ANNUAL
REPORT
September 30, 1997
Franklin Managed Trust
Franklin Corporate Qualified Dividend Fund
Franklin Rising Dividends Fund
Franklin Investment Grade Income Fund
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.
CONTENTS
Shareholder Letter 1
Fund Reports 4
Franklin Corporate
Qualified Dividend Fund 4
Franklin Rising
Dividends Fund 12
Franklin Investment Grade
Income Fund 21
Financial Highlights &
Statement of Investments 29
Financial Statements 41
Notes to
Financial Statements 45
Report of
Independent Accountants 50
Tax Information 51
SHAREHOLDER LETTER
Dear Shareholder:
It's a pleasure to bring you the Franklin Managed Trust annual report for the
period ended September 30, 1997.
Up, up and away?
The big news over the 12-month reporting period has been the large flow of
capital into the U.S. equity markets. The Dow Jones(R) Industrial Average gained
roughly 2100 points over the one-year period, pushing through the 8000-point
mark for the first time in July. Strong economic growth (second and third
quarter GDP posted annualized rates of 3.3% and 3.5% respectively), combined
with the stock market's meteoric rise, prompted some degree of caution on the
part of the Federal Reserve Board (the Fed). The chief topic on Wall Street was
whether the Federal Open Market Committee would increase the federal funds rate.
To no one's surprise, the Fed nudged the rate higher in March 1997, citing
heightened inflation risk as the reason for the quarter-point increase, from
5.25% to 5.50%. Although the market experienced a roughly 10% correction, stock
prices rebounded sharply. Despite such a recovery, recent reports show
relatively few signs of inflationary pressure. In fact, some economists have
dubbed the current, benign U.S. economic environment as the "Goldilocks
Economy," as it is neither "too hot" (growing fast enough to generate higher
prices and inflation) nor "too cold" (slowing down at a rate that threatens to
throw us into recession); rather, the economy -- at this time -- appears to be
"just right."
The Tale of the Tortoise and the Hare
We can't promise this positive economic environment will continue. It is
important to remember, then, that markets correct -- in our opinion, it is
desirable for them to do so. Consequently, investor concern about market
volatility and its long-term direction prompts us to comment on the importance
of having your own long-term investment strategy. And when you consider your
investment strategy, are you a tortoise or a hare?
We all know the familiar story: the tortoise won the race because he had a plan
and stuck to it, not allowing the hare's fast start to distract him. Much like
the tortoise, successful investors historically have achieved good results
through setting goals, diversifying their assets, and having patience. Smart
investors think like the tortoise. They know mutual fund investments are
long-term, so daily market fluctuations and short-term volatility have minimal
impact on their overall investment goals. They understand that patience and
discipline are keys to successful investing. Remember, it's time -- not timing
- -- that makes the difference.
We encourage you to speak with your investment representative about your
financial goals. To help reduce concern about volatility, stay focused on the
long-term and diversify your investments. Mutual funds offer a level of
diversification that is almost impossible for individual investors to achieve on
their own.
Regardless of the market's direction, Franklin Templeton's disciplined
investment strategy remains the same: all of our portfolio managers are
dedicated to providing shareholders like you with careful selection, broad
diversification and constant professional supervision.
As always, we appreciate your support, welcome your questions and comments, and
look forward to serving your investment needs in the years ahead.
Sincerely,
William J. Lippman
President
Franklin Managed Trust
"Much like the tortoise, successful investors historically have achieved good
results through setting goals, diversifying their assets, and having patience."
FRANKLIN CORPORATE
QUALIFIED DIVIDEND FUND
Your Fund's Objective: 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,
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.
Franklin Corporate Qualified Dividend Fund continued to meet its investment
objective during the one-year reporting period. The fund's share price, as
measured by net asset value, fluctuated within a narrow range and ended at
$24.03 on September 30, 1997, up from $23.52 at the start of the fiscal year.
Throughout the reporting period, the fund continued to pay monthly
tax-advantaged income, totaling $1.035 per share.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
As you can see from the chart on page 5, auction-rate preferred stocks and cash
& equivalents comprised about 65.3% of total net assets at the close of the
fiscal year. Auction-rate preferred stocks tend to exhibit low price-sensitivity
to interest rates, because they normally reset their rates every 49 days, based
on the results of a Dutch auction. The process generally allows investors to
receive par value for their securities at periodic intervals, as other investors
bid to set a new dividend rate.
Adjustable-rate preferred stocks offer 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 when interest
rates swing radically, but they are not protected from losses resulting from a
decline in credit quality.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Fixed-rate preferred stocks have the least price stability, with limited terms
until 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 rating services, such as Standard and Poor's(R) and
Moody's, as well as our own in-house evaluations, provide portfolio managers
with a guide to each issuer's credit quality. The chart to the left illustrates
the quality breakdown of the fund's investments at the close of the period.
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 above 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.
Looking forward, we expect to continue emphasizing investment-grade issues and
frequent dividend resets to minimize price fluctuation. We believe this
conservative approach should position the fund well for the future.
Franklin Corporate
Qualified Dividend Fund
Dividend Distributions
10/1/96 - 9/30/97
Dividend
Month per Share
October 9.0 cents
November 9.0 cents
December 9.0 cents
January 8.5 cents
February 8.5 cents
March 8.5 cents
April 8.5 cents
May 8.5 cents
June 8.5 cents
July 8.5 cents
August 8.5 cents
September 8.5 cents
Total $1.035
PERFORMANCE SUMMARY
Franklin Corporate Qualified Dividend Fund's share price, as measured by net
asset value, increased 51.0 cents, from $23.52 on September 30, 1996, to $24.03
on September 30, 1997. The fund also paid income distributions totaling $1.035
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 4.18%, based on an annualization of September's
monthly dividend of 8.5 cents ($0.085) per share and the maximum offering price
of $24.40 on September 30, 1997. Based on the 1997 maximum federal corporate tax
rate of 35%, the taxable equivalent distribution rate was 5.76%, assuming that
100% of your fund's dividends qualify for the 70% corporate dividends-received
deduction.
For the period ended September 30, 1997, your fund provided a 12-month
cumulative total return of 6.71%. Cumulative total return reflects the change in
value of an investment, assuming reinvestment of dividends and capital gains, if
any, and does not include the initial sales charge.
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 page 11 shows, if you had invested in the fund at its inception on January
14, 1987, your cumulative total return would have been 89.24% by the end of the
reporting period.
The charts on page 10 compare the fund's performance over the past 10 years with
the unmanaged Payden & Rygel 90-day T-Bill Index. As you can see, the fund's
pre-tax performance has overperformed the index. More significantly, on an
after-tax basis, the fund's performance overperformed the T-Bill Index by an
even wider margin.* T-Bills are of course backed by the U.S. Government and
carry the lowest credit risk. Fund shares, and its investments are not
guaranteed. Comparing a mutual fund to an unmanaged market index is never an
exact comparison. An index does not pay management fees to cover salaries of
security analysts or portfolio managers or pay commissions to buy and sell
stocks and bonds. Unlike an index, mutual funds can never be 100% invested
because they need to keep some cash on hand to redeem shares. The fund's
performance figures include the maximum initial sales charge, all fund expenses
and account fees. If operating expenses such as these had been applied to the
index, the index's performance would have been lower. In addition, most of the
securities in the Franklin Corporate Qualified Dividend Fund reset their
dividends on a 49-day or 90-day cycle. Please remember, an index is simply an
indicator of performance, and one cannot invest in it directly.
*The value of Treasuries, if held to maturity, is fixed; principal is guaranteed
and interest is fixed. Investment return and share price of the Franklin
Corporate Qualified Dividend Fund fluctuate with market condition.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Corporate Qualified Dividend Fund
Periods ended 9/30/97
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
NAV Cumulative Total Return1 6.71% 25.50% 94.55% 89.24%
POP Cumulative Total Return1 5.10% 23.59% 91.60% 86.41%
NAV Average Annual Total Return2 6.71% 4.65% 6.88% 6.14%
POP Average Annual Total Return2 5.10% 4.33% 6.72% 5.99%
Distribution Rate3 4.18%
Equivalent Taxable Distribution Rate4 5.76%
30-Day Standardized Yield5 4.47%
Equivalent Taxable Yield4 6.15%
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 sales charge.
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 $24.40 on September
30, 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 for the 30 days ended September 30, 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: 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 ten years.
We are pleased to report that the Franklin Rising Dividends Fund performed well
during the one-year reporting period ended September 30, 1997. As discussed in
the Performance Summary on page 15, the Class I share's one-year cumulative
total return was 44.10%.
A significant addition to the portfolio during the period was Nike, Inc., one of
the world's most recognized global brands. Other companies whose stock we
purchased included Hanna (M.A.) Co., Watts Industries, Inc., and Flowserve
Corp., smaller industrial companies in consolidating industries, with a history
of solid earnings and dividend growth. In the rapidly changing financial
services sector we acquired stock in three leading institutions -- First Union
Corp., U.S. Bancorp, and Washington Mutual, Inc.
Among the positions we eliminated from the portfolio were Banc One Corp.,
Loctite Corp, Arnold Industries Inc., and C.R. Bard Inc. Banc One's heavy
dependence on its credit card portfolio, during a period of increasing
uncollectable debts, led us to switch to the more attractively positioned First
Union Corp. Loctite, a specialty chemical company, was acquired by another
company in January at a 37% gain for the fund. We sold our positions in Arnold
Industries because the company stopped increasing its dividend after several
years of flat earnings. Also, we liquidated our position in Bard, which had
difficulty growing earnings in a very competitive environment.
During the one-year period, several holdings made notable dividend increases
over the prior year, including Kaydon Corp. (+28.6%), Mercury General Corp.
(+20.8%), Nike, Inc. (+33.3%), Nucor Corp. (+25%), Superior Surgical
Manufacturing Co., Inc. (+22.2%), Wal-Mart Stores, Inc. (+28.6%), and Washington
Mutual, Inc. (+17.4%).
Franklin Rising Dividends Fund vs.
Standard & Poor's 500(R) Stock Index*
Common Stock Analysis
Quarter Ended September 30, 1997
Franklin Rising
Dividends Fund S&P 500
Gross Income Yield 1.8% 1.6%
Price/Book Value 4.0x 4.6x
Average Market Capitalization 12.8 billion 14.6 billion
Price/Earnings Ratio 16.3 23.4
BETA .83 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 fast 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 .83 indicates
the fund should be about 20% less volatile than the S&P 500.
Franklin Rising
Dividends Fund
Top 10 Stock Holdings
9/30/97
Company % of Total
Industry Net Assets
Family Dollar Stores, Inc. 3.5%
Retail
Wallace Computer
Services, Inc. 3.0%
Office/Business Supplies
Nucor Corp. 2.8%
Industrial
Nike, Inc. 2.7%
Consumer Goods & Services
Millipore Corp. 2.5%
Industrial
Mercury General Corp. 2.5%
Insurance-Property Casualty
Watts Industries, Inc., Class A 2.2%
Industrial
Washington Mutual, Inc. 2.2%
Banks/Thrifts
Dimon, Inc. 2.2%
Consumer Goods & Services
Circle International
Group, Inc. 2.1%
Transportation
For a complete list of portfolio holdings, please see page 34.
