Annual Report
MARCH 31, 1998
TEMPLETON VIETNAM
OPPORTUNITIES FUND, INC.
[LOGO] FRANKLIN TEMPLETON
PAGE
[PHOTO OF J. MARK MOBIUS APPEARS HERE]
J. MARK MOBIUS, PH.D.
President
Templeton Vietnam
Opportunities Fund, Inc.
Dr. Mobius, a German citizen, has been living in emerging market countries 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 business practices and customs unique to developing nations.
TECHNOLOGY UPDATE:
FRANKLIN TEMPLETON
COMBATS THE YEAR 2000 PROBLEM
By Charles B. Johnson,
President of Franklin Resources, Inc.
As we near the 21st century, Franklin Templeton is taking important steps to
tackle the computer glitch dubbed the Year 2000 Problem, Y2K, or the Millennium
Bug. The problem originated from the software designers' attempt to save memory
by recording years in a two-digit format -- "98" instead of "1998," for example
- -- but didn't take into account that the year 2000, or "00," could also be
interpreted as 1900. Uncorrected, this problem could prevent computers from
accurately processing date-sensitive data after 1999.
Franklin Templeton's Information Services & Technology division established a
Year 2000 Project Team that has already begun making the necessary software
changes to help our computer systems, which service the funds and their
shareholders, be Year 2000 Compliant. As changes reach completion, we plan to
conduct comprehensive tests to verify their effectiveness. We will also seek
reasonable assurances from all of our major software or data-services suppliers
that they will be Year 2000 Compliant.
In addition, with an estimated 80% of businesses facing the Year 2000 Problem,
mutual fund managers appreciate the impact it potentially could have on
companies. That's why Franklin Templeton managers are aware of this issue when
managing fund portfolios.
PAGE
SHAREHOLDER LETTER
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Shareholder Letter ....................... 1
Performance Summary ...................... 7
Special Report ........................... 9
Financial Highlights &
Statement of Investments ................. 12
Financial Statements ..................... 16
Notes to Financial
Statements ............................... 19
Independent Auditor's Report ............. 23
</TABLE>
Your Fund's Objective: Templeton Vietnam Opportunities Fund sought long-term
capital appreciation by investing in the equity and debt securities of Vietnam
Companies and Vietnam-Related Companies, as defined in the Fund's prospectus. On
April 23, 1998, shareholders approved a change in the Fund's name and investment
policies. After that date, the Fund's name is Templeton Vietnam and Southeast
Asia Fund, Inc. The Fund seeks to achieve long-term capital appreciation by
investing in the equity and debt securities of Vietnam and other Southeast Asian
countries, currently including China, Hong Kong, India, Indonesia, South Korea,
Malaysia, Myanmar, the Philippines, Singapore, Taiwan, and Thailand.
Dear Shareholder:
This annual report of Templeton Vietnam Opportunities Fund covers the year ended
March 31, 1998. Six months ago, we reported a sharp drop in Asian equity prices
brought about by widespread currency problems in the region. During the
following six months, the situation approached crisis proportions, affecting
securities markets worldwide, although many of the severely affected markets
experienced significant rebounds by the end of the reporting period. During the
year, Vietnam
FUND CATEGORY
[GRAPHIC OMITTED]
You may find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 13 of
this report.
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
3/31/98
This chart shows, in pie format, the geographic distribution of total net
assets for the Templeton Vietnam Opportunities Fund, Inc., as of March 31, 1998.
[PIE FORMAT APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Thailand 38.0%
Vietnam 18.7%*
Singapore 10.0%
Other Countries 2.7%
Short-Term Investments & Other
Net Assets 30.6%
</TABLE>
*These are direct investments made through companies domiciled in Hong Kong and
Singapore.
enjoyed healthy economic growth and relatively low inflation, as its trade
deficit fell due to surging exports and import controls. However, by early 1998,
the country faced enhanced competition in its export markets due to the
devaluation of other Asian currencies. This caused new trade balance problems
and currency devaluations in Vietnam of about 10%.
Within this environment, the Fund posted a -25.14% one-year cumulative total
return in market-price terms, as discussed in the Performance Summary on page 7.
Based on the change in actual net asset value, the Fund posted a -34.10%
one-year cumulative total return.
As of March 31, 1998, the Fund's equity investments comprised 69.4% of total net
assets. 18.7% were direct investments in Vietnam made through companies
domiciled in Hong Kong and Singapore. During the year, we added a number of new
holdings to the portfolio. We saw opportunities in the depressed Thailand market
and initiated positions in Siam Commercial Bank Ltd., Thai Farmers Bank Public
Co. Ltd. and Bank of Ayudhya Public Co. Ltd. These holdings also helped make
banking our largest industry sector (19.6% of total net assets), followed by
real estate (10.8%).
At the end of the reporting period, Vietnam faced a challenging regional and
global economic environment. Although its economic growth rate exceeded that of
other countries in the region, this growth may not continue. Vietnam's
commercial debt has been in default for over a decade, but the December 1997
agreement by its central bank to reschedule outstanding commercial debt should
help
2
PAGE
TOP 10 HOLDINGS
3/31/98
This chart shows the top ten holdings of the Templeton Vietnam Opportunities
Fund, Inc., including company name, industry and country, as of March 31, 1998,
based on total net assets.
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
<S> <C>
HEA Holdings Ltd.
Real Estate, Vietnam
(direct investment) 9.6%
Indotel Ltd.
Leisure & Tourism, Vietnam
(direct investment) 9.1%
Siam Commercial Bank Ltd.,
fgn. & loc
Banking, Thailand 7.0%
Siam Cement Public Co. Ltd.,
fgn. & loc
Building Materials &
Components, Thailand 6.9%
Thai Farmers Bank
Public Co. Ltd.
Banking, Thailand 4.4%
Natsteel Ltd., fgn
Metals & Mining, Singapore 4.0%
Bangkok Bank Public Co. Ltd.
Banking, Thailand 3.9%
Bank of Ayudhya Public Co.
Ltd., fgn
Banking, Thailand 3.4%
Rothmans Industries Ltd., fgn
Beverages & Tobacco, Singapore 2.4%
British American Tobacco Co. Ltd.
Beverages & Tobacco, Singapore 1.8%
</TABLE>
reduce the country's interest payments and make it easier to raise funds in
international capital markets. The Vietnamese government has also taken steps to
liberalize the environment for private business, which may stimulate further
growth. Looking forward, we continue to view Vietnam as the focus of the Fund
and believe that the changes in the Fund's investment policies described in the
note following this letter should give us greater scope and flexibility in fully
investing the Fund in stocks we consider bargains, while waiting for a developed
capital market in Vietnam.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of March 31, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the Fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
Investing in Vietnam and Southeast Asia involves special considerations
including risks relating to direct investments in Vietnam companies, 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
3
PAGE
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 1,056% in the last 15 years, but has suffered five
declines of more than 20% during that time.* 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.
* Source: Bloomberg. Based on quarterly percentage price change over the 15
years ended March 31, 1998. Market return includes reinvested dividends.
4
PAGE
As reported in the September 30, 1997 Semi-Annual Report to Shareholders, the
Board of Directors of the Fund approved conducting a tender offer for
approximately 50% of the Fund's shares to provide shareholders with an
opportunity to sell their shares to the Fund at net asset value. The Board
announced that if less than 50% of the Fund's shares were tendered, it would
submit to shareholders a proposal to change the name and investment policies of
the Fund.
On December 19, 1997, the Fund commenced the tender offer. As of the close of
the offer, January 20, 1998, 3,377,430 shares of common stock, representing
approximately 42% of outstanding shares, were tendered by shareholders. The
tendered shares were repurchased by the Fund at a net asset value of $7.77 per
share.
As indicated, the Board then submitted to shareholders a proposal to change the
name of the Fund to "Templeton Vietnam and Southeast Asia Fund, Inc." and to
amend the Fund's investment policies. These changes will enable the Fund to
invest more broadly in other countries located in Southeast Asia, while
continuing to focus its investment program, to the extent feasible, on Vietnam.
At the Annual Meeting of Shareholders convened on March 31, 1998 and adjourned
to April 23, 1998, 2,441,921 shares, representing 97.86% of shares present and
voting on the matter and 52.17% of the outstanding shares of the Fund, approved
the proposed name change and amendment of the Fund's investment policies. The
revised investment policies appear on the following page. These changes were
implemented effective April 24, 1998.
