<PAGE>
Templeton Vietnam
Opportunities Fund, Inc.
[PHOTO APPEARS HERE]
J. Mark Mobius, Ph.D.
President
Templeton Vietnam
Opportunities Fund, Inc.
- ------------------------
Dr. Mobius has been living overseas since earning his Ph.D. in economics and
political science at Massachusetts Institute of Technology in 1964. During
his extensive travels, he has acquired a thorough knowledge of the business
practices and customs that are unique to developing nations. Together with
his team of Templeton analysts, Dr. Mobius currently oversees more than
$6 billion in emerging markets investments for the Templeton Group of Funds.
- --------------------------------------------------------------------------------
Your Fund's Objective
The Templeton Vietnam Opportunities Fund, Inc. seeks long-term capital
appreciation by investing at least 65% of its total assets in the equity and
debt securities of Vietnam or Vietnam-related companies.
- --------------------------------------------------------------------------------
May 19, 1995
Dear Shareholder:
This first annual report of the Templeton Vietnam Opportunities Fund covers the
period from its initial offering on September 15, 1994 through the end of the
fiscal year on March 31, 1995. The weakness experienced by South East Asian
stock markets was reflected in the performance of the Fund during this time.
At the close of the fiscal year, the Fund had 55.5% of its total net assets
invested in equities, with the remaining 44.5% in cash and other liquid
assets. To date, all of our equity investments have been made in companies
doing
1
<PAGE>
business in Vietnam (Vietnam-related companies), as opposed to Vietnamese
companies. We have identified over 130 Vietnam-related companies listed on 14
stock exchanges, including exchanges in Hong Kong, Thailand, Singapore,
Malaysia, and Indonesia. From this universe, we have picked stocks for the Fund
using Templeton's time-tested bottom-up approach.
As you can see in the chart to the right, Hong Kong-listed companies accounted
for 27.5% of the Fund's total net assets, Singapore-listed companies accounted
for 12.5%, Thai companies were 10.1%, Indonesian companies were 4.9%, and
investments in Australia-listed Barlile Corporation represented 0.5% of the
Fund's total net assets.
Specific investments in Hong Kong companies include New World Development Co.
Ltd., which invests in and develops hotel properties, and Jardine Matheson
Holdings Ltd., which has interests in property development, financial services,
shipping and trading. Through holdings in Singapore and Thailand, we will
participate in at least
- --------------------------------------------------------------------------------
Templeton Vietnam
Opportunities Fund, Inc.
Geographic Distribution on 3/31/95
Based on Total Net Assets
Indonesia 4.9%
Singapore 12.5%
Thailand 10.1%
[PIE CHART APPEARS HERE]
Australia/New Zealand 0.5%
Hong Kong 27.5%
Short-Term Obligations &
Other Net Assets 44.5%
three different sectors of the Vietnamese economy: Natsteel, Ltd., Singapore, is
involved in building Vietnam's physical infrastructure; Rothman's Industries
Ltd., Singapore, provides beverages and tobacco products to many countries,
including Vietnam; and Bangkok Bank Public Co. Ltd., participates in the growing
loan business in Vietnam.
2
<PAGE>
We envisage that some of the Fund's assets currently in cash and other liquid
assets will be invested in Vietnamese issues. Although we have been able to make
investments in Vietnam-related companies relatively quickly, the process of
making direct investments will take longer. Normally direct investments are made
in companies listed on stock exchanges. However, the opening of Vietnam's stock
exchange, originally planned for the first half of 1995, has now been postponed
because of technical problems. In an interview with the Reuters news agency,
Central Bank Governor Mr. Cao Si Kiem confirmed the delay, but added that the
Vietnamese government expects to set up a capital markets regulatory agency very
soon, and the stock market opening should follow shortly thereafter.
Meanwhile, we are seeking to invest in Vietnamese companies by means of joint
venture agreements. When selecting a joint venture partner, in addition to the
rigorous financial analysis we use to screen for value, we also insist on: (1)
audited financial statements, (2) a detailed and mutually agreed exit strategy,
and (3) a management team with a proven track record. In some cases, companies
are willing to list the joint venture on the stock exchange within a certain
period of time or once the
- --------------------------------------------------------------------------------
Templeton Vietnam Opportunities
Fund, Inc.
