UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04894
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FRANKLIN MANAGED TRUST
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(Exact name of registrant as specified in charter)
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
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Date of fiscal year end: 9/30
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Date of reporting period: 9/30/07
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ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
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SEPTEMBER 30, 2007
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A series of Franklin Managed Trust
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ANNUAL REPORT AND SHAREHOLDER LETTER
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WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
FRANKLIN
RISING DIVIDENDS FUND Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
FRANKLIN o Templeton o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE(R)
Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management groups--
Franklin, Templeton and Mutual Series.
SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.
FRANKLIN. Founded in 1947, Franklin is a
recognized leader in fixed income investing and
also brings expertise in growth- and value-style
U.S. equity investing.
TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched
what has become the industry's oldest global
fund. Today, with offices in over 25 countries,
Templeton offers investors a truly global
perspective.
MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.
TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why
our funds can be used to build truly diversified
allocation plans covering every major asset
class.
RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well
as the reliable, accurate and personal service
that has helped us become one of the most trusted
names in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]
Not part of the annual report
Contents
SHAREHOLDER LETTER ........................................................ 1
ANNUAL REPORT
Franklin Rising Dividends Fund ............................................ 3
Performance Summary ....................................................... 7
Your Fund's Expenses ...................................................... 12
Financial Highlights and Statement of Investments ......................... 14
Financial Statements ...................................................... 22
Notes to Financial Statements ............................................. 26
Report of Independent Registered Public Accounting Firm ................... 34
Tax Designation ........................................................... 35
Meeting of Shareholders ................................................... 36
Board Members and Officers ................................................ 40
Shareholder Information ................................................... 44
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Annual Report
Franklin Rising Dividends Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Rising Dividends Fund seeks
long-term capital appreciation. Preservation of capital, while not a goal, is
also an important consideration. The Fund invests at least 80% of its net assets
in equity securities of companies that have paid consistently rising dividends.
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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
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This annual report for Franklin Rising Dividends Fund covers the fiscal year
ended September 30, 2007.
PERFORMANCE OVERVIEW
For the 12 months under review, Franklin Rising Dividends Fund - Class A posted
a cumulative total return of +9.53%. The Fund underperformed its benchmark, the
Standard & Poor's 500 Index (S&P 500), which gained 16.44% for the same period.
1 You can find the Fund's long-term performance data in the Performance Summary
beginning on page 7.
ECONOMIC AND MARKET OVERVIEW
During the 12 months ended September 30, 2007, the U.S. economy advanced at a
moderate but uneven pace. Gross domestic product (GDP) grew an annualized 2.1%
in the fourth quarter of 2006, but slowed to an annualized 0.6% rate in the
first quarter of 2007 due in part to higher imports and lower spending for
nondurable goods. In the second quarter, however, GDP growth advanced at an
annualized 3.8% rate, supported by federal defense spending, accelerating
exports and declining imports, greater business inventory investment and
increased spending for nonresidential structures. GDP grew an estimated
annualized 3.9% in the third quarter of 2007 despite a struggling housing market
that became more fragile with the abrupt unraveling of the subprime mortgage
market.
The unemployment rate increased from 4.6% at the beginning of the period to 4.7%
in September 2007. 2 Although consumer confidence in July neared a
1. Source: Standard & Poor's Micropal. The S&P 500 consists of 500 stocks chosen
for market size, liquidity and industry group representation. Each stock's
weight in the index is proportionate to its market value. The S&P 500 is one of
the most widely used benchmarks of U.S. equity performance. The index is
unmanaged and includes reinvested dividends. One cannot invest directly in an
index, nor is an index representative of the Fund's portfolio.
2. Source: Bureau of Labor Statistics.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 19.
Annual Report | 3
PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 9/30/07
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Insurance 15.5%
Industrial Conglomerates 10.7%
Health Care Equipment & Supplies 7.3%
Thrifts & Mortgage Finance 6.5%
Machinery 6.3%
Chemicals 5.2%
Commercial Banks 5.2%
Electrical Equipment 5.0%
Aerospace & Defense 4.9%
Household Products 4.5%
Food & Staples Retailing 3.7%
Producer Manufacturing 3.4%
Multi-Line Retail 3.4%
Capital Markets 3.4%
Pharmaceuticals 2.8%
Metals & Mining 2.7%
Other 7.7%
Short-Term Investments & Other Net Assets 1.8%
six-year high, the pace of consumer spending slowed toward period-end as worries
about the housing slump and high gasoline prices made individuals more cautious.
After a welcome drop in energy costs during the latter half of 2006, oil prices
established a new record high in September, crossing $80 per barrel in response
to perceived tight supply and high demand, refinery maintenance issues, and
ongoing geopolitical tensions in the Middle East and Africa. The core Consumer
Price Index (CPI), which excludes food and energy costs, rose 2.1% for the 12
months ended September 30, 2007, which was lower than its 2.2% 10-year average.
2
Liquidity and financing became difficult to obtain in some corporate credit
markets, which dampened the outlook for economic growth. In response, the
Federal Reserve Board (Fed) lowered the federal funds target rate 50 basis
points to 4.75% from 5.25% in September, which marked the first interest rate
reduction in four years. The 10-year Treasury note yield fell from 4.64% at the
beginning of the period to 4.59% on September 30, 2007.
After stock market sell-offs in late February and mid-March, markets rebounded
in the second quarter of 2007 amid generally strong first quarter corporate
earnings reports. However, volatility picked up again in the second half of July
and in August due to investor concerns about the housing market, lending
environment and mixed second quarter earnings reports. The blue chip stocks of
the Dow Jones Industrial Average posted a 12-month total return of 21.69%, the
broader S&P 500 rose 16.44%, and the technology-heavy NASDAQ Composite Index
gained 20.52%. 3 Energy, materials and telecommunication stocks performed
particularly well.
INVESTMENT STRATEGY
We base our investment strategy on our belief that companies with consistently
rising dividends should, over time, also realize stock price appreciation. We
select portfolio securities based on several criteria. To be eligible for
purchase, stocks generally will pass certain screening criteria, 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 what we believe are attractive
prices, often when they are out of favor with other investors.
3. Source: Standard & Poor's Micropal. The Dow Jones Industrial Average is price
weighted based on the average market price of 30 blue chip stocks of companies
that are generally industry leaders. See footnote 1 for a description of the S&P
500. The NASDAQ Composite Index measures all NASDAQ domestic and international
based common type stocks listed on The NASDAQ Stock Market. The index is market
value weighted and includes more than 3,000 companies.
4 | Annual Report
MANAGER'S DISCUSSION
Significant positive contributors to the Fund's return during the 12 months
ended September 30, 2007, included Roper Industries, Praxair and United
Technologies. Roper continued to experience strong organic growth in many of its
businesses including radio frequency identification, energy systems and
controls, and automatic meter reading. Roper has 14 years of dividend increases.
Praxair's industrial gas businesses delivered consistent and predictable sales
and earnings growth in recent years, which became more highly valued by
investors in the current uncertain economic environment. Important drivers of
Praxair's businesses include high energy prices, environmental concerns and
emerging market growth. Praxair has also increased its dividend for 14
consecutive years. United Technologies has significant exposure to the strong
aerospace and defense markets through its Pratt & Whitney and Hamilton
Sundstrand units, as well as exposure to rapid infrastructure development in
emerging markets through subsidiaries Otis and Carrier. The company has 13 years
of dividend increases.
Three stocks that declined in value during the period were Leggett & Platt, Old
Republic International and Pfizer. Leggett & Platt, which has a major segment
that manufactures engineered components for residential furniture, was hurt by
the weak housing market. Leggett has increased its dividend for 36 years. Old
Republic's housing market exposure through its mortgage guaranty business caused
its stock price to fall below book value. Old Republic has 26 years of dividend
increases. Pfizer ended development of Torcetrapib, a cholesterol medicine in
late stage clinical trials. However, Pfizer's strong balance sheet and cash flow
enabled it to increase its dividend 21% during the reporting period, marking 40
years of dividend increases.
The Fund initiated a significant new position in Wal-Mart Stores. Wal-Mart has a
33-year record of significant and substantial dividend increases and was valued
near the low end of its historical price/earnings ratio range at period-end.
Wal-Mart has strong cash flow and should, in our opinion, be able to steadily
grow its earnings and dividends. Although its sales growth has been weak in
recent quarters, Wal-Mart remains a dominant global retailer. The Fund also
significantly increased its positions in two industrial companies, Brady and
Dover. Although both companies have solid secular growth prospects, they each
have some exposure to the economic cycle. At times during the period, these
stocks declined in value amid concerns that industrial production would weaken.
Brady has 22 years of dividend increases, while Dover has an impressive 52-year
record of increasing its dividend. The Fund also made smaller additions to 18
other positions during the past 12 months.
During the period, Fund holding Reynolds & Reynolds was acquired by a private
buyer for $40 per share in cash, and Mercantile Bankshares was acquired
TOP 10 EQUITY HOLDINGS
9/30/07
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COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
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Praxair Inc. 5.2%
CHEMICALS
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Roper Industries Inc. 5.0%
ELECTRICAL EQUIPMENT
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United Technologies Corp. 5.0%
AEROSPACE & DEFENSE
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Carlisle Cos. Inc. 4.8%
INDUSTRIAL CONGLOMERATES
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General Electric Co. 4.8%
INDUSTRIAL CONGLOMERATES
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The Procter & Gamble Co. 4.6%
HOUSEHOLD PRODUCTS
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Dover Corp. 4.2%
MACHINERY
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American International Group Inc. 4.1%
INSURANCE
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Wal-Mart Stores Inc. 3.7%
FOOD & STAPLES RETAILING
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Brady Corp., A 3.5%
PRODUCER MANUFACTURING
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Annual Report | 5
by PNC Financial Services Group for a combination of PNC stock and cash. We also
completed the sale of the Fund's remaining position in Superior Industries,
which faced a very challenging competitive environment for its aluminum
automobile wheels. We reduced the Fund's stake in Praxair after price
appreciation made it an exceptionally large position in the portfolio. We also
scaled back the Fund's position in Teleflex, which performed well during the
first half of the period despite its exposure to the difficult automotive and
marine markets. We slightly reduced eight other positions during the period.
Our 10 largest positions on September 30, 2007, represented 44.9% of the Fund's
total net assets. It is interesting to note how these 10 companies would, in
aggregate, respond to the Fund's screening criteria based on a simple average of
statistical measures. On average, these 10 companies have raised their dividends
28 years in a row and by 279% over the past 10 years. Their most recent
year-over-year dividend increases averaged 15% with a yield of 1.6% on September
30, 2007, and a dividend payout ratio of 28%, based on estimates of calendar
year 2007 operating earnings. The average price/earnings ratio was 18.1 times
2007 estimates versus 16.1 for that of the unmanaged S&P 500.
Thank you for your continued participation in Franklin Rising Dividends Fund. We
look forward to serving your future investment needs.
[PHOTO OMITTED] /s/ Donald G. Taylor
Donald G. Taylor
Lead Portfolio Manager
William J. Lippman
Bruce Baughman
Margaret McGee
Portfolio Management Team
Franklin Rising Dividends Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF SEPTEMBER 30, 2007, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
6 | Annual Report
Performance Summary as of 9/30/07
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
that a shareholder would pay on Fund dividends, capital gain distributions, if
any, or any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
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CLASS A (SYMBOL: FRDPX) CHANGE 9/30/07 9/30/06
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Net Asset Value (NAV) +$1.23 $ 37.48 $ 36.25
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DISTRIBUTIONS (10/1/06-9/30/07)
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Dividend Income $0.9139
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Short-Term Capital Gain $0.0322
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Long-Term Capital Gain $1.1599
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TOTAL $2.1060
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CLASS B (SYMBOL: FRDBX) CHANGE 9/30/07 9/30/06
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Net Asset Value (NAV) +$1.20 $ 36.99 $ 35.79
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DISTRIBUTIONS (10/1/06-9/30/07)
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Dividend Income $0.6323
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Short-Term Capital Gain $0.0322
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Long-Term Capital Gain $1.1599
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TOTAL $1.8244
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CLASS C (SYMBOL: FRDTX) CHANGE 9/30/07 9/30/06
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Net Asset Value (NAV) +$1.16 $ 36.89 $ 35.73
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DISTRIBUTIONS (10/1/06-9/30/07)
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Dividend Income $0.6605
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Short-Term Capital Gain $0.0322
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Long-Term Capital Gain $1.1599
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TOTAL $1.8526
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CLASS R (SYMBOL: FRDRX) CHANGE 9/30/07 9/30/06
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Net Asset Value (NAV) +$1.20 $ 37.31 $ 36.11
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DISTRIBUTIONS (10/1/06-9/30/07)
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Dividend Income $0.8267
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Short-Term Capital Gain $0.0322
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Long-Term Capital Gain $1.1599
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TOTAL $2.0188
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ADVISOR CLASS (SYMBOL: FRDAX) CHANGE 9/30/07 9/30/06
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Net Asset Value (NAV) +$1.24 $ 37.48 $ 36.24
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DISTRIBUTIONS (10/1/06-9/30/07)
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Dividend Income $0.9958
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Short-Term Capital Gain $0.0322
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Long-Term Capital Gain $1.1599
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TOTAL $2.1879
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Annual Report | 7
Performance Summary (CONTINUED)
PERFORMANCE
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURN AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE (CDSC)
DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; CLASS C: 1%
CDSC IN FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY
CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +9.53% +81.81% +119.88%
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Average Annual Total Return 2 +3.24% +11.37% +7.56%
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Value of $10,000 Investment 3 $10,324 $ 17,132 $ 20,726
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Total Annual Operating Expenses 4 1.02%
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 +8.71% +76.00% +93.88%
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Average Annual Total Return 2 +4.71% +11.71% +7.86%
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Value of $10,000 Investment 3 $10,471 $ 17,400 $ 19,388
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Total Annual Operating Expenses 4 1.78%
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CLASS C 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +8.69% +75.94% +107.21%
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Average Annual Total Return 2 +7.69% +11.96% +7.56%
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Value of $10,000 Investment 3 $10,769 $17,594 $ 20,721
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Total Annual Operating Expenses 4 1.76%
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CLASS R 1-YEAR 5-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 +9.22% +80.41% +67.60%
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Average Annual Total Return 2 +9.22% +12.53% +9.41%
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Value of $10,000 Investment 3 $10,922 $ 18,041 $ 16,760
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Total Annual Operating Expenses 4 1.28%
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ADVISOR CLASS 5 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +9.82% +82.69% +120.95%
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Average Annual Total Return 2 +9.82% +12.81% +8.25%
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Value of $10,000 Investment 3 $10,982 $ 18,269 $ 22,095
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Total Annual Operating Expenses 4 0.78%
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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND
PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
8 | Annual Report
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged index includes
reinvestment of any income or distributions. It differs from the Fund in
composition and does not pay management fees or expenses. One cannot invest
directly in an index.
CLASS A (10/1/97-9/30/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Franklin Rising
Date Dividends Fund S&P 500 6 CPI 6
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10/1/1997 $ 9,426 $10,000 $10,000
10/31/1997 $ 9,195 $ 9,666 $10,025
11/30/1997 $ 9,415 $10,113 $10,019
12/31/1997 $ 9,629 $10,287 $10,006
1/31/1998 $ 9,585 $10,401 $10,025
2/28/1998 $10,347 $11,151 $10,043
3/31/1998 $10,632 $11,722 $10,062
4/30/1998 $10,589 $11,840 $10,081
5/31/1998 $10,183 $11,637 $10,099
6/30/1998 $10,048 $12,109 $10,112
7/31/1998 $ 9,707 $11,980 $10,124
8/31/1998 $ 8,165 $10,248 $10,136
9/30/1998 $ 8,573 $10,905 $10,149
10/31/1998 $ 9,481 $11,792 $10,174
11/30/1998 $ 9,823 $12,506 $10,174
12/31/1998 $10,209 $13,227 $10,167
1/31/1999 $ 9,671 $13,780 $10,192
2/28/1999 $ 9,329 $13,352 $10,205
3/31/1999 $ 9,269 $13,886 $10,236
4/30/1999 $ 9,987 $14,424 $10,310
5/31/1999 $10,091 $14,083 $10,310
6/30/1999 $10,457 $14,865 $10,310
7/31/1999 $10,287 $14,401 $10,341
8/31/1999 $ 9,856 $14,329 $10,366
9/30/1999 $ 9,283 $13,937 $10,416
10/31/1999 $ 9,366 $14,819 $10,434
11/30/1999 $ 9,253 $15,120 $10,440
12/31/1999 $ 9,159 $16,010 $10,440
1/31/2000 $ 8,723 $15,206 $10,471
2/29/2000 $ 8,694 $14,918 $10,533
3/31/2000 $ 9,437 $16,377 $10,620
4/30/2000 $ 9,394 $15,885 $10,627
5/31/2000 $ 9,551 $15,559 $10,639
6/30/2000 $ 9,030 $15,942 $10,695
7/31/2000 $ 8,944 $15,693 $10,720
8/31/2000 $ 9,463 $16,668 $10,720
9/30/2000 $ 9,557 $15,788 $10,775
10/31/2000 $ 9,791 $15,721 $10,794
11/30/2000 $ 9,948 $14,482 $10,800
12/31/2000 $10,898 $14,553 $10,794
1/31/2001 $11,085 $15,069 $10,862
2/28/2001 $11,027 $13,695 $10,906
3/31/2001 $10,825 $12,827 $10,931
4/30/2001 $11,372 $13,824 $10,974
5/31/2001 $11,775 $13,917 $11,024
6/30/2001 $11,804 $13,578 $11,042
7/31/2001 $12,049 $13,444 $11,011
8/31/2001 $11,977 $12,603 $11,011
9/30/2001 $10,933 $11,585 $11,061
10/31/2001 $11,102 $11,806 $11,024
11/30/2001 $11,872 $12,712 $11,005
12/31/2001 $12,326 $12,823 $10,962
1/31/2002 $12,610 $12,636 $10,986
2/28/2002 $12,928 $12,392 $11,030
3/31/2002 $13,577 $12,858 $11,092
4/30/2002 $13,746 $12,079 $11,154
5/31/2002 $13,662 $11,990 $11,154
6/30/2002 $13,176 $11,136 $11,160
7/31/2002 $12,335 $10,268 $11,172
8/31/2002 $12,514 $10,335 $11,210
9/30/2002 $11,400 $ 9,212 $11,228
10/31/2002 $11,943 $10,023 $11,247
11/30/2002 $12,327 $10,612 $11,247
12/31/2002 $12,109 $ 9,989 $11,222
1/31/2003 $11,642 $ 9,727 $11,272
2/28/2003 $11,422 $ 9,581 $11,359
3/31/2003 $11,417 $ 9,674 $11,427
4/30/2003 $12,375 $10,471 $11,402
5/31/2003 $12,962 $11,023 $11,383
6/30/2003 $12,987 $11,164 $11,396
7/31/2003 $13,463 $11,360 $11,408
8/31/2003 $13,639 $11,582 $11,452
9/30/2003 $13,564 $11,459 $11,489
10/31/2003 $14,507 $12,107 $11,476
11/30/2003 $14,577 $12,214 $11,445
12/31/2003 $14,979 $12,854 $11,433
1/31/2004 $15,151 $13,090 $11,489
2/29/2004 $15,419 $13,272 $11,551
