UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-00537
Franklin Custodian Funds
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant’s telephone number, including area code: 650 312-2000
Date of fiscal year end: 9/30
Date of reporting period: 3/31/18
| Item 1. | Reports to Stockholders. |
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Semiannual Report and Shareholder Letter | |||
| March 31, 2018 |
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Franklin Custodian Funds
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Franklin DynaTech Fund
Franklin Growth Fund
Franklin Income Fund
Franklin U.S. Government Securities Fund
Franklin Utilities Fund
Sign up for electronic delivery at franklintempleton.com/edelivery
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
1. Source: Morningstar.
See: www.franklintempletondatasources.com for additional data provider information.
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Not FDIC Insured | May Lose Value | No Bank Guarantee |
| franklintempleton.com | Not part of the semiannual report |
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Semiannual Report
1. Source: Bureau of Labor Statistics.
2. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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1. Source: Morningstar.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
2. The consumer discretionary sector comprises diversified consumer services; internet and direct marketing retail; media; and textiles, apparel and luxury goods in the SOI. The IT sector comprises communications equipment; electronic equipment, instruments and components; internet software and services; IT services; semiconductors and semiconductor equipment; software; and technology hardware, storage and peripherals in the SOI. The industrials sector comprises aerospace and defense, air freight and logistics, electrical equipment, industrial conglomerates, machinery and professional services in the SOI.
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 39.
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FRANKLIN DYNATECH FUND
3. The energy sector comprises energy equipment and services in the SOI.
4. Not held at period-end.
See www.franklintempletondatasources.com for additional data provider information.
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FRANKLIN DYNATECH FUND
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FRANKLIN DYNATECH FUND
Performance Summary as of March 31, 2018
The performance table does 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. 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.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| Share Class | Cumulative Total Return2 |
Average Annual Total Return3 | ||
| A |
||||
| 6-Month |
+12.73% | +6.25% | ||
| 1-Year |
+31.36% | +23.82% | ||
| 5-Year |
+125.49% | +16.28% | ||
| 10-Year |
+229.64% | +12.01% | ||
| Advisor4 |
||||
| 6-Month |
+12.89% | +12.89% | ||
| 1-Year |
+31.69% | +31.69% | ||
| 5-Year |
+128.34% | +17.96% | ||
| 10-Year |
+237.85% | +12.95% | ||
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, go to franklintempleton.com or call (800) 342-5236.
See page 8 for Performance Summary footnotes.
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FRANKLIN DYNATECH FUND
PERFORMANCE SUMMARY
Distributions (10/1/17–3/31/18)
| Share Class | Long-Term Capital Gain |
|||
| A |
$1.1554 | |||
| C |
$1.1554 | |||
| R |
$1.1554 | |||
| R6 |
$1.1554 | |||
| Advisor |
$1.1554 | |||
Total Annual Operating Expenses5
| Share Class | With Waiver | Without Waiver | ||||||
| A |
0.89% | 0.90% | ||||||
| Advisor |
0.64% | 0.65% | ||||||
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Stocks historically have outperformed other asset classes over the long term, but tend to fluctuate more dramatically over the short term. Investments in fast-growing industries, like the technology and health care sectors (which have historically been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments. The Fund may also invest in small- and mid-capitalization companies, which can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 1/31/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Effective 5/15/08, 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 5/15/08, 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 5/15/08, actual Advisor Class performance is used reflecting all charges and fees applicable to that class. Since 5/15/08 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were +198.90% and +11.72%.
5. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN DYNATECH FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||||||||||||||||||||
| Share Class |
Beginning Account Value 10/1/17 |
Ending Account Value 3/31/18 |
Expenses Paid During Period 10/1/17–3/31/181,2 |
Ending Account Value 3/31/18 |
Expenses Paid During Period 10/1/17–3/31/181,2 |
Net Annualized Expense Ratio2 | ||||||||||||||||||||||||||||||
| A |
$ | 1,000 | $ | 1,127.30 | $ | 4.61 | $ | 1,020.59 | $ | 4.38 | 0.87% | |||||||||||||||||||||||||
| C |
$ | 1,000 | $ | 1,123.50 | $ | 8.58 | $ | 1,016.85 | $ | 8.15 | 1.62% | |||||||||||||||||||||||||
| R |
$ | 1,000 | $ | 1,126.10 | $ | 5.94 | $ | 1,019.35 | $ | 5.64 | 1.12% | |||||||||||||||||||||||||
| R6 |
$ | 1,000 | $ | 1,129.90 | $ | 2.60 | $ | 1,022.49 | $ | 2.47 | 0.49% | |||||||||||||||||||||||||
| Advisor |
$ | 1,000 | $ | 1,128.90 | $ | 3.29 | $ | 1,021.84 | $ | 3.13 | 0.62% | |||||||||||||||||||||||||
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
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 48.
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FRANKLIN GROWTH FUND
2. The consumer discretionary sector comprises automobiles and components, consumer durables and apparel, consumer services, media and retailing in the SOI. The industrials sector comprises capital goods, commercial and professional services and transportation in the SOI. The IT sector comprises semiconductors and semiconductor equipment, software and services and technology hardware equipment in the SOI.
3. Not held at period-end.
See www.franklintempletondatasources.com for additional data provider information.
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FRANKLIN GROWTH FUND
CFA® is a trademark owned by CFA Institute.
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FRANKLIN GROWTH FUND
Performance Summary as of March 31, 2018
The performance table does 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. 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.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| Share Class | Cumulative Total Return2 |
Average Annual Total Return3 | ||
| A |
||||
|
6-Month |
+8.04% | +1.83% | ||
| 1-Year |
+19.39% | +12.52% | ||
| 5-Year |
+96.59% | +13.13% | ||
| 10-Year |
+174.57% | +9.98% | ||
| Advisor |
||||
|
6-Month |
+8.17% | +8.17% | ||
| 1-Year |
+19.70% | +19.70% | ||
| 5-Year |
+99.05% | +14.76% | ||
| 10-Year |
+181.61% | +10.91% | ||
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, go to franklintempleton.com or call (800) 342-5236.
See page 14 for Performance Summary footnotes.
| franklintempleton.com | Semiannual Report |
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FRANKLIN GROWTH FUND
PERFORMANCE SUMMARY
Distributions (10/1/17–3/31/18)
| Share Class | Net Investment Income |
Long-Term Capital Gain |
Total | |||||||||
| A |
$0.3618 | $2.2538 | $2.6156 | |||||||||
| C |
N/A | $2.2538 | $2.2538 | |||||||||
| R |
$0.1304 | $2.2538 | $2.3842 | |||||||||
| R6 |
$0.7359 | $2.2538 | $2.9897 | |||||||||
| Advisor |
$0.5853 | $2.2538 | $2.8391 | |||||||||
Total Annual Operating Expenses4
| Share Class | With Waiver | Without Waiver | ||||||
| A |
0.87% | 0.88% | ||||||
| Advisor |
0.62% | 0.63% | ||||||
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Historically, the Fund has focused on larger companies. The Fund may also invest in small, relatively new and/or unseasoned companies, which involves additional risks, as the price of these securities can be volatile, particularly over the short term. The Fund may focus on particular sectors of the market from time to time, which can carry greater risks of adverse developments in such sectors. In addition, the Fund may invest up to 40% of its net assets in stocks of foreign companies, which involve special risks, including currency fluctuations and economic as well as political uncertainty. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 1/31/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN GROWTH FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
| Share Class |
Beginning Account Value 10/1/17 |
Ending Account Value 3/31/18 |
Expenses Paid During Period 10/1/17–3/31/181,2 |
Ending Account Value 3/31/18 |
Expenses Paid During Period 10/1/17–3/31/181,2 |
Net Annualized Expense Ratio2 | ||||||||||||
| A | $1,000 | $1,080.40 | $4.36 | $1,020.74 | $4.23 | 0.84% | ||||||||||||
| C | $1,000 | $1,076.40 | $8.23 | $1,017.00 | $8.00 | 1.59% | ||||||||||||
| R | $1,000 | $1,079.10 | $5.65 | $1,019.50 | $5.49 | 1.09% | ||||||||||||
| R6 | $1,000 | $1,082.60 | $2.44 | $1,022.59 | $2.37 | 0.47% | ||||||||||||
| Advisor | $1,000 | $1,081.70 | $3.06 | $1,021.99 | $2.97 | 0.59% | ||||||||||||
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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1. Source: Morningstar.
2. Source: Lipper, a Thomson Reuters Company. For the six month period ended 3/31/18, this category consisted of 563 funds. Lipper calculations do not include sales charges or expense subsidization by a fund’s manager. The Fund’s performance relative to the average may have differed if these and other factors had been considered.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
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 59.
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FRANKLIN INCOME FUND
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17 |
FRANKLIN INCOME FUND
3. Not held at period-end.
4. Electric utility holdings are in utilities in the fixed income section of the SOI. Technology holdings are in consumer discretionary, information technology and real estate in the fixed income section of the SOI.
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FRANKLIN INCOME FUND
5. Consumer non-cyclical holdings are in consumer discretionary, consumer staples and health care in the fixed income section of the SOI. Communications holdings are in consumer discretionary and telecommunication services in the fixed income section of the SOI.
See www.franklintempletondatasources.com for additional data provider information.
| franklintempleton.com | Semiannual Report |
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FRANKLIN INCOME FUND
Performance Summary as of March 31, 2018
The performance tables 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. 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.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| Share Class | Cumulative Total Return2 |
Average Annual Total Return3 |
||||||
| A |
||||||||
| 6-Month |
-1.73% | -6.06% | ||||||
| 1-Year |
+2.09% | -2.06% | ||||||
| 5-Year |
+27.59% | +4.12% | ||||||
| 10-Year |
+76.60% | +5.38% | ||||||
| Advisor |
||||||||
| 6-Month |
-1.67% | -1.67% | ||||||
| 1-Year |
+2.24% | +2.24% | ||||||
| 5-Year |
+28.75% | +5.18% | ||||||
| 10-Year |
+79.86% | +6.05% | ||||||
| Distribution | 30-Day Standardized Yield5 | |||||||||||
| Share Class | Rate4 | (with waiver) | (without waiver) | |||||||||
| A |
5.02% | 3.72% | 3.72% | |||||||||
| Advisor |
5.44% | 4.04% | 4.04% | |||||||||
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, go to franklintempleton.com or call (800) 342-5236.
See page 22 for Performance Summary footnotes.
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FRANKLIN INCOME FUND
PERFORMANCE SUMMARY
Net Asset Value
| Share Class (Symbol) | 3/31/18 |
1/25/18 |
9/30/17 |
Change | ||||
| A (FKINX) | $2.29 |
N/A |
$2.39 |
-$0.10 | ||||
| M(FIFMX) | $2.29 |
$2.43 |
N/A |
-$0.14 | ||||
| C (FCISX) | $2.32 |
N/A |
$2.42 |
-$0.10 | ||||
| R (FISRX) | $2.24 |
N/A |
$2.35 |
-$0.11 | ||||
| R6 (FNCFX) | $2.27 |
N/A |
$2.37 |
-$0.10 | ||||
| Advisor (FRIAX) | $2.27 |
N/A |
$2.37 |
-$0.10 | ||||
Distributions (10/1/17–3/31/18)
| Share Class | Net Investment Income |
|||
| A | $0.0600 | |||
| M (1/25/18–3/31/18) | $0.0206 | |||
| C | $0.0536 | |||
| R | $0.0558 | |||
| R6 | $0.0624 | |||
| Advisor | $0.0618 | |||
Total Annual Operating Expenses6
| Share Class | With Waiver | Without Waiver | ||||||
| A | 0.62% | 0.63% | ||||||
| Advisor | 0.47% | 0.48% | ||||||
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FRANKLIN INCOME FUND
PERFORMANCE SUMMARY
Each class of shares is available to certain investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund’s portfolio includes a substantial portion of higher yielding, lower rated corporate bonds because of the relatively higher yields they offer. Floating-rate loans are lower rated, higher yielding instruments, which are subject to increased risk of default and can potentially result in loss of principal. These securities carry a greater degree of credit risk relative to investment-grade securities. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 1/31/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Distribution rate is based on an annualization of the respective class’s March dividend and the maximum offering price (NAV for Advisor Class) per share on 3/31/18.
5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN INCOME FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
| Share Class |
Beginning Account Value1 |
Ending Account Value 3/31/18 |
Expenses Paid During Period2,3,4 |
Ending Account |
Expenses Paid During Period3,4 |
Net Annualized Expense Ratio4 | ||||||||||||
| A |
$1,000 | $982.70 | $2.97 | $1,021.94 | $3.02 | 0.60% | ||||||||||||
| M |
$1,000 | $946.50 | $0.78 | $1,022.69 | $2.27 | 0.45% | ||||||||||||
| C |
$1,000 | $976.10 | $5.42 | $1,019.45 | $5.54 | 1.10% | ||||||||||||
| R |
$1,000 | $976.30 | $4.68 | $1,020.19 | $4.78 | 0.95% | ||||||||||||
| R6 |
$1,000 | $983.50 | $1.98 | $1,022.94 | $2.02 | 0.40% | ||||||||||||
| Advisor |
$1,000 | $983.30 | $2.23 | $1,022.69 | $2.27 | 0.45% | ||||||||||||
1. For Classes A, C, R, R6 and Advisor, 10/1/17 for Actual and Hypothetical. For Class M, 1/25/18 for Actual and 10/1/17 for Hypothetical.
2. For Classes A, C, R, R6 and Advisor, 10/1/17–3/31/18. For Class M, 1/25/18–3/31/18.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period. The multiplier is 65/365 for Actual Class M expenses to reflect the number of days since inception.
4. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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23 |
Franklin U.S. Government Securities Fund
1. Securities owned by the Fund, but not shares of the Fund, are guaranteed by the US government, its agencies or instrumentalities as to timely payment of principal and interest. The Fund’s yield and share price are not guaranteed and will vary with market conditions.
2. Source: Morningstar.
3. Source: Lipper, a Thomson Reuters Company. For the six month period ended 3/31/18, there were 59 funds in this category. Lipper calculations do not include sales charges or expense subsidization by a fund’s manager. The Fund’s performance relative to the average may have differed if these or other factors had been considered.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
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 80.
| 24 | Semiannual Report | franklintempleton.com |
FRANKLIN U.S. GOVERNMENT SECURITIES FUND
| franklintempleton.com | Semiannual Report |
25 |
FRANKLIN U.S. GOVERNMENT SECURITIES FUND
Performance Summary as of March 31, 2018
The performance tables 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. 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.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| Share Class | |
Cumulative Total Return |
2 |
|
Average Annual Total Return3 |
| ||
| A |
||||||||
| 6-Month |
-1.48% | -5.63% | ||||||
| 1-Year |
-0.45% | -4.63% | ||||||
| 5-Year |
+4.08% | -0.07% | ||||||
| 10-Year |
+30.77% | +2.28% | ||||||
| Advisor |
||||||||
| 6-Month |
-1.40% | -1.40% | ||||||
| 1-Year |
-0.46% | -0.46% | ||||||
| 5-Year |
+4.84% | +0.95% | ||||||
| 10-Year |
+32.60% | +2.86% | ||||||
| Distribution | 30-Day Standardized Yield5 | |||||||||||||
| Share Class | Rate4 | (with waiver) | (without waiver) | |||||||||||
| A |
2.92% | 2.48% | 2.47% | |||||||||||
| Advisor |
3.18% | 2.75% | 2.73% | |||||||||||
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, go to franklintempleton.com or call (800) 342-5236.
See page 27 for Performance Summary footnotes.
| 26 | Semiannual Report | franklintempleton.com |
FRANKLIN U.S. GOVERNMENT SECURITIES FUND
PERFORMANCE SUMMARY
Distributions (10/1/17–3/31/18)
| Share Class | Net Investment Income |
|||
| A |
$0.0900 | |||
| M (1/25/18–3/31/18) |
$0.0486 | |||
| C |
$0.0747 | |||
| R |
$0.0794 | |||
| R6 |
$0.0984 | |||
| Advisor |
$0.0944 | |||
Total Annual Operating Expenses6
| Share Class | With Waiver | Without Waiver | ||||||
| A |
0.77% | 0.77% | ||||||
| Advisor |
0.62% | 0.62% | ||||||
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements and mortgage prepayments. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 1/31/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Distribution rate is based on an annualization of the respective class’s March dividend and the maximum offering price (NAV for Advisor Class) per share on 3/31/18.
5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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27 |
FRANKLIN U.S. GOVERNMENT SECURITIES FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
| Share Class |
Beginning Account Value1 |
Ending Account Value 3/31/18 |
Expenses Paid During Period2,3,4 |
Ending Value 3/31/18 |
Expenses Paid During Period3,4 |
Net Annualized Expense Ratio4 | ||||||||||||
| A |
$1,000 | $985.20 | $3.86 | $1,021.04 | $3.93 | 0.78% | ||||||||||||
| M |
$1,000 | $994.80 | $1.12 | $1,021.79 | $3.18 | 0.63% | ||||||||||||
| C |
$1,000 | $984.30 | $6.33 | $1,018.55 | $6.44 | 1.28% | ||||||||||||
| R |
$1,000 | $985.10 | $5.54 | $1,019.35 | $5.64 | 1.12% | ||||||||||||
| R6 |
$1,000 | $986.70 | $2.48 | $1,022.44 | $2.52 | 0.50% | ||||||||||||
| Advisor |
$1,000 | $986.00 | $3.12 | $1,021.79 | $3.18 | 0.63% | ||||||||||||
1. For Classes A, C, R, R6 and Advisor, 10/1/17 for Actual and Hypothetical. For Class M, 1/25/18 for Actual and 10/1/17 for Hypothetical.
2. For Classes A, C, R, R6 and Advisor, 10/1/17–3/31/18. For Class M, 1/25/18–3/31/18.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period. The multiplier is 65/365 for Actual Class M expenses to reflect the number of days since inception.
4. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| 28 | Semiannual Report | franklintempleton.com |
1. Source: Morningstar.
The indexes are unmanaged and include reinvested dividends. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
2. The utilities sector comprises electric utilities, gas utilities, multi-utilities and water utilities in the SOI. The energy sector comprises oil, gas and consumable fuels in the SOI. See www.franklintempletondatasources.com for additional data provider information.
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 89.
| franklintempleton.com | Semiannual Report |
29 |
FRANKLIN UTILITIES FUND
| 30 | Semiannual Report | franklintempleton.com |
FRANKLIN UTILITIES FUND
Performance Summary as of March 31, 2018
The performance tables 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. 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.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
| Share Class | Cumulative Total Return2 |
Average Annual Total Return3 |
||||||
| A |
||||||||
| 6-Month |
-3.99% | -8.07% | ||||||
| 1-Year |
+0.06% | -4.21% | ||||||
| 5-Year |
+47.46% | +7.14% | ||||||
| 10-Year |
+110.03% | +7.24% | ||||||
| Advisor |
||||||||
| 6-Month |
-4.00% | -4.00% | ||||||
| 1-Year |
+0.15% | +0.15% | ||||||
| 5-Year |
+48.63% | +8.25% | ||||||
| 10-Year |
+113.20% | +7.86% | ||||||
| Distribution | 30-Day Standardized Yield5 | |||||||||||||||
| Share Class | Rate4 | (with waiver) | (without waiver) | |||||||||||||
| A |
2.58% | 2.87% | 2.87% | |||||||||||||
| Advisor |
2.82% | 3.16% | 3.15% | |||||||||||||
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, go to franklintempleton.com or call (800) 342-5236.
See page 32 for Performance Summary footnotes.
| franklintempleton.com | Semiannual Report |
31 |
FRANKLIN UTILITIES FUND
PERFORMANCE SUMMARY
Net Asset Value
| Share Class (Symbol) | 3/31/18 |
1/25/18 |
9/30/17 |
Change | ||||
| A (FKUTX) | $17.85 |
N/A |
$19.18 |
-$1.33 | ||||
| M (FUFMX) | $17.84 |
$18.14 |
N/A |
-$0.30 | ||||
| C (FRUSX) | $17.75 |
N/A |
$19.09 |
-$1.34 | ||||
| R (FRURX) | $17.78 |
N/A |
$19.11 |
-$1.33 | ||||
| R6 (FUFRX) | $17.98 |
N/A |
$19.32 |
-$1.34 | ||||
| Advisor (FRUAX) | $17.98 |
N/A |
$19.32 |
-$1.34 | ||||
Distributions (10/1/17–3/31/18)
| Share Class | Net Investment Income |
Long-Term Capital Gain |
Total | |||||||||
| A | $0.2955 | $0.3087 | $0.6042 | |||||||||
| M (1/25/18 –3/31/18) | $0.1267 | N/A | $0.1267 | |||||||||
| C | $0.2483 | $0.3087 | $0.5570 | |||||||||
| R | $0.2624 | $0.3087 | $0.5711 | |||||||||
| R6 | $0.3189 | $0.3087 | $0.6276 | |||||||||
| Advisor |
$0.3096 | $0.3087 | $0.6183 | |||||||||
Total Annual Operating Expenses6
| Share Class | With Waiver | Without Waiver | ||||||
| A | 0.73% | 0.73% | ||||||
| Advisor | 0.58% | 0.58% |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Investing in a fund concentrating in the utilities sector involves special risks, including increased susceptibility to adverse economic and regulatory developments affecting the sector. Stocks historically have outperformed other asset classes over the long term, but tend to fluctuate more dramatically over the short term. Securities issued by utility companies have been historically sensitive to interestrate changes. When interest rates fall, utility securities prices, and thus a utilities fund’s share price, tend to rise; when interest rates rise, their prices generally fall. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 1/31/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Distribution rate is based on an annualization of the respective class’s current quarterly dividend and the maximum offering price (NAV for Advisor Class) per share on 3/31/18.
5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| 32 | Semiannual Report | franklintempleton.com |
FRANKLIN UTILITIES FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
| Share Class |
Beginning Account Value1 |
Ending Account Value 3/31/18 |
Expenses Paid During Period2,3,4 |
Ending Account Value 3/31/18 |
Expenses Paid During Period3,4 |
Net Annualized Expense Ratio4 | ||||||||||||
| A |
$1,000 | $960.10 | $3.52 | $1,021.34 | $3.63 | 0.72% | ||||||||||||
| M |
$1,000 | $990.70 | $1.01 | $1,022.09 | $2.87 | 0.57% | ||||||||||||
| C |
$1,000 | $956.90 | $5.95 | $1,018.85 | $6.14 | 1.22% | ||||||||||||
| R |
$1,000 | $958.20 | $5.22 | $1,019.60 | $5.39 | 1.07% | ||||||||||||
| R6 |
$1,000 | $961.00 | $2.40 | $1,022.49 | $2.47 | 0.49% | ||||||||||||
| Advisor |
$1,000 | $960.00 | $2.79 | $1,022.09 | $2.87 | 0.57% | ||||||||||||
1. For Classes A, C, R, R6 and Advisor, 10/1/17 for Actual and Hypothetical. For Class M, 1/25/18 for Actual and 10/1/17 for Hypothetical.
2. For Classes A, C, R, R6 and Advisor, 10/1/17–3/31/18. For Class M, 1/25/18–3/31/18.
3. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period. The multiplier is 65/365 for Actual Class M expenses to reflect the number of days since inception.
4. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| franklintempleton.com | Semiannual Report |
33 |
FRANKLIN CUSTODIAN FUNDS
Franklin DynaTech Fund
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$63.10 | $52.05 | $46.04 | $46.08 | $42.13 | $34.00 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.12 | ) | (0.18 | ) | (0.14 | ) | (0.21 | ) | (0.18 | ) | (0.12 | ) | ||||||||||||
| Net realized and unrealized gains (losses) |
8.09 | 12.92 | 7.35 | 1.78 | 5.94 | 8.25 | ||||||||||||||||||
| Total from investment operations |
7.97 | 12.74 | 7.21 | 1.57 | 5.76 | 8.13 | ||||||||||||||||||
| Less distributions from net realized gains |
(1.16 | ) | (1.69 | ) | (1.20 | ) | (1.61 | ) | (1.81 | ) | — | |||||||||||||
| Net asset value, end of period |
$69.91 | $63.10 | $52.05 | $46.04 | $46.08 | $42.13 | ||||||||||||||||||
| Total returnc |
12.73% | 25.67% | 15.73% | 3.40% | 13.98% | 23.91% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.88% | 0.92% | 0.91% | 0.89% | 0.89% | 0.94% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.87%e | 0.91%e | 0.90% | 0.89%f | 0.89%e,f | 0.94% | ||||||||||||||||||
| Net investment income (loss) |
(0.34)% | (0.33)% | (0.30)% | (0.44)% | (0.41)% | (0.34)% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$2,915,885 | $2,498,393 | $2,123,082 | $1,857,570 | $1,504,338 | $1,072,814 | ||||||||||||||||||
| Portfolio turnover rate |
9.07% | 19.85% | 22.42% | 31.02% | 26.43% | 35.40% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 34 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin DynaTech Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$53.49 | $44.71 | $40.00 | $40.53 | $37.53 | $30.52 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.31 | ) | (0.50 | ) | (0.43 | ) | (0.50 | ) | (0.46 | ) | (0.35 | ) | ||||||||||||
| Net realized and unrealized gains (losses) |
6.83 | 10.97 | 6.34 | 1.58 | 5.27 | 7.36 | ||||||||||||||||||
| Total from investment operations |
6.52 | 10.47 | 5.91 | 1.08 | 4.81 | 7.01 | ||||||||||||||||||
| Less distributions from net realized gains |
(1.16 | ) | (1.69 | ) | (1.20 | ) | (1.61 | ) | (1.81 | ) | — | |||||||||||||
| Net asset value, end of period |
$58.85 | $53.49 | $44.71 | $40.00 | $40.53 | $37.53 | ||||||||||||||||||
| Total returnc |
12.35% | 24.72% | 14.86% | 2.63% | 13.13% | 22.97% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.63% | 1.67% | 1.66% | 1.64% | 1.64% | 1.69% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
1.62%e | 1.66%e | 1.65% | 1.64%f | 1.64% | e,f | 1.69% | |||||||||||||||||
| Net investment income (loss) |
(1.09)% | (1.08)% | (1.05)% | (1.19)% | (1.16)% | (1.09)% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$468,828 | $374,502 | $318,896 | $270,961 | $212,961 | $176,556 | ||||||||||||||||||
| Portfolio turnover rate |
9.07% | 19.85% | 22.42% | 31.02% | 26.43% | 35.40% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 35 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin DynaTech Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class R |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$61.51 | $50.90 | $45.16 | $45.35 | $41.58 | $33.65 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.19 | ) | (0.31 | ) | (0.26 | ) | (0.32 | ) | (0.29 | ) | (0.21 | ) | ||||||||||||
| Net realized and unrealized gains (losses) |
7.87 | 12.61 | 7.20 | 1.74 | 5.87 | 8.14 | ||||||||||||||||||
| Total from investment operations |
7.68 | 12.30 | 6.94 | 1.42 | 5.58 | 7.93 | ||||||||||||||||||
| Less distributions from net realized gains |
(1.16 | ) | (1.69 | ) | (1.20 | ) | (1.61 | ) | (1.81 | ) | — | |||||||||||||
| Net asset value, end of period |
$68.03 | $61.51 | $50.90 | $45.16 | $45.35 | $41.58 | ||||||||||||||||||
| Total returnc |
12.61% | 25.36% | 15.43% | 3.11% | 13.72% | 23.57% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.13% | 1.17% | 1.16% | 1.14% | 1.14% | 1.19% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
1.12%e | 1.16%e | 1.15% | 1.14%f | 1.14%e,f | 1.19% | ||||||||||||||||||
| Net investment income (loss) |
(0.59)% | (0.58)% | (0.55)% | (0.69)% | (0.66)% | (0.59)% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$64,439 | $47,860 | $38,862 | $43,001 | $45,230 | $41,825 | ||||||||||||||||||
| Portfolio turnover rate |
9.07% | 19.85% | 22.42% | 31.02% | 26.43% | 35.40% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 36 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin DynaTech Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013a | |||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$65.28 | $53.56 | $47.15 | $46.97 | $42.74 | $36.56 | ||||||||||||||||||
| Income from investment operationsb: |
||||||||||||||||||||||||
| Net investment income (loss)c |
0.02 | 0.06 | 0.06 | (0.01 | ) | (0.01 | ) | 0.01 | ||||||||||||||||
| Net realized and unrealized gains (losses) |
8.36 | 13.35 | 7.55 | 1.80 | 6.05 | 6.17 | ||||||||||||||||||
| Total from investment operations |
8.38 | 13.41 | 7.61 | 1.79 | 6.04 | 6.18 | ||||||||||||||||||
| Less distributions from net realized gains |
(1.16 | ) | (1.69 | ) | (1.20 | ) | (1.61 | ) | (1.81 | ) | — | |||||||||||||
| Net asset value, end of period |
$72.50 | $65.28 | $53.56 | $47.15 | $46.97 | $42.74 | ||||||||||||||||||
| Total returnd |
12.99% | 26.17% | 16.21% | 3.81% | 14.45% | 16.90% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.50% | 0.49% | 0.49% | 0.48% | 0.49% | 0.52% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.49%f | 0.48%f | 0.48% | 0.48%g | 0.49% | f,g | 0.52% | |||||||||||||||||
| Net investment income (loss) |
0.04% | 0.10% | 0.12% | (0.03)% | (0.01)% | 0.08% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$1,242,880 | $457,846 | $359,505 | $362,627 | $342,466 | $317,315 | ||||||||||||||||||
| Portfolio turnover rate |
9.07% | 19.85% | 22.42% | 31.02% | 26.43% | 35.40% | ||||||||||||||||||
aFor the period May 1, 2013 (effective date) to September 30, 2013.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 37 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin DynaTech Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Advisor Class |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$64.78 | $53.25 | $46.96 | $46.87 | $42.71 | $34.39 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.04 | ) | (0.04 | ) | (0.03 | ) | (0.09 | ) | (0.07 | ) | (0.03 | ) | ||||||||||||
| Net realized and unrealized gains (losses) |
8.31 | 13.26 | 7.52 | 1.79 | 6.04 | 8.35 | ||||||||||||||||||
| Total from investment operations |
8.27 | 13.22 | 7.49 | 1.70 | 5.97 | 8.32 | ||||||||||||||||||
| Less distributions from net realized gains |
(1.16 | ) | (1.69 | ) | (1.20 | ) | (1.61 | ) | (1.81 | ) | — | |||||||||||||
| Net asset value, end of period |
$71.89 | $64.78 | $53.25 | $46.96 | $46.87 | $42.71 | ||||||||||||||||||
| Total returnc |
12.89% | 25.98% | 16.02% | 3.62% | 14.29% | 24.19% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.63% | 0.67% | 0.66% | 0.64% | 0.64% | 0.69% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.62%e | 0.66%e | 0.65% | 0.64%f | 0.64% | e,f | 0.69% | |||||||||||||||||
| Net investment income (loss) |
(0.09)% | (0.08)% | (0.05)% | (0.19)% | (0.16)% | (0.09)% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$425,166 | $712,762 | $203,443 | $176,090 | $159,180 | $122,287 | ||||||||||||||||||
| Portfolio turnover rate |
9.07% | 19.85% | 22.42% | 31.02% | 26.43% | 35.40% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 38 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin DynaTech Fund
| Country | Shares | Value | ||||||||||
| Common Stocks 96.9% |
||||||||||||
| Aerospace & Defense 3.6% |
||||||||||||
| The Boeing Co. |
United States | 200,000 | $ | 65,576,000 | ||||||||
| Heico Corp. |
United States | 350,000 | 30,383,500 | |||||||||
| Raytheon Co. |
United States | 400,000 | 86,328,000 | |||||||||
| 182,287,500 | ||||||||||||
| Air Freight & Logistics 0.9% |
||||||||||||
| FedEx Corp. |
United States | 200,000 | 48,022,000 | |||||||||
| Biotechnology 2.3% |
||||||||||||
| a Alnylam Pharmaceuticals Inc. |
United States | 40,000 | 4,764,000 | |||||||||
| Amgen Inc. |
United States | 80,000 | 13,638,400 | |||||||||
| a AveXis Inc. |
United States | 100,000 | 12,358,000 | |||||||||
| a Bluebird Bio Inc. |
United States | 100,000 | 17,075,000 | |||||||||
| a Foundation Medicine Inc. |
United States | 100,000 | 7,875,000 | |||||||||
| a Neurocrine Biosciences Inc. |
United States | 300,000 | 24,879,000 | |||||||||
| a Regeneron Pharmaceuticals Inc. |
United States | 100,000 | 34,436,000 | |||||||||
| a Rhythm Pharmaceuticals Inc. |
United States | 105,400 | 2,097,460 | |||||||||
| 117,122,860 | ||||||||||||
| Capital Markets 5.4% |
||||||||||||
| CBOE Global Markets Inc. |
United States | 350,000 | 39,935,000 | |||||||||
| The Charles Schwab Corp. |
United States | 1,300,000 | 67,886,000 | |||||||||
| Intercontinental Exchange Inc. |
United States | 750,000 | 54,390,000 | |||||||||
| MarketAxess Holdings Inc. |
United States | 100,000 | 21,744,000 | |||||||||
| Moody’s Corp. |
United States | 300,000 | 48,390,000 | |||||||||
| MSCI Inc. |
United States | 300,000 | 44,841,000 | |||||||||
| 277,186,000 | ||||||||||||
| Communications Equipment 0.4% |
||||||||||||
| a Arista Networks Inc. |
United States | 75,000 | 19,147,500 | |||||||||
| Consumer Finance 0.0%† |
||||||||||||
| a Lexinfintech Holdings Ltd., ADR |
China | 190,500 | 2,766,060 | |||||||||
| Diversified Consumer Services 0.1% |
||||||||||||
| a Bright Horizons Family Solutions Inc. |
United States | 80,000 | 7,977,600 | |||||||||
| Electrical Equipment 0.5% |
||||||||||||
| Nidec Corp. |
Japan | 20,000 | 3,084,740 | |||||||||
| Rockwell Automation Inc. |
United States | 140,000 | 24,388,000 | |||||||||
| 27,472,740 | ||||||||||||
| Electronic Equipment, Instruments & Components 2.2% |
||||||||||||
| Amphenol Corp., A |
United States | 500,000 | 43,065,000 | |||||||||
| Cognex Corp. |
United States | 500,000 | 25,995,000 | |||||||||
| Keyence Corp. |
Japan | 70,000 | 43,502,564 | |||||||||
| 112,562,564 | ||||||||||||
| Energy Equipment & Services 0.6% |
||||||||||||
| Schlumberger Ltd. |
United States | 500,000 | 32,390,000 | |||||||||
| Equity Real Estate Investment Trusts (REITs) 3.9% |
||||||||||||
| American Tower Corp. |
United States | 400,000 | 58,136,000 | |||||||||
| Equinix Inc. |
United States | 170,000 | 71,083,800 | |||||||||
| a SBA Communications Corp., A. |
United States | 400,000 | 68,368,000 | |||||||||
| 197,587,800 | ||||||||||||
| franklintempleton.com | Semiannual Report |
39 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin DynaTech Fund (continued)
| Country | Shares | Value | ||||||||||
| Common Stocks (continued) |
||||||||||||
| Health Care Equipment & Supplies 7.5% |
||||||||||||
| Abbott Laboratories |
United States | 750,000 | $ | 44,940,000 | ||||||||
| a ABIOMED Inc. |
United States | 115,000 | 33,463,850 | |||||||||
| a Align Technology Inc. |
United States | 50,000 | 12,556,500 | |||||||||
| Becton, Dickinson and Co. |
United States | 210,000 | 45,507,000 | |||||||||
| Danaher Corp. |
United States | 200,000 | 19,582,000 | |||||||||
| a Edwards Lifesciences Corp. |
United States | 300,000 | 41,856,000 | |||||||||
| a IDEXX Laboratories Inc. |
United States | 400,000 | 76,556,000 | |||||||||
| a Intuitive Surgical Inc. |
United States | 125,000 | 51,603,750 | |||||||||
| a iRhythm Technologies Inc. |
United States | 115,000 | 7,239,250 | |||||||||
| a Nevro Corp. |
United States | 100,000 | 8,667,000 | |||||||||
| Stryker Corp. |
United States | 250,000 | 40,230,000 | |||||||||
| 382,201,350 | ||||||||||||
| Health Care Providers & Services 1.5% |
||||||||||||
| UnitedHealth Group Inc. |
United States | 350,000 | 74,900,000 | |||||||||
| Health Care Technology 0.9% |
||||||||||||
| a Veeva Systems Inc. |
United States | 600,000 | 43,812,000 | |||||||||
| Industrial Conglomerates 0.1% |
||||||||||||
| Roper Technologies Inc. |
United States | 20,000 | 5,613,800 | |||||||||
| Internet & Direct Marketing Retail 9.7% |
||||||||||||
| a Amazon.com Inc. |
United States | 250,000 | 361,835,000 | |||||||||
| a Booking Holdings Inc. |
United States | 20,000 | 41,607,800 | |||||||||
| a Despegar.com Corp. |
Argentina | 100,000 | 3,125,000 | |||||||||
| a Netflix Inc. |
United States | 250,000 | 73,837,500 | |||||||||
| Start Today Co. Ltd. |
Japan | 650,000 | 17,383,899 | |||||||||
| 497,789,199 | ||||||||||||
| Internet Software & Services 15.2% |
||||||||||||
| a 2U Inc. |
United States | 400,000 | 33,612,000 | |||||||||
| a Alibaba Group Holding Ltd., ADR |
China | 400,000 | 73,416,000 | |||||||||
| a Alphabet Inc., A |
United States | 160,000 | 165,942,400 | |||||||||
| a Alphabet Inc., C |
United States | 62,170 | 64,146,384 | |||||||||
| a Alteryx Inc. |
United States | 20,000 | 682,800 | |||||||||
| a Baidu Inc., ADR |
China | 25,000 | 5,579,750 | |||||||||
| a CarGurus Inc. |
United States | 100,000 | 3,847,000 | |||||||||
| a Delivery Hero AG |
Germany | 200,000 | 9,683,913 | |||||||||
| a Dropbox Inc., A |
United States | 52,600 | 1,643,750 | |||||||||
| a eBay Inc. |
United States | 10,000 | 402,400 | |||||||||
| a Etsy Inc. |
United States | 100,000 | 2,806,000 | |||||||||
| a Facebook Inc., A |
United States | 1,000,000 | 159,790,000 | |||||||||
| a GoDaddy Inc., A |
United States | 40,000 | 2,456,800 | |||||||||
| a GrubHub Inc. |
United States | 160,000 | 16,235,200 | |||||||||
| a Match Group Inc. |
United States | 300,000 | 13,332,000 | |||||||||
| MercadoLibre Inc. |
Argentina | 100,000 | 35,639,000 | |||||||||
| NetEase Inc., ADR |
China | 50,000 | 14,019,500 | |||||||||
| a Q2 Holdings Inc. |
United States | 300,000 | 13,665,000 | |||||||||
| a SendGrid Inc. |
United States | 100,000 | 2,814,000 | |||||||||
| a Shopify Inc., A |
Canada | 100,000 | 12,430,316 | |||||||||
| Tencent Holdings Ltd. |
China | 2,500,000 | 130,465,804 | |||||||||
| a Weibo Corp., ADR |
China | 110,000 | 13,149,400 | |||||||||
| 775,759,417 | ||||||||||||
| 40 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin DynaTech Fund (continued)
| Country | Shares | Value | ||||||||||
| Common Stocks (continued) |
||||||||||||
| IT Services 8.5% |
||||||||||||
| DXC Technology Co. |
United States | 100,000 | $ | 10,053,000 | ||||||||
| a Fiserv Inc. |
United States | 500,000 | 35,655,000 | |||||||||
| a InterXion Holding NV |
Netherlands | 500,000 | 31,055,000 | |||||||||
| Mastercard Inc., A |
United States | 1,000,000 | 175,160,000 | |||||||||
| a Pagseguro Digital Ltd. |
Brazil | 350,000 | 13,412,000 | |||||||||
| a PayPal Holdings Inc. |
United States | 350,000 | 26,554,500 | |||||||||
| a Square Inc., A |
United States | 500,000 | 24,600,000 | |||||||||
| Visa Inc., A |
United States | 1,000,000 | 119,620,000 | |||||||||
| 436,109,500 | ||||||||||||
| Life Sciences Tools & Services 2.0% |
||||||||||||
| a Illumina Inc. |
United States | 165,000 | 39,009,300 | |||||||||
| Thermo Fisher Scientific Inc. |
United States | 200,000 | 41,292,000 | |||||||||
| a Waters Corp. |
United States | 100,000 | 19,865,000 | |||||||||
| 100,166,300 | ||||||||||||
| Machinery 1.0% |
||||||||||||
| FANUC Corp. |
Japan | 40,000 | 10,148,215 | |||||||||
| Fortive Corp. |
United States | 500,000 | 38,760,000 | |||||||||
| KUKA AG |
Germany | 38,218 | 4,336,665 | |||||||||
| 53,244,880 | ||||||||||||
| Media 1.7% |
||||||||||||
| a GCI Liberty Inc. |
United States | 330,000 | 17,443,800 | |||||||||
| a Liberty Broadband Corp., A |
United States | 400,000 | 33,920,000 | |||||||||
| a Liberty Broadband Corp., C |
United States | 130,907 | 11,217,421 | |||||||||
| Naspers Ltd., N |
South Africa | 100,000 | 24,456,444 | |||||||||
| 87,037,665 | ||||||||||||
| Pharmaceuticals 0.2% |
||||||||||||
| Merck KGaA |
Germany | 100,000 | 9,597,669 | |||||||||
| a Nektar Therapeutics |
United States | 30,000 | 3,187,800 | |||||||||
| 12,785,469 | ||||||||||||
| Professional Services 0.9% |
||||||||||||
| a CoStar Group Inc. |
United States | 120,000 | 43,521,600 | |||||||||
| en-japan Inc. |
Japan | 25,000 | 1,451,560 | |||||||||
| 44,973,160 | ||||||||||||
| Real Estate Management & Development 0.0%† |
||||||||||||
| a Redfin Corp. |
United States | 20,400 | 465,732 | |||||||||
| Semiconductors & Semiconductor Equipment 8.3% |
||||||||||||
| Analog Devices Inc. |
United States | 450,000 | 41,008,500 | |||||||||
| Applied Materials Inc. |
United States | 320,000 | 17,795,200 | |||||||||
| ASML Holding NV, N.Y. shs |
Netherlands | 200,000 | 39,712,000 | |||||||||
| Broadcom Ltd. |
United States | 250,000 | 58,912,500 | |||||||||
| Intel Corp. |
United States | 1,000,000 | 52,080,000 | |||||||||
| KLA-Tencor Corp. |
United States | 150,000 | 16,351,500 | |||||||||
| Lam Research Corp. |
United States | 350,000 | 71,106,000 | |||||||||
| Monolithic Power Systems |
United States | 200,000 | 23,154,000 | |||||||||
| NVIDIA Corp. |
United States | 350,000 | 81,056,500 | |||||||||
| Teradyne Inc. |
United States | 20,000 | 914,200 | |||||||||
| Xilinx Inc. |
United States | 325,000 | 23,478,000 | |||||||||
| 425,568,400 | ||||||||||||
| franklintempleton.com | Semiannual Report |
41 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin DynaTech Fund (continued)
| Country | Shares | Value | ||||||||||
| Common Stocks (continued) |
||||||||||||
| Software 17.9% |
||||||||||||
| Activision Blizzard Inc. |
United States | 550,000 | $ | 37,103,000 | ||||||||
| a Adobe Systems Inc. |
United States | 500,000 | 108,040,000 | |||||||||
| a Altair Engineering Inc. |
United States | 250,000 | 7,840,000 | |||||||||
| a ANSYS Inc. |
United States | 200,000 | 31,338,000 | |||||||||
| a Aspen Technology Inc. |
United States | 500,000 | 39,445,000 | |||||||||
| a Atlassian Corp. PLC |
Australia | 350,000 | 18,872,000 | |||||||||
| a Autodesk Inc. |
United States | 350,000 | 43,953,000 | |||||||||
| a Blackline Inc. |
United States | 200,200 | 7,849,842 | |||||||||
| a Cadence Design Systems Inc. |
United States | 500,000 | 18,385,000 | |||||||||
| a Electronic Arts Inc. |
United States | 500,000 | 60,620,000 | |||||||||
| a Guidewire Software Inc. |
United States | 350,000 | 28,290,500 | |||||||||
| a Hubspot Inc. |
United States | 250,000 | 27,075,000 | |||||||||
| Intuit Inc. |
United States | 250,000 | 43,337,500 | |||||||||
| Microsoft Corp.. |
United States | 750,000 | 68,452,500 | |||||||||
| NCsoft Corp. |
South Korea | 5,000 | 1,978,416 | |||||||||
| a Salesforce.com Inc. |
United States | 1,000,000 | 116,300,000 | |||||||||
| a Sea Ltd., ADR |
Singapore | 100,000 | 1,127,000 | |||||||||
| a ServiceNow Inc. |
United States | 600,000 | 99,270,000 | |||||||||
| a Splunk Inc. |
United States | 400,000 | 39,356,000 | |||||||||
| a Take-Two Interactive Software Inc. |
United States | 10,000 | 977,800 | |||||||||
| a Tyler Technologies Inc. |
United States | 100,000 | 21,096,000 | |||||||||
| a Ultimate Software Group Inc. |
United States | 50,000 | 12,185,000 | |||||||||
| a Workday Inc., A |
United States | 500,000 | 63,555,000 | |||||||||
| a Zendesk Inc. |
United States | 300,000 | 14,361,000 | |||||||||
| a Zscaler Inc. |
United States | 200,000 | 5,614,000 | |||||||||
| 916,421,558 | ||||||||||||
| Technology Hardware, Storage & Peripherals 1.3% |
||||||||||||
| Apple Inc. |
United States | 400,000 | 67,112,000 | |||||||||
| Textiles, Apparel & Luxury Goods 0.3% |
||||||||||||
| NIKE Inc., B |
United States | 200,000 | 13,288,000 | |||||||||
| Total Common Stocks (Cost $2,528,296,034) |
4,961,771,054 | |||||||||||
| Short Term Investments (Cost $168,212,818) 3.3% |
||||||||||||
| Money Market Funds 3.3% |
||||||||||||
| b,c Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
United States | 168,212,818 | 168,212,818 | |||||||||
| Total Investments (Cost $2,696,508,852) 100.2% |
5,129,983,872 | |||||||||||
| Other Assets, less Liabilities (0.2)% |
(12,785,711 | ) | ||||||||||
| Net Assets 100.0% |
$ | 5,117,198,161 | ||||||||||
See Abbreviations on page 120.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSee Note 3(f) regarding investments in affiliated management investment companies.
cThe rate shown is the annualized seven-day effective yield at period end.
| 42 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Financial Highlights
Franklin Growth Fund
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited | ) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$91.61 | $78.54 | $72.40 | $70.51 | $59.49 | $50.13 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.19 | 0.40 | 0.47 | c | 0.29 | 0.26 | 0.26 | |||||||||||||||||
| Net realized and unrealized gains (losses) |
7.10 | 15.56 | 8.51 | 1.79 | 11.06 | 9.24 | ||||||||||||||||||
| Total from investment operations |
7.29 | 15.96 | 8.98 | 2.08 | 11.32 | 9.50 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.36 | ) | (0.39 | ) | (0.47 | ) | (0.19 | ) | (0.30 | ) | (0.14 | ) | ||||||||||||
| Net realized gains |
(2.25 | ) | (2.50 | ) | (2.37 | ) | — | — | — | |||||||||||||||
| Total distributions |
(2.61 | ) | (2.89 | ) | (2.84 | ) | (0.19 | ) | (0.30 | ) | (0.14 | ) | ||||||||||||
| Net asset value, end of period |
$96.29 | $91.61 | $78.54 | $72.40 | $70.51 | $59.49 | ||||||||||||||||||
| Total returnd |
8.04% | 21.12% | 12.57% | 2.94% | 19.08% | 19.01% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.85% | 0.88% | 0.88% | 0.88% | 0.90% | 0.91% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatesf |
0.84% | 0.87% | 0.86% | 0.88% | g | 0.90% | g | 0.91% | ||||||||||||||||
| Net investment income |
0.40% | 0.47% | 0.63% | c | 0.38% | 0.40% | 0.49% | |||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$8,336,492 | $8,051,641 | $7,628,523 | $7,185,665 | $6,611,073 | $5,305,031 | ||||||||||||||||||
| Portfolio turnover rate |
3.02% | 5.60% | 7.53% | 5.05% | 1.50% | 0.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.50%.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 43 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Growth Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited | ) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$84.25 | $72.60 | $67.17 | $65.75 | $55.64 | $47.10 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment income (loss)b |
(0.16 | ) | (0.21 | ) | (0.08 | )c | (0.26 | ) | (0.22 | ) | (0.13 | ) | ||||||||||||
| Net realized and unrealized gains (losses) |
6.54 | 14.36 | 7.88 | 1.68 | 10.33 | 8.67 | ||||||||||||||||||
| Total from investment operations |
6.38 | 14.15 | 7.80 | 1.42 | 10.11 | 8.54 | ||||||||||||||||||
| Less distributions from net realized gains |
(2.25 | ) | (2.50 | ) | (2.37 | ) | — | — | — | |||||||||||||||
| Net asset value, end of period |
$88.38 | $84.25 | $72.60 | $67.17 | $65.75 | $55.64 | ||||||||||||||||||
| Total returnd |
7.64 | % | 20.21 | % | 11.74 | % | 2.16 | % | 18.17 | % | 18.13 | % | ||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.60 | % | 1.63 | % | 1.63 | % | 1.63 | % | 1.65 | % | 1.66 | % | ||||||||||||
| Expenses net of waiver and payments by affiliatesf |
1.59 | % | 1.62 | % | 1.61 | % | 1.63 | %g | 1.65 | %g | 1.66 | % | ||||||||||||
| Net investment income (loss) |
(0.35 | )% | (0.28 | )% | (0.12 | )%c | (0.37 | )% | (0.35 | )% | (0.26 | )% | ||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$994,443 | $930,751 | $846,965 | $777,570 | $662,548 | $546,505 | ||||||||||||||||||
| Portfolio turnover rate |
3.02 | % | 5.60 | % | 7.53 | % | 5.05 | % | 1.50 | % | 0.83 | % | ||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been (0.25)%.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 44 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Growth Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited | ) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
| Class R |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$91.13 | $78.14 | $71.93 | $70.05 | $59.07 | $49.82 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.07 | 0.19 | 0.29 | c | 0.10 | 0.10 | 0.13 | |||||||||||||||||
| Net realized and unrealized gains (losses) |
7.06 | 15.51 | 8.45 | 1.78 | 10.98 | 9.18 | ||||||||||||||||||
| Total from investment operations |
7.13 | 15.70 | 8.74 | 1.88 | 11.08 | 9.31 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.13 | ) | (0.21 | ) | (0.16 | ) | — | (0.10 | ) | (0.06 | ) | |||||||||||||
| Net realized gains |
(2.25 | ) | (2.50 | ) | (2.37 | ) | — | — | — | |||||||||||||||
| Total distributions |
(2.38 | ) | (2.71 | ) | (2.53 | ) | — | (0.10 | ) | (0.06 | ) | |||||||||||||
| Net asset value, end of period |
$95.88 | $91.13 | $78.14 | $71.93 | $70.05 | $59.07 | ||||||||||||||||||
| Total returnd |
7.91% | 20.81% | 12.29% | 2.68% | 18.77% | 18.71% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.10% | 1.13% | 1.13% | 1.13% | 1.15% | 1.16% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatesf |
1.09% | 1.12% | 1.11% | 1.13% | g | 1.15% | g | 1.16% | ||||||||||||||||
| Net investment income |
0.15% | 0.22% | 0.38% | c | 0.13% | 0.15% | 0.24% | |||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$507,133 | $510,317 | $477,221 | $501,813 | $565,634 | $552,391 | ||||||||||||||||||
| Portfolio turnover rate |
3.02% | 5.60% | 7.53% | 5.05% | 1.50% | 0.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.25%.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 45 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Growth Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited | ) | 2017 | 2016 | 2015 | 2014 | 2013 | a | |||||||||||||||||
| Class R6 |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$91.90 | $78.79 | $72.69 | $70.76 | $59.71 | $54.58 | ||||||||||||||||||
| Income from investment operationsb: |
||||||||||||||||||||||||
| Net investment incomec |
0.37 | 0.74 | 0.78 | d | 0.61 | 0.55 | 0.24 | |||||||||||||||||
| Net realized and unrealized gains (losses) |
7.12 | 15.59 | 8.56 | 1.79 | 11.08 | 4.89 | ||||||||||||||||||
| Total from investment operations |
7.49 | 16.33 | 9.34 | 2.40 | 11.63 | 5.13 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.74 | ) | (0.72 | ) | (0.87 | ) | (0.47 | ) | (0.58 | ) | — | |||||||||||||
| Net realized gains |
(2.25 | ) | (2.50 | ) | (2.37 | ) | — | — | — | |||||||||||||||
| Total distributions |
(2.99 | ) | (3.22 | ) | (3.24 | ) | (0.47 | ) | (0.58 | ) | — | |||||||||||||
| Net asset value, end of period |
$96.40 | $91.90 | $78.79 | $72.69 | $70.76 | $59.71 | ||||||||||||||||||
| Total returne |
8.26% | 21.61% | 13.05% | 3.37% | 19.59% | 9.40% | ||||||||||||||||||
| Ratios to average net assetsf |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.48% | 0.46% | 0.46% | 0.46% | 0.47% | 0.48% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatesg |
0.47% | 0.45% | 0.44% | 0.46% | h | 0.47% | h | 0.48% | ||||||||||||||||
| Net investment income |
0.77% | 0.89% | 1.05% | d | 0.80% | 0.83% | 0.92% | |||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$2,264,312 | $1,700,993 | $1,247,825 | $1,163,362 | $1,107,887 | $871,260 | ||||||||||||||||||
| Portfolio turnover rate |
3.02% | 5.60% | 7.53% | 5.05% | 1.50% | 0.83% | ||||||||||||||||||
aFor the period May 1, 2013 (effective date) to September 30, 2013.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.92%.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 46 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Growth Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited | ) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
| Advisor Class |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$91.90 | $78.80 | $72.67 | $70.75 | $59.66 | $50.24 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.31 | 0.60 | 0.65 | c | 0.48 | 0.43 | 0.39 | |||||||||||||||||
| Net realized and unrealized gains (losses) |
7.12 | 15.61 | 8.56 | 1.79 | 11.08 | 9.26 | ||||||||||||||||||
| Total from investment operations |
7.43 | 16.21 | 9.21 | 2.27 | 11.51 | 9.65 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income |
(0.59 | ) | (0.61 | ) | (0.71 | ) | (0.35 | ) | (0.42 | ) | (0.23 | ) | ||||||||||||
| Net realized gains |
(2.25 | ) | (2.50 | ) | (2.37 | ) | — | — | — | |||||||||||||||
| Total distributions |
(2.84 | ) | (3.11 | ) | (3.08 | ) | (0.35 | ) | (0.42 | ) | (0.23 | ) | ||||||||||||
| Net asset value, end of period |
$96.49 | $91.90 | $78.80 | $72.67 | $70.75 | $59.66 | ||||||||||||||||||
| Total returnd |
8.17% | 21.43% | 12.85% | 3.20% | 19.37% | 19.29% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.60% | 0.63% | 0.63% | 0.63% | 0.65% | 0.66% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatesf |
0.59% | 0.62% | 0.61% | 0.63% | g | 0.65% | g | 0.66% | ||||||||||||||||
| Net investment income |
0.65% | 0.72% | 0.88% | c | 0.63% | 0.65% | 0.74% | |||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$2,697,170 | $2,801,153 | $1,998,483 | $1,514,492 | $1,414,980 | $1,080,811 | ||||||||||||||||||
| Portfolio turnover rate |
3.02% | 5.60% | 7.53% | 5.05% | 1.50% | 0.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.75%.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 47 |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin Growth Fund
| Country | Shares | Value | ||||||||||||
| Common Stocks 97.6% | ||||||||||||||
| Automobiles & Components 0.6% | ||||||||||||||
| BorgWarner Inc. | United States | 1,650,000 | $ | 82,879,500 | ||||||||||
|
|
|
|||||||||||||
| Banks 0.3% | ||||||||||||||
| Wells Fargo & Co. | United States | 750,000 | 39,307,500 | |||||||||||
|
|
|
|||||||||||||
| Capital Goods 19.2% | ||||||||||||||
| 3M Co. | United States | 855,000 | 187,689,600 | |||||||||||
| Allegion PLC | United States | 700,000 | 59,703,000 | |||||||||||
| AMETEK Inc. | United States | 700,000 | 53,179,000 | |||||||||||
| The Boeing Co. | United States | 1,100,000 | 360,668,000 | |||||||||||
| BWX Technologies Inc. | United States | 1,200,000 | 76,236,000 | |||||||||||
| Caterpillar Inc. | United States | 550,000 | 81,059,000 | |||||||||||
| Deere & Co. | United States | 500,000 | 77,660,000 | |||||||||||
| Emerson Electric Co. | United States | 1,100,000 | 75,130,000 | |||||||||||
| Fortive Corp. | United States | 525,000 | 40,698,000 | |||||||||||
| General Dynamics Corp. | United States | 1,000,000 | 220,900,000 | |||||||||||
| General Electric Co. | United States | 5,000,000 | 67,400,000 | |||||||||||
| Huntington Ingalls Industries Inc. | United States | 300,000 | 77,328,000 | |||||||||||
| Illinois Tool Works Inc. | United States | 1,000,000 | 156,660,000 | |||||||||||
| Ingersoll-Rand PLC | United States | 1,100,000 | 94,061,000 | |||||||||||
| Lockheed Martin Corp. | United States | 500,000 | 168,965,000 | |||||||||||
| Northrop Grumman Corp. | United States | 1,100,000 | 384,032,000 | |||||||||||
| Raytheon Co. | United States | 600,000 | 129,492,000 | |||||||||||
| Rockwell Collins Inc. | United States | 350,000 | 47,197,500 | |||||||||||
| a |
Sensata Technologies Holding PLC | United States | 3,200,000 | 165,856,000 | ||||||||||
| Stanley Black & Decker Inc. | United States | 650,000 | 99,580,000 | |||||||||||
| Textron Inc. | United States | 1,600,000 | 94,352,000 | |||||||||||
| United Technologies Corp. | United States | 930,000 | 117,012,600 | |||||||||||
|
|
|
|||||||||||||
| 2,834,858,700 | ||||||||||||||
|
|
|
|||||||||||||
| Commercial & Professional Services 2.6% | ||||||||||||||
| Equifax Inc. | United States | 550,000 | 64,795,500 | |||||||||||
| a |
IHS Markit Ltd. | United States | 3,556,600 | 171,570,384 | ||||||||||
| a |
Verisk Analytics Inc. | United States | 1,500,000 | 156,000,000 | ||||||||||
|
|
|
|||||||||||||
| 392,365,884 | ||||||||||||||
|
|
|
|||||||||||||
| Consumer Durables & Apparel 0.8% | ||||||||||||||
| NIKE Inc., B | United States | 1,880,000 | 124,907,200 | |||||||||||
|
|
|
|||||||||||||
| Consumer Services 1.4% | ||||||||||||||
| Carnival Corp. | United States | 1,200,000 | 78,696,000 | |||||||||||
| Graham Holdings Co., B | United States | 80,000 | 48,180,000 | |||||||||||
| Marriott International Inc., A | United States | 200,000 | 27,196,000 | |||||||||||
| Starbucks Corp. | United States | 900,000 | 52,101,000 | |||||||||||
|
|
|
|||||||||||||
| 206,173,000 | ||||||||||||||
|
|
|
|||||||||||||
| Diversified Financials 4.0% | ||||||||||||||
| American Express Co. | United States | 600,000 | 55,968,000 | |||||||||||
| a |
Berkshire Hathaway Inc., A | United States | 184 | 55,034,400 | ||||||||||
| BlackRock Inc. | United States | 225,000 | 121,887,000 | |||||||||||
| The Charles Schwab Corp. | United States | 3,000,000 | 156,660,000 | |||||||||||
| Intercontinental Exchange Inc. | United States | 1,400,000 | 101,528,000 | |||||||||||
| T. Rowe Price Group Inc. | United States | 900,000 | 97,173,000 | |||||||||||
|
|
|
|||||||||||||
| 588,250,400 | ||||||||||||||
|
|
|
| 48 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Growth Fund (continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) |
||||||||||||||
| Energy 1.5% | ||||||||||||||
| Anadarko Petroleum Corp. | United States | 1,250,000 | $ | 75,512,500 | ||||||||||
| Cabot Oil & Gas Corp., A | United States | 1,700,000 | 40,766,000 | |||||||||||
| Halliburton Co. | United States | 850,000 | 39,899,000 | |||||||||||
| Royal Dutch Shell PLC, A, ADR | United Kingdom | 345,000 | 22,014,450 | |||||||||||
| Schlumberger Ltd. | United States | 573,700 | 37,164,286 | |||||||||||
|
|
|
|||||||||||||
| 215,356,236 | ||||||||||||||
|
|
|
|||||||||||||
| Food & Staples Retailing 0.3% | ||||||||||||||
| CVS Health Corp. | United States | 656,000 | 40,809,760 | |||||||||||
|
|
|
|||||||||||||
| Food, Beverage & Tobacco 3.4% | ||||||||||||||
| Anheuser-Busch InBev SA/NV, ADR | Belgium | 350,000 | 38,479,000 | |||||||||||
| Brown-Forman Corp., B | United States | 1,625,000 | 88,400,000 | |||||||||||
| Constellation Brands Inc., A | United States | 400,000 | 91,168,000 | |||||||||||
| Mondelez International Inc., A | United States | 1,500,000 | 62,595,000 | |||||||||||
| a |
Monster Beverage Corp. | United States | 2,700,000 | 154,467,000 | ||||||||||
| PepsiCo Inc. | United States | 650,000 | 70,947,500 | |||||||||||
|
|
|
|||||||||||||
| 506,056,500 | ||||||||||||||
|
|
|
|||||||||||||
| Health Care Equipment & Services 7.5% | ||||||||||||||
| Abbott Laboratories | United States | 1,350,000 | 80,892,000 | |||||||||||
| a |
ABIOMED Inc. | United States | 200,000 | 58,198,000 | ||||||||||
| Aetna Inc. | United States | 650,000 | 109,850,000 | |||||||||||
| Baxter International Inc. | United States | 400,000 | 26,016,000 | |||||||||||
| Becton, Dickinson and Co. | United States | 77,700 | 16,837,590 | |||||||||||
| Danaher Corp. | United States | 1,050,000 | 102,805,500 | |||||||||||
| a |
Edwards Lifesciences Corp. | United States | 400,000 | 55,808,000 | ||||||||||
| a |
Haemonetics Corp. | United States | 1,000,000 | 73,160,000 | ||||||||||
| a |
Intuitive Surgical Inc. | United States | 450,000 | 185,773,500 | ||||||||||
| a |
Laboratory Corp. of America Holdings | United States | 500,000 | 80,875,000 | ||||||||||
| Quest Diagnostics Inc. | United States | 900,000 | 90,270,000 | |||||||||||
| Stryker Corp. | United States | 400,000 | 64,368,000 | |||||||||||
| Teleflex Inc. | United States | 500,000 | 127,490,000 | |||||||||||
| a |
Varian Medical Systems Inc. | United States | 300,000 | 36,795,000 | ||||||||||
|
|
|
|||||||||||||
| 1,109,138,590 | ||||||||||||||
|
|
|
|||||||||||||
| Insurance 0.4% | ||||||||||||||
| Aflac Inc. | United States | 1,200,000 | 52,512,000 | |||||||||||
|
|
|
|||||||||||||
| Materials 4.4% | ||||||||||||||
| Air Products and Chemicals Inc. | United States | 500,000 | 79,515,000 | |||||||||||
| Albemarle Corp. | United States | 550,000 | 51,007,000 | |||||||||||
| a |
Axalta Coating Systems Ltd. | United States | 3,400,000 | 102,646,000 | ||||||||||
| Celanese Corp., A | United States | 1,250,000 | 125,262,500 | |||||||||||
| Ecolab Inc. | United States | 920,000 | 126,104,400 | |||||||||||
| Martin Marietta Materials Inc. | United States | 400,000 | 82,920,000 | |||||||||||
| Praxair Inc. | United States | 575,000 | 82,972,500 | |||||||||||
|
|
|
|||||||||||||
| 650,427,400 | ||||||||||||||
|
|
|
|||||||||||||
| Media 1.6% | ||||||||||||||
| Cable One Inc. | United States | 80,000 | 54,968,800 | |||||||||||
| Comcast Corp., A | United States | 110,000 | 3,758,700 | |||||||||||
| The Walt Disney Co. | United States | 1,724,290 | 173,187,688 | |||||||||||
|
|
|
|||||||||||||
| 231,915,188 | ||||||||||||||
|
|
|
| franklintempleton.com | Semiannual Report |
49 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Growth Fund (continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) |
||||||||||||||
| Pharmaceuticals, Biotechnology & Life Sciences 12.0% | ||||||||||||||
| AbbVie Inc. | United States | 460,000 | $ | 43,539,000 | ||||||||||
| Agilent Technologies Inc. | United States | 1,300,000 | 86,970,000 | |||||||||||
| Allergan PLC | United States | 200,000 | 33,658,000 | |||||||||||
| Amgen Inc. | United States | 1,000,000 | 170,480,000 | |||||||||||
| a |
Biogen Inc. | United States | 500,000 | 136,910,000 | ||||||||||
| a |
Catalent Inc. | United States | 3,400,000 | 139,604,000 | ||||||||||
| a |
Celgene Corp. | United States | 1,300,000 | 115,973,000 | ||||||||||
| Eli Lilly & Co. | United States | 1,450,000 | 112,186,500 | |||||||||||
| Gilead Sciences Inc. | United States | 650,000 | 49,003,500 | |||||||||||
| a |
Illumina Inc. | United States | 525,000 | 124,120,500 | ||||||||||
| Johnson & Johnson | United States | 1,200,100 | 153,792,815 | |||||||||||
| Merck & Co. Inc. | United States | 1,000,000 | 54,470,000 | |||||||||||
| a |
Mettler-Toledo International Inc. | United States | 425,000 | 244,387,750 | ||||||||||
| a |
Neurocrine Biosciences Inc. | United States | 500,000 | 41,465,000 | ||||||||||
| Pfizer Inc. | United States | 2,761,000 | 97,987,890 | |||||||||||
| Roche Holding AG, ADR | Switzerland | 1,700,000 | 48,662,500 | |||||||||||
| a |
Waters Corp. | United States | 625,000 | 124,156,250 | ||||||||||
|
|
|
|||||||||||||
| 1,777,366,705 | ||||||||||||||
|
|
|
|||||||||||||
| Real Estate 1.7% | ||||||||||||||
| American Tower Corp. | United States | 900,000 | 130,806,000 | |||||||||||
| Equinix Inc. | United States | 300,000 | 125,442,000 | |||||||||||
|
|
|
|||||||||||||
| 256,248,000 | ||||||||||||||
|
|
|
|||||||||||||
| Retailing 3.7% | ||||||||||||||
| a |
Amazon.com Inc. | United States | 350,000 | 506,569,000 | ||||||||||
| Expedia Group Inc. | United States | 350,000 | 38,643,500 | |||||||||||
| Lowe’s Cos. Inc. | United States | 60,000 | 5,265,000 | |||||||||||
|
|
|
|||||||||||||
| 550,477,500 | ||||||||||||||
|
|
|
|||||||||||||
| Semiconductors & Semiconductor Equipment 2.5% | ||||||||||||||
| ASML Holding NV, N.Y. shs | Netherlands | 650,000 | 129,064,000 | |||||||||||
| Intel Corp. | United States | 1,100,000 | 57,288,000 | |||||||||||
| Lam Research Corp. | United States | 30,000 | 6,094,800 | |||||||||||
| Monolithic Power Systems | United States | 200,000 | 23,154,000 | |||||||||||
| Texas Instruments Inc. | United States | 1,400,000 | 145,446,000 | |||||||||||
| Versum Materials Inc. | United States | 250,000 | 9,407,500 | |||||||||||
|
|
|
|||||||||||||
| 370,454,300 | ||||||||||||||
|
|
|
|||||||||||||
| Software & Services 15.2% | ||||||||||||||
| a |
Alibaba Group Holding Ltd., ADR | China | 480,400 | 88,172,616 | ||||||||||
| a |
Alphabet Inc., A | United States | 165,000 | 171,128,100 | ||||||||||
| a |
Alphabet Inc., C | United States | 158,432 | 163,468,553 | ||||||||||
| a |
Autodesk Inc. | United States | 800,000 | 100,464,000 | ||||||||||
| Automatic Data Processing Inc. | United States | 700,000 | 79,436,000 | |||||||||||
| CDK Global LLC | United States | 233,333 | 14,779,312 | |||||||||||
| CSRA Inc. | United States | 2,300,000 | 94,829,000 | |||||||||||
| DXC Technology Co. | United States | 1,400,000 | 140,742,000 | |||||||||||
| a |
Electronic Arts Inc. | United States | 300,000 | 36,372,000 | ||||||||||
| a |
Facebook Inc., A | United States | 750,000 | 119,842,500 | ||||||||||
| a |
IAC/InterActiveCorp. | United States | 300,000 | 46,914,000 | ||||||||||
| Intuit Inc. | United States | 1,000,000 | 173,350,000 | |||||||||||
| Mastercard Inc., A | United States | 1,400,000 | 245,224,000 | |||||||||||
| Microsoft Corp. | United States | 3,400,000 | 310,318,000 |
| 50 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Growth Fund (continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Software & Services (continued) | ||||||||||||||
| Oracle Corp. | United States | 1,400,000 | $ | 64,050,000 | ||||||||||
| a |
Salesforce.com Inc. | United States | 300,000 | 34,890,000 | ||||||||||
| a |
ServiceNow Inc. | United States | 1,000,000 | 165,450,000 | ||||||||||
| a |
Tyler Technologies Inc. | United States | 175,000 | 36,918,000 | ||||||||||
| Visa Inc., A | United States | 1,400,000 | 167,468,000 | |||||||||||
|
|
|
|||||||||||||
| 2,253,816,081 | ||||||||||||||
|
|
|
|||||||||||||
| Technology Hardware & Equipment 8.0% | ||||||||||||||
| Apple Inc. | United States | 4,086,000 | 685,549,080 | |||||||||||
| Cisco Systems Inc. | United States | 2,945,000 | 126,311,050 | |||||||||||
| Cognex Corp. | United States | 650,000 | 33,793,500 | |||||||||||
| a |
Keysight Technologies Inc. | United States | 650,000 | 34,053,500 | ||||||||||
| TE Connectivity Ltd. | United States | 1,650,000 | 164,835,000 | |||||||||||
| a |
Trimble Inc. | United States | 2,700,000 | 96,876,000 | ||||||||||
| a |
ViaSat Inc. | United States | 700,000 | 46,004,000 | ||||||||||
|
|
|
|||||||||||||
| 1,187,422,130 | ||||||||||||||
|
|
|
|||||||||||||
| Transportation 5.6% | ||||||||||||||
| Alaska Air Group Inc. | United States | 3,200,000 | 198,272,000 | |||||||||||
| Allegiant Travel Co. | United States | 200,000 | 34,510,000 | |||||||||||
| Canadian National Railway Co. | Canada | 1,000,000 | 73,130,000 | |||||||||||
| Canadian Pacific Railway Ltd. | Canada | 500,000 | 88,250,000 | |||||||||||
| J.B. Hunt Transport Services Inc. | United States | 500,000 | 58,575,000 | |||||||||||
| Kansas City Southern | United States | 750,000 | 82,387,500 | |||||||||||
| a |
Ryanair Holdings PLC, ADR | Ireland | 233,220 | 28,651,077 | ||||||||||
| Union Pacific Corp. | United States | 2,030,000 | 272,892,900 | |||||||||||
|
|
|
|||||||||||||
| 836,668,477 | ||||||||||||||
|
|
|
|||||||||||||
| Utilities 0.9% | ||||||||||||||
| American Water Works Co. Inc. | United States | 700,000 | 57,491,000 | |||||||||||
| NextEra Energy Inc. | United States | 500,000 | 81,665,000 | |||||||||||
|
|
|
|||||||||||||
| 139,156,000 | ||||||||||||||
|
|
|
|||||||||||||
| Total Common Stocks (Cost $5,327,057,694) | 14,446,567,051 | |||||||||||||
|
|
|
|||||||||||||
| Management Investment Companies (Cost $10,148,164) 0.9% | ||||||||||||||
| Diversified Financials 0.9% | ||||||||||||||
| a |
Altaba Inc. | United States | 1,700,000 | 125,868,000 | ||||||||||
|
|
|
|||||||||||||
| Total Investments before Short Term Investments (Cost $5,337,205,858) |
14,572,435,051 | |||||||||||||
|
|
|
| franklintempleton.com | Semiannual Report |
51 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Growth Fund (continued)
| Country | Shares | Value | ||||||||||||
| Short Term Investments (Cost $252,178,231) 1.7% | ||||||||||||||
| Money Market Funds 1.7% | ||||||||||||||
| b,c |
Institutional Fiduciary Trust Money Market Portfolio, 1.24% | United States | 252,178,231 | $ | 252,178,231 | |||||||||
|
|
|
|||||||||||||
| Total Investments (Cost $5,589,384,089) 100.2% | 14,824,613,282 | |||||||||||||
| Other Assets, less Liabilities (0.2)% | (25,062,653 | ) | ||||||||||||
|
|
|
|||||||||||||
| Net Assets 100.0% | $ | 14,799,550,629 | ||||||||||||
|
|
|
|||||||||||||
See Abbreviations on page 120.
aNon-income producing.
bSee Note 3(f) regarding investments in affiliated management investment companies.
cThe rate shown is the annualized seven-day effective yield at period end.
