N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSR

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: 10/31/18

Item 1. Reports to Stockholders.

Franklin Templeton Investments

Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.

During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.

Dear Fellow Shareholder:

The 12 months ended October 31, 2018, benefited from mostly upbeat economic data as corporate earnings increased, the U.S. job market continued to improve and the unemployment rate declined.

Under new chairman Jerome Powell, the U.S. Federal Reserve (Fed) increased its federal funds rate by 0.25% three times in 2018, after a 0.25% increase in December 2017, bringing the rate from 1.25% to 2.25% by period-end. In September, the Fed cited business investment and household spending growth as more evidence of economic strength. The Fed noted inflation remained stable and longer-term inflation expectations had changed little. The 10-year U.S. Treasury yield began the period at 2.38% and ended the period at 3.15%.

In September 2018, the Standard & Poor’s 500^® Index (S&P 500^®) reached an all-time high, but experienced heightened volatility near period-end due to investor concerns about Fed interest-rate policies, higher U.S. Treasury yields, trade tensions, a potentially slower economy and some weaker-than-expected fourth-quarter 2018 revenue guidance. In this environment, U.S. securities, as measured by the S&P 500, increased 7.35%,¹ representing a change in this total return index level from 5,002.03 to 5,369.49.² Investment-grade

bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, decreased 2.05%,¹ representing a change in this total return index level from 2,039.64 to 1,997.76.³

We are committed to our long-term perspective and disciplined investment approach as we conduct a rigorous, 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.

Franklin Investors Securities Trust’s annual report, covering Franklin Balanced Fund, Franklin Convertible Securities Fund, Franklin Equity Income Fund and Franklin Real Return Fund, 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.

1. Source: Morningstar.

2. Source: Copyright © 2018, S&P Dow Jones Indices LLC. All rights reserved. The index levels for the S&P 500 shown above are based on total returns, which include reinvestment of any income or distributions.

3. Source: Bloomberg Barclays Indices. The index levels for the Bloomberg Barclays U.S. Aggregate Bond Index shown above are based on total returns, which include reinvestment of any income or distributions.

The indexes are unmanaged and include reinvestment of any income or distributions.

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

Not FDIC Insured  |  May Lose Value  |  No Bank Guarantee

franklintempleton.com Not part of the annual report       1

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 October 31, 2018, 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.

Contents

Annual Report
Economic and Market Overview	3
Franklin Balanced Fund	4
Franklin Convertible Securities Fund	13
Franklin Equity Income Fund	20
Franklin Real Return Fund	27
Financial Highlights and Statements of Investments	33
Financial Statements	66
Notes to Financial Statements	72
Report of Independent Registered Public Accounting Firm	91
Tax Information	92
Special Meeting of Shareholders	93
Board Members and Officers	96
Shareholder Information	101

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

2       Not part of the annual report franklintempleton.com

Annual Report

Economic and Market Overview

The U.S. economy grew during the 12 months under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The manufacturing and services sectors expanded during the period. The unemployment rate declined from 4.1% in October 2017, as reported at the beginning of the 12-month period, to a nearly 49-year low of 3.7% at period-end.¹ Annual inflation, as measured by the Consumer Price Index, increased from 2.0% in October 2017, as reported at the beginning of the period, to 2.5% at period-end.¹

The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its December 2017 meeting and continued to reduce its balance sheet as part of its ongoing plan to normalize monetary policy. In his congressional testimonies in February and July 2018, as well as at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to gradually raise interest rates. As widely expected, the Fed further raised its target range for the federal funds rate 0.25% each at its March, June and September 2018 meetings, to 2.00%–2.25%. At its September meeting, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018. Minutes from the Fed’s September meeting (released in October) indicated that a few officials expected monetary policy to become modestly restrictive of economic growth, while some officials seemed to favor increasing the federal funds rate temporarily above what they consider to be its longer-term level to reduce the risk of overshooting the Fed’s inflation objective. In contrast, some officials indicated they would not favor a restrictive policy unless they see clear signs of an overheating economy and rising inflation.

U.S. equity markets overall rose during the period, benefiting from mostly upbeat economic data, and better U.S. corporate earnings, as well as the passage of the U.S. tax reform bill. After reaching record highs in January 2018, U.S. stocks declined amid concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected, as well as fears of tighter regulation of information technology and technology-related companies. Other factors that curbed investor sentiment included tensions

between the U.S. and North Korea at certain times during the period, political uncertainties in the U.S., the Trump administration’s protectionist policies, and the potential impact of escalating U.S.-China trade tensions on global growth and corporate earnings. Partially offsetting these concerns were an overall easing of tensions in the Korean peninsula in the latter part of the period, intermittent U.S.-China trade negotiations, an agreement between the U.S. and the European Union to try to reduce trade barriers, and a trade deal between the U.S., Mexico and Canada. After reaching a new all-time high in September 2018, the broad U.S. stock market, as measured by the Standard & Poor’s 500 Index (S&P 500), experienced heightened volatility in October amid investor concerns about the Fed’s interest-rate path, rising U.S. Treasury yields, trade, a potentially moderating economy and several big companies’ weaker-than-expected fourth-quarter 2018 revenue guidance. In this environment, the S&P 500 generated a +7.35% total return for the 12-month period.²

The foregoing information reflects our analysis and opinions as of October 31, 2018. 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: U.S. Bureau of Labor Statistics.

2. Source: Morningstar.

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

franklintempleton.com Annual Report           3

Franklin Balanced Fund

This annual report for Franklin Balanced Fund covers the fiscal year ended October 31, 2018.

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 debt securities, including bonds, notes, debentures and money market securities, and at least 25% of its total assets in equity securities, primarily common and preferred stock.

Portfolio Composition*

10/31/18

	% of Total Net Assets
Stocks	56.2%
Common Stocks	40.5%
Equity-Linked Securities	10.6%
Management Investment Companies	1.9%
Options Purchased	1.9%
Index-Linked Notes	1.0%
Convertible Preferred Stocks	0.3%
Bonds	39.2%
Corporate Bonds	33.7%
U.S. Government and Agency Securities	5.2%
Convertible Bonds	0.3%
Short-Term Investments & Other Net Assets**	4.6%

*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.

**Includes money market funds and other net assets (including derivatives).

Performance Overview

For the 12 months under review, the Fund’s Class A shares posted a cumulative total return of +0.89%. 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 +7.25% 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 -2.05% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 8.

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 US 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 from time to time enter into various equity-related transactions involving derivative instruments, including put and call options on equity securities and equity indexes. We may also enter into equity-related derivatives transactions to hedge against market risk, to earn income, to gain or increase exposure to certain equity securities or segments of the equity markets or to otherwise enhance Fund returns.

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.

Manager’s Discussion

Consistent with the Fund’s long-term strategy of investing across asset classes to seek to generate attractive income, while

1. Source: Morningstar.

The indexes are unmanaged and include reinvestment of any income or distributions. 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 38.

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FRANKLIN BALANCED FUND

seeking opportunities for capital appreciation, performance was supported by healthy diversification and a positive overall contribution from the Fund’s equity holdings, while our fixed income position detracted from results. During the 12 months under review, our actions and movements in equity and fixed income markets resulted in a decline in equity holdings from 61.2% to 56.2% of total net assets, and a rise in fixed income holdings from 33.0% to 39.2%. Our cash position decreased from 5.8% to 4.6% of total net assets. The flexibility to use market volatility to invest in different asset classes remains a core strategy of the Fund.

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class
November		3.00		2.25		2.74		3.34		3.25
December**		5.36		4.59		5.10		5.71		5.61
January		3.00		2.23		2.74		3.35		3.25
February		3.00		2.23		2.74		3.35		3.25
March		3.00		2.22		2.73		3.36		3.26
April		3.00		2.22		2.73		3.36		3.26
May		3.00		2.22		2.73		3.36		3.26
June		3.00		2.27		2.74		3.35		3.25
July		3.00		2.27		2.74		3.35		3.25
August		3.00		2.27		2.74		3.35		3.25
September		3.00		2.25		2.74		3.34		3.25
October		3.00		2.25		2.74		3.34		3.25
Total		38.36		29.27		35.21		42.56		41.39

*The distribution amount is the sum of all net investment income distributions for the period shown. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

**Includes an additional 2.36 cent per share distribution to meet excise tax requirements.

We reduced our equity exposure amid continued strong performance in 2018 and our assessment of relative value versus other asset classes. We substantially trimmed our energy and industrial holdings, and we found select opportunities to build on our information technology (IT) holdings amid volatility toward the end of the period.

The Fund’s equity holdings in the IT, health care and energy sectors led returns. Within the IT sector, our investments in Apple, Microsoft and Cisco Systems benefited performance. Apple reported solid results for its fiscal second and third quarters (ended March and June, respectively), supported by strong growth in services and higher average selling price for

Top Five Equity Holdings

10/31/18

Company Sector/Industry	% of Total Net Assets
Apple Inc. Information Technology	2.5%
Analog Devices Inc. Information Technology	2.0%
Microsoft Corp. Information Technology	1.9%
The Procter & Gamble Co. Consumer Staples	1.9%
Wells Fargo & Co. Financials	1.7%

iPhones, and issued strong guidance for its fiscal fourth quarter (ended September). Near period-end, the company revealed its latest lineup of products, which included new Apple Watch and iPhone models. Microsoft reported robust quarterly results during the period, supported by solid demand for its suite of office and cloud-based products, as well as its cloud services. The company is a beneficiary of strong sales execution, a positive enterprise IT spending environment, its status as a critical partner to IT departments in this time of digital transformation, and a large installed base that it is successfully moving to higher-value cloud and Service-as-a-Software (SaaS) deployments. In the consumer market, the company continued to deliver new value into the declining personal computer market, while generating growth in gaming. Cisco benefited from strong demand across most segments of its business including infrastructure, applications and security. In addition, the company continued to execute on key shareholder initiatives of share buybacks and dividends aided by the repatriation and corporate tax reforms earlier this year.

Health care sector contributors included Pfizer and Eli Lilly². Successful new products in large markets helped results for Pfizer, while Eli Lilly benefited from strong revenue growth and operating margin performance driven in part by several fast growing products including Trulicity, Taltz, and Basaglar.

Anadarko Petroleum² and Royal Dutch Shell were notable energy sector contributors. Anadarko Petroleum reported strong results in the improved commodity environment amid a shifting focus from production growth to delivering free cash flow back to shareholders. Royal Dutch Shell benefited from continued cost reductions, modest production growth and progress on asset sales as they integrate BG Group.

2. Not held at period-end.

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FRANKLIN BALANCED FUND

Conversely, the Fund’s equity holdings in the materials and industrials sectors detracted from performance. Notable detractors included General Electric and General Dynamics in the industrials sector and BASF and DowDuPont in the materials sector. General Electric (GE) was a major detractor during the period as cash flow eroded from weak fundamentals, causing the company to cut its dividend in half early in the period. General Dynamics was plagued by weakness in its Aerospace segment which included disappointing results in its Gulfstream corporate jet business. Germany-based chemical manufacturer BASF struggled to offset higher input costs, while DowDuPont underperformed in advance of its split into three distinct businesses—materials, agriculture and specialty chemicals—scheduled for 2019.

Fixed income returns were challenged for the year as interest rates increased across the yield curve. The Bloomberg Barclays U.S. Aggregate Index performed better than our fixed income holdings during the year as our portfolio was weighted more heavily in the corporate bonds category that lagged the overall index. As U.S. Treasury yields increased, we added to our exposure to U.S. Treasury securities based on our assessment of relative value within fixed income. Short-dated U.S. government securities were positive contributors during the period. The Fund’s investment-grade corporate exposure was negatively impacted by rising interest rates over the course of the year. We trimmed our exposures to the utilities and information technology sectors, while adding to the communication services sector and consumer cyclical companies based on broader credit market weakness.

Among the Fund’s corporate fixed income exposures, holdings in banking companies and in consumer cyclical and consumer non-cyclical companies detracted from performance.³ Among these holdings, longer-duration securities tended to underperform the most, including companies such as Anheuser-Busch Inbev, Clorox, Citigroup and Wells Fargo, that were challenged during the year. Other notable detractors were Capital One Financial, Morgan Stanley and Wynn Resorts.

Conversely, the Fund’s key fixed income contributors were in the energy and health care sectors, with high-yield issuers such as oil service companies Nabors Industries and Weatherford

Top Five Fixed Income Holdings

10/31/18

Company Sector/Industry	% of Total Net Assets
U.S. Treasury Note U.S. Government and Agency Securities	5.2%
Morgan Stanley Financials	1.0%
Amazon.com Inc. Consumer Discretionary	1.0%
Citigroup Inc. Financials	0.8%
Costco Wholesale Corp. Consumer Staples	0.9%

International², Bausch Health (formerly Valeant Pharmaceuticals) and Endo Finance² leading the way. Nabors Industries and Weatherford International benefited as crude oil prices recovered and drilling activity started to pick up. Bausch Health, formerly Valeant Pharmaceuticals, posted results well ahead of expectations, driven by positive revenue growth across most segments including Bausch, Salix, Ortho Dermatologics and Diversified Products. Endo International, a branded and generic pharmaceuticals company, benefited from strength in its base business as well as several competitive threats which have thus far failed to materialize. Other individual contributors included communication services companies Sprint Spectrum and Charter Communications and electric utility companies Intergen² and PSEG Power.

3. Banking companies are in financials in the fixed income section of the SOI. Consumer cyclical companies are in the consumer discretionary, consumer staples and health care sectors in the fixed income section of the SOI. Consumer non-cyclical companies are in the consumer discretionary, consumer staples and health care sectors in the fixed income section of the SOI.

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

6       Annual Report franklintempleton.com

FRANKLIN BALANCED FUND

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 October 31, 2018, 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.

franklintempleton.com Annual Report           7

FRANKLIN BALANCED FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% 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
A4
1-Year	+0.89%	-4.66%
5-Year	+28.94%	+4.02%
10-Year	+160.46%	+9.42%
Advisor
1-Year	+1.14%	+1.14%
5-Year	+30.71%	+5.50%
10-Year	+167.94%	+10.36%

Share Class	Distribution   Rate5	30-Day Standardized Yield6
		(with waiver)		(without waiver)
A	2.86%		2.14%	2.14%
Advisor	3.27%		2.53%	2.53%

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 11 for Performance Summary footnotes.

8       Annual Report franklintempleton.com

FRANKLIN BALANCED FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 11 for Performance Summary footnotes.

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FRANKLIN BALANCED FUND

PERFORMANCE SUMMARY

Net Asset Value

Share Class (Symbol)	10/31/18		10/31/17		Change
A (FBLAX)		$11.89		$12.36		-$0.47
C (FBMCX)		$11.78		$12.25		-$0.47
R (FBFQX)		$11.92		$12.39		-$0.47
R6 (FBFRX)		$11.93		$12.39		-$0.46
Advisor (FBFZX)		$11.92		$12.39		-$0.47

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income		Short-Term Capital Gain		Long-Term Capital Gain		Total
A		$0.3836		$0.0474		$0.1535		$0.5845
C		$0.2927		$0.0474		$0.1535		$0.4936
R		$0.3521		$0.0474		$0.1535		$0.5530
R6		$0.4256		$0.0474		$0.1535		$0.6265
Advisor		$0.4139		$0.0474		$0.1535		$0.6148

Total Annual Operating Expenses⁸

Share Class	With Waiver		Without Waiver
A		1.01%		1.03%
Advisor		0.76%		0.78%

See page 11 for Performance Summary footnotes.

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FRANKLIN BALANCED FUND

PERFORMANCE SUMMARY

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 2/28/19. 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. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.

5. Distribution rate is based on an annualization of the respective class’s October dividend and the maximum offering price (NAV for Advisor Class) per share on 10/31/18.

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. Source: Morningstar. The S&P 500 is a market capitalization-weighted index of 500 stocks designed to measure total U.S. equity market performance. The Bloomberg Barclays U.S. Aggregate Bond Index is a market capitalization-weighted index representing the U.S. investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. All issues included are SEC registered, taxable, dollar denominated and nonconvertible, must have at least one year to final maturity and must be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s, S&P and Fitch, respectively.

8. 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.

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

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FRANKLIN BALANCED 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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,007.30	$5.16	$1,020.06	$5.19	1.02%
C	$1,000	$1,003.70	$8.89	$1,016.33	$8.94	1.76%
R	$1,000	$1,006.00	$6.42	$1,018.75	$6.46	1.27%
R6	$1,000	$1,009.00	$3.39	$1,021.83	$3.41	0.67%
Advisor	$1,000	$1,009.40	$3.90	$1,021.32	$3.92	0.77%

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 184/365 to reflect the one-half year period.

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

12       Annual Report franklintempleton.com

Franklin Convertible Securities Fund

We are pleased to bring you Franklin Convertible Securities Fund’s annual report for the fiscal year ended October 31, 2018. Franklin Convertible Securities Fund closed to new investors with limited exceptions on August 29, 2018. Existing investors may continue to purchase additional shares of the Fund.

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. The Fund normally invests at least 80% of its net assets in convertible securities and common stock received upon conversion of convertible securities.

Portfolio Composition

Based on Total Net Assets as of 10/31/18

Performance Overview

For the 12 months under review, the Fund’s Class A shares delivered a +7.65% cumulative total return. In comparison, the Fund’s benchmark, the ICE BofA Merrill Lynch (BofAML) All Alternatives U.S. Convertibles Index, which tracks the domestic convertible securities market, generated a +7.34% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 16.

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. By investing in convertible securities, the Fund seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity market. 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

The information technology (IT), health care and consumer discretionary sectors contributed most to Fund performance during the period. Within IT, the Fund’s holdings of convertible bonds issued by mobile payment solutions provider Square, enterprise IT management software provider ServiceNow and open source software solutions provider Red Hat contributed to performance. Square’s quarterly results and earnings guidance were higher than anticipated. On top of solid performance in the company’s core payments business, the innovative company appears to be gaining traction in its platform-like subscription and services-based products for small and medium-sized businesses that could underpin an attractive long-term growth outlook for the company. Shares of ServiceNow rose amid better-than-expected earnings, revenue, operating margin, cash flow and billings, and higher revenue guidance. We believe ServiceNow is a high-quality Software-as-a-Service company that is proving itself as a key partner in business and government enterprise initiatives to drive productivity through digital transformation, while also delivering excellent unit economics. Red Hat’s stock price

1. Source: ICE 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.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 48.

franklintempleton.com Annual Report           13

FRANKLIN CONVERTIBLE SECURITIES FUND

soared shortly before period-end after IBM² announced an agreement to acquire all common shares of Red Hat for a substantial premium above the company’s share price at that time. IBM’s management believed the acquisition would make IBM the world’s number one hybrid cloud provider and unlock the full value of the cloud for businesses.

In health care, our holdings of convertible bonds issued by Sarepta Therapeutics, a commercial stage biotechnology company that seeks treatment for rare neuromuscular diseases, and Neurocrine Biosciences, which develops therapies for neurologic, psychiatric and endocrine related disorders, contributed to performance. In the consumer discretionary sector, our holdings of convertible bonds issued by digital image and photo products and services provider Shutterfly (not held at period-end) and online home furnishing store Wayfair, contributed to performance.

In contrast, the industrials, utilities and energy sectors detracted from performance. In industrials, our holdings in convertible preferred stock issued by power and hand tools maker Stanley Black & Decker hampered results, and in utilities, our position in convertible preferred stocks issued by diversified energy company Black Hills also hurt performance.

In other sectors, our holdings in convertible bonds issued by semiconductor products manufacturer Microchip Technology, biopharmaceutical dermatology company Dermira and semiconductor processing systems manufacturer LAM Research (Novellus Systems in the SOI) also hindered performance. Despite mostly solid earnings and revenue performance, Microchip Technology’s stock declined amid concerns about the company’s leveraged acquisition of Microsemi² in May. Microsemi’s prior practice of inflating revenue by overstocking its distributors is expected to temporarily reduce Microchip Technology’s future revenue and delay planned debt reduction by the company. Shares of Dermira fell significantly after the failure of two phase III clinical trials using its topical gel olumacostat to treat acne, but another clinical trial is pending to determine if the gel could be used to treat hyperhidrosis. The company has one more potential product in development that targets atopic dermatitis, with results expected by the first half of 2019. Semiconductor processing equipment manufacturer LAM Research suffered during the period from lower manufacturing spending in the industry, as evidenced by significant quarterly volatility in orders and a recent quarter-over-quarter decline in revenue.

Top 10 Holdings

10/31/18

Company Sector/Industry	% of Total Net Assets
Illumina Inc. Health Care		2.1%
Square Inc. Information Technology		2.1%
Sempra Energy Utilities		2.1%
Jazz Investments I Ltd. Health Care		2.1%
Workday Inc. Information Technology		2.0%
Atlassian Inc. Information Technology		2.0%
AXA SA Financials		2.0%
DexCom Inc. Health Care		2.0%
Ctrip.com International Ltd. Consumer Discretionary		2.0%
ServiceNow Inc. Information Technology		1.9%

However, we believe that rising demand for big data infrastructure by cloud providers, smartphone manufacturers and enterprises may support future revenue growth.

2. Not a Fund holding.

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

14       Annual Report franklintempleton.com

FRANKLIN CONVERTIBLE SECURITIES FUND

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

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

The foregoing information reflects our analysis, opinions and portfolio holdings as of October 31, 2018, 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.

franklintempleton.com Annual Report           15

FRANKLIN CONVERTIBLE SECURITIES FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% 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
A4
1-Year	+7.65%	+1.75%
5-Year	+48.59%	+7.02%
10-Year	+240.47%	+12.40%
Advisor
1-Year	+7.91%	+7.91%
5-Year	+50.41%	+8.51%
10-Year	+249.10%	+13.32%

	Distribution		30-Day Standardized Yield6
Share Class	Rate5		(with waiver)		(without waiver)
A		2.23%		1.49%	1.46%
Advisor		2.61%		1.84%	1.81%

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 18 for Performance Summary footnotes.

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FRANKLIN CONVERTIBLE SECURITIES FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 18 for Performance Summary footnotes.

franklintempleton.com Annual Report       17

FRANKLIN CONVERTIBLE SECURITIES FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income		Short-Term Capital Gain		Long-Term Capital Gain		Total
A		$0.4883		$0.2120		$0.8333		$1.5336
C		$0.3392		$0.2120		$0.8333		$1.3845
R6		$0.5591		$0.2120		$0.8333		$1.6044
Advisor		$0.5388		$0.2120		$0.8333		$1.5841

Total Annual Operating Expenses⁸

Share Class	With Waiver		Without Waiver
A	0.84%		0.85%
Advisor		0.59%		0.60%

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 2/28/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

2. Cumulative total return represents the change in value of an investment over the periods indicated.

3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

4. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.

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 10/31/18.

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. Source: Morningstar. The ICE BofAML All Alternatives U.S. Convertibles Index comprises domestic securities of all quality grades that are convertible into U.S. dollar-denominated common stock, ADRs or cash equivalents and have a delta (measure of equity sensitivity) that indicates the security likely has a balance between the debt and equity characteristics of the security.

8. 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.

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

18       Annual Report franklintempleton.com

FRANKLIN CONVERTIBLE 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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,029.30	$4.40	$1,020.87	$4.38	0.86%
C	$1,000	$1,025.20	$8.22	$1,017.09	$8.19	1.61%
R6	$1,000	$1,031.30	$2.51	$1,022.74	$2.50	0.49%
Advisor	$1,000	$1,030.00	$3.12	$1,022.13	$3.11	0.61%

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 184/365 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 Annual Report           19

Franklin Equity Income Fund

This annual report for Franklin Equity Income Fund covers the fiscal year ended October 31, 2018.

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 normally investing at least 80% of its net assets in equity securities, including securities convertible into common stocks. The Fund may also invest in debt securities and foreign securities, including emerging markets.

Performance Overview

For the 12 months under review, the Fund’s Class A shares delivered a +3.98% 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 +7.35% 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 +3.14% total return.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 23.

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 growth in selecting stocks for the Fund because we believe that,

Portfolio Composition

Based on Total Net Assets as of 10/31/18

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

The health care, information technology (IT) and energy sectors contributed most to Fund returns during the period. Within health care, pharmaceutical companies Merck, Pfizer

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company. For the 12-month period ended 10/31/18, this category consisted of 536 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 57.

20           Annual Report franklintempleton.com

FRANKLIN EQUITY INCOME FUND

and Eli Lilly were notable contributors. Merck delivered solid quarterly results with increased revenue and earnings, and the outlook has been helped by continued growing demand for its cancer treatment drug Keytruda. Although some investors remained concerned about the company’s growing reliance on a narrowing list of drugs, Merck planned to increase capital spending to develop new cancer treatments, vaccines and medicines for animal health.

In IT, software and services firm Microsoft, software and electronics company Apple and networking hardware and telecommunications equipment maker Cisco Systems were notable contributors. Microsoft reported robust quarterly results during the period, supported by solid demand for its suite of office and cloud-based products and services. The company is a beneficiary of strong sales execution, a positive enterprise IT spending environment, its status as a critical partner to IT departments in this time of digital transformation, and a large installed base that it is successfully moving to higher-value cloud and Service-as-a-Software (SaaS) deployments. In the consumer market, the company continued to deliver new value into the declining personal computer market, while generating growth in gaming. Apple reported solid results for its fiscal second and third quarters (ended March and June, respectively), supported by strong growth in services and higher average selling price for iPhones, and issued strong guidance for its fiscal fourth quarter (ended September). Near period-end, the company revealed its latest lineup of products, which included new Apple Watch and iPhone models.

In energy, the performance of independent oil and gas exploration and production company Anadarko Petroleum³ helped results as its focus on improving cash flow has been recognized by investors.

In other sectors, banking giant JPMorgan continued to show strong results across its businesses. Retailer Target benefited from an improving economy and new merchandise to post some of its best sales and earnings results in years. Strong results from railroad operator Norfolk Southern and managed care company UnitedHealth Group also aided performance.

In contrast, the industrials, materials and financials sectors detracted most from Fund performance. In industrials, conglomerate General Electric (GE)³ and diesel and natural gas engine manufacturer Cummins hurt results. In January 2018, GE announced a greater-than-expected $6.2 billion after-tax

Top 10 Holdings

10/31/18

Company Sector/Industry	% of Total Net Assets
JPMorgan Chase & Co. Financials		4.4%
Microsoft Corp. Information Technology		3.8%
Wells Fargo & Co. Financials		2.8%
Bank of America Corp. Financials		2.7%
PepsiCo Inc. Consumer Staples		2.4%
Johnson & Johnson Health Care		2.4%
Pfizer Inc. Health Care		2.4%
Chevron Corp. Energy		2.3%
The Procter & Gamble Co. Consumer Staples		2.3%
Merck & Co. Inc. Health Care		2.3%

charge related to its insurance subsidiary at GE Capital. The value of the company’s stock was heavily impacted by cash flow shortfalls during the period and the Fund exited the position during the early summer. Despite strong revenue and earnings results helped by an upturn in the industrials sector, shares of Cummins were affected by the discovery of faulty emissions control systems by regulators, in response to which the company agreed to a recall of diesel trucks using their engines. Investors were also concerned about long-term prospects for the company given a peaking North American truck market and a trend toward electric engines.

In materials, agriculture and specialty chemicals producer DowDuPont and Germany-based chemical manufacturer BASF hindered performance. In financials, insurer and financial services provider MetLife detracted from performance.

In other sectors, consumer and commercial products manufacturer Newell Brands³ and packaged food company Kraft Heinz also detracted. Newell Brands reported weak quarterly results and declining earnings guidance due in part to rising costs, unfavorable pricing and worse-than-expected margins. Revenue was also affected due to destocking by retailers and store closures of some important customers.

3. Not held at period-end.

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

franklintempleton.com Annual Report           21

FRANKLIN EQUITY INCOME FUND

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

The foregoing information reflects our analysis, opinions and portfolio holdings as of October 31, 2018, 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.

22       Annual Report franklintempleton.com

FRANKLIN EQUITY INCOME FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% 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
A4
1-Year	+3.98%	-1.74%
5-Year	+46.61%	+6.74%
10-Year	+192.77%	+10.71%
Advisor
1-Year	+4.22%	+4.22%
5-Year	+48.39%	+8.21%
10-Year	+200.35%	+11.63%

	Distribution		30-Day Standardized Yield6
Share Class	Rate5		(with waiver)		(without waiver)
A		2.75%		1.61%	1.60%
Advisor		3.18%		1.97%	1.96%

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 25 for Performance Summary footnotes.

franklintempleton.com Annual Report           23

FRANKLIN EQUITY INCOME FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 25 for Performance Summary footnotes.

24       Annual Report franklintempleton.com

FRANKLIN EQUITY INCOME FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income		Short-Term Capital Gain		Long-Term Capital Gain		Total
A		$0.5721		$0.0013		$0.6248		$1.1982
C		$0.3830		$0.0013		$0.6248		$1.0091
R		$0.5136		$0.0013		$0.6248		$1.1397
R6		$0.6643		$0.0013		$0.6248		$1.2904
Advisor		$0.6323		$0.0013		$0.6248		$1.2584

Total Annual Operating Expenses¹⁰

Share Class	With Waiver		Without Waiver
A		0.85%		0.85	%
Advisor		0.60%		0.60	%

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 2/28/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

2. Cumulative total return represents the change in value of an investment over the periods indicated.

3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

4. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.

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 10/31/18.

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. Source: Morningstar: The S&P 500 is a market capitalization-weighted index of 500 stocks designed to measure total U.S. equity market performance.

8. Source: Lipper, a Thomson Reuters Company. The Lipper Equity Income Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper Equity Income Funds classification in the Lipper Open-End underlying funds universe. Lipper Equity Income Funds seek relatively high current income and growth of income through investing 60% or more of their portfolios in equities. For the one-year period ended 10/31/18, there were 536 funds in this category. Lipper calculations do not include sales charges or expense subsidization by a fund’s manager. The Fund’s performance relative to the average may have differed if these or other factors had been considered.

9. Source: Bureau of Labor Statistics, bls.gov/cpi. The Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

10. 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.

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

franklintempleton.com Annual Report           25

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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,022.30	$4.33	$1,020.92	$4.33	0.85%
C	$1,000	$1,017.80	$8.14	$1,017.14	$8.13	1.60%
R	$1,000	$1,020.70	$5.50	$1,019.76	$5.50	1.08%
R6	$1,000	$1,024.00	$2.55	$1,022.68	$2.55	0.50%
Advisor	$1,000	$1,023.10	$3.06	$1,022.18	$3.06	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 184/365 to reflect the one-half year period.

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

26       Annual Report franklintempleton.com

Franklin Real Return Fund

This annual report for Franklin Real Return Fund covers the fiscal year ended October 31, 2018.

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 and at any given time may have a substantial amount of its asset in any one class: inflation-indexed securities and investment-grade fixed income securities issued by governments, corporations and municipal issuers; equity securities with high correlation to broad measures of inflation; and non-dollar denominated inflation-indexed securities.

Portfolio Composition*

Based on Total Net Assets as of 10/31/18

*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.

**In the SOI, the natural resources sector comprises energy and materials.

Performance Overview

For the 12 months under review, the Fund’s Class A shares had a -0.69% cumulative total return. In comparison, the Bloomberg 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 -1.24% 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 2.52% for the same period.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 29.

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

The Fund uses an active asset allocation strategy to try to achieve its goal of total return that exceeds the rate of inflation over an economic cycle by allocating its 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?

A yield curve is a line that plots the yield to maturity of bonds having equal credit quality against their maturity dates.

Manager’s Discussion

At period-end, nearly three quarters of total net assets were invested in Treasury Inflation-Protected Securities (TIPS). For diversification, we also allocated the Fund’s assets to management investment companies, natural resources common stocks, management investment companies, repurchase agreements and other 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.

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 64.

franklintempleton.com Annual Report           27

FRANKLIN REAL RETURN FUND

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
							Advisor
Month	Class A		Class C		Class R6		Class
November		4.32		3.98		4.66		4.48
December		10.37		10.02		10.73		10.60
January		0.56		0.24		0.88		0.77
February**		—		—		—		—
March		4.21		3.58		4.90		4.60
April		2.90		2.58		3.22		3.10
May		1.92		1.55		2.32		2.15
June		4.53		4.22		4.85		4.68
July		2.63		2.30		2.97		2.84
August**		—		—		—		—
September		1.15		0.48		1.84		1.57
October**		—		—		—		—
Total	32.59		28.95		36.37		34.79

*The distribution amount is the sum of all net investment income distributions for the period shown. All Fund distributions will vary depending upon current market conditions, and past distributions are not indicative of future trends.

**The Fund paid no dividends due to negative inflation adjustments for TIPS, which are the Fund’s primary investments.

During the period, we increased the Fund’s allocations to real estate investment trusts (REITs). In contrast, we decreased the Fund’s allocation to natural resources equities and TIPS and eliminated our exposure to foreign debt securities. The Fund’s heaviest allocations were in TIPS and natural resources equities. The Fund’s investments in TIPS, foreign currency exposure and bank loans helped results. In contrast, the Fund’s investments in natural resources equities, commodities and REITs 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 October 31, 2018, 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.

28       Annual Report franklintempleton.com

FRANKLIN REAL RETURN FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.

Share Class	Cumulative   Total Return2	Average Annual Total Return3
A
1-Year	-0.69%	-4.91%
5-Year	-1.96%	-1.26%
10-Year	+24.29%	+1.76%
Advisor
1-Year	-0.47%	-0.47%
5-Year	-0.82%	-0.17%
10-Year	+27.32%	+2.44%

	Distribution		30-Day Standardized Yield5
Share Class	Rate4		(with waiver)		(without waiver)
A		0.00%		1.81%		1.51%
Advisor		0.00%		2.15%		1.84%

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 31 for Performance Summary footnotes.

franklintempleton.com Annual Report           29

FRANKLIN REAL RETURN FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 31 for Performance Summary footnotes.

30       Annual Report franklintempleton.com

FRANKLIN REAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income
A		$0.3259
C		$0.2895
R6		$0.3637
Advisor		$0.3479

Total Annual Operating Expenses⁸

Share Class	With Waiver		Without Waiver
A		0.93%		1.17%
Advisor		0.68%		0.92%

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 2/28/19. 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 October dividend and the maximum offering price (NAV for Advisor Class) per share on 10/31/18.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays U.S. TIPS Index comprises U.S. TIPS rated investment grade (Baa3/BBB- or better) with at least one year to final maturity and at least $250 million par amount outstanding.

7. Source: Bureau of Labor Statistics, bls.gov/cpi. The Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

8. 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.

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

franklintempleton.com Annual Report           31

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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$982.00	$4.50	$1,020.67	$4.58	0.90%
C	$1,000	$979.20	$6.49	$1,018.65	$6.61	1.30%
R6	$1,000	$983.80	$2.45	$1,022.74	$2.50	0.49%
Advisor	$1,000	$982.10	$3.25	$1,021.93	$3.31	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 184/365 to reflect the one-half year period.

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

32       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Balanced Fund

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.36			$11.65			$11.40			$11.86			$11.43
Income from investment operationsa:
Net investment incomeb		0.27			0.33			0.30			0.30			0.31	c
Net realized and unrealized gains (losses)		(0.16	)		0.91			0.31			(0.24	)		0.65
Total from investment operations		0.11			1.24			0.61			0.06			0.96
Less distributions from:
Net investment income		(0.38	)		(0.36	)		(0.36	)		(0.36	)		(0.36	)
Net realized gains		(0.20	)		(0.17	)		(—	)d		(0.16	)		(0.17	)
Total distributions		(0.58	)		(0.53	)		(0.36	)		(0.52	)		(0.53	)
Net asset value, end of year		$11.89			$12.36			$11.65			$11.40			$11.86
Total returne		0.89%			10.88%			5.54%			0.51%			8.66%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.02%			1.02%			1.02%			1.06%			1.09%
Expenses net of waiver and payments by affiliatesf		1.01%			1.00%			1.01%			1.06%	g		1.09%	g
Net investment income		2.22%			2.72%			2.62%			2.56%			2.64%	c
Supplemental data
Net assets, end of year (000’s)		$2,586,246			$2,646,599			$2,532,459			$2,371,133			$2,053,623
Portfolio turnover rate		63.64%			34.99%			46.03%			69.23%			40.54%

^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.

^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.  |  Annual Report           33

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.25			$11.55			$11.31			$11.77			$11.34
Income from investment operationsa:
Net investment incomeb		0.19			0.24			0.21			0.21			0.23	c
Net realized and unrealized gains (losses)		(0.17	)		0.90			0.31			(0.23	)		0.65
Total from investment operations		0.02			1.14			0.52			(0.02	)		0.88
Less distributions from:
Net investment income		(0.29	)		(0.27	)		(0.28	)		(0.28	)		(0.28	)
Net realized gains		(0.20	)		(0.17	)		(—	)d		(0.16	)		(0.17	)
Total distributions		(0.49	)		(0.44	)		(0.28	)		(0.44	)		(0.45	)
Net asset value, end of year		$11.78			$12.25			$11.55			$11.31			$11.77
Total returne		0.14%			10.06%			4.73%			(0.20)%			7.97%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.76%			1.77%			1.77%			1.77%			1.79%
Expenses net of waiver and payments by affiliatesf		1.75%			1.75%			1.76%			1.77%	g		1.79%	g
Net investment income		1.48%			1.97%			1.87%			1.85%			1.94%	c
Supplemental data
Net assets, end of year (000’s)		$493,762			$633,108			$630,110			$563,419			$492,514
Portfolio turnover rate		63.64%			34.99%			46.03%			69.23%			40.54%

^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.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.39			$11.67			$11.42			$11.89			$11.45
Income from investment operationsa:
Net investment incomeb		0.26			0.30			0.27			0.27			0.29	c
Net realized and unrealized gains (losses)		(0.18	)		0.92			0.32			(0.24	)		0.66
Total from investment operations		0.08			1.22			0.59			0.03			0.95
Less distributions from:
Net investment income		(0.35	)		(0.33	)		(0.34	)		(0.34	)		(0.34	)
Net realized gains		(0.20	)		(0.17	)		(—	)d		(0.16	)		(0.17	)
Total distributions		(0.55	)		(0.50	)		(0.34	)		(0.50	)		(0.51	)
Net asset value, end of year		$11.92			$12.39			$11.67			$11.42			$11.89
Total return		0.63%			10.66%			5.28%			0.21%			8.51%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.27%			1.27%			1.27%			1.27%			1.29%
Expenses net of waiver and payments by affiliatese		1.26%			1.25%			1.26%			1.27%	f		1.29%	f
Net investment income		1.97%			2.47%			2.37%			2.35%			2.44%	c
Supplemental data
Net assets, end of year (000’s)		$3,371			$4,763			$4,482			$4,699			$3,598
Portfolio turnover rate		63.64%			34.99%			46.03%			69.23%			40.54%

^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.

^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.  |  Annual Report           35

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.39			$11.67			$11.42			$11.89			$11.45
Income from investment operationsa:
Net investment incomeb		0.31			0.41			0.34			0.35			0.37	c
Net realized and unrealized gains (losses)		(0.14	)		0.88			0.31			(0.25	)		0.65
Total from investment operations		0.17			1.29			0.65			0.10			1.02
Less distributions from:
Net investment income		(0.43	)		(0.40	)		(0.40	)		(0.41	)		(0.41	)
Net realized gains		(0.20	)		(0.17	)		(—	)d		(0.16	)		(0.17	)
Total distributions		(0.63	)		(0.57	)		(0.40	)		(0.57	)		(0.58	)
Net asset value, end of year		$11.93			$12.39			$11.67			$11.42			$11.89
Total return		1.23%			11.33%			5.90%			0.81%			9.29%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.68%			0.71%			0.73%			0.70%			0.68%
Expenses net of waiver and payments by affiliatese		0.66%			0.64%			0.66%			0.67%			0.68%	f
Net investment income		2.56%			3.08%			2.97%			2.95%			3.05%	c
Supplemental data
Net assets, end of year (000’s)		$138,923			$342			$233			$221			$513
Portfolio turnover rate		63.64%			34.99%			46.03%			69.23%			40.54%

^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 2.80%.

^dAmount rounds to less than $0.01 per share.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Balanced Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$12.39			$11.67			$11.42			$11.88			$11.45
Income from investment operationsa:
Net investment incomeb		0.30			0.35			0.29			0.33			0.35	c
Net realized and unrealized gains (losses)		(0.16	)		0.93			0.35			(0.24	)		0.65
Total from investment operations		0.14			1.28			0.64			0.09			1.00
Less distributions from:
Net investment income		(0.41	)		(0.39	)		(0.39	)		(0.39	)		(0.40	)
Net realized gains		(0.20	)		(0.17	)		(—	)d		(0.16	)		(0.17	)
Total distributions		(0.61	)		(0.56	)		(0.39	)		(0.55	)		(0.57	)
Net asset value, end of year		$11.92			$12.39			$11.67			$11.42			$11.88
Total return		1.14%			11.21%			5.79%			0.81%			8.97%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.77%			0.77%			0.77%			0.77%			0.79%
Expenses net of waiver and payments by affiliatese		0.76%			0.75%			0.76%			0.77%	f		0.79%	f
Net investment income		2.47%			2.97%			2.87%			2.85%			2.94%	c
Supplemental data
Net assets, end of year (000’s)		$124,265			$243,674			$138,111			$54,881			$41,494
Portfolio turnover rate		63.64%			34.99%			46.03%			69.23%			40.54%

^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.

^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.  |  Annual Report           37

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Balanced Fund

	Country		Shares		Value
Common Stocks 40.5%
Communication Services 1.7%
a Verizon Communications Inc.		United States		980,100	$	55,953,909
Consumer Discretionary 1.9%
b Amazon.com Inc.		United States		10,000		15,980,100
a Ford Motor Co.		United States		5,000,000		47,750,000
						63,730,100
Consumer Staples 6.0%
The Coca-Cola Co.		United States		650,200		31,131,576
Nestle SA		Switzerland		500,000		41,925,000
PepsiCo Inc.		United States		337,200		37,894,536
a Philip Morris International Inc.		United States		300,000		26,421,000
a The Procter & Gamble Co.		United States		700,000		62,076,000
						199,448,112
Energy 3.5%
Chevron Corp.		United States		375,000		41,868,750
Exxon Mobil Corp.		United States		535,000		42,628,800
Royal Dutch Shell PLC, A, ADR		United Kingdom		545,000		34,438,550
						118,936,100
Financials 6.0%
Bank of America Corp.		United States		1,496,715		41,159,662
The Charles Schwab Corp.		United States		505,000		23,351,200
JPMorgan Chase & Co.		United States		500,000		54,510,000
The Toronto-Dominion Bank		Canada		415,000		23,015,900
Wells Fargo & Co.		United States		1,100,000		58,553,000
						200,589,762
Health Care 4.3%
AbbVie Inc.		United States		200,000		15,570,000
AstraZeneca PLC, ADR		United Kingdom		1,100,000		42,658,000
a Johnson & Johnson		United States		267,000		37,377,330
a Pfizer Inc.		United States		1,150,000		49,519,000
						145,124,330
Industrials 3.6%
General Dynamics Corp.		United States		100,000		17,258,000
a Honeywell International Inc.		United States		200,000		28,964,000
Northrop Grumman Corp.		United States		105,000		27,504,750
Raytheon Co.		United States		260,000		45,510,400
b Resideo Technologies Inc.		United States		33,333		701,667
						119,938,817
Information Technology 6.4%
Analog Devices Inc.		United States		350,000		29,298,500
Apple Inc.		United States		200,000		43,772,000
Cisco Systems Inc.		United States		500,000		22,875,000
Intel Corp.		United States		500,000		23,440,000
Maxim Integrated Products Inc.		United States		325,000		16,256,500
Microsoft Corp.		United States		215,000		22,964,150
a Texas Instruments Inc.		United States		600,000		55,698,000
						214,304,150

38       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Balanced Fund (continued)
	Country		Shares		Value
Common Stocks (continued)
Materials 1.6%
BASF SE		Germany		400,000	$	30,810,786
DowDuPont Inc.		United States		400,000		21,568,000
						52,378,786
Real Estate 2.3%
American Tower Corp.		United States		305,970		47,673,186
Host Hotels & Resorts Inc.		United States		1,500,000		28,665,000
						76,338,186
Utilities 3.2%
a Dominion Energy Inc.		United States		550,000		39,281,000
NextEra Energy Inc.		United States		115,440		19,913,400
a Sempra Energy		United States		300,000		33,036,000
The Southern Co.		United States		350,000		15,760,500
						107,990,900
Total Common Stocks (Cost $1,086,033,628)						1,354,733,152
Management Investment Companies 1.9%
Financials 1.9%
c Franklin FTSE Europe Hedged ETF		United States		1,350,000		32,123,250
c Franklin FTSE Japan Hedged ETF		United States		1,250,000		30,808,000
Total Management Investment Companies   (Cost $66,585,500)						62,931,250
dEquity-Linked Securities 10.6%
Communication Services 2.5%
e Royal Bank of Canada into Comcast Corp., 7.50%, 144A		United States		1,485,000		53,968,201
e UBS AG London into Alphabet Inc., 6.00%, 144A		United States		29,000		30,558,982
						84,527,183
Industrials 1.7%
e Barclays Bank PLC into General Electric Co., 7.00%, 144A		United States		2,390,000		25,659,640
e Goldman Sachs International into Union Pacific Corp., 7.50%, 144A		United States		200,000		29,112,501
						54,772,141
Information Technology 6.4%
e Barclays Bank PLC into Broadcom Inc., 8.50%, 144A		United States		156,000		35,925,018
e BNP Paribas Arbitrage Issuance BV into Microsoft Corp., 6.50%, 144A		United States		410,000		41,992,428
e BNP Paribas Arbitrage Issuance BV into Oracle Corp., 6.50%, 144A		United States		582,000		28,197,753
e Credit Suisse AG London into Analog Devices Inc., 7.00%, 144A		United States		430,000		36,530,711
e Deutsche Bank AG London into Apple Inc., 6.50%, 144A		United States		200,000		39,037,959
e JPMorgan Chase Financial Co. LLC into Intel Corp., 9.00%, 144A		United States		685,000		32,855,447
						214,539,316
Total Equity-Linked Securities (Cost $359,820,760)						353,838,640
Convertible Preferred Stocks (Cost $10,227,000) 0.3%
Utilities 0.3%
Sempra Energy, 6.00%, cvt. pfd., A		United States		100,000		9,916,000
			Units
f Index-Linked Notes (Cost $33,147,500) 1.0%
Financials 1.0%
e,g Morgan Stanley Finance LLC, senior note, 144A, 5.89%, 10/03/19		United States		250,000		33,322,500

franklintempleton.com Annual Report           39

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Balanced Fund (continued)
	Country		Principal Amount	*		Value
Convertible Bonds (Cost $15,000,000) 0.3%
Energy 0.3%
Weatherford International Ltd., cvt., senior note, 5.875%, 7/01/21	United States	$	15,000,000		$	11,550,435
Corporate Bonds 33.7%
Communication Services 3.4%
AT&T Inc., senior note, 3.95%, 1/15/25	United States		11,700,000			11,369,530
CCO Holdings LLC/CCO Holdings Capital Corp.,
senior bond, 5.75%, 1/15/24	United States		5,000,000			5,062,500
e senior bond, 144A, 5.125%, 5/01/27	United States		15,000,000			14,156,250
Charter Communications Operating LLC/Charter Communications Operating Capital Corp.,  senior secured note, first lien, 4.908%, 7/23/25	United States		20,000,000			20,169,344
DISH DBS Corp., senior bond, 5.875%, 7/15/22	United States		12,000,000			11,385,000
e Sirius XM Radio Inc., senior bond, 144A, 5.375%, 4/15/25	United States		15,000,000			14,896,875
Sprint Corp., senior note, 7.625%, 2/15/25	United States		10,000,000			10,412,500
e Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC, senior secured bond, first lien, 144A, 4.738%, 9/20/29	United States		25,000,000			25,007,500
						112,459,499
Consumer Discretionary 3.4%
Amazon.com Inc.,
senior note, 5.20%, 12/03/25	United States		20,000,000			21,689,854
senior note, 2.40%, 2/22/23	United States		10,000,000			9,563,019
Dollar General Corp.,
senior bond, 3.25%, 4/15/23	United States		15,000,000			14,584,416
senior bond, 3.875%, 4/15/27	United States		10,000,000			9,552,047
NIKE Inc., senior bond, 2.375%, 11/01/26	United States		30,000,000			26,980,376
e Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.50%, 3/01/25	United States		10,000,000			9,537,500
e Wynn Macau Ltd., senior bond, 144A, 5.50%, 10/01/27	Macau		25,000,000			22,687,500
						114,594,712
Consumer Staples 4.2%
Anheuser-Busch InBev Finance Inc., senior bond, 4.90%, 2/01/46	Belgium		10,000,000			9,477,410
The Clorox Co., senior bond, 3.10%, 10/01/27	United States		22,500,000			20,884,547
Costco Wholesale Corp., senior note, 2.75%, 5/18/24	United States		30,000,000			28,925,395
Kraft Heinz Foods Co., senior bond, 3.50%, 6/06/22	United States		15,000,000			14,837,343
Mondelez International Inc., senior bond, 4.00%, 2/01/24	United States		15,000,000			15,030,828
The Procter & Gamble Co., senior note, 2.70%, 2/02/26	United States		25,000,000			23,434,393
Reynolds American Inc., senior note, 4.45%, 6/12/25	United Kingdom		15,000,000			14,945,070
Tyson Foods Inc., senior bond, 3.95%, 8/15/24	United States		12,100,000			12,052,239
						139,587,225
Energy 3.1%
Energy Transfer Operating LP, senior bond, 3.60%, 2/01/23	United States		15,000,000			14,621,264
Kinder Morgan Energy Partners LP, senior note, 4.30%, 5/01/24	United States		12,900,000			12,943,314
Nabors Industries Inc., senior note, 5.50%, 1/15/23	United States		15,000,000			14,173,683
Oceaneering International Inc.,
senior note, 4.65%, 11/15/24	United States		9,400,000			8,739,966
senior note, 6.00%, 2/01/28	United States		20,000,000			19,533,825
Sabine Pass Liquefaction LLC, senior secured bond, first lien, 5.00%, 3/15/27	United States		8,200,000			8,244,252
The Williams Companies Inc.,
senior note, 3.60%, 3/15/22	United States		15,000,000			14,776,632
senior note, 4.55%, 6/24/24	United States		10,000,000			10,078,156
						103,111,092

40       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Balanced Fund (continued)
	Country		Principal Amount	*		Value
Corporate Bonds (continued)
Financials 7.0%
Capital One Financial Corp.,
senior bond, 3.80%, 1/31/28	United States	$	20,000,000		$	18,466,058
senior note, 3.75%, 3/09/27	United States		10,000,000			9,297,691
h Capital One NA, FRN, 3.099%, (3-month USD LIBOR + 0.765%), 9/13/19	United States		10,000,000			10,043,895
Citigroup Inc.,
i junior sub. bond, P, 5.95% to 5/15/25, FRN thereafter, Perpetual	United States		15,000,000			14,803,125
sub. bond, 4.125%, 7/25/28	United States		15,000,000			14,257,148
Compass Bank, sub. note, 3.875%, 4/10/25	United States		15,000,000			14,263,930
HSBC Holdings PLC, senior bond, 4.292% to 9/12/25, FRN thereafter, 9/12/26	United Kingdom		20,000,000			19,725,400
JPMorgan Chase & Co.,
i junior sub. bond, V, 5.00% to 7/30/19, FRN thereafter, Perpetual	United States		13,000,000			13,016,250
senior note, 2.295%, 8/15/21	United States		15,000,000			14,522,798
e Liberty Mutual Group Inc., senior note, 144A, 4.95%, 5/01/22	United States		7,100,000			7,315,605
e Mizuho Bank Ltd., senior note, 144A, 2.45%, 4/16/19	Japan		12,000,000			11,976,429
Morgan Stanley,
senior note, 3.125%, 1/23/23	United States		20,000,000			19,374,278
senior sub. bond, 4.35%, 9/08/26	United States		15,000,000			14,633,081
Navient Corp., senior note, 6.125%, 3/25/24	United States		15,000,000			14,681,250
i PNC Financial Services Group Inc., junior sub. note, 4.85% to 6/01/23, FRN thereafter, Perpetual	United States		12,000,000			11,610,000
e Pricoa Global Funding I, secured note, 144A, 2.45%, 9/21/22	United States		10,000,000			9,606,837
i Wells Fargo & Co., junior sub. bond, 5.875% to 6/15/25, FRN thereafter, Perpetual	United States		15,000,000			15,468,750
						233,062,525
Health Care 5.5%
Anthem Inc., senior bond, 3.65%, 12/01/27	United States		10,000,000			9,366,817
e Bausch Health Cos. Inc.,
senior bond, 144A, 6.125%, 4/15/25	United States		6,300,000			5,809,860
senior note, 144A, 5.875%, 5/15/23	United States		8,300,000			7,968,000
senior secured note, first lien, 144A, 5.50%, 11/01/25	United States		10,000,000			9,837,500
Biogen Inc., senior note, 3.625%, 9/15/22	United States		10,000,000			9,988,296
Celgene Corp., senior note, 3.625%, 5/15/24	United States		10,000,000			9,724,657
CHS/Community Health Systems Inc., senior secured note, first lien, 6.25%, 3/31/23	United States		21,400,000			19,761,830
CVS Health Corp.,
senior bond, 5.05%, 3/25/48	United States		12,300,000			12,035,804
senior note, 3.875%, 7/20/25	United States		15,000,000			14,620,483
Edwards Lifesciences Corp., senior note, 4.30%, 6/15/28	United States		9,700,000			9,649,902
e Halfmoon Parent Inc., senior secured note, 144A, 3.75%, 7/15/23	United States		20,000,000			19,858,423
HCA Inc., senior note, 5.375%, 9/01/26	United States		25,000,000			24,875,000
e Mylan Inc., senior bond, 144A, 4.55%, 4/15/28	United States		19,000,000			17,616,625
Tenet Healthcare Corp., senior secured note, first lien, 4.625%, 7/15/24	United States		15,000,000			14,495,250
						185,608,447
Industrials 1.6%
e Air Canada 2013-1A Pass Through Trust, first lien, 144A, 4.125%, 11/15/26	Canada		5,497,629			5,549,856
CNH Industrial NV, senior bond, 3.85%, 11/15/27	United Kingdom		15,000,000			13,975,875
Lockheed Martin Corp., senior bond, 3.55%, 1/15/26	United States		20,000,000			19,552,906
United Rentals North America Inc., senior note, 4.625%, 10/15/25	United States		15,000,000			13,931,250
						53,009,887

franklintempleton.com Annual Report           41

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Balanced Fund (continued)
	Country		Principal Amount	*		Value
Corporate Bonds (continued)
Information Technology 1.8%
e CommScope Technologies LLC, senior bond, 144A, 5.00%, 3/15/27	United States	$	20,000,000		$	18,000,000
e Dell International LLC/EMC Corp., senior secured note, first lien, 144A, 4.42%, 6/15/21	United States		18,000,000			18,160,738
Fiserv Inc., senior bond, 4.20%, 10/01/28	United States		15,000,000			14,879,170
Xilinx Inc., senior note, 2.95%, 6/01/24	United States		11,000,000			10,436,841
						61,476,749
Materials 0.6%
e Syngenta Finance NV, senior note, 144A, 5.182%, 4/24/28	Switzerland		20,000,000			18,894,500
Real Estate 1.7%
HCP Inc., senior bond, 3.875%, 8/15/24	United States		21,700,000			21,166,523
Healthcare Trust of America Holdings LP, senior note, 3.375%, 7/15/21	United States		10,000,000			9,902,387
Prologis LP, senior note, 4.25%, 8/15/23	United States		12,000,000			12,345,231
Realty Income Corp., senior bond, 3.875%, 7/15/24	United States		15,000,000			14,922,591
						58,336,732
Utilities 1.4%
Duke Energy Corp., senior bond, 3.15%, 8/15/27	United States		20,000,000			18,378,480
e,i EDF SA, junior sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual	France		10,000,000			9,704,150
PSEG Power LLC, senior note, 3.00%, 6/15/21	United States		20,000,000			19,683,363
						47,765,993
Total Corporate Bonds (Cost $1,155,126,382)						1,127,907,361
U.S. Government and Agency Securities 5.2%
U.S. Treasury Note,
2.75%, 9/30/20	United States		75,000,000			74,838,867
2.75%, 9/15/21	United States		50,000,000			49,758,789
2.875%, 10/31/23	United States		50,000,000			49,756,836
Total U.S. Government and Agency Securities   (Cost $174,668,254)						174,354,492
	Number of Contracts		Notional Amount	*
Options Purchased (Cost $39,730,086) 1.9%
Puts - Exchange-Traded
S&P 500 Index, Put Option, Strike Price $2900, Expires 12/20/19	2,500		250,000			64,250,000
Total Investments before Short Term Investments   (Cost $2,940,339,110)						3,192,803,830

42       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Balanced Fund (continued)
	Country	Shares			Value
Short Term Investments (Cost $126,683,009) 3.8%
Money Market Funds 3.8%
c,j Institutional Fiduciary Trust Money Market Portfolio, 1.83%	United States	126,683,009		$	126,683,009
Total Investments (Cost $3,067,022,119) 99.2%					3,319,486,839
Options Written (0.3)%					(8,390,000	)
Other Assets, less Liabilities 1.1%					35,470,060
Net Assets 100.0%				$	3,346,566,899
	Number of Contracts	Notional Amount	*
k Options Written (0.3)%
Calls - Exchange-Traded
Dominion Energy Inc., Call Option, Strike Price $75, Expires 12/21/18	2,500	250,000			(187,500	)
Ford Motor Co., Call Option, Strike Price $11, Expires 1/18/19	25,000	2,500,000			(250,000	)
Honeywell International Inc., Call Option, Strike Price $155, Expires 12/21/18	2,000	200,000			(268,000	)
Johnson & Johnson, Call Option, Strike Price $145, Expires 12/21/18	2,000	200,000			(290,000	)
Pfizer Inc., Call Option, Strike Price $45, Expires 12/21/18	5,000	500,000			(195,000	)
Philip Morris International Inc., Call Option, Strike Price $92.50, Expires 12/21/18	3,000	300,000			(396,000	)
Procter & Gamble Co., Call Option, Strike Price $92.50, Expires 1/18/19	3,000	300,000			(372,000	)
Sempra Energy, Call Option, Strike Price $120, Expires 11/16/18	1,500	150,000			(15,000	)
Texas Instruments Inc., Call Option, Strike Price $110, Expires 1/18/19	3,000	300,000			(108,000	)
Verizon Communications Inc., Call Option, Strike Price $60, Expires 12/21/18	5,000	500,000			(280,000	)
					(2,361,500	)
Puts - Exchange-Traded
Alphabet Inc., Put Option, Strike Price $1050, Expires 12/21/18	150	15,000			(433,500	)
S&P 500 Index, Put Option, Strike Price $2500, Expires 12/21/18	2,500	250,000			(5,595,000	)
					(6,028,500	)
Total Options Written (Premiums received $10,407,129)				$	(8,390,000	)

See Abbreviations on page 90.

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

^aA portion or all of the security is held in connection with written option contracts open at year end.

^bNon-income producing.

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

^dSee Note 1(f) regarding equity-linked securities.

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At October 31, 2018, the aggregate value of these securities was $633,745,288, representing 18.9% of net assets.

^fSee Note 1(e) regarding index-linked notes.

^gSecurity pays a fixed 2.00% coupon rate and a variable coupon based on the distribution of the Morgan Stanley Custom Enhanced SPX B DT Index 20 Delta. The coupon rate shown represents the combined rate at period end. Cash payment at maturity or upon early redemption is based on the performance of the Morgan Stanley Custom Enhanced SPX B DT Index 20 Delta.

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

ⁱPerpetual security with no stated maturity date.

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

^kSee Note 1(d) regarding written options.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Annual Report           43

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Convertible Securities Fund

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$20.68			$18.24			$18.00			$18.97			$17.82
Income from investment operationsa:
Net investment incomeb		0.16			0.27			0.25			0.24			0.23
Net realized and unrealized gains (losses)		1.35			2.98			0.85			(0.14	)		1.32
Total from investment operations		1.51			3.25			1.10			0.10			1.55
Less distributions from:
Net investment income		(0.49	)		(0.47	)		(0.50	)		(0.39	)		(0.33	)
Net realized gains		(1.05	)		(0.34	)		(0.36	)		(0.68	)		(0.07	)
Total distributions		(1.54	)		(0.81	)		(0.86	)		(1.07	)		(0.40	)
Net asset value, end of year		$20.65			$20.68			$18.24			$18.00			$18.97
Total returnc		7.65%			18.39%			6.41%			0.66%			8.85%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.86%			0.85%			0.86%			0.86%			0.88%
Expenses net of waiver and payments by affiliatesd		0.84%			0.84%			0.85%			0.86%	e		0.88%	e
Net investment income		0.76%			1.39%			1.44%			1.33%			1.23%
Supplemental data
Net assets, end of year (000’s)		$1,153,875			$815,491			$768,553			$818,082			$921,134
Portfolio turnover rate		35.90%			27.24%			28.03%			17.30%			23.05%

^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.

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

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

44       Annual 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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$20.37			$17.98			$17.75			$18.73			$17.60
Income from investment operationsa:
Net investment incomeb		(—	)c		0.12			0.12			0.11			0.09
Net realized and unrealized gains (losses)		1.33			2.93			0.84			(0.16	)		1.31
Total from investment operations		1.33			3.05			0.96			(0.05	)		1.40
Less distributions from:
Net investment income		(0.34	)		(0.32	)		(0.37	)		(0.25	)		(0.20	)
Net realized gains		(1.05	)		(0.34	)		(0.36	)		(0.68	)		(0.07	)
Total distributions		(1.39	)		(0.66	)		(0.73	)		(0.93	)		(0.27	)
Net asset value, end of year		$20.31			$20.37			$17.98			$17.75			$18.73
Total returnd		6.84%			17.49%			5.65%			(0.15)%			8.01%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.61%			1.60%			1.61%			1.61%			1.63%
Expenses net of waiver and payments by affiliatese		1.59%			1.59%			1.60%			1.61%	f		1.63%	f
Net investment income		0.01%			0.64%			0.69%			0.58%			0.48%
Supplemental data
Net assets, end of year (000’s)		$299,716			$303,243			$293,038			$311,951			$333,034
Portfolio turnover rate		35.90%			27.24%			28.03%			17.30%			23.05%

^aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

^dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.

^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.  |  Annual Report           45

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014a
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$20.79			$18.33			$18.09			$18.99			$19.21
Income from investment operationsb:
Net investment incomec		0.24			0.34			0.33			0.30			0.19
Net realized and unrealized gains (losses)		1.36			3.00			0.84			(0.14	)		(0.17	)
Total from investment operations		1.60			3.34			1.17			0.16			0.02
Less distributions from:
Net investment income		(0.56	)		(0.54	)		(0.57	)		(0.38	)		(0.24	)
Net realized gains		(1.05	)		(0.34	)		(0.36	)		(0.68	)		—
Total distributions		(1.61	)		(0.88	)		(0.93	)		(1.06	)		(0.24	)
Net asset value, end of year		$20.78			$20.79			$18.33			$18.09			$18.99
Total returnd		8.07%			18.84%			6.78%			0.99%			0.11%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.55%			0.49%			0.50%			0.50%			0.51%
Expenses net of waiver and payments by affiliatesf		0.49%			0.48%			0.49%			0.50%	g		0.51%	g
Net investment income		1.11%			1.75%			1.80%			1.69%			1.60%
Supplemental data
Net assets, end of year (000’s)		$57,824			$22,950			$7,154			$5			$3,093
Portfolio turnover rate		35.90%			27.24%			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%.

46       Annual 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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$20.68			$18.24			$18.00			$18.98			$17.83
Income from investment operationsa:
Net investment incomeb		0.21			0.32			0.30			0.29			0.28
Net realized and unrealized gains (losses)		1.35			2.98			0.85			(0.15	)		1.32
Total from investment operations		1.56			3.30			1.15			0.14			1.60
Less distributions from:
Net investment income		(0.54	)		(0.52	)		(0.55	)		(0.44	)		(0.38	)
Net realized gains		(1.05	)		(0.34	)		(0.36	)		(0.68	)		(0.07	)
Total distributions		(1.59	)		(0.86	)		(0.91	)		(1.12	)		(0.45	)
Net asset value, end of year		$20.65			$20.68			$18.24			$18.00			$18.98
Total return		7.91%			18.69%			6.68%			0.87%			9.13%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.61%			0.60%			0.61%			0.61%			0.63%
Expenses net of waiver and payments by affiliatesc		0.59%			0.59%			0.60%			0.61%	d		0.63%	d
Net investment income		1.01%			1.64%			1.69%			1.58%			1.48%
Supplemental data
Net assets, end of year (000’s)		$2,189,462			$1,542,254			$1,080,346			$899,441			$877,190
Portfolio turnover rate		35.90%			27.24%			28.03%			17.30%			23.05%

^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.

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

^dBenefit 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.  |  Annual Report           47

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Convertible Securities Fund

	Country		Shares		Value
Common Stocks 2.6%
Communication Services 0.5%
a Take-Two Interactive Software Inc.		United States		156,263	$	20,137,613
Information Technology 1.5%
a Proofpoint Inc.		United States		393,941		35,828,934
a VeriSign Inc.		United States		129,542		18,464,917
						54,293,851
Real Estate 0.6%
Forest City Realty Trust Inc., A		United States		832,495		20,945,574
Total Common Stocks (Cost $70,226,320)						95,377,038
Convertible Preferred Stocks 16.4%
Communication Services 1.1%
b Mandatory Exchangeable Trust, 5.75%, cvt. pfd., 144A		China		251,500		40,605,933
Consumer Staples 3.2%
Bunge Ltd., 4.875%, cvt. pfd.		United States		630,000		65,205,000
Post Holdings Inc., 2.50%, cvt. pfd.		United States		321,200		52,985,698
						118,190,698
Health Care 1.8%
Becton Dickinson and Co., 6.125%, cvt. pfd., A		United States		1,120,000		65,710,400
Industrials 4.9%
Fortive Corp., 5.00%, cvt. pfd., A		United States		70,000		68,754,700
Rexnord Corp., 5.75%, cvt. pfd.		United States		1,017,500		58,170,475
Stanley Black & Decker Inc., 5.375%, cvt. pfd.		United States		592,000		54,316,000
						181,241,175
Materials 1.8%
a International Flavors & Fragrances Inc., 6.00%, cvt. pfd.		United States		1,192,242		68,649,294
Utilities 3.6%
Black Hills Corp., 7.75%, cvt. pfd.		United States		606,000		38,614,320
Sempra Energy, 6.00%, cvt. pfd., A		United States		567,500		56,273,300
Sempra Energy, 6.75%, cvt. pfd., B		United States		206,000		20,540,260
South Jersey Industries Inc, 7.25%, cvt. pfd.		United States		360,000		18,100,800
						133,528,680
Total Convertible Preferred Stocks (Cost $566,240,043)						607,926,180
			Principal   Amount*
Convertible Bonds 76.4%
Communication Services 7.9%
Altaba Inc., cvt., zero cpn., 12/01/18		United States	$	35,100,000		39,406,208
Dish Network Corp., cvt., senior bond, 3.375%, 8/15/26		United States		45,900,000		41,009,355
b Liberty Interactive LLC, cvt., senior bond, 144A, 1.75%, 9/30/46		United States		37,000,000		41,358,600
Liberty Media Corp.,     cvt., senior bond, 2.25%, 9/30/46		United States		39,000,000		20,408,973
cvt., senior note, 1.375%, 10/15/23		United States		21,200,000		24,498,720
b Weibo Corp., cvt., senior note, 144A, 1.25%, 11/15/22		China		78,000,000		69,586,530
Zillow Group Inc.,
cvt., senior note, 2.00%, 12/01/21		United States		34,500,000		36,563,790
cvt., senior note, 1.50%, 7/01/23		United States		23,500,000		21,479,000
						294,311,176

48       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund (continued)
	Country		Principal   Amount*		Value
Convertible Bonds (continued)
Consumer Discretionary 11.2%
Ctrip.com International Ltd., cvt., senior note, 1.25%, 9/15/22		China	$	75,000,000	$	72,736,125
b Etsy Inc., cvt., senior note, 144A, zero cpn., 3/01/23		United States		40,000,000		53,200,000
GNC Holdings Inc., cvt., senior note, 1.50%, 8/15/20		United States		5,000,000		3,869,000
b Liberty Expedia Holdings, cvt., 144A, 1.00%, 6/30/47		United States		52,450,000		52,287,405
Mercadolibre Inc., cvt., 2.25%, 7/01/19		Argentina		5,000,000		12,876,350
b MercadoLibre Inc., cvt., senior note, 144A, 2.00%, 8/15/28		Argentina		60,000,000		57,735,000
The Priceline Group Inc., cvt., senior note, 0.35%, 6/15/20		United States		35,000,000		50,624,630
b RH, cvt., senior note, 144A, zero cpn., 6/15/23		United States		56,500,000		49,866,222
Wayfair Inc., cvt., senior note, 0.375%, 9/01/22		United States		50,000,000		61,850,000
						415,044,732
Energy 0.7%
b Oil States International Inc., cvt., senior note, 144A, 1.50%, 2/15/23		United States		28,000,000		25,615,492
Financials 2.0%
b AXA SA, cvt., senior note, 144A, 7.25%, 5/15/21		France		71,500,000		73,737,950
Health Care 15.5%
Assertio Therapeutics Inc., cvt., senior note, 2.50%, 9/01/21		United States		16,000,000		12,322,080
BioMarin Pharmaceutical Inc., cvt., senior sub. note, 1.50%, 10/15/20		United States		28,200,000		33,313,844
Clovis Oncology Inc., cvt., senior note, 1.25%, 5/01/25		United States		30,000,000		18,470,880
b Corium International Inc., cvt., senior note, 144A, 5.00%, 3/15/25		United States		14,500,000		14,499,275
Dermira Inc., cvt., senior note, 3.00%, 5/15/22		United States		41,120,000		35,113,355
DexCom Inc., cvt., senior note, 0.75%, 5/15/22		United States		50,600,000		73,039,582
Fluidigm Corp., cvt., senior bond, 2.75%, 2/01/34		United States		11,918,000		12,366,737
Illumina Inc.,
cvt., senior note, 0.50%, 6/15/21		United States		32,500,000		43,944,973
b cvt., senior note, 144A, zero cpn., 8/15/23		United States		32,750,000		34,442,455
b Insulet Corp., cvt., senior note, 144A, 1.375%, 11/15/24		United States		51,300,000		58,032,355
Jazz Investments I Ltd.,
cvt., senior note, 1.875%, 8/15/21		United States		35,000,000		36,914,045
cvt., senior note, 1.50%, 8/15/24		United States		39,750,000		39,728,972
Neurocrine Biosciences Inc., cvt., senior note, 2.25%, 5/15/24		United States		44,750,000		69,068,806
Novavax Inc., cvt., senior note, 3.75%, 2/01/23		United States		29,000,000		17,617,500
NuVasive Inc., cvt., senior note, 2.25%, 3/15/21		United States		12,000,000		13,433,040
b Sarepta Therapeutics Inc., cvt., senior note, 144A, 1.50%, 11/15/24		United States		30,250,000		59,696,862
						572,004,761
Industrials 0.5%
The KeyW Holding Corp., cvt., senior note, 2.50%, 7/15/19		United States		20,000,000		19,896,400
Information Technology 36.7%
b Atlassian Inc., cvt., senior note, 144A, 0.625%, 5/01/23		United States		65,000,000		74,623,835
b DocuSign Inc., cvt., senior note, 144A, 0.50%, 9/15/23		United States		65,000,000		61,262,500
Electronics for Imaging Inc., cvt., senior note, 0.75%, 9/01/19		United States		22,000,000		21,673,542
b Envestnet Inc., cvt., senior note, 144A, 1.75%, 6/01/23		United States		51,500,000		51,918,438
Guidewire Software Inc., cvt., senior note, 1.25%, 3/15/25		United States		49,000,000		49,515,529
HubSpot Inc., cvt., senior note, 0.25%, 6/01/22		United States		43,875,000		66,668,940
Inphi Corp., cvt., senior note, 0.75%, 9/01/21		United States		9,600,000		8,928,000
Integrated Device Technology Inc., cvt., senior note, 0.875%, 11/15/22		United States		4,700,000		7,066,309
Intel Corp., cvt., junior sub. bond, 3.25%, 8/01/39		United States		8,000,000		18,174,520
Microchip Technology Inc., cvt., 1.625%, 2/15/27		United States		69,250,000		65,807,513
Micron Technology Inc., cvt., senior bond, G, 3.00%, 11/15/43		United States		35,050,000		45,757,635
Novellus Systems Inc., cvt., senior note, 2.625%, 5/15/41		United States		3,500,000		15,017,454
NXP Semiconductors NV, cvt., senior note, 1.00%, 12/01/19		Netherlands		55,000,000		55,751,300

franklintempleton.com Annual Report           49

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund (continued)
	Country		Principal   Amount*		Value
Convertible Bonds (continued)
Information Technology (continued)
b Okta Inc., cvt., senior note, 144A, 0.25%, 2/15/23		United States	$	44,500,000	$	60,757,674
Palo Alto Networks Inc.,
b cvt., senior note, 144A, 0.75%, 7/01/23		United States		53,000,000		51,753,069
cvt., senior note, zero cpn., 7/01/19		United States		10,100,000		16,711,359
b Q2 Holdings Inc., cvt., 144A, 0.75%, 2/15/23		United States		32,000,000		35,188,064
RealPage Inc., cvt., senior note, 1.50%, 11/15/22		United States		40,850,000		55,956,738
Red Hat Inc., cvt., senior note, 0.25%, 10/01/19		United States		29,250,000		68,162,416
ServiceNow Inc., cvt., senior note, zero cpn., 6/01/22		United States		50,000,000		70,814,200
Silicon Laboratories Inc., cvt., senior note, 1.375%, 3/01/22		United States		53,700,000		58,076,228
b Square Inc., cvt., senior note, 144A, 0.50%, 5/15/23		United States		65,000,000		77,771,200
b Twilio Inc., cvt., senior note, 144A, 0.25%, 6/01/23		United States		44,500,000		55,612,140
Viavi Solutions Inc.,
cvt., senior note, 1.00%, 3/01/24		United States		20,000,000		21,584,260
b cvt., senior note, 144A, 1.75%, 6/01/23		United States		40,969,000		44,391,386
b Wix.com Ltd., cvt., senior note, 144A, zero cpn., 7/01/23		Israel		56,500,000		55,528,200
Workday Inc., cvt., senior note, 0.25%, 10/01/22		United States		67,500,000		75,311,707
b Zendesk Inc., cvt., senior note, 144A, 0.25%, 3/15/23		United States		63,500,000		69,856,286
						1,359,640,442
Materials 1.2%
Cemex SAB de CV, cvt., sub. note, 3.72%, 3/15/20		Mexico		44,250,000		43,608,641
Real Estate 0.7%
Forest City Enterprises Inc., cvt., senior note, A, 3.625%, 8/15/20		United States		22,000,000		24,257,992
Total Convertible Bonds (Cost $2,612,654,696)						2,828,117,586
			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 $3,249,143,421)						3,531,420,804
Short Term Investments (Cost $163,242,682) 4.4%
Money Market Funds 4.4%
d,e Institutional Fiduciary Trust Money Market Portfolio, 1.83%		United States		163,242,682		163,242,682
Total Investments (Cost $3,412,386,103) 99.8%						3,694,663,486
Other Assets, less Liabilities 0.2%						6,214,009
Net Assets 100.0%						$3,700,877,495

50       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund (continued)

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

^aNon-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 October 31, 2018, the aggregate value of these securities was $1,269,326,871, representing 34.3% of net assets.

^cFair valued using significant unobservable inputs. See Note 10 regarding fair value measurements.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Equity Income Fund

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$25.06		$22.50		$22.99		$23.93		$22.16
Income from investment operationsa:
Net investment incomeb		0.42		0.48		0.47		0.55		0.66c
Net realized and unrealized gains (losses)		0.58		3.55		0.24		0.26		1.73
Total from investment operations		1.00		4.03		0.71		0.81		2.39
Less distributions from:
Net investment income		(0.57)		(0.58)		(0.60)		(0.69)		(0.50)
Net realized gains		(0.63)		(0.89)		(0.60)		(1.06)		(0.12)
Total distributions		(1.20)		(1.47)		(1.20)		(1.75)		(0.62)
Net asset value, end of year		$24.86		$25.06		$22.50		$22.99		$23.93
Total returnd		3.98%		18.55%		3.31%		3.72%		10.99%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.85%		0.86%		0.87%		0.86%		0.87%
Expenses net of waiver and payments by affiliatese		0.84%		0.86%f		0.87%f		0.86%f		0.87%f
Net investment income		1.66%		2.02%		2.13%		2.37%		2.87%c
Supplemental data
Net assets, end of year (000’s)		$1,752,181		$1,753,135		$1,700,712		$1,790,392		$1,762,318
Portfolio turnover rate		28.40%		27.18%		50.05%		34.09%		20.15%

^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.

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

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

52       Annual 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)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$24.86		$22.32		$22.85		$23.79		$22.04
Income from investment operationsa:
Net investment incomeb		0.26		0.30		0.30		0.37		0.49c
Net realized and unrealized gains (losses)		0.53		3.54		0.23		0.27		1.71
Total from investment operations		0.79		3.84		0.53		0.64		2.20
Less distributions from:
Net investment income		(0.38)		(0.41)		(0.46)		(0.52)		(0.33)
Net realized gains		(0.63)		(0.89)		(0.60)		(1.06)		(0.12)
Total distributions		(1.01)		(1.30)		(1.06)		(1.58)		(0.45)
Net asset value, end of year		$24.64		$24.86		$22.32		$22.85		$23.79
Total returnd		3.16%		17.73%		2.51%		2.96%		10.14%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.60%		1.61%		1.62%		1.61%		1.62%
Expenses net of waiver and payments by affiliatese		1.59%		1.61%f		1.62%f		1.61%f		1.62%f
Net investment income		0.91%		1.27%		1.38%		1.62%		2.12%c
Supplemental data
Net assets, end of year (000’s)		$204,402		$267,450		$257,156		$250,347		$241,566
Portfolio turnover rate		28.40%		27.18%		50.05%		34.09%		20.15%

^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.

^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.    |   Annual Report           53

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class R
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$25.05		$22.49		$22.99		$23.93		$22.17
Income from investment operationsa:
Net investment incomeb		0.36		0.42		0.41		0.50		0.61c
Net realized and unrealized gains (losses)		0.58		3.56		0.24		0.25		1.72
Total from investment operations		0.94		3.98		0.65		0.75		2.33
Less distributions from:
Net investment income		(0.51)		(0.53)		(0.55)		(0.63)		(0.45)
Net realized gains		(0.63)		(0.89)		(0.60)		(1.06)		(0.12)
Total distributions		(1.14)		(1.42)		(1.15)		(1.69)		(0.57)
Net asset value, end of year		$24.85		$25.05		$22.49		$22.99		$23.93
Total return		3.75%		18.29%		3.05%		3.45%		10.67%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.08%		1.09%		1.11%		1.11%		1.12%
Expenses net of waiver and payments by affiliatesd		1.07%		1.09%e		1.11%e		1.11%e		1.12%e
Net investment income		1.43%		1.79%		1.89%		2.12%		2.62%c
Supplemental data
Net assets, end of year (000’s)		$6,750		$7,074		$6,395		$6,265		$7,305
Portfolio turnover rate		28.40%		27.18%		50.05%		34.09%		20.15%

^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%.

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

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

54       Annual 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)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$25.11		$22.54		$23.01		$23.95		$22.18
Income from investment operationsa:
Net investment incomeb		0.50		0.56		0.43		0.63		0.75c
Net realized and unrealized gains (losses)		0.59		3.57		0.37		0.27		1.73
Total from investment operations		1.09		4.13		0.80		0.90		2.48
Less distributions from:
Net investment income		(0.66)		(0.67)		(0.67)		(0.78)		(0.59)
Net realized gains		(0.63)		(0.89)		(0.60)		(1.06)		(0.12)
Total distributions		(1.29)		(1.56)		(1.27)		(1.84)		(0.71)
Net asset value, end of year		$24.91		$25.11		$22.54		$23.01		$23.95
Total returnd		4.35%		19.00%		3.72%		4.10%		11.38%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.52%		0.49%		0.49%		2.89%		1.78%
Expenses net of waiver and payments by affiliatese		0.50%		0.49%f		0.49%f		0.48%		0.50%
Net investment income		2.00%		2.39%		2.51%		2.75%		3.24%c
Supplemental data
Net assets, end of year (000’s)		$81,171		$12,728		$10,537		$6		$6
Portfolio turnover rate		28.40%		27.18%		50.05%		34.09%		20.15%

^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 2.51%.

^dTotal return is not 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.    |    Annual Report           55

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund (continued)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$25.10		$22.53		$23.02		$23.96		$22.19
Income from investment operationsa:
Net investment incomeb		0.46		0.50		0.45		0.60		0.71c
Net realized and unrealized gains (losses)		0.60		3.60		0.31		0.27		1.74
Total from investment operations		1.06		4.10		0.76		0.87		2.45
Less distributions from:
Net investment income		(0.63)		(0.64)		(0.65)		(0.75)		(0.56)
Net realized gains		(0.63)		(0.89)		(0.60)		(1.06)		(0.12)
Total distributions		(1.26)		(1.53)		(1.25)		(1.81)		(0.68)
Net asset value, end of year		$24.90		$25.10		$22.53		$23.02		$23.96
Total return		4.22%		18.88%		3.53%		3.98%		11.25%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.60%		0.61%		0.62%		0.61%		0.62%
Expenses net of waiver and payments by affiliatesd		0.59%		0.61%e		0.62%e		0.61%e		0.62%e
Net investment income		1.91%		2.27%		2.38%		2.62%		3.12%c
Supplemental data
Net assets, end of year (000’s)		$109,435		$147,681		$80,422		$34,577		$30,166
Portfolio turnover rate		28.40%		27.18%		50.05%		34.09%		20.15%

^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%.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Equity Income Fund

	Country		Shares		Value
Common Stocks 87.0%
Communication Services 4.1%
Comcast Corp., A		United States		705,000	$	26,888,700
Rogers Communications Inc., B		Canada		310,000		15,968,100
TELUS Corp.		Canada		470,000		16,098,165
Verizon Communications Inc.		United States		525,000		29,972,250
						88,927,215
Consumer Discretionary 3.4%
Las Vegas Sands Corp.		United States		345,000		17,605,350
Lowe’s Cos. Inc.		United States		165,200		15,730,344
McDonald’s Corp.		United States		145,000		25,650,500
Target Corp.		United States		165,000		13,798,950
						72,785,144
Consumer Staples 8.9%
The Coca-Cola Co.		United States		885,000		42,373,800
The Kraft Heinz Co.		United States		191,600		10,532,252
PepsiCo Inc.		United States		460,500		51,750,990
The Procter & Gamble Co.		United States		567,500		50,325,900
Walmart Inc.		United States		370,000		37,103,600
						192,086,542
Energy 8.4%
Chevron Corp.		United States		453,900		50,677,935
Exxon Mobil Corp.		United States		455,934		36,328,821
Occidental Petroleum Corp.		United States		425,000		28,504,750
ONEOK Inc.		United States		262,000		17,187,200
Royal Dutch Shell PLC, A, ADR		United Kingdom		415,000		26,223,850
Suncor Energy Inc.		Canada		630,000		20,985,300
						179,907,856
Financials 18.7%
Arthur J. Gallagher & Co.		United States		297,800		22,040,178
Bank of America Corp.		United States		1,300,900		35,774,750
BB&T Corp.		United States		720,000		35,395,200
BlackRock Inc.		United States		87,500		35,999,250
JPMorgan Chase & Co.		United States		866,000		94,411,320
MetLife Inc.		United States		685,000		28,215,150
Morgan Stanley		United States		956,000		43,650,960
U.S. Bancorp		United States		879,300		45,961,011
Wells Fargo & Co.		United States		1,145,000		60,948,350
						402,396,169
Health Care 13.4%
Baxter International Inc.		United States		170,000		10,626,700
Bristol-Myers Squibb Co.		United States		215,000		10,866,100
Eli Lilly & Co.		United States		255,000		27,652,200
Johnson & Johnson		United States		365,000		51,096,350
Medtronic PLC		United States		500,000		44,910,000
Merck & Co. Inc.		United States		670,000		49,318,700
Pfizer Inc.		United States		1,184,300		50,995,958
UnitedHealth Group Inc.		United States		161,500		42,208,025
						287,674,033

franklintempleton.com Annual Report           57

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Equity Income Fund (continued)

	Country		Shares		Value
Common Stocks (continued)
Industrials 8.8%
Cummins Inc.		United States		115,000	$	15,719,350
Illinois Tool Works Inc.		United States		82,500		10,524,525
Lockheed Martin Corp.		United States		100,600		29,561,310
Norfolk Southern Corp.		United States		163,500		27,440,205
Raytheon Co.		United States		215,000		37,633,600
Republic Services Inc.		United States		553,500		40,228,380
Stanley Black & Decker Inc.		United States		81,280		9,470,746
United Technologies Corp.		United States		161,600		20,072,336
						190,650,452
Information Technology 10.9%
Apple Inc.		United States		213,500		46,726,610
Broadcom Inc.		United States		23,530		5,258,719
Cisco Systems Inc.		United States		854,233		39,081,160
Intel Corp.		United States		433,402		20,317,886
Microsoft Corp.		United States		775,000		82,777,750
Oracle Corp.		United States		290,500		14,188,020
Texas Instruments Inc.		United States		286,000		26,549,380
						234,899,525
Materials 4.0%
BASF SE		Germany		262,500		20,219,578
DowDuPont Inc.		United States		522,000		28,146,240
International Paper Co.		United States		454,800		20,629,728
Linde PLC		United Kingdom		108,500		17,953,495
						86,949,041
Real Estate 1.6%
Equity Residential		United States		175,000		11,368,000
Host Hotels & Resorts Inc.		United States		1,193,000		22,798,230
						34,166,230
Utilities 4.8%
Duke Energy Corp.		United States		291,500		24,086,645
NextEra Energy Inc.		United States		255,300		44,039,250
Xcel Energy Inc.		United States		723,500		35,458,735
						103,584,630
Total Common Stocks (Cost $1,312,600,606)						1,874,026,837
a Equity-Linked Securities 7.4%
Communication Services 1.2%
b Goldman Sachs International into Alphabet Inc., 5.00%, A, 144A		United States		23,900		25,995,817
Consumer Discretionary 1.3%
b Wells Fargo Bank National Assn. into Amazon.com Inc., 6.00%, 144A		United States		18,000		28,879,612
Energy 0.5%
b Credit Suisse AG London into Schlumberger Ltd., 6.50%, 144A		United States		210,000		10,947,650
Financials 2.2%
b Morgan Stanley BV into Bank of America Corp., 6.50%, 144A		United States		800,000		22,437,716
b UBS AG London into The Charles Schwab Corp., 6.50%, 144A		United States		545,000		25,531,378
						47,969,094
Health Care 0.5%
b Deutsche Bank AG London into Baxter International Inc., 4.50%, 144A		United States		170,000		10,691,798

58       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Equity Income Fund (continued)

	Country		Shares		Value
a Equity-Linked Securities (continued)
Information Technology 1.7%
b Credit Suisse AG London into Broadcom Inc., 8.50%, 144A		United States		70,500	$	16,273,778
b Merrill Lynch International & Co. CV into Analog Devices Inc., 7.00%, 144A		United States		235,000		19,671,729
						35,945,507
Total Equity-Linked Securities (Cost $174,339,589)						160,429,478
Convertible Preferred Stocks 2.7%
Health Care 1.7%
Becton Dickinson and Co., 6.125%, cvt. pfd., A		United States		613,000		35,964,710
Industrials 0.4%
Fortive Corp., 5.00% , cvt. pfd., A		United States		8,250		8,103,233
Materials 0.6%
c International Flavors & Fragrances Inc., 6.00%, cvt. pfd.		United States		227,476		13,098,068
Total Convertible Preferred Stocks (Cost $52,546,621)						57,166,011
Total Investments before Short Term Investments    (Cost $1,539,486,816)						2,091,622,326
Short Term Investments (Cost $70,527,817) 3.3%
Money Market Funds 3.3%
d,e Institutional Fiduciary Trust Money Market Portfolio, 1.83%		United States		70,527,817		70,527,817
Total Investments (Cost $1,610,014,633) 100.4%						2,162,150,143
Other Assets, less Liabilities (0.4)%						(8,212,231	)
Net Assets 100.0%						$2,153,937,912

See Abbreviations on page 90.

^aSee Note 1(f) 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 October 31, 2018, the aggregate value of these securities was $160,429,478 , representing 7.4% of net assets.

^cNon-income producing.

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

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

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |   Annual Report           59

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Real Return Fund

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$10.14		$10.09		$9.92		$10.66		$10.82
Income from investment operationsa:
Net investment incomeb		0.19		0.17		0.12		0.05		0.14
Net realized and unrealized gains (losses)		(0.25)		0.01		0.15		(0.72)		(0.06)
Total from investment operations		(0.06)		0.18		0.27		(0.67)		0.08
Less distributions from:
Net investment income		(0.33)		(0.13)		(0.09)		(0.07)		(0.24)
Tax return of capital		—		—		(0.01)		—		—
Total distributions		(0.33)		(0.13)		(0.10)		(0.07)		(0.24)
Net asset value, end of year		$9.75		$10.14		$10.09		$9.92		$10.66
Total returnc		(0.69)%		1.77%		2.77%		(6.32)%		0.75%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.16%		1.17%		1.12%		1.10%		1.10%
Expenses net of waiver and payments by affiliatesd		0.90%		0.90%		0.90%		0.90%		0.90%
Net investment income		1.92%		1.69%		1.18%		0.43%		1.34%
Supplemental data
Net assets, end of year (000’s)		$132,772		$146,866		$161,541		$185,743		$248,313
Portfolio turnover rate		27.83%		32.44%		31.82%		26.57%		33.02%

^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 does not reflect sales commissions or contingent deferred sales charges, if applicable.

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

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$10.03		$10.00		$9.82		$10.59		$10.76
Income from investment operationsa:
Net investment incomeb		0.15		0.13		0.08		—c		0.10
Net realized and unrealized gains (losses)		(0.25)		—c		0.16		(0.71)		(0.07)
Total from investment operations		(0.10)		0.13		0.24		(0.71)		0.03
Less distributions from:
Net investment income		(0.29)		(0.10)		(0.05)		(0.06)		(0.20)
Tax return of capital		—		—		(0.01)		—		—
Total distributions		(0.29)		(0.10)		(0.06)		(0.06)		(0.20)
Net asset value, end of year		$9.64		$10.03		$10.00		$9.82		$10.59
Total returnd		(1.06)%		1.30%		2.44%		(6.70)%		0.22%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.56%		1.57%		1.52%		1.50%		1.50%
Expenses net of waiver and payments by affiliatese		1.30%		1.30%		1.30%		1.30%		1.30%
Net investment income		1.52%		1.29%		0.78%		0.04%		0.94%
Supplemental data
Net assets, end of year (000’s)		$24,685		$33,844		$39,568		$48,084		$68,188
Portfolio turnover rate		27.83%		32.44%		31.82%		26.57%		33.02%

^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.

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

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$10.19		$10.15		$9.98		$10.68		$10.85
Income from investment operationsa:
Net investment incomeb		0.22		0.22		0.16		0.10		0.21
Net realized and unrealized gains (losses)		(0.24)		(0.01)		0.16		(0.72)		(0.10)
Total from investment operations		(0.02)		0.21		0.32		(0.62)		0.11
Less distributions from:
Net investment income		(0.36)		(0.17)		(0.14)		(0.08)		(0.28)
Tax return of capital		—		—		(0.01)		—		—
Total distributions		(0.36)		(0.17)		(0.15)		(0.08)		(0.28)
Net asset value, end of year		$9.81		$10.19		$10.15		$9.98		$10.68
Total return		(0.21)%		2.09%		3.25%		(5.87)%		1.04%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.81%		0.72%		0.71%		0.71%		0.70%
Expenses net of waiver and payments by affiliatesc		0.49%		0.49%		0.50%		0.50%		0.52%
Net investment income		2.33%		2.11%		1.58%		0.83%		1.72%
Supplemental data
Net assets, end of year (000’s)		$14,475		$5,727		$5,326		$1,730		$2,034
Portfolio turnover rate		27.83%		32.44%		31.82%		26.57%		33.02%

^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.

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

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$10.18		$10.13		$9.96		$10.68		$10.85
Income from investment operationsa:
Net investment incomeb		0.23		0.20		0.14		0.05		0.18
Net realized and unrealized gains (losses)		(0.27)		—c		0.16		(0.70)		(0.08)
Total from investment operations		(0.04)		0.20		0.30		(0.65)		0.10
Less distributions from:
Net investment income		(0.35)		(0.15)		(0.12)		(0.07)		(0.27)
Tax return of capital		—		—		(0.01)		—		—
Total distributions		(0.35)		(0.15)		(0.13)		(0.07)		(0.27)
Net asset value, end of year		$9.79		$10.18		$10.13		$9.96		$10.68
Total return		(0.47)%		2.03%		3.04%		(6.08)%		0.91%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.91%		0.92%		0.87%		0.85%		0.85%
Expenses net of waiver and payments by affiliatesd		0.65%		0.65%		0.65%		0.65%		0.65%
Net investment income		2.17%		1.94%		1.43%		0.68%		1.59%
Supplemental data
Net assets, end of year (000’s)		$19,703		$40,077		$35,215		$37,758		$65,958
Portfolio turnover rate		27.83%		32.44%		31.82%		26.57%		33.02%

^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.

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

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FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Real Return Fund

	Country		Shares		Value
Common Stocks 10.0%
Energy 5.8%
Anadarko Petroleum Corp.		United States		23,700	$	1,260,840
Canadian Natural Resources Ltd.		Canada		33,700		920,684
Chevron Corp.		United States		13,700		1,529,605
Exxon Mobil Corp.		United States		15,277		1,217,271
Halliburton Co.		United States		33,300		1,154,844
Noble Energy Inc.		United States		27,400		680,890
Occidental Petroleum Corp.		United States		18,200		1,220,674
Pioneer Natural Resources Co.		United States		4,700		692,169
Royal Dutch Shell PLC, A, ADR		United Kingdom		19,800		1,251,162
Schlumberger Ltd.		United States		20,850		1,069,814
a Weatherford International PLC		United States		119,400		161,190
						11,159,143
Materials 4.2%
BHP Billiton PLC, ADR		United Kingdom		32,700		1,316,175
DowDuPont Inc.		United States		26,600		1,434,272
Freeport-McMoRan Inc.		United States		53,046		617,986
Goldcorp Inc.		Canada		101,600		916,432
Nucor Corp.		United States		21,000		1,241,520
Nutrien Ltd.		Canada		19,624		1,038,698
Rio Tinto PLC, ADR		Australia		27,700		1,365,333
						7,930,416
Total Common Stocks (Cost $21,881,535)						19,089,559
Management Investment Companies 10.2%
Diversified Financials 10.2%
b Franklin Pelagos Commodities Strategy Fund, Class R6		United States		897,760		5,808,508
iShares Global Infrastructure ETF		United States		95,000		3,853,200
SPDR Dow Jones REIT ETF		United States		109,700		9,969,536
Total Management Investment Companies (Cost $15,329,164)						19,631,244
			Principal Amount
U.S. Government and Agency Securities 73.1%
c U.S. Treasury Bond, Index Linked, 0.625%, 1/15/24		United States	$	8,104,643		7,932,844
c U.S. Treasury Note,
Index Linked, 2.125%, 1/15/19		United States		28,185,392		28,194,384
Index Linked, 0.125%, 4/15/19		United States		19,691,856		19,521,475
Index Linked, 1.875%, 7/15/19		United States		24,798,689		24,987,747
Index Linked, 1.375%, 1/15/20		United States		12,359,528		12,390,024
Index Linked, 0.125%, 4/15/20		United States		10,228,616		10,053,744
Index Linked, 0.125%, 4/15/21		United States		12,340,738		12,028,242
Index Linked, 0.625%, 7/15/21		United States		7,047,939		6,988,611
Index Linked, 0.125%, 7/15/24		United States		8,495,120		8,096,683
Index Linked, 0.25%, 1/15/25		United States		10,326,075		9,814,834
Total U.S. Government and Agency Securities   (Cost $142,263,552)						140,008,588
Total Investments before Short Term Investments   (Cost $179,474,251)						178,729,391

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Real Return Fund (continued)

	Country		Principal Amount		Value
Short Term Investments (Cost $12,537,445) 6.5%
Repurchase Agreements 6.5%
d Joint Repurchase Agreement, 2.191%, 11/01/18 (Maturity Value $12,538,208)
BNP Paribas Securities Corp. (Maturity Value $5,793,655)
Deutsche Bank Securities Inc. (Maturity Value $1,675,230)
HSBC Securities (USA) Inc. (Maturity Value $5,069,323)
Collateralized by U.S. Government Agency Securities, 3.00% - 4.50%, 6/15/39 - 6/20/48; U.S. Treasury Bond, 2.50%, 8/15/23; and U.S. Treasury Note, 1.00% - 3.50%, 11/15/19 - 7/31/23 (valued at $12,789,879)		United States	$	12,537,445	$	12,537,445
Total Investments (Cost $192,011,696) 99.8%						191,266,836
Other Assets, less Liabilities 0.2%						368,246
Net Assets 100.0%.					$	191,635,082

See Abbreviations on page 90.

^aNon-income producing.

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

^cPrincipal amount of security is adjusted for inflation. See Note 1(i).

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

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FRANKLIN INVESTORS SECURITIES TRUST

Financial Statements

Statements of Assets and Liabilities

October 31, 2018

	Franklin Balanced Fund		Franklin Convertible     Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers		$2,873,753,610		$3,249,143,421		$1,539,486,816		$173,474,251
Cost - Controlled affiliates (Note 3f)		66,585,500		—		—		—
Cost - Non-controlled affiliates (Note 3f)		126,683,009		163,242,682		70,527,817		6,000,000
Cost - Unaffiliated repurchase agreements		—		—		—		12,537,445
Value - Unaffiliated issuers		$3,129,872,580		$3,531,420,804		$2,091,622,326		$172,920,883
Value - Controlled affiliates (Note 3f)		62,931,250		—		—		—
Value - Non-controlled affiliates (Note 3f)		126,683,009		163,242,682		70,527,817		5,808,508
Value - Unaffiliated repurchase agreements		—		—		—		12,537,445
Cash		223,156		—		—		—
Foreign currency, at value (cost $—, $—, $— and $80,597, respectively)		—		—		—		80,414
Receivables:
Investment securities sold		6,424,742		—		4,383,671		—
Capital shares sold		2,904,693		4,481,408		1,347,135		249,257
Dividends and interest		16,999,808		13,552,165		2,233,282		428,474
European Union tax reclaims		93,707		—		67,349		—
Deposits with brokers for:
Exchange traded options written		15,750,000		—		—		—
Other assets		1,044		724		665		62
Total assets		3,361,883,989		3,712,697,783		2,170,182,245		192,025,043
Liabilities:
Payables:
Investment securities purchased		—		—		12,424,637		—
Capital shares redeemed		3,246,783		9,040,382		1,860,516		202,815
Management fees		1,796,547		1,335,044		809,256		59,798
Distribution fees		1,003,143		543,227		579,061		43,244
Transfer agent fees		662,935		732,766		423,871		19,862
Professional fees		51,979		53,414		42,417		40,921
Options written, at value (premiums received $10,407,129, $—, $— and $—, respectively)		8,390,000		—		—		—
Accrued expenses and other liabilities		165,703		115,455		104,575		23,321
Total liabilities		15,317,090		11,820,288		16,244,333		389,961
Net assets, at value		$3,346,566,899		$3,700,877,495		$2,153,937,912		$191,635,082
Net assets consist of:
Paid-in capital		$3,083,999,531		$3,280,015,943		$1,512,423,816		$220,345,246
Total distributable earnings (loss)		262,567,368		420,861,552		641,514,096		(28,710,164	)
Net assets, at value		$3,346,566,899		$3,700,877,495		$2,153,937,912		$191,635,082

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities (continued)

October 31, 2018

	Franklin     Balanced Fund		Franklin     Convertible     Securities Fund		Franklin Equity     Income Fund		Franklin Real Return Fund
Class A:
Net assets, at value	$	2,586,245,501	$	1,153,875,107	$	1,752,181,235	$	132,771,781
Shares outstanding		217,527,234		55,885,263		70,492,708		13,624,269
Net asset value per sharea		$11.89		$20.65		$24.86		$9.75
Maximum offering price per share (net asset value per share ÷ 94.50%, 94.50%, 94.50% and 95.75%,respectively)		$12.58		$21.85		$26.31		$10.18
Class C:
Net assets, at value	$	493,761,889	$	299,716,003	$	204,401,566	$	24,685,147
Shares outstanding		41,918,260		14,754,378		8,294,179		2,560,649
Net asset value and maximum offering price per sharea		$11.78		$20.31		$24.64		$9.64
Class R:
Net assets, at value	$	3,371,023			$	6,749,558
Shares outstanding		282,776				271,617
Net asset value and maximum offering price per share		$11.92				$24.85
Class R6:
Net assets, at value	$	138,923,091	$	57,824,287	$	81,170,505	$	14,475,459
Shares outstanding		11,649,732		2,782,885		3,259,143		1,476,188
Net asset value and maximum offering price per share		$11.93		$20.78		$24.91		$9.81
Advisor Class:
Net assets, at value	$	124,265,395	$	2,189,462,098	$	109,435,048	$	19,702,695
Shares outstanding		10,427,576		106,003,482		4,394,958		2,013,090
Net asset value and maximum offering price per share		$11.92		$20.65		$24.90		$9.79

^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 year ended October 31, 2018

	Franklin Balanced Fund			Franklin Convertible     Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers		$  54,938,665			$  18,855,815			$  54,471,743			$1,108,011
Controlled affiliates (Note 3f)		1,168,132			—			—			—
Non-controlled affiliates (Note 3f)		1,038,400			2,180,907			670,617			95,470
Interest: (net of foreign taxes)~
Unaffiliated issuers:
Inflation principal adjustments		—			—			—			3,931,171
Paid in cash		55,381,461			29,381,862			2,086			614,182
Income from securities loaned (net of fees and rebates)		2,004			—			—			—
Other income (Note 1h)		103,005			—			74,032			—
Total investment income		112,631,667			50,418,584			55,218,478			5,748,834
Expenses:
Management fees (Note 3a)		21,953,802			14,511,526			10,176,295			1,275,469
Distribution fees: (Note 3c)
Class A		6,539,759			2,432,654			4,381,532			345,485
Class C		5,963,860			3,411,131			2,688,723			198,694
Class R		22,121			—			32,875			—
Transfer agent fees: (Note 3e)
Class A		3,145,733			1,277,790			2,096,341			268,954
Class C		722,153			448,630			321,981			59,528
Class R		5,330			—			8,244			—
Class R6		38,201			24,227			29,803			10,072
Advisor Class		150,173			2,340,456			119,252			47,253
Custodian fees (Note 4)		39,906			22,182			23,709			5,607
Reports to shareholders		282,185			211,875			185,512			43,533
Registration and filing fees		181,259			242,049			116,719			70,591
Professional fees		99,412			79,784			70,624			50,229
Trustees’ fees and expenses		41,982			33,114			26,222			2,571
Other		72,000			47,207			45,841			15,641
Total expenses		39,257,876			25,082,625			20,323,673			2,393,627
Expense reductions (Note 4)		(15,636	)		(3,504	)		(1,641	)		(693	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(302,496	)		(569,951	)		(197,721	)		(540,192	)
Net expenses		38,939,744			24,509,170			20,124,311			1,852,742
Net investment income		73,691,923			25,909,414			35,094,167			3,896,092
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:#
Unaffiliated issuers		30,633,552			245,578,005			106,734,084			4,153,170
Controlled affiliates (Note 3f)		(642,330	)		—			—			—
Non-controlled affiliates (Note 3f)		—			—			—			36,927
Written options		8,548,278			—			—			—
Foreign currency transactions		226,820			—			177,740			38,980
Capital gain distributions from management investment companies:
Non-controlled affiliates (Note 3f)		—			—			—			85,233
Net realized gain (loss)		38,766,320			245,578,005			106,911,824			4,314,310

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations (continued)

for the year ended October 31, 2018

	Franklin Balanced Fund			Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers	$	(81,114,494	)	$	(102,999,826	)	$	(57,111,745	)	$	(8,990,664	)
Controlled affiliates (Note 3f)		(4,241,125	)		—			—			—
Non-controlled affiliates (Note 3f)		—			—			—			(331,602	)
Translation of other assets and liabilities denominated in foreign currencies		(43,156	)		—			(21,957	)		14,792
Written options		2,017,129			—			—			—
Change in deferred taxes on unrealized appreciation		—			—			—			20,403
Net change in unrealized appreciation (depreciation)		(83,381,646	)		(102,999,826	)		(57,133,702	)		(9,287,071	)
Net realized and unrealized gain (loss)		(44,615,326	)		142,578,179			49,778,122			(4,972,761	)
Net increase (decrease) in net assets resulting from operations	$	29,076,597		$	168,487,593		$	84,872,289		$	(1,076,669	)
*Foreign taxes withheld on dividends	$	1,619,504		$	111,562		$	786,387		$	22,101
~Foreign taxes withheld on interest	$	—		$	—		$	—		$	8,723
#Net of foreign taxes	$	—		$	—		$	—		$	27,801

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Year Ended October 31,						Year Ended October 31,
	2018			2017			2018			2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	73,691,923		$	90,261,237		$	25,909,414		$	34,041,219
Net realized gain (loss)		38,766,320			85,304,619			245,578,005			164,567,291
Net change in unrealized appreciation (depreciation)		(83,381,646	)		176,686,329			(102,999,826	)		204,363,980
Net increase (decrease) in net assets resulting from operations		29,076,597			352,252,185			168,487,593			402,972,490
Distributions to shareholders: (Note 1i)
Class A		(124,779,231	)		(114,824,322	)		(63,608,374	)		(32,458,251	)
Class C		(24,853,963	)		(24,122,796	)		(21,106,601	)		(10,539,641	)
Class R		(205,981	)		(199,225	)		—			—
Class R6		(6,906,404	)		(27,445	)		(2,162,200	)		(453,041	)
Advisor Class		(6,100,753	)		(8,497,233	)		(124,290,867	)		(54,513,835	)
Total distributions to shareholders		(162,846,332	)		(147,671,021	)		(211,168,042	)		(97,964,768	)
Capital share transactions: (Note 2)
Class A		40,700,401			(40,657,348	)		344,731,206			(49,842,077	)
Class C		(116,913,479	)		(35,085,152	)		(1,890,826	)		(27,199,180	)
Class R		(1,229,264	)		(4,205	)		—			—
Class R6		144,466,333			54,098			35,475,394			14,196,058
Advisor Class		(115,174,213	)		94,203,381			681,304,202			292,684,054
Total capital share transactions		(48,150,222	)		18,510,774			1,059,619,976			229,838,855
Net increase (decrease) in net assets		(181,919,957	)		223,091,938			1,016,939,527			534,846,577
Net assets:
Beginning of year		3,528,486,856			3,305,394,918			2,683,937,968			2,149,091,391
End of year (Note 1i)	$	3,346,566,899		$	3,528,486,856		$	3,700,877,495		$	2,683,937,968

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FINANCIAL STATEMENTS

Statements of Changes in Net Assets (continued)

	Franklin Equity Income Fund						Franklin Real Return Fund
	Year Ended October 31,						Year Ended October 31,
	2018			2017			2018			2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	35,094,167		$	41,589,804		$	3,896,092		$	4,047,623
Net realized gain (loss)		106,911,824			69,697,927			4,314,310			(1,617,385	)
Net change in unrealized appreciation (depreciation)		(57,133,702	)		251,171,481			(9,287,071	)		1,674,655
Net increase (decrease) in net assets resulting from operations		84,872,289			362,459,212			(1,076,669	)		4,104,893
Distributions to shareholders: (Note 1i)
Class A		(82,499,588	)		(108,557,974	)		(4,501,773	)		(1,941,335	)
Class C		(10,790,019	)		(14,798,032	)		(905,045	)		(353,587	)
Class R		(315,650	)		(428,927	)		—			—
Class R6		(3,914,155	)		(729,191	)		(372,274	)		(94,114	)
Advisor Class		(4,738,259	)		(6,480,300	)		(829,402	)		(611,165	)
Total distributions to shareholders		(102,257,671	)		(130,994,424	)		(6,608,494	)		(3,000,201	)
Capital share transactions: (Note 2)
Class A		13,100,601			(135,418,963	)		(8,760,975	)		(15,477,267	)
Class C		(61,548,993	)		(18,455,576	)		(8,013,165	)		(5,864,126	)
Class R		(272,949	)		(80,399	)		—			—
Class R6		69,294,512			936,862			9,265,304			374,554
Advisor Class		(37,318,550	)		54,400,800			(19,684,992	)		4,725,881
Total capital share transactions		(16,745,379	)		(98,617,276	)		(27,193,828	)		(16,240,958	)
Net increase (decrease) in net assets		(34,130,761	)		132,847,512			(34,878,991	)		(15,136,266	)
Net assets:
Beginning of year		2,188,068,673			2,055,221,161			226,514,073			241,650,339
End of year (Note 1i)	$	2,153,937,912		$	2,188,068,673		$	191,635,082		$	226,514,073

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Notes to Financial Statements

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 classes of shares offered within each of the Funds are indicated below. Beginning on October 19, 2018, Class C shares automatically convert to Class A shares after they have been held for 10 years. 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 due to differing arrangements for distribution and transfer agent fees. Franklin Convertible Securities Fund was closed to new investors with limited exceptions effective at the close of market on August 29, 2018.

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 each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. 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.

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.

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

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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.

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

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1.  Organization and Significant Accounting

Policies (continued)

c.  Joint Repurchase Agreement (continued)

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 year end, as indicated in the Statements of Investments, had been entered into on October 31, 2018.

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.

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.

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 Note 8 regarding other derivative information.

e.  Index-Linked Notes

Certain or all Funds invest in index-linked notes. Index-linked notes are senior, unsecured, subordinated debt securities issued by a financial institution, and the value is based on the price movements of the underlying index. Index-linked notes are designed to provide investors access to the returns of various market benchmarks and intended to replicate the economic effects that would apply had the Fund directly purchased the underlying referenced asset or basket of assets. The risks of investing in index-linked notes include unfavorable price movements in the underlying index and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with index-linked notes and the appreciation potential may be limited. Index-linked notes may be more volatile and less liquid than other investments held by the Funds.

f.  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

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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.

g.  Securities Lending

Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Funds, and/or a joint repurchase agreement. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statements of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At October 31, 2018, Franklin Balanced Fund had no securities on loan.

h.  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.

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 October 31, 2018, 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 the statute of limitations in each jurisdiction in which the Fund invests.

i.  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

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1.  Organization and Significant Accounting

Policies (continued)

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

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 and capital gain distributions by Underlying Funds are 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. Distributable earnings are determined according to income tax regulations (tax basis) and 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 or based on the ratio of number of shareholders of each Fund to the combined number of shareholders 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, excluding 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.

j.  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.

k.  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, 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.

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*Effective during the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statements of Changes in Net Assets, therefore prior period amounts are presented below.

For the year ended October 31, 2017, distributions to shareholders were as follows:

	Franklin Balanced Fund			Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Real Return Fund
Distributions from net investment income:
Class A		$(78,196,064	)		$(18,543,170	)		$(42,489,638	)		$(1,941,335	)
Class C		(14,807,257	)		(5,076,900	)		(4,618,552	)		(353,587	)
Class R		(133,912	)		—			(158,369	)		—
Class R6		(24,051	)		(292,682	)		(321,585	)		(94,114	)
Advisor Class		(6,366,506	)		(34,146,214	)		(3,122,071	)		(611,165	)
Distributions from net realized gains:
Class A		(36,628,258	)		(13,915,081	)		(66,068,336	)		—
Class C		(9,315,539	)		(5,462,741	)		(10,179,480	)		—
Class R		(65,313	)		—			(270,558	)		—
Class R6		(3,394	)		(160,359	)		(407,606	)		—
Advisor Class		(2,130,727	)		(20,367,621	)		(3,358,229	)		—

For the year ended October 31, 2017, undistributed net investment income/distributions in excess of net investment income included in net assets were as follows:

Fund	Undistributed net           investment income		Distribution in excess of net investment income
Franklin Balanced Fund		$6,028,150		$               —
Franklin Convertible Securities Fund		$            —		$(26,290,348	)
Franklin Equity Income Fund		$3,531,137		$               —
Franklin Real Return Fund		$            —		$(2,022,005	)

2.  Shares of Beneficial Interest

At October 31, 2018, 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:
Year ended October 31, 2018
Shares solda		31,254,193		$	380,495,174			28,565,417		$	600,371,738
Shares issued in reinvestment of distributions		9,972,235			121,740,304			3,028,430			60,507,562
Shares redeemed		(37,826,274	)		(461,535,077	)		(15,150,859	)		(316,148,094	)
Net increase (decrease)		3,400,154		$	40,700,401			16,442,988		$	344,731,206
Year ended October 31, 2017
Shares sold		41,122,848		$	493,473,430			10,813,117		$	208,458,475
Shares issued in reinvestment of distributions		9,374,533			112,108,534			1,667,207			30,768,242
Shares redeemed		(53,839,472	)		(646,239,312	)		(15,184,687	)		(289,068,794	)
Net increase (decrease)		(3,342,091	)	$	(40,657,348	)		(2,704,363	)	$	(49,842,077	)

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2.  Shares of Beneficial Interest (continued)

	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Shares			Amount			Shares			Amount
Class C Shares:
Year ended October 31, 2018
Shares sold		5,331,825		$	64,522,420			5,832,864		$	120,961,542
Shares issued in reinvestment of distributions		1,966,557			23,818,011			963,682			18,860,854
Shares redeemeda		(17,061,942	)		(205,253,910	)		(6,928,441	)		(141,713,222	)
Net increase (decrease)		(9,763,560	)	$	(116,913,479	)		(131,895	)	$	(1,890,826	)
Year ended October 31, 2017
Shares sold		9,430,439		$	111,985,968			2,390,323		$	45,128,905
Shares issued in reinvestment of distributions		1,901,983			22,527,563			481,988			8,729,846
Shares redeemed		(14,220,032	)		(169,598,683	)		(4,287,078	)		(81,057,931	)
Net increase (decrease)		(2,887,610	)	$	(35,085,152	)		(1,414,767	)	$	(27,199,180	)
Class R Shares:
Year ended October 31, 2018
Shares sold		52,561		$	644,571
Shares issued in reinvestment of distributions		16,814			205,981
Shares redeemed		(170,975	)		(2,079,816	)
Net increase (decrease)		(101,600	)	$	(1,229,264	)
Year ended October 31, 2017
Shares sold		96,705		$	1,160,206
Shares issued in reinvestment of distributions		16,618			199,225
Shares redeemed		(112,933	)		(1,363,636	)
Net increase (decrease)		390		$	(4,205	)
Class R6 Shares:
Year ended October 31, 2018
Shares sold		14,240,369		$	176,497,963			2,814,780		$	59,072,073
Shares issued in reinvestment of distributions		564,301			6,905,816			106,403			2,160,058
Shares redeemed		(3,182,549	)		(38,937,446	)		(1,242,069	)		(25,756,737	)
Net increase (decrease)		11,622,121		$	144,466,333			1,679,114		$	35,475,394
Year ended October 31, 2017
Shares sold		101,768		$	1,216,479			825,661		$	16,405,823
Shares issued in reinvestment of distributions		2,272			27,446			24,212			452,646
Shares redeemed		(96,433	)		(1,189,827	)		(136,289	)		(2,662,411	)
Net increase (decrease)		7,607		$	54,098			713,584		$	14,196,058

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	Franklin Balanced Fund						Franklin Convertible Securities Fund
	Shares			Amount			Shares			Amount
Advisor Class Shares:
Year ended October 31, 2018
Shares sold		3,903,537		$	47,754,786			71,119,463		$	1,499,743,371
Shares issued in reinvestment of distributions		413,056			5,051,434			5,499,134			109,979,709
Shares redeemed		(13,562,421	)		(167,980,433	)		(45,190,202	)		(928,418,878	)
Net increase (decrease)		(9,245,828	)	$	(115,174,213	)		31,428,395		$	681,304,202
Year ended October 31, 2017
Shares sold		15,399,254		$	184,926,370			28,693,593		$	549,908,666
Shares issued in reinvestment of distributions		634,330			7,621,151			2,642,306			49,040,409
Shares redeemed		(8,197,066	)		(98,344,140	)		(15,989,308	)		(306,265,021	)
Net increase (decrease)		7,836,518		$	94,203,381			15,346,591		$	292,684,054

^aMay include a portion of Class C shares that were automatically converted to Class A.

	Franklin Equity Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Year ended October 31, 2018
Shares solda		8,522,436		$	215,600,707			2,394,029		$	23,972,212
Shares issued in reinvestment of distributions		3,204,198			80,643,785			437,971			4,406,173
Shares redeemed		(11,186,923	)		(283,143,891	)		(3,697,499	)		(37,139,360	)
Net increase (decrease)		539,711		$	13,100,601			(865,499	)	$	(8,760,975	)
Year ended October 31, 2017
Shares sold		7,935,217		$	186,557,733			3,149,721		$	31,981,942
Shares issued in reinvestment of distributions		4,586,199			106,137,449			186,888			1,895,555
Shares redeemed		(18,170,067	)		(428,114,145	)		(4,857,880	)		(49,354,764	)
Net increase (decrease)		(5,648,651	)	$	(135,418,963	)		(1,521,271	)	$	(15,477,267	)
Class C Shares:
Year ended October 31, 2018
Shares sold		1,755,701		$	44,156,220			384,940		$	3,821,041
Shares issued in reinvestment of distributions		419,604			10,474,658			88,631			882,650
Shares redeemeda		(4,640,390	)		(116,179,871	)		(1,285,936	)		(12,716,856	)
Net increase (decrease)		(2,465,085	)	$	(61,548,993	)		(812,365	)	$	(8,013,165	)
Year ended October 31, 2017
Shares sold		1,668,212		$	38,941,261			630,519		$	6,345,139
Shares issued in reinvestment of distributions		613,812			14,082,715			34,431			345,545
Shares redeemed		(3,042,070	)		(71,479,552	)		(1,248,666	)		(12,554,810	)
Net increase (decrease)		(760,046	)	$	(18,455,576	)		(583,716	)	$	(5,864,126	)

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2.  Shares of Beneficial Interest (continued)

	Franklin Equity Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Class R Shares:
Year ended October 31, 2018
Shares sold		41,575		$	1,049,280
Shares issued in reinvestment of distributions		11,318			284,867
Shares redeemed		(63,625	)		(1,607,096	)
Net increase (decrease)		(10,732	)	$	(272,949	)
Year ended October 31, 2017
Shares sold		64,993		$	1,525,028
Shares issued in reinvestment of distributions		16,175			374,199
Shares redeemed		(83,128	)		(1,979,626	)
Net increase (decrease)		(1,960	)	$	(80,399	)
Class R6 Shares:
Year ended October 31, 2018
Shares sold		3,474,912		$	87,644,288			1,199,559		$	12,138,483
Shares issued in reinvestment of distributions		126,940			3,202,571			26,854			271,471
Shares redeemed		(849,554	)		(21,552,347	)		(312,145	)		(3,144,650	)
Net increase (decrease)		2,752,298		$	69,294,512			914,268		$	9,265,304
Year ended October 31, 2017
Shares sold		228,564		$	5,407,737			299,229		$	3,051,514
Shares issued in reinvestment of distributions		479			11,161			5,063			51,659
Shares redeemed		(189,735	)		(4,482,036	)		(267,306	)		(2,728,619	)
Net increase (decrease)		39,308		$	936,862			36,986		$	374,554
Advisor Class Shares:
Year ended October 31, 2018
Shares sold		1,666,939		$	42,390,161			1,354,135		$	13,625,198
Shares issued in reinvestment of distributions		167,247			4,221,565			79,839			806,460
Shares redeemed		(3,322,517	)		(83,930,276	)		(3,358,885	)		(34,116,650	)
Net increase (decrease)		(1,488,331	)	$	(37,318,550	)		(1,924,911	)	$	(19,684,992	)
Year ended October 31, 2017
Shares sold		4,431,818		$	104,388,733			1,805,023		$	18,433,312
Shares issued in reinvestment of distributions		260,564			6,067,460			58,212			592,952
Shares redeemed		(2,378,377	)		(56,055,393	)		(1,401,509	)		(14,300,383	)
Net increase (decrease)		2,314,005		$	54,400,800			461,726		$	4,725,881

^aMay include a portion of Class C shares that were automatically converted to Class A.

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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

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

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3.  Transactions with Affiliates (continued)

a.  Management Fees (continued)

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 year ended October 31, 2018, each Fund’s gross 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%		0.463%		0.461%		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.

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.

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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 year:

	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		$743,787		$580,468		$359,473		$17,046
CDSC retained		$  40,173		$  21,322		$  14,772		$  4,535

Effective September 10, 2018, the Board approved changes to certain front-end sales charges and dealer commissions on Class A shares. Further details are disclosed in the Fund’s Prospectus.

e.  Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the year ended October 31, 2018, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:

	Franklin Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Transfer agent fees		$1,520,098		$1,230,740		$961,808		$176,502

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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. During the year ended October 31, 2018, investments in affiliated management investment companies were as follows:

	Number of Shares Held at Beginning of Year		Gross Additions		Gross Reductions			Number of Shares Held at End of Year		Value at End of Year		Dividend Income		Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)
Franklin Balanced Fund
Controlled Affiliates
Franklin FTSE Europe Hedged ETF		—		1,350,000		—			1,350,000	$	32,123,250	$	525,298	$	—		$	(1,589,375	)
Franklin FTSE Japan Hedged ETF		—		1,250,000		—			1,250,000		30,808,000		27,033		—			(2,064,875	)
Franklin Liberty Investment Grade Corporate ETF		750,000		250,000		(1,000,000	)		—		—		615,801		(642,330	)		(586,875	)
Total Controlled Affiliates										$	62,931,250	$	1,168,132	$	(642,330	)	$	(4,241,125	)
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		101,275,128		1,587,015,818		(1,561,607,937	)		126,683,009		126,683,009		1,038,400		—			—
Total Affiliated Securities										$	189,614,259	$	2,206,532	$	(642,330	)	$	(4,241,125	)
Franklin Convertible Securities Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		69,852,661		655,979,890		(562,589,869	)		163,242,682	$	163,242,682	$	2,180,907	$	—		$	—
Franklin Equity Income Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		36,691,548		474,951,728		(441,115,459	)		70,527,817	$	70,527,817	$	670,617	$	—		$	—
Franklin Real Return Fund
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		305,899		15,703		(321,602	)		—	$	—	$	74,590	$	140,938	a	$	(149,933	)
Franklin Middle Tier Floating Rate Fund		112,671		2,104		(114,775	)		—		—		20,880		(18,778	)		9,823
Franklin Pelagos Commodities
Strategy Fund, Class R6		—		897,760		—			897,760		5,808,508		—		—			(191,492	)
Total Affiliated Securities										$	5,808,508	$	95,470	$	122,160		$	(331,602	)

^aIncludes capital gain

distributions received.

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 the Franklin Real Return Fund so that the expenses (excluding distribution fees, acquired fund fees and expenses, and certain non-routine expenses or costs, including those relating to litigation, indemnification,

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reorganizations, and liquidations) for Class A, Class C, and Advisor Class of the Fund do not exceed 0.65%, and for Class R6 do not exceed 0.49%, based on the average net assets of each class until February 28, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end.

For Franklin Balanced Fund, Franklin Convertible Securities Fund and Franklin Equity Income Fund, Investor Services has voluntarily agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03%, 0.02% and 0.03% based on the average net assets of the class, respectively. Investor Services may discontinue this waiver in the future.

h.  Interfund Transactions

Franklin Real Return Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the year ended October 31, 2018, these purchase and sale transactions aggregated $0 and $1,241,087, respectively.

4.  Expense Offset Arrangement

The Funds have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ custodian expenses. During the year ended October 31, 2018, the custodian fees were reduced as noted in the Statements of Operations.

5.  Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains.

At October 31, 2018, the capital loss carryforwards were as follows:

	Franklin Real Return Fund
Capital loss carryforwards not subject to expiration:
Short Term		$  1,056,974
Long Term		25,062,261
Total capital loss carryforwards		$26,119,235

During the year ended October 31, 2018, the Franklin Real Return Fund utilized $1,422,523 of capital loss carryforwards.

On October 31, 2018, the Franklin Real Return Fund had expired capital loss carryforwards of $1,206,585, which were reclassified to paid-in capital.

The tax character of distributions paid during the years ended October 31, 2018 and 2017, was as follows:

	Franklin Balanced Fund				Franklin Convertible Securities Fund
	2018		2017		2018		2017
Distributions paid from:
Ordinary income		$119,167,099		$  99,527,790	$	102,614,199	$	94,056,058
Long term capital gain		43,679,233		48,143,231		108,553,843		3,908,710
		$162,846,332		$147,671,021	$	211,168,042	$	97,964,768

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5.  Income Taxes (continued)

	Franklin Equity Income Fund				Franklin Real Return Fund
	2018		2017		2018		2017
Distributions paid from:
Ordinary income		$    48,204,970	$	50,710,215	$	6,608,494	$	3,000,201
Long term capital gain		54,052,701		80,284,209		—		—
		$102,257,671	$	130,994,424	$	6,608,494	$	3,000,201

At October 31, 2018, the cost of investments, net unrealized appreciation (depreciation), undistributed ordinary income and undistributed long term capital gains 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	$	3,086,276,230		$	3,447,961,768		$	1,609,561,538		$	194,991,694
Unrealized appreciation	$	317,190,735		$	392,199,924		$	584,433,209		$	7,488,059
Unrealized depreciation		(102,777,255	)		(145,498,206	)		(31,844,604	)		(11,212,917	)
Net unrealized appreciation (depreciation)	$	214,413,480		$	246,701,718		$	552,588,605		$	(3,724,858	)
Distributable earnings:
Undistributed ordinary income	$	803,761		$	78,165,230		$	2,979,631		$	1,144,468
Undistributed long term capital gains		38,371,930			95,639,294			86,903,138			—
Total distributable earnings	$	39,175,691		$	173,804,524		$	89,882,769		$	1,144,468

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

The Funds except Franklin Real Return Fund, utilized a tax accounting practice to treat a portion of the proceeds from capital shares redeemed as a distribution from realized capital gains.

6.  Investment Transactions

Purchases and sales of investments (excluding short term securities) for the year ended October 31, 2018, were as follows:

	Franklin Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
Purchases		$2,129,348,755		$1,836,202,850		$610,249,312		$53,348,319
Sales		$2,232,336,640		$1,054,143,241		$708,981,472		$90,128,735

7.  Credit Risk

At October 31, 2018, Franklin Balanced Fund and Franklin Convertible Securities Fund had 8.6% and 73.9%, respectively, of their portfolio invested in high yield securities, 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.  Other Derivative Information

At October 31, 2018, the Fund’s investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:

	Asset Derivatives			Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Assets and Liabilities Location	Fair Value		Statements of Assets and Liabilities Location	Fair Value
Franklin Balanced Fund
Equity contracts	Investments in securities, at value		$64,250,000a	Options written, at value		$8,390,000

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

For the year ended October 31, 2018, the effect of derivative contracts in the Fund’s Statements of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Operations Location	Net Realized Gain (Loss) for the Year		Statements of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Year
	Net realized gain (loss) from:			Net change in unrealized appreciation (depreciation) on:
Franklin Balanced Fund
Equity contracts	Investments	$	(11,810,180)a	Investments	$	24,519,914	a
	Written options		8,548,278	Written options		2,017,129
Totals		$	(3,261,902)		$	26,537,043

^aPurchased option contracts are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statements of Operations.

For the year ended October 31, 2018, the average month end notional amount of options represented $2,105,923.

See Note 1(d) 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 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the 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 year ended October 31, 2018, the Funds did not use the Global Credit Facility.

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NOTES TO FINANCIAL STATEMENTS

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 October 31, 2018, 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:a
Equity Investmentsb	$	1,427,580,402	$	—	$	—		$	1,427,580,402
Equity-Linked Securities		—		353,838,640		—			353,838,640
Index-Linked Notes		—		33,322,500		—			33,322,500
Convertible Bonds		—		11,550,435		—			11,550,435
Corporate Bonds		—		1,127,907,361		—			1,127,907,361
U.S. Government and Agency Securities		—		174,354,492		—			174,354,492
Options Purchased		64,250,000		—		—			64,250,000
Short Term Investments		126,683,009		—		—			126,683,009
Total Investments in Securities	$	1,618,513,411	$	1,700,973,428	$	—		$	3,319,486,839
Liabilities:
Other Financial Instruments:
Options Written	$	8,390,000	$	—	$	—		$	8,390,000
Franklin Convertible Securities Fund
Assets:
Investments in Securities:a
Equity Investments:b
Communication Services	$	20,137,613	$	40,605,933	$	—		$	60,743,546
Consumer Staples		65,205,000		52,985,698		—			118,190,698
All Other Equity Investments		524,368,974		—		—			524,368,974
Convertible Bonds		—		2,828,117,586		—			2,828,117,586
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		163,242,682		—		—			163,242,682
Total Investments in Securities	$	772,954,269	$	2,921,709,217	$	—		$	3,694,663,486

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	Level 1		Level 2		Level 3		Total
Franklin Equity Income Fund
Assets:
Investments in Securities:a
Equity Investmentsb	$	1,931,192,848	$	—	$	—	$	1,931,192,848
Equity-Linked Securities		—		160,429,478		—		160,429,478
Short Term Investments		70,527,817		—		—		70,527,817
Total Investments in Securities	$	2,001,720,665	$	160,429,478	$	—	$	2,162,150,143
Franklin Real Return Fund
Assets:
Investments in Securities:a
Equity Investmentsb	$	38,720,803	$	—	$	—	$	38,720,803
U.S. Government and Agency Securities		—		140,008,588		—		140,008,588
Short Term Investments		—		12,537,445		—		12,537,445
Total Investments in Securities	$	38,720,803	$	152,546,033	$	—	$	191,266,836

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

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

^cIncludes securities determined to have no value at October 31, 2018.

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the year.

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 acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

In August 2018, FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

12.  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, except for the following:

On October 23, 2018, the Board approved the repositioning of the Fund as an income/managed payout strategy. As part of the repositioning, on December 13 2018, the Board approved changing the Fund’s name to Franklin Managed Income Fund. The repositioning and the name change will not become effective until March 1, 2019.

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NOTES TO FINANCIAL STATEMENTS

Abbreviations

Currency		Selected Portfolio
USD	United States Dollar	ADR	American Depositary Receipt
		ETF	Exchange Traded Fund
		FRN	Floating Rate Note
		LIBOR	London InterBank Offered Rate
		REIT	Real Estate Investment Trust
		SPDR	S&P Depositary Receipt

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Franklin Investors Securities Trust and Shareholders of Franklin Balanced Fund, Franklin Convertible Securities Fund, Franklin Equity Income Fund and Franklin Real Return Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Balanced Fund, Franklin Convertible Securities Fund, Franklin Equity Income Fund and Franklin Real Return Fund (the “Funds”) as of October 31, 2018, the related statements of operations for the year ended October 31, 2018, the statements of changes in net assets for each of the two years in the period ended October 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended October 31, 2018 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

San Francisco, California

December 18, 2018

We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.

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Tax Information (unaudited)

Under Section 852(b)(3)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as long term capital gain dividends for the fiscal year ended October 31, 2018:

Franklin       Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund
	$47,223,833		$140,282,409		$61,527,378

Under Section 871(k)(2)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as short term capital gain dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended October 31, 2018:

Franklin       Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund
	$13,487,645		$27,617,329		$111,590

Under Section 854(b)(1)(A) of the Internal Revenue Code, the Funds hereby report the following percentage amounts of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended October 31, 2018:

Franklin       Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund
	33.34%		6.51%		94.29%

Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended October 31, 2018:

Franklin       Balanced Fund		Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Real Return Fund
	$51,437,775		$9,352,590		$50,789,814		$653,422

Distributions, including qualified dividend income, paid during calendar year 2018 will be reported to shareholders on Form 1099-DIV by mid-February 2019. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.

Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended October 31, 2018:

Franklin Convertible     Securities Fund
	$17,771,879

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Special Meeting of Shareholders

MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017 AND DECEMBER 29, 2017

(UNAUDITED)

A Special Meeting of Shareholders of Franklin Investors Securities Trust was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017 and December 29, 2017. The purpose of the meeting was to elect Trustees of Franklin Investors Securities Trust and to vote on the following proposals for each Fund: to approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval and to approve an amended fundamental investment restriction regarding investments in commodities. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of Franklin Investors Securities Trust: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, Larry D. Thompson, and John B. Wilson; and (ii) the proposals to use a “manager of managers” structure and to approve an amended fundamental investment restriction regarding investments in commodities were approved by shareholders of each Fund, except for Franklin Real Return Fund. No other business was transacted at the meeting.

In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.

The results of the voting at the meeting are as follows:

Proposal 1.     To elect a Board of Trustees:

Name	For		Withheld
Harris J. Ashton		1,140,629,120		32,081,576
Terrence J. Checki		1,140,321,742		32,388,956
Mary C. Choksi		1,140,407,572		32,303,126
Edith E. Holiday		1,108,315,463		64,395,237
Gregory E. Johnson		1,141,429,086		31,281,610
Rupert H. Johnson, Jr.		1,140,181,429		32,529,268
J. Michael Luttig		1,140,612,578		32,098,122
Larry D. Thompson		1,140,871,851		31,838,848
John B. Wilson		1,141,487,184		31,223,513
Total Trust Shares Outstanding*: 1,818,967,134

* As of the record date.

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Proposal 2. To approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval:

Franklin Balanced Fund

	Shares
For		104,246,566
Against		8,903,975
Abstain		6,730,540
Broker Non-Votes		24,731,949
Total Fund Shares Voted		144,613,028
Total Fund Shares Outstanding*		288,495,988

Franklin Convertible Securities Fund

	Shares
For		59,793,433
Against		2,620,815
Abstain		1,644,437
Broker Non-Votes		22,720,089
Total Fund Shares Voted		86,778,774
Total Fund Shares Outstanding*		128,499,691

Franklin Equity Income Fund

	Shares
For		32,618,200
Against		2,669,239
Abstain		1,831,559
Broker Non-Votes		8,279,951
Total Fund Shares Voted		45,398,950
Total Fund Shares Outstanding*		88,573,120

Franklin Real Return Fund

	Shares
For		9,226,088
Against		824,151
Abstain		584,830
Broker Non-Votes		3,920,546
Total Fund Shares Voted		14,555,622
Total Fund Shares Outstanding*		23,154,340

Proposal 3. To approve an amended fundamental investment restriction regarding investments in commodities:

Franklin Balanced Fund

	Shares
For		106,101,197
Against		5,525,418
Abstain		8,254,464
Broker Non-Votes		24,731,949
Total Fund Shares Voted		144,613,028
Total Fund Shares Outstanding*		288,495,988

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Franklin Convertible Securities Fund

	Shares
For		59,902,307
Against		2,006,159
Abstain		2,150,219
Broker Non-Votes		22,720,089
Total Fund Shares Voted		86,778,774
Total Fund Shares Outstanding*		128,499,691

Franklin Equity Income Fund

	Shares
For		32,960,417
Against		1,888,508
Abstain		2,270,074
Broker Non-Votes		8,279,951
Total Fund Shares Voted		45,398,950
Total Fund Shares Outstanding*		88,573,120

Franklin Real Return Fund

	Shares
For		9,314,179
Against		637,451
Abstain		683,446
Broker Non-Votes		3,920,546
Total Fund Shares Voted		14,555,622
Total Fund Shares Outstanding*		23,154,340

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Board Members and Officers

The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton Investments fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.

Independent Board Members

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Harris J. Ashton (1932) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1986	136	Bar-S Foods (meat packing company) (1981-2010).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
Terrence J. Checki (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since December 2017	112	Hess Corporation (exploration of oil and gas) (2014-present).
Principal Occupation During at Least the Past 5 Years:
Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999-present);member of the Board of Trustees of the Economic Club of New York (2013 -present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; and formerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee (1995-2014); and Visiting Fellow at the Council on Foreign Relations (2014).
Mary C. Choksi (1950) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2014	136	Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987–2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987).
Edith E. Holiday (1952) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1998	136	Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013).
Principal Occupation During at Least the Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
J. Michael Luttig (1954) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2009	136	Boeing Capital Corporation (aircraft financing) (2006-2013).
Principal Occupation During at Least the Past 5 Years:
Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006-present);and formerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).

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Independent Board Members (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Larry D. Thompson (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	136	The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); and formerly, Executive Vice President - Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
John B. Wilson (1959) One Franklin Parkway San Mateo, CA 94403-1906	Lead Independent Trustee	Trustee since 2007 and Lead Independent Trustee since 2008	112	None
Principal Occupation During at Least the Past 5 Years:
President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing) (2002-present); Senior Advisor, McKinsey & Co. (consulting) (2017-present); serves on private and non-profit boards; and formerly, President, Staples International and Head of Global Transformation (office supplies) (2012-2016); Chief Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000); Chief Financial Officer and Executive Vice President – Finance and Strategy, Staples, Inc. (1992-1996); Senior Vice President – Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President and Partner, Bain & Company (consulting firm) (1986-1990).
Interested Board Members and Officers
Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2013	150	None
Principal Occupation During at Least the Past 5 Years:
Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments; Vice Chairman, Investment Company Institute; and formerly, President, Franklin Resources, Inc. (1994-2015).
**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906	Chairman of the Board, Trustee and Vice President	Chairman of the Board since 2013, Trustee since 1987 and Vice President since 1986	136	None
Principal Occupation During at Least the Past 5 Years:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 40 of the investment companies in Franklin Templeton Investments.

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Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2012	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.
Mark Boyadjian (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2003	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton Investments.
Gaston Gardey (1967) One Franklin Parkway San Mateo, CA 94403-1906	Chief Financial Officer, Chief Accounting Officer and Treasurer	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 28 of the investment companies in Franklin Templeton Investments.
Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.
Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906	Chief Executive Officer – Finance and Administration	Since 2017	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; and formerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments (2009-2017).
Edward B. Jamieson (1948) One Franklin Parkway San Mateo, CA 94403-1906	President and Chief Executive Officer – Investment Management	Since 2002	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin Templeton Institutional, LLC; and officer and/or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 10 of the investment companies in Franklin Templeton Investments.

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Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Madeline Lam (1969) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2010	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton Investments.
Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906	Vice President – AML Compliance	Since 2016	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.
Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 44 of the investment companies in Franklin Templeton Investments.
Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Chief Compliance Officer	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; and formerly, Senior Associate General Counsel, Franklin Templeton Investments (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013).
Karen L. Skidmore (1952) One Franklin Parkway San Mateo, CA 94403-1906	Vice President and Secretary	Since 2006	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2015	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2005	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.

franklintempleton.com Annual Report           99

FRANKLIN INVESTORS SECURITIES TRUST

Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2011	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.

*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton Investments fund complex. These portfolios have a common investment manager or affiliated investment managers.

**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director and major shareholder of Resources.

Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.

Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.

The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated John B. Wilson as its audit committee financial expert. The Board believes that Mr. Wilson qualifies as such an expert in view of his extensive business background and experience, including service as chief financial officer of Staples, Inc. from 1992 to 1996. Mr. Wilson has been a Member and Chairman of the Fund’s Audit Committee since 2007. As a result of such background and experience, the Board believes that Mr. Wilson has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Wilson is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.

The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIAL BEN/342-5236 to request the SAI.

100       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Shareholder Information

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.

Householding of Reports and Prospectuses

You will receive each Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Annual 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.

© 2018 Franklin Templeton Investments. All rights reserved. FIST1 A 12/18

Franklin Templeton Investments

Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.

During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.

Dear Fellow Shareholder:

The 12 months ended October 31, 2018, benefited from mostly upbeat economic data as corporate earnings increased, the U.S. job market continued to improve and the unemployment rate declined.

Under new chairman Jerome Powell, the U.S. Federal Reserve (Fed) increased its federal funds rate by 0.25% three times in 2018, after a 0.25% increase in December 2017, bringing the rate from 1.25% to 2.25% by period-end. In September, the Fed cited business investment and household spending growth as more evidence of economic strength. The Fed noted inflation remained stable and longer-term inflation expectations had changed little. The 10-year U.S. Treasury yield began the period at 2.38% and ended the period at 3.15%.

In September 2018, the Standard & Poor’s 500^® Index (S&P 500^®) reached an all-time high, but experienced heightened volatility near period-end due to investor concerns about Fed interest-rate policies, higher U.S. Treasury yields, trade tensions, a potentially slower economy and some weaker-than-expected fourth-quarter 2018 revenue guidance. In this environment, U.S. securities, as measured by the S&P 500, increased 7.35%,¹ representing a change in this total return index level from 5,002.03 to 5,369.49.² Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate

Bond Index, decreased 2.05%,¹ representing a change in this total return index level from 2,039.64 to 1,997.76.³

We are committed to our long-term perspective and disciplined investment approach as we conduct a rigorous, 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.

Franklin Investors Securities Trust’s annual report, covering Franklin Adjustable U.S. Government Securities Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund, 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.

1. Source: Morningstar.

2. Source: Copyright ^© 2018, S&P Dow Jones Indices LLC. All rights reserved. The index levels for the S&P 500 shown above are based on total returns, which include reinvestment of any income or distributions.

3. Source: Bloomberg Barclays Indices. The index levels for the Bloomberg Barclays U.S. Aggregate Bond Index shown above are based on total returns, which include reinvestment of any income or distributions.

The indexes are unmanaged and include reinvestment of any income or distributions.

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

Not FDIC Insured  |    May Lose Value  |    No Bank Guarantee  

franklintempleton.com Not part of the annual report       1

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 October 31, 2018, 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.

Contents

Annual Report
Economic and Market Overview	3
Franklin Adjustable U.S. Government Securities Fund	4
Franklin Floating Rate Daily Access Fund	10
Franklin Low Duration Total Return Fund	18
Franklin Total Return Fund	25
Financial Highlights and Statements of Investments	32
Financial Statements	123
Notes to Financial Statements	129
Report of Independent Registered Public Accounting Firm	159
Tax Information	160
Special Meeting of Shareholders	161
Board Members and Officers	164
Shareholder Information	169

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

2       Not part of the annual report franklintempleton.com

Annual Report

Economic and Market Overview

The U.S. economy grew during the 12 months under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The manufacturing and services sectors expanded during the period. The unemployment rate declined from 4.1% in October 2017, as reported at the beginning of the 12-month period, to a nearly 49-year low of 3.7% at period-end.¹ Annual inflation, as measured by the Consumer Price Index, increased from 2.0% in October 2017, as reported at the beginning of the period, to 2.5% at period-end.¹

The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its December 2017 meeting and continued to reduce its balance sheet as part of its ongoing plan to normalize monetary policy. In his congressional testimonies in February and July 2018, as well as at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to gradually raise interest rates. As widely expected, the Fed further raised its target range for the federal funds rate 0.25% each at its March, June and September 2018 meetings, to 2.00%–2.25%. At its September meeting, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018. Minutes from the Fed’s September meeting (released in October) indicated that a few officials expected monetary policy to become modestly restrictive of economic growth, while some officials seemed to favor increasing the federal funds rate temporarily above what they consider to be its longer-term level to reduce the risk of overshooting the Fed’s inflation objective. In contrast, some officials indicated they would not favor a restrictive policy unless they see clear signs of an overheating economy and rising inflation.

The 10-year Treasury yield, which moves inversely to its price, increased during the period. The yield rose amid the passage of the tax reform bill in December 2017. Moreover, investor concerns about higher inflation and the Fed’s interest-rate path drove the yield to multi-year highs in February, April, May and October 2018. Expectations that other central banks might scale back monetary stimulus and better-than-expected U.S. economic reports also pushed the yield higher. However, some factors weighed on the Treasury yield at certain points during the period, including concerns about political turmoil in Italy, political uncertainties in the U.S., tensions between the U.S. and North Korea, the Trump administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and economic turmoil in Turkey and Argentina. Overall, the 10-year Treasury yield rose from 2.38% at the beginning of the period to 3.15% at period-end.

The foregoing information reflects our analysis and opinions as of October 31, 2018. 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.

franklintempleton.com Annual Report         3

Franklin Adjustable U.S. Government Securities Fund

We are pleased to bring you Franklin Adjustable U.S. Government Securities Fund’s annual report for the fiscal year ended October 31, 2018.

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 posted a +0.65% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government Index: 1-2 Year Component, posted a +0.63% 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 10/31/18

comparable securities as well as their historical prepayment performance.

Manager’s Discussion

The Fund employed a conservative strategy that invested primarily in adjustable-rate mortgage securities (ARMs) that are either explicitly or implicitly backed by the US 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.

Over the period, we continued to focus on diverse, seasoned, post-reset FNMA and FHLMC ARMs with average coupons above 3% with larger loan counts and are well seasoned. With a shift toward a flatter yield curve this year, prepayments remained elevated, and we are cautious going forward. We do believe that with borrowers having been through a full year of mortgages resetting upward, a burnout effect could offset some of the refinance incentive which would help lower prepayment

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 37.

4         Annual Report franklintempleton.com

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
Month	Class A		Class A1		Class C		Class R6		Advisor Class
November		1.4899		1.5998		1.2256		1.7092		1.6640
December		1.3591		1.4585		1.0946		1.5904		1.5222
January		1.6155		1.7311		1.3181		1.8465		1.8035
February		1.5280		1.6247		1.2747		1.7639		1.6862
March		1.3929		1.4950		1.1332		1.6403		1.5561
April		1.6415		1.7528		1.3542		1.9156		1.8227
May		1.5564		1.6628		1.2773		1.8132		1.7310
June		1.5932		1.6907		1.3346		1.8395		1.7568
July		1.7037		1.8151		1.4177		1.9797		1.8849
August		1.6862		1.7941		1.4090		1.9589		1.8610
September		1.7229		1.8191		1.4738		1.9699		1.8803
October		2.0056		2.1180		1.7115		2.3355		2.1916
Total		19.2949		20.5617		16.0243		22.3626		21.3603

*The distribution amount is the sum of all net investment income distributions for the period shown. 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.

rates over the short to medium term. Hence we have been favoring those ARMs, linked to the London Interbank Offered Rate (LIBOR) index, which should demonstrate a better prepayment profile relative to constant maturity treasury index ARMs. The Fund’s LIBOR indexed ARMs were the most significant to performance, while ARMs indexed to US Treasuries were also additive.⁴ We have found such securities historically to have experienced lower volatility than comparable maturity Treasuries and have provided more consistent income.

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

	Paul Varunok
	Roger A. Bayston, CFA
	Portfolio Management Team

The foregoing information reflects our analysis, opinions and portfolio holdings as of October 31, 2018, 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.

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.

franklintempleton.com Annual Report         5

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 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
1-Year	+0.65%	-1.62%
5-Year	+0.59%	-0.34%
10-Year	+10.04%	+0.74%
Advisor
1-Year	+0.78%	+0.78%
5-Year	+1.73%	+0.34%
10-Year	+12.70%	+1.20%

	Distribution   Rate4	30-Day Standardized Yield5
Share Class		(with waiver)		(without waiver)
A	2.61%		1.44%	1.43%
Advisor	2.92%		1.73%	1.72%

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

See page 8 for Performance Summary footnotes.

6         Annual Report franklintempleton.com

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 8 for Performance Summary footnotes.

franklintempleton.com Annual Report         7

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income
A		$0.192949
A1		$0.205617
C		$0.160243
R6		$0.223626
Advisor		$0.213603

Total Annual Operating Expenses⁷

Share Class	With Waiver		Without Waiver
A		0.93%		0.94%
Advisor		0.68%		0.69%

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 2/28/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

2. Cumulative total return represents the change in value of an investment over the periods indicated.

3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

4. Distribution rate is based on an annualization of the sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 10/31/18.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays U.S. Government Index: 1-2 Year Component includes public obligations of the U.S. Treasury with at least one year up to, but not including, 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.

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.

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

8         Annual Report franklintempleton.com

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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,005.20	$4.80	$1,020.42	$4.84	0.95%
A1	$1,000	$1,004.80	$4.04	$1,021.17	$4.08	0.80%
C	$1,000	$1,002.00	$6.81	$1,018.40	$6.87	1.35%
R6	$1,000	$1,006.00	$2.78	$1,022.43	$2.80	0.55%
Advisor	$1,000	$1,005.30	$3.54	$1,021.68	$3.57	0.70%

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 184/365 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 Annual Report       9

Franklin Floating Rate Daily Access Fund

This annual report for Franklin Floating Rate Daily Access Fund covers the fiscal year ended October 31, 2018.

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 +2.97% cumulative total return for the 12 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 +4.89% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 14.

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

Technical conditions were relatively more balanced during the period under review as an increase in issuance helped to offset healthy demand. Moderate inflows into loan retail vehicles combined with strong collateralized-loan-obligation (CLO) issuance provided strong support for loan prices. Although continued refinancing activity and more primary deals helped weaken principal returns, rising London Interbank Offered

Portfolio Composition*

Based on Total Net Assets as of 10/31/18

*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.

Rates (LIBOR) helped to increase income generation and offset the principal declines.

Higher U.S. Treasury yields and rising LIBOR spurred moderate flows into loan retail vehicles as more investors looked for lower duration assets. After the Federal Reserve hiked rates multiple times during the period and expectations for further hikes improved, interest from retail investors returned to the asset class. However, tight valuations and concerns surrounding credit risk helped to restrain investor interest compared to previous periods of inflows.

Although retail investor demand was moderate, CLO issuance continued at a strong pace as demand for floating-rate investments continued. As a result, liability spreads for the highest-rated tranches reached the tightest levels for vehicles launched after the financial crisis. However, spreads widened slightly toward the end of the period due to heavy issuance, challenging the arbitrage between liability and loan spreads and slowing new vehicles. Despite the moderate deceleration, CLO volumes in 2018 still managed to outpace previous years, due in part to a record number of managers issuing at least one new vehicle during the period.

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 44.

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FRANKLIN FLOATING RATE DAILY ACCESS FUND

New issuance in the loan market also increased, as more transactions related to mergers and acquisitions launched in the primary market. The increase in issuance helped to balance technical conditions and restrain extensive repricing activity, which had comprised a larger portion of primary market activity in the previous year. Net new issuance helped to push the institutional loan mark above $1 trillion outstanding, but new supply was concentrated disproportionately among B rated loans, while covenants and investor protections remained weaker.

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
							Advisor
Month	Class A		Class C		Class R6		Class
November		2.8700		2.5832		3.1035		3.0503
December		3.3147		3.0358		3.5330		3.4910
January		3.5520		3.2346		3.8085		3.7534
February		3.0628		2.8043		3.2795		3.2297
March		3.2845		3.0036		3.5110		3.4574
April		3.8443		3.5375		4.1029		4.0387
May		3.3824		3.0851		3.6413		3.5714
June		3.0761		2.8000		3.3072		3.2510
July		3.6111		3.3054		3.8671		3.8035
August		3.2915		2.9954		3.5461		3.4786
September		2.9008		2.6336		3.1293		3.0690
October		3.5524		3.2374		3.8266		3.7542
Total	39.7426		36.2559		42.6560		41.9482

*The distribution amount is the sum of all net investment income distributions for the period shown. 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 increased to the highest level since 2015 during the period, following the widely expected default of a large broadcasting issuer. Although the rate declined from its highpoint as more issuers rolled off the calculation, the one-year default rate ended the period higher. Average first-lien debt leverage was also at a record high as more issuers came to the market launching only loans, rather than both loans and bonds, which diminished subordinated debt cushion for senior loan investors.

In anticipation of potential future volatility, we have maintained our overweighting in loans rated in the upper tier, which we would expect to outperform. Furthermore, we have increased portions of our portfolio with greater liquidity in terms of settlement, including CLO and open-end fund investments, which we could potentially sell in a period of

elevated redemptions, but could also provide relatively attractive credit exposure in low volatility periods. Although issuance has increased and resulted in many repricing transactions being curtailed, issuers have still been able to put forth looser loan documentation. Recent loan credit agreements have increasingly permitted issuers to change the reference rate from the LIBOR without lender approval, which has led us to not participate in many primary transactions, while maintaining relatively stronger lender protections among the loans within our portfolio.

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 year 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 tier loans in the index returned 3.89%, middle tier returned 4.99%, and lower tier returned 8.99%, according to the CS LLI.¹

The top contributors to performance included issuers that had previously experienced volatility or where we had built relatively large positions and through proactive engagement, were able to execute transactions that contributed to returns. The term loan of Ascena Retail Group, a specialty retailer with multiple core brands traded higher after the company reported better-than-expected earnings and the loan attracted demand

franklintempleton.com Annual Report           11

FRANKLIN FLOATING RATE DAILY ACCESS FUND

Top 10 Holdings

10/31/18

Company Sector/Industry	% of Total Net Assets
Fieldwood Energy LLC Oil & Gas Exploration & Production		3.8	%
General Nutrition Centers Inc. Specialty Stores		2.2	%
Ascena Retail Group Inc. Apparel Retail		2.2	%
NRG Energy Inc. Independent Power Producers & Energy Traders		1.8	%
Navistar Inc. Industrial Machinery		1.7	%
JBS USA LUX SA Packaged Foods & Meats		1.7	%
Delos Finance S.A.R.L. (AerCap) (Luxembourg) Aerospace & Defense		1.6	%
Foresight Energy LLC Coal & Consumable Fuels		1.5	%
Appvion Inc Forest Products		1.5	%
Zayo Group LLC Integrated Telecommunication Services		1.4	%

from CLOs due to its relatively higher spread and ratings. Fieldwood Energy, a provider of oil and gas, contributed to performance after the company completed a restructuring plan and the exit term loan also increased spread. However, the top detractors within our loan portfolio included issuers that had also emerged from bankruptcy. Remington Outdoor (a manufacturer of firearms and ammunition) detracted from performance after the company filed for bankruptcy due to weaker sales. Appvion, a paper products manufacturer, also filed for bankruptcy and detracted from performance as the company faced price declines in its products due to competition and higher costs for a key raw material.

The Fund maintained a significant overweighting in higher-rated loans, while also adding to positions in AAA to A rated CLO tranches. Other positions included two open-end funds, Franklin Middle Tier Floating Rate Fund and Franklin Lower Tier Floating Rate Fund. The investments allowed the Fund to have further exposure to credit, while providing a potential source of liquidity. The Fund also held protection in HYCDX, an index of high-yield bond credit default swaps providing synthetic exposure to the high-yield bond market, to protect against volatility in the credit markets.

CFA^® is a trademark owned by CFA Institute.

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 October 31, 2018, 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.

franklintempleton.com Annual Report       13

FRANKLIN FLOATING RATE DAILY ACCESS FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 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
1-Year	+2.97%	+0.70%
5-Year	+16.45%	+2.63%
10-Year	+71.76%	+5.31%
Advisor
1-Year	+3.35%	+3.35%
5-Year	+18.04%	+3.37%
10-Year	+76.28%	+5.83%

	Distribution  Rate4		30-Day Standardized Yield5
Share Class			(with waiver)		(without waiver)
A		4.41%		4.46%		4.42%
Advisor		4.77%		4.82%		4.78%

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. 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 FLOATING RATE DAILY ACCESS FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.

Class A (11/1/08–10/31/18)

Advisor Class (11/1/08–10/31/18)

See page 16 for Performance Summary footnotes.

franklintempleton.com Annual Report         15

FRANKLIN FLOATING RATE DAILY ACCESS FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

Share Class	Net Investment Income
A		$0.397426
C		$0.362559
R6		$0.426560
Advisor		$0.419482

Total Annual Operating Expenses⁷

Share Class	With Waiver		Without Waiver
A		0.86%		0.91%
Advisor		0.61%		0.66%

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 2/28/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

2. Cumulative total return represents the change in value of an investment over the periods indicated.

3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

4. Distribution rate is based on an annualization of the sum of the respective class’s past 30 days’ daily distributions and the maximum offering price (NAV for Advisor Class) per share on 10/31/18.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Credit Suisse Group. The CS LLI is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market. Loans must be below investment grade and rated no higher than Baa/BB+ or Ba1/BBB+ by Moody’s or S&P.

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.

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

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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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,014.70	$4.16	$1,021.07	$4.18	0.82%
C	$1,000	$1,013.90	$6.19	$1,019.06	$6.21	1.22%
R6	$1,000	$1,017.60	$2.44	$1,022.79	$2.45	0.48%
Advisor	$1,000	$1,016.00	$2.90	$1,022.33	$2.91	0.57%

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 184/365 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 Annual Report         17

Franklin Low Duration Total Return Fund

We are pleased to bring you Franklin Low Duration Total Return Fund’s annual report for the fiscal year ended October 31, 2018.

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 posted a +0.54% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government/Credit Index: 1-3 Year Component, posted a +0.34% 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 21.

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

Portfolio Composition*

Based on Total Net Assets as of 10/31/18

*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.

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

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

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

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 60.

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FRANKLIN LOW DURATION TOTAL RETURN FUND

agreements to obtain net long or short exposures to select currencies, interest rates, countries, duration or credit risks.

What is the yield curve?

A yield curve is a line that plots the yield to maturity of bonds having equal credit quality against their maturity dates.

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. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.

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

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

During the period, the Fund’s exposure to non-agency RMBS was the most significant contributor to the Fund’s performance relative to its benchmark. Exposure across corporate credit

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
Month	Class A		Class C		Class R6		Advisor Class
November		2.1123		1.7980		2.4584		2.3264
December		3.5363		3.2116		3.8780		3.7499
January		2.2047		1.8450		2.5907		2.4388
February		1.9354		1.6306		2.2571		2.1330
March		2.2882		1.9825		2.6254		2.4924
April		2.6070		2.2595		2.9608		2.8338
May		2.5054		2.1686		2.8522		2.7244
June		2.1828		1.8896		2.4837		2.3736
July		2.6935		2.3451		3.0499		2.9200
August		2.1386		1.8343		2.4500		2.3358
September		2.3417		2.0560		2.6530		2.5390
October		2.6296		2.2716		3.0087		2.8572
Total		29.1755		25.2924		33.2679		31.7243

*The distribution amount is the sum of all net investment income distributions for the period shown. 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.

sectors also benefitted returns, including high-yield and investment grade corporate credit. Allocations to collateralized loan obligations (CLOs) and senior secured floating rate loans were positive for returns, offsetting negative attribution from security selection within both sectors. U.S. yield curve positioning as yield curve movements had a positive impact relative to the benchmark. In contrast, the Fund’s currency forward exposure detracted from relative returns.

We maintained our largest sector allocation in investment-grade corporate credit and added exposure over the period. We also increased allocation to high yield corporate credit. We continue to find opportunities in the RMBS asset class and added exposure to the sector over the period. We prefer to remain allocated to the seasoned credit risk transfer and re-performing loan sectors, where fundamental and technical forces remain positive. We slightly pared our CMBS exposure, while cautiously maintaining exposure at the top of the capital structure due to our concerns that commercial real estate prices have surpassed pre-financial crisis levels, rent growth is slowing, and capitalization rates are trending higher. We initiated a small position in marketplace loans. We have continued to reduce our foreign-currency risk. Our foreign currency exposure is held primarily through a basket of developed market shorts versus a basket of emerging market longs.

franklintempleton.com Annual Report         19

FRANKLIN LOW DURATION TOTAL RETURN FUND

During the period, the portfolio utilized derivatives, including credit default and currency swaps, inflation-linked 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.

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 October 31, 2018, 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 October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 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
1-Year	+0.54%	-1.76%
5-Year	+5.32%	+0.59%
10-Year	+30.08%	+2.43%
Advisor
1-Year	+0.80%	+0.80%
5-Year	+6.62%	+1.29%
10-Year	+33.42%	+2.93%

	Distribution	30-Day  Standardized Yield5
Share Class	Rate4	(with waiver)			(without waiver)
A	3.21%		2.98	%		2.71	%
Advisor	3.55%		3.29	%		3.04	%

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

See page 23 for Performance Summary footnotes.

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FRANKLIN LOW DURATION TOTAL RETURN FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A  (11/1/08–10/31/18)

Advisor Class  (11/1/08–10/31/18)

See page 23 for Performance Summary footnotes.

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FRANKLIN LOW DURATION TOTAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)

	Net Investment
Share Class	Income
A	$0.291755
C	$0.252924
R6	$0.332679
Advisor	$0.317243

Total Annual Operating Expenses⁸

Share Class	With Waiver		Without Waiver
A		0.71%		0.97%
Advisor		0.46%		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. 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 the 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. 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 2/28/19. 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 10/31/18.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays U.S. Government/Credit Index: 1-3 Year Component includes dollar-denominated investment grade corporate debt and non-native currency agency and local authority debt, sovereign, supranational, and taxable municipal debt, public obligations of the U.S. Treasury with at least one year up to, but not including, 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.

7. Source: Bureau of Labor Statistics, bls.gov/cpi. The Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

8. 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.

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

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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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$1,008.80	$3.49	$1,021.73	$3.52	0.69%
C	$1,000	$1,006.80	$5.51	$1,019.71	$5.55	1.09%
R6	$1,000	$1,010.90	$1.47	$1,023.74	$1.48	0.29%
Advisor	$1,000	$1,010.10	$2.23	$1,022.99	$2.24	0.44%

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 184/365 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     Annual Report franklintempleton.com

Franklin Total Return Fund

This annual report for Franklin Total Return Fund covers the fiscal year ended October 31, 2018.

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 primarily in investment-grade debt securities (including unrated securities of comparable quality) and other investments that provide exposure to such securities. The Fund currently focuses on government and corporate debt securities and mortgage- and asset-backed securities, but may invest in other securities and investments, such as floating-rate corporate loans and securities and municipal securities.

Performance Overview

The Fund’s Class A shares had a -2.57% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index had a -2.05% 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 28.

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. 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

Portfolio Composition*

Based on Total Investments as of 10/31/18

*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.

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

long or short exposures to select currencies, interest rates, countries, duration or credit risks.

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.

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 94.

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FRANKLIN TOTAL RETURN FUND

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. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.

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

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

During the period, the Fund’s exposure to corporate credit sectors benefitted returns, with high-yield corporate credit being a significant contributor to the Fund’s performance relative to its benchmark. Allocations to collateralized loan obligations (CLOs) and senior secured floating rate loans were positive for returns, offsetting negative attribution from security selection within both sectors. RMBS and tax-exempt municipal bonds also benefited relative performance. In contrast, the Fund’s exposure to foreign currency, security selection in MBS and sovereign emerging markets securities detracted from relative returns.

What is the yield curve?

A yield curve is a line that plots the yield to maturity of bonds having equal credit quality against their maturity dates.

We maintained our largest sector allocation in investment-grade corporate credit, but pared exposure over the period. We also reduced allocation to high-yield corporate credit on strong sector performance and allocated exposure to CLOs and senior secured floating-rate loans. We continue to find opportunities in the RMBS asset class and added exposure to the sector over the period. We prefer to remain allocated to the seasoned credit risk transfer and re-performing loan sectors, where fundamental and technical forces remain positive. We cautiously maintained our CMBS exposure at the top of the capital structure due to our concerns that commercial real estate prices have surpassed pre-financial crisis levels, rent growth is slowing, and capitalization rates are trending higher. We have continued to reduce our foreign-currency risk. Our foreign currency exposure is held primarily through a basket of developed-market shorts versus a basket of emerging-market longs.

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.

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FRANKLIN TOTAL RETURN FUND

Dividend Distributions*

11/1/17–10/31/18

	Dividend per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class
November		2.4928		2.1570		2.2888		2.8250		2.7092
December		4.4369		4.1086		4.2331		4.7588		4.6496
January		2.4671		2.1009		2.2392		2.8279		2.7023
February		2.2908		1.9826		2.0994		2.5928		2.4877
March		2.3005		1.9875		2.1157		2.6108		2.5026
April		1.1642		0.9809		1.0499		1.3448		1.2814
May		2.5422		2.2065		2.3327		2.8758		2.7581
June		1.8727		1.6200		1.7124		2.1281		2.0391
July		2.7685		2.4191		2.5531		3.1125		2.9931
August		1.1808		1.0282		1.0856		1.3311		1.2790
September		1.9436		1.7148		1.8024		2.1697		2.0911
October		2.6344		2.2873		2.4123		2.9735		2.8578
Total	28.0945		24.5934		25.9246		31.5508		30.3510

*The distribution amount is the sum of all net investment income distributions for the period shown. 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.

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 October 31, 2018, 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.

franklintempleton.com Annual Report       27

FRANKLIN TOTAL RETURN FUND

Performance Summary as of October 31, 2018

The performance tables and graphs 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 10/31/18¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 4.25% and the minimum is 0%. Class A: 4.25% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.

Share Class	Cumulative   Total Return2	Average Annual   Total Return3
A
1-Year	-2.57%	-6.74%
5-Year	+7.22%	+0.52%
10-Year	+62.41%	+4.52%
Advisor
1-Year	-2.22%	-2.22%
5-Year	+8.67%	+1.68%
10-Year	+66.66%	+5.24%

	Distribution	30-Day  Standardized Yield5
Share Class	Rate4	(with waiver)	(without waiver)
A	3.25%	3.14%		3.10	%
Advisor	3.66%	3.55%		3.51	%

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 30 for Performance Summary footnotes.

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FRANKLIN TOTAL RETURN FUND

PERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment¹

Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.

Class A  (11/1/08–10/31/18)

Advisor Class  (11/1/08–10/31/18)

See page 30 for Performance Summary footnotes.

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FRANKLIN TOTAL RETURN FUND

PERFORMANCE SUMMARY

Distributions (11/1/17–10/31/18)
Share Class	Net Investment Income		Tax Return of Capital		Total
A		$0.274798		$0.006147		$0.280945
C		$0.240611		$0.005323		$0.245934
R		$0.253611		$0.005635		$0.259246
R6		$0.308547		$0.006961		$0.315508
Advisor		$0.296832		$0.006678		$0.303510

Total Annual Operating Expenses⁸

Share Class	With Waiver		Without Waiver
A	0.90	%	0.93	%
Advisor	0.65	%	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 2/28/19. 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 10/31/18.

5. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays U.S. Aggregate Bond Index is a market capitalization-weighted index representing the U.S. investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. All issues included are SEC registered, taxable, dollar denominated and nonconvertible, must have at least one year to final maturity and must be rated investment grade (Baa3/BBB-/BBB- or higher) using the middle rating of Moody’s, Standard & Poor’s and Fitch, respectively.

7. Source: Bureau of Labor Statistics, bls.gov/cpi. The Consumer Price Index (CPI) is a commonly used measure of the inflation rate.

8. 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.

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

30       Annual Report franklintempleton.com

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 5/1/18	Ending Account Value 10/31/18	Expenses Paid During Period         5/1/18–10/31/181,2	Ending Account Value 10/31/18	Expenses Paid During Period 5/1/18–10/31/181,2	Net Annualized Expense Ratio2
A	$1,000	$997.70	$4.43	$1,020.77	$4.48	0.88%
C	$1,000	$995.90	$6.44	$1,018.75	$6.51	1.28%
R	$1,000	$997.70	$5.69	$1,019.51	$5.75	1.13%
R6	$1,000	$1,000.50	$2.47	$1,022.74	$2.50	0.49%
Advisor	$1,000	$998.90	$3.17	$1,022.03	$3.21	0.63%

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 184/365 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 Annual Report       31

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Adjustable U.S. Government Securities Fund

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.24		$  8.40		$  8.55		$  8.67		$  8.72
Income from investment operationsa:
Net investment income		0.088b		0.026		0.025		0.019		0.043
Net realized and unrealized gains (losses)		(0.035)		(0.031)		(0.053)		(0.040)		0.006
Total from investment operations		0.053		(0.005)		(0.028)		(0.021)		0.049
Less distributions from net investment income		(0.193)		(0.155)		(0.122)		(0.099)		(0.099)
Net asset value, end of year		$  8.10		$  8.24		$  8.40		$  8.55		$  8.67
Total returnc		0.65%		(0.06)%		(0.32)%		(0.24)%		0.56%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.96%		0.95%		0.92%		0.91%		0.93%
Expenses net of waiver and payments by affiliatesd		0.95%		0.94%		0.91%		0.91%e		0.93%e
Net investment income		1.07%		0.54%		0.43%		0.39%		0.48%
Supplemental data
Net assets, end of year (000’s)		$419,055		$492,319		$667,671		$848,918		$1,058,838
Portfolio turnover rate		11.39%		2.81%		11.49%		9.98%		14.18%

^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.

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

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

32         Annual 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)

	Year Ended October 31,
	2018		2017		2016		2015		2014a
Class A1
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.24		$  8.40		$  8.54		$  8.67		$  8.68
Income from investment operationsb:
Net investment income		0.100c		0.059		0.049		0.046		0.018
Net realized and unrealized gains (losses)		(0.044)		(0.051)		(0.054)		(0.062)		0.010
Total from investment operations		0.056		0.008		(0.005)		(0.016)		0.028
Less distributions from net investment income		(0.206)		(0.168)		(0.135)		(0.114)		(0.038)
Net asset value, end of year		$  8.09		$  8.24		$  8.40		$  8.54		$  8.67
Total returnd		0.68%		0.10%		(0.05)%		(0.19)%		0.32%
Ratios to average net assetse
Expenses before waiver and payments by affiliates		0.80%		0.79%		0.77%		0.75%		0.78%
Expenses net of waiver and payments by affiliatesf		0.79%		0.78%		0.76%		0.75%g		0.78%g
Net investment income		1.23%		0.70%		0.58%		0.55%		0.63%
Supplemental data
Net assets, end of year (000’s)		$100,477		$121,012		$160,469		$198,670		$253,021
Portfolio turnover rate		11.39%		2.81%		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.

^cBased on average daily shares outstanding.

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

^eRatios are annualized for periods less than one year.

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

^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.    |    Annual Report         33

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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

	Year Ended October 31,
	2018		2017		2016		2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.24		$  8.40		$  8.54		$  8.66			$  8.71
Income from investment operationsa:
Net investment income (loss)		0.054b		(0.014)		(0.011)		(0.013)			(0.004)
Net realized and unrealized gains (losses)		(0.044)		(0.024)		(0.041)		(0.043)			0.018
Total from investment operations		0.010		(0.038)		(0.052)		(0.056)			0.014
Less distributions from net investment income		(0.160)		(0.122)		(0.088)		(0.064)			(0.064)
Net asset value, end of year		$  8.09		$  8.24		$  8.40		$  8.54			$  8.66
Total returnc		0.13%		(0.45)%		(0.61)%		(0.65)%			0.16%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.36%		1.35%		1.32%		1.31%			1.33%
Expenses net of waiver and payments by affiliatesd		1.35%		1.34%		1.31%		1.31%	e		1.33%	e
Net investment income (loss)		0.67%		0.14%		0.03%		(0.01)%			0.08%
Supplemental data
Net assets, end of year (000’s)		$126,585		$189,634		$266,186		$336,254			$428,031
Portfolio turnover rate		11.39%		2.81%		11.49%		9.98%			14.18%

^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.

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

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

34         Annual 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)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.25		$  8.41		$  8.55		$  8.68		$  8.73
Income from investment operationsa:
Net investment income		0.121b		0.074		0.066		0.013		0.088b
Net realized and unrealized gains (losses)		(0.037)		(0.046)		(0.053)		(0.010)		(0.009)
Total from investment operations		0.084		0.028		0.013		0.003		0.079
Less distributions from net investment income		(0.224)		(0.188)		(0.153)		(0.133)		(0.129)
Net asset value, end of year		$  8.11		$  8.25		$  8.41		$  8.55		$  8.68
Total return		1.03%		0.34%		0.15%		0.03%		0.92%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.62%		0.58%		0.56%		0.53%		0.56%
Expenses net of waiver and payments by affiliatesc		0.57%		0.55%		0.55%		0.53%d		0.56%d
Net investment income		1.45%		0.93%		0.79%		0.77%		0.85%
Supplemental data
Net assets, end of year (000’s)		$36,026		$2,196		$2,374		$2,176		$7,193
Portfolio turnover rate		11.39%		2.81%		11.49%		9.98%		14.18%

^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.

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

^dBenefit 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.    |    Annual Report         35

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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

	Year Ended October 31,
	2018		2017		2016		2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.25		$  8.41		$  8.55		$  8.68			$  8.73
Income from investment operationsa:
Net investment income		0.108b		0.052		0.046		0.040			0.068
Net realized and unrealized gains (losses)		(0.044)		(0.036)		(0.043)		(0.049)			0.003
Total from investment operations		0.064		0.016		0.003		(0.009)			0.071
Less distributions from net investment income		(0.214)		(0.176)		(0.143)		(0.121)			(0.121)
Net asset value, end of year		$  8.10		$  8.25		$  8.41		$  8.55			$  8.68
Total return		0.78%		0.20%		0.05%		(0.11)%			0.82%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.71%		0.70%		0.67%		0.66%			0.68%
Expenses net of waiver and payments by affiliatesc		0.70%		0.69%		0.66%		0.66%	d		0.68%d
Net investment income		1.32%		0.79%		0.68%		0.64%			0.73%
Supplemental data
Net assets, end of year (000’s)		$112,441		$184,299		$227,599		$308,683			$416,854
Portfolio turnover rate		11.39%		2.81%		11.49%		9.98%			14.18%

^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.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Adjustable U.S. Government Securities Fund

	Principal Amount		Value
Mortgage-Backed Securities 96.9%
a Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 19.5%
FHLMC, 3.334%, (12-month USD LIBOR +/- MBS Margin), 1/01/36	$	3,411,023	$	3,540,742
FHLMC, 3.616%, (12-month USD LIBOR +/- MBS Margin), 2/01/36		3,186,149		3,346,874
FHLMC, 3.188% - 3.73%, (12-month USD LIBOR +/- MBS Margin), 12/01/34 - 8/01/37		7,211,402		7,562,605
FHLMC, 3.764%, (12-month USD LIBOR +/- MBS Margin), 12/01/35		3,450,927		3,610,895
FHLMC, 3.781%, (12-month USD LIBOR +/- MBS Margin), 12/01/35		3,318,416		3,464,064
FHLMC, 3.754% - 3.84%, (12-month USD LIBOR +/- MBS Margin), 3/01/37 - 4/01/40		6,470,294		6,789,336
FHLMC, 3.876%, (12-month USD LIBOR +/- MBS Margin), 9/01/37		19,997,128		20,981,266
FHLMC, 3.873% - 3.955%, (12-month USD LIBOR +/- MBS Margin), 1/01/37 - 5/01/38		5,958,708		6,239,500
FHLMC, 3.571% - 3.958%, (US 1 Year CMT T-Note +/- MBS Margin), 9/01/35 - 4/01/37		5,576,278		5,875,601
FHLMC, 3.958% - 4.051%, (12-month USD LIBOR +/- MBS Margin), 11/01/35 - 10/01/38		6,872,263		7,186,547
FHLMC, 3.993% - 4.06%, (US 1 Year CMT T-Note +/- MBS Margin), 4/01/34 - 11/01/36		5,230,535		5,498,971
FHLMC, 4.065% - 4.074%, (12-month USD LIBOR +/- MBS Margin), 4/01/37 - 3/01/38		6,377,449		6,690,898
FHLMC, 4.076%, (US 1 Year CMT T-Note +/- MBS Margin), 6/01/37		3,326,759		3,518,968
FHLMC, 4.086%, (12-month USD LIBOR +/- MBS Margin), 9/01/35		5,924,243		6,123,796
FHLMC, 3.965% - 4.089%, (6-month USD LIBOR +/- MBS Margin), 4/01/36 - 1/01/37		1,733,134		1,793,805
FHLMC, 4.111%, (12-month USD LIBOR +/- MBS Margin), 7/01/35		8,022,501		8,424,388
FHLMC, 4.079% - 4.16%, (12-month USD LIBOR +/- MBS Margin), 8/01/34 - 5/01/40		6,785,123		7,113,274
FHLMC, 4.175%, (12-month USD LIBOR +/- MBS Margin), 10/01/41		3,768,928		3,941,461
FHLMC, 4.191%, (12-month USD LIBOR +/- MBS Margin), 11/01/37		3,501,566		3,661,636
FHLMC, 4.221%, (US 1 Year CMT T-Note +/- MBS Margin), 3/01/35		3,943,930		4,156,505
FHLMC, 4.233%, (12-month USD LIBOR +/- MBS Margin), 6/01/37		7,738,298		8,175,365
FHLMC, 4.35%, (12-month USD LIBOR +/- MBS Margin), 11/01/40		4,717,837		4,974,051
FHLMC, 4.061% - 4.43%, (US 1 Year CMT T-Note +/- MBS Margin), 8/01/33 - 3/01/37		7,358,348		7,759,387
FHLMC, 4.168% - 4.546%, (12-month USD LIBOR +/- MBS Margin), 6/01/35 - 11/01/41		6,932,708		7,267,920
FHLMC, 4.601%, (12-month USD LIBOR +/- MBS Margin), 1/01/37		3,573,331		3,807,605
FHLMC, 4.635%, (12-month USD LIBOR +/- MBS Margin), 9/01/37		669,844		705,596
FHLMC, 4.717% - 5.376%, (US 1 Year CMT T-Note +/- MBS Margin), 8/01/34 - 7/01/35		2,873,155		3,111,105
				155,322,161
a Federal National Mortgage Association (FNMA) Adjustable Rate 77.3%
FNMA, 2.213%, (12-month USD LIBOR +/- MBS Margin), 3/01/46		9,927,438		9,927,254
FNMA, 2.327%, (12-month USD LIBOR +/- MBS Margin), 4/01/45		5,370,234		5,399,436
FNMA, 1.684% - 2.791%, (11th District COF +/- MBS Margin), 1/01/19 - 11/01/40		7,476,760		7,509,501
FNMA, 3.015% - 3.388%, (12-month USD LIBOR +/- MBS Margin), 12/01/32 - 12/01/43		7,537,398		7,811,836
FNMA, 3.404%, (11th District COF +/- MBS Margin), 4/01/34		19,339,777		19,813,726
FNMA, 2.45% - 3.484%, (US 1 Year CMT T-Note +/- MBS Margin), 1/01/21 - 11/01/44		7,365,096		7,465,187
FNMA, 3.50%, (Federal COF +/- MBS Margin), 1/01/29		122		122
FNMA, 3.391% - 3.50%, (12-month USD LIBOR +/- MBS Margin), 11/01/32 - 12/01/39		7,627,771		7,931,052
FNMA, 3.502% - 3.546%, (12-month USD LIBOR +/- MBS Margin), 1/01/33 - 3/01/42		7,556,596		7,895,309
FNMA, 3.547% - 3.589%, (12-month USD LIBOR +/- MBS Margin), 3/01/33 - 1/01/41		7,108,681		7,422,418
FNMA, 3.594% - 3.631%, (12-month USD LIBOR +/- MBS Margin), 1/01/33 - 1/01/39		6,391,643		6,687,774
FNMA, 3.631% - 3.678%, (12-month USD LIBOR +/- MBS Margin), 12/01/32 - 2/01/41		6,795,920		7,077,883
FNMA, 3.679% - 3.721%, (12-month USD LIBOR +/- MBS Margin), 2/01/32 - 1/01/42		5,133,680		5,350,232
FNMA, 3.768%, (12-month USD LIBOR +/- MBS Margin), 1/01/36		4,318,714		4,508,570
FNMA, 3.722% - 3.778%, (12-month USD LIBOR +/- MBS Margin), 1/01/33 - 4/01/40		7,078,043		7,370,978
FNMA, 3.778% - 3.787%, (12-month USD LIBOR +/- MBS Margin), 1/01/34 - 3/01/40		4,891,105		5,098,042
FNMA, 3.801%, (12-month USD LIBOR +/- MBS Margin), 2/01/36		6,726,114		6,965,406
FNMA, 3.819%, (12-month USD LIBOR +/- MBS Margin), 1/01/36		3,927,423		4,143,258
FNMA, 3.788% - 3.82%, (12-month USD LIBOR +/- MBS Margin), 3/01/34 - 10/01/37		7,528,100		7,924,306
FNMA, 3.489% - 3.825%, (US 1 Year CMT T-Note +/- MBS Margin), 12/01/18 - 5/01/38		7,604,381		7,909,000
FNMA, 3.877%, (12-month USD LIBOR +/- MBS Margin), 5/01/39		6,590,742		6,845,501
FNMA, 3.82% - 3.879%, (12-month USD LIBOR +/- MBS Margin), 11/01/32 - 4/01/38		7,502,710		7,837,065

franklintempleton.com Annual Report         37

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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, 2.973% - 3.913%, (6-month USD LIBOR +/- MBS Margin), 6/01/21 - 3/01/38	$	7,689,889	$	7,900,746
FNMA, 3.921%, (12-month USD LIBOR +/- MBS Margin), 1/01/39		5,525,229		5,772,088
FNMA, 2.865% - 3.93%, (1-month USD LIBOR +/- MBS Margin), 10/01/26 - 10/01/34		490,091		497,833
FNMA, 3.887% - 3.939%, (12-month USD LIBOR +/- MBS Margin), 3/01/33 - 2/01/39		6,484,307		6,783,372
FNMA, 3.827% - 3.942%, (US 1 Year CMT T-Note +/- MBS Margin), 4/01/19 - 7/01/38		7,524,788		7,799,467
FNMA, 3.939% - 3.975%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 11/01/42		7,391,588		7,737,894
FNMA, 4.001%, (US 1 Year CMT T-Note +/- MBS Margin), 1/01/38		4,890,810		5,149,343
FNMA, 4.007%, (12-month USD LIBOR +/- MBS Margin), 11/01/34		5,031,182		5,268,449
FNMA, 4.009%, (6-month USD LIBOR +/- MBS Margin), 12/01/34		4,707,002		4,858,750
FNMA, 3.913% - 4.01%, (6-month USD LIBOR +/- MBS Margin), 9/01/21 - 7/01/37		7,254,304		7,499,232
FNMA, 4.013%, (12-month USD LIBOR +/- MBS Margin), 2/01/36		4,167,229		4,346,455
FNMA, 3.978% - 4.021%, (12-month USD LIBOR +/- MBS Margin), 3/01/32 - 4/01/38		7,562,378		7,903,752
FNMA, 4.035%, (12-month USD LIBOR +/- MBS Margin), 9/01/40		3,180,042		3,335,659
FNMA, 4.021% - 4.041%, (12-month USD LIBOR +/- MBS Margin), 4/01/33 - 7/01/37		6,689,305		7,005,469
FNMA, 4.01% - 4.048%, (6-month USD LIBOR +/- MBS Margin), 4/01/33 - 2/01/37		5,969,104		6,178,878
FNMA, 4.052%, (12-month USD LIBOR +/- MBS Margin), 11/01/42		12,333,170		12,890,023
FNMA, 4.044% - 4.054%, (12-month USD LIBOR +/- MBS Margin), 7/01/33 - 11/01/41		5,711,297		5,978,315
FNMA, 4.058%, (12-month USD LIBOR +/- MBS Margin), 8/01/35		3,395,947		3,562,811
FNMA, 4.048% - 4.06%, (6-month USD LIBOR +/- MBS Margin), 5/01/33 - 12/01/36		7,671,358		7,933,074
FNMA, 4.054% - 4.06%, (12-month USD LIBOR +/- MBS Margin), 7/01/34 - 3/01/37		6,612,221		6,918,680
FNMA, 4.064%, (12-month USD LIBOR +/- MBS Margin), 3/01/35		7,847,807		8,210,064
FNMA, 4.061% - 4.07%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 3/01/47		7,610,333		7,943,571
FNMA, 4.071%, (US 1 Year CMT T-Note +/- MBS Margin), 6/01/36		4,367,802		4,598,807
FNMA, 4.08%, (12-month USD LIBOR +/- MBS Margin), 2/01/42		4,233,681		4,445,620
FNMA, 3.946% - 4.083%, (US 1 Year CMT T-Note +/- MBS Margin), 4/01/19 - 9/01/39		7,549,028		7,877,237
FNMA, 4.077% - 4.089%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 7/01/42		7,593,015		7,945,358
FNMA, 4.06% - 4.092%, (6-month USD LIBOR +/- MBS Margin), 8/01/33 - 8/01/37		7,589,490		7,863,133
FNMA, 4.109%, (12-month USD LIBOR +/- MBS Margin), 9/01/39		3,349,512		3,511,925
FNMA, 4.121%, (12-month USD LIBOR +/- MBS Margin), 3/01/41		5,835,037		6,132,638
FNMA, 4.09% - 4.126%, (12-month USD LIBOR +/- MBS Margin), 4/01/32 - 11/01/38		7,071,521		7,366,759
FNMA, 4.141%, (12-month USD LIBOR +/- MBS Margin), 5/01/40		3,902,801		4,099,817
FNMA, 4.153%, (12-month USD LIBOR +/- MBS Margin), 3/01/37		4,728,249		4,929,625
FNMA, 4.131% - 4.156%, (12-month USD LIBOR +/- MBS Margin), 5/01/33 - 11/01/36		7,221,433		7,506,026
FNMA, 4.156% - 4.184%, (12-month USD LIBOR +/- MBS Margin), 3/01/33 - 8/01/39		7,161,063		7,495,083
FNMA, 4.188%, (12-month USD LIBOR +/- MBS Margin), 2/01/36		4,007,383		4,190,985
FNMA, 4.19%, (12-month USD LIBOR +/- MBS Margin), 9/01/42		9,626,105		10,041,742
FNMA, 4.184% - 4.194%, (12-month USD LIBOR +/- MBS Margin), 9/01/32 - 7/01/38		7,256,975		7,611,015
FNMA, 4.194%, (12-month USD LIBOR +/- MBS Margin), 10/01/38		4,184,050		4,387,448
FNMA, 4.083% - 4.208%, (US 1 Year CMT T-Note +/- MBS Margin), 5/01/22 - 12/01/40		7,434,136		7,776,905
FNMA, 4.194% - 4.216%, (12-month USD LIBOR +/- MBS Margin), 4/01/33 - 5/01/38		5,714,456		5,973,733
FNMA, 4.216% - 4.222%, (12-month USD LIBOR +/- MBS Margin), 10/01/34 - 1/01/42		7,257,697		7,602,854
FNMA, 4.235%, (12-month USD LIBOR +/- MBS Margin), 5/01/38		4,882,636		5,121,117
FNMA, 4.259%, (12-month USD LIBOR +/- MBS Margin), 6/01/35		3,816,596		4,016,486
FNMA, 4.223% - 4.26%, (12-month USD LIBOR +/- MBS Margin), 5/01/33 - 4/01/44		7,166,339		7,488,780
FNMA, 4.265%, (12-month USD LIBOR +/- MBS Margin), 10/01/38		8,807,217		9,271,880
FNMA, 4.261% - 4.276%, (12-month USD LIBOR +/- MBS Margin), 8/01/33 - 9/01/36		5,476,369		5,728,249
FNMA, 4.284%, (12-month USD LIBOR +/- MBS Margin), 7/01/40		4,177,013		4,387,550
FNMA, 4.296%, (US 1 Year CMT T-Note +/- MBS Margin), 5/01/36		17,281,096		18,231,871
FNMA, 4.278% - 4.30%, (12-month USD LIBOR +/- MBS Margin), 8/01/33 - 6/01/37		7,087,976		7,402,439
FNMA, 4.208% - 4.308%, (US 1 Year CMT T-Note +/- MBS Margin), 6/01/19 - 9/01/39		7,452,521		7,817,114
FNMA, 4.325%, (12-month USD LIBOR +/- MBS Margin), 2/01/43		3,264,706		3,430,020

38         Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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, 4.30% - 4.335%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 5/01/48	$	7,583,058	$	7,936,007
FNMA, 4.336% - 4.367%, (12-month USD LIBOR +/- MBS Margin), 8/01/33 - 12/01/40		6,019,075		6,291,731
FNMA, 4.367% - 4.389%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 7/01/38		6,556,627		6,836,605
FNMA, 4.393% - 4.403%, (12-month USD LIBOR +/- MBS Margin), 1/01/33 - 11/01/38		5,098,730		5,351,848
FNMA, 4.403%, (12-month USD LIBOR +/- MBS Margin), 1/01/37		4,885,455		5,140,411
FNMA, 4.404% - 4.424%, (12-month USD LIBOR +/- MBS Margin), 8/01/33 - 7/01/42		7,554,058		7,902,925
FNMA, 4.31% - 4.438%, (US 1 Year CMT T-Note +/- MBS Margin), 5/01/19 - 9/01/39		7,515,022		7,879,627
FNMA, 4.453%, (12-month USD LIBOR +/- MBS Margin), 11/01/34		4,219,395		4,408,723
FNMA, 4.424% - 4.476%, (12-month USD LIBOR +/- MBS Margin), 7/01/33 - 5/01/48		7,184,729		7,524,241
FNMA, 3.473% - 4.487%, (US 5 Year CMT T-Note +/- MBS Margin), 6/01/25 - 2/01/30		128,385		131,872
FNMA, 4.50%, (12-month USD LIBOR +/- MBS Margin), 8/01/40		3,394,017		3,560,452
FNMA, 4.476% - 4.527%, (12-month USD LIBOR +/- MBS Margin), 9/01/32 - 10/01/41		7,266,719		7,628,111
FNMA, 4.536%, (12-month USD LIBOR +/- MBS Margin), 1/01/36		4,482,869		4,725,161
FNMA, 4.527% - 4.569%, (12-month USD LIBOR +/- MBS Margin), 6/01/33 - 9/01/40		7,457,765		7,813,710
FNMA, 4.569% - 4.605%, (12-month USD LIBOR +/- MBS Margin), 10/01/33 - 11/01/38		5,765,045		6,037,968
FNMA, 4.099% - 4.75%, (6-month USD LIBOR +/- MBS Margin), 11/01/23 - 8/01/37		7,604,939		7,913,604
FNMA, 4.44% - 4.864%, (US 1 Year CMT T-Note +/- MBS Margin), 3/01/20 - 7/01/38		7,090,987		7,363,385
FNMA, 2.621% - 4.97%, (US 3 Year CMT T-Note +/- MBS Margin), 12/01/19 - 1/01/35		668,150		686,012
FNMA, 4.607% - 5.183%, (12-month USD LIBOR +/- MBS Margin), 9/01/19 - 10/01/40		6,247,152		6,613,651
FNMA, 4.751% - 5.725%, (6-month USD LIBOR +/- MBS Margin), 2/01/33 - 6/01/38		1,771,971		1,848,376
FNMA, 4.901% - 6.735%, (US 1 Year CMT T-Note +/- MBS Margin), 10/01/22 - 9/01/37		2,545,465		2,639,609
FNMA, 2.798% - 6.989%, (11th District COF +/- MBS Margin), 1/01/19 - 11/01/36		2,714,734		2,773,205
FNMA, 3.75% - 7.67%, (6-month US T-Bill +/- MBS Margin), 6/01/19 - 11/01/34		214,857		218,917
				613,846,148
a Government National Mortgage Association (GNMA) Adjustable Rate 0.1%
GNMA, 3.125% - 3.75%, (US 1 Year CMT T-Note +/- MBS Margin), 9/20/33 - 5/20/36		1,050,587		1,074,013
Total Mortgage-Backed Securities (Cost $773,029,163)				770,242,322
	Shares
Short Term Investments (Cost $18,732,898) 2.4%
Money Market Funds 2.4%
b,c Institutional Fiduciary Trust Money Market Portfolio, 1.83%		18,732,898		18,732,898
Total Investments (Cost $791,762,061) 99.3%				788,975,220
Other Assets, less Liabilities 0.7%				5,609,436
Net Assets 100.0%			$	794,584,656

See Abbreviations on page 158.

^aAdjustable Rate Mortgage-Backed Security (ARM); the rate shown is the effective rate at period end. ARM rates are not based on a published reference rate and spread, but instead pass-through weighted average interest income inclusive of any caps or floors, if applicable, from the underlying mortgage loans in which the majority of mortgages pay interest based on the index shown at their designated reset dates plus a spread, less the applicable servicing and guaranty fee (MBS margin).

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

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

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Annual Report         39

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Floating Rate Daily Access Fund

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  8.83		$  8.84		$  8.61		$  9.04		$  9.20
Income from investment operationsa:
Net investment income		0.396		0.307		0.401		0.406		0.335
Net realized and unrealized gains (losses)		(0.129)		(0.011)		0.228		(0.434)		(0.160)
Total from investment operations		0.267		0.296		0.629		(0.028)		0.175
Less distributions from net investment income		(0.397)		(0.306)		(0.399)		(0.402)		(0.335)
Net asset value, end of year		$  8.70		$  8.83		$  8.84		$  8.61		$  9.04
Total returnb		2.97%		3.51%		7.60%		(0.37)%		1.91%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.87%		0.87%		0.88%		0.85%		0.84%
Expenses net of waiver and payments by affiliatesc		0.81%		0.82%		0.86%		0.84%		0.82%
Net investment income		4.53%		3.45%		4.72%		4.55%		3.64%
Supplemental data
Net assets, end of year (000’s)		$1,344,473		$1,362,220		$1,359,862		$1,553,100		$1,874,867
Portfolio turnover rate		58.07%		64.21%		34.10%		46.72%		83.93%

^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.

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

40         Annual 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)

	Year Ended October 31,
	2018		2017		2016		2015		2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    8.83		$    8.84		$    8.61		$    9.05		$    9.20
Income from investment operationsa:
Net investment income		0.364		0.271		0.366		0.369		0.298
Net realized and unrealized gains (losses)		(0.131)		(0.010)		0.229		(0.443)		(0.150)
Total from investment operations		0.233		0.261		0.595		(0.074)		0.148
Less distributions from net investment income		(0.363)		(0.271)		(0.365)		(0.366)		(0.298)
Net asset value, end of year		$8.70		$8.83		$8.84		$8.61		$9.05
Total returnb		2.68%		3.11%		7.18%		(0.87)%		1.62%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.27%		1.27%		1.28%		1.25%		1.24%
Expenses net of waiver and payments by affiliatesc		1.21%		1.22%		1.26%		1.24%		1.22%
Net investment income		4.13%		3.05%		4.32%		4.15%		3.24%
Supplemental data
Net assets, end of year (000’s)		$438,480		$550,797		$551,726		$627,805		$742,602
Portfolio turnover rate		58.07%		64.21%		34.10%		46.72%		83.93%

^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.

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

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Annual Report         41

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    8.84			$    8.84			$    8.60			$    9.05			$    9.21
Income from investment operationsa:
Net investment income		0.427			0.338			0.422			0.437			0.364
Net realized and unrealized gains (losses)		(0.130	)		(0.002	)		0.245			(0.457	)		(0.159	)
Total from investment operations		0.297			0.336			0.667			(0.020	)		0.205
Less distributions from net investment income		(0.427	)		(0.336	)		(0.427	)		(0.430	)		(0.365	)
Net asset value, end of year		$    8.71			$    8.84			$    8.84			$    8.60			$    9.05
Total return		3.43%			3.85%			7.96%			(0.16)%			2.36%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.55%			0.52%			0.53%			0.72%			0.52%
Expenses net of waiver and payments by affiliatesb		0.48%			0.47%			0.51%			0.51%			0.50%
Net investment income		4.86%			3.80%			5.07%			4.88%			3.96%
Supplemental data
Net assets, end of year (000’s)		$142,075			$130,180			$12,333			$7			$465
Portfolio turnover rate		58.07%			64.21%			34.10%			46.72%			83.93%

^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.

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

42         Annual 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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    8.84			$    8.85			$    8.61			$    9.05			$    9.20
Income from investment operationsa:
Net investment income		0.418			0.327			0.422			0.427			0.358
Net realized and unrealized gains (losses)		(0.129	)		(0.010	)		0.239			(0.443	)		(0.150	)
Total from investment operations		0.289			0.317			0.661			(0.016	)		0.208
Less distributions from net investment income		(0.419	)		(0.327	)		(0.421	)		(0.424	)		(0.358	)
Net asset value, end of year		$    8.71			$    8.84			$    8.85			$    8.61			$    9.05
Total return		3.35%			3.64%			8.00%			(0.23)%			2.28%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.62%			0.62%			0.63%			0.60%			0.59%
Expenses net of waiver and payments by affiliatesb		0.56%			0.57%			0.61%			0.59%			0.57%
Net investment income		4.78%			3.70%			4.97%			4.80%			3.89%
Supplemental data
Net assets, end of year (000’s)		$1,743,880			$1,672,724			$1,108,692			$1,405,281			$2,019,477
Portfolio turnover rate		58.07%			64.21%			34.10%			46.72%			83.93%

^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.

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

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Annual Report         43

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Floating Rate Daily Access Fund

	Country		Shares/ Units		Value
Common Stocks and Other Equity Interests 1.1%
Diversified Support Services 0.5%
a,b,c,d Remington Outdoor Co. Inc.		United States		1,458,043	$	18,876,774
a,b,c,d Remington Outdoor Co. Inc., Litigation Units		United States		137,266		—
						18,876,774
Forest Products 0.3%
a,b,c,d Appvion Inc.		United States		1,132,044		11,581,914
Oil & Gas Exploration & Production 0.3%
a Samson Resources II LLC		United States		432,778		10,365,033
Total Common Stocks and Other Equity Interests (Cost $86,183,848)						40,823,721
Management Investment Companies 3.5%
Other Diversified Financial Services 3.5%
e Franklin Lower Tier Floating Rate Fund		United States		6,729,194		64,398,391
e Franklin Middle Tier Floating Rate Fund		United States		6,837,495		64,272,450
Total Management Investment Companies (Cost $137,283,610)						128,670,841
			Principal  Amount*
Corporate Bonds (Cost $17,118,065) 0.4%
Industrial Machinery 0.4%
f Onsite Rental Group Operations Pty. Ltd., secured note, PIK, 6.10%, 10/26/23		Australia	$	19,861,080		15,392,337
g,hSenior Floating Rate Interests 72.0%
Aerospace & Defense 3.3%
Delos Finance S.A.R.L. (AerCap), New Loans, 4.136%, (3-month USD LIBOR + 1.75%), 10/06/23		Luxembourg		59,610,818		59,770,516
Doncasters U.S. Finance LLC,
Second Lien Term Loan, 10.636%, (3-month USD LIBOR + 8.25%), 10/09/20		United States		5,818,610		4,931,272
Term B Loans, 5.886%, (3-month USD LIBOR + 3.50%), 4/09/20		United States		27,222,852		25,291,717
Flying Fortress Holdings LLC (ILFC), New Loan, 4.136%, (3-month USD LIBOR + 1.75%), 10/30/22		United States		30,062,918		30,197,119
						120,190,624
Agricultural Products 0.1%
Allflex Holdings III Inc., Second Lien Initial Term Loan, 9.477%, (3-month USD LIBOR + 7.00%), 7/19/21		United States		2,028,781		2,040,193
Air Freight & Logistics 0.3%
XPO Logistics Inc., Refinanced Term Loan, 4.509%, (3-month USD LIBOR + 2.00%), 2/24/25		United States		10,200,000		10,236,832
Airlines 1.5%
Air Canada, Term Loan, 4.295%, (1-month USD LIBOR + 2.00%), 10/06/23		Canada		34,984,134		35,100,736
American Airlines Inc.,
2018 Replacement Term Loans, 4.045%, (1-month USD LIBOR + 1.75%), 6/27/25		United States		16,384,617		16,070,999
2021 Replacement Term Loans, 4.277%, (3-month USD LIBOR + 2.00%), 10/10/21		United States		5,376,611		5,375,772
						56,547,507

44       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Apparel Retail 2.2%
Ascena Retail Group Inc., Tranche B Term Loan, 6.813%, (1-month USD LIBOR + 4.50%), 8/21/22		United States	$	82,855,654	$	80,597,838
Application Software 0.4%
TIBCO Software Inc., Term B-1 Loans, 5.80%, (1-month USD LIBOR + 3.50%), 12/04/20		United States		14,540,557		14,567,821
Auto Parts & Equipment 1.6%
Allison Transmission Inc., New Term Loans, 4.04%, (1-month USD LIBOR + 1.75%), 9/23/22		United States		25,971,660		26,133,983
American Axle & Manufacturing, Inc.,
Tranche B Term Loan, 4.54%, (1-month USD LIBOR + 2.25%), 4/06/24		United States		2,298,626		2,298,626
Tranche B Term Loan, 4.74%, (3-month USD LIBOR + 2.25%), 4/06/24		United States		1,561,150		1,561,150
TI Group Automotive Systems LLC, Initial US Term Loan, 4.802%, (1-month USD LIBOR + 2.50%), 6/30/22		United States		29,434,428		29,324,048
						59,317,807
Broadcasting 2.5%
Gray Television Inc., Term B-2 Loan, 4.515%, (1-month USD LIBOR + 2.25%), 2/07/24		United States		26,687,491		26,731,979
i,j Mission Broadcasting Inc., Term B-3 Loan, TBD, 1/17/24		United States		1,550,088		1,551,379
i,j Nexstar Broadcasting Inc.,
Term A-4 Loan, TBD, 10/26/23		United States		17,517,633		17,532,225
Term B-3 Loan, TBD, 7/17/24		United States		9,689,978		9,698,050
Sinclair Television Group Inc., Tranche B Term Loans, 4.56%, (1-month USD LIBOR + 2.25%), 1/03/24		United States		36,076,928		36,099,476
i,j WXXA-TV LLC and WLAJ-TV LLC, Term A-4 Loan, TBD, 10/26/23		United States		484,835		484,229
						92,097,338
Building Products 0.5%
i,j Resideo Technologies Inc.,
senior secured note, Term Loan, TBD, 10/25/25		United States		1,719,565		1,728,162
Tranche A Term Loan, TBD, 10/25/23		United States		17,400,000		17,443,500
						19,171,662
Cable & Satellite 2.5%
Charter Communications Operating LLC,
Term A-2 Loan, 3.81%, (1-month USD LIBOR + 1.50%), 3/31/23		United States		33,234,209		33,280,937
Term B Loan, 4.31%, (1-month USD LIBOR + 2.00%), 4/30/25		United States		5,969,925		5,977,029
CSC Holdings LLC, March 2017 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 7/17/25		United States		41,941,984		41,784,198
Mediacom Illinois LLC, Tranche N Term Loan, 3.97%, (1-week USD LIBOR + 1.75%), 2/15/24		United States		9,984,120		9,987,235
						91,029,399
Casinos & Gaming 3.3%
Aristocrat Technologies Inc., Term B-3 Loans, 4.219%, (3-month USD LIBOR + 1.75%), 10/19/24		United States		16,848,724		16,809,467
Boyd Gaming Corp.,
Refinancing Term B Loans, 4.467%, (1-week USD LIBOR + 2.25%), 9/15/23		United States		14,526,416		14,564,025
Term A Loan, 4.467%, (1-week USD LIBOR + 2.25%), 9/15/21		United States		4,476,523		4,484,916
Caesars Resort Collection LLC/CRC Finco Inc., Term B Loans, 5.052%, (1-month USD LIBOR + 2.75%), 12/22/24		United States		12,636,341		12,656,647
i CEOC LLC, Term B Loans, 4.302%, (1-month USD LIBOR + 2.00%), 10/06/24		United States		8,861,331		8,828,102

franklintempleton.com Annual Report           45

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Casinos & Gaming (continued)
Eldorado Resorts Inc., Initial Term Loan, 4.563%, (1-month USD LIBOR + 2.25%), 4/17/24		United States	$	12,873,438	$	12,905,622
Greektown Holdings LLC, Initial Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 4/25/24		United States		15,310,581		15,304,196
Kingpin Intermediate Holdings LLC, Amendment No. 2 Term Loans, 5.81%, (1-month USD LIBOR + 3.50%), 7/03/24		United States		2,772,000		2,785,860
Las Vegas Sands LLC, Term B Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/27/25		United States		20,402,498		20,357,286
i Station Casinos LLC, Term B Facility Loans, 4.81%, (1-month USD LIBOR + 2.50%), 6/08/23		United States		11,631,570		11,639,363
						120,335,484
Coal & Consumable Fuels 2.6%
Bowie Resource Holdings LLC,
First Lien Initial Term Loan, 8.052%, (1-month USD LIBOR + 5.75%), 8/14/20		United States		35,504,254		34,764,594
Second Lien Initial Term Loan, 13.052%, (1-month USD LIBOR + 10.75%), 2/16/21		United States		4,464,778		4,286,187
Foresight Energy LLC, Term Loans, 8.277%, (3-month USD LIBOR + 5.75%), 3/28/22		United States		54,491,422		54,707,099
						93,757,880
Commodity Chemicals 0.6%
Ineos U.S. Finance LLC, 2024 Dollar Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 3/31/24		United States		21,636,198		21,651,214
Communications Equipment 0.7%
Ciena Corp., senior secured note, 2018 Term Loan, 4.28%, (1-month USD LIBOR + 2.00%), 9/28/25		United States		14,284,326		14,324,493
CommScope Inc., Tranche 5 Term Loans, 4.302%, (1-month USD LIBOR + 2.00%), 12/29/22		United States		9,645,127		9,681,297
						24,005,790
Construction & Engineering 0.4%
AECOM, Term B Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/13/25		United States		15,932,501		15,974,802
Data Processing & Outsourced Services 0.7%
Iron Mountain Information Management LLC, Term B Loan, 4.052%, (1-month USD LIBOR + 1.75%), 1/26/26		United States		9,245,751		9,130,179
i Wex Inc., Term B-2 Loan, 4.552%, (1-month USD LIBOR + 2.25%), 7/01/23		United States		18,004,449		18,057,490
						27,187,669
Diversified Chemicals 0.7%
Chemours Co., Tranche B-2 US$ Term Loan, 4.05%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		18,318,472		18,238,329
i Univar USA Inc., Term B-3 Loans, 4.552%, (1-month USD LIBOR + 2.25%), 7/01/24		United States		8,080,668		8,086,558
						26,324,887
Diversified Support Services 0.3%
i,j United Rentals North America Inc., Initial Term Loans, TBD, 10/30/25		United States		2,762,874		2,778,415
Ventia Pty. Ltd., Term B Loans (USD), 5.886%, (3-month USD LIBOR + 3.50%), 5/21/22		Australia		9,756,638		9,829,813
						12,608,228
Electric Utilities 0.3%
EFS Cogen Holdings I LLC (Linden), Term B Advance, 5.64%, (3-month USD LIBOR + 3.25%), 6/28/23		United States		10,271,799		10,270,884

46       Annual Report franklintempleton.com

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STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Fertilizers & Agricultural Chemicals 0.0%†
Mosaic Co., Term Loan A, 3.78%, (1-month USD LIBOR + 1.50%), 11/18/21		United States	$	435,893	$	434,803
Food Distributors 0.9%
Aramark Corp., U.S. Term B-3 Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/11/25		United States		18,524,719		18,559,453
Nutraceutical International Corp., Term Loan B, 5.552%, (1-month USD LIBOR + 3.25%), 8/22/23		United States		5,069,600		5,050,589
U.S. Foods Inc., Initial Term Loans, 4.302%, (1-month USD LIBOR + 2.00%), 6/27/23		United States		8,709,678		8,706,978
						32,317,020
Food Retail 0.9%
BI-LO LLC (Southeastern Grocers), FILO Loan (ABL), 7.648%, (3-month USD LIBOR + 5.25%), 5/31/22		United States		31,281,250		31,281,250
Forest Products 1.5%
b Appvion Inc, Term Loan, 8.40%, (3-month USD LIBOR + 6.00%), 6/15/26		United States		53,498,450		53,498,450
General Merchandise Stores 2.2%
f 99 Cents Only Stores, First Lien Term Loan, PIK, 8.813% - 8.886%, (3-month USD LIBOR + 6.50%), 1/13/22		United States		36,527,071		35,180,135
Evergreen AcqCo. 1 LP (Savers), Term Loan, 6.098% - 6.219%, (3-month USD LIBOR + 3.75%), 7/09/19		United States		46,349,207		45,132,541
						80,312,676
Health Care Distributors 0.5%
Mallinckrodt International Finance SA/CB LLC, Extended Term Loan B, 5.136%, (3-month USD LIBOR + 2.75%), 9/24/24		Luxembourg		18,988,459		18,791,986
Health Care Facilities 0.4%
HCA Inc.,
Term Loan B10, 4.302%, (1-month USD LIBOR + 2.00%), 3/13/25		United States		8,119,001		8,167,487
Term Loan B11, 4.052%, (1-month USD LIBOR + 1.75%), 3/18/23		United States		5,253,600		5,280,335
i,jUniversal Health Services Inc., Incremental Tranche B Term Loans, TBD, 10/31/25		United States		1,976,511		1,986,394
						15,434,216
Health Care Services 2.0%
Air Medical Group Holdings Inc., 2018 New Term Loans, 6.53%, (1-month USD LIBOR + 4.25%), 3/14/25		United States		14,307,657		14,080,523
i Catalent Pharma Solutions Inc., Dollar Term Loan, 4.552%, (1-month USD LIBOR + 2.25%), 5/20/24		United States		13,686,405		13,762,173
DaVita Healthcare Partners Inc.,
Tranche A Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 6/24/19		United States		12,476,319		12,507,510
Tranche B Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 6/24/21		United States		15,057,693		15,108,227
U.S. Renal Care Inc., Initial Term Loan, 6.636%, (3-month USD LIBOR + 4.25%), 12/31/22		United States		18,196,938		17,704,110
						73,162,543
Health Care Technology 0.5%
IQVIA Inc.,
Term B-1 Dollar Loans, 4.386%, (3-month USD LIBOR + 2.00%), 3/07/24		United States		8,470,833		8,500,481
Term B-3 Dollar Loans, 4.136%, (3-month USD LIBOR + 1.75%), 6/11/25		United States		8,778,000		8,764,833
						17,265,314
Hotels, Resorts & Cruise Lines 0.5%
Hilton Worldwide Finance LLC, Series B-2 Term Loans, 4.031%, (1-month USD LIBOR + 1.75%), 10/25/23		United States		17,083,972		17,121,386

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Household Products 0.6%
Spectrum Brands, Inc.,
USD Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 6/23/22		United States	$	7,632,830	$	7,650,325
USD Term Loans, 4.33% - 4.40%, (2-month USD LIBOR + 2.00%), 6/23/22		United States		10,145,391		10,168,644
USD Term Loans, 4.35%, (3-month USD LIBOR + 2.00%), 6/23/22		United States		5,724,623		5,737,744
						23,556,713
Independent Power Producers & Energy Traders 1.8%
NRG Energy Inc., Term Loan B, 4.136%, (3-month USD LIBOR + 1.75%), 6/30/23		United States		65,952,628		65,763,015
Industrial Machinery 3.2%
Altra Industrial Motion Corp., Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 10/01/25		United States		14,886,097		14,867,489
Harsco Corp., Term Loan B-2, 4.563%, (1-month USD LIBOR + 2.25%), 12/10/24		United States		17,858,533		17,947,826
Navistar Inc., Tranche B Term Loan, 5.78%, (1-month USD LIBOR + 3.50%), 11/06/24		United States		61,898,050		62,052,796
Onsite Rental Group Operations Property Ltd., Term Loan, 6.781%, (1-month USD LIBOR + 4.50%), 10/25/22		Australia		14,526,645		14,381,378
i RBS Global Inc. (Rexnord), Term B Loan, 4.295%, (1-month USD LIBOR + 2.00%), 8/21/24		United States		8,700,000		8,724,464
						117,973,953
Integrated Telecommunication Services 1.9%
Global Tel*Link Corp.,
Second Lien Term Loan, 10.636%, (3-month USD LIBOR + 8.25%), 11/23/20		United States		6,033,937		6,056,564
Term Loan, 6.386%, (3-month USD LIBOR + 4.00%), 5/23/20		United States		9,652,638		9,694,869
Securus Technologies Holdings Inc., Second Lien Initial Loan, 10.552%, (1-month USD LIBOR + 8.25%), 11/01/25		United States		1,042,786		1,046,696
Zayo Group LLC, 2017 Incremental Refinancing B-1 Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 1/19/21		United States		53,324,476		53,413,368
						70,211,497
Interactive Media & Services 0.5%
i Ancestrycom Operations Inc., First Lien, Term Loan, 5.55%, (1-month USD LIBOR + 3.25%), 10/19/23		United States		1,741,936		1,748,468
Go Daddy Operating Co. LLC, Tranche B-1 Term Loans, 4.552%, (1-month USD LIBOR + 2.25%), 2/15/24		United States		17,887,750		17,928,087
						19,676,555
Internet Services & Infrastructure 0.0%†
Legalzoom.com Inc., Initial Term Loan, 6.537%, (1-month USD LIBOR + 4.25%), 11/21/24		United States		1,714,544		1,729,546
IT Consulting & Other Services 0.4%
i Gartner Inc., Tranche A Term Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/21/22		United States		9,236,322		9,288,275
Rackspace Hosting Inc., Term B Loans, 5.348%, (3-month USD LIBOR + 3.00%), 11/03/23		United States		5,247,676		5,104,467
						14,392,742
Leisure Facilities 0.6%
24 Hour Fitness Worldwide Inc., Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 5/30/25		United States		13,694,350		13,745,705
Equinox Holdings Inc., Term B-1 Loans, 5.302%, (1-month USD LIBOR + 3.00%), 3/08/24		United States		8,578,338		8,621,229
						22,366,934

48       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Life Sciences Tools & Services 0.4%
Syneos Health Inc., Initial Term B Loans, 4.302%, (1-month USD LIBOR + 2.00%), 8/01/24		United States	$	13,816,706	$	13,801,370
Marine 0.6%
International Seaways Operating Corp., Initial Term Loans, 8.26%, (1-month USD LIBOR + 5.50%), 6/22/22		United States		5,788,167		5,824,343
Navios Maritime Partners LP, Initial Term Loan, 7.34%, (3-month USD LIBOR + 5.00%), 9/14/20		United States		15,360,658		15,386,264
						21,210,607
Metal & Glass Containers 0.7%
i Berry Global Inc., Term Loan Q, 4.277%, (1-month USD LIBOR + 2.00%), 10/01/22		United States		13,400,204		13,410,669
Crown Americas LLC, Dollar Term B Loan, 4.283%, (1-month USD LIBOR + 2.00%), 4/03/25		United States		10,616,797		10,653,298
						24,063,967
Movies & Entertainment 1.3%
AMC Entertainment Holdings Inc.,
2016 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/23		United States		3,307,986		3,314,189
Initial Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/22		United States		5,254,346		5,264,199
Lions Gate Capital Holdings LLC, Term A Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/22/23		Canada		27,168,403		27,202,364
Live Nation Entertainment Inc., Term B-3 Loans, 4.063%, (1-month USD LIBOR + 1.75%), 10/ 31/23		United States		11,968,678		12,000,467
						47,781,219
Oil & Gas Exploration & Production 5.1%
Cantium LLC, Commitment, 8.39%, (3-month USD LIBOR + 6.00%), 6/13/20		United States		20,820,742		21,009,378
Fieldwood Energy LLC, Closing Date Loans, 7.552%, (1-month USD LIBOR + 5.25%), 4/11/22		United States		138,632,416		139,759,498
UTEX Industries Inc., First Lien Initial Term Loan, 6.302%, (1-month USD LIBOR + 4.00%), 5/21/21		United States		28,637,363		28,243,599
						189,012,475
Oil & Gas Storage & Transportation 0.9%
Centurion Pipeline Company LLC, senior secured note, Initial Term Loans, 5.636%, (3-month USD LIBOR + 3.75%), 9/28/25		United States		6,502,154		6,559,048
OSG Bulk Ships Inc., Initial Term Loan, 6.77%, (6-month USD LIBOR + 4.25%), 8/05/19		United States		19,016,612		18,858,204
Strike LLC, Term Loan, 10.386% - 10.594%, (3-month USD LIBOR + 8.00%), 11/30/22		United States		6,825,500		6,893,755
						32,311,007
Other Diversified Financial Services 0.3%
Asurion LLC,
i Replacement B-4 Term Loans, 5.302%, (1-month USD LIBOR + 3.00%), 8/04/22		United States		7,979,190		8,001,627
Replacement B-6 Term Loans, 5.302%, (1-month USD LIBOR + 3.00%), 11/03/23		United States		3,481,929		3,490,634
						11,492,261

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STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Packaged Foods & Meats 2.8%
CSM Bakery Supplies LLC,
Second Lien Term Loan, 10.16%, (3-month USD LIBOR + 7.75%), 7/03/21		United States	$	12,540,519	$	11,662,683
Term Loans, 6.41%, (3-month USD LIBOR + 4.00%), 7/03/20		United States		7,837,154		7,562,853
JBS USA LUX SA, New Initial Term Loans, 4.837% - 4.886%, (3-month USD LIBOR + 2.50%), 10/30/22		United States		61,049,421		61,120,971
Post Holdings Inc., Series A Incremental Term Loans, 4.29%, (1-month USD LIBOR + 2.00%), 5/24/24		United States		21,527,610		21,519,192
						101,865,699
Paper Packaging 0.9%
Caraustar Industries Inc., Refinancing Term Loans, 7.886%, (3-month USD LIBOR + 5.50%), 3/14/22		United States		23,663,618		23,800,394
Reynolds Group Holdings Inc., U.S. Term Loans, 5.052%, (1-month USD LIBOR + 2.75%), 2/05/23		United States		8,771,558		8,790,057
						32,590,451
Personal Products 1.2%
c FGI Operating Co. LLC (Freedom Group),
DDTL Filo, 9.313%, (3-month USD LIBOR + 7.00%), 5/15/21		United States		527,273		522,560
f Term Loan, PIK, 12.314%, (3-month USD LIBOR + 10.00%), 5/15/22		United States		41,244,945		40,180,612
Term Loan FILO, 9.314%, (3-month USD LIBOR + 7.00%), 5/15/21		United States		5,272,727		5,225,600
						45,928,772
Pharmaceuticals 3.1%
i Bausch Health Cos. Inc., Initial Term Loans, 5.274%, (1-month USD LIBOR + 3.00%), 6/02/25		United States		18,276,953		18,318,844
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.563%, (1-month USD LIBOR + 4.25%), 4/29/24		United States		26,290,366		26,410,645
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.467%, (1-week USD LIBOR + 2.25%), 1/31/25		United States		30,660,104		30,723,325
i Horizon Pharma Inc., Fourth Amendment Refinancing Term Loan, 5.313%, (1-month USD LIBOR + 3.00%), 3/29/24		United States		37,084,985		37,131,341
Innoviva Inc., Initial Term Loan, 6.812%, (3-month USD LIBOR + 4.50%), 8/18/22		United States		172,970		173,835
						112,757,990
Restaurants 0.8%
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC (Yum Brands), Term Loan B, 4.037%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		19,595,398		19,622,949
NPC International Inc., Second Lien Initial Term Loan, 9.802%, (1-month USD LIBOR + 7.50%), 4/20/25		United States		8,228,426		8,331,281
						27,954,230
Security & Alarm Services 0.2%
Prime Security Services Borrower LLC, Term B-1 Loans, 5.052%, (1-month USD LIBOR + 2.75%), 5/02/22		United States		8,460,948		8,474,544
Semiconductors 0.8%
ON Semiconductor Corp., 2018 New Replacement Term B-3 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/31/23		United States		28,274,740		28,265,918

50       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
g,h Senior Floating Rate Interests (continued)
Specialized Consumer Services 1.7%
Avis Budget Car Rental LLC, Tranche B Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 2/13/25		United States	$	30,610,267	$	30,571,086
NVA Holdings Inc., Term B-3 Loan, 5.052%, (1-month USD LIBOR + 2.75%), 2/02/25		United States		15,821,024		15,725,433
Sabre GLBL Inc.,
2017 Other Term A Loans, 4.302%, (1-month USD LIBOR + 2.00%), 7/01/22		United States		12,804,100		12,824,100
2018 Other Term B Loans, 4.302%, (1-month USD LIBOR + 2.00%), 2/22/24		United States		1,868,281		1,869,783
						60,990,402
Specialized Finance 0.4%
Trans Union LLC, 2017 Replacement Term A-2 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 8/09/22		United States		13,757,054		13,782,848
Specialty Chemicals 2.7%
Ashland LLC, Term B Loan, 4.03% - 4.052%, (1-month USD LIBOR + 1.75%), 5/17/24		United States		16,919,357		16,981,028
Axalta Coating Systems U.S. Holdings Inc., Term B-3 Dollar Loan, 4.136%, (3-month USD LIBOR + 1.75%), 6/01/24		United States		32,337,158		32,301,263
KMG Chemicals Inc., Initial Term Loan, 4.802%, (1-month USD LIBOR + 2.50%), 6/15/24		United States		2,570,473		2,573,686
Oxbow Carbon LLC,
Second Lien Term Loan, 9.802%, (1-month USD LIBOR + 7.50%), 1/04/24		United States		14,095,184		14,412,326
Tranche A Term Loan, 4.552%, (1-month USD LIBOR + 2.25%), 1/04/22		United States		12,950,000		12,982,375
Tranche B Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 1/04/23		United States		10,674,125		10,714,153
WR Grace & Co.,
Term B-1 Loans, 4.136%, (3-month USD LIBOR + 1.75%), 4/03/25		United States		3,896,405		3,908,987
Term B-2 Loans, 4.136%, (3-month USD LIBOR + 1.75%), 4/03/25		United States		6,679,552		6,701,120
						100,574,938
Specialty Stores 3.5%
General Nutrition Centers Inc.,
FILO Term Loan (ABL), 9.31%, (1-month USD LIBOR + 7.00%), 12/31/22		United States		26,060,479		26,744,567
Tranche B-2 Term Loans, 11.56%, (1-month USD LIBOR + 9.25%), 3/04/21		United States		47,167,984		46,171,560
Tranche B-2 Term Loans, 13.50%, (Prime + 7.75%), 3/04/21		United States		8,242,753		8,068,625
Harbor Freight Tools USA Inc., Refinancing Loans, 4.802%, (1-month USD LIBOR + 2.50%), 8/19/23		United States		9,083,333		8,957,729
i Jo-Ann Stores Inc., Initial Loans, 7.477%, (3-month USD LIBOR + 5.00%), 10/23/23		United States		8,263,158		8,275,205
Michaels Stores Inc., 2018 New Replacement Term B Loan, 4.787% - 4.797%, (1-month USD LIBOR + 2.50%), 1/28/23		United States		27,860,000		27,713,735
i PETCO Animal Supplies Stores Inc., Second Amendment Term Loans, 5.777%, (3-month USD LIBOR + 3.25%), 1/26/23		United States		2,800,000		2,181,668
						128,113,089
Technology Distributors 0.2%
CDW LLC, Term B Loan, 4.06%, (1-month USD LIBOR + 1.75%), 8/17/23		United States		8,882,893		8,910,652
Technology Hardware, Storage & Peripherals 0.1%
Western Digital Corp., US Term B-4 Loan, 4.044%, (1-month USD LIBOR + 1.75%), 4/29/23		United States		5,608,213		5,582,976
Trucking 1.4%
Hertz Corp., Tranche B-1 Term Loan, 5.06%, (1-month USD LIBOR + 2.75%), 6/30/23		United States		51,403,696		51,214,941
Total Senior Floating Rate Interests (Cost $2,635,293,306)						2,639,884,814

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STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities 14.1%
Multi-Sector Holdings 0.5%
k,l Atrium IX, 9A, CR, 144A, FRN, 4.861%, (3-month USD LIBOR + 2.55%), 5/28/30		United States	$	3,511,200	$	3,525,947
k,l Madison Park Funding XXIII Ltd., 2017-23A, C, 144A, FRN, 4.859%, (3-month USD LIBOR + 2.35%), 7/27/30		United States		3,000,000		3,011,250
k,l Magnetite XVIII Ltd., 2016-18A, C, 144A, FRN, 4.664%, (3-month USD LIBOR + 2.35%), 11/15/28		United States		11,823,000		11,833,523
k,l Octagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 3.468%, (3-month USD LIBOR + 1.13%), 8/12/26		United States		1,063,164		1,064,567
						19,435,287
Other Diversified Financial Services 13.6%
k,l Alinea CLO Ltd., 2018-1A, C, 144A, FRN, 4.207%, (3-month USD LIBOR + 1.90%), 7/20/31		United States		10,475,000		10,414,873
k,l AMMC CLO XII Ltd., 2013-12A, CR, 144A, FRN, 4.241%, (3-month USD LIBOR + 1.90%), 11/10/30		United States		1,493,000		1,478,563
k,l Annisa CLO Ltd., 2016-2A, CR, 144A, FRN, 4.45%, (3-month USD LIBOR + 2.00%), 7/20/31		United States		1,800,000		1,785,366
k,mARES XLIX CLO Ltd., 2018-49A, C, 144A, FRN, 4.293%, 7/22/30		United States		10,000,000		9,943,000
k,l ARES XLVIII CLO Ltd., 2018-48A, C, 144A, FRN, 4.139%, (3-month USD LIBOR + 1.80%), 7/20/30		United States		6,270,000		6,228,555
k,l ARES XXXVII CLO Ltd., 2015-4A, BR, 144A, FRN, 4.236%, (3-month USD LIBOR + 1.80%), 10/15/30		United States		4,908,000		4,877,325
k,l Atrium XI,
2011A, A2R, 144A, FRN, 3.617%,(3-month USD LIBOR + 1.14%), 10/23/25		United States		1,149,026		1,149,830
2011A, CR, 144A, FRN, 4.627%,(3-month USD LIBOR + 2.15%), 10/23/25		United States		574,513		575,972
k,m Atrium XIV LLC,
14A, B, 144A, FRN, 4.01%, 8/23/30		United States		6,300,000		6,313,545
14A, C, 144A, FRN, 4.26%, 8/23/30		United States		6,000,000		5,979,240
k,l Betony CLO 2 Ltd., 2018-1A, B, 144A, FRN, 4.37%, (3-month USD LIBOR + 1.85%), 4/30/31		United States		5,700,000		5,622,594
k,l BlueMountain CLO Ltd., 2012-2A, AR, 144A, FRN, 3.742%, (3-month USD LIBOR + 1.42%), 11/20/28		United States		23,309,026		23,319,748
k,m BlueMountain CLO XXII Ltd.,
2018-1A, B, 144A, FRN, 4.22%, 7/30/30		United States		10,330,510		10,341,047
2018-1A, C, 144A, FRN, 4.57%, 7/30/30		United States		3,750,000		3,747,263
k,l Bristol Park CLO Ltd., 2016-1A, A, 144A, FRN, 3.856%, (3-month USD LIBOR + 1.42%), 4/15/29		United States		40,000,000		40,142,800
k,l Carlyle Global Market Strategies CLO Ltd.,
2014-1A, A1R2, 144A, FRN, 3.419%,(3-month USD LIBOR + 0.97%), 4/17/31		United States		2,880,000		2,859,379
2014-4RA, B, 144A, FRN, 4.336%,(3-month USD LIBOR + 1.90%), 7/15/30		United States		6,560,000		6,510,800
2015-2A, A1R, 144A, FRN, 3.289%,(3-month USD LIBOR + 0.78%), 4/27/27		United States		16,540,000		16,535,700
k,l Carlyle U.S. CLO Ltd.,
2017-1A, A1A, 144A, FRN, 3.769%,(3-month USD LIBOR + 1.30%), 4/20/31		United States		24,000,000		24,016,080
2017-4A, B, 144A, FRN, 4.286%,(3-month USD LIBOR + 1.85%), 1/15/30		United States		1,493,000		1,487,775
k,m Cent CLO, 2018-27A, B, 144A, FRN, 4.79%, 10/25/28		United States		1,400,000		1,400,000
k,l Cent CLO LP,
2014-22A, A1R, 144A, FRN, 3.753%,(3-month USD LIBOR + 1.41%), 11/07/26		United States		5,000,000		5,004,700
2014-22A, BR, 144A, FRN, 5.293%,(3-month USD LIBOR + 2.95%), 11/07/26		United States		9,123,539		9,141,877

52       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities (continued)
Other Diversified Financial Services (continued)
k,m Dryden 40 Senior Loan Fund, 2015-40A, CR, 144A, FRN, 4.414%, 8/15/31		United States	$	2,000,000	$	2,003,820
k,l Dryden CLO Ltd., 2018-58A, C, 144A, FRN, 4.121%, (3-month USD LIBOR + 1.80%), 7/17/31		United States		11,000,000		10,872,510
k,l Dryden Senior Loan Fund, 2016-42A, CR, 144A, FRN, 4.486%, (3-month USD LIBOR + 2.05%), 7/15/30		United States		6,200,000		6,184,500
k,m Eaton Vance CLO Ltd., 2014-1RA, C, 144A, FRN, 4.257%, 7/15/30		United States		5,136,585		5,114,446
k Emerson Park CLO Ltd., 2013-1A, C2R, 144A, 4.055%, 7/15/25		United States		3,600,000		3,603,456
k,l Flagship CLO VIII Ltd., 2014-8A, CRR, 144A, FRN, 4.236%, (3-month USD LIBOR + 1.80%), 1/16/26		United States		6,700,000		6,674,004
k,l Galaxy XVIII CLO Ltd., 2018-28A, C, 144A, FRN, 4.289%, (3-month USD LIBOR + 1.95%), 7/15/31		United States		5,300,000		5,267,193
k,m,nGalaxy XXV CLO Ltd.,
2018-25A, B, 144A, FRN, 10/25/31		United States		4,000,000		4,000,440
2018-25A, C, 144A, FRN, 10/25/31		United States		500,000		492,485
k,n,o Galaxy XXVI CLO Ltd., 2018-26A, C, 144A, FRN, 11/22/31		United States		1,200,000		1,200,000
k,l Gilbert Park CLO Ltd., 2017-1A, C, 144A, FRN, 4.386%, (3-month USD LIBOR + 1.95%), 10/15/30		United States		350,000		350,308
k,mLCM Loan Income Fund I Income Note Issuer Ltd., 2027A, C, 144A, FRN, 4.401%, 7/16/31		United States		10,050,000		10,037,438
k,l LCM XV LP, 2015-A, CR, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/30		United States		6,500,000		6,533,865
k,l LCM XXIV Ltd., 24A, A, 144A, FRN, 3.779%, (3-month USD LIBOR + 1.31%), 3/20/30		United States		52,000,000		52,246,480
k,l LCM XXV Ltd., 25A, A, 144A, FRN, 3.679%, (3-month USD LIBOR + 1.21%), 7/20/30		United States		2,580,000		2,582,864
k,l Madison Park Funding Ltd.,
2016-21A, A1, 144A, FRN, 4.02%,(3-month USD LIBOR + 1.53%), 7/25/29		United States		17,200,000		17,307,156
2018-28A, C, 144A, FRN, 4.187%,(3-month USD LIBOR + 1.85%), 7/15/30		United States		13,350,000		13,304,476
k,l Madison Park Funding XI LTD., 2013-11, CR, 144A, FRN, 4.677%, (3-month USD LIBOR + 2.20%), 7/23/29		United States		2,040,000		2,044,712
k,l Madison Park Funding XXII Ltd., 2016-22A, C, 144A, FRN, 4.89%, (3-month USD LIBOR + 2.40%), 10/25/29		United States		3,317,500		3,320,320
k,l Madison Park Funding XXIV Ltd., 2016-24A, C1, 144A, FRN, 5.069%, (3-month USD LIBOR + 2.60%), 1/20/28		United States		1,875,000		1,885,500
k,l Neuberger Berman CLO Ltd., 2017-26A, C, 144A, FRN, 4.195%, (3-month USD LIBOR + 1.75%), 10/18/30		United States		746,000		739,473
k,l Octagon Investment Partners 26 Ltd., 2016-1A, CR, 144A, FRN, 4.236%, (3-month USD LIBOR + 1.80%), 7/15/30		United States		10,220,000		10,104,616
k,m Octagon Investment Partners 27 Ltd., 2016-1A, CR, 144A, FRN, 4.536%, 7/15/30		United States		7,435,000		7,424,145
k,l Octagon Investment Partners 30 Ltd., 144A, FRN, 3.789%, (3-month USD LIBOR + 1.32%), 3/17/30		United States		23,071,429		23,157,024
k,l Octagon Investment Partners 31 LLC, 2017-1A, C, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/30		United States		4,208,540		4,228,573
k,l Octagon Investment Partners 37 Ltd., 2018-2A, B, 144A, FRN, 4.11%, (3-month USD LIBOR + 1.75%), 7/25/30		United States		10,875,000		10,746,349
k,m Octagon Investment Partners 38, 2018-1A, A3A, 144A, FRN, 3.857%, 7/20/30		United States		3,484,000		3,486,613
k,l Octagon Investment Partners XVI Ltd., 2013-1A, CR, 144A, FRN, 4.186%, (3-month USD LIBOR + 1.85%), 7/17/30		United States		12,500,000		12,395,750
k,l Octagon Investment Partners XXII Ltd., 2014-1A, CRR, 144A, FRN, 4.369%, (3-month USD LIBOR + 1.90%), 1/22/30		United States		3,000,000		2,978,730
k,m Race Point X CLO Ltd., 2016-10A, C1R, 144A, FRN, 4.49%, 7/25/31		United States		7,000,000		6,977,950

franklintempleton.com Annual Report           53

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities (continued)
Other Diversified Financial Services (continued)
k,l TCI-Cent CLO Income Note Issuer Ltd., 2017-1A, B, 144A, FRN, 4.84%, (3-month USD LIBOR + 2.35%), 7/25/30		United States	$	9,671,118	$	9,707,191
k,l Venture XXIV CLO Ltd., 2016-24A, A1D, 144A, FRN, 3.889%, (3-month USD LIBOR + 1.42%), 10/20/28		United States		34,000,000		34,101,320
k Voya CLO Ltd.,
m 2016-3A, BR, 144A, FRN, 4.671%, 10/18/31		United States		10,000,000		10,000,000
l 2017-3A, B, 144A, FRN, 4.819%,(3-month USD LIBOR + 2.35%), 7/20/30		United States		8,362,537		8,389,799
						498,339,538
Total Asset-Backed Securities (Cost $518,480,277)						517,774,825
Total Investments before Short Term Investments
(Cost $3,394,359,106)						3,342,546,538
Short Term Investments 11.6%
U.S. Government and Agency Securities (Cost $104,839,199) 2.8%
p U.S. Treasury Bill, 3/28/19		United States		105,750,000		104,733,082
			Shares
Money Market Funds (Cost $219,846,906) 6.0%
e,q Institutional Fiduciary Trust Money Market Portfolio, 1.83%		United States		219,846,906		219,846,906
			Principal  Amount*
Repurchase Agreements (Cost $101,755,855) 2.8%
r  Joint Repurchase Agreement, 2.191%, 11/01/18 (Maturity Value $101,762,049)
BNP Paribas Securities Corp. (Maturity Value $47,022,208)
Deutsche Bank Securities Inc. (Maturity Value $13,596,427)
HSBC Securities (USA) Inc. (Maturity Value $41,143,414)
Collateralized by U.S. Government Agency Securities, 3.00% - 4.50%, 6/15/39 - 6/20/48; U.S. Treasury Bond, 2.50%, 8/15/23; and U.S. Treasury Note, 1.00% -3.50%, 11/15/19 - 7/31/23 (valued at $103,804,646)		United States	$	101,755,855		101,755,855
Total Investments (Cost $3,820,801,066) 102.7%						3,768,882,381
Other Assets, less Liabilities (2.7)%						(99,974,559	)
Net Assets 100.0%					$	3,668,907,822

54       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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 10 regarding holdings of 5% voting securities.

^cFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.

^dSee Note 8 regarding restricted securities.

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

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

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

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

ⁱSecurity purchased on a delayed delivery basis. See Note 1(d).

^jA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^kSecurity 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 October 31, 2018, the aggregate value of these securities was $517,774,825, representing 14.1% of net assets.

^lThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.

^mAdjustable rate security with an interest rate that is not based on a published reference index and spread. The rate is based on the structure of the agreement and current market conditions. The coupon rate shown represents the rate at period end.

ⁿThe coupon rate will be determined at time of issue.

^oSecurity purchased on a when-issued basis. See Note 1(d).

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

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

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

At October 31, 2018, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts

Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Maturity Date		Notional Amount		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating
Centrally Cleared Swap Contracts
Contracts to Buy Protectiona
Traded Index
CDX.NA.HY.26		(5.00)%		Quarterly		6/20/21	$	50,176,000	$	(3,264,532	)	$	(2,491,366	)	$	(773,166	)

^aPerformance triggers for settlement of contract include failure to pay or bankruptcy of the underlying securities for traded index swaps.

See Note 9 regarding other derivative information.

See Abbreviations on page 158.

franklintempleton.com The accompanying notes are an integral part of these financial statements. | Annual Report           55

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Low Duration Total Return Fund

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.84			$    9.89			$    9.91			$   10.11			$   10.16
Income from investment operationsa:
Net investment income		0.237			0.170			0.151			0.134			0.144
Net realized and unrealized gains (losses)		(0.185	)		(0.023	)		0.031			(0.135	)		(0.011	)
Total from investment operations		0.052			0.147			0.182			(0.001	)		0.133
Less distributions from net investment income and net foreign currency gains		(0.292	)		(0.197	)		(0.202	)		(0.199	)		(0.183	)
Net asset value, end of year		$    9.60			$    9.84			$    9.89			$     9.91			$   10.11
Total returnb		0.54%			1.50%			1.88%			(0.02)%			1.32%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.96%			0.96%			0.95%			0.96%			0.93%
Expenses net of waiver and payments by affiliatesc		0.72%			0.80%			0.80%			0.80%			0.80%
Net investment income		2.43%			1.73%			1.57%			1.27%			1.24%
Supplemental data
Net assets, end of year (000’s)		$1,499,579			$1,519,902			$1,524,437			$1,656,001			$1,589,854
Portfolio turnover rate		56.12%			50.40%			44.76%			41.28%			78.63%
Portfolio turnover rate excluding mortgage dollar rollsd		44.01%			45.29%			44.76%			41.28%			78.63%

^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.

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

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

56       Annual 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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.80			$    9.86			$    9.90			$   10.11			$   10.16
Income from investment operationsa:
Net investment income		0.168			0.121			0.113			0.104			0.098
Net realized and unrealized gains (losses)		(0.155	)		(0.015	)		0.024			(0.145	)		(0.001	)
Total from investment operations		0.013			0.106			0.137			(0.041	)		0.097
Less distributions from net investment income and net foreign currency gains		(0.253	)		(0.166	)		(0.177	)		(0.169	)		(0.147	)
Net asset value, end of year		$    9.56			$    9.80			$    9.86			$     9.90			$   10.11
Total returnb		0.14%			1.08%			1.41%			(0.41)%			0.96%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.36%			1.36%			1.35%			1.36%			1.33%
Expenses net of waiver and payments by affiliatesc		1.12%			1.20%			1.20%			1.20%			1.20%
Net investment income		2.03%			1.33%			1.17%			0.87%			0.84%
Supplemental data
Net assets, end of year (000’s)		$130,206			$174,754			$218,066			$211,354			$165,952
Portfolio turnover rate		56.12%			50.40%			44.76%			41.28%			78.63%
Portfolio turnover rate excluding mortgage dollar rollsd		44.01%			45.29%			44.76%			41.28%			78.63%

^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.

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.90			$    9.94			$    9.95			$  10.14			$  10.19
Income from investment operationsa:
Net investment income		0.271			0.214			0.195			0.165			0.164	b
Net realized and unrealized gains (losses)		(0.178	)		(0.025	)		0.021			(0.130	)		0.003
Total from investment operations		0.093			0.189			0.216			0.035			0.167
Less distributions from net investment income and net foreign currency gains		(0.333	)		(0.229	)		(0.226	)		(0.228	)		(0.217	)
Net asset value, end of year		$    9.66			$    9.90			$    9.94			$    9.95			$  10.14
Total return		0.96%			1.92%			2.22%			0.37%			1.66%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.55%			0.53%			0.53%			0.54%			0.55%
Expenses net of waiver and payments by affiliatesc		0.31%			0.39%			0.42%			0.42%			0.42%
Net investment income		2.84%			2.14%			1.95%			1.65%			1.62%
Supplemental data
Net assets, end of year (000’s)		$1,017,856			$591,622			$553,233			$508,675			$418,539
Portfolio turnover rate		56.12%			50.40%			44.76%			41.28%			78.63%
Portfolio turnover rate excluding mortgage dollar rollsd		44.01%			45.29%			44.76%			41.28%			78.63%

^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.

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

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

58       Annual 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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.89			$    9.94			$    9.95			$   10.14			$   10.19
Income from investment operationsa:
Net investment income		0.264			0.209			0.184			0.134			0.166
Net realized and unrealized gains (losses)		(0.187	)		(0.042	)		0.025			(0.106	)		(0.010	)
Total from investment operations		0.077			0.167			0.209			0.028			0.156
Less distributions from net investment income and net foreign currency gains		(0.317	)		(0.217	)		(0.219	)		(0.218	)		(0.206	)
Net asset value, end of year		$    9.65			$    9.89			$    9.94			$     9.95			$   10.14
Total return		0.80%			1.70%			2.14%			0.27%			1.54%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.71%			0.71%			0.70%			0.71%			0.68%
Expenses net of waiver and payments by affiliatesb		0.47%			0.55%			0.55%			0.55%			0.55%
Net investment income		2.68%			1.98%			1.82%			1.52%			1.49%
Supplemental data
Net assets, end of year (000’s)		$214,339			$428,838			$224,887			$150,464			$198,694
Portfolio turnover rate		56.12%			50.40%			44.76%			41.28%			78.63%
Portfolio turnover rate excluding mortgage dollar rollsc		44.01%			45.29%			44.76%			41.28%			78.63%

^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.

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

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

franklintempleton.com The accompanying notes are an integral part of these financial statements. | Annual Report           59

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2018

Franklin Low Duration Total Return Fund

	Country		Shares/ Units/ Warrants			Value
Common Stocks and Other Equity Interests 0.0%†
Commercial & Professional Services 0.0%†
a,b,c Remington Outdoor Co. Inc.		United States		72,043		$	932,716
a,b,c Remington Outdoor Co. Inc., Litigation Units		United States		6,782			—
							932,716
Energy 0.0%†
a Halcon Resources Corp.		United States		98,168			325,918
a Halcon Resources Corp., wts., 9/09/20		United States		8,753			387
a Riviera Resources Inc.		United States		2,964			63,192
a Roan Resources Inc.		United States		2,964			48,224
							437,721
Materials 0.0%†
a Verso Corp., A		United States		1,387			38,989
a Verso Corp., wts., 7/25/23		United States		146			949
							39,938
Retailing 0.0%†
a,b,c K2016470219 South Africa Ltd., A		South Africa		12,326,925			8,356
a,b,c K2016470219 South Africa Ltd., B		South Africa		1,226,701			831
							9,187
Total Common Stocks and Other Equity Interests (Cost $5,716,880)							1,419,562
Management Investment Companies 2.7%
Diversified Financials 2.7%
d Franklin Lower Tier Floating Rate Fund		United States		1,893,663			18,122,357
d Franklin Middle Tier Floating Rate Fund		United States		2,389,308			22,459,491
Invesco Senior Loan ETF		United States		1,550,000			35,665,500
Total Management Investment Companies (Cost $77,256,419)							76,247,348
			Principal  Amount*
Corporate Bonds 34.9%
Automobiles & Components 0.4%
Aptiv PLC, senior note, 3.15%, 11/19/20		United States		10,500,000			10,387,397
Banks 9.4%
e ANZ New Zealand International Ltd. of London, senior note, 144A, 2.85%, 8/06/20		New Zealand		7,500,000			7,417,834
f Banca Monte dei Paschi di Siena SpA, secured note, Reg S, 2.875%, 4/16/59		Italy		6,300,000	EUR		7,505,277
f Banco Popular Espanol SA, secured note, Reg S, 1.00%, 3/03/22		Spain		2,800,000	EUR		3,256,088
Bank of America Corp., senior note, 2.65%, 4/01/19		United States		9,300,000			9,293,642
senior note, 2.151%, 11/09/20		United States		6,600,000			6,441,758
senior note, 2.369% to 7/20/20, FRN thereafter, 7/21/21		United States		6,800,000			6,671,398
senior note, 3.55% to 3/05/23, FRN thereafter, 3/05/24		United States		8,950,000			8,788,807
g senior note, FRN, 3.476%, (3-month USD LIBOR + 1.04%), 1/15/19		United States		16,671,000			16,703,995
Barclays PLC, senior note, 3.25%, 1/12/21		United Kingdom		7,000,000			6,907,250

60       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Banks (continued)
g BB&T Corp., senior note, FRN, 3.003%, (3-month USD LIBOR + 0.66%), 2/01/19		United States		2,000,000		$	2,001,811
Citigroup Inc.,
senior note, 2.40%, 2/18/20		United States		11,300,000			11,179,567
senior note, 2.65%, 10/26/20		United States		5,000,000			4,925,991
senior note, 2.35%, 8/02/21		United States		5,400,000			5,219,657
senior note, 2.75%, 4/25/22		United States		5,800,000			5,607,630
g senior note, FRN, 3.247%, (3-month USD LIBOR + 0.93%), 6/07/19		United States		5,000,000			5,022,183
HSBC Holdings PLC, senior note, 3.40%, 3/08/21		United Kingdom		3,300,000			3,285,035
Industrial & Commercial Bank of China Ltd.,
senior note, 3.231%, 11/13/19		China		5,400,000			5,383,854
senior note, 2.957%, 11/08/22		China		9,400,000			9,055,772
e,gING Bank NV, senior note, 144A, FRN, 3.086%, (3-month USD LIBOR + 0.69%), 10/01/19		Netherlands		5,000,000			5,022,900
Intesa Sanpaolo SpA, senior note, 3.875%, 1/15/19		Italy		10,100,000			10,105,100
JPMorgan Chase & Co.,
senior note, 1.85%, 3/22/19		United States		8,000,000			7,968,070
senior note, 2.20%, 10/22/19		United States		21,400,000			21,216,859
senior note, 2.40%, 6/07/21		United States		2,600,000			2,534,032
e Norddeutsche Landesbank Girozentrale, secured note, 144A, 2.00%, 2/05/19		Germany		6,500,000			6,484,101
PHH Corp., senior note, 7.375%, 9/01/19		United States		1,800,000			1,851,750
PNC Bank NA, senior note, 2.00%, 5/19/20		United States		10,600,000			10,396,816
Regions Financial Corp., senior note, 3.20%, 2/08/21		United States		9,300,000			9,224,565
Royal Bank of Canada, secured note, 2.10%, 10/14/21		Canada		6,300,000			6,165,261
e Standard Chartered PLC, senior note, 144A, 3.885% to 3/15/23, FRN thereafter, 3/15/24		United Kingdom		7,800,000			7,588,425
g SunTrust Bank of Atlanta, senior note, FRN, 3.525%, 10/26/21		United States		5,000,000			4,999,453
e The Toronto-Dominion Bank, secured note, 144A, 2.25%, 3/15/22		Canada		12,700,000			12,403,648
f Turkiye Vakiflar Bankasi TAO, secured note, Reg S, 2.375%, 11/04/22		Turkey		1,800,000	EUR		1,962,184
Wells Fargo & Co.,
senior note, 2.50%, 3/04/21		United States		2,600,000			2,534,753
g senior note, FRN, 3.349%, (3-month USD LIBOR + 0.88%), 7/22/20		United States		13,700,000			13,818,957
e Westpac Banking Corp.,
secured note, 144A, 2.10%, 2/25/22		Australia		9,700,000			9,446,733
senior secured note, 144A, 2.25%, 11/09/21		Australia		6,300,000			6,176,457
e Woori Bank, sub. note, 144A, 4.75%, 4/30/24		South Korea		5,300,000			5,297,164
							269,864,777
Capital Goods 0.7%
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21		United States		5,100,000			5,091,604
John Deere Capital Corp., senior note, 1.95%, 3/04/19		United States		3,750,000			3,739,998
Lockheed Martin Corp., senior note, 1.85%, 11/23/18		United States		4,200,000			4,197,969
United Technologies Corp., senior note, 4.50%, 4/15/20		United States		7,500,000			7,620,959
							20,650,530
Consumer Services 0.3%
Marriott International Inc., senior note, 2.875%, 3/01/21		United States		10,000,000			9,873,172

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Diversified Financials 5.8%
American Express Co., senior note, 3.70%, 8/03/23		United States		6,800,000	$	6,735,755
g Bank of New York Mellon Corp., senior note, FRN, 3.182%, (3-month USD LIBOR + 0.87%), 8/17/20		United States		6,400,000		6,476,677
Capital One Bank USA NA, senior note, 2.30%, 6/05/19		United States		11,900,000		11,854,758
Capital One Financial Corp.,
senior note, 2.50%, 5/12/20		United States		3,900,000		3,845,897
senior note, 3.45%, 4/30/21		United States		6,800,000		6,774,490
senior note, 3.05%, 3/09/22		United States		13,600,000		13,278,730
g Deutsche Bank AG, senior note, FRN, 3.632%, (3-month USD LIBOR + 1.31%), 8/20/20		Germany		7,500,000		7,491,600
e Dexia Credit Local SA, senior note, 144A, 2.375%, 9/20/22		France		4,550,000		4,389,089
GE Capital International Funding Co., senior note, 2.342%, 11/15/20		United States		2,000,000		1,939,554
The Goldman Sachs Group Inc.,
senior note, 2.625%, 4/25/21		United States		12,000,000		11,739,968
senior note, 2.35%, 11/15/21		United States		4,000,000		3,851,940
g senior note, FRN, 3.534%, (3-month USD LIBOR + 1.20%), 9/15/20		United States		23,000,000		23,325,946
Morgan Stanley,
senior note, 2.65%, 1/27/20		United States		4,000,000		3,972,717
senior note, 2.80%, 6/16/20		United States		6,600,000		6,543,302
g senior note, FRN, 3.649%, (3-month USD LIBOR + 1.14%), 1/27/20		United States		22,400,000		22,619,544
Navient Corp.,
senior bond, 8.00%, 3/25/20		United States		1,150,000		1,203,188
senior note, 5.50%, 1/15/19		United States		4,350,000		4,371,750
senior note, 5.00%, 10/26/20		United States		2,000,000		2,016,000
e Pricoa Global Funding I,
secured note, 144A, 2.55%, 11/24/20		United States		5,600,000		5,498,733
secured note, 144A, 3.45%, 9/01/23		United States		7,200,000		7,119,586
e Protective Life Global Funding,
secured note, 144A, 2.262%, 4/08/20		United States		7,000,000		6,899,270
senior secured note, 144A, 1.722%, 4/15/19		United States		4,300,000		4,276,573
e,g Seven and Seven Ltd., senior note, 144A, FRN, 3.542%, (6-month USD LIBOR + 1.00%), 9/11/19		South Korea		400,000		397,498
						166,622,565
Energy 2.6%
Anadarko Petroleum Corp., senior note, 4.85%, 3/15/21		United States		6,100,000		6,235,594
e California Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		1,656,000		1,477,980
Devon Energy Corp., senior bond, 3.25%, 5/15/22		United States		5,300,000		5,153,587
Enable Midstream Partners LP, senior note, 2.40%, 5/15/19		United States		3,700,000		3,680,819
Energy Transfer Operating LP, senior note, 4.20%, 9/15/23		United States		2,800,000		2,790,591
Enterprise Products Operating LLC, senior note, 2.55%, 10/15/19		United States		7,500,000		7,458,842
g Equinor ASA, senior note, FRN, 2.803%, (3-month USD LIBOR + 0.46%), 11/08/18		Norway		6,900,000		6,900,656
Kinder Morgan Inc.,
senior note, 3.05%, 12/01/19		United States		4,500,000		4,484,756
senior note, 3.15%, 1/15/23		United States		9,300,000		8,976,231
Sabine Pass Liquefaction LLC, senior secured note, first lien, 5.625%, 2/01/21		United States		10,400,000		10,765,959
Sanchez Energy Corp., senior note, 7.75%, 6/15/21		United States		1,900,000		959,500

62       Annual Report franklintempleton.com

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Energy (continued)
e Sinopec Group Overseas Development 2015 Ltd., senior note, 144A, 2.50%, 4/28/20		China		7,400,000		$       7,292,589
e Sinopec Group Overseas Development 2017 Ltd., senior note, 144A, 2.375%, 4/12/20		China		5,100,000		5,019,752
e Sunoco LP/Sunoco Finance Corp., senior note, 144A, 4.875%, 1/15/23		United States		2,500,000		2,415,625
The Williams Cos. Inc., senior note, 4.125%, 11/15/20		United States		1,700,000		1,716,235
						75,328,716
Food & Staples Retailing 0.3%
The Kroger Co., senior note, 2.60%, 2/01/21		United States		7,500,000		7,342,071
Food, Beverage & Tobacco 1.7%
Anheuser-Busch InBev Finance Inc., senior note, 2.65%, 2/01/21		Belgium		8,500,000		8,336,120
Bunge Ltd. Finance Corp., senior note, 3.50%, 11/24/20		United States		3,100,000		3,094,867
Coca-Cola Femsa SAB de CV,
senior note, 2.375%, 11/26/18		Mexico		2,500,000		2,497,600
senior note, 4.625%, 2/15/20		Mexico		1,400,000		1,420,839
e Imperial Brands Finance PLC, senior note, 144A, 2.95%, 7/21/20		United Kingdom		6,000,000		5,931,894
Kraft Heinz Foods Co.,
senior bond, 3.50%, 6/06/22		United States		10,000,000		9,891,562
senior note, 3.50%, 7/15/22		United States		5,700,000		5,634,990
senior note, 4.00%, 6/15/23		United States		10,700,000		10,655,326
g Mondelez International Inc., senior note, FRN, 2.863%, (3-month USD LIBOR + 0.52%), 2/01/19		United States		500,000		500,476
						47,963,674
Health Care Equipment & Services 2.0%
Anthem Inc., senior note, 2.50%, 11/21/20		United States		7,800,000		7,645,764
e CHS/Community Health Systems Inc., senior note, 144A, 8.125%, 6/30/24		United States		1,500,000		1,192,500
CVS Health Corp.,
senior note, 2.80%, 7/20/20		United States		2,800,000		2,771,536
senior note, 2.125%, 6/01/21		United States		4,100,000		3,954,319
senior note, 3.70%, 3/09/23		United States		7,000,000		6,922,956
Express Scripts Holding Co., senior note, 4.75%, 11/15/21		United States		6,700,000		6,899,472
e Halfmoon Parent Inc.,
senior note, 144A, 3.40%, 9/17/21		United States		5,800,000		5,761,220
senior secured note, 144A, 3.75%, 7/15/23		United States		3,900,000		3,872,393
Stryker Corp., senior note, 2.00%, 3/08/19		United States		10,100,000		10,068,586
Tenet Healthcare Corp., senior note, 5.50%, 3/01/19		United States		1,825,000		1,836,406
Zimmer Holdings Inc., senior note, 2.70%, 4/01/20		United States		7,500,000		7,418,902
						58,344,054
Household & Personal Products 0.1%
The Procter & Gamble Co., senior note, 1.70%, 11/03/21		United States		3,200,000		3,065,717
Insurance 1.2%
e Jackson National Life Global Funding, secured note, 144A, 2.25%, 4/29/21		United States		7,600,000		7,388,143
e Metropolitan Life Global Funding I, senior secured bond, 144A, 3.875%, 4/11/22		United States		5,900,000		5,931,583
e New York Life Global Funding,
secured note, 144A, 2.10%, 1/02/19		United States		10,000,000		9,991,483
secured note, 144A, 2.15%, 6/18/19		United States		6,400,000		6,368,868

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
Corporate Bonds (continued)
Insurance (continued)
e Nuveen Finance LLC, senior note, 144A, 2.95%, 11/01/19		United States		4,200,000	$	4,192,812
						33,872,889
Materials 0.6%
e FMG Resources (August 2006) Pty. Ltd., senior note, 144A, 4.75%, 5/15/22		Australia		2,000,000		1,940,980
e Glencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		3,500,000		3,594,148
e Glencore Funding LLC,
senior note, 144A, 3.00%, 10/27/22		Switzerland		2,200,000		2,107,248
senior note, 144A, 4.125%, 5/30/23		Switzerland		4,300,000		4,252,999
LyondellBasell Industries NV, senior note, 6.00%, 11/15/21		United States		4,900,000		5,170,492
						17,065,867
Media & Entertainment 1.5%
e Altice Financing SA, secured bond, 144A, 7.50%, 5/15/26		Luxembourg		2,000,000		1,890,000
CBS Corp., senior note, 2.30%, 8/15/19		United States		8,437,000		8,384,566
CSC Holdings LLC, senior bond, 8.625%, 2/15/19		United States		3,000,000		3,037,500
DISH DBS Corp., senior bond, 5.875%, 7/15/22		United States		3,000,000		2,846,250
e NBCUniversal Enterprise Inc., senior note, 144A, 1.974%, 4/15/19		United States		10,000,000		9,959,803
e Tencent Holdings Ltd., senior note, 144A, 2.985%, 1/19/23		China		8,000,000		7,714,480
Time Warner Inc., senior note, 2.10%, 6/01/19		United States		8,500,000		8,456,030
						42,288,629
Pharmaceuticals, Biotechnology & Life Sciences 1.8%
Allergan Funding SCS, senior note, 3.45%, 3/15/22		United States		10,500,000		10,335,862
Amgen Inc.,
senior note, 1.85%, 8/19/21		United States		1,000,000		957,487
senior note, 3.875%, 11/15/21		United States		6,800,000		6,867,331
g senior note, FRN, 2.91%, (3-month USD LIBOR + 0.60%), 5/22/19		United States		6,200,000		6,210,865
e Bayer U.S. Finance II LLC, senior note, 144A, 3.875%, 12/15/23		Germany		3,400,000		3,352,320
Biogen Inc., senior note, 2.90%, 9/15/20		United States		11,500,000		11,395,222
Celgene Corp.,
senior note, 2.25%, 8/15/21		United States		7,900,000		7,629,729
senior note, 2.75%, 2/15/23		United States		3,700,000		3,522,790
						50,271,606
Real Estate 0.4%
American Tower Corp., senior note, 3.40%, 2/15/19		United States		6,200,000		6,207,392
Crown Castle International Corp., senior note, 3.15%, 7/15/23		United States		6,000,000		5,765,320
						11,972,712
Retailing 1.4%
Alibaba Group Holding Ltd.,
senior note, 2.50%, 11/28/19		China		11,900,000		11,821,757
senior note, 3.125%, 11/28/21		China		5,400,000		5,325,399
Amazon.com Inc., senior note, 2.40%, 2/22/23		United States		4,150,000		3,968,652
Dollar Tree Inc., senior note, 3.70%, 5/15/23		United States		8,800,000		8,584,691
JD.com Inc., senior note, 3.125%, 4/29/21		China		5,300,000		5,117,813
b,c,h K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		948,323		1,174
c,h K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		South Africa		183,405		13,544
e PetSmart Inc., senior note, 144A, 7.125%, 3/15/23		United States		5,500,000		3,877,500
						38,710,530

64       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*			Value
Corporate Bonds (continued)
Semiconductors & Semiconductor Equipment 0.5%
Broadcom Corp./Broadcom Cayman Finance Ltd., senior note, 2.375%, 1/15/20		United States		8,700,000		$	8,593,362
Maxim Integrated Products Inc., senior note, 2.50%, 11/15/18		United States		5,200,000			5,197,707
							13,791,069
Software & Services 0.4%
Fiserv Inc., senior note, 2.70%, 6/01/20		United States		11,300,000			11,183,327
Technology Hardware & Equipment 0.8%
e Dell International LLC/EMC Corp., senior secured note, first lien, 144A, 3.48%, 6/01/19		United States		6,400,000			6,408,885
Juniper Networks Inc.,
senior note, 3.125%, 2/26/19		United States		7,500,000			7,503,718
senior note, 3.30%, 6/15/20		United States		500,000			498,864
e Sanmina Corp., senior note, first lien, 144A, 4.375%, 6/01/19		United States		6,500,000			6,508,125
Tech Data Corp., senior note, 3.70%, 2/15/22		United States		800,000			783,637
							21,703,229
Telecommunication Services 0.8%
e Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC,
first lien, 144A, 3.36%, 3/20/23		United States		1,875,000			1,860,938
senior secured bond, first lien, 144A, 4.738%, 9/20/29		United States		6,600,000			6,601,980
Telefonica Emisiones S.A.U., senior bond, 5.134%, 4/27/20		Spain		6,900,000			7,071,913
T-Mobile USA Inc., senior note, 4.00%, 4/15/22		United States		1,800,000			1,782,000
Verizon Communications Inc., senior note, 3.00%, 11/01/21		United States		6,800,000			6,707,331
							24,024,162
Transportation 0.4%
e American Airlines Group Inc., senior note, 144A, 5.50%, 10/01/19		United States		1,780,000			1,804,475
e DAE Funding LLC, senior note, 144A, 4.00%, 8/01/20		United Arab Emirates		2,100,000			2,087,242
FedEx Corp., senior note, 0.50%, 4/09/20		United States		7,100,000	EUR		8,104,131
							11,995,848
Utilities 1.8%
Calpine Corp., senior note, 5.375%, 1/15/23		United States		7,600,000			7,229,500
Dominion Energy Inc.,
junior sub. note, 2.579%, 7/01/20		United States		5,200,000			5,122,503
senior note, 2.50%, 12/01/19		United States		9,500,000			9,445,082
e Korea East-West Power Co. Ltd., senior note, 144A, 3.875%, 7/19/23		South Korea		3,300,000			3,293,945
PSEG Power LLC, senior note, 3.00%, 6/15/21		United States		7,700,000			7,578,095
The Southern Co., senior note, 2.35%, 7/01/21		United States		6,500,000			6,291,953
e State Grid Overseas Investment 2014 Ltd., senior note, 144A, 2.75%, 5/07/19		China		2,200,000			2,193,587
e State Grid Overseas Investment 2016 Ltd., senior note, 144A, 2.75%, 5/04/22		China		9,400,000			9,075,559
e Talen Energy Supply LLC, senior note, 144A, 9.50%, 7/15/22		United States		2,400,000			2,448,000
							52,678,224
Total Corporate Bonds (Cost $1,013,415,528)							999,000,765

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
g,i Senior Floating Rate Interests 3.7%
Automobiles & Components 0.1%
Allison Transmission Inc., New Term Loans, 4.04%, (1-month USD LIBOR + 1.75%), 9/23/22		United States		847,557	$	852,855
TI Group Automotive Systems LLC, Initial US Term Loan, 4.802%, (1-month USD LIBOR + 2.50%), 6/30/22		United States		1,293,631		1,288,779
						2,141,634
Capital Goods 0.0%†
Altra Industrial Motion Corp., Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 10/01/25		United States		630,998		630,209
Harsco Corp., Term Loan B-2, 4.563%, (1-month USD LIBOR + 2.25%), 12/10/24		United States		133,869		134,539
						764,748
Commercial & Professional Services 0.2%
KAR Auction Services Inc., Tranche B-5 Term Loans, 4.938%, (3-month USD LIBOR + 2.50%), 3/09/23		United States		701,548		703,074
j,k United Rentals North America Inc., Initial Term Loans, TBD, 10/30/25		United States		4,730,841		4,757,452
						5,460,526
Consumer Services 0.4%
Aristocrat Technologies Inc., Term B-3 Loans, 4.219%, (3-month USD LIBOR + 1.75%), 10/19/24		United States		3,400,334		3,392,412
Avis Budget Car Rental LLC, Tranche B Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 2/13/25		United States		1,536,238		1,534,271
Eldorado Resorts Inc., Initial Term Loan, 4.563%, (1-month USD LIBOR + 2.25%), 4/17/24		United States		1,587,555		1,591,524
Greektown Holdings LLC, Initial Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 4/25/24		United States		3,300,563		3,299,187
Las Vegas Sands LLC, Term B Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/27/25		United States		995,000		992,795
						10,810,189
Diversified Financials 0.1%
j,k First Eagle Holdings Inc., Initial Term Loans, TBD, 12/01/24		United States		877,094		879,287
Trans Union LLC, 2017 Replacement Term A-2 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 8/09/22		United States		1,015,378		1,017,282
						1,896,569
Energy 0.3%
Bowie Resource Holdings LLC, First Lien Initial Term Loan, 8.052%, (1-month USD LIBOR + 5.75%), 8/14/20		United States		1,638,735		1,604,595
Fieldwood Energy LLC, Closing Date Loans, 7.552%, (1-month USD LIBOR + 5.25%), 4/11/22		United States		5,036,382		5,077,328
Foresight Energy LLC, Term Loans, 8.277%, (3-month USD LIBOR + 5.75%), 3/28/22		United States		1,207,845		1,212,626
OSG Bulk Ships Inc., Initial Term Loan, 6.77%, (6-month USD LIBOR + 4.25%), 8/05/19		United States		867,152		859,929
						8,754,478

66       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)
	Country		Principal   Amount*		Value
g,i Senior Floating Rate Interests (continued)
Food & Staples Retailing 0.0%†
Aramark Corp., U.S. Term B-3 Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/11/25		United States		95,905	$	96,085
Smart & Final Stores LLC, First Lien Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 11/15/22		United States		1,217,455		1,177,887
						1,273,972
Food, Beverage & Tobacco 0.3%
JBS USA LUX SA, New Initial Term Loans, 4.837% - 4.886%, (3-month USD LIBOR + 2.50%), 10/30/22		United States		6,768,963		6,776,897
Post Holdings Inc., Series A Incremental Term Loans, 4.29%, (1-month USD LIBOR + 2.00%), 5/24/24		United States		1,426,159		1,425,601
						8,202,498
Health Care Equipment & Services 0.3%
DaVita Healthcare Partners Inc., Tranche B Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 6/24/21		United States		2,348,273		2,356,154
HCA Inc., Term Loan B11, 4.052%, (1-month USD LIBOR + 1.75%), 3/18/23		United States		1,326,148		1,332,896
Quintiles IMS Inc., Term B-2 Dollar Loans, 4.386%, (3-month USD LIBOR + 2.00%), 1/20/25		United States		3,568,237		3,578,831
U.S. Renal Care Inc., Initial Term Loan, 6.636%, (3-month USD LIBOR + 4.25%), 12/31/22		United States		1,908,825		1,857,128
						9,125,009
Household & Personal Products 0.1%
Spectrum Brands, Inc.,
USD Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 6/23/22		United States		593,484		594,844
USD Term Loans, 4.33% - 4.40%, (2-month USD LIBOR + 2.00%), 6/23/22		United States		788,846		790,654
USD Term Loans, 4.35%, (3-month USD LIBOR + 2.00%), 6/23/22		United States		445,113		446,133
						1,831,631
Materials 0.3%
Ashland LLC, Term B Loan, 4.03% - 4.052%, (1-month USD LIBOR + 1.75%), 5/17/24		United States		4,216,328		4,231,696
Chemours Co., Tranche B-2 US$ Term Loan, 4.05%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		1,766,414		1,758,686
Crown Americas LLC, Dollar Term B Loan, 4.283%, (1-month USD LIBOR + 2.00%), 4/03/25		United States		1,871,972		1,878,408
Oxbow Carbon LLC,
Tranche A Term Loan, 4.552%, (1-month USD LIBOR + 2.25%), 1/04/22		United States		1,276,500		1,279,691
Tranche B Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 1/04/23		United States		577,500		579,666
						9,728,147

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
g,i Senior Floating Rate Interests (continued)
Media & Entertainment 0.5%
Altice U.S. Finance I Corp., March 2017 Refinancing Term Loan Commitments, 4.552%, (1-month USD LIBOR + 2.25%), 7/28/25		United States		114,644	$	114,549
AMC Entertainment Holdings Inc,.
2016 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/23		United States		504,194		505,140
Initial Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/22		United States		4,071,438		4,079,072
Charter Communications Operating LLC, Term A-2 Loan, 3.81%, (1-month USD LIBOR + 1.50%), 3/31/23		United States		1,192,765		1,194,442
CSC Holdings LLC, March 2017 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 7/17/25		United States		2,215,369		2,207,035
Lions Gate Capital Holdings LLC, Term A Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/22/23		Canada		148,475		148,660
Mediacom Illinois LLC, Tranche N Term Loan, 3.97%, (1-week USD LIBOR + 1.75%), 2/15/24		United States		4,508,902		4,510,309
						12,759,207
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Bausch Health Cos. Inc., Initial Term Loans, 5.274%, (1-month USD LIBOR + 3.00%), 6/02/25		United States		536,398		537,627
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.563%, (1-month USD LIBOR + 4.25%), 4/29/24		United States		3,411,647		3,427,255
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.467%, (1-week USD LIBOR + 2.25%), 1/31/25		United States		1,435,073		1,438,032
Syneos Health Inc., Initial Term B Loans, 4.302%, (1-month USD LIBOR + 2.00%), 8/01/24		United States		3,771,660		3,767,474
						9,170,388
Retailing 0.3%
Ascena Retail Group Inc., Tranche B Term Loan, 6.813%, (1-month USD LIBOR + 4.50%), 8/21/22		United States		2,802,088		2,725,731
General Nutrition Centers Inc.,
Tranche B-2 Term Loans, 11.56%, (1-month USD LIBOR + 9.25%), 3/04/21		United States		1,292,222		1,264,924
Tranche B-2 Term Loans, 13.50%, (Prime + 7.75%), 3/04/21		United States		225,820		221,049
Harbor Freight Tools USA Inc., Refinancing Loans, 4.802%, (1-month USD LIBOR + 2.50%), 8/19/23		United States		3,492,403		3,444,110
Jo-Ann Stores Inc., Initial Loans, 7.477%, (3-month USD LIBOR + 5.00%), 10/23/23		United States		2,010,470		2,013,402
						9,669,216
Semiconductors & Semiconductor Equipment 0.1%
MKS Instruments Inc., Tranche B-4 Term Loan, 4.052%, (1-month USD LIBOR + 1.75%), 4/29/23		United States		112,434		112,821
ON Semiconductor Corp., 2018 New Replacement Term B-3 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/31/23		United States		3,234,379		3,233,370
						3,346,191

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*				Value
g,i Senior Floating Rate Interests (continued)
Software & Services 0.1%
Rackspace Hosting Inc., Term B Loans, 5.348%, (3-month USD LIBOR + 3.00%), 11/03/23		United States		1,703,798			$	1,657,302
Wex Inc., Term B-2 Loan, 4.552%, (1-month USD LIBOR + 2.25%), 7/01/23		United States		384,146				385,277
								2,042,579
Technology Hardware & Equipment 0.0%†
CommScope Inc., Tranche 5 Term Loans, 4.302%, (1-month USD LIBOR + 2.00%), 12/29/22		United States		1,174,731				1,179,136
Telecommunication Services 0.0%†
Global Tel*Link Corp., Term Loan, 6.386%, (3-month USD LIBOR + 4.00%), 5/23/20		United States		258,582				259,713
Transportation 0.2%
Air Canada, Term Loan, 4.295%, (1-month USD LIBOR + 2.00%), 10/06/23		Canada		46,329				46,484
American Airlines Inc., 2021 Replacement Term Loans, 4.277%, (3-month USD LIBOR + 2.00%), 10/10/21		United States		1,011,678				1,011,521
International Seaways Operating Corp., Initial Term Loans, 8.26%, (1-month USD LIBOR + 5.50%), 6/22/22		United States		690,640				694,956
Navios Maritime Midstream Partners LP, Initial Term Loan, 6.84%, (3-month USD LIBOR + 4.50%), 6/18/20		Marshall Islands		1,197,245				1,155,341
Navios Maritime Partners LP, Initial Term Loan, 7.34%, (3-month USD LIBOR + 5.00%), 9/14/20		United States		2,081,253				2,084,722
								4,993,024
Utilities 0.1%
EFS Cogen Holdings I LLC (Linden), Term B Advance, 5.64%,
(3-month USD LIBOR + 3.25%), 6/28/23		United States		145,511				145,499
NRG Energy Inc., Term Loan B, 4.136%, (3-month USD LIBOR +
1.75%), 6/30/23		United States		2,111,499				2,105,428
								2,250,927
Total Senior Floating Rate Interests (Cost $105,495,248)								105,659,782
l Marketplace Loans (Cost $5,245,826) 0.2%
Diversified Financials 0.2%
b Lending Club, 10.08% - 27.27%, 9/19/21 - 11/13/23		United States		5,245,826				5,225,292
Foreign Government and Agency Securities 1.2%
e The Export-Import Bank of China, senior note, 144A, 2.50%, 7/31/19		China		8,000,000				7,954,840
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20		South Korea		11,200,000				11,074,896
Government of Mexico, senior note, M 10, 8.50%, 12/13/18		Mexico		1,060,000	m	MXN		5,219,668
e Harvest Operations Corp., senior note, 144A, 4.20%, 6/01/23		South Korea		1,900,000				1,921,442
The Korea Development Bank, senior note, 3.375%, 3/12/23		South Korea		6,500,000				6,401,493
Nota Do Tesouro Nacional, 10.00%, 1/01/21		Brazil		2,350	n	BRL		652,908
Total Foreign Government and Agency Securities (Cost $34,069,291)								33,225,247

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal   Amount*		Value
U.S. Government and Agency Securities 13.8%
U.S. Treasury Note,
2.125%, 1/31/21		United States		38,000,000	$	37,369,883
2.25%, 7/31/21		United States		39,000,000		38,315,977
2.00%, 8/31/21		United States		45,000,000		43,879,395
2.125%, 9/30/21		United States		55,000,000		53,772,168
2.00%, 10/31/21		United States		30,000,000		29,202,539
1.75%, 3/31/22		United States		54,000,000		51,916,992
1.875%, 3/31/22		United States		50,000,000		48,268,554
o Index Linked, 1.875%, 7/15/19		United States		9,730,533		9,804,716
o Index Linked, 1.375%, 1/15/20		United States		25,488,611		25,551,503
o Index Linked, 0.125%, 4/15/21		United States		19,149,421		18,664,514
o Index Linked, 0.125%, 1/15/22		United States		40,104,729		38,926,322
Total U.S. Government and Agency Securities (Cost $403,526,100)						395,672,563
Asset-Backed Securities and Commercial Mortgage-Backed Securities 40.3%
Automobiles & Components 0.0%†
p Countrywide Asset-Backed Certificates, 2002-3, 1A1, FRN, 3.021%, (1-month USD LIBOR + 0.74%), 5/25/32		United States		1,404		1,364
Banks 0.3%
q CD Commercial Mortgage Trust, 2005-CD1, E, FRN, 5.254%, 7/15/44		United States		427,112		426,517
Citigroup Commercial Mortgage Trust, 2006-C5, AJ, 5.482%, 10/15/49		United States		388,364		375,866
q Commercial Mortgage Trust,
2006-GG7, AJ, FRN, 5.667%, 7/10/38		United States		3,818,000		3,518,681
p CWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 3.031%, (1-month USD LIBOR + 0.75%), 3/25/34		United States		192,152		193,540
p FNMA Connecticut Avenue Securities, 2016-C03, 2M1, FRN, 4.481%, (1-month USD LIBOR + 2.20%), 10/25/28		United States		230,904		231,233
q GE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49		United States		858,348		858,251
q 2006-GG7, AM, FRN, 5.667%, 7/10/38		United States		181,770		181,951
p Impac Secured Assets Corp., 2004-4, M1, FRN, 3.046%, (1-month USD LIBOR + 0.765%), 2/25/35		United States		482,091		483,549
p Merrill Lynch Mortgage Investors Trust, 2003-A, 1A, FRN, 3.021%, (1-month USD LIBOR + 0.74%), 3/25/28		United States		337,348		325,984
p Morgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 3.016%, (1-month USD LIBOR + 0.735%), 1/25/35		United States		90,698		90,856
q Wells Fargo Mortgage Backed Securities Trust,
2005-AR, 1A1, FRN, 3.847%, 2/25/35		United States		970,747		997,846
2005-AR9, 2A2, FRN, 4.675%, 10/25/33		United States		127,651		127,999
						7,812,273
Diversified Financials 39.5%
e,p Alinea CLO Ltd., 2018-1A, B, 144A, FRN, 3.957%, (3-month USD LIBOR + 1.65%), 7/20/31		United States		3,000,000		2,998,530
American Express Credit Account Master Trust,
2017-1, B, 2.10%, 9/15/22		United States		13,480,000		13,303,787
2017-6, A, 2.04%, 5/15/23		United States		16,300,000		15,952,324
2018-1, A, 2.67%, 10/17/22		United States		12,000,000		11,929,927

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
p American Home Mortgage Investment Trust,
2004-3, 4A, FRN, 4.034%, (6-month USD LIBOR + 1.50%), 10/25/34		United States		1,895,701	$	1,881,257
2005-1, 6A, FRN, 4.592%, (6-month USD LIBOR + 2.00%), 6/25/45		United States		972,820		1,001,772
p Ameriquest Mortgage Securities Inc. Asset-Backed Pass-Through Certificates, 2004-R4, M1, FRN, 3.106%, (1-month USD LIBOR + 0.825%), 6/25/34		United States		550,884		554,554
e,p AMMC CLO XI Ltd.,
2012-11A, BR2, 144A, FRN, 4.12%, (3-month USD LIBOR + 1.60%), 4/30/31		United States		1,700,000		1,673,106
2012-11A, CR2, 144A, FRN, 4.42%, (3-month USD LIBOR + 1.90%), 4/30/31		United States		450,000		449,438
2012-11A, DR2, 144A, FRN, 5.37%, (3-month USD LIBOR + 2.85%), 4/30/31		United States		400,000		393,044
e,p Antares CLO Ltd., 2018-1A, B, 144A, FRN, 4.119%, (3-month USD LIBOR + 1.65%), 4/20/31		United States		5,400,000		5,402,970
e,p ARES CLO Ltd., 2018-48A, B, 144A, FRN, 3.919%, (3-month USD LIBOR + 1.58%), 7/20/30		United States		1,000,000		996,480
p  Argent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 2.641%, (1-month USD LIBOR + 0.36%), 10/25/35		United States		426,449		428,198
e,p Atrium IX, 9A, AR, 144A, FRN, 3.551%, (3-month USD LIBOR + 1.24%), 5/28/30		United States		2,000,000		2,003,380
e,p Atrium XI, 2011A, CR, 144A, FRN, 4.627%, (3-month USD LIBOR + 2.15%), 10/23/25		United States		6,750,000		6,767,145
e,p Atrium XIII,
2013A, B, 144A, FRN, 3.977%, (3-month USD LIBOR + 1.50%), 11/21/30		United States		1,000,000		998,300
2013A, C, 144A, FRN, 4.277%, (3-month USD LIBOR + 1.80%), 11/21/30		United States		1,000,000		992,420
e,q Atrium XIV LLC, 14A, B, 144A, FRN, 4.01%, 8/23/30		United States		2,400,000		2,405,160
e,p Bain Capital Credit CLO, 2018-1A, A1, 144A, FRN, 3.437%, (3-month USD LIBOR + 0.96%), 4/23/31		United States		2,000,000		1,982,740
e BAMLL Commercial Mortgage Securities Trust, 2012-PARK, A, 144A, 2.959%, 12/10/30		United States		3,200,000		3,154,749
q,r Bank, 2018-BN13, XA, IO, FRN, 0.522%, 8/15/61		United States		108,608,987		3,893,947
e,q BBC Middle Market CLO LLC, 2018-1A, A2, 144A, FRN, 4.369%, 10/20/30		United States		2,100,000		2,099,454
p Bear Stearns ALT-A Trust, 2004-13, A2, FRN, 3.161%, (1-month USD LIBOR + 0.88%), 11/25/34		United States		22,984		22,975
e,p Bellemeade Re Ltd., 2018-1A, M1B, 144A, FRN, 3.881%, (1-month USD LIBOR + 1.60%), 4/25/28		Bermuda		5,870,000		5,903,711
e,p BetonyCLO 2Ltd.,
2018-1A, A2, 144A, FRN, 4.12%, (3-month USD LIBOR + 1.60%), 4/30/31		United States		3,500,000		3,496,640
2018-1A, C, 144A, FRN, 5.42%, (3-month USD LIBOR + 2.90%), 4/30/31		United States		300,000		299,700

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e,q BlueMountain CLO Ltd.,
2014-2A, A2R2, 144A, FRN, 3.869%, 10/20/30		United States		974,225	$	974,834
2014-2A, CR2, 144A, FRN, 4.669%, 10/20/30		United States		1,000,000		1,000,000
2018-3A, B, 144A, FRN, 4.206%, 10/25/30		United States		4,000,000		3,999,280
2018-3A, C, 144A, FRN, 4.636%, 10/25/30		United States		1,785,715		1,785,394
e,p BlueMountain Fuji U.S. CLO I Ltd., 2017-1A, C, 144A, FRN, 4.819%, (3-month USD LIBOR + 2.35%), 7/20/29		United States		1,361,000		1,368,935
e,p BlueMountain Fuji U.S. CLO II Ltd.,
2017-2A, A1A, 144A, FRN, 3.548%, (3-month USD LIBOR + 1.20%), 10/20/30		United States		3,500,000		3,517,430
2017-2A, B, 144A, FRN, 4.498%, (3-month USD LIBOR + 2.15%), 10/20/30		United States		1,000,000		1,003,750
e,p BlueMountain Fuji U.S. CLO III Ltd., 2017-3A, C, 144A, FRN, 4.039%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		500,000		494,275
e,p Burnham Park CLO Ltd., 2016-1A, A, 144A, FRN, 3.899%, (3-month USD LIBOR + 1.43%), 10/20/29		United States		2,240,000		2,253,597
e,q BX Commercial Mortgage Trust, 2018-IND, A, 144A, FRN, 3.03%, 11/15/35		United States		7,090,000		7,158,171
Capital One Multi-Asset Execution Trust,
p 2004-B3, B3, FRN, 3.01%, (1-month USD LIBOR + 0.73%), 1/18/22		United States		2,220,000		2,224,464
2017-A4, A4, 1.99%, 7/17/23		United States		14,230,000		13,926,769
e,p Carlyle Global Market Strategies CLO Ltd.,
2012-4A, AR, 144A, FRN, 3.919%, (3-month USD LIBOR + 1.45%), 1/20/29		United States		2,800,000		2,805,740
2014-1A, A2R2, 144A, FRN, 3.579%, (3-month USD LIBOR + 1.13%), 4/17/31		United States		1,200,000		1,200,000
2014-4RA, A2, 144A, FRN, 4.036%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		12,000,000		12,015,360
e,q Carlyle GMS Finance MM CLO LLC, 2015-1A, A2R, 144A, FRN, 4.636%, 10/15/31		United States		6,500,000		6,511,375
e,p Carlyle U.S. CLO Ltd.,
2017-1A, A1A, 144A, FRN, 3.769%, (3-month USD LIBOR + 1.30%), 4/20/31		United States		1,000,000		1,000,670
2017-2A, B, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/31		United States		2,110,000		2,116,604
2017-3A, B, 144A, FRN, 4.819%, (3-month USD LIBOR + 2.35%), 7/20/29		United States		1,250,000		1,253,163
2017-5A, B, 144A, FRN, 4.269%, (3-month USD LIBOR + 1.80%), 1/20/30		United States		2,200,000		2,162,842
e,p Catamaran CLO Ltd., 2014-2A, BR, 144A, FRN, 5.395%, (3-month USD LIBOR + 2.95%), 10/18/26		United States		3,011,300		3,021,388
e,p Cent CLO LP,
2014-22A, A1R, 144A, FRN, 3.753%, (3-month USD LIBOR + 1.41%), 11/07/26		United States		2,800,000		2,802,632
2014-22A, BR, 144A, FRN, 5.293%, (3-month USD LIBOR + 2.95%), 11/07/26		United States		4,050,000		4,058,141

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e Centerline REIT Inc., 2004-RR3, B, 144A, 5.04%, 9/21/45		United States		2,185,390	$	2,152,588
p Chase Issuance Trust, 2014-A5, A5, FRN, 2.65%, (1-month USD LIBOR + 0.37%), 4/15/21		United States		7,310,000		7,319,626
e,q CIM Trust, 2018-INV1, A4, 144A, FRN, 4.00%, 8/25/48		United States		9,131,668		9,077,456
Citibank Credit Card Issuance Trust,
2017-A3, A3, 1.92%, 4/07/22		United States		11,000,000		10,816,991
2018-A1, A1, 2.49%, 1/20/23		United States		13,700,000		13,497,718
e,q Colombia Cent CLO 27 Ltd., 2018-27A, A2A, 144A, FRN, 4.899%, 10/25/28		United States		1,538,462		1,539,231
e,q COMM Mortgage Trust, 2014-277P, A, 144A, FRN, 3.611%, 8/10/49		United States		2,980,000		2,972,078
q Conseco Finance Securitizations Corp., 2002-2, M1, FRN, 7.424%, 3/01/33.		United States		723,394		791,316
q Conseco Financial Corp., 1998-6, A8, 6.66%, 6/01/30		United States		4,191,088		4,394,301
e,q Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I,
2018-14, PT, 144A, FRN, 9.57%, 9/16/41		United States		4,942,998		4,929,947
2018-8, 144A, FRN, 8.93%, 6/17/41		United States		4,104,361		4,104,478
e,p Cook Park CLO Ltd., 2018-1A, A2, 144A, FRN, 3.569%, (3-month USD LIBOR + 1.12%), 4/17/30		United States		1,000,000		996,480
e Core Industrial Trust, 2015-CALW, A, 144A, 3.04%, 2/10/34		United States		12,678,992		12,547,886
q Countrywide Home Loans, 2004-11, 2A1, FRN, 3.605%, 7/25/34		United States		1,460,623		1,462,281
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19		United States		215,472		223,537
e,q CSMC Trust, 2014-IVR3, A1, 144A, FRN, 3.50%, 7/25/44		United States		2,043,189		1,990,293
Discover Card Execution Note Trust,
p 2014-A1, A1, FRN, 2.71%, (1-month USD LIBOR + 0.43%), 7/15/21		United States		7,690,000		7,695,771
2018-A4, A4, 3.11%, 1/16/24		United States		8,230,000		8,214,645
e,p Dryden 33 Senior Loan Fund, 2014-33A, AR, 144A, FRN, 3.866%, (3-month USD LIBOR + 1.43%), 10/15/28		United States		12,415,000		12,433,498
e,p Dryden 41 Senior Loan Fund, 2015-41A, AR, 144A, FRN, 3.406%, (3-month USD LIBOR + 0.97%), 4/15/31		United States		1,875,000		1,863,638
e,q Dryden 45 Senior Loan Fund, 2016-45A, CR, 144A, FRN, 4.636%, 10/15/30		United States		625,000		625,025
e,p Dryden 49 Senior Loan Fund, 2017-49A, C, 144A, FRN, 4.799%, (3-month USD LIBOR + 2.35%), 7/18/30		United States		870,000		871,836
e,p Dryden 50 Senior Loan Fund,
2017-50A, A1, 144A, FRN, 3.656%, (3-month USD LIBOR + 1.22%), 7/15/30		United States		2,640,000		2,644,171
2017-50A, C, 144A, FRN, 4.686%, (3-month USD LIBOR + 2.25%), 7/15/30		United States		2,150,000		2,154,064
e,p Dryden 53 CLO Ltd.,
2017-53A, B, 144A, FRN, 3.836%, (3-month USD LIBOR + 1.40%), 1/15/31		United States		700,000		692,930
2017-53A, C, 144A, FRN, 4.136%, (3-month USD LIBOR + 1.70%), 1/15/31		United States		1,000,000		987,100
e,p Dryden 55 CLO Ltd.,
2018-55A, A1, 144A, FRN, 3.456%, (3-month USD LIBOR + 1.02%), 4/15/31		United States		3,000,000		2,994,720
2018-55A, D, 144A, FRN, 5.286%, (3-month USD LIBOR + 2.85%), 4/15/31		United States		300,000		299,883

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e,p Dryden 64 CLO Ltd.,
2018-64A, A, 144A, FRN, 3.415%, (3-month USD LIBOR + 0.97%), 4/18/31		United States		1,500,000	$	1,492,635
2018-64A, D, 144A, FRN, 5.095%, (3-month USD LIBOR + 2.65%), 4/18/31		United States		500,000		490,605
e,p Dryden CLO Ltd.,
2018-55A, C, 144A, FRN, 4.336%, (3-month USD LIBOR + 1.90%), 4/15/31		United States		600,000		597,882
2018-58A, A2, 144A, FRN, 3.571%, (3-month USD LIBOR + 1.25%), 7/17/31		United States		1,600,000		1,599,488
2018-58A, B, 144A, FRN, 3.821%, (3-month USD LIBOR + 1.50%), 7/17/31		United States		11,000,000		10,996,040
2018-58A, D, 144A, FRN, 5.021%, (3-month USD LIBOR + 2.70%), 7/17/31		United States		1,000,000		999,610
e,q Eaton Vance CLO Ltd., 2014-1RA, C, 144A, FRN, 4.257%, 7/15/30		United States		789,030		785,629
e,p Ellington CLO III Ltd., 2018-3A, A1, 144A, FRN, 4.119%, (3-month USD LIBOR + 1.65%), 7/20/30		United States		3,400,000		3,398,062
FHLMC Structured Agency Credit Risk Debt Notes,
p 2014-DN1, M2, FRN, 4.481%, (1-month USD LIBOR + 2.20%), 2/25/24		United States		1,232,831		1,265,171
p 2014-DN2, M3, FRN, 5.881%, (1-month USD LIBOR + 3.60%), 4/25/24		United States		14,350,000		15,831,996
p 2014-DN3, M3, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 8/25/24		United States		2,254,665		2,451,170
p 2014-DN4, M3, FRN, 6.831%, (1-month USD LIBOR + 4.55%), 10/25/24		United States		8,829,098		9,763,616
p 2014-HQ1, M2, FRN, 4.781%, (1-month USD LIBOR + 2.50%), 8/25/24		United States		455,345		456,710
p 2014-HQ1, M3, FRN, 6.381%, (1-month USD LIBOR + 4.10%), 8/25/24		United States		5,200,000		5,672,571
p 2014-HQ2, M3, FRN, 6.031%, (1-month USD LIBOR + 3.75%), 9/25/24		United States		12,060,000		13,825,208
p 2014-HQ3, M3, FRN, 7.031%, (1-month USD LIBOR + 4.75%), 10/25/24		United States		3,297,006		3,641,227
p 2015-DN1, M3, FRN, 6.431%, (1-month USD LIBOR + 4.15%), 1/25/25		United States		16,866,895		18,072,227
p 2015-DNA1, M2, FRN, 4.131%, (1-month USD LIBOR + 1.85%), 10/25/27		United States		8,987,572		9,132,083
p 2015-DNA1, M3, FRN, 5.581%, (1-month USD LIBOR + 3.30%), 10/25/27		United States		4,500,000		5,038,624
p 2015-DNA2, M2, FRN, 4.881%, (1-month USD LIBOR + 2.60%), 12/25/27		United States		5,315,883		5,419,223
p 2015-DNA2, M3, FRN, 6.181%, (1-month USD LIBOR + 3.90%), 12/25/27		United States		18,171,000		20,048,068
p 2015-DNA3, M2, FRN, 5.131%, (1-month USD LIBOR + 2.85%), 4/25/28		United States		5,195,209		5,363,064
p 2015-DNA3, M3, FRN, 6.981%, (1-month USD LIBOR + 4.70%), 4/25/28		United States		6,970,000		8,248,508
p 2015-HQ1, M2, FRN, 4.487%, (1-month USD LIBOR + 2.20%), 3/25/25		United States		774,861		776,928

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
FHLMC Structured Agency Credit Risk Debt Notes, (continued)
p 2015-HQ1, M3, FRN, 6.087%, (1-month USD LIBOR + 3.80%), 3/25/25		United States		13,295,000	$	14,094,095
p 2015-HQ2, M3, FRN, 5.537%, (1-month USD LIBOR + 3.25%), 5/25/25		United States		6,860,000		7,632,958
p 2015-HQA1, M2, FRN, 4.931%, (1-month USD LIBOR + 2.65%), 3/25/28		United States		5,183,080		5,267,891
p 2015-HQA1, M3, FRN, 6.981%, (1-month USD LIBOR + 4.70%), 3/25/28		United States		13,500,000		15,373,550
p 2015-HQA2, M2, FRN, 5.081%, (1-month USD LIBOR + 2.80%), 5/25/28		United States		6,511,748		6,686,716
p 2016-DNA1, M2, FRN, 5.187%, (1-month USD LIBOR + 2.90%), 7/25/28		United States		261,670		267,504
p 2016-DNA1, M3, FRN, 7.837%, (1-month USD LIBOR + 5.55%), 7/25/28		United States		13,460,000		16,198,165
p 2016-DNA2, M2, FRN, 4.481%, (1-month USD LIBOR + 2.20%), 10/25/28		United States		1,138,578		1,149,535
p 2016-DNA2, M3, FRN, 6.931%, (1-month USD LIBOR + 4.65%), 10/25/28		United States		10,047,000		11,532,469
p 2016-HQA1, M2, FRN, 5.031%, (1-month USD LIBOR + 2.75%), 9/25/28		United States		790,649		806,842
p 2016-HQA2, M2, FRN, 4.531%, (1-month USD LIBOR + 2.25%), 11/25/28		United States		880,705		898,662
p 2016-HQA2, M3, FRN, 7.431%, (1-month USD LIBOR + 5.15%), 11/25/28		United States		9,640,000		11,322,296
p 2016-HQA3, M2, FRN, 3.631%, (1-month USD LIBOR + 1.35%), 3/25/29		United States		250,000		253,721
p 2018-HQA1, M1, FRN, 2.981%, (1-month USD LIBOR + 0.70%), 9/25/30		United States		7,730,800		7,746,865
q HQA1, M2, FRN, 5.831%, 8/25/29		United States		15,764,156		17,218,923
e,p Flagship CLO VIII Ltd.,
2014-8A, ARR, 144A, FRN, 3.286%, (3-month USD LIBOR + 0.85%), 1/16/26		United States		6,385,000		6,376,572
2014-8A, DR, 144A, FRN, 5.486%, (3-month USD LIBOR + 3.05%), 1/16/26		United States		2,000,000		1,998,180
e,q Flagstar Mortgage Trust, 2018-6RR, 1A3, 144A, FRN, 4.00%, 10/25/48		United States		10,000,000		10,019,930
FNMA Connecticut Avenue Securities,
p 2013-C01, M1, FRN, 4.281%, (1-month USD LIBOR + 2.00%), 10/25/23		United States		118,913		119,071
p 2013-C01, M2, FRN, 7.531%, (1-month USD LIBOR + 5.25%), 10/25/23		United States		15,760,000		18,059,135
p 2014-C01, M1, FRN, 3.881%, (1-month USD LIBOR + 1.60%), 1/25/24		United States		4,073,298		4,091,891
p 2014-C02, 1M2, FRN, 4.881%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		13,645,000		14,513,860
p 2014-C02, 2M2, FRN, 4.881%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		1,448,525		1,533,640
p 2014-C03, 1M2, FRN, 5.281%, (1-month USD LIBOR + 3.00%), 7/25/24		United States		15,583,330		16,611,771

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
FNMA Connecticut Avenue Securities, (continued)
p 2014-C03, 2M2, FRN, 5.181%, (1-month USD LIBOR + 2.90%), 7/25/24		United States		13,321,531	$	14,245,885
p 2014-C04, 1M1, FRN, 7.181%, (1-month USD LIBOR + 4.90%), 11/25/24		United States		12,698,274		14,519,472
p 2014-C04, 2M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 11/25/24		United States		6,136,294		6,921,255
p 2015-C01, 1M2, FRN, 6.581%, (1-month USD LIBOR + 4.30%), 2/25/25		United States		13,279,543		14,581,759
p 2015-C01, 2M2, FRN, 6.831%, (1-month USD LIBOR + 4.55%), 2/25/25		United States		7,258,880		7,832,476
p 2015-C02, 1M2, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		13,839,974		15,181,551
p 2015-C02, 2M2, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		8,867,920		9,567,491
p 2015-C03, 1M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		12,635,968		14,224,749
p 2015-C03, 2M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		8,302,918		9,230,442
q 2016-C01, 2M2, FRN, FRN,FRN, 9.231%, 8/25/28		United States		10,159,286		11,947,132
p 2017-C01, 1M2, FRN, 5.831%, (1-month USD LIBOR + 3.55%), 7/25/29		United States		6,805,000		7,377,525
p 2018-C02, 2M1, FRN, 2.931%, (1-month USD LIBOR + 0.65%), 8/25/30		United States		7,800,678		7,810,672
e,s,t Galaxy CLO Ltd., 2018-26A, D, 144A, FRN, 11/22/31		United States		293,478		293,478
e,q,t Galaxy XXV CLO Ltd., 2018-25A, B, 144A, FRN, 10/25/31		United States		2,000,000		2,000,220
e,s,t Galaxy XXVI CLO Ltd.,
2018-26A, A, 144A, FRN, 11/22/31		United States		3,429,602		3,429,602
2018-26A, B, 144A, FRN, 11/22/31		United States		2,100,000		2,100,000
e,p Galaxy XXVII CLO Ltd.,
2018-27A, A, 144A, FRN, 3.335%, (3-month USD LIBOR + 1.02%), 5/16/31		United States		1,500,000		1,493,280
2018-27A, C, 144A, FRN, 5.065%, (3-month USD LIBOR + 2.75%), 5/16/31		United States		250,000		249,138
q Greenpoint Manufactured Housing, 1999-5, M1A, FRN, 8.30%, 10/15/26		United States		549,176		586,788
q,r GS Mortgage Securities Corp. II, 2015-GC30, XA, IO, FRN, 0.863%, 5/10/50		United States		7,846,863		289,353
p GSAA Home Equity Trust,
2005-5, M3, FRN, 3.226%, (1-month USD LIBOR + 0.945%), 2/25/35		United States		3,325,381		3,351,584
2005-6, A3, FRN, 2.651%, (1-month USD LIBOR + 0.37%), 6/25/35		United States		144,147		144,409
p GSAMP Trust, 2005-HE3, M2, FRN, 3.286%, (1-month USD LIBOR + 1.005%), 6/25/35		United States		295,764		296,514
q GSR Mortgage Loan Trust, 2005-AR1, 1A1, FRN, 4.517%, 1/25/35		United States		304,543		305,287
e,p Halcyon Loan Advisors Funding Ltd., 2018-1A, A2, 144A, FRN, 4.183%, (3-month USD LIBOR + 1.80%), 7/21/31		United States		5,000,000		4,984,400
e,p HayFin Kingsland IX Ltd., 2013-6A, BR, 144A, FRN, 4.309%, (3-month USD LIBOR + 1.80%), 4/28/31		United States		5,200,000		5,222,880

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e,q HPS Loan Management Ltd.,
2013A-18, A2, 144A, FRN, 3.886%, 10/15/30		United States		1,400,000	$	1,400,224
2013A-18, C, 144A, FRN, 4.586%, 10/15/30		United States		500,000		499,915
e Invitation Homes Trust,
p 2017-SFR2, A, 144A, FRN, 3.14%, (1-month USD LIBOR + 0.85%), 12/17/36		United States		14,055,582		14,091,963
p 2018-SFR3, A, 144A, FRN, 3.29%, (1-month USD LIBOR + 1.00%), 7/17/37		United States		11,464,804		11,472,307
q,s 2018-SFR4, A, 144A, FRN, 3.35%, 1/17/38		United States		9,400,000		9,400,000
q JP Morgan Chase Commercial Mortgage Securities Trust, 2005-LPD5, F, FRN, 5.706%, 12/15/44		United States		852,794		851,709
q JP Morgan Mortgage Trust, 2004-A1, 5A1, FRN, 3.756%, 2/25/34		United States		62,160		63,888
e,p LCM 26 Ltd.,
26A, B, 144A, FRN, 3.869%, (3-month USD LIBOR + 1.40%), 1/20/31		United States		4,500,000		4,446,945
26A, C, 144A, FRN, 4.269%, (3-month USD LIBOR + 1.80%), 1/20/31		United States		2,000,000		1,977,980
e,p LCM XXIII Ltd., 23A, A2, 144A, FRN, 4.319%, (3-month USD LIBOR + 1.85%), 10/20/29		United States		1,000,000		1,003,110
p Lehman XS Trust, 2005-4, 1A4, FRN, 2.841%, (1-month USD LIBOR + 0.56%), 10/25/35		United States		487,195		480,748
e,p Long Point Park CLO Ltd.,
2017-1A, A2, 144A, FRN, 3.824%, (3-month USD LIBOR + 1.375%), 1/17/30		United States		2,400,000		2,378,928
2017-1A, B, 144A, FRN, 4.149%, (3-month USD LIBOR + 1.70%), 1/17/30		United States		1,000,000		982,140
e,q Mach One ULC, 2004-1A, M, 144A, FRN, 5.45%, 5/28/40		United States		555,194		547,429
p Madison Avenue Manufactured Housing Contract Trust, 2002-A, B1, FRN, 5.531%, (1-month USD LIBOR + 3.25%), 3/25/32		United States		334,633		338,180
e,p Madison Park Funding Ltd., 2018-28A, B, 144A, FRN, 3.937%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		2,000,000		2,004,920
e,q Madison Park Funding XIV Ltd.,
2014-14A, BRR, 144A, FRN, 4.169%, 10/22/30		United States		1,000,000		999,720
2014-14A, CRR, 144A, FRN, 4.669%, 10/22/30		United States		375,000		374,888
e,p Madison Park Funding XXIII Ltd.,
2017-23A, B, 144A, FRN, 4.209%, (3-month USD LIBOR + 1.70%), 7/27/30		United States		4,000,000		3,999,120
2017-23A, C, 144A, FRN, 4.859%, (3-month USD LIBOR + 2.35%), 7/27/30		United States		1,300,000		1,304,875
e,s,t Madison Park Funding XXIX Ltd.,
2018-29A, A2, 144A, FRN, 10/18/30		United States		7,945,455		7,945,455
2018-29A, B, 144A, FRN, 10/18/30		United States		4,000,000		4,000,000
2018-29A, C, 144A, FRN, 10/18/30		United States		995,968		995,968
2018-29A, D, 144A, FRN, 10/18/30		United States		800,000		800,000
e,p Madison Park Funding XXVII Ltd., 2018-27A, A1B, 144A, FRN, 3.599%, (3-month USD LIBOR + 1.13%), 4/20/30		United States		3,061,000		3,060,633
e,p Madison Park Funding XXVIII Ltd., 2018-28A, D, 144A, FRN, 5.037%, (3-month USD LIBOR + 2.70%), 7/15/30		United States		500,000		490,040
e,q Magnetite Ltd., 2015-14RA, A1, 144A, FRN, 3.559%, 10/18/31		United States		11,000,000		10,999,670
e,p Magnetite XVIII Ltd., 2016-18A, B, 144A, FRN, 4.064%, (3-month USD LIBOR + 1.75%), 11/15/28		United States		3,000,000		3,003,720

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
p Manufactured Housing Contract Trust Pass Through Certificates, 2001-1, IIM2, FRN, 3.73%, (1-month USD LIBOR + 1.45%), 4/20/32		United States		4,573,249	$	4,532,675
MASTR Alternative Loan Trust,
2003-1, 3A1, 5.00%, 6/25/23		United States		13,493		13,962
2003-6, 2A1, 5.00%, 8/25/20		United States		24,079		24,083
q 2004-11, 2A1, FRN, 5.475%, 11/25/19		United States		158,556		160,769
2004-4, 5A1, 5.50%, 4/25/19		United States		42,998		43,112
p Merrill Lynch Mortgage Investors Trust, 2005-A10, A, FRN, 2.491%, (1-month USD LIBOR + 0.21%), 2/25/36		United States		2,369,635		2,292,488
p Merrill Lynch Mortgage Investors Trust Inc., 2003-E, A1, FRN, 2.901%, (1-month USD LIBOR + 0.62%), 10/25/28		United States		610,979		608,309
q Merrill Lynch Mortgage Trust, 2005-CKI1, D, FRN, 5.376%, 11/12/37		United States		2,920		2,915
e,q Mill City Mortgage Loan Trust,
2017-3, A1, 144A, FRN, 2.75%, 1/25/61		United States		8,460,774		8,278,181
2018-1, A1, 144A, FRN, 3.25%, 5/25/62		United States		15,228,297		15,092,739
e,q Morgan Stanley Capital I Trust, 2011-C1, A4, 144A, FRN, 5.033%, 9/15/47		United States		3,869,870		3,971,267
e,q Neuberger Berman CLO Ltd.,
2016-22A, A2R, 144A, FRN, 3.849%, 10/17/30		United States		1,400,000		1,400,000
2016-22A, BR, 144A, FRN, 4.099%, 10/17/30		United States		900,000		900,000
e,p Neuberger Berman Loan Advisers CLO Ltd.,
2017-26A, B, 144A, FRN, 3.945%, (3-month USD LIBOR + 1.50%), 10/18/30		United States		1,078,945		1,073,076
e,p Neuberger Berman CLO XVI-S Ltd.,
2017-16SA, B, 144A, FRN, 3.686%, (3-month USD LIBOR + 1.25%), 1/15/28		United States		400,000		395,644
2017-16SA, C, 144A, FRN, 4.036%, (3-month USD LIBOR + 1.60%), 1/15/28		United States		400,000		396,380
2018-27A, C, 144A, FRN, 4.136%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		500,000		498,305
p New York Mortgage Trust, 2005-3, M1, FRN, 2.956%, (1-month USD LIBOR + 0.675%), 2/25/36		United States		247,550		227,054
e,p NZCG Funding Ltd., 2015-1A, A2R, 144A, FRN, 3.861%, (3-month USD LIBOR + 1.55%), 2/26/31		United States		6,600,000		6,545,682
e OBP Depositor LLC Trust, 2010-OBP, A, 144A, 4.646%, 7/15/45		United States		5,834,000		5,932,172
e,p OBX Trust, 2018-1, A2, 144A, FRN, 2.931%, (1-month USD LIBOR + 0.65%), 6/25/57		United States		4,569,052		4,568,528
e,p Octagon Investment Partners 18-R Ltd., 2018-18A, C, 144A, FRN, 5.136%, (3-month USD LIBOR + 2.70%), 4/16/31		United States		1,000,000		991,540
e,p Octagon Investment Partners 26 Ltd.,
2016-1A, A2R, 144A, FRN, 3.786%, (3-month USD LIBOR + 1.35%), 7/15/30		United States		1,600,000		1,601,184
2016-1A, BR, 144A, FRN, 4.036%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		2,000,000		2,001,200

78       Annual Report franklintempleton.com

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e,p Octagon Investment Partners 31 LLC, 2017-1A, C, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/30		United States		280,761	$	282,097
e,p Octagon Investment Partners 35 Ltd., 2018-1A, A1B, 144A, FRN, 3.569%, (3-month USD LIBOR + 1.10%), 1/20/31		United States		2,000,000		1,997,960
e,p Octagon Investment Partners 37 Ltd., 2018-2A, A2, 144A, FRN, 3.94%, (3-month USD LIBOR + 1.58%), 7/25/30		United States		1,000,000		999,870
e,p Octagon Investment Partners XVI Ltd., 2013-1A, BR, 144A, FRN, 3.936%, (3-month USD LIBOR + 1.60%), 7/17/30		United States		4,000,000		3,982,840
e,p Octagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 3.468%, (3-month USD LIBOR + 1.13%), 8/12/26		United States		3,500,000		3,504,620
e,p Octagon Investment Partners XXIII Ltd.,
2015-1A, CR, 144A, FRN, 4.286%, (3-month USD LIBOR + 1.85%), 7/15/27		United States		250,000		250,330
2015-1A, DR, 144A, FRN, 4.986%, (3-month USD LIBOR + 2.55%), 7/15/27		United States		300,000		298,491
e Progress Residential Trust,
2015-SFR2, A, 144A, 2.74%, 6/12/32		United States		863,029		849,459
2017-SFR1, A, 144A, 2.768%, 8/17/34		United States		408,687		393,743
2018-SFR2, A, 144A, 3.712%, 8/17/35		United States		2,967,000		2,937,327
p RAAC, 2004-SP1, AII, FRN, 2.981%, (1-month USD LIBOR + 0.70%), 3/25/34		United States		376,572		370,297
e,q Race Point X CLO Ltd., 2016-10A, B1R, 144A, FRN, 4.14%, 7/25/31		United States		700,000		701,400
e,p Radnor RE Ltd., 2018-1, M1, 144A, FRN, 3.681%, (1-month USD LIBOR + 1.40%), 3/25/28		United States		5,790,000		5,801,665
q Structured ARM Loan Trust, 2004-12, 3A1, FRN, 4.328%, 9/25/34		United States		1,914,954		1,914,687
p Structured Asset Mortgage Investments II Trust, 2004-AR6, A1A, FRN, 2.982%, (1-month USD LIBOR + 0.70%), 2/19/35		United States		1,479,905		1,448,794
e,p TCI-Cent CLO Income Note Issuer Ltd., 2017-1A, B, 144A, FRN, 4.84%, (3-month USD LIBOR + 2.35%), 7/25/30		United States		583,989		586,167
e,p TCI-Flatiron CLO Ltd., 2017-1A, C, 144A, FRN, 4.162%, (3-month USD LIBOR + 1.85%), 11/17/30		United States		500,000		495,915
Thornburg Mortgage Securities Trust,
p 2004-3, A, FRN, 3.021%, (1-month USD LIBOR + 0.74%), 9/25/44		United States		837,314		827,379
q 2005-1, A3, FRN, 3.518%, 4/25/45		United States		272,408		275,631
e Towd Point Mortgage Trust,
q 2015-2, 2A1, 144A, FRN, 3.75%, 11/25/57		United States		884,181		885,370
q 2015-3, A1B, 144A, FRN, 3.00%, 3/25/54		United States		1,410,886		1,399,683
q 2016-1, A1, 144A, FRN, 3.50%, 2/25/55		United States		6,079,953		6,062,952
q 2016-3, A1, 144A, FRN, 2.25%, 4/25/56		United States		10,923,524		10,685,036
q 2016-4, A1, 144A, FRN, 2.25%, 7/25/56		United States		15,341,484		14,938,362
q 2016-5, A1, 144A, FRN, 2.50%, 10/25/56		United States		4,935,529		4,816,434
q 2017-1, A1, 144A, FRN, 2.75%, 10/25/56		United States		14,059,198		13,773,466
q 2017-2, A1, 144A, FRN, 2.75%, 4/25/57		United States		14,573,357		14,274,346
q 2017-4, A1, 144A, FRN, 2.75%, 6/25/57		United States		14,863,251		14,471,711
p 2017-5, A1, 144A, FRN, 2.887%, (1-month USD LIBOR + 0.60%), 2/25/57		United States		3,922,757		3,928,194
q 2018-1, A1, 144A, FRN, 3.00%, 1/25/58		United States		3,072,253		3,011,681
q 2018-2, A1, 144A, FRN, 3.25%, 3/25/58		United States		8,107,018		8,001,129
q 2018-3, A1, 144A, FRN, 3.75%, 5/25/58		United States		13,035,685		13,005,208
q 2018-3, A1A, 144A, FRN, 3.50%, 3/25/54		United States		3,055,286		3,048,481
q 2018-4, A1, 144A, FRN, 3.00%, 6/25/58		United States		13,058,060		12,689,992

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
e Towd Point Mortgage Trust, (continued)
q 2018-5, A1A, 144A, FRN, 3.25%, 7/25/58		United States		4,548,256	$	4,495,717
e Voya CLO Ltd.,
p 2012-4A, A2R, 144A, FRN, 4.286%, (3-month USD LIBOR + 1.85%), 10/15/28		United States		7,660,000		7,669,881
p 2013-2A, CR, 144A, FRN, 5.24%, (3-month USD LIBOR + 2.75%), 4/25/31		United States		375,000		367,429
p 2014-1A, CR2, 144A, FRN, 5.245%, (3-month USD LIBOR + 2.80%), 4/18/31		United States		600,000		597,006
q 2016-3A, A1R, 144A, FRN, 3.661%, 10/18/31		United States		1,800,000		1,800,000
q 2016-3A, A2R, 144A, FRN, 3.871%, 10/18/31		United States		818,182		818,182
q 2016-3A, CR, 144A, FRN, 5.721%, 10/18/31		United States		1,698,113		1,698,113
p 2017-3A, B, 144A, FRN, 4.819%, (3-month USD LIBOR + 2.35%), 7/20/30		United States		507,690		509,345
p 2018-2A, A2, 144A, FRN, 3.624%, (3-month USD LIBOR + 1.25%), 7/15/31		United States		2,500,000		2,499,325
p 2018-2A, D, 144A, FRN, 5.124%, (3-month USD LIBOR + 2.75%), 7/15/31		United States		300,000		295,356
p WaMu Mortgage Pass-Through Certificates,
2005-AR19, A1A1, FRN, 2.551%, (1-month USD LIBOR + 0.27%), 12/25/45		United States		2,533,967		2,531,817
2005-AR8, 1A1A, FRN, 2.861%, (1-month USD LIBOR + 0.58%), 7/25/45		United States		978,148		976,860
e,p Webster Park CLO Ltd., 2015-1A, A2R, 144A, FRN, 4.069%, (3-month USD LIBOR + 1.60%), 7/20/30		United States		1,750,000		1,755,530
Wells Fargo Commercial Mortgage Trust, 2016-NXS6, A2, 2.399%, 11/15/49		United States		6,534,000		6,357,460
e,q Wells Fargo Mortgage Backed Securities, 2018-1, A3, 144A, FRN, 3.50%, 7/25/47		United States		6,200,000		6,104,513
q Wells Fargo Mortgage Backed Securities Trust,
2004-W, A9, FRN, 4.69%, 11/25/34.		United States		75,800		78,105
2005-AR10, 2A3, FRN, 4.315%, 6/25/35		United States		439,915		445,330
e,p West CLO Ltd.,
2014-1A, A2R, 144A, FRN, 3.795%, (3-month USD LIBOR + 1.35%), 7/18/26		United States		1,360,000		1,360,000
2014-1A, BR, 144A, FRN, 4.295%, (3-month USD LIBOR + 1.85%), 7/18/26		United States		2,410,000		2,414,290
						1,130,412,655
Real Estate 0.5%
e American Homes 4 Rent, 2015-SFR1, A, 144A, 3.467%, 4/17/52		United States		5,747,369		5,609,644
e,p Colony American Homes, 2015-1A, A, 144A, FRN, 3.487%, (1-month USD LIBOR + 1.20%), 7/17/32		United States		9,181,007		9,189,185
						14,798,829
Total Asset-Backed Securities and Commercial
Mortgage-Backed Securities (Cost $1,155,164,714)						1,153,025,121

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Mortgage-Backed Securities 0.8%
u Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.1%
FHLMC, 3.742% - 4.233%, (12-month USD LIBOR +/- MBS Margin), 10/01/36 - 6/01/37		United States		1,852,554	$	1,952,935
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 0.0%†
FHLMC Gold 15 Year, 5.00%, 10/01/23		United States		107,066		108,510
FHLMC Gold 15 Year, 6.00%, 6/01/23		United States		18,522		18,933
FHLMC Gold 30 Year, 5.00%, 1/01/39		United States		123,585		130,486
						257,929
u Federal National Mortgage Association (FNMA) Adjustable Rate 0.6%
FNMA, 3.225% - 3.293%, (1-month USD LIBOR +/- MBS Margin), 4/01/28 - 7/01/34		United States		281,610		289,832
FNMA, 3.372% - 3.50%, (Federal COF +/- MBS Margin), 1/01/29 -10/01/29		United States		13,542		13,887
FNMA, 3.146% - 4.354%, (1 Year CMT +/- MBS Margin), 1/01/31 -6/01/43		United States		148,578		150,049
FNMA, 2.873% - 4.461%, (US 3 Year CMT T-Note +/- MBS Margin), 3/01/21 - 6/01/34		United States		70,296		72,003
FNMA, 4.487%, (US 5 Year CMT T-Note +/- MBS Margin), 2/01/30		United States		66,471		68,897
FNMA, 4.75%, (6-month US T-Bill +/- MBS Margin), 8/01/32		United States		102,449		104,379
FNMA, 2.77% - 4.873%, (US 1 Year CMT T-Note +/- MBS Margin), 2/01/21 - 10/01/44		United States		2,921,861		3,013,557
FNMA, 3.09% - 4.984%, (12-month USD LIBOR +/- MBS Margin), 11/01/32 - 2/01/44		United States		12,404,817		12,990,700
FNMA, 3.425% - 5.644%, (6-month USD LIBOR +/- MBS Margin), 9/01/22 - 8/01/37		United States		1,364,274		1,398,715
FNMA, 2.10% - 5.75%, (11th District COF +/- MBS Margin), 5/01/19 -12/01/36		United States		131,527		134,735
						18,236,754
Federal National Mortgage Association (FNMA) Fixed Rate 0.1%
FNMA 15 Year, 3.50%, 10/01/25		United States		856,599		856,507
FNMA 15 Year, 4.00%, 12/01/25		United States		1,284,029		1,306,250
FNMA 15 Year, 4.50%, 5/01/23 - 6/01/25		United States		967,585		992,552
FNMA 30 Year, 5.00%, 3/01/38		United States		23,757		24,941
						3,180,250
u Government National Mortgage Association (GNMA) Adjustable Rate 0.0%†
GNMA, 3.625% - 3.75%, (US 1 Year CMT T-Note +/- MBS Margin), 4/20/26 - 9/20/26		United States		19,045		19,463
Total Mortgage-Backed Securities (Cost $23,795,320)						23,647,331
Municipal Bonds 0.8%
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		5,913,039
Pennsylvania State GO, Refunding, Second Series, 5.00%, 1/15/20		United States		6,500,000		6,717,815
San Jose RDA Successor Agency Tax Allocation,
Senior, Refunding, Series A-T, 2.48%, 8/01/21		United States		1,595,000		1,568,938
Senior, Refunding, Series A-T, 2.63%, 8/01/22		United States		5,320,000		5,213,813

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

	Country		Principal  Amount*		Value
Municipal Bonds (continued)
Texas State GO, Transportation Commission Highway Improvement, Series A, 5.00%, 4/01/21		United States		2,685,000	$	2,863,364
Total Municipal Bonds (Cost $22,475,215)						22,276,969
			Shares
Escrows and Litigation Trusts 0.0%
a,b NewPage Corp., Litigation Trust		United States		500,000		—
a,b T-Mobile USA Inc., Escrow Account		United States		1,800,000		—
Total Escrows and Litigation Trusts (Cost $—)						—
Total Investments before Short Term Investments (Cost $2,846,160,541)						2,815,399,980
Short Term Investments (Cost $58,057,813) 2.0%
Money Market Funds 2.0%
d,v Institutional Fiduciary Trust Money Market Portfolio, 1.83%		United States		58,057,813		58,057,813
Total Investments (Cost $2,904,218,354) 100.4%						2,873,457,793
Other Assets, less Liabilities (0.4)%						(11,478,271	)
Net Assets 100.0%					$	2,861,979,522

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STATEMENT OF INVESTMENTS

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.

^bFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.

^cSee Note 8 regarding restricted securities.

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

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At October 31, 2018, the aggregate value of these securities was $812,112,123, representing 28.4% of net assets.

^fSecurity 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 October 31, 2018, the aggregate value of these securities was $12,723,549, representing 0.4% of net assets.

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

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

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

^jSecurity purchased on a delayed delivery basis. See Note 1(d).

^kA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^lSee Note 1(j) regarding Marketplace Lending.

^mPrincipal amount is stated in 100 Mexican Peso Units.

ⁿPrincipal amount is stated in 1,000 Brazilian Real Units.

^oPrincipal amount of security is adjusted for inflation. See Note 1(l).

^pThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.

^qAdjustable rate security with an interest rate that is not based on a published reference index and spread. The rate is based on the structure of the agreement and current market conditions. The coupon rate shown represents the rate at period end.

^rInvestment in an interest-only security entitles holders to receive only the interest payment on the underlying instruments. The principal amount shown is the notional amount of the underlying instruments.

^sSecurity purchased on a when-issued basis. See Note 1(d).

^tThe coupon rate will be determined at time of issue.

^uAdjustable Rate Mortgage-Backed Security (ARM); the rate shown is the effective rate at period end. ARM rates are not based on a published reference rate and spread, but instead pass-through weighted average interest income inclusive of any caps or floors, if applicable, from the underlying mortgage loans in which the majority of mortgages pay interest based on the index shown at their designated reset dates plus a spread, less the applicable servicing and guaranty fee (MBS margin).

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

At October 31, 2018, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts

Description	Type	Number of Contracts	Notional  Amount*	Expiration Date	Value/ Unrealized Appreciation (Depreciation)
Interest Rate Contracts
Canadian 10 Yr. Bond	Long	49	$    4,919,918	12/18/18	$     (66,260)
CME Ultra Long Term U.S. Treasury Bond	Short	5	746,094	12/19/18	50,494
U.S. Treasury 2 Yr. Note	Long	1,980	417,099,375	12/31/18	(1,170,228)
U.S. Treasury 5 Yr. Note	Short	242	27,196,640	12/31/18	240,463
U.S. Treasury 10 Yr. Note	Short	244	28,898,750	12/19/18	459,579
Total Futures Contracts					$  (485,952)

*As of period end.

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

At October 31, 2018, 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
Brazilian Real		JPHQ		Buy		7,500,000	$	1,870,371		2/04/19	$	126,689	$	—
Indian Rupee		DBAB		Buy		135,900,000		1,817,088		2/04/19		—		(6,263	)
Indian Rupee		JPHQ		Buy		145,000,000		1,938,114		2/04/19		—		(6,034	)
Indonesian Rupiah		JPHQ		Buy		45,365,000,000		2,901,874		2/04/19		27,697		—
Mexican Peso		JPHQ		Buy		145,950,000		7,354,348		2/05/19		—		(286,071	)
Canadian Dollar		JPHQ		Sell		3,300,000		2,580,474		3/14/19		66,972		—
Euro		BZWS		Sell		194,860		231,079		3/14/19		7,685		—
Euro		CITI		Sell		391,262		464,279		3/14/19		15,724		—
Euro		DBAB		Sell		6,267,136		7,428,436		3/14/19		243,596		—
Euro		GSCO		Sell		420,000		497,750		3/14/19		16,249		—
Euro		JPHQ		Sell		6,459,354		7,663,507		3/14/19		258,302		—
Polish Zloty		JPHQ		Buy		7,680,000		2,095,041		3/14/19		—		(85,664	)
Swedish Krona		JPHQ		Buy		32,420,000		3,684,777		3/14/19		—		(98,505	)
Swedish Krona		JPHQ		Sell		14,700,000		1,694,489		3/14/19		68,388		—
Australian Dollar		JPHQ		Sell		3,640,000		2,580,014		4/11/19		—		(2,724	)
Brazilian Real		JPHQ		Buy		7,800,000		1,848,341		4/11/19		216,987		—
Brazilian Real		JPHQ		Sell		7,420,000		1,941,392		4/11/19		—		(23,317	)
Chinese Yuan Renminbi		JPHQ		Sell		18,000,000		2,569,777		4/11/19		7,616		—
Philippine Peso		JPHQ		Sell		62,900,000		1,142,909		4/11/19		—		(21,776	)
South Korean Won		JPHQ		Sell		2,920,000,000		2,581,215		4/11/19		6,577		—
Total Forward Exchange Contracts											$	1,062,482	$	(530,354	)
Net unrealized appreciation (depreciation)											$	532,128

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

At October 31, 2018, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts

Description	Periodic Payment Rate Received (Paid)			Payment Frequency		Counter- party	Maturity Date		Notional  Amounta		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Ratingb
Centrally Cleared Swap Contracts
Contracts to Buy Protectionc
Single Name
Navient Corp		(5.00	)%		Quarterly			3/20/19	$	2,350,000	$	(55,841	)	$	(37,173	)	$	(18,668	)
Contracts to Sell Protectionc,d
Traded Index
CDX.EM.30		1.00	%		Quarterly			12/20/23		12,300,000		(570,893	)		(541,780	)		(29,113	)		Investment
																					Grade
CDX.NA.HY.30		5.00	%		Quarterly			6/20/23		46,140,000		3,031,041			2,496,641			534,400			Non-
																					Investment
																					Grade

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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

Credit Default Swap Contracts (continued)

Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Counter- party		Maturity Date		Notional   Amounta		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Ratingb
Centrally Cleared Swap Contracts (continued)
Contracts to Sell Protectionc,d (continued)
Traded Index (continued)
CDX.NA.HY.31		5.00%		Quarterly				12/20/23	$	7,200,000	$	422,745		$	388,766		$	33,979			Non-
																					Investment
																					Grade
Total Centrally Cleared Swap Contracts											$	2,827,052		$	2,306,454		$	520,598
OTC Swap Contracts
Contracts to Buy Protectionc
Single Name
The AES Corp.		(5.00)%		Quarterly		JPHQ		6/20/22	$	7,600,000	$	(1,140,089	)	$	(748,298	)	$	(391,791	)
Ally Financial Inc.		(5.00)%		Quarterly		CITI		12/20/22		1,500,000		(228,594	)		(226,525	)		(2,069	)
Ally Financial Inc.		(5.00)%		Quarterly		JPHQ		12/20/22		800,000		(121,917	)		(122,169	)		252
Ally Financial Inc.		(5.00)%		Quarterly		JPHQ		12/20/22		1,900,000		(289,553	)		(288,426	)		(1,127	)
American Airlines
Group Inc.		(5.00)%		Quarterly		CITI		12/20/19		1,780,000		(101,574	)		(83,284	)		(18,290	)
CSC Holdings LLC		(5.00)%		Quarterly		GSCO		3/20/19		3,000,000		(72,425	)		(13,711	)		(58,714	)
DISH DBS Corp.		(5.00)%		Quarterly		JPHQ		6/20/21		4,400,000		(293,982	)		(191,797	)		(102,185	)
Government of Italy		(1.00)%		Quarterly		BZWS		6/20/23		4,100,000		90,951			41,409			49,542
Government of Turkey		(1.00)%		Quarterly		BZWS		12/20/19		900,000		21,296			47,790			(26,494	)
Government of Turkey		(1.00)%		Quarterly		BZWS		12/20/23		1,845,000		222,045			234,686			(12,641	)
Nabors Industries Inc.		(1.00)%		Quarterly		JPHQ		6/20/20		1,950,000		(4,100	)		28,907			(33,007	)
Navient Corp.		(5.00)%		Quarterly		JPHQ		3/20/20		1,150,000		(75,459	)		(58,027	)		(17,432	)
PHH Corp.		(5.00)%		Quarterly		GSCO		9/20/19		1,800,000		(85,967	)		4,118			(90,085	)
Sanmina Corp.		(5.00)%		Quarterly		GSCO		6/20/19		6,500,000		(235,813	)		(181,682	)		(54,131	)
Tenet Healthcare Corp.		(5.00)%		Quarterly		DBAB		3/20/19		1,825,000		(43,285	)		(18,342	)		(24,943	)
Contracts to Sell Protectionc,d
Single Name
American Tower Corp.		1.00%		Quarterly		GSCO		3/20/21	$	6,500,000	$	(3,813	)	$	(58,066	)	$	54,253			BBB-
Dish DBS Corp.		5.00%		Quarterly		JPHQ		6/20/23		4,400,000		(21,260	)		(34,184	)		12,924			B
General Electric Co.		1.00%		Quarterly		BZWS		12/20/23		2,840,000		(58,405	)		(11,709	)		(46,696	)		BBB+
General Electric Co.		1.00%		Quarterly		CITI		12/20/23		5,770,000		(118,662	)		28,029			(146,691	)		BBB+
General Electric Co.		1.00%		Quarterly		CITI		12/20/23		2,930,000		(60,256	)		(14,113	)		(46,143	)		BBB+
General Electric Co.		1.00%		Quarterly		JPHQ		12/20/23		1,425,000		(27,347	)		(29,010	)		1,663			BBB+
Government of Argentina		5.00%		Quarterly		BZWS		6/20/23		1,135,000		(37,175	)		23,131			(60,306	)		B+
Government of Argentina		5.00%		Quarterly		CITI		6/20/23		1,950,000		(63,869	)		(46,639	)		(17,230	)		B+
Government of Argentina		5.00%		Quarterly		CITI		12/20/23		2,000,000		(76,268	)		(116,369	)		40,101			B+
Government of Colombia		1.00%		Quarterly		JPHQ		12/20/23		5,225,000		(62,860	)		(36,850	)		(26,010	)		BBB-
Government of Indonesia		1.00%		Quarterly		CITI		12/20/23		5,225,000		(129,686	)		(116,132	)		(13,554	)		BBB-
Government of Italy		1.00%		Quarterly		BZWS		6/20/23		4,100,000		(258,986	)		(181,586	)		(77,400	)		NR
Government of Italy		1.00%		Quarterly		JPHQ		12/20/23		2,850,000		(203,583	)		(203,145	)		(438	)		NR
Government of Mexico		1.00%		Quarterly		CITI		12/20/23		7,250,000		(139,686	)		(58,798	)		(80,888	)		BBB+
Nabors Industries Inc.		1.00%		Quarterly		JPHQ		6/20/22		1,950,000		(118,589	)		(185,649	)		67,060			BB

franklintempleton.com Annual Report           85

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

Credit Default Swap Contracts (continued)

Description	Periodic Payment Rate Received (Paid)	Payment Frequency	Counter- party	Maturity Date		Notional Amount	a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)		Ratingb
OTC Swap Contracts (continued)
Contracts to Sell Protectionc,d (continued)
Traded Index
eBNP Paribas Bespoke
Bordeaux Index,
Mezzanine Tranche 5-7%	2.00%	Quarterly	BNDP	12/20/20	$	3,600,000		$	(36,038	)	$	—		$	(36,038	)	Non-
																	Investment
																	Grade
eCitibank Bespoke
Cambridge Index, Equity
Tranche 0-3%	0.00%	Quarterly	CITI	12/20/19		2,700,000			(472,120	)		(251,283	)		(220,837	)	Non-
																	Investment
																	Grade
eCitibank Bespoke Hong
Kong Index, Mezzanine
Tranche 3-5%	1.00%	Quarterly	CITI	12/20/18		7,000,000			9,195			(20,524	)		29,719		Non-
																	Investment
																	Grade
eCitibank Bespoke Index,
Mezzanine Tranche
6-10%	0.63%	Quarterly	CITI	12/20/18		10,000,000			5,993			—			5,993		Non-
																	Investment
																	Grade
eCitibank Bespoke Lisbon
Index, Equity Tranche
0-3%	0.00%	Quarterly	CITI	6/20/19		1,300,000			(82,979	)		(97,758	)		14,779		Non-
																	Investment
																	Grade
eCitibank Bespoke Lisbon
Index, Mezzanine Tranche
3-7%	0.79%	Quarterly	CITI	6/20/19		4,000,000			(7,115	)		—			(7,115	)	Non-
																	Investment
																	Grade
eCitibank Bespoke Verona
Index, Equity Tranche
0-3%	0.00%	Quarterly	CITI	12/20/19		2,100,000			(307,911	)		(239,907	)		(68,004	)	Non-
																	Investment
																	Grade
eCitibank Bespoke Verona
Index, Mezzanine Tranche
7-15%	0.40%	Quarterly	CITI	12/20/19		4,000,000			11,780			—			11,780		Non-
																	Investment
																	Grade
Total OTC Swap Contracts								$	(4,618,106	)	$	(3,225,913)		$	(1,392,193	)
Total Credit Default Swap Contracts								$	(1,791,054	)	$	(919,459)		$	(871,595	)

86       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

Credit Default Swap Contracts (continued)

^aIn U.S. dollars unless otherwise indicated. For 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.

^cPerformance triggers for settlement of contract include default, bankruptcy or restructuring for single name swaps, and failure to pay or bankruptcy of the underlying securities for traded index swaps.

^dThe fund enters contracts to sell protection to create a long credit position.

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

At October 31, 2018, the Fund had the following cross-currency swap contracts outstanding. See Note 1(e).

Cross-Currency Swap Contracts

Description

Payment Frequency

Counter- party

Maturity Date

Notional Amount

Value/ Unrealized Appreciation (Depreciation)

OTC Swap Contracts

Receive Fixed 2.393%

Semi-Annual

7,916,500

USD

Pay Fixed 0.50%

Annual

JPHQ

4/09/20

7,100,000

EUR

$(310,288

)

Receive Floating 3-month USD LIBOR + 2.870%

Quarterly

1,743,000

USD

Pay Fixed 2.50%

Annual

CITI

5/04/21

1,500,000

EUR

52,348

Total Cross Currency Swap Contracts

$(257,940

)

At October 31, 2018, the Fund had the following interest rate swap contracts outstanding. See Note 1(e).

Interest Rate Swap Contracts

Description	Payment Frequency		Maturity Date		Notional Amount		Value			Unamortized Upfront Payments (Receipts)	Unrealized Appreciation (Depreciation)
Centrally Cleared Swap Contracts
Receive Fixed 2.75%		Semi-Annual
Pay Floating 3-month USD LIBOR		Quarterly		3/20/21		$147,720,000		$(1,169,230	)	$(518,420)		$(650,810	)
Receive Fixed 2.75%		Semi-Annual
Pay Floating 3-month USD LIBOR		Quarterly		3/20/21		40,670,000		(321,910	)	(139,918)		(181,992	)
Total Interest Rate Swap Contracts								$(1,491,140	)	$(658,338)		$(832,802	)

At October 31, 2018, the Fund had the following inflation index swap contracts outstanding. See Note 1(e).

Inflation Index Swap Contracts

Description	Payment Frequency		Maturity Date		Notional Amount		Value/ Unrealized Appreciation (Depreciation)
Centrally Cleared Swap Contracts
Receive variable change in USA-CPI-U		At maturity
Pay Fixed 1.96%		At maturity		8/31/24		$25,200,000		$527,845

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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)

At October 31, 2018, the Fund had the following total return swap contracts outstanding. See Note 1(e).

Total Return Swap Contracts

Underlying Instruments

Financing Rate

Payment Frequency

Counterparty

Maturity Date

Notional Value

Value/ Unrealized Appreciation (Depreciation)

OTC Swap Contracts

Longa

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

GSCO

12/20/18

$  8,500,000

$  (94,601

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

BNDP

3/20/19

2,500,000

(19,086

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

FBCO

3/20/19

4,900,000

(38,313

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

BOFA

6/20/19

20,000,000

(67,587

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

CITI

6/20/19

13,800,000

(76,140

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

GSCO

3/20/19

8,600,000

(48,851

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

CITI

9/20/19

18,500,000

(205,400

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

GSCO

9/20/19

4,300,000

(57,429

)

Total Return Swap Contracts

$(607,407

)

^aThe Fund receives the total return on the underlying instrument and pays a variable financing rate.

See Note 9 regarding other derivative information.

See Abbreviations on page 158.

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FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Financial Highlights

Franklin Total Return Fund

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class A
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  9.84			$  9.93			$  9.87			$   10.18			$   10.05
Income from investment operationsa:
Net investment income		0.269			0.251	b		0.231			0.217			0.257
Net realized and unrealized gains (losses)		(0.518	)		(0.110	)		0.107			(0.220	)		0.214
Total from investment operations		(0.249	)		0.141			0.338			(0.003	)		0.471
Less distributions from:
Net investment income and net foreign currency gains		(0.275	)		(0.231	)		(0.278	)		(0.307	)		(0.341	)
Tax return of capital		(0.006	)		—			—			—			—
Total distributions		(0.281	)		(0.231	)		(0.278	)		(0.307	)		(0.341	)
Net asset value, end of year		$  9.31			$  9.84			$  9.93			$   9.87			$   10.18
Total returnc		(2.57)%			1.47%			3.53%			(0.05)%			4.80%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.91%			0.91%			0.90%			0.91%			0.93%
Expenses net of waiver and payments by affiliatesd		0.88%			0.87%			0.85%			0.87%			0.88%
Net investment income		2.91%			2.58%			2.32%			2.08%			2.46%
Supplemental data
Net assets, end of year (000’s)		$2,763,774			$3,153,751			$3,623,035			$3,527,479			$3,213,446
Portfolio turnover rate		151.77%			101.07%			287.38%			294.80%			273.96%
Portfolio turnover rate excluding mortgage dollar rollse		84.86%			78.46%			146.15%			95.06%			85.03%

^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.

^bBased on average daily shares outstanding.

^cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.

^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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class C
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$  9.77			$  9.87			$  9.84			$ 10.16			$ 10.03
Income from investment operationsa:
Net investment income		0.183			0.212	b		0.189			0.172			0.201
Net realized and unrealized gains (losses)		(0.457	)		(0.109	)		0.100			(0.214	)		0.232
Total from investment operations		(0.274	)		0.103			0.289			(0.042	)		0.433
Less distributions from:
Net investment income and net foreign currency gains		(0.241	)		(0.203	)		(0.259	)		(0.278	)		(0.303	)
Tax return of capital.		(0.005	)		—			—			—			—
Total distributions		(0.246	)		(0.203	)		(0.259	)		(0.278	)		(0.303	)
Net asset value, end of year		$  9.25			$   9.77			$    9.87			$   9.84			$ 10.16
Total returnc		(2.84)%			0.98%			3.13%			(0.43)%			4.42%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.31%			1.31%			1.30%			1.31%			1.33%
Expenses net of waiver and payments by affiliatesd		1.28%			1.27%			1.25%			1.27%			1.28%
Net investment income		2.51%			2.18%			1.92%			1.68%			2.06%
Supplemental data
Net assets, end of year (000’s)		$243,068			$354,269			$449,274			$444,253			$432,767
Portfolio turnover rate		151.77%			101.07%			287.38%			294.80%			273.96%
Portfolio turnover rate excluding mortgage dollar rollse		84.86%			78.46%			146.15%			95.06%			85.03%

^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.

^bBased on average daily shares outstanding.

^cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.

^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)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.80			$    9.90			$    9.85			$   10.17			$   10.04
Income from investment operationsa:
Net investment income		0.182			0.228	b		0.199			0.198			0.209
Net realized and unrealized gains (losses)		(0.453	)		(0.115	)		0.117			(0.229	)		0.238
Total from investment operations		(0.271	)		0.113			0.316			(0.031	)		0.447
Less distributions from:
Net investment income and net foreign currency gains		(0.253	)		(0.213	)		(0.266	)		(0.289	)		(0.317	)
Tax return of capital		(0.006	)		—			—			—			—
Total distributions		(0.259	)		(0.213	)		(0.266	)		(0.289	)		(0.317	)
Net asset value, end of year		$    9.27			$    9.80			$    9.90			$   9.85			$ 10.17
Total return		(2.70)%			1.19%			3.31%			(0.32)%			4.56%
Ratios to average net assets
Expenses before waiver and payments by affiliates		1.16%			1.16%			1.15%			1.16%			1.18%
Expenses net of waiver and payments by affiliatesc		1.13%			1.12%			1.10%			1.12%			1.13%
Net investment income		2.66%			2.33%			2.07%			1.83%			2.21%
Supplemental data
Net assets, end of year (000’s)		$23,620			$36,337			$58,715			$70,506			$59,307
Portfolio turnover rate		151.77%			101.07%			287.38%			294.80%			273.96%
Portfolio turnover rate excluding mortgage dollar rollsd		84.86%			78.46%			146.15%			95.06%			85.03%

^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.

^bBased on average daily shares outstanding.

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

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

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Class R6
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.90			$    9.98			$    9.91			$ 10.20			$ 10.07
Income from investment operationsa:
Net investment income		0.308			0.296	b		0.195			0.255	b		0.317	b
Net realized and unrealized gains (losses)		(0.512	)		(0.117	)		0.173			(0.209	)		0.191
Total from investment operations		(0.204	)		0.179			0.368			0.046			0.508
Less distributions from:
Net investment income and net foreign currency gains		(0.309	)		(0.259	)		(0.298	)		(0.336	)		(0.378	)
Tax return of capital.		(0.007	)		—			—			—			—
Total distributions		(0.316	)		(0.259	)		(0.298	)		(0.336	)		(0.378	)
Net asset value, end of year		$    9.38			$    9.90			$    9.98			$   9.91			$ 10.20
Total return		(2.10)%			1.75%			3.94%			0.44%			5.18%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.54%			0.50%			0.51%			0.50%			0.50%
Expenses net of waiver and payments by affiliatesc		0.49%			0.48%			0.46%			0.46%			0.48%
Net investment income		3.30%			2.97%			2.71%			2.49%			2.86%
Supplemental data
Net assets, end of year (000’s)		$430,637			$398,732			$93,892			$68,848			$26,123
Portfolio turnover rate		151.77%			101.07%			287.38%			294.80%			273.96%
Portfolio turnover rate excluding mortgage dollar rollsd		84.86%			78.46%			146.15%			95.06%			85.03%

^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.

^bBased on average daily shares outstanding.

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

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

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund (continued)

	Year Ended October 31,
	2018			2017			2016			2015			2014
Advisor Class
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year		$    9.89			$    9.98			$    9.91			$ 10.20			$ 10.07
Income from investment operationsa:
Net investment income		0.291			0.275	b		0.218			0.127			0.288
Net realized and unrealized gains (losses)		(0.507	)		(0.116	)		0.142			(0.092	)		0.206
Total from investment operations		(0.216	)		0.159			0.360			0.035			0.494
Less distributions from:
Net investment income and net foreign currency gains		(0.297	)		(0.249	)		(0.290	)		(0.325	)		(0.364	)
Tax return of capital		(0.007	)		—			—			—			—
Total distributions		(0.304	)		(0.249	)		(0.290	)		(0.325	)		(0.364	)
Net asset value, end of year		$    9.37			$    9.89			$    9.98			$   9.91			$ 10.20
Total return		(2.22)%			1.65%			3.75%			0.33%			5.03%
Ratios to average net assets
Expenses before waiver and payments by affiliates		0.66%			0.66%			0.65%			0.66%			0.68%
Expenses net of waiver and payments by affiliatesc		0.63%			0.62%			0.60%			0.62%			0.63%
Net investment income		3.16%			2.83%			2.57%			2.33%			2.71%
Supplemental data
Net assets, end of year (000’s)		$620,803			$595,239			$740,046			$526,749			$1,281,151
Portfolio turnover rate		151.77%			101.07%			287.38%			294.80%			273.96%
Portfolio turnover rate excluding mortgage dollar rollsd		84.86%			78.46%			146.15%			95.06%			85.03%

^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.

^bBased on average daily shares outstanding.

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

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

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FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Statement of Investments, October 31, 2018

Franklin Total Return Fund

		Country		Shares/ Warrants				Value
	Common Stocks and Other Equity Interests 0.0%†
	Consumer Services 0.0%†
a,aa,b	Turtle Bay Resort		United States		1,550,568			$	34,113
	Energy 0.0%†
a	Halcon Resources Corp.		United States		229,059				760,476
a	Halcon Resources Corp., wts., 9/09/20		United States		20,425				903
a	Riviera Resources Inc.		United States		13,179				280,976
a	Roan Resources Inc.		United States		13,179				214,422
									1,256,777
	Materials 0.0%†
a	Verso Corp., A.		United States		6,954				195,477
a	Verso Corp., wts., 7/25/23		United States		732				4,758
									200,235
	Retailing 0.0%†
a,b,c	K2016470219 South Africa Ltd., A		South Africa		28,762,824				19,497
a,b,c	K2016470219 South Africa Ltd., B		South Africa		2,862,311				1,940
									21,437
	Total Common Stocks and Other Equity Interests (Cost $7,129,066)								1,512,562
	Management Investment Companies 3.9%
	Diversified Financials 3.9%
d	Franklin Flexible Alpha Bond Fund, Class R6		United States		10,172,940				99,287,894
d	Franklin Liberty Investment Grade Corporate ETF		United States		400,000				9,218,000
d	Franklin Liberty Senior Loan ETF		United States		299,900				7,548,483
d	Franklin Lower Tier Floating Rate Fund		United States		997,589				9,546,927
d	Franklin Middle Tier Floating Rate Fund		United States		1,889,310				17,759,516
	Invesco Senior Loan ETF		United States		672,210				15,467,552
	Total Management Investment Companies (Cost $160,787,719)								158,828,372
	Preferred Stocks (Cost $2,325,000) 0.1%
	Diversified Financials 0.1%
e	Citigroup Capital XIII, 8.137%, pfd.		United States		93,000				2,461,710
					Principal Amount	*
	Corporate Bonds 33.5%
	Automobiles & Components 0.1%
	Aptiv Corp., senior bond, 4.15%, 3/15/24		United States		5,100,000				5,080,758
	Banks 6.5%
f	Banca Monte dei Paschi di Siena SpA, secured note, Reg S, 2.125%, 11/26/63.		Italy		20,000,000		EUR		23,143,982
	Bank of America Corp.,
	senior bond, 3.875%, 8/01/25		United States		6,000,000				5,919,147
	senior note, 3.50%, 4/19/26		United States		20,400,000				19,426,600
f	Barclays Bank PLC, senior sub. bond, Reg S, 6.00%, 1/14/21		United Kingdom		8,000,000		EUR		10,005,775
	Barclays PLC, sub. note, 4.375%, 9/11/24		United Kingdom		500,000				477,815
	Citigroup Inc.,
	senior bond, 8.125%, 7/15/39		United States		4,400,000				6,158,443
	senior note, 3.40%, 5/01/26		United States		20,000,000				18,804,584

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*			Value
Corporate Bonds (continued)
Banks (continued)
HSBC Holdings PLC,
senior note, 3.60%, 5/25/23		United Kingdom		10,900,000		$	10,746,910
senior note, 4.30%, 3/08/26		United Kingdom		16,600,000			16,371,418
g ICICI Bank Ltd./Dubai, senior note, 144A, 3.80%, 12/14/27		India		11,200,000			10,060,439
Industrial & Commercial Bank of China Ltd., senior note, 2.957%, 11/08/22		China		11,300,000			10,886,194
g Intesa Sanpaolo SpA, senior note, 144A, 6.50%, 2/24/21		Italy		1,000,000			1,023,070
JPMorgan Chase & Co.,
h junior sub. bond, X, 6.10% to 10/01/24, FRN thereafter, Perpetual		United States		10,400,000			10,585,120
senior bond, 3.30%, 4/01/26		United States		22,000,000			20,799,178
senior bond, 3.20%, 6/15/26		United States		10,800,000			10,118,237
senior note, 2.40%, 6/07/21		United States		10,000,000			9,746,277
senior note, 3.25%, 9/23/22		United States		11,400,000			11,249,597
g Norddeutsche Landesbank Girozentrale, secured note, 144A, 2.00%, 2/05/19		Germany		7,000,000			6,982,878
PHH Corp., senior note, 7.375%, 9/01/19		United States		5,400,000			5,555,250
Royal Bank of Canada, secured note, 2.10%, 10/14/21		Canada		11,500,000			11,254,048
SVB Financial Group, senior note, 3.50%, 1/29/25		United States		6,000,000			5,764,212
f Turkiye Vakiflar Bankasi TAO, secured note, Reg S, 2.375%, 11/04/22		Turkey		3,100,000	EUR		3,379,316
Wells Fargo & Co.,
h junior sub. bond, S, 5.90% to 6/15/24, FRN thereafter, Perpetual		United States		5,500,000			5,520,460
sub. bond, 4.65%, 11/04/44		United States		10,000,000			9,426,687
g Westpac Banking Corp., senior secured note, 144A, 2.25%, 11/09/21		Australia		10,800,000			10,588,212
g Woori Bank, sub. note, 144A, 4.75%, 4/30/24		South Korea		9,750,000			9,744,784
							263,738,633
Capital Goods 1.4%
Aircastle Ltd., senior note, 4.125%, 5/01/24		United States		4,500,000			4,376,601
g Amcor Finance USA Inc., senior note, 144A, 3.625%, 4/28/26		Australia		11,800,000			11,045,260
g Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25		United States		6,600,000			5,956,500
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21		United States		3,400,000			3,394,403
CNH Industrial NV, senior bond, 3.85%, 11/15/27		United Kingdom		4,600,000			4,285,935
Lockheed Martin Corp., senior bond, 4.70%, 5/15/46		United States		13,900,000			14,145,597
United Technologies Corp., senior bond, 7.50%, 9/15/29		United States		8,000,000			10,055,677
g Vertiv Group Corp., senior note, 144A, 9.25%, 10/15/24		United States		4,100,000			4,100,000
							57,359,973
Commercial & Professional Services 0.3%
g IHS Markit Ltd., senior note, 144A, 4.00%, 3/01/26		United States		4,100,000			3,864,250
Republic Services Inc., senior note, 2.90%, 7/01/26		United States		4,500,000			4,162,879
g West Corp., senior note, 144A, 8.50%, 10/15/25		United States		5,000,000			4,537,500
							12,564,629
Consumer Services 0.8%
g Ascend Learning LLC, senior note, 144A, 6.875%, 8/01/25		United States		5,000,000			4,987,500
Marriott International Inc., senior bond, 3.75%, 10/01/25		United States		18,400,000			17,802,738
g Stars Group Holdings BV/Stars Group U.S. Co-Borrower LLC, senior note, 144A, 7.00%, 7/15/26		Canada		2,500,000			2,543,750

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*		Value
Corporate Bonds (continued)
Consumer Services (continued)
g Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.25%, 5/15/27		United States		5,500,000	$	4,984,375
						30,318,363
Diversified Financials 2.6%
g Bayer US Finance LLC, senior note, 144A, 3.00%, 10/08/21		Germany		3,600,000		3,524,830
Capital One Bank USA NA, sub. bond, 3.375%, 2/15/23		United States		6,000,000		5,805,625
Capital One Financial Corp., senior note, 3.20%, 2/05/25		United States		9,700,000		9,076,361
g FirstCash Inc., senior note, 144A, 5.375%, 6/01/24		United States		2,800,000		2,772,000
GE Capital International Funding Co., senior bond, 3.373%, 11/15/25		United States		17,000,000		15,464,696
The Goldman Sachs Group Inc.,
senior note, 3.75%, 5/22/25		United States		7,700,000		7,466,639
senior note, 3.75%, 2/25/26		United States		21,300,000		20,469,271
Morgan Stanley,
senior bond, 4.30%, 1/27/45		United States		10,000,000		9,227,676
senior note, 3.875%, 1/27/26		United States		20,500,000		19,880,481
Navient Corp.,
senior bond, 8.00%, 3/25/20		United States		5,000,000		5,231,250
senior note, 7.25%, 9/25/23		United States		5,500,000		5,749,590
Springleaf Finance Corp., senior note, 6.00%, 6/01/20		United States		700,000		717,500
						105,385,919
Energy 3.2%
g California Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		4,000,000		3,570,000
Cheniere Corpus Christi Holdings LLC,
senior secured note, first lien, 7.00%, 6/30/24		United States		2,300,000		2,492,625
senior secured note, first lien, 5.875%, 3/31/25		United States		1,600,000		1,648,000
Cheniere Energy Partners LP, senior secured note, first lien, 5.25%, 10/01/25		United States		4,000,000		3,935,000
CNOOC Finance 2013 Ltd., senior note, 3.00%, 5/09/23		China		14,000,000		13,375,320
CNOOC Finance 2015 USA LLC, senior note, 3.50%, 5/05/25		China		11,000,000		10,471,945
Enable Midstream Partners LP,
senior bond, 5.00%, 5/15/44		United States		1,200,000		1,045,602
senior note, 3.90%, 5/15/24		United States		3,600,000		3,471,601
Energy Transfer Operating LP, senior bond, 5.15%, 2/01/43		United States		6,000,000		5,306,237
Ensco PLC, senior bond, 5.75%, 10/01/44		United States		3,700,000		2,603,875
Exxon Mobil Corp., senior note, 2.222%, 3/01/21		United States		2,000,000		1,954,755
g,i Gaz Capital SA, (OJSC Gazprom), loan participation, senior note, 144A, 3.85%, 2/06/20		Russia		10,000,000		9,957,650
MPLX LP, senior bond, 4.00%, 2/15/25		United States		4,600,000		4,498,915
Oceaneering International Inc., senior note, 4.65%, 11/15/24		United States		7,900,000		7,345,291
Sabine Pass Liquefaction LLC, senior secured bond, first lien, 5.00%, 3/15/27		United States		3,700,000		3,719,967
Sanchez Energy Corp., senior note, 6.125%, 1/15/23		United States		3,000,000		1,132,500
g Sinopec Group Overseas Development 2015 Ltd., senior note, 144A, 3.25%, 4/28/25		China		16,400,000		15,370,654
g Sinopec Group Overseas Development 2016 Ltd., senior note, 144A, 2.75%, 9/29/26		China		11,000,000		9,758,980
Sunoco Logistics Partners Operations LP, senior note, 4.25%, 4/01/24		United States		9,300,000		9,182,285
Valero Energy Corp., senior bond, 4.90%, 3/15/45		United States		6,700,000		6,412,944

96       Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*			Value
Corporate Bonds (continued)
Energy (continued)
Weatherford International Ltd.,
senior note, 7.75%, 6/15/21		United States		1,600,000		$	1,330,000
senior note, 8.25%, 6/15/23		United States		2,000,000			1,540,000
g Woodside Finance Ltd.,
senior bond, 144A, 3.70%, 3/15/28		Australia		5,500,000			5,111,425
senior note, 144A, 3.70%, 9/15/26		Australia		4,000,000			3,768,645
							129,004,216
Food & Staples Retailing 0.4%
g Aramark Services Inc., senior bond, 144A, 5.00%, 2/01/28		United States		2,700,000			2,568,375
The Kroger Co., senior note, 4.00%, 2/01/24		United States		15,400,000			15,325,904
							17,894,279
Food, Beverage & Tobacco 1.4%
Anheuser-Busch Inbev Finance Inc., senior bond, 3.65%, 2/01/26		Belgium		17,000,000			16,149,530
Bunge Ltd. Finance Corp., senior note, 3.25%, 8/15/26		United States		12,000,000			10,772,653
Kraft Heinz Foods Co.,
senior bond, 3.00%, 6/01/26		United States		19,300,000			17,256,003
senior note, 3.50%, 7/15/22		United States		3,100,000			3,064,644
Reynolds American Inc., senior bond, 5.70%, 8/15/35		United Kingdom		9,300,000			9,571,816
							56,814,646
Health Care Equipment & Services 1.1%
g Avantor Inc., senior secured note, first lien, 144A, 6.00%, 10/01/24		United States		2,400,000			2,400,000
g Centene Corp., senior note, 144A, 5.375%, 6/01/26		United States		4,700,000			4,782,250
CHS/Community Health Systems Inc., senior secured note, first lien, 6.25%, 3/31/23		United States		5,000,000			4,617,250
CVS Health Corp., senior bond, 4.30%, 3/25/28		United States		7,000,000			6,841,097
Edwards Lifesciences Corp., senior note, 4.30%, 6/15/28		United States		1,700,000			1,691,220
g Halfmoon Parent Inc., senior secured note, 144A, 4.125%, 11/15/25		United States		5,900,000			5,841,236
HCA Inc., senior secured bond, first lien, 5.50%, 6/15/47		United States		9,000,000			8,878,500
Tenet Healthcare Corp., senior note, 5.50%, 3/01/19		United States		9,660,000			9,720,375
							44,771,928
Insurance 1.1%
Aflac Inc., senior note, 0.932%, 1/25/27		United States		1,400,000,000	JPY		12,558,912
g Liberty Mutual Group Inc., senior note, 144A, 4.95%, 5/01/22		United States		12,000,000			12,364,403
g Teachers Insurance & Annuity Assn. of America, sub. bond, 144A, 4.90%, 9/15/44		United States		20,400,000			21,101,057
							46,024,372
Materials 1.8%
ArcelorMittal, senior note, 5.50%, 3/01/21		France		1,300,000			1,345,116
g Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A, 6.00%, 2/15/25		Luxembourg		5,000,000			4,693,750
g BWAY Holding Co., senior note, 144A, 7.25%, 4/15/25		United States		4,000,000			3,800,000
g Cemex SAB de CV, senior secured bond, first lien, 144A, 5.70%, 1/11/25		Mexico		4,000,000			3,897,460
The Chemours Co., senior note, 5.375%, 5/15/27		United States		5,000,000			4,662,500
g First Quantum Minerals Ltd., senior note, 144A, 7.25%, 4/01/23		Zambia		4,100,000			3,802,750
g FMG Resources (August 2006) Pty. Ltd.,
senior note, 144A, 5.125%, 3/15/23		Australia		900,000			870,750
senior note, 144A, 5.125%, 5/15/24		Australia		1,900,000			1,813,341
Freeport-McMoRan Inc., senior bond, 3.875%, 3/15/23		United States		4,000,000			3,710,000

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*		Value
Corporate Bonds (continued)
Materials (continued)
g Glencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		4,700,000	$	4,826,427
LYB International Finance BV, senior note, 4.00%, 7/15/23		United States		18,400,000		18,356,760
g New Gold Inc., senior note, 144A, 6.375%, 5/15/25		Canada		1,800,000		1,451,250
g Northwest Acquisitions ULC/Dominion Finco Inc.,
secured note, second lien, 144A, 7.125%, 11/01/22		Canada		1,300,000		1,312,155
g OI European Group BV, senior note, 144A, 4.00%, 3/15/23		United States		5,000,000		4,693,750
g Plastipak Holdings Inc., senior note, 144A, 6.25%, 10/15/25		United States		2,300,000		2,116,000
Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23		United States		5,600,000		5,636,574
g Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds
Group Issuer Luxembourg SA,
senior note, 144A, 7.00%, 7/15/24.		United States		800,000		803,500
senior secured note, first lien, 144A, 5.125%, 7/15/23		United States		1,600,000		1,568,000
g SunCoke Energy Partners LP/SunCoke Energy Partners Finance
Corp., senior note, 144A, 7.50%, 6/15/25		United States		4,200,000		4,284,000
						73,644,083
Media & Entertainment 1.4%
21st Century Fox America Inc., senior note, 3.70%, 10/15/25		United States		2,300,000		2,271,414
g Altice US Finance I Corp., senior secured note, first lien, 144A, 5.50%, 5/15/26		United States		5,000,000		4,882,800
g CCO Holdings LLC/CCO Holdings Capital Corp.,
senior bond, 144A, 5.375%, 5/01/25		United States		3,200,000		3,140,000
senior bond, 144A, 5.00%, 2/01/28		United States		1,500,000		1,404,375
Comcast Corp., senior bond, 3.15%, 2/15/28		United States		8,100,000		7,451,830
CSC Holdings LLC,
senior bond, 8.625%, 2/15/19		United States		9,000,000		9,112,500
g senior bond, 144A, 5.375%, 2/01/28		United States		3,000,000		2,835,000
g Tencent Holdings Ltd., senior note, 144A, 3.595%, 1/19/28		China		13,200,000		12,113,046
Time Warner Inc., senior bond, 2.95%, 7/15/26		United States		16,200,000		14,361,113
						57,572,078
Pharmaceuticals, Biotechnology & Life Sciences 1.4%
Actavis Funding SCS, senior bond, 4.55%, 3/15/35		United States		7,800,000		7,380,316
Amgen Inc., senior bond, 4.95%, 10/01/41		United States		1,000,000		992,115
g Bausch Health Cos. Inc., senior bond, 144A, 6.125%, 4/15/25		United States		4,800,000		4,426,560
g Bayer US Finance II LLC, senior bond, 144A, 4.375%, 12/15/28		Germany		3,900,000		3,784,406
Biogen Inc., senior bond, 5.20%, 9/15/45		United States		18,200,000		18,296,571
Celgene Corp., senior bond, 3.45%, 11/15/27		United States		6,500,000		5,935,383
PerkinElmer Inc., senior note, 5.00%, 11/15/21		United States		13,200,000		13,591,384
g SABIC Capital II BV, senior note, 144A, 4.50%, 10/10/28		Saudi Arabia		4,200,000		4,122,594
						58,529,329
Real Estate 1.1%
American Homes 4 Rent LP, senior bond, 4.25%, 2/15/28		United States		5,900,000		5,603,479
American Tower Corp.,
senior bond, 3.50%, 1/31/23		United States		6,200,000		6,077,028
senior bond, 4.40%, 2/15/26		United States		9,400,000		9,329,218
senior bond, 3.375%, 10/15/26		United States		6,500,000		5,981,929
National Retail Properties Inc., senior bond, 4.30%, 10/15/28		United States		9,700,000		9,565,976
Prologis LP, senior bond, 3.75%, 11/01/25		United States		9,400,000		9,328,292
						45,885,922

98       Annual Report franklintempleton.com

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)
	Country		Principal  Amount*		Value
Corporate Bonds (continued)
Retailing 1.5%
Alibaba Group Holding Ltd.,
senior bond, 4.50%, 11/28/34		China		10,000,000	$	9,560,000
senior bond, 4.40%, 12/06/57		China		2,800,000		2,445,912
Amazon.com Inc., senior note, 2.80%, 8/22/24		United States		6,400,000		6,112,549
Dollar Tree Inc., senior note, 4.00%, 5/15/25		United States		13,100,000		12,605,800
Home Depot Inc., senior note, 2.125%, 9/15/26		United States		14,200,000		12,653,660
JD.com Inc., senior note, 3.125%, 4/29/21		China		1,900,000		1,834,688
b,c,j K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		2,212,754		2,739
c,j K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		South Africa		427,950		31,602
g Party City Holdings Inc., senior note, 144A, 6.625%, 8/01/26		United States		2,100,000		2,047,500
g PetSmart Inc., senior note, 144A, 7.125%, 3/15/23		United States		16,500,000		11,632,500
						58,926,950
Semiconductors & Semiconductor Equipment 0.7%
Maxim Integrated Products Inc., senior note, 3.375%, 3/15/23		United States		22,000,000		21,516,898
g Qorvo Inc., senior note, 144A, 5.50%, 7/15/26		United States		5,000,000		5,025,000
						26,541,898
Software & Services 0.2%
Fiserv Inc., senior bond, 3.85%, 6/01/25.		United States		9,300,000		9,185,218
Technology Hardware & Equipment 1.0%
g Dell International LLC/EMC Corp., senior secured note, first lien, 144A, 3.48%, 6/01/19		United States		12,000,000		12,016,658
Juniper Networks Inc.,
senior bond, 4.50%, 3/15/24		United States		4,500,000		4,538,583
senior bond, 4.35%, 6/15/25		United States		9,300,000		9,181,526
g Sanmina Corp., senior note, first lien, 144A, 4.375%, 6/01/19		United States		11,100,000		11,113,875
Tech Data Corp., senior bond, 4.95%, 2/15/27		United States		1,800,000		1,740,284
g Tempo Acquisition LLC/Tempo Acquisition Finance Corp., senior note, 144A, 6.75%, 6/01/25		United States		4,000,000		3,818,800
						42,409,726
Telecommunication Services 1.1%
g Sprint Spectrum Co. LLC, senior secured bond, first lien, 144A, 5.152%, 9/20/29		United States		15,600,000		15,639,000
Telefonica Emisiones S.A.U.,
senior note, 4.57%, 4/27/23		Spain		3,000,000		3,072,450
senior note, 4.103%, 3/08/27		Spain		7,600,000		7,234,744
Verizon Communications Inc.,
senior bond, 2.625%, 8/15/26		United States		10,700,000		9,615,752
senior bond, 4.812%, 3/15/39		United States		11,065,000		10,737,478
						46,299,424
Transportation 0.4%
Burlington Northern and Santa Fe 99-2 Trust, secured bond, 7.57%, 1/02/21		United States		36,134		37,241
g DAE Funding LLC, senior note, 144A, 5.00%, 8/01/24		United Arab Emirates		3,900,000		3,802,500
g DP World Ltd., senior bond, 144A, 6.85%, 7/02/37		United Arab Emirates		3,700,000		4,135,083
g Transurban Finance Co. Pty. Ltd., senior secured bond, 144A, 4.125%, 2/02/26		Australia		8,200,000		8,032,597

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*		Value
Corporate Bonds (continued)
Transportation (continued)
Union Pacific Railroad Co. 2005 Pass Through Trust, 2005-1, 5.082%, 1/02/29		United States		136,812	$	142,479
						16,149,900
Utilities 4.0%
Calpine Corp., senior note, 5.375%, 1/15/23		United States		13,275,000		12,627,844
g Colbun SA, senior note, 144A, 3.95%, 10/11/27		Chile		4,300,000		3,964,449
Commonwealth Edison Co., secured bond, 6.45%, 1/15/38		United States		700,000		866,958
Dominion Energy Inc., senior bond, 3.90%, 10/01/25		United States		12,200,000		11,920,706
Duke Energy Corp., senior bond, 3.15%, 8/15/27		United States		18,400,000		16,908,202
Duke Energy Indiana Inc., senior secured bond, 3.75%, 7/15/20		United States		2,015,000		2,034,193
g,h EDF SA, junior sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual		France		24,000,000		23,289,960
g EDP Finance BV, senior note, 144A, 3.625%, 7/15/24		Portugal		10,800,000		10,261,890
g Enogex LLC, senior bond, 144A, 6.25%, 3/15/20		United States		5,000,000		5,146,446
Georgia Power Co., senior bond, 4.30%, 3/15/42		United States		9,000,000		8,270,503
g Israel Electric Corp. Ltd., secured bond, 144A, 4.25%, 8/14/28		Israel		6,700,000		6,355,821
PacifiCorp., secured bond, 6.10%, 8/01/36		United States		10,200,000		12,237,197
The Southern Co., senior bond, 3.25%, 7/01/26		United States		14,350,000		13,329,668
g State Grid Overseas Investment 2016 Ltd.,
senior note, 144A, 3.50%, 5/04/27		China		10,700,000		10,055,004
senior note, 144A, 4.25%, 5/02/28		China		6,700,000		6,637,489
g Talen Energy Supply LLC, senior note, 144A, 9.50%, 7/15/22		United States		5,100,000		5,202,000
g Three Gorges Finance I Cayman Islands Ltd., senior note, 144A, 3.70%, 6/10/25		China		12,800,000		12,373,312
Virginia Electric & Power Co., senior bond, 6.35%, 11/30/37		United States		520,000		630,751
						162,112,393
Total Corporate Bonds (Cost $1,421,632,350)						1,366,214,637
k,l Senior Floating Rate Interests 4.2%
Automobiles & Components 0.2%
Allison Transmission Inc., New Term Loans, 4.04%, (1-month USD LIBOR + 1.75%), 9/23/22		United States		6,053,983		6,091,821
TI Group Automotive Systems LLC, Initial US Term Loan, 4.802%, (1-month USD LIBOR + 2.50%), 6/30/22		United States		1,199,210		1,194,713
						7,286,534
Capital Goods 0.0%†
Altra Industrial Motion Corp., Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 10/01/25		United States		630,998		630,209
Harsco Corp., Term Loan B-2, 4.563%, (1-month USD LIBOR + 2.25%), 12/10/24		United States		271,181		272,538
						902,747
Commercial & Professional Services 0.3%
Prime Security Services Borrower LLC, Term B-1 Loans, 5.052%, (1-month USD LIBOR + 2.75%), 5/02/22.		United States		6,467,254		6,477,648
m,n United Rentals North America Inc., Initial Term Loans, TBD, 10/30/25		United States		6,623,178		6,660,433
						13,138,081

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Franklin Total Return Fund (continued)

	Country		Principal  Amount*		Value
k,l Senior Floating Rate Interests (continued)
Consumer Services 0.3%
Aristocrat Technologies Inc., Term B-3 Loans, 4.219%, (3-month USD LIBOR + 1.75%), 10/19/24		United States		730,341	$	728,639
Avis Budget Car Rental LLC, Tranche B Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 2/13/25		United States		5,025,962		5,019,529
Eldorado Resorts Inc., Initial Term Loan, 4.563%, (1-month USD LIBOR + 2.25%), 4/17/24		United States		3,318,231		3,326,527
Greektown Holdings LLC, Initial Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 4/25/24		United States		376,480		376,323
Las Vegas Sands LLC, Term B Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/27/25		United States		1,393,000		1,389,913
						10,840,931
Diversified Financials 0.2%
FinCo I LLC (Fortress Investment Group), 2018 Replacement Term Loan, 4.302%, (1-month USD LIBOR + 2.00%), 12/27/22		United States		4,825,782		4,830,005
Trans Union LLC, 2017 Replacement Term A-2 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 8/09/22		United States		2,639,982		2,644,932
						7,474,937
Energy 0.3%
Bowie Resource Holdings LLC,
First Lien Initial Term Loan, 8.052%, (1-month USD LIBOR + 5.75%), 8/14/20		United States		2,430,168		2,379,540
Second Lien Initial Term Loan, 13.052%, (1-month USD LIBOR + 10.75%), 2/16/21		United States		592,359		568,664
Fieldwood Energy LLC, Closing Date Loans, 7.552%, (1-month USD LIBOR + 5.25%), 4/11/22		United States		6,287,342		6,338,458
Foresight Energy LLC, Term Loans, 8.277%, (3-month USD LIBOR + 5.75%), 3/28/22		United States		1,529,357		1,535,411
						10,822,073
Food & Staples Retailing 0.2%
Aramark Corp.,
U.S. Term B-2 Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/28/24		United States		4,252,500		4,256,051
U.S. Term B-3 Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/11/25		United States		1,834,185		1,837,624
Smart & Final Stores LLC, First Lien Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 11/15/22		United States		1,556,745		1,506,151
						7,599,826
Food, Beverage & Tobacco 0.2%
JBS USA LUX SA, New Initial Term Loans, 4.837% - 4.886%, (3-month USD LIBOR + 2.50%), 10/30/22		United States		7,667,585		7,676,571
Post Holdings Inc., Series A Incremental Term Loans, 4.29%, (1-month USD LIBOR + 2.00%), 5/24/24		United States		1,771,793		1,771,100
						9,447,671

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Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
k,l Senior Floating Rate Interests (continued)
Health Care Equipment & Services 0.2%
DaVita Healthcare Partners Inc., Tranche B Term Loan, 5.052%, (1-month USD LIBOR + 2.75%), 6/24/21		United States		2,063,834	$	2,070,760
HCA Inc., Term Loan B11, 4.052%, (1-month USD LIBOR + 1.75%), 3/18/23		United States		1,816,246		1,825,489
IQVIA Inc., Term B-3 Dollar Loans, 4.136%, (3-month USD LIBOR + 1.75%), 6/11/25		United States		2,917,998		2,913,621
Quintiles IMS Inc., Term B-2 Dollar Loans, 4.386%, (3-month USD LIBOR + 2.00%), 1/20/25		United States		1,018,668		1,021,692
U.S. Renal Care Inc., Initial Term Loan, 6.636%, (3-month USD LIBOR + 4.25%), 12/31/22		United States		2,154,637		2,096,283
						9,927,845
Household & Personal Products 0.1%
Spectrum Brands, Inc.,
USD Term Loans, 4.31%, (1-month USD LIBOR + 2.00%), 6/23/22		United States		871,246		873,243
USD Term Loans, 4.33% - 4.40%, (2-month USD LIBOR + 2.00%), 6/23/22		United States		1,158,041		1,160,695
USD Term Loans, 4.35%, (3-month USD LIBOR + 2.00%), 6/23/22		United States		653,435		654,933
						2,688,871
Materials 0.4%
Ashland LLC, Term B Loan, 4.03% - 4.052%, (1-month USD LIBOR + 1.75%), 5/17/24		United States		6,113,568		6,135,852
Axalta Coating Systems U.S. Holdings Inc., Term B-3 Dollar Loan, 4.136%, (3-month USD LIBOR + 1.75%), 6/01/24		United States		953,845		952,786
Chemours Co., Tranche B-2 US$ Term Loan, 4.05%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		1,541,151		1,534,408
Crown Americas LLC, Dollar Term B Loan, 4.283%, (1-month USD LIBOR + 2.00%), 4/03/25		United States		1,899,170		1,905,699
Oxbow Carbon LLC,
Second Lien Term Loan, 9.802%, (1-month USD LIBOR + 7.50%), 1/04/24		United States		36,943		37,774
Tranche A Term Loan, 4.552%, (1-month USD LIBOR + 2.25%), 1/04/22		United States		2,035,000		2,040,088
Tranche B Term Loan, 5.802%, (1-month USD LIBOR + 3.50%), 1/04/23		United States		3,455,375		3,468,333
						16,074,940
Media & Entertainment 0.6%
Altice U.S. Finance I Corp., March 2017 Refinancing Term Loan Commitments, 4.552%, (1-month USD LIBOR + 2.25%), 7/28/25		United States		231,974		231,781
AMC Entertainment Holdings Inc., 2016 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/23		United States		89,932		90,101
Initial Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 12/15/22		United States		1,534,834		1,537,712
CSC Holdings LLC, March 2017 Incremental Term Loans, 4.53%, (1-month USD LIBOR + 2.25%), 7/17/25		United States		1,082,826		1,078,753
Go Daddy Operating Co. LLC, Tranche B-1 Term Loans, 4.552%, (1-month USD LIBOR + 2.25%), 2/15/24		United States		6,467,219		6,481,803

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
k,l Senior Floating Rate Interests(continued)
Media & Entertainment (continued)
Lions Gate Capital Holdings LLC, Term A Loan, 4.052%, (1-month USD LIBOR + 1.75%), 3/22/23		Canada		1,669,963	$	1,672,050
Live Nation Entertainment Inc., Term B-3 Loans, 4.063%, (1-month USD LIBOR + 1.75%), 10/31/23		United States		6,465,543		6,482,715
Mediacom Illinois LLC, Tranche N Term Loan, 3.97%, (1-week USD LIBOR + 1.75%), 2/15/24		United States		6,175,236		6,177,162
						23,752,077
Pharmaceuticals, Biotechnology & Life Sciences 0.4%
Bausch Health Cos. Inc., Initial Term Loans, 5.274%, (1-month USD LIBOR + 3.00%), 6/02/25		United States		344,827		345,617
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.563%, (1-month USD LIBOR + 4.25%), 4/29/24		United States		3,000,969		3,014,698
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.467%, (1-week USD LIBOR + 2.25%), 1/31/25		United States		2,410,139		2,415,109
Horizon Pharma Inc., Fourth Amendment Refinancing Term Loans, 5.313%, (1-month USD LIBOR + 3.00%), 3/29/24		United States		6,221,469		6,244,800
Syneos Health Inc., Initial Term B Loans, 4.302%, (1-month USD LIBOR + 2.00%), 8/01/24		United States		3,791,328		3,787,119
						15,807,343
Retailing 0.3%
Ascena Retail Group Inc., Tranche B Term Loan, 6.813%, (1-month USD LIBOR + 4.50%), 8/21/22		United States		2,841,665		2,764,229
General Nutrition Centers Inc.,
Tranche B-2 Term Loans, 11.56%, (1-month USD LIBOR + 9.25%), 3/04/21		United States		1,967,140		1,925,584
Tranche B-2 Term Loans, 13.50%, (Prime + 7.75%), 3/04/21		United States		343,764		336,502
m Harbor Freight Tools USA Inc., Refinancing Loans, 4.802%, (1-month USD LIBOR + 2.50%), 8/19/23		United States		3,966,667		3,911,816
Jo-Ann Stores Inc., Initial Loans, 7.477%, (3-month USD LIBOR + 5.00%), 10/23/23		United States		1,063,165		1,064,715
						10,002,846
Semiconductors & Semiconductor Equipment 0.0%†
MKS Instruments Inc., Tranche B-4 Term Loan, 4.052%, (1-month USD LIBOR + 1.75%), 4/29/23		United States		102,440		102,793
ON Semiconductor Corp., 2018 New Replacement Term B-3 Loans, 4.052%, (1-month USD LIBOR + 1.75%), 3/31/23		United States		1,245,405		1,245,016
						1,347,809
Software & Services 0.0%†
Rackspace Hosting Inc., Term B Loans, 5.348%, (3-month USD LIBOR + 3.00%), 11/03/23		United States		450,819		438,516
Technology Hardware & Equipment 0.0%†
CommScope Inc., Tranche 5 Term Loans, 4.302%, (1-month USD LIBOR + 2.00%), 12/29/22		United States		1,135,498		1,139,756
Telecommunication Services 0.0%†
Global Tel*Link Corp., Term Loan, 6.386%, (3-month USD LIBOR + 4.00%), 5/23/20		United States		258,582		259,713

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal  Amount*				Value
k,l Senior Floating Rate Interests (continued)
Transportation 0.4%
Air Canada, Term Loan, 4.295%, (1-month USD LIBOR + 2.00%), 10/06/23		Canada		54,505			$	54,687
American Airlines Inc.,
2018 Replacement Term Loans, 4.045%, (1-month USD LIBOR + 1.75%), 6/27/25		United States		6,450,000				6,326,541
2021 Replacement Term Loans, 4.277%, (3-month USD LIBOR + 2.00%), 10/10/21		United States		1,311,435				1,311,230
Hertz Corp., Tranche B-1 Term Loan, 5.06%, (1-month USD LIBOR + 2.75%), 6/30/23		United States		3,889,447				3,875,165
Navios Maritime Midstream Partners LP, Initial Term Loan, 6.84%, (3-month USD LIBOR + 4.50%), 6/18/20		Marshall Islands		1,683,626				1,624,699
Navios Maritime Partners LP, Initial Term Loan, 7.34%, (3-month USD LIBOR + 5.00%), 9/14/20		United States		2,775,003				2,779,629
								15,971,951
Utilities 0.1%
EFS Cogen Holdings I LLC (Linden), Term B Advance, 5.64%, (3-month USD LIBOR + 3.25%), 6/28/23		United States		4,823,511				4,823,082
NRG Energy Inc., Term Loan B, 4.136%, (3-month USD LIBOR + 1.75%), 6/30/23		United States		1,026,375				1,023,424
								5,846,506
Total Senior Floating Rate Interests (Cost $170,674,394)								170,770,973
Foreign Government and Agency Securities 1.4%
g The Export-Import Bank of China, senior note, 144A, 3.625%, 7/31/24		China		11,300,000				11,084,622
g The Export-Import Bank of India, senior note, 144A, 3.875%, 2/01/28		India		11,400,000				10,478,059
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20		South Korea		18,800,000				18,590,004
Government of Mexico, senior note, M 10, 8.50%, 12/13/18		Mexico		2,000,000	o	MXN		9,848,431
g Government of Ukraine,
144A, 7.75%, 9/01/20		Ukraine		292,000				291,175
144A, 7.75%, 9/01/21		Ukraine		229,000				225,617
144A, 7.75%, 9/01/22		Ukraine		229,000				222,531
144A, 7.75%, 9/01/23		Ukraine		229,000				218,552
144A, 7.75%, 9/01/24		Ukraine		229,000				215,530
144A, 7.75%, 9/01/25		Ukraine		229,000				211,395
144A, 7.75%, 9/01/26		Ukraine		229,000				207,594
144A, 7.75%, 9/01/27		Ukraine		229,000				205,470
a,p 144A, VRI, GDP Linked Security, 5/31/40		Ukraine		474,000				244,470
g Harvest Operations Corp., senior note, 144A, 4.20%, 6/01/23		South Korea		3,800,000				3,842,883
Total Foreign Government and Agency Securities (Cost $58,948,656)								55,886,333
U.S. Government and Agency Securities 9.8%
U.S. Treasury Bond, 3.75%, 8/15/41		United States		11,600,000				12,315,484
2.875%, 5/15/43		United States		38,100,000				34,848,850
3.00%, 11/15/44		United States		13,000,000				12,132,656
2.875%, 8/15/45		United States		5,000,000				4,546,973
2.50%, 2/15/46		United States		50,000,000				42,048,828

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
U.S. Government and Agency Securities (continued)
U.S. Treasury Bond, (continued) 2.50%, 5/15/46		United States		60,000,000	$	50,409,375
2.25%, 8/15/46		United States		52,500,000		41,718,018
2.75%, 11/15/47		United States		11,500,000		10,140,664
3.125%, 5/15/48		United States		6,500,000		6,180,967
3.00%, 8/15/48		United States		10,000,000		9,275,000
U.S. Treasury Note, 2.125%, 6/30/21		United States		27,500,000		26,951,074
2.00%, 8/31/21		United States		30,000,000		29,252,930
2.00%, 10/31/22		United States		20,000,000		19,277,734
2.00%, 11/30/22		United States		26,900,000		25,907,012
2.75%, 6/30/25		United States		15,000,000		14,719,043
q Index Linked, 0.125%, 7/15/24		United States		64,244,349		61,231,164
Total U.S. Government and Agency Securities (Cost $430,297,506)						400,955,772
Asset-Backed Securities and Commercial Mortgage-Backed Securities 26.0%
Banks 0.6%
Citigroup Commercial Mortgage Trust, 2006-C5, AJ, 5.482%, 10/15/49		United States		3,320,532		3,213,677
r Commercial Mortgage Trust, 2006-GG7, AJ, FRN, 5.667%, 7/10/38		United States		7,281,000		6,710,192
2006-GG7, AM, FRN, 5.667%, 7/10/38		United States		1,290,290		1,291,580
g,r CSMC, 2009-15R, 3A1, 144A, FRN, 3.966%, 3/26/36		United States		1,402,389		1,410,247
s CWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 3.031%, (1-month USD LIBOR + 0.75%), 3/25/34		United States		1,037,131		1,044,621
g,s DBCG Mortgage Trust, 2017-BBG, A, 144A, FRN, 2.98%, (1-month USD LIBOR + 0.70%), 6/15/34		United States		9,840,000		9,844,949
s FNMA, 2005-122, FN, FRN, 2.631%, (1-month USD LIBOR + 0.35%), 1/25/36		United States		410,522		410,723
r,t GE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49		United States		1,687,435		1,687,244
s Merrill Lynch Mortgage Investors Trust, 2003-A, 1A, FRN, 3.021%, (1-month USD LIBOR + 0.74%), 3/25/28		United States		981,562		948,495
s Morgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 3.016%, (1-month USD LIBOR + 0.735%), 1/25/35		United States		544,185		545,138
b Weyerhaeuser Mortgage Co., 1984-A, 7.43%, 1/01/24		United States		12,079		12,079
						27,118,945
Diversified Financials 25.4%
s American Home Mortgage Investment Trust, 2004-3, 4A, FRN, 4.034%, (6-month USD LIBOR + 1.50%), 10/25/34		United States		1,114,852		1,106,358
s Ameriquest Mortgage Securities Inc. Asset-Backed Pass-Through Certificates, 2004-R4, M1, FRN, 3.106%, (1-month USD LIBOR + 0.825%), 6/25/34		United States		2,966,528		2,986,289
g,s AMMC CLO 21 Ltd., 2017-21A, C, 144A, FRN, 4.449%, (3-month USD LIBOR + 2.10%), 11/02/30		United States		1,000,000		988,520

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g,s AMMC CLO XI Ltd.,
2012-11A, BR2, 144A, FRN, 4.12%, (3-month USD LIBOR + 1.60%), 4/30/31		United States		5,050,000	$	4,970,109
2012-11A, CR2, 144A, FRN, 4.42%, (3-month USD LIBOR + 1.90%), 4/30/31		United States		3,750,000		3,745,312
2012-11A, DR2, 144A, FRN, 5.37%, (3-month USD LIBOR + 2.85%), 4/30/31		United States		1,750,000		1,719,568
g,s Antares CLO Ltd., 2018-1A, B, 144A, FRN, 4.119%, (3-month USD LIBOR + 1.65%), 4/20/31		United States		12,900,000		12,907,095
g,s Ares CLO Ltd., 2018-48A, D, 144A, FRN, 5.039%, (3-month USD LIBOR + 2.70%), 7/20/30		United States		2,000,000		1,978,000
s Argent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 2.641%, (1-month USD LIBOR + 0.36%), 10/25/35		United States		2,298,393		2,307,821
g,s Atrium IX, 9A, AR, 144A, FRN, 3.551%, (3-month USD LIBOR + 1.24%), 5/28/30		United States		4,500,000		4,507,605
g,s Atrium XIII, 2013A, B, 144A, FRN, 3.977%, (3-month USD LIBOR + 1.50%), 11/21/30		United States		2,700,000		2,695,410
2013A, C, 144A, FRN, 4.277%, (3-month USD LIBOR + 1.80%), 11/21/30		United States		3,753,500		3,725,048
2013A, D, 144A, FRN, 5.177%, (3-month USD LIBOR + 2.70%), 11/21/30		United States		5,500,000		5,438,565
g,r Atrium XIV LLC, 14A, A2A, 144A, FRN, 3.76%, 8/23/30		United States		7,400,000		7,395,856
g,s Bain Capital Credit CLO,
2018-1A, A1, 144A, FRN, 3.437%, (3-month USD LIBOR + 0.96%), 4/23/31		United States		12,000,000		11,896,440
2018-1A, A2, 144A, FRN, 3.627%, (3-month USD LIBOR + 1.15%), 4/23/31		United States		5,100,000		5,112,138
g,r BBC Middle Market CLO LLC, 2018-1A, A2, 144A, FRN, 4.369%, 10/20/30		United States		5,100,000		5,098,674
s Bear Stearns ALT-A Trust, 2004-13, A2, FRN, 3.161%, (1-month USD LIBOR + 0.88%), 11/25/34		United States		211,240		211,154
g,s Bellemeade Re Ltd., 2018-1A, M1B, 144A, FRN, 3.881%, (1-month USD LIBOR + 1.60%), 4/25/28		Bermuda		9,850,000		9,906,569
g,s Betony CLO 2 Ltd., 2018-1A, C, 144A, FRN, 5.42%, (3-month USD LIBOR + 2.90%), 4/30/31		United States		5,000,000		4,995,000
g,r BlueMountain CLO Ltd.,
2014-2A, A2R2, 144A, FRN, 3.869%, 10/20/30		United States		5,775,775		5,779,385
2014-2A, CR2, 144A, FRN, 4.669%, 10/20/30		United States		3,600,000		3,600,000
2018-3A, B, 144A, FRN, 4.206%, 10/25/30		United States		2,000,000		1,999,640
2018-3A, C, 144A, FRN, 4.636%, 10/25/30		United States		1,071,430		1,071,237
g,r BlueMountain CLO XXII Ltd., 2018-1A, B, 144A, FRN, 4.22%, 7/30/30		United States		272,725		273,003
g,s BlueMountain Fuji U.S. CLO II Ltd., 2017-2A, B, 144A, FRN, 4.498%, (3-month USD LIBOR + 2.15%), 10/20/30		United States		4,010,000		4,025,037
g,s BlueMountain Fuji U.S. CLO III Ltd.,
2017-3A, C, 144A, FRN, 4.039%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		1,500,000		1,482,825
2017-3A, D, 144A, FRN, 4.739%, (3-month USD LIBOR + 2.40%), 1/15/30		United States		1,600,000		1,559,216

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g,r Buttermilk Park CLO Ltd., 2018-1A, C, 144A, FRN, 4.438%, 10/15/31		United States		1,452,380	$	1,451,320
g,s Carlyle Global Market Strategies CLO Ltd.,
2012-4A, AR, 144A, FRN, 3.919%, (3-month USD LIBOR + 1.45%), 1/20/29		United States		6,280,000		6,292,874
2014-1A, A1R2, 144A, FRN, 3.419%, (3-month USD LIBOR + 0.97%), 4/17/31		United States		725,000		719,809
2014-1A, A2R2, 144A, FRN, 3.579%, (3-month USD LIBOR + 1.13%), 4/17/31		United States		6,300,000		6,300,000
2014-4RA, C, 144A, FRN, 5.336%, (3-month USD LIBOR + 2.90%), 7/15/30		United States		2,950,000		2,928,229
g,r Carlyle GMS Finance MM CLO LLC, 2015-1A, A2R, 144A, FRN, 4.636%, 10/15/31		United States		10,000,000		10,017,500
g,s Carlyle U.S. CLO Ltd., 2017-1A, A1A, 144A, FRN, 3.769%, (3-month USD LIBOR + 1.30%), 4/20/31		United States		18,160,000		18,172,167
2017-2A, A1B, 144A, FRN, 3.689%, (3-month USD LIBOR + 1.22%), 7/20/31		United States		10,650,000		10,673,323
2017-2A, B, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/31		United States		8,829,000		8,856,635
2017-3A, B, 144A, FRN, 4.819%, (3-month USD LIBOR + 2.35%), 7/20/29		United States		1,000,000		1,002,530
2017-4A, C, 144A, FRN, 5.236%, (3-month USD LIBOR + 2.80%), 1/15/30		United States		545,000		536,945
2017-5A, A2, 144A, FRN, 3.869%, (3-month USD LIBOR + 1.40%), 1/20/30		United States		2,000,000		1,971,280
2017-5A, B, 144A, FRN, 4.269%, (3-month USD LIBOR + 1.80%), 1/20/30		United States		7,000,000		6,881,770
g,s Catamaran CLO Ltd.,
2014-2A, BR, 144A, FRN, 5.395%, (3-month USD LIBOR + 2.95%), 10/18/26		United States		6,401,000		6,422,443
2015-1A, C2R, 144A, FRN, 4.419%, (3-month USD LIBOR + 1.95%), 4/22/27		United States		7,600,000		7,608,816
g,s Cent CLO LP,
2014-22A, A1R, 144A, FRN, 3.753%, (3-month USD LIBOR + 1.41%), 11/07/26		United States		6,280,000		6,285,903
2014-22A, C, 144A, FRN, 6.093%, (3-month USD LIBOR + 3.75%), 11/07/26		United States		2,500,000		2,506,375
g,r CIM Trust, 2018-INV1, A4, 144A, FRN, 4.00%, 8/25/48		United States		13,341,722		13,262,516
g,r Citigroup Mortgage Loan Trust, 2013-A, A, 144A, FRN, 3.00%, 5/25/42		United States		1,179,210		1,161,693
g,r Colombia Cent CLO 27 Ltd., 2018-27A, A2A, 144A, FRN, 4.899%, 10/25/28		United States		769,230		769,615
g,r Consumer Loan Underlying Bond (CLUB) Certificate Issuer Trust I, 2018-14, PT, 144A, FRN, 9.57%, 9/16/41		United States		7,593,789		7,573,739
g,s Cook Park CLO Ltd., 2018-1A, A2, 144A, FRN, 3.569%, (3-month USD LIBOR + 1.12%), 4/17/30		United States		6,000,000		5,978,880
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19		United States		156,541		162,400
g,s Dryden 33 Senior Loan Fund, 2014-33A, AR, 144A, FRN, 3.866%, (3-month USD LIBOR + 1.43%), 10/15/28		United States		12,185,000		12,203,156

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CONSOLIDATED STATEMENT OF INVESTMENTS                     

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g,s Dryden 41 Senior Loan Fund, 2015-41A, AR, 144A, FRN, 3.406%, (3-month USD LIBOR + 0.97%), 4/15/31		United States		18,000,000	$	17,890,920
g,s Dryden 42 Senior Loan Fund, 2016-42A, DR, 144A, FRN, 5.366%, (3-month USD LIBOR + 2.93%), 7/15/30		United States		800,000		793,008
g,r Dryden 45 Senior Loan Fund, 2016-45A, CR, 144A, FRN, 4.636%, 10/15/30		United States		1,250,000		1,250,050
g,s Dryden 49 Senior Loan Fund,
2017-49A, A, 144A, FRN, 3.659%, (3-month USD LIBOR + 1.21%), 7/18/30		United States		7,030,000		7,037,944
2017-49A, C, 144A, FRN, 4.799%, (3-month USD LIBOR + 2.35%), 7/18/30		United States		5,320,000		5,331,225
g,s Dryden 50 Senior Loan Fund,
2017-50A, A1, 144A, FRN, 3.656%, (3-month USD LIBOR + 1.22%), 7/15/30		United States		5,660,000		5,668,943
2017-50A, C, 144A, FRN, 4.686%, (3-month USD LIBOR + 2.25%), 7/15/30		United States		2,600,000		2,604,914
g,s Dryden 53 CLO Ltd.,
2017-53A, B, 144A, FRN, 3.836%, (3-month USD LIBOR + 1.40%), 1/15/31		United States		2,200,000		2,177,780
2017-53A, C, 144A, FRN, 4.136%, (3-month USD LIBOR + 1.70%), 1/15/31		United States		7,200,000		7,107,120
2017-53A, D, 144A, FRN, 4.836%, (3-month USD LIBOR + 2.40%), 1/15/31		United States		5,400,000		5,206,032
g,s Dryden 55 CLO Ltd.,
2018-55A, A1, 144A, FRN, 3.456%, (3-month USD LIBOR + 1.02%), 4/15/31		United States		17,000,000		16,970,080
2018-55A, D, 144A, FRN, 5.286%, (3-month USD LIBOR + 2.85%), 4/15/31		United States		2,000,000		1,999,220
g,s Dryden 64 CLO Ltd.,
2018-64A, A, 144A, FRN, 3.415%, (3-month USD LIBOR + 0.97%), 4/18/31		United States		1,200,000		1,194,108
2018-64A, D, 144A, FRN, 5.095%, (3-month USD LIBOR + 2.65%), 4/18/31		United States		4,000,000		3,924,840
g,r Eleven Madison Trust Mortgage Trust, 2015-11MD, A, 144A, FRN, 3.555%, 9/10/35		United States		3,255,000		3,214,584
g,s Ellington CLO III Ltd., 2018-3A, A1, 144A, FRN, 4.119%, (3-month USD LIBOR + 1.65%), 7/20/30		United States		5,400,000		5,396,922
s FHLMC Structured Agency Credit Risk Debt Notes,
2014-DN1, M2, FRN, 4.481%, (1-month USD LIBOR + 2.20%), 2/25/24		United States		2,273,447		2,333,084
2014-DN3, M3, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 8/25/24		United States		15,097,300		16,413,103
2014-DN4, M3, FRN, 6.831%, (1-month USD LIBOR + 4.55%), 10/25/24		United States		9,904,340		10,952,667
2015-DN1, M3, FRN, 6.431%, (1-month USD LIBOR + 4.15%), 1/25/25		United States		12,918,402		13,841,570
2015-DNA2, M3, FRN, 6.181%, (1-month USD LIBOR + 3.90%), 12/25/27		United States		25,057,000		27,645,393
2015-DNA3, M2, FRN, 5.131%, (1-month USD LIBOR + 2.85%), 4/25/28		United States		14,271,926		14,733,048

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
s FHLMC Structured Agency Credit Risk Debt Notes, (continued)
2015-DNA3, M3, FRN, 6.981%, (1-month USD LIBOR + 4.70%), 4/25/28		United States		3,330,000	$	3,940,822
2015-HQ1, M3, FRN, 6.087%, (1-month USD LIBOR + 3.80%), 3/25/25		United States		28,711,666		30,437,378
2015-HQ2, M3, FRN, 5.537%, (1-month USD LIBOR + 3.25%), 5/25/25		United States		780,000		867,887
2015-HQA1, M2, FRN, 4.931%, (1-month USD LIBOR + 2.65%), 3/25/28		United States		12,332,662		12,534,462
2015-HQA2, M2, FRN, 5.081%, (1-month USD LIBOR + 2.80%), 5/25/28		United States		1,833,021		1,882,273
2016-DNA1, M2, FRN, 5.187%, (1-month USD LIBOR + 2.90%), 7/25/28		United States		5,391,987		5,512,210
2016-DNA1, M3, FRN, 7.837%, (1-month USD LIBOR + 5.55%), 7/25/28		United States		29,600,000		35,621,522
2016-DNA2, M2, FRN, 4.481%, (1-month USD LIBOR + 2.20%), 10/25/28		United States		17,690,599		17,860,843
2016-HQA1, M2, FRN, 5.031%, (1-month USD LIBOR + 2.75%), 9/25/28		United States		9,963,752		10,167,815
2016-HQA2, M2, FRN, 4.531%, (1-month USD LIBOR + 2.25%), 11/25/28		United States		16,716,683		17,057,526
2016-HQA2, M3, FRN, 7.431%, (1-month USD LIBOR + 5.15%), 11/25/28		United States		11,120,000		13,060,573
2016-HQA3, M2, FRN, 3.631%, (1-month USD LIBOR + 1.35%), 3/25/29		United States		2,250,000		2,283,493
g,s Flagship CLO VIII Ltd.,
2014-8A, ARR, 144A, FRN, 3.286%, (3-month USD LIBOR + 0.85%), 1/16/26		United States		5,900,000		5,892,212
2014-8A, DR, 144A, FRN, 5.486%, (3-month USD LIBOR + 3.05%), 1/16/26		United States		5,500,000		5,494,995
s FNMA Connecticut Avenue Securities,
2014-C02, 1M2, FRN, 4.881%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		14,520,000		15,444,577
2014-C02, 2M2, FRN, 4.881%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		3,244,357		3,434,996
2014-C03, 1M2, FRN, 5.281%, (1-month USD LIBOR + 3.00%), 7/25/24		United States		17,576,931		18,736,942
2014-C03, 2M2, FRN, 5.181%, (1-month USD LIBOR + 2.90%), 7/25/24		United States		3,473,023		3,714,009
2014-C04, 1M1, FRN, 7.181%, (1-month USD LIBOR + 4.90%), 11/25/24		United States		15,422,786		17,634,736
2014-C04, 2M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 11/25/24		United States		4,383,329		4,944,049
2015-C01, 1M2, FRN, 6.581%, (1-month USD LIBOR + 4.30%), 2/25/25		United States		3,565,130		3,914,733
2015-C01, 2M2, FRN, 6.831%, (1-month USD LIBOR + 4.55%), 2/25/25		United States		15,363,844		16,577,895
2015-C02, 1M2, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		16,743,266		18,366,275
2015-C02, 2M2, FRN, 6.281%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		5,047,454		5,445,637

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
s FNMA Connecticut Avenue Securities, (continued)
2015-C03, 1M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		11,884,229	$	13,378,490
2015-C03, 2M2, FRN, 7.281%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		5,127,286		5,700,058
2017-C01, 1B1, FRN, 8.031%, (1-month USD LIBOR + 5.75%), 7/25/29		United States		5,375,000		6,498,482
g,r FREMF Mortgage Trust, 2018-K72, B, 144A, FRN, 3.992%, 12/25/50		United States		17,900,000		17,204,338
g,u,v Galaxy CLO Ltd., 2018-26A, D, 144A, FRN, 11/22/31		United States		586,957		586,957
g,s Galaxy XXVII CLO Ltd.,
2018-27A, A, 144A, FRN, 3.335%, (3-month USD LIBOR + 1.02%), 5/16/31		United States		1,000,000		995,520
2018-27A, C, 144A, FRN, 5.065%, (3-month USD LIBOR + 2.75%), 5/16/31		United States		750,000		747,413
g,s Gilbert Park CLO Ltd.,
2017-1A, B, 144A, FRN, 4.036%, (3-month USD LIBOR + 1.60%), 10/15/30		United States		1,000,000		1,000,550
2017-1A, D, 144A, FRN, 5.386%, (3-month USD LIBOR + 2.95%), 10/15/30		United States		2,600,000		2,603,250
s GSAA Home Equity Trust, 2005-5, M3, FRN, 3.226%, (1-month USD LIBOR + 0.945%), 2/25/35		United States		1,984,051		1,999,684
g,s Halcyon Loan Advisors Funding Ltd., 2018-1A, A2, 144A, FRN, 4.183%, (3-month USD LIBOR + 1.80%), 7/21/31		United States		8,500,000		8,473,480
g,s HayFin Kingsland IX Ltd., 2013-6A, BR, 144A, FRN, 4.309%, (3-month USD LIBOR + 1.80%), 4/28/31		United States		14,500,000		14,563,800
s Home Equity Mortgage Trust, 2004-4, M3, FRN, 3.256%, (1-month USD LIBOR + 0.975%), 12/25/34		United States		1,115,998		1,117,638
g,r HPS Loan Management Ltd., 2013A-18, A2, 144A, FRN, 3.886%, 10/15/30		United States		8,600,000		8,601,376
2013A-18, C, 144A, FRN, 4.586%, 10/15/30		United States		3,000,000		2,999,490
g,s Invitation Homes Trust, 2017-SFR2, A, 144A, FRN, 3.14%, (1-month USD LIBOR + 0.85%), 12/17/36		United States		9,767,438		9,792,720
g,s LCM 26 Ltd.,
26A, B, 144A, FRN, 3.869%, (3-month USD LIBOR + 1.40%), 1/20/31		United States		2,000,000		1,976,420
26A, C, 144A, FRN, 4.269%, (3-month USD LIBOR + 1.80%), 1/20/31		United States		9,600,000		9,494,304
26A, D, 144A, FRN, 4.969%, (3-month USD LIBOR + 2.50%), 1/20/31		United States		600,000		584,640
g,s LCM XVI LP, 2016A, DR, 144A, FRN, 5.436%, (3-month USD LIBOR + 3.00%), 7/15/26		United States		2,750,000		2,750,467
g,s LCM XVIII LP, 2018A, CR, 144A, FRN, 4.319%, (3-month USD LIBOR + 1.85%), 4/20/31		United States		2,000,000		1,983,180
g,s LCM XXIII Ltd., 23A, A2, 144A, FRN, 4.319%, (3-month USD LIBOR + 1.85%), 10/20/29		United States		2,000,000		2,006,220
g,s LCM XXV Ltd., 25A, C2, 144A, FRN, 4.769%, (3-month USD LIBOR + 2.30%), 7/20/30		United States		443,666		445,796

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g,s Long Point Park CLO Ltd.,
2017-1A, A2, 144A, FRN, 3.824%, (3-month USD LIBOR + 1.375%), 1/17/30		United States		5,800,000	$	5,749,076
2017-1A, B, 144A, FRN, 4.149%, (3-month USD LIBOR + 1.70%), 1/17/30		United States		2,700,000		2,651,778
2017-1A, C, 144A, FRN, 4.849%, (3-month USD LIBOR + 2.40%), 1/17/30		United States		3,100,000		3,014,223
g,u,v Madison Park Funding XXIX Ltd.,
2018-29A, A2, 144A, FRN, 10/18/30		United States		1,727,273		1,727,273
g Madison Park Funding XXIII Ltd.,
s 2017-23A, B, 144A, FRN, 4.209%, (3-month USD LIBOR + 1.70%), 7/27/30		United States		3,840,000		3,839,155
s 2017-23A, C, 144A, FRN, 4.859%, (3-month USD LIBOR + 2.35%), 7/27/30		United States		1,000,000		1,003,750
u,v 2018-29A, C, 144A, FRN, 10/18/30		United States		1,072,581		1,072,581
g,s Madison Park Funding XXVII Ltd., 2018-27A, A1B, 144A, FRN, 3.599%, (3-month USD LIBOR + 1.13%), 4/20/30		United States		6,837,000		6,836,180
g,s Madison Park Funding XXVIII Ltd., 2018-28A, D, 144A, FRN, 5.037%, (3-month USD LIBOR + 2.70%), 7/15/30		United States		2,000,000		1,960,160
g,s Magnetite IX Ltd., 2014-9A, BR, 144A, FRN, 4.49%, (3-month USD LIBOR + 2.00%), 7/25/26		United States		1,010,000		1,012,545
g,r Magnetite Ltd., 2015-14RA, A1, 144A, FRN, 3.559%, 10/18/31		United States		15,000,000		14,999,550
g,s Magnetite XVIII Ltd., 2016-18A, B, 144A, FRN, 4.064%, (3-month USD LIBOR + 1.75%), 11/15/28		United States		6,000,000		6,007,440
g,r Neuberger Berman CLO Ltd.,
2016-22A, A2R, 144A, FRN, 3.849%, 10/17/30		United States		8,300,000		8,300,000
2016-22A, CR, 144A, FRN, 4.649%, 10/17/30		United States		3,194,445		3,194,413
g,s Neuberger Berman CLO XVI-S Ltd.,
2017-16SA, C, 144A, FRN, 4.036%, (3-month USD LIBOR + 1.60%), 1/15/28		United States		2,350,000		2,328,732
2017-16SA, D, 144A, FRN, 4.936%, (3-month USD LIBOR + 2.50%), 1/15/28		United States		650,000		645,372
g,s Neuberger Berman Loan Advisers CLO Ltd.,
2017-26A, B, 144A, FRN, 3.945%, (3-month USD LIBOR + 1.50%), 10/18/30		United States		5,772,370		5,740,968
2018-27A, C, 144A, FRN, 4.136%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		4,900,000		4,883,389
g,s NZCG Funding Ltd., 2015-1A, A2R, 144A, FRN, 3.861%, (3-month USD LIBOR + 1.55%), 2/26/31		United States		11,200,000		11,107,824
g,s Octagon Investment Partners 18-R Ltd., 2018-18A, C, 144A, FRN, 5.136%, (3-month USD LIBOR + 2.70%), 4/16/31		United States		9,050,000		8,973,437
g,s Octagon Investment Partners 31 LLC, 2017-1A, C, 144A, FRN, 4.869%, (3-month USD LIBOR + 2.40%), 7/20/30		United States		1,707,068		1,715,194
g,s Octagon Investment Partners 33 Ltd.,
2017-1A, A2, 144A, FRN, 3.969%, (3-month USD LIBOR + 1.50%), 1/20/31		United States		400,000		398,548
2017-1A, C, 144A, FRN, 5.219%, (3-month USD LIBOR + 2.75%), 1/20/31		United States		2,800,000		2,780,932

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g,s Octagon Investment Partners 35 Ltd.,
2018-1A, A1B, 144A, FRN, 3.569%, (3-month USD LIBOR + 1.10%), 1/20/31		United States		3,325,000	$	3,321,608
2018-1A, B, 144A, FRN, 4.169%, (3-month USD LIBOR + 1.70%), 1/20/31		United States		450,000		442,526
g,s Octagon Investment Partners 36 Ltd.,
2018-1A, A1, 144A, FRN, 3.406%, (3-month USD LIBOR + 0.97%), 4/15/31		United States		9,000,000		8,953,200
2018-1A, A2, 144A, FRN, 3.636%, (3-month USD LIBOR + 1.20%), 4/15/31		United States		8,500,000		8,431,745
g,s Octagon Investment Partners 37 Ltd.,
2018-2A, C, 144A, FRN, 5.21%, (3-month USD LIBOR + 2.85%), 7/25/30		United States		2,000,000		1,990,560
g,r Octagon Investment Partners 38 Ltd., 2018-1A, C, 144A, FRN, 5.137%, 7/20/30		United States		4,000,000		3,996,520
g,s Octagon Investment Partners XVII Ltd., 2013-1A, CR2, 144A, FRN, 4.19%, (3-month USD LIBOR + 1.70%), 1/25/31		United States		5,250,000		5,160,750
g,s Octagon Investment Partners XX Ltd., 2014-1A, AR, 144A, FRN, 3.468%, (3-month USD LIBOR + 1.13%), 8/12/26		United States		6,500,000		6,508,580
g,s Octagon Investment Partners XXIII Ltd.,
2015-1A, BR, 144A, FRN, 3.636%, (3-month USD LIBOR + 1.20%), 7/15/27		United States		1,170,000		1,168,865
2015-1A, CR, 144A, FRN, 4.286%, (3-month USD LIBOR + 1.85%), 7/15/27		United States		2,700,000		2,703,564
2015-1A, DR, 144A, FRN, 4.986%, (3-month USD LIBOR + 2.55%), 7/15/27		United States		1,000,000		994,970
g,s Race Point IX CLO Ltd., 2015-9A, A1AR, 144A, FRN, 3.646%, (3-month USD LIBOR + 1.21%), 10/15/30		United States		1,175,000		1,177,491
g,r Race Point X CLO Ltd., 2016-10A, B1R, 144A, FRN, 4.14%, 7/25/31 .		United States		3,600,000		3,607,200
g,s Radnor RE Ltd., 2018-1, M1, 144A, FRN, 3.681%, (1-month USD LIBOR + 1.40%), 3/25/28		United States		6,557,000		6,570,210
g,s TCI-Cent CLO Income Note Issuer Ltd.,
2017-1A, B, 144A, FRN, 4.84%, (3-month USD LIBOR + 2.35%), 7/25/30		United States		3,069,687		3,081,137
2017-1A, C, 144A, FRN, 6.14%, (3-month USD LIBOR + 3.65%), 7/25/30		United States		1,000,000		1,005,440
g,s TCI-Flatiron CLO Ltd.,
2017-1A, B, 144A, FRN, 3.872%, (3-month USD LIBOR + 1.56%), 11/17/30		United States		3,500,000		3,489,605
2017-1A, C, 144A, FRN, 4.162%, (3-month USD LIBOR + 1.85%), 11/17/30		United States		2,800,000		2,777,124
2017-1A, D, 144A, FRN, 5.062%, (3-month USD LIBOR + 2.75%), 11/17/30		United States		11,800,000		11,642,352
g,r Towd Point Mortgage Trust,
2017-1, A2, 144A, FRN, 3.50%, 10/25/56		United States		8,862,000		8,632,980
2017-2, A1, 144A, FRN, 2.75%, 4/25/57		United States		4,631,982		4,536,945

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials (continued)
g Voya CLO Ltd.,
s 2013-2A, CR, 144A, FRN, 5.24%, (3-month USD LIBOR + 2.75%), 4/25/31		United States		1,650,000	$	1,616,687
s 2014-1A, BR2, 144A, FRN, 4.345%, (3-month USD LIBOR + 1.90%), 4/18/31		United States		1,000,000		998,800
s 2014-1A, CR2, 144A, FRN, 5.245%, (3-month USD LIBOR + 2.80%), 4/18/31		United States		4,000,000		3,980,040
r 2015-2A, AR, 144A, FRN, 3.447%, 7/23/27		United States		4,840,000		4,839,564
r 2016-3A, CR, 144A, FRN, 5.721%, 10/18/31		United States		2,547,170		2,547,170
s 2017-3A, B, 144A, FRN, 4.819%, (3-month USD LIBOR + 2.35%), 7/20/30		United States		3,091,704		3,101,783
s 2018-2A, A2, 144A, FRN, 3.624%, (3-month USD LIBOR + 1.25%), 7/15/31		United States		1,500,000		1,499,595
s 2018-2A, C1, 144A, FRN, 4.224%, (3-month USD LIBOR + 1.85%), 7/15/31		United States		700,000		698,488
s 2018-2A, D, 144A, FRN, 5.124%, (3-month USD LIBOR + 2.75%), 7/15/31		United States		2,000,000		1,969,040
g,s Webster Park CLO Ltd., 2015-1A, BR, 144A, FRN, 4.269%, (3-month USD LIBOR + 1.80%), 7/20/30		United States		2,000,000		1,993,660
Wells Fargo Mortgage Backed Securities Trust,
r 2004-W, A9, FRN, 4.69%, 11/25/34		United States		797,678		821,940
2007-3, 3A1, 5.50%, 4/25/22		United States		99,357		101,026
g,s West CLO Ltd.,
2014-1A, A2R, 144A, FRN, 3.795%, (3-month USD LIBOR + 1.35%), 7/18/26		United States		2,860,000		2,860,000
2014-1A, BR, 144A, FRN, 4.295%, (3-month USD LIBOR + 1.85%), 7/18/26		United States		5,060,000		5,069,007
						1,035,473,172
Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $1,061,273,808)						1,062,592,117
Mortgage-Backed Securities 24.4%
w Federal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.0%†
FHLMC, 2.268%, (11th District COF +/- MBS Margin), 11/01/27		United States		1,376,870		1,370,803
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 15.4%
FHLMC 30 Year, 4.00%, 8/01/48		United States		95,772,933		95,906,112
FHLMC 30 Year, 4.00%, 10/01/48		United States		50,904,080		50,972,241
FHLMC 30 Year, 6.00%, 6/01/37		United States		32,437		35,435
FHLMC 30 Year, 6.50%, 8/01/25 - 11/01/31		United States		85,249		93,951
FHLMC 30 Year, 7.00%, 7/01/31		United States		6,016		6,204
FHLMC 30 Year, 8.00%, 2/01/30		United States		19,521		21,822
FHLMC 30 Year, 8.50%, 10/01/24		United States		3,938		4,240
FHLMC Gold 15 Year, 5.50%, 11/01/22		United States		59,274		59,609
FHLMC Gold 15 Year, 6.00%, 10/01/21 - 9/01/22		United States		224,055		228,706
FHLMC Gold 30 Year, 3.50%, 12/01/47		United States		89,330,717		87,063,978
FHLMC Gold 30 Year, 3.50%, 4/01/48		United States		119,866,542		116,818,786
x FHLMC Gold 30 Year, 3.50%, 10/01/48		United States		90,500,000		88,117,680
FHLMC Gold 30 Year, 4.00%, 5/01/48		United States		73,130,317		73,228,951

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Mortgage-Backed Securities (continued)
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate (continued)
x FHLMC Gold 30 Year, 4.00%, 11/01/48		United States		99,655,000	$	99,697,325
FHLMC Gold 30 Year, 4.50%, 3/01/39		United States		1,696,316		1,747,746
FHLMC Gold 30 Year, 5.00%, 8/01/33 - 2/01/39		United States		9,827,445		10,374,448
FHLMC Gold 30 Year, 5.50%, 1/01/35 - 12/01/37		United States		813,247		871,809
FHLMC Gold 30 Year, 6.00%, 5/01/33 - 4/01/38		United States		1,058,990		1,162,934
FHLMC Gold 30 Year, 6.50%, 4/01/28 - 3/01/39		United States		807,810		890,645
FHLMC Gold 30 Year, 7.00%, 1/01/28 - 7/01/32		United States		61,659		68,044
FHLMC Gold 30 Year, 7.50%, 3/01/32		United States		14,978		17,008
FHLMC Gold 30 Year, 8.50%, 8/01/30		United States		1,416		1,545
FHLMC Gold 30 Year, 9.00%, 1/01/22		United States		317		319
FHLMC Gold 30 Year, 10.00%, 10/01/30		United States		3,794		3,803
						627,393,341
w Federal National Mortgage Association (FNMA) Adjustable Rate 0.1%
FNMA, 3.345% - 3.69%, (12-month USD LIBOR +/- MBS Margin), 2/01/34 - 3/01/37		United States		1,012,792		1,050,406
FNMA, 3.861%, (6-month USD LIBOR +/- MBS Margin), 10/01/32		United States		151,150		153,575
FNMA, 4.015%, (US 3 Year CMT T-Note +/- MBS Margin), 12/01/24		United States		9,478		9,685
FNMA, 2.268% - 4.107%, (11th District COF +/- MBS Margin), 12/01/27 - 9/01/34		United States		2,863,825		2,923,025
FNMA, 3.55% - 4.749%, (US 1 Year CMT T-Note +/- MBS Margin), 5/01/25 - 10/01/36		United States		263,558		276,239
						4,412,930
Federal National Mortgage Association (FNMA) Fixed Rate 6.7%
FNMA 15 Year, 4.50%, 3/01/19 - 6/01/19		United States		7,379		7,487
FNMA 15 Year, 5.50%, 12/01/22 - 12/01/23		United States		101,134		103,482
FNMA 15 Year, 6.00%, 9/01/22		United States		46,490		47,083
FNMA 30 Year, 3.50%, 11/01/47		United States		119,256,199		116,223,508
FNMA 30 Year, 3.50%, 4/01/48		United States		51,663,600		50,338,774
x FNMA 30 Year, 3.50%, 10/01/48		United States		92,400,000		89,956,456
FNMA 30 Year, 5.00%, 6/01/36 - 5/01/39		United States		1,666,478		1,758,725
FNMA 30 Year, 5.50%, 6/01/33 - 8/01/37		United States		5,755,654		6,173,838
FNMA 30 Year, 6.00%, 9/01/32 - 9/01/38		United States		7,233,089		7,891,012
FNMA 30 Year, 6.50%, 8/01/28 - 5/01/37		United States		191,458		208,909
FNMA 30 Year, 7.00%, 11/01/25		United States		3,222		3,233
FNMA 30 Year, 7.50%, 1/01/30		United States		11,389		12,986
FNMA 30 Year, 8.50%, 4/01/30 - 5/01/32		United States		63,715		73,772
FNMA 30 Year, 9.00%, 11/01/26 - 5/01/27		United States		63,666		64,910
						272,864,175
w Government National Mortgage Association (GNMA) Adjustable Rate 0.0%†
GNMA, 3.125% - 3.375%, (US 1 Year CMT T-Note +/- MBS Margin), 1/20/23 - 10/20/26		United States		32,656		33,478
Government National Mortgage Association (GNMA) Fixed Rate 2.2%
GNMA I SF 30 Year, 4.50%, 9/20/48		United States		85,449,422		87,811,124
GNMA I SF 30 Year, 6.00%, 1/15/39		United States		166,913		179,021
GNMA I SF 30 Year, 6.50%, 10/15/31 - 7/15/38		United States		21,430		23,393
GNMA I SF 30 Year, 7.00%, 10/15/27 - 6/15/31		United States		30,175		33,296
GNMA I SF 30 Year, 7.50%, 2/15/22 - 5/15/26		United States		49,916		50,725

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Principal   Amount*		Value
Mortgage-Backed Securities (continued)
Government National Mortgage Association (GNMA) Fixed Rate (continued)
GNMA I SF 30 Year, 9.00%, 9/15/25 - 1/15/31		United States		1,395	$	1,423
GNMA II SF 30 Year, 6.00%, 5/20/31		United States		3,888		4,201
GNMA II SF 30 Year, 6.50%, 3/20/28 - 7/20/38		United States		371,451		417,998
GNMA II SF 30 Year, 7.50%, 8/20/30 - 1/20/33		United States		40,818		46,013
						88,567,194
Total Mortgage-Backed Securities (Cost $1,014,179,777)						994,641,921
Municipal Bonds 1.9%
California State GO, Various Purpose, 6.00%, 11/01/39		United States		2,385,000		2,477,276
Chicago Transit Authority Sales and Transfer Tax Receipts Revenue, Pension Funding, Series A, 6.899%, 12/01/40		United States		800,000		1,001,432
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		10,221,100
Minnesota State GO, Various Purpose, Refunding, Series F, 4.00%, 10/01/24		United States		5,760,000		6,179,155
New Jersey EDA Revenue, School Facilities Construction, Refunding, Series NN, 5.00%, 3/01/30		United States		3,300,000		3,456,585
Orlando Health Obligated Group, 3.777%, 10/01/28		United States		2,810,000		2,731,038
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		4,698,691
Consolidated, Refunding, One Hundred Ninety-Second Series, 4.81%, 10/15/65		United States		15,000,000		15,905,100
Providence St. Joseph Health Obligated Group, 2.746%, 10/01/26		United States		8,875,000		8,135,818
y Puerto Rico Electric Power Authority Power Revenue, Series A, 6.75%, 7/01/36		United States		12,000,000		7,770,000
San Jose RDA Successor Agency Tax Allocation, Senior, Refunding, Series A-T, 3.226%, 8/01/27		United States		6,150,000		5,894,898
University of California Revenue, Limited Project, Refunding, Series J, 4.131%, 5/15/45		United States		10,750,000		10,444,807
Total Municipal Bonds (Cost $82,366,774)						78,915,900
				Shares
Escrows and Litigation Trusts 0.0%
a,b Motors Liquidation Co., Escrow Account, cvt. pfd., C		United States		43,500		—
a,b NewPage Corp., Litigation Trust		United States		2,500,000		—
Total Escrows and Litigation Trusts (Cost $2,307)						—
Total Investments before Short Term Investments (Cost $4,409,617,357)						4,292,780,297

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

	Country		Shares		Value
Short Term Investments (Cost $39,095,058) 0.9%
Money Market Funds 0.9%
d,z Institutional Fiduciary Trust Money Market Portfolio, 1.83%		United States		39,095,058	$	39,095,058
Total Investments (Cost $4,448,712,415) 106.1%						4,331,875,355
Other Assets, less Liabilities (6.1)%						(249,974,338	)
Net Assets 100.0%					$	4,081,901,017

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

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

^aNon-income producing.

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

^bFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.

^cSee Note 8 regarding restricted securities.

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

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

^fSecurity 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 October 31, 2018, the aggregate value of these securities was $36,529,073, representing 0.9% of net assets.

^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. At October 31, 2018, the aggregate value of these securities was $1,112,927,229, representing 27.3% of net assets.

^hPerpetual security with no stated maturity date.

ⁱSee Note 1(f) regarding loan participation notes.

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

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

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

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

ⁿA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^oPrincipal amount is stated in 100 Mexican Peso Units.

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

^qPrincipal amount of security is adjusted for inflation. See Note 1(l).

^rAdjustable rate security with an interest rate that is not based on a published reference index and spread. The rate is based on the structure of the agreement and current market conditions. The coupon rate shown represents the rate at period end.

^sThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.

^tThe 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.

^uSecurity purchased on a when-issued basis. See Note 1(d).

^vThe coupon rate will be determined at time of issue.

^wAdjustable Rate Mortgage-Backed Security (ARM); the rate shown is the effective rate at period end. ARM rates are not based on a published reference rate and spread, but instead pass-through weighted average interest income inclusive of any caps or floors, if applicable, from the underlying mortgage loans in which the majority of mortgages pay interest based on the index shown at their designated reset dates plus a spread, less the applicable servicing and guaranty fee (MBS margin).

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

^ySee Note 7 regarding defaulted securities.

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

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

At October 31, 2018, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts

Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Interest Rate Contracts
Australian 10 Yr. Bond		Long		280	$	25,649,334		12/17/18	$	(40,979	)
Canadian 10 Yr. Bond		Long		332		33,334,954		12/18/18		(448,944	)
CME Ultra Long Term U.S. Treasury Bond		Long		70		10,445,313		12/19/18		(737,380	)
Euro-Bund		Short		420		76,210,839		12/06/18		(195,947	)
U.S. Treasury 5 Yr. Note		Long		1,323		148,682,461		12/31/18		(527,936	)
U.S. Treasury 10 Yr. Note		Long		370		43,821,875		12/19/18		(139,730	)
U.S. Treasury 30 Yr. Bond		Long		1,095		151,246,875		12/19/18		(6,880,925	)
Ultra 10 Yr. U.S. Treasury Note		Long		162		20,267,719		12/19/18		(379,023	)
Total Futures Contracts									$	(9,350,864	)

*As of period end.

At October 31, 2018, 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
Japanese Yen		JPHQ		Sell		1,400,000,000	$	12,917,274		1/23/19	$	419,572	$	—
Indian Rupee		DBAB		Buy		631,935,000		8,449,459		2/04/19		—		(29,122	)
Indian Rupee		JPHQ		Buy		386,000,000		5,159,393		2/04/19		—		(16,064	)
Indonesian Rupiah		DBAB		Buy		139,844,100,000		8,975,873		2/04/19		54,950		—
Indonesian Rupiah		JPHQ		Buy		6,900,000,000		441,374		2/04/19		4,213		—
Mexican Peso		DBAB		Buy		138,200,000		7,222,518		2/05/19		—		(529,570	)
Mexican Peso		JPHQ		Buy		261,250,000		13,017,647		2/05/19		—		(365,456	)
Canadian Dollar		JPHQ		Sell		15,760,000		12,323,717		3/14/19		319,842		—
Euro		DBAB		Sell		11,401,350		13,514,019		3/14/19		443,157		—
Euro		JPHQ		Sell		6,401,460		7,594,821		3/14/19		255,987		—
Polish Zloty		JPHQ		Buy		31,600,000		8,620,219		3/14/19		—		(352,471	)
Swedish Krona		JPHQ		Buy		131,600,000		14,957,333		3/14/19		—		(399,852	)
Swedish Krona		JPHQ		Sell		62,400,000		7,192,934		3/14/19		290,299		—
Australian Dollar		JPHQ		Sell		16,750,000		11,872,316		4/11/19		—		(12,537	)
Brazilian Real		JPHQ		Buy		44,800,000		10,616,114		4/11/19		1,246,283		—
Brazilian Real		JPHQ		Sell		19,500,000		5,102,041		4/11/19		—		(61,279	)
Chinese Yuan Renminbi		JPHQ		Sell		86,300,000		12,320,651		4/11/19		36,513		—
Philippine Peso		JPHQ		Sell		454,000,000		8,224,761		4/11/19		—		(181,712	)
South Korean Won		JPHQ		Sell		14,000,000,000		12,375,691		4/11/19		31,536		—
Total Forward Exchange Contracts											$	3,102,352	$	(1,948,063	)
Net unrealized appreciation (depreciation)											$	1,154,289

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

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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

At October 31, 2018, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts

Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Counter- party		Maturity Date		Notional   Amounta		Value		Unamortized Upfront Payments (Receipts)		Unrealized Appreciation (Depreciation)		Ratingb
Centrally Cleared Swap Contracts
Contracts to Sell Protectionc,d
Traded Index
CDX.EM.30		1.00%		Quarterly				12/20/23	$	56,100,000	$	(2,603,829)	$	(2,471,224)	$	(132,605)		Investment
																		Grade
CDX.NA.HY.31		5.00%		Quarterly				12/20/23		20,600,000		1,209,504		1,097,290		112,214		Non-
																		Investment
																		Grade
CDX.NA.IG.24		1.00%		Quarterly				6/20/25		25,000,000		53,270		(38,872)		92,142		Investment
																		Grade
CDX.NA.IG.30		1.00%		Quarterly				6/20/23		13,850,000		236,413		258,534		(22,121)		Investment
																		Grade
CDX.NA.IG.31		1.00%		Quarterly				12/20/23		24,500,000		392,324		462,634		(70,310)		Investment
Total Centrally Cleared Swap Contracts											$	(712,318)	$	(691,638)	$	(20,680)		Grade
OTC Swap Contracts
Contracts to Buy Protectionc
Single Name
The AES Corp.		(5.00)%		Quarterly		JPHQ		6/20/22	$	13,275,000	$	(1,991,406)	$	(1,305,500)	$	(685,906)
Ally Financial Inc.		(5.00)%		Quarterly		CITI		12/20/22		5,200,000		(792,461)		(785,287)		(7,174)
Ally Financial Inc.		(5.00)%		Quarterly		JPHQ		12/20/22		2,600,000		(396,230)		(397,048)		818
Ally Financial Inc.		(5.00)%		Quarterly		JPHQ		12/20/22		6,200,000		(944,857)		(941,181)		(3,676)
CSC Holdings LLC		(5.00)%		Quarterly		GSCO		3/20/19		9,000,000		(217,274)		(45,718)		(171,556)
Dish DBS Corp.		(5.00)%		Quarterly		JPHQ		6/20/21		6,520,000		(435,628)		(251,823)		(183,805)
Government of Italy		(1.00)%		Quarterly		BZWS		6/20/23		10,600,000		235,142		107,058		128,084
Government of Turkey		(1.00)%		Quarterly		BZWS		12/20/19		3,466,666		82,029		184,078		(102,049)
Government of Turkey		(1.00)%		Quarterly		BZWS		12/20/23		8,415,000		1,012,743		1,070,400		(57,657)
Nabors Industries Inc.		(1.00)%		Quarterly		JPHQ		6/20/20		3,350,000		(7,043)		49,628		(56,671)
Navient Corp.		(5.00)%		Quarterly		JPHQ		3/20/20		5,000,000		(328,083)		(252,861)		(75,222)
PHH Corp.		(5.00)%		Quarterly		GSCO		9/20/19		5,400,000		(257,902)		8,321		(266,223)
Sanmina Corp.		(5.00)%		Quarterly		BZWS		6/20/19		3,600,000		(130,604)		(101,893)		(28,711)
Sanmina Corp.		(5.00)%		Quarterly		GSCO		6/20/19		7,500,000		(272,092)		(209,633)		(62,459)
Springleaf Finance Corp.		(5.00)%		Quarterly		GSCO		6/20/20		700,000		(51,079)		(13,837)		(37,242)
Tenet Healthcare Corp.		(5.00)%		Quarterly		BZWS		3/20/19		2,325,000		(55,144)		(21,593)		(33,551)
Tenet Healthcare Corp.		(5.00)%		Quarterly		GSCO		3/20/19		7,335,000		(173,969)		(57,895)		(116,074)
Contracts to Sell Protectionc,d
Single Name
Capital One Financial Corp.		1.00%		Quarterly		JPHQ		12/20/22	$	5,200,000	$	86,986	$	74,651	$	12,335		BBB
Dish DBS Corp.		5.00%		Quarterly		JPHQ		6/20/23		6,520,000		(31,503)		(79,999)		48,496		B
General Electric Co.		1.00%		Quarterly		BZWS		12/20/23		4,000,000		(82,261)		(16,492)		(65,769)		BBB+
General Electric Co.		1.00%		Quarterly		CITI		12/20/23		8,350,000		(171,721)		40,561		(212,282)		BBB+
General Electric Co.		1.00%		Quarterly		CITI		12/20/23		4,350,000		(89,459)		(20,953)		(68,506)		BBB+
General Electric Co.		1.00%		Quarterly		JPHQ		12/20/23		1,950,000		(37,422)		(39,697)		2,275		BBB+

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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

Credit Default Swap Contracts (continued)
Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Counter- party		Maturity Date		Notional   Amounta		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Ratingb
OTC Swap Contracts (continued)
Contracts to Sell Protectionc,d (continued)
Single Name (continued)
Goldman Sachs
Group Inc.		1.00%		Quarterly		BZWS		12/20/22	$	7,850,000	$	127,576		$	122,972		$	4,604			BBB+
Goldman Sachs Group Inc.		1.00%		Quarterly		JPHQ		12/20/22		6,150,000		99,948			95,016			4,932			BBB+
Government of Argentina		5.00%		Quarterly		BZWS		6/20/23		2,150,000		(70,419	)		43,817			(114,236	)		B+
Government of Argentina		5.00%		Quarterly		CITI		6/20/23		4,200,000		(137,563	)		(100,453	)		(37,110	)		B+
Government of Argentina		5.00%		Quarterly		CITI		12/20/23		4,200,000		(160,163	)		(244,374	)		84,211			B+
Government of Colombia		1.00%		Quarterly		JPHQ		12/20/23		24,300,000		(292,346	)		(171,380	)		(120,966	)		BBB-
Government of Indonesia		1.00%		Quarterly		CITI		12/20/23		22,650,000		(562,181	)		(503,424	)		(58,757	)		BBB-
Government of Italy		1.00%		Quarterly		BZWS		6/20/23		10,600,000		(669,574	)		(469,467	)		(200,107	)		NR
Government of Italy		1.00%		Quarterly		JPHQ		12/20/23		6,000,000		(428,596	)		(427,673	)		(923	)		NR
Government of Mexico		1.00%		Quarterly		CITI		12/20/23		21,400,000		(412,313	)		(173,554	)		(238,759	)		BBB+
Morgan Stanley		1.00%		Quarterly		BZWS		12/20/22		8,800,000		167,274			154,059			13,215			BBB+
Nabors Industries Inc		1.00%		Quarterly		JPHQ		6/20/22		3,350,000		(203,730	)		(318,877	)		115,147			BB
Prudential Financial Inc .		1.00%		Quarterly		BOFA		12/20/21		8,800,000		177,391			(81,678	)		259,069			A
Traded Index
eBNP Paribas Bespoke Bordeaux Index, Mezzanine Tranche 5-7%		2.00%		Quarterly		BNDP		12/20/20		5,300,000		(53,056	)		—			(53,056	)		Non-
																					Investment
																					Grade
eBNP Paribas Bespoke Bordeaux Index, Mezzanine Tranche 7-10%		2.10%		Quarterly		BNDP		6/20/20		5,150,000		4,167			—			4,167			Non-
																					Investment
																					Grade
eCitibank Bespoke Broker Index, Mezzanine Tranche 3-7%		1.30%		Quarterly		CITI		6/20/19		11,100,000		23,658			—			23,658			Non-
																					Investment
																					Grade
eCitibank Bespoke Broker Index, Mezzanine Tranche 3-7%		1.40%		Quarterly		CITI		6/20/19		9,100,000		26,186			—			26,186			Non-
																					Investment
																					Grade
eCitibank Bespoke Cambridge Index, Equity Tranche 0-3%		0.00%		Quarterly		CITI		12/20/19		10,400,000		(1,818,536	)		(967,904	)		(850,632	)		Non-
																					Investment
																					Grade

franklintempleton.com Annual Report         119

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

Credit Default Swap Contracts (continued)

Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Counter- party		Maturity Date		Notional   Amounta		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Ratingb
OTC Swap Contracts (continued)
Contracts to Sell Protectionc,d (continued)
Traded Index (continued)
eCitibank Bespoke Hong Kong Index, Mezzanine Tranche 3-5%		1.00%		Quarterly		CITI		12/20/18	$	13,100,000	$	17,208		$	(38,409	)	$	55,617			Non-
																					Investment
																					Grade
eCitibank Bespoke Lima Index, Mezzanine Tranche 5-7%		2.13%		Quarterly		CITI		12/20/19		10,500,000		61,625			—			61,625			Non-
																					Investment
																					Grade
eCitibank Bespoke Lisbon Index, Equity Tranche 0-3%		0.00%		Quarterly		CITI		6/20/19		3,600,000		(229,787	)		(270,713	)		40,926			Non-
																					Investment
																					Grade
eCitibank Bespoke Verona Index, Equity Tranche 0-3%		0.00%		Quarterly		CITI		12/20/19		7,500,000		(1,099,682	)		(856,812	)		(242,870	)		Non-
																					Investment
																					Grade
eCitibank Bespoke Verona Index, Mezzanine Tranche 7-15%		0.40%		Quarterly		CITI		12/20/19		21,000,000		61,846			—			61,846			Non-
																					Investment
																					Grade
MCDX.NA.30		1.00%		Quarterly		CITI		6/20/23		2,325,000		58,241			50,454			7,787			Investment
Total OTC Swap Contracts											$	(10,362,064	)	$	(7,165,113	)	$	(3,196,951	)		Grade
Total Credit Default Swap Contracts											$	(11,074,382	)	$	(7,856,751	)	$	(3,217,631	)

^aIn U.S. dollars unless otherwise indicated. For 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. Internal ratings based on mapping into equivalent ratings from external vendors.

^cPerformance triggers for settlement of contract include default, bankruptcy or restructuring for single name swaps, and failure to pay or bankruptcy of the underlying securities for traded index swaps.

^dThe fund enters contracts to sell protection to create a long credit position.

^eRepresents a custom index comprised of a basket of underlying instruments.

120         Annual Report franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

At October 31, 2018, the Fund had the following cross-currency swap contracts outstanding. See Note 1(e).

Cross-Currency Swap Contracts

Description	Payment Frequency		Counter- party		Maturity Date		Notional Amount			Value/ Unrealized Appreciation (Depreciation)
OTC Swap Contracts
Receive Floating 3-month USD LIBOR + 2.870%		Quarterly						3,137,400	USD
Pay Fixed 2.50%		Annual		CITI		5/04/21		2,700,000	EUR		$     94,227
Receive Floating 3-month USD LIBOR + 1.44%		Quarterly						1,428,000	USD
Pay Fixed 1.50%		Annual		HSBK		11/26/25		1,200,000	EUR		82,955
Receive Floating 3-month USD LIBOR + 1.395%		Quarterly						10,277,000	USD
Pay Fixed 1.50%		Annual		HSBK		11/26/25		8,600,000	EUR		610,309
Receive Floating 3-month USD LIBOR + 1.415%		Quarterly						12,209,400	USD
Pay Fixed 1.50%		Annual		HSBK		11/26/25		10,200,000	EUR		746,528
Total Cross Currency Swap Contracts											$1,534,019

At October 31, 2018, the Fund had the following inflation index swap contracts outstanding. See Note 1(e).

Inflation Index Swap Contracts

Description	Payment Frequency		Counterparty		Maturity Date		Notional Amount		Value/ Unrealized Appreciaton (Depreciation)
Centrally Cleared Swap Contracts
Receive variable change in USA-CPI-U		At maturity
Pay Fixed 1.96%		At maturity				8/31/24	$	24,600,000		$   515,278
OTC Swap Contracts
Receive variable change in USA-CPI-U		At maturity
Pay Fixed 1.782%		At maturity		JPHQ		5/27/24		35,700,000		1,304,925
Total Inflation Index Swap Contracts										$1,820,203

At October 31, 2018, the Fund had the following total return swap contracts outstanding. See Note 1(e).

Total Return Swap Contracts

Underlying Instruments

Financing Rate

Payment Frequency

Counterparty

Maturity Date

Notional Value

Value/ Unrealized Appreciation (Depreciation)

OTC Swap Contracts

Longa

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

BNDP

3/20/19

$

5,000,000

$

(38,172

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

FBCO

3/20/19

11,700,000

(105,234

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

BOFA

6/20/19

40,000,000

(135,175

)

iBoxx USD Liquid High Yield Index

3-month USD LIBOR

Quarterly

CITI

6/20/19

28,000,000

(154,488

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

CITI

6/20/19

36,200,000

(238,233

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

GSCO

6/20/19

38,000,000

(172,524

)

franklintempleton.com Annual Report         121

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund (continued)

Total Return Swap Contracts (continued)

Underlying Instruments

Financing Rate

Payment Frequency

Counterparty

Maturity Date

Notional Value

Value/ Unrealized Appreciation (Depreciation)

OTC Swap Contracts (continued)

Longa (continued)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

CITI

9/20/19

$

42,650,000

$

(446,963

)

Total Return Swap Contracts

$

(1,290,789

)

^aThe Fund receives the total return on the underlying instrument and pays a variable financing rate.

See Note 9 regarding other derivative information.

See Abbreviations on page 158.

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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Statements

Statements of Assets and Liabilities

October 31, 2018

	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		$773,029,163	$	3,224,324,731	$	2,804,709,369	$	4,264,411,674
Cost - Controlled affiliates (Note 3f and 10)		—		—		—		9,635,000
Cost - Non-controlled affiliates (Note 3f and 10)		18,732,898		494,720,480		99,508,985		174,665,741
Cost - Unaffiliated repurchase agreements		—		101,755,855		—		—
Value - Unaffiliated issuers		$770,242,322	$	3,234,651,641	$	2,774,818,132	$	4,149,419,477
Value - Controlled affiliates (Note 3f and 10)		—		—		—		9,218,000
Value - Non-controlled affiliates (Note 3f and 10)		18,732,898		432,474,885		98,639,661		173,237,878
Value - Unaffiliated repurchase agreements		—		101,755,855		—		—
Cash		—		4,586,363		5,426,526		5,489,884
Foreign currency, at value (cost $—, $—, $96,943 and $747,188, respectively)		—		—		96,943		747,188
Receivables:
Investment securities sold		3,597,574		4,786,468		34,203		40,365
Capital shares sold		1,487,701		6,975,019		12,331,615		2,892,560
Dividends and interest		2,877,348		10,503,035		11,940,273		24,596,768
Deposits with brokers for:
OTC derivative contracts		—		—		4,490,000		9,210,000
TBA transactions		—		—		—		713,000
Futures contracts		—		—		748,699		6,413,847
Centrally cleared swap contracts		—		1,055,397		6,512,125		11,039,878
Variation margin on centrally cleared swap contracts		—		—		—		67,199
OTC swap contracts (upfront payments $—, $—, $458,360 and $2,240,582)		—		—		408,070		2,001,015
Unrealized appreciation on OTC forward exchange contracts		—		—		1,062,482		3,102,352
Unrealized appreciation on OTC swap contracts		—		—		340,414		3,793,942
FT Subsidiary deferred tax benefit (Note 1g)		—		—		—		137,519
Other assets		262		1,012		906		2,453
Total assets		796,938,105		3,796,789,675		2,916,850,049		4,402,123,325
Liabilities:
Payables:
Investment securities purchased		—		111,198,226		38,388,078		290,014,065
Capital shares redeemed		1,360,316		10,323,095		6,465,745		8,270,259
Management fees		332,300		1,408,054		502,733		1,475,156
Distribution fees		171,165		540,858		391,608		747,026
Transfer agent fees		189,137		652,798		365,611		876,062
Distributions to shareholders		128,023		3,470,225		1,595,605		470,503
Variation margin on futures contracts		—		—		129,385		1,596,663
Variation margin on centrally cleared swap contracts		—		54,518		38,732		—
OTC swap contracts (upfront receipts $—, $—, $6,250,354 and $15,524,275)		—		—		3,633,983		9,166,128
Unrealized depreciation on OTC forward exchange contracts		—		—		530,354		1,948,063
Unrealized depreciation on OTC swap contracts		—		—		2,597,954		5,442,738
Accrued expenses and other liabilities		172,508		234,079		230,739		215,645

franklintempleton.com The accompanying notes are an integral part of these financial statements.    |    Annual Report         123

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities (continued)

October 31, 2018

	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	$	2,353,449			$   127,881,853		$	54,870,527		$	320,222,308
Net assets, at value	$	794,584,656			$3,668,907,822		$	2,861,979,522		$	4,081,901,017
Net assets consist of:
Paid-in capital	$	937,692,279			$3,920,681,479		$	3,013,316,361		$	4,401,121,104
Total distributable earnings (loss)		(143,107,623	)		(251,773,657	)		(151,336,839	)		(319,220,087	)
Net assets, at value	$	794,584,656			$3,668,907,822		$	2,861,979,522		$	4,081,901,017
Class A:
Net assets, at value	$	419,054,758			$1,344,472,845			$1,499,579,055			$2,763,774,381
Shares outstanding		51,761,788			154,475,045			156,229,240			296,767,705
Net asset value per shareb		$8.10			$8.70			$9.60			$9.31
Maximum offering price per share (net asset value per share ÷ 97.75%, 97.75%, 97.75% and 95.75%, respectively)		$8.29			$8.90			$9.82			$9.72
Class A1:
Net assets, at value	$	100,477,301
Shares outstanding		12,414,521
Net asset value per shareb	$	8.09
Maximum offering price per share (net asset value per share ÷ 97.75%)	$	8.28
Class C:
Net assets, at value	$	126,585,421		$	438,479,656		$	130,205,824		$	243,067,518
Shares outstanding.		15,646,377			50,371,775			13,620,794			26,289,988
Net asset value and maximum offering price per shareb		$8.09			$8.70			$9.56			$9.25
Class R:
Net assets, at value										$	23,619,888
Shares outstanding											2,546,792
Net asset value and maximum offering price per share										$	9.27
Class R6:
Net assets, at value	$	36,026,197		$	142,075,487		$	1,017,855,608		$	430,636,638
Shares outstanding		4,442,377			16,318,903			105,386,142			45,930,073
Net asset value and maximum offering price per share		$8.11			$8.71			$9.66			$9.38
Advisor Class:
Net assets, at value	$	112,440,979		$	1,743,879,834		$	214,339,035		$	620,802,592
Shares outstanding		13,874,319			200,274,779			22,213,248			66,269,794
Net asset value and maximum offering price per share		$8.10			$8.71			$9.65			$9.37

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

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

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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations

for the year ended October 31, 2018

	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	$	—		$	238,892		$	1,585,463		$	1,230,821
Controlled affiliates (Note 3f and 10)		—			—			—			353,025
Non-controlled affiliates (Note 3f and 10)		347,344			14,670,189			4,264,428			5,426,431
Interest: (net of foreign taxes)~
Non-controlled affiliates (Note 10)		—			1,730,358			—			—
Unaffiliated issuers:
Paydown gain (loss)		(11,213,136	)		—			(3,038,646	)		(3,551,299	)
Paid in cash		28,536,642			174,009,741			82,503,402			160,457,073
Other income (net of taxes of $112,444) (Note 1g)		—			—			—			505,209
Total investment income		17,670,850			190,649,180			85,314,647			164,421,260
Expenses:
Management fees (Note 3a)		4,390,541			17,811,083			13,417,611			20,499,183
Distribution fees: (Note 3c)
Class A		1,103,996			3,166,379			3,656,134			7,323,094
Class A1		100,395			—			—			—
Class C		1,059,481			3,364,694			1,012,995			2,049,779
Class R		—			—			—			150,823
Transfer agent fees: (Note 3e)
Class A		645,850			1,292,388			2,567,232			4,536,915
Class A1		156,083			—			—			—
Class C		238,382			528,164			275,218			488,394
Class R		—			—			—			46,892
Class R6		16,291			36,573			198,909			122,453
Advisor Class		203,292			1,681,704			376,779			981,209
Custodian fees (Note 4)		7,935			27,644			33,315			104,280
Reports to shareholders		111,003			225,755			260,029			597,038
Registration and filing fees		103,747			128,660			172,337			197,654
Professional fees		63,474			115,043			127,370			190,066
Trustees’ fees and expenses		11,027			43,407			26,895			53,266
Loan service fees (Note 1j)		—			—			4,274			—
Other		217,327			87,710			256,580			472,956
Total expenses		8,428,824			28,509,204			22,385,678			37,814,002
Expense reductions (Note 4)		(37	)		(23,118	)		(24,095	)		(51,513	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(102,279	)		(2,009,719	)		(6,387,126	)		(1,504,628	)
Net expenses		8,326,508			26,476,367			15,974,457			36,257,861
Net investment income		9,344,342			164,172,813			69,340,190			128,163,399
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(7,313	)		(36,351,865	)		(15,820,851	)		(75,407,439	)
Foreign currency transactions		—			79			157,553			(931,695	)
Forward exchange contracts		—			—			(840,981	)		(3,017,344	)
Futures contracts		—			—			(5,926,753	)		(22,319,051	)
TBA sale commitments		—			—			—			256,598
Swap contracts		—			(1,599,940	)		339,099			1,165,893
Capital gain distributions from management investment companies:
Non-controlled affiliates (Note 3f)		—			1,510,184			523,977			374,711

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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations (continued)

for the year ended October 31, 2018

	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Funda
Capital gain distribution received in FT Subsidiary (net of taxes of $1,980,057) (Note 1g)	$	—		$	—		$	—		$	4,678,986
Net realized gain (loss)		(7,313	)		(36,441,542	)		(21,567,956	)		(95,199,341	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(4,194,916	)		43,982,814			(27,855,934	)		(131,897,603	)
Controlled affiliates (Note 3f and 10)		—			—			—			(694,000	)
Non-controlled affiliates (Note 3f and 10)		—			(61,646,070	)		(2,613,124	)		(2,590,266	)
Translation of other assets and liabilities denominated in foreign currencies		—			—			13,356			27,170
Forward exchange contracts		—			—			(206,490	)		(2,259,058	)
Futures contracts		—			—			863,806			(3,318,505	)
Swap contracts		—			405,854			190,378			(1,300,615	)
Change in FT Subsidiary deferred tax benefit (Note 1g)		—			—			—			137,519
Net change in unrealized appreciation (depreciation)		(4,194,916	)		(17,257,402	)		(29,608,008	)		(141,895,358	)
Net realized and unrealized gain (loss)		(4,202,229	)		(53,698,944	)		(51,175,964	)		(237,094,699	)
Net increase (decrease) in net assets resulting from operations		$5,142,113		$	110,473,869		$	18,164,226		$	(108,931,300	)
~Foreign taxes withheld on interest	$	—		$	—		$	1,789		$	1,342

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

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FINANCIAL STATEMENTS

Statements of Changes in Net Assets

	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Year Ended October 31,						Year Ended October 31,
	2018			2017			2018			2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	9,344,342		$	6,086,122		$	164,172,813		$	128,801,212
Net realized gain (loss)		(7,313	)		96,773			(36,441,542	)		(27,985,552	)
Net change in unrealized appreciation (depreciation)		(4,194,916	)		(7,106,295	)		(17,257,402	)		20,553,230
Net increase (decrease) in net assets resulting from operations		5,142,113			(923,400	)		110,473,869			121,368,890
Distributions to shareholders: (Note 1l)
Class A		(10,399,916	)		(10,816,412	)		(57,420,220	)		(49,009,035	)
Class A1		(2,680,182	)		(2,796,558	)		—			—
Class C		(3,179,693	)		(3,300,858	)		(21,410,984	)		(17,722,222	)
Class R6		(749,735	)		(52,994	)		(6,632,500	)		(2,953,451	)
Advisor Class		(3,615,201	)		(4,370,331	)		(78,812,669	)		(58,557,532	)
Total distributions to shareholders		(20,624,727	)		(21,337,153	)		(164,276,373	)		(128,242,240	)
Capital share transactions: (Note 2)
Class A		(65,465,520	)		(164,170,469	)		1,323,344			3,631,210
Class A1		(18,641,058	)		(36,788,901	)		—			—
Class C		(60,178,017	)		(72,203,722	)		(104,757,060	)		(257,800	)
Class R6		34,338,586			(132,241	)		13,923,525			118,459,347
Advisor Class		(69,446,005	)		(39,282,849	)		96,300,188			568,347,099
Total capital share transactions		(179,392,014	)		(312,578,182	)		6,789,997			690,179,856
Net increase (decrease) in net assets		(194,874,628	)		(334,838,735	)		(47,012,507	)		683,306,506
Net assets:
Beginning of year		989,459,284			1,324,298,019			3,715,920,329			3,032,613,823
End of year (Note 1l)	$	794,584,656		$	989,459,284		$	3,668,907,822		$	3,715,920,329

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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
	Year Ended October 31,						Year Ended October 31,
	2018			2017			2018			2017
Increase (decrease) in net assets:
Operations:
Net investment income	$	69,340,190		$	46,895,267		$	128,163,399		$	120,030,375
Net realized gain (loss)		(21,567,956	)		(1,156,974	)		(95,199,341	)		(48,258,255	)
Net change in unrealized appreciation (depreciation)		(29,608,008	)		(6,135,070	)		(141,895,358	)		(10,230,159	)
Net increase (decrease) in net assets resulting from operations		18,164,226			39,603,223			(108,931,300	)		61,541,961
Distributions to shareholders: (Note 1l)
Class A		(44,054,661	)		(29,407,853	)		(84,620,684	)		(79,166,327	)
Class C		(4,116,896	)		(3,436,954	)		(8,070,593	)		(8,606,867	)
Class R		—			—			(821,725	)		(1,159,298	)
Class R6		(29,893,839	)		(12,604,268	)		(13,679,438	)		(2,523,966	)
Advisor Class		(7,005,174	)		(7,048,480	)		(19,582,562	)		(20,532,154	)
Distributions from tax return of capital:
Class A		—			—			(1,864,025	)		—
Class C		—			—			(173,121	)		—
Class R		—			—			(17,375	)		—
Class R6		—			—			(312,827	)		—
Advisor Class		—			—			(438,993	)		—
Total distributions to shareholders		(85,070,570	)		(52,497,555	)		(129,581,343	)		(111,988,612	)
Capital share transactions: (Note 2)
Class A		16,141,095			3,455,292			(228,420,356	)		(430,205,619	)
Class C		(40,573,740	)		(42,037,863	)		(93,634,238	)		(89,548,811	)
Class R		—			—			(11,028,558	)		(21,629,393	)
Class R6		447,306,561			40,905,255			55,069,872			304,494,859
Advisor Class		(209,104,674	)		205,066,211			60,100,000			(139,300,499	)
Total capital share transactions		213,769,242			207,388,895			(217,913,280	)		(376,189,463	)
Net increase (decrease) in net assets		146,862,898			194,494,563			(456,425,923	)		(426,636,114	)
Net assets:
Beginning of year		2,715,116,624			2,520,622,061			4,538,326,940			4,964,963,054
End of year (Note 1l)	$	2,861,979,522		$	2,715,116,624		$	4,081,901,017		$	4,538,326,940

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

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FRANKLIN INVESTORS SECURITIES TRUST

Notes to Financial Statements

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 classes of shares offered within each of the Funds are indicated below. Beginning on October 19, 2018, Class C shares automatically convert to Class A shares after they have been held for 10 years. 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 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 each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. 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. Investments in repurchase agreements are valued at cost, which approximates fair value.

Certain derivative financial instruments are centrally cleared or 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

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

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 year end, as indicated in the Statements of Investments, had been entered into on October 31, 2018.

d.  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.

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.

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

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NOTES TO FINANCIAL STATEMENTS

1.  Organization and Significant Accounting Policies (continued)

e.  Derivative Financial Instruments (continued)

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.

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.

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NOTES TO FINANCIAL STATEMENTS

Certain or all Funds entered into inflation index swap contracts primarily to manage and/or gain exposure to 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 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 entered into OTC total return swap contracts primarily to manage and/or gain exposure to interest rate risk of an underlying instrument such as a stock, bond, index or basket of securities or indices. A total return swap is an agreement between the Fund and a counterparty to exchange a return linked to an underlying instrument for a floating or fixed rate payment, both based upon a notional amount. Over the term of the contract, contractually required payments to be paid or

received are accrued daily and recorded as unrealized appreciation or depreciation until the payments are made, at which time they are recognized as realized gain or loss.

Certain or all Funds invest in value recovery instruments (VRI) primarily to gain exposure to economic growth. 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 9 regarding other derivative information.

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.  FT Holdings Corporation I (FT Subsidiary)

Franklin Total Return Fund invests in certain financial instruments through its investment in the FT Subsidiary. 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 October 31, 2018, FT Subsidiary’s investment, Turtle Bay Resort, as well as any other assets and liabilities of FT Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities.

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1.  Organization and Significant Accounting Policies (continued)

g.  FT Holdings Corporation I (FT Subsidiary) (continued)

During the year ended October 31, 2018, Turtle Bay Resort paid a distribution to FT Subsidiary upon the sale of a majority of its assets to a third party. The distribution received is reflected net of taxes as other income and capital gain distribution received in FT Subsidiary in the Consolidated Statement of Operations. For U.S. income tax purposes, this distribution is taxable to FT Subsidiary, and as such a tax expense was recorded in FT Subsidiary. The tax expense was calculated using FT Subsidiary’s prior year effective federal rate of 34%, and a blended Hawaii state rate of 4% of the 2017 estimated capital gain and 6.4% of the 2017 estimated ordinary income. In addition, a deferred tax benefit was recorded on the unrealized depreciation of the security. When the Fund disposes of the security, the deferred asset is relieved and the Fund should incur a realized tax benefit. The estimated deferred tax benefit was calculated using a federal rate of 21% and a Hawaii state rate (net of federal tax benefit) of 3%. This is reflected as FT Subsidiary deferred tax benefit in the Consolidated Statement of Assets and Liabilities.

The financial statements have been consolidated and include the accounts of the Fund and FT Subsidiary. All intercompany transactions and balances have been eliminated. At October 31, 2018, the net assets of FT Subsidiary were $5,211,476, representing 0.1% of the Fund’s consolidated net assets. The Fund’s investment in 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 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.  Marketplace Lending

Certain or all Funds invest in loans obtained through marketplace lending. Marketplace lending, sometimes referred to as peer-to-peer lending, is a method of financing in which a platform facilitates the borrowing and lending of money. It is considered an alternative to more traditional forms of debt financing. Prospective borrowers are required to provide certain financial information to the platform, including, but not limited to, the intended purpose of the loan, income, employment information, credit score, debt-to-income ratio, credit history (including defaults and delinquencies) and home ownership status. Based on this and other information, the platform assigns its own credit rating to the borrower and sets the interest rate for the requested loan. The platform then posts the borrowing requests online, giving investors the opportunity to purchase the loans based on factors such as the interest rates and expected yields of the loans, the borrower background data, and the credit rating assigned by the platform.

When the Fund invests in these loans, it usually purchases all rights, title and interest in the loans pursuant to a loan purchase agreement directly from the platform. The platform or a third-party servicer typically continues to service the loans, collecting payments and distributing them to the Fund, less any servicing fees assessed. The servicer is typically responsible for taking actions against a borrower in the event of a default on the loan. Servicing fees are included in loan service fees in the Statements of Operations. The Fund, as an investor in a loan,

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would be entitled to receive payment only from the borrower and would not be able to recover any deficiency from the platform, except under very narrow circumstances. The loans in which the Fund may invest are unsecured.

k.  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 October 31, 2018, 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 the statute of limitations in each jurisdiction in which the Fund invests.

l.  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 in the Statements of Operations. Facility fees are recognized as income over the expected term of the loan. Dividend income and capital gain distributions are 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. Distributable earnings are determined according to income tax regulations (tax basis) and 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 or based on the ratio of number of shareholders of each Fund to the combined number of shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.

Net investment income, excluding 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.

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 interest income/inflation principal adjustments in the Statements of Operations.

m.  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.

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1.  Organization and Significant Accounting Policies (continued)

n.  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, 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.

*Effective during the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statements of Changes in Net Assets, therefore prior period amounts are presented below.

For the year ended October 31, 2017, distributions to shareholders 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
Distributions from net investment income:
Class A		$(10,816,412	)		$(49,009,035	)		$(29,407,853	)		$(79,166,327	)
Class A1		(2,796,558	)		—			—			—
Class C		(3,300,858	)		(17,722,222	)		(3,436,954	)		(8,606,867	)
Class R		—			—			—			(1,159,298	)
Class R6		(52,994	)		(2,953,451	)		(12,604,268	)		(2,523,966	)
Advisor Class		(4,370,331	)		(58,557,532	)		(7,048,480	)		(20,532,154	)

For the year ended October 31, 2017, undistributed net investment income (loss) and distributions in excess of net investment income included in net assets were as follows:

Fund	Undistributed net investment income		Distribution in excess of net investment income
Franklin Adjustable U.S. Government Securities Fund		$     67,121		$              —
Franklin Floating Rate Daily Access Fund		$2,598,773		$              —
Franklin Low Duration Total Return Fund		$             —		$(3,889,428	)
Franklin Total Return Fund		$             —		$(5,810,566	)

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2.  Shares of Beneficial Interest

At October 31, 2018, 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:
Year ended October 31, 2018
Shares solda		12,980,707		$	105,938,933			40,041,598		$	350,572,136
Shares issued in reinvestment of distributions		1,209,703			9,874,447			6,091,861			53,389,454
Shares redeemed		(22,167,585	)		(181,278,900	)		(45,866,654	)		(402,638,246	)
Net increase (decrease)		(7,977,175	)	$	(65,465,520	)		266,805		$	1,323,344
Year ended October 31, 2017
Shares sold		15,064,447		$	125,693,039			44,354,738		$	393,140,477
Shares issued in reinvestment of distributions		1,228,691			10,224,922			5,153,232			45,658,928
Shares redeemed		(36,005,848	)		(300,088,430	)		(49,104,181	)		(435,168,195	)
Net increase (decrease)		(19,712,710	)	$	(164,170,469	)		403,789		$	3,631,210
Class A1 Shares:
Year ended October 31, 2018
Shares sold		748,665		$	6,097,241
Shares issued in reinvestment of distributions		309,106			2,522,673
Shares redeemed		(3,331,933	)		(27,260,972	)
Net increase (decrease)		(2,274,162	)	$	(18,641,058	)
Year ended October 31, 2017
Shares sold		460,357		$	3,832,460
Shares issued in reinvestment of distributions		318,104			2,645,959
Shares redeemed		(5,191,278	)		(43,267,320	)
Net increase (decrease)		(4,412,817	)	$	(36,788,901	)
Class C Shares:
Year ended October 31, 2018
Shares sold		1,531,585		$	12,510,001			9,725,663		$	85,257,879
Shares issued in reinvestment of distributions		364,009			2,969,738			2,281,358			19,996,858
Shares redeemeda		(9,275,058	)		(75,657,756	)		(23,980,411	)		(210,011,797	)
Net increase (decrease)		(7,379,464	)	$	(60,178,017	)		(11,973,390	)	$	(104,757,060	)
Year ended October 31, 2017
Shares sold		1,689,775		$	14,082,487			15,908,252		$	141,059,930
Shares issued in reinvestment of distributions		368,575			3,064,421			1,836,285			16,269,098
Shares redeemed		(10,729,636	)		(89,350,630	)		(17,787,164	)		(157,586,828	)
Net increase (decrease)		(8,671,286	)	$	(72,203,722	)		(42,627	)	$	(257,800	)

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2.  Shares of Beneficial Interest (continued)

	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Shares			Amount			Shares			Amount
Class R6 Shares:
Year ended October 31, 2018
Shares sold		5,030,194		$	41,324,507			4,483,095		$	39,317,573
Shares issued in reinvestment of distributions		91,803			749,678			746,119			6,539,786
Shares redeemed		(945,757	)		(7,735,599	)		(3,642,765	)		(31,933,834	)
Net increase (decrease)		4,176,240		$	34,338,586			1,586,449		$	13,923,525
Year ended October 31, 2017
Shares sold		51,545		$	430,037			15,034,860		$	133,480,154
Shares issued in reinvestment of distributions		6,366			52,994			326,520			2,890,725
Shares redeemed		(73,967	)		(615,272	)		(2,023,706	)		(17,911,532	)
Net increase (decrease)		(16,056	)	$	(132,241	)		13,337,674		$	118,459,347
Advisor Class Shares:
Year ended October 31, 2018
Shares sold		8,026,624		$	65,714,269			72,581,582		$	636,947,305
Shares issued in reinvestment of distributions		386,115			3,155,976			5,110,153			44,798,000
Shares redeemed		(16,879,585	)		(138,316,250	)		(66,685,337	)		(585,445,117	)
Net increase (decrease)		(8,466,846	)	$	(69,446,005	)		11,006,398		$	96,300,188
Year ended October 31, 2017
Shares sold		11,485,012		$	95,774,135			125,873,007		$	1,117,140,394
Shares issued in reinvestment of distributions		473,291			3,940,955			3,348,529			29,668,881
Shares redeemed		(16,675,962	)		(138,997,939	)		(65,298,771	)		(578,462,176	)
Net increase (decrease)		(4,717,659	)	$	(39,282,849	)		63,922,765		$	568,347,099
aMay include a portion of Class C shares that were automatically converted to Class A.
	Franklin Low Duration Total Return Fund						Franklin Total Return Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Year ended October 31, 2018
Shares solda		45,754,362		$	443,188,528			46,213,804		$	442,391,448
Shares issued in reinvestment of distributions		3,715,625			35,982,102			8,890,356			85,021,536
Shares redeemed		(47,715,588	)		(463,029,535	)		(78,958,900	)		(755,833,340	)
Net increase (decrease)		1,754,399		$	16,141,095			(23,854,740	)	$	(228,420,356	)
Year ended October 31, 2017
Shares sold		67,556,193		$	665,223,690			60,861,062		$	593,317,133
Shares issued in reinvestment of distributions		2,577,144			25,374,436			7,998,920			77,657,172
Shares redeemed		(69,776,656	)		(687,142,834	)		(113,164,691	)		(1,101,179,924	)
Net increase (decrease)		356,681		$	3,455,292			(44,304,709	)	$	(430,205,619	)

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	Franklin Low Duration Total Return Fund						Franklin Total Return Fund
	Shares			Amount			Shares			Amount
Class C Shares:
Year ended October 31, 2018
Shares sold		3,413,048		$	32,944,334			3,654,316		$	34,887,774
Shares issued in reinvestment of distributions		360,095			3,473,725			817,226			7,767,582
Shares redeemeda		(7,985,724	)		(76,991,799	)		(14,440,705	)		(136,289,594	)
Net increase (decrease)		(4,212,581	)	$	(40,573,740	)		(9,969,163	)	$	(93,634,238	)
Year ended October 31, 2017
Shares sold		4,898,935		$	48,093,413			5,424,433		$	52,538,301
Shares issued in reinvestment of distributions		284,264			2,789,104			820,431			7,915,305
Shares redeemed		(9,466,240	)		(92,920,380	)		(15,488,386	)		(150,002,417	)
Net increase (decrease)		(4,283,041	)	$	(42,037,863	)		(9,243,522	)	$	(89,548,811	)
Class R Shares:
Year ended October 31, 2018
Shares sold								492,019		$	4,681,884
Shares issued in reinvestment of distributions								82,563			787,630
Shares redeemed								(1,736,019	)		(16,498,072	)
Net increase (decrease)								(1,161,437	)	$	(11,028,558	)
Year ended October 31, 2017
Shares sold								902,022		$	8,746,669
Shares issued in reinvestment of distributions								114,619			1,108,621
Shares redeemed								(3,240,307	)		(31,484,683	)
Net increase (decrease)								(2,223,666	)	$	(21,629,393	)
Class R6 Shares:
Year ended October 31, 2018
Shares sold		70,752,923		$	691,874,381			16,699,247		$	161,014,195
Shares issued in reinvestment of distributions		2,699,247			26,294,764			1,317,931			12,670,874
Shares redeemed		(27,828,421	)		(270,862,584	)		(12,370,887	)		(118,615,197	)
Net increase (decrease)		45,623,749		$	447,306,561			5,646,291		$	55,069,872
Year ended October 31, 2017
Shares sold		14,784,998		$	146,559,335			38,903,238		$	383,335,522
Shares issued in reinvestment of distributions		1,264,112			12,513,346			18,879			184,469
Shares redeemed		(11,934,303	)		(118,167,426	)		(8,043,063	)		(79,025,132	)
Net increase (decrease)		4,114,807		$	40,905,255			30,879,054		$	304,494,859
Advisor Class Shares:
Year ended October 31, 2018
Shares sold		12,420,216		$	121,011,438			22,751,004		$	220,031,575
Shares issued in reinvestment of distributions		625,164			6,089,056			1,828,038			17,566,461
Shares redeemed		(34,195,050	)		(336,205,168	)		(18,489,847	)		(177,498,036	)
Net increase (decrease)		(21,149,670	)	$	(209,104,674	)		6,089,195		$	60,100,000
Year ended October 31, 2017
Shares sold		37,677,301		$	372,780,265			48,423,990		$	474,423,563
Shares issued in reinvestment of distributions		639,191			6,323,130			1,856,741			18,132,064
Shares redeemed		(17,587,989	)		(174,037,184	)		(64,272,380	)		(631,856,126	)
Net increase (decrease)		20,728,503		$	205,066,211			(13,991,649	)	$	(139,300,499	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

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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

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

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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 year ended October 31, 2018, each Fund’s gross 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%		0.495%		0.473%

b.   Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.

c.   Distribution Fees

The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A and 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.

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3.  Transactions with Affiliates (continued)

c.  Distribution Fees (continued)

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 year:

	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		$43,548		$130,514		$165,015		$470,241
CDSC retained		$19,675		$  47,751		$  34,371		$  29,217

Effective September 10, 2018, the Board approved changes to certain front-end sales charges and dealer commissions on Class A and A1 shares. Further details are disclosed in the Fund’s Prospectus.

e.  Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the year ended October 31, 2018, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:

	Franklin 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		$593,263		$1,465,381		$977,729		$2,012,001

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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. During the year ended October 31, 2018, investments in affiliated management investment companies were as follows:

	Number of Shares Held at Beginning of Year		Gross Additions		Gross Reductions			Number of Shares Held at End of Year		Value at End of Year		Dividend Income		Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)
Franklin Adjustable U.S. Government Securities Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		33,319,558		273,953,211		(288,539,871	)		18,732,898	$	18,732,898	$	347,344	$	—		$	—
Franklin Floating Rate Daily Access Fund
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		5,419,982		1,309,212		—			6,729,194	$	64,398,391	$	5,725,917	$	1,510,184	a	$	(5,268,578	)
Franklin Middle Tier Floating Rate Fund		5,706,221		1,131,274		—			6,837,495		64,272,450		4,523,357		—			(2,744,666	)
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		368,263,476		1,141,943,569		(1,290,360,139	)		219,846,906		219,846,906		4,420,915		—			—
Total Affiliated Securities										$	348,517,747	$	14,670,189	$	1,510,184		$	(8,013,244	)
Franklin Low Duration Total Return Fund
Non-Controlled Affiliates
Franklin Lower Tier Floating Rate Fund		1,893,663		—		—			1,893,663	$	18,122,357	$	1,699,720	$	523,977	a	$	(1,609,614	)
Franklin Middle Tier Floating Rate Fund		2,389,308		—		—			2,389,308		22,459,491		1,655,766		—			(1,003,510	)
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		79,803,015		1,063,247,833		(1,084,993,035	)		58,057,813		58,057,813		908,942		—			—
Total Affiliated Securities										$	98,639,661	$	4,264,428	$	523,977		$	(2,613,124	)
Franklin Total Return Fund
Controlled Affiliates
Franklin Liberty Investment Grade Corporate ETF		400,000		—		—			400,000	$	9,218,000	$	353,025	$	—		$	(694,000	)
Non-Controlled Affiliates
Franklin Flexible Alpha Bond Fund, Class R6		10,172,940		—		—			10,172,940		99,287,894		2,269,837	$	98,678	a		(915,565	)
Franklin Liberty Senior Loan ETF		—		299,900		—			299,900		7,548,483		94,566		—			(33,240	)
Franklin Lower Tier Floating Rate Fund Franklin Middle Tier		997,589		—		—			997,589		9,546,927		895,419		276,033	a		(847,951	)
Floating Rate Fund		1,889,310		—		—			1,889,310		17,759,516		1,309,273		—			(793,510	)

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3.  Transactions with Affiliates (continued)

f.  Investments in Affiliated Management Investment Companies (continued)

	Number of Shares Held at Beginning of Year		Gross Additions		Gross Reductions			Number of Shares Held at End of Year		Value at End of Year		Dividend Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Franklin Total Return Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.83%		122,271,638		1,455,731,750		(1,538,908,330	)		39,095,058	$	39,095,058	$	857,336		—	$	—
Total Non-Controlled Affiliates										$	173,237,878	$	5,426,431	$	374,711	$	(2,590,266	)
Total Affiliated Securities										$	182,455,878	$	5,779,456	$	374,711	$	(3,284,266	)

^aIncludes capital gain distributions received.

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 and certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) for Class A, Class A1, Class C, Class R and Advisor Class of the Funds do not exceed 0.44% and 0.63%, respectively, and for Class R6 do not exceed 0.28% and 0.49%, respectively, based on the average net assets of each class until February 28, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.

Prior to February 1, 2018, expenses (excluding certain fees and expenses as previously disclosed) for Franklin Low Duration Total Return Fund for Class A, Class C, and Advisor Class were limited to 0.55% and expenses for Class R6 were limited to 0.38% based on the average net assets of each class.

For Franklin Adjustable U.S. Government Fund and Franklin Floating Rate Daily Access Fund, Investor Services has voluntarily agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% and 0.02%, respectively, based on the average net assets of the class. Investor Services may discontinue this waiver in the future.

h.  Other Affiliated Transactions

At October 31, 2018, 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
	3.2%		15.8%

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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. These purchases and sales for the year ended October 31, 2018, were as follows:

	Franklin Floating Rate Daily Access Fund
Purchases		$29,551,449
Sales		$              —

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 year ended October 31, 2018, the custodian fees were reduced as noted in the Statements of Operations.

5.   Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.

At October 31, 2018, 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:
2019		$  21,934,756		$  10,282,409		$    5,327,487		$                —
Capital loss carryforwards not subject to expiration:
Short Term		22,082,842		16,361,915		38,638,818		81,811,543
Long Term		96,340,256		173,848,030		68,039,297		117,031,294
Total capital loss carryforwards		$140,357,854		$200,492,354		$112,005,602		$198,842,837

On October 31, 2018, Franklin Adjustable U.S. Government Securities Fund had expired capital loss carryforwards of $39,689,305, which were reclassified to paid-in capital.

The tax character of distributions paid during the years ended October 31, 2018 and 2017, was as follows:

	Franklin Adjustable U.S. Government Securities Fund				Franklin Floating Rate Daily Access Fund
	2018		2017		2018		2017
Distributions paid from ordinary income		$20,624,727		$21,337,153		$164,276,373		$128,242,240

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5.   Income Taxes (continued)

	Franklin Low Duration Total Return Fund				Franklin Total Return Fund
	2018		2017		2018		2017
Distributions paid from ordinary income	$	85,070,570	$	52,497,555	$	129,581,343	$	111,988,612
Return of capital		—		—		2,794,205		—
	$	85,070,570	$	52,497,555	$	132,375,548	$	111,988,612

At October 31, 2018, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income 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		$791,762,061			$3,819,144,354			$2,908,206,996			$4,440,439,770
Unrealized appreciation		$    3,337,379			$     23,887,607			$     11,081,352			$     38,833,228
Unrealized depreciation		(6,124,220	)		(77,698,699	)		(49,411,631	)		(164,019,957	)
Net unrealized appreciation (depreciation)		$   (2,786,841	)		$    (53,811,092	)		$    (38,330,279	)		$  (125,186,729	)
Distributable earnings – undistributed ordinary income		$       165,095			$       6,000,027			$          549,332			$                    —

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of defaulted securities, foreign currency transactions, paydown losses, bond discounts and premiums, swaps, tax straddles, short term capital gains distributions from Underlying Funds and ETFs and financial futures transactions.

6.   Investment Transactions

Purchases and sales of investments (excluding short term securities) for the year ended October 31, 2018, 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		$  96,298,495		$1,916,342,882		$1,723,077,089		$6,885,828,576
Sales		$261,267,325		$1,882,086,064		$1,492,025,909		$7,052,760,442

7.   Credit Risk and Defaulted Securities

At October 31, 2018, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund had 62.4%, 12.9% and 13.9% respectively, of their portfolio invested in high yield securities, senior secured floating rate loans, 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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Franklin Total Return Fund held a defaulted security and/or other securities for which the income has been deemed uncollectible. At October 31, 2018, the value of this security was $7,770,000, representing 0.2% of the Fund’s net assets . The Fund discontinues accruing income on securities for which income has been deemed uncollectible and provides an estimate for losses on interest receivable. The security has been identified in the accompanying Consolidated Statement of Investments.

8.   Restricted Securities

Certain or all Funds invest in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Funds may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At October 31, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:

Principal Amount/ Shares/ Units		Issuer	Acquisition Date		Cost		Value
	Franklin Floating Rate Daily Access Fund
	1,132,044	a Appvion Inc		6/14/18	$	11,602,730	$	11,581,914
	1,458,043	Remington Outdoor Co. Inc		5/08/17		72,633,617		18,876,774
	137,266	Remington Outdoor Co. Inc., Litigation Units		5/16/18		—		—
		Total Restricted Securities (Value is 0.8% of Net Assets)			$	84,236,347	$	30,458,688
	Franklin Low Duration Total Return Fund
	12,326,925	K2016470219 South Africa Ltd., A		4/15/13 - 2/01/17	$	92,078	$	8,356
	1,226,701	K2016470219 South Africa Ltd., B		2/01/17		911		831
	948,323	K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		4/15/13 - 7/05/18		1,458,480		1,174
	183,405	K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		2/01/17 - 7/05/18		161,352		13,544
	72,043	Remington Outdoor Co. Inc		3/08/17		3,564,519		932,716
	6,782	Remington Outdoor Co. Inc., Litigation Units		5/16/18		—		—
		Total Restricted Securities (Value is 0.0%† of Net Assets)			$	5,277,340	$	956,621
	Franklin Total Return Fund
	28,762,824	K2016470219 South Africa Ltd., A		4/15/13 - 2/01/17	$	221,469	$	19,497
	2,862,311	K2016470219 South Africa Ltd., B		2/01/17		2,125		1,940
	2,212,754	K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		4/15/13 - 7/05/18		3,476,740		2,739
	427,950	K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		2/01/17 - 7/05/18		376,488		31,602
		Total Restricted Securities (Value is 0.0%† of Net Assets)			$	4,076,822	$	55,778

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

^aThe Fund also invests in unrestricted securities of the issuer, valued at $53,498,450 as of October 31, 2018.

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9.  Other Derivative Information

At October 31, 2018, the Fund’s investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	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 on centrally cleared swap contracts	$	—		Variation margin on centrally cleared swap contracts	$	773,166	a
Franklin Low Duration Total Return Fund
Interest rate contracts	Variation margin on futures contracts	$	750,536	a	Variation margin on futures contracts	$	1,236,488	a
	Variation margin on centrally cleared swap contracts		—		Variation margin on centrally cleared swap contracts		832,802	a
	Unrealized appreciation on OTC swap contracts		52,348		Unrealized depreciation on OTC swap contracts		917,695
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		1,062,482		Unrealized depreciation on OTC forward exchange contracts		530,354
Credit contracts	Variation margin on centrally cleared swap contracts		568,379	a	Variation margin on centrally cleared swap contracts		47,781	a
	OTC swap contracts (upfront payments)		408,070		OTC swap contracts (upfront receipts)		3,633,983
	Unrealized appreciation on OTC swap contracts		288,066		Unrealized depreciation on OTC swap contracts		1,680,259
Inflation contracts	Variation margin on centrally cleared swap contracts		527,845	a	Variation margin on centrally cleared swap contracts		—
Totals		$	3,657,726			$	8,879,362
Franklin Total Return Fund
Interest rate contracts	Variation margin on futures contracts	$	—		Variation margin on futures contracts	$	9,350,864	a
	Unrealized appreciation on OTC swap contracts		1,534,019		Unrealized depreciation on OTC swap contracts		1,290,789
Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		3,102,352		Unrealized depreciation on OTC forward exchange contracts		1,948,063
Credit contracts	Variation margin on centrally cleared swap contracts		204,356	a	Variation margin on centrally cleared swap contracts		225,036	a
	OTC swap contracts (upfront payments)		2,001,015		OTC swap contracts (upfront receipts)		9,166,128
	Unrealized appreciation on OTC swap contracts		954,998		Unrealized depreciation on OTC swap contracts		4,151,949
Inflation contracts	Variation margin on centrally cleared swap contracts		515,278	a	Variation margin on centrally cleared swap contracts		—
	Unrealized appreciation on OTC swap contracts		1,304,925		Unrealized depreciation on OTC swap contracts		—
Value recovery instruments	Investments in securities, at value		244,470	b
Totals		$	9,861,413			$	26,132,829

^aThis 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 year end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

^bVRI are included in investments in securities, at value in the Statements of Assets and Liabilities.

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For the year ended October 31, 2018, 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 Location	Net Realized Gain (Loss) for the Year			Statements of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Year
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Franklin Floating Rate Daily Access Fund
Credit contracts	Swap contracts	$	(1,599,940	)	Swap contracts	$	405,854
Franklin Low Duration Total Return Fund
Interest rate contracts	Futures contracts	$	(5,926,753	)	Futures contracts	$	863,806
	Swap contracts		(1,337,478	)	Swap contracts		(1,297,878	)
Foreign exchange contracts	Forward exchange contracts		(840,981	)	Forward exchange contracts		(206,490	)
Credit contracts	Swap contracts		1,060,437		Swap contracts		1,417,705
Inflation contracts	Swap contracts		616,140		Swap contracts		70,551
Totals		$	(6,428,635	)		$	847,694
Franklin Total Return Fund
Interest rate contracts	Futures contracts	$	(22,319,051	)	Futures contracts	$	(3,318,505	)
	Swap contracts		(1,334,056	)	Swap contracts		(2,049,918	)
Foreign exchange contracts	Forward exchange contracts		(3,017,344	)	Forward exchange contracts		(2,259,058	)
Credit contracts	Swap contracts		253,503		Swap contracts		1,633,231
Inflation contracts	Swap contracts		2,246,446		Swap contracts		(883,928	)
Value recovery instruments	Investments		—		Investments		(27,796	)a
Totals		$	(24,170,502	)		$	(6,905,974	)

^aVRI are included in net change in unrealized appreciation (depreciation) on investments in the Statements of Operations.

For the year ended October 31, 2018, the average month end notional amount of futures contracts and swap contracts and the average month end contract value for forward exchange contracts, and average month end fair value of VRI, were as follows:

	Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Futures Contracts		$                —		$464,707,320		$542,583,360
Swap contracts		50,176,000		507,850,414		950,753,671
Forward exchange contracts		—		94,349,601		347,924,426
VRI		—		—		291,070

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9.   Other Derivative Information (continued)

At October 31, 2018, 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		$1,062,482		$     530,354
Swap contracts		748,484		6,231,937
Total		$1,810,966		$  6,762,291
Franklin Total
Return Fund
Forward exchange contracts		$3,102,352		$  1,948,063
Swap contracts		5,794,957		14,608,866
Total		$8,897,309		$16,556,929

^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 October 31, 2018, 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 Receiveda			Cash Collateral Received		Net Amount (Not less than zero)
Franklin Low Duration Total Return Fund
Counterparty
BNDP		$             —		$               —			$            —			$    —		$        —
BOFA		—		—			—			—		—
BZWS.		404,243		(404,243	)		—			—		—
CITI		198,473		(198,473	)		—			—		—
DBAB		243,596		(49,548	)		(100,546	)		—		93,502
FBCO		—		—			—			—		—
GSCO		74,620		(74,620	)		—			—		—
JPHQ		890,034		(890,034	)		—			—		—
Total		$1,810,966		$(1,616,918	)		$(100,546	)		$    —		$93,502

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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 Receiveda,b			Cash Collateral Received		Net Amount (Not less than zero)
Franklin Total Return Fund
Counterparty
BNDP		$       4,167		$       (4,167	)		$             —			$    —		$         —
BOFA		259,069		(216,853	)		—			—		42,216
BZWS		1,828,287		(1,211,525	)		(616,762	)		—		—
CITI		547,098		(547,098	)		—			—		—
DBAB		498,107		(498,107	)		—			—		—
FBCO		—		—			—			—		—
GSCO		8,321		(8,321	)		—			—		—
HSBK		1,439,792		—			(1,159,736	)		—		280,056
JPHQ		4,312,468		(4,312,468	)		—			—		—
Total		$8,897,309		$(6,798,539	)		$(1,776,498	)		$    —		$322,272

At October 31, 2018, 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 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 Pledgedb			Net Amount (Not less than zero)
Franklin Low Duration Total Return Fund Counterparty
BNDP		$     55,124		$              —			$    —		$              —			$  55,124
BOFA		67,587		—			—		(67,587	)		—
BZWS		416,832		(404,243	)		—		—			12,589
CITI		2,173,693		(198,473	)		—		(1,760,000	)		215,220
DBAB		49,548		(49,548	)		—		—			—
FBCO		38,313		—			—		—			38,313
GSCO		657,270		(74,620	)		—		(510,000	)		72,650
JPHQ		3,303,924		(890,034	)		—		(2,090,000	)		323,890
Total		$6,762,291		$(1,616,918	)		$    —		$(4,427,587	)		$717,786

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9.  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 Pledgedb			Net Amount (Not less than zero)
Franklin Total Return Fund
Counterparty
BNDP		$       91,228		$      (4,167	)		$    —		$               —			$  87,061
BOFA		216,853		(216,853	)		—		—			—
BZWS		1,211,525		(1,211,525	)		—		—			—
CITI		6,517,657		(547,098	)		—		(5,970,559	)		—
DBAB		558,692		(498,107	)		—		—			60,585
FBCO		105,234		—			—		(105,234	)		—
GSCO		1,153,161		(8,321	)		—		(1,030,000	)		114,840
HSBK		—		—			—		—			—
JPHQ		6,702,579		(4,312,468	)		—		(2,050,000	)		340,111
Total		$16,556,929		$(6,798,539	)		$    —		$(9,155,793	)		$602,597

^aAt October 31, 2018, the Fund received United Kingdom Treasury Bonds and U.S. Treasury Bonds as collateral for derivatives.

^bIn 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(e) regarding derivative financial instruments.

See Abbreviations on page 158.

10.  Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the year ended October 31, 2018, investments in “affiliated companies” were as follows:

Name of Issuer	Number of Held at Beginning of Year		Gross Additions		Gross Reductions			Number of Held at End of Year		Value at End of Year		Investment Income		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)
Franklin Floating Rate Daily Access Fund
Non-Controlled Affiliates
													Dividends
Appvion Inc.		—		1,132,044		—			1,132,044	$	11,581,914	$	—	$	—	$	(20,816	)
Remington Outdoor Co. Inc.		—		1,458,043		—			1,458,043		18,876,774		—		—		(53,756,843	)
Remington Outdoor Co. Inc., Litigation
Units		—		137,266		—			137,266		—		—		—		—
										$	30,458,688	$	—	$	—	$	(53,777,659	)
													Interest
Appvion Inc, Term Loan, 8.40%, (3-month USD LIBOR + 6.00%), 6/15/26		—		53,657,654		(159,204	)		53,498,450		53,498,450		1,730,358		—		144,833
Total Affiliated Securities (Value is 2.3% of Net Assets)										$	83,957,138	$	1,730,358	$	—	$	(53,632,826	)

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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 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the 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 year ended October 31, 2018, 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

• 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 October 31, 2018, 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:a
Mortgage-Backed Securities	$	—	$	770,242,322	$	—	$	770,242,322
Short Term Investments		18,732,898		—		—		18,732,898
Total Investments in Securities	$	18,732,898	$	770,242,322	$	—	$	788,975,220

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12.  Fair Value Measurements (continued)

	Level 1		Level 2		Level 3			Total
Franklin Floating Rate Daily Access Fund
Assets:
Investments in Securities:a
Equity Investments:b
Diversified Support Services	$	—	$	—	$	18,876,774	c	$	18,876,774
Forest Products		—		—		11,581,914			11,581,914
Oil & Gas Exploration & Production		—		10,365,033		—			10,365,033
All Other Equity Investments		128,670,841		—		—			128,670,841
Corporate Bonds		—		15,392,337		—			15,392,337
Senior Floating Rate Interests:
Personal Products		—		—		45,928,772			45,928,772
All Other Senior Floating Rate Interests		—		2,593,956,042		—			2,593,956,042
Asset-Backed Securities		—		517,774,825		—			517,774,825
Short Term Investments		324,579,988		101,755,855		—			426,335,843
Total Investments in Securities	$	453,250,829	$	3,239,244,092	$	76,387,460		$	3,768,882,381
Liabilities:
Other Financial Instruments:
Swap Contracts	$	—	$	773,166	$	—		$	773,166
Franklin Low Duration Total Return Fund
Assets:
Investments in Securities:a
Equity Investments:b
Commercial & Professional Services	$	—	$	—	$	932,716	c	$	932,716
Retailing		—		—		9,187			9,187
All Other Equity Investments		76,725,007		—		—			76,725,007
Corporate Bonds:
Retailing		—		38,709,356		1,174			38,710,530
All Other Corporate Bonds		—		960,290,235		—			960,290,235
Senior Floating Rate Interests		—		105,659,782		—			105,659,782
Foreign Government and Agency Securities		—		33,225,247		—			33,225,247
U.S. Government and Agency Securities		—		395,672,563		—			395,672,563
Marketplace Loans		—		—		5,225,292			5,225,292
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		1,153,025,121		—			1,153,025,121
Mortgage-Backed Securities		—		23,647,331		—			23,647,331
Municipal Bonds		—		22,276,969		—			22,276,969
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		58,057,813		—		—			58,057,813
Total Investments in Securities	$	134,782,820	$	2,732,506,604	$	6,168,369		$	2,873,457,793
Other Financial Instruments:
Futures Contracts	$	750,536	$	—	$	—		$	750,536
Forward Exchange Contracts		—		1,062,482		—			1,062,482
Swap Contracts		—		1,436,638		—			1,436,638
Total Other Financial Instruments	$	750,536	$	2,499,120	$	—		$	3,249,656
Liabilities:
Other Financial Instruments:
Futures Contracts	$	1,236,488	$	—	$	—		$	1,236,488
Forward Exchange Contracts		—		530,354		—			530,354
Swap Contracts		—		3,478,537		—			3,478,537
Total Other Financial Instruments	$	1,236,488	$	4,008,891	$	—		$	5,245,379

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12.  Fair Value Measurements (continued)

	Level 1		Level 2		Level 3			Total
Franklin Total Return Fund
Assets:
Investments in Securities:a
Equity Investments:b
Consumer Services	$	—	$	—	$	34,113		$	34,113
Retailing		—		—		21,437			21,437
All Other Equity Investments		162,747,094		—		—			162,747,094
Corporate Bonds:
Retailing		—		58,924,211		2,739			58,926,950
All Other Corporate Bonds		—		1,307,287,687		—			1,307,287,687
Senior Floating Rate Interests		—		170,770,973		—			170,770,973
Foreign Government and Agency Securities		—		55,886,333		—			55,886,333
U.S. Government and Agency Securities		—		400,955,772		—			400,955,772
Asset-Backed Securities and Commercial Mortgage-Backed Securities:
Banks		—		27,106,866		12,079			27,118,945
All Other Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		1,035,473,172		—			1,035,473,172
Mortgage-Backed Securities		—		994,641,921		—			994,641,921
Municipal Bonds		—		78,915,900		—			78,915,900
Escrows and Litigation Trusts		—		—		—	c		—
Short Term Investments		39,095,058		—		—			39,095,058
Total Investments in Securities	$	201,842,152	$	4,129,962,835	$	70,368		$	4,331,875,355
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	3,102,352	$	—		$	3,102,352
Swap Contracts		—		4,513,576		—			4,513,576
Total Other Financial Instruments	$	—	$	7,615,928	$	—		$	7,615,928
Liabilities:
Other Financial Instruments:
Futures Contracts	$	9,350,864	$	—	$	—		$	9,350,864
Forward Exchange Contracts		—		1,948,063		—			1,948,063
Swap Contracts.		—		5,667,774		—			5,667,774
Total Other Financial Instruments	$	9,350,864	$	7,615,837	$	—		$	16,966,701

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

^bIncludes common and preferred stocks and management investment companies as well as other equity interests.

^cIncludes securities determined to have no value at October 31, 2018.

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12.  Fair Value Measurements (continued)

A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the year. At October 31, 2018, the reconciliation of assets is as follows:

	Balance at Beginning of Year		Purchases		Sales		Transfer Into Level 3a		Transfer Out of Level 3b			Cost Basis Adjustments		Net Realized Gain (Loss)		Net Unrealized Appreciation (Depreciation)			Balance at End of Year			Net Change in Unrealized Appreciation (Depreciation) on Assets Held at Year End
Franklin Floating Rate Daily Access Fund
Assets:
Investments in Securities:
Equity Investments:c
Diversified Support Services	$	—		$          —		$—	$	18,105,222	$	—			$—		$—		$771,552		$	18,876,774	d		$771,552
Forest Products		—		—		—		11,602,730		—			—		—		(20,816	)		11,581,914			(20,816	)
Senior Floating Rate Interests:
Paper & Forest Products		30,211,103		—		—		—		(30,211,103	)		—		—		—			—			—
Personal Products		—		506,182		—		45,992,958		—			—		—		(570,368	)		45,928,772			(570,368	)
Short Term Investments		27,942,353		—		—		—		(27,942,353	)		—		—		—			—			—
Total Investments in Securities	$	58,153,456		$506,182		$—	$	75,700,910	$	(58,153,456	)		$—		$—		$180,368		$	76,387,460			$180,368
Other Financial Instruments:
Unfunded Loan Commitments	$	576,475		$          —		$—	$	—	$	(576,475	)		$—		$—		$          —		$	—			$           —
Total Other Financial Instruments	$	576,475		$          —		$—	$	—	$	(576,475	)		$—		$—		$          —		$	—			$           —

^aThe investments were transferred into Level 3 as a result of the unavailability of a quoted market price in an active market for identical securities and other significant observable valuation inputs. May include amounts related to a corporate action.

^bThe investments were transferred out of Level 3 as a result of the availability of a quoted price in an active market for identical securities and other significant observable valuation inputs. May include amounts related to a corporate action.

^cIncludes common stocks and other equity interests.

^dIncludes securities determined to have no value.

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NOTES TO FINANCIAL STATEMENTS

Significant unobservable valuation inputs for material Level 3 financial instruments and impact to fair value as a result of changes in unobservable valuation inputs as of October 31, 2018, are as follows:

Description	Fair Value at End of Year			Valuation Technique		Unobservable Input	Amount/ Range		Impact to Fair Value if Input Increasesa
Franklin Floating Rate Daily Access
Fund
Assets:
Investments in Securities:
Equity Investments:
Diversified Support Services	$	18,876,774	b		Discounted cash   flow	Discount for lack of marketability		20.0%		Decrease
						Long-term revenue growth rate		1.0%		Increase
						Weighted average cost of capital		12.8%		Decrease	c
					Consensus Pricing	Offered / Bid quotes		$8.00 - $10.00		Increase
Forest Products		11,581,914			Market Comparables	Discount for lack of marketability		20.0%		Decrease	d
						EV/EBITDA multiple		5.4x		Increase	d
Senior Floating Rate Interests:
Personal Products		45,406,212			Discounted cash   flow	Discount rate		12.1% - 13.1%		Decrease	c
						Free cash flow		$66.6 (mil)		Increase	c
All other investmentse		522,560	b
Total	$	76,387,460

^aRepresents the directional change in the fair value of the Level 3 financial instruments that would result from a significant and reasonable increase in the corresponding input. A significant and reasonable decrease in the input would have the opposite effect. Significant impacts, if any, to fair value and/or net assets have been indicated.

^bIncludes securities determined to have no value at October 31, 2018.

^cRepresents a significant impact to fair value and net assets.

^dRepresents a significant impact to fair value but not net assets.

^eIncludes financial instruments with values derived using private transaction prices or non-public third party pricing information which is unobservable. May also include fair value of immaterial financial instruments and developed using various valuation techniques and unobservable inputs.

Abbreviations List

EBITDA - Earnings before interest, taxes, depreciation and amortization

EV - Enterprise value

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 acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

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13.  New Accounting Pronouncements (continued)

In August 2018, FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

14.  Subsequent Events

The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty/Exchange		Currency		Selected Portfolio
BNDP	BNP Paribas SA	BRL	Brazilian Real	AGMC	Assured Guaranty Municipal Corp.
BOFA	Bank of America Corp.	EUR	Euro	ARM	Adjustable Rate Mortgage
BZWS	Barclays Bank PLC	JPY	Japanese Yen	CLO	Collateralized Loan Obligation
CITI	Citigroup, Inc.	MXN	Mexican Peso	CMT	Constant Maturity Treasury Index
CME	Chicago Mercantile Exchange	USD	United States Dollar	COF	Cost of Funds
DBAB	Deutsche Bank AG			EDA	Economic Development Authority
FBCO	Credit Suisse Group AG			ETF	Exchange Traded Fund
GSCO	The Goldman Sachs Group, Inc.			FRN	Floating Rate Note
HSBK	HSBC Bank PLC			GDP	Gross Domestic Product
JPHQ	JP Morgan Chase & Co.			GO	General Obligation
				LIBOR	London InterBank Offered Rate
				MBS	Mortgage-Backed Security
				PIK	Payment-In-Kind
				SF	Single Family
				T-Note	Treasury Note
				VRI	Value Recovery Instruments

Index
CDX.EM.Series number	CDX Emerging Markets 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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Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Franklin Investors Securities Trust and Shareholders of Franklin Adjustable U.S. Government Securities Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Adjustable U.S. Government Securities Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund (the “Funds”) as of October 31, 2018, the related statements of operations for the year ended October 31, 2018, the statements of changes in net assets for each of the two years in the period ended October 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended October 31, 2018 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

San Francisco, California

December 18, 2018

We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.

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Tax Information (unaudited)

Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended October 31, 2018:

Franklin Adjustable     U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
	$20,347,095		$149,590,171		$68,499,229		$112,855,871

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Special Meeting of Shareholders

MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017 AND DECEMBER 29, 2017

(UNAUDITED)

A Special Meeting of Shareholders of Franklin Investors Securities Trust was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017 and December 29, 2017. The purpose of the meeting was to elect Trustees of Franklin Investors Securities Trust and to vote on the following proposals for each Fund: to approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval and to approve an amended fundamental investment restriction regarding investments in commodities. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of Franklin Investors Securities Trust: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, Larry D. Thompson, and John B. Wilson; and (ii) the proposals to use a “manager of managers” structure and to approve an amended fundamental investment restriction regarding investments in commodities were approved by shareholders of each Fund, except for Franklin Adjustable U.S. Government Securities Fund. No other business was transacted at the meeting.

In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.

The results of the voting at the meeting are as follows:

Proposal 1.    To elect a Board of Trustees:

Name	For		Withheld
Harris J. Ashton		1,140,629,120		32,081,576
Terrence J. Checki		1,140,321,742		32,388,956
Mary C. Choksi		1,140,407,572		32,303,126
Edith E. Holiday		1,108,315,463		64,395,237
Gregory E. Johnson		1,141,429,086		31,281,610
Rupert H. Johnson, Jr.		1,140,181,429		32,529,268
J. Michael Luttig		1,140,612,578		32,098,122
Larry D. Thompson		1,140,871,851		31,838,848
John B. Wilson		1,141,487,184		31,223,513

Total Trust Shares Outstanding*: 1,818,967,134

* As of the record date.

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Proposal 2. To approve the use of a “manager of managers” structure whereby the Fund’s investment manager would be able to hire and replace subadvisers without shareholder approval:

Franklin Adjustable U.S. Government Securities Fund

	Shares
For		39,826,044
Against		3,205,365
Abstain		2,311,308
Broker Non-Votes		30,028,215
Total Fund Shares Voted		75,370,934
Total Fund Shares Outstanding*		125,633,216

Franklin Floating Rate Daily Access Fund

	Shares
For		243,290,272
Against		7,257,391
Abstain		5,415,717
Broker Non-Votes		144,713,604
Total Fund Shares Voted		400,676,982
Total Fund Shares Outstanding*		436,512,931

Franklin Low Duration Total Return Fund

	Shares
For		132,279,760
Against		5,197,232
Abstain		6,859,902
Broker Non-Votes		21,783,108
Total Fund Shares Voted		166,120,009
Total Fund Shares Outstanding*		266,594,979

Franklin Total Return Fund

	Shares
For		168,186,368
Against		11,905,018
Abstain		9,209,163
Broker Non-Votes		49,895,855
Total Fund Shares Voted		239,196,399
Total Fund Shares Outstanding*		461,502,868

Proposal 3. To approve an amended fundamental investment restriction regarding investments in commodities:

Franklin Adjustable U.S. Government Securities Fund

	Shares
For		40,233,929
Against		2,302,824
Abstain		2,805,966
Broker Non-Votes		30,028,215
Total Fund Shares Voted		75,370,934
Total Fund Shares Outstanding*		125,633,216

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Franklin Floating Rate Daily Access Fund

	Shares
For		244,030,871
Against		5,014,609
Abstain		6,917,899
Broker Non-Votes		144,713,604
Total Fund Shares Voted		400,676,982
Total Fund Shares Outstanding*		436,512,931

Franklin Low Duration Total Return Fund

	Shares
For		133,181,434
Against		3,615,575
Abstain		7,539,891
Broker Non-Votes		21,783,108
Total Fund Shares Voted		166,120,009
Total Fund Shares Outstanding*		266,594,979

Franklin Total Return Fund

	Shares
For		170,238,568
Against		7,831,326
Abstain		11,230,650
Broker Non-Votes		49,895,855
Total Fund Shares Voted		239,196,399
Total Fund Shares Outstanding*		461,502,868

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Board Members and Officers

The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Fund, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton Investments fund complex are shown below. Generally, each board member serves a three-year term that continues until that person’s successor is elected and qualified.

Independent Board Members

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Harris J. Ashton (1932) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1986	136	Bar-S Foods (meat packing company) (1981-2010).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
Terrence J. Checki (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since December 2017	112	Hess Corporation (exploration of oil and gas) (2014-present).
Principal Occupation During at Least the Past 5 Years:
Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999-present); member of the Board of Trustees of the Economic Club of New York (2013 -present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; and formerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee (1995-2014); and Visiting Fellow at the Council on Foreign Relations (2014).
Mary C. Choksi (1950) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2014	136	Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; and formerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987–2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987).
Edith E. Holiday (1952) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1998	136	Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013).
Principal Occupation During at Least the Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
J. Michael Luttig (1954) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2009	136	Boeing Capital Corporation (aircraft financing) (2006-2013).
Principal Occupation During at Least the Past 5 Years:
Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006-present); and formerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).

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Independent Board Members (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Larry D. Thompson (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	136	The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012).
Principal Occupation During at Least the Past 5 Years:
Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); and formerly, Executive Vice President - Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
John B. Wilson (1959) One Franklin Parkway San Mateo, CA 94403-1906	Lead Independent Trustee	Trustee since 2007 and Lead Independent Trustee since 2008	112	None
Principal Occupation During at Least the Past 5 Years:
President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing) (2002-present); Senior Advisor, McKinsey & Co. (consulting) (2017-present); serves on private and non-profit boards; and formerly, President, Staples International and Head of Global Transformation (office supplies) (2012-2016); Chief Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000); Chief Financial Officer and Executive Vice President – Finance and Strategy, Staples, Inc. (1992-1996); Senior Vice President – Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President and Partner, Bain & Company (consulting firm) (1986-1990).

Interested Board Members and Officers

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2013	150	None
Principal Occupation During at Least the Past 5 Years:
Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments; Vice Chairman, Investment Company Institute; and formerly, President, Franklin Resources, Inc. (1994-2015).
**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906	Chairman of the Board, Trustee and Vice President	Chairman of the Board since 2013, Trustee since 1987 and Vice President since 1986	136	None
Principal Occupation During at Least the Past 5 Years:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 40 of the investment companies in Franklin Templeton Investments.

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Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2012	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.
Mark Boyadjian (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2003	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton Investments.
Gaston Gardey (1967) One Franklin Parkway San Mateo, CA 94403-1906	Chief Financial Officer, Chief Accounting Officer and Treasurer	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 28 of the investment companies in Franklin Templeton Investments.
Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.
Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906	Chief Executive Officer – Finance and Administration	Since 2017	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; and formerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments (2009-2017).
Edward B. Jamieson (1948) One Franklin Parkway San Mateo, CA 94403-1906	President and Chief Executive Officer – Investment Management	Since 2002	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin Templeton Institutional, LLC; and officer and/or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 10 of the investment companies in Franklin Templeton Investments.

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Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Madeline Lam (1969) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2010	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton Investments.
Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906	Vice President – AML Compliance	Since 2016	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.
Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 44 of the investment companies in Franklin Templeton Investments.
Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Chief Compliance Officer	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; and formerly, Senior Associate General Counsel, Franklin Templeton Investments (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013).
Karen L. Skidmore (1952) One Franklin Parkway San Mateo, CA 94403-1906	Vice President and Secretary	Since 2006	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2015	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments.
Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2005	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments.

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Interested Board Members and Officers (continued)

Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years
Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2011	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments.

*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton Investments fund complex. These portfolios have a common investment manager or affiliated investment managers.

**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director of Franklin

Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person of the Fund under the federal securities laws due to his position as officer and director and major shareholder of Resources.

Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.

Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.

The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated John B. Wilson as its audit committee financial expert. The Board believes that Mr. Wilson qualifies as such an expert in view of his extensive business background and experience, including service as chief financial officer of Staples, Inc. from 1992 to 1996. Mr. Wilson has been a Member and Chairman of the Fund’s Audit Committee since 2006. As a result of such background and experience, the Board believes that Mr. Wilson has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Wilson is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.

The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIAL BEN/342-5236 to request the SAI.

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Shareholder Information

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.

Householding of Reports and Prospectuses

You will receive each Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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	Annual 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.

© 2018 Franklin Templeton Investments. All rights reserved. FIST2 A 12/18

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.

(a) Audit Fees

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $439,976 for the fiscal year ended October 31, 2018 and $457,608 for the fiscal year ended October 31, 2017.

(b) Audit-Related Fees

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of Item 4.

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.

(c) Tax Fees

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing

services to the registrant for tax compliance, tax advice and tax planning were $194,500 for the fiscal year ended October 31, 2018 and $32,500 for the fiscal year ended October 31, 2017. The services for which these fees were paid included tax compliance services related to year end, and tax consulting services related to the operating agreement and term sheet for the launch of a new fund.

(d) All Other Fees

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4 were $7,209 for the fiscal year ended October 31, 2018 and $0 for the fiscal year ended October 31, 2017. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $61,500 for the fiscal year ended October 31, 2018 and $40,225 for the fiscal year ended October 31, 2017. The services for which these fees were paid included compliance examination for Investment Advisor Act rule 204-2 and 206-4(2), account maintenance project, training on partnership tax accounting and capital account maintenance, benchmarking services in connection with the ICI TA survey, assets under management certification, and the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures.

(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:

(i) pre-approval of all audit and audit related services;

(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;

(iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and

(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of

(ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.

(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $263,209 for the fiscal year ended October 31, 2018 and $72,725 for the fiscal year ended October 31, 2017.

(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

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 provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, 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 control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.     N/A

Item 13. 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	December 27, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/MATTHEW T. HINKLE
	Matthew T. Hinkle           Chief Executive Officer – Finance and Administration
Date	December 27, 2018

By	/s/GASTON GARDEY
	Gaston Gardey           Chief Financial Officer and Chief Accounting Officer
Date	December 27, 2018

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;

• 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: Fax: E-MAIL: Code of Ethics Administration, Global Compliance SM-920/2 (650) 312-5646 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 13(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.

12/27/2018

S\MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer – Finance and Administration

Exhibit 13(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.

12/27/2018

S\GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

EX-99.906CERT

Exhibit 13(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 10/31/2018 (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: 12/27/2018

S\MATTHEW T. HINKLE

Matthew T. Hinkle

Chief Executive Officer - Finance and Administration

Exhibit 13(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 10/31/2018 (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: 12/27/2018

S\GASTON GARDEY

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer