SEMI ANNUAL REPORT
[GLOBAL MAP GRAPHIC]
FEBRUARY 29, 2000
TEMPLETON CAPITAL
ACCUMULATOR FUND, INC.
[LOGO]
[GRAPHIC - CELEBRATING 50 YEARS]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
[PHOTO - GARY P. MOTYL]
GARY P. MOTYL
Portfolio Manager
Templeton Capital Accumulator
Fund, Inc.
WE'RE ON THE WEB --
Now you can access online information about your fund, including this
shareholder report. Find our Web site at www.franklintempleton.com, your online
resource for fund literature, prices and performance, investor information and
around-the-clock account services.
SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton Capital Accumulator Fund seeks long-term capital
growth. Under normal market conditions, the Fund invests in equity securities
and debt obligations of companies and governments of any nation.
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to bring you this semiannual report of Templeton Capital
Accumulator Fund, which covers the six months ended February 29, 2000, a period
of extreme volatility for global financial markets. During this time, the U.S.
economy surged ahead at its fastest pace in more than three years as employment
and corporate profits rose, and the U.S. Federal Reserve Board (the Fed) raised
short term interest rates three times in an attempt to head off future
inflation. The widely anticipated Y2K problem proved to be a non-event, and by
the end of 1999 the Dow Jones Industrial Average (the Dow)1 posted a 25%
one-year gain, while
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the Fund's Statement of Investments (SOI), a complete listing of
the Fund's portfolio holdings, including dollar value and number of shares or
principal amount. The SOI begins on page 8.
1. The Dow Jones Industrial Average is price-weighted based on the average
market price of 30 blue chip (NYSE) stocks. The average is found by adding the
prices of the 30 stocks and dividing by a denominator that has been adjusted for
stock splits, stock dividends, and substitutions of stocks. It represents about
25% of the NYSE market capitalization.
CONTENTS
Shareholder Letter 1
Performance Summary 6
Financial Highlights &
Statement of Investments 7
Financial Statements 14
Notes to Financial
Statements 17
[PYRAMID CHART]
Geographic Distribution
Based on Total Net Assets
2/29/00
[VERTICAL PIE CHART]
European Stocks 44.0%
North American stocks 24.2%
Asian Stocks 16.0%
Latin American Stocks 8.8%
Australian & New Zealand Stocks 4.1%
Short-Term Investments & Other Net Assets 2.9%
the technology-laden Nasdaq(R) Composite Index (2) climbed to a record-breaking
4069 - an increase of more than 86% over the course of the year.
In early January, Fed Chairman Alan Greenspan warned that he might raise
interest rates to dampen red-hot economic growth. By January 25, the Dow was
trading below 10000, a drop of more than 14% since the first of the year. The
Nasdaq fared better as many investors flocked to technology stocks, which they
apparently believed would not be hurt by rising interest rates. On February 29,
the Dow closed at 10128, representing a decline of 5.9% for the reporting
period, while the divergent Nasdaq stood at 4697 after a rise of 71.6% over the
six-month period. Elsewhere, many European economies strengthened significantly,
while Japan and the Pacific Rim continued their struggle to sustain an economic
recovery.
Within this environment, Templeton Capital Accumulator Fund provided an 11.2%
six-month cumulative total return, as shown in the Performance Summary on page
6. The Morgan Stanley Capital International All Country (MSCI(R) AC) World Free
Index, (3) the Fund's benchmark, provided a 9.5% cumulative total return for the
same period.
During the reporting period, we attempted to take advantage of the market's
extreme volatility by increasing our buy and sell activity. Overall, our Latin
American equity holdings decreased from 9.7% of total net assets to 8.8%. In
Brazil, rising equity prices caused several of our holdings to reach valuation
targets,
2. The Nasdaq Composite Index measures all Nasdaq domestic and non-U.S. based
common stocks listed on the Nasdaq Stock Market. The Index is market-value
weighted and includes over 5,000 companies (as of 2/29/00).
3. The Morgan Stanley Capital International -- All Country (MSCI AC) World Free
Index measures the performance of securities located in 48 countries including
emerging markets in Latin America, Asia, and Eastern Europe. Securities are
based on those that are legally and practically available to foreign investors.
It is a capitalization-weighted index.
2
and we sold many of the telecommunication stocks acquired from the split-up of
Telebras (Telecomunicacoes Brasileiras) for a gain. Our European investments
also decreased slightly, from 45.5% to 44.0%. In Europe, we took advantage of
the continuing strength in Nokia, a leading telecom equipment manufacturer based
in Finland, to again reduce our position in that stock at a profit.
We also made several additions to the portfolio during the six months under
review. In the U.S., we purchased SBC Communications, the large U.S. regional
telecom company that also has interests in Telefonos de Mexico (TelMex). In our
opinion, SBC has a strong management team and is well positioned to grow
earnings over the long term. We also established a position in Albertson's, a
major food retailer whose stock had been under pressure because of investor
concerns about its acquisition of American Stores, and the possible impact of
competing Internet food retailers. However, we felt these concerns were
exaggerated and believed the stock offered good value. Another new addition to
the portfolio was South Korean-based Hyundai Electronics Industries, a global
leader in the manufacture of computer chips. We expect long-term demand for
computer chips to continue to rise, and think this is one of the best value
stocks in the technology sector.
Looking forward, we are optimistic about the long-term outlook for equity
investing. The concept of shareholder value as a core management goal is being
adopted by more and more companies around the world. Merger and acquisition
activity is increasing, as firms across all industry groups recognize the
TOP 10 INDUSTRIES
2/29/00
% OF TOTAL
INDUSTRY NET ASSETS
---------------------------------------
Telecommunications 21.5%
Banking 10.6%
Insurance 5.6%
Electrical & Electronics 5.2%
Health & Personal Care 5.1%
Financial Services 4.4%
Energy Sources 3.9%
Transportation 3.5%
Data Processing &
Reproduction 3.3%
Multi-Industry 3.3%
3
TOP 10 EQUITY HOLDINGS
2/29/00
COMPANY % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
--------------------------------------------
3Com Corp.
Data Processing &
Reproduction, United States 2.6%
Nortel Networks Corp.
Telecommunications, Canada 2.3%
Skandia Foersaekrings AB
Insurance, Sweden 2.1%
Koninklijke Philips
Electronics NV
Electrical & Electronics,
Netherlands 1.9%
Telefonos de Mexico SA
(TelMex), ADR
Telecommunications, Mexico 1.8%
Total Fina SA, B
Energy Sources, France 1.6%
Nokia Corp., A
Telecommunications, Finland 1.5%
Telecom Italia SpA
Telecommunications, Italy 1.5%
Telefonica SA
Telecommunications, Spain 1.3%
Sony Corp.
Appliances &
Household Durables, Japan 1.3%
need to produce, source or sell their products globally. Meanwhile, pension
reform and deregulation of financial markets are opening new opportunities for
investors and companies. We believe these are powerful forces which may have a
positive impact for shareholders in the future.
While we expect the high volatility that characterized the market during the
reporting period to continue, we currently like the composition of the Fund's
portfolio. Elevated equity prices in many parts of the world have made it more
challenging to identify bargain-priced stocks. However, we believe worthwhile
opportunities should become available as industries and individual companies
stumble and fall temporarily out of favor with investors. We remain committed to
our disciplined investment process, and as others scramble to pay high prices
for "hot" stocks, we shall continue to search diligently for shares selling well
below what we perceive as their intrinsic value and long-term potential.
Of course, investing in foreign securities involves special risks, such as
adverse economic, social and political developments in countries where the Fund
invests, as well as market and currency volatility. Emerging market securities
entail heightened risks related to the same factors, in addition to those
associated with the relatively small size and lesser liquidity of these markets.
Investing in any emerging market means accepting a certain amount of volatility
and, in some cases, the
4
consequences of severe market corrections. For example, Hong Kong's equity
market has increased 1,322% in the last 15 years, but has suffered 6 declines of
more than 15% during that time.4 The special risks associated with these types
of investments, as well as other considerations, are discussed in the Fund's
prospectus.
We thank you for your participation in Templeton Capital Accumulator Fund and
welcome your comments and suggestions.
Sincerely,
/S/ Gary P. Motyl, CFA
- ----------------------
Gary P. Motyl, CFA
Portfolio Manager
Templeton Capital Accumulator Fund, Inc.
4. Source: Bloomberg, Hang Seng Index. Based on quarterly percentage price
change over 15 years ended December 31, 1999. Market return is measured in U.S.
dollar terms and does not include reinvested dividends. The Hang Seng Index is a
capitalization-weighted index of 33 companies that represent approximately 70%
of the total market capitalization of the Stock Exchange of Hong Kong. The
components of the index are divided into four subindexes: Commerce and Industry,
Finance, Utilities, and Properties.
Hong Kong reverted to the sovereignty of China on July 1, 1997.
This discussion reflects our views, opinions and portfolio holdings as of
February 29, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. Market and economic conditions are changing constantly, which can be
expected to affect our strategies and the Fund's portfolio composition. Although
past performance is not predictive of future results, these insights may help
you better understand our investment and management philosophy.
5
1. Cumulative total return represents the change in value of an investment over
the periods indicated.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
Calculations do not include the effect of paying sales charges applicable to
purchases of Fund shares through Templeton Capital Accumulator Plans, which may
vary as discussed in the Plans' 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 Plans' prospectus for information regarding
applicable sales charges.
Past expense waivers by the Fund's manager increased the Fund's total returns.
Without these waivers, the Fund's total returns would have been lower.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 2/29/00
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of the Fund's operating expenses. Past distributions are not indicative of
future trends. All total returns include reinvested distributions at net asset
value.
PERFORMANCE
<TABLE>
<S> <C> <C>
Six-Month Total Return 11.20%
Net Asset Value (NAV) $12.74 (2/29/00) $12.11 (8/31/99)
Change in NAV +$0.63
Distributions (9/1/99-2/29/00) Dividend Income $0.1496
Short-Term Capital Gain $0.1368
Long-Term Capital Gain $0.3486
--------------------------------
TOTAL $0.6350
</TABLE>
ADDITIONAL PERFORMANCE
AS OF 3/31/00
<TABLE>
<CAPTION>
INCEPTION
1-YEAR 5-YEAR (3/1/91)
- ----------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 27.89% 114.68% 251.92%
Average Annual Total Return(2) 27.89% 16.51% 15.00%
Value of $10,000 Investment(3) $12,789 $21,468 $35,192
</TABLE>
For updated performance figures, see "Prices and Performance" on the Internet at
www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
6
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 -------------------------------------------------------
(UNAUDITED)++ 1999++ 1998 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the
period)
Net asset value, beginning of period....... $12.11 $9.69 $10.97 $9.08 $7.97 $8.10
----------------------------------------------------------------------------
Income from investment operations:
Net investment income..................... .02 .18 .18 .18 .19 .14
Net realized and unrealized gains
(losses)................................ 1.25 2.78 (1.00) 2.03 1.10 .12
----------------------------------------------------------------------------
Total from investment operations........... 1.27 2.96 (.82) 2.21 1.29 .26
----------------------------------------------------------------------------
Less distributions from:
Net investment income..................... (.15) (.18) (.18) (.18) (.15) (.10)
Net realized gains........................ (.49) (.36) (.28) (.14) (.03) (.29)
----------------------------------------------------------------------------
Total distributions........................ (.64) (.54) (.46) (.32) (.18) (.39)
----------------------------------------------------------------------------
Net asset value, end of period............. $12.74 $12.11 $9.69 $10.97 $9.08 $7.97
============================================================================
Total Return*.............................. 11.20% 32.01% (7.87)% 25.06% 16.50% 3.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's).......... $340,414 $291,136 $191,913 $172,683 $108,019 $65,538
Ratios to average net assets:
Expenses.................................. 1.05%** 1.11% 1.00% 1.00% 1.00% 1.00%
Expenses, excluding waiver and payments by
affiliate............................... 1.05%** 1.11% 1.09% 1.13% 1.16% 1.34%
Net investment income..................... .37%** 1.60% 1.77% 2.00% 2.56% 2.37%
Portfolio turnover rate.................... 7.93% 13.96% 11.92% 7.43% 11.08% 12.91%
</TABLE>
*Total return is not annualized.
**Annualized.
+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.
++Based on average weighted shares outstanding.
See Notes to Financial Statements.
7
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 93.7%
AEROSPACE & MILITARY TECHNOLOGY 1.3%
BAE Systems Plc. ........................................... United Kingdom 302,910 $ 1,495,542
Boeing Co. ................................................. United States 28,500 1,050,938
Raytheon Co., A............................................. United States 92,000 1,822,750
------------
4,369,230
------------
APPLIANCES & HOUSEHOLD DURABLES 3.0%
Electrolux AB, B............................................ Sweden 111,250 2,093,789
Fisher & Paykel Ltd. ....................................... New Zealand 450,200 1,366,356
Guangdong Kelon Electrical Holdings. Ltd., H................ China 2,000,000 976,512
Sony Corp. ................................................. Japan 14,600 4,319,330
*Windmere-Durable Holdings Inc. ............................ United States 90,000 1,350,000
------------
10,105,987
------------
AUTOMOBILES 3.2%
Fiat SpA.................................................... Italy 43,750 1,334,373
Ford Motor Co. ............................................. United States 24,000 999,000
General Motors Corp. ....................................... United States 25,000 1,901,563
Superior Industries International Inc. ..................... United States 113,000 2,697,875
Volkswagen AG............................................... Germany 47,000 1,914,046
Volvo AB, B................................................. Sweden 90,000 2,119,881
------------
10,966,738
------------
BANKING 9.6%
ABN Amro Holding NV......................................... Netherlands 60,000 1,241,949
Australia & New Zealand Banking Group Ltd. ................. Australia 200,000 1,229,526
*Banca Nazionale del Lavoro SpA............................. Italy 725,000 2,587,466
Banco Bradesco SA, ADR...................................... Brazil 300,000 2,154,846
Bank Austria AG............................................. Austria 34,700 1,510,017
Bank Handlowy W Warszawie SA, GDR, 144A..................... Poland 80,000 1,158,000
Bank of America Corp. ...................................... United States 50,600 2,330,763
Bankinter SA................................................ Spain 45,000 2,839,875
Banque Nationale de Paris................................... France 28,000 2,210,477
BPI-SGPS SA................................................. Portugal 125,855 467,705
Credicorp Ltd. ............................................. Peru 157,900 1,934,275
DBS Group Holdings Ltd. .................................... Singapore 348,900 4,311,406
Foreningssparbanken AB, A................................... Sweden 205,200 2,598,061
*Kookmin Bank............................................... South Korea 125,344 1,396,276
*Nordic Baltic Holding AB, cvt. ............................ Finland 612,000 3,270,081
*Philippine National Bank................................... Philippines 117,383 189,050
*Thai Farmers Bank Public Co. Ltd., fgn. ................... Thailand 1,200,000 1,133,412
------------
32,563,185
------------
BROADCASTING & PUBLISHING .6%
Wolters Kluwer NV........................................... Netherlands 60,000 2,137,885
------------
</TABLE>
8
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
BUILDING MATERIALS & COMPONENTS 1.0%
Pioneer International Ltd. ................................. Australia 675,815 $ 1,801,321
Svedala Industri, A......................................... Sweden 100,000 1,460,021
------------
3,261,342
------------
BUSINESS & PUBLIC SERVICES .3%
Lex Service Plc. ........................................... United Kingdom 165,000 866,090
------------
CHEMICALS 1.9%
Akzo Nobel NV............................................... Netherlands 30,000 1,155,590
BASF AG..................................................... Germany 36,200 1,608,401
Bayer AG, Br. .............................................. Germany 41,000 1,671,673
Great Lakes Chemical Corp. ................................. United States 22,000 639,375
Imperial Chemical Industries Plc. .......................... United Kingdom 200,000 1,540,769
------------
6,615,808
------------
DATA PROCESSING & REPRODUCTION 3.3%
*3Com Corp. ................................................ United States 89,500 8,771,000
Compaq Computer Corp. ...................................... United States 102,000 2,537,250
------------
11,308,250
------------
ELECTRICAL & ELECTRONICS 5.2%
*ABB Ltd. .................................................. Switzerland 10,568 1,124,323
Hitachi Ltd. ............................................... Japan 165,000 2,251,468
*Hyundai Electronics Industries Co. ........................ South Korea 125,500 1,986,067
Koninklijke Philips Electronics NV.......................... Netherlands 34,904 6,460,343
Marconi Plc. ............................................... United Kingdom 240,000 2,989,344
Matsushita Electric Industrial Co. Ltd. .................... Japan 99,000 2,883,801
------------
17,695,346
------------
ELECTRONIC COMPONENTS & INSTRUMENTS 1.4%
*Agilent Technologies Inc. ................................. United States 13,000 1,347,938
Intel Corp. ................................................ United States 32,000 3,616,000
------------
4,963,938
------------
ENERGY EQUIPMENT & SERVICES 1.2%
Sunoco Inc. ................................................ United States 85,000 2,098,438
TransCanada PipeLines Ltd. ................................. Canada 279,276 1,905,467
------------
4,003,905
------------
ENERGY SOURCES 3.9%
Lasmo Plc. ................................................. United Kingdom 900,000 1,342,647
Norsk Hydro ASA............................................. Norway 27,000 1,005,841
Occidental Petroleum Corp. ................................. United States 115,000 1,847,188
*Renaissance Energy Ltd. ................................... Canada 106,000 862,026
</TABLE>
9
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES (CONT.)
Shell Transport & Trading Co. Plc., ADR..................... United Kingdom 65,000 $ 2,701,563
Total Fina SA, B............................................ France 42,222 5,589,276
------------
13,348,541
------------
FINANCIAL SERVICES 4.4%
AXA SA...................................................... France 21,257 2,670,709
ICICI Ltd. ................................................. India 582,498 2,173,787
*ICICI Ltd., ADR............................................ India 101,100 3,867,075
ING Groep NV................................................ Netherlands 32,500 1,643,320
Mutual Risk Management Ltd. ................................ Bermuda 100,000 1,375,000
Nomura Securities Co. Ltd. ................................. Japan 120,000 3,386,282
------------
15,116,173
------------
FOOD & HOUSEHOLD PRODUCTS .8%
Devro Plc. ................................................. United Kingdom 340,000 389,139
Kikkoman Corp. ............................................. Japan 150,000 876,610
Newell Rubbermaid Inc. ..................................... United States 62,500 1,445,313
------------
2,711,062
------------
FOREST PRODUCTS & PAPER 2.4%
*Asia Pulp & Paper Co. Ltd., ADR............................ Indonesia 45,000 258,750
*Asia Pulp & Paper Co. Ltd., ADR, wts., 7/27/00............. Indonesia 9,000 2,250
Boise Cascade Corp. ........................................ United States 24,000 715,500
*Fletcher Challenge Ltd. Forestry Division.................. New Zealand 1,770,000 481,326
Holmen Aktiebolag AB, B..................................... Sweden 34,000 961,789
Jefferson Smurfit Group Plc. ............................... United Kingdom 750,000 1,710,869
Mayr-Melnhof Karton AG...................................... Austria 11,000 604,492
*Shorewood Packaging Corp. ................................. United States 41,250 855,938
Stora Enso OYJ, R, (EUR/FIM Traded)......................... Finland 140,400 1,419,288
Stora Enso OYJ, R, (SEK Traded)............................. Finland 130,627 1,318,637
------------
8,328,839
------------
HEALTH & PERSONAL CARE 5.1%
Abbott Laboratories......................................... United States 100,000 3,275,000
Astrazeneca Plc. ........................................... United Kingdom 26,906 891,547
Aventis SA.................................................. France 46,000 2,347,187
*CellTech Group Plc. ....................................... United Kingdom 163,200 3,442,027
Gehe AG..................................................... Germany 61,750 1,932,121
Mayne Nickless Ltd., A...................................... Australia 445,000 863,616
Nycomed Amersham Plc. ...................................... United Kingdom 234,215 1,842,784
Pharmacia & Upjohn Inc. .................................... United States 57,000 2,714,625
------------
17,308,907
------------
INDUSTRIAL COMPONENTS .3%
Goodyear Tire & Rubber Co. ................................. United States 46,000 1,043,625
------------
</TABLE>
10
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
INSURANCE 5.6%
Ace Ltd. ................................................... Bermuda 74,000 $ 1,322,750
American International Group Inc. .......................... United States 28,827 2,549,388
Muenchener Rueckversicherungs-Gesellschaft.................. Germany 12,600 3,523,958
Skandia Foersaekrings AB.................................... Sweden 175,000 7,166,077
Swiss Reinsurance Co. Zurich................................ Switzerland 605 972,555
XL Capital Ltd., A.......................................... Bermuda 30,000 1,213,135
Zurich Allied Plc. ......................................... United Kingdom 256,000 2,182,335
------------
18,930,198
------------
MACHINERY & ENGINEERING 2.7%
CNH Global NV............................................... Netherlands 124,800 1,380,600
IHC Caland NV............................................... Netherlands 42,000 1,415,244
Invensys Plc. .............................................. United Kingdom 302,643 1,390,309
Kvaerner ASA, A............................................. Norway 24,000 414,854
SIG Schweizerische Industrie-Gesellschaft Holding........... Switzerland 4,000 2,404,699
Tata Engineering & Locomotive Co., GDR, 144A................ India 210,000 913,500
VA Technologie AG, Br. ..................................... Austria 24,000 1,418,710
------------
9,337,916
------------
MERCHANDISING 2.7%
Albertson's Inc. ........................................... United States 76,000 1,862,000
Hudsons Bay Co. ............................................ Canada 90,000 852,860
Marks & Spencer Plc. ....................................... United Kingdom 436,000 1,577,915
Safeway Plc. ............................................... United Kingdom 350,000 848,133
Storehouse.................................................. United Kingdom 655,000 460,139
Target Corp. ............................................... United States 60,000 3,540,000
------------
9,141,047
------------
METALS & MINING 1.2%
Industrias Penoles SA....................................... Mexico 330,000 889,464
Pechiney SA, A.............................................. France 34,000 1,983,652
WMC Ltd. ................................................... Australia 400,000 1,503,436
------------
4,376,552
------------
MISC MATERIALS & COMMODITIES .5%
Golden Hope Plantations Bhd. ............................... Malaysia 1,498,000 1,332,432
Unitor ASA.................................................. Norway 42,550 309,418
------------
1,641,850
------------
MULTI-INDUSTRY 3.3%
Cheung Kong Holdings Ltd. .................................. Hong Kong 290,000 3,856,581
Foster Wheeler Corp. ....................................... United States 164,000 922,500
Hutchison Whampoa Ltd. ..................................... Hong Kong 201,500 3,158,632
Swire Pacific Ltd., A....................................... Hong Kong 170,000 814,745
</TABLE>
11
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MULTI-INDUSTRY (CONT.)
Swire Pacific Ltd., B....................................... Hong Kong 100,000 $ 64,887
Williams Plc. .............................................. United Kingdom 600,000 2,495,856
------------
11,313,201
------------
REAL ESTATE .7%
Equity Office Properties Trust.............................. United States 33,751 807,915
Inversiones Y Representacion SA............................. Argentina 453,035 1,477,116
------------
2,285,031
------------
TELECOMMUNICATIONS 20.2%
Alcatel SA.................................................. France 15,161 3,549,813
Asia Satellite Telecommunications Hldgs. Ltd. .............. Hong Kong 215,000 777,644
British Telecommunications Plc. ............................ United Kingdom 174,000 3,038,030
*Cable & Wireless Optus Ltd., 144A.......................... Australia 712,000 2,824,790
Cia de Telecomunicaciones de Chile SA, ADR.................. Chile 189,725 3,794,500
Motorola Inc. .............................................. United States 20,000 3,410,000
Nippon Telegraph & Telephone Corp. ......................... Japan 200 2,767,284
Nokia Corp., A.............................................. Finland 26,300 5,241,314
Nortel Networks Corp. ...................................... Canada 70,800 7,894,200
Philippine Long Distance Telephone Co. ..................... Philippines 60,000 1,303,075
Portugal Telecom SA......................................... Portugal 207,500 2,950,616
PT Indosat, ADR............................................. Indonesia 9,600 172,200
SBC Communications Inc. .................................... United States 87,000 3,306,000
Telecom Argentina Stet-France Telecom SA, ADR............... Argentina 49,200 2,051,025
Telecom Italia SpA.......................................... Italy 297,100 5,221,539
Telefonica De Argentina SA, ADR............................. Argentina 65,600 2,997,100
*Telefonica SA.............................................. Spain 154,500 4,440,040
Telefonos de Mexico SA (Telmex), ADR........................ Mexico 95,000 6,246,250
Videsh Sanchar Nigam Ltd. .................................. India 50,000 2,556,794
Videsh Sanchar Nigam Ltd., GDR, 144A........................ India 114,000 4,189,500
------------
68,731,714
------------
TEXTILES & APPAREL 1.1%
Hugo Boss AG................................................ Germany 11,250 1,278,052
Kellwood Co. ............................................... United States 60,500 1,020,938
Shaw Industries Inc. ....................................... United States 108,000 1,370,250
------------
3,669,240
------------
TRANSPORTATION 3.5%
Airborne Freight Corp. ..................................... United States 95,000 1,757,500
Autostrade Concessioni e Costruzioni SpA, A................. Italy 340,000 2,950,274
British Airways Plc. ....................................... United Kingdom 538,000 2,554,322
Burlington Northern Santa Fe Corp. ......................... United States 113,000 2,224,688
</TABLE>
12
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TRANSPORTATION (CONT.)
Guangshen Railway Co. Ltd., ADR, H.......................... China 148,000 $ 740,000
Stagecoach Holdings Plc. ................................... United Kingdom 1,079,000 1,584,135
------------
11,810,919
------------
UTILITIES ELECTRICAL & GAS 3.3%
British Energy Ltd. ........................................ United Kingdom 291,145 1,109,977
Endesa SA................................................... Spain 49,200 1,040,661
Evn AG...................................................... Austria 4,030 430,667
Gener SA, ADR............................................... Chile 45,000 697,500
Guangdong Electric Power Development Co Ltd., B,............ China 1,365,000 615,607
Iberdrola SA, Br. .......................................... Spain 135,000 1,693,527
*Korea Electric Power Corp. ................................ South Korea 45,470 1,137,649
Public Service Co. of New Mexico............................ United States 70,000 1,076,250
Veba AG..................................................... Germany 75,000 3,328,694
------------
11,130,532
------------
TOTAL COMMON STOCKS (COST $228,328,819)..................... 319,083,051
------------
PREFERRED STOCKS 3.4%
Banco Itau SA, pfd. ........................................ Brazil 44,000,000 3,493,642
Embratel Participacoes SA, ADR, pfd. ....................... Brazil 65,127 1,563,048
News Corp. Ltd., pfd. ...................................... Australia 312,000 3,904,527
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ................ Brazil 80,127 2,739,342
------------
TOTAL PREFERRED STOCKS (COST $6,866,230).................... 11,700,559
------------
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $10,406,717) 3.1%
U.S. Treasury Bills, 5.055% to 5.710%, with maturities to
5/25/00................................................... United States $10,515,000 10,405,557
------------
TOTAL INVESTMENTS (COST $245,601,766) 100.2%................ 341,189,167
OTHER ASSETS, LESS LIABILITIES (.2%)........................ (775,557)
------------
TOTAL NET ASSETS 100.0%..................................... $340,413,610
============
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
See Notes to Financial Statements.
13
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $245,601,766).... $341,189,167
Receivables:
Investment securities sold................................ 59,236
Capital shares sold....................................... 66,853
Dividends and interest.................................... 595,115
------------
Total assets.......................................... 341,910,371
------------
Liabilities:
Payables:
Investment securities purchased........................... 481,505
Capital shares redeemed................................... 140,946
To affiliates............................................. 243,485
Funds advanced by custodian................................ 212,535
Deferred tax liability (Note 1e)........................... 287,628
Accrued expenses........................................... 130,662
------------
Total liabilities..................................... 1,496,761
------------
Net assets, at value........................................ $340,413,610
============
Net assets consist of:
Undistributed net investment income........................ $ 197,993
Net unrealized appreciation................................ 95,299,773
Accumulated net realized loss.............................. (1,239,643)
Capital shares............................................. 246,155,487
------------
Net assets, at value........................................ $340,413,610
============
Net asset value per share ($340,413,610 / 26,713,473 shares
outstanding)............................................... $12.74
============
</TABLE>
See Notes to Financial Statements.
14
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $122,622)
Dividends.................................................. $ 1,704,902
Interest................................................... 526,431
-----------
Total investment income............................... $ 2,231,333
Expenses:
Management fees (Note 3)................................... 1,184,192
Administrative fees (Note 3)............................... 228,072
Custodian fees............................................. 52,300
Reports to shareholders.................................... 120,700
Registration and filing fees............................... 31,800
Professional fees.......................................... 24,000
Directors' fees and expenses............................... 9,900
Other...................................................... 3,955
-----------
Total expenses........................................ 1,654,919
-----------
Net investment income........................... 576,414
-----------
Realized and unrealized gains (losses):
Net realized loss from:
Investments............................................... (1,236,740)
Foreign currency transactions............................. (2,709)
-----------
Net realized loss..................................... (1,239,449)
Net unrealized appreciation (depreciation) on:
Investments............................................... 34,897,011
Deferred taxes (Note 1e).................................. (287,628)
-----------
Net unrealized appreciation........................... 34,609,383
-----------
Net realized and unrealized gain............................ 33,369,934
-----------
Net increase in net assets resulting from operations........ $33,946,348
===========
</TABLE>
See Notes to Financial Statements.
15
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 576,414 $ 4,024,813
Net realized gain (loss) from investments and foreign
currency transactions.................................... (1,239,449) 12,040,823
Net unrealized appreciation on investments and deferred
taxes.................................................... 34,609,383 50,479,478
---------------------------------------
Net increase in net assets resulting from operations.... 33,946,348 66,545,114
Distributions to shareholders from:
Net investment income..................................... (3,711,941) (3,754,352)
Net realized gains........................................ (11,927,083) (7,440,093)
Capital share transactions (Note 2)........................ 30,970,499 43,872,046
---------------------------------------
Net increase in net assets.............................. 49,277,823 99,222,715
Net assets:
Beginning of period........................................ 291,135,787 191,913,072
---------------------------------------
End of period.............................................. $340,413,610 $291,135,787
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 197,993 $ 3,333,520
=======================================
</TABLE>
See Notes to Financial Statements.
16
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (unaudited)
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. Under
normal market conditions, the Fund invests in equity securities and debt
obligations of companies and governments of any nation. 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. 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.
17
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. 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.
e. DEFERRED TAXES:
Deferred taxes are recorded for estimated tax liabilities inherent in the fund's
portfolio securities which may arise from subsequent sales of those securities
and asset repatriation from countries that impose such taxes.
2. CAPITAL STOCK
At February 29, 2000, there were 100 million shares of capital stock authorized
($0.01 par value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................ 2,807,703 $ 34,106,206 5,135,078 $ 56,136,687
Shares issued on reinvestment of distributions............. 1,376,536 15,345,940 1,158,746 11,145,979
Shares redeemed............................................ (1,507,016) (18,481,647) (2,071,924) (23,410,620)
-------------------------------------------------------------
Net increase............................................... 2,677,223 $ 30,970,499 4,221,900 $ 43,872,046
=============================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton
Investment Counsel, 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
- -----------------------------------------------------------------
<S> <C>
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>
18
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
Notes to Financial Statements (unaudited) (continued)
4. 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 all of its taxable income.
The cost of securities for federal income tax purposes is the same as that shown
in the Statement of Investments. At February 29, 2000, the net unrealized
appreciation based on the cost of investments for income tax purposes was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation................................ $128,527,180
Unrealized depreciation................................ (32,939,779)
------------
Net unrealized appreciation............................ $ 95,587,401
============
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended February 29, 2000 aggregated $45,747,204 and $23,528,494,
respectively.
19
SEMIANNUAL REPORT
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
www.franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton Capital
Accumulator Fund, Inc. prospectus, which contains more complete information
including risk factors, 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. 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.
TLCAP S00 04/00 [RECYCLE GRAPHIC] Printed on recycled paper
