Annual
Report
AUGUST 31, 1997
TEMPLETON CAPITAL
ACCUMULATOR FUND, INC.
[LOGO]
FRANKLIN TEMPLETON
<PAGE>
[SEAL]
[PHOTO]
GARY P. MOTYL
Portfolio Manager
Templeton Capital Accumulator Fund, Inc.
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest in companies and governments around the globe.
In addition, we want to stress that all securities markets move both up and
down. Mixed in with the good years can be some bad years. Accordingly, mutual
fund share prices also move up and down. Every investor should expect such
fluctuations, which can be wide. When markets are going down, as well as up, we
encourage investors to maintain a long-term perspective. We thank you for your
past support and look forward to serving your investment needs in the years
ahead.
<PAGE>
SHAREHOLDER LETTER
CONTENTS
Shareholder Letter ....................................................... 1
Performance Summary ...................................................... 6
Financial Highlights and
Statement of Investments ................................................. 9
Financial Statements ..................................................... 15
Notes to Financial
Statements ............................................................... 18
Independent Auditor's
Report ................................................................... 21
Tax Designation .......................................................... 22
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.
Dear Shareholder:
We are pleased to bring you this annual report of the Templeton Capital
Accumulator Fund, which covers the 12 months ended August 31, 1997.
MARKET OVERVIEW
During the reporting period, share prices around the world generally increased
against a backdrop of lower inflation and interest rates. However, global
financial markets experienced significant volatility, especially during the last
few months of the period, as corporate earnings announcements, both positive and
negative, were greeted with enormous upward and downward movements in global
securities markets. U.S. Federal Reserve chairman Alan Greenspan uttered the
words "virtually unbelievable" to characterize certain aspects of this period.
Most investors would agree. After a seven-year U.S. economic expansion, with
unemployment reaching a 23-year low, inflation an 11-year low, and consumer
confidence a 27-year high, any investor could be forgiven for feeling that what
was happening must be a dream. Within this environment, the Fund provided a
cumulative total return of 25.06%, as shown in the
<PAGE>
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
8/31/97
[PIE CHART]
Europe 45.8%
United States 18.2%
Asia 11.3%
Australia & New Zealand 5.8%
Latin America 4.9%
Canada 0.4%
Short Term Obligations & Other Net Assets 13.6%
Performance Summary on page 6, outperforming the Fund's benchmark, the Morgan
Stanley Capital International(R) (MSCI) World Index, which posted a gain of
22.85% for the same period.
FUND ACTIVITY
Although both the Fund and the MSCI World Index are well-diversified across many
countries and industries, there were significant differences in their holdings
during the period. Most notably, the Fund was underweighted in the U.S. market
compared to the index, which held back performance somewhat. As valuations such
as price-to-earnings ratio and price-to-book value rose, it became increasingly
difficult for us to find undervalued stocks in the U.S. In addition, several of
our U.S. holdings appreciated to our sell-price targets and we removed them from
the portfolio. However, we benefited from our larger weighting in Europe (where
we felt prospects were strong and valuation levels were reasonable) and by our
smaller position in the expensive but poorly performing Japanese market.
PORTFOLIO TURNOVER
During the period under review, several positions that we believed offered
solid, long-term value were added to the Fund's portfolio. For example, we
purchased shares in Storehouse Plc.,* a United Kingdom retailing firm with
exposure to the apparel and specialty merchandising areas. Its shares had been
under price pressure, along with the rest of the retailing sector, and we
believed it had the potential for strong earnings growth over the next few
years, as well as possible corporate restructuring moves. We initiated positions
in New Holland NV, a Netherlands-based producer of agricultural equipment, and
Industrial Credit & Investment Corp. of India, a company
*A complete listing of all stocks in the portfolio as of August 31, 1997 begins
on page 10.
2
<PAGE>
providing a broad range of business financing in that country. Its stock was
selling at a low multiple of earnings, and we believed it would benefit from
continuing growth in the Indian economy. In addition, we purchased shares of
Banco Itau SA, a leading Brazilian bank, and 3Com Corp., a well-respected U.S.
high technology company.
Because its shares had performed strongly over the past year and met our
long-term price objective, we liquidated our holdings in American Express Co.
during the reporting period. We also sold for a profit our position in
Internatio-Mueller NV, a Netherlands-based health and personal care company. The
share price of Banco Bilbao Vizcaya, a leading Spanish bank, rose sharply over
the past year, and we sold our holdings because the stock looked expensive
according to our valuation criteria.