The adoption of these policies does not lower the fund's risk profile. The risks
of investing in the Southeast Asian region are similar in many respects to the
risks of investing in Vietnam. The markets in which the Fund will invest are
volatile, and the Fund's investments will be subject to the risk of currency
fluctuation and local political, economic and social conditions. Recent currency
and economic crises in several Asian countries have had a severe impact on many
Asian stock markets. The Fund will continue to be subject to the risks of
investing in foreign markets generally, and to the added risks of investing in
emerging markets. Additional risks of investment in emerging markets include:
(i) a lower level of social, political, and economic stability; (ii) the smaller
size and lower volume of trading in the securities markets in such countries,
which may result in a lack of liquidity and in greater price volatility; (iii)
certain foreign national policies that may restrict the Fund's investment
opportunities, including restrictions on investments in issuers or industries
deemed sensitive to national interests, or expropriation or confiscation of
assets or property, which could result in the Fund's loss of its entire
investment in that market; (iv) less developed legal structures governing
private or foreign investment or allowing for judicial redress for injury to
private property; (v) higher rates of inflation; (vi) differences in, or lack
of, auditing and financial reporting standards which may result in
unavailability of material information about certain issuers; (vii) the fact
that statistical information regarding the economy of certain countries may be
inaccurate or not comparable to statistical information regarding the U.S. or
other economies; (viii) less extensive regulation of securities markets; and
(ix) risks regarding the maintenance of Fund portfolio securities and cash with
foreign subcustodians and depositories. An investment in the Fund should
continue to be viewed as speculative.
5
PAGE
REVISED INVESTMENT POLICIES FOR
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
EFFECTIVE APRIL 24, 1998
The Fund's investment objective is long-term capital appreciation. The Fund's
investment policies, under normal market conditions, are to invest at least
65 percent of its assets in equity and debt securities of companies (i) that are
organized under the laws of, or have a principal office in, Vietnam or other
Southeast Asian countries (the "Region Countries"); (ii) for which the principal
equity securities trading market is in a Region Country; or (iii) that derive at
least 50 percent of their revenues or profits from goods produced or sold,
investments made, or services performed in a Region Country, or have at least 50
percent of their assets invested in a Region Country (collectively, "Region
Country Issuers"). For purposes of these investment policies, Region Countries
include Vietnam, China, Hong Kong, India, Indonesia, South Korea, Malaysia,
Myanmar, the Philippines, Singapore, Taiwan, and Thailand, as well as any other
countries in the same geographic region that may be approved for investment by
the Board of Directors in the future.
The Fund invests in equity and debt securities of Region Country Issuers as
appropriate opportunities arise. In seeking to invest at least 65 percent of its
assets in Region Country Issuers, the Fund's focus is to invest in equity and
debt securities of Vietnam Issuers to the extent attractive investment
opportunities are available. A "Vietnam Issuer" is a company (i) that is
organized under the laws of, or has a principal office in, Vietnam; (ii) for
which the principal equity securities trading market is in Vietnam; or (iii)
that derives at least 50 percent of its revenues or profits from goods produced
or sold, investments made, or services performed in Vietnam or that has at least
50 percent of its assets invested in Vietnam. To the extent that the Investment
Manager is unable to find Vietnam Issuers that it considers attractive
investment opportunities for the Fund, the Fund's assets will be invested in
equity and debt securities of other Region Country Issuers. The amount invested
in any one Region Country at any time will depend on market conditions and the
Investment Manager's assessment of available investments. The Fund will not be
limited in the percentage of its assets that can be invested in any one Region
Country. It is anticipated, but there can be no assurance, that the Fund may
eventually have a significant portion of its assets invested in securities of
Vietnam Issuers.
6
PAGE
PERFORMANCE SUMMARY
In market-price terms, Templeton Vietnam Opportunities Fund produced a -25.14%
cumulative total return for the one-year period ended March 31, 1998. Based on
the change in net asset value (in contrast to market price), the Fund delivered
a -34.10% cumulative total return for the same period. Both total return figures
assume reinvestment of dividends and capital gains, if any, in accordance with
the dividend reinvestment plan.
During the reporting period, the Fund's closing price on the New York Stock
Exchange decreased $3.00 per share, from $11.25 on March 31, 1997, to $8.25 on
March 31, 1998, while the net asset value decreased $4.98 per share, from $14.05
to $9.07.
Shareholders received per share distributions of 14 cents ($0.14) in dividend
income, and 3.5 cents ($0.035) in long-term capital gains. Distributions will
vary depending on income earned by the Fund and any profits realized from the
sale of securities in the Fund's portfolio, as well as the level of the Fund's
operating expenses.
Past performance is not predictive of future results.
7
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND
Periods ended 3/31/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 3-YEAR (9/8/94)
<S> <C> <C> <C>
Cumulative Total Return(1)
Based on change in net asset value -34.10% -24.73% -29.80%
Based on change in market price -25.14% -18.52% -39.98%
Average Annual Total Return(2)
Based on change in net asset value -34.10% -9.03% -9.46%
Based on change in market price -25.14% -6.60% -13.35%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated.
All calculations assume reinvestment of dividends and capital gains, either 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.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility, and the economic,
social and political climates of the countries where investments are made.
Emerging markets involve heightened risks related to the same factors, in
addition to those associated with their relatively small size and lesser
liquidity. You may have a gain or loss when you sell your shares.
