Franklin Investors Securities Trust NCSR Certified annual shareholder report (management investment company)

Franklin Investors Securities Trust N-CSRCertified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number811-04986

Franklin Investors Securities Trust

(Exact name of registrant as specified in charter)

One Franklin Parkway, San Mateo, CA 94403-1906

(Address of principal executive offices) (Zip code)

Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant’s telephone number, including area code: 650 312-2000

Date of fiscal year end: 10/31

Date of reporting period: 10/31/19

Item 1.

Reports to Stockholders.

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		Franklin Adjustable U.S. Government Securities Fund

		Franklin Floating Rate Daily Access Fund

Franklin Low Duration Total Return Fund

Franklin Total Return Fund

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800)632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800)632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Shareholder:

During the 12 months ended October 31, 2019, the U.S. economy continued to grow, but at a more moderate pace mainly due to concerns about trade and geopolitical stress. The U.S. Federal Reserve (Fed) raised the federal funds rate by 0.25% at its December 2018 meeting, increasing the rate from 2.25% to 2.50%, but lowered it by 0.25% at each of its July, September and October 2019 meetings, resulting in a rate of 1.75% byperiod-end. The Fed cited muted inflation pressures and the potential effects of global trade tensions on economic growth as rationale for easing the rate. The10-year U.S. Treasury yield began the period at 3.15% and decreased to 1.69% atperiod-end.

In this environment, the prices of U.S. stocks, as measured by the Standard & Poor’s^® 500 Index (S&P 500^®), rose 12.02% (the index increasing from 2,711.74 to 3,037.56).^1,2 Investment-grade bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index (Bloomberg Index), posted a +11.51% total return (an index increase from 1,997.76 to 2,227.69), which includes reinvestment of interest.³

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

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

Franklin Investors Securities Trust’s annual report, covering Franklin Adjustable U.S. Government Securities Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund, includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.

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

Sincerely,

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Rupert H. Johnson, Jr.

Chairman

Franklin Investors Securities Trust

This letter reflects our analysis and opinions as of October 31, 2019, 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.

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 their total returns, which were: S&P 500 +14.33% (index total return resulting in an increase from 5,369.49 to 6,138.73).

3. Sources: Morningstar and Bloomberg Barclays Indices. 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.

Not FDIC Insured | May Lose Value | No Bank Guarantee



franklintempleton.com	Not part of the annual report	1

Contents


Annual Report

Economic and Market Overview			3

Franklin Adjustable U.S. Government Securities Fund			4

Franklin Floating Rate Daily Access Fund			10

Franklin Low Duration Total Return Fund			18

Franklin Total Return Fund			25

Financial Highlights and Statements of Investments			32

Financial Statements			129

Notes to Financial Statements			135

Report of Independent Registered Public Accounting Firm			166

Tax Information			167

Board Members and Officers			168

Shareholder Information			173

Visitfranklintempleton.comfor fund updates, to access your account, or to find helpful financial planning tools.



2	Annual Report	franklintempleton.com

ANNUAL REPORT

Economic and Market Overview

The U.S. economy expanded during the 12 months ended October 31, 2019. After moderating for two consecutive quarters, the economy grew significantly faster in 2019’s first quarter before moderating in the second quarter. However, the economy grew faster in the third quarter, aided by consumer spending, housing investment, government spending, inventory investment and exports. The manufacturing sector expanded during most of the period, but contracted in the last three consecutive months. The services sector continued to expand during the period. The unemployment rate decreased from 3.8% in October 2018 to 3.6% atperiod-end.¹ The annual inflation rate, as measured by the Consumer Price Index, decreased from 2.5% in October 2018 to 1.8% atperiod-end.¹

The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate by 0.25% at its December 2018 meeting, to 2.25%–2.50%. However, at its July 2019 meeting, the Fed lowered the federal funds target rate range for the first time since December 2008, to 2.00%–2.25%, citing muted inflation pressures and the potential effects of global trade tensions on economic growth. Furthermore, the Fed ended its balance sheet normalization program earlier than previously indicated. The Fed further lowered the federal funds target rate range by 0.25% at its September and October meetings, to 1.50%–1.75%, reiterating the rationale cited in the July meeting.

The10-year Treasury yield, which moves inversely to its price, decreased during the period. The yield rose to multi-year highs in late 2018, but fell to multi-year lows in 2019’s third quarter before recovering partially in October. U.S. political uncertainties (including the impeachment inquiry into President Donald Trump), geopolitical tensions in certain regions, U.S. trade disputes with China and other trading partners, slower domestic and global economic growth, and the Fed’s more accommodative monetary policy stance weighed on the Treasury yield at certain points during the period. However, several better-than-expected U.S. economic reports and periods of optimism about a potential U.S.-China trade agreement supported the yield. The10-year yield fell persistently below certain short-term yields during most of the period’s second half, but rose above all short-term Treasury yields towardperiod-end following the announcement of a potential phase one of the U.S.-China trade agreement. Overall, the10-year Treasury yield declined from 3.15% at the beginning of the period to 1.69% atperiod-end.

The foregoing information reflects our analysis and opinions as of October 31, 2019. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

1. Source: Bureau of Labor Statistics.



franklintempleton.com	Annual Report	3

Franklin Adjustable U.S. Government Securities Fund

This annual report for Franklin Adjustable U.S. Government Securities Fund covers the fiscal year ended October 31, 2019.

Your Fund’s Goal and Main Investments

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

Performance Overview

The Fund’s Class A shares posted a +2.01% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government Index:1-2 Year Component posted a +3.91% total return.³ The index measures public obligations of the U.S. Treasury with one to two years to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.

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

Investment Strategy

We employ a conservative investment strategy as we strive to produce solid performance in a variety of interest rate climates. We choose securities using a value-oriented

Portfolio Composition

Based on Total Net Assets as of 10/31/19

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approach, emphasizing the bonds’ economic fundamentals in relation to comparable securities as well as their historical prepayment performance.

Manager’s Discussion

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

Underlying coupons continued to reset higher, although prepayment rate uncertainty hampered the ARM market outlook as they remained significantly elevated. We continued to be cautious about future prepayment speeds given a significant rally in mortgage rates and securities trading at notable premiums. The outlook for prepayments

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

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

3. Source: Morningstar.

The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.

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

The SOI begins on page 37.



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FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Dividend Distributions*

11/1/18–10/31/19


			Dividend per Share (cents)
									Advisor
Month	Class A		Class A1		Class C		Class R6		Class

November		1.8935		1.9964		1.6225		2.1525	2.0621

December		1.8963		1.9686		1.6228		2.1536	2.0700

January		1.9663		2.0693		1.6911		2.2229	2.1403

February		2.0589		2.1506		1.8101		2.2855	2.2158

March		1.9112		1.9982		1.6563		2.1471	2.0723

April		2.2227		2.3281		1.9383		2.4827	2.4012

May		2.0842		2.1867		1.8113		2.3317	2.2544

June		1.9528		2.0453		1.7067		2.1804	2.1097

July		2.2182		2.3265		1.9256		2.4906	2.4029

August		1.9407		2.0394		1.6752		2.1916	2.1083

September		2.0650		2.1667		1.7907		2.3182	2.2382

October		1.8575		1.9598		1.5893		2.0890	2.0318

Total		24.0673		25.2356		20.8399		27.0458	26.1070

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

had created wariness in the sector and led to a decrease in prices ranging from10-15 basis points. With a shift toward a flatter yield curve, and absolute prepayments continuing to be elevated, we remain cautious going forward. We believe that with borrowers having experienced a full year of mortgages resetting upward, it could result in a burnout effect, which would offset some of the refinance incentive and help to lower prepayment rates at some point in the future. Hence, we have been favoring those ARMs linked to the London Interbank Offered Rate (LIBOR) index⁴, which we believe would have slower speeds relative to those indexed off of the Constant Maturity Treasury Index. Given the high probability of elevated speeds for the foreseeable future in a market where the premiums are quite significant, we have retained a slightly higher cash allocation.

During the period, the Fund’s focus on seasoned, shorter-maturity, high-quality ARMs that tended to be less sensitive to interest-rate changes, supported performance. In particular, we continued to focus on diverse, seasoned, post-reset FNMA and FHLMC ARMs with average coupons above 3% that had larger loan counts. Secondary flows over the period declined significantly as post-reset mortgages

tend to be somewhat avoided with a preference toward fixed-rate mortgages.

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



		Paul Varunok Lead Portfolio Manager

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.

4. The London Interbank Offered Rate (LIBOR) is the interest rate banks charge each other for loans. LIBOR is a widely used benchmark for short-term interest rates.

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



franklintempleton.com	Annual Report	5

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Performance Summary as of October 31, 2019

The performance tables and graphs do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 10/31/19¹

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 2.25% and the minimum is 0%.Class A:2.25% maximum initial sales charge;Advisor Class:no sales charges. For other share classes, visitfranklintempleton.com.


Share Class	Cumulative Total Return²	Average Annual Total Return³


A

1-Year	+2.01%	-0.33%


5-Year	+2.04%	-0.05%


10-Year	+7.83%	+0.52%


Advisor

1-Year	+2.39%	+2.39%


5-Year	+3.33%	+0.66%


10-Year	+10.57%	+1.01%


	Distribution Rate	⁴	30-Day Standardized Yield⁵
Share Class	Distribution Rate	⁴	(with fee waiver)	(without fee waiver)

A	2.66%		1.73%	1.72%

Advisor	2.97%		2.03%	2.01%

See page 8 for Performance Summary footnotes.



6	Annual Report	franklintempleton.com

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

PERFORMANCE SUMMARY

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

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

Class A(11/1/09–10/31/19)

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Advisor Class(11/1/09–10/31/19)

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See page 8 for Performance Summary footnotes.



franklintempleton.com	Annual Report	7

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class		Net Investment Income

A		$0.240673

A1		$0.252356

C		$0.208399

R6		$0.270458

Advisor		$0.261070

Total Annual Operating Expenses⁷


Share Class	With Fee Waiver		Without Fee Waiver

A		0.96%		0.97%

Advisor		0.71%		0.72%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Interest rate movements, unscheduled mortgage prepayments and other risk factors will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/29/20. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.

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

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

4. Distribution rate is based on an annualization of the sum of the respective class’s past month’s daily distributions and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

5. The Fund’s30-day standardized yield is calculated over a trailing30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

6. Source: Morningstar. The Bloomberg Barclays U.S. Government Index:1-2 Year Component includes public obligations of the U.S. Treasury with at least one year up to, but not including, two years to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government.

7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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



8	Annual Report	franklintempleton.com

FRANKLIN ADJUSTABLE U.S. GOVERNMENT SECURITIES FUND

Your Fund’s Expenses

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.


				Actual						Hypothetical
				(actual return after expenses)						(5% annual return before expenses)
							Expenses						Expenses			Net
	Beginning			Ending			Paid During			Ending			Paid During			Annualized
Share	Account			Account			Period			Account			Period			Expense
Class	Value 5/1/19			Value 10/31/19			5/1/19–10/31/19^1,²			Value 10/31/19			5/1/19–10/31/19^1,²			Ratio²

A		$	1,000		$	1,011.40		$	4.82		$	1,020.42		$	4.84		0.95%
A1		$	1,000		$	1,012.20		$	4.06		$	1,021.17		$	4.08		0.80%
C		$	1,000		$	1,010.60		$	6.84		$	1,018.40		$	6.87		1.35%
R6		$	1,000		$	1,013.20		$	2.99		$	1,022.23		$	3.01		0.59%
Advisor		$	1,000		$	1,012.70		$	3.55		$	1,021.68		$	3.57		0.70%

1. Expenses are equal to the annualized expense ratio for thesix-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect theone-half year period.

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



franklintempleton.com	Annual Report	9

Franklin Floating Rate Daily Access Fund

This annual report for Franklin Floating Rate Daily Access Fund covers the fiscal year ended October 31, 2019.

Your Fund’s Goal and Main Investments

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

What are corporate loans?

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

Performance Overview

The Fund’s Class A shares posted a-0.88% cumulative total return for the 12 months under review. In comparison, the Credit Suisse Leveraged Loan Index (CS LLI), which is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market, posted a +2.61% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 14.

Corporate Loan Market Overview

Technical conditions in the loan market significantly weakened toward the end of 2018 as the asset class was impacted by broader volatility in the equity and credit markets. However, improved investor sentiment early in 2019 and demand from newcollateralized-loan-obligations (CLOs) led to a sharp rebound. As the period progressed,

Portfolio Composition*

Based on Total Net Assets as of 10/31/19

LOGO

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

expectations that interest-rate cuts by the U.S. Federal Reserve (Fed) would decrease income generation limited principal gains, as retail investors continued loan mutual fund redemptions at a steadier pace. Healthy demand from CLOs remained and helped to support loan prices amid periodic bouts of volatility. While the loan market saw an increase in new issuance to finance mergers and acquisitions (M&A), large paydowns helped keep net new issuance relatively low compared to its historical levels.

While many investors had expected rising interest rates at the beginning of the period, eventual uncertainty surrounding future rate hikes led to the largest monthly outflows by dollar amount, resulting in significantly deteriorated technical conditions in December 2018. Outflows from retail investors continued throughout the period as the Fed cut its benchmark rate three times, prompting investors to shift away from low duration assets. Assets under management of retail loan funds declined significantly from its peak in October 2018 and the

1. Source: Credit Suisse Group.

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 45.



10	Annual Report	franklintempleton.com

FRANKLIN FLOATING RATE DAILY ACCESS FUND

composition of the loan investor base shifted as a result, with loan retail funds holding a meaningfully smaller share atperiod-end.

Dividend Distributions*

11/1/18–10/31/19


	Dividend per Share (cents)
Month	Class A		Class C		Class R6		Advisor Class

November		3.2858		2.9994		3.5297		3.4647

December		4.4747		4.1878		4.7126		4.6577

January		3.6543		3.3690		3.8942		3.8399

February		3.5818		3.3177		3.7973		3.7438

March		3.4932		3.2247		3.7269		3.6639

April		3.8449		3.5468		4.1015		4.0347

May		3.7831		3.4944		4.0085		3.9658

June		3.4156		3.1567		3.6570		3.5800

July		4.0064		3.7059		4.3005		4.1999

August		3.7197		3.4462		3.9549		3.8930

September		3.7212		3.4392		3.9609		3.8995

October		3.6602		3.3822		3.8556		3.8293

Total		44.6409		41.2700		47.4996		46.7722

CLOs, which had already been the majority holder of institutional leveraged loans, further gained share as retail investor demand shrunk. Although interest-rate cuts moderated demand for floating rate CLO tranches compared to the prior period, issuance of new CLOs remained the primary driver of demand for loans. Issuance was slower in 2019 compared to the previous year, but more than a hundred open CLO warehouses continued ramping and buying loans, which provided a floor to loan valuations and a source of support to loan prices. Managers overcame challenges in loan supply and arbitrage, in addition to fears that scrutiny from financial regulators would diminish demand from investors.

New issuance in the loan market remained relatively low, which eventually helped balance technical conditions as investor sentiment improved in 2019. Furthermore, price declines in the loan market restrained refinancing and repricing activity, which was more common in previous periods. Amid the slowdown in demand in the loan market, some deals also shifted funds from the loan market to the bond market, where there was more demand, reversing the trend from the previous year when the loan market

surpassed the size of the high-yield bond market by some measures. New supply continued to be primarily in B rated loans, while loan documentation remained relatively loose. Although deals related to M&A transactions picked up, the pace of total issuance continued to lag due to an increase in paydowns, especially among larger tranche names.

The default rate by principal amount declined during the period and continued to be below the historical average, after reaching a three-year high earlier in 2018. The default outlook remained generally benign even with higher leverage levels, especially among first-lien loans, a higher proportion of B rated loans in the market and more loans trading at distressed levels. However, uncertainty about the pace of economic growth contributed to increased concerns, as the pace of credit rating downgrades outpaced the number of loans that were upgraded. Due to CLO limits on holding CCC rated loans, further downgrades were expected to potentially contribute to increased selling and volatility in the loan market. As a result, lower-rated loans underperformed during the period, as less support from CLO managers and the absence of demand from retail investors led to greater price declines and higher leverage. Amid fears of slower economic growth, higher-rated loans outperformed lower-rated loans, widening the spread differential between BB rated and B rated loans.

Investment Strategy

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

Manager’s Discussion

During theone-year period under review, the Fund underperformed its benchmark, the CSLLI. The Fund maintained an overweight in the upper tier of the market throughout the period, which contributed to performance as upper tier loans in the index returned +4.38%, middle tier returned +2.31%, and lower tier returned-3.97%, according to the CSLLI. Although upper tier loans outperformed during the quarter, performance was primarily driven by loan



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selection, but some issuers continued to face operational and industry challenges.

The top individual contributors to performance included higher-rated issuers that attracted stronger demand, as well as companies that had support due to potential catalysts that investors expected to push prices higher. Within our portfolio, General Nutrition Centers, a specialty retailer of nutritional supplements, was a major contributor to performance after an equity investment from a Chinese pharmaceutical company cleared regulatory hurdles and was used to reduce leverage. Onsite Rentals, a specialized industrial equipment rental company, also contributed to performance as it reported improved results due to an increase in contracts and as the company explored a potential initial public offering.

The top detractors from performance included issuers that faced challenges in operations, in addition to sector weakness, which hindered results. The term loan of Foresight Energy (not held atperiod-end), a thermal coal producer, declined as company results were weaker due to low coal prices, competition from natural gas producers and flooding conditions that prevented delivery of shipments. These factors led to a credit rating downgrade during the period. Ascena Retail Group, a specialty apparel retailer with multiple core brands, also detracted from performance after the company reported worse-than-expected results and weak guidance for the remainder of the year, which resulted in major management changes and a material change in strategy.

During the period, the Fund looked to lower risk in areas of the portfolio that we believed had elevated credit risk and higher uncertainty. The Fund also reduced its investment in CLOs by selling AAA rated and A rated tranches. Buys during the period included higher-rated loans that launched deals in the primary market with relatively attractive spreads.

The Fund continued to maintain a significant overweighting in higher-rated loans as upper tier loans were more than half of the loan portfolio atperiod-end, compared to under one third for the index. In addition, we maintained the Fund’s investment in the Franklin Floating Rate Income Fund, which allowed the Fund to have further exposure to credit, while providing a potential source of liquidity. In an effort to protect against volatility in the credit markets, the Fund held a high-yield bond credit default swap index that provided synthetic exposure to the high-yield bond market.

Top 10 Holdings

10/31/19


Company *Sector/Industry*		% of Total Net Assets

Fieldwood Energy LLC Oil & Gas Exploration & Production		4.4%

Appvion Operations, Inc.* Forest Products		2.8%

FGI Operating Co. LLC (Freedom Group) Personal Products		2.8%

General Nutrition Centers Inc. Specialty Stores		2.6%

Navistar Inc. Industrial Machinery		2.2%

Wolverine Fuels Holding LLC Coal & Consumable Fuels		1.9%

CSC Holdings LLC Cable & Satellite		1.9%

JBS USA Lux SA Packaged Foods & Meats		1.8%

Berry Global Inc. Metal & Glass Containers		1.6%

Sinclair Television Group Inc. Broadcasting		1.6%

*Includes common stock and senior floating rate interests.

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

LOGO

Reema Agarwal, CFA


		Justin Ma, CFA

		Margaret Chiu, CFA

		Portfolio Management Team



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The foregoing information reflects our analysis, opinions and portfolio holdings as of October 31, 2019, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.



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Performance Summary as of October 31, 2019

Performance as of 10/31/19¹


	Cumulative	Average Annual
Share Class	Total Return²	Total Return³

A
1-Year	-0.88%	-3.10%

5-Year	+13.27%	+2.05%

10-Year	+43.90%	+3.47%

Advisor
1-Year	-0.74%	-0.74%

5-Year	+14.55%	+2.75%

10-Year	+47.35%	+3.95%


	Distribution Rate⁴	30-Day Standardized Yield⁵
Share Class	Distribution Rate⁴		(with fee waiver)	(without fee waiver)

A	5.14%		6.11%	6.07%

Advisor	5.50%		6.51%	6.48%

See page 16 for Performance Summary footnotes.



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PERFORMANCE SUMMARY

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 16 for Performance Summary footnotes.



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PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class		Net Investment Income

A		$0.446409

C		$0.412700

R6		$0.474996

Advisor		$0.467722

Total Annual Operating Expenses⁷


Share Class	With Fee Waiver		Without Fee Waiver

A		0.87%	0.93%

Advisor		0.62%	0.68%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus

All investments involve risks, including possible loss of principal. Investors should be aware that the Fund’s share price and yield will fluctuate with market conditions. The Fund should not be considered an alternative to money market funds or certificates of deposit (CDs). The floating rate loans and debt securities in which the Fund invests tend to be rated below investment grade. Investing in higher-yielding, lower-rated, floating rate loans and debt securities involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Interest earned on floating rate loans varies with changes in prevailing interest rates. Therefore, while floating rate loans offer higher interest income when interest rates rise, they will also generate less income when interest rates decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

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.

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

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



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Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Net Annualized Expense Ratio²

A	$1,000	$983.70	$4.45	$1,020.72	$4.53	0.89%
C	$1,000	$980.60	$6.44	$1,018.70	$6.56	1.29%
R6	$1,000	$985.40	$2.70	$1,022.48	$2.75	0.54%
Advisor	$1,000	$983.80	$3.20	$1,021.98	$3.26	0.64%

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



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Franklin Low Duration Total Return Fund

This annual report for Franklin Low Duration Total Return Fund covers the fiscal year ended October 31, 2019.

Your Fund’s Goal and Main Investments

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

Performance Overview

The Fund’s Class A shares posted a +3.78% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Government/Credit Index:1-3 Year Component, posted a +4.89% total return.¹ The index measures public obligations of the U.S. Treasury with one to three years to final maturity and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. You can find more of the Fund’s performance data in the Performance Summary beginning on page 21.

Investment Strategy

We seek to invest in a combination of fixed income securities, primarily from across the investment-grade debt universe. We analyze securities using proprietary and nonproprietary research to help us identify attractive investment opportunities across the entire fixed income opportunity set, on a relative basis. When making investment decisions, we evaluate business cycles, yield curves, and values between and within markets. Through a low duration portfolio, we seek to position the Fund to be less affected by

Portfolio Composition*

Based on Total Net Assets as of 10/31/19

LOGO

**Includesnon-agency residential mortgage backed securities, collateralized loan obligations and consumer loan certificates.

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

interest-rate changes than a fund with a higher duration. In addition, we may use derivative transactions, such as forwards, futures contracts and swap agreements to obtain net long or short exposures to select currencies, interest rates, countries, duration or credit risks.

1. Source: Morningstar.

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 61.



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What is duration?

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

What is the yield curve?

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

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.

What is a futures contract?

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

What are swap agreements?

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

Manager’s Discussion

From a perspective of excess returns over Treasuries of similar duration, U.S. corporate credit performed well. Other major fixed income sectors that delivered notable positive excess returns, as measured by Bloomberg Barclays indexes, includednon-agency residential mortgage-backed securities (RMBS), emerging markets securities and commercial mortgage-backed securities (CMBS). In contrast, fixed-rate agency mortgage-backed securities (MBS) underperformed Treasuries.

Dividend Distributions*

11/1/18–10/31/19


	Dividend per Share (cents)
					Advisor
Month	Class A	Class C	Class R**	Class R6	Class

November	2.5107	2.1872	—	2.8413	2.7224

December	2.6718	2.3375	—	3.0026	2.8892

January	2.4447	2.1106	—	2.7737	2.6620

February	2.3819	2.0779	—	2.6858	2.5799

March	2.4572	2.1446	—	2.7701	2.6378

April	2.7103	2.3558	—	3.0450	2.9639

May	2.8762	2.5394	—	3.2098	3.0981

June	2.6035	2.2985	—	2.9059	2.8045

July	2.7284	2.4008	—	3.0514	2.9433

August	2.4763	2.1486	—	2.7960	2.6891

September	2.4858	2.1492	—	2.8165	2.7053

October	2.4929	2.1685	1.3375	2.8118	2.7050

Total	30.8397	26.9186	1.3375	34.7099	33.4005

**Effective 10/15/19, the Fund began offering Class R shares. See the prospectus for details.

During the period, the Fund’s exposure to the corporate credit sectors of high-yield, investment-grade and collateralized loan obligations (CLOs) contributed to the Fund’s performance relative to its benchmark. Allocation to senior secured floating-rate loans was positive, but not enough to offset negative security selection. Additionally, CMBS andnon-dollar developed bonds were positive for returns. In contrast, the Fund’s U.S. yield curve positioning detracted as did TIPS and RMBS.

We maintained our largest sector allocation in RMBS and increased it slightly over the period. We also increased allocation to CLOs, TIPS, U.S. Treasuries, MBS and sovereign emerging-market debt. We pared our exposure to investment-grade and high-yield corporate credit, senior secured floating-rate loans and CMBS as we found better relative opportunities.

During the period, the portfolio utilized derivatives, including credit default and currency swaps, inflation-linked swaps, currency forwards, Treasury futures, interest-rate swaps and credit default swap options, principally as a tool for efficient portfolio management and to manage overall portfolio risk. These derivative transactions may provide the same, or similar, net long or short exposure to select currencies,



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FRANKLIN LOW DURATION TOTAL RETURN FUND

interest rates, countries, duration or credit risks in a less expensive way than by directly purchasing securities. In those markets wherenon-derivative securities are readily available, the cost difference in normal market conditions may be small.

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


		Sonal Desai, Ph.D. Co-Lead Portfolio Manager

		David Yuen, CFA, FRM Co-Lead Portfolio Manager

		Tina Chou Co-Lead Portfolio Manager

		Kent Burns, CFA Co-Lead Portfolio Manager



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FRANKLIN LOW DURATION TOTAL RETURN FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹


Share Class	Cumulative Total Return	²	Average Annual Total Return³


A

1-Year	+3.78%		+1.46%



5-Year	+7.88%		+1.07%



10-Year	+22.12%		+1.79%



Advisor

1-Year	+4.04%		+4.04%



5-Year	+9.24%		+1.78%



10-Year	+25.28%		+2.28%


Share Class	Distribution Rate	⁴	30-Day Standardized Yield⁵
Share Class	Distribution Rate	⁴	(with fee waiver)	(without fee waiver)

A	3.03%		2.76%	2.41%

Advisor	3.35%		3.09%	2.72%

See page 23 for Performance Summary footnotes.



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FRANKLIN LOW DURATION TOTAL RETURN FUND

PERFORMANCE SUMMARY

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

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 23 for Performance Summary footnotes.



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PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class		Net Investment Income

A		$0.308397

C		$0.269186

R		$0.013375

R6		$0.347099

Advisor		$0.334005

Total Annual Operating Expenses⁸

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Interest-rate movements and mortgage prepayments will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The risks associated with higher-yielding, lower-rated securities include higher risk of default and loss of principal. Investment in foreign securities also involves special risks, including currency fluctuations, and political and economic uncertainty. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses (as well as gains) on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

1. The Fund has an expense reduction contractually guaranteed through 2/28/21 and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/29/20. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower.

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

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

6. Source: Morningstar. The Bloomberg Barclays U.S. Government/Credit Index:1-3 Year Component includes dollar-denominated investment grade corporate debt andnon-native currency agency and local authority debt, sovereign, supranational, and taxable municipal debt, public obligations of the U.S. Treasury with at least one year up to, but not including, three years to final maturity, and publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government.

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

8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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



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Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19¹	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^2,³^,⁴	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^2,⁴	Net Annualized Expense Ratio⁴

A	$1,000	$1,014.20	$3.45	$1,021.78	$3.47	0.68%
C	$1,000	$1,012.20	$5.48	$1,019.76	$5.50	1.08%
R	$1,000	$1,001.40	$0.41	$1,020.52	$4.74	0.93%
R6	$1,000	$1,016.10	$1.52	$1,023.69	$1.53	0.30%
Advisor	$1,000	$1,015.50	$2.18	$1,023.04	$2.19	0.43%

1. For Classes A, C, R6 and Advisor, 5/1/19 for Actual and Hypothetical. For Class R, 10/15/19 for Actual and 5/1/19 for Hypothetical.

2. For Classes A, C, R6 and Advisor, 5/1/19–10/31/19. For Class R, 10/15/19–10/31/19.

3. Expenses are equal to the annualized expense ratio for thesix-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect theone-half year period. The multiplier is 16/365 for Actual Class R expenses to reflect the number of days since inception.

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



24	Annual Report	franklintempleton.com

Franklin Total Return Fund

This annual report for Franklin Total Return Fund covers the fiscal year ended October 31, 2019.

Your Fund’s Goal and Main Investments

The Fund seeks to provide high current income, consistent with preservation of capital. Capital appreciation over the long term is a secondary goal. The Fund invests primarily in investment-grade debt securities (including unrated securities of comparable quality) and other investments that provide exposure to such securities. The Fund currently focuses on government and corporate debt securities and mortgage- and asset-backed securities, but may invest in other securities and investments, such as floating-rate corporate loans and securities and municipal securities.

Performance Overview

The Fund’s Class A shares posted a +10.01% cumulative total return for the 12 months under review. In comparison, the Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index posted a +11.51% total return.¹ The index measures the U.S. investment-grade, fixed-rate, taxable bond market with index components for government and corporate, mortgage pass-through and asset-backed securities. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 28.

Investment Strategy

We seek to invest in a combination of fixed income securities, primarily from across the investment-grade debt universe. We analyze securities using proprietary and nonproprietary research to help us identify attractive investment opportunities, across the entire fixed income opportunity set, on a relative basis. The Fund may also invest up to 20% of its total assets in noninvestment-grade debt securities. In addition, we may use derivative

Portfolio Composition*

Based on Total Net Assets as of 10/31/19

LOGO

**Includesnon-agency residential mortgage backed securities, collateralized loan obligations and consumer loan certificates.

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

transactions, such as currency and cross-currency forwards, futures contracts and swap agreements, to obtain net long or short exposures to select currencies, interest rates, countries, duration or credit risks.

1. Source: Morningstar.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Consolidated Statement of Investments (SOI). The Consolidated SOI begins on page 97.



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		What is a futures contract?

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

		What is a currency forward contract?

		A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.

		What are swap agreements?

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

		What is the yield curve?

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

		What is an option?

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

Manager’s Discussion

securities (RMBS), emerging markets securities and commercial mortgage-backed securities (CMBS). In contrast, fixed-rate agency mortgage-backed securities (MBS) underperformed Treasuries.

During the period, the Fund’snon-U.S. dollar yield curve positioning and exposure to high-yield corporate credit were significant contributors to the Fund’s performance relative to its benchmark. The Fund’s exposure to foreign currency andnon-dollar developed securities also benefited results as did senior secured floating-rate loans, marketplace loans and sovereign developed securities. In contrast, the Fund’s U.S. yield curve positioning and exposure to MBS and TIPS detracted from relative returns. Collateralized loan obligations (CLOs) also detracted.

We maintained our largest sector allocation in MBS and increased our allocation over the period. We also added to TIPS, Treasury positions and RMBS while paring exposure across corporate credit sectors, inclusive of investment-grade and high-yield corporate credit, senior secured floating-rate loans and CLOs. We also reduced exposure to sovereign emerging markets securities and CMBS.

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



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

LOGO

Sonal Desai, Ph.D.

Co-Lead Portfolio Manager

LOGO

Tina Chou

Co-Lead Portfolio Manager

David Yuen, CFA, FRM

Co-Lead Portfolio Manager

Patrick Klein, Ph.D.

Co-Lead Portfolio Manager

Dividend Distributions*

11/1/18–10/31/19


	Dividend per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class

November		2.1769		1.8681		1.9832		2.4812		2.3753

December		2.8677		2.5351		2.6663		3.1837		3.0831

January		2.7227		2.3855		2.5124		3.0400		2.9399

February		2.5445		2.2361		2.3521		2.8206		2.7434

March		2.2626		1.9658		2.0830		2.5311		2.4541

April		2.8015		2.4456		2.5791		3.1357		3.0310

May		2.8399		2.4933		2.6242		3.1514		3.0631

June		2.5602		2.2441		2.3622		2.8501		2.7647

July		2.4792		2.1622		2.2817		2.7705		2.6848

August		2.4163		2.0932		2.2146		2.7097		2.6228

September		2.7006		2.3451		2.4787		3.0255		2.9298

October		2.6595		2.2976		2.4288		3.0384		2.8832

Total		31.0316		27.0717		28.5663		34.7379		33.5752



franklintempleton.com	Annual Report	27

FRANKLIN TOTAL RETURN FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹

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, visitfranklintempleton.com.


Share Class	Cumulative Total Return²	Average Annual Total Return³

A⁴

1-Year	+10.01%	+5.92%

5-Year	+12.56%	+1.61%

10-Year	+48.58%	+3.64%

Advisor

1-Year	+10.23%	+10.23%

5-Year	+14.06%	+2.67%

10-Year	+52.44%	+4.31%


Share Class	Distribution Rate⁵	30-Day Standardized Yield⁶
Share Class	Distribution Rate⁵	(with fee waiver)	(without fee waiver)

A	3.10%	2.65%	2.56%

Advisor	3.47%	3.01%	2.93%

See page 30 for Performance Summary footnotes.



28	Annual Report	franklintempleton.com

FRANKLIN TOTAL RETURN FUND

PERFORMANCE SUMMARY

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

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 30 for Performance Summary footnotes.



franklintempleton.com	Annual Report	29

FRANKLIN TOTAL RETURN FUND

PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class		Net Investment Income

A		$0.310316

C		$0.270717

R		$0.285663

R6		$0.347379

Advisor		$0.335752

Total Annual Operating Expenses⁹


Share Class	With Fee Waiver		Without Fee Waiver

A		0.88%	0.92%

Advisor		0.63%	0.67%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Interest-rate movements and mortgage prepayments will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The risks associated with higher-yielding, lower-rated securities include higher risk of default and loss of principal. Investment in foreign securities also involves special risks, including currency fluctuations, and political and economic uncertainty. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses (as well as gains) on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits and may realize losses when a counterparty fails to perform as promised. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.

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 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 sum of the respective class’s past month’s daily distributions and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

6. The Fund’s30-day standardized yield is calculated over a trailing30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

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

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

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.



30	Annual Report	franklintempleton.com

FRANKLIN TOTAL RETURN FUND

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Net Annualized Expense Ratio²

A	$1,000	$1,043.30	$4.43	$1,020.87	$4.38	0.86%
C	$1,000	$1,041.40	$6.48	$1,018.85	$6.41	1.26%
R	$1,000	$1,042.10	$5.71	$1,019.61	$5.65	1.11%
R6	$1,000	$1,044.90	$2.53	$1,022.74	$2.50	0.49%
Advisor	$1,000	$1,044.40	$3.14	$1,022.13	$3.11	0.61%

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



franklintempleton.com	Annual Report	31

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Adjustable U.S. Government Securities Fund


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.10			$ 8.24			$ 8.40			$ 8.55			$ 8.67

Income from investment operations^a:

Net investment income		0.140	^b		0.088	^b		0.026			0.025			0.019

Net realized and unrealized gains (losses)		0.021			(0.035	)		(0.031	)		(0.053	)		(0.040	)

Total from investment operations		0.161			0.053			(0.005	)		(0.028	)		(0.021	)

Less distributions from:

Net investment income		(0.241	)		(0.193	)		(0.155	)		(0.122	)		(0.099	)

Net asset value, end of year		$ 8.02			$ 8.10			$ 8.24			$ 8.40			$ 8.55

Total return^c		2.01%			0.65%			(0.06)%			(0.32)%			(0.24)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.95%			0.96%			0.95%			0.92%			0.91%

Expenses net of waiver and payments by affiliates^d		0.94%			0.95%			0.94%			0.91%			0.91%	^e

Net investment income		1.73%			1.07%			0.54%			0.43%			0.39%

Supplemental data

Net assets, end of year (000’s)	$	393,736		$	419,055		$	492,319		$	667,671		$	848,918

Portfolio turnover rate		12.72%			11.39%			2.81%			11.49%			9.98%

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

^bBased on average daily shares outstanding.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class A1

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.09			$ 8.24			$ 8.40			$ 8.54			$ 8.67

Income from investment operations^a:

Net investment income		0.151	^b		0.100	^b		0.059			0.049			0.046

Net realized and unrealized gains (losses)		0.031			(0.044	)		(0.051	)		(0.054	)		(0.062	)

Total from investment operations		0.182			0.056			0.008			(0.005	)		(0.016	)

Less distributions from:

Net investment income		(0.252	)		(0.206	)		(0.168	)		(0.135	)		(0.114	)

Net asset value, end of year		$ 8.02			$ 8.09			$ 8.24			$ 8.40			$ 8.54

Total return^c		2.29%			0.68%			0.10%			(0.05)%			(0.19)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.80%			0.80%			0.79%			0.77%			0.75%

Expenses net of waiver and payments by affiliates^d		0.79%			0.79%			0.78%			0.76%			0.75%	^e

Net investment income		1.88%			1.23%			0.70%			0.58%			0.55%

Supplemental data

Net assets, end of year (000’s)		$86,471			$100,477			$121,012			$160,469			$198,670

Portfolio turnover rate		12.72%			11.39%			2.81%			11.49%			9.98%

^bBased on average daily shares outstanding.

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

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

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



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	33

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.09			$ 8.24			$ 8.40			$ 8.54			$ 8.66

Income from investment operations^a:

Net investment income (loss)		0.106	^b		0.054	^b		(0.014	)		(0.011	)		(0.013	)

Net realized and unrealized gains (losses)		0.032			(0.044	)		(0.024	)		(0.041	)		(0.043	)

Total from investment operations		0.138			0.010			(0.038	)		(0.052	)		(0.056	)

Less distributions from:

Net investment income		(0.208	)		(0.160	)		(0.122	)		(0.088	)		(0.064	)

Net asset value, end of year		$ 8.02			$ 8.09			$ 8.24			$ 8.40			$ 8.54

Total return^c		1.73%			0.13%			(0.45)%			(0.61)%			(0.65)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.35%			1.36%			1.35%			1.32%			1.31%

Expenses net of waiver and payments by affiliates^d		1.34%			1.35%			1.34%			1.31%			1.31%	^e

Net investment income (loss)		1.33%			0.67%			0.14%			0.03%			(0.01)%

Supplemental data

Net assets, end of year (000’s)		$84,685			$126,585			$189,634			$266,186			$336,254

Portfolio turnover rate		12.72%			11.39%			2.81%			11.49%			9.98%

^bBased on average daily shares outstanding.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.11			$ 8.25			$ 8.41			$ 8.55			$ 8.68

Income from investment operations^a:

Net investment income		0.169	^b		0.121	^b		0.074			0.066			0.013

Net realized and unrealized gains (losses)		0.021			(0.037	)		(0.046	)		(0.053	)		(0.010	)

Total from investment operations		0.190			0.084			0.028			0.013			0.003

Less distributions from:

Net investment income		(0.270	)		(0.224	)		(0.188	)		(0.153	)		(0.133	)

Net asset value, end of year		$ 8.03			$ 8.11			$ 8.25			$ 8.41			$ 8.55

Total return		2.39%			1.03%			0.34%			0.15%			0.03%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.62%			0.62%			0.58%			0.56%			0.53%

Expenses net of waiver and payments by affiliates^c		0.58%			0.57%			0.55%			0.55%			0.53%	^d

Net investment income		2.09%			1.45%			0.93%			0.79%			0.77%

Supplemental data

Net assets, end of year (000’s)		$31,953			$36,026			$2,196			$2,374			$2,176

Portfolio turnover rate		12.72%			11.39%			2.81%			11.49%			9.98%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

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


	Year Ended October 31,

	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.10			$ 8.25			$ 8.41			$ 8.55			$ 8.68

Income from investment operations^a:

Net investment income		0.160	^b		0.108	^b		0.052			0.046			0.040

Net realized and unrealized gains (losses)		0.031			(0.044	)		(0.036	)		(0.043	)		(0.049	)

Total from investment operations		0.191			0.064			0.016			0.003			(0.009	)

Less distributions from:

Net investment income		(0.261	)		(0.214	)		(0.176	)		(0.143	)		(0.121	)

Net asset value, end of year		$ 8.03			$ 8.10			$ 8.25			$ 8.41			$ 8.55

Total return		2.39%			0.78%			0.20%			0.05%			(0.11)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.70%			0.71%			0.70%			0.67%			0.66%

Expenses net of waiver and payments by affiliates^c		0.69%			0.70%			0.69%			0.66%			0.66%	^d

Net investment income		1.98%			1.32%			0.79%			0.68%			0.64%

Supplemental data

Net assets, end of year (000’s)		$103,639			$112,441			$184,299			$227,599			$308,683

Portfolio turnover rate		12.72%			11.39%			2.81%			11.49%			9.98%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Adjustable U.S. Government Securities Fund


	Principal Amount		Value

Mortgage-Backed Securities 93.0%
^aFederal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 18.1%
FHLMC, 2.704%,(12-month USD LIBOR +/- MBS Margin), 5/01/45	$	10,785,185	$	11,017,504
FHLMC, 3.751%,(12-month USD LIBOR +/- MBS Margin), 9/01/35		4,885,547		5,064,366
FHLMC, 3.949% - 4.085%,(6-month USD LIBOR +/- MBS Margin), 4/01/36 - 1/01/37		1,244,365		1,290,606
FHLMC, 3.833% - 4.481%,(12-month USD LIBOR +/- MBS Margin), 11/01/35 - 11/01/41		6,595,610		6,926,719
FHLMC, 4.56%,(12-month USD LIBOR +/- MBS Margin), 11/01/37		2,680,286		2,827,230
FHLMC, 4.483% - 4.561%,(12-month USD LIBOR +/- MBS Margin), 2/01/36 - 10/01/38		6,576,541		6,901,607
FHLMC, 4.634%,(12-month USD LIBOR +/- MBS Margin), 9/01/37		14,761,197		15,384,168
FHLMC, 4.635%, (US 1 Year CMTT-Note +/- MBS Margin), 3/01/35		3,209,037		3,396,974
FHLMC, 4.58% - 4.636%,(12-month USD LIBOR +/- MBS Margin), 6/01/35 - 5/01/37		6,431,221		6,717,946
FHLMC, 4.536% - 4.663%, (US 1 Year CMTT-Note +/- MBS Margin), 8/01/33 - 6/01/37		6,358,910		6,729,083
FHLMC, 4.65% - 4.699%,(12-month USD LIBOR +/- MBS Margin), 6/01/35 - 12/01/37		5,847,036		6,160,438
FHLMC, 4.673% - 4.746%, (US 1 Year CMTT-Note +/- MBS Margin), 9/01/35 - 11/01/36		6,462,068		6,818,039
FHLMC, 4.756%,(12-month USD LIBOR +/- MBS Margin), 10/01/41		2,781,423		2,933,682
FHLMC, 4.757%,(12-month USD LIBOR +/- MBS Margin), 7/01/35		6,232,780		6,579,356
FHLMC, 4.70% - 4.772%,(12-month USD LIBOR +/- MBS Margin), 1/01/36 - 5/01/40		6,213,998		6,535,764
FHLMC, 4.798%,(12-month USD LIBOR +/- MBS Margin), 12/01/35		2,645,625		2,781,882
FHLMC, 4.817%,(12-month USD LIBOR +/- MBS Margin), 11/01/40		3,365,167		3,558,984
FHLMC, 4.782% - 4.822%,(12-month USD LIBOR +/- MBS Margin), 8/01/34 - 4/01/40		6,196,810		6,540,187
FHLMC, 4.886%,(12-month USD LIBOR +/- MBS Margin), 6/01/37		5,912,581		6,266,952
FHLMC, 4.858% - 4.966%,(12-month USD LIBOR +/- MBS Margin), 12/01/34 - 3/01/37		3,665,305		3,866,974
FHLMC, 4.983%,(12-month USD LIBOR +/- MBS Margin), 1/01/37		2,887,174		3,091,661
FHLMC, 4.774% - 5.909%, (US 1 Year CMTT-Note +/- MBS Margin), 4/01/34 - 7/01/36		5,001,710		5,357,234


				126,747,356

^aFederal National Mortgage Association (FNMA) Adjustable Rate 70.5%
FNMA, 2.329%,(12-month USD LIBOR +/- MBS Margin), 4/01/45		4,772,529		4,908,003
FNMA, 2.475%,(12-month USD LIBOR +/- MBS Margin), 3/01/46		6,969,714		7,164,450
FNMA, 2.375% - 2.941%, (11th District COF +/- MBS Margin), 4/01/20 - 11/01/40		5,910,949		5,864,511
FNMA, 3.434%, (11th District COF +/- MBS Margin), 4/01/34		15,759,961		16,046,965
FNMA, 3.613%,(12-month USD LIBOR +/- MBS Margin), 11/01/34		3,517,940		3,669,650
FNMA, 3.201% - 3.628%,(12-month USD LIBOR +/- MBS Margin), 8/01/33 - 11/01/38		6,213,036		6,433,271
FNMA, 2.723% - 3.704%,(6-month USD LIBOR +/- MBS Margin), 6/01/21 - 3/01/38		6,594,954		6,779,698
FNMA, 3.63% - 3.773%,(12-month USD LIBOR +/- MBS Margin), 3/01/33 - 11/01/39		5,196,126		5,413,730
FNMA, 3.712% - 3.789%,(6-month USD LIBOR +/- MBS Margin), 3/01/32 - 1/01/37		5,624,379		5,819,568
FNMA, 2.74% - 3.805%,(1-month USD LIBOR +/- MBS Margin), 10/01/26 - 10/01/34		359,954		364,701
FNMA, 3.789% - 3.857%,(6-month USD LIBOR +/- MBS Margin), 9/01/24 - 6/01/37		5,023,624		5,198,962
FNMA, 3.778% - 3.881%,(12-month USD LIBOR +/- MBS Margin), 7/01/33 - 10/01/40		5,572,218		5,805,677
FNMA, 3.861% - 3.912%,(6-month USD LIBOR +/- MBS Margin), 9/01/23 - 7/01/37		6,487,807		6,733,792
FNMA, 3.881% - 3.992%,(12-month USD LIBOR +/- MBS Margin), 9/01/32 - 11/01/42		6,461,160		6,706,553
FNMA, 4.023%,(12-month USD LIBOR +/- MBS Margin), 3/01/37		3,121,913		3,266,673
FNMA, 3.994% - 4.025%,(12-month USD LIBOR +/- MBS Margin), 6/01/33 - 9/01/40		5,934,162		6,191,811
FNMA, 4.044%,(6-month USD LIBOR +/- MBS Margin), 12/01/34		3,418,547		3,534,602
FNMA, 4.044%,(12-month USD LIBOR +/- MBS Margin), 8/01/40		2,830,829		2,973,998
FNMA, 3.35% - 4.061%, (US 1 Year CMTT-Note +/- MBS Margin), 1/01/21 - 11/01/44		6,705,859		6,907,987
FNMA, 4.025% - 4.075%,(12-month USD LIBOR +/- MBS Margin), 11/01/32 - 5/01/39		5,558,997		5,797,780
FNMA, 4.088%,(12-month USD LIBOR +/- MBS Margin), 2/01/36		4,949,856		5,153,639
FNMA, 4.095%,(12-month USD LIBOR +/- MBS Margin), 2/01/36		3,048,195		3,199,414



franklintempleton.com	Annual Report	37

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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


	Principal Amount		Value

Mortgage-Backed Securities(continued)
^aFederal National Mortgage Association (FNMA) Adjustable Rate(continued)
FNMA, 4.079% - 4.13%,(12-month USD LIBOR +/- MBS Margin), 8/01/33 - 6/01/38	$	6,580,646	$	6,892,896
FNMA, 3.913% - 4.172%,(6-month USD LIBOR +/- MBS Margin), 9/01/23 - 8/01/37		6,738,868		6,983,538
FNMA, 4.13% - 4.189%,(12-month USD LIBOR +/- MBS Margin), 12/01/32 - 9/01/40		4,945,268		5,189,740
FNMA, 4.189% - 4.21%,(12-month USD LIBOR +/- MBS Margin), 9/01/32 - 8/01/38		4,822,115		5,038,650
FNMA, 4.213% - 4.23%,(12-month USD LIBOR +/- MBS Margin), 7/01/34 - 10/01/38		6,491,766		6,784,135
FNMA, 4.23% - 4.259%,(12-month USD LIBOR +/- MBS Margin), 7/01/33 - 12/01/40		6,059,205		6,363,246
FNMA, 4.264%,(12-month USD LIBOR +/- MBS Margin), 5/01/39		4,896,220		5,093,100
FNMA, 4.27%,(12-month USD LIBOR +/- MBS Margin), 11/01/42		9,100,870		9,541,517
FNMA, 4.259% - 4.286%,(12-month USD LIBOR +/- MBS Margin), 10/01/33 - 2/01/43		6,482,921		6,813,112
FNMA, 4.318%,(12-month USD LIBOR +/- MBS Margin), 11/01/34		4,327,456		4,542,260
FNMA, 4.286% - 4.325%,(12-month USD LIBOR +/- MBS Margin), 5/01/33 - 8/01/40		6,712,085		6,994,406
FNMA, 4.096% - 4.34%, (US 1 Year CMTT-Note +/- MBS Margin), 11/01/20 - 7/01/38		6,613,038		6,911,821
FNMA, 4.346%,(12-month USD LIBOR +/- MBS Margin), 2/01/36		3,160,023		3,308,733
FNMA, 4.326% - 4.354%,(12-month USD LIBOR +/- MBS Margin), 3/01/33 - 8/01/40		6,112,464		6,402,050
FNMA, 4.354%,(12-month USD LIBOR +/- MBS Margin), 10/01/38		3,289,528		3,458,763
FNMA, 4.355% - 4.377%,(12-month USD LIBOR +/- MBS Margin), 6/01/33 - 12/01/43		6,433,828		6,740,990
FNMA, 4.378% - 4.383%,(12-month USD LIBOR +/- MBS Margin), 6/01/34 - 7/01/42		6,413,351		6,716,816
FNMA, 4.383% - 4.391%,(12-month USD LIBOR +/- MBS Margin), 2/01/35 - 3/01/40		6,389,670		6,721,033
FNMA, 4.401%,(12-month USD LIBOR +/- MBS Margin), 4/01/40		8,146,226		8,565,108
FNMA, 4.407%,(12-month USD LIBOR +/- MBS Margin), 1/01/36		2,990,452		3,154,440
FNMA, 4.395% - 4.426%,(12-month USD LIBOR +/- MBS Margin), 5/01/33 - 1/01/42		6,582,154		6,892,998
FNMA, 4.434%,(12-month USD LIBOR +/- MBS Margin), 7/01/40		2,921,993		3,084,155
FNMA, 4.435%,(12-month USD LIBOR +/- MBS Margin), 3/01/35		5,907,156		6,198,584
FNMA, 4.441%,(12-month USD LIBOR +/- MBS Margin), 5/01/38		3,591,034		3,770,360
FNMA, 4.427% - 4.445%,(12-month USD LIBOR +/- MBS Margin), 5/01/33 - 7/01/38		6,261,178		6,570,175
FNMA, 4.457%,(12-month USD LIBOR +/- MBS Margin), 1/01/36		3,390,825		3,549,892
FNMA, 4.447% - 4.475%,(12-month USD LIBOR +/- MBS Margin), 5/01/33 - 3/01/42		6,241,442		6,528,043
FNMA, 4.493%,(12-month USD LIBOR +/- MBS Margin), 10/01/38		6,490,325		6,791,350
FNMA, 4.502%,(12-month USD LIBOR +/- MBS Margin), 9/01/42		6,395,600		6,704,833
FNMA, 4.476% - 4.503%,(12-month USD LIBOR +/- MBS Margin), 12/01/32 - 4/01/40		6,399,780		6,726,296
FNMA, 4.343% - 4.515%, (US 1 Year CMTT-Note +/- MBS Margin), 4/01/22 - 7/01/40		6,645,600		6,960,170
FNMA, 4.504% - 4.525%,(12-month USD LIBOR +/- MBS Margin), 4/01/33 - 1/01/42		6,320,281		6,634,600
FNMA, 4.534%,(12-month USD LIBOR +/- MBS Margin), 2/01/42		2,791,832		2,940,888
FNMA, 4.549%,(12-month USD LIBOR +/- MBS Margin), 1/01/37		3,816,726		4,029,493
FNMA, 4.551%, (US 1 Year CMTT-Note +/- MBS Margin), 5/01/36		12,743,306		13,494,507
FNMA, 4.564%,(12-month USD LIBOR +/- MBS Margin), 2/01/43		7,518,614		7,857,974
FNMA, 4.526% - 4.572%,(12-month USD LIBOR +/- MBS Margin), 11/01/32 - 2/01/39		6,323,600		6,644,070
FNMA, 4.581%, (US 1 Year CMTT-Note +/- MBS Margin), 6/01/36		2,999,714		3,169,035
FNMA, 4.573% - 4.595%,(12-month USD LIBOR +/- MBS Margin), 12/01/32 - 12/01/39		5,230,528		5,481,996
FNMA, 4.595%,(12-month USD LIBOR +/- MBS Margin), 1/01/39		4,512,936		4,726,051
FNMA, 4.516% - 4.599%, (US 1 Year CMTT-Note +/- MBS Margin), 7/01/22 - 12/01/40		6,553,591		6,874,167
FNMA, 4.596% - 4.609%,(12-month USD LIBOR +/- MBS Margin), 11/01/32 - 11/01/42		6,553,699		6,887,139
FNMA, 4.615%,(12-month USD LIBOR +/- MBS Margin), 7/01/42		7,476,946		7,851,598
FNMA, 4.62%,(12-month USD LIBOR +/- MBS Margin), 8/01/35		2,622,079		2,759,415
FNMA, 4.638%, (US 1 Year CMTT-Note +/- MBS Margin), 1/01/38		3,536,841		3,737,155
FNMA, 4.641%,(12-month USD LIBOR +/- MBS Margin), 3/01/41		3,979,496		4,197,820



38	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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


	Principal Amount		Value

Mortgage-Backed Securities(continued)
^aFederal National Mortgage Association (FNMA) Adjustable Rate(continued)
FNMA, 4.609% - 4.643%,(12-month USD LIBOR +/- MBS Margin), 4/01/33 - 5/01/48	$	6,607,594	$	6,926,400
FNMA, 4.648% - 4.669%,(12-month USD LIBOR +/- MBS Margin), 4/01/32 - 6/01/38		6,512,700		6,807,524
FNMA, 4.693%,(12-month USD LIBOR +/- MBS Margin), 6/01/35		2,848,885		3,003,436
FNMA, 4.601% - 4.703%, (US 1 Year CMTT-Note +/- MBS Margin), 4/01/22 - 9/01/39		6,564,932		6,892,982
FNMA, 4.669% - 4.71%,(12-month USD LIBOR +/- MBS Margin), 2/01/33 - 5/01/40		6,651,585		6,980,080
FNMA, 4.71% - 4.732%,(12-month USD LIBOR +/- MBS Margin), 1/01/33 - 2/01/37		6,118,638		6,420,064
FNMA, 4.741%,(12-month USD LIBOR +/- MBS Margin), 5/01/40		2,633,807		2,783,574
FNMA, 3.478% - 4.746%, (US 5 Year CMTT-Note +/- MBS Margin), 5/01/26 - 2/01/30		102,355		107,973
FNMA, 4.80%,(12-month USD LIBOR +/- MBS Margin), 5/01/40		7,411,664		7,808,735
FNMA, 4.732% - 4.803%,(12-month USD LIBOR +/- MBS Margin), 3/01/32 - 4/01/44		6,548,689		6,871,322
FNMA, 4.704% - 4.81%, (US 1 Year CMTT-Note +/- MBS Margin), 1/01/21 - 5/01/38		6,618,046		6,928,172
FNMA, 4.903%,(12-month USD LIBOR +/- MBS Margin), 1/01/36		2,906,714		3,065,574
FNMA, 4.807% - 4.91%,(12-month USD LIBOR +/- MBS Margin), 2/01/32 - 4/01/41		6,482,575		6,832,136
FNMA, 4.913% - 4.987%,(12-month USD LIBOR +/- MBS Margin), 7/01/33 - 3/01/47		6,595,428		6,952,507
FNMA, 3.25% - 5.027%, (US 3 Year CMTT-Note +/- MBS Margin), 6/01/21 - 1/01/35		570,000		587,565
FNMA, 4.81% - 5.085%, (US 1 Year CMTT-Note +/- MBS Margin), 10/01/22 - 1/01/40		6,688,667		6,951,106
FNMA, 5.033% - 5.516%,(12-month USD LIBOR +/- MBS Margin), 1/01/35 - 4/01/38		2,165,844		2,275,125
FNMA, 4.175% - 5.727%,(6-month USD LIBOR +/- MBS Margin), 11/01/23 - 6/01/38		4,239,052		4,410,396
FNMA, 5.124% - 6.81%, (US 1 Year CMTT-Note +/- MBS Margin), 12/01/23 - 10/01/36		1,611,612		1,676,624
FNMA, 2.99% - 6.989%, (11th District COF +/- MBS Margin), 2/01/20 - 11/01/36		2,044,631		2,073,419
FNMA, 4.381% - 7.67%,(6-month UST-Bill +/- MBS Margin), 12/01/21 - 11/01/34		165,988		169,058


				493,738,325


Federal National Mortgage Association (FNMA) Fixed Rate 4.3%
FNMA 15 Year, 2.50%, 11/01/34		30,000,000		30,334,663


^aGovernment National Mortgage Association (GNMA) Adjustable Rate 0.1%
GNMA, 3.25% - 4.125%, (US 1 Year CMTT-Note +/- MBS Margin), 9/20/33 - 5/20/36		764,550		779,717


Total Mortgage-Backed Securities (Cost $651,910,074)				651,600,061


	Shares

Short Term Investments 6.4%

Money Market Funds (Cost $35,052,748) 5.0%
^b,cInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		35,052,748		35,052,748



franklintempleton.com	Annual Report	39

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

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


	Principal Amount		Value

Short Term Investments(continued)
Repurchase Agreements (Cost $9,446,232) 1.4%
^dJoint Repurchase Agreement, 1.722%, 11/01/19 (Maturity Value $9,446,684) BNP Paribas Securities Corp. (Maturity Value $6,687,024) Deutsche Bank Securities Inc. (Maturity Value $1,645,140) HSBC Securities (USA) Inc. (Maturity Value $1,114,520) Collateralized by U.S. Government Agency Securities, 5.00%, 10/20/48;^eU.S. Treasury Bills, 12/03/19 - 12/10/19; and U.S. Treasury Notes, 1.625% - 1.875%, 3/15/20 - 4/30/22 (valued at $ 9,635,332)		9,446,232	$	9,446,232


Total Investments (Cost $696,409,054) 99.4%				696,099,041
Other Assets, less Liabilities 0.6%				4,384,915


Net Assets 100.0%			$	700,483,956

��

See Abbreviations on page 165.

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

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

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Floating Rate Daily Access Fund


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.70			$ 8.83			$ 8.84			$ 8.61			$ 9.04

Income from investment operations^a:

Net investment income		0.441	^b		0.396			0.307			0.401			0.406

Net realized and unrealized gains (losses)		(0.515	)		(0.129	)		(0.011	)		0.228			(0.434	)

Total from investment operations		(0.074	)		0.267			0.296			0.629			(0.028	)

Less distributions from:

Net investment income		(0.446	)		(0.397	)		(0.306	)		(0.399	)		(0.402	)

Net asset value, end of year		$ 8.18			$ 8.70			$ 8.83			$ 8.84			$ 8.61

Total return^c		(0.88)%			2.97%			3.51%			7.60%			(0.37)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.89%			0.87%			0.87%			0.88%			0.85%

Expenses net of waiver and payments by affiliates^d		0.86%			0.81%			0.82%			0.86%			0.84%

Net investment income		5.21%			4.53%			3.45%			4.72%			4.55%

Supplemental data

Net assets, end of year (000’s)		$1,049,359			$1,344,473			$1,362,220			$1,359,862			$1,553,100

Portfolio turnover rate		23.23%	^e		58.07%			64.21%			34.10%			46.72%

^bBased on average daily shares outstanding.

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

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

^eExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund(continued)


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.70			$ 8.83			$ 8.84			$ 8.61			$ 9.05

Income from investment operations^a:

Net investment income		0.407	^b		0.364			0.271			0.366			0.369

Net realized and unrealized gains (losses)		(0.514	)		(0.131	)		(0.010	)		0.229			(0.443	)

Total from investment operations		(0.107	)		0.233			0.261			0.595			(0.074	)

Less distributions from:

Net investment income		(0.413	)		(0.363	)		(0.271	)		(0.365	)		(0.366	)

Net asset value, end of year		$ 8.18			$ 8.70			$ 8.83			$ 8.84			$ 8.61

Total return^c		(1.39)%			2.68%			3.11%			7.18%			(0.87)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.29%			1.27%			1.27%			1.28%			1.25%

Expenses net of waiver and payments by affiliates^d		1.26%			1.21%			1.22%			1.26%			1.24%

Net investment income		4.81%			4.13%			3.05%			4.32%			4.15%

Supplemental data

Net assets, end of year (000’s)		$296,134			$438,480			$550,797			$551,726			$627,805

Portfolio turnover rate		23.23%	^e		58.07%			64.21%			34.10%			46.72%

^bBased on average daily shares outstanding.

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

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

^eExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund(continued)


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.71			$ 8.84			$ 8.84			$ 8.60			$ 9.05

Income from investment operations^a:

Net investment income		0.463	^b		0.427			0.338			0.422			0.437

Net realized and unrealized gains (losses)		(0.508	)		(0.130	)		(0.002	)		0.245			(0.457	)

Total from investment operations		(0.045	)		0.297			0.336			0.667			(0.020	)

Less distributions from:

Net investment income		(0.475	)		(0.427	)		(0.336	)		(0.427	)		(0.430	)

Net asset value, end of year		$ 8.19			$ 8.71			$ 8.84			$ 8.84			$ 8.60

Total return		(0.54)%			3.43%			3.85%			7.96%			(0.16)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.57%			0.55%			0.52%			0.53%			0.72%

Expenses net of waiver and payments by affiliates^c		0.53%			0.48%			0.47%			0.51%			0.51%

Net investment income		5.54%			4.86%			3.80%			5.07%			4.88%

Supplemental data

Net assets, end of year (000’s)		$18,764			$142,075			$130,180			$12,333			$7

Portfolio turnover rate		23.23%	^d		58.07%			64.21%			34.10%			46.72%

^bBased on average daily shares outstanding.

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

^dExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Floating Rate Daily Access Fund(continued)


	Year Ended October 31,

	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 8.71			$ 8.84			$ 8.85			$ 8.61			$ 9.05

Income from investment operations^a:

Net investment income		0.463	^b		0.418			0.327			0.422			0.427

Net realized and unrealized gains (losses)		(0.525	)		(0.129	)		(0.010	)		0.239			(0.443	)

Total from investment operations		(0.062	)		0.289			0.317			0.661			(0.016	)

Less distributions from:

Net investment income		(0.468	)		(0.419	)		(0.327	)		(0.421	)		(0.424	)

Net asset value, end of year		$ 8.18			$ 8.71			$ 8.84			$ 8.85			$ 8.61

Total return		(0.74)%			3.35%			3.64%			8.00%			(0.23)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.64%			0.62%			0.62%			0.63%			0.60%

Expenses net of waiver and payments by affiliates^c		0.61%			0.56%			0.57%			0.61%			0.59%

Net investment income		5.46%			4.78%			3.70%			4.97%			4.80%

Supplemental data

Net assets, end of year (000’s)		$858,071			$1,743,880			$1,672,724			$1,108,692			$1,405,281

Portfolio turnover rate		23.23%	^d		58.07%			64.21%			34.10%			46.72%

^bBased on average daily shares outstanding.

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

^dExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Floating Rate Daily Access Fund


	Country		Shares		Value

Common Stocks 1.2%
Diversified Support Services 0.1%
^a,b,cRemington Outdoor Co. Inc.		United States		1,808,932	$	1,808,932

Forest Products 0.7%
^a,b,c,dAppvion Operations Inc.		United States		1,219,956		16,265,063

Oil & Gas Exploration & Production 0.4%
^aSamson Resources II LLC		United States		432,778		9,304,727


Total Common Stocks (Cost $87,820,268)						27,378,722


Management Investment Companies (Cost $67,471,246) 2.6%
Other Diversified Financial Services 2.6%
^eFranklin Floating Rate Income Fund		United States		6,837,495		56,546,081


			Principal Amount*

Corporate Bonds (Cost $18,556,766) 0.9%
Industrial Machinery 0.9%
^fOnsite Rental Group Operations Pty. Ltd., secured note, PIK, 6.10%, 10/26/23		Australia	$	21,096,262		19,514,042

^g,hSenior Floating Rate Interests 81.8%
Aerospace & Defense 1.7%
Delos Finance S.A.R.L. (AerCap), New Loans, 3.854%,(3-month USD LIBOR + 1.75%), 10/06/23		Luxembourg		12,359,015		12,409,996
Doncasters U.S. Finance LLC,
Second-Lien Term Loans, 10.354%,(3-month USD LIBOR + 8.25%), 10/09/20		United States		8,951,314		2,416,855
Term B Loans, 5.604%,(3-month USD LIBOR + 3.50%), 4/09/20		United States		26,917,631		18,976,930
Flying Fortress Holdings LLC (ILFC), New Loan, 3.854%,(3-month USD LIBOR + 1.75%), 10/30/22		United States		4,696,029		4,715,400


						38,519,181


Air Freight & Logistics 0.5%
XPO Logistics Inc., Refinanced Term Loan, 3.786%,(1-month USD LIBOR + 2.00%), 2/24/25		United States		10,200,000		10,230,457

Airlines 2.4%
Air Canada, Term Loan, 3.805%,(1-month USD LIBOR + 2.00%), 10/06/23		Canada		15,893,103		15,972,569
Allegiant Travel Co., Class B Term Loans, 6.709%,(3-month USD LIBOR + 4.50%), 2/05/24		United States		17,711,000		17,777,416
American Airlines Inc., 2018 Replacement Term Loans, 3.554%,(1-month USD LIBOR + 1.75%), 6/27/25		United States		10,600,000		10,498,420
^i,jKestrel Bidco Inc & WestJet, Term Loan B, TBD, 8/08/26		Canada		8,175,918		8,225,554


						52,473,959


Apparel Retail 0.8%
Ascena Retail Group Inc., Tranche B Term Loan, 6.313%,(1-month USD LIBOR + 4.50%), 8/21/22		United States		31,598,193		17,471,178

Auto Parts & Equipment 2.7%
Adient US LLC,
Initial Term Loans, 6.459%,(3-month USD LIBOR + 4.25%), 5/06/24		United States		3,546,698		3,471,331
Initial Term Loans, 6.889%,(6-month USD LIBOR + 4.25%), 5/06/24		United States		10,604,629		10,379,281



franklintempleton.com	Annual Report	45

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests(continued)
Auto Parts & Equipment(continued)
American Axle & Manufacturing, Inc.,
Tranche B Term Loan, 4.08%,(1-month USD LIBOR + 2.25%), 4/06/24		United States	$	2,554,029	$	2,442,290
Tranche B Term Loan, 4.19%,(3-month USD LIBOR + 2.25%), 4/06/24		United States		634,996		607,215
Panther BF Aggregator 2 LP, Initial Dollar Term Loan, 5.30%,(1-month USD LIBOR + 3.50%), 4/30/26		United States		16,901,359		16,689,889
TI Group Automotive Systems LLC, Initial US Term Loan, 4.286%,(1-month USD LIBOR + 2.50%), 6/30/22		United States		27,566,480		27,389,889


						60,979,895


Automobile Manufacturers 0.6%
Thor Industries Inc., Initial USD Term Loans, 5.813%,(1-month USD LIBOR + 3.75%), 2/01/26		United States		14,313,553		13,982,552


Automotive Retail 0.2%
Wand NewCo. 3 Inc. (Caliber Collision), Initial Term Loan, 5.286%,(1-month USD LIBOR + 3.50%), 2/05/26		United States		3,491,250		3,509,143


Broadcasting 5.2%
Diamond Sports Group LLC, Term Loan, 5.08%,(1-month USD LIBOR + 3.25%), 8/24/26		United States		20,949,399		21,077,714
Gray Television Inc.,
TermB-2 Loan, 4.261%,(1-month USD LIBOR + 2.25%), 2/07/24		United States		26,687,491		26,745,883
Term C Loan, 4.511%,(1-month USD LIBOR + 2.50%), 1/02/26		United States		5,718,602		5,741,390
Mission Broadcasting Inc., TermB-3 Loan, 4.282%,(1-month USD LIBOR + 2.25%), 1/17/24		United States		2,061,034		2,065,414
Nexstar Broadcasting Inc.,
TermA-4 Loan, 3.532%,(1-month USD LIBOR + 1.50%), 10/26/23		United States		12,721,352		12,647,186
TermB-3 Loan, 4.05%,(1-month USD LIBOR + 2.25%), 10/26/25		United States		10,372,313		10,394,354
TermB-4 Loan, 4.554%,(1-month USD LIBOR + 2.75%), 9/19/26		United States		1,665,034		1,674,192
Sinclair Television Group Inc., Tranche B Term Loans, 4.04%,(1-month USD LIBOR + 2.25%), 1/03/24		United States		35,709,733		35,720,875
WXXA-TV LLC andWLAJ-TV LLC, TermA-4 Loan, 3.532%,(1-month USD LIBOR + 1.50%), 10/26/23		United States		352,088		350,036


						116,417,044


Building Products 0.8%
Resideo Funding Inc.,
Tranche A Term Loan, 4.11%,(3-month USD LIBOR + 2.00%), 10/25/23		United States		16,747,500		16,757,548
Tranche B Term Loan, 4.11%,(3-month USD LIBOR + 2.00%), 10/25/25		United States		1,706,668		1,703,113


						18,460,661


Cable & Satellite 2.0%
Charter Communications Operating LLC (CCO Safari), TermB-2 Loan, 3.58%,(1-month USD LIBOR + 1.75%), 2/01/27		United States		2,418,657		2,431,054
CSC Holdings LLC, March 2017 Incremental Term Loans, 4.171%,(1-month USD LIBOR + 2.25%), 7/17/25		United States		41,516,177		41,373,444


						43,804,498



46	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests (continued)
Casinos & Gaming 3.3%
Aristocrat Technologies Inc., TermB-3 Loans, 3.716%,(3-month USD LIBOR + 1.75%), 10/19/24		United States	$	7,641,152	$	7,668,614
Boyd Gaming Corp.,
Refinancing Term B Loans, 3.96%,(1-week USD LIBOR + 2.25%), 9/15/23		United States		13,169,841		13,207,467
Term A Loans, 3.96%,(1-week USD LIBOR + 2.25%), 9/15/21		United States		4,223,263		4,216,223
Caesars Resort Collection LLC, Term B Loans, 4.536%,(1-month USD LIBOR + 2.75%), 12/22/24		United States		18,992,525		18,738,804
Eldorado Resorts Inc., Initial Term Loan, 4.125% - 4.313%,(1-month USD LIBOR + 2.25%), 4/17/24		United States		14,546,158		14,543,002
Kingpin Intermediate Holdings LLC, Amendment No. 2 Term Loans, 5.29%,(1-month USD LIBOR + 3.50%), 7/03/24		United States		2,744,280		2,747,688
Station Casinos LLC, Term B Facility Loans, 4.29%,(1-month USD LIBOR + 2.50%), 6/08/23		United States		11,511,534		11,539,162


						72,660,960


Coal & Consumable Fuels 1.9%
Wolverine Fuels Holding LLC,
First Lien Initial Term Loan, 7.874%,(3-month USD LIBOR + 5.75%), 8/14/20		United States		29,981,854		29,332,237
Second Lien Initial Term Loan, 12.874%,(3-month USD LIBOR + 10.75%), 2/16/21		United States		13,774,236		13,028,127


						42,360,364


Commodity Chemicals 0.7%
Ineos U.S. Finance LLC, 2024 Dollar Term Loan, 3.786%,(1-month USD LIBOR + 2.00%), 3/31/24		United States		6,942,313		6,878,534
ⁱUnivar USA Inc., TermB-3 Loans, 4.036%,(1-month USD LIBOR + 2.25%), 7/01/24		United States		9,448,371		9,507,423


						16,385,957


Communications Equipment 1.0%
Ciena Corp., 2018 Term Loan, 3.846%,(1-month USD LIBOR + 2.00%), 9/28/25		United States		9,191,483		9,244,618
CommScope Inc., Initial Term Loans, 5.036%,(1-month USD LIBOR + 3.25%), 4/04/26		United States		14,019,428		13,813,511


						23,058,129


Data Processing & Outsourced Services 2.3%
Iron Mountain Information Management LLC, Term B Loan, 3.536%,(1-month USD LIBOR + 1.75%), 1/26/26		United States		9,152,828		9,038,418
Neustar Inc.,
TLB4, 5.286%,(1-month USD LIBOR + 3.50%), 8/08/24		United States		3,084,264		2,958,580
TLB5, 6.286%,(1-month USD LIBOR + 4.50%), 8/08/24		United States		16,463,685		16,251,057
WEX Inc., TermB-3 Loan, 4.036%,(1-month USD LIBOR + 2.25%), 5/17/26		United States		23,655,166		23,773,441


						52,021,496

Diversified Chemicals 0.2%
Chemours Co., TrancheB-2 US$ Term Loan, 3.54%,(1-month USD LIBOR + 1.75%), 4/03/25		United States		5,112,427		4,854,674

Diversified Support Services 0.9%
Ventia Pty Ltd., Term B Loans, 5.604%,(3-month USD LIBOR + 3.50%), 5/21/26		Australia		19,001,766		19,049,271



franklintempleton.com	Annual Report	47

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,^hSenior Floating Rate Interests (continued)
Electric Utilities 0.6%
EFS Cogen Holdings I LLC (Linden),
Term B Advance, 5.04%,(1-month USD LIBOR + 3.25%), 6/28/23	United States	$	3,779,501	$	3,773,598
Term B Advance, 5.36%,(3-month USD LIBOR + 3.25%), 6/28/23	United States		9,334,011		9,319,431


					13,093,029


Food Distributors 1.4%
Aramark Corp., U.S. TermB-3 Loan, 3.536%,(1-month USD LIBOR + 1.75%), 3/11/25	United States		18,524,719		18,582,609
Nutraceutical International Corp., Term Loan B, 5.036%,(1-month USD LIBOR + 3.25%), 8/22/23	United States		5,018,521		4,911,878
U.S. Foods Inc., Initial Term Loans, 3.786%,(1-month USD LIBOR + 2.00%), 6/27/23	United States		6,625,731		6,654,718


					30,149,205

Food Retail 1.4%
BI-LO LLC (Southeastern Grocers), FILO Loan (ABL), 7.374%,(3-month USD LIBOR + 5.25%), 5/31/22	United States		26,406,250		26,472,266
Whatabrands LLC (Whataburger), Term Loan B, 5.516%,(3-month USD LIBOR + 3.25%), 8/02/26	United States		4,003,143		4,018,871


					30,491,137

Forest Products 2.1%
^bAppvion Operations, Inc.,
Term Loan, 8.10%,(3-month USD LIBOR + 6.00%), 6/15/26	United States		2,672,630		2,699,356
Term Loan, 8.22%,(6-month USD LIBOR + 6.00%), 6/15/26	United States		42,511,633		42,936,750


					45,636,106

General Merchandise Stores 1.5%
^f99 Cents Only Stores,
First Lien Term Loan, PIK, 8.604%,(3-month USD LIBOR + 6.50%), 1/13/22	United States		22,704,412		18,674,379
First Lien Term Loan, PIK, 8.535%,(6-month USD LIBOR + 6.50%), 1/13/22	United States		17,041,733		14,016,825


					32,691,204


Health Care Distributors 0.3%
Mallinckrodt International Finance SA & Mallinckrodt CB LLC, 2017 Term B Loans, 4.854%,(3-month USD LIBOR + 2.75%), 9/24/24	Luxembourg		8,332,110		6,551,122

Health Care Facilities 0.4%
HCA Inc., Term Loan, 3.536%,(1-month USD LIBOR + 1.75%), 3/13/25	United States		8,037,402		8,081,777

Health Care Services 1.9%
Air Medical Group Holdings Inc., 2018 New Term Loans, 6.036%,(1-month USD LIBOR + 4.25%), 3/14/25	United States		18,555,189		16,671,837
Catalent Pharma Solutions Inc., Dollar TermB-2 Loan, 4.036%,(1-month USD LIBOR + 2.25%), 5/17/26	United States		8,044,155		8,065,875
DaVita Inc., Tranche B Term Loan, 4.036%,(1-month USD LIBOR + 2.25%), 8/12/26	United States		7,039,110		7,068,590
ⁱNational Mentor Holdings Inc.,
Initial Term C Loans, 6.04%,(1-month USD LIBOR + 4.25%), 3/08/26	United States		497,615		498,963
Initial Term Loans, 6.04%,(1-month USD LIBOR + 4.25%), 3/08/26	United States		9,491,544		9,517,246


					41,822,511



48	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests (continued)
Health Care Technology 0.8%
IQVIA Inc.,
TermB-1 Dollar Loans, 4.104%,(3-month USD LIBOR + 2.00%), 3/07/24		United States	$	8,470,833	$	8,511,426
TermB-3 Dollar Loans, 3.854%,(3-month USD LIBOR + 1.75%), 6/11/25		United States		8,690,000		8,699,307


						17,210,733


Industrial Machinery 4.3%
Altra Industrial Motion Corp., Term Loan, 3.786%,(3-month USD LIBOR + 2.00%), 10/01/25		United States		13,608,559		13,587,207
Harsco Corp., Term LoanB-2, 4.063%,(1-month USD LIBOR + 2.25%), 12/10/24		United States		8,514,574		8,541,182
Navistar Inc., Tranche B Term Loan, 5.42%,(1-month USD LIBOR + 3.50%), 11/06/24		United States		49,939,064		49,407,863
Onsite Rental Group Operations Pty. Ltd., Term Loan, 6.323%,(1-month USD LIBOR + 4.50%), 10/25/22		Australia		15,430,073		15,237,197
RBS Global Inc. (Rexnord), Term B Loan, 3.786%,(1-month USD LIBOR + 2.00%), 8/21/24		United States		7,884,375		7,932,170


						94,705,619


Integrated Telecommunication Services 1.7%
Global Tel*Link Corp.,
First Lien Term Loan, 6.036%,(1-month USD LIBOR + 4.25%), 11/29/25		United States		11,570,219		10,135,511
Second Lien Term Loan, 10.036%,(1-month USD LIBOR + 8.25%), 11/29/26		United States		7,895,149		7,539,868
Securus Technologies Holdings Inc.,
Initial Term Loan, 6.286%,(1-month USD LIBOR + 4.50%), 11/01/24		United States		8,931,818		7,094,409
Second Lien Initial Loan, 10.036%,(1-month USD LIBOR + 8.25%), 11/01/25		United States		4,911,521		2,701,337
Zayo Group LLC, 2017 Incremental RefinancingB-1 Term Loan, 3.786%,(1-month USD LIBOR + 2.00%), 1/19/21		United States		10,067,511		10,101,066


