ANNUAL
REPORT
DECEMBER 31, 1998
TEMPLETON GLOBAL
OPPORTUNITIES TRUST
[FRANKLIN TEMPLETON LOGO]
PAGE
[50th ANNIVERSARY SEAL]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently he devotes all of his time and efforts to the John
Templeton Foundation. A major portion of his assets remain invested in the
Templeton funds which are managed by many of the investment professionals he
selected and trained.
[PHOTOGRAPH, HOWARD J. LEONARD APPEARS HERE]
HOWARD J. LEONARD
Portfolio Manager
Templeton Global Opportunities Trust
PAGE
SHAREHOLDER LETTER
Your Fund's Goal: Templeton Global Opportunities Trust seeks long-term capital
growth through a flexible policy of investing in the equity and debt securities
of companies and governments of any nation.
Dear Shareholder:
This annual report of Templeton Global Opportunities Trust covers the fiscal
year ended December 31, 1998. During the reporting period, financial turmoil in
Russia coupled with the aftermath of the 1997 Asian currency crisis drove many
investors to the relative safety of large-capitalization U.S. stocks. This
contributed to another year of stellar returns for U.S. equity markets, even in
the face of relatively weak earnings forecasts and signs of global economic
weakness. Continuing high valuations of U.S. stocks made it difficult to find
domestic equities that met our strict value criteria, and we held a large cash
position throughout the year. Within this environment, the Fund's Class I shares
posted a -0.61% 12-month cumulative total return, substantially underperforming
the Fund's benchmark, the Morgan Stanley Capital International(R) (MSCI) All
Country World Free Index, as
CONTENTS
Shareholder Letter ..................... 1
Performance Summary .................... 6
Financial Highlights &
Statement of Investments ...............10
Financial Statements ...................17
Notes to Financial Statements ..........20
Independent Auditor's Report ...........23
Tax Designation ........................24
[PYRAMID GRAPH]
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 12 of
this report.
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
12/31/98
[PIE GRAPH]
[This charts shows in pie format the geographic distribution breakdown of
securities in Templeton Global Opportunities Trust on December 31, 1998, based
on total net assets.]
Europe 35.6%
North America 17.2%
Latin America 10.7%
Asia 4.0%
Australia/New Zealand 4.0%
Middle East/Africa 0.6%
Fixed Income Securities 3.0%
Short-Term Investments & Other Net Assets 24.9%
discussed in the Performance Summary on page 6.(1) The Fund's underperformance
was due mainly to its heavy weighting in cash, our small-cap stocks' poor
performance, and its greater exposure to emerging markets, almost all of which
suffered declines in 1998.
Many investors fleeing the carnage of Asian stock markets seized upon U.S. and
European technology and Internet stocks whose prices seemed to be rising out of
proportion to their earnings potential. During the period, most of these stocks
did not meet our value criteria for new purchases. The Fund did have exposure,
however, to some technology stocks (such as Nokia Corp., A, Lucent Technologies
Inc., Newbridge Networks Corp., Bay Networks Inc., and DSC Communications Corp.)
that we had purchased several years ago when, according to our analysis, they
were trading at much lower multiples of future earnings potential.
Unfortunately, our technology weighting was not sufficient to offset the
weakness in our cyclical and emerging-market holdings.
The Fund's performance also was hurt by the spread of the "Asian flu" to Latin
America. After Russia's economic meltdown in late summer, many investors became
concerned that Brazil
(1.) Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
2
PAGE
and Venezuela also might encounter repayment difficulties. Even though Latin
American share prices already were among the world's lowest, selling pressure in
these markets intensified, and many equities fell in value. However, at the end
of the reporting period many of our Brazilian stocks were trading below book
value at single-digit price-to-earnings multiples, and we believe they have the
potential to ultimately provide positive returns. In our view, these companies
have strong balance sheets and they appear to be positioned to withstand
short-term economic weakness.
During the period under review, we were frustrated in our search for attractive
long-term values in Asia. Although we believe that some Asian economies have
begun to approach their low point, damage done to their banking and corporate
sectors will take much time and money to repair. We are particularly concerned
that while many companies will begin to see improving sales and operating
earnings in 1999 and 2000, earnings per share may be diluted by the need for new
equity issues to repair weakened balance sheets. Moreover, continued economic
problems in Japan and China could pose additional challenges for the region. We
therefore maintained a low Asian weighting, adding only Hong Kong
Telecommunications Ltd., a company we consider to be strongly capitalized, to
the Fund's portfolio.
TOP 10 COUNTRIES (EQUITY)
12/31/98
[This table shows the top 10 countries for equity securities represented in
Templeton Global Opportunities Trust on December 31, 1998, based on total net
assets.]
% OF TOTAL
COUNTRY NET ASSETS
----------------------------
U.S. 12.3%
Brazil 6.0%
U.K. 5.8%
Sweden 5.4%
Spain 5.4%
Finland 3.8%
Mexico 3.5%
France 3.3%
Canada 3.3%
Switzerland 3.1%
3
PAGE
TOP 10 EQUITY HOLDINGS
12/31/98
[This table lists the top 10 equity holdings, including industruy and country or
origin, of Templeton Global Opportunities Trust as of December 31, 1998, based
on total net assets.]
COMPANY % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
---------------------------------------------------------------
Nokia Corp., A
Telecommunications, Finland 3.0%
Lucent Technologies Inc.
