MESSAGE FROM THE PRESIDENT
Table of Contents Page
Message from the President 1
Fund Reports
Franklin Corporate Qualified
Dividend Fund 3
Franklin Rising Dividends Fund 8
Franklin Investment Grade
Income Fund 14
Statement of Investments 19
Financial Statements 26
Notes to Financial Statements 29
May 15, 1996
Dear Shareholder:
It's a pleasure to bring you the tenth semi-annual report of the Franklin
Managed Trust for the period ended March 31, 1996.
Declining interest rates and moderate economic growth characterized most of the
period under review. The Federal Reserve Board lowered its federal funds rate
twice during the six-month period. As a result, both the bond and the stock
markets reacted favorably. Prices of fixed-income securities appreciated, and
the Dow Jones Industrial Average(R) advanced 16.67% to 5587.14 on March 31,
1996, from 4789.08 on September 30, 1995.
Interest rates rose in March, however, following a stronger-than-expected
employment report, which caused temporary weakness in the financial markets.
While there was still no clear evidence of increasing inflation, hopes for
immediate federal funds rate reductions dimmed slightly as the economy began to
show signs of improvement. Should inflation remain subdued, however, the Fed may
be prompted into easing monetary policy further, which could benefit the equity
and fixed-income markets.
Interest rate fluctuations in 1995 -- caused primarily by the Fed's activities
- -- reinforce our philosophy that shareholders should view their investments with
a long-term perspective. If you have a long-term investment horizon, you can
usually ignore any short-term volatility accompanying the stock and bond
markets.
The following pages contain specific information about each fund's performance.
While the funds have distinct investment objectives, the fundamental principles
remain the same: careful selection and constant professional investment
supervision.
As always, we appreciate your trust and support, and look forward to serving
your investment needs in the years ahead.
Sincerely,
William J. Lippman
President
Franklin Managed Trust
FRANKLIN CORPORATE QUALIFIED DIVIDEND FUND
Your Fund's Objective:
The Franklin Corporate Qualified Dividend Fund is designed to serve as an
income-producing vehicle for the cash reserves of taxable corporations. The fund
seeks to generate high after-tax income for corporations by investing primarily
in the equity securities of domestic corporations whose dividends qualify for
the 70% corporate dividends-received deduction.
We are pleased to report that the Franklin Corporate Qualified Dividend Fund has
continued to meet its investment objective over the reporting period. Its share
price, as measured by net asset value, fluctuated narrowly through the first
half of the fiscal period, ending at $23.60 on March 29, 1996, down from $23.76
on September 30, 1995.
The table below shows that the portfolio composition remained somewhat
consistent throughout the reporting period. All our fixed-rate preferred stocks
have limited terms (ranging from a few months to a few years) until redemption.
Their sensitivity to interest rates is similar to that of short- to
intermediate-term bonds.
Franklin Corporate Qualified Dividend Fund
Portfolio Breakdown
Based on Total Net Assets
Sector 9/30/95 3/31/96
Auction Rate
Preferred Stocks 37.5% 36.1%
Fixed-Rate
Preferred Stocks 26.2% 21.5%
Adjustable Rate
Preferred Stocks 16.1% 19.0%
Cash & Cash Equivalents 20.2% 23.4%
Prices of adjustable-rate preferred stocks are even less sensitive to changes in
interest rates as they reset their dividends quarterly (according to a yield
spread fixed at the time of their offerings) relative to the highest of three
U.S. Treasury benchmarks: the three-month Treasury bill rate, the 10-year
Constant Maturity Rate, and the 20-year Constant Maturity Rate. Auction-rate
preferred stocks and cash equivalents exhibit the lowest price sensitivity, and
normally reset their rates every 49 days pursuant to Dutch auction. Dutch
auction preferreds are typically priced at par plus a factor equivalent to the
amount of dividends "earned" since the last distribution. Investors have the
right to redeem their securities at par on each auction date.
We seek to control risk, including interest-rate risk and credit risk, through
careful selection of securities and active management of the fund. National
ratings services such as Standard & Poor's and Moody's, and our own in-house
evaluations, provide us with a guide to each security issuer's credit quality.
Franklin Corporate Qualified Dividend Fund
Top 10 Stock Holdings on 3/31/96
Based on Total Net Assets
Company % of total
Industry net assets
Louisiana Power & Light Co. 5.62%
Utilities
Transamerica Co. 5.52%
Financial
Bankers Trust (New York) 5.16%
Commercial Banks
Rhone-Poulenc Rorer 4.81%
Pharmaceuticals
SunAmerica Corp. 4.44%
Insurance
Citicorp International 3.89%
Commercial Banks
Rochester Gas & Electric Co. 3.75%
Utilities
Household Finance Co. 3.75%
Financial
Virginia Electric & Power Co. 3.69%
Utilities
Northern Trust Corp. 3.69%
Insurance
For a complete list of portfolio holdings, please see page 19 of this report.
The pie chart to the right illustrates the qualitative breakdown of the fund's
investments. As described in your fund's prospectus, these ratings are assigned
by national rating agencies, or are our own internal ratings, and reflect their
assessment of the credit quality of the securities at the time of purchase.
This discussion reflects the strategies we employed for the fund and includes
our opinions as of the close of the reporting period. Since economic and market
conditions are constantly changing, our strategies, evaluations, conclusions and
decisions regarding portfolio holdings may change in light of new circumstances.
Although past performance of a specific investment or sector cannot guarantee
future performance, such information can be useful in analyzing the securities
we purchase or sell for the fund.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Looking forward, we will continue to emphasize investment quality issues and
frequent dividend resets to help minimize price fluctuations. We believe this
conservative approach should continue to position the fund well for the future.
Performance Summary
During the six-month reporting period, the fund's price per share, as measured
by net asset value, decreased to $23.60 on March 31, 1996, from $23.76 on
September 30, 1995. The fund paid income distributions totaling 60 cents ($0.60)
per share over the same period. Dividends will vary based on portfolio earnings,
and past distributions are not indicative of future trends.
The fund's distribution rate was 5.01%, based on an annualization of the current
monthly dividend of 10 cents ($0.10) per share and the maximum offering price of
$23.96 on March 31, 1996. Based on the 1996 maximum federal corporate tax rate
of 35%, the taxable equivalent distribution rate was 6.90%. These calculations
assume that 100% of your fund's dividends qualify for the 70% corporate
dividends-received deduction.
For the period ended March 31, 1996, your fund provided a six-month cumulative
total return of +1.88%. Cumulative total return reflects the change in value of
an investment, assuming reinvestment of dividends and capital gains, if any. It
does not include the maximum 1.5% initial sales charge. Past performance is not
predictive of future results.
We have always maintained a long-term perspective and encourage our shareholders
to do the same. While the fund may experience volatility from time to time, we
are confident that its performance will be satisfactory over the long term. The
table on the following page illustrates that if you had invested in the fund at
its inception, your total return would have been over +73% by the end of the
reporting period.
Franklin Corporate Qualified Dividend Fund
Periods ended March 31, 1996
Since
Inception
1-Year 5-Year (01/14/87)
NAV Cumulative Total Return1 5.15% 51.62% 73.83%
POP Cumulative Total Return1 3.58% 49.34% 71.23%
NAV Average Annual Total Return2 5.16% 8.68% 6.18%
POP Average Annual Total Return2 3.58% 8.35% 6.01%
Distribution Rate3 5.01%
Taxable Equivalent Distribution Rate4 6.90%
30-Day Standardized Yield5 4.49%
Taxable Equivalent Yield4 6.18%
1. Net asset value (NAV) cumulative total returns show the change in value of an
investment over the periods indicated and do not include the maximum 1.5% sales
charge. Public offering price (POP) returns include the maximum 1.5% sales
charge. See Note below.
2. NAV average annual total returns represent the average annual change in value
of an investment over the specified periods and do not include the maximum 1.5%
sales charge. POP returns reflect the current, maximum 1.5% sales charge stated
in the prospectus. See Note below.
3. Distribution rate is based on an annualization of the fund's current 10 cent
per share monthly dividend and the maximum offering price of $23.96 on March 31,
1996.
4. Taxable equivalent distribution rate and yield assume the 1996 maximum
federal corporate tax rate of 35%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended March 31, 1996.
Note: All total return calculations assume reinvestment of dividends and capital
gains, if any, at net asset value. Your investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares. Past performance is not predictive of future results.
FRANKLIN RISING DIVIDENDS FUND
Your Fund's Objective:
The Franklin Rising Dividends Fund seeks long-term capital appreciation
primarily through investment in the equity securities of companies that have
paid consistently rising dividends over the past 10 years.
The above investment strategy is based on our belief that companies with
consistently rising dividends should, over time, realize increases in the prices
of their shares. We select portfolio securities based on several criteria. To be
eligible for purchase, stocks must pass certain investment "screens," or
screening procedures, requiring consistent and substantial dividend increases,
strong balance sheets and relatively low price/earnings ratios. We seek
fundamentally sound companies that meet our standards and attempt to acquire
them at attractive prices, often when they are out of favor with investors.
Franklin Rising Dividends Fund vs.
Standard & Poor's 500 Stock Index(R)
Common Stock Analysis
Quarter ended March 31, 1996
Rising S&P 500
Dividends Stock
Fund Index
Income Yield 2.6% 2.3%
Price/Book
Value 3.3x 3.8x
Average Market
Capitalization $8.4 billion $9.7 billion
Price/Earnings 14.6 18.9
Debt/Total
Capital 28.8% 37.0%
BETA 0.67 1.00
As shown in the table to the right, our ten largest positions on March 31, 1996,
comprised 27% of the fund's total net assets. It is interesting to note how
these ten companies would, in the aggregate, answer the fund's screening
criteria. To do this, we take a simple average of statistical measures. On
average, these ten companies have raised their dividends 22 years in a row, and
by 849% in the last ten years (315%, excluding Fannie Mae's unrepeatable 5658%).
The latest dividend increases for these ten holdings averaged 14.4%, for a
current yield of 2.8% at March 31, 1996 quarter end, and a dividend payout ratio
of 38%. Long-term debt averaged 23% of capitalization, and the average
price/earnings ratio was 14.6, versus 18.9 for that of the unmanaged Standard &
Poor's 500 Stock Index(R) on the same date.
Franklin Rising Dividends Fund
Top 10 Stock Holdings on 3/31/96
Based on Total Net Assets
Company % of total
Industry net assets
Philip Morris Cos., Inc 3.18%
Consumer Goods
Federal National Mortgage Assc. 3.05%
Government Sponsored Corporations
Dimon, Inc. 2.72%
Consumer Goods
Allied Group, Inc. 2.71%
Insurance -- Property Casualty
TrustCo Bank Corp., NY 2.65%
Banks
C.R. Bard, Inc. 2.65%
Drugs/Healthcare
Chubb Corp. 2.59%
Insurance -- Property Casualty
Pfizer, Inc. 2.55%
Drugs/Healthcare
Rite Aid Corp. 2.53%
Retail
Monsanto Co. 2.45%
Industrial
We note that the ten top holdings have become large positions because of
appreciation, and we are now more likely to be sellers of these than buyers. Our
approach is to buy companies like these when they are out of favor. Thus, the
ten give a sense of what has worked, if not necessarily what we are buying now.
We think they illustrate the fundamental characteristics of the overall
portfolio.
Notable dividend increases during the six-month reporting period include Allied
Group (+29.4%), Arbor Drugs (+40%), CoreStates Financial (+23.5%), MMI Cos.
(+20%), Mercury General (+20%), Newell Co. (+16.7%), Pfizer, Inc. (+15.3%), and
UST, Inc. (+13.8%).
This discussion reflects the strategies we employed for the fund and includes
our opinions as of the close of the reporting period. Since economic and market
conditions are constantly changing, our strategies, evaluations, conclusions and
decisions regarding portfolio holdings may change in light of new circumstances.
Although past performance of a specific investment or sector cannot guarantee
future performance, such information can be useful in analyzing the securities
we purchase or sell for the fund.
Performance Summary
Class I
(Class II Performance Summary starts on page 12.)
Class I share price, as measured by net asset value, increased significantly
during the reporting period, to $18.74 on March 31, 1996, from $17.31 on
September 30, 1995. Class I shares paid distributions totaling 19.9 cents
($0.199) per share, including 14 cents ($0.14) per share in dividend income and
a special 1995 year-end income distribution of 5.9 cents ($0.059) per share.
Class I shares posted a cumulative total return of +9.44% for the six months
ended March 31, 1996. For the one-year period ended March 31, cumulative total
return was +24.35%. Total return measures the change in value over the period
shown, assuming reinvestment of all distributions, and does not include the
initial sales charge. Past performance is not predictive of future results.
We have always maintained a long-term perspective and encourage our shareholders
to do the same. While the fund may experience volatility from time to time, we
are confident that its performance will be satisfactory over the long term. The
table on page 13 illustrates that if you had invested in the fund at its
inception, your total return would have been more than +133% at the end of this
reporting period.
Performance Summary
Class II
Class II share price, as measured by net asset value, increased significantly
during the reporting period, to $18.69 on March 31, 1996, from $17.28 on
September 30, 1995. Class II shares paid distributions totaling 15.58 cents
($0.1558) per share, including 11.48 cents ($0.1148) per share in dividend
income and a special 1995 year-end income distribution of 4.1 cents ($0.041) per
share.
Class II shares posted a cumulative total return of +9.09% for the six months
ended March 31, 1996. Total return measures the change in value over the period
indicated, assuming reinvestment of dividends, and does not include sales
charges. Past performance is not predictive of future results.
Franklin Rising Dividends Fund
Periods ended March 31, 1996
Since Since
Inception Inception
1-Year 5-Year (01/14/87) (05/01/95)
Cumulative Total Return1
Class I 24.35% 57.08% 133.07%
Class II -- -- -- 23.11%
Average Annual Total Return2
Class I 18.78% 8.44% 9.07%
Aggregate Total Return2
Class II -- -- -- 20.85%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the maximum 4.5% initial sales charge
for Class I shares, or the 1.0% initial sales charge and the 1.0% contingent
deferred sales charge (CDSC) for Class II shares, applicable to shares redeemed
within the first 18 months of investment. See Note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods and reflects the current, maximum 4.5%
initial sales charge for Class I shares. Aggregate total return includes the
1.0% initial sales charge and represents the change in value of an investment
since the inception date. It also includes the 1.0% CDSC applicable to shares
redeemed within the first 18 months of investment. Since Class II shares have
existed for less than one year, average annual total returns are not provided.
See Note below.
Note: Prior to July 1, 1994, Class I shares were offered at a lower initial
sales charge. Thus, actual total returns for purchasers of shares during that
period would have been somewhat higher than noted above. All total return
calculations assume reinvestment of dividends and capital gains, if any, at net
asset value. Your investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
FRANKLIN INVESTMENT GRADE INCOME FUND
Your Fund's Objective:
The Franklin Investment Grade Income Fund seeks to generate a maximum level of
high current income consistent with investing in investment-grade debt
securities having primarily intermediate-term maturities. The fund seeks to
offer a higher total return than a money market fund, generally with less
potential risk to principal than a fund composed of either long-term securities
or of securities that are below investment-grade quality.*
In the absence of inflationary threats during this reporting period, the Federal
Reserve Board continued its bid to promote sustainable economic growth by
engineering two additional modest cuts in the federal funds rate. By the end of
the reporting period, the federal funds rate had been reduced to 5.25% -- 75
basis points below its cyclical high of 6.00% in the second quarter of 1995.
Long bond yields, which had fallen to a low of 5.95% at year end, ended the
period at 6.65%.**
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
*Generally, long-term securities and lower quality securities provide higher
yields. A money market fund seeks a stable $1.00 per share net asset value.
The weighted average credit quality of the portfolio's securities was in the AA
range, as measured by Standard & Poor's Corporation. As described in the fund's
prospectus, these ratings are assigned by national ratings agencies and reflect
their assessment of the bonds' credit quality at the time of purchase. All of
the fund's investments are call-protected for life.
As always, we seek to control risk, including interest-rate risk and credit
risk, through careful selection of securities and active management of their
maturities. On March 31, 1996, the fund's investments included 32% in government
bonds, 26% in straight short- and intermediate-term corporate bonds, 22% in
"putable" bonds, and 20% in cash and equivalents.
A "putable" bond is structured so that if interest rates rise, the bond can be
redeemed at par value at an early effective maturity. This feature allows the
proceeds to be reinvested at the then-higher interest rate. Conversely, if
interest rates decline by the security's optional retirement date, we can either
keep the higher yielding bond or sell it at a favorable price. The use of
"putable" bonds is an integral part of our conservative investment strategy. By
the end of the reporting period, we were able to increase the percentage of
"putables" to approximately 22% of total net assets, from 17% on September 30,
1995. On March 31, 1996, the fund's weighted average maturity was about 1.8
years based on the optional "put" dates as the effective maturities, and 4.5
years based on the final stated maturities.
We will continue to pursue our conservative investment posture. It is our belief
that this strategy will possibly enable us to produce more total return than
that which is available from money market funds, while not subjecting the
portfolio's net asset value price to the kind of volatility (risk) potentially
associated with long-term bonds or lower-quality investments.
This discussion reflects the strategies we employed for the fund and includes
our opinions as of the close of the reporting period. Since economic and market
conditions are constantly changing, our strategies, evaluations, conclusions and
decisions regarding portfolio holdings may change in light of new circumstances.
Although past performance of a specific investment or sector cannot guarantee
future performance, such information can be useful in analyzing the securities
we purchase or sell for the fund.
**Source: Micropal, 4/16/96.
Performance Summary
Your fund's share price, as measured by net asset value, finished the period
roughly where it began - at $9.03 on March 31, 1996, down slightly from $9.04 on
September 30, 1995.
During the six-month period, your fund paid income distributions totaling 20.8
cents ($0.208) per share, including 19.8 cents ($0.198) per share in monthly
dividend income and a special 1995 year-end income distribution of 1 cent
($0.01) per share. Based on an annualization of the current monthly dividend of
3.3 cents ($0.033) per share and the maximum offering price of $9.43 on March
31, 1996, your fund's distribution rate was 4.20%. Distributions will vary based
on the earnings of the fund's portfolio, and past distributions are not
indicative of future trends.
For the periods ended March 31, 1996, your fund posted a six-month cumulative
total return of +2.20%, and a one-year total return of +7.38%. Cumulative total
return reflects the change in value of an investment, and assumes reinvestment
of dividends. It does not include the maximum initial sales charge. Past
performance is not predictive of future results.
Franklin Investment Grade Income Fund
Periods ended March 31, 1996
Since
Inception
1-Year 5-Year (01/14/87)
Cumulative Total Return1 7.38% 42.92% 73.90%
Average Annual Total Return2 2.83% 6.47% 5.69%
Distribution Rate3 4.20%
30-Day Standardized Yield4 4.30%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the current maximum 4.25% initial sales
charge. See Note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods and reflects the current, maximum 4.25%
initial sales charge. See Note below.
3. Distribution rate is based on an annualization of the current 3.3 cent per
share monthly dividend and the maximum offering price of $9.43 on March 31,
1996.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended March 31, 1996.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge. Thus, actual total returns for purchasers of shares during that period
would have been somewhat higher than noted above. All total return calculations
assume reinvestment of dividends and capital gains, if any, at net asset value.
Your investment return and principal value will fluctuate with market
conditions, and you may have a gain or loss when you sell your shares. Past
performance is not predictive of future results.
FRANKLIN MANAGED TRUST
<TABLE>
<CAPTION>
Statement of Investments in Securities and Net Assets, March 31, 1996
(unaudited)
Value
Shares Franklin Corporate Qualified Dividend Fund (Note 1)
- ---------------------------------------------------------------------------------------------------------------------------
aAdjustable Rate Preferred Stocks 19.0%
<C> <C> <C>
Commercial Banks & Bank Holding Companies 7.5%
48,200 Citicorp, 5.124% adj. rate pfd., Series 19 ...................................... $ 1,060,400
22,400 Marine Midland Bank, Inc. (HONSHA), 6.00% adj. rate pfd., Series A............... 982,800
----------------
2,043,200
----------------
Electric Utilities 7.0%
10,000 Arizona Public Service Co., 6.00% adj. rate pfd., Series Q....................... 900,000
6,500 Niagara Mohawk Power Corp., 7.20% cum. adj. rate pfd., Series C.................. 111,313
46,700 Toledo Edison Co., 7.23% cum. adj. rate pfd., Series A........................... 898,975
----------------
1,910,288
----------------
Insurance 4.5%
12,000 SunAmerica, Inc., 7.00% cum. adj. rate pfd., Series C............................ 1,209,000
----------------
Total Adjustable Rate Preferred Stocks (Cost $5,635,792)................... 5,162,488
----------------
bAuction Rate Preferred Stocks 36.1%
10 cCNA Financial Corp., 4.03%, Series F............................................ 1,000,336
10 cInternational Lease Finance, 3.99%, Series B.................................... 1,001,995
1,000 dMorgan (JP), Inc., 3.86%, Series C.............................................. 1,003,217
10 cNorthern Trust Corp., 3.92%, Series C........................................... 1,004,138
10 cRepublic NY Corp., 3.95%, Series A ............................................. 1,001,975
13 cRhone-Poulenc Rorer, 4.99%, Series 1 ........................................... 1,309,550
10 cSara Lee Corp., 3.874%, Series D................................................ 1,002,475
15 cTransamerica Co., 3.927%, Series A-1............................................ 1,503,927
10 cVirginia Electric & Power Co., 3.985%, Series 92-A ............................. 1,005,332
----------------
Total Auction Rate Preferred Stocks (Cost $9,800,000)...................... 9,832,945
----------------
Fixed Rate Preferred Stocks 21.5%
Commercial Banks 5.2%
28,000 Bankers Trust (New York), 7.375% flex rate pfd., Series J........................ 1,406,121
----------------
Financial 3.7%
10,000 Household Finance Co., 7.25% pfd., Series 92-A................................... 1,021,250
----------------
Industrial 3.2%
28,913 McDermott, Inc., $2.60 cum. S.F., pfd., Series B................................. 878,232
----------------
Utilities 9.4%
15,000 Louisiana Power & Light Co., 7.00% S.F., pfd..................................... 1,530,000
10,000 Rochester Gas & Electric Co., 7.45% S.F., pfd., Series S......................... 1,022,500
----------------
2,552,500
----------------
Total Fixed Rate Preferred Stocks (Cost $5,963,184)........................ 5,858,103
----------------
Total Long Term Investments (Cost $21,398,976)............................. 20,853,536
----------------
eReceivables from Repurchase Agreements 23.2%
$ 6,361,641 Joint Repurchase Agreement, 5.423%, 04/01/96, (Maturity Value $6,332,170)
(Cost $6,329,310)
BT Securities Corp., (Maturity Value $1,222,109)
Collateral: U.S. Treasury Notes, 6.75% - 7.125%, 09/30/99 - 04/30/00
Daiwa Securities America, Inc., (Maturity Value $1,443,734)
Collateral: U.S. Treasury Bills, 06/27/96 - 09/26/96
Fuji Securities, Inc., (Maturity Value $1,222,109)
Collateral: U.S. Treasury Bills, 06/13/96 - 11/14/96
U.S. Treasury Notes, 6.125%, 09/30/00
Lehman Government Securities, Inc., (Maturity Value $1,222,109)
Collateral: U.S. Treasury Bills, 06/20/96
U.S. Treasury Notes, 6.125%, 05/31/97
The Nikko Securities Co. International, Inc., (Maturity Value $1,222,109)
Collateral: U.S. Treasury Notes, 5.625% - 8.50%, 04/30/97 - 11/15/00 ........... 6,329,310
----------------
Total Investments (Cost $27,728,286) 99.8%............................ 27,182,846
Other Assets and Liabilities, Net .2%................................. 53,218
----------------
Net Assets 100.0%..................................................... $27,236,064
================
At March 31, 1996, the net unrealized depreciation based on the
cost of investments for income tax purposes of $27,728,286 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost................................................... $ 96,618
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value .................................................. (642,058)
----------------
Net unrealized depreciation.................................................... $ (545,440)
================
PORTFOLIO ABBREVIATIONS:
S.F. - Sinking Fund
a Dividend rates adjust quarterly in reference to various U.S. Treasury
benchmarks.
b Dividend rates adjust in response to periodic auctions, normally on
a 49-day cycle.
c1 share = $100,000 par value
d1 share = $1,000 par value
e Face amount for repurchase agreements is for the underlying collateral.
See Note 1(f) regarding joint repurchase agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN MANAGED TRUST
Statement of Investments in Securities and Net Assets, March 31, 1996 (unaudited)
Value
Shares Franklin Rising Dividends Fund (Note 1)
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
Common Stocks 90.4%
Banks 13.1%
121,000 Banc One Corp. ................................................................. $ 4,310,625
103,500 CoreStates Financial Corp. ..................................................... 4,385,813
150,000 Mercantile Bankshares Corp. .................................................... 3,937,500
160,000 National Commerce Bancorp. ..................................................... 4,960,000
133,100 State Street Boston Corp. ...................................................... 6,655,000
353,400 TrustCo Bank Corp., New York ................................................... 7,310,962
142,000 Wilmington Trust Corp. ......................................................... 4,579,500
----------------
36,139,400
----------------
Consumer Goods 13.1%
124,000 Alberto-Culver Co., Class A .................................................... 4,417,500
29,437 Block Drug Co., Inc., Class A................................................... 1,217,956
425,000 Dimon, Inc. .................................................................... 7,490,625
100,000 Philip Morris Cos., Inc. ....................................................... 8,775,000
65,000 Roto-Rooter, Inc................................................................ 1,998,750
21,500 Stanhome, Inc................................................................... 685,313
324,700 Stride Rite Corp. .............................................................. 2,962,888
180,000 Universal Corp. ................................................................ 4,522,500
125,000 UST, Inc. ...................................................................... 3,984,375
----------------
36,054,907
----------------
Drugs/Health Care 8.7%
205,000 Bard (C.R.), Inc................................................................ 7,303,125
36,500 Bristol-Myers Squibb Co. ....................................................... 3,125,313
105,000 Merck & Co., Inc. .............................................................. 6,536,250
105,000 Pfizer, Inc. ................................................................... 7,035,000
----------------
23,999,688
----------------
Energy 2.0%
40,000 Royal Dutch Petroleum Co., New York Shares...................................... 5,650,000
----------------
Financial Services 3.1%
263,000 Federal National Mortgage Association .......................................... 8,416,000
----------------
Industrial 15.4%
54,700 Avery Dennison Corp. ........................................................... 2,953,800
21,000 Diebold, Inc. .................................................................. 832,125
68,700 General Electric Co. ........................................................... 5,350,013
52,000 Hanson, Plc., Sponsored ADR..................................................... 780,000
66,000 Kaydon Corp. ................................................................... 2,310,000
117,000 Kimball International, Inc., Class B ........................................... 3,334,500
102,200 Loctite Corp. .................................................................. 5,161,100
44,000 Monsanto Co. ................................................................... $ 6,754,000
135,000 Myers Industries, Inc........................................................... 2,278,125
217,000 Newell Co. ..................................................................... 5,804,750
53,200 Rockwell International Corp. ................................................... 3,132,150
120,000 Superior Industries International, Inc. ........................................ 3,000,000
71,100 Superior Surgical Manufacturing Co., Inc. ...................................... 728,775
--------------
42,419,338
----------------
Insurance - Life & Health .7%
37,500 Jefferson-Pilot Corp. .......................................................... 2,020,313
----------------
Insurance - Property Casualty 17.3%
187,800 Allied Group, Inc. ............................................................. 7,465,050
31,800 American International Group, Inc. ............................................. 2,977,275
76,000 Chubb Corp. .................................................................... 7,134,500
158,000 Mercury General Corp. .......................................................... 6,576,750
95,000 MMI Cos., Inc................................................................... 2,850,000
256,250 RLI Corp. ...................................................................... 6,342,188
142,000 SAFECO Corp. ................................................................... 4,757,000
115,000 Selective Insurance Group, Inc. ................................................ 4,140,000
99,100 St. Paul Cos., Inc.............................................................. 5,500,050
----------------
47,742,813
----------------
Printing/Publishing 2.1%
28,300 Dun & Bradstreet Corp. ......................................................... 1,715,688
100,000 Ennis Business Forms ........................................................... 1,137,500
57,800 Reader's Digest Association, Inc., Class A ..................................... 2,731,050
13,100 Standard Register Co. .......................................................... 311,125
----------------
5,895,363
----------------
Retail 10.9%
33,000 Albertson's, Inc. .............................................................. 1,225,124
10,750 Arbor Drugs, Inc. .............................................................. 225,750
84,000 Bob Evans Farms, Inc. .......................................................... 1,365,000
425,000 Family Dollar Stores, Inc....................................................... 6,268,750
226,000 Rite Aid Corp. ................................................................. 6,977,750
119,658 The Limited, Inc. .............................................................. 2,273,501
162,000 Walgreen Co. ................................................................... 5,285,250
273,000 Wal-Mart Stores, Inc............................................................ 6,313,124
----------------
29,934,249
----------------
Transportation 4.0%
314,500 Arnold Industries, Inc. ........................................................ $ 4,953,374
330,000 Harper Group, Inc............................................................... 6,022,500
----------------
10,975,874
----------------
Total Long Term Investments (Cost $192,105,039) .......................... 249,247,945
----------------
Face
Amount
eReceivables from Repurchase Agreements 9.8%
$27,054,878 Joint Repurchase Agreement, 5.423%, 04/01/96, (Maturity Value
$26,930,745) (Cost $26,918,580) BT Securities Corp., (Maturity
Value $5,197,634) Collateral: U.S. Treasury Notes, 6.75% -
7.125%, 09/30/99 - 04/30/00
Daiwa Securities America, Inc., (Maturity Value $6,140,209)
Collateral: U.S. Treasury Bills, 06/27/96 - 09/26/96
Fuji Securities, Inc., (Maturity Value $5,197,634)
Collateral: U.S. Treasury Bills, 06/13/96 - 11/14/96
U.S. Treasury Notes, 6.125%, 09/30/00
Lehman Government Securities, Inc., (Maturity Value $5,197,634)
Collateral: U.S. Treasury Bills, 06/20/96
U.S. Treasury Notes, 6.125%, 05/31/97
The Nikko Securities Co. International, Inc., (Maturity Value $5,197,634)
Collateral: U.S. Treasury Notes, 5.625% - 8.50%, 04/30/97 - 11/15/00 .......... 26,918,580
----------------
Total Investments (Cost $219,023,619) 100.2%......................... 276,166,525
Liabilities in Excess of Other Assets (.2)%.......................... (458,670)
----------------
Net Assets 100.0% ................................................... $275,707,855
================
At March 31, 1996 the net unrealized appreciation based on the
cost of investments for income tax purposes of $219,023,619 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................. $ 62,588,512
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................. (5,445,606)
----------------
Net unrealized appreciation .................................................. $ 57,142,906
================
eFace amount for repurchase agreements is for the underlying collateral. See
Note 1(f) regarding joint repurchase agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN MANAGED TRUST
Statement of Investments in Securities and Net Assets, March 31, 1996 (unaudited)
Face Value
Amount Franklin Investment Grade Income Fund (Note 1)
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
U.S. Government Securities and Agencies 39.2%
$ 2,000,000 Tennessee Valley Authority, bonds, (putable* 07/15/01, callable 07/15/20), 6.235%,
07/15/45 ........................................................................ $ 1,999,320
2,000,000 U.S. Treasury Notes, 5.625%, 06/30/97 ............................................ 2,001,250
2,000,000 U.S. Treasury Notes, 5.875%, 07/31/97 ............................................ 2,007,500
1,000,000 U.S. Treasury Notes, 5.625%, 10/31/97 ............................................ 1,000,625
1,000,000 U.S. Treasury Notes, 5.125%, 04/30/98 ............................................ 987,500
2,000,000 U.S. Treasury Notes, 5.875%, 08/15/98 ............................................ 2,001,250
1,000,000 U.S. Treasury Notes, 5.875%, 03/31/99 ............................................ 998,125
----------------
Total U.S. Government Securities and Agencies (Cost $11,029,036)............ 10,995,570
----------------
Corporate Bonds 41.2%
Consumer Goods 5.3%
1,500,000 Heinz (H.J.) Co., notes, 5.50%, 09/15/97 ......................................... 1,493,068
----------------
Electric Utilities 3.5%
1,000,000 Southern California Edison Co., notes, 5.875%, 02/01/98 .......................... 993,686
----------------
Financial 19.7%
1,300,000 Associates Corp. of North America, deb., (putable* 03/03/98), Series B, 7.95%,
02/15/10 ........................................................................ 1,405,890
1,500,000 Ford Motor Credit Corp., global bond, 6.25%, 02/26/98 ............................ 1,504,660
1,500,000 GE Capital Corp., medium term notes (step up to 8.125% or putable* 04/01/98), 5.80%,
04/01/08 ........................................................................ 1,603,831
1,000,000 Norwest Financial, Inc., senior notes, 6.23%, 09/01/98 ........................... 1,002,786
----------------
5,517,167
----------------
Industrial 3.8%
1,000,000 WMX Technologies, Inc., notes (step up to 8.00% or putable* 04/30/97), 6.22%,
04/30/04 ........................................................................ 1,052,921
----------------
Telephone Utilities 8.9%
1,000,000 Bellsouth Telecommunications Corp., notes, 6.50%, 02/01/00 ....................... 1,005,000
1,000,000 New England Telephone and Telegraph, notes, 6.25%, 12/15/97 ...................... 1,003,187
500,000 Northern Telecommunications, Ltd., notes, 8.25%, 06/13/96 ........................ 502,770
----------------
2,510,957
----------------
Total Corporate Bonds (Cost $11,222,244).................................... 11,567,799
----------------
Total Long Term Investments (Cost $22,251,280).............................. 22,563,369
----------------
eReceivables from Repurchase Agreements 18.8%....................................
$ 5,283,227 Joint Repurchase Agreement, 5.423%, 04/01/96, (Maturity Value $5,259,014)
Cost $5,256,638)
BT Securities Corp., (Maturity Value $1,014,990)
Collateral: U.S. Treasury Notes, 6.75% - 7.125%, 09/30/99 - 04/30/00
Daiwa Securities America, Inc., (Maturity Value $1,199,054)
Collateral: U.S. Treasury Bills, 06/27/96 - 09/26/96
Fuji Securities, Inc., (Maturity Value $1,014,990)
Collateral: U.S. Treasury Bills, 06/13/96 - 11/14/96
U.S. Treasury Notes, 6.125%, 09/30/00
Lehman Government Securities, Inc., (Maturity Value $1,014,990)
Collateral: U.S. Treasury Bills, 06/20/96
U.S. Treasury Notes, 6.125%, 05/31/97
The Nikko Securities Co. International, Inc., (Maturity Value $1,014,990)
Collateral: U.S. Treasury Notes, 5.625% - 8.50%, 04/30/97 - 11/15/00 ............ $ 5,256,638
----------------
Total Investments (Cost $27,507,918) 99.2%............................. 27,820,007
Other Assets and Liabilities, Net .8%.................................. 233,676
----------------
Net Assets 100.0%...................................................... $28,053,683
================
At March 31,1996, the net unrealized appreciation based on the
cost of investments for income tax purposes of $27,507,918 was
as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost.................................................... $ 387,742
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................... (75,653)
----------------
Net unrealized appreciation..................................................... $ 312,089
================
*Holder may choose either to redeem at par on put date or, if more advantageous, to hold to final stated maturity.
eFace amount for repurchase agreements is for the underlying collateral. See Note 1(f) regarding joint repurchase
agreement.
The accompanying notes are an integral part of these financial statements.
FRANKLIN MANAGED TRUST
Financial Statements
Statements of Assets and Liabilities
March 31, 1996 (unaudited)
Franklin Franklin
Corporate Qualified Franklin Rising Investment Grade
Dividend Fund Dividends Fund Income Fund
-------------- -------------- -------------
Assets:
Investments in securities:
<S> <C> <C> <C>
At identified cost............................................ $21,398,976 $192,105,039 $22,251,280
============ ========== ===========
At value...................................................... $20,853,536 $249,247,945 $22,563,369
Receivables from repurchase agreements, at value and cost...... 6,329,310 26,918,580 5,256,638
Cash........................................................... 30,835 -- --
Receivables:
Dividends and interest........................................ 42,374 668,889 316,191
Investment securities sold.................................... -- 662,109 --
Capital shares sold........................................... -- 127,237 57,324
Prepaid expenses............................................... 1,353 -- --
------------ ---------- -----------
Total assets.............................................. 27,257,408 277,624,760 28,193,522
------------ ---------- -----------
Liabilities:
Payables:
Investment securities purchased............................... -- 1,287,313 --
Capital shares repurchased.................................... -- 181,737 100,959
Management fees............................................... 11,165 176,469 11,760
Distribution fees............................................. 9,601 208,594 12,723
Shareholder servicing costs................................... 578 26,105 1,308
Accrued expenses and other liabilities......................... -- 36,687 13,089
------------ ---------- -----------
Total liabilities......................................... 21,344 1,916,905 139,839
------------ ---------- -----------
Net assets, at value............................................ $27,236,064 $275,707,855 $28,053,683
============ ========== ===========
Net assets consist of:
Undistributed net investment income............................ 256,270 200,514 171,436
Unrealized appreciation (depreciation) on investments.......... (545,440) 57,142,906 312,089
Accumulated net realized gain (loss)........................... (8,539,777) 3,579,322 (1,296,429)
Class I capital shares......................................... 11,539 145,726 31,058
Class II capital shares........................................ -- 1,391 --
Additional paid-in capital Class I............................. 36,053,472 212,215,578 28,835,529
Additional paid-in capital Class II............................ -- 2,422,418 --
------------ ---------- -----------
Net assets, at value............................................ $27,236,064 $275,707,855 $28,053,683
============ ========== ===========
Class I shares:
Net assets, at value........................................... $27,236,064 $273,108,722 $28,053,683
------------ ---------- -----------
Shares outstanding............................................. 1,153,938 14,572,606 3,105,789
============ ========== ===========
Net asset value per share*..................................... $23.60 $18.74 $9.03
============ ========== ===========
Class II shares:
Net assets, at value........................................... $2,599,133
==========
Shares outstanding............................................. 139,078
==========
Net asset value per share*..................................... $18.69
==========
*Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
FRANKLIN MANAGED TRUST
===========================================================================================================================
Financial Statements (cont.)
Statements of Operations
for the six months ended March 31, 1996 (unaudited)
Franklin Franklin Franklin
Corporate Rising Investment
Qualified Dividends Grade Income
Dividend Fund Fund Fund
--------- ----------- ---------
Investment income:
<S> <C> <C> <C>
Dividends........................................................ $679,924 $ 3,151,400 $--
Interest (Note 1)................................................ 107,572 858,552 853,341
--------- ----------- ---------
Total income................................................ 787,496 4,009,952 853,341
--------- ----------- ---------
Expenses:
Management fees (Note 5)......................................... 66,747 1,025,878 72,911
Distribution fees- Class I (Note 5).............................. 28,602 613,010 28,076
Distribution fees- Class II (Note 5)............................. -- 8,987 --
Shareholder servicing costs (Note 5)............................. 2,838 143,182 10,750
Accounting fees (Note 5)......................................... 19,893 19,890 19,890
Professional fees................................................ 7,006 14,067 4,838
Reports to shareholders.......................................... 5,070 72,046 11,561
Registration and filing fees..................................... 3,168 6,031 2,264
Trustees' fees and expenses...................................... 1,633 14,594 1,885
Custodian fees................................................... 1,199 11,289 1,290
Other............................................................ 1,315 6,322 1,886
--------- ----------- ---------
Total expenses.............................................. 137,471 1,935,296 155,351
--------- ----------- ---------
Net investment income....................................... 650,025 2,074,656 697,990
--------- ----------- ---------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss)......................................... (124,516) 6,898,976 133,831
Net unrealized appreciation (depreciation)....................... (27,922) 15,488,775 (173,672)
--------- ----------- ---------
Net realized and unrealized gain (loss) on investments...... (152,438) 22,387,751 (39,841)
--------- ----------- ---------
Net increase in net assets resulting from operations.............. $497,587 $24,462,407 $658,149
========= =========== =========
The accompanying notes are an integral part of these financial statements.
FRANKLIN MANAGED TRUST
===========================================================================================================================
Financial Statements (cont.)
Statements of Changes in Net Assets
for the six months ended March 31, 1996 (unaudited)
and the year ended September 30, 1995
Franklin Corporate Franklin Rising Franklin Investment Grade
Qualified Dividend Fund Dividends Fund Income Fund
---------------------- ---------------------- ----------------------
Six months Year Six months Year Six months Year
ended 03/31/96 ended 09/30/95 ended 03/31/96 ended 09/30/95 ended 03/31/96 ended 09/30/95
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets:
Operations:
Net investment
income.............. $ 650,025 $ 1,422,873 $ 2,074,656 $ 5,237,925 $ 697,990 $ 1,428,227
Net realized gain
(loss) from security
transactions........ (124,516) (61,429) 6,898,976 7,405,862 133,831 (759,019)
Net unrealized appre-
ciation (depreciation)
on investments...... (27,922) 84,597 15,488,775 33,317,370 (173,672) 1,601,549
--------- ------------ ---------- ------------ --------- -----------
Net increase in
net assets
resulting from
operations.......... 497,587 1,446,041 24,462,407 45,961,157 658,149 2,270,757
Distributions to
shareholders from
undistributed net
investment income:
Class I............ (677,970) (1,369,958) (2,966,284) (4,790,807) (666,721) (1,554,109)
Class II........... -- -- (15,165) (3,853) -- --
Decrease in net assets
from capital share
transactions (Note 2) (376,586) (4,073,416) (7,750,361) (40,650,380) (1,761,451) (446,283)
--------- ------------ --------- ------------ - --------- -----------
Net increase
(decrease) in
net assets.......... (556,969) (3,997,333) 13,730,597 516,117 (1,770,023) 270,365
Net assets:
Beginning of period. 27,793,033 31,790,366 261,977,258 261,461,141 29,823,706 29,553,341
---------- ------------ ----------- ------------ ----------- -----------
End of period....... $27,236,064 $27,793,033 $275,707,855 $261,977,258 $28,053,683 $29,823,706
=========== ============ ============ ============ =========== ===========
Undistributed net
investment income
included in net assets:
Beginning of period $ 284,215 $ 231,300 $ 1,107,307 $ 664,042 $ 140,167 $ 266,049
=========== ============ ========= ============ ========== ============
End of period...... $ 256,270 $ 284,215 $ 200,514 $ 1,107,307 $ 171,436 $ 140,167
=========== ============ ========= ============ ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN MANAGED TRUST
================================================================================
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Managed Trust (the Trust) is an open-end, diversified management
investment company (mutual fund), registered under the Investment Company Act of
1940 as amended. The Trust currently consists of three separate funds (the
Funds). Each of the Funds issues a separate series of the Trust's shares and
maintains a totally separate investment portfolio. The Franklin Corporate
Qualified Dividend Fund seeks to generate high after-tax income for
corporations, consistent with investment in investment quality securities. The
Franklin Rising Dividends Fund seeks to provide long-term capital appreciation
primarily through investment in the equity securities of companies that have
paid consistently rising dividends over the past ten years. The Franklin
Investment Grade Income Fund seeks to provide a maximum level of income
consistent with prudent exposure to risk.
