o 133*SA3
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SHARE CLASS REDESIGNATION
EFFECTIVE JANUARY 1, 1999
Class A - Formerly Considered Class I
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SUPPLEMENT DATED APRIL 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN ASSET ALLOCATION FUND
DATED MAY 1, 1998
The Statement of Additional Information is amended as follows:
I. As of January 1, 1999, the fund's shares are considered Class A shares for
redemption, exchange and other purposes. Before January 1, 1999, the fund's
shares were considered Class I shares.
All references in the Statement of Additional Information to Class I shares
are replaced with Class A.
II. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is replaced
with the following:
If you request the exchange of the total value of your account, declared
but unpaid income dividends and capital gain distributions will be
reinvested in the fund and exchanged into the new fund at Net Asset Value
when paid.
III. The following is added to the section "Additional Information on Selling
Shares," found under "How Do I Buy, Sell and Exchange Shares?":
The contingent deferred sales charge will generally be waived for
redemptions of shares by investors who purchased $1 million or more without
an initial sales charge if the Securities Dealer of record waived its
commission in connection with the purchase.
IV. The following replaces the performance figures in the applicable sections
under "How Does the Fund Measure Performance?" The figures below have been
restated to reflect the fund's current, maximum 5.75% initial sales charge.
TOTAL RETURN
The fund's average annual total return for the one-, five- and ten-year
periods ended December 31, 1997, was 8.58%, 13.08% and 12.30%,
respectively.
The fund's cumulative total return for the one-, five- and ten-year periods
ended December 31, 1997, was 8.58%, 84.94% and 218.95%, respectively.
YIELD
The fund's yield for the 30-day period ended December 31, 1997, was 1.83%.
CURRENT DISTRIBUTION RATE
The fund's current distribution rate for the 30-day period ended December
31, 1997, was 1.55%.
V. The following paragraph is added under "Miscellaneous Information":
The Information Services & Technology division of Resources established a
Year 2000 Project Team in 1996. This team has already begun making
necessary software changes to help the computer systems that service the
fund and its shareholders to be Year 2000 compliant. After completing these
modifications, comprehensive tests are conducted in one of Resources' U.S.
test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
VI. In the "Useful Terms and Definitions" section, the definition of "Offering
Price" is replaced with the following:
OFFERING PRICE - The public offering price is based on the Net Asset Value
per share and includes the front-end sales charge. The maximum front-end
sales charge is 5.75%.
Please keep this supplement for future reference.