| 52 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Financial Highlights
Franklin Income Fund
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 2.39 | $ 2.25 | $ 2.10 | $ 2.48 | $ 2.33 | $ 2.23 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.05 | 0.10 | 0.10 | 0.10 | 0.11 | 0.11 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.09 | ) | 0.16 | 0.17 | (0.36 | ) | 0.16 | 0.12 | ||||||||||||||||
| Total from investment operations |
(0.04 | ) | 0.26 | 0.27 | (0.26 | ) | 0.27 | 0.23 | ||||||||||||||||
| Less distributions from net investment income |
(0.06 | ) | (0.12 | ) | (0.12 | ) | (0.12 | ) | (0.12 | ) | (0.13 | ) | ||||||||||||
| Net asset value, end of period |
$ 2.29 | $ 2.39 | $ 2.25 | $ 2.10 | $ 2.48 | $ 2.33 | ||||||||||||||||||
| Total returnc |
(1.73)% | 11.86% | 13.31% | (10.93)% | 11.86% | 10.72% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.60% | 0.62% | 0.61% | 0.61% | 0.61% | 0.62% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatese |
0.60% | f | 0.61% | 0.61% | f | 0.61% | f | 0.61% | f | 0.62% | ||||||||||||||
| Net investment income |
3.90% | 4.22% | 4.57% | 4.43% | 4.28% | 4.98% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$43,544,927 | $46,505,632 | $45,515,127 | $44,886,127 | $53,823,921 | $48,320,611 | ||||||||||||||||||
| Portfolio turnover rate |
25.78% | 34.12% | 61.26% | 44.81% | 36.03% | 37.60% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 53 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Income Fund (continued)
| Period Ended March 31, 2018 (unaudited)a |
||||
|
Class M |
||||
| Per share operating performance |
||||
| (for a share outstanding throughout the period) |
||||
| Net asset value, beginning of period |
$2.43 | |||
| Income from investment operationsb: |
||||
| Net investment incomec |
0.01 | |||
| Net realized and unrealized gains (losses) |
(0.13) | |||
| Total from investment operations |
(0.12) | |||
| Less distributions from net investment income |
(0.02) | |||
| Net asset value, end of period |
$2.29 | |||
| Total returnd |
(5.35)% | |||
| Ratios to average net assetse |
||||
|
Expensesf |
0.45% | |||
|
Net investment income |
4.05% | |||
| Supplemental data |
||||
|
Net assets, end of period (000’s) |
$5 | |||
|
Portfolio turnover rate |
25.78% | |||
aFor the period January 25, 2018 (effective date) to March 31, 2018.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of waiver and payments by affiliates and expense reduction rounds to less than 0.01%.
| 54 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Income Fund (continued)
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
|
Class C |
||||||||||||||||||||||||
| Per share operating performance |
||||||||||||||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$2.42 | $2.27 | $2.13 | $2.50 | $2.35 | $2.25 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.04 | 0.09 | 0.09 | 0.09 | 0.09 | 0.10 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.09 | ) | 0.17 | 0.16 | (0.35 | ) | 0.17 | 0.12 | ||||||||||||||||
| Total from investment operations |
(0.05 | ) | 0.26 | 0.25 | (0.26 | ) | 0.26 | 0.22 | ||||||||||||||||
| Less distributions from net investment income |
(0.05 | ) | (0.11 | ) | (0.11 | ) | (0.11 | ) | (0.11 | ) | (0.12 | ) | ||||||||||||
| Net asset value, end of period |
$2.32 | $2.42 | $2.27 | $2.13 | $2.50 | $2.35 | ||||||||||||||||||
| Total returnc |
(2.39)% | 11.63% | 12.07% | (10.89)% | 11.19% | 10.07% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
|
Expenses before waiver and payments by affiliates |
1.10% | 1.12% | 1.11% | 1.11% | 1.11% | 1.12% | ||||||||||||||||||
|
Expenses net of waiver and payments by affiliatese |
1.10% | f | 1.11% | 1.11% | f | 1.11% | f | 1.11% | f | 1.12% | ||||||||||||||
|
Net investment income |
3.40% | 3.72% | 4.07% | 3.93% | 3.78% | 4.48% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
|
Net assets, end of period (000’s) |
$20,981,302 | $23,036,875 | $23,841,466 | $24,091,638 | $28,802,209 | $24,016,797 | ||||||||||||||||||
|
Portfolio turnover rate |
25.78% | 34.12% | 61.26% | 44.81% | 36.03% | 37.60% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 55 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Income Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class R |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 2.35 | $ 2.21 | $ 2.07 | $ 2.44 | $ 2.29 | $ 2.20 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.04 | 0.09 | 0.09 | 0.10 | 0.10 | 0.11 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.09 | ) | 0.16 | 0.16 | (0.36 | ) | 0.16 | 0.10 | ||||||||||||||||
| Total from investment operations |
(0.05 | ) | 0.25 | 0.25 | (0.26 | ) | 0.26 | 0.21 | ||||||||||||||||
| Less distributions from net investment income |
(0.06 | ) | (0.11 | ) | (0.11 | ) | (0.11 | ) | (0.11 | ) | (0.12 | ) | ||||||||||||
| Net asset value, end of period |
$ 2.24 | $ 2.35 | $ 2.21 | $ 2.07 | $ 2.44 | $ 2.29 | ||||||||||||||||||
| Total returnc |
(2.37)% | 11.67% | 12.62% | (10.99)% | 11.66% | 10.03% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.95% | 0.97% | 0.96% | 0.96% | 0.96% | 0.97% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatese |
0.95% | f | 0.96% | 0.96% | f | 0.96% | f | 0.96% | f | 0.97% | ||||||||||||||
| Net investment income |
3.55% | 3.87% | 4.22% | 4.08% | 3.93% | 4.63% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$308,864 | $361,603 | $396,107 | $416,653 | $514,892 | $446,463 | ||||||||||||||||||
| Portfolio turnover rate |
25.78% | 34.12% | 61.26% | 44.81% | 36.03% | 37.60% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 56 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Income Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013a | |||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 2.37 | $ 2.23 | $ 2.09 | $ 2.46 | $ 2.31 | $ 2.33 | ||||||||||||||||||
| Income from investment operationsb: |
||||||||||||||||||||||||
| Net investment incomec |
0.05 | 0.11 | 0.10 | 0.11 | 0.11 | 0.04 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.09 | ) | 0.15 | 0.16 | (0.35 | ) | 0.17 | (0.02 | ) | |||||||||||||||
| Total from investment operations |
(0.04 | ) | 0.26 | 0.26 | (0.24 | ) | 0.28 | 0.02 | ||||||||||||||||
| Less distributions from net investment income |
(0.06 | ) | (0.12 | ) | (0.12 | ) | (0.13 | ) | (0.13 | ) | (0.04 | ) | ||||||||||||
| Net asset value, end of period |
$ 2.27 | $ 2.37 | $ 2.23 | $ 2.09 | $ 2.46 | $ 2.31 | ||||||||||||||||||
| Total returnd |
(1.65)% | 12.15% | 13.15% | (10.39)% | 12.19% | 1.06% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.40% | 0.39% | 0.38% | 0.38% | 0.38% | 0.39% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatesf |
0.40% | g | 0.38% | 0.38% | g | 0.38% | g | 0.38% | g | 0.39% | ||||||||||||||
| Net investment income |
4.10% | 4.45% | 4.80% | 4.66% | 4.50% | 5.21% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$2,099,137 | $1,815,977 | $1,737,577 | $1,744,718 | $2,108,076 | $1,921,084 | ||||||||||||||||||
| Portfolio turnover rate |
25.78% | 34.12% | 61.26% | 44.81% | 36.03% | 37.60% | ||||||||||||||||||
aFor the period May 1, 2013 (effective date) to September 30, 2013.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 57 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Income Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Advisor Class |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 2.37 | $ 2.23 | $ 2.09 | $ 2.46 | $ 2.31 | $ 2.22 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.05 | 0.10 | 0.10 | 0.11 | 0.11 | 0.12 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.09 | ) | 0.16 | 0.16 | (0.36 | ) | 0.17 | 0.11 | ||||||||||||||||
| Total from investment operations |
(0.04 | ) | 0.26 | 0.26 | (0.25 | ) | 0.28 | 0.23 | ||||||||||||||||
| Less distributions from net investment income |
(0.06 | ) | (0.12 | ) | (0.12 | ) | (0.12 | ) | (0.13 | ) | (0.14 | ) | ||||||||||||
| Net asset value, end of period |
$ 2.27 | $ 2.37 | $ 2.23 | $ 2.09 | $ 2.46 | $ 2.31 | ||||||||||||||||||
| Total returnc |
(1.67)% | 12.09% | 13.06% | (10.46)% | 12.12% | 10.49% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.45% | 0.47% | 0.46% | 0.46% | 0.46% | 0.47% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliatese |
0.45% | f | 0.46% | 0.46% | f | 0.46% | f | 0.46% | f | 0.47% | ||||||||||||||
| Net investment income |
4.05% | 4.37% | 4.72% | 4.58% | 4.43% | 5.13% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$10,984,006 | $11,671,173 | $8,143,479 | $7,754,475 | $9,096,269 | $5,903,701 | ||||||||||||||||||
| Portfolio turnover rate |
25.78% | 34.12% | 61.26% | 44.81% | 36.03% | 37.60% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 58 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin Income Fund
| Country | Shares | Value | ||||||||||||
|
|
||||||||||||||
| Common Stocks 39.5% | ||||||||||||||
| Consumer Discretionary 2.3% | ||||||||||||||
| Comcast Corp., A | United States | 1,000,000 | $ | 34,170,000 | ||||||||||
| Daimler AG | Germany | 8,000,000 | 679,795,884 | |||||||||||
| a |
Ford Motor Co. | United States | 39,738,498 | 440,302,558 | ||||||||||
| General Motors Co. | United States | 10,780,000 | 391,745,200 | |||||||||||
| Target Corp. | United States | 4,000,000 | 277,720,000 | |||||||||||
|
|
|
|||||||||||||
| 1,823,733,642 | ||||||||||||||
|
|
|
|||||||||||||
| Consumer Staples 3.6% | ||||||||||||||
| Anheuser-Busch InBev SA/NV, ADR | Belgium | 3,500,000 | 384,790,000 | |||||||||||
| The Coca-Cola Co. | United States | 12,000,000 | 521,160,000 | |||||||||||
| Nestle SA | Switzerland | 5,000,000 | 396,455,908 | |||||||||||
| PepsiCo Inc. | United States | 5,500,000 | 600,325,000 | |||||||||||
| Philip Morris International Inc. | United States | 5,500,000 | 546,700,000 | |||||||||||
| The Procter & Gamble Co. | United States | 4,000,000 | 317,120,000 | |||||||||||
|
|
|
|||||||||||||
| 2,766,550,908 | ||||||||||||||
|
|
|
|||||||||||||
| Energy 5.2% | ||||||||||||||
| a |
Anadarko Petroleum Corp. | United States | 3,000,000 | 181,230,000 | ||||||||||
| Baker Hughes a GE Co., A | United States | 9,500,000 | 263,815,000 | |||||||||||
| a |
BP PLC, ADR | United Kingdom | 9,000,000 | 364,860,000 | ||||||||||
| a |
Chevron Corp. | United States | 5,000,000 | 570,200,000 | ||||||||||
| Exxon Mobil Corp. | United States | 5,000,000 | 373,050,000 | |||||||||||
| b |
Halcon Resources Corp. | United States | 5,341,485 | 26,013,032 | ||||||||||
| b |
HighPoint Resources Corp. | United States | 6,540,000 | 33,223,200 | ||||||||||
| Occidental Petroleum Corp. | United States | 4,000,000 | 259,840,000 | |||||||||||
| b |
PetroQuest Energy Inc. | United States | 1,000,000 | 580,700 | ||||||||||
| Royal Dutch Shell PLC, A, ADR | United Kingdom | 22,189,194 | 1,415,892,469 | |||||||||||
| b,c |
Stone Energy Corp. | United States | 6,151,402 | 228,217,014 | ||||||||||
| TransCanada Corp. | Canada | 2,500,000 | 103,275,000 | |||||||||||
| b |
Weatherford International PLC | United States | 41,450,000 | 94,920,500 | ||||||||||
| The Williams Cos. Inc. | United States | 5,000,000 | 124,300,000 | |||||||||||
|
|
|
|||||||||||||
| 4,039,416,915 | ||||||||||||||
|
|
|
|||||||||||||
| Financials 6.2% | ||||||||||||||
| AXA SA | France | 22,000,000 | 585,470,139 | |||||||||||
| Bank of America Corp. | United States | 15,000,000 | 449,850,000 | |||||||||||
| HSBC Holdings PLC | United Kingdom | 45,000,000 | 420,130,219 | |||||||||||
| JPMorgan Chase & Co. | United States | 6,000,000 | 659,820,000 | |||||||||||
| MetLife Inc. | United States | 12,500,000 | 573,625,000 | |||||||||||
| U.S. Bancorp | United States | 8,200,000 | 414,100,000 | |||||||||||
| a |
Wells Fargo & Co. | United States | 33,520,000 | 1,756,783,200 | ||||||||||
|
|
|
|||||||||||||
| 4,859,778,558 | ||||||||||||||
|
|
|
|||||||||||||
| Health Care 6.3% | ||||||||||||||
| AstraZeneca PLC | United Kingdom | 12,000,000 | 824,265,098 | |||||||||||
| Eli Lilly & Co. | United States | 7,380,703 | 571,044,991 | |||||||||||
| Medtronic PLC | United States | 3,843,098 | 308,293,322 | |||||||||||
| Merck & Co. Inc. | United States | 20,000,000 | 1,089,400,000 | |||||||||||
| Pfizer Inc. | United States | 25,000,000 | 887,250,000 | |||||||||||
| Roche Holding AG | Switzerland | 2,297,022 | 527,710,517 | |||||||||||
| Sanofi, ADR | France | 18,000,000 | 721,440,000 | |||||||||||
|
|
|
|||||||||||||
| 4,929,403,928 | ||||||||||||||
|
|
|
|||||||||||||
| franklintempleton.com | Semiannual Report |
59 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | Shares | Value | ||||||||||||
|
|
||||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Industrials 2.5% | ||||||||||||||
| b,c |
CEVA Holdings LLC | United States | 81,371 | $ | 49,636,347 | |||||||||
| Cummins Inc. | United States | 1,760,706 | 285,392,835 | |||||||||||
| General Electric Co. | United States | 106,714,131 | 1,438,506,486 | |||||||||||
| Republic Services Inc. | United States | 2,000,000 | 132,460,000 | |||||||||||
|
|
|
|||||||||||||
| 1,905,995,668 | ||||||||||||||
|
|
|
|||||||||||||
| Information Technology 1.6% | ||||||||||||||
| Analog Devices Inc. | United States | 2,500,000 | 227,825,000 | |||||||||||
| Apple Inc. | United States | 808,000 | 135,566,240 | |||||||||||
| a |
Intel Corp. | United States | 1,000,000 | 52,080,000 | ||||||||||
| a |
Microsoft Corp. | United States | 6,142,000 | 560,580,340 | ||||||||||
| Texas Instruments Inc. | United States | 2,500,000 | 259,725,000 | |||||||||||
|
|
|
|||||||||||||
| 1,235,776,580 | ||||||||||||||
|
|
|
|||||||||||||
| Materials 3.2% | ||||||||||||||
| BASF SE | Germany | 12,000,000 | 1,219,285,919 | |||||||||||
| DowDuPont Inc. | United States | 12,500,000 | 796,375,000 | |||||||||||
| Rio Tinto PLC, ADR | United Kingdom | 8,910,000 | 459,132,300 | |||||||||||
|
|
|
|||||||||||||
| 2,474,793,219 | ||||||||||||||
|
|
|
|||||||||||||
| Real Estate 0.8% | ||||||||||||||
| Equity Residential | United States | 1,600,000 | 98,592,000 | |||||||||||
| Host Hotels & Resorts Inc. | United States | 30,000,000 | 559,200,000 | |||||||||||
|
|
|
|||||||||||||
| 657,792,000 | ||||||||||||||
|
|
|
|||||||||||||
| Telecommunication Services 1.3% | ||||||||||||||
| BCE Inc. | Canada | 6,000,000 | 257,910,448 | |||||||||||
| Verizon Communications Inc. | United States | 16,000,000 | 765,120,000 | |||||||||||
|
|
|
|||||||||||||
| 1,023,030,448 | ||||||||||||||
|
|
|
|||||||||||||
| Utilities 6.5% | ||||||||||||||
| Dominion Energy Inc. | United States | 20,000,000 | 1,348,600,000 | |||||||||||
| Duke Energy Corp. | United States | 9,000,000 | 697,230,000 | |||||||||||
| Great Plains Energy Inc. | United States | 4,000,000 | 127,160,000 | |||||||||||
| Sempra Energy | United States | 11,000,000 | 1,223,420,000 | |||||||||||
| The Southern Co. | United States | 30,000,000 | 1,339,800,000 | |||||||||||
| Xcel Energy Inc. | United States | 6,500,000 | 295,620,000 | |||||||||||
|
|
|
|||||||||||||
| 5,031,830,000 | ||||||||||||||
|
|
|
|||||||||||||
| Total Common Stocks (Cost $28,295,658,833) | 30,748,101,866 | |||||||||||||
|
|
|
|||||||||||||
| d |
Equity-Linked Securities 13.8% | |||||||||||||
| Consumer Discretionary 3.0% | ||||||||||||||
| e |
Citigroup Global Markets Holdings Inc. into Ford Motor Co., 9.00%, 144A | United States | 17,100,000 | 195,428,325 | ||||||||||
| e |
Credit Suisse AG London into Comcast Corp., 7.00%, 144A | United States | 6,204,000 | 220,729,486 | ||||||||||
| e |
Credit Suisse AG London into General Motors Co., 8.00%, 144A | United States | 5,680,000 | 218,251,171 | ||||||||||
| e |
Credit Suisse AG London into Newell Brands Inc., 7.00%, 144A | United States | 3,940,000 | 106,666,840 | ||||||||||
| e |
Goldman Sachs International into Target Corp., 8.00%, 144A | United States | 4,650,000 | 282,807,215 | ||||||||||
| e |
JP Morgan Chase Financial Co. LLC into Ford Motor Co., 10.00%, 144A | United States | 28,170,000 | 313,350,094 | ||||||||||
| e |
Merrill Lynch International & Co. CV into Ford Motor Co., 9.00%, 144A | United States | 26,270,000 | 293,888,374 | ||||||||||
| e |
Morgan Stanley BV into Target Corp., 8.00%, 144A | United States | 3,379,000 | 238,948,617 | ||||||||||
| e |
UBS AG London into General Motors Co., 8.00%, 144A | United States | 6,793,000 | 248,611,240 | ||||||||||
| e |
Wells Fargo Bank National Assn. into Target Corp., 8.00%, 144A | United States | 2,536,000 | 182,777,694 | ||||||||||
|
|
|
|||||||||||||
| 2,301,459,056 | ||||||||||||||
|
|
|
|||||||||||||
| 60 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | Shares | Value | ||||||||||||
|
|
||||||||||||||
| d |
Equity-Linked Securities (continued) | |||||||||||||
| Consumer Staples 0.3% | ||||||||||||||
| e |
Royal Bank of Canada into Anheuser-Busch Cos. Inc., 6.50%, 144A | Belgium | 2,100,000 | $ | 233,502,196 | |||||||||
|
|
|
|||||||||||||
| Energy 1.6% | ||||||||||||||
| e |
Barclays Bank PLC into Halliburton Co., 7.00%, 144A | United States | 5,680,000 | 260,771,362 | ||||||||||
| e |
BNP Paribas Arbitrage Issuance BV into Anadarko Petroleum Corp., 8.50%, 144A | United States | 4,464,000 | 239,499,814 | ||||||||||
| e |
Deutsche Bank AG/London into Schlumberger Ltd., 6.00%, 144A | United States | 3,032,000 | 197,142,402 | ||||||||||
| e |
Morgan Stanley into Halliburton Co., 6.50%, 144A | United States | 6,305,000 | 271,373,246 | ||||||||||
| e |
Royal Bank of Canada into Anadarko Petroleum Corp., 8.50%, 144A | United States | 4,450,000 | 242,595,524 | ||||||||||
| e |
UBS AG London into Halliburton Co., 7.00%, 144A | United States | 1,400,000 | 67,713,216 | ||||||||||
|
|
|
|||||||||||||
| 1,279,095,564 | ||||||||||||||
|
|
|
|||||||||||||
| Financials 0.5% | ||||||||||||||
| e |
Deutsche Bank AG/London into Wells Fargo & Co., 7.00%, 144A | United States | 3,785,000 | 209,598,599 | ||||||||||
| e |
Royal Bank of Canada into U.S. Bancorp, 6.00%, 144A | United States | 3,680,000 | 189,126,582 | ||||||||||
|
|
|
|||||||||||||
| 398,725,181 | ||||||||||||||
|
|
|
|||||||||||||
| Health Care 1.3% | ||||||||||||||
| e |
Deutsche Bank AG/London into Medtronic PLC, 6.00%, 144A | United States | 1,858,000 | 148,730,447 | ||||||||||
| e |
Goldman Sachs International into Mylan NV, 7.50%, 144A | United States | 5,400,000 | 215,477,966 | ||||||||||
| e |
Merrill Lynch International & Co. CV into Merck & Co. Inc., 6.50%, 144A | United States | 4,125,000 | 232,026,502 | ||||||||||
| e |
UBS AG London into Medtronic PLC, 6.00%, 144A | United States | 2,442,000 | 197,962,291 | ||||||||||
| e |
Wells Fargo Bank National Assn. into Bristol-Myers Squibb Co., 7.00%, 144A | United States | 3,200,000 | 202,040,291 | ||||||||||
|
|
|
|||||||||||||
| 996,237,497 | ||||||||||||||
|
|
|
|||||||||||||
| Industrials 2.0% | ||||||||||||||
| e |
Citigroup Global Markets Holdings Inc. into Union Pacific Corp., 6.50%, 144A | United States | 2,284,000 | 276,121,017 | ||||||||||
| e |
Goldman Sachs International into Union Pacific Corp., 6.00%, 144A | United States | 1,450,000 | 165,903,364 | ||||||||||
| e |
Merrill Lynch International & Co. CV into Deere & Co., 7.00%, 144A | United States | 1,848,000 | 260,084,929 | ||||||||||
| e |
Merrill Lynch International & Co. CV into General Electric Co., 6.00%, 144A | United States | 8,932,000 | 123,846,565 | ||||||||||
| e |
Morgan Stanley BV into Cummins Inc., 7.50%, 144A | United States | 1,265,000 | 202,524,929 | ||||||||||
| e |
UBS AG London into Union Pacific Corp., 7.50%, 144A | United States | 2,130,000 | 292,008,143 | ||||||||||
| e |
Wells Fargo Bank National Assn. into General Electric Co., 8.00%, 144A | United States | 17,300,000 | 238,565,564 | ||||||||||
|
|
|
|||||||||||||
| 1,559,054,511 | ||||||||||||||
|
|
|
|||||||||||||
| Information Technology 3.7% | ||||||||||||||
| e |
Barclays Bank PLC into Alphabet Inc., 7.00%, 144A | United States | 182,000 | 192,393,297 | ||||||||||
| e |
Deutsche Bank AG/London into Applied Materials Inc., 8.00%, 144A | United States | 3,252,000 | 182,457,040 | ||||||||||
| e |
Deutsche Bank AG/London into Intel Corp., 7.00%, 144A | United States | 10,750,000 | 515,933,533 | ||||||||||
| e |
Goldman Sachs International into Apple Inc., 6.50%, 144A | United States | 2,883,000 | 487,817,092 | ||||||||||
| e |
Goldman Sachs International into Mylan NV, 6.00%, 144A | United States | 2,530,000 | 101,775,932 | ||||||||||
| e |
Merrill Lynch International & Co. CV into Cisco Systems Inc., 6.50%, 144A | United States | 11,110,000 | 385,720,346 | ||||||||||
| e |
Societe Generale SA into Intel Corp., 8.00%, 144A | United States | 4,322,000 | 220,445,590 | ||||||||||
| e |
UBS AG London into Broadcom Ltd., 8.00%, 144A | United States | 757,000 | 182,198,701 | ||||||||||
| e |
UBS AG London into Oracle Corp., 5.50%, 144A | United States | 3,799,000 | 176,909,298 | ||||||||||
| e |
Wells Fargo Bank National Assn. into Microsoft Corp., 7.00%, 144A | United States | 3,118,000 | 287,465,410 | ||||||||||
| e |
Wells Fargo Bank National Assn. into Oracle Corp., 6.00%, 144A | United States | 3,925,000 | 181,632,676 | ||||||||||
|
|
|
|||||||||||||
| 2,914,748,915 | ||||||||||||||
|
|
|
|||||||||||||
| Materials 1.4% | ||||||||||||||
| e |
Barclays Bank PLC into Rio Tinto PLC, 10.00%, 144A | United Kingdom | 4,752,000 | 247,010,267 | ||||||||||
| e |
The Goldman Sachs Group Inc. into Rio Tinto PLC, 11.00%, 144A | United Kingdom | 4,900,000 | 241,440,758 | ||||||||||
| e |
Royal Bank of Canada into Barrick Gold Corp., 7.50%, 144A | Canada | 7,936,000 | 100,795,572 | ||||||||||
| franklintempleton.com | Semiannual Report |
61 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | Shares | Value | ||||||||||||||||
|
|
||||||||||||||||||
| d |
Equity-Linked Securities (continued) | |||||||||||||||||
| Materials (continued) | ||||||||||||||||||
| e |
UBS AG London into DowDuPont Inc., 6.00%, 144A | United States | 4,360,000 | $ | 284,245,012 | |||||||||||||
| e |
Wells Fargo Bank National Assn. into Rio Tinto PLC, 9.00%, 144A | United Kingdom | 4,238,000 | 212,149,855 | ||||||||||||||
|
|
|
|||||||||||||||||
| 1,085,641,464 | ||||||||||||||||||
|
|
|
|||||||||||||||||
| Total Equity-Linked Securities (Cost $11,010,297,650) | 10,768,464,384 | |||||||||||||||||
|
|
|
|||||||||||||||||
| Convertible Preferred Stocks 2.1% | ||||||||||||||||||
| Energy 0.1% | ||||||||||||||||||
| Chesapeake Energy Corp., 5.75%, cvt. pfd. | United States | 95,150 | 54,711,250 | |||||||||||||||
|
|
|
|||||||||||||||||
| Financials 1.4% | ||||||||||||||||||
| Bank of America Corp., 7.25%, cvt. pfd., L | United States | 570,218 | 735,267,600 | |||||||||||||||
| b |
FNMA, 5.375%, cvt. pfd. | United States | 4,250 | 76,500,000 | ||||||||||||||
| Wells Fargo & Co., 7.50%, cvt. pfd., A | United States | 235,097 | 303,275,130 | |||||||||||||||
|
|
|
|||||||||||||||||
| 1,115,042,730 | ||||||||||||||||||
|
|
|
|||||||||||||||||
| Health Care 0.2% | ||||||||||||||||||
| Becton Dickinson and Co., 6.125%, cvt. pfd., A | United States | 3,000,000 | 175,290,000 | |||||||||||||||
|
|
|
|||||||||||||||||
| Industrials 0.1% | ||||||||||||||||||
| b,c |
CEVA Holdings LLC, cvt. pfd., A-1 | United States | 2,897 | 2,607,525 | ||||||||||||||
| b,c |
CEVA Holdings LLC, cvt. pfd., A-2 | United States | 110,565 | 67,444,699 | ||||||||||||||
|
|
|
|||||||||||||||||
| 70,052,224 | ||||||||||||||||||
|
|
|
|||||||||||||||||
| Real Estate 0.0%† | ||||||||||||||||||
| RLJ Lodging Trust, 1.95%, cvt. pfd. | United States | 95,293 | 2,418,536 | |||||||||||||||
|
|
|
|||||||||||||||||
| Utilities 0.3% | ||||||||||||||||||
| NextEra Energy Inc., 6.371%, cvt. pfd. | United States | 3,650,000 | 265,811,250 | |||||||||||||||
|
|
|
|||||||||||||||||
| Total Convertible Preferred Stocks (Cost $1,544,200,270) | 1,683,325,990 | |||||||||||||||||
|
|
|
|||||||||||||||||
| Preferred Stocks 0.1% | ||||||||||||||||||
| Financials 0.1% | ||||||||||||||||||
| b |
FHLMC, 8.375%, pfd., Z | United States | 8,132,009 | 46,759,052 | ||||||||||||||
| b |
FNMA, 8.25%, pfd., S | United States | 6,000,000 | 34,500,000 | ||||||||||||||
| Morgan Stanley, 6.375%, pfd., I | United States | 60,000 | 1,627,200 | |||||||||||||||
|
|
|
|||||||||||||||||
| Total Preferred Stocks (Cost $342,567,732) | 82,886,252 | |||||||||||||||||
|
|
|
|||||||||||||||||
| Units | ||||||||||||||||||
| f |
Index-Linked Notes (Cost $100,005,322) 0.1% | |||||||||||||||||
| Financials 0.1% | ||||||||||||||||||
| e,g |
Morgan Stanley Finance LLC, senior note, 144A, 2.00%, 10/03/19 | United States | 755,000 | 99,214,550 | ||||||||||||||
|
|
|
|||||||||||||||||
| Principal Amount* |
||||||||||||||||||
| Convertible Bonds 0.8% | ||||||||||||||||||
| Energy 0.4% | ||||||||||||||||||
| Chesapeake Energy Corp., cvt., senior note, 5.50%, 9/15/26 | United States | 140,000,000 | 120,873,340 | |||||||||||||||
| Weatherford International Ltd., cvt., senior note, 5.875%, 7/01/21 | United States | 238,500,000 | 214,396,474 | |||||||||||||||
|
|
|
|||||||||||||||||
| 335,269,814 | ||||||||||||||||||
|
|
|
|||||||||||||||||
| 62 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount |
* |
Value | ||||||||||||||
|
|
||||||||||||||||||
| Convertible Bonds (continued) | ||||||||||||||||||
| Health Care 0.4% | ||||||||||||||||||
| e |
Bayer Capital Corp BV, cvt., junior sub. note, 144A, 5.625%, 11/22/19 | Germany | 180,000,000 | EUR | $ | 227,051,530 | ||||||||||||
| Impax Laboratories Inc., cvt., senior note, 2.00%, 6/15/22 | United States | 60,000,000 | 59,719,980 | |||||||||||||||
|
|
|
|||||||||||||||||
| 286,771,510 | ||||||||||||||||||
|
|
|
|||||||||||||||||
| Total Convertible Bonds (Cost $624,206,200) | 622,041,324 | |||||||||||||||||
|
|
|
|||||||||||||||||
| Corporate Bonds 37.1% | ||||||||||||||||||
| Consumer Discretionary 4.7% | ||||||||||||||||||
| e |
24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22 | United States | 110,000,000 | 110,539,000 | ||||||||||||||
| e |
Altice Financing SA, secured bond, 144A, 7.50%, 5/15/26 | Luxembourg | 50,000,000 | 49,125,000 | ||||||||||||||
| e |
Altice Luxembourg SA, senior secured note, 144A, 7.75%, 5/15/22 | Luxembourg | 50,000,000 | 46,562,500 | ||||||||||||||
| AMC Entertainment Holdings Inc., | ||||||||||||||||||
| senior sub. bond, 5.75%, 6/15/25 |
United States | 43,325,000 | 42,837,594 | |||||||||||||||
| senior sub. note, 5.875%, 11/15/26 |
United States | 64,900,000 | 63,926,500 | |||||||||||||||
| CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||||||||||||
| senior bond, 5.125%, 2/15/23. |
United States | 105,000,000 | 105,945,000 | |||||||||||||||
| senior bond, 5.75%, 9/01/23 |
United States | 67,000,000 | 68,172,500 | |||||||||||||||
| senior bond, 5.75%, 1/15/24 |
United States | 105,000,000 | 106,837,500 | |||||||||||||||
| e senior bond, 144A, 5.50%, 5/01/26 |
United States | 50,000,000 | 49,062,500 | |||||||||||||||
| e senior bond, 144A, 5.125%, 5/01/27 |
United States | 50,000,000 | 47,595,000 | |||||||||||||||
| e senior bond, 144A, 5.00%, 2/01/28 |
United States | 65,500,000 | 61,733,750 | |||||||||||||||
| e,h |
Cequel Communications Holdings I LLC/Cequel Capital Corp., senior note, 144A, 7.50%, 4/01/28 |
United States | 50,000,000 | 51,375,000 | ||||||||||||||
| Cinemark USA Inc., senior note, 5.125%, 12/15/22 | United States | 50,000,000 | 51,125,000 | |||||||||||||||
| e |
CSC Holdings LLC, senior note, 144A, 10.125%, 1/15/23 | United States | 75,000,000 | 83,250,000 | ||||||||||||||
| DISH DBS Corp., | ||||||||||||||||||
| senior bond, 5.00%, 3/15/23 |
United States | 300,000,000 | 271,875,000 | |||||||||||||||
| senior note, 6.75%, 6/01/21 |
United States | 100,000,000 | 101,250,000 | |||||||||||||||
| senior note, 5.875%, 7/15/22 |
United States | 347,500,000 | 333,165,625 | |||||||||||||||
| senior note, 5.875%, 11/15/24 |
United States | 128,200,000 | 114,739,000 | |||||||||||||||
| Fiat Chrysler Automobiles NV, senior note, 5.25%, 4/15/23 | United Kingdom | 55,400,000 | 56,814,085 | |||||||||||||||
| Ford Motor Co., senior note, 4.346%, 12/08/26 | United States | 50,000,000 | 49,456,892 | |||||||||||||||
| Ford Motor Credit Co. LLC, senior note, 4.134%, 8/04/25 | United States | 19,000,000 | 18,700,741 | |||||||||||||||
| General Motors Co., senior bond, 5.15%, 4/01/38 | United States | 50,000,000 | 49,929,904 | |||||||||||||||
| e |
Golden Nugget Inc., senior note, 144A, 6.75%, 10/15/24 | United States | 50,000,000 | 50,500,000 | ||||||||||||||
| i |
iHeartCommunications Inc., senior secured note, first lien, 9.00%, 12/15/19 | United States | 284,000,000 | 226,845,000 | ||||||||||||||
| KB Home, | ||||||||||||||||||
| senior bond, 7.50%, 9/15/22 |
United States | 50,000,000 | 55,125,000 | |||||||||||||||
| senior note, 7.00%, 12/15/21 |
United States | 50,000,000 | 53,812,500 | |||||||||||||||
| e |
PetSmart Inc., | |||||||||||||||||
| senior note, 144A, 7.125%, 3/15/23 |
United States | 104,600,000 | 59,883,500 | |||||||||||||||
| senior secured note, first lien, 144A, 5.875%, 6/01/25 |
United States | 127,700,000 | 92,901,750 | |||||||||||||||
| Quebecor Media Inc., senior bond, 5.75%, 1/15/23 | Canada | 33,800,000 | 34,814,000 | |||||||||||||||
| e |
Shea Homes LP/Shea Homes Funding Corp., | |||||||||||||||||
| senior bond, 144A, 6.125%, 4/01/25 |
United States | 90,000,000 | 91,462,500 | |||||||||||||||
| senior note, 144A, 5.875%, 4/01/23 |
United States | 80,000,000 | 81,400,000 | |||||||||||||||
| e |
Sirius XM Radio Inc., | |||||||||||||||||
| senior bond, 144A, 6.00%, 7/15/24 |
United States | 50,000,000 | 51,625,000 | |||||||||||||||
| senior note, 144A, 4.625%, 5/15/23 |
United States | 88,400,000 | 87,211,020 | |||||||||||||||
| e,j |
Tesla Inc., senior note, 144A, 5.30%, 8/15/25 | United States | 220,000,000 | 192,775,000 | ||||||||||||||
| e |
Univision Communications Inc., | |||||||||||||||||
| senior secured note, first lien, 144A, 5.125%, 5/15/23 |
United States | 137,000,000 | 130,848,700 | |||||||||||||||
| senior secured note, first lien, 144A, 5.125%, 2/15/25 |
United States | 120,020,000 | 112,218,700 | |||||||||||||||
| franklintempleton.com | Semiannual Report |
63 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
|
|
||||||||||||||
| Corporate Bonds (continued) | ||||||||||||||
| Consumer Discretionary (continued) | ||||||||||||||
| e |
Virgin Media Secured Finance PLC, senior secured bond, first lien, 144A, 5.50%, 1/15/25 | United Kingdom | 80,000,000 | $ | 79,300,000 | |||||||||
| e |
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., | |||||||||||||
| senior bond, 144A, 4.25%, 5/30/23 |
United States | 84,000,000 | 82,635,000 | |||||||||||
| senior bond, 144A, 5.50%, 3/01/25 |
United States | 111,000,000 | 111,832,500 | |||||||||||
| senior bond, 144A, 5.25%, 5/15/27 |
United States | 84,577,000 | 83,096,902 | |||||||||||
| e |
Wynn Macau Ltd., senior bond, 144A, 5.50%, 10/01/27 | Macau | 47,200,000 | 46,374,000 | ||||||||||
| e |
Ziggo Secured Finance BV, secured bond, 144A, 5.50%, 1/15/27 | Netherlands | 35,000,000 | 32,943,750 | ||||||||||
|
|
|
|||||||||||||
| 3,691,622,913 | ||||||||||||||
|
|
|
|||||||||||||
| Consumer Staples 0.7% | ||||||||||||||
| CVS Health Corp., | ||||||||||||||
| senior bond, 4.30%, 3/25/28 |
United States | 115,000,000 | 115,938,630 | |||||||||||
| senior bond, 5.05%, 3/25/48 |
United States | 50,200,000 | 52,898,920 | |||||||||||
| senior note, 4.10%, 3/25/25 |
United States | 65,200,000 | 65,702,260 | |||||||||||
| e |
JBS USA LLC/Finance Inc., | |||||||||||||
| senior bond, 144A, 5.875%, 7/15/24 |
United States | 101,180,000 | 99,060,279 | |||||||||||
| senior note, 144A, 7.25%, 6/01/21 |
United States | 98,500,000 | 99,854,375 | |||||||||||
| senior note, 144A, 5.75%, 6/15/25 |
United States | 55,000,000 | 51,562,500 | |||||||||||
| e |
Post Holdings Inc., | |||||||||||||
| senior bond, 144A, 5.00%, 8/15/26 |
United States | 29,500,000 | 28,098,750 | |||||||||||
| senior bond, 144A, 5.625%, 1/15/28 |
United States | 65,000,000 | 62,318,750 | |||||||||||
|
|
|
|||||||||||||
| 575,434,464 | ||||||||||||||
|
|
|
|||||||||||||
| Energy 8.0% | ||||||||||||||
| e |
Ascent Resources Utica Holdings LLC/ARU Finance Corp., senior note, 144A, 10.00%, 4/01/22 | United States | 225,000,000 | 244,125,000 | ||||||||||