Telecommunications, U.S. 3.0%
Foreningssparbanken AB, A
Banking, Sweden 2.4%
Fannie Mae
Financial Services, U.S. 2.4%
Telefonica SA
Telecommunications, Spain 2.2%
Kuoni Reisen Holding AG, B
Leisure & Tourism, Switzerland 2.1%
Muenchener Rueckversicherungs-Gesellschaft
Insurance, Germany 1.8%
General Electric Co. Plc.
Electrical & Electronics, U.K. 1.7%
British Energy Ltd., 144A
Utilities Electrical & Gas, U.K. 1.7%
Intel Corp.
Electronic Components &
Instruments, U.S. 1.7%
Looking forward, we will seek to maintain an appropriate degree of
diversification while scouring the globe for stocks whose prices we believe are
selling at a low value in relation to their long-term earnings potential. This
may be difficult since many of the world's stock markets are already trading at
record high levels. But we believe that following this strategy should be
helpful in offering our shareholders the potential for attractive long-term
returns.
There are, of course, special risks involved with global investing related to
market, currency, economic, social, political and other factors. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity.
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.
In fact, the Hong Kong equity market has increased 1,049% in the last 15 years,
but has suffered five declines of more than 20% during that time.(2) These
special risks and other considerations are discussed in the Fund's prospectus.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of December 31, 1998, the end of the
2. Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended December 31, 1998. Market return is measured in Hong Kong dollars.
4
PAGE
reporting period. However, market and economic conditions are changing
constantly, which can be expected to affect our strategies and the Fund's
portfolio composition. Although past performance is not predictive of future
results, these insights may help you understand our investment and management
philosophy.
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/ Howard J. Leonard
Howard J. Leonard, CFA
Portfolio Manager
Templeton Global Opportunities Trust
5
PAGE
CLASS I:
Subject to the current, maximum 5.75% initial sales charge. Prior to January 1,
1992, Fund shares were offered at a higher initial sales charge. Thus, actual
returns would have been lower. On January 1, 1993, the Fund implemented a Rule
12b-1 plan, which affects subsequent performance.
CLASS II:
Subject to 1% initial sales charge and 1% contingent deferred sales charge for
shares redeemed within 18 months of investment. These shares have higher annual
fees and expenses than Class I shares.
PERFORMANCE SUMMARY AS OF 12/31/98
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (1/1/98 - 12/31/98)
<TABLE>
<CAPTION>
CLASS I CHANGE 12/31/98 12/31/97
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$0.69 $14.63 $15.32
DISTRIBUTIONS
--------------------------------
Dividend Income $0.3150
Long-Term Capital Gain $0.2850
TOTAL $0.6000
<CAPTION>
CLASS II CHANGE 12/31/98 12/31/97
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$0.67 $14.50 $15.17
DISTRIBUTIONS
--------------------------------
Dividend Income $0.1968
Long-Term Capital Gain $0.2850
TOTAL $0.4818
</TABLE>
Templeton Global Opportunities Trust paid distributions derived from long-term
capital gains of 28.5 cents ($0.2850) per share in March 1998. The Fund hereby
designates such distributions as capital gain dividends per Internal Revenue
Code Section 852(b)(3).
6 Past performance is not predictive of future results.
PAGE
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS I 1-YEAR 5-YEAR (1/19/90)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -0.61% 53.04% 176.13%
Average Annual Total Return(2) -6.29% 7.60% 11.29%
Value of $10,000 Investment(3) $9,371 $14,426 $26,025
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------------------------------------------------------------------------
One-Year
Total Return(4) -4.09% 12.87% 24.19% 14.53% -0.61%
INCEPTION
CLASS II 1-YEAR 3-YEAR (5/1/95)
- ---------------------------------------------------------------------------------------------
Cumulative Total Return(1) -1.29% 38.41% 48.70%
Average Annual Total Return(2) -3.24% 11.06% 11.13%
Value of $10,000 Investment(3) $9,676 $13,701 $14,725
12/31/96 12/31/97 12/31/98
-----------------------------------------
One-Year
Total Return(4) 23.28% 13.74% -1.29%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
Past performance is not predictive of future results. 7
PAGE
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged index differs from the Fund in composition, does not pay
management fees or expenses and includes reinvested dividends. One cannot invest
directly in an index. Total return represents the change in value of an
investment over the periods shown. It includes the current, applicable, maximum
sales charge(s), Fund expenses, account fees, and reinvested distributions.
The MSCI All Country (AC) World Free Index represents the stock markets of 48
developed and emerging countries, including the U.S., Germany, Mexico,
Indonesia, Thailand and Japan.
CLASS I (1/19/90 - 12/31/98)
[LINE GRAPH]
[The following line graph compares the performance of Templeton Global
Opportunities Trust Class I shares with the Morgan Stanley Capital International
(MSCI) All Countries (AC) World Free Index and the Consumer Price Index (CPI)
based on a $10,000 investment from 1/19/90 to 12/31/98. *Source MSCI. **Source
Standard and Poor's /R/ Micropal.]
