N-CSRS

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 811-04986

Franklin Investors Securities Trust

(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: 10/31

Date of reporting period: 4/30/17

Item 1. Reports to Stockholders.

Franklin Templeton Investments

Gain From Our Perspective^®

At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.

Dear Shareholder:

During the six months ended April 30, 2017, mostly upbeat economic data, improved U.S. corporate earnings and supportive global monetary policies were positives for U.S. securities markets. After maintaining its target interest rate in the 0.25%–0.50% range for nearly a year, the U.S. Federal Reserve (Fed) increased its target range for the federal funds rate twice, in December 2016 and March 2017, to 0.75%–1.00%, noting improved employment and hints of higher inflation. The 10-year U.S. Treasury yield began the period at 1.84% and ended the period at 2.29%. In this environment, U.S. stocks, as measured by the Standard & Poor’s^® 500 Index, generated a +13.32% total return for the six-month period.¹ Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, had a -0.67% total return.¹

In all economic environments, we are committed to our long-term perspective and disciplined investment approach as we conduct a diligent, fundamental analysis of securities with a regular emphasis on investment risk management.

We believe active, professional investment management serves investors well. We also recognize the important role of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.

In addition, Franklin Investors Securities Trust’s semiannual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.

We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your future investment needs.

Sincerely,

Rupert H. Johnson, Jr.

Chairman

Franklin Investors Securities Trust

This letter reflects our analysis and opinions as of April 30, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

 Not FDIC Insured  |  May Lose Value  |   No Bank Guarantee 

franklintempleton.com Not part of the semiannual report         1

Contents

Semiannual Report
Economic and Market Overview	3
Franklin Balanced Fund	4
Franklin Convertible Securities Fund	12
Franklin Equity Income Fund	18
Franklin Real Return Fund	25
Financial Highlights and Statements of Investments	30
Financial Statements	68
Notes to Financial Statements	73
Shareholder Information	91

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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Semiannual Report

Economic and Market Overview

U.S. economic growth decelerated in 2017’s first quarter, largely due to declines in private inventory investment and government spending. However, an increase in exports and personal consumption, as well as residential and nonresidential fixed investment aided growth. The manufacturing sector generally expanded and the services sector also continued to grow. The unemployment rate decreased from 4.8% in October 2016 to 4.4% at period-end.¹ Monthly retail sales were volatile, but grew for most of the period. Annual inflation, as measured by the Consumer Price Index, increased from 1.6% to 2.2% during the period.

At its December meeting, the U.S. Federal Reserve (Fed) raised its target range for the federal funds rate from 0.25%–0.50% to 0.50%–0.75%, as policymakers cited improved labor market conditions and higher inflation. The Fed kept its interest rate unchanged at its February meeting, but incoming economic data, along with statements by Fed officials in late February and early March, heightened many investors’ expectations for a March interest-rate hike. The Fed, at its March meeting, made the widely anticipated increase in its federal funds target rate to 0.75%–1.00%.

U.S. equity markets rose during the period, benefiting from mostly upbeat economic data, better U.S. corporate earnings and signs of improvement in the Chinese and European economies. The European Central Bank’s December announcement to extend its quantitative easing program beyond March 2017, investor optimism arising from pro-growth and pro-business policy plans in the U.S. and the results of the first round of presidential elections in France also helped U.S. equities. However, investor concerns about the terms of the U.K.’s exit from the European Union (also known as “Brexit”) and geopolitical tensions in the Middle East and the Korean peninsula weighed on market sentiment. The broad U.S. stock market, as measured by the Standard & Poor’s 500 Index, generated a +13.32% total return for the six-month period.²

The foregoing information reflects our analysis and opinions as of April 30, 2017. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

1. Source: Bureau of Labor Statistics.

2. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

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Franklin Balanced Fund

This semiannual report for Franklin Balanced Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks both income and capital appreciation by investing in a diversified portfolio of stocks (substantially dividend paying), convertible securities and debt securities. The Fund normally invests at least 25% of its total assets in equity securities, primarily common and preferred stock, and at least 25% of its total assets in debt securities, including bonds, notes, debentures and money market securities.

Portfolio Composition*

4/30/17

	% of Total Net Assets
Stocks	57.2%
Common Stocks	44.2%
Equity-Linked Securities	8.1%
Convertible Preferred Stocks	3.7%
Management Investment Companies	1.0%
Preferred Stocks	0.2%
Options Purchased	0.0%**
Bonds	32.5%
Corporate Bonds	32.0%
Convertible Bonds	0.5%
Short-Term Investments & Other Net Assets	10.3%

^*Percentages reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors. The composition may not match the SOI.

^**Rounds to less than 0.1% of net assets.

Performance Overview

For the six months under review, the Fund’s Class A shares delivered a cumulative total return of +6.24%. In comparison, the Fund’s equity benchmark, the Standard & Poor’s 500 Index (S&P 500^®), which is a broad measure of U.S. stock performance, generated a +13.32% total return.¹ The Fund’s fixed income benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, which tracks the U.S. investment-grade, taxable bond market, had a -0.67% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 9.

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.

Investment Strategy

We apply a bottom-up approach to investing in individual securities. We will assess the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio, profit margins and liquidation value. In determining an optimal mix of equity and fixed income investments for the Fund, we assess changing economic, market and industry conditions. The Fund seeks income by investing in a combination of corporate, agency and government bonds issued in the U.S. and other countries, as well as common stocks and convertible securities. The Fund seeks capital appreciation by investing in equity securities and convertible securities of companies from a variety of industries. For purposes of pursuing the Fund’s investment goal, we may enter into various equity-related transactions involving derivative instruments. We may also invest in equity-linked notes, which are hybrid derivative-type instruments specially designed to combine the characteristics of one or more reference securities (usually a single stock, a stock index or a basket of stocks) and a related equity derivative, such as a put or call option.

What is an equity-linked note?

An equity-linked note is a derivative instrument whose return is determined by the performance of a single equity security, a basket of equity securities, or an equity index. The purchase of equity-linked notes may involve investment in related equity derivatives, such as put and call options.

Manager’s Discussion

Consistent with the Fund’s long-term strategy of investing across asset classes to seek to generate attractive income, while seeking opportunities for capital appreciation, performance was supported by healthy diversification and positive overall contributions from the Fund’s equity and fixed income

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.

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 35.

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What are put and call options?

A put option is a contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. Put options are most commonly used to protect against the decline of a stock price below a certain price. Conversely, a call option gives the holder the right to buy shares at a specified price within a specified time, regardless of the price in the future before the expiration date. If the stock price rises, the holder of the call option has the right to buy at the agreed-upon price, which could be lower.

Distributions*

11/1/16–4/30/17

	Distributions per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class
November		3.00		2.27		2.75		3.34		3.24
December		3.00		2.28		2.75		3.36		3.24
January		3.00		2.28		2.75		3.36		3.24
February		3.00		2.28		2.75		3.36		3.24
March		3.00		2.26		2.75		3.33		3.24
April		3.00		2.26		2.75		3.33		3.24
Total		18.00		13.63		16.50		20.08		19.44

^*The distribution amount is the sum of all distributions to shareholders for the period shown and includes only estimated tax-basis net investment income. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

positions. During the six months under review, our actions and movements in equity and fixed income markets resulted in a modest decline in equity holdings from 63.2% to 57.2% of total net assets, while fixed income holdings were relatively flat at 32.5%. Our cash position rose from 4.1% to 10.3% of total net assets. The flexibility to use market volatility to invest in different asset classes remains a core strategy of the Fund.

In the months following the U.S. presidential election, equity markets have performed well. The prospects of higher interest rates, an accelerating economy that could benefit from less regulation, the possibility of a large infrastructure bill and a focus on job creation all contributed to investor optimism and pushed equity values higher.

Among equities, the largest contributor during the period under review was the financials sector as the Federal Reserve (Fed) raised interest rates in December and inflation expectations rose in the fourth quarter. The Fund began to increase its weightings across the sector in early 2016 as we believed that fears of slower growth and deteriorating credit concerns would

dissipate and that financial companies would continue to grow book value. Our holdings in banking companies Wells Fargo, JPMorgan Chase and Bank of America were notable contributors to performance.² Strong performance at Wells Fargo during the period was driven by mortgage-origination income, while JPMorgan reported strong performance helped by results within their fixed income currencies and commodities business and lower legal costs. Bank of America reported increased total loans, credit card spending, assets under management, and client fees across divisions. Earnings at all three companies benefited from improved net interest income, which resulted from the increase in long-term interest rates, while investor optimism about accelerating economic growth also supported share gains.

Top Five Equity Holdings

4/30/17

Company Sector/Industry	% of Total Net Assets
Microsoft Corp. Information Technology	2.0%
Texas Instruments Information Technology	1.8%
Wells Fargo & Co. Financials	1.8%
General Electric Co. Industrials	1.7%
Raytheon Co. Industrials	1.6%

The industrials sector contributed to Fund performance as companies benefited from anticipated prospects of an improvement in the economy, the potential for a large infrastructure spending measure and increased focus by the Trump administration on bringing manufacturing jobs to the U.S. All of the Fund’s industrials sector holdings benefited performance, led by Union Pacific. Union Pacific reported higher first quarter 2017 revenue resulting from transport volume increases in coal, agricultural products, and industrial products. Waste management company Republic Services grew revenue and earnings as it transitioned its annual contract price adjustments formerly based on the consumer price index to more favorable methods and advanced productivity and cost saving initiatives. Raytheon also fared well on the prospects of increased U.S. government defense spending.

In recent years, the Fund has seen an increasing number of opportunities in the information technology (IT) sector, which saw solid gains during the period. Microsoft was the largest

2. Banking companies are in financials in the equity section of the SOI.

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contributor as it posted two impressive quarters within the period, showing continued strong execution in the shift of enterprise customers to their Office 365 platform and robust growth in their cloud-computing solution Azure. Oracle advanced in the wake of the company’s inline quarterly revenue results and above-consensus earnings-per-share results.³ The company saw modest outperformance in its higher margin software and cloud segments, but this was offset somewhat by signs of weakness in its hardware business. Semiconductor manufacturer Texas Instruments continued to increase its market share while serving a broad array of end markets, and has lately shown improving profitability and financial metrics, underscored by better-than-expected results during the fourth-quarter 2016 earnings season.

All of our materials sector investments advanced on signs of stronger global demand that has helped diminish inventory overhangs and supply surpluses in key commodity markets, and on expectations of increased infrastructure spending under the new U.S. presidential administration. The sector was further supported by the inverse pricing correlation of a weaker trade-weighted U.S. dollar (which makes commodities less expensive for non-U.S. buyers) and ongoing cost-containment efforts. Contributions from the sector were led by strong results from chemical manufacturers Dow Chemical and BASF. Dow has shown consistently promising results in recent years and their pending merger with DuPont could drive additional value over time. Similarly, BASF continued to show healthy cash flow generation and a diversified portfolio across products and geographies, which enabled favorable product development. Despite lower market prices for phosphate and potash and lower year-over-year quarterly revenue during the period, the share price of Mosaic, an agricultural fertilizer producer, increased overall, helped by lower phosphate raw materials prices and effective expense management.

Within consumer staples, Kimberly-Clark and Philip Morris International also aided results. Kimberly-Clark, an American multinational personal goods manufacturer that produces mostly paper-based consumer goods, was driven by stronger-than expected earnings aided by effective cost savings, an equity valuation that was below its industry peer group average, and merger speculation among food and household product companies in recent months. Global tobacco producer Philip Morris International reported strong sales with favorable pricing in its legacy products, in addition to incremental returns from newer product platforms.

3. Not held at period-end.

Other individual contributors included Lowe’s in the consumer discretionary sector. Lowe’s reported a solid fourth quarter of 2016, with strong sales and good momentum heading into 2017, according to our analysis. Amgen in the health care sector benefited from positive data on its cholesterol drug as well as a favorable outcome in litigation over one of its other drugs.³ AstraZeneca rebounded after it posted better-than-expected earnings, and the company continued to be a highly successful sought-after partner for several of its pharmaceutical peers due to its focused developmental pipeline. In telecommunication services, Rogers Communications’ wireless business continued to perform well, with its cable business improving as investors become less concerned about business operations during the period prior to its new chief executive officer taking charge.

Although all equity sectors contributed to performance, the utilities, telecommunication services, real estate, energy and health care sectors contributed less to results. Individual detractors from performance included Verizon Communications, which reported weaker-than-anticipated results driven by increased competition within its wireless business. In the health care sector, Teva Pharmaceutical Industries had disappointing quarterly earnings and negative outcomes in regard to drug patent challenges that hurt its share price. Along with the wider energy sector, Occidental Petroleum was affected by rising U.S. onshore oil-rig counts and elevated global crude oil inventory levels pressured energy commodities and numerous related equities outside of the oilfield services industry. In addition to these factors, Occidental also suffered from near-term production disruptions.

Other individual equity positions that detracted from performance included QUALCOMM and Target. Computer chip manufacturer QUALCOMM in the IT sector was affected by Apple’s lawsuit in January regarding royalties previously paid by Apple’s mobile phone chip suppliers, which has significantly reduced QUALCOMM’s revenue. This also affected QUALCOMM’s 2017 earnings guidance, although the company’s earnings continued to increase during the period.³ In the consumer discretionary sector, Target announced that strong holiday season results, which started off with solid Black Friday sales, did not continue through year-end 2016. Target also offered weak guidance for 2017 that was emblematic of many brick-and-mortar retailers’ struggles in competing with online competitors.

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The Fund used derivative instruments during the period, such as equity and equity index options. The goal of these instruments is to enhance Fund returns, to mitigate volatility, or to more efficiently enter and exit stock positions at prices the Fund deems attractive. These positions did not have a material impact on performance. We were comfortable with the Fund’s rising cash position during the period, as we believed it helped reduce volatility and enabled us to invest opportunistically at times when the markets retreated.

What many investors at the outset of 2017 thought was supposed to be the year of the bear market in bonds has thus far turned out to be just the opposite. The decline in longer term yields was largely a tailwind for corporate fixed income securities, which ended the period in positive territory despite flat results in March. Investors continued to migrate into higher yielding corporate bonds even as their yield spreads versus Treasuries have narrowed as prices reached recent highs. According to our analysis, high-yield corporate debt default rates continued to decline during the period as liquidity and access to capital remained favorable amid robust new issuance, particularly in March as issuers rushed to get ahead of the Fed’s latest interest-rate hike.

The Fund’s fixed income holdings contributed to performance, particularly in the financials sector, led by banks JPMorgan Chase and Bank of America, but also including Citigroup, Morgan Stanley and Wells Fargo. These companies are among several examples of how the Fund invests across the capital structure of companies we view positively. The Fund’s fixed income holdings in energy companies all added to Fund performance.⁴ Most of the Fund’s energy bonds fared better than related equities as many investors maintained confidence in these companies’ ability to pay down their long-term debt despite a lack of crude oil and natural gas pricing power so far in 2017. Moreover, green shoots of pricing power have emerged on the services side of the energy value chain, which has benefited Weatherford International in particular. Weatherford is also an example of the many situations where the Fund has worked closely with a company to help them solve potential financing needs such as reducing debt and extending maturities. These situations can lead to improved financial flexibility for companies, while allowing the Fund to participate in securities that have an attractive income and total return profile. For the six-month period, a more constructive commodity price environment that served as a tailwind for the

industry as a whole and the decision by the Organization of the Petroleum Exporting Countries to remove production from the market in November provided catalysts that helped bond prices.

Within the telecommunication services sector, Sprint bonds performed well as confidence in its operational turnaround continued to increase, bolstered by positive earnings performance in the September and December quarters. In addition, there was increased speculation that Sprint would be involved in an industry consolidation. Our positions in DISH DBS, a global provider of satellite communications, and broadcaster Sirius XM Radio, both in the consumer discretionary sector, also performed well.

Individual fixed income health care positions that significantly contributed to Fund performance included hospital and health care center operators like Community Health Systems, Tenet Healthcare and Hospital Corporation of America (HCA), which outperformed as hospital names rallied after concerns about the potential repeal of the Affordable Care Act receded. Community Health reported much better-than-expected fourth-quarter earnings and announced several asset sales at robust deleveraging multiples, leading to significant outperformance relative to the broader market. Tenet’s USPI and Conifer divisions both performed well.⁵ HCA expected increased first-quarter facility revenue to increase based on an increase in the total number of “same facility” admissions.

Top Five Fixed Income Holdings

4/30/17

Company Sector/Industry	% of Total Net Assets
Morgan Stanley Financials	1.2%
JPMorgan Chase & Co. Financials	1.1%
Weatherford International Ltd. Energy	0.9%
Kraft Heinz Foods Co. Consumer Staples	0.8%
Bank of America Corp. Financials	0.8%

Although all fixed income sectors contributed to Fund performance, among individual companies, some longer duration securities showed negative performance given the

4. Energy companies are in energy and utilities in the fixed income section of the SOI.

5. New position during the period.

See www.franklintempletondatasources.com for additional data provider information.

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backup in interest rates during the period, including Verizon Communications.³ In addition, some consumer and food-related issues did not have enough spread tightening to offset the backup in rates and posted slightly negative returns during the period. Kraft Heinz Foods, Mondelez International, Tyson Foods and Anheuser-Busch InBev Finance are all in this category.

Thank you for your continued participation in Franklin Balanced Fund. We look forward to serving your future investment needs.

	Edward D. Perks, CFA
	Alan E. Muschott, CFA Shawn Lyons, CFA Todd Brighton, CFA
	Portfolio Management Team

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

CFA^® is a trademark owned by CFA Institute.

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FRANKLIN BALANCED FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include 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	+6.24%	+0.14%
1-Year	+10.17%	+3.80%
5-Year	+43.14%	+6.16%
10-Year	+65.87%	+4.57%
Advisor
6-Month	+6.44%	+6.44%
1-Year	+10.50%	+10.50%
5-Year	+45.20%	+7.74%
10-Year	+70.96%	+5.51%

Share Class	Distribution Rate4	30-Day Standardized Yield5
		(with waiver)		(without waiver)
A	2.82%		2.01%	1.98%
Advisor	3.23%		2.38%	2.35%

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 10 for Performance Summary footnotes.

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PERFORMANCE SUMMARY

Net Asset Value

Share Class (Symbol)	4/30/17		10/31/16		Change
A (FBLAX)		$12.02		$11.65		+$0.37
C (FBMCX)		$11.91		$11.55		+$0.36
R (N/A)		$12.05		$11.67		+$0.38
R6 (FBFRX)		$12.04		$11.67		+$0.37
Advisor (FBFZX)		$12.04		$11.67		+$0.37
Distributions (11/1/16–4/30/17)
Share Class	Net Investment Income		Long-Term Capital Gain		Total
A		$0.1800		$0.1692		$0.3492
C		$0.1363		$0.1692		$0.3055
R		$0.1650		$0.1692		$0.3342
R6		$0.2008		$0.1692		$0.3700
Advisor		$0.1944		$0.1692		$0.3636

Total Annual Operating Expenses6
Share Class	With Waiver			Without Waiver
A		1.02	%		1.03%
Advisor		0.77	%		0.78%

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. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. 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 2/28/18. Fund investment results reflect the fee waiver; 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. Distribution rate is based on an annualization of the respective class’s April dividend and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

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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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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,062.40	$5.06	$1,019.89	$4.96	0.99%
C	$1,000	$1,059.00	$8.88	$1,016.17	$8.70	1.74%
R	$1,000	$1,061.80	$6.34	$1,018.65	$6.21	1.24%
R6	$1,000	$1,065.00	$3.28	$1,021.62	$3.21	0.64%
Advisor	$1,000	$1,064.40	$3.79	$1,021.12	$3.71	0.74%

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 181/365 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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Franklin Convertible Securities Fund

This semiannual report for Franklin Convertible Securities Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks to maximize total return, consistent with reasonable risk, by seeking to optimize capital appreciation and high current income under varying market conditions and investing at least 80% of its net assets in convertible securities.

Portfolio Composition

Based on Total Net Assets as of 4/30/17

Performance Overview

For the six months under review, the Fund’s Class A shares delivered a +8.72% cumulative total return. In comparison, the Fund’s benchmark, the BofA Merrill Lynch (BofAML) All Total Return Alternatives U.S. Convertibles Index, which tracks the domestic convertible securities market, generated a +8.77% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 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.

Investment Strategy

When choosing convertible securities for the Fund, we attempt to maintain a balance in the portfolio between the equity and debt characteristics of convertible securities with an emphasis

on the equity features. We also consider the company’s long-term earnings, asset value and cash flow potential. Some of the convertible securities in which the Fund may invest have been structured to provide enhanced yield, increased equity exposure or enhanced downside protection. These securities typically provide a benefit to the issuer in exchange for the enhanced features, such as a conversion premium that is paid by the Fund. We may invest in convertible securities of companies of any capitalization size, but we generally seek to make the portfolio representative of the entire convertible securities market.

Manager’s Discussion

All the sectors the Fund invested in rose in value during the six months under review and supported performance. The information technology (IT), industrials and consumer discretionary sectors contributed most to Fund performance during the period. Within IT, the Fund’s holdings of convertible bonds issued by semiconductor processing systems manufacturer Novellus Systems (now owned by LAM Research), semiconductor manufacturer Micron Technology and interactive entertainment provider Take-Two Interactive Software aided performance. LAM Research benefited from a strong semiconductor environment, leading to increased demand for capital equipment. Flash memory chip manufacturers are converting to vertical chip architectures, which require more of LAM’s etch and deposition tools relative to prior versions. Large foundry customers like Taiwan Semiconductor Manufacturing are developing new leading-edge logic devices, a capital-intensive process.² These factors have allowed LAM to grow at roughly twice the pace of the broader semiconductor equipment market, in our analysis. Micron’s shares rose amid firm pricing in both the dynamic random access memory and NAND flash memory markets. Pricing was strong due to constrained supply growth and solid demand from the personal computer, server and mobile phone markets, relative to expectations. In addition, Micron made good headway toward improving its 3-D NAND 64-layer product. Micron also reported significant upside to revenue and earnings-per-share expectations when it reported its February fiscal quarter. Take-Two’s share price increased significantly during the period, largely driven by a strong holiday season,

1. Source: BofA Merrill Lynch.

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. Not a Fund holding.

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 46.

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continued growth in user engagement, and the successful launch of a highly anticipated title. In its most recent earnings call, management announced that the anticipated title Mafia III broke the company’s first-week sales record. Mafia III, along with strong user engagement in Grand Theft Auto Online and NBA 2K17, combined for an above expectations holiday season that achieved impressive growth in total sales.

Top 10 Holdings

4/30/17

Company Sector/Industry	% of Total Net Assets
Liberty Media Corp. Consumer Discretionary	2.8%
Microchip Technology Inc. Information Technology	2.4%
Micron Technology Inc. Information Technology	2.2%
Novellus Systems Inc. Information Technology	2.2%
Mandatory Exchangeable Trust Information Technology	2.2%
The Priceline Group Inc. Consumer Discretionary	2.2%
Dish Network Corp. Consumer Discretionary	2.2%
Post Holdings Inc. Consumer Staples	2.1%
T-Mobile U.S. Inc. Telecommunication Services	2.1%
Rexnord Corp. Industrials	2.0%

In industrials, Arconic, a lightweight metals engineering and manufacturing company, and Stanley Black & Decker, a manufacturer of hand and power tools and electronic security systems, contributed to performance. Arconic, which separated from Alcoa² at the start of the period, makes aluminum products for the aerospace, auto and other industries. Restructuring contributed to an operating loss in 2016’s last quarter, but better revenue and cost controls improved 2017’s first quarter. Shareholder activism leading to the replacement of Arconic’s chief executive officer (CEO) in April and a proxy vote in May about adding board members have investors watching closely. Stanley Black & Decker experienced increased sales helped by its acquisition of the Craftsman brand from Sears² and the tools business of Newell Brands. Stanley also sold its struggling mechanical security business and increased its 2017 earnings guidance.

In the consumer discretionary sector, our convertibles in media company Liberty Interactive benefited performance. The

convertibles are exchangeable for common stock of Charter Communications, which provides TV, Internet and voice broadband communication services. The company benefited from strong growth in customer relationships, revenue and earnings that was helped by a number of acquisitions last year.

Elsewhere, the Fund’s positions in wireless telecommunications company T-Mobile U.S. contributed to performance in the telecommunication services sector, as did regional bank Wintrust Financial in the financials sector. T-Mobile has continued to gain market share, and the company’s shares were also boosted by speculation about potential merger-and-acquisition activity as the broadcaster auction came to a close at the end of April and would allow carriers like T-Mobile to start talking to one another without going against auction rules. Wintrust benefited from growth in loans, deposits and mortgage banking, as well as extremely good credit quality. In addition, rising short-term interest rates have helped most bank stock prices because investors believe that net interest margins will expand if short-term interest rates continue to rise. Corporate tax reform, if it happens, would also likely benefit bank stocks.

In contrast, several individual holdings detracted from the Fund’s absolute performance, including Frontier Communications in the telecommunication services sector, Palo Alto Networks in the information technology sector, and Teva Pharmaceutical Industries, Depomed and Novavax in the health care sector. Telecommunications company Frontier continued to have difficulty integrating the Verizon Communications² assets it acquired in 2016. Frontier has not been able to stabilize the assets, which continued to lose subscribers and profitability. The inability of the company to stabilize the assets has put in question its dividend, which was eventually cut in the most recent quarter. Security solutions platform provider Palo Alto Networks struggled with sales execution during the October 2016 and January 2017 fiscal quarters after a large and ill-conceived sales reorganization during the October quarter. We believe the company is also struggling to move down market as Cisco Systems² has improved its security portfolio and provided greater incentives to its channel. Although we remain confident that Palo Alto Networks is attractively valued, we have taken a more conservative view on how large this company can be in the future. Generic pharmaceuticals company Teva’s competitive dynamics worsened, as customer consolidation and new competition led to lower prices for generic drugs. The company’s acquisition of Actavis Generics from Allergan was a poor decision, in our view, as the transaction took longer than expected to close and was too expensive for the new realities of the generics industry. During

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FRANKLIN CONVERTIBLE SECURITIES FUND

the period, Teva’s three most senior executives resigned, which created significant uncertainty. Although specialty pharmaceutical company Depomed had record pain medicine sales in 2016, unrealized merger expectations, high debt, senior management changes and operating losses hinder the company. Vaccine developer Novavax experienced decreased revenue and a net loss for 2016, largely due to disappointing clinical trial results and increased research and development expenses. Tyson Foods, a food products manufacturer that hindered results in the consumer staples sector, announced the transition to a new CEO by the end of 2016. Although the company reported lower fiscal-year 2016 sales, earnings increased from the prior year and first-quarter 2017 sales and earnings also increased.

Thank you for your continued participation in Franklin Convertible Securities Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

	Alan E. Muschott, CFA
	Matthew D. Quinlan
	Eric Webster, CFA
	Portfolio Management Team

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FRANKLIN CONVERTIBLE SECURITIES FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include 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	+8.72%	+2.48%
1-Year	+15.60%	+8.95%
5-Year	+58.74%	+8.39%
10-Year	+79.30%	+5.38%
Advisor4
6-Month	+8.86%	+8.86%
1-Year	+15.90%	+15.90%
5-Year	+60.78%	+9.96%
10-Year	+83.44%	+6.25%

Share Class	Distribution		30-Day Standardized Yield6
	Rate5		(with waiver)		(without waiver)
A		2.30%		1.33%		1.32%
Advisor		2.68%		1.66%		1.64%

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 16 for Performance Summary footnotes.

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FRANKLIN CONVERTIBLE SECURITIES FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income		Short-Term Capital Gain		Long-Term Capital Gain		Total
A		$0.2588		$0.3076		$0.0334		$0.5998
C		$0.1911		$0.3076		$0.0334		$0.5321
R6		$0.2930		$0.3076		$0.0334		$0.6340
Advisor		$0.2827		$0.3076		$0.0334		$0.6237
Total Annual Operating Expenses7

Share Class	With Waiver		Without Waiver
A		0.86%	0.87%
Advisor		0.61%	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. Convertible securities are subject to the risks of stocks when the underlying stock price is high relative to the conversion price (because more of the security’s value resides in the conversion feature) and debt securities when the underlying stock price is low relative to the conversion price (because the conversion feature is less valuable). A convertible security is not as sensitive to interest rate changes as a similar non-convertible debt security, and generally has less potential for gain or loss than the underlying stock. The Fund may invest in high yielding, fixed income securities. High yields reflect the higher credit risk associated with these lower rated securities and, in some cases, the lower market prices for these instruments. Interest rate movements may affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. The Fund may also invest in foreign securities, which involve special risks, including political uncertainty and currency volatility. 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 2/28/18. 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 +87.16% and +7.25%.

5. Distribution rate is based on the sum of the respective class’s past four quarterly dividends and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

6. 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.

7. 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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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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,087.20	$4.40	$1,020.58	$4.26	0.85%
C	$1,000	$1,083.30	$8.26	$1,016.86	$8.00	1.60%
R6	$1,000	$1,089.30	$2.54	$1,022.36	$2.46	0.49%
Advisor	$1,000	$1,088.60	$3.11	$1,021.82	$3.01	0.60%

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 181/365 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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Franklin Equity Income Fund

This semiannual report for Franklin Equity Income Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks to maximize total return, emphasizing high current income and long-term capital appreciation, consistent with reasonable risk, by investing at least 80% of its net assets in equity securities including securities convertible into common stocks. The Fund may invest up to 20% of its net assets in debt securities and may also invest in foreign securities, including emerging markets.

Performance Overview

For the six months under review, the Fund’s Class A shares delivered a +9.99% cumulative total return. In comparison, the Fund’s benchmark, the Standard & Poor’s 500 Index (S&P 500), which tracks the broad U.S. stock market, generated a +13.32% total return.¹ The Fund’s peers, as measured by the Lipper Equity Income Funds Classification Average, which consists of funds chosen by Lipper that seek relatively high current income and growth of income by investing at least 60% of their portfolios in stocks, posted a +10.90% total return.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 22.

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.

Investment Strategy

We seek to invest in a broadly diversified portfolio of equity securities that we consider to be financially strong, with a focus on “blue chip” companies. We apply a bottom-up approach to investing in individual securities. We will assess the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio, profit margins, balance sheet and liquidation value. We consider dividend yield and the opportunity for dividend

Portfolio Composition

Based on Total Net Assets as of 4/30/17

growth in selecting stocks for the Fund because we believe that, over time, dividend income can contribute significantly to total return and can be a more consistent source of investment return than capital appreciation. We seek to take advantage of price dislocations that result from the market’s short-term focus and choose to invest in those companies that, in our opinion, offer the best trade-off between growth opportunity, business and financial risk, and valuation.

Manager’s Discussion

All the sectors the Fund invested in rose in value during the six months under review and supported performance. The

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company. For the 6-month period ended 4/30/17, this category consisted of 508 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 include 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 55.

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FRANKLIN EQUITY INCOME FUND

financials, industrials and information technology (IT) sectors contributed most to Fund returns during the period. Within financials, global banks JPMorgan Chase and Wells Fargo helped performance, as did capital markets firm Morgan Stanley. All three companies benefited as optimism increased that economic growth would improve, which could drive stronger loan growth and lower credit costs. The potential for higher interest rates and improved net interest income, due to higher inflation and stronger economic growth, also supported the shares, as did the potential for lower tax rates, which would benefit banks more than the broader market because of their relatively high tax rates and more domestic focus. In addition, investors believed the regulatory environment was likely to ease, thus reducing expenses, creating new revenue opportunities and freeing up capital to return to shareholders.

In industrials, Illinois Tool Works and Republic Services were notable contributors to results. Shares of industrial products and equipment manufacturer Illinois Tool Works performed well for the reporting period as the company reported another quarter well above analysts’ estimates and raised 2017 guidance. The company saw a nice turn upward in its core industrial businesses, in our view, and integration of its recent auto component supplier deal is going well. The company performed especially well amid increasing operating leverage driving significant earnings-per-share growth. Waste management company Republic Services grew revenue and earnings as it transitioned its annual contract price adjustments formerly based on the consumer price index to more favorable methods and advanced productivity and cost saving initiatives.

IT holdings that benefited the Fund’s performance included Microsoft and Apple. Microsoft, a software and IT services company, performed well during the period due to a more resilient personal computer spending environment, continued growth in enterprise Office 365 adoption, a rebound in growth of its legacy server business and sustained growth of its Azure cloud offering. We remain positive on Microsoft as the company transitions to the cloud and expands its share of IT spending. Technology hardware and software provider Apple performed well as the iPhone 7 cycle turned out to be better than expected. Additionally, Apple’s service revenue has continued to grow and investor anticipation of a strong iPhone 8 cycle is buoying sentiment toward the stock.

Elsewhere, contributors included Lowe’s in the consumer discretionary sector and International Paper in the materials sector. Home improvement retailer Lowe’s continued to benefit from strong demand for home improvement products. Paper and packaging firm International Paper delivered solid quarterly earnings during the period despite a challenging

Top 10 Holdings

4/30/17

Company Sector/Industry	% of Total Net Assets
Microsoft Corp. Information Technology	3.8%
JPMorgan Chase & Co. Financials	3.7%
Wells Fargo & Co. Financials	2.9%
U.S. Bancorp Financials	2.6%
Chevron Corp. Energy	2.5%
Apple Inc. Information Technology	2.5%
PepsiCo Inc. Consumer Staples	2.4%
General Electric Co. Industrials	2.4%
Raytheon Co. Industrials	2.1%
Medtronic PLC Health Care	2.0%

operating environment including higher raw materials prices, maintenance outage expenses and an accident at its Pensacola mill. The company began to experience benefits from price increases and its December purchase of cellulose fiber pulp mills from Weyerhaeuser, and management expects improved results going forward resulting from several commercial and operational initiatives.

In contrast, several holdings in the consumer discretionary and telecommunication services sectors detracted from the Fund’s absolute performance during the six months under review. In consumer discretionary, detractors included toy maker Mattel, discount retailer Target and specialty retailer L Brands. Mattel suffered from an industry-wide challenge of lower-than-expected toy sales in the U.S. over the holiday season, which resulted in excess inventory coming into 2017, and these trends were exacerbated by unfavorable currency exchange dynamics. However, the company reported that its core brands continued to show solid growth and that momentum in high-growth markets like China was equally strong. Shares of Target were pressured after slow in-store sales during the holidays led to disappointing results. Target later sharply reduced its earnings outlook for 2017 as it planned to increase investment. L

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Brands³ experienced recent volatility, driven by a strategic initiative early last year to exit non-core categories at Victoria’s Secret. The initiative has driven negative comparable-store sales and a focus on core categories, with the goal of driving market share in the short run. This move has led to potential customer demand disruptions during a time when the environment has become more competitive and mall traffic continued to suffer. We have seen recovery in most segments of the company’s business. We continue to believe L Brands is a high-quality company that is going through a transition that has driven volatility but should benefit the business longer term.

In telecommunication services, wireless provider Verizon Communications hindered results. The company continued to face an increasingly competitive wireless environment as the industry moves to unlimited plans, which resulted in the company needing to reverse course on previous statements that such plans were unprofitable in the long run. Verizon also reported weak quarterly results that showed the financial impact of the competitive environment.

Elsewhere, notable detractors from the Fund’s performance included oil and gas exploration and production company Anadarko Petroleum, information and measurement company Nielsen Holdings,⁴ and retailer and pharmacy benefits manager CVS Health. Anadarko’s shares declined during the period following a 2016 rally capped by the decision in late November 2016 by the Organization of the Petroleum Exporting Countries (OPEC) to curtail production. Although the company sold several assets to increase cash to more than $6 billion, disappointing 2017 production guidance and uncertainty about how the company would deploy its large cash position weighed on the shares. In addition, crude oil prices failed to sustain positive momentum above $50 per barrel from the OPEC rally, as the OPEC supply cuts did not immediately translate into crude inventory declines, which pressured the industry in early 2017. Shares of CVS Health declined during the reporting period due to increasing scrutiny on the pharmacy benefit manager’s business model and uncertainty regarding the drug pricing environment. We believe the vertically integrated business model of CVS as a retailer and pharmacy benefits manager offers competitive advantages that could enable the company to capture an increasing share of health care spending in the long term. Nielsen’s consumer packaged goods measurement and data analytics business, particularly in the

U.S., has come under substantial pressure as customers are reducing costs to offset a combination of negligible market growth and eroding market share. The company’s shares declined amid disappointing quarterly results and outlook.

Thank you for your continued participation in Franklin Equity Income Fund. We look forward to serving your future investment needs.

	Matthew D. Quinlan
	Alan E. Muschott, CFA
	Todd Brighton, CFA
	Portfolio Management Team

3. A new Fund holding.

4. Not held at period-end.

See www.franklintempletondatasources.com for additional data provider information.

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The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN EQUITY INCOME FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include 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	+9.99%	+3.68%
1-Year	+13.70%	+7.14%
5-Year	+68.09%	+9.64%
10-Year	+59.75%	+4.18%
Advisor4
6-Month	+10.17%	+10.17%
1-Year	+13.97%	+13.97%
5-Year	+70.30%	+11.24%
10-Year	+63.51%	+5.04%

	Distribution		30-Day Standardized Yield6
Share Class	Rate5		(with waiver)		(without waiver)
A		2.13%		1.62%		1.62%
Advisor		2.43%		1.97%		1.97%

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 23 for Performance Summary footnotes.

22         Semiannual Report franklintempleton.com

FRANKLIN EQUITY INCOME FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income		Long-Term Capital Gain		Total
A		$0.2923		$0.8885		$1.1808
C		$0.2078		$0.8885		$1.0963
R		$0.2683		$0.8885		$1.1568
R6		$0.3361		$0.8885		$1.2246
Advisor		$0.3233		$0.8885		$1.2118

Total Annual Operating Expenses⁷

Share Class
A	0.88%
Advisor	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. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Convertible securities are subject to the risks of stocks when the underlying stock price is high relative to the conversion price and debt securities when the underlying stock price is low relative to the conversion price. The Fund’s investment in foreign securities also involves 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 2/28/18. 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 +77.77% and +6.63%.

5. 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 4/30/17.

6. 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.

7. 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.

franklintempleton.com Semiannual Report         23

FRANKLIN EQUITY 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 Value 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,099.90	$4.43	$1,020.58	$4.26	0.85%
C	$1,000	$1,096.30	$8.32	$1,016.86	$8.00	1.60%
R	$1,000	$1,098.80	$5.62	$1,019.44	$5.41	1.08%
R6	$1,000	$1,101.80	$2.50	$1,022.41	$2.41	0.48%
Advisor	$1,000	$1,101.70	$3.13	$1,021.82	$3.01	0.60%

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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

24         Semiannual Report franklintempleton.com

Franklin Real Return Fund

This semiannual report for Franklin Real Return Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks total return that exceeds the rate of inflation over an economic cycle. Under normal market conditions, the Fund seeks to allocate assets among investments to achieve the highest level of real return (total return less the rate of inflation) consistent with an acceptable level of risk. The Fund shifts its investments among the following general asset classes: inflation-indexed securities and investment-grade and high yield fixed income securities issued by governments, corporations and municipal issuers; equity securities with high correlation to broad measures of inflation; and short-term non-dollar denominated debt securities.

Portfolio Composition*

Based on Total Net Assets as of 4/30/17

^*Percentages reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.

^**In the SOI, the natural resources sector comprises energy and materials. ^***Includes Senior Floating Rate Interests.

Performance Overview

For the six months under review, the Fund’s Class A shares had a +0.98% cumulative total return. In comparison, the Barclays U.S. TIPS Index, which tracks the universe of inflation-protected notes issued by the U.S. Treasury that have at least

one year to final maturity, had a -0.19% total return.¹ Also for comparison, the Consumer Price Index for All Urban Consumers - Non-Seasonally Adjusted (CPI-NSA), a measure of the average change in prices of all goods and services purchased for consumption by urban householders, rose 1.16% for the same period.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 27.

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.

Investment Strategy

Under normal market conditions, we will allocate the Fund’s assets among securities in various market sectors based on our assessment of changing economic, global market, industry and issuer conditions. When making our investment decisions, we use a “top-down” analysis of macroeconomic trends combined with a “bottom-up” fundamental analysis of market sectors, industries and issuers to try to take advantage of varying sector reactions to economic events. We will evaluate such criteria as country risk, business cycles, yield curves and values between and within markets.

What is the yield curve?

The yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.

Manager’s Discussion

U.S. economic indicators remained generally encouraging during the reporting period. Steady growth in manufacturing and services created jobs, boosting employment. The U.S. Federal Reserve increased its target rate twice, noting improved employment and higher inflation. Retail sales increased and home sales continued to grow but more slowly.

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.

2. Source: Bureau of Labor Statistics, bls.gov/cpi.

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 62.

franklintempleton.com Semiannual Report         25

FRANKLIN REAL RETURN FUND

At period-end, more than half of total net assets were invested in Treasury Inflation Protected Securities (TIPS). For diversification, we also allocated the Fund’s assets to foreign government and agency securities, management investment companies, common stocks, repurchase agreements, corporate bonds, senior secured floating rate loans and short-term investments. We employed a non-U.S. dollar strategy to help hedge against potential U.S. dollar weakness versus certain currencies and concentrated our TIPS holdings in shorter maturities.

During the period, we increased the Fund’s allocations to TIPS and high yield corporate credit securities. In contrast, we decreased the Fund’s allocation to foreign government debt securities and senior secured floating rate loans. The Fund’s heaviest allocations were in TIPS and foreign government debt securities.

The Fund’s investments in foreign government bonds and TIPS helped results. In contrast, the Fund’s foreign currency exposure hindered Fund performance.

Thank you for your continued participation in Franklin Real Return Fund. We look forward to serving your future investment needs.

	T. Anthony Coffey, CFA
	Kent Burns, CFA
	Portfolio Management Team

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

26         Semiannual Report franklintempleton.com

FRANKLIN REAL RETURN FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include 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	+0.98%	-3.33%
1-Year	+2.19%	-2.12%
5-Year	-0.33%	-0.93%
10-Year	+23.24%	+1.67%
Advisor
6-Month	+1.11%	+1.11%
1-Year	+2.42%	+2.42%
5-Year	+0.84%	+0.17%
10-Year	+26.36%	+2.37%

	Distribution		30-Day Standardized Yield5
Share Class	Rate4		(with waiver)		(without waiver)
A		0.99%		1.58%		1.37%
Advisor		2.58%		1.91%		1.68%

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 28 for Performance Summary footnotes.

franklintempleton.com Semiannual Report         27

FRANKLIN REAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income
A		$0.0088
R6		$0.0292
Advisor		$0.0220

Total Annual Operating Expenses⁶

Share Class	With Waiver			Without Waiver
A		0.93	%	1.15%
Advisor		0.68	%	0.90%

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. Interest rate movements will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in a Fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. 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 an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/28/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, 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 April dividend and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

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.

28         Semiannual Report franklintempleton.com

FRANKLIN REAL RETURN 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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,009.80	$4.48	$1,020.33	$4.51	0.90%
C	$1,000	$1,008.00	$6.52	$1,018.30	$6.56	1.31%
R6	$1,000	$1,011.70	$2.44	$1,022.36	$2.46	0.49%
Advisor	$1,000	$1,011.10	$3.24	$1,021.57	$3.26	0.65%

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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

franklintempleton.com Semiannual Report         29

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Balanced Fund

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$11.65			$11.40			$11.86			$11.43			$10.64			$9.87
Income from investment operationsa:
Net investment incomeb		0.14			0.30			0.30			0.31	c		0.27			0.30
Net realized and unrealized gains (losses)		0.58			0.31			(0.24	)		0.65			1.02			0.83
Total from investment operations		0.72			0.61			0.06			0.96			1.29			1.13
Less distributions from:
Net investment income		(0.18	)		(0.36	)		(0.36	)		(0.36	)		(0.36	)		(0.36	)
Net realized gains		(0.17	)		(—	)d		(0.16	)		(0.17	)		(0.14	)		(—	)d
Total distributions		(0.35	)		(0.36	)		(0.52	)		(0.53	)		(0.50	)		(0.36	)
Net asset value, end of period		$12.02			$11.65			$11.40			$11.86			$11.43			$10.64
Total returne		6.24%			5.54%			0.51%			8.66%			12.51%			11.70%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.01%			1.02%			1.06%			1.09%			1.12%			1.15%
Expenses net of waiver and payments by affiliates		0.99%	g		1.01%	g		1.06%	g,h		1.09%	g,h		1.10%	g		1.01%
Net investment income		2.36%			2.62%			2.56%			2.64%	c		2.51%			2.95%
Supplemental data
Net assets, end of period (000’s)		$2,633,337			$2,532,459			$2,371,133			$2,053,623			$1,354,710			$627,287
Portfolio turnover rate		12.05%			46.03%			69.23%			40.54%			58.52%			58.59%

^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 $0.03 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.39%.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and 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%.

30         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31,
				2016			2015			2014			2013			2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$11.55			$11.31			$11.77			$11.34			$10.57			$9.81
Income from investment operationsa:
Net investment incomeb		0.10			0.21			0.21			0.23	c		0.20			0.23
Net realized and unrealized gains (losses)		0.57			0.31			(0.23	)		0.65			0.99			0.82
Total from investment operations		0.67			0.52			(0.02	)		0.88			1.19			1.05
Less distributions from:
Net investment income		(0.14	)		(0.28	)		(0.28	)		(0.28	)		(0.28	)		(0.29	)
Net realized gains		(0.17	)		(—	)d		(0.16	)		(0.17	)		(0.14	)		(—	)d
Total distributions		(0.31	)		(0.28	)		(0.44	)		(0.45	)		(0.42	)		(0.29	)
Net asset value, end of period		$11.91			$11.55			$11.31			$11.77			$11.34			$10.57
Total returne		5.90%			4.73%			(0.20)%			7.97%			11.62%			10.91%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.76%			1.77%			1.77%			1.79%			1.82%			1.85%
Expenses net of waiver and payments by affiliates		1.74%	g		1.76%	g		1.77%	g,h		1.79%	g,h		1.80%	g		1.71%
Net investment income		1.61%			1.87%			1.85%			1.94%	c		1.81%			2.25%
Supplemental data
Net assets, end of period (000’s)		$663,322			$630,110			$563,419			$492,514			$354,359			$187,991
Portfolio turnover rate		12.05%			46.03%			69.23%			40.54%			58.52%			58.59%

^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 $0.03 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.69%.

^dAmount rounds to less than $0.01 per share.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and 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%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         31

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31,
				2016			2015			2014			2013			2012
Class R
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$11.67			$11.42			$11.89			$11.45			$10.66			$9.89
Income from investment operationsa:
Net investment incomeb		0.12			0.27			0.27			0.29	c		0.26			0.29
Net realized and unrealized gains (losses)		0.60			0.32			(0.24	)		0.66			1.01			0.82
Total from investment operations		0.72			0.59			0.03			0.95			1.27			1.11
Less distributions from:
Net investment income		(0.17	)		(0.34	)		(0.34	)		(0.34	)		(0.34	)		(0.34	)
Net realized gains		(0.17	)		(—	)d		(0.16	)		(0.17	)		(0.14	)		(—	)d
Total distributions		(0.34	)		(0.34	)		(0.50	)		(0.51	)		(0.48	)		(0.34	)
Net asset value, end of period		$12.05			$11.67			$11.42			$11.89			$11.45			$10.66
Total returne		6.18%			5.28%			0.21%			8.51%			12.26%			11.46%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		1.26%			1.27%			1.27%			1.29%			1.32%			1.35%
Expenses net of waiver and payments by affiliates		1.24%	g		1.26%	g		1.27%	g,h		1.29%	g,h		1.30%	g		1.21%
Net investment income		2.11%			2.39%			2.35%			2.44%	c		2.31%			2.75%
Supplemental data
Net assets, end of period (000’s)		$5,179			$4,482			$4,699			$3,598			$3,253			$2,378
Portfolio turnover rate		12.05%			46.03%			69.23%			40.54%			58.52%			58.59%

^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 $0.03 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.19%.

^dAmount rounds to less than $0.01 per share.

^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%.

32         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31,
				2016			2015			2014			2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$11.67			$11.42			$11.89			$11.45			$11.08
Income from investment operationsb:
Net investment incomec		0.14			0.34			0.35			0.37d			0.19
Net realized and unrealized gains (losses)		0.60			0.31			(0.25)			0.65			0.38
Total from investment operations		0.74			0.65			0.10			1.02			0.57
Less distributions from:
Net investment income		(0.20	)		(0.40	)		(0.41	)		(0.41	)		(0.20	)
Net realized gains		(0.17)			(—)e			(0.16)			(0.17)			—
Total distributions		(0.37)			(0.40)			(0.57)			(0.58)			(0.20)
Net asset value, end of period		$12.04			$11.67			$11.42			$11.89			$11.45
Total returnf		6.50%			5.90%			0.81%			9.29%			5.15%
Ratios to average net assetsg
Expenses before waiver and payments by affiliates		0.70%			0.73%			0.70%			0.68%			1.82%
Expenses net of waiver and payments by affiliatesh		0.64%			0.66%			0.67%			0.68%i			0.70%
Net investment income		2.71%			2.99%			2.95%			3.05%d			2.91%
Supplemental data
Net assets, end of period (000’s)		$608			$233			$221			$513			$5
Portfolio turnover rate		12.05%			46.03%			69.23%			40.54%			58.52%

^aFor the period May 1, 2013 (effective date) to October 31, 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 $0.03 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.80%.

^eAmount rounds to less than $0.01 per share.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit 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         33

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31,
				2016			2015			2014			2013			2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$11.67			$11.42			$11.88			$11.45			$10.66			$9.89
Income from investment operationsa:
Net investment incomeb		0.15			0.29			0.33			0.35	c		0.30			0.34
Net realized and unrealized gains (losses)		0.58			0.35			(0.24	)		0.65			1.02			0.82
Total from investment operations		0.73			0.64			0.09			1.00			1.32			1.16
Less distributions from:
Net investment income		(0.19	)		(0.39	)		(0.39	)		(0.40	)		(0.39	)		(0.39	)
Net realized gains		(0.17	)		(—	)d		(0.16	)		(0.17	)		(0.14	)		(—	)d
Total distributions		(0.36	)		(0.39	)		(0.55	)		(0.57	)		(0.53	)		(0.39	)
Net asset value, end of period		$12.04			$11.67			$11.42			$11.88			$11.45			$10.66
Total returne		6.44%			5.79%			0.81%			8.97%			12.82%			12.01%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		0.76%			0.77%			0.77%			0.79%			0.82%			0.85%
Expenses net of waiver and payments by affiliates		0.74%	g		0.76%	g		0.77%	g,h		0.79%	g,h		0.80%	g		0.71%
Net investment income		2.61%			2.87%			2.85%			2.94%	c		2.81%			3.25%
Supplemental data
Net assets, end of period (000’s)		$201,900			$138,111			$54,881			$41,494			$68,201			$13,779
Portfolio turnover rate		12.05%			46.03%			69.23%			40.54%			58.52%			58.59%

^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 $0.03 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.69%.

^dAmount rounds to less than $0.01 per share.

^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%.