3/31/2004 $15,292 $13,072 $11,625
4/30/2004 $15,020 $12,867 $11,663
5/31/2004 $15,272 $13,043 $11,731
6/30/2004 $15,610 $13,297 $11,768
7/31/2004 $15,237 $12,857 $11,749
8/31/2004 $15,439 $12,909 $11,756
9/30/2004 $15,444 $13,049 $11,780
10/31/2004 $15,363 $13,248 $11,842
11/30/2004 $16,020 $13,784 $11,849
12/31/2004 $16,519 $14,253 $11,805
1/31/2005 $16,144 $13,906 $11,830
2/28/2005 $16,385 $14,198 $11,898
3/31/2005 $16,103 $13,947 $11,991
4/30/2005 $15,810 $13,682 $12,072
5/31/2005 $16,159 $14,118 $12,060
6/30/2005 $16,051 $14,138 $12,066
7/31/2005 $16,555 $14,664 $12,122
8/31/2005 $16,062 $14,530 $12,184
9/30/2005 $16,000 $14,647 $12,333
10/31/2005 $16,072 $14,403 $12,357
11/30/2005 $16,699 $14,948 $12,258
12/31/2005 $16,902 $14,953 $12,208
1/31/2006 $17,440 $15,349 $12,301
2/28/2006 $17,831 $15,391 $12,326
3/31/2006 $18,139 $15,582 $12,395
4/30/2006 $18,312 $15,792 $12,500
5/31/2006 $17,847 $15,337 $12,562
6/30/2006 $17,763 $15,358 $12,587
7/31/2006 $17,790 $15,453 $12,624
8/31/2006 $18,479 $15,820 $12,649
9/30/2006 $18,922 $16,228 $12,587
10/31/2006 $19,350 $16,757 $12,519
11/30/2006 $19,705 $17,075 $12,500
12/31/2006 $19,836 $17,315 $12,519
1/31/2007 $20,178 $17,577 $12,557
2/28/2007 $19,780 $17,233 $12,624
3/31/2007 $19,708 $17,426 $12,739
4/30/2007 $20,228 $18,198 $12,822
5/31/2007 $21,013 $18,833 $12,900
6/30/2007 $20,720 $18,520 $12,925
7/31/2007 $19,963 $17,946 $12,922
8/31/2007 $20,295 $18,215 $12,898
9/30/2007 $20,726 $18,896 $12,934
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS A 9/30/07
- --------------------------------------
1-Year +3.24%
- --------------------------------------
5-Year +11.37%
- --------------------------------------
10-Year +7.56%
- --------------------------------------
CLASS B (1/1/99-9/30/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Franklin Rising
Date Dividends Fund S&P 500 6 CPI 6
- --------------------------------------------------------------------------------
1/1/1999 $10,000 $10,000 $10,000
1/31/1999 $ 9,473 $10,418 $10,024
2/28/1999 $ 9,133 $10,094 $10,037
3/31/1999 $ 9,075 $10,498 $10,067
4/30/1999 $ 9,774 $10,905 $10,140
5/31/1999 $ 9,867 $10,647 $10,140
6/30/1999 $10,222 $11,238 $10,140
7/31/1999 $10,051 $10,887 $10,171
8/31/1999 $ 9,625 $10,833 $10,195
9/30/1999 $ 9,063 $10,536 $10,244
10/31/1999 $ 9,140 $11,203 $10,262
11/30/1999 $ 9,024 $11,431 $10,268
12/31/1999 $ 8,930 $12,104 $10,268
1/31/2000 $ 8,498 $11,496 $10,299
2/29/2000 $ 8,471 $11,278 $10,360
3/31/2000 $ 9,194 $12,382 $10,445
4/30/2000 $ 9,147 $12,009 $10,451
5/31/2000 $ 9,291 $11,763 $10,464
6/30/2000 $ 8,780 $12,053 $10,519
7/31/2000 $ 8,692 $11,864 $10,543
8/31/2000 $ 9,194 $12,601 $10,543
9/30/2000 $ 9,278 $11,936 $10,598
10/31/2000 $ 9,506 $11,886 $10,616
11/30/2000 $ 9,650 $10,949 $10,622
12/31/2000 $10,570 $11,002 $10,616
1/31/2001 $10,747 $11,392 $10,683
2/28/2001 $10,682 $10,354 $10,726
3/31/2001 $10,481 $ 9,698 $10,750
4/30/2001 $11,008 $10,451 $10,793
5/31/2001 $11,390 $10,521 $10,842
6/30/2001 $11,416 $10,265 $10,860
7/31/2001 $11,644 $10,164 $10,830
8/31/2001 $11,574 $ 9,528 $10,830
9/30/2001 $10,556 $ 8,759 $10,879
10/31/2001 $10,720 $ 8,926 $10,842
11/30/2001 $11,452 $ 9,610 $10,824
12/31/2001 $11,894 $ 9,694 $10,781
1/31/2002 $12,159 $ 9,553 $10,805
2/28/2002 $12,457 $ 9,369 $10,848
3/31/2002 $13,083 $ 9,721 $10,909
4/30/2002 $13,237 $ 9,132 $10,970
5/31/2002 $13,146 $ 9,064 $10,970
6/30/2002 $12,679 $ 8,419 $10,976
7/31/2002 $11,860 $ 7,763 $10,988
8/31/2002 $12,029 $ 7,813 $11,025
9/30/2002 $10,955 $ 6,964 $11,043
10/31/2002 $11,470 $ 7,577 $11,062
11/30/2002 $11,836 $ 8,023 $11,062
12/31/2002 $11,619 $ 7,552 $11,037
1/31/2003 $11,174 $ 7,354 $11,086
2/28/2003 $10,952 $ 7,244 $11,171
3/31/2003 $10,947 $ 7,314 $11,239
4/30/2003 $11,861 $ 7,917 $11,214
5/31/2003 $12,412 $ 8,334 $11,196
6/30/2003 $12,431 $ 8,440 $11,208
7/31/2003 $12,881 $ 8,589 $11,220
8/31/2003 $13,045 $ 8,756 $11,263
9/30/2003 $12,963 $ 8,663 $11,300
10/31/2003 $13,858 $ 9,153 $11,287
11/30/2003 $13,920 $ 9,234 $11,257
12/31/2003 $14,298 $ 9,718 $11,245
1/31/2004 $14,458 $ 9,897 $11,300
2/29/2004 $14,706 $10,034 $11,361
3/31/2004 $14,580 $ 9,883 $11,434
4/30/2004 $14,313 $ 9,728 $11,470
5/31/2004 $14,546 $ 9,861 $11,538
6/30/2004 $14,861 $10,053 $11,574
7/31/2004 $14,502 $ 9,720 $11,556
8/31/2004 $14,687 $ 9,759 $11,562
9/30/2004 $14,682 $ 9,865 $11,586
10/31/2004 $14,604 $10,016 $11,647
11/30/2004 $15,220 $10,421 $11,653
12/31/2004 $15,685 $10,776 $11,611
1/31/2005 $15,322 $10,513 $11,635
2/28/2005 $15,543 $10,734 $11,702
3/31/2005 $15,268 $10,544 $11,794
4/30/2005 $14,978 $10,344 $11,873
5/31/2005 $15,302 $10,673 $11,861
6/30/2005 $15,184 $10,689 $11,867
7/31/2005 $15,656 $11,086 $11,922
8/31/2005 $15,179 $10,985 $11,983
9/30/2005 $15,105 $11,074 $12,129
10/31/2005 $15,169 $10,889 $12,154
11/30/2005 $15,749 $11,301 $12,056
12/31/2005 $15,928 $11,305 $12,007
1/31/2006 $16,423 $11,604 $12,099
2/28/2006 $16,780 $11,636 $12,123
3/31/2006 $17,063 $11,781 $12,190
4/30/2006 $17,216 $11,939 $12,294
5/31/2006 $16,765 $11,595 $12,355
6/30/2006 $16,676 $11,611 $12,379
7/31/2006 $16,696 $11,683 $12,416
8/31/2006 $17,330 $11,961 $12,441
9/30/2006 $17,737 $12,269 $12,379
10/31/2006 $18,123 $12,669 $12,312
11/30/2006 $18,440 $12,909 $12,294
12/31/2006 $18,556 $13,091 $12,312
1/31/2007 $18,877 $13,289 $12,350
2/28/2007 $18,505 $13,029 $12,416
3/31/2007 $18,439 $13,174 $12,529
4/30/2007 $18,925 $13,758 $12,610
5/31/2007 $19,660 $14,238 $12,688
6/30/2007 $19,386 $14,001 $12,712
7/31/2007 $18,677 $13,567 $12,709
8/31/2007 $18,987 $13,771 $12,686
9/30/2007 $19,388 $14,286 $12,721
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS B 9/30/07
- --------------------------------------
1-Year +4.71%
- --------------------------------------
5-Year +11.71%
- --------------------------------------
Since Inception (1/1/99) +7.86%
- --------------------------------------
Annual Report | 9
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS C 9/30/07
- --------------------------------------
1-Year +7.69%
- --------------------------------------
5-Year +11.96%
- --------------------------------------
10-Year +7.56%
- --------------------------------------
CLASS C (10/1/97-9/30/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Franklin Rising
Date Dividends Fund S&P 500 6 CPI 6
- --------------------------------------------------------------------------------
10/1/1997 $10,000 $10,000 $10,000
10/31/1997 $ 9,750 $ 9,666 $10,025
11/30/1997 $ 9,978 $10,113 $10,019
12/31/1997 $10,204 $10,287 $10,006
1/31/1998 $10,153 $10,401 $10,025
2/28/1998 $10,955 $11,151 $10,043
3/31/1998 $11,254 $11,722 $10,062
4/30/1998 $11,204 $11,840 $10,081
5/31/1998 $10,769 $11,637 $10,099
6/30/1998 $10,621 $12,109 $10,112
7/31/1998 $10,254 $11,980 $10,124
8/31/1998 $ 8,621 $10,248 $10,136
9/30/1998 $ 9,052 $10,905 $10,149
10/31/1998 $10,002 $11,792 $10,174
11/30/1998 $10,360 $12,506 $10,174
12/31/1998 $10,761 $13,227 $10,167
1/31/1999 $10,191 $13,780 $10,192
2/28/1999 $ 9,828 $13,352 $10,205
3/31/1999 $ 9,761 $13,886 $10,236
4/30/1999 $10,510 $14,424 $10,310
5/31/1999 $10,611 $14,083 $10,310
6/30/1999 $10,992 $14,865 $10,310
7/31/1999 $10,808 $14,401 $10,341
8/31/1999 $10,353 $14,329 $10,366
9/30/1999 $ 9,748 $13,937 $10,416
10/31/1999 $ 9,827 $14,819 $10,434
11/30/1999 $ 9,702 $15,120 $10,440
12/31/1999 $ 9,602 $16,010 $10,440
1/31/2000 $ 9,137 $15,206 $10,471
2/29/2000 $ 9,112 $14,918 $10,533
3/31/2000 $ 9,888 $16,377 $10,620
4/30/2000 $ 9,842 $15,885 $10,627
5/31/2000 $ 9,998 $15,559 $10,639
6/30/2000 $ 9,447 $15,942 $10,695
7/31/2000 $ 9,352 $15,693 $10,720
8/31/2000 $ 9,893 $16,668 $10,720
9/30/2000 $ 9,980 $15,788 $10,775
10/31/2000 $10,221 $15,721 $10,794
11/30/2000 $10,376 $14,482 $10,800
12/31/2000 $11,366 $14,553 $10,794
1/31/2001 $11,557 $15,069 $10,862
2/28/2001 $11,487 $13,695 $10,906
3/31/2001 $11,276 $12,827 $10,931
4/30/2001 $11,838 $13,824 $10,974
5/31/2001 $12,250 $13,917 $11,024
6/30/2001 $12,274 $13,578 $11,042
7/31/2001 $12,525 $13,444 $11,011
8/31/2001 $12,445 $12,603 $11,011
9/30/2001 $11,356 $11,585 $11,061
10/31/2001 $11,526 $11,806 $11,024
11/30/2001 $12,315 $12,712 $11,005
12/31/2001 $12,783 $12,823 $10,962
1/31/2002 $13,068 $12,636 $10,986
2/28/2002 $13,395 $12,392 $11,030
3/31/2002 $14,064 $12,858 $11,092
4/30/2002 $14,235 $12,079 $11,154
5/31/2002 $14,136 $11,990 $11,154
6/30/2002 $13,634 $11,136 $11,160
7/31/2002 $12,757 $10,268 $11,172
8/31/2002 $12,939 $10,335 $11,210
9/30/2002 $11,778 $ 9,212 $11,228
10/31/2002 $12,332 $10,023 $11,247
11/30/2002 $12,732 $10,612 $11,247
12/31/2002 $12,497 $ 9,989 $11,222
1/31/2003 $12,013 $ 9,727 $11,272
2/28/2003 $11,779 $ 9,581 $11,359
3/31/2003 $11,763 $ 9,674 $11,427
4/30/2003 $12,747 $10,471 $11,402
5/31/2003 $13,340 $11,023 $11,383
6/30/2003 $13,361 $11,164 $11,396
7/31/2003 $13,845 $11,360 $11,408
8/31/2003 $14,017 $11,582 $11,452
9/30/2003 $13,934 $11,459 $11,489
10/31/2003 $14,896 $12,107 $11,476
11/30/2003 $14,964 $12,214 $11,445
12/31/2003 $15,369 $12,854 $11,433
1/31/2004 $15,536 $13,090 $11,489
2/29/2004 $15,802 $13,272 $11,551
3/31/2004 $15,672 $13,072 $11,625
4/30/2004 $15,384 $12,867 $11,663
5/31/2004 $15,635 $13,043 $11,731
6/30/2004 $15,970 $13,297 $11,768
7/31/2004 $15,588 $12,857 $11,749
8/31/2004 $15,781 $12,909 $11,756
9/30/2004 $15,781 $13,049 $11,780
10/31/2004 $15,693 $13,248 $11,842
11/30/2004 $16,356 $13,784 $11,849
12/31/2004 $16,856 $14,253 $11,805
1/31/2005 $16,464 $13,906 $11,830
2/28/2005 $16,702 $14,198 $11,898
3/31/2005 $16,406 $13,947 $11,991
4/30/2005 $16,094 $13,682 $12,072
5/31/2005 $16,443 $14,118 $12,060
6/30/2005 $16,321 $14,138 $12,066
7/31/2005 $16,824 $14,664 $12,122
8/31/2005 $16,311 $14,530 $12,184
9/30/2005 $16,237 $14,647 $12,333
10/31/2005 $16,300 $14,403 $12,357
11/30/2005 $16,930 $14,948 $12,258
12/31/2005 $17,122 $14,953 $12,208
1/31/2006 $17,656 $15,349 $12,301
2/28/2006 $18,040 $15,391 $12,326
3/31/2006 $18,344 $15,582 $12,395
4/30/2006 $18,504 $15,792 $12,500
5/31/2006 $18,018 $15,337 $12,562
6/30/2006 $17,928 $15,358 $12,587
7/31/2006 $17,944 $15,453 $12,624
8/31/2006 $18,627 $15,820 $12,649
9/30/2006 $19,064 $16,228 $12,587
10/31/2006 $19,486 $16,757 $12,519
11/30/2006 $19,822 $17,075 $12,500
12/31/2006 $19,946 $17,315 $12,519
1/31/2007 $20,277 $17,577 $12,557
2/28/2007 $19,867 $17,233 $12,624
3/31/2007 $19,777 $17,426 $12,739
4/30/2007 $20,289 $18,198 $12,822
5/31/2007 $21,064 $18,833 $12,900
6/30/2007 $20,755 $18,520 $12,925
7/31/2007 $19,985 $17,946 $12,922
8/31/2007 $20,305 $18,215 $12,898
9/30/2007 $20,721 $18,896 $12,934
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS R 9/30/07
- --------------------------------------
1-Year +9.22%
- --------------------------------------
5-Year +12.53%
- --------------------------------------
Since Inception (1/1/02) +9.41%
- --------------------------------------
CLASS R (1/1/02-9/30/07)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Franklin Rising
Date Dividends Fund S&P 500 6 CPI 6
- --------------------------------------------------------------------------------
1/1/2002 $10,000 $10,000 $10,000
1/31/2002 $10,276 $ 9,854 $10,023
2/28/2002 $10,535 $ 9,664 $10,062
3/31/2002 $11,065 $10,027 $10,119
4/30/2002 $11,202 $ 9,420 $10,175
5/31/2002 $11,133 $ 9,350 $10,175
6/30/2002 $10,738 $ 8,684 $10,181
7/31/2002 $10,052 $ 8,007 $10,192
8/31/2002 $10,198 $ 8,060 $10,226
9/30/2002 $ 9,291 $ 7,184 $10,243
10/31/2002 $ 9,734 $ 7,816 $10,260
11/30/2002 $10,047 $ 8,276 $10,260
12/31/2002 $ 9,867 $ 7,790 $10,238
1/31/2003 $ 9,490 $ 7,586 $10,283
2/28/2003 $ 9,307 $ 7,472 $10,362
3/31/2003 $ 9,303 $ 7,545 $10,424
4/30/2003 $10,084 $ 8,166 $10,402
5/31/2003 $10,559 $ 8,596 $10,385
6/30/2003 $10,580 $ 8,706 $10,396
7/31/2003 $10,965 $ 8,859 $10,407
8/31/2003 $11,109 $ 9,032 $10,447
9/30/2003 $11,046 $ 8,936 $10,481
10/31/2003 $11,817 $ 9,442 $10,470
11/30/2003 $11,874 $ 9,525 $10,441
12/31/2003 $12,198 $10,024 $10,430
1/31/2004 $12,338 $10,208 $10,481
2/29/2004 $12,556 $10,350 $10,538
3/31/2004 $12,454 $10,194 $10,606
4/30/2004 $12,231 $10,034 $10,640
5/31/2004 $12,437 $10,172 $10,702
6/30/2004 $12,709 $10,370 $10,736
7/31/2004 $12,409 $10,026 $10,719
8/31/2004 $12,573 $10,067 $10,724
9/30/2004 $12,573 $10,176 $10,747
10/31/2004 $12,511 $10,332 $10,804
11/30/2004 $13,047 $10,750 $10,809
12/31/2004 $13,450 $11,115 $10,770
1/31/2005 $13,145 $10,844 $10,792
2/28/2005 $13,338 $11,073 $10,855
3/31/2005 $13,107 $10,877 $10,939
4/30/2005 $12,864 $10,670 $11,013
5/31/2005 $13,149 $11,010 $11,002
6/30/2005 $13,052 $11,025 $11,007
7/31/2005 $13,463 $11,435 $11,058
8/31/2005 $13,060 $11,331 $11,115
9/30/2005 $13,006 $11,423 $11,251
10/31/2005 $13,060 $11,232 $11,273
11/30/2005 $13,568 $11,657 $11,183
12/31/2005 $13,730 $11,661 $11,138
1/31/2006 $14,164 $11,970 $11,222
2/28/2006 $14,475 $12,003 $11,245
3/31/2006 $14,725 $12,152 $11,307
4/30/2006 $14,862 $12,315 $11,404
5/31/2006 $14,479 $11,961 $11,460
6/30/2006 $14,411 $11,977 $11,483
7/31/2006 $14,428 $12,051 $11,517
8/31/2006 $14,989 $12,338 $11,539
9/30/2006 $15,346 $12,655 $11,483
10/31/2006 $15,685 $13,068 $11,420
11/30/2006 $15,966 $13,316 $11,404
12/31/2006 $16,073 $13,503 $11,420
1/31/2007 $16,347 $13,707 $11,455
2/28/2007 $16,024 $13,439 $11,517
3/31/2007 $15,956 $13,590 $11,622
4/30/2007 $16,378 $14,192 $11,697
5/31/2007 $17,007 $14,687 $11,768
6/30/2007 $16,769 $14,443 $11,791
7/31/2007 $16,153 $13,995 $11,788
8/31/2007 $16,418 $14,205 $11,767
9/30/2007 $16,760 $14,736 $11,799
10 | Annual Report
Performance Summary (CONTINUED)
ADVISOR CLASS (10/1/97-9/30/07) 5
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Franklin Rising
Date Dividends Fund S&P 500 6 CPI 6
- --------------------------------------------------------------------------------
10/1/1997 $10,000 $10,000 $10,000
10/31/1997 $ 9,755 $ 9,666 $10,025
11/30/1997 $ 9,989 $10,113 $10,019
12/31/1997 $10,215 $10,287 $10,006
1/31/1998 $10,169 $10,401 $10,025
2/28/1998 $10,978 $11,151 $10,043
3/31/1998 $11,280 $11,722 $10,062
4/30/1998 $11,233 $11,840 $10,081
5/31/1998 $10,804 $11,637 $10,099
6/30/1998 $10,660 $12,109 $10,112
7/31/1998 $10,298 $11,980 $10,124
8/31/1998 $ 8,662 $10,248 $10,136
9/30/1998 $ 9,095 $10,905 $10,149
10/31/1998 $10,058 $11,792 $10,174
11/30/1998 $10,421 $12,506 $10,174
12/31/1998 $10,831 $13,227 $10,167
1/31/1999 $10,260 $13,780 $10,192
2/28/1999 $ 9,897 $13,352 $10,205
3/31/1999 $ 9,834 $13,886 $10,236
4/30/1999 $10,595 $14,424 $10,310
5/31/1999 $10,706 $14,083 $10,310
6/30/1999 $11,093 $14,865 $10,310
7/31/1999 $10,913 $14,401 $10,341
8/31/1999 $10,456 $14,329 $10,366
9/30/1999 $ 9,849 $13,937 $10,416
10/31/1999 $ 9,937 $14,819 $10,434
11/30/1999 $ 9,816 $15,120 $10,440
12/31/1999 $ 9,717 $16,010 $10,440
1/31/2000 $ 9,254 $15,206 $10,471
2/29/2000 $ 9,224 $14,918 $10,533
3/31/2000 $10,012 $16,377 $10,620
4/30/2000 $ 9,966 $15,885 $10,627
5/31/2000 $10,133 $15,559 $10,639
6/30/2000 $ 9,580 $15,942 $10,695
7/31/2000 $ 9,489 $15,693 $10,720
8/31/2000 $10,039 $16,668 $10,720
9/30/2000 $10,139 $15,788 $10,775
10/31/2000 $10,387 $15,721 $10,794
11/30/2000 $10,554 $14,482 $10,800
12/31/2000 $11,561 $14,553 $10,794
1/31/2001 $11,760 $15,069 $10,862
2/28/2001 $11,699 $13,695 $10,906
3/31/2001 $11,485 $12,827 $10,931
4/30/2001 $12,065 $13,824 $10,974
5/31/2001 $12,492 $13,917 $11,024
6/30/2001 $12,523 $13,578 $11,042
7/31/2001 $12,783 $13,444 $11,011
8/31/2001 $12,707 $12,603 $11,011
9/30/2001 $11,599 $11,585 $11,061
10/31/2001 $11,778 $11,806 $11,024
11/30/2001 $12,595 $12,712 $11,005
12/31/2001 $13,077 $12,823 $10,962
1/31/2002 $13,378 $12,636 $10,986
2/28/2002 $13,716 $12,392 $11,030
3/31/2002 $14,404 $12,858 $11,092
4/30/2002 $14,583 $12,079 $11,154
5/31/2002 $14,494 $11,990 $11,154
6/30/2002 $13,978 $11,136 $11,160
7/31/2002 $13,086 $10,268 $11,172
8/31/2002 $13,276 $10,335 $11,210
9/30/2002 $12,094 $ 9,212 $11,228
10/31/2002 $12,671 $10,023 $11,247
11/30/2002 $13,078 $10,612 $11,247
12/31/2002 $12,846 $ 9,989 $11,222
1/31/2003 $12,351 $ 9,727 $11,272
2/28/2003 $12,117 $ 9,581 $11,359
3/31/2003 $12,112 $ 9,674 $11,427
4/30/2003 $13,128 $10,471 $11,402
5/31/2003 $13,751 $11,023 $11,383
6/30/2003 $13,778 $11,164 $11,396
7/31/2003 $14,283 $11,360 $11,408
8/31/2003 $14,469 $11,582 $11,452
9/30/2003 $14,389 $11,459 $11,489
10/31/2003 $15,390 $12,107 $11,476
11/30/2003 $15,464 $12,214 $11,445
12/31/2003 $15,891 $12,854 $11,433
1/31/2004 $16,074 $13,090 $11,489
2/29/2004 $16,358 $13,272 $11,551
3/31/2004 $16,224 $13,072 $11,625
4/30/2004 $15,934 $12,867 $11,663
5/31/2004 $16,202 $13,043 $11,731
6/30/2004 $16,561 $13,297 $11,768
7/31/2004 $16,165 $12,857 $11,749
8/31/2004 $16,379 $12,909 $11,756
9/30/2004 $16,384 $13,049 $11,780
10/31/2004 $16,299 $13,248 $11,842
11/30/2004 $16,995 $13,784 $11,849
12/31/2004 $17,525 $14,253 $11,805
1/31/2005 $17,127 $13,906 $11,830
2/28/2005 $17,383 $14,198 $11,898
3/31/2005 $17,083 $13,947 $11,991
4/30/2005 $16,773 $13,682 $12,072
5/31/2005 $17,143 $14,118 $12,060
6/30/2005 $17,029 $14,138 $12,066
7/31/2005 $17,563 $14,664 $12,122
8/31/2005 $17,040 $14,530 $12,184
9/30/2005 $16,974 $14,647 $12,333
10/31/2005 $17,051 $14,403 $12,357
11/30/2005 $17,721 $14,948 $12,258
12/31/2005 $17,938 $14,953 $12,208
1/31/2006 $18,510 $15,349 $12,301
2/28/2006 $18,926 $15,391 $12,326
3/31/2006 $19,265 $15,582 $12,395
4/30/2006 $19,448 $15,792 $12,500
5/31/2006 $18,954 $15,337 $12,562
6/30/2006 $18,871 $15,358 $12,587
7/31/2006 $18,910 $15,453 $12,624
8/31/2006 $19,648 $15,820 $12,649
9/30/2006 $20,120 $16,228 $12,587
10/31/2006 $20,581 $16,757 $12,519
11/30/2006 $20,958 $17,075 $12,500
12/31/2006 $21,104 $17,315 $12,519
1/31/2007 $21,476 $17,577 $12,557
2/28/2007 $21,057 $17,233 $12,624
3/31/2007 $20,981 $17,426 $12,739
4/30/2007 $21,541 $18,198 $12,822
5/31/2007 $22,384 $18,833 $12,900
6/30/2007 $22,071 $18,520 $12,925
7/31/2007 $21,269 $17,946 $12,922
8/31/2007 $21,629 $18,215 $12,898
9/30/2007 $22,095 $18,896 $12,934
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
ADVISOR CLASS 5 9/30/07
- --------------------------------------
1-Year +9.82%
- --------------------------------------
5-Year +12.81%
- --------------------------------------
10-Year +8.25%
- --------------------------------------
ENDNOTES
THE FUND MAY INVEST IN STOCKS OF SMALLER-CAPITALIZATION COMPANIES, WHICH CARRY
SPECIAL RISKS SUCH AS GREATER PRICE VOLATILITY THAN LARGER-COMPANY STOCKS,
PARTICULARLY OVER THE SHORT TERM. TO THE EXTENT THE FUND HAS SIGNIFICANT
INVESTMENTS IN PARTICULAR SECTORS, IT IS SUBJECT TO MORE RISK THAN A BROADLY
DIVERSIFIED FUND. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
CLASS A: Prior to 8/3/98, these shares were offered at a lower initial
sales charge; thus actual total returns may differ.
CLASS B: These shares have higher annual fees and expenses than Class
A shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial
sales charge; thus actual total returns would have differed.
These shares have higher annual fees and expenses than Class
A shares.
CLASS R: Shares are available to certain eligible investors as
described in the prospectus. These shares have higher annual
fees and expenses than Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as
described in the prospectus.
1. Cumulative total return represents the change in value of an investment over
the periods indicated.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
4. Figures are as stated in the Fund's prospectus current as of the date of this
report.
5. Effective 10/3/05, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 10/3/05,
a restated figure is used based upon the Fund's Class A performance, excluding
the effect of Class A's maximum initial sales charge, but reflecting the effect
of the Class A Rule 12b-1 fees; and (b) for periods after 10/2/05, actual
Advisor Class performance is used reflecting all charges and fees applicable to
that class. Since 10/3/05 (commencement of sales), the cumulative and average
annual total returns of Advisor Class shares were +30.25% and +14.19%.
6. Source: Standard & Poor's Micropal. The S&P 500 consists of 500 stocks chosen
for market size, liquidity and industry group representation. Each stock's
weight in the index is proportionate to its market value. The S&P 500 is one of
the most widely used benchmarks of U.S. equity performance. The Consumer Price
Index (CPI), calculated by the U.S. Bureau of Labor Statistics, is a commonly
used measure of the inflation rate.
Annual Report | 11
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.
ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
12 | Annual Report
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.
- ---------------------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 4/1/07 VALUE 9/30/07 PERIOD* 4/1/07-9/30/07
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,051.60 $5.04
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.16 $4.96
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,047.90 $8.88
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.39 $8.74
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,047.70 $8.88
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.39 $8.74
- ---------------------------------------------------------------------------------------------------------------------------
CLASS R
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,050.40 $6.32
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.90 $6.23
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,053.10 $3.70
- ---------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.41 $3.70
- ---------------------------------------------------------------------------------------------------------------------------
*Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 0.98%; B: 1.73%; C: 1.73%; R: 1.23%; and Advisor;
0.73%), multiplied by the average account value over the period, multiplied by
183/365 to reflect the one-half year period.
Annual Report | 13
Franklin Managed Trust
FINANCIAL HIGHLIGHTS
FRANKLIN RISING DIVIDENDS FUND
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
CLASS A 2007 2006 2005 2004 2003
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 36.25 $ 31.14 $ 30.58 $ 27.03 $ 22.87
----------------------------------------------------------------------
Income from investment operations a:
Net investment income b ...................... 0.89 d 0.44 0.29 0.35 0.16
Net realized and unrealized gains (losses) ... 2.43 5.20 0.81 3.40 4.16
----------------------------------------------------------------------
Total from investment operations ................ 3.32 5.64 1.10 3.75 4.32
----------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.91) (0.35) (0.30) (0.16) (0.07)
Net realized gains ........................... (1.19) (0.18) (0.24) (0.04) (0.09)
----------------------------------------------------------------------
Total distributions ............................. (2.10) (0.53) (0.54) (0.20) (0.16)
----------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e --
----------------------------------------------------------------------
Net asset value, end of year .................... $ 37.47 $ 36.25 $ 31.14 $ 30.58 $ 27.03
======================================================================
Total return c .................................. 9.53% 18.26% 3.60% 13.86% 18.98%
RATIOS TO AVERAGE NET ASSETS
Expenses ........................................ 1.00% f 1.00% f 1.09% f 1.25% f 1.37%
Net investment income ........................... 2.42% d 1.32% 0.92% 1.17% 0.62%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $2,061,210 $1,741,181 $1,480,742 $1,285,585 $ 832,195
Portfolio turnover rate ......................... 6.02% 7.58% 3.58% 3.42% 4.23%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable.
d Net investment income per share includes approximately $0.48 per share
received in the form of a special dividend paid in connection with a corporate
spin-off. Excluding this non-recurring amount, the ratio of net investment
income to average net assets would have been 1.23%.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
14 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Franklin Managed Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND (CONTINUED)
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
CLASS B 2007 2006 2005 2004 2003
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 35.79 $ 30.74 $ 30.25 $ 26.81 $ 22.75
----------------------------------------------------------------------
Income from investment operations a:
Net investment income b ...................... 0.64 d 0.19 0.07 0.19 0.02
Net realized and unrealized gains (losses) ... 2.37 5.13 0.81 3.36 4.14
----------------------------------------------------------------------
Total from investment operations ................ 3.01 5.32 0.88 3.55 4.16
----------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.63) (0.09) (0.15) (0.07) (0.01)
Net realized gains ........................... (1.19) (0.18) (0.24) (0.04) (0.09)
----------------------------------------------------------------------
Total distributions ............................. (1.82) (0.27) (0.39) (0.11) (0.10)
----------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e --
----------------------------------------------------------------------
Net asset value, end of year .................... $ 36.98 $ 35.79 $ 30.74 $ 30.25 $ 26.81
======================================================================
Total return c .................................. 8.71% 17.42% 2.89% 13.26% 18.33%
RATIOS TO AVERAGE NET ASSETS
Expenses ........................................ 1.75% f 1.76% f 1.78% f 1.79% f 1.92%
Net investment income ........................... 1.67% d 0.56% 0.23% 0.63% 0.07%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $ 270,367 $ 289,640 $ 291,714 $ 292,322 $ 176,837
Portfolio turnover rate ......................... 6.02% 7.58% 3.58% 3.42% 4.23%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable.
d Net investment income per share includes approximately $0.48 per share
received in the form of a special dividend paid in connection with a corporate
spin-off. Excluding this non-recurring amount, the ratio of net investment
income to average net assets would have been 0.48%.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 15
Franklin Managed Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND (CONTINUED)
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
CLASS C 2007 2006 2005 2004 2003
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 35.73 $ 30.69 $ 30.21 $ 26.77 $ 22.72
----------------------------------------------------------------------
Income from investment operations a:
Net investment income b ...................... 0.61 d 0.19 0.07 0.19 0.02
Net realized and unrealized gains (losses) ... 2.40 5.13 0.80 3.36 4.13
----------------------------------------------------------------------
Total from investment operations ................ 3.01 5.32 0.87 3.55 4.15
----------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.66) (0.10) (0.15) (0.07) (0.01)
Net realized gains ........................... (1.19) (0.18) (0.24) (0.04) (0.09)
----------------------------------------------------------------------
Total distributions ............................. (1.85) (0.28) (0.39) (0.11) (0.10)
----------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e --
----------------------------------------------------------------------
Net asset value, end of year .................... $ 36.89 $ 35.73 $ 30.69 $ 30.21 $ 26.77
======================================================================
Total return c .................................. 8.69% 17.41% 2.89% 13.26% 18.30%
RATIOS TO AVERAGE NET ASSETS
Expenses ........................................ 1.75% f 1.74% f 1.77% f 1.79% f 1.93%
Net investment income ........................... 1.67% d 0.58% 0.24% 0.63% 0.06%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $ 622,647 $ 566,357 $ 523,687 $ 475,176 $ 289,700
Portfolio turnover rate ......................... 6.02% 7.58% 3.58% 3.42% 4.23%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable.
d Net investment income per share includes approximately $0.48 per share
received in the form of a special dividend paid in connection with a corporate
spin-off. Excluding this non-recurring amount, the ratio of net investment
income to average net assets would have been 0.48%.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
16 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Franklin Managed Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND (CONTINUED)
----------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
CLASS R 2007 2006 2005 2004 2003
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 36.11 $ 31.02 $ 30.51 $ 26.97 $ 22.84
----------------------------------------------------------------------
Income from investment operations a:
Net investment income b ...................... 0.80 d 0.35 0.23 0.35 0.14
Net realized and unrealized gains (losses) ... 2.42 5.19 0.81 3.39 4.15
----------------------------------------------------------------------
Total from investment operations ................ 3.22 5.54 1.04 3.74 4.29
----------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.83) (0.27) (0.29) (0.16) (0.07)
Net realized gains ........................... (1.19) (0.18) (0.24) (0.04) (0.09)
----------------------------------------------------------------------
Total distributions ............................. (2.02) (0.45) (0.53) (0.20) (0.16)
----------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e --
----------------------------------------------------------------------
Net asset value, end of year .................... $ 37.31 $ 36.11 $ 31.02 $ 30.51 $ 26.97
======================================================================
Total return c .................................. 9.22% 17.99% 3.45% 13.82% 18.91%
RATIOS TO AVERAGE NET ASSETS
Expenses ........................................ 1.25% f 1.26% f 1.28% f 1.29% f 1.43%
Net investment income ........................... 2.17% d 1.06% 0.73% 1.13% 0.56%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $ 55,458 $ 46,414 $ 44,448 $ 36,510 $ 19,464
Portfolio turnover rate ......................... 6.02% 7.58% 3.58% 3.42% 4.23%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable.
d Net investment income per share includes approximately $0.48 per share
received in the form of a special dividend paid in connection with a corporate
spin-off. Excluding this non-recurring amount, the ratio of net investment
income to average net assets would have been 0.98%.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 17
Franklin Managed Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND (CONTINUED)
-------------------------------
YEAR ENDED SEPTEMBER 30,
ADVISOR CLASS 2007 2006 g
-------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............................. $ 36.24 $ 31.13
-------------------------------
Income from investment operations a:
Net investment income b ..................................... 0.88 e 0.58
Net realized and unrealized gains (losses) .................. 2.54 5.14
-------------------------------
Total from investment operations ............................... 3.42 5.72
-------------------------------
Less distributions from:
Net investment income ....................................... (1.00) (0.43)
Net realized gains .......................................... (1.19) (0.18)
-------------------------------
Total distributions ............................................ (2.19) (0.61)
-------------------------------
Redemption fees ................................................ -- f -- f
-------------------------------
Net asset value, end of year ................................... $ 37.47 $ 36.24
===============================
Total return c ................................................. 9.82% 18.53%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................................................... 0.75% g 0.76% g
Net investment income .......................................... 2.67% e 1.56%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................ $ 51,544 $ 29,949
Portfolio turnover rate ........................................ 6.02% 7.58%
a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.
b Based on average daily shares outstanding.
c Total return is not annualized for periods less than one year.
d Ratios are annualized for periods less than one year.
e Net investment income per share includes approximately $0.48 per share
received in the form of a special dividend paid in connection with a corporate
spin-off. Excluding this non-recurring amount, the ratio of net investment
income to average net assets would have been 1.48%.
f Amount rounds to less than $0.01 per share.
g Benefit of expense reduction rounds to less than 0.01%.
h For the period October 3, 2005 (effective date) to September 30, 2006.
18 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Franklin Managed Trust
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2007
- -----------------------------------------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS FUND SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCKS 98.2%
BANKS 11.6%
Fannie Mae .............................................................. 611,500 $ 37,185,315
Freddie Mac ............................................................. 1,762,900 104,028,729
Peoples Bancorp Inc. .................................................... 262,768 6,879,266
PNC Financial Services Group Inc. ....................................... 264,815 18,033,902
SunTrust Banks Inc. ..................................................... 672,005 50,850,618
a TrustCo Bank Corp. NY ................................................... 678,121 7,411,863
U.S. Bancorp ............................................................ 2,529,303 82,278,227
Washington Mutual Inc. .................................................. 1,399,550 49,418,110
----------------
356,086,030
----------------
CAPITAL GOODS 30.3%
Brady Corp., A .......................................................... 2,952,155 105,923,321
Carlisle Cos. Inc. ...................................................... 3,005,000 146,043,000
Donaldson Co. Inc. ...................................................... 421,100 17,585,136
Dover Corp. ............................................................. 2,532,300 129,020,685
General Electric Co. .................................................... 3,522,900 145,848,060
Graco Inc. .............................................................. 700,171 27,383,688
Nordson Corp. ........................................................... 345,449 17,344,994
Roper Industries Inc. ................................................... 2,341,700 153,381,350
Teleflex Inc. ........................................................... 445,141 34,685,387
United Technologies Corp. ............................................... 1,884,500 151,664,560
----------------
928,880,181
----------------
COMMERCIAL SERVICES & SUPPLIES 2.1%
ABM Industries Inc. ..................................................... 818,050 16,344,639
Cintas Corp. ............................................................ 1,233,200 45,751,720
Superior Uniform Group Inc. ............................................. 224,200 2,746,450
----------------
64,842,809
----------------
CONSUMER DURABLES & APPAREL 1.7%
Leggett & Platt Inc. .................................................... 2,192,000 41,998,720
b Russ Berrie and Co. Inc. ................................................ 684,019 11,491,519
----------------
53,490,239
----------------
DIVERSIFIED FINANCIALS 3.4%
State Street Corp. ...................................................... 1,508,200 102,798,912
----------------
FOOD & STAPLES RETAILING 3.7%
Wal-Mart Stores Inc. .................................................... 2,567,500 112,071,375
----------------
FOOD, BEVERAGE & TOBACCO 0.9%
McCormick & Co. Inc. .................................................... 749,900 26,973,903
----------------
HEALTH CARE EQUIPMENT & SERVICES 7.3%
Becton Dickinson and Co. ................................................ 754,800 61,931,340
Hillenbrand Industries Inc. ............................................. 1,613,500 88,774,770
c West Pharmaceutical Services Inc. ....................................... 1,775,200 73,954,832
----------------
224,660,942
----------------
Annual Report | 19
Franklin Managed Trust
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2007 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS FUND SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
HOUSEHOLD & PERSONAL PRODUCTS 5.7%
Alberto-Culver Co. ...................................................... 1,424,050 $ 35,302,199
The Procter & Gamble Co. ................................................ 1,981,200 139,357,608
----------------
174,659,807
----------------
INSURANCE 15.6%
AFLAC Inc. .............................................................. 1,689,000 96,340,560
American International Group Inc. ....................................... 1,847,277 124,968,289
Arthur J. Gallagher & Co. ............................................... 902,000 26,130,940
Erie Indemnity Co., A ................................................... 1,652,782 101,034,563
Mercury General Corp. ................................................... 350,619 18,908,883
Old Republic International Corp. ........................................ 4,453,250 83,453,905
RLI Corp. ............................................................... 466,283 26,447,572
----------------
477,284,712
----------------
MATERIALS 9.3%
Bemis Co. Inc. .......................................................... 1,491,989 43,431,800
Nucor Corp. ............................................................. 1,385,300 82,383,791
Praxair Inc. ............................................................ 1,888,100 158,147,256
----------------
283,962,847
----------------
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES 2.8%
Pfizer Inc. ............................................................. 3,462,600 84,591,318
----------------
RETAILING 3.7%
Family Dollar Stores Inc. ............................................... 3,956,000 105,071,360
Sally Beauty Holdings Inc. .............................................. 929,050 7,850,473
----------------
112,921,833
----------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.1%
Cohu Inc. ............................................................... 94,200 1,766,250
----------------
TOTAL COMMON STOCKS (COST $2,179,071,981) ............................... $ 3,004,991,158
----------------
20 | Annual Report
Franklin Managed Trust
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2007 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
FRANKLIN RISING DIVIDENDS FUND SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS 2.0%
MONEY MARKET FUND (COST $58,441,904) 1.9%
d Franklin Institutional Fiduciary Trust Money Market Portfolio, 5.08% .... 58,441,904 $ 58,441,904
----------------
INVESTMENTS FROM CASH COLLATERAL RECEIVED FOR LOANED SECURITIES 0.1%
MONEY MARKET FUND (COST $4,150,625) 0.1%
e Bank of New York Institutional Cash Reserve Fund, 5.48% ................. 4,150,625 4,150,625
----------------
TOTAL SHORT TERM INVESTMENTS (COST $62,592,529) ......................... 62,592,529
----------------
TOTAL INVESTMENTS (COST $2,241,664,510) 100.2% .......................... 3,067,583,687
OTHER ASSETS, LESS LIABILITIES (0.2)% ................................... (6,357,862)
----------------
NET ASSETS 100.0% ....................................................... $ 3,061,225,825
================
a A portion or all of the security is on loan as of September 30, 2007. See Note
1(b).
b Non-income producing for the twelve months ended September 30, 2007.
c See Note 8 regarding holdings of 5% voting securities.
d See Note 7 regarding investments in the Franklin Institutional Fiduciary Trust
Money Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
e The rate shown is the annualized seven-day yield at period end.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 21
Franklin Managed Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2007
----------------
FRANKLIN RISING
DIVIDENDS FUND
----------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers ................................................................ $ 2,154,887,721
Cost - Non-controlled affiliated issuers (Note 8) .......................................... 24,184,260
Cost - Sweep Money Fund (Note 7) ........................................................... 58,441,904
Cost - Money Market Fund ................................................................... 4,150,625
----------------
Total cost of investments .................................................................. $ 2,241,664,510
================
Value - Unaffiliated issuers (includes securities loaned in the amount of $4,051,751) ...... $ 2,931,036,326
Value - Non-controlled affiliated issuers (Note 8) ......................................... 73,954,832
Value - Sweep Money Fund (Note 7) .......................................................... 58,441,904
Value - Money Market Fund .................................................................. 4,150,625
----------------
Total value of investments a ............................................................... 3,067,583,687
Receivables:
Investment securities sold ................................................................. 1,960,743
Capital shares sold ........................................................................ 4,994,852
Dividends .................................................................................. 4,578,633
Other receivables .......................................................................... 25,000
----------------
Total assets ............................................................................. 3,079,142,915
----------------
Liabilities:
Payables:
Capital shares redeemed .................................................................... 8,586,075
Affiliates ................................................................................. 4,947,224
Payable upon return of securities loaned ................................................... 4,150,625
Accrued expenses and other liabilities ....................................................... 233,166
----------------
Total liabilities ........................................................................ 17,917,090
----------------
Net assets, at value ................................................................... $ 3,061,225,825
================
Net assets consist of:
Paid-in capital .............................................................................. $ 2,176,737,693
Undistributed net investment income .......................................................... 21,003,866
Net unrealized appreciation (depreciation) ................................................... 825,919,177
Accumulated net realized gain (loss) ......................................................... 37,565,089
----------------
Net assets, at value ................................................................... $ 3,061,225,825
================
22 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Franklin Managed Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
September 30, 2007
----------------
FRANKLIN RISING
DIVIDENDS FUND
----------------
CLASS A:
Net assets, at value ......................................................................... $ 2,061,210,415
================
Shares outstanding ........................................................................... 55,003,694
================
Net asset value per share a .................................................................. $ 37.47
================
Maximum offering price per share (net asset value per share / 94.25%) ........................ $ 39.76
================
CLASS B:
Net assets, at value ......................................................................... $ 270,366,633
================
Shares outstanding ........................................................................... 7,310,760
================
Net asset value and maximum offering price per share a ....................................... $ 36.98
================
CLASS C:
Net assets, at value ......................................................................... $ 622,647,094
================
Shares outstanding ........................................................................... 16,879,118
================
Net asset value and maximum offering price per share a ....................................... $ 36.89
================
CLASS R:
Net assets, at value ......................................................................... $ 55,458,093
================
Shares outstanding ........................................................................... 1,486,398
================
Net asset value and maximum offering price per share a ....................................... $ 37.31
================
ADVISOR CLASS:
Net assets, at value ......................................................................... $ 51,543,590
================
Shares outstanding ........................................................................... 1,375,458
================
Net asset value and maximum offering price per share a ....................................... $ 37.47
================
a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 23
Franklin Managed Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended September 30, 2007
----------------
FRANKLIN RISING
DIVIDENDS FUND
----------------
Investment income:
Dividends:
Unaffiliated issuers ....................................................................... $ 97,338,932
Non-controlled affiliated issuers (Note 8) ................................................. 923,104
Sweep Money Fund (Note 7) .................................................................. 3,922,109
Income from securities loaned - net .......................................................... 126,484
----------------
Total investment income .................................................................. 102,310,629
----------------
Expenses:
Management fees (Note 3a) .................................................................... 16,527,576
Administrative fees (Note 3b) ................................................................ 40,000
Distribution fees (Note 3c)
Class A .................................................................................... 4,956,545
Class B .................................................................................... 2,872,959
Class C .................................................................................... 6,167,669
Class R .................................................................................... 266,729
Transfer agent fees (Note 3e) ................................................................ 5,048,237
Custodian fees (Note 4) ...................................................................... 49,517
Reports to shareholders ...................................................................... 369,299
Registration and filing fees ................................................................. 193,340
Professional fees ............................................................................ 72,114
Trustees' fees and expenses .................................................................. 90,318
Other ........................................................................................ 71,770
----------------
Total expenses ........................................................................... 36,726,073
Expense reductions (Note 4) .............................................................. (10,657)
----------------
Net expenses ........................................................................... 36,715,416
----------------
Net investment income ................................................................ 65,595,213
----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments .................................................... 68,073,503
Net change in unrealized appreciation (depreciation) on investments .......................... 121,770,366
----------------
Net realized and unrealized gain (loss) ......................................................... 189,843,869
----------------
Net increase (decrease) in net assets resulting from operations ................................. $ 255,439,082
================
24 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Franklin Managed Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------
FRANKLIN RISING DIVIDENDS FUND
------------------------------------
YEAR ENDED SEPTEMBER 30,
2007 2006
------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ............................................................. $ 65,595,213 $ 26,243,693
Net realized gain (loss) from investments ......................................... 68,073,503 62,108,716
Net change in unrealized appreciation (depreciation) on investments ............... 121,770,366 317,933,383
------------------------------------
Net increase (decrease) in net assets resulting from operations ............... 255,439,082 406,285,792
------------------------------------
Distributions to shareholders from:
Net investment income:
Class A ......................................................................... (45,722,328) (15,942,155)
Class B ......................................................................... (5,040,797) (863,469)
Class C ......................................................................... (10,660,172) (1,718,117)
Class R ......................................................................... (1,129,835) (371,174)
Advisor Class ................................................................... (843,203) (304,302)
Net realized gains:
Class A ......................................................................... (59,639,692) (8,228,244)
Class B ......................................................................... (9,499,285) (1,644,290)
Class C ......................................................................... (19,228,084) (2,949,410)
Class R ......................................................................... (1,629,187) (247,042)
Advisor Class ................................................................... (1,009,669) (125,622)
------------------------------------
Total distributions to shareholders ................................................. (154,402,252) (32,393,825)
------------------------------------
Capital share transactions: (Note 2)
Class A ......................................................................... 252,286,774 21,505,352
Class B ......................................................................... (28,992,188) (46,122,272)
Class C ......................................................................... 36,333,572 (38,310,186)
Class R ......................................................................... 7,236,288 (4,851,957)
Advisor Class ................................................................... 19,773,758 26,827,149
------------------------------------
Total capital share transactions .................................................... 286,638,204 (40,951,914)
------------------------------------
Redemption fees ........................................................................ 10,388 9,253
------------------------------------
Net increase (decrease) in net assets ......................................... 387,685,422 332,949,306
Net assets:
Beginning of year ................................................................... 2,673,540,403 2,340,591,097
------------------------------------
End of year ......................................................................... $ 3,061,225,825 $ 2,673,540,403
====================================
Undistributed net investment income included in net assets:
End of year ......................................................................... $ 21,003,866 $ 18,790,223
====================================
Annual Report |
The accompanying notes are an integral part of these financial statements. | 25
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS
FRANKLIN RISING DIVIDENDS FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Managed Trust (the Trust) is registered under the Investment Company
Act of 1940, as amended, (the 1940 Act) as a diversified, open-end investment
company, consisting of one fund, the Franklin Rising Dividends Fund (the Fund).
The Fund offers five classes of shares: Class A, Class B, Class C, Class R, and
Advisor Class. Each class of shares differs by its initial sales load,
contingent deferred sales charges, distribution fees, voting rights on matters
affecting a single class and its exchange privilege.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. If such an event occurs, the securities may be valued
using fair value procedures, which may include the use of independent pricing
services. All security valuation procedures are approved by the Trust's Board of
Trustees.
B. SECURITIES LENDING
The Fund participates in a principal based security lending program and receives
a minimum guaranteed payment for their participation, and may receive additional
payment based on actual securities loaned. The fund receives cash collateral
against the loaned securities in an amount equal to at least 102% of the market
value of the loaned securities. Collateral is maintained over the life of the
loan in an amount not less than 100% of the market value of loaned securities,
as determined at the close of fund business each day; any additional collateral
required due to changes in security values is delivered to the fund on the next
business day. The collateral is held in a segregated account with the fund's
custodian on the fund's behalf. The fund bears the risk of loss with respect to
the securities loaned and of default of any securities borrower.
26 | Annual Report
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. INCOME TAXES
No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.
D. 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. Dividend income is
recorded on the ex-dividend date. Distributions to shareholders are recorded on
the ex-dividend date and are determined according to income tax regulations (tax
basis). Distributable earnings determined on a tax basis may differ from
earnings recorded in accordance with accounting principles generally accepted in
the United States of America. These differences may be permanent or temporary.
Permanent differences are reclassified among capital accounts to reflect their
tax character. These reclassifications have no impact on net assets or the
results of operations. Temporary differences are not reclassified, as they may
reverse in subsequent periods.
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. Differences in per share
distributions, by class, are generally due to differences in class specific
expenses.
E. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
F. REDEMPTION FEES
A short term trading redemption fee will be imposed, with some exceptions, on
any fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. The redemption fee is 2% of the amount redeemed.
Such fees are retained by the funds and accounted for as an addition to paid-in
capital.
Annual Report | 27
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust enters into contracts with service providers that contain
general indemnification clauses. The Trust's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Trust that have not yet occurred. Currently, the Trust expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At September 30, 2007, there were an unlimited number of shares authorized
($0.01 par value). Transactions in the Fund's shares were as follows:
----------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2007 2006
----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------
CLASS A SHARES:
Shares sold ...................... 16,559,854 $ 607,965,181 12,072,890 $ 408,280,950
Shares issued in reinvestment of
distributions .................. 2,628,734 93,241,222 661,007 21,455,701
Shares redeemed .................. (12,211,137) (448,919,629) (12,258,151) (408,231,299)
----------------------------------------------------------
Net increase (decrease) .......... 6,977,451 $ 252,286,774 475,746 $ 21,505,352
==========================================================
CLASS B SHARES:
Shares sold ...................... 155,100 $ 5,593,986 138,828 $ 4,649,866
Shares issued in reinvestment of
distributions .................. 348,611 12,278,106 67,217 2,168,018
Shares redeemed .................. (1,285,943) (46,864,280) (1,603,388) (52,940,156)
----------------------------------------------------------
Net increase (decrease) .......... (782,232) $ (28,992,188) (1,397,343) $ (46,122,272)
==========================================================
CLASS C SHARES:
Shares sold ...................... 3,028,619 $ 109,650,184 2,455,404 $ 82,023,933
Shares issued in reinvestment of
distributions .................. 733,057 25,752,297 124,527 4,009,065
Shares redeemed .................. (2,732,760) (99,068,909) (3,791,038) (124,343,184)
----------------------------------------------------------
Net increase (decrease) .......... 1,028,916 $ 36,333,572 (1,211,107) $ (38,310,186)
==========================================================
CLASS R SHARES:
Shares sold ...................... 589,116 $ 21,490,926 403,880 $ 13,546,401
Shares issued in reinvestment of
distributions .................. 75,782 2,681,923 18,499 599,392
Shares redeemed .................. (464,026) (16,936,561) (569,737) (18,997,750)
----------------------------------------------------------
Net increase (decrease) .......... 200,872 $ 7,236,288 (147,358) $ (4,851,957)
==========================================================
28 | Annual Report
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
----------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2007 2006 a
----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------
ADVISOR CLASS:
Shares sold ...................... 613,215 $ 22,187,072 936,777 $ 30,533,051
Shares issued in reinvestment of
distributions .................. 52,298 1,850,833 13,268 429,728
Shares redeemed .................. (116,408) (4,264,147) (123,692) (4,135,630)
----------------------------------------------------------
Net increase (decrease) .......... 549,105 $ 19,773,758 826,353 $ 26,827,149
==========================================================
a For the period October 3, 2005 (effective date) to September 30, 2006.
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Trust are also officers and/or directors of the following
subsidiaries:
- --------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- --------------------------------------------------------------------------------
Franklin Advisory Services, LLC (Advisory Services) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Transfer agent
Services)
A. MANAGEMENT FEES
The Fund pays an investment management fee to Advisory Services based on the
average daily net assets of the Fund as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.750% Up to and including $500 million
0.625% Over $500 million, up to and including $1 billion
0.500% In excess of $1 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to Advisory Services as noted in the
Statement of Operations.
Under an agreement with Advisory Services, FT Services provides administrative
services to the Fund. The fee is paid by Advisory Services based on average
daily net assets, and is not an additional expense of the Fund.
Annual Report | 29
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES
The Funds' Board of Trustees has adopted distribution plans for each share
class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate.
Under the Class A reimbursement distribution plan, costs exceeding the maximum
for the current plan year cannot be reimbursed in subsequent periods.
In addition, under the Fund's Class B, C, and R compensation distribution plans,
the Fund pays Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate
for each class.
The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:
Class A ....................................................... 0.25%
Class B ....................................................... 1.00%
Class C ....................................................... 1.00%
Class R ....................................................... 0.50%
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the year:
Sales charges retained net of commissions paid to
unaffiliated broker/dealers ................................. $ 1,673,500
Contingent deferred sales charges retained .................... $ 459,903
E. TRANSFER AGENT FEES
For the year ended September 30, 2007, the Fund paid transfer agent fees of
$5,048,237, of which $2,617,811 was retained by Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended September 30, 2007,
custodian fees were reduced as noted in the Statements of Operations.
30 | Annual Report
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
5. INCOME TAXES
The tax character of distributions paid during the years ended September 30,
2007 and 2006, was as follows:
------------------------------
2007 2006
------------------------------
Distributions paid from:
Ordinary income .......................... $ 65,861,682 $ 22,027,682
Long term capital gain ................... 88,540,570 10,366,143
------------------------------
$ 154,402,252 $ 32,393,825
==============================
At September 30, 2007, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long term
capital gains for income tax purposes were as follows:
Cost of investments ........................................ $ 2,242,369,927
================
Unrealized appreciation .................................... $ 883,728,789
Unrealized depreciation .................................... (58,515,029)
----------------
Net unrealized appreciation (depreciation) ................. $ 825,213,760
================
Undistributed ordinary income .............................. $ 21,003,866
Undistributed long term capital gains ...................... 38,270,506
----------------
Distributable earnings ..................................... $ 59,274,372
================
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended September 30, 2007, aggregated $373,535,911 and $173,628,938,
respectively.
7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund), an open-end investment company managed by
Franklin Advisers, Inc. (an affiliate of the investment manager). Management
fees paid by the Funds are reduced on assets invested in the Sweep Money Fund,
in an amount not to exceed the management and administrative fees paid by the
Sweep Money Fund.
Annual Report | 31
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The 1940 Act defines "affiliated companies" to include investments in portfolio
companies in which a fund owns 5% or more of the outstanding voting securities.
Investments in "affiliated companies" for the year ended September 30, 2007,
were as shown below.
- -------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARES HELD SHARES HELD VALUE REALIZED
AT BEGINNING GROSS GROSS AT END AT END INVESTMENT CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR OF YEAR INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------------------
NON-CONTROLLED AFFILIATES
West Pharmaceutical Services Inc. 1,775,200 -- -- 1,775,200 $ 73,954,832 $ 923,104 $ --
=====================================
TOTAL AFFILIATED SECURITIES (2.42% of Net Assets)
9. REGULATORY AND LITIGATION MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support payments to
securities dealers who sell fund shares ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.
On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, in accordance with the terms and conditions of the settlement and plan.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and employees, have been named in private lawsuits (styled as
shareholder class actions, or as derivative actions on behalf of either the
named funds or Franklin Resources, Inc.). The lawsuits relate to the industry
practices referenced above.
32 | Annual Report
Franklin Managed Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
9. REGULATORY AND LITIGATION MATTERS (CONTINUED)
The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.
10. NEW ACCOUNTING PRONOUNCEMENTS
The Fund adopted Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" (FIN 48), on September 28, 2007. FIN
48 clarifies the accounting for uncertainty in tax positions taken or expected
to be taken in a tax return. FIN 48 provides guidance on the measurement,
recognition, classification and disclosure of tax positions, along with
accounting for the related interest and penalties. The Fund has reviewed the tax
positions for open tax years March 31, 2005-2007 and has determined that the
implementation of FIN 48 did not have a material impact on the Fund's financial
statements.
In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement"
(SFAS 157), which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. SFAS 157 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The Fund believes the adoption of SFAS 157
will have no material impact on its financial statements.
Annual Report | 33
Franklin Managed Trust
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FRANKLIN RISING DIVIDENDS FUND
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF FRANKLIN MANAGED TRUST SAN MATEO,
CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Franklin Rising Dividends Fund, a series of shares of Franklin Managed Trust,
including the statement of investments, as of September 30, 2007, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated thereon. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. 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, 2007, by correspondence with the custodian. 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
Franklin Rising Dividends Fund at September 30, 2007, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America.
Tait, Weller & Baker LLP
Philadelphia, Pennsylvania
November 9, 2007
34 | Annual Report
Franklin Managed Trust
TAX DESIGNATION (UNAUDITED)
FRANKLIN RISING DIVIDENDS FUND
Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $68,216,687 as a long
term capital gain dividend for the fiscal year ended September 30, 2007.
Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $98,229,290 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
September 30, 2007. In January 2008, shareholders will receive Form 1099-DIV
which will include their share of qualified dividends distributed during the
calendar year 2007. Shareholders are advised to check with their tax advisors
for information on the treatment of these amounts on their individual income tax
returns.
Under Section 871(k)(1)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $2,514,612 as interest related dividends for purposes
of the tax imposed under Section 871(a)(1)(A) of the Code for the fiscal year
ended September 30, 2007.
Under Section 854(b)(2) of the Code, the Fund designates 100% of the ordinary
income dividends as income qualifying for the dividends received deduction for
the fiscal year ended September 30, 2007.
