The Investment Strategy Pyramid
As a Valuemark contract owner, you can invest in one or more portfolios at one
time. When selecting a portfolio, there are two things you may wish to consider:
1) your investment objective; and 2) the degree of risk with which you can feel
comfortable. Before you make these decisions, you may want to consider the
investment strategy pyramid pictured below. The base of the pyramid represents
investments emphasizing stability and preservation of capital. Moving up the
pyramid, the categories reflect a greater focus on potential investment return
- -- categories that generally entail a greater degree of investment risk as well.
Of course, you should review the prospectus for more information about a
specific portfolio.
Precious Metals Fund
Real Estate Securities Fund
Templeton Developing
Markets Equity Fund
Templeton Global Growth Fund
Templeton International Equity Fund
Templeton Pacific Growth Fund
Income Securities Fund
Rising Dividends Fund
Templeton Global Asset Allocation Fund**
Growth and Income Fund*
Utility Equity Fund
Adjustable US
Government Fund
Global Income Fund
High Income Fund
Investment Grade
Intermediate Bond Fund
US Government
Securities Fund
Money Market Fund
Four Zero Coupon Funds --
maturing in 1995, 2000, 2005, 2010
(zero funds placement in pyramid
assumes funds are held to maturity)
*Formerly Equity Growth Fund
**As of June 1, 1995, the Templeton Global Asset Allocation Fund is available
for sale in Washington D.C. and all states except California.
Table of Contents Page
Letter to Contract Owners 2
The Franklin Valuemark Funds
Adjustable U.S. Government Fund 6
Growth and Income Fund 7
Global Income Fund 8
High Income Fund 9
Income Securities Fund 10
Investment Grade
Intermediate Bond Fund 11
Money Market Fund 12
Precious Metals Fund 13
Real Estate Securities Fund 14
Rising Dividends Fund 15
Templeton Global Asset
Allocation Fund 16
Templeton Developing Markets
Equity Fund 17
Templeton Global Growth Fund 19
Templeton International Equity Fund 20
Templeton Pacific Growth Fund 20
U.S. Government Securities Fund 22
Utility Equity Fund 23
Four Zero Coupon Funds 24
Allianz Life Variable Account A
Financial Statements and Notes 25
Franklin Valuemark Funds
Statement of Investments 47
Financial Statements and Notes 116
For service regarding your contract, please contact your investment
representative. You may also call 1-800/624-0197 for specific account
information, or 1-800/342-FUND for portfolio inquiries. To ensure the highest
quality of service, telephone calls to or from a Valuemark service center may be
monitored, recorded and accessed. These calls can be determined by the presence
of a regular beeping tone.
August 15, 1995
Dear Contract Owner:
This report covers the six months ended June 30, 1995, for Franklin Valuemarksm
Life, Allianz ValueLife, and the Franklin Valuemark Funds.
Franklin Valuemark Life is a single-premium variable life insurance policy and
Allianz ValueLife is a flexible premium variable life insurance policy. Both
offer insurance benefits, tax-deferred growth and investment flexibility through
the Franklin Valuemark Funds.
Franklin Valuemark Life offers a choice of 21 funds or portfolios. Each of the
Valuemark portfolios has clearly defined investment objectives that seek to meet
your specific needs, and you may invest in one or more of the portfolios at one
time. You may also change portfolios up to 12 times per year without any fees or
charges.
On June 1, 1995, we added the Templeton Global Asset Allocation Fund to the
Valuemark family.1 This new fund seeks a high level of total return by
allocating investments among three asset classes: global equities, global debt
obligations and global money market instruments. The fund's managers will draw
from Templeton's worldwide network of research sources and employ a flexible
investment approach, which could potentially encompass a broad spectrum of
geographic and industry investment sectors. Consistent with the Templeton
investment philosophy, they will focus on selecting undervalued
securities, while maintaining a long-term investment horizon. Of course,
international investing, especially in developing markets, involves special
risks -- currency fluctuations, market volatility, political uncertainties --
when compared to U.S. investing.
For more information about this new fund, please see page 16 of this report. For
specifics on how to invest in this fund within your contract, please contact
your investment representative, or call Franklin Templeton Fund Information,
toll free, at 1-800/342-3863.
The Economy
Economic conditions in the first six months of 1995 presented a striking
contrast to the market volatility of 1994. Throughout 1994, U.S. interest rates
moved sharply higher, causing the bond market to experience one of the worst
declines in history, Mexico experienced a currency crisis, which created panic
in many other emerging markets, and the U.S. dollar continued its sharp decline
versus the Japanese yen and German mark.
During the first six months of 1995, U.S. stock and bond markets improved
significantly as long-term interest rates began to descend and inflation remain
subdued.
After increasing at an annualized rate of 5.1% in the fourth quarter of 1994,
U.S. Gross Domestic Product (GDP) slowed to just 2.7% in the first quarter of
1995, and growth in the second quarter was considerably slower.2 This downward
trend in the U.S. was mirrored in many nations. Japan's economic growth was
essentially flat, as its GDP increased at an annualized rate of 0.3% in the
first quarter. Consumer spending remained sluggish, and the yen's strength
hampered economic growth throughout the reporting period. Germany also felt
downward growth pressures, which were primarily the result of the strong German
mark, tax hikes and sluggish wage increases, which made German consumers
cautious.
Equity Markets
Nearly all U.S. equity sectors performed well in the first six months of 1995.
In February, the Dow Jones Industrial Average(R) (DJIA) broke the 4,000 mark
for the first time, finishing the period above 4,500. Some stock market analysts
predicted that the DJIA would go as high as 5,000 before year-end. The NASDAQ,
which tracks many smaller, faster-growing companies rose over 24% during the
same period. Even utility stocks, which had experienced sharp declines in 1994
as interest rates rose, experienced a strong recovery in 1995. Not surprisingly,
the U.S. stock market was the top-performing market in the world for the first
half of 1995.
Worldwide equity markets did not fare as well as the U.S. market during the
six-month reporting period. The Nikkei, Japan's main stock exchange, felt the
effects of the rising yen. As the yen rose relative to the dollar and other
major currencies, Japanese exports became more expensive, resulting in decreased
earnings for many Japanese companies.
European markets rose, though not as dramatically as U.S. markets. According to
the Morgan Stanley Capital Indices, the total returns for the six months ended
June 30, 1995 for the German, French and UK markets were 12.7%, 13.2%, and 10.6%
respectively.
Emerging markets experienced fairly high volatility, primarily in response to
Mexico's devaluation of its currency in December of 1994. Mexico had been viewed
as one of the more established, "safer" emerging markets, given its close
relationship and proximity to the United States. Because of Mexico's currency
devaluation and the effects on that country's economy, investor confidence was
shaken badly, and this uncertainty spilled over into other emerging markets.
After an initial period of near-panic selling, however, emerging markets began
to rebound.
The Bond Markets
In welcome contrast to 1994, falling U.S. interest rates resulted in substantial
gains for the domestic bond market. U.S. Treasury securities, from one-year
Treasury bills to 30-year Treasury bonds, recorded strong price gains during the
first half of the year.
The overall U.S. bond market, as measured by the Lehman Brothers Aggregate Bond
Index which includes both corporate and government bonds, rose 7.50% between
December 31, 1994 and June 30, 1995.
Global bond markets also improved significantly as it became increasingly
evident that economic growth was slowing globally.
Of course, it is important to remember that financial markets fluctuate daily
and past investment conditions and results are not necessarily indicative of
future trends.
On the following pages you will find a summary covering the past six months for
each of the Franklin Valuemark Funds.
We look to the future with confidence and believe Franklin Valuemark Life and
Allianz Valuelife will continue to be appropriate vehicles for tax-conscious
investors seeking to meet their long-term estate planning, retirement and other
financial needs. As always, we thank you for your continued support and look
forward to serving your financial needs in the years to come.
Sincerely,
Rupert H. Johnson, Jr.
Director and Executive Vice President
Franklin Valuemark Funds
Lowell C. Anderson
Chairman of the Board
Allianz Life Insurance Company of North America
1. As of June 1, 1995, the Fund is not yet available for sale in California.
2. Source: U.S. Commerce Dept.
<TABLE>
<CAPTION>
Variable Account A
Change in Unit Prices
% Change
Unit Price* Unit Price* in Unit Price
Fund 12/31/94 6/30/95 12/31/94 to 6/30/95
<S> <C> <C> <C>
Adjustable U.S. Government Fund $11.37 $11.96 5.16%
Growth and Income Fund $21.01 $24.10 14.73%
Global Income Fund $13.48 $14.51 7.63%
High Income Fund $16.51 $18.65 12.94%
Income Securities Fund $16.21 $18.10 11.65%
Investment Grade Intermediate Bond Fund $13.98 $14.74 5.44%
Money Market Fund $14.19 $14.55 2.50%
Precious Metals Fund $14.98 $15.07 0.59%
Real Estate Securities Fund $17.93 $18.62 3.83%
Rising Dividends Fund $ 9.95 $11.28 13.33%
Templeton Developing Markets Equity Fund $ 9.17 $ 9.42 2.74%
Templeton Global Asset Allocation Fund NA** $10.11 NA**
Templeton Global Growth Fund $ 9.89 $10.56 6.80%
Templeton International Equity Fund $12.39 $13.29 7.28%
Templeton Pacific Growth Fund $13.04 $13.30 2.00%
U.S. Government Securities Fund $16.84 $18.87 12.04%
Utility Equity Fund $17.91 $20.11 12.29%
Zero Coupon - 1995 $17.82 $18.55 4.06%
Zero Coupon - 2000 $19.61 $22.23 13.34%
Zero Coupon - 2005 $20.82 $24.74 18.80%
Zero Coupon - 2010 $21.87 $26.99 23.41%
</TABLE>
*The unit prices have been rounded to the nearest hundredth. Percent change is
calculated using rounded unit prices.
**Figure for this time period is not available due to the fund's recent
inception date. The fund is not available in California.
Note: The unit value for each sub-account which invests in a particular fund is
the total value of assets in the sub-account (net assets of the fund), minus the
daily charges for mortality and expense risk and administrative expenses
(annualized at .75% of the account's average daily net assets), plus or minus a
charge or credit for any taxes provision, divided by the total number of
outstanding units for that sub-account at the end of the valuation period.
The unit value does NOT include certain charges deducted from the Policy Account
or from premium payments. These charges and deductions can have a significant
effect on policy account, insurance benefit, and cash surrender values. See the
contract prospectus for a complete description of these charges, including
applicable sales charges.
Past performance is not indicative of future performance. Unit price and return
vary, so that investors may have a gain or loss when they sell their units. This
information is for policy owners only and may not be used as sales literature.
FRANKLIN VALUEMARK FUNDS
Adjustable U.S. Government Fund
The Adjustable U.S. Government Fund seeks a high level of current income with
lower volatility of principal by investing primarily in adjustable-rate,
mortgage-backed securities (ARMs) issued or guaranteed by the U.S. government,
its agencies or instrumentalities. Individual adjustable-rate securities in the
underlying portfolio, but not shares of the fund, are issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
On June 30, 1995, 32.1% of the fund's total net assets were invested in
obligations of the Federal National Mortgage Association (FNMA), 22.4% in
obligations of the Federal Home Loan Mortgage Corporation (FHLMC), and 12.2% in
obligations of the Government National Mortgage Association (GNMA). The fund
also held 17.2% of its assets in Small Business Association (SBA) obligations
and 15.2% in U.S.Treasury securities and cash equivalents.
Manager's Perspective
After rising throughout most of 1994, short-term interest rates reversed their
direction during the last six months. For example, the one-year Treasury rate
moved lower to 5.80%, 1.4 percentage points below its 7.20% level on December
30, 1994.
Declining short-term rates had a positive impact on the performance of ARM
securities, and thus, on the Valuemark Adjustable U.S. Government Securities
Fund. While the sharp rises in interest rates in 1994 caused ARM prices to
decline substantially (with ARM coupon adjustments lagging the rate movements
and many securities hitting their annual caps), the decline in interest rates
over the last six months allowed many of these securities to catch up to last
year's movements in rates. As a result, the fund benefited from higher security
valuations and an improved income stream.
We continued to concentrate the portfolio's holdings in securities, such as
one-year Constant Maturity Treasury ARMS, which have less price sensitivity to
changes in interest rates. We remained underweight with 6.7% of total net assets
in ARMs tied to the 11th District Cost of Funds Index (COFI), because of the
lagging nature of that index.
While it is not possible to predict the future with any certainty, it appears
that the Federal Reserve Board has reached at least a temporary pause in its
credit tightening cycle and that for the time being, rates should not be
increased further.
The current slowdown in economic activity may cause the Fed to take a more
neutral posture in the near-term provided inflationary pressures remain
contained. Moreover, the recent drop in mortgage rates should stimulate the
housing sector of the economy and possibly lead to a slight pick-up in economic
activity later in the year. This could reduce the likelihood of more interest
rate volatility.
Callable securities such as ARMs should benefit from more stable rates, and we
are actively positioning the fund to perform well in this environment. Our main
concern continues to be stability of principal while maintaining a yield which
is competitive with short-term alternatives.
Performance Summary
During the reporting period, the fund's net asset value dropped to $10.38 on
June 30, 1995, from $10.53 on December 31, 1994.
Growth and Income Fund
(Formerly Equity Growth Fund)
Effective May 1, 1995 the name of the Franklin Valuemark Equity Growth Fund was
changed to Franklin Valuemark Growth and Income Fund. The new name better
reflects the fund's investment objectives and its new investment strategy, as
described in the Manager's Perspective below. The fund's primary objective of
capital appreciation (growth) and a secondary objective of current income remain
unchanged.
Manager's Perspective
To better achieve the fund's investment objectives, we have shifted our
investment strategy from primarily a quantitative analysis to a relative yield
analysis. Specifically, we search for undervalued equity securities with
significant capital appreciation potential, as indicated by their high current
yields relative to the yields of the Standard & Poor's 500 Stock Index(R). To a
lesser degree, other valuation tools, including quantitative and fundamental
analyses, are also used to uncover worthy investment opportunities.
The fund's new investment strategy has decreased its exposure to smaller
capitalization issuers in favor of larger capitalization issuers, which offer
the potential for long-term appreciation and comparatively lower volatility. The
average market capitalization of the fund holdings was $8.6 billion on June 30,
1995.
We also adjusted the fund's exposure to certain market sectors during the
reporting period. For example, exposure to utility equities, including electric,
telephone, and gas stocks, was increased to 10.9% of total net assets as of June
30, 1995, from 3.2% as of December 31, 1994. We believe utilities represent
extremely attractive current relative valuations and high current dividend
yields (5% to over 7% for industry leaders such as Dominion Resources, CINergy,
GTE, and Consolidated Natural Gas). Investment positions in energy stocks
including Exxon, Pennzoil, Texaco and YPF were also initiated or increased
during the period. These stocks have current dividend yields of 4% to over 6%
and favorable long term fundamentals. Conversely, we reduced the fund's exposure
to other sectors, most notably the technology sector, as many stocks in this
group have appreciated dramatically and now have become Wall Street's favorites.
Performance Summary
During the reporting period, the fund's net asset value rose to $14.86 on June
30, 1995, from $13.42 on December 31, 1994.
Global Income Fund
The Global Income Fund seeks a high level of current income, consistent with
preservation of capital, with capital appreciation as a secondary consideration.
The fund invests in domestic and foreign debt securities and related currency
transactions. Fund share prices and returns will fluctuate with market
conditions, currencies and the economic and political climates where the
investments are made.
As of June 30, 1995, the fund's largest country allocations included Germany
(21.4%), the United States (11.4%), Japan (11.0%), Australia (8%), Sweden
(5.3%), France (4.6%), and Denmark (4.3%).
Manager's Perspective
For most of the six-month period under review, long-term interest rates declined
in the United States and foreign industrialized nations. This decline followed
moves by the central banks of Germany and Japan to lower each country's interest
rates; it also followed a change in the monetary policy of the Federal Reserve
Board. Chairman Alan Greenspan pointed to the slow U.S. Gross Domestic Product
(GDP) growth and low inflationary pressures as the reason for the change in
monetary policy.
The downward trend in the U.S. is mirrored in the performance of other nations.
For example, the strong deutschemark is exerting pressure on the German economy
while alleviating pressure on wholesale prices. The Bundesbank, Germany's
central bank, also eased monetary policy, amid expectations that the rate of
growth will slow next year. The situation is similar in Japan, where earlier
estimates of growth, around 2.5% for 1995, were revised downward to 1.8%.1
Although the rate of growth is slowing globally, the world economy is still
expanding and for the most part, inflation worldwide has been subdued. Some
inflationary pressure is likely to occur the longer the expansion continues.
Indeed, as in the U.S., consumer prices are increasing moderately in other
industrialized countries; however, that upward movement is muted compared with
the experience in recent business cycles. It is for that reason that signs of
slower U.S. economic growth have resulted in surging prices in global bond
markets.
During the past six months, the fund benefited from heavy weightings in European
markets, as European currencies gained in value relative to the dollar. During
this period, the German mark rose approximately 10.3% versus the U.S. dollar.
The Japanese yen rose even further to approximately 15.56% above the dollar.
Over the past six months, the major portfolio shifts have been from Spain and
Italy into Germany, Japan and Denmark. The economies of Spain and Italy have
continued to be pressured by high debt burdens, inflationary problems, poor
fiscal policies, high interest rates and political instability. We believe these
five factors, combined with numerous other problems, have driven the perceived
risk in these countries much higher than the actual reward for being invested in
these markets.
1. Source: IMF Work Economic Outlook, October 1994 and May 1995.
We anticipate we will maintain a conservative investment policy as we seek to
provide investors with high current income while minimizing risk. As always, we
will purchase only those bonds issued or backed by the full faith and credit of
foreign governments. Please remember, however, that international investing
continues to be subject to special risks, including currency fluctuations.
Performance Summary
During the reporting period, the fund's net asset value rose to $12.67 on June
30, 1995, from $12.19 on December 31, 1994.
High Income Fund
The High Income Fund seeks a high level of current return, with capital
appreciation as a secondary objective. The fund invests primarily in high yield,
lower rated debt securities (commonly referred to as junk bonds) and
dividend-paying common and preferred stocks. High yields reflect the higher
credit risks associated with certain lower rated securities in the fund's
portfolio, and in some cases, the lower market prices for these instruments.
However, lower rated bonds generally offer investors higher yields to compensate
for the additional risks.
On June 30, 1995, the fund's five largest sector holdings included
gaming/leisure (10.3%), healthcare services (10.2%), cable television (9.3%),
food retailing (8.5%), and industrial products (7.2%).
Manager's Perspective
Declining interest rates and strong corporate earnings proved to be positive
factors for the high yield market. And, despite a relatively heavy volume of new
issues within the high yield sector, demand for these securities remained brisk,
which contributed to the strong performance of high yield bonds.
According to government statistics, the current economic expansion celebrated
its fourth anniversary in March, 1995. Since this is already one of the longer
periods of business expansion, and considering the decline in interest rates
during the past six months, we may be closer to the end of this business cycle
than to its beginning. With this in mind, our strategy during the reporting
period was to focus on more defensive industries -- that is, industries that
tend to perform well during periods of economic uncertainty. For example, we
increased the fund's assets in healthcare services, cable television and food
retailing, since even during economic downturns, demand for these services
remains strong.
We also increased the overall credit quality of the portfolio during the
reporting period. Investment grade securities (those rated BBB and above by
rating agencies such as Standard and Poor's), increased to approximately
6.2% by June 30, 1995, from less than 5% of the total portfolio at the beginning
of the period. In addition to the increase in investment grade securities,
BB-rated securities in the fund's portfolio increased, while B-rated securities
decreased. The improvement in ratings was due to upgrades of current securities
held as well as purchases of higher rated securities.
With inflation apparently under control and economic growth slowing, we believe
that interest rate increases are behind us for the time being. In fact, the
Federal Reserve Board lowered the federal funds rate in July in hopes of
preventing further economic contraction. In light of this, our focus on less
cyclical industries should prove beneficial for the fund.
Performance Summary
During the reporting period, the fund's net asset value rose to $12.93 on June
30, 1995, from $12.21 on December 31, 1994.
Income Securities Fund
The Income Securities Fund seeks to maximize income while maintaining prospects
for capital appreciation. The fund invests in a diversified portfolio of stocks
and bonds, which may include below investment grade bonds, commonly referred to
as junk bonds. High yields reflect the higher credit risks associated with
certain lower rated securities in the funds portfolio, and in some cases, the
lower market prices for these instruments.
As of June 30, 1995, bonds accounted for the largest portion of the fund,
representing 47.3 % of total net assets. This portion can be broken down into
corporate straight bonds (25.7%), foreign government bonds (13.4%), U.S.
Treasuries (2.1%), and corporate convertible bonds (6.1%).
Stocks represented 33.7% of the fund's assets, with the largest portions being
common stock (24.5%) and convertible preferred stock (9.1%). Cash equivalents
and other assets made up 19.0% of the fund's total net assets on June 30, 1995.
Manager's Perspective
During the first half of 1995, stock and bond markets benefited from a decline
in interest rates as U.S. economic growth slowed from the fourth quarter of
1994. Consequently, many of the sectors in which the fund invests performed well
during this period.
Corporate bonds represented the largest segment of bonds in the fund. We
initiated several corporate bond positions, including Hartmarx Corp. (apparel),
and Marcus Cable Holding Co. (cable), which offered attractive yields, as well
as the potential for appreciation due to anticipated improvement in credit
quality.
In U.S. Treasury bond holdings, we started the year with a 10% weighting and
subsequently recognized gains on the majority of the fund's holdings as interest
rates declined.
In foreign bonds, we increased the fund's South Africa and U.S.
dollar-denominated Argentina Brady bond holdings. The fund's Latin America
bonds, which represented 9.2% of the fund as of the end of June, appreciated
from their depressed levels following Mexico's currency devaluation in December.
Utilities continued to represent the largest equity sector of the fund at 14.4%
of total net assets, followed by energy at 4.7%, metals at 4.6%, pharmaceuticals
at 3.6%, and REITs at 3.9%. Due in part to lower interest rates and signs of
slower economic growth, the value of the fund's utility and pharmaceutical
stocks appreciated during the period, while gold stocks declined. We selectively
added to the fund's utility sector, including a new position in New England
Electric. We recognized gains on our holdings of financial services stocks due
to price appreciation and limited call protection on our bank convertible
preferred stock positions.
With the overall stock market near record levels and the significant decline in
interest rates over the past six months, management is comfortable with the
fund's 19.0% cash position. This cash position, combined with the fund's broad
diversification, should provide flexibility to take advantage of investment
opportunities as they arise.
We remain committed to the fund's basic investment philosophy, actively managing
a diversified mix of bonds and stocks for income and growth.
Performance Summary
During the reporting period, the fund's net asset value rose to $15.08 on June
30, 1995, from $14.31 on December 31, 1994.
Investment Grade Intermediate Bond Fund
The Investment Grade Intermediate Bond Fund seeks current income, consistent
with preservation of capital. The fund invests primarily in intermediate-term,
investment grade corporate obligations and U.S. government securities.
Typically, the fund invests at least 65% of its assets in intermediate-term
obligations whose effective remaining maturities range between two and ten years
at the time of purchase.
Manager's Perspective
During the past six months, falling long-term interest rates resulted in higher
intermediate and long-term bond prices. Valuemark Investment Grade Intermediate
Bond Fund benefited in this environment. It's important to note that while the
fund benefited from higher bond prices, it did not assume the higher risks
normally associated with long-term bonds or bonds of lower investment grade
quality.
Particularly helpful to the fund's performance over the reporting period was the
portion of the fund's portfolio invested in "putable" bonds (a total of 21% of
total net assets on December 31, 1994, including 15% acquired during the fourth
quarter of 1994)."Putable" bonds grant the fund the right, but not the
obligation, to choose to receive full face value at a specified early redemption
date. The fund's "putable" (which in a rising interest rate environment would
have experienced lesser price declines in relation to their shorter-term
"putable" dates) rose sharply in price in relation to their longer-term final
stated maturities during the falling interest rate environment actually
experienced during the reporting period.
We recognize that interest rate declines may not continue indefinitely. For this
reason, we have reduced our "putable" positions to about 16% of total net
assets, eliminating the most volatile issues. We have taken profits on certain
issues and subsequently decreased the fund's sensitivity to interest rate risk.
Approximately 85% of the fund's holdings now mature within two years. The
average weighted quality of the investments in the portfolio is AA+, with about
75% of the assets invested in AAA-rated U.S. government related issues. We
anticipate that current interest rate declines (particularly in home mortgage
rates) may stimulate economic activity, and we will continue to follow a
cautious course.
Performance Summary
During the reporting period, the fund's net asset value rose to $13.52 on June
30, 1995, from $13.31 on December 31, 1994.
Money Market Fund
The Money Market Fund seeks high current income, consistent with capital
preservation and liquidity, through investments in high quality money market
instruments. U.S. government securities owned by the fund or held under
repurchase agreement, but not shares of the fund, are issued or guaranteed by
the U.S. government, its agencies and instrumentalities. The securities in the
fund are among the highest quality available to money market portfolios.
Accordingly the fund does not invest in derivatives or other securities that we
deem to be potentially volatile.
Manager's Perspective
Short-term interest rates reflected the trends in economic growth during the
reporting period. Since December, economic growth has slowed considerably, and
interest rates have fallen accordingly. As rates began to fall, we lengthened
the fund's average maturity to lock in higher rates for as long as possible. As
of June 30, 1995, the fund's average maturity was 49 days, up from 33 days on
December 31, 1994.
With the economy slowing considerably in the past few months, we believe future
Fed tightenings to be unlikely. If growth rebounds, however, and rises above
their long-term target of 2.5% annually, the Fed may be forced to raise
short-term rates again. In addition, continued high levels of resource
utilization may create bottlenecks in production capability, which could prove
to be inflation-ary. These inflationary concerns, coupled with a weak dollar,
may put additional pressure on the Fed to raise interest rates further if
economic growth returns and exceeds their target rate.
As always, we invest the fund's assets in securities that are among the highest
quality available to money market portfolios. Since the fund's objective is to
provide shareholders with a high-quality, conservative investment, we do not
invest in derivatives or other potentially volatile securities that we believe
involve undue risk.
Precious Metals Fund
The Precious Metals Fund seeks capital appreciation, with current income as a
secondary objective. Investments are concentrated in securities of U.S. and
foreign companies engaged in mining, processing, or dealing gold and other
precious metals. The fund is therefore subject to special risks related to
fluctuations in the price of gold and other precious metals, and the currency
and market volatility associated with foreign investing.
In order to decrease dependency on any one economic or political environment,
the fund seeks broad diversification. The fund's five largest long-term
positions on June 30, 1995 as a percentage of total net assets were: Placer
Dome, Inc. (7.1%), Barrick Gold Corp. (5.9%), Santa Fe Pacific Gold Corp.
(5.6%), DeBeers Consolidated Mines, Ltd., ADR (4.3%), and RTZ Corp., Plc (3.7%).
Manager's Perspective
The past six months provided a relatively stable environment for the gold market
and the Franklin Valuemark Precious Metals Fund. Gold prices generally traded
within a relatively narrow band during the period: Bullion prices bottomed at
$372.40 per ounce in early January, peaked at $395.55 per ounce in the middle of
April, and traded within a relatively narrow range of $375 and $395 per ounce.
Gold prices, and consequently the market value of the fund's holdings, are
generally affected by four major factors: supply and demand, inflation,
political climates, and currency volatility. During the six months under review,
gold prices benefited from a relatively subdued inflationary environment, both
in the U.S. and abroad, and a dip in worldwide gold supplies. In fact, western
world mine production declined 0.2% in 1994, which is the first decline reported
in over a decade. South Africa, the largest gold-producing region in the world,
experienced a particularly sharp decline in production due to labor unrest and
increased public holidays. Overall, the flat to slightly negative mine supply
growth, coupled with continued robust physical demand, provided strong support
for gold prices. Moreover, we were pleased to see that the gold market was
hardly affected by the Belgian Central Bank sale of 175 tons in the first
quarter of 1995.
The Franklin Valuemark Precious Metals Fund maintained its conservative strategy
of investing in quality mining companies with attractive reserve and production
profiles. The fund remains committed to diversifying its assets geographically,
as well as among various types of precious metals. While no new securities were
purchased during the past six months, we added to existing holdings in
Australia, where growth prospects appeared attractive. We also sold our holdings
in Pegasus Gold Inc. (a medium-life gold mining company based in Spokane,
Washington) due to deteriorating company fundamentals.
Additionally, the fund's exposure to platinum (5.1% of total net assets) and
various base metals including copper, aluminum, and zinc, contributed positively
to performance, as these markets enjoyed strong rallies during the first half of
this year.
Looking forward, our outlook for gold and the fund remains optimistic, as supply
and demand fundamentals appear attractive. Physical demand continues to exceed
mineral production, which supports a gradual increase in the price of gold. We
will continue to emphasize investments that are capable of performing well over
the long term. Specifically, we will remain focused on companies with solid
reserve base, low operating costs, and good management. Within the fund's
conservative investment philosophy, we will also continue to invest in companies
with international exploration and mining potential, particularly in the fast
growing gold mining regions.
Performance Summary
During the reporting period, the fund's net asset value declined to $13.89 on
June 30, 1995, from $14.09 on December 31, 1994.
Real Estate Securities Fund
The Real Estate Securities Fund seeks capital appreciation, with current income
as a secondary objective.
The fund invests in the publicly traded securities of companies in the real
estate industry.
The fund focuses primarily on equity real estate investment trusts (REITs).
Equity REITs are real estate companies that own and manage income-producing real
estate properties, such as apartments or shopping centers. The income from these
properties is paid to REIT investors as dividends.
Equity REIT management teams seek to increase property income, and thus dividend
payments, by acquiring or developing new properties and increasing rental rates
on existing properties. These companies provide experienced property management
teams and generally concentrate on a certain geographic region and/or property
type.
Manager's Perspective
Our investment strategy continues to center on investing in REITs with strong
growth prospects and attractive valuations. In terms of real estate property
types, we focus on sectors experiencing the strongest supply and demand
fundamentals, which should lead to higher occupancy and rental income.
Accordingly, the fund's managers increased the portfolio's exposure to the
hotel, storage, office and industrial REITs over the reporting period. In
general, these property types are exhibiting strong rental increases, leading to
higher cash flow growth for REITs that own these properties.
For example, new development has been limited in the hotel sector over the past
several years, which has set the stage for rising occupancy rates and higher
room rates. In fact, demand for hotel rooms increased by 4.5%, while new supply
expanded by just 1.4%.2 Recognizing that such dramatic improvements in this
sector could lead to strong cash-flow growth, we increased the fund's weighting
in hotel properties to 15.4% as of June 30, 1995, from 12.0 % of total net
assets on December 31, 1994.
We also increased our investment weighting in storage facilities to 8.4% of
total net assets on June 30, 1995, from 5.5 % on December 30, 1994. In general,
this type of property has high operating margins, low capital expenditure
requirements and a low degree of tenant sensitivity to rent increases. Our
favorite holdings within this group include Storage USA, Inc. and Storage Trust
Realty.
The fund's investment weighting in retail property REITs was decreased from
15.2% of total net assets on December 30, 1994, to 12.4% on June 30, 1995.
Owners of retail properties including community shopping centers, factory outlet
centers and regional "mega" malls, have been experiencing slow rent growth and a
steady stream of new property development.
We believe the prospects for investing in equity REITs are quite attractive
given the combination of stable dividend yields and growth opportunities. We
think real estate fundamentals remain strong across most property types due to
increased demand for space from new and existing tenants combined with a
relatively low level of new construction. Securities of real estate companies,
particularly equity REITs, should continue to be an effective way to participate
in the overall strength of real estate markets across the nation.
Performance Summary
During the reporting period, the fund's net asset value rose to $15.43 on June
30, 1995, from $15.31 on December 31, 1994.
Rising Dividends Fund
The Rising Dividends Fund seeks capital appreciation and incidental current
income by investing primarily in equity securities of companies that, among
other criteria, have paid consistently rising dividends over the past 10 years.
This strategy is based on the belief that companies with consistently rising
dividends should, over time, realize increases in the prices of their shares.
Portfolio securities are selected based on a number of factors. To be eligible
for purchase, stocks must first pass a variety of screens, which include
consistent and substantial dividend increases, strong balance sheets, and
relatively low price/earnings (P/E) ratios.
2. Source: Smith Travel Research.
Applying these standards produces a universe of high quality growth companies
from which selections can be made on the basis of fundamental research.
On June 30, 1995, the fund's top five holdings were: Philip Morris Cos. (3.02%),
Mercury General Corp. (2.87%), DIMON Incorporated (2.78%), Trustco Bank Corp. NY
(2.47%), and Merck & Co., Inc. (2.37%)
Manager's Perspective
A stock selling in the lower half of its own ten-year price/earnings range is
generally out of favor with investors. Family Dollar Stores, for example, has
been under pressure as it seeks to transform itself into an "everyday low price"
retailer from a promotional discounter. In the transition, the company's margins
have suffered. Family Dollar was still able to raise its dividend 17% in
January, making 1995 the 18th successive year of dividend growth. Myers
Industries has also suffered margin compression as raw material prices have
risen faster than the company can re-coup in sales of its own products. Like
Family Dollar, Myers is essentially debt free. Its margin problems are not
likely permanent and, in July, it extended its record of dividend increases to
19 years.
Looking forward, we believe the companies in the portfolio are financially
strong and fundamentally sound, and are likely to prosper over the long term.
Performance Summary
During the reporting period, the fund's net asset value rose to $11.10 on June
30, 1995, from $9.97 on December 31, 1994.
New! Templeton Global Asset Allocation Fund
Templeton Global Asset Allocation Fund seeks a high level of total return
through a flexible investment strategy of allocating among three asset classes:
global equities, global debt obligations and global money market instruments.
The Fund does plan on having a meaningful weighting
in emerging market debt and equity instruments in order to reduce the Fund's
overall portfolio risk while at the same time potentially increasing the risk
adjusted returns for shareholders. However, investing in developing markets
involves special considerations, which may include risks related to market and
currency volatility, adverse social and political developments, and the
relatively small size and lesser liquidity of these markets. These special risk
considerations are discussed in the fund's prospectus.
Manager's Perspective
In pursuing the fund's objective, we have no minimum and maximum percentage
limitations on the amount of the fund's assets which may be invested in the
above three asset classes. We have a high level of flexibility to capitalize on
global investment opportunities (including investments in developing market
securities), uncovered by Templeton's worldwide network of research sources.
In addition to these classes, our flexibility extends to a broad spectrum of
industry sectors, which may include traditional sectors such as utilities and
financial services as well as non-traditional sectors such as technology,
realestate and precious metals. Moreover, the portfolio holdings can be
allocated geographically to take advantage of opportunities offered by changing
markets throughout the world. Consistent with the Templeton investment
philosophy, we will focus on selecting undervalued securities and investments
with a longer investment horizon.
As of June 30, 1995, we have invested 31.1% of the fund's total net assets in
common stocks, 30.9% in bonds and 53% in short-term investments, primarily U.S.
Treasury bills.3
The fund's common stock holdings were invested in over 20 countries, with
heaviest exposure in the United States (10.1%), Finland (3.1%), France (2.2%),
Sweden (1.9%) and Hong Kong (1.7%).
With respect to bonds, the fund was invested in government securities of five
countries: the United States (18.1%), Canada (5.8%), Germany (4.8%), Australia
(1.2%) and France (1.0%).
Performance Summary
During the reporting period, the fund's net asset value rose to $10.13 on June
30, 1995, from $10.00 on its effective date of May 1, 1995.
Templeton Developing Markets Equity Fund
The Templeton Developing Markets Equity Fund seeks long-term capital
appreciation. The fund seeks to achieve this objective by investing primarily in
equities of issuers in countries with developing markets.
As of June 30, 1995, the Fund had 87.5% of its total net assets invested in
equity securities with the remaining 13.4% in cash and short-term investments.
The largest portion of the fund's assets was invested in companies in Asia
(33.6%) , followed by companies in Latin America (32.2%), Southern Europe
(16.3%), Africa (2.9%), the Middle East (1.4%) and Eastern Europe (1.1%).
Countries with the heaviest weightings were Hong Kong (15.7%), Mexico (12.8%),
Argentina (9.4%), Brazil (7.8%) and Turkey (6.6%). Overall, the fund had
holdings in 21 countries, with no single market accounting for more than 17% of
the its total net assets.
New markets in which the fund invested during the past six months were Korea and
the Philippines.
3. The percentages shown include securities which were acquired, but not
settled, by June 30, 1995. This resulted in the fund's total investments being
reported in excess of 100%. See page 115 of this report for details regarding
the fund's assets and liabilities.
Manager's Perspective
The first six months of this year were a turbulent time for emerging markets.
According to Lipper Analytical Services, Inc. the average emerging market mutual
fund posted a total return of -11.22% for the first quarter, +8.56% for the
second quarter, and -3.21% for the period as a whole.4 While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. In fact, the Hong Kong market has suffered six
declines of more than 20% during the last 15 years, but has increased 763%
during that time.5
During the six months under review, we substantially increased our investments
in Hong Kong which, as of June 30th, accounted for 15.7% of the fund's total net
assets. In 1994, rising U.S. interest rates and the slowing Chinese economy
negatively impacted the Hong Kong market. However, U.S. long-term interest rates
have fallen recently, and economic indicators show signs of improved economic
growth in China. We believe that fears about Hong Kong's reversion to China in
1997 are already reflected in present market valuations, and that Hong Kong
companies are selling at low prices in comparison with their counterparts
elsewhere. With confidence in China's economic prospects restored, and political
concerns about 1997 receding, we anticipate that the performance of this market
will continue to be a realistic reflection of Hong Kong's strong economic
fundamentals.
In Latin America, Argentina's macroeconomics and political fundamentals
continued to strengthen. A combination of external aid and internal government
action overcame the liquidity crisis in its banking system, and strong
first-round election results for the Menem administration have paved the way for
an accelerated economic reform. We have therefore substantially increased our
investments in Argentina, believing the country's long-term growth prospects
have improved.
Although Mexico's devaluation of its peso in December of 1994 took the shine off
emerging markets for many investors, our long-term outlook remains positive, and
as a result of additional investments and capital appreciation during the
period, our Mexican investments increased to 12.8% of the fund's total net
assets.
Looking forward, we shall continue to search for the best investment values in
emerging markets throughout the world. Our work in seeking to achieve this
objective has resulted in a well-diversified portfolio, helping to minimize the
risks associated with individual markets. We anticipate the fund's holdings will
become even more diversified as we continue our efforts to take advantage of new
opportunities in new markets.
Performance Summary
During the reporting period, the fund's net asset value rose to $9.81 on June
30, 1995, from $9.56 on December 31, 1994.
4. Source: Lipper Analytical Services, an independent research firm.
5. Source: Bloomberg. Based on quarterly fluctuations over 15 years.
Templeton Global Growth Fund
The Templeton Global Growth Fund seeks long-term capital growth by investing in
stocks and debt obligations of companies and governments of any nation,
including developing market nations. The fund follows the time-tested Templeton
approach, searching for bargains around the world.
On June 30, 1995, equities and debt obligations represented 88.2% of the fund's
total net assets. The remaining assets were concentrated in short-term
obligations.
Manager's Perspective
The Templeton Global Growth Fund endured turbulent investment conditions over
the past 12 months. During the six months under review, conflicting
macroeconomic signals, including the U.S. dollar's dramatic fall against the
yen, a rising U.S. discount rate and resulting volatile financial markets,
presented us with excellent opportunities to increase the Global Growth Fund's
holdings in undervalued securities.
While the fund was invested in more than 26 nations at the end of June, nowhere
in the world were market conditions more favorable than in the U.S. For the six
months ended June 30 1995, U.S. stocks, as represented by the Standard & Poor's
500 Stock Index(R), achieved a total return of 20.15% -- far exceeding the
Index's return of 5.67% just six months prior. Despite strong improvements in
the performance of U.S. stocks, Templeton analysts continued to uncover many
opportunities in undervalued securities, and thus, we more than doubled the
fund's U.S. weighting to 29.9% on June 30, 1995 from 12.3% of total net assets
on December 31, 1994.
One area of particular interest to us was the U.S. banking sector, where we
nearly doubled the fund's holdings in Citicorp to 0.97% on June 30, 1995, from
0.57% of total net assets on December 31, 1994. Early in 1995 we recognized the
company's glaring undervaluation and were encouraged when the firm announced a
$3 billion stock repurchase plan in late June, which reinforced our beliefs in
the firm's value. We believe the repurchase plan move reflected the importance
management places on providing returns to shareholders and their commitment to
expanding future global businesses.
Looking forward, we are encouraged by signs of performance in the forest
products area. Many of these very cyclical companies are coming out of depressed
earnings levels. Over the past five years, forest products companies posted an
average return on equity of just 7.6%, as compared with a normalized return on
equity of 12.5% for the 20-year period between 1969 and 1989. Utilizing our
approach of investing based on normalized long-term earnings expectations,
forest products stocks clearly represent value at recent price levels.
Presently, capacity utilization is at peak levels, yet current high demand
cannot be met by current production levels. While efficient U.S. producers will
continue to benefit from these conditions, many Scandinavian countries, blessed
with an abundance of natural forest products resources, have benefited mostly
from weak currencies and stand to benefit further because of the continuing
worldwide supply and demand imbalance.
Performance Summary
During the reporting period, the fund's net asset value rose to $11.17 on June
30, 1995, from $10.48 on December 31, 1994.
Templeton International Equity Fund
The Templeton International Equity Fund seeks long-term capital growth by
investing primarily in equity securities of companies outside the United States.
The fund's managers invest in undervalued stocks throughout the world, typically
using a five-year investment horizon. The fund currently holds securities from
over 20 different countries, including developing market countries. These
investments are not limited to any particular region, allowing the fund the
flexibility to adapt to changing economic conditions around the world.
Manager's Perspective
International economic and securities market conditions remained volatile during
the past six months. In early 1995, problems in Latin America, which were
centered around Mexico's currency crisis, cast a "bearish" pall over the world's
equity markets; second quarter results had a more "bullish" feel to them.
Improvements in the world equity markets during the second quarter of 1995
proved beneficial for the securities held in the International Equity Fund.
Our style of investing has always attempted to capitalize on volatile and
uncertain periods by buying securities which we feel are cheap or undervalued.
This means we are buying securities where we believe the problems are temporary
or the reaction of the market is too dramatic relative to the present
environment.
On June 30, 1995, the fund's equity assets included the following geographic
sectors: Europe (55.4% of total net assets), Asia (10.4%), Australia/New Zealand
(4.6%), Latin America (4.7%) and North America (2.0%). The fund's five largest
country holdings at year end were the United Kingdom (10.8% of total net
assets), Sweden (10.5%), Hong Kong (9.2%), the Netherlands (8.6%), and Spain
(6.8%).
Looking ahead, we remain optimistic about international markets. Economic and
political borders continue to fall, opening minds and markets to new
opportunities. In this environment, we will continue our disciplined search for
undervalued investments.
Performance Summary
During the reporting period, the fund's net asset value rose to $12.97 on June
30, 1995, from $12.51 on December 31, 1994.
Templeton Pacific Growth Fund
The Templeton Pacific Growth Fund seeks long-term growth of capital primarily
through investments in the equity securities of companies whose primary
operations are located in countries of the Pacific Rim (including China, Hong
Kong, Australia, Singapore, Indonesia, Japan, the Philippines, Malaysia, and
Thailand). The Pacific Rim offers a variety of investment opportunities, as it
is comprised of a unique mix of industrialized nations such as Japan, and
commodity-based nations such as Australia and Malaysia.
During the reporting period, the fund's top geographic allocations were Hong
Kong (19.2%), China (1.6%), Australia (17.8%), Japan (17.0%), Thailand (7.5%),
and the Philippines (6.0%).
Manager's Perspective
Pacific Rim markets, especially emerging markets such as Thailand and Indonesia,
were fairly volatile during the six months ended June 30, 1995. Early in the
year, markets in the region suffered from the Kobe earthquake in Japan, the
unexpected bankruptcy of Barings PLC, Mexico's currency devaluation and
investors preoccupation with the U.S. market. However, the stabilization of U.S.
interest rates fueled a second quarter rally in East Asian equities, drawing a
sharp contrast to the lackluster performance of the region during the first
quarter.
During the first half of 1995, lower U.S. interest rates and signs of a soft
landing in China caused the Hang Seng Index to reverse the previous year's
decline and Hong Kong settled into its new long-term role as China's bridge to
the outside world. Unlike 1992-1993, when its citizenry poured out of the
colony, an influx of people have returned to Hong Kong, reversing the migration
trend that began after the Tiananmen incident.
During this period, the Kobe earthquake had a nega- tive impact on Japanese
demand, the government struggled with its potentially perilous banking situation
and the Yen's unwavering strength was viewed as an obstacle to corporate
earnings growth. As a result, the Japanese securities market experienced
continued selling pressure in early 1995, with the Nikkei 225 down for the first
half of the year.
Philippine equities strengthened in the second quarter as the Mexican Peso
stabilized, while Philippine congressional elections suggested renewed support
for President Ramos. In Thailand, the market rose as high imports of capital
equipment suggested that the economy was moving to a higher plateau of
technology and productivity. In Indonesia, concerns regarding inflation led to
higher interest rates and lackluster market performance. Comments from
Malaysia's Finance Minister in early May led to a reversal of interest rate
expectations, raising hopes for an economic soft landing there, and its equity
market rebounded strongly. Meanwhile in Singapore, concerns about the impact of
rising unit labor costs and the strengthening Singapore dollar on corporate
earnings factored into the decline of the Straits Times Index.
Looking forward, we will continue to employ a value-oriented investment strategy
when managing the fund, which gives us the opportunity to take advantage of
market corrections as they occur.
Performance Summary
During the reporting period, the fund's net asset value declined to $13.19 on
June 30, 1995, from $13.24 on December 31, 1994.
U.S. Government Securities Fund
The U.S. Government Securities Fund seeks current income by investing
exclusively in obligations of the U.S. government or its agencies or
instrumentalities, primarily in Government National Mortgage Association (GNMA
or Ginnie Mae) and Federal National Mortgage Association (FNMA or Fannie Mae)
pass-through securities. The fund does not invest in derivatives or other more
potentially volatile securities.
As of June 30, 1995, the fund's total investments consisted of 74.5%
mortgage-backed securities (of which 53.9% were GNMAs), 22.9% other U.S.
government and agency securities, and 4.3% short-term investments.6
Manager's Perspective
Over the past six months, the U.S. Treasury market rallied in response to market
expectations of a slower rate of economic growth with sustained low inflation.
As of June 30, 1995, the 30-year Treasury bond yield had declined 1.26
percentage points to 6.63% from 7.89% on December 31, 1994.
We believe the recent decline in mortgage rates should stimulate the housing
sector of the economy and lead to an increase in economic activity later this
year. We think an overall slowdown in economic activity, however, will most
likely cause the Fed to take a more neutral or relaxed stance on monetary policy
in the near term provided inflationary pressures remain constrained.
(On July 6, 1995, the Fed did, in fact, lower its federal funds rate, the rate
banks charge each other for overnight loans, from 6.00% to 5.75%.)
It is our view that with a moderate growth rate and inflation under control, the
outlook for government and agency securities should improve, as the cost of
borrowing should remain low. Further, when long-term interest rates fall, bond
prices tend to rise. This environment bodes well for the fund's current holdings
as older, higher yielding securities become increasingly desirable as new bonds
are yielding less.
The political environment will also influence financial markets, as we approach
the elections in 1996. It appears to us that efforts to balance the budget may
prevail, thereby fostering a continued positive outlook for the economy.
Long-term, there has been some discussion in Congress about reducing the role of
the FHA (Federal Housing Administration). This movement could potentially reduce
the future supply of Ginnie Maes, which would add a scarcity value to these
securities while enhancing their value relative to other securities.
Performance Summary
During the reporting period, the funds net asset value rose to $13.18 on June
30, 1995, from $12.57 on December 31, 1994.
6. The percentages shown include securities which were acquired, but not
settled, by June 30, 1995. This resulted in the fund's total investments being
reported in excess of 100%. See page 64 of this report for details regarding the
fund's assets and liabilities.
Utility Equity Fund
The Utility Equity Fund seeks both capital appreciation and current income by
concentrating its investments in securities issued by companies in the public
utility industry. On June 30, 1995, the fund's five largest holdings were
Southern Company (4.5%), Duke Power Co. (4.2%), General Public Utilities Corp.
(3.8%), FPL Group, Inc. (3.7%), and Dominion Resources, Inc. (3.6%).
Manager's Perspective
Interest rates have eased substantially over the past six months. The yield on
the benchmark 30-year U.S. Treasury bond has fallen from 7.89% on December 31,
1994 to 6.63% on June 30, 1995. Typically, falling interest rates tend to boost
the stock prices of the utility companies in which the fund invests.
Even after the impressive gains of utility stocks over the past six months, we
believe their relative valuations still appear inexpensive and attractive. For
example, on June 30, the average yield of electric utilities was 6.4%, which was
almost at parity with the 6.63% yield of the 30-year Treasury bond.
Historically, when utility yields rose to such comparative levels they also
presented excellent long-term total return potential. Of course, past
performance does not guarantee future results,and the values and yields of
utility securities fluctuate both up and down with market conditions.
Due to the attractive valuations in the utility sector, management added to
several positions in the fund, including Dominion Resources, Entergy and SCANA
Corp., and initiated new positions in Dayton Power & Light and New England
Electric System.
In addition to its focus on U.S. electric companies, management seeks investment
opportunities in other areas of the utility industry. The fund currently has
holdings in domestic telephone and gas stocks as well as foreign utility stocks.
These investments can offer very attractive growth prospects and help diversify
the fund's holdings. Over the past six months, we took advantage of weakness in
foreign markets to build up the fund's small, diversified foreign component. For
example, we added to its position in a Spanish electric company, Empresa
Nacional de Electricidad, and also initiated a position in Portugal Telecom.
These foreign holdings have the same positive characteristics that we
traditionally look for in domestic securities -- strong economic growth, strong
demographics, favorable political and regulatory environments and superior
entrepreneurial management.
Looking forward, one of our principal concerns is the changing regulatory
environment of the utility industry. For this reason, we have been focusing
specifically on utilities that we think are best positioned to handle increasing
competition. Such utilities have low production costs, strong entrepreneurial
management teams, and service territories located in regions with positive
demographic trends. Moreover, we believe that these utilities will produce
higher total returns than their peers as they capture a larger part of a more
competitive marketplace.
In spite of the potential for regulatory change in the industry, utilities
continue to provide services that are an essential part of everyday life, and we
believe that utility stocks will continue to play an important role in a
well-diversified investment portfolio. The fund remains committed to its
long-term objective of income and capital growth.
Performance Summary
During the reporting period, the funds net asset value rose to $15.36 on June
30, 1995, from $14.42 on December 31,1994.
Four Zero Coupon Funds (maturity dates: 1995, 2000, 2005, 2010)
The objective of each fund is to provide as high an investment return as is
consistent with preservation of capital. Each zero coupon fund seeks to return a
reasonably assured targeted dollar amount, predictable at the time of
investment, on a specific date in the future.
The funds invest primarily in zero coupon bonds issued by the U.S. government
and its agencies and by domestic corporations. Zero coupon bonds pay no cash
income to the fund but are purchased at a substantial discount from their stated
value at maturity. The fund's managers do not base their strategy on interest
rate fluctuations -- rather, they search for relative value among agency
securities.
Manager's Perspective
We began 1995 with the concern that the Federal Reserve would continue to raise
interest rates to curb economic growth. However, the first half of 1995
demonstrated an economic slowdown, causing the Federal Reserve to change
monetary policy from an aggressive stance to one of neutrality. In our view,
several economic indicators have signaled an overall slowing of growth.
During the past six months, the zero coupon funds have benefited from the strong
rally in the bond market. We believe that the bond market is closing out the six
month period in anticipation of a reduction in interest rates. This reversal in
the bond market's perception of Federal Reserve policy has allowed interest
rates to fall by as much as two percentage points during the past six months.
Naturally, the longer the target maturity date, the more the portfolio would
likely benefit from this drop in rates.
At the time of this writing, the Fed has lowered the federal funds rate (the
rate banks charge each other for overnight loans) 25 basis points to 5.75%. The
discount rate (the rate charged by the Fed on loans made to banks) remained the
same.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Adjustable U.S. Government Fund (Note 1)
Adjustable Rate Mortgage Securities 83.9%....................................................
Federal Home Loan Mortgage Corp. (FHLMC) 22.4%
<S> <C> <C>
$ 645,610 FHLMC, Cap 12.34%, Margin 2.00% + CMT, Resets Semi-Annually, 6.255%, 11/01/18 ................ $ 653,248
7,141,922 FHLMC, Cap 12.522%, Margin 2.105% + CMT, Resets Annually, 7.528%, 06/01/22 ................... 7,356,823
479,011 FHLMC, Cap 13.00%, Margin 2.00% + CMT, Resets Semi-Annually, 7.25%, 07/01/18 ................. 489,198
3,314,922 FHLMC, Cap 13.006%, Margin 2.00% + CMT, Resets Annually, 7.436%, 09/01/19 .................... 3,398,179
3,916,191 FHLMC, Cap 13.125%, Margin 2.00%, + CMT, Resets Annually, 6.952%, 07/01/18 ................... 4,024,348
851,306 FHLMC, Cap 13.364%, Margin 2.225% + CMT, Resets Annually, 7.775%, 07/01/19 ................... 876,537
9,846,504 FHLMC, Cap 13.458%, Margin 2.195% + CMT, Resets Annually, 7.485%, 02/01/19 ................... 10,123,657
7,271,373 FHLMC, Cap 13.50%, Margin 2.03% + CMT, Resets Annually, 6.95%, 05/01/18 ...................... 7,482,497
2,129,332 FHLMC, Cap 13.605%, Margin 2.20% + CMT, Resets Annually, 7.786%, 02/01/19 .................... 2,203,742
8,907,878 FHLMC, Cap 13.879%, Margin 2.089%, + CMT, Resets Annually, 7.527%, 04/01/18 .................. 9,171,897
-------------
Total Federal Home Loan Mortgage Corp. (Cost $46,025,433) .............................. 45,780,126
-------------
Federal National Mortgage Association (FNMA) 32.1%
5,773,750 FNMA, Cap 11.76%, Margin 2.15% + CMT, Resets Annually, 7.497%, 10/01/22 ...................... 5,961,264
9,075,817 FNMA, Cap 12.22%, Margin 1.75% + 6 Month DR, Resets Semi-Annually, 7.021%, 06/01/18 .......... 9,118,791
1,373,651 FNMA, Cap 12.248%, Margin 1.749% + COFI, Resets Annually, 5.558%, 02/01/28 ................... 1,381,423
1,316,845 FNMA, Cap 12.323%, Margin 1.66% + CMT, Resets Annually, 7.662%, 03/01/21 ..................... 1,345,586
919,509 FNMA, Cap 12.65%, Margin 1.75% + NCI, Resets Monthly, 6.25%, 10/01/28 ........................ 916,766
919,789 FNMA, Cap 12.75%, Margin 2.125% + CMT, Resets Annually, 7.375%, 06/01/18 ..................... 953,750
4,493,912 FNMA, Cap 12.786%, Margin 1.25% + COFI, Resets Monthly, 6.175%, 02/01/03 ..................... 4,464,163
8,171,585 FNMA, Cap 12.819%, Margin 2.127% + CMT, Resets Annually, 7.728%, 09/01/18 .................... 8,477,071
847,560 FNMA, Cap 12.981%, Margin 2.011% + CMT, Resets Annually, 7.515%, 08/01/20 .................... 874,629
1,127,744 FNMA, Cap 13.099%, Margin 1.75% + 6 Month TB, Resets Semi-Annually, 7.229%, 07/01/20 ......... 1,134,194
5,174,279 FNMA, Cap 13.313%, Margin 2.126% + CMT, Resets Annually, 7.617%, 07/01/19 .................... 5,365,396
399,826 FNMA, Cap 13.644%, Margin 2.011% + CMT, Resets Annually, 7.408%, 01/01/18 .................... 411,306
764,917 FNMA, Cap 13.793%, Margin 2.167% + CMT, Resets Annually, 7.444%, 06/01/18 .................... 787,602
1,452,531 FNMA, Cap 13.80%, Margin 0.94% + 6 Month DR, Resets Semi-Annually, 6.795%, 07/01/24 .......... 1,420,350
526,769 FNMA, Cap 13.843%, Margin 1.25% + COFI, Resets Monthly, 6.257%, 02/01/17 ..................... 523,940
903,664 FNMA, Cap 14.071%, Margin 1.25% + COFI, Resets Monthly, 6.175%, 12/01/18 ..................... 898,531
1,704,787 FNMA, Cap 14.428%, Margin 2.125% + CMT, Resets Annually, 7.75%, 04/01/19 ..................... 1,767,606
6,464,523 FNMA, Cap 14.625%, Margin 1.25% + COFI, Resets Monthly, 6.258%, 06/01/02 ..................... 6,421,728
6,006,383 FNMA, Cap 14.808%, Margin 18.25%, + 3CMT, Resets Tri-Annually, 7.998%, 07/01/20 .............. 6,137,502
7,012,119 FNMA, Cap 15.156%, Margin 2.284% + 3CMT, Resets Tri-Annually, 8.233%, 03/01/20 ............... 7,273,700
-------------
Total Federal National Mortgage Association (Cost $66,326,095) ......................... 65,635,298
-------------
Government National Mortgage Association (GNMA) 12.2%
803,296 GNMA, Cap 11.00%, Margin 1.50% + CMT, Resets Annually, 6.50%, 02/20/17 ....................... 812,293
8,542,179 GNMA, Cap 11.00%, Margin 1.50% + CMT, Resets Annually, 7.00%, 08/20/23 ....................... 8,712,596
4,413,373 GNMA, Cap 11.50%, Margin 1.50% + CMT, Resets Annually, 7.125%, 07/20/17 ...................... 4,490,386
109,264 GNMA, Cap 11.50%, Margin 1.50% + CMT, Resets Annually, 7.125%, 07/20/23 ...................... 111,513
4,670,633 GNMA, Cap 11.50%, Margin 1.50% + CMT, Resets Annually, 7.125%, 08/20/23 ...................... 4,766,755
561,024 GNMA, Cap 12.75%, Margin 1.50% + CMT, Resets Annually, 6.75%, 10/20/17 ....................... 567,830
453,961 GNMA, Cap 13.50%, Margin 1.50% + CMT, Resets Annually, 6.75%, 12/20/17 ....................... 460,749
4,962,817 GNMA, Cap 14.00%, Margin 1.50% + CMT, Resets Annually, 6.75%, 01/20/16 ....................... 5,027,730
-------------
Total Government National Mortgage Association (Cost $25,396,874) ...................... 24,949,852
-------------
Other Bonds 17.2%
11,777,882 SBA, Cap 10.50%, Margin Prime - 0.50%, Resets Quarterly, 8.50%, 03/25/19 ..................... 12,131,219
9,355,551 SBA, Cap 10.85%, Margin Prime - 0.40%, Resets Quarterly, 8.60%, 06/25/19 ..................... 9,729,774
12,705,510 SBA, Cap 10.875%, Margin Prime - 0.125%, Resets Quarterly, 8.875%, 03/25/18 .................. 13,277,259
-------------
Total Other Bonds (Cost $36,004,887) ................................................... 35,138,252
-------------
Total Adjustable Rate Mortgage Securities (Cost $173,753,289) .......................... 171,503,528
-------------
g Short Term Investments
U.S. Government Securities 12.6%
$26,700,000 U.S Treasury Bills, 5.945% - 5.61%, 03/07/96 - 04/04/96 (Cost $25,564,433)................. $ 25,635,902
-------------
Total Investments before Repurchase Agreements (Cost $199,317,722)..................... 197,139,430
-------------
h,iReceivables from Repurchase Agreements 2.6%
5,472,347 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $5,347,822) (Cost $5,345,052)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ................... 5,345,052
-------------
Total Investments (Cost $204,662,774) 99.1% ......................................... 202,484,482
Other Assets and Liabilities, Net .9%................................................ 1,884,520
-------------
Net Assets 100.0% .................................................................. $204,369,002
=============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $204,662,774 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................. $ 304,138
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................... (2,482,430)
-------------
Net unrealized depreciation.....................................................................$ (2,178,292)
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
3CMT - 3 Year Constant Maturity Treasury Index
CMT - 1 Year Constant Maturity Treasury Index
COFI - 11th District Cost of Funds Index
DR - Discount Rate
NCI - National District Cost of Funds Index
SBA - Small Business Administration
TB - Treasury Bill
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Country* Shares Global Income Fund (Note 1)
Preferred Stocks 1.4%
Telecommunications - Argentina 1.4%
<S> <C> <C>
US 386,800 Nortel, Inc., pfd., Series A .................................................... $ 3,283,932
US 14,000 Nortel, Inc., pfd., Series B, ADR ............................................... 273,000
-------------
Total Preferred Stocks (Cost $3,961,032) .................................. 3,556,932
-------------
Face
Amount
Bonds 72.0%
Argentina 3.4%
US 13,500,000 Argentina Government, 5.00%, 03/31/23 ........................................... 6,480,000
US 2,500,000 c Hidro Electrica Alicuras, 8.375%, 03/15/99 ...................................... 2,128,125
-------------
8,608,125
-------------
Australia 5.9%
AU 9,000,000 c New South Wales Treasury Corp., 7.00%, 04/01/04 ................................. 5,499,112
AU 7,000,000 New South Wales Treasury Corp., 6.50%, 05/01/06 ................................. 3,970,063
AU 5,570,000 Queensland Treasury Corp., 8.875%, 11/08/96 ..................................... 4,003,903
AU 2,000,000 Queensland Treasury Corp., 8.00%, 05/14/03 ...................................... 1,325,041
-------------
14,798,119
-------------
Canada 3.9%
CA 11,910,000 Government of Canada, 10.50%, 03/01/01 .......................................... 9,788,958
-------------
Denmark 4.3%
DK 25,917,000 Kingdom of Denmark, 8.00%, 05/15/03 ............................................. 4,666,356
DK 31,625,539 Nykredit, 11.00%, 10/01/10 ...................................................... 6,197,985
-------------
10,864,341
-------------
France 4.6%
FR 26,850,000 Government of France, 8.50%, 03/28/00 ........................................... 5,827,993
FR 25,306,000 Government of France, 9.50%, 01/25/01 ........................................... 5,741,678
-------------
11,569,671
-------------
Germany 21.4%
DD 7,350,000 Bundesobligation, 5.375%, 02/22/99 .............................................. 5,246,508
DD 19,840,000 Bundesschatzanweisungen, 6.875%, 12/02/98 ....................................... 14,784,602
DD 10,140,000 Duetsche Bendespost, 7.75%, 10/01/04 ............................................ 7,570,174
DD 14,055,000 German Unity Fund, 8.75%, 08/20/01 .............................................. 11,261,277
DD 12,520,000 German Unity Fund, 8.00%, 01/21/02 .............................................. 9,609,530
DD 6,720,000 International Bank of Reconstruction and Development, 7.125%, 04/12/05 .......... 4,828,633
-------------
53,300,724
-------------
India .4%
US 1,000,000 c Essar Gujarat, Ltd., FRN, 9.40%, 07/15/99 ....................................... 995,000
-------------
Japan 11.0%
JP 505,000,000 European Investment Bank, 5.875%, 11/26/99 ...................................... 6,946,468
JP 714,000,000 European Investment Bank, 6.625%, 03/15/00 ...................................... 10,137,141
JP 726,000,000 International Bank of Reconstruction and Development, 6.75%, 03/15/00 ........... 10,350,327
-------------
27,433,936
-------------
Mexico .4%
US 600,000 United Mexican States, 6.25%, 12/31/19 .......................................... 365,250
US 300,000 United Mexican States, FRN, 8.125%, 03/31/08 .................................... 262,875
US 400,000 United Mexican States, FRN, 6.875%, 12/31/19 .................................... 287,000
-------------
915,125
-------------
Sweden 5.3%
SE 72,000,000 Government of Sweden, 6.00%, 02/09/05 ........................................... $ 7,039,067
SE 43,100,000 Statens Bostadiffinansier, 12.50%, 01/23/97 ..................................... 6,084,692
-------------
13,123,759
-------------
United States 11.4%
US 380,000 U.S. Treasury Bonds, 11.625%, 11/15/04 .......................................... 522,619
US 2,590,000 U.S. Treasury Bonds, 7.25%, 05/15/16 ............................................ 2,758,350
US 470,000 U.S. Treasury Notes, 9.125%, 05/15/99 ........................................... 520,819
US 3,111,000 U.S. Treasury Notes, 6.875%, 07/31/99 ........................................... 3,211,133
US 4,209,000 U.S. Treasury Notes, 8.75%, 08/15/00 ............................................ 4,714,080
US 4,242,000 U.S. Treasury Notes, 7.50%, 11/15/01 ............................................ 4,552,196
US 6,887,000 U.S. Treasury Notes, 7.25%, 05/15/04 ............................................ 7,351,873
US 4,692,000 U.S. Treasury Notes, 6.50%, 05/15/05 ............................................ 4,790,236
-------------
28,421,306
-------------
Total Bonds (Cost $179,238,898) ........................................... 179,819,064
-------------
Total Long Term Investments (Cost $183,199,930) ........................... 183,375,996
-------------
g Short Term Securities 6.9%
Bonds 4.2%
AU 7,000,000 IBM Australia, 12.00%, 03/26/96 ................................................. 5,092,185
DK 12,000,000 Kingdom of Denmark, 9.00%, 11/15/95 ............................................. 2,238,400
SE 5,000,000 Statens Bostadiffinansier, 13.00%, 09/20/95 ..................................... 689,825
TH 60,000,000 Thailand Military Bank Notes, 8.50%, 09/22/95 ................................... 2,408,021
-------------
Total Bonds (Cost $10,804,599) ............................................ 10,428,431
-------------
Certificates of Deposit .6%
TH 10,000,000 Bangkok Bank, 11.50%, 05/16/96 .................................................. 406,772
TH 10,000,000 Thailand Military Bank, 11.125%, 06/03/96 ....................................... 405,104
TH 14,000,000 Thailand Military Bank, 11.00%, 06/05/96 ........................................ 568,167
-------------
Total Certificates of Deposit (Cost $1,380,043) ........................... 1,380,043
-------------
p Indexed Securities 2.1%
US 5,200,000 Goldman Sachs Group, IDR, (principal and interest is linked to the change in the
Indonesian Rupiah to U.S. Dollar foreign exchange rate between issue date
(2,226.35 Rupiah/U.S. Dollar) and maturity date), 15.85%, 09/15/95 (Cost $5,200,000) 5,168,280
-------------
Total Investments before Repurchase Agreements (Cost $200,584,572) ........ 200,352,750
-------------
h,i Receivables from Repurchase Agreements .9%
US 2,267,038 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $2,216,026)
(Cost $2,214,878)
Collateral U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ........... 2,214,878
-------------
Total Investments (Cost $202,799,450) 81.2% .......................... 202,567,628
Other Assets and Liabilities, Net 18.8% .............................. 46,988,529
-------------
Net Assets 100.0% .................................................... $249,556,157
=============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $202,801,787 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost .............................................. $ 6,317,279
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................ (6,551,438)
------------
Net unrealized depreciation ................................................... $ (234,159)
============
</TABLE>
COUNTRY LEGEND:
AU - Australia
CA - Canada
DD - Germany
DK - Denmark
FR - France
ID - Indonesia
JP - Japan
SE - Sweden
TH - Thailand
US - United States of America
PORTFOLIO ABBREVIATIONS :
FRN - Floating Rate Notes
IDR - Indonesian Rupiah
*Securities traded in currency of country indicated.
cSee Note 8 regarding Rule 144A securities.
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
pSee Note 1(g) regarding Indexed Securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Warrants High Income Fund (Note 1)
aCommon Stocks & Warrants .2%
<S> <C> <C>
33,568 Bucyrus-Erie Co. ............................................................................ $ 193,016
6,500 Dial Page, Inc., warrants ................................................................... 6,500
6,900 Empire Gas Corp., warrants .................................................................. 69
70 Foodmaker, Inc., warrants ................................................................... 960
5,000 Gulf States Steel, warrants ................................................................. 50,000
12,924 Kash N'Karry Food Stores, Inc. .............................................................. 436,185
395 Thermadyne Holdings Corp. ................................................................... 5,579
-------------
Total Common Stocks & Warrants (Cost $1,197,658) ...................................... 692,309
-------------
Preferred Stocks 2.2%
7,000 Panamsat Corp., 12.75%, pfd., PIK (Cost $7,000,000) ......................................... 7,280,000
-------------
Total Common Stocks & Warrants, and Preferred Stocks (Cost $8,197,658) ................ 7,972,309
-------------
Face
Amount
Bonds 93.6%
Automotive 3.5%
$ 125,000 Motor Wheel Corp., senior notes, Series B, 11.50%, 03/01/00 ................................. 105,625
4,500,000 SPX Corp., senior sub. notes, 11.75%, 06/01/02 .............................................. 4,747,500
5,900,000 Truck Components, Inc., senior notes, Series B, 12.25%, 06/30/01 ............................ 6,534,250
-------------
11,387,375
-------------
Cable Television 9.3%
4,000,000 Cablevision Industries Corp., senior sub. deb., 9.25%, 04/01/08 ............................. 4,165,000
2,000,000 Cablevision Systems Corp., senior sub. deb., 9.875%, 04/01/23 ............................... 2,090,000
2,000,000 Comcast Corp., senior sub. deb., 9.50%, 01/15/08 ............................................ 2,015,000
500,000 Continental Cablevision, Inc., senior deb., 8.875%, 09/15/05 ................................ 511,250
1,500,000 Continental Cablevision, Inc., senior deb., 9.50%, 08/01/13 ................................. 1,552,500
1,000,000 Continental Cablevision, Inc., senior sub. deb., 11.00%, 06/01/07 ........................... 1,110,000
2,900,000 Continental Cablevision, Inc., senior sub. deb., 9.00%, 09/01/08 ............................ 2,947,125
5,200,000 e Diamond Cable Communications Co., senior disc. notes, zero coupon to 09/30/99, (original accretion
rate 13.25%), 13.25% thereafter, 09/30/04 .................................................. 3,445,000
2,200,000 Le Groupe Videotron Ltee, senior notes, 10.625%, 02/15/05 ................................... 2,332,000
4,500,000 f Rogers Cablesystems, Inc., senior secured deb. (Canada), 9.65%, 01/15/14 .................... 2,784,349
1,500,000 Rogers Communications, Inc., senior deb., 10.875%, 04/15/04 ................................. 1,545,000
1,500,000 Time Warner, Inc., senior notes, 10.15%, 05/01/12 ........................................... 1,768,422
1,500,000 Time Warner, Inc., sub. deb., 9.125%, 01/15/13 .............................................. 1,545,000
3,000,000 Turner Broadcasting Systems, Inc., senior deb., 8.40%, 02/01/24 ............................. 2,625,000
-------------
30,435,646
-------------
Chemicals 4.4%
3,750,000 Applied Extrusion Technology, senior notes, 11.50%, 04/01/02 ................................ 3,956,250
2,500,000 Harris Chemical of North America, senior sub. notes, 10.75%, 10/15/03 ....................... 2,350,000
3,000,000 IMC Global, Inc., senior notes, 9.25%, 10/01/00 ............................................. 3,097,500
1,200,000 IMC Global, Inc., senior notes, Series B, 10.125%, 06/15/01 ................................. 1,290,000
2,425,000 IMC Global, Inc., senior notes, Series B, 10.75%, 06/15/03 .................................. 2,631,125
1,150,000 UCC Investors, senior notes, 10.50%, 05/01/02 ............................................... 1,178,750
-------------
14,503,625
-------------
Consumer Goods 3.6%
4,250,000 e Coleman Holdings, Inc., senior secured disc. notes, (original accretion rate 10.875),
0.00%, 05/27/98 ........................................................................... 3,166,250
2,800,000 Playtex Family Products Corp., senior sub. notes, 9.00%, 12/15/03 ........................... 2,642,500
Consumer Goods (cont.)
$3,000,000 Revlon Consumer Products Corp., senior sub. notes, 10.50%, 02/15/03 ......................... $ 2,955,000
3,000,000 RJR Nabisco, Inc., notes, 9.25%, 08/15/13 ................................................... 3,075,000
-------------
11,838,750
-------------
Containers & Packaging .6%
1,000,000 Owens-Illinois, Inc., senior sub. notes, 10.00%, 08/01/02 ................................... 1,037,500
1,000,000 Owens-Illinois, Inc., senior sub. notes, 9.75%, 08/15/04 .................................... 1,025,000
-------------
2,062,500
-------------
Energy 1.2%
5,000,000 Empire Gas Corp., units, senior secured notes, 7.00% coupon to 07/15/99, 12.875% thereafter,
07/15/04 .................................................................................. 4,050,000
-------------
Food & Beverage 5.5%
3,000,000 Coca Cola Bottling Group Southwest, Inc., senior sub. notes, 9.00%, 11/15/03 ................ 2,958,750
700,000 Curtice-Burns Foods, Inc., senior sub. notes, 12.75%, 02/01/05 .............................. 747,250
1,395,000 c Del Monte Corp., sub. notes, PIK, 12.25%, 09/01/02 .......................................... 1,053,225
250,000 Dr Pepper Bottling Co. of Texas, senior sub. notes, 10.25%, 02/15/00 ........................ 256,250
4,296,000 e Dr Pepper/Seven-Up Cos., Inc., senior sub. disc. notes, zero coupon to 11/01/97, (original accretion
rate 11.75%), 11.75% thereafter, 11/01/02 ................................................. 3,850,290
4,700,000 PMI Acquisition Corp., senior sub. notes, 10.25%, 09/01/03 .................................. 4,899,750
1,230,000 Specialty Foods Corp., senior unsecured notes, Series B, 10.25%, 08/15/01 ................... 1,220,775
3,000,000 Texas Bottling Group, Inc., senior sub. notes, 9.00%, 11/15/03 .............................. 2,955,000
-------------
17,941,290
-------------
Food Retailing 8.5%
1,700,000 c Dominick's Finer Foods, 10.875%, 05/01/05 ................................................... 1,725,500
1,500,000 c Grand Union Capital Corp., senior sub. notes, 11.375%, 02/15/99 ............................. 1,665,000
6,000,000 Pathmark Stores, Inc., senior sub. notes, 9.625%, 05/01/03 .................................. 5,880,000
1,000,000 Pathmark Stores, Inc., S.F., sub. notes, 11.625%, 06/15/02 .................................. 1,055,000
3,000,000 Penn Traffic Co., senior notes, 8.625%, 12/15/03 ............................................ 2,835,000
1,500,000 Penn Traffic Co., senior notes, 10.375%, 10/01/04 ........................................... 1,541,250
1,500,000 Penn Traffic Co., senior sub. notes, 9.625%, 04/15/05 ....................................... 1,425,000
6,500,000 Pueblo Xtra International, senior notes, 9.50%, 08/01/03 .................................... 5,833,750
3,750,000 Ralphs Grocery Co., senior notes, 10.45%, 06/15/04 .......................................... 3,768,750
2,000,000 Ralphs Grocery Co., senior sub. notes, 11.00%, 06/15/05 ..................................... 1,950,000
-------------
27,679,250
-------------
Forest & Paper Products 6.0%
3,500,000 Container Corp., senior notes, Series A, 11.25%, 05/01/04 ................................... 3,688,125
4,000,000 Fort Howard Corp., senior sub. notes, 9.00%, 02/01/06 ....................................... 3,680,000
3,000,000 Fort Howard Corp., sub. notes, 10.00%, 03/15/03 ............................................. 2,966,250
2,000,000 Repap New Brunswick, senior notes, first priority, 9.875%, 07/15/00 ......................... 2,030,000
2,000,000 Repap New Brunswick, senior notes, second priority, 10.625%, 04/15/05 ....................... 2,025,000
3,000,000 REPAP Wisconsin Inc., senior secured notes, 9.25%, 02/01/02 ................................. 2,913,750
2,300,000 S.D. Warren Co., senior sub. notes, Series B, 12.00%, 12/15/04 .............................. 2,484,000
-------------
19,787,125
-------------
Gaming & Leisure 10.3%
6,000,000 Aztar Corp., senior sub. notes, 13.75%, 10/01/04 ............................................ 6,795,000
4,500,000 Bally's Grand, first mortgage, Series B, 10.375%, 12/15/03 .................................. 4,432,500
1,500,000 Embassy Suites, Inc., guaranteed senior sub. notes, 10.875%, 04/15/02 ....................... 1,623,750
5,500,000 Harrah's Jazz Co., first mortgage, 14.25%, 11/15/01 ......................................... 5,720,000
1,500,000 MGM Grand Hotels Finance Corp., guaranteed first mortgage notes, 11.75%, 05/01/99 ........... 1,631,250
Gaming & Leisure (cont.)
$5,900,000 c Players International, Inc., senior notes, 10.875%, 04/15/05 ................................ $ 5,826,250
7,500,000 Showboat, Inc., senior sub. notes, 13.00%, 08/01/09 ......................................... 7,753,125
-------------
33,781,875
-------------
Health Care Services 10.2%
4,270,000 Abbey Healthcare Group, Inc., senior sub. notes, 9.50%, 11/01/02 ............................ 4,419,450
2,236,911 Amerisource Distribution Corp., senior deb., PIK, 11.25%, 07/15/05 .......................... 2,404,679
2,400,000 Columbia/HCA Healthcare, Inc., notes, 6.91%, 06/15/05 ....................................... 2,646,000
4,000,000 Columbia/HCA Healthcare, Inc., notes, 7.69%, 06/15/25 ....................................... 4,400,000
4,000,000 c Dade International, Inc., senior sub. notes, 13.00%, 02/01/05 ............................... 4,220,000
5,500,000 c Integrated Health Services, Inc., senior sub. notes, 9.625%, 05/31/02 ....................... 5,582,500
850,000 National Medical Enterprises, senior notes, 9.625%, 09/01/02 ................................ 886,125
3,400,000 National Medical Enterprises, senior sub. notes, 10.125%, 03/01/05 .......................... 3,612,500
5,500,000 Sola Group, Ltd., senior sub. notes, 6.00% coupon to 12/15/98, 9.625% thereafter, 12/15/03 .. 5,032,500
-------------
33,203,754
-------------
Industrial Products 7.2%
8,500,000 e American Standard, Inc., S.F., senior sub. deb., zero coupon to 06/01/98, (original accretion rate
10.50%), 10.50% thereafter, 06/01/05 ....................................................... 6,460,000
1,000,000 c Day International Group, senior sub. notes, 11.125%, 06/01/05 ............................... 1,010,000
6,500,000 Easco Corp., senior notes, Series B, 10.00%, 03/15/01 ....................................... 6,500,000
5,500,000 Nortek, Inc., senior sub. notes, 9.875%, 03/01/04 ........................................... 4,977,500
5,000,000 Pace Industries, Inc., senior notes, Series B, 10.625%, 12/01/02 ............................ 4,750,000
-------------
23,697,500
-------------
Lodging 2.4%
8,000,000 c HMH Properties, Inc., senior secured notes, 9.50%, 05/15/05 ................................. 7,780,000
-------------
Media & Broadcasting 6.0%
1,000,000 Act III Broadcasting, senior sub. notes, 9.625%, 12/15/03 ................................... 1,013,750
1,700,000 American Media Operation, senior sub. notes, 11.625%, 11/15/04 .............................. 1,819,000
2,500,000 c Benedek Broadcasting, senior secured notes, 11.875%, 03/01/05 ............................... 2,603,125
3,500,000 c Granite Broadcasting Corp., senior sub. notes, Series A, 10.375%, 05/15/05 .................. 3,497,830
925,000 Infinity Broadcasting Corp., senior sub. notes, 10.375%, 03/15/02 ........................... 981,656
2,500,000 K-III Communications Corp., senior notes, 10.25%, 06/01/04 .................................. 2,612,500
4,000,000 New World Television, Inc., S.F., senior notes, 11.00%, 06/30/05 ............................ 4,170,000
5,000,000 f News America Holdings, Inc., deb. (Australia), 8.625%, 02/07/14 ............................. 2,860,778
-------------
19,558,639
-------------
Metals & Mining 2.8%
2,000,000 Algoma Steel, Inc., first mortgage, 12.375%, 07/15/05 ....................................... 1,803,082
5,000,000 c Gulf States Steel, first mortgage, 13.50%, 04/15/03 ......................................... 4,912,500
2,100,000 Ucar Global Enterprises, Inc., senior sub. notes, Series B, 12.00%, 01/15/05 ................ 2,257,500
-------------
8,973,082
-------------
Retail .1%
147,000 Eckerd (Jack) Corp., S.F., sub. deb., 11.125%, 05/01/01 ..................................... 149,573
-------------
Technology & Information Systems 3.2%
6,000,000 ADT Operations, guaranteed senior sub. notes, 9.25%, 08/01/03 ............................... 6,210,000
1,400,000 e Bell & Howell Co., senior deb., zero coupon to 03/01/00, (original accretion rate 11.50%), 11.50%
thereafter, 03/01/05 ...................................................................... 826,000
2,450,000 Bell & Howell Co., senior notes, 9.25%, 07/15/00 ............................................ 2,407,125
800,000 Bell & Howell Co., senior sub. notes, 10.75%, 10/01/02 ...................................... 852,000
-------------
10,295,125
-------------
Textiles & Apparel 1.2%
$ 144,200 Forstmann & Co., Inc., senior sub. notes, 14.75%, 04/15/99 .................................. $ 149,247
4,000,000 WestPoint Stevens, Inc., senior sub. deb., 9.375%, 12/15/05 ................................. 3,870,000
-------------
4,019,247
-------------
Transportation 4.6%
3,000,000 Delta Airlines, Inc., S.F., equipment trust, 10.50%, 04/30/16 ............................... 3,630,075
1,600,000 Eletson Holdings, Inc., first mortgage notes, 9.25%, 11/15/03 ............................... 1,564,000
4,500,000 Gearbulk Holding, Ltd., senior notes, 11.25%, 12/01/04 ...................................... 4,792,500
5,000,000 United Airlines, S.F., pass through trust, Series B-2, 9.06%, 09/26/14 ...................... 5,112,350
-------------
15,098,925
-------------
Utilities 2.0%
3,000,000 e CMS Energy Corp., senior notes, Series B, zero coupon to 10/01/95, (original accretion rate 9.875%),
9.875% thereafter, 10/01/99 ................................................................ 3,069,267
3,206,766 Midland CoGeneration Venture, S.F., deb., Series C, 10.33%, 07/23/02 ........................ 3,294,750
6,000 System Energy Resource, S.F., first mortgage, 11.375%, 09/01/16 ............................. 6,673
-------------
6,370,690
-------------
Wireless Communication 1.0%
6,500,000 e Dial Call Communications, units, senior disc. notes, zero coupon to 04/15/99, (original accretion rate
12.25%), 12.25% thereafter, 04/15/04 ..................................................... 3,315,000
-------------
Total Bonds (Cost $301,397,462) ....................................................... 305,928,971
-------------
Total Investments before Repurchase Agreements (Cost $309,595,120) .................... 313,901,280
-------------
h,i Receivables from Repurchase Agreements 1.0%
3,387,901 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $3,311,205) (Cost $3,309,490)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ................................... 3,309,490
-------------
Total Investments (Cost $312,904,610) Net 97.0% .................................. 317,210,770
Other Assets and Liabilities, Net 3.0% ........................................... 9,924,003
-------------
Net Assets 100.0% ................................................................ $327,134,773
=============
At June 30, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $312,904,610 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 10,638,722
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................... (6,332,562)
-------------
Net unrealized appreciation ............................................................... $ 4,306,160
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
PIK - Payment-in-Kind
S.F. - Sinking Fund
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
eZero coupon/Step-up bonds. The current effective yield may vary. The original
accretion rate by security will remain constant.
fFace amount stated in foreign currencies, value in U.S. dollars.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Investment Grade Intermediate Bond Fund (Note 1)
U.S. Government, Agencies & Instrumentalities 26.5%
<S> <C> <C>
$ 7,000,000 Tennessee Valley Authority, bonds, 8.25%, 11/15/96 .......................................... $ 7,201,684
2,000,000 U.S. Treasury Notes, 7.875%, 07/15/96 ....................................................... 2,042,500
4,000,000 U.S. Treasury Notes, 6.50%, 09/30/96 ........................................................ 4,036,248
5,000,000 U.S. Treasury Notes, 6.50%, 04/30/97 ........................................................ 5,057,809
10,000,000 U.S. Treasury Notes, 6.125%, 05/31/97 ....................................................... 10,056,250
15,000,000 U.S. Treasury Notes, 5.625%, 06/30/97 ....................................................... 14,953,125
-------------
Total U.S. Government, Agencies & Instrumentalities (Cost $43,358,699) ................ 43,347,616
-------------
Corporate Bonds 22.7%
Chemicals, Basic 1.0%
1,500,000 Dow Chemical Co., notes (putable1 10/15/99), 8.55%, 10/15/09 ................................ 1,710,417
-------------
Consumer Goods 3.7%
4,000,000 American Home Products, notes, 6.875%, 04/15/97 ............................................. 4,049,608
2,000,000 Heinz (H.J.) Co., notes, 5.50%, 09/15/97 .................................................... 1,976,602
-------------
6,026,210
-------------
Electric Utilities 1.8%
3,000,000 Southern California Edison Co., first mortgage bonds, 6.125%, 07/15/97 ...................... 2,992,485
-------------
Financial 11.1%
6,400,000 Associates Corp. of North America, deb., Series B, (putable1 03/03/98),7.95%, 02/15/10 ...... 6,931,545
1,200,000 Associates Corp. of North America, senior deb. (putable1 07/15/99), 8.55%, 07/15/09 ......... 1,355,207
7,500,000 GE Capital Corp., medium term notes (step up to 8.125% or putable1 04/01/98), 5.80%, 04/01/08 7,914,637
2,000,000 International Lease Financial Co., notes, 6.375%, 11/01/96 .................................. 2,003,496
-------------
18,204,885
-------------
Semiconductor .6%
750,000 Motorola, Inc. (putable1 08/15/01), 8.40%, 08/15/31 ......................................... 895,407
-------------
Waste Management 4.5%
7,000,000 WMX Technologies, notes (step up to 8.00% or putable1 04/30/97), 6.22%, 04/30/04 ............ 7,378,112
-------------
Total Corporate Bonds (Cost $35,507,042) .............................................. 37,207,516
-------------
Total U.S. Government, Agencies & Instrumentalities and Corporate Bonds
(Cost $78,865,741) ................................................................. 80,555,132
-------------
Short Term Investments 50.1%
U.S. Government, Agencies & Instrumentalities 24.7%
8,000,000 U.S. Treasury Notes, 3.875%, 10/31/95 ....................................................... 7,957,495
5,000,000 U.S. Treasury Notes, 4.25%, 11/30/95 ........................................................ 4,973,434
5,000,000 U.S. Treasury Notes, 4.25%, 12/31/95 ........................................................ 4,967,184
1,000,000 U.S. Treasury Notes, 7.50%, 01/31/96 ........................................................ 1,010,312
8,000,000 U.S. Treasury Notes, 4.625%, 02/15/96 ....................................................... 7,950,000
1,000,000 U.S. Treasury Notes, 7.75%, 03/31/96 ........................................................ 1,014,375
5,000,000 U.S. Treasury Notes, 5.50%, 04/30/96 ........................................................ 4,990,625
2,500,000 U.S. Treasury Notes, 7.375%, 05/15/96 ....................................................... 2,535,155
5,000,000 U.S. Treasury Notes, 5.875%, 05/31/96 ....................................................... 5,006,248
-------------
Total U.S. Government, Agencies & Intrumentalities (Cost $40,704,135) ................. 40,404,828
-------------
Total Investments before Repurchase Agreements (Cost $119,569,876) .................... 120,959,960
-------------
h Receivables from Repurchase Agreements 25.4%
$13,871,595 i Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $13,553,936)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ............................... $ 13,546,914
28,713,000 Nikko Government Securities Co., Inc., 6.10%, 07/03/95 (Maturity Value $28,014,233)
Collateral: U.S. Treasury Notes, 5.875%, 06/30/00 ......................................... 28,000,000
-------------
Total Receivables from Repurchase Agreements (Cost $41,546,914) ....................... 41,546,914
-------------
Total Investments (Cost $161,116,790) 99.3% ...................................... 162,506,874
Other Assets and Liabilities, Net .7% ............................................ 1,220,847
-------------
Net Assets 100.0% ................................................................ $163,727,721
=============
At June 30, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $161,116,790 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 2,243,462
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................ (853,378)
-------------
Net unrealized appreciation ............................................................... $ 1,390,084
=============
</TABLE>
1Holder may choose either to redeem at par on any put date or, if more
advantageous, to hold to final stated maturity.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Shares Precious Metals Fund (Note 1)
Common Stocks 84.6%
Gold & Diversified Resources 14.1%
<S> <C> <C>
160,718 Freeport-McMoRan Copper & Gold, Inc. ........................................................ $ 3,314,809
50,000 Horsham Corp. ............................................................................... 675,000
339,429 RTZ Corp., Plc. ............................................................................. 4,425,481
209,100 Teck Corp., Class B ......................................................................... 4,128,726
270,000 Western Mining Corp., Holdings, Ltd. ........................................................ 1,485,330
131,400 Western Mining Holdings, Ltd., ADR .......................................................... 2,890,800
-------------
16,920,146
-------------
Long Life Gold Mines 40.6%
160,800a,c Ashanti Goldfields Co., Ltd. ................................................................ 3,738,600
279,595 Barrick Gold Corp. .......................................................................... 7,059,774
199,500 Driefontein Consolidated Mines, Ltd., ADR ................................................... 2,761,828
226,700 Hartebeestfontein Gold Mining Co., Ltd., ADR ................................................ 816,687
206,488 Homestake Mining Co. ........................................................................ 3,407,052
164,000 Kloof Gold Mining Co., Ltd., ADR ............................................................ 1,783,500
82,400 Newmont Gold Co. ............................................................................ 3,316,600
99,755 Newmont Mining Corp. ........................................................................ 4,177,241
327,500 Placer Dome, Inc. ........................................................................... 8,555,938
553,301 Santa Fe Pacific Gold Corp. ................................................................. 6,708,775
522,000 a TVX Gold, Inc. .............................................................................. 3,752,320
339,000 Vaal Reefs Exploration & Mining Co., Ltd., ADR .............................................. 2,097,563
53,000 Western Areas Gold Mining Co., Ltd. ......................................................... 604,881
-------------
48,780,759
-------------
Medium Life Gold Mines 20.3%
1,043,600 a Acacia Resources, Ltd. ...................................................................... 1,839,518
578,500 a Amax Gold, Inc. ............................................................................. 3,181,750
324,500 Battle Mountain Gold Co. .................................................................... 3,123,313
314,500 Cambior, Inc. ............................................................................... 3,891,902
193,400 Echo Bay Mines, Ltd. ........................................................................ 1,740,600
7,300 a Emperor Mines, Ltd., ADR .................................................................... 8,796
15,700 FMC Gold Co. ................................................................................ 62,800
350,000 Hemlo Gold Mines, Inc. ...................................................................... 3,718,750
371,500 Newcrest Mining, Ltd. ....................................................................... 1,576,345
895,600 Placer Pacific, Ltd. ........................................................................ 1,992,401
367,500 Plutonic Resources, Ltd. .................................................................... 1,488,848
878,071 Poseidon Gold, Ltd. ......................................................................... 1,766,177
-------------
24,391,200
-------------
Mining Finance Companies 4.5%
201,900 DeBeers Consolidated Mines, Ltd., ADR ....................................................... 5,224,163
7,500 Gold Field South Africa, Ltd., ADR .......................................................... 200,625
-------------
5,424,788
-------------
Platinum Companies 5.1%
30,000 Impala Platinum Holdings, Ltd. .............................................................. 759,024
60,700 Impala Platinum Holdings, Ltd., ADR ......................................................... 1,535,758
187,900 Rustenburg Platinum Holdings, Ltd., ADR ..................................................... 3,875,494
-------------
6,170,276
-------------
Total Common Stocks (Cost $96,455,402) ................................................ 101,687,169
-------------
Convertible Preferred Stocks 2.7%
7,100 Amax Gold, Inc., $3.75 cvt. pfd., Series B .................................................. $ 342,575
12,800 Battle Mountain Gold Co., $3.25 cvt. pfd. ................................................... 707,200
17,100 Echo Bay Finance Corp., $1.75 cum. cvt. pfd., Series A ...................................... 483,075
37,000 Freeport-McMoRan Copper & Gold, Inc., 3.50% pfd. notes, Series C ............................ 1,234,875
13,000 Freeport-McMoRan Copper & Gold, Inc., S.F., 3.25% pfd., Series B ............................ 463,125
-------------
Total Convertible Preferred Stocks (Cost $3,433,164) .................................. 3,230,850
-------------
Face
Amount
Convertible Debentures 1.3%
$ 400,000 FMC Corp., cvt. deb., 6.75%, 01/16/05 ....................................................... 345,000
1,230,000 Teck Corp., cvt. deb., 3.75%, 07/15/06 ..................................................... 1,257,675
-------------
Total Convertible Debentures (Cost $1,335,374) ........................................ 1,602,675
-------------
Total Investments before Repurchase Agreements (Cost $101,223,940) .................... 106,520,694
-------------
h Receivables from Repurchase Agreements 14.9%
14,717,666 i Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $14,380,862)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ................................ 14,373,412
3,520,000 Lehman Brothers Securities, 6.20%, 07/03/95 (Maturity Value $3,521,819)
Collateral: U.S. Treasury Notes, 8.125%, 02/15/98 ...................................... 3,520,000
-------------
Total Receivables from Repurchase Agreements (Cost $17,893,412) ....................... 17,893,412
-------------
Total Investments (Cost $119,117,352) 103.5% ..................................... 124,414,106
Liabilities in Excess of Other Assets, Net (3.5)% ................................ (4,207,901)
-------------
Net Assets 100.0% ................................................................ $120,206,205
=============
At June 30, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $119,117,352 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................ $ 10,688,485
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................... (5,391,731)
-------------
Net unrealized appreciation ............................................................... $ 5,296,754
=============
</TABLE>
PORTFOLIO ABBREVIATION:
S.F. - Sinking Fund
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Shares Real Estate Securities Fund (Note 1)
Common Stocks 93.8%.........................................................................
Equity REIT - Apartments 29.9%
<S> <C> <C>
150,000 Amli Residential Properties Trust ......................................................... $ 2,850,000
160,000 Bay Apartment Communities, Inc. ........................................................... 3,120,000
110,000 Camden Property Trust ..................................................................... 2,406,250
52,500 Charles E. Smith Residential Realty, Inc. ................................................. 1,246,875
230,000 Equity Residential Properties Trust ....................................................... 6,411,250
200,000 Evans Withycombe Residential, Inc. ........................................................ 4,075,000
125,000 Gables Residential Trust .................................................................. 2,562,500
95,000 Irvine Apartment Communities, Inc. ........................................................ 1,638,750
275,000 Merry Land & Investment Co. ............................................................... 5,603,125
185,000 Mid-America Apartment Communities, Inc. ................................................... 4,625,000
185,000 Oasis Residential, Inc. ................................................................... 4,023,750
175,000 Post Properties, Inc. ..................................................................... 5,293,750
285,000 Security Capital Pacific Trust ............................................................ 4,951,875
220,000 South West Property Trust ................................................................. 2,530,000
190,000 Summit Properties, Inc. ................................................................... 3,277,500
260,000 United Dominion Realty Trust, Inc. ........................................................ 3,835,000
-------------
58,450,625
-------------
Equity REIT - Diversified 1.1%
95,000 Colonial Properties Trust ................................................................. 2,185,000
-------------
Equity REIT - Health Care 4.2%
70,000 Health Care Property Investors, Inc. ...................................................... 2,240,000
70,000 Nationwide Health Properties, Inc. ........................................................ 2,730,000
125,000 OMEGA Healthcare Investors, Inc. .......................................................... 3,171,875
-------------
8,141,875
-------------
Equity REIT - Hotels 12.8%
500,000 Equity Inns, Inc. ......................................................................... 5,375,000
242,000 FelCor Suite Hotels, Inc. ................................................................. 6,171,000
375,000 RFS Hotel Investors, Inc. ................................................................. 5,718,750
110,000 Starwood Lodging Trust .................................................................... 2,585,000
522,200 k Winston Hotels, Inc. ...................................................................... 5,222,000
-------------
25,071,750
-------------
Equity REIT - Industrial 8.9%
105,000 Centerpoint Properties Corp. .............................................................. 2,165,625
112,500 Duke Realty Investments, Inc. ............................................................. 3,178,125
155,000 Liberty Property Trust .................................................................... 3,041,875
259,100 Security Capital Industrial Trust ......................................................... 4,210,375
90,000 Spieker Properties, Inc. .................................................................. 2,013,750
110,000 Weeks Corp. ............................................................................... 2,750,000
-------------
17,359,750
-------------
Equity REIT - Office 4.0%
60,000 Beacon Properties Corp. ................................................................... 1,192,500
90,000 Crescent Real Estate Equities, Inc. ....................................................... 2,868,750
150,000 Highwoods Properties, Inc. ................................................................ 3,825,000
-------------
7,886,250
-------------
Equity REIT - Residential Communities 4.6%
225,000 Manufactured Home Communities, Inc. ....................................................... $ 3,459,375
125,000 ROC Communities, Inc. ..................................................................... 2,765,625
110,000 Sun Communities, Inc. ..................................................................... 2,750,000
-------------
8,975,000
-------------
Equity REIT - Retail - Community Centers 4.4%
102,000 Developers Diversified Realty Corp. ....................................................... 2,932,500
65,000 Kimco Realty Corp. ........................................................................ 2,470,000
90,000 Vornado Realty Trust ...................................................................... 3,138,750
-------------
8,541,250
-------------
Equity REIT - Retail - Outlet Centers 2.2%
80,000 Chelsea GCA Realty, Inc. .................................................................. 2,160,000
80,000 Tanger Factory Outlet Centers, Inc. ....................................................... 2,030,000
-------------
4,190,000
-------------
Equity REIT - Retail - Regional Malls 5.8%
150,000 DeBartolo Realty Corp. .................................................................... 2,193,750
90,000 General Growth Properties, Inc. ........................................................... 1,833,750
140,000 The Macerich Co. .......................................................................... 2,747,500
83,000 Mills Corp. ............................................................................... 1,649,625
118,500 Simon Property Group, Inc. ................................................................ 2,977,313
-------------
11,401,938
-------------
Equity REIT - Storage 8.4%
270,000 Storage Equities, Inc. .................................................................... 4,421,250
314,700 Storage Trust Realty ...................................................................... 6,372,675
200,000 Storage USA, Inc. ......................................................................... 5,675,000
-------------
16,468,925
-------------
Home Builders 4.0%
100,000 a Beazer Homes USA, Inc. .................................................................... 1,662,500
75,000 Centex Corp. .............................................................................. 2,118,750
85,000 Kaufman & Broad Home Corp. ................................................................ 1,232,500
70,000 Lennar Corp. .............................................................................. 1,312,500
200,000 a NVR, Inc. ................................................................................. 1,462,500
-------------
7,788,750
-------------
Hotels 2.6%
470,000 a Host Marriott Corp. ....................................................................... 4,993,750
-------------
Real Estate Development - Commercial .9%
90,000 Rouse Co. ................................................................................. 1,766,250
-------------
Total Common Stocks (Cost $177,537,470) ............................................. 183,221,113
-------------
Convertible Preferred Stocks .4%
20,000 c Catellus Development Corp., $3.625 cvt. pfd., Series B (Cost $1,000,000) .................. 842,500
-------------
Face
Amount
Bonds .9%
$ 2,000,000 US Home Corp., cvt. sub. notes, 4.875%, 11/01/05 (Cost $1,970,000) ........................ 1,657,500
-------------
Total Common Stocks, Convertible Preferred Stocks and Bonds (Cost $180,507,470) ..... 185,721,113
-------------
h,jReceivables from Repurchase Agreements 5.5%
$11,045,933 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $10,794,023) (Cost $10,788,431)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ..................... $ 10,788,431
-------------
Total Investments (Cost $191,295,901) 100.6% ................................... 196,509,544
Liabilities in Excess of Other Assets, Net (.6)% ............................... (1,272,469)
-------------
Net Assets 100.0 % ............................................................. $195,237,075
=============
At June 30, 1995, the net unrealized appreciation based on
the cost of investments for income tax purposes of $191,295,901 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ......................................................... $ 11,341,308
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ......................................................... (6,127,665)
-------------
Net unrealized appreciation ............................................................. $ 5,213,643
=============
</TABLE>
PORTFOLIO ABBREVIATION:
REIT - Real Estate Investment Trust
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
kSee Note 10 regarding holdings of 5% or more of voting securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount U.S. Government Securities Fund (Note 1)
Mortgage-Backed Securities 74.5%
Federal Home Loan Mortgage Corp. (FHLMC) 9.7%
<S> <C> <C>
$26,182,498 FHLMC, 6.50%, 06/01/08 - 01/01/24 ........................................................... $ 25,316,226
19,407,345 FHLMC, 7.00%, 04/01/24 ...................................................................... 19,104,106
6,939,147 FHLMC, 7.50%, 11/01/22 - 05/01/24 ........................................................... 6,967,346
5,778,315 FHLMC, 8.00%, 05/01/16 - 05/01/22 ........................................................... 5,885,973
1,707,082 FHLMC, 8.50%, 04/01/18 - 03/01/22 ........................................................... 1,756,707
1,698,859 FHLMC, 9.00%, 03/01/03 - 01/01/21 ........................................................... 1,754,551
505,921 FHLMC, 9.50%, 06/01/16 - 08/01/20 ........................................................... 528,057
270,765 FHLMC, 10.00%, 08/01/20 - 10/01/20 .......................................................... 290,819
-------------
61,603,785
-------------
Federal National Mortgage Association (FNMA) 10.9%
7,736,892 FNMA, 6.00%, 10/01/23 - 04/01/24 ............................................................ 7,258,178
17,907,750 FNMA, 6.50%, 01/01/24 - 06/01/24 ............................................................ 17,236,216
11,939,958 FNMA, 7.00%, 10/01/23 - 06/01/24 ............................................................ 11,749,675
3,933,883 FNMA, 7.50%, 08/01/24 ....................................................................... 3,949,866
9,660,000 n FNMA, 7.50%, 08/01/25 ....................................................................... 9,699,248
16,883,755 FNMA, 8.00%, 07/01/16 - 02/01/25 ............................................................ 17,225,118
1,663,409 FNMA, 8.50%, 10/01/19 - 03/01/22 ............................................................ 1,717,467
298,198 FNMA, 9.00%, 09/01/18 - 03/01/21 ............................................................ 310,965
156,308 FNMA, 9.50%, 07/01/19 - 08/01/20 ............................................................ 164,272
100,993 FNMA, 10.00%, 08/01/19 - 10/01/20 ........................................................... 109,704
-------------
69,420,709
-------------
Government National Mortgage Association (GNMA) 53.9%
13,825,072 GNMA I, SF, 6.00%, 12/15/23 - 01/15/24 ...................................................... 12,939,412
2,400,000 n GNMA II, 6.00%, 07/20/25 .................................................................... 2,246,251
78,801,193 GNMA I, SF, 6.50%, 05/15/23 - 08/15/24 ...................................................... 75,747,731
8,808,137 GNMA, PL, 6.50%, 09/15/28 . ................................................................. 8,268,639
18,066,719 GNMA, PL, 6.90%, 11/15/22 ................................................................... 17,298,884
55,643,731 GNMA I, SF, 7.00%, 03/15/22 - 11/15/23 ...................................................... 54,791,767
3,000,000 n GNMA I, SF, 7.00%, 07/20/25 ................................................................. 2,954,064
5,369,074 GNMA II, 7.00%, 01/20/24 .................................................................... 5,253,306
4,648,204 GNMA, PL, 7.00%, 01/15/29 ................................................................... 4,472,446
2,285,286 GNMA, PL, 7.25%, 05/15/22 - 08/15/22 ........................................................ 2,223,157
3,766,586 GNMA, PL, 7.50%, 03/15/28 . ................................................................. 3,704,204
50,430,117 GNMA I, SF, 7.50%, 02/15/17 - 06/15/23 ...................................................... 50,729,611
22,937,814 GNMA II, 7.50%, 11/20/16 - 06/20/23 ......................................................... 22,945,003
36,470,029 GNMA I, SF, 8.00%, 04/15/05 - 06/15/25 ...................................................... 37,347,474
1,603,496 GNMA II, 8.00%, 02/20/16 - 05/20/17 ......................................................... 1,636,065
3,262,284 GNMA I, SF, 8.25%, 04/15/25 . ............................................................... 3,365,232
14,577,694 GNMA I, SF, 8.50%, 08/15/21 - 08/15/24 ...................................................... 15,147,085
6,023,251 GNMA I, SF, 9.00%, 04/15/16 - 02/15/21 ...................................................... 6,331,933
15,204,123 GNMA I, SF, 9.50%, 10/15/15 - 12/15/21 ...................................................... 16,121,170
484,948 GNMA II, 10.00%, 07/20/19 - 02/20/21 ........................................................ 521,625
-------------
344,045,059
-------------
Total Mortgage-Backed Securities (Cost $469,600,153) .................................. 475,069,553
-------------
Other Government & Agency Securities 22.9%
2,000,000 Federal Agriculture Mortgage Corp., 6.91%, 07/15/97 ......................................... 2,031,719
5,000,000 Federal Farm Credit Bank, 5.80%, 09/16/03 ................................................... 4,761,105
10,000,000 Federal Farm Credit Bank, 7.06%, 08/05/02 ................................................... 9,873,920
10,000,000 Federal Farm Credit Bank, 7.95%, 04/01/02 ................................................... 10,340,680
2,250,000 Federal Land Bank, 7.35%, 01/20/97 .......................................................... 2,298,175
$ 3,876,000 j FICO Strips, 0.00%, 11/11/01 ................................................................ $ 2,599,264
1,925,000 j FICO Strips, 0.00%, 5/11/02 ................................................................. 1,249,848
10,000,000 j FICO Strips, 0.00%, 05/11/13 ................................................................ 2,755,980
15,000,000 j FICO Strips, Series 1, 0.00%, 05/11/99 ...................................................... 11,858,865
1,758,000 j FICO Strips, Series 1, 0.00%, 05/11/09 ...................................................... 666,145
11,024,000 j FICO Strips, Series 13, 0.00%, 06/27/09 ..................................................... 4,136,225
10,115,000 j FICO Strips, Series 15, 0.00%, 09/07/98 ..................................................... 8,343,447
10,000,000 j FICO Strips, Series 15, 0.00%, 03/07/02 ..................................................... 6,548,270
3,202,000 j FICO Strips, Series 16, 0.00%, 04/05/09 ..................................................... 1,223,241
4,745,000 j FICO Strips, Series 16, 0.00%, 10/05/10 ..................................................... 1,604,303
2,060,000 j FICO Strips, Series A, 0.00%, 02/08/09 ...................................................... 797,148
7,000,000 j FICO Strips, Series D, 0.00%, 09/26/01 ...................................................... 4,734,842
15,000,000 j Student Loan Marketing Association, 0.00%, 05/15/14 ......................................... 3,271,559
10,000,000 j Tennessee Valley Authority, 0.00%, 04/15/03 ................................................. 6,077,359
6,000,000 j Tennessee Valley Authority, 0.00%, 04/15/42 ................................................. 1,681,584
6,700,000 Tennessee Valley Authority, 6.00%, 01/15/97 ................................................. 6,688,315
5,000,000 Tennessee Valley Authority, 6.125%, 07/15/03 ................................................ 4,832,639
10,000,000 Tennessee Valley Authority, 7.25%, 07/15/43 ................................................. 9,663,509
1,000,000 Tennessee Valley Authority, 8.375%, 10/01/99 ................................................ 1,075,178
12,000,000 Tennessee Valley Authority, 8.625%, 11/15/29 ................................................ 12,857,268
25,000,000 U.S. Treasury Notes, 5.75%, 08/15/03 ........................................................ 24,265,625
-------------
Total Other Government & Agency Securities (Cost $142,829,094) ........................ 146,236,213
-------------
Total Mortgage-Backed Securities and Other Government & Agency Securities
(Cost $612,429,247) ................................................................. 621,305,766
-------------
h,i Receivables from Repurchase Agreements 4.3%
28,254,810 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $27,608,592) (Cost $27,594,289)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ................................... 27,594,289
-------------
Total Investments (Cost $640,023,536) 101.7% ..................................... 648,900,055
Liabilities in Excess of Other Assets, Net (1.7)% ................................ (10,646,338)
-------------
Net Assets 100.0% ................................................................ $638,253,717
=============
At June 30, 1995 the net unrealized appreciation based on the
cost of investments for income tax purposes of $640,023,536 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 17,398,217
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................... (8,521,698)
-------------
Net unrealized appreciation ............................................................... $ 8,876,519
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
FICO - Financing Corp.
PL - Project Loan
SF - Single Family
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
jZero coupon bonds. Accretion rate may vary.
nSee Note 1(g) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Zero Coupon Fund - 1995 (Note 1)
jLong Term Investments 6.0%
<S> <C> <C>
$3,000,000 General Electric Credit International, 0.00%, 07/10/96 ........................................ $ 2,811,285
-------------
Total Long Term Investments (Cost $2,756,700) ........................................... 2,811,285
-------------
j Short Term Investments
U.S. Government & Agency Securities 91.5%
1,721,000 FHLB Strips, Series A-1, 0.00%, 02/25/96 ...................................................... 1,657,204
4,600,000 FICO Strips, 0.00%, 04/06/96 .................................................................. 4,400,272
1,000,000 FICO Strips, Series 1, 0.00%, 11/11/95 ........................................................ 979,458
1,000,000 FICO Strips, Series 8, 0.00%, 02/03/96 ........................................................ 966,380
1,000,000 FICO Strips, Series 10, 0.00%, 11/30/95 ....................................................... 976,498
3,265,000 FICO Strips, Series 13, 0.00%, 12/27/95 ....................................................... 3,174,202
5,000,000 FICO Strips, Series 15, 0.00%, 03/07/96 ....................................................... 4,805,385
2,250,000 FICO Strips, Series 18, 0.00%, 10/05/95 ....................................................... 2,216,835
1,000,000 FICO Strips, Series 19, 0.00%, 12/06/95 ....................................................... 975,441
1,400,000 FICO Strips, Series D, 0.00%, 02/03/96 ........................................................ 1,352,932
300,000 FICO Strips, Series E, 0.00%, 11/02/95 ........................................................ 294,268
3,000,000 FICO Strips, Series F, 0.00%, 02/08/96 ........................................................ 2,896,775
3,000,000 FNMA Strips, Series 1, 0.00%, 12/20/95 ........................................................ 2,919,834
1,375,000 FNMA Strips, Series 1, 0.00%, 02/12/96 ........................................................ 1,326,812
3,000,000 FNMA Strips, Series 1, 0.00%, 03/09/96 ........................................................ 2,882,334
4,500,000 REFCO Strips, 0.00%, 10/15/95 ................................................................. 4,427,977
1,000,000 SLMA, 0.00%, 08/25/95 ......................................................................... 992,733
3,250,000 Tennessee Valley Authority, 0.00%, 01/01/96 ................................................... 3,153,611
1,000,000 U.S. Treasury Strips, 0.00%, 11/15/95 ......................................................... 978,639
1,480,000 U.S. Treasury Strips, 0.00%, 02/15/96 ......................................................... 1,428,727
-------------
Total U.S. Government & Agency Securities (Cost $42,582,125) 42,806,317
-------------
Other Securities - "AAA" Rated 2.6%
1,280,000 InterAmerican Development Bank, 0.00%, 06/16/96 (Cost $1,203,061).............................. 1,210,064
-------------
Total Investments before Repurchase Agreements (Cost $46,541,886) 46,827,666
-------------
h,i Receivables from Repurchase Agreements .2%
68,698 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $67,386) (Cost $67,351)
Collateral: U.S. Treasury Bills, 10/19/95-06/27/96
U.S. Treasury Notes, 3.875%-8.625%, 09/30/95-02/15/00 ............................. $ 67,351
-------------
Total Investments (Cost $46,609,237) 100.3% ........................................ 46,895,017
Liabilities in Excess of Other Assets, Net (.3)% ................................... (127,153)
-------------
Net Assets 100.0% .................................................................. $46,767,864
=============
At June 30, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $46,609,237 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................. $ 314,909
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value .............................................................. (29,129)
-------------
Net unrealized appreciation ................................................................. $ 285,780
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
FHLB - Federal Home Loan Bank
FICO - Financing Corp.
FNMA - Federal National Mortgage Association
REFCO - Resolution Funding Corp.
SLMA - Student Loan Marketing Association
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
jZero coupon bonds. Accretion rate may vary.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Zero Coupon Fund - 2000 (Note 1)
j Long Term Investments 99.4%
U.S. Government & Agency Securities 98.0%
<S> <C> <C>
$ 7,567,000 FHLB Strips, Series A-1, 0.00%, 02/25/01 .................................................... $ 5,353,531
2,884,000 FHLB Strips, Series A-1, 0.00%, 08/25/01 .................................................... 1,972,872
465,000 FHLB Strips, Series A-1, 0.00%, 02/25/02 .................................................... 306,914
14,000,000 FHLMC, notes, 0.00%, 05/15/00 ............................................................... 10,440,288
5,550,000 FICO Strips, 0.00%, 02/03/01 ................................................................ 3,925,543
9,023,000 FICO Strips, 0.00%, 03/26/01 ................................................................ 6,317,335
2,000,000 FICO Strips, 0.00%, 04/06/01 ................................................................ 1,397,460
1,139,000 FICO Strips, Series 1, 0.00%, 11/11/00 ...................................................... 818,845
1,000,000 FICO Strips, Series 7, 0.00%, 02/03/01 ...................................................... 707,305
17,390,000 FICO Strips, Series 12, 0.00%, 12/06/00 ..................................................... 12,441,187
6,000,000 FICO Strips, Series 12, 0.00%, 06/06/01 ..................................................... 4,144,037
4,000,000 FICO Strips, Series 13, 0.00%, 06/27/01 ..................................................... 2,751,908
148,000 FICO Strips, Series 15, 0.00%, 09/07/00 ..................................................... 107,584
5,000,000 FICO Strips, Series 15, 0.00%, 03/07/01 ..................................................... 3,513,415
5,875,000 FICO Strips, Series 17, 0.00%, 10/05/00 ..................................................... 4,249,957
6,200,000 FICO Strips, Series 18, 0.00%, 10/06/00 ..................................................... 4,484,317
4,965,000 FICO Strips, Series D, 0.00%, 09/26/00 ...................................................... 3,597,514
3,800,000 FNMA Strips, 0.00%, 11/22/99 ................................................................ 2,907,497
1,000,000 FNMA Strips, 0.00%, 02/12/02 ................................................................ 657,942
500,000 FNMA Strips, Series 1, 0.00%, 02/12/00 ...................................................... 377,282
1,875,000 FNMA Strips, Series 1, 0.00%, 02/01/01 ...................................................... 1,327,153
1,000,000 FNMA Strips, Series 1, 0.00%, 02/01/02 ...................................................... 659,520
3,000,000 FNMA Strips, Series 2, 0.00%, 08/12/01 ...................................................... 2,047,464
9,195,000 REFCO Strips, 0.00%, 01/15/01 ............................................................... 6,604,042
2,320,000 Tennessee Valley Authority, 0.00%, 07/15/00 ................................................. 1,708,376
2,500,000 Tennessee Valley Authority, 0.00%, 10/15/00 ................................................. 1,811,230
65,000 Tennessee Valley Authority, 0.00%, 01/01/01 ................................................. 45,713
10,500,000 Tennessee Valley Authority, 0.00%, 04/15/01 ................................................. 7,351,942
1,000,000 Tennessee Valley Authority, 0.00%, 04/15/02 ................................................. 654,870
1,110,375 U.S. Treasury Strips, 0.00%, 11/15/00 ....................................................... 803,460
2,778,750 U.S. Treasury Strips, 0.00%, 02/15/01 ....................................................... 1,976,063
7,000,000 U.S. Treasury Strips, 0.00%, 02/15/01 ....................................................... 5,010,599
27,690,000 U.S. Treasury Strips, 0.00%, 02/15/01 ....................................................... 19,852,952
-------------
120,326,117
-------------
Other Securities - "AAA" Rated 1.4%
220,000 InterAmerican Development Bank, 0.00%, 12/16/00 ............................................. 157,109
405,000 International Bank for Reconstruction and Development, 0.00%, 02/15/00 ...................... 305,579
945,000 International Bank for Reconstruction and Development, 0.00%, 08/15/00 ...................... 689,892
735,000 International Bank for Reconstruction and Development, 0.00%, 02/15/01 ...................... 518,924
-------------
1,671,504
-------------
Total Long Term Investments (Cost $ 113,547,576) ...................................... 121,997,621
-------------
h,i Receivables from Repurchase Agreements .6%
699,636 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $683,796) (Cost $683,442)
Collateral: U.S. Treasury Bills, 10/19/95-06/27/96
U.S. Treasury Notes, 3.875%-8.625%, 09/30/95-02/15/00 .......................... $ 683,442
-------------
Total Investments (Cost $114,231,018) 100.0% ..................................... 122,681,063
Other Assets and Liabilities, Net ................................................. 25,410
-------------
Net Assets 100.0% ................................................................ $122,706,473
=============
At June 30, 1995, the net unrealized appreciation based on the
cost of investments for income tax purposes of $114,231,019 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................ $ 8,683,000
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................ (232,956)
-------------
Net unrealized appreciation ............................................................... $ 8,450,044
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corp.
FICO - Financial Corp.
FNMA - Federal National Mortgage Association
REFCO - Resolution Funding Corp.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
jZero coupon bonds. Accretion rate may vary.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Zero Coupon Fund - 2005 (Note 1)
j Long Term Investments 98.3%
U.S. Government & Agency Securities 94.9 %
<S> <C> <C>
$ 1,000,000 FHLB Strips, 0.00%, 08/25/02 ................................................................ $ 637,843
9,910,000 FHLB Strips, Series A-1, 0.00%, 02/25/04 .................................................... 5,679,410
11,400,000 FICO Strips, 0.00%, 10/06/05 ................................................................ 5,739,305
3,500,000 FICO Strips, Series 1, 0.00%, 05/11/05 ...................................................... 1,811,306
829,000 FICO Strips, Series 1, 0.00%, 11/11/05 ...................................................... 414,101
3,509,000 FICO Strips, Series 2, 0.00%, 11/02/05 ...................................................... 1,756,286
11,055,000 FICO Strips, Series 12, 0.00%, 12/06/05 ..................................................... 5,491,018
2,755,000 FICO Strips, Series 13, 0.00%, 12/27/05 ..................................................... 1,362,047
2,620,000 FICO Strips, Series 15, 0.00%, 09/07/05 ..................................................... 1,327,572
6,000,000 FICO Strips, Series 16, 0.00%, 04/05/06 ..................................................... 2,900,783
10,000,000 FICO Strips, Series 19, 0.00%, 12/06/05 ..................................................... 4,967,000
6,799,000 FICO Strips, Series D, 0.00%, 09/26/05 ...................................................... 3,430,754
1,763,000 FICO Strips, Series D, 0.00%, 03/26/06 ...................................................... 854,180
5,000,000 FICO Strips, Series F, 0.00%, 03/26/05 ...................................................... 2,612,460
120,000 FNMA Strips, 0.00%, 02/12/08 ................................................................ 50,421
450,000 FNMA Strips, Series 1, 0.00%, 08/01/04 ...................................................... 247,354
1,000,000 FNMA Strips, Series 1, 0.00%, 02/12/05 ...................................................... 528,261
875,000 FNMA Strips, Series 1, 0.00%, 08/12/05 ...................................................... 446,641
4,307,000 FNMA Strips, Series 1, 0.00%, 02/01/06 ...................................................... 2,116,912
250,000 FNMA Strips, Series 1, 0.00%, 02/12/06 ...................................................... 122,574
1,730,000 FNMA Strips, Series 1, 0.00%, 02/01/08 ...................................................... 728,646
6,000,000 FNMA Strips, Series 2, 0.00%, 02/01/05 ...................................................... 3,176,819
530,000 FNMA Strips, Series 9, 0.00%, 08/01/06 ...................................................... 250,500
6,500,000 REFCO Strips, 0.00%, 01/15/06 ............................................................... 3,290,046
3,000,000 REFCO Strips, Series R, 0.00%, 4/15/06 ...................................................... 1,489,395
5,000,000 Tennessee Valley Authority, 0.00%, 10/15/04 ................................................. 2,727,345
2,260,000 Tennessee Valley Authority, 0.00%, 04/15/05 ................................................. 1,188,091
1,000,000 Tennessee Valley Authority, 0.00%, 10/15/05 ................................................. 508,120
21,240,000 U.S. Treasury Strips, 0.00%, 02/15/06 ....................................................... 10,812,986
-------------
66,668,176
-------------
Other Securities - "AAA" Rated 3.4 %
1,500,000 Exxon Corp., 0.00%, 11/15/04 ................................................................ 825,105
1,000,000 International Bank of Reconstruction and Development, 0.00%, 02/15/07 ....................... 455,182
2,500,000 International Bank of Reconstruction and Development, 0.00%, 08/15/07 ....................... 1,096,215
-------------
2,376,502
-------------
Total Long Term Investments (Cost $62,401,615) ........................................ 69,044,678
-------------
h,i Receivables from Repurchase Agreements 2.0 %
235,392 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $1,439,966) (Cost $1,436,222)
Collateral: U.S. Treasury Bills, 10/19/95-06/27/96
U.S. Treasury Notes, 3.875%-8.625%, 09/30/95-02/15/00............................ $ 1,436,222
-------------
Total Investments (Cost $63,837,837) 100.3 % ..................................... 70,480,900
Liabilities in Excess of Other Assets, Net (.3) % ................................ (187,584)
-------------
Net Assets 100.0%................................................................. $70,293,316
=============
At June 30, 1995, the net unrealized appreciation based on
the cost of investments for income tax purposes of $63,842,005 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 7,153,523
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value .......................................................... (514,628)
-------------
Net unrealized appreciation ............................................................... $ 6,638,895
=============
</TABLE>
PORTFOLIO ABBREVIATIONS:
FHLB - Federal Home Loan Bank
FICO - Financing Corp.
FNMA - Federal National Mortgage Association
REFCO - Resolution Funding Corp.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
jZero coupon bonds. Accretion rate may vary.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Zero Coupon Fund - 2010 (Note 1)
jLong Term Investments 99.2%
U.S. Government & Agency Securities 94.0%
<S> <C> <C>
$ 4,450,000 FHLMC, capital deb., 0.00%, 11/29/19 ........................................................ $ 782,599
4,040,000 FICO Strips, 0.00%, 10/06/10 ................................................................ 1,365,617
16,246,000 FICO Strips, Series 1, 0.00%, 11/11/10 ...................................................... 5,450,905
2,000,000 FICO Strips, Series 3, 0.00%, 05/30/10 ...................................................... 695,418
1,528,000 FICO Strips, Series 4, 0.00%, 10/06/10 ...................................................... 516,501
3,021,000 FICO Strips, Series 8, 0.00%, 08/03/10 ...................................................... 1,035,133
2,837,000 FICO Strips, Series 11, 0.00%, 02/08/11 ..................................................... 932,885
4,550,000 FICO Strips, Series 12, 0.00%, 06/06/09 ..................................................... 1,714,722
7,500,000 FICO Strips, Series 12, 0.00%, 12/06/10 ..................................................... 2,502,015
3,000,000 FICO Strips, Series 19, 0.00%, 06/06/10 ..................................................... 1,041,537
2,080,000 FICO Strips, Series 19, 0.00%, 12/06/10 ..................................................... 693,892
12,412,000 FICO Strips, Series E, 0.00%, 11/02/10 ...................................................... 4,172,330
860,000 FICO Strips, Series F, 0.00%, 03/26/10 ...................................................... 303,177
7,000,000 FICO Strips, Series F, 0.00%. 08/08/10 ...................................................... 2,395,791
860,000 FICO Strips, Series F, 0.00%, 09/26/10 ...................................................... 291,346
5,311,000 FICO Strips, Series F, 0.00%, 02/08/11 ...................................................... 1,746,405
4,000,000 FICO Strips, Series F, 0.00%, 03/26/11 ...................................................... 1,301,863
1,975,000 FNMA Strips, 0.00%, 08/12/09 ................................................................ 738,962
5,000,000 FNMA Strips, Series 1, 0.00%, 02/01/10 ...................................................... 1,796,799
8,250,000 FNMA Strips, Series 1, 0.00%, 08/01/10 ...................................................... 2,848,428
1,230,000 FNMA Strips, Series 1, 0.00%, 08/12/10 ...................................................... 423,591
4,450,000 FNMA Strips, Series 1, 0.00%, 02/01/11 ...................................................... 1,475,379
3,281,000 FNMA sub. deb., 0.00%, 02/01/12 ............................................................. 1,004,668
15,000,000 REFCO Strips, 0.00%, 10/15/10 ............................................................... 5,303,293
9,000,000 REFCO Strips, 0.00%, 01/15/11 ............................................................... 3,119,571
8,650,000 SLMA, 0.00%, 05/15/14 ....................................................................... 1,886,599
412,000 Tennessee Valley Authority, 0.00%, 01/01/10 ................................................. 144,920
9,000,000 Tennessee Valley Authority, 0.00%, 04/15/10 ................................................. 3,237,534
1,320,000 Tennessee Valley Authority, 0.00%, 10/15/10 ................................................. 456,468
9,525,000 Tennessee Valley Authority, 0.00%, 04/15/11 ................................................. 3,164,500
7,295,000 Tennessee Valley Authority, 0.00%, 10/15/11 ................................................. 2,331,284
26,815,000 U.S. Treasury Strips, 0.00%, 11/15/10 ....................................................... 9,610,601
-----------
64,484,733
-----------
Other Securities - "AAA" Rated 5.2%
1,392,000 International Bank for Reconstruction and Development, 0.00%, 02/15/11 ...................... 463,931
2,800,000 International Bank for Reconstruction and Development, 0.00%, 02/15/12 ...................... 862,867
3,287,000 International Bank for Reconstruction and Development, 0.00%, 02/15/13 ...................... 938,865
4,100,000 International Bank for Reconstruction and Development, 0.00%, 08/15/13 ...................... 1,126,225
500,000 International Bank for Reconstruction and Development, Series 2, 0.00%, 02/15/11 ............ 166,642
-----------
3,558,530
-----------
Total Long Term Investments (Cost $59,216,585) ........................................ 68,043,263
-----------
h,i Receivables from Repurchase Agreements .5%
392,302 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $382,758) (Cost $382,559)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ........................ $ 382,559
-----------
Total Investments (Cost $59,599,144) 99.7% ..................................... 68,425,822
Other Assets and Liabilities, Net .3% .......................................... 185,535
-----------
Net Assets 100.0% .............................................................. $68,611,357
===========
<PAGE>
At June 30, 1995, the net unrealized appreciation based on the cost of investments
for income tax purposes of $59,691,234 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................ $ 8,953,407
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................ (218,819)
-----------
Net unrealized appreciation ............................................................... $ 8,734,588
===========
</TABLE>
PORTFOLIO ABBREVIATIONS:
FHLMC - Federal Home Loan Mortgage Corp.
FICO - Financing Corp.
FNMA - Federal National Mortgage Association
REFCO - Resolution Funding Corp.
SLMA - Student Loan Marketing Association
<PAGE>
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
jZero coupon bonds. Accretion rate may vary.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Face Value
Amount Money Market Fund (Note 1)
gShort Term Investments 83.7%
Certificates of Deposit 7.8%
<S> <C> <C>
$10,000,000 Societe Generale, New York Branch, 6.00%, 07/05/95 ........................................... $ 10,000,000
10,000,000 Societe Generale, New York Branch, 6.03%, 07/24/95 ........................................... 10,000,000
15,000,000 Swiss Bank Corp., 5.80%, 08/07/95 ............................................................ 14,998,445
-----------
Total Certificates of Deposit (Cost $34,998,445) ....................................... 34,998,445
-----------
Commercial Paper 72.5%
6,000,000 Abbey North America, 6.11%, 10/10/95 ......................................................... 5,897,148
15,000,000 American Express Credit Corp., 5.85%, 09/06/95 ............................................... 14,836,687
10,000,000 Ameritech Corp., 5.87%, 11/09/95 ............................................................. 9,786,397
10,000,000 Ameritech Corp., 5.70%, 02/26/96 ............................................................. 9,620,000
15,000,000 Associates Corp. of North America, 5.95%, 07/25/95 ........................................... 14,940,500
20,000,000 AT&T Corp., 6.20%, 07/06/95 .................................................................. 19,982,778
4,361,000 BBV Finance (DE), Inc., 6.09%, 08/16/95 ...................................................... 4,327,065
5,000,000 Campbell Soup Co., 5.92%, 02/02/96 ........................................................... 4,822,400
5,000,000 Cheltenham & Gloucester Building Society, 6.01%, 08/02/95 .................................... 4,973,289
10,500,000 CIESCO L.P., 5.85%, 07/12/95 ................................................................. 10,481,231
10,000,000 Den Danske Corp., Inc., 6.06%, 08/14/95 ...................................................... 9,925,934
5,000,000 General Electric Capital Corp., 6.21%, 07/10/95 .............................................. 4,992,237
10,000,000 General Electric Capital Corp., 5.87%, 08/08/95 .............................................. 9,938,039
5,000,000 General Electric Capital Corp., 6.01%, 09/01/95 .............................................. 4,948,247
10,000,000 H.J. Heinz Co., 5.95%, 07/28/95 .............................................................. 9,955,375
10,000,000 Kingdom of Sweden, 6.26%, 07/13/95 ........................................................... 9,979,134
10,000,000 Kingdom of Sweden, 6.26%, 08/04/95 ........................................................... 9,940,878
15,000,000 MetLife Funding, Inc., 5.90%, 08/24/95 ....................................................... 14,867,250
5,000,000 National Rural Utilities Cooperative Finance Corp., 5.93%, 08/16/95 .......................... 4,962,114
10,000,000 National Rural Utilities Cooperative Finance Corp., 5.94%, 09/08/95 .......................... 9,886,150
5,000,000 National Rural Utilities Cooperative Finance Corp., 5.69%, 10/26/95 .......................... 4,907,537
10,000,000 New South Wales Treasury Corp., 6.20%, 07/10/95 .............................................. 9,984,500
10,000,000 New South Wales Treasury Corp., 6.02%, 10/30/95 .............................................. 9,797,661
15,000,000 PepsiCo, Inc., 5.93%, 07/26/95 ............................................................... 14,938,229
5,000,000 Province of Alberta, 6.29%, 08/02/95 ......................................................... 4,972,044
5,000,000 Prudential Funding Corp., 6.21%, 07/11/95 .................................................... 4,991,375
10,000,000 Prudential Funding Corp., 6.06%, 10/16/95 .................................................... 9,819,883
11,055,000 Schering Corp., 6.02%, 09/19/95 .............................................................. 10,907,108
10,000,000 Schering Corp., 6.03%, 10/13/95 .............................................................. 9,825,800
10,000,000 Svenska Handelsbanken, Inc., 6.30%, 07/27/95 ................................................. 9,954,500
10,000,000 Svenska Handelsbanken, Inc., 6.00%, 08/04/95 ................................................. 9,943,333
10,000,000 Treasury Corp. of Victoria, 6.00%, 09/05/95 .................................................. 9,890,000
5,000,000 U.S. Central Credit Union, 5.99%, 07/28/95 ................................................... 4,977,538
5,000,000 Westpac Capital Corp., 6.20%, 07/11/95 ....................................................... 4,991,389
10,000,000 Westpac Capital Corp., 5.75%, 09/07/95 ....................................................... 9,891,389
5,000,000 Westpac Capital Corp., 5.73%, 10/05/95 ....................................................... 4,923,600
-----------
Total Commercial Paper (Cost $323,778,739) ............................................. 323,778,739
-----------
Medium Term Notes 3.4%
10,000,000 Abbey National Treasury Services, variable rate notes, 6.063%, 11/24/95 ...................... 10,000,000
5,000,000 Merrill Lynch & Co., Inc., variable rate notes, 6.13%, 10/11/95 .............................. 5,000,000
-----------
Total Medium Term Notes (Cost $15,000,000) ............................................. 15,000,000
-----------
Total Investments before Repurchase Agreements (Cost $373,777,184) ..................... 373,777,184
-----------
<PAGE>
hReceivables from Repurchase Agreements 15.6%
$40,000,000 Chase Securities, Inc., 6.125%, 07/03/95 (Maturity Value $40,020,417)
Collateral: U.S. Treasury Notes, 6.25%, 08/31/96 .............................................. $ 40,000,000
29,695,000 Nomura Securities International, Inc., 6.125%, 07/03/95 (Maturity Value $29,710,157)
Collateral: U.S. Treasury Notes, 6.625%, 03/31/97 ............................................. 29,695,000
-----------
Total Receivables from Repurchase Agreements (Cost $69,695,000) ........................ 69,695,000
-----------
Total Investments (Cost $443,472,184) 99.3% ....................................... 443,472,184
Other Assets and Liabilities, Net .7% ............................................. 3,076,789
-----------
Net Assets 100.0% ................................................................. $446,548,973
===========
</TABLE>
At June 30, 1995, there was no unrealized appreciation or depreciation for
financial statement or income tax purposes.
<PAGE>
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
hFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Shares Growth and Income Fund (Note 1)
Common Stocks & Warrants 88.7%
Aerospace/Defense .9%
<S> <C> <C>
49,700 Kaman Corp., Class A ....................................................................... $ 633,674
47,200 Northrop Grumman Corp. ..................................................................... 2,460,300
14,100 Rockwell International Corp. ............................................................... 645,075
31,000 United Technologies Corp. .................................................................. 2,421,875
-----------
6,160,924
-----------
Automobile/Auto Parts 2.7%
154,500 Chrysler Corp. ............................................................................. 7,396,687
28,500 Eaton Corp. ................................................................................ 1,656,563
150,000 Ford Motor Co. ............................................................................. 4,462,500
33,400 General Motors Corp. ....................................................................... 1,565,625
46,000 Textron, Inc. .............................................................................. 2,673,750
-----------
17,755,125
-----------
Beverages .2%
31,600 Brown-Forman Corp., Class B ................................................................ 1,054,650
-----------
Chemicals, Basic 5.0%
13,000 Chemed Corp. ............................................................................... 451,750
138,600 Dow Chemical Co. ........................................................................... 9,961,875
89,500 Du Pont, (E.I.), De Nemours & Co. .......................................................... 6,153,125
45,400 Eastman Chemical Co. ....................................................................... 2,701,300
177,000 Goodrich (B.F.) Co. ........................................................................ 9,491,625
29,600 Monsanto Co. ............................................................................... 2,667,700
37,100 PPG Industries, Inc. ....................................................................... 1,595,300
-----------
33,022,675
-----------
Commercial Services 1.6%
5,900 CPI Corp. .................................................................................. 112,838
30,000 Dial Corp. ................................................................................. 742,500
26,000 Kelly Services, Inc., Class A .............................................................. 669,500
20 a Monro Muffler Brake, Inc. .................................................................. 290
410,000 Ogden Corp. ................................................................................ 8,968,750
-----------
10,493,878
-----------
Consumer Products .8%
31,900 Clorox Co. ................................................................................. 2,081,475
88,700 ConAgra, Inc. .............................................................................. 3,093,413
-----------
5,174,888
-----------
Electrical Equipment 1.6%
182,300 General Electric Co. ....................................................................... 10,277,163
-----------
Financial/Banks 6.1%
7,000 American Federal Bank ...................................................................... 96,250
65,500 Bank of Boston Corp. ....................................................................... 2,456,250
22,000 Bank of New York Co., Inc. ................................................................. 888,250
72,500 BankAmerica Corp. .......................................................................... 3,815,313
12,000 BayBanks, Inc. ............................................................................. 951,000
13,125 Bear Stearns Cos., Inc. .................................................................... 280,546
23,900 Beneficial Corp. ........................................................................... 1,051,600
28,600 Chemical Banking Corp. ..................................................................... 1,351,350
11,600 Citizens Bancorp ........................................................................... 339,300
37,000 City National Corp. ........................................................................ 420,875
30,500 Comerica, Inc. ............................................................................. 979,813
Financial/Banks (cont.)
16,500 Federal National Mortgage Association ...................................................... $ 1,557,188
58,500 First Bank System, Inc. .................................................................... 2,398,500
42,800 First Chicago Corp. ........................................................................ 2,562,650
29,000 J.P. Morgan & Co., Inc. .................................................................... 2,033,625
5,500 Households International, Inc. ............................................................. 272,250
63,500 KeyCorp .................................................................................... 1,992,313
8,000 MAF Bancorp, Inc. .......................................................................... 188,000
33,500 Magna Group, Inc. .......................................................................... 737,000
31,900 MBNA Corp. ................................................................................. 1,076,625
74,000 NBD Bancorp, Inc. .......................................................................... 2,368,000
19,000 Norwest Corp. .............................................................................. 546,250
10,000 Peoples Heritage Financial Group, Inc. ..................................................... 150,000
22,000 Republic New York Corp. .................................................................... 1,232,000
395,000 Roosevelt Financial Corp. .................................................................. 6,591,563
21,000 Student Loan Marketing Association ......................................................... 984,375
30,000 Summit Bancorp ............................................................................. 637,500
1,700 Trustmark Corp ............................................................................. 29,962
28,000 Washington Mutual, Inc. .................................................................... 658,000
24,200 Webster Financial Corp. .................................................................... 577,775
42,000 West One Bancorp ........................................................................... 1,401,750
-----------
40,625,873
-----------
Food/Processing .3%
22,500 Campbell Soup Co. .......................................................................... 1,102,500
8,600 Unilever N.V. .............................................................................. 1,119,075
550 WLR Foods, Inc. ............................................................................ 7,906
-----------
2,229,481
-----------
Food/Retail
4,000 Smith's Food & Drug Centers, Inc. .......................................................... 79,000
-----------
Forest Products & Paper 2.1%
540,000 a,c Portucel Industrial, SA .................................................................... 3,857,166
204,700 n Potlatch Corp. ............................................................................. 8,546,225
27,000 Westvaco Corp. ............................................................................. 1,194,750
-----------
13,598,141
-----------
Health Care
6,800 a Salick Health Care, Inc. ................................................................... 251,600
-----------
Insurance 2.9%
38,000 Aetna Life & Casualty Co. .................................................................. 2,389,250
39,000 American General Corp. ..................................................................... 1,316,250
19,300 American National Insurance Co. ............................................................ 1,177,300
77,500 Aon Corp. .................................................................................. 2,886,875
66,100 CIGNA Corp. ................................................................................ 5,131,013
20,800 John Alden Financial Corp. ................................................................. 356,200
83,000 Lincoln National Corp. ..................................................................... 3,631,250
8,500 Marsh & McLennan Cos., Inc. ................................................................ 689,563
9,000 Ohio Casualty Corp. ........................................................................ 283,500
8,400 Protective Life Corp. ...................................................................... 228,900
8,700 PXRE Corp. ................................................................................. 204,450
<PAGE>
Insurance (cont.)
26,188 Reliastar Financial Corp. .................................................................. $ 1,001,691
5,100 Zenith National Insurance .................................................................. 109,650
-----------
19,405,892
-----------
Leisure Time .4%
57,000 Brunswick Corp. ............................................................................ 969,000
37,000 Fleetwood Enterprises, Inc. ................................................................ 730,750
104,300 Handleman Co. .............................................................................. 1,003,888
-----------
2,703,638
-----------
Machinery .7%
55,200 Briggs & Stratton Corp. .................................................................... 1,904,400
28,500 Deere & Co. ................................................................................ 2,440,313
29,800 Regal-Beloit Corp. ......................................................................... 461,900
-----------
4,806,613
-----------
Medical Supplies .5%
82,500 Baxter International, Inc. ................................................................. 3,000,938
-----------
Metals & Mining, Precious .5%
80,600 Cyprus Amax Minerals Co. ................................................................... 2,297,100
17,900 Phelps Dodge Corp. ......................................................................... 1,056,100
9,000 Quanex Corp. ............................................................................... 222,750
5,900 a Webco Industries, Inc. ..................................................................... 36,875
-----------
3,612,825
-----------
Miscellaneous Manufacturing 2.4%
7,000 Commercial Intertech Corp. ................................................................. 112,000
765,000 Hanson, Plc. ............................................................................... 13,483,125
26,000 Harsco Corp. ............................................................................... 1,371,500
12,500 Minnesota Mining & Manufacturing Co. ....................................................... 715,625
-----------
15,682,250
-----------
Office Supplies .2%
9,400 Xerox Corp. ................................................................................ 1,102,150
-----------
Oil/Gas Transmission 15.4%
39,500 Ashland, Inc. .............................................................................. 1,387,437
115,300 Atlantic Richfield Co. ..................................................................... 12,654,175
3,060 a BJ Services Co., warrants .................................................................. 13,005
216,000 Chevron Corp. .............................................................................. 10,071,000
145,000 Consolidated Natural Gas Co. ............................................................... 5,473,750
179,500 Exxon Corp. ................................................................................ 12,677,187
98,000 Mobil Corp. ................................................................................ 9,408,000
210,000 National Fuel Gas Co. ...................................................................... 6,011,250
325,100 Noram Energy Corp. ......................................................................... 2,113,150
128,800 ONEOK, Inc. ................................................................................ 2,753,100
39,000 Panhandle Eastern Corp. .................................................................... 950,625
226,000 Pennzoil Co. ............................................................................... 10,650,250
72,600 Sun Company, Inc. .......................................................................... 1,987,425
188,000 Texaco, Inc. ............................................................................... 12,337,500
130,000 USX-Marathon Group, Inc. ................................................................... 2,567,500
15,000 Valero Energy Corp. ........................................................................ 303,750
<PAGE>
Oil/Gas Transmission (cont.)
26,988 Williams Companies, Inc. ................................................................... $ 941,207
515,000 YPF, S.A. .................................................................................. 9,720,625
------------
102,020,936
------------
Petroleum, Integrated 1.2%
20,700 Amoco Corp. ................................................................................ 1,379,138
77,800 Phillips Petroleum Co. ..................................................................... 2,596,575
16,900 Royal Dutch Petroleum Co., New York Shares ................................................. 2,059,687
81,300 Ultramar Corp. ............................................................................. 2,052,825
------------
8,088,225
------------
Pharmaceuticals 5.5%
133,000 American Home Products Corp. ............................................................... 10,290,875
138,500 Bristol-Myers Squibb Co. ................................................................... 9,435,313
100,500 Merck & Co., Inc. .......................................................................... 4,924,500
88,800 Schering-Plough Corp. ...................................................................... 3,918,300
206,500 Upjohn Co. ................................................................................. 7,821,187
------------
36,390,175
------------
Printing & Publishing 2.0%
254,000 Dun & Bradstreet Corp. ..................................................................... 13,335,000
------------
Property/Casualty Insurance .5%
17,300 Allied Group, Inc. ......................................................................... 493,050
11,500 Argonaut Group, Inc. ....................................................................... 365,125
45,500 St. Paul Companies, Inc. ................................................................... 2,240,875
------------
3,099,050
------------
Real Estate Investment Trust 4.1%
53,400 Associated Estates Realty Corp. ............................................................ 1,128,075
29,700 Avalon Properties, Inc. .................................................................... 590,287
62,500 Chelsea GCA Realty, Inc. ................................................................... 1,687,500
360,000 Equity Residential Properties Trust ........................................................ 10,035,000
24,000 Federal Realty Investment Trust ............................................................ 519,000
23,800 Health Care Property Investors, Inc. ....................................................... 761,600
7,500 Manufactured Home Communities, Inc. ........................................................ 115,312
80,000 McArthur/Glen Realty Corp. ................................................................. 1,170,000
61,500 Merry Land & Investment Co., Inc. .......................................................... 1,253,062
379,400 Oasis Residential, Inc. .................................................................... 8,251,950
72,600 Taubman Centers, Inc. ...................................................................... 689,700
50,200 United Dominion Realty Trust ............................................................... 740,450
------------
26,941,936
------------
Restaurants
19,200 a The Krystal Co. ............................................................................ 115,200
13,000 Sizzler International, Inc. ................................................................ 82,875
------------
198,075
------------
Retail 4.0%
185,900 Bruno's, Inc. .............................................................................. 2,161,088
38,500 Dayton Hudson Corp. ........................................................................ 2,762,375
148,700 Family Dollar Stores, Inc. ................................................................. 2,193,325
34,900 Hancock Fabrics, Inc. ...................................................................... 318,463
660,000 Kmart Corp. ................................................................................ 9,652,500
<PAGE>
Retail (cont.)
7,100 May Department Stores Co. .................................................................. $ 295,538
188,400 Penney (J.C.) Co., Inc. .................................................................... 9,043,200
------------
26,426,489
------------
Retail, Discount Chains .1%
40,000 Intelligent Electronics, Inc. .............................................................. 545,000
------------
Telephone/Communication 8.6%
87,000 Ameritech Corp. ............................................................................ 3,828,000
126,800 AT&T Corp. ................................................................................. 6,736,250
128,900 BellSouth Corp. ............................................................................ 8,185,150
367,500 GTE Corp. .................................................................................. 12,540,938
295,000 NYNEX Corp. ................................................................................ 11,873,750
147,300 SBC Communication, Inc. .................................................................... 7,015,163
34,500 Southern New England Telecommunications Corp. .............................................. 1,216,125
106,400 Sprint Corp. ............................................................................... 3,577,700
62,500 Telefonos de Mexico, SA, ADR ............................................................... 1,851,563
------------
56,824,639
------------
Textiles .6%
37,400 Springs Industries, Inc., Class A .......................................................... 1,393,150
44,600 V.F. Corp. ................................................................................. 2,397,250
------------
3,790,400
------------
Tobacco 6.2%
220,100 American Brands, Inc. ...................................................................... 8,748,974
132,600 Philip Morris Cos., Inc. ................................................................... 9,862,125
392,960 RJR Nabisco Holdings Corp. ................................................................. 10,953,760
385,000 UST, Inc. .................................................................................. 11,453,750
------------
41,018,609
------------
Transportation .7%
16,000 Arnold Industries, Inc. .................................................................... 280,000
12,500 Conrail, Inc. .............................................................................. 695,312
46,200 GATX Corp. ................................................................................. 2,177,175
8,100 Norfolk Southern Corp. ..................................................................... 545,738
12,500 Union Pacific Corp. ........................................................................ 692,188
12,000 Yellow Corp. ............................................................................... 217,500
------------
4,607,913
------------
Utilities 10.9%
203,000 American Electric Power Co. ................................................................ 7,130,375
6,000 Altanta Gas Light Co. ...................................................................... 208,500
441,000 CINergy Corp. .............................................................................. 11,576,250
40,000 Duke Power Co. ............................................................................. 1,660,000
313,000 Dominion Resources, Inc. ................................................................... 11,424,500
278,300 General Public Utilities Corp. ............................................................. 8,279,425
62,200 Illinova Corp. ............................................................................. 1,578,324
45,000 Ohio Edison Co. ............................................................................ 1,018,125
550,000 PacifiCorp. ................................................................................ 10,312,500
41,800 Pacific Telesis Group ...................................................................... 1,118,150
200 Pinnacle West Capital Corp. ................................................................ 4,900
52,700 Public Service Company of Colorado ......................................................... 1,712,750
35,000 Southern Co. ............................................................................... 783,125
<PAGE>
Utilities (cont.)
165,000 Texas Utilities, Co. ....................................................................... $ 5,671,873
220,000 US West, Inc. .............................................................................. 9,157,500
------------
71,636,297
------------
Total Common Stocks & Warrants (Cost $559,447,075) ................................... 585,960,447
============
Face
Amount
h,i Receivables from Repurchase Agreements 11.1%
$75,443,180 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $73,718,127) (Cost $73,679,937)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ..................... 73,679,937
------------
Total Investments (Cost $633,127,012) 99.8% .................................. 659,640,384
Other Assets and Liabilities, Net .2% ........................................ 1,188,286
------------
Net Assets 100.0% ............................................................... $660,828,670
============
At June 30, 1995 the net unrealized appreciation based on the cost of investments
for income tax purposes of $633,657,386 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 34,525,096
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................... (8,542,098)
------------
Net unrealized appreciation .............................................................. $ 25,982,998
============
</TABLE>
<PAGE>
aNon-income producing.
cSee Note 8 regarding Rule 144A Securities.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
nSee Note 1(g) regarding securities purchased on a when-issued basis.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Warrants Income Securities Fund (Note 1)
Common Stocks 24.5%
Consumer Products 1.2%
<S> <C> <C>
180,000 Philip Morris Cos., Inc. .................................................................. $ 13,387,500
93,750 a,c Specialty Foods Corp. ..................................................................... 246,094
------------
13,633,594
------------
Energy .7%
25,000 Atlantic Richfield Co. .................................................................... 2,743,750
50,000 BP Prudhoe Bay Royalty Trust .............................................................. 850,000
100,000 Pennzoil Co. .............................................................................. 4,712,500
------------
8,306,250
------------
Home Builders
5,908 a NVR, Inc. ................................................................................. 43,202
------------
Metals 1.9%
160,000 Driefontein Consolidated Mines, Ltd., ADR ................................................. 2,215,000
350,000 Free State Consolidated Gold Mines, Ltd., ADR ............................................. 4,331,250
425,000 Hartebeestfontein Gold Mining Co., Ltd., ADR .............................................. 1,531,063
191,500 Impala Platinum Holdings, Ltd., ADR ....................................................... 4,845,103
60,000 Kinross Mines, Ltd., ADR .................................................................. 478,506
185,800 Rustenburg Platinum Holdings, Ltd., ADR ................................................... 3,832,182
19,000 St. Helena Gold Mines, Ltd., ADR .......................................................... 166,250
210,000 Vaal Reefs Exploration & Mining Co., Ltd., ADR ............................................ 1,299,375
102,500 Western Deep Levels, Ltd., ADR ............................................................ 2,895,625
------------
21,594,354
------------
Pharmaceuticals 3.6%
145,000 American Home Products Corp. .............................................................. 11,219,375
190,000 Bristol-Myers Squibb Co. .................................................................. 12,943,750
242,600 Merck & Co., Inc. ......................................................................... 11,887,400
145,000 Upjohn Co. ................................................................................ 5,491,875
------------
41,542,400
------------
Real Estate Investment Trust 2.7%
180,000 Equity Residential Properties Trust, Inc. ................................................. 5,017,500
125,000 Felcor Suite Hotels, Inc. ................................................................. 3,187,500
150,000 Gables Residential Trust .................................................................. 3,075,000
199,000 Merry Land & Investment Co., Inc. ......................................................... 4,054,625
200,000 Post Properties, Inc. ..................................................................... 6,050,000
360,400 k Tanger Factory Outlet Centers, Inc. ....................................................... 9,145,150
------------
30,529,775
------------
Retail
11,870 a Federated Department Stores, Inc. ......................................................... 305,653
------------
Utilities 14.4%
310,700 American Electric Power Co., Inc. ......................................................... 10,913,338
350,000 Central & South West Corp. ................................................................ 9,187,500
325,000 CINergy Corp. ............................................................................. 8,531,250
330,000 Delmarva Power & Light Co. ................................................................ 6,765,000
209,600 Dominion Resources, Inc. .................................................................. 7,650,400
100,000 Entergy Corp. ............................................................................. 2,412,500
276,000 Florida Progress Corp. .................................................................... 8,625,000
231,700 FPL Group, Inc. ........................................................................... 8,949,413
141,200 Hawaiian Electric Industries, Inc. ........................................................ 5,136,150
150,000 Houston Industries, Inc. .................................................................. 6,318,750
Utilities (cont.)
400,000 Long Island Lighting Co. .................................................................. $ 6,200,000
175,000 Nevada Power Co. .......................................................................... 3,609,375
88,700 New England Electric System ............................................................... 3,060,150
300,000 New York State Electric & Gas Corp. ....................................................... 7,012,500
285,000 Ohio Edison Co. ........................................................................... 6,448,125
542,000 Pacific Gas & Electric Co. ................................................................ 15,718,000
25,000 PacifiCorp ................................................................................ 468,750
230,100 Public Service Enterprise Group, Inc. ..................................................... 6,385,275
262,100 San Diego Gas & Electric Co. .............................................................. 5,438,575
560,000 SCEcorp ................................................................................... 9,590,000
425,000 Southern Co. .............................................................................. 9,509,375
215,000 Southwestern Public Services Co. .......................................................... 6,342,500
295,000 Texas Utilities Co. ....................................................................... 10,140,625
------------
164,412,551
------------
Total Common Stocks (Cost $267,184,508) ............................................. 280,367,779
------------
Preferred Stocks .1%
Automotive
8,874 Harvard Industries, Inc., 14.25% pfd., PIK ................................................ 246,254
------------
Consumer Products .1%
11,000 Pantry Pride, Inc., $14.875 pfd., Series B ................................................ 1,144,000
------------
Total Preferred Stocks (Cost $1,439,482) ............................................ 1,390,254
------------
Convertible Preferred Stocks 9.1%
Airlines .4%
110,000 USAir Corp., $4.375 cum. cvt. pfd. ........................................................ 4,180,000
------------
Apparel/Textile .2%
40,000 Fieldcrest Cannon, Inc., $3.00 cvt. pfd., Series A ........................................ 1,880,000
------------
Consumer Products .2%
300,000 RJR Nabisco Holdings Corp., $0.6012 cvt. pfd., Series C ................................... 1,837,500
------------
Energy 4.0%
135,500 Gerrity Oil & Gas, $1.50 cvt. pfd., Series G .............................................. 1,575,188
140,300 Maxus Energy Corp., $4.00 cum. cvt. pfd. .................................................. 5,682,150
220,400 c McDermott International, Inc., $2.875 cvt. pfd., Series C ................................. 9,835,350
224,700 Noble Drilling Corp., $1.50 cvt. pfd. ..................................................... 5,336,625
75,000 c Occidental Petroleum Corp., $3.875 cvt. pfd. .............................................. 4,359,375
170,000 c Parker & Parsley Capital, 6.25% cvt. pfd. ................................................. 7,607,500
96,200 Reading & Bates, $1.625 cum. cvt. pfd. .................................................... 2,741,700
66,923 Santa Fe Energy Resources, Inc., 7.00% cvt. pfd. .......................................... 1,221,345
593,000 Santa Fe Energy Resources, Inc., 8.25% cvt. pfd. .......................................... 5,707,625
100,000 Snyder Oil Corp., $1.50 cvt. exch. pfd. ................................................... 1,975,000
------------
46,041,858
------------
Metals 2.7%
135,000 Amax Gold, Inc., $3.75 cvt. pfd., Series B ................................................ 6,513,750
65,000 Armco, Inc., $3.625 cum. cvt. pfd., Series A .............................................. 3,404,375
56,600 Battle Mountain Gold Co., $3.25 cvt. pfd. ................................................. 3,127,150
55,000 Cyprus Minerals, $4.00 cvt. pfd., Series A ................................................ 3,355,000
99,100 Freeport-McMoRan Cooper & Gold, Inc., $1.25 cum. cvt. pfd. ................................ 3,530,438
90,000 Freeport-McMoRan Cooper & Gold, Inc., $1.75 cvt. pfd. ..................................... 2,250,000
70,000 c Freeport-McMoRan, Inc., 4.375% cvt. exch. pfd. ............................................ 3,587,500
<PAGE>
Metals (cont.)
70,000 Hecla Mining Co., $3.50 cvt. pfd., Series B ............................................... $ 3,456,250
25,000 c Newmont Mining Corp., $2.75 cvt. pfd. ..................................................... 1,465,625
------------
30,690,088
------------
Real Estate 1.2%
400,000 Property Trust of America, $1.75 cvt. pfd., Series A ...................................... 8,900,000
100,000 Rouse Co., 3.25% cvt. pfd. ................................................................ 5,100,000
------------
14,000,000
------------
Restaurants .4%
210,000 Flagstar Cos. $2.25 cvt. pfd., Series A ................................................... 4,095,000
------------
Total Convertible Preferred Stocks (Cost $108,669,341) .............................. 102,724,446
------------
Warrants
3,128 a NVR, Inc. (Cost $13,294) .................................................................. 2,737
------------
Face
Amount
Corporate Bonds 26.3%
Apparel/Textiles 2.7%
$ 7,000,000 a,o Bibb Co., senior sub. notes, 14.00%, 10/01/99 ............................................. 2,765,000
10,000,000 Consoltex Group, Inc., senior sub. notes, Series B, 11.00%, 10/01/03 ...................... 9,150,000
175,000 Forstmann Textile, Inc., S.F., senior sub. deb., 14.75%, 04/15/99 ......................... 181,125
4,195,000 JPS Textile Group, Inc., S.F., disc. notes deb., 10.85%, 06/01/99 ......................... 3,628,675
3,981,000 JPS Textile Group, Inc., S.F., sub. notes, 10.25%, 06/01/99 ............................... 3,324,135
5,000,000 JPS Textile Group, Inc., S.F., sub. notes, 7.00%, 05/15/00 ................................ 2,975,000
3,800,000 Hartmarx Corp., senior sub. notes, 10.875%, 01/15/02 ...................................... 3,705,000
5,000,000 WestPoint Stevens, Inc., senior sub. deb., 9.375%, 12/15/05 ............................... 4,837,500
------------
30,566,435
------------
Automotive .6%
400,000 Exide Corp., senior notes, 10.75%, 12/15/02 ............................................... 423,500
7,850,000 Motor Wheel Corp., senior notes, Series B, 11.50%, 03/01/00 ............................... 6,633,250
------------
7,056,750
------------
Building Products .8%
9,250,000 Inter-City Products Corp., senior notes, 9.75%, 03/01/00 .................................. 8,186,250
1,000,000 Nortek, Inc., senior sub. notes, 9.875%, 03/01/04 ......................................... 905,000
------------
9,091,250
------------
Cable Systems 2.0%
150,000 Cablevision Industries Corp., guaranteed senior sub. notes, 10.75%, 01/30/02 .............. 163,500
3,000,000 Cablevision Systems Corp., senior sub. deb., 9.875%, 04/01/23 ............................. 3,135,000
8,000,000 Continental Cablevision, Inc., senior deb., 9.50%, 08/01/13 ............................... 8,280,000
7,300,000 Helicon Group LP Corp., S.F., senior secured notes, Series B, 9.00%, 11/01/03 ............. 6,643,000
5,000,000 Storer Communications, Inc., sub. deb., 10.00%, 05/15/03 .................................. 5,012,500
------------
23,234,000
------------
Chemicals 1.5%
8,000,000 Applied Extrusion Technology, senior notes, Series B, 11.50%, 04/01/02 .................... 8,440,000
3,250,000 IMC Fertilizer Group, Inc., notes, Series B, 10.75%, 06/15/03 ............................. 3,526,250
725,000 Uniroyal Chemical Corp., senior notes, 10.50%, 05/01/02 ................................... 743,125
4,150,000 Uniroyal Chemical Corp., senior notes, 11.00%, 05/01/03 ................................... 4,253,750
------------
16,963,125
------------
Communications .4%
$ 5,000,000 CommNet Cellular, Inc., sub. notes, 11.25%, 07/01/05 ...................................... $ 5,000,000
------------
Consumer Products 2.1%
2,600,000 Calmar, Inc., S.F., senior secured notes, 12.00%, 12/15/97 ................................ 2,678,000
5,050,000 Mafco, Inc., senior sub. notes, 11.875%, 11/15/02 ......................................... 5,062,625
6,000,000 Playtex Family Products Corp., senior sub. notes, 9.00%, 12/15/03 ......................... 5,662,500
5,000,000 Revlon Consumer Product Corp., senior sub. notes, Series B, 10.50%, 02/15/03 .............. 4,925,000
5,000,000 RJR Nabisco, Inc., notes, 9.25%, 08/15/13 ................................................. 5,125,000
1,150,000 Sealy Corp., senior sub. notes, 9.50%, 05/01/03 ........................................... 1,124,125
------------
24,577,250
------------
Energy 1.7%
3,250,000 Energy Ventures, senior notes, 10.25%, 03/15/04 ........................................... 3,347,500
9,835,000 Gerrity Oil & Gas Corp., senior sub. notes, 11.75%, 07/15/04 .............................. 9,097,375
1,000,000 Global Marine, Inc., senior secured notes, 12.75%, 12/15/99 ............................... 1,102,500
3,000,000 Mesa Capital Corp., disc. notes, 12.75%, 06/30/98 ......................................... 2,700,000
3,785,000 Tesoro Petroleum Corp., S.F., sub. deb., 12.75%, 03/15/01 ................................. 3,870,163
------------
20,117,538
------------
Food/Beverages 1.4%
4,692,000 c Del Monte Corp., sub. notes, PIK, 12.25%, 09/01/02 ........................................ 3,542,460
1,010,000 Dr Pepper Bottling Co. of Texas, senior sub. notes, 10.25%, 02/15/00 ...................... 1,035,250
5,000,000 PMI Acquisition Corp., guaranteed senior sub. notes, 10.25%, 09/01/03 ..................... 5,212,500
3,000,000 Specialty Foods Corp., senior sub. notes, Series B, 11.25%, 08/15//03 ..................... 2,955,000
3,000,000 Specialty Foods Corp., senior unsecured notes, Series B, 10.25%, 08/15//01 ................ 2,977,500
------------
15,722,710
------------
Food Chains 2.0%
9,000,000 Americold Corp., senior sub. notes, Series B, 11.50%, 03/01/05 ............................ 8,820,000
4,000,000 c Grand Union Capital Corp., senior notes, 11.375%, 02/15/99 ................................ 4,440,000
10,000,000 Ralphs Grocery Co., senior sub. notes, 11.00%, 06/15/05 ................................... 9,750,000
------------
23,010,000
------------
Gaming & Hotels .5%
6,000,000 Aztar Corp., senior sub. notes, 11.00%, 10/01/02 .......................................... 6,000,000
------------
Health Care .5%
1,500,000 OrNda Healthcorp., Inc., senior sub. notes, 12.25%, 05/15/02 .............................. 1,657,500
4,000,000 Sola Group, Ltd., senior sub. notes, 6.00%, 12/15/03 ...................................... 3,660,000
------------
5,317,500
------------
Industrial Products 2.3%
8,650,000 Easco Corp., senior notes, Series B, 10.00%, 03/15/01 ..................................... 8,650,000
10,000,000 Pace Industries, Inc., senior notes, Series B, 10.625%, 12/01/02 .......................... 9,500,000
5,030,000 RHI Holdings, Inc. senior sub. deb., 11.875%, 03/01/99 .................................... 4,879,100
2,696,000 Thermadyne Industries, Inc., notes, 10.75%, 11/01/03 ...................................... 2,601,640
246,000 Thermadyne Industries, Inc., senior notes, 10.25%, 05/01/02 ............................... 239,850
------------
25,870,590
------------
Media & Broadcasting .4%
3,000,000 Act III Broadcasting, senior sub. notes, 9.625%, 12/15/03 ................................. 3,041,250
2,000,000 c Benedek Broadcasting, senior notes, 11.875%, 03/01/05 ..................................... 2,082,500
------------
5,123,750
------------
<PAGE>
Metals 1.0%
$ 1,000,000 Armco Steel, Inc., senior notes, 11.375%, 10/15/99 ........................................ $ 1,025,000
5,020,000 Jorgensen Earle M. Co., senior notes, 10.75%, 03/01/00 .................................... 4,819,200
4,000,000 Republic Engineered Steel, first mortgage, 9.875%, 12/15/01 ............................... 3,650,000
1,500,000 c UCAR Global Enterprises, Inc., senior sub. notes, 12.00%, 01/15/05 ........................ 1,612,500
------------
11,106,700
------------
Publishing .5%
4,625,000 a,o Anacomp, Inc., senior sub. notes, 15.00%, 11/01/00 ........................................ 3,584,375
1,600,000 Bell & Howell Co., senior sub. notes, 10.75%, 10/01/02 .................................... 1,704,000
800,000 Sullivan Graphics, Inc., senior sub. notes, 15.00%, 02/01/00 .............................. 848,000
------------
6,136,375
------------
Railroads .5%
6,000,000 Southern Pacific Rail Co., senior notes, 9.375%, 08/15/05 ................................. 6,195,000
------------
Restaurants 1.2%
10,000,000 Flagstar Corp., S.F., senior sub. deb., 11.25%, 11/01/04 .................................. 7,850,000
6,175,000 Foodmaker, Inc., senior sub. notes, 14.25%, 05/15/98 ...................................... 6,267,625
------------
14,117,625
------------
Retail .3%
3,750,000 Levitz Furniture Corp., senior notes, 12.375%, 04/15/97 ................................... 3,787,500
------------
Utilities 3.9%
195,782,500 f ESCOM, E168, utility deb. (South Africa), 11.00%, 06/01/08 ................................ 37,805,069
4,581,094 Midland CoGeneration Venture, S.F., sub. deb., Series C, 10.33%, 07/23/02 ................. 4,706,786
2,000,000 Texas, New Mexico Power, secured deb., 10.75%, 09/15/03 ................................... 2,085,334
------------
44,597,189
------------
Total Corporate Bonds (Cost $308,037,571) ........................................... 303,591,287
------------
Convertible Corporate Bonds 6.1%
Biotechnology .7%
2,000,000 Centocor, Inc., Eurobonds, cvt. sub. deb., 6.75%, 10/16/01 ................................ 1,570,000
6,900,000 c Genzyme Corp. cvt. sub. deb. 6.75%, 10/01/01 .............................................. 6,891,375
------------
8,461,375
------------
Chemicals .4%
5,000,000 IMC Fertilizer Group, Inc., cvt. deb., 6.25%, 12/01/01 .................................... 5,081,250
------------
Communications .2%
2,315,000 Cellular, Inc., cvt. sub. deb., 6.75%, 07/15/09 ........................................... 2,404,706
------------
Computer/Technology .4%
3,000,000 Conner Peripherals, Inc., cvt. sub. deb., 6.75%, 03/01/01 ................................. 2,550,000
2,815,000 Maxtor Corp., cvt. sub. deb., 5.75%, 03/01/12 ............................................. 1,720,669
------------
4,270,669
------------
Energy 1.8%
4,500,000 Ashland, Inc., S.F., cvt, deb., 6.75%, 07/01/14 ........................................... 4,460,624
9,000,000 Oryx Energy Co., cvt. sub. deb., 7.50%, 05/15/14 .......................................... 7,830,000
282,000 Pogo Producing Co., cvt. sub. deb., 8.00%, 12/31/05 ....................................... 289,403
1,800,000 c Seacor Holdings, Inc., cvt. sub. deb., 6.00%, 07/01/03 .................................... 1,851,750
7,000,000 Snyder Oil Corp., cvt. sub. notes, 7.00%, 05/15/01 ........................................ 6,282,500
------------
20,714,277
------------
<PAGE>
Health Care .3%
$ 3,000,000 Grancare, Inc., cvt. sub. deb., 6.50%, 01/15/03 ........................................... $ 2,610,000
1,430,000 c Medical Care International, Inc., cvt. sub. deb., 6.75%, 10/01/06 ......................... 1,394,250
------------
4,004,250
------------
Media
518,000 Time Warner, Inc., cvt. sub. deb., 8.75%, 01/10/15 ........................................ 541,958
------------
Metals 1.1%
100,000 Coeur D'Alene Mines Corp., cvt. senior sub. deb., 6.00%, 06/10/02 ......................... 90,000
6,000,000 Coeur D'Alene Mines Corp., cvt. sub. deb., 6.375%, 01/31/04 ............................... 5,400,000
1,900,000 FMC Corp., Eurobonds, cvt. senior sub. deb., 6.75%, 01/16/05 .............................. 1,638,750
3,850,000 c Homestake Mining Co., cvt. sub. deb., 5.50%, 06/23/00 ..................................... 3,869,250
------------
10,998,000
------------
Pollution Control .3%
3,610,000 Air & Water Technology Corp., cvt. sub. deb., 8.00%, 05/15/15 ............................. 2,897,024
------------
Retail .5%
6,800,000 Carter Hawley Hale Stores, cvt. senior sub. notes, 6.25%, 12/31/00 ........................ 4,250,000
1,180,000 Drug Emporium, Inc., cvt. sub. deb., 7.75%, 10/01/14 ...................................... 923,350
------------
5,173,350
------------
Transportation .4%
4,750,000 AMR Corp., cvt. sub. deb., 6.125%, 11/01/24 ............................................... 4,940,000
------------
Total Convertible Corporate Bonds (Cost $71,274,170) ................................ 69,486,859
------------
e Zero Coupon/Step-up Bonds 2.7%
10,000,000 Bell & Howell Co., senior deb., zero coupon to 03/01/00, (original accretion rate 11.50%), 11.50%
thereafter, 03/01/05 ....................................................................... 5,900,000
2,600,000 Dr Pepper Bottling Holdings Co., S.F., senior sub. disc. notes, zero coupon to 02/15/98, (original
accretion rate 11.625%), 11.625% thereafter, 02/15/03 .................................... 1,937,000
2,416,000 Dr Pepper/Seven-Up Cos., Inc., senior sub. disc. notes, zero coupon to 11/01/97, (original accretion
rate 11.50%), 11.50% thereafter, 11/01/02 ................................................ 2,165,340
1,000,000 Exide Corp., senior sub. deb., zero coupon to 12/15/97, (original accretion rate 12.25%), 12.25%
thereafter, 12/15/04 ..................................................................... 795,000
1,648,000 a,o Grand Union Capital Corp., senior notes, Series B, zero coupon to 07/15/99, (original accretion rate
15.00%), 15.00% thereafter, 07/15/04 .................................................... 12,360
3,933,000 a,o Grand Union Capital Corp., senior sub. notes, Series B, (original accretion rate 16.50%), 0.00%
thereafter, 01/15/07 ..................................................................... 24,580
1,300,000 L.F.C. Holding Corp., senior deb., zero coupon to 06/15/97, (original accretion rate 15.00%),
15.00% thereafter, 06/15/02 .............................................................. 987,636
14,000,000 c Marcus Cable Holding Co., senior disc. notes, zero coupon to 06/15/00, (original accretion rate
14.25%), 14.25% thereafter, 12/15/05 ..................................................... 7,455,000
8,000,000 Revlon Worldwide Corp., senior secured disc. notes, Series B, (original accretion rate 12.00%),
0.00%, 03/15/98 ........................................................................ 5,500,000
6,520,000 Rogers Communication, Inc., cvt. sub. notes, LYONs, (original accretion rate 5.50%), 0.00%,
05/20/13 2,224,950
6,250,000 Specialty Foods Corp., senior secured disc. deb., Series B, zero coupon to 08/13/99, (original
accretion rate 13.00%), 13.00% thereafter, 08/15/05 ...................................... 3,156,250
1,500,000 Uniroyal Chemical Corp., senior notes, zero coupon to 05/01/98, (original accretion rate 12.00%),
12.00% thereafter, 05/01/05 .............................................................. 1,102,500
------------
Total Zero Coupon/Step-up Bonds (Cost $32,894,578) .................................. 31,260,616
------------
Total Bonds (Cost $412,206,319) ..................................................... 404,338,762
------------
<PAGE>
$ 24,390,000 U.S. Treasury Notes, 6.00% - 6.875%, 04/30/97 - 08/15/02 (Cost $24,030,005) ............... $ 24,575,690
------------
Foreign Government & Agency Securities 8.4%
14,000,000 f Canadian Government, first coupon deb., 8.00%, 06/01/23 ................................... 9,864,966
110,000,000 Republic of Argentina, Series L, 5.00%, 03/31/23 .......................................... 52,800,000
4,850,000 Republic of Brazil, 7.813%, 01/01/01 ...................................................... 3,907,281
48,000,000 United Mexican States, Series B, 6.25%, 12/31/19 .......................................... 29,220,000
------------
Total Foreign Government & Agency Securities (Cost $92,303,745) ..................... 95,792,247
------------
Total Long Term Investments (Cost $905,846,694) ..................................... 909,191,915
------------
g Short Term Investments 19.9%
f Foreign Government Agencies 1.7%
19,715,320 Mexican Federal Treasury Certificates (CETES), 16.00%, 07/06/95 ........................... 3,133,315
17,500,000 Mexican Federal Treasury Certificates (CETES), 16.74%, 07/13/95 ........................... 2,759,400
12,000,000 Mexican Federal Treasury Certificates (CETES), 34.5%, 07/20/95 ............................ 1,877,568
23,578,000 Mexican Federal Treasury Certificates (CETES), 35.38%, 07/27/95 ........................... 3,660,815
5,834,000 Mexican Federal Treasury Certificates (CETES), 32.98%, 08/10/95 ........................... 891,808
15,000,000 Mexican Federal Treasury Certificates (CETES), 35.07%, 09/07/95 ........................... 2,222,880
11,400,000 Mexican Federal Treasury Certificates (CETES), 13.86%, 10/19/95 ........................... 1,614,240
10,350,000 Mexican Federal Treasury Certificates (CETES), 13.98%, 10/26/95 ........................... 1,454,630
11,449,000 Mexican Federal Treasury Certificates (CETES), 14.33%, 11/16/95 ........................... 1,574,100
------------
Total Foreign Government Agencies (Cost $29,302,686) ................................ 19,188,756
------------
Total Investments before Repurchase Agreements (Cost $935,149,380) .................. 928,380,671
------------
h,i Receivables from Repurchase Agreements 18.2%
213,526,381 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $208,645,654)
(Cost $208,537,565)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ..................... 208,537,565
------------
Total Investments (Cost $1,143,686,945) 99.2% ................................ 1,136,918,236
Other Assets and Liabilities, Net .8% ........................................ 8,663,577
------------
Net Assets 100.0% ............................................................ $1,145,581,813
==============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $1,143,686,945 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ........................................................... $ 42,535,815
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ........................................................... (49,304,524)
------------
Net unrealized depreciation ............................................................. $ (6,768,709)
============
</TABLE>
<PAGE>
PORTFOLIO ABBREVIATIONS:
LYONs - Liquid Yield Option Notes
PIK - Payment-in-Kind
S.F. - Sinking Fund
<PAGE>
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
eZero coupon/step-up bonds. The current effective yield may vary. The original
accretion rate will remain constant.
fFace amount stated in foreign currency, value in U.S. dollars.
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rate shown, payable at fixed dates or upon maturity.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
kSee Note 10 regarding holdings of 5% or more of voting securities.
oSee Note 9 regarding defaulted securities.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Country* Warrants Templeton International Equity Fund (Note 1)
Common Stocks & Warrants 79.0%
Argentina 1.5%
<S> <C> <C> <C>
AR 441,525 Compania Interamericana, SA ..................................................... $ 2,141,932
AR 56,000 YPF, SA ......................................................................... 1,067,067
US 495,000 YPF, SA, ADR .................................................................... 9,343,125
------------
12,552,124
------------
Australia 4.3%
AU 1,633,494 Australia and New Zealand Banking Group, Ltd. ................................... 5,805,048
AU 954,000 Comalco, Ltd. ................................................................... 3,451,313
AU 1,230,000 Email, Ltd. ..................................................................... 2,998,593
AU 1,397,864 Gio Australia Holdings, Ltd. .................................................... 2,593,126
AU 1,003,000 National Foods, Ltd. ............................................................ 926,750
AU 152,200 News Corp., Ltd. ................................................................ 752,908
AU 5,087,166 Pacific Dunlop, Ltd. ............................................................ 10,702,515
AU 3,219,236 Pioneer International, Ltd. ..................................................... 8,008,277
------------
35,238,530
------------
Belgium .6%
BE 10,650 a Arbed, SA ....................................................................... 1,535,014
BE 6,054 Solvay, SA ...................................................................... 3,320,059
------------
4,855,073
------------
Bermuda 2.2%
US 635,000 ACE, Ltd. ....................................................................... 18,415,000
------------
Canada 1.9%
CA 205,800 Bank of Montreal ............................................................... 4,288,280
CA 203,700 Canadian Imperial Bank of Commerce ............................................. 4,893,248
CA 127,000 London Insurance Group, Inc. .................................................... 2,368,972
CA 447,000 National Bank of Canada, Montreal ............................................... 3,660,600
------------
15,211,100
------------
China .2%
HK 8,400,000 Shanghai Haixing Shipping Co. ................................................... 1,715,216
------------
Columbia .4%
US 159,000 Banco Ganadero, ADS ............................................................. 3,309,188
------------
Finland 2.5%
FI 111,562 American Group, Ltd. ............................................................ 2,029,350
FI 1,754,300 Enso-Gutzeit Oy ................................................................. 15,894,044
FI 171,000 a Outokumpu Oy A ................................................................. 2,842,327
FI 99,700 a Outokumpu Oy A, warrants ........................................................ 53,684
------------
20,819,405
------------
France 4.4%
FR 24,509 Compagnie de Saint Gobain ...................................................... 2,960,531
FR 81,710 ECCO, SA ........................................................................ 12,817,585
FR 14,850 Labinal, SA ..................................................................... 2,617,212
FR 221,000 Pechiney International, SA ...................................................... 5,580,520
FR 143,990 Societe Nationale Elf Acquitane, SA ............................................. 10,640,642
FR 24,503 Total, SA ....................................................................... 1,474,852
------------
36,091,342
------------
Greece 1.2%
GR 113,800 c Alpha Credit Bank .............................................................. 6,321,660
GR 69,970 Ergo Bank, SA ................................................................... 3,220,910
------------
9,542,570
------------
Hong Kong 9.2%
HK 846,000 Cathay Pacific Airways, Ltd. .................................................... $ 1,235,467
HK 623,000 Cheung Kong Holdings, Ltd ...................................................... 3,083,680
HK 1,742,000 Consolidated Electric Power-Asia ............................................... 4,041,058
HK 5,961,000 CP Pokphand Co. ................................................................. 2,099,269
US 9,123,000 Dairy Farm International, Ord. .................................................. 7,845,780
HK 9,922,000 Great Wall Electronics International, Ltd. ...................................... 859,125
HK 779,000 Hang Lung Development Co., Ltd. ................................................. 1,238,298
HK 77,900 a Hang Lung Development Co., Ltd., warrants ....................................... 13,390
HK 240,339 HSBC Holdings Corp., Plc. ....................................................... 3,082,743
US 905,200 Jardine Matheson Holdings, Ltd. ................................................. 6,653,220
US 2,864,250 Jardine Strategic Holdings, Ltd. ................................................ 9,222,885
US 318,250 a Jardine Strategic Holdings, Ltd., warrants ...................................... 140,030
HK 6,860,000 Maanshan Iron & Steel Co., Ltd. ................................................. 1,436,222
HK 1,032,736 New World Development Co., Ltd. ................................................. 3,436,759
HK 5,999,000 Oriental Press Group ........................................................... 2,422,765
HK 7,092,000 Peregrine Investments Holdings, Ltd. ............................................ 10,081,935
US 332,140 a Shandong Huaneng Power, ADR ..................................................... 2,532,568
HK 1,245,000 Shenzhen China Bicycles Co. .................................................... 402,246
HK 17,474,000 Shun Tak Holdings, Ltd. ......................................................... 13,888,327
HK 3,172,400 Sing Tao Holding, Ltd. .......................................................... 1,742,446
HK 1,974,000 Yue Yuen Industrial Holdings .................................................... 479,609
------------
75,937,822
------------
India .1%
US 109,700 a,c Gujarat Narmada Co., Ltd. ....................................................... 1,056,411
------------
Indonesia
ID 167,500 P.T. Barito Pacific Timber ..................................................... 240,682
------------
Italy 1.0%
IT 148,000 Banco di Sardegna, S.P.A. ....................................................... 958,778
IT 140,200 a Cartiere Burgo, S.P.A. .......................................................... 925,299
IT 144,400 a Cartiere Burgo, S.P.A., warrants ................................................ 12,708
IT 404,000 Sasib, S.P.A. Di Risp ........................................................... 1,083,917
IT 504,800 Sirti, S.P.A. ................................................................... 3,745,007
IT 468,000 Unicem Unione Cementi Marchino ................................................. 1,345,151
------------
8,070,860
------------
Mexico 1.9%
MX 1,256,000 Consorcio G Grupo, SA ........................................................... 917,382
US 332,300 Consorcio Grupo Dina, ADR ....................................................... 1,038,438
US 137,600 Empresa ICA Sociedad, ADS ....................................................... 1,410,400
MX 266,400 Grupo Financiero Banamex, Ord., Series B ........................................ 404,928
MX 31,070 Grupo Financiero Banamex, SA, Series L .......................................... 47,227
US 275,600 Telefonos de Mexico, SA, ADR .................................................... 8,164,650
MX 1,274,640 Vitro, SA ....................................................................... 3,626,096
------------
15,609,121
------------
Netherlands 8.6%
NL 93,700 ABN-AMRO Holdings, NV ........................................................... 3,616,173
NL 32,300 AKZO Nobel, NV .................................................................. 3,860,574
NL 126,700 a DSM, NV ......................................................................... 10,916,070
NL 359,554 International Nederlanden Grp., NV .............................................. 19,886,271
NL 147,900 Koninklijke Bijenkorf Beheer .................................................... 10,614,056
Netherlands (cont.)
NL 330,807 Philips Electronics, NV ......................................................... $ 14,005,124
NL 63,000 Telegraaf (Holdingsmij) - CVA ................................................... 7,684,414
------------
70,582,682
------------
New Zealand .7%
NZ 411,700 Fisher & Paykel Industries, Ltd. ................................................ 1,211,069
NZ 3,520,000 Fletcher Forestry Shares ........................................................ 4,636,007
------------
5,847,076
------------
Norway 2.3%
NO 13,200 a Elkem, AS Oslo, Series A ........................................................ 184,226
NO 824,959 Hafslund Nycomed Free, Series B ................................................. 19,077,679
------------
19,261,905
------------
Portugal .7%
PT 207,900 Banco Portuges de Investimento, SA .............................................. 3,630,789
US 239,400 a,c Portucel Industrial, SA ......................................................... 1,710,010
------------
5,340,799
------------
South Korea 1.4%
SK 44,500 Byucksan Corp. ................................................................. 833,366
SK 109,900 a Daegu Bank, Ltd. ................................................................ 1,317,496
SK 30,600 Daehan Synthetic Fiber Co., Ltd. .............................................. 5,044,510
SK 9,300 a Keumkang, Ltd. .................................................................. 826,667
SK 138,990 Pacific Chemical Co., Ltd. ...................................................... 3,519,430
------------
11,541,469
------------
Spain 6.8%
ES 172,300 Banco Bilbao Vizcaya, SA ........................................................ 4,971,628
ES 33,500 Banco Intercontinental Espanol ................................................. 3,014,654
ES 24,600 Banco Popular Espanol .......................................................... 3,655,728
ES 734,000 Compania Sevillana de Electricidad ............................................. 4,514,592
ES 318,000 Dragados & Construcciones, SA ................................................... 4,620,681
ES 365,500 Huerte, SA ...................................................................... 3,289,123
ES 1,863,800 Iberdrola, SA ................................................................... 14,033,318
ES 1,238,100 Telefonica de Espana ............................................................ 15,945,808
ES 52,200 Unipapel, SA .................................................................... 1,404,929
------------
55,450,461
------------
Sweden 10.5 %
SE 117,600 Asea, AB, Series A .............................................................. 10,135,980
SE 120,400 a Autoliv, Ord. ................................................................... 6,438,237
SE 582,000 Celsius Industrier, AB, Ord., Series B .......................................... 8,840,486
SE 186,000 Electrolux, AB, Ord., Series B .................................................. 8,463,146
SE 158,500 Esselte, AB ..................................................................... 1,971,826
SE 592,800 Pharmacia, AB, Ord., Series B ................................................... 12,875,265
SE 14,900 c Sparbanken Sverige, AB, Series A ................................................ 124,942
SE 251,000 a Stadshypotek, AB ................................................................ 3,726,390
SE 548,000 Stena Line, AB, Series B ........................................................ 2,696,835
SE 804,250 Stora Kopparbergs Bergslags, Series B ........................................... 10,889,757
SE 311,800 a Svenska Handelsbanken, Inc. ..................................................... 4,650,469
SE 831,000 Volvo, AB, Ord., Series B ....................................................... 15,821,282
------------
86,634,615
------------
<PAGE>
Switzerland 5.0%
CH 3,690 Baloise Holdings ................................................................ $ 8,411,854
CH 12,800 Bucher Holdings, AG-B ........................................................... 7,836,735
CH 11,000 Ciba-Geigy, Ltd., ............................................................... 8,062,527
CH 2,570 Kuoni Reisebuero, AG-PC ......................................................... 4,128,962
CH 15,400 S.M.H., AG ...................................................................... 9,896,656
CH 3,118 Swiss Reinsurance Co. .......................................................... 2,401,794
------------
40,738,528
------------
Turkey .8%
US 1,468,600 Tofas Turk Otomobil Fabrikasi, AS ............................................... 6,314,980
------------
United Kingdom 10.8%
GB 6,312,400 Albert Fisher Group, Plc. ....................................................... 4,566,712
GB 2,536,000 Anglian Group, Plc. ............................................................. 6,774,172
GB 1,635,473 Argyll Group ................................................................... 8,737,362
GB 537,777 British Aerospace ............................................................... 4,814,025
GB 7,123,000 Cordiant, Plc. .................................................................. 11,835,236
GB 1,890,000 Govett & Co., Plc. .............................................................. 8,264,037
GB 2,493,900 Hillsdown Holdings, Plc ......................................................... 7,137,552
GB 128,198 Hong Kong Shanghai Bank ........................................................ 1,654,123
GB 871,900 Kwik Save Group, Plc. ........................................................... 8,997,235
GB 2,524,800 Meggitt Holding, Plc. ........................................................... 3,151,334
GB 212,341 National Westminster Bank, Plc. ................................................. 1,843,420
GB 1,984,500 News International, Plc. ........................................................ 9,592,293
GB 23,000 a Queens Moat House, Plc. ......................................................... 3,658
GB 8,102,000 Raine, Plc. ..................................................................... 3,864,659
GB 312,900 Thames Water Group, Plc. ........................................................ 2,368,156
GB 1,306,000 Wace Group, Plc. ................................................................ 4,755,284
------------
88,359,258
------------
Total Common Stocks & Warrants (Cost $640,494,260) ........................ 648,736,217
------------
Preferred Stocks
Netherlands
NL 2,547 ABN-AMRO, cvt. pfd. (Cost $87,929) .............................................. 92,708
------------
Total Common Stocks & Warrants and Preferred Stocks
(Cost $640,582,189) ...................................................... 648,828,925
------------
Face
Amount
Bonds 13.3%
Finland .3%
US $ 3,050,000 AMER Group, cvt., 6.25%, 06/15/03 ............................................... 2,828,875
------------
Hong Kong .2%
US 1,531,000 Jardine Strategic Holdings, cvt., 7.50%, 05/07/49 ............................... 1,691,755
------------
Mexico .1%
US 970,000 Banco Nacional de Mexico, cvt., 7.00%, 12/15/99 ................................. 698,400
------------
United States 6.0%
US 48,000,000 U.S. Treasury Notes, 7.50%, 12/31/96 ............................................ 49,125,120
------------
Total Bonds (Cost $53,788,191) ............................................ 54,344,150
------------
Total Long Term Investments (Cost $694,370,380) ........................... 703,173,075
------------
<PAGE>
Short Term Securities 6.7%
US $55,500,000 U.S. Treasury Notes, 5.125%, 03/31/96 (Cost $55,456,641)......................... $ 55,256,910
------------
Total Investments before Repurchase Agreements (Cost $749,827,021) ....... 758,429,985
------------
h,i Receivables from Repurchase Agreements 5.6%
US 47,446,892 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $46,632,677)
(Cost $46,338,658)
Collateral: U.S Treasury Bills, 10/19/95 - 06/27/96
U.S Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ............. 46,338,658
------------
Total Investments (Cost $796,165,679) 98.0% ...................... 804,768,643
Other Assets and Liabilities, Net 2.0% ........................... 17,021,309
------------
Net Assets 100.0% ................................................ $821,789,952
============
At June 30, 1995, the net unrealized appreciation based on the cost of investments
for income tax purposes of $796,165,679 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................ $ 87,488,801
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................ (78,885,837)
------------
Net unrealized appreciation ................................................... $ 8,602,964
============
</TABLE>
CURRENCY LEGEND:
AR - Argentina
AU - Australia
BE - Belgium
CA - Canada
CH - Switzerland
ES - Spain
FI - Finland
FR - France
GB - United Kingdom
GR - Greece
HK - Hong Kong
ID - Indonesia
IT - Italy
MX - Mexico
NL - Netherland
NO - Norway
NZ - New Zealand
PT - Portugal
SK - South Korea
SE - Sweden
US - United States of America
<PAGE>
*Securities traded in currency of country indicated.
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
hFace amount for repurchase agreements is for the underlying collateral.
iSee note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
(cont.)
<TABLE>
<CAPTION>
Shares,
Warrants, Value
Country* and Rights Templeton Pacific Growth Fund (Note 1)
Common Stocks, Warrants & Rights 86.9%
Australia 17.8%
<S> <C> <C> <C>
AU 2,150,000 a Alcan Australia, Ltd. ............................................................ $ 3,881,418
AU 1,953,749 Australia and New Zealand Banking Group, Ltd. .................................... 6,943,158
AU 1,706,264 Australian Gas & Light Co., Ord. ................................................. 5,408,780
AU 680,000 Brambles Industries, Ltd. ........................................................ 6,447,376
AU 2,950,000 BTR Nylex, Ltd. .................................................................. 5,640,175
AU 875,000 Email, Ltd. ...................................................................... 2,133,145
AU 2,399,145 Gio Australia Holdings, Ltd. ..................................................... 4,450,566
AU 5,997,391 Goodman Fielder, Ltd. ............................................................ 4,987,311
AU 419,000 Mayne Nickless, Ltd. ............................................................. 1,730,248
AU 3,547,000 National Foods, Ltd. ............................................................. 3,277,350
AU 2,061,877 Pacific Dunlop, Ltd. ............................................................. 4,337,832
AU 1,968,750 Western Mining Corp. Holdings, Ltd. .............................................. 10,830,532
AU 489,343 Westpac Banking Corp., Ltd. ...................................................... 1,773,788
------------
61,841,679
------------
China .5%
US 225,000 Shandong Huaneng Power, ADR ...................................................... 1,715,625
------------
Hong Kong 20.8%
HK 3,000,000 Cathay Pacific Airways, Ltd. ..................................................... 4,381,090
HK 800,000 Cheung Kong Holdings, Ltd. ....................................................... 3,959,782
US 4,197,727 Dairy Farm International Holdings. Ltd. .......................................... 3,610,045
HK 5,415,000 Grand Hotel Holdings, Ltd. ....................................................... 1,784,519
HK 4,888,000 Great Wall Electronics International, Ltd. ....................................... 423,242
HK 800 a Great Wall Electronics International, Ltd., warrants ............................. 2
HK 169,800 a Hang Lung Development Co., Ltd., warrants ........................................ 29,186
HK 4,463,140 Hon Kwok Land Investment Co., Ltd. ............................................... 1,240,114
HK 150,000 a Hong Kong and China Gas Co., Ltd., warrants ...................................... 22,875
US 39,024 Hong Kong Land Holdings, Ltd. .................................................... 71,024
HK 1,750,000 Hong Kong Telecommunications Co., Ltd. ........................................... 3,460,286
HK 350,000 HSBC Holdings Corp. .............................................................. 4,489,325
HK 1,067,503 Hsin Chong Construction Group .................................................... 120,025
US 632,031 Jardine Matheson Holdings, Ltd. .................................................. 4,645,428
US 2,475,000 Jardine Strategic Holdings, Ltd. ................................................. 7,969,500
US 275,000 a Jardine Strategic Holdings, Ltd., warrants ....................................... 121,000
HK 2,846,000 Lai Sun Development Co., Ltd. .................................................... 349,415
HK 3,216,000 Maanshan Iron & Steel Co., Ltd. .................................................. 673,308
HK 3,860,000 National Mutual Asia, Ltd. ....................................................... 2,469,307
HK 1,839,667 New World Development Co., Ltd. .................................................. 6,122,079
HK 1,050,000 Peregrine Investment Holdings, Ltd. .............................................. 1,492,672
HK 17,658,000 a Shanghai Haixing Shipping ........................................................ 3,605,630
HK 3,210,000 Shun Tak Holdings ................................................................ 2,551,307
HK 2,201,100 Sing Tao Holdings, Ltd. .......................................................... 1,208,958
HK 4,888,000 South China Morning Post (Holdings), Ltd. ........................................ 2,937,424
HK 645,000 Swire Pacific, Ltd., Class A ..................................................... 4,918,065
HK 1,012,000 Tomei International Holdings, Ltd. ............................................... 78,472
HK 3,100,000 Wheelock & Co., Ltd. ............................................................. 5,148,104
HK 1,934,000 Winsor Industrial Corp., Ltd. .................................................... 2,574,401
HK 5,532,000 Yaohan Hongkong Corp., Ltd. ...................................................... 450,407
HK 5,522,000 Yue Yuen Industrial Holdings ..................................................... 1,341,642
------------
72,248,634
------------
Indonesia 4.3%
US 300,000 a Asia Pacific Resources International Holdings, Ltd., Class A ..................... $ 2,737,500
ID 300,000 P.T. Bali Bank ................................................................... 761,114
ID 950,000 P.T. Barito Pacific Timber ....................................................... 1,365,065
ID 1,405,400 P.T. Evershine Textile ........................................................... 631,073
ID 1,219,500 P.T. Hadtex Indosyntec ........................................................... 794,017
ID 1,015,980 P.T. Indorama Synthetics, fgn. ................................................... 3,079,419
US 110,000 P.T. Indosat, ADR ................................................................ 4,207,500
ID 129,000 P.T. Inti Indorayon Utama ........................................................ 266,457
ID 316,000 P.T. Pabrik Kertas Tjiwi Kimia ................................................... 634,980
ID 361,500 P.T. Panin Bank .................................................................. 430,164
ID 90,375 a P.T. Panin Bank, rights .......................................................... 30,436
ID 50,000 P.T. Toko Gunung Agung ........................................................... 36,484
------------
14,974,209
------------
Japan 17.0%
JP 1,200 East Japan Railway Co. ........................................................... 6,156,749
JP 582,800 Hitachi, Ltd. .................................................................... 5,808,410
JP 300,000 Matsushita Electric Industrial Co. ............................................... 4,670,637
JP 824,000 Mitsubishi Heavy Industries, Ltd. ................................................ 5,597,971
JP 250,000 Mitsubishi Oil Co., Ltd. ......................................................... 2,400,189
JP 200,000 Nintendo Corp., Ltd. ............................................................. 11,511,470
JP 1,130 Nippon Telegraph & Telephone Corp. ............................................... 9,462,759
JP 700,000 Nisshinbo Industries, Inc. ....................................................... 5,523,383
JP 134,000 Nissin Corp. ..................................................................... 554,744
JP 550,000 Rengo Co., Ltd. .................................................................. 3,775,432
JP 50,000 Sony Corp. ....................................................................... 2,400,189
JP 70,000 Tenma Corp. ...................................................................... 1,527,393
------------
59,389,326
------------
Malaysia 4.4%
MY 50,000 Commerce Asset Holdings .......................................................... 256,358
MY 16,667 a Commerce Asset Holdings, warrants ................................................ 44,094
MY 3,342,666 Malaysia International Shipping Corp. ............................................ 9,803,143
MY 80,000 Public Finance ................................................................... 212,469
MY 1,798,800 Sime Darby Berhad ................................................................ 5,017,162
------------
15,333,226
------------
New Zealand 1.1%
NZ 2,030,713 Brierley Investments, Ltd. ....................................................... 1,534,130
NZ 770,000 Fletcher Challenge, Ltd. ......................................................... 2,162,097
------------
3,696,227
------------
Philippines 6.0%
PH 13,750,000 Filinvest Land, Inc. ............................................................. 3,983,947
PH 116,000 Philippine Long Distance Telephone Co. ........................................... 8,288,958
US 4,400 Philippine Long Distance Telephone Co., ADR ...................................... 315,700
PH 700,000 Philippine National Bank ......................................................... 8,153,876
------------
20,742,481
------------
Singapore 5.0%
SG 489,600 City Developments, Ltd. .......................................................... 2,995,406
US 68,000 GP Batteries International, Ltd. ................................................. 166,600
SG 393,800 Overseas Union Bank, Ltd. ........................................................ 2,479,742
Singapore (cont.)
SG 1,217,000 Parkway Holdings, Ltd. ........................................................... $ 2,943,442
SG 882,000 Singapore Airlines, Ltd. ......................................................... 8,141,538
SG 90,500 Singapore Bus Service, Ltd. ...................................................... 633,014
------------
17,359,742
------------
Thailand 7.5%
TH 700,000 Bangkok Bank Co., Ltd. ........................................................... 7,713,186
TH 347,400 Charoen Pokphand Feedmill Co., Ltd. .............................................. 2,110,999
TH 2,783,133 Industrial Finance Corp. of Thailand ............................................. 7,328,485
TH 643,700 MDX Public Co., Ltd. ............................................................. 1,499,402
TH 103,500 Oriental Hotel, Ltd. ............................................................. 301,883
TH 36,570 Thai Farmers Bank, Ltd. .......................................................... 265,181
TH 733,440 Thai Farmers Bank, Ltd., fgn. .................................................... 7,012,024
------------
26,231,160
------------
United States 2.5%
US 46,000 American International Group, Inc. ............................................... 5,244,000
US 150,000 American President Co. ........................................................... 3,562,500
------------
8,806,500
------------
Total Common Stocks, Warrants and Rights (Cost $310,413,248) ............... 302,338,809
------------
Face
Amount
Convertible Bonds .3%
US 31,000 Dairy Farm International, cvt., 6.50%, 05/10/49 .................................. 23,560
US 22,000 Jardine Strategic Holdings, Ltd., cvt., 7.50%, 05/07/49 .......................... 24,310
US 1,307,000 MDX Public Co., cvt., 4.75%, 09/17/03 ............................................ 764,595
US 360,000 P.T. Inti Indorayon Utama, cvt., 5.50%, 10/01/02 ................................. 428,400
------------
Total Convertible Bonds (Cost $1,994,722) .................................. 1,240,865
------------
Total Investments before Repurchase Agreements (Cost $312,407,970) ......... 303,579,674
------------
h,i Receivables from Repurchase Agreements 12.0%
US 42,771,805 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $41,794,555)
(Cost $41,772,903)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ............ 41,772,903
------------
Total Investments (Cost $354,180,873) 99.2% ........................... 345,352,577
Other Assets and Liabilities, Net .8% ................................. 2,693,795
------------
Net Assets 100.0% .................................................... $348,046,372
============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $354,180,873 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................. $ 24,572,340
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................. (33,400,636)
------------
Net unrealized depreciation .................................................... $ (8,828,296)
============
</TABLE>
<PAGE>
COUNTRY LEGEND:
AU - Australia
HK - Hong Kong
ID - Indonesia
JP - Japan
MY - Malaysia
NZ - New Zealand
PH - Philippines
SG - Singapore
TH - Thailand
US - United States of America
<PAGE>
*Securities traded in currency of country indicated.
aNon-income producing.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Shares Rising Dividends Fund (Note 1)
Common Stocks 77.0%
Banks 13.3%
<S> <C> <C>
200,825 Banc One Corp. .............................................................................. $ 6,476,605
218,500 CoreStates Financial Corp. .................................................................. 7,620,187
279,650 Mercantile Bankshares Corp. ................................................................. 6,292,125
263,000 National Commerce Bancorp. .................................................................. 6,640,750
205,200 State Street Boston Corp. ................................................................... 7,566,750
430,600 TrustCo Bank Corp., New York ................................................................ 9,365,550
232,900 Wilmington Trust Corp. ...................................................................... 6,579,425
------------
50,541,392
------------
Consumer Goods/Services 12.3%
87,000 Alberto-Culver Co., Class A ................................................................. 2,240,250
92,900 Bob Evans Farms, Inc. ....................................................................... 1,892,837
625,000 DIMON, Inc. ................................................................................. 10,546,875
154,000 Philip Morris Cos., Inc. .................................................................... 11,453,750
102,000 Roto-Rooter, Inc. ........................................................................... 2,779,500
466,600 Stride Rite Corp. ........................................................................... 4,840,975
245,000 Universal Corp. ............................................................................. 5,145,000
257,500 UST, Inc. ................................................................................... 7,660,625
------------
46,559,812
------------
Drugs/Health Care 4.9%
52,500 Bristol-Myers Squibb Co. .................................................................... 3,576,562
183,300 Merck & Co., Inc. ........................................................................... 8,981,700
67,500 Pfizer, Inc. ................................................................................ 6,235,313
------------
18,793,575
------------
Energy 1.8%
55,000 Royal Dutch Petroleum Co., New York Shares, ADR ............................................. 6,703,125
------------
Financial Services 2.2%
90,000 Federal National Mortgage Association ....................................................... 8,493,750
------------
Industrial 15.0%
27,300 Diebold, Inc. ............................................................................... 1,187,550
81,500 General Electric Co. ........................................................................ 4,594,563
133,000 Genuine Parts Co. ........................................................................... 5,037,375
385,400 Hanson, Plc., ADR ........................................................................... 6,792,675
154,800 Kimball International, Inc., Class B ........................................................ 4,218,300
68,500 Loctite Corp. ............................................................................... 3,116,750
156,500 Masco Corp. ................................................................................. 4,225,500
90,000 Monsanto Co. ................................................................................ 8,111,250
184,000 Myers Industries, Inc. ...................................................................... 2,645,000
310,000 Newell Co. .................................................................................. 7,595,000
81,800 Rockwell International Corp. ................................................................ 3,742,350
158,000 Superior Industries International, Inc. ..................................................... 4,917,750
46,000 Superior Surgical Manufacturing Co., Inc. ................................................... 483,000
19,270 U.S. Industries, Inc. ....................................................................... 262,554
------------
56,929,617
------------
Insurance - Life & Health 1.9%
193,200 Torchmark Corp. ............................................................................. 7,293,300
------------
Insurance - Property Casualty 14.3%
294,700 Allied Group, Inc. .......................................................................... 8,398,950
28,800 American International Group, Inc. .......................................................... 3,283,200
103,100 Chubb Corp. ................................................................................. 8,260,888
Insurance - Property Casualty (cont.)
16,800 Cincinnati Financial Corp. .................................................................. $ 940,800
317,500 Mercury General Corp. ....................................................................... 10,914,063
115,000 MMI Cos, Inc. ............................................................................... 2,256,875
314,625 RLI Corp. ................................................................................... 7,157,719
101,000 SAFECO Corp. ................................................................................ 5,801,188
223,000 Selective Insurance Group, Inc. ............................................................. 7,359,000
------------
54,372,683
------------
Printing & Publishing 1.3%
31,000 Dun & Bradstreet Corp. ...................................................................... 1,627,500
73,100 Reader's Digest Association, Inc., Class A .................................................. 3,225,538
------------
4,853,038
------------
Retail 8.0%
44,100 Arbor Drugs, Inc. ........................................................................... 705,600
413,200 Family Dollar Stores, Inc. .................................................................. 6,094,700
321,700 Rite Aid Corp. .............................................................................. 8,243,562
315,000 The Limited, Inc. ........................................................................... 6,930,000
170,200 Walgreen Co. ................................................................................ 8,531,275
------------
30,505,137
------------
Transportation 2.0%
434,000 Arnold Industries, Inc. ..................................................................... 7,595,000
------------
Total Common Stocks (Cost $263,698,257) ............................................... 292,640,429
------------
Face
Amount
h Receivables from Repurchase Agreements 22.9%
$42,000,000 Nikko Securities Co., International Inc., 6.10%,07/03/95 (Maturity Value $42,021,350)
Collateral: U.S. Treasury Notes, 6.875%, 03/31/00 .......................................... $ 42,000,000
45,924,687 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $44,875,556)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% -8.625%, 09/30/95 - 02/15/00 ....................... 44,852,308
------------
Total Receivables from Repurchase Agreements (Cost $86,852,307) ....................... 86,852,308
------------
Total Investments (Cost $350,550,565) 99.9% ...................................... 379,492,737
Other Assets and Liabilities, Net .1% ............................................ 262,288
------------
Net Assets 100.0% ................................................................ $379,755,025
============
At June 30, 1995, the net unrealized appreciation based on the cost of investments
for income tax purposes of $350,897,336 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ............................................................ $ 37,978,860
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ............................................................ (9,383,459)
------------
Net unrealized appreciation .............................................................. $ 28,595,401
============
</TABLE>
<PAGE>
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Warrants Utility Equity Fund (Note 1)
Common Stocks & Warrants 92.3%
<S> <C> <C>
446,100 a AirTouch Communications, Inc. ............................................................ $ 12,713,850
1,298,700 Allegheny Power System, Inc. ............................................................. 30,519,450
1,300,230 American Electric Power Co., Inc. ........................................................ 45,670,579
120,000 AT&T Corp. ............................................................................... 6,375,000
83,100 BellSouth Corp. .......................................................................... 5,276,850
600,000 Cable and Wireless, Plc. ................................................................. 4,102,205
667,200 a Call-Net Enterprises, Inc., Class B ...................................................... 4,492,520
1,733,900 Central & South West Corp. ............................................................... 45,514,875
1,000,000 China Light & Power Co. .................................................................. 5,143,581
1,523,900 CINergy Corp. ............................................................................ 40,002,375
832,710 CIPSCO, Inc. ............................................................................. 24,877,211
445,150 Delmarva Power & Light Co. ............................................................... 9,125,575
1,253,450 Dominion Resources, Inc. ................................................................. 45,750,925
716,000 DPL, Inc. ................................................................................ 15,841,500
1,269,750 Duke Power Co. ........................................................................... 52,694,625
279,900 Empresa Nacional de Electricidad, ADR .................................................... 13,785,075
1,554,000 Entergy Corp. ............................................................................ 37,490,250
195,000 c Espoon Sahko Oy .......................................................................... 2,287,155
853,000 Florida Progress Corp. ................................................................... 26,656,250
1,201,300 FPL Group, Inc. .......................................................................... 46,400,213
1,621,100 General Public Utilities Corp. ........................................................... 48,227,725
55,600 a Grupo Iusacell, SA, Series D ............................................................. 53,910
144,440 a Grupo Iusacell, SA, Series L, ADR ........................................................ 1,733,280
1,040,840 GTE Corp. ................................................................................ 35,518,665
525,430 Hawaiian Electric Industries, Inc. ....................................................... 19,112,516
5,760,000 Hong Kong & China Gas Co., Ltd. .......................................................... 9,193,311
400,000 a Hong Kong & China Gas Co., Ltd., warrants ................................................ 60,999
2,500,000 Hong Kong Electric Holdings, Ltd. ........................................................ 8,497,247
138,000 a Huaneng Power International, Inc., ADR ................................................... 2,535,750
200,000 Iberdrola, SA ............................................................................ 1,505,882
345,600 Long Island Lighting Co. ................................................................. 5,356,800
1,017,450 New England Electric System .............................................................. 35,102,025
558,050 New York State Electric & Gas Corp. ...................................................... 13,044,419
749,900 NIPSCO Industries, Inc. .................................................................. 25,496,600
323,000 a Nynex Cablecomms Group, ADR .............................................................. 6,540,750
1,123,150 Pacific Gas & Electric Co. ............................................................... 32,571,350
125,825 Pacific Telesis Group .................................................................... 3,365,819
1,702,400 PacifiCorp ............................................................................... 31,920,000
199,000 Panhandle Eastern Corp. .................................................................. 4,850,625
846,900 Pinnacle West Capital Corp. .............................................................. 20,749,050
330,000 Portugal Telecom, SA, ADR ................................................................ 6,270,000
1,368,500 PP&L Resources, Inc. ..................................................................... 26,514,688
1,407,560 San Diego Gas & Electric Co. ............................................................. 29,206,870
290,000 SBC Communications, Inc. ................................................................. 13,811,250
1,773,160 SCANA Corp................................................................................ 39,674,455
1,424,700 SCEcorp ................................................................................. 24,397,988
590,000 Scottish Power, Plc. ..................................................................... 3,034,757
47,250 Sierra Pacific Resources ................................................................ 1,027,688
2,580,090 Southern Co. ............................................................................ 57,729,514
14,800 Southern Indiana Gas & Electric Co. ...................................................... 475,450
350,400 Southwestern Public Service Co. ......................................................... 10,336,800
697,000 STET - Societa Finanziaria Telefonica .................................................... 1,927,532
2,074,850 TECO Energy, Inc. ........................................................................ 45,387,344
315,000 Tele Danmark, A/S, ADS ................................................................... $ 8,820,000
115,000 Telecom de Argentina, ADR ................................................................ 5,232,500
170,000 Telefonos de Mexico, SA, ADR ............................................................. 5,036,250
69,000 a Telewest Communications, Plc., ADR ....................................................... 1,776,750
1,292,350 Texas Utilities Co. ..................................................................... 44,424,531
370,000 c Transportadora de Gas del Sul, SA, ADS ................................................... 3,885,000
30,000 Veba, Ag ................................................................................. 11,778,742
840,151 Williams Companies, Inc. ................................................................. 29,300,266
1,029,200 Wisconsin Energy Corp. ................................................................... 28,817,600
------------
Total Common Stocks & Warrants (Cost $1,240,726,804) ............................... 1,179,022,762
------------
Face
Amount
h,i Receivables from Repurchase Agreements 7.2%
$94,434,591 Joint Repurchase Agreement, 6.22%, 07/03/95 (Maturity Value $92,275,168) (Cost $92,227,364)
Collateral: U.S. Treasury Bills, 10/19/95 - 06/27/96
U.S. Treasury Notes, 3.875% - 8.625%, 09/30/95 - 02/15/00 ................... 92,227,364
------------
Total Investments (Cost $1,332,954,168) 99.5% ................................. 1,271,250,126
Other Assets and Liabilities, Net .5% ......................................... 6,553,937
------------
Net Assets 100.0 % ........................................................... $1,277,804,063
==============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $1,332,954,182 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ......................................................... $ 40,999,345
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ......................................................... (102,703,401)
------------
Net unrealized depreciation ............................................................ $ (61,704,056)
============
</TABLE>
<PAGE>
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
hFace amount for repurchase agreements is for the underlying collateral.
iSee Note 1(h) regarding Joint Repurchase Agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Shares,
Warrants Value
Country* & Rights Templeton Developing Markets Equity Fund (Note 1)
Common Stocks, Preferred Stocks, Warrants & Rights 87.5%..........................
Argentina 9.4%
<S> <C> <C> <C>
AR 368,000 Banco de Galicia y Buenos Aires, SA, Class B .................................... $ 1,461,325
AR 200,000 Banco Del Sud, SA, B ............................................................ 1,240,310
AR 135,000 Banco Frances del Rio de la Plata, SA ........................................... 810,203
AR 280,000 Ciadea, SA ...................................................................... 1,358,340
AR 904,000 a Comercial de Plata, SA .......................................................... 2,242,481
AR 396,539 Compania Naviera Perez Companc, SA, Class B ..................................... 1,665,881
AR 272,089 Molinos Rio de Plata, SA, Class B ............................................... 1,554,017
AR 21,007 Nobleza Piccardo Sociedad Industrial Comercial y Financial ...................... 86,150
AR 287,739 Sevel Argentina, SA, Class C .................................................... 532,450
AR 394,000 Transportadora de Gas del Sur, SA, Class B. ..................................... 807,902
US 38,000 YPF SA, ADR ..................................................................... 717,250
AR 2,841 Zanella Hermanos, SA ............................................................ 668
------------
12,476,977
------------
Bolivia 0.2%
BO 9,400 Compania Boliviana de Energia Electricas, SA .................................... 279,650
------------
Brazil 7.8%
BR 3,543,500 Banco do Brasil, SA ............................................................. 37,725
BR 60,000,000 Banco do Brasil, SA, pfd. ....................................................... 717,002
BR 70,668,700 Banespa-Banco do Estado de Sao Paulo, SA, pfd. .................................. 391,538
BR 2,000,000 Brasmotor, SA, pfd. ............................................................. 369,364
BR 7,484,000 Cia Mesbla, SA, pfd. ............................................................ 447,170
BR 116,700 Copene-Petroquimica do Nordeste, SA, Class A, pfd. .............................. 91,281
BR 8,585,000 Duratex, SA, pfd. ............................................................... 419,690
BR 9,529,000 Eletrobras-Centrais Eletricas Brasileiras, SA, Class B, pfd. .................... 2,567,292
BR 39,700 Mannesmann, SA, pfd. ............................................................ 10,399
BR 21,251,200 Petrobras-Petroleo Brasileiro, SA, pfd. ......................................... 1,800,754
BR 278,421,000 Refripar-Refrigeracao Parana, SA, pfd. .......................................... 541,416
BR 12,605,000 Telebras-Telecomunicacoes Brasileiras, SA ....................................... 357,404
BR 38,921,000 Telebras-Telecomunicacoes Brasileiras, SA, pfd. ................................. 1,298,071
BR 4,090,000 Telerj-Telecomunicacoes do Rio de Janeiro, SA, pfd. ............................. 204,389
BR 17,460,000 Unibanco-Uniao de Bancos Brasileiros, SA, pfd. .................................. 417,674
BR 4,000,000 Vale de Rio Doce, pfd. .......................................................... 599,674
------------
10,270,843
------------
China 2.9%
CN 346,000 China Southern Glass Co., Ltd., Class B ......................................... 219,106
CN 816,000 China Textile Machinery Co., Ltd., Class B ...................................... 106,080
CN 858,000 Chiwan Wharf Holdings Ltd., Class B. ............................................ 426,904
CN 508,000 Guangzhou Shipyard International Co., Ltd., Class H ............................. 213,368
CN 503,000 a Luoyang Glass Co., Ltd., Class H ................................................ 255,147
CN 93,400 Shandong Huaneng Power .......................................................... 712,175
CN 869,000 Shanghai Chlor-Alkali Chemical Co., Ltd., Class B ............................... 201,608
CN 252,000 Shanghai Industrial Sewing Machine Corp. ........................................ 46,368
CN 975,000 Shanghai Jin Jiang Tower Co., Ltd., Class B ..................................... 312,000
CN 360,000 Shanghai Jinqiao Export Processing Zone Development, Class B .................... 172,800
CN 98,000 Shanghai Refrigerator Compressor Co., Ltd., Class B ............................. 35,084
CN 1,078,000 Shanghai Vacuum Electron Devices Co., Ltd., Class B ............................. 219,912
CN 50,000 Shanghai Yaohua Pilkington Glass, Class B ....................................... 50,000
CN 262,000 Shenzhen Gintian Industrial Co., Ltd., Class B .................................. 108,351
<PAGE>
China (cont.)
CN 1,394,000 Shenzhen Vanke Co., Ltd., Class B ............................................... $ 486,417
CN 586,000 a Zhuhai Sez Lizhu Pharmaceutical, Class B ........................................ 258,247
------------
3,823,567
------------
Czechoslovakia 0.4%
CS 14,000 a CEZ, GDR ........................................................................ 518,000
------------
Greece 3.5%
GR 29,000 Alpha Credit Bank ............................................................... 1,610,968
GR 19,000 Alpha Leasing, SA ............................................................... 464,775
GR 2,000 Elais Oleaginous Co. ............................................................ 64,891
GR 9,000 Ergo Bank, SA ................................................................... 414,295
GR 32,200 Etba Leasing .................................................................... 591,469
GR 25,250 Hellas Can - Container Manufacturers ............................................ 477,284
GR 7,905 Hellenic Bottling Co., SA ....................................................... 234,858
GR 6,000 Intracom SA ..................................................................... 165,451
GR 3,000 National Bank of Greece, SA ..................................................... 163,850
GR 13,000 Titan Cement Co. ................................................................ 493,772
------------
4,681,613
------------
Hong Kong 15.7%
HK 506,000 Cheung Kong Holdings, Ltd. ...................................................... 2,504,562
HK 2,496,000 China Overseas Land & Investment, Ltd. .......................................... 499,987
HK 2,000,000 a China Pharmaceutical Enterprise & Investment Corp., Ltd. ........................ 209,362
HK 251,439 Dairy Farm International Holdings, Ltd. ......................................... 216,238
HK 407,000 Dickson Concepts (International), Ltd. .......................................... 243,270
HK 1,154,000 East Asiatic Co., (Hong Kong) Ltd. (The) ........................................ 161,069
HK 1,538,000 Fortei Holdings, Ltd. ........................................................... 87,456
HK 2,044,000 a Fu Hui Jewellery Co., (Hong Kong) Ltd. .......................................... 118,871
HK 1,044,000 Goldlion Holdings, Ltd. ......................................................... 330,559
HK 566,000 Great Wall Electronic International, Ltd. ....................................... 49,009
HK 987,000 a Hang Lung Development Co., Ltd. ................................................. 1,568,934
HK 59,900 a Hang Lung Development Co., Ltd., warrants ....................................... 10,296
HK 200,000 Hong Kong Electric Holdings, Ltd. ............................................... 679,780
HK 414,000 Hopewell Holdings, Ltd. ......................................................... 350,448
HK 204,628 HSBC Holdings Plc. .............................................................. 2,624,690
HK 320,000 Jardine International Motor Holdings, Ltd. ...................................... 314,301
HK 20,414 Jardine Matheson Holdings, Ltd. ................................................. 150,043
HK 194,625 Jardine Strategic Holdings, Ltd. ................................................ 626,693
HK 21,625 a Jardine Strategic Holdings, Ltd., warrants ...................................... 9,515
HK 178,000 a JCG Holdings, Ltd. .............................................................. 117,320
HK 1,873,206 K Wah International Holdings, Ltd. .............................................. 331,657
HK 2,162,000 Lai Sun Development Co., Ltd. ................................................... 265,437
HK 234,000 Lai Sun Garment International, Ltd. ............................................. 243,441
HK 1,450,000 Laws International Holdings, Ltd. ............................................... 252,979
HK 1,172,000 Le Saunda Holdings, Ltd. ........................................................ 86,335
HK 178,000 Li & Fung, Ltd. ................................................................. 133,423
HK 435,000 a Linkful International Holdings, Ltd. ............................................ 28,109
HK 700,000 Luks Industrial Co., Ltd. ....................................................... 75,086
HK 731,592 New World Development Co., Ltd. ................................................. 2,434,606
HK 1,626,000 S. Megga International Holdings, Ltd. ........................................... 109,271
HK 223,935 Semi-Tech (Global) Co., Ltd. .................................................... 360,308
Hong Kong (cont.)
HK 1,280,658 Stelux International Holdings, Ltd. ............................................. $ 376,528
HK 1,351,000 Sun Hung Kai & Co., Ltd. ........................................................ 506,333
HK 319,000 Sun Hung Kai Properties, Ltd. ................................................... 2,360,199
HK 2,123,000 Tian An China Investments Co., Ltd. ............................................. 329,241
HK 2,021,000 Top Form International, Ltd. .................................................... 188,053
HK 1,364,000 Tungtex (Holdings) Co., Ltd. .................................................... 255,602
HK 294,000 Vitasoy International Holdings, Ltd. ............................................ 116,836
HK 385,000 Wai Kee Holdings, Ltd. .......................................................... 73,141
HK 184,000 Wheelock & Co., Ltd. ............................................................ 305,565
HK 1,228,000 Wing Shan International, Ltd. ................................................... 165,048
HK 1,588,000 Wo Kee Hong Holdings, Ltd. ...................................................... 369,407
HK 300,000 Yaohan Hongkong Corp., Ltd. ..................................................... 24,426
HK 1,802,000 Yue Yuen Industrial (Holdings), Ltd. ............................................ 437,820
------------
20,701,254
------------
Indonesia 3.9%
ID 694,000 PT Anwar Sierad, fgn. ........................................................... 436,282
ID 52,500 PT Aqua Golden Mississippi, fgn. ................................................ 48,327
ID 371,000 PT Bank PDFCI, fgn. ............................................................. 224,899
ID 312,500 PT Charoen Pokphand Indonesia, fgn. ............................................. 680,568
ID 273,000 PT Duta Anggada Realty, fgn. .................................................... 220,656
ID 435,000 PT Gajah Surya Multi Finance, fgn. .............................................. 234,396
ID 829,600 PT Ganda Wangsa Utama, fgn. ..................................................... 288,702
ID 278,000 PT Hadtex Indosyntec, fgn. ...................................................... 181,006
ID 12,000 PT Inter-Pacific Bank, fgn. ..................................................... 8,015
ID 399,500 PT Jakarta International Hotel & Development, fgn. .............................. 502,290
ID 337,500 PT Japfa Comfeed Indonesia, fgn. ................................................ 234,901
ID 441,750 a PT Multibreeder Adirama, fgn. ................................................... 535,575
ID 105,000 PT Multipolar Corp., fgn. ....................................................... 63,651
ID 1,656,000 PT Polysindo Eka Perkasa, fgn. .................................................. 929,502
ID 468,000 a PT Pudjiadi Prestige, Ltd., fgn. ................................................ 309,969
ID 316,500 PT Summarecon Agung, fgn. ....................................................... 227,391
ID 68,200 PT Unggul Indah Corp., fgn. ..................................................... 61,248
------------
5,187,378
------------
Israel 1.4%
IL 200,774 a Bank Hapoalim BM ................................................................ 315,558
IL 82,827 Clal Industries, Ltd. ........................................................... 491,542
IL 13,018 a Discount Investment Corp. ....................................................... 829,753
IL 2,402 a The First International Bank of Israel .......................................... 296,690
------------
1,933,543
------------
Malaysia 1.7%
MY 40,000 Federal Flour Mills, Bhd. ....................................................... 132,486
MY 254,666 Malaysian International Shipping Corp., Bhd., fgn. .............................. 746,867
MY 8,600 Oriental Holdings, Bhd., fgn. ................................................... 45,857
MY 155,000 Perlis Plantations, Bhd., fgn. .................................................. 514,971
MY 683,000 Shangri-La Hotels (Malaysia), Bhd. .............................................. 784,413
------------
2,224,594
------------
<PAGE>
Mexico 12.8%
MX 649,000 Cemex, SA, Class B .............................................................. $ 2,341,592
MX 1,528,000 Cifra SA, Class C ............................................................... 2,014,515
MX 110,034 DESC, SA, Class B ............................................................... 365,313
MX 899,000 Grupo Financiero Banamex Accival, SA, Class B ................................... 1,366,480
MX 597,250 Grupo Financiero Banamex Accival, SA, Class L ................................... 907,820
MX 5,650,000 Grupo Financiero Bancomer, SA , Class B ......................................... 1,636,240
MX 209,259 Grupo Financiero Bancomer, SA, Class L .......................................... 55,244
MX 529,000 a Grupo Financiero Serfin, SA, rights ............................................. 1,123
MX 529,000 Grupo Financiero Serfin, SA, Class B ............................................ 369,030
MX 97,000 Telefonos de Mexico, SA, Class L ................................................ 143,094
US 196,200 Telefonos de Mexico, SA, Class L, ADR ........................................... 5,812,425
US 15,200 Transportacion Maritima Mexicana, SA, de CV, ADR, Class A ....................... 76,000
MX 87,835 a Tubos de Acero de Mexico, SA .................................................... 428,635
MX 457,200 Vitro, SA ....................................................................... 1,300,643
------------
16,818,154
------------
Philippines 0.5%
PH 195,810 Keppel Philippine Holdings Inc., Class B ........................................ 93,918
US 3,200 Philippine Long Distance Telephone Co., ADR ..................................... 229,600
PH 24,840 Philippine National Bank ........................................................ 289,346
------------
612,864
------------
Poland 0.7%
PL 13,000 Bank Przemyslowo-Handlowy, SA ................................................... 449,808
PL 120,000 a Elektrim Towarzystwo Handlowe, SA ............................................... 422,896
------------
872,704
------------
Portugal 6.2%
PT 45,600 Banco Chemical .................................................................. 458,494
PT 249,000 Banco Comercial Portugues, SA ................................................... 3,295,038
PT 83,000 Banco Espirito Santo e Comercial de Lisboa ...................................... 1,386,548
PT 79,000 Banco Portugues de Investimento, SA ............................................. 1,379,665
PT 31,000 Banco Totta & Acores, SA ........................................................ 656,869
US 83,840 Espirito Santo Financial Holding, SA, ADR ....................................... 974,640
------------
8,151,254
------------
Singapore 2.2%
SG 40,000 Acma, Ltd. ...................................................................... 127,084
SG 180,000 Acma, Ltd., fgn. ................................................................ 571,878
SG 55,000 First Capital Corp., Ltd., fgn. ................................................. 170,018
SG 72,000 G.P. Batteries International, Ltd. .............................................. 176,400
SG 276,000 Hai Sun Hup Group, Ltd. ......................................................... 165,896
SG 276,000 Hai Sun Hup Group, Ltd., new .................................................... 161,946
SG 167,000 Hinds Hotels International, Ltd. ................................................ 191,199
SG 191,000 Hinds Hotels International, Ltd., fgn. .......................................... 218,676
SG 120,000 a Hotel Properties, Ltd., fgn. .................................................... 212,093
SG 86,000 Inchcape, Bhd., fgn. ............................................................ 280,615
SG 85,000 Isetan, Ltd., fgn. .............................................................. 173,953
SG 132,000 a Osprey Maritime, Ltd. ........................................................... 260,040
SG 124,000 Wing Tai Holdings, Ltd., fgn. ................................................... 238,683
------------
2,948,481
------------
South Africa 2.9%
ZA 284,000 BTR Dunlop, Ltd. ................................................................ $ 464,710
ZA 333,800 Del Monte Royal Foods, Ltd. ..................................................... 449,810
ZA 197,067 Engen, Ltd. ..................................................................... 1,192,293
ZA 104,200 First National Bank Holdings, Ltd. .............................................. 666,250
ZA 37,561 Nedcor, Ltd. .................................................................... 454,502
ZA 83,000 Rembrandt Group, Ltd. ........................................................... 570,643
------------
3,798,208
------------
South Korea 1.3%
KR 24,000 Central Investment & Finance Corp. .............................................. 547,577
KR 39,010 Daegu Bank Co., Ltd. ............................................................ 467,657
KR 2,092 Daegu Bank Co., Ltd., new ....................................................... 23,700
KR 2,000 Daehan Synthetic Fiber Co., Ltd. ................................................ 329,706
KR 3,950 Hankook Cosmetics Co., Ltd. ..................................................... 151,072
KR 4,000 Ssangyong Oil Refining Co., Ltd. ................................................ 115,002
KR 1,000 Yuhwa Corp. ..................................................................... 54,072
------------
1,688,786
------------
Sri Lanka 0.1%
LK 36,000 Associated Motorways, Ltd. ...................................................... 36,468
------------
Thailand 5.3%
TH 24,000 American Standard Sanitaryware (THB) Public Co., Ltd.,fgn. ...................... 398,623
TH 23,000 Ayudhya Insurance Public Co., Ltd., fgn. ........................................ 171,906
TH 64,500 Bangkok Bank Public Co., Ltd. ................................................... 564,391
TH 413,000 Bangkok Land Co., Ltd., fgn. .................................................... 698,511
TH 25,000 Bank of Ayudhya, Ltd. ........................................................... 118,493
TH 75,000 Bank of Ayudhya, Ltd., fgn. ..................................................... 367,632
TH 24,000 Charoen Pokphand Feedmill Public Co., Ltd. ...................................... 142,921
TH 253,000 Chareon Pokphand Feedmill Public Co., Ltd., fgn. ................................ 1,537,371
TH 16,000 Hua Thai Manufacturing Public Co., Ltd. ......................................... 42,779
TH 73,600 Karat Sanitaryware Public Co., Ltd., fgn. ....................................... 287,721
TH 50,700 Kian Gwan Public Co., Ltd., fgn. ................................................ 156,095
TH 313,500 Royal Ceramic Industry Public Co., Ltd., fgn. ................................... 755,651
TH 80,600 Saha Pathanapibul Co., Ltd., fgn. ............................................... 154,278
TH 444,000 Saha Union Public Co., Ltd., fgn. ............................................... 714,969
TH 116,410 Thai Asahi Glass Public Co., Ltd. ............................................... 254,654
TH 45,200 Thai Rayon Public Co., Ltd. ..................................................... 395,511
TH 2,700 Thai Wacoal Public Co., Ltd. .................................................... 15,805
TH 14,900 Thai Wacoal Public Co., Ltd., fgn. .............................................. 121,325
TH 4,500 United Motor Works (Siam) Public Co., Ltd. ...................................... 20,782
------------
6,919,418
------------
Turkey 6.6%
TR 6,014,000 Akbank .......................................................................... 1,530,193
TR 2,267,500 a Akbank, new ..................................................................... 551,298
TR 800,000 a Aksigorta, AS ................................................................... 155,603
TR 216,000 a Anadolu Anonim Turk Sigorta Sirketi ............................................. 47,875
TR 1,612,894 Arcelik, AS ..................................................................... 492,459
TR 242,000 Bagfas Bandirma Gubre Fabrikalari, AS ........................................... 112,202
TR 2,898,724 Bekoteknik, AS .................................................................. 380,247
TR 784,250 a Cimentas Izmir Cimento Fabrikasi, AS ............................................ 505,510
TR 235,000 Cimsa Cimento Sanayi ve Ticaret, AS ............................................. 167,421
Turkey (cont.)
TR 9,000 Compagnie Financiere Ottomane, SA ............................................... $ 422,146
TR 271,000 a Dardanel Onentas. ............................................................... 674,206
TR 313,714 Izocam Ticaret ve Sanayii, AS, br ............................................... 73,790
TR 688,000 Koc Holding, AS ................................................................. 676,874
TR 1,906,400 Koc Yatirim ve Sanayii Mamullesi Pazarlanca, AS ................................. 592,853
TR 578,760 Marshall Boya ve Vernik Sanayii, AS ............................................. 85,083
TR 1,331,148 a Marshall Boya ve Vernik Sanayii, AS, new ........................................ 137,246
TR 85,000 Netas Northern Electric Telekomunic Asyon, AS ................................... 29,317
TR 328,800 Otosan Otomobil Sanayii, AS ..................................................... 120,841
TR 531,800 Tofas Turk Otomobil Fabrikasi, AS ............................................... 469,076
TR 507,838 a Trakya Cam Sanayii, AS .......................................................... 64,320
TR 1,257,838 a Trakya Cam Sanayii, AS, rights .................................................. 190,603
TR 1,765,676 a Trakya Cam Sanayii, AS, rights .................................................. 36,739
TR 2,223,944 Turk Demir Dokum, br ............................................................ 372,208
TR 1,668,000 a Turkiye Demir Dokum, rights ..................................................... 80,479
TR 5,191,400 Turkiye Garanti Bankasi, AS ..................................................... 704,476
TR 803,000 Vakif Finansal Kiralama, AS ..................................................... 86,266
------------
8,759,331
------------
m Venezuela 2.0%
VE 9,189 Banco Venezolano de Credito ..................................................... 275,197
VE 232,800 Ceramica Carabobo CA, Class A ................................................... 163,368
US 140,000 Ceramica Carabobo CA, Class A, ADR .............................................. 98,246
VE 250,000 Consolidada Carabobo, Class A ................................................... 23,496
VE 1,500,000 Consolidada Carabobo, Class B ................................................... 139,098
VE 760,124 Electricidad de Caracas ......................................................... 675,729
VE 60,000 Industrias Ventane .............................................................. 18,677
VE 10,000 Manufacturera de Aparatos Domesticos, SA ........................................ 17,544
US 183,000 Mavesa, SA, ADR ................................................................. 541,203
VE 50,000 Siderurgica Venezolana Sivensa Saica Svs ........................................ 14,160
US 101,550 Siderurgica Venezolana Sivensa Saica Svs., ADR .................................. 143,799
VE 301,600 Vencemos de Cementos, SA ........................................................ 362,827
VE 110,240 Venezolana de Cementos-Vencemos, #2 ............................................. 121,015
------------
2,594,359
------------
Total Common Stocks, Preferred Stocks, Warrants & Rights (Cost $121,818,851) 115,297,446
------------
g Short Term Investments 13.4%
US 17,831,000 U.S. Treasury Bills, 5.29% - 5.65%, 8/24/95 (Cost $17,697,523) .................. 17,710,254
------------
Total Investments (Cost $139,516,374) 100.9% ......................... 133,007,700
Liabilities in Excess of Other Assets, Net (.9%) ..................... (1,229,033)
------------
Net Assets 100.0% .................................................... $131,778,667
============
At June 30, 1995, the net unrealized depreciation based on the cost of investments
for income tax purposes of $139,516,374 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................ $ 8,129,724
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................ (14,638,398)
------------
Net unrealized depreciation ................................................... $ (6,508,674)
============
</TABLE>
COUNTRY LEGEND:
AR - Argentina
BO - Bolivia
BR - Brazil
CN - China
CS - Czechoslovakia
GR - Greece
HK - Hong Kong
ID - Indonesia
IL - Israel
KR - South Korea
LK - Sri Lanka
MX - Mexico
MY - Malaysia
PH - Philippines
PL - Poland
PT - Portugal
SG - Singapore
TH - Thailand
TR - Turkey
US - United States of America
VE - Venezuela
ZA - South Africa
<PAGE>
*Securities traded in currency of country indicated.
aNon-incoming producing.
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rate shown, payable at fixed dates or upon maturity.
mExchange rate to translate security values into U.S. dollars was estimated by
the Board of Trustees.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Value
Country* Shares Templeton Global Growth Fund (Note 1)
Common Stocks 85.0%
Argentina .9%
<S> <C> <C> <C>
US 120,000 YPF, SA, ADR .................................................................... $ 2,265,000
------------
Australia 5.8%
AU 250,000 BTR Nylex, Ltd. ................................................................. 477,984
AU 843,300 C.E. Heath International Holdings, Ltd. ......................................... 1,042,917
AU 950,000 Email, Ltd. ..................................................................... 2,315,986
AU 503,531 a News Corp., Ltd. ................................................................ 2,490,885
AU 2,149,000 Pacific Dunlop, Ltd. ............................................................ 4,521,124
AU 700,000 Renison Goldfields Consolidated, Ltd. ........................................... 2,213,993
AU 1,125,776 a Stanilite Pacific ............................................................... 1,280,237
AU 225,155 a Stanilite Pacific ............................................................... 120,022
------------
14,463,148
------------
Austria 3.7%
AT 30,000 a Boehler-Uddeholm, AG ............................................................ 2,075,975
AT 29,500 EVN Energie-Versorgung Niederoesterreich, AG .................................... 4,122,125
AT 25,000 a Mayr-Melnhof Karton, AG ......................................................... 1,445,072
AT 13,000 a,c VA Technologies, AG, Ord. ....................................................... 1,627,002
------------
9,270,174
------------
Bermuda 1.7%
US 80,000 ACE, Ltd. ....................................................................... 2,320,000
US 68,800 PartnerRe Ltd. .................................................................. 1,797,400
------------
4,117,400
------------
Brazil 1.5%
BR 72,000,000 Companhia Energetica de Minas Gerais ............................................ 1,407,930
US 75,000 Telebras-Telecomunicacoes Brasileiras, SA, ADR .................................. 2,470,313
------------
3,878,243
------------
Canada 1.5%
CA 40,000 Cameco Corp. .................................................................... 1,204,732
CA 9,700 Intrawest Corp. ................................................................. 82,966
US 37,000 a Newbridge Networks Corp. ........................................................ 1,304,250
CA 195,000 Primex Forest Products, Ltd. .................................................... 1,242,038
------------
3,833,986
------------
Colombia .1%
US 6,700 c Cementos Diamante, SA, ADR ...................................................... 194,300
------------
Czechoslovakia 1.2%
US 171,000 Komercni Banka, AS .............................................................. 3,014,730
------------
Denmark .4%
DK 20,000 Tele Denmark, A/S-B ............................................................. 1,111,420
------------
Finland 2.6%
FI 8,300 American Group, Ltd. ............................................................ 150,980
FI 285,000 Enso-Gutzeit OY ................................................................. 2,582,114
FI 54,000 Metsa-Serla OY .................................................................. 2,401,967
FI 65,000 a Outokumpu OY .................................................................... 1,080,417
FI 18,400 Repola OY ....................................................................... 387,686
------------
6,603,164
------------
France 4.4%
FR 30,000 Alcatel Alsthom ................................................................. 2,701,159
FR 40,814 AXA ............................................................................. 2,204,273
France (cont.)
FR 46,500 Banque Nationale de Paris ....................................................... $ 2,242,927
FR 15,000 Credit Foncier de France ........................................................ 1,660,397
FR 20,000 Pechiney International, SA ...................................................... 505,024
FR 21,296 Societe Elf Aquitane, SA ........................................................ 1,573,742
------------
10,887,522
------------
Germany .7%
DD 6,300 Volkswagen, AG .................................................................. 1,815,293
------------
Greece .7%
GR 27,200 Alpha Credit Bank ............................................................... 1,510,977
GR 4,400 a,c Alpha Credit Bank, Ord. ......................................................... 244,423
------------
1,755,400
------------
Hong Kong 2.5%
HK 400,000 Cheung Kong (Holdings), Ltd. .................................................... 1,979,891
HK 95,278 HSBC Holdings Corp. ............................................................. 1,222,097
HK 2,299,000 Oriental Press Group ............................................................ 928,478
HK 1,200,000 Shun Tak Holdings, Ltd. ......................................................... 953,759
HK 150,000 Swire Pacific, Ltd., Series A ................................................... 1,143,736
HK 75,000 Swire Pacific, Ltd., Series B ................................................... 91,111
------------
6,319,072
------------
India .5%
GB 720,000 India Fund (The), Ord., Series B ................................................ 1,356,590
------------
Indonesia .6%
US 22,900 a Asia Pacific Resources International Holdings, Ltd. ............................. 208,963
ID 843,000 P.T. Barito Pacific Timber ...................................................... 1,211,316
------------
1,420,279
------------
Italy 1.4%
IT 2,203,300 Autostrade Conc E Costr-Priv .................................................... 2,457,462
IT 150,000 Sirti, S.P.A. ................................................................... 1,112,819
------------
3,570,281
------------
Japan .2%
JP 48,000 Hitachi, Ltd. ................................................................... 478,387
------------
Mexico 1.2%
MX 1,400,000 Cifra, SA ....................................................................... 1,926,400
MX 400,000 Consorcio G Grupo Dina, SA ...................................................... 292,160
US 21,400 Telefonos de Mexico, ADR ........................................................ 633,975
US 24,000 Vitro, SA, ADR .................................................................. 207,000
------------
3,059,535
------------
Netherlands 2.8%
NL 56,500 a European Vinyls Corp., International NV ......................................... 2,632,656
NL 50,000 a Koninklijke Frans Maas Groep, NV ................................................ 1,510,165
NL 15,000 a Koninklijke Nedlloyd Groep, NV .................................................. 511,133
NL 40,575 International Nederlanden Group, Ord. ........................................... 2,244,129
------------
6,898,083
------------
<PAGE>
Norway 1.4%
NO 45,000 Hafslund Nycomed Free, Series B ................................................. $ 1,040,652
NO 180,600 Helikopter Service, AS .......................................................... 2,344,693
------------
3,385,345
------------
New Zealand 1.9%
NZ 560,000 Fisher & Paykel Industries, Ltd. ................................................ 1,647,312
US 110,000 Fletcher Challenge, Ltd. ........................................................ 3,088,712
------------
4,736,024
------------
Philippines .5%
PH 99,890 Philippine National Bank ........................................................ 1,163,558
------------
South Korea 1.1%
KR 17,000 Byucksan Corp. .................................................................. 318,365
KR 11,227 a Keumkang, Ltd. .................................................................. 997,956
KR 30,000 a Shinhan Bank .................................................................... 617,211
KR 1,000 Tae Kwang Industrial Co., Ltd. .................................................. 764,919
------------
2,698,451
------------
Spain 3.8%
ES 8,000 Banco Bilbao Vizcaya, SA ........................................................ 230,836
ES 4,400 Banco Popular Espanol ........................................................... 653,870
ES 75,000 Banco Santander, SA ............................................................. 2,956,656
ES 63,900 a Cristaleria Espanola, SA ........................................................ 3,640,124
ES 260,000 Iberdrola, SA ................................................................... 1,957,647
------------
9,439,133
------------
Sweden 4.1%
SE 35,000 Asea, AB A-F .................................................................... 3,016,661
SE 50,000 a Assidoman, AB ................................................................... 1,075,661
SE 26,500 a Autoliv, Ord. ................................................................... 1,417,054
SE 56,700 Pharmacia, AB-A . ............................................................... 1,243,182
SE 95,000 Pharmacia, AB-B, Ord. ........................................................... 2,063,344
SE 68,000 Volvo AB, Ord., Series B ........................................................ 1,294,642
------------
10,110,544
------------
Switzerland 2.3%
CH 5,700 Ciba-Geigy, Ltd. ................................................................ 4,177,855
CH 157 Reiseburo Kuoni, AG ............................................................. 252,236
CH 700 Societe Generale de Surveila Holdings, SA ....................................... 1,215,805
------------
5,645,896
------------
Thailand 1.5%
TH 1,166,666 Industrial Finance of Thailand .................................................. 3,072,039
TH 256,100 MDX Public Co., Ltd. ............................................................ 596,546
------------
3,668,585
------------
Turkey .4%
US 75,000 Turkish Growth Fund ............................................................. 984,375
------------
United Kingdom 3.7%
GB 220,000 Argyll Group, Plc. .............................................................. 1,175,330
GB 1,300,000 a Cordiant, Plc. .................................................................. 2,160,018
GB 986,800 Dawson International, Plc. ...................................................... 1,804,366
GB 256,000 Govett & Co., Plc. .............................................................. 1,119,361
<PAGE>
United Kingdom (cont.)
GB 400,000 Lex Service, Plc. ............................................................... $ 2,194,203
GB 150,000 News International, Plc. ........................................................ 725,041
------------
9,178,319
------------
United States 29.9%
US 16,200 Aflac, Inc. ..................................................................... 708,750
US 105,000 a AK Steel Holdings Corp. ......................................................... 2,861,250
US 339,000 a Banner Aerospace, Inc. .......................................................... 1,695,000
US 68,900 CCP Insurance, Inc. ............................................................. 1,567,475
US 42,000 Citicorp ........................................................................ 2,430,750
US 35,000 Dayton Hudson Corp. ............................................................. 2,511,250
US 92,300 Dean Witter Discover & Co. ...................................................... 4,338,100
US 46,000 DeLuxe Corp. .................................................................... 1,523,750
US 64,800 a DSC Communications Corp. ........................................................ 3,013,200
US 89,000 Edwards (A.G.), Inc. ............................................................ 2,002,500
US 58,500 Entergy Corp. ................................................................... 1,411,313
US 9,000 Federal National Mortgage Association ........................................... 849,375
US 35,000 First Chicago Corp. ............................................................. 2,095,625
US 80,000 Ford Motor Co. .................................................................. 2,380,000
US 49,500 a Fruit of the Loom, Inc., Class A ................................................ 1,045,688
US 89,000 General Growth Properties ....................................................... 1,813,375
US 65,000 General Public Utilities Corp. .................................................. 1,933,750
US 28,200 Georgia Pacific Corp. ........................................................... 2,446,350
US 70,000 Goodyear Tire & Rubber .......................................................... 2,887,500
US 8,800 International Business Machines Corp. ........................................... 844,800
US 130,000 Limited (The), Inc. ............................................................. 2,860,000
US 47,000 Merrill Lynch & Co. ............................................................. 2,467,500
US 20,000 Mobil Corp. ..................................................................... 1,920,000
US 32,000 National Health Investors, Inc. ................................................. 872,000
US 15,200 Nike, Inc., Class B ............................................................. 1,276,800
US 157,000 a OMI Corp. ....................................................................... 1,040,125
US 50,000 a Owens-Corning Fiberglas Corp. ................................................... 1,843,750
US 70,000 Peco Energy Co. ................................................................. 1,933,750
US 24,000 Reliastar Financial Corp. ....................................................... 918,000
US 80,000 Rouse Co. ....................................................................... 1,570,000
US 78,000 Sun Company, Inc. ............................................................... 2,135,250
US 130,000 Syms Corp. ...................................................................... 942,500
US 30,000 Texaco, Inc. .................................................................... 1,968,750
US 75,000 Torchmark Corp. ................................................................. 2,831,250
US 70,000 Travelers Group, Inc. ........................................................... 3,062,500
US 69,200 UNUM Corp. ...................................................................... 3,243,750
US 81,000 Valero Energy Corp. ............................................................. 1,640,250
US 72,400 Weeks Corp. ..................................................................... 1,810,000
------------
74,695,976
------------
Total Common Stocks (Cost $202,528,100) ................................... 212,018,213
------------
Preferred Stocks .1%
Mexico
US 6,500 Nacional Financiera, SA, cvt. pfd. (Cost $392,356) .............................. 203,929
------------
Total Common Stocks and Preferred Stocks (Cost $202,920,456) .............. 212,222,142
------------
<PAGE>
Bonds 3.1%
India .1%
US 200,000 c Gujarat Ambuja Cement, cvt., 3.50%, 06/30/99 .................................... $ 267,000
------------
Italy .8%
IT 2,950,000 c Softe, SA, cvt., 4.25%, 07/30/98 ................................................ 2,032,773
------------
Mexico .3%
US 1,210,000 Empresas Ica Sociedad, cvt., 5.00%, 03/15/04 .................................... 653,400
------------
Switzerland .2%
US 365,000 CS Holding Finance, cvt., 4.875%, 11/19/02 ...................................... 516,475
------------
Thailand .8%
US 3,602,000 MDX Public Co., Ltd., cvt., 4.75%, 09/17/03 ..................................... 2,107,170
------------
United Kingdom .9%
GB 1,388,000 National Power Co., Plc., cvt., 6.25%, 09/23/08 ................................. 2,317,269
------------
Total Bonds (Cost $7,555,312) ............................................. 7,894,087
------------
Total Investments Before Repurchase Agreements (Cost $210,475,768) ........ 220,116,229
------------
h Receivables from Repurchase Agreements
US 8,915,000 Lehman Brothers Securities, 6.20%, 07/03/95 (Maturity Value $9,309,808)
Collateral: U.S. Treasury Notes, 7.50%, 10/31/99 ............................... 9,305,000
US 10,490,000 Lehman Brothers Securities, 6.20%, 07/03/95 (Maturity Value $11,005,683)
Collateral: U.S. Treasury Notes, 7.75%, 11/30/99 ............................... 11,000,000
US 20,509,000 Nikko Securities Co. International, Inc., 6.10%, 07/03/95 (Maturity Value $20,010,167)
Collateral: U.S. Treasury Notes, 5.875%, 06/30/00 .............................. 20,000,000
------------
Total Receivables from Repurchase Agreements (Cost $40,305,000) ........... 40,305,000
------------
Total Investments (Cost $250,780,768) 104.3% ......................... 260,421,229
Liabilities in Excess of Other Assets, Net (4.3)% .................... (10,667,280)
------------
Net Assets 100.0% .................................................... $249,753,949
============
At June 30, 1995 the net unrealized appreciation based on the cost of investments
for income tax purposes of $250,793,331 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................. $ 18,841,746
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................. (9,213,848)
------------
Net unrealized appreciation .................................................... $ 9,627,898
============
</TABLE>
COUNTRY LEGEND:
AU - Australia
AT - Austria
BR - Brazil
CA - Canada
CH - Switzerland
DD - Germany
DK - Denmark
ES - Spain
FI - Finland
FR - France
GB - United Kingdom
GR - Greece
HK - Hong Kong
<PAGE>
ID - Indonesia
IT - Italy
JP - Japan
KR - South Korea
MX - Mexico
NL - Netherland
<PAGE>
NO - Norway
NZ - New Zealand
PH - Philippines
SE - Sweden
TH - Thailand
US - United States of America
*Securities traded in currency of country indicated.
aNon-income producing.
cSee Note 8 regarding Rule 144A securities.
hFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Statement of Investments in Securities and Net Assets, June 30, 1995 (unaudited)
(cont.)
<TABLE>
<CAPTION>
Shares,
Warrants Value
Country* &Rights Templeton Global Asset Allocation Fund (Note 1)
Common Stocks 31.1%
Argentina .6%
<S> <C> <C> <C>
US 500 Telecom Argentina Stet France, SA, ADR .............................................. $ 22,750
------------
Australia .3%
AU 2,000 Goldfields, Ltd. .................................................................... 6,326
AU 2,550 Pacific Dunlop, Ltd. ................................................................ 5,365
------------
11,691
------------
Austria .7%
AT 400 Bohler Uddeholm, AG ................................................................. 27,680
------------
Bermuda .8%
US 620 ACE, Ltd. ........................................................................... 17,980
US 600 PartnerRe, Ltd. ..................................................................... 15,675
------------
33,655
------------
Canada .6%
CA 1,200 Hudsons Bay Co. ..................................................................... 23,803
------------
Denmark .6%
DK 400 Tele Danmark AS-B ................................................................... 22,228
------------
Finland 3.1%
FI 5,000 Enso Gutzeit Oy ..................................................................... 45,300
FI 750 Metsa Serla Oy ...................................................................... 33,361
FI 1,200 Outokumpu Oy ........................................................................ 19,946
FI 1,100 Repola Oy ........................................................................... 23,177
------------
121,784
------------
France 2.2%
FR 600 Banque Nationale de Paris ........................................................... 28,941
FR 400 Societe Elf Aquitane, SA ............................................................ 59,119
------------
88,060
------------
Germany .6%
DD 80 Volkswagen, AG ...................................................................... 23,051
------------
Hong Kong 1.7%
HK 2,000 Cheung Kong Holdings, Ltd. .......................................................... 9,899
HK 61,000 Grand Hotel Holdings, Ltd. .......................................................... 20,103
HK 56,000 Hon Kwok Land Investment Co., Ltd. .................................................. 15,560
HK 88,000 Yue Yuen Industrial (Holdings), Ltd. ................................................ 21,381
------------
66,943
------------
Indonesia .6%
US 2,600 a Asia Pacific Resources International, Class A ....................................... 23,725
------------
Italy .7%
IT 10,000 STET - Societe Finanziaria Telefonica ............................................... 27,746
------------
Mexico 1.3%
MX 14,100 Cifra, SA, Series B ................................................................. 19,402
US 3,000 Empresas ICA Sociedad Controladora, SA, ADR ......................................... 30,750
------------
50,152
------------
Netherlands .6%
NL 400 International Nederlanden Group ..................................................... 22,123
------------
Norway .8%
NO 900 Hafslund Nycomed, SA, Class B ....................................................... 30,063
------------
Spain 1.5%
ES 5,200 Iberdrola, SA ....................................................................... $ 39,153
ES 1,750 Telefonica de Espana, SA ............................................................ 22,539
------------
61,692
------------
Sweden 1.9%
SE 1,000 Pharmacia, AB, Series B ............................................................. 21,719
SE 1,600 Skandia Foersaekrings, AB ........................................................... 31,012
SE 1,650 Svenska Handelsbanken, Class A ...................................................... 24,610
------------
77,341
------------
Switzerland 1.5%
CH 80 Ciba-Geigy, AG ...................................................................... 58,637
------------
United Kingdom .9%
GB 4,000 Dawson International, Plc. .......................................................... 7,314
GB 5,000 Lex Service, Plc. ................................................................... 27,428
------------
34,742
------------
United States 10.1%
US 1,960 a AK Steel Holdings Corp. ............................................................. 53,410
US 600 Chemical Banking Corp. .............................................................. 28,350
US 900 Citicorp ............................................................................ 52,088
US 500 Dayton-Hudson Corp. ................................................................. 35,875
US 800 General Public Utilities Corp. ...................................................... 23,800
US 1,400 Limited (The), Inc. ................................................................. 30,800
US 1,800 Peco Energy Co. ..................................................................... 49,725
US 1,200 Sun Co., Inc. ....................................................................... 32,850
US 700 Texas Utilties Electric Co. ......................................................... 24,063
US 2,400 Valero Energy Corp. ................................................................. 48,600
US 800 Weeks Corp. ......................................................................... 20,000
------------
399,561
------------
Total Common Stocks (Cost $1,216,947) ......................................... 1,227,427
------------
Face
Amount
Bonds 30.9%
Australia 1.2%
AU 75,000 Treasury Corp. of Victoria, 8.25%, 10/15/03 ......................................... 49,966
------------
Canada 5.8%
CA 140,000 Government of Canada, 10.50%, 3/01/01 ............................................... 115,057
CA 150,000 Government of Canada, 8.50%, 4/01/02 ................................................ 113,394
------------
228,451
------------
France 1.0%
FR 90,000 Government of France, 8.50%, 3/28/00 ................................................ 19,530
FR 84,000 Government of France, 9.50%, 1/25/01 ................................................ 19,036
------------
38,566
------------
Germany 4.8%
DD 100,000 Deutsche Bundespost, 7.75%, 10/01/04 ................................................ 74,657
DD 150,000 Federal Republic of Germany, 8.00%, 7/22/02 ......................................... 115,141
------------
189,798
------------
United States 18.1%
US 200,000 U.S. Treasury Bond, 7.625%, 2/15/25 ................................................. $ 225,874
US 454,000 U.S. Treasury Notes, 7.50% - 8.00%, 11/15/01 ........................................ 487,236
------------
713,110
------------
Total Bonds (Cost $1,228,757) ................................................. 1,219,891
------------
g Short Term Investments 53.0%
US 400,000 Swiss Bank Corp., 5.875%, 7/05/95 ................................................... 400,000
US 1,707,000 U.S. Treasury Bills, 5.10% - 5.67%, 9/21/95 ......................................... 1,695,892
------------
Total Short Term Investments (Cost $2,094,746) ................................ 2,095,892
------------
Total Investments (Cost $4,540,450) 115.0% ............................... 4,543,210
Liabilities in Excess of Other Assets, Net (15.0)% ....................... (593,961)
------------
Net Assets 100.0% ........................................................ $3,949,249
============
At June 30, 1995, the net unrealized appreciation based on the cost of
investments for income tax purposes of $4,540,450
was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost....................................... $ 34,376
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value....................................... (31,616)
------------
Net unrealized appreciation..................................................... $ 2,760
============
</TABLE>
COUNTRY LEGEND:
AU - Australia
AT - Austria
CA - Canada
CH - Switzerland
DD -Germany
DK - Denmark
ES - Spain
FI - Finland
FR - France
GB - United Kingdom
HK - Hong Kong
IT - Italy
MX - Mexico
NL - Netherland
NO - Norway
SE - Sweden
US - United States of America
<PAGE>
*Securities traded in currency of country indicated.
aNon-income producing.
gCertain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rate shown, payable at fixed dates or upon maturity.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements
Statements of Assets and Liabilities
June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Investment Grade
Adjustable U.S. Global High Intermediate Precious
Government Fund Income Fund Income Fund Bond Fund Metals Fund
----------- ---------- ---------- ---------- ----------
Assets:
Investments in securities:
<S> <C> <C> <C> <C> <C>
At identified cost................................. $199,317,722 $200,584,572 $309,595,120 $119,569,876 $101,223,940
=========== ========== ========== ========== ==========
At value........................................... 197,139,430 200,352,750 313,901,280 120,959,960 106,520,694
Receivables from repurchase agreements, at value
and cost............................................ 5,345,052 2,214,878 3,309,490 41,546,914 17,893,412
Cash................................................ -- 123,096 912,144 -- --
Foreign currencies (Cost $20 and $581,474
respectively)....................................... -- -- 21 -- 583,178
Receivables:
Dividends and interest............................. 1,840,292 6,380,841 6,879,032 1,450,782 363,395
Investment securities sold......................... 502,952 57,048,895 762,625 -- --
Capital shares sold................................ 387,534 98,550 3,635,424 64,850 59,172
----------- ---------- ---------- ---------- ----------
Total assets................................... 205,215,260 266,219,010 329,400,016 164,022,506 125,419,851
----------- ---------- ---------- ---------- ----------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery.................................. 193,777 15,930,076 1,803,082 -- 1,189,760
Capital shares repurchased......................... 525,564 384,382 236,968 196,705 420,214
Payable upon return of securities loaned (Note 7).. -- -- -- -- 3,522,933
Management fees.................................... 94,073 113,441 140,753 77,336 60,346
Accrued expenses and other liabilities.............. 32,844 132,373 84,440 20,744 20,393
Unrealized loss on forward foreign currency contracts
(Note 2)............................................ -- 102,581 -- -- --
----------- ---------- ---------- ---------- ----------
Total liabilities.............................. 846,258 16,662,853 2,265,243 294,785 5,213,646
----------- ---------- ---------- ---------- ----------
Net assets, at value................................. $204,369,002 $249,556,157 $327,134,773 $163,727,721 $120,206,205
=========== ========== ========== ========== ==========
Net assets consist of:
Undistributed net investment income................. $ 6,863,087 $ 21,490,539 $ 14,178,595 $ 4,256,980 $ 1,055,659
Unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated
in foreign currencies............................... (2,178,292) (311,729) 4,303,943 1,390,084 5,297,137
Net realized gain (loss) from investments and foreign
currency transactions............................... (12,385,784) (23,899,523) 78,811 (832,870) (209,740)
Capital shares...................................... 196,965 196,947 253,068 121,117 86,515
Additional paid-in capital.......................... 211,873,026 252,079,923 308,320,356 158,792,410 113,976,634
----------- ---------- ---------- ---------- ----------
Net assets, at value................................. $204,369,002 $249,556,157 $327,134,773 $163,727,721 $120,206,205
=========== ========== ========== ========== ==========
Shares outstanding................................... 19,696,457 19,694,746 25,306,809 12,111,684 8,651,478
=========== ========== ========== ========== ==========
Net asset value per share............................ $10.38 $12.67 $12.93 $13.52 $13.89
=========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1995 (unaudited)
Real Estate U.S. Government Zero Coupon Zero Coupon Zero Coupon Zero Coupon
Securities Fund Securities Fund Fund - 1995 Fund - 2000 Fund - 2005 Fund - 2010
---------- ----------- --------- ---------- --------- ---------
Assets:
Investments in securities:
<S> <C> <C> <C> <C> <C> <C>
At identified cost....................... $180,507,470 $612,429,247 $46,541,886 $113,547,576 $62,401,615 $59,216,585
========== =========== ========= ========== ========= =========
At value................................. 185,721,113 621,305,766 46,827,666 121,997,621 69,044,678 68,043,263
Receivables from repurchase agreements,
at value and cost......................... 10,788,431 27,594,289 67,351 683,442 1,436,222 382,559
Receivables:
Dividends and interest................... 1,525,226 4,903,707 -- -- -- --
Investment securities sold............... -- 50,209 -- -- -- --
Capital shares sold...................... 61,586 329,812 -- 168,246 22,442 266,798
Prepaid expenses.......................... -- -- -- -- 943 --
---------- ----------- --------- ---------- --------- ---------
Total assets......................... 198,096,356 654,183,783 46,895,017 122,849,309 70,504,285 68,692,620
---------- ----------- --------- ---------- --------- ---------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery.......................... 2,530,000 -- -- -- -- --
When-issued basis (Note 1)................ -- 14,971,833 -- -- -- --
Capital shares repurchased............... 217,003 657,838 108,313 102,538 185,615 57,969
Management fees.......................... 91,086 257,197 14,092 37,302 25,354 22,748
Accrued expenses and other liabilities.... 21,192 43,198 4,748 2,996 -- 546
---------- ----------- --------- ---------- --------- ---------
Total liabilities.................... 2,859,281 15,930,066 127,153 142,836 210,969 81,263
---------- ----------- --------- ---------- --------- ---------
Net assets, at value....................... $195,237,075 $638,253,717 $46,767,864 $122,706,473 $70,293,316 $68,611,357
========== =========== ========= ========== ========= =========
Net assets consist of:
Undistributed net investment income....... $ 4,590,888 $ 21,028,030 $ 1,646,492 $ 3,500,814 $ 2,003,725 $ 1,975,556
Unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies......... 5,213,643 8,876,519 285,780 8,450,045 6,643,063 8,826,678
Net realized gain (loss) from investments
and foreign currency transactions......... (3,276,490) (15,939,270) 184,727 46,962 (34,364) 209,780
Capital shares............................ 126,533 484,189 39,941 82,750 44,693 43,843
Additional paid-in capital................ 188,582,501 623,804,249 44,610,924 110,625,902 61,636,199 57,555,500
---------- ----------- --------- ---------- --------- ---------
Net assets, at value....................... $195,237,075 $638,253,717 $46,767,864 $122,706,473 $70,293,316 $68,611,357
========== =========== ========= ========== ========= =========
Shares outstanding......................... 12,653,322 48,418,913 3,994,139 8,274,992 4,469,268 4,384,338
========== =========== ========= ========== ========= =========
Net asset value per share.................. $15.43 $13.18 $11.71 $14.83 $15.73 $15.65
========== =========== ========= ========== ========= =========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1995 (unaudited)
Templeton Templeton
Money Growth and Income International Pacific
Market Fund Income Fund Securities Fund Equity Fund Growth Fund
---------- ---------- ----------- ---------- ----------
Assets:
Investments in securities:
<S> <C> <C> <C> <C> <C>
At identified cost................................ $373,777,184 $559,447,075 $ 935,149,380 $749,827,021 $312,407,970
========== ========== =========== ========== ==========
At value.......................................... 373,777,184 585,960,447 928,380,671 758,429,985 303,579,674
Receivables from repurchase agreements, at value
and cost........................................... 69,695,000 73,679,937 208,537,565 46,338,658 41,772,903
Cash............................................... 2,632 98,083 737,530 -- 6,706
Foreign currencies (Cost $6,943,016 and $3,337,531
respectively)...................................... -- -- -- 6,994,463 3,340,889
Receivables:
Dividends and interest............................ 327,046 2,019,881 13,911,836 6,567,222 2,220,674
Investment securities sold........................ -- 11,958,970 2,235,101 6,628,388 873,333
Capital shares sold............................... 4,809,332 1,729,633 1,139,302 428,935 476,684
---------- ---------- ----------- ---------- ----------
Total assets.................................. 448,611,194 675,446,951 1,154,942,005 825,387,651 352,270,863
---------- ---------- ----------- ---------- ----------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery................................. -- 12,512,982 7,697,813 375,245 358,691
When-issued basis (Note 1)....................... -- 1,190,780 -- -- --
Capital shares repurchased........................ 1,870,316 572,463 1,077,268 2,467,215 3,448,570
Management fees................................... 135,487 262,190 439,324 560,746 268,029
Accrued expenses and other liabilities............. 56,418 79,866 145,787 194,493 149,201
---------- ---------- ----------- ---------- ----------
Total liabilities............................. 2,062,221 14,618,281 9,360,192 3,597,699 4,224,491
---------- ---------- ----------- ---------- ----------
Net assets, at value................................ $446,548,973 $660,828,670 $1,145,581,813 $821,789,952 $348,046,372
========== ========== =========== ========== ==========
Net assets consist of:
Undistributed net investment income................ $-- $ 6,996,439 $ 42,647,312 $ 14,448,719 $ 4,017,794
Unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated
in foreign currencies.............................. -- 26,513,372 (6,755,856) 8,660,682 (8,803,567)
Net realized gain (loss) from investments and foreign
currency transactions.............................. -- 56,017,419 (5,562,657) 20,616,415 3,254,868
Capital shares..................................... 4,465,490 444,834 759,695 633,418 263,917
Additional paid-in capital......................... 442,083,483 570,856,606 1,114,493,319 777,430,718 349,313,360
---------- ---------- ----------- ---------- ----------
Net assets, at value................................ $446,548,973 $660,828,670 $1,145,581,813 $821,789,952 $348,046,372
========== ========== =========== ========== ==========
Shares outstanding.................................. 446,548,973 44,483,398 75,969,473 63,341,751 26,391,706
========== ========== =========== ========== ==========
Net asset value per share........................... $1.00 $14.86 $15.08 $12.97 $13.19
========== ========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Assets and Liabilities (cont.)
June 30, 1995 (unaudited)
Templeton
Developing Templeton Templeton
Rising Utility Markets Global Global Asset
Dividends Fund Equity Fund Equity Fund Growth Fund Allocation Fund
---------- ----------- ---------- ---------- ----------
Assets:
Investments in securities:
<S> <C> <C> <C> <C> <C>
At identified cost................................. $263,698,257 $1,240,726,804 $139,516,374 $210,475,768 $4,540,450
========== =========== ========== ========== ==========
At value........................................... 292,640,429 1,179,022,762 133,007,700 220,116,229 4,543,210
Receivables from repurchase agreements, at value
and cost............................................ 86,852,308 92,227,364 -- 40,305,000 --
Cash................................................ -- -- 256,176 146,551 108,667
Foreign currencies (Cost $1,162,054)................ -- -- -- 1,164,641 --
Receivables:
Dividends and interest............................. 954,877 5,795,252 359,512 943,935 38,797
Investment securities sold......................... 553,122 2,647,238 275,771 1,172,147 --
Capital shares sold................................ 654,734 382,415 28,010 752,662 20,662
---------- ----------- ---------- ---------- ----------
Total assets................................... 381,655,470 1,280,075,031 133,927,169 264,601,165 4,711,336
---------- ----------- ---------- ---------- ----------
Liabilities:
Payables:
Investment securities purchased.................... 1,473,452 -- 1,816,335 14,130,802 759,660
Capital shares repurchased......................... 182,062 1,601,691 -- 395,358 --
Management fees.................................... 235,259 494,151 133,185 186,373 1,643
Accrued expenses and other liabilities.............. 9,672 175,126 198,982 134,683 784
---------- ----------- ---------- ---------- ----------
Total liabilities.............................. 1,900,445 2,270,968 2,148,502 14,847,216 762,087
---------- ----------- ---------- ---------- ----------
Net assets, at value................................. $379,755,025 $1,277,804,063 $131,778,667 $249,753,949 $3,949,249
========== =========== ========== ========== ==========
Net assets consist of:
Undistributed net investment income................. $ 4,875,819 $ 34,070,742 $ 2,022,227 $ 3,668,986 $ 18,459
Unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated
in foreign currencies............................... 28,942,172 (61,703,837) (6,508,674) 9,639,249 3,045
Net realized gain (loss) from investments and foreign
currency transactions............................... (14,935,347) (12,152,360) 1,672,864 839,659 6,166
Capital shares...................................... 341,980 831,749 134,264 223,591 3,898
Additional paid-in capital.......................... 360,530,401 1,316,757,769 134,457,986 235,382,464 3,917,681
---------- ----------- ---------- ---------- ----------
Net assets, at value................................. $379,755,025 $1,277,804,063 $131,778,667 $249,753,949 $3,949,249
========== =========== ========== ========== ==========
Shares outstanding................................... 34,198,020 83,174,930 13,426,438 22,359,102 389,786
========== =========== ========== ========== ==========
Net asset value per share............................ $11.10 $15.36 $9.81 $11.17 $10.13
========== =========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Operations
for the six months ended June 30, 1995 (unaudited)
Adjustable U.S. Investment Grade
Government Global High Intermediate Precious Real Estate U.S. Government
Fund Income Fund Income Fund Bond Fund Metals FundSecurities FundSecurities Fund
---------- --------- --------- ----------- -------- ---------- -----------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest1 (Note 1)......... $ 7,522,207 $10,506,886 $15,014,580 $4,748,306 $ 527,710 $ 356,994 $22,686,570
Dividends2................. -- 416,425 -- -- 922,464 4,811,572 --
---------- --------- --------- ----------- -------- ---------- -----------
Total income.......... 7,522,207 10,923,311 15,014,580 4,748,306 1,450,174 5,168,566 22,686,570
---------- --------- --------- ----------- -------- ---------- -----------
Expenses:
Management fees, net
(Note 6)................... 600,724 676,404 784,348 455,097 354,448 536,256 1,491,677
Reports to shareholders.... 19,193 24,530 26,571 11,353 6,482 12,647 37,572
Custodian fees............. 15,420 151,230 35,474 9,854 24,836 11,914 32,824
Professional fees.......... 6,376 5,233 8,959 4,021 3,379 4,358 12,070
Trustees' fees and
expenses................... 1,705 1,386 2,601 973 778 1,268 3,352
Other...................... 13,969 16,335 39,593 9,822 4,454 10,055 15,235
---------- --------- --------- ----------- -------- ---------- -----------
Total expenses........ 657,387 875,118 897,546 491,120 394,377 576,498 1,592,730
---------- --------- --------- ----------- -------- ---------- -----------
Net investment
income..................... 6,864,820 10,048,193 14,117,034 4,257,186 1,055,797 4,592,068 21,093,840
---------- --------- --------- ----------- -------- ---------- -----------
Realized and unrealized
gain (loss) from investments
and foreign currency:
Net realized gain (loss)
from:
Investments............. (1,464,056) (9,993,605) 276,325 250,016 (211,086) (1,773,394) (1,121,164)
Foreign currency
transactions............... -- (365,894) (6,332) -- 1,346 -- --
Net unrealized appreciation
(depreciation) on:
Investments............. 6,242,815 19,266,321 22,251,531 4,458,711 (402,604) 4,978,979 51,778,319
Translation of assets and
liabilities denominated
in foreign currencies...... -- (64,248) (2,927) -- 546 -- --
---------- --------- --------- ----------- -------- ---------- -----------
Net realized and unrealized
gain (loss) from investments
and foreign currencies..... 4,778,759 8,842,574 22,518,597 4,708,727 (611,798) 3,205,585 50,657,155
---------- --------- --------- ----------- -------- ---------- -----------
Net increase in net assets
resulting from operations.. $11,643,579 $18,890,767 $36,635,631 $8,965,913 $ 443,999 $ 7,797,653 $71,750,995
========== ========= ========= =========== ======== ========== ===========
1Net of foreign taxes withheld of $29,886 in the Global Income Fund.
2Net of foreign taxes withheld of $59,163 in the Precious Metals Fund.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Operations (cont.)
for the six months ended June 30, 1995 (unaudited)
Income
Zero Coupon Zero Coupon Zero Coupon Zero Coupon Money Growth and Securities
Fund - 1995 Fund - 2000 Fund - 2005 Fund - 2010 Market Fund Income Fund Fund
-------- --------- --------- --------- --------- --------- ----------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest (Note 1)................ $1,746,772 $ 3,719,831 $ 2,127,901 $ 2,091,479 $14,266,818 $ 1,027,068 $ 32,535,396
Dividends3....................... -- -- -- -- -- 7,527,699 12,895,428
-------- --------- --------- --------- --------- --------- ----------
Total income................ 1,746,772 3,719,831 2,127,901 2,091,479 14,266,818 8,554,767 45,430,824
-------- --------- --------- --------- --------- --------- ----------
Expenses:
Management fees, net (Note 6).... 89,247 204,117 114,757 109,556 864,226 1,426,993 2,488,992
Reports to shareholders.......... 3,182 4,974 3,003 1,507 15,365 55,231 62,935
Custodian fees................... 4,754 5,067 2,862 2,202 13,030 33,576 154,269
Professional fees................ 1,474 2,145 1,479 1,265 4,278 10,874 18,950
Trustees' fees and expenses...... 258 501 288 201 1,295 3,303 6,652
Other............................ 1,123 2,205 1,635 1,051 23,305 33,256 45,124
-------- --------- --------- --------- --------- --------- ----------
Total expenses.............. 100,038 219,009 124,024 115,782 921,499 1,563,233 2,776,922
-------- --------- --------- --------- --------- --------- ----------
Net investment income...... 1,646,734 3,500,822 2,003,877 1,975,697 13,345,319 6,991,534 42,653,902
-------- --------- --------- --------- --------- --------- ----------
Realized and unrealized gain (loss)
from investments and foreign
currency:
Net realized gain (loss) from:
Investments.................... 184,961 46,978 -- 557,271 -- 56,693,276 (954,835)
Foreign currency transactions.. -- -- -- -- -- (54) (4,607,822)
Net unrealized appreciation on:
Investments................... 366,990 10,785,884 9,051,881 9,880,024 -- 17,747,754 84,142,248
Translation of assets and
liabilities denominated in
foreign currencies............... -- -- -- -- -- -- 326,273
-------- --------- --------- --------- --------- --------- ----------
Net realized and unrealized gain
from investments and foreign
currencies....................... 551,951 10,832,862 9,051,881 10,437,295 -- 74,440,976 78,905,864
-------- --------- --------- --------- --------- --------- ----------
Net increase in net assets resulting
from operations.................. $2,198,685 $14,333,684 $11,055,758 $12,412,992 $13,345,319 $81,432,510 $121,559,766
======== ========= ========= ========= ========= ========= ==========
3Net of foreign taxes withheld of $30,934 in the Growth and Income Fund and
$85,117 in the Income Securities Fund.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Operations (cont.)
for the six months ended June 30, 1995 (except as noted) (unaudited)
Templeton
Templeton Templeton Developing Templeton Templeton
International Pacific Rising Utility Markets Global Global Asset
Equity Fund Growth FundDividends Fund Equity Fund Equity Fund Growth FundAllocation Fund*
--------- -------- ---------- ---------- -------- --------- ----------
Investment income:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest (Note 1)............. $ 4,299,606 $1,182,366 $ 1,822,369 $ 3,293,188 $ 684,709 $ 2,479,974 $17,911
Dividends4.................... 13,925,488 4,846,596 4,384,529 33,962,092 1,879,872 2,226,298 3,854
--------- -------- ---------- ---------- -------- --------- ----------
Total income............. 18,225,094 6,028,962 6,206,898 37,255,280 2,564,581 4,706,272 21,765
--------- -------- ---------- ---------- -------- --------- ----------
Expenses:
Management fees, net (Note 6). 3,226,902 1,602,256 1,289,676 2,880,222 686,915 939,521 2,357
Adminstration fees (Note 6)... -- -- -- -- -- -- 545
Custodian fees................ 363,938 217,665 15,146 105,802 112,846 39,695 220
Reports to shareholders....... 33,624 18,983 16,408 87,405 3,000 3,240 100
Professional fees............. 10,595 6,454 5,169 22,462 6,000 2,187 75
Trustees' fees and expenses... 3,444 1,681 1,626 7,963 1,000 413 --
Other......................... 20,210 15,949 2,416 75,689 983 -- 9
--------- -------- ---------- ---------- -------- --------- ----------
Total expenses........... 3,658,713 1,862,988 1,330,441 3,179,543 810,744 985,056 3,306
--------- -------- ---------- ---------- -------- --------- ----------
Net investment income... 14,566,381 4,165,974 4,876,457 34,075,737 1,753,837 3,721,216 18,459
--------- -------- ---------- ---------- -------- --------- ----------
Realized and unrealized gain
(loss) from investments and
foreign currency:
Net realized gain (loss) from:
Investments................. 20,453,217 3,255,474 128,547 (1,643,130) 2,372,297 1,216,691 7,565
Foreign currency
transactions.................. 163,198 (606) -- (24,137) (429,446) (107,670) (1,399)
Net unrealized appreciation
(depreciation) on:
Investments................ 23,457,004 543,305 38,849,907 114,314,448 903,138 10,291,137 2,760
Translation of assets and
liabilities denominated in
foreign currencies............ 83,556 20,836 -- (4,003) -- 13,394 285
--------- -------- ---------- ---------- -------- --------- ----------
Net realized and unrealized gain
from investments and foreign
currencies.................... 44,156,975 3,819,009 38,978,454 112,643,178 2,845,989 11,413,552 9,211
--------- -------- ---------- ---------- -------- --------- ----------
Net increase in net assets
resulting from operations..... $58,723,356 $7,984,983 $43,854,911 $146,718,915 $4,599,826 $15,134,768 $27,670
========= ======== ========== ========== ======== ========= ==========
4Net of foreign taxes withheld of $1,716,083, $316,209, $60,061, $238,818,
$135,148, $304,832 and $--, respectively.
*April 19, 1995 (effective date) to June 30, 1995.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets for the six months ended June 30, 1995
(unaudited) and the year ended December 31, 1994
Adjustable U.S.
Government Fund Global Income Fund High Income Fund
--------------------- --------------------- ---------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income................. $ 6,864,820 $ 13,539,572 $ 10,048,193 $ 20,521,047 $ 14,117,034 $ 21,545,420
Net realized gain (loss) from
investments and foreign currency
transactions.......................... (1,464,056) (8,446,100) (10,359,499) (13,480,259) 269,993 (191,182)
Net realized gain on expired written
foreign currency options.............. -- -- -- 90,000 -- --
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies..... 6,242,815 (5,701,721) 19,202,073 (21,215,816) 22,248,604 (25,640,770)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
operations............................ 11,643,579 (608,249) 18,890,767 (14,085,028) 36,635,631 (4,286,532)
Distributions to shareholders from:
Undistributed net investment income... (13,455,726) (12,817,214) (9,275,584) (6,910,568) (21,305,944) (10,514,139)
Net realized capital gains............ -- -- -- (2,846,724) -- (1,428,550)
Increase (decrease) in net assets from
capital share transactions (Note 3)... (33,514,288) (50,262,985) (14,369,834) 71,559,545 56,768,637 74,294,093
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets................................ (35,326,435) (63,688,448) (4,754,651) 47,717,225 72,098,324 58,064,872
Net assets:
Beginning of period................... 239,695,437 303,383,885 254,310,808 206,593,583 255,036,449 196,971,577
---------- ---------- ---------- ---------- ---------- ----------
End of period......................... $204,369,002 $239,695,437 $249,556,157 $254,310,808 $327,134,773 $255,036,449
========== ========== ========== ========== ========== ==========
Undistributed net investment income
included in net assets:
Beginning of period.................. $ 13,453,993 $ 12,731,635 $ 20,717,930 $ 7,107,451 $ 21,367,505 $ 10,336,224
========== ========== ========== ========== ========== ==========
End of period........................ $ 6,863,087 $ 13,453,993 $ 21,490,539 $ 20,717,930 $ 14,178,595 $ 21,367,505
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994
Investment Grade Real Estate
Intermediate Bond Fund Precious Metals Fund Securities Fund
---------------------- ---------------------- ----------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income................. $ 4,257,186 $ 6,714,564 $ 1,055,797 $ 1,704,724 $ 4,592,068 $ 6,462,652
Net realized gain (loss) from
investments and foreign currency
transactions.......................... 250,016 (1,082,886) (209,740) 1,420,070 (1,773,394) (1,257,107)
Net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
denominated in foreign currencies..... 4,458,711 (4,836,222) (402,058) (5,612,042) 4,978,979 (3,752,188)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
operations............................ 8,965,913 795,456 443,999 (2,487,248) 7,797,653 1,453,357
Distributions to shareholders from:
Undistributed net investment income... (6,603,637) (4,060,614) (1,664,389) (595,781) (6,411,953) (1,877,913)
Net realized capital gains............ -- (625,307) (1,232,041) -- -- --
Increase (decrease) in net assets from
capital share transactions (Note 3)... 6,466,709 35,413,004 (2,419,723) 54,586,633 (1,845,300) 103,443,157
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets................................ 8,828,985 31,522,539 (4,872,154) 51,503,604 (459,600) 103,018,601
Net assets:
Beginning of period................... 154,898,736 123,376,197 125,078,359 73,574,755 195,696,675 92,678,074
---------- ---------- ---------- ---------- ---------- ----------
End of period......................... $163,727,721 $154,898,736 $120,206,205 $125,078,359 $195,237,075 $195,696,675
========== ========== ========== ========== ========== ==========
Undistributed net investment
income included in net assets:
Beginning of period.................. $ 6,603,431 $ 3,949,481 $ 1,682,044 $ 573,101 $ 6,410,773 $ 1,826,034
========== ========== ========== ========== ========== ==========
End of period........................ $ 4,256,980 $ 6,603,431 $ 1,055,659 $ 1,682,044 $ 4,590,888 $ 6,410,773
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994
U.S. Government
Securities Fund Zero Coupon Fund - 1995 Zero Coupon Fund - 2000
---------------------- -------------------- ---------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
---------- ----------- --------- --------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income................... $ 21,093,840 $ 43,497,492 $ 1,646,734 $ 3,277,939 $ 3,500,822 $ 5,342,935
Net realized gain (loss) from investments (1,121,164) (14,818,106) 184,961 15,796 46,978 (16)
Net unrealized appreciation (depreciation)
on investments.......................... 51,778,319 (60,874,526) 366,990 (2,943,148) 10,785,884 (10,807,581)
---------- ----------- --------- --------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations........ 71,750,995 (32,195,140) 2,198,685 350,587 14,333,684 (5,464,662)
Distributions to shareholders from:
Undistributed net investment income..... (43,440,615) (32,225,955) (3,252,328) (2,968,120) (5,282,548) (3,929,502)
Net realized capital gains.............. -- (2,520,838) (16,034) (121,482) -- (559,100)
Increase (decrease) in net assets from
capital share transactions (Note 3)..... 30,904,252 (38,322,399) (3,303,069) 4,918,560 19,425,173 27,267,700
---------- ----------- --------- --------- ---------- ----------
Net increase (decrease) in net assets.. 59,214,632 (105,264,332) (4,372,746) 2,179,545 28,476,309 17,314,436
Net assets:
Beginning of period..................... 579,039,085 684,303,417 51,140,610 48,961,065 94,230,164 76,915,728
---------- ----------- --------- --------- ---------- ----------
End of period........................... $638,253,717 $579,039,085 $46,767,864 $51,140,610 $122,706,473 $94,230,164
========== =========== ========= ========= ========== ==========
Undistributed net investment
income included in net assets:
Beginning of period.................... $ 43,374,805 $ 32,103,268 $ 3,252,086 $ 2,942,267 $ 5,282,540 $ 3,869,107
========== =========== ========= ========= ========== ==========
End of period.......................... $ 21,028,030 $ 43,374,805 $ 1,646,492 $ 3,252,086 $ 3,500,814 $ 5,282,540
========== =========== ========= ========= ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994
Zero Coupon Fund - 2005 Zero Coupon Fund - 2010 Money Market Fund
-------------------- -------------------- ---------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
--------- --------- --------- --------- ---------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income..................... $ 2,003,877 $ 2,941,524 $ 1,975,697 $ 2,088,467 $ 13,345,319 $ 15,558,725
Net realized gain (loss) from investments. -- (34,363) 557,271 (247,797) -- (7,568)
Net unrealized appreciation (depreciation)
on investments............................ 9,051,881 (7,078,603) 9,880,024 (4,693,017) -- --
--------- --------- --------- --------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations................. 11,055,758 (4,171,442) 12,412,992 (2,852,347) 13,345,319 15,551,157
Distributions to shareholders from:
Undistributed net investment income....... (2,941,626) (1,813,740) (2,074,389) (1,275,410) (13,345,319) (15,551,157)
Net realized capital gains................ -- (566,970) -- (618,973) -- --
Increase (decrease) in net assets from
capital share transactions (Note 3)....... 10,680,307 15,053,117 12,911,672 20,918,804 (72,069,413) 387,084,518
--------- --------- --------- --------- ---------- -----------
Net increase (decrease) in net assets.... 18,794,439 8,500,965 23,250,275 16,172,074 (72,069,413) 387,084,518
Net assets:
Beginning of period....................... 51,498,877 42,997,912 45,361,082 29,189,008 518,618,386 131,533,868
--------- --------- --------- --------- ---------- -----------
End of period............................. $70,293,316 $51,498,877 $68,611,357 $45,361,082 $446,548,973 $518,618,386
========= ========= ========= ========= ========== ===========
Undistributed net investment income included in net assets:
Beginning of period...................... $ 2,941,474 $ 1,813,835 $ 2,074,248 $ 1,261,191 $-- $--
========= ========= ========= ========= ========== ===========
End of period............................ $ 2,003,725 $ 2,941,474 $ 1,975,556 $ 2,074,248 $-- $--
========= ========= ========= ========= ========== ===========
+Distributions were decreased by net realized loss from security transactions of
$7,568.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994
Templeton International
Growth and Income Fund Income Securities Fund Equity Fund
--------------------- ------------------------ ---------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
---------- ---------- ----------- ----------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income............. $ 6,991,534 $ 8,306,522 $ 42,653,902 $ 68,219,530 $ 14,566,381 $ 13,760,599
Net realized gain (loss) from
investments and foreign currency
transactions...................... 56,693,222 16,759,522 (5,562,657) 948,127 20,616,415 16,941,223
Net unrealized appreciation
(depreciation) on investments
and translation of assets and
liabilities denominated in foreign
currencies........................ 17,747,754 (36,767,195) 84,468,521 (129,155,214) 23,540,560 (46,356,706)
---------- ---------- ----------- ----------- ---------- ----------
Net increase (decrease) in
net assets resulting from
operations........................ 81,432,510 (11,701,151) 121,559,766 (59,987,557) 58,723,356 (15,654,884)
Distributions to shareholders from:
Undistributed net investment
income............................ (8,012,172) (3,190,611) (63,454,169) (28,168,693) (13,634,404) (1,765,449)
Net realized capital gains........ (17,435,325) (6,567,213) (5,103,693) (4,210,527) (16,891,097) (3,177,968)
Increase in net assets from capital
share transactions (Note 3)....... 86,966,611 167,852,487 92,577,531 354,427,242 8,467,623 495,576,867
---------- ---------- ----------- ----------- ---------- ----------
Net increase in net assets....... 142,951,624 146,393,512 145,579,435 262,060,465 36,665,478 474,978,566
Net assets:
Beginning of period............... 517,877,046 371,483,534 1,000,002,378 737,941,913 785,124,474 310,145,908
---------- ---------- ----------- ----------- ---------- ----------
End of period..................... $660,828,670 $517,877,046 $1,145,581,813 $1,000,002,378 $821,789,952 $785,124,474
========== ========== =========== =========== ========== ==========
Undistributed net investment
income included in net assets:
Beginning of period.............. $ 8,017,077 $ 2,901,166 $ 67,603,145 $ 27,552,308 $ 13,466,616 $ 1,471,466
========== ========== =========== =========== ========== ==========
End of period.................... $ 6,996,439 $ 8,017,077 $ 42,647,312 $ 67,603,145 $ 14,448,719 $ 13,466,616
========== ========== =========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994
Templeton
Pacific Growth Fund Rising Dividends Fund Utility Equity Fund
--------------------- --------------------- ------------------------
Six months Year ended Six months Year ended Six months Year ended
ended 6/30/95 12/31/94 ended 6/30/95 12/31/94 ended 6/30/95 12/31/94
---------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income............. $ 4,165,974 $ 6,901,186 $ 4,876,457 $ 8,185,971 $ 34,075,737 $ 71,196,799
Net realized gain (loss) from
investments and foreign currency
transactions...................... 3,254,868 2,433,153 128,547 (11,756,980) (1,667,267) (10,481,962)
Net unrealized appreciation
(depreciation) on investments
and translation of assets and
liabilities denominated in foreign
currencies........................ 564,141 (40,845,737) 38,849,907 (8,689,799) 114,310,445 (241,583,439)
---------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in
net assets resulting from
operations........................ 7,984,983 (31,511,398) 43,854,911 (12,260,808) 146,718,915 (180,868,602)
Distributions to shareholders from:
Undistributed net investment
income............................ (6,625,099) (798,003) (8,063,908) (5,040,932) (70,961,297) (52,184,345)
Net realized capital gains........ (2,753,036) (1,475,399) -- -- -- (9,240,534)
Increase (decrease) in net assets
from capital share transactions
(Note 3).......................... (26,392,546) 193,734,840 34,034,995 27,500,542 46,935,956 (192,230,223)
---------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in net
assets............................ (27,785,698) 159,950,040 69,825,998 10,198,802 122,693,574 (434,523,704)
Net assets:
Beginning of period............... 375,832,070 215,882,030 309,929,027 299,730,225 1,155,110,489 1,589,634,193
---------- ---------- ---------- ---------- ----------- -----------
End of period..................... $348,046,372 $375,832,070 $379,755,025 $309,929,027 $1,277,804,063 $1,155,110,489
========== ========== ========== ========== =========== ===========
Undistributed net investment
income included in net assets:
Beginning of period.............. $ 6,796,802 $ 693,619 $ 8,063,270 $ 4,918,231 $ 70,953,514 $ 51,941,060
========== ========== ========== ========== =========== ===========
End of period.................... $ 4,017,794 $ 6,796,802 $ 4,875,819 $ 8,063,270 $ 34,070,742 $ 70,953,514
========== ========== ========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended June 30, 1995 (unaudited)
and the year ended December 31, 1994 (except as noted)
Templeton
Templeton Developing Templeton Global Global Asset
Markets Equity Fund Growth Fund Allocation Fund
--------------------- --------------------- ----------
Six months Period ended Six months Period ended Period ended
ended 6/30/95 12/31/94* ended 6/30/95 12/31/94* 6/30/95**
---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C> <C>
Net investment income................................ $ 1,753,837 $ 758,368 $ 3,721,216 $ 1,453,560 $ 18,459
Net realized gain (loss) from investments and foreign
currency transactions................................ 1,942,851 (154,856) 1,109,021 (451,023) 6,166
Net unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currencies.................... 903,138 (7,411,812) 10,304,531 (672,201) 3,045
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations...................................... 4,599,826 (6,808,300) 15,134,768 330,336 27,670
Distributions to shareholders from:
Undistributed net investment income.................. (489,978) -- (1,324,712) -- --
Net realized capital gains........................... (115,131) -- -- -- --
Increasein net assets from capital share transactions
(Note 3)............................................. 29,595,069 104,997,081 77,087,805 158,018,150 3,421,579
---------- ---------- ---------- ---------- ----------
Net increase in net assets.......................... 33,589,786 98,188,781 90,897,861 158,348,486 3,449,249
Net assets:
Beginning of period.................................. 98,188,881 100 158,856,088 507,602 500,000
---------- ---------- ---------- ---------- ----------
End of period........................................ $131,778,667 $ 98,188,881 $249,753,949 $158,856,088 $3,949,249
========== ========== ========== ========== ==========
Undistributed net investment income included in net assets:
Beginning of period................................. $ 758,368 $-- $ 1,454,896 $ 1,336 $ --
========== ========== ========== ========== ==========
End of period....................................... $ 2,022,227 $ 758,368 $ 3,668,986 $ 1,454,896 $ 18,459
========== ========== ========== ========== ==========
</TABLE>
*March 15, 1994 (effective date) to December 31, 1994.
**April 19, 1995 (effective date) to June 30, 1995.
The accompanying notes are an integral part of these financial statements.
FRANKLIN VALUEMARK FUNDS
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Valuemark Funds (the Trust) is an open-end diversified management
investment company (mutual fund) registered under the Investment Company Act of
1940 as amended. The Trust currently consists of twenty-one separate funds (the
Funds). Each of the Funds issues a separate series of the Trust's shares and
maintains a totally separate investment portfolio. Shares of the Funds are sold
only to insurance company separate accounts to fund the benefits of variable
life insurance policies or variable annuity contracts issued by Allianz Life
Insurance Company of North America (Allianz Life), which was formerly North
American Life and Casualty Company (NALAC), and its affiliates.
On May 1, 1995. the Board of Trustees approved the name change of Equity Growth
Fund to Growth and Income Fund.
The Zero Coupon Fund - 1995 will mature on December 15, 1995. As the Fund
approaches maturity, the liabilities of the Fund will be discharged, or a
provision made thereof and the net assets will consist of money market
instruments. These instruments will be sold or allowed to mature. If the
investor does not complete an instruction form directing what should be done
with the liquidation proceeds, the proceeds will be automatically invested in
the Money Fund and the Policyholders will be notified of such event. The
estimated expenses of terminating and liquidating a Fund will be accrued ratably
over the year of 1995. These expenses, which are charged to income as are all
expenses, are not expected to exceed significantly the ordinary annual expenses
incurred by the Fund and, therefore, should have no significant additional
effect on the maturity value of the Fund.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuation:
Portfolio securities listed on a securities exchange or on the NASDAQ National
Market System for which market quotations are readily available are valued at
the last quoted sale price of the day or, if there is no such reported sale,
within the range of the most recent quoted bid and asked prices. Other
securities for which market quotations are readily available are valued at
current market values, obtained from pricing services, which are based on a
variety of factors, including recent trades, institutional size trading in
similar types of securities (considering yield, risk and maturity) and/or
developments related to specific securities. Portfolio securities which are
traded both in the over-the-counter market and on a securities exchange are
valued according to the broadest and most representative market as determined by
the Manager. Other securities for which market quotations are not available, if
any, are valued in accordance with procedures established by the Board of
Trustees.
The value of a foreign security is determined as of the close of trading on the
foreign exchange on which it is traded or as of the close of trading on the New
York Stock Exchange, if that is earlier, and that value is then converted into
its U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked price
is used. Occasionally, events which affect the values of foreign securities and
foreign exchange rates may occur between the times at which they are determined
and the close of the exchange and will, therefore, not be reflected in the
computation of the Fund's net asset value, unless material. If events which
materially affect the value of these foreign securities occur during such
period, then these securities will be valued in accordance with procedures
established by the Board of Trustees.
The fair values of securities restricted as to resale, if any, are determined
following procedures established by the Board of Trustees.
Portfolio securities in the Money Market Fund are valued at amortized cost,
which approximates value. The Money Market Fund must maintain a dollar weighted
average maturity of 90 days or less and only purchase instruments having
remaining maturities of 397 days or less. If the Fund's portfolio has a
remaining weighted average maturity of greater than 90 days, the portfolio will
be stated at value based on recorded closing sales on a national securities
exchange or, in the absence of a recorded sale, within the range of the most
recent quoted bid and asked prices. The Trustees have established procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00.
b. Income Taxes:
The Trust intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income taxes. Therefore, no income tax provision is required. Each Fund
is treated as a separate entity in the determination of compliance with the
Internal Revenue Code.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification for both financial statement
and income tax purposes.
Net realized capital gains or losses differ for financial statement and tax
purposes primarily due to differing treatments of wash sale and realized gain or
loss on foreign currency transactions.
d. Investment Income, Expenses and Distributions:
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income and estimated expenses are accrued daily. Bond
discount and premium, if any, are amortized as required by the Internal Revenue
Code.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
d. Investment Income, Expenses and Distributions: (cont.)
For the Money Market Fund, net investment income includes income, calculated on
an accrual basis, amortization of original issue and market discount or premium
(if any), and estimated expenses which are accrued daily. The total available
for dividends is computed daily and includes the net investment income, plus or
minus any gains or losses on security transactions and changes in unrealized
portfolio appreciation or depreciation, (if any).
A portion of the distributions received from investments in real estate
investment trust (REIT) securities may be characterized as tax basis return of
capital (ROC) distributions, which are not recorded as dividend income, but
reduce the cost basis of the REIT securities. ROC distributions exceeding the
cost basis of the REIT security are recognized by the Fund as capital gain.
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of realized gain/loss on foreign currency
transactions.
e. Expense Allocation:
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
f. Foreign Currency Translation:
The accounting records of the Trust are maintained in U. S. dollars. All assets
and liabilities denominated in foreign currencies are translated into U. S.
dollars at the rate of exchange of such currencies against U. S. dollars on the
date of the valuation. Purchases and sales of securities, income and expenses
are translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are recognized when reported by the custodian
bank.
The Trust does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade date and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Trust's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
appreciation/depreciation on translation of assets and liabilities denominated
in foreign currencies arise from changes in the value of assets and liabilities
other than investments in securities at the end of the period, resulting from
changes in exchange rates.
g. Securities Traded on a When-Issued or Delayed Delivery Basis:
The Trust may trade securities on a when-issued or delayed delivery basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Trust will
generally purchase these securities with the intention of acquiring such
securities, it may sell such securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Trust has set aside sufficient investment
securities as collateral for these purchase commitments.
h. Repurchase Agreements:
The Trust may enter into a Joint Repurchase Agreement whereby each Fund's
uninvested cash balance is deposited into a joint cash account to be used to
invest in one or more repurchase agreements with government securities dealers
recognized by the Federal Reserve Board and/or member banks of the Federal
Reserve System. The value and face amount of the Joint Repurchase Agreement are
allocated to the Funds based on their pro rata interest.
In a repurchase agreement, the Trust purchases a U. S. Government security from
a dealer or bank subject to an agreement to resell it at a mutually agreed upon
price and date. Such a transaction is accounted for as a loan by the Trust to
the seller, collateralized by the underlying security. The transaction requires
the initial collateralization of the seller's obligation by U.S. Government
securities with market value, including accrued interest, of at least 102% of
the dollar amount invested by the Trust, with the value of the underlying
security marked to market daily to maintain coverage of at least 100%. The
collateral is delivered to the Trust's custodian and held until resold to the
dealer or bank. At June 30, 1995, all outstanding repurchase agreements held by
the Trust had been entered into on that date.
i. Mortgage Dollar Rolls:
The U.S. Government Securities Fund may enter into mortgage dollar rolls in
which the Fund sells mortgage-backed securities and simultaneously contracts to
repurchase substantially similar, but not identical, securities on a specified
future date, generally at a price lower than the price of the security sold. The
counterparty receives all principal and interest payments, including
prepayments, made on the mortgage-backed security sold while it is the holder.
Mortgage dollar rolls may be renewed with a new sale and repurchase price fixed
and a cash settlement made without physical delivery of the securities subject
to the contract, at the renewal date. Mortgage dollar rolls are accounted for as
non-collateralized financing transactions.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
j. Indexed Securities:
The Fund may invest in debt instruments in which the prinicpal and/or interest
is dependent on another factor such as a yield curve, currency exchange rates or
commodity prices. The Fund's objective in holding these securities, commonly
called structured notes, is to tailor the Fund's instruments to the specific
risk and returns it wishes to assume while avoiding unwanted risk or change the
Fund's exposure to a particular foreign exchange rate or the spread between two
foreign exchange rates.
2. FORWARD FOREIGN CURRENCY CONTRACTS
A forward currency contract, which is individually negotiated and privately
traded by currency traders and their customers, is a commitment to purchase or
sell a specific currency for an agreed-upon price at a future date.
The Global Income Fund may enter into forward contracts with the objective of
minimizing the risk to the Fund from adverse changes in the relationship between
currencies or to enhance income. The Fund may also enter into a forward contract
in relation to a security denominated in a foreign currency or when it
anticipates receipt in a foreign currency of dividends or interest payments in
order to "lock in" the U. S. dollar price of a security or the U.S. dollar
equivalent of such dividend or interest payments.
Any gain or loss realized from a forward currency contract is recorded as a
realized gain or loss from investments. See the accompanying Statement of
Operations for the fund's total realized gains or losses from investments during
the period.
The Fund segregates in its custodian bank sufficient cash, cash equivalents or
readily marketable debt securities as collateral for commitments created by open
forward contracts. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably.
As of June 30, 1995, the Global Income Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
In Unrealized
Contracts to Sell Exchange for Settlement Date gain (loss)
-------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
10,300,000 Deutsche Marks................ U.S. $7,355,304 07/31/95 U.S. $(102,581)
========== =========
3. TRUST SHARES
At June 30,1995, there was an unlimited number of $.01 par value shares
authorized. Transactions in each of the Fund's shares for the six months ended
June 30,1995 and the year ended December 31, 1994 were as follows:
Adjustable U.S.
Government Fund Global Income Fund High Income Fund
-------------------- ------------------- --------------------
Shares Amount Shares Amount Shares Amount
----------------- ------------- ------------ ------------- ------------- -------------
Six months ended June 30, 1995
<S> <C> <C> <C> <C> <C> <C>
Shares sold................................. 1,908,436 $ 20,663,644 622,121 $ 7,805,221 1,733,022 $ 22,877,605
Shares issued in reinvestment of distributions 1,296,313 13,455,726 732,090 9,275,584 1,649,067 21,305,944
Shares redeemed............................. (1,703,491) (18,410,577) (1,423,712) (17,865,287) (1,785,004) (23,369,450)
Changes from exercise of exchange privilege:
Shares sold................................ 830,307 9,007,737 499,801 6,252,971 4,382,921 56,936,681
Shares redeemed............................ (5,393,603) (58,230,818) (1,599,038) (19,838,323) (1,564,606) (20,982,143)
----------------- ------------- ------------ ------------ ------------ -------------
Net increase (decrease)................ (3,062,038) $ (33,514,288) (1,168,738) $(14,369,834) 4,415,400 $ 56,768,637
================= ============= ============ ============= ============ =============
Year ended December 31, 1994
Shares sold................................. 12,010,675 $130,272,592 6,738,386 $ 87,098,849 6,522,474 $ 82,707,638
Shares issued in reinvestment of distributions 1,214,917 12,817,214 793,928 9,757,292 983,734 11,942,689
Shares redeemed............................. (3,521,496) (37,802,677) (1,832,803) (22,920,629) (2,213,669) (27,309,521)
Changes from exercise of exchange privilege:
Shares sold................................ 3,897,925 42,013,145 3,166,736 41,540,055 9,933,704 123,304,003
Shares redeemed............................ (18,312,792) (197,563,259) (3,523,661) (43,916,022) (9,335,197) (116,350,716)
----------------- ------------- ----------- ------------- ------------ -------------
Net increase (decrease)................ (4,710,771) $ (50,262,985) 5,342,586 $ 71,559,545 5,891,046 $ 74,294,093
================= ============= =========== ============= ============ =============
3. TRUST SHARES (cont.)
Investment Grade Real Estate U.S. Government
Intermediate Bond Fund Precious Metals Fund Securities Fund Securities Fund
------------------ ------------------ ------------------- --------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ---------- --------- ---------- ---------- ------------- -------------
Six months ended
June 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.......... 634,971 $ 8,719,165 430,507 $ 5,912,216 752,578 $ 11,451,636 1,748,564 $ 23,560,333
Shares issued in
reinvestment of
distributions......... 487,713 6,603,637 205,566 2,896,429 417,717 6,411,953 3,278,537 43,440,615
Shares redeemed...... (820,632) (11,218,728) (569,876) (7,840,449) (712,783) (10,852,858) (3,805,997) (50,796,423)
Changes from
exercise of
exchange privilege:
Shares sold........ 543,604 7,432,178 2,266,657 31,445,774 665,646 10,208,899 2,777,278 36,678,717
Shares redeemed.... (371,814) (5,069,543)(2,559,824) (34,833,693) (1,254,674) (19,064,930) (1,655,168) (21,978,990)
------------- ----------- ---------- ------------ ---------- ------------ ----------- -------------
Net increase
(decrease)............ 473,842 $ 6,466,709 (226,970) $ (2,419,723) (131,516)$ (1,845,300) 2,343,214 $ 30,904,252
------------- ----------- ----------- ------------ ---------- ----------- ----------- -------------
------------- ----------- ----------- ------------ ---------- ----------- ----------- -------------
Year ended
December 31, 1994
Shares sold.......... 3,257,872 $ 44,016,572 2,982,606 $ 42,073,264 4,832,335 $ 74,222,833 9,082,274 $121,401,531
Shares issued in
reinvestment of
distributions......... 355,733 4,685,921 43,118 595,781 119,168 1,877,913 2,751,223 34,746,793
Shares redeemed...... (924,245) (12,356,406) (617,375) (8,711,480) (790,561) (11,875,843) (6,478,312) (83,338,710)
Changes from
exercise of
exchange privilege:
Shares sold........ 1,131,556 15,135,556 5,338,664 76,420,205 4,201,082 65,295,800 1,903,918 24,669,105
Shares redeemed.... (1,192,144) (16,068,639)(3,955,412) (55,791,137) (1,739,049) (26,077,546) (10,345,251) (135,801,118)
------------ ----------- ------------ ------------ ----------- ----------- ------------ --------------
Net increase
(decrease)............ 2,628,772 $ 35,413,004 3,791,601 $ 54,586,633 6,622,975 $103,443,157 (3,086,148) $ (38,322,399)
------------ ----------- ------------ ------------ ----------- ----------- ------------ --------------
------------ ----------- ------------ ------------ ----------- ----------- ------------ --------------
Zero Coupon Fund - 1995 Zero Coupon Fund - 2000 Zero Coupon Fund - 2005 Zero Coupon Fund - 2010
------------------ ----------------- ----------------- -------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ---------- ---------- ---------- ---------- ----------- ---------- ---------
Six months ended
June 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................ 110,957 $ 1,326,484 877,799 $12,692,458 497,763 $ 7,394,609 434,819 $ 6,111,907
Shares issued in
reinvestment of
distributions............... 279,109 3,268,362 354,295 5,282,548 185,241 2,941,626 129,811 2,074,389
Shares redeemed............ (732,586) (9,023,822) (434,778) (6,366,332) (205,336) (3,081,294) (251,692) (3,631,958)
Changes from exercise of
exchange privilege:
Shares sold.............. 454,993 5,577,139 1,025,385 14,777,998 539,992 7,906,641 1,698,639 24,808,253
Shares redeemed.......... (363,232) (4,487,232) (466,919) (6,961,499) (292,086) (4,481,275) (1,111,027) (16,450,919)
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
Net increase
(decrease).................. (250,759)$ (3,303,069) 1,355,782 $19,425,173 725,574 $10,680,307 900,550 $12,911,672
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
Year ended
December 31, 1994
Shares sold................ 482,606 $ 5,963,590 2,043,220 $29,144,438 1,219,989 $17,676,802 735,396 $ 10,083,257
Shares issued in
reinvestment of
distributions............... 259,387 3,089,602 324,365 4,488,602 171,028 2,380,710 145,318 1,894,383
Shares redeemed............ (652,856) (7,948,463) (643,343) (9,029,470) (277,845) (3,952,827) (308,264) (4,076,991)
Changes from exercise of
exchange privilege:
Shares sold.............. 1,030,645 12,681,932 730,575 10,214,871 548,258 7,674,664 1,836,888 23,907,687
Shares redeemed.......... (710,569) (8,868,101) (518,068) (7,550,741) (592,246) (8,726,232) (786,583) (10,889,532)
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
Net increase........... 409,213 $ 4,918,560 1,936,749 $27,267,700 1,069,184 $15,053,117 1,622,755 $ 20,918,804
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
----------- ----------- ---------- ------------ ---------- ----------- ----------- -------------
3. TRUST SHARES (cont.)
Money Market Fund Growth and Income Fund Income Securities Fund
--------------------- ------------------- -------------------
Shares Amount Shares Amount Shares Amount
-------------- ------------- ---------- ------------- ----------- -----------
Six months ended June 30, 1995
<S> <C> <C> <C> <C> <C> <C>
Shares sold.................................. 98,347,663 $ 98,347,663 2,911,691 $ 42,358,251 4,614,655 $ 69,456,230
Shares issued in reinvestment of distributions 13,345,284 13,345,284 1,706,740 25,447,497 4,534,250 68,557,863
Shares redeemed.............................. (74,969,523) (74,969,523) (2,846,680) (41,108,288) (4,959,302) (74,312,050)
Changes from exercise of exchange privilege:
Shares sold................................. 130,986,213 130,986,213 5,697,323 83,365,783 3,105,381 46,744,861
Shares redeemed............................. (239,779,050) (239,779,050) (1,589,564) (23,096,632) (1,206,470) (17,869,373)
---------------- ------------- ------------ ------------ ----------- ------------
Net increase (decrease)................. (72,069,413) $ (72,069,413) 5,879,510 $ 86,966,611 6,088,514 $ 92,577,531
---------------- ------------- ------------ ------------ ----------- ------------
---------------- ------------- ------------ ------------ ----------- ------------
Year ended December 31, 1994
Shares sold.................................. 424,037,520 $424,037,520 9,868,807 $137,325,386 23,941,300 $363,246,465
Shares issued in reinvestment of distributions 15,512,865 15,512,865 719,479 9,757,824 2,212,995 32,379,220
Shares redeemed.............................. (95,736,753) (95,736,753) (3,148,857) (43,090,930) (6,252,877) (92,597,936)
Changes from exercise of exchange privilege:
Shares sold................................. 510,610,390 510,610,390 8,469,360 116,722,872 9,398,133 142,168,572
Shares redeemed............................. (467,339,504) (467,339,504) (3,865,858) (52,862,665) (6,116,883) (90,769,079)
--------------- -------------- ----------- ------------- ----------- ------------
Net increase............................ 387,084,518 $387,084,518 12,042,931 $167,852,487 23,182,668 $354,427,242
--------------- -------------- ----------- ------------- ----------- -------------
--------------- -------------- ----------- ------------- ----------- -------------
Templeton Templeton
International Equity Fund Pacific Growth Fund Rising Dividends Fund
------------------- ------------------- ------------------
Shares Amount Shares Amount Shares Amount
------------ ----------- ----------- ------------ ------------ -----------
Six months ended June 30, 1995
<S> <C> <C> <C> <C> <C> <C>
Shares sold..................................... 4,386,688 $ 55,524,463 1,252,518 $ 16,378,938 1,734,970 $18,715,833
Shares issued in reinvestment of distributions.. 2,362,655 30,525,501 711,543 9,378,134 726,478 8,063,908
Shares redeemed................................. (3,435,106) (43,458,355) (1,729,958) (22,638,415)(1,736,792) (18,571,345)
Changes from exercise of exchange privilege:
Shares sold.................................... 2,492,969 31,592,779 4,028,819 52,789,222 3,144,133 33,745,874
Shares redeemed................................ (5,228,538) (65,716,765) (6,261,975) (82,300,425) (754,622) (7,919,275)
------------- ------------ ----------- ------------- ---------- -----------
Net increase (decrease).................... 578,668 $ 8,467,623 (1,999,053) $(26,392,546) 3,114,167 $34,034,995
------------- ------------ ----------- ------------- ---------- -----------
------------- ------------ ----------- ------------- ---------- -----------
Year ended December 31, 1994
Shares sold..................................... 24,902,343 $322,951,099 11,284,540 $158,252,876 6,744,155 $68,650,822
Shares issued in reinvestment of distributions.. 390,029 4,943,416 162,761 2,273,402 502,408 5,040,932
Shares redeemed................................. (3,427,169) (44,336,564) (2,000,116) (27,492,273)(2,367,971) (23,835,820)
Changes from exercise of exchange privilege:
Shares sold.................................... 23,175,551 302,804,749 10,146,730 142,218,164 3,179,304 32,128,734
Shares redeemed................................ (7,095,697) (90,785,833) (5,977,685) (81,517,329)(5,339,619) (54,484,126)
------------- ------------ ----------- ------------- --------- ------------
Net increase............................... 37,945,057 $495,576,867 13,616,230 $193,734,840 2,718,277 $27,500,542
------------- ------------ ----------- ------------- ---------- -----------
------------- ------------ ----------- ------------- ---------- -----------
3. TRUST SHARES (cont.)
Templeton
Templeton Developing Templeton Global Asset
Utility Equity Fund Markets Equity Fund Global Growth Fund Allocation Fund*
-------------------- ------------------- ------------------- ---------------
Shares Amount Shares Amount Shares Amount Shares Amount
------------ ------------- ---------- ------------ ------------ ---------- --------- ----------
Six months ended
June 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............. 2,594,863 $ 39,787,528 2,446,401 $ 22,679,656 5,519,254 $ 58,973,134 58,347 $ 590,264
Shares issued in
reinvestment of
distributions............ 4,578,148 70,961,297 61,746 605,109 119,022 1,324,712 -- --
Shares redeemed......... (5,388,274) (82,814,395) (491,757) (4,606,224) (849,824) (9,109,840) (1,492) (15,081)
Changes from exercise
of exchange privilege:
Shares sold........... 3,691,475 55,987,577 2,247,755 21,271,254 3,114,876 33,420,871 282,931 2,846,396
Shares redeemed....... (2,406,586) (36,986,051) (1,103,364) (10,354,726) (704,721) (7,521,072) -- --
Net increase........ 3,069,626 $ 46,935,956 3,160,781 $ 29,595,069 7,198,607 $ 77,087,805 339,786 $3,421,579
------------ ------------- ---------- ------------ ------------ ---------- --------- ----------
------------ ------------- ---------- ------------ ------------ ---------- --------- ----------
Year ended
December 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. 13,792,363 $213,571,803 6,007,111 $ 61,181,104 8,960,993 $ 93,861,733
Shares issued in
reinvestment of
distributions............ 4,307,366 61,424,879 -- -- -- --
Shares redeemed......... (8,615,440) (127,070,915) (258,526) (2,643,123) (464,430) (4,891,450)
Changes from exercise
of exchange privilege:
Shares sold........... 2,752,534 40,452,256 5,532,889 56,791,853 7,017,618 73,271,655
Shares redeemed....... (24,866,552) (380,608,246) (1,015,827) (10,332,753) (403,696) (4,223,788)
------------ ------------- ---------- ------------ ------------ ----------
Net increase
(decrease)............... (12,629,729) $(192,230,223) 10,265,647 $104,997,081 15,110,485 $158,018,150
============= ============= ========== ============ ============ ===========
*For the period April 19, 1995 (effective date) to June 30, 1995.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At December 31, 1994, for tax purposes, the Trust had accumulated net realized
capital gains or capital loss carryovers as follows:
Templeton Templeton
Precious Zero Coupon Growth and Income International Templeton Pacific Developing Markets
Metals Fund Fund -- 1995 Income Fund Securities Fund Equity Fund Growth Fund Equity Fund
-------- -------- --------- ---------- --------- ----------- ------------
Accumulated net
<S> <C> <C> <C> <C> <C> <C> <C>
realized gains.............. $1,232,041 $15,800 $17,435,234 $5,103,693 $16,891,097 $2,753,036 $114,419
======== ======== ========= ========== ========= =========== ============
Adjustable U.S. Global High Investment Grade Real Estate U.S. Government Rising
Government Fund Income Fund Income Fund Intermediate Bond Fund Securities Fund Securities Fund Dividends Fund
----------- -------- -------- --------------- ---------- ----------- ----------
Capital loss carryovers
Expiring in:
1999................. $ 159,000 $-- $-- $-- $ 165,115 $-- $--
2000................. 501,025 -- -- -- 61,046 -- 104,141
2001................. 1,813,667 -- -- -- 19,828 -- 3,121,190
2002................. 8,448,036 2,035,257 128,964 1,082,886 1,257,107 14,818,106 11,480,517
----------- -------- -------- --------------- ---------- ----------- ----------
$10,921,728 $2,035,257 $128,964 $1,082,886 $1,503,096 $14,818,106 $14,705,848
=========== ======== ======== =============== ========== =========== ==========
Zero Coupon Zero Coupon Zero Coupon Utility Templeton Global
Fund -- 2000 Fund -- 2005 Fund -- 2010 Equity Fund Growth Fund
-------- -------- -------- --------- -----------
Capital loss carryovers
<S> <C> <C> <C> <C> <C>
Expiring in: 2002 $16 $30,195 $185,250 $10,484,750 $257,359
======== ======== ======== ========= ===========
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS (cont.)
For tax purposes, the aggregate cost of securities is higher (and unrealized
appreciation is lower or unrealized depreciation is higher) than for financial
reporting purposes at June 30, 1995 by $2,337 in Global Income Fund, $4,168 in
Zero Coupon Fund - 2005, $92,090 in Zero Coupon Fund - 2010, $530,374 in Growth
and Income Fund, $346,771 in Rising Dividends Fund, $14 in Utility Equity Fund
and $12,563 in Templeton Global Growth Fund.
5. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the six months ended June 30, 1995 were as follows:
Investment Grade
Adjustable U.S. Global High Intermediate Precious Real Estate U.S. Government
Government Fund Income Fund Income Fund Bond Fund Metals FundSecurities FundSecurities Fund**
----------- ---------- --------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases.................... $28,607,227 $233,749,911 $86,955,402 $29,986,328 $6,751,910 $22,458,153 $36,397,860
=========== ========== ========= =========== ======== ========== ===========
Sales........................ $76,977,015 $230,452,300 $28,336,923 $18,075,744 $1,758,930 $21,563,950 $34,354,871
=========== ========== ========= =========== ======== ========== ===========
Templeton
Zero Coupon Zero Coupon Zero Coupon Zero Coupon Growth and Income International
Fund - 1995 Fund - 2000 Fund - 2005 Fund - 2010 Income Fund Securities Fund Equity Fund
--------- --------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases........................... $ 4,410,090 $14,701,680 $6,686,695 $18,743,426 $539,383,849 $207,295,579 $105,032,769
========= ========= ======== ========= ========== ========== ==========
Sales............................... $11,012,916 $ 715,930 -- $ 7,852,552 $527,701,218 $219,296,968 $ 73,988,579
========= ========= ======== ========= ========== ========== ==========
Templeton Templeton
Templeton Pacific Rising Utility Developing Markets Templeton Global Global Asset
Growth Fund Dividends Fund Equity Fund Equity Fund Growth Fund Allocation Fund*
----------- ---------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases............................. $64,976,649 $23,096,033 $74,643,098 $56,570,017 $167,198,428 $2,935,550
=========== ========== ========= ============ =========== ==========
Sales................................. $77,087,484 $35,540,262 $84,157,640 $11,619,249 $28,337,829 $ 497,770
=========== ========== ========= ============ =========== ==========
*For the period April 19, 1995 (effective date) to June 30, 1995.
**Excludes purchase and sales of mortgage dollar roll transactions, which
aggregated $41,788,896 and $41,633,482, respectively.
6. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc., under the terms of an agreement, provides investment
advice, administrative services, office space and facilities to the Trust and
receives fees computed monthly on the average daily net assets of each Fund as
follows, except the Templeton International Equity Fund, the Templeton Pacific
Growth Fund, the Rising Dividends Fund, the Templeton Global Growth Fund, the
Templeton Developing Markets Equity Fund and the Templeton Global Asset
Allocation Fund:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
<S> <C>
.625 of 1% First $100 million
.500 of 1% over $100 million, up to and including $250 million
.450 of 1% over $250 million, up to and including $10 billion
The rate of fee for each Fund is reduced further on net assets over $10 billion.
Under the terms of a separate management agreement with the Templeton
International Equity Fund and the Templeton Pacific Growth Fund, Franklin
Advisers, Inc. receives fees computed monthly on average daily net assets as
follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
1.00 of 1% First $100 million
0.90 of 1% over $100 million, up to and including $250 million
0.80 of 1% over $250 million, up to and including $500 million
0.75 of 1% over $500 million
Under the terms of a separate management agreement with the Rising Dividends
Fund, Franklin Advisers, Inc. receives fees computed monthly on average daily
net assets as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.750 of 1% First $500 million
.625 of 1% over $500 million, up to and including $1 billion
.500 of 1% over $1 billion
6. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
Templeton, Galbraith & Hansberger, Ltd. (TGH) serves as the investment adviser
for the Templeton Global Growth Fund and receives fees computed monthly on
average daily net assets as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
1.00 of 1% First $100 million
0.90 of 1% over $100 million, up to and including $250 million
0.80 of 1% over $250 million, up to and including $500 million
0.75 of 1% over $500 million
Templeton, Galbraith & Hansberger, Ltd. (TGH) serves as the investment adviser
for the Templeton Global Asset Allocation Fund and receives fees computed
monthly on average daily net assets of the Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.650 of 1% First $200 million
.585 of 1% over $200 million, up to and including $1.3 billion
.520 of 1% over $1.3 billion
Templeton Investment Management (Hong Kong), Ltd. (TIML) serves as the
investment adviser for the Templeton Developing Markets Equity Fund and receives
a monthly fee equal to an annual rate of 1.25 of 1% of the Fund's average daily
net assets.
Under a subadvisory agreement, Templeton Investment Counsel, Inc. (TICI or the
"Subadvisor") provides services to the Templeton International Equity Fund and
Templeton Pacific Growth Fund, and receives from Franklin Advisers, Inc. fees
computed monthly on the average daily net assets of each Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
0.50 of 1% First $100 million
0.40 of 1% over $100 million, up to and including $250 million
0.30 of 1% over $250 million, up to and including $500 million
0.25 of 1% over $500 million
Under a subadvisory agreement, Templeton Investment Counsel, Inc. (TICI or the
"Subadvisor") provides services to the Templeton Global Asset Allocation Fund
and receives from Templeton, Galbraith & Hansberger, Ltd. (TGH) fees computed
monthly on the average daily net assets of the Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.250 of 1% First $200 million
.225 of 1% over $200 million, up to and including $1.3 billion
.200 of 1% over $1.3 billion
Under a subadvisory agreement, Templeton Investment Counsel, Inc. (TICI or the
"Subadvisor") provides services to the Global Income Fund, and receives from
Franklin Advisers, Inc. fees computed monthly on the average daily net assets as
follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.350 of 1% First $100 million
.250 of 1% over $100 million, up to and including $250 million
.200 of 1% over $250 million
Under a subadvisory agreement, Templeton Quantitative Advisors, Inc. (TQA or the
"Subadvisor") provides services to the Growth and Income Fund, and receives from
Franklin Advisers, Inc. fees computed monthly on the average daily net assets of
the Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
0.3125 of 1% First $100 million
0.2500 of 1% over $100 million, up to and including $250 million
0.2250 of 1% over $250 million, up to and including $10 billion
0.2200 of 1% over $10 billion, up to and including $12.5 billion
0.2100 of 1% over $12.5 billion, up to and including $15 billion
0.2000 of 1% over $15 billion
6. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
Templeton Global Investors, Inc. serves as the business manager for the
Templeton Global Asset Allocation Fund and receives fees computed monthly on the
average daily net assets as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.150 of 1% First $200 million
.135 of 1% over $200 million, up to and including $700 million
.100 of 1% over $700 million, up to and including $1.2 billion
.075 of 1% over $1.2 billion
Templeton Global Investors, Inc. serves as the business manager for the
Templeton Developing Markets Fund and receives from Templeton Investment
Management (Hong Kong), Ltd. (TIML) fees computed monthly on the average daily
net assets of the Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.150 of 1% First $200 million
.135 of 1% over $200 million, up to and including $700 million
.100 of 1% over $700 million, up to and including $1.2 billion
.075 of 1% over $1.2 billion
Templeton Global Investors, Inc. serves as the business manager for the
Templeton Global Growth Fund and receives from Templeton, Galbraith &
Hansberger, Ltd. (TGH) fees computed monthly on the average daily net assets of
the Fund as follows:
Annualized Fee Rate Average Daily Net Assets
------------- ----------------------------------
.050 of 1% First $200 million
.045 of 1% over $200 million, up to and including $700 million
.033 of 1% over $700 million, up to and including $1.2 billion
.0025 of 1% over $1.2 billion
The terms of the agreements provide that aggregate annual expenses of the Trust
be limited to the extent necessary to comply with the limitations set forth in
the laws, regulations and administrative interpretations of the states in which
the Trust's shares are registered. The Trust's expenses did not exceed these
limitations; however, for the six months ended June 30, 1995, Franklin Advisers,
Inc. agreed in advance to waive $653,273 of the management fees as indicated
below:
Zero Coupon Zero Coupon Zero Coupon Zero Coupon Money
Fund - 1995 Fund - 2000 Fund - 2005 Fund - 2010 Market Fund
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Fees waived....................................................... $65,674 $132,270 $77,848 $70,278 $307,203
======== ======== ======== ======== ========
The management agreements between the Trust, Franklin Advisers, Inc., TGH and
TIML include distribution plans pursuant to Rule 12b-1 under the 1940 Act.
However, no payments were made by any Fund as a result of the plans.
Franklin/Templeton Investors Services, Inc., under the terms of an agreement,
performs shareholder servicing for the Funds and is not paid by the Funds for
the service.
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin Advisers, Inc., Franklin/Templeton Investor Services, Inc., Templeton,
Galbraith & Hansberger, Ltd., Templeton Investment Management (Hong Kong), Ltd.,
Templeton Investment Counsel, Inc., Templeton Global Investors, Inc. and
Templeton Quantitative Advisors, Inc., all wholly-owned subsidiaries of Franklin
Resources, Inc., and/or Allianz Life Insurance Company of North America.
7. LOANS OF PORTFOLIO SECURITIES
During the six months ended June 30, 1995, the Precious Metals Fund loaned
securities to certain brokers for which it received cash collateral against the
loaned securities in an amount equal to at least 102% of the market value of the
loaned securities. The cash collateral received is invested by the Fund in
short-term instruments and any interest income in excess of a predetermined
rebate to the brokers is kept by the fund as interest income. Interest income
from this source amounted to $2,864 for the six months ended June 30, 1995, and
as of that date, the value of the loaned securities amounted to $3,314,809 in
the Fund. The Fund has received sufficient cash collateral to meet these
commitments.
8. RULE 144A SECURITIES
Rule 144A provides a non-exclusive safe harbor exemption from the registration
requirements of the Securities Act of 1933 for specified resales of restricted
securities to qualified institutional investors. The Funds value these
securities as disclosed in Note 1. At June 30, 1995, Rule 144A securities were
held as follows:
Global High Precious Real Estate
Income Fund Income Fund Metals FundSecurities Fund
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Value....................................................................... $8,622,237 $39,875,930 $3,738,600 $842,500
-------- --------- -------- ----------
Ratio of value to net assets................................................ 3.46% 12.19% 3.11% .43%
======== ========= ======== ==========
Templeton
Growth and Income International Utility Templeton Global
Income Fund Securities Fund Equity Fund Equity Fund Growth Fund
-------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Value........................................................ $3,857,166 $60,240,529 $7,503,013 $6,172,155 $4,365,498
======== ========== ======== ======== ===========
Ratio of value to net assets................................. .58% 5.26% .91% .48% 1.75%
======== ========== ======== ======== ===========
See the accompanying statement of investments in securities and net assets for
specific information on such securities.
9. CREDIT RISK AND DEFAULTED SECURITIES
Although the Trust has diversified portfolios, the High Income Fund and the
Income Securities Fund have 89.41% and 41.22%, respectively, of their portfolios
invested in lower rated and unrated securities. Investments in higher yield
securities are accompanied by a greater degree of credit risk and such lower
quality securities tend to be more sensitive to economic conditions than higher
rated securities. The risk of loss due to default by the issuer may be
significantly greater for the holders of high yielding securities, because such
securities are generally unsecured and are often subordinated to other creditors
of the issuer. At June 30, 1995, the High Income Fund did not hold any defaulted
securities while the Income Securities Fund held four defaulted securities
issued by three companies with a value aggregating $6,386,315 representing 0.56%
of the Fund's net assets. For more information as to specific securities, see
the accompanying Statement of Investments in Securities and Net Assets.
Although each of the Funds has a diversified investment portfolio, there are
certain credit risks, foreign currency exchange risk, or event risk due to the
manner in which certain Funds are invested, which may subject the Funds more
significantly to economic changes occurring in certain industries or sectors, as
follows:
The Global Income Fund has investments in excess of 10% of its total net
assets in German and Japanese bonds.
The Investment Grade Intermediate Bond Fund has investments in excess of
10% of its total net assets in the financial industry.
The High Income Fund has investments in excess of 10% of its total net
assets in the gaming and leisure and the health care services industries.
10. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities held by
any of the Funds are defined in the Investment Company Act of 1940 as affiliated
companies. The Funds had investments in such affiliated companies at June 30,
1995 as follows:
Purchase Market Dividend
Fund Affiliate Cost Value Income
- -------------------------- -------------------------------------- --------- -------- -------
<S> <C> <C> <C>
Real Estate Securities Fund........ Winston Hotels, Inc............................... $ 5,493,438 $5,222,000 $ 88,000
Income Securities Fund............. Tanger Factory Outlet Centers, Inc................ 10,000,000 9,145,000 180,000
</TABLE>
11. OTHER CONSIDERATIONS
Franklin Advisers, Inc., as the Fund's Manager of the Income Securities may
serve as a member of various bondholder's committees, representing bondholders'
interests in certain corporate restructuring negotiations. Currently, the
Manager serves on the bondholders' committee for Grand Union. As a result of
this involvement in this committee, Franklin Advisers, Inc. may be in possession
of certain material non-public information. The Fund's Manager has not sold nor
does it intend to sell any of its holdings in these securities while in
possession of material non-public information in contravention of the Federal
Securities Laws.
<TABLE>
<CAPTION>
12. FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout each
year, by Fund, are as follows:
Per Share Operating Performance Ratios/Supplemental Data
----------------------------------------------------- -----------------------------
Net Distri- Distri- Net Ratio of Net
Net Asset Net Realized & butions butions Asset Net Ratio of Investment
Value at Invest- Unrealized Total From From Net From Total Value at Assets at Expenses Income to Portfolio
Year Beginning ment Gain (Loss) Investment Investment Capital Distri- End of Total End of Year to Average Average Turnover
Ended of Year Income on SecuritiesOperations Income Gains butions Year Return++(in 000's) Net Assets Net Assets Rate
Adjustable U.S. Government Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19901 $ 10.00 $ .01 $-- $ .01 $-- $-- $-- $ 10.01 .10% $ 754 --%5 4.73%* --%
1991 10.01 .36 .49 .85 -- -- -- 10.86 8.49 130,664 .3345 7.19 43.31
1992 10.86 .36 .12 .48 (.24) -- (.24) 11.10 4.45 256,980 .6045 5.38 53.69
1993 11.10 .43 (.04) .39 (.45) -- (.45) 11.04 3.55 303,384 .58 4.50 133.68
1994 11.04 .62 (.64) (.02) (.49) -- (.49) 10.53 (.19) 239,695 .57 4.79 62.05
1995+ 10.53 .49 .09 .58 (.73) -- (.73) 10.38 5.55 204,369 .51* 5.33* 14.78
Global Income Fund
1990 10.93 .60 .45 1.05 (.20) -- (.20) 11.78 9.83 15,646 .69 10.82 61.52
1991 11.78 .42 .99 1.41 (.60) -- (.60) 12.59 12.34 39,265 .69 7.91 130.66
1992 12.59 .26 (.30) (.04) (.40) (.15) (.55) 12.00 (.40 75,062 .67 4.72 92.22
1993 12.00 .50 1.47 1.97 (.50) (.16) (.66) 13.31 16.68 206,594 .73 7.56 59.98
1994 13.31 .86 (1.52) (.66) (.33) (.13) (.46) 12.19 (4.99) 254,311 .71 7.99 79.38
1995+ 12.19 .59 .38 .97 (.49) -- (.49) 12.67 10.40 249,556 .71* 8.11* 108.83
High Income Fund
1990 10.13 1.00 (1.86) (.86) (.33) -- (.33) 8.94 (8.67) 10,768 .67 12.94 13.95
1991 8.94 .78 1.80 2.58 (.90) -- (.90) 10.62 30.15 23,675 .69 11.41 36.67
1992 10.62 .38 1.31 1.69 (.54) -- (.54) 11.77 16.21 67,991 .68 9.76 33.36
1993 11.77 .37 1.45 1.82 (.46) -- (.46) 13.13 15.71 196,972 .64 8.18 21.06
1994 13.13 .88 (1.18) (.30) (.55) (.07) (.62) 12.21 (2.26) 255,036 .60 9.45 22.94
1995+ 12.21 .45 1.18 1.63 (.91) -- (.91) 12.93 13.36 327,135 .61* 9.55* 10.42
Investment Grade Intermediate Bond Fund
1990 10.75 .57 .23 .80 (.19) -- (.19) 11.36 7.55 6,786 .69 7.92 22.91
1991 11.36 .43 1.31 1.74 (.49) -- (.49) 12.61 15.75 17,247 .73 7.49 28.75
1992 12.61 .25 .47 .72 (.33) (.02) (.35) 12.98 5.89 49,549 .68 6.15 19.96
1993 12.98 .27 .82 1.09 (.33) (.05) (.38) 13.69 8.52 123,376 .66 4.74 18.84
1994 13.69 .51 (.45) .06 (.38) (.06) (.44) 13.31 .47 154,899 .63 4.66 30.99
1995+ 13.31 .35 .43 .78 (.57) -- (.57) 13.52 5.84 163,728 .62* 5.42* 17.16
Precious Metals Fund
1990 12.38 .13 (1.84) (1.71) (.08) (.07) (.15) 10.52 (13.97) 10,926 .69 3.25 1.02
1991 10.52 .38 .02 .40 (.20) (.01) (.21) 10.71 3.86 9,049 .69 3.20 .25
1992 10.71 .10 (1.14) (1.04) (.31) -- (.31) 9.36 (10.13) 13,827 .69 2.23 --
1993 9.36 .03 5.16 5.19 (.09) -- (.09) 14.46 55.62 73,575 .68 1.58 .01
1994 14.46 .16 (.45) (.29) (.08) -- (.08) 14.09 (2.01) 125,078 .68 1.63 7.66
1995+ 14.09 .13 .02 .15 (.20) (.15) (.35) 13.89 .97 120,206 .67* 1.79* 1.73
Real Estate Securities Fund
1990 10.48 .48 (1.72) (1.24) (.15) -- (.15) 9.09 (11.98) 1,963 .72 7.66 --
1991 9.09 .34 2.67 3.01 (.45) -- (.45) 11.65 33.47 4,810 .74 6.05 7.95
1992 11.65 .14 1.24 1.38 (.24) -- (.24) 12.79 12.12 14,859 .69 4.50 2.76
1993 12.79 .09 2.33 2.42 (.17) -- (.17) 15.04 19.01 92,678 .67 4.05 5.84
1994 15.04 .38 .06 .44 (.17) -- (.17) 15.31 2.89 195,697 .62 4.00 11.73
1995+ 15.31 .38 .26 .64 (.52) -- (.52) 15.43 4.22 195,237 .61* 4.84* 11.91
U.S. Government Securities Fund
1990 10.54 .48 .45 .93 (.11) -- (.11) 11.36 8.92 62,253 .69 8.40 5.15
1991 11.36 .41 1.35 1.76 (.40) -- (.40) 12.72 15.93 187,987 .65 7.76 11.69
1992 12.72 .52 .44 .96 (.43) (.01) (.44) 13.24 7.69 371,828 .59 7.07 28.64
1993 13.24 .50 .77 1.27 (.51) (.08) (.59) 13.92 9.71 684,303 .54 6.06 145.11
1994 13.92 .96 (1.59) (.63) (.67) (.05) (.72) 12.57 (4.55) 579,039 .53 6.87 18.25**
1995+ 12.57 .45 1.12 1.57 (.96) -- (.96) 13.18 12.46 628,254 .52* 6.89* 5.81**
Zero Coupon Fund - 1995
1990 10.47 .42 .54 0.96 (.05) (0.04) (0.09) 11.34 9.28 23,929 .405 8.22 111.71
1991 11.34 .72 1.11 1.83 (.49) (.03) (.52) 12.65 16.75 36,095 .255 7.70 18.93
1992 12.65 .81 .13 .94 (.74) (.05) (.79) 12.80 7.85 41,824 .255 6.96 19.93
1993 12.80 .74 .19 .93 (.80) (.17) (.97) 12.76 7.46 48,961 .365 6.37 10.79
1994 12.76 .76 (.68) .08 (.76) (.03) (.79) 12.05 .70 51,141 .405 6.51 3.64
1995+ 12.05 .52 .02 .54 (.87) (.01) (.88) 11.71 4.45 46,768 .405* 6.59* 9.01
Zero Coupon Fund - 2000
1990 11.08 .43 .19 .62 (.13) (.17) (.30) 11.40 5.91 12,314 .375 8.55 180.49
1991 11.40 .57 1.67 2.24 (.38) -- (.38) 13.26 20.19 27,699 .255 7.88 19.15
1992 13.26 .57 .58 1.15 (.53) -- (.53) 13.88 9.04 48,217 .255 6.97 9.10
1993 13.88 .66 1.55 2.21 (.62) (.03) (.65) 15.44 16.15 76,916 .375 5.88 7.02
1994 15.44 .68 (1.71) (1.03) (.69) (.10) (.79) 13.62 (6.76) 94,230 .405 6.37 --
1995+ 13.62 .33 1.55 1.88 (.67) -- (.67) 14.83 13.77 122,706 .405* 6.32* .66
Zero Coupon Fund - 2005
1990 11.53 .55 (.32) .23 (.14) (.47) (.61) 11.15 2.69 5,151 .385 8.56 164.90
1991 11.15 .54 1.65 2.19 (.43) -- (.43) 12.91 20.37 11,299 .255 8.00 4.54
1992 12.91 .65 .67 1.32 (.61) -- (.61) 13.62 10.81 18,295 .255 7.46 19.48
1993 13.62 .44 2.55 2.99 (.52) (.01) (.53) 16.08 22.21 42,998 .375 5.67 16.59
1994 16.08 .71 (2.24) (1.53) (.60) (.19) (.79) 13.76 (9.60) 51,499 .405 6.53 2.00
1995+ 13.76 .35 2.31 2.66 (.69) -- (.69) 15.73 19.25 70,293 .405* 6.45* --
Zero Coupon Fund - 2010
1990 11.61 .59 (.57) .02 (.13) (.25) (.38) 11.25 .57 6,846 .405 8.70 178.75
1991 11.25 .56 1.58 2.14 (.55) -- (.55) 12.84 20.09 15,610 .255 8.05 22.44
1992 12.84 1.21 .03 1.24 (.73) -- (.73) 13.35 10.31 13,431 .255 7.64 54.50
1993 13.35 .50 2.81 3.31 (.94) (.04) (.98) 15.68 25.47 29,189 .255 5.89 36.63
1994 15.68 .55 (2.27) (1.72) (.63) (.31) (.94) 13.02 (10.97) 45,361 .405 6.57 4.34
1995+ 13.02 .34 2.78 3.12 (.49) -- (.49) 15.65 23.88 68,611 .405* 6.82* 13.76
Money Market Fund
1990 1.00 .07 -- $ .07 (.07) -- (.07) 1.00 7.62 66,524 .65 7.39 --
1991 1.00 .05 -- .05 (.05) -- (.05) 1.00 5.48 68,060 .67 5.43 --
1992 1.00 .03 -- .03 (.03) -- (.03) 1.00 3.06 86,907 .69 2.99 --
1993 1.00 .03 -- .03 (.03) -- (.03) 1.00 2.54 131,534 .66 2.53 --
1994 1.00 .04 -- .04 (.04) -- (.04) 1.00 3.82 518,618 .465 4.05 --
1995+ 1.00 .03 -- .03 (.03) -- (.03) 1.00 2.88 446,549 .39* 5.68* --
Growth and Income Fund
1990 10.29 .20 (.44) (.24) (.08) -- (.08) 9.97 (2.35) 53,902 .67 3.46 45.08
1991 9.97 .12 2.22 2.34 (.20) -- (.20) 12.11 23.63 117,944 .67 2.09 40.43
1992 12.11 .08 .72 .80 (.12) -- (.12) 12.79 6.73 231,659 .62 1.44 25.22
1993 12.79 .09 1.22 1.31 (.11) -- (.11) 13.99 10.32 371,484 .58 1.00 41.56
1994 13.99 .19 (.47) (.28) (.09) (.20) (.29) 13.42 (3.41) 517,877 .54 1.81 99.21
1995+ 13.42 .14 1.90 2.04 (.19) (.41) (.60) 14.86 15.16 660,829 .54* 2.40* 96.23
Income Securities Fund
1990 10.90 $ .82 $(1.62) $ (.80) $ (.21) $-- $ (.21) $ 9.89 (7.42)% $ 30,054 .67% 10.39% 5.53%
1991 9.89 .77 3.06 3.83 (.90) -- (.90) 12.82 39.93 61,266 .67 8.91 29.65
1992 12.82 .40 1.26 1.66 (.59) (.24) (.83) 13.65 13.20 182,993 .67 7.44 12.59
1993 13.65 .33 2.18 2.51 (.31) (.05) (.36) 15.80 18.59 737,942 .56 6.66 10.12
1994 15.80 .82 (1.80) (.98) (.44) (.07) (.51) 14.31 (6.27) 1,000,002 .54 7.27 13.33
1995+ 14.31 .54 1.19 1.73 (.89) (.07) (.96) 15.08 12.07 1,145,582 .52* 8.05* 22.19
Templeton International Equity Fund
19922 10.00 .14 (0.38) (0.24) -- -- -- 9.76 (2.40) 13,662 1.77* 3.91* 21.78
1993+++ 9.76 .18 2.60 2.78 (.04) -- (.04) 12.50 28.56 310,146 1.12 1.58 29.50
1994 12.50 .19 (.08) .11 (.03) (.07) (.10) 12.51 .87 785,124 .99 2.17 12.22
1995+ 12.51 .24 .72 .96 (.22) (.28) (.50) 12.97 7.68 821,790 .94* 3.73* 10.00
Templeton Pacific Growth Fund
19922 10.00 -- (.12) (.12) -- -- -- 9.88 (1.20) 5,788 1.315* -- 8.41
1993 9.88 .05 4.68 4.73 -- -- -- 14.61 47.87 215,882 1.14 1.29 12.36
1994 14.61 .22 (1.50) (1.28) (.03) (.06) (.09) 13.24 (8.79) 375,832 1.07 2.04 4.29
1995+ 13.24 .18 .14 .32 (.26) (.11) (.37) 13.19 2.38 348,046 1.04* 2.33* 20.65
Rising Dividends Fund
19922 10.00 .06 .92 .98 -- -- -- 10.98 9.80 97,687 .675* 2.11* 5.22
1993 10.98 .14 (.52) (.38) (.03) -- (.03) 10.57 (3.48) 299,730 .79 2.31 13.58
1994 10.57 .26 (.69) (.43) (.17) -- (.17) 9.97 (4.08) 309,929 .80 2.71 24.07
1995+ 9.97 .12 1.25 1.37 (.24) -- (.24) 11.10 13.75 379,755 .77* 2.84* 8.21
Utility Equity Fund
1990 12.14 .40 (.18) .22 (.10) -- (.10) 12.26 1.84 77,739 .68 6.53 --
1991 12.26 .35 2.60 2.95 (.35) -- (.35) 14.86 24.56 243,626 .63 5.92 2.01
1992 14.86 .35 .92 1.27 (.31) -- (.31) 15.82 8.69 667,118 .55 5.18 .13
1993 15.82 .38 1.28 1.66 (.34) -- (.34) 17.14 10.54 1,589,634 .51 4.47 4.80
1994 17.14 .95 (2.94) (1.99) (.62) (.11) (.73) 14.42 (11.56) 1,155,110 .52 5.58 11.74
1995+ 14.42 .43 1.41 1.84 (.90) -- (.90) 15.36 12.71 1,277,804 .52* 5.57* 6.64
Templeton Developing Markets Equity Fund
19943 10.00 .07 (.51) (.44) -- -- -- 9.56 (4.40) 98,189 1.53* 1.85* 1.15
1995+ 9.56 .12 .18 .30 (.04) (.01) (.05) 9.81 3.09 131,779 1.47* 3.19* 13.35
Templeton Global Growth Fund
19943 10.15 .07 .26 .33 -- -- -- 10.48 3.25 158,856 1.14* 2.49* 7.14
1995+ 10.48 .14 .61 .75 (.06) -- (.06) 11.17 7.16 249,754 1.00* 3.77 20.75
Templeton Global Asset Allocation Fund
19954 10.00 .05 .08 .13 -- -- -- 10.13 1.30 3,949 .88* 4.91* 48.87
</TABLE>
*Annualized.
**The portfolio turnover rate excludes mortgage dollar roll transactions.
+For the six months ended June 30, 1995
++Total return measures the change in value of an investment over the periods
indicated. It assumes reinvestment of dividends and capital gains, if any, at
net asset value and is not annualized.
+++Per share amounts have been calculated
using the average shares outstanding during the period.
1For the period December 3, 1990 (effective date) to December 31, 1990.
2For the period January 27, 1992 (effective date) to December 31, 1992.
3For the period March 15, 1994 (effective date) to December 31, 1994.
4For the period April 19, 1995 (effective date) to June 30,1995.
12. FINANCIAL HIGHLIGHTS (cont.)
5During the periods indicated below, Franklin Advisers, Inc., the advisor,
agreed to waive in advance a portion of its management fees and made payments of
other expenses incurred by the Funds. Had such action not been taken, ratios of
operating expenses to average net assets would have been as follows:
Ratio of
expenses
to average
net assets
-----
Adjustable U.S. Government Fund
19901.......................... 0.05%*
1991........................... 0.66
1992........................... 0.62
Zero Coupon Fund-- 1995
1990........................... 0.69
1991........................... 0.68
1992........................... 0.68
1993........................... 0.68
1994........................... 0.67
1995+.......................... 0.66*
Ratio of
expenses
to average
net assets
-----
Zero Coupon Fund-- 2000
1990........................... 0.70%
1991........................... 0.68
1992........................... 0.68
1993........................... 0.67
1994........................... 0.66
1995+.......................... 0.63*
Zero Coupon Fund-- 2005
1990........................... 0.71
1991........................... 0.71
1992........................... 0.69
1993........................... 0.67
1994........................... 0.68
1995+.......................... 0.65*
Ratio of
expenses
to average
net assets
-----
Zero Coupon Fund-- 2010
1990........................... 0.68%
1991........................... 0.70
1992........................... 0.69
1993........................... 0.68
1994........................... 0.68
1995+.......................... 0.64*
Money Market Fund
1994........................... 0.54
1995+.......................... 0.52
Templeton Pacific Growth Fund
19922.......................... 2.57*
Rising Dividends Fund
19922.......................... 0.76*