| Bill Barrett Corp., | ||||||||||||||
| senior bond, 7.00%, 10/15/22 |
United States | 200,890,000 | 202,898,900 | |||||||||||
| senior note, 8.75%, 6/15/25 |
United States | 142,000,000 | 154,070,000 | |||||||||||
| Calumet Specialty Products Partners LP/Calumet Finance Corp., | ||||||||||||||
| senior note, 6.50%, 4/15/21 |
United States | 309,348,000 | 301,614,300 | |||||||||||
| senior note, 7.625%, 1/15/22 |
United States | 90,552,000 | 90,099,240 | |||||||||||
| senior note, 7.75%, 4/15/23 |
United States | 62,000,000 | 61,535,000 | |||||||||||
| e senior note, 144A, 11.50%, 1/15/21 |
United States | 32,200,000 | 36,003,625 | |||||||||||
| Chesapeake Energy Corp., | ||||||||||||||
| e secured note, second lien, 144A, 8.00%, 12/15/22 |
United States | 506,386,000 | 536,136,177 | |||||||||||
| senior bond, 6.875%, 11/15/20 |
United States | 95,000,000 | 98,562,500 | |||||||||||
| senior bond, 6.125%, 2/15/21 |
United States | 226,000,000 | 228,260,000 | |||||||||||
| e,j senior bond, 144A, 8.00%, 6/15/27 |
United States | 306,000,000 | 293,760,000 | |||||||||||
| senior note, 6.625%, 8/15/20 |
United States | 192,500,000 | 199,237,500 | |||||||||||
| senior note, 5.375%, 6/15/21 |
United States | 97,000,000 | 94,817,500 | |||||||||||
| senior note, 4.875%, 4/15/22 |
United States | 107,710,000 | 100,170,300 | |||||||||||
| senior note, 5.75%, 3/15/23 |
United States | 96,700,000 | 87,634,375 | |||||||||||
| e,j senior note, 144A, 8.00%, 1/15/25 |
United States | 430,000,000 | 417,100,000 | |||||||||||
| k senior note, FRN, 4.97%, (3-month USD LIBOR + 3.25%), 4/15/19 |
United States | 148,000,000 | 147,630,000 | |||||||||||
| Energy Transfer Equity LP, senior secured bond, first lien, 5.50%, 6/01/27 | United States | 95,300,000 | 96,014,750 | |||||||||||
| Ensco PLC, | ||||||||||||||
| senior bond, 5.75%, 10/01/44 |
United States | 50,000,000 | 34,375,000 | |||||||||||
| senior note, 7.75%, 2/01/26 |
United States | 60,000,000 | 55,200,000 | |||||||||||
| 64 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
|
|
||||||||||||||
| Corporate Bonds (continued) | ||||||||||||||
| Energy (continued) | ||||||||||||||
| Ferrellgas LP/Ferrellgas Finance Corp., | ||||||||||||||
| senior note, 6.50%, 5/01/21 |
United States | 79,295,000 | $ | 76,321,438 | ||||||||||
| senior note, 6.75%, 1/15/22 |
United States | 107,500,000 | 102,393,750 | |||||||||||
| senior note, 6.75%, 6/15/23 |
United States | 80,900,000 | 74,023,500 | |||||||||||
| Gulfport Energy Corp., | ||||||||||||||
| senior note, 6.375%, 5/15/25 |
United States | 50,000,000 | 48,312,500 | |||||||||||
| senior note, 6.375%, 1/15/26 |
United States | 50,000,000 | 47,625,000 | |||||||||||
| Halcon Resources Corp., senior note, 6.75%, 2/15/25 | United States | 65,000,000 | 64,187,500 | |||||||||||
| Kinder Morgan Inc., | ||||||||||||||
| senior bond, 7.75%, 1/15/32 |
United States | 118,000,000 | 151,168,137 | |||||||||||
| e senior secured bond, first lien, 144A, 5.625%, 11/15/23 |
United States | 91,200,000 | 97,713,144 | |||||||||||
| e |
McDermott International Inc., secured note, second lien, 144A, 8.00%, 5/01/21 | United States | 145,270,000 | 149,083,338 | ||||||||||
| Petroquest Energy Inc., | ||||||||||||||
| secured note, second lien, 10.00%, 2/15/21 |
United States | 7,343,000 | 5,901,936 | |||||||||||
| l secured note, second lien, PIK, 10.00%, 2/15/21 |
United States | 56,811,246 | 45,733,053 | |||||||||||
| Rex Energy Corp., second lien, 8.00%, 10/01/20 | United States | 109,000,000 | 31,610,000 | |||||||||||
| Sanchez Energy Corp., senior note, 7.75%, 6/15/21 | United States | 199,790,000 | 184,805,750 | |||||||||||
| e |
Sesi LLC, senior note, 144A, 7.75%, 9/15/24 | United States | 50,000,000 | 51,875,000 | ||||||||||
| c |
Stone Energy Corp., senior note, 7.50%, 5/31/22 | United States | 72,845,556 | 74,484,581 | ||||||||||
| e |
Sunoco LP/Sunoco Finance Corp., senior note, 144A, 5.50%, 2/15/26 | United States | 50,000,000 | 48,375,000 | ||||||||||
|
|
|
|||||||||||||
| W&T Offshore Inc., | ||||||||||||||
| e,l secured note, second lien, 144A, PIK, 9.00%, 5/15/20 |
United States | 79,711,396 | 76,722,219 | |||||||||||
| senior note, 8.50%, 6/15/19 |
United States | 96,921,000 | 93,044,160 | |||||||||||
| e,l senior secured note, third lien, 144A, PIK, 10.00%, 6/15/21 |
United States | 71,081,877 | 57,655,726 | |||||||||||
| e |
Weatherford International LLC, senior note, 144A, 9.875%, 3/01/25 | United States | 100,000,000 | 90,470,000 | ||||||||||
| Weatherford International Ltd., | ||||||||||||||
| senior note, 5.125%, 9/15/20 |
United States | 91,000,000 | 87,360,000 | |||||||||||
| senior note, 7.75%, 6/15/21 |
United States | 384,500,000 | 359,988,125 | |||||||||||
| j senior note, 4.50%, 4/15/22 |
United States | 317,600,000 | 265,196,000 | |||||||||||
| senior note, 8.25%, 6/15/23 |
United States | 293,100,000 | 255,729,750 | |||||||||||
| senior note, 9.875%, 2/15/24 |
United States | 230,000,000 | 211,025,000 | |||||||||||
| The Williams Cos. Inc., senior note, 4.55%, 6/24/24 | United States | 24,000,000 | 24,287,280 | |||||||||||
|
|
|
|||||||||||||
| 6,254,336,054 | ||||||||||||||
|
|
|
|||||||||||||
| Financials 3.7% | ||||||||||||||
| m |
Bank of America Corp., | |||||||||||||
| junior sub. bond, AA, 6.10% to 3/17/25, FRN thereafter, Perpetual |
United States | 80,000,000 | 84,300,000 | |||||||||||
| junior sub. bond, U, 5.20% to 6/01/23, FRN thereafter, Perpetual |
United States | 80,000,000 | 79,700,000 | |||||||||||
| junior sub. bond, X, 6.25% to 9/05/24, FRN thereafter, Perpetual |
United States | 85,000,000 | 90,214,750 | |||||||||||
| Capital One Financial Corp., senior sub. note, 4.20%, 10/29/25 | United States | 40,000,000 | 39,675,707 | |||||||||||
| Citigroup Inc., | ||||||||||||||
| m junior sub. bond, 5.35% to 5/15/23, FRN thereafter, Perpetual |
United States | 179,195,000 | 178,299,025 | |||||||||||
| m junior sub. bond, 5.90% to 2/15/23, FRN thereafter, Perpetual |
United States | 33,000,000 | 34,113,750 | |||||||||||
| m junior sub. bond, 5.95% to 1/30/23, FRN thereafter, Perpetual |
United States | 230,000,000 | 236,900,000 | |||||||||||
| m junior sub. bond, M, 6.30% to 5/15/24, FRN thereafter, Perpetual |
United States | 250,000,000 | 261,250,000 | |||||||||||
| m junior sub. bond, O, 5.875% to 3/27/20, FRN thereafter, Perpetual |
United States | 160,000,000 | 165,400,000 | |||||||||||
| m junior sub. bond, Q, 5.95% to 8/15/20, FRN thereafter, Perpetual |
United States | 120,000,000 | 124,576,200 | |||||||||||
| sub. bond, 4.125%, 7/25/28 |
United States | 50,000,000 | 49,437,263 | |||||||||||
| franklintempleton.com | Semiannual Report |
65 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
|
|
||||||||||||||
| Corporate Bonds (continued) | ||||||||||||||
| Financials (continued) | ||||||||||||||
| m |
Fifth Third Bancorp, junior sub. bond, 5.10% to 6/30/23, FRN thereafter, Perpetual | United States | 54,000,000 | $ | 53,325,000 | |||||||||
| The Goldman Sachs Group Inc., | ||||||||||||||
| m junior sub. note, 5.70% to 5/10/19, FRN thereafter, Perpetual |
United States | 13,400,000 | 13,668,000 | |||||||||||
| k senior note, FRN, 3.272%, (3-month USD LIBOR + 1.201%), 9/29/25 |
United States | 50,000,000 | 48,149,164 | |||||||||||
| m |
JPMorgan Chase & Co., | |||||||||||||
| junior sub. bond, 6.125% to 4/30/24, FRN thereafter, Perpetual |
United States | 60,000,000 | 62,925,000 | |||||||||||
| junior sub. bond, 6.75% to 2/01/24, FRN thereafter, Perpetual |
United States | 100,000,000 | 109,225,000 | |||||||||||
| junior sub. bond, I, 7.90% to 4/30/19, FRN thereafter, Perpetual |
United States | 585,000,000 | 588,714,750 | |||||||||||
| junior sub. bond, Q, 5.15% to 5/01/23, FRN thereafter, Perpetual |
United States | 100,000,000 | 100,160,000 | |||||||||||
| junior sub. bond, R, 6.00% to 8/01/23, FRN thereafter, Perpetual |
United States | 105,000,000 | 108,543,750 | |||||||||||
| junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual |
United States | 200,000,000 | 202,030,000 | |||||||||||
| junior sub. bond, X, 6.10% to 10/01/24, FRN thereafter, Perpetual |
United States | 80,000,000 | 84,100,000 | |||||||||||
| m |
Morgan Stanley, junior sub. bond, 5.55% to 7/15/20, FRN thereafter, Perpetual | United States | 58,000,000 | 59,871,660 | ||||||||||
| m |
Wells Fargo & Co., junior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual | United States | 98,700,000 | 101,794,245 | ||||||||||
|
|
|
|||||||||||||
| 2,876,373,264 | ||||||||||||||
|
|
|
|||||||||||||
| Health Care 11.0% | ||||||||||||||
| e |
AMAG Pharmaceuticals Inc., senior note, 144A, 7.875%, 9/01/23 | United States | 55,600,000 | 55,183,000 | ||||||||||
| e |
Avantor Inc., senior note, 144A, 9.00%, 10/01/25 | United States | 75,000,000 | 73,640,625 | ||||||||||
| CHS/Community Health Systems Inc., | ||||||||||||||
| senior note, 8.00%, 11/15/19 |
United States | 1,171,245,000 | 1,059,976,725 | |||||||||||
| senior note, 7.125%, 7/15/20 |
United States | 575,000,000 | 470,781,250 | |||||||||||
| senior note, 6.875%, 2/01/22 |
United States | 1,433,900,000 | 833,454,375 | |||||||||||
| senior secured note, 5.125%, 8/01/21 |
United States | 132,000,000 | 123,420,000 | |||||||||||
| senior secured note, first lien, 6.25%, 3/31/23 |
United States | 351,000,000 | 325,113,750 | |||||||||||
| DaVita Inc., | ||||||||||||||
| senior bond, 5.125%, 7/15/24 |
United States | 122,000,000 | 119,331,250 | |||||||||||
| senior bond, 5.00%, 5/01/25 |
United States | 110,000,000 | 106,595,500 | |||||||||||
| e |
Endo DAC/Endo Finance LLC/Endo Finco Inc., | |||||||||||||
| senior bond, 144A, 6.00%, 2/01/25 |
United States | 108,700,000 | 78,535,750 | |||||||||||
| senior note, 144A, 6.00%, 7/15/23 |
United States | 218,025,000 | 165,699,000 | |||||||||||
| e |
Endo Finance LLC, senior note, 144A, 5.75%, 1/15/22 | United States | 126,000,000 | 103,950,000 | ||||||||||
| e |
Endo Finance LLC/Endo Finco Inc., senior note, 144A, 5.375%, 1/15/23 | United States | 35,000,000 | 26,512,500 | ||||||||||
| HCA Inc., | ||||||||||||||
| senior bond, 5.875%, 5/01/23 |
United States | 120,000,000 | 124,500,000 | |||||||||||
| senior note, 7.50%, 2/15/22 |
United States | 100,000,000 | 110,125,000 | |||||||||||
| senior secured note, first lien, 5.00%, 3/15/24 |
United States | 134,800,000 | 136,485,000 | |||||||||||
| Horizon Pharma Inc., senior note, 6.625%, 5/01/23 | United States | 105,012,000 | 105,012,000 | |||||||||||
| e |
Horizon Pharma Inc./Horizon Pharma USA Inc., senior note, 144A, 8.75%, 11/01/24 | United States | 33,303,000 | 35,634,210 | ||||||||||
| e |
Jaguar Holding Co. II/Pharmaceutical Product Development LLC, senior note, 144A, 6.375%, 8/01/23 | United States | 54,265,000 | 55,011,144 | ||||||||||
| Kindred Healthcare Inc., senior note, 8.00%, 1/15/20 | United States | 28,845,000 | 30,683,869 | |||||||||||
| j |
Mallinckrodt International Finance SA, senior bond, 4.75%, 4/15/23 | United States | 66,000,000 | 50,820,000 | ||||||||||
| e |
Mallinckrodt International Finance SA/Mallinckrodt CB LLC, | |||||||||||||
| j senior note, 144A, 4.875%, 4/15/20 |
United States | 258,127,000 | 246,511,285 | |||||||||||
| senior note, 144A, 5.75%, 8/01/22 |
United States | 337,775,000 | 290,486,500 | |||||||||||
| senior note, 144A, 5.625%, 10/15/23 |
United States | 285,350,000 | 229,706,750 | |||||||||||
| senior note, 144A, 5.50%, 4/15/25 |
United States | 137,500,000 | 107,421,875 | |||||||||||
| 66 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
|
|
||||||||||||||
| Corporate Bonds (continued) | ||||||||||||||
| Health Care (continued) | ||||||||||||||
| Tenet Healthcare Corp., | ||||||||||||||
| e secured note, second lien, 144A, 5.125%, 5/01/25 |
United States | 128,300,000 | $ | 123,809,500 | ||||||||||
| senior note, 5.50%, 3/01/19 |
United States | 45,000,000 | 45,675,000 | |||||||||||
| senior note, 8.125%, 4/01/22 |
United States | 876,400,000 | 916,933,500 | |||||||||||
| j senior note, 6.75%, 6/15/23 |
United States | 570,000,000 | 560,025,000 | |||||||||||
| senior note, 6.875%, 11/15/31 |
United States | 24,400,000 | 22,326,000 | |||||||||||
| e senior note, 144A, 7.00%, 8/01/25 |
United States | 140,000,000 | 138,250,000 | |||||||||||
| senior secured note, first lien, 4.375%, 10/01/21 |
United States | 140,000,000 | 138,250,000 | |||||||||||
| e senior secured note, first lien, 144A, 4.625%, 7/15/24 |
United States | 25,200,000 | 24,318,000 | |||||||||||
| e senior secured note, second lien, 144A, 7.50%, 1/01/22 |
United States | 66,700,000 | 70,535,250 | |||||||||||
| e |
Valeant Pharmaceuticals International, | |||||||||||||
| senior note, 144A, 6.375%, 10/15/20 |
United States | 209,900,000 | 212,261,375 | |||||||||||
| senior note, 144A, 9.25%, 4/01/26 |
United States | 200,000,000 | 199,750,000 | |||||||||||
| e |
Valeant Pharmaceuticals International Inc., | |||||||||||||
| senior bond, 144A, 6.125%, 4/15/25 |
United States | 122,400,000 | 106,090,200 | |||||||||||
| senior note, 144A, 5.375%, 3/15/20 |
United States | 356,991,000 | 360,221,768 | |||||||||||
| senior note, 144A, 7.50%, 7/15/21 |
United States | 205,000,000 | 207,306,250 | |||||||||||
| senior note, 144A, 5.875%, 5/15/23 |
United States | 183,500,000 | 163,544,375 | |||||||||||
| senior note, 144A, 9.00%, 12/15/25 |
United States | 85,000,000 | 84,787,500 | |||||||||||
| senior note, first lien, 144A, 7.00%, 3/15/24 |
United States | 77,300,000 | 80,875,125 | |||||||||||
| senior secured note, first lien, 144A, 6.50%, 3/15/22 |
United States | 50,500,000 | 52,330,625 | |||||||||||
| senior secured note, first lien, 144A, 5.50%, 11/01/25 |
United States | 25,000,000 | 24,431,250 | |||||||||||
|
|
|
|||||||||||||
| 8,596,312,076 | ||||||||||||||
|
|
|
|||||||||||||
| Industrials 0.8% | ||||||||||||||
| l,n |
CEVA Group PLC, senior secured note, first lien, 144A, PIK, 9.00%, 9/01/20 | United Kingdom | 165,515,180 | 168,784,616 | ||||||||||
| e |
Cloud Crane LLC, secured note, second lien, 144A, 10.125%, 8/01/24 | United States | 29,500,000 | 32,745,000 | ||||||||||
| TransDigm Inc., senior sub. note, 6.00%, 7/15/22 | United States | 17,900,000 | 18,302,750 | |||||||||||
| United Rentals North America Inc., senior bond, 5.75%, 11/15/24 | United States | 70,400,000 | 73,553,920 | |||||||||||
| e |
West Corp., senior note, 144A, 8.50%, 10/15/25 | United States | 50,000,000 | 48,625,000 | ||||||||||
| e |
XPO Logistics Inc., senior note, 144A, 6.50%, 6/15/22 | United States | 240,000,000 | 248,400,000 | ||||||||||
|
|
|
|||||||||||||
| 590,411,286 | ||||||||||||||
|
|
|
|||||||||||||
| Information Technology 0.9% | ||||||||||||||
| e |
BMC Software Finance Inc., senior note, 144A, 8.125%, 7/15/21 | United States | 110,805,000 | 111,220,519 | ||||||||||
| e |
CommScope Inc., senior bond, 144A, 5.50%, 6/15/24 | United States | 100,000,000 | 102,500,000 | ||||||||||
| e |
CommScope Technologies LLC, senior bond, 144A, 6.00%, 6/15/25 | United States | 74,200,000 | 77,576,100 | ||||||||||
| e |
Dell International LLC/EMC Corp., senior secured note, first lien, 144A, 5.45%, 6/15/23 | United States | 69,750,000 | 73,993,057 | ||||||||||
| e |
First Data Corp., | |||||||||||||
| secured note, second lien, 144A, 5.75%, 1/15/24 |
United States | 35,000,000 | 35,350,000 | |||||||||||
| senior note, 144A, 7.00%, 12/01/23 |
United States | 175,000,000 | 184,406,250 | |||||||||||
| NCR Corp., | ||||||||||||||
| senior note, 5.00%, 7/15/22 |
United States | 40,000,000 | 40,200,000 | |||||||||||
| senior note, 6.375%, 12/15/23 |
United States | 35,000,000 | 36,400,000 | |||||||||||
|
|
|
|||||||||||||
| 661,645,926 | ||||||||||||||
|
|
|
|||||||||||||
| franklintempleton.com | Semiannual Report |
67 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
| Corporate Bonds (continued) | ||||||||||||||
| Materials 1.6% | ||||||||||||||
| e |
Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A, 7.25%, 5/15/24 | Luxembourg | 27,300,000 | $ | 29,176,875 | |||||||||
| Ball Corp., senior bond, 4.00%, 11/15/23 | United States | 100,000,000 | 97,875,000 | |||||||||||
| e |
BWAY Holding Co., | |||||||||||||
| secured note, 144A, 5.50%, 4/15/24 |
United States | 75,000,000 | 75,656,250 | |||||||||||
| senior note, 144A, 7.25%, 4/15/25 |
United States | 175,000,000 | 178,937,500 | |||||||||||
| e |
Cemex Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24 | Mexico | 88,400,000 | 91,716,326 | ||||||||||
| e |
Cemex SAB de CV, | |||||||||||||
| senior secured bond, 144A, 7.75%, 4/16/26 |
Mexico | 55,100,000 | 60,886,878 | |||||||||||
| senior secured bond, first lien, 144A, 5.70%, 1/11/25 |
Mexico | 70,000,000 | 71,990,450 | |||||||||||
| Crown Americas LLC/Crown Americas Capital Corp. IV, senior bond, 4.50%, 1/15/23 | United States | 105,000,000 | 104,475,000 | |||||||||||
| e |
FMG Resources (August 2006) Pty. Ltd., | |||||||||||||
| senior note, 144A, 5.125%, 5/15/24 |
Australia | 44,400,000 | 44,178,000 | |||||||||||
| senior secured note, 144A, 9.75%, 3/01/22 | Australia | 425,000,000 | 469,625,000 | |||||||||||
| 1,224,517,279 | ||||||||||||||
| Real Estate 0.6% | ||||||||||||||
| Equinix Inc., senior bond, 5.375%, 5/15/27 | United States | 140,000,000 | 142,450,000 | |||||||||||
| Iron Mountain Inc., | ||||||||||||||
|
e senior note, 144A, 4.875%, 9/15/27 |
United States | 91,500,000 | 85,323,750 | |||||||||||
| senior sub. bond, 5.75%, 8/15/24 |
United States | 122,254,000 | 119,044,832 | |||||||||||
| iStar Inc., senior note, 5.00%, 7/01/19 | United States | 95,900,000 | 96,263,941 | |||||||||||
| 443,082,523 | ||||||||||||||
| Telecommunication Services 2.5% | ||||||||||||||
| AT&T Inc., senior bond, 4.125%, 2/17/26 | United States | 50,000,000 | 50,173,968 | |||||||||||
| Consolidated Communications Inc., senior note, 6.50%, 10/01/22 | United States | 64,200,000 | 57,670,860 | |||||||||||
| e |
Digicel Ltd., senior note, 144A, 6.75%, 3/01/23 | Bermuda | 68,300,000 | 61,875,702 | ||||||||||
| e |
SFR Group SA, | |||||||||||||
| secured bond, 144A, 7.375%, 5/01/26 |
France | 50,000,000 | 47,875,000 | |||||||||||
| senior note, first lien, 144A, 6.00%, 5/15/22 |
France | 60,000,000 | 58,725,000 | |||||||||||
| Sprint Capital Corp., senior note, 6.90%, 5/01/19 | United States | 200,000,000 | 206,500,000 | |||||||||||
| Sprint Communications Inc., | ||||||||||||||
| senior bond, 11.50%, 11/15/21 |
United States | 200,000,000 | 233,000,000 | |||||||||||
| senior note, 7.00%, 8/15/20 |
United States | 102,500,000 | 106,856,250 | |||||||||||
| senior note, 6.00%, 11/15/22 |
United States | 362,700,000 | 356,806,125 | |||||||||||
| Sprint Corp., | ||||||||||||||
| senior bond, 7.875%, 9/15/23 |
United States | 187,350,000 | 191,799,562 | |||||||||||
| senior bond, 7.125%, 6/15/24 |
United States | 190,650,000 | 186,360,375 | |||||||||||
| senior note, 7.625%, 3/01/26 |
United States | 100,000,000 | 97,875,000 | |||||||||||
| e |
Sprint Spectrum Co. LLC, first lien, senior secured note, 144A, 5.152%, 9/20/29 | United States | 220,000,000 | 221,375,000 | ||||||||||
| Zayo Group LLC/Zayo Capital Inc., senior note, 6.00%, 4/01/23 | United States | 77,000,000 | 79,502,500 | |||||||||||
| 1,956,395,342 | ||||||||||||||
| Utilities 2.6% | ||||||||||||||
| The AES Corp., senior bond, 4.875%, 5/15/23 | United States | 75,000,000 | 76,687,500 | |||||||||||
| Calpine Corp., | ||||||||||||||
| senior bond, 5.75%, 1/15/25 |
United States | 227,000,000 | 208,272,500 | |||||||||||
| senior note, 5.375%, 1/15/23 |
United States | 340,000,000 | 326,757,000 | |||||||||||
| senior note, 5.50%, 2/01/24 |
United States | 186,500,000 | 170,414,375 |
| 68 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||||||
| Corporate Bonds (continued) | ||||||||||||||||||
| Utilities (continued) | ||||||||||||||||||
| Dynegy Inc., | ||||||||||||||||||
| senior bond, 8.034%, 2/02/24 |
United States | 81,983,928 | $ | 86,083,124 | ||||||||||||||
| senior note, 6.75%, 11/01/19 |
United States | 324,002,000 | 330,482,040 | |||||||||||||||
| senior note, 7.375%, 11/01/22 |
United States | 351,500,000 | 371,271,875 | |||||||||||||||
| senior note, 5.875%, 6/01/23 |
United States | 130,000,000 | 133,926,000 | |||||||||||||||
| e senior note, 144A, 8.00%, 1/15/25 |
United States | 58,300,000 | 63,692,750 | |||||||||||||||
| Ferrellgas Partners LP/Ferrellgas Partners Finance Corp., senior note, 8.625%, 6/15/20 | United States | 49,900,000 | 45,908,000 | |||||||||||||||
| e |
InterGen NV, | |||||||||||||||||
| secured bond, 144A, 7.00%, 6/30/23 |
Netherlands | 143,700,000 | 143,697,845 | |||||||||||||||
| secured note, 144A, 7.50%, 6/30/21 |
Netherlands | 35,800,000 | GBP | 50,419,344 | ||||||||||||||
| e |
Talen Energy Supply LLC, senior note, 144A, 10.50%, 1/15/26 | United States | 50,000,000 | 43,187,500 | ||||||||||||||
| 2,050,799,853 | ||||||||||||||||||
| Total Corporate Bonds (Cost $28,982,113,018) | 28,920,930,980 | |||||||||||||||||
|
k,o |
Senior Floating Rate Interests 4.0% | |||||||||||||||||
| Consumer Discretionary 2.0% | ||||||||||||||||||
| 24 Hour Fitness Worldwide Inc., Term Loan, 6.052%, (LIBOR + 3.75%), 5/28/21 | United States | 54,529,366 | 54,836,093 | |||||||||||||||
| Academy Ltd., Initial Term Loan, 5.887% - 6.017%, (LIBOR + 4.00%), 7/02/22 | United States | 111,471,778 | 89,363,246 | |||||||||||||||
| Belk Inc., Closing Date Term Loan, 6.458%, (LIBOR + 4.75%), 12/12/22 | United States | 244,755,330 | 213,068,326 | |||||||||||||||
| BJ’s Wholesale Club Inc., | ||||||||||||||||||
| Second Lien Initial Term Loans, 9.191%, (LIBOR + 7.50%), 3/24/25 |
United States | 38,817,949 | 39,048,450 | |||||||||||||||
| Tranche B Term Loans, 5.191%, (LIBOR + 3.50%), 3/27/24 |
United States | 24,824,937 | 24,836,233 | |||||||||||||||
| Global Eagle Entertainment Inc., Initial Term Loans, 9.358%, (LIBOR + 7.50%), 1/06/23 | United States | 105,251,250 | 109,987,556 | |||||||||||||||
| i |
iHeartCommunications Inc., | |||||||||||||||||
| Tranche D Term Loan, 8.443%, (LIBOR + 6.75%), 1/30/19 |
United States | 908,185,547 | 720,150,270 | |||||||||||||||
| Tranche E Term Loan, 9.193%, (LIBOR + 7.50%), 7/30/19 |
United States | 241,744,256 | 191,170,149 | |||||||||||||||
| Neiman Marcus Group Ltd. Inc., Term Loan, 4.941%, (LIBOR + 3.25%), 10/25/20 | United States | 50,351,145 | 43,632,389 | |||||||||||||||
| PetSmart Inc., Tranche B-2 Loans, 4.89%, (LIBOR + 3.00%), 3/11/22 | United States | 29,923,077 | 24,088,077 | |||||||||||||||
| p |
Stars Group Holdings BV, Term B Loan, TBD, 3/29/25 | United States | 50,000,000 | 49,875,000 | ||||||||||||||
| p,q |
Univision Communications Inc., Term Loan, TBD, 3/15/24 | United States | 30,000,000 | 29,573,430 | ||||||||||||||
| 1,589,629,219 | ||||||||||||||||||
| Consumer Staples 0.1% | ||||||||||||||||||
| Almonde Inc., | ||||||||||||||||||
| 2nd Lien Dollar Term Loan, 9.234%, (LIBOR + 7.25%), 6/13/25 |
United States | 15,000,000 | 14,898,435 | |||||||||||||||
| Dollar Term Loan, 5.484%, (LIBOR + 3.50%), 6/13/24 |
United States | 59,700,000 | 59,720,716 | |||||||||||||||
| 74,619,151 | ||||||||||||||||||
| Energy 0.3% | ||||||||||||||||||
| r |
PetroQuest Energy Inc., Multidraw Term Loan Facility, 10.00%, 10/17/20 | United States | 30,000,000 | 29,721,300 | ||||||||||||||
| W&T Offshore Inc., | ||||||||||||||||||
| Second Lien Term Loan, 9.00%, 5/15/20 |
United States | 161,850,000 | 156,362,314 | |||||||||||||||
| Senior Secured 1.5 Lien Term Loan, 11.00%, 11/15/19 |
United States | 75,000,000 | 77,250,000 | |||||||||||||||
| 263,333,614 | ||||||||||||||||||
| Financials 0.1% | ||||||||||||||||||
| Russell Investments U.S. Institutional Holdco Inc., Term Loan B, 4.943%, (LIBOR + 3.25%), 6/01/23 |
United States | 64,099,246 | 64,566,850 | |||||||||||||||
| franklintempleton.com | Semiannual Report |
69 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
| k,o |
Senior Floating Rate Interests (continued) | |||||||||||||
| Health Care 0.4% | ||||||||||||||
| Air Medical Group Holdings Inc., 2018 Term Loans, 4.936%, (LIBOR + 3.25%), 4/28/22 | United States | 14,673,613 | $ | 14,752,719 | ||||||||||
| p,q |
Amneal Holdings LLC, Term B Loan, TBD, 3/23/25 | United States | 60,000,000 | 60,112,500 | ||||||||||
| Community Health Systems Inc., 2021 Term H Loans, 4.984%, (LIBOR + 3.00%), 1/15/21 | United States | 38,797,057 | 37,371,808 | |||||||||||
| Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.188%, (LIBOR + 4.25%), 4/29/24 |
United States | 79,400,000 | 79,489,325 | |||||||||||
| Horizon Pharma Inc., Third Amendment Refinancing Term Loan, 5.125%, (LIBOR + 3.25%), 3/29/24 | United States | 32,642,777 | 32,880,807 | |||||||||||
| Lannett Co. Inc., Initial Tranche B Term Loans, 7.252%, (LIBOR + 5.375%), 11/25/22 | United States | 56,157,222 | 56,087,026 | |||||||||||
| Mallinckrodt International Finance SA, 2018 Incremental Term Loans, 4.82%, (LIBOR + 3.00%), 2/24/25 | Luxembourg | 50,000,000 | 50,140,600 | |||||||||||
| 330,834,785 | ||||||||||||||
| Industrials 0.4% | ||||||||||||||
| CEVA Group PLC, Pre-Funded L/C, 6.50%, (LIBOR + 5.50%), 3/19/21 | United Kingdom | 18,246,603 | 17,967,248 | |||||||||||
| CEVA Intercompany BV, Dutch BV Term Loan, 7.272%, (LIBOR + 5.50%), 3/19/21 | United Kingdom | 18,520,302 | 18,236,756 | |||||||||||
| CEVA Logistics Canada ULC, Canadian Term Loan, 7.272%, (LIBOR + 5.50%), 3/19/21 | Canada | 3,193,156 | 3,144,269 | |||||||||||
| CEVA Logistics U.S. Holdings Inc., U.S. Term Loan, 7.272%, (LIBOR + 5.50%), 3/19/21 | United Kingdom | 25,545,245 | 25,154,147 | |||||||||||
| Commercial Barge Line Co., Initial Term Loan, 10.627%, (LIBOR + 8.75%), 11/12/20 | United States | 126,000,000 | 75,521,250 | |||||||||||
| Vertiv Group Corp., Term B Loans, 5.887%, (LIBOR + 4.00%), 11/30/23 | United States | 104,327,586 | 105,172,640 | |||||||||||
| West Corp., Term B Loans, 5.877%, (LIBOR + 4.00%), 10/10/24 | United States | 61,577,512 | 62,129,123 | |||||||||||
| 307,325,433 | ||||||||||||||
| Information Technology 0.2% | ||||||||||||||
| Digicert Inc., | ||||||||||||||
| First Lien Term Loan, 6.522%, (LIBOR + 4.75%), 10/31/24 |
United States | 45,000,000 | 45,579,375 | |||||||||||
| Second Lien Initial Loan, 9.772%, (LIBOR + 8.00%), 9/18/25 |
United States | 10,000,000 | 10,100,000 | |||||||||||
| MH Sub I LLC and Micro Holding Corp., | ||||||||||||||
| Amendment No. 2 Initial Term Loan, 5.527%, (LIBOR + 3.75%), 9/15/24 |
United States | 39,800,000 | 39,858,028 | |||||||||||
| Second Lien Initial Term Loan, 9.277%, (LIBOR + 7.50%), 9/15/25 |
United States | 30,000,000 | 30,431,250 | |||||||||||
| 125,968,653 | ||||||||||||||
| Telecommunication Services 0.2% | ||||||||||||||
| Digicel International Finance Ltd., Initial Term B Loans, 5.02%, (LIBOR + 3.25%), 5/25/24 | United States | 69,516,548 | 69,299,308 | |||||||||||
| Securus Technologies Holdings Inc., | ||||||||||||||
| Second Lien Initial Loan, 10.127%, (LIBOR + 8.25%), 11/01/25 |
United States | 30,000,000 | 30,412,500 | |||||||||||
| Term Loan B, 6.377%, (LIBOR + 4.50%), 11/01/24 |
United States | 44,887,500 | 45,431,761 | |||||||||||
| 145,143,569 |
| 70 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| Country | |
Principal Amount* |
|
Value | ||||||||||
|
|
||||||||||||||
| k,o |
Senior Floating Rate Interests (continued) | |||||||||||||
| Utilities 0.3% | ||||||||||||||
| Intergen NV, Term Advance, 6.24%, (LIBOR + 4.50%), 6/13/20 | Netherlands | 66,549,146 | $ | 66,923,485 | ||||||||||
| Talen Energy Supply LLC, | ||||||||||||||
| Term B-1 Loans, 5.877%, (LIBOR + 4.00%), 7/15/23 |
United States | 64,213,875 | 63,411,202 | |||||||||||
| Tranche B-2 Term Loan, 5.877%, (LIBOR + 4.00%), 4/13/24 |
United States | 59,280,000 | 58,390,800 | |||||||||||
| 188,725,487 | ||||||||||||||
| Total Senior Floating Rate Interests |
3,090,146,761 | |||||||||||||
| Shares | ||||||||||||||
| Escrows and Litigation Trusts 0.0% | ||||||||||||||
| b,s |
Impax Laboratories Inc., Escrow Account | United States | 60,000,000 | — | ||||||||||
| b,s |
Motors Liquidation Co., Escrow Account | United States | 400,000,000 | — | ||||||||||
| b,s |
Motors Liquidation Co., Escrow Account, cvt. pfd., C | United States | 11,000,000 | — | ||||||||||
| Total Escrows and Litigation Trusts |
— | |||||||||||||
| Total Investments before Short Term Investments |
76,015,112,107 | |||||||||||||
| Short Term Investments 0.3% | ||||||||||||||
| Money Market Funds (Cost $108,191,396) 0.2% | ||||||||||||||
| t,u |
Institutional Fiduciary Trust Money Market Portfolio, 1.24% | United States | 108,191,396 | 108,191,396 | ||||||||||
| v |
Investments from Cash Collateral Received for Loaned Securities 0.1% |
|||||||||||||
| Money Market Funds (Cost $84,739,000) 0.1% | ||||||||||||||
| t,u |
Institutional Fiduciary Trust Money Market Portfolio, 1.24% | United States | 84,739,000 | 84,739,000 | ||||||||||
| Principal Amount* |
||||||||||||||
| Repurchase Agreement (Cost $17,011,579) 0.0%† | ||||||||||||||
| w |
Joint Repurchase Agreement, 1.80%, 4/02/18 (Maturity Value $17,014,981) | |||||||||||||
| BNP Paribas Securities Corp. |
||||||||||||||
| Collateralized by xU.S. Treasury Bill, 6/14/18; U.S. Treasury Bond,
8.13% |
United States | 17,011,579 | 17,011,579 | |||||||||||
| Total Investments from Cash Collateral Received for Loaned Securities (Cost $101,750,579) |
101,750,579 | |||||||||||||
| Total Investments (Cost $74,442,853,338) 97.8%. |
76,225,054,082 | |||||||||||||
| Options Written (0.0)%† |
(22,440,000 | ) | ||||||||||||
| Other Assets, less Liabilities 2.2% |
1,715,627,717 | |||||||||||||
| Net Assets 100.0% |
$ | 77,918,241,799 | ||||||||||||
| franklintempleton.com | Semiannual Report |
71 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
| |
Number of Contracts |
|
|
Notional Amount* |
|
Value | ||||||||
| y |
Options Written (0.0)%† | |||||||||||||
| Calls - Exchange-Traded | ||||||||||||||
| Anadarko Petroleum Corp., April Strike Price $62.50, Expires 4/20/18 | 10,000 | 1,000,000 | $ | (960,000 | ) | |||||||||
| Anadarko Petroleum Corp., April Strike Price $65, Expires 4/20/18 | 10,000 | 1,000,000 | (340,000 | ) | ||||||||||
| BP PLC, April Strike Price $41, Expires 4/20/18 | 40,000 | 4,000,000 | (2,440,000 | ) | ||||||||||
| Chevron Corp., April Strike Price $120, Expires 4/20/18 | 20,000 | 2,000,000 | (780,000 | ) | ||||||||||
| Ford Motor Co., April Strike Price $11.50, Expires 4/27/18 | 10,000 | 1,000,000 | (130,000 | ) | ||||||||||
| Ford Motor Co., June Strike Price $11.87, Expires 6/15/18 | 35,000 | 3,500,000 | (630,000 | ) | ||||||||||
| Intel Corp., April Strike Price $52.50, Expires 4/20/18 | 10,000 | 1,000,000 | (1,320,000 | ) | ||||||||||
| Microsoft Corp., April Strike Price $97.50, Expires 4/20/18 | 10,000 | 1,000,000 | (510,000 | ) | ||||||||||
| Wells Fargo & Co., April Strike Price $65, Expires 4/20/18 | 20,000 | 2,000,000 | (60,000 | ) | ||||||||||
| (7,170,000 | ) | |||||||||||||
| Puts - Exchange-Traded | ||||||||||||||
| Alphabet Inc., April Strike Price $1,000, Expires 4/20/18 | 1,000 | 100,000 | (1,500,000 | ) | ||||||||||
| Caterpillar Inc., April Strike Price $140, Expires 4/20/18 | 10,000 | 1,000,000 | (1,910,000 | ) | ||||||||||
| Comcast Corp., April Strike Price $35, Expires 4/20/18 | 20,000 | 2,000,000 | (2,900,000 | ) | ||||||||||
| Microsoft Corp., April Strike Price $85, Expires 4/20/18 | 10,000 | 1,000,000 | (610,000 | ) | ||||||||||
| Target Corp., April Strike Price $65, Expires 4/20/18 | 10,000 | 1,000,000 | (620,000 | ) | ||||||||||
| Texas Instruments Inc., April Strike Price $100, Expires 4/20/18 | 5,000 | 500,000 | (630,000 | ) | ||||||||||
| Texas Instruments Inc., April Strike Price $105, Expires 4/20/18 | 20,000 | 2,000,000 | (6,140,000 | ) | ||||||||||
| Walmart Inc., April Strike Price $85, Expires 4/20/18 | 20,000 | 2,000,000 | (960,000 | ) | ||||||||||
| (15,270,000 | ) | |||||||||||||
| Total Options Written (Premiums received $19,982,836) | $ | (22,440,000 | ) | |||||||||||
| 72 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Income Fund (continued)
See Abbreviations on page 120.
