SUPPLEMENT TO THE PROSPECTUSES DATED JANUARY 1, 1997
FRANKLIN ASSET ALLOCATION FUND
DATED MAY 1, 1996 AS AMENDED AUGUST 1, 1996
FRANKLIN ADJUSTABLE RATE SECURITIES FUND
FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND
DATED MARCH 1, 1996 AS AMENDED DECEMBER 16, 1996
FRANKLIN STRATEGIC INCOME FUND
FRANKLIN MIDCAP GROWTH FUND
DATED SEPTEMBER 1, 1996
I. The discussion under "How Do I Buy Shares? - Cumulative Quantity Discounts"
is amended by replacing it with the following text:
To determine if you may pay a reduced sales charge, the amount of your current
purchase is added to the cost or current value, whichever is higher, of your
shares in other Franklin Templeton Funds, as well as those of your spouse,
children under the age of 21 and grandchildren under the age of 21. If you are
the sole owner of a company, you may also add any company accounts, including
retirement plan accounts. Companies with one or more retirement plans may add
together the total plan assets invested in the Franklin Templeton Funds to
determine the sales charge that applies.
II. The discussion under "How Do I Buy Shares? - Sales Charge Waivers" is
amended by adding the following new item as the last item in the list of waiver
categories:
o Investors exchanging Advisor Class shares from any of the Franklin Templeton
Funds, or, beginning on or about May 1, 1997, Class Z shares of Mutual Series
III. The discussion under "May I Exchange Shares for Shares of Another Fund?
Exchange Restrictions" is amended by replacing the first restriction with the
following text:
You may only exchange shares within the same class.*
*Because the Fund does not offer Advisor Class shares, Advisor Class shares of
any Franklin Templeton Fund may be exchanged for shares of the Fund at Net
Asset Value. Beginning on or about May 1, 1997, Class Z shares of Mutual Series
may also be exchanged into shares of the Fund.
January 1, 1997
