SEMI ANNUAL REPORT
SEPTEMBER 30, 1997
TEMPLETON VIETNAM
OPPORTUNITIES FUND, INC.
[FRANKLIN TEMPLETON LOGO]
<PAGE>
[FRANKLIN TEMPLETON 50 YEAR LOGO]
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest in companies and governments around the globe.
In addition, we want to stress that all securities markets move both up and
down. Mixed in with the good years can be some bad years. Accordingly, mutual
fund share prices also move up and down. Every investor should expect such
fluctuations, which can be wide. When markets are going down, as well as up, we
encourage investors to maintain a long-term perspective. We thank you for your
past support and look forward to serving your investment needs in the years
ahead.
[PHOTO of J.MARK MOBIUS]
J.MARK MOBIUS, Ph.D.
President
Templeton 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 $15 billion
in emerging markets investments for the Templeton Group of Funds.
<PAGE>
SHAREHOLDER LETTER
Your Fund's Objective: The Templeton Vietnam Opportunities Fund seeks long-term
capital appreciation by investing in the equity and debt securities of Vietnam
and Vietnam-Related Companies, as defined in the Fund's prospectus.
Dear Shareholder:
This semi-annual report of the Templeton Vietnam Opportunities Fund covers the
period ended September 30, 1997.
During the period under review, many Asian stock markets in which the Fund
invests dropped sharply due to severe currency crises in Thailand, the
Philippines, Indonesia and Malaysia. This situation put pressure on Vietnam's
economy and the competitiveness of its exports. However, Vietnam's currency did
not weaken significantly, its trade deficit declined by 50%, and inflation
remained subdued at an estimated annual rate of 3.6%. Within this environment,
your Fund posted a 2.23% six-month cumulative total return in market-price
terms, and -6.89% in terms of net asset value, as discussed in the Performance
Summary on page 5.
At the end of the period, equity investments comprised 87.7% of total net
assets, with 12.3% in cash and other short-term obligations. During the six
months under review, we added 25 stocks to our holdings, including three Thai
banks which were among our ten largest holdings on September 30, 1997. Siam
CONTENTS
Shareholder Letter ......... 1
Performance Summary ........ 5
Financial Highlights and
Statement of Investments.... 7
Financial Statements ....... 11
Notes to Financial
Statements ................. 14
FUND CATEGORY
[PYRAMID GRAPH]
<PAGE>
INDUSTRY DISTRIBUTION
Based on Total Net Assets
9/30/97
Banking 18.7%
Real Estate 17.9%
Multi-Industry 13.1%
Leisure & Tourism 9.3%
Metals & Mining 6.4%
Food & Household
Products 4.3%
Other Industries 18.0%
Short-Term
Obligations & Other
Net Assets 12.3%
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
9/30/97
Thailand 29.7%
Hong Kong 26.5%
Vietnam 15.9%*
Singapore 11.5%
Indonesia 4.1%
Short-Term
Obligations & Other
Net Assets 12.3%
Commercial Bank,(1) Thai Farmers Bank Public Co. Ltd., and Bank of Ayudhya
Public Co. Ltd. help provide financing for developments in Vietnam. In addition,
we increased our holdings of Bangkok Bank, which also lends money to companies
building Vietnam's infrastructure. We believed that shares of these companies
were selling at bargain prices due to Thailand's currency crisis. Because of
these purchases, our total Thai holdings increased from 2.8% of total net assets
on March 31, 1997, to 29.7% on September 30, 1997.
Although bureaucracy generally continued to impede the Vietnamese economy, some
officials attempted to speed up the issuance of new investment licenses.
However, these approvals totaled only US$2.1 billion in the first half of 1997,
compared with US$8.8 billion for all of 1996, and the value of such projects
fell 18% for the same period. In response, the Vietnamese government completed a
blueprint to attract US$43 billion in new foreign direct investment by the year
2000.
Looking forward, it remains to be seen whether the Vietnamese economy will
continue to grow in the near term. The recent slowdown in foreign investment and
a lack of government initiatives to further liberalize and privatize the
economy, are causes for concern. Nevertheless, we view the Asian currency crisis
as an opportunity to discover bargain stocks and have positioned the Fund to
participate in Vietnam's future, which has the potential to be bright over the
long term.
This discussion reflects the strategies we employed for the Fund during the six
months under review, and includes our opinions as of the close of the period.
Because economic and market conditions are constantly changing, our strategies,
and our evaluations, conclusions and decisions regarding portfolio holdings
1. A complete listing of all stocks in the portfolio as of September 30, 1997
begins on page 8.
*These are direct investments made through companies domiciled in Belgium, Hong
Kong and Singapore.
2
<PAGE>
may change as new circumstances arise. All figures shown are as of September 30,
1997, and the Fund's holdings can be expected to change with market developments
and management of the portfolio. 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.
Investing in Vietnam involves special considerations including risks relating to
direct investments, as well as the risks associated with investing in an
emerging market. These risks include adverse economic, social and political
developments, the absence of an organized stock exchange in Vietnam, reduced
liquidity of emerging markets, and greater currency volatility. Investing in
emerging markets also means accepting a certain amount of market volatility and,
in some cases, severe market corrections. 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 1,523% in the last 15
years, but has suffered four declines of more than 20% during that time.(2)
Investment in the Fund should be considered speculative.
Thank you for investing in the Templeton Vietnam Opportunities Fund. We
appreciate your support, welcome your comments, and look forward to serving you
in the future.
Sincerely,
/s/ J. Mark Mobius
J. Mark Mobius, Ph.D.
President
Templeton Vietnam Opportunities Fund, Inc.
2. Source: Bloomberg. Based on quarterly percentage price change over the 15
years ended September 30, 1997.
TOP 10 HOLDINGS
9/30/97
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
New World Development Co. Ltd.
Real Estate, Hong Kong 10.3%
Indotel Ltd.
Leisure & Tourism, Vietnam
(direct investment) 8.7%
Natsteel Ltd. fgn.
Metals & Mining, Singapore 6.4%
Siam Commercial Bank
Banking, Thailand 5.5%
HEA Holdings Ltd.
Real Estate, Vietnam
(direct investment) 5.3%
Swire Pacific Ltd. B
Multi-Industry, Hong Kong 5.1%
Thai Farmers Bank Public Co. Ltd.
Banking, Thailand 4.7%
Bangkok Bank Public Co. Ltd.
Banking, Thailand 3.8%
Jardine Matheson Holdings Ltd.
(Singapore)
Multi-Industry, Hong Kong 3.7%
Bank of Ayudhya Public Co. Ltd.
Banking, Thailand 3.6%
For a complete list of portfolio holdings, see page 8 of this report.
3
<PAGE>
On October 18, 1997, the Board of Directors approved conducting a tender offer
for up to 50% of the Fund's shares. Management of the Fund anticipates that the
tender offer would commence in December, 1997, and conclude in January, 1998.
The tender offer will permit shareholders to sell their shares to the Fund at
the net asset value per share on the last day of the tender offer. If more than
50% of the Fund's shares are tendered pursuant to the tender offer, tendered
shares will be accepted by the Fund on a pro rata basis.
At the time of its initial public offering, the Fund's prospectus stated that,
if at least 65% of the Fund's total assets are not invested in the equity and
debt securities of Vietnam Companies (as defined in the prospectus) by October
1, 1997, management of the Fund will call a shareholders meeting to vote on a
proposal either to modify the Fund's investment policies (and to change the name
of the Fund) or to liquidate the Fund. The securities markets in Vietnam have
not developed to the point where the Fund was able to achieve the 65% level.
Accordingly, the Fund's Board of Directors considered the alternatives of
changing the investment policies and name of the Fund or liquidation, but
determined that the Fund should first conduct a tender offer to provide
shareholders who no longer wish to participate in the Fund with the opportunity
to sell their shares to the Fund at net asset value.
After completion of the tender offer, the Annual Meeting of Shareholders of the
Fund will be held to determine the future of the Fund. If less than 50% of the
Fund's shares are tendered, the Board of Directors intends to submit to
shareholders a proposal to change the name of the Fund to "Templeton Vietnam and
Southeast Asia Fund, Inc.," and to change the Fund's investment policies to
expand its ability to invest in other Southeast Asian countries, while
continuing to focus its investment program on Vietnam. The new policies would
allow the Fund to invest its assets in Vietnam as that country's markets
develop, while giving it the flexibility to invest in other Southeast Asian
countries. In the event that an organized securities market develops in Vietnam,
the Fund would have the ability to invest a significant amount of its assets in
Vietnam. If more than 50% of the Fund's shares are tendered, the Board currently
intends to submit to shareholders a proposal to liquidate the Fund.
4
<PAGE>
PERFORMANCE SUMMARY
In market-price terms, the Templeton Vietnam Opportunities Fund produced a total
return of 2.23% for the six months ended September 30, 1997. Based on the change
in net asset value (in contrast to market price), the total return of the Fund
was -6.89% 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 18.75 cents ($0.1875) per share, from $11.25 on March 31,
1997, to $11.4375 on September 30, 1997, while the net asset value decreased
$1.04 per share, from $14.05 to $13.01.
Shareholders received distributions totaling 6.5 cents ($0.065) per share,
including 3.0 cents ($0.03) in dividend income and 3.5 cents ($0.035) in
long-term capital gains. We believe it is important to maintain a long-term
investment perspective, and encourage shareholders to view their investments in
a similar manner. Distributions will vary depending on income earned by the Fund
and any profits realized from the sale of securities in the portfolio, as well
as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
5
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND
Periods ended 9/30/97
SINCE
INCEPTION
1-YEAR 3-YEAR (9/8/94)
- --------------------------------------------------------------------------------
Cumulative Total Return(1)
Based on change in net asset value -3.99% 0.10% -0.81%
Based on change in market price -3.73% -20.47% -18.03%
Average Annual Total Return(2)
Based on change in net asset value -3.99% 0.03% -0.27%
Based on change in market price -3.73% -7.35% -6.29%
1. Cumulative total returns represent the change in value of an investment over
the periods indicated.
2. Average annual total returns represent the average annual change in value of
an investment over the periods indicated.
All calculations assume reinvestment of dividend and capital gains distributions
at net asset value or at market price on the reinvestment date, in accordance
with the dividend reinvestment plan and do not reflect sales charges that would
have been paid at inception or brokerage commissions that would have been paid
on secondary market purchases. Investment return and principal value will
fluctuate with market conditions, currency volatility and the political, social
and economic climates of countries where investments are made. Emerging markets
involve heightened risks related to the same factors, in addition to those
associated with the relatively small size and lesser liquidity of these markets.
You may have a gain or loss when you sell your shares. From October 1, 1994
through September 30, 1995, fee waivers by the Fund's Investment Manager
increased the Fund's total return. If the Investment Manager had not taken this
action, the Fund's total return would have been lower.
Past performance is not predictive of future results.
6
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 1997 ------------------------------------------
(UNAUDITED) 1997 1996 1995+
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period................ $14.05 $13.91 $13.09 $14.10
----------------------------------------------------------------------
Income from investment operations:
Net investment income.............................. .14 .29 .36 .13
Net realized and unrealized gains (losses)......... (1.11) .21 .91 (1.00)
----------------------------------------------------------------------
Total from investment operations.................... (.97) .50 1.27 (.87)
----------------------------------------------------------------------
Underwriting expenses deducted from capital......... -- -- -- (.09)
----------------------------------------------------------------------
Less distributions:
Dividends from net investment income............... (.03) (.31) (.38) (.05)
Distributions from net realized gains.............. (.04) (.05) (.07) --
----------------------------------------------------------------------
Total distributions................................. (.07) (.36) (.45) (.05)
----------------------------------------------------------------------
Net asset value, end of period...................... $13.01 $14.05 $13.91 $13.09
======================================================================
Total return*
Based on market value per share..................... 2.23% (10.87)% 22.11% (26.33)%
Based on net asset value per share.................. (6.89)% 4.03% 9.80% (6.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)................... $104,865 $113,214 $112,073 $105,306
Ratios to average net assets:
Expenses........................................... 1.82%** 1.82% 1.47% 1.72%**
Net investment income.............................. 1.99%** 2.04% 2.62% 1.81%**
Portfolio turnover rate............................. 22.56% 20.16% 4.01% 11.77%
Average commission rate paid***..................... $.0160 $.0009 $.0060 --
</TABLE>
*Total return is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities. Prior to fiscal year end
1996 disclosure of average commission rate was not required.
+For the period September 8, 1994 (commencement of operations) to March 31,
1995.
See notes to financial statements.
7
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS 71.8%
BANKING 18.7%
Bangkok Bank Public Co. Ltd...................................... Thailand 1,155,800 $ 3,979,997
Bank of Ayudhya Public Co. Ltd................................... Thailand 77,050 124,171
Bank of Ayudhya Public Co. Ltd., fgn............................. Thailand 2,272,950 3,694,326
Siam Commercial Bank............................................. Thailand 980,000 3,185,686
Siam Commercial Bank Ltd., loc................................... Thailand 529,300 1,720,590
Siam Commercial Bank Ltd., fgn................................... Thailand 262,700 853,956
Thai Farmers Bank Public Co. Ltd................................. Thailand 506,500 1,332,528
Thai Farmers Bank Public Co. Ltd., fgn........................... Thailand 60,000 209,917
Thai Farmers Bank Public Co. Ltd., SEC........................... Thailand 1,300,000 3,420,110
Thai Military Bank Ltd., fgn..................................... Thailand 1,453,900 1,021,335
------------
19,542,616
------------
BEVERAGES & TOBACCO 4.0%
Asia Pacific Breweries Ltd....................................... Singapore 30,000 103,956
British American Tobacco Co. Ltd................................. Singapore 235,000 746,715
Carnaudmetalbox Asia Ltd., fgn................................... Singapore 371,000 566,384
Rothmans Industries Ltd., fgn.................................... Singapore 605,000 2,768,879
------------
4,185,934
------------
BUILDING MATERIALS & COMPONENTS 2.8%
Siam Cement Public Co. Ltd....................................... Thailand 70,200 812,230
Siam Cement Public Co. Ltd., fgn................................. Thailand 22,200 364,496
*Siam Cement Public Co. Ltd., SEC................................ Thailand 154,700 1,789,910
------------
2,966,636
------------
CHEMICALS 2.0%
PT Unggul Indah Corp., fgn....................................... Indonesia 1,724,800 1,782,468
Thai Petrochemical Industry Public Co. Ltd., fgn................. Thailand 1,138,000 344,848
------------
2,127,316
------------
CONSTRUCTION & HOUSING 1.2%
Italian-Thai Development Public Company, fgn..................... Thailand 409,900 790,441
Siam Syntech Construction Public Co. Ltd., fgn................... Thailand 646,350 227,024
*Sino-Thai Engineering & Construction Public Co., fgn............ Thailand 122,000 201,653
------------
1,219,118
------------
FINANCIAL SERVICES 1.6%
Asia Credit Public Co. Ltd....................................... Thailand 226,300 561,074
Peregrine Investments Holdings Ltd............................... Hong Kong 685,000 1,164,093
------------
1,725,167
------------
FOOD & HOUSEHOLD PRODUCTS 4.3%
Charoen Pokphand Feedmill Public Co. Ltd......................... Thailand 175,663 367,779
Chareon Pokphand Feedmill Public Co. Ltd., fgn................... Thailand 135,737 758,145
Golden Resources Development International Ltd................... Hong Kong 21,284,000 3,163,169
Saha Pathanapibul Public Co. Ltd., fgn........................... Thailand 71,100 121,438
Serm Suk Public Co. Ltd.......................................... Thailand 16,000 144,573
------------
4,555,104
------------
</TABLE>
8
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1997 (UNAUDITED) (continued)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
INSURANCE 0.6%
Bangkok Insurance Public Co. Ltd. BKI............................ Thailand 4,700 $ 55,675
Bangkok Insurance Public Co. Ltd. BKI, SEC....................... Thailand 50,300 595,840
------------
651,515
------------
LEISURE & TOURISM 0.6%
Dusit Thani Public Company Ltd., fgn............................. Thailand 530,000 624,174
*Lai Sun Hotels International Ltd., wts.......................... Hong Kong 211,717 10,671
------------
634,845
------------
MERCHANDISING 1.1%
*Siam Makro Public Company Ltd., fgn............................. Thailand 342,000 565,289
*Wo Kee Hong Holdings Ltd........................................ Hong Kong 5,938,800 613,988
------------
1,179,277
------------
METALS & MINING 6.4%
Natsteel Ltd., fgn............................................... Singapore 2,467,000 6,742,112
------------
MULTI-INDUSTRY 11.2%
Jardine Matheson Holdings Ltd. (Singapore)....................... Hong Kong 474,731 3,845,321
Saha Union Public Co. Ltd........................................ Thailand 1,000 813
Saha Union Public Co. Ltd., fgn.................................. Thailand 339,000 275,496
Swire Pacific Ltd., B............................................ Hong Kong 3,620,000 5,356,552
Thai Wah Public Co. Ltd., fgn.................................... Thailand 410,850 70,739
United Communications Industries, fgn............................ Thailand 320,000 934,435
Wheelock and Co. Ltd............................................. Hong Kong 600,000 1,221,246
------------
11,704,602
------------
REAL ESTATE 12.6%
First Capital Corp. Ltd., fgn.................................... Singapore 40,000 89,441
Lai Sun Development Co. Ltd...................................... Hong Kong 1,292,000 1,177,126
*Lai Sun Development Co. Ltd., wts............................... Hong Kong 532,000 33,345
Lim Kah Ngam Ltd................................................. Singapore 42,000 37,895
Lim Kah Ngam Ltd., fgn........................................... Singapore 1,108,000 999,699
New World Development Co. Ltd.................................... Hong Kong 1,791,681 10,836,220
------------
13,173,726
------------
RECREATION & OTHER CONSUMER GOODS 0.3%
KTP Holdings Ltd................................................. Hong Kong 506,250 320,577
------------
TELECOMMUNICATIONS 1.0%
Jasmine International Public Co. Ltd., fgn....................... Thailand 500,000 416,667
Total Access Communication Public Co. Ltd........................ Thailand 180,000 594,000
------------
1,010,667
------------
TEXTILES & APPAREL 2.7%
Hua Thai Manufacturing Public Co. Ltd............................ Thailand 259,400 257,256
PT Polysindo Eka Perkasa, fgn.................................... Indonesia 6,386,000 2,523,343
------------
2,780,599
------------
TRANSPORTATION 0.7%
Thai Airways International Public Co. Ltd., fgn.................. Thailand 444,000 736,942
------------
</TABLE>
9
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1997 (UNAUDITED) (continued)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
TOTAL COMMON STOCKS AND WARRANTS (COST $81,476,145).............. $75,256,753
------------
DIRECT EQUITY INVESTMENTS 15.9%
REAL ESTATE 5.3%
*+(R)Mayfair Hanoi, Ltd., 30% equity interest owned through HEA
Holdings Ltd., a wholly owned investment acquired 10/31/96..... Vietnam 5,547,596
LEISURE & TOURISM 8.7%
*+(R)Indotel Ltd., acquired 11/22/96............................. Vietnam 900,000 9,154,566
MULTI-INDUSTRY 1.9%
*+(R)Phuben Tea Joint Venture, 30% equity interest owned through
Sipef East Asia Holdings, a 50% owned investment acquired
5/29/96........................................................ Vietnam 2,031,357
------------
TOTAL DIRECT EQUITY INVESTMENTS (COST $16,733,519)............... 16,733,519
------------
PRINCIPAL
AMOUNT**
---------
SHORT TERM OBLIGATIONS (COST $12,737,274) 12.2% GOVERNMENT AND
GOVERNMENT AGENCIES
U.S. Treasury Bills, 4.765% to 5.160% with maturities to
12/26/97................................................... United States $12,888,000 12,742,731
------------
TOTAL INVESTMENTS (COST $110,946,938) 99.9%...................... 104,733,003
OTHER ASSETS, LESS LIABILITIES 0.1%.............................. 132,135
------------
TOTAL NET ASSETS 100.0%.......................................... $104,865,138
============
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
+See note 6.
(R)Restricted securities, see note 7.
See notes to financial statements.