TOP 10 INDUSTRIES
8/31/97
<TABLE>
<CAPTION>
% OF TOTAL
INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Banking 10.0%
Telecommunications 8.7%
Forest Products & Paper 5.1%
Electrical & Electronics 5.0%
Utilities - Electrical & Gas 4.3%
Transportation 4.2%
Industrial Components 4.0%
Energy Sources 3.9%
Automobiles 3.8%
Merchandising 3.7%
</TABLE>
LOOKING FORWARD
Because so many global stocks reached unusually high valuation levels during the
reporting period, we have become increasingly selective and cautious. Still,
there are many reasons we are optimistic about the long-term potential of global
stock markets. The trend toward free and open capital, labor, and trade markets
continues to grow throughout the world. In Europe, many companies have begun to
make difficult restructuring decisions, and many European and Latin American
governments have privatized poorly run, state-owned entities, leading to more
reasonable allocations of resources and capital. And in Japan, the government
has begun the process of freeing up its capital markets.
As you know, China regained sovereignty over Hong Kong on July 1, 1997. Some
people believe this could ultimately mean an
3
<PAGE>
TOP 10 HOLDINGS
8/31/97
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Philips Electronics NV,
Electrical & Electronics,
Netherlands 1.6%
Nokia AB, A,
Telecommunications, Finland 1.5%
Telefonica de Espana SA,
Telecommunications, Spain 1.4%
Dayton-Hudson Corp.,
Merchandising, U.S. 1.4%
Merita Ltd., A, Banking,
Finland 1.4%
Fiat SpA, Automobiles, Italy 1.3%
Societe Elf Aquitane SA,
Energy Sources, France 1.3%
Svedala Industri, A,
Building Materials &
Components, Sweden 1.2%
Bay Networks Inc.,
Data Processing &
Reproduction, U.S. 1.2%
Pioneer International Ltd.,
Building Materials &
Components, Australia 1.1%
</TABLE>
For a complete list of portfolio holdings, please see page 10 of this report.
end to economic and personal freedoms there. We think this is unlikely, but
developments following any major transfer of political power cannot be
predicted. In our opinion, China's leaders are pragmatic, and are likely to use
Hong Kong as a blueprint for a market economy, which could benefit its citizens
immeasurably. While we expect problems to arise during this process, we are
hopeful they will be overcome. Although Hong Kong is likely to undergo vast
changes, what makes it special should remain the same. Under Chinese rule, the
former British colony has the chance to become much more than just an important
island state. Together, Hong Kong and China have the potential to become the
largest economic superpower the world has ever known.
We see an important trend toward millions of individuals worldwide becoming
shareholders via mutual funds, pension funds, and privatizations. As these
individuals' net worth becomes tied to the implementation of sensible economic
policies in their nations, they are more likely to vote for politicians who will
support sound economic endeavors. Therefore, even though we know that bear
markets will occur from time to time, we choose to regard them as temporary
phenomena, and are optimistic about long-term opportunities for attractive
global investment returns.
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.
All figures shown are as of August 31, 1997, and the Fund's holdings can be
expected to change with market developments and management of the portfolio.
Because economic and market conditions are constantly changing, our strategies,
and our evaluations, conclusions and decisions regarding portfolio holdings may
change as
4
<PAGE>
new circumstances arise. Although past 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.
As always, we remind our shareholders that investments in foreign securities
involve special risks, 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 1,089% in the past 15 years, but has
suffered 5 declines of more than 20% during that time.* Emerging markets are
represented in the Fund's portfolio, and involve heightened risks associated
with the same factors as well as those related to their relatively small size
and lesser liquidity. These risks and other considerations are discussed in the
Fund's prospectus.
We appreciate your support, 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, 1997.
5
<PAGE>
PERFORMANCE SUMMARY
Templeton Capital Accumulator Fund reported a cumulative total return of 25.06%
for the one-year period ended August 31, 1997. Cumulative 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 8, the Fund has delivered a cumulative total return of more
than 160% since its inception on March 1, 1991.
The price of the Fund's shares increased $1.89, from $9.08 on August 31, 1996,
to $10.97 on August 31, 1997. During this time, shareholders received
distributions of 18.0 cents ($0.18) per share in dividend income, 2.0 cents
($0.02) per share in short-term capital gains, and 12.0 cents ($0.12) per share
in long-term capital gains. Of course, distributions will vary depending on
income earned by the Fund and any profits realized from the sale of securities
in the portfolio, as well as the level of the Fund's operating expenses.
The graph on page 7 compares the performance of the Templeton Capital
Accumulator Fund since inception with that of the unmanaged Morgan Stanley
Capital International(R) (MSCI) World Index, which includes approximately 1,500
companies representing the
Past performance is not predictive of future results.
6
<PAGE>
stock markets of 22 countries, including the U.S., Canada, the United Kingdom,
and Japan. It also shows the Fund's performance versus the Consumer Price Index
(CPI), a commonly used measure of inflation. Please remember that the Fund's
performance differs from that of an index because, among other things, an index
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 nor is an index representative of the
Fund's portfolio.
TOTAL RETURN INDEX COMPARISION
$10,000 Investment (3/1/91 - 8/31/97)
<TABLE>
<CAPTION>
Templeton Capital MSCI World
Accumulator Fund* Index** CR***
<C> <C> <C> <C>
3/1/91 $10,000 $10,000 $10,000
3/91 $9,960 $9,707 $10,015
4/91 $10,050 $9,784 $10,029
5/91 $10,249 $10,008 $10,059
6/91 $9,841 $9,391 $10,089
7/91 $10,299 $9,837 $10,104
8/91 $10,378 $9,807 $10,133
9/91 $10,408 $10,066 $10,178
10/91 $10,441 $10,231 $10,193
11/91 $10,219 $9,787 $10,222
12/91 $10,700 $10,501 $10,230
1/92 $10,944 $10,308 $10,245
2/92 $11,096 $10,132 $10,282
3/92 $11,005 $9,657 $10,334
4/92 $11,238 $9,793 $10,349
5/92 $11,613 $10,184 $10,363
6/92 $11,349 $9,844 $10,401
7/92 $11,268 $9,872 $10,423
8/92 $11,106 $10,114 $10,453
9/92 $11,076 $10,022 $10,482
10/92 $10,945 $9,753 $10,519
11/92 $11,079 $9,930 $10,534
12/92 $11,411 $10,012 $10,527
1/93 $11,557 $10,047 $10,579
2/93 $11,953 $10,286 $10,616
3/93 $12,474 $10,885 $10,654
4/93 $12,776 $11,391 $10,683
5/93 $13,234 $11,656 $10,698
6/93 $13,151 $11,560 $10,713
7/93 $13,380 $11,800 $10,712
8/93 $14,339 $12,343 $10,742
9/93 $14,318 $12,117 $10,764
10/93 $15,027 $12,452 $10,809
11/93 $14,635 $11,750 $10,817
12/93 $15,921 $12,327 $10,816
1/94 $17,093 $13,143 $10,846
2/94 $16,752 $12,974 $10,884
3/94 $16,006 $12,417 $10,921
4/94 $16,198 $12,803 $10,936
5/94 $16,389 $12,838 $10,943
6/94 $15,889 $12,805 $10,980
7/94 $16,603 $13,051 $11,009
8/94 $17,274 $13,446 $11,054
9/94 $16,944 $13,095 $11,084
10/94 $17,158 $13,470 $11,092
11/94 $16,540 $12,888 $11,106
12/94 $16,348 $13,015 $11,106
1/95 $16,045 $12,823 $11,150
2/95 $16,393 $13,012 $11,195
3/95 $16,639 $13,642 $11,232
4/95 $17,076 $14,119 $11,269
5/95 $17,603 $14,243 $11,291
6/95 $17,749 $14,241 $11,314
7/95 $18,320 $14,957 $11,313
8/95 $17,861 $14,626 $11,344
9/95 $18,275 $15,055 $11,366
10/95 $17,837 $14,821 $11,403
11/95 $18,212 $15,338 $11,402
12/95 $18,768 $15,790 $11,395
1/96 $19,169 $16,078 $11,462
2/96 $19,455 $16,179 $11,499
3/96 $19,753 $16,451 $11,558
4/96 $20,624 $16,841 $11,603
5/96 $20,876 $16,858 $11,625
6/96 $20,899 $16,947 $11,632
7/96 $20,166 $16,351 $11,655
8/96 $20,807 $16,542 $11,677
9/96 $21,105 $17,193 $11,714
10/96 $21,410 $17,316 $11,751
11/96 $22,522 $18,289 $11,774
12/96 $23,080 $18,000 $11,774
1/97 $23,530 $18,219 $11,811
2/97 $23,673 $18,432 $11,846
3/97 $23,744 $18,071 $11,882
4/97 $23,744 $18,665 $11,893
5/97 $25,001 $19,820 $11,881
6/97 $26,235 $20,811 $11,893
7/97 $27,373 $21,773 $11,905
8/97 $26,021 $20,320 $11,929
</TABLE>
___ Templeton Capital MSCI World Index** ----- CR***
Accumulator Fund*
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (3/1/91)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Annual Total Return**** 25.06% 18.60% 15.84%
</TABLE>
* Represents the change in value of an investment over the period shown,
assuming reinvestment of dividends and capital gains. This was a period of
generally rising security prices.
** Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
*** Source: U.S. Bureau of Labor Statistics (9/30/97).
**** Please see table on page 8.
Past performance is not predictive of future results.
7
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND
Periods ended 8/31/97
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (3/1/91)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 25.06% 134.65% 160.21%
Average Annual Total Return(2) 25.06% 18.60% 15.84%
Value of $10,000 Investment(3) $12,506 $23,465 $26,021
<CAPTION>
8/31/93 8/31/94 8/31/95 8/31/96 8/31/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) 29.11% 20.64% 3.40% 16.50% 25.06%
</TABLE>
1. Cumulative total returns represent the change in value of an investment over
the periods indicated, and do not include any sales and creation charges.
2. Average annual total returns represent 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 indicated periods.
4. One-year total returns represent the change in value of an investment over
the periods ended on the dates indicated.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Calculations do not include the effect of paying sales and creation
charges applicable to purchases of Fund shares through Templeton Capital
Accumulation Plans, which may vary as discussed in the Plan's prospectus. For
the first year of a Plan, these charges can amount to 50% of the total amount
invested during the year. Total returns would have been lower if these charges
had been applied. Please refer to the Templeton Capital Accumulation Plan's
prospectus for information regarding applicable charges. Investment return and
principal value will fluctuate with market conditions, currency volatility, and
the economic, social, and political climates of countries where investments are
made. Emerging markets involve heightened risks related to the same factors, in
addition to those associated with the relatively small size and lesser liquidity
of these markets. You may have a gain or loss when you sell your shares.
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 returns would have been lower. After December 31, 1997, this agreement may
end at any time, upon notice to the Fund's Board of Directors.
Past performance is not predictive of future results.
8
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(for a share outstanding throughout the year)
Net asset value, beginning of year................... $ 9.08 $7.97 $8.10 $6.87 $5.48
----------------------------------------------------------------
Income from investment operations:
Net investment income............................... .18 .19 .14 .09 .10
Net realized and unrealized gains................... 2.03 1.10 .12 1.30 1.44
----------------------------------------------------------------
Total from investment operations..................... 2.21 1.29 .26 1.39 1.54
----------------------------------------------------------------
Less distributions:
Dividends from net investment income................ (.18) (.15) (.10) (.07) (.10)
Distributions from net realized gains............... (.14) (.03) (.29) (.09) (.05)
----------------------------------------------------------------
Total distributions.................................. (.32) (.18) (.39) (.16) (.15)
----------------------------------------------------------------
Net asset value, end of year......................... $10.97 $9.08 $7.97 $8.10 $6.87
================================================================
Total return......................................... 25.06% 16.50% 3.40% 20.64% 29.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's)...................... $172,683 $108,019 $65,538 $38,323 $18,365
Ratios to average net assets:
Expenses............................................ 1.13% 1.16% 1.34% 1.58% 1.91%
Expenses, net of reimbursement...................... 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income............................... 2.00% 2.56% 2.37% 1.58% 1.99%
Portfolio turnover rate.............................. 7.43% 11.08% 12.91% 15.25% 14.97%
Average commission rate paid*........................ $.0110 $.0210 -- -- --
</TABLE>
+Per share amounts for all periods prior to August 31, 1996 have been restated
to reflect a 2-for-1 stock split effective March 27, 1996.
*Relates to purchases and sales of equity securities. Prior to fiscal year end
1996, disclosure of average commission rate was not required.
See notes to financial statements.
9
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1997
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS 83.9%
APPLIANCES & HOUSEHOLD DURABLES 2.3%
Electrolux AB, B................................................ Sweden 22,250 $ 1,581,740
Fisher & Paykel Ltd............................................. New Zealand 200,200 671,464
Merloni Elettrodomestici SpA.................................... Italy 147,100 522,426
Sony Corp....................................................... Japan 14,600 1,268,515
------------
4,044,145
------------
AUTOMOBILES 3.8%
Ciadea SA....................................................... Argentina 35,200 90,535
Fiat SpA........................................................ Italy 742,500 2,278,242
Ford Motor Co................................................... United States 24,000 1,032,000
General Motors Corp............................................. United States 20,000 1,255,000
Volvo AB, B..................................................... Sweden 71,000 1,820,651
------------
6,476,428
------------
BANKING 9.4%
ABN Amro NV..................................................... Netherlands 60,000 1,177,860
Australia & New Zealand Banking Group Ltd....................... Australia 200,000 1,438,151
Bank of Montreal................................................ Canada 10,000 381,748
Bankinter SA.................................................... Spain 22,500 1,141,090
Banque Nationale de Paris....................................... France 28,000 1,193,902
Barclays Plc.................................................... United Kingdom 22,100 505,862
BPI Socieda de Gestora de Participacoes Socias SA............... Portugal 25,171 494,894
Fokus Bank AS................................................... Norway 100,000 782,326
Foreningssparbanken AB, A....................................... Sweden 85,000 1,845,152
Foreningssparbanken AB, A, 144A................................. Sweden 51,800 1,124,457
HSBC Holdings Plc............................................... Hong Kong 55,200 1,681,037
Korea Long Term Credit Bank..................................... South Korea 9,476 108,320
Merita Ltd., A.................................................. Finland 600,000 2,348,488
NationsBank Corp................................................ United States 11,600 688,750
*Philippine National Bank....................................... Philippines 118,083 514,591
PT Bank Bali, fgn............................................... Indonesia 190,000 288,364
PT Bank Pan Indonesia TBK....................................... Indonesia 420,300 133,638
*PT Bank Pan Indonesia TBK, wts................................. Indonesia 60,042 4,455
Thai Farmers Bank Public Co. Ltd., fgn.......................... Thailand 100,000 286,634
------------
16,139,719
------------
BROADCASTING & PUBLISHING 0.2%
News Corp. Ltd.................................................. Australia 70,000 315,599
------------
BUILDING MATERIALS & COMPONENTS 2.6%
Pioneer International Ltd....................................... Australia 575,815 1,939,028
Siam City Cement, fgn........................................... Thailand 120,000 400,117
Svedala Industri, A............................................. Sweden 100,000 2,158,072
------------
4,497,217
------------
</TABLE>
10
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1997 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
BUSINESS & PUBLIC SERVICES 2.8%
Esselte AB, B................................................... Sweden 40,000 $ 1,030,797
Lex Service Plc................................................. United Kingdom 165,000 1,184,511
Societe Generale de Surveillance Holdings Ltd., br.............. Switzerland 460 831,446
Waste Management Inc............................................ United States 18,000 576,000
Wheelabrator Technologies Inc................................... United States 76,000 1,192,250
------------
4,815,004
------------
CHEMICALS 3.3%
Akzo Nobel NV................................................... Netherlands 7,500 1,163,100
Courtaulds Plc.................................................. United Kingdom 150,000 764,475
Great Lakes Chemical Corp....................................... United States 22,000 1,023,000
Rhone-Poulenc SA, A............................................. France 46,000 1,687,267
Solvay SA....................................................... Belgium 20,000 1,116,404
------------
5,754,246
------------
CONSTRUCTION & HOUSING 0.5%
Redland Plc..................................................... United Kingdom 164,000 770,714
------------
DATA PROCESSING & REPRODUCTION 1.7%
*3com Corp...................................................... United States 17,000 848,937
*Bay Networks Inc............................................... United States 59,000 2,087,125
------------
2,936,062
------------
ELECTRICAL & ELECTRONICS 5.0%
ABB AG, br...................................................... Switzerland 652 960,750
Alcatel Alsthom Cie Generale D'Electricite SA................... France 6,661 815,874
GP Batteries International Ltd.................................. Singapore 56,000 151,902
Hitachi Ltd..................................................... Japan 165,000 1,515,515
Matsushita Electric Industrial Co. Ltd.......................... Japan 99,000 1,818,618
Motorola Inc.................................................... United States 10,000 733,750
Philips Electronics NV.......................................... Netherlands 37,940 2,701,067
------------
8,697,476
------------
ELECTRONIC COMPONENTS & INSTRUMENTS 0.9%
Intel Corp...................................................... United States 16,000 1,474,000
------------
ENERGY SOURCES 3.9%
Norsk Hydro AS.................................................. Norway 20,000 1,083,221
Saga Petroleum AS, B............................................ Norway 49,070 944,954
Societe Elf Aquitane SA......................................... France 20,000 2,222,515
Total SA, B..................................................... France 13,000 1,217,774
YPF Sociedad Anonima, ADR....................................... Argentina 37,500 1,221,094
------------
6,689,558
------------
FINANCIAL SERVICES 1.7%
Axa SA.......................................................... France 21,257 1,354,328
Industrial Credit & Inv. Corp. of India, GDR, 144A.............. India 44,500 617,438
Onbancorp Inc................................................... United States 18,000 936,000
------------
2,907,766
------------
</TABLE>
11
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1997 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
FOOD & HOUSEHOLD PRODUCTS 0.3%
IBP Inc......................................................... United States 23,000 $ 527,563
------------
FOREST PRODUCTS & PAPER 5.1%
Asia Pulp & Paper Co. Ltd., ADR................................. Indonesia 45,000 582,187
Boise Cascade Corp.............................................. United States 14,000 553,875
Enso OY, R...................................................... Finland 70,400 613,209
Georgia-Pacific Corp............................................ United States 16,000 1,460,000
Hansol Paper Co. Ltd., GDS...................................... South Korea 22,373 296,442
International Paper Co.......................................... United States 26,000 1,371,500
Mayr-Melnhof Karton AG.......................................... Austria 11,000 633,125
Mo Och Domsjoe AB, B............................................ Sweden 17,000 561,099
Portucel Industrial Empresa Product Celulose, ADR, 144A......... Portugal 49,100 368,552
*PT Inti Indorayon Utama, fgn................................... Indonesia 450,000 159,359
*Shorewood Packaging Corp....................................... United States 27,500 594,688
Stora Kopparbergs Bergslags AB, B............................... Sweden 90,000 1,405,286
Unipapel SA..................................................... Spain 12,000 260,989
------------
8,860,311
------------
HEALTH & PERSONAL CARE 3.0%
Astra AB, B..................................................... Sweden 53,333 805,675
Medeva Plc...................................................... United Kingdom 58,500 208,560
Novartis AG..................................................... Switzerland 853 1,208,214
Nycomed ASA, B.................................................. Norway 72,000 1,314,308
Windmere-Durable Holdings Inc................................... United States 90,000 1,710,000
------------
5,246,757
------------
INDUSTRIAL COMPONENTS 4.0%
BTR Plc......................................................... United Kingdom 465,000 1,642,710
Exide Corp...................................................... United States 40,500 845,437
Flowserve Corp.................................................. United States 39,021 1,375,483
Goodyear Tire & Rubber Co....................................... United States 23,000 1,417,375
*Granges AB..................................................... Sweden 11,125 166,648
SKF AB, B....................................................... Sweden 55,000 1,487,166
------------
6,934,819
------------
INSURANCE 3.7%
Aegon NV........................................................ Netherlands 17,500 1,300,123
American International Group Inc................................ United States 15,375 1,451,016
Ing Groep NV.................................................... Netherlands 32,500 1,415,129
Skandia Foersaekrings AB, free.................................. Sweden 35,000 1,355,143
Swiss Reinsurance Co............................................ Switzerland 605 803,279
------------
6,324,690
------------
MACHINERY & ENGINEERING 2.1%
New Holland NV.................................................. Netherlands 51,100 1,373,313
SIG Schweizerische Industrie-Gesell, br......................... Switzerland 500 1,444,650
VA Technologie AG............................................... Austria 4,000 732,097
------------
3,550,060
------------
</TABLE>
12
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1997 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
MERCHANDISING 3.7%
Burton Group Plc................................................ United Kingdom 375,000 $ 752,018
Dairy Farm International Holdings Ltd........................... Hong Kong 450,000 378,000
Dayton-Hudson Corp.............................................. United States 42,000 2,394,000
*K Mart Corp.................................................... United States 60,000 832,500
Robinson Depart. Store Public Co. Ltd., fgn..................... Thailand 137,800 32,243
Sa des Galeries Lafayette....................................... France 898 326,723
Storehouse Plc.................................................. United Kingdom 455,800 1,684,072
------------
6,399,556
------------
METALS & MINING 1.6%
Pechiney SA, A.................................................. France 34,000 1,468,770
RGC Ltd......................................................... Australia 200,000 566,143
Vale do Rio Doce, ADR........................................... Brazil 31,000 721,393
------------
2,756,306
------------
MISC MATERIALS & COMMODITIES 0.4%
Golden Hope Plantations Bhd., fgn............................... Malaysia 498,000 654,064
------------
MULTI-INDUSTRY 2.7%
Cheung Kong Holdings Ltd........................................ Hong Kong 160,000 1,693,012
Hicom Holdings Bhd.............................................. Malaysia 414,300 561,138
Hutchison Whampoa Ltd........................................... Hong Kong 101,500 844,796
Jardine Matheson Holdings Ltd. (Singapore)...................... Hong Kong 62,336 436,352
Metro Pacific Corp. MDI......................................... Philippines 2,667,000 361,000
Saha Union Public Co. Ltd., fgn................................. Thailand 96,900 56,683
Swire Pacific Ltd., A........................................... Hong Kong 85,000 649,881
Swire Pacific Ltd., B........................................... Hong Kong 100,000 143,880
------------
4,746,742
------------
REAL ESTATE 1.2%
Beacon Properties Corp.......................................... United States 24,000 864,000
*Catellus Development Corp...................................... United States 50,000 962,500
PT Jaya Properties, fgn......................................... Indonesia 250,000 168,634
------------
1,995,134
------------
TELECOMMUNICATIONS 8.1%
*Asia Satellite Telecommunicatons Hldgs. Ltd.................... Hong Kong 215,000 599,264
British Telecommunications Plc.................................. United Kingdom 174,000 1,126,465
Compania De Telecomunicaciones De Chile SA, Spons. ADR.......... Chile 19,125 574,945
*Digital Telecommunications Philippines Inc..................... Philippines 407,000 30,636
Jasmine International Public Co. Ltd., fgn...................... Thailand 400,000 312,957
Nokia AB, A..................................................... Finland 34,500 2,665,892
Philippine Long Distance Telephone Co........................... Philippines 30,000 762,628
Telecom Argentina Stet France SA, ADR........................... Argentina 49,200 1,359,150
Telecom Italia SpA.............................................. Italy 297,100 1,736,204
Telefonica de Argentina SA, B, ADR.............................. Argentina 36,600 1,269,562
Telefonica de Espana SA......................................... Spain 95,500 2,474,905
Telefonos de Mexico SA, L, ADR.................................. Mexico 25,000 1,146,875
------------
14,059,483
------------
</TABLE>
13
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 1997 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS (CONT.)
TEXTILES & APPAREL 1.5%
Dawson International Plc........................................ United Kingdom 265,000 $ 322,076
Kellwood Co..................................................... United States 30,500 1,101,813
PT Indorama Synthetics, fgn..................................... Indonesia 793,440 428,163
Shaw Industries Inc............................................. United States 73,000 816,688
------------
2,668,740
------------
TRANSPORTATION 3.5%
Brambles Industries Ltd......................................... Australia 70,000 1,379,331
Cathay Pacific Airways Ltd...................................... Hong Kong 150,000 244,854
Guangshen Railway Co. Ltd., ADR................................. China 37,000 788,563
Kvaerner Industrier AS, A....................................... Norway 24,000 1,277,398
Qantas Airways Ltd., ADR, 144A.................................. Australia 65,000 1,418,300
Unitor AS....................................................... Norway 70,000 982,923
------------
6,091,369
------------
UTILITIES ELECTRICAL & GAS 4.3%
British Energy Ltd.............................................. United Kingdom 325,000 903,231
Endesa-Empresa Nacional de Electricidad SA...................... Spain 49,200 990,972
Evn Energie-Versorgung Niederoesterreich AG..................... Austria 4,800 572,576
Iberdrola SA.................................................... Spain 135,000 1,514,565
Korea Electric Power Corp....................................... South Korea 20,000 522,992
Nova Corp....................................................... Canada 36,200 306,371
Public Service Co. of New Mexico................................ United States 70,000 1,277,500
VEBA AG......................................................... Germany 26,000 1,362,282
------------
7,450,489
------------
WHOLESALE & INTERNATIONAL TRADE 0.6%
Brierley Investments Ltd........................................ New Zealand 1,200,000 1,027,273
------------
TOTAL COMMON STOCKS AND WARRANTS (COST $103,785,575)............ 144,811,290
------------
PREFERRED STOCKS 2.5%
Banco Itau SA, pfd.............................................. Brazil 1,800,000 1,032,341
Concessioni e Costruzioni Autostrade SpA, B, pfd................ Italy 490,000 1,161,545
News Corp. Ltd., pfd............................................ Australia 312,000 1,190,577
Telecomunicacoes Brasileiras SA, ADR, pfd....................... Brazil 8,427 994,386
------------
TOTAL PREFERRED STOCKS (COST $3,261,496)........................ 4,378,849
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
SHORT TERM OBLIGATIONS 13.9% (COST $24,002,528)
U.S. Treasury Bills, 4.90% to 5.16% with maturities to
11/20/97...................................................... United States $24,174,000 24,013,137
------------
TOTAL INVESTMENTS (COST $131,049,599) 100.3%.................... 173,203,276
OTHER ASSETS, LESS LIABILITIES (0.3%)........................... (519,983)
------------
TOTAL NET ASSETS 100.0%......................................... $172,683,293
============
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
See notes to financial statements.
14
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1997
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $131,049,599)............................. $173,203,276
Cash................................................................................ 19,485
Receivables:
Capital shares sold................................................................ 26,983
Dividends and other................................................................ 433,847
------------
Total assets.................................................................... 173,683,591
------------
Liabilities:
Payables:
Investment securities purchased.................................................... 818,852
Capital shares redeemed............................................................ 11,374
Accrued expenses.................................................................... 170,072
------------
Total liabilities............................................................... 1,000,298
------------
Net assets, at value........................................................... $172,683,293
============
Net assets consist of:
Undistributed net investment income................................................. $ 2,504,819
Net unrealized appreciation......................................................... 42,153,677
Accumulated net realized gain....................................................... 2,215,714
Capital shares...................................................................... 125,809,083
------------
Net assets, at value............................................................ $172,683,293
============
Net asset value per share ($172,683,293 / 15,747,924 shares outstanding)............ $10.97
============
</TABLE>
See notes to financial statements.
15
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
<TABLE>
<S> <C> <C>
Investment income:
(net of $355,671 foreign taxes withheld)
Dividends................................................................ $3,247,021
Interest................................................................. 1,037,588
------------
Total investment income.............................................. $ 4,284,609
Expenses:
Management fees (Note 3)................................................. 1,072,883
Administrative fees (Note 3)............................................. 214,577
Custodian fees........................................................... 56,720
Reports to shareholders.................................................. 190,840
Registration and filing fees............................................. 32,372
Professional fees (Note 3)............................................... 24,406
Directors' fees and expenses............................................. 13,837
Other.................................................................... 4,112
------------
Total expenses....................................................... 1,609,747
Less expenses reimbursed (Note 3)........................................ (184,371)
------------
Total expenses less reimbursement.................................... 1,425,376
------------
Net investment income............................................... 2,859,233
============
Realized and unrealized gains:
Net realized gain from:
Investments............................................................. 2,261,454
Foreign currency transactions........................................... 16,426
------------
Net realized gain........................................................ 2,277,880
Net unrealized appreciation on investments............................... 25,677,851
------------
Net realized and unrealized gain.......................................... 27,955,731
------------
Net increase in net assets resulting from operations...................... $30,814,964
============
</TABLE>
See notes to financial statements.
16
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............................................... $ 2,859,233 $ 2,240,768
Net realized gain from investments and foreign currency
transactions...................................................... 2,277,880 1,998,603
Net unrealized appreciation on investments.......................... 25,677,851 8,686,029
-------------------------------
Net increase in net assets resulting from operations............ 30,814,964 12,925,400
Distributions to shareholders from:
Net investment income............................................... (2,272,093) (1,315,933)
Net realized gain................................................... (1,748,572) (285,372)
Capital share transactions (Note 2).................................. 37,870,430 31,156,843
-------------------------------
Net increase in net assets...................................... 64,664,729 42,480,938
Net assets:
Beginning of year.................................................... 108,018,564 65,537,626
-------------------------------
End of year.......................................................... $172,683,293 $108,018,564
===============================
Undistributed net investment income included in net assets:
Beginning of year.................................................... $ 1,917,679 $ 1,017,645
===============================
End of year.......................................................... $ 2,504,819 $ 1,917,679
===============================
</TABLE>
See notes to financial statements.
17
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Capital Accumulator Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
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. 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. 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 Directors.
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. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign currency 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 the 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.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
18
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (cont.)
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. CAPITAL SHARES
Effective March 27, 1996, the shares of the Fund were split on a 2-for-1 basis.
All previously reported per share data for the Fund have been restated to give
effect to the split.
At August 31, 1997, there were 100 million shares authorized ($0.01 par value).
Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------
1997 1996
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................ 4,160,931 $ 41,490,628 2,871,022 $ 34,173,284
Shares issued on reinvestment of distributions............. 438,969 4,009,606 101,200 1,600,666
Shares issued on 2-for-1 stock split....................... -- -- 5,209,444 --
Shares redeemed............................................ (751,000) (7,629,804) (393,813) (4,617,107)
-------------------------------------------------------------
Net increase............................................... 3,848,900 $ 37,870,430 7,787,853 $ 31,156,843
=============================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton
Investment Councel, Inc. (TICI) and Franklin Templeton Services, Inc. (FT
Services), the Fund's investment manager and administrative manager,
respectively.
The Fund pays an investment management fee to TICI of 0.75% per year of the
average daily net assets of the Fund.
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE-DAILY NET ASSETS
------------------------------------------------------------------
<C> <S>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
19
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (cont.)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
TICI and FT Services agreed in advance to waive management fees and assume
payment of other expenses that exceed a total of 1% of the Fund's average daily
net assets, as reported in the Statement of Operations.
During the year ended August 31, 1997, legal fees of $5,407 were paid to a law
firm in which an officer of the Fund is a partner.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 1997 aggregated $36,994,528 and $9,115,434, respectively.
5. INCOME TAXES
The cost of securities for federal income tax purposes is the same as that shown
in the investment portfolio. At August 31, 1997, the net unrealized appreciation
based on the cost of investments for income tax purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation............ $ 46,516,541
Unrealized depreciation............ (4,362,864)
--------------
Net unrealized appreciation........ $ 42,153,677
==============
</TABLE>
20
<PAGE>
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 statement of investments, of Templeton Capital Accumulator Fund, Inc. as of
August 31, 1997, 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 each of the five years in
the period then ended. 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, 1997 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, 1997, 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.
McGLADREY & PULLEN, LLP
New York, New York
September 26, 1997
21
<PAGE>
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates $2,200,000 as a capital gain dividend for the fiscal year ended
August 31, 1997.
Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
15.06% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended August 31, 1997.
22
<PAGE>
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<PAGE>
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<PAGE>
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
Franklin Global Health Care Fund
Franklin Templeton Japan Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global
Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German
Government Bond Fund
Franklin Templeton Global
Currency Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High Income
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FOR CORPORATIONS
Franklin Corporate Qualified
Dividend Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan*
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee**
Texas
Virginia
Washington**
VARIABLE ANNUITIES+
Franklin Valuemark(R)
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.
+ Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC.
09/97.1
<PAGE>
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, California 94404-1585
SHAREHOLDER SERVICES
1-800/632-2301
FUND INFORMATION
1-800/342-5236
This report must be preceded or accompanied by the current prospectus for the
Templeton Capital Accumulator Fund, Inc., which contains more complete
information including risk factors, charges and expenses. Like any investment in
securities, 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 Fund investors are not protected from such losses by the
Investment Manager. Therefore, investors who cannot accept the risk of such
losses 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.
TLCAP A97 10/97 [LOGO] PRINTED ON RECYCLED PAPER