†Rounds to less than 0.1% of net assets.
*The principal/notional amount is stated in U.S. dollars unless otherwise indicated.
aA portion or all of the security is held in connection with written option contracts open at period end.
bNon-income producing.
cSee Note 11 regarding holdings of 5% voting securities.
dSee Note 1(g) regarding equity-linked securities.
eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At March 31, 2018, the aggregate value of these securities was $21,450,854,372, representing 27.5% of net assets.
fSee Note 1(f) regarding index-linked notes.
gSecurity pays a fixed 2.00% coupon rate and a variable coupon based on the distribution of the Morgan Stanley Custom Enhanced SPX B DT Index 20 Delta. The coupon rate shown represents the combined rate at period end. Cash payment at maturity or upon early redemption is based on the performance of the Morgan Stanley Custom Enhanced SPX B Index 20 Delta.
hSecurity purchased on a when-issued basis. See Note 1(d).
iSee Note 7 regarding defaulted securities.
jA portion or all of the security is on loan at March 31, 2018. See Note 1(h).
kThe coupon rate shown represents the rate at period end.
lIncome may be received in additional securities and/or cash.
mPerpetual security with no stated maturity date.
nSee Note 8 regarding restricted securities.
oSee Note 1(j) regarding senior floating rate interests.
pA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.
qSecurity purchased on a delayed delivery basis. See Note 1(d).
rSee Note 9 regarding unfunded loan commitments.
sFair valued using significant unobservable inputs. See Note 13 regarding fair value measurements.
tSee Note 3(f) regarding investments in affiliated management investment companies.
uThe rate shown is the annualized seven-day effective yield at period end.
vSee Note 1(h) regarding securities on loan.
wSee Note 1(c) regarding joint repurchase agreement.
xThe security was issued on a discount basis with no stated coupon rate.
ySee Note 1(e) regarding written options.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report |
73 |
FRANKLIN CUSTODIAN FUNDS
Financial Highlights
Franklin U.S. Government Securities Fund
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 6.13 | $ 6.35 | $ 6.40 | $ 6.48 | $ 6.53 | $ 6.91 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.07 | 0.13 | 0.14 | 0.15 | 0.17 | 0.15 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.16 | ) | (0.16 | ) | 0.01 | (0.02 | ) | 0.01 | (0.29 | ) | ||||||||||||||
| Total from investment operations |
(0.09 | ) | (0.03 | ) | 0.15 | 0.13 | 0.18 | (0.14 | ) | |||||||||||||||
| Less distributions from net investment income |
(0.09 | ) | (0.19 | ) | (0.20 | ) | (0.21 | ) | (0.23 | ) | (0.24 | ) | ||||||||||||
| Net asset value, end of period |
$ 5.95 | $ 6.13 | $ 6.35 | $ 6.40 | $ 6.48 | $ 6.53 | ||||||||||||||||||
| Total returnc |
(1.48)% | (0.45)% | 2.35% | 2.07% | 2.80% | (2.03)% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.79% | 0.79% | 0.76% | 0.76% | 0.75% | 0.73% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.78% | e | 0.79% | e,f | 0.76% | e,f | 0.76% | e,f | 0.75% | e,f | 0.73% | |||||||||||||
| Net investment income |
2.44% | 2.17% | 2.21% | 2.28% | 2.62% | 2.17% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$3,416,942 | $3,581,769 | $4,235,819 | $4,167,639 | $4,323,990 | $5,138,613 | ||||||||||||||||||
| Portfolio turnover rate |
32.61% | 86.72% | 92.18% | 69.10% | 69.73% | 46.16% | ||||||||||||||||||
| Portfolio turnover rate excluding mortgage dollar rollsg |
32.61% | 86.72% | 92.18% | 58.70% | 38.79% | 40.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
gSee Note 1(i) regarding mortgage dollar rolls.
| 74 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin U.S. Government Securities Fund (continued)
| Period Ended March 31, 2018 (unaudited)a |
||||
|
|
||||
| Class M |
||||
| Per share operating performance (for a share outstanding throughout the period) |
||||
| Net asset value, beginning of period |
$6.03 | |||
|
|
|
|||
| Income from investment operationsb: |
||||
| Net investment incomec |
0.03 | |||
| Net realized and unrealized gains (losses) |
(0.06 | ) | ||
|
|
|
|||
| Total from investment operations |
(0.03 | ) | ||
|
|
|
|||
| Less distributions from net investment income |
(0.05 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$5.95 | |||
|
|
|
|||
| Total returnd |
(0.52)% | |||
| Ratios to average net assetse |
||||
| Expenses before waiver and payments by affiliates |
0.64% | |||
| Expenses net of waiver and payments by affiliatesf |
0.63% | |||
| Net investment income |
2.59% | |||
| Supplemental data |
||||
| Net assets, end of period (000’s) |
$5 | |||
| Portfolio turnover rate |
32.61% | |||
| Portfolio turnover rate excluding mortgage dollar rollsg |
32.61% | |||
aFor the period January 25, 2018 (effective date) to March 31, 2018.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gSee Note 1(i) regarding mortgage dollar rolls.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 75 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin U.S. Government Securities Fund (continued)
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 6.08 | $ 6.30 | $ 6.36 | $ 6.44 | $ 6.49 | $ 6.86 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.06 | 0.10 | 0.11 | 0.11 | 0.14 | 0.11 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.16) | (0.16) | — | c | (0.01) | 0.01 | (0.28) | |||||||||||||||||
| Total from investment operations |
(0.10) | (0.06) | 0.11 | 0.10 | 0.15 | (0.17) | ||||||||||||||||||
| Less distributions from net investment income |
(0.07) | (0.16) | (0.17) | (0.18) | (0.20) | (0.20) | ||||||||||||||||||
| Net asset value, end of period |
$ 5.91 | $ 6.08 | $ 6.30 | $ 6.36 | $ 6.44 | $ 6.49 | ||||||||||||||||||
| Total returnd |
(1.57)% | (0.96)% | 1.70% | 1.57% | 2.30% | (2.45)% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.29% | 1.29% | 1.26% | 1.26% | 1.25% | 1.23% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
1.28%f | 1.29% | f,g | 1.26% | f,g | 1.26% | f,g | 1.25% | f,g | 1.23% | ||||||||||||||
| Net investment income |
1.94% | 1.67% | 1.71% | 1.78% | 2.12% | 1.67% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$667,400 | $797,394 | $1,034,410 | $1,040,294 | $1,190,720 | $1,640,787 | ||||||||||||||||||
| Portfolio turnover rate |
32.61% | 86.72% | 92.18% | 69.10% | 69.73% | 46.16% | ||||||||||||||||||
| Portfolio turnover rate excluding mortgage dollar rollsh |
32.61% | 86.72% | 92.18% | 58.70% | 38.79% | 40.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cAmount rounds to less than $0.01 per share.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable and is not annualized for periods less than one year. eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
hSee Note 1(i) regarding mortgage dollar rolls.
| 76 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin U.S. Government Securities Fund (continued)
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Class R |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 6.12 | $ 6.34 | $ 6.40 | $ 6.48 | $ 6.53 | $ 6.90 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.06 | 0.11 | 0.12 | 0.13 | 0.15 | 0.12 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.15) | (0.16) | —c | (0.02) | 0.01 | (0.27) | ||||||||||||||||||
| Total from investment operations |
(0.09) | (0.05) | 0.12 | 0.11 | 0.16 | (0.15) | ||||||||||||||||||
| Less distributions from net investment income |
(0.08) | (0.17) | (0.18) | (0.19) | (0.21) | (0.22) | ||||||||||||||||||
| Net asset value, end of period |
$ 5.95 | $ 6.12 | $ 6.34 | $ 6.40 | $ 6.48 | $ 6.53 | ||||||||||||||||||
| Total returnd |
(1.49)% | (0.81)% | 1.84% | 1.71% | 2.44% | (2.27)% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
1.13% | 1.13% | 1.11% | 1.11% | 1.10% | 1.08% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
1.12%f | 1.13%f,g | 1.11%f,g | 1.11%f,g | 1.10%f,g | 1.08% | ||||||||||||||||||
| Net investment income |
2.10% | 1.83% | 1.86% | 1.93% | 2.27% | 1.82% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$33,832 | $38,363 | $59,785 | $64,689 | $74,442 | $94,110 | ||||||||||||||||||
| Portfolio turnover rate |
32.61% | 86.72% | 92.18% | 69.10% | 69.73% | 46.16% | ||||||||||||||||||
| Portfolio turnover rate excluding mortgage dollar rollsh |
32.61% | 86.72% | 92.18% | 58.70% | 38.79% | 40.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cAmount rounds to less than $0.01 per share.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
hSee Note 1(i) regarding mortgage dollar rolls.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 77 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin U.S. Government Securities Fund (continued)
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013a | |||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$6.15 | $6.37 | $6.42 | $6.50 | $6.55 | $6.76 | ||||||||||||||||||
| Income from investment operationsb: |
||||||||||||||||||||||||
| Net investment incomec |
0.08 | 0.15 | 0.16 | 0.17 | 0.19 | 0.07 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.16) | (0.16) | 0.01 | (0.02) | 0.01 | (0.17) | ||||||||||||||||||
| Total from investment operations |
(0.08) | (0.01) | 0.17 | 0.15 | 0.20 | (0.10) | ||||||||||||||||||
| Less distributions from net investment income |
(0.10) | (0.21) | (0.22) | (0.23) | (0.25) | (0.11) | ||||||||||||||||||
| Net asset value, end of period |
$5.97 | $6.15 | $6.37 | $6.42 | $6.50 | $6.55 | ||||||||||||||||||
| Total returnd |
(1.33)% | (0.16)% | 2.63% | 2.35% | 3.08% | (1.53)% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.51% | 0.48% | 0.48% | 0.47% | 0.47% | 0.46% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.50%f | 0.48%f,g | 0.48%f,g | 0.47%f,g | 0.47%f,g | 0.46% | ||||||||||||||||||
| Net investment income |
2.72% | 2.48% | 2.49% | 2.57% | 2.90% | 2.44% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$607,967 | $446,174 | $624,619 | $375,644 | $497,246 | $480,590 | ||||||||||||||||||
| Portfolio turnover rate |
32.61% | 86.72% | 92.18% | 69.10% | 69.73% | 46.16% | ||||||||||||||||||
| Portfolio turnover rate excluding mortgage dollar rollsh |
32.61% | 86.72% | 92.18% | 58.70% | 38.79% | 40.83% | ||||||||||||||||||
aFor the period May 1, 2013 (effective date) to September 30, 2013.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
hSee Note 1(i) regarding mortgage dollar rolls.
| 78 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin U.S. Government Securities Fund (continued)
| Six Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | Year Ended September 30, | |||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Advisor Class |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$ 6.15 | $ 6.37 | $ 6.42 | $ 6.50 | $ 6.55 | $ 6.93 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.08 | 0.15 | 0.15 | 0.16 | 0.18 | 0.16 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.17) | (0.17) | 0.01 | (0.02) | 0.01 | (0.29) | ||||||||||||||||||
| Total from investment operations |
(0.09) | (0.02) | 0.16 | 0.14 | 0.19 | (0.13) | ||||||||||||||||||
| Less distributions from net investment income |
(0.09) | (0.20) | (0.21) | (0.22) | (0.24) | (0.25) | ||||||||||||||||||
| Net asset value, end of period |
$ 5.97 | $ 6.15 | $ 6.37 | $ 6.42 | $ 6.50 | $ 6.55 | ||||||||||||||||||
| Total returnc |
(1.40)% | (0.30)% | 2.49% | 2.21% | 2.94% | (1.86)% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.64% | 0.64% | 0.61% | 0.61% | 0.60% | 0.58% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.63%e | 0.64%e,f | 0.61%e,f | 0.61%e,f | 0.60%e,f | 0.58% | ||||||||||||||||||
| Net investment income |
2.59% | 2.32% | 2.36% | 2.43% | 2.77% | 2.32% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$716,203 | $854,640 | $718,975 | $622,339 | $652,737 | $949,085 | ||||||||||||||||||
| Portfolio turnover rate |
32.61% | 86.72% | 92.18% | 69.10% | 69.73% | 46.16% | ||||||||||||||||||
| Portfolio turnover rate excluding mortgage dollar rollsg |
32.61% | 86.72% | 92.18% | 58.70% | 38.79% | 40.83% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
gSee Note 1(i) regarding mortgage dollar rolls.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 79 |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin U.S. Government Securities Fund
| |
Principal Amount |
|
Value | |||||||
| Mortgage-Backed Securities 96.6% | ||||||||||
| Government National Mortgage Association (GNMA) Fixed Rate 96.6% | ||||||||||
| GNMA I SF 15 Year, 6.50%, 5/15/18 | $ 5 | $ 5 | ||||||||
| GNMA I SF 30 Year, 3.50%, 4/15/43 - 5/15/43 | 29,737,755 | 30,188,840 | ||||||||
| GNMA I SF 30 Year, 4.00%, 10/15/40 - 1/15/45 | 48,494,081 | 50,248,897 | ||||||||
| GNMA I SF 30 Year, 4.00%, 8/15/44 | 18,312,175 | 18,970,556 | ||||||||
| GNMA I SF 30 Year, 4.00%, 1/15/45 - 8/15/46 | 51,483,815 | 53,333,184 | ||||||||
| GNMA I SF 30 Year, 4.50%, 2/15/39 - 12/15/39 | 51,317,769 | 54,312,881 | ||||||||
| GNMA I SF 30 Year, 4.50%, 3/15/39 | 17,982,335 | 19,017,903 | ||||||||
| GNMA I SF 30 Year, 4.50%, 1/15/40 - 6/15/40 | 49,863,121 | 52,752,161 | ||||||||
| GNMA I SF 30 Year, 4.50%, 6/15/40 | 14,579,923 | 15,423,468 | ||||||||
| GNMA I SF 30 Year, 4.50%, 6/15/40 - 8/15/40 | 46,175,452 | 48,754,867 | ||||||||
| GNMA I SF 30 Year, 4.50%, 7/15/40 | 14,945,739 | 15,794,916 | ||||||||
| GNMA I SF 30 Year, 4.50%, 8/15/40 - 6/15/41 | 38,941,103 | 41,236,267 | ||||||||
| GNMA I SF 30 Year, 5.00%, 2/15/33 - 10/15/33 | 50,335,545 | 53,970,092 | ||||||||
| GNMA I SF 30 Year, 5.00%, 10/15/33 - 6/15/39 | 48,939,816 | 52,483,707 | ||||||||
| GNMA I SF 30 Year, 5.00%, 6/15/39 - 10/15/39 | 46,667,195 | 50,070,401 | ||||||||
| GNMA I SF 30 Year, 5.00%, 8/15/39 | 21,374,422 | 22,975,408 | ||||||||
| GNMA I SF 30 Year, 5.00%, 10/15/39 | 14,662,779 | 15,764,437 | ||||||||
| GNMA I SF 30 Year, 5.00%, 10/15/39 | 20,047,418 | 21,545,067 | ||||||||
| GNMA I SF 30 Year, 5.00%, 10/15/39 - 2/15/40 | 42,234,832 | 45,319,931 | ||||||||
| GNMA I SF 30 Year, 5.00%, 11/15/39 | 26,137,592 | 28,092,280 | ||||||||
| GNMA I SF 30 Year, 5.00%, 2/15/40 | 14,083,346 | 15,134,475 | ||||||||
| GNMA I SF 30 Year, 5.00%, 2/15/40 - 6/15/40 | 48,273,328 | 51,746,068 | ||||||||
| GNMA I SF 30 Year, 5.00%, 3/15/40 | 17,456,733 | 18,764,039 | ||||||||
| GNMA I SF 30 Year, 5.00%, 6/15/40 | 23,173,141 | 24,888,247 | ||||||||
| GNMA I SF 30 Year, 5.00%, 9/15/40 | 22,473,953 | 24,158,862 | ||||||||
| GNMA I SF 30 Year, 5.50%, 5/15/28 - 6/15/33 | 49,469,116 | 54,394,673 | ||||||||
| GNMA I SF 30 Year, 5.50%, 6/15/33 - 5/15/36 | 49,170,685 | 54,097,518 | ||||||||
| GNMA I SF 30 Year, 5.50%, 6/15/36 - 7/15/39 | 49,429,008 | 54,313,359 | ||||||||
| GNMA I SF 30 Year, 5.50%, 8/15/39 - 2/15/40 | 15,550,306 | 17,121,941 | ||||||||
| GNMA I SF 30 Year, 6.00%, 10/15/23 - 10/15/33 | 48,105,234 | 53,886,477 | ||||||||
| GNMA I SF 30 Year, 6.00%, 10/15/33 - 6/15/37 | 47,911,093 | 53,935,912 | ||||||||
| GNMA I SF 30 Year, 6.00%, 6/15/37 - 12/15/39 | 48,086,273 | 53,829,861 | ||||||||
| GNMA I SF 30 Year, 6.50%, 5/15/23 - 8/15/37 | 45,644,904 | 51,246,280 | ||||||||
| GNMA I SF 30 Year, 7.00%, 3/15/22 - 9/15/32 | 31,714,196 | 34,510,705 | ||||||||
| GNMA I SF 30 Year, 7.25%, 12/15/25 - 1/15/26 | 86,130 | 87,631 | ||||||||
| GNMA I SF 30 Year, 7.50%, 6/15/21 - 8/15/33 | 8,860,101 | 9,504,694 | ||||||||
| GNMA I SF 30 Year, 7.70%, 1/15/21 - 10/15/21 | 41,448 | 41,546 | ||||||||
| GNMA I SF 30 Year, 8.00%, 2/15/20 - 9/15/30 | 3,365,889 | 3,467,696 | ||||||||
| GNMA I SF 30 Year, 8.50%, 9/15/19 - 5/15/25 | 607,706 | 625,115 | ||||||||
| GNMA I SF 30 Year, 9.00%, 5/15/18 - 7/15/23 | 508,828 | 519,986 | ||||||||
| GNMA I SF 30 Year, 9.50%, 6/15/18 - 8/15/22 | 490,523 | 495,079 | ||||||||
| GNMA I SF 30 Year, 10.00%, 6/15/18 - 3/15/25 | 207,872 | 209,442 | ||||||||
| GNMA I SF 30 Year, 10.50%, 5/15/18 - 10/15/21 | 87,411 | 87,942 | ||||||||
| GNMA I SF 30 Year, 11.00%, 9/15/18 - 5/15/21 | 8,163 | 8,196 | ||||||||
| GNMA II SF 30 Year, 3.00%, 2/20/45 | 9,466,503 | 9,380,731 | ||||||||
| GNMA II SF 30 Year, 3.00%, 7/20/47 | 256,384,030 | 252,478,725 | ||||||||
| GNMA II SF 30 Year, 3.00%, 9/20/47 | 58,792,726 | 57,874,082 | ||||||||
| GNMA II SF 30 Year, 3.00%, 10/20/47 | 25,367,090 | 24,970,728 | ||||||||
| GNMA II SF 30 Year, 3.00%, 11/20/47 | 93,903,311 | 92,412,370 | ||||||||
| GNMA II SF 30 Year, 3.50%, 10/20/40 - 5/20/43 | 36,284,438 | 36,796,637 | ||||||||
| GNMA II SF 30 Year, 3.50%, 7/20/42 | 55,265,789 | 56,099,657 |
| 80 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin U.S. Government Securities Fund (continued)
| |
Principal Amount |
|
Value | |||||||
| Mortgage-Backed Securities (continued) | ||||||||||
| Government National Mortgage Association (GNMA) Fixed Rate (continued) | ||||||||||
| GNMA II SF 30 Year, 3.50%, 8/20/42 | $ | 19,094,655 | $ | 19,382,764 | ||||||
| GNMA II SF 30 Year, 3.50%, 9/20/42 | 126,547,178 | 128,456,606 | ||||||||
| GNMA II SF 30 Year, 3.50%, 10/20/42 | 26,116,792 | 26,510,865 | ||||||||
| GNMA II SF 30 Year, 3.50%, 11/20/42 | 21,756,444 | 22,084,728 | ||||||||
| GNMA II SF 30 Year, 3.50%, 4/20/43 | 26,688,827 | 27,091,558 | ||||||||
| GNMA II SF 30 Year, 3.50%, 5/20/43 | 36,139,327 | 36,684,666 | ||||||||
| GNMA II SF 30 Year, 3.50%, 6/20/43 | 41,744,128 | 42,374,050 | ||||||||
| GNMA II SF 30 Year, 3.50%, 8/20/43 | 29,915,473 | 30,366,919 | ||||||||
| GNMA II SF 30 Year, 3.50%, 9/20/47 | 798,489,325 | 806,802,724 | ||||||||
| GNMA II SF 30 Year, 3.50%, 11/20/47 | 734,981,747 | 742,645,909 | ||||||||
| GNMA II SF 30 Year, 3.50%, 2/20/48 | 304,093,806 | 307,258,927 | ||||||||
| GNMA II SF 30 Year, 4.00%, 5/20/40 - 2/20/44 | 23,710,273 | 24,663,449 | ||||||||
| GNMA II SF 30 Year, 4.00%, 11/20/40 | 36,435,807 | 38,096,838 | ||||||||
| GNMA II SF 30 Year, 4.00%, 12/20/40 | 21,447,372 | 22,424,207 | ||||||||
| GNMA II SF 30 Year, 4.00%, 1/20/41 | 23,506,411 | 24,578,337 | ||||||||
| GNMA II SF 30 Year, 4.00%, 7/20/41 | 29,263,744 | 30,596,498 | ||||||||
| GNMA II SF 30 Year, 4.00%, 9/20/41 | 34,447,467 | 36,015,141 | ||||||||
| GNMA II SF 30 Year, 4.00%, 10/20/41 | 42,612,775 | 44,553,989 | ||||||||
| GNMA II SF 30 Year, 4.00%, 11/20/41 | 38,912,646 | 40,684,479 | ||||||||
| GNMA II SF 30 Year, 4.00%, 2/20/44 | 24,133,959 | 24,966,690 | ||||||||
| GNMA II SF 30 Year, 4.00%, 10/20/47 | 236,094,305 | 242,957,450 | ||||||||
| a GNMA II SF 30 Year, 4.00%, 4/01/48 | 75,000,000 | 77,070,759 | ||||||||
| GNMA II SF 30 Year, 4.50%, 5/20/33 - 7/20/40 | 45,062,880 | 47,381,792 | ||||||||
| GNMA II SF 30 Year, 4.50%, 12/20/39 | 24,532,881 | 25,795,593 | ||||||||
| GNMA II SF 30 Year, 4.50%, 5/20/41 | 32,057,855 | 33,714,584 | ||||||||
| GNMA II SF 30 Year, 4.50%, 6/20/41 - 8/20/42 | 16,872,784 | 17,752,097 | ||||||||
| GNMA II SF 30 Year, 4.50%, 6/20/41 | 38,871,666 | 40,896,321 | ||||||||
| GNMA II SF 30 Year, 4.50%, 7/20/41 | 42,209,630 | 44,419,375 | ||||||||
| GNMA II SF 30 Year, 4.50%, 9/20/41 | 56,480,872 | 59,446,196 | ||||||||
| GNMA II SF 30 Year, 4.50%, 10/20/41 | 42,105,835 | 44,316,000 | ||||||||
| GNMA II SF 30 Year, 4.50%, 2/20/44 | 22,917,003 | 24,153,161 | ||||||||
| GNMA II SF 30 Year, 5.00%, 7/20/33 - 4/20/40 | 43,420,015 | 46,777,222 | ||||||||
| GNMA II SF 30 Year, 5.00%, 9/20/33 | 23,598,815 | 25,644,312 | ||||||||
| GNMA II SF 30 Year, 5.00%, 7/20/39 | 13,901,889 | 14,978,976 | ||||||||
| GNMA II SF 30 Year, 5.00%, 5/20/40 - 9/20/41 | 9,614,841 | 10,334,056 | ||||||||
| GNMA II SF 30 Year, 5.00%, 6/20/40 | 16,640,265 | 18,086,140 | ||||||||
| GNMA II SF 30 Year, 5.50%, 6/20/34 - 6/20/35 | 47,075,734 | 51,879,890 | ||||||||
| GNMA II SF 30 Year, 5.50%, 12/20/34 | 15,352,558 | 16,920,180 | ||||||||
| GNMA II SF 30 Year, 5.50%, 7/20/35 - 4/20/40 | 28,176,902 | 30,701,595 | ||||||||
| GNMA II SF 30 Year, 6.00%, 10/20/23 - 5/20/37 | 47,304,943 | 53,421,668 | ||||||||
| GNMA II SF 30 Year, 6.00%, 8/20/37 - 7/20/39 | 20,131,129 | 22,651,577 | ||||||||
| GNMA II SF 30 Year, 6.50%, 6/20/24 - 1/20/39 | 22,895,028 | 25,861,870 | ||||||||
| GNMA II SF 30 Year, 7.00%, 2/20/28 - 7/20/33 | 5,609,603 | 6,481,013 | ||||||||
| GNMA II SF 30 Year, 7.50%, 10/20/22 - 4/20/32 | 1,174,463 | 1,308,921 | ||||||||
| GNMA II SF 30 Year, 8.00%, 5/20/24 - 6/20/30 | 567,152 | 648,107 | ||||||||
| GNMA II SF 30 Year, 8.50%, 5/20/19 - 6/20/25 | 118,321 | 123,308 | ||||||||
| GNMA II SF 30 Year, 9.00%, 6/20/18 - 11/20/21 | 27,958 | 29,446 | ||||||||
| GNMA II SF 30 Year, 9.50%, 8/20/18 - 4/20/25 | 47,346 | 48,203 | ||||||||
| GNMA II SF 30 Year, 10.00%, 4/20/19 - 3/20/21 | 40,562 | 42,237 | ||||||||
| GNMA II SF 30 Year, 10.50%, 8/20/18 - 1/20/21 | 33,656 | 33,821 |
| franklintempleton.com | Semiannual Report |
81 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin U.S. Government Securities Fund (continued)
| |
Principal Amount |
|
Value | |||||||||
| Mortgage-Backed Securities (continued) | ||||||||||||
| Government National Mortgage Association (GNMA) Fixed Rate (continued) | ||||||||||||
| GNMA II SF 30 Year, 11.00%, 1/20/19 - 1/20/21 | $ | 4,247 | $ | 4,262 | ||||||||
|
|
|
|||||||||||
| Total Mortgage-Backed Securities (Cost $5,285,784,244) | 5,257,463,418 | |||||||||||
|
|
|
|||||||||||
| U.S. Government and Agency Securities (Cost $90,459,572) 1.6% | ||||||||||||
| U.S. Treasury Bond, 4.75%, 2/15/37 | 67,500,000 | 86,299,658 | ||||||||||
|
|
|
|||||||||||
| Total Investments before Short Term Investments |
5,343,763,076 | |||||||||||
| Shares | ||||||||||||
| Short Term Investments (Cost $175,163,520) 3.2% | ||||||||||||
|
|
|
|||||||||||
| Money Market Funds 3.2% | ||||||||||||
| b,c | Institutional Fiduciary Trust Money Market Portfolio, 1.24% | 175,163,520 | 175,163,520 | |||||||||
|
|
|
|||||||||||
| Total Investments (Cost $5,551,407,336) 101.4% | 5,518,926,596 | |||||||||||
| Other Assets, less Liabilities (1.4)% | (76,577,343 | ) | ||||||||||
|
|
|
|||||||||||
| Net Assets 100.0% | $ | 5,442,349,253 | ||||||||||
|
|
|
|||||||||||
See Abbreviations on page 120.
aSecurity purchased on a to-be-announced (TBA) basis. See Note 1(d).
bSee Note 3(f) regarding investments in affiliated management investment companies.
cThe rate shown is the annualized seven-day effective yield at period end.
| 82 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Financial Highlights
Franklin Utilities Fund
| Six Months Ended (unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$19.18 | $17.85 | $16.08 | $16.58 | $14.62 | $14.04 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.24 | 0.53 | 0.48 | 0.49 | 0.49 | 0.49 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.96) | 1.30 | 2.31 | (0.09 | ) | 2.00 | 0.60 | |||||||||||||||||
| Total from investment operations |
(0.72) | 1.83 | 2.79 | 0.40 | 2.49 | 1.09 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income. |
(0.30) | (0.49 | ) | (0.50 | ) | (0.48 | ) | (0.49 | ) | (0.51 | ) | |||||||||||||
| Net realized gains |
(0.31) | (0.01 | ) | (0.52 | ) | (0.42 | ) | (0.04 | ) | — | ||||||||||||||
| Total distributions |
(0.61) | (0.50 | ) | (1.02 | ) | (0.90 | ) | (0.53 | ) | (0.51 | ) | |||||||||||||
| Net asset value, end of period |
$17.85 | $19.18 | $17.85 | $16.08 | $16.58 | $14.62 | ||||||||||||||||||
| Total returnc |
(3.99)% | 10.38% | 18.23% | 2.19% | 17.24% | 7.92% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses |
0.72%e,f | 0.75% | e,f | 0.73% | e,f | 0.73% | f | 0.75% | e,f | 0.75% | e | |||||||||||||
| Net investment income |
2.63% | 2.86% | 2.81% | 2.88% | 3.05% | 3.34% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$3,729,894 | $4,182,780 | $4,180,124 | $3,524,835 | $3,717,397 | $3,275,129 | ||||||||||||||||||
| Portfolio turnover rate |
2.60% | 0.89% | 7.17% | 9.55% | 8.10% | 4.57% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 83 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Utilities Fund (continued)
| Period Ended March 31, 2018 (unaudited)a |
||||
| Class M |
||||
| Per share operating performance (for a share outstanding throughout the period) |
||||
| Net asset value, beginning of period |
$18.14 | |||
|
|
|
|||
| Income from investment operationsb: |
||||
| Net investment incomec |
0.13 | |||
|
|
|
|||
| Net realized and unrealized gains (losses) |
(0.30 | ) | ||
|
|
|
|||
| Total from investment operations |
(0.17 | ) | ||
|
|
|
|||
| Less distributions from net investment income |
(0.13 | ) | ||
|
|
|
|||
| Net asset value, end of period |
$17.84 | |||
|
|
|
|||
| Total returnd |
(0.93)% | |||
| Ratios to average net assetse |
||||
| Expensesf |
0.57% | |||
| Net investment income |
2.78% | |||
| Supplemental data |
||||
| Net assets, end of period (000’s) |
$5 | |||
| Portfolio turnover rate |
2.60% | |||
aFor the period January 25, 2018 (effective date) to March 31, 2018.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of waiver and payments by affiliates and expense reduction rounds to less than 0.01%.
