SHAREHOLDER LETTER
Dear Shareholder:
This semiannual report for Franklin Value Investors Trust covers the period
ended April 30, 2000.
During the six months under review, the domestic economy remained strong with
unemployment at a 30-year low, yet consumer confidence began to wane as heating
oil and gasoline prices rose. By mid-April 2000, we began to see a slight
increase in the inflation rate mostly due to the rise in crude oil prices, which
peaked above $34 per barrel, up from $21.75 at the beginning of the period. In
an attempt to ease inflationary pressures, the Federal Reserve Board raised the
federal funds target rate three times during the period, adding a total of 75
basis points, to end the period at 6.00%, the highest rate in five years.
U.S. stock markets began the 21st century with dramatic volatility, and several
records were shattered. During the reporting period, the Dow Jones(R) Industrial
Average established a one-day record increase of 499 points, followed closely by
an astonishing one-day drop of 618 points, ending the period with a return of
0.67%. The Nasdaq Composite(R) Index reached its highest level ever, only to
later record its biggest one-day point loss, ending the period with a 30.37%
return. While lagging most of the period, the Standard & Poor's 500(R) Index
finally hit its first record high close for the year on March 21, and had a
7.20% return.
CONTENTS
Shareholder Letter 1
Fund Reports
Franklin Balance Sheet
Investment Fund 4
Franklin MicroCap
Value Fund 9
Franklin Value Fund 14
Financial Highlights &
Statements of Investments 20
Financial Statements 37
Notes to
Financial Statements 42
[Pyramid Graph]
Value stocks remained out of favor for most of the reporting period, as
investors seemed to ignore the greatest negative divergence between value and
growth stocks in the stock market's history. This gap began to close near the
end of the period as the Russell 2000 Growth Index lost 24.83% from its
year-to-date high, ending the period with a return of 27.78%, versus the Russell
2000 Value Index's 8.20% return. Capital continued to flow mostly into growth
and technology stocks, as investors generally preferred to buy dot-com companies
with inflated earnings promises in lieu of the steady, year-after-year, "old
economy" earnings growers. During the final few weeks of the period, some
investors were increasingly attracted to relatively cheap stocks and away from
overvalued, technology issues.
Throughout the reporting period, strategic buyers continued to recognize some of
our bargain holdings. Within the Trust's three funds, 17 portfolio holdings were
announced as takeovers during the period, almost all at premiums to prior-day
prices.
Franklin Value Investors Trust is organized into three portfolios, each managed
in the same spirit but with a differing focus. While the funds have distinct
investment objectives, our fundamental operating principles remain the same:
prudent investment selection and constant professional supervision. Despite this
atmosphere of increased market volatility, we remain steadfast and committed to
our common-sense value investment strategy. We believe our value funds provide
shareholders with a portfolio of well-managed, financially sound companies that
possess the potential for solid earnings growth and, with patience, stock-price
appreciation over the long term.
Historically, patient investors have achieved favorable results by evaluating
their goals and diversifying their assets. We suggest you contact your
investment representative to discuss your goals and consider establishing 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, of which capital appreciation and income are components, by investing
primarily in securities that we believe are undervalued in the marketplace.
We are pleased that our directors voted to reopen Franklin Balance Sheet
Investment Fund to all investors as of February 1, 2000. You may recall that the
fund had been closed to all but retirement accounts for about four years. At the
time of its closing, we felt that new opportunities for investment under our
discipline were not commensurate with the volume of new money coming into the
fund. Four years later, conditions have changed, and we believe opportunities
for value investors have never been better than during the six months under
review.
Unfortunately, but perhaps inevitably, we had to endure a prolonged period of
challenges for value investing to reach the point where opportunities
re-emerged. As was noted in this report's cover letter, the performance
divergence between the two style camps -- value and growth -- reached historical
extremes during the period. The fund's performance during the six months ended
April 30, 2000, reflected the disparity, although, as the period progressed, we
saw encouraging signs that the trends were shifting. For the six months under
review, Franklin Balance Sheet Investment Fund - Class A produced a +5.03%
cumulative total return, compared with the 8.20% return of its benchmark, the
unmanaged Russell 2000 Value Index. (1)
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 21.
During the previous reporting period, we were anticipating management bids to
take some of our holdings private. By the end of this period, there were
management bids on the table at Crown Central Petroleum, Pulaski Furniture,
Castle & Cooke, Cherry Corp. and KLLM Transport Services. In the cases of Crown
Central and KLLM, outside companies came forward with competing bids. All bid
prices offered were below levels we anticipated when we bought the stocks,
although, in our opinion, they do represent reasonable premiums to levels at
which the shares were trading during the period. We believe such moves to take
companies private indicate stock prices are reaching their lowest levels. As
these actions continue, we believe prices should improve, and investors'
attention should return to small value stocks.
These developments occurred against a backdrop of dramatic volatility in the
Nasdaq Composite Index, which is weighted to large-cap growth and technology
stocks. During April 2000 alone, the index experienced 3 of the 10 largest
single-day percentage increases and 4 of the 10 biggest single-day percentage
drops in Nasdaq history. In our opinion, this "bipolar" market reflects many
contending forces, among them risk assessment. Only time will show whether these
events represent the market's turning point or merely a retrenchment phase.
During the period, we continued to reduce the number of portfolio positions. By
the end of the period, there were 114 positions (excluding closed-end funds),
down from 129 six months earlier. Corporate takeovers were a significant source
of liquidity, and, as we invested the cash, we attempted to take advantage of
attractive value situations available to us. Generally, such situations offered
higher quality management and operating characteristics and were larger in size
than the best opportunities available when we closed the fund. Going forward, we
would like to reduce the total number of holdings further.
(1). Source: Standard & Poor's Micropal. Cumulative total return represents the
change in value of an investment, assuming reinvestment of all distributions,
and does not include the sales charge. The index is unmanaged and includes
reinvested dividends. One cannot invest directly in an index.
TOP 10 HOLDINGS
Franklin Balance Sheet
Investment Fund
4/30/00
COMPANY % OF TOTAL
SECTOR NET ASSETS
------ ----------
Aztar Corp.
Consumer Services 3.6%
Overseas Shipholding
Group Inc.
Transportation 3.6%
Charming Shoppes Inc.
Retail Trade 3.6%
Niagara Mohawk
Holdings Inc.
Utilities 3.1%
American National
Insurance Co.
Finance 2.8%
Castle & Cooke Inc.
Consumer Durables 2.8%
Handleman Co.
Commercial Services 2.5%
Entergy Corp.
Utilities 2.3%
CMP Group Inc.
Utilities 2.3%
Tecumseh Products Co., A & B
Producer Manufacturing 2.2%
PORTFOLIO BREAKDOWN
Franklin Balance Sheet Investment Fund
Based on Total Net Assets
4/30/00
[BAR GRAPH]
Finance 23.1%
Utilities 11.8%
Retail Trade 8.5%
Consumer Durables 8.2%
Electronic Technology 6.6%
Producer Manufacturing 6.5%
Transportation 5.8%
Closed-End Funds 5.6%
Consumer Services 5.5%
Consumer Non-Durables 4.4%
Non-Energy Minerals 3.7%
Commercial Services 3.2%
Process Industries 2.8%
Other 3.3%
Short-Term Investments
& Other Net Assets 1.0%
The following portfolio additions illustrate the kinds of opportunities we found
during the period. Silicon Valley Group is a semiconductor capital equipment
manufacturer, and we acquired the stock below tangible book value. The company
has no net debt and was entering a new ordering cycle as we purchased the stock.
Another fund addition is D.R. Horton, a homebuilder with a strong growth record.
The company's management developed strategies for keeping productivity high and
fixed expenses low in a business that is notoriously capital intensive. As a
result, earnings have increased consistently through 20-plus years of housing
cycles. During the reporting period, the company's earnings benefited from
excellent industry conditions, despite higher mortgage rates. Priced below book
value and at less than five times estimated earnings, we believe Horton is a
terrific value. We like the homebuilders in general because they are applying
technology to improve profit margins and hold down working capital requirements.
The industry is also consolidating, with publicly held companies gaining market
share, a process that should accelerate in any economic downturn.
As the chart to the left shows, on April 30, 2000, the fund's largest sector
weighting was financial services companies at 23.1% of the fund's total net
assets. (2) This sector includes life insurance stocks (12% of total net
assets), a group that is significantly undervalued and has characteristics we
believe are underappreciated in the current economic environment. For example,
with baby boomers approaching retirement age, we believe sales of retirement and
estate planning products are likely to fuel accelerated growth for
well-positioned companies. We also think the group will see massive
consolidation, especially now that banks and brokerage firms are free to combine
with life insurers. We participated in Metropolitan Life's conversion from
mutual status -- in which a company is owned by its policyholders -- to a
publicly traded company, a transaction that allowed us to buy shares of a huge,
name brand financial services company at about a 25% discount to book value. Now
known as MetLife Inc., the company provides insurance, retirement and investment
products to nine million households, and group and retirement products to 86 of
the Fortune 100 companies.
(2). There are specific risks to investing in the financial services industry,
which is sensitive to changes in interest rates, subject to extensive government
regulation, and recently has undergone rapid change related to consolidations
and changes to its regulatory framework. The portfolio's significant exposure to
a single sector may result in the fund's experiencing greater volatility than a
fund with a more broadly diversified portfolio.
Looking forward, we remain optimistic about the second half of the fund's fiscal
year. We are encouraged by the opportunities for investing in strong companies
that fit our value criteria and for adding to existing positions whose merit may
not be reflected in current prices. We will adhere to our value investment
philosophy, and firmly believe our patience will be rewarded over the long term.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 2000, the end of the reporting period. The information provided is not a
complete listing of every aspect of any country, industry, security or the fund.
Our strategies and the fund's portfolio composition will change depending on
market and economic conditions. Although historical performance does not
guarantee future results, these insights may help you understand our investment
and management philosophy.
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 the sales charge.
(2). Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the maximum sales
charge.
(3). These figures represent the value of a hypothetical $10,000 investment in
the fund over the periods indicated and include the sales charge.
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.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 4/30/00
Six-month total return does not include the sales charge. 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.
<TABLE>
<CAPTION>
CLASS A
<S> <C> <C>
Six-Month Total Return +5.03%
Net Asset Value (NAV) $31.03 (4/30/00) $29.96 (10/31/99)
Change in NAV +$1.07
Distributions (11/1/99-4/30/00) Dividend Income $0.1386
Long-Term Capital Gain $0.2768
---------------------- -------
Total $0.4154
</TABLE>
ADDITIONAL PERFORMANCE
AS OF 3/31/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (4/2/90)
------- ------ ------ ------- --------
<S> <C> <C> <C> <C>
Cumulative Total Return (1) +10.12% +72.91% +237.32% +237.32%
Average Annual Total Return (2) +8.48% +11.24% +12.76% +12.76%
Value of $10,000 Investment (3) $10,848 $17,032 $33,223 $33,223
</TABLE>
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee 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
$200 million at the time of purchase, and which we believe are undervalued in
the marketplace.
Franklin MicroCap Value Fund generally follows the same investment strategy as
Franklin Balance Sheet Investment Fund: searching for financially sound
companies that are cheaply priced relative to asset values. However, the fund is
limited to companies with market capitalizations below $200 million, which tend
to be riskier than larger companies, inasmuch as these very small companies may
not have the necessary staying power when difficulties arise, and they are
seldom dominant in their industries. In addition, stock pricing inefficiencies
often occur because fewer analysts follow such companies. Their small size
should naturally increase the number of potential acquirers, often leading to
increased share prices. We believe the rewards, over time, are commensurate with
the risks, since the risks are more than reflected in market prices.
After enduring a prolonged period of challenges for value investing, we believe
opportunities for value investors have never been better. As noted in this
report's cover letter, the performance divergence between the two style camps --
value and growth -- reached historical extremes during this time. The fund's
performance during the six months ended April 30, 2000, reflected this
disparity, although, as the period progressed, we saw encouraging signs that the
trends were shifting. For the six months under review, Franklin MicroCap Value
Fund - Class A produced a +3.02% cumulative total return, compared with the
8.20% return of its benchmark, the unmanaged Russell 2000 Value Index. (1)
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 27.
PORTFOLIO BREAKDOWN
Franklin MicroCap Value Fund
Based on Total Net Assets
4/30/00
[BAR GRAPH]
Finance 12.9%
Producer Manufacturing 9.6%
Utilities 9.6%
Retail Trade 8.3%
Consumer Non-Durables 7.6%
Consumer Durables 7.1%
Industrial Services 7.1%
Electronic Technology 5.8%
Process Industries 5.7%
Non-Energy Minerals 5.1%
Commercial Services 4.6%
Transportation 4.0%
Energy Minerals 3.8%
Consumer Services 2.5%
Technology Services 2.1%
Health Technology 0.6%
Short-Term Investments
& Other Net Assets 3.6%
During the six months under review, stock markets experienced severe volatility.
In April, the Nasdaq Composite Index, weighted to large-cap growth and
technology stocks, experienced 3 of the 10 largest single-day percentage
increases and 4 of the 10 biggest single-day percentage drops in Nasdaq history.
We believe extreme volatility reflects many competing forces, among them risk
assessment. Only time will show whether these events represent a turning point
in the market or merely a regrouping phase.
At the end of the period, we owned several stocks that we believe illustrate the
fund's value orientation. Casino Data Systems develops and sells technologically
advanced gaming systems. The company provides integrated, Windows-based software
that ties together table games and slot machines. The same technology supports
multi-site progressive jackpot games. Product innovation is key to earnings
growth, and in our opinion, the company has a superior record of developing
popular games. However, gaining approval for new products by gaming
jurisdictions is a slow and uncertain process. During the reporting period, the
company's Bandit series of multi-media slots introduced two new products, which
we believe should contribute to the company's earnings. As of April 30, 2000,
Casino Data, which is debt-free, was trading at book value, 12.7 times trailing
earnings and about one times sales, a valuation we find compelling for what is
essentially a business software provider.
(1). Source: Standard & Poor's Micropal. Cumulative total return represents the
change in value of an investment, assuming reinvestment of all distributions,
and does not include the sales charge. The index is unmanaged and includes
reinvested dividends. One cannot invest directly in an index.
Seneca Foods is one of North America's three dominant fruit and vegetable
canners. The company underwent a recapitalization in 1998, when we acquired our
position. Years of unfavorable pricing sharply reduced the number of
participants in this industry, and over the past three years in particular, the
industry lost significant capacity. We believe Seneca is the low-cost producer
and could see a sharp increase in earnings as industry trends may lead to
potentially improved pricing power. At the end of the reporting period, Seneca's
stock, trading at $11.00, about 70% of tangible book value, has strong cash flow
and what we believe is a conservatively stated balance sheet.
Another good example of a value holding is Hardinge Inc., a manufacturer of
high-precision machine tools and replacement parts. Orders for machine tools are
highly cyclical, and we believe the current down cycle is nearing an end. The
relatively high-margin after-market parts business tends to be counter-cyclical,
which has enabled Hardinge to report over 50 successive years of net profits, a
remarkable record. In our opinion, the balance sheet is clean and the company
has cash flow adequate to fund all necessary expenditures, including new product
development. At the end of the period, trading at about 60% of book value and
about four times projected peak earnings, Hardinge embodies the quality,
stability and value we seek.
Lastly, Courier Corp. is a book printer that focuses on services: preparation,
production, media replication and packaging. Target niches for the company
include religion, education, consumer, and technical information and
documentation. The company is capable of efficient short-run production and can
manage copyright compliance, allowing educators to design course packs from
multiple publishers. Additionally, home schooling is a growing application.
Productivity gains from the company's investments in facilities and systems are
producing strong operating leverage. Operating income was up 33% for the first
six months of fiscal 2000 and sales increased 12%. Part of the leverage comes
from diminishing losses in the developing education e-commerce business, where
sales increased 20%. As of April 30, the company was debt free, trading at a
modest premium to book value and about 10 times its 2000 earnings estimate. In
our opinion, as the company generates increased earnings from services, its
return on capital should continue to increase. As a result, we believe the
company could experience several phases of expansion.
TOP 10 HOLDINGS
Franklin MicroCap Value Fund
4/30/00
COMPANY % OF TOTAL
SECTOR NET ASSETS
------ ----------
Maynard Oil Co.
Energy Minerals 3.4%
Zemex Corp. (Canada)
Non-Energy Minerals 3.2%
Bangor Hydro-Electric Co.
Utilities 2.8%
Allen Organ Co., B
Consumer Durables 2.6%
Crowley Maritime Corp.
Transportation 2.5%
Casino Data Systems
Consumer Services 2.5%
Atlantic Tele-Network Inc.
Utilities 2.5%
Rofin-Sinar Technologies Inc.
Producer Manufacturing 2.4%
Seneca Foods Corp., A & B
Consumer Non-Durables 2.3%
Bresler & Reiner Inc.
Finance 2.2%
Looking forward, we remain optimistic about the second half of the fund's fiscal
year. We are encouraged by the opportunities for investing in strong companies
that fit our value criteria and for adding to existing positions whose merit may
not be reflected in current prices. We will adhere to our value investment
philosophy, and firmly believe our patience will be rewarded over the long term.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
fund. Our strategies and the fund's portfolio composition will change depending
on market and economic conditions. Although historical performance does not
guarantee future results, these insights may help you understand our investment
and management philosophy.
SIX-MONTH PERFORMANCE SUMMARY AS OF 4/30/00
Six-month total return does not include the sales charge. 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.
<TABLE>
<CAPTION>
CLASS A
<S> <C> <C>
Six-Month Total Return +3.02%
Net Asset Value (NAV) $17.44 (4/30/00) $18.41 (10/31/99)
Change in NAV -$0.97
Distributions (11/1/99-4/30/00) Long-Term Capital Gain $1.4734
</TABLE>
ADDITIONAL PERFORMANCE
AS OF 3/31/00
INCEPTION
CLASS A 1-YEAR 3-YEAR (12/12/95)
------- ------ ------ ----------
Cumulative Total Return (1) +10.15% +18.11% +56.56%
Average Annual Total Return (2) +3.82% +3.63% +9.46%
Value of $10,000 Investment (3) $10,382 $11,130 $14,751
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
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 returns.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current 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 sales charge.
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 does not guarantee 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.
During the six-month period ended April 30, 2000, the domestic economy remained
strong as it entered a record 10th year of expansion, fueled by high spending,
consumer confidence and a savings rate near zero. The Federal Reserve Board (the
Fed) implemented three separate 0.25% interest-rate increases, bringing the
federal funds target rate to 6.0% -- the highest rate in five years -- with
seemingly little impact on the hot economy.
The stock markets experienced extreme volatility during the period, with many
records shattered. Value stocks generally remained out of favor, while
technology stocks continued their climb until the middle of March, when
investors seemed to realize that the uncertain rewards did not justify the risk.
During the period, the price difference between value and growth stocks
registered the widest gap in the market's history.
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 34.
Franklin Value Fund - Class A produced a +9.90% cumulative total return for the
six months ended April 30, 2000. By comparison, the fund's benchmark, the
Russell 2000 Value Index, returned 8.20% for the same period. (1)
Our value investment strategy focuses on bargain stocks that sell at a low price
to earnings, cash flow, or book value. Others have overlooked assets, such as
land or tax-loss carry forwards, or valuable intangibles like patents or
distribution systems. As a rule, these stocks are out-of-favor when we buy them,
which is why we can pick them up at bargain prices. If these companies perform
as expected, often investors or strategic buyers will discover their value and
bid prices up.
As the chart to the right shows, on April 30, 2000, the fund's largest sector
weighting was financial services companies at 23.8% of the fund's total net
assets. This significant exposure to a single sector may result in the fund's
experiencing greater volatility than a fund with a more broadly diversified
portfolio. (2)
During the reporting period, we concentrated new purchases on companies with
strong financial positions and quality management. Two examples are Family
Dollar Stores, Inc. and Leggett & Platt, Inc. Family Dollar is a mid-sized
manager of a national chain of convenience discount stores.
(1). Source: Standard & Poor's Micropal. Cumulative total return represents the
change in value of an investment, assuming reinvestment of all distributions,
and does not include sales charges. The index is unmanaged and includes
reinvested dividends. One cannot invest directly in an index.
(2). There are specific risks to investing in the financial services industry,
which is sensitive to changes in interest rates, subject to extensive government
regulation, and recently has undergone rapid change related to consolidations
and changes to its regulatory framework.
PORTFOLIO BREAKDOWN
Franklin Value Fund
Based on Total Net Assets
4/30/00
[Bar Graph]
Finance 23.8%
Producer Manufacturing 15.7%
Industrial Services 9.6%
Consumer Non-Durables 7.8%
Transportation 6.4%
Consumer Durables 5.8%
Electronic Technology 5.6%
Process Industries 4.6%
Retail Trade 4.0%
Technology Services 3.5%
Non-Energy Minerals 3.4%
Energy Minerals 2.1%
Health Technology 1.6%
Commercial Services 1.5%
Consumer Services 1.5%
Bonds 0.9%
Short-Term Investments
& Other Net Assets 2.2%
TOP 10 HOLDINGS
Franklin Value Fund
4/30/00
COMPANY % OF TOTAL
SECTOR NET ASSETS
Presidential Life Corp.
Finance 3.0%
ReliaStar Financial Corp.
Finance 2.6%
JLG Industries Inc.
Producer Manufacturing 2.5%
R&B Falcon Corp.
Industrial Services 2.3%
Diebold Inc.
Electronic Technology 2.2%
Reynolds & Reynolds Co., A
Technology Services 2.1%
Professionals Group Inc.
Finance 2.1%
ENSCO International Inc.
Industrial Services 2.0%
Rowan Cos. Inc.
Industrial Services 2.0%
Wolverine World Wide Inc.
Consumer Non-Durables 2.0%
Publicly held for 30 years, Family Dollar has increased its dividend for 24
consecutive years, has no long-term debt and has achieved accelerated earnings
growth in recent years due to the company's popular, everyday low-pricing
strategy. At the end of the period, Family Dollar traded at 18.7 times this
year's estimated earnings, while its larger and better-known competitor,
Wal-Mart, sold at about 37.6 times. Leggett & Platt, incorporated in 1901,
manufactures a wide range of engineered products, including components for
commercial and retail furnishings and retail store fixtures and displays.
Leggett has posted 29 years of increased dividends, which have grown at a
greater than 15% compounded annual rate. The company has generated compound
annual growth rates of 14.3% in sales and 20.2% in net earnings over the past 10
years, yet traded at the end of the period at a mere 12.9 times this year's
estimated earnings.
Although value investing was out of favor during most of the period, strategic
buyers were still looking for bargains. One day after the reporting period, ING
Groep NV agreed to purchase fund holding ReliaStar Financial Corp. at a
substantial premium to ReliaStar's closing price, sending the company's share
price up significantly. In addition, one of our newer holdings, Duff & Phelps
Credit Rating Co., announced that it would be acquired at a premium to the
prior day's closing price. Elsewhere, our oil drilling and oil services stocks
performed well during the period, as oil prices continued to climb and then
level off after the Organization of the Petroleum Exporting Countries agreed in
late March to increase production.
Looking forward, we continue to stay the course and follow our value investment
philosophy. Patience is an essential ingredient for success in value investing,
and we remain confident that our investment approach will be rewarding over the
long term.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
fund. Our strategies and the fund's portfolio composition will change depending
on market and economic conditions. Although historical performance does not
guarantee future results, these insights may help you understand our investment
and management philosophy.
FRANKLIN 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.*
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: 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.*
*Past expense reductions by the fund's manager increased the fund's total
returns.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 4/30/00
Six-month total return does not include sales charges. 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.
CLASS A
Six-Month Total Return +9.90%
Net Asset Value (NAV) $18.99 (4/30/00) $17.28 (10/31/99)
Change in NAV +$1.71
CLASS B
Six-Month Total Return +9.49%
Net Asset Value (NAV) $18.81 (4/30/00) $17.18 (10/31/99)
Change in NAV +$1.63
CLASS C
Six-Month Total Return +9.52%
Net Asset Value (NAV) $18.63 (4/30/00) $17.01 (10/31/99)
Change in NAV +$1.62
ADVISOR CLASS
Six-Month Total Return +10.09%
Net Asset Value (NAV) $19.20 (4/30/00) $17.44 (10/31/99)
Change in NAV +$1.76
Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF 3/31/00
INCEPTION
CLASS A 1-YEAR 3-YEAR (3/11/96)
------- ------ ------ ---------
Cumulative Total Return (1) +12.53% -0.99% +29.22%
Average Annual Total Return (2) +6.05% -2.27% +4.97%
Value of $10,000 Investment (3) $10,605 $9,333 $12,176
INCEPTION
CLASS B 1-YEAR (1/1/99)
Cumulative Total Return (1) +11.69% +0.60%
Average Annual Total Return (2) +7.69% -2.74%
Value of $10,000 Investment (3) $10,769 $9,660
INCEPTION
CLASS C 1-YEAR 3-YEAR (9/3/96)
Cumulative Total Return (1) +11.76% -2.84% +15.79%
Average Annual Total Return (2) +9.68% -1.28% +3.90%
Value of $10,000 Investment (3) $10,968 $9,620 $11,466
INCEPTION
ADVISOR CLASS (4) 1-YEAR 3-YEAR (3/11/96)
Cumulative Total Return (1) +12.92% +0.20% +31.93%
Average Annual Total Return (2) +12.92% +0.07% +7.07%
Value of $10,000 Investment (3) $11,292 $10,020 $13,193
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
(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.
(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). 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 +4.37% and +1.29%, 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 does not guarantee future results.
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights
FRANKLIN BALANCE SHEET INVESTMENT FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000 --------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period $ 29.96 $ 31.86 $ 35.22 $ 29.15 $ 26.34 $ 22.68
--------- ----------- ----------- ----------- --------- ---------
Income from investment operations:
Net investment income (a) .16 .37 .50 .48 .47 .30
Net realized and unrealized gains (losses) 1.33 (.68) (1.55) 8.40 3.85 3.98
--------- ----------- ----------- ----------- --------- ---------
Total from investment operations 1.49 (.31) (1.05) 8.88 4.32 4.28
--------- ----------- ----------- ----------- --------- ---------
Less distributions from:
Net investment income (.14) (.43) (.51) (.46) (.44) (.27)
Net realized gains (.28) (1.16) (1.80) (2.35) (1.07) (.35)
--------- ----------- ----------- ----------- --------- ---------
Total distributions (.42) (1.59) (2.31) (2.81) (1.51) (.62)
--------- ----------- ----------- ----------- --------- ---------
Net asset value, end of period $ 31.03 $ 29.96 $ 31.86 $ 35.22 $ 29.15 $ 26.34
--------- ----------- ----------- ----------- --------- ---------
Total return (b) 5.03% (1.04)% (3.14)% 32.86% 16.93% 19.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $ 984,246 $ 1,165,779 $ 1,467,207 $ 1,222,953 $ 657,002 $ 387,540
Ratios to average net assets:
Expenses .98% (c) .93% .93% 1.08% 1.08% 1.17%
Net investment income 1.06% (c) 1.19% 1.47% 1.59% 1.69% 1.30%
Portfolio turnover rate 2.49% 17.53% 11.81% 24.63% 35.46% 28.63%
</TABLE>
(a) Based on average shares outstanding effective year ended October 31,1999.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) Annualized
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
CLOSED END MUTUAL FUNDS 5.6%
(a)Central European Equity Fund ................. 250,000 $ 3,750,000
(a)Emerging Markets Infrastructure Fund ......... 300,000 3,431,250
(a)H & Q Healthcare Investors Fund .............. 150,000 3,881,250
(a)INVESCO Global Health Sciences Fund .......... 325,000 5,057,813
Irish Investment Fund Inc. ...................... 135,000 1,965,938
(a)John Hancock Bank & Thrift Opportunity Fund .. 1,650,000 10,931,250
Latin America Equity Fund Inc. .................. 175,000 2,121,875
Latin America Investment Fund Inc. .............. 175,000 2,264,063
(a)Liberty All-Star Growth Fund Inc. ............ 150,000 1,631,250
Mexico Fund ..................................... 625,000 9,453,125
(a)Morgan Grenfell SmallCap Fund ................ 123,800 1,733,200
Petroleum & Resources Corp. ..................... 100,000 3,487,500
(a)Royce Focus Trust Inc. ....................... 160,000 790,000
(a)Royce Micro-Cap Trust Inc. ................... 50,000 481,250
(a)Royce Value Trust ............................ 52,500 692,344
(a)Swiss Helvetia Fund .......................... 250,000 3,453,125
-----------
TOTAL CLOSED END MUTUAL FUNDS (COST $55,387,135) 55,125,233
-----------
COMMON STOCKS 92.5%
(c)COMMERCIAL SERVICES 3.2%
(a)Handleman Co. .......................... 2,060,600 24,727,200
Nash-Finch Co. ............................ 895,000 6,600,625
-----------
31,327,825
-----------
CONSUMER DURABLES 8.2%
(c)Allen Organ Co., B ..................... 73,000 4,421,063
(a)Baldwin Piano & Organ Co. .............. 124,600 918,925
(a),(c)Castle & Cooke Inc. ................ 1,500,000 27,187,500
D.R. Horton Inc. .......................... 500,000 6,468,750
(a)Dixie Group Inc. ....................... 370,000 1,526,250
Engle Homes Inc. .......................... 340,000 3,251,250
(a),(c)Jan Bell Marketing Inc. ............ 1,251,400 3,675,988
M.D.C. Holdings Inc. ...................... 640,000 12,200,000
(c)Pulaski Furniture Corp. ................ 192,000 4,224,000
(a)Schuler Homes Inc. ..................... 500,000 3,000,000
(a)U.S. Home Corp. ........................ 370,000 13,250,625
(a)Washington Homes Inc. .................. 65,000 333,125
-----------
80,457,476
-----------
CONSUMER NON-DURABLES 4.4%
Block Drug Co. Inc., A .................... 412,000 11,742,000
(a),(c)Chic By H.I.S. Inc. ................ 756,000 70,837
(a),(c)Cyrk Inc. .......................... 1,100,000 9,693,750
(c)DIMON Inc. ............................. 2,236,500 5,311,688
(c)Garan Inc. ............................. 280,000 6,055,000
Genesee Corp., B .......................... 117,900 2,107,463
(c)Haggar Corp. ........................... 600,000 7,837,500
-----------
42,818,238
-----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
-------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
(a)CONSUMER SERVICES 5.5%
(c)Aztar Corp. ............................ 2,975,000 $35,514,063
Casino Data Systems ....................... 755,000 3,633,438
(c)Champps Entertainment Inc. ............. 1,100,000 4,675,000
(c)VICORP Restaurants Inc. ................ 487,063 10,289,206
----------
54,111,707
----------
ELECTRONIC TECHNOLOGY 6.6%
(a)Audiovox Corp., A ...................... 290,000 9,950,625
(a),(c)Cherry Corp., B .................... 600,000 10,800,000
Cubic Corp. ............................... 140,000 3,115,000
(a)ESCO Electronics Corp. ................. 610,000 9,950,625
(a)FSI International Inc. ................. 725,000 10,829,688
(a)Silicon Valley Group Inc. .............. 200,000 5,700,000
(a),(c)Standard Microsystems Corp. ........ 1,100,000 14,300,000
----------
64,645,938
----------
(a)ENERGY MINERALS .6%
Crown Central Petroleum Corp., B .......... 248,000 2,216,500
(c)Maynard Oil Co. ........................ 260,000 3,315,000
----------
5,531,500
----------
FINANCE 23.1%
(a),(c)ACMAT Corp., A ..................... 293,500 2,421,375
American General Corp. .................... 300,000 16,800,000
American National Insurance Co. ........... 531,100 27,418,038
AmerUs Life Holdings Inc., A .............. 225,000 4,485,938
Amwest Insurance Group Inc. ............... 10,600 74,200
Baldwin & Lyons Inc., B ................... 43,600 855,650
Clarica Life Insurance Co. (Canada) ....... 300,000 5,891,881
(a)Farm Family Holdings Inc. .............. 215,200 6,133,200
Farmers & Merchants Bank of Long Beach .... 2,200 3,971,000
FBL Financial Group Inc., A ............... 765,000 11,857,500
(c)Fidelity Bancorp Inc. .................. 128,300 2,245,250
First Defiance Financial Corp. ............ 300,000 2,625,000
GA Financial Inc. ......................... 278,200 3,321,013
Kansas City Life Insurance Co. ............ 87,600 2,376,150
LandAmerica Financial Group Inc. .......... 140,000 2,467,500
Manulife Financial Corp. (Canada) ......... 550,000 8,628,125
(c)Merchants Group Inc. ................... 257,800 4,181,194
Meridian Insurance Group Inc. ............. 310,000 4,107,500
(a)MetLife Inc. ........................... 201,000 3,329,063
MIIX Group Inc. ........................... 450,000 5,400,000
(a)National Western Life Insurance Co., A . 102,500 7,629,844
(a)PBOC Holdings Inc. ..................... 251,800 2,203,250
Presidential Life Corp. ................... 730,000 11,622,969
(a),(c)Professionals Group Inc. ........... 509,850 9,017,972
(a)Quaker City Bancorp Inc. ............... 137,500 1,942,188
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
FINANCE (CONT.)
Reinsurance Group of America Inc. ...................... 341,440 $ 8,493,320
(a)Risk Capital Holdings Inc. .......................... 400,000 6,156,250
(c)SCPIE Holdings Inc. ................................. 544,000 16,082,000
Selective Insurance Group Inc. ......................... 320,000 6,060,000
St. Paul Cos. Inc. ..................................... 430,000 15,318,750
StanCorp Financial Group Inc. .......................... 470,000 13,688,750
(c)Stewart Information Services Corp. .................. 780,000 11,115,000
-----------
227,919,870
-----------
(a)HEALTH SERVICES .9%
Trigon Healthcare Inc. ................................. 260,000 9,343,750
----------
INDUSTRIAL SERVICES .7%
(c)Ecology & Environment Inc., A ....................... 201,400 1,132,875
(a)Harding Lawson Associates Group Inc. ................ 119,800 1,325,288
(a)Matrix Service Co. .................................. 300,000 1,471,875
(a)Petroleum Helicopters Inc. .......................... 77,500 755,625
(a)Petroleum Helicopters Inc., non-voting .............. 210,000 1,995,000
----------
6,680,663
----------
NON-ENERGY MINERALS 3.7%
Central Steel & Wire Co. ............................... 1,405 843,000
(c)Commonwealth Industries Inc. ........................ 1,100,000 8,250,000
Corus Group PLC (United Kingdom) ....................... 9,000,000 12,181,574
LTV Corp. .............................................. 4,180,000 14,891,250
(a)Zemex Corp. ......................................... 38,000 294,500
----------
36,460,324
----------
PROCESS INDUSTRIES 2.8%
(a),(c)American Pacific Corp. .......................... 414,000 2,898,000
Corn Products International Inc. ....................... 300,000 7,200,000
(a),(c)Delta Woodside Industries Inc. .................. 2,240,000 4,480,000
J.G. Boswell Co. ....................................... 6,000 6,930,000
Mercer International Inc. (Switzerland) ................ 744,000 6,138,000
---------
27,646,000
----------
PRODUCER MANUFACTURING 6.5%
(a)Genesis Worldwide Inc. .............................. 100,000 337,500
(c)Hardinge Inc. ....................................... 520,000 5,850,000
(c)Insteel Industries Inc. ............................. 560,000 3,255,000
(a)Nashua Corp. ........................................ 249,100 1,992,800
Oshkosh Truck Corp. .................................... 322,500 10,158,750
(c)Pitt-Des Moines Inc. ................................ 420,000 10,080,000
Tecumseh Products Co., A ............................... 360,000 16,717,500
Tecumseh Products Co., B ............................... 114,000 4,959,000
Timken Co. ............................................. 490,000 9,065,000
TransPro Inc. .......................................... 230,000 1,293,750
---------
63,709,300
----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN BALANCE SHEET INVESTMENT FUND SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
RETAIL TRADE 8.5%
Cato Corp., A .......................................... 469,000 $ 4,953,813
(a),(c)Charming Shoppes Inc. ........................... 5,200,000 35,100,000
(a),(c)Designs Inc. .................................... 1,190,000 1,413,125
(c)Fred's Inc. ......................................... 940,000 14,805,000
Haverty Furniture Cos. Inc. ............................ 360,000 4,050,000
(a),(c)Jacobson Stores Inc. ............................ 384,300 1,981,547
(a)Kmart Corp. ......................................... 680,000 5,525,000
(a),(c)Syms Corp. ...................................... 1,443,200 5,772,800
(a)United Retail Group Inc. ............................ 632,600 5,179,413
(c)Wolohan Lumber Co. .................................. 520,000 5,297,500
-----------
84,078,198
-----------
(a),(c)TECHNOLOGY SERVICES .2%
Government Technology Services Inc. .................... 489,000 1,573,969
-----------
TRANSPORTATION 5.8%
(a)Crowley Maritime Corp. .............................. 4,440 5,328,000
(c)International Shipholding Corp. ..................... 570,000 4,595,625
(a),(c)KLLM Transport Services Inc. .................... 245,000 1,990,625
(a)Mesa Air Group Inc. ................................. 1,000,000 6,500,000
(a)OMI Corp. ........................................... 1,075,000 3,762,500
Overseas Shipholding Group Inc. ........................ 1,350,000 35,353,125
-----------
57,529,875
-----------
UTILITIES 11.8%
CMP Group Inc. ......................................... 770,000 22,281,875
Conectiv Inc. .......................................... 215,000 3,816,250
Entergy Corp. .......................................... 900,000 22,893,750
(a),(c)Kaneb Services Inc. ............................. 2,992,500 17,019,844
(a)Niagara Mohawk Holdings Inc. ........................ 2,180,000 30,247,500
Northeast Utilities .................................... 950,000 20,425,000
-----------
116,684,219
-----------
TOTAL COMMON STOCKS (COST $854,544,094) 910,518,852
PREFERRED STOCKS .8%
----------
Price Enterprises Inc., 8.75%, pfd., A (COST $6,943,576) 533,400 7,534,264
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------
<S> <C> <C>
(d)CORPORATE BONDS .1%
Hechinger Co., senior note, 6.95%, 10/15/03 (COST $5,043,193) $ 7,000,000 595,000
-----------
TOTAL LONG TERM INVESTMENTS (COST $921,917,998) 973,773,349
-----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN BALANCE SHEET INVESTMENT FUND AMOUNT VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
(b) REPURCHASE AGREEMENTS 3.4%
Joint Repurchase Agreement, 5.706%, 5/01/00,
(Maturity Value $34,100,950) (COST $34,084,743).... $ 34,084,743 $ 34,084,743
Banc of America Securities LLC
Barclays Capital Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corp.
Dresdner Kleinwort Benson, North America LLC
Lehman Brothers Inc.
Nesbitt Burns Securities Inc.
Paine Webber Inc.
Paribas Corp.
Societe Generale
Warburg Dillon Read LLC
Collateralized by U.S Treasury Bills & Notes
--------------
TOTAL INVESTMENTS (COST $956,002,741) 102.4% ....... 1,007,858,092
OTHER ASSETS, LESS LIABILITIES (2.4)% .............. (23,612,219)
--------------
NET ASSETS 100.0% .................................. $ 984,245,873
==============
</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, 2000, all repurchase
agreements had been entered into on April 28, 2000.
(c) See Note 8 regarding holdings of 5% voting securities.
(d) See Note 6 regarding defaulted securities.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000 ------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996(c)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $18.41 $20.27 $24.29 $18.44 $15.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) .............. .02 (.01) (.02) (.01) .14
Net realized and unrealized gains (losses) ... .48 (.29) (2.51) 6.33 3.41
--------------------------------------------------------------------
Total from investment operations .............. .50 (.30) (2.53) 6.32 3.55
--------------------------------------------------------------------
Less distributions from:
Net investment income -- -- (.01) (.07) (.11)
Net realized gains ........................... (1.47) (1.56) (1.48) (.40) --
--------------------------------------------------------------------
Total distributions ........................... (1.47) (1.56) (1.49) (.47) (.11)
--------------------------------------------------------------------
Net asset value, end of period ................ $17.44 $18.41 $20.27 $24.29 $18.44
--------------------------------------------------------------------
Total return(b) ............................... 3.02% (1.59)% (10.95)% 35.05% 23.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $95,649 $115,999 $175,635 $191,638 $119,664
Ratios to average net assets:
Expenses ..................................... 1.36% (d) 1.27% 1.21% 1.22% 1.24% (d)
Net investment income (loss) ................. .24% (d) (.05)% (.11)% (.05)% 1.28% (d)
Portfolio turnover rate ....................... 1.26% 14.12% 31.91% 21.33% 14.15%
</TABLE>
(a) Based on average shares outstanding effective year ended October 31, 1999.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) For the period December 12, 1995 (effective date) to October 31, 1996.
(d) Annualized
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 96.4%
COMMERCIAL SERVICES 4.6%
(a)Allou Health & Beauty Care Inc., A ......... 259,000 $1,926,313
Courier Corp. ................................. 75,000 1,940,625
Noland Co. .................................... 31,400 522,025
---------
4,388,963
---------
CONSUMER DURABLES 7.1%
Allen Organ Co., B ............................ 40,800 2,470,950
(a)Baldwin Piano & Organ Co. .................. 49,000 361,375
Engle Homes Inc. .............................. 83,000 793,688
M/I Schottenstein Homes Inc. .................. 68,000 1,088,000
Pulaski Furniture Corp. ....................... 45,000 990,000
(a)Washington Homes Inc. ...................... 213,500 1,094,188
---------
6,798,201
---------
CONSUMER NON-DURABLES 7.6%
(a)Chic By H.I.S. Inc. ........................ 208,100 19,499
Garan Inc. .................................... 75,000 1,621,875
Genesee Corp., A .............................. 7,000 135,625
Genesee Corp., B .............................. 35,000 625,625
(a)McNaughton Apparel Group Inc. .............. 220,000 1,883,750
(a,c)Seneca Foods Corp., A .................... 191,600 2,107,600
(a)Seneca Foods Corp., B ...................... 12,500 139,063
Standard Commercial Corp. ..................... 226,800 694,575
---------
7,227,612
---------
(a)CONSUMER SERVICES 2.5%
Casino Data Systems ........................... 493,000 2,372,563
---------
ELECTRONIC TECHNOLOGY 5.8%
(a)Aehr Test Systems .......................... 90,000 540,000
(a)Datron Systems Inc. ........................ 55,000 570,625
(a,c)ECC International Corp. .................. 570,000 2,066,250
(c)Espey Manufacturing & Electronics Corp. .... 80,000 1,200,000
(a)SPACEHAB Inc. .............................. 124,000 635,500
(a)Sparton Corp. .............................. 136,100 578,425
---------
5,590,800
---------
ENERGY MINERALS 3.8%
Home-Stake Oil & Gas Co. ...................... 50,000 384,375
(a,c)Maynard Oil Co. .......................... 256,000 3,264,000
---------
3,648,375
---------
FINANCE 12.9%
(a,c)ACMAT Corp., A ........................... 150,000 1,237,500
Amwest Insurance Group Inc. ................... 148,000 1,036,000
(a)Bresler & Reiner Inc. ...................... 78,000 2,125,500
GA Financial Inc. ............................. 145,300 1,734,519
(a)Meemic Holdings Inc. ....................... 66,800 1,035,400
Meridian Insurance Group Inc. ................. 117,000 1,550,250
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
FINANCE (CONT.)
Old Guard Group Inc. ........................ 155,400 $ 1,515,150
PAULA Financial ............................. 100,000 240,625
(a)Pinnacle Global Group Inc. ............... 160,025 640,100
(a)Quaker City Bancorp Inc. ................. 90,000 1,271,250
----------
12,386,294
----------
(a)HEALTH TECHNOLOGY .6%
Atrion Corp. ................................ 50,100 604,331
----------
INDUSTRIAL SERVICES 7.1%
Ecology & Environment Inc., A ............... 105,000 590,625
(a,c)GZA GeoEnvironmental Technologies Inc... 232,000 1,334,000
(a)Harding Lawson Associates Group Inc. ..... 171,000 1,891,688
(a)Petroleum Helicopters Inc. ............... 17,600 171,600
(a)Petroleum Helicopters Inc., non-voting ... 110,000 1,045,000
(a,c)Roy F. Weston Inc., A .................. 600,000 1,725,000
----------
6,757,913
----------
NON-ENERGY MINERALS 5.1%
Case Pomeroy & Co. Inc., A .................. 220 220,000
Case Pomeroy & Co. Inc., B, cvt ............. 500 550,000
(a,c)Kentucky Electric Steel Inc. ........... 430,000 1,021,250
(a)Zemex Corp. (Canada) ..................... 400,000 3,100,000
----------
4,891,250
----------
(a)PROCESS INDUSTRIES 5.7%
American Pacific Corp. ...................... 243,000 1,701,000
Flanders Corp. .............................. 760,000 2,090,000
Griffin Land & Nurseries Inc. ............... 131,000 1,621,125
----------
5,412,125
----------
PRODUCER MANUFACTURING 9.6%
(a,c)Art's-Way Manufacturing Co. Inc. ....... 120,500 399,156
(a,c)Athey Products Corp. ................... 198,000 420,750
(a)Continental Materials Corp. .............. 80,000 1,670,000
(a)Genesis Worldwide Inc. ................... 35,000 118,125
Hardinge Inc. ............................... 46,000 517,500
Insteel Industries Inc. ..................... 250,000 1,453,125
(a)Nashua Corp. ............................. 130,100 1,040,800
(a)Rofin-Sinar Technologies Inc. ............ 200,000 2,262,500
(a,c)Temtex Industries Inc. ................. 265,500 290,391
TransPro Inc. ............................... 184,500 1,037,813
----------
9,210,160
----------
RETAIL TRADE 8.3%
(a)Designs Inc. ............................. 680,000 807,500
(a)Lechters Inc. ............................ 530,000 795,000
(a,c)S&K Famous Brands Inc. ................. 250,000 1,812,500
(a)United Retail Group Inc. ................. 235,000 1,924,059
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN MICROCAP VALUE FUND SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
RETAIL TRADE (CONT.)
(a,c)Village Super Market Inc., A .......... 105,000 $ 1,420,781
Wolohan Lumber Co. ......................... 112,000 1,141,000
------------
7,900,840
------------
(a)TECHNOLOGY SERVICES 2.1%
Ultrak Inc. ................................ 225,000 2,025,000
TRANSPORTATION 4.0%
(a)Crowley Maritime Corp. .................. 2,000 2,400,000
Providence & Worchester Railroad Co. ....... 147,200 1,030,400
(a,c)TransFinancial Holdings Inc. .......... 254,500 413,563
------------
3,843,963
------------
UTILITIES 9.6%
(c)Atlantic Tele-Network Inc. .............. 240,000 2,340,000
Bangor Hydro-Electric Co. .................. 160,000 2,640,000
Central Vermont Public Service Corp. ....... 70,000 761,250
Green Mountain Power Corp. ................. 180,000 1,350,000
(c)Maine Public Service Co. ................ 110,000 2,062,500
------------
9,153,750
------------
TOTAL COMMON STOCKS (COST $99,897,886) ..... 92,212,140
------------
SHORT TERM INVESTMENTS 3.8%
(e)Franklin Institutional Fiduciary Trust
Money Market Portfolio (COST $3,595,098) .. 3,595,098 3,595,098
------------
TOTAL INVESTMENTS (COST $103,492,984) 100.2% 95,807,238
OTHER ASSETS, LESS LIABILITIES (.2)% ....... (158,342)
------------
NET ASSETS 100.0% .......................... $ 95,648,896
============
</TABLE>
(a) Non-income producing
(c) See Note 8 regarding holdings of 5% voting securities.
(e) The Franklin Institutional Fiduciary Trust Money Market
Portfolio is managed by Franklin Advisers Inc.
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, 2000 -------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996(c)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $17.30 $17.98 $24.68 $17.15 $15.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) ................... -- (.04) (.03) .08 .05
Net realized and unrealized gains (losses) ........ 1.69 (.55) (6.45) 7.90 2.15
--------------------------------------------------------------------
Total from investment operations ................... 1.69 (.59) (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 ..................... $18.99 $17.30 $17.98 $24.68 $17.15
====================================================================
Total return(b) .................................... 9.90% (3.38)% (26.48)% 47.43% 14.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $59,539 $65,898 $98,288 $78,897 $7,828
Ratios to average net assets:
Expenses .......................................... 1.58%(d) 1.49% 1.32% 1.32% 1.35%(d)
Expenses excluding waiver and payments by affiliate 1.58%(d) 1.49% 1.38% 1.41% 2.87%(d)
Net investment income (loss) ...................... .02%(d) (.23)% (.16)% .27% .57%(d)
Portfolio turnover rate ............................ 22.39% 41.21% 36.88% 13.92% 32.52%
</TABLE>
(a) Based on average shares outstanding effective year ended October 31, 1999.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) For the period March 11, 1996 (effective date) to October 31, 1996.
(d) Annualized
FRANKLIN VALUE INVESTORS TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999(c)
-------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .............. $ 17.21 $ 18.33
-------------------------------------------
Income from investment operations:
Net investment loss(a) ........................... (.06) (.15)
Net realized and unrealized gains (losses) ....... 1.66 (.97)
-------------------------------------------
Total from investment operations .................. 1.60 (1.12)
-------------------------------------------
Net asset value, end of period .................... $ 18.81 $ 17.21
===========================================
Total return(b) ................................... 9.49 % (6.27)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................. $ 1,993 $ 1,293 %
Ratios to average net assets:
Expenses ......................................... 2.28 %(d) 2.12 %(d)
Net investment loss .............................. (.68)%(d) (.84)%(d)
Portfolio turnover rate ........................... 22.39 % 41.21 %
</TABLE>
(a) Based on average shares outstanding effective year ended October 31,
1999.
(b) Total return does not reflect the contingent deferred sales charge, and
is not annualized for periods less than one year.
(c) For the period January 1, 1999 (effective date) to October 31, 1999.
(d) Annualized
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights (continued)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000 -------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996(c)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............. $17.03 $17.82 $24.59 $17.14 $16.38
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) ................. (.06) (.16) (.13) (.02) .01
Net realized and unrealized gains (losses) ...... 1.66 (.54) (6.43) 7.84 .76
-----------------------------------------------------------------------------
Total from investment operations ................. 1.60 (.70) (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 ................... $18.63 $17.03 $17.82 $24.59 $17.14
=============================================================================
Total return(b) .................................. 9.52% (4.03)% (26.93)% 46.40% 4.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................ $27,005 $30,133 $41,694 $21,554 $434
Ratios to average net assets:
Expenses ........................................ 2.26%(d) 2.17% 1.97% 1.87% 2.00%(d)
Expenses excluding waiver and payments
by affiliate .................................. 2.26%(d) 2.17% 2.03% 1.96% 3.52%(d)
Net investment loss ............................. (.66)%(d) (.91)% (.81)% (.30)% (.08)%(d)
Portfolio turnover rate .......................... 22.39% 41.21% 36.88% 13.92% 32.52%
</TABLE>
(a) Based on average shares outstanding effective year ended October 31, 1999.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
(c) For the period September 1, 1996 (effective date) to October 31, 1996.
(d) Annualized
FRANKLIN VALUE INVESTORS TRUST
Financial Highlights (continued)
FRANKLIN VALUE FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
---------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000 -------------------------------------------
(UNAUDITED) 1999 1998 1997(c)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .................. $17.46 $18.07 $24.72 $18.75
---------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ............................. .03 .01 .04 .10
Net realized and unrealized gains (losses) ........... 1.71 (.53) (6.45) 5.95
---------------------------------------------------------------------
Total from investment operations ...................... 1.74 (.52) (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 ........................ $19.20 $17.46 $18.07 $24.72
=====================================================================
Total return(b) ....................................... 10.09% (2.97)% (26.18)% 32.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ..................... $3,238 $2,941 $4,739 $4,495
Ratios to average net assets:
Expenses ............................................. 1.28%(d) 1.17% .97% .98%(d)
Expenses excluding waiver and payments
by affiliate ....................................... 1.28%(d) 1.17% 1.03% 1.07%(d)
Net investment income ................................ .34%(d) .09% .19% .59%(d)
Portfolio turnover rate ............................... 22.39% 41.21% 36.88% 13.92%
</TABLE>
(a) Based on average shares outstanding effective year ended October 31, 1999.
(b) Total return is not annualized for periods less than one year.
(c) For the period January 2, 1997 (effective date) to October 31, 1997.
(d) Annualized
See notes to financial statements
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN VALUE FUND SHARES VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 96.9%
(a)COMMERCIAL SERVICES 1.5%
Robert Half International Inc. ............. 22,500 $1,375,313
----------
CONSUMER DURABLES 5.8%
D.R. Horton Inc. ........................... 142,500 1,843,582
Engle Homes Inc. ........................... 38,000 363,375
Flexsteel Industries Inc. .................. 33,600 445,200
La-Z-Boy Inc. .............................. 70,000 1,098,125
Leggett & Platt Inc. ....................... 54,000 1,154,250
M/I Schottenstein Homes Inc. ............... 29,500 472,000
----------
5,376,532
----------
CONSUMER NON-DURABLES 7.8%
Block Drug Co. Inc., A ..................... 49,955 1,423,718
DIMON Inc. ................................. 105,000 249,375
Standard Commercial Corp. .................. 245,800 752,763
(a)Timberland Co., A .......................... 16,000 1,110,000
(a)Tropical Sportswear International Corp. .... 99,500 1,753,688
Wolverine World Wide Inc. .................. 155,000 1,860,000
----------
7,149,544
----------
CONSUMER SERVICES 1.5%
(a)Aztar Corp. ................................ 89,000 1,062,438
Wendy's International Inc. ................. 13,000 290,875
----------
1,353,313
----------
ELECTRONIC TECHNOLOGY 5.6%
B.F. Goodrich Co. .......................... 31,800 1,013,625
Diebold Inc. ............................... 70,000 2,021,250
(a)ESCO Electronics Corp. ..................... 43,000 701,438
(a)SPACEHAB Inc. .............................. 123,000 630,375
United Technologies Corp. .................. 12,500 777,344
----------
5,144,032
----------
ENERGY MINERALS 2.1%
(a)Nuevo Energy Co. ........................... 65,000 1,137,500
USX-Marathon Group Inc. .................... 36,000 839,250
----------
1,976,750
----------
FINANCE 23.8%
(a)Acceptance Insurance Cos. Inc. ............. 65,000 288,438
Allstate Corp. ............................. 78,000 1,842,750
American National Insurance Co. ............ 21,000 1,084,125
Harleysville Group Inc. .................... 73,000 1,172,563
Household International Inc. ............... 36,500 1,523,875
Manulife Financial Corp. (Canada) .......... 55,400 869,088
(a)Matrix Bancorp Inc. ........................ 63,000 472,500
National Commerce Bancorp .................. 85,000 1,397,188
(a)PBOC Holdings Inc. ......................... 83,000 726,250
Penn-America Group Inc. .................... 105,000 938,438
The PMI Group Inc. ......................... 29,000 1,404,688
Presidential Life Corp. .................... 173,000 2,754,484
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN VALUE FUND SHARES VALUE
----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
FINANCE (CONT.)
(a) Professionals Group Inc. ................... 108,500 $1,919,094
Reinsurance Group of America Inc. .......... 17,700 440,288
ReliaStar Financial Corp. .................. 55,500 2,389,969
(a) Seibels Bruce Group Inc. ................... 103,500 181,125
StanCorp Financial Group Inc. .............. 35,000 1,019,375
Washington Mutual Inc. ..................... 55,000 1,405,938
----------
21,830,176
----------
HEALTH TECHNOLOGY 1.6%
(a) SkyePharma PLC, ADR (United Kingdom) ....... 10,498 167,964
West Pharmaceutical Services Inc. .......... 53,000 1,295,188
----------
1,463,152
----------
INDUSTRIAL SERVICES 9.6%
(a) Atwood Oceanics Inc. ....................... 27,500 1,667,188
ENSCO International Inc. ................... 56,500 1,875,094
(a) R&B Falcon Corp. ........................... 103,000 2,137,250
(a) Rowan Cos. Inc. ............................ 67,000 1,871,813
Santa Fe International Corp. ............... 37,000 1,271,875
----------
8,823,220
----------
NON-ENERGY MINERALS 3.4%
Commonwealth Industries Inc. ............... 117,500 881,250
(a) Lone Star Technologies Inc. ................ 33,500 1,545,188
LTV Corp. .................................. 187,000 666,188
----------
3,092,626
----------
PROCESS INDUSTRIES 4.6%
Lancaster Colony Corp. ..................... 30,500 800,625
Myers Industries Inc. ...................... 105,500 1,477,000
RPM Inc. ................................... 127,200 1,287,900
Sherwin-Williams Co. ....................... 9,000 223,875
Tuscarora Inc. ............................. 37,400 474,513
----------
4,263,913
----------
PRODUCER MANUFACTURING 15.7%
Baldor Electric Co. ........................ 50,000 928,125
CIRCOR International Inc. .................. 47,750 546,141
Dana Corp. ................................. 51,500 1,564,313
Graco Inc. ................................. 8,300 281,163
JLG Industries Inc. ........................ 240,000 2,280,000
Kaydon Corp. ............................... 42,000 981,750
Patrick Industries Inc. .................... 43,000 319,813
Superior Industries International Inc. ..... 43,000 1,384,063
Teleflex Inc. .............................. 38,500 1,330,656
Timken Co. ................................. 95,000 1,757,500
(a) Tower Automotive Inc. ...................... 82,500 1,289,063
Watts Industries Inc., A ................... 87,000 1,163,625
Woodhead Industries Inc. ................... 36,300 608,025
----------
14,434,237
----------
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FRANKLIN VALUE FUND SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
RETAIL TRADE 4.0%
Family Dollar Stores Inc. .............................................. 68,000 $ 1,296,250
(a) Rite Aid Corp. ......................................................... 115,000 575,000
Schultz Sav-O Stores Inc. .............................................. 63,250 723,422
The TJX Cos. Inc. ...................................................... 54,000 1,036,125
-----------
3,630,797
-----------
TECHNOLOGY SERVICES 3.5%
Reynolds & Reynolds Co., A ............................................. 82,500 1,959,375
(a) Ultrak Inc. ............................................................ 140,000 1,260,000
---------
3,219,375
---------
TRANSPORTATION 6.4%
(a) Atlantic Coast Airlines Holdings Inc. .................................. 43,000 1,284,625
Kenan Transport Co. .................................................... 66,500 1,330,000
(a) Midwest Express Holdings ............................................... 8,500 215,156
(a) Motor Cargo Industries Inc. ............................................ 113,000 522,625
Teekay Shipping Corp. .................................................. 34,000 1,115,625
Tidewater Inc. ......................................................... 46,000 1,368,500
-----------
5,836,531
-----------
TOTAL COMMON STOCK (COST $100,606,521) ................................. 88,969,511
-----------
PRINCIPAL
AMOUNT
------
BONDS .9%
(d) CORPORATE BONDS .1%
Hechinger Co., senior notes, 6.95%, 10/15/03
(COST $334,590) ....................................................... $500,000 42,500
-----------
(a,f) CONVERTIBLE BONDS .8%
SPACEHAB Inc., cvt. sub. notes, 144A, 8.00%, 10/15/07
(COST $1,000,000) ..................................................... 1,000,000 740,000
-----------
TOTAL BONDS (COST $1,334,590) .......................................... 782,500
-----------
TOTAL LONG TERM INVESTMENTS (COST $101,941,111) ........................ 89,752,011
-----------
SHARES
------
SHORT TERM INVESTMENTS 2.7%
(e) Franklin Institutional Fiduciary Trust Money
Market Portfolio (COST $2,452,350) ................................... 2,452,350 2,452,350
-----------
TOTAL INVESTMENTS (COST $104,393,461) 100.5% ........................... 92,204,361
OTHER ASSETS, LESS LIABILITIES (.5)% ................................... (429,341)
-----------
NET ASSETS 100.0% ...................................................... $91,775,020
===========
</TABLE>
(a) Non-income producing
(d) See Note 6 regarding defaulted securities.
(e) The Franklin Institutional Fiduciary Trust Money Market Portfolio is managed
by Franklin Advisers Inc.
(f) See Note 7 regarding restricted securities.
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP FRANKLIN
INVESTMENT FUND VALUE FUND VALUE FUND
-----------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities:
Cost - Unaffiliated issuers ......... $ 614,210,570 $ 76,162,005 $ 104,393,461
Cost - Non-controlled affiliated
issuers ........................... 341,792,171 27,330,979 --
=====================================================
Value - Unaffiliated issuers ........ 658,600,971 72,691,997 92,204,361
Value - Non-controlled affiliated
issuers ........................... 349,257,121 23,115,241 --
Receivables:
Investment securities sold .......... 767,978 7,575 1,079,441
Capital shares sold ................. 1,062,964 201,713 213,158
Dividends and interest .............. 317,532 15,400 53,616
Other assets ......................... 85,600 56,500 518
-----------------------------------------------------
Total assets .................... 1,010,092,166 96,088,426 93,551,094
-----------------------------------------------------
Liabilities:
Payables:
Investment securities purchased ..... 413,065 18,504 35,316
Capital shares redeemed ............. 24,266,661 258,924 1,460,050
Affiliates .......................... 759,454 112,459 174,326
Shareholders ........................ 308,362 49,275 85,733
Other liabilities .................... 98,751 368 20,649
-----------------------------------------------------
Total liabilities ............... 25,846,293 439,530 1,776,074
-----------------------------------------------------
Net assets, at value ........... $ 984,245,873 $ 95,648,896 $ 91,775,020
=====================================================
Net assets consist of:
Undistributed net investment income
(loss) ............................. $ 1,087,561 $ 126,034 $ (83,030)
Net unrealized appreciation
(depreciation) ..................... 51,855,008 (7,685,746) (12,189,133)
Accumulated net realized gain (loss).. 26,739,739 2,114,920 (30,140,921)
Capital shares ....................... 904,563,565 101,093,688 134,188,104
-----------------------------------------------------
Net assets, at value ........... $ 984,245,873 $ 95,648,896 $ 91,775,020
=====================================================
</TABLE>
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP FRANKLIN
INVESTMENT FUND VALUE FUND VALUE FUND
------------------------------------------------------
CLASS A:
<S> <C> <C> <C>
Net assets, at value ................. $ 984,245,873 $ 95,648,896 $ 59,539,424
======================================================
Shares outstanding ................... 31,715,666 5,485,892 3,136,094
======================================================
Net asset value per share* ........... $ 31.03 $ 17.44 $ 18.99
======================================================
Maximum offering price per share
(net asset value per share / 98.50%,
94.25%, 94.25%, respectively) ...... $ 31.50 $ 18.50 $ 20.15
======================================================
CLASS B:
Net assets, at value ................. -- -- $ 1,993,310
======================================================
Shares outstanding ................... -- -- 105,945
======================================================
Net asset value and maximum offering -- -- $ 18.81
price per share* ................... ======================================================
CLASS C:
Net assets, at value ................. -- -- $ 27,004,582
======================================================
Shares outstanding ................... -- -- 1,449,884
======================================================
Net asset value per share* ........... -- -- $ 18.63
======================================================
Maximum offering price per share
(net asset value per share / 99.00%) -- -- $ 18.82
======================================================
ADVISOR CLASS:
Net assets, at value ................. -- -- $ 3,237,704
======================================================
Shares outstanding ................... -- -- 168,674
======================================================
Net asset value and maximum offering
price per share .................... -- -- $ 19.20
======================================================
</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, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP VALUE
INVESTMENT FUND VALUE FUND FUND
------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends+
Unaffiliated issuers ............................. $ 7,763,332 $ 679,671 $ 689,025
Non-controlled affiliated issuers (Note 8) ....... 1,881,338 157,350 --
Interest .......................................... 1,247,885 -- 40,005
------------------------------------------------
Total investment income ...................... 10,892,555 837,021 729,030
------------------------------------------------
Expenses:
Management fees (Note 3) .......................... 2,533,871 384,003 336,621
Distribution fees (Note 3)
Class A .......................................... 1,336,604 130,229 91,835
Class B .......................................... -- -- 7,779
Class C .......................................... -- -- 134,973
Transfer agent fees (Note 3) ...................... 1,085,014 151,813 155,530
Custodian fees .................................... 22,159 1,100 132
Reports to shareholders ........................... 96,582 16,174 24,835
Registration and filing fees ...................... 115,650 18,405 52,673
Professional fees ................................. 24,197 3,982 2,142
Trustees' fees and expenses ....................... 22,245 2,392 4,444
Other ............................................. 14,194 2,889 1,096
------------------------------------------------
Total expenses ............................... 5,250,516 710,987 812,060
------------------------------------------------
Net investment income (loss) ................ 5,642,039 126,034 (83,030)
------------------------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments
Unaffiliated issuers ............................ (3,337,345) 2,542,750 (892,715)
Non-controlled affiliated issuers (Note 8) ...... 30,836,313 (426,480) --
Closed-end funds distributions .................. 1,151,430 -- --
Foreign currency transactions .................... (166,193) -- --
------------------------------------------------
Net realized gain (loss) ..................... 28,484,205 2,116,270 (892,715)
Net unrealized appreciation (depreciation) on:
Investments ...................................... 17,894,727 1,097,040 9,087,011
Translation of assets and liabilities
denominated in foreign currencies ............. 53,243 -- (48)
------------------------------------------------
Net unrealized appreciation .................. 17,947,970 1,097,040 9,086,963
------------------------------------------------
Net realized and unrealized gain ................... 46,432,175 3,213,310 8,194,248
------------------------------------------------
Net increase in net assets resulting from operations $ 52,074,214 $ 3,339,344 $ 8,111,218
================================================
</TABLE>
+ Net of foreign taxes and fees of $18,336 and $1,378 for the Franklin Balance
Sheet Investment Fund and the 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, 2000 (UNAUDITED)
AND THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
Franklin Balance Franklin MicroCap
Sheet Investment Fund Value Fund
-------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, 2000 October 31, 1999 April 30, 2000 October 31, 1999
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income (loss) ................. $ 5,642,039 $ 16,294,986 $ 126,034 $ (73,394)
Net realized gain from investments and
foreign currency transactions ............... 28,484,205 8,435,693 2,116,270 9,110,832
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities denominated in
foreign currencies .......................... 17,947,970 (33,780,186) 1,097,040 (9,966,758)
-------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............... 52,074,214 (9,049,507) 3,339,344 (929,320)
Distributions to shareholders from:
Net investment income ........................ (4,995,010) (18,737,781) -- --
Net realized gains ........................... (10,253,110) (53,832,197) (9,054,566) (13,333,988)
-------------------------------------------------------------------------------
Total distributions to shareholders ........... (15,248,120) (72,569,978) (9,054,566) (13,333,988)
Capital share transactions (Note 2) ........... (218,358,996) (219,808,908) (14,634,971) (45,372,974)
-------------------------------------------------------------------------------
Net decrease in net assets ............... (181,532,902) (301,428,393) (20,350,193) (59,636,282)
Net assets:
Beginning of period ........................... 1,165,778,775 1,467,207,168 115,999,089 175,635,371
-------------------------------------------------------------------------------
End of period ................................. $ 984,245,873 $1,165,778,775 $ 95,648,896 $ 115,999,089
===============================================================================
Undistributed net investment income included
in net assets:
End of period ................................ $ 1,087,561 $ 440,532 $ 126,034 $ --
===============================================================================
</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, 2000 (UNAUDITED)
AND THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
FRANKLIN VALUE FUND
----------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2000 OCTOBER 31, 1999
----------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment loss ......................................... $ (83,030) $ (513,905)
Net realized loss from investments and foreign currency
transactions ............................................. (892,715) (29,248,166)
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies .. 9,086,963 24,916,452
----------------------------------
Net increase (decrease) in net assets resulting from
operations ............................................ 8,111,218 (4,845,619)
Distributions to shareholders from:
Net realized gains:
Class A .................................................... -- (484,796)
Class C .................................................... -- (215,275)
Advisor Class .............................................. -- (13,287)
----------------------------------
Total distributions to shareholders .......................... -- (713,358)
Capital share transactions: (Note 2)
Class A ..................................................... (11,664,552) (28,835,655)
Class B ..................................................... 535,472 1,378,201
Class C ..................................................... (5,482,343) (9,739,449)
Advisor Class ............................................... 10,203 (1,699,686)
----------------------------------
Total capital share transactions ............................. (16,601,220) (38,896,589)
Net decrease in net assets .............................. (8,490,002) (44,455,566)
Net assets:
Beginning of period .......................................... 100,265,022 144,720,588
================================
End of period ................................................ $ 91,775,020 $ 100,265,022
================================
Undistributed net investment loss included in net assets:
End of period ................................................ $ (83,030) $--
================================
</TABLE>
See notes to financial statements.
FRANKLIN VALUE INVESTORS TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Value Investors Trust (the Trust) is registered under the Investment
Company Act of 1940 as a non-diversified, open-end investment company,
consisting of three series (the Funds). The Funds' investment objectives are
growth and income.
Effective June 1, 2000, the Trust began offering shares of the Franklin Large
Cap Value Fund.
The following summarizes the Funds' significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. 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.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
c. 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.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
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.)
e. 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. Each
class of shares differs by its initial sales load, distribution fees, voting
rights on matters affecting a single class and its exchange privilege.
CLASS A CLASS A, CLASS B, CLASS C & ADVISOR CLASS
--------------------------------------------------------------------------------
Franklin Balance Sheet Franklin Value Fund
Investment Fund
Franklin Microcap Value Fund
At April 30, 2000, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
FRANKLIN BALANCE FRANKLIN MICROCAP
SHEET INVESTMENT FUND VALUE FUND
--------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Six months ended April 30, 2000
Shares sold ..................................... 4,407,571 $132,832,118 920,466 $16,117,014
Shares issued in reinvestment of distributions .. 473,606 14,022,303 482,226 8,120,320
Shares redeemed ................................. (12,081,993) (365,213,417) (2,219,056) (38,872,305)
--------------------------------------------------------------------
Net decrease .................................... (7,200,816) $(218,358,996) (816,364) $(14,634,971)
=====================================================================
Year ended October 31, 1999
Shares sold ..................................... 13,927,778 $431,957,836 867,659 $16,807,823
Shares issued in reinvestment of distributions .. 2,197,329 67,192,593 644,741 12,063,077
Shares redeemed ................................. (23,260,066) (718,959,337) (3,876,306) (74,243,874)
--------------------------------------------------------------------
Net decrease .................................... (7,134,959) $(219,808,908) (2,363,906) $(45,372,974)
=====================================================================
CLASS B SHARES:
Six months ended April 30, 2000
Shares sold .....................................
Shares redeemed .................................
Net increase ....................................
Year ended October 31, 1999*
Shares sold .....................................
Shares redeemed .................................
Net increase ....................................
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN
VALUE FUND
--------------------------------------------------------------------------------------
SHARES AMOUNT
--------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES:
Six months ended April 30, 2000
Shares sold ..................................... 1,546,674 $27,506,801
Shares issued in reinvestment of distributions .. -- --
Shares redeemed ................................. (2,220,094) (39,171,353)
-------------------------------
Net decrease .................................... (673,420) $(11,664,552)
===============================
Year ended October 31, 1999
Shares sold ..................................... 1,856,763 $34,066,206
Shares issued in reinvestment of distributions .. 25,433 439,189
Shares redeemed ................................. (3,538,676) (63,341,050)
-------------------------------
Net decrease .................................... (1,656,480) $(28,835,655)
===============================
CLASS B SHARES:
Six months ended April 30, 2000
Shares sold ..................................... 41,539 $ 728,077
Shares redeemed ................................. (10,749) (192,605)
-------------------------------
Net increase .................................... 30,790 $ 535,472
===============================
Year ended October 31, 1999*
Shares sold ..................................... 77,515 $1,420,965
Shares redeemed ................................. (2,360) (42,764)
-------------------------------
Net increase .................................... 75,155 $1,378,201
===============================
</TABLE>
*For the period January 1, 1999 (effective date) to October 31, 1999.
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 C SHARES:
Six months ended April 30, 2000
Shares sold 306,231 $ 5,287,310
Shares redeemed (625,850) (10,769,653)
----------------------------------
Net decrease (319,619) $ (5,482,343)
==================================
Year ended October 31, 1999
Shares sold 653,697 $11,754,271
Shares issued in reinvestment of distributions 11,693 200,090
Shares redeemed (1,235,879) (21,693,810)
----------------------------------
Net decrease (570,489) $ (9,739,449)
==================================
ADVISOR CLASS SHARES:
Six months ended April 30, 2000
Shares sold 18,294 $ 331,101
Shares redeemed (18,024) (320,898)
----------------------------------
Net increase 270 $ 10,203
==================================
Year ended October 31, 1999
Shares sold 45,867 $ 843,626
Shares issued in reinvestment of distributions 758 13,180
Shares redeemed (140,454) (2,556,492)
----------------------------------
Net decrease (93,829) $ (1,699,686)
==================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Trust are also officers and/or directors of
Franklin Advisory Services, LLC (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, up to and including $250 million
.450% Over $250 million, up to and including $10 billion
Fees are further reduced on net assets over $10 billion.
The Franklin MicroCap Value Fund pays an investment management fee to Advisory
Services of .750% per year of the average daily net assets of the fund.
The Franklin Value Fund pays an investment management fee to Advisory Services
based on the average net assets of the fund as follows:
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
--------------------------------------------------------------------------------
.750% First $500 million
.625% Over $500 million, up to and including $1 billion
.500% Over $1 billion
For the Franklin MicroCap Value Fund and the Franklin Value Fund, management
fees were reduced on assets invested in the Franklin Institutional Fiduciary
Trust Money Market Portfolio.
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 Funds' 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
BALANCE SHEET MICROCAP FRANKLIN
INVESTMENT FUND VALUE FUND VALUE FUND
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net commissions received (paid) ........... $(533,493) $12,606 $(63,911)
Contingent deferred sales charges ......... $ 1,710 $ 447 $20,011
</TABLE>
The Funds paid transfer agent fees of $1,392,357, of which $815,299 was paid to
Investor Services.
Included in professional fees are legal fees of $7,856 that were paid to a law
firm in which a partner is an officer of the Funds.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES
At October 31, 1999, the Franklin Value Fund had tax basis capital losses of
$29,248,206 which may be carried over to offset future capital gains. Such
losses expire in 2007.
At April 30, 2000, the net unrealized appreciation (depreciation) based on the
cost of investments for income tax purposes was as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP FRANKLIN
INVESTMENT FUND VALUE FUND VALUE FUND
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments at cost ........................... $957,746,881 $103,492,984 $104,472,575
============ ============ ============
Unrealized appreciation ....................... $216,429,140 $ 13,796,712 $ 11,287,142
Unrealized depreciation ...................... (166,317,929) (21,482,458) (23,555,356)
------------ ------------ ------------
Net unrealized appreciation (depreciation) .... $ 50,111,211 $ (7,685,746) $(12,268,214)
============ ============ ============
</TABLE>
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
Net realized capital gains and losses 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, 2000 were as follows:
FRANKLIN FRANKLIN
BALANCE SHEET MICROCAP FRANKLIN
INVESTMENT FUND VALUE FUND VALUE FUND
--------------------------------------------------------------------------------
Purchases .................. $ 25,753,737 $ 1,270,618 $20,089,832
Sales ...................... $208,686,871 $25,246,650 $36,568,596
6. DEFAULTED SECURITIES
At April 30, 2000, the Franklin Balance Sheet Investment Fund and Franklin Value
Fund held defaulted securities with a value aggregating $595,000 and $42,500,
representing .1% of each of the fund's net assets. For information as to
specific securities, see the accompanying Statement of Investments.
For financial reporting purposes, the Funds discontinue accruing income on
defaulted bonds and provide an estimate for losses on interest receivable.
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
7. RESTRICTED SECURITIES
The Funds may purchase securities through a private offering that generally
cannot be resold to the public without prior registration under the Securities
Act of 1933. The costs of registering such securities are paid by the issuer.
Restricted securities held at April 30, 2000 were as follows:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT ISSUER ACQUISITION DATE COST VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANKLIN VALUE FUND
$1,000,000 SPACEHAB Inc., cvt. sub. notes, 144A, 8.00%, 10/15/07 (.8% of Net Assets) .... 10/15/97 $1,000,000 $740,000
</TABLE>
8. 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", including dividend
income and net realized capital gains and losses at April 30, 2000 were as
follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES HELD NUMBER OF
AT BEGINNING GROSS GROSS SHARES HELD AT
NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANKLIN BALANCE SHEET INVESTMENT FUND
ACMAT Corp., A ......................... 295,000 -- 1,500 293,500
Allen Organ Co., B ..................... 83,000 -- 10,000 73,000
American Pacific Corp. ................. 421,100 -- 7,100 414,000
Audiovox Corp., A ...................... 1,200,000 -- 910,000 290,000
Aztar Corp. ............................ 3,250,000 -- 275,000 2,975,000
Castle & Cooke Inc. .................... 1,729,000 -- 229,000 1,500,000
Champps Entertainment Inc. ............. 985,000 133,000 18,000 1,100,000
Charming Shoppes Inc. .................. 6,000,000 -- 800,000 5,200,000
Cherry Corp., B ........................ 654,900 -- 54,900 600,000
Chic By H.I.S. Inc. .................... 756,000 -- -- 756,000
Commonwealth Industries Inc. ........... 1,174,300 -- 74,300 1,100,000
Crown Central Petroleum Corp., B ....... 397,800 -- 149,800 248,000
Cyrk Inc. .............................. 1,150,000 -- 50,000 1,100,000
Delta Woodside Industries Inc. ......... 2,283,500 -- 43,500 2,240,000
Designs Inc. ........................... 1,190,000 -- -- 1,190,000
DIMON Inc. ............................. 2,145,000 91,500 -- 2,236,500
Echelon International Corp. Inc. ....... 408,700 -- 408,700 --
Ecology & Environment Inc., A .......... 235,000 -- 33,600 201,400
ESCO Electronics Corp. ................. 800,000 -- 190,000 610,000
Fidelity Bancorp Inc. .................. 128,300 -- -- 128,300
Fred's Inc. ............................ 969,000 -- 29,000 940,000
Garan Inc. ............................. 285,100 -- 5,100 280,000
Government Technology Services Inc. .... 194,500 448,500 154,000 489,000
</TABLE>
<TABLE>
<CAPTION>
NET REALIZED
VALUE AT DIVIDEND CAPITAL GAINS
NAME OF ISSUER END OF PERIOD INCOME (LOSSES)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANKLIN BALANCE SHEET INVESTMENT FUND
ACMAT Corp., A ......................... $ 2,421,375 $ -- $ 2,249
Allen Organ Co., B ..................... 4,421,063 23,240 173,731
American Pacific Corp. ................. 2,898,000 -- (1,651)
Audiovox Corp., A ...................... * -- 27,236,685
Aztar Corp. ............................ 35,514,063 -- 576,014
Castle & Cooke Inc. .................... 27,187,500 -- (602,636)
Champps Entertainment Inc. ............. 4,675,000 -- (66,102)
Charming Shoppes Inc. .................. 35,100,000 -- 1,753,001
Cherry Corp., B ........................ 10,800,000 -- 232,438
Chic By H.I.S. Inc. .................... 70,837 -- --
Commonwealth Industries Inc. ........... 8,250,000 110,000 (373,050)
Crown Central Petroleum Corp., B ....... * -- (1,327,460)
Cyrk Inc. .............................. 9,693,750 -- (92,679)
Delta Woodside Industries Inc. ......... 4,480,000 -- (280,935)
Designs Inc. ........................... 1,413,125 -- --
DIMON Inc. ............................. 5,311,688 219,075 --
Echelon International Corp. Inc. ....... * -- 4,051,851
Ecology & Environment Inc., A .......... 1,132,875 37,216 (101,646)
ESCO Electronics Corp. ................. * -- 505,249
Fidelity Bancorp Inc. .................. 2,245,250 30,792 --
Fred's Inc. ............................ 14,805,000 95,945 74,997
Garan Inc. ............................. 6,055,000 369,355 61,272
Government Technology Services Inc. .... 1,573,969 -- 165,446
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (CONT.)
<TABLE>
<CAPTION>
NUMBER OF
SHARES HELD NUMBER OF
AT BEGINNING GROSS GROSS SHARES HELD AT
NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANKLIN BALANCE SHEET INVESTMENT FUND (CONT.)
Haggar Corp. ................................. 827,000 -- 227,000 600,000
Handleman Co. ................................ 1,850,000 260,600 50,000 2,060,600
Hardinge Inc. ................................ 430,000 90,000 -- 520,000
Insteel Industries Inc. ...................... 570,000 -- 10,000 560,000
International Shipholding Corp. .............. 587,900 -- 17,900 570,000
Jacobson Stores Inc. ......................... 298,100 86,200 -- 384,300
Jan Bell Marketing Inc. ...................... 1,251,400 -- -- 1,251,400
Kaneb Services Inc. .......................... 3,190,000 -- 197,500 2,992,500
KLLM Transport Services Inc. ................. 295,900 -- 50,900 245,000
Maynard Oil Co. .............................. 260,000 -- -- 260,000
Merchants Group Inc. ......................... 257,800 -- -- 257,800
Nash-Finch Co. ............................... 950,000 -- 55,000 895,000
Nashua Corp. ................................. 299,100 -- 50,000 249,100
Pitt-Des Moines Inc. ......................... 446,500 -- 26,500 420,000
Professionals Group Inc. ..................... 463,500 46,350 -- 509,850
Pulaski Furniture Corp. ...................... 192,000 -- -- 192,000
SCPIE Holdings Inc. .......................... 559,000 -- 15,000 544,000
Standard Microsystems Corp. .................. 1,315,000 -- 215,000 1,100,000
Stewart Information Services Corp. ........... 780,000 -- -- 780,000
Syms Corp. ................................... 1,443,200 -- -- 1,443,200
VICORP Restaurants Inc. ...................... 606,700 -- 119,637 487,063
Wolohan Lumber Co. ........................... 520,000 -- -- 520,000
TOTAL NON-CONTROLLED AFFILIATED ISSUERS .....
FRANKLIN MICROCAP VALUE FUND
ACMAT Corp., A ............................... 150,000 -- -- 150,000
Allou Health & Beauty Care Inc., A ........... 300,000 -- 41,000 259,000
Art's-Way Manufacturing Co. Inc. ............. 120,500 -- -- 120,500
Athey Products Corp. ......................... 198,000 -- -- 198,000
Atlantic Tele-Network Inc. ................... 270,000 -- 30,000 240,000
ECC International Corp. ...................... 682,000 -- 112,000 570,000
Espey Manufacturing & Electronics Corp. ...... 90,000 -- 10,000 80,000
GZA GeoEnvironmental Technologies Inc. ....... 310,000 -- 78,000 232,000
Harding Lawson Associates Group Inc. ......... 300,900 -- 129,900 171,000
Kentucky Electric Steel Inc. ................. 450,000 -- 20,000 430,000
Maine Public Service Co. ..................... 118,000 -- 8,000 110,000
Maynard Oil Co. .............................. 290,000 -- 34,000 256,000
Roy F. Weston Inc., A ........................ 633,000 -- 33,000 600,000
S&K Famous Brands Inc. ....................... 250,000 -- -- 250,000
</TABLE>
<TABLE>
<CAPTION>
NET REALIZED
VALUE AT DIVIDEND CAPITAL GAINS
NAME OF ISSUER END OF PERIOD INCOME (LOSSES)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANKLIN BALANCE SHEET INVESTMENT FUND (CONT.)
Haggar Corp. ................................. $ 7,837,500 $ 69,975 $ (795,780)
Handleman Co. ................................ 24,727,200 -- 411,640
Hardinge Inc. ................................ 5,850,000 138,950 --
Insteel Industries Inc. ...................... 3,255,000 67,200 6,497
International Shipholding Corp. .............. 4,595,625 71,875 (103,273)
Jacobson Stores Inc. ......................... 1,981,547 -- --
Jan Bell Marketing Inc. ...................... 3,675,988 -- --
Kaneb Services Inc. .......................... 17,019,844 -- (71,581)
KLLM Transport Services Inc. ................. 1,990,625 -- (262,739)
Maynard Oil Co. .............................. 3,315,000 -- --
Merchants Group Inc. ......................... 4,181,194 51,560 --
Nash-Finch Co. ............................... 6,600,625 167,850 (667,769)
Nashua Corp. ................................. * -- (268,908)
Pitt-Des Moines Inc. ......................... 10,080,000 159,905 (81,387)
Professionals Group Inc. ..................... 9,017,972 -- --
Pulaski Furniture Corp. ...................... 4,224,000 65,280 --
SCPIE Holdings Inc. .......................... 16,082,000 99,120 51,102
Standard Microsystems Corp. .................. 14,300,000 -- 193,492
Stewart Information Services Corp. ........... 11,115,000 31,200 --
Syms Corp. ................................... 5,772,800 -- --
VICORP Restaurants Inc. ...................... 10,289,206 -- 438,245
Wolohan Lumber Co. ........................... 5,297,500 72,800 --
---------------------------------------------------
TOTAL NON-CONTROLLED AFFILIATED ISSUERS ..... $349,257,121 $ 1,881,338 $ 30,836,313
=============------------------------==============
FRANKLIN MICROCAP VALUE FUND
ACMAT Corp., A ............................... $ 1,237,500 $ -- $ --
Allou Health & Beauty Care Inc., A ........... * -- (9,215)
Art's-Way Manufacturing Co. Inc. ............. 399,156 -- --
Athey Products Corp. ......................... 420,750 -- --
Atlantic Tele-Network Inc. ................... 2,340,000 80,100 (175,573)
ECC International Corp. ...................... 2,066,250 -- (25,495)
Espey Manufacturing & Electronics Corp. ...... 1,200,000 8,850 (27,624)
GZA GeoEnvironmental Technologies Inc. ....... 1,334,000 -- (10,098)
Harding Lawson Associates Group Inc. ......... * -- 156,343
Kentucky Electric Steel Inc. ................. 1,021,250 -- (88,127)
Maine Public Service Co. ..................... 2,062,500 68,400 (10,332)
Maynard Oil Co. .............................. 3,264,000 -- 59,442
Roy F. Weston Inc., A ........................ 1,725,000 -- (93,060)
S&K Famous Brands Inc. ....................... 1,812,500 -- --
</TABLE>
FRANKLIN VALUE INVESTORS TRUST
Notes to Financial Statements (unaudited) (continued)
8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO ISSUERS (CONT.)
<TABLE>
<CAPTION>
NUMBER OF
SHARES HELD NUMBER OF
AT BEGINNING GROSS GROSS SHARES HELD AT
NAME OF ISSUER OF PERIOD ADDITIONS REDUCTIONS END OF PERIOD
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRANKLIN MICROCAP VALUE FUND (CONT.) ......
Seneca Foods Corp., A ..................... 191,600 -- -- 191,600
Temtex Industries Inc. .................... 265,500 -- -- 265,500
TransFinancial Holdings Inc. .............. 300,000 -- 45,500 254,500
Village Super Market Inc., A .............. 108,500 -- 3,500 105,000
TOTAL NON-CONTROLLED AFFILIATED ISSUERS
</TABLE>
<TABLE>
<CAPTION>
NET REALIZED
VALUE AT DIVIDEND CAPITAL
NAME OF ISSUER END OF PERIOD INCOME LOSSES
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANKLIN MICROCAP VALUE FUND (CONT.) ......
Seneca Foods Corp., A ..................... $2,107,600 $ -- $ --
Temtex Industries Inc. .................... 290,391 -- --
TransFinancial Holdings Inc. .............. 413,563 -- (194,239)
Village Super Market Inc., A .............. 1,420,781 -- (8,502)
-----------------------------------------------
TOTAL NON-CONTROLLED AFFILIATED ISSUERS $23,115,241 $ 157,350 $ (426,480)
===============================================
</TABLE>
*As of April 30, 2000, no longer an affiliate.
