SEMI
ANNUAL
REPORT
April 30, 1998
Franklin Value Investors Trust
Franklin Balance Sheet Investment Fund
Franklin MicroCap Value Fund
Franklin Value Fund
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
William J. Lippman
President
Franklin Value Investors Trust
CONTENTS
Shareholder Letter..................................................... 1
Fund Reports........................................................... 4
Franklin Balance Sheet
Investment Fund........................................................ 4
Franklin MicroCap
Value Fund............................................................. 9
Franklin Value Fund................................................... 14
Financial Highlights &
Statement of Investments............................................... 22
Financial Statements................................................... 42
Notes to
Financial Statements................................................... 47
SHAREHOLDER LETTER
Dear Shareholder:
We are pleased to bring you Franklin Value Investors Trust's semi-annual report
for the period ended April 30, 1998.
The U.S. economy remained strong over the Trust's reporting period as measured
by 1998's first quarter, annualized Gross Domestic Product gain of 4.8%.
Investors also reacted favorably to first quarter corporate earnings and pushed
stock prices generally higher in April. Although overall corporate earnings
increases were lower than in recent quarters, they generally exceeded
expectations. On April 6, the Dow Jones(R) Industrial Average (the Dow) broke
9000, closing at its highest point in history.* The Dow stood at 9063.37 on
April 30, 1998, up from its October 31 closing of 7442.08.
Interest rate stability characterized the reporting period. The Federal Reserve
Board met in April and left its overnight target rate unchanged at 5.50%. This
rate has only fluctuated once since January 1996. Investors and traders waited
for evidence that either the economy would slow down because of Asian problems
and push rates lower; or that inflation would increase, based on current
economic strength, and push rates higher. Neither event occurred. The yield on
the 30-year U.S. Treasury bond varied between 5.7% and 6.25% during the
six-month reporting period. The Consumer Price Index (CPI), a widely used
measure of inflation, continued to trend downward. The CPI's annualized increase
for March 1998 was 2.25%, a surprisingly favorable showing, considering the U.S.
economy is in its seventh consecutive year of expansion.
*The Dow Jones Industrial Average is a price-weighted average of 30 actively
traded blue chip stocks.
Investor concern about the volatility that comes with such highs, and questions
about the market's long-term direction prompt us to comment on the importance of
investing in value. As the name indicates, the Franklin Value Investors Trust
seeks companies that we view as bargains, which can come in a variety of styles
and sizes. Some are so obscure and small as to be off the radar screen for most
market analysts. Others are well known, large-cap stocks experiencing dramatic
drops, often due to only one bad quarter. These are what we call "fallen
angels." Some value stocks trade at extraordinarily low prices relative to
visible net assets; in many cases it is possible to buy a healthy company at or
below such value and pay very little for hard assets like land, minerals, and
timber, whose potential sales value is unknown, but obviously substantial.
"As the name indicates, the Franklin Value Investors Trust seeks companies that
we view as bargains, which can come in a variety of styles and sizes."
Other stocks can be purchased at low prices relative to earnings or cash flows.
Frequently, the stocks we perceive as bargains have a cloud hanging over them.
It could be an out-of-favor company or industry, an ineffectual management team,
or a passive board of directors. Our job is to work at determining whether the
problem is correctable.
At times, companies of interest to us are in a turnaround mode and trading at
prices that say more about the seller's emotions than about what we are buying.
Turnarounds do not proceed on schedule, and we frequently must conclude that we
are early. Our attention to a business's balance sheet and cash flow buys us
time to wait out our disappointments.
The only identifiable catalyst is the mispricing of assets or cash flow. We look
for gains to come in one of three ways. First, the market's appraisal of the
firm may change. The stock will be bid up to levels we think appropriate, and we
exit. Second, the value disparity stays the same or increases, and a competitor
or other strategic buyer launches a takeover bid, which again, drives up the
price. Third, nothing changes except that the intrinsic value increases over
time. If that happens, we will stay with a strong balance sheet indefinitely,
since we can't predict when lightning will strike. We can also be wrong, of
course, and end up with a loss. Obviously, there are no guarantees.
The Franklin Value Investors Trust is organized into three portfolios, each
managed in the same spirit but with differing focus. While the funds have
distinct investment objectives, our fundamental operating principles remain the
same: careful investment selection and constant professional supervision.
We encourage you to discuss your financial goals with an investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. If you have any
questions concerning the Franklin Value Investors Trust, we welcome the
opportunity to answer them.
Cordially,
William J. Lippman
President
Franklin Value Investors Trust
FRANKLIN BALANCE SHEET
INVESTMENT FUND
Your Fund's Objective: Franklin Balance Sheet Investment Fund seeks high total
return as well as capital appreciation by investing primarily in securities that
we believe are undervalued in the marketplace. The fund will also seek income
when deemed consistent with its objective.
The largest and oldest fund in the Trust is Franklin Balance Sheet Investment
Fund. The fund searches for securities of companies (any size) selling at an
unusually low price to book value. We typically screen for companies whose ratio
of price to book value, based on reported figures, is within the lowest 10
percent of the stock universe. Before we invest, we analyze a company's balance
sheet, seeking to identify tangible assets that may be suspect, liabilities that
may understate a claim on the assets, and soft or intangible assets (items that
exist only to be amortized or expensed at some future time).
Our investment process usually raises questions that we take to a company's
management. In the course of getting answers to our technical questions, we
often learn important things about business strategy, industry trends, problems
and opportunities that don't come into focus in the written financials. Beyond
factual information, we evaluate management's sense of responsibility to
shareholders and the importance of providing them a reasonable return on
invested capital.
Occasionally we come away with a conviction that asset values are greatly
understated. Our bias, however, is toward skepticism. We want the belt and the
suspenders before we invest. Our aim is to minimize risk, not to come up with a
"right" number or exact dollar value for a company. Ideally, we set an
unrealistically low value and buy below it.
This process is far from foolproof. We have missed out on some profitable
investments because we couldn't get our questions answered, and we have
sometimes missed problems or been misled when we thought we were on solid
ground. Overall the process works well, and the biggest challenge is sticking
with it in an optimistic market when the fund has strong cash flow. Despite
being closed to other new investors, net cash flow from new retirement accounts
and existing accounts totaled $325.0 million compared to $128.8 million in the
same six-month period a year ago, and $188.4 million for the fiscal year ended
October 31, 1997. Cash was 18% of the fund's total net assets on April 30, 1998,
compared with 13% at the October 31 year-end.
New investments over the six months were concentrated in steel, homebuilding,
retailing and electric utilities with stranded costs. We found more candidates
among technology stocks after the emergence of Asia's banking and currency
problems. We also added to scores of existing positions where we could do so at
appropriate prices. Relatively little has gone into financial stocks, a
departure from past periods, reflecting the excellent performance of that sector
over several years.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
What are stranded costs?
Under traditional regulation, utility companies were required to build and
maintain generation plants, transmission and distribution lines and other
equipment. The regulators set rates that companies could charge customers to pay
for these costs, spread over as much as 30 years. When retail competition
begins, customers may choose a different electricity supplier, and will no
longer pay for the facilities that were built to serve them, thus creating
"stranded costs" for their former electricity suppliers.
PERFORMANCE SUMMARY
Franklin Balance Sheet Investment Fund produced a +12.18% cumulative total
return for the six-month period ended April 30, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of all
distributions, and does not include the sales charge. We have always maintained
a long-term perspective when managing the fund, and we encourage shareholders to
view their investments in a similar manner. As you can see from the table on
page 8, the fund delivered a +280.26% cumulative total return since its
inception in April 1990.
The fund's share price, as measured by net asset value, increased $1.95, from
$35.22 on October 31, 1997, to $37.17 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 26.9 cents ($0.269) in
dividend income, 66.11 cents ($0.6611) in short-term capital gains, and $1.1369
in long-term capital gains. Distributions will vary depending on income earned
by the fund and any profits realized from the sale of securities in the
portfolio. Past distributions are not indicative of future trends.
Past performance is not predictive of future results.
<TABLE>
<CAPTION>
Franklin Balance Sheet Investment Fund
Periods Ended 4/30/98
Since
Inception
1-Year 5-Year (4/2/90)
<S> <C> <C> <C>
Cumulative Total Return1 36.14% 157.31% 280.26%
Average Annual Total Return2 34.07% 20.45% 17.76%
Value of $10,000 Investment3 $13,407 $25,351 $37,452
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return4 17.85% 15.70% 21.92% 13.67% 36.14%
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 1.50% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the sales charge.
4. One-year total return represents the change in value of an investment over
the periods ended on the specified dates and does not include the sales charge.
Past expense reductions by the fund's manager increased the fund's total
returns.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, and you may have a gain or loss
when you sell your shares.
Effective February 1, 1998, the fund's 12b-1 fee was reduced to 0.25%.
Past performance is not predictive of future results.
FRANKLIN MICROCAP VALUE FUND
Your Fund's Objective: Franklin MicroCap Value Fund seeks high total return by
investing primarily in securities of companies with market capitalizations under
$100 million at the time of purchase, and which we believe are undervalued in
the marketplace. The fund will also seek income when deemed consistent with its
objective.
Franklin MicroCap Value Fund, which we sometimes refer to as "Son of Balance
Sheet," started in late 1995 when Franklin Balance Sheet Investment Fund
partially closed to new investors. We manage it in the same manner as Balance
Sheet, except that, for this fund, we buy only companies whose market
capitalizations are less than $100 million, and we do not buy closed-end funds
as we do in Balance Sheet.
Because of its microfocus, the Trustees determined at inception that the fund
would close to all but retirement accounts and existing shareholders once assets
reached $100 million, which they did in July 1996. Total assets stood at $232.1
million on April 30, 1998, and Franklin MicroCap Value Fund was 96.4% invested
at the end of the reporting period.
The closure provision was intended to keep the fund from outgrowing the market
segment we want to exploit. We anticipated that a rapid flow of cash into the
fund could hamper our ability to invest fast enough without compromising our
investment strategy. Price is the bedrock criterion for our purchase and sale
decisions, and unless we are able to be patient buyers and sellers of these
thinly-traded, small securities, we will not capture the opportunities offered
by this poorly mapped corner of the investment universe.
We buy companies under very conservative valuation assumptions. It is our
conviction that companies with difficulties are likely to be worth more intact
than the liquidation value of their parts. While we cannot be sure what
liquidation will bring, we can make reasoned estimates. If our bias is
conservative, any surprises that come about stand to be more positive than
negative.
That said, we sustained losses in Gantos, Inc., River Oaks Furniture, Inc. and
Guy F. Atkinson Construction Corp. River Oaks declared bankruptcy, and Atkinson
was an ill-advised attempt at vulture investing, by buying shares of a company
already in bankruptcy -- reminding us of the evils of debt.
During the period, we sold a number of positions at considerable gains on cost.
Among these were Cato Corp., Class A(+147%), Fred's Inc. (+150%), Courier Corp.
(+69%), DBA Systems, Inc. (+61%), HF Financial Corp. (+67%), Analysis &
Technology, Inc. (+83%), Calumet Bancorp, Inc. (+78%), Enex Resources Corp.
(+61%), Seaman Furniture Co. (+40%), Hallmark Capital Corp. (+91%), Universal
Electronics (+98%), Ameriwood Industries International Corp. (+52%), Centigram
Communications Corp. (+66%), and American National Bancorp, Inc. (+106%).
Ameriwood, Enex, DBA and Seaman were takeovers. Other deals that were agreed but
not completed at period's end included A.P. Green Industries, Inc., Bertucci's,
Inc., American Waste Services, Inc., Class A, Buttrey Food and Drug Stores Co.,
Citizens Electric Co., Little Switzerland, Inc., and Morrison Restaurants, Inc.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
In contrast to the gains mentioned above, Hi-Lo Automotive, Inc., one of the
fund's large positions, was a disappointment. Although it was taken over, its
price did not increase significantly relative to our cost, and we did not
realize the return we expected when we bought it.
Cash flow into the fund over the six months totaled $26.8 million. We directed
the funds to new and existing investments in generally the same areas as
previously invested. We continue to search for worthwhile opportunities among
micro-cap companies.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY
Franklin MicroCap Value Fund produced a +12.51% cumulative total return for the
six-month period ended April 30, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of all distributions,
and does not include the sales charge.
The fund's share price, as measured by net asset value, increased $1.32, from
$24.29 on October 31, 1997, to $25.61 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 0.8 cents ($0.008) in
dividend income, 69.13 cents ($0.6913) in short-term capital gains, and 79.17
cents ($0.7917) in long-term capital gains. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio. Past distributions are not indicative of future trends.
Franklin MicroCap Value Fund
Periods ended 4/30/98
Since
Inception
1-Year (12/12/95)
Cumulative Total Return1 45.14% 87.99%
Average Annual Total Return2 38.59% 27.84%
Value of $10,000 Investment3 $13,859 $17,949
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 4.50% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include sales charges.
Past expense reductions by the fund's manager increased the fund's total
returns.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, and you may have a gain or loss
when you sell your shares.
Past performance is not predictive of future results.
FRANKLIN VALUE FUND
Your Fund's Objective: Franklin Value Fund seeks long-term total return by
investing in the securities of companies that we believe are undervalued. The
fund will seek income when deemed consistent with its objective.
We are pleased to report that, as shown in the Performance Summary on page 17,
Franklin Value Fund's Class I shares provided a +4.81% total return for the six
months ended April 30, 1998. By comparison, the unmanaged Wilshire Small Company
Value Index returned +14.33% for the same period.1 As mentioned in the October
31, 1997, annual report, we are using the Wilshire Small Company Value Index as
a benchmark of the fund's performance. It is composed of 125 to 500 securities
of companies with market capitalizations of at least $70 million. The index
excludes companies with high price to earnings ratios, low yields, or high price
to book ratios. While our investment focus is directed toward both large and
small capitalization stocks, the new index is more reflective of actual
portfolio holdings. We have always maintained a long-term perspective when
managing the fund, and we encourage shareholders to view their investments in a
similar manner. As you can see from the table on page 18, the fund delivered a
+77.21% cumulative total return since its inception in March 1996. Over the same
period, the Wilshire Small Company Value Index returned +61.27%.
1. Source: Standard and Poor's(R) Micropal. Indices are unmanaged and include
reinvested dividends. One cannot invest directly in an index.
Franklin Value Fund includes companies of many sizes. As of April 30, 1998, the
average market capitalization of Franklin Value Fund's portfolio was $479.6
million, which would normally place the fund in the small-cap fund category.
Although it currently belongs in that group, and will likely fit there for some
time into the future, we underscore that size is not a criterion in selecting
stocks for the fund. While our management team recently found its most
attractive values in the small-cap area (market cap below $1.5 billion), we
welcome large-cap stocks that fit our value criteria and, in fact, own a few in
the mega-cap class. As managers, our mandate is to find bargains of any size,
not to focus on a specific class.
You can see this variation in market capitalization among the fund's 10 largest
positions listed in the chart to the right. In this group are companies with
market caps ranging from tiny Tropical Sportswear International Corp. with a
total market capitalization of $129 million, to Rowan Companies, Inc., with more
than $2.6 billion in market capitalization.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
An important element in our bargain hunting procedure is our focus on decent
companies with healthy balance sheets, that are suffering (temporarily, we hope)
from current investor concerns. An example of these concerns was the sharp price
drop in oil drilling and service companies that accompanied the oil price
declines to $13.11 per barrel. A high quality oil and gas driller such as Rowan,
which sold above $43 within the past year, struck us at a bargain at $27, a 38%
discount from its recent high. Tidewater, Inc., a leading supplier of ships to
the oil and gas drillers, sold as high as $69 per share in the last 12 months.
At $43 per share, 39% below its recent high, we believe investor concerns are
overdone. These two large positions are typical of our approach: buy good
companies when they are out of favor and have patience until their value is
recognized by other investors.
"...our approach: buy good companies when they are out of favor and have
patience until their value is recognized by other investors."
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY
Class I
Franklin Value Fund - Class I produced a +4.81% cumulative total return for the
six-month period ended April 30, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of all distributions,
and does not include the sales charge.
The fund's share price, as measured by net asset value, increased 95 cents, from
$24.68 on October 31, 1997, to $25.63 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 1.2 cents ($0.012) in
dividend income, 17.66 cents ($0.1766) in short-term capital gains, and 3.14
cents ($0.0314) in long-term capital gains. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio. Past distributions are not indicative of future trends.
Franklin Value Fund - Class I
Periods ended 4/30/98
Since
Inception
1-Year (3/11/96)
Cumulative Total Return1 37.07% 77.21%
Average Annual Total Return2 30.90% 27.93%
Value of $10,000 Investment3 $13,090 $16,920
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 4.5% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the sales charge.
Past expense reductions by the fund's manager increased the fund's total
returns. All calculations assume reinvestment of dividends and capital gains at
net asset value. Since markets can go down as well as up, investment return and
principal value will fluctuate with market conditions, and you may have a gain
or loss when you sell your shares.
Class II
Franklin Value Fund - Class II produced a +4.53% cumulative total return for the
six-month period ended April 30, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of all distributions and
does not include sales charges.
The fund's share price, as measured by net asset value, increased 89 cents, from
$24.59 on October 31, 1997, to $25.48 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 0.0 cents ($0.00) in
dividend income, 17.66 cents ($0.1766) in short-term capital gains, and 3.14
cents ($0.0314) in long-term capital gains. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio.
Past distributions are not indicative of future trends.
Franklin Value Fund - Class II
4/30/98
Since
Inception
1-Year (9/3/96)
Cumulative Total Return1 36.49% 60.78%
Average Annual Total Return2 33.93% 32.48%
Value of $10,000 Investment3 $13,393 $15,922
1. Cumulative total return measures the change in value of an investment over
the period indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 1.0% initial
sales charge and the 1.0% contingent deferred sales charge, applicable to shares
redeemed within 18 months of investment.
3. These figures represent a hypothetical $10,000 investment in the fund over
the periods indicated and include sales charges.
Past expense reductions by the fund's manager increased the fund's total
returns. All calculations assume reinvestment of dividends and capital gains, if
any, at net asset value. Since markets can go down as well as up, investment
return and principal value will fluctuate with market conditions, and you may
have a gain or loss when you sell your shares.
Advisor Class
Franklin Value Fund - Advisor Class produced a +5.03% cumulative total return
for the six-month period ended April 30, 1998. Cumulative total return measures
the change in value of an investment, assuming reinvestment of all
distributions.
The fund's share price, as measured by net asset value, increased 99 cents, from
$24.72 on October 31, 1997, to $25.71 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 2.8 cents ($0.028) in
dividend income, 17.66 cents ($0.1766) in short-term capital gains, and 3.14
cents ($0.0314) in long-term capital gains. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio. Past distributions are not indicative of future trends.
Franklin Value Fund - Advisor Class
Periods ended 4/30/98
Since
Inception
1-Year* (3/11/96)*
Cumulative Total Return1 37.67% 78.14%
Average Annual Total Return1 37.67% 31.05%
Value of $10,000 Investment2 $13,767 $17,814
*On January 2, 1997, the fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Class I expenses, including Rule 12b-1 fees;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable only to
that class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was 28.22%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated. Past expense reductions by the fund's manager
increased the fund's total returns.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, and you may have a gain or loss
when you sell your shares.
Past performance is not predictive of future results.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
Franklin Balance Sheet Investment Fund
<TABLE>
<CAPTION>
Class I
--------------------------------------------------------------
Six Months Ended
April 30, 1998 Year Ended October 31,
(unaudited) 1997 1996 1995 1994 1993
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period ... $35.22 $29.15 $26.34 $22.68 $22.97 $17.37
--------------------------------------------------------------
Income from investment operations:.......
Net investment income .................. .22 .48 .47 .30 .23 .39
Net realized and unrealized gains ...... 3.80 8.40 3.85 3.98 .51 6.26
--------------------------------------------------------------
Total from investment operations ........ 4.02 8.88 4.32 4.28 .74 6.65
--------------------------------------------------------------
Less distributions from:
Net investment income .................. (.27) (.46) (.44) (.27) (.26) (.43)
Net realized gains ..................... (1.80) (2.35) (1.07) (.35) (.77) (.62)
--------------------------------------------------------------
Total distributions ..................... (2.07) (2.81) (1.51) (.62) (1.03) (1.05)
--------------------------------------------------------------
Net asset value, end of period .......... $37.17 $35.22 $29.15 $26.34 $22.68 $22.97
==============================================================
Total return* ........................... 12.18% 32.86% 16.93% 19.32% 3.42% 37.78%
Ratios/supplemental data
Net assets, end of period (000's) ....... $1,639,621 $1,222,953 $657,002 $387,540 $134,255 $22,317
Ratio to average net assets:
Expenses ............................... .98%** 1.08% 1.08% 1.17% 1.19% --
Expenses excluding waiver
and payments by affiliate .............. .98%** 1.08% 1.08% 1.17% 1.34% 1.85%
Net investment income .................. 1.30%** 1.59% 1.69% 1.30% .99% 1.89%
Portfolio turnover rate ................. 4.05% 24.63% 35.46% 28.63% 24.96% 31.36%
Average commission rate paid*** ......... $.0470 $.0384 $.0453 -- -- --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were invested at the offering price.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year end
1996 disclosure of average commission rate was not required.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Statement of Investments, April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Franklin Balance Sheet Investment Fund SHARES VALUE
<S> <C> <C>
Common Stocks 81.6%
Closed End Funds 4.7%
Central European Equity Fund ............................................ 225,000 $ 4,443,750
Emerging Markets Infrastructure Fund, Inc. .............................. 300,000 3,506,250
Growth Fund of Spain, Inc. .............................................. 275,000 5,929,688
H & Q Healthcare Investors .............................................. 150,000 2,550,000
INVESCO Global Health Sciences Fund ..................................... 325,000 6,418,750
Irish Investment Fund, Inc. ............................................. 135,000 3,341,250
John Hancock Bank and Thrift Opportunity Fund ........................... 1,150,000 15,237,500
Latin America Investment Fund, Inc. ..................................... 175,000 2,504,688
Latin American Equity Fund, Inc. ........................................ 175,000 2,351,563
Liberty All Star Growth Fund ............................................ 150,000 2,043,750
Mexico Fund ............................................................. 625,000 11,367,188
Morgan Grenfell Smallcap Fund, Inc. ..................................... 123,800 1,385,013
Petroleum & Resources Corp. ............................................. 60,000 2,325,000
Royce Global Trust, Inc. ................................................ 160,000 950,000
Royce OTC Micro-Cap Trust ............................................... 50,000 556,250
Royce Value Trust ....................................................... 52,500 892,500
Scudder New Europe Fund, Inc. ........................................... 325,000 6,621,875
Swiss Helvetia Fund ..................................................... 125,000 3,828,125
---------------
76,253,140
---------------
Commercial Services 2.9%
a Craig Corp. ............................................................. 59,700 794,756
a,cHandleman Co. ........................................................... 2,409,000 25,595,625
c Nash-Finch Co. .......................................................... 1,000,000 19,625,000
Noland Co. .............................................................. 47,800 1,254,750
---------------
47,270,131
---------------
Consumer Durables 8.1%
c Allen Organ Co., Class B ................................................ 83,000 3,403,000
a Ameriwood Industries International Corp. ................................ 200,000 1,893,760
a,cAudiovox Corp., Class A ................................................ 1,658,800 11,922,609
a Baldwin Piano & Organ Co. ............................................... 126,300 2,005,013
a Beazer Homes USA, Inc. .................................................. 256,700 6,257,063
a,cCastle & Cooke, Inc. .................................................... 1,782,400 30,746,400
c Dixie Group, Inc. ....................................................... 600,000 7,537,500
a Jan Bell Marketing, Inc. ................................................ 283,700 1,578,081
c M.D.C. Holdings, Inc. ................................................... 1,000,000 17,187,500
a OroAmerica, Inc. ........................................................ 92,000 1,035,000
a Powerhouse Technologies, Inc. ........................................... 122,500 1,209,688
c Pulaski Furniture Corp. ................................................. 192,000 4,800,000
a River Oaks Furniture, Inc. .............................................. 23,000 15,813
Ryland Group, Inc. ...................................................... 386,600 8,094,438
a Schuler Homes, Inc. ..................................................... 537,400 4,769,425
a Treadco, Inc. ........................................................... 38,000 377,625
a,cU.S. Home Corp. ......................................................... 700,800 29,083,200
a Washington Homes, Inc. .................................................. 224,000 1,148,000
---------------
133,064,115
---------------
Consumer Non-Durables 3.4%
c Chic By H.I.S., Inc. .................................................... 756,000 $ 6,331,500
a,cCyrk, Inc. .............................................................. 1,200,900 19,214,400
a,cFarah, Inc. ............................................................. 800,000 5,550,000
c Garan, Inc. ............................................................. 285,100 7,875,888
Genesee Corp., Class B .................................................. 117,900 4,148,606
c Haggar Corp. ............................................................ 850,000 12,431,250
a Hampton Industries, Inc. ................................................ 73,800 535,050
---------------
56,086,694
---------------
Consumer Services 3.8%
a,cAztar Corp. ............................................................. 3,400,000 26,562,500
a Bertucci's, Inc. ........................................................ 249,400 2,416,063
a Casino Data Systems ..................................................... 775,000 3,100,000
a,cHomebase, Inc. .......................................................... 2,408,300 20,169,513
a,cUnique Casual Restaurants, Inc. ......................................... 785,000 4,513,750
a VICORP Restaurants, Inc. ................................................ 280,000 5,005,000
---------------
61,766,826
---------------
Electronic Technology 2.8%
a,cAydin Corp. ............................................................. 270,000 2,683,125
a Centigram Communications Corp. .......................................... 243,400 3,225,050
a,cESCO Electronics Corp. .................................................. 840,000 15,435,000
Espey Manufacturing & Electronics Corp. ................................. 15,000 225,000
a FSI International, Inc. ................................................. 161,500 1,897,625
a Intergraph Corp. ........................................................ 1,150,000 9,775,000
a,cStandard Microsystems Corp. ............................................. 1,196,500 13,161,500
---------------
46,402,300
---------------
Energy Minerals 2.1%
a,cCrown Central Petroleum, Class B ........................................ 500,000 7,250,000
Kentucky River Coal Corp. ............................................... 418 1,285,350
a,cMaynard Oil Co. ......................................................... 268,000 2,780,500
c Rochester & Pittsburgh Coal Co. ......................................... 174,000 8,178,000
Ultramar Diamond Shamrock Corp. ......................................... 483,000 15,606,938
---------------
35,100,788
---------------
Finance 21.3%
a,cACMAT Corp., Class A .................................................... 295,000 4,609,375
Ameriana Bancorp, Inc. .................................................. 6,000 121,500
American General Corp. .................................................. 397,283 26,468,980
American Indemnity Financial Corp. ...................................... 90,000 1,068,750
American National Insurance Co. ......................................... 378,800 40,910,400
AmerUs Life Holdings, Inc., Class A ..................................... 89,400 2,860,800
Amwest Insurance Group, Inc. ............................................ 82,170 1,345,534
a Annuity and Life Re (Holdings), Ltd. .................................... 200 4,775
Argonaut Group, Inc. .................................................... 161,000 5,514,250
Baldwin & Lyons, Class B ................................................ 91,477 2,149,710
a Bank Plus Corp. ......................................................... 915,000 12,867,188
a Brookline Bancorp, Inc. ................................................. 55,000 955,625
Finance (cont.)
a Calumet Bancorp, Inc. ................................................... 105,000 $ 3,832,500
Chartwell Re Corp. ...................................................... 225,000 6,932,813
a,cEchelon International Corp., Inc. ....................................... 500,000 13,500,000
a Farm Family Holdings, Inc. .............................................. 137,000 5,454,313
Farmers & Merchants Bank of Long Beach .................................. 2,400 6,660,000
FBL Financial Group, Inc., Class A ...................................... 884,000 25,415,000
c Fidelity Bancorp, Inc. .................................................. 144,500 3,738,938
Fidelity Financial Ohio, Inc. ........................................... 93,000 1,708,875
First Defiance Financial Corp. .......................................... 300,000 4,500,000
a,cFirst Financial Bancorp, Inc. ........................................... 24,000 612,000
First Shenango Bancorp, Inc. ............................................ 30,275 1,392,650
GA Financial, Inc. ...................................................... 198,700 3,924,325
Guarantee Life Companies, Inc. .......................................... 135,100 3,664,588
Kansas City Life Insurance Co. .......................................... 800 68,000
LandAmerica Financial Group, Inc. ....................................... 152,500 8,044,375
Lehman Brothers Holdings, Inc. .......................................... 85,000 6,040,313
c Merchants Group, Inc. ................................................... 257,800 6,767,250
Meridian Insurance Group, Inc. .......................................... 272,000 5,117,000
MMI Companies, Inc. ..................................................... 336,500 7,907,750
a National Western Life Insurance Co., Class A ............................ 98,000 10,167,500
Presidential Life Corp. ................................................. 728,000 14,833,000
Price Enterprises, Inc. ................................................. 533,400 9,801,225
a Professionals Insurance Co. Management Group ............................ 90,650 3,739,313
a Provident Financial Holdings, Inc. ...................................... 10,000 235,000
PXRE Corp. .............................................................. 425,700 12,824,213
a Quaker City Bancorp, Inc. ............................................... 110,000 2,488,750
a Risk Capital Holdings, Inc. ............................................. 510,100 12,784,381
Rouse Co. ............................................................... 367,800 11,355,825
Scor (France) ........................................................... 350,000 21,566,200
SCPIE Holdings, Inc. .................................................... 472,800 16,045,650
c Stewart Information Services Corp. ...................................... 493,600 17,337,700
Westco Bancorp, Inc. .................................................... 69,000 2,035,500
---------------
349,371,834
---------------
Health Services .5%
a Trigon Healthcare, Inc. ................................................. 273,300 8,301,488
---------------
Industrial Services .8%
c Ecology and Environment, Inc., Class A .................................. 260,000 2,665,000
a Emcon ................................................................... 200,000 1,000,000
a Harding Lawson Associates Group, Inc. ................................... 135,800 1,425,900
a Matrix Service Co. ...................................................... 279,400 2,130,425
Petroleum Helicopters, Inc., Non Voting ................................. 220,000 4,922,500
Petroleum Helicopters, Inc., Voting ..................................... 77,500 1,767,969
---------------
13,911,794
---------------
Non-Energy Minerals 4.6%
British Steel, Plc. ..................................................... 10,000,000 $ 26,668,227
a Devcon International Corp. .............................................. 216,200 783,725
LTV Corp. ............................................................... 3,516,600 45,715,800
a Zemex Corp. ............................................................. 169,700 1,675,788
---------------
74,843,540
---------------
Process Industries 2.8%
c A.P. Green Industries, Inc. ............................................. 521,300 10,947,300
a,cAmerican Pacific Corp. .................................................. 421,100 4,421,550
a Corn Products International, Inc. ....................................... 170,000 6,056,250
c Delta Woodside Industries, Inc. ......................................... 2,400,000 14,550,000
Mercer International, Inc. .............................................. 175,000 1,673,438
Mine Safety Appliances Co. .............................................. 18,400 1,324,800
a Orange-co, Inc. ......................................................... 234,000 1,535,625
Terra Industries, Inc. .................................................. 293,200 3,151,900
Thomaston Mills, Inc., Class A........................................... 205,600 1,734,750
---------------
45,395,613
---------------
Producer Manufacturing 5.7%
c Binks Sames Corp. ....................................................... 149,300 6,475,888
a,cCherry Corp., Class A ................................................... 408,900 7,564,650
a,cCherry Corp., Class B ................................................... 271,000 5,115,125
c Commonwealth Industries, Inc. ........................................... 1,219,100 20,724,700
c Insteel Industries, Inc. ................................................ 580,000 4,241,250
c Monarch Machine Tool Co. ................................................ 250,000 2,031,250
a Nashua Corp. ............................................................ 299,100 4,598,663
c Oshkosh Truck Corp., Class B ............................................ 460,400 9,035,350
c Pitt-Des Moines, Inc. ................................................... 177,500 9,806,875
Tecumseh Products Co., Class A .......................................... 318,000 16,019,250
Tecumseh Products Co., Class B........................................... 104,300 5,508,344
c TransPro, Inc. .......................................................... 345,500 2,850,375
---------------
93,971,720
---------------
Retail Trade 7.9%
a,cButtrey Food and Drug Stores Co. ........................................ 467,700 7,132,425
Cato Corp., Class A ..................................................... 782,900 11,156,325
a,cCharming Shoppes, Inc. .................................................. 5,343,300 24,880,008
a Crown Books Corp. ....................................................... 160,000 1,240,000
DEB Shops, Inc. ......................................................... 51,000 366,563
a,cDesigns, Inc. .......................................................... 1,200,000 2,550,000
a Evans, Inc. ............................................................. 201,100 188,531
c Fred's, Inc. ............................................................ 700,000 17,500,000
a,cGood Guys!, Inc. ........................................................ 737,500 9,403,125
Haverty Furniture Co., Inc. ............................................. 398,100 8,807,963
a,cJacobson Stores, Inc. ................................................... 298,100 3,912,563
a Kmart Corp. ............................................................. 590,000 10,288,125
a Lechters, Inc. .......................................................... 733,500 4,790,709
a Little Switzerland, Inc. ................................................ 192,000 1,536,000
Retail Trade (cont.)
a PriceSmart, Inc. ........................................................ 133,350 $ 2,133,600
a Syms Corp. .............................................................. 869,600 12,880,950
a United Retail Group, Inc. ............................................... 565,600 4,595,500
c Wolohan Lumber Co. ...................................................... 520,000 6,467,500
---------------
129,829,887
---------------
Technology Services .1%
a Government Technology Services, Inc. .................................... 192,800 843,500
---------------
Transportation 3.0%
a Crowley Maritime Corp. .................................................. 4,440 5,683,200
c International Shipholding Corp. ......................................... 660,000 11,220,000
a KLLM Transport Services, Inc. ........................................... 77,000 904,750
a Mesa Air Group, Inc. .................................................... 875,500 7,004,000
Overseas Shipholding Group, Inc. ........................................ 1,021,200 21,700,500
a TransFinancial Holdings, Inc. ........................................... 270,000 2,497,500
---------------
49,009,950
---------------
Utilities 7.1%
Central Maine Power Co. ................................................. 1,431,100 26,028,131
New York State Electric & Gas Corp. ..................................... 226,700 9,464,725
Entergy Corp. ........................................................... 1,300,000 32,337,500
a,cKaneb Services, Inc. .................................................... 3,126,300 18,367,013
a Niagara Mohawk Power Corp. .............................................. 2,425,000 29,706,250
---------------
115,903,619
---------------
Company In Liquidation
Strawbridge & Clothier .................................................. 330,500 --
---------------
Total Common Stocks (Cost $995,778,346) ................................. 1,337,326,939
---------------
Preferred Stocks
a Craig Corp. pfd (Cost $424,155) ......................................... 59,700 761,175
---------------
PRINCIPAL
AMOUNT
Bonds .3%
Hechinger Co., 6.95%, 10/15/03 (Cost $4,627,788) ........................ $ 7,000,000 5,320,000
---------------
Total Long Term Investments (Cost $1,000,830,289) ....................... $1,343,408,114
---------------
Joint Repurchase Agreement, 5.487%, 05/01/98,
(Maturity Value $296,983,332) (Cost $296,938,070)............................ $296,938,070 $ 296,938,070
BancAmerica Robertson Stephens (Maturity Value $26,479,302)
Barclays Capital Group, Inc. (Maturity Value $26,479,302)
Bear, Stearns & Co., Inc. (Maturity Value $14,443,256)
BT Alex. Brown, Inc. (Maturity Value $26,479,302)
Chase Securities, Inc. (Maturity Value $17,747,060)
Donaldson, Lufkin & Jenrette Securities Corp. (Maturity Value $26,479,302)
Dresdner Kleinwort Benson North America L.L.C. (Maturity Value $26,479,302)
Greenwich Capital Markets, Inc. (Maturity Value $26,479,302)
Lehman Brothers, Inc. (Maturity Value $26,479,301)
Paribas Corp. (Maturity Value $26,479,301)
SBC Warburg Dillon Read, Inc. (Maturity Value $26,479,301)
UBS Securities, L.L.C. (Maturity Value $26,479,301)
Collateralized by U.S. Treasury Bills and Notes
Total Investments (Cost $1,297,768,359) 100.0%........................... $1,640,346,184
Other Assets, less Liabilities........................................... (725,671)
---------------
Net Assets 100.0 %....................................................... $1,639,620,513
===============
</TABLE>
a Non-income producing.
b See Note 1(d) regarding joint repurchase agreement.
c See Note 7 regarding holdings of 5% voting securities.
<TABLE>
<CAPTION>
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
Franklin MicroCap Value Fund
Class I
---------------------------------------
Six Months Ended
April 30, 1998 Year Ended October 31,
(unaudited) 1997 19961
---------------------------------------
<S> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period................................... $24.29 $18.44 $15.00
---------------------------------------
Income from investment operations:
Net investment income (loss).......................................... (.02) (.01) .14
Net realized and unrealized gains..................................... 2.83 6.33 3.41
---------------------------------------
Total from investment operations....................................... 2.81 6.32 3.55
---------------------------------------
Less distributions from:
Net investment income................................................. -- (.07) (.11)
In excess of net investment income.................................... (.01) -- --
Net realized gains.................................................... (1.48) (.40) --
---------------------------------------
Total distributions.................................................... (1.49) (.47) (.11)
---------------------------------------
Net asset value, end of period......................................... $25.61 $24.29 $18.44
=======================================
Total return*.......................................................... 12.51% 35.05% 23.72%
Ratios/supplemental data
Net assets, end of period (000's)...................................... $232,102 $191,638 $119,664
Ratios to average net assets:
Expenses.............................................................. 1.20%** 1.22% 1.24%**
Net investment income (loss).......................................... (.12%)** (.05%) 1.28%**
Portfolio turnover rate................................................ 13.19% 21.33% 14.15%
Average commission rate paid***........................................ $.0444 $.0437 $.0476
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities.
1For the period December 12, 1995 (effective date) to October 31, 1996.
See notes to financial statements.
<TABLE>
<CAPTION>
FRANKLIN VALUE INVESTORS TRUST
Statement of Investments, April 30, 1998 (unaudited)
Franklin MicroCap Value Fund SHARES VALUE
<S> <C> <C>
Common Stocks 96.4%
Commercial Services 3.0%
a,cAllou Health and Beauty, Inc., Class A ................................. 407,000 $ 4,680,500
a Craig Corp. ............................................................. 50,500 672,281
Noland Co. .............................................................. 48,500 1,273,125
---------------
6,625,906
---------------
Consumer Durables 10.4%
a Acorn Products, Inc. .................................................... 7,300 67,525
Allen Organ Co., Class B ................................................ 42,000 1,722,000
a Ameriwood Industries International Corp. ................................ 200,000 1,893,760
a Baldwin Piano & Organ Co. ............................................... 53,700 852,488
a Beazer Homes USA, Inc. .................................................. 76,800 1,872,000
a Dixie Group, Inc. ....................................................... 100,000 1,256,250
Engle Homes, Inc. ....................................................... 100,000 1,537,500
a First Team Sports, Inc. ................................................. 8,000 23,750
a Jan Bell Marketing, Inc. ................................................ 283,600 1,577,525
Liberty Homes, Inc., Class A ............................................ 9,000 96,750
M/I Schottenstein Homes, Inc. ........................................... 161,500 3,704,406
a,cOriole Homes Corp., Class B ............................................. 360,000 1,777,500
a OroAmerica, Inc. ........................................................ 51,300 577,125
a Powerhouse Technologies, Inc. ........................................... 107,000 1,056,625
Pulaski Furniture Corp. ................................................. 80,000 2,000,000
a,cRiver Oaks Furniture, Inc. .............................................. 394,600 271,288
a,cTreadco, Inc............................................................. 255,000 2,534,063
a Washington Homes, Inc. .................................................. 238,500 1,222,313
---------------
24,042,868
---------------
Consumer Non-Durables 4.7%
a Chic By H.I.S., Inc. .................................................... 194,100 1,625,588
a Farah, Inc. ............................................................. 200,000 1,387,500
Garan, Inc. ............................................................. 120,500 3,328,813
Genesee Corp., Class A .................................................. 600 21,113
Genesee Corp., Class B .................................................. 36,000 1,266,750
a Hampton Industries, Inc. ................................................ 201,200 1,458,700
a Norton McNaughton, Inc. ................................................. 300,000 1,912,500
---------------
11,000,964
---------------
Consumer Services 6.8%
a Bertucci's, Inc. ........................................................ 444,600 4,307,052
a Casino Data Systems ..................................................... 626,000 2,504,000
a,cMorrison Restaurants, Inc. .............................................. 500,000 2,468,750
a,cSpaghetti Warehouse, Inc. .............................................. 550,000 4,262,500
a Unique Casual Restaurants, Inc. ......................................... 350,000 2,012,500
a VICORP Restaurants, Inc. ................................................ 14,100 252,038
---------------
15,806,840
---------------
Electronic Technology 5.9%
a Aehr Test Systems ....................................................... 125,000 765,625
a Aydin Corp. ............................................................. 210,000 2,086,875
a Datron Systems, Inc. .................................................... 107,800 808,500
Electronic Technology (cont.)
a,cECC International Corp. ................................................. 705,000 $ 2,335,313
c Espey Manufacturing & Electronics Corp. ................................. 93,000 1,395,000
c Moore Products Co. ...................................................... 134,700 4,714,500
a SPACEHAB, Inc. .......................................................... 137,700 1,531,913
a Titan Corp. ............................................................. 12 93
---------------
13,637,819
---------------
Energy Minerals 2.5%
a Crystal Oil Co. ......................................................... 47,900 1,916,000
Kentucky River Coal Corp. ............................................... 200 615,000
a,cMaynard Oil Co. ........................................................ 298,500 3,096,938
Rochester & Pittsburgh Coal Co. ......................................... 4,900 230,300
---------------
5,858,238
---------------
Finance 15.7%
a,cACMAT Corp., Class A ................................................... 150,000 2,343,750
a,cAllstate Financial Corp. ................................................ 209,000 1,632,813
a American Indemnity Financial Corp. ...................................... 70,000 831,250
Amwest Insurance Group, Inc. ............................................ 174,900 2,863,988
Bayonne Bancshares, Inc. ................................................ 188,005 3,102,083
a Farm Family Holdings, Inc. .............................................. 50,000 1,990,625
FFD Financial Corp. ..................................................... 35,000 783,125
Fidelity Financial of Ohio, Inc. ........................................ 116,000 2,131,500
a First Financial Bancorp, Inc. ........................................... 2,500 63,750
GA Financial, Inc. ...................................................... 150,300 2,968,425
a HF Bancorp, Inc. ........................................................ 100,000 1,687,500
Landmark Bancshares, Inc. ............................................... 51,700 1,415,288
Little Falls Bancorp, Inc. .............................................. 70,000 1,487,500
Merchants Group, Inc. ................................................... 500 13,125
Meridian Insurance Group, Inc. .......................................... 128,000 2,408,000
MidCity Financial Corp. ................................................. 600 2,400,000
National Security Group, Inc. ........................................... 9,500 187,031
Old Guard Group, Inc. ................................................... 107,500 2,230,625
Peoples Home Savings Bank ............................................... 16,200 352,350
a Professional Insurance Co. Management Group ............................. 92,450 3,813,563
a Quaker City Bancorp, Inc. ............................................... 80,000 1,810,000
---------------
36,516,291
---------------
Industrial Services 9.8%
a American Waste Services, Inc., Class A .................................. 754,000 3,063,125
c Ecology and Environment, Inc., Class A .................................. 110,000 1,127,500
a,cEmcon ................................................................... 650,000 3,250,000
a Fluor Daniel/GTI, Inc. .................................................. 250,000 2,359,375
a Guy F. Atkinson Co. ..................................................... 83,500 1,336
a,cGZA GeoEnvironmental Technologies, Inc. ................................. 291,500 1,457,500
a,cHarding Lawson Associates Group, Inc. .................................. 304,900 3,201,450
a Matrix Service Co. ...................................................... 24,900 189,863
NSC Corp. ............................................................... 110,000 254,375
Industrial Services (cont.)
Petroleum Helicopters, Inc., Non Voting ................................. 113,000 $ 2,528,375
Petroleum Helicopters, Inc., Voting ..................................... 17,600 401,500
a,cRoy F. Weston, Inc., Class A ........................................... 633,000 2,650,688
a,cTEI, Inc. ............................................................... 1,000,000 2,343,800
---------------
22,828,887
---------------
Non-Energy Minerals 3.3%
Case Pomery & Co., Inc., Class B ........................................ 500 575,000
a,cDevcon International Corp. ............................................. 230,000 833,750
a,cKentucky Electric Steel, Inc. .......................................... 450,000 2,643,750
a Zemex Corp. ............................................................. 375,268 3,705,772
---------------
7,758,272
---------------
Process Industries 5.0%
A.P. Green Industries, Inc. ............................................. 123,600 2,595,600
a American Pacific Corp. .................................................. 300,000 3,150,000
a,dBibb Co. ................................................................ 72,000 747,000
a,cConcord Fabrics, Inc., Class A ....................................... 148,800 1,525,200
a Griffin Land & Nurseries, Inc. .......................................... 94,600 1,537,250
a Orange-co, Inc. ......................................................... 150,000 984,375
Thomaston Mills, Inc., Class A .......................................... 128,800 1,086,750
---------------
11,626,175
---------------
Producer Manufacturing 7.3%
a,cAerovox, Inc. ......................................................... 400,000 1,400,000
a,cArt's-Way Manufacturing Co., Inc. ..................................... 82,500 721,875
a,cAthey Products Corp. ................................................... 200,000 856,260
a Bridgeport Machines, Inc. ............................................... 14,000 180,250
a Continental Materials Corp. ............................................. 50,000 1,757,815
Insteel Industries, Inc. ................................................ 260,000 1,901,250
Monarch Machine Tool Co. ................................................ 101,000 820,625
a Nashua Corp. ............................................................ 142,900 2,197,088
Pitt-Des Moines, Inc. ................................................... 45,000 2,486,250
Somerest Group, Inc. .................................................... 40,000 950,000
TAB Products Co. ........................................................ 60,000 885,000
a,cTemtex Industries, Inc. ............................................... 265,500 995,625
a Todd Shipyards Corp. .................................................... 2,500 18,125
TransPro, Inc. .......................................................... 214,600 1,770,450
---------------
16,940,613
---------------
Retail Trade 13.1%
a Buttrey Food and Drug Stores Co. ........................................ 188,300 2,871,575
a Catherines Stores Corp. ................................................. 101,700 1,042,425
a Cosmetic Center, Inc., Class C .......................................... 5,500 19,938
a,cCrown Books Corp. ..................................................... 304,000 2,356,000
DEB Shops, Inc. ......................................................... 150,000 1,078,125
a Designs, Inc. ........................................................... 700,000 1,487,500
a Good Guys!, Inc. ........................................................ 294,300 3,752,325
a Homeland Holding Corp. .................................................. 8,600 67,188
Retail Trade (cont.)
a Jacobson Stores, Inc. ................................................... 87,200 $ 1,144,500
a Jos. A. Bank Clothiers, Inc. ............................................ 42,000 315,000
a Lechters, Inc. .......................................................... 640,000 4,180,032
a Little Switzerland, Inc. ................................................ 290,000 2,320,000
a S & K Famous Brands, Inc. ............................................... 60,000 975,000
a Syms Corp. .............................................................. 100,600 1,490,138
a Trak Auto Corp. ......................................................... 54,000 648,000
a United Retail Group, Inc. ............................................... 445,000 3,615,625
a,cVillage Super Market, Inc., Class A .................................. 95,000 1,270,625
Wolohan Lumber Co. ...................................................... 138,000 1,716,375
Zions Co-Op Mercantile Institution ...................................... 9,400 137,475
---------------
30,487,846
---------------
Technology Services 2.4%
a,cAmerican Physicians Service Group, Inc. ................................ 247,000 1,759,875
a,cGovernment Technology Services, Inc. .................................. 430,200 1,882,125
a Interlink Computer Sciences, Inc. ....................................... 380,000 1,971,250
---------------
5,613,250
---------------
Transportation 4.5%
a Crowley Maritime Corp. .................................................. 2,200 2,816,000
a,cKLLM Transport Services, Inc. ......................................... 219,000 2,573,250
Providence and Worcester Railroad Co. ................................... 111,700 1,898,900
a,cTransFinancial Holdings, Inc. ......................................... 336,000 3,108,000
---------------
10,396,150
---------------
Utilities 2.0%
a Atlantic Tele-Network, Inc. ............................................. 229,200 2,807,700
Citizens Electric Co. ................................................... 4,600 292,100
c Maine Public Service Co. ................................................ 112,800 1,614,450
---------------
4,714,250
---------------
Total Common Stocks (Cost $169,557,667) ................................. 223,854,369
---------------
Preferred Stock .3%
a Craig Corp. pfd (Cost $358,794) ......................................... 50,500 643,875
---------------
Total Long Term Investments (Cost $169,916,461) ......................... 224,498,244
---------------
b Repurchase Agreement 4.0%
Joint Repurchase Agreement, 5.487%, 5/01/98,
(Maturity Value $9,253,463) (Cost $9,252,053) ............................... $9,252,053 $ 9,252,053
BancAmerica Robertson Stephens (Maturity Value $825,047)
Barclays Capital Group, Inc. (Maturity Value $825,047)
Bear, Stearns & Co., Inc. (Maturity Value $450,026)
BT Alex. Brown, Inc. (Maturity Value $825,047)
Chase Securities, Inc. (Maturity Value $552,967)
Donaldson, Lufkin & Jenrette Securities Corp. (Maturity Value $825,047)
Dresdner Kleinwort Benson North America, L.L.C. (Maturity Value $825,047)
Greenwich Capital Markets, Inc. (Maturity Value $825,047)
Lehman Brothers, Inc. (Maturity Value $825,047)
Paribas Corp. (Maturity Value $825,047)
SBC Warburg Dillon Read, Inc. (Maturity Value $825,047)
UBS Securities, L.L.C. (Maturity Value $825,047)
Collateralized by U.S. Treasury Bills and Notes
Total Investments (Cost $179,168,514) 100.7% ............................ 233,750,297
Other Assets, less Liabilities (.7%) .................................... (1,647,907)
---------------
Net Assets 100.0% ....................................................... $232,102,390
===============
</TABLE>
a Non-income producing.
b See Note 1(d) regarding joint repurchase agreement.
c See Note 7 regarding holdings of 5% voting securities.
d See Note 6 regarding restricted securities.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Value Fund
Class I
-------------------------------------
Six Months Ended
April 30, 1998 Year Ended October 31,
(unaudited) 1997 19962
-------------------------------------
<S> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .................................. $24.68 $17.15 $15.00
-------------------------------------
Income from investment operations:
Net investment income (loss).......................................... (.01) .08 .05
Net realized and unrealized gains .................................... 1.18 7.90 2.15
-------------------------------------
Total from investment operations ...................................... 1.17 7.98 2.20
-------------------------------------
Less distributions from:
Net investment income ................................................ -- (.08) (.05)
In excess of net investment income ................................... (.01) -- --
Net realized gains ................................................... (.21) (.37) --
-------------------------------------
Total distributions ................................................... (.22) (.45) (.05)
-------------------------------------
Net asset value, end of period ........................................ $25.63 $24.68 $17.15
=====================================
Total return* ......................................................... 4.81% 47.43% 14.69%
Ratios/supplemental data:
Net assets, end of period (000's) ..................................... $137,394 $78,897 $7,828
Ratios to average net assets:
Expenses ............................................................. 1.29%** 1.33% 1.35%**
Expenses excluding waiver and payments by affiliate .................. 1.31%** 1.41% 2.87%**
Net investment income (loss) ......................................... (.12%)** .27% .57%**
Portfolio turnover rate ............................................... 11.92% 13.92% .36%
Average commission rate paid*** ....................................... $.0482 $.0474 $.0464
</TABLE>
*Total return does not reflect sales commissions or contingent deferred sales
charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year end
1996 disclosure of average commission was not required.
2For the period March 11, 1996 (effective date) to October 31, 1996.
<TABLE>
<CAPTION>
Class II
-------------------------------------
Six Months Ended
April 30, 1998 Year Ended October 31,
(unaudited) 1997 19963
-------------------------------------
<S> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .................................. $24.59 $17.14 $16.38
-------------------------------------
Income from investment operations:
Net investment income (loss) ......................................... (.06) (.02) .01
Net realized and unrealized gains .................................... 1.16 7.84 .76
-------------------------------------
Total from investment operations ...................................... 1.10 7.82 .77
-------------------------------------
Less distributions from:
Net investment income ................................................ -- -- (.01)
Net realized gains ................................................... (.21) (.37) --
-------------------------------------
Total distributions ................................................... (.21) (.37) (.01)
-------------------------------------
Net asset value, end of period ........................................ $25.48 $24.59 $17.14
=====================================
Total return* ......................................................... 4.53% 46.40% 4.68%
Ratios/supplemental data
Net assets, end of period (000's) ..................................... $51,367 $21,554 $434
Ratios to average net assets:
Expenses ............................................................. 1.98%** 1.87% 2.00%**
Expenses excluding waiver and payments by affiliate .................. 2.00%** 1.96% 3.52%**
Net investment loss .................................................. (.83%)** (.30%) (.08%)**
Portfolio turnover rate ............................................... 11.92% 13.92% 32.52%
Average commission rate paid*** ....................................... $.0482 $.0474 $.0464
</TABLE>
*Total return does not reflect sales commissions or contingent deferred sales
charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year end
1996 disclosure of average commission was not required.
3For the period September 1, 1996 (effective date) to October 31, 1996.
<TABLE>
<CAPTION>
Advisor Class
-----------------------------
Six Months Ended Year Ended
April 30, 1998 October 31,
(unaudited) 19974
-----------------------------
<S> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period .................................. $24.72 $18.75
-----------------------------
Income from investment operations:
Net investment income ................................................ .02 .10
Net realized and unrealized gains .................................... 1.21 5.95
-----------------------------
Total from investment operations ...................................... 1.23 6.05
-----------------------------
Less distributions from:
Net investment income ................................................ (.03) (.08)
Net realized gains ................................................... (.21) --
-----------------------------
Total distributions ................................................... (.24) (.08)
-----------------------------
Net asset value, end of period ........................................ $25.71 $24.72
=============================
Total return* ......................................................... 5.03% 32.35%
Ratios/supplemental data
Net assets, end of period (000's) ..................................... $7,108 $4,495
Ratios to average net assets:
Expenses ............................................................. 1.00%** .98%**
Expenses excluding waiver and payments by affiliate .................. 1.01%** 1.07%**
Net investment income ................................................ .50%** .59%**
Portfolio turnover rate ............................................... 11.92% 13.92%
Average commission rate paid*** ....................................... $.0482 $.0474
</TABLE>
*Total return is not annualized.
**Annualized
***Relates to purchases and sales of equity securities.
4For the period January 1, 1997 (effective date) to October 31, 1997.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Statement of Investments, April 30, 1998 (unaudited) (cont.)
<TABLE>
<CAPTION>
Franklin Value Fund (cont.) SHARES VALUE
<S> <C> <C>
Common Stocks 98.1%
Commercial Services 3.3%
a Allou Health and Beauty, Inc., Class A .................................. 18,900 $ 217,350
Ennis Business Forms, Inc. .............................................. 100,000 1,200,000
a Kevco, Inc. ............................................................. 43,300 1,006,725
Nash-Finch Co. .......................................................... 24,000 471,000
a Republic Automotive Parts, Inc. ......................................... 97,000 1,915,750
a Rush Enterprises, Inc. .................................................. 63,000 756,000
Unisource Worldwide, Inc. ............................................... 71,000 900,813
---------------
6,467,638
---------------
Consumer Durables 9.0%
a Acorn Products, Inc. .................................................... 10,900 100,825
a Cannondale Corp. ........................................................ 203,200 3,225,800
Cavalier Homes, Inc. .................................................... 63,600 763,200
Coachmen Industries, Inc. ............................................... 131,000 3,258,625
D.R. Horton, Inc. ....................................................... 78,000 1,443,000
a Ekco Group, Inc. ........................................................ 81,100 593,044
a,cEngel General Developers, Ltd. ........................................ 240,000 1,440,000
Engle Homes, Inc. ....................................................... 38,000 584,250
Flexsteel Industries, Inc. .............................................. 46,200 643,913
Myers Industries, Inc. .................................................. 28,600 711,425
a RockShox, Inc. .......................................................... 263,000 1,479,375
Ryland Group, Inc. ...................................................... 30,000 628,125
a Southern Energy Homes, Inc. ............................................. 242,000 2,677,125
---------------
17,548,707
---------------
Consumer Non-Durables 8.8%
a Chic By H.I.S., Inc. .................................................... 20,000 167,500
DIMON, Inc. ............................................................. 354,000 5,177,250
a Ridgeview, Inc. ......................................................... 143,100 858,600
Schweitzer-Mauduit International, Inc. .................................. 80,000 2,660,000
Standard Commercial Corp. ............................................... 302,000 4,001,500
a Tropical Sportswear International Corp. ................................. 267,000 4,539,000
---------------
17,403,850
---------------
Consumer Services 0.7%
a Aztar Corp. ............................................................. 168,000 1,312,500
---------------
Electronic Technology 13.4%
a Aehr Test Systems ....................................................... 212,600 1,302,175
a Alliant Techsystems, Inc. ............................................... 34,000 2,173,875
Astro-Med, Inc. ......................................................... 91,600 664,100
a Aydin Corp. ............................................................. 19,400 192,788
a Dunn Computer Corp. ..................................................... 150,000 1,312,500
Elbit Systems, Ltd. (Israel) ............................................ 150,000 1,921,875
a ESCO Electronics Corp. .................................................. 43,000 790,125
a Komag, Inc. ............................................................. 170,000 2,635,000
a Ladish Co., Inc. ........................................................ 126,000 1,953,000
a NCR Corp. ............................................................... 65,000 2,384,688
Electronic Technology (cont.)
a RadiSys Corp. ........................................................... 5,700 $ 155,325
a Read-Rite Corp. ......................................................... 205,000 2,831,563
a SPACEHAB, Inc. .......................................................... 209,700 2,332,913
a Spectralink Corp. ....................................................... 27,300 119,438
a SpeedFam International, Inc. ............................................ 73,500 2,131,500
a Synopsis, Inc. .......................................................... 10,000 430,000
a ThermoTrex Corp. ........................................................ 23,000 458,563
a Trident Microsystems, Inc. .............................................. 205,000 1,569,542
United Industrial Corp. ................................................. 75,500 972,063
---------------
26,331,033
---------------
Energy Minerals 0.9%
a Nuevo Energy Co. ........................................................ 45,000 1,603,125
Rochester & Pittsburgh Coal Co. ......................................... 2,500 117,500
---------------
1,720,625
---------------
Finance 18.5%
a Acceptance Insurance Companies, Inc. .................................... 65,000 1,482,813
ALLIED Group, Inc. ...................................................... 10,000 298,750
ALLIED Life Financial Corp. ............................................. 120,400 2,889,600
American National Insurance Co. ......................................... 1,600 172,800
a American Safety Insurance Group, Ltd. ................................... 190,000 2,731,250
a Farm Family Holdings, Inc. .............................................. 7,800 310,538
First International Bancorp, Inc. ....................................... 9,500 164,469
Flagstar Bancorp, Inc. .................................................. 20,000 561,250
GA Financial, Inc. ...................................................... 5,000 98,750
a,eHeller Financial, Inc. .................................................. 10,900 294,300
a Matrix Capital Corp. .................................................... 118,400 3,167,200
Midwest Banc Holdings, Inc. ............................................. 20,000 385,000
MMI Companies, Inc. ..................................................... 196,000 4,606,000
Ocwen Asset Investment Corp. ............................................ 135,900 2,497,163
PAULA Financial ......................................................... 20,000 480,000
Penn-America Group, Inc. ................................................ 24,700 509,438
Presidential Life Corp. ................................................. 10,200 207,825
a Professional Insurance Co. Management Group ............................. 51,720 2,133,450
RLI Corp. ............................................................... 5,200 282,100
Rouse Co. ............................................................... 12,500 385,938
a Seibels Bruce Group, Inc. ............................................... 287,700 2,301,600
a Symons International Group, Inc. ........................................ 115,000 2,156,250
Terra Nova (Bermuda) Holdings, Ltd., Class A ............................ 33,000 1,010,625
The Centris Group, Inc. ................................................. 246,000 3,490,125
The PMI Group, Inc. ..................................................... 42,000 3,412,500
a Wilshire Financial Services Group, Inc. ................................. 10,000 241,250
---------------
36,270,984
---------------
Health Technology 3.1%
a DepoTech Corp. .......................................................... 600,000 2,756,280
a Matrix Pharmaceutical, Inc. ............................................. 100,000 450,000
Health Technology (cont.)
a OrthoLogic Corp. ........................................................ 403,000 $ 2,418,000
West Company, Inc. ...................................................... 13,400 413,725
---------------
6,038,005
---------------
Industrial Services 8.2%
a American Buildings Co. .................................................. 5,300 184,175
a Atwood Oceanics, Inc. ................................................... 26,500 1,449,219
Butler Manufacturing Co. ................................................ 85,000 3,171,563
ENSCO International, Inc. ............................................... 135,000 3,813,750
a NRG Generating (U.S.), Inc. ............................................. 3,900 58,988
a Perini Corp. ............................................................ 177,000 1,758,938
a Rowan Companies, Inc. ................................................... 190,000 5,593,125
---------------
16,029,758
---------------
Non-Energy Minerals 3.3%
Ameron International Corp. .............................................. 3,100 191,038
Carpenter Technology Corp. .............................................. 51,800 3,007,638
LTV Corp. ............................................................... 246,100 3,199,300
---------------
6,397,976
---------------
Process Industries 1.4%
Oil-Dri Corporation of America .......................................... 81,000 1,290,938
Tuscarora, Inc. ......................................................... 50,000 800,000
a Valley National Gases, Inc. ............................................. 50,000 587,500
---------------
2,678,438
---------------
Producer Manufacturing 11.3%
a Atchison Casting Corp. .................................................. 163,800 3,101,963
Binks Sames Corp. ....................................................... 50,000 2,168,750
Commercial Intertech Corp. .............................................. 42,000 905,625
Commonwealth Industries, Inc. ........................................... 119,400 2,029,800
a Denison International Plc. (United Kingdom) ............................. 65,000 1,170,000
Flowserve Corp. ......................................................... 22,000 657,250
a Global Industrial Technologies, Inc. .................................... 115,000 2,062,813
Haskel International, Inc., Class A ..................................... 159,500 1,614,938
JLG Industries, Inc. .................................................... 272,000 4,437,000
a Keystone Consolidated Industries, Inc. .................................. 85,600 1,011,150
a Morgan Products, Ltd. ................................................... 220,000 1,320,000
Patrick Industries, Inc. ................................................ 51,700 827,200
Reliance Steel & Aluminum Co. ........................................... 20,000 807,500
---------------
22,113,989
---------------
Retail Trade 5.0%
a Brookstone, Inc. ........................................................ 106,400 1,529,500
a Duckwall-Alco Stores, Inc. .............................................. 122,200 2,230,150
Haverty Furniture Co., Inc. ............................................. 78,400 1,734,600
a Little Switzerland, Inc. ................................................ 31,000 248,000
Schultz Sav-O Stores, Inc. .............................................. 63,250 1,043,625
a Syms Corp. .............................................................. 207,200 3,069,150
---------------
9,855,025
---------------
Technology Services 3.0%
a Cohr, Inc. .............................................................. 300,000 $ 2,343,750
a Interlink Computer Sciences, Inc. ....................................... 104,000 539,500
a Manchester Equipment Co., Inc. .......................................... 76,000 304,000
Reynolds & Reynolds Co., Class A ........................................ 45,000 1,035,000
a Ultrak, Inc. ............................................................ 166,000 1,660,000
---------------
5,882,250
---------------
Transportation 8.2%
a Fritz Companies, Inc. ................................................... 71,000 1,038,375
Kenan Transport Co. ..................................................... 70,150 2,350,025
a Motor Cargo Industries, Inc. ............................................ 323,900 4,048,750
Teekay Shipping Corp. (Canada) .......................................... 91,000 2,798,250
Tidewater, Inc. ......................................................... 147,000 5,824,862
---------------
16,060,262
---------------
Total Common Stocks (Cost $179,765,775) ................................. 192,111,040
---------------
PRINCIPAL
AMOUNT
Corporate Bonds 0.2%
Hechinger Co., senior notes, 6.95%, 10/15/03 (Cost $313,167) ............ $ 500,000 380,000
---------------
Convertible Corporate Bonds 0.5%
d SPACEHAB, Inc., cvt. sub. notes, 144A, 8.00%, 10/15/07 (Cost $1,000,000) 1,000,000 1,075,000
---------------
Total Bonds (Cost $1,313,167) ........................................... 1,455,000
---------------
Total Long Term Investments (Cost $181,078,942) ......................... 193,566,040
---------------
b Repurchase Agreement 1.7%
Joint Repurchase Agreement 5.487%, 5/01/98,
(Maturity Value $3,374,245) (Cost $3,373,731) ............................... 3,373,731 3,373,731
BancAmerica Robertson Stephens (Maturity Value $300,851)
Barclays Capital Group, Inc. (Maturity Value $300,851)
Bear, Sterns & Co., Inc. (Maturity Value $164,100)
BT Alex. Brown, Inc. (Maturity Value $300,851)
Chase Securities, Inc. (Maturity Value $201,635)
Donaldson, Lufkin & Jenrette Securities Corp. (Maturity Value $300,851)
Dresdner Kleinwort Benson North America L.L.C. (Maturity Value $300,851)
Greenwich Capital Markets, Inc. (Maturity Value $300,851)
Lehman Brothers, Inc. (Maturity Value $300,851)
Paribas Corp. (Maturity Value $300,851)
SBC Warburg Dillon Read, Inc. (Maturity Value $300,851)
UBS Securities, L.L.C. (Maturity Value $300,851)
Collateralized by U.S. Treasury Bills and Notes
Total Investments (Cost $184,452,673) 100.5% ............................ 196,939,771
Other Assets, less Liabilities (.5%) .................................... (1,071,196)
---------------
Net Assets 100.0% ....................................................... $195,868,575
===============
</TABLE>
a Non-income producing.
b See Note 1(d) regarding joint repurchase agreement.
c See Note 7 regarding holdings of 5% voting securities.
d See Note 6 regarding restricted securities.
e Sufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements
Statements of Assets and Liabilities
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Franklin Franklin Franklin
Balance Sheet MicroCap Value
Investment Fund Value Fund Fund
-------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities:
Cost - Unaffiliated issuers ....................... $ 571,683,854 $109,348,240 $178,918,942
Cost - Non-controlled affiliated issuers .......... 429,146,435 60,568,221 2,160,000
-------------------------------------------------
Value - Unaffiliated issuers....................... 792,943,144 155,413,606 192,126,040
Value - Non-controlled affiliated issuers.......... 550,464,970 69,084,638 1,440,000
Repurchase agreements, at value and cost ........... 296,938,070 9,252,053 3,373,731
Cash ............................................... 2,163,320 108,604 635,971
Receivables:
Investment securities sold ........................ 3,633,769 -- 1,539,009
Capital shares sold ............................... 3,916,518 1,038,108 884,628
Dividends and interest ............................ 437,834 39,963 43,650
Other assets ....................................... 562,282 -- 1,709
-------------------------------------------------
Total assets ...................................... 1,651,059,907 234,936,972 200,044,738
-------------------------------------------------
Liabilities:
Payables:
Investment securities purchased ................... 5,535,253 2,310,353 3,657,740
Capital shares redeemed ........................... 470,855 183,993 21,193
Affiliates .......................................... 1,577,824 266,502 334,637
Shareholders ........................................ 3,742,464 24,455 59,217
Other liabilities .................................. 112,998 49,279 103,376
-------------------------------------------------
Total liabilities ................................. 11,439,394 2,834,582 4,176,163
-------------------------------------------------
Net assets, at value ................................ $1,639,620,513 $232,102,390 $195,868,575
=================================================
Net assets consist of:
Undistributed net investment income ................ 1,230,248 -- --
Accumulated distributions in
excess of net investment income .................... -- (187,629) (258,340)
Net unrealized appreciation ........................ 342,577,825 54,581,783 12,487,098
Accumulated net realized gain ...................... 23,870,031 8,919,321 5,905,580
Capital shares ..................................... 1,271,942,409 168,788,915 177,734,237
-------------------------------------------------
Net assets, at value ................................ $1,639,620,513 $232,102,390 $195,868,575
=================================================
Franklin Franklin Franklin
Balance Sheet MicroCap Value
Investment Fund Value Fund Fund
-------------------------------------------------
<S> <C> <C> <C>
Class I:
Net assets, at value ............................... $1,639,620,513 $232,102,390 $137,393,644
=================================================
Shares outstanding ................................. 44,106,919 9,061,288 5,360,228
=================================================
Net asset value per share* ......................... $37.17 $25.61 $25.63
=================================================
Maximum offering price
(net assets value O 98.50%, 95.50%,
and 95.50%, respectively) ......................... $37.74 $26.82 $26.84
=================================================
Class II:
Net assets, at value ............................... -- -- $51,367,253
=================================================
Shares outstanding ................................. -- -- 2,016,149
=================================================
Net asset value per share* ......................... -- -- $25.48
=================================================
Maximum offering price
(net asset value O 99.00%) ......................... -- -- $25.74
=================================================
Advisor Class:
Net assets, at value ............................... -- -- $7,107,678
=================================================
Shares outstanding ................................. -- -- 276,439
=================================================
Net asset value per share and
maximum offering price per share ................... -- -- $25.71
=================================================
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
Statements of Operations
for the six months ended April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Franklin Franklin Franklin
Balance Sheet MicroCap Value
Investment Fund Value Fund Fund
-------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends:
Unaffiliated issuers* ............................. $ 6,813,118 $ 690,653 $ 565,346
Non-controlled affiliated issuers (Note 7) ........ 1,980,960 107,955 --
Interest ........................................... 6,975,872 296,186 315,121
-------------------------------------------------
Total investment income ........................... 15,769,950 1,094,794 880,467
-------------------------------------------------
Expenses:
Management fees (Note 3) ........................... 3,250,800 751,538 562,206
Distribution fees (Note 3)
Class I ........................................... 2,296,373 255,520 166,674
Class II .......................................... -- -- 180,381
Transfer agent fees (Note 3) ....................... 852,267 116,409 99,455
Custodian fees ..................................... 16,505 870 210
Reports to shareholders ............................ 129,031 35,529 21,870
Registration and filing fees ....................... 197,120 49,676 61,504
Professional fees .................................. 24,864 3,213 813
Trustees' fees and expenses ........................ 18,887 2,874 2,385
Other .............................................. 23,104 2,662 14,130
-------------------------------------------------
Total expenses ...................................... 6,808,951 1,218,291 1,109,628
Expenses waived/paid by affiliate (Note 3) .......... -- -- (15,589)
-------------------------------------------------
Net expenses ....................................... 6,808,951 1,218,291 1,094,039
-------------------------------------------------
Net investment income (loss) ...................... 8,960,999 (123,497) (213,572)
-------------------------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments in unaffiliated issues ................ 10,007,588 8,664,217 5,831,347
Investments in non-controlled
affiliated issues (Note 7).......................... 8,678,176 286,255 27,002
Closed-end funds distributions..................... 5,235,902 -- --
Foreign currency transactions ..................... (24,656) -- 866
-------------------------------------------------
Net realized gain ................................... 23,897,010 8,950,472 5,859,215
-------------------------------------------------
Net unrealized appreciation on:
Investments ....................................... 134,386,830 16,608,274 3,787,402
Translation of assets and liabilities
denominated in foreign currencies .................. 1,418 -- --
-------------------------------------------------
Net unrealized appreciation ......................... 134,388,248 16,608,274 3,787,402
-------------------------------------------------
Net realized and unrealized gain .................... 158,285,258 25,558,746 9,646,617
-------------------------------------------------
Net increase in net assets resulting from operations $167,246,257 $25,435,249 $9,433,045
=================================================
</TABLE>
*Net of foreign taxes of $126,747 and $3,750 for the Franklin Balance Sheet
Investment Fund and Franklin Value Fund, respectively.
Statements of Changes in Net Assets
for the six months ended April 30, 1998 (unaudited)
and the year ended October 31, 1997
<TABLE>
<CAPTION>
Franklin Balance Franklin MicroCap Franklin
Sheet Investment Fund Value Fund Value Fund
-----------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
April 30, 1998 October 31, 1997 April 30, 1998 October 31, 1997 April 30, 1998October 31, 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) $ 8,960,999 $ 14,167,799 $ (123,497) $ (78,345) $ (213,572) $ 72,999
Net realized gain from
investments and foreign
currency transactions... 23,897,010 65,350,389 8,950,472 12,151,934 5,859,215 1,067,208
Net unrealized appreciation
on investments and
translation of assets and
liabilities denominated in
foreign currencies...... 134,388,248 165,462,247 16,608,274 33,546,997 3,787,402 8,386,549
-----------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations................ 167,246,257 244,980,435 25,435,249 45,620,586 9,433,045 9,526,756
Distributions to
shareholders from:
Net investment income:
Class I................... (10,454,693) (12,631,986) -- (152,942) -- (66,816)
Advisor Class............. -- -- -- -- (5,419) (3,903)
In excess of net
investment income:
Class I................... -- -- (64,132) -- (43,334) --
Class II.................. -- -- -- -- (144) --
Net realized gains:
Class I................... (65,064,560) (53,996,143) (11,892,846) (2,930,586) (750,789) (192,201)
Class II.................. -- -- -- -- (237,843) (10,143)
Advisor Class............. -- -- -- -- (40,255) --
-----------------------------------------------------------------------------------------------
Total distributions
to shareholders........... (75,519,253) (66,628,129) (11,956,978) (3,083,528) (1,077,784) (273,063)
Franklin Balance Franklin MicroCap Franklin
Sheet Investment Fund Value Fund Value Fund
-----------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
April 30, 1998 October 31, 1997 April 30, 1998 October 31, 1997 April 30, 1998October 31, 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital share transactions: (Note 2)
Class I................... $ 324,940,749 $ 387,598,329 $ 26,986,165 $ 29,437,190 $ 52,451,215 $ 63,130,877
Class II.................. -- -- -- -- 27,817,668 20,208,077
Advisor Class............. -- -- -- -- 2,298,075 4,091,936
-----------------------------------------------------------------------------------------------
Total capital
share transactions........ 324,940,749 387,598,329 26,986,165 29,437,190 82,566,958 87,430,890
Net increase in
net assets ............... 416,667,753 565,950,635 40,464,436 71,974,248 90,922,219 96,684,583
Net assets:
Beginning of year......... 1,222,952,760 657,002,125 191,637,954 119,663,706 104,946,356 8,261,773
-----------------------------------------------------------------------------------------------
End of year.............. $1,639,620,513 $1,222,952,760 $232,102,390 $191,637,954 $195,868,575 $104,946,356
===============================================================================================
Undistributed net invest-
ment income (accumulated
distributions in excess of net
investment income) included
in net assets:
End of year................ $ 1,230,248 $ 2,723,942 $ (187,629) $-- $ (258,340) $ 4,129
===============================================================================================
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Organization:
Franklin Value Investors Trust (the Trust) is registered under the Investment
Company Act of 1940 as an open-end, non-diversified investment company,
consisting of three series (the Funds). The Funds' investment objectives are
growth and income.
The following summarizes the Funds' significant accounting policies.
b. Security Valuation:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Restricted securities and securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.
c. Foreign Currency Translation:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
d. Joint Repurchase Agreement:
The Funds may enter into a joint repurchase agreement whereby its uninvested
cash balance is deposited into a joint cash account to be used to invest in one
or more repurchase agreements. The value and face amount of the joint repurchase
agreement are allocated to the Funds based on their pro-rata interest. A
repurchase agreement is accounted for as a loan by the Fund to the seller,
collateralized by securities which are delivered to the Fund's custodian. The
market value, including accrued interest, of the initial collateralization is
required to be at least 102% of the dollar amount invested by the Funds, with
the value of the underlying securities marked to market daily to maintain
coverage of at least 100%. At April 30, 1998, all outstanding repurchase
agreements held by the Funds had been entered into on that date.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)
e. Income Taxes:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.
f. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
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. Other expenses are
charged to each Fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
g. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The classes of shares offered within each of the Funds are indicated below. The
shares have the same rights except for their initial sales load, distribution
fees, voting rights on matters affecting a single class and the exchange
privilege of each class.
Class I Class I, Class II, & Advisor Class
Franklin Balance Sheet Investment Fund Franklin Value Fund
Franklin Microcap Value Fund
2. CAPITAL STOCK (cont.)
At April 30, 1998, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
Franklin Balance Franklin MicroCap Franklin
Sheet Investment Fund Value Fund Value Fund
------------------------------------------------------------------------------------------
Class I Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Six months ended April 30, 1998
Shares sold............... 10,566,963 $371,325,398 1,200,921 $28,311,315 3,320,747 $81,286,652
Shares issued in reinvestment
of distributions......... 2,073,401 68,401,017 486,480 10,804,719 30,313 722,975
Shares redeemed........... (3,255,873) (114,785,666) (515,114) (12,129,869) (1,188,089) (29,558,412)
------------------------------------------------------------------------------------------
Net increase............... 9,384,491 $324,940,749 1,172,287 $26,986,165 2,162,971 $52,451,215
==========================================================================================
Year ended October 31, 1997
Shares sold .............. 14,624,224 $470,566,560 2,302,643 $48,279,959 3,359,946 $77,528,012
Shares issued in reinvestment
of distributions ........ 2,029,002 58,119,661 148,129 2,750,756 12,980 240,426
Shares redeemed .......... (4,466,272) (141,087,892) (1,050,071) (21,593,525) (632,076) (14,637,561)
------------------------------------------------------------------------------------------
Net increase .............. 12,186,954 $387,598,329 1,400,701 $29,437,190 2,740,850 $63,130,877
==========================================================================================
Class II Shares Amount
---------------------------
<S> <C> <C>
Six months ended April 30, 1998
Shares sold .................................................................................... 1,270,058 $31,036,840
Shares issued in reinvestment of distributions ................................................. 9,094 216,085
Shares redeemed ................................................................................ (139,423) (3,435,257)
---------------------------
Net increase .................................................................................... 1,139,729 $27,817,668
===========================
Year ended October 31, 1997
Shares sold .................................................................................... 886,618 $21,017,778
Shares issued in reinvestment of distributions ................................................. 446 8,061
Shares redeemed ................................................................................ (35,962) (817,762)
---------------------------
Net increase .................................................................................... 851,102 $20,208,077
===========================
Advisor Class Shares Amount
---------------------------
Six months ended April 30, 1998
Shares sold .................................................................................... 171,184 $ 4,161,057
Shares issued in reinvestment of distributions ................................................. 1,904 45,486
Shares redeemed ................................................................................ (78,488) (1,908,468)
---------------------------
Net increase .................................................................................... 94,600 $ 2,298,075
===========================
Year ended October 31, 1997*
Shares sold .................................................................................... 217,368 $ 4,869,043
Shares issued in reinvestment of distributions ................................................. 187 3,903
Shares redeemed ................................................................................ (35,716) (781,010)
---------------------------
Net increase .................................................................................... 181,839 $ 4,091,936
===========================
</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Trust are also officers and/or trustees of
Franklin Advisory Services, Inc. (Advisory Services), Franklin/Templeton
Distributors, Inc. (Distributors), Franklin Templeton Services, Inc. (FT
Services), and Franklin/Templeton Investor Services, Inc. (Investor Services),
the Fund's investment manager, principal underwriter, administrative manager,
and transfer agent, respectively.
The Franklin Balance Sheet Investment Fund pays an investment management fee to
Advisory Services based on the average net assets of the Fund as follows:
Annualized Fee RateAverage Daily Net Assets
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% Over $250 million, up to and including $10 billion
Fees are further reduced on net assets over $10 billion.
The Franklin MicroCap Value Fund pays an investment management fee to Advisory
Services of .750% per year of the average daily net assets of the Fund.
The Franklin Value Fund pays an investment management fee to Advisory Services
based on the average net assets of the Fund as follows:
Annualized Fee RateAverage Daily Net Assets
.750% First $500 million
.625% Over $500 million, up to and including $1 billion
.500% In excess of $1 billion
Under an agreement with Advisory Services, FT Services provides administrative
services to the Funds. The fee is paid by Advisory Services based on average
daily net assets, and is not an additional expense of the Funds.
Advisory Services agreed in advance to waive management fees for the Franklin
Value Fund, as noted in the Statement of Operations.
The Franklin Value Fund reimburses Distributors up to .35% and 1.00% per year of
the average daily net assets of Class I and Class II, respectively, and the
Franklin Balance Sheet Investment Fund and the Franklin MicroCap Fund reimburses
Distributors up to .50% and .25%, respectively, per year of the average daily
net assets of Class I for costs incurred in marketing the Funds' shares.
Distributors received (paid) net commissions on sales of the Funds' shares, and
received contingent deferred sales charges for the period as follows:
Franklin Franklin Franklin
Balance Sheet Microcap Value
Investment FundValue Fund Fund
Net commisions received (paid) $(849,822) $58,435 $(197,245)
Contingent deferred sales charges $-- $-- $ 657
The Funds paid transfer agent fees of $1,068,131, of which $642,380 was paid to
Investor Services.
4. INCOME TAXES
At April 30, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes was as follows:
Franklin Franklin Franklin
Balance Sheet MicroCap Value
Investment Fund Value Fund Fund
Investments at cost $1,297,766,796 $179,195,879 $184,452,673
Unrealized appreciation $ 358,164,691 $ 62,404,078 $ 23,225,662
Unrealized depreciation (15,586,866) (7,849,660) (10,738,564)
Net unrealized appreciation $ 342,577,825 $ 54,554,418 $ 12,487,098
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions. Net realized
capital gains differ for financial statement and tax purposes primarily due to
differing treatment of wash sales and foreign currency transactions.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended April 30, 1998 were as follows:
Franklin Franklin Franklin
Balance Sheet MicroCap Value
Investment Fund Value Fund Fund
Purchases $181,944,658 $39,615,059 $104,841,106
Sales $ 47,041,896 $25,503,784 $ 17,038,882
6. RESTRICTED SECURITIES
The Funds may purchase securities through a private offering that generally
cannot be resold to the public without prior registration under the Securities
Act of 1933. The costs of registering such securities are paid by the issuer.
Restricted securities held at April 30, 1998 are as follows:
<TABLE>
<CAPTION>
Shares Issuer Acquisition Date Cost Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Microcap Value Fund
72,000 Bibb Co. (.3% of Net Assets) 10/16/96 - 10/24/96$ 596,874 $ 747,000
==========
Principal
Amount
- -----------
Franklin Value Fund
$1,000,000 SPACEHAB, Inc., cvt. sub. notes,
144A, 8.00%, 10/15/07 (.5% of Net Assets) 2/06/97 - 10/31/97$1,000,000$1,075,000
==========
</TABLE>
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS
The Investment Company Act of 1940 defines "affiliated companies" as investments
in portfolio companies in which the Fund owns 5% or more of the outstanding
voting securities. Investments in "affiliated companies" at April 30, 1998 were
as follows:
<TABLE>
<CAPTION>
Balance of Shares Number of Realized
Shares Held at Gross Gross Shares Held at Value at Dividend Capital Gains
Name of Issuer: October 31, 1997 Additions Reductions April 30, 1998April 30, 1998 Income (Losses)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Franklin Balance Sheet
Investment Fund
ACMAT Corp., Class A 295,000 -- -- 295,000 $ 4,609,375 $-- $--
A.P. Green Industries, Inc. 521,300 -- -- 521,300 10,947,300 41,704 --
Allen Organ Co., Class B 83,000 -- -- 83,000 3,403,000 23,240 --
American Pacific Corp. 421,100 -- -- 421,100 4,421,550 -- --
Audiovox Corp., Class A 1,053,900 604,900 -- 1,658,800 11,922,609 -- --
Aydin Corp. 270,000 -- -- 270,000 2,683,125 -- --
Aztar Corp. 3,210,000 190,000 -- 3,400,000 26,562,500 -- --
Binks Sames Corp. 149,300 -- -- 149,300 6,475,888 14,930 --
Buttrey Food and Drug Stores Co. 467,700 -- -- 467,700 7,132,425 -- --
Castle & Cooke, Inc. 1,270,000 512,400 -- 1,782,400 30,746,400 -- --
Charming Shoppes, Inc. -- 5,343,300 -- 5,343,300 24,880,008 -- --
Cherry Corp., Class A 408,900 -- -- 408,900 7,564,650 -- --
Cherry Corp., Class B 271,000 -- -- 271,000 5,115,125 -- --
Chic By H.I.S., Inc. 756,000 -- -- 756,000 6,331,500 7,560 --
Commonwealth Industries, Inc. 1,127,300 91,800 -- 1,219,100 20,724,700 120,425 --
Crown Central
Petroleum, Class B 500,000 -- -- 500,000 7,250,000 -- --
Cyrk, Inc. 1,171,000 29,900 -- 1,200,900 19,214,400 -- --
Delta Woodside Industries, Inc. 2,267,500 132,500 -- 2,400,000 14,550,000 118,675 --
Designs, Inc. 848,000 352,000 -- 1,200,000 2,550,000 -- --
Dixie Group, Inc. 600,000 -- -- 600,00 7,537,500 30,000 --
Echelon International Corp., Inc. 490,000 10,000 -- 500,000 13,500,000 -- --
Ecology and
Environmental, Inc., Class A 260,000 -- -- 260,000 2,665,000 41,600 --
Enex Resources Corp. 104,500 -- 104,500 -- * 26,125 740,400
ESCO Electronics Corp. 840,000 -- -- 840,000 15,435,000 -- --
Farah, Inc. 649,300 150,700 -- 800,000 5,550,000 -- --
Fidelity Bancorp, Inc. 144,500 -- -- 144,500 3,738,938 28,900 --
First Financial Bancorp, Inc. 24,000 -- -- 24,000 612,000 -- --
Fred's, Inc. 712,000 178,000 190,000 700,000 17,500,000 81,500 3,126,265
Garan, Inc. 285,100 -- -- 285,100 7,875,888 228,080 --
Good Guys!, Inc. 737,500 -- -- 737,500 9,403,125 -- --
Haggar Corp. 850,000 -- -- 850,000 12,431,250 85,000 --
Handleman Co. 1,115,000 1,294,000 -- 2,409,000 25,595,625 -- --
Homebase, Inc. 1,483,900 924,400 -- 2,408,300 20,169,513 -- --
Insteel Industries, Inc. 565,300 14,700 -- 580,000 4,241,250 69,600 --
International Shipholding Corp. 652,300 7,700 -- 660,000 11,220,000 82,500 --
Jacobson Stores, Inc. 298,100 -- -- 298,100 3,912,563 -- --
Kaneb Services, Inc. 2,463,000 663,300 -- 3,126,300 18,367,013 -- --
M.D.C. Holdings, Inc. 1,069,300 -- 69,300 1,000,000 17,187,500 104,158 510,061
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (cont.)
Balance of Shares Number of Realized
Shares Held at Gross Gross Shares Held at Value at Dividend Capital Gains
Name of Issuer: October 31, 1997 Additions Reductions April 30, 1998April 30, 1998 Income (Losses)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Franklin Balance Sheet
Investment Fund (cont.)
Maynard Oil Co. -- 268,000 -- 268,000 $ 2,780,500 $-- $--
Merchants Group, Inc. 257,800 -- -- 257,800 6,767,250 25,780 --
Monarch Machine Tool Co. 250,000 -- -- 250,000 2,031,250 25,000 --
Nash-Finch Co. 699,100 300,900 -- 1,000,000 19,625,000 272,754 --
Oshkosh Truck Corp., Class B 483,000 -- 22,600 460,400 9,035,350 120,750 231,978
Pitt-Des Moines, Inc. 177,500 -- -- 177,500 9,806,875 102,063 --
Pulaski Furniture Corp. 192,000 -- -- 192,000 4,800,000 65,280 --
Rochester & Pittsburgh Coal Co. 172,000 2,000 -- 174,000 8,178,000 51,900 --
Ryland Group, Inc. 834,800 448,200 386,600 * 56,992 4,069,472
Standard Microsystems Corp. 700,000 496,500 -- 1,196,500 13,161,500 -- --
Stewart Information
Services Corp. 465,000 28,600 -- 493,600 17,337,700 69,104 --
TransPro Inc. 25,300 320,200 -- 345,500 2,850,375 14,540 --
U.S. Home Corp. 700,800 -- -- 700,800 29,083,200 -- --
Unique Casual Restaurants, Inc. 764,500 20,500 -- 785,000 4,513,750 -- --
Wolohan Lumber Co. 520,000 -- -- 520,000 6,467,500 72,800 --
-------------------------------------
Total affiliated issuers $550,464,970 $1,980,960 $8,678,176
=====================================
Franklin MicroCap Value Fund
ACMAT Corp., Class A 150,000 -- -- 150,000 $ 2,343,750 $-- $--
Aerovox, Inc. 291,600 108,400 -- 400,000 1,400,000 -- --
Allou Health and
Beauty, Inc., Class A 407,000 -- -- 407,000 4,680,500 -- --
Allstate Financial Corp. 209,000 -- -- 209,000 1,632,813 -- --
American Physicians
Service Group, Inc. 247,000 -- -- 247,000 1,759,875 -- --
Art's-Way Manufacturing Co., Inc. 82,500 -- -- 82,500 721,875 -- --
Athey Products Corp. 154,000 46,000 -- 200,000 856,260 -- --
Concord Fabrics, Inc., Class A 148,800 -- -- 148,800 1,525,200 -- --
Crown Books Corp. 240,800 63,200 -- 304,000 2,356,000 -- --
Devcon International Corp. 230,000 -- -- 230,000 833,750 -- --
ECC International Corp. -- 705,000 -- 705,000 2,335,313 -- --
Ecology and Environment,
Inc., Class A 110,000 -- -- 110,000 1,127,500 17,600 --
Emcon 650,000 -- -- 650,000 3,250,000 -- --
Espey Manufacturing &
Electronics Corp. 93,000 -- -- 93,000 1,395,000 -- --
Gantos, Inc. 500,000 -- 500,000 -- * --(1,174,751)
Government
Technology Services, Inc. 400,200 30,000 -- 430,200 1,882,125 -- --
GZA GeoEnvironmental
Technologies, Inc. 235,000 56,500 -- 291,500 1,457,500 -- --
Harding Lawson Associates
Group, Inc. 304,900 -- -- 304,900 3,201,450 -- --
High-Lo Automotive, Inc. 809,800 -- 809,800 -- * -- 42,659
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (cont.)
Balance of Shares Number of Realized
Shares Held at Gross Gross Shares Held at Value at Dividend Capital Gains
Name of Issuer: October 31, 1997 Additions Reductions April 30, 1998April 30, 1998 Income (Losses)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Franklin MicroCap Value Fund (cont.)
Kentucky Electric Steel, Inc. 450,000 -- -- 450,000 $ 2,643,750 $-- $--
KLLM Transport Services, Inc. 216,000 3,000 -- 219,000 2,573,250 -- --
Maine Public Service Co. 42,200 70,600 -- 112,800 1,614,450 36,475 --
Maynard Oil Company -- 298,500 -- 298,500 3,096,938 -- --
Moore Products Co. 134,700 -- -- 134,700 4,714,500 53,880 --
Morrison Restaurants, Inc. -- 500,000 -- 500,000 2,468,750 -- --
Oriole Homes Corp., Class B 360,000 -- -- 360,000 1,777,500 -- --
River Oaks Furniture, Inc. 394,600 -- -- 394,600 271,288 -- --
Roy F. Weston, Inc., Class A 570,300 62,700 -- 633,000 2,650,688 -- --
Spaghetti Warehouse, Inc. 310,000 240,000 -- 550,000 4,262,500 -- --
TEI, Inc. -- 1,000,000 -- 1,000,000 2,343,800 -- --
Temtex Industries, Inc. 265,500 -- -- 265,500 995,625 -- --
TransFinancial Holdings, Inc. 336,000 -- -- 336,000 3,108,000 -- --
Treadco, Inc. -- 255,000 -- 255,000 2,534,063 -- --
Video Lottery Technologies, Inc.** 527,000 -- 527,000 -- * -- 1,418,347
Village Super Market, Inc., Class A 23,000 72,000 -- 95,000 1,270,625 -- --
-------------------------------------
Total affiliated issuers $69,084,638 $107,955 $ 286,255
=====================================
Franklin Value Fund
Engel General Developers, Ltd. 248,000 -- 8,000 240,000 $ 1,440,000 $-- $ 27,002
=====================================
</TABLE>
*As of April 30, 1998, no longer an affiliate.
**Name change on January 9, 1998 to Powerhouse Technologies, Inc.
Franklin Value Investors Trust
Semi-annual Report
April 30, 1998.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows the top 10 holdings by company and industry of the Franklin
Balance Sheet Investment Fund based on total net assets on April 30, 1998.
Company % of Total
Industry Net Assets
LTV Corp. 2.79%
Non-Energy Minerals
American National Insurance 2.50%
Finance
Entergy Corp. 1.97%
Utilities
Castle & Cooke, Inc. 1.88%
Consumer Durables
Niagara Mohawk Power Corp. 1.81%
Utilities
US Home Corp. 1.77%
Consumer Durables
British Steel Plc 1.63%
Non-Energy Minerals
Aztar Corp. 1.62%
Consumer Services
American General Corp. 1.61%
Finance
Central Maine Power Co. 1.59%
Utilities
GRAPHIC MATERIAL (2)
This chart shows the top 10 holdings by company and industry of the Franklin
MicroCap Value Fund based on total net assets on April 30, 1998.
Company % of Total
Industry Net Assets
Moore Products Co. 2.03%
Electronic Technology
Allou Health & Beauty, Inc.,
Class A 2.02%
Commercial Services
Bertucci's, Inc. 1.86%
Consumer Services
Spaghetti Warehouse, Inc. 1.84%
Consumer Services
Lechters Inc. 1.80%
Retail Trade
Professionals Insurance CO.
Management Group 1.64%
Finance
Good Guys!, Inc. 1.62%
Retail Trade
Zemex Corp. 1.60%
Non-Energy Minerals
M/I Schottenstein Homes, Inc. 1.60%
Consumer Durables
United Retail Group, Inc. 1.56%
Retail Trade
GRAPHIC MATERIAL (3)
This chart shows the top 10 holdings by company and industry of the Franklin
Value Fund based on total net assets on April 30, 1998.
Company % of Total
Industry Net Assets
Tidewater, Inc. 2.97%
Transportation
Rowan Companies, Inc. 2.86%
Consumer Non-Durables
DIMON Inc. 2.64%
Consumer Non-Durables
MMI Companies, Inc. 2.35%
Finance
Tropical Sportswear International
Corp. 2.32%
Consumer Non-Durables
JLG Industries, Inc. 2.27%
Producer Manufacturing
Motor Cargo Industries, Inc. 2.07%
Transportation
Standard Commercial Corp. 2.04%
Consumer Non-Durables
ENSCO International, Inc. 1.95%
Industrial Services
The Centris Group, Inc. 1.78%
Finance
