MESSAGE FROM THE PRESIDENT
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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 29
Notes to Financial Statements 32
May 15, 1997
Dear Shareholder,
We are pleased to bring you the Franklin Managed Trust semi-annual report for
the period ended March 31, 1997.
For the six-month reporting period, interest rates fluctuated as investors
reacted to various U.S. economic reports. The 30-year Treasury, for example,
fluctuated between a low of 6.35% on December 3, 1996, and a high of 7.10% on
March 31, 1997.* Interest rates ended the period higher due to continued,
above-trend U.S. economic strength. In fact, the Federal Reserve Board moved to
pre-empt potentially higher inflation by raising the federal funds rate (the
rate banks charge each other for overnight loans) from 5.25% to 5.50% in March.
So far, this rate increase has caused some volatility in the U.S. stock and bond
markets. Many analysts anticipate further rate hikes, which could result in
additional volatility of financial markets. However, any slowdown in economic
activity could reduce the risk of higher inflation, and fixed-income securities
may respond well in this type of environment.
*Source: Micropal.
During the period under review, fixed-income mutual funds performed in the
shadow of an exciting and alluring stock market. Investors poured large amounts
of capital into equity mutual funds throughout 1996 and early 1997, while the
Dow Jones Industrial Average(R) set new highs -- closing above 7000 for the
first time on February 13, 1997.
It is important to remember that financial markets always have -- and always
will -- fluctuate. No one can predict the future performance of the securities
markets, but history has shown that over the long term, stocks and bonds have
delivered impressive results. For this reason, we encourage you to review your
investment program periodically with your investment representative and focus on
your long-term goals.
The following pages contain more detailed information regarding the performance
of the funds in the Franklin Managed Trust. If you have any questions concerning
your investment, we welcome the opportunity to answer them. We appreciate your
continued support, welcome new shareholders, and look forward to serving your
investment needs in the years ahead.
Sincerely,
William J. Lippman
President
Franklin Managed Trust
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-- Celebrating 50 Years --
This year marks 50 years of business for Franklin Templeton. Over these years,
the mutual fund industry has experienced profound changes in technology,
regulations and customer expectations. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest around the globe. We thank you for your past
support and look forward to serving your investment needs in the years ahead.
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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's objective is to generate high, after-tax income for corporations
consistent with investment in investment-quality securities. The fund invests
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
continued to meet its investment objective during the reporting period. Its
share price, as measured by net asset value, fluctuated narrowly and ended at
$23.90 on March 31, 1997, up from $23.52 on September 30, 1996. During the
period, the fund also paid monthly tax-advantaged income to corporations, which
totaled 52.5 cents per share over the six-month period.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The chart above, showing asset classes with historically the greatest price
stability furthest to the right, profiles the fund's investments at the close of
the period. As the illustration shows, auction-rate preferred stocks, and cash
and equivalents, comprised more than 60% of the fund's total net assets. With
the exception of cash and equivalents, auction-rate preferred stocks exhibit the
lowest price sensitivity to interest rates, because they normally reset their
rates every 49 days based on the results of a Dutch auction. This process
generally allows investors to receive par value for their securities at periodic
intervals, as other investors bid to set a new dividend rate.
Next are adjustable-rate preferred stocks, which have offered somewhat less
price stability than auction-rate preferreds. Adjustables reset their dividend
rates approximately every 90 days (according to a yield spread fixed at the time
of original sale) 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. Thus, adjustables tend to maintain their prices
even when interest rates swing radically, but they are not protected from losses
caused by a decline in credit quality.
Finally, fixed-rate preferred stocks have the least price stability. As of the
end of the reporting period, all our fixed-rate preferreds had limited terms to
redemption, ranging from a few months to a few years. This lowers their
sensitivity to interest rates similar to that of short to intermediate-term
bonds.
We seek to control various sources of potential risk, including interest rate
and credit risk, through careful selection of securities and active management
of the fund. National ratings services, such as Standard and Poor's(R) and
Moody's, as well as our own in-house evaluations, provide us with a guide to
each issuer's credit quality. The chart on the next page illustrates the quality
breakdown of the fund's investments at the close of the period.
Last year the Clinton Administration proposed eliminating the dividends-received
deduction, but didn't take any action. This year, the Administration has
proposed reducing the deduction, from 70% to 50%. Although it is impossible to
predict the future, we intend to maintain the portfolio's conservative position
by holding more than 50% of total net assets in cash and equivalents and
auction-rate preferreds.
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase or sell for the fund.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Performance Summary
The Franklin Corporate Qualified Dividend Fund's share price, as measured by net
asset value, increased 38.0 cents, from $23.52 on September 30, 1996, to $23.90
on March 31, 1997. The fund also paid income distributions totaling 52.5 cents
($0.525) per share during 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 4.20%, based on an annualization of the 8.5
cent per share March dividend and the maximum offering price of $24.26 on March
31, 1997. Based on the 1997 maximum federal corporate tax rate of 35%, the
taxable equivalent distribution rate was 5.78%, assuming that 100% of your
fund's dividends qualify for the 70% corporate-dividends-received deduction.
For the periods ended March 31, 1997, your fund provided six- and 12-month
cumulative total returns of +3.89% and +6.00%, respectively. Cumulative total
returns reflect the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any. They do not include the initial sales
charge, and past performance is not predictive of future results.
FRANKLIN CORPORATE QUALIFIED DIVIDEND FUND
Dividend Distributions 10/1/96 - 3/31/97
Dividend
Month per Share
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October 9.0 cents
November 9.0 cents
December 9.0 cents
January 8.5 cents
February 8.5 cents
March 8.5 cents
Total 52.5 cents
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
believe its performance should be satisfactory over the long term. As the table
on the following page illustrates, if you had invested in the fund at its
inception, your cumulative total return would have been +84.25% by the end of
the reporting period.
<TABLE>
<CAPTION>
Franklin Corporate Qualified Dividend Fund
Periods Ended March 31, 1997
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
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<S> <C> <C> <C> <C>
NAV Cumulative Total Return1 6.00% 31.05% 83.44% 84.25%
POP Cumulative Total Return1 4.40% 29.09% 80.69% 81.49%
NAV Average Annual Total Return2 6.00% 5.56% 6.26% 6.17%
POP Average Annual Total Return2 4.40% 5.24% 6.09% 6.01%
Distribution Rate3 4.20%
Equivalent Taxable
Distribution Rate4 5.78%
30-Day Standardized Yield5 4.12%
Equivalent Taxable Yield4 5.67%
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</TABLE>
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 initial sales
charge. Public offering price (POP) returns include the maximum 1.5% initial
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 sales charge.
POP returns reflect the maximum 1.5% initial sales charge. See Note below.
3. Distribution rate is based on an annualization of the fund's current 8.5 cent
per share monthly dividend and the maximum offering price of $24.26 on March 31,
1997.
4. Equivalent taxable distribution rate and yield assume the 1997 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, 1997.
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.
Preservation of capital is also an important consideration. The fund invests in
the equity securities of companies that have paid consistently rising dividends
over the past 10 years.
We are pleased to report that the Franklin Rising Dividends Fund performed well
during the six months ended March 31, 1997. As discussed in the Performance
Summary on page 11, the Class I share's six-month cumulative total return was
+12.86%.
We added several significant positions to the portfolio, including Gap, Inc.,
Hanna M.A. Co., First Union Corp., Watts Industries, Inc., and Duriron Co., Inc.