						37,572,191

Interactive Media & Services 0.3%
Ancestry.com Operations Inc.,Non-Extended Term Loans, 5.54%,(1-month USD LIBOR + 3.75%), 10/19/23		United States		7,484,557		6,941,927

Internet Services & Infrastructure 1.5%
Carbonite Inc., Initial Term Loan, 5.677%,(3-month USD LIBOR + 3.75%), 3/26/26		United States		5,642,595		5,643,476
LegalZoom.com Inc., 2018 Term Loans, 6.286%,(1-month USD LIBOR + 4.50%), 11/21/24		United States		7,675,374		7,687,363
TIBCO Software Inc., TermB-2 Loans, 6.00%,(1-month USD LIBOR + 4.00%), 6/30/26		United States		19,844,370		19,778,228


						33,109,067


Investment Banking & Brokerage 0.5%
Russell Investments U.S. Institutional Holdco Inc., Initial Term Loan, 5.036%,(1-month USD LIBOR + 3.25%), 6/01/23		United States		11,809,666		11,489,825

Leisure Facilities 1.7%
ⁱ24 Hour Fitness Worldwide Inc., Term Loan, 5.286%,(1-month USD LIBOR + 3.50%), 5/30/25		United States		23,511,838		18,260,939
Equinox Holdings Inc., TermB-1 Loans, 4.786%,(1-month USD LIBOR + 3.00%), 3/08/24		United States		12,334,872		12,304,035
NASCAR Holdings Inc., Initial Term Loans, 4.628%,(3-month USD LIBOR + 2.75%), 10/18/26		United States		8,042,028		8,091,736


						38,656,710



franklintempleton.com	Annual Report	49

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests(continued)
Life Sciences Tools & Services 0.4%
Syneos Health Inc., Initial Term B Loans, 3.786%,(1-month USD LIBOR + 2.00%), 8/01/24		United States	$	9,526,616	$	9,556,386


Marine 0.3%
ⁱInternational Seaways Operating Corp., Initial Term Loans, 7.79%,(1-month USD LIBOR + 6.00%), 6/22/22		United States		7,076,410		7,109,584


Mortgage REITs 0.1%
Blackstone Mortgage Trust Inc., Initial Term Loans, 4.30%,(1-month USD LIBOR + 2.50%), 4/23/26		United States		1,524,249		1,531,871


Movies & Entertainment 1.0%
Lions Gate Capital Holdings LLC, Term A Loan, 3.536%,(1-month USD LIBOR + 1.75%), 3/22/23		Canada		23,564,193		23,004,543


Office Services & Supplies 0.3%
West Corporation,
Term B Loans, 5.786%,(1-month USD LIBOR + 4.00%), 10/10/24		United States		17,160		14,396
Term B Loans, 5.927%,(3-month USD LIBOR + 4.00%), 10/10/24		United States		6,726,613		5,643,346


						5,657,742


Oil & Gas Exploration & Production 5.5%
Fieldwood Energy LLC, Closing Date Loans, 7.177%,(3-month USD LIBOR + 5.25%), 4/11/22		United States		120,576,116		97,546,078
Utex Industries Inc.,
First Lien Initial Term Loan, 5.786%,(1-month USD LIBOR + 4.00%), 5/21/21		United States		30,770,987		23,693,660
Second Lien Initial Term Loan, 9.036%,(1-month USD LIBOR + 7.25%), 5/20/22		United States		253,504		134,357


						121,374,095


Oil & Gas Storage & Transportation 1.4%
^i,jBuckeye Partners LP, Initial Term, TBD, 11/01/26		United States		8,374,652		8,423,066
Centurion Pipeline Co. LLC, Initial Term Loans, 5.036%,(1-month USD LIBOR + 3.25%), 9/28/25		United States		6,453,388		6,465,488
Strike LLC,
Term Loan, 10.104%,(3-month USD LIBOR + 8.00%), 11/30/22		United States		245,065		244,759
Term Loan, 10.064%,(6-month USD LIBOR + 8.00%), 11/30/22		United States		16,664,416		16,643,585


						31,776,898


Other Diversified Financial Services 0.7%
Asurion LLC,
AM No. 14 ReplacementB-4 Term Loans, 4.786%,(1-month USD LIBOR + 3.00%), 8/04/22		United States		6,569,740		6,581,033
ReplacementB-6 Term Loans, 4.786%,(1-month USD LIBOR + 3.00%), 11/03/23		United States		9,233,592		9,249,465
Second Lien ReplacementB-2 Term Loans, 8.286%,(1-month USD LIBOR + 6.50%), 8/04/25		United States		169,003		170,164


						16,000,662



50	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests(continued)
Packaged Foods & Meats 3.5%
B&G Foods Inc., TrancheB-4 Term Loan, 4.475%,(1-month USD LIBOR + 2.50%), 10/10/26		United States	$	1,999,696	$	2,005,111
CSM Bakery Supplies LLC,
Second Lien Term Loan, 9.78%,(3-month USD LIBOR + 7.75%), 7/03/21		United States		15,995,244		14,315,743
Term Loans, 6.03%,(3-month USD LIBOR + 4.00%), 7/03/20		United States		21,563,389		20,233,640
JBS USA Lux SA, New Term Loans, 4.286%,(1-month USD LIBOR + 2.50%), 5/01/26		United States		38,648,644		38,832,688
Post Holdings Inc., Series A Incremental Term Loans, 3.83%,(1-month USD LIBOR + 2.00%), 5/24/24		United States		1,840,842		1,846,759


						77,233,941


Paper Packaging 2.0%
Berry Global Inc.,
Term U Loans, 4.439%,(1-month USD LIBOR + 2.50%), 7/01/26		United States		22,965,300		23,077,256
Term W Loan, 3.878%,(1-month USD LIBOR + 2.00%), 10/01/22		United States		13,400,204		13,458,830
Reynolds Group Holdings Inc., U.S. Term Loans, 4.536%,(1-month USD LIBOR + 2.75%), 2/05/23		United States		8,682,280		8,694,218


						45,230,304


Personal Products 2.9%
^cFGI Operating Co. LLC (Freedom Group),
^fTerm Loan, PIK, 12.10%,(3-month USD LIBOR + 10.00%), 5/15/22		United States		49,219,310		48,024,659
Term Loan FILO, 9.624% - 9.658%,(3-month USD LIBOR + 7.50%), 5/15/21		United States		13,405,115		13,378,940
Sunshine Luxembourg VII SARL, Facility B1 Commitments, 6.349%,(2-month USD LIBOR + 4.25%), 9/25/26		Luxembourg		2,700,000		2,705,400


						64,108,999


Pharmaceuticals 3.6%
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.063%,(1-month USD LIBOR + 4.25%), 4/29/24		United States		7,072,604		6,499,221
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.086%,(1-week USD LIBOR + 2.25%), 1/31/25		United States		30,348,834		30,429,440
Horizon Pharma Inc., Sixth Amendment Refinanced Term Loans, 4.563%,(1-month USD LIBOR + 2.50%), 5/22/26		United States		18,951,094		19,025,117
Innoviva Inc., Initial Term Loan, 6.652%,(3-month USD LIBOR + 4.50%), 8/18/22		United States		172,970		170,375
Valeant Pharmaceuticals International, Initial Term Loans, 4.921%,(1-month USD LIBOR + 3.00%), 6/02/25		United States		23,505,680		23,616,674


						79,740,827


Research & Consulting Services 0.1%
Nielsen Finance LLC,Class B-4 Term Loans, 3.94%,(1-month USD LIBOR + 2.00%), 10/04/23		United States		3,274,809		3,267,644


Restaurants 0.6%
1011778 B.C. ULC, TermB-3 Loan, 4.036%,(1-month USD LIBOR + 2.25%), 2/17/24		Canada		3,160,842		3,170,707
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC (Yum Brands), Term Loan B, 3.628%,(1-month USD LIBOR + 1.75%), 4/03/25		United States		9,423,776		9,455,185
NPC International Inc., Second Lien Initial Term Loan, 9.427%,(3-month USD LIBOR + 7.50%), 4/20/25		United States		8,228,426		1,494,833


						14,120,725



franklintempleton.com	Annual Report	51

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests(continued)
Semiconductor Equipment 0.2%
MKS Instruments Inc., TrancheB-6 Term Loan, 3.536%,(1-month USD LIBOR + 1.75%), 2/02/26		United States	$	5,085,082	$	5,105,738


Semiconductors 0.6%
ON Semiconductor Corp., 2019 Replacement TermB-4 Loans, 3.786%,(1-month USD LIBOR + 2.00%), 9/18/26		United States		13,474,740		13,552,368


Specialized Consumer Services 2.7%
Avis Budget Car Rental LLC, Tranche B Term Loans, 3.79%,(1-month USD LIBOR + 2.00%), 2/13/25		United States		30,301,852		30,364,879
NVA Holdings Inc.,
TermB-3 Loan, 4.536%,(1-month USD LIBOR + 2.75%), 2/02/25		United States		18,882,784		18,878,063
TermB-4 Loan, 5.286%,(1-month USD LIBOR + 3.50%), 2/02/25		United States		2,020,719		2,023,245
Sabre GLBL Inc.,
2017 Other Term A Loans, 4.036%,(1-month USD LIBOR + 2.25%), 7/01/22		United States		6,506,048		6,518,247
2018 Other Term B Loans, 3.786%,(1-month USD LIBOR + 2.00%), 2/22/24		United States		1,849,457		1,854,577


						59,639,011

Specialty Chemicals 1.8%
Axalta Coating Systems U.S. Holdings Inc., TermB-3 Dollar Loan, 3.854%,(3-month USD LIBOR + 1.75%), 6/01/24		United States		27,012,161		27,015,673
Oxbow Carbon LLC,
Tranche A Term Loan, 4.286%,(1-month USD LIBOR + 2.50%), 1/04/22		United States		3,259,436		3,243,138
Tranche B Term Loan, 5.536%,(1-month USD LIBOR + 3.75%), 1/04/23		United States		10,119,625		10,113,300


						40,372,111

Specialty Stores 4.4%
General Nutrition Centers Inc.,
FILO Term Loan (ABL), 8.79%,(1-month USD LIBOR + 7.00%), 12/31/22		United States		16,678,686		16,700,702
TrancheB-2 Term Loans, 10.54%,(1-month USD LIBOR + 8.75%), 3/04/21		United States		42,922,055		40,574,862
Harbor Freight Tools USA Inc., Refinancing Loans, 4.286%,(1-month USD LIBOR + 2.50%), 8/19/23.		United States		6,585,654		6,458,057
Jo-Ann Stores Inc., Initial Loans, 6.934%,(3-month USD LIBOR + 5.00%), 10/23/23		United States		11,400,965		8,750,240
Michaels Stores Inc., 2018 New Replacement Term B Loan, 4.30% - 4.323%,(1-month USD LIBOR + 2.50%), 1/28/23		United States		26,732,479		26,084,217
PetSmart Inc., Amended Loan, 5.93%,(1-month USD LIBOR + 4.00%), 3/11/22		United States		140,117		136,935


						98,705,013

Systems Software 1.1%
ⁱDcert Buyer Inc., First Lien Term Loan, 5.786%,(1-month USD LIBOR + 4.00%), 10/16/26		United States		5,262,169		5,172,275
^i,jFinastra USA Inc., Dollar Term Laon, TBD, 6/13/24		United States		1,000,000		958,125
Go Daddy Operating Co. LLC, TrancheB-2 Term Loan, 3.536%,(1-month USD LIBOR + 1.75%), 2/15/24		United States		13,349,920		13,380,292
^i,jHyland Software Inc., First Lien Term, TBD, 7/01/24		United States		1,480,000		1,472,600
^i,jPerforce Software Inc., first lien, Term Loan, TBD, 7/08/26		United States		2,600,000		2,574,000


						23,557,292



52	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

^g,hSenior Floating Rate Interests(continued)
Trucking 1.0%
Hertz Corp., TrancheB-1 Term Loan, 4.54%,(1-month USD LIBOR + 2.75%), 6/30/23		United States	$	23,027,660	$	23,061,234


Total Senior Floating Rate Interests (Cost $1,907,110,797)						1,818,148,570


Asset-Backed Securities 8.8%
Other Diversified Financial Services 8.8%
^k,lAlinea CLO Ltd.,2018-1A, C, 144A, FRN, 3.866%,(3-month USD LIBOR + 1.90%), 7/20/31		United States		7,000,000		6,663,930
^k,lAnnisa CLO Ltd.,2016-2A, CR, 144A, FRN, 3.966%,(3-month USD LIBOR + 2.00%), 7/20/31		United States		1,800,000		1,712,394
^k,mARES XLIX CLO Ltd.,2018-49A, C, 144A, FRN, 3.903%, 7/22/30		United States		3,000,000		2,890,530
^k,lARES XXXVII CLO Ltd.,2015-4A, BR, 144A, FRN, 3.801%,(3-month USD LIBOR + 1.80%), 10/15/30		United States		4,908,000		4,707,803
^k,mAtrium XIV LLC, 14A, B, 144A, FRN, 3.701%, 8/23/30		United States		6,300,000		6,264,342
^k,lBetony CLO 2 Ltd.,2018-1A, B, 144A, FRN, 3.786%,(3-month USD LIBOR + 1.85%), 4/30/31		United States		5,700,000		5,409,300
^k,mBlueMountain CLO XXII Ltd.,
2018-1A, B, 144A, FRN, 3.636%, 7/30/30.		United States		10,330,510		10,238,672
2018-1A, C, 144A, FRN, 3.986%, 7/30/30		United States		3,750,000		3,600,000
^k,lBristol Park CLO Ltd.,2016-1A, A, 144A, FRN, 3.421%,(3-month USD LIBOR + 1.42%), 4/15/29		United States		25,000,000		25,028,250
^k,lCarlyle U.S. CLO Ltd.,2017-4A, B, 144A, FRN, 3.851%,(3-month USD LIBOR + 1.85%), 1/15/30		United States		1,493,000		1,416,349
^k,mCole Park CLO Ltd.,2015-1A, CR, 144A, FRN, 3.966%, 10/20/28		United States		2,500,000		2,478,850
^k,mDryden 40 Senior Loan Fund,2015-40A, CR, 144A, FRN, 4.258%, 8/15/31		United States		2,000,000		1,949,900
^k,mDryden 70 CLO Ltd.,2018-70A, B, 144A, FRN, 3.701%, 1/16/32		United States		5,880,435		5,831,098
^k,mEaton Vance CLO Ltd.,2014-1RA, C, 144A, FRN, 4.101%, 7/15/30		United States		5,136,585		4,967,848
^kEmerson Park CLO Ltd.,2013-1A, C2R, 144A, 4.055%, 7/15/25		United States		3,600,000		3,604,644
^k,mGalaxy XXV CLO Ltd.,
2018-25A, B, 144A, FRN, 3.59%, 10/25/31		United States		4,000,000		3,938,360
2018-25A, C, 144A, FRN, 3.94%, 10/25/31.		United States		500,000		476,560
^k,lGilbert Park CLO Ltd.,2017-1A, C, 144A, FRN, 3.951%,(3-month USD LIBOR + 1.95%), 10/15/30		United States		350,000		339,560
^k,mLCM Loan Income Fund I Income Note Issuer Ltd., 2027A, C, 144A, FRN, 3.951%, 7/16/31		United States		3,000,000		2,849,220
^k,mLCM XVI LP, 2016A, BR2, 144A, FRN, 3.751%, 10/15/31		United States		6,399,083		6,382,253
^k,lLCM XXIV Ltd., 24A, A, 144A, FRN, 3.276%,(3-month USD LIBOR + 1.31%), 3/20/30		United States		17,000,000		16,996,260
^k,lMadison Park Funding Ltd.,
2016-21A, A1, 144A, FRN,3.47%,(3-month USD LIBOR + 1.53%), 7/25/29		United States		5,400,000		5,407,992
2018-28A, C, 144A, FRN,3.851%,(3-month USD LIBOR + 1.85%), 7/15/30		United States		7,000,000		6,724,690



franklintempleton.com	Annual Report	53

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities(continued)
Other Diversified Financial Services(continued)
^k,lMadison Park Funding XI Ltd.,2013-11, CR, 144A, FRN, 4.134%,(3-month USD LIBOR + 2.20%), 7/23/29		United States	$	2,040,000	$	1,982,982
^k,lMadison Park Funding XXIII Ltd.,2017-23A, C, 144A, FRN, 4.286%,(3-month USD LIBOR + 2.35%), 7/27/30.		United States		3,000,000		2,950,590
^k,lNeuberger Berman CLO Ltd.,2017-26A, C, 144A, FRN, 3.753%,(3-month USD LIBOR + 1.75%), 10/18/30		United States		746,000		705,462
^k,lOctagon Investment Partners 37 Ltd.,2018-2A, B, 144A, FRN, 3.69%,(3-month USD LIBOR + 1.75%), 7/25/30.		United States		10,875,000		10,193,573
^k,mOctagon Investment Partners 38,2018-1A, A3A, 144A, FRN, 3.636%, 7/20/30		United States		3,484,000		3,447,766
^k,lOctagon Investment Partners XVI Ltd.,2013-1A, CR, 144A, FRN, 3.852%,(3-month USD LIBOR + 1.85%), 7/17/30		United States		12,500,000		11,762,125
^k,lOctagon Investment Partners XXII Ltd.,2014-1A, CRR, 144A, FRN, 3.853%,(3-month USD LIBOR + 1.90%), 1/22/30		United States		3,000,000		2,838,900
^k,mRace Point X CLO Ltd.,2016-10A, C1R, 144A, FRN, 3.94%, 7/25/31		United States		7,000,000		6,693,750
^kVoya CLO Ltd.,
^l2017-3A, B, 144A, FRN,4.316%,(3-month USD LIBOR + 2.35%), 7/20/30		United States		8,362,537		8,270,884
^m2018-4A, B, 144A, FRN, 3.851%, 1/15/32		United States		14,285,714		14,193,714
^m2018-4A, C1, 144A, FRN, 4.551%, 1/15/32		United States		3,000,000		3,001,230


Total Asset-Backed Securities (Cost $200,419,875)						195,919,781


			Units

Escrows and Litigation Trusts (Cost $—) 0.0%
^a,b,c,dRemington Outdoor Co. Inc., Litigation Units		United States		170,300		—


Total Investments before Short Term Investments (Cost $2,281,378,952)						2,117,507,196


			Shares

Short Term Investments (Cost $103,958,277) 4.7%

Money Market Funds 4.7%
^e,nInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		103,958,277		103,958,277


Total Investments (Cost $2,385,337,229) 100.0%						2,221,465,473
Other Assets, less Liabilities 0.0%^†						861,240


Net Assets 100.0%					$	2,222,326,713



54	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Floating Rate Daily Access Fund(continued)

†Rounds to less than 0.1% of net assets.

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

^aNon-income producing.

^bSee Note 10 regarding holdings of 5% voting securities.

^cFair valued using significant unobservable inputs. See Note 13 regarding fair value measurements.

^dSee Note 8 regarding restricted securities.

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

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

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

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

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

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

^kSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At October 31, 2019, the aggregate value of these securities was $195,919,781, representing 8.8% of net assets.

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

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

ⁿThe rate shown is the annualizedseven-day effective yield at period end.

At October 31, 2019, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts

Description

Periodic
Payment Rate
Received
(Paid)

Payment
Frequency

Maturity
Date

Notional
Amount

Value

Unamortized
Upfront
Payments
(Receipts)

Unrealized
Appreciation
  (Depreciation)

Centrally Cleared Swap Contracts

Contracts to Buy Protection^a

Traded Index

CDX.NA.HY.26

��

(5.00)%

Quarterly

6/20/21

$31,772,000

$(1,352,702

)

$(983,530)

$(369,172)

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

See Note 9 regarding other derivative information.

See Abbreviations on page 165.



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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Low Duration Total Return Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.60			$ 9.84			$ 9.89			$ 9.91			$ 10.11

Income from investment operations^a:

Net investment income		0.290			0.237			0.170			0.151			0.134

Net realized and unrealized gains (losses)		0.068			(0.185	)		(0.023	)		0.031			(0.135	)

Total from investment operations		0.358			0.052			0.147			0.182			(0.001	)

Less distributions from:

Net investment income and net foreign currency gains		(0.308	)		(0.292	)		(0.197	)		(0.202	)		(0.199	)

Net asset value, end of year		$ 9.65			$ 9.60			$ 9.84			$ 9.89			$ 9.91

Total return^b		3.78%			0.54%			1.50%			1.88%			(0.02)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.94%			0.96%			0.96%			0.95%			0.96%

Expenses net of waiver and payments by affiliates^c		0.68%			0.72%			0.80%			0.80%			0.80%

Net investment income		2.99%			2.43%			1.73%			1.57%			1.27%

Supplemental data

Net assets, end of year (000’s)		$1,631,123			$1,499,579			$1,519,902			$1,524,437			$1,656,001

Portfolio turnover rate		51.93%	^d		56.12%			50.40%			44.76%			41.28%

Portfolio turnover rate excluding mortgage dollar rolls		51.93%	^d		44.01%	^e		45.29%	^e		44.76%	^e		41.28%	^e

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

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

^dExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund(continued)


	Year Ended October 31,

	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.56			$ 9.80			$ 9.86			$ 9.90			$ 10.11

Income from investment operations^a:

Net investment income		0.251			0.168			0.121			0.113			0.104

Net realized and unrealized gains (losses)		0.068			(0.155	)		(0.015	)		0.024			(0.145	)

Total from investment operations		0.319			0.013			0.106			0.137			(0.041	)

Less distributions from:

Net investment income and net foreign currency gains		(0.269	)		(0.253	)		(0.166	)		(0.177	)		(0.169	)

Net asset value, end of year		$ 9.61			$ 9.56			$ 9.80			$ 9.86			$ 9.90

Total return^b		3.38%			0.14%			1.08%			1.41%			(0.41)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.34%			1.36%			1.36%			1.35%			1.36%

Expenses net of waiver and payments by affiliates^c		1.08%			1.12%			1.20%			1.20%			1.20%

Net investment income		2.59%			2.03%			1.33%			1.17%			0.87%

Supplemental data

Net assets, end of year (000’s)		$135,372			$130,206			$174,754			$218,066			$211,354

Portfolio turnover rate		51.93%	^d		56.12%			50.40%			44.76%			41.28%

Portfolio turnover rate excluding mortgage dollar rolls		51.93%	^d		44.01%	^e		45.29%	^e		44.76%	^e		41.28%	^e

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

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

^dExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund(continued)


	Year Ended October 31, 2019^a

Class R

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.65

Income from investment operations^b:

Net investment income		0.012

Net realized and unrealized gains (losses)		0.001

Total from investment operations		0.013

Less distributions from:

Net investment income		(0.013	)

Net asset value, end of year		$ 9.65

Total return^c		0.14%

Ratios to average net assets^d

Expenses before waiver and payments by affiliates		1.19%

Expenses net of waiver and payments by affiliates^e		0.93%

Net investment income		2.73%

Supplemental data

Net assets, end of year (000’s)		$18

Portfolio turnover rate		51.93%	^f

Portfolio turnover rate excluding mortgage dollar rolls		51.93%	^f

^aFor the period October 15, 2019 (effective date) to October 31, 2019.

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

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

^dRatios are annualized for periods less than one year.

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

^fExcludes the value of portfolio activity as a result ofin-kind transactions. See Note 6.



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.66			$ 9.90			$ 9.94			$ 9.95			$ 10.14

Income from investment operations^a:

Net investment income		0.326			0.271			0.214			0.195			0.165

Net realized and unrealized gains (losses)		0.071			(0.178	)		(0.025	)		0.021			(0.130	)

Total from investment operations		0.397			0.093			0.189			0.216			0.035

Less distributions from:

Net investment income and net foreign currency gains		(0.347	)		(0.333	)		(0.229	)		(0.226	)		(0.228	)

Net asset value, end of year		$ 9.71			$ 9.66			$ 9.90			$ 9.94			$ 9.95

Total return		4.17%			0.96%			1.92%			2.22%			0.37%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.56%			0.55%			0.53%			0.53%			0.54%

Expenses net of waiver and payments by affiliates^b		0.30%			0.31%			0.39%			0.42%			0.42%

Net investment income		3.37%			2.84%			2.14%			1.95%			1.65%

Supplemental data

Net assets, end of year (000’s)		$1,003,208			$1,017,856			$591,622			$553,233			$508,675

Portfolio turnover rate		51.93%	^c		56.12%			50.40%			44.76%			41.28%

Portfolio turnover rate excluding mortgage dollar rolls		51.93%	^c		44.01%	^d		45.29%	^d		44.76%	^d		41.28%	^d

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

^cExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Low Duration Total Return Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.65			$ 9.89			$ 9.94			$ 9.95			$ 10.14

Income from investment operations^a:

Net investment income		0.315			0.264			0.209			0.184			0.134

Net realized and unrealized gains (losses)		0.069			(0.187	)		(0.042	)		0.025			(0.106	)

Total from investment operations		0.384			0.077			0.167			0.209			0.028

Less distributions from:

Net investment income and net foreign currency gains		(0.334	)		(0.317	)		(0.217	)		(0.219	)		(0.218	)

Net asset value, end of year		$ 9.70			$ 9.65			$ 9.89			$ 9.94			$ 9.95

Total return		4.04%			0.80%			1.70%			2.14%			0.27%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.69%			0.71%			0.71%			0.70%			0.71%

Expenses net of waiver and payments by affiliates^b		0.43%			0.47%			0.55%			0.55%			0.55%

Net investment income		3.24%			2.68%			1.98%			1.82%			1.52%

Supplemental data

Net assets, end of year (000’s)		$254,314			$214,339			$428,838			$224,887			$150,464

Portfolio turnover rate		51.93%	^c		56.12%			50.40%			44.76%			41.28%

Portfolio turnover rate excluding mortgage dollar rolls		51.93%	^c		44.01%	^d		45.29%	^d		44.76%	^d		41.28%	^d

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

^cExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Low Duration Total Return Fund


	Country		Shares/ Warrants			Value

Common Stocks and Other Equity Interests 0.0%^†
Commercial & Professional Services 0.0%^†
^a,bRemington Outdoor Co. Inc.		United States		170,787		$	170,787


Energy 0.0%^†
^a,^bHalcon Resources Corp.		United States		227			4,511
^a,bHalcon Resources Corp., wts., 9/09/20		United States		8,753			—
^a,bHalcon Resources Corp., wts., A, 10/08/20		United States		1,093			—
^a,bHalcon Resources Corp., wts., B, 10/08/22		United States		1,366			—
^a,bHalcon Resources Corp., wts., C, 10/08/22		United States		1,757			—
^aRiviera Resources Inc.		United States		2,835			36,968
^aRoan Resources Inc.		United States		2,964			4,446


							45,925

Materials 0.0%^†
^a,b,cAppvion Operations Inc.		United States		24,739			329,838
^aVerso Corp., A		United States		1,387			20,306
^aVerso Corp., wts., 7/25/23		United States		146			255


							350,399

Retailing 0.0%^†
^a,b,cK2016470219 South Africa Ltd., A		South Africa		12,326,925			8,155
^a,b,cK2016470219 South Africa Ltd., B		South Africa		1,226,701			812


							8,967


Total Common Stocks and Other Equity Interests (Cost $6,174,515)							576,078


Management Investment Companies 1.9%
Diversified Financials 1.9%

^dFranklin Floating Rate Income Fund		United States		2,389,308			19,759,574

Invesco Senior Loan ETF		United States		1,629,000			36,505,890


Total Management Investment Companies (Cost $60,536,785)							56,265,464


			Principal Amount*

Corporate Bonds 22.4%
Banks 6.4%
^eAkbank T.A.S., senior note, 144A, 5.125%, 3/31/25		Turkey		2,200,000			2,105,488
^eANZ New Zealand International Ltd. of London, senior note, 144A, 2.85%, 8/06/20		New Zealand		7,500,000			7,554,319
^fBanca Monte dei Paschi di Siena SpA, secured note, Reg S, 2.875%, 4/16/59		Italy		6,300,000	EUR		7,315,070
Bank of America Corp.,
senior note, 2.369% to 7/20/20, FRN thereafter, 7/21/21		United States		6,800,000			6,815,802
senior note, 3.55% to 3/05/23, FRN thereafter, 3/05/24		United States		8,950,000			9,332,300



franklintempleton.com	Annual Report	61

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*			Value

Corporate Bonds(continued)
Banks(continued)
Barclays PLC, senior note, 4.61% to 2/14/22, FRN thereafter, 2/15/23		United Kingdom		6,300,000		$	6,577,295
Citibank NA, senior note, 3.165% to 2/19/22, FRN thereafter, 2/19/22		United States		5,950,000			6,039,420
Citigroup Inc.,
senior note, 2.40%, 2/18/20		United States		11,300,000			11,313,449
senior note, 2.65%, 10/26/20		United States		5,000,000			5,035,570
senior note, 2.35%, 8/02/21		United States		5,400,000			5,434,706
senior note, 2.90%, 12/08/21		United States		6,000,000			6,106,830
senior note, 2.75%, 4/25/22		United States		5,800,000			5,890,200
Credit Suisse of New York, senior note, 4.375%, 8/05/20		Switzerland		12,000,000			12,305,400
HSBC Holdings PLC,
senior note, 3.40%, 3/08/21		United Kingdom		3,300,000			3,359,499
senior note, 2.95%, 5/25/21		United Kingdom		14,500,000			14,699,230
Industrial & Commercial Bank of China Ltd.,
senior note, 3.231%, 11/13/19		China		5,400,000			5,401,026
senior note, 2.957%, 11/08/22		China		9,400,000			9,526,195
Realkredit Danmark A/S, secured bond, 1.00%, 4/01/27		Denmark		30,060,000	DKK		4,834,922
Regions Financial Corp., senior note, 3.20%, 2/08/21		United States		9,300,000			9,429,013
Royal Bank of Canada, secured note, 2.10%, 10/14/21		Canada		6,300,000			6,317,090
^eStandard Chartered PLC, senior note, 144A, 3.885% to 3/15/23, FRN thereafter, 3/15/24		United Kingdom		10,000,000			10,390,150
SunTrust Bank of Atlanta, senior note, 3.525% to 10/25/20, FRN thereafter, 10/26/21		United States		5,000,000			5,071,340
^eThe Toronto-Dominion Bank, secured note, 144A, 2.25%, 3/15/22		Canada		12,700,000			12,778,629
^fTurkiye Vakiflar Bankasi TAO, secured note, Reg S, 2.375%, 11/04/22		Turkey		1,800,000	EUR		2,026,792
^eWestpac Banking Corp.,
secured note, 144A, 2.10%, 2/25/22		Australia		9,700,000			9,720,418
senior secured note, 144A, 2.25%, 11/09/21		Australia		6,300,000			6,319,184


							191,699,337


Capital Goods 0.4%
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21		United States		5,100,000			5,253,000
^gOnsite Rental Group Operations Pty. Ltd., secured note, PIK, 6.10%, 10/26/23		Australia		347,593			321,524
United Technologies Corp., senior note, 4.50%, 4/15/20		United States		7,500,000			7,590,105


							13,164,629

Consumer Services 0.5%
^e1011778 BC ULC/New Red Finance Inc., senior secured note, first lien, 144A, 4.25%, 5/15/24		Canada		4,000,000			4,112,660
Marriott International Inc., senior note, 2.875%, 3/01/21		United States		10,000,000			10,113,896


							14,226,556



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*				Value

Corporate Bonds(continued)
Diversified Financials 4.5%
American Express Co., senior note, 3.70%, 8/03/23		United States		6,800,000			$	7,199,075
Capital One Financial Corp.,
senior note, 2.50%, 5/12/20		United States		3,900,000				3,908,594
senior note, 3.45%, 4/30/21		United States		6,800,000				6,942,916
senior note, 3.05%, 3/09/22		United States		13,600,000				13,868,965
^hCia Securitizadora de Creditos Financeiros Vert-Fintech, senior secured note, FRN, 5.96%, (BZDIOVRA + 5.75%), 2/14/24		Brazil		3,537	ⁱ	BRL		910,995
^hDeutsche Bank AG, senior note, FRN, 3.446%, (3-month USD LIBOR + 1.31%), 8/20/20		Germany		7,500,000				7,518,300
^eDexia Credit Local SA, senior note, 144A, 2.375%, 9/20/22		France		4,550,000				4,617,545
GE Capital International Funding Co., senior note, 2.342%, 11/15/20		United States		2,000,000				1,999,224
The Goldman Sachs Group Inc.,
senior note, 2.625%, 4/25/21		United States		12,000,000				12,115,167
senior note, 2.35%, 11/15/21		United States		4,000,000				4,015,422
^hsenior note, FRN, 3.319%, (3-month USD LIBOR + 1.20%), 9/15/20		United States		23,000,000				23,191,643
Jyske Realkredit A/S, secured note, 1.00%, 4/01/26		Denmark		49,970,000		DKK		8,006,486
Morgan Stanley,
senior note, 2.65%, 1/27/20		United States		4,000,000				4,006,912
senior note, 2.80%, 6/16/20		United States		6,600,000				6,632,611
^hsenior note, FRN, 3.076%, (3-month USD LIBOR + 1.14%), 1/27/20		United States		22,400,000				22,451,821
Navient Corp., senior bond, 8.00%, 3/25/20		United States		1,150,000				1,177,313
^ePricoa Global Funding I, secured note, 144A, 3.45%, 9/01/23		United States		7,200,000				7,554,785


								136,117,774

Energy 1.0%
^eAker BP ASA, senior note, 144A, 4.75%, 6/15/24		Norway		1,800,000				1,872,000
^eCalifornia Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22		United States		1,656,000				488,520
^eHarvest Operations Corp., senior note, 144A, 4.20%, 6/01/23		South Korea		1,900,000				2,030,959
Kinder Morgan Inc.,
senior note, 3.05%, 12/01/19		United States		4,500,000				4,503,153
senior note, 3.15%, 1/15/23		United States		9,300,000				9,535,155
Sabine Pass Liquefaction LLC, senior secured note, first lien, 5.625%, 2/01/21		United States		10,400,000				10,736,639
^jSanchez Energy Corp., senior note, 7.75%, 6/15/21		United States		1,900,000				95,000
The Williams Cos. Inc., senior note, 4.125%, 11/15/20		United States		1,700,000				1,726,440


								30,987,866

Food, Beverage & Tobacco 0.4%
BAT Capital Corp., senior note, 2.764%, 8/15/22		United Kingdom		3,000,000				3,029,938
Bunge Ltd. Finance Corp., senior note, 3.50%, 11/24/20		United States		3,100,000				3,139,907
^eImperial Brands Finance PLC, senior note, 144A, 2.95%, 7/21/20		United Kingdom		6,000,000				6,001,737


								12,171,582



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Corporate Bonds(continued)
Health Care Equipment & Services 1.7%
Anthem Inc., senior note, 2.50%, 11/21/20		United States		7,800,000	$	7,853,969
Centene Corp., senior note, 4.75%, 5/15/22		United States		4,000,000		4,100,000
^eCHS/Community Health Systems Inc., senior note, 144A, 8.125%, 6/30/24		United States		1,500,000		1,155,000
Cigna Corp.,
senior note, 3.40%, 9/17/21		United States		5,800,000		5,942,911
senior note, 3.75%, 7/15/23		United States		3,900,000		4,090,763
^esenior note, 144A, 4.75%, 11/15/21		United States		6,700,000		7,041,808
CVS Health Corp.,
senior note, 2.80%, 7/20/20		United States		2,800,000		2,813,632
senior note, 2.125%, 6/01/21		United States		4,100,000		4,109,193
senior note, 3.70%, 3/09/23		United States		7,000,000		7,303,362
Zimmer Holdings Inc., senior note, 2.70%, 4/01/20		United States		7,500,000		7,515,542


						51,926,180

Household & Personal Products 0.3%
Avon Products Inc., senior bond, 7.00%, 3/15/23		United Kingdom		5,835,000		6,155,925
The Procter & Gamble Co., senior note, 1.70%, 11/03/21		United States		3,200,000		3,204,534


						9,360,459

Insurance 0.9%
^eJackson National Life Global Funding, secured note, 144A, 3.30%, 2/01/22		United States		12,000,000		12,341,643
^eMetropolitan Life Global Funding I,
secured note, 144A, 3.375%, 1/11/22		United States		8,400,000		8,668,548
senior secured bond, 144A, 3.875%, 4/11/22		United States		5,900,000		6,166,730


						27,176,921

Materials 0.8%
^eArdagh Packaging Finance PLC/Ardagh MP Holdings USA Inc., senior note, 144A, 4.25%, 9/15/22		Luxembourg		4,000,000		4,065,000
^fCNAC HK Finbridge Co. Ltd., senior note, Reg S, 3.875%, 6/19/29		China		4,700,000		4,841,729
^eFMG Resources (August 2006) Pty. Ltd., senior note, 144A, 4.75%, 5/15/22		Australia		4,900,000		5,077,625
^eGlencore Finance Canada Ltd., senior bond, 144A, 4.95%, 11/15/21		Switzerland		3,500,000		3,666,001
^eGlencore Funding LLC, senior note, 144A, 3.00%, 10/27/22		Switzerland		2,200,000		2,219,713
^eOwens-Brockway Glass Container Inc., senior note, 144A, 5.875%, 8/15/23		United States		4,000,000		4,240,000


						24,110,068

Media & Entertainment 1.2%
^eAltice Financing SA, secured bond, 144A, 7.50%, 5/15/26		Luxembourg		2,000,000		2,127,500
Baidu Inc., senior note, 4.375%, 5/14/24		China		6,000,000		6,414,240
CCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 5.125%, 2/15/23		United States		3,800,000		3,890,250
Comcast Corp., senior note, 3.45%, 10/01/21		United States		12,000,000		12,375,496
DISH DBS Corp., senior bond, 5.875%, 7/15/22		United States		3,000,000		3,148,680
^eSirius XM Radio Inc., senior note, 144A, 4.625%, 7/15/24		United States		700,000		733,250



64	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Corporate Bonds(continued)
Media & Entertainment(continued)
^eTencent Holdings Ltd., senior note, 144A, 2.985%, 1/19/23		China		8,000,000	$	8,137,240


						36,826,656

Pharmaceuticals, Biotechnology & Life Sciences 1.2%
Allergan Funding SCS, senior note, 3.45%, 3/15/22		United States		10,500,000		10,765,595
^eBayer U.S. Finance II LLC, senior note, 144A, 3.875%, 12/15/23		Germany		5,400,000		5,659,982
Biogen Inc., senior note, 2.90%, 9/15/20		United States		11,500,000		11,592,747
Celgene Corp., senior note, 2.25%, 8/15/21		United States		7,900,000		7,941,294


						35,959,618

Retailing 1.0%
Alibaba Group Holding Ltd.,
senior note, 2.50%, 11/28/19		China		11,900,000		11,902,499
senior note, 3.125%, 11/28/21		China		5,400,000		5,494,419
Amazon.com Inc., senior note, 2.40%, 2/22/23		United States		4,150,000		4,230,196
Dollar Tree Inc., senior note, 3.70%, 5/15/23		United States		8,800,000		9,198,552
^b,e,gK2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22		South Africa		976,985		1,209
^b,e,gK2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22		South Africa		232,121		1,071


