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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 12
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SIGNATURE LAURA FERGERSON
TITLE ASST. TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FRANKLIN EQUITY FUND JUNE 30, 1998 ANNUAL REPORT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> FRANKLIN EQUITY FUND CLASS I
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FRANKLIN EQUITY FUND JUNE 30, 1998 ANNUAL REPORT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> FRANKLIN EQUITY FUND CLASS II
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FRANKLIN EQUITY FUND JUNE 30, 1998 ANNUAL REPORT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 013
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<INVESTMENTS-AT-VALUE> 634,382,016
<RECEIVABLES> 40,670,984
<ASSETS-OTHER> 828,973
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 675,881,973
<PAYABLE-FOR-SECURITIES> 893,831
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,525,116
<TOTAL-LIABILITIES> 9,418,947
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 430,084,155
<SHARES-COMMON-STOCK> 1,537,562
<SHARES-COMMON-PRIOR> 677,536
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 36,407,655
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 199,971,216
<NET-ASSETS> 666,463,026
<DIVIDEND-INCOME> 5,327,245
<INTEREST-INCOME> 2,682,061
<OTHER-INCOME> 0
<EXPENSES-NET> (5,343,369)
<NET-INVESTMENT-INCOME> 2,665,937
<REALIZED-GAINS-CURRENT> 45,956,120
<APPREC-INCREASE-CURRENT> 64,966,613
<NET-CHANGE-FROM-OPS> 113,588,670
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (101,907)
<DISTRIBUTIONS-OF-GAINS> (1,486,880)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,602,804
<NUMBER-OF-SHARES-REDEEMED> (903,282)
<SHARES-REINVESTED> 160,504
<NET-CHANGE-IN-ASSETS> 187,046,612
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 53,546,968
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,894,330)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (5,343,369)
<AVERAGE-NET-ASSETS> 580,742,947
<PER-SHARE-NAV-BEGIN> 10.170
<PER-SHARE-NII> .070
<PER-SHARE-GAIN-APPREC> 2.080
<PER-SHARE-DIVIDEND> (.070)
<PER-SHARE-DISTRIBUTIONS> (1.250)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.000
<EXPENSE-RATIO> .690
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .000
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Franklin Equity Fund:
In planning and performing our audit of the financial statements of Franklin
Equity Fund for the year ended June 30, 1998, we considered its internal
control, including controls over safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form N-SAR,
not to provide assurance on internal control.
The management of the Franklin Equity Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for
external purposes that are fairly presented in conformity with generally
accepted accounting principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and may not be detected. Also, projection of any evaluation of
internal control 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 internal control would not necessarily disclose all
matters in internal control 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 any
specific internal control component 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 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
internal control, including controls over safeguarding securities, that we
consider to be material weaknesses as defined above, as of June 30, 1998.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
S\PricewaterhouseCoopers LLP
San Francisco, California
August 5, 1998