Top Ten Holdings as of 3/31/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
New World Development Co. Ltd.;
Real Estate, Hong Kong 5.9%
- --------------------------------------------------------------------------------
Natsteel, Ltd.; Metals & Mining, Singapore 5.6%
- --------------------------------------------------------------------------------
Jardine Matheson Holdings Ltd.;
Multi-Industry, Hong Kong 4.8%
- --------------------------------------------------------------------------------
Swire Pacific Ltd. B; Multi-Industry,
Hong Kong 4.0%
- --------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, fgn.;
Textiles & Apparel, Indonesia 3.5%
- --------------------------------------------------------------------------------
Rothman's Industries Ltd.;
Beverages & Tobacco, Singapore 2.7%
- --------------------------------------------------------------------------------
Bangkok Bank Public Co. Ltd.;
Banking, Thailand 2.6%
- --------------------------------------------------------------------------------
Hong Kong & Shanghai Hotels Ltd.;
Leisure & Tourism, Hong Kong 2.3%
- --------------------------------------------------------------------------------
First Pacific Co.; Multi-Industry,
Hong Kong 1.9%
- --------------------------------------------------------------------------------
Golden Resources Development International
Ltd.; Food & Household Products, Hong Kong 1.8%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 9 of this report.
stock exchange in Vietnam is ready. In other projects, the joint venture
partners are also willing to give us a buy-back agreement, allowing the Fund
to sell its shares in the joint venture back to the other partners at cost
plus a pre-determined rate of return. In all cases, we remain passive
investors, ensuring that our partners are experts in the specific area of
investment.
3
<PAGE>
During the last six months, we have conducted numerous interviews with
Vietnamese government and company officials, lawyers, accountants, and others in
an effort to identify viable investments in the country. While making several
research visits to Vietnam to seek direct investments, we established more
permanent research facilities there. We obtained our Representative Office
license in February 1995, and have since moved expeditiously to establish a
permanent presence in Vietnam with the leasing of office space in the Landmark
building in Ho Chi Minh City and the addition of three professionals to that
office.
Looking forward, given the pace of economic development in Vietnam, the outlook
for the Templeton Vietnam Opportunities Fund remains favorable. The reasons for
our initial interest in Vietnam remain valid: good natural resources, excellent
potential labor force, strategic geographic position, location in one of the
world's fastest growing economic regions, and an improved political climate.
Gradually, Vietnam is developing a regulatory structure to absorb the
investments destined for the country and this Fund is admirably placed to
participate in these developments.
Of course, investments in foreign securities involve special risks, such as
market and currency volatility and adverse economic, social and political
developments in the countries where the fund is invested. Developing markets
involve heightened risks related to the same factors, in addition to risks
associated with the relatively small size and lesser liquidity of these markets.
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 1000% in the last 15 years, but has suffered nine declines of more
than 20% during that time.
Thank you for investing in the Templeton Vietnam Opportunities Fund. We
appreciate your support and welcome your comments.
4
<PAGE>
Performance Summary
In market-price terms, the Templeton Vietnam Opportunities Fund produced a total
return of -26.33% for the period from inception on September 15, 1994 through
March 31, 1995. Based on the change in actual net asset value (in contrast to
market price), total return was -6.74% for the same period. Both total returns
assume reinvestment of dividends and capital gains in accordance with the
dividend reinvestment plan.
During the reporting period, the Fund's closing price on the New York Stock
Exchange decreased $4.00 per share, from $15.00 at inception on September 15,
1994 to $11.00 on March 31, 1995. During this time, the Fund's net asset value
declined from $14.10 to $13.09. Shareholders received income distributions
totaling 5.5 cents ($0.055) per share.
Distributions will vary depending on income earned by the Fund, as well as any
profits realized from the sale of securities in the portfolio. Of course, past
performance is not predictive of future results, and we encourage shareholders
to view their investments in a long-term perspective.
