<PAGE> 1
TEMPLETON CAPITAL
ACCUMULATOR FUND, INC.
Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800-342-5236
This report must be preceded or accompanied by the prospectus of Templeton
Capital Accumulator Fund, Inc., which contains more complete information
including charges and expenses. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors, as well as investment decisions by the
investment manager which will not always be profitable or wise. The Fund and its
investors are not protected from such losses by the investment manager.
Therefore, investors who cannot accept this risk should not invest in shares of
the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
[BACKGROUND GRAPHIC OF WORLD GLOBE]
TEMPLETON
CAPITAL
ACCUMULATOR
FUND, INC.
Annual Report
August 31, 1996
[FRANKLIN TEMPLETON LOGO]
[Recycle Logo] TL450 A96 10/96
<PAGE> 2
TEMPLETON CAPITAL
ACCUMULATOR FUND
[PHOTOGRAPH]
GARY P. MOTYL
President
Templeton Capital
Accumulator Fund
YOUR FUND'S OBJECTIVE:
The Templeton Capital Accumulator Fund seeks long-term capital growth by
investing in a portfolio primarily composed of common stocks in various nations
throughout the world.
October 15, 1996
Dear Shareholder:
We are pleased to bring you this annual report of the Templeton Capital
Accumulator Fund covering the 12 months ended August 31, 1996.
During the period under review, global equity markets were characterized by a
high degree of volatility. In the first half of the fiscal year, many of these
markets performed strongly due to relatively low interest rates, subdued
inflation, and overall economic stability. During the latter half, however,
rapid changes in interest rates, variations in corporate profits, and shifts in
the domestic and foreign political landscapes contributed to market uncertainty.
Within this environment, the Fund provided a total return of 16.50%, as shown in
the Performance Summary on page 6, outperforming the Morgan Stanley Capital
International (MSCI) World Index, which posted a total return of 13.10% for the
period.
1
<PAGE> 3
- --------------------------------------------------------------------------
TEMPLETON CAPITAL ACCUMULATOR FUND
Geographic Distribution on 8/31/96
Based on Total Net Assets
<TABLE>
<S> <C>
European Stocks 46.9%
Asian Stocks 9.0%
Australian &
New Zealand Stocks 7.2%
United States Stocks 19.3%
Latin American Stocks 3.6%
Canadian Stocks 0.5%
Short-Term Obligations
& Other Net Assets 13.5%
</TABLE>
In the U.S., falling interest rates, moderate economic growth, and massive cash
inflows into mutual funds helped to buoy equities during the first six months of
the period. Later, when the economy strengthened and interest rates rose, the
U.S. stock market experienced a sharp divergence of performance among sectors.
Many small-company stocks, computer system stocks, and long-distance
telecommunication stocks suffered severe declines, while many banking and energy
stocks posted impressive gains. Despite these fluctuations, U.S. equity markets
posted an excellent return for the fiscal year.
In Europe, economic growth was essentially flat, as the countdown toward
monetary and economic union continued at a slower-than-expected pace. However,
order inflows from export-related areas were strong, and many companies posted
respectable earnings, thanks to cost reduction programs which offset the effects
of poor revenue growth. Stock markets turned in mixed performances, with the
equity markets of the Netherlands, Sweden, and Switzerland performing well,
while Italian and Austrian stocks delivered lackluster returns.
The Japanese economy continued to be affected by problems in the banking and
real estate sectors, and despite a weaker yen, by intense competition from
exporters in developing Asian economies. It appeared to recover toward the end
of the period, but Japanese stocks remain the world's most expensive, and we do
not anticipate purchasing any unless their valuations fall substantially.
Throughout the fiscal year, we took profits in a number of stocks. Our shares in
U.S. energy companies such as Amerada Hess Corp., Valero Energy Corp., Sun Co.,
Inc., and USX-Marathon Group, Inc. were
2
<PAGE> 4
TEMPLETON CAPITAL
ACCUMULATOR FUND
Top 10 Equity Holdings on 8/31/96
Based on Total Net Assets
<TABLE>
<CAPTION>
% OF TOTAL
COMPANY, INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Telefonica de Espana SA
Telecommunications, Spain 1.6%
- --------------------------------------------------------------------------------
Sparbanken Sverige AB
Banking, Sweden 1.6%
- --------------------------------------------------------------------------------
Volvo AB, B
Automobiles, Sweden 1.4%
- --------------------------------------------------------------------------------
Fiat Spa
Automobiles, Italy 1.4%
- --------------------------------------------------------------------------------
Societe Elf Aquitaine SA
Energy Sources, France 1.3%
- --------------------------------------------------------------------------------
Dayton-Hudson Corp.
Merchandising, United States 1.3%
- --------------------------------------------------------------------------------
News Corporation Ltd.
Broadcasting & Publishing, Australia 1.3%
- --------------------------------------------------------------------------------
VEBA AG
Utilities, Electrical & Gas, Germany 1.3%
- --------------------------------------------------------------------------------
Nokia AB, A
Multi-Industry, Finland 1.2%
- --------------------------------------------------------------------------------
Electrolux AB, B
Appliances & Household Durables, Sweden 1.2%
- --------------------------------------------------------------------------------
</TABLE>
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 8 OF THIS REPORT.
sold for gains after they appreciated to our target prices. Strong price
increases prompted us to eliminate our holdings in Bayer AG, a major German
chemical and pharmaceutical firm, and Swedish Match, a consumer products company
recently spun off from Volvo AB. We also realized profits by reducing our
position in Brambles Industries Ltd., a major global transportation-related
company based in Australia.
During the period, we purchased shares in a number of companies that we believe
have growth opportunities. We initiated a position in Nokia AB, a Finnish
producer of cellular phones and related devices. Although its stock price had
been under pressure due to concerns about high inventories in certain product
lines, we felt this situation was temporary, and believe that the company's
long-term earnings prospects are positive. We also bought shares in Fiat Spa, a
large, Italian automobile manufacturer, which has introduced a broad array of
new models and appears to be well-positioned to gain market share in Europe and
in developing market countries. Other stocks added to the Fund's portfolio
included Bay Networks, Inc., a leading U.S. computer networking company, and
Guanshen Railway Company Ltd., a southern Chinese railroad.
This discussion reflects the strategies we employed for the Fund during the 12
months under review, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
and our evaluations, conclusions and decisions regarding portfolio holdings, may
change as new circumstances arise. Although past
3
<PAGE> 5
performance of a specific investment or sector cannot guarantee future
performance, such information can be useful in analyzing securities we purchase
or sell for the Fund.
Looking forward, we are optimistic about potential opportunities for the
Templeton Capital Accumulator Fund. We have expanded our staff of investment
professionals, and shall continue to implement, in a disciplined fashion, the
investment strategies that have served our shareholders over the long term.
Although the sustainability of U.S. economic growth and the prospects for a
rebound in Europe and Japan are uncertain, we believe that the Fund's diversity
should enable it to perform well in a variety of market conditions.
As always, we remind our shareholders that investments in foreign securities
involve special risks, which are heightened in developing markets, such as
adverse economic, social and political developments in the countries where the
Fund is invested, as well as currency and market volatility. While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. For example, the Hong Kong market has increased
535% in the last 15 years, but has suffered six declines of more than 20% during
that time.* Developing markets also involve risks associated with the relatively
small size and lesser liquidity of these markets. These special risks and other
considerations are discussed in the Fund's prospectus.
We thank you for your participation in the Templeton Capital Accumulator Fund,
and welcome any comments or suggestions you may have.
Sincerely,
/s/ Gary P. Motyl
- ----------------------------
Gary P. Motyl, CFA
President
Templeton Capital Accumulator Fund, Inc.
* SOURCE: BLOOMBERG. BASED ON QUARTERLY PERCENTAGE CHANGE OVER 15 YEARS ENDED
JUNE 30, 1996.
4
<PAGE> 6
PERFORMANCE SUMMARY
The Templeton Capital Accumulator Fund reported a total return of 16.50% for the
one-year period ended August 31, 1996. Total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains
distributions, and does not include the initial sales and creation charges.
While we expect market volatility in the short term, we have always maintained a
long-term perspective when managing the Fund and encourage shareholders to view
their investments in a similar manner. As you can see from the table on page 6,
the Fund has delivered a cumulative total return of more than 108% since
inception on March 1, 1991.
The price of the Fund's shares, as measured by net asset value, increased $1.11,
from $7.97 on August 31, 1995 to $9.08 on August 31, 1996. During this time,
shareholders received distributions of 14.75 cents ($0.1475) per share in
dividend income and 3 cents ($0.03) in long-term capital gains.+ Of course, past
performance is not predictive of future results, and distributions will vary
depending on income earned by the Fund, as well as any profits realized from the
sale of securities in the portfolio.
The graph on page 6 shows that, since inception, the Templeton Capital
Accumulator Fund has outperformed the unmanaged Morgan Stanley Capital
International (MSCI) World Index, which tracks 22 equity markets worldwide. You
can also see from the graph how an investment in the Fund over the same period
has kept your purchasing power ahead of inflation, as measured by the Consumer
Price Index (CPI). Please remember that the Fund's performance differs from that
of the MSCI because, among other things, the MSCI is not managed according to
any investment strategy, includes no sales and creation charges or management
expenses, and does not contain cash (the Fund generally carries a certain
percentage of cash at any given time). Of course, one cannot invest directly in
an index, and past performance is not predictive of future results.
+ PER SHARE AMOUNTS FOR ALL PERIODS PRIOR TO FEBRUARY 29, 1996, HAVE BEEN
RESTATED TO REFLECT A 2-FOR-1 STOCK DIVIDEND/SPLIT EFFECTIVE AT THE CLOSE OF
BUSINESS ON WEDNESDAY, MARCH 27, 1996.
5
<PAGE> 7
TEMPLETON CAPITAL ACCUMULATOR FUND
Total Return Index Comparison
$10,000 Investment (3/1/91 - 8/31/96)
<TABLE>
<CAPTION>
Date TCAP MSCI World CPI
<S> <C> <C> <C>
3/1/91 $10,000 $10,000 $10,000
3/31/91 9,960 9,707 10,015
4/30/91 10,050 9,785 10,030
5/31/91 10,249 10,008 10,060
6/30/91 9,841 9,391 10,089
7/31/91 10,299 9,836 10,104
8/31/91 10,378 9,807 10,134
9/30/91 10,408 10,066 10,178
10/31/91 10,441 10,231 10,194
11/30/91 10,219 9,787 10,223
12/31/91 10,700 10,501 10,230
1/31/92 10,944 10,309 10,246
2/29/92 11,096 10,133 10,283
3/31/92 11,005 9,658 10,335
4/30/92 11,238 9,794 10,349
5/31/92 11,613 10,186 10,364
6/30/92 11,349 9,846 10,401
7/31/92 11,268 9,873 10,423
8/31/92 11,106 10,115 10,452
9/30/92 11,076 10,024 10,482
10/31/92 10,945 9,754 10,518
11/30/92 11,079 9,931 10,533
12/31/92 11,411 10,013 10,526
1/31/93 11,557 10,048 10,577
2/28/93 11,953 10,288 10,614
3/31/93 12,474 10,887 10,651
4/30/93 12,776 11,393 10,681
5/31/93 13,234 11,658 10,696
6/30/93 13,151 11,562 10,711
7/31/93 13,380 11,803 10,711
8/31/93 14,339 12,346 10,741
9/30/93 14,318 12,120 10,764
10/31/93 15,027 12,455 10,808
11/30/93 14,635 11,753 10,815
12/31/93 15,921 12,330 10,815
1/31/94 17,093 13,145 10,845
2/28/94 16,752 12,977 10,881
3/31/94 16,006 12,420 10,918
4/30/94 16,198 12,806 10,934
5/31/94 16,389 12,841 10,941
6/30/94 15,889 12,806 10,979
7/31/94 16,603 13,052 11,008
8/31/94 17,274 13,446 11,052
9/30/94 16,944 13,095 11,082
10/31/94 17,158 13,471 11,090
11/30/94 16,540 12,889 11,104
12/31/94 16,348 13,017 11,104
1/31/95 16,045 12,824 11,149
2/28/95 16,393 13,014 11,193
3/31/95 16,639 13,644 11,230
4/30/95 17,076 14,123 11,267
5/31/95 17,603 14,245 11,290
6/30/95 17,749 14,244 11,312
7/31/95 18,320 14,959 11,312
8/31/95 17,861 14,629 11,342
9/30/95 18,275 15,057 11,364
10/31/95 17,837 14,822 11,402
11/30/95 18,212 15,340 11,394
12/31/95 18,768 15,791 11,386
1/31/96 19,169 16,079 11,453
2/29/96 19,455 16,181 11,490
3/31/96 19,753 16,453 11,550
4/30/96 20,624 16,843 11,595
5/31/96 20,876 16,859 11,617
6/30/96 20,899 16,947 11,624
7/31/96 20,165 16,351 11,646
8/31/96 20,807 16,542 11,668
</TABLE>
1. REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER THE PERIOD SHOWN,
ASSUMING REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE
IS NOT PREDICTIVE OF FUTURE RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
3. SOURCE: U.S. BUREAU OF LABOR STATISTICS.
TEMPLETON CAPITAL ACCUMULATOR FUND
Periods Ended 8/31/96
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year (3/1/91)
<S> <C> <C> <C>
Cumulative
Total Return(1) 16.50% 100.48% 108.07%
Average Annual
Total Return(2) 16.50% 14.92% 14.24%
Value of $10,000
Investment(3) $11,650 $20,048 $20,807
</TABLE>
1. CUMULATIVE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE SPECIFIED PERIODS, ASSUMING REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS.
2. AVERAGE ANNUAL TOTAL RETURN REPRESENTS THE AVERAGE ANNUAL CHANGE IN VALUE OF
AN INVESTMENT OVER THE INDICATED PERIODS.
3. THESE FIGURES REPRESENT THE VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE
FUND OVER THE SPECIFIED PERIODS.
NOTE: ALL TOTAL RETURN CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS AT NET ASSET VALUE. TOTAL RETURN CALCULATIONS DO NOT INCLUDE THE EFFECT OF
PAYING THE SALES AND CREATION CHARGES APPLICABLE TO PURCHASES OF FUND SHARES
THROUGH TEMPLETON CAPITAL ACCUMULATION PLANS. THESE CHARGES FOR THE FIRST YEAR
OF A PLAN CAN AMOUNT TO 50% OF THE TOTAL AMOUNT PAID DURING THE YEAR.
ACCORDINGLY, THE TOTAL RETURN CALCULATIONS SHOWN ABOVE ARE HIGHER THAN THE NET
TOTAL RETURNS OF AN INVESTMENT THROUGH PLANS TO WHICH THESE CHARGES APPLY.
PLEASE REFER TO THE PROSPECTUS FOR TEMPLETON CAPITAL ACCUMULATION PLANS FOR
INFORMATION REGARDING APPLICABLE CHARGES. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT YOUR SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR INITIAL COST. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
THE FUND'S MANAGER HAS AGREED IN ADVANCE TO WAIVE A PORTION OF ITS MANAGEMENT
FEES AND TO MAKE CERTAIN PAYMENTS TO REDUCE EXPENSES, WHICH INCREASES TOTAL
RETURN TO SHAREHOLDERS. IF THE MANAGER HAD NOT TAKEN THIS ACTION, THE FUND'S
TOTAL RETURN WOULD HAVE BEEN LOWER. THE FEE WAIVER MAY BE DISCONTINUED AT ANY
TIME, UPON NOTICE TO THE FUND'S BOARD OF DIRECTORS.
Under section 854(b)(2) of the Internal Revenue Code, the Templeton Capital
Accumulator Fund hereby designates 28.49% of its ordinary income dividends paid
by the Fund during the fiscal year ended August 31, 1996, as income qualifying
for the corporate dividends received deduction.
6
<PAGE> 8
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
------------------------------------------------
1996 1995 1994 1993 1992
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.97 $ 8.10 $ 6.87 $ 5.48 $ 5.21
-------- ------- ------- ------- ------
Income from investment operations:
Net investment income .19 .14 .09 .10 .08
Net realized and unrealized gain 1.10 .12 1.30 1.44 .28
-------- ------- ------- ------- ------
Total from investment operations 1.29 .26 1.39 1.54 .36
-------- ------- ------- ------- ------
Distributions:
Dividends from net investment income (.15) (.10) (.07) (.10) (.09)
Distributions from net realized gains (.03) (.29) (.09) (.05) --
-------- ------- ------- ------- ------
Total distributions (.18) (.39) (.16) (.15) (.09)
-------- ------- ------- ------- ------
Change in net asset value 1.11 (.13) 1.23 1.39 .27
-------- ------- ------- ------- ------
Net asset value, end of year $ 9.08 $ 7.97 $ 8.10 $ 6.87 $ 5.48
======== ======= ======= ======= ======
TOTAL RETURN 16.50% 3.40% 20.64% 29.11% 7.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000) $108,019 $65,538 $38,323 $18,365 $8,690
Ratio of expenses to average net assets 1.16% 1.34% 1.58% 1.91% 1.84%
Ratio of expenses, net of reimbursement, to average net assets 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets 2.56% 2.37% 1.58% 1.99% 2.06%
Portfolio turnover rate 11.08% 12.91% 15.25% 14.97% 16.42%
Average commission rate paid (per share) $ .0210
+ PER SHARE AMOUNTS FOR ALL PERIODS HAVE BEEN RESTATED TO REFLECT A 2-FOR-1 STOCK SPLIT EFFECTIVE MARCH 27, 1996.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 9
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 84.8%
- ------------------------------------------------------------------------------------------------------------------------
APPLIANCES & HOUSEHOLD DURABLES: 1.5%
Electrolux AB, B Swe. 22,250 $ 1,293,536
Fisher & Paykel Ltd. N.Z. 100,000 335,608
------------
1,629,144
- ------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES: 4.5%
* Ciadea SA Arg. 29,333 130,608
Fiat Spa Itl. 475,000 1,465,842
Ford Motor Co. U.S. 24,000 804,000
General Motors Corp. U.S. 20,000 995,000
Volvo AB, B Swe. 71,000 1,511,699
------------
4,907,149
- ------------------------------------------------------------------------------------------------------------------------
BANKING: 9.9%
ABN AMRO NV Neth. 15,000 819,332
* Abn Amro NV, trading cpn. Neth. 15,000 16,260
Australia & New Zealand Banking Group Ltd. Aus. 200,000 1,045,770
Banco Bilbao Vizcaya Sp. 20,000 840,423
Bank of Montreal Can. 10,000 245,551
Bankinter SA Sp. 7,500 847,813
Banque Nationale de Paris Fr. 21,000 756,361
Barclays PLC U.K. 22,100 314,166
BPI Socieda de Gestora de Participacoes Socias SA Port. 18,240 226,423
Fokus Bank AS Nor. 100,000 558,498
HSBC Holdings PLC H.K. 55,200 953,016
Korea Long Term Credit Bank Kor. 5,250 130,890
* Merita Ltd., A Fin. 600,000 1,274,298
NationsBank Corp. U.S. 5,800 493,725
* Philippine National Bank Phil. 16,170 270,066
PT Bank Bali, fgn. Indo. 49,500 102,509
PT Panin Bank, fgn. Indo. 140,100 137,588
Sparbanken Sverige AB, A Swe. 85,000 1,058,914
Sparbanken Sverige AB, A, 144A Swe. 51,800 645,315
------------
10,736,918
- ------------------------------------------------------------------------------------------------------------------------
BROADCASTING & PUBLISHING: 1.0%
News Corp. Ltd. Aus. 230,000 1,037,069
- ------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS: 1.4%
Pioneer International Ltd. Aus. 340,815 984,048
* Unione Cementi Marchino Emiliane (Unicem) Itl. 80,000 566,381
------------
1,550,429
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 10
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996 (cont.)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
BUSINESS & PUBLIC SERVICES: 4.3%
Esselte AB, B Swe. 40,000 $ 851,661
Lex Service PLC U.K. 165,000 1,003,411
Societe Generale de Surveillance
Holdings Ltd., br. Swtz. 460 1,075,250
Wheelabrator Technologies Inc. U.S. 76,000 1,130,500
WMX Technologies Inc. U.S. 18,000 569,250
------------
4,630,072
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS: 3.6%
Akzo Nobel NV Neth. 7,500 871,274
Great Lakes Chemical Corp. U.S. 11,000 632,500
Rhone-Poulenc SA, A Fr. 46,000 1,205,351
Solvay SA Bel. 2,000 1,169,236
------------
3,878,361
- ------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING & REPRODUCTION: 0.6%
* Bay Networks Inc U.S. 25,000 687,500
- ------------------------------------------------------------------------------------------------------------------------
ELECTRICAL & ELECTRONICS: 3.7%
ABB AG, br. Swtz. 652 803,590
Alcatel Alsthom SA Fr. 6,661 515,597
GP Batteries International Ltd. Sing. 56,000 156,800
* GP Batteries International Ltd., wts. Sing. 14,000 9,450
Hitachi Ltd. Jpn. 135,000 1,240,037
Motorola Inc. U.S. 10,000 533,750
Philips Electronics NV Neth. 21,940 741,243
------------
4,000,467
- ------------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS & INSTRUMENTS: 0.6%
Intel Corp. U.S. 8,000 638,500
- ------------------------------------------------------------------------------------------------------------------------
ENERGY SOURCES: 5.1%
* Barrett Resources Corp. U.S. 26,000 861,250
Hafslund ASA, B Nor. 36,000 227,455
Norsk Hydro AS Nor. 10,000 458,655
Royal Dutch Petroleum Co. Neth. 800 119,500
Saga Petroleum AS, B Nor. 49,070 677,482
Societe Elf Aquitane SA Fr. 20,000 1,456,484
Total SA, B Fr. 13,000 956,213
YPF Sociedad Anonima, ADR Arg. 37,500 792,188
------------
5,549,227
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 11
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: 1.5%
American Express Co. U.S. 6,050 $ 264,687
Axa SA Fr. 13,757 772,027
Onbancorp Inc. U.S. 18,000 580,500
------------
1,617,214
- ------------------------------------------------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS: 0.6%
Burns Philp & Co. Ltd. Aus. 438,800 649,102
Melco International Development Ltd. H.K. 29,900 9,764
------------
658,866
- ------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER: 6.4%
* Asia Pulp & Paper Co. Ltd., ADR Indo. 45,000 528,750
Boise Cascade Corp. U.S. 7,000 236,250
* Enso OY, R Fin. 70,400 601,218
Georgia-Pacific Corp. U.S. 12,000 892,500
Hansol Paper Co. Ltd., GDS Kor. 21,723 351,340
International Paper Co. U.S. 21,000 840,000
Maderas Y Sinteticos SA, ADR Chil. 16,000 226,000
* Mayr-Melnhof Karton AG Aust. 11,000 516,541
Portucel Industrial Empresa Product
Celulose, ADR, 144A Port. 49,100 332,722
PT Inti Indorayon Utama, fgn. Indo. 450,000 389,091
* Shorewood Packaging Corp. U.S. 27,500 467,500
Stora Kopparbergs Bergslags AB, B Swe. 90,000 1,257,107
Unipapel SA Sp. 12,000 215,698
------------
6,854,717
- ------------------------------------------------------------------------------------------------------------------------
HEALTH & PERSONAL CARE: 4.3%
Astra AB, B Swe. 20,000 827,501
Ciba-Geigy AG Swtz. 800 1,010,000
Internatio-Mueller NV Neth. 28,000 634,026
* Nycomed ASA, B Nor. 72,000 859,276
Windmere-Durable Holdings Inc. U.S. 90,000 1,282,500
------------
4,613,303
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS: 2.5%
BW/IP Inc. U.S. 31,000 561,875
Goodyear Tire & Rubber Co. U.S. 23,000 1,049,375
SKF AB, B Swe. 45,000 1,056,649
------------
2,667,899
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 12
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
INSURANCE: 3.7%
Aegon NV Neth. 17,500 $ 853,658
American International Group Inc. U.S. 10,250 973,750
Ing Groep NV Neth. 32,500 1,011,894
* Ing Groep NV, trading cpn. Neth. 32,500 16,245
Progressive Corp. Ohio U.S. 2,000 108,750
Skandia Foersaekrings AB, free Swe. 17,600 413,267
Swiss Reinsurance Co. Swtz. 605 653,904
------------
4,031,468
- ------------------------------------------------------------------------------------------------------------------------
MACHINERY & ENGINEERING: 1.1%
Sasib SPA, di Risp Itl. 388,802 689,957
VA Technologie AG, br., 144A Aust. 4,000 511,644
------------
1,201,601
- ------------------------------------------------------------------------------------------------------------------------
MERCHANDISING: 3.3%
Burton Group PLC U.K. 375,000 889,944
Dairy Farm International Holdings Ltd. H.K. 450,000 355,500
Dayton-Hudson Corp. U.S. 42,000 1,449,000
K Mart Corp. U.S. 60,000 600,000
* Sa Des Galeries Lafayette Fr. 898 257,116
------------
3,551,560
- ------------------------------------------------------------------------------------------------------------------------
METALS & MINING: 2.3%
Pechiney SA, A Fr. 30,000 1,255,862
SIG (Schweizerische Industrie Gesellschaft)
Holdings AG Swtz. 500 1,208,333
------------
2,464,195
- ------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS MATERIALS & COMMODITIES: 0.1%
* Golden Hope Plantations BHD, fgn. Mal. 4,000 6,449
- ------------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY: 4.0%
Cheung Kong Holdings Ltd. H.K. 160,000 1,122,535
Hutchison Whampoa Ltd. H.K. 101,500 614,316
Jardine Matheson Holdings Ltd. H.K. 62,336 392,717
Nokia AB, A Fin. 31,500 1,338,013
Swire Pacific Ltd., A H.K. 85,000 755,739
Swire Pacific Ltd., B H.K. 100,000 139,670
------------
4,362,990
- ------------------------------------------------------------------------------------------------------------------------
REAL ESTATE: 1.9%
Beacon Properties Corp U.S. 24,000 654,000
Carramerica Realty Corp. U.S. 26,000 637,000
</TABLE>
11
<PAGE> 13
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996 (cont.)
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
REAL ESTATE (cont.)
* Catellus Development Corp. U.S. 50,000 $ 475,000
* Fastighets AB Tornet, A Swe. 13,680 148,733
PT Jaya Properties, fgn. Indo. 99,000 138,439
------------
2,053,172
- ------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: 4.5%
Compania de Telecomunicaciones de Chile SA, ADR Chil. 4,500 439,875
Philippine Long Distance Telephone Co. Phil. 3,000 181,523
STET (Sta Finanziaria Telefonica Torino) SPA Itl. 297,100 944,563
Telecom Argentina Stet France SA, ADR Arg. 9,900 384,863
Telecomunicacoes Brasileiras SA, ADR, 144A Braz. 227 16,883
Telefonica de Argentina SA, B, ADR Arg. 26,600 635,075
Telefonica de Espana SA Sp. 95,500 1,773,817
Telmex-Telefonos de Mexico SA, L, ADR Mex. 15,000 493,125
------------
4,869,724
- ------------------------------------------------------------------------------------------------------------------------
TEXTILES & APPAREL: 2.5%
Dawson International PLC U.K. 265,000 273,072
* Fruit of the Loom Inc., A U.S. 22,500 624,375
Kellwood Co. U.S. 30,500 491,813
PT Indorama Synthetics, fgn. Indo. 220,400 531,708
Shaw Industries Inc. U.S. 53,000 795,000
------------
2,715,968
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: 5.1%
APL Ltd. U.S. 20,000 472,500
Brambles Industries Ltd. Aus. 70,000 1,046,561
Cathay Pacific Airways Ltd. H.K. 150,000 249,273
* Guangshen Railway Co. Ltd., ADR Chn. 25,000 478,125
Kvaerner Industrier AS, A Nor. 24,000 857,404
Qantas Airways Ltd., ADR, 144A Aus. 65,000 1,088,750
Shun Tak Holdings H.K. 598,000 351,878
Unitor AS Nor. 70,000 982,832
------------
5,527,323
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES ELECTRICAL & GAS: 3.6%
Endesa-Empresa Nacional de Electricidad SA Sp. 4,800 279,545
Evn Energie-Versorgung Niederoesterreich AG Aust. 4,800 651,677
Iberdrola SA Sp. 135,000 1,218,694
Nova Corp. Can. 36,200 321,431
VEBA AG Ger. 26,000 1,362,503
------------
3,833,850
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 14
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Investment Portfolio, August 31, 1996 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
WHOLESALE & INTERNATIONAL TRADE: 1.2%
Brierley Investments Ltd. N.Z. 1,200,000 $ 1,193,271
Sime Darby Hongkong Ltd. H.K. 90,000 94,859
------------
1,288,130
------------
TOTAL COMMON STOCKS (cost $75,693,566) 91,563,265
- ------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: 1.7%
- ------------------------------------------------------------------------------------------------------------------------
ABN Amro NV, conv., pfd. Neth. 333 17,086
Concessioni e Costruzioni Autostrade SPA, B, pfd Itl. 490,000 810,534
News Corp. Ltd., conv. pfd. Aus. 70,000 373,218
Telebras-Telecomunicacoes Brasileiras
SA, pfd., ADR Braz. 8,200 609,875
------------
TOTAL PREFERRED STOCKS (cost $1,209,788) 1,810,713
- ------------------------------------------------------------------------------------------------------------------------
PRINCIPAL IN
LOCAL CURRENCY**
- ------------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 15.4% (cost $16,695,937)
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 4.925% to 5.13% with
maturities to 11/21/96 U.S. 17,294,000 16,701,139
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 101.9% (cost $93,599,291) 110,075,117
OTHER ASSETS, LESS LIABILITIES: (1.9%) (2,056,553)
------------
TOTAL NET ASSETS: 100.0% $108,018,564
============
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 15
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $93,599,291) $110,075,117
Cash 135
Receivables:
Capital shares sold 19,841
Dividends 229,722
Fee reimbursement 21,734
------------
Total assets 110,346,549
------------
Liabilities:
Payables:
Investment securities purchased 2,200,383
Capital shares redeemed 1,788
Accrued expenses and other 125,814
------------
Total liabilities 2,327,985
------------
Net assets, at value $108,018,564
============
Net assets consist of:
Undistributed net investment income $ 1,917,679
Net unrealized appreciation 16,475,826
Accumulated net realized gain 1,686,406
Net capital paid in on shares of
capital stock 87,938,653
------------
Net assets, at value $108,018,564
============
Shares outstanding (Note 2) 11,899,024
============
Net asset value per share (Note 2)
($108,018,564 / 11,899,024) $ 9.08
============
</TABLE>
STATEMENT OF OPERATIONS
for the year ended August 31, 1996
<TABLE>
<S> <C> <C>
Investment income:
(net of $251,967 foreign
taxes withheld)
Dividends $2,500,965
Interest 612,776
----------
Total income $ 3,113,741
Expenses:
Management fees (Note 3) 656,146
Administrative fees (Note 3) 131,231
Custodian fees 15,635
Reports to shareholders 148,200
Audit fees 17,500
Legal fees (Note 3) 7,500
Registration and filing fees 22,200
Directors' fees and expenses 16,222
Other 2,129
----------
Total expenses 1,016,763
Less expenses reimbursed
(Note 3) (143,790)
----------
Total expenses less
reimbursement 872,973
-----------
Net investment income 2,240,768
Realized and unrealized gain
(loss):
Net realized gain (loss) on:
Investments 2,034,084
Foreign currency
transactions (35,481)
----------
1,998,603
Net unrealized appreciation
on investments 8,686,029
----------
Net realized and
unrealized gain 10,684,632
-----------
Net increase in net assets
resulting from operations $12,925,400
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 16
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 2,240,768 $ 1,196,838
Net realized gain on investment and foreign currency transactions 1,998,603 411,227
Net unrealized appreciation 8,686,029 961,710
------------ -----------
Net increase in net assets resulting from operations 12,925,400 2,569,775
Distributions to shareholders:
From net investment income (1,315,933) (584,857)
From net realized gain (285,372) (1,459,126)
Capital share transactions (Note 2) 31,156,843 26,689,267
------------ -----------
Net increase in net assets 42,480,938 27,215,059
Net assets:
Beginning of year 65,537,626 38,322,567
------------ -----------
End of year $108,018,564 $65,537,626
============ ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 17
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Capital Accumulator Fund, Inc. (the Fund) is an open-end, diversified
management investment company registered under the Investment Company Act of
1940. Shares of the Fund are offered to the general public only through
Templeton Capital Accumulation Plans. The Fund seeks long-term capital growth by
investing in a portfolio primarily composed of common stocks in various nations
throughout the world. The following summarizes the Fund's significant accounting
policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed
securities for which no sale is reported are valued at the mean between the last
current bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Directors.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized gain or loss from investments.
Reported net 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, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
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.
16
<PAGE> 18
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
Effective March 27, 1996, the shares of the Fund were split on a 2-for-1 basis.
Accordingly all per share amounts have been restated to reflect the split. At
August 31, 1996, there were 100 million shares of capital stock authorized
($0.01 par value). Transactions in the Fund's shares for the years ended August
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold 2,871,022 $34,173,284 1,748,863 $26,758,403
Shares issued on reinvestment of distributions 101,200 1,600,666 135,355 2,042,103
Shares issued on 2-for-1 split 5,209,444 -- -- --
Shares redeemed (393,813) (4,617,107) (137,739) (2,111,239)
--------- ----------- --------- -----------
Net increase 7,787,853 $31,156,843 1,746,479 $26,689,267
========= =========== ========= ===========
</TABLE>
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI) and Templeton Global Investors Inc. (TGII), the
Fund's investment manager and administrative manager, respectively. The Fund
pays monthly an investment management fee to TICI equal, on an annual basis, to
0.75% per annum of its average daily net assets. The Fund pays to TGII monthly a
fee of 0.15% per annum on the first $200 million of the Fund's average daily net
assets, 0.135% of the next $500 million, 0.10% of the next $500 million and
0.075% per annum of such average net assets in excess of $1.2 billion. TICI and
TGII have voluntarily agreed to reduce their respective fees to the extent
necessary to limit the total expenses to an annual rate of 1.00% of the Fund's
average net assets. The amount of the reimbursement for the year ended August
31, 1996 is set forth in the Statement of Operations.
An officer of the Company is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $7,500 for the year ended August 31,
1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 1996 aggregated $28,746,615 and $8,499,081, respectively. The
cost of securities for federal income tax purposes is the same as that shown in
the investment portfolio. Realized gains and losses are reported on identified
cost basis.
At August 31, 1996, the aggregate gross unrealized appreciation and depreciation
of portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $19,227,955
Unrealized depreciation (2,752,129)
-----------
Net unrealized appreciation $16,475,826
===========
</TABLE>
17
<PAGE> 19
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Templeton Capital Accumulator Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of Templeton Capital Accumulator Fund, Inc. as of
August 31, 1996, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Capital Accumulator Fund, Inc. as of August 31, 1996, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles.
/s/ McGladrey & Pullen, LLP
[McGladrey & Pullen, LLP]
New York, New York
September 27, 1996
18
<PAGE> 20
LITERATURE REQUEST
- --------------------------------------------------------------------------------
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (1-800/342-5236). Please read the prospectus carefully before you
invest or send money. To ensure the highest quality of service, telephone calls
to or from our service departments may be monitored, recorded and accessed.
These calls can be determined by the presence of a regular beeping tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH INCOME
Franklin Global Health Franklin Adjustable Rate
Care Fund Securities Fund
Franklin Templeton Franklin Adjustable U.S.
Japan Fund Government Securities Fund
Templeton Developing Franklin's AGE High
Markets Trust Income Fund
Templeton Foreign Fund Franklin Investment Grade
Templeton Foreign Smaller Income Fund
Companies Fund Franklin Short-Intermediate U.S.
Templeton Global Government Securities Fund
Infrastructure Fund Franklin U.S. Government
Templeton Global Securities Fund
Opportunities Trust Franklin Money Fund
Templeton Global Franklin Federal Money Fund
Real Estate Fund
Templeton Global Smaller FOR NON-U.S. INVESTORS:
Companies Fund
Templeton Greater Franklin Tax-Advantaged
European Fund High Yield Securities Fund
Templeton Growth Fund Franklin Tax-Advantaged
Templeton Latin America International Bond Fund
Fund Franklin Tax-Advantaged U.S.
Templeton Pacific Government Securities Fund
Growth Fund
Templeton World Fund FOR CORPORATIONS:
GLOBAL GROWTH AND INCOME Franklin Corporate Qualified
Dividend Fund
Franklin Global Utilities Fund
Franklin Templeton German FRANKLIN FUNDS SEEKING
Government Bond Fund TAX-FREE INCOME
Franklin Templeton
Global Currency Fund Federal Intermediate-Term
Templeton Global Bond Fund Tax-Free Income Fund
Templeton Growth and Federal Tax-Free Income Fund
Income Fund High Yield Tax-Free
Income Fund
GLOBAL INCOME Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Franklin Global Government Income Fund
Income Fund Tax-Exempt Money Fund
Franklin Templeton Hard
Currency Fund FRANKLIN STATE-SPECIFIC
Franklin Templeton High FUNDS SEEKING
Income Currency Fund TAX-FREE INCOME
Templeton Americas
Government Securities Fund Alabama
Arizona*
GROWTH Arkansas**
California*
Franklin Blue Chip Fund Colorado
Franklin California Growth Fund Connecticut
Franklin DynaTech Fund Florida*
Franklin Equity Fund Georgia
Franklin Gold Fund Hawaii**
Franklin Growth Fund Indiana
Franklin MidCap Growth Fund Kentucky
Franklin Small Cap Growth Fund Louisiana
Maryland
GROWTH AND INCOME Massachusetts***
Michigan*
Franklin Asset Allocation Fund Minnesota***
Franklin Balance Sheet Missouri
Investment Fund New Jersey
Franklin Convertible New York*
Securities Fund North Carolina
Franklin Equity Income Fund Ohio***
Franklin Income Fund Oregon
Franklin MicroCap Value Fund Pennsylvania
Franklin Natural Resources Fund Tennessee**
Franklin Real Estate Texas
Securities Fund Virginia
Franklin Rising Dividends Fund Washington**
Franklin Strategic Income Fund
Franklin Utilities Fund VARIABLE ANNUITIES
Franklin Value Fund
Templeton American Trust, Inc. Franklin Valuemark(SM)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
**The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
***Portfolio of insured municipal securities. 10/96.1