The Franklin Rising Dividends Fund offers two classes of shares, Class I and
Class II. Class I shares are sold with a higher front-end sales charge than
Class II shares. Each class of shares may be subject to a contingent deferred
sales charge and has the same rights, except with respect to the effect of the
respective sales charges, the distribution fees borne by each class, voting
rights on matters affecting a single class and the exchange privilege of each
class.
The offering of Class II shares began May 1, 1995, at which time all previously
outstanding shares became Class I shares. Realized and unrealized gains or
losses and net investment income, other than class specific expenses, are
allocated daily to each class of shares based upon the relative proportion of
net assets of each class.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuation:
Portfolio securities listed on a securities exchange or on the NASDAQ for which
market quotations are readily available are valued at the last sale price or, if
there is no sale price, within the range of the most recent quoted bid and asked
prices. Other securities are valued based on a variety of factors, including
yield, risk, maturity, trade activity and recent developments related to the
securities. The Trust may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions, under
procedures approved by the Board of Trustees (the Board). Securities for which
market quotations are not available are valued in accordance with procedures
established by the Board.
b. Income Taxes:
The Funds intend to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to shareholders which will be sufficient to relieve the
Funds from income and excise taxes. Each Fund is treated as a separate entity in
the determination of compliance with the Internal Revenue Code.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification.
d. Investment Income, Expenses and Distributions:
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income and estimated expenses are accrued daily. Bond
discount and premium are amortized as required by the Internal Revenue Code.
e. Expense Allocation:
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
f. Joint Repurchase Agreements
The Funds may enter into a joint repurchase agreement whereby their univested
cash balance is deposited into a joint cash account to be used to invest in one
or more repurchase agreements with government securities dealers recognized by
the Federal Reserve Board and/or member banks of the Federal Reserve System. The
value and face amount of the joint repurchase agreement are allocated to the
Fund based on its pro-rata interest. A repurchase agreement is accounted for as
a loan by the Fund to the seller, collaterized by the underlying U.S. government
securities, which are delivered to the Fund's custodian. The market value,
including accrued interest, of the initial collateralization is required to be
at least 102% of the dollar amount invested by the Fund, with the value of the
underlying securities marked to market daily to maintain coverage of at least
100%. At March 31, 1996, all outstanding repurchase agreements held by the Funds
had been entered into on March 29, 1996.
g. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. TRUST SHARES
At March 31, 1996, there was an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in the Funds' shares for the six
months ended March 31, 1996 and the year ended September 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
----------------------- --------------- -------------------
Class I shares: Shares Amount Shares Amount Shares Amount
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Six months ended March 31, 1996
Shares sold ............................ 185,140 $ 4,375,756 665,587 $12,171,814 346,381 $3,151,005
Shares issued in reinvestment of
distributions .......................... 25,098 592,283 129,305 2,367,315 50,643 460,515
Share redeemed ......................... (203,534) (4,808,058) (1,221,572) (22,393,686) (451,062) (4,104,459)
Changes from exercise of exchange
privilege:
Shares sold .......................... 20,659 487,664 438,380 7,988,119 107,885 982,669
Shares redeemed ...................... (43,359) (1,024,231) (509,365) (9,295,265) (247,010) (2,251,181)
------- ---------- -------- ---------- -------- ---------
Net decrease ............................ (15,996) $ (376,586) (497,665) $ (9,161,703) (193,163) $(1,761,451)
======= ========== ========= ========== ======== =========
Year ended September 30, 1995
Shares sold ............................ 517,711 $12,210,015 1,128,325 $ 17,560,571 475,519 $4,217,766
Shares issued in reinvestment of
distributions .......................... 50,778 1,195,996 245,418 3,737,669 114,062 1,005,381
Share redeemed ......................... (700,481) (16,533,103) (3,138,298) (47,889,077) (808,785) (7,148,964)
Changes from exercise of exchange
privilege:
Shares sold .......................... 33,527 790,845 789,099 12,040,922 541,786 4,797,377
Shares redeemed ...................... (73,619) (1,737,169) (1,780,795) (27,112,934) (374,809) (3,317,843)
------- ---------- --------- ---------- ------- ---------
Net decrease ............................ (172,084) $ (4,073,416) (2,756,251) $(41,662,849) (52,227) $ (446,283)
======= ========== ========== ========== ======= =========
Class II shares:
Six months ended March 31, 1996
Shares sold ............................ -- -- 74,749 $ 1,355,953 -- --
Shares issued in reinvestment of
distributions .......................... -- -- 519 9,497 -- --
Share redeemed ......................... -- -- (1,256) (23,812) -- --
Changes from exercise of exchange
privilege:
Shares sold .......................... -- -- 4,224 78,758 -- --
Shares redeemed ...................... -- -- (480) (9,054) -- --
------- ---------- -------- ---------- ------- ---------
Net increase ............................ -- -- 77,756 $ 1,411,342 -- --
======= ========== ======== ========== ======= =========
May 1, 1995 to September 30, 1995
Shares sold ............................ -- -- 61,207 $ 1,010,493 -- --
Shares issued in reinvestment of
distributions .......................... -- -- 119 1,976 -- --
------- ---------- -------- ---------- ------- ---------
Net increase ............................ -- -- 61,326 $ 1,012,469 -- --
======= ========== ======== ========== ======= =========
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At September 30, 1995, for tax purposes, the Funds had accumulated net capital
loss carryovers as follows:
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
----------------------- --------------- ------------------
Capital loss carryovers
Expiring in:
<C> <C> <C> <C>
1996...................................... $5,376,536 $ -- $ 124,885
1997...................................... 1,251,202 -- 274,652
1998 ..................................... 794,958 -- 139,900
1999 ..................................... 226,936 -- 131,804
2000 ..................................... 375,717 -- --
2002 ..................................... 328,483 3,319,654 --
2003 ..................................... 61,429 -- 759,019
--------------- ---------- ------------
$8,415,261 $3,319,654 $1,430,260
=============== ========== ============
</TABLE>
The Franklin Corporate Qualified Dividend Fund and the Franklin Investment Grade
Income Fund had capital loss carryovers of $2,056,972 and $178,611,
respectively, that expired on September 30, 1995 and were reclassified to
paid-in-capital.
For tax purposes, the aggregate cost of securities and unrealized appreciation
(depreciation) of the Trust are the same as for financial statement purposes at
March 31, 1996.
4. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the six months ended March 31, 1996, were as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
<S> <C> <C> <C>
Purchases ............................................. $3,111,492 $28,372,351 $5,057,232
=============== ========== ============
Sales ................................................. $4,297,583 $33,107,312 $3,906,023
=============== ========== ============
</TABLE>
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Management Agreement:
Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to each Fund, and receives fees computed monthly based on the net assets of each
Fund on the last day of the month, using the following annualized fee rates:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Month End Net Assets Qualified Dividend Fund Dividends Fund Grade Income Fund
- ----------------------------------------- --------------- ------------- ---------------
<S> <C> <C> <C>
First $500 million..................................... 0.50% 0.75% 0.50%
Over $500 million, up to and including $1 billion...... 0.45% 0.625% 0.45%
In excess of $1 billion................................ 0.40% 0.50% 0.40%
</TABLE>
Pursuant to the terms of the management agreement, each of the Funds also pays
accounting fees of $40,000 per year to Advisers for the provision of certain
accounting, bookkeeping and recordkeeping functions for the Funds. The terms of
the management agreement provide that aggregate annual expenses of the Funds be
limited to the extent necessary to comply with the limitations set forth in the
laws, regulations and administrative interpretations of the states in which the
Funds' shares are registered. For the six months ended March 31, 1996, the
Funds' expenses did not exceed these limitations.
b. Shareholder Service Agreement:
Under the terms of a shareholder servicing agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Funds pay costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Funds for
the six months ended March 31, 1996, aggregated $156,770, of which $135,088 was
paid to Investor Services.
c. Distribution Plans and Underwriting Agreement:
Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Franklin Rising Dividends Fund will
reimburse the Franklin/Templeton Distributors, Inc. (Distributors) in an amount
up to a maximum of 0.50% per annum for Class I and 1.00% per annum for Class II,
of the average daily net assets of such class, while the Franklin Corporate
Qualified Dividend Fund and the Franklin Investment Grade Income Fund will
reimburse up to a maximum of 0.25% per annum, of the average daily net assets,
for costs incurred in the promotion, offering and marketing of the Funds'
shares. The Plans do not permit nor require payments of excess costs after
termination. Fees incurred by the Funds under the Plans aggregated $678,675 for
the period ended March 31, 1996.
In its capacity as underwriter for the shares of the Funds, Distributors
receives commissions on sales of the Funds' shares of beneficial interest.
Commissions are deducted from the gross proceeds received from the sale of the
shares of the Funds, and as such are not expenses of the Funds. Distributors may
also make payments, out of its own resources, to the dealers for certain sales
of the Funds' Class I and Class II shares. Commissions received by the
Distributors and the amounts paid to other dealers for the six months ended
March 31, 1996, were as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Class I Qualified Dividend Fund Dividends Fund Grade Income Fund
---------------------- --------------- -----------------
<S> <C> <C> <C>
Total commissions received ........................... $47,043 $245,012 $64,732
====================== =============== =================
Paid to other dealers ................................ $48,530 $218,423 $68,791
====================== =============== =================
Class II
Total commissions received ........................... -- $ 13,289 --
====================== =============== =================
Paid to other dealers ................................ -- $ 28,531 --
====================== ============== =================
</TABLE>
d. Other Affiliated Parties and Transactions:
Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, and Investor Services, all wholly-owned subsidiaries of
Franklin Resources, Inc.
6. FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period by Fund are as follows:
<TABLE>
<CAPTION>
Per Share Operating Performance Ratios/Supplemental Data
--------------------------------------- --------------------------------
Net Ratio of
Net Distri- Net Assets Net Invest-
Period Asset Net Net Realized Total butions Asset at End Ratio of ment
Ended Value at Invest- & Unrealized From From Net Value at of Period Expenses Income to Portfolio Average
Sept. Beginning ment Gain (Loss) Investment Investment End of Total (in to Average Average Turnover Commission
30 of Period Income on Securities Operations Income Period Return++ 000's) Net Assets Net Assets Rate Rate+
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Corporate Qualified Dividend Fund:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19921 $21.63 $1.37 $2.144 $3.514 $(1.394) $23.75 16.75% $ 29,444 1.10% 5.97% 29.01% --
19932 23.75 0.73 0.78 1.51 (0.787) 24.47 6.44 33,849 1.06* 4.09* 27.46 --
1994 24.47 1.02 (0.84) 0.18 (0.956) 23.69 0.72 31,790 1.00 4.19 32.17 --
1995 23.69 1.21 -- 1.21 (1.140) 23.76 5.26 27,793 1.02 5.02 29.18 --
19964 23.76 0.58 (0.14) 0.44 (0.600) 23.60 1.88 27,236 1.03* 5.12* 13.78 .0600
Franklin Rising Dividends Fund:
Class I Shares:
19921 14.91 0.24 1.290 1.530 (0.260) 16.18 10.38 197,804 1.46 1.67 12.73 --
19932 16.18 0.19 0.745) (0.555) (0.195) 15.43 (3.43) 356,708 1.40* 1.73* 11.48 --
1994 15.43 0.28 (0.800) (0.520) (0.240) 14.67 (3.38) 261,461 1.43 1.81 25.75 --
1995 14.67 0.33 2.608 2.938 (0.298) 17.31 20.32 260,917 1.43 2.10 14.60 --
19964 17.31 0.14 1.489 1.629 (0.199) 18.74 9.44 273,109 1.41* 1.52* 11.75 .0503
Class II Shares:
19953 15.47 0.11 1.826 1.936 (0.126) 17.28 12.56 1,060 1.90* 1.92* 14.60 --
19964 17.28 0.12 1.446 1.566 (0.156) 18.69 9.09 2,599 1.96* 1.04* 11.75 .0503
Franklin Investment Grade Income Fund:
19921 9.03 0.62 (0.086) 0.534 (0.634) 8.93 6.16 29,367 1.08 7.02 27.28 --
19932 8.93 0.38 0.402 0.782 (0.402) 9.31 8.94 35,970 1.09* 5.61* 53.19 --
1994 9.31 0.45 (0.544) (0.094) (0.396) 8.82 (1.02) 29,553 1.05 4.91 10.57 --
1995 8.82 0.44 0.259 0.699 (0.479) 9.04 8.21 29,824 1.09 4.96 64.70 --
19964 9.04 0.22 (0.022) 0.198 (0.208) 9.03 2.20 28,054 1.05* 4.70* 17.83 --
</TABLE>
*Annualized
+Represents the average broker commission rate per share paid by the Fund in
connection with the execution of the Fund's portfolio transactions in equity
securities
++Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum
front-end sales charge or the contingent deferred sales charge and assumes
reinvestment of dividends and capital gains at net asset value.
1For the year ended December 31.
2For the nine months ended September 30, 1993.
3For the period May 1, 1995 to September 30, 1995.
4For the six months ended March 31, 1996.
Franklin Managed Trust
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM 304
(a) of REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in pie format the credit quality breakdown of the fund's
securities based on total long-term investments.
<TABLE>
<CAPTION>
Credit Quality Breakdown on 3/31/96
<S> <C>
AAA 23.4%
AA 3.7%
A 47.9%
BBB 21.3%
BB 3.7%
</TABLE>
GRAPHIC MATERIAL (2)
This chart shows in pie format the credit quality breakdown on the fund's
securities based on corporate bond assets.
<TABLE>
<CAPTION>
Credit Quality Breakdown on 3/31/96
<S> <C>
AAA 68.2%
AA 12.1%
A 19.7%
</TABLE>