Templeton Global MSCI AC Consumer Price Index
Opportunities World Free
Trust - Class I Index
1/19/90 $9,428 $10,000 $10,000
1/90 $9,428 $9,817 $10,039
2/90 $9,428 $9,405 $10,086
3/90 $9,418 $8,824 $10,142
4/90 $9,168 $8,714 $10,158
5/90 $9,940 $9,624 $10,181
6/90 $9,930 $9,560 $10,236
7/90 $10,261 $9,657 $10,275
8/90 $9,278 $8,749 $10,369
9/90 $8,395 $7,835 $10,457
10/90 $8,385 $8,556 $10,519
11/90 $8,646 $8,412 $10,542
12/90 $8,646 $8,594 $10,542
1/91 $9,101 $8,912 $10,606
2/91 $9,878 $9,750 $10,622
3/91 $9,930 $9,478 $10,637
4/91 $10,189 $9,558 $10,653
5/91 $10,666 $9,786 $10,684
6/91 $10,117 $9,189 $10,716
7/91 $10,957 $9,627 $10,732
8/91 $11,092 $9,608 $10,763
9/91 $11,206 $9,853 $10,811
10/91 $11,372 $10,024 $10,826
11/91 $10,947 $9,593 $10,857
12/91 $11,526 $10,305 $10,866
1/92 $11,663 $10,151 $10,881
2/92 $12,158 $9,998 $10,921
3/92 $12,069 $9,553 $10,976
4/92 $12,368 $9,681 $10,992
5/92 $12,933 $10,052 $11,007
6/92 $12,560 $9,693 $11,047
7/92 $12,421 $9,724 $11,071
8/92 $12,079 $9,942 $11,102
9/92 $11,898 $9,858 $11,133
10/92 $11,845 $9,616 $11,172
11/92 $12,058 $9,777 $11,188
12/92 $12,316 $9,869 $11,181
1/93 $12,625 $9,904 $11,236
2/93 $12,957 $10,137 $11,275
3/93 $13,404 $10,719 $11,315
4/93 $13,771 $11,206 $11,346
5/93 $14,023 $11,469 $11,362
6/93 $13,920 $11,395 $11,378
7/93 $14,344 $11,631 $11,377
8/93 $15,455 $12,183 $11,409
9/93 $15,420 $11,979 $11,432
10/93 $16,360 $12,333 $11,481
11/93 $15,753 $11,692 $11,488
12/93 $17,011 $12,325 $11,488
1/94 $17,952 $13,142 $11,520
2/94 $17,353 $12,952 $11,560
3/94 $16,274 $12,370 $11,599
4/94 $16,478 $12,706 $11,615
5/94 $16,593 $12,781 $11,622
6/94 $16,005 $12,719 $11,661
7/94 $16,810 $13,001 $11,692
8/94 $17,462 $13,464 $11,741
9/94 $17,386 $13,148 $11,772
10/94 $17,373 $13,485 $11,780
11/94 $16,580 $12,899 $11,796
12/94 $16,329 $12,944 $11,796
1/95 $15,888 $12,681 $11,842
2/95 $16,315 $12,816 $11,890
3/95 $16,399 $13,403 $11,929
4/95 $17,053 $13,891 $11,968
5/95 $17,706 $14,044 $11,992
6/95 $18,165 $14,047 $12,016
7/95 $18,930 $14,727 $12,015
8/95 $18,430 $14,404 $12,048
9/95 $18,916 $14,801 $12,070
10/95 $18,054 $14,553 $12,110
11/95 $18,193 $15,011 $12,102
12/95 $18,415 $15,463 $12,094
1/96 $19,352 $15,807 $12,165
2/96 $19,649 $15,873 $12,204
3/96 $19,872 $16,117 $12,267
4/96 $20,588 $16,510 $12,314
5/96 $20,871 $16,528 $12,338
6/96 $20,692 $16,618 $12,346
7/96 $19,678 $15,998 $12,369
8/96 $20,379 $16,195 $12,393
9/96 $20,990 $16,793 $12,432
10/96 $21,303 $16,860 $12,472
11/96 $22,541 $17,761 $12,495
12/96 $22,870 $17,504 $12,495
1/97 $23,824 $17,798 $12,534
2/97 $24,186 $18,040 $12,572
3/97 $24,058 $17,680 $12,603
4/97 $24,506 $18,247 $12,618
5/97 $25,960 $19,336 $12,611
6/97 $26,904 $20,326 $12,626
7/97 $28,182 $21,245 $12,641
8/97 $26,952 $19,754 $12,665
9/97 $28,982 $20,808 $12,697
10/97 $26,664 $19,569 $12,728
11/97 $26,328 $19,868 $12,721
12/97 $26,194 $20,129 $12,706
1/98 $25,544 $20,572 $12,728
2/98 $26,895 $21,979 $12,754
3/98 $28,198 $22,917 $12,779
4/98 $28,511 $23,132 $12,803
5/98 $27,535 $22,693 $12,826
6/98 $27,379 $23,102 $12,841
7/98 $27,710 $23,109 $12,856
8/98 $23,283 $19,872 $12,872
9/98 $23,091 $20,267 $12,887
10/98 $24,555 $22,118 $12,918
11/98 $25,862 $23,461 $12,918
12/98 $26,025 $24,550 $12,910
AVERAGE ANNUAL TOTAL RETURN
12/31/98
[This table shows the averge annual returns for Templeton Global Opportunities
Trust Class I shares as of December 31, 1998.]
CLASS I
- -------------------------------------------
1-Year -6.29%
5-Year 7.60%
Since Inception (1/19/90) 11.29%
8 Past performance is not predictive of future results.
PAGE
CLASS II (5/1/95 - 12/31/98)
[LINE GRAPH]
[The following line graph compares the performance of Templeton Global
Opportunities Trust Class II shares with the Morgan Stanley Capital
International (MSCI) All Countries (AC) World Free Index and the Consumer Price
Index (CPI) based on a $10,000 investment from 5/1/95 to 12/31/98. *Source MSCI.
**Source Standard and Poor's /R/ Micropal.]
Templeton Global MSCI AC World Consumer
Opportunities Free Index Price Index
Trust - Class II
---------------------------------------------------
5/1/95 $9,903 $10,000 $10,000
5/95 $10,275 $10,110 $10,020
6/95 $10,533 $10,113 $10,040
7/95 $10,969 $10,602 $10,040
8/95 $10,679 $10,370 $10,067
9/95 $10,953 $10,655 $10,086
10/95 $10,452 $10,477 $10,119
11/95 $10,517 $10,807 $10,112
12/95 $10,639 $11,132 $10,105
1/96 $11,174 $11,379 $10,164
2/96 $11,346 $11,427 $10,197
3/96 $11,467 $11,603 $10,250
4/96 $11,864 $11,886 $10,289
5/96 $12,020 $11,898 $10,309
6/96 $11,916 $11,964 $10,316
7/96 $11,329 $11,517 $10,335
8/96 $11,718 $11,659 $10,355
9/96 $12,063 $12,089 $10,388
10/96 $12,236 $12,138 $10,421
11/96 $12,945 $12,787 $10,441
12/96 $13,116 $12,601 $10,441
1/97 $13,658 $12,813 $10,473
2/97 $13,858 $12,987 $10,505
3/97 $13,775 $12,728 $10,531
4/97 $14,024 $13,136 $10,544
5/97 $14,855 $13,920 $10,537
6/97 $15,390 $14,633 $10,550
7/97 $16,110 $15,294 $10,563
8/97 $15,390 $14,221 $10,583
9/97 $16,544 $14,980 $10,609
10/97 $15,215 $14,088 $10,636
11/97 $15,012 $14,303 $10,629
12/97 $14,919 $14,491 $10,617
1/98 $14,535 $14,810 $10,636
2/98 $15,302 $15,823 $10,657
3/98 $16,032 $16,498 $10,678
4/98 $16,202 $16,653 $10,697
5/98 $15,641 $16,337 $10,717
6/98 $15,540 $16,631 $10,730
7/98 $15,721 $16,637 $10,742
8/98 $13,194 $14,306 $10,755
9/98 $13,084 $14,590 $10,768
10/98 $13,906 $15,923 $10,794
11/98 $14,638 $16,890 $10,794
12/98 $14,725 $17,674 $10,788
AVERAGE ANNUAL TOTAL RETURN
12/31/98
[This table shows the averge annual returns for Templeton Global Opportunities
Trust Class II shares as of December 31, 1998.]
<TABLE>
<CAPTION>
CLASS II
- -----------------------------------------------
<S> <C>
1-Year -3.24%
3-Year 11.06%
Since Inception (5/1/95) 11.13%
</TABLE>
* Source: MSCI.
** Source: Standard and Poor's(R) Micropal.
Past performance is not predictive of future results. 9
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Highlights
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $15.32 $14.62 $12.57 $11.84 $14.46
--------------------------------------------------------
Income from investment operations:
Net investment income...................................... .39 .38 .30 .16 .09
Net realized and unrealized gains (losses)................. (.48) 1.70 2.69 1.33 (.63)
--------------------------------------------------------
Total from investment operations............................ (.09) 2.08 2.99 1.49 (.54)
--------------------------------------------------------
Less distributions from:
Net investment income...................................... (.32) (.37) (.30) (.16) (.09)
In excess of net investment income......................... -- -- (.06) -- --
Net realized gains......................................... (.28) (1.01) (.58) (.60) (1.99)
--------------------------------------------------------
Total distributions......................................... (.60) (1.38) (.94) (.76) (2.08)
--------------------------------------------------------
Net asset value, end of year................................ $14.63 $15.32 $14.62 $12.57 $11.84
--------------------------------------------------------
--------------------------------------------------------
Total Return*............................................... (.61)% 14.53% 24.19% 12.87% (4.09)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $656,108 $786,219 $634,478 $510,777 $476,822
Ratios to average net assets:
Expenses................................................... 1.41% 1.37% 1.45% 1.52% 1.53%
Net investment income...................................... 2.38% 2.30% 2.10% 1.19% .71%
Portfolio turnover rate..................................... 3.09% 26.21% 18.54% 15.54% 37.31%
</TABLE>
*Total return does not reflect sales commissions.
10
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS II
---------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------
1998 1997 1996 1995+
-------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $15.17 $14.52 $12.53 $12.26
---------------------------------------------
Income from investment operations:
Net investment income...................................... .24 .18 .24 .02
Net realized and unrealized gains (losses)................. (.43) 1.77 2.63 .88
---------------------------------------------
Total from investment operations............................ (.19) 1.95 2.87 .90
---------------------------------------------
Less distributions from:
Net investment income...................................... (.20) (.29) (.24) (.12)
In excess of net investment income......................... -- -- (.06) --
Net realized gains......................................... (.28) (1.01) (.58) (.51)
---------------------------------------------
Total distributions......................................... (.48) (1.30) (.88) (.63)
---------------------------------------------
Net asset value, end of year................................ $14.50 $15.17 $14.52 $12.53
---------------------------------------------
---------------------------------------------
Total Return*............................................... (1.29)% 13.74% 23.28% 7.43%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $33,423 $38,627 $11,622 $2,264
Ratios to average net assets:
Expenses................................................... 2.16% 2.12% 2.20% 2.22%**
Net investment income...................................... 1.62% .93% 1.12% (.01)%**
Portfolio turnover rate..................................... 3.09% 26.21% 18.54% 15.54%
</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.
See Notes to Financial Statements.
11
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 68.1%
AUTOMOBILES 1.3%
Autoliv Inc., SDR........................................... Sweden 217,000 $ 7,790,348
Volvo AB, B................................................. Sweden 39,700 910,977
------------
8,701,325
------------
BANKING 8.1%
Banco Popular Espanol SA.................................... Spain 140,000 10,571,962
BPI Socieda de Gestora de Participacoes Socias SA........... Portugal 117,300 3,980,721
Credit Suisse Group, reg. .................................. Switzerland 42,000 6,574,445
Foreningssparbanken AB, A................................... Sweden 642,100 16,635,125
National Australia Bank Ltd................................. Australia 424,214 6,400,717
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 385,575 5,566,739
Union Bank of Norway, Primary Capital Cert. ................ Norway 124,800 2,424,255
Union Bank of Norway, Primary Capital Cert. 144A............ Norway 175,200 3,403,281
------------
55,557,245
------------
BUILDING MATERIALS & COMPONENTS .1%
Cementos Diamante SA, ADR, 144A............................. Colombia 129,200 226,100
Pioneer International Ltd. ................................. Australia 100,000 211,606
------------
437,706
------------
BUSINESS & PUBLIC SERVICES 1.0%
Hyder Plc. ................................................. United Kingdom 79,780 1,005,463
Laidlaw Inc. ............................................... Canada 600,000 6,035,156
------------
7,040,619
------------
CHEMICALS .8%
Akzo Nobel NV............................................... Netherlands 8,000 364,470
Imperial Chemical Industries Plc. .......................... United Kingdom 575,000 4,965,061
------------
5,329,531
------------
DATA PROCESSING & REPRODUCTION 1.1%
*Newbridge Networks Corp. .................................. Canada 256,000 7,776,000
*ODS Networks Inc. ......................................... United States 42,200 126,600
------------
7,902,600
------------
ELECTRICAL & ELECTRONICS 4.7%
Alcatel SA, ADR............................................. France 266,098 6,502,758
General Electric Co. Plc. .................................. United Kingdom 1,325,000 11,904,168
Motorola Inc. .............................................. United States 10,000 610,625
Philips Electronics NV...................................... Netherlands 135,000 9,063,782
*Scitex Corp. Ltd. ......................................... Israel 360,000 4,230,000
------------
32,311,333
------------
ELECTRONIC COMPONENTS & INSTRUMENTS 1.7%
Intel Corp. ................................................ United States 96,000 11,382,000
------------
</TABLE>
12
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES 5.6%
Amerada Hess Corp. ......................................... United States 50,000 $ 2,487,500
Hub Power Co. Ltd., GDR, 144A............................... Pakistan 310,000 1,986,181
Rao Gazprom, ADR, 144A...................................... Russia 390,300 3,307,793
Repsol SA................................................... Spain 25,000 1,335,610
Societe Elf Aquitaine SA.................................... France 55,000 6,360,316
Total SA, B................................................. France 100,000 10,132,111
Valero Energy Corp., new.................................... United States 161,400 3,429,750
YPF Sociedad Anonima, ADR................................... Argentina 333,000 9,303,188
------------
38,342,449
------------
FINANCIAL SERVICES 2.6%
Federal National Mortgage Assn. ............................ United States 220,000 16,280,000
Merrill Lynch & Co. Inc. ................................... United States 20,000 1,335,000
------------
17,615,000
------------
FOOD & HOUSEHOLD PRODUCTS
Cafe de Coral Holdings Ltd. ................................ Hong Kong 1,000 313
------------
FOREST PRODUCTS & PAPER 1.8%
*Asia Pacific Resources International Hldgs. Ltd., A........ Indonesia 1,923,775 1,322,595
Assidomaen AB............................................... Sweden 234,900 3,709,344
Bowater Inc. ............................................... United States 10,000 414,375
Carter Holt Harvey Ltd. .................................... New Zealand 3,084,890 2,770,313
*Empaques Ponderosa SA de CV, B............................. Mexico 3,000,000 1,565,217
Enso OY, R.................................................. Finland 69,400 699,016
Fletcher Challenge Ltd. Forestry Division................... New Zealand 4,652,452 1,548,327
Georgia Pacific Corp. ...................................... United States 5,000 292,813
Georgia Pacific Timber Group................................ United States 5,000 119,063
------------
12,441,063
------------
HEALTH & PERSONAL CARE 1.5%
Astra AB, B................................................. Sweden 266,667 5,428,219
Medeva Plc. ................................................ United Kingdom 988,516 1,743,327
Nycomed Amersham Plc. ...................................... United Kingdom 184,500 1,283,436
*Windmere-Durable Holdings Inc. ............................ United States 225,000 1,743,750
------------
10,198,732
------------
INDUSTRIAL COMPONENTS .3%
BTR Plc. ................................................... United Kingdom 1,015,625 2,078,394
------------
INSURANCE 8.1%
Ace Ltd. ................................................... Bermuda 309,000 10,641,188
American International Group Inc. .......................... United States 112,500 10,870,313
GIO Australia Holdings Ltd. ................................ Australia 2,000,000 6,575,114
Muenchner Rueckversicherungs-Gesellschaft, Pp............... Germany 26,000 12,722,142
National Mutual Asia Ltd. .................................. Hong Kong 10,338,000 7,739,572
Presidential Life Corp. .................................... United States 375,000 7,453,125
------------
56,001,454
------------
</TABLE>
13
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
LEISURE & TOURISM 2.1%
Kuoni Reisen Holding AG, B.................................. Switzerland 3,660 $ 14,522,752
------------
MACHINERY & ENGINEERING 1.6%
IHC Caland NV............................................... Netherlands 20,280 842,884
Rauma OY, ADR............................................... Finland 353,700 5,261,288
VA Technologie AG, 144A..................................... Austria 57,300 4,967,982
------------
11,072,154
------------
MERCHANDISING 1.9%
*BJ's Wholesale Club Inc. .................................. United States 140,000 6,483,750
*Cifra SA de CV............................................. Mexico 627,753 761,682
*Homebase Inc. ............................................. United States 140,000 892,500
Storehouse Plc. ............................................ United Kingdom 2,300,000 5,242,492
------------
13,380,424
------------
METALS & MINING 2.2%
Aluminum Co. of America..................................... United States 10,000 745,625
Boehler Uddeholm AG, 144A................................... Austria 58,500 2,724,216
Companhia Siderurgica Nacional Sid Nacional CSN............. Brazil 151,111,000 3,376,782
Elkem AS.................................................... Norway 501,000 5,983,856
Trelleborg AB, B............................................ Sweden 324,500 2,642,182
------------
15,472,661
------------
MULTI-INDUSTRY .4%
Jardine Strategic Holdings Ltd. ............................ Hong Kong 1,656,137 2,401,399
PT Bimantara Citra.......................................... Indonesia 8,975,000 592,689
------------
2,994,088
------------
REAL ESTATE
*PT Jaya Properties......................................... Indonesia 3,598,000 135,774
------------
RECREATION & OTHER CONSUMER GOODS .7%
Yue Yuen Industrial (Holdings) Ltd. ........................ Hong Kong 2,453,600 4,718,918
------------
TELECOMMUNICATIONS 15.9%
Hong Kong Telecommunications Ltd. .......................... Hong Kong 905,873 1,589,625
Lucent Technologies Inc. ................................... United States 185,200 20,372,000
Nokia Corp., A.............................................. Finland 168,000 20,571,158
Northern Telecom, Ltd. ..................................... Canada 180,000 9,022,500
Telecom Italia SpA, di Risp................................. Italy 1,703,050 10,703,049
*Telecomunicacoes Brasileiras SA (Telebras), ADR............ Brazil 135,000 9,812,813
Telefonica de Argentina SA, B, ADR.......................... Argentina 277,414 7,750,254
Telefonica del Peru SA, B, ADR.............................. Peru 171,500 2,175,906
Telefonica SA............................................... Spain 340,000 15,140,913
*Telefonica SA, rts. ....................................... Spain 340,000 302,338
Telefonos de Mexico SA (Telmex), L, ADR..................... Mexico 226,050 11,005,809
Videsh Sanchar Nigam Ltd., GDR, 144A........................ India 77,600 950,600
------------
109,396,965
------------
</TABLE>
14
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TRANSPORTATION .9%
Air New Zealand Ltd., B..................................... New Zealand 2,408,000 $ 3,790,644
Guangshen Railway Co. Ltd., ADR............................. China 163,200 979,200
Mayne Nickless Ltd., A...................................... Australia 353,000 1,309,901
------------
6,079,745
------------
UTILITIES ELECTRICAL & GAS 3.7%
British Energy Ltd., 144A................................... United Kingdom 1,021,900 11,765,324
Centrais Eletricas Brasileiras SA (Electrobras)............. Brazil 237,540,000 4,089,246
*Centrais Geradoras Do Sul Do Brasil SA (Gerasul)........... Brazil 237,540,000 310,625
Iberdrola SA................................................ Spain 515,000 9,649,738
------------
25,814,933
------------
TOTAL COMMON STOCKS (COST $348,098,184)..................... 468,928,178
------------
PREFERRED STOCKS 4.0%
Banco Bradesco SA BBD, pfd. ................................ Brazil 508,140,000 2,817,743
*Banco Bradesco SA BBD, rts., pfd. ......................... Brazil 21,061,966 11,993
Cia Energetica de Minas Gerais, ADR, pfd. .................. Brazil 275,348 5,241,473
Cia Vale do Rio Doce, ADR, pfd. ............................ Brazil 330,000 4,233,395
Coteminas Cia Tecidos Norte de Minas, pfd. ................. Brazil 11,918,000 1,282,301
Empresa Nacional de Comercio Redito Participacoe, pfd. ..... Brazil 11,918,000 17,755
National Australia Cap Sec Plc., 7.88%, cvt., pfd. ......... Australia 159,608 4,449,073
Petrobras-Petroleo Brasileiro SA, pfd. ..................... Brazil 42,000,000 4,762,259
Philippine Long Distance Telephone Co., 7.00%, cvt., pfd.
ser. 3.................................................... Philippines 105,000 4,987,500
------------
TOTAL PREFERRED STOCKS (COST $37,603,726)................... 27,803,492
------------
PRINCIPAL
AMOUNT**
--------
BONDS 3.0%
Banco Nacional de Mexico, cvt., Reg S, 7.00%, 12/15/99...... Mexico $ 10,910,000 10,800,900
Government of Italy, cvt., 5.00%, 6/28/01................... Italy 5,235,000 9,795,994
------------
TOTAL BONDS (COST $16,678,783).............................. 20,596,894
------------
SHORT TERM INVESTMENTS 29.7%
Fannie Mae, 5.58%, 1/15/99.................................. United States 50,000,000 50,008,200
Federal Farm Credit Banks, 4.85% to 5.32%, with maturities
to 4/01/99................................................ United States 155,000,000 155,019,400
------------
TOTAL SHORT TERM INVESTMENTS (COST $205,025,000)............ 205,027,600
------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST
$607,405,693)............................................. 722,356,164
------------
</TABLE>
15
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
STATEMENT OF INVESTMENTS, DECEMBER 31, 1998 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT** VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)REPURCHASE AGREEMENT (COST $15,327,000) 2.2%
Barclays Bank Plc., 4.75%, 01/04/99 (Maturity Value
$15,335,089) Collateralized by U.S. Treasury Notes &
Bonds..................................................... United States $ 15,327,000 $ 15,327,000
------------
TOTAL INVESTMENTS (COST $622,732,693) 107.0%................ 737,683,164
OTHER ASSETS, LESS LIABILITIES (7.0%)....................... (48,152,260)
------------
TOTAL NET ASSETS 100.0%..................................... $689,530,904
------------
------------
</TABLE>
*Non-Income Producing.
**Securities traded in U.S. dollars.
(a)At December 31, 1998, all repurchase agreements held by the Fund had been
entered into on that date.
See Notes to Financial Statements.
16
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
Assets:
Investments in securities, at value ($607,405,693)......... $722,356,164
Repurchase agreement, at value and cost.................... 15,327,000
Cash....................................................... 77,898
Receivables:
Investment securities sold................................ 299,194
Fund shares sold.......................................... 435,741
Dividends and interest.................................... 4,133,123
------------
Total assets.......................................... 742,629,120
------------
Liabilities:
Payables:
Investment securities purchased........................... 50,223,415
Fund shares redeemed...................................... 1,676,603
To affiliates............................................. 911,020
Distributions to shareholders.............................. 461
Accrued expenses........................................... 286,717
------------
Total liabilities..................................... 53,098,216
------------
Net assets, at value........................................ $689,530,904
------------
------------
Net assets consist of:
Undistributed net investment income........................ $ 3,690,136
Net unrealized appreciation................................ 114,950,471
Accumulated net realized gain.............................. 15,956,505
Beneficial shares.......................................... 554,933,792
------------
Net assets, at value........................................ $689,530,904
------------
------------
CLASS I:
Net asset value per share ($656,108,039 / 44,834,593 shares
outstanding)............................................. $14.63
------------
------------
Maximum offering price per share ($14.63 / 94.25%)......... $15.52
------------
------------
CLASS II:
Net asset value per share ($33,422,865 / 2,304,812 shares
outstanding)*............................................ $14.50
------------
------------
Maximum offering price per share ($14.50 / 99.00%)......... $14.65
------------
------------
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
17
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $1,909,236)
Dividends.................................................. $16,171,598
Interest................................................... 13,374,028
-----------
Total investment income............................... $ 29,545,626
Expenses:
Management fees (Note 3)................................... 6,239,270
Administrative fees (Note 3)............................... 1,054,909
Distribution fees (Note 3)
Class I................................................... 1,864,590
Class II.................................................. 369,351
Transfer agent fees (Note 3)............................... 884,000
Custodian fees............................................. 276,000
Reports to shareholders.................................... 283,000
Registration and filing fees............................... 74,000
Professional fees.......................................... 58,300
Trustees' fees and expenses................................ 116,000
Other...................................................... 66,415
-----------
Total expenses........................................ 11,285,835
------------
Net investment income........................... 18,259,791
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 16,202,860
Foreign currency transactions............................. 7,738
-----------
Net realized gain..................................... 16,210,598
Net unrealized depreciation on investments............ (36,288,088)
------------
Net realized and unrealized loss............................ (20,077,490)
------------
Net decrease in net assets resulting from operations........ $ (1,817,699)
------------
------------
</TABLE>
See Notes to Financial Statements.
18
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 18,259,791 $ 17,928,804
Net realized gains from investments and foreign currency
transactions............................................. 16,210,598 56,831,220
Net unrealized appreciation (depreciation) on
investments.............................................. (36,288,088) 18,738,843
--------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (1,817,699) 93,498,867
Distributions to shareholders from:
Net investment income:
Class I.................................................. (14,111,066) (17,851,213)
Class II................................................. (458,589) (635,878)
Net realized gains:
Class I.................................................. (14,629,485) (47,840,555)
Class II................................................. (723,508) (1,940,548)
Beneficial share transactions (Note 2):
Class I.................................................. (100,213,697) 125,392,016
Class II................................................. (3,361,227) 28,123,894
--------------------------------
Net increase (decrease) in net assets................... (135,315,271) 178,746,583
Net assets:
Beginning of year.......................................... 824,846,175 646,099,592
--------------------------------
End of year................................................ $ 689,530,904 $824,846,175
--------------------------------
--------------------------------
Undistributed net investment income included in net assets:
End of year................................................ $ 3,690,136 $ 189,982
--------------------------------
--------------------------------
</TABLE>
See Notes to Financial Statements.
19
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Global Opportunities 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 growth through a flexible policy of investing
in the equity and debt securities of companies and governments of any nation.
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 and 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 currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
20
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
e. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
During the year ended December 31, 1998, the Fund offered two classes of shares;
Class I and Class II. Effective January 1, 1999, Class I and Class II were
renamed Class A and Class C, respectively, and a third class of shares, Class B,
was established. The Shares differ by their initial sales load, distribution
fees, voting rights on matters affecting a single class and the exchange
privilege of each class.