| 84 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Utilities Fund (continued)
| Six Months Ended (unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$19.09 | $17.76 | $16.01 | $16.50 | $14.56 | $13.98 | ||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.20 | 0.43 | 0.39 | 0.40 | 0.41 | 0.41 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.98) | 1.30 | 2.30 | (0.08 | ) | 1.98 | 0.61 | |||||||||||||||||
| Total from investment operations |
(0.78) | 1.73 | 2.69 | 0.32 | 2.39 | 1.02 | ||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income. |
(0.25) | (0.39 | ) | (0.42 | ) | (0.39 | ) | (0.41 | ) | (0.44 | ) | |||||||||||||
| Net realized gains |
(0.31) | (0.01 | ) | (0.52 | ) | (0.42 | ) | (0.04 | ) | — | ||||||||||||||
| Total distributions |
(0.56) | (0.40 | ) | (0.94 | ) | (0.81 | ) | (0.45 | ) | (0.44 | ) | |||||||||||||
| Net asset value, end of period |
$17.75 | $19.09 | $17.76 | $16.01 | $16.50 | $14.56 | ||||||||||||||||||
| Total returnc |
(4.31)% | 9.88% | 17.59% | 1.74% | 16.61% | 7.40% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses. |
1.22%e,f | 1.25% | e,f | 1.23% | e,f | 1.23% | f | 1.25% | e,f | 1.25% | e | |||||||||||||
| Net investment income |
2.13% | 2.36% | 2.31% | 2.38% | 2.55% | 2.84% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$867,860 | $ | 981,515 | $ | 1,064,065 | $ | 931,800 | $ | 986,318 | $ | 845,173 | |||||||||||||
| Portfolio turnover rate |
2.60% | 0.89% | 7.17% | 9.55% | 8.10% | 4.57% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 85 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Utilities Fund (continued)
| Six Months Ended (unaudited) |
Year Ended September 30, | |||||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
| Class R |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$19.11 | $17.78 | $16.02 | $16.52 | $14.58 | $14.00 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Income from investment operationsa: |
||||||||||||||||||||||||
| Net investment incomeb |
0.21 | 0.46 | 0.42 | 0.42 | 0.43 | 0.44 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.97) | 1.30 | 2.30 | (0.09 | ) | 1.99 | 0.60 | |||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total from investment operations |
(0.76) | 1.76 | 2.72 | 0.33 | 2.42 | 1.04 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Less distributions from: |
||||||||||||||||||||||||
| Net investment income. |
(0.26) | (0.42 | ) | (0.44 | ) | (0.41 | ) | (0.44 | ) | (0.46 | ) | |||||||||||||
| Net realized gains |
(0.31) | (0.01 | ) | (0.52 | ) | (0.42 | ) | (0.04 | ) | — | ||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total distributions |
(0.57) | (0.43 | ) | (0.96 | ) | (0.83 | ) | (0.48 | ) | (0.46 | ) | |||||||||||||
|
|
|
|||||||||||||||||||||||
| Net asset value, end of period |
$17.78 | $19.11 | $17.78 | $16.02 | $16.52 | $14.58 | ||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total returnc |
(4.18)% | 10.04% | 17.81% | 1.83% | 16.75% | 7.56% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses. |
1.07%e,f | 1.10% | e,f | 1.08% | e,f | 1.08% | f | 1.10% | e,f | 1.10% | e | |||||||||||||
| Net investment income |
2.28% | 2.51% | 2.46% | 2.53% | 2.70% | 2.99% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$76,897 | $ | 94,465 | $ | 103,247 | $ | 83,271 | $95,498 | $ | 86,216 | ||||||||||||||
| Portfolio turnover rate |
2.60% | 0.89% | 7.17% | 9.55% | 8.10% | 4.57% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 86 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Utilities Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, |
|||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013a | |||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$19.32 | $17.97 | $16.18 | $16.68 | $14.71 | $15.88 | ||||||||||||||||||
| Income from investment operationsb: | ||||||||||||||||||||||||
| Net investment incomec |
0.27 | 0.58 | 0.53 | 0.53 | 0.53 | 0.25 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.98 | ) | 1.31 | 2.32 | (0.09 | ) | 2.01 | (1.17 | ) | |||||||||||||||
| Total from investment operations |
(0.71 | ) | 1.89 | 2.85 | 0.44 | 2.54 | (0.92 | ) | ||||||||||||||||
| Less distributions from: | ||||||||||||||||||||||||
| Net investment income |
(0.32 | ) | (0.53 | ) | (0.54 | ) | (0.52 | ) | (0.53 | ) | (0.25 | ) | ||||||||||||
| Net realized gains |
(0.31 | ) | (0.01 | ) | (0.52 | ) | (0.42 | ) | (0.04 | ) | — | |||||||||||||
| Total distributions |
(0.63 | ) | (0.54 | ) | (1.06 | ) | (0.94 | ) | (0.57 | ) | (0.25 | ) | ||||||||||||
| Net asset value, end of period |
$17.98 | $19.32 | $17.97 | $16.18 | $16.68 | $14.71 | ||||||||||||||||||
| Total returnd |
(3.90)% | 10.70% | 18.55% | 2.45% | 17.51% | (5.79)% | ||||||||||||||||||
| Ratios to average net assetse |
||||||||||||||||||||||||
| Expenses before waiver and payments by affiliates |
0.52% | 0.48% | 0.47% | 0.47% | 0.48% | 0.48% | ||||||||||||||||||
| Expenses net of waiver and payments by affiliates |
0.49%f | 0.48% | f,g | 0.47% | f,g | 0.47% | g | 0.48% | f,g | 0.48%f | ||||||||||||||
| Net investment income |
2.86% | 3.13% | 3.07% | 3.14% | 3.32% | 3.61% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$221,503 | $ | 241,455 | $ | 219,587 | $ | 201,225 | $ | 236,437 | $ | 218,746 | |||||||||||||
| Portfolio turnover rate |
2.60% | 0.89% | 7.17% | 9.55% | 8.10% | 4.57% | ||||||||||||||||||
aFor the period May 1, 2013 (effective date) to September 30, 2013.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 87 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL HIGHLIGHTS
Franklin Utilities Fund (continued)
| Six Months Ended March 31, 2018 |
Year Ended September 30, |
|||||||||||||||||||||||
| (unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
| Advisor Class |
||||||||||||||||||||||||
| Per share operating performance (for a share outstanding throughout the period) |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$19.32 | $17.97 | $16.19 | $16.68 | $14.71 | $14.12 | ||||||||||||||||||
| Income from investment operationsa: | ||||||||||||||||||||||||
| Net investment incomeb |
0.26 | 0.57 | 0.51 | 0.52 | 0.52 | 0.50 | ||||||||||||||||||
| Net realized and unrealized gains (losses) |
(0.98 | ) | 1.30 | 2.32 | (0.09 | ) | 2.00 | 0.62 | ||||||||||||||||
| Total from investment operations |
(0.72 | ) | 1.87 | 2.83 | 0.43 | 2.52 | 1.12 | |||||||||||||||||
| Less distributions from: | ||||||||||||||||||||||||
| Net investment income |
(0.31 | ) | (0.51 | ) | (0.53 | ) | (0.50 | ) | (0.51 | ) | (0.53 | ) | ||||||||||||
| Net realized gains |
(0.31 | ) | (0.01 | ) | (0.52 | ) | (0.42 | ) | (0.04 | ) | — | |||||||||||||
| Total distributions |
(0.62 | ) | (0.52 | ) | (1.05 | ) | (0.92 | ) | (0.55 | ) | (0.53 | ) | ||||||||||||
| Net asset value, end of period |
$17.98 | $19.32 | $17.97 | $16.19 | $16.68 | $14.71 | ||||||||||||||||||
| Total returnc |
(4.00)% | 10.64% | 18.34% | 2.40% | 17.37% | 8.11% | ||||||||||||||||||
| Ratios to average net assetsd |
||||||||||||||||||||||||
| Expenses. |
0.57% | e,f | 0.60% | e,f | 0.58% | e,f | 0.58% | f | 0.60% | e,f | 0.60% | e | ||||||||||||
| Net investment income |
2.78% | 3.01% | 2.96% | 3.03% | 3.20% | 3.49% | ||||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000’s) |
$884,092 | $ | 963,228 | $ | 755,484 | $ | 549,371 | $ | 562,202 | $ | 343,082 | |||||||||||||
| Portfolio turnover rate |
2.60% | 0.89% | 7.17% | 9.55% | 8.10% | 4.57% | ||||||||||||||||||
aThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| 88 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin Utilities Fund
|
|
Country | Shares | Value | |||||||||||
| Common Stocks 99.3% |
||||||||||||||
| Electric Utilities 57.8% |
||||||||||||||
| ALLETE Inc. |
United States | 397,290 | $ | 28,704,202 | ||||||||||
| Alliant Energy Corp. |
United States | 3,800,000 | 155,268,000 | |||||||||||
| American Electric Power Co. Inc. |
United States | 3,900,000 | 267,501,000 | |||||||||||
| Duke Energy Corp. |
United States | 3,250,000 | 251,777,500 | |||||||||||
| Edison International |
United States | 3,600,000 | 229,176,000 | |||||||||||
| Emera Inc. |
Canada | 2,000,000 | 63,206,048 | |||||||||||
| Entergy Corp. |
United States | 1,500,000 | 118,170,000 | |||||||||||
| Eversource Energy |
United States | 2,300,000 | 135,516,000 | |||||||||||
| Exelon Corp. |
United States | 6,700,000 | 261,367,000 | |||||||||||
| FirstEnergy Corp. |
United States | 4,800,000 | 163,248,000 | |||||||||||
| Great Plains Energy Inc. |
United States | 5,100,000 | 162,129,000 | |||||||||||
| a |
Hydro One Ltd., 144A |
Canada | 1,000,000 | 16,220,198 | ||||||||||
| NextEra Energy Inc. |
United States | 2,900,000 | 473,657,000 | |||||||||||
| OGE Energy Corp. |
United States | 1,800,000 | 58,986,000 | |||||||||||
| PG&E Corp. |
United States | 2,800,000 | 123,004,000 | |||||||||||
| Pinnacle West Capital Corp. |
United States | 1,500,000 | 119,700,000 | |||||||||||
| PNM Resources Inc. |
United States | 2,500,000 | 95,625,000 | |||||||||||
| Portland General Electric Co. |
United States | 570,928 | 23,128,293 | |||||||||||
| PPL Corp. |
United States | 2,750,000 | 77,797,500 | |||||||||||
| The Southern Co. |
United States | 4,500,000 | 200,970,000 | |||||||||||
| Westar Energy Inc. |
United States | 2,000,000 | 105,180,000 | |||||||||||
| Xcel Energy Inc. | United States | 4,600,000 | 209,208,000 | |||||||||||
| 3,339,538,741 | ||||||||||||||
| Gas Utilities 1.6% |
||||||||||||||
| Atmos Energy Corp. |
United States | 200,000 | 16,848,000 | |||||||||||
| ONE Gas Inc. |
United States | 38,181 | 2,520,710 | |||||||||||
| Spire Inc. | United States | 1,000,000 | 72,300,000 | |||||||||||
| 91,668,710 | ||||||||||||||
| Multi-Utilities 32.2% |
||||||||||||||
| Ameren Corp. |
United States | 900,000 | 50,967,000 | |||||||||||
| Black Hills Corp. |
United States | 800,000 | 43,440,000 | |||||||||||
| CenterPoint Energy Inc. |
United States | 5,000,000 | 137,000,000 | |||||||||||
| CMS Energy Corp. |
United States | 5,100,000 | 230,979,000 | |||||||||||
| Consolidated Edison Inc. |
United States | 1,250,000 | 97,425,000 | |||||||||||
| Dominion Energy Inc. |
United States | 4,200,000 | 283,206,000 | |||||||||||
| DTE Energy Co. |
United States | 1,683,000 | 175,705,200 | |||||||||||
| National Grid PLC |
United Kingdom | 10,083,333 | 113,494,647 | |||||||||||
| NiSource Inc. |
United States | 2,500,000 | 59,775,000 | |||||||||||
| NorthWestern Corp. |
United States | 596,800 | 32,107,840 | |||||||||||
| Public Service Enterprise Group Inc. |
United States | 2,900,000 | 145,696,000 | |||||||||||
| Sempra Energy |
United States | 2,650,000 | 294,733,000 | |||||||||||
| Vectren Corp. |
United States | 1,000,000 | 63,920,000 | |||||||||||
| WEC Energy Group Inc. | United States | 2,150,792 | 134,854,658 | |||||||||||
| 1,863,303,345 | ||||||||||||||
| Oil, Gas & Consumable Fuels 4.4% |
||||||||||||||
| Enbridge Inc. (CAD Traded) |
Canada | 847,200 | 26,616,433 | |||||||||||
| Enbridge Inc. (USD Traded) |
Canada | 984,000 | 30,966,480 | |||||||||||
| Kinder Morgan Inc. |
United States | 5,000,000 | 75,300,000 | |||||||||||
| ONEOK Inc. |
United States | 568,200 | 32,341,944 | |||||||||||
| TransCanada Corp. |
Canada | 1,000,000 | 41,310,331 | |||||||||||
| franklintempleton.com | Semiannual Report |
89 |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Utilities Fund (continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) |
||||||||||||||
| Oil, Gas & Consumable Fuels (continued) | ||||||||||||||
| The Williams Cos. Inc. | United States | 1,800,000 | $ | 44,748,000 | ||||||||||
| 251,283,188 | ||||||||||||||
| Water Utilities 3.3% |
||||||||||||||
| American Water Works Co. Inc. |
United States | 1,500,000 | 123,195,000 | |||||||||||
| United Utilities Group PLC |
United Kingdom | 6,700,000 | 67,253,107 | |||||||||||
| 190,448,107 | ||||||||||||||
| Total Common Stocks (Cost $3,332,316,762) |
5,736,242,091 | |||||||||||||
| Principal Amount |
||||||||||||||
| Corporate Bonds 0.2% |
||||||||||||||
| Electric Utilities 0.1% |
||||||||||||||
| Northeast Generation Co., senior secured note, B-1, 8.812%, 10/15/26 |
United States | $ | 5,613,281 | 6,234,430 | ||||||||||
| Multi-Utilities 0.1% |
||||||||||||||
| Aquila Inc., senior note, 8.27%, 11/15/21 |
United States | 6,100,000 | 7,001,436 | |||||||||||
| Total Corporate Bonds (Cost $11,799,234) |
13,235,866 | |||||||||||||
| Total Investments before Short Term Investments |
5,749,477,957 | |||||||||||||
| Shares | ||||||||||||||
| Short Term Investments (Cost $8,879,870) 0.1% |
||||||||||||||
| Money Market Funds 0.1% |
||||||||||||||
| b,c |
Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
United States | 8,879,870 | 8,879,870 | ||||||||||
| Total Investments (Cost $3,352,995,866) 99.6% |
5,758,357,827 | |||||||||||||
| Other Assets, less Liabilities 0.4% |
21,893,662 | |||||||||||||
| Net Assets 100.0% |
$ | 5,780,251,489 | ||||||||||||
See Abbreviations on page 120.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At March 31, 2018, the value of this security was $16,220,198, representing 0.3% of net assets.
bSee Note 3(f) regarding investments in affiliated management investment companies.
cThe rate shown is the annualized seven-day effective yield at period end.
| 90 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
Statements of Assets and Liabilities
March 31, 2018 (unaudited)
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
||||||||||
| Assets: |
||||||||||||
| +Investments in securities: |
||||||||||||
| Cost - Unaffiliated issuers |
$2,528,296,034 | $ | 5,337,205,858 | $ | 73,617,605,594 | |||||||
| Cost - Controlled affiliates (Note 3f and 11) |
— | — | 299,161,226 | |||||||||
| Cost - Non-controlled affiliates (Note 3f and 11) |
168,212,818 | 252,178,231 | 509,074,939 | |||||||||
| Cost - Unaffiliated repurchase agreements |
— | — | 17,011,579 | |||||||||
| Value - Unaffiliated issuers |
$4,961,771,054 | $ | 14,572,435,051 | $ | 75,592,721,941 | |||||||
| Value - Controlled affiliates (Note 3f and 11) |
— | — | 302,701,595 | |||||||||
| Value - Non-controlled affiliates (Note 3f and 11) |
168,212,818 | 252,178,231 | 312,618,967 | |||||||||
| Value - Unaffiliated repurchase agreements |
— | — | 17,011,579 | |||||||||
| Cash |
151,200 | 3,285,730 | 25,233,853 | |||||||||
| Receivables: |
||||||||||||
| Investment securities sold |
27,434,624 | — | 462,502,299 | |||||||||
| Capital shares sold |
40,697,663 | 11,590,221 | 61,719,078 | |||||||||
| Dividends and interest |
1,165,636 | 10,672,410 | 743,697,397 | |||||||||
| Deposits with brokers for: |
||||||||||||
| Exchange traded options written |
— | — | 890,000,000 | |||||||||
| Other assets |
4,614 | 14,127 | 76,063 | |||||||||
| Total assets |
5,199,437,609 | 14,850,175,770 | 78,408,282,772 | |||||||||
| Liabilities: |
||||||||||||
| Payables: |
||||||||||||
| Investment securities purchased |
60,271,323 | — | 189,087,500 | |||||||||
| Capital shares redeemed |
16,656,380 | 34,591,326 | 103,846,539 | |||||||||
| Management fees |
1,903,262 | 5,395,306 | 23,895,317 | |||||||||
| Distribution fees |
1,986,531 | 5,502,249 | 33,641,335 | |||||||||
| Transfer agent fees |
1,272,650 | 4,428,244 | 10,758,150 | |||||||||
| Options written, at value (premiums received $—, $— and $19,982,836, respectively) |
— | — | 22,440,000 | |||||||||
| Payable upon return of securities loaned |
— | — | 101,750,579 | |||||||||
| Unrealized depreciation on unfunded loan commitments (Note 9) |
— | — | 185,800 | |||||||||
| Accrued expenses and other liabilities |
149,302 | 708,016 | 4,435,753 | |||||||||
| Total liabilities |
82,239,448 | 50,625,141 | 490,040,973 | |||||||||
| Net assets, at value |
$5,117,198,161 | $ | 14,799,550,629 | $ | 77,918,241,799 | |||||||
| Net assets consist of: |
||||||||||||
| Paid-in capital |
$2,611,147,992 | $ | 5,429,732,859 | $ | 81,285,315,302 | |||||||
| Accumulated net investment loss |
(15,595,995) | — | — | |||||||||
| Undistributed net investment income |
— | 4,983,177 | — | |||||||||
| Distributions in excess of net investment income |
— | — | (557,606,440 | ) | ||||||||
| Net unrealized appreciation (depreciation) |
2,433,438,884 | 9,235,229,164 | 1,780,591,730 | |||||||||
| Accumulated net realized gain (loss) |
88,207,280 | 129,605,429 | (4,590,058,793 | ) | ||||||||
| Net assets, at value |
$5,117,198,161 | $ | 14,799,550,629 | $ | 77,918,241,799 | |||||||
| +Includes securities loaned |
$ — | $ | — | $ | 97,991,090 | |||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report |
91 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
March 31, 2018 (unaudited)
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
||||||||||
| Class A: | ||||||||||||
| Net assets, at value |
$2,915,885,158 | $8,336,492,282 | $43,544,926,764 | |||||||||
| Shares outstanding. |
41,711,070 | 86,579,296 | 19,055,990,161 | |||||||||
| Net asset value per sharea |
$69.91 | $96.29 | $2.29 | |||||||||
| Maximum offering price per share (net asset value per share ÷ 94.25%, 94.25% and 95.75%, respectively) |
$74.18 | $102.16 | $2.39 | |||||||||
| Class M: | ||||||||||||
| Net assets, at value |
$ 4,702 | |||||||||||
| Shares outstanding. |
2,058 | |||||||||||
| Net asset value per sharea,b |
$2.29 | |||||||||||
| Maximum offering price per share (net asset value per share ÷ 95.75%) |
$2.39 | |||||||||||
| Class C: | ||||||||||||
| Net assets, at value |
$ 468,828,325 | $ 994,442,847 | $20,981,302,105 | |||||||||
| Shares outstanding. |
7,966,368 | 11,252,188 | 9,062,261,038 | |||||||||
| Net asset value and maximum offering price per sharea |
$58.85 | $88.38 | $2.32 | |||||||||
| Class R: | ||||||||||||
| Net assets, at value |
$64,438,760 | $ 507,133,236 | $ 308,864,427 | |||||||||
| Shares outstanding. |
947,228 | 5,288,974 | 137,676,454 | |||||||||
| Net asset value and maximum offering price per share |
$68.03 | $95.88 | $2.24 | |||||||||
| Class R6: | ||||||||||||
| Net assets, at value |
$1,242,879,666 | $2,264,311,803 | $ 2,099,137,411 | |||||||||
| Shares outstanding. |
17,143,019 | 23,488,134 | 925,884,777 | |||||||||
| Net asset value and maximum offering price per share |
$72.50 | $96.40 | $2.27 | |||||||||
| Advisor Class: | ||||||||||||
| Net assets, at value |
$ 425,166,252 | $2,697,170,461 | $10,984,006,390 | |||||||||
| Shares outstanding. |
5,914,499 | 27,951,918 | 4,846,825,889 | |||||||||
| Net asset value and maximum offering price per share |
$71.89 | $96.49 | $2.27 | |||||||||
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
bNet asset value and maximum offering price may not recalculate due to rounding of net assets and/or shares outstanding.
| 92 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
March 31, 2018 (unaudited)
| Franklin U.S. Government |
Franklin Utilities Fund |
|||||||
| Assets: |
||||||||
| Investments in securities: |
||||||||
| Cost - Unaffiliated issuers |
$5,376,243,816 | $3,344,115,996 | ||||||
| Cost - Non-controlled affiliates (Note 3f and 11) |
175,163,520 | 8,879,870 | ||||||
| Value - Unaffiliated issuers |
$5,343,763,076 | $5,749,477,957 | ||||||
| Value - Non-controlled affiliates (Note 3f and 11) |
175,163,520 | 8,879,870 | ||||||
| Cash |
— | 2,466,500 | ||||||
| Receivables: |
||||||||
| Investment securities sold |
— | 16,244,543 | ||||||
| Capital shares sold |
2,711,239 | 7,237,785 | ||||||
| Dividends and interest |
16,946,615 | 11,407,836 | ||||||
| Other assets |
4,978 | 5,644 | ||||||
| Total assets. |
5,538,589,428 | 5,795,720,135 | ||||||
| Liabilities: |
||||||||
| Payables: |
||||||||
| Investment securities purchased |
77,048,437 | — | ||||||
| Capital shares redeemed |
11,060,211 | 9,965,954 | ||||||
| Management fees |
2,019,776 | 2,188,324 | ||||||
| Distribution fees. |
1,554,901 | 1,862,435 | ||||||
| Transfer agent fees |
1,992,111 | 1,103,730 | ||||||
| Distributions to shareholders |
1,754,907 | — | ||||||
| Accrued expenses and other liabilities |
809,832 | 348,203 | ||||||
| Total liabilities |
96,240,175 | 15,468,646 | ||||||
| Net assets, at value |
$5,442,349,253 | $5,780,251,489 | ||||||
| Net assets consist of: |
||||||||
| Paid-in capital |
$6,024,919,036 | $3,283,063,304 | ||||||
| Undistributed net investment income |
— | 3,574,625 | ||||||
| Distributions in excess of net investment income |
(16,209,048 | ) | — | |||||
| Net unrealized appreciation (depreciation) |
(32,480,740 | ) | 2,405,374,786 | |||||
| Accumulated net realized gain (loss) |
(533,879,995 | ) | 88,238,774 | |||||
| Net assets, at value |
$5,442,349,253 | $5,780,251,489 | ||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 93 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
March 31, 2018 (unaudited)
| Franklin U.S. Government |
Franklin Utilities Fund |
|||||||
| Class A: |
||||||||
| Net assets, at value |
$3,416,941,883 | $3,729,893,930 | ||||||
| Shares outstanding |
574,367,234 | 209,013,105 | ||||||
| Net asset value per sharea |
$5.95 | $17.85 | ||||||
| Maximum offering price per share (net asset value per share ÷ 95.75%) |
$6.21 | $18.64 | ||||||
| Class M: |
||||||||
| Net assets, at value |
$4,931 | $4,918 | ||||||
| Shares outstanding |
829 | 276 | ||||||
| Net asset value per sharea |
$5.95 | $17.84b | ||||||
| Maximum offering price per share (net asset value per share ÷ 95.75%) |
$6.21 | $18.63 | ||||||
| Class C: |
||||||||
| Net assets, at value |
$667,399,837 | $867,860,093 | ||||||
| Shares outstanding |
112,986,967 | 48,882,950 | ||||||
| Net asset value and maximum offering price per sharea |
$5.91 | $17.75 | ||||||
| Class R: |
||||||||
| Net assets, at value |
$33,832,267 | $76,897,321 | ||||||
| Shares outstanding |
5,690,329 | 4,325,455 | ||||||
| Net asset value and maximum offering price per share |
$5.95 | $17.78 | ||||||
| Class R6: |
||||||||
| Net assets, at value |
$607,967,316 | $221,503,265 | ||||||
| Shares outstanding |
101,860,668 | 12,321,043 | ||||||
| Net asset value and maximum offering price per share |
$5.97 | $17.98 | ||||||
| Advisor Class: |
||||||||
| Net assets, at value |
$716,203,019 | $884,091,962 | ||||||
| Shares outstanding |
119,976,177 | 49,170,103 | ||||||
| Net asset value and maximum offering price per share |
$5.97 | $17.98 | ||||||
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
bNet asset value and maximum offering price may not recalculate due to rounding of net assets and/or shares outstanding.
| 94 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended March 31, 2018 (unaudited)
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
||||||||||
| Investment income: |
||||||||||||
| Dividends: (net of foreign taxes)* |
||||||||||||
| Unaffiliated issuers. |
$ 11,781,844 | $90,274,304 | $570,103,269 | |||||||||
| Non-controlled affiliates (Note 3f and 11) |
573,368 | 1,092,627 | 6,942,930 | |||||||||
| Interest: |
||||||||||||
| Unaffiliated issuers. |
— | — | 1,219,066,961 | |||||||||
| Controlled affiliates (Note 11) |
— | — | 2,746,885 | |||||||||
| Non-controlled affiliates (Note 11) |
— | — | 30,864,897 | |||||||||
| Income from securities loaned (net of fees and rebates) |
— | — | 886,608 | |||||||||
| Total investment income |
12,355,212 | 91,366,931 | 1,830,611,550 | |||||||||
| Expenses: |
||||||||||||
| Management fees (Note 3a) |
10,791,606 | 32,842,942 | 151,030,270 | |||||||||
| Distribution fees: (Note 3c) |
||||||||||||
| Class A |
3,437,272 | 10,495,467 | 34,129,922 | |||||||||
| Class C |
2,127,044 | 4,916,993 | 72,109,149 | |||||||||
| Class R |
136,529 | 1,305,745 | 842,224 | |||||||||
| Transfer agent fees: (Note 3e) |
||||||||||||
| Class A |
2,020,528 | 6,003,055 | 17,051,463 | |||||||||
| Class M |
— | — | 1 | |||||||||
| Class C |
312,575 | 703,075 | 8,313,542 | |||||||||
| Class R |
40,286 | 375,148 | 127,381 | |||||||||
| Class R6 |
119,096 | 244,240 | 217,901 | |||||||||
| Advisor Class |
315,825 | 1,923,149 | 4,250,306 | |||||||||
| Custodian fees (Note 4) |
36,856 | 61,908 | 544,240 | |||||||||
| Reports to shareholders |
170,136 | 481,253 | 2,224,712 | |||||||||
| Registration and filing fees |
139,068 | 176,313 | 548,864 | |||||||||
| Professional fees |
34,863 | 78,952 | 1,266,353 | |||||||||
| Trustees’ fees and expenses |
6,140 | 24,529 | 161,538 | |||||||||
| Other |
33,321 | 114,762 | 957,696 | |||||||||
| Total expenses |
19,721,145 | 59,747,531 | 293,775,562 | |||||||||
| Expense reductions (Note 4) |
(25 | ) | (235 | ) | (104,142 | ) | ||||||
| Expenses waived/paid by affiliates (Note 3f and 3g) |
(247,006 | ) | (478,233 | ) | (3,121,642 | ) | ||||||
| Net expenses |
19,474,114 | 59,269,063 | 290,549,778 | |||||||||
| Net investment income (loss) |
(7,118,902 | ) | 32,097,868 | 1,540,061,772 | ||||||||
| Realized and unrealized gains (losses): |
||||||||||||
| Net realized gain (loss) from: |
||||||||||||
| Investments: |
||||||||||||
| Unaffiliated issuers |
95,334,341 | 220,978,669 | 1,387,929,211 | |||||||||
| Non-controlled affiliates (Note 3f and 11) |
— | — | (367,030,218 | ) | ||||||||
| Written options |
— | — | 51,908,601 | |||||||||
| Foreign currency transactions |
(94,948 | ) | 13,138 | (158,972 | ) | |||||||
| Net realized gain (loss) |
95,239,393 | 220,991,807 | 1,072,648,622 | |||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||
| Investments: |
||||||||||||
| Unaffiliated issuers |
443,304,096 | 872,974,910 | (4,552,134,319 | ) | ||||||||
| Controlled affiliates (Note 3f and 11) |
— | — | 53,570,976 | |||||||||
| Non-controlled affiliates (Note 3f and 11) |
— | — | 252,746,144 | |||||||||
| Translation of other assets and liabilities denominated in foreign currencies |
(39,350 | ) | — | (17,074 | ) | |||||||
| Written options |
— | — | 662,521 | |||||||||
| Net change in unrealized appreciation (depreciation) |
443,264,746 | 872,974,910 | (4,245,171,752 | ) | ||||||||
| Net realized and unrealized gain (loss) |
538,504,139 | 1,093,966,717 | (3,172,523,130 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations |
$531,385,237 | $1,126,064,585 | $(1,632,461,358 | ) | ||||||||
| *Foreign taxes withheld on dividends |
$24,765 | $ 572,839 | $ 13,610,200 | |||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 95 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the six months ended March 31, 2018 (unaudited)
| Franklin U.S. Government |
Franklin Utilities Fund |
|||||||
| Investment income: |
||||||||
| Dividends: (net of foreign taxes)* |
||||||||
| Unaffiliated issuers |
$ — | $102,721,294 | ||||||
| Non-controlled affiliates (Note 3f and 11) |
566,442 | 159,746 | ||||||
| Interest: |
||||||||
| Unaffiliated issuers: |
||||||||
| Paydown gain (loss) |
(15,826,313 | ) | — | |||||
| Paid in cash |
104,970,037 | 1,015,251 | ||||||
| Income from securities loaned (net of fees and rebates) |
— | 11 | ||||||
| Total investment income |
89,710,166 | 103,896,302 | ||||||
| Expenses: |
||||||||
| Management fees (Note 3a) |
12,660,117 | 14,087,787 | ||||||
| Distribution fees: (Note 3c) |
||||||||
| Class A |
2,571,084 | 2,994,117 | ||||||
| Class C |
2,359,268 | 3,050,947 | ||||||
| Class R |
88,273 | 217,030 | ||||||
| Transfer agent fees: (Note 3e) |
||||||||
| Class A |
2,572,433 | 2,095,406 | ||||||
| Class M |
1 | 1 | ||||||
| Class C |
534,190 | 492,704 | ||||||
| Class R |
26,334 | 45,821 | ||||||
| Class R6 |
65,448 | 56,844 | ||||||
| Advisor Class |
552,332 | 496,301 | ||||||
| Custodian fees (Note 4) |
23,891 | 42,451 | ||||||
| Reports to shareholders |
225,692 | 233,186 | ||||||
| Registration and filing fees |
94,333 | 90,915 | ||||||
| Professional fees |
48,911 | 48,336 | ||||||
| Trustees’ fees and expenses |
11,879 | 12,321 | ||||||
| Other |
514,339 | 55,561 | ||||||
| Total expenses |
22,348,525 | 24,019,728 | ||||||
| Expense reductions (Note 4) |
(39 | ) | (958 | ) | ||||
| Expenses waived/paid by affiliates (Note 3f and 3g) |
(226,865 | ) | (106,191 | ) | ||||
| Net expenses |
22,121,621 | 23,912,579 | ||||||
| Net investment income |
67,588,545 | 79,983,723 | ||||||
| Realized and unrealized gains (losses): |
||||||||
| Net realized gain (loss) from: |
||||||||
| Investments: |
||||||||
| Unaffiliated issuers |
(9,044,695 | ) | 114,622,749 | |||||
| Foreign currency transactions. |
— | 83,970 | ||||||
| Net realized gain (loss) |
(9,044,695 | ) | 114,706,719 | |||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||
| Investments: |
||||||||
| Unaffiliated issuers |
(139,665,584 | ) | (452,919,658 | ) | ||||
| Translation of other assets and liabilities denominated in foreign currencies |
— | 13,012 | ||||||
| Net change in unrealized appreciation (depreciation) |
(139,665,584 | ) | (452,906,646 | ) | ||||
| Net realized and unrealized gain (loss) |
(148,710,279 | ) | (338,199,927 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
$ (81,121,734 | ) | $(258,216,204 | ) | ||||
| *Foreign taxes withheld on dividends |
$ — | $787,004 | ||||||
| 96 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin DynaTech Fund | Franklin Growth Fund | |||||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
|||||||||||||
| Increase (decrease) in net assets: |
||||||||||||||||
| Operations: |
||||||||||||||||
| Net investment income (loss) |
$ (7,118,902 | ) | $ (10,773,451 | ) | $ 32,097,868 | $ 65,365,826 | ||||||||||
| Net realized gain (loss) |
95,239,393 | 110,351,134 | 220,991,807 | 281,282,680 | ||||||||||||
| Net change in unrealized appreciation (depreciation) |
443,264,746 | 687,873,992 | 872,974,910 | 2,130,737,126 | ||||||||||||
| Net increase (decrease) in net assets resulting from operations |
531,385,237 | 787,451,675 | 1,126,064,585 | 2,477,385,632 | ||||||||||||
| Distributions to shareholders from: |
||||||||||||||||
| Net investment income: |
||||||||||||||||
| Class A |
— | — | (31,386,194 | ) | (36,895,906 | ) | ||||||||||
| Class R |
— | — | (717,885 | ) | (1,230,882 | ) | ||||||||||
| Class R6 |
— | — | (16,406,737 | ) | (11,177,576 | ) | ||||||||||
| Advisor Class |
— | — | (15,847,658 | ) | (15,699,120 | ) | ||||||||||
| Net realized gains: |
||||||||||||||||
| Class A |
(46,020,811 | ) | (67,256,053 | ) | (195,463,740 | ) | (234,479,371 | ) | ||||||||
| Class C |
(8,263,869 | ) | (11,758,906 | ) | (24,691,047 | ) | (28,670,653 | ) | ||||||||
| Class R |
(916,851 | ) | (1,284,067 | ) | (12,407,706 | ) | (14,987,347 | ) | ||||||||
| Class R6 |
(16,654,639 | ) | (11,046,724 | ) | (50,248,000 | ) | (38,880,082 | ) | ||||||||
| Advisor Class |
(5,793,931 | ) | (7,824,210 | ) | (61,022,144 | ) | (64,547,148 | ) | ||||||||
| Total distributions to shareholders |
(77,650,101 | ) | (99,169,960 | ) | (408,191,111 | ) | (446,568,085 | ) | ||||||||
| Capital share transactions: (Note 2) |
||||||||||||||||
| Class A |
145,712,737 | (58,619,051 | ) | (131,157,188 | ) | (775,062,897 | ) | |||||||||
| Class C |
56,075,988 | (5,464,905 | ) | 17,878,065 | (50,580,939 | ) | ||||||||||
| Class R |
11,887,480 | 1,319,443 | (30,195,848 | ) | (43,562,140 | ) | ||||||||||
| Class R6 |
690,870,713 | 11,234,886 | 469,075,500 | 215,211,021 | ||||||||||||
| Advisor Class |
(332,447,190 | ) | 410,822,596 | (238,778,470 | ) | 419,014,663 | ||||||||||
| Total capital share transactions |
572,099,728 | 359,292,969 | 86,822,059 | (234,980,292 | ) | |||||||||||
| Net increase (decrease) in net assets |
1,025,834,864 | 1,047,574,684 | 804,695,533 | 1,795,837,255 | ||||||||||||
| Net assets: |
||||||||||||||||
| Beginning of period |
4,091,363,297 | 3,043,788,613 | 13,994,855,096 | 12,199,017,841 | ||||||||||||
| End of period |
$5,117,198,161 | $4,091,363,297 | $14,799,550,629 | $13,994,855,096 | ||||||||||||
| Undistributed net investment income included in net assets: |
||||||||||||||||
| End of period |
$ — | $ — | $ 4,983,177 | $ 37,243,783 | ||||||||||||
| Accumulated net investment loss included in net assets: |
||||||||||||||||
| End of period |
$ (15,595,995 | ) | $ (8,477,093 | ) | $ — | $ — | ||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 97 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| Franklin Income Fund | Franklin U.S. Government Securities Fund | |||||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||||
| March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
|||||||||||||
| Increase (decrease) in net assets: |
||||||||||||||||
| Operations: |
||||||||||||||||
| Net investment income |
$ | 1,540,061,772 | $ | 3,350,660,766 | $ 67,588,545 | $ 130,407,046 | ||||||||||
| Net realized gain (loss) |
1,072,648,622 | 1,860,395,900 | (9,044,695 | ) | (63,379,288 | ) | ||||||||||
| Net change in unrealized appreciation (depreciation) |
(4,245,171,752 | ) | 3,978,607,766 | (139,665,584 | ) | (107,534,558 | ) | |||||||||
| Net increase (decrease) in net assets resulting from operations |
(1,632,461,358 | ) | 9,189,664,432 | (81,121,734 | ) | (40,506,800 | ) | |||||||||
| Distributions to shareholders from: |
||||||||||||||||
| Net investment income: |
||||||||||||||||
| Class A |
(1,159,404,745 | ) | (2,378,392,172 | ) | (52,191,790 | ) | (117,543,709 | ) | ||||||||
| Class M |
(43 | ) | — | (40 | ) | — | ||||||||||
| Class C |
(499,574,183 | ) | (1,087,030,360 | ) | (8,937,772 | ) | (23,194,188 | ) | ||||||||
| Class R |
(8,214,731 | ) | (18,864,554 | ) | (469,071 | ) | (1,294,613 | ) | ||||||||
| Class R6 |
(56,154,357 | ) | (95,303,179 | ) | (9,662,040 | ) | (16,694,015 | ) | ||||||||
| Advisor Class |
(299,448,723 | ) | (524,726,253 | ) | (11,450,389 | ) | (25,402,172 | ) | ||||||||
| Total distributions to shareholders |
(2,022,796,782 | ) | (4,104,316,518 | ) | (82,711,102 | ) | (184,128,697 | ) | ||||||||
| Capital share transactions: (Note 2) |
||||||||||||||||
| Class A |
(914,067,921 | ) | (1,869,610,539 | ) | (62,259,646 | ) | (511,968,136 | ) | ||||||||
| Class M |
5,000 | — | 5,000 | — | ||||||||||||
| Class C |
(1,073,804,823 | ) | (2,293,654,717 | ) | (108,723,438 | ) | (202,855,335 | ) | ||||||||
| Class R |
(37,926,923 | ) | (58,209,535 | ) | (3,481,480 | ) | (19,433,072 | ) | ||||||||
| Class R6 |
380,242,631 | (32,346,017 | ) | 178,797,605 | (159,062,673 | ) | ||||||||||
| Advisor Class |
(172,208,492 | ) | 2,925,976,903 | (116,495,126 | ) | 162,685,038 | ||||||||||
| Total capital share transactions |
(1,817,760,528 | ) | (1,327,843,905 | ) | (112,157,085 | ) | (730,634,178 | ) | ||||||||
| Net increase (decrease) in net assets |
(5,473,018,668 | ) | 3,757,504,009 | (275,989,921 | ) | (955,269,675 | ) | |||||||||
| Net assets: |
||||||||||||||||
| Beginning of period |
83,391,260,467 | 79,633,756,458 | 5,718,339,174 | 6,673,608,849 | ||||||||||||
| End of period |
$ | 77,918,241,799 | $ | 83,391,260,467 | $5,442,349,253 | $5,718,339,174 | ||||||||||
| Distributions in excess of net investment income included in net assets: |
||||||||||||||||
| End of period |
$ | (557,606,440 | ) | $ | (74,871,430 | ) | $ (16,209,048 | ) | $ (1,086,491 | ) | ||||||
| 98 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| Franklin Utilities Fund | ||||||||
| Six Months Ended | ||||||||
| March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
|||||||
| Increase (decrease) in net assets: |
||||||||
| Operations: |
||||||||
| Net investment income |
$ | 79,983,723 | $ | 177,423,281 | ||||
| Net realized gain (loss) |
114,706,719 | 88,486,105 | ||||||
| Net change in unrealized appreciation (depreciation) |
(452,906,646 | ) | 349,739,100 | |||||
| Net increase (decrease) in net assets resulting from operations |
(258,216,204 | ) | 615,648,486 | |||||
| Distributions to shareholders from: |
||||||||
| Net investment income: |
||||||||
| Class A |
(62,985,661 | ) | (108,430,003 | ) | ||||
| Class M |
(35 | ) | — | |||||
| Class C |
(12,510,837 | ) | (21,699,670 | ) | ||||
| Class R |
(1,223,463 | ) | (2,242,163 | ) | ||||
| Class R6 |
(3,938,812 | ) | (6,694,467 | ) | ||||
| Advisor Class |
(15,586,734 | ) | (23,372,926 | ) | ||||
| Net realized gains: |
||||||||
| Class A |
(66,128,695 | ) | (2,346,125 | ) | ||||
| Class C |
(15,697,484 | ) | (595,960 | ) | ||||
| Class R |
(1,496,735 | ) | (58,199 | ) | ||||
| Class R6 |
(3,834,374 | ) | (124,605 | ) | ||||
| Advisor Class |
(15,623,915 | ) | (418,502 | ) | ||||
| Total distributions to shareholders |
(199,026,745 | ) | (165,982,620 | ) | ||||
| Capital share transactions: (Note 2) |
||||||||
| Class A |
(160,019,833 | ) | (289,671,581 | ) | ||||
| Class M |
5,000 | — | ||||||
| Class C |
(44,039,208 | ) | (156,252,743 | ) | ||||
| Class R |
(11,156,134 | ) | (15,638,722 | ) | ||||
| Class R6 |
(2,810,947 | ) | 4,295,848 | |||||
| Advisor Class |
(7,926,561 | ) | 148,535,428 | |||||
| Total capital share transactions |
(225,947,683 | ) | (308,731,770 | ) | ||||
| Net increase (decrease) in net assets |
(683,190,632 | ) | 140,934,096 | |||||
| Net assets: |
||||||||
| Beginning of period |
6,463,442,121 | 6,322,508,025 | ||||||
| End of period |
$ | 5,780,251,489 | $ | 6,463,442,121 | ||||
| Undistributed net investment income included in net assets: |
||||||||
| End of period |
$ | 3,574,625 | $ | 19,836,444 | ||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 99 |
FRANKLIN CUSTODIAN FUNDS
Notes to Financial Statements (unaudited)
| 100 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| franklintempleton.com | Semiannual Report |
101 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| 102 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| franklintempleton.com | Semiannual Report |
103 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| 104 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 March 31, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin | Franklin | |||||||||||||||
| DynaTech Fund | Growth Fund | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
6,367,837 | $ | 435,926,940 | 6,250,804 | $ | 599,985,557 | ||||||||||
| Shares issued in reinvestment of distributions |
649,395 | 42,411,985 | 2,241,541 | 209,291,769 | ||||||||||||
| Shares redeemed |
(4,900,449 | ) | (332,626,188 | ) | (9,802,762 | ) | (940,434,514 | ) | ||||||||
| Net increase (decrease) |
2,116,783 | $ | 145,712,737 | (1,310,417 | ) | $ | (131,157,188 | ) | ||||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
9,362,267 | $ | 523,007,968 | 14,162,348 | $ | 1,174,286,495 | ||||||||||
| Shares issued in reinvestment of distributions. |
1,325,934 | 62,305,651 | 3,311,489 | 249,918,049 | ||||||||||||
| Shares redeemed |
(11,882,951 | ) | (643,932,670 | ) | (26,713,031 | ) | (2,199,267,441 | ) | ||||||||
| Net increase (decrease) |
(1,194,750 | ) | $ | (58,619,051 | ) | (9,239,194 | ) | $ | (775,062,897 | ) | ||||||
| Class C Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
1,670,401 | $ | 96,756,708 | 1,081,685 | $ | 95,826,220 | ||||||||||
| Shares issued in reinvestment of distributions. |
145,521 | 8,019,677 | 273,481 | 23,494,774 | ||||||||||||
| Shares redeemed |
(850,950 | ) | (48,700,397 | ) | (1,149,972 | ) | (101,442,929 | ) | ||||||||
| Net increase (decrease) |
964,972 | $ | 56,075,988 | 205,194 | $ | 17,878,065 | ||||||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
1,608,949 | $ | 76,923,384 | 2,061,309 | $ | 157,211,473 | ||||||||||
| Shares issued in reinvestment of distributions. |
278,097 | 11,146,149 | 378,292 | 26,423,730 | ||||||||||||
| Shares redeemed |
(2,017,425 | ) | (93,534,438 | ) | (3,058,986 | ) | (234,216,142 | ) | ||||||||
| Net increase (decrease) |
(130,379 | ) | $ | (5,464,905 | ) | (619,385 | ) | $ | (50,580,939 | ) | ||||||
| Class R Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
320,570 | $ | 21,830,372 | 396,478 | $ | 37,940,573 | ||||||||||
| Shares issued in reinvestment of distributions. |
14,081 | 895,541 | 137,301 | 12,777,240 | ||||||||||||
| Shares redeemed |
(165,519 | ) | (10,838,433 | ) | (844,755 | ) | (80,913,661 | ) | ||||||||
| Net increase (decrease) |
169,132 | $ | 11,887,480 | (310,976 | ) | $ | (30,195,848 | ) | ||||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
267,584 | $ | 14,852,690 | 912,197 | $ | 76,231,533 | ||||||||||
| Shares issued in reinvestment of distributions. |
27,272 | 1,251,781 | 210,204 | 15,813,630 | ||||||||||||
| Shares redeemed |
(280,176 | ) | (14,785,028 | ) | (1,629,437 | ) | (135,607,303 | ) | ||||||||
| Net increase (decrease) |
14,680 | $ | 1,319,443 | (507,036 | ) | $ | (43,562,140 | ) | ||||||||
| franklintempleton.com | Semiannual Report |
105 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| Franklin | Franklin | |||||||||||||||
| DynaTech Fund | Growth Fund | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class R6 Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
11,454,430 | $ 786,224,285 | 7,319,293 | $ | 697,242,997 | |||||||||||
| Shares issued in reinvestment of distributions. |
246,188 | 16,654,639 | 664,502 | 62,044,590 | ||||||||||||
| Shares redeemed |
(1,571,471 | ) | (112,008,211 | ) | (3,004,157 | ) | (290,212,087 | ) | ||||||||
| Net increase (decrease) |
10,129,147 | $690,870,713 | 4,979,638 | $ | 469,075,500 | |||||||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
1,671,232 | $ 92,675,376 | 6,556,890 | $ | 547,502,376 | |||||||||||
| Shares issued in reinvestment of distributions. |
228,050 | 11,046,724 | 613,371 | 46,278,808 | ||||||||||||
| Shares redeemed |
(1,597,410 | ) | (92,487,214 | ) | (4,499,648 | ) | (378,570,163 | ) | ||||||||
| Net increase (decrease) |
301,872 | $ 11,234,886 | 2,670,613 | $ | 215,211,021 | |||||||||||
| Advisor Class Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
2,283,325 | $ 159,045,222 | 3,434,597 | $ | 331,619,297 | |||||||||||
| Shares issued in reinvestment of distributions. |
79,332 | 5,323,142 | 772,474 | 72,226,322 | ||||||||||||
| Shares redeemed |
(7,451,449 | ) | (496,815,554 | ) | (6,735,376 | ) | (642,624,089 | ) | ||||||||
| Net increase (decrease) |
(5,088,792 | ) | $(332,447,190 | ) | (2,528,305 | ) | $ | (238,778,470 | ) | |||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
9,006,379 | $ 514,535,401 | 11,853,956 | $ | 980,377,887 | |||||||||||
| Shares issued in reinvestment of distributions. |
155,933 | 7,506,593 | 998,990 | 75,473,718 | ||||||||||||
| Shares redeemed |
(1,979,331 | ) | (111,219,398 | ) | (7,733,627 | ) | (636,836,942 | ) | ||||||||
| Net increase (decrease) |
7,182,981 | $ 410,822,596 | 5,119,319 | $ | 419,014,663 | |||||||||||
| Franklin | ||||||||||||||||
| Franklin | U.S. Government | |||||||||||||||
| Income Fund | Securities Fund | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
926,579,698 | $ | 2,191,310,521 | 67,521,749 | $ | 409,200,577 | ||||||||||
| Shares issued in reinvestment of distributions |
447,378,662 | 1,060,113,076 | 7,198,044 | 43,312,583 | ||||||||||||
| Shares redeemed |
(1,763,973,175 | ) | (4,165,491,518 | ) | (85,037,731 | ) | (514,772,806 | ) | ||||||||
| Net increase (decrease) |
(390,014,815 | ) | $ | (914,067,921 | ) | (10,317,938 | ) | $ | (62,259,646 | ) | ||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
2,326,579,530 | $ | 5,409,263,110 | 88,315,020 | $ | 547,846,708 | ||||||||||
| Shares issued in reinvestment of distributions |
942,817,065 | 2,180,859,371 | 16,155,083 | 99,906,202 | ||||||||||||
| Shares redeemed |
(4,077,035,296 | ) | (9,459,733,020 | ) | (187,133,417 | ) | (1,159,721,046 | ) | ||||||||
| Net increase (decrease) |
(807,638,701 | ) | $ | (1,869,610,539 | ) | (82,663,314 | ) | $ | (511,968,136 | ) | ||||||
| Class M Shares: |
||||||||||||||||
| Six Months ended March 31, 2018a |
||||||||||||||||
| Shares sold |
2,058 | $ | 5,000 | 829 | $ | 5,000 | ||||||||||
| 106 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| Franklin | ||||||||||||||||
| Franklin | U.S. Government | |||||||||||||||
| Income Fund | Securities Fund | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class C Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
334,478,242 | $ | 801,284,726 | 4,935,332 | $ | 29,614,557 | ||||||||||
| Shares issued in reinvestment of distributions |
190,839,487 | 458,277,686 | 1,362,701 | 8,144,318 | ||||||||||||
| Shares redeemed |
(975,038,808 | ) | (2,333,367,235 | ) | (24,396,769 | ) | (146,482,313 | ) | ||||||||
| Net increase (decrease) |
(449,721,079 | ) | $ | (1,073,804,823 | ) | (18,098,736 | ) | $ | (108,723,438 | ) | ||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
911,767,616 | $ | 2,142,426,105 | 14,550,091 | $ | 89,797,342 | ||||||||||
| Shares issued in reinvestment of distributions |
413,154,940 | 967,759,461 | 3,401,372 | 20,890,746 | ||||||||||||
| Shares redeemed |
(2,297,260,192 | ) | (5,403,840,283 | ) | (50,952,421 | ) | (313,543,423 | ) | ||||||||
| Net increase (decrease) |
(972,337,636 | ) | $ | (2,293,654,717 | ) | (33,000,958 | ) | $ | (202,855,335 | ) | ||||||
| Class R Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
12,851,921 | $ | 29,831,404 | 757,077 | $ | 4,565,740 | ||||||||||
| Shares issued in reinvestment of distributions |
3,320,608 | 7,725,627 | 73,484 | 441,918 | ||||||||||||
| Shares redeemed |
(32,444,558 | ) | (75,483,954 | ) | (1,406,528 | ) | (8,489,138 | ) | ||||||||
| Net increase (decrease) |
(16,272,029 | ) | $ | (37,926,923 | ) | (575,967 | ) | $ | (3,481,480 | ) | ||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
29,390,834 | $ | 67,078,836 | 2,216,203 | $ | 13,791,777 | ||||||||||
| Shares issued in reinvestment of distributions |
7,822,410 | 17,773,811 | 199,172 | 1,231,596 | ||||||||||||
| Shares redeemed |
(62,623,063 | ) | (143,062,182 | ) | (5,574,593 | ) | (34,456,445 | ) | ||||||||
| Net increase (decrease) |
(25,409,819 | ) | $ | (58,209,535 | ) | (3,159,218 | ) | $ | (19,433,072 | ) | ||||||
| Class R6 Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
204,936,724 | $ | 482,815,039 | 36,428,526 | $ | 222,031,620 | ||||||||||
| Shares issued in reinvestment of distributions |
22,742,764 | 53,419,508 | 1,600,842 | 9,660,713 | ||||||||||||
| Shares redeemed |
(66,880,921 | ) | (155,991,916 | ) | (8,766,105 | ) | (52,894,728 | ) | ||||||||
| Net increase (decrease) |
160,798,567 | $ | 380,242,631 | 29,263,263 | $ | 178,797,605 | ||||||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
45,238,070 | $ | 104,748,463 | 7,989,421 | $ | 49,592,166 | ||||||||||
| Shares issued in reinvestment of distributions |
39,448,905 | 90,547,964 | 2,685,559 | 16,667,699 | ||||||||||||
| Shares redeemed |
(98,936,238 | ) | (227,642,444 | ) | (36,176,783 | ) | (225,322,538 | ) | ||||||||
| Net increase (decrease) |
(14,249,263 | ) | $ | (32,346,017 | ) | (25,501,803 | ) | $ | (159,062,673 | ) | ||||||
| franklintempleton.com | Semiannual Report |
107 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
| Franklin | ||||||||||||||||
| Franklin | U.S. Government | |||||||||||||||
| Income Fund | Securities Fund | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Advisor Class Shares: |
||||||||||||||||
| Six Months ended March 31, 2018 |
||||||||||||||||
| Shares sold |
589,149,896 | $ | 1,380,111,790 | 22,114,042 | $ | 134,147,350 | ||||||||||
| Shares issued in reinvestment of distributions |
111,821,111 | 262,732,211 | 1,714,653 | 10,349,609 | ||||||||||||
| Shares redeemed |
(773,915,021 | ) | (1,815,052,493 | ) | (42,890,333 | ) | (260,992,085 | ) | ||||||||
| Net increase (decrease) |
(72,944,014 | ) | $ | (172,208,492 | ) | (19,061,638 | ) | $ | (116,495,126 | ) | ||||||
| Year ended September 30, 2017 |
||||||||||||||||
| Shares sold |
2,163,722,071 | $ | 4,992,265,330 | 63,438,736 | $ | 394,713,677 | ||||||||||
| Shares issued in reinvestment of distributions |
201,275,423 | 462,952,027 | 3,720,638 | 23,067,829 | ||||||||||||
| Shares redeemed |
(1,099,054,643 | ) | (2,529,240,454 | ) | (41,027,662 | ) | (255,096,468 | ) | ||||||||
| Net increase (decrease) |
1,265,942,851 | $ | 2,925,976,903 | 26,131,712 | $ | 162,685,038 | ||||||||||
aFor the period January 25, 2018 (effective date) to March 31, 2018.
| Franklin | ||||||||
| Utilities Fund | ||||||||
| Shares | Amount | |||||||
| Class A Shares: |
||||||||
| Six Months ended March 31, 2018 |
||||||||
| Shares sold |
15,388,836 | $ | 285,230,695 | |||||
| Shares issued in reinvestment of distributions |
6,152,157 | 118,374,673 | ||||||
| Shares redeemed |
(30,561,917 | ) | (563,625,201 | ) | ||||
| Net increase (decrease) |
(9,020,924 | ) | $ | (160,019,833 | ) | |||
| Year ended September 30, 2017 |
||||||||
| Shares sold |
33,746,244 | $ | 620,365,753 | |||||
| Shares issued in reinvestment of distributions |
5,477,068 | 100,790,068 | ||||||
| Shares redeemed |
(55,404,028 | ) | (1,010,827,402 | ) | ||||
| Net increase (decrease) |
(16,180,716 | ) | $ | (289,671,581 | ) | |||
| Class M Shares: |
||||||||
| Six Months ended March 31, 2018a |
||||||||
| Shares sold |
276 | $ | 5,000 | |||||
| Class C Shares: |
||||||||
| Six Months ended March 31, 2018 |
||||||||
| Shares sold |
2,278,088 | $ | 42,669,956 | |||||
| Shares issued in reinvestment of distributions |
1,371,834 | 26,359,077 | ||||||
| Shares redeemed |
(6,187,912 | ) | (113,068,241 | ) | ||||
| Net increase (decrease) |
(2,537,990 | ) | $ | (44,039,208 | ) | |||
| Year ended September 30, 2017 |
||||||||
| Shares sold |
5,503,753 | $ | 100,721,777 | |||||
| Shares issued in reinvestment of distributions |
1,083,738 | 19,834,562 | ||||||
| Shares redeemed |
(15,075,669 | ) | (276,809,082 | ) | ||||
| Net increase (decrease) |
(8,488,178 | ) | $ | (156,252,743 | ) | |||
| 108 |
Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| Franklin | ||||||||
| Utilities Fund | ||||||||
| Shares | Amount | |||||||
| Class R Shares: |
||||||||
| Six Months ended March 31, 2018 |
||||||||
| Shares sold |
547,137 | $ | 10,063,175 | |||||
| Shares issued in reinvestment of distributions |
136,901 | 2,634,569 | ||||||
| Shares redeemed |
(1,301,035 | ) | (23,853,878 | ) | ||||
| Net increase (decrease) |
(616,997 | ) | $ | (11,156,134 | ) | |||
| Year ended September 30, 2017 |
||||||||
| Shares sold |
1,609,833 | $ | 29,215,041 | |||||
| Shares issued in reinvestment of distributions |
121,708 | 2,225,505 | ||||||
| Shares redeemed |
(2,594,910 | ) | (47,079,268 | ) | ||||
| Net increase (decrease) |
(863,369 | ) | $ | (15,638,722 | ) | |||
| Class R6 Shares: |
||||||||
| Six Months ended March 31, 2018 |
||||||||
| Shares sold |
1,352,066 | $ | 25,257,656 | |||||
| Shares issued in reinvestment of distributions |
401,753 | 7,773,186 | ||||||
| Shares redeemed |
(1,928,417 | ) | (35,841,789 | ) | ||||
| Net increase (decrease) |
(174,598 | ) | $ | (2,810,947 | ) | |||
| Year ended September 30, 2017 |
||||||||
| Shares sold |
3,378,291 | $ | 61,987,731 | |||||
| Shares issued in reinvestment of distributions |
367,045 | 6,819,073 | ||||||
| Shares redeemed |
(3,469,190 | ) | (64,510,956 | ) | ||||
| Net increase (decrease) |
276,146 | $ | 4,295,848 | |||||
| Advisor Class Shares: |
||||||||
| Six Months ended March 31, 2018 |
||||||||
| Shares sold |
7,949,121 | $ | 149,301,424 | |||||
| Shares issued in reinvestment of distributions |
1,484,912 | 28,746,338 | ||||||
| Shares redeemed |
(10,108,294 | ) | (185,974,323 | ) | ||||
| Net increase (decrease) |
(674,261 | ) | $ | (7,926,561 | ) | |||
| Year ended September 30, 2017 |
||||||||
| Shares sold |
21,268,414 | $ | 394,510,240 | |||||
| Shares issued in reinvestment of distributions |
1,182,297 | 22,042,770 | ||||||
| Shares redeemed |
(14,639,265 | ) | (268,017,582 | ) | ||||
| Net increase (decrease) |
7,811,446 | $ | 148,535,428 | |||||
aFor the period January 25, 2018 (effective date) to March 31, 2018.
| franklintempleton.com | Semiannual Report |
109 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 Advisers, Inc. (Advisers) | Investment manager | |
| Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
| Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
| Franklin Templeton Investor Services, LLC (Investor Services) | Transfer agent |
a. Management Fees
Franklin Income Fund and Franklin Utilities Fund pay an investment management fee to Advisers based on the month-end net assets of each of the Funds as follows:
| Annualized Fee Rate | Net Assets | |
| 0.625% |
Up to and including $100 million | |
| 0.500% |
Over $100 million, up to and including $250 million | |
| 0.450% |
Over $250 million, up to and including $7.5 billion | |
| 0.440% |
Over $7.5 billion, up to and including $10 billion | |
| 0.430% |
Over $10 billion, up to and including $12.5 billion | |
| 0.420% |
Over $12.5 billion, up to and including $15 billion | |
| 0.400% |
Over $15 billion, up to and including $17.5 billion | |
| 0.380% |
Over $17.5 billion, up to and including $20 billion | |
| 0.360% |
Over $20 billion, up to and including $35 billion | |
| 0.355% |
Over $35 billion, up to and including $50 billion | |
| 0.350% |
Over $50 billion, up to and including $65 billion | |
| 0.345% |
Over $65 billion, up to and including $80 billion | |
| 0.340% |
In excess of $80 billion |
Franklin DynaTech Fund, Franklin Growth Fund and Franklin U.S. Government Securities Fund pay an investment management fee to Advisers based on the month-end net assets of each of the Funds as follows:
| Annualized Fee Rate | Net Assets | |
| 0.625% |
Up to and including $100 million | |
| 0.500% |
Over $100 million, up to and including $250 million | |
| 0.450% |
Over $250 million, up to and including $7.5 billion | |
| 0.440% |
Over $7.5 billion, up to and including $10 billion | |
| 0.430% |
Over $10 billion, up to and including $12.5 billion | |
| 0.420% |
Over $12.5 billion, up to and including $15 billion | |
| 0.400% |
Over $15 billion, up to and including $17.5 billion | |
| 0.380% |
Over $17.5 billion, up to and including $20 billion | |
| 0.360% |
Over $20 billion, up to and including $35 billion | |
| 0.355% |
Over $35 billion, up to and including $50 billion | |
| 0.350% |
In excess of $50 billion |
| 110 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the period ended March 31, 2018, each Fund’s annualized gross effective investment management fee rate based on average daily net assets was as follows:
| Franklin DynaTech Fund
|
Franklin Growth Fund
|
Franklin Income Fund
|
Franklin U.S. Government Securities Fund
|
Franklin Utilities Fund
| ||||
| 0.463% | 0.445% | 0.371% | 0.454% | 0.455% |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A and M reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. Under the Class A and M reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| Franklin
|
Franklin
|
Franklin
|
Franklin U.S. Government
|
Franklin Utilities Fund
| ||||||
| Reimbursement Plans: |
||||||||||
| Class A |
0.25% | 0.25% | 0.15% | 0.15% | 0.15% | |||||
| Class M |
— | — | 0.25% | 0.25% | 0.25% | |||||
| Compensation Plans: |
||||||||||
| Class C |
1.00% | 1.00% | 0.65% | 0.65% | 0.65% | |||||
| Class R |
0.50% | 0.50% | 0.50% | 0.50% | 0.50% |
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Funds. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the period:
| Franklin
|
Franklin Growth Fund
|
Franklin Income Fund
|
Franklin U.S. Government
|
Franklin Utilities Fund
| ||||||
| Sales charges retained net of commissions paid to unaffiliated brokers/dealers |
$803,178 | $1,017,788 | $5,600,292 | $206,865 | $267,408 | |||||
| CDSC retained |
$ 35,698 | $ 36,102 | $ 520,977 | $ 26,216 | $ 43,227 |
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111 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
e. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the period ended March 31, 2018, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
Franklin U.S. Government Securities Fund |
Franklin Utilities Fund |
||||||||||||||||
| Transfer agent fees |
$573,609 | $1,814,197 | $8,280,379 | $763,543 | $724,611 | |||||||||||||||
f. Investments in Affiliated Management Investment Companies
Certain or all Funds invest in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Funds are waived on assets invested in the affiliated management investment companies, as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to October 1, 2013, the waiver was accounted for as a reduction to management fees. During the period ended March 31, 2018, investments in affiliated management investment companies were as follows:
| Number of at Beginning |
Gross Additions |
Gross Reductions |
Number of Held at End |
Value at End of Period |
Dividend Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||||||
| Franklin DynaTech Fund |
||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
90,584,258 | 555,149,373 | (477,520,813 | ) | 168,212,818 | $168,212,818 | $ 573,368 | $ — | $ — | |||||||||||||||||||||||
| Franklin Growth Fund |
||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
331,780,723 | 482,526,928 | (562,129,420 | ) | 252,178,231 | $252,178,231 | $1,092,627 | $ — | $ — | |||||||||||||||||||||||
| Franklin Income Fund |
||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
4,208,455,331 | 9,946,152,061 | (13,961,676,996 | ) | 192,930,396 | $192,930,396 | $6,942,930 | $ — | $ — | |||||||||||||||||||||||
| Franklin U.S. Government Securities Fund |
||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
90,681,295 | 585,575,893 | (501,093,668 | ) | 175,163,520 | $175,163,520 | $ 566,442 | $ — | $ — | |||||||||||||||||||||||
| Franklin Utilities Fund |
||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
21,127,106 | 368,150,323 | (380,397,559 | ) | 8,879,870 | $ 8,879,870 | $ 159,746 | $ — | $ — | |||||||||||||||||||||||
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FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
g. Waiver and Expense Reimbursements
For Franklin Income Fund, Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.01% until January 31, 2019. For Franklin DynaTech Fund, Franklin Growth Fund, Franklin U.S. Government Securities Fund and Franklin Utilities Fund, Investor Services has voluntarily agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.02%. Investor Services may discontinue this waiver in the future.
h. Other Affiliated Transactions
At March 31, 2018, one or more of the funds in Franklin Fund Allocator Series owned a percentage of the following Funds’ outstanding shares:
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
Franklin U.S. Government |
Franklin Utilities Fund | ||||
| 7.9% |
6.0% | 2.0% | 6.5% | 2.3% |
i. Interfund Transactions
Franklin Income Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended March 31, 2018, these purchase and sale transactions aggregated $11,130,000 and $0, respectively.
4. Expense Offset Arrangement
The Funds have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ custodian expenses. During the period ended March 31, 2018, the custodian fees were reduced as noted in the Statements of Operations.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.
At September 30, 2017, the capital loss carryforwards were as follows:
| |
Franklin Income Fund |
|
|
Franklin U.S. Government |
| |||
| Capital loss carryforwards subject to expiration: |
||||||||
| 2018 |
$ | 2,298,838,256 | $ 16,923,310 | |||||
| 2019 |
— | 4,445,156 | ||||||
| Capital loss carryforwards not subject to expiration: |
||||||||
| Short term |
1,089,373,631 | 204,034,009 | ||||||
| Long term |
2,047,701,218 | 299,432,828 | ||||||
|
|
|
|||||||
| Total capital loss carryforwards |
$ | 5,435,913,105 | $524,835,303 | |||||
|
|
|
|||||||
For tax purposes, the Funds may elect to defer any portion of a late-year ordinary loss to the first day of the following fiscal year. At September 30, 2017, Franklin DynaTech Fund deferred late-year ordinary losses of $8,477,090.
| franklintempleton.com | Semiannual Report |
113 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. Income Taxes (continued)
At March 31, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
||||||||||
| Cost of investments |
$2,697,378,323 | $ | 5,600,984,688 | $ | 74,724,917,945 | |||||||
| Unrealized appreciation |
$2,440,943,446 | $ | 9,351,653,075 | $ | 6,272,662,132 | |||||||
| Unrealized depreciation |
(8,337,897 | ) | (128,024,481 | ) | (4,794,965,995 | ) | ||||||
| Net unrealized appreciation (depreciation) |
$2,432,605,549 | $ | 9,223,628,594 | $ | 1,477,696,137 | |||||||
| Franklin U.S. Government |
Franklin Utilities Fund |
|||||||||||
| Cost of investments |
$5,551,665,733 | $ | 3,351,963,961 | |||||||||
| Unrealized appreciation |
$ 82,192,719 | $ | 2,480,689,095 | |||||||||
| Unrealized depreciation |
(114,931,856 | ) | (74,295,229 | ) | ||||||||
| Net unrealized appreciation (depreciation) |
$ (32,739,137 | ) | $ | 2,406,393,866 | ||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of paydown losses, bond discounts and premiums, corporate actions, equity-linked securities and wash sales.
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the period ended March 31, 2018, were as follows:
| Franklin DynaTech Fund |
Franklin Growth Fund |
Franklin Income Fund |
Franklin U.S. Government Securities Fund |
Franklin Utilities Fund |
||||||||||||||||
| Purchases |
$837,496,609 | $437,636,754 | $21,089,284,044 | $1,781,846,189 | $160,912,802 | |||||||||||||||
| Sales |
$409,838,338 | $626,960,176 | $20,089,254,881 | $1,919,082,603 | $509,042,511 | |||||||||||||||
At March 31, 2018, in connection with securities lending transactions, Franklin Income Fund loaned corporate bonds and notes and received $101,750,579 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.
7. Credit Risk and Defaulted Securities
At March 31, 2018, Franklin Income Fund had 38.3% of its portfolio invested in high yield securities, senior secured floating rate notes, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
Franklin Income Fund held defaulted securities and/or other securities for which the income has been deemed uncollectible. At March 31, 2018, the aggregate value of these securities was $1,138,165,419, representing 1.5% of the Fund’s net assets. The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The securities have been identified in the accompanying Statement of Investments.
| 114 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. Restricted Securities
Certain or all Funds invest in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Funds may have registration rights for restricted securities. The issuer generally incurs all registration costs.
At March 31, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:
| Principal Amount |
Issuer | Acquisition Date |
Cost | Value | ||||||||||
| Franklin Income Fund |
||||||||||||||
| 165,515,180 | a CEVA Group PLC, senior secured note, first lien, 144A, PIK, 9.00%, 9/01/20 (Value is 0.2% of Net Assets) |
4/07/17 - 11/01/17 | $ | 152,236,933 | $ | 168,784,616 | ||||||||
aThe Fund also invests in unrestricted securities of the issuer, valued at $17,967,248 as of March 31, 2018.
9. Unfunded Loan Commitments
Certain or all Funds enter into certain credit agreements, all or a portion of which may be unfunded. The Funds are obligated to fund these loan commitments at the borrowers’ discretion. Unfunded loan commitments and funded portions of credit agreements are marked to market daily and any unrealized appreciation or depreciation is included in the Statements of Assets and Liabilities and the Statements of Operations. Funded portions of credit agreements are presented in the Statements of Investments.
At March 31, 2018, unfunded commitments were as follows:
| Borrower | Unfunded Commitment |
|||
| Franklin Income Fund |
||||
| PetroQuest Energy Inc., Mutlidraw Term Loan Facility |
$20,000,000 | |||
10. Other Derivative Information
At March 31, 2018, Franklin Income Fund’s investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
| Asset Derivatives | Liability Derivatives | |||||||||||
| Derivative Contracts Not Accounted for as Hedging Instruments |
Statement of Assets and Liabilities Location |
Fair Value | Statement of Assets and Liabilities |
Fair Value | ||||||||
| Equity contracts |
Investments in securities, at value | $— | Options written, at value | $22,440,000 | ||||||||
| franklintempleton.com | Semiannual Report |
115 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
10. Other Derivative Information (continued)
For the period ended March 31, 2018, the effect of derivative contracts in the Franklin Income Fund’s Statements of Operations was as follows:
| Derivative Contracts Not Accounted for as Hedging Instruments |
Statement of Operations Location |
Net Realized Gain (Loss) for the Period |
Statement of Operations Location |
Net Change in Unrealized Appreciation (Depreciation) for the Period |
||||||||
| Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
| Equity contracts |
Investments | $ 4,614,303 | a | Investments | $6,245,230 | a | ||||||
| Written options |
51,908,601 | Written options | 662,521 | |||||||||
| Totals |
$56,522,904 | $6,907,751 | ||||||||||
aPurchased option contracts are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statements of Operations.
For the period ended March 31, 2018, the average month end notional amount of options represented $48,146,286.
See Note 1(e) regarding derivative financial instruments.
11. 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. During the period ended March 31, 2018, investments in “affiliated companies” were as follows:
| Name of Issuer | Number of Shares/ Principal Amount Held at Beginning of Period |
Gross Additions |
Gross Reductions |
Number of at End of Period |
Value at End of Period |
Investment Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||
| Franklin Income Fund |
|
|||||||||||||||||||||||||||||||
| Controlled Affiliatesa |
|
|||||||||||||||||||||||||||||||
| Dividends | ||||||||||||||||||||||||||||||||
| Stone Energy Corp. |
6,151,402 | — | — | 6,151,402 | $ | 228,217,014 | $ | — | $ — | $49,457,272 | ||||||||||||||||||||||
| Interest | ||||||||||||||||||||||||||||||||
| Stone Energy Corp., senior note, 7.50%, 5/31/22 |
72,845,556 | — | — | 72,845,556 | 74,484,581 | 2,746,885 | — | 4,113,704 | ||||||||||||||||||||||||
| Total Controlled Affiliates |
|
$ | 302,701,595 | $ | 2,746,885 | $ — | $53,570,976 | |||||||||||||||||||||||||
| 116 | Semiannual Report | franklintempleton.com |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| Name of Issuer | Number of Shares/ Principal Amount Held at Beginning of Period |
Gross Additions |
Gross Reductions |
Number of of Period |
Value at End of Period |
Investment Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||
| Franklin Income Fund (continued) |
|
|||||||||||||||||||||||||||||||
| Non-Controlled Affiliates |
|
|||||||||||||||||||||||||||||||
| Dividends | ||||||||||||||||||||||||||||||||
| CEVA Holdings LLC. |
81,371 | — | — | 81,371 | $ | 49,636,347 | $ | — | $ | — | $ | 13,019,370 | ||||||||||||||||||||
| CEVA Holdings LLC, cvt |
||||||||||||||||||||||||||||||||
| pfd., A-1, 2/20/49 |
2,897 | — | — | 2,897 | 2,607,525 | — | — | 811,230 | ||||||||||||||||||||||||
| CEVA Holdings LLC, cvt |
||||||||||||||||||||||||||||||||
| pfd., A-2, 2/20/49 |
110,565 | — | — | 110,565 | 67,444,699 | — | — | 17,690,413 | ||||||||||||||||||||||||
| Energy XXI Gulf Coast Inc. |
7,000,000 | — | (7,000,000 | ) | — | — | — | (276,683,474 | ) | 244,184,332 | ||||||||||||||||||||||
| Goodrich Petroleum Corp. |
2,260,859 | — | (2,260,859 | ) | — | — | — | 4,645,755 | (1,960,199 | ) | ||||||||||||||||||||||
| Halcon Resources Corp. |
22,500,000 | — | (17,158,515 | ) | 5,341,485 | — | b | — | (112,264,327 | ) | — | b | ||||||||||||||||||||
| W&T Offshore Inc. |
10,000,000 | — | (10,000,000 | ) | — | — | — | 15,002,537 | (14,382,287 | ) | ||||||||||||||||||||||
| $ | 119,688,571 | $ | — | $ | (369,299,509 | ) | $ | 259,362,859 | ||||||||||||||||||||||||
| Interest | ||||||||||||||||||||||||||||||||
| Halcon Resources Corp., senior note, 144A, 6.75%, 2/15/25 |
108,000,000 | — | (108,000,000 | )c | — | — | 90,147 | 2,269,291 | (6,616,715 | ) | ||||||||||||||||||||||
| W&T Offshore Inc., Second Lien Term Loan, 9.00%, 5/15/20 |
161,850,000 | — | — | 161,850,000 | — | b | 7,263,296 | — | — | b | ||||||||||||||||||||||
| W&T Offshore Inc., secured note, second lien, 144A, PIK, 9.00%, 5/15/20 |
75,645,453 | 4,065,943 | c | — | 79,711,396 | — | b | 6,375,224 | d | — | — | b | ||||||||||||||||||||
| W&T Offshore Inc., senior note, 8.50%, 6/15/19 |
15,568,000 | 81,353,000 | — | 96,921,000 | — | b | 8,786,252 | — | — | b | ||||||||||||||||||||||
| W&T Offshore Inc., Senior Secured 1.5 Lien Term Loan, 11.00%, 11/15/19 |
75,000,000 | — | — | 75,000,000 | — | b | 4,113,699 | — | — | b | ||||||||||||||||||||||
| W&T Offshore Inc., senior secured note, third lien, 144A, PIK, 10.00%, 6/15/21 |
67,697,026 | 3,384,851 | c | — | 71,081,877 | — | b | 4,236,279 | d | — | — | b | ||||||||||||||||||||
| $ | — | $ | 30,864,897 | $ | 2,269,291 | $ | (6,616,715 | ) | ||||||||||||||||||||||||
| Total Non-Controlled Affiliates |
|
$ | 119,688,571 | $ | 30,864,897 | $ | (367,030,218 | ) | $ | 252,746,144 | ||||||||||||||||||||||
| Total Affiliated Securities (Value is 0.5% of Net Assets) |
|
$ | 422,390,166 | $ | 33,611,782 | $ | (367,030,218 | ) | $ | 306,317,120 | ||||||||||||||||||||||
aIssuer in which the Fund owns 25% or more of the outstanding voting securities.
bAs of March 31, 2018, no longer an affiliate.
cGross addition/reduction was the result of various corporate actions.
dIncludes non-cash dividend/interest received.
12. Credit Facility
The Funds, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
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FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
12. Credit Facility (continued)
Under the terms of the Global Credit Facility, the Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the period ended March 31, 2018, the Funds did not use the Global Credit Facility.
13. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
| • | Level 1 – quoted prices in active markets for identical financial instruments |
| • | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of March 31, 2018, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin DynaTech Fund |
||||||||||||||||
| Assets: |
||||||||||||||||
| Investments in Securities:a |
||||||||||||||||
| Equity Investments |
$ | 4,961,771,054 | $ | — | $ | — | $ | 4,961,771,054 | ||||||||
| Short Term Investments |
168,212,818 | — | — | 168,212,818 | ||||||||||||
| Total Investments in Securities |
$ | 5,129,983,872 | $ | — | $ | — | $ | 5,129,983,872 | ||||||||
| Franklin Growth Fund |
||||||||||||||||
| Assets: |
||||||||||||||||
| Investments in Securities:a |
||||||||||||||||
| Equity Investmentsb |
$ | 14,572,435,051 | $ | — | $ | — | $ | 14,572,435,051 | ||||||||
| Short Term Investments |
252,178,231 | — | — | 252,178,231 | ||||||||||||
| Total Investments in Securities |
$ | 14,824,613,282 | $ | — | $ | — | $ | 14,824,613,282 | ||||||||
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FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin Income Fund |
||||||||||||||||
| Assets: |
||||||||||||||||
| Investments in Securities:a |
||||||||||||||||
| Equity Investments:b |
||||||||||||||||
| Financials |
$ | 5,981,207,540 | $ | 76,500,000 | $ | — | $ | 6,057,707,540 | ||||||||
| Industrials |
1,856,359,321 | 119,688,571 | — | 1,976,047,892 | ||||||||||||
| All Other Equity Investments. |
24,480,558,676 | — | — | 24,480,558,676 | ||||||||||||
| Equity-Linked Securities |
— | 10,768,464,384 | — | 10,768,464,384 | ||||||||||||
| Index-Linked Notes |
— | 99,214,550 | — | 99,214,550 | ||||||||||||
| Convertible Bonds |
— | 622,041,324 | — | 622,041,324 | ||||||||||||
| Corporate Bonds |
— | 28,920,930,980 | — | 28,920,930,980 | ||||||||||||
| Senior Floating Rate Interests |
— | 3,090,146,761 | — | 3,090,146,761 | ||||||||||||
| Escrows and Litigation Trusts |
— | — | — | c | — | |||||||||||
| Short Term Investments |
192,930,396 | 17,011,579 | — | 209,941,975 | ||||||||||||
| Total Investments in Securities |
$ | 32,511,055,933 | $ | 43,713,998,149 | $ | — | $ | 76,225,054,082 | ||||||||
| Liabilities: |
||||||||||||||||
| Other Financial Instruments: |
||||||||||||||||
| Options Written |
$ | 22,440,000 | $ | — | $ | — | $ | 22,440,000 | ||||||||
| Unfunded Loan Commitments. |
— | 185,800 | — | 185,800 | ||||||||||||
| Total Other Financial Instruments |
$ | 22,440,000 | $ | 185,800 | $ | — | $ | 22,625,800 | ||||||||
| Franklin U.S. Government Securities Fund |
||||||||||||||||
| Assets: |
||||||||||||||||
| Investments in Securities:a |
||||||||||||||||
| Mortgage-Backed Securities |
$ | — | $ | 5,257,463,418 | $ | — | $ | 5,257,463,418 | ||||||||
| U.S. Government and Agency Securities |
— | 86,299,658 | — | 86,299,658 | ||||||||||||
| Short Term Investments |
175,163,520 | — | — | 175,163,520 | ||||||||||||
| Total Investments in Securities |
$ | 175,163,520 | $ | 5,343,763,076 | $ | — | $ | 5,518,926,596 | ||||||||
| Franklin Utilities Fund |
||||||||||||||||
| Assets: |
||||||||||||||||
| Investments in Securities:a |
||||||||||||||||
| Equity Investments |
$ | 5,736,242,091 | $ | — | $ | — | $ | 5,736,242,091 | ||||||||
| Corporate Bonds |
— | 13,235,866 | — | 13,235,866 | ||||||||||||
| Short Term Investments |
8,879,870 | — | — | 8,879,870 | ||||||||||||
| Total Investments in Securities |
$ | 5,745,121,961 | $ | 13,235,866 | $ | — | $ | 5,758,357,827 | ||||||||
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common, preferred and convertible preferred stocks and management investment companies.
cIncludes securities determined to have no value at March 31, 2018.
A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.
14. New Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.
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119 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
15. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
| Currency | Selected Portfolio | |||||||
| CAD | Canadian Dollar | ADR | American Depositary Receipt | |||||
| EUR | Euro | FHLMC | Federal Home Loan Mortgage Corp. | |||||
| GBP | British Pound | FNMA | Federal National Mortgage Association | |||||
| USD | United States Dollar | FRN | Floating Rate Note | |||||
| L/C | Letter of Credit | |||||||
| LIBOR | London InterBank Offered Rate | |||||||
| PIK | Payment-In-Kind | |||||||
| SF | Single Family | |||||||
| SPX B | S&P 500 Index Buy-Write | |||||||
| SPX B DT | S&P 500 Index Buy-Write Distribution | |||||||
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FRANKLIN CUSTODIAN FUNDS
Special Meeting of Shareholders
MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017 AND DECEMBER 29, 2017
(UNAUDITED)
A Special Meeting of Shareholders of Franklin Custodian Funds was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017 and December 29, 2017. The purpose of the meeting was to elect Trustees of Franklin Custodian Funds and to vote on the following proposals: for each Fund to approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval; for each Fund, to approve an amended fundamental investment restriction regarding investments in commodities; and for Franklin Income Fund, to consider a shareholder proposal. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of Franklin Custodian Funds: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, Larry D. Thompson, and John B. Wilson; (ii) the proposals to use a “manager of managers” structure to approve the amended fundamental investment restriction regarding investments in commodities were approved by shareholders of each Fund; and (iii) sufficient votes were not received to pass the shareholder proposal for Franklin Income Fund. No other business was transacted at the meeting.
In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.
The results of the voting at the meeting are as follows:
Proposal 1. To elect a Board of Trustees:
| Name | For | Withheld | ||
| Harris J. Ashton | 20,620,255,266 | 682,475,910 | ||
| Terrence J. Checki | 20,622,617,162 | 680,114,004 | ||
| Mary C. Choksi | 20,641,972,272 | 660,758,903 | ||
| Edith E. Holiday | 20,643,191,970 | 659,539,208 | ||
| Gregory E. Johnson | 20,640,028,777 | 662,702,399 | ||
| Rupert H. Johnson, Jr. | 20,623,629,983 | 679,101,196 | ||
| J. Michael Luttig | 20,638,743,410 | 663,987,768 | ||
| Larry D. Thompson | 20,634,644,439 | 668,086,738 | ||
| John B. Wilson | 20,638,176,920 | 661,053,794 | ||
Total Trust Shares Outstanding*: 36,447,693,102
| * | As of the record date. |
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FRANKLIN CUSTODIAN FUNDS
SPECIAL MEETING OF SHAREHOLDERS
| Proposal 2. | To approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval: |
Franklin DynaTech Fund
| Shares | ||||
|
|
||||
| For |
26,120,033 | |||
| Against |
1,611,032 | |||
| Abstain |
1,036,224 | |||
| Broker Non-Votes |
7,606,644 | |||
| Total Fund Shares Voted |
36,373,925 | |||
| Total Fund Shares Outstanding* |
64,259,298 | |||
| Franklin Growth Fund | ||||
| Shares | ||||
|
|
||||
| For |
62,525,115 | |||
| Against |
3,841,242 | |||
| Abstain |
2,289,625 | |||
| Broker Non-Votes |
17,966,153 | |||
| Total Fund Shares Voted |
86,622,134 | |||
| Total Fund Shares Outstanding* |
153,895,391 | |||
| Franklin Income Fund | ||||
| Shares | ||||
|
|
||||
| For |
13,745,941,125 | |||
| Against |
1,083,743,995 | |||
| Abstain |
700,822,344 | |||
| Broker Non-Votes |
4,857,894,126 | |||
| Total Fund Shares Voted |
20,388,081,146 | |||
| Total Fund Shares Outstanding* |
34,952,846,556 | |||
| Franklin U.S. Government Securities Fund | ||||
| Shares | ||||
|
|
||||
| For |
428,222,393 | |||
| Against |
29,263,682 | |||
| Abstain |
20,078,313 | |||
| Broker Non-Votes |
103,560,080 | |||
| Total Fund Shares Voted |
581,124,647 | |||
| Total Fund Shares Outstanding* |
940,312,857 | |||
| Franklin Utilities Fund | ||||
| Shares | ||||
|
|
||||
| For |
143,130,068 | |||
| Against |
10,836,309 | |||
| Abstain |
7,518,358 | |||
| Broker Non-Votes |
48,794,594 | |||
| Total Fund Shares Voted |
210,279,325 | |||
| Total Fund Shares Outstanding* |
336,129,000 | |||
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FRANKLIN CUSTODIAN FUNDS
SPECIAL MEETING OF SHAREHOLDERS
| Proposal 3. | To approve an amended fundamental investment restriction regarding investments in commodities: |
Franklin DynaTech Fund
| Shares | ||||
|
|
||||
| For |
26,263,004 | |||
| Against |
1,160,563 | |||
| Abstain |
1,343,715 | |||
| Broker Non-Votes |
7,606,644 | |||
| Total Fund Shares Voted |
36,373,925 | |||
| Total Fund Shares Outstanding* |
64,259,298 | |||
| Franklin Growth Fund | ||||
| Shares | ||||
|
|
||||
| For |
62,908,596 | |||
| Against |
2,906,472 | |||
| Abstain |
2,840,914 | |||
| Broker Non-Votes |
17,966,153 | |||
| Total Fund Shares Voted |
86,622,134 | |||
| Total Fund Shares Outstanding* |
153,895,391 | |||
| Franklin Income Fund | ||||
| Shares | ||||
|
|
||||
| For |
13,861,058,200 | |||
| Against |
776,938,721 | |||
| Abstain |
892,190,099 | |||
| Broker Non-Votes |
4,857,894,126 | |||
| Total Fund Shares Voted |
20,388,081,146 | |||
| Total Fund Shares Outstanding* |
34,952,846,556 | |||
| Franklin U.S. Government Securities Fund | ||||
| Shares | ||||
|
|
||||
| For |
428,632,998 | |||
| Against |
23,699,554 | |||
| Abstain |
25,232,014 | |||
| Broker Non-Votes |
103,560,080 | |||
| Total Fund Shares Voted |
581,124,647 | |||
| Total Fund Shares Outstanding* |
940,312,857 | |||
| Franklin Utilities Fund | ||||
| Shares | ||||
|
|
||||
| For |
143,792,779 | |||
| Against |
8,193,703 | |||
| Abstain |
9,498,250 | |||
| Broker Non-Votes |
48,794,594 | |||
| Total Fund Shares Voted |
210,279,325 | |||
| Total Fund Shares Outstanding* |
336,129,000 | |||
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123 |
FRANKLIN CUSTODIAN FUNDS
SPECIAL MEETING OF SHAREHOLDERS
| Proposal 4. | Shareholder proposal requesting that Franklin Income Fund’s Board institute procedures to prevent holding investments in companies that, in the judgment of the Board, substantially contribute to genocide or crimes against humanity: |
| Shares | ||||
|
|
||||
| For |
3,258,164,390 | |||
| Against |
11,233,489,698 | |||
| Abstain |
1,038,532,927 | |||
| Broker Non-Votes |
4,857,894,126 | |||
| Total Fund Shares Voted |
20,388,081,146 | |||
| Total Fund Shares Outstanding* |
34,952,846,556 | |||
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FRANKLIN CUSTODIAN FUNDS
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FRANKLIN CUSTODIAN FUNDS
SHAREHOLDER INFORMATION
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FRANKLIN CUSTODIAN FUNDS
SHAREHOLDER INFORMATION
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FRANKLIN CUSTODIAN FUNDS
SHAREHOLDER INFORMATION
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|
|
Semiannual Report and Shareholder Letter Franklin Custodian Funds
Investment Manager Franklin Advisers, Inc.
Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 franklintempleton.com
Shareholder Services (800) 632-2301
|
|||
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
| © 2018 Franklin Templeton Investments. All rights reserved. | FCF S 05/18 |
| 1 | Semiannual Report | |||
1. Source: Morningstar. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not 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 9.
| Semiannual Report |
2 | |||
FRANKLIN FOCUSED GROWTH FUND
3. Source: Morningstar.
4. The IT sector comprises internet software and services, IT services, semiconductors and semiconductor equipment, and software in the SOI. The consumer discretionary sector comprises hotels, restaurants and leisure; internet and direct marketing retail; media; multiline retail; and textiles, apparel and luxury goods in the SOI. The industrials sector comprises aerospace and defense, electrical equipment, industrial conglomerates, machinery and professional services in the SOI.
| 3 | Semiannual Report | |||
FRANKLIN FOCUSED GROWTH FUND
5. The health care sector comprises health care equipment and supplies, health care providers and services, and life sciences tools and services in the SOI.
6. No longer held at period-end.
See www.franklintempletondatasources.com for additional data provider information.
| Semiannual Report |
4 | |||
FRANKLIN FOCUSED GROWTH FUND
Performance Summary as of March 31, 2018
The performance table does 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. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. Advisor Class shares are offered without sales charges.
| Share Class | Cumulative Total Return2 |
Average Annual Total Return3 |
||||||
| Advisor |
||||||||
| 6-Month
|
|
+11.68%
|
|
|
+11.68%
|
| ||
| 1-Year
|
|
+28.18%
|
|
|
+28.18%
|
| ||
| Since Inception (4/12/16)
|
|
+49.73%
|
|
|
+22.78%
|
| ||
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.
See page 6 for Performance Summary footnotes.
| 5 | Semiannual Report | |||
FRANKLIN FOCUSED GROWTH FUND
PERFORMANCE SUMMARY
Total Annual Operating Expenses4
| Share Class | With Waiver | Without Waiver | ||||||
| Advisor
|
|
1.00%
|
|
|
2.56%
|
| ||
All investments involve risks, including possible loss of principal. The market values of securities or other investments owned by the Fund will go up or down, sometimes rapidly or unpredictably. Growth stock prices reflect projections of future earnings or revenues, and can, therefore, fall dramatically if the company fails to meet those projections. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Investments in fast-growing industries such as the information technology and health care sectors (which have historically been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments. The Fund may also invest in small- and mid-capitalization companies, which can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has an expense reduction contractually guaranteed through 1/31/19. Fund investment results reflect the expense reduction; without this reduction the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
| Semiannual Report |
6 | |||
FRANKLIN FOCUSED GROWTH FUND
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) 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 table below 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 table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” 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): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
| Share Class |
Beginning Account Value |
Ending Account Value 3/31/18 |
Expenses Paid During Period |
Ending Account Value 3/31/18 |
Expenses Paid During Period 10/1/17–3/31/181,2 |
Net Annualized Expense Ratio2 | ||||||||||||
| Advisor |
$1,000 | $1,116.80 | $5.28 | $1,019.95 | $5.04 | 1.00% | ||||||||||||
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 182/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| 7 | Semiannual Report | |||
FRANKLIN CUSTODIAN FUNDS
Franklin Focused Growth Fund
| Six Months Ended March 31, 2018 |
Year Ended September 30, | |||||||||||
| (unaudited) | 2017 | 2016a | ||||||||||
| Advisor Class |
||||||||||||
| Per share operating performance |
||||||||||||
| (for a share outstanding throughout the period) |
||||||||||||
| Net asset value, beginning of period |
$13.36 | $10.93 | $10.00 | |||||||||
| Income from investment operationsb: |
||||||||||||
| Net investment income (loss)c |
(0.03 | ) | (0.02 | ) | (0.01 | ) | ||||||
| Net realized and unrealized gains (losses) |
1.59 | 2.49 | 0.94 | |||||||||
| Total from investment operations |
1.56 | 2.47 | 0.93 | |||||||||
| Less distributions from: |
||||||||||||
| Net investment income |
— | (0.01 | ) | — | ||||||||
| Net realized gains |
— | (0.03 | ) | — | ||||||||
| Total distributions |
— | (0.04 | ) | — | ||||||||
| Net asset value, end of period |
$14.92 | $13.36 | $10.93 | |||||||||
| Total returnd |
11.68 | % | 22.78 | % | 9.30 | % | ||||||
| Ratios to average net assetse |
||||||||||||
| Expenses before waiver and payments by affiliates |
2.25% | 2.31% | 4.76% | |||||||||
| Expenses net of waiver and payments by affiliates |
1.00%f | 1.00%f | 1.00% | |||||||||
| Net investment income (loss) |
(0.36)% | (0.20)% | (0.18)% | |||||||||
| Supplemental data |
||||||||||||
| Net assets, end of period (000’s) |
$3,730 | $3,341 | $2,732 | |||||||||
| Portfolio turnover rate |
7.44% | 28.48% | 7.46% | |||||||||
aFor the period April 12, 2016 (commencement of operations) to September 30, 2016.
bThe 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 repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fBenefit of expense reduction rounds to less than 0.01%.
|
The accompanying notes are an integral part of these financial statements. | Semiannual Report |
8 |
FRANKLIN CUSTODIAN FUNDS
Statement of Investments, March 31, 2018 (unaudited)
Franklin Focused Growth Fund
| Country | Shares | Value | ||||||||||
| Common Stocks 97.2% |
||||||||||||
| Aerospace & Defense 5.2% |
||||||||||||
| The Boeing Co. |
United States | 200 | $ | 65,576 | ||||||||
| Raytheon Co. |
United States | 600 | 129,492 | |||||||||
| 195,068 | ||||||||||||
| Beverages 2.4% |
||||||||||||
| Constellation Brands Inc., A |
United States | 400 | 91,168 | |||||||||
| Capital Markets 5.2% |
||||||||||||
| BlackRock Inc. |
United States | 100 | 54,172 | |||||||||
| CBOE Global Markets Inc. |
United States | 300 | 34,230 | |||||||||
| The Charles Schwab Corp. |
United States | 2,000 | 104,440 | |||||||||
| 192,842 | ||||||||||||
| Electrical Equipment 0.9% |
||||||||||||
| Rockwell Automation Inc. |
United States | 200 | 34,840 | |||||||||
| Equity Real Estate Investment Trusts (REITs) 4.2% |
||||||||||||
| American Tower Corp. |
United States | 500 | 72,670 | |||||||||
| Equinix Inc. |
United States | 200 | 83,628 | |||||||||
| 156,298 | ||||||||||||
| Food & Staples Retailing 1.8% |
||||||||||||
| Costco Wholesale Corp. |
United States | 350 | 65,951 | |||||||||
| Health Care Equipment & Supplies 3.6% |
||||||||||||
| Danaher Corp. |
United States | 700 | 68,537 | |||||||||
| a IDEXX Laboratories Inc. |
United States | 350 | 66,986 | |||||||||
| 135,523 | ||||||||||||
| Health Care Providers & Services 2.3% |
||||||||||||
| UnitedHealth Group Inc. |
United States | 400 | 85,600 | |||||||||
| Hotels, Restaurants & Leisure 0.9% |
||||||||||||
| Vail Resorts Inc. |
United States | 150 | 33,255 | |||||||||
| Industrial Conglomerates 1.8% |
||||||||||||
| 3M Co. |
United States | 300 | 65,856 | |||||||||
| Internet & Direct Marketing Retail 12.0% |
||||||||||||
| a Amazon.com Inc. |
United States | 220 | 318,415 | |||||||||
| a Booking Holdings Inc. |
United States | 20 | 41,608 | |||||||||
| a Netflix Inc. |
United States | 300 | 88,605 | |||||||||
| 448,628 | ||||||||||||
| Internet Software & Services 15.8% |
||||||||||||
| a Alibaba Group Holding Ltd., ADR |
China | 300 | 55,062 | |||||||||
| a Alphabet Inc., A |
United States | 200 | 207,428 | |||||||||
| a Dropbox Inc., A |
United States | 100 | 3,125 | |||||||||
| a Facebook Inc., A |
United States | 1,200 | 191,748 | |||||||||
| Tencent Holdings Ltd. |
China | 2,500 | 130,466 | |||||||||
| 587,829 | ||||||||||||
| IT Services 6.4% |
||||||||||||
| Visa Inc., A |
United States | 2,000 | 239,240 | |||||||||
| Life Sciences Tools & Services 2.3% |
||||||||||||
| a Mettler-Toledo International Inc. |
United States | 150 | 86,254 | |||||||||
| Machinery 2.1% |
||||||||||||
| Fortive Corp. |
United States | 1,000 | 77,520 |
| 9 |
Semiannual Report |
FRANKLIN CUSTODIAN FUNDS
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
| Country | Shares | Value | ||||||||||
| Common Stocks (continued) |
||||||||||||
| Media 1.7% |
||||||||||||
| a Charter Communications Inc., A |
United States | 200 | $ | 62,244 | ||||||||
| Oil, Gas & Consumable Fuels 1.2% |
||||||||||||
| a Concho Resources Inc. |
United States | 300 | 45,099 | |||||||||
| Personal Products 1.3% |
||||||||||||
| Estee Lauder Cos. Inc., A |
United States | 330 | 49,408 | |||||||||
| Professional Services 1.0% |
||||||||||||
| a Verisk Analytics Inc. |
United States | 350 | 36,400 | |||||||||
| Semiconductors & Semiconductor Equipment 5.8% |
||||||||||||
| Analog Devices Inc. |
United States | 800 | 72,904 | |||||||||
| NVIDIA Corp. |
United States | 300 | 69,477 | |||||||||
| Xilinx Inc. |
United States | 1,000 | 72,240 | |||||||||
| 214,621 | ||||||||||||
| Software 18.4% |
||||||||||||
| Activision Blizzard Inc. |
United States | 1,200 | 80,952 | |||||||||
| a Adobe Systems Inc. |
United States | 800 | 172,864 | |||||||||
| Microsoft Corp. |
United States | 2,000 | 182,540 | |||||||||
| a Salesforce.com Inc. |
United States | 1,200 | 139,560 | |||||||||
| a ServiceNow Inc. |
United States | 650 | 107,542 | |||||||||
| a Zscaler Inc. |
United States | 100 | 2,807 | |||||||||
| 686,265 | ||||||||||||
| Textiles, Apparel & Luxury Goods 0.9% |
||||||||||||
| NIKE Inc., B |
United States | 500 | 33,220 | |||||||||
| Total Common Stocks (Cost $2,340,487) |
3,623,129 | |||||||||||
| Short Term Investments (Cost $119,997) 3.2% |
||||||||||||
| Money Market Funds 3.2% |
||||||||||||
| b,c Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
United States | 119,997 | 119,997 | |||||||||
| Total Investments (Cost $2,460,484) 100.4% |
3,743,126 | |||||||||||
| Other Assets, less Liabilities (0.4)% |
(13,271 | ) | ||||||||||
| Net Assets 100.0% |
$ | 3,729,855 | ||||||||||
See Abbreviations on page 19.
aNon-income producing.
bSee Note 3(e) regarding investments in affiliated management investment companies.
cThe rate shown is the annualized seven-day effective yield at period end.
| The accompanying notes are an integral part of these financial statements. | Semiannual Report | 10 | |||||
FRANKLIN CUSTODIAN FUNDS
Statement of Assets and Liabilities
March 31, 2018 (unaudited)
Franklin Focused Growth Fund
| Assets: |
||||
| Investments in securities: |
||||
| Cost - Unaffiliated issuers |
$2,340,487 | |||
| Cost - Non-controlled affiliates (Note 3e) |
119,997 | |||
| Value - Unaffiliated issuers |
$3,623,129 | |||
| Value - Non-controlled affiliates (Note 3e) |
119,997 | |||
| Receivables: |
||||
| Investment securities sold |
4,789 | |||
| Dividends |
840 | |||
| Affiliates |
7,138 | |||
| Other assets |
3 | |||
| Total assets |
3,755,896 | |||
| Liabilities: |
||||
| Payables: |
||||
| Investment securities purchased |
5,400 | |||
| Reports to shareholders. |
2,229 | |||
| Professional fees |
16,439 | |||
| Accrued expenses and other liabilities |
1,973 | |||
| Total liabilities |
26,041 | |||
| Net assets, at value |
$3,729,855 | |||
| Net assets consist of: |
||||
| Paid-in capital |
$2,495,234 | |||
| Distributions in excess of net investment income |
(12,534 | ) | ||
| Net unrealized appreciation (depreciation) |
1,282,642 | |||
| Accumulated net realized gain (loss) |
(35,487 | ) | ||
| Net assets, at value |
$3,729,855 | |||
| Shares outstanding |
250,000 | |||
| Net asset value and maximum offering price per share |
$14.92 | |||
| 11 | Semiannual Report | | The accompanying notes are an integral part of these financial statements. | ||
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statement of Operations
for the six months ended March 31, 2018 (unaudited)
Franklin Focused Growth Fund
| Investment income: |
||||
| Dividends: |
||||
| Unaffiliated issuers |
$ | 11,174 | ||
| Non-controlled affiliates (Note 3e) |
384 | |||
|
|
|
|||
| Total investment income |
11,558 | |||
|
|
|
|||
| Expenses: |
||||
| Management fees (Note 3a) |
15,367 | |||
| Transfer agent fees (Note 3d) |
304 | |||
| Custodian fees (Note 4) |
28 | |||
| Reports to shareholders |
3,842 | |||
| Professional fees |
18,822 | |||
| Other |
2,316 | |||
| Total expenses |
40,679 | |||
|
|
|
|||
| Expense reductions (Note 4) |
(8 | ) | ||
| Expenses waived/paid by affiliates (Note 3f) |
(22,587 | ) | ||
|
|
|
|||
| Net expenses |
18,084 | |||
|
|
|
|||
| Net investment income (loss) |
(6,526 | ) | ||
|
|
|
|||
| Realized and unrealized gains (losses): |
||||
| Net realized gain (loss) from: |
||||
| Investments: |
||||
| Unaffiliated issuers |
(19,971 | ) | ||
|
|
|
|||
| Net change in unrealized appreciation (depreciation) on: |
||||
| Investments: |
||||
| Unaffiliated issuers |
415,827 | |||
|
|
|
|||
| Net realized and unrealized gain (loss) |
395,856 | |||
|
|
|
|||
| Net increase (decrease) in net assets resulting from operations |
$ | 389,330 | ||
|
|
|
|||
|
The accompanying notes are an integral part of these financial statements. | Semiannual Report |
12 |
FRANKLIN CUSTODIAN FUNDS
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin Focused Growth Fund
| Six Months Ended March 31, 2018 (unaudited) |
Year Ended September 30, 2017 |
|||||||||||||||||||
| Increase (decrease) in net assets: |
||||||||||||||||||||
| Operations: |
||||||||||||||||||||
| Net investment income (loss) |
$ | (6,526 | ) | $ | (6,004 | ) | ||||||||||||||
| Net realized gain (loss) |
(19,971 | ) | (15,522 | ) | ||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
415,827 | 639,454 | ||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
389,330 | 617,928 | ||||||||||||||||||
| Distributions to shareholders from: |
||||||||||||||||||||
| Net investment income |
— | (2,575 | ) | |||||||||||||||||
| Net realized gains |
— | (6,900 | ) | |||||||||||||||||
| Total distributions to shareholders |
— | (9,475 | ) | |||||||||||||||||
| Net increase (decrease) in net assets |
389,330 | 608,453 | ||||||||||||||||||
| Net assets: |
||||||||||||||||||||
| Beginning of period |
3,340,525 | 2,732,072 | ||||||||||||||||||
| End of period |
$ | 3,729,855 | $ | 3,340,525 | ||||||||||||||||
| Distributions in excess of net investment income included in net assets: |
||||||||||||||||||||
| End of period |
$ | (12,534 | ) | $ | (6,008 | ) | ||||||||||||||
| 13 | Semiannual Report | The accompanying notes are an integral part of these financial statements. |
FRANKLIN CUSTODIAN FUNDS
Notes to Financial Statements (unaudited)
Franklin Focused Growth Fund
|
Semiannual Report |
14 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
| 15 |
Semiannual Report |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
2. Shares of Beneficial Interest
At March 31, 2018, there were an unlimited number of shares authorized (without par value). During the period ended March 31, 2018 and year ended September 30, 2017, there were no transactions of the Fund’s shares.
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 Advisers, Inc. (Advisers) | Investment manager | |
| Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
| Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
| Franklin Templeton Investor Services, LLC (Investor Services) | Transfer agent |
|
Semiannual Report |
16 |
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
3. Transactions with Affiliates (continued)
a. Management Fees
The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:
| Annualized Fee Rate | Net Assets | |
| 0.850% |
Up to and including $500 million | |
| 0.800% |
Over $500 million, up to and including $1 billion | |
| 0.750% |
Over $1 billion, up to and including $3 billion | |
| 0.730% |
Over $3 billion, up to and including $5 billion | |
| 0.700% |
In excess of $5 billion |
For the period ended March 31, 2018, the annualized gross effective investment management fee rate was 0.850% of the Fund’s average daily net assets.
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and 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 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 plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| Class A |
0.25% | |
| Class C |
1.00% | |
| Class R |
0.50% |
d. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the period ended March 31, 2018, the Fund paid transfer agent fees of $304, which were retained by Investor Services.
| 17 | Semiannual Report | |||
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
e. Investments in Affiliated Management Investment Companies
The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended March 31, 2018, the Fund held investments in affiliated management investment companies as follows:
| Number of Shares Held at Beginning of Period |
Gross Additions |
Gross Reductions |
Number of Shares Held at End of Period |
Value at End of |
Dividend Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||
| Non-Controlled Affiliates |
||||||||||||||||||||||||||
| Institutional Fiduciary Trust Money Market Portfolio, 1.24% |
25,993 | 258,053 | (164,049 | ) | 119,997 | $ | 119,997 | $384 | $ — | $ — | ||||||||||||||||
f. Waiver and Expense Reimbursements
Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for each class of the Fund do not exceed 1.00% based on the average net assets of each class (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until January 31, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end.
g. Other Affiliated Transactions
At March 31, 2018, Franklin Resources Inc. owned 100% of the Fund’s outstanding shares. Investment activities of this shareholder could have a material impact on the Fund.
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 period ended March 31, 2018, the custodian fees were reduced as noted in the Statement of Operations.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At September 30, 2017, the Fund had short-term capital loss carryforwards of $15,516.
For tax purposes, the Fund may elect to defer any portion of a late-year ordinary loss to the first day of the following fiscal year. At September 30, 2017, the Fund deferred late-year ordinary losses of $6,009.
At March 31, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| Cost of investments |
$ | 2,460,484 | ||
| Unrealized appreciation |
$ | 1,287,929 | ||
| Unrealized depreciation |
(5,287 | ) | ||
| Net unrealized appreciation (depreciation) |
$ | 1,282,642 | ||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions.
| Semiannual Report |
18 | |||
FRANKLIN CUSTODIAN FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Focused Growth Fund (continued)
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the period ended March 31, 2018, aggregated $261,785 and $369,037, respectively.
7. Credit Facility
The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended March 31, 2018, the Fund did not use the Global Credit Facility.
8. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:
| • | Level 1 – quoted prices in active markets for identical financial instruments |
| • | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At March 31, 2018, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statement of Investments.
9. Subsequent Events
The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
| Selected Portfolio | ||||||||
| ADR | American Depository Receipt | |||||||
|
19 |
Semiannual Report |
FRANKLIN FOCUSED GROWTH FUND
Special Meeting of Shareholders
MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017 AND DECEMBER 29, 2017
(UNAUDITED)
A Special Meeting of Shareholders of Franklin Custodian Funds was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017 and December 29, 2017. The purpose of the meeting was to elect Trustees of Franklin Custodian Funds and to vote to approve an amended fundamental investment restriction regarding investments in commodities for the Fund. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of Franklin Custodian Funds: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, Larry D. Thompson, and John B. Wilson; and (ii) the proposal to approve the amended fundamental investment restriction regarding investments in commodities was approved by shareholders of the Fund. No other business was transacted at the meeting.
In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.
The results of the voting at the meeting are as follows:
Proposal 1. To elect a Board of Trustees:
| Name | For | Withheld | ||
| Harris J. Ashton | 20,620,255,266.00 | 682,475,910.00 | ||
| Terrence J. Checki | 20,622,617,162.00 | 680,114,004.00 | ||
| Mary C. Choksi | 20,641,972,272.00 | 660,758,903.00 | ||
| Edith E. Holiday | 20,643,191,970.00 | 659,539,208.00 | ||
| Gregory E. Johnson | 20,640,028,777.00 | 662,702,399.00 | ||
| Rupert H. Johnson, Jr. | 20,623,629,983.00 | 679,101,196.00 | ||
| J. Michael Luttig | 20,638,743,410.00 | 663,987,768.00 | ||
| Larry D. Thompson | 20,634,644,439.00 | 668,086,738.00 | ||
| John B. Wilson | 20,638,176,920.00 | 661,053,794.00 | ||
Total Trust Shares Outstanding*: 36,447,693,102
* As of the record date.
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FRANKLIN FOCUSED GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
| Proposal 2. | To approve an amended fundamental investment restriction regarding investments in commodities: |
| Shares | ||||
|
|
||||
| For |
250,000 | |||
| Against |
0 | |||
| Abstain |
0 | |||
| Broker Non-Votes |
0 | |||
| Total Fund Shares Voted |
250,000 | |||
| Total Fund Shares Outstanding* |
250,000 | |||
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FRANKLIN CUSTODIAN FUNDS
FRANKLIN FOCUSED GROWTH FUND
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FRANKLIN CUSTODIAN FUNDS
FRANKLIN FOCUSED GROWTH FUND
SHAREHOLDER INFORMATION
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FRANKLIN CUSTODIAN FUNDS
FRANKLIN FOCUSED GROWTH FUND
SHAREHOLDER INFORMATION
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| 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 John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.
| Item 4. | Principal Accountant Fees and Services. N/A |
| 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 Matthew T. Hinkle, Chief Executive Officer – Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer – Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting 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 CUSTODIAN FUNDS
| By | /s/ MATTHEW T. HINKLE | |
| Matthew T. Hinkle | ||
| Chief Executive Officer – Finance and Administration | ||
| Date | May 24, 2018 | |
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/ MATTHEW T. HINKLE | |
| Matthew T. Hinkle | ||
| Chief Executive Officer – Finance and Administration | ||
| Date | May 24, 2018 | |
| By | /s/ GASTON GARDEY | |
| Gaston Gardey | ||
| Chief Financial Officer and Chief Accounting Officer | ||
| Date | May 24, 2018 | |