Annual Report | 35
Franklin Managed Trust
MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
FRANKLIN RISING DIVIDENDS FUND
A Special Meeting of Shareholders of Franklin Managed Trust (the "Trust"), and
its sole series, Franklin Rising Dividends Fund (the "Fund") was held at the
Trust's offices, One Franklin Parkway, San Mateo, California on March 21, 2007
and reconvened on April 11, 2007. The purpose of the meeting was to elect
Trustees of the Trust and to vote on the following Proposals and Sub-Proposals:
to approve an Amended and Restated Agreement and Declaration of Trust, to
approve amendments to certain of the Fund's fundamental investment restrictions
(including six (6) Sub-Proposals), and to approve the reclassification of
certain investment policies as non-fundamental. At the meeting, the following
persons were elected by the shareholders to serve as Independent Trustees of the
Fund: Frank T. Crohn, Burton J. Greenwald, Charles Rubens II and Robert E.
Wade.1 William J. Lippman was elected by the shareholders to serve as an
Interested Trustee. Shareholders also approved the Amended and Restated
Agreement and Declaration of Trust, amendments to certain of the Fund's
fundamental investment restrictions (including six (6) Sub-Proposals), and the
reclassification of certain investment policies as non-fundamental. No other
business for the Trust was transacted at the meeting.
The results of the voting at the meeting, with respect to the Trust are as
follows:
Proposal 1. The Election of Trustees:
- ---------------------------------------------------------------------------------------------------------
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING SHARES
NAME FOR SHARES PRESENT WITHHELD SHARES PRESENT
- ---------------------------------------------------------------------------------------------------------
Frank T. Crohn .......... 43,062,340.910 52.924% 97.997% 880,105.673 1.082% 2.003%
Burton J. Greenwald ..... 43,131,711.189 53.009% 98.155% 810,735.394 0.997% 1.845%
Charles Rubens II ....... 43,115,492.782 52.990% 98.118% 826,953.801 1.016% 1.882%
Robert E. Wade .......... 43,170,660.230 53.057% 98.244% 771,786.353 0.949% 1.756%
William J. Lippman ...... 43,042,807.940 52.900% 97.953% 899,638.643 1.106% 2.047%
Proposal 2. To approve an Amended and Restated Agreement and Declaration of
Trust:
- -------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- -------------------------------------------------------------------
For ..................... 30,933,116.502 38.017% 70.395%
Against ................. 599,206.027 0.737% 1.363%
Abstain ................. 1,241,275.054 1.525% 2.825%
Broker Non-Votes ........ 11,168,849.000 13.727% 25.417%
- -------------------------------------------------------------------
TOTAL ................... 43,942,446.583 54.006% 100.000%
- -------------------------------------------------------------------
1 Mr. Leonard Rubin had been nominated to stand for election as an Independent
Trustee of the Trust; however Mr. Rubin passed away prior to the Special Meeting
of Shareholders.
36 | Annual Report
Franklin Managed Trust
MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
Proposal 3. To approve amendments to certain of the Fund's fundamental
investment restrictions (includes six (6) sub-Proposals):
(a) To amend the Fund's fundamental investment restriction regarding borrowing:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,416,601.760 37.382% 69.219%
Against ................... 1,043,014.844 1.282% 2.374%
Abstain ................... 1,313,980.979 1.615% 2.990%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
(b) To amend the Fund's fundamental investment restriction regarding lending:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,425,391.577 37.393% 69.239%
Against ................... 1,029,791.877 1.266% 2.344%
Abstain ................... 1,318,414.129 1.620% 3.000%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
(c) To amend the Fund's fundamental investment restriction regarding investments
in real estate:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,598,025.644 37.605% 69.632%
Against ................... 883,216.024 1.086% 2.010%
Abstain ................... 1,292,355.915 1.588% 2.941%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
Annual Report | 37
Franklin Managed Trust
MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
(d) To amend the Fund's fundamental investment restriction regarding investments
in commodities:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,402,537.537 37.365% 69.187%
Against ................... 1,036,960.939 1.275% 2.360%
Abstain ................... 1,334,099.107 1.639% 3.036%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
(e) To amend the Fund's fundamental investment restriction regarding issuing
senior securities:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,464,047.427 37.441% 69.327%
Against ................... 957,279.397 1.176% 2.179%
Abstain ................... 1,352,270.759 1.662% 3.077%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
(f) To amend the Fund's fundamental investment restriction regarding
diversification of investments:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENT
- ----------------------------------------------------------------------
For ....................... 30,755,527.643 37.799% 69.990%
Against ................... 718,481.499 0.883% 1.636%
Abstain ................... 1,299,588.441 1.597% 2.957%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
38 | Annual Report
Franklin Managed Trust
MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)
FRANKLIN RISING DIVIDENDS FUND
Proposal 4. To approve the reclassificiation of certain investment policies as
non-fundamental:
- ----------------------------------------------------------------------
% OF % OF
OUTSTANDING SHARES
SHARES VOTED SHARES PRESENTS
- ----------------------------------------------------------------------
For ....................... 30,392,396.389 37.353% 69.164%
Against ................... 1,015,610.216 1.248% 2.311%
Abstain ................... 1,365,590.978 1.678% 3.108%
Broker Non-Votes .......... 11,168,849.000 13.727% 25.417%
- ----------------------------------------------------------------------
TOTAL ..................... 43,942,446.583 54.006% 100.000%
- ----------------------------------------------------------------------
Annual Report | 39
Franklin Managed Trust
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Generally, each board member
serves until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------
FRANK T. CROHN (1924) Trustee Since 1986 7 FORMERLY, Director, Unity Mutual
One Franklin Parkway Life Insurance Company (until May
San Mateo, CA 94403-1906 2006).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Eastport Lobster & Fish Company; and FORMERLY, Chief Executive Officer and Chairman, Financial Benefit Life
Insurance Company (insurance and annuities) (until 1996); Chief Executive Officer, National Benefit Life Insurance Co.
(insurance) (1963-1982); and Director, AmVestors Financial Corporation (until 1997).
- ------------------------------------------------------------------------------------------------------------------------
BURTON J. GREENWALD (1929) Trustee Since 2001 14 Franklin Templeton Emerging Markets
One Franklin Parkway Debt Opportunities Fund PLC and
San Mateo, CA 94403-1906 Fiduciary International Ireland
Limited.
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Managing Director, B.J. Greenwald Associates (management consultants to the financial services industry); and FORMERLY,
Chairman, Fiduciary Trust International Funds; Executive Vice President, L.F. Rothschild Fund Management, Inc.;
President and Director, Merit Mutual Funds; President, Underwriting Division and Director, National Securities &
Research Corporation; Governor, Investment Company Institute and Chairman, ICI Public Information Committee.
- ------------------------------------------------------------------------------------------------------------------------
CHARLES RUBENS II (1930) Trustee Since 1986 14 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor.
- ------------------------------------------------------------------------------------------------------------------------
ROBERT E. WADE (1946) Trustee Since 2004 33 El Oro and Exploration Co., p.l.c.
One Franklin Parkway (investments) and ARC Wireless
San Mateo, CA 94403-1906 Solutions, Inc. (wireless
components and network products).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Practicing attorney.
- ------------------------------------------------------------------------------------------------------------------------
40 | Annual Report
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------
**WILLIAM J. LIPPMAN (1925) Trustee, Trustee and 7 None
One Parker Plaza, 9th Floor President and President since
Fort Lee, NJ 07024 Chief Executive 1986 and Chief
Officer - Executive
Investment Officer -
Management Investment
Management
since 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Advisory Services, LLC; Director, Templeton Worldwide, Inc.; and officer and/or director or trustee,
as the case may be, of four of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since
San Mateo, CA 94403-1906 Officer and 2004 and Vice
Vice President President - AML
- AML Compliance since
Compliance 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources,
Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance,
Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief Executive
Fort Lauderdale, FL 33394-3091 Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of some of
the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the subsidiaries of
Franklin Resources, Inc.; and officer of 46 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------
Annual Report | 41
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------
STEVEN J. GRAY (1955) Secretary Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Secretary, Franklin Advisory Services, LLC, Franklin
Mutual Advisers, LLC and Franklin Templeton Distributors, Inc.; and officer of 41 of the investment companies in
Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (1940) Vice President Since 1991 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.
and Templeton Worldwide, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment
companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------
GREGORY R. SEWARD (1956) Treasurer Since October Not Applicable Not Applicable
500 East Broward Blvd. 2007
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 18 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------------------
KAREN L. SKIDMORE (1952) Vice President Since 2006 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 30 of the investment companies in
Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------
CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Partner,
Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company Institute (ICI) (1997-2004).
- ------------------------------------------------------------------------------------------------------------------------
42 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (1951) Chief Financial Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Officer and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Managing
Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and 1991-2004).
- ------------------------------------------------------------------------------------------------------------------------
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments fund
complex. These portfolios have a common investment manager or affiliated
investment managers.
** William J. Lippman is considered to be an interested person of the Fund under
the federal securities laws due to his position as an officer of some of the
subsidiaries of Franklin Resources, Inc., which is the parent company of the
Fund's investment manager and distributor.
Note 1: Officer information is current as of October 17, 2007. It is possible
that information about officers may change.
Note 2: Prior to September 30, 2007, Leonard Rubin, ceased to be a trustee of
the Fund.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES HAVE DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK T. CROHN AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. CROHN, WHO CURRENTLY IS A DIRECTOR OF VARIOUS COMPANIES AND
CHAIRS THE FUND'S AUDIT COMMITTEE, QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS
BUSINESS BACKGROUND AND EXPERIENCE, WHICH INCLUDES SERVICE AS CHIEF EXECUTIVE
OFFICER OF NATIONAL BENEFIT LIFE INSURANCE COMPANY (1963-1982), CHIEF EXECUTIVE
OFFICER OF FINANCIAL BENEFIT LIFE INSURANCE COMPANY (1982-1996), AND SERVICE AS
A DIRECTOR OF AMVESTORS FINANCIAL CORPORATION UNTIL 1997. AS A RESULT OF SUCH
BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. CROHN HAS
ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. CROHN IS AN INDEPENDENT TRUSTEE
AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
Annual Report | 43
Franklin Managed Trust
SHAREHOLDER INFORMATION
FRANKLIN RISING DIVIDENDS FUND
PROXY VOTING POLICIES AND PROCEDURES
The Trust has established Proxy Voting Policies and Procedures (Policies) that
the Trust uses to determine how to vote proxies relating to portfolio
securities. Shareholders may view the Trust's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/527-7678 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Trust's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Trust files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.
44 | Annual Report
Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. To ensure the highest quality of
service, we may monitor, record and access telephone calls to or from our
service departments. These calls can be identified by the presence of a regular
beeping tone.
FRANKLIN TEMPLETON FUNDS
INTERNATIONAL
Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund 1
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small Cap Growth Fund II 2
Franklin Small-Mid Cap Growth Fund
VALUE
Franklin Balance Sheet Investment Fund 1
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund
BLEND
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund
ASSET ALLOCATION
Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund 4
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund 5
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund 4
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 4
Templeton Global Bond Fund
Templeton Income Fund
TAX-FREE INCOME 6
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 7
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California 8
Colorado
Connecticut
Florida 8
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust 9
1. The fund is open only to existing shareholders and select retirement plans.
2. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
4. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
5. Effective 10/1/06, Franklin's AGE High Income Fund changed its name to
Franklin High Income Fund. The fund's investment goal and strategy remained the
same.
6. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
7. The fund invests primarily in insured municipal securities.
8. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
9. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
05/07 Not part of the annual report
[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
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ANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN RISING DIVIDENDS FUND
INVESTMENT MANAGER
Franklin Advisory Services, LLC
One Parker Plaza
Ninth Floor
Fort Lee, NJ 07024-2938
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
158 A2007 11/07
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is Frank T. Crohn he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $22,000 for the fiscal year ended September 30, 2007 and $21,000 for the
fiscal year ended September 30, 2006.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.
(d) All Other Fees
There were no fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4.
There were no fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant other than
services reported in paragraphs (a)-(c) of Item 4.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) There were no non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND
PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.
ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN MANAGED TRUST
By /S/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date November 27, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date November 27, 2007
By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date November 27, 2007