Gap is a premier apparel retailer with several strong franchises, including
Banana Republic and Old Navy. First Union is a large, eastern, regional bank
that has increased its dividend for 19 consecutive years, at a compound annual
rate of 13%. Hanna, Watts, and Duriron -- smaller industrial companies in
consolidating industries all have a history of solid earnings and dividend
growth.
Some of the positions we eliminated included Banc One Corp., Circuit City
Stores, Inc., and Loctite Corp. Banc One's heavy dependence on its credit card
portfolio during a period of increasing charge-offs led us to sell this stock
and invest, instead, in First Union. Likewise, we decided to sell leading
electronics retailer Circuit City when the company's sales remained weak in a
very competitive environment. Loctite, a specialty chemical company, was
acquired by another company in January, and we sold our shares at a gain of 37%.
During the six-month period, several holdings made notable dividend increases
over the prior year, including Kaydon Corp. (+16.7%), Merck & Co. Inc. (+23.5%),
Mercury General Corp. (+20.8%), Nucor Corp. (+25%), Superior Surgical
Manufacturing Co. Inc. (+22.2%), Wal-Mart Stores, Inc. (+28.6%), and Washington
Mutual Inc. (+19%).
Franklin Rising Dividends Fund vs.
Standard & Poor's 500(R) Stock Index*
Common Stock Analysis
Quarter Ended March 31, 1997
Franklin Rising
Dividends Fund S&P 500(R)*
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Gross Income Yield 2.1% 1.99%
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Price/Book Value 3.4x 3.7x
Average Market
Capitalization $10.8 billion $11.6 billion
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Price/Earnings Ratio 15.0 19.6
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BETA .82 1.00
Glossary of Terms:
Gross Income Yield: Rate of dividend return for a stock, calculated by dividing
the annual dividend by the stock price.
Price/Book Value: Ratio of a stock's price to its book value per share. Book
value is the total net asset value of a company's securities (total assets minus
total liabilities). Dividing book value by the number of common shares
outstanding gives the book value per share. A stock that has a low ratio of
price to book value may be underpriced and thus, a good value.
Market Capitalization: The value of a company, determined by multiplying the
market price of one share by the number of its issued and outstanding shares.
Price/Earnings Ratio (P/E): The price of a stock divided by the company's
earnings per share. For instance, a stock selling for $40 a share, and the
company earned $2 per share last year, has a trailing P/E of 20. Companies with
P/Es greater than 20 tend to be young and faster-growing, while low P/E stocks
tend to be in mature industries or of established blue-chip companies. P/E is
often used to demonstrate how expensive a stock is (i.e., how much investors are
willing to pay for a company's earnings).
BETA: A measure of a stock's relative volatility, in this case relative to the
S&P 500, which has a beta of 1.0. Thus, a beta below this number indicates a
stock or fund should be less volatile than the S&P 500, while a beta higher than
1.0 indicates greater volatility than the S&P 500. A fund beta of .82 indicates
the fund should be about 20% less volatile than the S&P 500.
*Source: Standard and Poor's. The S&P 500 Index is unmanaged, and one cannot
invest directly in an index.
We base our investment strategy on the belief that companies with consistently
rising dividends should, over time, also realize appreciation in their stock
prices. Highlighted in the table on page 9 are several criteria we use to select
portfolio securities. 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 other investors.
As shown in the table to the right, our 10 largest positions on March 31, 1997,
approximated 27% of the fund's total net assets. It is interesting to note how
these 10 companies would, in the aggregate, answer the fund's screening criteria
based on a simple average of statistical measures. On average, these 10
companies have raised their dividends 16 years in a row and by 372% in the last
10 years. Their most recent dividend increases averaged 17.2%, and the stocks
provided a quarter-end yield of 1.8% on March 31, 1997. Their average dividend
payout ratio was 26%, and the average price/earnings ratio was 14.7, versus 17.3
for that of the unmanaged Standard and Poor's 500 Stock Index on the same date.
Franklin Rising Dividends Fund
Top 10 Stock Holdings on March 31, 1997
Based on Total Net Assets
Company % of total
Industry net assets
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Family Dollar Stores, Inc. 3.37%
Retail
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Wallace Computer Services, Inc. 3.00%
Office/Business Supplies
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Allied Group, Inc. 2.90%
Insurance -- Property Casualty
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Millipore Corp. 2.89%
Industrial
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Dimon, Inc. 2.77%
Consumer Goods & Services
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MMI Companies, Inc. 2.42%
Insurance -- Property Casualty
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Wal-Mart Stores, Inc. 2.42%
Retail
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Harper Group, Inc. 2.36%
Transportation
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Mercury General Corp. 2.34%
Insurance - Property Casualty
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Royal Dutch Petroleum Co. 2.29%
Energy
For a complete list of the fund's holdings, please see page 22 of this report.
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase for the fund.
Performance Summary
Class I
The Franklin Rising Dividends Fund's share price, as measured by net asset
value, increased $1.13, from $20.03 on September 30, 1996, to $21.16 on March
31, 1997. In addition to paying income distributions totaling 10.0 cents ($0.10)
per share during the period, the fund paid out a long-term capital gain of
$1.311 per share in December 1996. Distributions will vary depending on the
fund's income and any profits realized from the sale of securities in the fund's
portfolio. Past distributions are not predictive of future trends.
The fund posted cumulative total returns of +12.86% and +21.51%, for the six-
and 12-month periods, respectively, ended March 31, 1997. Total returns measure
the change in value of an investment over the periods indicated, assuming
reinvestment of all distributions, and do not include the initial sales charge.
Past performance is not predictive of future results.
<TABLE>
<CAPTION>
Franklin Rising Dividends Fund -- Class I
Periods Ended March 31, 1997
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
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<S> <C> <C> <C> <C>
Cumulative Total Return1 21.51% 66.50% 182.36% 183.21%
Average Annual Total Return2 16.06% 9.72% 10.43% 10.24%
Distribution Rate3 1.08%
30-Day Standardized Yield4 0.70%
Value of $10,000 Investment5 $11,606 $15,903 $26,972 $27,049
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</TABLE>
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the initial sales charge. See Note
below.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the current, maximum 4.50%
initial sales charge. See Note below.
3. Distribution rate for Class I is based on an annualization of the current six
cents per share quarterly dividend and the maximum offering price of $22.16 on
March 31, 1997.
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, 1997.
5. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the initial sales charge. See Note
below.
All total return calculations assume reinvestment of dividends and capital gains
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.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price. Thus, actual total
returns for purchasers of shares during that period would have been different
than noted above. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a plan of distribution under Rule 12b-1,
which affects subsequent performance.
Performance Summary
Class II
The Franklin Rising Dividends Fund's share price, as measured by net asset
value, increased $1.13, from $19.98 on September 30, 1996, to $21.11 on March
31, 1997. In addition to paying income distributions totaling 4.34 cents
($0.0434) per share during the period, the fund paid out a long-term capital
gain of $1.311 per share in December 1996. Distributions will vary depending on
the fund's income and any profits realized from the sale of securities in the
fund's portfolio. Past distributions are not predictive of future trends.
The fund posted cumulative total returns of +12.60% and +20.93%, for the six-
and 12-month periods, respectively, ended March 31, 1997. Total returns measure
the change in value of an investment over the periods indicated, assuming
reinvestment of all distributions, and do not include the initial sales charge.
Past performance is not predictive of future results.