At December 31, 1998, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
------------1998---------------------------------1997------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold............................................ 31,019,020 $ 466,421,039 17,195,097 $ 281,507,387
Shares issued on reinvestment of distributions......... 1,692,945 25,243,069 3,859,713 58,207,367
Shares redeemed........................................ (39,210,265) (591,877,805) (13,121,848) (214,322,738)
-----------------------------------------------------------------
Net increase (decrease)................................ (6,498,300) $(100,213,697) 7,932,962 $ 125,392,016
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
------------1998---------------------------------1997------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold............................................ 660,394 $ 9,995,284 1,773,264 $ 28,763,454
Shares issued on reinvestment of distributions......... 70,768 1,054,025 154,119 2,299,060
Shares redeemed........................................ (972,334) (14,410,536) (181,625) (2,938,620)
-----------------------------------------------------------------
Net increase (decrease)................................ (241,172) $ (3,361,227) 1,745,758 $ 28,123,894
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
21
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors) and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Fund's
investment manager, administrative manager, principal underwriter, and transfer
agent, respectively.
The Fund pays an investment management fee to TICI of 0.80% per year of the
average daily net assets of the Fund. The Fund pays an administrative fee to FT
Services based on the Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- --------------------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
The Fund reimburses Distributors up to 0.25% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At December 31, 1998, unreimbursed costs were $1,501,166. Distributors
received net commissions from sales of fund shares, and received contingent
deferred sales charges for the period of $326,934 and $38,939, respectively.
Legal fees of $33,851 were paid to a law firm in which a partner is an officer
of the Fund.
4. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At December 31, 1998, the net unrealized appreciation
based on cost of investments for income tax purposes was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $204,929,730
Unrealized depreciation..................................... (89,979,259)
------------
Net unrealized appreciation................................. $114,950,471
============
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended December 31, 1998 aggregated $17,246,621 and $63,861,590,
respectively.
22
PAGE
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 Statement of Investments, of Templeton Global Opportunities Trust as of
December 31, 1998, and the related Statement of Operations for the year then
ended, the Statement of Changes in net assets for each of the two years in the
period then ended and the Financial Highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Global Opportunities Trust as of December 31, 1998, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
January 28, 1999
23
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Templeton Global
Opportunities Trust hereby designates $13,630,237 as a capital gain dividend for
the fiscal year ended December 31, 1998.
Under Section 854(b)(2) of the Internal Revenue Code, the Templeton Global
Opportunities Trust hereby designates 3.75% of the ordinary income dividends as
income qualifying for the dividends received deduction for the fiscal year ended
December 31, 1998.
At December 31, 1998, more than 50% of the Templeton Global Opportunities
Trust's total assets were invested in securities of foreign issuers. In most
instances, foreign taxes were withheld from dividends paid to the Fund on these
investments. As in prior years, the Fund intends to make an election under
Section 853 of the Internal Revenue Code. This election will allow shareholders
to treat their proportionate share of foreign taxes paid by the Fund as having
been paid directly by them.
In January 1999, shareholders will receive Form 1099-DIV, which will include
their share of taxes withheld and foreign source income distributed during the
calendar year 1998.
24
PAGE
TEMPLETON GLOBAL OPPORTUNITIES TRUST
Tax Designation (continued)
The following table provides a breakdown by country of foreign source income and
foreign taxes paid to Class I and Class II shareholders in December 1998.
<TABLE>
<CAPTION>
---------------CLASS-I-----------------------------------CLASS-II---------------
FOREIGN TAXES FOREIGN SOURCE FOREIGN TAXES FOREIGN SOURCE
COUNTRY WITHHELD PER SHARE INCOME PER SHARE WITHHELD PER SHARE INCOME PER SHARE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Argentina.................................... $ 0.0000 $ 0.0162 $ 0.0000 $ 0.0123
Australia.................................... 0.0000 0.0126 0.0000 0.0095
Austria...................................... 0.0009 0.0039 0.0009 0.0029
Bermuda...................................... 0.0000 0.0016 0.0000 0.0012
Brazil....................................... 0.0098 0.0566 0.0098 0.0429
Canada....................................... 0.0004 0.0018 0.0004 0.0014
China........................................ 0.0000 0.0017 0.0000 0.0013
Colombia..................................... 0.0000 0.0003 0.0000 0.0002
Denmark...................................... 0.0001 0.0004 0.0001 0.0003
Finland...................................... 0.0015 0.0065 0.0015 0.0049
France....................................... 0.0011 0.0073 0.0011 0.0055
Hong Kong.................................... 0.0000 0.0106 0.0000 0.0080
India........................................ 0.0000 0.0001 0.0000 0.0000
Italy........................................ 0.0005 0.0066 0.0005 0.0050
Mexico....................................... 0.0000 0.0189 0.0000 0.0143
Netherlands.................................. 0.0005 0.0020 0.0005 0.0015
New Zealand.................................. 0.0015 0.0069 0.0015 0.0052
Norway....................................... 0.0035 0.0144 0.0035 0.0110
Pakistan..................................... 0.0019 0.0174 0.0019 0.0132
Peru......................................... 0.0000 0.0013 0.0000 0.0009
Philippines.................................. 0.0014 0.0062 0.0014 0.0047
Portugal..................................... 0.0002 0.0009 0.0002 0.0007
Russia....................................... 0.0001 0.0003 0.0001 0.0002
Spain........................................ 0.0029 0.0132 0.0029 0.0100
Sweden....................................... 0.0034 0.0152 0.0034 0.0115
Switzerland.................................. 0.0013 0.0056 0.0013 0.0043
Thailand..................................... -0.0002 -0.0017 -0.0002 -0.0013
United Kingdom............................... 0.0094 0.0387 0.0094 0.0293
--------------------------------------------------------------------------------
TOTAL........................................ $ 0.0402 $ 0.2655 $ 0.0402 $ 0.2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
25
PAGE
This page intentionally left blank.
PAGE
This page intentionally left blank.
PAGE
This page intentionally left blank.
