution fees (Note 3)
Class I 1,425,391
Class II 71,350
Transfer agent fees
(Note 3) 755,000
Custodian fees 244,660
Reports to shareholders 283,000
Audit fees 36,000
Legal fees 7,000
Registration and filing
fees 67,000
Trustees' fees and expenses 72,000
Other 9,834
-----------
Total expenses 8,396,635
------------
Net investment income 12,076,812
Realized and unrealized gain
(loss):
Net realized gain (loss)
on:
Investments 29,237,506
Foreign currency
transactions (223,643)
-----------
29,013,863
Net unrealized appreciation
on investments 83,861,546
-----------
Net realized and
unrealized gain 112,875,409
------------
Net increase in net assets
resulting from operations $124,952,221
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 18
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 12,076,812 $ 5,988,672
Net realized gain on investment and foreign currency transactions 29,013,863 22,985,453
Net unrealized appreciation 83,861,546 30,619,809
------------ ------------
Net increase in net assets resulting from operations 124,952,221 59,593,934
Distributions to shareholders:
From net investment income
Class I (12,133,064) (5,674,514)
Class II (164,600) (19,476)
In excess of net investment income
Class I (2,513,780) --
Class II (45,656) --
From net realized gain
Class I (23,782,315) (23,792,243)
Class II (343,200) (84,546)
Capital share transactions (Note 2)
Class I 38,648,962 3,824,434
Class II 8,440,010 2,371,175
------------ ------------
Net increase in net assets 133,058,578 36,218,764
Net assets:
Beginning of year 513,041,014 476,822,250
------------ ------------
End of year $646,099,592 $513,041,014
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE> 19
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Global Opportunities Trust (the Fund) is a Massachusetts business
trust and an open-end, diversified management investment company registered
under the Investment Company Act of 1940. The Fund seeks long-term capital
growth through a flexible policy of investing in global securities. The
following summarizes the Fund's significant accounting policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange on
which the securities are traded. Over-the-counter securities for which no sale
is reported are valued at the mean between the last current bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by management and approved by
the Board of Trustees.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net 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 differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
E. ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity 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 expenses during the reporting
period. Actual results could differ from those estimates.
19
<PAGE> 20
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF BENEFICIAL STOCK
The Fund offers two classes of shares: Class I shares and Class II shares.
Shares of each class are identical except for their initial sales load, a
contingent deferred sales charge on Class II shares, distribution fees, and
voting rights on matters affecting a single class. At December 31, 1996, there
were an unlimited number of shares of beneficial interest authorized for each
class of shares ($0.01 par value). Transactions in the Fund's shares were as
follows:
<TABLE>
<CAPTION>
CLASS I
-------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold 7,047,189 $ 96,865,915 5,371,682 $ 67,759,190
Shares issued on reinvestment of
distributions 2,459,156 34,358,478 2,184,017 26,504,181
Shares redeemed (6,755,860) (92,575,431) (7,163,041) (90,438,937)
--------- ----------- --------- -----------
Net increase 2,750,485 $ 38,648,962 392,658 $ 3,824,434
========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS II
-------------------------------------------------------
FOR THE PERIOD
YEAR ENDED MAY 1, 1995 THROUGH
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold 610,014 $ 8,301,964 196,010 $ 2,576,233
Shares issued on reinvestment of
distributions 35,561 497,767 6,729 81,954
Shares redeemed (25,995) (359,721) (22,093) (287,012)
--------- ----------- --------- -----------
Net increase 619,580 $ 8,440,010 180,646 $ 2,371,175
========= =========== ========= ===========
</TABLE>
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain Officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI), Franklin Templeton Services, Inc. (FTSI),
Franklin Templeton Distributors, Inc. (FTD) and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TICI equal, on an annual
basis, to 0.80% of the average daily net assets of the Fund. The Investment
Manager has entered into a Sub-Advisory Agreement with Dean Witter InterCapital,
Inc. (InterCapital) a subsidiary of Dean Witter, Discover & Co. whereby
InterCapital provides the Investment Manager with economic, market, industry,
asset allocation and foreign currency research. For its services, the Investment
Manager pays InterCapital a fee equal, on an annual basis, to 0.25% of the
Fund's average daily net assets. The Fund pays FTSI monthly an administrative
fee of 0.15% per annum on the first $200 million of the Company's aggregate
average daily net assets, 0.135% of the next $500 million, 0.10% of the next
$500 million, and 0.075% per annum of such average net assets in excess of $1.2
billion. For the year ended December 31, 1996, FTD received net commissions of
$170,283 from the sale of the Fund's shares and FTIS received fees of $755,000.