Franklin Rising Dividends Fund -- Class II
Periods Ended March 31, 1997
Since
Inception
1-Year (5/1/95)
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Cumulative Total Return1 20.93% 48.87%
Average Annual Total Return2 18.73% 22.42%
Distribution Rate3 0.58%
30-Day Standardized Yield4 0.17%
Value of $10,000 Investment5 $11,873 $14,735
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1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include sales charges.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the maximum 1.0% initial
sales charge and 1.0% contingent deferred sales charge, applicable to shares
redeemed within the first 18 months of investment.
3. Distribution rate for Class II is based on an annualization of the current
3.09 cents per share quarterly dividend and the maximum offering price of $21.32
on March 31, 1997.
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, 1997.
5. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include sales charges. See Note below.
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 INVESTMENT GRADE INCOME FUND
Your Fund's Objective:
The Franklin Investment Grade Income Fund's objective is to seek a maximum level
of income consistent with prudent exposure to risk. The fund pursues this
objective by investing in investment-grade debt securities having primarily
intermediate maturities. The fund also seeks to offer a higher total return than
a money market fund, generally with less risk to principal than a fund composed
of either long-term securities or securities that are below investment-grade
quality.*
During the reporting period, the fund emphasized a shorter maturity structure,
attempting to minimize fluctuations in share value. This proved effective, as
the fund's Class I share price, as measured by net asset value, was $8.97 on
March 31, 1997, down only slightly from $9.01 at the beginning of the period.
As always, we sought to control risk, including interest rate and credit risk,
through careful selection of securities, especially in relation to their
maturities. On March 31, 1997, the weighted average credit quality of the
portfolio's securities was in the AA range, as measured by Standard & Poor's(R)
Corporation, a national credit-rating agency.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
All of the portfolio's investments as of the end of the reporting period are
call-protected for at least 20 years.
*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.
On March 31, 1997, the portfolio had 30% of total net assets in government
bonds, 16% in straight, short- and intermediate-term bonds, 24% in "put" bonds,
and 30% in cash and equivalents (includes net other assets and liabilities).
Put bonds are an integral part of our conservative investment strategy. Such a
bond allows the holder to redeem the issue at specified intervals before
maturity and still receive full face value. Thus, if interest rates rise, we can
redeem the bond early and reinvest the proceeds at a higher interest rate.
Conversely, if interest rates decline, we can either keep the higher-yielding
bond until maturity or sell it at a favorable price. On March 31, 1997, the
fund's weighted average maturity was about 1.5 years, using the optional put
dates as effective maturities, and 6.6 years using stated maturity dates.
As well-publicized, the Federal Reserve Board raised short-term interest rates a
quarter percent in March, initiating what it described as a "pre-emptive" move
against potentially higher inflation.
Against this background, we expect to maintain our emphasis on put bonds to keep
a shorter effective maturity. We believe this strategy should help us produce a
higher total return than a money fund, without subjecting the portfolio's share
price to the kind of volatility associated with longer-term bonds or
lower-quality investments.*
This discussion reflects our strategies for the fund and includes our opinions
at the close of the reporting period. Since economic and market conditions are
constantly changing, our strategies, evaluations, conclusions and decisions
regarding the portfolio holdings discussed in this report may change as new
circumstances arise. Although past performance of a specific investment or
sector cannot guarantee future performance, such information can help illustrate
how we analyze the securities we purchase or sell for the fund.
*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.
Performance Summary
Class I
The Franklin Investment Grade Income Fund's share price, as measured by net
asset value, decreased 4.0 cents, from $9.01 on September 30, 1996, to $8.97 on
March 31, 1997.
The fund paid income distributions totaling 23.10 cents ($0.2310) per share,
including a special year-end income distribution of 3.3 cents ($0.033) per share
to meet excise tax requirements. Distributions will vary based on the earnings
of the fund's portfolio, and past distributions are not predictive of future
trends. Based on an annualization of March's monthly dividend of 3.3 cents
($0.033) per share and the maximum offering price of $9.37 on March 31, 1997,
your fund's distribution rate was 4.23%.
For the six- and 12-month periods ended March 31, 1997, your fund posted
cumulative total returns of +2.13% and +4.18%, respectively.
Franklin Investment Grade Income Fund --
Class I
Dividend Distributions 10/1/96 - 3/31/97
Dividend
Month per Share
- --------------------------------------------------------------------------------
October 3.3 cents
November 3.3 cents
December 6.6 cents+
January 3.3 cents
February 3.3 cents
March 3.3 cents
Total 23.1 cents
- --------------------------------------------------------------------------------
Cumulative total returns measure the change in value of an investment over the
specified periods, and assume reinvestment of dividends and capital gains. They
do not include the initial sales charge, and past performance does not guarantee
future results.
+Includes the regular, monthly dividend of 3.3 cents ($0.033) per share and a
distribution of 3.3 cents ($0.033) per share to meet excise requirements.
<TABLE>
<CAPTION>
Franklin Investment Grade Income Fund -- Class I
Periods Ended March 31, 1997
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return1 4.18% 33.83% 82.89% 81.33%
Average Annual Total Return2 -0.24% 5.08% 5.76% 5.56%
Distribution Rate3 4.23%
30-Day Standardized Yield4 4.57%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the initial sales charge. See Note
below.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect 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 for Class I of $9.37 on
March 31, 1997.
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, 1997.
All total return calculations assume reinvestment of dividends and capital gains
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.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price. Thus, actual total
returns for purchasers of shares during that period would have been different
than noted above. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a plan of distribution under Rule 12b-1,
which affects subsequent performance.
Performance Summary
Advisor Class
The Franklin Investment Grade Income Fund's share price, as measured by net
asset value, decreased 7.0 cents, to $8.96 on March 31, 1997, from $9.03 on
January 2, 1997, the day Advisor Class shares became available. During the
three-month period, your fund paid income distributions totaling 10.59 cents
($0.1059) per share. Distributions will vary based on the earnings of the fund's
portfolio, and past distributions are not predictive of future trends.
Based on an annualization of the current monthly dividend of 3.46 cents
($0.0346) per share and the fund's share price of $8.96 on March 31, 1997, your
fund's distribution rate was 4.63%.
For the three-month period ended March 31, 1997, your fund posted a cumulative
total return of +0.40%. Cumulative total return measures the change in value of
an investment over the specified periods, and assumes reinvestment of dividends
and capital gains.
Franklin Investment Grade Income Fund --
Advisor Class
Dividend Distributions 1/2/97 - 3/31/97
Dividend
Month per Share
- --------------------------------------------------------------------------------
January 3.30 cents
February 3.83 cents
March 3.46 cents
Total 10.59 cents
- --------------------------------------------------------------------------------
Franklin Investment Grade Income Fund --
Advisor Class
Period Ended March 31, 1997
Since
Inception
(1/02/97)
- --------------------------------------------------------------------------------
Cumulative Total Return1 0.40%
Distribution Rate2 4.63%
30-Day Standardized Yield3 4.99%
- --------------------------------------------------------------------------------
1. Cumulative total return measures the change in value of an investment over
the period indicated.
2. Distribution rate for Advisor Class is based on an annualization of the
current 3.46 cent per share monthly dividend and share price of $8.96 on March
31, 1997.
3. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended March 31, 1997.
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997
(unaudited)
Value
Shares Franklin Corporate Qualified Dividend Fund (Note 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
aAdjustable Rate Preferred Stocks 11.7%
Commercial Banks & Bank Holding Companies 4.5%
48,200 Citicorp, 5.628% adj. rate pfd., Series 19 ...................................... $ 1,198,975
------------
Electric Utilities 7.2%
10,000 Arizona Public Service Co., 6.00% adj. rate pfd., Series Q ...................... 880,000
46,700 Toledo Edison Co., 7.00% cum. adj. rate pfd., Series A .......................... 1,033,238
------------
1,913,238
------------
Total Adjustable Rate Preferred Stocks (Cost $3,166,492) .................. 3,112,213
------------
bAuction Rate Preferred Stocks 39.3%
12 cCNA Financial Corp., 3.97%, Series F ............................................ 1,203,573
12 cGeneral Electric Capital Corp., 3.81%, Series K ................................. 1,203,556
12 cInternational Lease Finance, 3.849%, Series B ................................... 1,205,388
1,000 dMorgan (JP), Inc., 4.035%, Series C ............................................. 1,000,560
12 cNorthern Trust Corp., 3.91%, Series C ........................................... 1,201,694
10 cRepublic NY Corp., 3.879%, Series A ............................................ 1,004,418
12 cRhone-Poulenc Rorer, 5.05%, Series 1 ............................................ 1,209,987
12 cSara Lee Corp., 3.858%, Series D ................................................ 1,206,044
12 cVirginia Electric & Power Co., 4.00%, Series 92-A .............................. 1,202,933
------------
Total Auction Rate Preferred Stocks (Cost $10,400,000) .................... 10,438,153
------------
Fixed Rate Preferred Stocks 26.9%
Commercial Banks 5.3%
28,000 Bankers Trust (New York), 7.375% flex rate pfd., Series J ....................... 1,406,768
------------
Financial Services 3.8%
10,000 Household Finance Co., 7.25% pfd., Series 92-A .................................. 1,017,500
------------
Industrial 3.3%
28,913 McDermott, Inc., $2.60 cum. S.F., pfd., Series B ................................ 861,969
------------
Pharmaceuticals 5.0%
13 cSmithkline Beecham Holding, flex. rate pfd., 5.58%, Series A-1 ................. 1,316,250
------------
Utilities 9.5%
15,000 Entergy Louisiana, Inc., 7.00% S.F., pfd., ...................................... 1,515,000
10,000 Rochester Gas & Electric Co., 7.45% S.F., pfd., Series S ........................ 1,018,750
------------
2,533,750
------------
Total Fixed Rate Preferred Stocks (Cost $7,263,184) ....................... 7,136,237
------------
Total Long Term Investments (Cost $20,829,676) ............................ 20,686,603
------------
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997
(unaudited) (cont.)
Face Value
Amount Franklin Corporate Qualified Dividend Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
eReceivables from Repurchase Agreements 21.7%
$5,843,066 Joint Repurchase Agreement, 6.417%, 04/01/97, (Maturity Value $5,748,243)
(Cost $5,747,219)
Aubrey G. Lanston & Co., Inc., (Maturity Value $690,885)
Collateral: U.S. Treasury Bills, 09/04/97
U.S. Treasury Notes, 6.75% - 7.00%, 04/15/99 - 05/31/99
Barclays de Zoete Wedd Securities, Inc., (Maturity Value $345,443)
Collateral: U.S.Treasury Notes, 6.00% - 7.125%, 09/30/98 - 09/30/99
CIBC Wood Gundy Securities Corp., (Maturity Value $690,885)
Collateral: U.S.Treasury Notes, 6.25%, 06/30/98
Daiwa Securities America, Inc., (Maturity Value $690,885)
Collateral: U.S. Treasury Notes, 5.00% - 7.50%, 06/30/98 - 12/31/01
Fuji Securities, Inc., (Maturity Value $690,885)
Collateral: U.S. Treasury Bills, 07/31/97
U.S. Treasury Notes, 5.875%, 04/30/98
Sanwa Securities (USA) Co., L.P., (Maturity Value $690,885)
Collateral: U.S. Treasury Bills, 05/15/97
U.S. Treasury Notes, 5.625% - 6.75%, 05/15/98 - 11/30/00
SBC Warburg, Inc., (Maturity Value $690,885)
Collateral: U.S. Treasury Notes, 6.875%, 03/31/00
The Nikko Securities Co. International, Inc., (Maturity Value $566,605)
Collateral: U.S. Treasury Notes, 4.75% - 6.50%, 05/31/98 - 09/30/01
UBS Securities, L.L.C., (Maturity Value $690,885)
Collateral: U.S. Treasury Notes, 5.00% - 6.875%, 04/30/97 - 04/30/00 ......... $ 5,747,219
------------
Total Investments (Cost $26,576,895) 99.6% .......................... 26,433,822
Other Assets and Liabilities, Net 0.4% .............................. 107,752
------------
Net Assets 100.0% ................................................... $26,541,574
============
At March 31, 1997, the net unrealized depreciation based on the cost of investments
for income tax purposes of $26,576,895 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost................................................... $ 172,171
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value................................................... (315,244)
------------
Net unrealized depreciation.................................................... $ (143,073)
============
PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership
S.F. - Sinking Fund
aDividend rates adjust quarterly in reference to various U.S. Treasury benchmarks.
bDividend 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
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.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997
(unaudited)
Value
Shares Franklin Rising Dividends Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 97.7%
Banks/Thrifts 11.9%
88,500 CoreStates Financial Corp. ...................................................... $ 4,203,750
70,000 First Union Corp. ............................................................... 5,678,750
115,500 Mercantile Bankshares Corp. ..................................................... 3,898,125
106,400 National Commerce Bancorp. ...................................................... 4,096,400
72,100 State Street Boston Corp. ....................................................... 5,001,938
310,010 TrustCo Bank Corp., New York .................................................... 6,432,708
51,000 Washington Mutual, Inc........................................................... 2,463,938
106,000 Wilmington Trust Corp. .......................................................... 4,505,000
------------
36,280,609
------------
Consumer Goods & Services 13.1%
223,500 Alberto-Culver Co., Class A ..................................................... 4,972,875
71,586 Block Drug Co., Inc., Class A.................................................... 3,149,784
367,700 Dimon, Inc. ..................................................................... 8,457,100
162,200 Newell Co. ...................................................................... 5,433,700
58,000 Philip Morris Cos., Inc. ........................................................ 6,619,250
165,000 Stanhome, Inc.................................................................... 4,104,375
170,000 Universal Corp. ................................................................. 4,908,750
89,700 UST, Inc. ....................................................................... 2,500,388
------------
40,146,222
------------
Drugs/Health Care 4.9%
111,000 Bard, (C.R.), Inc. .............................................................. 3,163,500
62,600 Bristol-Myers Squibb Co. ........................................................ 3,693,400
47,000 Merck & Co., Inc. ............................................................... 3,959,750
18,500 Pfizer, Inc. .................................................................... 1,556,313
98,600 West Co., Inc.................................................................... 2,674,525
------------
15,047,488
------------
Electronics/Technology 6.4%
49,000 Baldor Electric Co............................................................... 1,231,125
130,100 Cohu, Inc........................................................................ 3,106,138
47,700 General Electric Co. ............................................................ 4,734,225
118,500 Hewlett-Packard Co............................................................... 6,310,125
64,300 Rockwell International Corp. .................................................... 4,171,463
------------
19,553,076
------------
Energy 2.3%
40,000 Royal Dutch Petroleum Co., New York Shares, ADR ................................. 7,000,000
------------
Financial Services 2.1%
180,000 Federal National Mortgage Association ........................................... 6,502,500
------------
Industrial 21.0%
` 3,750 Boeing Co. ...................................................................... $ 369,844
30,300 Donaldson Co., Inc. ............................................................. 1,052,925
112,400 Dover Corp....................................................................... 5,901,000
234,600 Duriron Co., Inc. ............................................................... 5,161,200
280,500 Hanna (M.A.) Co. ................................................................ 5,960,625
118,000 Kaydon Corp. .................................................................... 4,941,250
127,000 Kimball International, Inc., Class B ............................................ 4,826,000
40,100 Leggett & Platt, Inc............................................................. 1,303,250
208,300 Millipore Corp. ................................................................. 8,826,713
145,500 Monsanto Co. .................................................................... 5,565,375
173,800 Myers Industries, Inc. .......................................................... 2,889,425
138,800 Nucor Corp....................................................................... 6,350,100
181,600 Superior Industries International, Inc. ......................................... 4,108,700
106,800 Superior Surgical Manufacturing Co., Inc. ....................................... 1,388,400
229,800 Watts Industries, Inc., Class A ................................................. 5,342,850
------------
63,987,657
------------
Insurance - Property Casualty 13.8%
257,250 Allied Group, Inc................................................................ 8,875,125
23,500 American International Group, Inc. .............................................. 2,758,312
100,000 Chubb Corp. ..................................................................... 5,387,500
117,000 Mercury General Corp. ........................................................... 7,137,000
289,700 MMI Cos., Inc. .................................................................. 7,387,350
157,450 RLI Corp. ....................................................................... 5,018,718
7,100 SAFECO Corp. .................................................................... 284,000
84,000 St. Paul Cos., Inc. ............................................................. 5,449,500
------------
42,297,505
------------
Office/Business Supplies 8.6%
109,400 Avery Dennison Corp. ........................................................... 4,211,900
208,000 Brady, (W.H.) Co. ............................................................... 5,226,000
256,900 Ennis Business Forms ............................................................ 2,825,900
145,500 Standard Register Co............................................................. 4,765,124
277,000 Wallace Computer Services, Inc. ................................................. 9,175,624
------------
26,204,548
------------
Retail 10.1%
440,000 Family Dollar Stores, Inc. ...................................................... 10,285,000
187,300 Gap, Inc. ....................................................................... 6,274,550
146,000 Rite Aid Corp. .................................................................. 6,132,000
Retail (cont.)
44,700 The Limited, Inc. ............................................................... $ 821,362
264,800 Wal-Mart Stores, Inc. ........................................................... 7,381,300
------------
30,894,212
------------
Transportation 3.5%
247,500 Arnold Industries, Inc. ......................................................... 3,495,937
330,000 Harper Group, Inc. .............................................................. 7,218,750
------------
10,714,687
------------
Total Long Term Investments (Cost $223,259,195) ........................... 298,628,504
------------
Face
Amount
----------
eReceivables from Repurchase Agreements 2.2%
$6,947,734 Joint Repurchase Agreement, 6.417%, 04/01/97, (Maturity Value $6,834,956)
(Cost $6,833,738)
Aubrey G. Lanston & Co., Inc., (Maturity Value $821,498)
Collateral: U.S. Treasury Bills, 09/04/97
U.S. Treasury Notes, 6.75% - 7.00%, 04/15/99 - 05/31/99
Barclays de Zoete Wedd Securities, Inc., (Maturity Value $410,749)
Collateral: U.S. Treasury Notes, 6.00% - 7.125%, 09/30/98 - 09/30/99
CIBC Wood Gundy Securities Corp., (Maturity Value $821,498)
Collateral: U.S. Treasury Notes, 6.25%, 06/30/98
Daiwa Securities America, Inc., (Maturity Value $821,498)
Collateral: U.S. Treasury Notes, 5.00% - 7.50%, 06/30/98 - 12/31/01
Fuji Securities, Inc., (Maturity Value $821,498)
Collateral: U.S. Treasury Bills, 07/31/97
U.S. Treasury Notes, 5.875%, 04/30/98
Sanwa Securities (USA) Co., L.P., (Maturity Value $821,498)
Collateral: U.S. Treasury Bills, 05/15/97
U.S. Treasury Notes, 5.625% - 6.75%, 05/15/98 - 11/30/00
SBC Warburg, Inc., (Maturity Value $821,498)
Collateral: U.S. Treasury Notes, 6.875%, 03/31/00
The Nikko Securities Co. International, Inc., (Maturity Value $673,721)
Collateral: U.S. Treasury Notes, 4.75% - 6.50%, 05/31/98 - 09/30/01
UBS Securities, L.L.C., (Maturity Value $821,498)
Collateral: U.S. Treasury Notes, 5.00% - 6.875%, 04/30/97 - 04/30/00 ......... 6,833,738
------------
Total Investments (Cost $230,092,933) 99.9% ......................... 305,462,242
Other Assets and Liabilities, Net 0.1%............................... 140,735
------------
Net Assets 100.0% ................................................... $305,602,977
============
At March 31, 1997 the net unrealized appreciation based on the cost of investments
for income tax purposes of $230,092,933 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................ $ 78,070,529
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................ (2,701,220)
------------
Net unrealized appreciation ................................................... $ 75,369,309
============
PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership
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.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997 (unaudited)
Face Value
Amount Franklin Investment Grade Income Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Securities and Agencies 35.0%
$ 2,000,000 Tennessee Valley Authority, bonds, (putable* 07/15/01, callable 07/15/20), 6.235%,
07/15/45 ....................................................................... $ 1,962,706
2,000,000 U.S. Treasury Notes, 5.625%, 06/30/97 ........................................... 2,001,252
2,000,000 U.S. Treasury Notes, 5.875%, 07/31/97 ........................................... 2,001,876
1,000,000 U.S. Treasury Notes, 5.625%, 10/31/97 ........................................... 998,751
1,000,000 U.S. Treasury Notes, 5.125%, 04/30/98 ........................................... 989,376
2,000,000 U.S. Treasury Notes, 5.875%, 08/15/98 ........................................... 1,988,752
2,000,000 U.S. Treasury Notes, 5.875%, 01/31/99 ........................................... 1,981,876
1,000,000 U.S. Treasury Notes, 5.875%, 03/31/99 ........................................... 990,313
------------
Total U.S. Government Securities and Agencies (Cost $10,990,857) .......... 12,914,902
------------
Corporate Bonds 35.1%
Consumer Goods 8.0%
1,500,000 Coca-Cola Enterprises, bonds, (putable* 10/15/03), 6.70%,10/15/36 ............... 1,475,134
1,500,000 Heinz (H.J.) Co., notes, 5.50%, 09/15/97 ........................................ 1,497,388
------------
2,972,522
------------
Electric Utilities 2.7%
1,000,000 Southern California Edison Co., notes, 5.875%, 02/01/98 ......................... 996,488
------------
Financial Services 11.0%
1,500,000 Ford Motor Credit Corp., global bond, 6.25%, 02/26/98 ........................... 1,503,330
1,500,000 General Electric Capital Corp., medium term notes (step up to 8.125% or putable *
04/01/98), 5.80%, 04/01/08 ..................................................... 1,562,386
1,000,000 Norwest Financial, Inc., senior notes, 6.23%, 09/01/98 .......................... 996,852
------------
4,062,568
------------
Industrial 4.1%
1,500,000 WMX Technologies, Inc., notes, (putable* 05/15/00), 6.65%, 05/15/05 ............. 1,494,868
------------
Retail 4.0%
1,500,000 Penney J.C. & Co., Inc., deb., (putable* 08/15/03), 6.90%, 08/15/26 ............. 1,477,908
------------
Telephone Utilities 5.3%
1,000,000 Bellsouth Telecommunications Corp., deb., (putable* 11/15/00), 5.85%, 11/15/45 .. 970,811
1,000,000 New England Telephone and Telegraph, notes, 6.25%, 12/15/97 ..................... 1,001,148
------------
1,971,959
------------
Total Corporate Bonds (Cost $14,984,005) .................................. 12,976,313
------------
Total Long Term Investments (Cost $25,974,862)............................. 25,891,215
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997 (unaudited) (cont.)
Face Value
Amount Franklin Investment Grade Income Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
eReceivables from Repurchase Agreements 28.6%
$10,750,633 Joint Repurchase Agreement, 6.417%, 04/01/97, (Maturity Value $10,576,861)
(Cost $10,574,976)
Aubrey G. Lanston & Co., Inc., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Bills, 09/04/97
U.S. Treasury Notes, 6.75% - 7.00%, 04/15/99 - 05/31/99
Barclays de Zoete Wedd Securities, Inc., (Maturity Value $635,620)
Collateral: U.S.Treasury Notes, 6.00% - 7.125%, 09/30/98 - 09/30/99
CIBC Wood Gundy Securities Corp., (Maturity Value $1,271,240)
Collateral: U.S.Treasury Notes, 6.25%, 06/30/98
Daiwa Securities America, Inc., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Notes, 5.00% - 7.50%, 06/30/98 - 12/31/01
Fuji Securities, Inc., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Bills, 07/31/97
U.S. Treasury Notes, 5.875%, 04/30/98
Sanwa Securities (USA) Co., L.P., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Bills, 05/15/97
U.S. Treasury Notes, 5.625% - 6.75%, 05/15/98 - 11/30/00
SBC Warburg, Inc., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Notes, 6.875%, 03/31/00
The Nikko Securities Co. International, Inc., (Maturity Value $1,042,561)
Collateral: U.S. Treasury Notes, 4.75% - 6.50%, 05/31/98 - 09/30/01
UBS Securities, L.L.C., (Maturity Value $1,271,240)
Collateral: U.S. Treasury Notes, 5.00% - 6.875%, 04/30/97 - 04/30/00 ......... $10,574,976
------------
Total Investments (Cost $36,549,838) 98.7% ........................... 36,466,191
Other Assets and Liabilities, Net 1.3% ............................... 491,416
------------
Net Assets 100.0%..................................................... $36,957,607
============
At March 31, 1997, the net unrealized depreciation based on the cost of investments
for income tax purposes of $36,549,838 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ................................................ $ 137,288
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value ................................................ (220,935)
------------
Net unrealized depreciation ................................................... $ (83,647)
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Statement of Investments in Securities and Net Assets, March 31, 1997
(unaudited) (cont.)
Franklin Investment Grade Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
L.P. - Limited Partnership
*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.
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Financial Statements
Statements of Assets and Liabilities
March 31, 1997 (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 ....................................... $20,829,676 $223,259,195 $25,974,862
============== ============== =============
At value ................................................. 20,686,603 298,628,504 25,891,215
Receivables from repurchase agreements, at value and cost . 5,747,219 6,833,738 10,574,976
Cash ...................................................... 108,345 -- 78,728
Receivables:
Dividends and interest ................................... 35,593 630,355 364,433
Investment securities sold ............................... -- 615,614 --
Capital shares sold ...................................... -- 506,758 77,224
-------------- -------------- -------------
Total assets ......................................... 26,577,760 307,214,969 36,986,576
-------------- -------------- -------------
Liabilities:
Payables:
Investment securities purchased .......................... -- 760,619 --
Capital shares repurchased ............................... -- 375,023 518
Management fees .......................................... 10,984 198,753 10,183
Distribution fees ........................................ 9,123 236,028 17,863
Shareholder servicing costs .............................. 249 -- 405
Accrued expenses and other liabilities .................... 15,830 41,569 --
-------------- -------------- -------------
Total liabilities .................................... 36,186 1,611,992 28,969
-------------- -------------- -------------
Net assets, at value ....................................... $26,541,574 $305,602,977 $36,957,607
============== ============== =============
Net assets consist of:
Undistributed net investment income ....................... $ 226,500 $ 49,997 $ 181,672
Net unrealized appreciation (depreciation) on investments . (143,073) 75,369,309 (83,647)
Accumulated net realized gain (loss) from investments ..... (3,199,186) 19,837,734 (1,012,824)
Class I capital shares .................................... 29,657,333 204,731,292 37,834,312
Class II capital shares ................................... -- 5,614,645 --
Advisor Class capital shares .............................. -- -- 38,094
-------------- -------------- -------------
Net assets, at value ....................................... $26,541,574 $305,602,977 $36,957,607
============== ============== =============
Class I shares:
Net assets, at value ...................................... $26,541,574 $299,374,952 $36,919,667
============== ============== =============
Shares outstanding ........................................ 1,110,659 14,150,247 4,116,882
============== ============== =============
Net asset value per share* ................................ $23.90 $21.16 $8.97
============== ============== =============
Class II shares:
Net assets, at value ...................................... $ 6,228,025
==========
Shares outstanding ........................................ 295,079
==========
Net asset value per share* ................................ $21.11
==========
Advisor Class shares:
Net assets, at value ...................................... $ 37,940
===========
Shares outstanding ........................................ 4,233
===========
Net asset value per share ................................. $8.96
===========
*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.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Financial Statements (cont.)
Statements of Operations
for the six months ended March 31, 1997 (unaudited)
Franklin Franklin
Corporate Qualified Franklin Rising Investment Grade
Dividend Fund Dividends Fund Income Fund
------------- -------------- -------------
Investment income:
<S> <C> <C> <C>
Dividends ................................................. $ 648,204 $ 3,150,931 $ --
Interest .................................................. 78,276 245,719 939,266
------------- ------------- ------------
Total Income ............................................... 726,480 3,396,650 939,266
------------- ------------- ------------
Expenses:
Management fees (Note 5) .................................. 65,354 1,144,313 82,349
Distribution fees- Class I (Note 5) ....................... 26,974 682,427 33,015
Distribution fees- Class II (Note 5) ...................... -- 25,230 --
Shareholder servicing costs (Note 5) ...................... 2,659 126,640 11,228
Accounting fees ........................................... 20,000 20,000 20,000
Registration and filing fees .............................. 11,248 15,187 6,135
Professional fees ......................................... 8,568 13,223 5,292
Reports to shareholders ................................... 3,718 68,966 8,561
Trustees' fees and expenses ............................... 1,269 15,056 1,329
Custodian fees ............................................ 356 1,172 294
Other ..................................................... 1,014 4,280 1,576
------------- ------------- ------------
Total expenses ............................................. 141,160 2,116,494 169,779
------------- ------------- ------------
Net investment income ...................................... 585,320 1,280,156 769,487
------------- ------------- ------------
Realized and unrealized gain (loss) on investments:
Net realized gain ......................................... 25,700 23,110,691 141,920
Net unrealized appreciation (depreciation) ................ 404,305 11,418,037 (278,386)
------------- ------------- ------------
Net realized and unrealized gain (loss) on investments ..... 430,005 34,528,728 (136,466)
------------- ------------- ------------
Net increase in net assets resulting from operations ....... $1,015,325 $35,808,884 $ 633,021
============= ============= ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN MANAGED TRUST
- --------------------------------------------------------------------------------
Financial Statements (cont.)
Statements of Changes in Net Assets
for the six months ended March 31, 1997 (unaudited)
and the year ended September 30, 1996
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
------------------------- --------------------------- -------------------------
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
3/31/97 9/30/96 3/31/97 9/30/96 3/31/97 9/30/96
--------- --------- --------- --------- --------- ---------
Increase in net assets:
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income ........ $ 585,320 $ 1,269,131 $ 1,280,156 $ 4,050,067 $ 769,487 $ 1,385,410
Net realized gain (loss) from
security transactions ....... 25,700 (186,161) 23,110,691 18,376,109 141,920 136,241
Net unrealized appreciation
(depreciation) on investments 404,305 (29,860) 11,418,037 22,297,141 (278,386) (291,022)
--------- --------- ---------- ----------- ---------- ----------
Net increase in net assets
resulting from operations 1,015,325 1,053,110 35,808,884 44,723,317 633,021 1,230,629
Distributions to shareholders from:
Undistributed net
investment income:
Class I .................... (581,815) (1,330,351) (1,404,304) (4,942,788) (820,747) (1,292,338)
Class II ................... -- -- (10,750) (29,691) -- --
Advisor Class .............. -- -- -- -- (307) --
Net realized capital gain:
Class I ..................... -- -- (18,052,928) -- -- --
Class II .................... -- -- (276,484) -- -- --
Increase (decrease) in net
assets from capital share
transactions (Note 3)......... (1,683,351) 275,623 7,910,464 (20,100,001) 7,773,467 (389,824)
--------- --------- ---------- ----------- ---------- ----------
Net increase (decrease)
in net assets ........... (1,249,841) (1,618) 23,974,882 19,650,837 7,585,434 (451,533)
Net assets:
Beginning of period ........... 27,791,415 27,793,033 281,628,095 261,977,258 29,372,173 29,823,706
--------- --------- ---------- ----------- ---------- ----------
End of period ................. $26,541,574 $27,791,415 $305,602,977 $281,628,095 $36,957,607 $29,372,173
========= ========= ========== =========== ========== ==========
Undistributed net investment
income included net assets:
Beginning of period .......... $ 222,995 $ 284,215 $ 184,895 $ 1,107,307 $ 233,239 $ 140,167
========= ========= ========== =========== ========== ==========
End of period ................ $ 226,500 $ 222,995 $ 49,997 $ 184,895 $ 181,672 $ 233,239
========= ========= ========== =========== ========== ==========
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, management investment company
(mutual fund), registered under the Investment Company Act of 1940 as amended.
The Trust consists of three separate diversified funds (the Funds). Each of the
Funds issues a separate series of the Trust's shares and maintains a totally
separate investment portfolio.
The investment objectives of each Fund are as follows:
Fund Objective
------------------------- --------------
Corporate Qualified Dividend Fund Income
Rising Dividends Fund Growth and Income
Investment Grade Income Fund Income
The Rising Dividends Fund offers Class I and Class II shares and the Investment
Grade Income Fund offers Class I and Advisor Class shares. Class I shares are
sold with a higher front-end sales charge than Class II shares. There is no
front-end sales load nor distribution fees for Advisor Class shares. Class I and
II shares may be subject to a contingent deferred sales charge and all shares
have 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. The offering of Advisor Class shares began January
1, 1997.
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 Valuations:
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. Portfolio securities which are traded both in the over the counter
market and on a securities exchange are valued according to the broadest and
most representative market determined by the manager. The Funds 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.
The value of auction rate preferred stock is determined based upon quotations
readily available in the marketplace. If there are no readily available
quotations, the value will be based upon the values of comparable traded
securities. When market quotations are not readily available for securities held
by the Funds, or for comparable securities, then such securities will be valued
at par value plus an accrual of the dividend to be received on the next dividend
payment date, as approved 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.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
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.
Original issue discount is amortized as required by the Internal Revenue Code.
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.
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. Repurchase Agreements:
The Funds may enter into a joint repurchase agreement whereby their uninvested
cash balances are 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
Funds based on their pro-rata interest. A repurchase agreement is accounted for
as a loan by the Funds to the seller, collateralized by underlying U.S.
government securities, which are delivered to the Funds' 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 Funds, with the value
of the underlying securities marked to market daily to maintain coverage of at
least 100%. At March 31, 1997, all outstanding repurchase agreements held by the
Funds had been entered into on that date.
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 expenses during the reporting
period. Actual results could differ from those estimates.
<TABLE>
<CAPTION>
2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At September 30, 1996, for tax purposes, the Rising Dividends Fund had
accumulated net realized capital gains of $15,056,455. The Corporate Qualified
Dividend Fund and Investment Grade Income Fund had capital loss carryovers as
follows:
Franklin Corporate Franklin Investment
Qualified Dividend Fund Grade Income Fund
--------------- ---------------
Capital loss carryovers expiring in:
<S> <C> <C>
1997......................................................... $1,251,202 $ 274,652
1998 ........................................................ 794,958 139,900
1999 ........................................................ 226,936 117,414
2000 ........................................................ 375,717 --
2002 ........................................................ 328,483 --
2003 ........................................................ 61,429 254,062
2004......................................................... -- 368,716
--------------- ------------
$3,038,725 $1,154,744
=============== ============
</TABLE>
2. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS (cont.)
From November 1, 1995 through September 30, 1996, the Corporate Qualified
Dividend Fund incurred $186,161 of realized capital losses. As permitted by tax
regulations, the Corporate Qualified Dividend Fund intends to elect to defer
these losses and treat them as having arisen in the year ended September 30,
1997.
Capital loss carryovers of $5,368,105 for the Corporate Qualified Dividend Fund
and $124,885 for the Investment Grade Income Fund expired at September 30, 1996,
and were reclassified to paid-in-capital.
For tax purposes, the aggregate cost of securities and unrealized appreciation
(depreciation) of the Funds are the same as for financial statement purposes at
March 31, 1997.
<TABLE>
<CAPTION>
3. TRUST SHARES
At March 31, 1997, there was an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in each of the Funds' shares were
as follows:
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
------------------------- ------------------------ -----------------------
Shares Amount Shares Amount Shares Amount
-------- -------- -------- -------- -------- --------
Class I shares:
Six months ended March 31, 1997
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 182,989 $ 4,339,245 1,069,989 $ 22,729,426 1,376,768 $ 12,421,587
Shares issued in reinvestment
of distributions .............. 21,733 513,674 765,963 15,865,146 70,590 636,725
Shares redeemed ................ (275,832) (6,536,270) (1,550,795) (32,822,467) (589,646) (5,322,939)
-------- -------- -------- -------- -------- --------
Net increase (decrease) ......... (71,110) $ (1,683,351) 285,157 $ 5,772,105 857,712 $ 7,735,373
======== ======== ======== ======== ========= ========
Year ended September 30, 1996
Shares sold .................... 461,688 $ 10,870,468 2,088,118 $ 38,945,585 1,086,667 $ 9,800,009
Shares issued in reinvestment
of distributions .............. 49,210 1,157,520 212,015 3,948,319 100,794 909,440
Shares redeemed ................ (499,062) (11,752,365) (3,505,315) (65,457,722) (1,227,244) (11,099,273)
-------- -------- -------- -------- -------- --------
Net increase (decrease) ......... 11,836 $ 275,623 (1,205,182) $(22,563,818) (39,783) $ (389,824)
======== ======== ======== ======== ======== ========
3. TRUST SHARES (cont.)
Franklin Rising Franklin Investment
Dividends Fund Grade Income Fund
------------------------ -----------------------
Shares Amount Shares Amount
-------- -------- -------- --------
Class II shares:
Six months ended March 31, 1997
<S> <C> <C>
Shares sold .................... 123,531 $2,629,440
Shares issued in reinvestment
of distributions .............. 11,251 232,287
Shares redeemed ................ (33,971) (723,368)
-------- --------
Net increase .................... 100,811 $2,138,359
======== ========
Year ended September 30, 1996
Shares sold .................... 146,186 $ 2,716,874
Shares issued in reinvestment
of distributions .............. 1,078 20,157
Shares redeemed ................ (14,322) (273,214)
-------- --------
Net increase .................... 132,942 $2,463,817
======== ========
Advisor Class shares:
January 1, 1997 to March 31, 1997
Shares sold .................... 4,199 $37,787
Shares issued in reinvestment
of distributions .............. 34 307
Shares redeemed ................ -- --
--------- ---------
Net increase .................... 4,233 $38,094
========= =========
</TABLE>
<TABLE>
<CAPTION>
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, 1997 were as follows:
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
----------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Purchases ............................... $ -- $58,915,096 $7,505,881
Sales ................................... $3,320,000 $66,819,329 $3,439,760
</TABLE>
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
<TABLE>
<CAPTION>
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, using the following annualized fee rates:
Franklin Corporate Franklin Rising Franklin Investment
Average Daily 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.
Under an agreement with Advisers, Franklin Templeton Services, Inc. (FT
Services) provides administrative services and facilities for the Funds. The fee
is paid by Advisers and computed monthly based on average daily net assets. It
is not a separate expense of the Funds.
b. Shareholder Services Agreement:
Under the terms of a shareholder services 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, 1997, aggregated $140,527, all of which 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 Rising Dividends Fund reimburses
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 of the Fund, while the Corporate
Qualified Dividend Fund and the Investment Grade Income Fund reimburse up to a
maximum of 0.25% per annum of the average daily net assets for Class I, 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 $767,646 for the six
months ended March 31, 1997.
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' shares. Commissions received by Distributors, the amounts paid to
other dealers, and any applicable contingent deferred sales charges (CDSC) for
the six months ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividends Fund Grade Income Fund
----------------------- -------------------- ---------------------
<S> <C> <C> <C>
Total commissions received, including CDSC ......... $38,555 $265,376 $ 88,259
Paid to other dealers .............................. $38,639 $264,821 $ 112,540
CDSC................................................ $ -- $ 986 $ --
</TABLE>
d. Other Affiliates and Related Party Transaction:
Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, FT Services, and Investor Services, all wholly-owned
subsidiaries of Franklin Resources, Inc.
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period by Fund are as follows:
Per Share Operating Performance Ratios/Supplemental Data
--------------------------------------------------- ------------------------------------
Ratio of
Net Distri- Net
Net Realized & Total butions Invest-
Asset Unrealized From From Distri- Net Net Ratio of ment
Value at Net Gain Invest- Net butions Asset Assets Expenses Income to Port- Average
Year Begin- Invest- (Loss) ment Invest- From Total Value at at End to Aver- Average folio Com-
Ended ning of ment on Secur- Oper- ment Capital Distri- End of Total of Period age Net Net Turnover mission
Sept. 30 Period Income ities ations Income Gains butions Period Return++ (in 000's) Assets Assets Rate Rate+
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Corporate Qualified Dividend Fund:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19921 $21.63 $1.37 $2.144 $3.514 $(1.394) $ -- $(1.394) $23.75 16.75% $ 29,444 1.10% 5.97% 29.01% --
19932 23.75 0.73 0.777 1.507 (0.787) -- (0.787) 24.47 6.44 33,849 1.06* 4.09* 27.46 --
1994 24.47 1.02 (0.844) 0.176 (0.956) -- (0.956) 23.69 0.72 31,790 1.00 4.19 32.17 --
1995 23.69 1.21 -- 1.210 (1.140) -- (1.140) 23.76 5.26 27,793 1.02 5.02 29.18 --
1996 23.76 1.10 (0.190) 0.910 (1.150) -- (1.150) 23.52 3.94 27,791 1.07 4.64 24.88 0.0600
19974 23.52 0.54 0.365 0.905 (0.525) -- (0.525) 23.90 3.89 26,542 1.08* 4.48* -- --
Franklin Rising Dividends Fund:
Class I Shares:
19921 14.91 0.24 1.290 1.530 (0.260) -- (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) -- (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) -- (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) -- (0.298) 17.31 20.32 260,917 1.43 2.10 14.60 --
1996 17.31 0.28 2.779 3.059 (0.339) -- (0.339) 20.03 17.83 277,746 1.40 1.49 31.55 0.0508
19974 20.03 0.09 2.451 2.541 (0.100) (1.311) (0.411) 21.16 12.86 299,375 1.38* 0.85* 20.07 0.0501
Class II Shares:
19953 15.47 0.11 1.826 1.936 (0.126) -- (0.126) 17.28 12.56 1,060 1.90* 1.92* 14.60 --
1996 17.28 0.21 2.735 2.945 (0.245) -- (0.245) 19.98 17.16 3,882 1.95 0.94 31.55 0.0508
19974 19.98 0.04 2.444 2.484 (0.043) (1.311) (1.354) 21.11 12.60 6,228 1.92* 0.30* 20.07 0.0501
Franklin Investment Grade Income Fund:
Class I Shares:
19921 9.03 0.62 (0.086) 0.534 (0.634) -- (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) -- (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) -- (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) -- (0.479) 9.04 8.21 29,824 1.09 4.96 64.70 --
1996 9.04 0.44 (0.064) 0.376 (0.406) -- (0.406) 9.01 4.25 29,372 1.06 4.81 20.06 --
19974 9.01 0.20 (0.009) 0.191 (0.231) -- (0.231) 8.97 2.13 36,920 1.03* 4.68* 15.00 --
Advisor Class Shares:
19975 9.03 0.13 (0.094) 0.036 (0.106) -- (0.106) 8.96 0.40 38 0.84* 4.86* 15.00 --
*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 contingent deferred sales charge, and assumes reinvestment of dividends and capital gains at
net asset value. Prior to May 1, 1994, dividends were reinvested at the maximum offering price, and capital gains at net asset
value. Effective May 1, 1994, with the implementation of the Rule 12b-1 distribution plans for Class I shares, the sales charge on
reinvested dividends was eliminated.
1For the year ended December 31, 1992.
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, 1997.
5For the period January 1, 1997 to March 31, 1997.
</TABLE>
Franklin Managed Trust Semi-Annual Report March 31, 1997.
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 bar format portfolio breakdown and sector price stability of
the fund's securities on 3/31/97, as a percentage of total net assets.
<TABLE>
<CAPTION>
Portfolio Breakdown and Sector Price Stability
<S> <C>
Fixed-Rate Preferred Stocks 25.9%
Adjustable-Rate Preferred Stocks 11.7%
Auction-Rate Preferred Stocks 39.3%
Cash & Equivalents 22.1%
</TABLE>
GRAPHIC MATERIAL (2)
This chart shows in pie format the fund's credit quality breakdown on 3/31/97,
as a percentage of total net assets.
<TABLE>
<CAPTION>
Credit Quality Breakdown on March 31, 1997
<S> <C>
AAA 21.8%
AA 3.8%
A 48.9%
BBB 21.6%
Below Investment Grade 3.9%
</TABLE>
GRAPHIC MATERIAL (3)
This chart shows in pie format the fund's credit quality breakdown on 3/31/97,
as a percentage of total net assets.
<TABLE>
<CAPTION>
Credit Quality Breakdown on March 31, 1997
<S> <C>
AAA 71.7%
AA 5.4%
A 22.9%
</TABLE>