34         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Balanced Fund
	Country		Shares		Value
Common Stocks 44.2%
Consumer Discretionary 4.5%
Ford Motor Co.		United States		3,500,000	$	40,145,000
General Motors Co.		United States		1,000,000		34,640,000
Lowe’s Cos. Inc.		United States		600,000		50,928,000
Nordstrom Inc.		United States		250,000		12,067,500
Target Corp.		United States		350,000		19,547,500
						157,328,000
Consumer Staples 5.7%
Anheuser-Busch InBev SA/NV, ADR		Belgium		300,000		33,972,000
The Coca-Cola Co.		United States		1,200,000		51,780,000
Kimberly-Clark Corp.		United States		300,000		38,925,000
Philip Morris International Inc.		United States		300,000		33,252,000
Walgreens Boots Alliance Inc.		United States		500,000		43,270,000
						201,199,000
Energy 3.7%
Chevron Corp.		United States		300,000		32,010,000
Exxon Mobil Corp.		United States		420,000		34,293,000
Occidental Petroleum Corp.		United States		400,000		24,616,000
Royal Dutch Shell PLC, A, ADR		United Kingdom		719,264		37,538,388
						128,457,388
Financials 7.3%
Bank of America Corp.		United States		1,496,715		34,933,328
The Charles Schwab Corp.		United States		400,000		15,540,000
JPMorgan Chase & Co.		United States		450,000		39,150,000
T. Rowe Price Group Inc.		United States		400,000		28,356,000
The Toronto-Dominion Bank		Canada		750,000		35,317,500
U.S. Bancorp		United States		750,000		38,460,000
Wells Fargo & Co.		United States		1,200,000		64,608,000
						256,364,828
Health Care 4.1%
AstraZeneca PLC, ADR		United Kingdom		985,000		29,796,250
Johnson & Johnson		United States		300,000		37,041,000
a Mylan NV		United States		355,800		13,289,130
Pfizer Inc		United States		1,250,000		42,400,000
Teva Pharmaceutical Industries Ltd., ADR		Israel		687,400		21,708,092
						144,234,472
Industrials 9.0%
General Dynamics Corp.		United States		100,000		19,379,000
General Electric Co.		United States		2,000,000		57,980,000
Honeywell International Inc.		United States		225,000		29,506,500
Northrop Grumman Corp.		United States		125,000		30,745,000
Raytheon Co.		United States		360,000		55,875,600
Republic Services Inc.		United States		560,000		35,274,400
Union Pacific Corp.		United States		385,189		43,125,761
United Technologies Corp.		United States		353,592		42,073,912
						313,960,173
Information Technology 3.0%
Microsoft Corp.		United States		1,000,000		68,460,000
Texas Instruments Inc.		United States		465,000		36,818,700
						105,278,700

franklintempleton.com Semiannual Report         35

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)
	Country		Shares		Value
Common Stocks (continued)
Materials 3.0%
BASF SE		Germany		400,000	$	38,979,513
The Dow Chemical Co.		United States		800,000		50,240,000
The Mosaic Co.		United States		560,000		15,080,800
						104,300,313
Real Estate 0.8%
Host Hotels & Resorts Inc.		United States		1,500,000		26,925,000
Telecommunication Services 2.2%
Rogers Communications Inc., B		Canada		790,000		36,229,400
Verizon Communications Inc.		United States		900,000		41,319,000
						77,548,400
Utilities 0.9%
Dominion Resources Inc.		United States		100,000		7,743,000
Entergy Corp.		United States		118,400		9,029,184
The Southern Co.		United States		330,000		16,434,000
						33,206,184
Total Common Stocks (Cost $1,322,630,221)						1,548,802,458
Management Investment Companies 1.0%
Financials 1.0%
b Franklin Liberty Investment Grade Corporate ETF.		United States		750,000		18,262,500
iShares Core U.S. Aggregate Bond ETF		United States		160,000		17,480,000
Total Management Investment Companies (Cost $35,181,725)						35,742,500
c Equity-Linked Securities 8.1%
Energy 2.8%
d Credit Suisse New York into Schlumberger Ltd., 7.50%, 144A		United States		320,000		23,478,176
d Royal Bank of Canada into Anadarko Petroleum Corp., 7.50%, 144A		United States		475,000		27,406,217
d The Goldman Sachs Group Inc. into Anadarko Petroleum Corp., 7.00%, 144A		United States		340,000		20,225,614
d Wells Fargo Bank National Assn. into Halliburton Co., 8.00%, 144A		United States		550,000		25,463,130
						96,573,137
Industrials 1.1%
d Wells Fargo Bank National Assn. into The Boeing Co., 7.00%, 144A		United States		275,000		40,066,813
Information Technology 3.2%
d Citigroup Global Markets Holdings Inc. into Analog Devices Inc., 6.50%, 144A		United States		450,000		34,875,765
d Credit Suisse AG London into Apple Inc., 6.50%, 144A		United States		190,000		25,312,180
d Royal Bank of Canada into Texas Instruments Inc., 6.00%, 144A		United States		400,000		27,825,440
d UBS AG London into Intel Corp., 6.00%, 144A		United States		715,000		25,705,680
						113,719,065
Materials 1.0%
d The Goldman Sachs Group Inc. into The Mosaic Co., 10.00%, 144A		United States		1,210,000		33,396,968
Total Equity-Linked Securities (Cost $274,579,050)						283,755,983
Convertible Preferred Stocks 3.7%
Energy 0.7%
Hess Corp., 8.00%, cvt. pfd.		United States		400,000		23,860,000
Health Care 0.9%
Allergan PLC, 5.50%, cvt. pfd.		United States		35,102		30,390,610

36         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)
	Country		Shares		Value
Convertible Preferred Stocks (continued)
Real Estate 1.1%
American Tower Corp., 5.50%, cvt. pfd.		United States		350,000	$	40,348,875
Utilities 1.0%
Great Plains Energy Inc., 7.00%, cvt. pfd.		United States		324,000		17,528,400
NextEra Energy Inc., 6.371%, cvt. pfd.		United States		260,000		16,034,200
						33,562,600
Total Convertible Preferred Stocks (Cost $118,785,263)						128,162,085
Preferred Stocks (Cost $7,750,000) 0.2%
Financials 0.2%
Morgan Stanley, 6.375%, pfd., I		United States		310,000		8,608,700
			Principal Amount*
Convertible Bonds (Cost $15,000,000) 0.5%
Energy 0.5%
Weatherford International Ltd., cvt., senior note, 5.875%, 7/01/21		United States	$	15,000,000		17,868,750
Corporate Bonds 32.0%
Consumer Discretionary 4.1%
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., senior secured note, first lien, 4.908%, 7/23/25		United States		20,000,000		21,482,480
DISH DBS Corp.,
senior note, 5.875%, 7/15/22		United States		12,000,000		12,741,480
senior note, 7.75%, 7/01/26		United States		10,000,000		11,737,500
Dollar General Corp.,
senior bond, 3.25%, 4/15/23		United States		15,000,000		15,203,490
senior bond, 3.875%, 4/15/27		United States		10,000,000		10,141,190
Ford Motor Credit Co. LLC, senior note, 2.551%, 10/05/18		United States		5,000,000		5,035,915
NIKE Inc., senior bond, 2.375%, 11/01/26		United States		20,000,000		18,996,780
d Sirius XM Radio Inc., senior bond, 144A, 5.375%, 4/15/25		United States		15,000,000		15,431,250
Tiffany & Co., senior bond, 4.90%, 10/01/44		United States		7,000,000		6,586,797
Trinity Acquisition PLC, senior note, 4.625%, 8/15/23		United States		7,000,000		7,423,150
Yum! Brands Inc., senior bond, 3.875%, 11/01/23		United States		17,950,000		17,792,937
						142,572,969
Consumer Staples 3.6%
Anheuser-Busch InBev Finance Inc., senior bond, 4.90%, 2/01/46		Belgium		15,000,000		16,449,075
CVS Health Corp., senior note, 3.875%, 7/20/25		United States		10,000,000		10,415,780
Kraft Heinz Foods Co.,
senior bond, 3.50%, 6/06/22		United States		10,000,000		10,348,240
senior bond, 3.00%, 6/01/26		United States		20,000,000		19,045,680
Mondelez International Inc., senior bond, 4.00%, 2/01/24		United States		15,000,000		15,873,390
Reynolds American Inc.,
senior note, 2.30%, 8/21/17		United States		6,100,000		6,113,853
senior note, 4.45%, 6/12/25		United States		15,000,000		16,023,390
Tyson Foods Inc., senior bond, 3.95%, 8/15/24		United States		12,100,000		12,469,171
Whole Foods Market Inc., senior note, 5.20%, 12/03/25		United States		20,000,000		20,991,160
						127,729,739
Energy 2.8%
Anadarko Petroleum Corp., senior note, 8.70%, 3/15/19		United States		7,215,000		8,069,718
Energy Transfer Partners LP, senior bond, 3.60%, 2/01/23		United States		15,000,000		15,138,990
EOG Resources Inc., senior bond, 2.625%, 3/15/23		United States		5,500,000		5,431,475
Ferrellgas LP/Ferrellgas Finance Corp., senior note, 6.75%, 6/15/23		United States		18,800,000		18,236,000

franklintempleton.com Semiannual Report         37

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)
	Country		Principal Amount*		Value
Corporate Bonds (continued)
Energy (continued)
Oceaneering International Inc., senior note, 4.65%, 11/15/24		United States	$	9,400,000	$	9,540,925
d Sabine Pass Liquefaction LLC, senior secured bond, 144A, 5.00%, 3/15/27		United States		8,200,000		8,671,049
Weatherford International Ltd.,
senior bond, 5.95%, 4/15/42		United States		4,000,000		3,520,000
senior note, 5.125%, 9/15/20		United States		10,000,000		10,107,000
The Williams Cos. Inc., senior bond, 3.70%, 1/15/23		United States		5,000,000		4,950,000
Williams Partners LP, senior note, 3.60%, 3/15/22		United States		15,000,000		15,368,850
						99,034,007
Financials 8.1%
e Bank of America Corp.,
junior sub. bond, AA, 6.10% to 3/17/25, FRN thereafter, Perpetual		United States		15,000,000		16,087,500
junior sub. bond, M, 8.125% to 5/15/18, FRN thereafter, Perpetual		United States		10,000,000		10,487,500
Capital One Bank USA NA, senior note, 2.30%, 6/05/19		United States		10,000,000		10,020,850
f Capital One NA, FRN, 1.885%, 9/13/19		United States		15,000,000		15,082,590
Citigroup Inc.,
ejunior sub. bond, P, 5.95% to 5/15/25, FRN thereafter, Perpetual		United States		15,000,000		15,778,125
sub. bond, 4.125%, 7/25/28		United States		10,000,000		10,016,180
Compass Bank, sub. note, 3.875%, 4/10/25		United States		15,000,000		14,789,550
JPMorgan Chase & Co.,
ejunior sub. bond, I, 7.90% to 4/30/19, FRN thereafter, Perpetual		United States		10,000,000		10,462,500
ejunior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual		United States		13,000,000		13,255,580
senior note, 2.295%, 8/15/21		United States		15,000,000		14,914,935
d Liberty Mutual Group Inc., senior note, 144A, 4.95%, 5/01/22		United States		7,100,000		7,784,916
d Mizuho Bank Ltd., senior note, 144A, 2.45%, 4/16/19		Japan		12,000,000		12,069,888
Morgan Stanley,
ejunior sub. bond, 5.55% to 7/15/20, FRN thereafter, Perpetual		United States		10,900,000		11,424,562
senior note, 2.50%, 4/21/21		United States		15,000,000		14,970,060
senior sub. bond, 4.35%, 9/08/26		United States		15,000,000		15,542,265
Navient Corp., senior note, 6.125%, 3/25/24		United States		15,000,000		14,925,000
d Nippon Life Insurance Co., sub. bond, 144A, 5.10% to 10/16/24, FRN thereafter, 10/16/44		Japan		15,000,000		15,955,125
e PNC Financial Services Group Inc., junior sub. note, 4.85% to 6/01/23, FRNthereafter, Perpetual		United States		12,000,000		12,054,000
Prudential Financial Inc.,
3.50%, 5/15/24		United States		10,000,000		10,403,100
junior sub. bond, 5.875%, 9/15/42		United States		5,000,000		5,530,270
Royal Bank of Scotland Group PLC,
sub. note, 6.125%, 12/15/22		United Kingdom		4,000,000		4,319,340
sub. note, 5.125%, 5/28/24		United Kingdom		10,400,000		10,696,868
e Wells Fargo & Co., junior sub. bond, 5.875% to 6/15/25, FRN thereafter, Perpetual		United States		15,000,000		16,293,750
						282,864,454
Health Care 4.1%
Actavis Funding SCS, senior bond, 4.75%, 3/15/45		United States		12,000,000		12,243,792
d AMAG Pharmaceuticals Inc., senior note, 144A, 7.875%, 9/01/23		United States		16,000,000		15,280,000
Baxalta Inc., senior note, 4.00%, 6/23/25		United States		11,900,000		12,260,058
Biogen Inc., senior note, 3.625%, 9/15/22		United States		10,000,000		10,431,140
Celgene Corp., senior bond, 4.00%, 8/15/23		United States		10,000,000		10,551,590
CHS/Community Health Systems Inc.,
senior note, 8.00%, 11/15/19		United States		10,000,000		9,768,900
senior secured note, first lien, 6.25%, 3/31/23		United States		16,400,000		16,748,500
Edwards Lifesciences Corp., senior note, 2.875%, 10/15/18		United States		10,000,000		10,136,430

38         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)
	Country		Principal Amount*		Value
Corporate Bonds (continued)
Health Care (continued)
d Endo Finance LLC/Endo Finco Inc., senior note, 144A, 5.375%, 1/15/23		United States	$	15,000,000	$	12,937,500
HCA Inc., senior secured note, first lien, 5.00%, 3/15/24		United States		12,000,000		12,765,000
d Tenet Healthcare Corp., senior secured note, second lien, 144A, 7.50%, 1/01/22		United States		9,200,000		9,867,000
d Valeant Pharmaceuticals International Inc.,
senior bond, 144A, 6.125%, 4/15/25		United States		6,300,000		4,674,600
senior note, 144A, 5.875%, 5/15/23		United States		8,300,000		6,173,125
						143,837,635
Industrials 1.0%
d Air Canada 2013-1A Pass Through Trust, first lien, 144A, 4.125%, 11/15/26		Canada		5,998,419		6,258,151
e General Electric Co., junior sub. bond, 5.00% to 1/21/21, FRN thereafter, Perpetual		United States		9,876,000		10,429,056
Lockheed Martin Corp., senior bond, 3.55%, 1/15/26		United States		15,000,000		15,507,030
United Rentals North America Inc., senior bond, 5.875%, 9/15/26		United States		4,300,000		4,552,625
						36,746,862
Information Technology 2.1%
d CommScope Technologies LLC, senior bond, 144A, 5.00%, 3/15/27		United States		10,000,000		10,112,500
d Diamond 1 Finance Corp./Diamond 2 Finance Corp.,
senior note, 144A, 5.875%, 6/15/21		United States		2,700,000		2,868,750
senior note, 144A, 7.125%, 6/15/24		United States		2,700,000		2,985,852
senior secured note, first lien, 144A, 4.42%, 6/15/21		United States		18,000,000		18,910,134
d Microsemi Corp., senior note, 144A, 9.125%, 4/15/23		United States		5,500,000		6,352,500
Oracle Corp., senior note, 2.50%, 10/15/22		United States		10,000,000		10,037,370
d Western Digital Corp., senior secured note, 144A, 7.375%, 4/01/23		United States		20,000,000		21,950,000
						73,217,106
Materials 1.0%
Crown Americas LLC/Crown Americas Capital Corp. IV, senior bond, 4.50%, 1/15/23		United States		5,000,000		5,175,000
EI du Pont de Nemours & Co., senior note, 2.20%, 5/01/20		United States		3,600,000		3,607,164
d FMG Resources (August 2006) Pty. Ltd., senior secured note, 144A, 9.75%, 3/01/22		Australia		12,500,000		14,421,875
Freeport-McMoRan Inc., senior bond, 3.875%, 3/15/23		United States		7,000,000		6,527,500
Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23		United States		4,000,000		4,194,776
						33,926,315
Real Estate 1.9%
HCP Inc., senior bond, 3.875%, 8/15/24		United States		21,700,000		21,962,071
Healthcare Trust of America Holdings LP, senior note, 3.375%, 7/15/21		United States		10,000,000		10,237,940
Prologis LP, senior note, 4.25%, 8/15/23		United States		12,000,000		12,861,648
Realty Income Corp., senior bond, 3.875%, 7/15/24		United States		15,000,000		15,491,880
Senior Housing Properties Trust, senior note, 6.75%, 12/15/21		United States		7,000,000		7,810,138
						68,363,677
Telecommunication Services 1.0%
AT&T Inc., senior note, 3.95%, 1/15/25		United States		11,700,000		11,866,877
Sprint Corp., senior note, 7.625%, 2/15/25		United States		10,000,000		11,187,500
Telefonica Emisiones S.A.U., senior note, 4.57%, 4/27/23		Spain		10,000,000		10,787,450
						33,841,827
Utilities 2.3%
Alabama Power Co., senior note, 2.80%, 4/01/25		United States		7,000,000		6,864,305
d Calpine Corp., senior secured bond, 144A, 5.25%, 6/01/26		United States		15,000,000		15,168,750
d,e EDF SA, sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		10,000,000		10,007,800
d Enogex LLC, senior note, 144A, 6.25%, 3/15/20		United States		5,000,000		5,385,910
d InterGen NV, secured bond, 144A, 7.00%, 6/30/23		Netherlands		10,000,000		9,350,000

franklintempleton.com Semiannual Report         39

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)
	Country		Principal Amount*		Value
Corporate Bonds (continued)
Utilities (continued)
Kinder Morgan Energy Partners LP, senior note, 4.30%, 5/01/24		United States	$	12,900,000	$	13,387,375
PSEG Power LLC, senior note, 3.00%, 6/15/21		United States		20,000,000		20,273,120
						80,437,260
Total Corporate Bonds (Cost $1,086,189,376)						1,122,571,851
			Number of Contracts
Options Purchased (Cost $797,012) 0.0%†
Calls - Exchange-Traded
Financials 0.0%†
CBOE SPX Volatility Index, May Strike Price $18, Expires 5/17/17				5,000		100,000
Total Investments before Short Term Investments (Cost $2,860,912,647)						3,145,612,327
			Shares
Short Term Investments (Cost $314,587,427) 9.0%
Money Market Funds 9.0%
b,g Institutional Fiduciary Trust Money Market Portfolio, 0.37%		United States		314,587,427		314,587,427
Total Investments (Cost $3,175,500,074) 98.7%						3,460,199,754
Options Written (0.0)%†						(25,000	)
Other Assets, less Liabilities 1.3%						44,170,378
Net Assets 100.0%					$	3,504,345,132
			Number of Contracts
h Options Written (Premiums received $210,400) (0.0)%†
Calls - Exchange-Traded
Financials (0.0)%†
CBOE SPX Volatility Index, May Strike Price $30, Expires 5/17/17				5,000		(25,000	)

40         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Balanced Fund (continued)

See Abbreviations on page 90.

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 3(f) regarding investments in affiliated management investment companies.

^cSee Note 1(g) regarding equity-linked securities.

^dSecurity 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 April 30, 2017, the aggregate value of these securities was $516,372,658, representing 14.7% of net assets.

^ePerpetual security with no stated maturity date.

^fThe coupon rate shown represents the rate at period end.

^gThe rate shown is the annualized seven-day yield at period end.

^hSee Note 1(e) regarding written options.

franklintempleton.com Semiannual Report         41

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Convertible Securities Fund

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$18.24		$18.00		$18.97		$17.82		$14.93		$14.37
Income from investment operationsa:
Net investment incomeb		0.12		0.25		0.24		0.23		0.37		0.41
Net realized and unrealized gains (losses)		1.43		0.85		(0.14)		1.32		2.99		0.67
Total from investment operations		1.55		1.10		0.10		1.55		3.36		1.08
Less distributions from:
Net investment income		(0.26)		(0.50)		(0.39)		(0.33)		(0.47)		(0.52)
Net realized gains		(0.34)		(0.36)		(0.68)		(0.07)		—		—
Total distributions		(0.60)		(0.86)		(1.07)		(0.40)		(0.47)		(0.52)
Net asset value, end of period		$19.19		$18.24		$18.00		$18.97		$17.82		$14.93
Total returnc		8.72%		6.41%		0.66%		8.85%		22.92%		7.66%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.86%		0.86%		0.86%		0.88%		0.88%		0.90%
Expenses net of waiver and payments by affiliates		0.85%e		0.85%e		0.86%e,f		0.88%e,f		0.88%e		0.90%
Net investment income		1.30%		1.44%		1.33%		1.23%		2.25%		2.84%
Supplemental data
Net assets, end of period (000’s)		$745,901		$768,553		$818,082		$921,134		$844,498		$602,804
Portfolio turnover rate		13.02%		28.03%		17.30%		23.05%		34.69%		12.82%

^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%.

42         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund  (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$17.98		$17.75		$18.73		$17.60		$14.75		$14.21
Income from investment operationsa:
Net investment incomeb		0.05		0.12		0.11		0.09		0.24		0.30
Net realized and unrealized gains (losses)		1.41		0.84		(0.16)		1.31		2.97		0.65
Total from investment operations		1.46		0.96		(0.05)		1.40		3.21		0.95
Less distributions from:
Net investment income		(0.19)		(0.37)		(0.25)		(0.20)		(0.36)		(0.41)
Net realized gains		(0.34)		(0.36)		(0.68)		(0.07)		—		—
Total distributions		(0.53)		(0.73)		(0.93)		(0.27)		(0.36)		(0.41)
Net asset value, end of period		$18.91		$17.98		$17.75		$18.73		$17.60		$14.75
Total returnc		8.33%		5.65%		(0.15)%		8.01%		22.11%		6.79%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.61%		1.61%		1.61%		1.63%		1.63%		1.65%
Expenses net of waiver and payments by affiliates		1.60%e		1.60%e		1.61%e,f		1.63%e,f		1.63%e		1.65%
Net investment income		0.55%		0.69%		0.58%		0.48%		1.50%		2.09%
Supplemental data
Net assets, end of period (000’s)		$301,022		$293,038		$311,951		$333,034		$273,132		$211,630
Portfolio turnover rate		13.02%		28.03%		17.30%		23.05%		34.69%		12.82%

^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         43

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund  (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$18.33		$18.09		$18.99		$19.21
Income from investment operationsb:
Net investment incomec		0.15		0.33		0.30		0.19
Net realized and unrealized gains (losses)		1.44		0.84		(0.14)		(0.17)
Total from investment operations		1.59		1.17		0.16		0.02
Less distributions from:
Net investment income		(0.29)		(0.57)		(0.38)		(0.24)
Net realized gains		(0.34)		(0.36)		(0.68)		—
Total distributions		(0.63)		(0.93)		(1.06)		(0.24)
Net asset value, end of period		$19.29		$18.33		$18.09		$18.99
Total returnd		8.93%		6.78%		0.99%		0.11%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.50%		0.50%		0.50%		0.51%
Expenses net of waiver and payments by affiliatesf		0.49%		0.49%		0.50%g		0.51%g
Net investment income		1.66%		1.80%		1.69%		1.60%
Supplemental data
Net assets, end of period (000’s)		$11,706		$7,154		$5		$3,093
Portfolio turnover rate		13.02%		28.03%		17.30%		23.05%

^aFor the period March 4, 2014 (effective date) to October 31, 2014.

^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%.

44         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund  (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$18.24		$18.00		$18.98		$17.83		$14.94		$14.38
Income from investment operationsa:
Net investment incomeb		0.14		0.30		0.29		0.28		0.41		0.45
Net realized and unrealized gains (losses)		1.43		0.85		(0.15)		1.32		2.99		0.66
Total from investment operations		1.57		1.15		0.14		1.60		3.40		1.11
Less distributions from:
Net investment income		(0.28)		(0.55)		(0.44)		(0.38)		(0.51)		(0.55)
Net realized gains		(0.34)		(0.36)		(0.68)		(0.07)		—		—
Total distributions		(0.62)		(0.91)		(1.12)		(0.45)		(0.51)		(0.55)
Net asset value, end of period		$19.19		$18.24		$18.00		$18.98		$17.83		$14.94
Total returnc		8.86%		6.68%		0.87%		9.13%		23.21%		7.93%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.61%		0.61%		0.61%		0.63%		0.63%		0.65%
Expenses net of waiver and payments by affiliates		0.60%e		0.60%e		0.61%e,f		0.63%e,f		0.63%e		0.65%
Net investment income		1.55%		1.69%		1.58%		1.48%		2.50%		3.09%
Supplemental data
Net assets, end of period (000’s)		$1,295,521		$1,080,346		$899,441		$877,190		$387,528		$196,765
Portfolio turnover rate		13.02%		28.03%		17.30%		23.05%		34.69%		12.82%

^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%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         45

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Convertible Securities Fund

	Country	Shares		Value
Common Stocks 5.1%
Consumer Discretionary 0.8%
Newell Brands Inc.	United States		403,856	$	19,280,085
Energy 1.0%
a McDermott International Inc.	United States		3,407,616		22,285,809
Financials 1.3%
Wintrust Financial Corp.	United States		440,016		31,179,534
Industrials 2.0%
Stanley Black & Decker Inc.	United States		346,021		47,110,759
Total Common Stocks (Cost $97,224,674)					119,856,187
Convertible Preferred Stocks 20.6%
Consumer Staples 3.9%
Post Holdings Inc., 2.50%, cvt. pfd.	United States		231,200		36,717,450
Post Holdings Inc., 5.25%, cvt. pfd.	United States		95,200		13,873,020
Tyson Foods Inc., 4.75%, cvt. pfd.	United States		600,000		41,610,000
					92,200,470
Energy 0.4%
Sanchez Energy Corp., 6.50%, cvt. pfd., B	United States		236,000		7,979,160
Health Care 2.7%
Allergan PLC, 5.50%, cvt. pfd.	United States		45,500		39,392,990
Teva Pharmaceutical Industries Ltd., 7.00%, cvt. pfd.	Israel		42,500		24,267,500
					63,660,490
Industrials 4.6%
Arconic Inc., 5.375%, cvt. pfd.	United States		750,000		31,845,000
Rexnord Corp., 5.75%, cvt. pfd.	United States		855,000		48,179,250
Stericycle Inc., 5.25%, cvt. pfd.	United States		380,000		28,123,800
					108,148,050
Information Technology 2.2%
b Mandatory Exchangeable Trust, 5.75%, cvt. pfd., 144A	China		375,000		51,605,625
Telecommunication Services 2.6%
Frontier Communications Corp., 11.125%, cvt. pfd.	United States		267,060		11,841,440
T-Mobile U.S. Inc., 5.50%, cvt. pfd.	United States		455,000		49,922,600
					61,764,040
Utilities 4.2%
Black Hills Corp., 7.75%, cvt. pfd.	United States		606,000		45,140,940
Dominion Resources Inc., 6.375%, cvt. pfd., A	United States		185,200		9,326,672
Exelon Corp., 6.50%, cvt. pfd.	United States		500,000		24,695,000
Great Plains Energy Inc., 7.00%, cvt. pfd.	United States		370,000		20,017,000
					99,179,612
Total Convertible Preferred Stocks (Cost $447,405,496)					484,537,447

46         Semiannual Report         franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Convertible Securities Fund (continued)

	Country		Principal Amount*		Value
Convertible Bonds 69.6%
Consumer Discretionary 12.8%
Ctrip.com International Ltd.,
cvt., senior note, 1.25%, 10/15/18		China	$	19,200,000	$	25,632,768
bcvt., senior note, 144A, 1.25%, 9/15/22		China		20,000,000		21,000,000
b Dish Network Corp., cvt., senior bond, 144A, 3.375%, 8/15/26		United States		41,250,000		50,685,937
GNC Holdings Inc., cvt., senior note, 1.50%, 8/15/20		United States		5,000,000		3,445,750
b Liberty Interactive LLC, cvt., senior bond, 144A, 1.75%, 9/30/46		United States		37,000,000		43,429,120
Liberty Media Corp.,
bcvt., senior bond, 144A, 2.25%, 9/30/46		United States		39,000,000		42,680,625
cvt., senior note, 1.375%, 10/15/23		United States		21,200,000		23,995,750
The Priceline Group Inc., cvt., senior note, 0.35%, 6/15/20		United States		35,000,000		51,209,375
Shutterfly Inc., cvt., 0.25%, 5/15/18		United States		37,465,000		38,050,391
						300,129,716
Energy 0.2%
Cobalt International Energy Inc., cvt., senior bond, 3.125%, 5/15/24		United States		15,200,000		4,522,000
Health Care 11.8%
BioMarin Pharmaceutical Inc., cvt., senior sub. note, 1.50%, 10/15/20		United States		28,200,000		35,091,375
Brookdale Senior Living Inc., cvt., senior note, 2.75%, 6/15/18		United States		26,200,000		25,970,750
Depomed Inc., cvt., senior note, 2.50%, 9/01/21		United States		16,000,000		14,920,000
Fluidigm Corp., cvt., senior bond, 2.75%, 2/01/34		United States		14,418,000		9,930,397
Illumina Inc., cvt., senior note, 0.50%, 6/15/21		United States		33,000,000		35,330,625
Impax Laboratories Inc., cvt., senior note, 2.00%, 6/15/22		United States		45,000,000		38,165,625
Jazz Investments I Ltd., cvt., senior note, 1.875%, 8/15/21		United States		35,000,000		38,937,500
b Neurocrine Biosciences Inc., cvt., senior note, 144A, 2.25%, 5/15/24		United States		24,000,000		24,960,000
Novavax Inc., senior note, cvt., 3.75%, 2/01/23		United States		34,000,000		13,408,750
Nuvasive Inc., cvt., 2.25%, 3/15/21		United States		12,000,000		16,027,500
b Pacira Pharmaceuticals Inc., cvt., senior note, 144A, 2.375%, 4/01/22		United States		6,000,000		6,405,000
Spectranetics Corp., cvt., senior note, 2.625%, 6/01/34		United States		17,000,000		19,411,875
						278,559,397
Industrials 0.8%
The keyW Holding Corp., cvt., senior note, 2.50%, 7/15/19		United States		20,000,000		19,462,500
Information Technology 40.7%
b Blackhawk Network Holdings Inc., cvt., senior note, 144A, 1.50%, 1/15/22		United States		42,700,000		46,489,625
Bottomline Technologies (de) Inc., cvt., senior note, 1.50%, 12/01/17		United States		21,400,000		21,520,375
Electronics for Imaging Inc., cvt., senior note, 0.75%, 9/01/19		United States		22,000,000		23,430,000
b Inphi Corp., cvt., senior note, 144A, 0.75%, 9/01/21		United States		9,600,000		9,870,000
Integrated Device Technology Inc., cvt., senior note, 0.875%, 11/15/22		United States		4,700,000		4,791,063
Intel Corp.,
cvt., junior sub. bond, 3.25%, 8/01/39		United States		8,000,000		14,005,040
bcvt., junior sub. bond, 144A, 2.95%, 12/15/35		United States		19,000,000		25,923,125
cvt., junior sub. deb., 2.95%, 12/15/35		United States		2,000,000		2,728,750
Mercadolibre Inc., cvt., 2.25%, 7/01/19		Argentina		5,000,000		9,346,450
Microchip Technology Inc.,
bcvt., senior note, 144A, 1.625%, 2/15/27		United States		38,750,000		39,866,000
cvt., senior sub. bond, 1.625%, 2/15/25		United States		11,000,000		16,135,625
Micron Technology Inc.,
cvt., senior bond, 2.125%, 2/15/33		United States		6,800,000		17,493,000
cvt., senior bond, G, 3.00%, 11/15/43		United States		32,000,000		34,720,000
Novellus Systems Inc., cvt., senior note, 2.625%, 5/15/41		United States		12,100,000		51,840,937
NXP Semiconductors NV, cvt., senior note, 1.00%, 12/01/19		Netherlands		35,000,000		40,971,875
Palo Alto Networks Inc., cvt., zero cpn., 7/01/19		United States		28,750,000		33,673,438

franklintempleton.com     Semiannual Report         47

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Convertible Securities Fund (continued)

	Country		Principal Amount*		Value
Convertible Bonds (continued)
Information Technology (continued)
Proofpoint Inc., cvt., 0.75%, 6/15/20		United States	$	39,100,000	$	44,842,812
Red Hat Inc., cvt., senior note, 0.25%, 10/01/19		United States		29,250,000		38,591,719
Salesforce.com Inc., cvt., senior note, 0.25%, 4/01/18		United States		35,200,000		46,772,000
ServiceNow Inc., cvt., zero cpn., 11/01/18		United States		35,500,000		47,925,000
b Silicon Laboratories Inc., cvt., 144A, 1.375%, 3/01/22		United States		38,700,000		40,804,313
b Square Inc., cvt., 144A, 0.375%, 3/01/22		United States		43,000,000		45,687,500
Take-Two Interactive Software Inc., cvt., senior note, 1.00%, 7/01/18		United States		16,400,000		47,939,250
Twitter Inc., cvt., senior note, 1.00%, 9/15/21		United States		35,000,000		32,331,250
VeriSign Inc., cvt., junior sub. bond, 3.25%, 8/15/37		United States		11,000,000		28,710,000
Viavi Solutions Inc., cvt., senior bond, 0.625%, 8/15/33		United States		39,900,000		43,515,937
Workday Inc., cvt., senior note, 1.50%, 7/15/20		United States		24,166,500		30,298,749
Xilinx Inc., cvt., senior note, 2.625%, 6/15/17		United States		16,270,000		35,875,350
Yahoo! Inc., cvt., zero cpn., 12/01/18		United States		35,100,000		37,030,500
b Zillow Group Inc., cvt., senior note, 144A, 2.00%, 12/01/21		United States		43,500,000		45,692,835
						958,822,518
Materials 1.8%
B2Gold Corp., cvt., senior sub. note, 3.25%, 10/01/18		Canada		13,900,000		14,534,188
Cemex SAB de CV, cvt., sub. note, 3.75%, 3/15/18		Mexico		24,000,000		28,095,360
						42,629,548
Real Estate 1.5%
Forest City Enterprises Inc.,
cvt., senior note, 4.25%, 8/15/18		United States		17,110,000		19,494,707
cvt., senior note, A, 3.625%, 8/15/20		United States		15,250,000		16,670,156
						36,164,863
Total Convertible Bonds (Cost $1,436,023,841)						1,640,290,542
			Shares
Escrows and Litigation Trusts (Cost $22,362) 0.0%
a,c Motors Liquidation Co., Escrow Account		United States		376,200		—
Total Investments before Short Term Investments     (Cost $1,980,676,373)						2,244,684,176
Short Term Investments 5.4%
Money Market Funds (Cost $118,070,432) 5.0%
d,e Institutional Fiduciary Trust Money Market Portfolio, 0.37%		United States		118,070,432		118,070,432

48         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Convertible Securities Fund (continued)

	Country		Principal Amount*		Value
Repurchase Agreements (Cost $8,702,266) 0.4%
f Joint Repurchase Agreement, 0.797%, 5/01/17 (Maturity Value $8,702,844)
BNP Paribas Securities Corp. (Maturity Value $3,498,021)
Deutsche Bank Securities Inc. (Maturity Value $395,109)
HSBC Securities (USA) Inc. (Maturity Value $3,498,021)
Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $1,311,693)
Collateralized by U.S. Government Agency Securities, 0.75% - 2.375%, 4/09/18 -
4/05/22; gU.S. Treasury Bill, 6/08/17 - 11/09/17; U.S. Treasury Note, 0.75% -
2.125%, 7/15/19 - 8/15/21; and U.S. Treasury Note, Index Linked, 0.125%,
4/15/19 (valued at $8,882,607)		United States	$	8,702,266	$	8,702,266
Total Investments (Cost $2,107,449,071) 100.7%						2,371,456,874
Other Assets, less Liabilities (0.7)%						(17,307,948	)
Net Assets 100.0%					$	2,354,148,926

*The principal amount is stated in U.S. dollars unless otherwise indicated.

^a Non-income producing.

^bSecurity 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 April 30, 2017, the aggregate value of these securities was $495,099,705, representing 21.0% of net assets.

^cSecurity has been deemed illiquid because it may not be able to be sold within seven days.

^dSee Note 3(f) regarding investments in affiliated management investment companies.

^eThe rate shown is the annualized seven-day yield at period end.

^fSee Note 1(c) regarding joint repurchase agreement.

^gThe security was issued on a discount basis with no stated coupon rate.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         49

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Equity Income Fund

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$22.50		$22.99		$23.93		$22.16		$18.01		$16.58
Income from investment operationsa:
Net investment incomeb		0.21		0.47		0.55		0.66c		0.44		0.41
Net realized and unrealized gains (losses)		2.00		0.24		0.26		1.73		4.19		1.46
Total from investment operations		2.21		0.71		0.81		2.39		4.63		1.87
Less distributions from:
Net investment income		(0.29)		(0.60)		(0.69)		(0.50)		(0.48)		(0.44)
Net realized gains		(0.89)		(0.60)		(1.06)		(0.12)		—		—
Total distributions		(1.18)		(1.20)		(1.75)		(0.62)		(0.48)		(0.44)
Net asset value, end of period		$23.53		$22.50		$22.99		$23.93		$22.16		$18.01
Total returnd		9.99%		3.31%		3.72%		10.99%		26.07%		11.43%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.86%		0.87%		0.86%		0.87%		0.91%		0.95%
Expenses net of waiver and payments by affiliates		0.85%f		0.87%f,g		0.86%f,g		0.87%f,g		0.91%f		0.95%
Net investment income		1.80%		2.13%		2.37%		2.87%c		2.19%		2.36%
Supplemental data
Net assets, end of period (000’s)		$1,742,039		$1,700,712		$1,790,392		$1,762,318		$1,637,089		$1,305,791
Portfolio turnover rate		12.63%		50.05%		34.09%		20.15%		33.18%		19.71%

^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 $0.17 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.15%.

^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%.

50         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$22.32		$22.85		$23.79		$22.04		$17.91		$16.50
Income from investment operationsa:
Net investment incomeb		0.12		0.30		0.37		0.49c		0.28		0.28
Net realized and unrealized gains (losses)		2.00		0.23		0.27		1.71		4.18		1.45
Total from investment operations		2.12		0.53		0.64		2.20		4.46		1.73
Less distributions from:
Net investment income		(0.21)		(0.46)		(0.52)		(0.33)		(0.33)		(0.32)
Net realized gains		(0.89)		(0.60)		(1.06)		(0.12)		—		—
Total distributions		(1.10)		(1.06)		(1.58)		(0.45)		(0.33)		(0.32)
Net asset value, end of period		$23.34		$22.32		$22.85		$23.79		$22.04		$17.91
Total returnd		9.63%		2.51%		2.96%		10.14%		25.18%		10.56%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.61%		1.62%		1.61%		1.62%		1.66%		1.70%
Expenses net of waiver and payments by affiliates		1.60%f		1.62%f,g		1.61%f,g		1.62%f,g		1.66%f		1.70%
Net investment income		1.05%		1.38%		1.62%		2.12%c		1.44%		1.61%
Supplemental data
Net assets, end of period (000’s)		$271,578		$257,156		$250,347		$241,566		$208,325		$134,746
Portfolio turnover rate		12.63%		50.05%		34.09%		20.15%		33.18%		19.71%

^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 $0.17 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.40%.

^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         51

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class R
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$22.49		$22.99		$23.93		$22.17		$18.01		$16.58
Income from investment operationsa:
Net investment incomeb		0.18		0.41		0.50		0.61c		0.39		0.37
Net realized and unrealized gains (losses)		2.01		0.24		0.25		1.72		4.20		1.46
Total from investment operations		2.19		0.65		0.75		2.33		4.59		1.83
Less distributions from:
Net investment income		(0.27)		(0.55)		(0.63)		(0.45)		(0.43)		(0.40)
Net realized gains		(0.89)		(0.60)		(1.06)		(0.12)		—		—
Total distributions		(1.16)		(1.15)		(1.69)		(0.57)		(0.43)		(0.40)
Net asset value, end of period		$23.52		$22.49		$22.99		$23.93		$22.17		$18.01
Total returnd		9.88%		3.05%		3.45%		10.67%		25.81%		11.16%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.09%		1.11%		1.11%		1.12%		1.16%		1.20%
Expenses net of waiver and payments by affiliates		1.08%f		1.11%f,g		1.11%f,g		1.12%f,g		1.16%f		1.20%
Net investment income		1.57%		1.89%		2.12%		2.62%c		1.94%		2.11%
Supplemental data
Net assets, end of period (000’s)		$7,282		$6,395		$6,265		$7,305		$5,844		$4,940
Portfolio turnover rate		12.63%		50.05%		34.09%		20.15%		33.18%		19.71%

^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 $0.17 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.90%.

^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%.

52         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$22.54		$23.01		$23.95		$22.18		$20.00
Income from investment operationsb:
Net investment incomec		0.25		0.43		0.63		0.75d		0.26
Net realized and unrealized gains (losses)		2.01		0.37		0.27		1.73		2.18
Total from investment operations		2.26		0.80		0.90		2.48		2.44
Less distributions from:
Net investment income		(0.34)		(0.67)		(0.78)		(0.59)		(0.26)
Net realized gains		(0.89)		(0.60)		(1.06)		(0.12)		—
Total distributions		(1.23)		(1.27)		(1.84)		(0.71)		(0.26)
Net asset value, end of period		$23.57		$22.54		$23.01		$23.95		$22.18
Total returne		10.18%		3.72%		4.10%		11.38%		12.30%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		0.49%		0.49%		2.89%		1.78%		2.16%
Expenses net of waiver and payments by affiliatesg		0.48%		0.49%h		0.48%		0.50%		0.51%
Net investment income		2.17%		2.51%		2.75%		3.24%d		2.59%
Supplemental data
Net assets, end of period (000’s)		$11,544		$10,537		$6		$6		$6
Portfolio turnover rate		12.63%		50.05%		34.09%		20.15%		33.18%

^aFor the period May 1, 2013 (effective date) to October 31, 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 $0.17 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.51%.

^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%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         53

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$22.53		$23.02		$23.96		$22.19		$18.02		$16.59
Income from investment operationsa:
Net investment incomeb		0.22		0.45		0.60		0.71c		0.48		0.45
Net realized and unrealized gains (losses)		2.03		0.31		0.27		1.74		4.22		1.46
Total from investment operations		2.25		0.76		0.87		2.45		4.70		1.91
Less distributions from:
Net investment income		(0.32)		(0.65)		(0.75)		(0.56)		(0.53)		(0.48)
Net realized gains		(0.89)		(0.60)		(1.06)		(0.12)		—		—
Total distributions		(1.21)		(1.25)		(1.81)		(0.68)		(0.53)		(0.48)
Net asset value, end of period		$23.57		$22.53		$23.02		$23.96		$22.19		$18.02
Total returnd		10.17%		3.53%		3.98%		11.25%		26.48%		11.69%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.61%		0.62%		0.61%		0.62%		0.66%		0.70%
Expenses net of waiver and payments by affiliates		0.60%f		0.62%f,g		0.61%f,g		0.62%f,g		0.66%f		0.70%
Net investment income		2.05%		2.38%		2.62%		3.12%c		2.44%		2.61%
Supplemental data
Net assets, end of period (000’s)		$117,357		$80,422		$34,577		$30,166		$17,534		$10,527
Portfolio turnover rate		12.63%		50.05%		34.09%		20.15%		33.18%		19.71%

^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 $0.17 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.40%.

^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%.

54         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Equity Income Fund

	Country	Shares		Value
Common Stocks 86.7%
Consumer Discretionary 5.7%
Ford Motor Co.	United States		1,236,700	$	14,184,949
L Brands Inc.	United States		230,000		12,146,300
Lowe’s Cos. Inc.	United States		440,000		37,347,200
Mattel Inc.	United States		550,000		12,331,000
Newell Brands Inc.	United States		570,000		27,211,800
Target Corp.	United States		348,900		19,486,065
					122,707,314
Consumer Staples 8.1%
Anheuser-Busch InBev SA/NV, ADR	Belgium		201,100		22,772,564
CVS Health Corp.	United States		346,000		28,524,240
Kimberly-Clark Corp.	United States		114,000		14,791,500
The Kraft Heinz Co.	United States		369,100		33,362,949
PepsiCo Inc.	United States		460,500		52,165,440
Wal-Mart Stores Inc.	United States		285,000		21,426,300
					173,042,993
Energy 8.5%
Anadarko Petroleum Corp.	United States		193,200		11,016,264
Baker Hughes Inc.	United States		225,000		13,358,250
BP PLC, ADR	United Kingdom		265,000		9,094,800
Chevron Corp.	United States		502,800		53,648,760
Exxon Mobil Corp.	United States		367,234		29,984,656
Royal Dutch Shell PLC, A, ADR	United Kingdom		385,900		20,140,121
Schlumberger Ltd.	United States		283,000		20,542,970
Suncor Energy Inc.	Canada		775,000		24,304,000
					182,089,821
Financials 17.0%
Arthur J. Gallagher & Co.	United States		571,800		31,912,158
Bank of America Corp.	United States		937,200		21,874,248
BB&T Corp.	United States		720,000		31,089,600
BlackRock Inc.	United States		110,500		42,494,985
JPMorgan Chase & Co.	United States		922,800		80,283,600
Morgan Stanley	United States		956,000		41,461,720
U.S. Bancorp	United States		1,076,800		55,218,304
Wells Fargo & Co.	United States		1,145,000		61,646,800
					365,981,415
Health Care 8.9%
AstraZeneca PLC, ADR	United Kingdom		298,800		9,038,700
Eli Lilly & Co.	United States		465,400		38,190,724
Johnson & Johnson	United States		144,000		17,779,680
Medtronic PLC	United States		523,000		43,456,070
Merck & Co. Inc.	United States		225,000		14,024,250
Pfizer Inc.	United States		1,174,300		39,832,256
UnitedHealth Group Inc.	United States		161,500		28,243,120
					190,564,800
Industrials 16.8%
Cummins Inc.	United States		161,800		24,422,092
Deere & Co.	United States		186,500		20,815,265
General Electric Co.	United States		1,770,500		51,326,795
Illinois Tool Works Inc.	United States		225,400		31,125,486
Lockheed Martin Corp.	United States		122,600		33,034,570

franklintempleton.com Semiannual Report         55

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Equity Income Fund (continued)

	Country	Shares		Value
Common Stocks (continued)
Industrials (continued)
Norfolk Southern Corp.	United States		149,500	$	17,564,755
Raytheon Co.	United States		293,500		45,554,135
Republic Services Inc.	United States		643,500		40,534,065
Stanley Black & Decker Inc.	United States		258,380		35,178,437
United Parcel Service Inc., B	United States		266,600		28,648,836
United Technologies Corp.	United States		274,700		32,686,553
					360,890,989
Information Technology 11.8%
Apple Inc.	United States		370,500		53,222,325
Automatic Data Processing Inc.	United States		80,000		8,359,200
Broadcom Ltd.	United States		53,500		11,813,335
Cisco Systems Inc.	United States		966,733		32,936,593
Intel Corp.	United States		311,518		11,261,376
Microsoft Corp.	United States		1,200,100		82,158,846
Oracle Corp.	United States		323,000		14,522,080
Texas Instruments Inc.	United States		493,000		39,035,740
					253,309,495
Materials 4.4%
BASF SE	Germany		286,500		27,919,077
The Dow Chemical Co.	United States		525,400		32,995,120
International Paper Co.	United States		612,600		33,062,022
					93,976,219
Real Estate 1.2%
Host Hotels & Resorts Inc.	United States		1,483,000		26,619,850
Telecommunication Services 1.6%
Rogers Communications Inc., B	Canada		362,700		16,633,422
Verizon Communications Inc.	United States		408,000		18,731,280
					35,364,702
Utilities 2.7%
Dominion Resources Inc.	United States		361,100		27,959,973
Xcel Energy Inc.	United States		673,500		30,341,175
					58,301,148
Total Common Stocks (Cost $1,379,149,162)					1,862,848,746
a Equity-Linked Securities 7.4%
Consumer Discretionary 1.4%
b Wells Fargo Bank National Assn. into Amazon.com Inc., 5.00%, 144A	United States		33,300		29,027,710
Energy 0.8%
b Merrill Lynch International & Co. CV into Schlumberger Ltd., 7.00%, 144A	United States		126,000		9,495,738
b UBS AG London into Anadarko Petroleum Corp., 9.00%, 144A	United States		150,000		8,761,455
					18,257,193
Financials 1.6%
b The Goldman Sachs Group Inc. into The Charles Schwab Corp., 7.00%, 144A	United States		1,000,000		34,063,100
Health Care 0.9%
b Merrill Lynch International & Co. CV into Gilead Sciences Inc., 7.25%, 144A	United States		284,000		19,909,082

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Equity Income Fund (continued)

	Country	Shares		Value
a Equity-Linked Securities (continued)
Information Technology 2.7%
b Barclays Bank PLC into Broadcom Ltd., 9.00%, 144A	Singapore		160,000	$	27,695,920
b UBS AG into Intel Corp., 7.00%, 144A	United States		845,000		30,763,661
					58,459,581
Total Equity-Linked Securities (Cost $154,316,208)					159,716,666
Convertible Preferred Stocks 3.8%
Energy 0.5%
Hess Corp., 8.00%, cvt. pfd.	United States		175,000		10,438,750
Health Care 1.7%
Allergan PLC, 5.50%, cvt. pfd.	United States		41,700		36,103,026
Utilities 1.6%
NextEra Energy Inc., 6.371%, cvt. pfd.	United States		575,000		35,460,250
Total Convertible Preferred Stocks (Cost $81,908,075)					82,002,026
Total Investments before Short Term Investments (Cost $1,615,373,445)					2,104,567,438
Short Term Investments (Cost $39,182,790) 1.8%
Money Market Funds 1.8%
c,d Institutional Fiduciary Trust Money Market Portfolio, 0.37%	United States		39,182,790		39,182,790
Total Investments (Cost $1,654,556,235) 99.7%					2,143,750,228
Other Assets, less Liabilities 0.3%					6,050,760
Net Assets 100.0%				$	2,149,800,988

See Abbreviations on page 90.

^aSee Note 1(g) regarding equity-linked securities.

^bSecurity 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 April 30, 2017, the aggregate value of these securities was $159,716,666, representing 7.4% of net assets.

^cSee Note 3(f) regarding investments in affiliated management investment companies.

^dThe rate shown is the annualized seven-day yield at period end.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         57

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Real Return Fund

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$10.09		$9.92		$10.66		$10.82		$10.94		$11.06
Income from investment operationsa:
Net investment incomeb		0.10		0.12		0.05		0.14		0.15		0.17
Net realized and unrealized gains (losses)		—c		0.15		(0.72)		(0.06)		(0.01)		0.01
Total from investment operations		0.10		0.27		(0.67)		0.08		0.14		0.18
Less distributions from:
Net investment income and net foreign currency gains		(0.01)		(0.09)		(0.07)		(0.24)		(0.26)		(0.30)
Tax return of capital		—		(0.01)		—		—		—		—
Total distributions		(0.01)		(0.10)		(0.07)		(0.24)		(0.26)		(0.30)
Net asset value, end of period		$10.18		$10.09		$9.92		$10.66		$10.82		$10.94
Total returnd		0.98%		2.77%		(6.32)%		0.75%		1.34%		1.67%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.13%		1.12%		1.10%		1.10%		1.08%		1.06%
Expenses net of waiver and payments by affiliates		0.90%f		0.90%f		0.90%f		0.90%f		0.90%f		0.90%
Net investment income		1.92%		1.18%		0.43%		1.34%		1.35%		1.58%
Supplemental data
Net assets, end of period (000’s)		$161,408		$161,541		$185,743		$248,313		$327,285		$411,419
Portfolio turnover rate		23.46%		31.82%		26.57%		33.02%		27.91%		18.64%

^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, adjustments to interest income for the inflation-indexed bonds, 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%.

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$10.00		$9.82		$10.59		$10.76		$10.87		$11.00
Income from investment operationsa:
Net investment incomeb		0.08		0.08		—c		0.10		0.10		0.13
Net realized and unrealized gains (losses)		—c		0.16		(0.71)		(0.07)		0.01		—c
Total from investment operations		0.08		0.24		(0.71)		0.03		0.11		0.13
Less distributions from:
Net investment income and net foreign currency gains		—		(0.05)		(0.06)		(0.20)		(0.22)		(0.26)
Tax return of capital		—		(0.01)		—		—		—		—
Total distributions		—		(0.06)		(0.06)		(0.20)		(0.22)		(0.26)
Net asset value, end of period		$10.08		$10.00		$9.82		$10.59		$10.76		$10.87
Total returnd		0.80%		2.44%		(6.70)%		0.22%		1.03%		1.22%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		1.54%		1.52%		1.50%		1.50%		1.48%		1.46%
Expenses net of waiver and payments by affiliates		1.31%f		1.30%f		1.30%f		1.30%f		1.30%f		1.30%
Net investment income		1.51%		0.78%		0.04%		0.94%		0.95%		1.18%
Supplemental data
Net assets, end of period (000’s)		$38,617		$39,568		$48,084		$68,188		$83,666		$104,682
Portfolio turnover rate		23.46%		31.82%		26.57%		33.02%		27.91%		18.64%

^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, adjustments to interest income for the inflation-indexed bonds, 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%.

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$10.15		$9.98		$10.68		$10.85		$11.01
Income from investment operationsb:
Net investment incomec		0.12		0.16		0.10		0.21		0.09
Net realized and unrealized gains (losses)		—d		0.16		(0.72)		(0.10)		(0.10)
Total from investment operations		0.12		0.32		(0.62)		0.11		(0.01)
Less distributions from:
Net investment income and net foreign currency gains		(0.03)		(0.14)		(0.08)		(0.28)		(0.15)
Tax return of capital		—		(0.01)		—		—		—
Total distributions		(0.03)		(0.15)		(0.08)		(0.28)		(0.15)
Net asset value, end of period		$10.24		$10.15		$9.98		$10.68		$10.85
Total returne		1.17%		3.25%		(5.87)%		1.04%		(0.06)%
Ratios to average net assetsf
Expenses before waiver and payments by affiliates		0.70%		0.71%		0.71%		0.70%		2.43%
Expenses net of waiver and payments by affiliatesg		0.49%		0.50%		0.50%		0.52%		0.52%
Net investment income		2.33%		1.58%		0.83%		1.72%		1.73%
Supplemental data
Net assets, end of period (000’s)		$6,006		$5,326		$1,730		$2,034		$5
Portfolio turnover rate		23.46%		31.82%		26.57%		33.02%		27.91%

^aFor the period May 1, 2013 (effective date) to October 31, 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, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.

^cBased on average daily shares outstanding.

^dAmount rounds to less than $0.01 per share.

^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%.

60         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015		2014		2013		2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$10.13		$9.96		$10.68		$10.85		$10.97		$11.08
Income from investment operationsa:
Net investment incomeb		0.11		0.14		0.05		0.18		0.18		0.20
Net realized and unrealized gains (losses)		0.01		0.16		(0.70)		(0.08)		(0.01)		0.01
Total from investment operations		0.12		0.30		(0.65)		0.10		0.17		0.21
Less distributions from:
Net investment income and net foreign currency gains		(0.02)		(0.12)		(0.07)		(0.27)		(0.29)		(0.32)
Tax return of capital		—		(0.01)		—		—		—		—
Total distributions		(0.02)		(0.13)		(0.07)		(0.27)		(0.29)		(0.32)
Net asset value, end of period		$10.23		$10.13		$9.96		$10.68		$10.85		$10.97
Total returnc		1.11%		3.04%		(6.08)%		0.91%		1.60%		1.99%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.88%		0.87%		0.85%		0.85%		0.83%		0.81%
Expenses net of waiver and payments by affiliates		0.65%e		0.65%e		0.65%e		0.65%e		0.65%e		0.65%
Net investment income		2.17%		1.43%		0.68%		1.59%		1.60%		1.83%
Supplemental data
Net assets, end of period (000’s)		$39,833		$35,215		$37,758		$65,958		$28,042		$35,362
Portfolio turnover rate		23.46%		31.82%		26.57%		33.02%		27.91%		18.64%

^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, adjustments to interest income for the inflation-indexed bonds, 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%.

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FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Real Return Fund

	Country	Shares		Value
Common Stocks 8.4%
Energy 5.2%
Anadarko Petroleum Corp.	United States		23,700	$	1,351,374
Canadian Natural Resources Ltd.	Canada		33,700		1,074,019
Chevron Corp.	United States		13,700		1,461,790
Exxon Mobil Corp.	United States		15,277		1,247,367
Halliburton Co.	United States		33,300		1,527,804
Noble Energy Inc.	United States		27,400		885,842
Occidental Petroleum Corp.	United States		18,200		1,120,028
Pioneer Natural Resources Co.	United States		4,700		813,053
Royal Dutch Shell PLC, A, ADR	United Kingdom		19,800		1,033,362
Schlumberger Ltd.	United States		20,850		1,513,502
a Weatherford International PLC	United States		119,400		688,938
					12,717,079
Materials 3.2%
Agrium Inc.	Canada		8,800		826,584
BHP Billiton PLC, ADR	United Kingdom		32,700		1,004,871
The Dow Chemical Co.	United States		26,600		1,670,480
a Freeport-McMoRan Inc.	United States		53,046		676,336
Goldcorp Inc.	Canada		101,600		1,418,336
Nucor Corp.	United States		21,000		1,287,930
Rio Tinto PLC, ADR	United Kingdom		27,700		1,103,014
					7,987,551
Total Common Stocks (Cost $21,881,836)					20,704,630
Management Investment Companies 8.9%
Diversified Financials 1.7%
b Franklin Lower Tier Floating Rate Fund	United States		292,284		3,083,593
b Franklin Middle Tier Floating Rate Fund	United States		108,877		1,095,307
					4,178,900
Real Estate 7.2%
SPDR Dow Jones REIT ETF	United States		193,000		17,773,370
Total Management Investment Companies       (Cost $13,334,958)					21,952,270
		Principal Amount*
Corporate Bonds 4.1%
Consumer Services 0.1%
MGM Resorts International, senior note, 7.75%, 3/15/22	United States		200,000		233,500
Energy 1.5%
c Chesapeake Energy Corp., secured note, second lien, 144A, 8.00%, 12/15/22	United States		425,000		449,437
CONSOL Energy Inc.,
senior note, 5.875%, 4/15/22	United States		300,000		294,000
senior note, 8.00%, 4/01/23	United States		600,000		628,125
Energy Transfer Equity LP, senior note, first lien, 7.50%, 10/15/20	United States		1,000,000		1,131,875
Sabine Pass Liquefaction LLC, first lien, 5.625%, 2/01/21	United States		1,000,000		1,088,391
					3,591,828

62         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Real Return Fund (continued)

	Country	Principal Amount*		Value
Corporate Bonds (continued)
Health Care Equipment & Services 0.5%
HCA Inc., senior secured bond, first lien, 5.875%, 3/15/22	United States		1,000,000	$	1,111,250
Materials 0.3%
c Novelis Corp., senior bond, 144A, 5.875%, 9/30/26	United States		700,000		721,000
Media 0.6%
c Altice U.S. Finance I Corp., senior secured bond, 144A, 5.50%, 5/15/26	United States		300,000		310,875
CSC Holdings LLC, senior note, 6.75%, 11/15/21	United States		1,000,000		1,102,500
					1,413,375
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
c Valeant Pharmaceuticals International Inc., senior note, 144A, 7.50%, 7/15/21	United States		1,000,000		832,500
Telecommunication Services 0.8%
Intelsat Jackson Holdings SA, senior note, 7.25%, 10/15/20	Luxembourg		1,000,000		941,200
c Sprint Communications Inc., senior note, 144A, 7.00%, 3/01/20	United States		1,000,000		1,095,000
					2,036,200
Total Corporate Bonds (Cost $9,768,590)					9,939,653
d,eSenior Floating Rate Interests 2.0%
Automobiles & Components 0.1%
The Goodyear Tire & Rubber Co., Second Lien Term Loan, 2.99%, 4/30/19	United States		47,572		48,147
TI Group Automotive Systems LLC, Initial US Term Loan, 3.743%, 6/30/22	United States		147,070		148,173
					196,320
Capital Goods 0.1%
f Allison Transmission Inc., Term Loans, 2.99%, 9/23/22	United States		86,520		87,487
Harsco Corp., Initial Term Loan, 6.00%, 11/02/23	United States		29,299		29,940
Leidos (Abacus Innovations Corp.), B Term Loan, 3.25%, 8/16/23	United States		22,692		22,947
					140,374
Commercial & Professional Services 0.0%†
KAR Auction Services Inc., Tranche B-3 Term Loans, 4.50%, 3/09/23	United States		91,257		92,411
Consumer Services 0.1%
Aristocrat Technologies Inc., Tranche B-2 Loans, 3.406%, 10/20/21	United States		16,979		17,145
f Caesars Entertainment Operating Co. LLC., Term B Loans, 5.75%, 8/31/24	United States		15,167		15,085
f Greektown Holdings LLC, Initial Term Loan, 6.00%, 4/25/24	United States		31,122		31,193
Prime Security Services Borrower LLC, 2016-2 Refinancing Term B-1 Loan, 4.25%, 5/02/22	United States		99,203		100,328
					163,751
Diversified Financials 0.0%†
First Eagle Investment Management LLC, Initial Term Loans, 4.656%, 12/01/22	United States		46,333		46,579
Russell Investments US Institutional Holdco Inc., Initial Term Loan, 6.75%, 6/01/23	United States		34,911		35,261
					81,840

franklintempleton.com Semiannual Report         63

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Real Return Fund (continued)

	Country		Principal Amount*		Value
d,e Senior Floating Rate Interests (continued)
Energy 0.2%
Bowie Resource Holdings LLC, First Lien Initial Term Loan, 6.75%, 8/14/20		United States		196,065	$	190,837
f Fieldwood Energy LLC, Loans, 3.875%, 10/01/18		United States		404,913		396,308
McDermott Finance LLC, Term Loan, 8.397%, 4/16/19		United States		10,050		10,207
						597,352
Food, Beverage & Tobacco 0.0%†
JBS USA LUX SA, New Initial Term Loans, 3.483%, 10/30/22		Brazil		21,300		21,403
Pinnacle Foods Finance LLC, Initial Term Loans, 2.983%, 2/03/24		United States		17,532		17,663
						39,066
Health Care Equipment & Services 0.0%†
Carestream Health Inc., Term Loan, 5.147%, 6/07/19		United States		66,912		66,514
Household & Personal Products 0.1%
FGI Operating Co. LLC (Freedom Group), Term B Loans, 5.50%, 4/19/19		United States		359,062		347,392
Spectrum Brands Inc., Term Loans, 2.852% - 3.486%, 6/23/22		United States		3,705		3,740
						351,132
Materials 0.2%
Chemours Co., Tranche B-1 US Term Loans, 3.49%, 5/12/22		United States		207,953		209,350
Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		56,195		56,512
f FMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		Australia		140,743		141,782
OCI Beaumont LLC, Term B-3 Loan, 8.025%, 8/20/19		United States		124,626		128,520
						536,164
Media 0.2%
Altice US Finance I Corp., March 2017 Refinancing TL Commitments, 3.241%, 7/28/25		United States		25,126		25,132
AMC Entertainment Holdings Inc.,
2016 Incremental Term Commitments, 3.742%, 12/15/23		United States		9,766		9,848
Initial Term Loans, 3.744%, 12/15/22		United States		15,240		15,348
Charter Communications Operating LLC (CCO Safari), Term Loan A-1, 2.75%, 5/18/21		United States		133,000		133,047
CSC Holdings LLC, March 2017 Incremental Term Loans, 3.244%, 7/17/25		United States		121,086		121,171
Lions Gate Entertainment Corp., Term A Loan, 3.482%, 12/08/21		United States		67,100		67,478
Live Nation Entertainment Inc., Term B-2 Loans, 3.50%, 10/31/23		United States		9,742		9,819
UPC Financing Partnership, Facility AP, 3.744%, 4/15/25		United States		30,895		31,046
						412,889
Pharmaceuticals, Biotechnology & Life Sciences 0.2%f
f Endo Luxembourg Finance Co. I S.A.R.L and Endo LLC, Initial Term Loans, 7.25%, 4/27/24		United States		198,748		200,021
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 3.195%, 1/31/25		United States		197,579		198,444
RPI Finance Trust, Term A-2 Term Loan, 3.397%, 10/14/20		United States		37,207		37,276
Valeant Pharmaceuticals International Inc., Series F Tranche B Term Loan, 5.74%, 4/01/22		United States		145,109		146,032
						581,773

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Real Return Fund (continued)

	Country		Principal Amount*				Value
d,e Senior Floating Rate Interests (continued)
Retailing 0.2%
Ascena Retail Group Inc., Tranche B Term Loan, 5.50%, 8/21/22		United States		230,352			$	208,756
Dollar Tree Inc., Term A-1 Loans, 2.75%, 7/06/20		United States		69,598				69,402
f PetSmart Inc., Tranche B-2 Loans, 4.02%, 3/11/22		United States		200,798				185,362
								463,520
Semiconductors & Semiconductor Equipment 0.2%
MACOM Technology Solutions Holdings Inc., Initial Term Loans, 3.989%, 5/07/21		United States		120,690				122,500
MKS Instruments Inc., Tranche B-2 Term Loans, 3.743%, 5/01/23		United States		49,260				49,845
ON Semiconductor Corp., 2017 Replacement Term Loans, 3.243%, 3/31/23		United States		230,406				232,011
								404,356
Software & Services 0.1%
Global Payments Inc., Delayed Draw Term Loan (A-2), 3.196%, 10/31/21		United States		139,877				140,139
Rackspace Hosting Inc., 2016 Refinancing Term B Loan, 4.535%, 11/03/23		United States		48,832				49,234
								189,373
Technology Hardware & Equipment 0.1%
Ciena Corp., Refinancing Term Loan, 3.493%, 1/28/22		United States		26,241				26,454
Dell International LLC, Term A-3 Loan, 3.00%, 12/31/18		United States		104,098				104,369
Western Digital Corp., US Term B-2 Loan, 3.743%, 4/29/23		United States		66,991				67,611
Zebra Technologies Corp., Second Amendment Refinancing Term Loan,       3.60%, 10/27/21		United States		46,719				47,230
								245,664
Telecommunication Services 0.0%†
Consolidated Communications Inc., Initial Term Loan, 4.00%, 10/05/23		United States		24,445				24,653
Global Tel*Link Corp., Term Loan, 5.00%, 5/23/20		United States		26,655				26,655
								51,308
Transportation 0.1%
Air Canada, Term Loan, 3.90%, 10/06/23		Canada		6,423				6,474
Navios Maritime Midstream Partners LP and Navios Maritime Midstream           Partners Finance (US) Inc., Term Loan, 5.66%, 6/18/20		Marshall Islands		85,486				85,486
United Air Lines Inc., Class B Term Loans, 3.422%, 4/01/24		United States		32,482				32,619
XPO Logistics Inc., Loans, 3.405%, 11/01/21		United States		89,706				90,188
								214,767
Utilities 0.1%
EFS Cogen Holdings I LLC (Linden), Term B Advance, 4.65%, 6/28/23		United States		15,864				16,003
NRG Energy Inc., Term Loans, 3.243%, 6/30/23		United States		119,100				119,757
								135,760
Total Senior Floating Rate Interests (Cost $4,926,263)								4,964,334
Foreign Government and Agency Securities 9.6%
Government of Hungary, senior note, 6.375%, 3/29/21		Hungary		620,000				701,933
Government of Indonesia, senior bond, FR53, 8.25%, 7/15/21		Indonesia		58,500,000,000		IDR		4,634,703
Government of Malaysia, senior note, 3.58%, 9/28/18		Malaysia		7,650,000		MYR		1,770,620
Government of Mexico,		Mexico		1,124,000	g	MXN		5,841,905
M, 4.75%, 6/14/18
senior note, M, 5.00%, 6/15/17		Mexico		750,000	g	MXN		3,978,356

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNDAUDITED)

Franklin Real Return Fund (continued)

	Country		Principal Amount*				Value
Foreign Government and Agency Securities (continued)
Nota Do Tesouro Nacional,
10.00%, 1/01/21		Brazil		17,200	h	BRL	$	5,433,831
iIndex Linked, 6.00%, 8/15/18		Brazil		1,270	h	BRL		1,211,257
Total Foreign Government and Agency Securities     (Cost $22,950,368)								23,572,605
U.S. Government and Agency Securities 61.4%
j U.S. Treasury Note,
Index Linked, 2.625%, 7/15/17		United States		15,278,216				15,405,835
Index Linked, 1.625%, 1/15/18		United States		33,717,748				34,199,810
Index Linked, 1.375%, 7/15/18		United States		982,714				1,008,863
Index Linked, 2.125%, 1/15/19		United States		38,573,113				40,312,644
Index Linked, 0.125%, 4/15/19		United States		22,037,602				22,241,538
Index Linked, 1.875%, 7/15/19		United States		23,956,405				25,304,001
Index Linked, 1.375%, 1/15/20		United States		2,365,420				2,480,808
Index Linked, 0.125%, 4/15/20		United States		9,881,202				9,997,751
Total U.S. Government and Agency Securities     (Cost $150,677,923)								150,951,250
Total Investments before Short Term Investments     (Cost $223,539,938)								232,084,742
Short Term Investments (Cost $13,070,414) 5.3%
Repurchase Agreements 5.3%
kJoint Repurchase Agreement, 0.797%, 5/01/17
(Maturity Value $13,071,282)
BNP Paribas Securities Corp. (Maturity Value $5,253,871)
Deutsche Bank Securities Inc. (Maturity Value $593,436)
HSBC Securities (USA) Inc. (Maturity Value $5,253,871)
Merrill Lynch, Pierce, Fenner & Smith Inc. (Maturity Value $1,970,104)
Collateralized by U.S. Government Agency Securities, 0.75% - 2.375%, 4/09/18 - 4/05/22; lU.S. Treasury Bill, 6/08/17 - 11/09/17; U.S. Treasury Note, 0.75% - 2.125%, 7/15/19 - 8/15/21; and U.S. Treasury Note, Index Linked, 0.125%, 4/15/19 (valued at $13,341,278)		United States		13,070,414				13,070,414
Total Investments (Cost $236,610,352) 99.7%								245,155,156
Other Assets, less Liabilities 0.3%								708,736
Net Assets 100.0%							$	245,863,892

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNDAUDITED)

Franklin Real Return Fund (continued)

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 3(f) regarding investments in affiliated management investment companies.