20
<PAGE> 21
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
Under the distribution plans for Class I and Class II shares, the Fund
reimburses FTD quarterly, the substantial portion of which is paid to Dean
Witter, Discover & Co. and other dealers who distribute the Fund's shares, for
FTD's costs and expenses in connection with any activity that is primarily
intended to result in a sale of Fund shares, subject to a maximum of 0.25% and
1.00% per annum of the average daily net assets of Class I and Class II shares,
respectively. Under the Class I distribution plan, costs and expenses exceeding
the maximum may be reimbursed in subsequent periods. At December 31, 1996,
unreimbursed expenses amounted to $1,280,292. Class II shares redeemed within 18
months are subject to a contingent deferred sales charge. Contingent deferred
sales charges of $2,696 were paid to FTD for the year ended December 31, 1996.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel for
the Fund, which firm received fees for the year ended December 31, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the year
ended December 31, 1996 aggregated $96,531,653 and $97,393,810, respectively.
The cost of securities for federal income tax purposes is $519,803,084. Realized
gains and losses are reported on an identified cost basis.
At December 31, 1996, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $162,477,829
Unrealized depreciation (36,011,197)
------------
Net unrealized appreciation $126,466,632
============
</TABLE>
The amounts distributed from net investment income include $3,200,000
attributable to the mark to market income tax rules for passive foreign
investment companies which is included in unrealized appreciation under
generally accepted accounting principles.
21
<PAGE> 22
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Templeton Global Opportunities Trust
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of Templeton Global Opportunities Trust as of December
31, 1996, 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, 1996, 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 Global Opportunities Trust as of December 31, 1996, 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 SIGNATURE]
New York, New York
January 31, 1997
22
<PAGE> 23
FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST -- Call 1-800/DIAL BEN (1-800/342-5236) today for a free
descriptive brochure and prospectus on any of the funds listed below. The
prospectus contains more complete information, including fees, charges and
expenses, and should be read carefully before investing or sending money.
GLOBAL GROWTH
Franklin Global Health Care Fund
Franklin Templeton Japan 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
Franklin Templeton German
Government Bond Fund
Franklin Templeton
Global Currency Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High
Income Currency Fund
Templeton Americas
Government Securities Fund
GROWTH
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
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES:
Franklin Templeton
Conservative Target Fund
Franklin Templeton
Moderate Target Fund
Franklin Templeton
Growth Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Investment
Grade Income Fund
Franklin Short-Intermediate U.S.
Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FOR NON-U.S. INVESTORS:
Franklin Tax-Advantaged
High Yield Securities Fund
Franklin Tax-Advantaged
International Bond Fund
Franklin Tax-Advantaged U.S.
Government Securities Fund
FOR CORPORATIONS:
Franklin Corporate Qualified
Dividend Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan*
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee**
Texas
Virginia
Washington**
VARIABLE ANNUITIES
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*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.
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.
12/96.1
<PAGE> 24
TEMPLETON
GLOBAL
OPPORTUNITIES
TRUST
Annual Report
December 31, 1996
Templeton Global Opportunities Trust
Auditors McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800-342-5236
This report must be preceded or accompanied by the current prospectus of the
Templeton Global Opportunities Trust, which contains more complete information
including risk factors, charges and expenses. Like any investment in
securities, the Fund's portfolio will be subject to the risk of loss from
market, currency, economic, political, and other factors, as well as
investment decisions by the Investment Manager which will not always be
profitable or wise. The Fund and 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.
[Global Backround]
TL415 A96 2/97
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