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.
8
PAGE
"I want to look back
over the progress
that has been made
so far..."
SPECIAL REPORT BY J. MARK MOBIUS
A VIETNAMESE STOCK EXCHANGE:
FACT OR DREAM?
Although Vietnam does not currently have a functioning stock exchange, the
government has made considerable progress towards achieving this goal. In this
report, I want to look back over the progress that has been made so far in this
country and discuss what remains to be done.
The first stage in liberalizing the government-controlled economy came in
December 1993, when the government allowed foreign investors to own up to 30% of
Vietnamese joint stock banks. Then, in 1994, the "Law on the Encouragement of
Domestic Investment" was passed, which allowed overseas Vietnamese and resident
foreigners to purchase shares of Vietnamese joint stock companies. Because this
law contradicted other existing laws, its impact was negligible at that time.
However, a Prime Minister's decree in May 1996 clarified the situation, allowing
the sales of shares to foreigners on a trial basis.
To implement this enabling legislation, the State Securities Commission (SSC)
was formed in November 1996 and made responsible for the development and
regulation of Vietnam's securities markets. In May 1997, the Prime Minister's
office issued a decree clarifying the procedures for the privatization of
state-owned enterprises. Two months later, the Ministry of Finance established
clear procedures for the issuance and transfer of shares.
9
PAGE
"...several issues still need to be resolved
before a stock exchange can function."
Although the SSC has targeted late 1998 for opening the first "trading floor" in
Ho Chi Minh City, several issues still need to be resolved before a stock
exchange can function. The SSC's "Ordinance on the Regulation of Securities and
the Securities Market," which is now in its seventh draft and considerably
behind schedule, must be ratified. This will establish the legal framework for
regulating the securities market in Vietnam, including listing and disclosure
requirements for interested companies. When ready, the draft will be submitted
to the Prime Minister's office for approval and gain the legal status of a
decree. Hopefully, this will happen soon, because once this occurs, trading can
begin on a trial basis. If no problems emerge during this period, the ordinance
will be submitted to the Standing Committee of the National Assembly to be
ratified and become the permanent securities law for Vietnam.
Laws governing the clearing and settlement systems are covered in the "Ordinance
on the Regulation of Securities and the Securities Market," but the actual
institutions and systems have yet to be established. Although one, or possibly
several, state-owned banks may serve as depositories and registrars, this system
still has to be worked out. State-owned banks will be responsible for clearing
and settlement of trades. Local banks are expected to branch into the brokerage
business, and some have set up brokerage departments in anticipation of the
future stock market. Some may already be involved in very small volumes of
over-the-counter trading. However, the current version of the draft does not
give brokers an essential role, because investors will be able to place their
order directly to the exchange, whose staff will be responsible for executing
and settling the trade properly.
10
PAGE
Although various sites have been proposed, the first stock exchange is expected
to be in Ho Chi Minh City. A number of foreign countries have offered to provide
trading hardware and software to Vietnam at subsidized prices, but no final
decision has been made.
Although Vietnamese authorities are planning to privatize 150 companies by the
end of 1998, only about 20 had been privatized as of March 31. However, even if
the stock exchange is established, companies initially listed on it are expected
to be smaller and more illiquid than the minimum that the Fund would require to
become meaningfully invested in the securities of Vietnamese issuers. Since the
establishment of a functioning stock exchange could greatly benefit the Fund, we
would welcome a stronger commitment on the part of the Vietnamese government to
get the stock exchange up and running as quickly as possible.
Our staff in Vietnam expect to see significant progress toward this goal. Later
in the year, I shall report to you on whether or not such progress has been
made.*
Sincerely,
/s/ J. Mark Mobius
- ------------------------
J. Mark Mobius, Ph.D.
President
Templeton Vietnam Opportunities Fund, Inc.
*This letter reflects the strategies employed for the Fund during the reporting
period and includes our opinions as of the close of the period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the Fund's portfolio composition.
