SUPPLEMENT DATED MAY 1, 1995
TO THE PROSPECTUS FOR
FRANKLIN RISING DIVIDENDS FUND
Franklin Managed Trust
dated February 1, 1995
INTRODUCTION. As of May 1, 1995, the Franklin Rising
Dividends Fund (the "Fund") offers two classes to its
investors: Franklin Rising Dividends Fund - Class I ("Class
I") and Franklin Rising Dividends Fund - Class II ("Class
II"). Investors can choose between Class I shares, which
generally bear a higher front-end sales charge and lower
ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"),
and Class II shares, which generally have a lower front-end
sales charge and higher ongoing Rule 12b-1 fees. Investors
should consider the differences between the two classes,
including the impact of sales charges and distribution fees,
in choosing the more suitable class given their anticipated
investment amount and time horizon.
This Supplement must be read in conjunction with the
Prospectus for this Fund. All investment objectives and
policies described in the Prospectus apply equally to both
classes of shares in the new multiclass structure. Further,
all operational procedures apply equally to both classes,
unless otherwise specified in the following discussion. See
"Deciding Which Class To Purchase" below.
THE NEW APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST
BE USED FOR ALL PURCHASES. DO NOT USE THE APPLICATION FORM
INCLUDED IN THE PROSPECTUS.
MULTICLASS FUND STRUCTURE. The Fund has two classes of
shares available for investment: Class I and Class II. ALL
FUND SHARES OUTSTANDING BEFORE THE IMPLEMENTATION OF THE
MULTICLASS STRUCTURE HAVE BEEN REDESIGNATED AS CLASS I
SHARES, AND WILL RETAIN THEIR PREVIOUS RIGHTS AND
PRIVILEGES. See the Prospectus for more details about Class
I shares. Class II shares are explained in detail in the
following discussion. Except as described below, shares of
both classes represent identical interests in the Fund's
investment portfolio.
EXPENSE TABLE
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a
shareholder will bear directly or indirectly in connection
with an investment in the Fund. The figures for both classes
of shares are based on restated aggregate operating expenses
of the Class I shares for the fiscal year ended September
30, 1994.
SHAREHOLDER TRANSACTION EXPENSES
Class I ClassII
Maximum Sales Charge Imposed on
Purchases
(as a percentage of offering 4.50% 1.00%^
price)
Deferred Sales Charge NONE^^ 1.00%+
Exchange Fee (per transaction) $5.00++ $5.00++
ANNUAL FUND OPERATING EXPENSES**
(as a percentage of average net assets)
Management Fees 0.75% 0.75%
Rule 12b-1 Fees 0.48%* 1.00%*
Other Expenses:
Shareholder Servicing Costs 0.07% 0.07%
Reports to Shareholders 0.06% 0.06%
Other 0.07% 0.07%
Total Other Expenses 0.20% 0.20%
Total Fund Operating Expenses 1.43% 1.95%^
^Although Class II has a lower front-end sales charge than
Class I, over time the higher Rule 12b-1 fee for Class II
may cause shareholders to pay more for Class II shares than
for Class I shares. Given the maximum front-end sales charge
and the rate of Rule 12b-1 fees of each class, it is
estimated that this will take less than six years for
shareholders who maintain total shares valued at less than
$100,000 in the Franklin Templeton Funds. Shareholders with
larger investments in the Franklin Templeton Funds will
reach the crossover point more quickly.
^^Class I investments of $1 million or more are not subject
to a front-end sales charge; however, a contingent deferred
sales charge of 1%, which has not been reflected in the
Example below, is generally imposed on certain redemptions
within a "contingency period" of 12 months of the calendar
month following such investments. See "How to Sell Shares of
the Fund - Contingent Deferred Sales Charge."
+Class II shares redeemed within a "contingency period" of
18 months of the calendar month following such investments
are subject to a 1% contingent deferred sales charge. See
"How to Sell Shares of the Fund - Contingent Deferred Sales
Charge."
++$5.00 fee imposed only on Timing Accounts as described
under "Exchange Privilege" in the Prospectus. All other
exchanges are processed without a fee.
*Consistent with National Association of Securities Dealers,
Inc.'s rules, it is possible that the combination of front-
end sales charges and Rule 12b-1 fees could cause long-term
shareholders to pay more than the economic equivalent of the
maximum front-end sales charges permitted under those same
rules.
**"Other Expenses" for Class II shares are estimates based
on the actual expenses incurred by Class I shares for the
fiscal year ended September 30, 1994.
Investors should be aware that the above table is not
intended to reflect in precise detail the fees and expenses
associated with an individual's own investment in the Fund.
Rather, the table has been provided only to assist investors
in gaining a more complete understanding of fees, charges
and expenses. For a more detailed discussion of these
matters, investors should refer to the appropriate sections
of the Prospectus and this Supplement.
EXAMPLE
As required by SEC regulations, the following example
illustrates the expenses, including the maximum front-end
sales charge and applicable contingent deferred sales
charge, that apply to a $1,000 investment in the Fund over
various time periods assuming (1) a 5% annual rate of return
and (2) redemption at the end of each time period.
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
CLASS I $59 $88 $120 $209
CLASS II $40 $71 $114 $235
THIS EXAMPLE IS BASED ON THE RESTATED ANNUAL OPERATING
EXPENSES SHOWN ABOVE AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, WHICH MAY BE MORE
OR LESS THAN THOSE SHOWN. The operating expenses are paid by
the Fund and are borne by shareholders as a result of their
investment in the Fund. (See "Management of the Fund" in the
Prospectus for a description of the Fund's expenses.) In
addition, federal securities regulations require the example
to assume an annual return of 5%, but the Fund's actual
return may be more or less than 5%.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully
evaluate their anticipated investment amount and time
horizon prior to determining which class of shares to
purchase. Generally, an investor who expects to invest less
than $100,000 in the Franklin Templeton Funds and who
expects to make substantial redemptions within approximately
six years or less of investment should consider purchasing
Class II shares. However, the higher annual Rule 12b-1 fees
on Class II shares will result in slightly higher operating
expenses and lower income dividends for Class II shares,
which will accumulate over time to outweigh the difference
in initial sales charges. For this reason, Class I shares
may be more attractive to long-term investors even if no
sales charge reductions are available to them.
Investors who qualify to purchase Class I shares at reduced
sales charges definitely should consider purchasing Class I
shares, especially if they intend to hold their shares for
approximately six years or more. Investors who qualify to
purchase Class I shares at reduced sales charges but who
intend to hold their shares less than approximately six
years should evaluate whether it is more economical to
purchase Class I shares through a Letter of Intent or under
Rights of Accumulation or other means rather than purchasing
Class II shares. INVESTORS INVESTING $1 MILLION OR MORE IN A
SINGLE PAYMENT AND OTHER INVESTORS WHO QUALIFY TO PURCHASE
CLASS I SHARES AT NET ASSET VALUE WILL BE PRECLUDED FROM
PURCHASING CLASS II SHARES. See "How to Buy Shares of the
Fund" in the Prospectus.
Each class represents the same interest in the investment
portfolio of the Fund and has the same rights, except that
each class has a different sales charge, bears the separate
expenses of its Rule 12b-1 distribution plan, and has
exclusive voting rights with respect to such plan. The two
classes also have separate exchange privileges.
ALTERNATIVE PURCHASE ARRANGEMENTS. The difference between
Class I and Class II shares lies primarily in their front-
end and contingent deferred sales charges and Rule 12b-1
fees as described below.
A separate Plan of Distribution has been approved and
adopted for each class ("Class I Plan" and "Class II Plan,"
respectively) pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("1940 Act"). The Rule 12b-1
fees charged to each class will be based solely on the
distribution and servicing fees attributable to that
particular class. Any portion of fees remaining from either
Plan after distribution to securities dealers of up to the
maximum amount permitted under each Plan may be used by the
class to reimburse Franklin Templeton Distributors, Inc.
("Distributors") for routine ongoing promotion and
distribution expenses incurred with respect to such class.
See "Plan of Distribution" in the Prospectus for a
description of such expenses.
CLASS I. Class I shares are generally subject to a variable
sales charge upon purchase and not subject to any sales
charge upon redemption. Class I shares are subject to Rule
12b-1 fees of up to an annual maximum of .50% (.25% for
distribution and related expenses and .25% as a servicing
fee) of average daily net assets of such shares. With this
multiclass structure, Class I shares have higher front-end
sales charges than Class II shares and comparatively lower
Rule 12b-1 fees.
Plan of Distribution. Under the Class I Plan, the Fund will
reimburse Distributors or other securities dealers for
expenses incurred in the promotion, servicing, and
distribution of Class I Fund shares. (See "Management of the
Fund - Plan of Distribution" in the Prospectus and "The
Trust's Underwriter - Plans of Distribution" in the
Statement of Additional Information ("SAI")).
Quantity Discounts and Purchases At Net Asset Value. Class I
shares may be purchased at a reduced front-end sales charge
or at net asset value if certain conditions are met. See
"How to Buy Shares of the Fund."
Contingent Deferred Sales Charge. In most circumstances, a
contingent deferred sales charge will not be assessed
against redemptions of Class I shares. A contingent deferred
sales charge will be imposed on Class I shares only if
shares valued at $1 million or more are purchased after
February 1, 1995 without a sales charge and are subsequently
redeemed within 12 months of the calendar month following
their purchase. See "Contingent Deferred Sales Charge" under
"How to Sell Shares of the Fund" in this Supplement.
CLASS II. The current public offering price of Class II
shares is equal to the net asset value, plus a front-end
sales charge of 1% of the amount invested. Class II shares
are also subject to a contingent deferred sales charge of
1.0% if shares are redeemed within 18 months of the calendar
month following purchase. In addition, Class II shares are
subject to Rule 12b-1 fees of up to a maximum of 1.0% of
average daily net assets of such shares. Class II shares
have lower front-end sales charges than Class I shares and
comparatively higher Rule 12b-1 fees.
Purchases of Class II shares are limited to amounts below $1
million. Any purchases of $1 million or more will
automatically be invested in Class I shares, since that is
more beneficial to investors. Such purchases, however, may
be subject to a contingent deferred sales charge. Investors
may exceed $1 million in Class II shares by cumulative
purchases over a period of time. Investors who intend to
make investments exceeding $1 million, however, should
consider purchasing Class I shares through a Letter of
Intent instead of purchasing Class II shares. See "How to
Buy Shares of the Fund" in the Prospectus for more
information.
Plan of Distribution. Class II's operating expenses will
generally be higher under the Class II Plan. During the
first year following a purchase of Class II shares,
Distributors will keep a portion of the Plan fees
attributable to those shares to partially recoup fees
Distributors pays to securities dealers. Distributors, or
its affiliates, may pay, from its own resources, a
commission of up to 1% of the amount invested to securities
dealers who initiate and are responsible for purchases of
Class II shares.
Contingent Deferred Sales Charge. Unless a waiver applies, a
contingent deferred sales charge of 1% will be imposed on
Class II shares redeemed within 18 months of their purchase.
See "Contingent Deferred Sales Charges" under "How to Sell
Shares of the Fund" in this Supplement.
MANAGEMENT OF THE FUND
The Board of Trustees has carefully reviewed the multiclass
structure to ensure that no material conflict exists between
the two classes of shares. Although the Board does not
expect to encounter material conflicts in the future, the
Board will continue to monitor the Fund and will take
appropriate action to resolve such conflicts if any should
later arise.
In developing the multiclass structure, the Fund has
retained the authority to establish additional classes of
shares. It is the Fund's present intention to offer only two
classes of shares, but new classes may be offered in the
future.
For more information regarding the responsibilities of the
Board and the management of the Fund, please see "Management
of the Fund" in the Prospectus.
CLASS II PLAN OF DISTRIBUTION
Under the Class II Plan, the maximum amount which the Fund
is permitted to pay to Distributors or others for
distribution and related expenses is 0.75% per annum of
Class II shares' daily net assets, payable quarterly. All
expenses of distribution, marketing and related services
over that amount will be borne by Distributors or others who
have incurred them, without reimbursement by the Fund. In
addition, the Class II Plan provides for an additional
payment by the Fund of up to 0.25% per annum of the class'
average daily net assets as a servicing fee, payable
quarterly. This fee will be used to pay securities dealers
or others for, among other things, assisting in establishing
and maintaining customer accounts and records; assisting
with purchase and redemption requests; receiving and
answering correspondence; monitoring dividend payments from
the Fund on behalf of customers, or similar activities
related to furnishing personal services and/or maintaining
shareholder accounts.
The Class II Plan also covers any payments to or by the
Fund, Advisers, Distributors, or other parties on behalf of
the Fund, Advisers or Distributors, to the extent such
payments are deemed to be for the financing of any activity
primarily intended to result in the sale of Class II shares
issued by the Fund within the context of Rule 12b-1. The
payments under the Plan are included in the maximum
operating expenses which may be borne by Class II of the
Fund.
During the first year after the purchase of Class II shares,
Distributors will keep a portion of the Plan fees assessed
on Class II shares to partially recoup fees Distributors
pays to securities dealers.
See the "Plan of Distribution" discussion in the "Management
of the Fund" section in the Prospectus and in the SAI for
more information about both Class I and Class II Plans.
DISTRIBUTIONS TO SHAREHOLDERS
According to the requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), dividends and capital
gains will be calculated and distributed in the same manner
for Class I and Class II shares. The per share amount of any
income dividends will generally differ only to the extent
that each class is subject to different Rule 12b-1 fees.
Unless otherwise, income dividends and capital gain
distributions, if any, will be automatically reinvested in
the shareholder's account in the form of additional shares,
valued at the closing net asset value (without a front-end
sales charge) on the dividend reinvestment date. Dividend
and capital gain distributions are only eligible for
reinvestment at net asset value in the same class of shares
of the Fund or the same class of another of the Franklin
Templeton Funds. See "Distributions to Shareholders" in the
Prospectus and the SAI for more information.
HOW TO BUY SHARES OF THE FUND
The following discussion supplements the one included in the
Prospectus under "How to Buy Shares of the Fund." THE
APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST
ACCOMPANY ANY PURCHASE OF SHARES. DO NOT USE THE APPLICATION
INCLUDED IN THE PROSPECTUS.
PURCHASE PRICE OF FUND SHARES
Shares of both classes of the Fund are offered at their
respective public offering prices, which are determined by
adding the net asset value per share plus a front-end sales
charge, next computed (1) after the shareholder's securities
dealer receives the order which is promptly transmitted to
the Fund, or (2) after receipt of an order by mail from the
shareholder directly in proper form (which generally means a
completed Shareholder Application accompanied by a
negotiable check).
CLASS I. The sales charge for Class I shares is a variable
percentage of the offering price depending upon the amount
of the sale. The offering price will be calculated to two
decimal places using standard rounding criteria. A
description of the method of calculating net asset value per
share is included under the caption "Valuation of Fund
Shares" in the Prospectus.
Set forth below is a table of total front-end sales charges
or underwriting commissions and dealer concessions for Class
I shares:
TOTAL SALES CHARGE
SIZE OF AS A PERCENTAGE AS A PERCENTAGE DEALER
TRANSACTION AT OF OFFERING OF NET AMOUNT CONCESSION AS A
OFFERING PRICE PRICE INVESTED PERCENTAGE OF
OFFERING
PRICE*, ***
Less than 4.50% 4.71% 4.00%
$100,000
$100,000 but 3.75% 3.90% 3.25%
less than
$250,000
$250,000 but 2.75% 2.83% 2.50%
less than
$500,000
$500,000 but 2.25% 2.30% 2.00%
less than
$1,000,000
$1,000,000 or none none (see below)**
more
*Financial institutions or their affiliated brokers may
receive an agency transaction fee in the percentages set
forth above.
**The following commissions will be paid by Distributors,
out of its own resources, to securities dealers who initiate
and are responsible for purchases of $1 million or more:
1.00% on sales of $1 million but less than $2 million, plus
0.80% on sales of $2 million but less than $3 million, plus
0.50% on sales of $3 million but less than $50 million, plus
0.25% on sales of $50 million but less than $100 million,
plus 0.15% on sales of $100 million or more. Dealer
concession breakpoints are reset every 12 months for
purposes of additional purchases.
***At the discretion of Distributors, all sales charges may
at times be allowed to the securities dealer. If 90% or more
of the sales commission is allowed, such securities dealer
may be deemed to be an underwriter as that term is defined
in the Securities Act of 1933, as amended.
No front-end sales charge applies on investments of $1
million or more, but a contingent deferred sales charge of
1% is imposed on certain redemptions of all or a portion of
investments of $1 million or more within the contingency
period. See "How to Sell Shares of the Fund - Contingent
Deferred Sales Charge" in this Supplement.
The size of a transaction which determines the applicable
sales charge on the purchase of Class I shares is determined
by adding the amount of the shareholder's current purchase
plus the cost or current value (whichever is higher) of a
shareholder's existing investment in one or more of the
funds in the Franklin Group of Funds(Registered Trademark)
and the Templeton Group of Funds. Included for these
aggregation purposes are (a) the mutual funds in the
Franklin Group of Funds except Franklin Valuemark Funds and
Franklin Government Securities Trust (the "Franklin Funds"),
(b) other investment products underwritten by Distributors
or its affiliates (although certain investments may not have
the same schedule of sales charges and/or may not be subject
to reduction) and (c) the U.S. registered mutual funds in
the Templeton Group of Funds except Templeton Capital
Accumulator Fund, Inc., Templeton Variable Annuity Fund, and
Templeton Variable Products Series Fund (the "Templeton
Funds"). (Franklin Funds and Templeton Funds are
collectively referred to as the "Franklin Templeton Funds.")
Sales charge reductions based upon aggregate holdings of
(a), (b) and (c) above ("Franklin Templeton Investments")
may be effective only after notification to Distributors
that the investment qualifies for a discount.
Other Payments to Securities Dealers. Distributors, or one
of its affiliates, may make payments, out of its own
resources, of up to 1% of the amount purchased to securities
dealers who initiate and are responsible for purchases made
at net asset value by certain designated retirement plans
(excluding IRA and IRA rollovers), certain non-designated
plans, certain trust companies and trust departments of
banks and certain retirement plans of organizations with
collective retirement plan assets of $10 million or more.
See definitions under "Description of Special Net Asset
Value Purchases" and as set forth in the SAI.
CLASS II. Unlike Class I shares, the front-end sales charges
and dealer concessions for Class II shares do not vary
depending on the amount of purchase. See table below:
TOTAL SALES CHARGE
AS A DEALER
SIZE OF TRANSACTION AS A PERCENTAGE PERCENTAGE CONCESSION AS
AT OFFERING PRICE OF NET OFFERING OF NET A PERCENTAGE
PRICE AMOUNT OF OFFERING
INVESTED PRICE*
any amount (less
than $1 million) 1.00% 1.01% 1.00%
* Distributors, or one of its affiliates, may make
additional payments to securities dealers, from its own
resources, of up to 1% of the amount invested. During the
first year following a purchase of Class II shares,
Distributors will keep a portion of the Plan fees
attributable to those shares to partially recoup fees
Distributors pays to securities dealers.
Class II shares redeemed within eighteen months of their
purchase will be assessed a contingent deferred sales charge
of 1.0% on the lesser of the then-current net asset value or
the net asset value of such shares at the time of purchase,
unless such charge is waived as described under "How to Sell
Shares of the Fund - Contingent Deferred Sales Charge."
The following section, which supersedes that included in the
Prospectus, describes the categories of investors who may
purchase Class I shares of the Fund at net asset value and
when Class I and Class II shares may be purchased at net
asset value. The sections in the Prospectus titled "Quantity
Discounts in Sales Charges" and "Group Purchases" only apply
to Class I shares. Although sales charges on Class II shares
may not be reduced through a Letter of Intent or Rights of
Accumulation as described under "Quantity Discounts in Sales
Charges," the value of Class II shares owned by an investor
may be included in determining the appropriate sales charges
for Class I shares.
PURCHASES AT NET ASSET VALUE
Class I shares may be purchased without the imposition of
either a front-end sales charge ("net asset value") or a
contingent deferred sales charge by (1) officers, trustees,
directors and full-time employees of the Fund, any of the
Franklin Templeton Funds, or of the Franklin Templeton
Group, and by their spouses and family members, including
any subsequent payments made by such parties after cessation
of employment; (2) companies exchanging shares with or
selling assets pursuant to a merger, acquisition or exchange
offer; (3) insurance company separate accounts for pension
plan contracts; (4) accounts managed by the Franklin
Templeton Group; (5) shareholders of Templeton Institutional
Funds, Inc. reinvesting redemption proceeds from that fund
under an employee benefit plan qualified under Section 401
of the Internal Revenue Code of 1986, as amended, in shares
of the Fund; (6) certain unit investment trusts and unit
holders of such trusts reinvesting their distributions from
the trusts in the Fund; (7) registered securities dealers
and their affiliates, for their investment account only, and
(8) registered personnel and employees of securities dealers
and by their spouses and family members, in accordance with
the internal policies and procedures of the employing
securities dealer.
For either Class I or Class II, the same class of shares of
the Fund may be purchased at net asset value by persons who
have redeemed, within the previous 120 days, their shares of
the Fund or another of the Franklin Templeton Funds which
were purchased with a front-end sales charge or assessed a
contingent deferred sales charge on redemption. If a
different class of shares is purchased, the full front-end
sales charge must be paid at the time of purchase of the new
shares. An investor may reinvest an amount not exceeding the
redemption proceeds. While credit will be given for any
contingent deferred sales charge paid on the shares redeemed
and subsequently repurchased, a new contingency period will
begin. Shares of the Fund redeemed in connection with an
exchange into another fund (see "Exchange Privilege") are
not considered "redeemed" for this privilege. In order to
exercise this privilege, a written order for the purchase of
shares of the Fund must be received by the Fund or the
Fund's Shareholder Services Agent within 120 days after the
redemption. The 120 days, however, do not begin to run on
redemption proceeds placed immediately after redemption in a
Franklin Bank Certificate of Deposit ("CD") until the CD
(including any rollover) matures. Reinvestment at net asset
value may also be handled by a securities dealer or other
financial institution, who may charge the shareholder a fee
for this service. The redemption is a taxable transaction
but reinvestment without a sales charge may affect the
amount of gain or loss recognized and the tax basis of the
shares reinvested. If there has been a loss on the
redemption, the loss may be disallowed if a reinvestment in
the same fund is made within a 30-day period. Information
regarding the possible tax consequences of such a
reinvestment is included in the tax section of the
Prospectus and the SAI.
For either Class I or Class II, the same class of shares of
the Fund or of another of the Franklin Templeton Funds may
be purchased at net asset value and without a contingent
deferred sales charge by persons who have received dividends
and capital gain distributions in cash from investments in
that class of shares of the Fund within 120 days of the
payment date of such distribution. To exercise this
privilege, a written request to reinvest the distribution
must accompany the purchase order. Additional information
may be obtained from Shareholder Services at 1-800/632-2301.
See "Distributions in Cash" under "Distributions to
Shareholders" in the Prospectus.
Class I shares may be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by investors who have, within the past 60 days, redeemed an
investment in a mutual fund which is not part of the
Franklin Templeton Funds and which charged the investor a
contingent deferred sales charge upon redemption and which
has investment objectives similar to those of the Fund.
Class I shares may be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by broker-dealers who have entered into a supplemental
agreement with Distributors, or by registered investment
advisors affiliated with such broker-dealers, on behalf of
their clients who are participating in a comprehensive fee
program (sometimes known as a wrap fee program).
Class I shares may be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by anyone who has taken a distribution from an existing
retirement plan already invested in the Franklin Templeton
Funds (including former participants of the Franklin
Templeton Profit Sharing 401(k) plan), to the extent of such
distribution. In order to exercise this privilege a written
order for the purchase of shares of the Fund must be
received by Franklin Templeton Trust Company (the "Trust
Company"), the Fund or Investor Services, within 120 days
after the plan distribution.
Class I shares may also be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by any state, county, or city, or any instrumentality,
department, authority or agency thereof which has determined
that the Fund is a legally permissible investment and which
is prohibited by applicable investment laws from paying a
sales charge or commission in connection with the purchase
of shares of any registered management investment company
("an eligible governmental authority"). SUCH INVESTORS
SHOULD CONSULT THEIR OWN LEGAL ADVISORS TO DETERMINE WHETHER
AND TO WHAT EXTENT THE SHARES OF THE FUND CONSTITUTE LEGAL
INVESTMENTS FOR THEM. Municipal investors considering
investment of proceeds of bond offerings into the Fund
should consult with expert counsel to determine the effect,
if any, of various payments made by the Fund or its
investment manager on arbitrage rebate calculations. If an
investment by an eligible governmental authority at net
asset value is made through a securities dealer who has
executed a dealer agreement with Distributors, Distributors
or one of its affiliates may make a payment, out of their
own resources, to such securities dealer in an amount not to
exceed 0.25% of the amount invested. Contact Franklin's
Institutional Sales Department for additional information.
DESCRIPTION OF SPECIAL NET ASSET VALUE PURCHASES
Class I shares may also be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by certain designated retirement plans, including profit
sharing, pension, 401(k) and simplified employee pension
plans ("designated plans"), subject to minimum requirements
with respect to number of employees or amount of purchase,
which may be established by Distributors. Currently those
criteria require that the employer establishing the plan
have 200 or more employees or that the amount invested or to
be invested during the subsequent 13-month period in the
Fund or in any of the Franklin Templeton Investments totals
at least $1,000,000. Employee benefit plans not designated
above or qualified under Section 401 of the Code ("non-
designated plans") may be afforded the same privilege if
they meet the above requirements as well as the uniform
criteria for qualified groups previously described under
"Group Purchases" which enable Distributors to realize
economies of scale in its sales efforts and sales related
expenses.
Class I shares may be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by trust companies and bank trust departments for funds over
which they exercise exclusive discretionary investment
authority and which are held in a fiduciary, agency,
advisory, custodial or similar capacity. Such purchases are
subject to minimum requirements with respect to amount of
purchase, which may be established by Distributors.
Currently, those criteria require that the amount invested
or to be invested during the subsequent 13-month period in
this Fund or any of the Franklin Templeton Investments must
total at least $1,000,000. Orders for such accounts will be
accepted by mail accompanied by a check or by telephone or
other means of electronic data transfer directly from the
bank or trust company, with payment by federal funds
received by the close of business on the next business day
following such order.
Class I shares may be purchased at net asset value and
without the imposition of a contingent deferred sales charge
by trustees or other fiduciaries purchasing securities for
certain retirement plans of organizations with collective
retirement plan assets of $10 million or more, without
regard to where such assets are currently invested.
For a complete understanding of how to buy shares of the
Fund, this Supplement must be read in conjunction with the
Prospectus. Refer to the SAI for further information
regarding net asset value purchases of Class I shares.
PURCHASING CLASS I AND CLASS II SHARES
When placing purchase orders, investors should clearly
indicate which class of shares they intend to purchase. A
purchase order that fails to specify a class will
automatically be invested in Class I shares. Purchases of $1
million or more in a single payment will be invested in
Class I shares. There are no conversion features attached to
either class of shares.
Investors who qualify to purchase Class I shares at net
asset value should purchase Class I rather than Class II
shares. See the section "Purchases at Net Asset Value" and
"Description of Special Net Asset Value Purchases" above for
a discussion of when shares may be purchased at net asset
value.
OTHER PROGRAMS AND PRIVILEGES AVAILABLE TO FUND SHAREHOLDERS
With the exception of Systematic Withdrawal Plans, all
programs and privileges detailed under the discussion of
"Other Programs and Privileges Available to the Fund
Shareholders" will remain in effect as described in the
Prospectus for the new multiclass structure. For a complete
discussion of these programs, see "Other Programs and
Privileges Available to Fund Shareholders" in the
Prospectus.
SYSTEMATIC WITHDRAWAL PLANS. Subject to the requirements
outlined in the Prospectus, a shareholder may establish a
Systematic Withdrawal Plan for his or her account. With
respect to Class I shares, the contingent deferred sales
charge is waived for redemptions through a Systematic
Withdrawal Plan set up prior to February 1, 1995. With
respect to Systematic Withdrawal Plans set up on or after
February 1, 1995, the applicable contingent deferred sales
charge is waived for Class I and Class II share redemptions
of up to 1% monthly of an account's net asset value (12%
annually, 6% semi-annually, 3% quarterly). For example, if a
Class I account maintained an annual balance of $1,000,000,
only $120,000 could be withdrawn through a once-yearly
Systematic Withdrawal Plan free of charge; any amount over
that $120,000 would be assessed a 1% (or applicable)
contingent deferred sales charge. Likewise, if a Class II
account maintained an annual balance of $10,000, only $1,200
could be withdrawn through a once-yearly Systematic
Withdrawal Plan free of charge.
EXCHANGE PRIVILEGE
Shareholders are entitled to exchange their shares for
shares of the same class of other Franklin Templeton Funds
which are eligible for sale in the shareholder's state of
residence and in conformity with such fund's stated
eligibility requirements and investment minimums. Some
funds, however, may not offer Class II shares. Class I
shares may be exchanged for Class I shares of any Franklin
Templeton Funds. Class II shares may be exchanged for Class
II shares of any Franklin Templeton Funds. No exchanges
between different classes of shares will be allowed. A
contingent deferred sales charge will not be imposed on
exchanges. If, however, the exchanged shares were subject to
a contingent deferred sales charge in the original fund
purchased and shares are subsequently redeemed within 12
months (Class I shares) or 18 months (Class II shares) of
the calendar month following the original purchase date, a
contingent deferred sales charge will be imposed. Investors
should review the prospectus of the fund they wish to
exchange from and the fund they wish to exchange into for
all specific requirements or limitations on exercising the
exchange privilege, for example, minimum holding periods or
applicable sales charges.
EXCHANGES OF CLASS I SHARES
The contingency period of Class I shares will be tolled (or
stopped) for the period such shares are exchanged into and
held in a Franklin or Templeton money market fund. If a
Class I account has shares subject to a contingent deferred
sales charge, Class I shares will be exchanged into the new
account on a "first-in, first-out" basis. See also "How to
Sell Shares of the Fund - Contingent Deferred Sales Charge."
EXCHANGES OF CLASS II SHARES
When an account is composed of Class II shares subject to
the contingent deferred sales charge, and shares that are
not, the shares will be transferred proportionately into the
new fund. Shares received from reinvestment of dividends and
capital gains are referred to as "free shares," shares which
were originally subject to a contingent deferred sales
charge but to which the contingent deferred sales charge no
longer applies are called "matured shares," and shares still
subject to the contingent deferred sales charge are referred
to as "CDSC liable shares." CDSC liable shares held for
different periods of time are considered different types of
CDSC liable shares. For instance, if a shareholder has
$1,000 in free shares, $2,000 in matured shares, and $3,000
in CDSC liable shares, and the shareholder exchanges $3,000
into a new fund, $500 will be exchanged from free shares,
$1,000 from matured shares, and $1,500 from CDSC liable
shares. Similarly, if CDSC liable shares have been purchased
at different periods, a proportionate amount will be taken
from shares held for each period. If, for example, a
shareholder holds $1,000 in shares bought 3 months ago,
$1,000 bought 6 months ago, and $1,000 bought 9 months ago,
and the shareholder exchanges $1,500 into a new fund, $500
from each of these shares will be deemed exchanged into the
new fund.
The only money market fund exchange option available to
Class II shareholders is the Franklin Templeton Money Fund
II ("Money Fund II"), a series of the Franklin Templeton
Money Fund Trust. No drafts (checks) may be written on Money
Fund II accounts, nor may shareholders purchase shares of
Money Fund II directly. Class II shares exchanged for shares
of Money Fund II will continue to age and a contingent
deferred sales charge will be assessed if CDSC liable shares
are redeemed. No other money market funds are available for
Class II shareholders for exchange purposes. Class I shares
may be exchanged for shares of any of the money market funds
in the Franklin Templeton Funds except Money Fund II. Draft
writing privileges and direct purchases are allowed on these
other money market funds as described in their respective
prospectuses.
To the extent shares are exchanged proportionately, as
opposed to another method, such as first-in first-out, or
free-shares followed by CDSC liable shares, the exchanged
shares may, in some instances, be CDSC liable even though a
redemption of such shares, as discussed elsewhere herein,
may no longer be subject to a CDSC. The proportional method
is believed by management to more closely meet and reflect
the expectations of Class II shareholders in the event
shares are redeemed during the contingency period. For
federal income tax purposes, the cost basis of shares
redeemed or exchanged is determined under the Code without
regard to the method of transferring shares chosen by the
Fund.
TRANSFERS
Transfers between identically registered accounts in the
same fund and class are treated as non-monetary and non-
taxable events, and are not subject to a contingent deferred
sales charge. The transferred shares will continue to age
from the date of original purchase. Like exchanges, Class
II shares will be moved proportionately from each type of
shares in the original account.
CONVERSION RIGHTS
It is not presently anticipated that Class II shares will be
converted to Class I shares. A shareholder may, however,
sell his Class II shares and use the proceeds to purchase
Class I shares, subject to all applicable sales charges.
See "Exchange Privilege" in the Prospectus for more
information.
HOW TO SELL SHARES OF THE FUND
For a discussion regarding the sale of either class of Fund
shares, refer to the section in the Prospectus titled "How
to Sell Shares of the Fund." In addition, the charges
described in this Supplement will also apply to the sale of
all Fund shares.
CONTINGENT DEFERRED SALES CHARGE
CLASS I. In order to recover commissions paid to securities
dealers on investments of $1 million or more, a contingent
deferred sales charge of 1% applies to redemptions of those
investments within the contingency period of 12 months of
the calendar month following their purchase. The charge is
1% of the lesser of the net asset value of the shares
redeemed (exclusive of reinvested dividends and capital gain
distributions) or the total cost of such shares at the time
of purchase, and is retained by Distributors. The contingent
deferred sales charge is waived in certain instances. See
below and "Purchases at Net Asset Value" under "How to Buy
Shares of the Fund."
CLASS II. Class II shares redeemed within the contingency
period of 18 months of the calendar month following their
purchase will be assessed a contingent deferred sales
charge, unless one of the exceptions described below
applies. The charge is 1% of the lesser of the value of the
shares redeemed (exclusive of reinvested dividends and
capital gain distributions) or the net asset value at the
time of purchase of such shares, and is retained by
Distributors. The contingent deferred sales charge is waived
in certain instances. See below.
CLASS I AND CLASS II. In determining if a contingent
deferred sales charge applies, shares not subject to a
contingent deferred sales charge are deemed to be redeemed
first, in the following order: (i) Shares representing
amounts attributable to capital appreciation of those shares
held less than the contingency period (12 months in the case
of Class I shares and 18 months in the case of Class II
shares); (ii) shares purchased with reinvested dividends and
capital gain distributions; and (iii) other shares held
longer than the contingency period; and followed by any
shares held less than the contingency period, on a "first
in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in
redemption proceeds or an adjustment to the cost basis of
the shares redeemed.
The contingent deferred sales charge on each class of shares
is waived, as applicable, for: exchanges; any account fees;
distributions to participants or their beneficiaries in
Trust Company retirement plan accounts due to death,
disability or attainment of age 59 1/2; tax-free returns of
excess contributions from employee benefit plans;
distributions from employee benefit plans, including those
due to termination or plan transfer; redemptions through a
Systematic Withdrawal Plan set up for shares prior to
February 1, 1995, and for Systematic Withdrawal Plans set up
thereafter, redemptions of up to 1% monthly of an account's
net asset value (3% quarterly, 6% semiannually or 12%
annually); redemptions initiated by the Fund due to a
shareholder's account falling below the minimum specified
account size; and redemptions following the death of the
shareholder or the beneficial owner.
All investments made during a calendar month, regardless of
when during the month the investment occurred, will age one
month on the last day of that month and each subsequent
month.
Requests for redemptions for a SPECIFIED DOLLAR amount will
result in additional shares being redeemed to cover any
applicable contingent deferred sales charge, while requests
for redemption of a SPECIFIC NUMBER of shares will result in
the applicable contingent deferred sales charge being
deducted from the total dollar amount redeemed.
VALUATION OF FUND SHARES
The following sentence replaces the first sentence of the
first paragraph in this section; the subsequent paragraph is
added to the end of this section.
The net asset value per share of each class of the Fund is
determined as of the scheduled closing time of the New York
Stock Exchange ("Exchange") (generally 1:00 p.m. Pacific
time) each day that the Exchange is open for trading.
Each of the Fund's classes will bear, prorata, all of the
common expenses of the Fund. The net asset value of all
outstanding shares of each class of the Fund will be
computed on a pro-rata basis for each outstanding share
based on the proportionate participation in the Fund
represented by the value of shares of such classes, except
that the Class I and Class II shares will bear the Rule 12b-
1 expenses payable under their respective plans. Due to the
specific distribution expenses and other costs that will be
allocable to each class, the dividends paid to each class of
the Fund may vary.
HOW TO GET INFORMATION REGARDING AN INVESTMENT IN THE FUND
Replace the second and third paragraphs in this section with
the following language:
From a touch-tone phone, Franklin and Templeton shareholders
may access an automated system (day or night) which offers
the following features.
By calling the Franklin TeleFACTS system, Class I
shareholders may obtain current price, yield or other
performance information specific to a Franklin fund; process
an exchange into an identically registered Franklin account;
obtain account information and request duplicate
confirmation or year-end statements, money fund checks, if
applicable, and deposit slips.
By calling the Templeton Star Service, shareholders may
obtain current price and yield information specific to a
Templeton fund, regardless of class, or Franklin Class II
shares; obtain account information, request duplicate
confirmation or year-end statements and money fund checks,
if applicable.
Share prices and account information specific to Templeton
Class I or II shares and Franklin Class II shares may also
be accessed on TeleFACTS by Franklin Class I and Class II
shareholders.
The TeleFACTS system is accessible by calling 1-800/247-
1753. The Star Service is accessible by calling 1-800/654-
0123. Franklin Class I and Class II share codes for the
Fund, which will be needed to access system information are
158 and 258, respectively. The system's automated operator
will prompt the caller with easy to follow step-by-step
instructions from the main menu. Other features may be added
in the future.
PERFORMANCE (CLASS II)
Because Class II shares were not offered prior to May 1,
1995, no performance data is available for these shares.
After a sufficient period of time has passed, Class II
performance data as described in the "Performance" section
of the Prospectus will be available.
GENERAL INFORMATION
With the exception of Voting Rights, all rights and
privileges detailed under the discussion of "General
Information" will remain in effect as described in the
Prospectus for the new multiclass structure. For a complete
discussion of these rights and privileges, see "General
Information" in the Prospectus.
VOTING RIGHTS. Shares of each class represent proportionate
interests in the assets of the Fund and have the same voting
and other rights and preferences as the other class of the
Fund for matters that affect the Fund as a whole. For
matters that only affect a certain class of the Fund's
shares, however, only shareholders of that class will be
entitled to vote. Therefore, each class of shares will vote
separately on matters (1) affecting only that class, (2)
expressly required to be voted on separately by the state
business trust law, or (3) required to be voted on
separately by the 1940 Act or the rules adopted thereunder.
For instance, if a change to the Rule 12b-1 plan relating to
Class I shares requires shareholder approval, only
shareholders of Class I may vote on changes to the Rule 12b-
1 plan affecting that class. Similarly, if a change to the
Rule 12b-1 plan relating to Class II shares requires
shareholder approval, only shareholders of Class II may vote
on the change to such plan. On the other hand, if there is a
proposed change to the investment objective of the Fund,
this affects all shareholders, regardless of which class of
shares they hold, and therefore, each share has the same
voting rights. For more information regarding voting rights,
see the "Voting Rights" discussion in the Prospectus under
the heading "General Information."
SUPPLEMENT DATED MAY 1, 1995
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN MANAGED TRUST
dated February 1, 1995
As described in its Prospectus, the Rising Dividends Fund
(the "Rising Dividends Fund") now offers two classes of
shares to its investors. This new structure allows investors
to consider, among other features, the impact of sales
charges and distribution fees ("Rule 12b-1 fees") on their
investments in this Fund.
ADD THE FOLLOWING AS THE LAST SENTENCE OF THE PARAGRAPH
DESCRIBING FEES PAID TO THE MANAGER UNDER "INVESTMENT
ADVISORY AND OTHER SERVICES":
Each class of the Rising Dividends Fund will pay its share
of the fee as determined by the proportion of the Rising
Dividends Fund that it represents.
EACH CLASS OF SHARES OF THE RISING DIVIDENDS FUND HAS A
SEPARATE DISTRIBUTION PLAN. FOR THIS REASON, THE FIRST
PARAGRAPH OF THE SECTION "THE TRUST'S UNDERWRITER -
DISTRIBUTION PLANS" HAS BEEN REPLACED WITH THE FOLLOWING
PARAGRAPH:
PLANS OF DISTRIBUTION
Each class of the Rising Dividends Fund has adopted a
Distribution Plan ("Class I Plan" and "Class II Plan,"
respectively) pursuant to Rule 12b-1 under the 1940 Act. The
Franklin Investment Grade Income Fund (the "Investment Grade
Fund") and the Franklin Corporate Qualified Dividend Fund
(the "Corporate Qualified Fund") have also adopted a Plan
pursuant to Rule 12b-1 (the "Investment Grade Fund Plan" and
the "Corporate Qualified Fund Plan"). The Investment Grade
Fund Plan, the Corporate Qualified Fund Plan, Class I Plan
and Class II Plan may collectively be referred to as the
"Plans." Pursuant to the Class I Plan, the Investment Grade
Fund Plan and the Corporate Qualified Fund Plan, each may
pay up to a maximum of 0.25% per annum (0.25 of 1%) of its
average daily net assets for expenses incurred in the
promotion and distribution of its shares. In addition,
pursuant to the Class I Plan, the Rising ividends Fund may
pay up to an additional 0.25% per annum (0.25 of 1%) of its
average daily net assets to Distributors or others as a
service fee to reimburse such service providers for personal
services provided to shareholders of the Fund and/or the
maintenance of shareholder accounts. Thus, the amounts
payable under the Class I Plan related to the Franklin
Rising Dividends Fund total 0.50%.
THE PARAGRAPH DESCRIBED ABOVE AND THE NEXT TWO PARAGRAPHS OF
THIS SECTION IN THE STATEMENT OF ADDITIONAL INFORMATION ONLY
CONCERN THE CLASS I PLAN, THE INVESTMENT GRADE FUND PLAN AND
THE CORPORATE QUALIFIED FUND PLAN. THE FOLLOWING PARAGRAPH
HAS BEEN ADDED TO THIS SECTION AFTER THE DISCUSSION OF THE
CLASS I PLAN, THE INVESTMENT GRADE FUND PLAN AND THE
CORPORATE QUALIFIED FUND PLAN TO DESCRIBE THE CLASS II PLAN:
THE CLASS II PLAN
Under the Class II Plan, the Rising Dividends Fund is
permitted to pay to Distributors or others annual
distribution fees, payable quarterly of 0.75% of Class II's
average daily net assets, in order to compensate
Distributors or others for providing distribution and
related services and bearing certain expenses of the Class.
All expenses of distribution and marketing over that amount
will be borne by Distributors, or others who have incurred
them, without reimbursement by the Rising Dividends Fund. In
addition to this amount, under the Class II Plan, the Rising
Dividends Fund shall pay 0.25% per annum, payable quarterly,
of the Class II average daily net assets as a servicing fee.
This fee will be used to pay dealers or others for, among
other things, assisting in establishing and maintaining
customer accounts and records; assisting with purchase and
redemption requests; receiving and answering correspondence;
monitoring dividend payments from the Rising Dividends Fund
on behalf of customers, and similar activities related to
furnishing personal services and maintaining shareholder
accounts. Distributors may pay the securities dealer, from
its own resources, a commission of up to 1% of the amount
invested at the time of investment.
THE SUBSEQUENT PARAGRAPHS IN THE SECTION "DISTRIBUTION
PLANS" APPLY EQUALLY TO BOTH CLASS I AND CLASS II PLANS, AND
THE INVESTMENT GRADE FUND PLAN AND THE CORPORATE QUALIFIED
FUND PLAN WITH THE EXCEPTIONS THAT (1) THE SENTENCE
REGARDING UNREIMBURSED EXPENSES REFERS TO THE CLASS I PLAN,
THE INVESTMENT GRADE FUND PLAN AND THE CORPORATE QUALIFIED
FUND PLAN ONLY, AND (2) THE CLASS II PLAN WAS APPROVED BY
THE BOARD OF TRUSTEES AND THE SOLE INITIAL SHAREHOLDER PRIOR
TO MAY 1, 1995, AND IS EFFECTIVE FROM MAY 1, 1995.
THE OFFICERS AND TRUSTEES SECTION IS REVISED TO READ AS
FOLLOWS:
OFFICERS AND TRUSTEES
The Board of Trustees has the responsibility for the overall
management of the Trust, including general supervision and
review of its investment activities. The trustees, in turn,
elect the officers of the Trust who are responsible for
administering the day-to-day operations of the Trust. The
affiliations of the officers and trustees and their
principal occupations for the past five years are listed
below. Trustees who are deemed to be "interested persons" of
the Trust, as defined in the 1940 Act, are indicated by an
asterisk (*).
Frank T. Crohn (70)
7251 West Palmetto Park Road
Boca Raton, FL 33433
Trustee
Chairman and Chief Executive Officer, Financial Benefit Life
Insurance Company and Financial Benefit Group, Inc.;
Director, Unity Mutual Life Insurance Company; and trustee
of three of the investment companies in the Franklin Group
of Funds.
*William J. Lippman (70)
One Parker Plaza
Fort Lee, NJ 07024
President and Trustee
Senior Vice President, Franklin Resources, Inc., Franklin
Advisers, Inc., Franklin Templeton Distributors, Inc. and
Franklin Management, Inc.; officer and/or director or
trustee of six of the investment companies in the Franklin
Group of Funds.
Charles Rubens II (65)
18 Park Road
Scarsdale, NY 10583
Trustee
Private Investor; and trustee of three of the investment
companies in the Franklin Group of Funds.
Leonard Rubin (69)
501 Broad Avenue
Ridgefield, NJ 07657
Trustee
Chairman of the Board, Carolace Embroidery Co., Inc.;
President, F.N.C Textiles, Inc.; Vice President, Trimtex Co.
Inc.; and trustee of three of the investment companies in
the Franklin Group of Funds.
Harmon E. Burns (50)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Executive Vice President, Secretary and Director, Franklin
Resources, Inc.; Executive Vice President and Director,
Franklin Templeton Distributors, Inc.; Executive Vice
President, Franklin Advisers, Inc.; Director,
Franklin/Templeton Investor Services, Inc.; officer and/or
director, as the case may be, of other subsidiaries of
Franklin Resources, Inc.; and officer and/or director or
trustee of 41 of the investment companies in the Franklin
Templeton Group of Funds.
Kenneth V. Domingues (62)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President - Financial Reporting and Accounting
Standards
Senior Vice President, Franklin Resources, Inc., Franklin
Advisers, Inc., and Franklin Templeton Distributors, Inc.;
officer and/or director, as the case may be, of other
subsidiaries of Franklin Resources, Inc.; and Officer and/or
managing general partner, as the case may be, of 36 of the
investment companies in the Franklin Group of Funds.
Martin L. Flanagan (34)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and
Treasurer, Franklin Resources, Inc.; Executive Vice
President, Templeton Worldwide, Inc.; Senior Vice President
and Treasurer, Franklin Advisers, Inc. and Franklin
Templeton Distributors, Inc.; Senior Vice President,
Franklin/Templeton Investor Services, Inc.; officer of most
other subsidiaries of Franklin Resources, Inc.; and officer
of 60 of the investment companies in the Franklin Templeton
Group of Funds.
Deborah R. Gatzek (46)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Secretary
Senior Vice President - Legal, Franklin Resources, Inc. and
Franklin Templeton Distributors, Inc.; Vice President,
Franklin Advisers, Inc. and officer of 36 of the investment
companies in the Franklin Group of Funds.
Rupert H. Johnson, Jr. (54)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Executive Vice President and Director, Franklin Resources,
Inc. and Franklin Templeton Distributors, Inc.; President
and Director, Franklin Advisers, Inc.; Director,
Franklin/Templeton Investor Services, Inc.; and officer
and/or director, trustee or managing general partner, as the
case may be, of most other subsidiaries of Franklin
Resources, Inc. and of 42 of the investment companies in the
Franklin Templeton Group of Funds.
Diomedes Loo-Tam (56)
777 Mariners Island Blvd.
San Mateo, CA 94404
Treasurer and Principal Accounting Officer
Employee of Franklin Advisers, Inc.; and officer of 36 of
the investment companies in the Franklin Group of Funds.
Edward V. McVey (57)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President/National Sales Manager, Franklin
Templeton Distributors, Inc.; and officer of 31 of the
investment companies in the Franklin Group of Funds.
R. Martin Wiskemann (68)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President, Portfolio Manager and Director,
Franklin Advisers, Inc.; Senior Vice President, Franklin
Management, Inc.; Vice President, Treasurer and Director,
ILA Financial Services, Inc. and Arizona Life Insurance
Company of America; and officer and/or director, as the case
may be, of 19 of the investment companies in the Franklin
Group of Funds.
Trustees not affiliated with the investment manager
("nonaffiliated trustees") are currently paid fees of $1,800
per quarter plus $900 per meeting attended. During the
fiscal year ended September 30, 1994, fees totaling $29,850
were paid to nonaffiliated trustees of the Trust. As
indicated above, certain of the trustees and officers hold
positions with other companies in the Franklin Group of
Funds(Registered Trademark) and the Templeton Funds
("Franklin Templeton Funds"). The following table shows the
fees paid by the Trust to its nonaffiliated trustees and the
total fees paid to such trustees by the Trust and other
Franklin Templeton Funds for which they serve as directors,
trustees or managing general partners.
TOTAL
COMPENSATION
FROM
NUMBER OF FRANKLIN
FRANKLIN TEMPLETON
TEMPLETON FUNDS,
AGGREGATE FUNDS BOARDS INCLUDING
COMPENSATION ON WHICH THE
NAME FROM TRUST* EACH SERVES TRUST**
Frank Crohn $9,450 3 $14,700
Charles Rubens II $10,200 3 $15,900
Leonard Rubin $10,200 3 $15,900
*For the fiscal year ended September 30, 1994.
**For the calendar year ended December 31,1994.
Nonaffiliated trustees are also reimbursed for expenses
incurred in connection with attending Board meetings, paid
pro rata by each Franklin Templeton Fund for which they
serve as directors, trustees or managing general partners.
No officer or trustee received any other compensation
directly from the Trust.
As of April 7, 1995, the trustees and officers, as a group,
owned of record and beneficially approximately 79,080 shares
of the Rising Dividends Fund and 1,810 shares of the
Investment Grade Fund or less than 1% of the total
outstanding shares of each respective Fund. The trustees
and officers did not own any shares of the Corporate
Qualified Fund. In addition, many of the Trust's trustees
own shares in various of the other funds in the Franklin
Group of Funds and the Templeton Group of Funds. Certain
officers or trustees who are shareholders of Franklin
Resources, Inc. may be deemed to receive indirect
remuneration by virtue of their participation, if any, in
the fees paid to its subsidiaries.
From time to time, the number of each Fund's shares held in
"street name" accounts of various securities dealers for the
benefit of their clients or in centralized securities
depositories may exceed 5% of the total shares outstanding.
To the best of the Funds' knowledge, as of April 7, 1995, no
shareholders of any of the Funds, beneficial or of record,
owned 5% or more of any of the Funds' shares.
THE FOLLOWING PARAGRAPH IS ADDED TO "ADDITIONAL INFORMATION
REGARDING TRUST SHARES":
Each Fund may impose a $10 charge for each returned item
against any shareholder account which, in connection with
the purchase of Fund shares, submits a check or a draft
which is returned unpaid to such Fund.
THE FOLLOWING REPLACES THE SUBSECTION "ADDITIONAL
INFORMATION REGARDING PURCHASES" UNDER "ADDITIONAL
INFORMATION REGARDING TRUST SHARES":
SPECIAL NET ASSET VALUE PURCHASES. As discussed in the
Prospectuses of the Rising Dividends Fund and the Investment
Grade Fund under "How to Buy Shares of the Fund -
Description of Special Net Asset Value Purchases," certain
categories of investors may purchase shares of the Rising
Dividends Fund (Class I) and the Investment Grade Fund at
net asset value (without a front-end or contingent deferred
sales charge). Distributors or one of its affiliates may
make payments, out of its own resources, to securities
dealers who initiate and are responsible for such purchases,
as indicated below. Distributors may make these payments in
the form of contingent advance payments, which may require
reimbursement from the securities dealers with respect to
certain redemptions made within 12 months of the calendar
month following purchase, as well as other conditions, all
of which may be imposed by an agreement between
Distributors, or its affiliates, and the securities dealer.
The following amounts will be paid by Distributors or one of
its affiliates, out of its own resources, to securities
dealers who initiate and are responsible for (i) purchases
of most equity and fixed-income Franklin Templeton Funds
made at net asset value by certain designated retirement
plans (excluding IRA and IRA rollovers): 1.00% on sales of
$1 million but less than $2 million, plus 0.80% on sales of
$2 million but less than $3 million, plus 0.50% on sales of
$3 million but less than $50 million, plus 0.25% on sales of
$50 million but less than $100 million, plus 0.15% on sales
of $100 million or more; and (ii) purchases of most fixed-
income Franklin Templeton Funds made at net asset value by
non-designated retirement plans: 0.75% on sales of $1
million but less than $2 million, plus 0.60% on sales of $2
million but less than $3 million, plus 0.50% on sales of $3
million but less than $50 million, plus 0.25% on sales of
$50 million but less than $100 million, plus 0.15% on sales
of $100 million or more. These payment breakpoints are
reset every 12 months for purposes of additional purchases.
With respect to purchases made at net asset value by certain
trust companies and trust departments of banks and certain
retirement plans of organizations with collective retirement
plan assets of $10 million or more, Distributors, or one of
its affiliates, out of its own resources, may pay up to 1%
of the amount invested.
LETTER OF INTENT
An investor may qualify for a reduced sales charge on the
purchase of shares of the Rising Dividends Fund (Class I),
the Investment Grade Fund and the Corporate Qualified Fund
as described in the Prospectuses. At any time within 90 days
after the first investment which the investor wants to
qualify for the reduced sales charge, a signed Shareholder
Application, with the Letter of Intent ("Letter") section
completed, may be filed with the Rising Dividends Fund, the
Investment Grade Fund or the Corporate Qualified Fund. After
the Letter is filed, each additional investment made will be
entitled to the sales charge applicable to the level of
investment indicated on the Letter. Sales charge reductions
based upon purchases in more than one company in the
Franklin Templeton Group will be effective only after
notification to Distributors that the investment qualifies
for a discount. The shareholder's holdings in the Franklin
Templeton Group, including Class II shares, acquired more
than 90 days before the Letter of Intent is filed will be
counted towards completion of the Letter of Intent but will
not be entitled to a retroactive downward adjustment of
sales charge. Any redemptions made by the shareholder, other
than by a qualifying employee benefit plan (the "Benefit
Plan"), during the 13-month period will be subtracted from
the amount of the purchases for purposes of determining
whether the terms of the Letter have been completed. If the
Letter is not completed within the 13-month period, there
will be an upward adjustment of the sales charge, depending
upon the amount actually purchased (less redemptions) during
the period. The upward adjustment does not apply to
qualifying employee benefit plans. An investor who executes
a Letter prior to a change in the sales charge structure for
the Rising Dividends Fund, the Investment Grade Fund or the
Corporate Qualified Fund will be entitled to complete the
Letter at the lower of (i) the new sales charge structure;
or (ii) the sales charge structure in effect at the time the
Letter was filed with the Rising Dividends Fund, the
Investment Grade Fund or the Corporate Qualified Fund.
As mentioned in the Trust's Prospectuses, five percent (5%)
of the amount of the total intended purchase will be
reserved in shares of the Rising Dividends Fund, the
Investment Grade Fund or the Corporate Qualified Fund
registered in the investor's name unless the investor is a
Benefit Plan. If the total purchases, less redemptions,
equal the amount specified under the Letter, the reserved
shares will be deposited to an account in the name of the
investor or delivered to the investor or the investor's
order. If the total purchases, less redemptions, exceed the
amount specified under the Letter and is an amount which
would qualify for a further quantity discount, a retroactive
price adjustment will be made by Distributors and the dealer
through whom purchases were made pursuant to the Letter (to
reflect such further quantity discount) on purchases made
within 90 days before and on those made after filing the
Letter. The resulting difference in offering price will be
applied to the purchase of additional shares at the offering
price applicable to a single purchase or the dollar amount
of the total purchases. If the total purchases, less
redemptions, are less than the amount specified under the
Letter, the investor will remit to Distributors an amount
equal to the difference in the dollar amount of sales charge
actually paid and the amount of sales charge which would
have applied to the aggregate purchases if the total of such
purchases had been made at a single time. Upon such
remittance the reserved shares held for the investor's
account will be deposited to an account in the name of the
investor or delivered to the investor or to the investor's
order. If within 20 days after written request such
difference in sales charge is not paid, the redemption of an
appropriate number of reserved shares to realize such
difference will be made. In the event of a total redemption
of the account prior to fulfillment of the Letter of Intent,
the additional sales charge due will be deducted from the
proceeds of the redemption, and the balance will be
forwarded to the investor.
If a Letter of Intent is executed on behalf of a benefit
plan (such plans are described under "Purchases at Net Asset
Value" in the Prospectus), the level and any reduction in
sales charge for these employee benefit plans will be based
on actual plan participation and the projected investments
in the Franklin Templeton Group under the Letter. Benefit
Plans are not subject to the requirement to reserve 5% of
the total intended purchase, or to any penalty as a result
of the early termination of a plan, nor are Benefit Plans
entitled to receive retroactive adjustments in price for
investments made before executing Letters.
THE "PURCHASES AND REDEMPTIONS THROUGH SECURITIES DEALERS"
AND "CALCULATION OF NET ASSET VALUE" SUBSECTIONS ARE
MODIFIED TO REFLECT THAT THE NET ASSET VALUE FOR THE
INVESTMENT GRADE FUND, THE CORPORATE QUALIFIED FUND AND EACH
CLASS OF THE RISING DIVIDENDS FUND IS CALCULATED SEPARATELY
AS OF THE SCHEDULED CLOSING OF THE NEW YORK STOCK EXCHANGE
(GENERALLY 1:00 P.M. PACIFIC TIME).
