<PAGE>
Templeton Vietnam
Opportunities Fund
[PHOTO OF MARK MOBIUS APPEARS HERE]
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 emerging markets. Together with his
team of Templeton analysts, Dr. Mobius currently oversees more than $8 billion
in emerging markets investments for the Templeton Group of Funds.
Your Fund's Objective:
The Templeton Vietnam Opportunities Fund 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 16, 1996
Dear Shareholder:
We are pleased to bring you the second annual report of the Templeton Vietnam
Opportunities Fund, which covers the period ended March 31, 1996. As shown in
the Performance Summary on page 5, the Fund produced a one-year total return of
22.11% in market-price terms.
When the Templeton Vietnam Opportunities Fund was launched, we knew it would not
be easy to invest money in Vietnam due to the lack of a functioning capital
market. We expected that the country would have developed such a market by now,
but this has not happened. Therefore, all of our equity investments have
involved companies doing business in Vietnam (Vietnam-related companies), as
opposed to Vietnamese companies. The
1
<PAGE>
Templeton Vietnam Opportunities Fund
Geographic Distribution on 3/31/95
Based on Total Net Assets
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Hong Kong 27.5%
Singapore 10.1%
Indonesia 5.5%
Thailand 5.0%
Short Term Obligations &
Other Net Assets 51.9%
</TABLE>
companies we selected were listed on exchanges in Hong Kong, Singapore,
Indonesia and Thailand. As you can see from 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 10.1%, Indonesian companies were 5.5%, and Thai
companies represented 5.0% of the Fund's total net assets.
On March 31, 1996, 48.1% of our total net assets were invested in equities, with
the remaining 51.9% in cash and other liquid assets. The multi-industry sector
represented 10.2% of the Fund's total net assets and the real estate sector
consisted of 9.8%. Our top holdings included New World Development Co., Ltd., a
Hong Kong-based company which invests in and develops property, especially
hotels in Hong Kong and abroad; Swire Pacific Ltd., the Hong Kong parent company
of a diversified group consisting of several divisions including aviation,
property, shipping, dockyard services, and trading; and Natsteel Ltd., a
Singapore-based steel company. Each firm is active in Vietnam, participating in
new projects in their respective fields of expertise.
We anticipate that some of the Fund's net assets currently held in cash and
short-term obligations may soon be invested in Vietnamese joint venture
companies. When selecting a Vietnamese investment, we insist on audited
financial statements, a detailed, mutually agreed upon exit strategy, and a
management team with a proven track record. During the reporting period, we
reviewed investment opportunities in the property development, tourism and
agricultural sectors, and started negotiations
2
<PAGE>
for participation in several projects. In the near future, we envisage
exploring other areas, such as heavy industry and infrastructure-related
projects. To this end, we are constantly meeting with Vietnamese government and
company officials, lawyers, and accountants. However, in light of how new this
emerging market is, we have proceeded slowly in order to find projects that
appear to have a realistic chance of producing positive returns in the long
term.
This discussion reflects the strategies we employed for the Fund during the
twelve months under review, and includes our opinions as of the close of the
period. Since economic and market conditions are constantly changing, our
strategies, and our evaluations, conclusions and decisions regarding portfolio
holdings, may change as new circumstances arise. Although past performance of a
specific investment or sector cannot guarantee future performance, such
information can be useful in analyzing the securities we purchase or sell for
the Fund.
Looking forward, we are optimistic about potential investment opportunities in
Vietnam. Economic growth there appears to be gaining momentum and inflation
remains relatively stable. However, one should be aware that
Templeton Vietnam
Opportunities Fund
<TABLE>
<CAPTION>
Top Ten Holdings on 3/31/96
Based on Total Net Assets
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
New World Development Co. Ltd.
Real Estate, Hong Kong 7.2%
- --------------------------------------------------------------------------------
Swire Pacific Ltd. B.
Multi-Industry, Hong Kong 4.4%
- --------------------------------------------------------------------------------
Natsteel Ltd.
Metals & Mining, Singapore 4.3%
- --------------------------------------------------------------------------------
Jardine Matheson Holdings Ltd.
Multi-Industry, Hong Kong 3.9%
- --------------------------------------------------------------------------------
P T Polysindo Eka Perkasa, fgn.
Textiles & Apparel, Indonesia 3.8%
- --------------------------------------------------------------------------------
Golden Resources Development
International Ltd.,
Food & Household Products, Hong Kong 2.8%
- --------------------------------------------------------------------------------
Hongkong & Shanghai Hotels Ltd.
Leisure & Tourism, Hong Kong 2.7%
- --------------------------------------------------------------------------------
Rothmans Industries Ltd.
Beverages & Tobacco, Singapore 2.1%
- --------------------------------------------------------------------------------
P T Unggul Indah Corp., fgn.
Chemicals, Indonesia 1.7%
- --------------------------------------------------------------------------------
Carnaudmetalbox Asia Ltd.
Beverages & Tobacco, Singapore 1.4%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 7 of this report.
some issues must be closely monitored. For example, the country needs to
overcome deficiencies in its legal and regulatory infrastructure if it is to
develop a market-based economy. Unfortunately, progress in policy concerning
foreign investment of any kind seems to have come to a halt, as decisionmakers
prepare for Vietnam's Congress of the Communist Party, which is tentatively
sched-
3
<PAGE>
uled to be held in September 1996. Until that meeting takes place, many policy
developments are on hold.
It should be remembered that investing in Vietnam involves special
considerations related to the absence of a stock market for the Fund's direct
investments, as well as the risks associated with investing in an emerging
market. These risks include adverse economic, social and political developments,
the relatively small size and lesser liquidity of these markets, and market and
currency volatility. Investment in the Fund should be considered speculative.
We thank you for your participation in the Fund and welcome your comments and
suggestions.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Vietnam Opportunities Fund, Inc.
- --------------------------------------------------------------------------------
On October 21, 1995, the Fund's Board of Directors approved a change to the
Fund's non-fundamental investment policy to authorize an increase in the
percentage of the Fund's assets that may be invested in direct equity
investments from 35% to 65%. Direct investments will consist of (i) the private
purchase from an enterprise of an equity interest in the enterprise in the form
of shares of common stock or equity interests in trusts, partnerships, joint
ventures or similar enterprises, or (ii) the purchase of such an equity interest
in an enterprise from a principal investor in the enterprise. Due to the absence
of a public trading market for the Fund's direct investments, they will be less
liquid than listed securities.
- --------------------------------------------------------------------------------
4
<PAGE>
Performance Summary
In market-price terms, the Templeton Vietnam Opportunities Fund produced a total
return of 22.11% for the one-year period ended March 31, 1996. Based on the
change in actual net asset value (in contrast to market price), total return was
9.80% for the same period. Both total return figures 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 increased from $11.00 on March 31, 1995 to $13.00 on March 31, 1996,
while the net asset value increased from $13.09 to $13.91 for the same period.
Shareholders received distributions of 37.5 cents ($0.375) per share in income
dividends, and 7 cents ($0.07) per share in short-term capital gains.
We have always maintained a long-term investment perspective, and encourage
shareholders to view their investments in a similar manner. Past performance is
not predictive of future results, and distributions will vary depending on
income earned by the Fund, as well as any profits realized from the sale of
securities in the portfolio.
Templeton Vietnam Opportunities Fund
Cumulative Total Returns*
Periods ended March 31, 1996
<TABLE>
<CAPTION>
Since
Inception
One-Year (9/8/94)
<S> <C> <C>
Based on change
in net asset value 9.80% 2.40%
Based on change
in market price 22.11% -10.04%
</TABLE>
*Cumulative total returns show the change in value of an investment over the
periods indicated. These calculations assume reinvestment of all dividend and
capital gains distributions, either at net asset value or at market price on the
reinvestment date, in accordance with the dividend reinvestment plan. Past
performance is not predictive of future results.
The Fund's investment manager waived a portion of its fees, which reduced
operating expenses and increased total return to shareholders. Without these
reductions, the Fund's total return would have been lower.
5
<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
YEAR ENDED OF OPERATIONS) TO
MARCH 31, 1996 MARCH 31, 1995
-------------- -----------------
<S> <C> <C>
Net asset value, beginning of period $ 13.09 $ 14.10
-------- --------
Income from investment operations:
Net investment income .36 .13
Net realized and unrealized gain (loss) .91 (1.00)
-------- --------
Total from investment operations 1.27 (.87)
-------- --------
Underwriting expenses deducted from capital -- (.09)
-------- --------
Distributions:
Dividends from net investment income (.38) (.05)
Distributions in excess of net realized gains (.07) --
-------- --------
Total distributions (.45) (.05)
-------- --------
Change in net asset value .82 (1.01)
-------- --------
Net asset value, end of period $ 13.91 $ 13.09
======== ========
TOTAL RETURN*
Based on market value per share 22.11% (26.33)%
Based on net asset value per share 9.80% (6.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $112,073 $105,306
Ratio of expenses, net of fee waiver, to
average net assets 1.47% 1.72%**
Ratio of net investment income to average net
assets 2.62% 1.81%**
Portfolio turnover rate 4.01% 11.77%
Average commission rate paid (per share) $ .0060
</TABLE>
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Investment Portfolio, March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS: 48.1%
- ------------------------------------------------------------------------------
Appliances & Household Durables: 1.1%
Luks Industrial Co. Ltd. H.K. 11,260,000 $ 1,193,845
- ------------------------------------------------------------------------------
Beverages & Tobacco: 4.7%
Asia Pacific Breweries Ltd. Sing. 58,000 358,457
British American Tobacco Ltd. Sing. 235,000 984,940
Carnaudmetalbox Asia Ltd., fgn. Sing. 399,000 1,587,270
Rothmans Industries Ltd., fgn. Sing. 605,000 2,299,318
------------
5,229,985
- ------------------------------------------------------------------------------
Chemicals: 1.6%
PT Unggul Indah Corp., fgn. Indo. 1,724,800 1,862,754
- ------------------------------------------------------------------------------
Construction & Housing: 2.1%
*Christiani and Nielsen (Thai)
Public Co. Ltd., new, fgn. Thai. 278,766 273,268
Siam Syntech Construction Public
Co. Ltd., fgn. Thai. 499,000 1,393,358
*Sino-Thai Engineering &
Construction Public Co., fgn. Thai. 122,000 710,314
------------
2,376,940
- ------------------------------------------------------------------------------
Financial Services: 1.1%
Peregrine Investments Holdings
Ltd. H.K. 763,000 1,228,258
- ------------------------------------------------------------------------------
Food & Household Products: 4.1%
Chareon Pokphand Feedmill Public
Co. Ltd., fgn. Thai. 113,000 716,096
Charoen Pokphand Feedmill Public
Co. Ltd. Thai. 150,000 754,515
Golden Resources Development
International Ltd. H.K. 21,284,000 3,137,285
------------
4,607,896
- ------------------------------------------------------------------------------
Leisure & Tourism: 3.5%
*Glynhill International Ltd. H.K. 27,678,000 880,371
Hongkong & Shanghai Hotels Ltd. H.K. 1,875,000 3,066,815
------------
3,947,186
- ------------------------------------------------------------------------------
Merchandising: 0.8%
Wo Kee Hong Holdings Ltd. H.K. 4,949,000 883,064
- ------------------------------------------------------------------------------
Metals & Mining: 4.5%
Natsteel Ltd., fgn. Sing. 2,467,000 4,854,436
*Padaeng Industry Public Co.
Ltd., fgn. Thai. 306,300 197,139
------------
5,051,575
- ------------------------------------------------------------------------------
Multi-Industry: 10.2%
Jardine Matheson Holdings Ltd.
(Singapore) H.K. 558,842 4,358,968
Saha Union Public Co. Ltd., fgn. Thai. 400,000 546,578
</TABLE>
7
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Investment Portfolio, March 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Multi-Industry (cont.)
Swire Pacific Ltd., B H.K. 3,560,000 $ 4,879,235
Thai Wah Public Co. Ltd., fgn. Thai. 410,850 406,814
Wheelock & Co. Ltd. H.K. 600,000 1,202,483
------------
11,394,078
- -------------------------------------------------------------------------------
Real Estate: 9.8%
*Lai Sun Development Co. Ltd. H.K. 7,520,000 1,273,752
Lim Kah Ngam Ltd., fgn. Sing. 1,108,000 1,243,617
New World Development Co. Ltd. H.K. 1,735,965 8,080,520
*South Sea Development Co. Ltd. H.K. 12,239,000 357,643
------------
10,955,532
- -------------------------------------------------------------------------------
Recreation & Other Consumer Goods: 0.2%
KTP Holdings Ltd. H.K. 4,050,000 183,282
- -------------------------------------------------------------------------------
Textiles & Apparel: 4.4%
Hua Thai Manufacturing Public Co.
Ltd. Thai. 259,400 657,541
PT Polysindo Eka Perkasa, fgn. Indo. 7,144,000 4,277,844
------------
4,935,385
------------
TOTAL COMMON STOCKS (cost $54,439,310) 53,849,780
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT TERM OBLIGATIONS: 51.8% (cost
$58,139,954)
- -------------------------------------------------------------------------------
U.S. Treasury Bills, 4.59% to
5.06% with
maturities to 6/06/96 U.S. 58,389,000 58,132,707
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.9% (cost $112,579,264) 111,982,487
OTHER ASSETS, LESS LIABILITIES: 0.1% 90,871
------------
TOTAL NET ASSETS: 100.0% $112,073,358
============
</TABLE>
*NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost
$112,579,264) $111,982,487
Cash 461
Receivables:
Investment securities sold 502,961
Dividends 81,172
Unamortized organization costs 14,660
------------
Total assets 112,581,741
------------
Liabilities:
Payables for investment
securities purchased 194,111
Accrued expenses 314,272
------------
Total liabilities 508,383
------------
Net assets, at value $112,073,358
============
Net assets consist of:
Undistributed net investment income $ 379,647
Net unrealized depreciation (596,777)
Distributions in excess of net
realized gain (613,263)
Net capital paid in on shares of
capital stock 112,903,751
------------
Net assets, at value $112,073,358
============
Shares outstanding 8,058,603
============
Net asset value per share
($112,073,358 / 8,058,603) $ 13.91
============
</TABLE>
STATEMENT OF OPERATIONS
for the year ended March 31, 1996
<TABLE>
<S> <C> <C>
Investment income:
(net of $321,085
foreign taxes withheld)
Dividends $1,587,813
Interest 2,905,250
----------
Total income $ 4,493,063
Expenses:
Management fees (Note 3) 1,234,481
Administrative fees (Note 3) 164,287
Transfer agent fees 1,000
Custodian fees 55,000
Reports to shareholders 56,500
Audit fees 44,850
Legal fees (Note 3) 22,000
Registration and filing fees 23,235
Directors' fees and expenses 8,000
Amortization of
organization costs 4,392
Other 2,174
----------
Total expenses 1,615,919
-----------
Net investment income 2,877,144
Realized and unrealized
gain (loss):
Net realized gain (loss) on:
Investments 195,198
Foreign currency transactions (26,076)
----------
169,122
Net unrealized appreciation
on investments 7,145,378
----------
Net realized and
unrealized gain 7,314,500
-----------
Net increase in net assets resulting from operations $10,191,644
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 8, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
MARCH 31, 1996 MARCH 31, 1995
-------------- -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 2,877,144 $ 1,022,089
Net realized gain (loss) on investment and
foreign currency transactions 169,122 (278,424)
Net unrealized appreciation (depreciation) 7,145,378 (7,742,155)
------------ ------------
Net increase (decrease) in net assets re-
sulting from operations 10,191,644 (6,998,490)
Distributions to shareholders:
From net investment income (3,042,096) (442,590)
In excess of net realized gain (538,861) --
Capital share transactions (Note 2) 156,421 112,647,319
------------ ------------
Net increase in net assets 6,767,108 105,206,239
Net assets:
Beginning of period 105,306,250 100,011
------------ ------------
End of period $112,073,358 $105,306,250
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Vietnam Opportunities Fund, Inc. (the Fund) is a Maryland corporation
and a closed-end, non-diversified management investment company registered un-
der the Investment Company Act of 1940. The Fund seeks long-term capital appre-
ciation by investing at least 65% of its total assets in the equity and debt
securities of Vietnam or Vietnam-related companies. The following summarizes
the Fund's significant accounting policies.
a. Securities Valuations:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed se-
curities 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 ap-
proved in good faith by the Board of Directors.
b. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates of
such transactions. When the Fund purchases or sells foreign securities it
customarily enters into a foreign exchange contract to minimize foreign
exchange risk between the trade date and the settlement date of such
transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of 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 five
years.
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.
f. 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.
11
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
On September 22, 1994, the Fund completed its 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 resulting in additional proceeds of
$14,664,000.
At March 31, 1996, there were 100,000,000 shares of capital stock authorized
($0.01 par value).
During the year ended March 31, 1996, 11,510 shares were issued for $156,421
from reinvested distributions.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton Asset
Management Limited (TAML) and Templeton Global Investors, Inc. (TGII), the
Fund's investment manager and administrative manager, respectively.
The Fund pays monthly an investment management fee to TAML 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. From
its investment management fee, TAML 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. TAML 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 TAML attributable to the
Fund amounted to $408,359 for the year ended March 31, 1996.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $22,000 for the year ended March 31,
1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
year ended March 31, 1996 aggregated $2,190,716 and $14,144,063, respectively.
The cost of securities for federal income tax purposes is the same as that
shown in the Investment Portfolio. Realized gains and losses are reported on an
identified cost basis.
At March 31, 1996, the aggregate gross unrealized appreciation and depreciation
of portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,943,978
Unrealized depreciation (6,540,755)
-----------
Net unrealized depreciation $ (596,777)
===========
</TABLE>
5. DEFERRED TAX LOSSES
At March 31, 1996, the Fund has deferred capital losses occurring subsequent to
October 31, 1995 of $587,000. Such losses will be reorganized in the year end-
ing March 31, 1997.
12
<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, 1996, and the related statement of operations for the year then end-
ed, the statements of changes in net assets 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 man-
agement. Our responsibility is to express an opinion on these financial state-
ments and financial highlights based on our audits.
We conducted our audits 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, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide 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, 1996, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting princi-
ples.
/s/ McGladrey & Pullen, LLP
New York, New York
April 26, 1996
13
<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
shareholder 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 dis-
tributions 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 common 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 but not less than 95% of the then current
market price of the Fund's shares. If the market price is lower than the 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 div-
idends or distributions. . The participant may withdraw from the Plan without
penalty at any time by written notice to Mellon. Upon withdrawal, the partici-
pant will receive, without charge, stock certificates issued and in the partic-
ipant's name for all full shares; or if the participant wishes, Mellon will
sell the participant's shares and send the proceeds, net of any brokerage com-
missions. A $5.00 fee is charged by Mellon upon any cash withdrawal or termina-
tion. . Whenever shares are purchased on the New York Stock Exchange, each par-
ticipant will pay a pro rata portion of brokerage commissions. Brokerage com-
missions will be deducted from amounts to be invested.
14
<PAGE>
Templeton Vietnam Opportunities Fund, Inc.
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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.
15
<PAGE>
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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
departments may be monitored, recorded, and accessed. These calls can be
determined by the presence of a regular beeping tone.
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TEMPLETON
VIETNAM
OPPORTUNITIES
FUND, INC.
Annual Report
March 31, 1996
[LOGO OF RECYCLED PAPER APPEARS HERE] TLTVF A96 5/96
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