- --------------------------------------------------------------------------------
Templeton Vietnam Opportunities
Fund, Inc.
Cumulative Total Returns*
Period Ended 3/31/95
<TABLE>
<CAPTION>
Since
Inception
(9/15/94)
<S> <C>
Based on change
in net asset value -6.74%
Based on change
in market price -26.33%
</TABLE>
*Cumulative total return calculations show the change in value of an investment
over the period indicated. These calculations assume reinvestment of all
distributions and capital gains, either at net asset value or at market price on
the reinvestment date. Past performance is not predictive of future results.
5
<PAGE>
The Following Letter was
Written by Dr. Mobius After a
Recent Visit to Vietnam.
Ho Chi Minh City, Vietnam
This report is being written in Ho Chi Minh City (formerly Saigon). I'm
delighted to report that Templeton now has a representative office in this
bustling city. This is important because it facilitates our search for
investment opportunities in this exciting country as it joins the race to become
one of Asia's newest "Tiger" economies.
Signs of optimism about the future are everywhere. Vietnam has a hard-working
and able workforce, low wages, plenty of raw materials, a potentially important
domestic market and an increasingly stable political environment. Gross Domestic
Product grew 9% in 1994 and is forecast to grow 10% in 1995. To economists and
businessmen alike, these factors point to a bright future for this nation of 70
million people.
On the streets, the pace has picked up, with increasing numbers of trucks filled
with merchandise competing for space with private luxury vehicles, motor
scooters, and vendors pushing carts piled high with everything from garments to
compact discs. The growth in economic development can also be observed on
people's feet; leather shoes are in abundance, although plastic sandals still
predominate.
Less frenetic, but just as upbeat, is the mood within many of the manufacturing,
trading and service-sector companies that have set up shop in the city's growing
number of modern office buildings. With a strong sense of the country's
potential, foreign companies have been lining up to establish a presence in
Vietnam as it continues its economic restructuring program known as Doi Moi.
It's not hard to be impressed by the amount of foreign investment pouring into
Vietnam. Since 1988, direct foreign investment pledges have grown to more than
$10 billion, the majority coming from Taiwan, followed by Hong Kong, South
Korea,
6
<PAGE>
Australia, France and Singapore. With the lifting of the U.S. trade embargo,
investments from U.S. companies should increase substantially. Major U.S.
companies such as PepsiCo, Coca-Cola, and Mobil Oil already have licensed
ventures in the country.
The tourism sector is also expanding rapidly. Overall investment in hotels,
tourism and services now totals $2.8 billion, second only to manufacturing,
which has attracted $3.7 billion. In addition to Hanoi, which is expected to
become a major tourist destination, Hue, the scenic, former imperial capital,
and the coastal city of Danang are being targeted by foreign investors for
tourism infrastructure development.
That's not to say Vietnam is problem-free. The country's creaking bureaucracy is
a source of great frustration to many foreign investors, who are also concerned
about corruption. Another sore point is the glacial pace of the development of
Vietnam's capital markets. Encouragingly, the government has recently announced
plans for the opening of a government debt market, and an equity market could
exist by 1996. In the meantime, the Fund continues to seek investments in
companies that have exposure to Vietnam. Over the long term, there is tremendous
potential for investors to profit from what we believe will be Vietnam's
inevitable transformation into a major Asian economy.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Vietnam Opportunities Fund, Inc.
- --------------------------------------------------------------------------------
Although Sir John Templeton has not been involved in investment management of
the Templeton funds since October 1992, we were saddened by his recent decision
to step down as Chairman and Director of the U.S. registered Templeton funds.
The independent directors have nominated John Wm. Galbraith, former vice
chairman of Templeton, Galbraith & Hansberger, Ltd. to succeed him. The
investment manager will continue to use the investment philosophies and
principles established by Sir John.
- --------------------------------------------------------------------------------
7
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SEPTEMBER 8, 1994
(COMMENCEMENT
OF OPERATIONS) TO
MARCH 31, 1995
-----------------
<S> <C>
Net asset value, beginning of period $ 14.10
--------
Income from investment operations:
Net investment income .13
Net realized and unrealized loss (1.00)
--------
Total from investment operations (.87)
Underwriting expenses deducted from capital (.09)
Distribution to shareholders from net investment income (.05)
--------
Change in net asset value (1.01)
--------
Net asset value, end of period $ 13.09
========
TOTAL RETURN *
Based on market value per share (26.33)%
Based on net asset value per share (6.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $105,306
Ratio of expenses, net of fee waiver, to average net assets 1.72%**
Ratio of net investment income to average net assets 1.81%**
Portfolio turnover rate 11.77%
</TABLE>
* NOT ANNUALIZED.
** ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Investment Portfolio, March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS: 55.5%
- -------------------------------------------------------------------------------
Appliances & Household Durables: 1.3%
Luks Industrial Co. Ltd. H.K. 11,260,000 $ 1,412,597
- -------------------------------------------------------------------------------
Banking: 3.2%
Bangkok Bank Public Co. Ltd. Thai. 376,200 2,734,611
Thai Military Bank Ltd., fgn. Thai. 224,000 654,944
------------
3,389,555
- -------------------------------------------------------------------------------
Beverages & Tobacco: 4.3%
Asia Pacific Breweries Ltd. Sing. 92,000 534,467
British American Tobacco Ltd. Sing. 235,000 1,098,831
Rothmans Industries Ltd. Sing. 395,000 1,874,956
Rothmans Industries Ltd., fgn. Sing. 210,000 996,812
------------
4,505,066
- -------------------------------------------------------------------------------
Broadcasting & Publishing: 0.6%
South Sea Development Co. Ltd. H.K. 11,888,000 599,627
- -------------------------------------------------------------------------------
Business & Public Services: 0.8%
Carnaudmetalbox Asia Ltd. Sing. 252,000 878,385
- -------------------------------------------------------------------------------
Chemicals: 1.4%
PT Unggul Indah Corp., fgn. Indo. 1,568,000 1,436,282
- -------------------------------------------------------------------------------
Construction & Housing: 3.3%
Christiani and Nielsen (Thai)
Public Co. Ltd., fgn. Thai. 360,000 815,025
Siam Syntech Construction Public
Co. Ltd., fgn. Thai. 499,000 1,317,157
Sino-Thai Engineering &
Construction Public Co., fgn. Thai. 122,000 1,387,208
------------
3,519,390
- -------------------------------------------------------------------------------
Financial Services: 0.8%
Peregrine Investments Holdings Ltd. H.K. 763,000 873,325
- -------------------------------------------------------------------------------
Food & Household Products: 4.4%
Barlile Corp. Ltd. Aus. 370,000 542,419
Chareon Pokphand Feedmill Public
Co. Ltd., fgn. Thai. 113,000 766,335
Charoen Pokphand Feedmill Public
Co. Ltd. Thai. 150,000 944,162
Golden Resources Development
International Ltd. H.K. 21,284,000 1,871,847
Thai Wah Public Co. Ltd. Thai. 71,000 87,579
Thai Wah Public Co. Ltd., fgn. Thai. 331,400 408,783
------------
4,621,125
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Investment Portfolio, March 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS (CONT.)
- -----------------------------------------------------------------------------
Leisure & Tourism: 3.2%
*Glynhill International Ltd. H.K. 26,980,000 $ 942,136
Hongkong & Shanghai Hotels Ltd. H.K. 2,034,000 2,393,870
------------
3,336,006
- -----------------------------------------------------------------------------
Merchandising: 2.0%
LI & Fung Ltd. H.K. 1,800,000 1,210,554
Wo Kee Hong Holdings Ltd. H.K. 4,251,000 896,163
------------
2,106,717
- -----------------------------------------------------------------------------
Metals & Mining: 5.9%
Natsteel Ltd., fgn. Sing. 148,000 309,316
Natsteel Ltd., ord. Sing. 2,669,000 5,578,144
Padaeng Industry Public Co. Ltd.,
fgn. Thai. 306,300 310,964
------------
6,198,424
- -----------------------------------------------------------------------------
Multi-Industry: 11.2%
Carnaudmetalbox Asia Ltd., fgn. Sing. 147,000 512,391
First Pacific Co. H.K. 2,800,000 2,046,042
Jardine Matheson Holdings Ltd.
(Singapore) H.K. 560,000 5,040,000
Swire Pacific Ltd., B H.K. 3,750,000 4,170,978
------------
11,769,411
- -----------------------------------------------------------------------------
Real Estate: 8.1%
First Capital Corp. Ltd. Sing. 100,000 279,136
First Capital Corp. Ltd., fgn. Sing. 30,000 83,741
Lai Sun Development Co. Ltd. H.K. 7,244,000 946,255
Lim Kah Ngam Ltd. Sing. 520,000 563,656
Lim Kah Ngam Ltd., fgn. Sing. 400,000 433,581
New World Development Co. Ltd. H.K. 2,270,000 6,179,966
------------
8,486,335
- -----------------------------------------------------------------------------
Recreation, Other Consumer Goods: 0.4%
KTP Holdings Ltd. H.K. 4,050,000 445,227
- -----------------------------------------------------------------------------
Textiles & Apparel: 4.6%
Hua Thai Manufacturing Public Co.
Ltd. Thai. 250,000 598,985
PT Polysindo Eka Perkasa, fgn. Indo. 3,752,000 3,688,293
Saha Union Public Co. Ltd., fgn. Thai. 400,000 572,589
------------
4,859,867
------------
TOTAL COMMON STOCKS (cost $66,198,191) 58,437,339
- -----------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Investment Portfolio, March 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT TERM OBLIGATIONS: 44.6% (cost
$46,951,539)
- ------------------------------------------------------------------------------
U.S. Treasury Bills, 5.63% to
5.66% with
maturities to 5/18/95 U.S. 47,252,000 $ 46,970,236
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS: 100.1% (cost
$113,149,730) 105,407,575
OTHER ASSETS, LESS LIABILITIES: (0.1)% (101,325)
------------
TOTAL NET ASSETS: 100.0% $105,306,250
============
</TABLE>
* NON-INCOMING PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $113,149,730) $105,407,575
Dividends receivable 220,808
Unamortized organization costs 19,052
------------
Total assets 105,647,435
------------
Liabilities:
Accrued expenses 341,185
------------
Total liabilities 341,185
------------
Net assets, at value $105,306,250
============
Net assets consists of:
Undistributed net investment income $ 579,499
Net unrealized depreciation (7,742,155)
Accumulated net realized loss (278,424)
Net capital paid in on shares of capital stock 112,747,330
------------
Net assets, at value $105,306,250
============
Shares outstanding 8,047,093
============
Net asset value per share
($105,306,250 / 8,047,093) $ 13.09
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
for the period September 8, 1994 (commencement of operations) to March 31, 1995
<TABLE>
<S> <C> <C>
Investment income: (net of $56,703
foreign taxes withheld)
Dividends $ 578,957
Interest 1,414,878
-----------
Total income $ 1,993,835
Expenses:
Management fees (Note 3) 648,978
Administrative fees (Note 3) 84,554
Transfer agent fees 48,500
Custodian fees 48,000
Reports to shareholders 70,000
Audit fees 20,000
Registration and filing fees 15,000
Directors' fees and expenses 18,000
Legal fees 11,000
Amortization of organization costs 2,448
Other 5,266
-----------
Total expenses 971,746
-----------
Net investment income 1,022,089
Realized and unrealized loss:
Net realized loss on:
Investments (243,524)
Foreign currency transactions (34,900)
-----------
(278,424)
Net unrealized depreciation on investments (7,742,155)
-----------
Net realized and unrealized loss (8,020,579)
-----------
Net decrease in net assets resulting from operations $(6,998,490)
===========
</TABLE>
12
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 8, 1994
(COMMENCEMENT OF
OPERATIONS) TO
MARCH 31, 1995
-----------------
<S> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 1,022,089
Net realized loss from security and foreign currency
transactions (278,424)
Net unrealized depreciation (7,742,155)
------------
Net decrease in net assets resulting from operations (6,998,490)
Distributions to shareholders from net investment income (442,590)
Capital share transactions (Note 2) 112,647,319
------------
Net increase in net assets 105,206,239
Net assets:
Beginning of period 100,011
------------
End of period $105,306,250
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Vietnam Opportunities Fund, Inc. (the Fund) was organized as a Mary-
land corporation on July 19, 1994 and commenced operations on September 8, 1994
as a closed-end, non-diversified management investment company registered under
the Investment Company Act of 1940. The following summarizes the Fund's signif-
icant accounting policies.
a. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal ex-
change on which the securities are traded. Over-the-counter securities and
listed 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 by management
and approved in good faith by the Board of Directors.
b. FOREIGN CURRENCY TRANSLATIONS:
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 curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into foreign exchange contracts 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 for-
eign currencies, currency gains or losses realized between the trade and set-
tlement 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 of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
d. UNAMORTIZED ORGANIZATION COSTS:
Organization costs are being amortized on a straight line basis over a five
year period.
e. 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 securi-
ties is recorded as soon as information is available to the Fund. Interest in-
come 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.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
On September 22, 1994, the Fund completed the initial public offering of
7,000,000 shares of its common stock; proceeds paid to the Fund amounted to
$97,983,319, after deduction of underwriting commissions and expenses of
$716,681. On October 26, 1994, the Fund completed a subsequent offering of
1,040,000 shares of its common stock, proceeds paid to the Fund amounted to
$14,664,000.
At March 31, 1995, there were 100,000,000 shares of capital stock authorized
($0.01 par value).
14
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton In-
vestment Management (Singapore) Pte. Limited (TIMPL) and Templeton Global In-
vestors, Inc. (TGII), the Fund's investment manager and administrative manager,
respectively. The Fund pays monthly an investment management fee to TIMPL
equal, on an annual basis, to 1.5% of the average weekly net assets of the
Fund. The Fund pays TGII monthly a fee of 0.15% per annum of the Fund's average
weekly net assets. TIMPL pays monthly a shareholder servicing agent fee to
Paine Webber (formerly Kidder, Peabody & Co.) equal, on an annual basis, to
0.10% of the average daily net assets of the Fund. Prior to November 15, 1994,
the shareholder servicing fees were paid by the Fund. TIMPL and Paine Webber
have agreed to reduce their fees by one half during the fiscal quarter follow-
ing any of the first four fiscal quarters of the Fund if the average closing
price of the Fund's Shares in the preceding quarter is less than the $15.00
initial offering price. Such reduction in fees for TIMPL attributable to the
Fund amounted to $195,250 for the period ended March 31, 1995.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received $11,000 for the period ended March 31, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the pe-
riod ended March 31, 1995 aggregated $72,240,929 and $5,801,921, respectively.
The cost of securities for federal income tax purposes is the same as that
shown in the Statement of Assets and Liabilities. Realized gains and losses are
reported on an identified cost basis.
At March 31, 1995, the aggregate gross unrealized appreciation and depreciation
of portfolio securities, based on cost for federal income taxes purposes, was
as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 1,035,172
Unrealized depreciation (8,777,327)
-----------
Net unrealized depreciation $(7,742,155)
===========
</TABLE>
5. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET LOSS NET DECREASE
ON SECURITY AND IN NET ASSETS
INVESTMENT NET INVESTMENT FOREIGN CURRENCY RESULTING FROM
INCOME INCOME TRANSACTIONS OPERATIONS
---------------- ----------------- ------------------- ------------------
PER PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
---------- ----- ---------- ----- ----------- ------ ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995:
For the period ended:
September 30, 1994 $ 59,487 $.01 $ (21,616) -- $ (402,751) $ (.06) $ (424,367) $(.06)
December 31, 1994 1,056,581 .13 467,180 .06 (6,771,113) (.84) (6,303,933) (.78)
March 31, 1995 877,767 .11 576,525 .07 (846,715) (.10) (270,190) (.03)
---------- ---- ---------- ---- ----------- ------ ----------- ----- ---
$1,993,835 $.25 $1,022,089 $.13 $(8,020,579) $(1.00) $(6,998,490) $(.87)
========== ==== ========== ==== =========== ====== =========== ===== ===
</TABLE>
15
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Templeton Vietnam Opportunities Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of Templeton Vietnam Opportunities Fund, Inc. as of
March 31, 1995, and the related statement of operations, the statement of
changes in net assets and the financial highlights for the period from Septem-
ber 8, 1994 (commencement of operations) to March 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's man-
agement. Our responsibility is to express an opinion on these financial state-
ments and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights 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
March 31, 1995, 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 pre-
sentation. We believe that our audit provides a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Tem-
pleton Vietnam Opportunities Fund, Inc. as of March 31, 1995, the results of
its operations, the changes in its net assets and the financial highlights for
the period indicated, in conformity with generally accepted accounting princi-
ples.
/s/ McGladrey & Pullen, LLP
New York, New York
April 28, 1995
16
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following
features: *If shares of the Fund are held in the shareholder's name, the share-
holder will automatically be a participant in the Plan unless he elects to
withdraw. If the shares are registered in the name of a broker-dealer or other
nominee (i.e., in "street name"), the broker-dealer or nominee will elect to
participate in the Plan on the shareholder's behalf unless the shareholder in-
structs them otherwise, or unless the reinvestment service is not provided by
the broker-dealer or nominee. *Participants should contact Chemical Mellon Se-
curities Trust Company, Dividend Reinvestment Services, P.O. Box 750, Pitts-
burgh, PA 15230, to receive the Plan brochure. *To receive dividends or distri-
butions in cash, the shareholder must notify Chemical Mellon Securities Trust
Company ("Mellon") or the institution in whose name the shares are held. Mellon
must receive written notice within 10 business days before the record date for
the distribution. *Whenever the Fund declares dividends in either cash or com-
mon stock of the Fund, if the market price is equal to or exceeds net asset
value at the valuation date, participants will receive the dividends entirely
in stock at a price equal to the net asset value but not less than 95% of the
then current market price of the Fund's shares. If the market price is lower
than net asset value and if dividends and/or capital gains distributions are
payable only in cash, the participant will receive shares purchased on the New
York Stock Exchange. *The automatic reinvestment of dividends and/or capital
gains does not relieve the participant of any income tax which may be payable
on dividends or distributions. *The participant may withdraw from the Plan
without penalty at any time by written notice to Mellon. Upon withdrawal, the
participant will receive, without charge, stock certificates issued and in the
participant's name for all full shares; or, if the participant's wishes, Mellon
will sell the participant's shares and send the proceeds, net of any brokerage
commissions. A $5.00 fee is charged by Mellon upon any cash withdrawal or ter-
mination. *Whenever shares are purchased on the New York Stock Exchange, each
participant will pay a pro rata portion of brokerage commissions. Brokerage
commissions will be deducted from amounts to be invested.
17
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
- --------------------------------------------------------------------------------
TRANSFER AGENT
Chemical Mellon Shareholder Services
Securities Transfer Services
450 West 33rd Street,
15th Floor New York, NY 10001
800-526-0801
SHAREHOLDER INFORMATION
Shares of Templeton Vietnam Opportunities, Inc. are traded daily on the New
York Stock Exchange under the symbol "TVF". Information about the net asset
value and the market price is published weekly in Barron's and in the Monday
edition of the Wall Street Journal in a table called "Publicly Traded Funds".
For current information about the net asset value, call 1-800-292-9293.
If any shareholder is not receiving copies of the Reports to Shareholders be-
cause shares are registered in a broker's name or in a custodian's name, he or
she can write and request that his or her name be added to the Fund's mailing
list, by writing Templeton Vietnam Opportunities, Inc., 700 Central Avenue, St.
Petersburg, FL 33701.
For information about dividends and shareholder accounts, call 1-800-526-0801.