						30,827,946

Technology Hardware & Equipment 0.0%^†

Tech Data Corp., senior note, 3.70%, 2/15/22		United States		800,000		821,125


Telecommunication Services 0.2%
^eSprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint
Spectrum Co. III LLC, first lien, 144A, 3.36%, 3/20/23		United States		1,250,000		1,260,937
Telefonica Emisiones SA, senior bond, 5.134%, 4/27/20		Spain		3,600,000		3,654,342


						4,915,279

Transportation 0.7%
^eDAE Funding LLC, senior note, 144A, 4.00%, 8/01/20		United Arab Emirates		4,100,000		4,130,545
FedEx Corp., senior note, 3.40%, 1/14/22		United States		3,900,000		4,017,413
^eKazakhstan Temir Zholy Finance BV, senior bond, 144A, 6.95%, 7/10/42		Kazakhstan		3,200,000		4,330,560
^eMexico City Airport Trust, senior secured bond, first lien, 144A, 5.50%, 7/31/47		Mexico		2,000,000		2,013,850
^f,kRZD Capital PLC, (Russian Railways), loan participation, senior bond, Reg S, 5.70%, 4/05/22		Russia		4,800,000		5,151,096


						19,643,464

Utilities 1.2%
^eCalpine Corp., senior secured bond, first lien, 144A, 5.875%, 1/15/24		United States		4,000,000		4,098,000
Dominion Energy Inc., junior sub. note, 2.579%, 7/01/20		United States		5,200,000		5,216,160
^eKorea East-West Power Co. Ltd., senior note, 144A, 3.875%, 7/19/23		South Korea		3,300,000		3,494,436
PSEG Power LLC, senior note, 3.00%, 6/15/21		United States		7,700,000		7,799,530
The Southern Co., senior note, 2.35%, 7/01/21		United States		6,500,000		6,537,060



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Corporate Bonds(continued)
Utilities(continued)
^eState Grid Overseas Investment 2016 Ltd., senior note, 144A, 2.75%, 5/04/22		China		9,400,000	$	9,503,447


						36,648,633


Total Corporate Bonds (Cost $671,167,951)						676,584,093


^h,lSenior Floating Rate Interests 2.5%
Automobiles & Components 0.1%
Adient US LLC,
Initial Term Loans, 6.459%, (3-month USD LIBOR + 4.25%), 5/06/24		United States		517,500		506,503
Initial Term Loans, 6.889%, (6-month USD LIBOR + 4.25%), 5/06/24		United States		1,547,325		1,514,444
Thor Industries Inc., Initial USD Term Loans, 5.813%, (1-month USD LIBOR + 3.75%), 2/01/26		United States		1,791,220		1,749,798


						3,770,745

Capital Goods 0.0%^†
Altra Industrial Motion Corp., Term Loan, 3.786%, (3-month USD LIBOR + 2.00%), 10/01/25		United States		576,845		575,940
Doncasters U.S. Finance LLC, Second-Lien Term Loans, 10.354%, (3-month USD LIBOR + 8.25%), 10/09/20		United States		881,574		238,025
Onsite Rental Group Operations Pty. Ltd., Term Loan, 6.323%, (1-month USD LIBOR + 4.50%), 10/25/22		Australia		254,234		251,056


						1,065,021


Commercial & Professional Services 0.2%
United Rentals North America Inc., Initial Term Loans, 3.536%, (1-month USD LIBOR + 1.75%), 10/31/25		United States		4,683,533		4,708,904


Consumer Services 0.3%
Aristocrat Technologies Inc., Term B-3 Loans, 3.716%, (3-month USD LIBOR + 1.75%), 10/19/24		United States		2,075,901		2,083,362
Avis Budget Car Rental LLC, Tranche B Term Loans, 3.79%, (1-month USD LIBOR + 2.00%), 2/13/25		United States		1,520,759		1,523,922
Eldorado Resorts Inc., Initial Term Loan, 4.125% - 4.313%, (1-month USD LIBOR + 2.25%), 4/17/24		United States		1,454,810		1,454,494
Hilton Worldwide Finance LLC, Refinanced Series B-2 Term Loans, 3.573%, (1-month USD LIBOR + 1.75%), 6/17/26		United States		1,650,000		1,658,663
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC (Yum Brands), Term Loan B, 3.628%, (1-month USD LIBOR + 1.75%), 4/03/25		United States		1,790,909		1,796,878


						8,517,319



66	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

^h,lSenior Floating Rate Interests(continued)
Energy 0.3%
^m,nBuckeye Partners LP, Initial Term, TBD, 11/01/26		United States		2,000,000	$	2,011,562
Fieldwood Energy LLC, Closing Date Loans, 7.177%, (3-month USD LIBOR + 5.25%), 4/11/22		United States		6,760,617		5,469,339
Utex Industries Inc.,
First Lien Initial Term Loan, 5.786%, (1-month USD LIBOR + 4.00%), 5/21/21		United States		684,589		527,133
Second Lien Initial Term Loan, 9.036%, (1-month USD LIBOR + 7.25%), 5/20/22		United States		71,338		37,810
Wolverine Fuels Holding LLC,
First Lien Initial Term Loan, 7.874%, (3-month USD LIBOR + 5.75%), 8/14/20		United States		1,371,508		1,341,791
Second Lien Initial Term Loan, 12.874%, (3-month USD LIBOR + 10.75%), 2/16/21		United States		427,667		404,502


						9,792,137

Food & Staples Retailing 0.0%^†
Aramark Corp., U.S. Term B-3 Loan, 3.536%, (1-month USD LIBOR + 1.75%), 3/11/25		United States		95,905		96,205


Food, Beverage & Tobacco 0.1%
CSM Bakery Supplies LLC, Second Lien Term Loan, 9.78%, (3-month USD LIBOR + 7.75%), 7/03/21		United States		772,194		691,114
JBS USA Lux SA, New Term Loans, 4.286%, (1-month USD LIBOR + 2.50%), 5/01/26		United States		3,785,787		3,803,815
Post Holdings Inc., Series A Incremental Term Loans, 3.83%, (1-month USD LIBOR + 2.00%), 5/24/24		United States		92,028		92,324


						4,587,253

Health Care Equipment & Services 0.2%
HCA Inc., Term Loan B11, 3.536%, (1-month USD LIBOR + 1.75%), 3/18/23		United States		1,312,820		1,318,819
IQVIA Inc., Term B-2 Dollar Loans, 4.104%, (3-month USD LIBOR + 2.00%), 1/20/25		United States		3,532,194		3,546,175


						4,864,994

Household & Personal Products 0.1%
^bFGI Operating Co. LLC (Freedom Group),
^gTerm Loan, PIK, 12.10%, (3-month USD LIBOR + 10.00%), 5/15/22		United States		1,124,853		1,097,551
Term Loan FILO, 9.624% - 9.658%, (3-month USD LIBOR + 7.50%), 5/15/21		United States		2,140,156		2,135,977


						3,233,528

Materials 0.1%
Appvion Operations, Inc.,
Term Loan, 8.10%, (3-month USD LIBOR + 6.00%), 6/15/26		United States		33,067		33,397
Term Loan, 8.22%, (6-month USD LIBOR + 6.00%), 6/15/26		United States		525,968		531,228



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

^h,lSenior Floating Rate Interests(continued)
Materials(continued)
Crown Americas LLC, Dollar Term B Loan, 3.997%, (1-month USD LIBOR + 2.00%), 4/03/25		United States		1,052,971	$	1,060,868
Oxbow Carbon LLC,
Tranche A Term Loan, 4.286%, (1-month USD LIBOR + 2.50%), 1/04/22		United States		321,287		319,681
Tranche B Term Loan, 5.536%, (1-month USD LIBOR + 3.75%), 1/04/23		United States		547,500		547,158


						2,492,332

Media & Entertainment 0.3%
Charter Communications Operating LLC, Term A-2 Loan, 3.55%, (1-month USD LIBOR + 1.50%), 3/31/23		United States		1,130,803		1,129,390
CSC Holdings LLC, March 2017 Incremental Term Loans, 4.171%, (1-month USD LIBOR + 2.25%), 7/17/25		United States		2,192,878		2,185,339
Gray Television Inc., Term C Loan, 4.511%, (1-month USD LIBOR + 2.50%), 1/02/26		United States		375,921		377,418
Lions Gate Capital Holdings LLC, Term A Loan, 3.536%, (1-month USD LIBOR + 1.75%), 3/22/23		Canada		144,763		141,325
Live Nation Entertainment Inc., Term Loan B, 3.688%, (1-month USD LIBOR + 1.75%), 10/17/26		United States		1,292,095		1,294,108
Mediacom Illinois LLC, Tranche N Term Loan, 3.57%, (1-week USD LIBOR + 1.75%), 2/15/24		United States		3,494,496		3,491,585


						8,619,165

Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.063%, (1-month USD LIBOR + 4.25%), 4/29/24		United States		118,232		108,646
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.086%, (1-week USD LIBOR + 2.25%), 1/31/25		United States		1,420,504		1,424,277
^mHorizon Pharma Inc., Sixth Amendment Refinanced Term Loans, 4.563%, (1-month USD LIBOR + 2.50%), 5/22/26		United States		1,452,527		1,458,201
Syneos Health Inc., Initial Term B Loans, 3.786%, (1-month USD LIBOR + 2.00%), 8/01/24		United States		2,600,559		2,608,686
Valeant Pharmaceuticals International,
First Incremental Term Loan, 4.671%, (1-month USD LIBOR + 2.75%), 11/27/25		United States		1,750,000		1,753,594
Initial Term Loans, 4.921%, (1-month USD LIBOR + 3.00%), 6/02/25		United States		473,850		476,088


						7,829,492

Retailing 0.2%
^g99 Cents Only Stores,
First Lien Term Loan, PIK, 8.604%, (3-month USD LIBOR + 6.50%), 1/13/22		United States		257,453		211,755
First Lien Term Loan, PIK, 8.535%, (6-month USD LIBOR + 6.50%), 1/13/22		United States		193,242		158,942



68	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

^h,lSenior Floating Rate Interests(continued)
Retailing(continued)
Ascena Retail Group Inc., Tranche B Term Loan, 6.313%, (1-month USD LIBOR + 4.50%), 8/21/22		United States		1,373,784	$	759,588
General Nutrition Centers Inc., Tranche B-2 Term Loans, 10.54%, (1-month USD LIBOR + 8.75%), 3/04/21		United States		1,166,712		1,102,910
Harbor Freight Tools USA Inc., Refinancing Loans, 4.286%, (1-month USD LIBOR + 2.50%), 8/19/23		United States		2,532,083		2,483,024


						4,716,219


Semiconductors & Semiconductor Equipment 0.1%
MKS Instruments Inc., Tranche B-6 Term Loan, 3.536%, (1-month USD LIBOR + 1.75%), 2/02/26		United States		494,868		496,878
ON Semiconductor Corp., 2019 Replacement Term B-4 Loans, 3.786%, (1-month USD LIBOR + 2.00%), 9/18/26		United States		3,234,379		3,253,012


						3,749,890


Software & Services 0.1%
Go Daddy Operating Co. LLC, Tranche B-2 Term Loan, 3.536%, (1-month USD LIBOR + 1.75%), 2/15/24		United States		1,350,213		1,353,285
LegalZoom.com Inc., 2018 Term Loans, 6.286%, (1-month USD LIBOR + 4.50%), 11/21/24		United States		230,116		230,475
TIBCO Software Inc., Term B-2 Loans, 6.00%, (1-month USD LIBOR + 4.00%), 6/30/26		United States		1,380,000		1,375,401


						2,959,161


Telecommunication Services 0.1%
Global Tel*Link Corp.,
First Lien Term Loan, 6.036%, (1-month USD LIBOR + 4.25%), 11/29/25		United States		953,133		834,945
Second Lien Term Loan, 10.036%, (1-month USD LIBOR + 8.25%), 11/29/26		United States		242,354		231,448
Securus Technologies Holdings Inc.,
Initial Term Loan, 6.286%, (1-month USD LIBOR + 4.50%), 11/01/24		United States		348,228		276,592
Second Lien Initial Loan, 10.036%, (1-month USD LIBOR + 8.25%), 11/01/25		United States		790,636		434,850
^mZayo Group LLC, 2017 Incremental Refinancing B-1 Term Loan, 3.786%, (1-month USD LIBOR + 2.00%), 1/19/21		United States		1,193,878		1,197,857


						2,975,692


Transportation 0.0%^†
Air Canada, Term Loan, 3.805%, (1-month USD LIBOR + 2.00%), 10/06/23		Canada		34,630		34,803
Allegiant Travel Co., Class B Term Loans, 6.709%, (3-month USD LIBOR + 4.50%), 2/05/24		United States		309,501		310,661


						345,464



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*				Value

^h,lSenior Floating Rate Interests(continued)
Utilities 0.0%^†
EFS Cogen Holdings I LLC (Linden),
Term B Advance, 5.04%, (1-month USD LIBOR + 3.25%), 6/28/23		United States		40,424			$	40,361
Term B Advance, 5.36%, (3-month USD LIBOR + 3.25%), 6/28/23		United States		99,832				99,676


								140,037


Total Senior Floating Rate Interests (Cost $77,297,359)								74,463,558


^oMarketplace Loans 0.8%
Diversified Financials 0.8%
^bLending Club, 6.00% - 28.80%, 9/19/21 - 10/25/24		United States		23,664,284				22,126,055
^bUpgrade, 13.64% - 30.50%, 9/05/22 - 10/24/24		United States		2,369,621				2,345,867


Total Marketplace Loans (Cost $26,033,905)								24,471,922


Foreign Government and Agency Securities 4.8%
^eAngolan Government International Bond, senior note, 144A, 8.25%, 5/09/28		Angola		7,400,000				7,760,676
^fBanque Centrale de Tunisie International Bond, senior note, Reg S, 5.625%, 2/17/24		Tunisia		7,300,000		EUR		7,980,200
^eDominican Republic, senior note, 144A, 8.90%, 2/15/23		Dominican Republic		323,200,000		DOP		6,133,492
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20		South Korea		11,200,000				11,206,552
^eGovernment of Belarus International Bond, senior note, 144A, 7.625%, 6/29/27		Belarus		500,000				575,625
Government of China, 3.29%, 5/23/29		China		13,500,000		CNY		1,915,535
Government of Colombia,
senior bond, 9.85%, 6/28/27		Colombia		19,800,000,000		COP		7,365,160
senior bond, 5.00%, 6/15/45		Colombia		5,800,000				6,770,108
^eGovernment of Gabon, 144A, 6.375%, 12/12/24		Gabon		8,000,000				7,987,320
^eGovernment of Iraq, 144A, 5.80%, 1/15/28		Iraq		8,000,000				7,695,720
^eGovernment of Kazakhstan, senior bond, 144A, 4.875%, 10/14/44		Kazakhstan		3,500,000				4,268,005
Government of Mexico, senior note, 4.15%, 3/28/27		Mexico		7,600,000				8,146,440
Government of Peru, senior bond, 6.55%, 3/14/37		Peru		2,200,000				3,218,072
Government of South Africa, senior bond, 7.00%, 2/28/31		South Africa		115,300,000		ZAR		6,366,240
^e,fGovernment of Spain,
senior bond, 144A, Reg S, 2.70%, 10/31/48		Spain		7,350,000		EUR		11,398,808
senior note, 144A, Reg S, 0.25%, 7/30/24		Spain		22,500,000		EUR		25,644,694
^eGovernment of Ukraine, senior bond, 144A, 7.375%, 9/25/32		Ukraine		8,100,000				8,484,871
^pGovernment of Uruguay, senior bond, Index Linked, 3.70%, 6/26/37		Uruguay		222,537,457		UYU		5,938,933
The Korea Development Bank, senior note, 3.375%, 3/12/23		South Korea		6,500,000				6,768,158
Nota do Tesouro Nacional, 10.00%, 1/01/21		Brazil		2,350	ⁱ	BRL		620,290


Total Foreign Government and Agency Securities (Cost $146,406,250)								146,244,899



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

U.S. Government and Agency Securities 12.0%
U.S. Treasury Note,
2.125%, 1/31/21		United States		55,500,000	$	55,873,975
2.25%, 7/31/21		United States		39,000,000		39,457,031
2.125%, 9/30/21		United States		117,000,000		118,247,695
^pIndex Linked, 1.375%, 1/15/20		United States		25,935,113		25,937,139
^pIndex Linked, 0.125%, 4/15/21		United States		19,484,874		19,338,313
^pIndex Linked, 0.125%, 1/15/22		United States		40,807,271		40,545,202
^pIndex Linked, 0.125%, 7/15/22		United States		31,238,216		31,192,802
^pIndex Linked, 0.375%, 7/15/23		United States		32,081,106		32,353,627


Total U.S. Government and Agency Securities (Cost $360,798,801)						362,945,784


Asset-Backed Securities and Commercial Mortgage-Backed Securities 46.5%

Automobiles & Components 0.0%^†
^qCountrywide Asset-Backed Certificates, 2002-3, 1A1, FRN, 2.563%, (1-month USD LIBOR + 0.74%), 5/25/32		United States		1,245		1,217


Banks 0.3%
^e,rBX Commercial Mortgage Trust, 2018-IND, A, 144A, FRN, 2.515%, 11/15/35		United States		5,567,626		5,567,674
^rCommercial Mortgage Trust,
2006-GG7, AJ, FRN, 5.637%, 7/10/38		United States		1,908,000		1,768,060
2006-GG7, AM, FRN, 5.637%, 7/10/38		United States		102,317		103,014
^qCWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 2.573%, (1-month USD LIBOR + 0.75%), 3/25/34		United States		134,052		135,119
^r,sGE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49		United States		858,348		758,402
^qMerrill Lynch Mortgage Investors Trust, 2003-A, 1A, FRN, 2.563%, (1-month USD LIBOR + 0.74%), 3/25/28		United States		212,832		212,899
^qMorgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 2.558%, (1-month USD LIBOR + 0.735%), 1/25/35		United States		30,800		31,376
^rWells Fargo Mortgage Backed Securities Trust,
2005-AR, 1A1, FRN, 5.08%, 2/25/35		United States		593,820		619,475
2005-AR9, 2A2, FRN, 4.592%, 10/25/33		United States		86,686		88,048


						9,284,067


Diversified Financials 46.2%
^e,qAlinea CLO Ltd., 2018-1A, B, 144A, FRN, 3.616%, (3-month USD LIBOR + 1.65%), 7/20/31		United States		3,000,000		2,941,950
American Express Credit Account Master Trust,
2017-1, B, 2.10%, 9/15/22		United States		13,480,000		13,479,476
2017-6, A, 2.04%, 5/15/23		United States		16,300,000		16,336,316
2018-1, A, 2.67%, 10/17/22		United States		12,000,000		12,039,187
^qAmerican Home Mortgage Investment Trust,
2004-3, 4A, FRN, 3.531%, (6-month USD LIBOR + 1.50%), 10/25/34		United States		1,402,597		1,411,942
2005-1, 6A, FRN, 4.059%, (6-month USD LIBOR + 2.00%), 6/25/45		United States		755,992		778,556



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^eAmerican Homes 4 Rent, 2015-SFR1, A, 144A, 3.467%, 4/17/52		United States		5,634,933		$	5,897,204
^qAmeriquest Mortgage Securities Inc. Asset-Backed Pass-Through Certificates, 2004-R4, M1, FRN, 2.648%, (1-month USD LIBOR + 0.825%), 6/25/34		United States		379,984			382,032
^e,rAMMC CLO 15 Ltd.,
2014-15A, ARR, 144A, FRN, 3.261%, 1/15/32		United States		4,700,000			4,694,642
2014-15A, BRR, 144A, FRN, 3.801%, 1/15/32		United States		1,494,355			1,474,570
^eAMMC CLO XI Ltd.,
^r2012-11A, A1R2, 144A, FRN, 2.946%, 4/30/31		United States		2,750,000			2,728,825
^q2012-11A, BR2, 144A, FRN, 3.536%, (3-month USD LIBOR + 1.60%), 4/30/31		United States		1,700,000			1,661,767
^q2012-11A, CR2, 144A, FRN, 3.836%, (3-month USD LIBOR + 1.90%), 4/30/31		United States		1,850,000			1,742,126
^e,qAntares CLO Ltd., 2018-1A, B, 144A, FRN, 3.616%, (3-month USD LIBOR + 1.65%), 4/20/31		United States		5,400,000			5,262,732
^e,qARES CLO Ltd., 2018-48A, B, 144A, FRN, 3.546%, (3-month USD LIBOR + 1.58%), 7/20/30		United States		1,000,000			985,680
^e,rARES L CLO Ltd., 2018-50A, B, 144A, FRN, 3.701%, 1/15/32		United States		4,000,000			3,942,760
^e,rARES LII CLO Ltd., 2019-52A, C, 144A, FRN, 4.633%, 4/22/31		United States		1,000,000			995,020
^e,rARES XLIX CLO Ltd., 2018-49A, C, 144A, FRN, 3.903%, 7/22/30		United States		3,100,000			2,986,881
^e,qARES XLVIII CLO Ltd., 2018-48A, C, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 7/20/30		United States		3,135,000			2,988,658
^qArgent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 2.183%, (1-month USD LIBOR + 0.36%), 10/25/35		United States		315,010			316,353
^e,r,tArmada Euro CLO IV DAC, 4A, B, 144A, FRN, 1.70%, 7/15/33		United Kingdom		10,700,000	EUR		11,933,711
^e,qAtrium IX, 9A, AR, 144A, FRN, 3.384%, (3-month USD LIBOR + 1.24%), 5/28/30		United States		2,000,000			1,999,040
^e,rAtrium XII, 2012A, CR, 144A, FRN, 2.783%, 4/22/27		United States		9,000,000			8,977,770
^e,qAtrium XIII,
2013A, B, 144A, FRN, 3.434%, (3-month USD LIBOR + 1.50%), 11/21/30		United States		1,000,000			988,500
2013A, C, 144A, FRN, 3.734%, (3-month USD LIBOR + 1.80%), 11/21/30		United States		1,000,000			954,000
^e,rAtrium XIV LLC,
14A, B, 144A, FRN, 3.701%, 8/23/30		United States		2,400,000			2,386,416
14A, C, 144A, FRN, 3.951%, 8/23/30		United States		4,000,000			3,862,280
^e,rAtrium XV, 15A, B, 144A, FRN, 3.684%, 1/23/31		United States		2,000,000			1,991,560
^e,qBain Capital Credit CLO, 2018-1A, A1, 144A, FRN, 2.894%, (3-month USD LIBOR + 0.96%), 4/23/31		United States		2,000,000			1,975,360
^eBAMLL Commercial Mortgage Securities Trust, 2012-PARK, A, 144A, 2.959%, 12/10/30		United States		3,200,000			3,293,555
^r,uBank, 2018-BN13, XA, IO, FRN, 0.515%, 8/15/61		United States		106,419,998			3,593,239
^e,rBCC Middle Market CLO LLC, 2018-1A, A2, 144A, FRN, 4.116%, 10/20/30		United States		2,100,000			2,084,565
^e,qBellemeade Re Ltd., 2018-1A, M1B, 144A, FRN, 3.423%, (1-month USD LIBOR + 1.60%), 4/25/28		United States		5,208,216			5,215,886
^e,qBetony CLO 2 Ltd., 2018-1A, A2, 144A, FRN, 3.536%, (3-month USD LIBOR + 1.60%), 4/30/31		United States		3,500,000			3,418,275



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,rBlueMountain CLO Ltd.,
2012-2A, AR2, 144A, FRN, 3.186%, 11/20/28		United States		2,841,775		$	2,846,180
2012-2A, BR2, 144A, FRN, 3.586%, 11/20/28		United States		2,051,917			2,042,150
2014-2A, A2R2, 144A, FRN, 3.366%, 10/20/30		United States		974,225			957,468
2014-2A, CR2, 144A, FRN, 4.166%, 10/20/30		United States		1,000,000			953,960
2018-3A, B, 144A, FRN, 3.71%, 10/25/30		United States		4,000,000			3,985,000
2018-3A, C, 144A, FRN, 4.14%, 10/25/30		United States		1,785,715			1,714,644
^e,rBlueMountain CLO XXIV Ltd.,
2019-24A, A2, 144A, FRN, 3.566%, 4/20/31		United States		4,687,500			4,674,234
2019-24A, C, 144A, FRN, 4.666%, 4/20/31		United States		1,750,000			1,757,227
^e,r,tBlueMountain EUR CLO,
5A, A, 144A, FRN, 0.91%, 1/15/33		Ireland		14,100,000	EUR		15,725,731
5A, B, 144A, FRN, 1.55%, 1/15/33		Ireland		4,300,000	EUR		4,795,790
^e,qBlueMountain Fuji U.S. CLO II Ltd.,
2017-2A, A1A, 144A, FRN, 3.166%, (3-month USD LIBOR + 1.20%), 10/20/30		United States		3,500,000			3,502,240
2017-2A, B, 144A, FRN, 4.116%, (3-month USD LIBOR + 2.15%), 10/20/30		United States		1,000,000			968,080
^e,qBlueMountain Fuji U.S. CLO III Ltd.,
2017-3A, A2, 144A, FRN, 3.151%, (3-month USD LIBOR + 1.15%), 1/15/30		United States		1,000,000			977,500
2017-3A, C, 144A, FRN, 3.701%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		500,000			473,110
^eBRAVO Residential Funding Trust, 2019-1, A1C, 144A, 3.50%, 3/25/58		United States		6,843,104			6,971,571
^e,rBurnham Park CLO Ltd., 2016-1A, BR, 144A, FRN, 3.466%, 10/20/29		United States		2,321,575			2,297,454
Capital One Multi-Asset Execution Trust,
2016-A5, A5, 1.66%, 6/17/24		United States		8,878,000			8,857,858
2017-A4, A4, 1.99%, 7/17/23		United States		14,230,000			14,248,996
^e,qCarlyle Global Market Strategies CLO Ltd.,
2014-1A, A2R2, 144A, FRN, 3.132%, (3-month USD LIBOR + 1.13%), 4/17/31		United States		1,200,000			1,168,812
2014-4RA, A2, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		12,000,000			11,791,560
^e,rCarlyle GMS Finance MM CLO LLC, 2015-1A, A2R, 144A, FRN, 4.201%, 10/15/31		United States		6,500,000			6,447,675
^e,qCarlyle U.S. CLO Ltd.,
2017-1A, A1A, 144A, FRN, 3.266%, (3-month USD LIBOR + 1.30%), 4/20/31		United States		1,000,000			998,770
2017-2A, B, 144A, FRN, 4.366%, (3-month USD LIBOR + 2.40%), 7/20/31		United States		2,110,000			2,059,254
2017-3A, B, 144A, FRN, 4.316%, (3-month USD LIBOR + 2.35%), 7/20/29		United States		1,250,000			1,216,112
2017-5A, B, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 1/20/30		United States		2,200,000			2,062,962



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qCatamaran CLO Ltd., 2014-2A, BR, 144A, FRN, 4.953%, (3-month USD LIBOR + 2.95%), 10/18/26		United States		3,011,300	$	3,012,685
^e,rCIM Trust,
2018-INV1, A4, 144A, FRN, 4.00%, 8/25/48		United States		7,124,450		7,455,519
2019-INV2, A3, 144A, FRN, 4.00%, 5/25/49		United States		13,606,058		14,227,063
Citibank Credit Card Issuance Trust,
2017-A3, A3, 1.92%, 4/07/22		United States		11,000,000		11,003,760
2018-A1, A1, 2.49%, 1/20/23		United States		13,700,000		13,815,899
^e,rCole Park CLO Ltd., 2015-1A, BR, 144A, FRN, 3.566%, 10/20/28		United States		1,714,286		1,703,280
^e,rColumbia Cent CLO 27 Ltd., 2018-27A, A2A, 144A, FRN, 3.54%, 10/25/28		United States		1,538,462		1,525,816
^e,rCOMM Mortgage Trust, 2014-277P, A, 144A, FRN, 3.732%, 8/10/49.		United States		2,980,000		3,183,994
^rConseco Finance Securitizations Corp., 2002-2, M1, FRN, 7.424%, 3/01/33		United States		582,820		632,916
^rConseco Financial Corp., 1998-6, A8, FRN, 6.66%, 6/01/30		United States		2,642,433		2,733,312
^e,rConsumer Loan Underlying Bond CLUB Certificate Issuer Trust I,
2019-S6, PT, 144A, FRN, 12.793%, 10/17/44		United States		1,720,503		1,606,347
2018-14, PT, 144A, FRN, 9.459%, 9/16/41		United States		2,586,727		2,539,266
2018-29, PT, 144A, FRN, 25.917%, 12/15/43		United States		721,225		596,586
2018-8, 144A, FRN, 8.60%, 6/17/41		United States		1,929,917		1,781,617
2019-26, PT, 144A, FRN, 20.442%, 8/15/44		United States		2,547,260		2,397,754
2019-31, PT, 144A, FRN, 21.412%, 9/15/44		United States		2,300,367		2,149,903
2019-37, PT, 144A, FRN, 20.088%, 10/17/44		United States		2,157,523		2,073,145
2019-42, PT, 144A, FRN, 24.207%, 11/15/44		United States		2,048,001		1,969,275
2019-S1, PT, 144A, FRN, 14.902%, 4/15/44		United States		2,058,107		1,807,253
2019-S2, PT, 144A, FRN, 14.389%, 5/16/44		United States		1,501,488		1,372,529
2019-S3, PT, 144A, FRN, 14.539%, 6/15/44		United States		912,502		851,455
2019-S4, PT, 144A, FRN, 13.454%, 8/15/44		United States		1,943,026		1,813,564
2019-S5, PT, 144A, FRN, 13.279%, 9/15/44		United States		1,846,587		1,693,239
^e,qCook Park CLO Ltd., 2018-1A, A2, 144A, FRN, 3.122%, (3-month USD LIBOR + 1.12%), 4/17/30		United States		1,000,000		974,180
^rCountrywide Home Loans, 2004-11, 2A1, FRN, 3.82%, 7/25/34		United States		1,241,833		1,270,706
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19		United States		167,135		151,351
^e,rCSMC Trust, 2014-IVR3, A1, 144A, FRN, 3.50%, 7/25/44		United States		1,684,145		1,716,135
Discover Card Execution Note Trust,
2018-A4, A4, 3.11%, 1/16/24		United States		8,230,000		8,414,974
2018-A5, A5, 3.32%, 3/15/24		United States		9,386,000		9,654,143
^r2019-A2, A, FRN, 2.191%, 12/15/23.		United States		9,250,000		9,266,046
2019-A3, A, 1.89%, 10/15/24		United States		11,820,000		11,843,931



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)


	Country		Principal Amount*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities (continued)
Diversified Financials(continued)
^e,qDryden 41 Senior Loan Fund, 2015-41A, AR, 144A, FRN, 2.956%, (3-month USD LIBOR + 0.97%), 4/15/31		United States		3,025,000		$	2,992,058
^e,rDryden 45 Senior Loan Fund, 2016-45A, CR, 144A, FRN, 4.201%, 10/15/30		United States		625,000			615,119
^e,qDryden 49 Senior Loan Fund, 2017-49A, C, 144A, FRN, 4.353%, (3-month USD LIBOR + 2.35%), 7/18/30		United States		870,000			848,676
^e,qDryden 50 Senior Loan Fund,
2017-50A, A1, 144A, FRN, 3.221%, (3-month USD LIBOR + 1.22%), 7/15/30		United States		2,640,000			2,631,288
2017-50A, C, 144A, FRN, 4.251%, (3-month USD LIBOR + 2.25%), 7/15/30		United States		2,150,000			2,150,666
^e,qDryden 55 CLO Ltd.,
2018-55A, A1, 144A, FRN, 3.021%, (3-month USD LIBOR + 1.02%), 4/15/31		United States		3,000,000			2,972,340
2018-55A, C, 144A, FRN, 3.901%, (3-month USD LIBOR + 1.90%), 4/15/31		United States		600,000			568,896
2018-55A, D, 144A, FRN, 4.851%, (3-month USD LIBOR + 2.85%), 4/15/31		United States		300,000			272,409
^e,qDryden 58 CLO Ltd.,
2018-58A, A2, 144A, FRN, 3.252%, (3-month USD LIBOR + 1.25%), 7/17/31		United States		1,600,000			1,573,744
2018-58A, B, 144A, FRN, 3.502%, (3-month USD LIBOR + 1.50%), 7/17/31		United States		11,000,000			10,792,760
^e,qDryden 64 CLO Ltd., 2018-64A, A, 144A, FRN, 2.973%, (3-month USD LIBOR + 0.97%), 4/18/31		United States		6,500,000			6,423,820
^e,rDryden 70 CLO Ltd., 2018-70A, B, 144A, FRN, 3.701%, 1/16/32		United States		560,580			555,877
^e,rDunedin Park CLO DAC,
1A, A1, 144A, FRN, 1.07%, 10/22/32		Ireland		8,200,000	EUR		9,079,062
1A, A2A, 144A, FRN, 1.75%, 10/22/32		Ireland		3,900,000	EUR		4,312,235
^e,rEaton Vance CLO Ltd., 2014-1RA, C, 144A, FRN, 4.101%, 7/15/30		United States		789,030			763,110
^e,qEllington CLO III Ltd., 2018-3A, A1, 144A, FRN, 3.616%, (3-month USD LIBOR + 1.65%), 7/20/30		United States		3,400,000			3,383,850
^e,rEuro-Galaxy III CLO BV, 2013-3A, B2ER, 144A, FRN, 1.50%, 1/17/31		Netherlands		1,800,000	EUR		2,004,015
^e,rEuro-Galaxy V CLO BV, 2016-5A, BR, 144A, FRN, 1.60%, 11/10/30		Netherlands		6,000,000	EUR		6,691,800
FHLMC Structured Agency Credit Risk Debt Notes,
^q2013-DN2, M2, FRN, 6.073%, (1-month USD LIBOR + 4.25%), 11/25/23		United States		6,474,000			6,987,559
^q2014-DN1, M2, FRN, 4.023%, (1-month USD LIBOR + 2.20%), 2/25/24		United States		833,001			842,623
^q2014-DN2, M3, FRN, 5.423%, (1-month USD LIBOR + 3.60%), 4/25/24		United States		14,350,000			15,161,381
^q2014-DN3, M3, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 8/25/24		United States		1,887,705			1,992,679
^q2014-DN4, M3, FRN, 6.373%, (1-month USD LIBOR + 4.55%), 10/25/24		United States		7,330,755			7,863,516
^q2014-HQ1, M3, FRN, 5.923%, (1-month USD LIBOR + 4.10%), 8/25/24		United States		10,078,927			10,653,721



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
FHLMC Structured Agency Credit Risk Debt Notes, (continued)
^q2014-HQ2, M3, FRN, 5.573%, (1-month USD LIBOR + 3.75%), 9/25/24		United States		12,060,000	$	13,034,897
^q2014-HQ3, M3, FRN, 6.573%, (1-month USD LIBOR + 4.75%), 10/25/24		United States		3,249,179		3,442,389
^q2015-DN1, M3, FRN, 5.973%, (1-month USD LIBOR + 4.15%), 1/25/25		United States		12,578,190		13,027,363
^q2015-DNA1, M2, FRN, 3.673%, (1-month USD LIBOR + 1.85%), 10/25/27		United States		5,535,364		5,578,668
^q2015-DNA1, M3, FRN, 5.123%, (1-month USD LIBOR + 3.30%), 10/25/27		United States		4,500,000		4,787,649
^q2015-DNA2, M2, FRN, 4.423%, (1-month USD LIBOR + 2.60%), 12/25/27		United States		1,941,926		1,949,975
^q2015-DNA2, M3, FRN, 5.723%, (1-month USD LIBOR + 3.90%), 12/25/27		United States		18,171,000		18,889,663
^q2015-DNA3, M2, FRN, 4.673%, (1-month USD LIBOR + 2.85%), 4/25/28		United States		3,077,919		3,111,961
^q2015-DNA3, M3, FRN, 6.523%, (1-month USD LIBOR + 4.70%), 4/25/28		United States		6,970,000		7,692,802
^q2015-HQ1, M3, FRN, 5.623%, (1-month USD LIBOR + 3.80%), 3/25/25		United States		10,046,903		10,325,061
^q2015-HQ2, M3, FRN, 5.073%, (1-month USD LIBOR + 3.25%), 5/25/25		United States		6,860,000		7,173,494
^q2015-HQA1, M2, FRN, 4.473%, (1-month USD LIBOR + 2.65%), 3/25/28		United States		1,756,238		1,761,315
^q2015-HQA1, M3, FRN, 6.523%, (1-month USD LIBOR + 4.70%), 3/25/28		United States		18,500,000		19,601,323
^q2015-HQA2, M2, FRN, 4.623%, (1-month USD LIBOR + 2.80%), 5/25/28		United States		3,078,283		3,096,373
^q2016-DNA1, M2, FRN, 4.723%, (1-month USD LIBOR + 2.90%), 7/25/28		United States		108,268		108,942
^q2016-DNA1, M3, FRN, 7.373%, (1-month USD LIBOR + 5.55%), 7/25/28		United States		23,610,000		26,055,920
^q2016-DNA2, M3, FRN, 6.473%, (1-month USD LIBOR + 4.65%), 10/25/28		United States		14,255,829		15,292,496
^q2016-HQA1, M2, FRN, 4.573%, (1-month USD LIBOR + 2.75%), 9/25/28		United States		259,109		260,149
^q2016-HQA2, M2, FRN, 4.073%, (1-month USD LIBOR + 2.25%), 11/25/28		United States		413,458		415,582
^q2016-HQA2, M3, FRN, 6.973%, (1-month USD LIBOR + 5.15%), 11/25/28		United States		9,640,000		10,580,021
^q2016-HQA3, M2, FRN, 3.173%, (1-month USD LIBOR + 1.35%), 3/25/29		United States		177,719		178,083
^q2017-DNA3, M2, FRN, 4.323%, (1-month USD LIBOR + 2.50%), 3/25/30		United States		8,350,000		8,526,492
^r2017-HQA1, M2, FRN, 5.373%, 8/25/29		United States		15,764,156		16,528,418
^q2018-HQA1, M1, FRN, 2.523%, (1-month USD LIBOR + 0.70%), 9/25/30		United States		3,720,904		3,722,141



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qFlagship CLO VIII Ltd., 2014-8A, ARR, 144A, FRN, 2.851%, (3-month USD LIBOR + 0.85%), 1/16/26		United States		4,490,326	$	4,490,192
^e,rFlagstar Mortgage Trust, 2018-6RR, 1A3, 144A, FRN, 4.00%, 10/25/48		United States		6,974,011		7,157,551
FNMA Connecticut Avenue Securities,
^q2013-C01, M2, FRN, 7.073%, (1-month USD LIBOR + 5.25%), 10/25/23		United States		17,238,688		19,004,514
^q2014-C02, 1M2, FRN, 4.423%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		12,929,309		13,451,733
^q2014-C02, 2M2, FRN, 4.423%, (1-month USD LIBOR + 2.60%), 5/25/24		United States		1,212,596		1,254,600
^q2014-C03, 1M2, FRN, 4.823%, (1-month USD LIBOR + 3.00%), 7/25/24		United States		22,732,254		23,888,098
^q2014-C03, 2M2, FRN, 4.723%, (1-month USD LIBOR + 2.90%), 7/25/24		United States		18,457,940		19,196,655
^q2014-C04, 1M1, FRN, 6.723%, (1-month USD LIBOR + 4.90%), 11/25/24		United States		10,966,017		11,954,627
^q2014-C04, 2M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 11/25/24		United States		4,943,769		5,273,890
^q2015-C01, 1M2, FRN, 6.123%, (1-month USD LIBOR + 4.30%), 2/25/25		United States		11,008,666		11,661,856
^q2015-C01, 2M2, FRN, 6.373%, (1-month USD LIBOR + 4.55%), 2/25/25		United States		5,430,894		5,617,519
^q2015-C02, 1M2, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		11,688,629		12,335,509
^q2015-C02, 2M2, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 5/25/25		United States		6,756,227		7,029,755
^q2015-C03, 1M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		10,596,089		11,447,389
^q2015-C03, 2M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 7/25/25		United States		6,414,064		6,823,093
^r2016-C01, 2M2, FRN, 8.773%, 8/25/28		United States		7,939,852		8,625,289
^r2016-C04, 1M2, FRN, 6.073%, 1/25/29		United States		15,320,000		16,190,921
^r2016-C05, 2M2, FRN, 6.273%, 1/25/29		United States		14,277,901		15,040,098
^r2016-C06, 1M2, FRN, 6.073%, 4/25/29		United States		4,260,000		4,533,771
^r2016-C07, 2M2, FRN, 6.173%, 5/25/29		United States		11,110,238		11,675,662
^q2017-C01, 1M2, FRN, 5.373%, (1-month USD LIBOR + 3.55%), 7/25/29		United States		20,305,000		21,278,361
^r2017-C06, 1M2, FRN, 4.473%, 2/25/30		United States		12,970,000		13,256,162
^q2018-C02, 2M1, FRN, 2.473%, (1-month USD LIBOR + 0.65%), 8/25/30		United States		1,707,986		1,708,031
^e,rGalaxy XVIII CLO Ltd., 2018-28A, A2, 144A, FRN, 3.071%, 7/15/31		United States		6,500,000		6,492,005
^e,rGalaxy XXV CLO Ltd., 2018-25A, B, 144A, FRN, 3.59%, 10/25/31		United States		2,000,000		1,969,180
^e,rGalaxy XXVI CLO Ltd.,
2018-26A, A, 144A, FRN, 3.35%, 11/22/31		United States		3,429,602		3,423,154
2018-26A, B, 144A, FRN, 3.85%, 11/22/31		United States		2,100,000		2,072,595



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qGalaxy XXVII CLO Ltd., 2018-27A, A, 144A, FRN, 3.188%, (3-month USD LIBOR + 1.02%), 5/16/31		United States		1,500,000		$	1,483,170
^rGreenpoint Manufactured Housing, 1999-5, M1A, FRN, 8.30%, 10/15/26		United States		357,243			377,933
^qGSAA Home Equity Trust,
2005-5, M3, FRN, 2.768%, (1-month USD LIBOR + 0.945%), 2/25/35		United States		1,763,533			1,803,312
2005-6, A3, FRN, 2.193%, (1-month USD LIBOR + 0.37%), 6/25/35		United States		54,750			54,953
^qGSAMP Trust, 2005-HE3, M2, FRN, 2.828%, (1-month USD LIBOR + 1.005%), 6/25/35		United States		55,659			55,847
^rGSR Mortgage Loan Trust, 2005-AR1, 1A1, FRN, 4.53%, 1/25/35		United States		242,832			248,978
^e,qHalcyon Loan Advisors Funding Ltd., 2018-1A, A2, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 7/21/31		United States		5,000,000			4,850,200
^e,rHarbor Park CLO Ltd.,
1A, A2, 144A, FRN, 3.366%, 1/20/31		United States		1,710,526			1,697,817
1A, B1, 144A, FRN, 3.666%, 1/20/31		United States		466,667			463,545
^e,qHayFin Kingsland IX Ltd., 2013-6A, BR, 144A, FRN, 3.736%, (3-month USD LIBOR + 1.80%), 4/28/31		United States		5,200,000			5,134,220
^e,rHPS Loan Management Ltd.,
2013A-18, A2, 144A, FRN, 3.451%, 10/15/30		United States		1,400,000			1,388,366
2013A-18, C, 144A, FRN, 4.151%, 10/15/30		United States		500,000			481,535
^eInvitation Homes Trust,
^q2017-SFR2, A, 144A, FRN, 2.739%, (1-month USD LIBOR + 0.85%), 12/17/36		United States		13,295,218			13,294,568
^q2018-SFR3, A, 144A, FRN, 2.889%, (1-month USD LIBOR + 1.00%), 7/17/37		United States		10,983,696			11,013,156
^r2018-SFR4, A, 144A, FRN, 2.989%, 1/17/38		United States		9,051,576			9,101,942
^rJP Morgan Mortgage Trust, 2004-A1, 5A1, FRN, 4.909%, 2/25/34		United States		32,256			34,062
^e,qLCM 26 Ltd.,
26A, B, 144A, FRN, 3.366%, (3-month USD LIBOR + 1.40%), 1/20/31		United States		4,500,000			4,351,995
26A, C, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 1/20/31		United States		2,000,000			1,883,540
^e,rLCM XV LP, 2015-A, AR, 144A, FRN, 3.206%, 7/20/30		United States		1,250,000			1,250,487
^e,rLCM XVI LP,
2016A, A2R, 144A, FRN, 3.181%, 10/15/31		United States		1,083,333			1,080,300
2016A, BR2, 144A, FRN, 3.751%, 10/15/31		United States		1,756,602			1,751,982
^e,rLCM XXII Ltd., 22A, A2R, 144A, FRN, 3.416%, 10/20/28		United States		5,000,000			4,901,700
^e,qLCM XXIII Ltd., 23A, A2, 144A, FRN, 3.816%, (3-month USD LIBOR + 1.85%), 10/20/29		United States		1,000,000			1,000,400
^e,qLCM XXV Ltd., 25A, A, 144A, FRN, 3.176%, (3-month USD LIBOR + 1.21%), 7/20/30		United States		274,000			273,797
^qLehman XS Trust, 2005-4, 1A4, FRN, 2.383%, (1-month USD LIBOR + 0.56%), 10/25/35		United States		393,785	��		391,991



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qLong Point Park CLO Ltd.,
2017-1A, A2, 144A, FRN, 3.377%, (3-month USD LIBOR + 1.375%), 1/17/30		United States		2,400,000		$	2,340,720
2017-1A, B, 144A, FRN, 3.702%, (3-month USD LIBOR + 1.70%), 1/17/30		United States		1,000,000			954,350
^e,rMach One ULC, 2004-1A, M, 144A, FRN, 5.45%, 5/28/40		United States		162,674			161,983
^e,rMadison Park Euro Funding XIV DAC, 2014A, A1N, 144A, FRN, 1.12%, 7/15/32		Ireland		4,200,000	EUR		4,704,534
^e,qMadison Park Funding Ltd.,
2018-28A, B, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		2,000,000			1,976,700
2018-28A, C, 144A, FRN, 3.851%, (3-month USD LIBOR + 1.85%), 7/15/30		United States		4,200,000			4,034,814
^e,qMadison Park Funding XI Ltd., 2013-11, CR, 144A, FRN, 4.134%, (3-month USD LIBOR + 2.20%), 7/23/29		United States		1,910,000			1,856,615
^e,rMadison Park Funding XIV Ltd.,
2014-14A, BRR, 144A, FRN, 3.653%, 10/22/30		United States		1,000,000			992,990
2014-14A, CRR, 144A, FRN, 4.153%, 10/22/30		United States		375,000			368,490
^e,qMadison Park Funding XXIII Ltd.,
2017-23A, B, 144A, FRN, 3.636%, (3-month USD LIBOR + 1.70%), 7/27/30		United States		4,000,000			3,975,240
2017-23A, C, 144A, FRN, 4.286%, (3-month USD LIBOR + 2.35%), 7/27/30		United States		1,300,000			1,278,589
^e,rMadison Park Funding XXIX Ltd.,
2018-29A, A2, 144A, FRN, 3.453%, 10/18/30		United States		7,945,455			7,859,565
2018-29A, B, 144A, FRN, 3.753%, 10/18/30		United States		4,000,000			3,978,200
2018-29A, C, 144A, FRN, 4.203%, 10/18/30		United States		995,968			976,118
^e,qMadison Park Funding XXVI Ltd., 2017-26A, AR, 144A, FRN, 3.128%, (3-month USD LIBOR + 1.20%), 7/29/30		United States		4,400,000			4,392,124
^e,qMadison Park Funding XXVII Ltd., 2018-27A, A1B, 144A, FRN, 3.096%, (3-month USD LIBOR + 1.13%), 4/20/30		United States		3,061,000			3,018,238
^e,rMadison Park Funding XXXI Ltd.,
2018-31A, A2A, 144A, FRN, 3.434%, 1/23/31		United States		2,250,000			2,234,700
2018-31A, B, 144A, FRN, 3.634%, 1/23/31		United States		3,000,000			2,979,660
2018-31A, C, 144A, FRN, 4.084%, 1/23/31		United States		650,000			636,200
^e,rMagnetite Ltd., 2015-14RA, A1, 144A, FRN, 3.123%, 10/18/31		United States		11,000,000			10,970,630
MASTR Alternative Loan Trust,
2003-1, 3A1, 5.00%, 6/25/23		United States		13,248			13,968
2003-6, 2A1, 5.00%, 8/25/20		United States		23,663			23,670
^qMerrill Lynch Mortgage Investors Trust, 2005-A10, A, FRN, 2.033%, (1-month USD LIBOR + 0.21%), 2/25/36		United States		1,875,976			1,845,880
^qMerrill Lynch Mortgage Investors Trust Inc., 2003-E, A1, FRN, 2.443%, (1-month USD LIBOR + 0.62%), 10/25/28		United States		474,822			481,562
^e,rMill City Mortgage Loan Trust,
2016-1, A, 144A, FRN, 2.50%, 4/25/57		United States		5,835,014			5,864,387
2017-3, A1, 144A, FRN, 2.75%, 1/25/61		United States		6,665,992			6,747,840
2018-1, A1, 144A, FRN, 3.25%, 5/25/62		United States		12,541,036			12,868,113
2018-2, A1, 144A, FRN, 3.50%, 5/25/58		United States		4,359,279			4,479,687



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,rMill City Mortgage Loan Trust, (continued)
2018-4, A1B, 144A, FRN, 3.50%, 4/25/66		United States		9,680,000	$	9,991,114
^e,rMorgan Stanley Capital I Trust, 2011-C1, A4, 144A, FRN, 5.033%, 9/15/47		United States		3,478,298		3,537,553
^e,rMountain View Funding CLO XIV Ltd., 2019-1A, A1, 144A, FRN, 3.441%, 4/15/29		United States		4,500,000		4,500,945
^eNeuberger Berman CLO Ltd.,
^r2016-22A, A2R, 144A, FRN, 3.402%, 10/17/30		United States		1,400,000		1,388,856
^r2016-22A, BR, 144A, FRN, 3.652%, 10/17/30		United States		900,000		891,819
^q2017-26A, C, 144A, FRN, 3.753%, (3-month USD LIBOR + 1.75%), 10/18/30		United States		2,100,000		1,985,886
^e,rNeuberger Berman CLO XVIII Ltd.,
2014-18A, A1BR, 144A, FRN, 3.366%, 10/21/30		United States		2,295,000		2,283,846
2014-18A, BR2, 144A, FRN, 4.116%, 10/21/30		United States		1,600,000		1,532,912
^e,qNeuberger Berman CLO XVI-S Ltd.,
2017-16SA, B, 144A, FRN, 3.251%, (3-month USD LIBOR + 1.25%), 1/15/28		United States		400,000		391,720
2017-16SA, C, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 1/15/28		United States		400,000		390,464
^eNeuberger Berman Loan Advisers CLO Ltd.,
^q2017-26A, B, 144A, FRN, 3.503%, (3-month USD LIBOR + 1.50%), 10/18/30		United States		1,078,945		1,058,186
^q2018-27A, C, 144A, FRN, 3.701%, (3-month USD LIBOR + 1.70%), 1/15/30		United States		500,000		469,325
^r2019-32A, B, 144A, FRN, 3.816%, 1/19/32		United States		4,800,000		4,787,952
^r2019-32A, C, 144A, FRN, 4.616%, 1/19/32		United States		6,000,000		6,000,300
^qNew York Mortgage Trust, 2005-3, M1, FRN, 2.498%, (1-month USD LIBOR + 0.675%), 2/25/36		United States		190,431		180,098
^e,qNewark BSL CLO 2 Ltd., 2017-1A, B, 144A, FRN, 4.29%, (3-month USD LIBOR + 2.35%), 7/25/30		United States		583,989		576,543
^e,qNZCG Funding Ltd., 2015-1A, A2R, 144A, FRN, 3.682%, (3-month USD LIBOR + 1.55%), 2/26/31		United States		6,600,000		6,470,376
^eOBP Depositor LLC Trust, 2010-OBP, A, 144A, 4.646%, 7/15/45		United States		5,834,000		5,858,123
^e,qOBX Trust, 2018-1, A2, 144A, FRN, 2.473%, (1-month USD LIBOR + 0.65%), 6/25/57		United States		2,821,866		2,817,135
^eOctagon Investment Partners 18-R Ltd.,
^r2018-18A, A1A, 144A, FRN, 2.961%, 4/16/31		United States		1,000,000		991,010
^q2018-18A, C, 144A, FRN, 4.701%, (3-month USD LIBOR + 2.70%), 4/16/31		United States		1,000,000		894,420
^e,qOctagon Investment Partners 26 Ltd.,
2016-1A, A2R, 144A, FRN, 3.351%, (3-month USD LIBOR + 1.35%), 7/15/30		United States		1,600,000		1,573,632
2016-1A, BR, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 7/15/30		United States		2,000,000		1,971,600
^e,rOctagon Investment Partners 28 Ltd.,
2016-1A, A2R, 144A, FRN, 3.386%, 10/24/30		United States		4,000,000		4,004,840
2016-1A, BR, 144A, FRN, 3.736%, 10/24/30		United States		1,186,282		1,185,511



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qOctagon Investment Partners 31 LLC, 2017-1A, C, 144A, FRN, 4.366%, (3-month USD LIBOR + 2.40%), 7/20/30		United States		280,761		$	278,024
^e,qOctagon Investment Partners 35 Ltd., 2018-1A, A1B, 144A, FRN, 3.066%, (3-month USD LIBOR + 1.10%), 1/20/31		United States		2,000,000			1,955,580
^e,qOctagon Investment Partners 37 Ltd., 2018-2A, A2, 144A, FRN, 3.52%, (3-month USD LIBOR + 1.58%), 7/25/30		United States		1,000,000			986,660
^e,qOctagon Investment Partners XVI Ltd.,
2013-1A, BR, 144A, FRN, 3.602%, (3-month USD LIBOR + 1.60%), 7/17/30		United States		4,000,000			3,944,200
2013-1A, CR, 144A, FRN, 3.852%, (3-month USD LIBOR + 1.85%), 7/17/30		United States		3,000,000			2,822,910
^e,qOctagon Investment Partners XXII Ltd., 2014-1A, CRR, 144A, FRN, 3.853%, (3-month USD LIBOR + 1.90%), 1/22/30		United States		2,100,000			1,987,230
^e,qOctagon Investment Partners XXIII Ltd.,
2015-1A, CR, 144A, FRN, 3.851%, (3-month USD LIBOR + 1.85%), 7/15/27		United States		250,000			246,322
2015-1A, DR, 144A, FRN, 4.551%, (3-month USD LIBOR + 2.55%), 7/15/27		United States		300,000			292,137
^e,rOctagon Loan Funding Ltd., 2014-1A, ARR, 144A, FRN, 3.304%, 11/18/31		United States		3,300,000			3,286,734
^eProgress Residential Trust,
2017-SFR1, A, 144A, 2.768%, 8/17/34		United States		408,504			411,260
2018-SFR2, A, 144A, 3.712%, 8/17/35		United States		2,967,000			3,033,868
^qRAAC, 2004-SP1, AII, FRN, 2.523%, (1-month USD LIBOR + 0.70%), 3/25/34		United States		289,629			288,597
^e,rRace Point X CLO Ltd., 2016-10A, B1R, 144A, FRN, 3.59%, 7/25/31		United States		700,000			683,718
^e,qRadnor RE Ltd., 2018-1, M1, 144A, FRN, 3.223%, (1-month USD LIBOR + 1.40%), 3/25/28		United States		3,632,060			3,632,869
^e,rSequoia Mortgage Trust, 2016-2, A4, 144A, FRN, 3.50%, 8/25/46		United States		12,254,106			12,527,757
^e,rSound Point Euro CLO II Funding DAC,
2A, A, 144A, FRN, 1.11%, 10/26/32		Ireland		8,200,000	EUR		9,167,815
2A, B1, 144A, FRN, 1.85%, 10/26/32		Ireland		4,300,000	EUR		4,788,239
^rStructured ARM Loan Trust, 2004-12, 3A1, FRN, 4.214%, 9/25/34		United States		1,260,162			1,289,988
^qStructured Asset Mortgage Investments II Trust, 2004-AR6, A1A, FRN, 2.546%, (1-month USD LIBOR + 0.70%), 2/19/35		United States		1,160,143			1,152,575
^e,qTCI-Flatiron CLO Ltd., 2017-1A, C, 144A, FRN, 3.974%, (3-month USD LIBOR + 1.85%), 11/18/30		United States		500,000			472,450
Thornburg Mortgage Securities Trust,
^q2004-3, A, FRN, 2.563%, (1-month USD LIBOR + 0.74%), 9/25/44		United States		701,125			708,994
^r2005-1, A3, FRN, 4.578%, 4/25/45		United States		177,865			179,680
^eTowd Point Mortgage Trust,
^r2015-1, 144A, FRN, 2.75%, 11/25/60		United States		475,819			479,655
2015-1, AE, 144A, 3.00%, 10/25/53		United States		3,103,826			3,126,021
^r2015-2, 2A1, 144A, FRN, 3.75%, 11/25/57		United States		505,655			511,131
^r2015-3, A1A, 144A, FRN, 3.50%, 3/25/54		United States		1,964,945			1,986,838
^r2015-3, A1B, 144A, FRN, 3.00%, 3/25/54		United States		907,383			913,685



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund (continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^eTowd Point Mortgage Trust, (continued)
^r2016-1, A1, 144A, FRN, 3.50%, 2/25/55		United States		7,664,199	$	7,798,680
^r2016-2, A1A, 144A, FRN, 2.75%, 8/25/55		United States		789,910		798,795
^r2016-3, A1, 144A, FRN, 2.25%, 4/25/56		United States		8,114,465		8,117,020
^r2016-4, A1, 144A, FRN, 2.25%, 7/25/56		United States		12,206,495		12,216,297
^r2016-5, A1, 144A, FRN, 2.50%, 10/25/56		United States		3,829,710		3,854,502
^r2017-1, A1, 144A, FRN, 2.75%, 10/25/56		United States		11,588,709		11,759,202
^r2017-2, A1, 144A, FRN, 2.75%, 4/25/57		United States		11,467,112		11,587,730
^r2017-4, A1, 144A, FRN, 2.75%, 6/25/57		United States		12,483,079		12,665,784
^q2017-5, A1, 144A, FRN, 2.423%, (1-month USD LIBOR + 0.60%), 2/25/57		United States		2,697,691		2,698,147
^r2018-1, A1, 144A, FRN, 3.00%, 1/25/58		United States		2,879,629		2,930,983
^r2018-2, A1, 144A, FRN, 3.25%, 3/25/58		United States		6,725,882		6,902,797
^r2018-3, A1, 144A, FRN, 3.75%, 5/25/58		United States		14,300,553		14,945,307
^r2018-4, A1, 144A, FRN, 3.00%, 6/25/58		United States		17,003,140		17,569,970
^r2018-5, A1A, 144A, FRN, 3.25%, 7/25/58		United States		3,828,359		3,941,368
^r2018-6, A1A, 144A, FRN, 3.75%, 3/25/58		United States		6,957,214		7,248,483
^r2019-1, A1, 144A, FRN, 3.75%, 3/25/58		United States		13,437,024		14,203,934
^e,rUpgrade Master Pass-Thru Trust, 2019-PT1, A, 144A, FRN, 11.128%, 6/15/25		United States		1,090,333		1,089,898
^eVoya CLO Ltd.,
^q2012-4A, A2R, 144A, FRN, 3.851%, (3-month USD LIBOR + 1.85%), 10/15/28		United States		7,660,000		7,663,141
^q2013-2A, A1R, 144A, FRN, 2.91%, (3-month USD LIBOR + 0.97%), 4/25/31		United States		4,500,000		4,455,540
^q2013-2A, CR, 144A, FRN, 4.69%, (3-month USD LIBOR + 2.75%), 4/25/31		United States		375,000		337,766
^q2014-1A, CR2, 144A, FRN, 4.803%, (3-month USD LIBOR + 2.80%), 4/18/31		United States		600,000		542,958
^r2016-3A, A1R, 144A, FRN, 3.193%, 10/18/31		United States		1,800,000		1,797,498
^r2016-3A, A2R, 144A, FRN, 3.403%, 10/18/31		United States		818,182		808,282
^r2016-3A, CR, 144A, FRN, 5.253%, 10/18/31		United States		1,698,113		1,588,007
^q2017-3A, B, 144A, FRN, 4.316%, (3-month USD LIBOR + 2.35%), 7/20/30		United States		507,690		502,126
^q2018-2A, A2, 144A, FRN, 3.251%, (3-month USD LIBOR + 1.25%), 7/15/31		United States		2,500,000		2,455,000
^r2018-4A, B, 144A, FRN, 3.851%, 1/15/32		United States		948,052		941,947
^qWaMu Mortgage Pass-Through Certificates,
2005-AR19, A1A1, FRN, 2.093%, (1-month USD LIBOR + 0.27%), 12/25/45		United States		2,037,361		2,041,238
2005-AR8, 1A1A, FRN, 2.403%, (1-month USD LIBOR + 0.58%), 7/25/45		United States		820,751		822,924



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^e,qWebster Park CLO Ltd., 2015-1A, A2R, 144A, FRN, 3.566%, (3-month USD LIBOR + 1.60%), 7/20/30		United States		1,750,000	$	1,726,690
Wells Fargo Commercial Mortgage Trust, 2016-NXS6, A2, 2.399%, 11/15/49		United States		6,534,000		6,566,403
^e,rWells Fargo Mortgage Backed Securities, 2018-1, A3, 144A, FRN, 3.50%, 7/25/47		United States		5,327,292		5,427,829
^rWells Fargo Mortgage Backed Securities Trust,
2004-W, A9, FRN, 4.597%, 11/25/34		United States		56,574		59,328
2005-AR10, 2A3, FRN, 4.927%, 6/25/35		United States		310,284		319,128
^e,qWest CLO Ltd.,
2014-1A, A2R, 144A, FRN, 3.353%, (3-month USD LIBOR + 1.35%), 7/18/26		United States		1,360,000		1,357,103
2014-1A, BR, 144A, FRN, 3.853%, (3-month USD LIBOR + 1.85%), 7/18/26		United States		2,410,000		2,403,879


						1,397,999,556


Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $1,421,609,049)						1,407,284,840


Mortgage-Backed Securities 2.7%
^vFederal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.1%
FHLMC, 4.715% - 4.886%, (12-month USD LIBOR +/- MBS Margin), 10/01/36 - 6/01/37		United States		1,396,398		1,476,208


Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 2.1%
^wFHLMC 15 Year, 2.50%, 10/01/34		United States		62,740,000		63,421,317
FHLMC Gold 15 Year, 5.00%, 10/01/23		United States		75,095		77,449
FHLMC Gold 15 Year, 6.00%, 6/01/23		United States		10,081		10,405
FHLMC Gold 30 Year, 5.00%, 1/01/39		United States		104,437		115,396


						63,624,567


^vFederal National Mortgage Association (FNMA) Adjustable Rate 0.4%
FNMA, 3.10% - 3.293%, (1-month USD LIBOR +/- MBS Margin), 4/01/28 - 7/01/34		United States		258,729		265,827
FNMA, 4.25%, (Federal COF +/- MBS Margin), 8/01/29		United States		3,347		3,388
FNMA, 2.946% - 4.461%, (US 3 Year CMT T-Note +/- MBS Margin), 3/01/21 - 6/01/34		United States		48,260		49,047
FNMA, 4.50%, (6-month US T-Bill +/- MBS Margin), 8/01/32		United States		85,994		87,947
FNMA, 4.746%, (US 5 Year CMT T-Note +/- MBS Margin), 2/01/30		United States		55,039		58,906
FNMA, 3.334% - 5.011%, (12-month USD LIBOR +/- MBS Margin), 11/01/32 - 2/01/44		United States		9,255,049		9,707,967
FNMA, 3.59% - 5.165%, (US 1 Year CMT T-Note +/- MBS Margin), 2/01/21 - 10/01/44		United States		2,258,494		2,332,924
FNMA, 3.123% - 5.488%, (6-month USD LIBOR +/- MBS Margin), 9/01/22 - 8/01/37		United States		891,044		912,076



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Principal Amount*		Value

Mortgage-Backed Securities(continued)
^vFederal National Mortgage Association (FNMA) Adjustable Rate (continued)
FNMA, 2.391% - 5.625%, (11th District COF +/- MBS Margin), 12/01/25 - 12/01/36		United States		105,095	$	106,943


						13,525,025

Federal National Mortgage Association (FNMA) Fixed Rate 0.1%
FNMA 15 Year, 3.50%, 10/01/25		United States		656,713		680,101
FNMA 15 Year, 4.00%, 12/01/25		United States		973,985		1,016,085
FNMA 15 Year, 4.50%, 5/01/23 - 6/01/25		United States		638,857		661,632
FNMA 30 Year, 5.00%, 3/01/38		United States		22,164		24,411


						2,382,229

^vGovernment National Mortgage Association (GNMA) Adjustable Rate 0.0%^†

GNMA, 3.25% - 3.875%, (US 1 Year CMT T-Note +/- MBS Margin), 4/20/26 - 9/20/26		United States		14,733		15,027


Total Mortgage-Backed Securities (Cost $80,797,940)						81,023,056


Municipal Bonds 2.9%
California State GO, Various Purpose, Refunding, 2.375%, 10/01/26		United States		18,195,000		18,441,178
^tHonolulu City and County Wastewater System Revenue, Second Bond Resolution, Refunding, Junior Series B, 2.233%, 7/01/24		United States		2,470,000		2,486,598
Industry Public Facilities Authority Tax Allocation Revenue, Transportation District, Industrial Redevelopment Project No. 2, Refunding, Series B, AGMC Insured, 3.389%, 1/01/20		United States		5,900,000		5,912,980
New York State GO, Refunding, Series B, 2.12%, 2/15/25		United States		18,195,000		18,414,614
New York State Urban Development Corp. Sales Tax Revenue, Series B, 2.25%, 3/15/26		United States		20,685,000		20,884,610
Pennsylvania State GO, Refunding, Second Series, 5.00%, 1/15/20		United States		6,500,000		6,548,750
San Jose RDA Successor Agency Tax Allocation,
Senior, Refunding, Series A-T, 2.48%, 8/01/21		United States		1,595,000		1,617,234
Senior, Refunding, Series A-T, 2.63%, 8/01/22		United States		5,320,000		5,446,191
Texas State GO, Transportation Commission Highway Improvement, Series A, 5.00%, 4/01/21		United States		2,685,000		2,831,306
^tTexas State University Systems Financing Revenue, Refunding, Serise B, 2.351%, 3/15/26		United States		4,825,000		4,854,288


Total Municipal Bonds (Cost $86,566,551)						87,437,749



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)


	Country		Shares/ Units		Value

Escrows and Litigation Trusts 0.0%
^a,bNewPage Corp., Escrow Account		United States		500,000	$	—
^a,b,cRemington Outdoor Co. Inc., Litigation Units		United States		16,078		—
^a,bT-Mobile USA Inc., Escrow Account		United States		1,800,000		—


Total Escrows and Litigation Trusts (Cost $—)						—


Total Investments before Short Term Investments (Cost $2,937,389,106)						2,917,297,443


			Principal Amount*

Short Term Investments 3.6%

Corporate Bonds (Cost $2,021,670) 0.0%^†
Telecommunication Services 0.0%^†
^eSprint Communications Inc., senior note, 144A, 7.00%, 3/01/20		United States		2,000,000		2,030,000


Total Investments before Money Market Funds (Cost $2,939,410,776)						2,919,327,443


			Shares
Money Market Funds (Cost $108,041,040) 3.6%
^d,xInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		108,041,040		108,041,040

Total Investments (Cost $3,047,451,816) 100.1%						3,027,368,483

Other Assets, less Liabilities (0.1)%						(3,332,585	)


Net Assets 100.0%					$	3,024,035,898



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

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

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

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 13 regarding fair value measurements.

^cSee Note 8 regarding restricted securities.

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

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At October 31, 2019, the aggregate value of these securities was $1,022,164,639, representing 33.8% of net assets.

^fSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. At October 31, 2019, the aggregate value of these securities was $64,358,389, representing 2.1% of net assets.

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

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

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

^jSee Note 7 regarding defaulted securities.

^kSee Note 1(g) regarding loan participation notes.

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

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

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

^oSee Note 1(k) regarding Marketplace lending.

^pPrincipal amount of security is adjusted for inflation. See Note 1(m).

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

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

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

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

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

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

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

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



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STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

At October 31, 2019, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts


Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)

Interest Rate Contracts
Australian 3 Yr. Bond		Long		725	$	57,666,724		12/16/19	$	87,706
Australian 10 Yr. Bond		Long		200		20,105,599		12/16/19		(243	)
Canadian 10 Yr. Bond		Long		354		38,193,817		12/18/19		(531,552	)
CME Ultra Long Term U.S. Treasury Bond		Short		5		948,750		12/19/19		42,649
U.S. Treasury 2 Yr. Note		Long		3,291		709,544,742		12/31/19		(1,561,842	)
U.S. Treasury 5 Yr. Note		Short		76		9,059,438		12/31/19		79,466
U.S. Treasury 10 Yr. Note		Short		850		110,752,344		12/19/19		(238,196	)
U.S. Treasury 30 Yr. Bond		Short		150		24,206,250		12/19/19		656,037
Ultra 10 Yr. U.S. Treasury Note		Short		84		11,937,187		12/19/19		234,429


Total Futures Contracts									$	(1,231,546	)

*As of period end.

At October 31, 2019, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts


Currency	Counterparty^a		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation

OTC Forward Exchange Contracts
Brazilian Real		JPHQ		Sell		2,640,000	$	645,582		12/09/19	$	—	$	(10,752	)
Brazilian Real		JPHQ		Sell		985,000		241,244		12/11/19		—		(3,615	)
Indonesian Rupiah		JPHQ		Buy		31,065,000,000		2,120,912		12/16/19		73,897		—
Australian Dollar		JPHQ		Sell		11,520,000		7,773,523		1/09/20		—		(183,605	)
Australian Dollar		JPHQ		Sell		4,300,000		2,931,525		1/28/20		—		(39,711	)
Japanese Yen		JPHQ		Buy		2,572,000,000		24,360,898		1/29/20		—		(395,701	)
Canadian Dollar		JPHQ		Sell		9,160,000		6,901,904		1/30/20		—		(59,120	)
Canadian Dollar		JPHQ		Sell		43,606,003		33,187,715		1/30/20		49,895		—
Danish Krone		JPHQ		Sell		88,653,329		13,362,422		1/30/20		32,595		—
Euro		JPHQ		Sell		63,822,612		72,171,192		1/30/20		532,384		—
Mexican Peso		JPHQ		Buy		48,650,000		2,410,982		1/30/20		82,529		—
Norwegian Krone		JPHQ		Buy		67,900,000		7,546,118		1/30/20		—		(159,038	)
Chinese Yuan Renminbi		JPHQ		Sell		68,950,000		9,697,114		2/24/20		—		(55,301	)
Japanese Yen		JPHQ		Buy		1,080,000,000		10,161,502		3/13/20		—		(72,306	)
Canadian Dollar		JPHQ		Buy		43,524,355		33,070,705		3/16/20		4,683		—
Canadian Dollar		JPHQ		Sell		3,300,000		2,495,803		3/16/20		—		(11,961	)
Canadian Dollar		JPHQ		Sell		5,300,000		4,052,731		3/16/20		25,112		—
Euro		BZWS		Sell		194,860		218,644		3/16/20		—		(683	)
Euro		CITI		Sell		391,262		439,094		3/16/20		—		(1,295	)
Euro		DBAB		Sell		3,367,136		3,774,728		3/16/20		—		(15,185	)
Euro		GSCO		Sell		420,000		470,988		3/16/20		—		(1,747	)
Euro		JPHQ		Sell		21,003,130		23,504,936		3/16/20		—		(135,344	)
Norwegian Krone		JPHQ		Buy		83,000,000		9,268,565		3/16/20		—		(239,746	)



franklintempleton.com	Annual Report	87

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

Forward Exchange Contracts(continued)


Currency	Counterparty^a		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation

OTC Forward Exchange Contracts(continued)
Swedish Krona		JPHQ		Buy		59,800,000	$	6,101,138		3/16/20	$	136,493	$	—
Swedish Krona		JPHQ		Sell		59,800,000		6,287,192		3/16/20		49,562		—
South Korean Won		JPHQ		Sell		2,920,000,000		2,454,400		3/25/20		—		(50,220	)
Turkish Lira		JPHQ		Buy		9,910,000		1,571,395		4/15/20		87,878		—

Total Forward Exchange Contracts											$	1,075,028	$	(1,435,330	)

Net unrealized appreciation (depreciation)													$	(360,302	)

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

At October 31, 2019, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts


Description	Periodic Payment Rate Received (Paid)		Payment Frequency		Counter- party		Maturity Date		Notional Amount^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating^b

Centrally Cleared Swap Contracts

Contracts to Sell Protection^c,d

Traded Index
CDX.NA.HY.24		5.00%		Quarterly				6/20/20	$	28,536,250	$	538,027		$	496,637		$	41,390			Non- Investment Grade
CDX.NA.IG.31		1.00%		Quarterly				12/20/21		74,600,000		1,363,537			868,045			495,492			Investment Grade

Total Centrally Cleared Swap Contracts											$	1,901,564		$	1,364,682		$	536,882


OTC Swap Contracts

Contracts to Buy Protectionc

Single Name
Ally Financial Inc.		(5.00)%		Quarterly		JPHQ		12/20/24	$	11,000,000	$	(2,263,291	)	$	(2,113,160	)	$	(150,131	)
American Airlines Group Inc.		(5.00)%		Quarterly		CITI		12/20/19		1,780,000		(21,878	)		(10,034	)		(11,844	)
Avon Products Inc.		(5.00)%		Quarterly		CITI		3/20/23		5,835,000		(668,856	)		(574,811	)		(94,045	)
Government of Italy		(1.00)%		Quarterly		BZWS		6/20/23		4,100,000		(63,316	)		32,482			(95,798	)
Government of Turkey		(1.00)%		Quarterly		BZWS		12/20/19		900,000		(1,553	)		5,757			(7,310	)
Nabors Industries Inc.		(1.00)%		Quarterly		CITI		12/20/21		5,150,000		616,740			160,545			456,195
Navient Corp.		(5.00)%		Quarterly		JPHQ		3/20/20		1,150,000		(27,611	)		(16,169	)		(11,442	)

Contracts to Sell Protection^c,d

Single Name
American Tower Corp.		1.00%		Quarterly		GSCO		3/20/21		6,500,000		20,414			(33,733	)		54,147			BBB-
The Goldman Sachs Group Inc.		1.00%		Quarterly		JPHQ		12/20/24		11,000,000		220,478			194,747			25,731			BBB+
Government of Argentina		5.00%		Quarterly		CITI		12/20/21		7,085,000		(4,208,379	)		(4,007,018	)		(201,361	)		CCC-
Government of Indonesia		1.00%		Quarterly		CITI		12/20/24		5,225,000		65,889			35,145			30,744			NR
Government of Italy		1.00%		Quarterly		BZWS		6/20/23		4,100,000		20,813			(142,437	)		163,250			NR
Government of Russia		1.00%		Quarterly		CITI		12/20/24		3,700,000		47,268			37,701			9,567			BBB-
Government of Spain		1.00%		Quarterly		CITI		12/20/24		4,400,000		144,651			128,704			15,947			NR



88	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

Credit Default Swap Contracts(continued)


Description	Periodic Payment Rate Received (Paid)			Payment Frequency		Counter- party		Maturity Date		Notional Amount^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating^b


OTC Swap Contracts(continued)

Contracts to Sell Protection^c,d(continued)

Single Name(continued)
Morgan Stanley		1.00	%		Quarterly		JPHQ		12/20/24	$	11,000,000	$	239,090		$	213,745		$	25,345			BBB+
Nabors Industries Inc.		1.00	%		Quarterly		CITI		12/20/23		5,150,000		(1,295,717	)		(638,278	)		(657,439	)		BB-
Traded Index
^eBNP Paribas Bespoke Rodez Index, Mezzanine Tranche 5-7%		2.00	%		Quarterly		BNDP		12/20/20		3,600,000		29,863			—			29,863			Non-
																						Investment
																						Grade
^eBNP Paribas Bespoke Rodez2 Index, Mezzanine Tranche 5-7%		3.20	%		Quarterly		BNDP		12/20/20		2,000,000		48,245			—			48,245			Non-
																						Investment
																						Grade
^eCitibank Bespoke Cambridge Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		12/20/19		2,200,500		(196,514	)		(24,674	)		(171,840	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Palma Index, Mezzanine Tranche 5-7%		2.30	%		Quarterly		CITI		6/20/21		4,200,000		59,610			—			59,610			Non-
																						Investment
																						Grade
^eCitibank Bespoke Phoenix Index, Mezzanine Tranche 5-7%		2.90	%		Quarterly		CITI		12/20/21		2,800,000		76,517			—			76,517			Non-
																						Investment
																						Grade
^eCitibank Bespoke Singapore Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		6/20/20		5,000,000		(529,614	)		(445,361	)		(84,253	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Sydney Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		6/20/20		798,913		(101,805	)		(81,239	)		(20,566	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Verona Index, Equity Tranche 0-3%		0.00	%		Quarterly		CITI		12/20/19		1,711,500		(23,667	)		(23,557	)		(110	)		Non-
																						Investment
																						Grade
^eCitibank Bespoke Verona Index, Mezzanine Tranche 7-15%		0.40	%		Quarterly		CITI		12/20/19		4,000,000		2,843			—			2,843			Non-
																						Investment
																						Grade



franklintempleton.com	Annual Report	89

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

Credit Default Swap Contracts(continued)


Description	Periodic Payment Rate Received (Paid)			Payment Frequency		Counter- party		Maturity Date		Notional Amount^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)			Rating^b

OTC Swap Contracts (continued)

Contracts to Sell Protection^c,d(continued)

Traded Index(continued)

^eMorgan Stanley Bespoke Pecan Index, Mezzanine Tranche 5-10%		3.98	%		Quarterly		MSCO		12/20/21	$	2,900,000	$	72,994		$	—		$	72,994			Non- Investment Grade

^eMorgan Stanley Bespoke Pecan Index, Mezzanine Tranche 5-10%		4.10	%		Quarterly		MSCO		12/20/21		2,900,000		86,225			—			86,225			Non- Investment Grade
Total OTC Swap Contracts												$	(7,650,561	)	$	(7,301,645	)	$	(348,916	)
Total Credit Default Swap Contracts												$	(5,748,997	)	$	(5,936,963	)	$	187,966

^aIn U.S. dollars unless otherwise indicated. For contracts to sell protection, the notional amount is equal to the maximum potential amount of the future payments and no recourse provisions have been entered into in association with the contracts.

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

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

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

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

At October 31, 2019, the Fund had the following cross-currency swap contracts outstanding. See Note 1(e).

Cross-Currency Swap Contracts

Description

Payment

Frequency

Coun-

terparty

Maturity

Date

Notional

Amount

Value/

Unrealized

Appreciation

(Depreciation)

OTC Swap Contracts

Receive Fixed 2.393%

Semi-Annual

7,916,500

USD

Pay Fixed 0.50%

Annual

JPHQ

4/09/20

7,100,000

EUR

$ (32,283)

Receive Floating 3-month USD LIBOR + 2.87%

Quarterly

1,743,000

USD

Pay Fixed 2.50%

Annual

CITI

5/04/21

1,500,000

EUR

68,293

Receive Floating 3-month USD LIBOR + 1.334%

Quarterly

4,704,000

USD

Pay Floating 3-month EUR LIBOR + 1.12%

Quarterly

CITI

7/10/21

4,200,000

EUR

29,102

Receive Floating 3-month USD LIBOR + 1.81%

Quarterly

6,720,000

USD

Pay Floating 3-month EUR LIBOR + 1.60%

Quarterly

CITI

8/12/21

6,000,000

EUR

78,393

Receive Floating 3-month USD LIBOR + 1.31%

Quarterly

13,875,000

USD

Pay Floating 3-month EUR LIBOR + 1.11%

Quarterly

CITI

8/30/21

12,500,000

EUR

2,605

Receive Floating 3-month USD LIBOR + 1.23%

Quarterly

15,429,000

USD

Pay Floating 3-month EUR LIBOR + 1.07%

Quarterly

CITI

9/17/21

13,900,000

EUR

(25,786

)

Total Cross Currency Swap Contracts

$ 120,324



90	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Low Duration Total Return Fund(continued)

At October 31, 2019, the Fund had the following interest rate swap contracts outstanding. See Note 1(e).

Interest Rate Swap Contracts

Description

Payment
Frequency

Maturity
Date

Notional
Amount^*

Value/

Unrealized

Appreciation
(Depreciation)

Centrally Cleared Swap Contracts

Receive Fixed 2.773%

Quarterly

Pay Floating 3-month CNY CNRR

Quarterly

8/23/24

135,800,000

CNY

$(288,249

)

Receive Fixed 2.765%

Quarterly

Pay Floating 3-month CNY CNRR

Quarterly

8/26/24

109,200,000

CNY

(237,145

)

Receive Fixed 2.79%

Quarterly

Pay Floating 3-month CNY CNRR

Quarterly

8/30/24

171,350,000

CNY

(352,681

)

Total Interest Rate Swap Contracts

$(878,075

)

*In U.S. dollars unless otherwise indicated.

At October 31, 2019, the Fund had the following inflation index swap contracts outstanding. See Note 1(e).

Inflation Index Swap Contracts

Description

Payment
Frequency

Maturity
Date

Notional
Amount

Value/
Unrealized
Appreciaton
(Depreciation)

Centrally Cleared Swap Contracts

Receive variable change in USA-CPI-U

At maturity

Pay Fixed 1.96%

At maturity

8/31/24

25,200,000

$ (313,072

)

Receive variable change in USA-CPI-U

At maturity

Pay Fixed 1.719%

At maturity

8/14/26

16,000,000

(77,305

)

Total Inflation Index Swap Contracts

$ (390,377

)

At October 31, 2019, the Fund had the following total return swap contracts outstanding. See Note 1(e).

Total Return Swap Contracts

Underlying Instruments

Financing Rate

Payment
Frequency

Counter-

party

Maturity
Date

Notional
Value^*

Value/
Unrealized
Appreciation
(Depreciation)

OTC Swap Contracts

Long^a

Euribor 3 Month

3-month EUR LIBOR

Quarterly

BNDP

12/20/19

8,500,000

EUR

$ (15,642

)

Euribor 3 Month

3-month EUR LIBOR

Quarterly

CITI

12/20/19

18,750,000

EUR

(72,007

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

JPHQ

12/20/19

1,300,000

10,562

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

MSCO

12/20/19

1,700,000

24,196

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

FBCO

3/20/20

1,600,000

19,666

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

GSCO

3/20/20

2,600,000

42,832

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

BZWS

6/20/20

30,950,000

(329,186

)

Short^b

iBoxx USD Liquid Investment Grade Index

3-month USD LIBOR

Quarterly

BNDP

12/20/19

6,400,000

(2,762

)

iBoxx USD Liquid Investment Grade Index

3-month USD LIBOR

Quarterly

GSCO

12/20/19

5,400,000

7,741

Total Total Return Swap Contracts

$ (314,600

)

*In U.S. dollars unless otherwise indicated.

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

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

See Note 9 regarding other derivative information.



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	91

FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Financial Highlights

Franklin Total Return Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.31			$ 9.84			$ 9.93			$ 9.87			$ 10.18

Income from investment operations^a:

Net investment income		0.302	^b		0.269			0.251	^b		0.231			0.217

Net realized and unrealized gains (losses)		0.618			(0.518	)		(0.110	)		0.107			(0.220	)

Total from investment operations		0.920			(0.249	)		0.141			0.338			(0.003	)

Less distributions from:

Net investment income and net foreign currency gains		(0.310	)		(0.275	)		(0.231	)		(0.278	)		(0.307	)

Tax return of capital		—			(0.006	)		—			—			—

Total distributions		(0.310	)		(0.281	)		(0.231	)		(0.278	)		(0.307	)

Net asset value, end of year		$ 9.92			$ 9.31			$ 9.84			$ 9.93			$ 9.87

Total return^c		10.01%			(2.57	)%		1.47%			3.53%			(0.05)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.90%			0.91%			0.91%			0.90%			0.91%

Expenses net of waiver and payments by affiliates^d		0.86%			0.88%			0.87%			0.85%			0.87%

Net investment income		3.12%			2.91%			2.58%			2.32%			2.08%

Supplemental data

Net assets, end of year (000’s)		$3,422,747			$2,763,774			$3,153,751			$3,623,035			$3,527,479

Portfolio turnover rate		169.95%	^e		151.77%			101.07%			287.38%			294.80%

Portfolio turnover rate excluding mortgage dollar rolls^f		98.83%	^e		84.86%			78.46%			146.15%			95.06%

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

^bBased on average daily shares outstanding.

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

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

^eExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

^fSee Note 1(i) regarding mortgage dollar rolls.



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

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.25			$ 9.77			$ 9.87			$ 9.84			$ 10.16

Income from investment operations^a:

Net investment income		0.262	^b		0.183			0.212	^b		0.189			0.172

Net realized and unrealized gains (losses)		0.609			(0.457	)		(0.109	)		0.100			(0.214	)

Total from investment operations		0.871			(0.274	)		0.103			0.289			(0.042	)

Less distributions from:

Net investment income and net foreign currency gains		(0.271	)		(0.241	)		(0.203	)		(0.259	)		(0.278	)

Tax return of capital		—			(0.005	)		—			—			—

Total distributions		(0.271	)		(0.246	)		(0.203	)		(0.259	)		(0.278	)

Net asset value, end of year		$ 9.85			$ 9.25			$ 9.77			$ 9.87			$ 9.84

Total return^c		9.52%			(2.84	)%		0.98%			3.13%			(0.43)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.30%			1.31%			1.31%			1.30%			1.31%

Expenses net of waiver and payments by affiliates^d		1.26%			1.28%			1.27%			1.25%			1.27%

Net investment income		2.72%			2.51%			2.18%			1.92%			1.68%

Supplemental data

Net assets, end of year (000’s)		$236,838			$243,068			$354,269			$449,274			$444,253

Portfolio turnover rate		169.95%	^e		151.77%			101.07%			287.38%			294.80%

Portfolio turnover rate excluding mortgage dollar rolls^f		98.83%	^e		84.86%			78.46%			146.15%			95.06%

^bBased on average daily shares outstanding.

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

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

^eExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

^fSee Note 1(i) regarding mortgage dollar rolls.



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	93

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.27			$ 9.80			$ 9.90			$ 9.85			$ 10.17

Income from investment operations^a:

Net investment income		0.277	^b		0.182			0.228	^b		0.199			0.198

Net realized and unrealized gains (losses)		0.619			(0.453	)		(0.115	)		0.117			(0.229	)

Total from investment operations		0.896			(0.271	)		0.113			0.316			(0.031	)

Less distributions from:

Net investment income and net foreign currency gains		(0.286	)		(0.253	)		(0.213	)		(0.266	)		(0.289	)

Tax return of capital		—			(0.006	)		—			—			—

Total distributions		(0.286	)		(0.259	)		(0.213	)		(0.266	)		(0.289	)

Net asset value, end of year		$ 9.88			$ 9.27			$ 9.80			$ 9.90			$ 9.85

Total return		9.66%			(2.70	)%		1.19%			3.31%			(0.32)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.15%			1.16%			1.16%			1.15%			1.16%

Expenses net of waiver and payments by affiliates^c		1.11%			1.13%			1.12%			1.10%			1.12%

Net investment income		2.87%			2.66%			2.33%			2.07%			1.83%

Supplemental data

Net assets, end of year (000’s)		$21,223			$23,620			$36,337			$58,715			$70,506

Portfolio turnover rate		169.95%	^d		151.77%			101.07%			287.38%			294.80%

Portfolio turnover rate excluding mortgage dollar rolls^e		98.83%	^d		84.86%			78.46%			146.15%			95.06%

^bBased on average daily shares outstanding.

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

^dExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED FINANCIAL HIGHLIGHTS

Franklin Total Return Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$ 9.38			$ 9.90			$ 9.98			$ 9.91			$ 10.20

Income from investment operations^a:

Net investment income		0.340	^b		0.308			0.296	^b		0.195			0.255	^b

Net realized and unrealized gains (losses)		0.617			(0.512	)		(0.117	)		0.173			(0.209	)

Total from investment operations		0.957			(0.204	)		0.179			0.368			0.046

Less distributions from:

Net investment income and net foreign currency gains		(0.347	)		(0.309	)		(0.259	)		(0.298	)		(0.336	)

Tax return of capital		—			(0.007	)		—			—			—

Total distributions		(0.347	)		(0.316	)		(0.259	)		(0.298	)		(0.336	)

Net asset value, end of year		$ 9.99			$ 9.38			$ 9.90			$ 9.98			$ 9.91

Total return		10.35%			(2.10	)%		1.75%			3.94%			0.44%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.53%			0.54%			0.50%			0.51%			0.50%

Expenses net of waiver and payments by affiliates^c		0.49%			0.49%			0.48%			0.46%			0.46%

Net investment income		3.49%			3.30%			2.97%			2.71%			2.49%

Supplemental data

Net assets, end of year (000’s)		$481,399			$430,637			$398,732			$93,892			$68,848

Portfolio turnover rate		169.95%	^d		151.77%			101.07%			287.38%			294.80%

Portfolio turnover rate excluding mortgage dollar rolls^e		98.83%	^d		84.86%			78.46%			146.15%			95.06%

^bBased on average daily shares outstanding.

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

^dExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

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



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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


				Year Ended October 31,
	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance (for a share outstanding throughout the year)
Net asset value, beginning of year	$	9.37		$	9.89		$	9.98		$	9.91		$	10.20

Income from investment operations^a:
Net investment income		0.328	^b		0.291			0.275	^b		0.218			0.127
Net realized and unrealized gains (losses)		0.618			(0.507	)		(0.116	)		0.142			(0.092	)

Total from investment operations		0.946			(0.216	)		0.159			0.360			0.035

Less distributions from:
Net investment income and net foreign currency gains		(0.336	)		(0.297	)		(0.249	)		(0.290	)		(0.325	)
Tax return of capital		—			(0.007	)		—			—			—

Total distributions		(0.336	)		(0.304	)		(0.249	)		(0.290	)		(0.325	)

Net asset value, end of year	$	9.98		$	9.37		$	9.89		$	9.98		$	9.91

Total return		10.23%			(2.22)%			1.65%			3.75%			0.33%

Ratios to average net assets
Expenses before waiver and payments by affiliates		0.65%			0.66%			0.66%			0.65%			0.66%
Expenses net of waiver and payments by affiliates^c		0.61%			0.63%			0.62%			0.60%			0.62%
Net investment income		3.37%			3.16%			2.83%			2.57%			2.33%

Supplemental data
Net assets, end of year (000’s)	$	863,516		$	620,803		$	595,239		$	740,046		$	526,749
Portfolio turnover rate		169.95%	^d		151.77%			101.07%			287.38%			294.80%
Portfolio turnover rate excluding mortgage dollar rolls^e		98.83%	^d		84.86%			78.46%			146.15%			95.06%

^bBased on average daily shares outstanding.

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

^dExcludes the value of portfolio activity as a result of in-kind transactions. See Note 6.

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



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FRANKLIN INVESTORS SECURITIES TRUST

Consolidated Statement of Investments, October 31, 2019

Franklin Total Return Fund


	Country		Shares/ Warrants			Value

Common Stocks and Other Equity Interests 0.0%^†
Commercial & Professional Services 0.0%^†
^a,bRemington Outdoor Co. Inc.		United States		52,019		$	52,019


Consumer Services 0.0%^†
^a,b,cTurtle Bay Resort		United States		1,550,567			34,113


Energy 0.0%^†
^a,bHalcon Resources Corp.		United States		531			10,552
^a,bHalcon Resources Corp., wts., 9/09/20		United States		20,425			—
^a,bHalcon Resources Corp., wts., A, 10/08/20		United States		2,551			—
^a,bHalcon Resources Corp., wts., B, 10/08/22		United States		3,189			—
^a,bHalcon Resources Corp., wts., C, 10/08/22		United States		4,100			—
^aRiviera Resources Inc.		United States		12,605			164,369
^aRoan Resources Inc.		United States		13,179			19,767

							194,688


Materials 0.0%^†
^a,b,dAppvion Operations Inc.		United States		13,033			173,760
^aVerso Corp., A		United States		6,954			101,806
^aVerso Corp., wts., 7/25/23		United States		732			1,281

							276,847


Retailing 0.0%^†
^a,b,dK2016470219 South Africa Ltd., A		South Africa		28,762,824			19,029
^a,b,dK2016470219 South Africa Ltd., B		South Africa		2,862,311			1,894

							20,923

Total Common Stocks and Other Equity Interests (Cost $7,358,889)							578,590


Management Investment Companies 8.1%
Diversified Financials 8.1%
^eFranklin Floating Rate Income Fund		United States		1,549,310			12,812,795
^eFranklin Liberty Investment Grade Corporate ETF		United States		14,415,000			369,960,975
^eFranklin Liberty Senior Loan ETF		United States		914,900			22,730,691


Total Management Investment Companies (Cost $397,290,975)							405,504,461


Preferred Stocks (Cost $2,325,000) 0.1%
Diversified Financials 0.1%
^fCitigroup Capital XIII, 8.265%, pfd., 10/30/40		United States		93,000			2,537,970


				Principal Amount	*
Corporate Bonds 15.2%
Automobiles & Components 0.1%
^gAdient U.S. LLC, senior secured note, 144A, 7.00%, 5/15/26		United States		1,000,000			1,056,250
^gAllison Transmission Inc., senior bond, 144A, 5.875%, 6/01/29		United States		800,000			864,000
Aptiv Corp., senior bond, 4.15%, 3/15/24		United States		5,100,000			5,430,241

							7,350,491



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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Corporate Bonds(continued)
Banks 2.3%
^gAkbank T.A.S., senior note, 144A, 5.125%, 3/31/25	Turkey	5,000,000			$	4,785,200
^hBanca Monte dei Paschi di Siena SpA, secured note, Reg S, 2.125%, 11/26/63	Italy	20,000,000		EUR		24,184,166
Bank of America Corp., senior note, 3.50%, 4/19/26	United States	20,400,000				21,722,724
^gIntesa Sanpaolo SpA, senior note, 144A, 6.50%, 2/24/21	Italy	1,000,000				1,049,595
Realkredit Danmark A/S,
secured bond, 1.00%, 4/01/27	Denmark	77,800,000		DKK		12,513,537
senior bond, 10F, 1.00%, 4/01/29	Denmark	57,080,000		DKK		9,214,667
Royal Bank of Canada, secured note, 2.10%, 10/14/21	Canada	11,500,000				11,531,196
SVB Financial Group, senior note, 3.50%, 1/29/25	United States	6,000,000				6,257,395
Wells Fargo & Co., sub. bond, 4.65%, 11/04/44	United States	10,000,000				11,716,244
^gWestpac Banking Corp., senior secured note, 144A, 2.25%, 11/09/21	Australia	10,800,000				10,832,886

						113,807,610


Capital Goods 0.8%
^gAhern Rentals Inc., secured note, second lien, 144A, 7.375%, 5/15/23	United States	400,000				326,000
Aircastle Ltd., senior note, 4.25%, 6/15/26	United States	2,800,000				2,916,945
^gAmcor Finance USA Inc., senior note, 144A, 3.625%, 4/28/26	Australia	11,800,000				12,285,647
^gBeacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25	United States	4,100,000				4,043,830
CNH Industrial Capital LLC, senior note, 3.875%, 10/15/21	United States	3,400,000				3,502,000
CNH Industrial NV, senior bond, 3.85%, 11/15/27	United Kingdom	4,600,000				4,801,365
^gHarsco Corp., senior note, 144A, 5.75%, 7/31/27	United States	5,000,000				5,206,350
^gJeld-Wen Inc., senior note, 144A, 4.625%, 12/15/25	United States	1,000,000				995,000
^gThe Manitowoc Co. Inc., secured note, second lien, 144A, 9.00%, 4/01/26	United States	400,000				385,500
^gNCI Building Systems Inc., senior secured note, 144A, 8.00%, 4/15/26	United States	400,000				394,852
ⁱOnsite Rental Group Operations Pty. Ltd., secured note, PIK, 6.10%, 10/26/23	Australia	183,113				169,379
^gVertiv Group Corp., senior note, 144A, 9.25%, 10/15/24	United States	6,400,000				6,052,000

						41,078,868


Commercial & Professional Services 0.2%
United Rentals North America Inc., senior bond, 5.875%, 9/15/26	United States	5,000,000				5,325,000
^gWest Corp., senior note, 144A, 8.50%, 10/15/25	United States	5,000,000				3,800,000

						9,125,000


Consumer Durables & Apparel 0.1%
^gAshton Woods USA LLC/Ashton Woods Finance Co., senior note, 144A, 6.75%, 8/01/25	United States	600,000				604,083
^gHanesbrands Inc., senior bond, 144A, 4.875%, 5/15/26	United States	1,900,000				2,018,750

						2,622,833


Consumer Services 0.1%
^gWynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.25%, 5/15/27	United States	6,000,000				6,262,500


Diversified Financials 1.8%
^gBayer US Finance LLC, senior note, 144A, 3.00%, 10/08/21	Germany	3,600,000				3,651,733
Capital One Bank USA NA, sub. bond, 3.375%, 2/15/23	United States	6,000,000				6,186,366
Capital One Financial Corp., senior note, 3.20%, 2/05/25	United States	9,700,000				10,051,305



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FRANKLIN INVESTORS SECURITIES TRUST

CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Corporate Bonds(continued)
Diversified Financials(continued)
^gFirstCash Inc., senior note, 144A, 5.375%, 6/01/24	United States	4,000,000			$	4,160,000
GE Capital International Funding Co., senior bond, 3.373%, 11/15/25	United States	17,000,000				17,526,580
The Goldman Sachs Group Inc.,
senior note, 3.75%, 5/22/25	United States	7,700,000				8,174,198
senior note, 3.75%, 2/25/26	United States	21,300,000				22,677,088
Jyske Realkredit A/S, secured note, 1.00%, 4/01/26	Denmark	68,400,000		DKK		10,959,449
Navient Corp., senior bond, 8.00%, 3/25/20	United States	5,000,000				5,118,750
Springleaf Finance Corp., senior note, 6.625%, 1/15/28	United States	4,000,000				4,440,000

						92,945,469

Energy 1.3%
^gAker BP ASA, senior note, 144A, 4.75%, 6/15/24	Norway	3,400,000				3,536,000
Baker Hughes a GE Co. LLC/Baker Hughes Co-obligator Inc., senior bond, 4.08%, 12/15/47	United States	1,200,000				1,189,042
^gCalifornia Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22	United States	3,400,000				1,003,000
Cheniere Corpus Christi Holdings LLC, senior secured note, first lien, 5.875%, 3/31/25	United States	1,600,000				1,778,144
Cheniere Energy Partners LP, senior secured note, first lien, 5.25%, 10/01/25	United States	4,000,000				4,155,000
Enable Midstream Partners LP,
senior bond, 5.00%, 5/15/44	United States	1,200,000				1,058,862
senior note, 3.90%, 5/15/24	United States	3,600,000				3,672,720
Energy Transfer Operating LP, senior bond, 5.15%, 2/01/43	United States	6,000,000				6,141,956
EnLink Midstream LLC, senior bond, 5.375%, 6/01/29	United States	400,000				356,000
^g,jGaz Capital SA, (OJSC Gazprom), loan participation, senior note, 144A, 3.85%, 2/06/20	Russia	10,000,000				10,042,050
^gHarvest Operations Corp., senior note, 144A, 4.20%, 6/01/23	South Korea	3,800,000				4,061,919
Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21	United States	800,000				722,800
MPLX LP,
senior bond, 4.00%, 2/15/25	United States	4,600,000				4,820,408
senior bond, 4.70%, 4/15/48	United States	2,000,000				2,023,663
Murphy Oil USA Inc., senior bond, 4.75%, 9/15/29	United States	3,700,000				3,871,125
Oceaneering International Inc., senior note, 4.65%, 11/15/24	United States	1,200,000				1,122,000
^kSanchez Energy Corp., senior note, 6.125%, 1/15/23	United States	3,000,000				150,000
Sunoco Logistics Partners Operations LP, senior note, 4.25%, 4/01/24	United States	6,100,000				6,453,595
^gTullow Oil PLC, senior note, 144A, 7.00%, 3/01/25	Ghana	600,000				618,447
Valaris PLC, senior bond, 5.75%, 10/01/44	United States	3,700,000				1,517,000
^kWeatherford International Ltd.,
senior note, 7.75%, 6/15/21	United States	1,600,000				512,000
senior note, 8.25%, 6/15/23	United States	2,000,000				620,000
^gWoodside Finance Ltd., senior note, 144A, 3.70%, 9/15/26	Australia	4,000,000				4,165,110

						63,590,841



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Corporate Bonds(continued)
Food & Staples Retailing 0.3%
The Kroger Co., senior note, 4.00%, 2/01/24	United States	15,400,000			$	16,475,038
^gPerformance Food Group Inc., senior note, 144A, 5.50%, 10/15/27	United States	1,000,000				1,062,500

						17,537,538


Food, Beverage & Tobacco 0.6%
Bunge Ltd. Finance Corp., senior note, 3.25%, 8/15/26	United States	12,000,000				12,034,138
^gJBS USA LUX SA/JBS USA Food Co./JBS USA Finance Inc., senior bond, 144A, 5.50%, 1/15/30	United States	1,200,000				1,296,000
Kraft Heinz Foods Co., senior bond, 3.00%, 6/01/26	United States	5,100,000				5,086,803
Reynolds American Inc.,
senior bond, 5.70%, 8/15/35	United Kingdom	9,300,000				10,517,787
senior bond, 5.85%, 8/15/45	United Kingdom	300,000				333,822

						29,268,550


Health Care Equipment & Services 0.4%
CHS/Community Health Systems Inc., senior secured note, first lien, 6.25%, 3/31/23	United States	4,000,000				3,912,500
Cigna Corp., senior note, 4.125%, 11/15/25	United States	5,900,000				6,399,344
CVS Health Corp., senior bond, 4.30%, 3/25/28	United States	1,800,000				1,955,558
Edwards Lifesciences Corp., senior note, 4.30%, 6/15/28	United States	1,700,000				1,920,164
^gMEDNAX Inc., senior note, 144A, 6.25%, 1/15/27	United States	5,200,000				5,157,880

						19,345,446


Household & Personal Products 0.2%
Avon Products Inc., senior bond, 7.00%, 3/15/23	United Kingdom	8,800,000				9,284,000


Insurance 1.0%
Aflac Inc., senior note, 0.932%, 1/25/27	United States	1,400,000,000		JPY		13,237,931
^gLiberty Mutual Group Inc., senior bond, 144A, 4.569%, 2/01/29	United States	12,000,000				13,571,894
^gTeachers Insurance & Annuity Assn. of America, sub. bond, 144A, 4.90%, 9/15/44	United States	20,400,000				25,656,232

						52,466,057


Materials 0.5%
The Chemours Co., senior note, 5.375%, 5/15/27	United States	700,000				625,513
^gMauser Packaging Solutions Holding Co., senior note, 144A, 7.25%, 4/15/25	United States	4,000,000				3,840,000
^gNew Gold Inc., senior note, 144A, 6.375%, 5/15/25	Canada	1,800,000				1,719,000
^gNovelis Corp., senior bond, 144A, 5.875%, 9/30/26	United States	5,000,000				5,263,000
^gOI European Group BV, senior note, 144A, 4.00%, 3/15/23	United States	2,500,000				2,509,375
^gPlastipak Holdings Inc., senior note, 144A, 6.25%, 10/15/25	United States	2,300,000				1,909,000
Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23	United States	5,600,000				5,944,894
^gSunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., senior note, 144A, 7.50%, 6/15/25	United States	4,500,000				3,847,500

						25,658,282


Media & Entertainment 0.6%
^gAltice Luxembourg SA, first lien, 144A, 10.50%, 5/15/27	Luxembourg	600,000				680,250
AMC Entertainment Holdings Inc., senior sub. bond, 5.75%, 6/15/25	United States	800,000				763,080
^gCCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 144A, 5.00%, 2/01/28	United States	1,500,000				1,573,125



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Corporate Bonds(continued)
Media & Entertainment(continued)
^gCSC Holdings LLC,
senior bond, 144A, 5.375%, 2/01/28	United States	3,000,000		$	3,180,000
senior secured note, first lien, 144A, 5.50%, 5/15/26	United States	4,000,000			4,225,000
^gDiamond Sports Group LLC/Diamond Sports Finance Co., first lien, 144A, 5.375%, 8/15/26	United States	6,200,000			6,486,750
DISH DBS Corp., senior bond, 5.00%, 3/15/23	United States	2,600,000			2,629,250
^gLive Nation Entertainment Inc., senior note, 144A, 4.75%, 10/15/27	United States	3,000,000			3,135,300
Netflix Inc., senior bond, 4.875%, 4/15/28	United States	1,800,000			1,864,422
^gNexstar Broadcasting Inc. senior note, 144A, 5.625%, 7/15/27	United States	4,900,000			5,180,280
^gUnivision Communications Inc., senior secured note, first lien, 144A, 5.125%, 2/15/25	United States	1,000,000			980,000


					30,697,457

Pharmaceuticals, Biotechnology & Life Sciences 0.6%
^gBausch Health Cos. Inc., senior bond, 144A, 6.125%, 4/15/25	United States	4,800,000			4,995,000
^gBayer U.S. Finance II LLC, senior bond, 144A, 4.375%, 12/15/28	Germany	3,900,000			4,234,002
Biogen Inc., senior bond, 5.20%, 9/15/45	United States	18,200,000			22,333,181
^gHorizon Pharma USA Inc., senior note, 144A, 5.50%, 8/01/27	United States	800,000			836,000


					32,398,183

Real Estate 0.2%
^gFive Point Operating Co. LP/Five Point Capital Corp., senior note, 144A, 7.875%, 11/15/25	United States	600,000			568,602
National Retail Properties Inc., senior bond, 4.30%, 10/15/28	United States	9,700,000			10,850,319


					11,418,921

Retailing 0.4%
Dollar Tree Inc., senior note, 4.00%, 5/15/25	United States	13,100,000			14,099,360
^b,g,iK2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22	South Africa	2,279,634			2,821
^b,g,iK2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22	South Africa	541,623			2,500
^gParty City Holdings Inc., senior note, 144A, 6.625%, 8/01/26	United States	5,100,000			4,947,000


					19,051,681

Semiconductors & Semiconductor Equipment 0.5%
^gAmkor Technology Inc., senior note, 144A, 6.625%, 9/15/27	United States	1,000,000			1,100,000
Maxim Integrated Products Inc., senior note, 3.375%, 3/15/23	United States	22,000,000			22,649,824


					23,749,824

Software & Services 0.2%
Fiserv Inc., senior bond, 3.85%, 6/01/25	United States	9,300,000			10,023,357

Technology Hardware & Equipment 0.2%
^gCommScope Technologies LLC, senior bond, 144A, 5.00%, 3/15/27	United States	5,000,000			4,112,500
^gTempo Acquisition LLC/Tempo Acquisition Finance Corp., senior note, 144A, 6.75%, 6/01/25	United States	4,000,000			4,135,000


					8,247,500

Telecommunication Services 0.2%
Telefonica Emisiones SA, senior note, 4.103%, 3/08/27	Spain	7,600,000			8,269,294



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Corporate Bonds(continued)
Transportation 0.7%
Burlington Northern and Santa Fe 99-2 Trust, secured bond, 7.57%, 1/02/21	United States	14,337		$	14,664
^gKazakhstan Temir Zholy Finance BV, senior bond, 144A, 6.95%, 7/10/42	Kazakhstan	7,400,000			10,014,420
^gMexico City Airport Trust, senior secured bond, first lien, 144A, 5.50%, 7/31/47	Mexico	4,500,000			4,531,162
^h,jRZD Capital PLC, (Russian Railways), loan participation, senior bond, Reg S, 5.70%, 4/05/22	Russia	11,600,000			12,448,482
^gTransurban Finance Co. Pty. Ltd., senior secured bond, 144A, 4.125%, 2/02/26	Australia	8,200,000			8,697,822
Union Pacific Railroad Co. 2005 Pass Through Trust, 2005-1, 5.082%, 1/02/29	United States	115,805			124,335


					35,830,885

Utilities 1.9%
Commonwealth Edison Co., secured bond, 6.45%, 1/15/38	United States	700,000			1,011,721
Duke Energy Corp., senior bond, 3.15%, 8/15/27	United States	15,400,000			16,052,633
^g,lEDF SA, junior sub. note, 144A, 5.25% to 1/29/23, FRN thereafter, Perpetual	France	24,000,000			24,877,440
Georgia Power Co., senior bond, 4.30%, 3/15/42	United States	9,000,000			9,893,890
^gInterGen NV, secured bond, 144A, 7.00%, 6/30/23	Netherlands	400,000			382,200
^gIsrael Electric Corp. Ltd., secured bond, 144A, 4.25%, 8/14/28	Israel	6,700,000			7,309,599
The Southern Co., senior bond, 3.25%, 7/01/26	United States	7,950,000			8,300,520
^gState Grid Overseas Investment 2016 Ltd.,
senior note, 144A, 3.50%, 5/04/27	China	10,700,000			11,318,139
senior note, 144A, 4.25%, 5/02/28	China	6,700,000			7,504,335
^gTalen Energy Supply LLC,
senior note, 144A, 10.50%, 1/15/26	United States	1,500,000			1,293,750
senior secured note, 144A, 7.25%, 5/15/27	United States	5,500,000			5,513,750
Virginia Electric & Power Co., senior bond, 6.35%, 11/30/37	United States	520,000			734,027


					94,192,004


Total Corporate Bonds (Cost $744,162,840)					764,222,591


^m,nSenior Floating Rate Interests 2.8%
Automobiles & Components 0.1%
Adient US LLC,
Initial Term Loans, 6.459%, (3-month USD LIBOR + 4.25%), 5/06/24	United States	775,000			758,531
Initial Term Loans, 6.889%, (6-month USD LIBOR + 4.25%), 5/06/24	United States	2,317,250			2,268,008
Allison Transmission Inc., Term Loan, 3.796%, (1-month USD LIBOR + 1.75%), 3/29/26	United States	3,786,688			3,811,128


					6,837,667



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

^m,nSenior Floating Rate Interests(continued)
Capital Goods 0.1%
Altra Industrial Motion Corp., Term Loan, 3.786%, (3-month USD LIBOR + 2.00%), 10/01/25	United States	576,845		$	575,940
Doncasters U.S. Finance LLC, Second-Lien Term Loans, 10.354%, (3-month USD LIBOR + 8.25%), 10/09/20	United States	464,417			125,393
Navistar Inc., Tranche B Term Loan, 5.42%, (1-month USD LIBOR + 3.50%), 11/06/24	United States	3,431,269			3,394,771
Onsite Rental Group Operations Pty. Ltd., Term Loan, 6.323%, (1-month USD LIBOR + 4.50%), 10/25/22	Australia	133,931			132,257
RBS Global Inc. (Rexnord), Term B Loan, 3.786%, (1-month USD LIBOR + 2.00%), 8/21/24	United States	1,250,000			1,257,577


					5,485,938

Commercial & Professional Services 0.2%
United Rentals North America Inc., Initial Term Loans, 3.536%, (1-month USD LIBOR + 1.75%), 10/31/25	United States	6,556,946			6,592,465
^oVentia Pty Ltd., Term B Loans, 5.604%, (3-month USD LIBOR + 3.50%), 5/21/26	Australia	1,951,631			1,956,510


					8,548,975

Consumer Services 0.4%
24 Hour Fitness Worldwide Inc., Term Loan, 5.286%, (1-month USD LIBOR + 3.50%), 5/30/25	United States	3,331,566			2,587,527
Avis Budget Car Rental LLC, Tranche B Term Loans, 3.79%, (1-month USD LIBOR + 2.00%), 2/13/25	United States	4,975,323			4,985,672
Caesars Resort Collection LLC, Term B Loans, 4.536%, (1-month USD LIBOR + 2.75%), 12/22/24	United States	3,331,523			3,287,017
Eldorado Resorts Inc., Initial Term Loan, 4.125% - 4.313%, (1-month USD LIBOR + 2.25%), 4/17/24	United States	3,040,773			3,040,113
Hilton Worldwide Finance LLC, Refinanced Series B-2 Term Loans, 3.573%, (1-month USD LIBOR + 1.75%), 6/17/26	United States	2,500,000			2,513,125
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC (Yum Brands), Term Loan B, 3.628%, (1-month USD LIBOR + 1.75%), 4/03/25	United States	2,984,848			2,994,797
NASCAR Holdings Inc., Initial Term Loans, 4.628%, (3-month USD LIBOR + 2.75%), 10/18/26	United States	367,194			369,463


					19,777,714


Diversified Financials 0.1%
FinCo I LLC (Fortress Investment Group), 2018 Replacement Term Loan, 3.786%, (1-month USD LIBOR + 2.00%), 12/27/22	United States	4,184,412			4,195,994


Energy 0.4%
Centurion Pipeline Co. LLC, Initial Term Loans, 5.036%, (1-month USD LIBOR + 3.25%), 9/28/25	United States	1,213,885			1,216,161
Fieldwood Energy LLC, Closing Date Loans, 7.177%, (3-month USD LIBOR + 5.25%), 4/11/22	United States	6,877,828			5,564,163
Strike LLC,
Term Loan, 10.104%, (3-month USD LIBOR + 8.00%), 11/30/22	United States	86,443			86,335
Term Loan, 10.064%, (6-month USD LIBOR + 8.00%), 11/30/22	United States	5,878,112			5,870,764



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

^m,nSenior Floating Rate Interests(continued)
Energy(continued)
Utex Industries Inc.,
First Lien Initial Term Loan, 5.786%, (1-month USD LIBOR + 4.00%), 5/21/21	United States	360,644		$	277,696
Second Lien Initial Term Loan, 9.036%, (1-month USD LIBOR + 7.25%), 5/20/22	United States	37,582			19,918
Wolverine Fuels Holding LLC,
First Lien Initial Term Loan, 7.874%, (3-month USD LIBOR + 5.75%), 8/14/20	United States	4,823,484			4,718,973
Second Lien Initial Term Loan, 12.874%, (3-month USD LIBOR + 10.75%), 2/16/21	United States	817,655			773,366


					18,527,376

Food & Staples Retailing 0.1%
Aramark Corp.,
U.S. Term B-2 Loan, 3.536%, (1-month USD LIBOR + 1.75%), 3/28/24	United States	2,657,462			2,666,312
U.S. Term B-3 Loan, 3.536%, (1-month USD LIBOR + 1.75%), 3/11/25	United States	1,834,185			1,839,917


					4,506,229

Food, Beverage & Tobacco 0.1%
B&G Foods Inc., Tranche B-4 Term Loan, 4.475%, (1-month USD LIBOR + 2.50%), 10/10/26	United States	907,221			909,678
CSM Bakery Supplies LLC, Second Lien Term Loan, 9.78%, (3-month USD LIBOR + 7.75%), 7/03/21	United States	412,156			368,879
JBS USA Lux SA, New Term Loans, 4.286%, (1-month USD LIBOR + 2.50%), 5/01/26	United States	4,288,373			4,308,795
Post Holdings Inc., Series A Incremental Term Loans, 3.83%, (1-month USD LIBOR + 2.00%), 5/24/24	United States	114,331			114,698


					5,702,050

Health Care Equipment & Services 0.2%
DaVita Inc., Tranche B Term Loan, 4.036%, (1-month USD LIBOR + 2.25%), 8/12/26	United States	2,325,000			2,334,737
HCA Inc., Term Loan B11, 3.536%, (1-month USD LIBOR + 1.75%), 3/18/23	United States	1,797,992			1,806,209
IQVIA Inc.,
Term B-2 Dollar Loans, 4.104%, (3-month USD LIBOR + 2.00%), 1/20/25	United States	1,008,378			1,012,369
Term B-3 Dollar Loans, 3.854%, (3-month USD LIBOR + 1.75%), 6/11/25	United States	2,888,745			2,891,839


					8,045,154

Household & Personal Products 0.0%^†
^bFGI Operating Co. LLC (Freedom Group),
ⁱTerm Loan, PIK, 12.10%, (3-month USD LIBOR + 10.00%), 5/15/22	United States	592,577			578,194
Term Loan FILO, 9.624% - 9.658%, (3-month USD LIBOR + 7.50%), 5/15/21	United States	1,127,442			1,125,241


					1,703,435



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

^m,nSenior Floating Rate Interests(continued)
Materials 0.1%
Appvion Operations, Inc.,
Term Loan, 8.10%, (3-month USD LIBOR + 6.00%), 6/15/26	United States	17,420		$	17,594
Term Loan, 8.22%, (6-month USD LIBOR + 6.00%), 6/15/26	United States	277,082			279,853
Crown Americas LLC, Dollar Term B Loan, 3.997%, (1-month USD LIBOR + 2.00%), 4/03/25	United States	1,068,269			1,076,282
Oxbow Carbon LLC,
Tranche A Term Loan, 4.286%, (1-month USD LIBOR + 2.50%), 1/04/22	United States	512,197			509,636
Tranche B Term Loan, 5.536%, (1-month USD LIBOR + 3.75%), 1/04/23	United States	2,535,745			2,534,160


					4,417,525

Media & Entertainment 0.3%
Charter Communications Operating LLC (CCO Safari), Term B-2 Loan, 3.58%, (1-month USD LIBOR + 1.75%), 2/01/27	United States	2,984,810			3,000,107
Diamond Sports Group LLC, Term Loan, 5.08%, (1-month USD LIBOR + 3.25%), 8/24/26	United States	887,784			893,222
^oGray Television Inc., Term C Loan, 4.511%, (1-month USD LIBOR + 2.50%), 1/02/26	United States	2,704,505			2,715,283
Lions Gate Capital Holdings LLC, Term A Loan, 3.536%, (1-month USD LIBOR + 1.75%), 3/22/23	Canada	1,628,214			1,589,544
Live Nation Entertainment Inc., Term Loan B, 3.688%, (1-month USD LIBOR + 1.75%), 10/17/26	United States	4,405,018			4,411,881
Mediacom Illinois LLC, Tranche N Term Loan, 3.57%, (1-week USD LIBOR + 1.75%), 2/15/24	United States	2,123,300			2,121,531
Sinclair Television Group Inc., Tranche B Term Loans, 4.04%, (1-month USD LIBOR + 2.25%), 1/03/24	United States	994,885			995,195


					15,726,763

Pharmaceuticals, Biotechnology & Life Sciences 0.2%
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.086%, (1-week USD LIBOR + 2.25%), 1/31/25	United States	2,385,671			2,392,007
Horizon Pharma Inc., Sixth Amendment Refinanced Term Loans, 4.563%, (1-month USD LIBOR + 2.50%), 5/22/26	United States	3,179,283			3,191,701
Valeant Pharmaceuticals International,
First Incremental Term Loan, 4.671%, (1-month USD LIBOR + 2.75%), 11/27/25	United States	2,625,000			2,630,392
Initial Term Loans, 4.921%, (1-month USD LIBOR + 3.00%), 6/02/25	United States	304,618			306,056


					8,520,156

Retailing 0.1%
ⁱ99 Cents Only Stores,
First Lien Term Loan, PIK, 8.604%, (3-month USD LIBOR + 6.50%), 1/13/22	United States	78,020			64,172
First Lien Term Loan, PIK, 8.535%, (6-month USD LIBOR + 6.50%), 1/13/22	United States	58,561			48,166



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

^m,nSenior Floating Rate Interests(continued)
Retailing(continued)
General Nutrition Centers Inc., Tranche B-2 Term Loans, 10.54%, (1-month USD LIBOR + 8.75%), 3/04/21	United States	1,646,911		$	1,556,849
Harbor Freight Tools USA Inc., Refinancing Loans, 4.286%, (1-month USD LIBOR + 2.50%), 8/19/23	United States	2,876,200			2,820,474


					4,489,661

Semiconductors & Semiconductor Equipment 0.0%^†
MKS Instruments Inc., Tranche B-6 Term Loan, 3.536%, (1-month USD LIBOR + 1.75%), 2/02/26	United States	81,483			81,814
ON Semiconductor Corp., 2019 Replacement Term B-4 Loans, 3.786%, (1-month USD LIBOR + 2.00%), 9/18/26	United States	1,245,405			1,252,579


					1,334,393

Software & Services 0.1%
Go Daddy Operating Co. LLC, Tranche B-2 Term Loan, 3.536%, (1-month USD LIBOR + 1.75%), 2/15/24	United States	4,826,591			4,837,572
LegalZoom.com Inc., 2018 Term Loans, 6.286%, (1-month USD LIBOR + 4.50%), 11/21/24	United States	306,821			307,300


					5,144,872

Telecommunication Services 0.1%
Global Tel*Link Corp.,
First Lien Term Loan, 6.036%, (1-month USD LIBOR + 4.25%), 11/29/25	United States	1,052,632			922,106
Second Lien Term Loan, 10.036%, (1-month USD LIBOR + 8.25%), 11/29/26	United States	127,673			121,928
Securus Technologies Holdings Inc., Second Lien Initial Loan, 10.036%, (1-month USD LIBOR + 8.25%), 11/01/25	United States	416,510			229,080
^oZayo Group LLC, 2017 Incremental Refinancing B-1 Term Loan, 3.786%, (1-month USD LIBOR + 2.00%), 1/19/21	United States	2,984,694			2,994,642


					4,267,756

Transportation 0.2%
Air Canada, Term Loan, 3.805%, (1-month USD LIBOR + 2.00%), 10/06/23	Canada	40,741			40,945
Allegiant Travel Co., Class B Term Loans, 6.709%, (3-month USD LIBOR + 4.50%), 2/05/24	United States	464,251			465,991
American Airlines Inc., 2018 Replacement Term Loans, 3.554%, (1-month USD LIBOR + 1.75%), 6/27/25	United States	6,385,500			6,324,308
Hertz Corp., Tranche B-1 Term Loan, 4.54%, (1-month USD LIBOR + 2.75%), 6/30/23	United States	3,809,045			3,814,599


					10,645,843



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

^m,nSenior Floating Rate Interests(continued)
Utilities 0.0%^†
EFS Cogen Holdings I LLC (Linden),
Term B Advance, 5.04%, (1-month USD LIBOR + 3.25%), 6/28/23	United States	331,235			$	330,718
Term B Advance, 5.36%, (3-month USD LIBOR + 3.25%), 6/28/23	United States	818,032				816,754


						1,147,472


Total Senior Floating Rate Interests (Cost $141,619,286)						139,024,973


^pMarketplace Loans (Cost $1,567,003) 0.0%^†
Diversified Financials 0.0%†

^bUpgrade, 14.19% - 31.00%, 10/11/22 - 10/28/24	United States	1,567,003				1,560,709


Foreign Government and Agency Securities 5.9%
^gAngolan Government International Bond, senior note, 144A, 8.25%, 5/09/28	Angola	16,700,000				17,513,958
^hBanque Centrale de Tunisie International Bond, senior note, Reg S, 5.625%, 2/17/24	Tunisia	16,500,000		EUR		18,037,438
^gDominican Republic, senior note, 144A, 8.90%, 2/15/23	Dominican Republic	727,200,000		DOP		13,800,358
The Export-Import Bank of Korea, senior note, 2.25%, 1/21/20	South Korea	18,800,000				18,810,998
^gGovernment of Belarus International Bond, senior note, 144A, 7.625%, 6/29/27	Belarus	900,000				1,036,125
Government of China, 3.29%, 5/23/29	China	160,800,000		CNY		22,816,148
Government of Colombia,
senior bond, 9.85%, 6/28/27	Colombia	27,300,000,000		COP		10,154,994
senior bond, 5.00%, 6/15/45	Colombia	13,000,000				15,174,380
^gGovernment of Gabon, 144A, 6.375%, 12/12/24	Gabon	17,900,000				17,871,629
^gGovernment of Iraq, 144A, 5.80%, 1/15/28	Iraq	18,000,000				17,315,370
^gGovernment of Kazakhstan, senior bond, 144A, 4.875%, 10/14/44	Kazakhstan	8,200,000				9,999,326
Government of Mexico, senior note, 4.15%, 3/28/27	Mexico	17,200,000				18,436,680
Government of Peru, senior bond, 6.55%, 3/14/37	Peru	5,700,000				8,337,732
Government of South Africa, senior bond, 7.00%, 2/28/31	South Africa	259,300,000		ZAR		14,317,139
^g,hGovernment of Spain,
senior bond, 144A, Reg S, 1.45%, 4/30/29	Spain	19,700,000		EUR		24,532,069
senior bond, 144A, Reg S, 2.70%, 10/31/48	Spain	20,000,000		EUR		31,017,164
^gGovernment of Ukraine,
144A, 7.75%, 9/01/20	Ukraine	292,000				300,329
144A, 7.75%, 9/01/21	Ukraine	229,000				240,026
144A, 7.75%, 9/01/22	Ukraine	229,000				244,022
144A, 7.75%, 9/01/23	Ukraine	229,000				245,351
144A, 7.75%, 9/01/24	Ukraine	229,000				245,889
144A, 7.75%, 9/01/25	Ukraine	229,000				246,275
144A, 7.75%, 9/01/26	Ukraine	229,000				246,438
144A, 7.75%, 9/01/27	Ukraine	229,000				246,610
^a,q144A, VRI, GDP Linked Security, 5/31/40	Ukraine	474,000				446,532
senior bond, 144A, 7.375%, 9/25/32	Ukraine	18,200,000				19,064,773



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Foreign Government and Agency Securities (continued)
^rGovernment of Uruguay, senior bond, Index Linked, 3.70%, 6/26/37	Uruguay	509,096,046		UYU	$	13,586,420


Total Foreign Government and Agency Securities (Cost $294,986,696)						294,284,173


U.S. Government and Agency Securities 13.3%
U.S. Treasury Bond,
3.50%, 2/15/39	United States	7,700,000				9,556,572
3.125%, 11/15/41	United States	12,000,000				14,127,891
3.00%, 11/15/44	United States	13,000,000				15,086,094
2.50%, 5/15/46	United States	41,000,000				43,622,558
2.25%, 8/15/46	United States	58,500,000				59,268,955
2.75%, 11/15/47	United States	19,500,000				21,817,529
3.125%, 5/15/48	United States	10,500,000				12,606,973
3.00%, 8/15/48	United States	17,000,000				19,966,367
2.875%, 5/15/49	United States	14,000,000				16,118,047
2.25%, 8/15/49	United States	10,800,000				10,960,313
U.S. Treasury Note,
2.00%, 8/31/21	United States	60,000,000				60,476,953
1.875%, 8/31/24	United States	89,900,000				91,341,561
1.50%, 9/30/24	United States	48,700,000				48,646,734
2.625%, 12/31/25	United States	43,700,000				46,353,580
2.00%, 11/15/26	United States	25,500,000				26,180,332
^rIndex Linked, 0.125%, 7/15/24	United States	65,369,761				65,434,928
^rIndex Linked, 0.375%, 7/15/25	United States	45,438,508				46,132,854
^rIndex Linked, 0.625%, 1/15/26	United States	14,576,490				14,962,756
^rIndex Linked, 0.375%, 7/15/27	United States	44,899,592				45,686,794


Total U.S. Government and Agency Securities (Cost $639,484,934)						668,347,791


Asset-Backed Securities and Commercial Mortgage-Backed Securities 28.8%
Banks 0.7%
^sCommercial Mortgage Trust,
^t2006-GG7, AJ, FRN, 5.637%, 7/10/38	United States	3,599,000				3,335,036
2006-GG7, AM, FRN, 5.637%, 7/10/38	United States	726,298				731,245
^g,sCSMC, 2009-15R, 3A1, 144A, FRN, 5.155%, 3/26/36	United States	467,324				469,703
^uCWABS Inc. Asset-Backed Certificates, 2004-1, M1, FRN, 2.573%, (1-month USD LIBOR + 0.75%), 3/25/34	United States	723,541				729,295
^g,uDBCG Mortgage Trust, 2017-BBG, A, 144A, FRN, 2.614%, (1-month USD LIBOR + 0.70%), 6/15/34	United States	9,840,000				9,832,908
^uFNMA, 2005-122, FN, FRN, 2.173%, (1-month USD LIBOR + 0.35%), 1/25/36	United States	380,188				378,647
^g,sFREMF Mortgage Trust, 2018-K72, B, 144A, FRN, 3.992%, 12/25/50	United States	17,900,000				19,308,000
^sGE Capital Commercial Mortgage Corp. Trust, 2007-C1, AM, FRN, 5.606%, 12/10/49	United States	1,687,435				1,490,950
^uMerrill Lynch Mortgage Investors Trust, 2003-A, 1A, FRN, 2.563%, (1-month USD LIBOR + 0.74%), 3/25/28	United States	619,263				619,460



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Banks(continued)
^uMorgan Stanley ABS Capital I Inc. Trust, 2005-WMC, M2, FRN, 2.558%, (1-month USD LIBOR + 0.735%), 1/25/35	United States	184,798			$	188,255
^bWeyerhaeuser Mortgage Co., 1984-A, 7.43%, 1/01/24	United States	10,010				10,010


						37,093,509

Diversified Financials 28.1%
^g,s,vAdagio CLO VIII DAC, VIII-A, B1, 144A, FRN, 1.65%, 4/15/32	Ireland	2,050,000		EUR		2,286,365
^uAmerican Home Mortgage Investment Trust, 2004-3, 4A, FRN, 3.531%, (6-month USD LIBOR + 1.50%), 10/25/34	United States	824,860				830,357
^uAmeriquest Mortgage Securities Inc. Asset-Backed Pass-Through Certificates, 2004-R4, M1, FRN, 2.648%, (1-month USD LIBOR + 0.825%), 6/25/34	United States	2,046,227				2,057,254
^g,sAMMC CLO 15 Ltd.,
2014-15A, ARR, 144A, FRN, 3.261%, 1/15/32	United States	3,000,000				2,996,580
2014-15A, BRR, 144A, FRN, 3.801%, 1/15/32	United States	922,984				910,764
^g,uAMMC CLO 21 Ltd., 2017-21A, C, 144A, FRN, 4.002%, (3-month USD LIBOR + 2.10%), 11/02/30	United States	1,000,000				956,690
^g,uAMMC CLO XI Ltd.,
2012-11A, BR2, 144A, FRN, 3.536%, (3-month USD LIBOR + 1.60%), 4/30/31	United States	5,050,000				4,936,426
2012-11A, CR2, 144A, FRN, 3.836%, (3-month USD LIBOR + 1.90%), 4/30/31	United States	2,750,000				2,589,648
^g,uAntares CLO Ltd., 2018-1A, B, 144A, FRN, 3.616%, (3-month USD LIBOR + 1.65%), 4/20/31	United States	12,900,000				12,572,082
^g,uAres CLO Ltd., 2018-48A, D, 144A, FRN, 4.666%, (3-month USD LIBOR + 2.70%), 7/20/30	United States	2,000,000				1,845,000
^g,sAres European CLO VIII BV,
8A, AR, 144A, FRN, 0.92%, 4/17/32	Netherlands	20,700,000		EUR		23,086,711
8A, BR, 144A, FRN, 1.60%, 4/17/32	Netherlands	2,900,000		EUR		3,234,370
^g,sARES LII CLO Ltd.,
2019-52A, A2, 144A, FRN, 3.603%, 4/22/31	United States	1,382,114				1,378,673
2019-52A, B, 144A, FRN, 3.803%, 4/22/31	United States	6,000,000				6,006,000
2019-52A, C, 144A, FRN, 4.633%, 4/22/31	United States	2,500,000				2,487,550
2019-52A, D, 144A, FRN, 5.903%, 4/22/31	United States	3,194,444				3,150,520
^uArgent Securities Inc. Asset-Backed Pass-Through Certificates, 2005-W2, A2C, FRN, 2.183%, (1-month USD LIBOR + 0.36%), 10/25/35	United States	1,697,781				1,705,019
^g,s,vArmada Euro CLO IV DAC, 4A, B, 144A, FRN, 1.70%, 7/15/33	United Kingdom	5,100,000		EUR		5,688,030
^g,uAtrium IX, 9A, AR, 144A, FRN, 3.384%, (3-month USD LIBOR + 1.24%), 5/28/30	United States	4,500,000				4,497,840
^g,sAtrium XII, 2012A, CR, 144A, FRN, 2.783%, 4/22/27	United States	11,600,000				11,571,348
^g,uAtrium XIII,
2013A, B, 144A, FRN, 3.434%, (3-month USD LIBOR + 1.50%), 11/21/30	United States	2,700,000				2,668,950
2013A, C, 144A, FRN, 3.734%, (3-month USD LIBOR + 1.80%), 11/21/30	United States	3,753,500				3,580,839
2013A, D, 144A, FRN, 4.634%, (3-month USD LIBOR + 2.70%), 11/21/30	United States	5,500,000				4,972,660



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value
Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^g,sAtrium XIV LLC, 14A, A2A, 144A, FRN, 3.451%, 8/23/30	United States	7,400,000			$	7,337,544
^g,sAtrium XV, 15A, A1, 144A, FRN, 3.104%, 1/23/31	United States	3,150,000				3,143,480
^g,sAvoca CLO XVII Designated Activity Co., 17A, B1R, 144A, FRN, 1.70%, 10/15/32	Ireland	5,600,000		EUR		6,241,408
^g,uBain Capital Credit CLO,
2018-1A, A1, 144A, FRN, 2.894%, (3-month USD LIBOR + 0.96%), 4/23/31	United States	12,000,000				11,852,160
2018-1A, A2, 144A, FRN, 3.084%, (3-month USD LIBOR + 1.15%), 4/23/31	United States	5,100,000				5,060,679
^g,sBCC Middle Market CLO LLC, 2018-1A, A2, 144A, FRN, 4.116%, 10/20/30	United States	5,100,000				5,062,515
^g,uBellemeade Re Ltd., 2018-1A, M1B, 144A, FRN, 3.423%, (1-month USD LIBOR + 1.60%), 4/25/28	United States	8,739,511				8,752,381
^g,sBetony CLO 2 Ltd., 2018-1A, A1, 144A, FRN, 3.016%, 4/30/31	United States	10,300,000				10,212,038
^g,s,vBlackrock European CLO IX DAC,
9A, A, 144A, FRN, 0.90%, 12/15/32	Ireland	17,350,000		EUR		19,350,456
9A, B, 144A, FRN, 1.55%, 12/15/32	Ireland	5,250,000		EUR		5,855,325
^g,sBlueMountain CLO Ltd.,
2012-2A, AR2, 144A, FRN, 3.186%, 11/20/28	United States	1,291,071				1,293,072
2014-2A, A2R2, 144A, FRN, 3.366%, 10/20/30	United States	5,775,775				5,676,432
2014-2A, CR2, 144A, FRN, 4.166%, 10/20/30	United States	3,600,000				3,434,256
2018-3A, B, 144A, FRN, 3.71%, 10/25/30	United States	2,000,000				1,992,500
2018-3A, C, 144A, FRN, 4.14%, 10/25/30	United States	1,071,430				1,028,787
^g,sBlueMountain CLO XXII Ltd., 2018-1A, B, 144A, FRN, 3.636%, 7/30/30	United States	272,725				270,300
^g,s,vBlueMountain EUR CLO,
5A, A, 144A, FRN, 0.91%, 1/15/33	Ireland	20,950,000		EUR		23,365,536
5A, B, 144A, FRN, 1.55%, 1/15/33	Ireland	6,250,000		EUR		6,970,625
^g,uBlueMountain Fuji U.S. CLO II Ltd., 2017-2A, B, 144A, FRN, 4.116%, (3-month USD LIBOR + 2.15%), 10/20/30	United States	4,010,000				3,882,001
^g,uBlueMountain Fuji U.S. CLO III Ltd.,
2017-3A, C, 144A, FRN, 3.701%, (3-month USD LIBOR + 1.70%), 1/15/30	United States	2,300,000				2,176,306
2017-3A, D, 144A, FRN, 4.401%, (3-month USD LIBOR + 2.40%), 1/15/30	United States	1,600,000				1,422,672
^gBRAVO Residential Funding Trust, 2019-1, A1C, 144A, 3.50%, 3/25/58	United States	9,634,370				9,815,238
^g,sBurnham Park CLO Ltd., 2016-1A, BR, 144A, FRN, 3.466%, 10/20/29	United States	1,488,189				1,472,727
^g,sButtermilk Park CLO Ltd., 2018-1A, C, 144A, FRN, 4.101%, 10/15/31	United States	1,452,380				1,404,582
^g,sCarlyle Euro CLO DAC, 2019-2A, A1A, 144A, FRN, 1.11%, 8/15/32	Ireland	10,400,000		EUR		11,622,319
^g,uCarlyle Global Market Strategies CLO Ltd.,
2014-1A, A1R2, 144A, FRN, 2.972%, (3-month USD LIBOR + 0.97%), 4/17/31	United States	725,000				716,119
2014-1A, A2R2, 144A, FRN, 3.132%, (3-month USD LIBOR + 1.13%), 4/17/31	United States	6,300,000				6,136,263



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^g,sCarlyle GMS Finance MM CLO LLC, 2015-1A, A2R, 144A, FRN, 4.201%, 10/15/31	United States	10,000,000		$	9,919,500
^g,uCarlyle U.S. CLO Ltd.,
2017-1A, A1A, 144A, FRN, 3.266%, (3-month USD LIBOR + 1.30%), 4/20/31	United States	8,160,000			8,149,963
2017-2A, A1B, 144A, FRN, 3.186%, (3-month USD LIBOR + 1.22%), 7/20/31	United States	10,650,000			10,650,319
2017-2A, B, 144A, FRN, 4.366%, (3-month USD LIBOR + 2.40%), 7/20/31	United States	8,829,000			8,616,663
2017-3A, B, 144A, FRN, 4.316%, (3-month USD LIBOR + 2.35%), 7/20/29	United States	1,000,000			972,890
2017-4A, C, 144A, FRN, 4.801%, (3-month USD LIBOR + 2.80%), 1/15/30	United States	545,000			498,675
2017-5A, A2, 144A, FRN, 3.366%, (3-month USD LIBOR + 1.40%), 1/20/30	United States	2,000,000			1,925,980
2017-5A, B, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 1/20/30	United States	7,000,000			6,563,970
^g,uCatamaran CLO Ltd.,
2014-2A, BR, 144A, FRN, 4.953%, (3-month USD LIBOR + 2.95%), 10/18/26	United States	6,401,000			6,403,944
2015-1A, C2R, 144A, FRN, 3.903%, (3-month USD LIBOR + 1.95%), 4/22/27	United States	7,600,000			7,308,996
^g,sCIM Trust,
2018-INV1, A4, 144A, FRN, 4.00%, 8/25/48	United States	10,409,099			10,892,804
2019-INV1, A1, 144A, FRN, 4.00%, 2/25/49	United States	12,335,955			12,656,063
2019-INV2, A3, 144A, FRN, 4.00%, 5/25/49	United States	20,481,369			21,416,175
^g,sCitigroup Mortgage Loan Trust, 2013-A, A, 144A, FRN, 3.00%, 5/25/42	United States	608,244			599,914
^g,sCole Park CLO Ltd., 2015-1A, BR, 144A, FRN, 3.566%, 10/20/28	United States	2,571,428			2,554,919
^g,sColumbia Cent CLO 27 Ltd., 2018-27A, A2A, 144A, FRN, 3.54%, 10/25/28	United States	769,230			762,907
^g,sConsumer Loan Underlying Bond CLUB Certificate Issuer Trust I,
2019-S6, PT, 144A, FRN, 12.793%, 10/17/44	United States	5,630,734			5,257,135
2018-14, PT, 144A, FRN, 9.459%, 9/16/41	United States	3,973,916			3,901,003
2018-29, PT, 144A, FRN, 25.917%, 12/15/43	United States	1,775,324			1,468,520
2019-26, PT, 144A, FRN, 20.442%, 8/15/44	United States	7,429,510			6,993,448
2019-31, PT, 144A, FRN, 21.412%, 9/15/44	United States	6,709,404			6,270,551
2019-37, PT, 144A, FRN, 20.088%, 10/17/44	United States	7,257,122			6,973,307
2019-42, PT, 144A, FRN, 24.207%, 11/15/44	United States	7,987,204			7,680,171
2019-S1, PT, 144A, FRN, 14.902%, 4/15/44	United States	5,831,303			5,120,548
2019-S2, PT, 144A, FRN, 14.389%, 5/16/44	United States	4,504,462			4,117,587
2019-S3, PT, 144A, FRN, 14.539%, 6/15/44	United States	5,475,010			5,108,734
2019-S4, PT, 144A, FRN, 13.454%, 8/15/44	United States	6,182,356			5,770,430
2019-S5, PT, 144A, FRN, 13.279%, 9/15/44	United States	6,043,377			5,541,510



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^g,uCook Park CLO Ltd., 2018-1A, A2, 144A, FRN, 3.122%, (3-month USD LIBOR + 1.12%), 4/17/30	United States	6,000,000			$	5,845,080
Credit Suisse First Boston Mortgage Securities Corp., 2004-6, 3A1, 5.00%, 9/25/19	United States	121,424				109,956
Discover Card Execution Note Trust, 2019-A3, A, 1.89%, 10/15/24	United States	17,820,000				17,856,078
Dryden 41 Senior Loan Fund,
^g,u2015-41A, AR, 144A, FRN, 2.956%, (3-month USD LIBOR + 0.97%), 4/15/31	United States	22,025,000				21,785,148
^h,s2015-41X, AR, Reg S, FRN, 2.956%, 4/15/31	United States	4,700,000				4,648,817
^g,uDryden 42 Senior Loan Fund, 2016-42A, DR, 144A, FRN, 4.931%, (3-month USD LIBOR + 2.93%), 7/15/30	United States	800,000				728,536
^g,sDryden 45 Senior Loan Fund, 2016-45A, CR, 144A, FRN, 4.201%, 10/15/30	United States	1,250,000				1,230,238
^g,uDryden 49 Senior Loan Fund,
2017-49A, A, 144A, FRN, 3.213%, (3-month USD LIBOR + 1.21%), 7/18/30	United States	7,030,000				7,033,164
2017-49A, C, 144A, FRN, 4.353%, (3-month USD LIBOR + 2.35%), 7/18/30	United States	5,320,000				5,189,607
^g,uDryden 50 Senior Loan Fund,
2017-50A, A1, 144A, FRN, 3.221%, (3-month USD LIBOR + 1.22%), 7/15/30	United States	5,660,000				5,641,322
2017-50A, C, 144A, FRN, 4.251%, (3-month USD LIBOR + 2.25%), 7/15/30	United States	2,600,000				2,600,806
^g,uDryden 55 CLO Ltd.,
2018-55A, A1, 144A, FRN, 3.021%, (3-month USD LIBOR + 1.02%), 4/15/31	United States	23,362,000				23,146,602
2018-55A, D, 144A, FRN, 4.851%, (3-month USD LIBOR + 2.85%), 4/15/31	United States	2,000,000				1,816,060
^g,uDryden 64 CLO Ltd., 2018-64A, A, 144A, FRN, 2.973%, (3-month USD LIBOR + 0.97%), 4/18/31	United States	1,200,000				1,185,936
^g,sEleven Madison Trust 2015-11MD Mortgage Trust, 2015-11MD, A, 144A, FRN, 3.673%, 9/10/35	United States	3,255,000				3,484,490
^g,uEllington CLO III Ltd., 2018-3A, A1, 144A, FRN, 3.616%, (3-month USD LIBOR + 1.65%), 7/20/30	United States	5,400,000				5,374,350
^g,sEuro-Galaxy III CLO BV, 2013-3A, B2ER, 144A, FRN, 1.50%, 1/17/31	Netherlands	2,550,000		EUR		2,839,021
FHLMC Structured Agency Credit Risk Debt Notes,
^u2014-DN1, M2, FRN, 4.023%, (1-month USD LIBOR + 2.20%), 2/25/24	United States	1,536,126				1,553,869
^u2014-DN3, M3, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 8/25/24	United States	14,241,606				15,033,579
^u2014-DN4, M3, FRN, 6.373%, (1-month USD LIBOR + 4.55%), 10/25/24	United States	8,223,523				8,821,165
^u2014-HQ1, M3, FRN, 5.923%, (1-month USD LIBOR + 4.10%), 8/25/24	United States	2,608,716				2,757,489
^u2015-DN1, M3, FRN, 5.973%, (1-month USD LIBOR + 4.15%), 1/25/25	United States	9,633,672				9,977,694
^u2015-DNA2, M3, FRN, 5.723%, (1-month USD LIBOR + 3.90%), 12/25/27	United States	25,057,000				26,048,004



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
FHLMC Structured Agency Credit Risk Debt Notes, (continued)
^u2015-DNA3, M2, FRN, 4.673%, (1-month USD LIBOR + 2.85%), 4/25/28	United States	8,455,451		$	8,548,970
^u2015-DNA3, M3, FRN, 6.523%, (1-month USD LIBOR + 4.70%), 4/25/28	United States	3,330,000			3,675,327
^u2015-HQ1, M3, FRN, 5.623%, (1-month USD LIBOR + 3.80%), 3/25/25	United States	21,697,129			22,297,834
^u2015-HQ2, M3, FRN, 5.073%, (1-month USD LIBOR + 3.25%), 5/25/25	United States	4,580,000			4,789,301
^u2015-HQA1, M2, FRN, 4.473%, (1-month USD LIBOR + 2.65%), 3/25/28	United States	4,178,808			4,190,886
^u2015-HQA2, M2, FRN, 4.623%, (1-month USD LIBOR + 2.80%), 5/25/28	United States	866,519			871,612
^u2016-DNA1, M2, FRN, 4.723%, (1-month USD LIBOR + 2.90%), 7/25/28	United States	2,230,978			2,244,868
^u2016-DNA1, M3, FRN, 7.373%, (1-month USD LIBOR + 5.55%), 7/25/28	United States	29,600,000			32,666,465
^u2016-DNA2, M3, FRN, 6.473%, (1-month USD LIBOR + 4.65%), 10/25/28	United States	19,720,548			21,154,602
^u2016-HQA1, M2, FRN, 4.573%, (1-month USD LIBOR + 2.75%), 9/25/28	United States	3,265,294			3,278,392
^u2016-HQA2, M2, FRN, 4.073%, (1-month USD LIBOR + 2.25%), 11/25/28	United States	7,847,855			7,888,177
^u2016-HQA2, M3, FRN, 6.973%, (1-month USD LIBOR + 5.15%), 11/25/28	United States	26,915,000			29,539,552
^u2016-HQA3, M2, FRN, 3.173%, (1-month USD LIBOR + 1.35%), 3/25/29	United States	1,599,473			1,602,743
^s2017-DNA1, M2, FRN, 5.073%, 7/25/29	United States	10,450,000			10,965,906
^s2017-DNA2, M2, FRN, 5.273%, 10/25/29	United States	12,000,000			12,755,563
^u2017-DNA3, M2, FRN, 4.323%, (1-month USD LIBOR + 2.50%), 3/25/30	United States	13,500,000			13,785,347
^g,uFlagship CLO VIII Ltd., 2014-8A, ARR, 144A, FRN, 2.851%, (3-month USD LIBOR + 0.85%), 1/16/26	United States	4,149,244			4,149,120
FNMA Connecticut Avenue Securities,
^u2013-C01, M2, FRN, 7.073%, (1-month USD LIBOR + 5.25%), 10/25/23	United States	5,358,447			5,907,333
^u2014-C02, 1M2, FRN, 4.423%, (1-month USD LIBOR + 2.60%), 5/25/24	United States	22,096,847			22,989,697
^u2014-C02, 2M2, FRN, 4.423%, (1-month USD LIBOR + 2.60%), 5/25/24	United States	7,903,146			8,176,909
^u2014-C03, 1M2, FRN, 4.823%, (1-month USD LIBOR + 3.00%), 7/25/24	United States	26,470,037			27,815,932
^u2014-C03, 2M2, FRN, 4.723%, (1-month USD LIBOR + 2.90%), 7/25/24	United States	2,858,508			2,972,910
^u2014-C04, 1M1, FRN, 6.723%, (1-month USD LIBOR + 4.90%), 11/25/24	United States	20,250,164			22,075,761
^u2014-C04, 2M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 11/25/24	United States	3,531,475			3,767,290
^u2015-C01, 1M2, FRN, 6.123%, (1-month USD LIBOR + 4.30%), 2/25/25	United States	2,955,472			3,130,833



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
FNMA Connecticut Avenue Securities, (continued)
^u2015-C01, 2M2, FRN, 6.373%, (1-month USD LIBOR + 4.55%), 2/25/25	United States	11,494,806		$	11,889,807
^u2015-C02, 1M2, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 5/25/25	United States	14,140,622			14,923,201
^u2015-C02, 2M2, FRN, 5.823%, (1-month USD LIBOR + 4.00%), 5/25/25	United States	3,845,518			4,001,205
^u2015-C03, 1M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 7/25/25	United States	9,965,706			10,766,360
^u2015-C03, 2M2, FRN, 6.823%, (1-month USD LIBOR + 5.00%), 7/25/25	United States	3,960,865			4,213,452
^s2016-C02, 1M2, FRN, 7.823%, 9/25/28	United States	19,149,481			20,902,065
^s2016-C04, 1M2, FRN, 6.073%, 1/25/29	United States	17,450,000			18,442,008
^s2016-C05, 2M2, FRN, 6.273%, 1/25/29	United States	18,816,393			19,820,869
^s2016-C07, 2M2, FRN, 6.173%, 5/25/29	United States	12,732,171			13,380,138
^u2017-C01, 1B1, FRN, 7.573%, (1-month USD LIBOR + 5.75%), 7/25/29	United States	5,375,000			6,323,589
^u2017-C01, 1M2, FRN, 5.373%, (1-month USD LIBOR + 3.55%), 7/25/29	United States	11,760,000			12,323,739
^s2017-C03, 1M2, FRN, 4.823%, 10/25/29	United States	17,670,000			18,406,906
^sFreddie Mac Structured Agency Credit Risk Debt Notes, HQA2, M2, FRN, 4.473%, 12/25/29	United States	3,000,000			3,082,208
^g,uGalaxy XXVII CLO Ltd.,
2018-27A, A, 144A, FRN, 3.188%, (3-month USD LIBOR + 1.02%), 5/16/31	United States	1,000,000			988,780
2018-27A, C, 144A, FRN, 3.968%, (3-month USD LIBOR + 1.80%), 5/16/31	United States	4,000,000			3,770,960
^g,uGilbert Park CLO Ltd., 2017-1A, B, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 10/15/30	United States	1,000,000			992,210
^uGSAA Home Equity Trust, 2005-5, M3, FRN, 2.768%, (1-month USD LIBOR + 0.945%), 2/25/35	United States	1,052,192			1,075,926
^g,uHalcyon Loan Advisors Funding Ltd., 2018-1A, A2, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 7/21/31	United States	4,500,000			4,365,180
^g,sHarbor Park CLO Ltd., 1A, A2, 144A, FRN, 3.366%, 1/20/31	United States	657,895			653,007
^g,uHayFin Kingsland IX Ltd., 2013-6A, BR, 144A, FRN, 3.736%, (3-month USD LIBOR + 1.80%), 4/28/31	United States	14,500,000			14,316,575
^g,sHPS Loan Management Ltd.,
2013A-18, A2, 144A, FRN, 3.451%, 10/15/30	United States	8,600,000			8,528,534
2013A-18, C, 144A, FRN, 4.151%, 10/15/30	United States	3,000,000			2,889,210
^g,uInvitation Homes Trust, 2017-SFR2, A, 144A, FRN, 2.739%, (1-month USD LIBOR + 0.85%), 12/17/36	United States	9,239,050			9,238,598
^g,uLCM 26 Ltd.,
26A, B, 144A, FRN, 3.366%, (3-month USD LIBOR + 1.40%), 1/20/31	United States	2,000,000			1,934,220
26A, C, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 1/20/31	United States	9,600,000			9,040,992
26A, D, 144A, FRN, 4.466%, (3-month USD LIBOR + 2.50%), 1/20/31	United States	600,000			529,290



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*			Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^g,sLCM XVI LP, 2016A, A2R, 144A, FRN, 3.181%, 10/15/31	United States	1,083,333			$	1,080,300
^g,uLCM XVIII LP, 2018A, CR, 144A, FRN, 3.816%, (3-month USD LIBOR + 1.85%), 4/20/31	United States	2,000,000				1,883,140
^g,sLCM XXII Ltd.,
22A, A2R, 144A, FRN, 3.416%, 10/20/28	United States	1,000,000				980,340
22A, CR, 144A, FRN, 4.766%, 10/20/28	United States	1,000,000				916,290
^g,uLCM XXIII Ltd., 23A, A2, 144A, FRN, 3.816%, (3-month USD LIBOR + 1.85%), 10/20/29	United States	2,000,000				2,000,800
^g,uLong Point Park CLO Ltd.,
2017-1A, A2, 144A, FRN, 3.377%, (3-month USD LIBOR + 1.375%), 1/17/30	United States	5,800,000				5,656,740
2017-1A, B, 144A, FRN, 3.702%, (3-month USD LIBOR + 1.70%), 1/17/30	United States	2,700,000				2,576,745
2017-1A, C, 144A, FRN, 4.402%, (3-month USD LIBOR + 2.40%), 1/17/30	United States	3,100,000				2,769,819
^g,sMadison Park Euro Funding XIV DAC, 2014A, A1N, 144A, FRN, 1.12%, 7/15/32	Ireland	7,300,000		EUR		8,176,928
^g,uMadison Park Funding XXIII Ltd.,
2017-23A, B, 144A, FRN, 3.636%, (3-month USD LIBOR + 1.70%), 7/27/30	United States	3,840,000				3,816,230
2017-23A, C, 144A, FRN, 4.286%, (3-month USD LIBOR + 2.35%), 7/27/30	United States	1,000,000				983,530
^g,sMadison Park Funding XXIX Ltd.,
2018-29A, A2, 144A, FRN, 3.453%, 10/18/30	United States	1,727,273				1,708,601
2018-29A, C, 144A, FRN, 4.203%, 10/18/30	United States	1,072,581				1,051,204
^g,uMadison Park Funding XXVII Ltd., 2018-27A, A1B, 144A, FRN, 3.096%, (3-month USD LIBOR + 1.13%), 4/20/30	United States	6,837,000				6,741,487
^g,sMadison Park Funding XXXI Ltd.,
2018-31A, B, 144A, FRN, 3.634%, 1/23/31	United States	1,500,000				1,489,830
2018-31A, C, 144A, FRN, 4.084%, 1/23/31	United States	650,000				636,201
^g,sMagnetite Ltd., 2015-14RA, A1, 144A, FRN, 3.123%, 10/18/31	United States	15,000,000				14,959,950
^g,sMill City Mortgage Loan Trust,
2018-1, A1, 144A, FRN, 3.25%, 5/25/62	United States	2,179,387				2,236,227
2018-4, A1B, 144A, FRN, 3.50%, 4/25/66	United States	14,274,000				14,732,764
^g,sNeuberger Berman CLO Ltd., 2016-22A, A2R, 144A, FRN, 3.402%, 10/17/30	United States	8,300,000				8,233,932
^g,sNeuberger Berman CLO XVIII Ltd., 2014-18A, A1BR, 144A, FRN, 3.366%, 10/21/30	United States	1,700,000				1,691,738
^g,uNeuberger Berman CLO XVI-S Ltd.,
2017-16SA, C, 144A, FRN, 3.601%, (3-month USD LIBOR + 1.60%), 1/15/28	United States	2,350,000				2,293,976
2017-16SA, D, 144A, FRN, 4.501%, (3-month USD LIBOR + 2.50%), 1/15/28	United States	650,000				627,660



