UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-00537
Franklin Custodian Funds
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
Date of fiscal year end: 9/30
Date of reporting period: 9/30/21
Item 1. Reports to Stockholders.
a.)
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)
b.)
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Franklin
Custodian
Funds
September
30,
2021
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
Shareholder
Letter
Dear
Shareholder:
During
the
12
months
ended
September
30,
2021,
the
U.S.
economy
continued
to
recover
from
the
COVID-19
pandemic.
Growth
accelerated
in
2021’s
first
half
as
the
reopening
of
businesses,
widespread
COVID-19
vaccinations
and
federal
assistance
programs
continued
to
boost
consumer
spending.
During
the
summer,
however,
investors
became
concerned
that
the
swiftly
spreading
Delta
variant
of
COVID-19
could
hinder
the
economic
recovery.
During
the
reporting
period,
the
U.S.
Federal
Reserve,
in
its
efforts
to
support
U.S.
economic
activity,
held
the
federal
funds
rate
unchanged
at
0.25%,
and
it
continued
broad
quantitative
easing
measures
to
bolster
credit
markets.
The
Federal
Reserve
also
adjusted
its
GDP
and
inflation
projections
higher
and
expected
to
begin
decreasing
its
asset
purchases
later
this
year,
while
delaying
any
interest
rate
increases
until
reaching
its
goal
of
maximum
U.S.
employment.
The
10-year
U.S.
Treasury
yield
was
0.69%
on
September
30,
2020,
and
it
increased
to
1.52%
by
the
end
of
September
2021.
In
this
environment,
the
prices
of
U.S.
stocks,
as
measured
by
the
Standard
&
Poor’s
®
500
Index
(S&P
500
®
),
rose
28.09%,
(the
index
increasing
from
3,363.00
to
4,307.54).
1
,2
Reflecting
the
rise
in
interest
rates,
investment-
grade
bonds,
as
measured
by
the
Bloomberg
U.S.
Aggregate
Bond
Index
(Bloomberg
Index),
posted
a
-0.90%
total
return
(an
index
decrease
from
2,376.13
to
2,352.55),
which
includes
reinvestment
of
income
and
distributions.
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
professionals
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
Custodian
Funds’
annual
report,
covering
Franklin
DynaTech
Fund,
Franklin
Focused
Growth
Fund,
Franklin
Growth
Fund,
Franklin
Income
Fund,
Franklin
U.S.
Government
Securities
Fund
and
Franklin
Utilities
Fund,
includes
more
detail
about
investment
decisions
during
the
period.
All
securities
markets
fluctuate
in
value,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
future
investment
needs.
Sincerely,
Rupert
H.
Johnson,
Jr.
Chairman
Franklin
Custodian
Funds
This
letter
reflects
our
analysis
and
opinions
as
of
September
30,
2021,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
1.
Source:
Copyright
©
2021,
S&P
Dow
Jones
Indices
LLC.
All
rights
reserved.
2.
Source:
Morningstar.
The
changes
in
index
prices
shown
for
the
S&P
500
do
not
include
reinvestments
of
income
and
distributions,
which
are
included
in
its
total
return,
which
was:
S&P
500
+30.00%
(index
total
return
resulting
in
an
increase
from
6,918.83
to
8,994.83).
3.
Sources:
Morningstar
and
Bloomberg
Barclays
indexes.
For
the
Bloomberg
Index,
only
total
return
as
shown
is
available,
not
price
change
without
the
inclusion
of
reinvested
income
and
distributions.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Economic
and
Market
Overview
3
Franklin
DynaTech
Fund
4
Franklin
Focused
Growth
Fund
11
Franklin
Growth
Fund
17
Franklin
Income
Fund
23
Franklin
U.S.
Government
Securities
Fund
30
Franklin
Utilities
Fund
36
Financial
Highlights
and
Statements
of
Investments
42
Financial
Statements
107
Notes
to
Financial
Statements
117
Report
of
Independent
Registered
Public
Accounting
Firm
144
Tax
Information
145
Board
Members
and
Officers
146
Shareholder
Information
151
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Economic
and
Market
Overview
U.S.
equities,
as
measured
by
the
Standard
&
Poor’s
®
500
Index
(S&P
500
®
),
posted
a
+30.00%
total
return
for
the
12
months
ended
September
30,
2021.
1
Stocks
benefited
from
the
continued
economic
recovery,
monetary
and
fiscal
stimulus
measures,
development
of
highly
effective
novel
coronavirus
(COVID-19)
vaccines,
implementation
of
vaccination
programs
and
easing
pandemic
restrictions.
As
many
businesses
reopened,
stimulus
payments
and
generally
high
household
savings
contributed
to
increased
consumer
spending.
A
rebound
in
corporate
earnings
and
the
U.S.
Senate’s
passage
of
a
bipartisan
infrastructure
bill
further
bolstered
investor
sentiment,
helping
equities
to
reach
new
all-time
price
highs
late
in
the
12-month
period.
Gross
domestic
product
growth
was
robust,
as
the
lifting
of
many
COVID-19
restrictions
and
strong
consumer
spending
continued
to
support
the
economy.
Both
exports
and
imports
increased
significantly
in
an
environment
of
high
business
confidence
and
recovering
industrial
production.
The
continued
growth
of
the
economy
led
the
U.S.
to
surpass
its
pre-pandemic
output
in
2021’s
second
quarter.
The
inflation
rate
surged
during
the
12-month
period
amid
increased
demand
and
supply-chain
bottlenecks,
with
the
price
pressures
coming
principally
from
the
areas
particularly
impacted
by
the
shutdown,
such
as
used
vehicles,
airfares,
semiconductors
and
energy.
Personal
consumption
expenditure,
a
measure
of
inflation,
also
rose
dramatically
during
the
period,
representing
the
highest
12-month
increase
in
decades.
The
unemployment
rate
declined
from
7.8%
in
September
2020
to
4.8%
in
September
2021
as
job
openings
increased,
but
a
relative
lack
of
available
workers
fueled
wage
growth,
adding
to
some
investors’
inflation
concerns.
In
an
effort
to
support
the
economy,
the
U.S.
Federal
Reserve
(Fed)
kept
the
federal
funds
target
rate
at
a
record-low
range
of
0.00%–0.25%.
The
Fed
also
maintained
quantitative
easing
measures
aimed
at
ensuring
credit
flows
to
borrowers
and
supporting
credit
markets
with
open-
ended
U.S.
Treasury
and
mortgage
bond
purchasing.
In
its
September
2021
meeting
statement,
the
Fed
indicated
that
it
soon
plans
to
reduce
its
purchases
of
U.S.
Treasury
and
mortgage-backed
securities
but
declined
to
provide
a
timetable.
The
Fed
also
maintained
that
it
views
inflation
as
partially
transitory,
and
that
further
employment
progress
was
needed
before
the
Fed
would
consider
raising
the
range
for
the
federal
funds
target
rate.
The
foregoing
information
reflects
our
analysis
and
opinions
as
of
September
30,
2021.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
1.
Source:
Morningstar.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
4
franklintempleton.com
Annual
Report
Franklin
DynaTech
Fund
This
annual
report
for
Franklin
DynaTech
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation
by
investing
primarily
in
equity
securities
of
companies
that
emphasize
innovation
and
new
technologies,
have
superior
management
and
that
benefit
from
new
industry
conditions
in
the
dynamically
changing
global
economy.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+29.69%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Russell
1000
®
Growth
Index,
which
is
market
capitalization
weighted
and
measures
performance
of
those
Russell
1000
®
Index
companies
with
relatively
higher
price-
to-book
ratios
and
higher
forecasted
growth
rates,
posted
a
cumulative
total
return
of
+27.32%.
1
Also
for
comparison,
the
broad
U.S.
stock
market,
as
measured
by
the
Standard
&
Poor’s
500
Index
(S&P
500),
posted
a
+30.00%
cumulative
total
return.
1
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
7
.
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
use
fundamental,
bottom-up
research
to
seek
companies
meeting
our
criteria
of
growth
potential,
quality
and
valuation.
In
seeking
sustainable
growth
characteristics,
we
look
for
companies
we
believe
can
produce
sustainable
earnings
and
cash
flow
growth,
evaluating
the
long-term
market
opportunity
and
competitive
structure
of
an
industry
to
target
leaders
and
emerging
leaders.
We
define
quality
companies
as
those
with
strong
and
improving
competitive
positions
in
attractive
markets.
We
also
believe
important
attributes
of
quality
are
experienced
and
talented
management
teams
as
well
as
financial
strength
reflected
in
the
capital
structure,
gross
and
operating
margins,
free
cash
flow
generation
and
returns
on
capital
employed.
Our
valuation
analysis
includes
a
range
of
potential
outcomes
based
on
an
assessment
of
multiple
scenarios.
In
assessing
value,
we
consider
whether
security
prices
fully
reflect
the
balance
of
the
sustainable
growth
opportunities
relative
to
business
and
financial
risks.
Manager’s
Discussion
During
the
period
under
review,
the
Fund
posted
a
solid
absolute
return
aided
by
widespread
gains
across
nine
out
of
10
sector
allocations.
Information
technology
(IT)
investments
provided
more
than
half
of
the
overall
gain,
followed
by
strong
support
from
health
care,
communication
services
and
consumer
discretionary
stocks.
The
IT
sector
comprised
roughly
almost
half
of
the
overall
portfolio,
and
related
contributors
were
concentrated
in
the
software;
IT
services;
and
semiconductors
and
semiconductor
equipment
industries.
HubSpot,
a
marketing,
sales
and
customer
service
platform,
PC
software
giant
Microsoft
and
Atlassian,
a
software
development
and
collaboration
tools
provider,
topped
a
long
list
of
software-
related
contributors,
while
IT
services
gains
were
boosted
foremost
by
Adyen,
a
versatile
payments
platform
for
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Software
22.6%
IT
Services
14.5%
Internet
&
Direct
Marketing
Retail
9.3%
Interactive
Media
&
Services
8.9%
Semiconductors
&
Semiconductor
Equipment
8.8%
Life
Sciences
Tools
&
Services
6.7%
Health
Care
Equipment
&
Supplies
6.6%
Entertainment
3.9%
Capital
Markets
2.2%
Biotechnology
2.0%
Health
Care
Technology
1.8%
Automobiles
1.7%
Electronic
Equipment,
Instruments
&
Components
1.2%
Pharmaceuticals
1.1%
Other
7.0%
Short-Term
Investments
&
Other
Net
Assets
1.7%
1.
Source:
Morningstar.
Frank
Russell
Company
is
the
source
and
owner
of
the
trademarks,
service
marks
and
copyrights
related
to
the
Russell
Indexes.
Russell
®
is
a
trademark
of
Frank
Russell
Company.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Statement
of
Investments
(SOI).
The
SOI
begins
on
page
47
.
Franklin
DynaTech
Fund
5
franklintempleton.com
Annual
Report
e-commerce,
mobile
and
point-of-sale
transactions,
Shopify,
a
sales,
shipping
and
payments
processing
hybrid
platform,
and
PayPal,
a
digital
payments
and
money
transfer
services
provider
for
merchants
and
consumers.
Semiconductor
stocks
saw
the
highest
average
returns
within
the
IT
sector
as
several
related
holdings
more
than
doubled
the
Fund’s
overall
return
for
the
year.
Similar
to
many
of
its
industry
peers,
semiconductor
manufacturer
NVIDIA
was
contending
with
brisk
demand
and
a
robust
order
backlog
amid
a
worldwide
shortage
of
specialty
microchips.
The
company
gets
most
of
its
sales
from
its
industry-leading
graphics
processing
units
(GPUs),
which
are
the
top
choice
of
gamers
everywhere.
NVIDIA
dominates
the
competition,
with
a
significant
share
of
the
discrete
desktop
GPU
market.
NVIDIA
consistently
posted
record
revenues
throughout
the
year
as
it
benefited
from
the
broadening
digital
transformation
and
accelerated
adoption
of
cloud
computing,
which
represents
another
massive
market
for
NVIDIA.
It
turns
out
that
the
parallel
processing
that
is
key
to
rendering
lifelike
images
in
video
games,
is
equally
adept
at
training
artificial
intelligence
systems
and
moving
information
around
the
data
center
at
lightning
speeds.
As
a
result,
NVIDIA
has
become
the
leading
provider
of
GPUs
for
cloud
computing
operations,
and
its
processors
are
harnessed
by
each
of
the
biggest
cloud
providers,
including
Amazon
Web
Services,
Alphabet’s
Google
Cloud,
and
Microsoft's
Azure,
just
to
name
a
few.
Some
of
the
largest
individual
contributors
to
the
Fund’s
overall
gain
were
in
the
communication
services
sector
as
our
investment
in
tech
bellwether
Alphabet,
Google’s
parent
holding
company,
appreciated
substantially
within
the
interactive
media
and
services
space,
while
the
shares
of
Singapore-based
consumer
internet
company
Sea,
which
has
operations
in
Taiwan
and
is
the
Fund’s
top
overall
contributor
for
the
period
under
review,
more
than
doubled
in
value
and
served
as
a
major
outlier
to
the
upside
in
the
entertainment
industry.
The
company
specializes
in
online
gaming
services
through
its
Digital
Entertainment
division,
though
it
has
also
been
making
headway
with
its
e-commerce
and
digital
financial
services
segments.
In
particular,
Sea
manages
a
third-party
marketplace
through
the
Shopee
mobile
app
and
websites
that
connect
buyers
and
sellers.
These
services
saw
a
notable
rise
in
adoption
by
consumers
as
the
company
expanded
into
more
countries.
Sea
repeatedly
reported
accelerating
quarterly
earnings
throughout
the
annual
period,
and
its
latest
release
for
2021’s
second
quarter
underscored
a
continuation
of
its
impressive
growth
streak.
The
company’s
digital
entertainment
division,
Garena,
has
grown
its
user
base,
increasing
its
number
of
quarterly
paying
users
substantially.
Its
e-commerce
division,
Shopee,
also
posted
positive
results
as
it
saw
its
revenue
increase
as
orders
and
gross
merchandise
value
rose.
SeaMoney,
the
company’s
digital
financial-services
arm,
also
saw
an
increase
in
paying
users
over
the
period.
Although
Alphabet
sold
off
from
record
highs
in
September
2021,
the
company
reported
accelerating
earnings
through
June
2021
as
it
continued
to
reap
larger-than-expected
profits
during
the
pandemic,
though
Alphabet
and
other
tech
giants,
including
Microsoft
and
social
networking
services
provider
Facebook
(both
of
which
are
owned
by
the
Fund),
began
facing
tougher
quarter-over-quarter
financial
performance
comparisons
going
forward.
Elsewhere
in
the
portfolio,
health
care
sector
returns
were
positive
across
all
six
industry
groups,
led
by
life
sciences
tools
and
services
companies
such
as
Hong
Kong-based
WuXi
Biologics,
a
contract
research
organization
for
pharmaceutical
and
biotech
companies
conducting
clinical
trials
and
other
medical
research.
Advanced
health
care
equipment
manufacturers
such
as
IDEXX
Laboratories
and
Danaher
also
provided
a
solid
contribution
to
overall
returns.
In
the
consumer
discretionary
sector,
a
portfolio
concentration
in
internet
retailers
such
as
Latin
American
e-commerce
giant
MercadoLibre
further
lifted
returns
despite
generally
trading
lower
throughout
the
summer
of
2021,
while
electric
vehicle
manufacturer
Tesla
was
the
standout
contributor
in
the
automobile
industry.
Given
the
breadth
of
the
portfolio’s
gains,
there
were
very
few
detractors
of
consequence.
Our
small
exposure
to
real
estate
holdings
was
focused
solely
on
technology-oriented
Top
10
Holdings
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Amazon.com,
Inc.
5.9%
Internet
&
Direct
Marketing
Retail,
United
States
Alphabet,
Inc.
3.5%
Interactive
Media
&
Services,
United
States
Microsoft
Corp.
3.0%
Software,
United
States
NVIDIA
Corp.
3.0%
Semiconductors
&
Semiconductor
Equipment,
United
States
Sea
Ltd.
2.9%
Entertainment,
Taiwan
Shopify,
Inc.
2.4%
IT
Services,
Canada
PayPal
Holdings,
Inc.
2.3%
IT
Services,
United
States
ServiceNow
,
Inc.
2.2%
Software,
United
States
Facebook,
Inc.
2.2%
Interactive
Media
&
Services,
United
States
Adyen
NV
2.0%
IT
Services,
Netherlands
Franklin
DynaTech
Fund
6
franklintempleton.com
Annual
Report
real
estate
investment
trusts
(REITs),
which
had
mixed
but
slightly
negative
results
overall.
In
particular,
our
REIT
holdings
in
American
Tower
and
Digital
Realty
Trust
(not
held
at
period-end)
detracted
from
performance.
All
other
detractors
served
to
reduce
the
overall
gains
made
in
other
sector
allocations.
In
particular,
China-based
e-commerce
giant
Alibaba
Group
Holding
(not
held
at
period-
end)
was
the
single
largest
detractor,
and
in
general
the
portfolio's
Chinese
tech
stocks
showed
erratic
performance
in
the
latter
half
of
the
period,
with
Alibaba
losing
about
a
third
of
its
market
value
in
2021’s
third
quarter
alone.
Some
Chinese
companies
have
seen
their
industries
uprooted
amid
political
pressures,
while
others
faced
a
surge
in
government
regulation
as
Beijing
rolls
out
strict
new
anti-
monopoly
initiatives—the
latter
of
which
were
directed
at
Alibaba.
Not
only
did
Ant
Financial,
a
digital
payment
platform
provider,
indefinitely
suspend
a
potentially
lucrative
initial
public
offering
(Alibaba
owns
about
one-third
of
Ant),
but
the
government
also
took
a
closer
look
at
Alibaba’s
massive
operations
and
decided
to
levy
a
substantial
fine
on
the
company.
Online
gaming
and
social-media
company
Tencent,
another
significant
detractor
for
the
period
under
review,
and
other
companies
also
sold
off
in
response
to
China’s
intensifying
regulatory
crackdown
on
property,
private
education,
technology,
data
security
and
other
sectors
of
the
economy.
Health
care
sector
gains
were
pared
by
key
detractors
iRhythm
Technologies,
a
provider
of
health
care
equipment
and
supplies
(not
held
at
period-end),
and
health
care
technology
industry
companies
such
as
Teledoc
Health
and
Livongo
Health
(not
held
at
period-end).
Many
of
these
companies
underwent
prolonged
rallies
during
the
worst
of
the
COVID-19
pandemic
but
began
to
lose
steam
as
the
pandemic
waned.
For
example,
iRhythm
Technologies’
stock
price
more
than
tripled
in
2020
given
rapid
growth
in
the
cardiac
device
maker’s
revenue
growth.
Strong
demand
for
the
company’s
heart
sensors
prompted
huge
gains
last
year
but
concerns
over
significantly
lower
Medicare
reimbursement
rates
for
its
products,
along
with
the
abrupt
departure
of
its
CEO,
sent
the
shares
tumbling
in
2021.
Teladoc,
meanwhile,
fared
well
during
the
pandemic
as
remote
care
“telehealth”
took
off,
but
investors
eventually
grew
concerned
about
whether
the
company
could
hold
on
to
its
COVID-19
related
momentum.
Investors
were
seeing
the
stock
as
too
COVID-19
dependent,
in
that
its
business
plan
is
reliant
on
people
staying
at
home
and
out
of
their
doctors’
offices.
From
2018
to
2019,
the
company’s
annual
revenue
increased
slightly,
but
last
year,
once
the
pandemic
hit,
Teladoc’s
annual
revenue
rose
substantially.
Though
the
company
was
still
seeing
growth
in
2021,
we
also
grew
concerned
that
such
a
growth
rate
could
not
be
sustained
once
people
began
going
back
to
work
and
returning
in-
person
to
their
doctors’
offices.
Elsewhere
in
the
portfolio,
several
other
holdings
curbed
the
Fund’s
absolute
gains
including
key
detractors
Wix.com
(not
held
at
period-end),
a
website
building
platform
within
the
IT
sector;
ridesharing
app
developer
Uber
Technologies
within
the
industrials
sector;
and
Coupa
Software,
which
offers
a
global
technology
platform
for
business
spending
management,
within
the
software
sector.
Thank
you
for
your
continued
participation
in
Franklin
Dynatech
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Matthew
J.
Moberg,
CPA
Rupert
H.
Johnson,
Jr.
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Performance
Summary
as
of
September
30,
2021
Franklin
DynaTech
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
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
9/30/21
1
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.
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.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+29.69%
5
+22.55%
5-Year
+229.55%
+25.51%
10-Year
+599.43%
+20.79%
Advisor
1-Year
+30.01%
+30.01%
5-Year
+233.71%
+27.26%
10-Year
+617.32%
+21.78%
See
page
9
for
Performance
Summary
footnotes.
Franklin
DynaTech
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
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
(10/1/11–9/30/21)
Advisor
Class
(10/1/11–9/30/21)
Franklin
DynaTech
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Stocks
historically
have
outperformed
other
asset
classes
over
the
long
term,
but
tend
to
fluctuate
more
dramatically
over
the
short
term.
Investments
in
fast-growing
industries,
like
the
technology
and
health
care
sectors
(which
have
historically
been
volatile)
could
result
in
increased
price
fluctuation,
especially
over
the
short
term,
due
to
the
rapid
pace
of
product
change
and
development
and
changes
in
government
regulation
of
companies
emphasizing
scientific
or
technological
advancement
or
regulatory
approval
for
new
drugs
and
medical
instruments.
The
Fund
may
also
invest
in
small-
and
mid-capitalization
companies,
which
can
be
particularly
sensitive
to
changing
economic
conditions,
and
their
prospects
for
growth
are
less
certain
than
those
of
larger,
more
established
companies.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
1/31/22.
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
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Total
return
information
is
based
on
net
asset
values
calculated
for
shareholder
transactions.
Certain
adjustments
were
made
to
the
net
asset
values
of
the
Fund
at
9/30/21
for
financial
reporting
purposes.
Accordingly,
adjusted
total
returns
have
been
disclosed
in
the
Financial
Highlights
and
differ
from
those
reported
here.
6.
Source:
Morningstar.
The
Russell
1000
Growth
Index
is
market
capitalization
weighted
and
measures
performance
of
those
Russell
1000
Index
companies
with
relatively
higher
price-to-book
ratios
and
higher
forecasted
growth
rate.
The
S&P
500
is
a
market
capitalization-weighted
index
of
500
stocks
designed
to
measure
total
U.S.
equity
market
performance.
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.
Total
Annual
Operating
Expenses
7
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
0.85%
0.86%
Advisor
0.60%
0.61%
Your
Fund’s
Expenses
Franklin
DynaTech
Fund
10
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,150.60
$4.35
$1,021.02
$4.09
0.81%
C
$1,000
$1,146.20
$8.52
$1,017.13
$8.01
1.58%
R
$1,000
$1,149.10
$5.69
$1,019.77
$5.35
1.06%
R6
$1,000
$1,152.50
$2.36
$1,022.88
$2.22
0.44%
Advisor
$1,000
$1,152.00
$2.98
$1,022.30
$2.80
0.55%
11
franklintempleton.com
Annual
Report
Franklin
Focused
Growth
Fund
This
annual
report
for
Franklin
Focused
Growth
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation
by
investing
in
an
equity
securities
portfolio
of
approximately
20–50
companies
that
we
believe
offers
a
compelling
trade-off
between
growth
opportunity,
business
and
financial
risk
and
valuation.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+27.17%
cumulative
total
return
for
the
12
months
under
review.
1
In
comparison,
the
Russell
1000
®
Growth
Index,
which
is
market
capitalization
weighted
and
measures
performance
of
those
Russell
1000
®
Index
companies
with
relatively
higher
price-
to-book
ratios
and
higher
forecasted
growth
rates,
posted
a
cumulative
total
return
of
+27.32%.
1
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
13
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236.
Investment
Strategy
We
use
fundamental,
bottom-up
research
to
seek
companies
meeting
our
criteria
of
growth
potential,
quality
and
valuation.
In
seeking
sustainable
growth
characteristics,
we
look
for
companies
we
believe
can
produce
sustainable
earnings
and
cash
flow
growth,
evaluating
the
long-term
market
opportunity
and
competitive
structure
of
an
industry
to
target
leaders
and
emerging
leaders.
We
define
quality
companies
as
those
with
strong
and
improving
competitive
positions
in
attractive
markets.
We
also
believe
important
attributes
of
quality
are
experienced
and
talented
management
teams
as
well
as
financial
strength
reflected
in
the
capital
structure,
gross
and
operating
margins,
free
cash
flow
generation
and
returns
on
capital
employed.
Our
valuation
analysis
includes
a
range
of
potential
outcomes
based
on
an
assessment
of
multiple
scenarios.
In
assessing
value,
we
consider
whether
security
prices
fully
reflect
the
balance
of
the
sustainable
growth
opportunities
relative
to
business
and
financial
risks.
Manager’s
Discussion
During
the
period
under
review,
the
health
care
sector
was
the
biggest
contributor
to
relative
performance.
Within
the
sector,
notable
holdings
included
Wuxi
Biologics
and
IDEXX
Laboratories.
Wuxi
Biologics
is
a
China-based
contract
developer
and
manufacturer
of
biologic
drugs.
The
company
was
approached
by
several
vaccine
developers
for
help
with
COVID-19
vaccine
related
development
and
manufacturing
services,
which
improved
its
bottom
line.
The
acceleration
in
the
adoption
of
companion
animals
during
the
COVID-19
pandemic
increased
demand
for
veterinary
services
and
products,
which
contributed
to
revenue
growth
for
IDEXX
Laboratories.
Conversely,
Veeva
Systems,
a
provider
of
cloud-based
software
for
the
life
sciences
industry,
underperformed
the
benchmark
and
hampered
relative
returns
over
the
annual
period.
Positive
fund
results
were
also
supported
by
stock
selection
in
the
information
technology
sector
and
the
performance
of
semiconductor
equipment
manufacturer
ASML
Holding.
The
company
has
essentially
a
monopoly
on
extreme
ultraviolet
lithography
and
ASML’s
performance
has
been
bolstered
by
the
strong
demand
backdrop
and
supply
constraints
in
the
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Software
18.6%
IT
Services
16.5%
Internet
&
Direct
Marketing
Retail
11.1%
Semiconductors
&
Semiconductor
Equipment
10.6%
Health
Care
Equipment
&
Supplies
9.9%
Interactive
Media
&
Services
7.5%
Entertainment
4.2%
Automobiles
2.9%
Life
Sciences
Tools
&
Services
2.7%
Health
Care
Technology
2.1%
Media
2.0%
Electric
Utilities
2.0%
Food
&
Staples
Retailing
1.9%
Capital
Markets
1.7%
Other
2.9%
Short-Term
Investments
&
Other
Net
Assets
3.4%
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
58
.
Franklin
Focused
Growth
Fund
12
franklintempleton.com
Annual
Report
semiconductor
industry.
Digital
communications
platform
Twilio,
on
the
other
hand,
dampened
relative
results
as
it
maintained
a
more
cautious
outlook
of
its
business.
Although
communication
services
was
a
leading
relative
detractor
at
the
sector
level,
a
position
in
Singapore-based
consumer
internet
company
Sea
Limited
served
as
a
catalyst
for
positive
Fund
performance
over
the
period.
The
company
generates
revenue
from
its
online
gaming
and
shopping
platforms,
which
have
been
more
widely
adopted
since
the
pandemic.
Conversely,
search
engine
provider
Google,
which
was
not
held
most
of
the
period,
was
a
leading
detractor.
Elsewhere,
record-high
e-commerce
revenue
contributed
to
strong
growth
for
Argentina-based
online
marketplace
MercadoLibre
in
the
consumer
discretionary
sector.
Conversely,
performance
of
Chinese
tech
giants
Alibaba
Group
Holding
(not
held
at
period-end),
an
online
and
mobile
commerce
company,
and
Tencent
Holdings,
an
internet
content
and
information
provider,
was
pressured
by
fear
of
Chinese
regulations.
Thank
you
for
your
participation
in
Franklin
Focused
Growth
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Matthew
J.
Moberg,
CPA
Portfolio
Manager
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Top
10
Holdings
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Amazon.com,
Inc.
7.9%
Internet
&
Direct
Marketing
Retail,
United
States
Microsoft
Corp.
7.5%
Software,
United
States
NVIDIA
Corp.
4.8%
Semiconductors
&
Semiconductor
Equipment,
United
States
Shopify,
Inc.
4.5%
IT
Services,
Canada
ServiceNow
,
Inc.
4.1%
Software,
United
States
PayPal
Holdings,
Inc.
3.5%
IT
Services,
United
States
Adyen
NV
3.4%
IT
Services,
Netherlands
MercadoLibre
,
Inc.
3.2%
Internet
&
Direct
Marketing
Retail,
Argentina
Sea
Ltd.
3.2%
Entertainment,
Taiwan
Danaher
Corp.
3.0%
Health
Care
Equipment
&
Supplies,
United
States
Performance
Summary
as
of
September
30,
2021
Franklin
Focused
Growth
Fund
13
franklintempleton.com
Annual
Report
The
performance
table
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
9/30/21
1
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.
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.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+27.17%
+20.17%
5-Year
+209.96%
+23.98%
Since
Inception
(4/13/16)
5
+238.09%
+23.67%
Advisor
1-Year
+27.47%
+27.47%
5-Year
+213.91%
+25.71%
Since
Inception
(4/13/16)
5
+242.79%
+25.28%
See
page
15
for
Performance
Summary
footnotes.
Franklin
Focused
Growth
Fund
Performance
Summary
14
franklintempleton.com
Annual
Report
See
page
15
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
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
(4/13/16–9/30/21)
Advisor
Class
(4/13/16–9/30/21)
Franklin
Focused
Growth
Fund
Performance
Summary
15
franklintempleton.com
Annual
Report
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.
To
the
extent
the
Fund
focuses
on
particular
countries,
regions,
industries,
sectors
or
types
of
investment
from
time
to
time,
it
may
be
subject
to
greater
risks
of
adverse
developments
in
such
areas
of
focus
than
a
fund
that
invests
in
a
wider
variety
of
countries,
regions,
industries,
sectors
or
investments.
Growth
stock
prices
reflect
projections
of
future
earnings
or
revenues,
and
can,
therefore,
fall
dramati-
cally
if
the
company
fails
to
meet
those
projections.
The
Fund
may
also
invest
in
small-
and
mid-capitalization
companies,
which
can
be
particularly
sensitive
to
changing
economic
conditions,
and
their
prospects
for
growth
are
less
certain
than
those
of
larger,
more
established
companies.
Foreign
investing
carries
additional
risks
such
as
currency
and
market
volatility,
and
political
or
social
instability;
risks
which
are
heightened
in
developing
countries.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
1/31/22.
Fund
investment
results
reflect
the
expense
reduction;
without
this
reduction,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Effective
2/14/20,
the
Fund
began
offering
Class
A
shares.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
2/14/20,
a
restated
figure
is
used
based
on
the
Fund’s
Advisor
Class
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A
and
Advisor
Class;
and
(b)
for
periods
after
2/14/20,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
5.
Since
Inception
returns
are
based
on
the
performance
inception
date
of
4/13/16.
6.
Source:
Morningstar.
The
Russell
1000
Growth
Index
is
market
capitalization-weighted
and
measures
performance
of
those
Russell
1000
Index
companies
with
relatively
higher
price-to-book
ratios
and
higher
forecasted
growth
rates.
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.
Distributions
(10/1/20–9/30/21)
Share
Class
Short-Term
Capital
Gain
Long-Term
Capital
Gain
Total
A
$0.0703
$0.1389
$0.2092
C
$0.0703
$0.1389
$0.2092
R
$0.0703
$0.1389
$0.2092
R6
$0.0703
$0.1389
$0.2092
Advisor
$0.0703
$0.1389
$0.2092
Total
Annual
Operating
Expenses
7
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.12%
1.95%
Advisor
0.87%
1.70%
Your
Fund’s
Expenses
Franklin
Focused
Growth
Fund
16
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,156.20
$5.93
$1,019.57
$5.56
1.10%
C
$1,000
$1,152.00
$9.99
$1,015.79
$9.35
1.85%
R
$1,000
$1,154.50
$6.98
$1,018.59
$6.54
1.29%
R6
$1,000
$1,158.20
$3.97
$1,021.39
$3.72
0.73%
Advisor
$1,000
$1,157.50
$4.60
$1,020.80
$4.31
0.85%
17
franklintempleton.com
Annual
Report
Franklin
Growth
Fund
This
annual
report
for
Franklin
Growth
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation
by
investing
substantially
in
equity
securities
of
companies
that
are
leaders
in
their
industries.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+26.44%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Standard
&
Poor’s
500
Index
(S&P
500),
which
is
a
broad
measure
of
U.S.
stock
performance,
posted
a
+30.00%
cumulative
total
return.
1
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
19
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236.
Investment
Strategy
We
use
fundamental,
bottom-up
research
to
seek
companies
meeting
our
criteria
of
growth
potential,
quality
and
valuation.
In
seeking
sustainable
growth
characteristics,
we
look
for
companies
we
believe
can
produce
sustainable
earnings
and
cash
flow
growth,
evaluating
the
long-term
market
opportunity
and
competitive
structure
of
an
industry
to
target
leaders
and
emerging
leaders.
We
define
quality
companies
as
those
with
strong
and
improving
competitive
positions
in
attractive
markets.
We
also
believe
important
attributes
of
quality
are
experienced
and
talented
management
teams
as
well
as
financial
strength
reflected
in
the
capital
structure,
gross
and
operating
margins,
free
cash
flow
generation
and
returns
on
capital
employed.
Our
valuation
analysis
includes
a
range
of
potential
outcomes
based
on
an
assessment
of
multiple
scenarios.
In
assessing
value,
we
consider
whether
security
prices
fully
reflect
the
balance
of
the
sustainable
growth
opportunities
relative
to
business
and
financial
risks.
The
investment
manager’s
process
generally
includes
an
assessment
of
the
potential
impacts
of
any
material
environmental,
social
and
governance
(“ESG”)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
*Categories
within
the
Other
category
are
listed
in
full
in
the
Fund’s
Statement
of
Investments
(SOI),
which
can
be
found
later
in
the
report.
Manager’s
Discussion
During
the
period
under
review,
the
Fund
posted
a
solid
absolute
return
aided
by
gains
across
all
sector
allocations.
The
Fund’s
relative
returns,
however,
lagged
those
of
the
benchmark.
This
was
due,
in
part,
to
an
underweighting
and
stock
selection
in
the
financials
sector
and
a
lack
of
exposure
to
the
bank
industry,
which
received
a
boost
from
rising
U.S.
Treasury
yields
and
talk
of
potential
stimulus
tapering.
Stock
selection
in
the
industrials
sector
also
weighed
on
results.
Within
the
sector,
relative
underperformance
was
most
evident
in
the
aerospace
and
defense
industry.
Uncertainty
about
defense
industry
spending
under
the
new
Biden
administration
had
a
dampening
effect
on
the
shares
of
many
defense
contractors,
which
included
the
Fund’s
holdings
in
Lockheed
Martin.
Lack
of
exposure
to
the
energy
sector
proved
adverse
as
an
emerging
shortfall
in
global
energy
supplies
supported
crude
oil
and
natural
gas
markets
leading
to
a
broad-based
rally
in
the
sector.
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Software
17.5%
IT
Services
7.0%
Semiconductors
&
Semiconductor
Equipment
6.3%
Health
Care
Equipment
&
Supplies
6.3%
Interactive
Media
&
Services
5.6%
Life
Sciences
Tools
&
Services
5.3%
Internet
&
Direct
Marketing
Retail
4.7%
Technology
Hardware,
Storage
&
Peripherals
4.6%
Pharmaceuticals
4.6%
Machinery
3.9%
Aerospace
&
Defense
3.5%
Capital
Markets
3.4%
Electronic
Equipment,
Instruments
&
Components
2.9%
Road
&
Rail
2.9%
Other*
20.9%
Short-Term
Investments
&
Other
Net
Assets
0.6%
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
65
.
Franklin
Growth
Fund
18
franklintempleton.com
Annual
Report
In
the
consumer
discretionary
sector,
China-based
e-commerce
giant
Alibaba
Group
Holding
was
the
single
largest
detractor
over
the
period
as
some
Chinese
companies
had
seen
their
industries
uprooted
amid
political
pressures,
while
others
faced
a
surge
in
government
regulation
as
Beijing
rolled
out
strict
new
anti-monopoly
initiatives,
the
latter
of
which
were
directed
at
Alibaba.
Turning
to
contributors,
the
Fund
benefited
from
stock
selection
in
the
information
technology
(IT)
sector
where
contributors
were
concentrated
in
the
software
and
semiconductor
and
semiconductor
equipment
sectors.
Top
software
contributors
were
Bill.com
Holdings
and
Intuit.
Bill.com
is
a
provider
of
payment
software
solutions
and
has
been
a
beneficiary
of
the
digital
transformation
needs
of
small
and
medium
size
businesses.
Financial
software
company
Intuit
has
seen
strong
growth
of
its
business
driven
by
increased
adoption
of
its
tax
software,
outperformance
by
its
credit
reporting
arm
and
improved
usage
metrics
for
its
accounting
software.
Semiconductor
equipment
manufacturer
ASML
Holding
has
been
a
beneficiary
of
the
brisk
demand
and
robust
order
backlog
amid
a
worldwide
shortage
of
specialty
microchips.
High
demand
for
the
company’s
leading
extreme
ultraviolet
(EUV)
lithography
systems
has
been
a
significant
growth
driver.
A
detractor
in
the
IT
sector
was
payment
processor
Mastercard,
which
underperformed
the
benchmark
although
had
an
overall
positive
effect
on
returns.
Elsewhere,
stock
selection
in
the
health
care
sector
was
a
driver
of
performance
helped
by
positions
in
Catalent,
a
pharmaceutical
delivery
technology
and
development
solutions
provider,
and
Wuxi
Biologics,
a
manufacturer
of
biologics,
which
benefited
from
increased
demand
for
their
COVID-19
development
and
manufacturing
services.
Thank
you
for
your
continued
participation
in
Franklin
Growth
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Serena
Perin
Vinton,
CFA
Robert
Rendler,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Top
10
Holdings
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Microsoft
Corp.
4.7%
Software,
United
States
Apple,
Inc.
4.6%
Technology
Hardware,
Storage
&
Peripherals,
United
States
Amazon.com,
Inc.
4.5%
Internet
&
Direct
Marketing
Retail,
United
States
Alphabet,
Inc.
3.9%
Interactive
Media
&
Services,
United
States
ServiceNow
,
Inc.
2.5%
Software,
United
States
Mastercard
,
Inc.
2.2%
IT
Services,
United
States
Intuit,
Inc.
2.1%
Software,
United
States
NVIDIA
Corp.
2.0%
Semiconductors
&
Semiconductor
Equipment,
United
States
Mettler
-Toledo
International,
Inc.
1.9%
Life
Sciences
Tools
&
Services,
United
States
Union
Pacific
Corp.
1.8%
Road
&
Rail,
United
States
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
September
30,
2021
Franklin
Growth
Fund
19
franklintempleton.com
Annual
Report
The
performance
table
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
9/30/21
1
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.
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.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+26.44%
+19.49%
5-Year
+140.03%
+17.80%
10-Year
+391.67%
+16.60%
Advisor
1-Year
+26.76%
+26.76%
5-Year
+143.06%
+19.44%
10-Year
+404.03%
+17.56%
See
page
21
for
Performance
Summary
footnotes.
Franklin
Growth
Fund
Performance
Summary
20
franklintempleton.com
Annual
Report
See
page
21
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
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
(10/1/11–9/30/21)
Advisor
Class
(10/1/11–9/30/21)
Franklin
Growth
Fund
Performance
Summary
21
franklintempleton.com
Annual
Report
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
market
values
of
securities
or
other
investments
owned
by
the
Fund
will
go
up
or
down,
sometimes
rapidly
or
unpredictably.
The
Fund
may
focus
on
particular
sectors
of
the
market
from
time
to
time,
which
can
carry
greater
risks
of
adverse
developments
in
such
sectors.
While
the
Fund
historically
has
focused
on
larger
companies,
it
may
invest
up
to
25%
of
its
assets
in
small,
relatively
new
and/
or
unseasoned
companies,
which
involves
additional
risks,
as
these
companies
may
have
less
certain
growth
prospects
and
limited
or
less
developed
product
lines
or
markets,
and
less
secure
financing.
Growth
stock
prices
can
be
volatile,
particularly
over
the
short
term.
The
Fund
may
invest
up
to
40%
of
its
net
assets
in
stocks
of
foreign
companies,
which
involve
special
risks,
including
currency
fluctuations
and
economic
as
well
as
political
uncertainty.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
1/31/22.
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
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
Morningstar.
The
S&P
500
is
a
market
capitalization-weighted
index
of
500
stocks
designed
to
measure
total
U.S.
equity
market
performance.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(10/1/20–9/30/21)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
A
$0.1833
$10.6145
$10.7978
C
–
$10.6145
$10.6145
R
–
$10.6145
$10.6145
R6
$0.4731
$10.6145
$11.0876
Advisor
$0.3942
$10.6145
$11.0087
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
0.82%
0.83%
Advisor
0.57%
0.58%
Your
Fund’s
Expenses
Franklin
Growth
Fund
22
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,099.00
$4.14
$1,021.12
$3.99
0.79%
C
$1,000
$1,094.90
$8.29
$1,017.16
$7.98
1.58%
R
$1,000
$1,097.60
$5.69
$1,019.64
$5.48
1.08%
R6
$1,000
$1,100.90
$2.56
$1,022.63
$2.47
0.49%
Advisor
$1,000
$1,100.40
$2.88
$1,022.33
$2.77
0.55%
23
franklintempleton.com
Annual
Report
Franklin
Income
Fund
This
annual
report
for
Franklin
Income
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
to
maximize
income,
while
maintaining
prospects
for
capital
appreciation
by
investing,
under
normal
market
conditions,
in
a
diversified
portfolio
of
debt
and
equity
securities.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
cumulative
total
return
of
+24.55%
for
the
12
months
under
review.
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,
posted
a
+30.00%
cumulative
total
return.
1
The
Fund’s
secondary
benchmark,
the
blended
50%
MSCI
USA
High
Dividend
Yield
Index
+
25%
Bloomberg
High
Yield
Very
Liquid
Index
+
25%
Bloomberg
U.S.
Aggregate
Bond
Index
(Blended
Benchmark),
which
is
a
combination
of
leading
stock
and
bond
indexes,
posted
a
+12.83%
cumulative
total
return.
2
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
26
.
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
In
analyzing
debt
and
equity
securities,
we
consider
such
factors
as
a
company’s
experience
and
managerial
strength;
responsiveness
to
changes
in
interest
rates
and
business
conditions;
debt
maturity
schedules
and
borrowing
requirements;
changing
financial
condition
and
market
recognition
of
the
change;
and
a
security’s
relative
value
based
on
such
factors
as
anticipated
cash
flow,
interest
or
dividend
coverage,
asset
coverage
and
earnings.
When
choosing
investments
for
the
Fund,
we
apply
a
bottom-up,
value
oriented,
long-term
approach,
focusing
on
the
market
price
of
a
company’s
securities
relative
to
the
investment
manager’s
evaluation
of
the
company’s
long-term
earning,
asset
value
and
cash
flow
potential.
Manager’s
Discussion
During
the
period
under
review,
our
equity
weighting
decreased
from
73.7%
to
64.6%,
and
our
fixed
income
weighting
increased
from
24.8%
to
30.1%.
The
Fund’s
cash
position
increased
from
1.5%
to
5.3%
of
total
net
assets.
The
Fund
generated
positive
returns
during
the
period
with
strong
performance
across
equity
and
fixed
income.
Overweight
Fund
exposure
to
the
equity
market
helped
drive
strong
returns,
while
lower
exposure
to
interest-rate
sensitive
fixed
income
securities
led
to
strong
performance
from
the
Fund
relative
to
its
blended
benchmark.
Dividend
stocks,
particularly
value-oriented
sectors,
outperformed
considerably
during
more
than
the
first
half
of
the
period
under
review.
While
the
outperformance
narrowed
compared
to
other
growth-oriented
sectors
by
the
end
of
the
period,
it
did
not
fully
offset
the
early
outperformance.
The
equity
component
of
the
Fund’s
blended
benchmark
increased
with
the
MSCI
USA
High
Dividend
Yield
Index
posting
positive
returns
for
the
12-month
period.
The
Fund’s
equity
positions
also
generated
positive
returns
during
the
period.
Corporate
credit
spreads
continued
to
narrow
during
the
period
as
the
reopening
of
economies
and
the
lingering
positive
effects
of
the
record
fiscal
and
monetary
accommodation
continued
to
support
markets.
Offsetting
narrowing
credit
spreads
were
rising
interest
rates,
which
weighed
on
the
more
duration
sensitive
portions
of
the
Fund’s
benchmark.
Fixed
income
returns
for
the
Fund
outperformed
the
Fund’s
blended
benchmark.
The
Bloomberg
U.S.
Aggregate
Bond
Index
posted
negative
returns,
while
the
Bloomberg
U.S.
High
Yield
Very
Liquid
Index
posted
positive
returns
at
period-end.
The
Fund
entered
the
period
with
an
increased
equity
weighting
and
a
decreased
fixed
income
weighting,
while
also
holding
a
portion
in
cash
equivalents,
as
a
result
of
making
a
meaningful
shift
in
asset
mix
earlier
in
2020.
The
shift
continued
over
the
12-month
period,
which
continued
to
maintain
the
increased
equity
weighting
and
decreased
fixed
income
weighting,
while
continuing
to
hold
a
portion
in
cash
equivalents
by
period-end.
1.
Source:
Morningstar.
2.
Source:
Factset.
The
Fund’s
Blended
Benchmark
was
calculated
internally.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Statement
of
Investments
(SOI).
The
SOI
begins
on
page
77
.
Franklin
Income
Fund
24
franklintempleton.com
Annual
Report
*Categories
within
the
Other
category
are
listed
in
full
in
the
Fund’s
Statement
of
Investments
(SOI),
which
can
be
found
later
in
the
report.
Fixed
Income
holdings
posted
positive
returns
during
the
period
with
considerable
outperformance
relative
to
the
Fund’s
blended
fixed
income
benchmark.
While
U.S.
10-year
Treasury
yields
did
not
move
in
a
straight
line
over
the
course
of
the
year,
the
broad
trend
over
the
period
under
review
saw
yields
move
higher.
The
Fund’s
duration
positioning
at
the
front
end
of
the
yield
curve
in
the
face
of
rising
interest
rates
was
a
key
source
in
driving
the
outperformance
relative
to
the
Fund’s
benchmark.
Additionally,
spread
compression
across
the
corporate
credit
market
helped
support
strong
performance
across
the
Fund’s
fixed
income
allocation.
The
Fund
was
underweight
fixed
income
relative
to
its
benchmark
given
what
was
perceived
to
be
better
opportunities
in
the
equity
market
during
the
period
under
review.
Every
corporate
credit
sector
generated
positive
absolute
returns
during
the
period
under
review,
with
health
care
and
energy
leading
the
way
in
terms
of
performance
contribution
relative
to
the
Fund’s
blended
benchmark.
Our
holdings
in
U.S.
Treasuries
and
agency
mortage-backed
securities
(MBS)
were
minor
absolute
detractors
during
the
period.
However,
these
positions
were
shorter
in
duration
and
much
smaller
in
size
relative
to
the
benchmark,
which
resulted
in
these
sectors
being
positive
contributors
relative
to
the
Fund’s
blended
benchmark.
*Includes
senior
floating
rate
interests
and
index-linked
notes.
Corporate
credit
spreads
continued
to
narrow
during
the
period
under
review,
which
benefited
high-yield
exposures
in
particular.
High-yield
corporate
bonds
are
generally
lower
in
duration
than
investment-grade
corporate
bonds.
Narrowing
credit
spreads
(high-yield
saw
spreads
compress
by
228
basis
points)
and
a
greater
than
80
basis
points
increase
in
U.S.
Treasury
yields
favored
high-yield
performance
within
the
fixed
income
asset
class.
Within
health
care,
the
largest
contributor
to
performance
was
high-yield
rated
hospital
company
CHS/Community
Health
Systems.
The
company
moved
past
COVID-19
induced
disruptions
and
was
able
to
access
both
the
debt
and
equity
markets
during
the
period
to
reduce
interest
expense
and
improve
the
health
of
their
balance
sheet,
which
led
to
a
very
strong
performance.
The
company
represented
the
largest
position
in
the
Fund
during
the
period
and
its
strong
performance
generated
roughly
half
of
the
total
fixed
income
return
contribution
over
the
period.
In
health
care
outside
of
CHS/Community
Health
Systems,
high-yield
hospital
peer
Tenet
Healthcare
and
pharmaceutical
companies
Endo
and
Bausch
Health
also
benefited
Fund
returns
during
the
period.
The
other
large
sector
contributor
to
fixed
income
performance
during
the
period
came
from
debt
securities
in
the
energy
sector.
Strong
commodity
price
performance,
increased
demand
outlooks
as
the
market
looked
past
the
COVID-19
enforced
lockdowns
as
well
as
company
specific
drivers
led
to
strong
performance
in
Chesapeake
Energy,
Weatherford
International,
HighPoint
Resources
(not
held
at
period-end)
and
Calumet
Specialty
Products.
No
other
corporate
sectors
stood
out
in
terms
of
outsized
performance
contributions.
However,
other
strong
individual
contributors
came
from
the
consumer
discretionary
sector
in
holdings
of
Ford
Motor
as
well
as
communication
services
peers
DISH
Network
and
Univision
Communications.
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Pharmaceuticals
8.8%
Banks
8.4%
Health
Care
Providers
&
Services
8.1%
Electric
Utilities
7.3%
Oil,
Gas
&
Consumable
Fuels
7.0%
Diversified
Financial
Services
6.5%
Multi-Utilities
3.8%
Semiconductors
&
Semiconductor
Equipment
3.7%
Diversified
Telecommunication
Services
3.7%
Biotechnology
3.1%
Energy
Equipment
&
Services
2.4%
Aerospace
&
Defense
2.2%
Beverages
2.1%
Media
2.1%
Other*
25.5%
Short-Term
Investments
&
Other
Net
Assets
5.3%
Top
Five
Fixed
Income
Holdings
*
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
U.S.
Treasury
Notes
6.5%
Diversified
Financial
Services
,
United
States
CHS/Community
Health
Systems,
Inc.
4.5%
Health
Care
Providers
&
Services
,
United
States
Tenet
Healthcare
Corp.
1.3%
Health
Care
Providers
&
Services
,
United
States
DISH
DBS
Corp.
1.2%
Media
,
United
States
Weatherford
International
Ltd.
1.0%
Energy
Equipment
&
Services
,
United
States
Franklin
Income
Fund
25
franklintempleton.com
Annual
Report
*Includes
convertible
bonds.
U.S.
Treasury
and
agency
MBS
holdings
were
small
absolute
detractors
during
the
period
as
noted
previously.
However,
the
reduced
size
and
shorter
duration
of
our
U.S.
Treasury
holdings
relative
to
the
Fund’s
blended
benchmark
led
to
the
strongest
relative
performance
within
fixed
income
after
health
care
and
energy.
Equity
holdings
increased
over
the
period.
As
an
asset-
class,
equities
outperformed
fixed
income
during
the
period.
An
overweight
allocation
to
the
equity
market
relative
to
the
Fund’s
blended
benchmark
benefited
overall
Fund
performance
during
the
period
under
review.
While
absolute
levels
of
our
equity
allocation
looked
similar
from
the
beginning
and
end
of
the
period
under
review,
our
allocation
to
the
equity
markets
had
increased
for
more
than
half
of
the
period
under
review
before
a
reduction
in
the
Fund’s
equity
allocation
toward
period-end.
All
sectors
were
positive
absolute
contributors
to
Fund
performance
during
the
period.
Financials
and
energy
holdings
were
large
positive
contributors
relative
to
the
Fund’s
benchmark
during
the
period.
Consumer
discretionary,
materials
and
utilities
holdings
provided
notable
positive
relative
contributions
as
well.
All
the
Fund’s
equity
positions
in
the
financials
sector
were
positive
contributors
during
the
period
amidst
rising
interest
rates.
Holdings
of
JPMorgan
Chase,
MetLife,
Bank
of
America
and
Morgan
Stanley
led
returns.
Other
notable
contributors
included
Truist
Financial,
U.S.
Bancorp
and
Citigroup.
Energy
peers
Chevron
and
Exxon
Mobile
were
notable
positive
contributors
during
the
period
as
a
much
better
macro
supply
and
demand
forecast
for
the
industry
led
to
strong
performance
from
depressed
valuations.
Top
performers
in
the
Fund
outside
of
financials
and
energy
included
CVS
Health
in
the
health
care
industry
as
the
company
played
an
active
role
in
vaccine
distribution,
which
contributed
to
strong
financial
performance.
General
Motors
also
saw
strong
performance
from
favorable
vehicle
sales
trends
coming
out
of
the
pandemic
as
well
as
a
favorable
reaction
to
the
company’s
commitments
in
the
electronic
vehicle
space
going
forward.
Despite
positive
absolute
contributions,
equity
holdings
in
the
health
care,
industrials
and
consumer
staples
sectors
were
modest
detractors
in
the
period
relative
to
the
Fund’s
benchmark.
At
the
individual
security
level,
the
only
notable
detractor
from
performance
during
the
period
was
our
small
position
in
the
preferred
securities
of
Federal
National
Mortgage
Association
(FNMA),
which
received
an
unfavorable
Supreme
Court
ruling
related
to
the
U.S.
government
conservatorship
actions
since
the
global
financial
crisis.
During
the
period,
the
Fund
used
derivatives
such
as
equity
call
and
put
options
to
sell
and
reduce
positions
(call
options)
and/or
to
initiate
and
add
to
positions,
which
generated
gains
during
the
period
under
review.
Thank
you
for
your
continued
participation
in
Franklin
Income
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Edward
D.
Perks,
CFA
Lead
Portfolio
Manager
Brendan
Circle,
CFA
Todd
Brighton,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Top
Five
Equity
Holdings*
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Merck
&
Co.,
Inc.
2.1%
Pharmaceuticals
,
United
States
Southern
Co.
(The)
1.9%
Electric
Utilities
,
United
States
Verizon
Communications,
Inc.
1.9%
Diversified
Telecommunication
Services
,
United
States
Pfizer,
Inc.
1.9%
Pharmaceuticals
,
United
States
Chevron
Corp.
1.7%
Oil,
Gas
&
Consumable
Fuels
,
United
States
Performance
Summary
as
of
September
30,
2021
Franklin
Income
Fund
26
franklintempleton.com
Annual
Report
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
9/30/21
1
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
3.75%
and
the
minimum
is
0%.
Class
A:
3.75%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
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.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4,5
1-Year
+24.55%
+19.88%
5-Year
+41.95%
+6.44%
10-Year
+113.54%
+7.47%
Advisor
1-Year
+24.98%
+24.98%
5-Year
+44.25%
+7.60%
10-Year
+118.35%
+8.12%
30-Day
Standardized
Yield
7
Share
Class
Distribution
Rate
6
(with
fee
waiver)
(without
fee
waiver)
A
4.20%
1.96%
1.96%
Advisor
4.68%
2.29%
2.28%
See
page
28
for
Performance
Summary
footnotes.
Franklin
Income
Fund
Performance
Summary
27
franklintempleton.com
Annual
Report
See
page
28
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
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
(10/1/11–9/30/21)
Advisor
Class
(10/1/11–9/30/21)
Franklin
Income
Fund
Performance
Summary
28
franklintempleton.com
Annual
Report
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
portfolio
includes
a
substantial
portion
of
higher-yielding,
lower-rated
corporate
bonds
and
some
floating
rate
loans,
which
are
also
higher-yielding
and
lower-rated.
These
investments
have
more
credit
risk
than
investment-grade
securities
and
are
subject
to
increased
risk
of
default
and
potential
loss
of
principal.
The
Fund’s
share
price
and
yield
will
be
affected
by
interest
rate
movements.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
Thus,
as
prices
of
bonds
in
the
Fund
adjust
to
a
rise
in
interest
rates,
the
Fund’s
share
price
may
decline.
Changes
in
the
financial
strength
of
a
bond
issuer
or
in
a
bond’s
credit
rating
may
affect
its
value.
Stock
prices
fluctuate,
sometimes
rapidly
and
dra-
matically,
due
to
factors
affecting
individual
companies,
particular
industries
or
sectors,
or
general
market
conditions.
Foreign
investing
involves
additional
risks
such
as
currency
and
market
volatility,
as
well
as
political
and
social
instability.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
1/31/22.
Fund
investment
results
reflect
the
fee
waiver;
without
this
waiver,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Effective
9/10/18,
Class
A
shares
closed
to
new
investors,
were
renamed
Class
A1
shares,
and
a
new
Class
A
share
with
a
different
expense
structure
became
available.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
9/10/18,
a
restated
figure
is
used
based
on
the
Fund’s
Class
A1
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A1
and
Class
A;
and
(b)
for
periods
after
9/10/18,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
5.
Prior
to
3/1/19,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
4.25%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
3.75%.
6.
Distribution
rate
is
based
on
an
annualization
of
the
respective
class’s
September
dividend
and
the
maximum
offering
price
(NAV
for
Advisor
Class)
per
share
on
9/30/21.
7.
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.
8.
Source:
Morningstar.
The
S&P
500
is
a
market
capitalization-weighted
index
of
500
stocks
designed
to
measure
total
U.S.
equity
market
performance.
9.
Source:
Factset.
The
Blended
50%
MSCI
USD
High
Dividend
Yield
Index
+
25%
Bloomberg
High
Yield
Very
Liquid
Index
+
25%
Bloomberg
U.S.
Aggregate
Index
measures
performance
of
high
dividend-paying
global
and
developed
and
emerging
stocks,
noninvestment-grade
corporate
bonds
and
tracks
performance
of
the
U.S.
investment-grade
bond
market.
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.
Net
Asset
Value
Share
Class
(Symbol)
9/30/21
9/30/20
Change
A
(FKIQX)
$2.47
$2.08
+$0.39
A1
(FKINX)
$2.48
$2.08
+$0.40
C
(FCISX)
$2.52
$2.12
+$0.40
R
(FISRX)
$2.43
$2.04
+$0.39
R6
(FNCFX)
$2.47
$2.07
+$0.40
Advisor
(FRIAX)
$2.46
$2.07
+$0.39
Distributions
(10/1/20–9/30/21)
Share
Class
Net
Investment
Income
A
$0.1116
A1
$0.1144
C
$0.1024
R
$0.1063
R6
$0.1184
Advisor
$0.1172
Total
Annual
Operating
Expenses
10
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
0.71%
0.72%
Advisor
0.46%
0.47%
Your
Fund’s
Expenses
FRANKLIN
INCOME
FUND
29
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,034.60
$3.66
$1,021.47
$3.64
0.72%
A1
$1,000
$1,039.40
$3.16
$1,021.97
$3.13
0.62%
C
$1,000
$1,036.10
$5.71
$1,019.46
$5.66
1.12%
R
$1,000
$1,038.40
$4.95
$1,020.21
$4.90
0.97%
R6
$1,000
$1,040.40
$2.05
$1,023.06
$2.03
0.40%
Advisor
$1,000
$1,040.40
$2.40
$1,022.72
$2.38
0.47%
30
franklintempleton.com
Annual
Report
Franklin
U.S.
Government
Securities
Fund
This
annual
report
for
Franklin
U.S.
Government
Securities
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
income
by
investing
at
least
80%
of
its
net
assets
in
U.S.
government
securities.
The
Fund
presently
invests
substantially
all
of
its
assets
in
Government
National
Mortgage
Association
obligations
(Ginnie
Maes).
Since
1983,
the
Fund
has
invested
substantially
in
Ginnie
Mae
securities,
which
carry
a
guarantee
backed
by
the
full
faith
and
credit
of
the
U.S.
government
as
to
the
timely
payment
of
interest
and
principal.
1
Issued
by
the
Government
National
Mortgage
Association
(GNMA),
Ginnie
Maes
have
been
among
the
highest
yielding
U.S.
government
obligations
available.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
-1.15%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Bloomberg
U.S.
Government
-
Intermediate
Index,
the
intermediate
component
of
the
Bloomberg
U.S.
Government
Index,
posted
a
-1.33%
cumulative
total
return.
2
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
32
.
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
currently
invest
the
Fund’s
assets
substantially
in
GNMA
obligations.
We
analyze
securities
using
proprietary
models
to
help
us
identify
attractive
investment
opportunities.
Manager’s
Discussion
In
the
months
leading
up
to
the
U.S.
presidential
election,
there
were
bouts
of
risk-off
sentiment
driven
largely
by
factors
such
as
a
resurgence
in
global
COVID-19
cases
and
the
political
impasse
regarding
additional
fiscal
stimulus.
Following
the
U.S.
presidential
election,
market
sentiment
remained
generally
positive
until
year-end.
As
financial
markets
settled
into
2021,
amid
a
stronger
than
expected
U.S.
economic
recovery
along
with
unprecedented
fiscal
stimulus,
inflation
concerns
took
center
stage.
U.S.
Treasury
(UST)
yields
surged
during
the
first
half
of
the
reporting
period,
peaking
at
1.74%
in
March
2021
before
trending
lower
and
ending
the
reporting
period
at
1.52%,
84
basis
points
higher
year-over-year.
Volatility,
as
measured
by
the
Merrill
Lynch
Option
Volatility
Estimate
(MOVE)
Index,
also
increased
during
the
period.
The
U.S.
housing
market
remained
strong
with
significant
demand
for
homes
despite
a
large
increase
in
prices.
Supply
and
demand
imbalances
combined
with
mortgage
rates
still
near
historic
lows
should
continue
to
support
a
strong
housing
market.
The
Federal
Reserve
(Fed)
continued
on
its
path
towards
tapering
its
current
level
of
asset
purchases
and
changed
the
language
of
its
September
2021
meeting
statement
to
“a
moderation
in
the
pace
of
asset
purchases
may
soon
be
warranted”
so
long
as
economic
progress
continues
broadly
as
expected.
Based
on
this
statement,
and
the
comments
from
Fed
Chair
Jerome
Powell
during
the
September
2021
press
conference,
the
tapering
of
asset
purchases
is
likely
to
be
announced
in
November
and
is
likely
to
be
completed
around
mid-2022,
following
a
gradual
tapering
of
$10
billion
in
USTs
and
$5
billion
in
mortage-backed
securities
(MBS)
per
month.
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Mortgage-Backed
Securities
98.1%
Other
0.5%
Short-Term
Investments
&
Other
Net
Assets
1.4%
1.
Securities
owned
by
the
Fund,
but
not
shares
of
the
Fund,
are
guaranteed
by
the
U.S.
government,
its
agencies
or
instrumentalities
as
to
the
timely
payment
of
principal
and
interest.
The
Fund’s
yield
and
share
price
are
not
guaranteed
and
will
vary
with
market
conditions.
2.
Source:
Morningstar.
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
97
.
Franklin
U.S.
Government
Securities
Fund
31
franklintempleton.com
Annual
Report
Prepayment
risk
is
expected
to
decline
over
the
next
quarter,
and
we
expect
origination
to
drop
over
the
winter
season.
We
believe
spreads
will
remain
rangebound,
with
seasonal
effects
offsetting
the
reduced
demand
from
tapering
of
purchases
by
the
Fed.
However,
spreads
could
start
widening
post
winter
as
origination
begins
to
increase.
The
Fund
maintains
a
conservative,
disciplined
investment
strategy
and
invests
primarily
in
GNMA
mortgage
pass-
throughs,
which
remain
the
only
MBS
that
are
backed
by
the
full
faith
and
credit
of
the
U.S.
government—the
same
guarantee
applicable
to
U.S.
Treasuries.
1
We
believe
our
collateral-intensive
research
approach
can
allow
us
to
uncover
dislocations
across
the
GNMA
markets
and
associated
mispricing
of
prepayment
risk.
We
continue
to
focus
on
specified
pools
where
we
believe
our
experience
and
continual
investment
in
new
technologies
help
us
uncover
these
discrepancies.
Agency
MBS
posted
negative
total
returns
and
underperformed
similar
duration
USTs
during
the
reporting
period.
Within
the
agency
mortgage
pass-through
sector,
Fannie
Mae
MBS
and
Freddie
Mac
MBS
were
the
best
performers,
while
GNMA
MBS
underperformed.
Within
the
GNMA
sector,
GNMA
I
3.0%,
5.0%
and
3.5%
coupons
were
the
best
performers,
while
GNMA
II
2.5%,
3.5%
and
3.0%
coupons
lagged.
During
the
period,
the
portfolio
retained
a
higher
weighting
to
GNMA
IIs
(pools
of
mortgages
from
multiple
issuers)
than
GNMA
Is
(pools
of
mortgages
from
single
issuers).
Over
the
period,
we
added
to
GNMA
II
2.5%
and
2.0%
coupons,
while
reducing
exposure
to
GNMA
II
3.0%
through
4.5%
coupons.
The
portfolio’s
largest
absolute
allocations
were
in
2.5%
and
3.0%
coupons
at
period-end
and
relative
to
the
Bloomberg
GNMA
Index
the
portfolio
was
underweight
the
2.0%,
2.5%,
3.5%
and
4.0%
coupons
and
overweight
the
3.0%
coupon
and
4.5%
through
6.0%
coupons.
The
Fund’s
overweight
allocation
to
GNMA
I
5.0%
coupons
was
the
largest
contributor
to
performance.
In
addition,
an
overweight
allocation
to
coupons
GNMA
I
6.0%,
5.5%
and
4.5%
also
contributed,
as
did
security
selection
in
GNMA
I
5.0%
coupons.
Overweight
allocation
to
GNMA
II
5.5%
and
6.0%
coupons
and
security
selection
in
GNMA
II
2.5%
through
5.0%
coupons
also
benefited
performance.
Overweight
allocation
to
GNMA
II
3.0%
and
underweight
allocation
to
GNMA
I
3.0%
coupons
were
the
largest
detractors
from
performance.
Thank
you
for
your
continued
participation
in
Franklin
U.S.
Government
Securities
Fund.
We
welcome
your
comments
and
questions
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Paul
Varunok
Neil
Dhruv
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Performance
Summary
as
of
September
30,
2021
Franklin
U.S.
Government
Securities
Fund
32
franklintempleton.com
Annual
Report
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
9/30/21
1
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
3.75%
and
the
minimum
is
0%.
Class
A:
3.75%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
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.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4,5
1-Year
-1.15%
-4.86%
5-Year
+6.60%
+0.52%
10-Year
+16.04%
+1.11%
Advisor
1-Year
-0.74%
-0.74%
5-Year
+7.81%
+1.52%
10-Year
+18.25%
+1.69%
30-Day
Standardized
Yield
7
Share
Class
Distribution
Rate
6
(with
fee
waiver)
(without
fee
waiver)
A
2.20%
1.10%
1.10%
Advisor
2.51%
1.37%
1.37%
See
page
34
for
Performance
Summary
footnotes.
Franklin
U.S.
Government
Securities
Fund
Performance
Summary
33
franklintempleton.com
Annual
Report
See
page
34
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
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
(10/1/11–9/30/21)
Advisor
Class
(10/1/11–9/30/21)
Franklin
U.S.
Government
Securities
Fund
Performance
Summary
34
franklintempleton.com
Annual
Report
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
loss
of
principal.
The
Fund’s
share
price
and
yield
will
be
affected
by
interest
rate
movements
and
mortgage
prepayments.
Bond
prices
generally
move
in
the
opposite
direction
of
interest
rates.
Thus,
as
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.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
The
Fund
has
a
fee
waiver
associated
with
any
investment
it
makes
in
a
Franklin
Templeton
money
fund
and/or
other
Franklin
Templeton
fund,
contractually
guaranteed
through
1/31/22.
Fund
investment
results
reflect
the
fee
waiver;
without
this
waiver,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Effective
9/10/18,
Class
A
shares
closed
to
new
investors,
were
renamed
Class
A1
shares,
and
a
new
Class
A
share
with
a
different
expense
structure
became
available.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
9/10/18,
a
restated
figure
is
used
based
on
the
Fund’s
Class
A1
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A1
and
Class
A;
and
(b)
for
periods
after
9/10/18,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
5.
Prior
to
3/1/19,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
4.25%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
3.75%.
6.
Distribution
rate
is
based
on
an
annualization
of
the
respective
class’s
September
dividend
and
the
maximum
offering
price
(NAV
for
Advisor
Class)
per
share
on
9/30/21.
7.
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.
8.
Source:
Morningstar.
Bloomberg
Barclays
U.S.
Government
Intermediate
Index,
the
intermediate
component
of
the
Bloomberg
Barclays
U.S.
Government
Index,
which
includes
public
obligations
of
the
U.S.
Treasury
with
at
least
one
year
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.
9.
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.
Distributions
(10/1/20–9/30/21)
Share
Class
Net
Investment
Income
A
$0.1308
A1
$0.1368
C
$0.1058
R
$0.1151
R6
$0.1520
Advisor
$0.1457
Total
Annual
Operating
Expenses
9
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
0.89%
0.90%
Advisor
0.64%
0.65%
Your
Fund’s
Expenses
Franklin
U.S.
Government
Securities
Fund
35
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$994.10
$4.35
$1,020.70
$4.41
0.87%
A1
$1,000
$996.30
$3.84
$1,021.23
$3.88
0.77%
C
$1,000
$993.60
$6.36
$1,018.69
$6.44
1.27%
R
$1,000
$992.80
$5.60
$1,019.45
$5.68
1.12%
R6
$1,000
$997.50
$2.53
$1,022.54
$2.56
0.50%
Advisor
$1,000
$997.00
$3.11
$1,021.96
$3.15
0.62%
36
franklintempleton.com
Annual
Report
Franklin
Utilities
Fund
This
annual
report
for
Franklin
Utilities
Fund
covers
the
fiscal
year
ended
September
30,
2021.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
both
capital
appreciation
and
current
income
by
investing
at
least
80%
of
its
net
assets
in
the
securities
of
public
utility
companies.
These
are
companies
that
provide
electricity,
natural
gas,
water,
and
communications
services
to
the
public
and
companies
that
provide
services
to
public
utilities
companies.
The
Fund
concentrates
(invests
more
than
25%
of
its
total
assets)
in
companies
operating
in
the
utilities
industry.
The
Fund
invests
primarily
in
equity
securities,
which
consist
mainly
of
common
stocks.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+12.29%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
S&P
500
Utilities
Index,
which
measures
the
performance
of
all
utilities
stocks
in
the
S&P
500,
posted
a
+11.01%
cumulative
total
return
and
the
Standard
&
Poor’s
500
Index
(S&P
500),
which
is
a
broad
measure
of
U.S.
stock
performance,
posted
a
+30.00%
cumulative
total
return.
1
You
can
find
the
Fund’s
long-term
performance
data
in
the
Performance
Summary
beginning
on
page
38
.
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
search
for
the
best
return
opportunities
available
in
the
global
utilities
arena
with
a
specific
focus
on
the
U.S.
electricity
and
gas
sector.
Generally,
we
seek
to
invest
in
companies
producing
a
high
percentage
of
earnings
from
their
regulated
operations.
Manager’s
Discussion
During
the
12
months
under
review,
within
the
utilities
sector,
electric
utilities,
multi-utilities,
and
the
oil,
gas
and
consumable
fuels
industries
drove
performance.
No
industries
detracted
on
an
absolute
basis.
Among
the
individual
contributors,
renewable
power
producer
and
electric
utility
NextEra
Energy
saw
healthy
growth
in
its
renewable
power
business
over
the
period,
which
bolstered
the
Fund’s
returns.
The
company's
fundamentals
have
remained
robust.
We
believe
that
the
company
is
well-positioned
for
strong
long-term
growth
regardless
of
the
regulatory
environment.
NextEra
has
a
significant
backlog
of
renewable
power
projects
that
can
be
developed
cost-effectively,
in
our
view.
Shares
of
Exelon,
a
purchaser,
transmitter,
and
distributer
of
electricity,
also
rose
during
the
period,
outperforming
as
Illinois
passed
clean
energy
legislation
that
included
support
for
the
company’s
merchant
nuclear
plants.
The
company
announced
that
it
was
separating
its
generation
and
retail
business,
which
includes
the
company’s
nuclear
power
plants,
from
its
utility
business,
and
investors
reacted
favorably.
Recent
earnings
results
have
been
relatively
positive,
but
the
company
did
caution
that
the
February
2021
winter
storm
in
Texas
would
have
an
impact
on
its
full-year
2021
earnings.
Cheniere
Energy,
a
liquefied
natural
gas
(LNG)
company,
supported
relative
returns,
benefiting
from
swiftly
rising
LNG
prices
toward
the
end
of
the
period.
While
the
company
missed
earnings
estimates
in
the
second
quarter
of
2021,
it
later
announced
plans
to
pay
a
dividend
and
spend
$1
billion
on
share
buybacks.
Cheniere
was
able
to
post
robust
Portfolio
Composition
9/30/21
%
of
Total
Net
Assets
Electric
Utilities
58.7%
Multi-Utilities
32.5%
Gas
Utilities
2.3%
Oil,
Gas
&
Consumable
Fuels
2.2%
Water
Utilities
1.7%
Diversified
Telecommunication
Services
1.1%
Independent
Power
and
Renewable
Electricity
Producers
1.1%
Short-Term
Investments
&
Other
Net
Assets
0.4%
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.
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
105
.
Franklin
Utilities
Fund
37
franklintempleton.com
Annual
Report
earnings
earlier
in
the
period,
despite
the
stresses
caused
by
then-low
LNG
prices,
driven
by
the
pandemic,
and
a
spate
of
hurricanes
in
2020.
Despite
significant
competition
in
the
market,
we
believe
the
supply
and
demand
outlook
is
favorable
in
the
natural
gas
industry.
Conversely,
Dominion
Energy,
a
Virginia-based
power
company,
hindered
the
Fund’s
performance
as
the
stock
lagged
during
the
period.
Results
at
the
company
were
resilient
during
and
shortly
after
the
height
of
the
pandemic,
and
Dominion
continues
to
invest
in
more
sustainable
power
generation.
However,
the
stock
underperformed
in
recent
months
amid
concerns
about
risk
to
earnings
power
in
Virginia,
which
cut
incentive
returns
after
the
state
reached
in-state
energy
production
goals.
Minnesota-based
Xcel
Energy,
an
electric
and
natural
gas
energy
provider,
weighed
on
absolute
returns.
The
company
has
been
a
leader
in
transitioning
to
clean
energy,
with
plans
to
invest
heavily
in
the
coming
years.
However,
investors
have
been
concerned
about
Xcel’s
regulatory
risk
as
the
firm
seeks
future
rate
increases
in
key
states,
such
as
Minnesota
and
Colorado.
We
view
Xcel
favorably,
as
its
growth
rate
looks
likely
to
be
strong
over
the
longer
term,
particularly
because
the
company
has
made
moves
to
focus
more
on
renewables.
Recent
earnings
showed
improved
profit
and
operating
revenues,
bolstered
by
higher
margins
for
both
electricity
and
natural
gas.
Thank
you
for
your
continued
participation
in
Franklin
Utilities
Fund.
We
look
forward
to
serving
your
future
investment
needs.
John
C.
Kohli,
CFA
J.
Blair
Schmicker,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
September
30,
2021,
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.
Top
10
Holdings
9/30/21
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
NextEra
Energy,
Inc.
12.5%
Electric
Utilities,
United
States
Exelon
Corp.
4.9%
Electric
Utilities,
United
States
Dominion
Energy,
Inc.
4.9%
Multi-Utilities,
United
States
CMS
Energy
Corp.
4.9%
Multi-Utilities,
United
States
Duke
Energy
Corp.
4.5%
Electric
Utilities,
United
States
Southern
Co.
(The)
4.2%
Electric
Utilities,
United
States
Edison
International
4.1%
Electric
Utilities,
United
States
Sempra
Energy
3.9%
Multi-Utilities,
United
States
American
Electric
Power
Co.,
Inc.
3.9%
Electric
Utilities,
United
States
Entergy
Corp.
3.7%
Electric
Utilities,
United
States
Performance
Summary
as
of
September
30,
2021
Franklin
Utilities
Fund
38
franklintempleton.com
Annual
Report
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
9/30/21
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
3.75%
and
the
minimum
is
0%.
Class
A:
3.75%
maximum
initial
sales
charge;
Advisor
Class
:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
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
.
Share
Class
Cumulative
Total
Return
1
Average
Annual
Total
Return
2
–
A
3,4
1-Year
+12.29%
+8.08%
5-Year
+46.63%
+7.13%
10-Year
+162.17%
+9.70%
Advisor
1-Year
+12.62%
+12.62%
5-Year
+48.32%
+8.20%
10-Year
+167.17%
+10.33%
Share
Class
Distribution
Rate
5
30-Day
Standardized
Yield
6
A
2.19%
2.25%
Advisor
2.51%
2.60%
See
page
40
for
Performance
Summary
footnotes.
Franklin
Utilities
Fund
Performance
Summary
39
franklintempleton.com
Annual
Report
See
page
40
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
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
(10/1/11–9/30/21)
Advisor
Class
(10/1/11–9/30/21)
Franklin
Utilities
Fund
Performance
Summary
40
franklintempleton.com
Annual
Report
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
loss
of
principal.
Investing
in
a
Fund
concentrating
in
the
utilities
sector
involves
special
risks,
including
increased
susceptibility
to
adverse
economic
and
regulatory
developments
affecting
the
sector.
Stocks
historically
have
outperformed
other
asset
classes
over
the
long
term,
but
tend
to
fluctuate
more
dramatically
over
the
short
term.
Securities
issued
by
utility
companies
have
been
historically
sensitive
to
interest
rate
changes.
When
interest
rates
fall,
utility
securities
prices,
and
thus
a
utilities
Fund’s
share
price,
tend
to
rise;
when
interest
rates
rise,
their
prices
generally
fall.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
1.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
2.
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.
3.
Effective
9/10/18,
Class
A
shares
closed
to
new
investors,
were
renamed
Class
A1
shares,
and
a
new
Class
A
share
with
a
different
expense
structure
became
available.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
9/10/18,
a
restated
figure
is
used
based
on
the
Fund’s
Class
A1
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A1
and
Class
A;
and
(b)
for
periods
after
9/10/18,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
4.
Prior
to
3/1/19,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
4.25%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
3.75%.
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
9/30/21.
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.
Morningstar.
The
S&P
500
is
a
market
capitalization-weighted
index
of
500
stocks
designed
to
measure
total
U.S.
equity
market
performance.
The
S&P
500
Utilities
Index
is
market
capitalization
weighted
and
consists
of
all
utility
stocks
in
the
S&P
500.
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.
Net
Asset
Value
Share
Class
(Symbol)
9/30/21
9/30/20
Change
A
(FKUQX)
$20.20
$19.76
+$0.44
A1
(FKUTX)
$20.21
$19.77
+$0.44
C
(FRUSX)
$20.09
$19.65
+$0.44
R
(FRURX)
$20.12
$19.68
+$0.44
R6
(FUFRX)
$20.40
$19.93
+$0.47
Advisor
(FRUAX)
$20.40
$19.93
+$0.47
Distributions
(10/1/20–9/30/21)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
A
$0.5168
$1.4065
$1.9233
A1
$0.5374
$1.4065
$1.9439
C
$0.4356
$1.4065
$1.8421
R
$0.4661
$1.4065
$1.8726
R6
$0.5849
$1.4065
$1.9914
Advisor
$0.5680
$1.4065
$1.9745
Total
Annual
Operating
Expenses
8
Share
Class
A
0.83%
Advisor
0.58%
Your
Fund’s
Expenses
Franklin
Utilities
Fund
41
franklintempleton.com
Annual
Report
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.
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
183/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
4/1/21
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
Ending
Account
Value
9/30/21
Expenses
Paid
During
Period
4/1/21–9/30/21
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,011.40
$4.15
$1,020.94
$4.17
0.82%
A1
$1,000
$1,012.40
$3.65
$1,021.44
$3.66
0.72%
C
$1,000
$1,010.00
$6.16
$1,018.94
$6.19
1.22%
R
$1,000
$1,010.70
$5.41
$1,019.69
$5.43
1.07%
R6
$1,000
$1,013.50
$2.51
$1,022.57
$2.52
0.50%
Advisor
$1,000
$1,013.00
$2.89
$1,022.20
$2.91
0.57%
Franklin
Custodian
Funds
Financial
Highlights
Franklin
DynaTech
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
42
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$121.24
$82.84
$81.16
$63.10
$52.05
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(0.82)
(0.38)
(0.20)
(0.23)
(0.18)
Net
realized
and
unrealized
gains
(losses)
...........
36.81
39.44
3.79
19.45
12.92
Total
from
investment
operations
....................
35.99
39.06
3.59
19.22
12.74
Less
distributions
from:
Net
realized
gains
.............................
—
(0.66)
(1.91)
(1.16)
(1.69)
Net
asset
value,
end
of
year
.......................
$157.23
$121.24
$82.84
$81.16
$63.10
Total
return
c
...................................
29.68%
47.47%
4.77%
30.88%
25.67%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.79%
0.85%
0.86%
0.86%
0.92%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.79%
d,e
0.84%
d
0.85%
d
0.86%
d,e
0.91%
d
Net
investment
(loss)
............................
(0.56)%
(0.39)%
(0.26)%
(0.32)%
(0.33)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$12,129,483
$8,378,574
$4,504,434
$3,741,562
$2,498,393
Portfolio
turnover
rate
............................
18.77%
13.82%
20.01%
17.22%
19.85%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
43
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$99.49
$68.60
$68.07
$53.49
$44.71
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(1.55)
(0.91)
(0.66)
(0.65)
(0.50)
Net
realized
and
unrealized
gains
(losses)
...........
30.12
32.46
3.10
16.39
10.97
Total
from
investment
operations
....................
28.57
31.55
2.44
15.74
10.47
Less
distributions
from:
Net
realized
gains
.............................
—
(0.66)
(1.91)
(1.16)
(1.69)
Net
asset
value,
end
of
year
.......................
$128.06
$99.49
$68.60
$68.07
$53.49
Total
return
c
...................................
28.72%
46.37%
3.97%
29.93%
24.72%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.54%
1.60%
1.61%
1.61%
1.67%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.54%
d,e
1.59%
d
1.60%
d
1.61%
d,e
1.66%
d
Net
investment
(loss)
............................
(1.31)%
(1.14)%
(1.01)%
(1.07)%
(1.08)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,339,016
$1,095,702
$597,927
$611,221
$374,502
Portfolio
turnover
rate
............................
18.77%
13.82%
20.01%
17.22%
19.85%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
44
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$117.13
$80.26
$78.88
$61.51
$50.90
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(1.14)
(0.60)
(0.39)
(0.40)
(0.31)
Net
realized
and
unrealized
gains
(losses)
...........
35.53
38.13
3.68
18.93
12.61
Total
from
investment
operations
....................
34.39
37.53
3.29
18.53
12.30
Less
distributions
from:
Net
realized
gains
.............................
—
(0.66)
(1.91)
(1.16)
(1.69)
Net
asset
value,
end
of
year
.......................
$151.52
$117.13
$80.26
$78.88
$61.51
Total
return
....................................
29.36%
47.09%
4.52%
30.57%
25.36%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.04%
1.10%
1.11%
1.11%
1.17%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.04%
c,d
1.09%
c
1.10%
c
1.11%
c,d
1.16%
c
Net
investment
(loss)
............................
(0.81)%
(0.63)%
(0.51)%
(0.57)%
(0.58)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$311,646
$221,041
$123,721
$95,925
$47,860
Portfolio
turnover
rate
............................
18.77%
13.82%
20.01%
17.22%
19.85%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
45
ue
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$127.01
$86.46
$84.31
$65.28
$53.56
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(0.36)
(0.05)
0.07
0.04
0.06
Net
realized
and
unrealized
gains
(losses)
...........
38.61
41.26
3.99
20.15
13.35
Total
from
investment
operations
....................
38.25
41.21
4.06
20.19
13.41
Less
distributions
from:
Net
realized
gains
.............................
—
(0.66)
(1.91)
(1.16)
(1.69)
Net
asset
value,
end
of
year
.......................
$165.26
$127.01
$86.46
$84.31
$65.28
Total
return
....................................
30.12%
47.97%
5.15%
31.38%
26.17%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.46%
0.50%
0.51%
0.50%
0.49%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.46%
c,d
0.50%
c,d
0.50%
c
0.50%
c,d
0.48%
c
Net
investment
income
(loss)
......................
(0.23)%
(0.05)%
0.09%
0.04%
0.10%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$9,820,184
$5,817,028
$2,473,942
$1,688,595
$457,846
Portfolio
turnover
rate
............................
18.77%
13.82%
20.01%
17.22%
19.85%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
46
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$125.58
$85.58
$83.56
$64.78
$53.25
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(0.48)
(0.15)
(0.01)
(0.06)
(0.04)
Net
realized
and
unrealized
gains
(losses)
...........
38.17
40.81
3.94
20.00
13.26
Total
from
investment
operations
....................
37.69
40.66
3.93
19.94
13.22
Less
distributions
from:
Net
realized
gains
.............................
—
(0.66)
(1.91)
(1.16)
(1.69)
Net
asset
value,
end
of
year
.......................
$163.27
$125.58
$85.58
$83.56
$64.78
Total
return
....................................
30.01%
47.83%
5.04%
31.21%
25.98%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.54%
0.60%
0.61%
0.61%
0.67%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.54%
c,d
0.59%
c
0.60%
c
0.61%
c,d
0.66%
c
Net
investment
(loss)
............................
(0.32)%
(0.15)%
(0.01)%
(0.07)%
(0.08)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$4,352,531
$2,884,489
$1,154,604
$680,066
$712,762
Portfolio
turnover
rate
............................
18.77%
13.82%
20.01%
17.22%
19.85%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
DynaTech
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
47
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
98.3%
Aerospace
&
Defense
0.5%
a
Axon
Enterprise,
Inc.
...................................
United
States
650,000
$
113,763,000
a
TransDigm
Group,
Inc.
.................................
United
States
35,000
21,859,950
135,622,950
Automobiles
1.7%
a
Tesla,
Inc.
...........................................
United
States
600,000
465,288,000
Banks
0.3%
a
SVB
Financial
Group
...................................
United
States
150,000
97,032,000
Biotechnology
2.0%
a,b
Applied
Molecular
Transport,
Inc.
.........................
United
States
622,200
16,096,314
a
Argenx
SE
..........................................
Netherlands
300,000
90,650,969
a
BioNTech
SE,
ADR
....................................
Germany
350,000
95,546,500
a
Intellia
Therapeutics,
Inc.
................................
United
States
400,000
53,660,000
a
Moderna
,
Inc.
........................................
United
States
500,000
192,430,000
a
Natera
,
Inc.
..........................................
United
States
1,000,000
111,440,000
559,823,783
Capital
Markets
2.2%
Moody's
Corp.
........................................
United
States
300,000
106,533,000
MSCI,
Inc.
...........................................
United
States
500,000
304,170,000
Tradeweb
Markets,
Inc.,
A
...............................
United
States
2,500,000
201,950,000
612,653,000
Chemicals
0.2%
a,c
SK
IE
Technology
Co.
Ltd.,
144A,
Reg
S
....................
South
Korea
300,000
56,868,604
Diversified
Consumer
Services
0.2%
a
Chegg
,
Inc.
..........................................
United
States
800,000
54,416,000
a
Duolingo
,
Inc.
........................................
United
States
62,900
10,464,044
64,880,044
Electric
Utilities
0.6%
NextEra
Energy,
Inc.
...................................
United
States
2,250,000
176,670,000
Electronic
Equipment,
Instruments
&
Components
1.2%
Amphenol
Corp.,
A
....................................
United
States
1,200,000
87,876,000
Keyence
Corp.
.......................................
Japan
175,000
104,452,446
a
Keysight
Technologies,
Inc.
..............................
United
States
200,000
32,858,000
a
Zebra
Technologies
Corp.,
A
.............................
United
States
200,000
103,084,000
328,270,446
Entertainment
3.9%
Activision
Blizzard,
Inc.
.................................
United
States
1,100,000
85,129,000
a
Netflix,
Inc.
..........................................
United
States
100,000
61,034,000
a
ROBLOX
Corp.,
A
.....................................
United
States
2,000,000
151,100,000
a
Sea
Ltd.,
ADR
........................................
Taiwan
2,500,000
796,825,000
1,094,088,000
Equity
Real
Estate
Investment
Trusts
(REITs)
0.8%
Crown
Castle
International
Corp.
..........................
United
States
500,000
86,660,000
SBA
Communications
Corp.
.............................
United
States
400,000
132,228,000
218,888,000
Health
Care
Equipment
&
Supplies
6.6%
Abbott
Laboratories
....................................
United
States
1,300,000
153,569,000
a
CryoPort
,
Inc.
........................................
United
States
250,000
16,627,500
Danaher
Corp.
.......................................
United
States
1,550,000
471,882,000
a
DexCom
,
Inc.
........................................
United
States
100,000
54,686,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
48
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Health
Care
Equipment
&
Supplies
(continued)
a
Edwards
Lifesciences
Corp.
.............................
United
States
1,200,000
$
135,852,000
a
IDEXX
Laboratories,
Inc.
................................
United
States
650,000
404,235,000
a
Inari
Medical,
Inc.
.....................................
United
States
400,000
32,440,000
a
Inmode
Ltd.
.........................................
United
States
200,000
31,890,000
a
Insulet
Corp.
.........................................
United
States
35,000
9,948,050
a
Intuitive
Surgical,
Inc.
..................................
United
States
300,000
298,245,000
STERIS
plc
..........................................
United
States
500,000
102,140,000
Stryker
Corp.
........................................
United
States
500,000
131,860,000
1,843,374,550
Health
Care
Providers
&
Services
0.6%
a
Accolade,
Inc.
........................................
United
States
150,000
6,325,500
a
Guardant
Health,
Inc.
United
States
500,000
62,505,000
UnitedHealth
Group,
Inc.
................................
United
States
250,000
97,685,000
166,515,500
Health
Care
Technology
1.8%
a
Definitive
Healthcare
Corp.
..............................
United
States
350,000
14,990,500
a,b
Doximity
,
Inc.,
A
......................................
United
States
200,000
16,140,000
a
Inspire
Medical
Systems,
Inc.
............................
United
States
750,000
174,660,000
a
Veeva
Systems,
Inc.,
A
.................................
United
States
1,000,000
288,170,000
493,960,500
Hotels,
Restaurants
&
Leisure
0.7%
a
Airbnb,
Inc.,
A
........................................
United
States
500,000
83,875,000
a
Booking
Holdings,
Inc.
.................................
United
States
50,000
118,693,500
202,568,500
Industrial
Conglomerates
0.3%
Roper
Technologies,
Inc.
................................
United
States
200,000
89,226,000
Interactive
Media
&
Services
8.9%
a
Adevinta
ASA
........................................
France
1,000,000
17,137,692
a
Alphabet,
Inc.,
A
......................................
United
States
300,000
802,056,000
a
Alphabet,
Inc.,
C
......................................
United
States
67,170
179,028,873
a
Facebook,
Inc.,
A
.....................................
United
States
1,800,000
610,902,000
a
Match
Group,
Inc.
.....................................
United
States
1,000,000
156,990,000
a
Pinterest,
Inc.,
A
......................................
United
States
1,000,000
50,950,000
a
Snap,
Inc.,
A
.........................................
United
States
2,750,000
203,142,500
Tencent
Holdings
Ltd.
..................................
China
5,000,000
298,491,874
a,c
Trustpilot
Group
plc,
144A,
Reg
S
.........................
United
Kingdom
2,661,715
13,827,599
a
VTEX,
A
............................................
Brazil
200,000
4,114,000
a
ZoomInfo
Technologies,
Inc.,
A
...........................
United
States
2,250,000
137,677,500
2,474,318,038
Internet
&
Direct
Marketing
Retail
9.3%
a
Amazon.com,
Inc.
.....................................
United
States
500,000
1,642,520,000
a,b
Chewy,
Inc.,
A
........................................
United
States
2,000,000
136,220,000
a,c
Delivery
Hero
SE,
144A,
Reg
S
...........................
Saudi
Arabia
700,000
89,284,780
a
DoorDash
,
Inc.,
A
.....................................
United
States
350,000
72,093,000
a
Fiverr
International
Ltd.
.................................
Israel
800,000
146,144,000
a
MercadoLibre
,
Inc.
....................................
Argentina
300,000
503,820,000
a
THG
plc
............................................
United
Kingdom
845,675
5,776,432
a,c
Zalando
SE,
144A,
Reg
S
...............................
Germany
150,678
13,741,477
2,609,599,689
IT
Services
14.5%
a,c
Adyen
NV,
144A,
Reg
S
................................
Netherlands
200,000
559,048,632
a
Afterpay
Ltd.
.........................................
Australia
600,000
52,103,446
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
49
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
IT
Services
(continued)
a
Cloudflare
,
Inc.,
A
.....................................
United
States
100,000
$
11,265,000
a,b
Dlocal
Ltd.
..........................................
Uruguay
150,000
8,184,000
a
Endava
plc,
ADR
......................................
United
Kingdom
250,000
33,962,500
a
EPAM
Systems,
Inc.
...................................
United
States
350,000
199,668,000
a
Globant
SA
..........................................
United
States
250,000
70,252,500
Mastercard
,
Inc.,
A
....................................
United
States
1,000,000
347,680,000
a
MongoDB,
Inc.
.......................................
United
States
265,000
124,950,150
a,c
Nuvei
Corp.,
144A,
Reg
S
...............................
Canada
1,000,000
115,520,000
a
Okta
,
Inc.
...........................................
United
States
350,000
83,069,000
a
Paymentus
Holdings,
Inc.,
A
.............................
United
States
421,700
10,390,688
a
PayPal
Holdings,
Inc.
..................................
United
States
2,500,000
650,525,000
a,b
Remitly
Global,
Inc.
....................................
United
States
382,400
14,034,080
a
Shopify,
Inc.,
A
.......................................
Canada
500,000
678,541,264
a
Snowflake,
Inc.,
A
.....................................
United
States
225,000
68,046,750
a
Square,
Inc.,
A
.......................................
United
States
1,600,000
383,744,000
a
TaskUS
,
Inc.,
A
.......................................
Philippines
100,000
6,637,000
a,b
Thoughtworks
Holding,
Inc.
..............................
United
States
547,700
15,724,467
a,b
Toast,
Inc.,
A
.........................................
United
States
283,700
14,170,815
a
Twilio
,
Inc.,
A
.........................................
United
States
1,000,000
319,050,000
Visa,
Inc.,
A
..........................................
United
States
1,300,000
289,575,000
4,056,142,292
Life
Sciences
Tools
&
Services
6.7%
a
10X
Genomics,
Inc.,
A
..................................
United
States
600,000
87,348,000
Agilent
Technologies,
Inc.
...............................
United
States
100,000
15,753,000
a
Avantor
,
Inc.
.........................................
United
States
300,000
12,270,000
a
Bio-Rad
Laboratories,
Inc.,
A
.............................
United
States
200,000
149,190,000
Bio-
Techne
Corp.
.....................................
United
States
200,000
96,914,000
a
Charles
River
Laboratories
International,
Inc.
.................
United
States
100,000
41,267,000
a
Evotec
SE
...........................................
Germany
550,000
26,078,211
a
Illumina,
Inc.
.........................................
United
States
450,000
182,524,500
Lonza
Group
AG
......................................
Switzerland
250,000
187,557,641
a
Maravai
LifeSciences
Holdings,
Inc.,
A
.....................
United
States
1,750,000
85,890,000
a,b
Olink
Holding
AB,
ADR
.................................
Sweden
500,000
12,125,000
a
Repligen
Corp.
.......................................
United
States
1,000,000
288,990,000
a,b
Seer,
Inc.
...........................................
United
States
100,000
3,453,000
Thermo
Fisher
Scientific,
Inc.
............................
United
States
750,000
428,497,500
a,c
Wuxi
Biologics
Cayman,
Inc.,
144A,
Reg
S
..................
China
15,000,000
243,302,877
1,861,160,729
Media
0.8%
a
Charter
Communications,
Inc.,
A
..........................
United
States
150,000
109,134,000
a
Liberty
Broadband
Corp.,
A
..............................
United
States
750,000
126,262,500
235,396,500
Pharmaceuticals
1.1%
a
Catalent
,
Inc.
........................................
United
States
1,500,000
199,605,000
Zoetis,
Inc.
..........................................
United
States
500,000
97,070,000
296,675,000
Professional
Services
0.5%
a
CoStar
Group,
Inc.
....................................
United
States
1,500,000
129,090,000
Semiconductors
&
Semiconductor
Equipment
8.8%
Analog
Devices,
Inc.
...................................
United
States
1,000,000
167,480,000
ASML
Holding
NV,
NYRS
...............................
Netherlands
650,000
484,321,500
a
Enphase
Energy,
Inc.
..................................
United
States
200,000
29,994,000
Entegris
,
Inc.
.........................................
United
States
1,000,000
125,900,000
Intel
Corp.
...........................................
United
States
750,000
39,960,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
50
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Semiconductors
&
Semiconductor
Equipment
(continued)
KLA
Corp.
...........................................
United
States
315,000
$
105,370,650
Lam
Research
Corp.
...................................
United
States
500,000
284,575,000
Monolithic
Power
Systems,
Inc.
...........................
United
States
500,000
242,340,000
NVIDIA
Corp.
........................................
United
States
4,000,000
828,640,000
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
...........
Taiwan
825,000
92,111,250
Teradyne,
Inc.
........................................
United
States
500,000
54,585,000
Texas
Instruments,
Inc.
.................................
United
States
75,000
14,415,750
2,469,693,150
Software
22.6%
a
Adobe,
Inc.
..........................................
United
States
600,000
345,432,000
a
Amplitude,
Inc.,
A
.....................................
United
States
273,200
14,845,688
a
ANSYS,
Inc.
.........................................
United
States
450,000
153,202,500
a
Aspen
Technology,
Inc.
.................................
United
States
200,000
24,560,000
a
Atlassian
Corp.
plc,
A
..................................
United
States
1,000,000
391,420,000
a
Autodesk,
Inc.
........................................
United
States
500,000
142,585,000
a
Avalara,
Inc.
.........................................
United
States
1,100,000
192,247,000
Bentley
Systems,
Inc.,
B
................................
United
States
400,000
24,256,000
a
Bill.com
Holdings,
Inc.
..................................
United
States
250,000
66,737,500
a
Cadence
Design
Systems,
Inc.
...........................
United
States
1,200,000
181,728,000
a
Cerence
,
Inc.
........................................
United
States
1,500,000
144,165,000
a
Coupa
Software,
Inc.
...................................
United
States
300,000
65,754,000
a
Crowdstrike
Holdings,
Inc.,
A
.............................
United
States
900,000
221,202,000
a
CS
Disco,
Inc.
........................................
United
States
250,000
11,985,000
a
Datadog
,
Inc.,
A
......................................
United
States
1,000,000
141,350,000
a
DocuSign,
Inc.
.......................................
United
States
1,550,000
399,016,500
a,b
DoubleVerify
Holdings,
Inc.
..............................
United
States
281,300
9,609,208
a
Five9,
Inc.
...........................................
United
States
450,000
71,883,000
a
Fortinet,
Inc.
.........................................
United
States
75,000
21,903,000
a
Freshworks
,
Inc.,
A
....................................
United
States
609,400
26,015,286
a
HubSpot
,
Inc.
........................................
United
States
800,000
540,872,000
Intuit,
Inc.
...........................................
United
States
1,025,000
552,997,750
a
Lightspeed
Commerce,
Inc.,
(CAD
Traded)
..................
Canada
250,000
24,118,877
a
Lightspeed
Commerce,
Inc.,
(USD
Traded)
..................
Canada
200,000
19,286,000
Microsoft
Corp.
.......................................
United
States
3,000,000
845,760,000
a
Monday.com
Ltd.
......................................
United
States
250,000
81,550,000
a
Palo
Alto
Networks,
Inc.
................................
United
States
50,000
23,950,000
a,b
Procore
Technologies,
Inc.
..............................
United
States
500,000
44,670,000
a
salesforce.com,
Inc.
...................................
United
States
1,000,000
271,220,000
a,b
SentinelOne
,
Inc.,
A
...................................
United
States
650,000
34,820,500
a
ServiceNow
,
Inc.
......................................
United
States
1,000,000
622,270,000
a,b
Sprinklr
,
Inc.,
A
.......................................
United
States
1,131,300
19,797,750
a
Sprout
Social,
Inc.,
A
...................................
United
States
50,000
6,097,500
a
Synopsys,
Inc.
.......................................
United
States
1,000,000
299,410,000
a
Tyler
Technologies,
Inc.
.................................
United
States
250,000
114,662,500
a
Workday,
Inc.,
A
......................................
United
States
550,000
137,439,500
a
Zendesk
,
Inc.
........................................
United
States
300,000
34,917,000
6,323,736,059
Specialty
Retail
0.7%
a
Carvana
Co.
.........................................
United
States
625,000
188,462,500
a
Olaplex
Holdings,
Inc.
..................................
United
States
476,300
11,669,350
200,131,850
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
51
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Technology
Hardware,
Storage
&
Peripherals
0.8%
Apple,
Inc.
..........................................
United
States
1,600,000
$
226,400,000
Total
Common
Stocks
(Cost
$13,074,609,824)
...................................
27,488,073,184
Short
Term
Investments
1.8%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
1.4%
d,e
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
396,130,154
396,130,154
Total
Money
Market
Funds
(Cost
$396,130,154)
.................................
396,130,154
Principal
Amount
*
a
a
a
a
a
Repurchase
Agreements
0.1%
f
Joint
Repurchase
Agreement,
0.028%,
10/01/21
(Maturity
Value
$30,463,230)
BNP
Paribas
Securities
Corp.
(Maturity
Value
$18,816,223)
Deutsche
Bank
Securities,
Inc.
(Maturity
Value
$3,702,501)
HSBC
Securities
(USA),
Inc.
(Maturity
Value
$7,944,506)
Collateralized
by
U.S.
Government
Agency
Securities,
2.5%
-
4%,
4/20/27
-
4/20/51;
and
U.S.
Treasury
Notes,
0.25%
-
2%,
6/30/25
-
8/15/25
(valued
at
$31,079,102)
.........................
30,463,206
30,463,206
Total
Repurchase
Agreements
(Cost
$30,463,206)
...............................
30,463,206
g
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.3%
Country
Shares
Money
Market
Funds
0.2%
d,e
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
44,677,000
44,677,000
Principal
Amount
*
Repurchase
Agreements
0.1%
f
Joint
Repurchase
Agreement,
BNP
Paribas
SA,
0.05%,
10/01/21
(Maturity
Value
$39,287,834)
Collateralized
by
U.S.
Treasury
Notes,
0.125%
-
3%,
9/30/22
-
8/31/26;
and
U.S.
Treasury
Notes,
Index
Linked,
0.125%,
10/15/24
-
4/15/25
(valued
at
$40,073,546)
........................
39,287,779
39,287,779
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$83,964,779)
...........................................................
83,964,779
Total
Short
Term
Investments
(Cost
$510,558,139
)
...............................
510,558,139
a
Total
Investments
(Cost
$13,585,167,963)
100.1%
...............................
$27,998,631,323
Other
Assets,
less
Liabilities
(0.1)%
...........................................
(45,771,177)
Net
Assets
100.0%
...........................................................
$27,952,860,146
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
DynaTech
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
52
See
Abbreviations
on
page
143.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
September
30,
2021.
See
Note
1(g).
c
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
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.
At
September
30,
2021,
the
aggregate
value
of
these
securities
was
$1,091,593,969,
representing
3.9%
of
net
assets.
d
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
e
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
f
See
Note
1(c)
regarding
joint
repurchase
agreement.
g
See
Note
1(g)
regarding
securities
on
loan.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Focused
Growth
Fund
franklintempleton.com
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accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
53
a
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
a
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$25.05
$20.16
Income
from
investment
operations
b
:
Net
investment
(loss)
c
...............................................................
(0.23)
(0.10)
Net
realized
and
unrealized
gains
(losses)
................................................
7.00
4.99
Total
from
investment
operations
.........................................................
6.77
4.89
Less
distributions
from:
Net
realized
gains
..................................................................
(0.21)
—
Net
asset
value,
end
of
year
............................................................
$31.61
$25.05
Total
return
d
........................................................................
27.17%
24.26%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...........................................
1.36%
1.81%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
1.10%
f
1.10%
Net
investment
(loss)
.................................................................
(0.78)%
(0.72)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$80,509
$26,793
Portfolio
turnover
rate
.................................................................
22.77%
33.93%
a
For
the
period
February
14,
2020
(effective
date)
to
September
30,
2020.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Focused
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
54
a
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
a
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$24.94
$20.16
Income
from
investment
operations
b
:
Net
investment
(loss)
c
...............................................................
(0.44)
(0.21)
Net
realized
and
unrealized
gains
(losses)
................................................
6.94
4.99
Total
from
investment
operations
.........................................................
6.50
4.78
Less
distributions
from:
Net
realized
gains
..................................................................
(0.21)
—
Net
asset
value,
end
of
year
............................................................
$31.23
$24.94
Total
return
d
........................................................................
26.20%
23.71%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...........................................
2.12%
2.56%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
1.85%
f
1.85%
Net
investment
(loss)
.................................................................
(1.53)%
(1.47)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$6,028
$3,931
Portfolio
turnover
rate
.................................................................
22.77%
33.93%
a
For
the
period
February
14,
2020
(effective
date)
to
September
30,
2020.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Focused
Growth
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
55
a
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
a
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$25.06
$20.16
Income
from
investment
operations
b
:
Net
investment
(loss)
c
...............................................................
(0.31)
(0.11)
Net
realized
and
unrealized
gains
(losses)
................................................
6.99
5.01
Total
from
investment
operations
.........................................................
6.68
4.90
Less
distributions
from:
Net
realized
gains
..................................................................
(0.21)
—
Net
asset
value,
end
of
year
............................................................
$31.53
$25.06
Total
return
d
........................................................................
26.79%
24.31%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...........................................
1.66%
1.65%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
1.38%
f
1.04%
Net
investment
(loss)
.................................................................
(1.05)%
(0.77)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$984
$643
Portfolio
turnover
rate
.................................................................
22.77%
33.93%
a
For
the
period
February
14,
2020
(effective
date)
to
September
30,
2020.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Focused
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
56
a
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
a
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$25.10
$20.16
Income
from
investment
operations
b
:
Net
investment
(loss)
c
...............................................................
(0.13)
(0.07)
Net
realized
and
unrealized
gains
(losses)
................................................
7.02
5.01
Total
from
investment
operations
.........................................................
6.89
4.94
Less
distributions
from:
Net
realized
gains
..................................................................
(0.21)
—
Net
asset
value,
end
of
year
............................................................
$31.78
$25.10
Total
return
d
........................................................................
27.59%
24.50%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...........................................
1.05%
2.08%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
0.77%
0.85%
Net
investment
(loss)
.................................................................
(0.44)%
(0.52)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$75
$65
Portfolio
turnover
rate
.................................................................
22.77%
33.93%
a
For
the
period
February
14,
2020
(effective
date)
to
September
30,
2020.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Focused
Growth
Fund
(continued)
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The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
57
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$25.10
$17.62
$17.24
$13.36
$10.93
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(0.16)
(0.09)
(0.06)
(0.05)
(0.02)
Net
realized
and
unrealized
gains
(losses)
...........
7.02
8.66
0.52
3.93
2.49
Total
from
investment
operations
....................
6.86
8.57
0.46
3.88
2.47
Less
distributions
from:
Net
investment
income
..........................
—
—
(0.01)
—
(0.01)
Net
realized
gains
.............................
(0.21)
(1.09)
(0.07)
—
(0.03)
Total
distributions
...............................
(0.21)
(1.09)
(0.08)
—
(0.04)
Net
asset
value,
end
of
year
.......................
$31.75
$25.10
$17.62
$17.24
$13.36
Total
return
....................................
27.47%
51.20%
2.80%
29.04%
22.78%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.12%
2.04%
2.41%
2.23%
2.31%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.85%
c
0.88%
1.00%
1.00%
c
1.00%
c
Net
investment
(loss)
............................
(0.53)%
(0.41)%
(0.36)%
(0.34)%
(0.20)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$25,041
$16,747
$4,404
$4,310
$3,341
Portfolio
turnover
rate
............................
22.77%
33.93%
28.65%
14.47%
28.48%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
Focused
Growth
Fund
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58
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
96.6%
Aerospace
&
Defense
1.0%
a
Axon
Enterprise,
Inc.
...................................
United
States
6,389
$
1,118,203
Automobiles
2.9%
a
Tesla,
Inc.
...........................................
United
States
4,272
3,312,851
Capital
Markets
1.7%
MSCI,
Inc.
...........................................
United
States
3,210
1,952,771
Electric
Utilities
2.0%
NextEra
Energy,
Inc.
...................................
United
States
28,002
2,198,717
Entertainment
4.2%
a
ROBLOX
Corp.,
A
.....................................
United
States
14,445
1,091,320
a
Sea
Ltd.,
ADR
........................................
Taiwan
11,318
3,607,386
4,698,706
Equity
Real
Estate
Investment
Trusts
(REITs)
0.9%
SBA
Communications
Corp.
.............................
United
States
3,164
1,045,923
Food
&
Staples
Retailing
1.9%
Costco
Wholesale
Corp.
................................
United
States
4,823
2,167,215
Health
Care
Equipment
&
Supplies
9.9%
Abbott
Laboratories
....................................
United
States
14,732
1,740,291
Danaher
Corp.
.......................................
United
States
11,252
3,425,559
a
IDEXX
Laboratories,
Inc.
................................
United
States
5,318
3,307,264
a
Intuitive
Surgical,
Inc.
..................................
United
States
2,672
2,656,369
11,129,483
Health
Care
Technology
2.1%
a
Veeva
Systems,
Inc.,
A
.................................
United
States
8,020
2,311,123
Interactive
Media
&
Services
7.5%
a
Alphabet,
Inc.,
A
......................................
United
States
1,246
3,331,206
a
Facebook,
Inc.,
A
.....................................
United
States
8,080
2,742,271
a
Snap,
Inc.,
A
.........................................
United
States
16,226
1,198,615
Tencent
Holdings
Ltd.
..................................
China
19,994
1,193,609
8,465,701
Internet
&
Direct
Marketing
Retail
11.1%
a
Amazon.com,
Inc.
.....................................
United
States
2,697
8,859,753
a
MercadoLibre
,
Inc.
....................................
Argentina
2,156
3,620,786
12,480,539
IT
Services
16.5%
a,b
Adyen
NV,
144A,
Reg
S
................................
Netherlands
1,364
3,812,712
Mastercard
,
Inc.,
A
....................................
United
States
6,792
2,361,442
a
PayPal
Holdings,
Inc.
..................................
United
States
14,962
3,893,262
a
Shopify,
Inc.,
A
.......................................
Canada
3,742
5,078,203
a
Square,
Inc.,
A
.......................................
United
States
9,221
2,211,565
a
Twilio
,
Inc.,
A
.........................................
United
States
3,741
1,193,566
18,550,750
Life
Sciences
Tools
&
Services
2.7%
a
Repligen
Corp.
.......................................
United
States
4,314
1,246,703
a,b
Wuxi
Biologics
Cayman,
Inc.,
144A,
Reg
S
..................
China
113,751
1,845,063
3,091,766
Media
2.0%
a
Charter
Communications,
Inc.,
A
..........................
United
States
3,164
2,302,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Focused
Growth
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
59
s
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Personal
Products
1.0%
Estee
Lauder
Cos.,
Inc.
(The),
A
..........................
United
States
3,671
$
1,101,043
Semiconductors
&
Semiconductor
Equipment
10.6%
Analog
Devices,
Inc.
...................................
United
States
11,882
1,989,997
ASML
Holding
NV,
NYRS
...............................
Netherlands
4,307
3,209,189
NVIDIA
Corp.
........................................
United
States
26,174
5,422,206
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
...........
Taiwan
11,781
1,315,349
11,936,741
Software
18.6%
a
Adobe,
Inc.
..........................................
United
States
3,890
2,239,551
a
Atlassian
Corp.
plc,
A
..................................
United
States
4,367
1,709,331
a
DocuSign,
Inc.
.......................................
United
States
5,305
1,365,666
Microsoft
Corp.
.......................................
United
States
29,940
8,440,685
a
Procore
Technologies,
Inc.
..............................
United
States
12,303
1,099,150
a
salesforce.com,
Inc.
...................................
United
States
5,285
1,433,398
a
ServiceNow
,
Inc.
......................................
United
States
7,490
4,660,802
20,948,583
Total
Common
Stocks
(Cost
$83,256,018)
......................................
108,812,115
Short
Term
Investments
2.8%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
2.8%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
3,205,079
3,205,079
Total
Money
Market
Funds
(Cost
$3,205,079)
...................................
3,205,079
Total
Short
Term
Investments
(Cost
$3,205,079
)
.................................
3,205,079
a
Total
Investments
(Cost
$86,461,097)
99.4%
....................................
$112,017,194
Other
Assets,
less
Liabilities
0.6%
.............................................
619,800
Net
Assets
100.0%
...........................................................
$112,636,994
See
abbreviations
on
page
143
.
a
Non-income
producing.
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
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.
At
September
30,
2021,
the
aggregate
value
of
these
securities
was
$5,657,775,
representing
5.0%
of
net
assets.
c
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
d
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Growth
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
60
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$129.91
$110.04
$107.59
$91.61
$78.54
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(0.06)
0.33
0.46
0.41
0.40
Net
realized
and
unrealized
gains
(losses)
...........
32.67
25.99
3.47
18.18
15.56
Total
from
investment
operations
....................
32.61
26.32
3.93
18.59
15.96
Less
distributions
from:
Net
investment
income
..........................
(0.18)
(0.46)
(0.44)
(0.36)
(0.39)
Net
realized
gains
.............................
(10.61)
(5.99)
(1.04)
(2.25)
(2.50)
Total
distributions
...............................
(10.79)
(6.45)
(1.48)
(2.61)
(2.89)
Net
asset
value,
end
of
year
.......................
$151.73
$129.91
$110.04
$107.59
$91.61
Total
return
c
...................................
26.44%
25.09%
3.79%
20.72%
21.12%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.79%
0.82%
0.83%
0.83%
0.88%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
0.79%
e
0.81%
0.83%
e
0.83%
e
0.87%
Net
investment
income
(loss)
......................
(0.04)%
0.29%
0.45%
0.41%
0.47%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$12,927,577
$10,990,297
$9,157,154
$9,044,834
$8,051,641
Portfolio
turnover
rate
............................
6.04%
f
9.01%
4.91%
f
6.05%
f
5.60%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
f
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
13.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Growth
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
61
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$117.27
$100.21
$98.38
$84.25
$72.60
Income
from
investment
operations
a
:
Net
investment
(loss)
b
..........................
(1.01)
(0.47)
(0.29)
(0.30)
(0.21)
Net
realized
and
unrealized
gains
(losses)
...........
29.28
23.52
3.16
16.68
14.36
Total
from
investment
operations
....................
28.27
23.05
2.87
16.38
14.15
Less
distributions
from:
Net
realized
gains
.............................
(10.61)
(5.99)
(1.04)
(2.25)
(2.50)
Net
asset
value,
end
of
year
.......................
$134.93
$117.27
$100.21
$98.38
$84.25
Total
return
c
...................................
25.51%
24.16%
3.02%
19.82%
20.21%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.54%
1.57%
1.58%
1.58%
1.63%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
1.54%
e
1.56%
1.58%
e
1.58%
e
1.62%
Net
investment
(loss)
............................
(0.79)%
(0.46)%
(0.30)%
(0.34)%
(0.28)%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$666,348
$727,093
$704,217
$1,060,258
$930,751
Portfolio
turnover
rate
............................
6.04%
f
9.01%
4.91%
f
6.05%
f
5.60%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
f
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
13.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
62
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$129.28
$109.49
$107.00
$91.13
$78.14
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(0.41)
0.05
0.21
0.16
0.19
Net
realized
and
unrealized
gains
(losses)
...........
32.51
25.86
3.46
18.09
15.51
Total
from
investment
operations
....................
32.10
25.91
3.67
18.25
15.70
Less
distributions
from:
Net
investment
income
..........................
—
(0.13)
(0.14)
(0.13)
(0.21)
Net
realized
gains
.............................
(10.61)
(5.99)
(1.04)
(2.25)
(2.50)
Total
distributions
...............................
(10.61)
(6.12)
(1.18)
(2.38)
(2.71)
Net
asset
value,
end
of
year
.......................
$150.77
$129.28
$109.49
$107.00
$91.13
Total
return
....................................
26.13%
24.78%
3.54%
20.42%
20.81%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.04%
1.07%
1.08%
1.08%
1.13%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
1.04%
d
1.06%
1.08%
d
1.08%
d
1.12%
Net
investment
income
(loss)
......................
(0.29)%
0.04%
0.20%
0.16%
0.22%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$395,301
$420,082
$435,331
$524,960
$510,317
Portfolio
turnover
rate
............................
6.04%
e
9.01%
4.91%
e
6.05%
e
5.60%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
13.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Growth
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
63
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$130.31
$110.37
$107.90
$91.90
$78.79
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.41
0.71
0.83
0.77
0.74
Net
realized
and
unrealized
gains
(losses)
...........
32.76
26.06
3.47
18.22
15.59
Total
from
investment
operations
....................
33.17
26.77
4.30
18.99
16.33
Less
distributions
from:
Net
investment
income
..........................
(0.47)
(0.84)
(0.79)
(0.74)
(0.72)
Net
realized
gains
.............................
(10.61)
(5.99)
(1.04)
(2.25)
(2.50)
Total
distributions
...............................
(11.08)
(6.83)
(1.83)
(2.99)
(3.22)
Net
asset
value,
end
of
year
.......................
$152.40
$130.31
$110.37
$107.90
$91.90
Total
return
....................................
26.86%
25.51%
4.16%
21.17%
21.61%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.47%
0.48%
0.48%
0.47%
0.46%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.47%
d
0.48%
d
0.48%
d
0.46%
0.45%
Net
investment
income
...........................
0.29%
0.63%
0.80%
0.78%
0.89%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$3,113,946
$2,999,370
$2,545,800
$2,634,455
$1,700,993
Portfolio
turnover
rate
............................
6.04%
e
9.01%
4.91%
e
6.05%
e
5.60%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
13.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
64
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$130.38
$110.41
$107.95
$91.90
$78.80
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.30
0.62
0.72
0.66
0.60
Net
realized
and
unrealized
gains
(losses)
...........
32.79
26.07
3.47
18.23
15.61
Total
from
investment
operations
....................
33.09
26.69
4.19
18.89
16.21
Less
distributions
from:
Net
investment
income
..........................
(0.39)
(0.73)
(0.69)
(0.59)
(0.61)
Net
realized
gains
.............................
(10.61)
(5.99)
(1.04)
(2.25)
(2.50)
Total
distributions
...............................
(11.00)
(6.72)
(1.73)
(2.84)
(3.11)
Net
asset
value,
end
of
year
.......................
$152.47
$130.38
$110.41
$107.95
$91.90
Total
return
....................................
26.76%
25.41%
4.05%
21.02%
21.43%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.54%
0.57%
0.58%
0.58%
0.63%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.54%
d
0.56%
0.58%
d
0.58%
,d
0.62%
Net
investment
income
...........................
0.21%
0.54%
0.70%
0.66%
0.72%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$4,229,679
$3,549,412
$3,154,342
$3,139,208
$2,801,153
Portfolio
turnover
rate
............................
6.04%
e
9.01%
4.91%
e
6.05%
e
5.60%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
13.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
Growth
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
65
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
99.0%
Aerospace
&
Defense
3.5%
BWX
Technologies,
Inc.
................................
United
States
1,395,585
$
75,166,208
Lockheed
Martin
Corp.
.................................
United
States
491,971
169,779,192
Northrop
Grumman
Corp.
...............................
United
States
808,736
291,266,270
Raytheon
Technologies
Corp.
............................
United
States
2,448,182
210,445,725
746,657,395
Auto
Components
0.4%
a
Aptiv
plc
............................................
United
States
607,271
90,465,161
Automobiles
0.5%
a
Lucid
Group,
Inc.
.....................................
United
States
4,040,405
102,545,479
Beverages
2.6%
Brown-Forman
Corp.,
B
................................
United
States
1,598,904
107,142,557
Constellation
Brands,
Inc.,
A
.............................
United
States
548,723
115,610,449
a
Monster
Beverage
Corp.
................................
United
States
2,680,594
238,117,165
PepsiCo,
Inc.
........................................
United
States
639,563
96,196,671
557,066,842
Biotechnology
1.9%
AbbVie,
Inc.
.........................................
United
States
452,614
48,823,472
Amgen,
Inc.
.........................................
United
States
661,595
140,688,177
a
Deciphera
Pharmaceuticals,
Inc.
..........................
United
States
573,931
19,502,175
a
Ginkgo
Bioworks
Holdings,
Inc.
...........................
United
States
2,000,000
23,180,000
a
Iovance
Biotherapeutics
,
Inc.
.............................
United
States
406,741
10,030,233
a
Mirati
Therapeutics,
Inc.
................................
United
States
267,000
47,234,970
a
Neurocrine
Biosciences,
Inc.
.............................
United
States
369,571
35,445,555
a
PTC
Therapeutics,
Inc.
.................................
United
States
965,463
35,924,878
a
Regeneron
Pharmaceuticals,
Inc.
.........................
United
States
74,848
45,296,513
406,125,973
Building
Products
1.3%
Allegion
plc
..........................................
United
States
688,759
91,040,165
Trane
Technologies
plc
.................................
United
States
1,082,336
186,865,310
277,905,475
Capital
Markets
3.4%
BlackRock,
Inc.
.......................................
United
States
226,428
189,896,106
Charles
Schwab
Corp.
(The)
.............................
United
States
3,001,382
218,620,665
Intercontinental
Exchange,
Inc.
...........................
United
States
1,402,427
161,026,668
MarketAxess
Holdings,
Inc.
..............................
United
States
90,147
37,923,941
S&P
Global,
Inc.
......................................
United
States
104,350
44,337,272
Tradeweb
Markets,
Inc.,
A
...............................
United
States
916,652
74,047,149
725,851,801
Chemicals
2.2%
Air
Products
and
Chemicals,
Inc.
..........................
United
States
491,971
125,998,693
a,b
Danimer
Scientific,
Inc.
.................................
United
States
214,900
3,511,466
Ecolab,
Inc.
..........................................
United
States
613,649
128,019,454
Linde
plc
............................................
United
Kingdom
714,866
209,727,387
467,257,000
Commercial
Services
&
Supplies
0.4%
Republic
Services,
Inc.
.................................
United
States
640,528
76,901,792
Construction
Materials
0.5%
Martin
Marietta
Materials,
Inc.
............................
United
States
312,378
106,733,315
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
66
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Electric
Utilities
0.7%
NextEra
Energy,
Inc.
...................................
United
States
2,020,008
$
158,611,028
Electrical
Equipment
0.4%
AMETEK,
Inc.
........................................
United
States
688,759
85,413,004
Electronic
Equipment,
Instruments
&
Components
2.9%
Amphenol
Corp.,
A
....................................
United
States
2,849,842
208,693,930
Cognex
Corp.
........................................
United
States
410,654
32,942,664
a
Keysight
Technologies,
Inc.
..............................
United
States
720,474
118,366,673
TE
Connectivity
Ltd.
...................................
United
States
1,838,883
252,331,525
Vontier
Corp.
.........................................
United
States
431,281
14,491,042
626,825,834
Entertainment
1.3%
a
Walt
Disney
Co.
(The)
..................................
United
States
1,603,162
271,206,915
Equity
Real
Estate
Investment
Trusts
(REITs)
0.9%
Crown
Castle
International
Corp.
..........................
United
States
1,125,695
195,105,457
Food
Products
0.2%
Lamb
Weston
Holdings,
Inc.
.............................
United
States
539,519
33,110,281
Health
Care
Equipment
&
Supplies
6.3%
Abbott
Laboratories
....................................
United
States
1,253,421
148,066,623
Danaher
Corp.
.......................................
United
States
1,133,531
345,092,178
a
Edwards
Lifesciences
Corp.
.............................
United
States
1,180,733
133,670,783
a
Haemonetics
Corp.
....................................
United
States
983,941
69,456,395
a
Intuitive
Surgical,
Inc.
..................................
United
States
374,875
372,681,981
Stryker
Corp.
........................................
United
States
403,906
106,518,090
Teleflex,
Inc.
.........................................
United
States
424,481
159,838,321
1,335,324,371
Health
Care
Providers
&
Services
0.9%
a
Guardant
Health,
Inc.
..................................
United
States
156,800
19,601,568
a
Laboratory
Corp.
of
America
Holdings
......................
United
States
382,671
107,698,926
UnitedHealth
Group,
Inc.
................................
United
States
153,671
60,045,407
187,345,901
Health
Care
Technology
0.4%
a
Certara
,
Inc.
.........................................
United
States
249,400
8,255,140
a
Veeva
Systems,
Inc.,
A
.................................
United
States
252,746
72,833,815
81,088,955
Hotels,
Restaurants
&
Leisure
0.8%
a
Airbnb,
Inc.,
A
........................................
United
States
253,500
42,524,625
a
Booking
Holdings,
Inc.
.................................
United
States
29,136
69,165,076
a
Las
Vegas
Sands
Corp.
.................................
United
States
1,924,125
70,422,975
182,112,676
Interactive
Media
&
Services
5.6%
a
Alphabet,
Inc.,
A
......................................
United
States
159,656
426,843,509
a
Alphabet,
Inc.,
C
......................................
United
States
154,189
410,961,484
a
Facebook,
Inc.,
A
.....................................
United
States
626,604
212,663,131
a
IAC/InterActiveCorp
...................................
United
States
295,183
38,459,393
a
Match
Group,
Inc.
.....................................
United
States
637,122
100,021,783
a
Vimeo,
Inc.
..........................................
United
States
479,229
14,074,956
1,203,024,256
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Growth
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
67
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Internet
&
Direct
Marketing
Retail
4.7%
a
Alibaba
Group
Holding
Ltd.,
ADR
.........................
China
342,497
$
50,706,681
a
Amazon.com,
Inc.
.....................................
United
States
292,803
961,869,567
1,012,576,248
IT
Services
7.0%
a,c
Adyen
NV,
144A,
Reg
S
................................
Netherlands
59,595
166,582,516
Automatic
Data
Processing,
Inc.
..........................
United
States
109,359
21,863,051
a,b
Marqeta
,
Inc.,
A
.......................................
United
States
817,400
18,080,888
Mastercard
,
Inc.,
A
....................................
United
States
1,334,308
463,912,205
a
Okta
,
Inc.
...........................................
United
States
313,296
74,357,673
a,b
Paymentus
Holdings,
Inc.,
A
.............................
United
States
368,600
9,082,304
a
PayPal
Holdings,
Inc.
..................................
United
States
725,315
188,734,216
a
Snowflake,
Inc.,
A
.....................................
United
States
321,754
97,308,062
a
Twilio
,
Inc.,
A
.........................................
United
States
452,474
144,361,830
Visa,
Inc.,
A
..........................................
United
States
1,377,517
306,841,912
1,491,124,657
Life
Sciences
Tools
&
Services
5.3%
a
10X
Genomics,
Inc.,
A
..................................
United
States
315,266
45,896,425
Agilent
Technologies,
Inc.
...............................
United
States
1,279,123
201,500,246
a
Illumina,
Inc.
.........................................
United
States
591,874
240,070,013
a
Mettler
-Toledo
International,
Inc.
..........................
United
States
289,278
398,439,946
Thermo
Fisher
Scientific,
Inc.
............................
United
States
148,300
84,728,239
a,c
Wuxi
Biologics
Cayman,
Inc.,
144A,
Reg
S
..................
China
9,367,269
151,938,900
1,122,573,769
Machinery
3.9%
Caterpillar,
Inc.
.......................................
United
States
319,869
61,405,252
Deere
&
Co.
.........................................
United
States
462,571
154,993,665
Fortive
Corp.
.........................................
United
States
1,078,204
76,088,856
Illinois
Tool
Works,
Inc.
.................................
United
States
983,941
203,311,729
a
Ingersoll
Rand,
Inc.
....................................
United
States
1,353,352
68,222,475
Otis
Worldwide
Corp.
..................................
United
States
522,147
42,962,255
a,b
Proterra
,
Inc.
.........................................
United
States
1,780,600
18,001,866
Stanley
Black
&
Decker,
Inc.
.............................
United
States
781,107
136,935,868
Xylem,
Inc.
..........................................
United
States
531,700
65,760,656
827,682,622
Media
0.6%
Cable
One,
Inc.
.......................................
United
States
47,817
86,698,437
Comcast
Corp.,
A
.....................................
United
States
790,241
44,198,179
130,896,616
Personal
Products
0.3%
Estee
Lauder
Cos.,
Inc.
(The),
A
..........................
United
States
185,168
55,537,438
Pharmaceuticals
4.6%
AstraZeneca
plc,
ADR
..................................
United
Kingdom
2,018,704
121,243,362
a
Catalent
,
Inc.
........................................
United
States
2,593,597
345,129,953
Eli
Lilly
&
Co.
........................................
United
States
1,146,323
264,857,929
Johnson
&
Johnson
...................................
United
States
1,068,228
172,518,822
Merck
&
Co.,
Inc.
.....................................
United
States
983,941
73,903,809
977,653,875
Professional
Services
2.1%
a
CoStar
Group,
Inc.
....................................
United
States
1,279,480
110,112,049
Equifax,
Inc.
.........................................
United
States
482,569
122,292,636
IHS
Markit
Ltd.
.......................................
United
States
914,914
106,697,270
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Growth
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
68
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Professional
Services
(continued)
Verisk
Analytics,
Inc.
...................................
United
States
566,899
$
113,532,863
452,634,818
Road
&
Rail
2.9%
b
Canadian
Pacific
Railway
Ltd.
............................
Canada
1,398,655
91,010,481
JB
Hunt
Transport
Services,
Inc.
..........................
United
States
491,971
82,267,391
a
Uber
Technologies,
Inc.
.................................
United
States
1,002,639
44,918,227
Union
Pacific
Corp.
....................................
United
States
1,997,400
391,510,374
609,706,473
Semiconductors
&
Semiconductor
Equipment
6.3%
a
Alphawave
IP
Group
plc
................................
United
Kingdom
2,232,000
6,976,384
ASML
Holding
NV,
NYRS
...............................
Netherlands
403,753
300,840,398
Lam
Research
Corp.
...................................
United
States
29,519
16,800,739
Monolithic
Power
Systems,
Inc.
...........................
United
States
442,775
214,604,187
NVIDIA
Corp.
........................................
United
States
2,023,924
419,276,096
NXP
Semiconductors
NV
...............................
China
666,769
130,600,044
Texas
Instruments,
Inc.
.................................
United
States
1,377,517
264,772,542
1,353,870,390
Software
17.1%
a
Adobe,
Inc.
..........................................
United
States
167,687
96,540,760
a,b
AppLovin
Corp.,
A
.....................................
United
States
256,100
18,533,957
a
Atlassian
Corp.
plc,
A
..................................
United
States
216,818
84,866,902
a
Autodesk,
Inc.
........................................
United
States
769,883
219,547,535
a
Avalara,
Inc.
.........................................
United
States
673,934
117,783,445
a
Bill.com
Holdings,
Inc.
..................................
United
States
1,066,191
284,619,687
a
Crowdstrike
Holdings,
Inc.,
A
.............................
United
States
85,100
20,915,878
Intuit,
Inc.
...........................................
United
States
847,941
457,472,649
Microsoft
Corp.
.......................................
United
States
3,586,466
1,011,096,495
a
Paycom
Software,
Inc.
.................................
United
States
186,135
92,276,426
a,b
Procore
Technologies,
Inc.
..............................
United
States
69,300
6,191,262
a
PTC,
Inc.
...........................................
United
States
1,184,865
141,934,978
a
salesforce.com,
Inc.
...................................
United
States
554,766
150,463,635
a
ServiceNow
,
Inc.
......................................
United
States
846,261
526,602,832
a,d,e
Stripe,
Inc.,
B
........................................
United
States
540,043
23,032,834
a
Synopsys,
Inc.
.......................................
United
States
522,615
156,476,157
a
Tyler
Technologies,
Inc.
.................................
United
States
118,574
54,383,965
a
Workday,
Inc.,
A
......................................
United
States
738,265
184,485,041
3,647,224,438
Specialty
Retail
0.0%
†
a
Olaplex
Holdings,
Inc.
..................................
United
States
361,900
8,866,550
Technology
Hardware,
Storage
&
Peripherals
4.6%
Apple,
Inc.
..........................................
United
States
6,935,254
981,338,441
Textiles,
Apparel
&
Luxury
Goods
1.3%
NIKE,
Inc.,
B
.........................................
United
States
1,874,977
272,302,910
Trading
Companies
&
Distributors
0.7%
Fastenal
Co.
.........................................
United
States
2,705,146
139,612,585
Water
Utilities
0.5%
American
Water
Works
Co.,
Inc.
..........................
United
States
688,759
116,427,821
Total
Common
Stocks
(Cost
$5,807,597,725)
....................................
21,116,708,562
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Growth
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
69
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Convertible
Preferred
Stocks
0.4%
Software
0.4%
a,d,e
Gusto,
Inc.,
E
........................................
United
States
822,494
$
28,554,628
a,d,e
OneTrust
LLC,
C
......................................
United
States
849,894
20,099,993
a,d,e
Stripe,
Inc.,
H
........................................
United
States
756,137
32,249,243
80,903,864
Total
Convertible
Preferred
Stocks
(Cost
$72,006,650)
...........................
80,903,864
Total
Long
Term
Investments
(Cost
$5,879,604,375)
.............................
21,197,612,426
a
Short
Term
Investments
1.1%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
0.7%
f,g
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
141,998,542
141,998,542
Total
Money
Market
Funds
(Cost
$141,998,542)
.................................
141,998,542
h
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.4%
a
a
a
a
a
Money
Market
Funds
0.3%
f,g
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
76,774,000
76,774,000
Principal
Amount
*
Repurchase
Agreements
0.1%
i
Joint
Repurchase
Agreement,
BNP
Paribas
SA,
0.05%,
10/01/21
(Maturity
Value
$19,174,790)
Collateralized
by
U.S.
Treasury
Notes,
0.125%
-
3%,
9/30/22
-
8/31/26;
and
U.S.
Treasury
Notes,
Index
Linked,
0.125%,
10/15/24
-
4/15/25
(valued
at
$19,558,264)
........................
19,174,763
19,174,763
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$95,948,763)
...........................................................
95,948,763
Total
Short
Term
Investments
(Cost
$237,947,305
)
...............................
237,947,305
a
Total
Investments
(Cost
$6,117,551,680)
100.5%
.................................
$21,435,559,731
Other
Assets,
less
Liabilities
(0.5)%
...........................................
(102,709,369)
Net
Assets
100.0%
...........................................................
$21,332,850,362
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Growth
Fund
(continued)
franklintempleton.com
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Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
70
See
Abbreviations
on
page
143
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
September
30,
2021.
See
Note
1(g).
c
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
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.
At
September
30,
2021,
the
aggregate
value
of
these
securities
was
$318,521,416,
representing
1.5%
of
net
assets.
d
Fair
valued
using
significant
unobservable
inputs.
See
Note
14
regarding
fair
value
measurements.
e
See
Note
9
regarding
restricted
securities.
f
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
g
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
h
See
Note
1(g)
regarding
securities
on
loan.
i
See
Note
1(c)
regarding
joint
repurchase
agreement.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
franklintempleton.com
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accompanying
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are
an
integral
part
of
these
financial
statements.
Annual
Report
71
a
Year
Ended
September
30,
Year
Ended
September
30,
2018
a
2021
2020
2019
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
................................
$2.08
$2.30
$2.32
$2.31
Income
from
investment
operations
b
:
Net
investment
income
(loss)
c
.................................
0.08
0.08
0.08
(0.04)
Net
realized
and
unrealized
gains
(losses)
........................
0.42
(0.18)
0.02
0.05
Total
from
investment
operations
.................................
0.50
(0.10)
0.10
0.01
Less
distributions
from:
Net
investment
income
.......................................
(0.11)
(0.12)
(0.12)
—
Net
asset
value,
end
of
year
....................................
$2.47
$2.08
$2.30
$2.32
Total
return
d
................................................
24.55%
(4.48)%
4.40%
0.43%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...................
0.72%
0.71%
0.72%
0.71%
Expenses
net
of
waiver
and
payments
by
affiliates
f
...................
0.72%
g
0.70%
0.72%
g
0.71%
g
Net
investment
income
........................................
3.19%
3.64%
3.92%
3.89%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..................................
$16,044,379
$10,072,437
$7,427,468
$107,057
Portfolio
turnover
rate
.........................................
68.93%
69.13%
43.63%
49.95%
a
For
the
period
September
10,
2018
(effective
date)
to
September
30,
2018.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
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The
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are
an
integral
part
of
these
financial
statements.
72
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
A1
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$2.08
$2.30
$2.32
$2.39
$2.25
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.08
0.08
0.09
0.09
0.10
Net
realized
and
unrealized
gains
(losses)
...........
0.43
(0.18)
0.01
(0.04)
0.16
Total
from
investment
operations
....................
0.51
(0.10)
0.10
0.05
0.26
Less
distributions
from:
Net
investment
income
..........................
(0.11)
(0.12)
(0.12)
(0.12)
(0.12)
Net
asset
value,
end
of
year
.......................
$2.48
$2.08
$2.30
$2.32
$2.39
Total
return
c
...................................
25.19%
(4.39)%
4.50%
2.18%
11.86%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.62%
0.61%
0.62%
0.61%
0.62%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
0.62%
e
0.60%
0.62%
e
0.61%
e
0.61%
Net
investment
income
...........................
3.32%
3.74%
4.02%
3.99%
4.22%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$35,704,730
$32,693,224
$39,625,649
$42,929,573
$46,505,632
Portfolio
turnover
rate
............................
68.93%
69.13%
43.63%
49.95%
34.12%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
73
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$2.12
$2.34
$2.35
$2.42
$2.27
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.07
0.08
0.08
0.09
Net
realized
and
unrealized
gains
(losses)
...........
0.43
(0.18)
0.02
(0.04)
0.17
Total
from
investment
operations
....................
0.50
(0.11)
0.10
0.04
0.26
Less
distributions
from:
Net
investment
income
..........................
(0.10)
(0.11)
(0.11)
(0.11)
(0.11)
Net
asset
value,
end
of
year
.......................
$2.52
$2.12
$2.34
$2.35
$2.42
Total
return
c
...................................
24.09%
(4.80)%
4.35%
1.61%
11.63%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.13
%
1.11%
1.12%
1.11%
1.12%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
1.12%
1.10%
1.12%
e
1.11%
e
1.11%
Net
investment
income
...........................
2.84%
3.24%
3.52%
3.49%
3.72%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$7,507,658
$9,339,238
$13,488,627
$19,895,441
$23,036,875
Portfolio
turnover
rate
............................
68.93%
69.13%
43.63%
49.95%
34.12%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
74
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$2.04
$2.26
$2.28
$2.35
$2.21
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.07
0.08
0.08
0.09
Net
realized
and
unrealized
gains
(losses)
...........
0.43
(0.18)
0.01
(0.04)
0.16
Total
from
investment
operations
....................
0.50
(0.11)
0.09
0.04
0.25
Less
distributions
from:
Net
investment
income
..........................
(0.11)
(0.11)
(0.11)
(0.11)
(0.11)
Net
asset
value,
end
of
year
.......................
$2.43
$2.04
$2.26
$2.28
$2.35
Total
return
....................................
24.75%
(4.82)%
4.20%
1.86%
11.67%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.97%
0.96%
0.97%
0.96%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.97%
d
0.95%
0.97%
d
0.96%
d
0.96%
Net
investment
income
...........................
2.97%
3.40%
3.67%
3.64%
3.87%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$257,109
$221,584
$265,531
$296,098
$361,603
Portfolio
turnover
rate
............................
68.93%
69.13%
43.63%
49.95%
34.12%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
75
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$2.07
$2.29
$2.30
$2.37
$2.23
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.08
0.09
0.10
0.10
0.11
Net
realized
and
unrealized
gains
(losses)
...........
0.44
(0.19)
0.01
(0.05)
0.15
Total
from
investment
operations
....................
0.52
(0.10)
0.11
0.05
0.26
Less
distributions
from:
Net
investment
income
..........................
(0.12)
(0.12)
(0.12)
(0.12)
(0.12)
Net
asset
value,
end
of
year
.......................
$2.47
$2.07
$2.29
$2.30
$2.37
Total
return
....................................
25.53%
(4.23)%
5.17%
2.40%
12.15%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.43%
0.40%
0.41%
0.39%
0.39%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.41%
0.39%
0.40%
0.39%
d
0.38%
Net
investment
income
...........................
3.50%
3.96%
4.24%
4.21%
4.45%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$748,355
$1,626,735
$1,902,027
$2,062,334
$1,815,977
Portfolio
turnover
rate
............................
68.93%
69.13%
43.63%
49.95%
34.12%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
76
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$2.07
$2.28
$2.30
$2.37
$2.23
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.08
0.08
0.09
0.10
0.10
Net
realized
and
unrealized
gains
(losses)
...........
0.43
(0.17)
0.01
(0.05)
0.16
Total
from
investment
operations
....................
0.51
(0.09)
0.10
0.05
0.26
Less
distributions
from:
Net
investment
income
..........................
(0.12)
(0.12)
(0.12)
(0.12)
(0.12)
Net
asset
value,
end
of
year
.......................
$2.46
$2.07
$2.28
$2.30
$2.37
Total
return
....................................
24.98%
(3.86)%
4.65%
2.34%
12.09%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.47%
0.46%
0.47%
0.46%
0.47%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.47%
d
0.45%
0.47%
d
0.46%
d
0.46%
Net
investment
income
...........................
3.46%
3.89%
4.17%
4.14%
4.37%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$11,969,691
$9,712,076
$11,816,599
$11,328,761
$11,671,173
Portfolio
turnover
rate
............................
68.93%
69.13%
43.63%
49.95%
34.12%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
Income
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
77
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
43.4%
Aerospace
&
Defense
1.5%
Lockheed
Martin
Corp.
.................................
United
States
2,500,000
$
862,750,000
Raytheon
Technologies
Corp.
............................
United
States
2,959,550
254,402,918
1,117,152,918
Banks
4.0%
Bank
of
America
Corp.
.................................
United
States
10,000,000
424,500,000
Barclays
plc
.........................................
United
Kingdom
160,000,000
406,511,444
Citigroup,
Inc.
........................................
United
States
6,000,000
421,080,000
JPMorgan
Chase
&
Co.
.................................
United
States
5,000,000
818,450,000
Truist
Financial
Corp.
..................................
United
States
7,170,000
420,520,500
US
Bancorp
.........................................
United
States
7,000,000
416,080,000
2,907,141,944
Beverages
2.1%
Coca-Cola
Co.
(The)
...................................
United
States
15,000,000
787,050,000
PepsiCo,
Inc.
........................................
United
States
5,000,100
752,065,041
1,539,115,041
Biotechnology
1.9%
AbbVie,
Inc.
.........................................
United
States
9,000,000
970,830,000
Amgen,
Inc.
.........................................
United
States
2,000,000
425,300,000
1,396,130,000
Capital
Markets
0.1%
Morgan
Stanley
.......................................
United
States
810,000
78,821,100
Chemicals
1.0%
Air
Products
and
Chemicals,
Inc.
..........................
United
States
1,150,000
294,526,500
BASF
SE
...........................................
Germany
6,000,000
454,842,023
749,368,523
Communications
Equipment
1.0%
Cisco
Systems,
Inc.
...................................
United
States
13,000,000
707,590,000
Diversified
Telecommunication
Services
3.4%
AT&T,
Inc.
...........................................
United
States
22,500,000
607,725,000
BCE,
Inc.
...........................................
Canada
7,500,000
375,636,421
TELUS
Corp.
........................................
Canada
4,000,000
87,903,067
Verizon
Communications,
Inc.
............................
United
States
25,000,000
1,350,250,000
2,421,514,488
Electric
Utilities
5.4%
American
Electric
Power
Co.,
Inc.
.........................
United
States
8,750,000
710,325,000
Duke
Energy
Corp.
....................................
United
States
6,000,000
585,540,000
Edison
International
...................................
United
States
11,000,000
610,170,000
Entergy
Corp.
........................................
United
States
1,500,000
148,965,000
Exelon
Corp.
.........................................
United
States
7,000,000
338,380,000
a
PG&E
Corp.
.........................................
United
States
10,000,000
96,000,000
PPL
Corp.
...........................................
United
States
6,500,000
181,220,000
Southern
Co.
(The)
....................................
United
States
17,000,000
1,053,490,000
Xcel
Energy,
Inc.
......................................
United
States
2,500,000
156,250,000
3,880,340,000
Energy
Equipment
&
Services
0.4%
Halliburton
Co.
.......................................
United
States
4,000,000
86,480,000
a,b
Weatherford
International
plc
.............................
United
States
11,820,000
232,499,400
318,979,400
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
78
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Food
&
Staples
Retailing
0.4%
Walmart,
Inc.
........................................
United
States
2,000,500
$
278,829,690
Health
Care
Providers
&
Services
0.5%
a,b
CHS/Community
Health
Systems,
Inc.
......................
United
States
10,000,000
117,000,000
CVS
Health
Corp.
.....................................
United
States
2,800,000
237,608,000
354,608,000
Health
Care
Technology
0.0%
†
a
Multiplan
Corp.
.......................................
United
States
4,400,000
24,772,000
Household
Products
1.2%
Procter
&
Gamble
Co.
(The)
.............................
United
States
6,000,000
838,800,000
Independent
Power
and
Renewable
Electricity
Producers
0.2%
Vistra
Corp.
..........................................
United
States
10,000,000
171,000,000
Industrial
Conglomerates
0.4%
3M
Co.
.............................................
United
States
1,500,000
263,130,000
Insurance
0.3%
MetLife,
Inc.
.........................................
United
States
3,500,000
216,055,000
IT
Services
0.9%
Fidelity
National
Information
Services,
Inc.
...................
United
States
2,000,000
243,360,000
International
Business
Machines
Corp.
.....................
United
States
3,000,000
416,790,000
660,150,000
Metals
&
Mining
0.2%
Freeport-McMoRan,
Inc.
................................
United
States
3,500,000
113,855,000
Multi-Utilities
3.0%
CMS
Energy
Corp.
....................................
United
States
2,000,000
119,460,000
Dominion
Energy,
Inc.
..................................
United
States
12,000,000
876,240,000
DTE
Energy
Co.
......................................
United
States
4,000,000
446,840,000
NiSource,
Inc.
........................................
United
States
1,000,000
24,230,000
Sempra
Energy
.......................................
United
States
5,621,111
711,070,541
2,177,840,541
Oil,
Gas
&
Consumable
Fuels
4.8%
b
Bonanza
Creek
Energy,
Inc.
.............................
United
States
3,400,000
162,860,000
BP
plc,
ADR
.........................................
United
Kingdom
10,000,000
273,300,000
b
Chesapeake
Energy
Corp.
..............................
United
States
5,000,000
307,950,000
Chevron
Corp.
.......................................
United
States
12,000,000
1,217,400,000
DT
Midstream,
Inc.
....................................
United
States
471,785
21,815,338
Exxon
Mobil
Corp.
.....................................
United
States
15,000,000
882,300,000
Royal
Dutch
Shell
plc,
ADR,
A
............................
Netherlands
5,500,000
245,135,000
TotalEnergies
SE,
ADR
.................................
France
7,500,000
359,475,000
3,470,235,338
Personal
Products
0.8%
Unilever
plc
..........................................
United
Kingdom
10,000,000
541,323,408
Pharmaceuticals
6.5%
AstraZeneca
plc,
ADR
..................................
United
Kingdom
2,500,000
150,150,000
Bayer
AG
...........................................
Germany
5,000,000
271,365,801
Bristol-Myers
Squibb
Co.
................................
United
States
9,500,000
562,115,000
Johnson
&
Johnson
...................................
United
States
5,500,000
888,250,000
Merck
&
Co.,
Inc.
.....................................
United
States
20,000,000
1,502,200,000
Pfizer,
Inc.
...........................................
United
States
31,249,800
1,344,053,898
4,718,134,699
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
79
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Road
&
Rail
0.3%
Union
Pacific
Corp.
....................................
United
States
1,000,000
$
196,010,000
Semiconductors
&
Semiconductor
Equipment
0.7%
Intel
Corp.
...........................................
United
States
6,282,800
334,747,584
Texas
Instruments,
Inc.
.................................
United
States
720,000
138,391,200
473,138,784
Specialty
Retail
0.5%
Home
Depot,
Inc.
(The)
.................................
United
States
1,000,000
328,260,000
Tobacco
1.5%
Altria
Group,
Inc.
......................................
United
States
4,000,000
182,080,000
British
American
Tobacco
plc
.............................
United
Kingdom
3,000,000
104,851,925
Philip
Morris
International,
Inc.
...........................
United
States
8,777,900
832,057,141
1,118,989,066
Wireless
Telecommunication
Services
0.4%
Vodafone
Group
plc
...................................
United
Kingdom
175,000,000
266,266,461
Total
Common
Stocks
(Cost
$29,458,599,568)
...................................
31,327,551,401
c
Equity-Linked
Securities
17.9%
Aerospace
&
Defense
0.6%
d
J.P.
Morgan
Structured
Products
BV
into
Raytheon
Technologies
Corp.,
144A,
9%,
3/18/22
..............................
United
States
3,345,000
271,548,744
d
J.P.
Morgan
Structured
Products
BV
into
Raytheon
Technologies
Corp.,
144A,
10%,
1/11/22
.............................
United
States
2,120,000
166,869,012
438,417,756
Air
Freight
&
Logistics
0.3%
d
Royal
Bank
of
Canada
into
United
Parcel
Service,
Inc.,
144A,
8.5%,
3/08/22
...........................................
United
States
1,355,000
234,333,960
Airlines
0.2%
d
BNP
Paribas
Issuance
BV
into
Delta
Air
Lines,
Inc.,
144A,
10%,
5/03/22
...........................................
United
States
3,507,000
158,772,232
Automobiles
1.2%
d
Barclays
Bank
plc
into
General
Motors
Co.,
144A,
10%,
12/08/21
.
United
States
5,735,000
285,860,401
d
Credit
Suisse
AG
into
General
Motors
Co.,
144A,
10%,
12/17/21
..
United
States
5,678,000
281,755,211
d
Credit
Suisse
AG
into
General
Motors
Co.,
144A,
12%,
2/08/22
...
United
States
4,820,000
263,246,889
830,862,501
Banks
2.1%
d
Barclays
Bank
plc
into
Truist
Financial
Corp.,
144A,
8%,
8/17/22
..
United
States
2,740,000
157,056,724
d
BNP
Paribas
Issuance
BV
into
Bank
of
America
Corp.,
144A,
9%,
4/13/22
...........................................
United
States
7,200,000
301,496,669
d
Credit
Suisse
AG
into
Citigroup,
Inc.,
144A,
9%,
8/05/22
........
United
States
4,060,000
283,652,686
d
Mizuho
Markets
Cayman
LP
into
JPMorgan
Chase
&
Co.,
144A,
8%,
6/30/22
...........................................
United
States
1,620,000
254,585,973
d
National
Bank
of
Canada
into
Bank
of
America
Corp.,
144A,
8%,
6/15/22
...........................................
United
States
5,833,000
249,128,061
d
UBS
AG
into
JPMorgan
Chase
&
Co.,
144A,
8.5%,
5/06/22
......
United
States
1,725,000
273,847,068
1,519,767,181
Biotechnology
1.0%
d
Merrill
Lynch
International
&
Co.
CV
into
Gilead
Sciences,
Inc.,
144A,
10%,
1/25/22
.......................................
United
States
3,725,000
251,473,511
d
National
Bank
of
Canada
into
AbbVie,
Inc.,
144A,
8.5%,
8/12/22
..
United
States
2,197,000
244,067,895
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
80
a
a
Country
Shares
a
Value
a
a
a
a
a
a
c
Equity-Linked
Securities
(continued)
Biotechnology
(continued)
d
Societe
Generale
SA
into
AbbVie,
Inc.,
144A,
10%,
12/10/21
.....
United
States
2,345,000
$
251,841,657
747,383,063
Capital
Markets
1.0%
d
Citigroup
Global
Markets
Holdings,
Inc.
into
Barrick
Gold
Corp.,
144A,
9%,
10/13/22
..................................
United
States
3,225,000
58,679,332
d
Credit
Suisse
AG
into
Morgan
Stanley,
144A,
8.5%,
7/06/22
.....
United
States
2,970,000
264,004,291
d
Royal
Bank
of
Canada
into
Barrick
Gold
Corp.,
144A,
10%,
4/08/22
United
States
8,910,000
165,150,573
d
UBS
AG
into
Morgan
Stanley,
144A,
8.5%,
2/11/22
............
United
States
2,345,000
196,502,605
684,336,801
Chemicals
0.4%
d
Citigroup
Global
Markets
Holdings,
Inc.
into
LyondellBasell
Industries
NV,
144A,
10%,
6/23/22
...............................
United
States
1,600,000
156,549,384
d
National
Bank
of
Canada
into
Air
Products
and
Chemicals,
Inc.,
144A,
8.5%,
4/13/22
.................................
United
States
590,000
157,913,334
314,462,718
Communications
Equipment
0.2%
d
Royal
Bank
of
Canada
into
Cisco
Systems,
Inc.,
144A,
8.5%,
1/25/22
United
States
3,175,000
157,198,422
Containers
&
Packaging
0.4%
d
National
Bank
of
Canada
into
International
Paper
Co.,
144A,
9.5%,
12/06/21
..........................................
United
States
5,000,000
272,939,762
Energy
Equipment
&
Services
1.0%
d
J.P.
Morgan
Structured
Products
BV
into
Baker
Hughes
Co.,
144A,
12%,
2/15/22
.......................................
United
States
9,836,000
240,572,511
d
Societe
Generale
SA
into
Schlumberger
NV,
144A,
10%,
2/10/22
..
United
States
8,975,000
248,472,123
d
UBS
AG
into
Halliburton
Co.,
144A,
12%,
2/25/22
.............
United
States
10,300,000
222,230,605
711,275,239
Health
Care
Providers
&
Services
0.7%
d
Citigroup
Global
Markets
Holdings,
Inc.
into
CVS
Health
Corp.,
144A,
8%,
5/18/22
........................................
United
States
3,287,000
270,915,220
d
J.P.
Morgan
Structured
Products
BV
into
CVS
Health
Corp.,
144A,
9%,
2/22/22
........................................
United
States
2,950,000
237,858,931
508,774,151
Hotels,
Restaurants
&
Leisure
0.1%
d
Mizuho
Markets
Cayman
LP
into
Las
Vegas
Sands
Corp.,
144A,
12%,
8/29/22
.......................................
United
States
1,734,000
66,327,800
Industrial
Conglomerates
0.4%
d
Societe
Generale
SA
into
Honeywell
International,
Inc.,
144A,
8%,
2/01/22
...........................................
United
States
1,271,000
273,660,795
Insurance
1.1%
d
Barclays
Bank
plc
into
MetLife,
Inc.,
144A,
8.5%,
7/11/22
........
United
States
4,240,000
258,970,559
d
Barclays
Bank
plc
into
MetLife,
Inc.,
144A,
9.5%,
3/09/22
.......
United
States
4,251,700
258,830,181
d
Royal
Bank
of
Canada
into
MetLife,
Inc.,
144A,
9.5%,
12/21/21
...
United
States
4,545,000
244,324,827
762,125,567
Internet
&
Direct
Marketing
Retail
0.5%
d
Citigroup
Global
Markets
Holdings,
Inc.
into
Amazon.com,
Inc.,
144A,
9.54%,
12/02/21
.....................................
United
States
113,000
372,160,913
Machinery
0.5%
d
Goldman
Sachs
International
Bank
into
Cummins,
Inc.,
144A,
9%,
1/28/22
...........................................
United
States
920,000
209,723,659
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
81
a
a
Country
Shares
a
Value
a
a
a
a
a
a
c
Equity-Linked
Securities
(continued)
Machinery
(continued)
d
Royal
Bank
of
Canada
into
International
Paper
Co.,
144A,
9.5%,
3/18/22
...........................................
Italy
2,852,000
$
160,428,969
370,152,628
Metals
&
Mining
0.6%
d
Barclays
Bank
plc
into
Newmont
Corp.,
144A,
9.5%,
6/15/22
.....
United
States
3,278,000
188,854,077
d
Morgan
Stanley
Finance
II
Ltd.
into
Rio
Tinto
Ltd.,
144A,
10%,
6/07/22
...........................................
Australia
2,972,000
214,730,093
403,584,170
Multiline
Retail
0.7%
d
Citigroup
Global
Markets
Holdings,
Inc.
into
Target
Corp.,
144A,
9%,
3/09/22
...........................................
United
States
1,386,000
292,168,968
d
Societe
Generale
SA
into
Target
Corp.,
144A,
8%,
12/20/21
......
United
States
1,165,000
229,261,125
521,430,093
Oil,
Gas
&
Consumable
Fuels
0.4%
d
Credit
Suisse
AG
into
Chevron
Corp.,
144A,
10%,
6/07/22
.......
United
States
2,540,000
258,695,019
Pharmaceuticals
0.3%
d
National
Bank
of
Canada
into
Bristol-Myers
Squibb
Co.,
144A,
8.5%,
2/16/22
...........................................
United
States
3,984,000
240,154,650
Road
&
Rail
0.3%
d
Goldman
Sachs
International
Bank
into
Union
Pacific
Corp.,
144A,
8%,
2/09/22
........................................
United
States
1,085,000
220,182,143
Semiconductors
&
Semiconductor
Equipment
2.9%
d
BNP
Paribas
Issuance
BV
into
Broadcom,
Inc.,
144A,
10%,
8/08/22
United
States
575,000
277,051,150
d
Citigroup
Global
Markets
Holdings,
Inc.
into
Intel
Corp.,
144A,
10%,
4/06/22
...........................................
United
States
3,857,000
220,419,891
d
Citigroup
Global
Markets
Holdings,
Inc.
into
Texas
Instruments,
Inc.,
144A,
8%,
6/21/22
...................................
United
States
1,328,000
251,295,521
d
Goldman
Sachs
International
Bank
into
Texas
Instruments,
Inc.,
144A,
9%,
1/26/22
...................................
United
States
1,593,000
283,804,245
d
Merrill
Lynch
International
&
Co.
CV
into
Broadcom,
Inc.,
144A,
9.5%,
10/13/22
.....................................
United
States
550,000
267,419,502
d
Merrill
Lynch
International
&
Co.
CV
into
Intel
Corp.,
144A,
8.5%,
12/08/21
..........................................
United
States
6,167,000
309,250,188
d
Mizuho
Markets
Cayman
LP
into
Microchip
Technology,
Inc.,
144A,
9%,
10/11/22
.......................................
United
States
1,273,500
195,574,869
d
National
Bank
of
Canada
into
Broadcom,
Inc.,
144A,
10%,
5/02/22
United
States
578,000
284,265,325
2,089,080,691
Software
0.7%
d
Merrill
Lynch
International
&
Co.
CV
into
Oracle
Corp.,
144A,
8%,
11/08/21
..........................................
United
States
4,500,000
298,255,491
d
Mizuho
Markets
Cayman
LP
into
Workday,
Inc.,
144A,
9.5%,
6/07/22
United
States
921,000
223,348,968
521,604,459
Technology
Hardware,
Storage
&
Peripherals
0.3%
d
BNP
Paribas
Issuance
BV
into
Apple,
Inc.,
144A,
10%,
12/22/21
..
United
States
1,630,000
220,271,151
Total
Equity-Linked
Securities
(Cost
$12,513,595,758)
...........................
12,897,953,865
Convertible
Preferred
Stocks
2.8%
Capital
Markets
0.1%
e
KKR
&
Co.,
Inc.,
6%,
C
.................................
United
States
1,350,000
106,663,500
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
82
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Convertible
Preferred
Stocks
(continued)
Electric
Utilities
1.8%
American
Electric
Power
Co.,
Inc.,
6.125%
..................
United
States
1,600,000
$
76,272,000
American
Electric
Power
Co.,
Inc.,
6.125%
..................
United
States
3,600,000
178,992,000
NextEra
Energy,
Inc.,
5.279%
............................
United
States
5,250,000
267,540,000
NextEra
Energy,
Inc.,
6.219%
............................
United
States
7,250,000
370,547,500
PG&E
Corp.,
5.5%
....................................
United
States
500,000
47,800,000
Southern
Co.
(The),
6.75%,
2019
.........................
United
States
6,300,000
321,363,000
1,262,514,500
Machinery
0.0%
†
a
RBC
Bearings,
Inc.,
5%,
A
...............................
United
States
200,000
22,294,000
a
Multi-Utilities
0.8%
e
Dominion
Energy,
Inc.,
7.25%,
A
..........................
United
States
3,050,000
296,246,500
DTE
Energy
Co.,
6.25%
................................
United
States
3,250,000
163,345,000
NiSource,
Inc.,
7.75%
..................................
United
States
1,167,000
120,726,150
580,317,650
Thrifts
&
Mortgage
Finance
0.1%
a
FNMA,
5.375%
.......................................
United
States
4,250
34,637,500
a
Total
Convertible
Preferred
Stocks
(Cost
$2,187,699,371)
........................
2,006,427,150
Preferred
Stocks
0.0%
Thrifts
&
Mortgage
Finance
0.0%
†
a,e
FHLMC,
8.375%,
Z
....................................
United
States
6,000,000
14,340,000
a
FNMA,
8.25%,
S
......................................
United
States
4,000,000
10,400,000
24,740,000
Total
Preferred
Stocks
(Cost
$238,139,001)
.....................................
24,740,000
Warrants
Warrants
0.5%
Oil,
Gas
&
Consumable
Fuels
0.5%
a,b
Chesapeake
Energy
Corp.,
2/09/26
........................
United
States
12,050,000
391,333,500
391,333,500
Total
Warrants
(Cost
$655,163,737)
............................................
391,333,500
Principal
Amount
*
Convertible
Bonds
0.1%
Media
0.1%
DISH
Network
Corp.
,
Senior
Note
,
2.375
%
,
3/15/24
............
United
States
85,000,000
83,140,625
Total
Convertible
Bonds
(Cost
$79,830,938)
....................................
83,140,625
Corporate
Bonds
23.1%
Aerospace
&
Defense
0.1%
Raytheon
Technologies
Corp.
,
Senior
Note
,
3.125
%
,
5/04/27
.....
United
States
40,000,000
43,493,734
Airlines
0.2%
d
American
Airlines
Group,
Inc.
,
Senior
Note
,
144A,
5
%
,
6/01/22
...
United
States
49,471,000
49,594,678
d
American
Airlines
Inc
/
AAdvantage
Loyalty
IP
Ltd.
,
Senior
Secured
Note,
144A,
5.5%,
4/20/26
................
United
States
50,000,000
52,625,000
Senior
Secured
Note,
144A,
5.75%,
4/20/29
...............
United
States
50,000,000
53,937,500
156,157,178
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
83
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Auto
Components
0.1%
d,f
Dornoch
Debt
Merger
Sub,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
10/15/29
..........................................
United
States
35,000,000
$
35,043,750
d
Goodyear
Tire
&
Rubber
Co.
(The)
,
Senior
Bond,
144A,
5.25%,
7/15/31
......................
United
States
30,000,000
31,987,500
Senior
Note,
144A,
5%,
7/15/29
........................
United
States
30,000,000
31,875,000
98,906,250
Automobiles
0.5%
Ford
Motor
Co.
,
Senior
Note,
9%,
4/22/25
.............................
United
States
50,000,000
60,189,000
Senior
Note,
4.346%,
12/08/26
.........................
United
States
120,000,000
127,950,000
General
Motors
Co.
,
Senior
Bond
,
5.15
%
,
4/01/38
.............
United
States
140,000,000
167,261,840
355,400,840
Banks
2.3%
Bank
of
America
Corp.
,
g
AA,
Junior
Sub.
Bond,
6.1%
to
3/17/25,
FRN
thereafter,
Perpetual
United
States
70,000,000
78,107,750
g
X,
Junior
Sub.
Bond,
6.25%
to
9/05/24,
FRN
thereafter,
Perpetual
United
States
55,000,000
60,534,375
Senior
Bond,
3.419%
to
12/20/27,
FRN
thereafter,
12/20/28
...
United
States
135,000,000
146,414,747
Senior
Note,
3.004%
to
12/20/22,
FRN
thereafter,
12/20/23
....
United
States
40,000,000
41,232,026
Barclays
plc
,
Senior
Note,
4.61%
to
2/15/22,
FRN
thereafter,
2/15/23
.......
United
Kingdom
40,000,000
40,613,592
Senior
Note,
3.932%
to
5/07/24,
FRN
thereafter,
5/07/25
......
United
Kingdom
50,000,000
53,671,950
Senior
Note,
3.65%,
3/16/25
...........................
United
Kingdom
50,000,000
53,792,361
Senior
Note,
4.375%,
1/12/26
..........................
United
Kingdom
125,000,000
139,568,278
Citigroup,
Inc.
,
g
Junior
Sub.
Bond,
5.95%
to
1/30/23,
FRN
thereafter,
Perpetual
.
United
States
135,000,000
140,821,875
g
D,
Junior
Sub.
Bond,
5.35%
to
5/15/23,
FRN
thereafter,
Perpetual
United
States
100,000,000
103,250,000
g
M,
Junior
Sub.
Bond,
6.3%
to
5/15/24,
FRN
thereafter,
Perpetual
United
States
115,000,000
124,430,000
Sub.
Bond,
4.125%,
7/25/28
...........................
United
States
130,000,000
145,221,510
g
JPMorgan
Chase
&
Co.
,
h
I,
Junior
Sub.
Bond,
FRN,
3.598%,
(3-month
USD
LIBOR
+
3.47%),
Perpetual
...................................
United
States
115,959,000
116,594,420
Q,
Junior
Sub.
Bond,
5.15%
to
5/01/23,
FRN
thereafter,
Perpetual
United
States
60,700,000
62,521,030
R,
Junior
Sub.
Bond,
6%
to
8/01/23,
FRN
thereafter,
Perpetual
.
United
States
55,000,000
58,100,625
S,
Junior
Sub.
Bond,
6.75%
to
2/01/24,
FRN
thereafter,
Perpetual
United
States
65,000,000
71,378,125
h
V,
Junior
Sub.
Bond,
FRN,
3.465%,
(3-month
USD
LIBOR
+
3.32%),
Perpetual
...................................
United
States
108,100,000
108,508,047
X,
Junior
Sub.
Bond,
6.1%
to
10/01/24,
FRN
thereafter,
Perpetual
United
States
70,000,000
76,119,750
g
Wells
Fargo
&
Co.
,
S
,
Junior
Sub.
Bond
,
5.9%
to
6/15/24,
FRN
thereafter
,
Perpetual
.................................
United
States
70,000,000
75,381,250
1,696,261,711
Beverages
0.0%
†
Anheuser-Busch
InBev
Worldwide,
Inc.
,
Senior
Bond
,
4
%
,
4/13/28
Belgium
25,000,000
28,233,191
Biotechnology
0.2%
AbbVie,
Inc.
,
Senior
Note,
3.8%,
3/15/25
............................
United
States
100,000,000
108,621,648
Senior
Note,
3.2%,
5/14/26
............................
United
States
25,000,000
26,987,116
135,608,764
Chemicals
0.2%
d
Olin
Corp.
,
Senior
Note
,
144A,
9.5
%
,
6/01/25
................
United
States
40,000,000
49,900,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
84
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Chemicals
(continued)
d
SCIH
Salt
Holdings,
Inc.
,
Senior
Note,
144A,
6.625%,
5/01/29
.....................
United
States
83,000,000
$
79,785,410
Senior
Secured
Note,
144A,
4.875%,
5/01/28
..............
United
States
30,000,000
30,187,500
159,872,910
Commercial
Services
&
Supplies
0.0%
†
d
APX
Group,
Inc.
,
Senior
Note
,
144A,
5.75
%
,
7/15/29
...........
United
States
35,000,000
34,595,750
Communications
Equipment
0.1%
d
CommScope
Technologies
LLC
,
Senior
Bond,
144A,
6%,
6/15/25
........................
United
States
25,000,000
25,343,750
Senior
Note,
144A,
5%,
3/15/27
........................
United
States
25,000,000
23,817,000
d
CommScope
,
Inc.
,
Senior
Note
,
144A,
7.125
%
,
7/01/28
.........
United
States
40,000,000
40,875,200
90,035,950
Consumer
Finance
0.9%
Capital
One
Financial
Corp.
,
Sub.
Note,
4.2%,
10/29/25
............................
United
States
113,000,000
125,300,258
Sub.
Note,
3.75%,
7/28/26
............................
United
States
100,200,000
110,057,926
Ford
Motor
Credit
Co.
LLC
,
Senior
Note,
5.125%,
6/16/25
..........................
United
States
60,000,000
65,250,000
Senior
Note,
4.134%,
8/04/25
..........................
United
States
149,650,000
158,441,938
Senior
Note,
5.113%,
5/03/29
..........................
United
States
100,000,000
111,875,000
General
Motors
Financial
Co.,
Inc.
,
Senior
Note
,
4.15
%
,
6/19/23
..
United
States
75,000,000
79,287,212
650,212,334
Containers
&
Packaging
0.5%
d
Mauser
Packaging
Solutions
Holding
Co.
,
Senior
Note,
144A,
7.25%,
4/15/25
......................
United
States
212,495,000
211,475,024
Senior
Secured
Note,
144A,
5.5%,
4/15/24
................
United
States
115,000,000
116,150,000
327,625,024
Diversified
Telecommunication
Services
0.3%
d
Altice
France
SA
,
Senior
Secured
Note,
144A,
5.125%,
7/15/29
..............
France
50,000,000
49,092,250
f
Senior
Secured
Note,
144A,
5.5%,
10/15/29
...............
France
25,000,000
24,779,188
AT&T,
Inc.
,
Senior
Bond
,
4.125
%
,
2/17/26
...................
United
States
75,000,000
83,751,819
d
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp.
,
Senior
Bond,
144A,
5.5%,
5/01/26
.......................
United
States
20,002,000
20,652,665
Senior
Bond,
144A,
5.125%,
5/01/27
.....................
United
States
30,000,000
31,276,800
209,552,722
Electric
Utilities
0.1%
d
Vistra
Operations
Co.
LLC
,
Senior
Note
,
144A,
4.375
%
,
5/01/29
..
United
States
50,000,000
50,369,000
Energy
Equipment
&
Services
1.0%
d
Nabors
Industries
Ltd.
,
Senior
Note
,
144A,
7.25
%
,
1/15/26
......
United
States
16,000,000
15,587,120
d
Nabors
Industries,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
2/01/25
.......
United
States
28,000,000
27,304,340
d
Weatherford
International
Ltd.
,
Senior
Note,
144A,
11%,
12/01/24
.......................
United
States
584,000,000
615,936,040
Senior
Secured
Note,
144A,
6.5%,
9/15/28
................
United
States
80,000,000
82,500,000
741,327,500
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
85
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Entertainment
0.3%
Netflix,
Inc.
,
Senior
Bond,
4.375%,
11/15/26
.........................
United
States
100,000,000
$
111,875,000
Senior
Bond,
4.875%,
4/15/28
..........................
United
States
69,300,000
79,954,875
Senior
Bond,
5.875%,
11/15/28
.........................
United
States
50,000,000
61,332,500
253,162,375
Equity
Real
Estate
Investment
Trusts
(REITs)
0.1%
American
Tower
Corp.
,
Senior
Bond
,
3.375
%
,
10/15/26
.........
United
States
30,000,000
32,483,136
d
Iron
Mountain,
Inc.
,
Senior
Note
,
144A,
4.875
%
,
9/15/27
........
United
States
73,250,000
76,138,248
108,621,384
Food
Products
0.1%
d
Post
Holdings,
Inc.
,
Senior
Bond
,
144A,
5.625
%
,
1/15/28
.......
United
States
40,000,000
42,074,000
Health
Care
Equipment
&
Supplies
0.1%
d
Mozart
Debt
Merger
Sub,
Inc.
,
Senior
Note
,
144A,
5.25
%
,
10/01/29
United
States
65,000,000
65,000,000
Health
Care
Providers
&
Services
6.8%
d
CHS/Community
Health
Systems,
Inc.
,
Secured
Note,
144A,
6.875%,
4/15/29
....................
United
States
775,000,000
777,894,625
Secured
Note,
144A,
6.125%,
4/01/30
....................
United
States
500,000,000
486,520,000
Senior
Note,
144A,
6.875%,
4/01/28
.....................
United
States
550,000,000
529,611,500
Senior
Secured
Note,
144A,
6.625%,
2/15/25
..............
United
States
150,900,000
158,067,750
Senior
Secured
Note,
144A,
8%,
3/15/26
..................
United
States
335,000,000
355,677,875
Senior
Secured
Note,
144A,
5.625%,
3/15/27
..............
United
States
250,000,000
262,095,000
Senior
Secured
Note,
144A,
8%,
12/15/27
.................
United
States
380,000,000
414,675,000
Senior
Secured
Note,
144A,
6%,
1/15/29
..................
United
States
250,000,000
265,312,500
CVS
Health
Corp.
,
Senior
Bond,
4.3%,
3/25/28
............................
United
States
125,000,000
142,701,740
Senior
Bond,
5.05%,
3/25/48
...........................
United
States
40,000,000
51,578,417
HCA,
Inc.
,
Senior
Bond,
5.875%,
5/01/23
..........................
United
States
90,000,000
96,864,300
Senior
Bond,
5.625%,
9/01/28
..........................
United
States
80,000,000
95,276,000
Senior
Secured
Note,
5%,
3/15/24
.......................
United
States
114,800,000
126,033,707
d
MPH
Acquisition
Holdings
LLC
,
Senior
Note,
144A,
5.75%,
11/01/28
.....................
United
States
157,000,000
148,127,930
Senior
Secured
Note,
144A,
5.5%,
9/01/28
................
United
States
50,000,000
49,931,250
Tenet
Healthcare
Corp.
,
Senior
Bond,
6.875%,
11/15/31
.........................
United
States
55,258,000
63,503,323
Senior
Note,
6.75%,
6/15/23
...........................
United
States
599,200,000
646,686,600
d
Senior
Note,
144A,
6.125%,
10/01/28
....................
United
States
205,000,000
215,610,800
4,886,168,317
Health
Care
Technology
0.2%
d
Multiplan
Corp.
,
144A,
6
%
,
10/15/27
.......................
United
States
185,000,000
157,897,500
Hotels,
Restaurants
&
Leisure
0.7%
d
Caesars
Entertainment,
Inc.
,
Senior
Note,
144A,
8.125%,
7/01/27
.....................
United
States
35,000,000
39,391,625
Senior
Secured
Note,
144A,
6.25%,
7/01/25
...............
United
States
30,000,000
31,620,225
d
Golden
Nugget,
Inc.
,
Senior
Note
,
144A,
6.75
%
,
10/15/24
.......
United
States
100,000,000
100,255,000
d
Wynn
Las
Vegas
LLC
/
Wynn
Las
Vegas
Capital
Corp.
,
Senior
Bond,
144A,
5.5%,
3/01/25
.......................
United
States
164,500,000
167,995,625
Senior
Note,
144A,
4.25%,
5/30/23
......................
United
States
84,000,000
84,761,880
Senior
Note,
144A,
5.25%,
5/15/27
......................
United
States
96,827,000
97,934,701
521,959,056
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
86
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Insurance
0.1%
Prudential
Financial,
Inc.
,
Junior
Sub.
Bond
,
5.7%
to
9/15/28,
FRN
thereafter
,
9/15/48
...................................
United
States
65,000,000
$
76,125,982
Machinery
0.1%
d,f
Roller
Bearing
Co.
of
America,
Inc.
,
Senior
Secured
Note
,
144A,
4.375
%
,
10/15/29
....................................
United
States
17,000,000
17,446,250
d
TK
Elevator
U.S.
Newco
,
Inc.
,
Senior
Secured
Note
,
144A,
5.25
%
,
7/15/27
...........................................
Germany
43,000,000
45,116,675
62,562,925
Media
2.0%
d
Clear
Channel
Outdoor
Holdings,
Inc.
,
Senior
Note,
144A,
7.75%,
4/15/28
......................
United
States
20,000,000
21,076,800
Senior
Note,
144A,
7.5%,
6/01/29
.......................
United
States
35,000,000
36,443,750
d
Diamond
Sports
Group
LLC
/
Diamond
Sports
Finance
Co.
,
Senior
Secured
Note
,
144A,
5.375
%
,
8/15/26
....................
United
States
152,000,000
100,510,000
d
DIRECTV
Holdings
LLC
/
DIRECTV
Financing
Co.,
Inc.
,
Senior
Secured
Note
,
144A,
5.875
%
,
8/15/27
....................
United
States
35,000,000
36,575,000
DISH
DBS
Corp.
,
Senior
Note,
5.875%,
7/15/22
..........................
United
States
383,500,000
395,724,062
Senior
Note,
5%,
3/15/23
.............................
United
States
300,000,000
311,250,000
Senior
Note,
5.875%,
11/15/24
.........................
United
States
128,200,000
138,011,146
Senior
Note,
7.375%,
7/01/28
..........................
United
States
35,000,000
37,164,400
d
Midas
OpCo
Holdings
LLC
,
Senior
Note
,
144A,
5.625
%
,
8/15/29
..
United
States
35,000,000
36,260,000
d
Univision
Communications,
Inc.
,
Senior
Secured
Note,
144A,
5.125%,
2/15/25
..............
United
States
217,220,000
220,662,937
Senior
Secured
Note,
144A,
9.5%,
5/01/25
................
United
States
55,000,000
59,764,650
Senior
Secured
Note,
144A,
6.625%,
6/01/27
..............
United
States
30,000,000
32,625,000
1,426,067,745
Metals
&
Mining
0.3%
d
Cleveland-Cliffs,
Inc.
,
Senior
Secured
Note
,
144A,
6.75
%
,
3/15/26
.
United
States
50,000,000
53,375,000
d
FMG
Resources
August
2006
Pty.
Ltd.
,
Senior
Bond,
144A,
4.375%,
4/01/31
.....................
Australia
35,000,000
36,211,000
Senior
Note,
144A,
5.125%,
5/15/24
.....................
Australia
60,540,000
64,720,287
Freeport-McMoRan,
Inc.
,
Senior
Bond,
5.25%,
9/01/29
...........................
United
States
25,000,000
27,187,500
Senior
Note,
3.875%,
3/15/23
..........................
United
States
62,636,000
64,699,856
246,193,643
Oil,
Gas
&
Consumable
Fuels
1.3%
b
Bonanza
Creek
Energy,
Inc.
,
Senior
Note
,
7.5
%
,
4/30/26
........
United
States
32,713,617
33,003,296
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note,
7.625%,
1/15/22
..........................
United
States
33,215,000
33,261,999
Senior
Note,
7.75%,
4/15/23
...........................
United
States
132,585,000
131,590,613
d
Senior
Note,
144A,
11%,
4/15/25
........................
United
States
270,000,000
292,612,500
d
Senior
Secured
Note,
144A,
9.25%,
7/15/24
...............
United
States
111,402,000
121,339,615
Occidental
Petroleum
Corp.
,
Senior
Bond,
6.125%,
1/01/31
..........................
United
States
30,000,000
36,051,750
Senior
Note,
8%,
7/15/25
.............................
United
States
50,000,000
59,796,000
Senior
Note,
5.5%,
12/01/25
...........................
United
States
30,000,000
33,262,500
Senior
Note,
6.375%,
9/01/28
..........................
United
States
60,000,000
70,275,000
Senior
Note,
6.625%,
9/01/30
..........................
United
States
40,000,000
49,350,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
87
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Oil,
Gas
&
Consumable
Fuels
(continued)
PBF
Holding
Co.
LLC
/
PBF
Finance
Corp.
,
Senior
Note,
6%,
2/15/28
.............................
United
States
37,000,000
$
23,680,000
d
Senior
Secured
Note,
144A,
9.25%,
5/15/25
...............
United
States
43,430,000
41,209,207
925,432,480
Pharmaceuticals
2.0%
d
Bausch
Health
Americas,
Inc.
,
Senior
Note
,
144A,
9.25
%
,
4/01/26
.
United
States
137,000,000
146,483,825
d
Bausch
Health
Cos.,
Inc.
,
Senior
Bond,
144A,
6.125%,
4/15/25
.....................
United
States
123,454,000
126,157,643
Senior
Note,
144A,
9%,
12/15/25
.......................
United
States
105,000,000
110,956,125
Senior
Note,
144A,
5%,
1/30/28
........................
United
States
93,000,000
88,369,995
Senior
Note,
144A,
5%,
2/15/29
........................
United
States
63,000,000
58,764,510
Senior
Note,
144A,
6.25%,
2/15/29
......................
United
States
81,000,000
80,266,140
Senior
Secured
Note,
144A,
5.5%,
11/01/25
...............
United
States
87,220,000
88,637,325
Senior
Secured
Note,
144A,
4.875%,
6/01/28
..............
United
States
35,000,000
36,312,500
d
Bayer
US
Finance
II
LLC
,
Senior
Note
,
144A,
4.25
%
,
12/15/25
...
Germany
65,000,000
71,883,366
d
Endo
Dac
/
Endo
Finance
LLC
/
Endo
Finco
,
Inc.
,
Secured
Note,
144A,
9.5%,
7/31/27
......................
United
States
135,712,000
136,201,920
Senior
Note,
144A,
6%,
6/30/28
........................
United
States
160,739,000
115,214,500
Senior
Secured
Note,
144A,
5.875%,
10/15/24
.............
United
States
47,500,000
46,688,938
d
Endo
Finance
LLC
,
Senior
Note
,
144A,
5.75
%
,
1/15/22
.........
United
States
53,224,000
46,837,120
d
Endo
Luxembourg
Finance
Co.
I
SARL
/
Endo
US,
Inc.
,
Senior
Secured
Note
,
144A,
6.125
%
,
4/01/29
....................
United
States
55,000,000
55,074,525
d
Par
Pharmaceutical,
Inc.
,
Senior
Secured
Note
,
144A,
7.5
%
,
4/01/27
United
States
99,744,000
101,745,862
Utah
Acquisition
Sub,
Inc.
,
Senior
Note
,
3.95
%
,
6/15/26
.........
United
States
110,000,000
121,238,590
1,430,832,884
Road
&
Rail
0.1%
d
Ashtead
Capital,
Inc.
,
Senior
Note,
144A,
4%,
5/01/28
........................
United
Kingdom
15,000,000
15,946,221
Senior
Note,
144A,
4.375%,
8/15/27
.....................
United
Kingdom
34,500,000
36,196,365
52,142,586
Semiconductors
&
Semiconductor
Equipment
0.1%
Microchip
Technology,
Inc.
,
Senior
Secured
Note
,
4.333
%
,
6/01/23
United
States
69,000,000
72,945,265
Tobacco
0.4%
BAT
Capital
Corp.
,
Senior
Note,
3.222%,
8/15/24
..........................
United
Kingdom
78,500,000
83,247,899
Senior
Note,
3.557%,
8/15/27
..........................
United
Kingdom
170,000,000
183,263,898
266,511,797
Trading
Companies
&
Distributors
0.2%
United
Rentals
North
America,
Inc.
,
Senior
Bond
,
4.875
%
,
1/15/28
United
States
93,000,000
98,442,360
d
WESCO
Distribution,
Inc.
,
Senior
Note
,
144A,
7.125
%
,
6/15/25
...
United
States
30,000,000
32,051,400
130,493,760
Wireless
Telecommunication
Services
1.7%
Sprint
Communications,
Inc.
,
Senior
Note,
11.5%,
11/15/21
..........................
United
States
215,000,000
217,687,500
Senior
Note,
6%,
11/15/22
.............................
United
States
347,700,000
366,030,744
Sprint
Corp.
,
Senior
Note,
7.875%,
9/15/23
..........................
United
States
187,350,000
209,569,710
Senior
Note,
7.125%,
6/15/24
..........................
United
States
190,650,000
217,236,142
Senior
Note,
7.625%,
3/01/26
..........................
United
States
86,300,000
104,679,743
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
88
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Wireless
Telecommunication
Services
(continued)
d
Sprint
Spectrum
Co.
LLC
/
Sprint
Spectrum
Co.
II
LLC
/
Sprint
Spectrum
Co.
III
LLC
,
Senior
Secured
Note
,
144A,
5.152
%
,
3/20/28
...........................................
United
States
90,000,000
$
102,964,500
1,218,168,339
Total
Corporate
Bonds
(Cost
$15,617,655,323)
..................................
16,720,012,896
a
h,i
Senior
Floating
Rate
Interests
0.2%
Commercial
Services
&
Supplies
0.0%
†
APX
Group,
Inc.
,
Initial
Term
Loan
,
4
%
,
(
1-month
USD
LIBOR
+
3.5
%
),
7/10/28
......................................
United
States
20,000,000
19,965,600
Health
Care
Equipment
&
Supplies
0.0%
†
Jazz
Pharmaceuticals
plc
,
Initial
Dollar
Term
Loan
,
4
%
,
(
1-month
USD
LIBOR
+
3.5
%
),
5/05/28
...........................
United
States
19,950,000
19,999,975
Health
Care
Providers
&
Services
0.1%
MPH
Acquisition
Holdings
LLC
,
Initial
Term
Loan
,
4.75
%
,
(
3-month
USD
LIBOR
+
4.25
%
),
9/01/28
..........................
United
States
25,000,000
24,750,125
Media
0.0%
†
DIRECTV
Financing
LLC
,
Closing
Date
Term
Loan
,
5.75
%
,
(
3-month
USD
LIBOR
+
5
%
),
8/02/27
............................
United
States
20,000,000
20,035,400
Specialty
Retail
0.1%
Belk,
Inc.
,
First
Lien,
First-Out
Term
Loan,
8.5%,
(3-month
USD
LIBOR
+
7.5%),
7/31/25
......................................
United
States
4,913,316
4,940,339
First
Lien,
Second-Out
Term
Loan,
13%,
(3-month
USD
LIBOR
+
5%),
7/31/25
.......................................
United
States
29,833,102
23,158,095
28,098,434
a
a
a
a
a
a
Total
Senior
Floating
Rate
Interests
(Cost
$104,119,192)
.........................
112,849,534
U.S.
Government
and
Agency
Securities
6.5%
U.S.
Treasury
Notes
,
0.125%,
8/31/23
.....................................
United
States
500,000,000
498,710,940
0.25%,
3/15/24
.....................................
United
States
750,000,000
747,539,062
0.25%,
6/15/24
.....................................
United
States
750,000,000
745,898,438
0.375%,
9/15/24
.....................................
United
States
750,000,000
746,835,938
0.5%,
3/31/25
......................................
United
States
750,000,000
746,015,625
0.75%,
5/31/26
.....................................
United
States
750,000,000
743,759,767
0.875%,
6/30/26
.....................................
United
States
500,000,000
498,281,250
Total
U.S.
Government
and
Agency
Securities
(Cost
$4,735,742,509)
..............
4,727,041,020
Asset-Backed
Securities
0.1%
Airlines
0.1%
United
Airlines
Pass-Through
Trust
,
2020-1
,
A
,
5.875
%
,
10/15/27
.
United
States
51,011,125
57,187,578
Total
Asset-Backed
Securities
(Cost
$51,011,125)
...............................
57,187,578
Mortgage-Backed
Securities
0.1%
Federal
National
Mortgage
Association
(FNMA)
Fixed
Rate
0.1%
FNMA,
30
Year,
4%,
8/01/49
.............................
United
States
40,070,219
43,686,728
Total
Mortgage-Backed
Securities
(Cost
$42,449,389)
............................
43,686,728
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
89
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Escrows
and
Litigation
Trusts
0.0%
†
b,d
Chesapeake
Energy
Corp.,
Escrow
Account,
144A
............
United
States
25,000,000
$
26,742,500
Total
Escrows
and
Litigation
Trusts
(Cost
$25,000,000)
..........................
26,742,500
Total
Long
Term
Investments
(Cost
$65,709,005,911)
............................
68,418,666,797
a
Short
Term
Investments
4.7%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
4.7%
j,k
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
3,428,988,776
3,428,988,776
Total
Money
Market
Funds
(Cost
$3,428,988,776)
................................
3,428,988,776
l
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.0%
a
a
a
a
a
Money
Market
Funds
0.0%
†
j,k
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
1,876,000
1,876,000
Principal
Amount
*
Repurchase
Agreements
0.0%
†
m
Joint
Repurchase
Agreement,
BNP
Paribas
SA,
0.05%,
10/01/21
(Maturity
Value
$469,690)
Collateralized
by
U.S.
Treasury
Notes,
0.125%
-
3%,
9/30/22
-
8/31/26;
and
U.S.
Treasury
Notes,
Index
Linked,
0.125%,
10/15/24
-
4/15/25
(valued
at
$479,083)
..........................
469,689
469,689
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$2,345,689)
............................................................
2,345,689
Total
Short
Term
Investments
(Cost
$3,431,334,465
)
.............................
3,431,334,465
a
Total
Investments
(Cost
$69,140,340,376)
99.4%
................................
$71,850,001,262
Options
Written
(0.1)%
.......................................................
(48,500,500)
Other
Assets,
less
Liabilities
0.7%
.............................................
430,420,968
Net
Assets
100.0%
...........................................................
$72,231,921,730
Number
of
Contracts
Notional
Amount
#
n
Options
Written
(0.1)%
†
Calls
-
Exchange-Traded
Equity
Options
AbbVie,
Inc.,
November
Strike
Price
$125.00,
Expires
11/19/21
...
10,000
107,870,000
(240,000)
AstraZeneca
plc,
October
Strike
Price
$60.00,
Expires
10/15/21
..
10,000
60,060,000
(1,170,000)
AT&T,
Inc.,
December
Strike
Price
$30.00,
Expires
12/17/21
.....
25,000
67,525,000
(325,000)
Bank
of
America
Corp.,
December
Strike
Price
$45.00,
Expires
12/17/21
..........................................
20,000
84,900,000
(2,240,000)
Bristol-Myers
Squibb
Co.,
December
Strike
Price
$70.00,
Expires
12/17/21
..........................................
10,000
59,170,000
(280,000)
Intel
Corp.,
November
Strike
Price
$60.00,
Expires
11/19/21
.....
25,000
133,200,000
(1,175,000)
International
Business
Machines
Corp.,
November
Strike
Price
$145.00,
Expires
11/19/21
.............................
10,000
138,930,000
(2,620,000)
JPMorgan
Chase
&
Co.,
November
Strike
Price
$170.00,
Expires
11/19/21
..........................................
10,000
163,690,000
(3,290,000)
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Income
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
90
See
Abbreviations
on
page
143
.
a
a
a
Number
of
Contracts
Notional
Amount
#
a
Value
a
a
a
a
a
a
n
Options
Written
(continued)
Calls
-
Exchange-Traded
(continued)
Equity
Options
(continued)
Merck
&
Co.,
Inc.,
December
Strike
Price
$82.50,
Expires
12/17/21
25,000
187,775,000
$
(2,000,000)
Pfizer,
Inc.,
December
Strike
Price
$55.00,
Expires
12/17/21
.....
20,000
86,020,000
(200,000)
Texas
Instruments,
Inc.,
November
Strike
Price
$200.00,
Expires
11/19/21
..........................................
7,200
138,391,200
(2,844,000)
(16,384,000)
Puts
-
Exchange-Traded
Equity
Options
3M
Co.,
October
Strike
Price
$175.00,
Expires
10/15/21
........
5,000
87,710,000
(1,575,000)
Amazon.com,
Inc.,
December
Strike
Price
$3,150.00,
Expires
12/17/21
..........................................
1,000
328,504,000
(10,359,000)
Analog
Devices,
Inc.,
October
Strike
Price
$150.00,
Expires
10/15/21
10,000
167,480,000
(360,000)
Apple,
Inc.,
November
Strike
Price
$130.00,
Expires
11/19/21
....
10,000
141,500,000
(2,520,000)
Bank
of
America
Corp.,
November
Strike
Price
$38.00,
Expires
11/19/21
..........................................
25,000
106,125,000
(1,550,000)
Broadcom,
Inc.,
November
Strike
Price
$430.00,
Expires
11/19/21
.
2,500
121,232,500
(1,160,000)
Caterpillar,
Inc.,
December
Strike
Price
$180.00,
Expires
12/17/21
.
10,000
191,970,000
(5,470,000)
Microsoft
Corp.,
November
Strike
Price
$255.00,
Expires
11/19/21
5,000
281,920,000
(2,070,000)
Morgan
Stanley,
October
Strike
Price
$90.00,
Expires
10/15/21
...
20,000
194,620,000
(1,660,000)
Texas
Instruments,
Inc.,
November
Strike
Price
$165.00,
Expires
11/19/21
..........................................
10,000
192,210,000
(1,380,000)
Workday,
Inc.,
December
Strike
Price
$230.00,
Expires
12/17/21
..
5,000
124,945,000
(4,012,500)
(32,116,500)
Total
Options
Written
(Premiums
received
$46,429,658)
..........................
$
(48,500,500)
#
Notional
amount
is
the
number
of
units
specified
in
the
contract,
and
can
include
currency
units,
bushels,
shares,
pounds,
barrels
or
other
units.
Currency
units
are
stated
in
U.S.
dollars
unless
otherwise
indicated.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
b
See
Note
11
regarding
holdings
of
5%
voting
securities.
c
See
Note
1(f)
regarding
equity-linked
securities.
d
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
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.
At
September
30,
2021,
the
aggregate
value
of
these
securities
was
$21,948,681,315,
representing
30.4%
of
net
assets.
e
A
portion
or
all
of
the
security
is
on
loan
at
September
30,
2021.
See
Note
1(g).
f
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(d).
g
Perpetual
security
with
no
stated
maturity
date.
h
The
coupon
rate
shown
represents
the
rate
at
period
end.
i
See
Note
1(h)
regarding
senior
floating
rate
interests.
j
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
k
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
l
See
Note
1(g)
regarding
securities
on
loan.
m
See
Note
1(c)
regarding
joint
repurchase
agreement.
n
See
Note
1(e)
regarding
written
options.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
91
a
Year
Ended
September
30,
Year
Ended
September
30,
2018
a
2021
2020
2019
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
................................
$6.09
$6.07
$5.86
$5.89
Income
from
investment
operations
b
:
Net
investment
income
c
......................................
0.05
0.10
0.14
0.01
Net
realized
and
unrealized
gains
(losses)
........................
(0.12)
0.08
0.25
(0.02)
Total
from
investment
operations
.................................
(0.07)
0.18
0.39
(0.01)
Less
distributions
from:
Net
investment
income
.......................................
(0.13)
(0.16)
(0.18)
(0.02)
Net
asset
value,
end
of
year
....................................
$5.89
$6.09
$6.07
$5.86
Total
return
d
................................................
(1.15)%
3.01%
6.70%
(0.23)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...................
0.87%
0.89%
0.89%
0.86%
Expenses
net
of
waiver
and
payments
by
affiliates
f
...................
0.87%
g
0.88%
0.88%
0.86%
g
Net
investment
income
........................................
0.79%
1.58%
2.36%
2.40%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..................................
$1,020,574
$1,097,545
$336,646
$4,472
Portfolio
turnover
rate
.........................................
89.16%
65.54%
41.34%
44.67%
a
For
the
period
September
10,
2018
(effective
date)
to
September
30,
2018.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
92
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
A1
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.09
$6.07
$5.85
$6.13
$6.35
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.05
0.10
0.15
0.15
0.13
Net
realized
and
unrealized
gains
(losses)
...........
(0.10)
0.09
0.25
(0.25)
(0.16)
Total
from
investment
operations
....................
(0.05)
0.19
0.40
(0.10)
(0.03)
Less
distributions
from:
Net
investment
income
..........................
(0.14)
(0.17)
(0.18)
(0.18)
(0.19)
Net
asset
value,
end
of
year
.......................
$5.90
$6.09
$6.07
$5.85
$6.13
Total
return
c
...................................
(0.89)%
3.09%
6.94%
(1.60)%
(0.45)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.77%
0.78%
0.79%
0.76%
0.79%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
0.76%
0.77%
0.78%
0.76%
e
0.79%
e
Net
investment
income
...........................
0.90%
1.69%
2.46%
2.50%
2.17%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,104,978
$2,661,888
$2,885,194
$3,099,373
$3,581,769
Portfolio
turnover
rate
............................
89.16%
65.54%
41.34%
44.67%
86.72%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
93
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.04
$6.03
$5.81
$6.08
$6.30
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.02
0.07
0.12
0.12
0.10
Net
realized
and
unrealized
gains
(losses)
...........
(0.10)
0.08
0.25
(0.24)
(0.16)
Total
from
investment
operations
....................
(0.08)
0.15
0.37
(0.12)
(0.06)
Less
distributions
from:
Net
investment
income
..........................
(0.11)
(0.14)
(0.15)
(0.15)
(0.16)
Net
asset
value,
end
of
year
.......................
$5.85
$6.04
$6.03
$5.81
$6.08
Total
return
c
...................................
(1.41)%
2.43%
6.45%
(1.94)%
(0.96)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.27%
1.29%
1.29%
1.26%
1.29%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
1.27%
e
1.28%
1.28%
1.26%
e
1.29%
e
Net
investment
income
...........................
0.39%
1.18%
1.96%
2.00%
1.67%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$196,643
$354,483
$389,021
$571,525
$797,394
Portfolio
turnover
rate
............................
89.16%
65.54%
41.34%
44.67%
86.72%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
94
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.09
$6.07
$5.85
$6.12
$6.34
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.03
0.08
0.13
0.13
0.11
Net
realized
and
unrealized
gains
(losses)
...........
(0.11)
0.08
0.25
(0.24)
(0.16)
Total
from
investment
operations
....................
(0.08)
0.16
0.38
(0.11)
(0.05)
Less
distributions
from:
Net
investment
income
..........................
(0.12)
(0.14)
(0.16)
(0.16)
(0.17)
Net
asset
value,
end
of
year
.......................
$5.89
$6.09
$6.07
$5.85
$6.12
Total
return
....................................
(1.41)%
2.73%
6.58%
(1.78)%
(0.81)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.11%
1.13%
1.14%
1.11%
1.13%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
1.11%
d
1.12%
1.13%
1.11%
d
1.13%
d
Net
investment
income
...........................
0.55%
1.34%
2.11%
2.15%
1.83%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$19,513
$27,746
$32,906
$31,144
$38,363
Portfolio
turnover
rate
............................
89.16%
65.54%
41.34%
44.67%
86.72%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
95
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.12
$6.10
$5.87
$6.15
$6.37
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.12
0.16
0.17
0.15
Net
realized
and
unrealized
gains
(losses)
...........
(0.12)
0.08
0.27
(0.25)
(0.16)
Total
from
investment
operations
....................
(0.05)
0.20
0.43
(0.08)
(0.01)
Less
distributions
from:
Net
investment
income
..........................
(0.15)
(0.18)
(0.20)
(0.20)
(0.21)
Net
asset
value,
end
of
year
.......................
$5.92
$6.12
$6.10
$5.87
$6.15
Total
return
....................................
(0.80)%
3.34%
7.39%
(1.33)%
(0.16)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.53%
0.54%
0.51%
0.49%
0.48%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.51%
0.52%
0.50%
0.48%
0.48%
d
Net
investment
income
...........................
1.15%
1.96%
2.74%
2.78%
2.48%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$304,650
$361,791
$573,957
$694,813
$446,174
Portfolio
turnover
rate
............................
89.16%
65.54%
41.34%
44.67%
86.72%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
96
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.11
$6.10
$5.87
$6.15
$6.37
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.06
0.11
0.16
0.16
0.15
Net
realized
and
unrealized
gains
(losses)
...........
(0.10)
0.07
0.26
(0.25)
(0.17)
Total
from
investment
operations
....................
(0.04)
0.18
0.42
(0.09)
(0.02)
Less
distributions
from:
Net
investment
income
..........................
(0.15)
(0.17)
(0.19)
(0.19)
(0.20)
Net
asset
value,
end
of
year
.......................
$5.92
$6.11
$6.10
$5.87
$6.15
Total
return
....................................
(0.74)
%
3.23%
7.08%
(1.45)%
(0.30)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.62%
0.64%
0.64%
0.61%
0.64%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.62%
d
0.63%
0.63%
0.61%
d
0.64%
d
Net
investment
income
...........................
1.04%
1.84%
2.61%
2.65%
2.32%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$692,010
$743,012
$946,318
$720,281
$854,640
Portfolio
turnover
rate
............................
89.16%
65.54%
41.34%
44.67%
86.72%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
U.S.
Government
Securities
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
97
a
a
Principal
Amount
a
Value
a
a
a
a
a
U.S.
Government
and
Agency
Securities
0.5%
U.S.
Treasury
Bonds,
4.75%,
2/15/37
....................................
$
14,500,000
$
20,471,055
Total
U.S.
Government
and
Agency
Securities
(Cost
$18,778,551)
.................
20,471,055
Mortgage-Backed
Securities
98.1%
Government
National
Mortgage
Association
(GNMA)
Fixed
Rate
98.1%
GNMA
I,
30
Year,
4.5%,
4/15/40
........................................
4,688,976
5,299,954
GNMA
I,
30
Year,
5%,
9/15/40
..........................................
173,273,041
199,607,259
GNMA
I,
30
Year,
5.5%,
2/15/40
........................................
78,361,522
91,852,778
GNMA
I,
30
Year,
6%,
12/15/39
.........................................
70,489,576
83,303,586
GNMA
I,
30
Year,
6.5%,
8/15/37
........................................
19,851,111
22,633,280
GNMA
I,
30
Year,
7%,
9/15/32
..........................................
12,931,469
15,122,599
GNMA
I,
30
Year,
7.5%,
7/15/26
-
8/15/33
.................................
1,262,382
1,438,857
GNMA
I,
30
Year,
8%,
10/15/29
.........................................
2,717
3,200
GNMA
I,
30
Year,
8.5%,
11/15/24
........................................
633
678
GNMA
I,
Single-family,
30
Year,
3.5%,
4/15/43
-
5/15/43
......................
15,322,631
16,588,002
GNMA
I,
Single-family,
30
Year,
4%,
10/15/40
-
8/15/46
.......................
46,669,964
51,577,794
GNMA
I,
Single-family,
30
Year,
4.5%,
2/15/39
-
6/15/41
......................
90,325,991
102,832,085
GNMA
I,
Single-family,
30
Year,
5%,
2/15/35
...............................
26,343
29,798
GNMA
I,
Single-family,
30
Year,
5.5%,
5/15/33
-
4/15/49
......................
938,708
1,046,816
GNMA
I,
Single-family,
30
Year,
7.25%,
12/15/25
-
1/15/26
.....................
44,781
45,493
GNMA
I,
Single-family,
30
Year,
7.5%,
1/15/22
-
7/15/31
......................
1,585,047
1,659,779
GNMA
I,
Single-family,
30
Year,
8%,
11/15/21
-
9/15/30
.......................
614,845
630,318
GNMA
I,
Single-family,
30
Year,
8.5%,
12/15/21
-
5/15/25
......................
43,235
43,571
GNMA
I,
Single-family,
30
Year,
9%,
3/15/22
-
1/15/23
........................
5,072
5,092
GNMA
I,
Single-family,
30
Year,
9.5%,
1/15/22
-
8/15/22
......................
3,297
3,304
GNMA
I,
Single-family,
30
Year,
10%,
2/15/25
..............................
3,878
3,889
GNMA
II,
30
Year,
4.5%,
5/20/34
-
6/20/41
.................................
4,023,640
4,490,670
GNMA
II,
30
Year,
6%,
7/20/39
.........................................
31,297,744
36,871,337
GNMA
II,
30
Year,
6%,
3/20/34
-
9/20/34
..................................
1,340,175
1,457,458
GNMA
II,
30
Year,
6.5%,
9/20/31
-
9/20/32
.................................
1,316,630
1,544,436
GNMA
II,
30
Year,
7%,
7/20/32
.........................................
378,379
448,013
GNMA
II,
30
Year,
7.5%,
10/20/24
.......................................
19,145
19,223
GNMA
II,
30
Year,
8%,
12/20/28
........................................
65,833
72,685
GNMA
II,
Single-family,
30
Year,
2%,
8/20/51
...............................
283,821,821
288,229,072
GNMA
II,
Single-family,
30
Year,
2.5%,
11/20/50
............................
18,439,443
19,054,291
GNMA
II,
Single-family,
30
Year,
2.5%,
3/20/51
.............................
99,915,173
103,257,099
GNMA
II,
Single-family,
30
Year,
2.5%,
4/20/51
.............................
102,504,369
105,906,369
GNMA
II,
Single-family,
30
Year,
2.5%,
5/20/51
.............................
251,550,148
259,673,620
GNMA
II,
Single-family,
30
Year,
2.5%,
7/20/51
.............................
87,885,206
90,744,532
GNMA
II,
Single-family,
30
Year,
2.5%,
8/20/51
.............................
257,261,502
265,673,506
GNMA
II,
Single-family,
30
Year,
2.5%,
9/20/51
.............................
102,500,000
105,999,227
GNMA
II,
Single-family,
30
Year,
3%,
10/20/44
..............................
25,726,550
27,243,957
GNMA
II,
Single-family,
30
Year,
3%,
12/20/44
..............................
13,891,067
14,670,695
GNMA
II,
Single-family,
30
Year,
3%,
5/20/45
...............................
20,856,380
21,986,089
GNMA
II,
Single-family,
30
Year,
3%,
4/20/46
...............................
28,422,904
29,942,669
GNMA
II,
Single-family,
30
Year,
3%,
9/20/47
...............................
23,100,316
24,265,740
GNMA
II,
Single-family,
30
Year,
3%,
10/20/47
..............................
37,280,861
39,228,698
GNMA
II,
Single-family,
30
Year,
3%,
5/20/50
...............................
12,251,782
13,059,110
GNMA
II,
Single-family,
30
Year,
3%,
6/20/50
...............................
18,930,217
20,177,980
GNMA
II,
Single-family,
30
Year,
3%,
9/20/50
...............................
12,095,187
12,822,351
GNMA
II,
Single-family,
30
Year,
3%,
3/20/51
...............................
150,506,503
157,482,547
GNMA
II,
Single-family,
30
Year,
3%,
4/20/51
...............................
94,683,441
99,072,061
GNMA
II,
Single-family,
30
Year,
3%,
5/20/51
...............................
133,708,694
139,906,152
GNMA
II,
Single-family,
30
Year,
3%,
7/20/51
...............................
196,565,213
205,676,099
GNMA
II,
Single-family,
30
Year,
3%,
8/20/51
...............................
213,826,816
224,179,460
a
GNMA
II,
Single-family,
30
Year,
3%,
9/20/51
...............................
35,000,000
36,735,271
GNMA
II,
Single-family,
30
Year,
3%,
2/20/45
-
10/20/50
......................
80,530,696
85,258,230
GNMA
II,
Single-family,
30
Year,
3.5%,
7/20/42
.............................
40,895,027
44,238,414
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
U.S.
Government
Securities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
98
a
a
Principal
Amount
a
Value
a
a
a
a
a
Mortgage-Backed
Securities
(continued)
Government
National
Mortgage
Association
(GNMA)
Fixed
Rate
(continued)
GNMA
II,
Single-family,
30
Year,
3.5%,
9/20/42
.............................
$
51,627,160
$
55,838,676
GNMA
II,
Single-family,
30
Year,
3.5%,
5/20/43
.............................
15,329,252
16,576,164
GNMA
II,
Single-family,
30
Year,
3.5%,
6/20/43
.............................
17,819,254
19,273,761
GNMA
II,
Single-family,
30
Year,
3.5%,
9/20/47
.............................
219,562,522
232,837,865
GNMA
II,
Single-family,
30
Year,
3.5%,
11/20/47
............................
206,815,961
219,139,826
GNMA
II,
Single-family,
30
Year,
3.5%,
4/20/51
.............................
26,350,387
27,823,391
GNMA
II,
Single-family,
30
Year,
3.5%,
10/20/40
-
1/20/49
.....................
67,298,275
72,800,524
GNMA
II,
Single-family,
30
Year,
4%,
11/20/40
..............................
13,903,728
15,249,664
GNMA
II,
Single-family,
30
Year,
4%,
9/20/41
...............................
13,565,949
14,882,117
GNMA
II,
Single-family,
30
Year,
4%,
10/20/41
..............................
16,850,224
18,485,032
GNMA
II,
Single-family,
30
Year,
4%,
11/20/41
..............................
15,731,268
17,257,495
GNMA
II,
Single-family,
30
Year,
4%,
5/20/47
...............................
53,104,877
56,925,777
GNMA
II,
Single-family,
30
Year,
4%,
6/20/47
...............................
40,663,431
43,628,316
GNMA
II,
Single-family,
30
Year,
4%,
7/20/47
...............................
26,986,456
28,926,492
GNMA
II,
Single-family,
30
Year,
4%,
5/20/40
-
12/20/49
......................
69,010,323
75,393,556
GNMA
II,
Single-family,
30
Year,
4.5%,
5/20/41
.............................
12,429,482
13,864,017
GNMA
II,
Single-family,
30
Year,
4.5%,
6/20/41
.............................
15,218,431
17,002,846
GNMA
II,
Single-family,
30
Year,
4.5%,
7/20/41
.............................
17,015,231
19,025,969
GNMA
II,
Single-family,
30
Year,
4.5%,
9/20/41
.............................
24,143,925
26,997,111
GNMA
II,
Single-family,
30
Year,
4.5%,
10/20/41
............................
17,379,956
19,433,863
GNMA
II,
Single-family,
30
Year,
4.5%,
5/20/33
-
2/20/44
......................
39,375,938
43,692,366
GNMA
II,
Single-family,
30
Year,
5%,
7/20/33
-
9/20/41
.......................
46,690,355
52,898,646
GNMA
II,
Single-family,
30
Year,
5.5%,
6/20/34
-
2/20/50
......................
50,399,744
58,531,199
GNMA
II,
Single-family,
30
Year,
6%,
6/20/34
...............................
632,705
715,630
GNMA
II,
Single-family,
30
Year,
6.5%,
6/20/24
-
1/20/39
......................
9,959,882
11,722,711
GNMA
II,
Single-family,
30
Year,
7%,
2/20/28
-
7/20/33
.......................
2,701,004
3,174,177
GNMA
II,
Single-family,
30
Year,
7.5%,
10/20/22
-
4/20/32
.....................
444,742
500,783
GNMA
II,
Single-family,
30
Year,
8%,
12/20/24
-
6/20/30
......................
186,747
210,915
GNMA
II,
Single-family,
30
Year,
8.5%,
1/20/22
-
6/20/25
......................
2,773
2,786
GNMA
II,
Single-family,
30
Year,
9.5%,
12/20/24
-
1/20/25
.....................
3,177
3,186
4,255,930,054
Total
Mortgage-Backed
Securities
(Cost
$4,167,436,560)
.........................
4,255,930,054
Total
Long
Term
Investments
(Cost
$4,186,215,111)
.............................
4,276,401,109
a
a
a
a
a
Short
Term
Investments
2.0%
Shares
a
Money
Market
Funds
2.0%
b,c
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
...................
85,708,046
85,708,046
Total
Money
Market
Funds
(Cost
$85,708,046)
..................................
85,708,046
Total
Short
Term
Investments
(Cost
$85,708,046
)
................................
85,708,046
a
Total
Investments
(Cost
$4,271,923,157)
100.6%
................................
$4,362,109,155
Other
Assets,
less
Liabilities
(0.6)%
...........................................
(23,740,200)
Net
Assets
100.0%
...........................................................
$4,338,368,955
See
Abbreviations
on
page
143
.
a
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(d)
.
b
See
Note
3
(
f
)
regarding
investments
in
affiliated
management
investment
companies.
c
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
99
a
Year
Ended
September
30,
Year
Ended
September
30,
2018
a
2021
2020
2019
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
................................
$19.76
$22.53
$18.66
$19.16
Income
from
investment
operations
b
:
Net
investment
income
c
......................................
0.43
0.51
0.53
0.02
Net
realized
and
unrealized
gains
(losses)
........................
1.94
(2.43)
4.41
(0.52)
Total
from
investment
operations
.................................
2.37
(1.92)
4.94
(0.50)
Less
distributions
from:
Net
investment
income
.......................................
(0.52)
(0.50)
(0.49)
—
Net
realized
gains
..........................................
(1.41)
(0.35)
(0.58)
—
Total
distributions
............................................
(1.93)
(0.85)
(1.07)
—
Net
asset
value,
end
of
year
....................................
$20.20
$19.76
$22.53
$18.66
Total
return
d
................................................
12.29%
(8.68)%
27.43%
(2.61)%
Ratios
to
average
net
assets
e
Expenses
f,g
.................................................
0.82%
0.83%
0.83%
0.84%
Net
investment
income
........................................
2.10%
2.46%
2.51%
2.62%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..................................
$982,201
$742,188
$521,782
$3,536
Portfolio
turnover
rate
.........................................
5.18%
12.19%
7.90%
4.58%
a
For
the
period
September
10,
2018
(effective
date)
to
September
30,
2018.
b
The
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.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
100
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
A1
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$19.77
$22.54
$18.66
$19.18
$17.85
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.45
0.52
0.53
0.50
0.53
Net
realized
and
unrealized
gains
(losses)
...........
1.94
(2.41)
4.44
(0.17)
1.30
Total
from
investment
operations
....................
2.39
(1.89)
4.97
0.33
1.83
Less
distributions
from:
Net
investment
income
..........................
(0.54)
(0.53)
(0.51)
(0.54)
(0.49)
Net
realized
gains
.............................
(1.41)
(0.35)
(0.58)
(0.31)
(0.01)
Total
distributions
...............................
(1.95)
(0.88)
(1.09)
(0.85)
(0.50)
Net
asset
value,
end
of
year
.......................
$20.21
$19.77
$22.54
$18.66
$19.18
Total
return
c
...................................
12.40%
(8.59)%
27.61%
1.68%
10.38%
Ratios
to
average
net
assets
Expenses
d
,e
....................................
0.72%
0.73%
0.73%
0.74%
0.75%
Net
investment
income
...........................
2.20%
2.50%
2.61%
2.72%
2.86%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$3,321,370
$3,388,126
$4,176,487
$3,654,795
$4,182,780
Portfolio
turnover
rate
............................
5.18%
12.19%
7.90%
4.58%
0.89%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
101
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$19.65
$22.42
$18.57
$19.09
$17.76
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.34
0.41
0.42
0.41
0.43
Net
realized
and
unrealized
gains
(losses)
...........
1.95
(2.41)
4.43
(0.18)
1.30
Total
from
investment
operations
....................
2.29
(2.00)
4.85
0.23
1.73
Less
distributions
from:
Net
investment
income
..........................
(0.44)
(0.42)
(0.42)
(0.44)
(0.39)
Net
realized
gains
.............................
(1.41)
(0.35)
(0.58)
(0.31)
(0.01)
Total
distributions
...............................
(1.85)
(0.77)
(1.00)
(0.75)
(0.40)
Net
asset
value,
end
of
year
.......................
$20.09
$19.65
$22.42
$18.57
$19.09
Total
return
c
...................................
11.91%
(9.10)%
26.96%
1.18%
9.88%
Ratios
to
average
net
assets
Expenses
d
,e
....................................
1.22%
1.23%
1.23%
1.24%
1.25%
Net
investment
income
...........................
1.69%
1.98%
2.11%
2.22%
2.36%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$350,553
$537,808
$767,363
$834,070
$981,515
Portfolio
turnover
rate
............................
5.18%
12.19%
7.90%
4.58%
0.89%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
102
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$19.68
$22.45
$18.59
$19.11
$17.78
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.38
0.44
0.45
0.44
0.46
Net
realized
and
unrealized
gains
(losses)
...........
1.94
(2.41)
4.44
(0.18)
1.30
Total
from
investment
operations
....................
2.32
(1.97)
4.89
0.26
1.76
Less
distributions
from:
Net
investment
income
..........................
(0.47)
(0.45)
(0.45)
(0.47)
(0.42)
Net
realized
gains
.............................
(1.41)
(0.35)
(0.58)
(0.31)
(0.01)
Total
distributions
...............................
(1.88)
(0.80)
(1.03)
(0.78)
(0.43)
Net
asset
value,
end
of
year
.......................
$20.12
$19.68
$22.45
$18.59
$19.11
Total
return
....................................
12.06%
(8.95)%
27.17%
1.33%
10.04%
Ratios
to
average
net
assets
Expenses
c
,d
....................................
1.07%
1.08%
1.08%
1.09%
1.10%
Net
investment
income
...........................
1.85%
2.15%
2.26%
2.37%
2.51%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$83,441
$84,488
$103,376
$72,927
$94,465
Portfolio
turnover
rate
............................
5.18%
12.19%
7.90%
4.58%
0.89%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
103
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$19.93
$22.73
$18.81
$19.32
$17.97
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.50
0.58
0.56
0.55
0.58
Net
realized
and
unrealized
gains
(losses)
...........
1.96
(2.46)
4.50
(0.17)
1.31
Total
from
investment
operations
....................
2.46
(1.88)
5.06
0.38
1.89
Less
distributions
from:
Net
investment
income
..........................
(0.58)
(0.57)
(0.56)
(0.58)
(0.53)
Net
realized
gains
.............................
(1.41)
(0.35)
(0.58)
(0.31)
(0.01)
Total
distributions
...............................
(1.99)
(0.92)
(1.14)
(0.89)
(0.54)
Net
asset
value,
end
of
year
.......................
$20.40
$19.93
$22.73
$18.81
$19.32
Total
return
....................................
12.71%
(8.44)%
27.89%
1.97%
10.70%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.58%
0.56%
0.53%
0.52%
0.48%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
0.50%
0.50%
0.50%
0.48%
0.48%
d
Net
investment
income
...........................
2.42%
2.75%
2.84%
2.98%
3.13%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$153,969
$144,079
$150,244
$230,393
$241,455
Portfolio
turnover
rate
............................
5.18%
12.19%
7.90%
4.58%
0.89%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Financial
Highlights
Franklin
Utilities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
104
a
Year
Ended
September
30,
2021
2020
2019
2018
2017
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$19.93
$22.73
$18.81
$19.32
$17.97
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.48
0.56
0.56
0.54
0.57
Net
realized
and
unrealized
gains
(losses)
...........
1.97
(2.46)
4.48
(0.18)
1.30
Total
from
investment
operations
....................
2.45
(1.90)
5.04
0.36
1.87
Less
distributions
from:
Net
investment
income
..........................
(0.57)
(0.55)
(0.54)
(0.56)
(0.51)
Net
realized
gains
.............................
(1.41)
(0.35)
(0.58)
(0.31)
(0.01)
Total
distributions
...............................
(1.98)
(0.90)
(1.12)
(0.87)
(0.52)
Net
asset
value,
end
of
year
.......................
$20.40
$19.93
$22.73
$18.81
$19.32
Total
return
....................................
12.62%
(8.51)%
27.78%
1.82%
10.64%
Ratios
to
average
net
assets
Expenses
c
,d
....................................
0.57%
0.58%
0.58%
0.59%
0.60%
Net
investment
income
...........................
2.35
%
2.66%
2.76%
2.87%
3.01%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,200,859
$1,179,002
$1,262,883
$927,845
$963,228
Portfolio
turnover
rate
............................
5.18%
12.19%
7.90%
4.58%
0.89%
a
The
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.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Custodian
Funds
Statement
of
Investments,
September
30,
2021
Franklin
Utilities
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
105
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
99.5%
Diversified
Telecommunication
Services
1.1%
TELUS
Corp.
........................................
Canada
3,000,000
$
65,927,300
Electric
Utilities
58.6%
Alliant
Energy
Corp.
...................................
United
States
3,800,000
212,724,000
American
Electric
Power
Co.,
Inc.
.........................
United
States
2,900,000
235,422,000
Avangrid
,
Inc.
........................................
United
States
300,000
14,580,000
Duke
Energy
Corp.
....................................
United
States
2,800,000
273,252,000
Edison
International
...................................
United
States
4,500,000
249,615,000
Emera
,
Inc.
..........................................
Canada
1,800,000
81,499,783
Entergy
Corp.
........................................
United
States
2,300,000
228,413,000
Evergy
,
Inc.
..........................................
United
States
3,200,000
199,040,000
Eversource
Energy
....................................
United
States
2,200,000
179,872,000
Exelon
Corp.
.........................................
United
States
6,200,000
299,708,000
FirstEnergy
Corp.
.....................................
United
States
2,000,000
71,240,000
NextEra
Energy,
Inc.
...................................
United
States
9,686,286
760,567,177
OGE
Energy
Corp.
....................................
United
States
1,400,000
46,144,000
Origin
Energy
Ltd.
.....................................
Australia
7,000,000
23,475,270
a
PG&E
Corp.
.........................................
United
States
7,000,000
67,200,000
Pinnacle
West
Capital
Corp.
.............................
United
States
1,600,000
115,776,000
PNM
Resources,
Inc.
..................................
United
States
300,070
14,847,463
PPL
Corp.
...........................................
United
States
3,700,000
103,156,000
Southern
Co.
(The)
....................................
United
States
4,100,000
254,077,000
Xcel
Energy,
Inc.
......................................
United
States
2,200,000
137,500,000
3,568,108,693
Gas
Utilities
2.3%
Atmos
Energy
Corp.
...................................
United
States
250,000
22,050,000
Southwest
Gas
Holdings,
Inc.
............................
United
States
900,000
60,192,000
Spire,
Inc.
...........................................
United
States
1,000,000
61,180,000
143,422,000
Independent
Power
and
Renewable
Electricity
Producers
1.1%
Clearway
Energy,
Inc.,
C
................................
United
States
200,000
6,054,000
Vistra
Corp.
..........................................
United
States
3,500,000
59,850,000
65,904,000
Multi-Utilities
32.5%
Ameren
Corp.
........................................
United
States
1,668,250
135,128,250
Black
Hills
Corp.
......................................
United
States
784,393
49,228,505
CenterPoint
Energy,
Inc.
................................
United
States
6,200,000
152,520,000
CMS
Energy
Corp.
....................................
United
States
5,000,000
298,650,000
Consolidated
Edison,
Inc.
...............................
United
States
1,200,000
87,108,000
Dominion
Energy,
Inc.
..................................
United
States
4,100,000
299,382,000
DTE
Energy
Co.
......................................
United
States
1,500,000
167,565,000
E.ON
SE
............................................
Germany
9,000,000
109,846,579
National
Grid
plc
......................................
United
Kingdom
5,500,000
65,529,158
NiSource,
Inc.
........................................
United
States
5,500,000
133,265,000
NorthWestern
Corp.
...................................
United
States
1,000,000
57,300,000
Public
Service
Enterprise
Group,
Inc.
......................
United
States
1,900,000
115,710,000
Sempra
Energy
.......................................
United
States
1,900,000
240,350,000
WEC
Energy
Group,
Inc.
................................
United
States
800,000
70,560,000
1,982,142,492
Oil,
Gas
&
Consumable
Fuels
2.2%
a
Cheniere
Energy,
Inc.
..................................
United
States
900,000
87,903,000
DT
Midstream,
Inc.
....................................
United
States
750,000
34,680,000
Williams
Cos.,
Inc.
(The)
................................
United
States
400,000
10,376,000
132,959,000
Franklin
Custodian
Funds
Statement
of
Investments
Franklin
Utilities
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
106
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Water
Utilities
1.7%
Essential
Utilities,
Inc.
..................................
United
States
1,700,000
$
78,336,000
United
Utilities
Group
plc
................................
United
Kingdom
2,000,000
26,027,806
104,363,806
Total
Common
Stocks
(Cost
$3,109,294,726)
....................................
6,062,827,291
Principal
Amount
*
Corporate
Bonds
0.1%
Electric
Utilities
0.1%
Evergy
Missouri
West,
Inc.
,
Senior
Bond
,
8.27
%
,
11/15/21
.......
United
States
6,100,000
6,152,363
Total
Corporate
Bonds
(Cost
$6,099,167)
.......................................
6,152,363
Total
Long
Term
Investments
(Cost
$3,115,393,893)
.............................
6,068,979,654
a
Short
Term
Investments
0.2%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
0.2%
b,c
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.....
United
States
12,629,462
12,629,462
Total
Money
Market
Funds
(Cost
$12,629,462)
..................................
12,629,462
Total
Short
Term
Investments
(Cost
$12,629,462
)
................................
12,629,462
a
Total
Investments
(Cost
$3,128,023,355)
99.8%
..................................
$6,081,609,116
Other
Assets,
less
Liabilities
0.2%
.............................................
10,784,272
Net
Assets
100.0%
...........................................................
$6,092,393,388
See
Abbreviations
on
page
143
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
c
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
September
30,
2021
franklintempleton.com
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accompanying
notes
are
an
integral
part
of
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financial
statements.
Annual
Report
107
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
.................................
$13,074,609,824
$83,256,018
$5,879,604,375
Cost
-
Non-controlled
affiliates
(Note
3
f
and
11
)
.................
440,807,154
3,205,079
218,772,542
Cost
-
Unaffiliated
repurchase
agreements
....................
69,750,985
—
19,174,763
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$86,193,087,
$—
and
$100,680,593,
respectively)
.........................
$27,488,073,184
$108,812,115
$21,197,612,426
Value
-
Non-controlled
affiliates
(Note
3
f
and
11
)
................
440,807,154
3,205,079
218,772,542
Value
-
Unaffiliated
repurchase
agreements
....................
69,750,985
—
19,174,763
Cash
..................................................
—
19
—
Foreign
currency,
at
value
(cost
$–,
$–
and
$14,
respectively)
........
—
—
14
Receivables:
Investment
securities
sold
.................................
384,843,141
—
—
Capital
shares
sold
......................................
77,674,813
728,205
31,277,964
Dividends
and
interest
...................................
2,786,652
6,907
6,945,549
Affiliates
..............................................
—
17,638
—
Total
assets
........................................
28,463,935,929
112,769,963
21,473,783,258
Liabilities:
Payables:
Investment
securities
purchased
............................
367,938,353
—
7,599,900
Capital
shares
redeemed
.................................
41,779,886
31,591
21,752,559
Management
fees
.......................................
9,947,552
36,296
7,911,176
Distribution
fees
........................................
3,931,989
22,644
3,597,092
Transfer
agent
fees
......................................
2,721,498
1,787
3,105,810
Professional
fees
.......................................
64,670
28,280
77,268
Payable
upon
return
of
securities
loaned
(Note
1
g
)
................
83,964,779
—
95,948,763
Accrued
expenses
and
other
liabilities
.........................
727,056
12,371
940,328
Total
liabilities
.......................................
511,075,783
132,969
140,932,896
Net
assets,
at
value
...............................
$27,952,860,146
$112,636,994
$21,332,850,362
Net
assets
consist
of:
Paid-in
capital
...........................................
$13,300,613,593
$87,328,592
$4,192,757,721
Total
distributable
earnings
(losses)
...........................
14,652,246,553
25,308,402
17,140,092,641
Net
assets,
at
value
...............................
$27,952,860,146
$112,636,994
$21,332,850,362
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
September
30,
2021
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
108
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Class
A:
Net
assets,
at
value
.....................................
$12,129,482,858
$80,508,606
$12,927,576,783
Shares
outstanding
......................................
77,145,971
2,546,885
85,202,805
Net
asset
value
per
share
a
................................
$157.23
$31.61
$151.73
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%,
94.50%
and
94.50%,
respectively)
..........................
$166.38
$33.45
$160.56
Class
C:
Net
assets,
at
value
.....................................
$1,339,015,952
$6,028,343
$666,347,728
Shares
outstanding
......................................
10,456,233
193,027
4,938,356
Net
asset
value
and
maximum
offering
price
per
share
a
...........
$128.06
$31.23
$134.93
Class
R:
Net
assets,
at
value
.....................................
$311,646,232
$983,567
$395,300,964
Shares
outstanding
......................................
2,056,847
31,190
2,621,927
Net
asset
value
and
maximum
offering
price
per
share
...........
$151.52
$31.53
$150.77
Class
R6:
Net
assets,
at
value
.....................................
$9,820,183,953
$75,051
$3,113,945,958
Shares
outstanding
......................................
59,421,868
2,361
20,432,955
Net
asset
value
and
maximum
offering
price
per
share
...........
$165.26
$31.78
$152.40
Advisor
Class:
Net
assets,
at
value
.....................................
$4,352,531,151
$25,041,427
$4,229,678,929
Shares
outstanding
......................................
26,658,099
788,647
27,741,359
Net
asset
value
and
maximum
offering
price
per
share
...........
$163.27
$31.75
$152.47
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
September
30,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
109
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
.................................
$63,926,845,354
$4,186,215,111
$3,115,393,893
Cost
-
Non-controlled
affiliates
(Note
3
f
and
11
)
.................
5,213,025,333
85,708,046
12,629,462
Cost
-
Unaffiliated
repurchase
agreements
....................
469,689
—
—
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$2,280,893,
$—
and
$—,
respectively)
.................................
$67,147,278,101
$4,276,401,109
$6,068,979,654
Value
-
Non-controlled
affiliates
(Note
3
f
and
11
)
................
4,702,253,472
85,708,046
12,629,462
Value
-
Unaffiliated
repurchase
agreements
....................
469,689
—
—
Cash
..................................................
10,951,385
—
49
Foreign
currency,
at
value
(cost
$9,083,814,
$–
and
$–,
respectively)
..
8,960,427
—
—
Receivables:
Investment
securities
sold
.................................
142,604,653
36,557,626
9,834,681
Capital
shares
sold
......................................
54,139,090
2,891,136
5,738,422
Dividends
and
interest
...................................
433,713,663
11,298,825
11,039,987
European
Union
tax
reclaims
(Note
1j)
.......................
64,845,933
—
1,601,498
Total
assets
........................................
72,565,216,413
4,412,856,742
6,109,823,753
Liabilities:
Payables:
Investment
securities
purchased
............................
168,397,776
36,728,125
5,670,629
Capital
shares
redeemed
.................................
65,469,789
32,139,914
6,967,483
Management
fees
.......................................
22,350,042
1,711,513
2,423,758
Distribution
fees
........................................
11,948,899
596,700
875,308
Transfer
agent
fees
......................................
8,237,302
806,677
879,821
Professional
fees
.......................................
1,599,759
59,184
73,883
Distributions
to
shareholders
...............................
2,205
621,772
254
Options
written,
at
value
(premiums
received
$46,429,658,
$–
and
$–,
respectively)
............................................
48,500,500
—
—
Payable
upon
return
of
securities
loaned
(Note
1
g
)
................
2,345,689
—
—
Accrued
expenses
and
other
liabilities
.........................
4,442,722
1,823,902
539,229
Total
liabilities
.......................................
333,294,683
74,487,787
17,430,365
Net
assets,
at
value
...............................
$72,231,921,730
$4,338,368,955
$6,092,393,388
Net
assets
consist
of:
Paid-in
capital
...........................................
$68,121,901,525
$4,940,379,623
$2,969,871,613
Total
distributable
earnings
(losses)
...........................
4,110,020,205
(602,010,668)
3,122,521,775
Net
assets,
at
value
...............................
$72,231,921,730
$4,338,368,955
$6,092,393,388
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
September
30,
2021
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
110
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Class
A:
Net
assets,
at
value
.....................................
$16,044,378,705
$1,020,574,443
$982,200,642
Shares
outstanding
......................................
6,491,461,386
173,160,155
48,622,292
Net
asset
value
per
share
a
................................
$2.47
$5.89
$20.20
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
96.25%,
96.25%
and
96.25%,
respectively)
..........................
$2.57
$6.12
$20.99
Class
A1:
Net
assets,
at
value
.....................................
$35,704,730,209
$2,104,978,107
$3,321,370,378
Shares
outstanding
......................................
14,409,590,580
356,985,847
164,357,341
Net
asset
value
per
share
a
................................
$2.48
$5.90
$20.21
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
96.25%,
96.25%
and
96.25%,
respectively)
..........................
$2.58
$6.13
$21.00
Class
C:
Net
assets,
at
value
.....................................
$7,507,657,901
$196,643,436
$350,552,902
Shares
outstanding
......................................
2,981,885,106
33,606,465
17,453,007
Net
asset
value
and
maximum
offering
price
per
share
a
...........
$2.52
$5.85
$20.09
Class
R:
Net
assets,
at
value
.....................................
$257,108,802
$19,513,237
$83,441,233
Shares
outstanding
......................................
106,017,103
3,310,239
4,147,875
Net
asset
value
and
maximum
offering
price
per
share
...........
$2.43
$5.89
$20.12
Class
R6:
Net
assets,
at
value
.....................................
$748,355,213
$304,650,057
$153,969,295
Shares
outstanding
......................................
303,324,087
51,438,115
7,548,780
Net
asset
value
and
maximum
offering
price
per
share
...........
$2.47
$5.92
$20.40
Advisor
Class:
Net
assets,
at
value
.....................................
$11,969,690,900
$692,009,675
$1,200,858,938
Shares
outstanding
......................................
4,873,423,802
116,953,960
58,873,749
Net
asset
value
and
maximum
offering
price
per
share
...........
$2.46
$5.92
$20.40
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Operations
for
the
year
ended
September
30,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
111
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$806,432,
$4,514
and
$896,470,
respectively)
Unaffiliated
issuers
......................................
$53,217,105
$266,750
$156,632,277
Non-controlled
affiliates
(Note
3
f
and
11
)
......................
14,869
157
9,537
Interest:
Unaffiliated
issuers
......................................
861
—
—
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
...................
1,488,251
—
469,908
Non-controlled
affiliates
(Note
3
f
)
...........................
3,303
—
1,943
Total
investment
income
.................................
54,724,389
266,907
157,113,665
Expenses:
Management
fees
(Note
3
a
)
.................................
102,341,656
581,860
89,349,613
Distribution
fees:
(Note
3c
)
Class
A
..............................................
26,566,591
137,794
31,573,422
Class
C
..............................................
13,121,409
59,716
7,631,099
Class
R
..............................................
1,399,287
4,030
2,101,577
Transfer
agent
fees:
(Note
3e
)
Class
A
..............................................
11,295,453
85,998
13,444,332
Class
C
..............................................
1,393,451
9,953
815,331
Class
R
..............................................
297,707
1,261
449,539
Class
R6
.............................................
1,931,181
63
914,947
Advisor
Class
..........................................
4,038,836
35,342
4,200,501
Custodian
fees
(Note
4
)
....................................
405,549
1,172
157,624
Reports
to
shareholders
fees
................................
1,332,310
8,935
1,001,001
Registration
and
filing
fees
..................................
1,159,228
92,168
367,184
Professional
fees
.........................................
109,623
56,272
135,087
Trustees'
fees
and
expenses
................................
164,016
1,645
150,152
Amortization
of
offering
costs
(Note
1k)
........................
—
44,051
—
Other
..................................................
342,951
7,450
339,222
Total
expenses
.......................................
165,899,248
1,127,710
152,630,631
Expense
reductions
(Note
4
)
.............................
(28)
(3)
(51)
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
............
(293,643)
(216,761)
(160,006)
Net
expenses
.......................................
165,605,577
910,946
152,470,574
Net
investment
income
(loss)
..........................
(110,881,188)
(644,039)
4,643,091
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:*
Unaffiliated
issuers
....................................
374,439,822
421,837
2,255,989,584
Foreign
currency
transactions
..............................
(650,537)
(32)
(45,052)
Net
realized
gain
(loss)
................................
373,789,285
421,805
2,255,944,532
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
....................................
5,610,019,094
16,905,656
2,537,598,120
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
...........................................
(22,083)
—
(1,343)
Net
change
in
unrealized
appreciation
(depreciation)
..........
5,609,997,011
16,905,656
2,537,596,777
Net
realized
and
unrealized
gain
(loss)
..........................
5,983,786,296
17,327,461
4,793,541,309
Net
increase
(decrease)
in
net
assets
resulting
from
operations
........
$5,872,905,108
$16,683,422
$4,798,184,400
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
September
30,
2021
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
112
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$30,854,940,
$–
and
$1,890,348,
respectively)
Unaffiliated
issuers
......................................
$1,532,628,685
$—
$182,490,086
Non-controlled
affiliates
(Note
3
f
and
11
)
......................
10,646,236
9,922
661
Interest:
Unaffiliated
issuers:
Paydown
gain
(loss)
...................................
(11,158,523)
(68,302,798)
—
Paid
in
cash
a
.........................................
1,160,777,812
152,311,544
511,066
Non-controlled
affiliates
(Note
3
f
and
11
)
......................
1,830,781
—
—
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
...................
165,616
—
58
Non-controlled
affiliates
(Note
3
f
)
...........................
1,014
—
—
Other
income
(Note
1
i
)
.....................................
76,206,377
—
1,064,361
Total
investment
income
.................................
2,771,097,998
84,018,668
184,066,232
Expenses:
Management
fees
(Note
3
a
)
.................................
263,854,990
22,884,123
28,445,027
Distribution
fees:
(Note
3c
)
Class
A
..............................................
32,193,412
2,745,809
2,117,546
Class
A1
.............................................
53,392,881
3,632,258
5,219,528
Class
C
..............................................
60,871,606
1,992,708
3,254,463
Class
R
..............................................
1,226,252
115,554
419,264
Transfer
agent
fees:
(Note
3e
)
Class
A
..............................................
10,954,569
1,474,675
893,541
Class
A1
.............................................
30,443,811
3,371,122
3,654,241
Class
C
..............................................
8,033,304
411,111
523,388
Class
R
..............................................
210,301
31,427
88,680
Class
R6
.............................................
444,076
129,136
167,911
Advisor
Class
..........................................
9,532,471
1,058,961
1,300,749
Custodian
fees
(Note
4
)
....................................
540,734
31,959
62,532
Reports
to
shareholders
fees
................................
4,002,476
440,703
424,040
Registration
and
filing
fees
..................................
1,016,837
320,256
246,032
Professional
fees
.........................................
1,242,301
96,833
116,387
Trustees'
fees
and
expenses
................................
513,424
39,073
46,837
Other
..................................................
2,763,364
865,566
195,465
Total
expenses
.......................................
481,236,809
39,641,274
47,175,631
Expense
reductions
(Note
4
)
.............................
(365,146)
(17,782)
(14)
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
............
(1,433,790)
(191,512)
(130,776)
Net
expenses
.......................................
479,437,873
39,431,980
47,044,841
Net
investment
income
..............................
2,291,660,125
44,586,688
137,021,391
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
September
30,
2021
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
113
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
....................................
7,897,887,029
(37,616,745)
264,092,197
Non-controlled
affiliates
(Note
3
f
and
11
)
....................
136,369,389
—
—
Written
options
.........................................
244,136,155
—
—
Foreign
currency
transactions
..............................
(606,553)
—
31,213
Net
realized
gain
(loss)
................................
8,277,786,020
(37,616,745)
264,123,410
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
....................................
4,347,245,080
(55,832,649)
331,119,932
Non-controlled
affiliates
(Note
3
f
and
11
)
....................
121,873,996
—
—
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
...........................................
(2,838,246)
—
(51,116)
Written
options
.........................................
(12,542,094)
—
—
Net
change
in
unrealized
appreciation
(depreciation)
..........
4,453,738,736
(55,832,649)
331,068,816
Net
realized
and
unrealized
gain
(loss)
..........................
12,731,524,756
(93,449,394)
595,192,226
Net
increase
(decrease)
in
net
assets
resulting
from
operations
........
$
15,023,184,881
$(48,862,706)
$732,213,617
*Includes
gains
from
a
redemption
in-kind
(Note
13).
a
Includes
amortization
of
premium
and
accretion
of
discount.
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
114
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
(loss)
.......
$(110,881,188)
$(37,307,263)
$(644,039)
$(96,095)
Net
realized
gain
(loss)
............
373,789,285
(11,782,615)
421,805
616,957
Net
change
in
unrealized
appreciation
(depreciation)
.................
5,609,997,011
5,214,814,999
16,905,656
6,946,877
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
5,872,905,108
5,165,725,121
16,683,422
7,467,739
Distributions
to
shareholders:
Class
A
........................
—
(36,593,390)
(319,730)
—
Class
C
........................
—
(5,870,103)
(38,815)
—
Class
R
........................
—
(1,018,472)
(5,388)
—
Class
R6
.......................
—
(18,942,625)
(542)
—
Advisor
Class
...................
—
(9,227,766)
(143,074)
(271,450)
Total
distributions
to
shareholders
.....
—
(71,652,356)
(507,549)
(271,450)
Capital
share
transactions:
(Note
2
)
Class
A
........................
1,166,707,331
1,454,891,535
43,462,387
23,681,349
Class
C
........................
(76,438,621)
180,005,579
883,316
3,472,386
Class
R
........................
22,853,993
31,793,316
179,679
636,164
Class
R6
.......................
2,023,008,052
1,809,661,791
(6,601)
54,504
Advisor
Class
...................
546,990,073
971,781,641
3,763,971
8,733,501
Total
capital
share
transactions
.......
3,683,120,828
4,448,133,862
48,282,752
36,577,904
Net
increase
(decrease)
in
net
assets
.....................
9,556,025,936
9,542,206,627
64,458,625
43,774,193
Net
assets:
Beginning
of
year
..................
18,396,834,210
8,854,627,583
48,178,369
4,404,176
End
of
year
......................
$27,952,860,146
$18,396,834,210
$112,636,994
$48,178,369
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
115
Franklin
Growth
Fund
Franklin
Income
Fund
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$4,643,091
$60,448,577
$2,291,660,125
$2,517,733,786
Net
realized
gain
(loss)
............
2,255,944,532
1,577,883,876
8,277,786,020
(1,745,655,238)
Net
change
in
unrealized
appreciation
(depreciation)
.................
2,537,596,777
2,276,524,662
4,453,738,736
(4,183,159,000)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
4,798,184,400
3,914,857,115
15,023,184,881
(3,411,080,452)
Distributions
to
shareholders:
Class
A
........................
(914,505,600)
(533,975,512)
(592,401,375)
(456,846,261)
Class
A1
.......................
—
—
(1,711,720,100)
(1,983,784,425)
Class
C
........................
(64,091,884)
(41,241,305)
(403,199,100)
(576,464,046)
Class
R
........................
(32,805,859)
(23,492,106)
(11,176,955)
(12,776,908)
Class
R6
.......................
(241,399,632)
(159,258,755)
(54,960,003)
(102,305,422)
Advisor
Class
...................
(294,899,901)
(191,436,704)
(551,809,902)
(614,533,098)
Total
distributions
to
shareholders
.....
(1,547,702,876)
(949,404,382)
(3,325,267,435)
(3,746,710,160)
Capital
share
transactions:
(Note
2
)
Class
A
........................
(27,036,183)
97,946,521
4,037,666,517
3,477,926,943
Class
A1
.......................
—
—
(2,988,069,908)
(3,211,657,147)
Class
C
........................
(175,973,220)
(92,577,459)
(3,537,489,972)
(2,917,320,022)
Class
R
........................
(90,877,145)
(82,247,248)
(4,876,292)
(18,625,701)
Class
R6
.......................
(384,267,389)
(26,354,084)
(1,087,687,048)
(89,580,554)
Advisor
Class
...................
74,268,334
(172,809,996)
449,167,160
(943,560,671)
Total
capital
share
transactions
.......
(603,885,603)
(276,042,266)
(3,131,289,543)
(3,702,817,152)
Net
increase
(decrease)
in
net
assets
.....................
2,646,595,921
2,689,410,467
8,566,627,903
(10,860,607,764)
Net
assets:
Beginning
of
year
..................
18,686,254,441
15,996,843,974
63,665,293,827
74,525,901,591
End
of
year
......................
$21,332,850,362
$18,686,254,441
$72,231,921,730
$63,665,293,827
Franklin
Custodian
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
116
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Year
Ended
September
30,
2021
Year
Ended
September
30,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$44,586,688
$83,651,109
$137,021,391
$160,749,555
Net
realized
gain
(loss)
............
(37,616,745)
28,608,372
264,123,410
408,249,244
Net
change
in
unrealized
appreciation
(depreciation)
.................
(55,832,649)
36,591,677
331,068,816
(1,191,749,346)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(48,862,706)
148,851,158
732,213,617
(622,750,547)
Distributions
to
shareholders:
Class
A
........................
(23,887,218)
(18,115,363)
(73,915,473)
(25,093,089)
Class
A1
.......................
(56,617,836)
(74,781,123)
(326,246,620)
(156,995,208)
Class
C
........................
(5,344,917)
(8,281,370)
(47,366,175)
(25,054,946)
Class
R
........................
(439,687)
(763,817)
(7,457,012)
(3,626,631)
Class
R6
.......................
(8,320,373)
(9,736,779)
(14,174,816)
(7,024,821)
Advisor
Class
...................
(18,999,076)
(23,389,929)
(115,894,567)
(51,729,682)
Total
distributions
to
shareholders
.....
(113,609,107)
(135,068,381)
(585,054,663)
(269,524,377)
Capital
share
transactions:
(Note
2
)
Class
A
........................
(41,286,508)
763,086,030
231,006,447
305,811,426
Class
A1
.......................
(476,854,975)
(231,496,873)
(149,939,578)
(279,454,687)
Class
C
........................
(148,136,268)
(35,370,433)
(208,206,881)
(137,173,801)
Class
R
........................
(7,497,229)
(5,296,773)
(3,125,939)
(5,101,327)
Class
R6
.......................
(46,647,889)
(213,464,773)
6,307,964
16,015,666
Advisor
Class
...................
(25,201,526)
(208,817,347)
(6,498,496)
85,734,447
Total
capital
share
transactions
.......
(745,624,395)
68,639,831
(130,456,483)
(14,168,276)
Net
increase
(decrease)
in
net
assets
.....................
(908,096,208)
82,422,608
16,702,471
(906,443,200)
Net
assets:
Beginning
of
year
..................
5,246,465,163
5,164,042,555
6,075,690,917
6,982,134,117
End
of
year
......................
$4,338,368,955
$5,246,465,163
$6,092,393,388
$6,075,690,917
Franklin
Custodian
Funds
117
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
1.
Organization
and
Significant
Accounting
Policies
Franklin
Custodian
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of
six
separate
funds
(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.
Effective
August
2,
2021,
Class
C
shares
automatically
convert
to
Class
A
shares
on
a
monthly
basis,
after
they
have
been
held
for
8
years.
Prior
to
August
2,
2021,
Class
C
shares
converted
to
Class
A
shares
after
a
10-year
holding
period.
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
C,
Class
R,
Class
R6,
&
Advisor
Class
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Class
A,
Class
A1,
Class
C,
Class
R,
Class
R6,
&
Advisor
Class
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
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
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities
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.
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
Funds
primarily
employ
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
Franklin
Custodian
Funds
Notes
to
Financial
Statements
118
franklintempleton.com
Annual
Report
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.
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.
Events
can 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,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Funds'
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
September
30,
2021,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
inputs
within
the
fair
value
hierarchy
(referred
to
as
“market
level
fair
value”).
See
the
Fair
Value
Measurements
note
for
more
information.
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
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
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
119
franklintempleton.com
Annual
Report
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
September
30,
2021.
d.
Securities
Purchased
on
a
Delayed
Delivery
Basis
Certain
or
all
Funds
purchase
securities
on
a
delayed
delivery
basis,
with
payment
and
delivery
scheduled
for
a
future
date.
These
transactions
are
subject
to
market
fluctuations
and
are
subject
to
the
risk
that
the
value
at
delivery
may
be
more
or
less
than
the
trade
date
purchase
price.
Although
the
Funds
will
generally
purchase
these
securities
with
the
intention
of
holding
the
securities,
they
may
sell
the
securities
before
the
settlement
date.
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.
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
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
10
regarding
other
derivative
information.
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
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
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
c.
Joint
Repurchase
Agreement
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
120
franklintempleton.com
Annual
Report
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.
Any
cash
collateral
received
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
as
included
in
the
Statements
of
Assets
and
Liabilities.
Additionally,
at
September
30,
2021
the
Franklin
DynaTech
Fund
and
Franklin
Growth
Fund
held
$16,218,048
and
$8,780,892,
respectively,
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
collateral
in
segregated
accounts
with
the
Fund’s
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-
cash
collateral
is
excluded
from
the
Statements
of
Assets
and
Liabilities.
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
any
cash
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.
h.
Senior
Floating
Rate
Interests
Certain
or
all
Funds
invest
in
senior
secured
corporate
loans
that
pay
interest
at
rates
which
are
periodically
reset
by
reference
to
a
base
lending
rate
plus
a
spread.
These
base
lending
rates
are
generally
the
prime
rate
offered
by
a
designated
U.S.
bank
or
the
London
InterBank
Offered
Rate
(LIBOR).
Senior
secured
corporate
loans
often
require
prepayment
of
principal
from
excess
cash
flows
or
at
the
discretion
of
the
borrower.
As
a
result,
actual
maturity
may
be
substantially
less
than
the
stated
maturity.
Senior
secured
corporate
loans
in
which
the
Funds
invest
are
generally
readily
marketable,
but
may
be
subject
to
certain
restrictions
on
resale.
i.
Income
and
Deferred
Taxes
It
is each
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. Each
Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
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).
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
amount
of
foreign
taxes
Fund
shareholders
can
use
as
tax
deductions
or
credits
on
their
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
September
30,
2021, 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.
1.
Organization
and
Significant
Accounting
Policies
(continued)
g.
Securities
Lending
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
121
franklintempleton.com
Annual
Report
j.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Paydown
gains
and
losses
are
recorded
separately
on
the Statements
of
Operations.
Facility
fees
are
recognized
as
income
over
the
expected
term
of
the
loan.
Dividend
income
is
recorded
on
the
ex-
dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Funds.
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.
k.
Offering
Costs
Offering
costs
are
amortized
on
a
straight
line
basis
over
the
first
twelve
months
of
operations.
l.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
m.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Funds,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
September
30,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Funds'
shares
were
as
follows:
1.
Organization
and
Significant
Accounting
Policies
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
122
franklintempleton.com
Annual
Report
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Shares
Amount
Shares
Amount
Class
A
Class
A
Shares:
Year
ended
September
30,
2021
Shares
sold
a
...................................
22,450,304
$3,225,590,483
2,298,548
$66,948,165
Shares
issued
in
reinvestment
of
distributions
..........
—
—
11,547
311,678
Shares
redeemed
...............................
(14,413,505)
(2,058,883,152)
(832,827)
(23,797,456)
Net
increase
(decrease)
..........................
8,036,799
$1,166,707,331
1,477,268
$43,462,387
Year
ended
September
30,
2020
b
Shares
sold
a
...................................
28,364,638
$2,769,255,113
1,189,714
$26,508,969
Shares
issued
in
reinvestment
of
distributions
..........
402,761
34,512,576
—
—
Shares
redeemed
...............................
(14,031,050)
(1,348,876,154)
(120,097)
(2,827,620)
Net
increase
(decrease)
..........................
14,736,349
$1,454,891,535
1,069,617
$23,681,349
Class
C
Class
C
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
2,828,390
$329,663,898
181,084
$5,135,059
Shares
issued
in
reinvestment
of
distributions
..........
—
—
1,441
38,661
Shares
redeemed
a
..............................
(3,385,379)
(406,102,519)
(147,086)
(4,290,404)
Net
increase
(decrease)
..........................
(556,989)
$(76,438,621)
35,439
$883,316
Year
ended
September
30,
2020
b
Shares
sold
...................................
5,052,306
$403,013,647
166,260
$3,673,808
Shares
issued
in
reinvestment
of
distributions
..........
80,045
5,663,940
—
—
Shares
redeemed
a
..............................
(2,834,712)
(228,672,008)
(8,672)
(201,422)
Net
increase
(decrease)
..........................
2,297,639
$180,005,579
157,588
$3,472,386
Class
R
Class
R
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
616,643
$85,062,126
8,048
$254,410
Shares
issued
in
reinvestment
of
distributions
..........
—
—
198
5,336
Shares
redeemed
...............................
(446,989)
(62,208,133)
(2,717)
(80,067)
Net
increase
(decrease)
..........................
169,654
$22,853,993
5,529
$179,679
Year
ended
September
30,
2020
b
Shares
sold
...................................
796,616
$73,704,539
26,436
$655,110
Shares
issued
in
reinvestment
of
distributions
..........
12,155
1,008,426
—
—
Shares
redeemed
...............................
(463,145)
(42,919,649)
(775)
(18,946)
Net
increase
(decrease)
..........................
345,626
$31,793,316
25,661
$636,164
Class
R6
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
123
franklintempleton.com
Annual
Report
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Shares
Amount
Shares
Amount
Class
R6
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
25,514,587
$3,822,032,801
—
$—
Shares
issued
in
reinvestment
of
distributions
..........
—
—
18
490
Shares
redeemed
...............................
(11,892,075)
(1,799,024,749)
(248)
(7,091)
Net
increase
(decrease)
..........................
13,622,512
$2,023,008,052
(230)
$(6,601)
Year
ended
September
30,
2020
b
Shares
sold
...................................
26,515,105
$2,733,712,541
2,591
$54,504
Shares
issued
in
reinvestment
of
distributions
..........
210,608
18,853,620
—
—
Shares
redeemed
...............................
(9,539,958)
(942,904,370)
—
—
Net
increase
(decrease)
..........................
17,185,755
$1,809,661,791
2,591
$54,504
Advisor
Class
Advisor
Class
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
11,005,673
$1,635,552,794
914,232
$27,927,761
Shares
issued
in
reinvestment
of
distributions
..........
—
—
1,206
32,617
Shares
redeemed
...............................
(7,316,134)
(1,088,562,721)
(794,013)
(24,196,407)
Net
increase
(decrease)
..........................
3,689,539
$546,990,073
121,425
$3,763,971
Year
ended
September
30,
2020
Shares
sold
...................................
16,461,840
$1,663,036,037
422,071
$8,849,438
Shares
issued
in
reinvestment
of
distributions
..........
95,164
8,429,619
—
—
Shares
redeemed
...............................
(7,080,222)
(699,684,015)
(4,849)
(115,937)
Net
increase
(decrease)
..........................
9,476,782
$971,781,641
417,222
$8,733,501
Franklin
Growth
Fund
Franklin
Income
Fund
Shares
Amount
Shares
Amount
Class
A
Class
A
Shares:
Year
ended
September
30,
2021
Shares
sold
a
...................................
10,761,385
$1,530,421,261
2,486,746,513
$6,012,096,557
Shares
issued
in
reinvestment
of
distributions
..........
6,500,918
849,149,921
227,899,336
535,039,091
Shares
redeemed
...............................
(16,660,446)
(2,406,607,365)
(1,066,730,651)
(2,509,469,131)
Net
increase
(decrease)
..........................
601,857
$(27,036,183)
1,647,915,198
$4,037,666,517
Year
ended
September
30,
2020
Shares
sold
a
...................................
13,572,097
$1,499,164,158
2,231,805,325
$4,788,946,529
Shares
issued
in
reinvestment
of
distributions
..........
4,607,922
498,807,566
200,674,952
428,721,746
Shares
issued
on
reorganization
....................
681,606
54,922,873
—
—
Shares
redeemed
...............................
(17,479,810)
(1,954,948,076)
(820,875,107)
(1,739,741,332)
Net
increase
(decrease)
..........................
1,381,815
$97,946,521
1,611,605,170
$3,477,926,943
Class
A1
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
124
franklintempleton.com
Annual
Report
Franklin
Growth
Fund
Franklin
Income
Fund
Shares
Amount
Shares
Amount
Class
A1
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
—
$—
479,110,753
$1,144,654,736
Shares
issued
in
reinvestment
of
distributions
..........
—
—
670,125,547
1,566,412,599
Shares
redeemed
...............................
—
—
(2,421,276,941)
(5,699,137,243)
Net
increase
(decrease)
..........................
—
$—
(1,272,040,641)
$(2,988,069,908)
Year
ended
September
30,
2020
Shares
sold
...................................
—
$—
605,114,189
$1,309,458,300
Shares
issued
in
reinvestment
of
distributions
..........
—
—
841,814,378
1,814,735,049
Shares
redeemed
...............................
—
—
(2,964,479,957)
(6,335,850,496)
Net
increase
(decrease)
..........................
—
$—
(1,517,551,390)
$(3,211,657,147)
Class
C
Class
C
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
878,018
$110,767,406
369,536,736
$901,731,340
Shares
issued
in
reinvestment
of
distributions
..........
540,219
63,146,424
163,270,374
386,364,385
Shares
redeemed
a
..............................
(2,680,063)
(349,887,050)
(1,962,492,383)
(4,825,585,697)
Net
increase
(decrease)
..........................
(1,261,826)
$(175,973,220)
(1,429,685,273)
$(3,537,489,972)
Year
ended
September
30,
2020
Shares
sold
...................................
1,134,871
$114,930,143
480,482,839
$1,065,708,701
Shares
issued
in
reinvestment
of
distributions
..........
395,742
38,913,324
240,566,813
526,881,379
Shares
issued
on
reorganization
...................
131,927
9,642,973
—
—
Shares
redeemed
a
..............................
(2,489,823)
(256,063,899)
(2,081,765,774)
(4,509,910,102)
Net
increase
(decrease)
..........................
(827,283)
$(92,577,459)
(1,360,716,122)
$(2,917,320,022)
Class
R
Class
R
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
250,280
$35,061,835
21,710,983
$51,205,964
Shares
issued
in
reinvestment
of
distributions
..........
250,543
32,588,126
4,834,655
11,084,861
Shares
redeemed
...............................
(1,128,351)
(158,527,106)
(29,013,897)
(67,167,117)
Net
increase
(decrease)
..........................
(627,528)
$(90,877,145)
(2,468,259)
$(4,876,292)
Year
ended
September
30,
2020
Shares
sold
...................................
438,763
$49,058,513
25,335,822
$53,679,732
Shares
issued
in
reinvestment
of
distributions
..........
215,326
23,244,460
5,933,815
12,525,310
Shares
issued
on
reorganization
...................
1,379
110,728
—
—
Shares
redeemed
...............................
(1,382,098)
(154,660,949)
(40,320,807)
(84,830,743)
Net
increase
(decrease)
..........................
(726,630)
$(82,247,248)
(9,051,170)
$(18,625,701)
Class
R6
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
125
franklintempleton.com
Annual
Report
Franklin
Growth
Fund
Franklin
Income
Fund
Shares
Amount
Shares
Amount
Class
R6
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
3,272,102
$463,210,889
89,459,562
$211,443,897
Shares
issued
in
reinvestment
of
distributions
..........
1,693,859
221,624,576
21,206,893
47,792,309
Shares
redeemed
in-kind
(Note
13)
..................
(859,936)
(116,617,086)
—
—
Shares
redeemed
...............................
(6,691,054)
(952,485,768)
(593,615,276)
(1,346,923,254)
Net
increase
(decrease)
..........................
(2,585,029)
$(384,267,389)
(482,948,821)
$(1,087,687,048)
Year
ended
September
30,
2020
Shares
sold
...................................
5,630,222
$626,797,874
105,804,359
$227,268,477
Shares
issued
in
reinvestment
of
distributions
..........
1,355,970
146,824,455
44,557,746
95,237,499
Shares
issued
on
reorganization
...................
8,606
694,117
—
—
Shares
redeemed
...............................
(7,043,737)
(800,670,530)
(195,996,222)
(412,086,530)
Net
increase
(decrease)
..........................
(48,939)
$(26,354,084)
(45,634,117)
$(89,580,554)
Advisor
Class
Advisor
Class
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
6,084,784
$911,711,800
1,011,404,240
$2,393,159,824
Shares
issued
in
reinvestment
of
distributions
..........
1,944,250
254,677,320
215,574,797
501,000,847
Shares
redeemed
...............................
(7,510,655)
(1,092,120,786)
(1,052,411,881)
(2,444,993,511)
Net
increase
(decrease)
..........................
518,379
$74,268,334
174,567,156
$449,167,160
Year
ended
September
30,
2020
Shares
sold
...................................
5,569,885
$622,207,744
1,042,609,514
$2,237,381,151
Shares
issued
in
reinvestment
of
distributions
..........
1,537,666
166,713,686
258,698,629
552,732,715
Shares
issued
on
reorganization
...................
110,569
8,927,640
—
—
Shares
redeemed
...............................
(8,564,088)
(970,659,066)
(1,775,265,615)
(3,733,674,537)
Net
increase
(decrease)
..........................
(1,345,968)
$(172,809,996)
(473,957,472)
$(943,560,671)
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Shares
Amount
Shares
Amount
Class
A
Class
A
Shares:
Year
ended
September
30,
2021
Shares
sold
a
...................................
89,048,888
$536,625,922
22,811,120
$471,624,865
Shares
issued
in
reinvestment
of
distributions
..........
3,796,157
22,766,715
3,159,167
62,740,214
Shares
redeemed
...............................
(99,939,196)
(600,679,145)
(14,909,843)
(303,358,632)
Net
increase
(decrease)
..........................
(7,094,151)
$(41,286,508)
11,060,444
$231,006,447
Year
ended
September
30,
2020
Shares
sold
a
...................................
165,446,175
$1,011,564,347
26,610,660
$556,423,424
Shares
issued
in
reinvestment
of
distributions
..........
2,856,704
17,452,362
1,023,288
21,318,732
Shares
redeemed
...............................
(43,482,356)
(265,930,679)
(13,227,827)
(271,930,730)
Net
increase
(decrease)
..........................
124,820,523
$763,086,030
14,406,121
$305,811,426
Class
A1
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
126
franklintempleton.com
Annual
Report
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Shares
Amount
Shares
Amount
Class
A1
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
32,558,459
$196,137,703
6,411,233
$130,366,150
Shares
issued
in
reinvestment
of
distributions
..........
7,736,135
46,404,671
15,028,911
298,136,413
Shares
redeemed
...............................
(120,294,904)
(719,397,349)
(28,494,750)
(578,442,141)
Net
increase
(decrease)
..........................
(80,000,310)
$(476,854,975)
(7,054,606)
$(149,939,578)
Year
ended
September
30,
2020
Shares
sold
...................................
52,130,054
$317,814,590
8,112,628
$168,512,761
Shares
issued
in
reinvestment
of
distributions
..........
10,091,453
61,577,188
6,824,409
142,669,167
Shares
redeemed
...............................
(100,228,230)
(610,888,651)
(28,792,932)
(590,636,615)
Net
increase
(decrease)
..........................
(38,006,723)
$(231,496,873)
(13,855,895)
$(279,454,687)
Class
C
Class
C
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
12,752,895
$76,470,649
2,249,049
$45,668,999
Shares
issued
in
reinvestment
of
distributions
..........
876,685
5,224,662
2,345,268
46,172,729
Shares
redeemed
a
..............................
(38,672,490)
(229,831,579)
(14,504,035)
(300,048,609)
Net
increase
(decrease)
..........................
(25,042,910)
$(148,136,268)
(9,909,718)
$(208,206,881)
Year
ended
September
30,
2020
Shares
sold
...................................
29,895,894
$181,312,974
4,039,119
$84,267,016
Shares
issued
in
reinvestment
of
distributions
..........
1,257,443
7,616,309
1,125,133
23,428,018
Shares
redeemed
a
..............................
(37,031,228)
(224,299,716)
(12,031,826)
(244,868,835)
Net
increase
(decrease)
..........................
(5,877,891)
$(35,370,433)
(6,867,574)
$(137,173,801)
Class
R
Class
R
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
908,077
$5,471,084
938,885
$19,039,802
Shares
issued
in
reinvestment
of
distributions
..........
71,959
431,680
376,330
7,434,213
Shares
redeemed
...............................
(2,226,889)
(13,399,993)
(1,459,736)
(29,599,954)
Net
increase
(decrease)
..........................
(1,246,853)
$(7,497,229)
(144,521)
$(3,125,939)
Year
ended
September
30,
2020
Shares
sold
...................................
2,655,852
$16,194,708
1,826,488
$38,608,635
Shares
issued
in
reinvestment
of
distributions
..........
122,169
745,216
172,297
3,588,892
Shares
redeemed
...............................
(3,641,431)
(22,236,697)
(2,311,257)
(47,298,854)
Net
increase
(decrease)
..........................
(863,410)
$(5,296,773)
(312,472)
$(5,101,327)
Class
R6
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
127
franklintempleton.com
Annual
Report
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Shares
Amount
Shares
Amount
Class
R6
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
14,680,034
$88,831,810
2,602,530
$53,255,623
Shares
issued
in
reinvestment
of
distributions
..........
1,368,088
8,243,208
705,440
14,135,443
Shares
redeemed
...............................
(23,746,448)
(143,722,907)
(2,987,204)
(61,083,102)
Net
increase
(decrease)
..........................
(7,698,326)
$(46,647,889)
320,766
$6,307,964
Year
ended
September
30,
2020
Shares
sold
...................................
25,475,895
$156,361,081
4,191,939
$89,390,985
Shares
issued
in
reinvestment
of
distributions
..........
1,576,631
9,666,706
332,307
7,001,051
Shares
redeemed
...............................
(62,059,954)
(379,492,560)
(3,907,293)
(80,376,370)
Net
increase
(decrease)
..........................
(35,007,428)
$(213,464,773)
616,953
$16,015,666
Advisor
Class
Advisor
Class
Shares:
Year
ended
September
30,
2021
Shares
sold
...................................
100,843,441
$605,662,748
15,271,199
$312,500,667
Shares
issued
in
reinvestment
of
distributions
..........
2,890,966
17,388,910
5,397,482
108,098,490
Shares
redeemed
...............................
(108,356,509)
(648,253,184)
(20,941,268)
(427,097,653)
Net
increase
(decrease)
..........................
(4,622,102)
$(25,201,526)
(272,587)
$(6,498,496)
Year
ended
September
30,
2020
Shares
sold
...................................
88,283,587
$542,055,380
20,381,545
$427,808,668
Shares
issued
in
reinvestment
of
distributions
..........
3,609,760
22,075,398
2,288,051
48,162,900
Shares
redeemed
...............................
(125,578,345)
(772,948,125)
(19,091,448)
(390,237,121)
Net
increase
(decrease)
..........................
(33,684,998)
$(208,817,347)
3,578,148
$85,734,447
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
b
For
the
period
February
14,
2020
(effective
date)
to
September
30,
2020
for
Classes
A,
C,
R
and
R6
of
Franklin
Focused
Growth
Fund
.
Subsidiary
Affiliation
Franklin
Advisers,
Inc.
(Advisers)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(Distributors)
(formerly
Franklin
Templeton
Distributors,
Inc.)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
128
franklintempleton.com
Annual
Report
a.
Management
Fees
Franklin
Income
Fund
and
Franklin
Utilities
Fund
pay
an
investment
management
fee
to
Advisers
based
on
the
month-end
net
assets
of
each
of
the
Funds
as
follows:
Franklin
DynaTech
Fund,
Franklin
Growth
Fund
and
Franklin
U.S.
Government
Securities
Fund
pay
an
investment
management
fee
to
Advisers
based
on
the
month-end
net
assets
of
each
of
the
Funds
as
follows:
Franklin
Focused
Growth
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
$100
million
0.500%
Over
$100
million,
up
to
and
including
$250
million
0.450%
Over
$250
million,
up
to
and
including
$7.5
billion
0.440%
Over
$7.5
billion,
up
to
and
including
$10
billion
0.430%
Over
$10
billion,
up
to
and
including
$12.5
billion
0.420%
Over
$12.5
billion,
up
to
and
including
$15
billion
0.400%
Over
$15
billion,
up
to
and
including
$17.5
billion
0.380%
Over
$17.5
billion,
up
to
and
including
$20
billion
0.360%
Over
$20
billion,
up
to
and
including
$35
billion
0.355%
Over
$35
billion,
up
to
and
including
$50
billion
0.350%
Over
$50
billion,
up
to
and
including
$65
billion
0.345%
Over
$65
billion,
up
to
and
including
$80
billion
0.340%
In
excess
of
$80
billion
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
Annualized
Fee
Rate
Net
Assets
0.700%
Up
to
and
including
$500
million
0.600%
Over
$500
million,
up
to
and
including
$1
billion
0.550%
Over
$1
billion,
up
to
and
including
$3
billion
0.500%
Over
$3
billion,
up
to
and
including
$5
billion
0.450%
In
excess
of
$5
billion
3.
Transactions
with
Affiliates
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
129
franklintempleton.com
Annual
Report
For
the
year
ended
September
30,
2021,
each
Fund's
gross
effective
investment
management
fee
rate
based
on
average
daily
net
assets
was
as
follows:
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.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Gross
effective
investment
management
fee
rate
........
0.421%
0.700%
0.427%
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Gross
effective
investment
management
fee
rate
........
0.375%
0.453%
0.451%
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Reimbursement
Plans:
Class
A
...............................
0.25%
0.25%
0.25%
Compensation
Plans:
Class
C
...............................
1.00%
1.00%
1.00%
Class
R
...............................
0.50%
0.50%
0.50%
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
130
franklintempleton.com
Annual
Report
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:
e.
Transfer
Agent
Fees
Each
class
of
shares
pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
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
September
30,
2021,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Reimbursement
Plans:
Class
A
...............................
0.25%
0.25%
0.25%
Class
A1
..............................
0.15%
0.15%
0.15%
Compensation
Plans:
Class
C
...............................
0.65%
0.65%
0.65%
Class
R
...............................
0.50%
0.50%
0.50%
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..................
$4,722,568
$58,908
$1,652,974
CDSC
retained
...........................
$273,276
$4,914
$85,278
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..................
$2,346,316
$103,306
$121,724
CDSC
retained
...........................
$1,055,223
$329,207
$66,636
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Transfer
agent
fees
........................
$7,827,603
$108,896
$8,316,215
3.
Transactions
with
Affiliates
(continued)
c.
Distribution
Fees
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
131
franklintempleton.com
Annual
Report
f.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Funds
do
not
invest
for
purposes
of
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
September
30,
2021,
investments
in
affiliated
management
investment
companies
were
as
follows:
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Transfer
agent
fees
........................
$25,121,285
$3,084,677
$2,926,919
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Franklin
DynaTech
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$323,931,348
$3,339,598,035
$(3,267,399,229)
$—
$—
$396,130,154
396,130,154
$14,869
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
72,237,000
1,209,008,000
(1,236,568,000)
—
—
44,677,000
44,677,000
3,303
Total
Affiliated
Securities
...
$396,168,348
$4,548,606,035
$(4,503,967,229)
$—
$—
$440,807,154
$18,172
Franklin
Focused
Growth
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$2,346,648
$68,213,021
$(67,354,590)
$—
$—
$3,205,079
3,205,079
$157
Total
Affiliated
Securities
...
$2,346,648
$68,213,021
$(67,354,590)
$—
$—
$3,205,079
$157
Franklin
Growth
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$94,207,855
$2,254,437,241
$(2,206,646,554)
$—
$—
$141,998,542
141,998,542
$9,537
3.
Transactions
with
Affiliates
(continued)
e.
Transfer
Agent
Fees
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
132
franklintempleton.com
Annual
Report
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
Franklin
Growth
Fund
(continued)
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$46,871,000
$660,075,000
$(630,172,000)
$
—
$
—
$76,774,000
76,774,000
$1,943
Total
Affiliated
Securities
...
$141,078,855
$2,914,512,241
$(2,836,818,554)
$—
$—
$218,772,542
$11,480
Franklin
Income
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$639,000,040
$26,961,973,466
$(24,171,984,730)
$—
$—
$3,428,988,776
3,428,988,776
$95,328
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
23,122,000
445,429,000
(466,675,000)
—
—
1,876,000
1,876,000
1,014
Total
Affiliated
Securities
...
$662,122,040
$27,407,402,466
$(24,638,659,730)
$—
$—
$3,430,864,776
$96,342
Franklin
U.S.
Government
Securities
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$231,583,058
$1,056,430,107
$(1,202,305,119)
$—
$—
$85,708,046
85,708,046
$9,922
Total
Affiliated
Securities
...
$231,583,058
$1,056,430,107
$(1,202,305,119)
$—
$—
$85,708,046
$9,922
Franklin
Utilities
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0.01%
.
$5,118,759
$529,546,650
$(522,035,947)
$—
$—
$12,629,462
12,629,462
$661
Total
Affiliated
Securities
...
$5,118,759
$529,546,650
$(522,035,947)
$—
$—
$12,629,462
$661
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
133
franklintempleton.com
Annual
Report
g.
Waiver
and
Expense
Reimbursements
Advisers
has
contractually
agreed
in
advance
to
waive
or
limit
its
respective
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
Franklin
Focused
Growth
Fund
so
that
the
operating
expenses
(excluding
distribution
fees,
acquired
fund
fees
and
expenses
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
each
class
of
the
Fund
does
not
exceed
0.85%
based
on
the
average
net
assets
of
each
class
until
January
31,
2022.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund’s
fiscal
year
end.
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.03%
based
on
the
average
net
assets
of
the
class
until
January
31,
2022.
Prior
to
January
31,
2021,
for
Franklin
Income
Fund
the
Class
R6
transfer
agent
fees
were
limited
to
0.02%
based
on
the
average
net
assets
of
the
class.
h.
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
September
30,
2021,
were
as
follows:
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
September
30,
2021, 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
September
30,
2021,
the
capital
loss
carryforwards
were
as
follows:
During
the
year
ended
September
30,
2021,
the
following
Funds
utilized
capital
loss
carryforwards
as
follows:
Franklin
Income
Fund
Purchases
..............................
$199,582,086
Sales
..................................
—
Franklin
U.S.
Government
Securities
Fund
1
1
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
.............................
$
280,349,613
Long
term
.............................
410,781,366
Total
capital
loss
carryforwards
............
$691,130,979
Franklin
DynaTech
Fund
Franklin
Income
Fund
a
1
1
Capital
loss
utilized
carryforwards
.............
$10,904,697
$5,417,294,034
3.
Transactions
with
Affiliates
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
134
franklintempleton.com
Annual
Report
For
tax
purposes,
the
Funds
may
elect
to
defer
any
portion
of
a
post-October
capital
loss
or
late-year
ordinary
loss
to
the
first
day
of
the
following
fiscal
year.
At
September
30,
2021
the
deferred
losses
were
as
follows:
The
tax
character
of
distributions
paid
during
the
years
ended
September
30,
2021
and
2020,
was
as
follows:
At
September
30,
2021,
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
DynaTech
Fund
Franklin
Focused
Growth
Fund
1
1
1
Late-year
ordinary
loss
....................
$
88,558,636
$
559,
818
Post-October
capital
loss
..................
—
18,56
8
$88,558,636
$578,386
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
2021
2020
2021
2020
Distributions
paid
from:
Ordinary
income
........................
$—
$—
$169,579
$5,450
Long
term
capital
gain
....................
—
71,650,551
337,970
266,000
$—
$71,650,551
$507,549
$271,450
Franklin
Growth
Fund
Franklin
Income
Fund
2021
2020
2021
2020
Distributions
paid
from:
Ordinary
income
........................
$36,384,494
$78,550,080
$3,325,267,435
$3,746,710,160
Long
term
capital
gain
....................
1,511,318,382
870,854,302
—
—
$1,547,702,876
$949,404,382
$3,325,267,435
$3,746,710,160
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
2021
2020
2021
2020
Distributions
paid
from:
Ordinary
income
........................
$113,609,107
$135,068,381
$162,038,791
$171,087,874
Long
term
capital
gain
....................
—
—
423,015,872
98,436,503
$113,609,107
$135,068,381
$585,054,663
$269,524,377
5.
Income
Taxes
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
135
franklintempleton.com
Annual
Report
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,
EU
reclaims,
passive
foreign
investment
company
shares,
paydown
losses,
bond
discounts
and
premiums,
corporate
actions,
equity-linked
securities,
wash
sales
and
gains
realized
on
in-kind
shareholder
redemptions.
The
Funds,
except
for
Franklin
Income
Fund
and
Franklin
U.S.
Government
Securities
Fund
utilized
a
tax
accounting
practice
to
treat
a
portion
of
the
proceeds
from
capital
shares
redeemed
as
a
distribution
from
net
investment
income
and
realized
capital
gains.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities
and
in-kind
transactions)
for
the
year
ended
September
30,
2021,
were
as
follows:
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
a
a
a
a
Cost
of
investments
.......................
$13,587,989,617
$86,643,358
$6,113,868,433
Unrealized
appreciation
.....................
$14,450,392,955
$26,563,554
$15,431,870,276
Unrealized
depreciation
.....................
(39,751,249)
(1,189,718)
(110,178,978)
Net
unrealized
appreciation
(depreciation)
.......
$14,410,641,706
$25,373,836
$15,321,691,298
Distributable
earnings:
Undistributed
ordinary
income
................
$—
$—
$9,276,364
Undistributed
long
term
capital
gains
...........
330,182,220
512,951
1,809,125,540
Total
distributable
earnings
..................
$330,182,220
$512,951
$1,818,401,904
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
a
a
a
a
Cost
of
investments
.......................
$69,310,225,751
$4,272,860,261
$3,128,766,904
Unrealized
appreciation
.....................
$4,908,452,305
$104,729,929
$2,992,117,132
Unrealized
depreciation
.....................
(2,417,177,293)
(15,481,035)
(39,274,920)
Net
unrealized
appreciation
(depreciation)
.......
$2,491,275,012
$89,248,894
$2,952,842,212
Distributable
earnings:
Undistributed
ordinary
income
................
$517,308,778
$493,188
$19,611,266
Undistributed
long
term
capital
gains
...........
1,062,281,571
—
149,160,504
Total
distributable
earnings
..................
$1,579,590,349
$493,188
$168,771,770
Franklin
DynaTech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Purchases
..............................
$7,794,637,709
$64,199,785
$1,242,186,336
Sales
..................................
$4,447,389,136
$18,092,454
$3,272,078,838
a
5.
Income
Taxes
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
136
franklintempleton.com
Annual
Report
At
September
30,
2021,
in
connection
with
securities
lending
transactions,
certain
or
all
Funds
loaned
investments
and
received
cash
collateral
as
follows:
7.
Credit Risk
At
September
30,
2021,
Franklin
Income
Fund
had
18.7%
of
its
portfolio
invested
in
high
yield
securities,
senior
secured
floating
rate
loans,
or
other
securities
rated
below
investment
grade
and
unrated
securities.
These
securities
may
be
more
sensitive
to
economic
conditions
causing
greater
price
volatility
and
are
potentially
subject
to
a
greater
risk
of
loss
due
to
default
than
higher
rated
securities.
8.
Novel
Coronavirus
Pandemic
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the
Funds, their ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and their ability
to
achieve their investment
objectives.
9.
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
September
30,
2021,
investments
in
restricted
securities,
excluding
securities
exempt
from
registration
under
the
1933
Act,
were
as
follows:
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Purchases
..............................
$46,783,532,916
$4,296,318,465
$320,925,645
Sales
..................................
$52,433,015,994
$4,927,022,926
$869,027,587
a
Sales
of
investments
excludes
in-kind
transactions
of
$115,808,692.
Franklin
DynaTech
Fund
Franklin
Growth
Fund
Franklin
Income
Fund
Securities
lending
transactions
a
:
Equity
investments
b
........................
$83,964,779
$95,948,763
$2,345,689
a
The
agreements
can
be
terminated
at
any
time..
b
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Statements
of
Assets
and
Liabilities..
Shares
Issuer
Acquisition
Date
Cost
Value
Franklin
Growth
Fund
822,494
Gusto,
Inc.,
E
...............................
7/13/21
$
24,999,977
$
28,554,628
849,894
OneTrust
LLC,
C
............................
4/01/21
16,666,676
20,099,993
6.
Investment
Transactions
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
137
franklintempleton.com
Annual
Report
10.
Other
Derivative
Information
At
September
30,
2021,
investments
in
derivative
contracts
are
reflected
in
the
Statements
of
Assets
and
Liabilities
as
follows:
For
the
year
ended
September
30,
2021,
the
effect
of
derivative
contracts
in
the
Statements
of
Operations
was
as
follows:
For
the
year
ended
September
30,
2021,
the
average
month
end
notional
amount
of
options
represented
28,966,062
shares.
See
Note
1(e)
regarding
derivative
financial
instruments.
11.
Holdings
of
5%
Voting
Securities
of
Portfolio
Companies
The
1940
Act
defines
"affiliated
companies"
to
include
investments
in
portfolio
companies
in
which
a
fund
owns
5%
or
more
of
the
outstanding
voting
securities.
Additionally,
as
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
companies’
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
company.
During
the
year
ended
September
30,
2021,
investments
in
“affiliated
companies”
were
as
follows:
Shares
Issuer
Acquisition
Date
Cost
Value
Franklin
Growth
Fund
(continued)
540,043
Stripe,
Inc.,
B
...............................
5/18/21
$
21,671,052
$
23,032,834
756,137
Stripe,
Inc.,
H
...............................
3/15/21
30,339,997
32,249,243
Total
Restricted
Securities
(Value
is
0.5%
of
Net
Assets)
..............
$93,677,702
$103,936,698
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Franklin
Income
Fund
Equity
contracts
...........
Investments
in
securities,
at
value
$
—
Options
written,
at
value
$
48,500,500
Total
....................
$—
$48,500,500
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Franklin
Income
Fund
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Equity
Contracts
..............
Written
options
$244,136,155
Written
options
$(12,542,094)
Total
.......................
$244,136,155
$(12,542,094)
6.
Investment
Transactions
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
138
franklintempleton.com
Annual
Report
12.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
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
September
30,
2021,
the
Funds
did
not
use
the
Global
Credit
Facility.
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares/Principal
Amount
Held
at
End
of
Year
Investment
Income
Franklin
Income
Fund
Non-Controlled
Affiliates
Dividends
Bonanza
Creek
Energy,
Inc.
............
$
—
$
172,109,284
$
(46,984,534)
$
3,055,250
$
34,680,000
$
162,860,000
3,400,000
$
2,678,690
Chesapeake
Energy
Corp.
—
498,432,872
a
(442,140,279)
182,255,608
69,401,799
307,950,000
5,000,000
6,008,537
Chesapeake
Energy
Corp.,
2/09/26
..........
—
730,829,175
a
(57,703,882)
(17,961,556)
(263,830,237)
391,333,500
12,050,000
—
Chesapeake
Energy
Corp.,
Escrow
Account,
144A
—
50,000,000
a
(26,731,250)
1,731,250
1,742,500
26,742,500
25,000,000
1,863,681
CHS/Community
Health
Systems,
Inc.
......
—
104,604,374
a
—
—
12,395,626
117,000,000
10,000,000
—
Weatherford
International
plc
.............
28,665,000
—
(30,456,816)
(32,903,179)
267,194,395
232,499,400
11,820,000
—
$28,665,000
$1,555,975,705
$(604,016,761)
$
136,177,373
$
121,584,083
$1,238,385,400
—
$
10,550,908
Interest
Bonanza
Creek
Energy,
Inc.,
Senior
Note,
7.5%,
4/30/26
..........
—
50,171,367
(17,650,000)
192,016
289,913
33,003,296
32,713,617
1,830,781
Total
Affiliated
Securities
(Value
is
1.8%
of
Net
Assets)
..........
$28,665,000
$1,606,147,072
$(621,666,761)
$
136,369,389
$
121,873,996
$1,271,388,696
$12,381,689
a
May
include
accretion,
amortization,
partnership
adjustments,
and/or
corporate
actions.
11.
Holdings
of
5%
Voting
Securities
of
Portfolio
Companies
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
139
franklintempleton.com
Annual
Report
13.
Redemption
In-Kind
During
the
year
ended
September
30,
2021,
the
Franklin
Growth
Fund
realized
$80,827,002
of
net
gains
resulting
from
redemptions
in-kind
in
which
a
shareholder
redeemed
fund
shares
for
cash
and
securities
held
by
the
Fund.
Because
such
gains
are
not
taxable
to
the
Fund,
and
are
not
distributed
to
remaining
shareholders,
they
are
reclassified
from
accumulated
net
realized
gains
to
paid-in
capital.
14.
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.
A
summary
of
inputs
used
as
of
September
30,
2021,
in
valuing
the
Funds'
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Franklin
DynaTech
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
$
135,622,950
$
—
$
—
$
135,622,950
Automobiles
..........................
465,288,000
—
—
465,288,000
Banks
...............................
97,032,000
—
—
97,032,000
Biotechnology
.........................
469,172,814
90,650,969
—
559,823,783
Capital
Markets
........................
612,653,000
—
—
612,653,000
Chemicals
...........................
—
56,868,604
—
56,868,604
Diversified
Consumer
Services
............
64,880,044
—
—
64,880,044
Electric
Utilities
........................
176,670,000
—
—
176,670,000
Electronic
Equipment,
Instruments
&
Components
........................
223,818,000
104,452,446
—
328,270,446
Entertainment
.........................
1,094,088,000
—
—
1,094,088,000
Equity
Real
Estate
Investment
Trusts
(REITs)
.
218,888,000
—
—
218,888,000
Health
Care
Equipment
&
Supplies
.........
1,843,374,550
—
—
1,843,374,550
Health
Care
Providers
&
Services
..........
166,515,500
—
—
166,515,500
Health
Care
Technology
.................
493,960,500
—
—
493,960,500
Hotels,
Restaurants
&
Leisure
.............
202,568,500
—
—
202,568,500
Industrial
Conglomerates
................
89,226,000
—
—
89,226,000
Interactive
Media
&
Services
..............
2,158,688,472
315,629,566
—
2,474,318,038
Internet
&
Direct
Marketing
Retail
..........
2,506,573,432
103,026,257
—
2,609,599,689
IT
Services
...........................
3,444,990,214
611,152,078
—
4,056,142,292
Life
Sciences
Tools
&
Services
............
1,404,222,000
456,938,729
—
1,861,160,729
Media
...............................
235,396,500
—
—
235,396,500
Pharmaceuticals
.......................
296,675,000
—
—
296,675,000
Professional
Services
...................
129,090,000
—
—
129,090,000
Semiconductors
&
Semiconductor
Equipment
.
2,469,693,150
—
—
2,469,693,150
Software
.............................
6,323,736,059
—
—
6,323,736,059
Franklin
Custodian
Funds
Notes
to
Financial
Statements
140
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
DynaTech
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Specialty
Retail
........................
$
200,131,850
$
—
$
—
$
200,131,850
Technology
Hardware,
Storage
&
Peripherals
.
226,400,000
—
—
226,400,000
Short
Term
Investments
...................
440,807,154
69,750,985
—
510,558,139
Total
Investments
in
Securities
...........
$26,190,161,689
$1,808,469,634
a
$—
$27,998,631,323
Franklin
Focused
Growth
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
1,118,203
—
—
1,118,203
Automobiles
..........................
3,312,851
—
—
3,312,851
Capital
Markets
........................
1,952,771
—
—
1,952,771
Electric
Utilities
........................
2,198,717
—
—
2,198,717
Entertainment
.........................
4,698,706
—
—
4,698,706
Equity
Real
Estate
Investment
Trusts
(REITs)
.
1,045,923
—
—
1,045,923
Food
&
Staples
Retailing
.................
2,167,215
—
—
2,167,215
Health
Care
Equipment
&
Supplies
.........
11,129,483
—
—
11,129,483
Health
Care
Technology
.................
2,311,123
—
—
2,311,123
Interactive
Media
&
Services
..............
7,272,092
1,193,609
—
8,465,701
Internet
&
Direct
Marketing
Retail
..........
12,480,539
—
—
12,480,539
IT
Services
...........................
14,738,038
3,812,712
—
18,550,750
Life
Sciences
Tools
&
Services
............
1,246,703
1,845,063
—
3,091,766
Media
...............................
2,302,000
—
—
2,302,000
Personal
Products
.....................
1,101,043
—
—
1,101,043
Semiconductors
&
Semiconductor
Equipment
.
11,936,741
—
—
11,936,741
Software
.............................
20,948,583
—
—
20,948,583
Short
Term
Investments
...................
3,205,079
—
—
3,205,079
Total
Investments
in
Securities
...........
$105,165,810
$6,851,384
b
$—
$112,017,194
Franklin
Growth
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
746,657,395
—
—
746,657,395
Auto
Components
......................
90,465,161
—
—
90,465,161
Automobiles
..........................
102,545,479
—
—
102,545,479
Beverages
...........................
557,066,842
—
—
557,066,842
Biotechnology
.........................
406,125,973
—
—
406,125,973
Building
Products
......................
277,905,475
—
—
277,905,475
Capital
Markets
........................
725,851,801
—
—
725,851,801
Chemicals
...........................
467,257,000
—
—
467,257,000
Commercial
Services
&
Supplies
...........
76,901,792
—
—
76,901,792
Construction
Materials
..................
106,733,315
—
—
106,733,315
Electric
Utilities
........................
158,611,028
—
—
158,611,028
Electrical
Equipment
....................
85,413,004
—
—
85,413,004
Electronic
Equipment,
Instruments
&
Components
........................
626,825,834
—
—
626,825,834
Entertainment
.........................
271,206,915
—
—
271,206,915
Equity
Real
Estate
Investment
Trusts
(REITs)
.
195,105,457
—
—
195,105,457
Food
Products
........................
33,110,281
—
—
33,110,281
Health
Care
Equipment
&
Supplies
.........
1,335,324,371
—
—
1,335,324,371
Health
Care
Providers
&
Services
..........
187,345,901
—
—
187,345,901
Health
Care
Technology
.................
81,088,955
—
—
81,088,955
Hotels,
Restaurants
&
Leisure
.............
182,112,676
—
—
182,112,676
14.
Fair
Value
Measurements
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
141
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Growth
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Interactive
Media
&
Services
..............
$
1,203,024,256
$
—
$
—
$
1,203,024,256
Internet
&
Direct
Marketing
Retail
..........
1,012,576,248
—
—
1,012,576,248
IT
Services
...........................
1,324,542,141
166,582,516
—
1,491,124,657
Life
Sciences
Tools
&
Services
............
970,634,869
151,938,900
—
1,122,573,769
Machinery
............................
827,682,622
—
—
827,682,622
Media
...............................
130,896,616
—
—
130,896,616
Personal
Products
.....................
55,537,438
—
—
55,537,438
Pharmaceuticals
.......................
977,653,875
—
—
977,653,875
Professional
Services
...................
452,634,818
—
—
452,634,818
Road
&
Rail
..........................
609,706,473
—
—
609,706,473
Semiconductors
&
Semiconductor
Equipment
.
1,353,870,390
—
—
1,353,870,390
Software
.............................
3,624,191,604
—
23,032,834
3,647,224,438
Specialty
Retail
........................
8,866,550
—
—
8,866,550
Technology
Hardware,
Storage
&
Peripherals
.
981,338,441
—
—
981,338,441
Textiles,
Apparel
&
Luxury
Goods
..........
272,302,910
—
—
272,302,910
Trading
Companies
&
Distributors
..........
139,612,585
—
—
139,612,585
Water
Utilities
.........................
116,427,821
—
—
116,427,821
Convertible
Preferred
Stocks
...............
—
—
80,903,864
80,903,864
Short
Term
Investments
...................
218,772,542
19,174,763
—
237,947,305
Total
Investments
in
Securities
...........
$20,993,926,854
$337,696,179
c
$103,936,698
$21,435,559,731
Franklin
Income
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
1,117,152,918
—
—
1,117,152,918
Banks
...............................
2,500,630,500
406,511,444
—
2,907,141,944
Beverages
...........................
1,539,115,041
—
—
1,539,115,041
Biotechnology
.........................
1,396,130,000
—
—
1,396,130,000
Capital
Markets
........................
78,821,100
—
—
78,821,100
Chemicals
...........................
294,526,500
454,842,023
—
749,368,523
Communications
Equipment
..............
707,590,000
—
—
707,590,000
Diversified
Telecommunication
Services
.....
2,421,514,488
—
—
2,421,514,488
Electric
Utilities
........................
3,880,340,000
—
—
3,880,340,000
Energy
Equipment
&
Services
.............
318,979,400
—
—
318,979,400
Food
&
Staples
Retailing
.................
278,829,690
—
—
278,829,690
Health
Care
Providers
&
Services
..........
354,608,000
—
—
354,608,000
Health
Care
Technology
.................
24,772,000
—
—
24,772,000
Household
Products
....................
838,800,000
—
—
838,800,000
Independent
Power
and
Renewable
Electricity
Producers
..........................
171,000,000
—
—
171,000,000
Industrial
Conglomerates
................
263,130,000
—
—
263,130,000
Insurance
............................
216,055,000
—
—
216,055,000
IT
Services
...........................
660,150,000
—
—
660,150,000
Metals
&
Mining
.......................
113,855,000
—
—
113,855,000
Multi-Utilities
..........................
2,177,840,541
—
—
2,177,840,541
Oil,
Gas
&
Consumable
Fuels
.............
3,470,235,338
—
—
3,470,235,338
Personal
Products
.....................
—
541,323,408
—
541,323,408
Pharmaceuticals
.......................
4,446,768,898
271,365,801
—
4,718,134,699
Road
&
Rail
..........................
196,010,000
—
—
196,010,000
Semiconductors
&
Semiconductor
Equipment
.
473,138,784
—
—
473,138,784
Specialty
Retail
........................
328,260,000
—
—
328,260,000
Tobacco
.............................
1,014,137,141
104,851,925
—
1,118,989,066
14.
Fair
Value
Measurements
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
142
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Income
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Wireless
Telecommunication
Services
.......
$
—
$
266,266,461
$
—
$
266,266,461
Equity-Linked
Securities
...................
—
12,897,953,865
—
12,897,953,865
Convertible
Preferred
Stocks
:
Capital
Markets
........................
106,663,500
—
—
106,663,500
Electric
Utilities
........................
1,262,514,500
—
—
1,262,514,500
Machinery
............................
22,294,000
—
—
22,294,000
Multi-Utilities
..........................
580,317,650
—
—
580,317,650
Thrifts
&
Mortgage
Finance
...............
—
34,637,500
—
34,637,500
Preferred
Stocks
........................
24,740,000
—
—
24,740,000
Warrants
..............................
391,333,500
—
—
391,333,500
Convertible
Bonds
.......................
—
83,140,625
—
83,140,625
Corporate
Bonds
........................
—
16,720,012,896
—
16,720,012,896
Senior
Floating
Rate
Interests
...............
—
112,849,534
—
112,849,534
U.S.
Government
and
Agency
Securities
.......
—
4,727,041,020
—
4,727,041,020
Asset-Backed
Securities
..................
—
57,187,578
—
57,187,578
Mortgage-Backed
Securities
................
—
43,686,728
—
43,686,728
Escrows
and
Litigation
Trusts
...............
—
26,742,500
—
26,742,500
Short
Term
Investments
...................
3,430,864,776
469,689
—
3,431,334,465
Total
Investments
in
Securities
...........
$35,101,118,265
$36,748,882,997
d
$—
$71,850,001,262
Liabilities:
Other
Financial
Instruments:
Options
written
..........................
$
48,500,500
$
—
$
—
$
48,500,500
Franklin
U.S.
Government
Securities
Fund
Assets:
Investments
in
Securities:
e
U.S.
Government
and
Agency
Securities
.......
—
20,471,055
—
20,471,055
Mortgage-Backed
Securities
................
—
4,255,930,054
—
4,255,930,054
Short
Term
Investments
...................
85,708,046
—
—
85,708,046
Total
Investments
in
Securities
...........
$85,708,046
$4,276,401,109
$—
$4,362,109,155
Franklin
Utilities
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Diversified
Telecommunication
Services
.....
—
65,927,300
—
65,927,300
Electric
Utilities
........................
3,544,633,423
23,475,270
—
3,568,108,693
Gas
Utilities
..........................
143,422,000
—
—
143,422,000
Independent
Power
and
Renewable
Electricity
Producers
..........................
65,904,000
—
—
65,904,000
Multi-Utilities
..........................
1,806,766,755
175,375,737
—
1,982,142,492
Oil,
Gas
&
Consumable
Fuels
.............
132,959,000
—
—
132,959,000
Water
Utilities
.........................
78,336,000
26,027,806
—
104,363,806
Corporate
Bonds
........................
—
6,152,363
—
6,152,363
Short
Term
Investments
...................
12,629,462
—
—
12,629,462
Total
Investments
in
Securities
...........
$5,784,650,640
$296,958,476
f
$—
$6,081,609,116
a
Includes
foreign
securities
valued
at
$1,738,718,649,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
b
Includes
foreign
securities
valued
at
$6,851,384,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
c
Includes
foreign
securities
valued
at
$318,521,416,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
14.
Fair
Value
Measurements
(continued)
Franklin
Custodian
Funds
Notes
to
Financial
Statements
143
franklintempleton.com
Annual
Report
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
beginning
and/or
end
of
the year.
15.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2020-04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
In
January
2021,
the
FASB
issued
ASU
No.
2021-01,
with
further
amendments
to
Topic
848.
The
amendments
in
the
ASUs
provide
optional
temporary
accounting
recognition
and financial
reporting
relief
from
the
effect
of
certain
types
of
contract
modifications
due
to
the
planned
discontinuation
of
the
London
Interbank
Offered
Rate
(LIBOR)
and
other
interbank-offered
based
reference
rates
as
of
the
end
of
2021
for
certain
LIBOR
settings
and
2023
for
the
remainder. The
ASUs
are
effective
for
certain
reference
rate-related
contract
modifications
that
occur
during
the
period
March
12,
2020
through
December
31,
2022.
Management
has
reviewed
the
requirements
and
believes
the
adoption
of
these
ASUs
will
not
have
a
material
impact
on
the
financial
statements.
16.
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
d
Includes
foreign
securities
valued
at
$2,045,161,062,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
e
For
detailed
categories,
see
the
accompanying
Statement
of
Investments.
f
Includes
foreign
securities
valued
at
$224,878,813,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
Selected
Portfolio
ADR
American
Depositary
Receipt
FHLMC
Federal
Home
Loan
Mortgage
Corp.
FNMA
Federal
National
Mortgage
Association
FRN
Floating
Rate
Note
GNMA
Government
National
Mortgage
Association
LIBOR
London
Inter-Bank
Offered
Rate
NYRS
New
York
Registry
Shares
14.
Fair
Value
Measurements
(continued)
Franklin
Custodian
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
144
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Franklin
Custodian
Funds
and
Shareholders
of
Franklin
DynaTech
Fund,
Franklin
Focused
Growth
Fund,
Franklin
Growth
Fund,
Franklin
Income
Fund,
Franklin
U.S.
Government
Securities
Fund,
and
Franklin
Utilities
Fund
Opinions
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities,
including
the
statements
of
investments,
of
Franklin
DynaTech
Fund,
Franklin
Focused
Growth
Fund,
Franklin
Growth
Fund,
Franklin
Income
Fund,
Franklin
U.S.
Government
Securities
Fund,
and
Franklin
Utilities
Fund
(constituting
Franklin
Custodian
Funds,
hereafter
collectively
referred
to
as
the
"Funds")
as
of
September
30,
2021,
the
related
statements
of
operations
for
the
year
ended
September
30,
2021,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
September
30,
2021,
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
September
30,
2021,
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
September
30,
2021
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
September
30,
2021
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
November
16,
2021
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Franklin
Custodian
Funds
Tax
Information
(unaudited)
145
franklintempleton.com
Annual
Report
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Funds
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Funds
hereby
report
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
September
30,
2021:
Note
(1)
-
The
Law
varies
in
each
state
as
to
whether
and
what
percentage
of
dividend
income
attributable
to
Federal
obligations
is
exempt
from
state
income
tax.
Shareholders
are
advised
to
consult
with
their
tax
advisors
to
determine
if
any
portion
of
the
dividends
received
is
exempt
from
state
income
taxes.
Pursuant
to:
Franklin
Dynatech
Fund
Franklin
Focused
Growth
Fund
Franklin
Growth
Fund
Long-Term
Capital
Gain
Dividends
§852(b)(3)(C)
$7,390,211
$346,465
$1,651,833,874
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$38,150,782
$213,592
$132,422,884
Qualified
Dividend
Income
(QDI)
§854(b)(1)(B)
$46,970,012
$237,119
$150,881,480
Short-Term
Capital
Gain
Dividends
§871(k)(2)(C)
$
—
$169,579
$812,339
Pursuant
to:
Franklin
Income
Fund
Franklin
U.S.
Government
Securities
Fund
Franklin
Utilities
Fund
Long-Term
Capital
Gain
Dividends
§852(b)(3)(C)
$
—
$
—
$439,292,990
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$1,202,954,607
$
—
$166,181,552
Qualified
Dividend
Income
(QDI)
§854(b)(1)(B)
$1,439,454,573
$
—
$184,380,435
Interest-Related
Dividends
§871(k)(1)(C)
$1,839,135,153
$113,821,660
$
—
Short-Term
Capital
Gain
Dividends
§871(k)(2)(C)
$
—
$
—
$13,080,933
Interest
from
Federal
Obligations
Note
(1)
$
29,839,899
$
688,750
$
—
Franklin
Custodian
Funds
Board
Members
and
Officers
146
franklintempleton.com
Annual
Report
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
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)
Trustee
Since
1976
122
Bar-S
Foods
(meat
packing
company)
(1981-2010).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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)
Trustee
Since
2017
104
Hess
Corporation
(exploration
of
oil
and
gas)
(2014-present).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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);
member
of
the
board
of
directors
of
Council
of
the
Americas
(2007-present)
and
the
Tallberg
Foundation
(2018-present);
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)
Trustee
Since
2014
123
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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).
Franklin
Custodian
Funds
147
franklintempleton.com
Annual
Report
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
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
1998
and
Lead
Independent
Trustee
since
2019
123
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-April
2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-May
2021),RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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)
Trustee
Since
2009
123
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Private
investor;
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(May
2019-January
1,
2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
Larry
D.
Thompson
(1945)
Trustee
Since
2007
123
Formerly,
Graham
Holdings
Company
(education
and
media
organization)
(2011-May
2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-2012).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
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).
Independent
Board
Members
(continued)
Franklin
Custodian
Funds
148
franklintempleton.com
Annual
Report
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
Valerie
M.
Williams
(1956)
Trustee
Since
May
2021
104
Omnicom
Group,
Inc.
(advertising
and
marketing
communications
services)
(2016-present),
DTE
Energy
Co.
(gas
and
electric
utility)
(2018-present),
Devon
Energy
Corporation
(exploration
and
production
of
oil
and
gas)
(January
2021-present);
and
formerly
,
WPX
Energy,
Inc.
(exploration
and
production
of
oil
and
gas)
(2018-January
2021).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Regional
Assurance
Managing
Partner,
Ernst
&
Young
LLP
(public
accounting)
(2005-2016),
various
roles
of
increasing
responsibility
at
Ernst
&
Young
(1981-2005).
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)
Trustee
Since
2013
134
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
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
39
of
the
investment
companies
in
Franklin
Templeton;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015),
Franklin
Resources,
Inc.
**Rupert
H.
Johnson,
Jr.
(1940)
Chairman
of
the
Board,
Trustee
and
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1983
and
Vice
President
since
1982
123
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
37
of
the
investment
companies
in
Franklin
Templeton.
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
44
of
the
investment
companies
in
Franklin
Templeton.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
39
of
the
investment
companies
in
Franklin
Templeton.
Independent
Board
Members
(continued)
Franklin
Custodian
Funds
149
franklintempleton.com
Annual
Report
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
Steven
J.
Gray
(1955)
Vice
President
and
Co-Secretary
Vice
President
since
2009
and
Co-Secretary
since
2019
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Vice
President,
FASA,
LLC;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
July
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Global
Compliance,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
41
of
the
investment
companies
in
Franklin
Templeton
Edward
D.
Perks
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2018
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Franklin
Advisers,
Inc.;
and
officer
of
eight
of
the
investment
companies
in
Franklin
Templeton
(since
December
2018).
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Associate
General
Counsel
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Craig
S.
Tyle
(1960)
Vice
President
Since
2005
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
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.
Lori
A.
Weber
(1964)
Vice
President
and
Co-Secretary
Vice
President
since
2011
and
Co-Secretary
since
2019
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
44
of
the
investment
companies
in
Franklin
Templeton.
Interested
Board
Members
and
Officers
(continued)
Franklin
Custodian
Funds
150
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton
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
Mary
C.
Choksi
as
its
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Choksi
qualifies
as
such
an
expert
in
view
of
her
extensive
business
background
and
experience.
She
served
as
a
director
of
Avis
Budget
Group,
Inc.
(2007
to
2020)
and
formerly,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(1987
to
2017).
Ms.
Choksi
has
been
a
Member
of
the
Fund’s
Audit
Committee
since
2014.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Choksi
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.
Ms.
Choksi
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.
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
Jeffrey
W.
White
(1971)
Interim
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
October
2021
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director,
Fund
Administration
&
Reporting;
officer
of
24
of
the
investment
companies
in
Franklin
Templeton;
and
formerly
,
Manager,
Fund
Administration
&
Reporting
(2009-2017).
Interested
Board
Members
and
Officers
(continued)
Franklin
Custodian
Funds
Shareholder
Information
151
franklintempleton.com
Annual
Report
Liquidity
Risk
Management
Program-
Funds
no
HLIM
Each
Fund
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
FT
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2021,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2020.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
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.
Franklin
Custodian
Funds
Shareholder
Information
152
franklintempleton.com
Annual
Report
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
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
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,
or
receive
notice
of
availability
of,
the
Fund’s
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
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
(to
the
extent
received
by
mail)
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.
FCF
A
11/21
©
2021
Franklin
Templeton
Investments.
All
rights
reserved.
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.
Annual
Report
and
Shareholder
Letter
Franklin
Custodian
Funds
Investment
Manager
Distributor
Shareholder
Services
Franklin
Advisers,
Inc.
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
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 13(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 Mary C. Choksi and she 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 $458,671 for the fiscal year ended September 30, 2021 and $545,322 for the fiscal year ended September 30, 2020.
(b) Audit-Related Fees
The aggregate 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 were $9,399 for the fiscal year ended September 30, 2021 and $9,399 for the fiscal year ended September 30, 2020. The services for which these fees were paid included attestation services.
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 planningwere $0 for the fiscal year ended September 30, 2021 and $199,302 for the fiscal year ended September 30, 2020. The services for which these fees were paid included tax compliance services related to year-end.
(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 $89,027 for the fiscal year ended September 30, 2021 and $0 for the fiscal year ended September 30, 2020. 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 processand professional fees in connection with SOC 1 Reports.
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 $37,812 for the fiscal year ended September 30, 2021 and $87,458 for the fiscal year ended September 30, 2020. The services for which these fees were paid included valuation services related to fair value engagement, the issuance of an Auditor’s Certificate for South Korean regulatory shareholders disclosures, benchmarking services in connection with the ICI TA Survey, professional fees in connection with determining the feasibility of a U.S. direct lending structure, compliance examination for Investment Advisor Act rule 204-2 and 206-4 (2)assets under management certification, and professional fees in connection with SOC 1 Reports.
(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 $136,238 for the fiscal year ended September 30, 2021 and $296,159 for the fiscal year ended September 30, 2020.
(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 Jeffrey W. White, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Jeffrey W. White, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN
CUSTODIAN FUNDS
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
Chief Executive Officer – Finance and Administration
Date November
29, 2021
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 November
29, 2021
By S\Jeffrey W. White________________________
Jeffrey W. White
Interim Chief Financial Officer, Chief Accounting Officer and Treasurer
Date November
29, 2021