<PAGE> PAGE 1
000 B000000 12/31/96
000 C000000 0000014698
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 FRANKLIN ASSET ALLOCATION FUND
001 B000000 811-730
001 C000000 4153122000
002 A000000 777 MARINERS ISLAND BOULEVARD
002 B000000 SAN MATEO
002 C000000 CA
002 D010000 94404
002 D020000 1585
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 FRANKLIN ADVISERS, INC.
008 B000001 A
008 C000001 801-26292
008 D010001 SAN MATEO
008 D020001 CA
008 D030001 94403
008 D040001 7777
010 A000001 FRANKLIN TEMPLETON SERVICES, INC.
010 C010001 SAN MATEO
010 C020001 CA
010 C030001 94403
010 C040001 7777
011 A000001 FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
011 B000001 8-5889
011 C010001 SAN MATEO
011 C020001 CA
011 C030001 94403
011 C040001 7777
<PAGE> PAGE 2
012 A000001 FRANKLIN/TEMPLETON INVESTOR SERVICES, INC.
012 B000001 84-1036
012 C010001 SAN MATEO
012 C020001 CA
012 C030001 94403
012 C040001 7777
013 A000001 COOPERS & LYBRAND L.L.P.
013 B010001 SAN FRANCISCO
013 B020001 CA
013 B030001 94105
013 B040001 2119
014 A000001 FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
014 B000001 8-5889
015 A000001 BANK OF AMERICA NT & SA
015 B000001 C
015 C010001 SAN FRANCISCO
015 C020001 CA
015 C030001 94104
015 C040001 1502
015 E010001 X
015 A000002 CITIBANK DELAWARE
015 B000002 C
015 C010002 NEW CASTLE
015 C020002 DE
015 C030002 19720
015 C040002 2409
015 E010002 X
015 A000003 THE BANK OF NEW YORK
015 B000003 C
015 C010003 NEW YORK
015 C020003 NY
015 C030003 10286
015 E010003 X
015 A000004 THE BANK OF BOSTON
015 B000004 S
015 C010004 BUENOS AIRES
015 D010004 ARGENTINA
015 E040004 X
015 A000005 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
015 B000005 S
015 C010005 MELBOURNE
015 D010005 AUSTRALIA
015 E040005 X
015 A000006 CREDITANSTALT BANKVEREIN
015 B000006 S
015 C010006 VIENNA
015 D010006 AUSTRIA
015 E040006 X
015 A000007 STANDARD CHARTERED BANK PLC
015 B000007 S
015 C010007 DHAKA
<PAGE> PAGE 3
015 D010007 BANGLADESH
015 E040007 X
015 A000008 BANQUE BRUXELLES LAMBERT (BBL)
015 B000008 S
015 C010008 BRUSSELS
015 D010008 BELGIUM
015 E040008 X
015 A000009 THE FIRST NATIONAL BANK OF BOSTON
015 B000009 S
015 C010009 SAO PAULO
015 D010009 BRAZIL
015 E040009 X
015 A000010 ROYAL BANK OF CANADA
015 B000010 S
015 C010010 MONTREAL
015 D010010 CANADA
015 E040010 X
015 A000011 THE FIRST NATIONAL BANK OF BOSTON
015 B000011 S
015 C010011 SANTIAGO
015 D010011 CHILE
015 E040011 X
015 A000012 BANCO DE CHILE
015 B000012 S
015 C010012 SANTIAGO
015 D010012 CHILE
015 E040012 X
015 A000013 DELETE
015 A000014 THE STANDARD CHARTERED BANK, HONG KONG
015 B000014 S
015 C010014 HONG KONG
015 D010014 CHINA
015 E040014 X
015 A000015 CITIBANK, N.A. VIA CITITRUST COLOMBIA S.A.
015 B000015 S
015 C010015 BOGOTA
015 D010015 COLOMBIA
015 E040015 X
015 A000016 CESKOSLOVENSKA OBCHODNI BANKA A.S.
015 B000016 S
015 C010016 PRAGUE
015 D010016 CZECH REPUBLIC
015 E040016 X
015 A000017 DEN DANSKE BANK
015 B000017 S
015 C010017 COPENHAGEN
015 D010017 DENMARK
015 E040017 X
015 A000018 CITIBANK, N.A.
015 B000018 S
015 C010018 QUITO
<PAGE> PAGE 4
015 D010018 ECUADOR
015 E040018 X
015 A000019 CITIBANK, N.A. - EGYPT BRANCH
015 B000019 S