^cSecurity 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 April 30, 2017, the aggregate value of these securities was $3,408,812, representing 1.4% of net assets.

^dThe coupon rate shown represents the rate at period end.

^eSee Note 1(h) regarding senior floating rate interests.

^fA portion or all of the security purchased on a delayed delivery basis. See Note 1(d).

^gPrincipal amount is stated in 100 Mexican Peso Units.

^hPrincipal amount is stated in 1,000 Brazilian Real Units.

ⁱRedemption price at maturity is adjusted for inflation. See Note 1(j).

^jPrincipal amount of security is adjusted for inflation. See Note 1(j).

^kSee Note 1(c) regarding joint repurchase agreement.

^lThe security was issued on a discount basis with no stated coupon rate.

At April 30, 2017, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Chilean Peso		DBAB		Buy		328,810,000		$487,849		5/18/17		$    4,778		$  —
Euro		DBAB		Buy		3,072,361		3,257,225		5/18/17		93,029		—
Euro		DBAB		Sell		3,072,361		3,448,664		5/18/17		98,409		—
Euro		JPHQ		Buy		1,150,100		1,218,979		5/18/17		35,146		—
Euro		JPHQ		Sell		1,150,100		1,276,369		5/18/17		22,244		—
Total Forward Exchange Contracts												$253,606		$  —
Net unrealized appreciation (depreciation)												$253,606

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Abbreviations on page 90.

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FRANKLIN INVESTORS SECURITIES TRUST

Financial Statements

Statements of Assets and Liabilities

April 30, 2017 (unaudited)

	Franklin Balanced Fund			Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers		$2,842,914,522			$1,980,676,373			$1,615,373,445			$219,566,358
Cost - Controlled affiliates (Note 3f)		17,998,125			—			—			—
Cost - Non-controlled affiliates (Note 3f)		314,587,427			118,070,432			39,182,790			3,973,580
Cost - Repurchase agreements		—			8,702,266			—			13,070,414
Total cost of investments		$3,175,500,074			$2,107,449,071			$1,654,556,235			$236,610,352
Value - Unaffiliated issuers		$3,127,349,827			$2,244,684,176			$2,104,567,438			$227,905,842
Value - Controlled affiliates (Note 3f)		18,262,500			—			—			—
Value - Non-controlled affiliates (Note 3f)		314,587,427			118,070,432			39,182,790			4,178,900
Value - Repurchase agreements		—			8,702,266			—			13,070,414
Total value of investments		3,460,199,754			2,371,456,874			2,143,750,228			245,155,156
Cash		—			—			—			912
Restricted Cash (Note 1f)		—			—			—			230,000
Foreign currency, at value (cost $—, $—, $— and $77,334, respectively)		—			—			—			77,392
Receivables:
Investment securities sold		61,247,549			—			9,013,988			—
Capital shares sold		5,567,000			6,153,969			2,501,212			364,434
Dividends and interest		17,588,170			6,930,786			3,075,401			1,324,849
Affiliates		—			—			—			50,390
Unrealized appreciation on OTC forward exchange contracts		—			—			—			253,606
Other assets		2,845			1,842			1,770			203
Total assets		3,544,605,318			2,384,543,471			2,158,342,599			247,456,942
Liabilities:
Payables:
Investment securities purchased		29,074,298			24,000,000			2,198,889			314,283
Capital shares redeemed		7,313,218			4,540,083			4,393,594			797,163
Management fees		1,735,292			872,665			817,187			81,387
Distribution fees		1,087,997			392,447			579,301			53,981
Transfer agent fees		570,695			443,646			405,355			38,774
Trustees’ fees and expenses		1,411			1,075			1,321			229
Distributions to shareholders		—			—			—			12,741
Funds advanced by custodian.		190,468			—			—			—
Options written, at value (premiums received $210,400, $—, $— and $—, respectively)		25,000			—			—			—
Due to brokers		—			—			—			230,000
Deferred tax		—			—			—			19,529
Accrued expenses and other liabilities		261,807			144,629			145,964			44,963
Total liabilities		40,260,186			30,394,545			8,541,611			1,593,050
Net assets, at value		$3,504,345,132			$2,354,148,926			$2,149,800,988			$245,863,892
Net assets consist of:
Paid-in capital		$3,200,566,587			$2,031,834,953			$1,613,552,854			$268,163,766
Distributions in excess of net investment income		(13,590,101	)		(30,653,721	)		(5,258,125	)		(2,523,465	)
Net unrealized appreciation (depreciation)		284,873,966			264,007,803			489,174,612			8,785,902
Accumulated net realized gain (loss)		32,494,680			88,959,891			52,331,647			(28,562,311	)
Net assets, at value		$3,504,345,132			$2,354,148,926			$2,149,800,988			$245,863,892

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities (continued)

April 30, 2017 (unaudited)

	Franklin Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Class A:
Net assets, at value	$	2,633,336,723	$	745,900,612	$	1,742,039,324	$	161,407,573
Shares outstanding		219,099,176		38,874,415		74,035,908		15,848,199
Net asset value per sharea	$	12.02	$	19.19	$	23.53	$	10.18
Maximum offering price per share (net asset value pershare ÷ 94.25%, 94.25%, 94.25% and 95.75%,respectively)	$	12.75	$	20.36	$	24.97	$	10.63
Class C:
Net assets, at value	$	663,321,659	$	301,021,752	$	271,577,917	$	38,617,224
Shares outstanding		55,674,471		15,921,220		11,635,810		3,829,889
Net asset value and maximum offering price per sharea	$	11.91	$	18.91	$	23.34	$	10.08
Class R:
Net assets, at value	$	5,179,426			$	7,282,308
Shares outstanding		429,919				309,588
Net asset value and maximum offering price per share	$	12.05			$	23.52
Class R6:
Net assets, at value	$	607,767	$	11,705,964	$	11,544,444	$	6,005,873
Shares outstanding		50,466		606,714		489,698		586,435
Net asset value and maximum offering price per share	$	12.04	$	19.29	$	23.57	$	10.24
Advisor Class:
Net assets, at value	$	201,899,557	$	1,295,520,598	$	117,356,995	$	39,833,222
Shares outstanding		16,764,460		67,504,471		4,979,582		3,895,550
Net asset value and maximum offering price per share	$	12.04	$	19.19	$	23.57	$	10.23

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations

for the six months ended April 30, 2017 (unaudited)

	Franklin Balanced Fund			Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Investment income:
Dividends:
Unaffiliated issuers		$  30,488,644			$  12,645,067			$  28,193,757			$   695,337
Controlled affiliates (Note 3f)		233,907			—			—			—
Non-controlled affiliates (Note 3f)		200,023			86,058			37,356			188,018
Interest		26,336,407			10,912,337			—			943,533
Inflation principal adjustments		—			—			—			1,601,611
Total investment income		57,258,981			23,643,462			28,231,113			3,428,499
Expenses:
Management fees (Note 3a)		10,766,473			5,162,479			4,956,752			759,295
Distribution fees: (Note 3c)
Class A		3,228,819			922,953			2,171,998			203,670
Class C		3,265,689			1,458,209			1,342,455			128,062
Class R		12,014			—			17,146			—
Transfer agent fees: (Note 3e)
Class A		1,418,651			453,529			1,085,149			143,607
Class C		358,087			179,041			167,693			34,694
Class R		2,647			—			4,423			—
Class R6		89			360			132			85
Advisor Class		92,753			711,632			61,686			32,904
Custodian fees (Note 4)		17,163			8,746			10,772			8,113
Reports to shareholders		163,295			91,300			120,403			19,682
Registration and filing fees		142,905			73,576			83,379			33,295
Professional fees		33,169			28,465			29,230			21,638
Trustees’ fees and expenses		17,932			11,655			11,741			1,419
Other		36,577			21,221			22,095			10,798
Total expenses		19,556,263			9,123,166			10,085,054			1,397,262
Expense reductions (Note 4)		(973	)		(593	)		(447	)		(81	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(357,457	)		(170,694	)		(95,084	)		(280,133	)
Net expenses		19,197,833			8,951,879			9,989,523			1,117,048
Net investment income		38,061,148			14,691,583			18,241,590			2,311,451
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		39,079,578			88,851,626			52,307,676			(1,708,141	)
Written options		3,741,673			—			72,846			—
Foreign currency transactions		(14,553	)		—			(43,548	)		(34,480	)
Net realized gain (loss)		42,806,698			88,851,626			52,336,974			(1,742,621	)
Net change in unrealized appreciation (depreciation) on:
Investments		123,266,424			83,094,574			131,099,904			1,714,012
Translation of other assets and liabilities denominated in foreign currencies		(1,719	)		—			(569	)		204,204
Written options		465,321			—			—			—
Change in deferred taxes on unrealized appreciation		—			—			—			(528	)
Net change in unrealized appreciation (depreciation)		123,730,026			83,094,574			131,099,335			1,917,688
Net realized and unrealized gain (loss)		166,536,724			171,946,200			183,436,309			175,067
Net increase (decrease) in net assets resulting from operations		$204,597,872			$186,637,783			$201,677,899			$2,486,518

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016			Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016
Increase (decrease) in net assets:
Operations:
Net investment income	$	38,061,148		$	78,519,243		$	14,691,583		$	29,650,370
Net realized gain (loss)		42,806,698			70,229,504			88,851,626			70,272,718
Net change in unrealized appreciation (depreciation)		123,730,026			22,673,744			83,094,574			35,403,730
Net increase (decrease) in net assets resulting from operations		204,597,872			171,422,491			186,637,783			135,326,818
Distributions to shareholders from:
Net investment income:
Class A		(39,266,813	)		(79,181,917	)		(10,424,839	)		(21,449,948	)
Class C		(7,576,230	)		(15,011,956	)		(3,061,268	)		(6,322,161	)
Class R		(66,862	)		(131,468	)		—			—
Class R6		(6,106	)		(8,352	)		(147,853	)		(89,054	)
Advisor Class		(2,778,713	)		(2,775,337	)		(17,422,934	)		(28,889,795	)
Net realized gains:
Class A		(36,628,714	)		(196,452	)		(13,914,557	)		(15,784,677	)
Class C		(9,315,546	)		(49,077	)		(5,462,741	)		(6,225,597	)
Class R		(65,313	)		(340	)		—			—
Class R6		(3,395	)		(18	)		(160,359	)		(98	)
Advisor Class		(2,130,727	)		(10,279	)		(20,367,792	)		(15,633,159	)
Total distributions to shareholders		(97,838,419	)		(97,365,196	)		(70,962,343	)		(94,394,489	)
Capital share transactions: (Note 2)
Class A		19,439,762			102,305,345			(60,834,497	)		(54,566,518	)
Class C		12,920,859			53,175,745			(7,085,443	)		(21,791,985	)
Class R		547,749			(287,996	)		—			—
Class R6		364,124			5,265			3,953,303			6,867,487
Advisor Class		58,918,267			81,786,363			153,348,732			148,171,070
Total capital share transactions		92,190,761			236,984,722			89,382,095			78,680,054
Net increase (decrease) in net assets .		198,950,214			311,042,017			205,057,535			119,612,383
Net assets:
Beginning of period		3,305,394,918			2,994,352,901			2,149,091,391			2,029,479,008
End of period	$	3,504,345,132		$	3,305,394,918		$	2,354,148,926		$	2,149,091,391
Distributions in excess of net investment income included in net assets:
End of period	$	(13,590,101)		$	(1,700,359)		$	(30,653,721)		$	(14,288,410)

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets (continued)

	Franklin Equity Income Fund				Franklin Real Return Fund
	Six Months Ended April 30, 2017 (unaudited)		Year Ended October 31, 2016		Six Months Ended April 30, 2017 (unaudited)		Year Ended October 31, 2016
Increase (decrease) in net assets:
Operations:
Net investment income	$	18,241,590	$	42,110,358	$	2,311,451	$	2,879,106
Net realized gain (loss)		52,336,974		94,010,493		(1,742,621)		(17,568,660)
Net change in unrealized appreciation (depreciation)		131,099,335		(69,788,269)		1,917,688		20,787,529
Net increase (decrease) in net assets resulting from operations		201,677,899		66,332,582		2,486,518		6,097,975
Distributions to shareholders from:
Net investment income:
Class A		(21,831,977)		(47,097,269)		(139,432)		(1,562,108)
Class C		(2,420,028)		(5,251,049)		—		(215,455)
Class R		(82,033)		(152,076)		—		—
Class R6		(155,792)		(180,060)		(17,050)		(21,887)
Advisor Class		(1,349,299)		(1,422,902)		(85,725)		(429,016)
Net realized gains:
Class A		(66,065,657)		(46,499,582)		—		—
Class C		(10,179,945)		(6,537,589)		—		—
Class R		(270,558)		(161,343)		—		—
Class R6		(407,606)		(149)		—		—
Advisor Class		(3,358,230)		(889,611)		—		—
Tax return of capital:
Class A		—		—		—		(243,513)
Class C		—		—		—		(62,428)
Class R6		—		—		—		(3,525)
Advisor Class		—		—		—		(50,006)
Total distributions to shareholders		(106,121,125)		(108,191,630)		(242,207)		(2,587,938)
Capital share transactions: (Note 2)
Class A		(37,228,941)		(53,673,051)		(1,678,521)		(26,641,058)
Class C		2,516,798		12,513,162		(1,271,732)		(9,129,554)
Class R		579,755		252,727		—		—
Class R6		513,291		9,967,087		623,310		3,570,373
Advisor Class		32,642,150		46,433,315		4,296,185		(2,973,664)
Total capital share transactions		(976,947)		15,493,240		1,969,242		(35,173,903)
Net increase (decrease) in net assets .		94,579,827		(26,365,808)		4,213,553		(31,663,866)
Net assets:
Beginning of period		2,055,221,161		2,081,586,969		241,650,339		273,314,205
End of period	$	2,149,800,988	$	2,055,221,161	$	245,863,892	$	241,650,339
Undistributed net investment income included in net assets:
End of period	$	—	$	2,339,414	$	—	$	—
Distributions in excess of net investment income included in net assets:
End of period	$	(5,258,125)	$	—	$	(2,523,465)	$	(4,592,709)

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Notes to Financial Statements (unaudited)

1.  Organization and Significant Accounting Policies

Franklin Investors Securities Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eight separate funds, four of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The financial statements of the remaining funds in the Trust are presented separately. The classes of shares offered within each of the Funds are indicated below. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.

Class A, Class C, Class R, Class R6 & Advisor Class

Franklin Balanced Fund

Franklin Equity Income Fund

Class A, Class C, Class R6 & Advisor Class

Franklin Convertible Securities Fund

Franklin Real Return Fund

The following summarizes the Funds’ significant accounting policies.

a.  Financial Instrument Valuation

The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities, exchange traded funds, and derivative financial instruments listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt and certain preferred securities generally trade in the OTC market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements are valued at cost, which approximates fair value.

Certain derivative financial instruments trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.  Organization and Significant Accounting Policies (continued)

a.  Financial Instrument Valuation (continued)

The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Funds’ business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities

held by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Funds’ NAV is not calculated, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.

b.  Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

c.  Joint Repurchase Agreement

Certain or all Funds enter into a joint repurchase agreement whereby their uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Funds’ custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Funds, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Funds may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Funds in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Funds at period end, as indicated in the Statements of Investments, had been entered into on April 28, 2017.

d.  Securities Purchased on a Delayed Delivery Basis

Certain or all Funds purchase securities on a delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e.  Derivative Financial Instruments

Certain or all Funds invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial

investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counter-parties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Funds to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement. At April 30, 2017, Franklin Real Return Fund had no OTC derivatives in a net liability position for such contracts.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives

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FRANKLIN INVESTORS SECURITIES TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.  Organization and Significant Accounting Policies (continued)

e.  Derivative Financial Instruments (continued)

with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

Certain or all Funds entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

Certain or all Funds purchased or wrote exchange traded option contracts primarily to manage and/or gain exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.

See Notes 6 and 8 regarding investment transactions and other derivative information, respectively.

f.  Restricted Cash

At April 30, 2017, certain or all Funds held restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s custodian and is reflected in the Statements of Assets and Liabilities.

g.  Equity-Linked Securities

Certain or all Funds invest in equity-linked securities. Equity-linked securities are hybrid financial instruments that generally combine both debt and equity characteristics into a single note form. Income received from equity-linked securities is recorded as realized gains in the Statements of Operations and may be based on the performance of an underlying equity security, an equity index, or an option position. The risks of investing in equity-linked securities include unfavorable price movements in the underlying security and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with equity-linked securities and the appreciation potential may be limited. Equity-linked securities may be more volatile and less liquid than other investments held by the Funds.

h.  Senior Floating Rate Interests

Certain or all Funds invest in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Funds invest are generally readily marketable, but may be subject to certain restrictions on resale.

i.  Income and Deferred Taxes

It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date. As a result of several court cases, in certain countries across the European Union, certain or all Funds filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statements of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statements of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Funds, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of April 30, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.

j.  Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the

ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as inflation principal adjustments in the Statements of Operations.

k.  Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

l.  Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on

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FRANKLIN INVESTORS SECURITIES TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.  Organization and Significant Accounting Policies (continued)

l.  Guarantees and Indemnifications (continued)

behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s

maximum exposure under these arrangements is unknown as 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 April 30, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:

	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Six Months ended April 30, 2017
Shares sold		25,133,296		$	299,639,478			4,811,945		$	89,266,227
Shares issued in reinvestment of distributions		6,251,164			74,202,629			1,282,223			23,132,849
Shares redeemed		(29,754,455	)		(354,402,345	)		(9,366,391	)		(173,233,573	)
Net increase (decrease)		1,630,005		$	19,439,762			(3,272,223	)	$	(60,834,497	)
Year ended October 31, 2016
Shares sold		59,288,525		$	669,112,660			9,476,768		$	168,154,565
Shares issued in reinvestment of distributions		6,894,113			77,791,246			2,018,714			35,174,653
Shares redeemed		(56,715,686	)		(644,598,561	)		(14,805,915	)		(257,895,736	)
Net increase (decrease)		9,466,952		$	102,305,345			(3,310,433	)	$	(54,566,518	)
Class C Shares:
Six Months ended April 30, 2017
Shares sold		6,376,588		$	75,309,891			1,240,300		$	22,622,246
Shares issued in reinvestment of distributions		1,331,012			15,657,733			391,944			6,969,905
Shares redeemed		(6,602,559	)		(78,046,765	)		(2,012,064	)		(36,677,594	)
Net increase (decrease)		1,105,041		$	12,920,859			(379,820	)	$	(7,085,443	)
Year ended October 31, 2016
Shares sold		17,111,710		$	191,037,224			1,949,088		$	33,909,433
Shares issued in reinvestment of distributions		1,240,417			13,880,631			589,732			10,122,973
Shares redeemed		(13,610,128	)		(151,742,110	)		(3,808,818	)		(65,824,391	)
Net increase (decrease)		4,741,999		$	53,175,745			(1,269,998	)	$	(21,791,985	)
Class R Shares:
Six Months ended April 30, 2017
Shares sold		68,709		$	821,286
Shares issued in reinvestment of distributions		11,106			132,176
Shares redeemed		(33,882	)		(405,713	)
Net increase (decrease)		45,933		$	547,749
Year ended October 31, 2016
Shares sold		132,632		$	1,496,201
Shares issued in reinvestment of distributions		11,661			131,808
Shares redeemed		(171,599	)		(1,916,005	)
Net increase (decrease)		(27,306	)	$	(287,996	)

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Shares			Amount			Shares			Amount
Class R6 Shares:
Six Months ended April 30, 2017
Shares sold		29,716		$	355,237			255,574		$	4,701,653
Shares issued in reinvestment of distributions		797			9,500			16,962			308,064
Shares redeemed		(51	)		(613	)		(56,009	)		(1,056,414	)
Net increase (decrease)		30,462		$	364,124			216,527		$	3,953,303
Year ended October 31, 2016
Shares sold		3,047		$	34,245			788,664		$	13,994,019
Shares issued in reinvestment of distributions		740			8,369			4,845			88,899
Shares redeemed		(3,180	)		(37,349	)		(403,594	)		(7,215,431	)
Net increase (decrease)		607		$	5,265			389,915		$	6,867,487
Advisor Class Shares:
Six Months ended April 30, 2017
Shares sold		9,400,656		$	112,150,660			15,042,282		$	278,761,941
Shares issued in reinvestment of distributions		365,816			4,354,164			1,894,301			34,195,606
Shares redeemed		(4,838,898	)		(57,586,557	)		(8,660,608	)		(159,608,815	)
Net increase (decrease)		4,927,574		$	58,918,267			8,275,975		$	153,348,732
Year ended October 31, 2016
Shares sold		14,391,414		$	167,114,896			44,182,146		$	748,163,852
Shares issued in reinvestment of distributions		204,315			2,323,814			2,236,760			39,111,889
Shares redeemed		(7,564,701	)		(87,652,347	)		(37,152,701	)		(639,104,671	)
Net increase (decrease)		7,031,028		$	81,786,363			9,266,205		$	148,171,070

	Franklin Equity Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Six Months ended April 30, 2017
Shares sold		5,184,824		$	120,232,937			2,330,684		$	23,661,490
Shares issued in reinvestment of distributions		3,751,533			86,001,149			13,373			136,140
Shares redeemed		(10,502,097	)		(243,463,027	)		(2,506,897	)		(25,476,151	)
Net increase (decrease)		(1,565,740	)	$	(37,228,941	)		(162,840	)	$	(1,678,521	)
Year ended October 31, 2016
Shares sold		10,955,507		$	240,824,766			2,920,637		$	28,866,525
Shares issued in reinvestment of distributions		4,189,138			91,549,334			182,566			1,756,283
Shares redeemed		(17,422,052	)		(386,047,151	)		(5,823,642	)		(57,263,866	)
Net increase (decrease)		(2,277,407	)	$	(53,673,051	)		(2,720,439	)	$	(26,641,058	)

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2. Shares of Beneficial Interest (continued)

	Franklin Equity Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Class C Shares:
Six Months ended April 30, 2017
Shares sold		1,097,405		$	25,270,791			531,448		$	5,349,112
Shares issued in reinvestment of distributions		525,160			11,957,583			—			—
Shares redeemed		(1,506,065	)		(34,711,576	)		(658,289	)		(6,620,844	)
Net increase (decrease)		116,500		$	2,516,798			(126,841	)	$	(1,271,732	)
Year ended October 31, 2016
Shares sold		2,665,652		$	58,334,909			625,724		$	6,130,419
Shares issued in reinvestment of distributions		516,181			11,198,526			28,218			269,761
Shares redeemed		(2,617,595	)		(57,020,273	)		(1,591,824	)		(15,529,734	)
Net increase (decrease)		564,238		$	12,513,162			(937,882	)	$	(9,129,554	)
Class R Shares:
Six Months ended April 30, 2017
Shares sold		45,635		$	1,060,416
Shares issued in reinvestment of distributions		13,383			306,848
Shares redeemed		(33,739	)		(787,509	)
Net increase (decrease)		25,279		$	579,755
Year ended October 31, 2016
Shares sold		83,578		$	1,810,529
Shares issued in reinvestment of distributions		12,662			276,699
Shares redeemed		(84,438	)		(1,834,501	)
Net increase (decrease)		11,802		$	252,727
Class R6 Shares:
Six Months ended April 30, 2017
Shares sold		133,844		$	3,106,525			197,797		$	2,015,177
Shares issued in reinvestment of distributions		349			8,012			989			10,122
Shares redeemed		(112,032	)		(2,601,246	)		(137,285	)		(1,401,989	)
Net increase (decrease)		22,161		$	513,291			61,501		$	623,310
Year ended October 31, 2016
Shares sold		537,262		$	11,541,244			414,897		$	4,196,219
Shares issued in reinvestment of distributions		84			1,876			9			93
Shares redeemed		(70,059	)		(1,576,033	)		(63,409	)		(625,939	)
Net increase (decrease)		467,287		$	9,967,087			351,497		$	3,570,373

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

	Franklin Equity Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Advisor Class Shares:
Six Months ended April 30, 2017
Shares sold		2,600,993		$	60,295,727			1,150,282		$	11,758,592
Shares issued in reinvestment of distributions		192,701			4,427,807			8,141			83,204
Shares redeemed		(1,383,396	)		(32,081,384	)		(739,148	)		(7,545,611	)
Net increase (decrease)		1,410,298		$	32,642,150			419,275		$	4,296,185
Year ended October 31, 2016
Shares sold		4,153,049		$	93,471,028			1,852,276		$	18,341,311
Shares issued in reinvestment of distributions		95,903			2,107,308			47,451			457,432
Shares redeemed		(2,181,835	)		(49,145,021	)		(2,214,965	)		(21,772,407	)
Net increase (decrease)		2,067,117		$	46,433,315			(315,238	)	$	(2,973,664	)

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 Balanced 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
0.700%	Up to and including $250 million
0.675%	Over $250 million, up to and including $500 million
0.650%	Over $500 million, up to and including $1 billion
0.625%	Over $1 billion, up to and including $2.5 billion
0.600%	Over $2.5 billion, up to and including $5 billion
0.575%	Over $5 billion, up to and including $10 billion
0.550%	Over $10 billion, up to and including $15 billion
0.525%	Over $15 billion, up to and including $20 billion
0.500%	In excess of $20 billion

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3.  Transactions with Affiliates (continued)

a.  Management Fees (continued)

Franklin Convertible Securities Fund and Franklin Equity Income 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

Franklin Real Return 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
0.625%	Up to and including $500 million
0.525%	Over $500 million, up to and including $1 billion
0.480%	Over $1 billion, up to and including $1.5 billion
0.435%	Over $1.5 billion, up to and including $6.5 billion
0.415%	Over $6.5 billion, up to and including $11.5 billion
0.400%	Over $11.5 billion, up to and including $16.5 billion
0.390%	Over $16.5 billion, up to and including $19 billion
0.380%	Over $19 billion, up to and including $21.5 billion
0.370%	In excess of $21.5 billion

For the period ended April 30, 2017, each Fund’s annualized effective investment management fee rate based on average daily net assets was as follows:

Franklin Balanced Fund	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
0.631%		0.469%		0.466%		0.625%

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.

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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 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 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 Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Reimbursement Plans:
Class A		0.35%		0.25%		0.25%		0.25%
Compensation Plans:
Class C		1.00%		1.00%		1.00%		0.65%
Class R		0.50%		—		0.50%		—

For Franklin Balanced Fund, the Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

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 Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Sales charges retained net of commissions paid to unaffiliated brokers/dealers		$708,129		$88,052		$281,283		$21,580
CDSC retained		$  44,483		$10,101		$  10,866		$  4,410

e.  Transfer Agent Fees

Each class of shares, except for Class R6, pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including 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 April 30, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:

	Franklin Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Transfer agent fees		$621,025		$407,879		$478,366		$89,919

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3.  Transactions with Affiliates (continued)

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 November 1, 2013, the waiver was accounted for as a reduction to management fees. During the period ended April 30, 2017, investments in affiliated management investment companies were 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 Period			Investment Income			Realized Gain (Loss)			%of Affiliated Fund Shares Outstanding Held at End of Period
Franklin Balanced Fund
Controlled Affiliates
Franklin Liberty Investment Grade
Corporate ETF		—		750,000		—			750,000		$	18,262,500		$	233,907		$	—		32.6%
Non-Controlled Affiliates
Institutional Fiduciary Trust Money
Market Portfolio, 0.37%		120,863,963		576,549,575		(382,826,111	)		314,587,427		$	314,587,427		$	200,023		$	—		1.6%
Total											$	332,849,927		$	433,930		$	—
Franklin Convertible Securities Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.37%		98,515,365		182,180,531		(162,625,464	)		118,070,432		$	118,070,432		$	86,058		$	—		0.6%
Franklin Equity Income Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.37%		50,191,472		197,665,543		(208,674,225	)		39,182,790		$	39,182,790		$	37,356		$	—		0.2%
Franklin Real Return Fund
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		280,073		12,211		—			292,284		$	3,083,593		$	145,517		$	—		1.0%
Franklin Middle Tier Floating Rate Fund		105,222		3,655		—			108,877			1,095,307			42,501			—		0.4%
Total											$	4,178,900		$	188,018		$	—

g.  Waiver and Expense Reimbursements

Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by Franklin Real Return Fund so that the expenses (excluding distribution fees, and acquired fund fees and expenses) for Class A, Class C, and Advisor Class of the Fund do not exceed 0.65%, and Class R6 does not exceed 0.49% 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 February 28, 2018. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end. Prior to March 1, 2017, expenses for Class R6 were limited to 0.50%.

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Additionally, 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 February 28, 2018. For Franklin Convertible Securities Fund and Franklin Equity Income Fund, there were no Class R6 transfer agent fees waived during the period ended April 30, 2017.

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 April 30, 2017, 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 October 31, 2016, the capital loss carryforwards were as follows:

	Franklin Real Return Fund
Capital loss carryforwards subject to expiration:
2017		$  1,207,907
2018		1,206,586
Capital loss carryforwards not subject to expiration:
Short term		842,781
Long term		23,558,304
Total capital loss carryforwards		$26,815,578

At April 30, 2017, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

	Franklin Balanced Fund			Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Cost of investments		$3,187,831,006			$2,134,732,708			$1,654,730,289			$241,141,426
Unrealized appreciation		$   342,167,402			$   379,993,731			$   526,261,867			$  14,536,311
Unrealized depreciation		(69,798,654	)		(143,269,565	)		(37,241,928	)		(10,522,581	)
Net unrealized appreciation (depreciation)		$   272,368,748			$   236,724,166			$   489,019,939			$   4,013,730

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, bond discounts and premiums and wash sales.

6.  Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended April 30, 2017, were as follows:

	Franklin Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Purchases		$385,479,561		$300,488,159		$261,999,255		$61,252,254
Sales		$547,156,583		$274,447,702		$315,644,034		$53,679,050

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6.  Investment Transactions (continued)

Transactions in options written during the period ended April 30, 2017, were as follows:

	Number of Contracts			Premiums
Franklin Balanced Fund
Options outstanding at October 31, 2016		44,478		$	2,871,309
Options written		20,275			3,307,441
Options expired		(21,525	)		(1,992,485	)
Options exercised		(17,750	)		(1,226,378	)
Options closed		(20,478	)		(2,749,487	)
Options outstanding at April 30, 2017		5,000		$	210,400
Franklin Equity Income Fund
Options outstanding at October 31, 2016		—		$	—
Options written		1,600			72,846
Options expired		(1,600	)		(72,846	)
Options exercised		—			—
Options closed		—			—
Options outstanding at April 30, 2017		—		$	—

See Notes 1(e) and 8 regarding derivative financial instruments and other derivative information, respectively.

7.  Credit Risk

At April 30, 2017, Franklin Balanced Fund, Franklin Convertible Securities Fund and Franklin Real Return Fund had 11.4%, 58.0% and 9.9%, respectively, of their 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.

8.  Other Derivative Information

At April 30, 2017, the Funds’ 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 Location		Fair Value
Franklin Balanced Fund
Equity contracts	Investments in securities, at value		$100,000a	Options written, at value			$25,000
Franklin Real Return Fund
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		$253,606	Unrealized depreciation on OTC forward exchange contracts			$       —

^aPurchased option contracts are included in investments in securities, at value in the Statement of Assets and Liabilities.

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For the period ended April 30, 2017, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Locations	Net Realized Gain (Loss) for the Period				Statement of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:					Net change in unrealized appreciation (depreciation) on:
Franklin Balanced Fund
Equity contracts	Investments		$	(2,400,750	)a	Investments		$	(743,012	)a
	Written options			3,741,673		Written options			465,321
Franklin Equity Income Fund
Equity contracts	Written options		$	72,846		Written options		$	—
Franklin Real
Return Fund
Foreign exchange contracts	Foreign currency transactions		$	—		Translation of other assets and liabilities denominated in foreign currencies		$	198,982	b

^a Purchased 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.

^bForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statements of Operations.

For the period ended April 30, 2017, the average month end fair value of derivatives, as a percentage of average month end net assets, and the average month end number of open derivative contracts for the period were as follows:

	Franklin Balanced Fund	Franklin Equity Income Fund	Franklin Real Return Fund
Average month end fair value of derivatives	0.1%	0.0%a	0.1%
Average month end number of open derivatives	5	—b	4

^aRounds to less than 0.1%.

^bRounds to less than 1.

See Note 1(e) regarding derivative financial instruments.

9.  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 9, 2018. 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 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 April 30, 2017, the Funds did not use the Global Credit Facility.

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10.  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 April 30, 2017, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Franklin Balanced Fund
Assets:
Investments in Securities:
Equity Investmentsa,b	$	1,721,315,743	$	—	$	—		$	1,721,315,743
Equity-Linked Securities		—		283,755,983		—			283,755,983
Convertible Bonds		—		17,868,750		—			17,868,750
Corporate Bonds		—		1,122,571,851		—			1,122,571,851
Options Purchased		100,000		—		—			100,000
Short Term Investments		314,587,427		—		—			314,587,427
Total Investments in Securities	$	2,036,003,170	$	1,424,196,584	$	—		$	3,460,199,754
Liabilities:
Other Financial Instruments:
Options Written	$	25,000	$	—	$	—		$	25,000
Franklin Convertible Securities Fund
Assets:
Investments in Securities:
Equity Investments:a
Consumer Staples	$	41,610,000	$	50,590,470	$	—		$	92,200,470
Energy		22,285,809		7,979,160		—			30,264,969
Information Technology		—		51,605,625		—			51,605,625
All Other Equity Investmentsb		430,322,570		—		—			430,322,570
Convertible Bonds		—		1,640,290,542		—			1,640,290,542
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		118,070,432		8,702,266		—			126,772,698
Total Investments in Securities	$	612,288,811	$	1,759,168,063	$	—		$	2,371,456,874

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	Level 1		Level 2		Level 3		Total
Franklin Equity Income Fund
Assets:
Investments in Securities:
Equity Investmentsa,b	$	1,944,850,772	$	—	$	—	$	1,944,850,772
Equity-Linked Securities		—		159,716,666		—		159,716,666
Short Term Investments		39,182,790		—		—		39,182,790
Total Investments in Securities	$	1,984,033,562	$	159,716,666	$	—	$	2,143,750,228
Franklin Real Return Fund
Assets:
Investments in Securities:
Equity Investmentsa,b	$	42,656,900	$	—	$	—	$	42,656,900
Corporate Bonds		—		9,939,653		—		9,939,653
Senior Floating Rate Interests		—		4,964,334		—		4,964,334
Foreign Government and Agency Securities		—		23,572,605		—		23,572,605
U.S. Government and Agency Securities		—		150,951,250		—		150,951,250
Short Term Investments		—		13,070,414		—		13,070,414
Total Investments in Securities	$	42,656,900	$	202,498,256	$	—	$	245,155,156
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	253,606	$	—	$	253,606

^aIncludes common, preferred, convertible preferred stocks and management investment companies.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at April 30, 2017.

11.  New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (FASB) 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, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held 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 is currently evaluating the impact, if any, of applying this provision.

12.  Investment Company Reporting Modernization

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the Funds’ financial statements and related disclosures.

13.  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.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Abbreviations

Counterparty		Currency		Selected Portfolio
DBAB	Deutsche Bank AG	BRL	Brazilian Real	ADR	American Depositary Receipt
JPHQ	JP Morgan Chase & Co.	IDR	Indonesian Rupiah	ETF	Exchange Traded Fund
		MXN	Mexican Peso	FRN	Floating Rate Note
		MYR	Malaysian Ringgit	REIT	Real Estate Investment Trust
				SPDR	S&P Depositary Receipt

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Shareholder Information

Board Approval of Investment Management Agreements

FRANKLIN INVESTORS SECURITIES TRUST

Franklin Balanced Fund

Franklin Convertible Securities Fund

Franklin Equity Income Fund

Franklin Real Return Fund

(each a Fund)

At an in-person meeting held on February 28, 2017 (Meeting), the Board of Trustees (Board) of Franklin Investors Securities Trust, including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.

In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent, and quality of the services provided by the Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.

In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the existing management fees are fair and reasonable and that the continuance of such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.

Nature, Extent and Quality of Services

The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continual efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity, derivatives and liquidity risk management.

The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments (FTI) organization.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.

Fund Performance

The Board reviewed and considered the performance results of

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each Fund over various time periods ended December 31, 2016. The Board considered the performance returns for each Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.

Franklin Balanced Fund - The Performance Universe for this Fund included the Fund and all retail and institutional mixed-asset target allocation moderate funds. The Board noted that the Fund’s annualized income return and annualized total return for the one-, three-, five- and 10-year periods were above the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin Convertible Securities Fund - The Performance Universe for this Fund included the Fund and all retail and institutional convertible securities funds. The Board noted that the Fund’s annualized income return and annualized total return for the one-, three-, five- and 10-year periods were above the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin Equity Income Fund - The Performance Universe for this Fund included the Fund and all retail and institutional equity income funds. The Board noted that the Fund’s annualized income return for the one-, three-, five- and 10-year periods was above the median of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-, three-, five- and 10-year periods was below the median of its Performance Universe. In discussing such performance, management explained that it reflected the Fund’s long-standing strategy of investing in securities with yields higher than the overall market and Broadridge peers. Given the Fund’s income-oriented investment objective and consistently good comparative income returns, the Board concluded that the Fund’s performance was acceptable. In doing so, the Board noted the changes in the Fund’s portfolio management team in 2015 and that the Fund’s annualized total return for each of the one-, three-, five- and 10-year periods, while below the median, exceeded 4.9%.

Franklin Real Return Fund - The Performance Universe for this Fund included the Fund and all retail and institutional inflation-protected bond funds. The Board noted that the Fund’s annualized income return for the one-year period was below the median of its Performance Universe, but for the three-, five- and 10-year periods was above the median of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-year period was above the median of its Performance Universe, but for the three-, five-and 10-year periods was below the median of its Performance Universe. In discussing such performance, management explained that the Performance Universe contained many funds that invested primarily in treasury inflation protected securities (TIPS) and held longer term TIPS that performed better during such periods than the Fund’s portfolio, which had a lesser weighting in TIPS with those being held of a shorter duration. Management further explained that the Fund is positioned correctly to protect investors from a rise in inflation. Given the Fund’s income-oriented investment objective, the Board concluded that the Fund’s performance was acceptable.

Comparative Fees and Expenses

The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted that at its February meeting each year, it receives an annual report on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers, if any (Management Rate) of each Fund, in comparison to the median ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges, and the actual total expense ratio, for comparative consistency, was shown for Class A shares for funds with multiple classes of shares. The Board received a

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description of the methodology used by Broadridge to select the mutual funds included in an Expense Group.

Franklin Balanced Fund and Franklin Real Return Fund – The Expense Group for the Franklin Balanced Fund included the Fund and seven other mixed-asset target allocation moderate funds. The Expense Group for the Franklin Real Return Fund included the Fund and ten other inflation-protected bond funds. The Board noted that the Management Rates and actual total expense ratios for these Funds were above the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are fair and reasonable. In doing so, the Board noted that while the Management Rate and actual total expense ratio for the Franklin Balanced Fund were above the median, the Fund had very strong performance for the one-, three-, five- and 10-year periods ended December 31, 2016. The Board also noted management’s explanation that the Expense Group for the Franklin Real Return Fund consists of funds that predominantly invest in Treasury inflation protected securities as compared to the Fund which has a broader asset allocation and employs individual security selection among a variety of sectors, including equity sectors. The Board further noted that the Franklin Real Return Fund’s actual total expense ratio reflected a fee waiver from management.

Franklin Convertible Securities Fund and Franklin Equity Income Fund – The Expense Group for the Franklin Convertible Securities Fund included the Fund and eight other convertible securities funds. The Expense Group for the Franklin Equity Income Fund included the Fund and twelve other equity income funds. The Board noted that the Management Rates and actual total expense ratios for these Funds were below the medians of their Expense Groups. The Board concluded that the Management Rates charged to these Funds are fair and reasonable.

Profitability

The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2016, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to

organizational and product related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, the Funds’ independent registered public accounting firm has been engaged by the Manager to periodically review the reasonableness of the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.

The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.

The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided to each Fund.

Economies of Scale

The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints, which operate generally to share any economies of scale with a Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board concluded that to the extent economies of scale may be

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realized by the Manager and its affiliates, each Fund’s management fee structure provided a sharing of benefits with the Fund and its shareholders as the Fund grows.

Conclusion

Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

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	Semiannual Report and Shareholder Letter Franklin Investors Securities Trust
	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.

© 2017 Franklin Templeton Investments. All rights reserved.

FIST1 S 06/17

Franklin Templeton Investments

Gain From Our Perspective^®

At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.

Dear Shareholder:

During the six months ended April 30, 2017, mostly upbeat economic data, improved U.S. corporate earnings and supportive global monetary policies were positives for U.S. securities markets. After maintaining its target interest rate in the 0.25%–0.50% range for nearly a year, the U.S. Federal Reserve (Fed) increased its target range for the federal funds rate twice, in December 2016 and March 2017, to 0.75%–1.00%, noting improved employment and hints of higher inflation. The 10-year U.S. Treasury yield began the period at 1.84% and ended the period at 2.29%. Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, had a -0.67% total return.¹

In all economic environments, we are committed to our long-term perspective and disciplined investment approach as we conduct a diligent, fundamental analysis of securities with a regular emphasis on investment risk management.

We believe active, professional investment management serves investors well. We also recognize the important role of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.

In addition, Franklin Investors Securities Trust’s semiannual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.

We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your future investment needs.

Sincerely,

Rupert H. Johnson, Jr.

Chairman

Franklin Investors Securities Trust

This letter reflects our analysis and opinions as of April 30, 2017, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

Not FDIC Insured |  May loss value |  No Bank Guarantee

franklintempleton.com Not part of the semiannual report         1

Contents

Semiannual Report
Economic and Market Overview	3
Franklin Adjustable U.S. Government Securities Fund	4
Franklin Floating Rate Daily Access Fund	9
Franklin Low Duration Total Return Fund	16
Franklin Total Return Fund	22
Financial Highlights and Statements of Investments	28
Financial Statements	100
Notes to Financial Statements	106
Shareholder Information	132

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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Semiannual Report

Economic and Market Overview

The U.S. economic growth decelerated in 2017’s first quarter, largely due to declines in private inventory investment and government spending. However, an increase in exports and personal consumption, as well as residential and nonresidential fixed investment aided growth. The manufacturing sector generally expanded and the services sector also continued to grow. The unemployment rate decreased from 4.8% in October 2016 to 4.4% at period-end.¹ Monthly retail sales were volatile, but grew for most of the period. Annual inflation, as measured by the Consumer Price Index, increased from 1.1% to 2.2% during the period.

At its December meeting, the U.S. Federal Reserve (Fed) raised its target range for the federal funds rate from 0.25%–0.50% to 0.50%–0.75%, as policymakers cited improved labor market conditions and higher inflation. The Fed kept its interest rate unchanged at its February meeting, but incoming economic data, along with statements by Fed officials in late February and early March, heightened many investors’ expectations for a March interest-rate hike. The Fed, at its March meeting, made the widely anticipated increase in its federal funds target rate to 0.75%–1.00%.

The 10-year Treasury yield, which moves inversely to its price, shifted during the period. It increased in November and December, amid a bond market sell-off, based on investor expectations that possible expansionary fiscal policies under new U.S. President Donald Trump could lead to a stronger economy and higher inflation. Although toward period-end, geopolitical tensions in the Middle East and the Korean peninsula pushed the Treasury yield down. Overall, the U.S. Treasury yield rose from 1.84% on October 31, 2016, to 2.29% at period-end.

The foregoing information reflects our analysis and opinions as of April 30, 2017. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

1. Source: Bureau of Labor Statistics.

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Franklin Adjustable U.S. Government Securities Fund

This semiannual report for Franklin Adjustable U.S. Government Securities Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks to provide a high level of current income while providing lower volatility of principal than a fund that invests in fixed-rate securities by investing at least 80% of its net assets in adjustable-rate U.S. government mortgage securities, which are issued or guaranteed by the U.S. government, its agencies or instrumentalities.¹ The Fund’s investments may include securities issued by Ginnie Mae (GNMA) and government-sponsored entities, such as Fannie Mae (FNMA) and Freddie Mac (FHLMC).²

Performance Overview

The Fund’s Class A shares had a +0.04% cumulative total return for the six months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government Index: 1-2 Year Component, posted a +0.12% total return.³ The index measures public obligations of the U.S. Treasury with one to two years to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.

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.

Investment Strategy

We employ a conservative investment strategy as we strive to produce solid performance in a variety of interest rate climates. We choose securities using a value-oriented approach, emphasizing the bonds’ economic fundamentals in relation to

Portfolio Composition

Based on Total Net Assets as of 4/30/17

comparable securities as well as their historical prepayment performance.

Manager’s Discussion

U.S. economic indicators remained generally encouraging during the reporting period. Steady growth in manufacturing and services created jobs, boosting employment. The U.S. Federal Reserve increased its target rate twice, noting improved employment and higher inflation. Retail sales increased and home sales continued to grow but more slowly.

The Fund employed a conservative strategy that invested primarily in adjustable-rate mortgage securities (ARMs) that are either explicitly or implicitly backed by the U.S. government.¹ During the period, the Fund invested predominantly in securities issued or guaranteed by FNMA and FHLMC. The Fund took a collateral-intensive research approach to analyze the prepayment behavior of individual ARMs to identify those with the most attractive prepayment profiles and focused on seasoned ARMs. Such securities have typically been through several interest-rate cycles and therefore tend to be less sensitive to changes in interest rates, compared to newer issued counterparts. We have found such securities historically to have experienced lower volatility than comparable maturity Treasuries and have provided more consistent income. We focused on seasoned, post-reset FNMA and FHLMC ARM positions with average coupons near 3%.

1. Securities owned by the Fund, but not shares of the Fund, are issued or guaranteed by the U.S. government, its agencies or instrumentalities, including government-sponsored entities, as to timely payment of principal and interest.

2. Although U.S. government-sponsored entities may be chartered by acts of Congress, their securities are neither issued nor guaranteed by the U.S. Government. Please see the Fund’s prospectus for a detailed discussion regarding various levels of credit support for government agency or instrumentality securities. The Fund’s yield and share price are not guaranteed and will vary with market conditions.

3. 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 33.

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FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Distributions*

11/1/16–4/30/17

	Distributions per Share (cents)
Month	Class A		Class A1		Class C		Class R6		Advisor Class
November		1.1809		1.2880		0.9056		1.4299		1.3528
December		1.1900		1.2460		0.8638		1.4020		1.3136
January		1.1953		1.3507		0.9517		1.5237		1.4309
February		1.2951		1.4037		1.0381		1.5379		1.4580
March		1.2599		1.3686		0.9741		1.5263		1.4380
April		1.2118		1.3112		0.9599		1.4503		1.3707
Total		7.3330		7.9682		5.6932		8.8701		8.3640

*The distribution amount is the sum of all distributions to shareholders for the period shown and includes only estimated tax-basis net investment income. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

Although mortgage rates remained low, mortgage credit has remained constrained, and actual prepayment levels have been relatively low. The Fund’s London Interbank Offered Rate (LIBOR) indexed ARMs detracted from value, while ARMs indexed to U.S. Treasuries were generally additive.⁴

Thank you for your continued participation in Franklin Adjustable U.S. Government Securities Fund. We look forward to serving your future investment needs.

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

	Paul Varunok
	Roger A. Bayston, CFA
	Portfolio Management Team

CFA^® is a trademark owned by CFA Institute.

4. The London Interbank Offered Rate (LIBOR) is the interest rate banks charge each other for loans. LIBOR is a widely used benchmark for short-term interest rates. See www.franklintempletondatasources.com for additional data provider information.

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FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 2.25% and the minimum is 0%. Class A: 2.25% 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	+0.04%	-2.17%
1-Year	+0.46%	-1.76%
5-Year	+0.34%	-0.38%
10-Year	+16.51%	+1.31%
Advisor4
6-Month	+0.16%	+0.16%
1-Year	+0.71%	+0.71%
5-Year	+1.60%	+0.32%
10-Year	+19.28%	+1.78%

		30-Day Standardized Yield6
Share Class	Distribution Rate5	(with waiver)	(without waiver)
A	1.86%	0.42%	0.42%
Advisor	2.14%	0.67%	0.67%

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 7 for Performance Summary footnotes.

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FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

PERFORMANCE SUMMARY

Distributions

(11/1/16–4/30/17)

Share Class	Net Investment Income
A		$0.073330
A1		$0.079682
C		$0.056932
R6		$0.088701
Advisor		$0.083640

Total Annual Operating Expenses⁷

Share Class	With Waiver			Without Waiver
A		0.91	%	0.92%
Advisor		0.66	%	0.67%

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. Interest rate movements, unscheduled mortgage prepayments and other risk factors will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. 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 2/28/18. 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 +13.62% and +1.44%.

5. Distribution rate is based on an annualization of the sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

6. 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.

7. 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 ADJUSTABLE 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 Value 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,000.40	$4.56	$1,020.23	$4.61	0.92%
A1	$1,000	$1,001.20	$3.77	$1,021.03	$3.81	0.76%
C	$1,000	$   997.20	$6.54	$1,018.25	$6.61	1.32%
R6	$1,000	$1,002.20	$2.73	$1,022.07	$2.76	0.55%
Advisor	$1,000	$1,001.60	$3.33	$1,021.47	$3.36	0.67%

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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

8         Semiannual Report franklintempleton.com

Franklin Floating Rate Daily Access Fund

This semiannual report for Franklin Floating Rate Daily Access Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks to provide a high level of current income and, secondarily, preservation of capital by investing at least 80% of its net assets in income-producing floating interest-rate corporate loans and corporate debt securities made to or issued by U.S. companies, non-U.S. entities and U.S. subsidiaries of non-U.S. entities.

What are corporate loans?

Corporate loans are typically floating rate loans to corporate borrowers made by a group, or syndicate, of banks and other financial institutions. These loans provide capital to companies for varied purposes, such as merger and acquisition activity, leveraged buyouts or refinancings. These loans are typically syndicated to a group of investors.

Performance Overview

The Fund’s Class A shares delivered a +2.15% cumulative total return for the six months under review. In comparison, the Credit Suisse Leveraged Loan Index (CS LLI), which is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market, posted a +3.14% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 13.

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.

Corporate Loan Market Overview

During the period under review, loan prices moved higher and spreads tightened further as net new supply remained slow to meet demand from market participants who received an influx of cash from retail investors and the repayment of existing loans. Inflows into loan mutual funds accelerated following the U.S. presidential election, further increases in the London Interbank Offered Rate (LIBOR), and the decision by the U.S.

Portfolio Composition*

Based on Total Net Assets as of 4/30/17

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Federal Reserve (Fed) to increase its benchmark rate in December 2016 and March 2017. Issuance of collateralized loan obligations (CLOs) compounded this increase in demand while net new supply remained slow, leading to strong demand for loans trading at steep discounts to par and those with relatively lower ratings.

Following the U.S. presidential election, U.S. Treasury yields increased significantly after some investors adjusted their expectations for expansionary fiscal policy, which resulted in increased interest in the asset class. Furthermore, the Fed’s rate hikes during the period, as well as expectations of further rate hikes in 2017, led investors to search for a possible hedge against further increases in interest rates and shorter duration investments. The LIBOR also continued to move higher and the rate ended the period higher than the average floor in the market, leading to a large portion of the market being based on a floating rate rather than a fixed floor. Toward the end of the period as U.S. Treasury yields declined and the yield curve flattened, demand for loans moderated, but loan retail vehicles continued to report positive flows.

As risk retention rules were scheduled to take effect toward the end of 2016, CLO issuance increased as managers attempted to launch deals prior to the regulations becoming effective. Spreads among the highest rated tranches also tightened significantly, which allowed managers to lower liability costs by refinancing CLO vehicles. The lower spreads on liability tranches helped to mitigate the challenging arbitrage due to

1. Source: Credit Suisse Group.

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.

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 40.

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

robust repricing activity in the loan market. However, the lack of collateral in terms of new supply helped to restrain CLO volume later in the period, and most activity was related to refinancing.

Institutional issuance increased during the period, but a large portion of transactions continued to include repricing deals (refinancing transactions that cut spreads). Although repricing transactions eventually slowed down, the imbalance between supply and demand allowed issuers to reduce coupons by a meaningful amount, in our view. Furthermore, as volume from mergers-and-acquisition deals was relatively subdued, opportunistic issuance by issuers increased, including higher levels of dividend deals. In addition to the low net new supply, repayment activity increased during the period and included issuers that paid down loans through the issuance of high yield bonds.

Distributions*

11/1/16–4/30/17

	Distributions per Share (cents)
Month	Class A		Class C		Class R6		Advisor Class
November		2.7383		2.4487		2.9840		2.9195
December		2.8928		2.6018		3.1459		3.0764
January		2.6851		2.3739		2.9523		2.8811
February		2.1683		1.8968		2.3993		2.3401
March		2.3615		2.0603		2.6114		2.5512
April		2.0531		1.7857		2.2759		2.2226
Total		14.8991		13.1672		16.3688		15.9909

*The distribution amount is the sum of all distributions to shareholders for the period shown and includes only estimated tax-basis net investment income. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

The default rate declined during the period, as defaults from the prior year rolled off the calculation. The increase in refinancing and demand also helped to push impending maturities to later years. However, after the increase in commodity-related defaults from the previous year subsided, investor focus shifted to heightened stress within the retail space. The retail sector was a weak performer during the period amid concerns across brick-and-mortar stores and as more names within the industry traded to distressed levels.

Retail flows have decelerated in light of recent declines in U.S. Treasury yields and a flatter yield curve. Despite the moderation in demand, new supply remains scarce and repricing transactions have continued to tighten loan spreads. Furthermore, as a majority of

loans trade above par, the prospect for further repricing deals remains high, which we believe could possibly further deteriorate credit conditions. We have maintained our overweighted allocation in loans rated in the upper tier, including shorter tenor and non-institutional tranches, which we believe could protect against these conditions and potential future market volatility.

Investment Strategy

We use a detailed credit analysis process to select corporate loan and corporate debt securities that meet our criteria. We conduct ongoing credit monitoring of our investments. To help manage the credit risk associated with investing in securities rated below investment grade (or if unrated, of comparable quality), we seek to diversify the Fund by investing in a large number of loans of companies that we have identified as having attractive risk/reward profiles, favorable capital structures, strong asset coverage and dominant market shares. This diversification potentially reduces credit risk by spreading assets across many different industries.

In addition, we seek to exploit market inefficiencies by assigning forward-looking credit-risk tiers to issuers based upon our forward-looking analysis of the issuers’ prospects in the near term. This independent analysis enables us to express differences between backward-looking rating assignments of credit-risk tiers and our analysts’ forward-looking assessment of credit risk, thereby allowing us to potentially take advantage of credit risks the market may be overstating or avoid uncompensated credit risks the market may not have adequately identified.

Manager’s Discussion

During the six-month period under review, the Fund underperformed its benchmark, the CS LLI. The Fund maintained an overweighting in the upper tier of the market throughout the period, which detracted from performance as upper tiers loans in the index returned 1.95%, middle tier returned 2.90%, and lower tier returned 11.34%, according to the CS LLI. Furthermore, our selection in energy and service sectors detracted from relative performance compared to the index. However, the Fund’s overweighting in the metals and minerals sector contributed to performance.

The top contributors to performance included middle- and lower-tier rated names that began the period at steeper discounts to par, but traded higher following positive news and a favorable technical environment. The term loan of 99 Cents Only Stores, a regional value-based retailer, reported better-than-expected results for the fourth quarter and generated expectations that the company could take steps to address its

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

Top 10 Holdings

4/30/17

Company Sector/Industry	% of Total Net Assets
Zayo Group LLC		2.4%
Integrated Telecommunication Services
Ascena Retail Group Inc.		2.3%
Apparel Retail
Fieldwood Energy LLC		2.1%
Oil & Gas Exploration & Production
PetSmart Inc.		2.1%
Specialty Stores
Dell International LLC		2.0%
Technology Distributors
NRG Energy Inc.		2.0%
Independent Power Producers & Energy Traders
Lions Gate Entertainment Corp.		1.9%
Movies & Entertainment
FGI Operating Co. LLC (Freedom Group)		1.8%
Personal Products
Sungard Availability Services Capital Inc.		1.6%
IT Consulting & Other Services
Delos Finance S.A.R.L. (ILFC)		1.6%
Aerospace & Defense

capital structure. Bowie Resource Holdings, a coal producer, also contributed to performance as the company executed an amendment that allowed its sponsor to provide additional equity support. Furthermore, Fieldwood Energy, a provider of oil and gas services, benefited from relatively higher oil prices.