10
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $110,946,938)............................ $104,733,003
Cash............................................................................... 626
Receivables:
Investment securities sold........................................................ 24,387
Dividends and interest............................................................ 280,808
Unamortized organization costs..................................................... 8,084
--------------
Total assets................................................................... 105,046,908
--------------
Liabilities:
Payable to affiliates.............................................................. 146,302
Accrued expenses................................................................... 35,468
--------------
Total liabilities............................................................. 181,770
--------------
Net assets, at value.......................................................... $104,865,138
==============
Net assets consist of:
Undistributed net investment income................................................ $ 1,107,615
Net unrealized depreciation........................................................ (6,213,935)
Accumulated net realized loss...................................................... (2,932,293)
Capital shares..................................................................... 112,903,751
--------------
Net assets, at value.......................................................... $104,865,138
==============
Net asset value per share ($104,865,138 divided by 8,058,603 shares outstanding)... $13.01
==============
</TABLE>
See notes to financial statements.
11
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment income:
(net of foreign taxes of $112,555)
Dividends............................................................... $ 1,274,959
Interest................................................................ 889,893
-----------
Total investment income............................................. $ 2,164,852
Expenses:
Management fees (Note 3)................................................ 852,696
Administrative fees (Note 3)............................................ 85,270
Custodian fees.......................................................... 25,000
Reports to shareholders................................................. 16,100
Registration and filing fees............................................ 9,000
Professional fees....................................................... 36,500
Directors' fees and expenses............................................ 5,000
Amortization of organization costs...................................... 2,196
Other................................................................... 1,237
-----------
Total expenses...................................................... 1,032,999
------------
Net investment income.............................................. 1,131,853
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................................ (2,948,917)
Foreign currency transactions.......................................... 62,712
-----------
Net realized loss....................................................... (2,886,205)
Net unrealized depreciation on investments.............................. (6,070,848)
------------
Net realized and unrealized loss......................................... (8,957,053)
------------
Net decrease in net assets resulting from operations..................... $(7,825,200)
============
</TABLE>
See notes to financial statements.
12
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MARCH 31, 1997
---------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.......................................... $ 1,131,853 $ 2,321,823
Net realized gain (loss) from investments and foreign currency
transactions................................................. (2,886,205) 1,226,081
Net unrealized appreciation (depreciation) on investments...... (6,070,848) 453,690
-------------------------------------------
Net increase (decrease) in net assets resulting from
operations.............................................. (7,825,200) 4,001,594
Distributions to shareholders from:
Net investment income.......................................... (241,758) (2,457,874)
Net realized gains............................................. (282,052) (402,930)
-------------------------------------------
Net increase (decrease) in net assets...................... (8,349,010) 1,140,790
Net assets:
Beginning of period............................................. 113,214,148 112,073,358
-------------------------------------------
End of period................................................... $104,865,138 $ 113,214,148
===========================================
Undistributed net investment income included in net assets:
Beginning of period............................................. $ 217,520 $ 379,647
===========================================
End of period................................................... $ 1,107,615 $ 217,520
===========================================
</TABLE>
See notes to financial statements.
13
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Vietnam Opportunities Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940 as a closed-end, non-diversified investment
company. The Fund seeks long-term capital appreciation by investing at least 65%
of its total assets in the equity and debt securities of Vietnam companies. 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 Directors.
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.
14
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
e. ORGANIZATION COSTS:
Organization costs are amortized on a straight line basis over five years.
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.
2. CAPITAL SHARES
At September 30, 1997, there were 100,000,000 shares authorized ($0.01 par
value). During the period ended September 30, 1997 and the year ended March 31,
1997, there were no share transactions.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also directors or officers of Templeton Asset
Management Limited (TAML) and Franklin Templeton Services, Inc. (FT Services),
the Fund's investment manager and administrative manager, respectively.
The Fund pays an investment management fee to TAML of 1.5% per year of the
average weekly net assets of the Fund. From its investment management fee, TAML
pays a shareholder servicing agent fee to Paine Webber of 0.10% of the average
daily net assets of the Fund. The Fund pays FT Services an administrative fee of
0.15% per year of the Fund's average weekly net assets.
4. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
investment portfolio. At September 30, 1997, the net unrealized depreciation
based on the cost of investments for income tax purposes was as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $ 9,428,718
Unrealized depreciation........... (15,642,653)
-----------
Net unrealized depreciation....... $(6,213,935)
===========
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended September 30, 1997 aggregated $55,639,842 and $17,575,991
respectively.
15
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (unaudited) (continued)
6. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as investments
in portfolio companies in which the Fund owns 5% or more of the outstanding
voting securities. Investments in "affiliated companies" at September 30, 1997
were $16,733,519.
7. DIRECT INVESTMENTS IN VIETNAM VENTURES
The Fund may invest up to 65% of its total net assets in direct equity
investments. These investments typically take the form of a business corporation
contract, joint venture company established in Vietnam or a wholly owned foreign
company established in Vietnam. Since these securities are not publicly traded,
and may be restricted as to resale, they may be less liquid than securities
traded in active markets. Direct investments in Vietnam ventures include certain
risks not typically associated with investing in countries with developed
securities markets, such as political, economic, and legal uncertainties.
Readily available market quotations cannot be obtained for these securities. The
fair value of these securities is estimated using methods approved by the Board.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the differences could be material.
The total value of direct equity investments was $16,733,519 (15.9% of net
assets) at September 30, 1997.
8. TENDER OFFER
The Board of Directors has approved a tender offer for up to 50% of the Fund's
shares. Tendered shares will be accepted by the Fund at their net asset value on
the last day of the tender offering period, currently anticipated to commence in
December 1997 and conclude in January 1998. If more than 50% of the shares are
tendered, they will be accepted on a pro rata basis, and the Board currently
intends to submit to shareholders a proposal to liquidate the Fund. If less than
50% of the shares are tendered, the Board intends to submit to shareholders a
proposal to change the name of the Fund and expand its investment objectives to
include investing in other Southeast Asian countries, while continuing to focus
its investment program on Vietnam.
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
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
instructs them otherwise, or unless the reinvestment service is not provided by
the broker-dealer or nominee. -- Participants should contact ChaseMellon
Shareholder Services, Investor Services, P.O. Box 3338, So. Hackensack, NJ
07606-1938, to receive the plan brochure. -- To receive dividends or
distributions in cash, the shareholder must notify Mellon Securities Trust
Company ("Mellon") at the address above 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, the participant 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 the net asset value or if dividends and/or
capital gains distributions are payable only in cash, the participant will
receive shares purchased on the New York Stock Exchange or otherwise on the open
market. -- 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 in the participant's name for
all full shares; or, if the participant wishes, Mellon will sell the
participant's shares and send the proceeds, less a service charge of $5.00 and
less trading fees. -- Whenever shares are purchased on the New York Stock
Exchange or otherwise on the open market, each participant will pay a pro rata
portion of trading fees. Trading fees will be deducted from amounts to be
invested.
17
<PAGE>
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
TRANSFER AGENT
ChaseMellon Shareholder Services
Stock Transfer Services
P.O. Box 3312
South Hackensack, New Jersey 07606
1-800-526-0801
SHAREHOLDER INFORMATION
Shares of Templeton Vietnam Opportunities Fund, 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 each Monday in the Wall Street Journal,
weekly in Barron's and each Saturday in The New York Times and other newspapers.
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transactions section of newspapers.
For current information about dividends and shareholder accounts, call
1-800-292-9293.
The daily closing net asset value as of the previous business day may be
obtained by calling Franklin Templeton's Fund Information Department after 10
a.m. Eastern Time any business day at 1-800-DIAL-BEN (1-800-342-5236).
If any shareholder is not receiving copies of the Reports to Shareholders
because 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 Fund, Inc., 100 Fountain
Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
18
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<PAGE>
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<PAGE>
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (1-800/342-5236). Please read the prospectus carefully before you
invest or send money. 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.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Franklin Templeton Japan Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global
Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German
Government Bond Fund
Franklin Templeton Global
Currency Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High Income
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
Fund Allocator Series
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
For Corporations
Franklin Corporate Qualified
Dividend Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona**
Arkansas***
California**
Colorado
Connecticut
Florida**
Georgia
Hawaii***
Indiana
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan**
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
Washington***
VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
accounts.
**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
+Portfolio of insured municipal securities.
++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC.
10/97.1
<PAGE>
TEMPLETON VIETNAM
OPPORTUNITIES FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, Florida 33733-8030
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.
TLTVF S97 11/97 [LOGO] Printed on recycled paper