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 13 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 on the table to the left, our ten largest positions on September 30,
1997, comprised approximately 26% 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 based on a simple average of statistical measures. On
average, these ten companies have raised their dividends 16 years in a row and
by 413% in the last ten years. The most recent dividend increases averaged
16.2%, for a quarter-end yield of 1.3% on September 30, 1997, and a dividend
payout ratio of 23%. On the same date, long-term debt averaged 21% of
capitalization, and the average price/earnings ratio was 18.7%, versus 20.9% for
the unmanaged Standard & Poor's 500 Stock Index.
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 above 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.
*Source: Standard and Poor's. The S&P 500 Index is unmanaged, and one cannot
invest directly in an index.
PERFORMANCE SUMMARY
Class I
Franklin Rising Dividends Fund - Class I reported a cumulative total return of
44.10% for the one-year period ended September 30, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of all
distributions, and does not include the initial sales charge. We always maintain
a long-term perspective when managing the fund, and we encourage our
shareholders to view their investments in a similar manner. As you can see from
the table on page 17, the fund's Class I shares delivered a cumulative total
return of more than 247% for the 10-year period ended September 30, 1997.
The fund's share price, as measured by net asset value, increased $6.90, from
$20.03 on September 30, 1996, to $26.93 on September 30, 1997. The fund paid
distributions totaling $1.49 per share, including 17.9 cents ($0.179) in
dividend income, and 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 indicative of future trends.
The graph on page 17 compares the performance of the fund's Class I shares since
inception, with that of the unmanaged Wilshire MidCap Growth Index, and the
Consumer Price Index (CPI), a common measure of inflation. As you can see, your
investment returns have surpassed the rate of inflation, as measured by the CPI,
a primary goal of any investment. Please note that the Wilshire Index differs
from the fund as it includes companies with market capitalizations (the market
value of a company's issued and outstanding stock) ranging from $300 million to
$1.3 billion, while your fund's portfolio includes companies with smaller market
capitalizations and ranges from $83 million to $107 billion.
Keep in mind an unmanaged index has inherent performance differentials in
comparison with any fund. An index doesn't pay management fees to cover salaries
of security analysts or portfolio managers, or pay commissions or market spreads
to buy and sell stocks and bonds. Unlike an index, mutual funds can never be
100% invested because they need to keep some cash on hand to redeem shares. The
fund's performance figures also include the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to the index, the index's performance would have been lower. Please
remember, an index is simply a measure of performance, and one cannot invest in
it directly.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Rising Dividends Fund - Class I
Periods ended 9/30/97
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
Cumulative Total Return1 44.10% 101.19% 247.89% 261.60%
Average Annual Total Return2 37.64% 13.95% 12.76% 12.27%
Distribution Rate3 .45%
30-Day Standardized Yield4 .55%
Value of $10,000 Investment5 $13,764 $19,208 $33,236 $34,537
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the sales charge.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the current, maximum 4.5%
initial sales charge. See Note below.
3. Distribution rate is based on an annualization of the current 3.2 cents per
share quarterly dividend and the maximum offering price of $28.20 on September
30, 1997.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended September 30, 1997.
5. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the sales charge.
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.
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 would differ.
Class II
Franklin Rising Dividends Fund - Class II reported a cumulative total return of
43.37% for the one-year period ended September 30, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of all
distributions, and does not include sales charges. We always maintain a
long-term perspective when managing the fund, and we encourage our shareholders
to view their investments in a similar manner. As you can see from the table on
page 20, the fund's Class II shares delivered a cumulative total return of more
than 89% since the shares became available on May 1, 1995.
The fund's share price, as measured by net asset value, increased $6.87, from
$19.98 on September 30, 1996, to $26.85 on September 30, 1997. The fund paid
distributions totaling $1.3793 per share, including 6.83 cents ($0.0683) in
dividend income, and 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 indicative of future trends.
The graph on page 20 compares the performance of the fund's Class II shares
since inception, with that of the unmanaged Wilshire MidCap Growth Index, and
the Consumer Price Index (CPI), a common measure of inflation. As you can see,
your investment returns have surpassed the rate of inflation, as measured by the
CPI, a primary goal of any investment. Please note that the Wilshire Index
differs from the fund as it includes companies with market capitalizations (the
market value of a company's issued and outstanding stock) ranging from $300
million to $1.3 billion, while your fund's portfolio includes companies with
smaller market capitalizations and ranges from $83 million to $107 billion.
Keep in mind an unmanaged index has inherent performance differentials in
comparison with any fund. An index doesn't pay management fees to cover salaries
of security analysts or portfolio managers, or pay commissions or market spreads
to buy and sell stocks and bonds. Unlike an index, mutual funds can never be
100% invested because they need to keep some cash on hand to redeem shares. The
fund's performance figures also include the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to the index, the index's performance would have been lower. Please
remember, an index is simply a measure of performance, and one cannot invest in
it directly.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Rising Dividends Fund - Class II
Periods ended 9/30/97
Since
Inception
1-Year (5/1/95)
Cumulative Total Return1 43.37% 89.55%
Average Annual Total Return2 40.96% 29.73%
Distribution Rate3 .05%
30-Day Standardized Yield4 .06%
Value of $10,000 Investment5 $14,096 $18,761
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 1.0% initial sales
charge and the 1.0% contingent deferred sales charge, applicable to shares
redeemed within 18 months of investment.
3. Distribution rate is based on an annualization of the current .31 cent per
share quarterly dividend and the maximum offering price of $27.12 on September
30, 1997.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended September 30, 1997.
5. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include sales charges.
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: Franklin Investment Grade Income Fund seeks 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.1
1. 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.
During the one-year reporting period, the fund's Class I share price, as
measured by net asset value, remained relatively stable, increasing from $9.01
to $9.08. Our continuing emphasis on purchasing securities with limited
maturities greatly contributed to this share price stability. Because long-term
interest rates often exhibit relatively significant volatility, many investors
embraced the greater stability associated with short- and intermediate-term
investment instruments the fund typically purchases.
Also contributing to the fund's low level of volatility was our focus on
purchasing high-quality issues and using "put" bonds. As illustrated in the
chart on page 22, 71.8% of the fund's total net assets are invested in AAA-rated
issues (the highest-rated securities available), while 4.56% are AA with the
remainder in A-rated instruments.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The use of put bonds remains an integral part of our conservative investment
strategy. A put bond is one that can be redeemed before maturity, at face value
(par). Thus, if interest rates rise, we can redeem a put bond early, at par on
the optional retirement date, and reinvest the proceeds at the new, 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.
On September, 30 1997, 43.67% of the portfolio's total net assets consisted of
government and government related bonds, 10.35% straight, short- and
intermediate-term corporate bonds, 22.68% corporate "put" bonds, and 23.30% cash
and cash equivalents.
The fund's average weighted maturity was 1.75 years, using the optional put
dates as the effective maturities, and 8.70 years, using the stated maturities.
We will continue to maintain our conservative investment posture. It is our
belief that this strategy can enable us to produce solid total returns without
subjecting the portfolio's share price to significant price volatility. This
discussion reflects the strategies we employed for the fund during the year
under review and includes our opinions as of the close of the period. Because
economic and market conditions are constantly changing, our strategies, and our
evaluations, conclusions and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
PERFORMANCE SUMMARY
Class I
Franklin Investment Grade Income Fund - Class I share price, as measured by net
asset value, increased 7.0 cents, from $9.01 on September 30, 1996, to $9.08 on
September 30, 1997. The fund paid distributions totaling 42.90 cents ($0.429)
per share in dividend income and distributions will vary based on the fund's
income and any profits realized from the sale of securities in the fund's
portfolio. Past distributions are not indicative of future trends.
The fund posted a cumulative total return of 5.68% for the 12-month period ended
September 30, 1997. Cumulative total return measures the change in value of an
investment over the periods indicated, assuming reinvestment of all
distributions, and does not include the initial sales charge.
Franklin Investment
Grade Income Fund
Dividend Distributions
10/1/96 - 9/30/97
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
April 3.3 cents
May 3.3 cents
June 3.3 cents
July 3.3 cents
August 3.3 cents
September 3.3 cents
Total 42.9 cents
The graph on page 25 compares the performance of the fund's Class I shares,
since inception, with the Consumer Price Index (CPI) and the Lehman Brothers
Government /Corporate Bond Index.
As the graph illustrates, your investment returns have surpassed the rate of
inflation, as measured by the CPI, a primary goal of any investment.
Comparing a mutual fund with an unmanaged index, however, is never an exact
comparison. An index does not pay management fees to cover salaries of security
analysts or portfolio managers, or pay commissions to buy and sell stocks and
bonds. Unlike an index, mutual funds can never be 100% invested because they
need to keep some cash on hand to redeem shares. The fund's performance figures
also include the maximum initial sales charge, all fund expenses and account
fees. If operating expenses such as the fund's had been applied to the index,
the index's performance would have been lower. Please remember, an index is
simply a measure of performance, and one cannot invest in it directly.
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Investment Grade Income Fund - Class I
Periods ended 9/30/97
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
Cumulative Total Return1 5.68% 27.17% 105.10% 87.63%
Average Annual Total Return2 1.19% 4.01% 6.98% 5.63%
Distribution Rate3 4.18%
30-Day Standardized Yield4 4.44%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include the sales charge.
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 cents per
share monthly dividend and the maximum offering price of $9.48 on September 30,
1997.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended September 30, 1997.
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 would differ.
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.
Franklin Investment Grade Income Fund
Dividend Distributions
1/2/97 - 9/30/97
Dividend
Month per Share
January 3.30 cents
February 3.83 cents
March 3.46 cents
April 3.44 cents
May 3.45 cents
June 3.47 cents
July 3.45 cents
August 3.45 cents
September 3.45 cents
Total 31.3 cents
Advisor Class
Franklin Investment Grade Income Fund - Advisor Class share price, as measured
by net asset value, increased 4.0 cents, to $9.07 on September 30, 1997, from
$9.03 on January 2, 1997, the day Advisor Class shares became available.
During the nine-month period your fund paid income distributions totaling 31.3
cents ($0.313) per share. Distributions will vary based on the earnings of the
fund's portfolio and past distributions are not indicative of future trends.
Based on an annualization of September's monthly dividend of 3.45 cents
($0.0345) per share and the fund's share price of $9.07 on September 30, 1997,
your fund's distribution rate was 4.56%.
For the nine-month period ended September 30, 1997, your fund posted a
cumulative total return of 3.99%. Cumulative total return measures the change in
value of an investment over the periods indicated, assuming reinvestment of all
distributions.
The graph on page 28 compares the performance of the fund's Advisor Class
shares, since inception, with the Consumer Price Index (CPI) and the Lehman
Brothers Government/Corporate Bond Index. As the graph illustrates, your
investment returns have surpassed the rate of inflation, as measured by the CPI,
a primary goal of any investment.
Comparing a mutual fund with an unmanaged index, however, is never an exact
comparison. An index does not pay management fees to cover salaries of security
analysts or portfolio managers, or pay commissions to buy and sell stocks and
bonds. Unlike an index, mutual funds can never be 100% invested because they
need to keep some cash on hand to redeem shares. The fund's performance figures
also include the maximum initial sales charge, all fund expenses and account
fees. If operating expenses such as the fund's had been applied to the index,
the index's performance would have been lower. Please remember, an index is
simply a measure of performance, and one cannot invest in it directly.
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Investment Grade Income Fund - Advisor Class
Periods ended 9/30/97
Since
Inception
1-Year 5-Year 10-Year (1/14/87)
Cumulative Total Return1 5.74% 27.23% 105.21% 87.73%
Average Annual Total Return1 5.74% 4.94% 7.45% 6.06%
Distribution Rate2 4.56%
30-Day Standardized Yield3 4.82%
Effective January 2, 1997, the fund began offering Advisor Class shares to
certain eligible investors as described in its prospectus. This share class does
not have sales charges nor Rule 12b-1 plans. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the fund's Class I performance, excluding the effect of the Class I maximum
initial sales charge, but including the effect of Class I expenses, including
Rule 12b-1 fees; and (b) for periods after January 1, 1997, figures reflect
actual Advisor Class performance including the deduction of all charges and fees
applicable only to that class. Since January 2, 1997 (commencement of sales),
the cumulative total return of Advisor Class shares was 3.99%.
1. Cumulative total returns measure the change in value of an investment over
the periods indicated. Average annual total returns represent the average annual
change in value of an investment over the specified periods.
2. Distribution rate is based on an annualization of the current 3.45 cents per
share monthly dividend and the share price of $9.07 on September 30, 1997.
3. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended September 30, 1997.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Your investment return and principle 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
Financial Highlights
<TABLE>
<CAPTION>
Franklin Corporate Qualified Dividend Fund
Class I
-----------------------------------------------------
Year Ended September 30,
-----------------------------------------------------
1997 1996 1995 1994 19931
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $23.52 $23.76 $23.69 $24.47 $23.75
-----------------------------------------------------
Income from investment operations:
Net investment income 1.11 1.10 1.21 1.02 .73
Net realized and unrealized gains (losses) .44 (.19) -- (.84) .78
-----------------------------------------------------
Total from investment operations 1.55 .91 1.21 .18 1.51
Less distributions from:
Net investment income (1.04) (1.15) (1.14) (.96) (.79)
-----------------------------------------------------
Net asset value, end of year $24.03 $23.52 $23.76 $23.69 $24.47
=====================================================
Total return* 6.71% 3.94% 5.26% .72% 6.44%
Ratios/Supplemental Data:
Net assets, end of year (000's) $24,546 $27,791 $27,793 $31,790 $33,849
Ratios to average net assets:
Expenses 1.03% 1.07% 1.02% 1.00% 1.06%**
Net investment income 4.56% 4.64% 5.02% 4.19% 4.09%**
Portfolio turnover rate 13.41% 24.88% 29.18% 32.17% 27.46%
Average commission rate paid*** $.0600 $.0600 -- -- --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year end
1996 disclosure of average commission rate was not required.
1For the nine months ended September 30, 1993.
See notes to financial statements.
FRANKLIN MANAGED TRUST
Statement of Investments, September 30, 1997
<TABLE>
<CAPTION>
Franklin Corporate Qualified Dividend Fund SHARES VALUE
<S> <C> <C>
aAdjustable Rate Preferred Stocks 18.9%
Commercial Banks & Bank Holding Companies 10.7%
Bankers Trust (New York), 7.375% flex rate pfd., Series J 28,000 $ 1,420,748
Citicorp, 5.502% adj. rate pfd., Series 19 48,200 1,205,000
-------------
2,625,748
-------------
Electric Utilities 8.2%
Arizona Public Service Co., 6.00% adj. rate pfd., Series Q 10,000 925,000
Toledo Edison Co., 7.00% cum. adj. rate pfd., Series A 46,700 1,100,369
-------------
2,025,369
-------------
Total Adjustable Rate Preferred Stocks (Cost $4,667,992) 4,651,117
-------------
bAuction Rate Preferred Stocks 40.0%
cAlabama Power Co., 3.919%, Series 1993 2 200,181
cCNA Financial Corp., 4.135%, Series F 12 1,201,930
cCentral Power & Light Corp., 4.39%, Series B 12 1,202,072
cGeneral Electric Capital Corp., 3.90%, Series K 12 1,201,977
cInternational Lease Finance, 4.125%, Series B 12 1,203,905
dMorgan (JP), Inc., 3.91%, Series C 1,200 1,205,344
cNorthern Trust Corp., 4.04%, Series C 12 1,206,599
cRepublic NY Corp., 4.095%, Series A 12 1,203,730
cVirginia Electric & Power Co., 4.15%, Series 92-A 12 1,201,245
-------------
Total Auction Rate Preferred Stocks (Cost $9,800,000) 9,826,983
-------------
Fixed Rate Preferred Stocks 15.8%
Financial Services 4.1%
Donaldson, Lufkin & Jenrette Securities Corp., 5.94% adj. rate pfd., Series A 20,000 1,016,250
-------------
Pharmaceuticals 5.5%
cSmithkline Beecham Holding, 5.58%, Series A-1 13 1,342,250
-------------
Utilities 6.2%
Entergy Louisiana, Inc., 7.00% S.F., pfd. 15,000 1,532,812
-------------
Total Fixed Rate Preferred Stocks (Cost $3,926,250) 3,891,312
-------------
Total Long Term Investments (Cost $18,394,242) 18,369,412
-------------
PRINCIPAL
Franklin Corporate Qualified Dividend Fund AMOUNT VALUE
eRepurchase Agreement 25.4%
Joint Repurchase Agreement, 6.010%, 10/01/97, (Maturity Value $6,236,801) (Cost $6,235,761)
Aubrey G. Lanston & Co., Inc., ($474,460)
B.A. Securities, Inc., ($474,460)
Barclays de Zoete Wedd Securities, Inc., ($543,281)
Bear, Stearns & Co., Inc., ($474,460)
CIBC Wood Gundy Securities Corp., ($474,460)
Donaldson, Lufkin & Jenrette Securities Corp., ($474,460)
Dresdner Kleinwort Benson North America L.L.C., ($474,460)
Fuji Securities, Inc., ($474,460)
Lehman Brothers, Inc., ($474,460)
Sanwa Securities (USA) Co., L.P., ($474,460)
Swiss Bank Corp. Investment Bank, ($474,460)
The Nikko Securities Co. International, Inc., ($474,460)
UBS Securities, L.L.C., ($474,460)
Collateralized by U.S. Treasury Bills and Notes $6,235,761 $ 6,235,761
-------------
Total Investments (Cost $24,630,003) 100.1% 24,605,173
Other Assets, less Liabilities (.1)% (59,670)
-------------
Net Assets 100.0% $24,545,503
=============
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
eSee Note 1(c) regarding joint repurchase agreement.
</TABLE>
FRANKLIN MANAGED TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Rising Dividends Fund
Class I
-----------------------------------------------------
Year Ended September 30,
-----------------------------------------------------
1997 1996 1995 1994 19931
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $20.03 $17.31 $14.67 $15.43 $16.18
-----------------------------------------------------
Income from investment operations:
Net investment income .16 .28 .33 .28 .19
Net realized and unrealized gains (losses) 8.23 2.78 2.61 (.80) (.74)
-----------------------------------------------------
Total from investment operations 8.39 3.06 2.94 (.52) (.55)
-----------------------------------------------------
Less distributions from:
Net investment income (.18) (.34) (.30) (.24) (.20)
Net realized gains (1.31) -- -- -- --
-----------------------------------------------------
Total distributions (1.49) (.34) (.30) (.24) (.20)
-----------------------------------------------------
Net asset value, end of year $26.93 $20.03 $17.31 $14.67 $15.43
=====================================================
Total return* 44.10% 17.83% 20.32% (3.38)% (3.43)%
Ratios/Supplemental Data:
Net assets, end of year (000's) $394,873 $277,746 $260,917 $261,461 $356,708
Ratios to average net assets:
Expenses 1.41% 1.40% 1.43% 1.43% 1.40%**
Net investment income .71% 1.49% 2.10% 1.81% 1.73%**
Portfolio turnover rate 39.47% 31.55% 14.60% 25.75% 11.48%
Average commission rate paid*** $.0511 $.0508 -- -- --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year
end 1996 disclosure of average commission rate was not required.
1For the nine months ended September 30, 1993.
Franklin Rising Dividends Fund
<TABLE>
<CAPTION>
Class II
----------------------------
Year Ended September 30,
----------------------------
1997 1996 19952
----------------------------
<S> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $19.98 $17.28 $15.47
----------------------------
Income from investment operations:
Net investment income .08 .21 .11
Net realized and unrealized gains 8.17 2.74 1.83
----------------------------
Total from investment operations 8.25 2.95 1.94
----------------------------
Less distributions from:
Net investment income (.07) (.25) (.13)
Net realized gains (1.31) -- --
----------------------------
Total distributions (1.38) (.25) (.13)
----------------------------
Net asset value, end of year $26.85 $19.98 $17.28
============================
Total return* 43.37% 17.16% 12.56%
Ratios/Supplemental Data:
Net assets, end of year (000's) $14,526 $3,882 $1,060
Ratios to average net assets:
Expenses 1.95% 1.95% 1.90%**
Net investment income .17% .94% 1.92%**
Portfolio turnover rate 39.47% 31.55% 14.60%
Average commission rate paid*** $.0511 $.0508 --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
***Relates to purchases and sales of equity securities. Prior to fiscal year
end 1996 disclosure of average commission rate was not required.
2For the period May 1, 1995 (effective date) to September 30, 1995.
See notes to financial statements.
FRANKLIN MANAGED TRUST
Statement of Investments, September 30, 1997
<TABLE>
<CAPTION>
Franklin Rising Dividends Fund SHARES VALUE
<S> <C> <C>
Common Stocks 96.9%
Banks/Thrifts 14.4%
CoreStates Financial Corp. 64,000 $ 4,236,000
First Union Corp. 160,000 8,010,000
Mercantile Bankshares Corp. 166,050 5,396,625
National Commerce Bancorp. 242,300 6,602,675
State Street Corp. 98,200 5,984,063
TrustCo Bank Corp., New York 282,710 7,703,848
U.S. Bancorp 70,500 6,803,250
Washington Mutual, Inc. 127,000 8,858,250
Wilmington Trust Corp. 96,200 5,254,920
-------------
58,849,631
-------------
Consumer Goods & Services 16.2%
Alberto-Culver Co., Class A 337,200 8,725,050
Block Drug Co., Inc., Class A 95,786 4,573,782
Dimon, Inc. 367,700 9,192,500
Newell Co. 187,200 7,488,000
Nike, Inc., Class B 208,500 11,050,500
Philip Morris Cos., Inc. 168,700 7,011,594
Sherwin-Williams Co. 121,000 3,561,938
Stanhome, Inc. 165,000 4,877,813
Universal Corp. 192,300 6,970,875
UST, Inc. 89,700 2,741,456
-------------
66,193,508
-------------
Drugs/Health Care 4.8%
Becton, Dickinson & Co 139,800 6,692,925
Bristol-Myers Squibb Co. 32,200 2,664,550
Merck & Co., Inc. 24,700 2,468,456
Monsanto Co. 118,500 4,621,500
West Co., Inc. 98,600 3,253,800
-------------
19,701,231
-------------
Electronics/Technology 6.0%
Baldor Electric Co. 68,600 2,088,013
Cohu, Inc. 99,900 5,369,625
General Electric Co. 65,000 4,424,063
Hewlett-Packard Co. 81,100 5,641,519
Hubbell Inc., Class B 68,300 3,158,875
Rockwell International Corp. 62,300 3,921,006
-------------
24,603,101
-------------
Energy 1.3%
Royal Dutch Petroleum Co., New York Shares,
ADR (Netherlands) 93,700 5,200,350
-------------
Financial Services 2.1%
Fannie Mae 180,000 8,460,000
-------------
Industrial 20.5%
Boeing Co. 7,500 408,281
Donaldson Co., Inc. 33,200 1,593,600
Industrial (cont.)
Dover Corp. 99,200 $ 6,733,200
Flowserve Corp. 259,700 7,758,538
Graco, Inc. 17,600 629,200
Hanna (M.A.) Co. 276,900 7,355,156
Kaydon Corp. 109,700 6,582,000
Kimball International, Inc., Class B 157,500 6,615,000
Leggett & Platt, Inc. 121,200 5,400,975
Millipore Corp. 208,300 10,232,738
Myers Industries, Inc. 191,180 3,154,470
Nucor Corp. 215,900 11,375,231
Superior Industries International, Inc. 181,600 5,028,050
Superior Surgical Manufacturing Co., Inc. 125,300 1,973,475
Watts Industries, Inc., Class A 323,600 8,979,900
-------------
83,819,814
-------------
Insurance - Life .1%
American Heritage Life Investment Corp. 16,900 676,000
-------------
Insurance - Property/Casualty 12.4%
Allied Group, Inc. 167,750 8,523,797
American International Group, Inc. 35,250 3,637,359
Chubb Corp. 100,000 7,106,250
Harleysville Group, Inc. 22,400 940,800
Mercury General Corp. 115,600 10,115,000
MMI Cos., Inc. 296,900 7,830,738
RLI Corp. 188,850 8,498,250
St. Paul Cos., Inc. 50,200 4,094,438
-------------
50,746,632
-------------
Office/Business Supplies 8.4%
Avery Dennison Corp. 188,600 7,544,000
Brady, (W.H.) Co. 170,700 5,334,375
Ennis Business Forms, Inc. 256,900 2,906,181
Standard Register Co. 192,700 6,419,319
Wallace Computer Services, Inc. 330,200 12,176,125
-------------
34,380,000
-------------
Retail 8.6%
Family Dollar Stores, Inc. 625,600 14,271,500
Gap, Inc. 48,900 2,448,056
The Limited, Inc. 187,200 4,574,700
Rite Aid Corp. 116,900 6,480,644
Wal-Mart Stores, Inc. 204,300 7,482,488
-------------
35,257,388
-------------
Transportation 2.1%
Circle International Group, Inc. 295,300 8,785,175
-------------
Total Common Stocks (Cost $262,837,113) 396,672,830
-------------
Convertible Preferred Stock .2%
American Heritage Life Investment Corp., 8.50% cvt. pfd. 12,500 $ 775,000
-------------
Total Convertible Preferred Stock (Cost $625,000) 775,000
-------------
Total Long Term Investments ($263,462,113) 397,447,830
-------------
PRINCIPAL
AMOUNT
eRepurchase Agreement 3.8%
Joint Repurchase Agreement, 6.010%, 10/01/97,
(Maturity Value $15,628,710) (Cost $15,626,102)
Aubrey G. Lanston & Co., Inc., ($1,188,744)
B.A. Securities, Inc., ($1,188,744)
Barclays de Zoete Wedd Securities, Inc., ($1,361,172)
Bear, Stearns & Co., Inc., ($1,188,744)
CIBC Wood Gundy Securities Corp., ($1,188,744)
Donaldson, Lufkin & Jenrette Securities Corp., ($1,188,744)
Dresdner Kleinwort Benson North America, L.L.C., ($1,188,744)
Fuji Securities, Inc., ($1,188,744)
Lehman Brothers, Inc., ($1,188,744)
The Nikko Securities Co. International, Inc., ($1,188,744)
Sanwa Securities (USA) Co., L.P., ($1,188,744)
Swiss Bank Corp. Investment Bank, ($1,188,744)
UBS Securities L.L.C., ($1,188,744)
Collateralized by U.S. Treasury Bills and Notes $15,626,102 15,626,102
-------------
Total Investments (Cost $279,088,215) 100.9% 413,073,932
Other Assets, less Liabilities (.9%) (3,674,504)
-------------
Net Assets 100.0% $409,399,428
=============
eSee Note 1(c) regarding joint repurchase agreement.
</TABLE>
FRANKLIN MANAGED TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Investment Grade Income Fund
Class I
--------------------------------------------
Year Ended September 30,
--------------------------------------------
1997 1996 1995 1994 19931
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $9.01 $9.04 $8.82 $9.31 $8.93
--------------------------------------------
Income from investment operations:
Net investment income .41 .44 .44 .45 .38
Net realized and unrealized gains (losses) .09 (.06) .26 (.54) .40
--------------------------------------------
Total from investment operations .50 .38 .70 (.09) .78
--------------------------------------------
Less distributions from:
Net investment income (.43) (.41) (.48) (.40) (.40)
--------------------------------------------
Net asset value, end of year $9.08 $9.01 $9.04 $8.82 $9.31
--------------------------------------------
Total return* 5.68% 4.25% 8.21% (1.02)% 8.94%
Ratios/Supplemental Data:
Net assets, end of year (000's) $43,568 $29,372 $29,824 $29,553 $35,970
Ratios to average net assets:
Expenses 1.05% 1.06% 1.09% 1.05% 1.09%**
Net investment income 4.73% 4.81% 4.96% 4.91% 5.61%**
Portfolio turnover rate 41.32% 20.06% 64.70% 10.57% 53.19%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
1For the nine months ended September 30,1993.
Franklin Investment Grade Income Fund
Advisor Class
---------------
19973
---------------
Per Share Operating Performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $9.03
---------------
Income from investment operations:
Net investment income .28
Net realized and unrealized gains .07
---------------
Total from investment operations .35
---------------
Less distributions from:
Net investment income (.31)
---------------
Net asset value, end of period $9.07
===============
Total return* 3.98%
Ratios/Supplemental Data:
Net assets, end of period (000's) $39
Ratios to average net assets:
Expenses .85%**
Net investment income 4.84%**
Portfolio turnover rate 41.32%
*Total return is not annualized.
**Annualized
3For the period January 2, 1997 (effective date) to September 30, 1997.
See notes to financial statements.
FRANKLIN MANAGED TRUST
Statement of Investments, September 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Investment Grade Income Fund AMOUNT VALUE
<S> <C> <C>
U.S. Government Securities and Agencies 43.7%
Tennessee Valley Authority, bonds,
(putable* 7/15/01, callable 7/15/20),
6.235%, 7/15/45 $ 2,000,000 $ 2,015,474
U.S. Treasury Notes, 5.625%, 10/31/97 1,000,000 1,000,626
U.S. Treasury Notes, 5.125%, 4/30/98 1,000,000 998,126
U.S. Treasury Notes, 5.875%, 8/15/98 2,000,000 2,003,752
U.S. Treasury Notes, 5.875%, 1/31/99 2,000,000 2,003,752
U.S. Treasury Notes, 5.875%, 3/31/99 1,000,000 1,001,876
U.S. Treasury Notes, 6.00%, 6/30/99 2,000,000 2,007,502
U.S. Treasury Notes, 5.875%, 7/31/99 2,000,000 2,001,876
U.S. Treasury Notes, 5.875%, 8/31/99 3,000,000 3,002,814
U.S. Treasury Notes, 5.75%, 9/30/99 1,000,000 999,376
U.S. Treasury Notes, 6.00%, 8/15/00 2,000,000 2,007,502
-------------
Total U.S. Government Securities and Agencies (Cost $19,042,442) 19,042,676
-------------
Corporate Bonds 33.0%
Business Services 3.5%
Xerox Corp., (putable* 5/05/98), 5.90%, 5/05/37 1,500,000 1,508,005
-------------
Consumer Goods 4.7%
Coca-Cola Enterprises, deb., (putable* 10/15/03), 6.70%,10/15/36 2,000,000 2,048,628
-------------
Electric Utilities 2.3%
Southern California Edison Co., notes, 5.875%, 2/01/98 1,000,000 1,000,495
-------------
Financial Services 7.5%
Ford Motor Credit Corp., global bond, 6.25%, 2/26/98 1,500,000 1,506,825
Norwest Financial, Inc., senior notes, 6.23%, 9/01/98 1,000,000 1,003,403
Sear Roebuck Acceptance Corp., (putable* 11/15/00), 6.13%, 11/15/05 775,000 771,407
-------------
3,281,635
-------------
Industrial 4.6%
WMX Technologies, Inc., notes, (putable* 5/15/00), 6.65%, 5/15/05 2,000,000 2,027,502
-------------
Retail 3.5%
Penney J.C. & Co., Inc., deb., (putable* 8/15/03), 6.90%, 8/15/26 1,500,000 1,535,314
-------------
1,535,314
-------------
Telephone Utilities 6.9%
Bellsouth Telecommunications Corp., deb., (putable* 11/15/00), 5.85%, 11/15/45 2,000,000 1,999,814
New England Telephone and Telegraph, notes, 6.25%, 12/15/97 1,000,000 1,001,297
-------------
3,001,111
-------------
Total Corporate Bonds (Cost $14,286,993) 14,402,690
-------------
Total Long Term Investments (Cost $33,329,435) 33,445,366
-------------
eRepurchase Agreement 26%
Joint Repurchase Agreement, 6.010%, 10/01/97,
(Maturity Value $11,351,756) (Cost $11,349,862)
Aubrey G. Lanston & Co., Inc., ($863,576)
B.A. Securities, Inc., ($863,576)
Barclays De Soete Wedd Securities, Inc., ($988,844)
Bear, Stearns & Co. ,Inc., ($863,576)
CIBC Wood Gundy Securities Corp., ($863,576)
Donaldson, Lufkin & Jenrette Securities Corp., ($863,576)
Dresdner Kleinwort Benson North America, L.L.C., ($863,576)
Fuji Securities, Inc., ($863,576)
Lehman Brothers,Inc., ($863,576)
The Nikko Securities Co. International, Inc., ($863,576)
Sanwa Securities (USA) Co. , L.P., ($863,576)
Swiss Bank Corp Investment Bank, ($863,576)
UBS Securities L.L.C., ($863,576)
Collateralized by U.S. Treasury Bills and Notes $11,349,862 $11,349,862
-------------
Total Investments (Cost $44,679,297) 102.7% 44,795,228
Other Assets, less Liabilities (2.7%) (1,187,612)
-------------
Net Assets 100.0% $43,607,616
=============
</TABLE>
*Holder may redeem at par on put date.
eSee Note 1(c) regarding joint repurchase agreement.
FRANKLIN MANAGED TRUST
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
September 30, 1997
Franklin Franklin Franklin
Corporate Qualified Rising Investment Grade
Dividend FundDividends Fund Income Fund
---------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities:
Cost $18,394,242 $263,462,113 $33,329,435
=============================================
Value 18,369,412 397,447,830 33,445,366
Receivable from repurchase agreement
at value and cost 6,235,761 15,626,102 11,349,862
Cash 56,330 289,911 51,623
Receivables:
Dividends and interest -- 654,109 451,932
Investment securities sold -- 1,569,272 --
Capital shares sold 6,317 281,637 325,002
---------------------------------------------
Total assets 24,667,820 415,868,861 45,623,785
---------------------------------------------
Liabilities:
Payables:
Investment securities purchased -- 5,431,856 1,320,221
Capital shares redeemed 57,105 110,516 597,270
Affiliates 23,430 616,765 37,902
Shareholders 27,453 266,335 49,128
Other liabilities 14,329 43,961 11,648
---------------------------------------------
Total liabilities 122,317 6,469,433 2,016,169
---------------------------------------------
Net assets, at value $24,545,503 $409,399,428 $43,607,616
=============================================
Net assets consist of:
Undistributed net investment income $ 273,041 $-- $ 269,981
Net unrealized appreciation (depreciation) (24,830) 133,985,717 115,931
Accumulated net realized gain (loss) (1,968,650) 45,879,382 (810,425)
Capital shares 26,265,942 229,534,329 44,032,129
---------------------------------------------
Net assets, at value $24,545,503 $409,399,428 $43,607,616
=============================================
Franklin Franklin Franklin
Corporate Qualified Rising Investment Grade
Dividend Fund Dividends Fund Income Fund
---------------------------------------------
<S> <C> <C> <C>
Class I:
Net assets, at value $24,545,503 $394,873,117 $43,568,321
=============================================
Shares outstanding 1,021,275 14,663,468 4,799,828
=============================================
Net asset value per share* $24.03 $26.93 $9.08
=============================================
Maximum offering price per share
(100 O 98.5%, 100 O 95.5%,
100 O 95.75% of net assets
value per share, respectively) $24.40 $28.20 $9.48
=============================================
Class II:
Net assets, at value $ 14,526,311
=============
Shares outstanding 540,970
=============
Net asset value per share* $26.85
=============
Maximum offering price per share
(100 / 99% of net asset value per share) $27.12
=============
Advisor Class
Net assets, at value $ 39,295
=============
Shares outstanding 4,331
=============
Net asset value and maximum
offering price per share* $9.07
=============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
FRANKLIN MANAGED TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statement of Operations
for the year ended September 30, 1997
Franklin Franklin Franklin
Corporate Qualified Rising Investment Grade
Dividend FundDividends Fund Income Fund
------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends $1,194,122 $ 6,469,602 $--
Interest 250,503 547,152 2,108,623
------------------------------------------------
Total investment income 1,444,625 7,016,754 2,108,623
Expenses:
Management fees (Note 3) 129,118 2,483,231 182,521
Distribution fees (Note 3)
Class I 55,064 1,488,888 71,777
Class II -- 73,361 --
Transfer agent fees (Note 3) 6,651 399,938 30,779
Custodian fees 285 3,351 299
Reports to shareholders 5,525 107,620 14,360
Accounting fees (Note 3) 40,000 40,000 40,000
Registration and filing fees 12,796 42,967 27,863
Professional fees 14,353 26,093 10,155
Trustees' fees and expenses 2,611 29,648 3,511
Other 773 8,190 2,642
------------------------------------------------
Total expenses 267,176 4,703,287 383,907
------------------------------------------------
Net investment income 1,177,449 2,313,467 1,724,716
------------------------------------------------
Realized and unrealized gains (losses):
Net realized gain from investments 5,034 49,210,010 344,319
Net unrealized appreciation (depreciation)
on investments 522,548 70,034,445 (78,808)
------------------------------------------------
Net realized and unrealized gain 527,582 119,244,455 265,511
------------------------------------------------
Net increase in net assets
resulting from operations $1,705,031 $121,557,922 $1,990,227
================================================
</TABLE>
See notes to financial statements.
FRANKLIN MANAGED TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended September 30, 1997 and 1996
Franklin Corporate Qualified Franklin Franklin Investment Grade
Dividend Fund Rising Dividends Fund Income Fund
--------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 1,177,449 $ 1,269,131 $ 2,313,467 $ 4,050,067 $ 1,724,716$ 1,385,410
Net realized gain (loss)
from investments 5,034 (186,161) 49,210,010 18,376,109 344,319 136,241
Net unrealized appreciation
(depreciation) on
investments 522,548 (29,860) 70,034,445 22,297,141 (78,808) (291,022)
===============================================================================
Net increase in net assets
resulting from operations 1,705,031 1,053,110 121,557,922 44,723,317 1,990,227 1,230,629
Distributions to shareholders from:
Net investment income:
Class I (1,127,403) (1,330,351) (2,490,290) (4,942,788) (1,686,440)(1,292,338)
Class II -- -- (8,072) (29,691) -- --
Advisor Class -- -- -- -- (1,534) --
Net realized gains:
Class I -- -- (18,098,843) -- -- --
Class II -- -- (288,240) -- -- --
Capital share transactions (Note 2):
Class I (3,823,540) 275,623 18,867,160 (22,563,818) 13,893,814 (389,824)
Class II -- -- 8,231,696 2,463,817 -- --
Advisor Class -- -- -- -- 39,376 --
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets (3,245,912) (1,618) 127,771,333 19,650,837 14,235,443 (451,533)
Net assets:
Beginning of year 27,791,415 27,793,033 281,628,095 261,977,258 29,372,173 29,823,706
--------------------------------------------------------------------------------
End of year $24,545,503 $27,791,415 $409,399,428$281,628,095 $43,607,616$29,372,173
--------------------------------------------------------------------------------
Undistributed net investment
income included in net assets:
End of year $ 273,041 $ 222,995 $-- $ 184,895 $ 269,981 $ 233,239
--------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
FRANKLIN MANAGED TRUST
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Organization:
Franklin Managed Trust (the Trust) is registered under the Investment Company
Act of 1940 as a diversified, open-end investment company, consisting of three
series (the Funds). The Funds and their investment policies are:
Fund Objective
Franklin Corporate Qualified Dividend Fund Income
Franklin Rising Dividends Fund Growth and Income
Franklin Investment Grade Income Fund Income
The following summarizes the Funds' significant accounting policies.
b. Security Valuation:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
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 is based upon the values of comparable traded securities.
When market quotations are not readily available for securities held by the
Fund, or for comparable securities, then such securities will be valued at par
value plus the next accrued dividend, as approved by the Board of Trustees.
c. Joint Repurchase Agreement:
The Funds may enter into a joint repurchase agreement whereby its uninvested
cash balance is deposited into a joint cash account to be used to invest in one
or more repurchase agreements. 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 Fund to the seller,
collateralized by 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 Funds, with
the value of the underlying securities marked to market daily to maintain
coverage of at least 100%. At September 30, 1997, all outstanding repurchase
agreements held by the Fund had been entered into on that date.
d. Income Taxes:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.
e. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount is
amortized on an income tax basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
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. Other expenses are
charged to each Fund on a specific identification basis.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (cont.)
e. Security Transactions, Investment Income, Expenses and Distributions: (cont.)
Realized and unrealized gains and 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.
f. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
Effective January 2, 1997, the Franklin Investment Grade Income Fund offered two
classes of shares: Class I and Advisor Class. All Fund outstanding shares before
that date were designated as Class I shares.
All classes of shares have the same rights except for their initial sales load,
distribution fees, voting rights on matters affecting a single class and the
exchange privilege of each class. Advisor Class shares are offered to certain
qualified investors.
At September 30, 1997, there were an unlimited number of shares authorized ($.01
par value). Transactions in each of the Fund's shares were as follows:
<TABLE>
<CAPTION>
Franklin Corporate Qualified Franklin Rising Franklin Investment
Dividend Fund Dividends Fund Grade Income Fund
--------------------------------------------------------------------------------
Class I Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------
Year ended September 30, 1997
<S> <C> <C> <C> <C> <C> <C>
Shares sold 317,340$ 7,553,837 2,748,993$64,035,322 3,081,133$27,806,195
Shares issued in reinvestment
of distributions 42,345 1,005,884 803,577 16,782,484 148,291 1,335,521
Shares redeemed (520,179)(12,383,261) (2,754,192)(61,950,646) (1,688,767)(15,247,902)
--------------------------------------------------------------------------------
Net increase (decrease) (160,494)$(3,823,540) 798,378$18,867,160 1,540,657$13,893,814
--------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------
2. CAPITAL STOCK (cont.)
Franklin Rising
Dividends Fund
--------------------
Class II Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
Year ended September 30, 1997
Shares sold 428,747$10,143,144
Shares issued in reinvestment of distributions 11,554 239,444
Shares redeemed (93,599)(2,150,892)
--------------------
Net increase 346,702$ 8,231,696
====================
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
====================
Franklin Investment
Grade Income Fund
--------------------
Advisor Class Shares Amount
- --------------------------------------------------------------------------------
Period ended September 30, 1997*
Shares sold 14,121 $127,787
Shares issued in reinvestment of distributions 133 1,192
Shares redeemed (9,923) (89,603)
--------------------
Net increase 4,331 $ 39,376
====================
</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and trustees of the Funds are also officers and/or trustees of
Franklin Investment Advisory Services, Inc. (Advisory Services),
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Templeton
Services, Inc. (FT Services) and Franklin/Templeton Investor Services, Inc.
(Investor Services) the Fund's investment manager, principal underwriter,
administrative manager and transfer agent, respectively.
The Funds pay an investment management fee to Advisory Services based on the
average net assets of each Fund as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend FundDividends Fund Grade Income Fund
-----------------------------------------------------------
<S> <C> <C> <C>
Average Daily Net Assets
First $500 million .50% .75% .50%
Over $500 million, up to and including $1 billion .45% .625% .45%
In excess of $1 billion .40% .50% .40%
</TABLE>
3. TRANSACTIONS WITH AFFILIATES (cont.)
Each of the Fund also pays accounting fees to Advisory Services.
Under an agreement with Advisory Services, FT Services provides administrative
services to the Funds. The fee is paid by Advisory Services based on average
daily net assets, and is not an additional expense of the Funds.
The Franklin Rising Dividends Fund reimburses Distributors up to .50% and 1.00%
per year of the average daily net assets of Class I and Class II, respectively,
and the Franklin Corporate Qualified Fund and the Franklin Investment Grade
Income Fund reimburses Distributors up to .25% per year of the average daily net
assets of Class I, for costs incurred in marketing the Funds' shares.
Distributors paid net commissions on sales of the Funds' shares, and received
contingent deferred sales charges for the year ended September 30, 1997 as
follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividend Fund Grade Income Fund
------------------------------------------------------------
<S> <C> <C> <C>
Net commissions paid $(4,131) $(23,776) $(32,009)
Contingent deferred sales charges $-- $ 2,425 $--
</TABLE>
The funds paid transfer agent fees of $437,368, of which $386,938 was paid to
Investor Services.
4. INCOME TAXES
At September 30, 1997, the Funds had tax basis capital losses which may be
carried over to offset future capital gains. Such losses expire as follows:
Franklin Franklin
Corporate QualifiedInvestment Grade
Dividend Fund Income Fund
---------------------------------
Capital loss carryovers expiring in:
1998 $ 794,958 $ 70,233
1999 226,936 117,414
2000 375,717 --
2002 328,483 --
2003 61,429 254,062
2004 -- 368,716
2005 181,127 --
---------------------------------
$1,968,650 $810,425
=================================
On September 30, 1997, the Franklin Corporate Qualified Dividend Fund had
expired capital loss carryovers of $1,251,202 which were reclassified to paid-in
capital.
4. INCOME TAXES (cont.)
At September 30, 1997, the net unrealized appreciation (depreciation) based on
the cost of investments for income tax purposes was as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividend Fund Grade Income Fund
-----------------------------------------------------------
<S> <C> <C> <C>
Investments at cost $24,630,003 $279,088,215 $44,679,297
===========================================================
Unrealized appreciation $ 192,741 $134,488,274 $ 150,031
Unrealized depreciation (217,571) (502,557) (34,100)
-----------------------------------------------------------
Net unrealized appreciation (depreciation) $ (24,830) $133,985,717 $ 115,931
===========================================================
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
Franklin Corporate Franklin Rising Franklin Investment
Qualified Dividend Fund Dividend Fund Grade Income Fund
-----------------------------------------------------------
<S> <C> <C> <C>
Purchases $2,832,500 $133,160,921 $21,801,372
Sales $8,567,268 $126,961,555 $10,589,760
</TABLE>
FRANKLIN MANAGED TRUST
Report of Independent Accountants
To the Shareholders and Board of Trustees
of Franklin Managed Trust:
We have audited the accompanying statements of assets and liabilities of the
three funds comprising the Franklin Managed Trust (the Funds), including each
Fund's statement of investments in securities and net assets, as of September
30, 1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
three funds comprising the Franklin Managed Trust as of September 30, 1997, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 23, 1997
FRANKLIN MANAGED TRUST
Tax Information
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Rising Dividends
Fund hereby designates $43,259,215 as a capital gain dividend for the fiscal
year ended September 30, 1997.
Under Section 854(b)(2) of the Internal Revenue Code, the Funds hereby designate
the following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for the year ended September 30, 1997.
Franklin Corporate Qualified Dividend Fund 100.0%
Franklin Rising Dividends Fund 100.0%
Franklin Managed Trust Annual Report September 30, 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 the portfolio breakdown and sector price
stability of the fund's securities on 9/30/97, based on total net assets.
Portfolio Breakdown and Sector Price Stability
Fixed-Rate Preferred Stocks 15.8%
Adjustable-Rate Preferred Stocks 18.9%
Auction-Rate Preferred Stocks 40.0%
Cash & Equivalents 25.3%
GRAPHIC MATERIAL (2)
This chart shows in pie format the credit quality breakdown of the fund's
securities on 9/30/97, based on total net assets.
Credit Quality Breakdown on 9/30/97
AAA 30.59%
A 53.52%
BBB 11.42%
BB 4.47%
GRAPHIC MATERIAL (3)
The following line graph hypothetically compares the performance of the Franklin
Corporate Qualified Dividend Fund - before taxes to that of the Payden & Rygel
90-Day T-bill Index, based on a $10,000 investment from 10/1/87 to 9/30/97.
Period Ending Fund Index
10/1/1987 98,482 100,000
Oct-87 94,317 100,800
Nov-87 94,869 101,264
Dec-87 93,748 101,648
Jan-88 93,093 102,157
Feb-88 95,766 102,627
Mar-88 94,798 103,119
Apr-88 96,352 103,573
May-88 98,319 104,039
Jun-88 96,114 104,580
Jul-88 98,559 105,113
Aug-88 98,378 105,692
Sep-88 98,380 106,357
Oct-88 98,935 107,017
Nov-88 98,935 107,605
Dec-88 99,073 108,294
Jan-89 100,776 109,009
Feb-89 101,631 109,674
Mar-89 102,253 110,474
Apr-89 102,446 111,402
May-89 102,056 112,193
Jun-89 103,175 113,136
Jul-89 104,603 113,962
Aug-89 107,082 114,725
Sep-89 107,482 115,494
Oct-89 106,737 116,325
Nov-89 105,836 117,128
Dec-89 105,436 117,913
Jan-90 105,186 118,656
Feb-90 105,198 119,379
Mar-90 104,949 120,191
Apr-90 105,014 120,985
May-90 106,084 121,819
Jun-90 106,781 122,623
Jul-90 106,364 123,506
Aug-90 106,921 124,334
Sep-90 106,166 125,167
Oct-90 104,089 125,955
Nov-90 105,317 126,736
Dec-90 106,548 127,636
Jan-91 108,476 128,415
Feb-91 111,380 129,082
Mar-91 116,079 129,831
Apr-91 119,890 130,506
May-91 121,299 131,133
Jun-91 122,191 131,749
Jul-91 124,326 132,394
Aug-91 126,119 133,083
Sep-91 126,738 133,735
Oct-91 128,735 134,390
Nov-91 129,659 135,049
Dec-91 131,320 135,670
Jan-92 135,855 136,131
Feb-92 141,154 136,540
Mar-92 142,350 136,977
Apr-92 144,794 137,525
May-92 147,561 137,965
Jun-92 148,213 138,420
Jul-92 150,883 138,932
Aug-92 152,174 139,321
Sep-92 152,670 139,795
Oct-92 152,978 140,060
Nov-92 152,614 140,341
Dec-92 153,085 140,790
Jan-93 154,719 141,212
Feb-93 156,036 141,523
Mar-93 156,642 141,905
Apr-93 159,280 142,245
May-93 160,480 142,573
Jun-93 160,896 142,943
Jul-93 162,039 143,315
Aug-93 162,590 143,702
Sep-93 162,942 144,090
Oct-93 163,094 144,421
Nov-93 163,214 144,768
Dec-93 163,267 145,188
Jan-94 164,536 145,580
Feb-94 164,861 145,813
Mar-94 164,237 146,206
Apr-94 163,678 146,543
May-94 164,006 146,968
Jun-94 163,855 147,482
Jul-94 164,494 147,983
Aug-94 164,445 148,457
Sep-94 164,119 149,006
Oct-94 164,210 149,528
Nov-94 164,369 150,021
Dec-94 163,926 150,756
Jan-95 165,241 151,404
Feb-95 166,158 152,116
Mar-95 167,362 152,892
Apr-95 168,429 153,626
May-95 169,643 154,409
Jun-95 170,288 155,197
Jul-95 171,008 155,942
Aug-95 171,370 156,706
Sep-95 172,750 157,427
Oct-95 172,604 158,119
Nov-95 173,705 158,831
Dec-95 174,145 159,657
Jan-96 175,254 160,359
Feb-96 175,773 161,001
Mar-96 175,996 161,661
Apr-96 176,146 162,340
May-96 177,048 163,038
Jun-96 177,426 163,739
Jul-96 177,729 164,427
Aug-96 178,868 165,183
Sep-96 179,555 165,976
Oct-96 181,239 166,656
Nov-96 182,853 167,373
Dec-96 182,853 168,076
Jan-97 183,666 168,832
Feb-97 185,727 169,474
Mar-97 186,546 170,186
Apr-97 187,447 170,917
May-97 188,351 171,840
Jun-97 189,100 172,648
Jul-97 190,169 173,390
Aug-97 190,606 174,153
Sep-97 191,603 174,954
GRAPHIC MATERIAL (4)
The following line graph hypothetically compares the performance of the Franklin
Corporate Qualified Dividend Fund - after taxes to that of the Payden & Rygel
90-Day T-bill Index, based on a $10,000 investment from 10/1/87 to 9/30/97.
Period Ending Fund Index
10/1/1987 98,482 100,000
Oct-87 94,268 100,528
Nov-87 94,777 100,833
Dec-87 93,613 101,086
Jan-88 92,872 101,415
Feb-88 95,471 101,718
Mar-88 94,439 102,035
Apr-88 95,919 102,327
May-88 97,808 102,626
Jun-88 95,548 102,973
Jul-88 97,909 103,315
Aug-88 97,660 103,684
Sep-88 97,593 104,109
Oct-88 98,073 104,528
Nov-88 98,003 104,902
Dec-88 98,069 105,338
Jan-89 99,677 105,790
Feb-89 100,451 106,210
Mar-89 100,994 106,713
Apr-89 101,112 107,296
May-89 100,654 107,791
Jun-89 101,684 108,380
Jul-89 103,018 108,894
Aug-89 105,383 109,368
Sep-89 105,702 109,845
Oct-89 104,898 110,359
Nov-89 103,942 110,854
Dec-89 103,477 111,336
Jan-90 103,160 111,792
Feb-90 103,098 112,236
Mar-90 102,780 112,732
Apr-90 102,770 113,215
May-90 103,742 113,723
Jun-90 104,348 114,211
Jul-90 103,866 114,745
Aug-90 104,333 115,245
Sep-90 103,521 115,747
Oct-90 101,421 116,221
Nov-90 102,539 116,689
Dec-90 103,592 117,228
Jan-91 105,387 117,693
Feb-91 108,128 118,091
Mar-91 112,607 118,536
Apr-91 116,221 118,936
May-91 117,511 119,307
Jun-91 118,297 119,672
Jul-91 120,287 120,053
Aug-91 121,943 120,459
Sep-91 122,463 120,843
Oct-91 124,313 121,227
Nov-91 125,126 121,614
Dec-91 126,631 121,977
Jan-92 130,928 122,247
Feb-92 135,958 122,485
Mar-92 137,035 122,740
Apr-92 139,311 123,059
May-92 141,896 123,315
Jun-92 142,448 123,580
Jul-92 144,936 123,877
Aug-92 146,099 124,102
Sep-92 146,509 124,376
Oct-92 146,736 124,530
Nov-92 146,329 124,692
Dec-92 146,722 124,951
Jan-93 148,228 125,195
Feb-93 149,429 125,374
Mar-93 149,948 125,594
Apr-93 152,411 125,790
May-93 153,505 125,978
Jun-93 153,848 126,191
Jul-93 154,885 126,404
Aug-93 155,357 126,626
Sep-93 155,638 126,848
Oct-93 155,728 127,038
Nov-93 155,790 127,236
Dec-93 155,789 127,476
Jan-94 156,946 127,700
Feb-94 157,204 127,832
Mar-94 156,556 128,057
Apr-94 155,970 128,248
May-94 156,229 128,490
Jun-94 156,032 128,782
Jul-94 156,584 129,067
Aug-94 156,480 129,335
Sep-94 156,113 129,646
Oct-94 156,142 129,941
Nov-94 156,236 130,220
Dec-94 155,754 130,635
Jan-95 156,942 131,000
Feb-95 157,743 131,400
Mar-95 158,815 131,836
Apr-95 159,757 132,247
May-95 160,837 132,685
Jun-95 161,377 133,125
Jul-95 161,988 133,541
Aug-95 162,259 133,966
Sep-95 163,493 134,367
Oct-95 163,283 134,751
Nov-95 164,251 135,145
Dec-95 164,594 135,602
Jan-96 165,569 135,990
Feb-96 165,986 136,343
Mar-96 166,123 136,707
Apr-96 166,190 137,080
May-96 166,974 137,463
Jun-96 167,263 137,847
Jul-96 167,481 138,223
Aug-96 168,487 138,637
Sep-96 169,067 139,069
Oct-96 170,584 139,440
Nov-96 172,035 139,830
Dec-96 171,966 140,211
Jan-97 172,666 140,621
Feb-97 174,537 140,969
Mar-97 175,242 141,354
Apr-97 176,022 141,749
May-97 176,805 142,246
Jun-97 177,442 142,681
Jul-97 178,378 143,080
Aug-97 178,722 143,489
Sep-97 178,739 143,918
GRAPHIC MATERIAL (5)
The following line graph hypothetically compares the performance of the Franklin
Rising Dividends Fund - Class I shares to that of the Wilshire MidCap Growth
Index and the Consumer Price Index (CPI), based on a $10,000 investment from
10/1/87 to 9/30/97.
Period Ending Fund Index Index
10/1/1987 $9,553 $10,000 $10,000
10/31/1987 $8,261 $7,212 $10,026
11/30/1987 $7,877 $6,785 $10,035
12/31/1987 $8,158 $7,495 $10,035
1/31/1988 $8,686 $7,712 $10,061
2/29/1988 $9,082 $8,348 $10,087
3/31/1988 $9,139 $8,410 $10,131
4/30/1988 $9,216 $8,342 $10,183
5/31/1988 $9,216 $8,207 $10,218
6/30/1988 $9,587 $8,810 $10,262
7/31/1988 $9,683 $8,603 $10,305
8/31/1988 $9,558 $8,293 $10,348
9/30/1988 $9,750 $8,605 $10,418
10/31/1988 $9,904 $8,622 $10,452
11/30/1988 $9,623 $8,372 $10,460
12/31/1988 $9,691 $8,624 $10,478
1/31/1989 $9,984 $9,054 $10,531
2/28/1989 $10,004 $9,082 $10,574
3/31/1989 $10,209 $9,257 $10,635
4/30/1989 $10,465 $9,777 $10,704
5/31/1989 $10,859 $10,203 $10,765
6/30/1989 $10,957 $9,861 $10,791
7/31/1989 $11,433 $10,587 $10,817
8/31/1989 $11,552 $10,932 $10,834
9/30/1989 $11,523 $10,943 $10,869
10/31/1989 $11,400 $10,496 $10,921
11/30/1989 $11,440 $10,459 $10,947
12/31/1989 $11,590 $10,520 $10,965
1/31/1990 $11,035 $9,552 $11,078
2/28/1990 $11,176 $9,805 $11,130
3/31/1990 $11,368 $10,255 $11,191
4/30/1990 $11,064 $9,757 $11,209
5/31/1990 $11,613 $10,799 $11,235
6/30/1990 $11,714 $10,801 $11,295
7/31/1990 $11,684 $10,381 $11,338
8/31/1990 $10,659 $8,950 $11,443
9/30/1990 $10,224 $8,176 $11,539
10/31/1990 $10,090 $7,777 $11,608
11/30/1990 $11,041 $8,647 $11,633
12/31/1990 $11,621 $9,162 $11,633
1/31/1991 $12,015 $10,027 $11,703
2/28/1991 $13,103 $10,959 $11,721
3/31/1991 $13,638 $11,654 $11,738
4/30/1991 $13,753 $11,565 $11,756
5/31/1991 $14,399 $12,207 $11,791
6/30/1991 $14,059 $11,661 $11,825
7/31/1991 $14,468 $12,294 $11,843
8/31/1991 $14,782 $12,763 $11,878
9/30/1991 $14,892 $12,777 $11,930
10/31/1991 $15,039 $13,111 $11,948
11/30/1991 $14,860 $12,563 $11,982
12/31/1991 $15,798 $14,239 $11,991
1/31/1992 $15,893 $14,665 $12,009
2/29/1992 $15,872 $14,913 $12,052
3/31/1992 $15,634 $14,318 $12,113
4/30/1992 $15,793 $13,977 $12,130
5/31/1992 $16,059 $13,802 $12,147
6/30/1992 $15,797 $13,176 $12,191
7/31/1992 $16,417 $13,898 $12,217
8/31/1992 $16,225 $13,607 $12,251
9/30/1992 $16,519 $13,845 $12,285
10/31/1992 $16,713 $14,410 $12,328
11/30/1992 $17,249 $15,514 $12,345
12/31/1992 $17,437 $15,989 $12,337
1/31/1993 $17,265 $16,350 $12,397
2/28/1993 $17,006 $15,799 $12,441
3/31/1993 $17,141 $16,284 $12,484
4/30/1993 $16,535 $15,604 $12,519
5/31/1993 $16,740 $16,493 $12,537
6/30/1993 $16,551 $16,602 $12,554
7/31/1993 $16,562 $16,454 $12,554
8/31/1993 $16,834 $17,288 $12,589
9/30/1993 $16,839 $17,722 $12,616
10/31/1993 $17,079 $17,816 $12,668
11/30/1993 $16,643 $17,538 $12,676
12/31/1993 $16,828 $18,508 $12,676
1/31/1994 $17,058 $19,161 $12,711
2/28/1994 $16,434 $19,263 $12,754
3/31/1994 $15,631 $18,117 $12,797
4/30/1994 $15,653 $18,189 $12,815
5/31/1994 $15,862 $17,911 $12,824
6/30/1994 $15,828 $17,008 $12,868
7/31/1994 $15,972 $17,423 $12,902
8/31/1994 $16,657 $18,915 $12,954
9/30/1994 $16,269 $18,765 $12,989
10/31/1994 $16,203 $19,223 $12,998
11/30/1994 $15,803 $18,372 $13,015
12/31/1994 $15,958 $18,677 $13,015
1/31/1995 $16,371 $18,680 $13,067
2/28/1995 $16,863 $19,801 $13,119
3/31/1995 $17,227 $20,532 $13,163
4/30/1995 $17,350 $20,838 $13,206
5/31/1995 $17,979 $21,179 $13,233
6/30/1995 $18,176 $22,512 $13,259
7/31/1995 $18,615 $24,403 $13,259
8/31/1995 $18,908 $24,776 $13,293
9/30/1995 $19,574 $25,467 $13,320
10/31/1995 $19,393 $24,571 $13,364
11/30/1995 $20,388 $25,861 $13,355
12/31/1995 $20,785 $25,954 $13,345
1/31/1996 $21,207 $26,403 $13,424
2/29/1996 $21,469 $27,390 $13,467
3/31/1996 $21,422 $27,722 $13,537
4/30/1996 $21,342 $29,366 $13,590
5/31/1996 $21,948 $30,244 $13,616
6/30/1996 $22,166 $28,595 $13,624
7/31/1996 $21,455 $26,148 $13,650
8/31/1996 $21,948 $28,054 $13,676
9/30/1996 $23,065 $29,381 $13,719
10/31/1996 $23,767 $28,549 $13,763
11/30/1996 $25,414 $30,157 $13,789
12/31/1996 $25,653 $29,758 $13,789
1/31/1997 $26,156 $30,621 $13,834
2/28/1997 $26,867 $30,043 $13,876
3/31/1997 $26,030 $28,207 $13,911
4/30/1997 $26,682 $29,172 $13,929
5/31/1997 $28,712 $31,584 $13,921
6/30/1997 $29,732 $32,680 $13,938
7/31/1997 $32,271 $34,991 $13,954
8/31/1997 $31,605 $34,721 $13,981
9/30/1997 $33,236 $37,006 $14,016
GRAPHIC MATERIAL (6)
The following line graph hypothetically compares the performance of the Franklin
Rising Dividends Fund - Class II shares to that of the Wilshire MidCap Growth
Index and the Consumer Price Index (CPI), based on a $10,000 investment from
5/1/95 to 9/30/97.
Period Ending Fund Index Index
5/1/1995 $9,897 $10,000 $10,000
5/31/1995 $10,282 $10,164 $10,020
6/30/1995 $10,390 $10,803 $10,040
7/31/1995 $10,635 $11,711 $10,040
8/31/1995 $10,796 $11,890 $10,066
9/30/1995 $11,169 $12,222 $10,086
10/31/1995 $11,059 $11,791 $10,120
11/30/1995 $11,622 $12,411 $10,112
12/31/1995 $11,842 $12,455 $10,105
1/31/1996 $12,076 $12,671 $10,165
2/29/1996 $12,219 $13,145 $10,198
3/31/1996 $12,184 $13,304 $10,251
4/30/1996 $12,125 $14,093 $10,291
5/31/1996 $12,471 $14,514 $10,310
6/30/1996 $12,591 $13,723 $10,316
7/31/1996 $12,180 $12,548 $10,336
8/31/1996 $12,461 $13,463 $10,356
9/30/1996 $13,086 $14,100 $10,389
10/31/1996 $13,479 $13,701 $10,422
11/30/1996 $14,402 $14,472 $10,442
12/31/1996 $14,533 $14,281 $10,442
1/31/1997 $14,818 $14,695 $10,475
2/28/1997 $15,209 $14,417 $10,508
3/31/1997 $14,735 $13,537 $10,534
4/30/1997 $15,090 $14,000 $10,548
5/31/1997 $16,235 $15,157 $10,541
6/30/1997 $16,809 $15,683 $10,554
7/31/1997 $18,228 $16,792 $10,567
8/31/1997 $17,850 $16,663 $10,587
9/30/1997 $18,761 $17,759 $10,613
GRAPHIC MATERIAL (7)
This chart shows in pie format the credit quality of the fund's securities on
9/30/97, based on total net assets.
Credit Quality Breakdown on 9/30/97
AAA 71.80%
AA 4.56%
A 23.64%
GRAPHIC MATERIAL (8)
The following line graph hypothetically compares the performance of the Franklin
Investment Grade Income Fund - Class I shares to that of the Lehman Brothers
Government/Corporate Bond Index and the Consumer Price Index (CPI), based on a
$10,000 investment from 10/1/87 to 9/30/97.
Period Ending Fund Index Index
Oct 1-87 9573 10000 10,000
Oct-87 9,738 10,375 10,026
Nov-87 9,847 10,440 10,035
Dec-87 9,913 10,583 10,035
Jan-88 10,149 10,946 10,061
Feb-88 10,307 11,072 10,087
Mar-88 10,294 10,963 10,131
Apr-88 10,282 10,899 10,183
May-88 10,281 10,826 10,218
Jun-88 10,420 11,071 10,262
Jul-88 10,427 11,008 10,305
Aug-88 10,458 11,036 10,348
Sep-88 10,549 11,278 10,418
Oct-88 10,616 11,478 10,452
Nov-88 10,599 11,348 10,460
Dec-88 10,631 11,386 10,478
Jan-89 10,725 11,538 10,531
Feb-89 10,732 11,450 10,574
Mar-89 10,790 11,511 10,635
Apr-89 10,873 11,755 10,704
May-89 11,008 12,044 10,765
Jun-89 11,144 12,437 10,791
Jul-89 11,332 12,695 10,817
Aug-89 11,236 12,499 10,834
Sep-89 11,270 12,554 10,869
Oct-89 11,419 12,871 10,921
Nov-89 11,503 12,987 10,947
Dec-89 11,534 13,007 10,965
Jan-90 11,443 12,828 11,078
Feb-90 11,516 12,857 11,130
Mar-90 11,520 12,858 11,191
Apr-90 11,482 12,740 11,209
May-90 11,709 13,109 11,235
Jun-90 11,840 13,321 11,295
Jul-90 11,983 13,487 11,338
Aug-90 11,927 13,291 11,443
Sep-90 11,972 13,401 11,539
Oct-90 12,074 13,580 11,608
Nov-90 12,250 13,876 11,633
Dec-90 12,342 14,085 11,633
Jan-91 12,477 14,243 11,703
Feb-91 12,627 14,365 11,721
Mar-91 12,742 14,465 11,738
Apr-91 12,904 14,631 11,756
May-91 12,990 14,700 11,791
Jun-91 12,986 14,683 11,825
Jul-91 13,135 14,868 11,843
Aug-91 13,394 15,210 11,878
Sep-91 13,639 15,528 11,930
Oct-91 13,807 15,667 11,948
Nov-91 13,976 15,823 11,982
Dec-91 14,389 16,356 11,991
Jan-92 14,218 16,114 12,009
Feb-92 14,238 16,200 12,052
Mar-92 14,179 16,111 12,113
Apr-92 14,297 16,207 12,130
May-92 14,482 16,522 12,147
Jun-92 14,702 16,765 12,191
Jul-92 15,071 17,194 12,217
Aug-92 15,210 17,347 12,251
Sep-92 15,440 17,583 12,285
Oct-92 15,251 17,314 12,328
Nov-92 15,163 17,298 12,345
Dec-92 15,275 17,596 12,337
Jan-93 15,530 17,979 12,397
Feb-93 15,889 18,353 12,441
Mar-93 15,920 18,416 12,484
Apr-93 16,074 18,557 12,519
May-93 16,024 18,548 12,537
Jun-93 16,257 18,969 12,554
Jul-93 16,314 19,091 12,554
Aug-93 16,620 19,530 12,589
Sep-93 16,641 19,598 12,616
Oct-93 16,682 19,678 12,668
Nov-93 16,597 19,456 12,676
Dec-93 16,657 19,542 12,676
Jan-94 16,843 19,835 12,711
Feb-94 16,594 19,402 12,754
Mar-94 16,381 18,927 12,797
Apr-94 16,295 18,770 12,815
May-94 16,301 18,736 12,824
Jun-94 16,325 18,693 12,868
Jul-94 16,516 19,067 12,902
Aug-94 16,540 19,074 12,954
Sep-94 16,471 18,786 12,989
Oct-94 16,495 18,766 12,998
Nov-94 16,445 18,732 13,015
Dec-94 16,464 18,856 13,015
Jan-95 16,668 19,218 13,067
Feb-95 16,892 19,664 13,119
Mar-95 16,963 19,795 13,163
Apr-95 17,111 20,070 13,206
May-95 17,435 20,911 13,233
Jun-95 17,585 21,079 13,259
Jul-95 17,599 20,996 13,259
Aug-95 17,730 21,265 13,293
Sep-95 17,823 21,482 13,320
Oct-95 17,967 21,798 13,364
Nov-95 18,171 22,158 13,355
Dec-95 18,277 22,483 13,345
Jan-96 18,403 22,623 13,424
Feb-96 18,228 22,143 13,467
Mar-96 18,214 21,957 13,537
Apr-96 18,180 21,806 13,590
May-96 18,186 21,769 13,616
Jun-96 18,314 22,060 13,624
Jul-96 18,361 22,111 13,650
Aug-96 18,408 22,058 13,676
Sep-96 18,579 22,451 13,719
Oct-96 18,793 22,974 13,763
Nov-96 18,944 23,396 13,789
Dec-96 18,915 23,137 13,789
Jan-97 18,963 23,164 13,834
Feb-97 19,012 23,213 13,876
Mar-97 18,976 22,937 13,911
Apr-97 19,088 23,272 13,929
May-97 19,201 23,488 13,921
Jun-97 19,314 23,770 13,938
Jul-97 19,514 24,497 13,954
Aug-97 19,499 24,223 13,981
Sep-97 19,635 24,603 14,016
Total Return 96.35% 146.03% 40.16%
GRAPHIC MATERIAL (9)
The following line graph hypothetically compares the performance of the Franklin
Investment Grade Income Fund - Advisor Class shares to that of the Lehman
Brothers Government/Corporate Bond Index and the Consumer Price Index (CPI),
based on a $10,000 investment from 10/1/87 to 9/30/97.
Period Ending Fund Index Index
Oct-87 10,000 10,000 10,000
Oct-87 10,172 10,375 10,026
Nov-87 10,286 10,440 10,035
Dec-87 10,355 10,583 10,035
Jan-88 10,601 10,946 10,061
Feb-88 10,766 11,072 10,087
Mar-88 10,753 10,963 10,131
Apr-88 10,740 10,899 10,183
May-88 10,739 10,826 10,218
Jun-88 10,885 11,071 10,262
Jul-88 10,892 11,008 10,305
Aug-88 10,924 11,036 10,348
Sep-88 11,019 11,278 10,418
Oct-88 11,089 11,478 10,452
Nov-88 11,071 11,348 10,460
Dec-88 11,105 11,386 10,478
Jan-89 11,203 11,538 10,531
Feb-89 11,211 11,450 10,574
Mar-89 11,271 11,511 10,635
Apr-89 11,358 11,755 10,704
May-89 11,499 12,044 10,765
Jun-89 11,641 12,437 10,791
Jul-89 11,838 12,695 10,817
Aug-89 11,737 12,499 10,834
Sep-89 11,773 12,554 10,869
Oct-89 11,928 12,871 10,921
Nov-89 12,016 12,987 10,947
Dec-89 12,048 13,007 10,965
Jan-90 11,953 12,828 11,078
Feb-90 12,029 12,857 11,130
Mar-90 12,033 12,858 11,191
Apr-90 11,994 12,740 11,209
May-90 12,231 13,109 11,235
Jun-90 12,367 13,321 11,295
Jul-90 12,517 13,487 11,338
Aug-90 12,459 13,291 11,443
Sep-90 12,505 13,401 11,539
Oct-90 12,612 13,580 11,608
Nov-90 12,796 13,876 11,633
Dec-90 12,892 14,085 11,633
Jan-91 13,033 14,243 11,703
Feb-91 13,190 14,365 11,721
Mar-91 13,310 14,465 11,738
Apr-91 13,479 14,631 11,756
May-91 13,569 14,700 11,791
Jun-91 13,565 14,683 11,825
Jul-91 13,721 14,868 11,843
Aug-91 13,991 15,210 11,878
Sep-91 14,247 15,528 11,930
Oct-91 14,422 15,667 11,948
Nov-91 14,599 15,823 11,982
Dec-91 15,031 16,356 11,991
Jan-92 14,851 16,114 12,009
Feb-92 14,873 16,200 12,052
Mar-92 14,811 16,111 12,113
Apr-92 14,934 16,207 12,130
May-92 15,128 16,522 12,147
Jun-92 15,357 16,765 12,191
Jul-92 15,743 17,194 12,217
Aug-92 15,887 17,347 12,251
Sep-92 16,128 17,583 12,285
Oct-92 15,931 17,314 12,328
Nov-92 15,839 17,298 12,345
Dec-92 15,956 17,596 12,337
Jan-93 16,222 17,979 12,397
Feb-93 16,597 18,353 12,441
Mar-93 16,630 18,416 12,484
Apr-93 16,790 18,557 12,519
May-93 16,739 18,548 12,537
Jun-93 16,982 18,969 12,554
Jul-93 17,041 19,091 12,554
Aug-93 17,360 19,530 12,589
Sep-93 17,382 19,598 12,616
Oct-93 17,425 19,678 12,668
Nov-93 17,337 19,456 12,676
Dec-93 17,399 19,542 12,676
Jan-94 17,594 19,835 12,711
Feb-94 17,334 19,402 12,754
Mar-94 17,111 18,927 12,797
Apr-94 17,021 18,770 12,815
May-94 17,028 18,736 12,824
Jun-94 17,052 18,693 12,868
Jul-94 17,252 19,067 12,902
Aug-94 17,277 19,074 12,954
Sep-94 17,205 18,786 12,989
Oct-94 17,231 18,766 12,998
Nov-94 17,178 18,732 13,015
Dec-94 17,197 18,856 13,015
Jan-95 17,410 19,218 13,067
Feb-95 17,645 19,664 13,119
Mar-95 17,719 19,795 13,163
Apr-95 17,874 20,070 13,206
May-95 18,212 20,911 13,233
Jun-95 18,369 21,079 13,259
Jul-95 18,383 20,996 13,259
Aug-95 18,520 21,265 13,293
Sep-95 18,617 21,482 13,320
Oct-95 18,768 21,798 13,364
Nov-95 18,981 22,158 13,355
Dec-95 19,092 22,483 13,345
Jan-96 19,224 22,623 13,424
Feb-96 19,041 22,143 13,467
Mar-96 19,026 21,957 13,537
Apr-96 18,990 21,806 13,590
May-96 18,996 21,769 13,616
Jun-96 19,131 22,060 13,624
Jul-96 19,180 22,111 13,650
Aug-96 19,229 22,058 13,676
Sep-96 19,408 22,451 13,719
Oct-96 19,630 22,974 13,763
Nov-96 19,789 23,396 13,789
Dec-96 19,758 23,137 13,789
Jan-97 19,808 23,164 13,834
Feb-97 19,871 23,213 13,876
Mar-97 19,814 22,937 13,911
Apr-97 19,957 23,272 13,929
May-97 20,075 23,488 13,921
Jun-97 20,175 23,770 13,938
Jul-97 20,387 24,497 13,954
Aug-97 20,398 24,223 13,981
Sep-97 $20,521 24,603 14,016
Total Return 105.21% 146.03% 40.16%