The top detractors from performance included those that faced industry-specific challenges in the retail and commodities industries. PetSmart, a leading retailer in the pet market, detracted from performance amid concerns at brick-and-mortar stores about online competition. The term loan of Ascena Retail Group, a specialty retailer with multiple core brands, also declined after adjusting guidance downward amid a decline in sales due to weaker store traffic. Onsite Rental Group Operations, a specialized industrial equipment rental company in Australia, detracted from performance amid expectations of a possible restructuring as its natural resource segment faced continued weakness.

Purchases during the period focused on higher rated loans with relatively shorter years to maturity, which we believe would fare relatively better amid a period of increased credit risk as they would be closer to refinancing or repayment. Our weighting in the upper tier increased, while our weightings in the middle and lower tiers declined. The Fund also continued to increase its weighting in non-institutional loans such as Term Loan A, in addition to AAA-rated CLO tranches. Our largest

sells included positions that we believed had posed elevated credit risk, while we also opted not to participate in a handful of refinancing deals that extended maturities or tightened spreads to levels where we believed we were not being adequately compensated for the risk. The Fund also bought protection in HYCDX, an index of high-yield bond credit default swaps providing synthetic exposure to the high-yield bond market, to protect against potential volatility in the credit markets.

Thank you for your continued participation in Franklin Floating Rate Daily Access Fund. We look forward to serving your future investment needs.

	Mark Boyadjian, CFA
	Madeline Lam
	Justin Ma, CFA
	Portfolio Management Team

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 2.25% and the minimum is 0%. Class A: 2.25% 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	+2.15%	-0.11%
1-Year	+8.64%	+6.14%
5-Year	+19.80%	+3.21%
10-Year	+36.04%	+2.89%
Advisor
6-Month	+2.16%	+2.16%
1-Year	+8.91%	+8.91%
5-Year	+21.31%	+3.94%
10-Year	+39.47%	+3.38%

	Distribution Rate4	30-Day Standardized Yield5
Share Class		(with waiver)	(without waiver)
A	3.01%	2.94%	2.88%
Advisor	3.33%	3.24%	3.18%

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.

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income
A	$	0.148991
C	$	0.131672
R6	$	0.163688
Advisor	$	0.159909

Total Annual Operating Expenses⁶

Share Class	With Waiver			Without Waiver
A		0.87	%	0.89%
Advisor		0.62	%	0.64%

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. Investors should be aware that the Fund’s share price and yield will fluctuate with market conditions. The Fund should not be considered an alternative to money market funds or certificates of deposit (CDs). The floating rate loans and debt securities in which the Fund invests tend to be rated below investment grade. Investing in higher yielding, lower rated, floating rate loans and debt securities involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Interest earned on floating rate loans varies with changes in prevailing interest rates. Therefore, while floating rate loans offer higher interest income when interest rates rise, they will also generate less income when interest rates 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 2/28/18. 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 sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

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 FLOATING RATE DAILY ACCESS 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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,021.50	$4.06	$1,020.78	$4.06	0.81%
C	$1,000	$1,019.50	$6.06	$1,018.79	$6.06	1.21%
R6	$1,000	$1,023.20	$2.36	$1,022.46	$2.36	0.47%
Advisor	$1,000	$1,021.60	$2.81	$1,022.02	$2.81	0.56%

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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

franklintempleton.com Semiannual Report         15

Franklin Low Duration Total Return Fund

We are pleased to bring you Franklin Low Duration Total Return Fund’s semiannual report for the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks a high level of current income as is consistent with prudent investing, while seeking capital preservation. The Fund invests primarily in investment-grade debt securities and investments, including government and corporate debt securities and mortgage- and asset-backed securities, targeting an estimated average portfolio duration of three years or less.

What is duration?

Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.

Performance Overview

The Fund’s Class A shares delivered a +1.02% cumulative total return for the six months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government/Credit Index: 1-3 Year Component, posted a +0.24% total return.¹ The index measures public obligations of the U.S. Treasury with one to three years to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. You can find more of the Fund’s performance data in the Performance Summary beginning on page 19.

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.

Investment Strategy

We seek to invest in a combination of fixed income securities, primarily from across the investment-grade debt universe. We analyze securities using proprietary and nonproprietary research to help us identify attractive investment opportunities across the entire fixed income opportunity set, on a relative basis. When making investment decisions, we evaluate

Portfolio Composition*

Based on Total Net Assets as of 4/30/17

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.

business cycles, yield curves, and values between and within markets. Through a low duration portfolio, we seek to position the Fund to be less affected by interest rate changes than a fund with a higher duration. In addition, we may use derivative transactions, such as forwards, futures contracts and swap agreements to obtain net long or short exposures to select currencies, interest rates, countries, duration or credit risks.

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.

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 52.

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FRANKLIN LOW DURATION TOTAL RETURN FUND

What is the yield curve?

The yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

What is a futures contract?

A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

What are swap agreements?

Swap agreements, such as interest rate, fixed income total return, currency, inflation index and credit default swaps, are contracts between the Fund and another party (the swap counterparty). In a basic swap transaction, the Fund agrees with the swap counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular “notional amount” of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The parties typically do not actually exchange the notional amount. Instead, they agree to exchange the returns that would be earned or realized if the notional amount were invested in given instruments or at given interest rates.

Manager’s Discussion

U.S. economic indicators remained generally encouraging during the reporting period. Steady growth in manufacturing and services created jobs, boosting employment. The U.S. Federal Reserve increased its target rate twice, noting improved employment and higher inflation. Retail sales increased and home sales continued to grow but more slowly.

From a perspective of excess returns over Treasuries of similar duration, U.S. dollar-denominated high yield corporate credit performed well. Other major fixed income sectors that delivered notable positive excess returns, as measured by Bloomberg Barclays indexes, included emerging market bonds, senior secured floating rate loans and U.S. investment-grade corporate bonds. In contrast, agency mortgage-backed securities underperformed Treasuries.

During the period, the Fund’s non-agency residential mortgage-backed securities (RMBS) and senior secured floating rate loans exposure benefited performance. Our allocation to high yield corporate credit and foreign currency also contributed to results. In contrast, the Fund’s exposure to sovereign developed securities were a slight detractor from results.

Distributions*

11/1/16–4/30/17

	Distributions per Share (cents)
Month	Class A		Class C		Class R6		Advisor Class
November**		3.1581		2.8431		3.4832		3.3746
December**		4.1934		3.8594		4.5190		4.3953
January		1.7447		1.4062		2.0721		1.9612
February		0.9938		0.7827		1.1915		1.1236
March		1.6942		1.3801		2.0365		1.9003
April		1.2530		1.0234		1.5043		1.4046
Total		13.0372		11.2949		14.8066		14.1596

*The distribution amount is the sum of all distributions to shareholders for the period shown and includes only estimated tax-basis net investment income. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

**Includes additional income distributions made in order to meet excise tax requirements.

At period-end, we were overweighted relative to the benchmark in many spread sectors, including corporate credit and securitized products, based on our belief that valuations remained relatively attractive on a longer term basis. Over the period, we increased our exposure to non-agency RMBS. We decreased our exposures to investment-grade corporate debt, asset-backed securities and commercial mortgage-backed securities.

During the period, the portfolio utilized derivatives, including credit default and currency swaps, currency forwards, Treasury futures, interest rate swaps and credit default swap options, principally as a tool for efficient portfolio management and to manage overall portfolio risk. These derivative transactions may provide the same, or similar, net long or short exposure to select currencies, interest rates, countries, duration or credit risks in a less expensive way than by directly purchasing securities. In those markets where non-derivative securities are readily available, the cost difference in normal market conditions may be small.

franklintempleton.com Semiannual Report         17

FRANKLIN LOW DURATION TOTAL RETURN FUND

Thank you for your continued participation in Franklin Low Duration Total Return Fund. We look forward to serving your future investment needs.

	Roger A. Bayston, CFA
	Kent Burns, CFA
	Christopher J. Molumphy, CFA David Yuen, CFA, FRM
	Portfolio Management Team

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

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FRANKLIN LOW DURATION TOTAL RETURN FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 2.25% and the minimum is 0%. Class A: 2.25% 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	+1.02%	-1.27%
1-Year	+2.52%	+0.16%
5-Year	+7.19%	+0.93%
10-Year	+32.76%	+2.64%
Advisor4
6-Month	+1.13%	+1.13%
1-Year	+2.80%	+2.80%
5-Year	+8.69%	+1.68%
10-Year	+35.97%	+3.12%

		30-Day Standardized Yield6
Share Class	Distribution Rate5	(with waiver)	(without waiver)
A	1.49%	1.52%	1.37%
Advisor	1.70%	1.80%	1.64%

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 20 for Performance Summary footnotes.

franklintempleton.com Semiannual Report         19

FRANKLIN LOW DURATION TOTAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income
A		$0.130372
C		$0.112949
R6		$0.148066
Advisor		$0.141596

Total Annual Operating Expenses⁷

Share Class	With Waiver			Without Waiver
A		0.82	%	0.97%
Advisor		0.57	%	0.72%

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. Investors should be aware that the Fund’s share price and yield will fluctuate with market conditions. The Fund should not be considered an alternative to money market funds or certificates of deposit (CDs). The floating rate loans and debt securities in which the Fund invests tend to be rated below investment grade. Investing in higher yielding, lower rated, floating rate loans and debt securities involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Interest earned on floating rate loans varies with changes in prevailing interest rates. Therefore, while floating rate loans offer higher interest income when interest rates rise, they will also generate less income when interest rates 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 an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/28/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, 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 +28.63% and +2.85%.

5. Distribution rate is based on an annualization of the sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

6. 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.

7. 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 LOW DURATION TOTAL RETURN 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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$1,010.20	$3.99	$1,020.83	$4.01	0.80%
C	$1,000	$1,008.50	$5.93	$1,018.89	$5.96	1.19%
R6	$1,000	$1,013.00	$2.05	$1,022.76	$2.06	0.41%
Advisor	$1,000	$1,011.30	$2.74	$1,022.07	$2.76	0.55%

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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

franklintempleton.com Semiannual Report         21

Franklin Total Return Fund

This semiannual report for Franklin Total Return Fund covers the period ended April 30, 2017.

Your Fund’s Goal and Main Investments

The Fund seeks to provide high current income, consistent with preservation of capital. Capital appreciation over the long term is a secondary goal. The Fund invests at least 80% of its assets in investment-grade debt securities and investments. The Fund currently focuses on government and corporate debt securities and mortgage- and asset-backed securities.

Performance Overview

The Fund’s Class A shares produced a -0.06% cumulative total return for the six months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index had a -0.67% total return.1 The index measures the U.S. investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 25.

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.

Investment Strategy

We seek to invest in a combination of fixed income securities, predominantly from across the investment-grade debt universe. We analyze securities using proprietary and nonproprietary research to help us identify attractive investment opportunities, across the entire fixed income opportunity set, on a relative basis. The Fund may also invest up to 20% of its total assets in noninvestment-grade debt securities. In addition, we may use derivative transactions, such as currency and cross-currency forwards, futures contracts and swap agreements, to obtain net long or short exposures to select currencies, interest rates, countries, duration or credit risks.

Portfolio Composition*

Based on Total Net Assets as of 4/30/17

*Figures reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to roundings, use of derivatives, unsettled trades or other factors.

**Rounds to less than 0.1% of total net assets.

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

Manager’s Discussion

U.S. economic indicators remained generally encouraging during the reporting period. Steady growth in manufacturing

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.

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 Consolidated Statement of Investments (SOI). The Consolidated SOI begins on page 78.

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FRANKLIN TOTAL RETURN FUND

What is a futures contract?

A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.

What are swap agreements?

Swap agreements, such as interest rate, fixed income total return, currency, inflation index and credit default swaps, are contracts between the Fund and another party (the swap counterparty). In a basic swap transaction, the Fund agrees with the swap counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular “notional amount” of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The parties typically do not actually exchange the notional amount. Instead, they agree to exchange the returns that would be earned or realized if the notional amount were invested in given instruments or at given interest rates.

and services created jobs, boosting employment. The U.S. Federal Reserve increased its target rate twice, noting improved employment and higher inflation. Retail sales increased and home sales continued to grow but more slowly.

From a perspective of excess returns over Treasuries of similar duration, U.S. dollar-denominated high yield corporate credit performed well. Other major fixed income sectors that delivered notable positive excess returns, as measured by Bloomberg Barclays indexes, included emerging markets bonds, senior secured floating rate loans and U.S. investment-grade corporate bonds. In contrast, agency mortgage-backed securities underperformed Treasuries.

During the period, the Fund’s exposure to foreign currencies benefited performance. The Fund’s exposure to non-agency residential mortgage-backed securities (RMBS) and high yield corporate credit were significant contributors to returns. Senior secured floating rate loans also aided results. In contrast, the Fund’s exposure to investment-grade corporate bonds and commercial mortgage-backed securities (CMBS) detracted from performance.

What is the yield curve?

The yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.

Distributions*
11/1/16–4/30/17
	Distributions per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class
November**		4.1184		3.7778		3.9143		4.4466		4.3335
December**		5.0337		4.6872		4.8109		5.3537		5.2341
January		2.8305		2.4798		2.6116		3.1871		3.0563
February		1.2004		0.9934		1.0711		1.4129		1.3328
March		1.8946		1.5896		1.7042		2.1959		2.0902
April		2.0549		1.7619		1.8767		2.3470		2.2430
Total		17.1325		15.2897		15.9888		18.9432		18.2899

*The distribution amount is the sum of all distributions to shareholders for the period shown and includes only estimated tax-basis net investment income. Assumes shares were purchased and held for the entire accrual period. Since dividends accrue daily, your actual distributions will vary depending on the date you purchased your shares and any account activity. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

**Includes additional income distributions made in order to meet excise tax requirements

At period-end, we were overweighted relative to the benchmark in many spread sectors, including corporate credit and securitized products, based on our belief that valuations remained relatively attractive on a longer term basis. Over the period, we increased our exposure to collateralized loan obligations, non-agency RMBS and high yield corporate credit. We decreased our exposure to investment-grade corporate credit, asset-backed securities and CMBS as we found better relative opportunities.

During the period, the portfolio utilized derivatives, including credit default and currency swaps, currency forwards, Treasury futures, inflation index swaps and credit default swap options, principally as a tool for efficient portfolio management and to manage overall portfolio risk. These derivative transactions may provide the same, or similar, net long or short exposure to select currencies, interest rates, countries, duration or credit risks in a less expensive way than by directly purchasing securities. In those markets where non-derivative securities are readily available, the cost difference in normal market conditions may be small.

What is an option?

An option is a contract to buy or sell a specific financial product known as the option’s underlying instrument at a specific price. The buyer of an option has the right, but not the obligation, to buy or sell the underlying instrument at or until a specified expiration date. Conversely, the seller (“writer”) of an option who opens a transaction is obligated to buy or sell the underlying instrument should the option holder exercise that right.

franklintempleton.com Semiannual Report         23

FRANKLIN TOTAL RETURN FUND

Thank you for your continued participation in Franklin Total Return Fund. We look forward to serving your future investment needs.

	Roger A. Bayston, CFA
	Kent Burns, CFA
	Christopher J. Molumphy, CFA David Yuen, CFA, FRM Michael J. Materasso
	Portfolio Management Team

The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2017, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

24         Semiannual Report franklintempleton.com

FRANKLIN TOTAL RETURN FUND

Performance Summary as of April 30, 2017

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 4/30/17¹

Cumulative total return excludes sales charges. Average annual total return include 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	-0.06%	-4.30%
1-Year	+2.18%	-2.13%
5-Year	+13.04%	+1.59%
10-Year	+51.97%	+3.83%
Advisor
6-Month	+0.06%	+0.06%
1-Year	+2.44%	+2.44%
5-Year	+14.51%	+2.75%
10-Year	+55.92%	+4.54%

	Distribution Rate4	30-Day Standardized Yield5
Share Class		(with waiver)	(without waiver)
A	2.42%	2.09%	2.07%
Advisor	2.75%	2.44%	2.41%

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 26 for Performance Summary footnotes.

franklintempleton.com Semiannual Report         25

FRANKLIN TOTAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/16–4/30/17)

Share Class	Net Investment Income
A		$0.171325
C		$0.152897
R		$0.159888
R6		$0.189432
Advisor		$0.182899

Total Annual Operating Expenses⁶

Share Class	With Waiver			Without Waiver
A		0.91	%	0.93%
Advisor		0.66	%	0.68%

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. Interest rate movements and mortgage prepayments will affect the Fund’s share price and yield. 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 risks associated with higher yielding, lower rated securities include higher risk of default and loss of principal. Investment in foreign securities also involves special risks, including currency fluctuations, and political and economic uncertainty. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses (as well as gains) on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits and may realize losses when a counterparty fails to perform as promised. 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 and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/28/18. Fund investment results reflect the expense reduction and fee waiver; without these reductions, 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 sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 4/30/17.

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 TOTAL RETURN 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 11/1/16	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Ending Account Value 4/30/17	Expenses Paid During Period 11/1/16–4/30/171,2	Net Annualized Expense Ratio2
A	$1,000	$   999.40	$4.31	$1,020.48	$4.36	0.87%
C	$1,000	$   997.50	$6.29	$1,018.50	$6.36	1.27%
R	$1,000	$   998.20	$5.55	$1,019.24	$5.61	1.12%
R6	$1,000	$1,001.20	$2.38	$1,022.41	$2.41	0.48%
Advisor	$1,000	$1,000.60	$3.08	$1,021.72	$3.11	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 181/365 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

franklintempleton.com Semiannual Report         27

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Adjustable U.S. Government Securities Fund

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015			2014			2013		2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  8.40		$  8.55		$  8.67			$  8.72			$  8.90		$  8.84
Income from investment operationsa:
Net investment income		0.018		0.025		0.019			0.043			0.048		0.078
Net realized and unrealized gains (losses)		(0.015)		(0.053)		(0.040)			0.006			(0.098)		0.117
Total from investment operations		0.003		(0.028)		(0.021)			0.049			(0.050)		0.195
Less distributions from net investment income		(0.073)		(0.122)		(0.099)			(0.099)			(0.130)		(0.135)
Net asset value, end of period		$  8.33		$  8.40		$  8.55			$  8.67			$  8.72		$  8.90
Total returnb		0.04%		(0.32)%		(0.24)%			0.56%			(0.56)%		2.22%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.93%		0.92%		0.91%			0.93%			0.87%		0.87%
Expenses net of waiver and payments by affiliates		0.92%d		0.91%d		0.91%	d,e		0.93%	d,e		0.87%		0.87%
Net investment income		0.52%		0.43%		0.39%			0.48%			0.63%		0.91%
Supplemental data
Net assets, end of period (000’s)		$591,064		$667,671		$848,918			$1,058,838			$1,105,674		$1,308,971
Portfolio turnover rate		1.40%		11.49%		9.98%			14.18%			8.66%		9.69%

^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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit of waiver and payments by affiliates rounds to less than 0.01%.

28         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Adjustable U.S. Government Securities Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015			2014a
Class A1
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  8.40		$  8.54		$  8.67			$  8.68
Income from investment operationsb:
Net investment income		0.032		0.049		0.046			0.018
Net realized and unrealized gains (losses)		(0.022)		(0.054)		(0.062)			0.010
Total from investment operations		0.010		(0.005)		(0.016)			0.028
Less distributions from net investment income		(0.080)		(0.135)		(0.114)			(0.038)
Net asset value, end of period		$  8.33		$  8.40		$  8.54			$  8.67
Total returnc		0.12%		(0.05)%		(0.19)%			0.32%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.77%		0.77%		0.75%			0.78%
Expenses net of waiver and payments by affiliates		0.76%e		0.76%e		0.75%	e,f		0.78%	e,f
Net investment income		0.68%		0.58%		0.55%			0.63%
Supplemental data
Net assets, end of period (000’s)		$136,835		$160,469		$198,670			$253,021
Portfolio turnover rate		1.40%		11.49%		9.98%			14.18%

^aFor the period June 18, 2014 (effective date) to October 31, 2014.

^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.

^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         29

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Adjustable U.S. Government Securities Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015			2014			2013		2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  8.40		$  8.54		$  8.66			$  8.71			$  8.90		$  8.83
Income from investment operationsa:
Net investment income (loss)		(0.003)		(0.011)		(0.013)			(0.004)			0.006		0.042
Net realized and unrealized gains (losses)		(0.020)		(0.041)		(0.043)			0.018			(0.101)		0.128
Total from investment operations		(0.023)		(0.052)		(0.056)			0.014			(0.095)		0.170
Less distributions from net investment income		(0.057)		(0.088)		(0.064)			(0.064)			(0.095)		(0.100)
Net asset value, end of period		$  8.32		$  8.40		$  8.54			$  8.66			$  8.71		$  8.90
Total returnb		(0.28)%		(0.61)%		(0.65)%			0.16%			(1.07)%		1.93%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		1.33%		1.32%		1.31%			1.33%			1.27%		1.27%
Expenses net of waiver and payments by affiliates		1.32%d		1.31%d		1.31%	d,e		1.33%	d,e		1.27%		1.27%
Net investment income (loss)		0.12%		0.03%		(0.01)%			0.08%			0.23%		0.51%
Supplemental data
Net assets, end of period (000’s)		$224,664		$266,186		$336,254			$428,031			$603,067		$794,201
Portfolio turnover rate		1.40%		11.49%		9.98%			14.18%			8.66%		9.69%

^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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit of waiver and payments by affiliates rounds to less than 0.01%.

30         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Adjustable U.S. Government Securities Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015			2014			2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    8.41		$    8.55		$    8.68			$    8.73			$    8.72
Income from investment operationsb:
Net investment income		0.038		0.066		0.013			0.088c			0.008
Net realized and unrealized gains (losses)		(0.019)		(0.053)		(0.010)			(0.009)			0.018
Total from investment operations		0.019		0.013		0.003			0.079			0.026
Less distributions from net investment income		(0.089)		(0.153)		(0.133)			(0.129)			(0.016)
Net asset value, end of period		$    8.34		$    8.41		$    8.55			$    8.68			$    8.73
Total returnd		0.22%		0.15%		0.03%			0.92%			0.30%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.56%		0.56%		0.53%			0.56%			0.53%
Expenses net of waiver and payments by affiliates		0.55%f		0.55%f		0.53%	f,g		0.56%	f,g		0.53%
Net investment income		0.89%		0.79%		0.77%			0.85%			0.97%
Supplemental data
Net assets, end of period (000’s)		$2,363		$2,374		$2,176			$7,193			$335
Portfolio turnover rate		1.40%		11.49%		9.98%			14.18%			8.66%

^aFor the period September 20, 2013 (effective date) to October 31, 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         31

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Adjustable U.S. Government Securities Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
			Year Ended October 31,
			2016		2015			2014			2013		2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    8.41		$    8.55		$    8.68			$    8.73			$    8.91		$    8.85
Income from investment operationsa:
Net investment income		0.028		0.046		0.040			0.068			0.073		0.107
Net realized and unrealized gains (losses)		(0.014)		(0.043)		(0.049)			0.003			(0.101)		0.111
Total from investment operations		0.014		0.003		(0.009)			0.071			(0.028)		0.218
Less distributions from net investment income .		(0.084)		(0.143)		(0.121)			(0.121)			(0.152)		(0.158)
Net asset value, end of period		$    8.34		$    8.41		$    8.55			$    8.68			$    8.73		$    8.91
Total returnb		0.16%		0.05%		(0.11)%			0.82%			(0.31)%		2.48%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.68%		0.67%		0.66%			0.68%			0.62%		0.62%
Expenses net of waiver and payments by affiliates		0.67%d		0.66%d		0.66%	d,e		0.68%	d,e		0.62%		0.62%
Net investment income		0.77%		0.68%		0.64%			0.73%			0.88%		1.16%
Supplemental data
Net assets, end of period (000’s)		$204,947		$227,599		$308,683			$416,854			$411,228		$437,540
Portfolio turnover rate		1.40%		11.49%		9.98%			14.18%			8.66%		9.69%

^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.

^bTotal return is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit of waiver and payments by affiliates rounds to less than 0.01%.

32         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Adjustable U.S. Government Securities Fund

	Principal Amount		Value
Mortgage-Backed Securities 96.6%
a Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 23.4%
FHLMC, 2.594%, 9/01/35	$	10,013,341	$	10,513,592
FHLMC, 2.761%, 4/01/34		10,748,725		11,395,828
FHLMC, 1.849% - 2.806%, 2/01/18 - 4/01/37		10,528,318		11,090,410
FHLMC, 2.812%, 3/01/35		5,529,851		5,828,671
FHLMC, 2.845%, 12/01/35		5,416,671		5,714,885
FHLMC, 2.83% - 2.876%, 1/01/36 - 3/01/37		10,900,452		11,485,570
FHLMC, 2.899% - 3.005%, 1/01/36 - 12/01/37		10,731,660		11,319,059
FHLMC, 3.017% - 3.084%, 4/01/34 - 10/01/38		10,637,404		11,275,861
FHLMC, 3.104%, 1/01/36		5,373,043		5,692,033
FHLMC, 3.106% - 3.134%, 2/01/36 - 11/01/41		8,958,428		9,451,926
FHLMC, 3.138%, 11/01/37		6,420,948		6,791,736
FHLMC, 3.141% - 3.203%, 6/01/35 - 1/01/37		8,875,959		9,369,582
FHLMC, 3.211% - 3.215%, 4/01/37 - 11/01/37		7,643,720		8,019,694
FHLMC, 3.223%, 12/01/35		4,915,275		5,162,824
FHLMC, 3.225%, 9/01/37		33,085,546		35,016,137
FHLMC, 3.228%, 11/01/40		6,413,131		6,765,140
FHLMC, 3.229%, 9/01/38		6,619,165		6,996,146
FHLMC, 3.222% - 3.236%, 9/01/38 - 5/01/40		6,635,247		6,995,727
FHLMC, 3.259%, 7/01/35		13,060,284		13,843,454
FHLMC, 3.277%, 10/01/41		6,829,913		7,146,463
FHLMC, 3.257% - 3.295%, 11/01/35 - 12/01/37		10,908,787		11,521,412
FHLMC, 3.337%, 2/01/36		4,638,500		4,916,174
FHLMC, 3.299% - 3.388%, 8/01/34 - 3/01/38		8,242,415		8,735,439
FHLMC, 3.408%, 12/01/35		5,879,105		6,209,105
FHLMC, 3.418%, 6/01/37		12,382,163		13,190,523
FHLMC, 3.425%, 1/01/37		5,265,491		5,636,790
FHLMC, 3.415% - 3.482%, 11/01/36 - 4/01/40		8,142,604		8,614,496
FHLMC, 3.49% - 3.563%, 12/01/34 - 3/01/37		9,132,106		9,714,163
FHLMC, 4.141%, 8/01/34		2,770,433		2,921,563
				271,334,403
a Federal National Mortgage Association (FNMA) Adjustable Rate 73.1%
FNMA, 1.528% - 2.057%, 7/01/17 - 11/01/44		11,239,279		11,389,143
FNMA, 2.062% - 2.434%, 7/01/17 - 2/01/43		10,985,377		11,304,882
FNMA, 2.436% - 2.542%, 6/01/17 - 5/01/38		11,183,151		11,568,526
FNMA, 2.543% - 2.622%, 11/01/17 - 11/01/37		8,377,154		8,809,508
FNMA, 2.622% - 2.663%, 1/01/19 - 8/01/36		9,218,352		9,665,723
FNMA, 2.663% - 2.677%, 10/01/18 - 1/01/37		10,983,123		11,577,183
FNMA, 2.68% - 2.723%, 4/01/18 - 1/01/37		10,656,070		11,176,689
FNMA, 2.723% - 2.748%, 9/01/17 - 9/01/38		10,943,082		11,491,203
FNMA, 2.748% - 2.777%, 12/01/17 - 2/01/39		10,228,807		10,747,925
FNMA, 2.788%, 12/01/34		9,253,278		9,723,026
FNMA, 2.777% - 2.798%, 10/01/18 - 8/01/37		10,910,072		11,427,641
FNMA, 2.799% - 2.819%, 1/01/18 - 9/01/39		11,109,893		11,594,658
FNMA, 2.819%, 6/01/36		6,380,219		6,720,595
FNMA, 2.822%, 3/01/38		6,495,609		6,862,751
FNMA, 2.835%, 1/01/38		7,928,465		8,326,239
FNMA, 2.842%, 5/01/36		26,066,321		27,537,043
FNMA, 2.843%, 10/01/35		5,127,506		5,402,256
FNMA, 2.82% - 2.845%, 12/01/18 - 7/01/40		11,005,457		11,555,637
FNMA, 2.845% - 2.86%, 3/01/18 - 9/01/39		10,840,623		11,404,182
FNMA, 2.86% - 2.873%, 8/01/22 - 9/01/39		10,675,965		11,261,139

franklintempleton.com Semiannual Report         33

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Adjustable U.S. Government Securities Fund (continued)

	Principal Amount		Value
Mortgage-Backed Securities (continued)
a Federal National Mortgage Association (FNMA) Adjustable Rate (continued)
FNMA, 2.875%, 1/01/36	$	5,509,353	$	5,755,081
FNMA, 2.873% - 2.878%, 8/01/19 - 7/01/38		10,990,015		11,569,435
FNMA, 2.879% - 2.89%, 1/01/32 - 3/01/38		10,918,750		11,414,316
FNMA, 2.896%, 3/01/35		4,971,741		5,220,783
FNMA, 2.89% - 2.914%, 4/01/19 - 7/01/42		10,963,886		11,494,870
FNMA, 2.914%, 2/01/36		11,611,396		12,197,768
FNMA, 2.914% - 2.922%, 9/01/18 - 7/01/38		11,049,098		11,541,365
FNMA, 2.923%, 8/01/37		5,040,920		5,329,230
FNMA, 2.922% - 2.934%, 1/01/23 - 5/01/38		9,321,285		9,757,044
FNMA, 2.934% - 2.953%, 2/01/19 - 8/01/39		10,471,779		10,986,862
FNMA, 2.953% - 2.964%, 1/01/19 - 8/01/39		10,961,845		11,499,482
FNMA, 2.965% - 2.98%, 6/01/19 - 1/01/40		7,169,181		7,536,971
FNMA, 2.992%, 5/01/39		9,628,837		10,110,218
FNMA, 2.98% - 2.998%, 4/01/25 - 12/01/43		10,735,697		11,349,482
FNMA, 3.008%, 2/01/36		6,832,414		7,205,431
FNMA, 2.998% - 3.013%, 10/01/18 - 10/01/41		10,141,982		10,680,187
FNMA, 3.017%, 3/01/37		7,415,448		7,828,065
FNMA, 3.013% - 3.027%, 7/01/26 - 9/01/37		10,142,514		10,662,973
FNMA, 3.035%, 2/01/36		7,133,677		7,546,669
FNMA, 3.027% - 3.05%, 5/01/18 - 11/01/39		10,495,535		11,074,737
FNMA, 3.054%, 11/01/34		6,617,304		6,985,791
FNMA, 3.05% - 3.059%, 4/01/24 - 8/01/40		10,020,560		10,572,862
FNMA, 3.059% - 3.065%, 9/01/24 - 5/01/48		10,251,814		10,830,226
FNMA, 3.066% - 3.077%, 10/01/17 - 6/01/38		9,691,649		10,202,544
FNMA, 3.078% - 3.093%, 4/01/18 - 3/01/41		10,915,170		11,496,138
FNMA, 3.103%, 7/01/40		6,762,490		7,178,169
FNMA, 3.094% - 3.104%, 12/01/19 - 4/01/37		9,267,563		9,741,823
FNMA, 3.108%, 11/01/34		7,233,653		7,650,040
FNMA, 3.104% - 3.113%, 9/01/19 - 1/01/42		10,935,899		11,559,101
FNMA, 3.115% - 3.128%, 6/01/17 - 7/01/42		10,965,511		11,575,225
FNMA, 3.13%, 12/01/36		8,882,139		9,342,832
FNMA, 3.134%, 9/01/37		4,698,230		4,974,012
FNMA, 3.136%, 6/01/35		5,170,588		5,488,013
FNMA, 3.144%, 9/01/36		5,508,782		5,791,407
FNMA, 3.128% - 3.148%, 3/01/32 - 5/01/48		7,082,644		7,488,459
FNMA, 3.156%, 1/01/36		6,797,551		7,224,753
FNMA, 3.157%, 2/01/43		6,023,166		6,371,257
FNMA, 3.148% - 3.163%, 12/01/21 - 9/01/38		8,908,912		9,393,442
FNMA, 3.163% - 3.176%, 11/01/17 - 10/01/40		8,069,852		8,528,655
FNMA, 3.178% - 3.183%, 3/01/26 - 12/01/36		9,147,515		9,665,758
FNMA, 3.184%, 9/01/39		5,035,036		5,326,985
FNMA, 3.183% - 3.193%, 1/01/33 - 11/01/38		9,307,888		9,798,621
FNMA, 3.207%, 1/01/37		7,334,380		7,788,537
FNMA, 3.193% - 3.208%, 9/01/25 - 11/01/38		10,976,177		11,592,549
FNMA, 3.208% - 3.215%, 12/01/32 - 3/01/42		8,930,306		9,406,716
FNMA, 3.218% - 3.222%, 1/01/33 - 9/01/40		10,841,563		11,448,938
FNMA, 3.238%, 3/01/35		10,902,419		11,516,328
FNMA, 3.247%, 3/01/41		8,844,329		9,348,810
FNMA, 3.224% - 3.253%, 12/01/22 - 4/01/38		10,968,497		11,565,218
FNMA, 3.253% - 3.279%, 3/01/33 - 11/01/41		9,997,658		10,530,186
FNMA, 3.281% - 3.285%, 4/01/33 - 10/01/37		9,630,571		10,184,007

34         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Adjustable U.S. Government Securities Fund (continued)

	Principal Amount		Value
Mortgage-Backed Securities (continued)
a Federal National Mortgage Association (FNMA) Adjustable Rate (continued)
FNMA, 3.288%, 1/01/39	$	7,620,621	$	8,047,145
FNMA, 3.294%, 4/01/34		26,694,156		28,092,497
FNMA, 3.285% - 3.309%, 10/01/18 - 11/01/38		9,395,341		9,926,380
FNMA, 3.31%, 8/01/35		4,757,808		5,037,016
FNMA, 3.31% - 3.316%, 4/01/33 - 8/01/39		9,733,655		10,269,037
FNMA, 3.319% - 3.361%, 3/01/24 - 3/01/40		10,938,797		11,564,019
FNMA, 3.362% - 3.416%, 5/01/21 - 1/01/42		10,356,499		10,911,135
FNMA, 3.444%, 9/01/35		4,683,417		4,959,343
FNMA, 3.42% - 3.445%, 5/01/25 - 2/01/41		10,520,689		11,105,677
FNMA, 3.445%, 1/01/36		6,162,369		6,486,077
FNMA, 3.468%, 5/01/40		6,745,247		7,128,453
FNMA, 3.447% - 3.507%, 10/01/21 - 9/01/37		8,968,721		9,488,025
FNMA, 3.513% - 3.566%, 1/01/25 - 6/01/38		8,626,208		9,133,539
FNMA, 3.567% - 3.626%, 6/01/25 - 3/01/47		10,701,762		11,332,963
FNMA, 3.635% - 4.036%, 12/01/17 - 11/01/46		11,000,000		11,570,356
FNMA, 4.045% - 7.67%, 9/01/17 - 3/01/38		1,657,978		1,693,777
				847,619,759
a Government National Mortgage Association (GNMA) Adjustable Rate 0.1%
GNMA, 2.00% - 2.25%, 9/20/33 - 5/20/36		1,428,079		1,467,486
Total Mortgage-Backed Securities (Cost $1,115,083,438)				1,120,421,648
	Shares
Short Term Investments (Cost $30,179,621) 2.6%
Money Market Funds 2.6%		30,179,621		30,179,621
b,c Institutional Fiduciary Trust Money Market Portfolio, 0.37%
Total Investments (Cost $1,145,263,059) 99.2%				1,150,601,269
Other Assets, less Liabilities 0.8%				9,270,645
Net Assets 100.0%			$	1,159,871,914

^aThe coupon rate shown represents the rate at period end.

^bSee Note 3(f) regarding investments in affiliated management investment companies.

^cThe rate shown is the annualized seven-day yield at period end.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         35

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Floating Rate Daily Access Fund

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$   8.84			$   8.61			$   9.04			$   9.20			$   9.11			$   8.89
Income from investment operationsa:
Net investment income		0.149			0.401			0.406			0.335			0.333			0.403
Net realized and unrealized gains (losses)		0.040			0.228			(0.434	)		(0.160	)		0.088			0.225
Total from investment operations		0.189			0.629			(0.028	)		0.175			0.421			0.628
Less distributions from net investment income		(0.149	)		(0.399	)		(0.402	)		(0.335	)		(0.331	)		(0.408	)
Net asset value, end of period		$   8.88			$   8.84			$   8.61			$   9.04			$   9.20			$   9.11
Total returnb		2.15%			7.60%			(0.37)%			1.91%			4.69%			7.22%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.87%			0.88%			0.85%			0.84%			0.83%			0.90%
Expenses net of waiver and payments by affiliates		0.81%d			0.86%d			0.84%d			0.82%d			0.83%d,e			0.90%
Net investment income		3.37%			4.72%			4.55%			3.64%			3.60%			4.52%
Supplemental data
Net assets, end of period (000’s)		$1,455,825			$1,359,862			$1,553,100			$1,874,867			$1,991,138			$1,295,166
Portfolio turnover rate		43.26%			34.10%			46.72%			83.93%			42.72%			80.88%

^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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit 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 INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  8.84		$	8.61		$	9.05		$	9.20		$	9.11		$	8.89
Income from investment operationsa:
Net investment income		0.132			0.366			0.369			0.298			0.296			0.368
Net realized and unrealized gains (losses)		0.040			0.229			(0.443	)		(0.150	)		0.088			0.224
Total from investment operations		0.172			0.595			(0.074	)		0.148			0.384			0.592
Less distributions from net investment income		(0.132	)		(0.365	)		(0.366	)		(0.298	)		(0.294	)		(0.372	)
Net asset value, end of period		$  8.88		$	8.84		$	8.61		$	9.05		$	9.20		$	9.11
Total returnb		1.95	%		7.18	%		(0.87	)%		1.62	%		4.28	%		6.79	%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		1.27	%		1.28	%		1.25	%		1.24	%		1.23	%		1.30	%
Expenses net of waiver and payments by affiliates		1.21	%d		1.26	%d		1.24	%d		1.22	%d		1.23	%d,e		1.30	%
Net investment income		2.97	%		4.32	%		4.15	%		3.24	%		3.20	%		4.12	%
Supplemental data
Net assets, end of period (000’s)		$596,792		$	551,726		$	627,805		$	742,602		$	765,839		$	431,818
Portfolio turnover rate		43.26	%		34.10	%		46.72	%		83.93	%		42.72	%		80.88	%

^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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit 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 INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$   8.84			$   8.60			$   9.05			$   9.21			$   9.21
Income from investment operationsb:
Net investment income		0.165			0.422			0.437			0.364			0.175
Net realized and unrealized gains (losses)		0.039			0.245			(0.457	)		(0.159	)		(0.001	)
Total from investment operations		0.204			0.667			(0.020	)		0.205			0.174
Less distributions from net investment income		(0.164	)		(0.427	)		(0.430	)		(0.365	)		(0.174	)
Net asset value, end of period		$   8.88			$   8.84			$8.60			$   9.05			$   9.21
Total returnc		2.32%			7.96%			(0.16)%			2.36%			1.80%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		0.53%			0.53%			0.72%			0.52%			0.51%
Expenses net of waiver and payments by affiliates		0.47%	e		0.51%	e		0.51%	e		0.50%	e		0.51%	e,f
Net investment income		3.71%			5.07%			4.88%			3.96%			3.92%
Supplemental data
Net assets, end of period (000’s)		$110,557			$12,333			$7			$465			$1,339
Portfolio turnover rate		43.26%			34.10%			46.72%			83.93%			42.72%

^aFor the period May 1, 2013 (effective date) to October 31, 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.

^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 INVESTORS SECURITIES TRUST     

FINANCIAL HIGHLIGHTS     

Franklin Floating Rate Daily Access Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$   8.85			$   8.61			$   9.05			$   9.20			$   9.11			$   8.89
Income from investment operationsa:
Net investment income		0.159			0.422			0.427			0.358			0.355			0.426
Net realized and unrealized gains (losses)		0.031			0.239			(0.443	)		(0.150	)		0.089			0.225
Total from investment operations		0.190			0.661			(0.016	)		0.208			0.444			0.651
Less distributions from net investment income .		(0.160	)		(0.421	)		(0.424	)		(0.358	)		(0.354	)		(0.431	)
Net asset value, end of period		$   8.88			$   8.85			$   8.61			$   9.05			$   9.20			$   9.11
Total returnb		2.16%			8.00%			(0.23)%			2.28%			4.95%			7.49%
Ratios to average net assetsc
Expenses before waiver and paymentsby affiliates		0.62%			0.63%			0.60%			0.59%			0.58%			0.65%
Expenses net of waiver and payments by affiliates		0.56%d			0.61%d			0.59%d			0.57%d			0.58%d,e			0.65%
Net investment income		3.62%			4.97%			4.80%			3.89%			3.85%			4.77%
Supplemental data
Net assets, end of period (000’s)		$1,700,081			$1,108,692			$1,405,281			$2,019,477			$2,374,914			$739,974
Portfolio turnover rate		43.26%			34.10%			46.72%			83.93%			42.72%			80.88%

^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.

^bTotal return is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eBenefit 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         39

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Floating Rate Daily Access Fund

	Country	Shares		Value
Common Stocks 0.3%
Oil & Gas Exploration & Production 0.2%
a Samson Resources II LLC	United States		432,778	$	8,547,365
Steel 0.1%
a,b Warrior Met Coal Inc.	United States		96,129		1,651,113
Total Common Stocks (Cost $19,878,527)					10,198,478
		Principal  Amount*
c,d Senior Floating Rate Interests 78.7%
Aerospace & Defense 3.2%
Avolon TLB Borrower I, Initial Term B-1 Loans, 3.243%, 7/20/20	United States	$	14,200,000		14,372,431
e Delos Finance S.A.R.L. (ILFC), New Loan, 3.397%, 10/06/23	Luxembourg		59,610,818		60,231,784
Digitalglobe Inc., Term Loan B, 3.743%, 1/15/24	United States		5,402,935		5,432,203
Doncasters U.S. Finance LLC,
Second Lien Term Loan, 9.50%, 10/09/20	United States		6,608,226		6,404,474
eTerm B Loans, 4.647%, 4/09/20	United States		34,105,364		33,451,667
Leidos (Abacus Innovations Corp.), B Term Loan, 3.25%, 8/16/23	United States		3,319,115		3,356,455
					123,249,014
Agricultural Products 0.1%
Allflex Holdings III Inc., Second Lien Initial Term Loan, 8.156%, 7/16/21	United States		2,287,774		2,294,924
Air Freight & Logistics 0.3%
XPO Logistics Inc., Loans, 3.405%, 11/01/21	United States		10,923,643		10,982,358
Airlines 3.3%
Air Canada, Term Loan, 3.90%, 10/06/23	Canada		33,327,459		33,591,313
American Airlines Inc.,
2017 Replacement Term Loans, 2.993%, 6/27/20	United States		9,985,738		10,003,213
Class B Term Loans, 3.493%, 4/28/23	United States		14,621,025		14,670,780
Class B Term Loans, 3.494%, 12/14/23	United States		33,022,636		33,135,012
e Flying Fortress Inc. (ILFC), New Loan, 3.397%, 10/30/22	United States		30,062,918		30,344,758
United Air Lines Inc., Class B Term Loans, 3.422%, 4/01/24	United States		4,784,343		4,804,528
					126,549,604
Apparel Retail 2.4%
e Ascena Retail Group Inc., Tranche B Term Loan, 5.50%, 8/21/22	United States		96,448,452		87,406,410
The Men’s Wearhouse Inc., Tranche B Term Loan, 4.50% - 4.563%, 6/18/21	United States		5,033,680		4,844,917
					92,251,327
Auto Parts & Equipment 1.0%
American Axle and Manufacturing Inc., Tranche B Term Loan, 3.24%, 4/06/24	United States		3,958,745		3,947,364
TI Group Automotive Systems LLC, Initial US Term Loan, 3.743%, 6/30/22	United States		36,339,238		36,611,782
					40,559,146
Broadcasting 1.0%
Gray Television Inc., Term B-2 Loan, 3.483%, 2/07/24	United States		18,917,920		19,111,829
e Marshall Broadcasting Group Inc., Term A Loans, 5.00%, 6/28/18	United States		553,440		553,440
Mission Broadcasting Inc., Term B Loans, 3.994%, 1/17/24	United States		1,185,497		1,194,944
Nexstar Broadcasting Group Inc., Term B Loans, 3.994%, 1/17/24	United States		12,227,994		12,325,439
e Nexstar Broadcasting Inc., Term A Loans, 5.50%, 1/17/22	United States		3,170,680		3,178,607
Sinclair Television Group Inc., Tranche B Term Loans, 3.25%, 1/31/24	United States		3,778,411		3,792,172
e WXXA-TV LLC and WLAJ-TV LLC, Term A Loans, 5.50%, 1/17/22	United States		267,550		264,540
					40,420,971

40         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal   Amount*		Value
c,d Senior Floating Rate Interests (continued)
Cable & Satellite 3.2%
Charter Communications Operating LLC (CCO Safari), Term Loan A-1, 2.75%, 5/18/21		United States	$	29,296,655	$	29,307,114
CSC Holdings LLC, March 2017 Incremental Term Loans, 3.244%, 7/17/25		United States		42,580,694		42,610,628
Mediacom LLC/US, Tranche K Term Loan, 3.20%, 2/15/24		United States		9,056,123		9,116,500
UPC Financing Partnership, Facility AP, 3.744%, 4/15/25		United States		17,720,000		17,806,385
Virgin Media Bristol LLC, I Facility, 3.744%, 1/31/25		United States		24,326,188		24,444,778
						123,285,405
Casinos & Gaming 1.6%
Aristocrat Technologies Inc., Tranche B-2 Loans, 3.406%, 10/20/21		United States		7,181,102		7,251,255
Boyd Gaming Corp., eRefinancing Term B Loans, 5.50%, 9/15/23		United States		15,895,777		15,990,866
Term A Loan, 2.695%, 9/15/21		United States		4,875,253		4,881,347
e Caesars Entertainment Operating Co. LLC., Term B Loans, 5.75%, 8/31/24		United States		2,882,954		2,867,337
e Eldorado Resorts Inc., Initial Term Loan, 5.25%, 4/17/24		United States		12,014,309		12,029,327
e Greektown Holdings LLC, Initial Term Loan, 6.00%, 4/25/24		United States		15,504,386		15,539,922
Las Vegas Sands LLC, Term B Loans, 2.99%, 3/29/24		United States		1,461,074		1,464,041
						60,024,095
Coal & Consumable Fuels 2.1%
Bowie Resource Holdings LLC, eFirst Lien Initial Term Loan, 6.75%, 8/14/20		United States		30,057,858		29,256,305
Second Lien Initial Term Loan, 11.75%, 2/16/21		United States		4,464,778		4,120,990
Foresight Energy LLC, Term Loans, 6.75%, 3/28/22		United States		41,839,875		40,676,224
Westmoreland Coal Co., Term Loan, 7.647%, 12/16/20		United States		7,939,963		7,324,616
						81,378,135
Commodity Chemicals 1.9%
Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		56,293,579		56,610,231
e Ineos U.S. Finance LLC., 2024 Dollar Term Loan, 3.743%, 3/31/24		United States		16,705,583		16,828,268
						73,438,499
Communications Equipment 0.9%
Ciena Corp., Refinancing Term Loan, 3.493%, 1/28/22		United States		16,337,585		16,470,328
CommScope Inc., Tranche 5 Term Loans, 3.493%, 12/29/22		United States		17,153,762		17,289,414
						33,759,742
Construction Machinery & Heavy Trucks 1.0%
e Allison Transmission Inc., Term Loans, 2.99%, 9/23/22		United States		36,857,311		37,269,412
Data Processing & Outsourced Services 1.6%
Global Payments Inc., Delayed Draw Term Loan (A-2), 3.196%, 10/31/21		United States		36,057,214		36,124,821
MoneyGram International Inc., Term Loan, 4.397%, 3/27/20		United States		23,123,614		23,176,613
e Neustar Inc., Term Loan B1, 6.25%, 9/01/19		United States		720,000		731,588
						60,033,022
Diversified Chemicals 1.8%
e Chemours Co., Tranche B-1 US Term Loans, 3.49%, 5/12/22		United States		37,812,879		38,066,944
e Huntsman International LLC, Term Loan B, 3.743%, 10/01/21		United States		2,795,489		2,826,046
e OCI Beaumont LLC, Term B-3 Loan, 8.025%, 8/20/19		United States		26,941,532		27,783,455
Unifrax I LLC, Initial Dollar Term Loans, 4.90%, 4/04/24		United States		2,111,331		2,121,007
						70,797,452
Diversified Metals & Mining 1.4%
e FMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		Australia		54,855,314		55,260,037

franklintempleton.com Semiannual Report         41

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal   Amount*		Value
c,d Senior Floating Rate Interests (continued)
Diversified Real Estate Activities 0.3%
Realogy Group LLC, Initial Term A Loans, 2.99%, 10/23/20		United States	$	12,784,335	$	12,808,305
Diversified Support Services 0.2%
Ventia Pty. Ltd., Term B Loans (USD), 4.662%, 5/21/22		Australia		7,261,041		7,333,652
Electric Utilities 0.1%
EFS Cogen Holdings I LLC (Linden), Term B Advance, 4.65%, 6/28/23		United States		3,112,224		3,139,456
Electronic Equipment & Instruments 0.0%†
Zebra Technologies Corp., Second Amendment Refinancing Term Loan, 3.60%, 10/27/21		United States		1,756,570		1,775,789
Fertilizers & Agricultural Chemicals 0.1%
e Mosaic Co., Term Loan A, 4.50%, 11/18/21		United States		4,299,217		4,272,347
Food Distributors 0.3%
e Aramark Corp., U.S. Term A Loan, 4.75%, 3/28/22		United States		12,014,309		12,055,615
Forest Products 0.8%
Appvion Inc., Term Loan, 7.75%, 6/28/19		United States		30,211,103		29,493,589
General Merchandise Stores 2.6%
e 99 Cents Only Stores, Tranche B-2 Loan, 4.554% - 4.647%, 1/11/19		United States		42,904,848		40,357,373
Dollar Tree Inc., Term A-1 Loans, 2.75%, 7/06/20		United States		10,220,707		10,191,834
e Evergreen AcqCo. 1 LP (Savers), Term Loan, 5.00%, 7/09/19		United States		56,690,720		51,942,872
						102,492,079
Health Care Distributors 0.4%
Mallinckrodt International Finance SA/CB LLC, Extended Term Loan B, 3.897%, 9/24/24		United States		15,850,000		15,868,830
Health Care Equipment 0.2%
Carestream Health Inc., Term Loan, 5.147%, 6/07/19		United States		6,504,659		6,466,041
Health Care Facilities 1.2%
e Community Health Systems Inc., 2019 Term A Loans, 3.493% - 3.554%, 1/27/19		United States		28,137,472		28,168,254
HCA Inc., Tranche A-5 Term Loan, 2.493%, 6/10/20		United States		19,066,226		19,104,359
						47,272,613
Health Care Services 0.8%
DaVita Healthcare Partners Inc., Tranche A Term Loan, 2.993%, 6/24/19		United States		15,038,420		15,108,920
Envision Healthcare Corp. (Emergency Medical), Initial Term Loans, 4.15%, 12/01/23		United States		13,545,399		13,694,615
e US Renal Care Inc., Intial Term Loan, 7.25%, 12/31/22		United States		2,708,744		2,552,146
						31,355,681
Hotels, Resorts & Cruise Lines 0.7%
Hilton Worldwide Finance LLC, Series B-2 Term Loans, 2.991%, 10/25/23		United States		19,779,950		19,977,749
e Station Casinos LLC, Revolving Commitment, 5.50%, 6/08/21		United States		8,232,000		7,892,430
						27,870,179
Household Products 0.3%
Spectrum Brands Inc.,
Term Loans, 2.852% - 3.486%, 6/23/22		United States		9,029,242		9,113,891
eUSD Term Loans, 5.00%, 6/23/22		United States		1,031,513		1,039,106
						10,152,997
Independent Power Producers & Energy Traders 5.5%
e Calpine Construction Finance Co. LP, Term B-1 Loan, 3.24%, 5/03/20		United States		59,964,009		60,188,874
Calpine Corp., Term Loan (B5), 3.90%, 1/15/24		United States		19,314,017		19,404,561
e Helix Gen Funding LLC, Term Loan B, 6.75%, 5/01/24		United States		36,212,880		36,674,594

42         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
c,d Senior Floating Rate Interests (continued)
Independent Power Producers & Energy Traders (continued)
Lightstone Holdco LLC,
Initial Term B Loan, 5.539%, 1/30/24		United States	$	16,742,167	$	16,858,759
Initial Term C Loan, 5.50%, 1/30/24		United States		1,032,869		1,040,062
NRG Energy Inc., Term Loans, 3.243%, 6/30/23		United States		76,117,771		76,538,018
						210,704,868
Industrial Machinery 2.5%
Harsco Corp., Initial Term Loan, 6.00%, 11/02/23		United States		3,188,462		3,258,209
e Mueller Water Products Inc., Loans, 3.493% - 3.647%, 11/25/21		United States		9,147,489		9,265,647
Navistar Inc., Tranche B Term Loans, 5.00%, 8/07/20		United States		55,083,196		55,863,560
f Onsite Rental Group Operations Pty. Ltd., Term B Loan, 5.50%, 7/30/21		Australia		40,657,849		26,834,180
						95,221,596
Integrated Telecommunication Services 2.9%
e Consolidated Communications Inc., Term Loan B-2, 6.00%, 10/05/23		United States		4,278,791		4,315,161
Global Tel*Link Corp.,
eSecond Lien Term Loan, 9.00%, 11/20/20		United States		6,033,937		6,018,852
Term Loan, 5.00%, 5/23/20		United States		7,411,566		7,411,566
e Securus Technologies Holdings Inc., Second Lien Term Loan, 9.00%, 4/17/21		United States		666,667		666,042
Zayo Group LLC, 2017 Incremental Refinancing B-1 Term Loan, 2.991%, 1/19/21		United States		91,300,000		91,927,687
						110,339,308
Internet Software & Services 0.1%
Rackspace Hosting Inc., 2016 Refinancing Term B Loan, 4.535%, 11/03/23		United States		5,314,103		5,357,832
IT Consulting & Other Services 1.7%
Gartner Inc., Tranche A Term Loans, 2.993%, 3/21/22		United States		3,140,605		3,154,345
Sungard Availability Services Capital Inc., Tranche B Term Loan, 6.00%, 3/29/19		United States		63,973,532		63,333,796
						66,488,141
Leisure Facilities 1.8%
24 Hour Fitness Worldwide Inc., Term Loan, 4.897%, 5/28/21		United States		30,556,178		30,460,690
e Fitness International LLC, Term A Loan, 4.243%, 4/01/20		United States		40,107,694		40,107,694
						70,568,384
Life Sciences Tools & Services 0.5%
e Quintiles IMS Inc., Term Loan B, 5.00%, 3/02/24		United States		18,952,500		19,149,928
Marine 0.4%
Navios Maritime Partners LP, Initial Term Loan, 6.13%, 9/14/20		Greece		15,000,000		14,824,995
Metal & Glass Containers 0.6%
Owens-Brockway Glass Container Inc., Term A Loan, 2.695% - 2.742%, 4/22/20		United States		22,287,953		22,287,953
Movies & Entertainment 2.6%
AMC Entertainment Holdings Inc., 2016 Incremental Term Commitments, 3.742%, 12/15/23		United States		3,358,489		3,386,617
Cinemark USA Inc., Amended Term Loan Facility, 3.24%, 5/08/22		United States		1,227,095		1,241,156
e Lions Gate Entertainment Corp., Term A Loan, 3.482%, 12/08/21		United States		72,061,115		72,466,458
Live Nation Entertainment Inc., Term B-2 Loans, 3.50%, 10/31/23		United States		6,820,683		6,874,996
Regal Cinemas Corp., Term Loan, 3.493%, 4/01/22		United States		15,619,549		15,808,686
						99,777,913
Office Services & Supplies 0.2%
Conduent Business Services LLC, Delayed Draw Term A Loan, 3.243%, 12/07/21		United States		8,000,000		7,985,000
Oil & Gas Equipment & Services 0.3%
McDermott Finance LLC, Term Loan, 8.397%, 4/16/19		United States		11,490,217		11,669,752

franklintempleton.com Semiannual Report         43

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal   Amount*		Value
c,d Senior Floating Rate Interests (continued)
Oil & Gas Exploration & Production 3.2%
e Fieldwood Energy LLC, Loans, 3.875%, 10/01/18		United States	$	84,633,286	$	82,834,828
UTEX Industries Inc., First Lien Initial Term Loan, 5.00%, 5/21/21		United States		42,235,679		39,134,018
						121,968,846
Oil & Gas Storage & Transportation 1.5%
Energy Transfer Equity LP, Loans, 3.733%, 2/02/24		United States		17,571,354		17,621,556
International Seaways Inc., Initial Term Loan, 5.79%, 8/05/19		United States		13,269,466		13,258,412
OSG Bulk Ships Inc., Initial Term Loan, 5.29%, 8/05/19		United States		21,276,970		20,975,539
e Strike LLC, Term Loan, 9.291%, 11/10/22		United States		6,122,500		6,244,950
						58,100,457
Packaged Foods & Meats 1.6%
e CSM Bakery Supplies LLC,
Second Lien Term Loan, 8.90%, 7/03/21		United States		15,590,519		13,446,823
Term Loans, 5.15%, 7/03/20		United States		8,832,746		8,265,975
e JBS USA LUX SA, New Initial Term Loans, 3.483%, 10/30/22		Brazil		37,674,706		37,857,202
Pinnacle Foods Finance LLC, Initial Term Loans, 2.983%, 2/03/24		United States		2,309,445		2,326,593
						61,896,593
Paper Packaging 0.6%
Caraustar Industries Inc., Refinancing Term Loans, 6.647%, 3/14/22		United States		23,223,978		23,441,702
Personal Products 2.7%
Coty Inc., Term A Loan, 2.483%, 10/27/20		United States		32,867,533		32,840,154
FGI Operating Co. LLC (Freedom Group), Term B Loans, 5.50%, 4/19/19		United States		72,879,733		70,511,142
						103,351,296
Pharmaceuticals 3.8%
e Endo Luxembourg Finance Co. I S.A.R.L and Endo LLC, Initial Term Loans, 7.25%, 4/27/24		United States		39,996,893		40,253,113
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 3.195%, 1/31/25		United States		37,127,009		37,289,514
Horizon Pharma Inc., Second Amendment Refinancing Term Loans, 4.75%, 3/29/24		United States		8,481,332		8,544,942
RPI Finance Trust,
Term A-2 Term Loan, 3.397%, 10/14/20		United States		9,139,976		9,157,113
Term B-6 Term Loan, 3.153%, 3/13/23		United States		4,372,214		4,394,758
e Valeant Pharmaceuticals International Inc., Series F Tranche B Term Loan, 5.74%, 4/01/22		United States		48,793,280		49,103,313
						148,742,753
Restaurants 0.4%
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC, Term B Loans, 2.994%, 6/16/23		United States		9,111,746		9,172,494
e NPC International Inc., Second Lien Initial Term Loan, 10.50%, 4/20/25		United States		8,228,426		8,346,710
						17,519,204
Retail REITs 0.2%
Capital Automotive LP, Tranche B-2 Term Loan, 4.00%, 3/24/24		United States		8,607,418		8,689,903
Semiconductor Equipment 0.1%
MKS Instruments Inc., Tranche B-2 Term Loans, 3.743%, 5/01/23		United States		3,050,402		3,086,626
Semiconductors 1.2%
e MACOM Technology Solutions Holdings Inc., Initial Term Loans, 3.989%, 5/07/21		United States		27,751,088		28,167,355
ON Semiconductor Corp., 2017 Replacement Term Loans, 3.243%, 3/31/23		United States		18,831,093		18,962,232
						47,129,587

44         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal   Amount*		Value
c,d Senior Floating Rate Interests (continued)
Specialized Consumer Services 1.5%
Avis Budget Car Rental LLC, Tranche B Term Loan, 3.15%, 3/15/22		United States	$	23,041,125	$	23,101,608
NVA Holdings Inc.,
Second Lien Term Loan, 8.147%, 8/14/22		United States		307,870		311,077
eTerm Loan B-2, 4.647%, 8/14/21		United States		7,134,935		7,208,518
Sabre GLBL Inc.,
Incremental Term A Loan, 3.493%, 7/18/21		United States		26,907,358		27,013,857
Term B Loan, 3.743%, 2/22/24		United States		1,896,612		1,916,763
						59,551,823
Specialty Chemicals 1.3%
Axalta Coating Systems U.S. Holdings Inc., Term B-1 Dollar Loans, 3.647%, 2/01/23		United States		11,028,720		11,152,826
Oxbow Carbon LLC,
Second Lien Initial Term Loan, 8.00%, 1/17/20		United States		26,864,314		27,032,216
Tranche B Term Loan, 6.25%, 7/19/19		United States		3,531,637		3,540,466
Solenis International LP and Solenis Holdings 3 LLC, Second Lien Term Loan, 7.804%, 7/31/22		United States		7,800,000		7,753,200
						49,478,708
Specialty Stores 2.1%
ePetSmart Inc., Tranche B-2 Loans, 4.02%, 3/11/22		United States		86,599,569		79,942,227
Technology Distributors 2.0%
Dell International LLC,
Term A-1 Loan, 3.00%, 12/31/18		United States		10,482,500		10,497,574
Term A-3 Loan, 3.00%, 12/31/18		United States		67,306,123		67,481,388
						77,978,962
Technology Hardware, Storage & Peripherals 0.7%
Western Digital Corp.,
eTerm A Loan, 2.993%, 4/29/21		United States		18,839,286		18,988,437
US Term B-2 Loan, 3.743%, 4/29/23		United States		6,835,507		6,898,735
						25,887,172
Tires & Rubber 0.3%
The Goodyear Tire & Rubber Co., Second Lien Term Loan, 2.99%, 4/30/19		United States		12,281,318		12,429,713
Trucking 1.6%
The Hertz Corp., Tranche B-1 Term Loan, 3.743%, 6/30/23		United States		46,168,213		46,280,032
Pilot Travel Centers LLC, Initial Tranche B Term Loans, 2.993%, 5/25/23		United States		16,159,500		16,287,435
						62,567,467
Total Senior Floating Rate Interests (Cost $3,051,069,870)						3,040,049,025
Asset-Backed Securities 9.3%
Other Diversified Financial Services 9.3%
g Apidos CDO, 2013-14A, C2, 144A, 4.85%, 4/15/25		United States		3,540,000		3,556,496
c,g Ballyrock CLO LLC, 2014-1A, BR, 144A, FRN, 3.256%, 10/20/26		United States		5,200,000		5,210,452
c,g Birchwood Park CLO Ltd., 2014-1A, AR, 144A, FRN, 2.338%, 7/15/26		United States		8,625,000		8,641,129
c,g Bluemountain CLO Ltd., 2012-2A, AR, 144A, FRN, 2.472%, 11/20/28		United States		22,160,000		22,339,939
c,g Bristol Park CLO Ltd., 2016-1A, A, 144A, FRN, 2.578%, 4/15/29		United States		45,000,000		45,004,050
c,g Carlyle Global Market Strategies CLO Ltd.,
2014-2A, AR, 144A, FRN, 2.289%,5/15/25		United States		5,000,000		5,001,250
2015-2A, A1, 144A, FRN, 2.64%,4/27/27		United States		16,535,000		16,551,866

franklintempleton.com Semiannual Report         45

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities (continued)
Other Diversified Financial Services (continued)
c,g Carlyle U.S. CLO Ltd., 2017-1A, A1A, 144A, FRN, 2.391%, 4/20/31		United States	$	24,000,000	$	24,087,600
c,g Cent CLO LP,
2013-17A, B, 144A, FRN, 4.039%,1/30/25		United States		3,850,000		3,859,086
2014-22A, A1R, 144A, FRN, 2.444%,11/07/26		United States		5,000,000		5,020,050
2014-22A, BR, 144A, FRN, 3.984%,11/07/26		United States		7,400,000		7,401,110
c,g Eaton Vance CDO Ltd., 2014-1A, AR, 144A, FRN, 2.358%, 7/15/26		United States		6,510,000		6,512,995
g Emerson Park CLO Ltd., 2013-1A, C2R, 144A, 4.055%, 7/15/25		United States		3,600,000		3,582,936
c,g Flatiron CLO Ltd., 2014-1A, A1R, 144A, FRN, 2.338%, 7/17/26		United States		16,400,000		16,403,936
g Highbridge Loan Management Ltd., 2013-2A, B2, 144A, 5.80%, 10/20/24		United States		3,500,000		3,532,375
c,g LCM XXI LP, 21A, A, 144A, FRN, 2.706%, 4/20/28		United States		30,320,000		30,504,649
c,g LCM XXIV Ltd., 24A, A, 144A, FRN, 2.546%, 3/20/30		United States		52,000,000		52,007,800
c,g Madison Park Funding Ltd., 2016-21A, A1, 144A, FRN, 2.568%, 7/25/29		United States		17,200,000		17,251,944
c,g Magnetite XIV Ltd., 2015-14A, A, 144A, FRN, 2.548%, 7/18/28		United States		3,140,000		3,165,434
c,g Octagon Investment Partners 24 Ltd., 2015-1A, A1, 144A, FRN, 2.502%, 5/21/27		United States		3,300,000		3,314,718
c,g Octagon Investment Partners 30 Ltd., 144A, FRN, 2.355%, 3/17/30		United States		23,071,429		23,129,338
c,g Octagon Investment Partners XIX Ltd., 2014-14, AR, 144A, FRN, 2.258%, 4/15/26		United States		5,600,000		5,593,336
c,g Octagon Investment Partners XVII Ltd., 2013-1A, A1, 144A, FRN, 2.486%, 10/25/25		United States		6,820,000		6,839,028
c,g Venture XXIV CLO Ltd., 2016-24A, A1D, 144A, FRN, 2.576%, 10/20/28		United States		34,000,000		34,245,140
c,g Voya CLO Ltd., 2015-1A, A1, 144A, FRN, 2.638%, 4/18/27		United States		6,900,000		6,920,700
c,g Ziggurat CLO I Ltd., 2014-1A, C, 144A, FRN, 4.258%, 10/17/26		United States		1,340,000		1,344,247
Total Asset-Backed Securities (Cost $360,314,012)						361,021,604
Total Investments before Short Term Investments (Cost $3,431,262,409)						3,411,269,107
Short Term Investments 21.6%
U.S. Government and Agency Securities (Cost $66,538,690) 1.7%
h U.S. Treasury Bill, 6/22/17		United States		66,600,000		66,533,533
			Shares
Money Market Funds (Cost $766,726,003) 19.9%
i,j Institutional Fiduciary Trust Money Market Portfolio, 0.37%		United States		766,726,003		766,726,003
Total Investments (Cost $4,264,527,102) 109.9%						4,244,528,643
Other Assets, less Liabilities (9.9)%						(381,272,890	)
Net Assets 100.0%					$	3,863,255,753

46         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Floating Rate Daily Access Fund (continued)

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 8 regarding restricted securities.

^cThe coupon rate shown represents the rate at period end.

^dSee Note 1(i) regarding senior floating rate interests.

^eA portion or all of the security purchased on a delayed delivery basis. See Note 1(c).

^fAt April 30, 2017, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund is restricted from trading these securities at period end.

^gSecurity 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.

^hThe security was issued on a discount basis with no stated coupon rate.

ⁱ See Note 3(f) regarding investments in affiliated management investment companies.

^jThe rate shown is the annualized seven-day yield at period end.

At April 30, 2017, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts

Description	Periodic Payment Rate			Exchange		Notional Amount		Expiration Date		Unamortized Upfront Payments (Receipts)			Unrealized Appreciation		Unrealized Depreciation			Value			Rating
Centrally Cleared Swap Contracts
Contracts to Buy Protection
Traded Index
CDX.NA.HY.26		5.00	%		ICE	$	50,688,000		6/20/21	$	(3,950,810	)	$	—	$	(783,852	)	$	(4,734,662	)

See Note 10 regarding other derivative information.

See Abbreviations on page 131.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         47

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Low Duration Total Return Fund

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    9.89			$    9.91			$  10.11			$  10.16			$  10.29			$  10.27
Income from investment operationsa:
Net investment income		0.082			0.151			0.134			0.144			0.166			0.169
Net realized and unrealized gains (losses)		0.018			0.031			(0.135	)		(0.011	)		(0.032	)		0.158
Total from investment operations		0.100			0.182			(0.001	)		0.133			0.134			0.327
Less distributions from net investment income and net foreign currency gains		(0.130	)		(0.202	)		(0.199	)		(0.183	)		(0.264	)		(0.307	)
Net asset value, end of period		$    9.86			$    9.89			$    9.91			$  10.11			$  10.16			$  10.29
Total returnb		1.02%			1.88%			(0.02)%			1.32%			1.32%			3.26%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.95%			0.95%			0.96%			0.93%			0.98%			1.01%
Expenses net of waiver and payments by affiliates		0.80%	d		0.80%	d		0.80%	d		0.80%	d		0.80%	d		0.89%
Net investment income		1.74%			1.57%			1.27%			1.24%			1.25%			1.47%
Supplemental data
Net assets, end of period (000’s)		$1,457,581			$1,524,437			$1,656,001			$1,589,854			$1,296,612			$904,878
Portfolio turnover rate		20.40%			44.76%			41.28%			78.63%			64.86%			51.42%

^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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

48         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012a
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    9.86			$    9.90			$  10.11			$  10.16			$  10.29			$  10.29
Income from investment operationsb:
Net investment income		0.061			0.113			0.104			0.098			0.189			0.013
Net realized and unrealized gains (losses)		0.022			0.024			(0.145)			(0.001)			(0.090)			0.005
Total from investment operations		0.083			0.137			(0.041	)		0.097			0.099			0.018
Less distributions from net investment income and net foreign currency gains		(0.113	)		(0.177	)		(0.169	)		(0.147	)		(0.229	)		(0.018	)
Net asset value, end of period		$    9.83			$    9.86			$    9.90			$  10.11			$  10.16			$  10.29
Total returnc		0.85%			1.41%			(0.41)%			0.96%			0.97%			0.17%
Ratios to average net assetsd
Expenses before waiver and payments by affiliates		1.34%			1.35%			1.36%			1.33%			1.38%			1.41%
Expenses net of waiver and payments by affiliates		1.19%	e		1.20%	e		1.20%	e		1.20%	e		1.20%	e		1.29%
Net investment income		1.35%			1.17%			0.87%			0.84%			0.84%			1.07%
Supplemental data
Net assets, end of period (000’s)		$  198,093			$  218,066			$  211,354			$  165,952			$  114,200			$  1,034
Portfolio turnover rate		20.40%			44.76%			41.28%			78.63%			64.86%			51.42%

^aFor the period October 1, 2012 (effective date) to October 31, 2012.

^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.

^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%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         49

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    9.94			$    9.95			$  10.14			$  10.19			$  10.27
Income from investment operationsb:
Net investment income		0.106			0.195			0.165			0.164c			0.089
Net realized and unrealized gains (losses)		0.022			0.021			(0.130	)		0.003			(0.046	)
Total from investment operations		0.128			0.216			0.035			0.167			0.043
Less distributions from net investment income and net foreign currency gains		(0.148	)		(0.226	)		(0.228	)		(0.217	)		(0.123	)
Net asset value, end of period		$    9.92			$    9.94			$    9.95			$  10.14			$  10.19
Total returnd		1.30%			2.22%			0.37%			1.66%			0.43%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.53%			0.53%			0.54%			0.55%			0.62%
Expenses net of waiver and payments by affiliatesf		0.41%			0.42%			0.42%			0.42%			0.43%
Net investment income		2.13%			1.95%			1.65%			1.62%			1.61%
Supplemental data
Net assets, end of period (000’s)		$586,401			$553,233			$508,675			$418,539			$943
Portfolio turnover rate		20.40%			44.76%			41.28%			78.63%			64.86%

^aFor the period May 1, 2013 (effective date) to October 31, 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%.

50         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$    9.94			$    9.95			$  10.14			$  10.19			$  10.31			$  10.29
Income from investment operationsa:
Net investment income		0.108			0.184			0.134			0.166			0.231			0.202
Net realized and unrealized gains (losses)		0.004			0.025			(0.106)			(0.010)			(0.064)			0.146
Total from investment operations		0.112			0.209			0.028			0.156			0.167			0.348
Less distributions from net investment income and net foreign currency gains		(0.142	)		(0.219	)		(0.218	)		(0.206	)		(0.287	)		(0.328	)
Net asset value, end of period		$    9.91			$    9.94			$    9.95			$  10.14			$  10.19			$  10.31
Total returnb		1.13%			2.14%			0.27%			1.54%			1.64%			3.46%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.70%			0.70%			0.71%			0.68%			0.73%			0.76%
Expenses net of waiver and payments by affiliates		0.55%	d		0.55%	d		0.55%	d		0.55%	d		0.55%	d		0.64%
Net investment income		1.99%			1.82%			1.52%			1.49%			1.50%			1.72%
Supplemental data
Net assets, end of period (000’s)		$374,186			$224,887			$150,464			$198,694			$156,129			$70,442
Portfolio turnover rate		20.40%			44.76%			41.28%			78.63%			64.86%			51.42%

^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.

^bTotal return is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         51

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, April 30, 2017 (unaudited)

Franklin Low Duration Total Return Fund

	Country		Shares/ Warrants			Value
Common Stocks and Other Equity Interests 0.1%
Energy 0.1%		United States		57,719		$	1,587,272
a Energy XXI Gulf Coast Inc.
a,b Halcon Resources Corp.		United States		98,168			631,163
a Halcon Resources Corp., wts., 9/09/20		United States		8,753			9,191
a Linn Energy Inc.		United States		8,053			225,725
							2,453,351
Materials 0.0%†
a Verso Corp., A		United States		1,387			8,419
a Verso Corp., wts., 7/25/23		United States		146			22
							8,441
Retailing 0.0%†
a,b Holdco 2, A		South Africa		12,326,925			9,223
a,b Holdco 2, B		South Africa		1,226,701			918
							10,141
Total Common Stocks and Other Equity Interests (Cost $5,980,585)							2,471,933
Management Investment Companies 2.0%
Diversified Financials 2.0%
c Franklin Lower Tier Floating Rate Fund		United States		1,893,663			19,978,147
c Franklin Middle Tier Floating Rate Fund		United States		2,389,308			24,036,434
PowerShares Senior Loan Portfolio ETF		United States		380,000			8,846,400
Total Management Investment Companies (Cost $50,273,822)							52,860,981
			Principal   Amount*
Corporate Bonds 36.9%
Automobiles & Components 1.2%
Delphi Automotive PLC, senior note, 3.15%, 11/19/20		United States		10,500,000			10,675,350
Fiat Chrysler Automobiles NV, senior note, 4.50%, 4/15/20		United Kingdom		4,000,000			4,135,000
Ford Motor Credit Co. LLC,
senior note, 2.597%, 11/04/19		United States		4,000,000			4,023,696
senior note, 3.157%, 8/04/20		United States		11,300,000			11,507,863
							30,341,909
Banks 9.7%
d ANZ New Zealand International Ltd. of London, senior note, 144A, 2.85%, 8/06/20		New Zealand		7,500,000			7,607,850
e Banca Monte dei Paschi di Siena SpA, secured note, Reg S, 2.875%, 4/16/21		Italy		6,300,000	EUR		7,354,226
Banco Comercial Portugues SA, secured note, 4.75%, 6/22/17		Portugal		4,500,000	EUR		4,934,938
e Banco Popular Espanol SA, secured note, Reg S, 1.00%, 3/03/22		Spain		6,000,000	EUR		6,649,327
Bank of America Corp.,
senior note, 2.65%, 4/01/19		United States		9,300,000			9,413,906
fsenior note, FRN, 2.198%, 1/15/19		United States		16,671,000			16,858,982
Barclays PLC, senior note, 3.25%, 1/12/21		United Kingdom		7,000,000			7,117,040

52         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Banks (continued)
BB&T Corp.,
senior note, 2.05%, 6/19/18		United States		1,000,000		$	1,004,526
fsenior note, FRN, 1.694%, 2/01/19		United States		2,000,000			2,014,204
Citigroup Inc.,
senior note, 2.40%, 2/18/20		United States		11,300,000			11,367,077
fsenior note, FRN, 2.032%, 6/07/19		United States		5,000,000			5,034,760
f Credit Suisse New York, senior note, FRN, 1.542%, 5/26/17		Switzerland		5,400,000			5,401,960
Depfa ACS Bank, secured bond, 2.125%, 10/13/17		Ireland		5,000,000	CHF		5,083,409
HSBC Holdings PLC, senior note, 3.40%, 3/08/21		United Kingdom		3,300,000			3,392,945
HSBC USA Inc., senior note, 2.00%, 8/07/18		United States		7,500,000			7,520,985
Industrial and Commercial Bank of China Ltd./New York, 3.231%, 11/13/19		China		5,400,000			5,509,458
d,f ING Bank NV, senior note, 144A, FRN, 1.838%, 10/01/19		Netherlands		5,000,000			5,016,500
Intesa Sanpaolo SpA,
senior note, 3.875%, 1/16/18		Italy		5,900,000			5,969,207
senior note, 3.875%, 1/15/19		Italy		10,100,000			10,332,957
e,fsenior note, Reg S, FRN, 0.00%, 5/18/17		Italy		2,150,000	EUR		2,342,323
JPMorgan Chase & Co., senior note, 1.85%, 3/22/19		United States		8,000,000			8,002,112
senior note, 2.20%, 10/22/19		United States		21,400,000			21,502,506
senior note, 2.40%, 6/07/21		United States		2,600,000			2,596,643
National Australia Bank of New York, senior note, 1.875%, 7/23/18		Australia		7,600,000			7,610,997
d Norddeutsche Landesbank Girozentrale, secured note, 144A, 2.00%, 2/05/19		Germany		6,500,000			6,526,585
PHH Corp., senior note, 7.375%, 9/01/19		United States		1,800,000			1,957,500
Regions Financial Corp., senior note, 2.00%, 5/15/18		United States		4,500,000			4,505,184
Royal Bank of Canada, secured note, 2.10%, 10/14/20		Canada		6,300,000			6,301,625
d The Toronto-Dominion Bank, secured note, 144A, 2.25%, 3/15/21		Canada		12,700,000			12,723,222
e Unione di Banche Italiane SpA, senior note, Reg S, 2.875%, 2/18/19		Italy		5,800,000	EUR		6,633,079
Wells Fargo & Co.,
senior note, 2.50%, 3/04/21		United States		2,600,000			2,609,555
fsenior note, FRN, 2.033%, 7/22/20		United States		21,600,000			21,878,942
d Westpac Banking Corp.,
secured note, 144A, 2.10%, 2/25/22		Australia		9,700,000			9,656,738
senior secured note, 144A, 2.25%, 11/09/20		Australia		6,300,000			6,317,420
d Woori Bank, sub. note, 144A, 4.75%, 4/30/24		South Korea		5,300,000			5,489,926
							254,238,614
Capital Goods 0.8%
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21		United States		2,800,000			2,821,000
John Deere Capital Corp.,
senior note, 1.30%, 3/12/18		United States		1,700,000			1,699,657
senior note, 1.95%, 3/04/19		United States		3,750,000			3,768,776
Lockheed Martin Corp., senior note, 1.85%, 11/23/18		United States		4,200,000			4,213,007
United Technologies Corp., senior note, 4.50%, 4/15/20		United States		7,500,000			8,084,115
							20,586,555
Commercial & Professional Services 0.0%†
Republic Services Inc., senior note, 3.80%, 5/15/18		United States		1,035,000			1,056,193

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Consumer Durables & Apparel 0.7%
Beazer Homes USA Inc., senior note, 5.75%, 6/15/19		United States		13,000,000	$	13,666,250
KB Home, senior note, 4.75%, 5/15/19		United States		4,000,000		4,155,000
						17,821,250
Consumer Services 0.4%
Marriott International Inc., senior note, 2.875%, 3/01/21		United States		10,000,000		10,150,710
Diversified Financials 4.2%
American Express Credit Corp., senior note, 1.55%, 9/22/17		United States		4,600,000		4,602,599
f Bank of New York Mellon Corp., senior note, FRN, 1.912%, 8/17/20		United States		6,400,000		6,515,725
Capital One Bank USA NA, senior note, 2.30%, 6/05/19		United States		11,900,000		11,924,811
Capital One Financial Corp., senior note, 3.05%, 3/09/22		United States		6,600,000		6,626,261
f Deutsche Bank AG, senior note, FRN, 2.362%, 8/20/20		Germany		7,500,000		7,527,038
f The Goldman Sachs Group Inc., senior note, FRN, 2.331%, 9/15/20		United States		20,000,000		20,315,880
d Hutchison Whampoa International 14 Ltd., 144A, 1.625%, 10/31/17		Hong Kong		4,700,000		4,697,979
d Lincoln Finance Ltd., senior secured note, 144A, 7.375%, 4/15/21		Netherlands		400,000		428,000
f Morgan Stanley, senior note, FRN, 2.31%, 1/27/20		United States		22,400,000		22,791,104
Navient Corp., senior note, 5.50%, 1/15/19		United States		3,400,000		3,540,250
d Park Aerospace Holdings Ltd., senior note, 144A, 5.25%, 8/15/22		Ireland		3,100,000		3,274,375
d Pricoa Global Funding I, secured note, 144A, 2.55%, 11/24/20		United States		5,600,000		5,640,701
d Protective Life Global Funding,
secured note, 144A, 2.262%, 4/08/20		United States		7,000,000		7,007,791
senior secured note, 144A, 1.722%, 4/15/19		United States		4,300,000		4,262,973
d,f Seven and Seven Ltd., senior note, 144A, FRN, 2.43%, 9/11/19		South Korea		1,000,000		998,637
						110,154,124
Energy 2.8%
Anadarko Petroleum Corp., senior note, 4.85%, 3/15/21		United States		2,300,000		2,475,113
d California Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		1,656,000		1,281,330
d CNPC General Capital Ltd.,
senior note, 144A, 1.95%, 4/16/18		China		1,500,000		1,498,830
fsenior note, 144A, FRN, 1.936%, 5/14/17		China		7,500,000		7,537,507
Enable Midstream Partners LP, senior note, 2.40%, 5/15/19		United States		3,700,000		3,672,143
Energy Transfer Partners LP, senior note, 4.15%, 10/01/20		United States		2,600,000		2,707,809
EnLink Midstream Partners LP, senior note, 2.70%, 4/01/19		United States		800,000		801,409
Enterprise Products Operating LLC, senior note, 2.55%, 10/15/19		United States		7,500,000		7,577,070
d Kinder Morgan Finance Co. LLC, senior secured note, 144A, 6.00%, 1/15/18		United States		2,500,000		2,571,790
Kinder Morgan Inc., senior note, 3.05%, 12/01/19		United States		4,500,000		4,590,945
d Petrofac Ltd., senior note, 144A, 3.40%, 10/10/18		United Kingdom		1,300,000		1,313,822
Sabine Pass Liquefaction LLC, first lien, 5.625%, 2/01/21		United States		5,000,000		5,441,955
Sanchez Energy Corp., senior note, 7.75%, 6/15/21		United States		1,900,000		1,847,750
d Sinopec Group Overseas Development 2015 Ltd., senior note, 144A, 2.50%, 4/28/20		China		7,400,000		7,387,790
d Sinopec Group Overseas Development 2017 Ltd., senior note, 144A, 2.375%, 4/12/20		China		5,100,000		5,088,448
f Statoil ASA, senior note, FRN, 1.498%, 11/08/18		Norway		6,900,000		6,935,190
Transocean Inc., senior bond, 7.375%, 4/15/18		United States		7,000,000		7,210,000
Williams Partners LP, senior note, 4.125%, 11/15/20		United States		1,700,000		1,781,940
						71,720,841

54         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Food & Staples Retailing 0.5%
The Kroger Co., senior note, 2.60%, 2/01/21		United States		7,500,000	$	7,534,958
Walgreens Boots Alliance Inc., senior note, 1.75%, 11/17/17		United States		5,900,000		5,910,372
						13,445,330
Food, Beverage & Tobacco 1.8%
Anheuser-Busch InBev Finance Inc., senior note, 2.65%, 2/01/21		Belgium		6,500,000		6,580,730
Coca-Cola Femsa SAB de CV, senior note, 2.375%, 11/26/18		Mexico		5,500,000		5,514,795
Constellation Brands Inc., senior note, 7.25%, 5/15/17		United States		6,600,000		6,612,659
d Imperial Brands Finance PLC, senior note, 144A, 2.95%, 7/21/20		United Kingdom		6,000,000		6,107,793
d JBS USA LLC/Finance Inc., senior note, 144A, 7.25%, 6/01/21		United States		2,500,000		2,581,250
Kraft Heinz Foods Co.,
senior note, 2.25%, 6/05/17		United States		7,000,000		7,006,622
senior note, 2.00%, 7/02/18		United States		6,400,000		6,418,298
f Mondelez International Inc., senior note, FRN, 1.554%, 2/01/19		United States		500,000		502,197
Reynolds American Inc., senior note, 2.30%, 6/12/18		United States		6,200,000		6,235,774
						47,560,118
Health Care Equipment & Services 1.5%
Aetna Inc., senior note, 1.50%, 11/15/17		United States		1,000,000		999,953
CHS/Community Health Systems Inc., senior note, 7.125%, 7/15/20		United States		2,000,000		1,802,500
Edwards Lifesciences Corp., senior note, 2.875%, 10/15/18		United States		1,600,000		1,621,829
HCA Inc., senior secured note, first lien, 4.25%, 10/15/19		United States		3,000,000		3,116,250
Stryker Corp., senior note, 2.00%, 3/08/19		United States		10,100,000		10,138,612
Tenet Healthcare Corp.,
senior note, 5.00%, 3/01/19		United States		10,600,000		10,699,428
senior note, 5.50%, 3/01/19		United States		3,000,000		3,045,000
Zimmer Holdings Inc., senior note, 2.70%, 4/01/20		United States		7,500,000		7,587,683
						39,011,255
Household & Personal Products 0.6%
Avon Products Inc., senior note, 6.60%, 3/15/20		United States		10,000,000		10,212,500
Colgate-Palmolive Co., senior note, 0.90%, 5/01/18		United States		2,200,000		2,191,081
The Procter & Gamble Co., senior note, 1.70%, 11/03/21		United States		3,200,000		3,168,007
						15,571,588
Insurance 1.5%
d Jackson National Life Global Funding, secured note, 144A, 2.25%, 4/29/21		United States		7,600,000		7,527,625
d Metropolitan Life Global Funding I, senior secured bond, 144A, 3.875%, 4/11/22		United States		5,900,000		6,249,492
d New York Life Global Funding,
secured note, 144A, 2.10%, 1/02/19		United States		10,000,000		10,070,610
secured note, 144A, 2.15%, 6/18/19		United States		6,400,000		6,425,555
f Prudential Financial Inc., senior note, FRN, 1.819%, 8/15/18		United States		5,700,000		5,733,716
d TIAA Asset Management Finance LLC, senior note, 144A, 2.95%, 11/01/19		United States		4,200,000		4,270,577
						40,277,575
Materials 0.3%
d BlueScope Steel Ltd./BlueScope Steel Finance, senior note, 144A, 6.50%, 5/15/21		Australia		3,500,000		3,713,745
EI du Pont de Nemours & Co., senior note, 2.20%, 5/01/20		United States		1,400,000		1,402,786
Reynolds Group Holdings Inc., senior bond, 8.125%, 6/15/17		United States		2,100,000		2,121,000
						7,237,531

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Media 1.3%
CBS Corp., senior note, 2.30%, 8/15/19		United States		11,437,000	$	11,510,780
CSC Holdings LLC,
senior bond, 7.625%, 7/15/18		United States		3,500,000		3,714,375
senior note, 8.625%, 2/15/19		United States		3,000,000		3,312,150
d NBCUniversal Enterprise Inc., senior note, 144A, 1.974%, 4/15/19		United States		10,000,000		10,037,060
Time Warner Inc., senior note, 2.10%, 6/01/19		United States		4,500,000		4,510,944
						33,085,309
Pharmaceuticals, Biotechnology & Life Sciences 1.8%
AbbVie Inc., senior note, 1.80%, 5/14/18		United States		8,600,000		8,614,319
Actavis Funding SCS, senior note, 2.35%, 3/12/18		United States		6,200,000		6,227,763
Amgen Inc.,
senior note, 2.125%, 5/15/17		United States		2,500,000		2,500,620
fsenior note, FRN, 1.65%, 5/22/19		United States		6,200,000		6,251,119
Baxalta Inc., senior note, 2.00%, 6/22/18		United States		10,200,000		10,222,338
Biogen Inc., senior note, 2.90%, 9/15/20		United States		7,500,000		7,655,040
Celgene Corp., senior note, 2.30%, 8/15/18		United States		3,000,000		3,019,023
d Valeant Pharmaceuticals International Inc., senior note, 144A, 5.375%, 3/15/20		United States		3,800,000		3,268,000
						47,758,222
Real Estate 0.3%
American Tower Corp., senior note, 3.40%, 2/15/19		United States		3,600,000		3,679,254
Prologis LP, senior note, 2.75%, 2/15/19		United States		4,800,000		4,868,453
						8,547,707
Retailing 0.6%
Dollar General Corp., senior note, 1.875%, 4/15/18		United States		8,200,000		8,213,973
d Experian Finance PLC, 144A, 2.375%, 6/15/17		United Kingdom		1,000,000		1,001,040
d,g K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		909,211		86,375
d,g K2016740260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		South Africa		131,325		177,945
Toys R Us Inc., senior bond, 7.375%, 10/15/18		United States		5,740,000		5,424,300
						14,903,633
Semiconductors & Semiconductor Equipment 0.2%
Maxim Integrated Products Inc., senior note, 2.50%, 11/15/18		United States		5,200,000		5,244,304
Software & Services 0.9%
Alibaba Group Holding Ltd., senior note, 2.50%, 11/28/19		China		11,900,000		11,966,402
Fiserv Inc., senior note, 2.70%, 6/01/20		United States		11,300,000		11,475,817
						23,442,219
Technology Hardware & Equipment 1.8%
f Apple Inc., senior note, FRN, 1.285%, 5/03/18		United States		7,300,000		7,317,221
Cisco Systems Inc., senior note, 2.45%, 6/15/20		United States		8,700,000		8,860,437
d Diamond 1 Finance Corp./Diamond 2 Finance Corp., senior secured note,
first lien, 144A, 3.48%, 6/01/19		United States		6,400,000		6,549,728
f Hewlett Packard Enterprise Co., senior note, FRN, 3.08%, 10/05/18		United States		8,100,000		8,258,622
Juniper Networks Inc.,
senior note, 3.125%, 2/26/19		United States		7,500,000		7,651,252
senior note, 3.30%, 6/15/20		United States		500,000		513,099

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Technology Hardware & Equipment (continued)
d Sanmina Corp., senior note, first lien, 144A, 4.375%, 6/01/19		United States		6,500,000		$	6,678,750
							45,829,109
Telecommunication Services 1.3%
AT&T Inc., senior note, 2.45%, 6/30/20		United States		7,400,000			7,417,005
CenturyLink Inc., senior note, 5.625%, 4/01/20		United States		3,400,000			3,621,000
Intelsat Jackson Holdings SA, senior note, 7.25%, 10/15/20		Luxembourg		2,000,000			1,882,400
d Sprint Communications Inc., senior note, 144A, 9.00%, 11/15/18		United States		1,000,000			1,096,250
d Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC, 144A, 3.36%, 3/20/23		United States		2,500,000			2,523,025
Telefonica Emisiones S.A.U., senior note, 3.192%, 4/27/18		Spain		2,300,000			2,330,762
T-Mobile USA Inc., senior note, 4.00%, 4/15/22		United States		1,800,000			1,846,692
Verizon Communications Inc.,
senior note, 2.625%, 2/21/20		United States		8,824,000			8,966,084
fsenior note, FRN, 2.871%, 9/14/18		United States		4,800,000			4,898,986
							34,582,204
Transportation 0.4%
FedEx Corp., senior note, 0.50%, 4/09/20		United States		7,100,000	EUR		7,812,183
XPO CNW Inc., senior bond, 7.25%, 1/15/18		United States		3,275,000			3,389,625
							11,201,808
Utilities 2.3%
Dominion Resources Inc., senior note, 2.50%, 12/01/19		United States		9,500,000			9,601,830
Duke Energy Corp., senior note, 2.10%, 6/15/18		United States		5,100,000			5,119,278
d Engie SA, senior note, 144A, 1.625%, 10/10/17		France		1,000,000			1,000,025
d Korea Western Power Co. Ltd., senior note, 144A, 3.125%, 5/10/17		South Korea		5,200,000			5,201,248
PSEG Power LLC, senior note, 3.00%, 6/15/21		United States		7,700,000			7,805,151
Sempra Energy, senior note, 2.85%, 11/15/20		United States		9,600,000			9,755,270
The Southern Co.,
senior note, 2.45%, 9/01/18		United States		7,000,000			7,057,722
senior note, 2.35%, 7/01/21		United States		6,500,000			6,420,850
d State Grid Overseas Investment 2013 Ltd., senior note, 144A, 1.75%, 5/22/18		China		2,000,000			1,995,670
d State Grid Overseas Investment 2014 Ltd., senior note, 144A, 2.75%, 5/07/19		China		2,200,000			2,225,355
d Talen Energy Supply LLC, senior note, 144A, 9.50%, 7/15/22		United States		1,900,000			1,781,250
e Veolia Environnement SA, senior bond, Reg S, 4.625%, 3/30/27		France		1,000,000	EUR		1,438,067
Virginia Electric & Power Co., senior note, 1.20%, 1/15/18		United States		900,000			897,338
							60,299,054
Total Corporate Bonds (Cost $960,159,634)							964,067,162
f,h Senior Floating Rate Interests 2.6%
Automobiles & Components 0.1%
The Goodyear Tire & Rubber Co., Second Lien Term Loan, 2.99%, 4/30/19		United States		178,394			180,550
TI Group Automotive Systems LLC, Initial US Term Loan, 3.743%, 6/30/22		United States		1,597,095			1,609,072
							1,789,622

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
f,h  Senior Floating Rate Interests (continued)
Capital Goods 0.0%†
i Allison Transmission Inc., Term Loans, 2.99%, 9/23/22		United States		874,812	$	884,593
Harsco Corp., Initial Term Loan, 6.00%, 11/02/23		United States		135,219		138,177
Leidos (Abacus Innovations Corp.), B Term Loan, 3.25%, 8/16/23		United States		211,788		214,171
						1,236,941
Commercial & Professional Services 0.0%†
KAR Auction Services Inc., Tranche B-3 Term Loans, 4.50%, 3/09/23		United States		904,274		915,713
Consumer Services 0.3%
Aristocrat Technologies Inc., Tranche B-2 Loans, 3.406%, 10/20/21		United States		157,243		158,779
Avis Budget Car Rental LLC, Tranche B Term Loan, 3.15%, 3/15/22		United States		1,559,572		1,563,666
i Caesars Entertainment Operating Co. LLC., Term B Loans, 5.75%, 8/31/24		United States		166,833		165,929
Fitness International LLC, Term A Loan, 4.243%, 4/01/20		United States		3,244,978		3,244,978
i Greektown Holdings LLC, Initial Term Loan, 6.00%, 4/25/24		United States		684,685		686,255
Prime Security Services Borrower LLC, 2016-2 Refinancing Term B-1 Loan, 4.25%, 5/02/22		United States		867,903		877,744
						6,697,351
Diversified Financials 0.1%
First Eagle Investment Management LLC, Initial Term Loans, 4.656%, 12/01/22		United States		890,242		894,972
Russell Investments US Institutional Holdco Inc., Initial Term Loan, 6.75%, 6/01/23		United States		602,222		608,244
						1,503,216
Energy 0.4%
Bowie Resource Holdings LLC, First Lien Initial Term Loan, 6.75%, 8/14/20		United States		2,048,419		1,993,793
i Fieldwood Energy LLC, Loans, 3.875%, 10/01/18		United States		5,036,382		4,929,359
International Seaways Inc., Initial Term Loan, 5.79%, 8/05/19		United States		1,776,597		1,775,117
McDermott Finance LLC, Term Loan, 8.397%, 4/16/19		United States		138,185		140,344
OSG Bulk Ships Inc., Initial Term Loan, 5.29%, 8/05/19		United States		1,038,624		1,023,910
						9,862,523
Food & Staples Retailing 0.0%†
i Aramark Corp., U.S. Term A Loan, 4.75%, 3/28/22		United States		157,108		157,648
Food, Beverage & Tobacco 0.1%
JBS USA LUX SA, New Initial Term Loans, 3.483%, 10/30/22		Brazil		3,000,000		3,014,532
Health Care Equipment & Services 0.0%†
Carestream Health Inc., Term Loan, 5.147%, 6/07/19		United States		630,882		627,137
Household & Personal Products 0.1%
FGI Operating Co. LLC (Freedom Group), Term B Loans, 5.50%, 4/19/19		United States		3,650,460		3,531,820
Spectrum Brands Inc., Term Loans, 2.852% - 3.486%, 6/23/22		United States		34,272		34,593
						3,566,413
Materials 0.2%
Chemours Co., Tranche B-1 US Term Loans, 3.49%, 5/12/22		United States		2,864,999		2,884,249
Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		552,588		555,696
i FMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		Australia		1,019,812		1,027,336
OCI Beaumont LLC, Term B-3 Loan, 8.025%, 8/20/19		United States		824,833		850,610
						5,317,891

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STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
f,h Senior Floating Rate Interests (continued)
Media 0.1%
Altice US Finance I Corp., March 2017 Refinancing TL Commitments, 3.241%, 7/28/25		United States		116,095	$	116,124
AMC Entertainment Holdings Inc.,
2016 Incremental Term Commitments, 3.742%, 12/15/23		United States		45,073		45,451
Initial Term Loans, 3.744%, 12/15/22		United States		70,333		70,831
Charter Communications Operating LLC (CCO Safari), Term Loan A-1, 2.75%, 5/18/21		United States		1,273,000		1,273,454
CSC Holdings LLC, March 2017 Incremental Term Loans, 3.244%, 7/17/25		United States		1,246,599		1,247,476
Lions Gate Entertainment Corp., Term A Loan, 3.482%, 12/08/21		United States		310,428		312,174
Live Nation Entertainment Inc., Term B-2 Loans, 3.50%, 10/31/23		United States		44,960		45,318
UPC Financing Partnership, Facility AP, 3.744%, 4/15/25		United States		286,448		287,844
						3,398,672
Pharmaceuticals, Biotechnology & Life Sciences 0.2%
i Endo Luxembourg Finance Co. I S.A.R.L and Endo LLC, Initial Term Loans, 7.25%, 4/27/24		United States		2,687,915		2,705,134
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 3.195%, 1/31/25		United States		1,456,927		1,463,304
RPI Finance Trust, Term A-2 Term Loan, 3.397%, 10/14/20		United States		344,133		344,778
Valeant Pharmaceuticals International Inc., Series F Tranche B Term Loan, 5.74%, 4/01/22		United States		1,222,869		1,230,639
						5,743,855
Retailing 0.3%
Ascena Retail Group Inc., Tranche B Term Loan, 5.50%, 8/21/22		United States		3,261,781		2,955,989
Dollar Tree Inc., Term A-1 Loans, 2.75%, 7/06/20		United States		507,075		505,642
i PetSmart Inc., Tranche B-2 Loans, 4.02%, 3/11/22		United States		3,711,517		3,426,194
						6,887,825
Semiconductors & Semiconductor Equipment 0.1%
MACOM Technology Solutions Holdings Inc., Initial Term Loans, 3.989%, 5/07/21		United States		843,601		856,255
MKS Instruments Inc., Tranche B-2 Term Loans, 3.743%, 5/01/23		United States		185,539		187,742
ON Semiconductor Corp., 2017 Replacement Term Loans, 3.243%, 3/31/23		United States		2,144,420		2,159,354
						3,203,351
Software & Services 0.2%
Global Payments Inc., Delayed Draw Term Loan (A-2), 3.196%, 10/31/21		United States		645,986		647,197
MoneyGram International Inc., Term Loan, 4.397%, 3/27/20		United States		3,509,503		3,517,547
Rackspace Hosting Inc., 2016 Refinancing Term B Loan, 4.535%, 11/03/23		United States		225,365		227,220
						4,391,964
Technology Hardware & Equipment 0.1%
Ciena Corp., Refinancing Term Loan, 3.493%, 1/28/22		United States		189,522		191,062
Dell International LLC, Term A-3 Loan, 3.00%, 12/31/18		United States		923,168		925,572
Western Digital Corp., US Term B-2 Loan, 3.743%, 4/29/23		United States		636,891		642,782
Zebra Technologies Corp., Second Amendment Refinancing Term Loan, 3.60%, 10/27/21		United States		404,896		409,326
						2,168,742

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STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*				Value
f,h Senior Floating Rate Interests (continued)
Telecommunication Services 0.0%†
Consolidated Communications Inc., Initial Term Loan, 4.00%, 10/05/23		United States		226,143			$	228,065
Global Tel*Link Corp., Term Loan, 5.00%, 5/23/20		United States		266,546				266,546
								494,611
Transportation 0.1%
Air Canada, Term Loan, 3.90%, 10/06/23		Canada		46,797				47,168
Navios Maritime Midstream Partners LP and Navios Maritime Midstream
Partners Finance (US) Inc., Term Loan, 5.66%, 6/18/20		Marshall Islands		1,215,807				1,215,807
Navios Maritime Partners LP, Initial Term Loan, 6.13%, 9/14/20		Greece		2,250,000				2,223,749
United Air Lines Inc., Class B Term Loans, 3.422%, 4/01/24		United States		357,297				358,804
XPO Logistics Inc., Loans, 3.405%, 11/01/21		United States		88,294				88,769
								3,934,297
Utilities 0.2%
Calpine Construction Finance Co. LP, Term B-1 Loan, 3.24%, 5/03/20		United States		2,723,744				2,733,958
EFS Cogen Holdings I LLC (Linden), Term B Advance, 4.65%, 6/28/23		United States		158,638				160,026
NRG Energy Inc., Term Loans, 3.243%, 6/30/23		United States		1,141,375				1,147,677
								4,041,661
Total Senior Floating Rate Interests (Cost $68,635,341)								68,953,965
Foreign Government and Agency Securities 1.5%
d The Export-Import Bank of China, senior note, 144A, 2.50%, 7/31/19		China		8,000,000				8,090,000
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20		South Korea		11,200,000				11,186,504
Government of Hungary,
A, 6.75%, 11/24/17		Hungary		3,910,000		HUF		14,110
A, 5.50%, 12/20/18		Hungary		428,710,000		HUF		1,620,411
Government of Mexico,
7.75%, 12/14/17		Mexico		930,000	j	MXN		4,973,938
M, 4.75%, 6/14/18		Mexico		720,000	j	MXN		3,742,145
senior note, 8.50%, 12/13/18		Mexico		1,060,000	j	MXN		5,776,736
d Government of Serbia, senior note, 144A, 5.25%, 11/21/17		Serbia		1,800,000				1,834,407
Nota Do Tesouro Nacional,
10.00%, 1/01/21		Brazil		2,350	k	BRL		742,413
lIndex Linked, 6.00%, 5/15/17		Brazil		150	k	BRL		141,040
lIndex Linked, 6.00%, 8/15/18		Brazil		1,810	k	BRL		1,726,279
Total Foreign Government and Agency Securities (Cost $42,282,004)								39,847,983
U.S. Government and Agency Securities 24.4%
m U.S. Treasury Bond, Index Linked, 0.125%, 7/15/22		United States		14,405,159				14,546,675
U.S. Treasury Note,
1.50%, 12/31/18		United States		50,000,000				50,216,800
1.375%, 2/28/19		United States		40,000,000				40,092,960
1.50%, 2/28/19		United States		76,000,000				76,347,320
1.625%, 3/31/19		United States		80,000,000				80,573,440
3.125%, 5/15/19		United States		90,000,000				93,324,060
1.625%, 6/30/19		United States		50,000,000				50,354,500
3.375%, 11/15/19		United States		100,000,000				105,025,400
mIndex Linked, 1.875%, 7/15/19		United States		24,230,192				25,593,189
mIndex Linked, 1.375%, 1/15/20		United States		24,622,895				25,824,024
mIndex Linked, 0.125%, 1/15/22		United States		38,742,577				39,089,904
mIndex Linked, 0.125%, 1/15/23		United States		27,436,791				27,508,072

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STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
U.S. Government and Agency Securities (continued)
U.S. Treasury Note, (continued)
mIndex Linked, 0.125%, 7/15/24		United States		10,258,231	$	10,214,357
Total U.S. Government and Agency Securities (Cost $639,814,927)						638,710,701
Asset-Backed Securities and Commercial Mortgage- Backed Securities 24.8%
Automobiles & Components 0.0%†
f Countrywide Asset-Backed Certificates,
2001-BC3, A, FRN, 1.471%, 12/25/31		United States		1,447		1,087
2002-3, 1A1, FRN, 1.731%, 5/25/32		United States		1,619		1,558
						2,645
Banks 1.2%
Banc of America Commercial Mortgage Trust,
f2006-1, D, FRN, 5.648%, 9/10/45		United States		1,776,000		1,771,935
2006-4, AJ, 5.695%, 7/10/46		United States		2,045,886		2,042,138
Bear Stearns Commercial Mortgage Securities Trust,
f2005-T20, E, FRN, 5.115%, 10/12/42		United States		2,000,000		1,969,875
2006-PW13, AJ, 5.611%, 9/11/41		United States		404,647		404,401
f2007-PW16, AM, FRN, 5.655%, 6/11/40		United States		335,895		335,837
f CD Commercial Mortgage Trust, 2005-CD1, E, FRN, 5.259%, 7/15/44		United States		1,383,186		1,381,477
Citigroup Commercial Mortgage Trust,
2006-C5, AJ, 5.482%, 10/15/49		United States		947,404		898,488
f2007-C6, AM, FRN, 5.701%, 12/10/49		United States		5,200,000		5,268,424
f Commercial Mortgage Trust, 2006-GG7, AJ, FRN, 5.759%, 7/10/38		United States		4,448,000		3,771,555
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19		United States		635,818		653,112
f CWABS Asset-Backed Certificates Trust, 2004-7, MV3, FRN, 2.041%, 12/25/34		United States		329,861		330,568
f CWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 1.741%, 3/25/34		United States		283,978		276,129
f GE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49		United States		2,200,000		2,189,684
f Greenwich Capital Commercial Funding Corp., 2006-GG7, AM, FRN, 5.759%, 7/10/38		United States		278,307		278,276
f Impac Secured Assets CMN Owner Trust, 2004-4, M1, FRN, 1.756%, 2/25/35		United States		1,120,000		1,104,323
f LB-UBS Commercial Mortgage Trust, 2006-C1, AJ, FRN, 5.276%, 2/15/41		United States		1,572,251		1,573,113
f Merrill Lynch Mortgage Investors Trust,
2003-A, 1A, FRN, 1.731%, 3/25/28		United States		473,913		452,272
2005-1, 2A2, FRN, 3.027%, 4/25/35		United States		398,693		388,551
2006-3, 2A1, FRN, 3.101%, 10/25/36		United States		2,727,413		2,675,633
f Morgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 1.726%, 1/25/35		United States		263,928		260,783
Morgan Stanley Capital I Trust,
d2005-RR6, B, 144A, 5.306%, 5/24/43		United States		306,683		307,391
f2006-HQ8, AJ, FRN, 5.45%, 3/12/44		United States		1,165,861		1,168,954

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STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country	Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
Banks (continued)
d,f Wachovia Bank Commercial Mortgage Trust, 2003-C7, F, 144A, FRN, 5.93%,       10/15/35	United States		437,246	$	437,006
f Wells Fargo Mortgage Backed Securities Trust,
2005-AR, 1A1, FRN, 3.116%, 2/25/35	United States		1,653,889		1,682,785
2005-AR9, 2A2, FRN, 3.068%, 10/25/33	United States		173,182		171,374
					31,794,084
Diversified Financials 22.9%
f American Express Credit Account Master Trust,
2008-2, A, FRN, 2.254%, 9/15/20	United States		2,900,000		2,928,224
2012-1, A, FRN, 1.264%, 1/15/20	United States		11,890,000		11,892,540
f American Home Mortgage Investment Trust,
2004-3, 4A, FRN, 2.861%, 10/25/34	United States		2,881,927		2,818,275
2005-1, 6A, FRN, 3.428%, 6/25/45	United States		1,434,812		1,427,396
f Ameriquest Mortgage Securities Inc. Asset-Backed Pass-Through Certificates, 2004-R4, M1, FRN, 1.816%, 6/25/34	United States		1,008,564		992,441
d Apidos CDO, 2013-14A, C2, 144A, 4.85%, 4/15/25	United States		1,900,000		1,908,854
d,f ARCap REIT Inc., 2004-RR3, A2, 144A, FRN, 5.751%, 9/21/45	United States		1,414,591		1,429,572
f Argent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 1.351%, 10/25/35	United States		699,757		687,910
d,f Atrium X, 10A, A, 144A, FRN, 2.278%, 7/16/25	United States		1,390,000		1,389,013
d,f Atrium XI, 11A, CR, 144A, FRN, 3.303%, 10/23/25	Cayman Islands		6,750,000		6,749,932
f Bear Stearns ALT-A Trust,
n2004-10, 1A3, FRN, 1.991%, 9/25/34	United States		943,223		938,688
2004-13, A2, FRN, 1.871%, 11/25/34	United States		91,436		88,342
d,f BlueMountain CLO Ltd., 2013-3A, A, 144A, FRN, 2.439%, 10/29/25	United States		1,448,215		1,448,983
d,f Burnham Park CLO Ltd., 2016-1A, A, 144A, FRN, 2.586%, 10/20/29	Cayman Islands		2,240,000		2,240,650
f Capital One Multi-Asset Execution Trust, 2007-A5, A5, FRN, 1.034%, 7/15/20	United States		10,200,000		10,199,438
d,f Carlyle Global Market Strategies CLO Ltd., 2012-4A, AR, 144A, FRN, 2.606%,       1/20/29	United States		2,800,000		2,821,028
d,f Carlyle U.S. CLO Ltd., 2017-1A, A1A, 144A, FRN, 2.391%, 4/20/31	United States		1,000,000		1,003,650
d,f Catamaran CLO Ltd., 2014-2A, BR, 144A, FRN, 4.108%, 10/18/26	Cayman Islands		3,011,300		3,018,708
d,f Cent CLO, 2013-17A, A1, 144A, FRN, 2.339%, 1/30/25	United States		8,916,000		8,933,565
d,f Cent CLO 20 Ltd., 13-20A, AR, 144A, FRN, 2.256%, 1/25/26	Cayman Islands		4,000,000		4,000,000
d,f Cent CLO LP,
2014-22A, A1R, 144A, FRN, 2.444%, 11/07/26	United States		2,800,000		2,811,228
2014-22A, BR, 144A, FRN, 3.984%, 11/07/26	United States		4,050,000		4,050,607
d Centerline REIT Inc., 2004-RR3, B, 144A, 5.04%, 9/21/45	United States		2,227,000		2,058,750
f Chase Funding Trust, 2004-2, 2A2, FRN, 1.491%, 2/26/35	United States		12,255		11,346
Chase Issuance Trust,
f2013-A3, A3, FRN, 1.274%, 4/15/20	United States		6,147,000		6,158,111
f2014-A5, A5, FRN, 1.364%, 4/15/21	United States		7,310,000		7,349,856
2015-A2, A2, 1.59%, 2/18/20	United States		8,200,000		8,211,301
2015-A7, A7, 1.62%, 7/15/20	United States		5,005,000		5,012,123
f COBALT CMBS Commercial Mortgage Trust, 2007-C2, AMFX, FRN,
5.526%, 4/15/47	United States		415,199		418,509
d,f Colony American Homes,
2014-1A, A, 144A, FRN, 2.144%, 5/17/31	United States		4,455,781		4,462,850
2014-1A, C, 144A, FRN, 2.844%, 5/17/31	United States		700,000		700,685

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STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country	Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
Diversified Financials (continued)
d,f Commercial Mortgage Trust, 2014-BBG, A, 144A, FRN, 1.794%, 3/15/29	United States		6,600,000	$	6,616,573
f Conseco Finance Securitizations Corp., 2002-2, M1, FRN, 7.424%, 3/01/33	United States		948,781		1,050,761
Conseco Financial Corp.,
f1997-3, A7, FRN, 7.64%, 3/15/28	United States		939,060		966,344
1998-6, A8, 6.66%, 6/01/30	United States		6,976,422		7,449,814
d Core Industrial Trust, 2015-CALW, A, 144A, 3.04%, 2/10/34	United States		5,290,000		5,436,989
f Countrywide Home Loans,
2004-6, 1A1, FRN, 3.056%, 5/25/34	United States		2,098,163		2,083,568
2004-11, 2A1, FRN, 2.68%, 7/25/34	United States		2,333,196		2,333,582
d,f CSMC Trust, 2014-IVR3, A1, 144A, FRN, 3.50%, 7/25/44	United States		2,885,358		2,921,931
Discover Card Execution Note Trust,
f2012-A4, A4, FRN, 1.359%, 11/15/19	United States		10,500,000		10,501,624
f2013-A6, A6, FRN, 1.444%, 4/15/21	United States		5,520,000		5,546,157
f2014-A1, A1, FRN, 1.424%, 7/15/21	United States		7,690,000		7,733,058
2014-A5, A, 1.39%, 4/15/20	United States		2,060,000		2,060,951
d,f Dryden 33 Senior Loan Fund, 2014-33A, AR, 144A, FRN, 2.588%, 10/15/28	Cayman Islands		12,415,000		12,501,781
d,f Dryden 34 Senior Loan Fund, 14-34A, AR, 144A, FRN, 2.318%, 10/15/26	Cayman Islands		3,000,000		3,001,080
d,f Dryden 38 Senior Loan Fund, 2015-38A, A, 144A, FRN, 2.588%, 7/15/27	Cayman Islands		9,642,857		9,700,136
d,f Eaton Vance CDO Ltd., 2014-1A, AR, 144A, FRN, 2.358%, 7/15/26	United States		5,266,000		5,268,422
f FHLMC Structured Agency Credit Risk Debt Notes,
2014-DN1, M2, FRN, 3.191%, 2/25/24	United States		360,000		370,412
2014-DN3, M2, FRN, 3.391%, 8/25/24	United States		358,303		359,878
2014-DN3, M3, FRN, 4.991%, 8/25/24	United States		1,270,000		1,383,150
2014-DN4, M2, FRN, 3.391%, 10/25/24	United States		446,269		447,081
2014-HQ1, M2, FRN, 3.491%, 8/25/24	United States		4,373,049		4,446,915
2014-HQ3, M2, FRN, 3.641%, 10/25/24	United States		3,804,155		3,840,765
2015-DN1, M2, FRN, 3.391%, 1/25/25	United States		3,184,218		3,200,863
2015-DN1, M3, FRN, 5.141%, 1/25/25	United States		9,400,000		10,235,197
2015-DNA1, M2, FRN, 2.841%, 10/25/27	United States		10,530,000		10,785,633
2015-DNA1, M3, FRN, 4.291%, 10/25/27	United States		350,000		380,134
2015-DNA2, M2, FRN, 3.591%, 12/25/27	United States		11,918,837		12,234,405
2015-DNA2, M3, FRN, 4.891%, 12/25/27	United States		6,925,000		7,684,602
2015-DNA3, M2, FRN, 3.841%, 4/25/28	United States		9,199,699		9,557,106
2015-HQ1, M2, FRN, 3.191%, 3/25/25	United States		7,430,050		7,533,339
2015-HQ1, M3, FRN, 4.791%, 3/25/25	United States		8,725,000		9,474,528
2015-HQA1, M2, FRN, 3.641%, 3/25/28	United States		12,595,419		12,935,566
2015-HQA2, M2, FRN, 3.791%, 5/25/28	United States		13,209,343		13,660,721
2016-DNA1, M2, FRN, 3.891%, 7/25/28	United States		330,000		344,284
2016-DNA2, M2, FRN, 3.191%, 10/25/28	United States		2,270,000		2,322,442
2016-HQ1, M1, FRN, 2.741%, 9/25/28	United States		2,718,981		2,736,338
2016-HQA1, M2, FRN, 3.741%, 9/25/28	United States		655,000		681,995
2016-HQA2, M2, FRN, 3.241%, 11/25/28	United States		1,160,000		1,199,788
2016-HQA3, M2, FRN, 2.341%, 3/25/29	United States		250,000		252,933

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
Diversified Financials (continued)
f First Horizon Alternative Mortgage Securities Trust, 2004-AA5, 2A1, FRN, 2.759%, 12/25/34		United States		1,473,843	$	1,434,539
d,f Flagship CLO VIII Ltd., 2014-8A, AR, 144A, FRN, 2.408%, 1/16/26		Cayman Islands		5,545,000		5,553,484
f FNMA Connecticut Avenue Securities,
2013-C01, M1, FRN, 2.991%, 10/25/23		United States		3,198,812		3,236,807
2014-C02, 2M1, FRN, 1.941%, 5/25/24		United States		282,173		282,768
2014-C03, 1M2, FRN, 3.991%, 7/25/24		United States		12,579,000		13,242,525
2014-C03, 2M2, FRN, 3.891%, 7/25/24		United States		3,395,000		3,565,584
2014-C04, 1M1, FRN, 5.891%, 11/25/24		United States		287,000		327,652
2014-C04, 2M2, FRN, 5.991%, 11/25/24		United States		4,213,651		4,732,040
2015-C01, 1M2, FRN, 5.291%, 2/25/25		United States		2,512,039		2,744,747
2015-C01, 2M2, FRN, 5.541%, 2/25/25		United States		11,856,235		12,873,481
2015-C02, 1M2, FRN, 4.991%, 5/25/25		United States		2,957,554		3,208,295
2015-C02, 2M2, FRN, 4.991%, 5/25/25		United States		5,121,193		5,496,413
2015-C03, 1M2, FRN, 5.991%, 7/25/25		United States		3,689,966		4,097,224
2015-C03, 2M2, FRN, 5.991%, 7/25/25		United States		5,627,000		6,270,532
2017-C01, 1M2, FRN, 4.541%, 7/25/29		United States		6,805,000		7,059,887
d,f Galaxy CLO Ltd., 2014-17A, AR, 144A, FRN, 2.558%, 7/15/26		Cayman Islands		1,710,000		1,715,506
d,f Galaxy XV CLO Ltd., 2013-15A, A, 144A, FRN, 2.408%, 4/15/25		United States		10,063,000		10,082,824
d G-Force LLC, 2005-RRA, B, 144A, 5.09%, 8/22/36		United States		195,248		195,128
n GMAC Commercial Mortgage Securities Inc. Trust, 2005-C1, B, 4.936%, 5/10/43		United States		1,411,913		74,054
f Greenpoint Manufactured Housing, 1999-5, M1A, FRN, 8.30%, 10/15/26		United States		856,561		938,500
f,o GS Mortgage Securities Corp. II, 2015-GC30, XA, IO, FRN, 0.895%, 5/10/50		United States		7,998,399		389,772
f GSAA Home Equity Trust,
2005-5, M3, FRN, 1.936%, 2/25/35		United States		5,506,240		5,349,167
2005-6, A3, FRN, 1.361%, 6/25/35		United States		341,138		339,837
f GSAMP Trust, 2005-HE3, M2, FRN, 1.996%, 6/25/35		United States		806,529		798,481
f GSR Mortgage Loan Trust, 2005-AR1, 1A1, FRN, 3.489%, 1/25/35		United States		505,468		484,803
d Highbridge Loan Management Ltd., 2013-2A, B2, 144A, 5.80%, 10/20/24		United States		570,000		575,273
d,f Invitation Homes Trust,
2014-SFR1, B, 144A, FRN, 2.494%, 6/17/31		United States		490,089		490,367
2014-SFR2, A, 144A, FRN, 2.094%, 9/17/31		United States		4,328,680		4,332,256
2014-SFR2, B, 144A, FRN, 2.594%, 9/17/31		United States		8,500,000		8,507,630
2015-SFR1, A, 144A, FRN, 2.444%, 3/17/32		United States		2,374,697		2,381,454
2015-SFR2, A, 144A, FRN, 2.344%, 6/17/32		United States		7,945,589		7,971,217
2015-SFR3, A, 144A, FRN, 2.294%, 8/17/32		United States		4,259,271		4,284,554
f IXIS Real Estate Capital Trust, 2005-HE4, A3, FRN, 1.671%, 2/25/36		United States		2,730		2,734
d,f Jay Park CLO Ltd., 2016-1A, A2, 144A, FRN, 2.956%, 10/20/27		United States		17,290,000		17,298,126
d,f Jefferies & Co., 2009-R2, 4A, 144A, FRN, 3.302%, 5/26/37		United States		833,853		838,569
JP Morgan Chase Commercial Mortgage Securities Trust,
2004-LN2, A2, 5.115%, 7/15/41		United States		22,953		22,917
f2005-LPD5, F, FRN, 5.632%, 12/15/44		United States		6,357,475		6,342,465
2006-CB17, AM, 5.464%, 12/12/43		United States		136,615		136,586

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
Diversified Financials (continued)
f JP Morgan Mortgage Trust, 2004-A1, 5A1, FRN, 3.394%, 2/25/34		United States		89,500	$	88,662
d,f,n LB-UBS Commercial Mortgage Trust, 2001-C3, E, 144A, FRN, 6.95%,         6/15/36		United States		700,000		687,053
f Lehman XS Trust, 2005-4, 1A4, FRN, 1.551%, 10/25/35		United States		841,961		803,462
d,f Mach One ULC,
2004-1A, K, 144A, FRN, 5.45%, 5/28/40		United States		4,293,400		4,310,180
2004-1A, L, 144A, FRN, 5.45%, 5/28/40		United States		3,470,500		3,500,623
2004-1A, M, 144A, FRN, 5.45%, 5/28/40		United States		640,000		641,554
f Madison Avenue Manufactured Housing Contract Trust, 2002-A, B1, FRN, 4.241%, 3/25/32		United States		1,436,728		1,452,879
f Manufactured Housing Contract Trust Pass Through Certificates, 2001-1, IIM2, FRN, 2.443%, 4/20/32		United States		6,960,435		6,589,040
MASTR Alternative Loan Trust,
2003-1, 3A1, 5.00%, 2/25/18		United States		127,250		129,555
2003-6, 2A1, 5.00%, 8/25/18		United States		385,871		389,478
2003-9, 1A1, 5.50%, 12/25/18		United States		166,744		168,113
2004-4, 5A1, 5.50%, 4/25/19		United States		567,453		576,607
f2004-11, 2A1, FRN, 5.544%, 11/25/19		United States		701,613		715,130
f Merrill Lynch Mortgage Investors Trust,
2003-G, A2, FRN, 1.96%, 1/25/29		United States		794,942		752,159
2005-A10, A, FRN, 1.201%, 2/25/36		United States		3,368,922		3,225,428
f Merrill Lynch Mortgage Investors Trust Inc., 2003-E, A1, FRN, 1.611%, 10/25/28		United States		854,290		824,538
f Merrill Lynch Mortgage Trust, 2005-CKI1, D, FRN, 5.361%, 11/12/37		United States		990,779		989,857
d Multi Security Asset Trust LP Commercial Mortgage,
2005-RR4A, J, 144A, 5.88%, 11/28/35		United States		6,097,200		6,231,186
f2005-RR4A, K, 144A, FRN, 5.88%, 11/28/35		United States		3,866,000		3,958,417
f New York Mortgage Trust, 2005-3, M1, FRN, 1.666%, 2/25/36		United States		459,551		410,371
f Novastar Home Equity Loan, 2004-4, M4, FRN, 2.641%, 3/25/35		United States		665,773		664,469
d,f NZCG Funding Ltd., 2015-2A, A1, 144A, FRN, 2.72%, 4/27/27		United States		8,101,875		8,114,271
d OBP Depositor LLC Trust, 2010-OBP, A, 144A, 4.646%, 7/15/45		United States		1,700,000		1,817,062
d,f Octagon Investment Partners XVII Ltd., 2013-1A, A1, 144A, FRN, 2.486%,       10/25/25		United States		7,510,000		7,530,953
d,f,p Octagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 0.00%,         8/12/26		Cayman Islands		3,000,000		3,000,000
d,f Octagon Investment Partners XXIII Ltd.,
2015-1A, A1, 144A, FRN, 2.578%, 7/15/27		United States		4,160,328		4,172,809
2015-1A, A2, 144A, FRN, 2.578%, 7/15/27		United States		3,949,678		3,961,527
f Ownit Mortgage Loan Asset-Backed Certificates, 2005-2, M4, FRN, 1.921%, 3/25/36		United States		705,343		703,754
f Park Place Securities Inc. Asset-Backed Pass-Through Certificates, 2004-WHQ2, M2, FRN, 1.936%, 2/25/35		United States		704,983		707,673
f RAAC, 2004-SP1, AII, FRN, 1.691%, 3/25/34		United States		532,011		506,628
f Residential Funding Mortgage Securities II, 2004-HI3, A5, FRN, 5.48%, 6/25/34		United States		286,229		295,822
d,f Resource Capital Corp. Ltd.,
2014-CRE2, A, 144A, FRN, 2.044%, 4/15/32		United States		465,959		465,878
2015-CRE4, A, 144A, FRN, 2.394%, 8/15/32		United States		773,243		774,401
d,f Silver Bay Realty Trust,
2014-1, A, 144A, FRN, 1.994%, 9/17/31		United States		1,147,798		1,149,703
2014-1, B, 144A, FRN, 2.444%, 9/17/31		United States		540,000		536,584

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage- Backed Securities (continued)
Diversified Financials (continued)
f Structured ARM Loan Trust, 2004-12, 3A1, FRN, 3.314%, 9/25/34		United States		3,286,456	$	3,263,030
f Structured Asset Investment Loan Trust, 2004-BNC2, A2, FRN, 2.031%, 12/25/34		United States		755,022		755,038
f Structured Asset Mortgage Investments II Trust, 2004-AR6, A1A, FRN, 1.694%, 2/19/35		United States		1,832,814		1,713,282
f Structured Asset Mortgage Investments Trust,
2003-AR1, A1, FRN, 1.734%, 10/19/33		United States		360,250		338,061
n2003-AR2, A1, FRN, 1.734%, 12/19/33		United States		794,656		765,997
f Thornburg Mortgage Securities Trust,
2003-4, A1, FRN, 1.631%, 9/25/43		United States		2,234,099		2,160,119
2004-3, A, FRN, 1.731%, 9/25/44		United States		1,113,999		1,028,078
2005-1, A3, FRN, 3.073%, 4/25/45		United States		375,966		376,214
d Towd Point Mortgage Trust,
f2015-3, A1B, 144A, FRN, 3.00%, 3/25/54		United States		2,451,035		2,479,731
2016-1, A1, 144A, 3.50%, 2/25/55		United States		10,109,064		10,355,596
f2016-5, A1, 144A, FRN, 2.50%, 10/25/56		United States		6,156,911		6,155,608
f2017-1, A1, 144A, FRN, 2.75%, 10/25/56		United States		5,819,324		5,854,724
d,f Voya CLO Ltd.,
2012-4A, A2R, 144A, FRN, 3.008%, 10/15/28		Cayman Islands		7,660,000		7,689,261
2014-4A, A1, 144A, FRN, 2.658%, 10/14/26		Cayman Islands		6,450,000		6,457,740
2015-1A, A1, 144A, FRN, 2.638%, 4/18/27		United States		5,280,000		5,295,840
f WaMu Mortgage Pass-Through Certificates,
2005-AR8, 1A1A, FRN, 1.281%, 7/25/45		United States		1,343,444		1,300,121
2005-AR19, A1A1, FRN, 1.261%, 12/25/45		United States		3,563,137		3,405,700
f,o Wells Fargo Commercial Mortgage Trust, 2016-NXS6, XA, IO, FRN, 1.66%, 11/15/49		United States		54,357,682		5,736,029
f Wells Fargo Mortgage Backed Securities Trust,
2004-W, A9, FRN, 3.004%, 11/25/34		United States		131,026		132,893
2005-AR10, 2A3, FRN, 3.092%, 6/25/35		United States		712,276		711,225
d,f West CLO Ltd.,
2014-1A, A2, 144A, FRN, 3.258%, 7/18/26		United States		1,360,000		1,367,358
2014-1A, B, 144A, FRN, 4.008%, 7/18/26		United States		3,590,000		3,600,734
						598,869,824
Real Estate 0.7%
d BAMLL Commercial Mortgage Securities Trust, 2012-PARK, A, 144A, 2.959%, 12/10/30		United States		3,200,000		3,259,907
d Colony MFM Trust, 2014-1, A, 144A, 2.543%, 4/20/50		United States		3,538,544		3,525,124
d,f SWAY Residential Trust, 2014-1, A, 144A, FRN, 2.294%, 1/17/32		United States		4,329,854		4,353,024
d,f Tricon American Homes Trust, 2015-SFR1, A, 144A, FRN, 2.244%, 5/17/32		United States		7,213,743		7,232,074
						18,370,129
Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $645,297,132)						649,036,682
Mortgage-Backed Securities 1.4%
f Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.1%
FHLMC, 3.324% - 3.418%, 10/01/36 - 6/01/37		United States		3,020,051		3,211,546

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Mortgage-Backed Securities (continued)
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 0.0%†
FHLMC Gold 15 Year, 5.00%, 10/01/23		United States		151,729	$	158,806
FHLMC Gold 15 Year, 6.00%, 6/01/23		United States		37,672		39,857
FHLMC Gold 30 Year, 5.00%, 1/01/39		United States		171,472		187,463
						386,126
f Federal National Mortgage Association (FNMA) Adjustable Rate 1.1%
FNMA, 1.841% - 3.51%, 7/01/17 - 10/01/44		United States		21,986,014		23,042,504
FNMA, 3.513% - 5.89%, 8/01/19 - 4/01/38		United States		5,547,570		5,878,621
						28,921,125
Federal National Mortgage Association (FNMA) Fixed Rate 0.2%
FNMA 15 Year, 3.50%, 10/01/25		United States		1,297,660		1,357,750
FNMA 15 Year, 4.00%, 12/01/25		United States		1,960,654		2,072,079
FNMA 15 Year, 4.50%, 5/01/23 - 6/01/25		United States		1,423,691		1,504,102
FNMA 30 Year, 5.00%, 3/01/38		United States		38,721		42,408
						4,976,339
f Government National Mortgage Association (GNMA) Adjustable Rate 0.0%†
GNMA, 2.125%, 4/20/26 - 9/20/26		United States		26,621		27,467
Total Mortgage-Backed Securities (Cost $37,296,476)						37,522,603
Municipal Bonds 0.7%
Industry Public Facilities Authority Tax Allocation Revenue, Transportation District, Industrial Redevelopment Project No. 2, Refunding, Series B, AGMC Insured, 3.389%, 1/01/20		United States		5,900,000		6,063,371
Pennsylvania State GO, Refunding, Second Series, 5.00%, 1/15/20		United States		6,500,000		7,125,040
Texas State GO, Transportation Commission-Highway Improvement, Series A, 5.00%, 4/01/21		United States		2,685,000		3,061,518
f University of California Revenue, Series Y-2, Monthly FRN, 1.483%, 7/01/41		United States		390,000		390,000
Total Municipal Bonds (Cost $16,380,424)						16,639,929
			Shares
Escrows and Litigation Trusts (Cost $—) 0.0%
a,q NewPage Corp., Litigation Trust		United States		500,000		—
Total Investments before Short Term Investments (Cost $2,466,120,345)						2,470,111,939
Short Term Investments (Cost $137,532,020) 5.3%
Money Market Funds 5.3%
c,r Institutional Fiduciary Trust Money Market Portfolio, 0.37%		United States		137,532,020		137,532,020
Total Investments (Cost $2,603,652,365) 99.7%						2,607,643,959
Other Assets, less Liabilities 0.3%						8,615,839
Net Assets 100.0%					$	2,616,259,798

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bSee Note 8 regarding restricted securities.

^cSee Note 3(f) regarding investments in affiliated management investment companies.

^dSecurity 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 April 30, 2017, the aggregate value of these securities was $484,745,683, representing 18.5% of net assets.

^eSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At April 30, 2017, the aggregate value of these securities was $24,417,022, representing 0.9% of net assets.

^fThe coupon rate shown represents the rate at period end.

^gIncome may be received in additional securities and/or cash.

^hSee Note 1(i) regarding senior floating rate interests.

ⁱA portion or all of the security purchased on a delayed delivery basis. See Note 1(c).

^jPrincipal amount is stated in 100 Mexican Peso Units.

^kPrincipal amount is stated in 1,000 Brazilian Real Units.

^lRedemption price at maturity is adjusted for inflation. See Note 1(k).

^mPrincipal amount of security is adjusted for inflation. See Note 1(k).

ⁿThe bond pays interest and/or principal based upon the issuer’s ability to pay, which may be less than the stated interest rate or principal paydown.

^oInvestment in an interest-only security entitles holders to receive only the interest payments on the underlying mortgages. The principal amount shown is the notional amount of the underlying mortgages. The rate represents the coupon rate.

^pSecurity purchased on a when-issued basis. See Note 1(c).

^qSecurity has been deemed illiquid because it may not be able to be sold within seven days.

^rThe rate shown is the annualized seven-day yield at period end.

68         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

At April 30, 2017, the Fund had the following futures contracts outstanding. See Note 1(d).

Futures Contracts

Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Interest Rate Contracts
Canadian 10 Yr. Bond		Long		49		$    5,010,213		6/21/17		$112,255		$            —
CME Ultra Long Term U.S. Treasury Bond		Short		5		814,688		6/21/17		—		(4,232	)
U.S. Treasury 2 Yr. Note		Long		2,394		518,562,844		6/30/17		661,781		—
U.S. Treasury 5 Yr. Note		Short		710		84,068,437		6/30/17		—		(234,779	)
U.S. Treasury 10 Yr. Note		Short		336		42,241,500		6/21/17		—		(673,672	)
Total Futures Contracts										$774,036		$(912,683)
Net unrealized appreciation (depreciation)												$(138,647)

At April 30, 2017, the Fund had the following forward exchange contracts outstanding. See Note 1(d).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract  Amount*		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Australian Dollar		DBAB		Sell		3,360,000		2,532,432		5/18/17	$	17,573	$	—
Australian Dollar		DBAB		Sell		3,410,144		2,529,781		5/18/17		—		(22,609	)
Australian Dollar		JPHQ		Sell		11,750,000		8,908,850		5/18/17		114,328		—
Brazilian Real		JPHQ		Buy		7,500,000		2,202,643		5/18/17		145,914		—
British Pound		DBAB		Sell		3,000,000		3,750,600		5/18/17		—		(137,609	)
Canadian Dollar		JPHQ		Sell		1,350,000		1,028,611		5/18/17		39,247		—
Euro		BZWS		Sell		194,860		218,055		5/18/17		5,571		—
Euro		CITI		Sell		391,262		439,112		5/18/17		12,460		—
Euro		DBAB		Buy		558,065		613,425		5/18/17		—		(4,883	)
Euro		DBAB		Buy		23,277,041		24,843,575		5/18/17		538,860		—
Euro		DBAB		Sell		22,799,965		24,447,192		5/18/17		—		(415,016	)
Euro		DBAB		Sell		46,977,626		52,731,446		5/18/17		1,504,722		—
Euro		GSCO		Sell		420,000		471,912		5/18/17		13,923		—
Euro		HSBK		Sell		6,000		6,659		5/18/17		117		—
Euro		JPHQ		Sell		3,577,590		3,834,998		5/18/17		—		(66,184	)
Euro		JPHQ		Sell		6,167,765		6,862,323		5/18/17		136,687		—
Hungarian Forint		DBAB		Buy		750,880,000		2,554,535		5/18/17		58,903		—
Hungarian Forint		DBAB		Sell		900,000,000		3,220,266		5/18/17		87,816		—
Hungarian Forint		JPHQ		Sell		430,000,000		1,547,375		5/18/17		50,760		—
Indian Rupee		DBAB		Buy		135,900,000		1,955,396		5/18/17		153,652		—
Indian Rupee		JPHQ		Buy		78,000,000		1,130,435		5/18/17		80,056		—
Indonesian Rupiah		JPHQ		Buy		41,430,000,000		3,058,693		5/18/17		43,516		—
Japanese Yen		JPHQ		Buy		860,000,000		7,551,899		5/18/17		171,473		—
Japanese Yen		JPHQ		Sell		863,000,000		8,605,353		5/18/17		855,040		—
Japanese Yen		JPHQ		Sell		1,400,000,000		12,349,926		5/18/17		—		(223,004	)
Mexican Peso		JPHQ		Buy		214,700,000		10,313,078		5/18/17		1,048,213		—
Mexican Peso		JPHQ		Sell		63,000,000		3,391,473		5/18/17		57,698		—
Mexican Peso		JPHQ		Sell		70,500,000		3,401,361		5/18/17		—		(329,293	)
Philippine Peso		JPHQ		Buy		94,860,000		1,925,310		5/18/17		—		(38,318	)
South Korean Won		JPHQ		Buy		2,900,000,000		2,533,083		5/18/17		17,078		—
South Korean Won		JPHQ		Sell		2,900,000,000		2,491,366		5/18/17		—		(58,794	)

franklintempleton.com Semiannual Report         69

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract  Amount*			Settlement Date		Unrealized   Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound		JPHQ		Sell		1,900,000		21,815,863	SEK		10/26/17	$	13,332	$	—
Total Forward Exchange Contracts												$	5,166,939	$	(1,295,710)
Net unrealized appreciation (depreciation)												$	3,871,229

*In U.S. dollars unless otherwise indicated.

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

At April 30, 2017, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts

Description	Periodic Payment Rate			Counter- party/ Exchange		Notional  Amounta		Expiration Date		Unamortized Upfront Payments (Receipts)			Unrealized Appreciation		Unrealized Depreciation			Value			Ratingb
Centrally Cleared Swap Contracts
Contracts to Buy Protection
Single Name
Olin Corp.		1.00	%		ICE	$	2,400,000		12/20/21	$	58,791		$	—	$	(2,532	)	$	56,259
Contracts to Sell Protectionc
Traded Index
CDX.NA.IG.28		1.00	%		ICE		31,500,000		6/20/22		553,339			37,112		—			590,451			Investment
																						Grade
Total Centrally Cleared Swap Contracts										$	612,130		$	37,112	$	(2,532	)	$	646,710
OTC Swap Contracts
Contracts to Buy Protection
Single Name
The AES Corp.		5.00	%		JPHQ	$	7,400,000		6/20/21	$	(681,449	)	$	—	$	(340,221	)	$	(1,021,670	)
The AES Corp.		5.00	%		JPHQ		7,600,000		6/20/22		(1,057,648	)		—		(33,621	)		(1,091,269	)
Avon Products Inc.		5.00	%		GSCO		10,000,000		3/20/20		870,246			—		(1,550,652	)		(680,406	)
Beazer Homes USA Inc.		5.00	%		CITI		1,500,000		6/20/19		(39,257	)		—		(94,893	)		(134,150	)
Beazer Homes USA Inc.		5.00	%		FBCO		8,500,000		6/20/19		(734,520	)		—		(25,662	)		(760,182	)
Beazer Homes USA Inc.		5.00	%		GSCO		3,000,000		6/20/19		(75,627	)		—		(192,673	)		(268,300	)
Best Buy Co. Inc.		5.00	%		CITI		1,500,000		6/20/22		(242,560	)		—		(25,020	)		(267,580	)
Constellation Brands Inc.		5.00	%		DBAB		6,600,000		6/20/17		(33,406	)		—		(51,258	)		(84,664	)
CSC Holdings LLC		5.00	%		GSCO		3,500,000		9/20/18		(100,259	)		—		(142,594	)		(242,853	)
CSC Holdings LLC		5.00	%		GSCO		3,000,000		3/20/19		(67,471	)		—		(198,057	)		(265,528	)
Olin Corp.		1.00	%		CITI		1,430,000		6/20/21		92,531			—		(83,705	)		8,826
Olin Corp.		1.00	%		GSCO		3,570,000		6/20/21		237,516			—		(215,483	)		22,033
Pactiv LLC		5.00	%		BZWS		2,100,000		6/20/17		(6,983	)		—		(18,876	)		(25,859	)
PHH Corp.		5.00	%		GSCO		1,800,000		9/20/19		11,094			—		(164,906	)		(153,812	)
Sanmina Corp.		5.00	%		GSCO		6,500,000		6/20/19		(611,612	)		—		(73,389	)		(685,001	)
Staples Inc.		1.00	%		CITI		1,500,000		6/20/22		92,313			—		(12,951	)		79,362
Tenet Healthcare Corp.		5.00	%		DBAB		3,000,000		3/20/19		(148,385	)		2,222		—			(146,163	)
Tenet Healthcare Corp.		5.00	%		GSCO		9,100,000		3/20/19		(491,089	)		47,727		—			(443,362	)

70         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

Credit Default Swap Contracts (continued)

Description	Periodic Payment Rate		Counter- party/ Exchange		Notional  Amounta		Expiration Date		Unamortized Upfront Payments (Receipts)			Unrealized Appreciation		Unrealized Depreciation			Value			Ratingb
OTC Swap Contracts (continued)
Contracts to Buy Protection (continued)
Single Name (continued)
Toys R Us Inc.		5.00%		CITI	$	2,000,000		12/20/18	$	220,850		$	—	$	(40,830	)	$	180,020
Toys R Us Inc.		5.00%		DBAB		1,840,000		12/20/18		221,810			—		(56,192	)		165,618
Toys R Us Inc.		5.00%		GSCO		1,900,000		12/20/18		315,998			—		(144,979	)		171,019
Transocean Inc.		5.00%		MSCO		7,000,000		6/20/18		(96,923	)		—		(222,694	)		(319,617	)
XPO CNW Inc.		5.00%		JPHQ		3,275,000		3/20/18		(70,227	)		—		(70,971	)		(141,198	)
Contracts to Sell Protectionc
Single Name
American Tower Corp.		1.00%		GSCO		6,500,000		3/20/21		(94,665	)		5,601		—			(89,064	)		BBB-
Calpine Corp.		5.00%		JPHQ		7,400,000		6/20/21		359,132			422,306		—			781,438			B
Calpine Corp.		5.00%		JPHQ		7,600,000		6/20/22		562,686			34,044		—			596,730			B
Enterprise Products
Operating LLC		1.00%		MSCO		3,500,000		12/20/19		(13,369	)		59,604		—			46,235			BBB+
Government of Mexico		1.00%		CITI		2,500,000		6/20/20		(18,788	)		49,895		—			31,107			BBB+
Simon Property Group LP		1.00%		CITI		3,000,000		6/20/22		10,034			1,989		—			12,023			A
Traded Index
dCitibank Bespoke 58 IG/42
HY Equity Tranche 0-3%
Index		0.00%		CITI		1,300,000		6/20/19		(329,089	)		67,945		—			(261,144	)		Non-
																					Investment
																					Grade
dCitibank Bespoke Dec-18
Hong Kong Tranche Index		1.00%		CITI		7,000,000		12/20/18		(245,879	)		146,771		—			(99,108	)		Non-
																					Investment
																					Grade
Total OTC Swap Contracts									$	(2,164,996	)	$	838,104	$	(3,759,627	)	$	(5,086,519	)
Total Credit Default Swap Contracts									$	(1,552,866	)	$	875,216	$	(3,762,159	)	$	(4,439,809	)
Net unrealized appreciation (depreciation)														$	(2,886,943	)

^aFor contracts to sell protection, the notional amount is equal to the maximum potential amount of the future payments and no recourse provisions have been entered into in association with the contracts.

^bBased on Standard and Poor’s (S&P) Rating for single name swaps and internal ratings for index swaps. Internal ratings based on mapping into equivalent ratings from external vendors.

^cThe Fund enters contracts to sell protection to create a long credit position. Performance triggers include default, bankruptcy or restructuring for single name swaps, and failure to pay or bankruptcy of the underlying securities for traded index swaps.

^dRepresents a custom index comprised of a basket of underlying issuers.

franklintempleton.com Semiannual Report         71

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Low Duration Total Return Fund (continued)

At April 30, 2017, the Fund had the following cross-currency swap contracts outstanding. See Note 1(d).

Cross Currency Swap Contracts

Description	Counter- party		Notional         Amount		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
OTC Swap Contracts
Receive Floating Quarterly 3-month USD BBA LIBOR + 2.18%		CITI		3,922,448 USD		10/13/17	$	356,795	$	—
Pay Fixed Annual 2.125%				3,500,000 CHF
Receive Floating Quarterly 3-month USD BBA LIBOR + 3.29%		JPHQ		1,562,500 USD		10/13/17		41,884		—
Pay Fixed Annual 2.125%				1,500,000 CHF
Receive Fixed Semi-Annual 2.393%		JPHQ		7,916,500 USD		4/09/20		116,683		—
Pay Fixed Annual 0.50%				7,100,000 EUR
Net unrealized appreciation (depreciation)							$	515,362

See Note 10 regarding other derivative information.

See Abbreviations on page 131.

72         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Financial Highlights

Franklin Total Return Fund

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class A
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  9.93			$  9.87			$  10.18			$  10.05			$  10.53			$  10.32
Income from investment operationsa:
Net investment income		0.125			0.231			0.217			0.257			0.236			0.297
Net realized and unrealized gains (losses)		(0.134	)		0.107			(0.220	)		0.214			(0.205	)		0.472
Total from investment operations		(0.009	)		0.338			(0.003	)		0.471			0.031			0.769
Less distributions from:
Net investment income and net foreign currency gains		(0.171	)		(0.278	)		(0.307	)		(0.341	)		(0.351	)		(0.447	)
Net realized gains		—			—			—			—			(0.160	)		(0.112	)
Total distributions		(0.171	)		(0.278	)		(0.307	)		(0.341	)		(0.511	)		(0.559	)
Net asset value, end of period		$  9.75			$  9.93			$  9.87			$  10.18			$  10.05			$  10.53
Total returnb		(0.06)%			3.53%			(0.05)%			4.80%			0.30%			7.74%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.91%			0.90%			0.91%			0.93%			0.91%			0.92%
Expenses net of waiver and payments by affiliates		0.87%	d		0.85%	d		0.87%	d		0.88%	d		0.88%	d		0.88%
Net investment income		2.70%			2.32%			2.08%			2.46%			2.36%			2.69%
Supplemental data
Net assets, end of period (000’s)		$3,220,519			$3,623,035			$3,527,479			$3,213,446			$3,019,228			$3,134,211
Portfolio turnover rate		35.71%			287.38%			294.80%			273.96%			371.54%			314.62%
Portfolio turnover rate excluding mortgage dollar rollse		30.75%			146.15%			95.06%			85.03%			156.49%			122.04%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated 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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eSee Note 1(h) regarding mortgage dollar rolls.

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Semiannual Report         73

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  9.87			$  9.84			$  10.16			$  10.03			$  10.51			$  10.31
Income from investment operationsa:
Net investment income		0.098			0.189			0.172			0.201			0.174			0.253
Net realized and unrealized gains (losses)		(0.115	)		0.100			(0.214	)		0.232			(0.182	)		0.467
Total from investment operations		(0.017	)		0.289			(0.042	)		0.433			(0.008	)		0.720
Less distributions from:
Net investment income and net foreign currency gains		(0.153	)		(0.259	)		(0.278	)		(0.303	)		(0.312	)		(0.408	)
Net realized gains		—			—			—			—			(0.160	)		(0.112	)
Total distributions		(0.153	)		(0.259	)		(0.278	)		(0.303	)		(0.472	)		(0.520	)
Net asset value, end of period		$  9.70			$  9.87			$  9.84			$  10.16			$  10.03			$  10.51
Total returnb		(0.25)%			3.13%			(0.43)%			4.42%			(0.08)%			7.25%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		1.31%			1.30%			1.31%			1.33%			1.31%			1.32%
Expenses net of waiver and payments by affiliates		1.27%	d		1.25%	d		1.27%	d		1.28%	d		1.28%	d		1.28%
Net investment income		2.30%			1.92%			1.68%			2.06%			1.96%			2.29%
Supplemental data
Net assets, end of period (000’s)		$394,867			$449,274			$444,253			$432,767			$455,720			$571,206
Portfolio turnover rate		35.71%			287.38%			294.80%			273.96%			371.54%			314.62%
Portfolio turnover rate excluding mortgage dollar rollse		30.75%			146.15%			95.06%			85.03%			156.49%			122.04%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated 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.

^bTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eSee Note 1(h) regarding mortgage dollar rolls.

74         Semiannual Report    |    The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Class R
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  9.90			$  9.85			$  10.17			$  10.04			$  10.52			$  10.32
Income from investment operationsa:
Net investment income		0.102			0.199			0.198			0.209			0.204			0.255
Net realized and unrealized gains (losses)		(0.122	)		0.117			(0.229	)		0.238			(0.197	)		0.480
Total from investment operations		(0.020	)		0.316			(0.031	)		0.447			0.007			0.735
Less distributions from:
Net investment income and net foreign currency gains		(0.160	)		(0.266	)		(0.289	)		(0.317	)		(0.327	)		(0.423	)
Net realized gains		—			—			—			—			(0.160	)		(0.112	)
Total distributions		(0.160	)		(0.266	)		(0.289	)		(0.317	)		(0.487	)		(0.535	)
Net asset value, end of period		$  9.72			$  9.90			$  9.85			$  10.17			$  10.04			$  10.52
Total returnb		(0.18)%			3.31%			(0.32)%			4.56%			0.06%			7.39%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		1.16%			1.15%			1.16%			1.18%			1.16%			1.17%
Expenses net of waiver and payments by affiliates		1.12%	d		1.10%	d		1.12%	d		1.13%	d		1.13%	d		1.13%
Net investment income		2.45%			2.07%			1.83%			2.21%			2.11%			2.44%
Supplemental data
Net assets, end of period (000’s)		$49,027			$58,715			$70,506			$59,307			$65,601			$87,235
Portfolio turnover rate		35.71%			287.38%			294.80%			273.96%			371.54%			314.62%
Portfolio turnover rate excluding mortgage dollar rollse		30.75%			146.15%			95.06%			85.03%			156.49%			122.04%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated 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.

^bTotal return is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eSee Note 1(h) regarding mortgage dollar rolls.

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013a
Class R6
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  9.98			$  9.91			$  10.20			$  10.07			$  10.44
Income from investment operationsb:
Net investment income		0.124			0.195			0.255	c		0.317	c		0.145
Net realized and unrealized gains (losses)		(0.105	)		0.173			(0.209	)		0.191			(0.348	)
Total from investment operations		0.019			0.368			0.046			0.508			(0.203	)
Less distributions from net investment income and net foreign currency gains		(0.189	)		(0.298	)		(0.336	)		(0.378	)		(0.167	)
Net asset value, end of period		$  9.81			$  9.98			$  9.91			$  10.20			$  10.07
Total returnd		0.12%			3.94%			0.44%			5.18%			(1.92)%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.51%			0.51%			0.50%			0.50%			0.50%
Expenses net of waiver and payments by affiliatesf		0.48%			0.46%			0.46%			0.48%			0.49%
Net investment income		3.09%			2.71%			2.49%			2.86%			2.75%
Supplemental data
Net assets, end of period (000’s)		$106,537			$93,892			$68,848			$26,123			$329,806
Portfolio turnover rate		35.71%			287.38%			294.80%			273.96%			371.54%
Portfolio turnover rate excluding mortgage dollar rollsg		30.75%			146.15%			95.06%			85.03%			156.49%

^aFor the period May 1, 2013 (effective date) to October 31, 2013.

^bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated 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%.

^gSee Note 1(h) regarding mortgage dollar rolls.

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Six Months Ended April 30, 2017 (unaudited)
				Year Ended October 31,
				2016			2015			2014			2013			2012
Advisor Class
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$  9.98			$  9.91			$  10.20			$  10.07			$  10.55			$  10.34
Income from investment operationsa:
Net investment income		0.137			0.218			0.127			0.288			0.242			0.319
Net realized and unrealized gains (losses)		(0.134	)		0.142			(0.092	)		0.206			(0.186	)		0.474
Total from investment operations		0.003			0.360			0.035			0.494			0.056			0.793
Less distributions from:
Net investment income and net foreign currency gains		(0.183	)		(0.290	)		(0.325	)		(0.364	)		(0.376	)		(0.471	)
Net realized gains		—			—			—			—			(0.160	)		(0.112	)
Total distributions		(0.183	)		(0.290	)		(0.325	)		(0.364	)		(0.536	)		(0.583	)
Net asset value, end of period		$  9.80			$  9.98			$  9.91			$  10.20			$  10.07			$  10.55
Total returnb		0.06%			3.75%			0.33%			5.03%			0.54%			7.98%
Ratios to average net assetsc
Expenses before waiver and payments by affiliates		0.66%			0.65%			0.66%			0.68%			0.66%			0.67%
Expenses net of waiver and payments by affiliates		0.62%	d		0.60%	d		0.62%	d		0.63%	d		0.63%	d		0.63%
Net investment income		2.95%			2.57%			2.33%			2.71%			2.61%			2.94%
Supplemental data
Net assets, end of period (000’s)		$854,540			$740,046			$526,749			$1,281,151			$1,148,451			$1,482,994
Portfolio turnover rate		35.71%			287.38%			294.80%			273.96%			371.54%			314.62%
Portfolio turnover rate excluding mortgage dollar rollse		30.75%			146.15%			95.06%			85.03%			156.49%			122.04%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated 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.

^bTotal return is not annualized for periods less than one year.

^cRatios are annualized for periods less than one year.

^dBenefit of expense reduction rounds to less than 0.01%.

^eSee Note 1(h) regarding mortgage dollar rolls.

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FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Statement of Investments, April 30, 2017 (unaudited)

Franklin Total Return Fund

	Country		Shares/ Warrants			Value
Common Stocks and Other Equity Interests 0.3%
Consumer Services 0.2%
a,b,cTurtle Bay Resort		United States		1,550,567		$	7,210,139
Energy 0.1%
aEnergy XXI Gulf Coast Inc.		United States		115,438			3,174,545
a,dHalcon Resources Corp.		United States		229,059			1,472,715
aHalcon Resources Corp., wts., 9/09/20		United States		20,425			21,446
aLinn Energy Inc.		United States		35,793			1,003,278
							5,671,984
Materials 0.0%†
aVerso Corp., A		United States		6,954			42,211
aVerso Corp., wts., 7/25/23		United States		732			110
							42,321
Retailing 0.0%†
a,dHoldco 2, A		South Africa		28,762,824			21,519
a,dHoldco 2, B		South Africa		2,862,311			2,142
							23,661
Total Common Stocks and Other Equity Interests   (Cost $15,051,463)							12,948,105
Management Investment Companies 2.8%
Diversified Financials 2.8%
eFranklin Liberty Investment Grade Corporate ETF		United States		1,200,000			29,220,000
eFranklin Liberty Short Duration U.S. Government ETF		United States		500,000			48,437,500
eFranklin Lower Tier Floating Rate Fund		United States		997,589			10,524,565
eFranklin Middle Tier Floating Rate Fund		United States		1,889,310			19,006,460
PowerShares Senior Loan Portfolio ETF		United States		1,000,000			23,280,000
Total Management Investment Companies   (Cost $129,948,810)							130,468,525
Preferred Stocks (Cost $2,325,000) 0.0%†
Diversified Financials 0.0%†
fCitigroup Capital XIII, 6.902%, pfd		United States		93,000			2,440,320
			Principal   Amount*
Corporate Bonds 34.4%
Automobiles & Components 0.6%
Delphi Corp., senior bond, 4.15%, 3/15/24		United Kingdom		5,100,000			5,382,846
Fiat Chrysler Automobiles NV, senior note, 4.50%, 4/15/20		United Kingdom		4,000,000			4,135,000
Ford Motor Credit Co. LLC, senior note, 3.096%, 5/04/23		United States		18,200,000			17,935,390
							27,453,236
Banks 7.0%
Banco Comercial Portugues SA, secured note, 4.75%, 6/22/17		Portugal		5,400,000	EUR		5,921,925
Bank of America Corp.,
senior bond, 3.875%, 8/01/25		United States		6,000,000			6,148,392
senior note, 3.50%, 4/19/26		United States		20,400,000			20,394,043

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Banks (continued)
gBarclays Bank PLC, senior sub. note, Reg S, 6.00%, 1/14/21		United Kingdom		8,000,000	EUR	$	10,242,471
Barclays PLC, sub. note, 4.375%, 9/11/24		United Kingdom		500,000			508,425
CIT Group Inc., senior note, 5.00%, 8/15/22		United States		3,000,000			3,234,900
Citigroup Inc.,
senior bond, 8.125%, 7/15/39		United States		4,400,000			6,493,498
senior note, 3.40%, 5/01/26		United States		20,000,000			19,771,660
Depfa ACS Bank, secured bond, 2.125%, 10/13/17		Ireland		12,250,000	CHF		12,454,351
HSBC Holdings PLC,
senior note, 3.60%, 5/25/23		United Kingdom		12,700,000			13,040,678
senior note, 4.30%, 3/08/26		United Kingdom		14,800,000			15,614,222
Intesa Sanpaolo SpA, senior note, 3.875%, 1/16/18		Italy		4,300,000			4,350,439
JPMorgan Chase & Co.,
hjunior sub. bond, X, 6.10% to 10/01/24, FRN thereafter, Perpetual		United States		10,400,000			11,167,000
senior bond, 3.30%, 4/01/26		United States		22,000,000			21,763,610
senior bond, 3.20%, 6/15/26		United States		10,800,000			10,599,682
senior note, 2.40%, 6/07/21		United States		10,000,000			9,987,090
senior note, 3.25%, 9/23/22		United States		11,400,000			11,690,586
iNorddeutsche Landesbank Girozentrale, secured note, 144A, 2.00%, 2/05/19		Germany		7,000,000			7,028,630
PHH Corp., senior note, 7.375%, 9/01/19		United States		5,400,000			5,872,500
Royal Bank of Canada, secured note, 2.10%, 10/14/20		Canada		11,500,000			11,502,967
iShinhan Bank, senior note, 144A, 1.875%, 7/30/18		South Korea		10,000,000			9,978,650
SVB Financial Group, senior note, 3.50%, 1/29/25		United States		6,000,000			5,912,166
jUniCredit SpA, senior note, FRN, 1.672%, 10/31/17		Italy		9,500,000	EUR		10,432,638
gUnione di Banche Italiane SpA, senior note, Reg S, 2.875%, 2/18/19		Italy		12,000,000	EUR		13,723,612
Wells Fargo & Co.,
hjunior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		5,500,000			5,836,875
senior note, 2.50%, 3/04/21		United States		10,000,000			10,036,750
senior note, 3.00%, 4/22/26		United States		31,200,000			30,215,484
sub. bond, 4.65%, 11/04/44		United States		10,000,000			10,123,140
iWestpac Banking Corp., senior secured note, 144A, 2.25%, 11/09/20		Australia		10,800,000			10,829,862
iWoori Bank, sub. note, 144A, 4.75%, 4/30/24		South Korea		9,750,000			10,099,391
							324,975,637
Capital Goods 1.5%
Aircastle Ltd., senior note, 4.125%, 5/01/24		United States		4,000,000			4,078,000
iAmcor Finance USA Inc., senior note, 144A, 3.625%, 4/28/26		Australia		11,800,000			11,800,177
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21		United States		3,400,000			3,425,500
iCortes NP Acquisition Corp., senior note, 144A, 9.25%, 10/15/24		United States		4,100,000			4,422,875
General Electric Co., senior note, A, 8.50%, 4/06/18		United States		135,000,000	MXN		7,233,928
Lockheed Martin Corp., senior bond, 4.70%, 5/15/46		United States		13,900,000			15,333,493
iSydney Airport Finance Co. Pty. Ltd., 144A, 3.90%, 3/22/23		Australia		5,800,000			6,027,650
iTennant Co., senior note, 144A, 5.625%, 5/01/25		United States		2,600,000			2,713,750
iTerex Corp., senior note, 144A, 5.625%, 2/01/25		United States		1,100,000			1,126,125
United Technologies Corp., senior note, 1.125%, 12/15/21		United States		10,500,000	EUR		11,865,018
							68,026,516
Commercial & Professional Services 0.1%
Republic Services Inc., senior note, 2.90%, 7/01/26		United States		4,500,000			4,411,728

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Consumer Durables & Apparel 0.6%
Beazer Homes USA Inc., senior note, 5.75%, 6/15/19		United States		19,700,000	$	20,709,625
PulteGroup Inc., senior bond, 5.00%, 1/15/27		United States		4,900,000		4,979,625
						25,689,250
Consumer Services 0.5%
Marriott International Inc., senior bond, 3.75%, 10/01/25		United States		18,400,000		18,736,150
Yum! Brands Inc., senior note, 5.30%, 9/15/19		United States		3,000,000		3,191,250
						21,927,400
Diversified Financials 3.1%
American Airlines Pass Through Trust, first lien, 2016-2, AA, 3.20%, 6/15/28		United States		6,600,000		6,476,250
American Express Centurion Bank, senior note, 5.95%, 6/12/17		United States		800,000		804,018
Capital One Bank USA NA, sub. bond, 3.375%, 2/15/23		United States		6,000,000		6,050,124
Capital One Financial Corp., senior note, 3.20%, 2/05/25		United States		9,700,000		9,426,576
Discover Financial Services, senior note, 3.85%, 11/21/22		United States		3,052,000		3,132,973
GE Capital International Funding Co., senior bond, 3.373%, 11/15/25		United States		17,000,000		17,667,318
The Goldman Sachs Group Inc.,
senior note, 3.75%, 5/22/25		United States		7,700,000		7,852,475
senior note, 3.75%, 2/25/26		United States		21,300,000		21,678,778
Morgan Stanley,
senior bond, 4.30%, 1/27/45		United States		10,000,000		10,034,430
senior note, 3.875%, 1/27/26		United States		20,500,000		20,996,654
Navient Corp., senior note, 7.25%, 9/25/23		United States		4,000,000		4,200,000
iPark Aerospace Holdings Ltd.,
senior note, 144A, 5.25%, 8/15/22		Ireland		1,700,000		1,795,625
senior note, 144A, 5.50%, 2/15/24		Ireland		1,800,000		1,906,200
Springleaf Finance Corp., senior note, 6.00%, 6/01/20		United States		1,200,000		1,233,000
i,kTempo Acquisition LLC / Tempo Acquisition Finance Corp., senior note, 144A, 6.75%, 6/01/25		United States		2,700,000		2,781,000
iThree Gorges Finance I Cayman Islands Ltd., senior note, 144A, 3.70%, 6/10/25		China		12,800,000		13,071,488
iTransurban Finance Co. Pty. Ltd., senior secured bond, 144A, 4.125%, 2/02/26		Australia		8,200,000		8,446,164
United Airlines Pass Through Trust, first lien, 2016-1, AA, 3.10%, 1/07/30		United States		6,300,000		6,229,125
						143,782,198
Energy 3.8%
Anadarko Petroleum Corp., senior note, 6.45%, 9/15/36		United States		2,260,000		2,685,845
iCalifornia Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		4,000,000		3,095,000
iCheniere Corpus Christi Holdings LLC,
senior secured note, 144A, 7.00%, 6/30/24		United States		2,300,000		2,581,474
senior secured note, first lien, 144A, 5.875%, 3/31/25		United States		1,600,000		1,710,000
CNOOC Finance 2013 Ltd., senior note, 3.00%, 5/09/23		China		14,000,000		13,745,550
Enable Midstream Partners LP,
senior bond, 5.00%, 5/15/44		United States		1,200,000		1,110,083
senior note, 3.90%, 5/15/24		United States		3,600,000		3,543,638
Energy Transfer Partners LP, senior bond, 5.15%, 2/01/43		United States		6,000,000		5,805,054
EnLink Midstream Partners LP, senior bond, 5.05%, 4/01/45		United States		6,200,000		5,890,180
Ensco PLC, senior bond, 5.75%, 10/01/44		United States		3,700,000		2,713,580

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Energy (continued)
Enterprise Products Operating LLC, senior bond, 4.45%, 2/15/43		United States		6,000,000	$	5,878,716
Exxon Mobil Corp., senior note, 2.709%, 3/06/25		United States		21,500,000		21,349,500
i,lGaz Capital SA, (OJSC Gazprom), loan participation, senior note, 144A, 3.85%, 2/06/20		Russia		10,000,000		10,183,000
MPLX LP, senior bond, 4.00%, 2/15/25		United States		4,600,000		4,630,075
Oceaneering International Inc., senior note, 4.65%, 11/15/24		United States		7,900,000		8,018,437
iPetrofac Ltd., senior note, 144A, 3.40%, 10/10/18		United Kingdom		7,600,000		7,680,803
iSabine Pass Liquefaction LLC, senior secured bond, 144A, 5.00%, 3/15/27		United States		3,700,000		3,912,547
Sanchez Energy Corp., senior note, 6.125%, 1/15/23		United States		3,000,000		2,774,970
iSinopec Group Overseas Development 2014 Ltd., senior note, 144A, 4.375%, 4/10/24		China		9,300,000		9,857,488
iSinopec Group Overseas Development 2015 Ltd., senior note, 144A, 3.25%, 4/28/25		China		16,400,000		16,123,578
Sunoco Logistics Partners Operations LP, senior note, 4.25%, 4/01/24		United States		9,300,000		9,567,059
Transcontinental Gas Pipe Line Corp., senior note, 6.05%, 6/15/18		United States		550,000		574,256
Transocean Inc., senior bond, 7.375%, 4/15/18		United States		13,000,000		13,390,000
Valero Energy Corp., senior bond, 4.90%, 3/15/45		United States		6,700,000		6,731,838
Weatherford International Ltd.,
senior note, 7.75%, 6/15/21		United States		1,600,000		1,712,000
senior note, 8.25%, 6/15/23		United States		2,000,000		2,172,500
iWoodside Finance Ltd., senior note, 144A, 3.70%, 9/15/26		Australia		9,500,000		9,385,145
						176,822,316
Food & Staples Retailing 0.3%
The Kroger Co., senior note, 4.00%, 2/01/24		United States		15,400,000		16,108,000
Food, Beverage & Tobacco 1.5%
Anheuser-Busch InBev Finance Inc., senior bond, 3.65%, 2/01/26		Belgium		17,000,000		17,416,075
Bunge Ltd. Finance Corp., senior note, 3.25%, 8/15/26		United States		12,000,000		11,757,660
Constellation Brands Inc., senior note, 7.25%, 5/15/17		United States		5,000,000		5,009,590
Kraft Heinz Foods Co., senior note, 3.50%, 7/15/22		United States		21,400,000		22,077,920
iLamb Weston Holdings Inc.,
senior note, 144A, 4.625%, 11/01/24		United States		1,500,000		1,552,500
senior note, 144A, 4.875%, 11/01/26		United States		1,600,000		1,654,000
Reynolds American Inc., senior bond, 5.70%, 8/15/35		United States		9,300,000		10,673,508
						70,141,253
Health Care Equipment & Services 0.7%
CHS/Community Health Systems Inc., senior secured note, first lien, 6.25%, 3/31/23		United States		2,000,000		2,042,500
HCA Inc., senior bond, 5.875%, 5/01/23		United States		4,000,000		4,362,800
Medco Health Solutions Inc., senior note, 4.125%, 9/15/20		United States		3,500,000		3,664,850
iMPH Acquisition Holdings LLC, senior note, 144A, 7.125%, 6/01/24		United States		1,000,000		1,077,500
Stryker Corp., senior bond, 3.50%, 3/15/26		United States		3,000,000		3,061,035
Tenet Healthcare Corp., senior note, 5.50%, 3/01/19		United States		15,835,000		16,072,525
						30,281,210
Household & Personal Products 0.7%
Avon Products Inc., senior note, 6.60%, 3/15/20		United States		18,500,000		18,893,125
The Procter & Gamble Co., senior note, 2.45%, 11/03/26		United States		12,500,000		12,122,187
						31,015,312

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Insurance 1.7%
Aflac Inc.,
senior bond, 3.625%, 6/15/23		United States		5,100,000		$	5,355,653
senior note, 0.932%, 1/25/27		United States		1,400,000,000	JPY		12,698,497
iLiberty Mutual Group Inc., senior note, 144A, 4.95%, 5/01/22		United States		12,000,000			13,157,604
MetLife Inc.,
senior note, 3.60%, 4/10/24		United States		9,600,000			10,014,566
senior note, 3.00%, 3/01/25		United States		1,500,000			1,494,714
Prudential Financial Inc., junior sub. bond, 5.875%, 9/15/42		United States		7,000,000			7,742,378
iTeachers Insurance & Annuity Assn. of America, sub. bond, 144A, 4.90%, 9/15/44		United States		20,400,000			22,482,412
iTIAA Asset Management Finance LLC, senior note, 144A, 2.95%, 11/01/19		United States		5,800,000			5,897,463
							78,843,287
Materials 1.5%
ArcelorMittal, senior note, 6.25%, 3/01/21		France		5,000,000			5,469,500
iArdagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A, 6.00%, 2/15/25		Luxembourg		4,000,000			4,070,000
iBWAY Holding Co., senior note, 144A, 7.25%, 4/15/25		United States		4,000,000			4,005,000
iCemex SAB de CV, first lien, 144A, 5.70%, 1/11/25		Mexico		6,000,000			6,312,990
iFirst Quantum Minerals Ltd., senior note, 144A, 7.25%, 4/01/23		Canada		2,800,000			2,857,750
iGlencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		4,700,000			5,055,527
LYB International Finance BV, senior note, 4.00%, 7/15/23		United States		18,400,000			19,340,884
Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23		United States		5,600,000			5,872,686
Reynolds Group Holdings Inc., senior bond, 8.125%, 6/15/17		United States		12,000,000			12,120,000
iReynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Luxembourg SA,
first lien, 144A, 5.125%, 7/15/23		United States		1,600,000			1,670,000
senior note, 144A, 7.00%, 7/15/24		United States		800,000			862,500
							67,636,837
Media 1.1%
21st Century Fox America Inc.,
senior bond, 6.90%, 8/15/39		United States		1,800,000			2,334,748
senior bond, 7.90%, 12/01/95		United States		500,000			663,680
senior note, 3.00%, 9/15/22		United States		5,100,000			5,173,782
senior note, 3.70%, 10/15/25		United States		2,300,000			2,361,297
iAltice U.S. Finance I Corp., senior secured bond, 144A, 5.50%, 5/15/26		United States		4,500,000			4,663,125
iCCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 144A, 5.375%, 5/01/25		United States		4,000,000			4,180,000
CSC Holdings LLC,
senior bond, 7.625%, 7/15/18		United States		3,000,000			3,183,749
senior note, 8.625%, 2/15/19		United States		9,000,000			9,936,450
NBCUniversal Media LLC, senior bond, 4.45%, 1/15/43		United States		8,100,000			8,238,761
iNexstar Broadcasting Inc., senior note, 144A, 5.625%, 8/01/24		United States		1,600,000			1,644,000
Time Warner Inc., senior bond, 6.10%, 7/15/40		United States		8,600,000			9,747,008
							52,126,600

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Pharmaceuticals, Biotechnology & Life Sciences 1.1%
Actavis Funding SCS, senior bond, 4.55%, 3/15/35		United States		13,400,000	$	13,561,189
Baxalta Inc., senior note, 3.60%, 6/23/22		United States		8,300,000		8,549,548
Biogen Inc., senior bond, 5.20%, 9/15/45		United States		9,200,000		10,017,475
PerkinElmer Inc., senior note, 5.00%, 11/15/21		United States		13,200,000		14,411,984
iValeant Pharmaceuticals International Inc.,
senior bond, 144A, 6.125%, 4/15/25		United States		4,800,000		3,561,600
senior note, 144A, 7.00%, 3/15/24		United States		400,000		409,000
						50,510,796
Real Estate 1.4%
American Tower Corp.,
senior bond, 3.50%, 1/31/23		United States		12,700,000		12,937,782
senior bond, 4.40%, 2/15/26		United States		9,400,000		9,889,900
ERP Operating LP, senior bond, 5.75%, 6/15/17		United States		881,000		885,301
MPT Operating Partnership LP/MPT Finance Corp., senior bond, 5.25%, 8/01/26		United States		1,100,000		1,133,000
Prologis LP, senior bond, 3.75%, 11/01/25		United States		9,400,000		9,724,826
Realty Income Corp., senior bond, 4.125%, 10/15/26		United States		12,500,000		12,982,400
Senior Housing Properties Trust, senior note, 6.75%, 12/15/21		United States		14,500,000		16,178,143
						63,731,352
Retailing 1.2%
Dollar General Corp., senior bond, 4.15%, 11/01/25		United States		12,700,000		13,259,308
Home Depot Inc., senior note, 2.125%, 9/15/26		United States		16,800,000		15,786,691
i,mK2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		2,121,493		201,542
i,mK2016740260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		South Africa		306,426		415,207
Tiffany & Co., senior bond, 4.90%, 10/01/44		United States		10,300,000		9,692,002
Toys R Us Inc., senior bond, 7.375%, 10/15/18		United States		17,225,000		16,277,625
						55,632,375
Semiconductors & Semiconductor Equipment 0.5%
Maxim Integrated Products Inc., senior note, 3.375%, 3/15/23		United States		22,000,000		22,232,826
Software & Services 0.5%
Alibaba Group Holding Ltd., senior bond, 4.50%, 11/28/34		China		10,000,000		10,506,500
iFirst Data Corp., secured note, first lien, 144A, 5.00%, 1/15/24		United States		4,000,000		4,106,000
Fiserv Inc., senior bond, 3.85%, 6/01/25		United States		9,300,000		9,652,498
						24,264,998
Technology Hardware & Equipment 1.1%
Cisco Systems Inc., senior note, 2.60%, 2/28/23		United States		12,000,000		12,081,564
iDiamond 1 Finance Corp./Diamond 2 Finance Corp., senior secured note, first lien, 144A, 3.48%, 6/01/19		United States		12,000,000		12,280,740
Juniper Networks Inc.,
senior bond, 4.50%, 3/15/24		United States		4,500,000		4,744,618
senior bond, 4.35%, 6/15/25		United States		9,300,000		9,674,622
iSanmina Corp., senior note, first lien, 144A, 4.375%, 6/01/19		United States		11,100,000		11,405,250
iWestern Digital Corp., senior secured note, 144A, 7.375%, 4/01/23		United States		1,200,000		1,317,000
						51,503,794

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Telecommunication Services 1.3%
AT&T Inc.,
senior bond, 4.50%, 5/15/35		United States		16,200,000		$	15,387,521
senior note, 3.95%, 1/15/25		United States		7,400,000			7,505,546
iHughes Satellite Systems Corp., senior bond, 144A, 6.625%, 8/01/26		United States		4,500,000			4,635,000
Sprint Communications Inc., senior note, 6.00%, 11/15/22		United States		3,000,000			3,133,125
Telefonica Emisiones S.A.U., senior note, 4.57%, 4/27/23		Spain		9,000,000			9,708,705
Verizon Communications Inc.,
senior bond, 4.522%, 9/15/48		United States		10,700,000			9,812,831
isenior bond, 144A, 4.812%, 3/15/39		United States		11,065,000			10,888,104
iWind Acquisition Finance SA, secured note, second lien, 144A, 7.375%, 4/23/21		Italy		800,000			833,776
							61,904,608
Transportation 0.3%
iAviation Capital Group Corp., senior bond, 144A, 7.125%, 10/15/20		United States		6,000,000			6,867,648
Burlington Northern and Santa Fe 99-2 Trust, secured bond, 7.57%, 1/02/21		United States		71,584			77,311
iDP World Ltd., senior bond, 144A, 6.85%, 7/02/37		United Arab Emirates		3,700,000			4,365,667
Union Pacific Railroad Co. 2005 Pass Trust, 2005-1, 5.082%, 1/02/29		United States		160,249			175,736
XPO CNW Inc., senior bond, 7.25%, 1/15/18		United States		4,300,000			4,450,500
							15,936,862
Utilities 2.3%
Commonwealth Edison Co., secured bond, 6.45%, 1/15/38		United States		700,000			927,002
Dominion Resources Inc., senior bond, 3.90%, 10/01/25		United States		12,200,000			12,582,311
iDynegy Inc., senior note, 144A, 8.00%, 1/15/25		United States		4,400,000			4,081,000
h,iEDF SA, sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		24,000,000			24,018,720
iEnogex LLC, senior note, 144A, 6.25%, 3/15/20		United States		5,000,000			5,385,910
Georgia Power Co., senior bond, 4.30%, 3/15/42		United States		9,000,000			8,996,031
Kinder Morgan Energy Partners LP, senior note, 6.85%, 2/15/20		United States		1,000,000			1,114,844
Sempra Energy, senior note, 3.75%, 11/15/25		United States		8,200,000			8,429,936
The Southern Co., senior bond, 3.25%, 7/01/26		United States		14,350,000			13,994,149
iState Grid Overseas Invesments 2016 Ltd., senior note, 144A, 3.50%, 5/04/27		China		10,700,000			10,693,687
iTalen Energy Supply LLC, senior note, 144A, 9.50%, 7/15/22		United States		4,200,000			3,937,500
gVeolia Environnement SA, senior bond, Reg S, 4.625%, 3/30/27		France		7,800,000	EUR		11,216,920
							105,378,010
Total Corporate Bonds (Cost $1,575,252,311)							1,590,336,401
j,nSenior Floating Rate Interests 2.4%
Automobiles & Components 0.1%
The Goodyear Tire & Rubber Co., Second Lien Term Loan, 2.99%, 4/30/19		United States		832,506			842,565
TI Group Automotive Systems LLC, Initial US Term Loan, 3.743%, 6/30/22		United States		1,480,525			1,491,629
							2,334,194

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
j,nSenior Floating Rate Interests (continued)
Capital Goods 0.1%
oAllison Transmission Inc., Term Loans, 2.99%, 9/23/22		United States		6,248,655	$	6,318,521
Harsco Corp., Initial Term Loan, 6.00%, 11/02/23		United States		273,916		279,907
Leidos (Abacus Innovations Corp.), B Term Loan, 3.25%, 8/16/23		United States		194,139		196,324
						6,794,752
Consumer Services 0.3%
Aristocrat Technologies Inc., Tranche B-2 Loans, 3.406%, 10/20/21		United States		158,005		159,549
Avis Budget Car Rental LLC, Tranche B Term Loan, 3.15%, 3/15/22		United States		5,102,305		5,115,699
oCaesars Entertainment Operating Co. LLC., Term B Loans, 5.75%, 8/31/24		United States		187,055		186,041
oEldorado Resorts Inc., Initial Term Loan, 5.25%, 4/17/24		United States		5,028,937		5,035,223
Fitness International LLC, Term A Loan, 4.243%, 4/01/20		United States		2,110,649		2,110,649
oGreektown Holdings LLC, Initial Term Loan, 6.00%, 4/25/24		United States		381,245		382,119
Prime Security Services Borrower LLC, 2016-2 Refinancing Term B-1 Loan, 4.25%, 5/02/22		United States		793,525		802,523
c,mTurtle Bay Holdings LLC, Term Loan B, PIK, 3.75%, 6/30/17		United States		707,584		697,855
						14,489,658
Diversified Financials 0.0%†
First Eagle Investment Management LLC, Initial Term Loans, 4.656%, 12/01/22		United States		473,252		475,766
Russell Investments US Institutional Holdco Inc., Initial Term Loan, 6.75%, 6/01/23		United States		322,931		326,160
						801,926
Energy 0.2%
Bowie Resource Holdings LLC,
oFirst Lien Initial Term Loan, 6.75%, 8/14/20		United States		3,037,710		2,956,703
Second Lien Initial Term Loan, 11.75%, 2/16/21		United States		592,359		546,747
oFieldwood Energy LLC, Loans, 3.875%, 10/01/18		United States		6,287,342		6,153,736
McDermott Finance LLC, Term Loan, 8.397%, 4/16/19		United States		140,697		142,896
						9,800,082
Food & Staples Retailing 0.1%
oAramark Corp., U.S. Term A Loan, 4.75%, 3/28/22		United States		3,142,154		3,152,957
Food, Beverage & Tobacco 0.1%
JBS USA LUX SA, New Initial Term Loans, 3.483%, 10/30/22		Brazil		4,210,869		4,231,266
Pinnacle Foods Finance LLC, Initial Term Loans, 2.983%, 2/03/24		United States		186,112		187,494
						4,418,760
Health Care Equipment & Services 0.0%†
Carestream Health Inc., Term Loan, 5.147%, 6/07/19		United States		583,088		579,626
Household & Personal Products 0.0%†
Spectrum Brands Inc., Term Loans, 2.852% - 3.486%, 6/23/22		United States		34,576		34,900
Materials 0.2%
Chemours Co., Tranche B-1 US Term Loans, 3.49%, 5/12/22		United States		3,184,851		3,206,250
Cyanco Intermediate Corp., Initial Term Loan, 5.50%, 5/01/20		United States		561,953		565,114
oFMG America Finance Inc. (Fortescue Metals Group), Loans, 3.75%, 6/30/19		Australia		2,187,900		2,204,043
Huntsman International LLC, 2015 Extended Term B Dollar Loan, 3.993%, 4/19/19		United States		470,218		472,765
OCI Beaumont LLC, Term B-3 Loan, 8.025%, 8/20/19		United States		1,034,839		1,067,178

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
j,nSenior Floating Rate Interests (continued)
Materials (continued)
oOxbow Carbon LLC, Tranche A Term Loan, 6.00%, 10/21/19		United States		720,000	$	720,900
						8,236,250
Media 0.1%
Altice US Finance I Corp., March 2017 Refinancing TL Commitments, 3.241%, 7/28/25		United States		234,911		234,969
AMC Entertainment Holdings Inc.,
2016 Incremental Term Commitments, 3.742%, 12/15/23		United States		91,305		92,070
Initial Term Loans, 3.744%, 12/15/22		United States		142,475		143,484
CSC Holdings LLC, March 2017 Incremental Term Loans, 3.244%, 7/17/25		United States		1,099,316		1,100,089
Lions Gate Entertainment Corp., Term A Loan, 3.482%, 12/08/21		United States		3,491,518		3,511,158
Live Nation Entertainment Inc., Term B-2 Loans, 3.50%, 10/31/23		United States		91,076		91,801
UPC Financing Partnership, Facility AP, 3.744%, 4/15/25		United States		287,840		289,244
						5,462,815
Pharmaceuticals, Biotechnology & Life Sciences 0.2%
oEndo Luxembourg Finance Co. I S.A.R.L and Endo LLC, Initial Term Loans, 7.25%, 4/27/24		United States		3,038,956		3,058,423
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 3.195%, 1/31/25		United States		2,446,842		2,457,552
RPI Finance Trust, Term A-2 Term Loan, 3.397%, 10/14/20		United States		347,181		347,832
Valeant Pharmaceuticals International Inc., Series F Tranche B Term Loan, 5.74%, 4/01/22		United States		1,499,535		1,509,063
						7,372,870
Retailing 0.2%
Ascena Retail Group Inc., Tranche B Term Loan, 5.50%, 8/21/22		United States		3,307,851		2,997,740
Dollar Tree Inc., Term A-1 Loans, 2.75%, 7/06/20		United States		596,559		594,874
oPetSmart Inc., Tranche B-2 Loans, 4.02%, 3/11/22		United States		7,217,357		6,662,523
						10,255,137
Semiconductors & Semiconductor Equipment 0.1%
MACOM Technology Solutions Holdings Inc., Initial Term Loans, 3.989%, 5/07/21		United States		240,813		244,426
MKS Instruments Inc., Tranche B-2 Term Loans, 3.743%, 5/01/23		United States		169,047		171,054
ON Semiconductor Corp., 2017 Replacement Term Loans, 3.243%, 3/31/23		United States		1,980,870		1,994,665
						2,410,145
Software & Services 0.1%
Global Payments Inc., Delayed Draw Term Loan (A-2), 3.196%, 10/31/21		United States		1,307,605		1,310,057
MoneyGram International Inc., Term Loan, 4.397%, 3/27/20		United States		2,669,347		2,675,465
Rackspace Hosting Inc., 2016 Refinancing Term B Loan, 4.535%, 11/03/23		United States		456,526		460,282
						4,445,804
Technology Hardware & Equipment 0.0%†
Dell International LLC, Term A-3 Loan, 3.00%, 12/31/18		United States		927,880		930,297
Western Digital Corp., US Term B-2 Loan, 3.743%, 4/29/23		United States		578,155		583,503
Zebra Technologies Corp., Second Amendment Refinancing Term Loan, 3.60%, 10/27/21		United States		365,964		369,967
						1,883,767

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*				Value
j,nSenior Floating Rate Interests (continued)
Telecommunication Services 0.0%†
Consolidated Communications Inc., Initial Term Loan, 4.00%, 10/05/23		United States		228,131			$	230,070
Global Tel*Link Corp., Term Loan, 5.00%, 5/23/20		United States		266,546				266,546
								496,616
Transportation 0.3%
Air Canada, Term Loan, 3.90%, 10/06/23		Canada		55,056				55,492
The Hertz Corp., Tranche B-1 Term Loan, 3.743%, 6/30/23		United States		3,989,950				3,999,613
Navios Maritime Midstream Partners LP and Navios Maritime
Midstream Partners Finance (US) Inc., Term Loan, 5.66%, 6/18/20		Marshall Islands		1,709,728				1,709,728
Navios Maritime Partners LP, Initial Term Loan, 6.13%, 9/14/20		Greece		3,000,000				2,964,999
United Air Lines Inc., Class B Term Loans, 3.422%, 4/01/24		United States		397,898				399,577
oXPO Logistics Inc., Loans, 3.405%, 11/01/21		United States		2,375,250				2,388,017
								11,517,426
Utilities 0.3%
Calpine Construction Finance Co. LP, Term B-1 Loan, 3.24%, 5/03/20		United States		7,710,790				7,739,706
EFS Cogen Holdings I LLC (Linden), Term B Advance, 4.65%, 6/28/23		United States		158,638				160,026
oLightstone Holdco LLC,
Initial Term B Loan, 5.539%, 1/30/24		United States		6,046,948				6,089,059
Initial Term C Loan, 5.50%, 1/30/24		United States		373,053				375,650
NRG Energy Inc., Term Loans, 3.243%, 6/30/23		United States		1,042,125				1,047,879
								15,412,320
Total Senior Floating Rate Interests (Cost $109,999,992)								109,900,005
Foreign Government and Agency Securities 2.5%
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20		South Korea		18,800,000				18,777,346
Government of Hungary,
6.00%, 1/11/19		Hungary		1,820,000		EUR		2,189,056
A, 6.75%, 11/24/17		Hungary		1,457,960,000		HUF		5,261,153
A, 5.50%, 12/20/18		Hungary		205,390,000		HUF		776,320
gsenior bond, Reg S, 3.875%, 2/24/20		Hungary		285,000		EUR		343,203
gsenior note, Reg S, 4.375%, 7/04/17		Hungary		215,000		EUR		236,255
gsenior note, Reg S, 5.75%, 6/11/18		Hungary		695,000		EUR		809,112
iGovernment of Lithuania, 144A, 7.375%, 2/11/20		Lithuania		4,670,000				5,322,142
Government of Mexico,
7.75%, 12/14/17		Mexico		2,600,000	p	MXN		13,905,633
M, 4.75%, 6/14/18		Mexico		2,940,000	p	MXN		15,280,426
senior note, 8.50%, 12/13/18		Mexico		2,000,000	p	MXN		10,899,503
iGovernment of Serbia, senior note, 144A, 4.875%, 2/25/20		Serbia		6,000,000				6,264,030
iGovernment of Spain, senior bond, 144A, 2.75%, 10/31/24		Spain		5,700,000		EUR		6,911,963
iGovernment of Ukraine,
144A, 7.75%, 9/01/20		Ukraine		292,000				295,840
144A, 7.75%, 9/01/21		Ukraine		229,000				229,149
144A, 7.75%, 9/01/22		Ukraine		229,000				226,137
144A, 7.75%, 9/01/23		Ukraine		229,000				222,565
144A, 7.75%, 9/01/24		Ukraine		229,000				219,246
144A, 7.75%, 9/01/25		Ukraine		229,000				217,972
144A, 7.75%, 9/01/26		Ukraine		229,000				216,268

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*				Value
Foreign Government and Agency Securities (continued)
iGovernment of Ukraine, (continued)
144A, 7.75%, 9/01/27		Ukraine		229,000			$	215,695
a,q144A, VRI, GDP Linked Security, 5/31/40		Ukraine		474,000				167,872
iGovernment of Vietnam, 144A, 6.75%, 1/29/20		Vietnam		5,120,000				5,606,400
Italy Treasury Bond, 2.50%, 12/01/24		Italy		6,000,000		EUR		6,849,944
rNota Do Tesouro Nacional, Index Linked, 6.00%, 8/15/18		Brazil		13,695	s	BRL		13,061,546
iPeru Enhanced Pass-Through Finance Ltd., senior secured bond, A-1, 144A, zero cpn., 5/31/18		Peru		217,859				213,804
Total Foreign Government and Agency Securities   (Cost $127,282,201)								114,718,580
U.S. Government and Agency Securities 17.4%
U.S. Treasury Bond,
6.25%, 8/15/23		United States		66,000,000				82,634,046
4.75%, 2/15/37		United States		21,000,000				27,749,526
2.875%, 5/15/43		United States		27,000,000				26,651,430
2.875%, 8/15/45		United States		5,000,000				4,915,820
2.50%, 2/15/46		United States		50,000,000				45,447,250
2.50%, 5/15/46		United States		60,000,000				54,485,160
2.25%, 8/15/46		United States		55,000,000				47,205,510
tIndex Linked, 2.375%, 1/15/25		United States		21,321,483				24,685,758
U.S. Treasury Note,
1.375%, 12/31/18		United States		50,000,000				50,114,250
3.625%, 2/15/21		United States		25,000,000				26,833,500
3.125%, 5/15/21		United States		90,000,000				95,036,130
2.125%, 6/30/21		United States		50,000,000				50,837,900
2.00%, 8/31/21		United States		30,000,000				30,322,860
2.125%, 12/31/21		United States		23,000,000				23,345,897
2.00%, 11/30/22		United States		36,900,000				37,036,936
2.125%, 12/31/22		United States		55,500,000				56,036,574
2.125%, 3/31/24		United States		35,200,000				35,272,195
2.00%, 11/15/26		United States		10,000,000				9,759,770
tIndex Linked, 0.125%, 7/15/24		United States		76,423,822				76,096,957
Total U.S. Government and Agency Securities   (Cost $812,683,257)								804,467,469
Asset-Backed Securities and Commercial   Mortgage-Backed Securities 16.5%
Banks 1.2%
Banc of America Commercial Mortgage Trust, 2006-4, AJ, 5.695%, 7/10/46		United States		3,805,088				3,798,117
Bear Stearns Commercial Mortgage Securities Trust,
2006-PW13, AJ, 5.611%, 9/11/41		United States		751,499				751,041
j2007-PW16, AM, FRN, 5.655%, 6/11/40		United States		1,777,044				1,776,738
Citigroup Commercial Mortgage Trust, 2006-C5, AJ, 5.482%, 10/15/49		United States		8,154,362				7,733,336
jCommercial Mortgage Trust, 2006-GG7, AJ, FRN, 5.759%, 7/10/38		United States		8,491,000				7,199,702
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19		United States		461,922				474,486
i,jCSMC, 2009-15R, 3A1, 144A, FRN, 3/26/36		United States		3,071,398				3,056,065
jCWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 1.741%, 3/25/34		United States		1,532,756				1,490,395

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial   Mortgage-Backed Securities (continued)
Banks (continued)
jFNMA, 2005-122, FN, FRN, 1.341%, 1/25/36		United States		473,637	$	474,412
jGE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49		United States		4,325,000		4,304,719
jGreenwich Capital Commercial Funding Corp., 2006-GG7, AM, FRN, 5.759%, 7/10/38		United States		1,975,556		1,975,340
j,uJP Morgan Chase Commercial Mortgage Securities Trust, 2006-CB16, B, FRN, 5.672%, 5/12/45		United States		6,745,000		832,164
jMerrill Lynch Mortgage Investors Trust, 2003-A, 1A, FRN, 1.731%, 3/25/28		United States		1,378,917		1,315,949
jMorgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 1.726%, 1/25/35		United States		1,583,570		1,564,696
jMorgan Stanley Capital I Trust,
2006-HQ8, AJ, FRN, 5.45%, 3/12/44		United States		2,490,945		2,497,554
2007-IQ16, AM, FRN, 6.11%, 12/12/49		United States		16,470,000		16,723,720
vWeyerhaeuser Mortgage Co., 1984-A, 7.43%, 1/01/24		United States		14,906		14,906
						55,983,340
Diversified Financials 15.0%
jAmerican Home Mortgage Investment Trust, 2004-3, 4A, FRN, 2.861%, 10/25/34		United States		1,694,848		1,657,414
jAmeriquest Mortgage Securities Inc. Asset-Backed Pass-Through
Certificates, 2004-R4, M1, FRN, 1.816%, 6/25/34		United States		5,431,149		5,344,324
iApidos CDO, 2013-14A, C2, 144A, 4.85%, 4/15/25		United States		8,740,000		8,780,728
i,jARCap REIT Inc., 2004-RR3, A2, 144A, FRN, 5.751%, 9/21/45		United States		2,932,172		2,963,223
i,jAres Enhanced Loan Investment Strategy IR Ltd., 2013-IRAR, BR, 144A, FRN, 4.053%, 7/23/25		United States		900,000		906,453
jArgent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 1.351%, 10/25/35		United States		3,771,417		3,707,565
i,jAtrium X,
10A, A, 144A, FRN, 2.278%, 7/16/25		United States		3,890,000		3,887,238
10A, C, 144A, FRN, 3.758%, 7/16/25		United States		4,650,000		4,675,203
i,jBallyrock CLO LLC, 2014-1A, BR, 144A, FRN, 3.256%, 10/20/26		United States		10,000,000		10,020,100
jBear Stearns ALT-A Trust, 2004-13, A2, FRN, 1.871%, 11/25/34		United States		840,364		811,924
i,jBluemountain CLO Ltd., 2014, CL 3A, 144A, FRN, 2.298%, 10/15/26		Cayman Islands		8,100,000		8,109,882
i,jBlueMountain CLO Ltd., 2013-3A, A, 144A, FRN, 2.439%, 10/29/25		United States		2,638,970		2,640,369
i,jCarlyle Global Market Strategies CLO Ltd.,
2012-4A, AR, 144A, FRN, 2.606%, 1/20/29		United States		6,280,000		6,327,163
2014-3A, A1AR, 144A, FRN, 2.32%, 7/27/26		Cayman Islands		1,250,000		1,251,875
i,jCarlyle U.S. CLO Ltd., 2017-1A, A1A, 144A, FRN, 2.391%, 4/20/31		United States		18,800,000		18,868,620
i,jCatamaran CLO Ltd., 2014-2A, BR, 144A, FRN, 4.108%, 10/18/26		Cayman Islands		6,401,000		6,416,746
i,jCent CDO Ltd.,
2007-15A, A2B, 144A, FRN, 1.46%, 3/11/21		United States		5,686,824		5,506,608
2007-15A, B, 144A, FRN, 1.84%, 3/11/21		United States		8,500,000		8,252,905
i,jCent CLO, 2013-17A, A1, 144A, FRN, 2.339%, 1/30/25		United States		16,246,000		16,278,005
i,jCent CLO 20 Ltd.,
13-20A, AR, 144A, FRN, 2.256%, 1/25/26		Cayman Islands		8,000,000		8,000,000
13-20A, CR, 144A, FRN, 3.506%, 1/25/26		Cayman Islands		3,500,000		3,500,000
i,jCent CLO LP,
2013-17A, B, 144A, FRN, 4.039%, 1/30/25		United States		3,500,000		3,508,260
2014-22A, A1R, 144A, FRN, 2.444%, 11/07/26		United States		6,280,000		6,305,183

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial
Mortgage-Backed Securities (continued)
Diversified Financials (continued)
jChase Funding Trust, 2004-2, 2A2, FRN, 1.491%, 2/26/35		United States		625,033	$	578,634
i,jCitigroup Mortgage Loan Trust, 2013-A, A, 144A, FRN, 3.00%, 5/25/42		United States		2,500,046		2,498,514
i,jColony American Homes,
2014-1A, A, 144A, FRN, 2.144%, 5/17/31		United States		9,332,437		9,347,243
2014-2A, C, 144A, FRN, 2.884%, 7/17/31		United States		10,105,000		10,120,265
Conseco Financial Corp., 1996-9, M1, 7.63%, 8/15/27		United States		2,562,561		2,781,702
i,jDryden 31 Senior Loan Fund, 2014-31A, AR, 144A, FRN, 2.238%, 4/18/26		Cayman Islands		1,200,000		1,198,560
i,jDryden 33 Senior Loan Fund, 2014-33A, AR, 144A, FRN, 2.588%, 10/15/28		Cayman Islands		12,185,000		12,270,173
i,jDryden 34 Senior Loan Fund, 14-34A, AR, 144A, FRN, 2.318%, 10/15/26		Cayman Islands		19,310,000		19,316,952
i,jDryden 38 Senior Loan Fund, 2015-38A, A, 144A, FRN, 2.588%, 7/15/27		Cayman Islands		21,757,143		21,886,380
i,jEaton Vance CDO Ltd., 2014-1A, AR, 144A, FRN, 2.358%, 7/15/26		United States		10,096,000		10,100,644
i,jEleven Madison Trust Mortgage Trust, 2015-11MD, A, 144A, FRN, 3.555%, 9/10/35		United States		3,255,000		3,388,677
jFHLMC Structured Agency Credit Risk Debt Notes,
2014-DN1, M2, FRN, 3.191%, 2/25/24		United States		3,430,000		3,529,201
2014-DN3, M3, FRN, 4.991%, 8/25/24		United States		10,978,000		11,956,078
2014-DN4, M3, FRN, 5.541%, 10/25/24		United States		9,500,000		10,480,731
2015-DN1, M3, FRN, 5.141%, 1/25/25		United States		14,610,000		15,908,109
2015-DNA2, M3, FRN, 4.891%, 12/25/27		United States		15,000,000		16,645,347
2015-DNA3, M2, FRN, 3.841%, 4/25/28		United States		25,272,791		26,254,636
2015-HQ1, M3, FRN, 4.791%, 3/25/25		United States		23,111,666		25,097,092
2015-HQA1, M2, FRN, 3.641%, 3/25/28		United States		29,969,642		30,778,990
2015-HQA2, M2, FRN, 3.791%, 5/25/28		United States		3,718,356		3,845,417
2016-DNA1, M2, FRN, 3.891%, 7/25/28		United States		6,800,000		7,094,331
2016-DNA2, M2, FRN, 3.191%, 10/25/28		United States		35,270,000		36,084,815
2016-HQA1, M2, FRN, 3.741%, 9/25/28		United States		13,900,000		14,472,861
2016-HQA2, M2, FRN, 3.241%, 11/25/28		United States		22,018,000		22,773,217
2016-HQA3, M2, FRN, 2.341%, 3/25/29		United States		2,250,000		2,276,392
jFNMA Connecticut Avenue Securities,
2014-C02, 2M2, FRN, 3.591%, 5/25/24		United States		3,830,000		3,984,649
2014-C03, 1M2, FRN, 3.991%, 7/25/24		United States		9,960,000		10,485,376
2014-C04, 1M1, FRN, 5.891%, 11/25/24		United States		7,079,000		8,081,698
2014-C04, 2M2, FRN, 5.991%, 11/25/24		United States		4,166,394		4,678,970
2015-C01, 1M2, FRN, 5.291%, 2/25/25		United States		4,899,366		5,353,230
2015-C01, 2M2, FRN, 5.541%, 2/25/25		United States		22,049,478		23,941,288
2015-C02, 1M2, FRN, 4.991%, 5/25/25		United States		9,216,434		9,997,803
2015-C02, 2M2, FRN, 4.991%, 5/25/25		United States		4,886,634		5,244,668
2015-C03, 1M2, FRN, 5.991%, 7/25/25		United States		9,946,001		11,043,729
2017-C01, 1B1, FRN, 6.741%, 7/25/29		United States		5,375,000		5,746,781
i,jGalaxy XV CLO Ltd., 2013-15A, A, 144A, FRN, 2.408%, 4/15/25		United States		15,465,000		15,495,466
iG-Force LLC, 2005-RRA, C, 144A, 5.20%, 8/22/36		United States		9,275,000		9,105,174
uGMAC Commercial Mortgage Securities Inc. Trust, 2005-C1, B, 4.936%, 5/10/43		United States		8,991,659		471,605
jGSAA Home Equity Trust, 2005-5, M3, FRN, 1.936%, 2/25/35		United States		3,285,236		3,191,520
iHighbridge Loan Management Ltd., 2013-2A, B2, 144A, 5.80%, 10/20/24		United States		2,620,000		2,644,235

90         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial
Mortgage-Backed Securities (continued)
Diversified Financials (continued)
jHome Equity Mortgage Trust, 2004-4, M3, FRN, 1.966%, 12/25/34		United States		2,808,566	$	2,705,290
i,jInvitation Homes Trust,
2014-SFR3, C, 144A, FRN, 3.494%, 12/17/31		United States		1,250,000		1,251,925
2015-SFR1, B, 144A, FRN, 2.844%, 3/17/32		United States		7,400,000		7,421,406
2015-SFR2, C, 144A, FRN, 2.994%, 6/17/32		United States		2,340,000		2,349,093
2015-SFR3, C, 144A, FRN, 2.994%, 8/17/32		United States		10,402,000		10,444,433
JP Morgan Chase Commercial Mortgage Securities Trust, 2006-CB17, AM, 5.464%, 12/12/43		United States		801,669		801,501
i,jKatonah Ltd., 2007-IA, A2L, 144A, FRN, 2.653%, 4/23/22		United States		5,416,684		5,417,063
jMerrill Lynch Mortgage Investors Trust, 2004-A1, M1, FRN, 2/25/34		United States		1,487,050		1,191,977
i,jNZCG Funding Ltd., 2015-2A, A1, 144A, FRN, 2.72%, 4/27/27		United States		18,215,625		18,243,495
i,jOctagon Investment Partners 24 Ltd., 2015-1A, A1, 144A, FRN, 2.502%, 5/21/27		United States		10,530,000		10,576,964
i,j,kOctagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 0.00%, 8/12/26		Cayman Islands		4,000,000		4,000,000
i,jOctagon Investment Partners XXIII Ltd.,
2015-1A, A1, 144A, FRN, 2.578%, 7/15/27		United States		7,581,042		7,603,785
2015-1A, A2, 144A, FRN, 2.578%, 7/15/27		United States		7,197,192		7,218,784
jStructured Asset Securities Corp., 2002-1A, 2A1, FRN, 2.617%, 2/25/32		United States		20,275		18,557
i,jTowd Point Mortgage Trust, 2017-1, A2, 144A, FRN, 3.50%, 10/25/56		United States		8,862,000		9,054,472
i,jVoya CLO Ltd.,
2014-4A, A1, 144A, FRN, 2.658%, 10/14/26		Cayman Islands		7,620,000		7,629,144
2015-1A, A1, 144A, FRN, 2.638%, 4/18/27		United States		7,745,000		7,768,235
Wells Fargo Mortgage Backed Securities Trust,
j2004-W, A9, FRN, 3.004%, 11/25/34		United States		1,378,856		1,398,503
u2007-3, 3A1, 5.50%, 4/25/22		United States		206,752		211,605
i,jWest CLO Ltd.,
2014-1A, A2, 144A, FRN, 3.258%, 7/18/26		United States		2,860,000		2,875,473
2014-1A, B, 144A, FRN, 4.008%, 7/18/26		United States		7,540,000		7,562,545
i,jWestchester CLO Ltd., 2007-1A, A1A, 144A, FRN, 1.259%, 8/01/22		United States		170,649		170,601
i,jZiggurat CLO I Ltd., 2014-1A, C, 144A, FRN, 4.258%, 10/17/26		United States		2,000,000		2,006,340
						695,792,132
Real Estate 0.3%
iColony MFM Trust, 2014-1, A, 144A, 2.543%, 4/20/50		United States		5,912,318		5,889,894
i,jTricon American Homes Trust, 2015-SFR1, C, 144A, FRN, 2.894%, 5/17/32		United States		8,170,000		8,157,890
						14,047,784
Total Asset-Backed Securities and Commercial
Mortgage-Backed Securities (Cost $765,636,711)						765,823,256
Mortgage-Backed Securities 20.9%
jFederal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.1%
FHLMC, 1.866%, 11/01/27		United States		1,708,522		1,721,095
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 10.6%
FHLMC 30 Year, 6.00%, 6/01/37		United States		49,975		56,650
FHLMC 30 Year, 6.50%, 8/01/25 - 11/01/31		United States		92,200		102,500
FHLMC 30 Year, 7.00%, 7/01/31		United States		6,570		6,928

franklintempleton.com Semiannual Report         91

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Mortgage-Backed Securities (continued)
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate (continued)
FHLMC 30 Year, 8.00%, 2/01/30		United States		25,480	$	30,020
FHLMC 30 Year, 8.50%, 10/01/24		United States		5,094		5,729
FHLMC Gold 15 Year, 5.00%, 10/01/17 - 9/01/18		United States		16,100		16,529
FHLMC Gold 15 Year, 5.50%, 11/01/22		United States		121,332		126,760
FHLMC Gold 15 Year, 6.00%, 10/01/21 - 9/01/22		United States		378,080		400,123
FHLMC Gold 30 Year, 3.00%, 9/01/46		United States		110,962,303		110,929,713
FHLMC Gold 30 Year, 3.50%, 8/01/46		United States		79,699,231		82,048,355
FHLMC Gold 30 Year, 3.50%, 12/01/46		United States		19,609,436		20,187,421
wFHLMC Gold 30 Year, 3.50%, 5/01/47		United States		15,300,000		15,733,365
FHLMC Gold 30 Year, 4.00%, 3/01/47		United States		224,296,091		236,411,878
FHLMC Gold 30 Year, 4.50%, 3/01/39		United States		2,360,245		2,546,223
FHLMC Gold 30 Year, 5.00%, 8/01/33 - 2/01/39		United States		13,858,918		15,160,140
FHLMC Gold 30 Year, 5.50%, 1/01/35 - 12/01/37		United States		1,168,028		1,296,375
FHLMC Gold 30 Year, 6.00%, 5/01/33 - 4/01/38		United States		1,521,689		1,725,682
FHLMC Gold 30 Year, 6.50%, 4/01/28 - 3/01/39		United States		1,136,331		1,279,807
FHLMC Gold 30 Year, 7.00%, 1/01/28 - 7/01/32		United States		86,219		98,741
FHLMC Gold 30 Year, 7.50%, 3/01/32		United States		20,774		24,451
FHLMC Gold 30 Year, 8.50%, 8/01/30		United States		3,780		4,561
FHLMC Gold 30 Year, 9.00%, 1/01/22		United States		797		805
FHLMC Gold 30 Year, 10.00%, 10/01/30		United States		9,189		9,237
						488,201,993
jFederal National Mortgage Association (FNMA) Adjustable Rate 0.1%
FNMA, 1.869% - 4.107%, 12/01/24 - 3/01/37		United States		5,844,416		6,085,538
Federal National Mortgage Association (FNMA) Fixed Rate 6.3%
FNMA 15 Year, 4.50%, 3/01/19 - 6/01/19		United States		64,854		66,577
FNMA 15 Year, 5.00%, 6/01/18 - 7/01/18		United States		30,707		31,539
FNMA 15 Year, 5.50%, 9/01/17 - 12/01/23		United States		157,595		165,019
FNMA 15 Year, 6.00%, 6/01/17 - 9/01/22		United States		62,139		64,474
FNMA 30 Year, 3.00%, 8/01/46		United States		109,757,655		109,765,483
FNMA 30 Year, 3.50%, 7/01/46		United States		115,408,550		118,818,280
FNMA 30 Year, 3.50%, 12/01/46		United States		18,664,463		19,215,903
wFNMA 30 Year, 3.50%, 5/01/47		United States		10,000,000		10,283,593
wFNMA 30 Year, 4.00%, 5/01/47		United States		10,000,000		10,532,812
FNMA 30 Year, 5.00%, 6/01/36 - 5/01/39		United States		2,252,078		2,468,332
FNMA 30 Year, 5.50%, 6/01/33 - 8/01/37		United States		7,648,742		8,612,129
FNMA 30 Year, 6.00%, 9/01/32 - 9/01/38		United States		10,250,890		11,629,028
FNMA 30 Year, 6.50%, 8/01/28 - 5/01/37		United States		271,547		303,346
FNMA 30 Year, 7.00%, 11/01/25		United States		3,772		3,813
FNMA 30 Year, 7.50%, 1/01/30		United States		14,487		17,302
FNMA 30 Year, 8.50%, 4/01/30 - 5/01/32		United States		83,225		101,947
FNMA 30 Year, 9.00%, 11/01/26 - 5/01/27		United States		103,425		111,432
						292,191,009
jGovernment National Mortgage Association (GNMA) Adjustable Rate 0.0%†
GNMA, 2.00% - 2.25%, 1/20/23 - 10/20/26		United States		45,983		47,422

92         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Mortgage-Backed Securities (continued)
Government National Mortgage Association (GNMA) Fixed Rate 3.8%
GNMA I SF 30 Year, 6.00%, 1/15/39		United States		229,145	$	260,441
GNMA I SF 30 Year, 6.50%, 10/15/31 - 7/15/38		United States		40,249		45,400
GNMA I SF 30 Year, 7.00%, 10/15/27 - 6/15/31		United States		37,705		43,018
GNMA I SF 30 Year, 7.50%, 1/15/22 - 5/15/26		United States		92,206		95,246
GNMA I SF 30 Year, 9.00%, 9/15/25 - 1/15/31		United States		1,606		1,660
GNMA II SF 30 Year, 3.00%, 8/20/46		United States		76,217,962		77,358,341
GNMA II SF 30 Year, 3.50%, 2/20/47		United States		85,967,419		89,465,210
wGNMA II SF 30 Year, 3.50%, 5/01/47		United States		9,000,000		9,351,211
GNMA II SF 30 Year, 6.00%, 5/20/31		United States		5,217		6,025
GNMA II SF 30 Year, 6.50%, 3/20/28 - 7/20/38		United States		515,374		594,056
GNMA II SF 30 Year, 7.50%, 8/20/30 - 1/20/33		United States		56,184		66,134
						177,286,742
Total Mortgage-Backed Securities (Cost $977,446,313)						965,533,799
Municipal Bonds 2.0%
California State GO,
Refunding, 5.00%, 9/01/29		United States		1,730,000		2,063,976
Various Purpose, 6.00%, 11/01/39		United States		2,385,000		2,674,921
California Statewide CDA, PCR, Southern California Edison Co., Mandatory Put 12/01/23, Refunding, Series D, 2.625%, 11/01/33		United States		400,000		410,848
Chicago Transit Authority Sales and Transfer Tax Receipts Revenue, Pension Funding, Series A, 6.899%, 12/01/40		United States		800,000		1,000,456
Clark County School District GO, Refunding, Series D, 5.00%, 6/15/23		United States		1,500,000		1,768,245
Connecticut State GO, Series B, 5.00%, 4/15/18		United States		650,000		674,011
Denver City and County Airport System Revenue, Refunding, Series A, 5.00%, 11/15/25		United States		215,000		260,113
Industry Public Facilities Authority Tax Allocation Revenue, Transportation District, Industrial Redevelopment Project No. 2, Refunding, Series B, AGMC Insured, 4.294%, 1/01/23		United States		10,000,000		10,308,000
Minnesota State GO,
Refunding, Series D, 5.00%, 8/01/25		United States		860,000		1,055,908
Various Purpose, Refunding, Series F, 4.00%, 10/01/24		United States		5,760,000		6,490,483
New Jersey EDA Revenue, School Facilities Construction, Refunding, Series NN, 5.00%, 3/01/30		United States		3,300,000		3,353,097
New York State Dormitory Authority State Personal Income Tax Revenue, General Purpose, Refunding, Series A, 5.00%, 2/15/25		United States		950,000		1,133,236
Port Authority of New York and New Jersey Revenue,
Consolidated, One Hundred Ninety-First Series, 4.823%, 6/01/45		United States		4,570,000		4,829,896
Consolidated, Refunding, One Hundred Ninety-Second Series, 4.81%, 10/15/65		United States		15,000,000		16,541,400
Providence St. Joseph Health Obligated Group, 2.746%, 10/01/26		United States		8,875,000		8,503,031
Puerto Rico Electric Power Authority Power Revenue, Series A, 6.75%, 7/01/36		United States		12,000,000		8,550,000
Texas State GO, Transportation Commission-Highway Improvement, Series A, 5.00%, 4/01/26		United States		8,215,000		10,066,990
University of California Revenue, Limited Project, Refunding, Series J, 4.131%, 5/15/45		United States		10,750,000		10,719,685

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Municipal Bonds (continued)
University of Texas Revenue, Series J, 5.00%, 8/15/25		United States		1,000,000	$	1,222,800
Total Municipal Bonds (Cost $92,217,460)						91,627,096
			Shares
Escrows and Litigation Trusts 0.0%
a,vMotors Liquidation Co., Escrow Account, cvt. pfd., C		United States		43,500		—
a,vNewPage Corp., Litigation Trust		United States		2,500,000		—
Total Escrows and Litigation Trusts (Cost $2,307)						—
Total Investments before Short Term Investments   (Cost $4,607,845,825)						4,588,263,556
Short Term Investments (Cost $70,776,511) 1.5%
Money Market Funds 1.5%
e,xInstitutional Fiduciary Trust Money Market Portfolio, 0.37%		United States		70,776,511		70,776,511
Total Investments (Cost $4,678,622,336) 100.7%						4,659,040,067
Other Assets, less Liabilities (0.7)%						(33,551,310	)
Net Assets 100.0%					$	4,625,488,757

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bThe security is owned by FT Holdings Corporation I, a wholly-owned subsidiary of the Fund. See Note 1(g).

^cAt April 30, 2017, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund is restricted from trading these securities at period end.

^dSee Note 8 regarding restricted securities.

^eSee Note 3(f) regarding investments in affiliated management investment companies.

^fVariable rate security. The rate shown represents the yield at period end.

^gSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At April 30, 2017, the aggregate value of these securities was $36,571,573, representing 0.8% of net assets.

^hPerpetual security with no stated maturity date.

ⁱSecurity 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 April 30, 2017, the aggregate value of these securities was $745,699,878, representing 16.1% of net assets.

^jThe coupon rate shown represents the rate at period end.

^kSecurity purchased on a when-issued basis. See Note 1(c).

^lSee Note 1(f) regarding loan participation notes.

^mIncome may be received in additional securities and/or cash.

ⁿSee Note 1(i) regarding senior floating rate interests.

^oA portion or all of the security purchased on a delayed delivery basis. See Note 1(c).

^pPrincipal amount is stated in 100 Mexican Peso Units.

^qThe principal represents the notional amount. See Note 1(d) regarding value recovery instruments.

^rRedemption price at maturity is adjusted for inflation. See Note 1(k).

^sPrincipal amount is stated in 1,000 Brazilian Real Units.

^tPrincipal amount of security is adjusted for inflation. See Note 1(k).

^uThe bond pays interest and/or principal based upon the issuer’s ability to pay, which may be less than the stated interest rate or principal paydown.

^vSecurity has been deemed illiquid because it may not be able to be sold within seven days. At April 30, 2017, the aggregate value of these securities was $14,906, representing less than 0.1% of net assets.

^wSecurity purchased on a to-be-announced (TBA) basis. See Note 1(c).

^xThe rate shown is the annualized seven-day yield at period end.

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

At April 30, 2017, the Fund had the following futures contracts outstanding. See Note 1(d).

Futures Contracts

Description	Type		Number of Contracts		Notional Value		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
Interest Rate Contracts
Australian 10 Yr. Bond		Long		650		$  63,132,692		6/15/17		$1,857,084		$          —
Canadian 10 Yr. Bond		Long		207		21,165,594		6/21/17		474,221		—
Euro-Bund		Short		120		21,147,236		6/08/17		—		(62,997	)
Long Gilt		Long		380		63,136,292		6/28/17		1,082,299		—
U.S. Treasury 2 Yr. Note		Long		101		21,877,547		6/30/17		31,262		—
U.S. Treasury 5 Yr. Note		Long		1,359		160,914,094		6/30/17		1,300,082		—
U.S. Treasury 10 Yr. Ultra		Long		200		27,090,625		6/21/17		691,658		—
U.S. Treasury 30 Yr. Bond		Long		960		146,850,000		6/21/17		3,170,314		—
Total Futures Contracts										$8,606,920		$(62,997)
Net unrealized appreciation (depreciation)										$8,543,923

At April 30, 2017, the Fund had the following forward exchange contracts outstanding. See Note 1(d).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract   Amount*		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Australian Dollar		DBAB		Sell		9,789,527		7,262,263		5/18/17	$	—	$	(64,904	)
Australian Dollar		DBAB		Sell		33,150,000		24,985,155		5/18/17		173,376		—
Australian Dollar		JPHQ		Sell		36,198,000		27,445,324		5/18/17		352,208		—
British Pound		DBAB		Sell		15,900,000		19,878,180		5/18/17		—		(729,330	)
Canadian Dollar		JPHQ		Sell		11,500,000		8,655,000		5/18/17		227,087		—
Euro		BZWS		Sell		4,446,931		4,967,208		5/18/17		118,054		—
Euro		CITI		Sell		3,200,070		3,587,448		5/18/17		97,934		—
Euro		DBAB		Buy		3,683,229		4,048,606		5/18/17		—		(32,231	)
Euro		DBAB		Buy		85,572,473		91,214,308		5/18/17		2,098,142		—
Euro		DBAB		Sell		89,423,576		95,649,576		5/18/17		—		(1,862,309	)
Euro		DBAB		Sell		108,263,979		121,524,151		5/18/17		3,467,760		—
Euro		GSCO		Sell		1,024,000		1,150,566		5/18/17		33,946		—
Euro		HSBK		Sell		267,000		296,343		5/18/17		5,193		—
Euro		JPHQ		Sell		6,587,940		7,061,733		5/18/17		—		(122,082	)
Euro		JPHQ		Sell		30,245,583		33,837,258		5/18/17		855,980		—
Hungarian Forint		DBAB		Buy		3,092,050,000		10,519,324		5/18/17		242,558		—
Hungarian Forint		DBAB		Sell		4,332,000,000		15,500,215		5/18/17		422,686		—
Hungarian Forint		JPHQ		Sell		935,000,000		3,364,641		5/18/17		110,373		—
Indian Rupee		DBAB		Buy		631,935,000		9,092,590		5/18/17		714,482		—
Indian Rupee		JPHQ		Buy		260,000,000		3,768,116		5/18/17		266,854		—
Indonesian Rupiah		DBAB		Buy		139,844,100,000		10,237,489		5/18/17		233,803		—
Japanese Yen		JPHQ		Sell		852,000,000		8,570,356		5/18/17		918,831		—
Japanese Yen		JPHQ		Sell		900,000,000		7,939,238		5/18/17		—		(143,360	)
Mexican Peso		JPHQ		Buy		783,000,000		37,618,749		5/18/17		3,815,303		—
Mexican Peso		JPHQ		Sell		195,000,000		10,497,416		5/18/17		178,591		—
Mexican Peso		JPHQ		Sell		245,000,000		11,820,331		5/18/17		—		(1,144,347	)
Philippine Peso		JPHQ		Buy		177,480,000		3,602,192		5/18/17		—		(71,692	)
Singapore Dollar		JPHQ		Sell		13,800,000		9,805,315		5/18/17		—		(74,528	)

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract   Amount*			Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
South Korean Won		JPHQ		Sell		11,300,000,000		9,677,143			5/18/17	$	—	$	(259,689	)
Japanese Yen		DBAB		Sell		1,515,000,000		13,971,246			10/23/17		263,340		—
Japanese Yen		JPHQ		Sell		3,740,000,000		34,513,944			10/23/17		673,966		—
British Pound		JPHQ		Sell		6,600,000		75,781,420	SEK		10/26/17		46,316		—
Japanese Yen		JPHQ		Sell		1,400,000,000		12,917,274			1/23/19		—		(88,995	)
Total Forward Exchange Contracts												$	15,316,783	$	(4,593,467	)
Net unrealized appreciation (depreciation)												$	10,723,316

*In U.S. dollars unless otherwise indicated.

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

At April 30, 2017, the Fund had the following credit default swap contracts outstanding. See Note 1(d).

Credit Default Swap Contracts

Description	Periodic Payment Rate			Counter- party/ Exchange		Notional Amounta		Expiration Date		Unamortized Upfront Payments (Receipts)			Unrealized Appreciation		Unrealized Depreciation			Value			Ratingb
Centrally Cleared Swap Contracts
Contracts to Buy Protection
Single Name
Olin Corp.		1.00	%		ICE	$	3,800,000		12/20/21	$	93,085		$	—	$	(4,009	)	$	89,076
Contracts to Sell Protectionc
Traded Index
CDX.NA.IG.24		1.00	%		ICE		25,000,000		6/20/25		(47,676	)		49,455		—			1,779			Investment Grade
CDX.NA.IG.28		1.00	%		ICE		32,400,000		6/20/22		569,149			38,172		—			607,321			Investment Grade
Total Centrally Cleared Swap Contracts										$	614,558		$	87,627	$	(4,009	)	$	698,176
OTC Swap Contracts
Contracts to Buy Protection
Single Name
The AES Corp.		5.00	%		JPHQ	$	14,100,000		6/20/21	$	(1,298,842	)	$	—	$	(647,853	)	$	(1,946,695	)
The AES Corp.		5.00	%		JPHQ		13,275,000		6/20/22		(1,845,199	)		—		(56,923	)		(1,902,122	)
Avon Products Inc.		5.00	%		GSCO		18,500,000		3/20/20		1,754,401			—		(3,013,153	)		(1,258,752	)
Beazer Homes USA Inc.		5.00	%		CITI		4,000,000		6/20/19		(100,738	)		—		(256,995	)		(357,733	)
Beazer Homes USA Inc.		5.00	%		FBCO		9,700,000		6/20/19		(838,469	)		—		(29,033	)		(867,502	)
Beazer Homes USA Inc.		5.00	%		GSCO		5,000,000		6/20/19		(132,889	)		—		(314,277	)		(447,166	)
Best Buy Co. Inc.		5.00	%		CITI		4,600,000		6/20/22		(743,849	)		—		(76,728	)		(820,577	)
Constellation Brands Inc.		5.00	%		BZWS		3,000,000		6/20/17		(12,816	)		—		(25,668	)		(38,484	)
Constellation Brands Inc.		5.00	%		DBAB		2,000,000		6/20/17		(8,603	)		—		(17,053	)		(25,656	)
CSC Holdings LLC		5.00	%		GSCO		3,000,000		9/20/18		(85,936	)		—		(122,224	)		(208,160	)
CSC Holdings LLC		5.00	%		GSCO		9,000,000		3/20/19		(225,000	)		—		(571,585	)		(796,585	)
El Paso Corp.		5.00	%		GSCO		1,100,000		6/20/17		(5,798	)		—		(8,298	)		(14,096	)

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

Credit Default Swap Contracts (continued)

Description	Periodic Payment Rate			Counter- party/ Exchange		Notional Amounta		Expiration Date		Unamortized Upfront Payments (Receipts)			Unrealized Appreciation		Unrealized Depreciation			Value			Ratingb
OTC Swap Contracts (continued)
Contracts to Buy Protection (continued)
Single Name (continued)
Kinder Morgan Energy Partners LP		5.00	%		CITI	$	1,000,000		3/20/20	$	(125,550	)	$	—	$	(13,108	)	$	(138,658	)
Lennar Corp.		5.00	%		FBCO		4,500,000		9/20/19		(314,856	)		—		(174,720	)		(489,576	)
Olin Corp.		1.00	%		FBCO		5,000,000		6/20/21		325,234			—		(294,375	)		30,859
Olin Corp.		1.00	%		GSCO		5,000,000		6/20/21		322,186			—		(291,327	)		30,859
Pactiv LLC		5.00	%		UBSW		12,000,000		6/20/17		24,480			—		(172,243	)		(147,763	)
PHH Corp.		5.00	%		GSCO		5,400,000		9/20/19		22,422			—		(483,858	)		(461,436	)
Sanmina Corp.		5.00	%		BZWS		3,600,000		6/20/19		(343,011	)		—		(36,374	)		(379,385	)
Sanmina Corp.		5.00	%		GSCO		7,500,000		6/20/19		(705,706	)		—		(84,680	)		(790,386	)
Springleaf Finance Corp.		5.00	%		GSCO		1,200,000		6/20/20		(45,497	)		—		(34,567	)		(80,064	)
Staples Inc.		1.00	%		CITI		4,600,000		6/20/22		283,093			—		(39,717	)		243,376
Tenet Healthcare Corp.		5.00	%		BZWS		4,500,000		3/20/19		(189,798	)		—		(29,447	)		(219,245	)
Tenet Healthcare Corp.		5.00	%		DBAB		4,000,000		3/20/19		(197,847	)		2,963		—			(194,884	)
Tenet Healthcare Corp.		5.00	%		GSCO		7,335,000		3/20/19		(284,926	)		—		(72,443	)		(357,369	)
Toys R Us Inc.		5.00	%		DBAB		11,750,000		12/20/18		1,421,682			—		(364,065	)		1,057,617
Toys R Us Inc.		5.00	%		GSCO		5,475,000		12/20/18		816,770			—		(323,965	)		492,805
Transocean Inc.		5.00	%		MSCO		13,000,000		6/20/18		(180,000	)		—		(413,575	)		(593,575	)
XPO CNW Inc.		5.00	%		JPHQ		4,300,000		3/20/18		(92,211	)		—		(93,178	)		(185,389	)
Contracts to Sell Protectionc
Single Name
Calpine Corp.		5.00	%		JPHQ		14,100,000		6/20/21		685,106			803,849		—			1,488,955			B
Calpine Corp.		5.00	%		JPHQ		13,275,000		6/20/22		985,146			57,785		—			1,042,931			B
Freeport-McMoRan Inc.		1.00	%		DBAB		6,500,000		3/20/23		(276,291	)		—		(818,754	)		(1,095,045	)		BB-
Government of Mexico		1.00	%		CITI		8,400,000		6/20/20		(63,126	)		167,647		—			104,521			BBB+
Prudential Financial Inc.		1.00	%		BOFA		8,800,000		12/20/21		(120,806	)		301,113		—			180,307			A
Simon Property Group LP		1.00	%		CITI		9,200,000		6/20/22		30,771			6,098		—			36,869			A
Traded Index
dCitibank Bespoke 58 IG/42 HY Equity Tranche 0-3% Index		0.00	%		CITI		3,600,000		6/20/19		(911,323	)		188,156		—			(723,167	)		Non- Investment Grade
dCitibank Bespoke Dec-18
Hong Kong Tranche Index		1.00	%		CITI		13,100,000		12/20/18		(460,144	)		274,671		—			(185,473	)		Non-Investment Grade
MCDX.NA.28		1.00	%		CITI		6,160,000		6/20/22		97,183			27,518		—			124,701			Investment Grade
Total OTC Swap Contracts										$	(2,840,757	)	$	1,829,800	$	(8,880,186	)	$	(9,891,143	)
Total Credit Default Swap Contracts										$	(2,226,199	)	$	1,917,427	$	(8,884,195	)	$	(9,192,967	)
Net unrealized appreciation (depreciation)															$	(6,966,768	)

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CONSOLIDATED STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Total Return Fund (continued)

Credit Default Swap Contracts (continued)

^aFor contracts to sell protection, the notional amount is equal to the maximum potential amount of the future payments and no recourse provisions have been entered into in association with the contracts.

^bBased on Standard and Poor’s (S&P) Rating for single name swaps and internal ratings for index swaps. Internal ratings based on mapping into equivalent ratings from external vendors.

^cThe Fund enters contracts to sell protection to create a long credit position. Performance triggers include default, bankruptcy or restructuring for single name swaps, and failure to pay or bankruptcy of the underlying securities for traded index swaps.

^dRepresents a custom index comprised of a basket of underlying issuers.

At April 30, 2017, the Fund had the following cross-currency swap contracts outstanding. See Note 1(d).

Cross Currency Swap Contracts

Description	Counter- party		Notional Amount		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
OTC Swap Contracts
Receive Floating Quarterly 3-month USD BBA LIBOR + 3.29%		JPHQ		12,760,417 USD		10/13/17	$	342,046	$	—
Pay Fixed Annual 2.125%				12,250,000 CHF
Receive Fixed Semi-Annual 3.045%		CITI		11,760,000 USD		12/15/21		227,684		—
Pay Fixed Annual 1.125%				10,500,000 EUR
Net unrealized appreciation (depreciation)							$	569,730

At April 30, 2017, the Fund had the following inflation index swap contracts outstanding. See Note 1(d).

Inflation Index Swap Contracts

Description	Counterparty		Notional Amount		Expiration Date		Unrealized Appreciation		Unrealized Depreciation
OTC Swap Contracts
Receive variable change in USA-CPI-U
Pay fixed rate at maturity 1.782%		JPHQ	$	95,700,000		5/27/24	$	2,814,809	$	—

See Note 10 regarding other derivative information.

See Abbreviations on page 131.

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FRANKLIN INVESTORS SECURITIES TRUST

Financial Statements

Statements of Assets and Liabilities

April 30, 2017 (unaudited)

	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Funda
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,115,083,438	$	3,497,801,099	$	2,424,669,173	$	4,501,114,516
Cost - Controlled affiliates (Note 3f)		—		—		—		78,742,350
Cost - Non-controlled affiliates (Note 3f)		30,179,621		766,726,003		178,983,192		98,765,470
Total cost of investments	$	1,145,263,059	$	4,264,527,102	$	2,603,652,365	$	4,678,622,336
Value - Unaffiliated issuers	$	1,120,421,648	$	3,477,802,640	$	2,426,097,358	$	4,481,075,031
Value - Controlled affiliates (Note 3f)		—		—		—		77,657,500
Value - Non-controlled affiliates (Note 3f)		30,179,621		766,726,003		181,546,601		100,307,536
Total value of investments		1,150,601,269		4,244,528,643		2,607,643,959		4,659,040,067
Cash		—		2,997,481		600,319		768,461
Restricted Cash (Note 1e)		—		—		190,000		2,331,000
Foreign currency, at value (cost $—, $—, $5,566,782 and $3,072,812, respectively)		—		—		5,572,667		3,076,252
Receivables:
Investment securities sold		8,604,181		40,946		10,273,215		13,285,221
Capital shares sold		1,569,749		9,998,323		5,870,698		8,006,522
Dividends and interest		3,325,796		5,592,023		12,987,068		28,548,005
Affiliates		—		—		343,215		—
Due from brokers		—		1,151,759		5,135,766		17,829,585
Variation margin		—		—		—		970,383
OTC swap contracts (upfront payments $—, $—, $4,427,517 and $11,503,739)		—		—		2,994,210		6,768,474
Unrealized appreciation on OTC forward exchange contracts		—		—		5,166,939		15,316,783
Unrealized appreciation on OTC swap contracts		—		—		1,353,466		5,214,339
Unrealized appreciation on unfunded loan commitments (Note 9)		—		880,912		103,134		231,571
Other assets		1,026		2,893		2,244		7,891
Total assets		1,164,102,021		4,265,192,980		2,658,236,900		4,761,394,554
Liabilities:
Payables:
Investment securities purchased		—		387,304,682		24,624,513		92,837,114
Capital shares redeemed		2,979,839		8,849,023		5,131,763		12,819,348
Management fees		476,663		1,368,830		721,482		1,733,841
Distribution fees		250,869		614,217		398,899		880,565
Transfer agent fees		256,940		512,693		—		791,934
Trustees’ fees and expenses		1,713		2,410		5,923		3,490
Distributions to shareholders		113,307		2,449,130		352,542		633,404
Variation margin		—		18,914		19,879		—
OTC swap contracts (upfront receipts $—, $—, $7,719,642 and $12,952,288)		—		—		5,159,206		9,609,231
Due to brokers		—		—		190,000		2,331,000
Unrealized depreciation on OTC forward exchange contracts		—		—		1,295,710		4,593,467
Unrealized depreciation on OTC swap contracts		—		—		3,759,627		8,880,186
Accrued expenses and other liabilities		150,776		817,328		317,558		792,217

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities (continued)

April 30, 2017 (unaudited)

	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Funda
Total liabilities	$	4,230,107		$	401,937,227		$	41,977,102		$	135,905,797
Net assets, at value	$	1,159,871,914		$	3,863,255,753		$	2,616,259,798		$	4,625,488,757
Net assets consist of:
Paid-in capital	$	1,320,244,165		$	4,154,938,266		$	2,694,695,764		$	4,748,492,512
Undistributed net investment income		—			2,527,413			—			—
Distributions in excess of net investment income		(7,677,763	)		—			(9,743,274	)		(17,210,594	)
Net unrealized appreciation (depreciation)		5,338,210			(20,190,040	)		5,057,416			(4,359,937	)
Accumulated net realized gain (loss)		(158,032,698	)		(274,019,886	)		(73,750,108	)		(101,433,224	)
Net assets, at value	$	1,159,871,914		$	3,863,255,753		$	2,616,259,798		$	4,625,488,757
Class A:
Net assets, at value	$	591,063,541		$	1,455,825,235		$	1,457,580,736		$	3,220,518,564
Shares outstanding		70,965,235			163,984,231			147,777,057			330,251,615
Net asset value per shareb		$8.33			$8.88			$9.86			$9.75
Maximum offering price per share (net asset value per share ÷ 97.75%, 97.75%, 97.75% and 95.75%, respectively)		$8.52			$9.08			$10.09			$10.18
Class A1:
Net assets, at value	$	136,835,288
Shares outstanding		16,434,016
Net asset value per shareb		$8.33
Maximum offering price per share (net asset value per share ÷ 97.75%)		$8.52
Class C:
Net assets, at value	$	224,663,780		$	596,792,105		$	198,092,631		$	394,866,888
Shares outstanding		26,992,872			67,209,450			20,152,330			40,722,246
Net asset value and maximum offering price per shareb		$8.32			$8.88			$9.83			$9.70
Class R:
Net assets, at value										$	49,026,819
Shares outstanding											5,043,313
Net asset value and maximum offering price per share											$9.72
Class R6:
Net assets, at value	$	2,362,620		$	110,557,139		$	586,400,754		$	106,536,668
Shares outstanding		283,363			12,451,035			59,132,846			10,861,878
Net asset value and maximum offering price per share		$8.34			$8.88			$9.92			$9.81
Advisor Class:
Net assets, at value	$	204,946,685		$	1,700,081,274		$	374,185,677		$	854,539,818
Shares outstanding		24,582,636			191,418,675			37,760,240			87,182,218
Net asset value and maximum offering price per share		$8.34			$8.88			$9.91			$9.80

^aConsolidated financial statement. See Note 1(g).

^bRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations

for the six months ended April 30, 2017 (unaudited)

	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Funda
Investment income:
Dividends:
Unaffiliated issuers	$	—		$	340,697		$	24,556		$	629,379
Controlled affiliates (Note 3f)		—			—			—			942,024
Non-controlled affiliates (Note 3f)		16,988			531,665			1,759,782			1,162,121
Interest		16,678,354			71,662,576			29,692,474			78,421,777
Inflation principal adjustments		—			—			1,618,591			1,345,721
Paydown gain (loss)		(7,806,115	)		—			(1,761,764	)		540,746
Total investment income		8,889,227			72,534,938			31,333,639			83,041,768
Expenses:
Management fees (Note 3a)		3,086,976			8,661,717			6,185,963			10,936,928
Distribution fees: (Note 3c)
Class A		778,928			1,781,243			1,824,878			4,126,051
Class A1		69,562			—			—			—
Class C		790,091			1,879,577			666,177			1,334,602
Class R		—			—			—			133,363
Transfer agent fees: (Note 3e)
Class A		414,640			631,484			1,218,867			2,499,915
Class A1		98,133			—			—			—
Class C		161,721			256,279			172,262			310,918
Class R		—			—			—			40,526
Class R6		165			113			207			642
Advisor Class		143,586			628,113			247,182			592,585
Custodian fees (Note 4)		5,176			11,725			27,404			70,343
Reports to shareholders		75,847			126,724			121,876			317,466
Registration and filing fees		56,622			60,321			95,604			202,482
Professional fees		27,570			249,810			46,506			70,609
Trustees’ fees and expenses		8,250			17,294			15,714			27,617
Other		120,413			41,639			114,095			236,319
Total expenses		5,837,680			14,346,039			10,736,735			20,900,366
Expense reductions (Note 4)		(156	)		(6,071	)		(8,845	)		(17,926	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(35,871	)		(972,408	)		(1,812,227	)		(881,659	)
Net expenses		5,801,653			13,367,560			8,915,663			20,000,781
Net investment income		3,087,574			59,167,378			22,417,976			63,040,987
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		(30,187	)		(23,742,812	)		(5,400,462	)		(20,532,790	)
Foreign currency transactions		—			2,687			3,328,659			15,883,456
Futures contracts		—			—			4,165,038			(28,246,165	)
Swap contracts		—			95,162			343,433			(6,453,413	)
Net realized gain (loss)		(30,187	)		(23,644,963	)		2,436,668			(39,348,912	)
Net change in unrealized appreciation (depreciation) on:
Investments		(3,176,160	)		36,866,079			(54,419	)		(52,384,963	)
Translation of other assets and liabilities denominated in foreign currencies		—			—			2,350,380			3,522,175
Futures contracts		—			—			(1,105,738	)		12,401,376
Swap contracts		—			(783,852	)		873,632			6,648,460
Net change in unrealized appreciation (depreciation)		(3,176,160	)		36,082,227			2,063,855			(29,812,952	)

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations (continued)

for the six months ended April 30, 2017 (unaudited)

	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Funda
Net realized and unrealized gain (loss)		$(3,206,347	)		$12,437,264		$  4,500,523		$(69,161,864	)
Net increase (decrease) in net assets resulting from operations		$   (118,773	)		$71,604,642		$26,918,499		$  (6,120,877	)

^aConsolidated financial statement. See Note 1(g).

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016			Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016
Increase (decrease) in net assets:
Operations:
Net investment income		$       3,087,574			$       6,177,925			$     59,167,378			$   142,862,698
Net realized gain (loss)		(30,187	)		617,606			(23,644,963	)		(60,596,568	)
Net change in unrealized appreciation (depreciation)		(3,176,160	)		(11,522,082	)		36,082,227			119,213,445
Net increase (decrease) in net assets resulting from operations		(118,773	)		(4,726,551	)		71,604,642			201,479,575
Distributions to shareholders from:
Net investment income:
Class A		(5,513,417	)		(10,995,661	)		(24,128,920	)		(64,460,934	)
Class A1		(1,418,499	)		(2,862,431	)		—			—
Class C		(1,670,229	)		(3,137,657	)		(8,642,590	)		(23,786,613	)
Class R6		(24,971	)		(41,661	)		(743,147	)		(285,466	)
Advisor Class		(2,174,353	)		(4,223,137	)		(25,349,157	)		(54,321,011	)
Total distributions to shareholders		(10,801,469	)		(21,260,547	)		(58,863,814	)		(142,854,024	)
Capital share transactions: (Note 2)
Class A		(71,076,618	)		(167,984,621	)		90,116,578			(222,175,112	)
Class A1		(22,333,416	)		(35,100,623	)		—			—
Class C		(39,373,562	)		(64,817,272	)		42,750,617			(87,707,899	)
Class R6		9,740			236,438			98,314,701			11,857,272
Advisor Class		(20,732,007	)		(76,748,790	)		586,719,206			(314,178,543	)
Total capital share transactions		(153,505,863	)		(344,414,868	)		817,901,102			(612,204,282	)
Net increase (decrease) in net assets .		(164,426,105	)		(370,401,966	)		830,641,930			(553,578,731	)
Net assets:
Beginning of period		1,324,298,019			1,694,699,985			3,032,613,823			3,586,192,554
End of period		$1,159,871,914			$1,324,298,019			$3,863,255,753			$3,032,613,823
Undistributed net investment income included in net assets:
End of period		$                    —			$            36,132			$       2,527,413			$       2,223,849
Distributions in excess of net investment income included in net assets:
End of period		$     (7,677,763)			$                   —			$                   —			$                   —

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets (continued)

	Franklin Low Duration Total Return Fund						Franklin Total Return Funda
	Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016			Six Months Ended April 30, 2017 (unaudited)			Year Ended October 31, 2016
Increase (decrease) in net assets:
Operations:
Net investment income		$     22,417,976			$     41,317,809			$     63,040,987			$   110,841,380
Net realized gain (loss)		2,436,668			(21,952,845	)		(39,348,912	)		(59,263,353	)
Net change in unrealized appreciation (depreciation)		2,063,855			29,381,816			(29,812,952	)		114,335,062
Net increase (decrease) in net assets resulting from operations		26,918,499			48,746,780			(6,120,877	)		165,913,089
Distributions to shareholders from:
Net investment income:
Class A		(19,650,393	)		(33,131,709	)		(59,758,454	)		(101,527,245	)
Class C		(2,435,536	)		(4,013,836	)		(6,676,604	)		(11,788,656	)
Class R		—			—			(910,522	)		(1,861,369	)
Class R6		(7,740,893	)		(12,099,518	)		(1,937,130	)		(2,201,117	)
Advisor Class		(3,991,480	)		(3,563,139	)		(14,605,873	)		(15,522,886	)
Total distributions to shareholders		(33,818,302	)		(52,808,202	)		(83,888,583	)		(132,901,273	)
Capital share transactions: (Note 2)
Class A		(62,437,175	)		(127,311,300	)		(335,804,468	)		66,617,965
Class C		(19,266,344	)		7,361,242			(46,015,199	)		2,877,723
Class R		—			—			(8,600,375	)		(12,019,056	)
Class R6		34,667,600			43,783,151			14,179,336			24,451,715
Advisor Class		149,573,459			74,356,194			126,775,869			212,187,480
Total capital share transactions		102,537,540			(1,810,713	)		(249,464,837	)		294,115,827
Net increase (decrease) in net assets		95,637,737			(5,872,135	)		(339,474,297	)		327,127,643
Net assets:
Beginning of period		2,520,622,061			2,526,494,196			4,964,963,054			4,637,835,411
End of period		$2,616,259,798			$2,520,622,061			$4,625,488,757			$4,964,963,054
Undistributed net investment income included in net assets:
End of period		$                   —			$       1,657,052			$                   —			$       3,637,002
Distributions in excess of net investment income included in net assets:
End of period		$     (9,743,274	)		$                   —			$   (17,210,594	)		$                   —

^aConsolidated financial statement. See Note 1(g).

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FRANKLIN INVESTORS SECURITIES TRUST

Notes to Financial Statements (unaudited)

1. Organization and Significant Accounting Policies

Franklin Investors Securities Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eight separate funds, four of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The financial statements of the remaining funds in the Trust are presented separately. The classes of shares offered within each of the Funds are indicated below. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.

Class A, Class A1, Class C, Class R6 & Advisor Class

Franklin Adjustable U.S. Government Securities Fund

Class A, Class C, Class R6 & Advisor Class

Franklin Floating Rate Daily Access Fund

Franklin Low Duration Total Return Fund

Class A, Class C, Class R, Class R6 & Advisor Class

Franklin Total Return Fund

The following summarizes the Funds’ significant accounting policies.

a. Financial Instrument Valuation

The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities, exchange traded funds, and derivative financial instruments listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV.

Certain derivative financial instruments are centrally cleared or traded in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

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FRANKLIN INVESTORS SECURITIES TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Funds’ business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Funds’ NAV is not calculated, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

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1. Organization and Significant Accounting
Policies (continued)

c. Securities Purchased on a When-Issued, Delayed Delivery and TBA Basis

Certain or all Funds purchase securities on a when-issued or delayed delivery and to-be-announced (TBA) basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Sufficient assets have been segregated for these securities and collateral has been pledged and/or received for open TBA trades.

d. Derivative Financial Instruments

Certain or all Funds invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counter-parties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Funds to maintain certain net asset

levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to interest rate risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities.

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Certain or all Funds entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

Certain or all Funds entered into credit default swap contracts primarily to manage and/or gain exposure to credit risk. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. These agreements may be privately negotiated in the over-the-counter market (OTC credit default swaps) or may be executed in a multilateral trade facility platform, such as a registered exchange (centrally cleared credit default swaps). The underlying referenced debt obligation may be a single issuer of corporate or sovereign debt, a credit index, a basket of issuers or indices, or a tranche of a credit index or basket of issuers or indices. In the event of a default of the underlying referenced debt obligation, the buyer is entitled to receive the notional amount of the credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal to the notional amount of the credit default swap less the recovery value of the referenced debt obligation, or other agreed upon amount. For centrally cleared credit default swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities. Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default has occurred. Such periodic payments are accrued daily as an unrealized appreciation or depreciation until the payments are made, at which time they are realized. Upfront payments and receipts are reflected in the Statements of Assets and Liabilities and represent compensating factors between stated terms of the credit default swap agreement and prevailing market conditions (credit spreads and other relevant factors). These upfront payments and receipts are amortized over the term of the contract as a realized gain or loss in the Statements of Operations.

Certain or all Funds entered into OTC cross currency swap contracts primarily to manage and/or gain exposure to interest rate risk and certain foreign currencies. A cross currency swap is an agreement between the Fund and a counterparty to exchange cash flows (determined using either a fixed or floating rate) based on the

notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the opening of the contract. Cross currency swaps may require the exchange of notional amounts at the opening and/or closing of the contract. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized. Upfront payments and receipts are reflected in the Statements of Assets and Liabilities and represent compensating factors between stated terms of the cross currency swap contract and prevailing market conditions (interest rate spreads and other relevant factors). These upfront payments and receipts are amortized over the term of the contract as a realized gain or loss in the Statements of Operations.

Certain or all Funds entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate swap is an agreement between the Fund and a counterparty to exchange cash flows based on the difference between two interest rates, applied to a notional amount. These agreements may be privately negotiated in the over-the-counter market (OTC interest rate swaps) or may be executed on a registered exchange (centrally cleared interest rate swaps). For centrally cleared interest rate swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized.

Certain or all Funds purchased or wrote OTC option contracts primarily to manage and/or gain exposure to credit risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an

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1. Organization and Significant Accounting
Policies (continued)

d. Derivative Financial Instruments (continued)

option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.

Certain or all Funds entered into inflation index swap contracts primarily to manage inflation risk. An inflation index swap is an agreement between the Fund and a counterparty to exchange cash flows whereby one party makes payments based on the percentage change in an index that serves as a measure of inflation and the other party makes a regular payment based on a compounded fixed rate, applied to a notional amount. These agreements may be privately negotiated in the over-the-counter market (OTC inflation index swap) or may be executed on a registered exchange (centrally cleared inflation index swap). For centrally cleared inflation index swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized. Typically, an inflation index swap has payment obligations netted and exchanged upon maturity.

Certain or all Funds invest in value recovery instruments (VRI) primarily to gain exposure to growth risk. Periodic payments from VRI are dependent on established benchmarks for underlying variables. VRI has a notional amount, which is used to calculate amounts of payments to holders. Payments are recorded upon receipt as realized gains in the Statements of Operations. The risks of investing in VRI include growth risk, liquidity, and the potential loss of investment.

See Note 10 regarding other derivative information.

e. Restricted Cash

At April 30, 2017, certain or all Funds held restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s custodian and is reflected in the Statements of Assets and Liabilities.

f. Loan Participation Notes

Certain or all Funds invest in loan participation notes (Participations). Participations are loans originally issued to a borrower by one or more financial institutions (the Lender) and subsequently sold to other investors, such as the Funds. Participations typically result in the Fund having a contractual relationship only with the Lender and not with the borrower. The Funds have the right to receive from the Lender any payments of principal, interest and fees which the Lender received from the borrower. The Funds generally have no rights to either enforce compliance by the borrower with the terms of the loan agreement or to any collateral relating to the original loan. As a result, the Funds assume the credit risk of both the borrower and the Lender that is selling the Participation. The Participations may also involve interest rate risk and liquidity risk, including the potential default or insolvency of the borrower and/or the Lender.

g. Investments in FT Holdings Corporation I (FT Subsidiary)

Franklin Total Return Fund invests in certain financial instruments through its investment in the FT Subsidiary. The FT Subsidiary is a Delaware Corporation, is a wholly-owned Subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At April 30, 2017, the FT Subsidiary’s investment, Turtle Bay Resort, as well as any other assets and liabilities of the FT Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities. The financial statements have been consolidated and include the accounts of the Fund and the FT Subsidiary. All intercompany transactions and balances have been eliminated. At April 30, 2017, the net assets of the FT Subsidiary were $7,352,929, representing 0.2% of the Fund’s consolidated net assets. The Fund’s investment in the FT Subsidiary is limited to 25% of consolidated assets.

h. Mortgage Dollar Rolls

Certain or all Funds enter into mortgage dollar rolls, typically on a TBA basis. Mortgage dollar rolls are agreements between the Fund and a financial institution where the Fund sells (or buys) mortgage-backed securities for delivery on a specified date and simultaneously contracts to repurchase (or sell) substantially similar (same type, coupon, and maturity) securities at a future date and at a predetermined price. Gains or losses are realized on the initial sale, and the difference between

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

the repurchase price and the sale price is recorded as an unrealized gain or loss to the Fund upon entering into the mortgage dollar roll. In addition, the Fund may invest the cash proceeds that are received from the initial sale. During the period between the sale and repurchase, the Fund is not entitled to principal and interest paid on the mortgage backed securities. Transactions in mortgage dollar rolls are accounted for as purchases and sales and may result in an increase to the Fund’s portfolio turnover rate. The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.

i. Senior Floating Rate Interests

Certain or all Funds invest in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Funds invest are generally readily marketable, but may be subject to certain restrictions on resale.

j. Income and Deferred Taxes

It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical

merits. As of April 30, 2017, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.

k. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Paydown gains and losses are recorded separately on the Statements of Operations. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Dividends from net investment income are normally declared daily; these dividends may be reinvested or paid monthly to shareholders. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.

Net investment income, not including class specific expenses, is allocated daily to each class of shares based upon the relative value of the settled shares of each class. Realized and unrealized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Significant Accounting
Policies (continued)

k. Security Transactions, Investment Income, Expenses and Distributions (continued)

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as inflation principal adjustments in the Statements of Operations.

l. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date

of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

m. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enter into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as 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 April 30, 2017, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:

	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Six Months ended April 30, 2017
Shares sold		9,372,200		$	78,515,204			32,788,504		$	290,786,944
Shares issued in reinvestment of distributions		623,266			5,214,944			2,530,252			22,459,469
Shares redeemed		(18,481,904	)		(154,806,766	)		(25,138,976	)		(223,129,835	)
Net increase (decrease)		(8,486,438	)	$	(71,076,618	)		10,179,780		$	90,116,578
Year ended October 31, 2016
Shares sold		21,965,175		$	185,996,265			24,811,623		$	212,007,459
Shares issued in reinvestment of distributions		1,239,949			10,469,739			7,064,574			59,950,762
Shares redeemed		(43,095,113	)		(364,450,625	)		(58,463,296	)		(494,133,333	)
Net increase (decrease)		(19,889,989	)	$	(167,984,621	)		(26,587,099	)	$	(222,175,112	)
Class A1 Shares:
Six Months ended April 30, 2017
Shares sold		215,670		$	1,806,256
Shares issued in reinvestment of distributions		160,697			1,344,045
Shares redeemed		(3,043,851	)		(25,483,717	)
Net increase (decrease)		(2,667,484	)	$	(22,333,416	)
Year ended October 31, 2016
Shares sold		782,382		$	6,611,320
Shares issued in reinvestment of distributions		321,531			2,714,543
Shares redeemed		(5,258,218	)		(44,426,486	)
Net increase (decrease)		(4,154,305	)	$	(35,100,623	)

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	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Shares			Amount			Shares			Amount
Class C Shares:
Six Months ended April 30, 2017
Shares sold		1,022,602		$	8,561,902			12,026,180		$	106,690,314
Shares issued in reinvestment of distributions		184,858			1,545,482			886,780			7,871,319
Shares redeemed		(5,911,715	)		(49,480,946	)		(8,091,302	)		(71,811,016	)
Net increase (decrease)		(4,704,255	)	$	(39,373,562	)		4,821,658		$	42,750,617
Year ended October 31, 2016
Shares sold		4,522,226		$	38,281,353			9,537,412		$	81,449,034
Shares issued in reinvestment of distributions		342,782			2,892,128			2,536,642			21,527,906
Shares redeemed		(12,545,368	)		(105,990,753	)		(22,589,768	)		(190,684,839	)
Net increase (decrease)		(7,680,360	)	$	(64,817,272	)		(10,515,714	)	$	(87,707,899	)
Class R6 Shares:
Six Months ended April 30, 2017
Shares sold		27,660		$	231,971			11,527,268		$	102,495,436
Shares issued in reinvestment of distributions		2,981			24,971			83,703			743,141
Shares redeemed		(29,471	)		(247,202	)		(554,716	)		(4,923,876	)
Net increase (decrease)		1,170		$	9,740			11,056,255		$	98,314,701
Year ended October 31, 2016
Shares sold		59,418		$	503,303			1,447,506		$	12,322,386
Shares issued in reinvestment of distributions		4,930			41,660			32,856			285,282
Shares redeemed		(36,505	)		(308,525	)		(86,396	)		(750,396	)
Net increase (decrease)		27,843		$	236,438			1,393,966		$	11,857,272
Advisor Class Shares:
Six Months ended April 30, 2017
Shares sold		6,164,437		$	51,675,295			94,121,932		$	835,876,991
Shares issued in reinvestment of distributions		233,751			1,957,290			1,414,485			12,557,780
Shares redeemed		(8,874,376	)		(74,364,592	)		(29,463,358	)		(261,715,565	)
Net increase (decrease)		(2,476,188	)	$	(20,732,007	)		66,073,059		$	586,719,206
Year ended October 31, 2016
Shares sold		13,280,439		$	112,298,847			43,401,930		$	369,260,775
Shares issued in reinvestment of distributions		441,098			3,728,635			2,892,071			24,565,655
Shares redeemed		(22,751,797	)		(192,776,272	)		(84,100,921	)		(708,004,973	)
Net increase (decrease)		(9,030,260	)	$	(76,748,790	)		(37,806,920	)	$	(314,178,543	)

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2. Shares of Beneficial Interest (continued)

	Franklin Low Duration Total Return Fund						Franklin Total Return Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Six Months ended April 30, 2017
Shares sold		29,910,062		$	294,509,663			32,603,205		$	315,962,071
Shares issued in reinvestment of distributions		1,726,320			16,991,595			6,055,976			58,602,876
Shares redeemed		(37,977,485	)		(373,938,433	)		(73,334,720	)		(710,369,415	)
Net increase (decrease)		(6,341,103	)	$	(62,437,175	)		(34,675,539	)	$	(335,804,468	)
Year ended October 31, 2016
Shares sold		47,047,322		$	461,234,268			93,822,994		$	916,738,346
Shares issued in reinvestment of distributions		2,977,746			29,135,231			10,292,781			99,324,788
Shares redeemed		(62,936,182	)		(617,680,799	)		(96,558,711	)		(949,445,169	)
Net increase (decrease)		(12,911,114	)	$	(127,311,300	)		7,557,064		$	66,617,965
Class C Shares:
Six Months ended April 30, 2017
Shares sold		3,190,045		$	31,317,932			3,176,057		$	30,600,455
Shares issued in reinvestment of distributions		200,551			1,967,554			636,235			6,120,245
Shares redeemed		(5,354,682	)		(52,551,830	)		(8,592,719	)		(82,735,899	)
Net increase (decrease)		(1,964,086	)	$	(19,266,344	)		(4,780,427	)	$	(46,015,199	)
Year ended October 31, 2016
Shares sold		10,992,306		$	107,389,119			11,518,037		$	111,836,091
Shares issued in reinvestment of distributions		344,793			3,366,635			1,118,125			10,736,413
Shares redeemed		(10,576,146	)		(103,394,512	)		(12,292,706	)		(119,694,781	)
Net increase (decrease)		760,953		$	7,361,242			343,456		$	2,877,723
Class R Shares:
Six Months ended April 30, 2017
Shares sold								542,058		$	5,226,613
Shares issued in reinvestment of distributions								90,404			872,024
Shares redeemed								(1,521,044	)		(14,699,012	)
Net increase (decrease)								(888,582	)	$	(8,600,375	)
Year ended October 31, 2016
Shares sold								1,331,922		$	12,937,501
Shares issued in reinvestment of distributions								186,048			1,789,731
Shares redeemed								(2,741,401	)		(26,746,288	)
Net increase (decrease)								(1,223,431	)	$	(12,019,056	)
Class R6 Shares:
Six Months ended April 30, 2017
Shares sold		10,501,553		$	104,140,101			2,157,909		$	21,007,832
Shares issued in reinvestment of distributions		777,160			7,689,264			13,439			130,795
Shares redeemed		(7,793,453	)		(77,161,765	)		(714,198	)		(6,959,291	)
Net increase (decrease)		3,485,260		$	34,667,600			1,457,150		$	14,179,336
Year ended October 31, 2016
Shares sold		13,012,102		$	127,680,026			5,007,346		$	49,666,379
Shares issued in reinvestment of distributions		1,225,030			12,041,881			8,309			80,954
Shares redeemed		(9,709,503	)		(95,938,756	)		(2,560,569	)		(25,295,618	)
Net increase (decrease)		4,527,629		$	43,783,151			2,455,086		$	24,451,715

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	Franklin Low Duration Total Return Fund						Franklin Total Return Fund
	Shares			Amount			Shares			Amount
Advisor Class Shares:
Six Months ended April 30, 2017
Shares sold		23,350,987		$	230,935,690			28,116,273		$	273,973,224
Shares issued in reinvestment of distributions		357,059			3,530,051			1,319,091			12,832,191
Shares redeemed		(8,582,221	)		(84,892,282	)		(16,425,394	)		(160,029,546	)
Net increase (decrease)		15,125,825		$	149,573,459			13,009,970		$	126,775,869
Year ended October 31, 2016
Shares sold		18,882,422		$	186,687,617			48,174,526		$	480,064,749
Shares issued in reinvestment of distributions		280,629			2,760,337			1,297,441			12,575,671
Shares redeemed		(11,651,331	)		(115,091,760	)		(28,473,005	)		(280,452,940	)
Net increase (decrease)		7,511,720		$	74,356,194			20,998,962		$	212,187,480

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 Institutional, LLC (FT Institutional)	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 Adjustable U.S. Government Securities 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
0.500%	Up to and including $5 billion
0.440%	Over $5 billion, up to and including $10 billion
0.410%	Over $10 billion, up to and including $15 billion
0.380%	In excess of $15 billion

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3.    Transactions with Affiliates (continued)

a.    Management Fees (continued)

Franklin Floating Rate Daily Access 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
0.650%	Up to and including $500 million
0.550%	Over $500 million, up to and including $1 billion
0.500%	Over $1 billion, up to and including $1.5 billion
0.450%	Over $1.5 billion, up to and including $6.5 billion
0.425%	Over $6.5 billion, up to and including $11.5 billion
0.400%	Over $11.5 billion, up to and including $16.5 billion
0.390%	Over $16.5 billion, up to and including $19 billion
0.380%	Over $19 billion, up to and including $21.5 billion
0.370%	In excess of $21.5 billion

Franklin Low Duration Total Return Fund and Franklin Total Return Fund pay an investment management fee to Advisers based on the average daily net assets of each of the Funds as follows:

Annualized Fee Rate	Net Assets
0.625%	Up to and including $500 million
0.525%	Over $500 million, up to and including $1 billion
0.480%	Over $1 billion, up to and including $1.5 billion
0.435%	Over $1.5 billion, up to and including $6.5 billion
0.415%	Over $6.5 billion, up to and including $11.5 billion
0.400%	Over $11.5 billion, up to and including $16.5 billion
0.390%	Over $16.5 billion, up to and including $19 billion
0.380%	Over $19 billion, up to and including $21.5 billion
0.370%	In excess of $21.5 billion

Under a subadvisory agreement, FT Institutional, an affiliate of Advisers, provides subadvisory services to Franklin Total Return Fund. The subadvisory fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

For the period ended April 30, 2017, each Fund’s annualized effective investment management fee rate based on average daily net assets was as follows:

Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund
	0.500%		0.499	%		0.500	%		0.470	%

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.

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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 A1 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 A1 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 Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Reimbursement Plans:
Class A		0.25%		0.25%		0.25%		0.25%
Class A1		0.10%		—%		—%		—%
Compensation Plans:
Class C		0.65%		0.65%		0.65%		0.65%
Class R		—%		—%		—%		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 Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Sales charges retained net of commissions paid to unaffiliated brokers/dealers		$41,912		$111,815		$152,310		$560,096
CDSC retained		$  5,804		$  25,370		$  53,187		$  60,907

e.    Transfer Agent Fees

Each class of shares, except for Class R6, pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including 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 April 30, 2017, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:

	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Transfer agent fees		$325,416		$530,275		$626,407		$1,264,260

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3.    Transactions with Affiliates (continued)

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 November 1, 2013, the waiver was accounted for as a reduction to management fees. During the period ended April 30, 2017, investments in affiliated management investment companies were 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 Period		Investment Income		Realized Gain (Loss)		% of Affiliated Fund Shares Outstanding Held at End of Period
Franklin Adjustable U.S. Government Securities Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust
Money Market Portfolio, 0.37%		26,812,763		186,525,004		(183,158,146	)		30,179,621		$  30,179,621		$         16,988		$  —		0.2	%
Franklin Floating Rate Daily Access Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust
Money Market Portfolio, 0.37%		301,294,963		1,512,997,350		(1,047,566,310	)		766,726,003		$766,726,003		$       531,665		$  —		4.0	%
Franklin Low Duration Total Return Fund
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		1,893,663		—		—			1,893,663		$  19,978,147		$848,999		$  —		6.2	%
Franklin Middle Tier Floating Rate Fund		2,389,308		—		—			2,389,308		24,036,434		825,721		—		8.5	%
Institutional Fiduciary Trust Money Market Portfolio, 0.37%		89,753,463		432,965,820		(385,187,263	)		137,532,020		137,532,020		85,062		—		0.7	%
Total											$181,546,601		$    1,759,782		$  —
Franklin Total Return Fund Controlled Affiliates
Franklin Liberty Investment Grade Corporate ETF		400,000		800,000		—			1,200,000		$  29,220,000		$418,674		$  —		52.2	%
Franklin Liberty Short Duration U.S. Government ETF		500,000		—		—			500,000		48,437,500		523,350		—		29.4	%
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		997,589		—		—			997,589		10,524,565		447,256		—		3.3	%
Franklin Middle Tier Floating Rate Fund		1,889,310		—		—			1,889,310		19,006,460		652,927		—		6.7	%
Institutional Fiduciary Trust Money Market Portfolio, 0.37%		104,199,665		757,701,654		(791,124,808	)		70,776,511		70,776,511		61,938		—		0.4	%
Total											$177,965,036		$    2,104,145		$  —

g.    Waiver and Expense Reimbursements

Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by Franklin Low Duration Total Return Fund and Franklin Total Return Fund so that the expenses (excluding distribution fees and acquired fund fees and expenses) for Class A, Class C, Class R and Advisor Class

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of the Funds do not exceed 0.55% and 0.63%, respectively, and Class R6 does not exceed 0.38% and 0.49%, respectively, 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 February 28, 2018. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.

Additionally, 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 February 28, 2018. For Franklin Low Duration Total Return Fund and Franklin Total Return Fund, there were no Class R6 transfer agent fees waived during the period ended April 30, 2017.

h.    Other Affiliated Transactions

At April 30, 2017, one or more of the funds in Franklin Fund Allocator Series owned a percentage of the following Funds’ outstanding shares:

Franklin Floating Rate Daily Access Fund	Franklin Low Duration Total Return Fund
2.9%		21.3%

i.    Interfund Transactions

Certain or all Funds 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. Purchases and sales for the period ended April 30, 2017, were as follows:

	Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund
Purchases	$	20,186,742	$	—
Sales	$	—	$	1,067,625

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 April 30, 2017, 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.

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5.    Income Taxes (continued)

At October 31, 2016, the capital loss carryforwards were as follows:

	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Capital loss carryforwards subject to expiration:
2017		$    4,398,245		$113,325,538		$                —		$                —
2018		39,689,305		—		—		—
2019		21,934,756		10,282,409		5,327,487		—
Capital loss carryforwards not subject to expiration:
Short term		19,905,561		21,809,899		23,452,757		21,117,357
Long term		72,074,646		104,483,893		44,282,224		34,070,782
Total capital loss carryforwards		$158,002,513		$249,901,739		$73,062,468		$55,188,139

At April 30, 2017, the cost of investments and net unrealized appreciation (depreciation), for income tax purposes were as follows:

	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund
Cost of investments		$1,145,263,059			$4,263,821,148			$2,611,014,005			$4,694,573,640
Unrealized appreciation		$       9,426,306			$     29,379,620			$     23,176,735			$     82,454,170
Unrealized depreciation		(4,088,096	)		(48,672,125	)		(26,546,781	)		(117,987,743	)
Net unrealized appreciation (depreciation)		$       5,338,210			$    (19,292,505	)		$      (3,370,046	)		$    (35,533,573	)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, paydown losses, bond discounts and premiums, swaps and wash sales.

6.    Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended April 30, 2017, were as follows:

	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Purchases		$  16,952,758		$2,077,997,282		$541,572,424		$1,657,008,991
Sales		$176,915,954		$1,352,593,974		$488,488,579		$1,950,924,972

7.    Credit Risk

At April 30, 2017, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund had 64.0%, 15.7% and 16.0%, respectively, of their 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.

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8.    Restricted Securities

Certain or all Funds invest in securities that are restricted under the Securities Act of 1933 (1933 Act) or which are subject to legal, contractual, or other agreed upon restrictions on resale. 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 April 30, 2017, investments in restricted securities, excluding certain securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:

Shares		Issuer	Acquisition Date		Cost		Value
	Franklin Floating Rate Daily Access Fund
	96,129	Warrior Met Coal Inc.(Value is 0.1% of Net Assets)		7/31/14 - 9/23/14		$13,170,468		$1,651,113
	Franklin Low Duration Total Return Fund
	98,168	a Halcon Resources Corp.		3/17/15 - 7/07/15		$  1,880,354		$   631,163
	12,326,925	Holdco 2, A		4/15/13 - 2/01/17		92,078		9,223
	1,226,701	Holdco 2, B		2/01/17		911		918
		Total Restricted Securities (Value is 0.0%† of Net Assets)				$  1,973,343		$   641,304
	Franklin Total Return Fund
	229,059	b Halcon Resources Corp.		3/17/15 - 7/07/15		$  4,383,141		$1,472,715
	28,762,824	Holdco 2, A		4/15/13 - 2/01/17		221,469		21,519
	2,862,311	Holdco 2, B		2/01/17		2,125		2,142
		Total Restricted Securities (Value is 0.0%† of Net Assets)				$  4,606,735		$1,496,376

^†  Rounds to less than 0.1% of net assets.

^a  The Fund also invests in unrestricted securities or other investments in the issuer, valued at $9,191 as of April 30, 2017.

^b  The Fund also invests in unrestricted securities or other investments in the issuer, valued at $21,446 as of April 30, 2017.

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 April 30, 2017, unfunded commitments were as follows:

Borrower	Unfunded Commitment
Franklin Floating Rate Daily Access Fund
BMC Software Finance, Inc., Initial US Revolving Commitment		$20,723,252
Franklin Low Duration Total Return Fund
BMC Software Finance, Inc., Initial US Revolving Commitment		$  3,492,917
Franklin Total Return Fund
BMC Software Finance, Inc., Initial US Revolving Commitment		$  7,629,911
Global Tel*Link Corp, Revolving Commitment		211,174
		$  7,841,085

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10.  Other Derivative Information

At April 30, 2017, the Funds’ 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	Statements of Assets and Liabilities Location	Fair Value			Statements of Assets and Liabilities Location	Fair Value
Franklin Floating Rate Daily Access Fund
Credit contracts	Variation margin	$	—		Variation margin	$	783,852	a
Franklin Low Duration Total Return Fund
Interest rate contracts	Variation margin	$	774,036	a	Variation margin	$	912,683	a
	Unrealized appreciation on OTC swap contracts		515,362		Unrealized depreciation on OTC swap contracts		—
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		5,166,939		Unrealized depreciation on OTC forward exchange contracts		1,295,710
Credit contracts	Variation margin		37,112	a	Variation margin		2,532	a
	OTC swap contracts (Upfront payments)		2,994,210		OTC swap contracts (Upfront receipts)		5,159,206
	Unrealized appreciation on OTC swap contracts		838,104		Unrealized depreciation on OTC swap contracts		3,759,627
Totals		$	10,325,763			$	11,129,758
Franklin Total Return Fund
Interest rate contracts	Variation margin	$	8,606,920	a	Variation margin	$	62,997	a
	Unrealized appreciation on OTC swap contracts		569,730		Unrealized depreciation on OTC swap contracts		—
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		15,316,783		Unrealized depreciation on OTC forward exchange contracts		4,593,467
Credit contracts	Variation margin		87,627	a	Variation margin		4,009	a
	OTC swap contracts (Upfront payments)		6,768,474		OTC swap contracts (Upfront receipts)		9,609,231
	Unrealized appreciation on OTC swap contracts		1,829,800		Unrealized depreciation on OTC swap contracts		8,880,186
Inflation contracts	Unrealized appreciation on OTC swap contracts		2,814,809		Unrealized depreciation on OTC swap contracts		—
Value recovery instruments	Investments in securities, at value		167,872		Investments in securities, at value		—
Totals		$	36,162,015			$	23,149,890

^a This amount reflects the cumulative appreciation (depreciation) of futures contracts and centrally cleared swap contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

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For the period ended April 30, 2017, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Operations Locations	Net Realized Gain (Loss) for the Period			Statements of Operations Locations	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized
					appreciation (depreciation) on:
Franklin Floating Rate Daily Access Fund
Credit contracts	Swap contracts		$         95,162		Swap contracts		$  (783,852)
Franklin Low Duration Total Return Fund
Interest rate contracts	Futures contracts		$    4,165,038		Futures contracts		$(1,105,738)
	Swap contracts		2,396,017		Swap contracts		(361,064)
Foreign exchange contracts	Foreign currency transactions		2,992,677a		Translation of other assets and liabilities denominated in foreign currencies		2,312,545a
Credit contracts	Investments		(294,814)	b	Investments		148,822b
	Swap contracts		(2,052,584)		Swap contracts		1,234,696
Totals			$    7,206,334				$    2,229,261
Franklin Total Return Fund
Interest rate contracts	Futures contracts		$(28,246,165)		Futures contracts		$12,401,376
	Swap contracts		348,752		Swap contracts		(159,881)
Foreign exchange contracts	Foreign currency transactions		16,116,648a		Translation of other assets		3,408,056a
					and liabilities denominated
					in foreign currencies
Credit contracts	Investments		(859,360)	b	Investments		427,650b
	Swap contracts		(6,802,165)		Swap contracts		5,608,437
Inflation contracts	Swap contracts		—		Swap contracts		1,199,904
Value recovery instruments	Investments		—		Investments		15,581
Totals			$(19,442,290)				$22,901,123

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies in the Statements of Operations.

bPurchased 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 April 30, 2017, the average month end fair value of derivatives, as a percentage of average month end net assets, and the average month end number of open derivative contracts for the period were as follows:

	Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Average month end fair value of derivatives		0.0%	a		0.4%		1.0%
Average month end number of open derivatives		2			115		131
aRounds to less than 0.1%.

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10.  Other Derivative Information (continued)

At April 30, 2017, the Funds’ OTC derivative assets and liabilities are as follows:

	Gross Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities
	Assetsa		Liabilitiesa
Derivatives
Franklin Low Duration
Total Return Fund
Forward exchange contracts		$5,166,939		$  1,295,710
Swap contracts		4,347,676		8,918,833
Total		$9,514,615		$10,214,543
Franklin Total
Return Fund
Forward exchange contracts		$15,316,783		$  4,593,467
Swap contracts		11,982,813		18,489,417
Total		$27,299,596		$23,082,884

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.

At April 30, 2017, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:

			Amounts Not Offset in the Statements of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statements of Assets and Liabilities		Financial Instruments Available for Offset		Financial Instruments Collateral Receivedb,c		Cash Collateral Received		Net Amount (Not less than zero)
Franklin Low Duration Total Return Fund
Counterparty
BZWS		$       5,571		$       (5,571)		$               —		$—		$    —
CITI		1,051,583		(1,051,583)		—		—		—
DBAB		2,585,558		(869,358)		(1,526,200)		(190,000)		—
FBCO		—		—		—		—		—
GSCO		1,502,105		(1,502,105)		—		—		—
HSBK		117		—		—		—		117
JPHQ		4,310,077		(2,969,730)		(1,340,347)		—		—
MSCO		59,604		(59,604)		—		—		—
Total		$9,514,615		$(6,457,951)		$(2,866,547)		$(190,000)		$  117

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			Amounts Not Offset in the Statements of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statements of Assets and Liabilities		Financial Instruments Available for Offset		Financial Instruments Collateral Receivedb,c		Cash Collateral Received		Net Amount (Not less than zero)
Franklin Total Return Fund
Counterparty
BOFA		$     301,113		$     (120,806)		$                —		$   (111,000)		$69,307
BZWS		118,054		(118,054)		—		—		—
CITI		1,400,755		(1,400,755)		—		—		—
DBAB		9,040,792		(4,371,387)		(4,179,409)		(490,000)		—
FBCO		325,234		(325,234)		—		—		—
GSCO		2,949,725		(2,949,725)		—		—		—
HSBK		5,193		—		—		—		5,193
JPHQ		13,134,250		(5,938,899)		(5,465,351)		(1,730,000)		—
MSCO		—		—		—		—		—
UBSW		24,480		(24,480)		—		—		—
Total		$27,299,596		$(15,249,340)		$(9,644,756)		$(2,331,000)		$74,500

At April 30, 2017, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:

			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset		Financial Instruments Collateral Pledged		Cash Collateral Pledgedc		Net Amount (Not less than zero)
Franklin Low Duration Total Return Fund
Counterparty
BZWS		$       25,859		$       (5,571)		$  —		$     (20,288)		$         —
CITI		1,132,972		(1,051,583)		—		—		81,389
DBAB		869,358		(869,358)		—		—		—
FBCO		760,182		—		—		(760,000)		182
GSCO		4,123,456		(1,502,105)		—		(2,480,000)		141,351
HSBK		—		—		—		—		—
JPHQ		2,969,730		(2,969,730)		—		—		—
MSCO		332,986		(59,604)		—		(170,000)		103,382
Total		$10,214,543		$(6,457,951)		$  —		$(3,430,288)		$326,304

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10.  Other Derivative Information (continued)

			Amounts Not Offset in the Statements of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statements of Assets and Liabilities		Financial Instruments Available for Offset		Financial Instruments Collateral Pledged		Cash Collateral Pledgedc		Net Amount (Not less than zero)
Franklin Total Return Fund
Counterparty
BOFA		$     120,806		$     (120,806)		$  —		$               —		$         —
BZWS		637,114		(118,054)		—		(490,000)		29,060
CITI		2,791,278		(1,400,755)		—		(1,360,000)		30,523
DBAB		4,371,387		(4,371,387)		—		—		—
FBCO		1,651,453		(325,234)		—		(1,326,219)		—
GSCO		6,806,129		(2,949,725)		—		(3,720,000)		136,404
HSBK		—		—		—		—		—
JPHQ		5,938,899		(5,938,899)		—		—		—
MSCO		593,575		—		—		(490,000)		103,575
UBSW		172,243		(24,480)		—		(147,763)		—
		$23,082,884		$(15,249,340)		$  —		$(7,533,982)		$299,562

^bAt April 30, 2017, the Fund received U.S. Government and Agency Securities as collateral for derivatives.

^cIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

See Note 1(d) regarding derivative financial instruments.

See Abbreviations on page 131.

11.  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 9, 2018. 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 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 April 30, 2017, the Funds did not use the Global Credit Facility.

12.  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

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• 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 April 30, 2017, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Franklin Adjustable U.S. Government Securities Fund
Assets:
Investments in Securities:
Mortgage-Backed Securities	$	—	$	1,120,421,648	$	—	$	1,120,421,648
Short Term Investments		30,179,621		—		—		30,179,621
Total Investments in Securities	$	30,179,621	$	1,120,421,648	$	—	$	1,150,601,269
Franklin Floating Rate Daily Access Fund
Assets:
Investments in Securities:
Equity Investments:
Oil & Gas Exploration & Production	$	—	$	8,547,365	$	—	$	8,547,365
Steel		—		—		1,651,113		1,651,113
Senior Floating Rate Interests		—		3,040,049,025		—		3,040,049,025
Asset-Backed Securities		—		361,021,604		—		361,021,604
Short Term Investments		833,259,536		—		—		833,259,536
Total Investments in Securities	$	833,259,536	$	3,409,617,994	$	1,651,113	$	4,244,528,643
Other Financial Instruments:
Unfunded Loan Commitments	$	—	$	880,912	$	—	$	880,912
Liabilities:
Other Financial Instruments:
Swap Contracts	$	—	$	783,852	$	—	$	783,852

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12.  Fair Value Measurements (continued)

	Level 1		Level 2		Level 3			Total
Franklin Low Duration Total Return Fund
Assets:
Investments in Securities:
Equity Investments:a
Energy	$	1,822,188	$	—	$	631,163		$	2,453,351
Retailing		—		—		10,141			10,141
All Other Equity Investmentsb		52,869,422		—		—			52,869,422
Corporate Bonds		—		964,067,162		—			964,067,162
Senior Floating Rate Interests		—		68,953,965		—			68,953,965
Foreign Government and Agency Securities		—		39,847,983		—			39,847,983
U.S. Government and Agency Securities		—		638,710,701		—			638,710,701
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		649,036,682		—			649,036,682
Mortgage-Backed Securities		—		37,522,603		—			37,522,603
Municipal Bonds		—		16,639,929		—			16,639,929
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		137,532,020		—		—			137,532,020
Total Investments in Securities	$	192,223,630	$	2,414,779,025	$	641,304		$	2,607,643,959
Other Financial Instruments:
Futures Contracts	$	774,036	$	—	$	—		$	774,036
Forward Exchange Contracts		—		5,166,939		—			5,166,939
Swap Contracts		—		1,390,578		—			1,390,578
Unfunded Loan Commitments		—		103,134		—			103,134
Total Other Financial Instruments	$	774,036	$	6,660,651	$	—		$	7,434,687
Liabilities:
Other Financial Instruments:
Futures Contracts	$	912,683	$	—	$	—		$	912,683
Forward Exchange Contracts		—		1,295,710		—			1,295,710
Swap Contracts		—		3,762,159		—			3,762,159
Total Other Financial Instruments	$	912,683	$	5,057,869	$	—		$	5,970,552

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	Level 1		Level 2		Level 3			Total
Franklin Total Return Fund
Assets:
Investments in Securities:
Equity Investments:a
Consumer Services	$	—	$	—	$	7,210,139		$	7,210,139
Energy		4,199,269		—		1,472,715			5,671,984
Retailing		—		—		23,661			23,661
All Other Equity Investmentsb		132,951,166		—		—			132,951,166
Corporate Bonds		—		1,590,336,401		—			1,590,336,401
Senior Floating Rate Interests		—		109,900,005		—			109,900,005
Foreign Government and Agency Securities		—		114,718,580		—			114,718,580
U.S. Government and Agency Securities		—		804,467,469		—			804,467,469
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		765,808,350		14,906			765,823,256
Mortgage-Backed Securities		—		965,533,799		—			965,533,799
Municipal Bonds		—		91,627,096		—			91,627,096
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		70,776,511		—		—			70,776,511
Total Investments in Securities	$	207,926,946	$	4,442,391,700	$	8,721,421		$	4,659,040,067
Other Financial Instruments:
Futures Contracts	$	8,606,920	$	—	$	—		$	8,606,920
Forward Exchange Contracts		—		15,316,783		—			15,316,783
Swap Contracts		—		5,301,966		—			5,301,966
Unfunded Loan Commitments		—		231,571		—			231,571
Total Other Financial Instruments	$	8,606,920	$	20,850,320	$	—		$	29,457,240
Liabilities:
Other Financial Instruments:
Futures Contracts	$	62,997	$	—	$	—		$	62,997
Forward Exchange Contracts		—		4,593,467		—			4,593,467
Swap Contracts		—		8,884,195		—			8,884,195
Total Other Financial Instruments	$	62,997	$	13,477,662	$	—		$	13,540,659

^aIncludes common and preferred stocks, and management investment companies as well as other equity investments.

^bFor detailed categories, see the accompanying Statement of Investments.

^cIncludes securities determined to have no value at April 30, 2017.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial insutruments at the end of the period.

13.  New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (FASB) 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, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.

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14.  Investment Company Reporting Modernization

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosures about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the Funds’ financial statements and related disclosures.

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.

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Abbreviations

Counterparty/Exchange		Currency		Selected Portfolio
BOFA	Bank of America, N.A.	BRL	Brazilian Real	AGMC	Assured Guaranty Municipal Corp.
BZWS	Barclays Bank PLC	CHF	Swiss Franc	ARM	Adjustable Rate Mortgage
CITI	Citigroup, Inc.	EUR	Euro	BBA	British Bankers Association
DBAB	Deutsche Bank AG	HUF	Hungarian Forint	CDA	Community Development Authority/Agency
FBCO	Credit Suisse Group AG	JPY	Japanese Yen	CDO	Collateralized Debt Obligation
GSCO	The Goldman Sachs Group, Inc.	MXN	Mexican Peso	CLO	Collateralized Loan Obligation
HSBK	HSBC Bank PLC	SEK	Swedish Krona	EDA	Economic Development Authority
ICE	Intercontinental Exchange	USD	United States Dollar	ETF	Exchange Traded Fund
JPHQ	JP Morgan Chase & Co.			FRN	Floating Rate Note
MSCO	Morgan Stanley			GDP	Gross Domestic Product
UBSW	UBS AG			GO	General Obligation
				IO	Interest Only
				LIBOR	London InterBank Offered Rate
				MFM	Multi-Family Mortgage
				PCR	Pollution Control Revenue
				PIK	Payment-In-Kind
				REIT	Real Estate Investment Trust
				SF	Single Family
				VRI	Value Recovery Instruments

Index
CDX.NA.HY.Series number	CDX North America High Yield Index
CDX.NA.IG.Series number	CDX North America Investment Grade Index
MCDX.NA.Series number	MCDX North America Index

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Shareholder Information

Board Approval of Investment Management Agreements

FRANKLIN INVESTORS SECURITIES TRUST

Franklin Adjustable U.S. Government Securities Fund

Franklin Floating Rate Daily Access Fund

Franklin Low Duration Total Return Fund

Franklin Total Return Fund

(each a Fund)

At an in-person meeting held on February 28, 2017 (Meeting), the Board of Trustees (Board) of Franklin Investors Securities Trust, including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and each Fund and the investment sub-advisory agreement between the Manager and Franklin Templeton Institutional, LLC (Sub-Adviser), an affiliate of the Manager, on behalf of the Franklin Total Return Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.

In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent, and quality of the services provided by the Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund;

(iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.

In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the existing management fees are fair and reasonable and that the continuance of such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.

Nature, Extent and Quality of Services

The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses, shareholder services, marketing support payments made to financial intermediaries and third party servicing arrangements; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continual efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity, derivatives and liquidity risk management.

The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the strong financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the mutual fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the Franklin Templeton Investments (FTI) organization.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided

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by the Manager and its affiliates to the Funds and their shareholders.

Fund Performance

The Board reviewed and considered the performance results of each Fund over various time periods ended December 31, 2016. The Board considered the performance returns for each Fund in comparison to the performance returns of mutual funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the mutual funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.

Franklin Adjustable U.S. Government Securities Fund - The Performance Universe for this Fund included the Fund and all retail and institutional ultra-short obligation funds. The Board noted that the Fund’s annualized income return for the one-, three-, five- and 10-year periods was above the median of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-, three- and five-year periods was below the median of its Performance Universe, but for the 10-year period was above the median of its Performance Universe. Given the Fund’s income-oriented investment objective, the Board concluded that the Fund’s performance was acceptable.

Franklin Floating Rate Daily Access Fund - The Performance Universe for this Fund included the Fund and all retail and institutional loan participation funds. The Board noted that the Fund’s annualized income return and annualized total return for the one-, three- and five-year periods were above the medians of its Performance Universe, but for the 10-year period were below the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin Low Duration Total Return Fund - The Performance Universe for this Fund included the Fund and all retail and institutional short investment-grade debt funds. The Board noted that the Fund’s annualized income return and annualized total return for the one-, three-, five- and 10-year periods were above the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.

Franklin Total Return Fund - The Performance Universe for this Fund included the Fund and all retail and institutional core plus bond funds. The Board noted that the Fund’s annualized income return for the one-year period was below the median of its Performance Universe, but for the three-, five- and 10-year periods was above the median of its Performance Universe. The Board also noted that the Fund’s annualized total return for the one-, three-, five- and 10-year periods was below the median of its Performance Universe. Given the Fund’s income-oriented investment objective, the Board concluded that the Fund’s performance was acceptable. In doing so, the Board noted that Fund’s annualized total return for each of the one-, three-, five- and 10-year periods, while below the median, exceeded 2.3%.

Comparative Fees and Expenses

The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including management fees; transfer agent expenses; underlying fund expenses, if any; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board also noted that at its February meeting each year, it receives an annual report on all marketing support payments made by FTI to financial intermediaries. The Board considered the actual total expense ratio and, separately, the contractual management fee rate (Management Rate) of each Fund, in comparison to the median ratio and median Management Rate, respectively, of other mutual funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges, and the actual total expense ratio, for comparative consistency, was shown for Class A shares for funds with multiple classes of shares. The Board received a description of the methodology used by Broadridge to select the mutual funds included in an Expense Group.

Franklin Adjustable U.S. Government Securities Fund – The Expense Group for the Fund included the Fund and one other ultra-short obligation fund, one short U.S. government fund and one short-intermediate investment-grade debt fund. The Board noted the small size of the Expense Group and that the

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Management Rate and total expense ratio for the Fund were 8.4 and 8.1 basis points above the median of its Expense Group, respectively. The Board concluded that the Management Rate charged to the Fund is fair and reasonable.

Franklin Floating Rate Daily Access Fund – The Expense Group for the Fund included the Fund and 14 other loan participation funds. The Board noted that the Management Rate and actual total expense ratio for the Fund were below the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is fair and reasonable.

Franklin Low Duration Total Return Fund – The Expense Group for the Fund included the Fund and eight other short investment-grade debt funds. The Board noted that the Management Rate for the Fund was above the median of its Expense Group, but the actual total expense ratio for the Fund was equal to the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is fair and reasonable. In doing so, the Board noted that the Fund benefited from a fee waiver from management.

Franklin Total Return Fund – The Expense Group for the Fund included the Fund and eight other core plus bond funds. The Board noted that the Management Rate and actual total expense ratio for the Fund were 6.4 and 3.7 basis points above the median of its Expense Group, respectively. The Board concluded that the Management Rate charged to the Fund is fair and reasonable. In doing so, the Board noted that the Fund benefited from a fee waiver from management and that the Sub-Adviser was paid by the Manager out of the management fee the Manager received from the Fund.

Profitability

The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2016, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, the Funds’ independent registered public accounting firm has been engaged by the Manager to

periodically review the reasonableness of the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.

The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.

The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, quality and extent of services provided to each Fund.

Economies of Scale

The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints, which operate generally to share any economies of scale with a Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board concluded that to the extent economies of scale may be realized by the Manager and its affiliates, each Fund’s management fee structure provided a sharing of benefits with the Fund and its shareholders as the Fund grows.

Conclusion

Based on its review, consideration and evaluation of all factors

134         Semiannual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

SHAREHOLDER INFORMATION

it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

franklintempleton.com Semiannual Report         135

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	Semiannual Report and Shareholder Letter Franklin Investors Securities Trust
	Investment Manager Franklin Advisers, Inc.
	Subadvisor
	Franklin Templeton Institutional, LLC
	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.

© 2017 Franklin Templeton Investments. All rights reserved. FIST2 S 06/17

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 changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting 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 INVESTORS SECURITIES TRUST

By	/S/ MATTHEW T. HINKLE
	Matthew T. Hinkle
	Chief Executive Officer –
	Finance and Administration
Date	June 26, 2017

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	June 26, 2017

By	/S/ GASTON GARDEY
	Gaston Gardey
	Chief Financial Officer and
	Chief Accounting Officer
Date	June 26, 2017

EX-99.CODE

Exhibit 12(a)(1)

CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS

———————————————————————————————————————  

PROCEDURES Revised December 18, 2009

———————————————————————————————————————  

FRANKLIN TEMPLETON FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND

SENIOR FINANCIAL OFFICERS

I. Covered Officers and Purpose of the Code

This code of ethics (the “Code”) applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the “Covered Officers,” each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission (“SEC”) (collectively, “FT Funds”) for the purpose of promoting:

• Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships;

• Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds;

• Compliance with applicable laws and governmental rules and regulations;

• The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

• Accountability for adherence to the Code. Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.

Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT (“Business Conduct”), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employee’s business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies.

Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code.

Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds’ adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you.

III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

OVERVIEW. A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds.

Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as “affiliated persons” of the FT Funds. The FT Funds’ and the investment advisers’ compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds’ Boards of Directors (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds.

Each Covered Officer must:

• Not use his or her personal influence or personal relationships improperly to influence investment decisions orfinancial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds;

• Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds;

• Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith;

• Report at least annually the following affiliations or other relationships:/1

• all directorships for public companies and all companies that are required to file reports with the SEC; o any direct or indirect business relationship with any independent directors of the FT Funds;

• any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firm’s service as the Covered Persons accountant); and

• any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources).

These reports will be reviewed by the Legal Department for compliance with the Code.

There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2:

• Service as a director on the board of any public or private Company;

• The receipt of any gifts in excess of $100 from any person, from any corporation or association

• The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000.

• Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund’s service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof;

• A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting.

IV. Disclosure and Compliance

• Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds;

• Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds’ directors and auditors, and to governmental regulators and self-regulatory organizations;

• Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Fund’s adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and

• It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

V. Reporting and Accountability

Each Covered Officer must:

• Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B);

• Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and

• Notify Franklin Resources’ General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code.

Franklin Resources’ General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds.

The FT Funds will follow these procedures in investigating and enforcing this Code:

• Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department;

• If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action;

• Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund;

• If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer;

• The Independent Directors will be responsible for granting waivers, as appropriate; and

• Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5

VI. Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds’ advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund’s principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FT’s Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VII. Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds’ Board including a majority of independent directors.

VIII. Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds’ Board and their counsel.

IX. Internal Use

The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion.

X. Disclosure on Form N-CSR

Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so.

The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant’s annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention.

The Legal Department shall be responsible for ensuring that:

• a copy of the Code is filed with the SEC as an exhibit to each Fund’s annual report; and

• any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrant’s annual report on Form N-CSR.

In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR.

In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences.

EXHIBIT A

Persons Covered by the Franklin Templeton Funds

Code of Ethics

December 2013

FRANKLIN GROUP OF FUNDS

Edward B. Jamieson	President and Chief Executive Officer—Investment Management
Rupert H. Johnson, Jr.	President and Chief Executive Officer—Investment Management
William J. Lippman	President and Chief Executive Officer—Investment Management
Christopher Molumphy	President and Chief Executive Officer—Investment Management
Laura Fergerson	Chief Executive Officer—Finance and Administration
Gaston R. Gardey	Chief Financial Officer and Chief Accounting Officer
FRANKLIN MUTUAL SERIES FUNDS
Peter Langerman	Chief Executive Officer—Investment Management
Laura Fergerson	Chief Executive Officer—Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer
FRANKLIN ALTERNATIVE STRTEGIES FUNDS
William Yun	Chief Executive Officer—Investment Management
Laura Fergerson	Chief Executive Officer—Finance and Administration
Robert G. Kubilis	Chief Financial Officer and Chief Accounting Officer
TEMPLETON GROUP OF FUNDS
Mark Mobius	President and Chief Executive Officer—Investment Management
Christopher J. Molumphy	President and Chief Executive Officer—Investment Management
Norman Boersma	President and Chief Executive Officer—Investment Management
Donald F. Reed	President and Chief Executive Officer—Investment Management
Laura Fergerson	Chief Executive Officer—Finance and Administration
Mark H. Otani	Chief Financial Officer and Chief Accounting Officer

EXHIBIT B

ACKNOWLEDGMENT FORM

DECEMBER

FRANKLIN TEMPLETON FUNDS CODE OF ETHICS

FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS

INSTRUCTIONS:

1. Complete all sections of this form.

2. Print the completed form, sign, and date.

3. Submit completed form to FT’s General Counsel c/o Code of Ethics Administration within 10 days of becoming a Covered Officer and by February 15th of each subsequent year.

INTER-OFFICE MAIL:	Code of Ethics Administration, Global Compliance SM-920/2
Fax:	(650) 312-5646
E-MAIL:	Preclear-Code of Ethics (internal address); lpreclear@frk.com (external address)

COVERED OFFICER’S NAME:

TITLE:

DEPARTMENT:

LOCATION:

CERTIFICATION FOR YEAR ENDING:

TO: Franklin Resources General Counsel, Legal Department

I acknowledge receiving, reading and understanding the Franklin Templeton Fund’s Code of Ethics for Principal Executive Officers and Senior Financial Officers (the “Code”). I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment.

  Signature   Date signed

1. Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel.

2. Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officer’s immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT’s General Counsel in such situations.

3. Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so.

4. Item 2 of Form N-CSR defines “waiver” as “the approval by the registrant of a material departure from a provision of the code of ethics” and “implicit waiver,” which must also be disclosed, as “the registrant’s failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer” of the registrant. See Part X.

5. See Part X.

EX-99.CERT

Exhibit 12 (a) (2)

I, Matthew T. Hinkle, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Investors Securities Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

6/26/2017

/S/ MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer—Finance and Administration

Exhibit 12 (a) (2)

I, Gaston Gardey, certify that:

1. I have reviewed this report on Form N-CSR of Franklin Investors Securities Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

6/26/2017

/S/ GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

EX-99.906CERT

Exhibit 12 (b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew T. Hinkle, Chief Executive Officer of the Franklin Investors Securities Trust (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 4/30/2017 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 6/26/2017

/S/ MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer—Finance and Administration

Exhibit 12 (b)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Gaston Gardey, Chief Financial Officer of the Franklin Investors Securities Trust (the “Registrant”), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The periodic report on Form N-CSR of the Registrant for the period ended 4/30/2017 (the “Form N-CSR”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: 6/26/2017

/S/ GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer