SHAREHOLDER LETTER
Dear Shareholder:
This semiannual report for Franklin Value Investors Trust covers the period
ended April 30, 1999.
During the six months under review, the domestic economy remained strong with
March 1999 unemployment at 4.2%, a 29-year low. Inflation remained benign with
no change in Federal Reserve Board (the Fed) policy since the overnight bank
lending rate was reduced one-quarter point to 4.75% on November 17, 1998.(1)
While the overall global economy remained weak, there were signs that the Asian
crisis had peaked and a modest recovery was already under way in a few emerging
countries.
The major U.S. stock market news during the reporting period was the continuous
flow of capital into equity securities--mostly Internet, Internet-related and
larger-capitalization brand name stocks. In fact, the Dow Jones((R)) Industrial
Average set a number of records, including closing above the 10000-point mark
for the first time on March 29, as the Standard & Poor's((R)) 500 (S&P 500((R)))
and the NASDAQ indexes also reached all-time highs. Larger-cap stocks drove the
S&P 500 Index's 5.0% rise in the first quarter. Small-cap stocks, especially
those considered "value," remained out of favor as indicated by the Wilshire
Small Companies Value Index, the funds' benchmark, which declined 11.92% for the
first three months of 1999.(2) Last year's divergence between small and large
cap and between growth and value continued during 1999's first quarter.
1. Sources: Bureau of Labor Statistics, The Federal Reserve Board.
2. Source: Standard & Poor's Micropal.
CONTENTS
Shareholder Letter .................... 1
Fund Reports
Franklin Balance Sheet
Investment Fund ...................... 3
Franklin MicroCap
Value Fund ........................... 7
Franklin Value Fund .................. 11
Financial Highlights &
Statement of Investments .............. 16
Financial Statements .................. 35
Notes to
Financial Statements .................. 40
FUND CATEGORY
[PYRAMID]
Global
Growth
Growth & Income
Income
Tax-Free Income
Toward the end of the reporting period, we were encouraged when strategic buyers
and market investors began to recognize some of our bargain holdings. During
March, eight of the Trust's portfolio companies benefited from announcements of
corporate takeovers, all at a premium to prior-day prices. In addition, the
increase in oil pricing caused a significant upward move in our oil service and
oil drilling positions. Although there is still a long way to go for value
stocks to receive appropriate recognition in the marketplace, we believe the
turn has begun.
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:
prudent investment selection and constant professional supervision.
Historically, patient investors achieved good results through evaluating their
goals and diversifying their assets. A long-term investment strategy offers
investors an opportunity to take advantage of a regularly scheduled investment
plan that participates regardless of market fluctuations, and includes buying
during market downturns when prices are low and benefiting from market rallies.
We suggest you contact your investment representative to discuss your goals and
to set up a regular investment plan.
As always, we appreciate your support, welcome your questions and look forward
to serving your investment needs in the years to come.
Sincerely,
/s/William J. Lippman
William J. Lippman
President
Franklin Value Investors Trust
FRANKLIN BALANCE
SHEET INVESTMENT FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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 goal.
- --------------------------------------------------------------------------------
These are the times that try value investors' patience: For the six months ended
April 30, 1999, the fund's cumulative total return was -0.58%, compared with
0.91% for the unmanaged Wilshire Small Company Value Index. By contrast, the Dow
Jones Industrial Average returned 26.61% and the S&P 500 returned 22.32%.(1) The
trend we noted in our annual report last October, where the market equates
safety with large size and trading liquidity, continued unabated. We went on to
say that the less investor "exuberance" that attends a stock when we buy it,
provided it is financially secure, the safer we feel. Of course, we anticipate
that the market will come to see things our way, and discover value in our
bargains.
So we wait. Despite the performance of the major indices heralded in the media,
some sectors -- small, industrial, cyclical (excepting technology) and basic
industry -- have been in a bear market for more than a year. By the end of 1998,
the takeovers once commonplace among the type of companies in which we invest
had all but dried up. Instead, huge companies at already high prices took over
each other with their richly valued shares. Even when some deals were at last
announced among our holdings, beginning in March, the premiums offered on some
were disappointing. Buyers were taking advantage of these stocks' depressed
market prices, and the discouragement of value investors, to buy whole companies
at bargain prices.
1. Source: Standard & Poor's Micropal. Indices are unmanaged and include
reinvested dividends. One cannot invest directly in an index. Cumulative total
return represents the change in value of an investment over the period indicated
and does not include the sales charge.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 17 of
this report.
TOP 10 HOLDINGS
Franklin Balance Sheet
Investment Fund
4/30/99
COMPANY % OF TOTAL
INDUSTRY NET ASSETS
- -----------------------------------
Entergy Corp. 3.07%
Utilities
American National
Insurance Co. 2.71%
Finance
Niagara Mohawk
Holdings Inc. 2.61%
Utilities
CMP Group Inc. 2.17%
Utilities
Handleman Co. 2.12%
Commercial Services
American General Corp. 2.07%
Finance
Castle & Cooke Inc. 1.97%
Consumer Durables
Tecumseh Products Co., A 1.94%
Producer Manufacturing
Charming Shoppes Inc. 1.93%
Retail Trade
LTV Corp. 1.90%
Non-Energy Minerals
And yet, because of all that, we feel this is a wonderful time to be a value
investor. We believe we make money when stocks are cheap, which they most
certainly were in our portfolio on April 30, 1999. We sought to take advantage
of recent realities to improve the overall quality of our holdings in terms of
balance sheet strength and management quality, and move out of positions we
viewed as least likely to contribute to performance. Along with basic industry,
a significant amount of new investment went into financials, a sector that over
time has been fruitful for our low-price-to-book approach, but where bargains
were scarce a year ago. With nearly 10% of the fund in cash, we added to our
holdings and initiated new purchases. Some were Cubic Corp., DIMON Inc., Timken
Co., Capital Re Corp., Hardinge Inc., Boswell J.G. Co., Block Drug Co. Inc., St.
Paul Cos. Inc., AmerUs Life Holdings Inc., Farm Family Holdings Inc.,
Professionals Group Inc., StanCorp Financial Group Inc. and American National
Insurance Co.
Looking forward, we sense that the economies of developing countries have
stabilized, and in some cases begun to grow again, as shown by the 25.19% rise
in the Brazilian and 40.53% rise in the South Korean stock markets from
January 1, 1999, to the end of the reporting period.(2) All the while the
domestic economy remains strong. Increased marginal demand around the world will
have a decidedly beneficial effect on the smaller, more cyclical and
commodity-based companies that make up a large part of the fund. We are already
seeing evidence of improved profitability, generally in the first-quarter
earnings, and it appears to us that the valuation "disconnect" between small-cap
versus large, and value versus growth, is approaching a positive resolution. We
see a broadening of the markets, evidenced by the unmanaged Wilshire Small Cap
Value Index's total return of 8.18% in April versus a total return of 3.87% for
the S&P 500.(3) We feel this bodes well for our holdings.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, 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. These insights may help you
understand our investment and management philosophy.
2. Sources: Brazil Bovespa Stock Index, Korea Composite Index.
3. Source: Standard & Poor's Micropal.
FRANKLIN BALANCE SHEET
INVESTMENT FUND
CLASS A:
Subject to the maximum 1.50% initial sales charge. Past expense reductions by
the fund's manager increased the fund's total returns.
1. Cumulative total return represents the change in value of an investment over
the periods 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 1.50% initial
sales charge. Six-month return has not been annualized.
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 one-year periods ended on the specified dates and does not include sales
charges.
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.
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98-4/30/99)
CLASS A CHANGE 4/30/99 10/31/98
Net Asset Value -$1.57 $30.29 $31.86
Distributions
Dividend Income $0.2276
Long-Term Capital Gain $1.0188
Short-Term Capital Gain $0.1441
TOTAL $1.3905
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 5-YEAR (4/2/90)
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -0.58% -14.18% +87.38% +226.34%
Average Annual Total Return(2) -2.09% -15.47% +13.04% +13.73%
Value of $10,000 Investment(3) $ 9,791 $ 8,453 $ 18,457 $ 32,142
</TABLE>
<TABLE>
<CAPTION>
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) +15.70% +21.92% +13.67% +36.14% -14.18%
</TABLE>
Past performance is not predictive of future results.
FRANKLIN MICROCAP VALUE FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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
goal.
- --------------------------------------------------------------------------------
Franklin MicroCap Value Fund follows the same investment strategy as Franklin
Balance Sheet Investment Fund, but is generally limited to companies with market
capitalizations below $100 million. The fund closed to all but retirement
accounts and existing investors in 1996.
The fund's cumulative total return was +1.14%, compared with 0.91% for the
unmanaged Wilshire Small Company Value Index, for the six months ended April 30,
1999.(1) As was true in the previous reporting period, the market equated safety
with large size and trading liquidity during the six months under review.
Because this portfolio owns only the smallest of the low price-to-book
companies, this trend had a greater impact on your fund. Historically, takeovers
among the type of companies in which we invest were commonplace; however, by the
end of 1998, such takeover activity had all but dried up. Instead, huge
companies at already high prices took over each other with their richly valued
shares. Starting in March we did begin to see a resumption of takeover activity
among smaller-cap companies. Some of the deals were at prices below what we
consider fair, but we are encouraged that financial and strategic buyers are
agreeing with us that the market is pricing these companies too cheaply.
1. Cumulative total return represents the change in value of an investment over
the period indicated and does not include the sales charge. Source for Wilshire
Small Company Value Index: Standard & Poor's Micropal. Index is unmanaged and
includes reinvested dividends. One cannot invest directly in an index.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 23 of
this report.
Top 10 Holdings
Franklin MicroCap Value Fund
4/30/99
Company % of Total
Industry Net Assets
- ------------------------------------------
EMCON 2.37%
Industrial Services
Crowley Maritime Corp. 2.18%
Transportation
Moore Products Co. 2.13%
Electronic Technology
United Retail Group Inc. 1.99%
Retail Trade
Atlantic Tele-Network,Inc. 1.99%
Telecommunications
Maynard Oil Co. 1.90%
Energy Minerals
Seneca Foods Corp., A 1.88%
Consumer Non-Durables
Bangor Hydro-Electric Co. 1.87%
Utilities
Zemex Corp. 1.76%
Non-Energy Minerals
American Pacific Corp. 1.75%
Process Industries
There have been some fairly substantial changes in the portfolio over the past
six months. Two of the 10 largest positions as of October 31, 1998, Spaghetti
Warehouse, Inc. and Bayonne Bancshares, Inc., were sold pursuant to mergers that
had already been announced by that date. A third, MidCity Financial Corp., was
sold at a substantial gain and a large premium to book value. Aydin Corp.;
Treadco, Inc.; Citizens Electric Co.; and Interlink Computer Sciences, Inc.
were also sold into mergers. Additionally, buyouts of Trak Auto Corp., American
Indemnity Financial Corp. and Bridgeport Machines, Inc. were announced, with
settlement expected within the next three months. The most significant new
investments in the reporting period, through either additions or new positions,
were Ultrak Inc., Flanders Corp., Seneca Foods Corp., Standard Commercial Corp.,
S & K Famous Brands Inc. and Bangor Hydro-Electric Co.
Reflecting the difficult environment for value investors, the fund experienced
net redemptions during the period. To raise cash we took profits in Garan, Inc.;
DEB Shops, Inc.; HF Bancorp, Inc.; Crowley Maritime Corp.; Pitt-Des Moines,
Inc.; Allou Health and Beauty, Inc.; Farm Family Holdings, Inc.; Jan Bell
Marketing, Inc.; Jos. A. Bank Clothiers, Inc.; Professionals Group Inc.; Little
Falls Bancorp, Inc.; M/I Schottenstein Homes, Inc.; Powerhouse Technologies,
Inc. and others, through either complete or partial liquidations.
We are confident that our new positions in the fund represent unusual values
that the market will eventually recognize. We are heartened that trends in
global commodity demand are positive for many of our companies, so that
improvement in absolute and relative performance for out-of-favor basic
industries should be closer at hand. The Wilshire 5000 Index-- the best
representation of the entire stock market because it is composed of more than
7,000 companies headquartered in the U.S.--rose 4.79% in April 1999.(2) We
believe this indicates recent broadening of the markets to include more than
just a few large caps and tech stocks. Moreover, in April the unmanaged Wilshire
Small Cap Value Index produced a total return of 8.18% while the S&P 500's total
return was only 3.81%.(2) We believe these factors bode well for the fund.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, 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. These insights may help you
understand our investment and management philosophy.
2 Source: Standard & Poor's Micropal.
FRANKLIN MICROCAP VALUE FUND
Class A:
Subject to the current, maximum 5.75% initial sales charge. Prior to
August 3, 1998,fund shares were offered at a lower initial sales charge; thus
actual total returns may differ. Past expense reductions by the fund's manager
increased the fund's total performance.
1. Cumulative total return represents the change in value of an investment over
the periods 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 current, applicable,
maximum sales charge. Six-month return has not been annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the current, applicable, maximum
sales charge.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
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.
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98-4/30/99)
CLASS A CHANGE 4/30/99 10/31/98
----------------------------------------------------------------
Net Asset Value -$1.35 $18.92 $20.27
Distributions
----------------------------------
Long-Term Capital Gain $0.9768
Short-Term Capital Gain $0.5866
TOTAL $1.5634
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 3-YEAR (12/12/95)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +1.14% -19.95% +27.29% +50.48%
Average Annual Total Return(2) -4.69% -24.55% +6.26% +10.87%
Value of $10,000 Investment(3) $9,531 $7,545 $11,997 $14,179
<CAPTION>
4/30/97 4/30/98 4/30/99
----------------------------------------------------------------------------------
<S> <C> <C> <C>
One-Year Total Return(4) +9.56% +45.14% -19.95%
</TABLE>
Past performance is not predictive of future results.
FRANKLIN VALUE FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: 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 goal.
- --------------------------------------------------------------------------------
The six-month period ended April 30, 1999, was a very difficult time for value
stocks and for Franklin Value Fund. While tech stocks, Internet stocks and
large-cap household names blasted off to ever higher prices, more mundane,
industrial and commodity-based companies lingered in the shadows, unrecognized
or ignored by most investors.
As shown in the Performance Summary beginning on page 15, the fund's Class A
shares registered a cumulative total return of +1.60% for the six months ended
April 30, 1999. Cumulative total return represents the change in value of an
investment over the period indicated and does not include the sales charge. By
comparison, the unmanaged Wilshire Small Company Value Index -- the fund's
benchmark -- returned 0.91% for the same period.(1) The index is unmanaged and
includes reinvested dividends. One cannot invest directly in an index.
Our value investment strategy focuses on a broad category of bargain stocks.
Some sell at a low price to earnings, cash flow, or book value. Others have
overlooked assets such as land, valuable intangibles, patents or distribution
systems. As a rule these stocks are out-of-favor when we buy, which is why we
can get a bargain. If these companies perform as expected, often investors or
corporate buyers will discover our holdings and bid prices up. Clearly this did
not happen during most of the six months under review, but it did start to take
place in April. There were several hints that strategic corporate buyers or
investors were beginning to recognize some of our bargain holdings. During
March, three of our portfolio holdings benefited from announcements of corporate
takeovers, all at a premium to prior-day prices. In addition, our patience with
the oil drilling and oil services holdings was finally rewarded as oil prices
began to increase, causing a significant, positive move in their stock prices.
We are hopeful investors are beginning to seek rational valuations, for it could
have a favorable effect on the performance of Franklin Value Fund's portfolio.
1. Source: Standard & Poor's Micropal.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 31 of
this report.
TOP 10 HOLDINGS
Franklin Value Fund
4/30/99
COMPANY % OF TOTAL
INDUSTRY NET ASSETS
- -----------------------------------------
JLG Industries Inc. 4.13%
Producer Manufacturing
Tropical Sportswear
International Corp. 3.79%
Consumer Non-Durables
The Timberland Co., A 3.02%
Consumer Non-Durables
Rowan Cos., Inc. 2.42%
Industrial Services
Professionals Group Inc. 2.26%
Finance
Ensco International Inc. 2.23%
Industrial Services
Atwood Oceanics Inc. 2.14%
Industrial Services
Wolverine World Wide, Inc. 2.14%
Consumer Non-Durables
Timken Co. 2.09%
Producer Manufacturing
West Pharmaceutical
Services, Inc. 2.01%
Health Technology
During the reporting period we took steps to position the portfolio to take
advantage of the turnaround we anticipate. We began to reduce the number of the
fund's positions by liquidating many holdings that were too small to have an
impact on the portfolio and several where we felt the reasons for owning them
had changed. We focused new purchases on companies with larger market
capitalizations, increased liquidity and greater name recognition. Some examples
are Dana Corp., Timken Co., The Timberland Co. and Wolverine World Wide Inc.
We believe that the current bargain basement value situation has a positive
aspect--it provides patient investors with attractive buying opportunities. We
are confident that our value investing approach has the potential to serve our
shareholders well over the long term. As experienced value managers, we realize
that to harvest the pot of gold at the end of the rainbow we must also bear the
rain. While value investing may seem unfavorable in the near term, we believe
the rainbow has begun to appear on the horizon. We feel that the upward surge in
markets is broadening and starting to include formerly out-of-favor value
stocks. The Wilshire 5000 Index--the best representation of the entire stock
market because it is composed of more than 7,000 companies headquartered in the
U.S.--rose 4.79% in April 1999. Additionally, the unmanaged Wilshire Small Cap
Value Index rose 8.18%, while the S&P 500 rose 3.81%, in April.(2) We believe
that the fund is well-positioned to turn around and should prove rewarding to
its shareholders.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, 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. These insights may help you
understand our investment and management philosophy.
2. Source: Standard & Poor's Micropal.
FRANKLIN VALUE FUND
CLASS A (formerly Class I):
Subject to the current, maximum 5.75% initial sales charge. Prior to August 3,
1998, fund shares were offered at a lower initial sales charge; thus actual
total returns may differ.(*)
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.(*)
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.(*)
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors.(*)
(*)The fund's manager has agreed in advance to waive a portion of its management
fees, which increases total return to shareholders. If the manager had not taken
this action, the fund's total return would have been lower. The fee waiver may
be discontinued at any time, upon notice to the funds Board of Directors.
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities. Past distributions
are not indicative of future trends. All total returns include reinvested
distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98-4/30/99)
CLASS A CHANGE 4/30/99 10/31/98
-------------------------------------------------------------------------
Net Asset Value +$0.19 $18.17 $17.98
DISTRIBUTIONS
-------------------------------------------------------------------------
Long-Term Capital Gain $0.0929
CLASS B CHANGE 4/30/99 1/1/99
-------------------------------------------------------------------------
Net Asset Value -$0.40 $18.13 $18.53
CLASS C CHANGE 4/30/99 10/31/98
-------------------------------------------------------------------------
Net Asset Value +$0.13 $17.95 $17.82
DISTRIBUTIONS
-------------------------------------------------------------------------
Long-Term Capital Gain $0.0929
ADVISOR CLASS CHANGE 4/30/99 10/31/98
-------------------------------------------------------------------------
Net Asset Value +$0.24 $18.31 $18.07
DISTRIBUTIONS
-------------------------------------------------------------------------
Long-Term Capital Gain $0.0929
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 3-YEAR (3/11/96)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +1.60% -28.73% +18.71% +26.30%
Average Annual Total Return(2) -4.26% -32.81% +3.82% +5.70%
Value of $10,000 Investment(3) $9,574 $6,719 $11,191 $11,901
4/30/97 4/30/98 4/30/99
--------------------------------------------------------------------------------
One-Year Total Return(4) +21.51% +37.07% -28.73%
INCEPTION
CLASS B (1/1/99)
--------------------------------------------------------------------------------
Cumulative Total Return(1) -1.09%
Aggregate Total Return(2) -5.05%
Value of $10,000 Investment(3) $9,495
INCEPTION
CLASS C 6-MONTH 1-YEAR (9/3/96)
--------------------------------------------------------------------------------
Cumulative Total Return(1) +1.28% -29.17% +13.88%
Average Annual Total Return(2) -0.73% -30.58% +4.63%
Value of $10,000 Investment(3) $9,927 $6,942 $11,278
INCEPTION
ADVISOR CLASS(5) 6-MONTH 1-YEAR 3-YEAR (3/11/96)
--------------------------------------------------------------------------------
Cumulative Total Return(1) +1.87% -28.40% +19.87% +27.54%
Average Annual Total Return(2) +1.87% -28.40% +6.23% +8.06%
Value of $10,000 Investment(3) $10,187 $7,160 $11,987 $12,754
4/30/97 4/30/98 4/30/99
--------------------------------------------------------------------------------
One-Year Total Return(4) 21.62% +37.67% -28.40%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods 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 current, applicable,
maximum sales charge(s) for that class. Six-month return has not been
annualized. Since Class B shares have existed for less than one year, aggregate
total return for that class represents total return since inception, including
the maximum sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
5. 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
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; 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 and average annual
total returns of Advisor Class shares were -0.47% and -0.20% respectively.
- --------------------------------------------------------------------------------
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>
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30,1999 ---------------------
(UNAUDITED) 1998
--------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................................ $ 31.86 $ 35.22
--------------------------------------
Income from investment operations:
Net investment income .............................................. .21 .50
Net realized and unrealized gains (losses) ......................... (.39) (1.55)
--------------------------------------
Total from investment operations .................................... (.18) (1.05)
--------------------------------------
Less distributions from:
Net investment income .............................................. (.23) (.51)
Net realized gains ................................................. (1.16) (1.80)
--------------------------------------
Total distributions ................................................. (1.39) (2.31)
--------------------------------------
Net asset value, end of period ...................................... $ 30.29 $ 31.86
======================================
Total return(*) ..................................................... (0.58%) (3.14%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................................... $ 1,322,728 $ 1,467,207
Ratios to average net assets:
Expenses ........................................................... .90%(**)
Expenses excluding waiver and payments by affiliate ................ .90%(**) .93%
Net investment income .............................................. 1.36%(**) 1.47%
Portfolio turnover rate ............................................. 6.92% 11.81%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------
1997 1996 1995 1994
----------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................................ $ 29.15 $ 26.34 $ 22.68 $ 22.97
----------------------------------------------
Income from investment operations:
Net investment income .............................................. .48 .47 .30 .23
Net realized and unrealized gains (losses) ......................... 8.40 3.85 3.98 .51
----------------------------------------------
Total from investment operations .................................... 8.88 4.32 4.28 .74
----------------------------------------------
Less distributions from:
Net investment income .............................................. (.46) (.44) (.27) (.26)
Net realized gains ................................................. (2.35) (1.07) (.35) (.77)
----------------------------------------------
Total distributions ................................................. (2.81) (1.51) (.62) (1.03)
----------------------------------------------
Net asset value, end of period ...................................... $ 35.22 $ 29.15 $ 26.34 $ 22.68
==============================================
Total return(*) .....................................................
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................................... $1,222,953 $ 657,002 $387,540 $134,255
Ratios to average net assets:
Expenses ...........................................................
Expenses excluding waiver and payments by affiliate ................ 1.08% 1.08% 1.17% 1.34%
Net investment income .............................................. 1.59% 1.69% 1.30% .99%
Portfolio turnover rate ............................................. 24.63% 35.46% 28.63% 24.96%
</TABLE>
(*) Total return does not reflect sales commissions or the contingent
deferred sales charge,and is not annualized for periods less than one
year. Prior to May 1, 1994, dividends from net investment income were
invested at the offering price.
(**) Annualized
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
---------------------------------------------------------------------------------------
CLOSED END MUTUAL FUNDS 4.6%
<S> <C> <C>
Central European Equity Fund .................... 250,000 $ 3,187,500
Emerging Markets Infrastructure Fund Inc. ....... 300,000 2,625,000
H & Q Healthcare Investors Fund ................. 150,000 1,978,125
INVESCO Global Health Sciences Fund ............. 325,000 5,626,563
Irish Investment Fund Inc. ...................... 135,000 2,446,875
John Hancock Bank and Thrift Opportunity Fund ... 1,150,000 11,284,375
Latin America Investment Fund Inc. .............. 175,000 2,078,125
Latin American Equity Fund Inc. ................. 175,000 1,925,000
Liberty All Star Growth Fund Inc. ............... 150,000 1,603,125
Mexico Fund ..................................... 625,000 10,976,563
(a)Morgan Grenfell Smallcap Fund Inc. .............. 123,800 1,191,575
Petroleum & Resources Corp. ..................... 100,000 3,587,500
(a)Royce Global Trust Inc. ......................... 160,000 660,000
Royce Micro-Cap Trust Inc. ...................... 50,000 415,625
Royce Value Trust ............................... 52,500 682,500
Scudder New Europe Fund Inc. .................... 325,000 6,459,375
Swiss Helvetia Fund ............................. 250,000 3,500,000
------------
TOTAL CLOSED END MUTUAL FUNDS (COST $54,318,413) 60,227,826
------------
COMMON STOCKS 86.2%
COMMERCIAL SERVICES 3.4%
(a,c)Handleman Co. ................................... 2,000,000 28,125,000
(c)Nash-Finch Co. .................................. 1,000,000 9,500,000
Unisource Worldwide Inc. ........................ 1,000,000 8,125,000
------------
45,750,000
------------
CONSUMER DURABLES 7.7%
Allen Organ Co., B .............................. 83,000 3,029,500
(a,c)Audiovox Corp., A ............................... 1,630,000 10,391,250
(a)Baldwin Piano & Organ Co. ....................... 124,600 1,121,400
(a)Beazer Homes USA Inc. ........................... 216,700 4,997,644
(a,c)Castle & Cooke Inc. ............................. 1,772,400 26,142,900
(a)Dixie Group Inc. ................................ 500,000 4,437,500
Engle Homes Inc. ................................ 350,000 4,068,750
(a)Jan Bell Marketing Inc. ......................... 1,251,400 3,832,413
M.D.C. Holdings Inc. ............................ 675,000 13,246,875
(a)OroAmerica Inc. ................................. 74,900 641,331
(a)Powerhouse Technologies Inc. .................... 15,000 262,500
(c)Pulaski Furniture Corp. ......................... 192,000 4,128,000
(a)Schuler Homes Inc. .............................. 537,400 3,761,800
(a)U.S. Home Corp. ................................. 625,000 21,406,250
(a)Washington Homes Inc. ........................... 150,000 909,375
------------
102,377,488
------------
CONSUMER NON-DURABLES 3.6%
Block Drug Co. Inc., A .......................... 240,900 8,461,613
(a,c)Chic By H.I.S. Inc .............................. 756,000 2,409,750
(a,c)Cyrk Inc. ....................................... 1,150,000 7,762,500
DIMON Inc. ...................................... 2,145,000 9,384,375
(c)Garan Inc. ...................................... 285,100 7,626,425
Genesee Corp., B ................................ 117,900 2,402,213
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
---------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
CONSUMER NON-DURABLES (CONT.)
<S> <C> <C>
(c)Haggar Corp. .............................................................. 850,000 $ 9,243,750
(a)Hampton Industries Inc. ................................................... 62,700 289,988
-----------
47,580,614
-----------
CONSUMER SERVICES 3.0%
(a,c)Aztar Corp. ............................................................... 3,525,000 24,454,688
(a)Casino Data Systems ....................................................... 790,000 2,518,125
(a,c)Unique Casual Restaurants Inc. ............................................ 985,000 4,186,250
(a,c)VICORP Restaurants Inc. ................................................... 606,700 9,252,175
-----------
40,411,238
-----------
ELECTRONIC TECHNOLOGY 3.0%
(a)Centigram Communications Corp. ............................................ 153,000 1,377,000
(a)Cidco Inc. ................................................................ 435,000 2,324,553
Cubic Corp. ............................................................... 150,200 3,360,725
(a,c)ESCO Electronics Corp. .................................................... 840,000 8,137,500
(a)FSI International Inc. .................................................... 900,000 6,243,750
(a)Intergraph Corp. .......................................................... 1,150,000 7,690,625
(a,c)Standard Microsystems Corp. ............................................... 1,375,000 10,140,625
-----------
39,274,778
-----------
ENERGY MINERALS 1.3%
(a,c)Crown Central Petroleum Corp., B .......................................... 475,000 3,978,125
Kentucky River Coal Corp. ................................................. 1,498 4,662,525
(a,c)Maynard Oil Co. ........................................................... 268,000 2,420,388
Ultramar Diamond Shamrock Corp. ........................................... 300,000 6,918,750
-----------
17,979,788
-----------
FINANCE 25.0%
(a,c)ACMAT Corp., A ............................................................ 295,000 4,388,125
American General Corp. .................................................... 370,000 27,380,000
(a)American Indemnity Financial Corp. ........................................ 85,600 1,160,950
American National Insurance Co. ........................................... 518,400 35,964,000
AmerUs Life Holdings Inc., A .............................................. 225,000 5,034,375
Amwest Insurance Group Inc. ............................................... 57,040 570,400
Argonaut Group Inc. ....................................................... 161,000 4,025,000
Baldwin & Lyons Inc., B ................................................... 112,477 2,643,210
(a)Calumet Bancorp Inc. ...................................................... 105,000 3,366,563
Capital Re Corp. .......................................................... 790,000 15,454,375
The Centris Group Inc. .................................................... 240,600 2,736,825
Chartwell Re Corp. ........................................................ 160,000 2,960,000
Community Savings Bankshares Inc. ......................................... 50,000 625,000
(a,c)Echelon International Corp. Inc ........................................... 500,000 11,406,250
(a)Farm Family Holdings Inc. ................................................. 220,000 7,150,000
(a)Farmers & Merchants Bank of Long Beach .................................... 2,400 6,540,000
FBL Financial Group Inc., A ............................................... 884,000 17,569,500
(c)Fidelity Bancorp Inc. ..................................................... 138,300 3,146,325
Fidelity Financial of Ohio Inc. ........................................... 80,000 980,000
First Defiance Financial Corp. ............................................ 300,000 3,525,000
GA Financial Inc. ......................................................... 278,200 4,416,425
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
FINANCE (CONT.)
<S> <C> <C>
Guarantee Life Cos. Inc ...................................................... 425,000 $ 8,500,000
Kansas City Life Insurance Co. ............................................... 43,800 3,594,338
LandAmerica Financial Group Inc. ............................................. 140,000 3,920,000
(c)Merchants Group Inc. ......................................................... 257,800 5,574,925
Meridian Insurance Group Inc. ................................................ 299,200 4,983,565
MMI Cos. Inc ................................................................. 443,000 6,866,500
(a)National Western Life Insurance Co., A ....................................... 99,000 9,825,750
(a)PBOC Holdings Inc. ........................................................... 251,800 2,203,250
Presidential Life Corp. ...................................................... 736,600 13,212,763
(a,c)Professionals Group Inc. ..................................................... 455,000 11,574,063
PXRE Corp. ................................................................... 400,000 7,600,000
(a)Quaker City Bancorp Inc. ..................................................... 137,500 2,148,438
(a)Risk Capital Holdings Inc. ................................................... 600,000 8,700,000
RLI Corp. .................................................................... 40,000 1,272,500
Rouse Co. .................................................................... 330,000 8,023,125
(a)Scor (France) ................................................................ 338,000 16,878,187
SCPIE Holdings Inc. .......................................................... 534,000 12,816,000
St.Paul Cos. Inc ............................................................. 550,000 15,778,125
(a)StanCorp Financial Group Inc. ................................................ 460,300 11,075,969
(c)Stewart Information Services Corp. ........................................... 390,000 15,575,625
------------
331,165,446
------------
HEALTH SERVICES .7%
(a)Trigon Healthcare Inc. ....................................................... 273,300 8,677,275
------------
INDUSTRIAL SERVICES .7%
(c)Ecology & Environment Inc., A ................................................ 235,000 1,659,688
(a)EMCON ........................................................................ 186,200 1,035,738
(a)Harding Lawson Associates Group Inc. ......................................... 135,800 967,575
(a)Matrix Service Co. ........................................................... 457,500 1,601,250
Petroleum Helicopters Inc. ................................................... 77,500 1,046,250
Petroleum Helicopters Inc., Non-Voting ....................................... 210,000 2,677,500
------------
8,988,001
------------
NON-ENERGY MINERALS 3.8%
British Steel PLC (United Kingdom) ........................................... 9,600,000 22,836,902
Central Steel and Wire Co. ................................................... 1,405 1,036,188
(a)Devcon International Corp. ................................................... 211,200 396,000
LTV Corp. .................................................................... 3,950,000 25,181,250
(a)Zemex Corp. .................................................................. 54,000 330,750
------------
49,781,090
------------
PROCESS INDUSTRIES 3.3%
(a,c)American Pacific Corp. ....................................................... 421,100 3,474,075
(a)Boswell J.G. Co .............................................................. 8,000 9,000,000
Corn Products International Inc. ............................................. 259,400 7,490,175
(c)Delta Woodside Industries Inc. ............................................... 2,320,000 15,805,000
Mercer International Inc.(Switzerland) ....................................... 665,000 4,405,625
(a)Orange-co Inc. ............................................................... 170,000 881,875
Terra Industries Inc. ........................................................ 690,000 3,191,250
------------
44,248,000
------------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
PRODUCER MANUFACTURING 9.0%
<S> <C> <C>
(a,c)Cherry Corp., A .............................................................. 408,900 $ 5,571,263
(a,c)Cherry Corp., B .............................................................. 271,000 3,768,607
(c)Commonwealth Industries Inc. ................................................. 1,300,000 12,512,500
(a)Global Industrial Technologies Inc. .......................................... 1,100,000 14,506,250
Hardinge Inc. ................................................................ 400,000 6,600,000
(c)Insteel Industries Inc. ...................................................... 570,000 4,773,750
Monarch Machine Tool Co. ..................................................... 140,000 1,102,500
(a)Nashua Corp. ................................................................. 299,100 3,215,325
Oshkosh Truck Corp., B ....................................................... 307,900 11,392,300
(c)Pitt-Des Moines Inc. ......................................................... 450,000 10,462,500
Tecumseh Products Co., A ..................................................... 421,000 25,733,625
Tecumseh Products Co., B ..................................................... 114,000 6,483,750
Timken Co. ................................................................... 495,000 11,044,688
TransPro Inc. ................................................................ 250,000 1,531,250
------------
118,698,308
------------
RETAIL TRADE 7.9%
Cato Corp., A ................................................................ 550,000 6,187,500
(a,c)Charming Shoppes Inc. ........................................................ 6,600,000 25,575,000
(a,c)Designs Inc. ................................................................. 1,190,000 2,900,625
(a)Evans Inc. ................................................................... 48,275 72,413
(c)Fred's Inc. .................................................................. 969,000 11,325,188
(a,c)The Good Guys Inc. ........................................................... 800,000 2,900,000
Haverty Furniture Co. Inc .................................................... 180,000 4,252,500
(a,c)HomeBase Inc. ................................................................ 2,915,000 14,575,000
(a,c)Jacobson Stores Inc. ......................................................... 298,100 1,900,388
(a)Kmart Corp. .................................................................. 590,000 8,776,250
(a)Lechters Inc. ................................................................ 600,000 918,780
(a)Little Switzerland Inc. ...................................................... 183,400 171,938
(a)PriceSmart Inc. .............................................................. 123,050 2,461,000
(a,c)Syms Corp. ................................................................... 1,137,600 9,171,900
(a)United Retail Group Inc. ..................................................... 632,600 6,839,988
(c)Wolohan Lumber Co. ........................................................... 520,000 6,110,000
------------
104,138,470
------------
TECHNOLOGY SERVICES .1%
(a)Government Technology Services Inc. .......................................... 212,800 837,900
------------
TRANSPORTATION 3.3%
(a)Crowley Maritime Corp. ....................................................... 4,440 6,671,100
(c)International Shipholding Corp. .............................................. 587,900 7,789,675
(a,c)KLLM Transport Services Inc. ................................................. 322,000 2,143,329
(a)Mesa Air Group Inc. .......................................................... 870,300 5,874,525
(a)OMI Corp. .................................................................... 632,900 1,463,581
Overseas Shipholding Group Inc. .............................................. 1,540,000 19,250,000
------------
43,192,210
------------
UTILITIES 10.4%
Central Vermont Public Service Corp. ......................................... 70,000 752,500
CMP Group Inc. ............................................................... 1,486,600 28,802,875
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
--------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
UTILITIES (CONT.)
<S> <C> <C>
Conectiv Inc. ......................................................... 215,000 $ 5,146,563
Entergy Corp. ......................................................... 1,300,000 40,625,000
(a,c)Kaneb Services Inc. ................................................... 3,190,000 14,753,750
(a)Niagara Mohawk Holdings Inc. .......................................... 2,587,000 34,601,125
(a)Northeast Utilities ................................................... 800,000 12,800,000
---------------
137,481,813
---------------
COMPANY IN LIQUIDATION
(a)S&C Liquidating Trust ................................................. 330,500
---------------
TOTAL COMMON STOCKS (COST $1,106,792,708) ............................. 1,140,582,419
---------------
PREFERRED STOCKS .6%
FINANCE .6%
Price Enterprises Inc., 8.75%, pfd., A (COST $6,943,575) .............. 533,400 7,867,650
---------------
PRINCIPAL
AMOUNT
---------------
<S> <C> <C>
BONDS .1%
Hechinger Co., senior note, 6.95%, 10/15/03 (COST $5,062,228) ......... $ 7,000,000 1,435,000
---------------
TOTAL LONG TERM INVESTMENTS (COST $1,173,116,924) ..................... 1,210,112,895
---------------
(b)REPURCHASE AGREEMENT 9.0%
Joint Repurchase Agreement, 4.862%, 5/03/99, (Maturity Value $119,110,374)
(COST $119,062,135) .............................................. 119,062,135 119,062,135
Barclays Capital Inc.
Bear, Stearns & Co.
Chase Securities Inc.
CIBC Oppenheimer Corp.
Deutsche Bank Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corp.
Dresdner Kleinwort Benson, North America LLC
Lehman Brothers Inc.
Paine Webber Inc.
Paribas Corp.
UBS Securities LLC
Collateralized by U.S. Treasury Bills & Notes ---------------
TOTAL INVESTMENTS (COST $1,292,179,059) 100.5% ........................ 1,329,175,030
OTHER ASSETS, LESS LIABILITIES (.5%) .................................. (6,447,396)
---------------
NET ASSETS 100.0% ..................................................... $ 1,322,727,634
===============
</TABLE>
(a)Non-income producing.
(b)Investment is through participation in a joint account with other funds
managed by the investment advisor. At April 30, 1999, all repurchase
agreements had been entered into on that date.
(c)See Note 7 regarding holdings of 5% voting securities.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
FRANKLIN MICROCAP VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30,1999 ------------------------------------------
(UNAUDITED) 1998 1997 1996(1)
---------------- -------- -------- --------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value,beginning of period ........... $ 20.27 $ 24.29 $ 18.44 $ 15.00
---------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ................. (.01) (.02) (.01) .14
Net realized and unrealized gains (losses) ... .22 (2.51) 6.33 3.41
---------------------------------------------------------------
Total from investment operations .............. .21 (2.53) 6.32 3.55
---------------------------------------------------------------
Less distributions from:
Net investment income ........................ -- (.01) (.07) (.11)
Net realized gains ........................... (1.56) (1.48) (.40) --
---------------------------------------------------------------
Total distributions ........................... (1.56) (1.49) (.47) (.11)
---------------------------------------------------------------
Net asset value,end of period ................. $ 18.92 $ 20.27 $ 24.29 $ 18.44
===============================================================
Total return(*) ............................... 1.14% (10.95%) 35.05% 23.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) .............. $141,555 $175,635 $191,638 $119,664
Ratios to average net assets:
Expenses ..................................... 1.26%(**) 1.21% 1.22% 1.24%(**)
Net investment income (loss) ................. (.08%)(**) (.11%) (.05%) 1.28%(**)
Portfolio turnover rate ....................... 8.99% 31.91% 21.33% 14.15%
</TABLE>
(*) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(**) Annualized
(1) For the period December 12, 1995 (effective date) to October 31, 1996.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Statement of Investments, April 30,1999 (unaudited)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 94.3%
COMMERCIAL SERVICES 2.4%
(a,c)Allou Health & Beauty Care Inc., A.................... 285,000 $ 2,333,438
Noland Co. ........................................... 48,500 994,250
-----------
3,327,688
-----------
CONSUMER DURABLES 7.7%
(a) Acorn Products Inc. .................................. 160,000 970,000
Allen Organ Co.,B .................................... 42,000 1,533,000
(a) Baldwin Piano & Organ Co. ............................ 50,500 454,500
(a) Beazer Homes USA Inc. ................................ 20,000 461,250
Dixie Group Inc. ..................................... 100,000 887,500
Engle Homes Inc. ..................................... 90,000 1,046,250
M/I Schottenstein Homes Inc. ......................... 75,000 1,537,500
(a,c)Oriole Homes Corp., B ................................ 339,000 508,500
(a) OroAmerica Inc. ...................................... 46,300 396,444
Pulaski Furniture Corp. .............................. 80,000 1,720,000
(a) Washington Homes Inc. ................................ 233,500 1,415,594
-----------
10,930,538
-----------
CONSUMER NON-DURABLES 8.0%
(a) Chic By H.I.S.Inc .................................... 194,100 618,694
Garan Inc. ........................................... 90,000 2,407,500
Genesee Corp., A ..................................... 7,000 142,625
Genesee Corp., B ..................................... 36,000 733,500
(a) Hampton Industries Inc. .............................. 220,620 1,020,368
(a) McNaughton Apparel Group Inc. ........................ 341,200 2,004,550
(a,c)Seneca Foods Corp., A ................................ 191,600 2,658,450
(a) Seneca Foods Corp., B ................................ 42,500 552,500
Standard Commercial Corp. ............................ 250,000 1,109,375
-----------
11,247,562
-----------
CONSUMER SERVICES 2.2%
(a) Casino Data Systems .................................. 775,000 2,470,313
(a) Unique Casual Restaurants Inc. ....................... 150,000 637,500
-----------
3,107,813
-----------
ELECTRONIC TECHNOLOGY 6.7%
(a) Aehr Test Systems .................................... 122,000 549,000
(a) Datron Systems Inc. .................................. 120,000 930,000
(a,c)ECC International Corp. .............................. 780,000 2,193,750
(c) Espey Manufacturing & Electronics Corp. .............. 93,000 1,185,750
(a) Moore Products Co. ................................... 129,700 3,015,525
(a) SPACEHAB Inc. ........................................ 137,700 757,350
(a) Sparton Corp. ........................................ 136,100 859,131
-----------
9,490,506
-----------
ENERGY MINERALS 3.2%
(a) Crystal Oil Co. ...................................... 48,000 1,554,000
(a,c)Maynard Oil Co. ...................................... 298,500 2,695,843
Home-Stake Oil & Gas Co. ............................. 59,000 236,000
-----------
4,485,843
-----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
FINANCE 14.3%
(a,c)ACMAT Corp., A ................................ 150,000 $ 2,231,250
(a,c)Allstate Financial Corp. ...................... 194,000 1,048,822
(a) American Indemnity Financial Corp. ............ 66,500 901,906
Amwest Insurance Group Inc. ................... 187,000 1,870,000
(a) Bresler & Reiner Inc. ......................... 78,000 2,310,750
FFD Financial Corp. ........................... 35,000 560,000
Fidelity Financial of Ohio Inc. ............... 116,000 1,421,000
GA Financial Inc. ............................. 145,300 2,306,638
Meridian Insurance Group Inc. ................. 110,000 1,832,193
National Security Group Inc. .................. 7,000 83,125
Old Guard Group Inc. .......................... 160,000 2,050,000
PAULA Financial ............................... 100,000 775,000
PHS Bancorp Inc. .............................. 25,000 267,188
(a) Pinnacle Global Group Inc. .................... 200,525 1,115,420
(a) Quaker City Bancorp Inc. ...................... 90,000 1,406,250
Somerest Group Inc. ........................... 6,700 110,131
-----------
20,289,673
-----------
HEALTH SERVICES .6%
(a,c)American Physicians Service Group Inc. ........ 242,000 816,750
-----------
INDUSTRIAL SERVICES 8.6%
(c) Ecology & Environment Inc., A ................. 110,000 776,875
(a,c)EMCON ......................................... 602,100 3,349,173
(a,c)GZA GeoEnvironmental Technologies Inc. ........ 310,000 1,317,500
(a,c)Harding Lawson Associates Group Inc. .......... 300,900 2,143,913
(a) Matrix Service Co. ............................ 174,000 609,000
(a,c)NSC Corp. ..................................... 800,000 800,000
Petroleum Helicopters Inc. .................... 17,600 237,600
Petroleum Helicopters Inc. .................... 110,000 1,402,500
(a,c)Roy F. Weston Inc., A ......................... 633,000 1,582,500
-----------
12,219,061
-----------
NON-ENERGY MINERALS 3.5%
Case,Pomery & Co.Inc., A ...................... 220 222,200
Case,Pomery & Co.Inc., B ...................... 500 651,250
(a) Devcon International Corp. .................... 167,500 314,063
(a,c)Kentucky Electric Steel Inc. .................. 450,000 1,209,375
(a) Zemex Corp. ................................... 407,773 2,497,610
-----------
4,894,498
-----------
PROCESS INDUSTRIES 5.4%
(a) American Pacific Corp. ........................ 300,000 2,475,000
(a,c)Concord Fabrics Inc., A ....................... 146,000 720,875
(a) Flanders Corp. ................................ 700,000 1,881,250
(a) Griffin Land & Nurseries Inc. ................. 133,600 1,469,600
(a) Orange-co Inc. ................................ 145,000 752,188
Thomaston Mills Inc., A ....................... 103,800 298,425
-----------
7,597,338
-----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
PRODUCER MANUFACTURING 8.5%
(a,c)Aerovox Inc. .................................. 530,000 $ 1,325,000
(a,c)Art's-Way Manufacturing Co. Inc ................ 87,500 442,969
(a,c)Athey Products Corp. .......................... 200,000 575,000
(a) Bridgeport Machines Inc. ...................... 127,700 1,181,225
(a) Continental Materials Corp. ................... 50,000 1,825,000
Insteel Industries Inc. ....................... 260,000 2,177,500
Monarch Machine Tool Co. ...................... 100,000 787,500
(a) Napco Security Systems Inc. ................... 15,000 44,063
(a) Nashua Corp. .................................. 142,900 1,536,175
(a) Rofin-Sinar Technologies Inc. ................. 18,900 111,038
(a,c)Temtex Industries Inc. ........................ 265,500 680,344
TransPro Inc. ................................. 230,000 1,408,750
-----------
12,094,564
-----------
RETAIL TRADE 10.3%
(a) Catherines Stores Corp. ....................... 149,500 1,476,313
(a) Designs Inc. .................................. 695,000 1,694,063
(a) Jacobson Stores Inc. .......................... 87,200 555,900
(a) Lechters Inc. ................................. 630,000 964,719
(a) Little Switzerland Inc. ....................... 279,200 261,750
(a,c)S&K Famous Brands Inc. ........................ 265,000 2,434,688
(a) Syms Corp. .................................... 100,600 811,088
(a) Trak Auto Corp. ............................... 50,000 435,940
(a) United Retail Group Inc. ...................... 261,000 2,822,063
(a,c)Village Super Market Inc., A .................. 108,500 1,383,375
Wolohan Lumber Co. ............................ 138,000 1,621,500
Zions Cooperative Mercantile Institution ...... 9,400 136,300
-----------
14,597,699
-----------
TECHNOLOGY SERVICES 2.4%
(a,c)Government Technology Services Inc. ........... 470,000 1,850,625
(a) Ultrak Inc. ................................... 275,000 1,615,625
-----------
3,466,250
-----------
TELECOMMUNICATIONS 2.0%
(c) Atlantic Tele-Network Inc. .................... 300,000 2,812,500
-----------
TRANSPORTATION 4.5%
(a) Crowley Maritime Corp. ........................ 2,050 3,080,125
Providence & Worchester Railroad Co. .......... 149,400 1,886,175
(a,c)TransFinancial Holdings Inc. .................. 310,900 1,399,050
-----------
6,365,350
-----------
UTILITIES 4.0%
(a) Bangor Hydro-Electric Co. ..................... 220,000 2,653,750
Green Mountain Power Corp. .................... 140,000 1,338,750
(c) Maine Public Service Co. ...................... 120,000 1,680,000
-----------
5,672,500
-----------
TOTAL LONG TERM INVESTMENTS (COST $145,623,498) 133,416,133
-----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN MICROCAP VALUE FUND AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
(b)REPURCHASE AGREEMENT 6.3%
Joint Repurchase Agreement,4.862%,5/03/99,(Maturity Value $8,968,245)
(COST $8,964,613) ................................................. $ 8,964,613 $ 8,964,613
Barclays Capital Inc.
Bear,Stearns & Co.Inc
Chase Securities Inc.
CIBC Oppenheimer Corp.
Deutsche Bank Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corp.
Dresdner Kleinwort Benson, North America LLC
Lehman Brothers Inc.
Paine Webber Inc.
Paribas Corp.
UBS Securities LLC
Collateralized by U.S. Treasury Bills and Notes
-------------
TOTAL INVESTMENTS (COST $154,588,111) 100.6% ........................ 142,380,746
OTHER ASSETS, LESS LIABILITIES (.6%)................................. (825,379)
-------------
NET ASSETS 100.0% ................................................... $ 141,555,367
=============
</TABLE>
(a) Non-income producing.
(b) Investment is through participation in a joint account with other funds
managed by the investment advisor. At 4/30/99, all repurchase agreements
had been entered into on that date.
(c) See Note 7 regarding holdings of 5% voting securities.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
FRANKLIN VALUE FUND
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ---------------------------------------
(UNAUDITED) 1998 1997 1996(2)
---------------- ------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 17.98 $ 24.68 $ 17.15 $15.00
----------------------------------------------------------
Income from investment operations:
Net investment income (loss) ....................... (.05) (.03) .08 .05
Net realized and unrealized gains (losses) ......... .33 (6.45) 7.90 2.15
----------------------------------------------------------
Total from investment operations .................... .28 (6.48) 7.98 2.20
----------------------------------------------------------
Less distributions from:
Net investment income .............................. -- (.01) (.08) (.05)
Net realized gains ................................. (.09) (.21) (.37) --
----------------------------------------------------------
Total distributions ................................. (.09) (.22) (.45) (.05)
----------------------------------------------------------
Net asset value, end of period ...................... $ 18.17 $ 17.98 $ 24.68 $17.15
==========================================================
Total return(*) ..................................... 1.60% (26.48%) 47.43% 14.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $74,320 $98,288 $78,897 $7,828
Ratios to average net assets:
Expenses ........................................... 1.53%(**) 1.32% 1.32% 1.35%(**)
Expenses excluding waiver and payments by affiliate 1.53%(**) 1.38% 1.41% 2.87%(**)
Net investment income (loss) ....................... (.31%)(**) (.16%) .27% .57%(**)
Portfolio turnover rate ............................. 18.11% 36.88% 13.92% 32.52%
</TABLE>
(*) Total return does not reflect sales commissions or contingent deferred
sales charge, and is not annualized for periods less than one year.
(**) Annualized
(2) For the period March 11, 1996 (effective date) to October 31, 1996.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights (continued)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
----------------
PERIOD ENDED
APRIL 30, 1999(3)
(UNAUDITED)
----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......................... $ 18.33
-------
Income from investment operations:
Net investment loss .......................................... (.02)
Net realized and unrealized losses ........................... (.18)
-------
Total from investment operations .............................. (.20)
-------
Net asset value, end of period ................................ $ 18.13
=======
Total return(*) ............................................... (1.09%)
RATIOS/SUPPLEMENTAL DATA
Net assets,end of period (000's) .............................. $ 421
Ratios to average net assets:
Expenses ..................................................... 2.20%(**)
Net investment loss .......................................... (.80%)(**)
Portfolio turnover rate ....................................... 18.11%
</TABLE>
(*) Total return does not reflect contingent deferred sales charge, and it is
not annualized for periods less than one year.
(**) Annualized
(3) For the period January 1, 1999 (effective date) to April 30, 1999.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights (continued)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ---------------------------------------
(UNAUDITED) 1998 1997 1996(4)
--------------- ---------- ---------- -------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 17.82 $ 24.59 $ 17.14 $ 16.38
-----------------------------------------------------------
Income from investment operations:
Net investment income (loss) ....................... (.13) (.13) (.02) .01
Net realized and unrealized gains (losses) ......... .35 (6.43) 7.84 .76
-----------------------------------------------------------
Total from investment operations .................... .22 (6.56) 7.82 .77
-----------------------------------------------------------
Less distributions from:
Net investment income .............................. -- -- -- (.01)
Net realized gains ................................. (.09) (.21) (.37) --
-----------------------------------------------------------
Total distributions ................................. (.09) (.21) (.37) (.01)
-----------------------------------------------------------
Net asset value, end of period ...................... $ 17.95 $ 17.82 $ 24.59 $ 17.14
===========================================================
Total return(*) ..................................... 1.28% (26.93%) 46.40% 4.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $ 34,598 $ 41,694 $ 21,554 $ 434
Ratios to average net assets:
Expenses ........................................... 2.20%(**) 1.97% 1.87% 2.00%(**)
Expenses excluding waiver and payments by affiliate 2.20%(**) 2.03% 1.96% 3.52%(**)
Net investment loss ................................ (.97%)(**) (.81%) (.30%) (.08%)(**)
Portfolio turnover rate ............................. 18.11% 36.88% 13.92% 32.52%
</TABLE>
(*) Total return does not reflect sales commissions or contingent deferred
sales charge, and is not annualized for periods less than one year.
(**) Annualized
(4) For the period September 1, 1996 (effective date) to October 31, 1996.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights (continued)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ------------------------
(UNAUDITED) 1998 1997(5)
-------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .............. $ 18.07 $ 24.72 $ 18.75
-------------------------------------------
Income from investment operations:
Net investment income ............................ .02 .04 .10
Net realized and unrealized gains (losses) ....... .31 (6.45) 5.95
-------------------------------------------
Total from investment operations .................. .33 (6.41) 6.05
-------------------------------------------
Less distributions from:
Net investment income ............................ -- (.03) (.08)
Net realized gains ............................... (.09) (.21) --
-------------------------------------------
Total distributions ............................... (.09) (.24) (.08)
-------------------------------------------
Net asset value, end of period .................... $ 18.31 $ 18.07 $ 24.72
===========================================
Total return(*) ................................... 1.87% (26.18%) 32.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................. $ 3,009 $ 4,739 $ 4,495
Ratios to average net assets:
Expenses ......................................... 1.22%(**) .97% .98%(**)
Expenses excluding waiver and payments by affiliate 1.22%(**) 1.03% 1.07%(**)
Net investment income ............................ .01%(**) .19% .59%(**)
Portfolio turnover rate ........................... 18.11% 36.88% 13.92%
</TABLE>
(*) Total return is not annualized for periods less than one year.
(**) Annualized
(5) For the period January 2, 1997 (effective date) to October 31, 1997.
See notes to financial statements
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
FRANKLIN VALUE FUND RIGHTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND RIGHTS 96.9%
COMMERCIAL SERVICES 2.2%
Nash-Finch Co. .............................. 24,000 $ 228,000
Reynolds & Reynolds Co., A .................. 75,500 1,722,344
Unisource Worldwide Inc. .................... 64,000 520,000
-----------
2,470,344
-----------
CONSUMER DURABLES 4.3%
(a)Cannondale Corp. ............................ 50,000 475,000
Coachmen Industries Inc. .................... 28,000 528,500
D.R. Horton Inc. ............................ 51,000 984,938
(a)Engel General Developers Ltd. ............... 220,000 584,386
Engle Homes Inc. ............................ 38,000 441,750
Flexsteel Industries Inc. ................... 46,200 603,488
M/I Schottenstein Homes Inc. ................ 29,500 604,750
(a)RockShox Inc. ............................... 105,800 148,787
(a)TBC Corp. ................................... 53,000 410,750
-----------
4,782,349
-----------
CONSUMER NON-DURABLES 12.0%
(a)Chic By H.I.S. Inc .......................... 20,000 63,750
DIMON Inc. .................................. 160,000 700,000
Schweitzer-Mauduit International Inc. ....... 42,000 695,625
(a)Sola International Inc. ..................... 58,000 862,750
Standard Commercial Corp. ................... 260,000 1,153,750
(a)The Timberland Co., A ....................... 49,000 3,393,250
(a)Tropical Sportswear International Corp. ..... 194,000 4,255,875
Wolverine World Wide Inc. ................... 200,000 2,400,000
-----------
13,525,000
-----------
CONSUMER SERVICES 1.0%
(a)Aztar Corp. ................................. 168,000 1,165,500
-----------
ELECTRONIC TECHNOLOGY 5.4%
(a)Aehr Test Systems ........................... 191,400 861,300
B.F. Goodrich Co. ........................... 15,000 596,250
Cordant Technologies Inc. ................... 10,300 475,088
(a)ESCO Electronics Corp. ...................... 43,000 416,563
(a)Ladish Co. Inc .............................. 181,100 1,211,106
(a)NCR Corp. ................................... 20,000 820,000
(a)SPACEHAB Inc. ............................... 209,700 1,153,350
United Industrial Corp. ..................... 48,000 564,000
-----------
6,097,657
-----------
ENERGY MINERALS 1.3%
(a)Nuevo Energy Co. ............................ 94,000 1,492,250
-----------
FINANCE 22.1%
(a)Acceptance Insurance Cos. Inc ............... 65,000 914,055
Allstate Corp. .............................. 58,000 2,109,750
(a)American Safety Insurance Group Ltd. ........ 133,000 1,014,125
Executive Risk Inc. ......................... 15,000 1,076,250
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
FRANKLIN VALUE FUND RIGHTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND RIGHTS (CONT.)
FINANCE (CONT.)
HCC Insurance Holdings Inc. ................... 32,000 $ 676,000
Household International Inc. .................. 36,500 1,836,406
(a)Matrix Bancorp Inc. ........................... 93,800 1,407,000
MMI Cos. Inc. ................................. 111,000 1,720,500
(a)PBOC Holdings Inc. ............................ 100,000 875,000
Penn-America Group Inc. ....................... 127,000 1,333,500
Presidential Life Corp. ....................... 82,200 1,474,463
(a)Professionals Group Inc. ...................... 100,000 2,543,750
(a)StanCorp Financial Group Inc. ................. 71,000 1,708,438
(a)Symons International Group Inc. ............... 115,500 649,688
Terra Nova (Bermuda) Holdings Ltd., A ......... 48,000 1,077,000
The Centris Group Inc. ........................ 146,000 1,660,750
The PMI Group Inc. ............................ 33,700 1,880,881
(a)The Seibels Bruce Group Inc. .................. 218,600 901,725
-----------
24,859,281
-----------
HEALTH TECHNOLOGY 3.0%
(a)OrthoLogic Corp. .............................. 331,200 993,600
(a)SkyePharma PLC, ADR (United Kingdom) .......... 12,600 127,580
(a)SkyePharma PLC, rts., 3/31/00 (United Kingdom). 155,800 --
West Pharmaceutical Services Inc. ............. 68,300 2,258,169
-----------
3,379,349
-----------
INDUSTRIAL SERVICES 9.6%
(a)Atwood Oceanics Inc. .......................... 69,000 2,406,375
ENSCO International Inc. ...................... 135,000 2,505,938
(a)Perini Corp. .................................. 103,000 502,125
(a)R&B Falcon Corp. .............................. 153,000 1,530,000
(a)Rowan Cos. Inc ................................ 170,000 2,720,000
Santa Fe International Corp. .................. 50,000 1,075,000
-----------
10,739,438
-----------
NON-ENERGY MINERALS 4.2%
Carpenter Technology Corp. .................... 45,000 1,409,063
(a)Lone Star Technologies Inc. ................... 90,000 1,546,875
LTV Corp. ..................................... 280,000 1,785,000
-----------
4,740,938
-----------
PROCESS INDUSTRIES 1.2%
RPM Inc. ...................................... 66,000 928,125
Tuscarora Inc. ................................ 35,000 441,875
-----------
1,370,000
-----------
PRODUCER MANUFACTURING 18.3%
Baldor Electric Co. ........................... 67,000 1,293,938
Commercial Intertech Corp. .................... 42,000 538,125
Commonwealth Industries Inc. .................. 119,400 1,149,225
Dana Corp. .................................... 41,000 1,932,125
Easco Inc. .................................... 116,100 870,750
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS,APRIL 30,1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
FRANKLIN VALUE FUND RIGHTS VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND RIGHTS (CONT.)
PRODUCER MANUFACTURING (CONT.)
(a)Global Industrial Technologies Inc. ............................ 133,100 $ 1,755,256
(a)Holophane Corp. ................................................ 34,000 877,625
JLG Industries Inc. ............................................ 289,000 4,642,063
(a)Keystone Consolidated Industries Inc. .......................... 85,600 583,150
Myers Industries Inc. .......................................... 71,000 1,606,375
Patrick Industries Inc. ........................................ 50,000 637,500
Superior Industries International Inc. ......................... 31,000 775,000
Timken Co. ..................................................... 105,000 2,342,813
Watts Industries Inc.,A ........................................ 102,000 1,568,250
------------
20,572,195
------------
RETAIL TRADE 2.8%
(a)Duckwall-ALCO Stores Inc. ...................................... 44,500 408,844
(a)Little Switzerland Inc. ........................................ 8,600 8,063
Schultz Sav-O Stores Inc. ...................................... 63,250 1,019,906
(a)Syms Corp. ..................................................... 205,000 1,652,813
------------
3,089,626
------------
TECHNOLOGY SERVICES .9%
(a)Ultrak Inc. .................................................... 166,000 975,250
------------
TRANSPORTATION 8.6%
Air Express International Corp. ................................ 38,800 848,750
(a)Conrad Industries Inc. ......................................... 69,800 418,800
(a)Fritz Cos.Inc .................................................. 71,000 718,875
Kenan Transport Co. ............................................ 70,150 2,253,569
(a)Midwest Express Holdings ....................................... 48,000 1,500,000
(a)Motor Cargo Industries Inc. .................................... 160,300 951,782
Teekay Shipping Corp.(Canada) .................................. 40,000 680,000
Tidewater Inc. ................................................. 85,000 2,252,500
------------
9,624,276
------------
TOTAL COMMON STOCKS AND RIGHTS (COST $136,604,058) ............. 108,883,453
------------
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
CORPORATE BONDS .1%
Hechinger Co.,senior note,6.95%,10/15/03 ....................... $ 500,000 102,500
-------
CONVERTIBLE BONDS .7%
(c)SPACEHAB Inc.,cvt.sub.note,144A,8.00%,10/15/07 ................ 1,000,000 737,500
-------
TOTAL BONDS (COST $1,335,701) .................................. 840,000
-------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS,APRIL 30,1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN VALUE FUND AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
(b)REPURCHASE AGREEMENT 2.8%
Joint Repurchase Agreement,4.862%,5/03/99,(Maturity Value
$3,218,681) (COST $3,217,377) ................................... $ 3,217,377 $ 3,217,377
Barclays Capital Inc. ...........................................
Bear,Stearns & Co. ..............................................
Chase Securities Inc. ...........................................
CIBC Oppenheimer Corp. ..........................................
Deutsche Bank Securities Inc. ...................................
Donaldson,Lufkin & Jenrette Securities Corp. ....................
Dresdner Kleinwort Benson North America LLC
Lehman Brothers Inc. ............................................
Paine Webber Inc. ...............................................
Paribas Corp. ...................................................
UBS Securities LLC
Collateralized by U.S.Treasury Bills & Notes
------------
TOTAL INVESTMENTS (COST $141,157,136) 100.5% ..................... $112,940,830
OTHER ASSETS, LESS LIABILITIES (.5%) ............................. (592,657)
------------
NET ASSETS 100.0% ................................................ $112,348,173
============
</TABLE>
(a) Non-income producing.
(b) Investment is through participation in a joint account with other funds
managed by the investment advisor.At 4/30/99,all repurchase agreements had
been entered into on that date.
(c) See Note 6 regarding restricted securities.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements
Statements of Assets and Liabilities
April 30, 1999 (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 ............................... $ 889,825,646 $ 101,841,568 $ --
Cost - Non-controlled affiliated issuers .................. 402,353,413 52,746,543 141,157,136
==============================================================
Value - Unaffiliated issuers .............................. 952,438,153 100,224,431 112,940,830
Value - Non-controlled affiliated issuers ................. 376,736,877 42,156,315 --
Receivables:
Investment securities sold ................................ 545,760 205,997 435,063
Capital shares sold ....................................... 2,412,604 77,710 206,084
Dividends and interest .................................... 376,425 1,750 42,398
Organization costs (Note 1) ................................ -- -- 1,092
--------------------------------------------------------------
Total assets .......................................... 1,332,509,819 142,666,203 113,625,467
--------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased ........................... 104,456 -- 18,000
Capital shares redeemed ................................... 6,637,351 753,218 666,194
Affiliates ................................................ 1,391,999 219,926 275,846
Shareholders .............................................. 1,513,145 125,918 263,483
Other liabilities .......................................... 135,234 11,774 53,771
--------------------------------------------------------------
Total liabilities ..................................... 9,782,185 1,110,836 1,277,294
--------------------------------------------------------------
Net assets,at value ................................. $1,322,727,634 $ 141,555,367 $ 112,348,173
==============================================================
Net assets consist of:
Undistributed net investment income (loss) ................. $ 2,094,560 $ (57,213) $ (317,180)
Net unrealized appreciation (depreciation) ................. 36,995,971 (12,207,365) (28,216,306)
Accumulated net realized gain (loss) ....................... 11,588,486 14,984,835 (17,137,687)
Capital shares ............................................. 1,272,048,617 138,835,110 158,019,346
--------------------------------------------------------------
Net assets, at value .................................. $1,322,727,634 $ 141,555,367 $ 112,348,173
==============================================================
</TABLE>
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements (continued)
Statements of Assets and Liabilities (cont.)
April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP VALUE
INVESTMENT FUND VALUE FUND FUND
--------------------------------------------------
<S> <C> <C> <C>
CLASS A:
Net assets, at value ..................................................... $1,322,727,634 $141,555,367 $74,320,336
--------------------------------------------------
Shares outstanding ....................................................... 43,666,140 7,480,102 4,089,691
--------------------------------------------------
Net asset value per share(*) ............................................. $30.29 $18.92 $18.17
--------------------------------------------------
Maximum offering price per share (net asset value
per share/98.50%, 94.25%, 94.25%, respectively) ......................... $30.75 $20.07 $19.28
--------------------------------------------------
CLASS B:
Net assets, at value ..................................................... -- -- $421,167
--------------------------------------------------
Shares outstanding ....................................................... -- -- 23,232
--------------------------------------------------
Net asset value and maximum offering price per share(*) .................. -- -- $18.13
--------------------------------------------------
CLASS C:
Net assets, at value ..................................................... -- -- $34,597,936
--------------------------------------------------
Shares outstanding ....................................................... -- -- 1,927,298
--------------------------------------------------
Net asset value per share(*) ............................................. -- -- $17.95
--------------------------------------------------
Maximum offering price per share (net asset value per share/99.00%) ...... -- -- $18.13
ADVISOR CLASS:
Net assets, at value ..................................................... -- -- $3,008,734
--------------------------------------------------
Shares outstanding ....................................................... -- -- 164,363
--------------------------------------------------
Net asset value and maximum offering price per share ..................... -- -- $18.31
--------------------------------------------------
</TABLE>
(*) Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements (continued)
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(+) .................................................... $8,726,435 $592,431 $639,632
Non-controlled affiliated issuers (Note 7) ................................. 1,743,327 206,534 --
Interest .................................................................... 5,524,719 169,176 137,279
-------------------------------------------------
Total investment income ................................................ 15,994,481 968,141 776,911
-------------------------------------------------
Expenses:
Management fees (Note 3) .................................................... 3,308,959 605,249 464,410
Distribution fees (Note 3)
Class A .................................................................... 1,754,745 201,674 134,731
Class B .................................................................... -- -- 583
Class C .................................................................... -- -- 189,626
Transfer agent fees (Note 3) ................................................ 950,238 165,209 182,841
Custodian fees .............................................................. 32,011 499 1,352
Reports to shareholders ..................................................... 101,071 23,701 18,102
Registration and filing fees ................................................ 198,358 22,976 92,858
Professional fees ........................................................... 29,643 2,415 3,723
Trustees' fees and expenses ................................................. 16,698 1,983 1,784
Amortization of organization costs (Note 1) ................................. -- -- 308
Other ....................................................................... 5,362 1,648 3,773
-------------------------------------------------
Total expenses ......................................................... 6,397,085 1,025,354 1,094,091
-------------------------------------------------
Net investment income (loss) ......................................... 9,597,396 (57,213) (317,180)
-------------------------------------------------
Realized and unrealized gains (losses): Net realized gain (loss) from:
Investments:
Unaffiliated issuers ...................................................... 8,223,087 12,662,357 (17,118,119)
Non-controlled affiliated issuers (Note 7) ................................ 541,287 2,339,852 --
Closed-end funds distributions ............................................ 2,850,310 -- --
Foreign currency transactions ............................................. (16,525) -- --
-------------------------------------------------
Net realized gain (loss) ............................................... 11,598,159 15,002,209 (17,118,119)
Net unrealized appreciation (depreciation) on investments ................... (30,691,253) (13,391,337) 17,976,242
-------------------------------------------------
Net realized and unrealized gain (loss) ...................................... (19,093,094) 1,610,872 858,123
-------------------------------------------------
Net increase (decrease) in net assets resulting from operations .............. $(9,495,698) $1,553,659 $540,943
=================================================
</TABLE>
(+)Net of foreign taxes and fees of $93,837 and $1,938 for the Franklin Balance
Sheet Investment Fund and Franklin Value Fund, respectively.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED) AND THE YEAR ENDED OCTOBER 31, 1998
<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, 1999 OCTOBER 31, 1998 APRIL 30, 1999 OCTOBER 31, 1998 APRIL 30, 1999 OCTOBER 31, 1998
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) .... $9,597,396 $21,675,728 $(57,213) $(215,492) $(317,180) $(500,662)
Net realized gain (loss)
from investments and
foreign currency
transactions ................... 11,598,159 53,773,930 15,002,209 13,627,885 (17,118,119) 692,870
Net unrealized appreciation
(depreciation) on invest-
ments and translation of
assets and liabilities
denominated in
foreign currencies .............. (30,691,253) (140,502,353) (13,391,337) (36,789,537) 17,976,242 (54,892,244)
-----------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations ............ (9,495,698) (65,052,695) 1,553,659 (23,377,144) 540,943 (54,700,036)
Distributions to shareholders
from:
Net investment income:
Class A ......................... (10,468,717) (21,386,657) -- (64,132) -- (43,246)
Advisor Class ................... -- -- -- -- -- (5,419)
Net realized gains:
Class A ......................... (53,832,266) (65,036,050) (13,334,402) (11,892,928) (484,800) (750,851)
Class C ......................... -- -- -- -- (215,264) (237,831)
Advisor Class ................... -- -- -- -- (13,287) (40,254)
-----------------------------------------------------------------------------------------------
Total distributions
to shareholders .................. (64,300,983) (86,422,707) (13,334,402) (11,957,060) (713,351) (1,077,601)
</TABLE>
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS (cont.)
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (unaudited)
AND THE YEAR ENDED OCTOBER 31, 1998
<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, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital share transactions:
(Note 2)
Class A ................... $(70,682,853) $395,729,810 $(22,299,261) $19,331,621 $(23,871,900) $57,685,763
Class B ................... -- -- -- -- 398,702 --
Class C ................... -- -- -- -- (6,945,326) 35,364,755
Advisor Class ............. -- -- -- -- (1,781,483) 2,501,351
-------------------------------------------------------------------------------------------------
Total capital share
transactions ............... (70,682,853) 395,729,810 (22,299,261) 19,331,621 (32,200,007) 95,551,869
Net increase (decrease)
in net assets ........ (144,479,534) 244,254,408 (34,080,004) (16,002,583) (32,372,415) 39,774,232
Net assets:
Beginning of period ......... 1,467,207,168 1,222,952,760 175,635,371 191,637,954 144,720,588 104,946,356
-------------------------------------------------------------------------------------------------
End of period ............... $1,322,727,634 $1,467,207,168 $141,555,367 $175,635,371 $112,348,173 $144,720,588
=================================================================================================
Undistributed net investment
income (loss) included
in net assets:
End of period .............. $2,094,560 $2,965,881 $(57,213) $ -- $(317,180) $ --
=================================================================================================
</TABLE>
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited)
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 Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
d. 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 to
distribute substantially all of its taxable income.
e. 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. Bond discount is
amortized on an income tax basis. 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.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)
f. ORGANIZATIONAL COSTS
Organization costs are amortized on a straight line basis over five years.
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. SHARES OF BENEFICIAL INTEREST
The classes of shares offered within each of the Funds are indicated below.
Effective January 1, 1999, Class I and Class II were renamed Class A and Class
C, respectively and the Franklin Value Fund began offering a new class of
shares, Class B. The shares differ by their initial sales load, distribution
fees, voting rights on matters affecting a single class and the exchange
privilege of each class.
<TABLE>
<CAPTION>
CLASS A CLASS A, CLASS B, CLASS C & ADVISOR CLASS
- --------------------------------------------------------------------------------------
<S> <C>
Franklin Balance Sheet Investment Fund Franklin Value Fund
Franklin Microcap Value Fund
</TABLE>
At April 30, 1999, there were an unlimited number of shares amortized ($.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
-------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Six months ended April 30,1999
Shares sold 8,621,883 $263,795,430 600,368 $11,541,441 763,435 $13,522,689
Shares issued in reinvestment
of distributions 1,959,010 59,674,298 644,762 12,063,490 25,433 439,188
Shares redeemed (12,966,194) (394,152,581) (2,431,190) (45,904,192) (2,165,171) (37,833,777)
-------------------------------------------------------------------------------------------------
Net decrease (2,385,301) $(70,682,853) (1,186,060) $(22,299,261) (1,376,303) $(23,871,900)
=================================================================================================
Year ended October 31,1998
Shares sold 18,222,491 $633,618,542 2,069,052 $48,313,995 5,324,861 $124,490,260
Shares issued in reinvestment
of distributions 2,376,759 78,351,007 486,486 10,804,862 30,315 723,006
Shares redeemed (9,270,237) (316,239,739) (1,778,377) (39,787,236) (3,086,439) (67,527,503)
-------------------------------------------------------------------------------------------------
Net increase 11,329,013 $395,729,810 777,161 $19,331,621 2,268,737 $57,685,763
=================================================================================================
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
2. SHARES OF BENEFICIAL INTEREST (cont.)
<TABLE>
<CAPTION>
FRANKLIN
VALUE FUND
---------------------------------------
SHARES AMOUNT
---------------------------------------
<S> <C> <C>
CLASS B SHARES:
Six months ended April 30, 1999(*)
Shares sold ............................................................... 23,232 $398,702
Shares issued in reinvestment of distributions ............................ -- --
Shares redeemed ........................................................... -- --
---------------------------------------
Net increase ............................................................... 23,232 $398,702
=======================================
CLASS C SHARES:
Six months ended April 30, 1999
Shares sold ............................................................... 407,231 $7,183,286
Shares issued in reinvestment of distributions ............................ 11,692 200,079
Shares redeemed ........................................................... (831,617) (14,328,691)
---------------------------------------
Net decrease ............................................................... (412,694) $(6,945,326)
=======================================
Year ended October 31, 1998
Shares sold ............................................................... 2,011,944 $46,831,107
Shares issued in reinvestment of distributions ............................ 9,086 215,872
Shares redeemed ........................................................... (557,458) (11,682,224)
---------------------------------------
Net increase ............................................................... 1,463,572 $35,364,755
=======================================
ADVISOR CLASS SHARES:
Six months ended April 30, 1999
Shares sold ............................................................... 34,687 $627,353
Shares issued in reinvestment of distributions ............................ 758 13,180
Shares redeemed ........................................................... (133,315) (2,422,016)
---------------------------------------
Net decrease ............................................................... (97,870) $(1,781,483)
=======================================
Year ended October 31, 1998(**)
Shares sold ............................................................... 306,114 $7,058,256
Shares issued in reinvestment of distributions ............................ 1,904 45,486
Shares redeemed ........................................................... (227,624) (4,602,391)
---------------------------------------
Net increase ............................................................... 80,394 $2,501,351
=======================================
</TABLE>
(*)Effective date of Class B shares was January 1, 1999.
(**)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 directors 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 Funds' investment manager, principal underwriter, administrative manager,
and transfer agent, respectively.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES (cont.)
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 RATE AVERAGE DAILY NET ASSETS
------------------------------------
.625% First $100 million
.500% Over $100 million,upto and including $250 million
.450% Over $250 million,upto 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 RATE AVERAGE 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.
The Franklin Balance Sheet Investment Fund and the Franklin MicroCap Fund
reimburse Distributors up to .25% per year of their average daily net assets,
and the Franklin Value Fund reimburses Distributors up to .35%, 1.00%, and 1.00%
per year of the average daily net assets of Class A, Class B, and Class C,
respectively, for costs incurred in marketing the Fund's shares.
Distributors received (paid) net commissions on sales of the Funds' shares, and
received contingent deferred sales charges for the period as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP VALUE
INVESTMENT FUND VALUE FUND FUND
<S> <C> <C> <C>
Net commissions received (paid) ..... $(685,612) $4,507 $(35,899)
Contingent deferred sales charges ... $ 4,155 $ 947 $ 64,293
</TABLE>
The Funds paid transfer agent fees of $1,298,288, of which $ 926,084 was paid to
Investor Services.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES
At April 30, 1999, the net unrealized appreciation (depreciation) based on the
cost of investments for income tax purposes was as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP VALUE
INVESTMENT FUND VALUE FUND FUND
------------------------------------------------------------------
<S> <C> <C> <C>
Investment at cost .................................... $ 1,292,191,139 $ 154,588,111 $141,157,136
==================================================================
Unrealized appreciation ............................... $ 195,209,527 $ 15,132,236 $ 10,325,831
Unrealized depreciation ............................... (158,225,636) (27,339,601) (38,542,137)
------------------------------------------------------------------
Net unrealized appreciation (depreciation) ............ $ 36,983,891 $ (12,207,365) $ (28,216,306)
==================================================================
</TABLE>
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, 1999 were as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP VALUE
INVESTMENT FUND VALUE FUND FUND
---------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases ............................ $141,497,125 $13,942,031 $22,511,743
Sales ................................ $ 86,229,444 $43,822,631 $52,732,869
</TABLE>
6. RESTRICTED SECURITIES
The Fund 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, 1999 are as follows:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT ISSUER ACQUISITION DATE COST VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANKLIN VALUE FUND
$1,000,000 SPACEHAB,Inc.,cvt.sub.notes, 144A, 8.00%, 10/15/07.............. 2/06/97 - 10/31/97 $1,000,000 $737,500
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
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, 1999 were
as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD AT GROSS GROSS SHARES HELD AT VALUE AT
NAME OF ISSUER: BEGINNING OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD END OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
FRANKLIN BALANCE SHEET
INVESTMENT FUND
<S> <C> <C> <C> <C> <C>
ACMAT Corp.,A .................. 295,000 -- -- 295,000 $ 4,388,125
Allen Organ Co.,B .............. 83,000 -- -- 83,000 (*)
American Pacific Corp. ......... 421,100 -- -- 421,100 3,474,075
Audiovox Corp., A .............. 1,720,000 -- 90,000 1,630,000 10,391,250
Aydin Corp. .................... 270,000 -- 270,000 -- (*)
Aztar Corp. .................... 3,400,000 125,000 -- 3,525,000 24,454,688
Castle & Cooke Inc. ............ 1,782,400 -- 10,000 1,772,400 26,142,900
Charming Shoppes Inc. .......... 6,600,000 -- -- 6,600,000 25,575,000
Cherry Corp., A ................ 408,900 -- -- 408,900 5,571,263
Cherry Corp., B ................ 271,000 -- -- 271,000 3,768,607
Chic By H.I.S. Inc ............. 756,000 -- -- 756,000 2,409,750
Commonwealth Industries Inc. ... 1,300,000 -- -- 1,300,000 12,512,500
Crown Central Petroleum
Corp., B ..................... 500,000 -- 25,000 475,000 3,978,125
Cyrk Inc. ...................... 1,187,400 -- 37,400 1,150,000 7,762,500
Delta Woodside Industries Inc... 2,400,000 -- 80,000 2,320,000 15,805,000
Designs Inc. ................... 1,200,000 -- 10,000 1,190,000 2,900,625
Dixie Group Inc. ............... 600,000 -- 100,000 500,000 (*)
Echelon International
Corp. Inc .................... 500,000 -- -- 500,000 11,406,250
Ecology & Environment Inc., A .. 260,000 -- 25,000 235,000 1,659,688
ESCO Electronics Corp. ......... 840,000 -- -- 840,000 8,137,500
Fidelity Bancorp Inc. .......... 144,500 -- 6,200 138,300 3,146,325
Fred's Inc. .................... 850,000 119,000 -- 969,000 11,325,188
Garan Inc. ..................... 285,100 -- -- 285,100 7,626,425
The Good Guys Inc. ............. 987,500 -- 187,500 800,000 2,900,000
Haggar Corp. ................... 850,000 -- -- 850,000 9,243,750
Handleman Co. .................. 2,409,000 -- 409,000 2,000,000 28,125,000
HomeBase Inc. .................. 3,300,000 -- 385,000 2,915,000 14,575,000
Insteel Industries Inc. ........ 580,000 -- 10,000 570,000 4,773,750
International Shipholding Corp.. 660,000 -- 72,100 587,900 7,789,675
Jacobson Stores Inc. ........... 298,100 -- -- 298,100 1,900,388
KLLM Transport Services Inc. ... 322,000 -- -- 322,000 2,143,329
Kaneb Services Inc. ............ 3,200,000 -- 10,000 3,190,000 14,753,750
Lechters Inc. .................. 861,600 -- 261,600 600,000 (*)
Maynard Oil Co. ................ 268,000 -- -- 268,000 2,420,388
Merchants Group Inc. ........... 257,800 -- -- 257,800 5,574,925
Monarch Machine Tool Co. ....... 250,000 -- 110,000 140,000 (*)
Nash-Finch Co. ................. 1,000,000 -- -- 1,000,000 9,500,000
</TABLE>
REALIZED
DIVIDEND CAPITAL GAINS
NAME OF ISSUER: INCOME (LOSSES)
- --------------------------------------------------------------------------------
FRANKLIN BALANCE SHEET
INVESTMENT FUND
ACMAT Corp.,A .................. $ -- $ --
Allen Organ Co.,B .............. 23,240 --
American Pacific Corp. ......... -- --
Audiovox Corp., A .............. -- (151,983)
Aydin Corp. .................... -- 245,748
Aztar Corp. .................... -- --
Castle & Cooke Inc. ............ -- (12,220)
Charming Shoppes Inc. .......... -- --
Cherry Corp., A ................ -- --
Cherry Corp., B ................ -- --
Chic By H.I.S. Inc ............. -- --
Commonwealth Industries Inc. ... 130,000 --
Crown Central Petroleum
Corp., B ..................... -- (139,093)
Cyrk Inc. ...................... -- (115,233)
Delta Woodside
Industries Inc. .............. 120,000 (182,378)
Designs Inc. ................... -- (36,969)
Dixie Group Inc. ............... -- (208,913)
Echelon International
Corp. Inc .................... -- --
Ecology & Environment Inc., A .. 41,600 (25,606)
ESCO Electronics Corp. ......... -- --
Fidelity Bancorp Inc. .......... 31,108 84,222
Fred's Inc. .................... 92,560 --
Garan Inc. ..................... 327,865 --
The Good Guys Inc. ............. -- (832,732)
Haggar Corp. ................... 42,500 --
Handleman Co. .................. -- 2,132,632
HomeBase Inc. .................. -- (1,316,076)
Insteel Industries Inc. ........ 69,600 (14,952)
International Shipholding Corp.. 77,994 (83,529)
Jacobson Stores Inc. ........... -- --
KLLM Transport Services Inc. ... -- (9,851)
Kaneb Services Inc. ............ -- --
Lechters Inc. .................. -- (342,636)
Maynard Oil Co. ................ -- --
Merchants Group Inc. ........... 25,780 --
Monarch Machine Tool Co. ....... 25,000 (500,487)
Nash-Finch Co. ................. 270,000 --
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (cont.)
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD AT GROSS GROSS SHARES HELD AT
NAME OF ISSUER: BEGINNING OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANKLIN BALANCE SHEET
INVESTMENT FUND (CONT.)
Oshkosh Truck Corp., B ................. 460,400 -- 152,500 307,900
Pitt-Des Moines Inc. ................... 360,000 90,000 -- 450,000
Professionals Group Inc. ............... 184,350 270,650 -- 455,000
Pulaski Furniture Corp. ................ 192,000 -- -- 192,000
Standard Microsystems Corp. ............ 1,375,000 -- -- 1,375,000
Stewart Information Services Corp. ..... 400,000 -- 10,000 390,000
Syms Corp. ............................. 1,110,000 27,600 -- 1,137,600
TransFinancial Holdings Inc. ........... 270,000 -- 270,000 --
TransPro Inc. .......................... 370,000 -- 120,000 250,000
Unique Casual Restaurants Inc. ......... 985,000 -- -- 985,000
VICORP Restaurants Inc. ................ 480,000 126,700 -- 606,700
Wolohan Lumber Co. ..................... 520,000 -- -- 520,000
----------
TOTAL NON-CONTROLLED AFFILIATED ISSUERS 46,132,800
==========
FRANKLIN MICROCAP VALUE FUND
ACMAT Corp., A ......................... 150,000 -- -- 150,000
Aerovox Inc. ........................... 530,000 -- -- 530,000
Allou Health and Beauty Care Inc., A ... 457,000 -- 172,000 285,000
Allstate Financial Corp. ............... 209,000 -- 15,000 194,000
American Physicians Service Group Inc. . 247,000 -- 5,000 242,000
Art's-Way Manufacturing Co. Inc ........ 82,500 5,000 -- 87,500
Athey Products Corp. ................... 200,000 -- -- 200,000
Atlantic Tele-Network Inc. ............. 300,000 -- -- 300,000
Concord Fabrics Inc., A ................ 148,800 -- 2,800 146,000
ECC International Corp. ................ 800,000 -- 20,000 780,000
Ecology & Environment Inc., A .......... 110,000 -- -- 110,000
EMCON .................................. 650,000 -- 47,900 602,100
Espey Manufacturing & Electronics Corp. 93,000 -- -- 93,000
Government Technology Services Inc. .... 473,000 -- 3,000 470,000
GZA GeoEnvironmental Technologies Inc. . 310,000 -- -- 310,000
Harding Lawson Associates Group Inc. ... 304,900 -- 4,000 300,900
Kentucky Electric Steel Inc. ........... 450,000 -- -- 450,000
Maine Public Service Co. ............... 120,000 -- -- 120,000
Maynard Oil Co. ........................ 298,500 -- -- 298,500
Moore Products Co. ..................... 134,700 -- 5,000 129,700
NSC Corp. .............................. 485,000 315,000 -- 800,000
Oriole Homes Corp., B .................. 359,500 -- 20,500 339,000
Roy F.Weston Inc., A ................... 633,000 -- -- 633,000
S&K Famous Brands Inc. ................. 60,000 205,000 -- 265,000
Seneca Foods Corp., A .................. 175,600 16,000 -- 191,600
Spaghetti Warehouse Inc. ............... 550,000 -- 550,000 --
</TABLE>
<TABLE>
<CAPTION>
REALIZED
VALUE AT DIVIDEND CAPITAL GAINS
NAME OF ISSUER: END OF PERIOD INCOME (LOSSES)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANKLIN BALANCE SHEET
INVESTMENT FUND (CONT.)
Oshkosh Truck Corp., B ................. $ (*) $101,300 $ 3,633,891
Pitt-Des Moines Inc. ................... 10,462,500 130,500 --
Professionals Group Inc. ............... 11,574,063 -- --
Pulaski Furniture Corp. ................ 4,128,000 65,280 --
Standard Microsystems Corp. ............ 10,140,625 -- --
Stewart Information Services Corp. ..... 15,575,625 59,200 135,339
Syms Corp. ............................. 9,171,900 -- --
TransFinancial Holdings Inc. ........... (*) -- (1,242,046)
TransPro Inc. .......................... (*) 37,000 (475,841)
Unique Casual Restaurants Inc. ......... 4,186,250 -- --
VICORP Restaurants Inc. ................ 9,252,175 -- --
Wolohan Lumber Co. ..................... 6,110,000 72,800 --
------------ ---------- ----------
TOTAL NON-CONTROLLED AFFILIATED ISSUERS $376,736,877 $1,743,327 $ 541,287
============ ========== ==========
FRANKLIN MICROCAP VALUE FUND
ACMAT Corp., A ......................... $ 2,231,250 $ -- $ --
Aerovox Inc. ........................... 1,325,000 -- --
Allou Health and Beauty Care Inc., A ... 2,333,438 -- 817,737
Allstate Financial Corp. ............... 1,048,822 -- (26,173)
American Physicians Service Group Inc. . 816,750 -- (12,076)
Art's-Way Manufacturing Co. Inc ........ 442,969 -- --
Athey Products Corp. ................... 575,000 -- --
Atlantic Tele-Network Inc. ............. 2,812,500 90,000 --
Concord Fabrics Inc., A ................ 720,875 -- 1,037
ECC International Corp. ................ 2,193,750 -- (36,889)
Ecology & Environment Inc., A .......... 776,875 17,600 --
EMCON .................................. 3,349,173 -- 46,911
Espey Manufacturing & Electronics Corp. 1,185,750 9,300 --
Government Technology Services Inc. .... 1,850,625 -- (2,063)
GZA GeoEnvironmental Technologies Inc. . 1,317,500 -- --
Harding Lawson Associates Group Inc. ... 2,143,913 -- (2,877)
Kentucky Electric Steel Inc. ........... 1,209,375 -- --
Maine Public Service Co. ............... 1,680,000 60,000 --
Maynard Oil Co. ........................ 2,695,843 -- --
Moore Products Co. ..................... (*) 29,634 27,660
NSC Corp. .............................. 800,000 -- --
Oriole Homes Corp., B .................. 508,500 -- (99,750)
Roy F.Weston Inc., A ................... 1,582,500 -- --
S&K Famous Brands Inc. ................. 2,434,688 -- --
Seneca Foods Corp., A .................. 2,658,450 -- --
Spaghetti Warehouse Inc. ............... (*) -- 1,381,455
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (cont.)
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES HELD AT GROSS GROSS SHARES HELD AT
NAME OF ISSUER: BEGINNING OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
FRANKLIN MICROCAP VALUE FUND (CONT.)
<S> <C> <C> <C> <C>
TEI Inc. ............................... 955,000 -- 955,000 --
Temtex Industries Inc. ................. 265,500 -- -- 265,500
TransFinancial Holdings Inc. ........... 336,000 -- 25,100 310,900
Treadco Inc. ........................... 261,400 24,600 286,000 --
Village Super Market Inc., A ........... 95,000 13,500 -- 108,500
TOTAL NON-CONTROLLED AFFILIATED ISSUERS
REALIZED
VALUE AT DIVIDEND CAPITAL GAINS
NAME OF ISSUER: END OF PERIOD INCOME (LOSSES)
- -------------------------------------------------------------------------------------------------------
FRANKLIN MICROCAP VALUE FUND (CONT.)
<S> <C> <C> <C>
TEI Inc. ............................... $ (*) $ -- $ --
Temtex Industries Inc. ................. 680,344 -- --
TransFinancial Holdings Inc. ........... 1,399,050 -- (67,585)
Treadco Inc. ........................... (*) -- 312,465
Village Super Market Inc., A ........... 1,383,375 -- --
------------------------------------------------
TOTAL NON-CONTROLLED AFFILIATED ISSUERS $42,156,315 $206,534 $2,339,852
================================================
</TABLE>
(*) As of April 30, 1999 no longer an affiliate.