015 C010019 CAIRO
015 D010019 EGYPT
015 E040019 X
015 A000020 MERITA BANK LTD. (MB)
015 B000020 S
015 C010020 HELSINKI
015 D010020 FINLAND
015 E040020 X
015 A000021 BANQUE PARIBAS
015 B000021 S
015 C010021 PARIS
015 D010021 FRANCE
015 E040021 X
015 A000022 DRESDNER BANK AG
015 B000022 S
015 C010022 FRANKFURT
015 D010022 GERMANY
015 E040022 X
015 A000023 NATIONAL BANK OF GREECE SA
015 B000023 S
015 C010023 ATHENS
015 D010023 GREECE
015 E040023 X
015 A000024 THE HONGKONG & SHANGHAI BANKING CORP LTD
015 B000024 S
015 C010024 HONG KONG
015 D010024 HONG KONG
015 E040024 X
015 A000025 CITIBANK, N.A.
015 B000025 S
015 C010025 BUDAPEST
015 D010025 HUNGARY
015 E040025 X
015 A000026 THE HONGKONG & SHANGHAI BANKING CORP LTD
015 B000026 S
015 C010026 MUMBAI
015 D010026 INDIA
015 E040026 X
015 A000027 THE HONGKONG & SHANGHAI BANKING CORP LTD
015 B000027 S
015 C010027 JAKARTA
015 D010027 INDONESIA
015 E040027 X
015 A000028 ALLIED IRISH BANKS, PLC (AIB)
015 B000028 S
015 C010028 DUBLIN
015 D010028 IRELAND
<PAGE> PAGE 5
015 E040028 X
015 A000029 BANK LEUMI LE-ISRAEL B.M.
015 B000029 S
015 C010029 TEL AVIV
015 D010029 ISRAEL
015 E040029 X
015 A000030 BANCA COMMERCIALE ITALIANA (BCI)
015 B000030 S
015 C010030 MILAN
015 D010030 ITALY
015 E040030 X
015 A000031 BANK OF TOKYO MITSUBISHI (BTM)
015 B000031 S
015 C010031 TOKYO
015 D010031 JAPAN
015 E040031 X
015 A000032 THE HONGKONG BANK MALAYSIA BERHAD (HBMB)
015 B000032 S
015 C010032 KUALA LUMPUR
015 D010032 MALAYSIA
015 E040032 X
015 A000033 BANCO NACIONAL DE MEXICO
015 B000033 S
015 C010033 MEXICO CITY
015 D010033 MEXICO
015 E040033 X
015 A000034 BANQUE COMMERCIALE DU MAROC (BCM)
015 B000034 S
015 C010034 CASABLANCA
015 D010034 MOROCCO
015 E040034 X
015 A000035 MEESPIERSON
015 B000035 S
015 C010035 AMSTERDAM
015 D010035 NETHERLANDS
015 E040035 X
015 A000036 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
015 B000036 S
015 C010036 WELLINGTON
015 D010036 NEW ZEALAND
015 E040036 X
015 A000037 DEN NORSKE BANK
015 B000037 S
015 C010037 OSLO
015 D010037 NORWAY
015 E040037 X
015 A000038 STANDARD CHARTERED BANK (SCB)
015 B000038 S
015 C010038 KARACHI
015 D010038 PAKISTAN
015 E040038 X
<PAGE> PAGE 6
015 A000039 CITIBANK, N.A.
015 B000039 S
015 C010039 LIMA
015 D010039 PERU
015 E040039 X
015 A000040 THE HONGKONG & SHANGHAI BANKING CORP LTD
015 B000040 S
015 C010040 MANILA
015 D010040 PHILIPPINES
015 E040040 X
015 A000041 BANK HANDLOWY W WARSZAWIE S.A.
015 B000041 S
015 C010041 WARSAW
015 D010041 POLAND
015 E040041 X
015 A000042 BANCO COMERCIAL PORTUGUES
015 B000042 S
015 C010042 LISBON
015 D010042 PORTUGAL
015 E040042 X
015 A000043 UNITED OVERSEAS BANK LIMITED (UOB)
015 B000043 S
015 C010043 SINGAPORE
015 D010043 SINGAPORE
015 E040043 X
015 A000044 STANDARD CORPORATE AND MERCHANT BANK (SCMB)
015 B000044 S
015 C010044 JOHANNESBURG
015 D010044 SOUTH AFRICA
015 E040044 X
015 A000045 SEOULBANK (SB)
015 B000045 S
015 C010045 SEOUL
015 D010045 SOUTH KOREA
015 E040045 X
015 A000046 BANCO BILBAO VIZCAYA (BBV)
015 B000046 S
015 C010046 MADRID
015 D010046 SPAIN
015 E040046 X
015 A000047 STANDARD CHARTERED BANK (SCB)
015 B000047 S
015 C010047 COLOMBO
015 D010047 SRI LANKA
015 E040047 X
015 A000048 SKANDINAVISKA ENSKILDA BANKEN (SEB)
015 B000048 S
015 C010048 STOCKHOLM
015 D010048 SWEDEN
015 E040048 X
015 A000049 BANK LEU LTD.
<PAGE> PAGE 7
015 B000049 S
015 C010049 ZURICH
015 D010049 SWITZERLAND
015 E040049 X
015 A000050 THE HONGKONG & SHANGHAI BANKING CORP LTD
015 B000050 S
015 C010050 TAIPEI
015 D010050 TAIWAN
015 E040050 X
015 A000051 THE SIAM COMMERCIAL BANK PUBLIC CO LTD (SCB)
015 B000051 S
015 C010051 BANGKOK
015 D010051 THAILAND
015 E040051 X
015 A000052 CITIBANK, N.A. - ISTANBUL BRANCH
015 B000052 S
015 C010052 ISTANBUL
015 D010052 TURKEY
015 E040052 X
015 A000053 THE BANK OF NEW YORK
015 B000053 S
015 C010053 LONDON
015 D010053 UNITED KINGDOM
015 E040053 X
015 A000054 THE FIRST NATIONAL BANK OF BOSTON
015 B000054 S
015 C010054 MONTEVIDEO
015 D010054 URUGUAY
015 E040054 X
015 A000055 CITIBANK, N.A.
015 B000055 S
015 C010055 CARACAS
015 D010055 VENEZUELA
015 E040055 X
015 A000056 STANBIC BANK BOTSWANA LIMITED (STANBIC)
015 B000056 S
015 C010056 GABARONE
015 D010056 BOTSWANA
015 E040056 X
015 A000057 CREDIT COMMERCIAL DE FRANCE
015 B000057 S
015 C010057 PARIS
015 D010057 FRANCE
015 E040057 X
015 A000058 MERCHANT BANK (GHANA) LIMITED
015 B000058 S
015 C010058 ACCRA
015 D010058 GHANA
015 E040058 X
015 A000059 BANQUE PARIBAS
015 B000059 S
<PAGE> PAGE 8
015 C010059 MILAN
015 D010059 ITALY
015 E040059 X
015 A000060 JASDEC (DEPOSITORY)
015 B000060 S
015 C010060 TOKYO
015 D010060 JAPAN
015 E040060 X
015 A000061 THE BRITISH BANK OF THE MIDDLE EAST
015 B000061 S
015 C010061 AMMAN
015 D010061 JORDAN
015 E040061 X
015 A000062 STANBIC BANK KENYA LIMITED (STANBIC)
015 B000062 S
015 C010062 NAIROBI
015 D010062 KENYA
015 E040062 X
015 A000063 BANQUE INTERNATIONALE A LUXEMBOURG
015 B000063 S
015 C010063 LUXEMBOURG CITY
015 D010063 LUXEMBOURG
015 E040063 X
015 A000064 CEDEL (DEPOSITORY)
015 B000064 S
015 C010064 LUXEMBOURG CITY
015 D010064 LUXEMBOURG
015 E040064 X
015 A000065 STANBIC BANK NAMIBIA LIMITED (STANBIC)
015 B000065 S
015 C010065 WINDHOEK
015 D010065 NAMIBIA
015 E040065 X
015 A000066 KAS - ASSOCIATIE NV
015 B000066 S
015 C010066 AMSTERDAM
015 D010066 NETHERLANDS
015 E040066 X
015 A000067 STANBIC MERCHANT BANK NIGERIA LIMITED
015 B000067 S
015 C010067 LAGOS
015 D010067 NIGERIA
015 E040067 X
015 A000068 DEVELOPMENT BANK OF SINGAPORE LTD.
015 B000068 S
015 C010068 SINGAPORE
015 D010068 SINGAPORE
015 E040068 X
015 A000069 CESKOSLOVENSKA OBCHODNI BANKA A.S. (CSOB)
015 B000069 S
015 C010069 BRATISLAVA
<PAGE> PAGE 9
015 D010069 SLOVAK REPUBLIC
015 E040069 X
015 A000070 STANBIC BANK SWAZILAND LIMITED (STANBIC)
015 B000070 S
015 C010070 MBABANE
015 D010070 SWAZILAND
015 E040070 X
015 A000071 UNION BANK OF SWITZERLAND
015 B000071 S
015 C010071 ZURICH
015 D010071 SWITZERLAND
015 E040071 X
015 A000072 BANGKOK BANK PUBLIC COMPANY LTD.
015 B000072 S
015 C010072 BANGKOK
015 D010072 THAILAND
015 E040072 X
015 A000073 FIRST CHICAGO CLEARING CENTRE (FCCC)
015 B000073 S
015 C010073 LONDON
015 D010073 UNITED KINGDOM
015 E040073 X
015 A000074 STANBIC BANK ZAMBIA LIMITED (STANBIC)
015 B000074 S
015 C010074 LUSAKA
015 D010074 ZAMBIA
015 E040074 X
015 A000075 STANBIC BANK ZIMBABWE LIMITED (STANBIC)
015 B000075 S
015 C010075 HARARE
015 D010075 ZIMBABWE
015 E040075 X
018 000000 Y
019 A000000 Y
019 B000000 212
019 C000000 FRNKTEMGRP
020 A000001 NOMURA SECURITIES INTL INC
020 B000001 13-2642206
020 C000001 7
020 A000002 EDWARDS (AG) & SONS INC
020 B000002 43-0895447
020 C000002 6
020 A000003 ABN AMRO CHICAGO CORP
020 B000003 36-2549961
020 C000003 4
020 A000004 EVEREN SEC., INC
020 B000004 36-2693816
020 C000004 4
020 A000005 BANK OF AMERICA NT & SA
020 B000005 94-1687665
020 C000005 4
<PAGE> PAGE 10
020 A000006 MORGAN (JP) SECURITIES INC
020 B000006 13-3224016
020 C000006 4
020 A000007 BEAR, STEARNS & CO INC
020 B000007 13-3299429
020 C000007 3
020 A000008 DAIN BOSWORTH INC
020 B000008 41-0212020
020 C000008 3
020 A000009 UBS SECURITIES, L.L.C.
020 B000009 13-2932996
020 C000009 3
020 A000010 MERRILL LYNCH PIERCE FENNER
020 B000010 13-5674085
020 C000010 3
021 000000 71
022 A000001 SBCI SWISS BANK CORP INV
022 B000001 13-2639550
022 C000001 161208
022 D000001 0
022 A000002 FUJI SECURITIES INC
022 B000002 13-3038090
022 C000002 160826
022 D000002 0
022 A000003 DAIWA SECURITIES AMERICA
022 B000003 13-5680329
022 C000003 150670
022 D000003 0
022 A000004 UBS SECURITIES INC
022 B000004 13-2932996
022 C000004 135237
022 D000004 0
022 A000005 BEAR, STEARNS & CO INC
022 B000005 13-3299429
022 C000005 129640
022 D000005 342
022 A000006 DONALDSON LUFKIN & JENRETTE
022 B000006 13-2741729
022 C000006 127247
022 D000006 0
022 A000007 BANKERS TRUST CO
022 B000007 13-4941247
022 C000007 126059
022 D000007 0
022 A000008 BANK OF AMERICA NT & SA
022 B000008 94-1687665
022 C000008 104143
022 D000008 355
022 A000009 NIKKO SECURITIES CO INTL INC
022 B000009 94-1302123
022 C000009 93557
<PAGE> PAGE 11
022 D000009 0
022 A000010 LEHMAN BROTHERS SECS
022 B000010 13-2518466
022 C000010 77550
022 D000010 0
023 C000000 1453175
023 D000000 6807
024 000000 Y
025 A000001 BANK OF AMERICA NT & SA
025 B000001 94-1687665
025 C000001 E
025 D000001 998
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 Y
026 B000000 Y
026 C000000 Y
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
028 A010000 1950
028 A020000 2
028 A030000 0
028 A040000 875
028 B010000 1496
028 B020000 0
028 B030000 0
028 B040000 509
028 C010000 1319
028 C020000 185
028 C030000 0
028 C040000 587
028 D010000 1400
028 D020000 0
028 D030000 0
028 D040000 580
028 E010000 1564
028 E020000 0
028 E030000 0
028 E040000 557
028 F010000 1471
028 F020000 351
<PAGE> PAGE 12
028 F030000 0
028 F040000 685
028 G010000 9200
028 G020000 538
028 G030000 0
028 G040000 3793
028 H000000 9200
029 000000 Y
030 A000000 241
030 B000000 4.50
030 C000000 0.00
031 A000000 27
031 B000000 0
032 000000 214
033 000000 0
034 000000 Y
035 000000 0
036 A000000 N
036 B000000 0
037 000000 N
038 000000 0
039 000000 Y
040 000000 Y
041 000000 Y
042 A000000 0
042 B000000 0
042 C000000 100
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 96
044 000000 17
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.000
048 A010000 100000
048 A020000 0.625
048 B010000 150000
048 B020000 0.500
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
<PAGE> PAGE 13
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 250000
048 K020000 0.450
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 Y
054 C000000 Y
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 Y
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 Y
054 M000000 Y
054 N000000 N
054 O000000 N
055 A000000 N
055 B000000 N
056 000000 N
057 000000 N
058 A000000 N
059 000000 Y
060 A000000 Y
060 B000000 Y
061 000000 100
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
<PAGE> PAGE 14
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 N
066 D000000 N
066 E000000 N
066 F000000 N
066 G000000 Y
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 Y
070 B020000 Y
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 Y
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
070 G010000 Y
070 G020000 N
070 H010000 Y
070 H020000 N
070 I010000 Y
070 I020000 N
070 J010000 Y
070 J020000 N
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 Y
070 M010000 Y
070 M020000 Y
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 Y
070 P020000 N
070 Q010000 N
<PAGE> PAGE 15
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 32410
071 B000000 23823
071 C000000 39630
071 D000000 60
072 A000000 12
072 B000000 845
072 C000000 600
072 D000000 0
072 E000000 0
072 F000000 299
072 G000000 0
072 H000000 0
072 I000000 40
072 J000000 1
072 K000000 17
072 L000000 22
072 M000000 7
072 N000000 25
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 23
072 S000000 33
072 T000000 98
072 U000000 0
072 V000000 0
072 W000000 5
072 X000000 570
072 Y000000 0
072 Z000000 875
072AA000000 2737
072BB000000 1761
072CC010000 5671
072CC020000 0
072DD010000 915
072DD020000 0
072EE000000 216
073 A010000 0.1500
073 A020000 0.0000
073 B000000 0.0320
073 C000000 0.0000
074 A000000 0
074 B000000 7217
074 C000000 0
074 D000000 8310
074 E000000 308
074 F000000 40370
074 G000000 0
<PAGE> PAGE 16
074 H000000 0
074 I000000 0
074 J000000 1034
074 K000000 0
074 L000000 216
074 M000000 0
074 N000000 57455
074 O000000 466
074 P000000 47
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 75
074 S000000 0
074 T000000 56867
074 U010000 6834
074 U020000 0
074 V010000 8.32
074 V020000 0.00
074 W000000 0.0000
074 X000000 4340
074 Y000000 2843
075 A000000 0
075 B000000 47108
076 000000 0.00
077 A000000 Y
077 C000000 Y
078 000000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 B000000 NONE
080 C000000 130000
081 A000000 Y
081 B000000 211
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
<PAGE> PAGE 17
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE DIOMEDES LOO-TAM
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FRANKLIN ASSET ALLOCATION FUND DECEMBER 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 41,680,249
<INVESTMENTS-AT-VALUE> 48,988,185
<RECEIVABLES> 8,466,516
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,454,701
<PAYABLE-FOR-SECURITIES> 465,733
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 121,718
<TOTAL-LIABILITIES> 587,451
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,124,879
<SHARES-COMMON-STOCK> 6,833,908
<SHARES-COMMON-PRIOR> 5,423,517
<ACCUMULATED-NII-CURRENT> 29,261
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 405,174
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,307,936
<NET-ASSETS> 56,867,250
<DIVIDEND-INCOME> 600,066
<INTEREST-INCOME> 844,608
<OTHER-INCOME> 0
<EXPENSES-NET> (569,955)
<NET-INVESTMENT-INCOME> 874,719
<REALIZED-GAINS-CURRENT> 976,320
<APPREC-INCREASE-CURRENT> 5,670,859
<NET-CHANGE-FROM-OPS> 7,521,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (915,260)
<DISTRIBUTIONS-OF-GAINS> (215,956)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,278,018
<NUMBER-OF-SHARES-REDEEMED> (983,856)
<SHARES-REINVESTED> 116,229
<NET-CHANGE-IN-ASSETS> 17,548,607
<ACCUMULATED-NII-PRIOR> 70,714
<ACCUMULATED-GAINS-PRIOR> (356,102)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 298,727
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 569,955
<AVERAGE-NET-ASSETS> 47,107,855
<PER-SHARE-NAV-BEGIN> 7.250
<PER-SHARE-NII> .140
<PER-SHARE-GAIN-APPREC> 1.110
<PER-SHARE-DIVIDEND> (.150)
<PER-SHARE-DISTRIBUTIONS> (.030)
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 8.320
<EXPENSE-RATIO> 1.210
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
of the Franklin Asset Allocation Fund:
In planning and performing our audit of the financial
statements and financial highlights of the Franklin Asset
Allocation Fund for the year ended December 31, 1996, we
considered its internal control structure, including
procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and
financial highlights and to comply with the requirements of
Form N-SAR, not to provide assurance on the internal
control structure.
The management of the Franklin Asset Allocation Fund
is responsible for establishing and maintaining an internal
control structure. In fulfilling this responsibility,
estimates and judgements by management are required to
assess the expected benefits and related costs of internal
control structure policies and procedures. Two of the
objectives of an internal control structure are to
provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are
executed in accordance with management's authorization and
recorded properly to permit preparation of financial
statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal
control structure, errors or irregularities may occur
and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the
risk that it may become inadequate because of changes
in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would
not necessarily disclose all matters in the internal
control structure that might be material weaknesses
under standards
established by the American Institute of Certified
Public Accountants. A material weakness is a condition in
which the design or operation of the specific internal
control structure elements does not reduce to a relatively
low level the risk that errors or irregularities in
amounts that would be material in relation to the
financial statements and financial highlights being
audited may occur and not be detected within a timely
period by employees in the normal course of performing
their assigned functions. However, we noted no matters
involving the internal control structure, including
procedures for safeguarding securities, that we consider
to be material weaknesses, as defined above, as of
December 31, 1996.