11
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------------
1998 1997 1996 1995+
--------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $14.05 $13.91 $13.09 $14.10
--------------------------------------------------
Income from investment operations:
Net investment income...................................... .09 .29 .36 .13
Net realized and unrealized gains (losses)................. (4.86) .21 .91 (1.00)
--------------------------------------------------
Total from investment operations............................ (4.77) .50 1.27 (.87)
--------------------------------------------------
Underwriting expenses deducted from capital................. -- -- -- (.09)
Tender offer expenses deducted from capital................. (.04) -- -- --
--------------------------------------------------
Less distributions from:
Net investment income...................................... (.13) (.31) (.38) (.05)
Net realized gains......................................... (.03) (.05) (.07) --
Return of capital.......................................... (.01) -- -- --
--------------------------------------------------
Total distributions......................................... (.17) (.36) (.45) (.05)
--------------------------------------------------
Net asset value, end of year................................ $9.07 $14.05 $13.91 $13.09
--------------------------------------------------
--------------------------------------------------
Total Return*
Based on market value per share............................ (25.14)% (10.87)% 22.11% (26.33)%
Based on net asset value per share......................... (34.10)% 4.03% 9.80% (6.74)%
Ratios/Supplemental Data
Net assets, end of year (000's)............................. $42,437 $113,214 $112,073 $105,306
Ratios to average net assets:
Expenses................................................... 2.23% 1.82% 1.47% 1.72%**
Net investment income...................................... .91% 2.04% 2.62% 1.81%**
Portfolio turnover rate..................................... 89.42% 20.16% 4.01% 11.77%
Average commission rate paid***............................. $.0080 $.0009 $.0060 --
</TABLE>
*Total return is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities. Prior to fiscal year
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.
12
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Statement of Investments, March 31, 1998
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
Common Stocks 50.7%
Banking 19.6%
Bangkok Bank Public Co. Ltd................................. Thailand 795,800 $ 1,652,425
Bank of Ayudhya Public Co. Ltd., fgn. ...................... Thailand 2,350,000 1,421,975
Siam Commercial Bank Ltd., fgn. ............................ Thailand 1,676,480 2,477,346
Siam Commercial Bank Ltd., loc. ............................ Thailand 374,986 506,351
Thai Farmers Bank Public Co. Ltd. .......................... Thailand 960,000 1,846,624
Thai Military Bank Ltd., fgn. .............................. Thailand 1,453,900 407,462
-----------
8,312,183
-----------
Beverages & Tobacco 4.8%
Asia Pacific Breweries Ltd. ................................ Singapore 30,000 100,310
British American Tobacco Co. Ltd. .......................... Singapore 235,000 749,381
Carnaudmetalbox Asia Ltd., fgn. ............................ Singapore 170,000 178,947
Rothmans Industries Ltd., fgn. ............................. Singapore 224,000 998,638
-----------
2,027,276
-----------
Building Materials & Components 6.8%
Siam Cement Public Co. Ltd., loc. .......................... Thailand 224,900 2,601,391
Siam Cement Public Co. Ltd., fgn. .......................... Thailand 22,200 307,689
-----------
2,909,080
-----------
Chemicals 2.4%
PT Unggul Indah Corp. ...................................... Indonesia 3,449,600 677,956
Thai Petrochemical Industry Public Co. Ltd., fgn. .......... Thailand 1,138,000 337,051
-----------
1,015,007
-----------
Construction & Housing .8%
Italian-Thai Development Public Co. Ltd., fgn............... Thailand 409,900 323,743
*Sino-Thai Engineering & Construction Public Co., fgn. ..... Thailand 120,500 27,631
-----------
351,374
-----------
Food & Household Products 2.8%
Charoen Pokphand Feedmill Public Co. Ltd.................... Thailand 175,663 255,103
Chareon Pokphand Feedmill Public Co. Ltd., fgn. ............ Thailand 135,737 235,162
Golden Resources Development International Ltd. ............ Hong Kong 6,040,000 452,125
Saha Pathanapibul Public Co. Ltd., fgn. .................... Thailand 71,100 85,139
Serm Suk Public Co. Ltd. ................................... Thailand 15,700 148,800
Serm Suk Public Co. Ltd., fgn. ............................. Thailand 300 3,439
-----------
1,179,768
-----------
Insurance 1.0%
Bangkok Insurance Public Co. Ltd. BKI....................... Thailand 55,000 406,369
-----------
Leisure & Tourism 1.5%
Dusit Thani Public Company Ltd., fgn........................ Thailand 529,000 653,669
-----------
Merchandising 1.4%
*Siam Makro Public Company Ltd., fgn........................ Thailand 342,000 614,293
--------
</TABLE>
13
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Statement of Investments, March 31, 1998 (cont.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
Common Stocks (cont.)
Metals & Mining 4.0%
Natsteel Ltd., fgn. ........................................ Singapore 1,102,000 $ 1,712,706
-----------
Multi-Industry .9%
Saha Union Public Co. Ltd. ................................. Thailand 1,000 662
Saha Union Public Co. Ltd., fgn. ........................... Thailand 339,000 328,204
Thai Wah Public Co. Ltd., fgn. ............................. Thailand 410,850 43,964
-----------
372,830
-----------
Real Estate 1.2%
First Capital Corp. Ltd., fgn. ............................. Singapore 40,000 37,647
Lim Kah Ngam Ltd. .......................................... Singapore 42,000 16,904
Lim Kah Ngam Ltd., fgn. .................................... Singapore 1,108,000 445,944
-----------
500,495
-----------
Recreation & Other Consumer Goods
KTP Holdings Ltd. .......................................... Hong Kong 170,000 15,797
*KTP Holdings Ltd., wts. ................................... Hong Kong 101,250 915
-----------
16,712
-----------
Telecommunications 1.9%
Jasmine International Public Co. Ltd., fgn. ................ Thailand 500,000 305,732
Total Access Communication Public Co. Ltd. ................. Thailand 180,000 212,400
United Communications Industries, fgn. ..................... Thailand 320,000 289,427
-----------
807,559
-----------
Textiles & Apparel .7%
Hua Thai Manufacturing Public Co. Ltd. ..................... Thailand 259,400 284,183
-----------
Transportation .9%
Thai Airways International Public Co. Ltd., fgn. ........... Thailand 326,600 374,446
-----------
Total Common Stocks (Cost $38,170,407)...................... 21,537,950
-----------
Direct Equity Investments 18.7%
Real Estate 9.6%
(R)+*Mayfair Hanoi, Ltd., 30% equity interest owned through
HEA Holdings Ltd., a wholly owned investment acquired
10/31/96.................................................. Vietnam 4,093,534
-----------
Leisure & Tourism 9.1%
(R)+*Indotel Ltd., acquired 11/22/96........................ Vietnam 900,000 3,850,200
-----------
Total Direct Equity Investments (Cost $14,702,155).......... 7,943,734
-----------
</TABLE>
14
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Statement of Investments, March 31, 1998 (cont.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
--------
<S> <C> <C> <C>
Short Term Investments (Cost $13,357,168) 31.5%
U.S. Treasury Bills, 5.00% to 5.23%, with maturities to
6/25/98................................................... United States $13,428,000 $13,357,986
-----------
Total Investments (Cost $66,229,730) 100.9%................. 42,839,670
Other Assets, less Liabilities (.9%)........................ (402,524)
-----------
Total Net Assets 100.0%..................................... $42,437,146
===========
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
+See note 6 regarding Holdings of 5% Voting Securities.
(R)See note 7 regarding restricted securities.
See Notes to Financial Statements.
15
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements
Statement of Assets and Liabilities
March 31, 1998
Assets:
Investments in securities, at value (cost $66,229,730)..... $ 42,839,670
Cash....................................................... 25,589
Receivable from investment securities sold................. 478
Organization costs......................................... 5,900
------------
Total assets.......................................... 42,871,637
------------
Liabilities:
Payable to affiliates...................................... 57,987
Accrued expenses........................................... 376,504
------------
Total liabilities..................................... 434,491
------------
Net assets, at value........................................ $ 42,437,146
------------
------------
Net assets consist of:
Net unrealized depreciation................................ $(23,390,060)
Accumulated net realized loss.............................. (20,402,078)
Capital shares............................................. 86,229,284
------------
Net assets, at value........................................ $ 42,437,146
------------
------------
Net asset value per share ($42,437,146 divided by 4,681,173
shares outstanding)....................................... $9.07
------------
------------
See Notes to Financial Statements.
16
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements (continued)
Statement of Operations
for the year ended March 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $131,239)
Dividends.................................................. $ 1,315,826
Interest................................................... 1,469,758
------------
Total investment income............................... $ 2,785,584
Expenses:
Management fees (Note 3)................................... 1,330,396
Administrative fees (Note 3)............................... 225,854
Custodian fees............................................. 36,614
Reports to shareholders.................................... 71,100
Registration and filing fees............................... 15,900
Professional fees (Note 3)................................. 262,540
Directors' fees and expenses............................... 10,300
Amortization of organization costs......................... 4,380
Other...................................................... 17,027
------------
Total expenses........................................ 1,974,111
------------
Net investment income........................... 811,473
------------
Realized and unrealized losses:
Net realized loss from:
Investments............................................... (20,365,387)
Foreign currency transactions............................. (23,227)
------------
Net realized loss...................................... (20,388,614)
Net unrealized depreciation on investments............. (23,246,973)
------------
Net realized and unrealized loss............................ (43,635,587)
------------
Net decrease in net assets resulting from operations........ $(42,824,114)
=============
</TABLE>
See Notes to Financial Statements.