18
<PAGE>
The Franklin Templeton Group
- --------------------------------------------------------------------------------
Literature Request -- Call 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.
TEMPLETON Massachusetts*** German Government Bond Fund
FUNDS Michigan*** Global Government Income Fund
Minnesota*** Investment Grade Income Fund
American Trust Missouri U.S. Government Securities Fund
American Government New Jersey
Securities Fund New York* FRANKLIN FUNDS SEEKING HIGH
Developing Markets North Carolina CURRENT INCOME AND STABILITY
Trust Ohio*** OF PRINCIPAL
Foreign Fund Oregon Adjustable Rate Securities
Global Infrastructure Pennsylvania Fund
Fund Tennessee** Adjustable U.S. Government
Global Opportunities Texas Securities Fund
Trust Virginia Short-Intermediate U.S.
Global Rising Dividends Washington** Government Securities Fund
Fund
Greater European Fund FRANKLIN FUNDS FRANKLIN FUNDS FOR NON-U.S.
Growth Fund SEEKING CAPITAL GROWTH INVESTORS
Income Fund California Tax-Advantaged High Yield
Japan Fund DynaTech Fund Securities Fund
Latin America Fund Growth Fund Tax-Advantaged International
Money Fund Equity Fund Bond Fund
Real Estate Securities Global Health Tax-Advantaged U.S.
Fund Care Fund Government Securities Fund
Smaller Companies Gold Fund
Growth Fund Growth Fund FRANKLIN TEMPLETON
World Fund International INTERNATIONAL CURRENCY FUNDS
Equity Fund Global Currency Fund
FRANKLIN FUNDS Pacific Hard Currency Fund
SEEKING TAX- Growth Fund High Income Currency Fund
FREE INCOME Real Estate
Federal Intermediate Securities FRANKLIN MONEY MARKET FUNDS
Term Fund California Tax-Exempt Money
Tax-Free Income Fund Small Cap Fund
Federal Tax-Free Growth Fund Federal Money Fund
Income Fund IFT U.S. Treasury Money
High Yield Tax-Free Market Portfolio
Income Fund FRANKLIN FUNDS SEEKING Money Fund
Insured Tax-Free GROWTH AND INCOME New York Tax-Exempt Money
Income Fund*** Balance Sheet Fund
Puerto Rico Tax-Free Investment Fund Tax-Exempt Money Fund
Income Fund Convertible Securities
Fund FRANKLIN FUND FOR
FRANKLIN STATE-SPECIFIC Equity Income Fund CORPORATIONS
FUNDS SEEKING TAX-FREE Global Utilities Fund Corporate Qualified Dividend
INCOME Income Fund Fund
Alabama Premier Return Fund
Arizona* Rising Dividends Fund FRANKLIN TEMPLETON VARIABLE
Arkansas** Strategic Income Fund ANNUITIES
California* Utilities Fund Franklin Valuemark
Colorado Franklin Templeton Valuemark
Connecticut FRANKLIN FUNDS SEEKING Income
Florida* HIGH CURRENT INCOME Plus (an intermediate
Georgia AGE High Income Fund annuity)
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Toll-free 1-800/DIAL BEN (1-800/342-5236)
* Two or more fund options available: Long-term portfolio, intermediate-term
portfolio, a portfolio of municipal securities, and a high yield portfolio
(CA).
** 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.
<PAGE>
- --------------------------
TEMPLETON VIETNAM
OPPORTUNITIES FUND,
INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Investors should be aware that the value of investments made for the Fund may
go up as well as down and that the Investment Manager may make errors in
selecting securities for the Fund's portfolio. Like any investment in
securities, the Fund's portfolio will be subject to the risk of loss from
market, currency, economic, political and other factors. The Fund and Fund
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 de-partments may be moni-tored, recorded and ac-cessed. These calls can
be determined by the presence of a regular beeping tone.
- --------------------------
TLTVF A95 05/95
[LOGO APPEARS HERE]
TEMPLETON
VIETNAM
OPPORTUNITIES
FUND, INC.
Annual Report
March 31, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