This report is intended solely for the information and
use of management of the Franklin Asset Allocation
Fund and the
Securities and Exchange Commission.
S\COOPERS AND LYBRAND L.L.P.
Coopers and Lybrand L.L.P.
San Francisco, California
February 4, 1997
wpdoc2\nsar\1997\102-77c.doc 2 2/14/97
NAME OF REGISTRANT:
Franklin Asset Allocation Fund
File No. 811-730
EXHIBIT ITEM No. 77C:
Submission of matters to a vote of security holders.
FRANKLIN TEMPLETON
777 Mariners Island Blvd
PO Box 777
San Mateo CA 94403-7777
tel 1-800/632-2301
FRANKLIN ASSET ALLOCATION FUND
CONSENT OF SOLE SHAREHOLDER
Pursuant to the provisions of Section 4 of Article V of the
Agreement and Declaration of Trust of Franklin Asset Allocation
Fund, a Delaware business trust (the "Trust"), which governs
actions taken by unanimous written consent of shareholders, the
undersigned, being the sole shareholder of the Trust, does hereby
waive the requirement of written notice of the actions set forth
herein, and does hereby approve, ratify and consent to the
following resolutions:
NOW, THEREFORE, IT IS
RESOLVED, that the reorganization of Franklin Premier Return
Fund, a California corporation (the "Fund") and the Trust
pursuant to an Amended and Restated Agreement (the
"Reorganization"), which will involve: (i) the acquisition by
the Trust of substantially all of the assets of the Fund in
exchange solely for shares of beneficial interest in the Trust;
(ii) the distribution of such shares of beneficial interest of
the Trust to the shareholders of the Fund according to their
respective interest; and (iii) the dissolution of the Fund as
soon as practicable after the closing of the Reorganization is
hereby approved; and it is
FURTHER RESOLVED, that the Amended and Restated Agreement through
which the Reorganization shall be accomplished is hereby
approved; and it is
FURTHER RESOLVED, that the following individuals shall serve as
trustees of the Trust until their successors are elected and
shall qualify:
Frank H. Abbott, III
S. Joseph Fortunato
David W. Garbellano
Edward B. Jamieson
Charles B. Johnson
Hayato Tanaka
R. Martin Wiskemann
and it is
FURTHER RESOLVED, that the selection of Coopers & Lybrand L.L.P.,
as independent auditors of the Trust for the fiscal year ending
December 31, 1996 is hereby ratified and approved; and it is
FURTHER RESOLVED, that the investment management agreement
between the Trust and Franklin Advisers, Inc. ("Advisers"), which
is substantially identical to the current investment management
agreement between the Fund and Advisers is hereby approved; and
it is
FURTHER RESOLVED, that the distribution plan relating to the
shares of the Trust, as adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, which is
substantially identical to the current Rule 12b-1 distribution
plan for the shares of the Fund is hereby approved.
IN WITNESS WHEREOF, the undersigned, being the sole shareholder
of the Trust has executed this consent as of the 26th day of
July, 1996.
FRANKLIN PREMIER RETURN FUND
By:
Harmon E. Burns
Vice President
Filed with the minutes of the proceedings of the Trust, this 26th
day of July, 1996.
_________________________
Deborah R. Gatzek
Secretary
wpdoc2\nsar\1997\fprf-77c.doc 1 2/14/97
NAME OF REGISTRANT:
Franklin Asset Allocation Fund
File No. 811-730
EXHIBIT ITEM No. 77C:
Submission of matters to a vote of security holders.
At a special meeting of shareholders of the registrant held on
July 3, 1996 the following items were voted upon:
1. To approve an amendment to the Fund's investment objective:
For Against
2,979,222.662 61,347.68
2. To approve a change of the Fund's place and form of
organization from a California corporation to a Delaware business
trust.
For Against
2,958,559.383 91,719.235
3. To approve a change in the name of the Fund to Franklin Asset
Allocation Fund in the event the Reorganization is not approved
by shareholders.
For Against
3,428,009.854 67,446.639