17
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended March 31, 1998 and 1997
1998 1997
-------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 811,473 $ 2,321,823
Net realized gain (loss) from investments and foreign
currency transactions................................... (20,388,614) 1,226,081
Net unrealized appreciation (depreciation) on
investments.............................................. (23,246,973) 453,690
-------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (42,824,114) 4,001,594
Distributions to shareholders from:
Net investment income..................................... (1,021,093) (2,457,874)
Net realized gains........................................ (257,328) (402,930)
Return of capital......................................... (131,834) --
Capital share transactions (Note 2)........................ (26,542,633) --
-------------------------------
Net increase (decrease) in net assets................... (70,777,002) 1,140,790
Net assets:
Beginning of year.......................................... 113,214,148 112,073,358
-------------------------------
End of year................................................ $ 42,437,146 $113,214,148
===============================
Undistributed net investment income included in net assets:
End of year................................................ $ -- $ 217,520
===============================
</TABLE>
See Notes to Financial Statements.
18
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements
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 (see
note 8). 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.
19
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (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 STOCK
On January 20, 1998, the Fund completed a tender offer of 3,377,430 shares of
its common stock. The cost of the shares tendered and related offering expenses
of $26,242,633 and $300,000, respectively, were charged to capital shares.
During the year ended March 31, 1997, there were no share transactions.
At March 31, 1998, there were 100,000,000 shares authorized ($0.01 par value).
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also directors or officers of Templeton Asset
Management Ltd. (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% per year 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
($133,040 for the fiscal year ended March 31, 1998).
Legal fees of $308,281 were paid to a law firm in which a partner is an officer
of the Fund.
Two individuals have brought actions against the Fund's investment manager and
certain of its affiliates, Fund officers and directors seeking to recover
damages in connection with the Fund's tender offer and certain investments of
the Fund. The Fund has been named as a nominal defendant in these actions;
however, no damages are being sought against the Fund. The investment manager
and its affiliates strongly believe that the claims made in these actions are
without merit and intend to vigorously defend against these actions.
4. INCOME TAXES
At March 31, 1998, the net unrealized depreciation based on the cost of
investments for income tax purposes of $72,682,073 was as follows:
Unrealized appreciation..................................... $ 333,369
Unrealized depreciation..................................... (30,175,772)
------------
Net unrealized depreciation................................. $(29,842,403)
============
20
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (continued)
4. INCOME TAXES (cont.)
At March 31, 1998 the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire in:
2006........................................................ $ 501,487
2007........................................................ 13,411,556
------------
$ 13,913,043
============
Net realized capital gains differ for financial statement and tax purposes
primarily due to differing tax treatments of wash sales and losses realized on
the sale of securities subsequent to October 31.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended March 31, 1998 aggregated $62,261,447 and $52,113,006,
respectively.
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 March 31, 1998 were
$7,943,734.
<TABLE>
<CAPTION>
Number of Number of Realized
Shares Held Gross Gross Shares Held Value Dividend Income Capital
Name of Issuer Mar. 31, 1997 Additions Reductions Mar. 31, 1998 Mar. 31, 1998 4/1/97-3/31/98 Gains
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mayfair Hanoi, Ltd., 30%
equity interest owned
through HEA Holdings
Ltd. ................... -- -- -- -- $4,093,534 -- --
Indotel Ltd. ............. 900,000 900,000 3,850,200 -- --
Phuben Tea Joint Venture,
30% equity interest
owned through Sipef East
Asia Holdings........... -- -- -- -- * -- $167,474
----------------------------------------------
Total Affiliates....... $7,943,734 $-- $167,474
==============================================
</TABLE>
*As of March 31, 1998, no longer an affiliate.
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 $7,943,734 (18.7% of net
assets) at March 31, 1998.
21
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Notes to Financial Statements (continued)
8. SUBSEQUENT EVENT
On April 23, 1998, the shareholders voted to modify the Fund's investment
policies to require at least 65% of the Fund's total assets to be invested in
equity and debt securities of Vietnam and other Southeast Asian countries and to
change the name of the Fund to the Templeton Vietnam and Southeast Asia Fund,
Inc.
22
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 statement of investments, of Templeton Vietnam Opportunities Fund, Inc. as
of March 31, 1998, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Vietnam Opportunities Fund, Inc. as of March 31, 1998, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles.
/s/MCGLADREY & PULLEN LLP
New York, New York
April 24, 1998
23
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Annual Meeting of Shareholders, April 23, 1998
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 East Broward Boulevard, Ft. Lauderdale, Florida, on April 23, 1998. The
purpose of the meeting was to elect four Directors of the Fund; to approve or
reject (i) an amendment to the Fund's investment policies to enable the Fund to
invest more broadly in other countries located in Southeast Asia, while
continuing to focus its investment program on Vietnam, and (ii) a corresponding
amendment to the Fund's Articles of Incorporation to change the Fund's name to
"Templeton Vietnam and Southeast Asia Fund, Inc."; to ratify the selection of
McGladrey & Pullen, LLP, as the Fund's independent auditors for the fiscal year
ending March 31, 1998; and in their discretion, to authorize the proxyholders to
vote upon other such matters that may legally come before the meeting or any
adjournment of the meeting. At the meeting, the following persons were elected
by the shareholders to serve as Directors of the Fund: Harris J. Ashton,
Nicholas F. Brady, S. Joseph Fortunato and Edith E. Holiday.* Shareholders
approved (i) the amendment to the Fund's investment policies to enable the Fund
to invest more broadly in other countries located in Southeast Asia, while
continuing to focus its investment program on Vietnam, and (ii) the
corresponding amendment to the Fund's Articles of Incorporation to change the
Fund's name to "Templeton Vietnam and Southeast Asia Fund, Inc." Shareholders
ratified the selection of McGladrey & Pullen, LLP, to serve as the Fund's
independent auditors for the fiscal year ending March 31, 1998. No other
business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. The election of four (4) Directors:
<TABLE>
<CAPTION>
% of % of
Outstanding Outstanding
Term Expiring 2000: For Shares Withheld Shares
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harris J. Ashton............................................ 3,037,355 64.88% 146,810 3.14%
Nicholas F. Brady........................................... 3,032,090 64.77% 152,075 3.25%
S. Joseph Fortunato......................................... 3,036,286 64.86% 147,879 3.16%
Edith E. Holiday............................................ 3,032,217 64.77% 151,948 3.25%
</TABLE>
2. The approval or rejection of (i) an amendment to the Fund's investment
policies to enable the Fund to invest more broadly in other countries located in
Southeast Asia, while continuing to focus its investment program on Vietnam, and
(ii) a corresponding amendment to the Fund's Articles of Incorporation to change
the Fund's name to "Templeton Vietnam and Southeast Asia Fund, Inc.":
<TABLE>
<CAPTION>
% of % of % of % of
Outstanding Outstanding Outstanding Broker Non- Outstanding
For Shares Against Shares Abstain Shares Votes Shares
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2,441,921 52.17% 53,423 1.14% 72,588 1.55% 616,233 13.16%
</TABLE>
3. The ratification or rejection of the selection of McGladrey & Pullen, LLP, as
independent auditors for the Fund for the fiscal year ending March 31, 1998:
<TABLE>
<CAPTION>
% of % of % of % of
Outstanding Outstanding Outstanding Broker Non- Outstanding
For Shares Against Shares Abstain Shares Votes Shares
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3,045,018 65.05% 22,863 0.49% 116,282 2.48% 2 0.00%
</TABLE>
*Harmon E. Burns, Martin L. Flanagan, John Wm. Galbraith, Andrew H. Hines, Jr.,
Charles B. Johnson, Betty P. Krahmer, Gordon S. Macklin and Fred R. Millsaps are
Directors of the Fund who are currently serving and whose terms of office
continued after the Annual Meeting of Shareholders.
24
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, South Hackensack, NJ
07606-1938, to receive the Plan brochure. --To receive dividends or
distributions in cash, the shareholder must notify Mellon Securities Trust
Company (the "Plan Agent") at the address above or the institution in whose name
the shares are held. The Plan Agent 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 the Plan Agent. Upon
withdrawal, the participant will receive, without charge, stock certificates
issued in the participant's name for all full shares held by the Plan Agent; or,
if the participant wishes, the Plan Agent 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.
25
PAGE
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
Shareholder Information
Shares of Templeton Vietnam Opportunities Fund, Inc. are traded daily on the New
York Stock Exchange under the symbol "TVF." Effective April 24, 1998 the fund
was renamed Templeton Vietnam and Southeast Asia Fund, Inc. 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
1-800-416-5585.
The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information 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 request that his or her name be added to the Fund's mailing list by
writing Templeton Vietnam and Southeast Asia Fund, Inc., 100 Fountain Parkway,
P.O. Box 33030, St. Petersburg, FL 33733-8030.
26
PAGE
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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 Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending 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
Mutual Discovery 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
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency 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
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
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Templeton American Trust, Inc.
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
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Target Fund
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Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Floating Rate Trust
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
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
plan 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. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
05/98
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
TRANSFER AGENT
Chase Mellon Shareholders Services
450 West 33rd Street
New York, New York 10001
1-800/416-5585
FUND INFORMATION
1-800/342-5236
Investors should be aware that the value of investments made for the Fund may go
down as well as up, 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 A98 5/98 [LOGO] Printed on recycled paper