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^gNeuberger Berman Loan Advisers CLO Ltd.,
^u2017-26A, B, 144A, FRN, 3.503%, (3-month USD LIBOR + 1.50%), 10/18/30	United States	5,772,370		$	5,661,310
^u2018-27A, C, 144A, FRN, 3.701%, (3-month USD LIBOR + 1.70%), 1/15/30	United States	4,900,000			4,599,385
^s2019-32A, C, 144A, FRN, 4.616%, 1/19/32	United States	2,000,000			2,000,100
^g,uNewark BSL CLO 2 Ltd.,
2017-1A, B, 144A, FRN, 4.29%, (3-month USD LIBOR + 2.35%), 7/25/30	United States	3,069,687			3,030,548
2017-1A, C, 144A, FRN, 5.59%, (3-month USD LIBOR + 3.65%), 7/25/30	United States	1,000,000			976,780
^g,uNZCG Funding Ltd., 2015-1A, A2R, 144A, FRN, 3.682%, (3-month USD LIBOR + 1.55%), 2/26/31	United States	11,200,000			10,980,032
^g,uOctagon Investment Partners 18-R Ltd., 2018-18A, C, 144A, FRN, 4.701%, (3-month USD LIBOR + 2.70%), 4/16/31	United States	9,050,000			8,094,501
^g,sOctagon Investment Partners 24 Ltd., 2015-1A, BS, 144A, FRN, 3.866%, 4/21/31	United States	6,482,500			6,478,805
^g,sOctagon Investment Partners 28 Ltd., 2016-1A, A2R, 144A, FRN, 3.386%, 10/24/30	United States	1,000,000			1,001,210
^g,uOctagon Investment Partners 31 LLC, 2017-1A, C, 144A, FRN, 4.366%, (3-month USD LIBOR + 2.40%), 7/20/30	United States	1,707,068			1,690,424
^g,uOctagon Investment Partners 33 Ltd.,
2017-1A, A2, 144A, FRN, 3.466%, (3-month USD LIBOR + 1.50%), 1/20/31	United States	400,000			392,796
2017-1A, C, 144A, FRN, 4.716%, (3-month USD LIBOR + 2.75%), 1/20/31	United States	2,800,000			2,585,660
^g,uOctagon Investment Partners 35 Ltd.,
2018-1A, A1B, 144A, FRN, 3.066%, (3-month USD LIBOR + 1.10%), 1/20/31	United States	3,325,000			3,251,152
2018-1A, B, 144A, FRN, 3.666%, (3-month USD LIBOR + 1.70%), 1/20/31	United States	450,000			424,643
^g,uOctagon Investment Partners 36 Ltd.,
2018-1A, A1, 144A, FRN, 2.971%, (3-month USD LIBOR + 0.97%), 4/15/31	United States	18,000,000			17,866,440
2018-1A, A2, 144A, FRN, 3.201%, (3-month USD LIBOR + 1.20%), 4/15/31	United States	8,500,000			8,294,215
^g,uOctagon Investment Partners 37 Ltd., 2018-2A, C, 144A, FRN, 4.79%, (3-month USD LIBOR + 2.85%), 7/25/30	United States	2,000,000			1,812,080
^g,sOctagon Investment Partners 38 Ltd., 2018-1A, C, 144A, FRN, 4.916%, 7/20/30	United States	4,000,000			3,661,400
^g,uOctagon Investment Partners XVII Ltd., 2013-1A, CR2, 144A, FRN, 3.64%, (3-month USD LIBOR + 1.70%), 1/25/31	United States	5,250,000			4,918,830
^g,uOctagon Investment Partners XXIII Ltd.,
2015-1A, BR, 144A, FRN, 3.201%, (3-month USD LIBOR + 1.20%), 7/15/27	United States	1,170,000			1,150,438
2015-1A, CR, 144A, FRN, 3.851%, (3-month USD LIBOR + 1.85%), 7/15/27	United States	2,700,000			2,660,283
2015-1A, DR, 144A, FRN, 4.551%, (3-month USD LIBOR + 2.55%), 7/15/27	United States	1,000,000			973,790



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)

Diversified Financials(continued)
^g,sOctagon Loan Funding Ltd., 2014-1A, ARR, 144A, FRN, 3.304%, 11/18/31	United States	1,000,000		$	995,980
^g,uRace Point IX CLO Ltd., 2015-9A, A1AR, 144A, FRN, 3.211%, (3-month USD LIBOR + 1.21%), 10/15/30	United States	5,175,000			5,162,166
^g,sRace Point X CLO Ltd., 2016-10A, B1R, 144A, FRN, 3.59%, 7/25/31	United States	3,600,000			3,516,264
^g,uRadnor RE Ltd., 2018-1, M1, 144A, FRN, 3.223%, (1-month USD LIBOR + 1.40%), 3/25/28	United States	4,113,198			4,114,114
^g,sStrata CLO I Ltd., 2018-1A, B, 144A, FRN, 4.201%, 1/15/31	United States	11,000,000			10,857,550
^g,uTCI-Flatiron CLO Ltd.,
2017-1A, B, 144A, FRN, 3.684%, (3-month USD LIBOR + 1.56%), 11/18/30	United States	3,500,000			3,417,960
2017-1A, C, 144A, FRN, 3.974%, (3-month USD LIBOR + 1.85%), 11/18/30	United States	2,800,000			2,645,720
^g,sTowd Point Mortgage Trust,
2017-1, A1, 144A, FRN, 2.75%, 10/25/56	United States	7,998,758			8,116,436
2017-1, A2, 144A, FRN, 3.50%, 10/25/56	United States	8,862,000			9,258,609
2017-2, A1, 144A, FRN, 2.75%, 4/25/57	United States	3,644,696			3,683,033
2017-4, A1, 144A, FRN, 2.75%, 6/25/57	United States	6,328,413			6,421,037
2019-1, A1, 144A, FRN, 3.75%, 3/25/58	United States	13,676,326			14,456,894
^g,sUpgrade Master Pass-Thru Trust, 2019-PT1, A, 144A, FRN, 11.128%, 6/15/25	United States	3,270,998			3,269,693
^gVoya CLO Ltd.,
^u2013-2A, CR, 144A, FRN, 4.69%, (3-month USD LIBOR + 2.75%), 4/25/31	United States	1,650,000			1,486,172
^u2014-1A, BR2, 144A, FRN, 3.903%, (3-month USD LIBOR + 1.90%), 4/18/31	United States	1,000,000			965,020
^u2014-1A, CR2, 144A, FRN, 4.803%, (3-month USD LIBOR + 2.80%), 4/18/31	United States	3,750,000			3,393,488
^s2015-2A, AR, 144A, FRN, 2.904%, 7/23/27	United States	4,840,000			4,843,194
^s2016-3A, CR, 144A, FRN, 5.253%, 10/18/31	United States	2,547,170			2,382,012
^u2017-3A, B, 144A, FRN, 4.316%, (3-month USD LIBOR + 2.35%), 7/20/30	United States	3,091,704			3,057,819
^s2018-2A, A1, 144A, FRN, 3.001%, 7/15/31	United States	6,122,582			6,058,417
^u2018-2A, A2, 144A, FRN, 3.251%, (3-month USD LIBOR + 1.25%), 7/15/31	United States	1,500,000			1,473,000
^u2018-2A, C1, 144A, FRN, 3.851%, (3-month USD LIBOR + 1.85%), 7/15/31	United States	700,000			664,944
^s2018-4A, B, 144A, FRN, 3.851%, 1/15/32	United States	1,896,104			1,883,893



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Asset-Backed Securities and Commercial Mortgage-Backed Securities(continued)
Diversified Financials(continued)
^g,uWebster Park CLO Ltd., 2015-1A, BR, 144A, FRN, 3.766%, (3-month USD LIBOR + 1.80%), 7/20/30	United States	2,000,000		$	1,882,680
^sWells Fargo Mortgage Backed Securities Trust, 2004-W, A9, FRN, 4.597%, 11/25/34	United States	595,361			624,339
^g,uWest CLO Ltd.,
2014-1A, A2R, 144A, FRN, 3.353%, (3-month USD LIBOR + 1.35%), 7/18/26	United States	2,860,000			2,853,908
2014-1A, BR, 144A, FRN, 3.853%, (3-month USD LIBOR + 1.85%), 7/18/26	United States	5,060,000			5,047,148


					1,410,682,137


Total Asset-Backed Securities and Commercial Mortgage-Backed Securities (Cost $1,466,764,432)					1,447,775,646


Mortgage-Backed Securities 26.9%
^wFederal Home Loan Mortgage Corp. (FHLMC) Adjustable Rate 0.0%^†
FHLMC, 2.405%, (11th District COF +/- MBS Margin), 11/01/27	United States	1,146,366			1,141,578

Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 17.1%
^xFHLMC 15 Year, 2.50%, 10/01/34	United States	11,000,000			11,119,453
^xFHLMC 30 Year, 2.50%, 11/01/49	United States	31,000,000			30,829,258
^xFHLMC 30 Year, 3.00%, 11/01/49	United States	189,000,000			192,071,252
^xFHLMC 30 Year, 3.50%, 11/01/49	United States	226,800,000			232,895,252
FHLMC 30 Year, 4.00%, 7/01/49	United States	132,926,650			138,053,132
^xFHLMC 30 Year, 4.00%, 11/01/49	United States	48,800,000			50,638,244
^xFHLMC 30 Year, 4.50%, 11/01/49	United States	57,000,000			59,953,618
FHLMC 30 Year, 6.00%, 6/01/37	United States	28,801			33,099
FHLMC 30 Year, 6.50%, 8/01/25 - 11/01/31	United States	80,619			89,906
FHLMC 30 Year, 7.00%, 7/01/31	United States	5,610			5,865
FHLMC 30 Year, 8.00%, 2/01/30	United States	16,274			18,851
FHLMC 30 Year, 8.50%, 10/01/24	United States	3,271			3,556
FHLMC Gold 15 Year, 5.50%, 11/01/22	United States	45,566			45,940
FHLMC Gold 15 Year, 6.00%, 10/01/21 - 9/01/22	United States	122,021			125,169
FHLMC Gold 30 Year, 3.50%, 12/01/47	United States	49,371,336			51,306,631
FHLMC Gold 30 Year, 3.50%, 4/01/48	United States	77,512,038			80,360,845
FHLMC Gold 30 Year, 4.50%, 3/01/39	United States	1,400,592			1,518,381
FHLMC Gold 30 Year, 5.00%, 8/01/33 - 2/01/39	United States	8,409,419			9,286,886
FHLMC Gold 30 Year, 5.50%, 1/01/35 - 12/01/37	United States	623,962			691,219
FHLMC Gold 30 Year, 6.00%, 5/01/33 - 4/01/38	United States	884,552			1,015,527
FHLMC Gold 30 Year, 6.50%, 4/01/28 - 3/01/39	United States	661,173			754,245
FHLMC Gold 30 Year, 7.00%, 1/01/28 - 7/01/32	United States	50,658			57,336
FHLMC Gold 30 Year, 7.50%, 3/01/32.	United States	11,781			13,860
FHLMC Gold 30 Year, 8.50%, 8/01/30	United States	1,191			1,378
FHLMC Gold 30 Year, 9.00%, 1/01/22	United States	18			18


					860,888,921



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country	Principal Amount	*		Value

Mortgage-Backed Securities(continued)
^wFederal National Mortgage Association (FNMA) Adjustable Rate 0.1%
FNMA, 3.671%,(6-month USD LIBOR +/- MBS Margin), 10/01/32	United States	138,242		$	140,888
FNMA, 4.026%, (US 3 Year CMTT-Note +/- MBS Margin), 12/01/24	United States	7,496			7,737
FNMA, 2.404% - 4.108%, (11th District COF +/- MBS Margin), 12/01/27 - 9/01/34	United States	2,306,616			2,349,265
FNMA, 4.38% - 4.691%,(12-month USD LIBOR +/- MBS Margin), 2/01/34 - 3/01/37	United States	918,441			952,376
FNMA, 4.115% -5.287%, (US 1 Year CMTT-Note +/- MBS Margin), 5/01/25 - 10/01/36	United States	213,011			223,086


					3,673,352

Federal National Mortgage Association (FNMA) Fixed Rate 7.5%
FNMA 15 Year, 5.50%, 12/01/22 - 12/01/23	United States	76,300			78,637
FNMA 15 Year, 6.00%, 9/01/22	United States	34,920			35,457
FNMA 30 Year, 3.00%, 9/01/48	United States	72,793,547			74,743,858
FNMA 30 Year, 3.00%, 11/01/48	United States	89,321,586			91,553,515
FNMA 30 Year, 3.50%, 11/01/47	United States	83,946,192			87,116,203
FNMA 30 Year, 3.50%, 4/01/48	United States	46,392,612			48,096,338
FNMA 30 Year, 4.00%, 10/01/47	United States	55,889,810			58,726,123
FNMA 30 Year, 5.00%, 6/01/36 - 5/01/39	United States	1,493,509			1,644,818
FNMA 30 Year, 5.50%, 6/01/33 - 8/01/37	United States	4,779,221			5,283,287
FNMA 30 Year, 6.00%, 9/01/32 - 9/01/38	United States	6,003,648			6,882,674
FNMA 30 Year, 6.50%, 8/01/28 - 5/01/37	United States	164,343			184,823
FNMA 30 Year, 7.00%, 11/01/25	United States	2,825			2,828
FNMA 30 Year, 7.50%, 1/01/30	United States	9,561			11,186
FNMA 30 Year, 8.50%, 4/01/30 - 5/01/32	United States	53,159			63,394
FNMA 30 Year, 9.00%, 11/01/26 - 5/01/27	United States	51,552			52,615


					374,475,756

^wGovernment National Mortgage Association (GNMA) Adjustable Rate 0.0%^†
GNMA, 4.00% - 4.125%, (US 1 Year CMTT-Note +/- MBS Margin), 1/20/23 - 10/20/26	United States	26,064			26,752


Government National Mortgage Association (GNMA) Fixed Rate 2.2%
^xGNMA I SF 30 Year, 4.50%, 10/01/49	United States	4,900,000			5,130,364
GNMA I SF 30 Year, 6.00%, 1/15/39	United States	142,759			164,202
GNMA I SF 30 Year, 6.50%, 10/15/31 - 7/15/38	United States	20,506			22,727
GNMA I SF 30 Year, 7.00%, 10/15/27 - 6/15/31	United States	25,505			28,773
GNMA I SF 30 Year, 7.50%, 2/15/22 - 5/15/26	United States	29,012			29,713
GNMA I SF 30 Year, 9.00%, 9/15/25	United States	41			42
GNMA II SF 30 Year, 3.50%, 9/20/49	United States	8,132,931			8,454,447
^xGNMA II SF 30 Year, 3.50%, 10/01/49	United States	17,400,000			18,056,578
GNMA II SF 30 Year, 4.50%, 5/20/49	United States	76,092,664			79,809,245
GNMA II SF 30 Year, 6.00%, 5/20/31	United States	3,307			3,698
GNMA II SF 30 Year, 6.50%, 3/20/28 - 7/20/38	United States	318,891			367,756



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country		Principal Amount	*		Value

Mortgage-Backed Securities(continued)
Government National Mortgage Association (GNMA) Fixed Rate(continued)
GNMA II SF 30 Year, 7.50%, 8/20/30 - 1/20/33	United States		33,829		$	38,244
		��

						112,105,789


Total Mortgage-Backed Securities (Cost $1,334,689,214)						1,352,312,148


Municipal Bonds 3.2%
California State GO, Various Purpose, 6.00%, 11/01/39	United States		2,385,000			2,385,000
Chicago Transit Authority Sales and Transfer Tax Receipts Revenue, Pension Funding, Series A, 6.899%, 12/01/40	United States		800,000			1,106,152
City of Austin Electric Utility System Revenue, Travis and Williamson Counties, Refunding, 6.262%, 11/15/32	United States		6,830,000			8,583,193
^vGreenville City School District GO, County of Darke, School Improvement, Refunding, 3.541%, 1/01/51	United States		8,420,000			8,421,095
^vHonolulu City and County Wastewater System Revenue, Second Bond Resolution, Refunding, Junior, 2.585%, 7/01/28	United States		1,350,000			1,363,729
Industry Public Facilities Authority Tax Allocation Revenue, Transportation District, Industrial Redevelopment Project No. 2, Refunding, Series B, AGMC Insured, 4.294%, 1/01/23	United States		10,000,000			10,238,400
Kaiser Foundation Hospitals, 3.266%, 11/01/49	United States		11,270,000			11,506,686
Minnesota State GO, Various Purpose, Refunding, Series F, 4.00%, 10/01/24	United States		5,760,000			6,379,891
New York State Urban Development Corp. Sales Tax Revenue, Bidding Group 2, Series B, 2.97%, 3/15/34	United States		22,040,000			22,168,052
New York State GO, Refunding, Series B, 3.20%, 2/15/39	United States		13,470,000			13,650,902
^vOhio State Hospital Facility Revenue, Cleveland Clinic Health System Obligated Group, Refunding, Series G, 3.276%, 1/01/42	United States		2,265,000			2,327,582
Orlando Health Obligated Group, 3.777%, 10/01/28	United States		2,810,000			3,041,798
^vPennsylvania State Turnpike Commission Turnpike Revenue, Motor License Fund-Enhanced, Subordinate, Refunding, First Series, 3.579%, 12/01/43	United States		11,275,000			11,395,755
Port Authority of New York and New Jersey Revenue,
Consolidated, One Hundred Ninety-First Series, 4.823%, 6/01/45	United States		4,570,000			5,084,034
Consolidated, Refunding, One Hundred Ninety-Second Series, 4.81%, 10/15/65	United States		15,000,000			19,634,700
Providence St. Joseph Health Obligated Group, 2.746%, 10/01/26	United States		8,875,000			9,092,308
RWJ Barnabas Health Inc., 3.477%, 7/01/49	United States		3,050,000			3,116,240
San Jose RDA Successor Agency Tax Allocation, Senior, Refunding, SeriesA-T, 3.226%, 8/01/27	United States		6,150,000			6,580,561
^vTexas State University System Financing Revenue,
Refunding, Serise B, 2.938%, 3/15/33	United States		2,655,000			2,702,870
Refunding, Serise B, 3.289%, 3/15/40	United States		2,255,000			2,274,754
University of California Revenue, Limited Project, Refunding, Series J, 4.131%, 5/15/45	United States		10,750,000			12,045,697


Total Municipal Bonds (Cost $153,820,772)						163,099,399



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)


	Country		Shares/ Units		Value

Escrows and Litigation Trusts 0.0%
^a,bMotors Liquidation Co., Escrow Account, cvt. pfd., C		United States		43,500	$	—
^a,bNewPage Corp., Escrow Account		United States		2,500,000		—
^a,b,dRemington Outdoor Co. Inc., Litigation Units		United States		4,897		—


Total Escrows and Litigation Trusts (Cost $2,307)						—


Total Investments before Short Term Investments (Cost $5,184,072,348)						5,239,248,451


			Shares

Short Term Investments (Cost $373,627,760) 7.4%

Money Market Funds 7.4%
^e,yInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		373,627,760		373,627,760


Total Investments (Cost $5,557,700,108) 111.7%						5,612,876,211
Other Assets, less Liabilities (11.7)%						(587,153,055	)


Net Assets 100.0%.					$	5,025,723,156



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

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

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

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 13 regarding fair value measurements.

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

^dSee Note 8 regarding restricted securities.

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

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

^gSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At October 31, 2019, the aggregate value of these securities was $1,356,087,519, representing 27.0% of net assets.

^hSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. At October 31, 2019, the aggregate value of these securities was $114,868,136, representing 2.3% of net assets.

ⁱIncome may be received in additional securities and/or cash.

^jSee Note 1(g) regarding loan participation notes.

^kSee Note 7 regarding defaulted securities.

^lPerpetual security with no stated maturity date.

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

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

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

^pSee Note 1(k) regarding Marketplace lending.

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

^rPrincipal amount of security is adjusted for inflation. See Note 1(m).

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

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

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

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

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

^xA portion or all of the security purchased on ato-be-announced (TBA) basis. See Note 1(d).

^yThe rate shown is the annualizedseven-day effective yield at period end.



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

At October 31, 2019, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts


Description	Type	Number of Contracts		Notional Amount	*	Expiration Date	Value/ Unrealized Appreciation (Depreciation)
Interest Rate Contracts
Australian 3 Yr. Bond	Long	2,020	$	160,671,425		12/16/19	$ 244,368
Australian 10 Yr. Bond	Long	839		84,342,987		12/16/19	(1,021	)
Canadian 10 Yr. Bond	Long	1,002		108,107,923		12/18/19	(2,704,335	)
CME Ultra Long Term U.S. Treasury Bond	Long	529		100,377,750		12/19/19	(4,695,653	)
Euro-Bund	Long	174		33,332,125		12/06/19	(394,634	)
U.S. Treasury 2 Yr. Note	Long	907		195,550,617		12/31/19	(430,444	)
U.S. Treasury 5 Yr. Note	Long	2,710		323,040,469		12/31/19	(1,968,569	)
U.S. Treasury 10 Yr. Note	Long	240		31,271,250		12/19/19	(322,829	)
U.S. Treasury 30 Yr. Bond	Long	1,037		167,345,875		12/19/19	(3,801,105	)
Ultra 10 Yr. U.S. Treasury Note	Short	302		42,917,031		12/19/19	419,195

Total Futures Contracts							$(13,655,027	)

*As of period end.

At October 31, 2019, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts


Currency	Counterparty	^a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation

OTC Forward Exchange Contracts
Indonesian Rupiah	DBAB		Buy	139,844,100,000	$	9,568,532	12/16/19	$	311,755	$	—
Indonesian Rupiah	JPHQ		Buy	6,900,000,000		471,086	12/16/19		16,414		—
Australian Dollar	JPHQ		Sell	34,750,000		23,448,779	1/09/20		—		(553,843	)
Japanese Yen	JPHQ		Sell	1,400,000,000		13,147,638	1/09/20		117,866		—
Australian Dollar	JPHQ		Sell	11,200,000		7,635,600	1/28/20		—		(103,434	)
Japanese Yen	JPHQ		Buy	7,348,000,000		69,580,066	1/29/20		—		(1,113,400	)
Canadian Dollar	JPHQ		Sell	15,200,000		11,452,941	1/30/20		—		(98,103	)
Danish Krone	JPHQ		Sell	226,372,668		34,120,578	1/30/20		83,408		—
Euro	JPHQ		Sell	85,444,180		96,437,658	1/30/20		529,343		—
Mexican Peso	JPHQ		Buy	206,500,000		10,233,665	1/30/20		350,302		—
Norwegian Krone	JPHQ		Buy	274,700,000		30,425,270	1/30/20		—		(539,687	)
Chinese Yuan Renminbi	JPHQ		Sell	320,900,000		45,021,112	2/24/20		—		(367,570	)
Japanese Yen	JPHQ		Buy	2,510,000,000		23,616,083	3/13/20		—		(168,044	)
Canadian Dollar	JPHQ		Sell	24,180,000		18,287,426	3/16/20		—		(87,640	)
Canadian Dollar	JPHQ		Sell	26,000,000		19,881,324	3/16/20		123,189		—
Euro	DBAB		Sell	2,178,384		2,442,078	3/16/20		—		(9,824	)
Euro	JPHQ		Sell	68,474,138		76,597,003	3/16/20		—		(474,741	)
Norwegian Krone	JPHQ		Buy	233,800,000		26,108,319	3/16/20		—		(675,332	)
Swedish Krona	JPHQ		Buy	168,000,000		17,140,321	3/16/20		383,457		—
Swedish Krona	JPHQ		Sell	168,000,000		17,663,015	3/16/20		139,236		—
South Korean Won	JPHQ		Sell	14,000,000,000		11,767,672	3/25/20		—		(240,779	)



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

Forward Exchange Contracts(continued)

Currency

Counterparty

Type

Quantity

Contract
Amount

Settlement
Date

Unrealized
Appreciation

Unrealized
Depreciation

OTC Forward Exchange Contracts(continued)

Turkish Lira

JPHQ

Buy

41,600,000

6,596,369

4/15/20

$ 368,891

$ —

Total Forward Exchange Contracts

$2,423,861

$(4,432,397

)

Net unrealized appreciation (depreciation)

$(2,008,536

)

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

At October 31, 2019, the Fund had the following credit default swap contracts outstanding. See Note 1(e).

Credit Default Swap Contracts


Description	Periodic Payment Rate Received (Paid)	Payment Frequency	Counter- party	Maturity Date		Notional Amount	^a		Value			Unamortized Upfront Payments (Receipts)		Unrealized Appreciation (Depreciation)	Rating	^b


Centrally Cleared Swap Contracts
Contracts to Buy Protection^c
Traded Index
CDX.NA.HY.32	(5.00)%	Quarterly		6/20/24	$	14,850,000		$	(1,024,652	)	$	(1,067,909	)	$ 43,257

OTC Swap Contracts
Contracts to Buy Protection^c
Single Name
Ally Financial Inc.	(5.00)%	Quarterly	JPHQ	12/20/24	$	20,750,000		$	(4,269,390	)	$	(3,986,188	)	$ (283,202)
Avon Products Inc.	(5.00)%	Quarterly	CITI	3/20/23		8,800,000			(1,008,730	)		(866,895	)	(141,835)
Government of Italy	(1.00)%	Quarterly	BZWS	6/20/23		10,600,000			(163,694	)		83,978		(247,672)
Government of Turkey	(1.00)%	Quarterly	BZWS	12/20/19		3,466,666			(5,980	)		22,178		(28,158)
Nabors Industries Inc.	(1.00)%	Quarterly	CITI	12/20/21		10,225,000			1,224,500			318,661		905,839
Navient Corp.	(5.00)%	Quarterly	JPHQ	3/20/20		5,000,000			(120,049	)		(70,462	)	(49,587)
Contracts to Sell Protection^c,d
Single Name
The Goldman Sachs
Group Inc.	1.00%	Quarterly	JPHQ	12/20/24		20,750,000			415,902			367,363		48,539	BBB+
Government of Argentina	5.00%	Quarterly	CITI	12/20/21		16,050,000			(9,533,450	)		(9,069,947	)	(463,503)	CCC-
Government of Indonesia	1.00%	Quarterly	CITI	12/20/24		17,770,000			224,086			119,527		104,559	NR
Government of Italy	1.00%	Quarterly	BZWS	6/20/23		10,600,000			53,809			(368,253	)	422,062	NR
Government of Russia	1.00%	Quarterly	CITI	12/20/24		8,600,000			109,867			87,629		22,238	BBB-
Government of Spain	1.00%	Quarterly	CITI	12/20/24		12,300,000			404,366			359,788		44,578	NR
Morgan Stanley	1.00%	Quarterly	JPHQ	12/20/24		20,750,000			451,011			403,201		47,810	BBB+
Nabors Industries Inc.	1.00%	Quarterly	CITI	12/20/23		10,225,000			(2,572,565	)		(1,267,098	)	(1,305,467)	BB-
Traded Index
^eBNP Paribas Bespoke Bordeaux Index, Mezzanine Tranche7-10%	2.10%	Quarterly	BNDP	6/20/20		5,150,000			61,287			—		61,287	Non- Investment Grade



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

Credit Default Swap Contracts(continued)


Description	Periodic Payment Rate Received (Paid)		Payment Frequency	Counter- party	Maturity Date		Notional Amount	^a		Value			Unamortized Upfront Payments (Receipts)		Unrealized Appreciation (Depreciation)		Rating	^b


OTC Swap Contracts(continued)
Contracts to Sell Protection^c,d(continued)
Traded Index(continued)
^eBNP Paribas Bespoke Rodez Index, Mezzanine Tranche5-7%	2.00%		Quarterly	BNDP	12/20/20	$	5,300,000		$	43,964		$	—		$ 43,964		Non- Investment Grade
^eBNP Paribas Bespoke Rodez2 Index, Mezzanine Tranche5-7%	3.20%		Quarterly	BNDP	12/20/20		2,700,000			65,131			—		65,131		Non- Investment Grade
^eCitibank Bespoke Cambridge Index, Equity Tranche0-3%	0.00%		Quarterly	CITI	12/20/19		8,476,000			(756,942	)		(95,041	)	(661,901	)	Non- Investment Grade
^eCitibank Bespoke Lima Index, Mezzanine Tranche5-7%	2.13%		Quarterly	CITI	12/20/19		10,500,000			246			—		246		Non- Investment Grade
^eCitibank Bespoke Palma Index, Mezzanine Tranche5-7%	2.30%		Quarterly	CITI	6/20/21		5,900,000			83,738			—		83,738		Non- Investment Grade
^eCitibank Bespoke Phoenix Index, Mezzanine Tranche5-7%	2.90%		Quarterly	CITI	12/20/21		7,800,000			213,154			—		213,154		Non- Investment Grade
^eCitibank Bespoke Singapore Index, Equity Tranche0-3%	0.00%		Quarterly	CITI	6/20/20		11,300,000			(1,196,927	)		(1,006,514	)	(190,413	)	Non- Investment Grade
^eCitibank Bespoke Sydney Index, Equity Tranche0-3%	0.00%		Quarterly	CITI	6/20/20		3,595,109			(458,123	)		(365,577	)	(92,546	)	Non- Investment Grade
^eCitibank Bespoke Verona Index, Equity Tranche0-3%	0.00%	��	Quarterly	CITI	12/20/19		6,112,500			(84,526	)		(84,132	)	(394	)	Non- Investment Grade



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

Credit Default Swap Contracts(continued)


Description	Periodic Payment Rate Received (Paid)	Payment Frequency	Counter- party	Maturity Date		Notional Amount	^a		Value			Unamortized Upfront Payments (Receipts)			Unrealized Appreciation (Depreciation)		Rating	^b

OTC Swap Contracts(continued)
Contracts to Sell Protection^c,d(continued)
Traded Index(continued)
^eCitibank Bespoke Verona Index, Mezzanine Tranche7-15%	0.40%	Quarterly	CITI	12/20/19	$	21,000,000		$	14,925		$	—		$	14,925		Non- Investment Grade
MCDX.NA.31	1.00%	Quarterly	CITI	12/20/23		2,325,000			41,235			19,486			21,749		Investment Grade
^eMorgan Stanley Bespoke Pecan Index, Mezzanine Tranche5-10%	3.98%	Quarterly	MSCO	12/20/21		8,300,000			208,915			—			208,915		Non- Investment Grade
^eMorgan Stanley Bespoke Pecan Index, Mezzanine Tranche5-10%	4.10%	Quarterly	MSCO	12/20/21		8,300,000			246,781			—			246,781		Non- Investment Grade
Total OTC Swap Contracts								$	(16,307,459	)	$	(15,398,296	)	$	(909,163	)
Total Credit Default Swap Contracts								$	(17,332,111	)	$	(16,466,205	)	$	(865,906	)

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

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

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

At October 31, 2019, the Fund had the following cross-currency swap contracts outstanding. See Note 1(e).

Cross-Currency Swap Contracts

Description

Payment

Frequency

Coun-

terparty

Maturity

Date

Notional
Amount

Value/

Unrealized

Appreciation

(Depreciation)

OTC Swap Contracts

Receive Floating3-month USD LIBOR + 2.87%

Quarterly

3,137,400

USD

Pay Fixed 2.50%

Annual

CITI

5/04/21

2,700,000

EUR

$ 122,926

Receive Floating3-month USD LIBOR + 1.334%

Quarterly

8,176,000

USD

Pay Floating3-month EUR LIBOR + 1.12%

Quarterly

CITI

7/10/21

7,300,000

EUR

50,582

Receive Floating3-month USD LIBOR + 1.305%

Quarterly

11,512,800

USD

Pay Floating3-month EUR LIBOR + 1.11%

Quarterly

JPHQ

8/20/21

10,400,000

EUR

(24,068

)

Receive Floating3-month USD LIBOR + 1.23%

Quarterly

2,830,500

USD

Pay Floating3-month EUR LIBOR + 1.07%

Quarterly

CITI

9/17/21

2,550,000

EUR

(4,730

)



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

Cross-Currency Swap Contracts(continued)

Description

Payment

Frequency

Coun-

terparty

Maturity

Date

Notional

Amount

Value/

Unrealized

Appreciation

(Depreciation)

OTC Swap Contracts(continued)

Receive Floating3-month USD LIBOR + 1.87%

Quarterly

6,160,000

USD

Pay Floating3-month EUR LIBOR + 1.7%

Quarterly

CITI

10/15/21

5,600,000

EUR

(81,741

)

Receive Floating3-month USD LIBOR + 1.25%

Quarterly

28,471,500

USD

Pay Floating3-month EUR LIBOR + 1.10%

Quarterly

CITI

10/30/21

25,650,000

EUR

(137,610

)

Total Cross Currency Swap Contracts

(74,641

)

At October 31, 2019, the Fund had the following interest rate swap contracts outstanding. See Note 1(e).

Interest Rate Swap Contracts

Description

Payment

Frequency

Maturity

Date

Notional

Amount

Value/

Unrealized

Appreciation

(Depreciation)

Centrally Cleared Swap Contracts

Receive Fixed 2.773%

Quarterly

Pay Floating3-month CNY CNRR

Quarterly

8/23/24

194,000,000

CNY

$ (411,701

)

Receive Fixed 2.765%

Quarterly

Pay Floating3-month CNY CNRR

Quarterly

8/26/24

156,000,000

CNY

(338,695

)

Receive Fixed 2.79%

Quarterly

Pay Floating3-month CNY CNRR

Quarterly

8/30/24

244,300,000

CNY

(502,748

)

Total Interest Rate Swap Contracts

$(1,253,144

)

*In U.S. dollars unless otherwise indicated.

At October 31, 2019, the Fund had the following inflation index swap contracts outstanding. See Note 1(e).

Inflation Index Swap Contracts


Description	Payment Frequency	Counter- party		Maturity Date		Notional Amount		Value/ Unrealized Appreciation (Depreciation)
Centrally Cleared Swap Contracts
Receive variable change inUSA-CPI-U	At maturity
Pay Fixed 1.96%	At maturity				8/31/24	$	24,600,000	$	(305,618	)
Receive variable change inUSA-CPI-U	At maturity
Pay Fixed 1.719%	At maturity				8/14/26		23,000,000		(111,041	)

Total Centrally Cleared Swap Contracts								$	(416,659	)

OTC Swap Contracts
Receive variable change inUSA-CPI-U	At maturity
Pay Fixed 1.782%	At maturity		JPHQ		5/27/24	$	35,700,000	$	181,988

Total Inflation Index Swap Contracts								$	(234,671	)



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CONSOLIDATED STATEMENT OF INVESTMENTS

Franklin Total Return Fund(continued)

At October 31, 2019, the Fund had the following total return swap contracts outstanding. See Note 1(e).

Total Return Swap Contracts

Underlying Instruments

Financing Rate

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Value

Value/

Unrealized

Appreciation

(Depreciation)

OTC Swap Contracts

Long^a

Euribor 3 Month

3-month EUR LIBOR

Quarterly

BNDP

12/20/19

20,000,000

EUR

$ (36,806

)

Euribor 3 Month

3-month EUR LIBOR

Quarterly

CITI

12/20/19

37,350,000

EUR

(143,472

)

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

JPHQ

12/20/19

8,400,000

68,247

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

MSCO

12/20/19

1,600,000

22,773

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

FBCO

3/20/20

10,400,000

127,826

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

GSCO

3/20/20

16,700,000

275,113

Markit iBoxx USD Liquid Leveraged Loan Index

3-month USD LIBOR

Quarterly

BZWS

6/20/20

29,200,000

(310,573

)

Short^b

iBoxx USD Liquid Investment Grade Index

3-month USD LIBOR

Quarterly

BNDP

12/20/19

12,800,000

(5,525

)

iBoxx USD Liquid Investment Grade Index

3-month USD LIBOR

Quarterly

GSCO

12/20/19

10,700,000

15,338

Total Total Return Swap Contracts

$ 12,921

*In U.S. dollars unless otherwise indicated.

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

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

See Note 9 regarding other derivative information.

See Abbreviations on page 165.



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities

October 31, 2019


	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund^a
Assets:
Investments in securities:
Cost - Unaffiliated issuers		$651,910,074	$	2,082,947,346	$	2,916,100,481	$	4,786,781,373
Cost - Controlled affiliates (Note 3f and 10)		—		—		—		382,177,099
Cost -Non-controlled affiliates (Note 3f and 10)		35,052,748		302,389,883		131,351,335		388,741,636
Cost - Unaffiliated repurchase agreements		9,446,232		—		—		—

Value - Unaffiliated issuers		$651,600,061	$	1,997,251,014	$	2,899,567,869	$	4,833,743,990
Value - Controlled affiliates (Note 3f and 10)		—		—		—		392,691,666
Value -Non-controlled affiliates (Note 3f and 10)		35,052,748		224,214,459		127,800,614		386,440,555
Value - Unaffiliated repurchase agreements		9,446,232		—		—		—
Cash		—		8,618,519		9,964,534		7,390,560
Restricted cash for OTC derivative contracts (Note 1f)		—		—		260,000		330,000
Foreign currency, at value (cost $—, $—, $63,506,054 and $23,500,044, respectively)		—		—		63,505,559		23,517,577
Receivables:
Investment securities sold		3,076,109		28,714,001		10,173,153		39,532,325
Capital shares sold		569,407		1,159,728		10,379,186		8,012,813
Dividends and interest		2,590,450		9,849,411		11,841,342		23,715,684
Deposits with brokers for:
OTC derivative contracts		—		—		8,480,000		19,120,000
TBA transactions		—		—		—		1,538,000
Futures contracts		—		—		2,825,145		12,837,492
Centrally cleared swap contracts		—		663,851		2,823,787		2,089,759
Variation margin on futures contracts		—		—		196,489		5,775,722
Variation margin on centrally cleared swap contracts		—		10,753		117,441		210,400
OTC swap contracts (upfront payments $—, $—, $956,023 and $2,181,057)		—		—		808,826		1,781,811
Unrealized appreciation on OTC forward exchange contracts		—		—		1,075,028		2,423,861
Unrealized appreciation on OTC swap contracts		—		—		1,440,613		3,420,308
FT Subsidiary deferred tax benefit (Note 1h)		—		—		—		101,634
Other assets		252		1,034		2,450		6,557

Total assets		702,335,259		2,270,482,770		3,151,262,036		5,764,680,714

Liabilities:
Payables:
Investment securities purchased		—		36,437,646		106,232,883		701,588,214
Capital shares redeemed		1,046,894		7,610,812		6,408,610		6,917,631
Management fees		287,682		967,252		444,021		1,763,706
Distribution fees		137,915		394,725		438,951		817,346
Transfer agent fees		136,500		599,982		454,790		602,902
Distributions to shareholders		101,283		1,932,006		1,084,910		677,389
Deposits from brokers for:
OTC derivative contracts		—		—		260,000		330,000
OTC swap contracts (upfront receipts $—, $—, $10,107,531 and $22,603,046)		—		—		8,110,471		17,180,107
Unrealized depreciation on OTC forward exchange contracts		—		—		1,435,330		4,432,397
Unrealized depreciation on OTC swap contracts		—		—		1,983,805		4,209,203



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities(continued)

October 31, 2019


	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund^a

Deferred tax	$	—		$	—		$	—		$	2,835
Accrued expenses and other liabilities		141,029			213,634			372,367			435,828

Total liabilities		1,851,303			48,156,057			127,226,138			738,957,558

Net assets, at value	$	700,483,956		$	2,222,326,713		$	3,024,035,898		$	5,025,723,156

Net assets consist of:
Paid-in capital	$	828,740,166		$	2,650,109,183		$	3,155,271,176		$	5,075,873,079
Total distributable earnings (loss)		(128,256,210	)		(427,782,470	)		(131,235,278	)		(50,149,923	)

Net assets, at value	$	700,483,956		$	2,222,326,713		$	3,024,035,898		$	5,025,723,156

Class A:
Net assets, at value	$	393,735,642		$	1,049,358,722		$	1,631,122,894		$	3,422,746,926

Shares outstanding		49,088,208			128,312,702			169,083,814			345,070,333

Net asset value per share^b		$8.02			$8.18			$9.65			$9.92

Maximum offering price per share (net asset value per share ÷ 97.75%, 97.75%, 97.75% and 96.25%, respectively)		$8.20			$8.37			$9.87			$10.31

Class A1:
Net assets, at value	$	86,471,463

Shares outstanding		10,783,541

Net asset value per share^b		$8.02

Maximum offering price per share (net asset value per share ÷ 97.75%)		$8.20

Class C:
Net assets, at value	$	84,684,691		$	296,133,765		$	135,372,403		$	236,837,930

Shares outstanding		10,565,088			36,204,175			14,091,443			24,052,695

Net asset value and maximum offering price per share^b		$8.02			$8.18			$9.61			$9.85

Class R:
Net assets, at value							$	18,304		$	21,223,216

Shares outstanding								1,897			2,148,644

Net asset value and maximum offering price per share								$9.65			$9.88

Class R6:
Net assets, at value	$	31,953,034		$	18,763,620		$	1,003,208,195		$	481,398,619

Shares outstanding		3,976,783			2,289,985			103,351,645			48,200,781

Net asset value and maximum offering price per share	$	8.03		$	8.19		$	9.71		$	9.99

Advisor Class:
Net assets, at value	$	103,639,126		$	858,070,606		$	254,314,102		$	863,516,465

Shares outstanding		12,907,315			104,874,478			26,223,910			86,529,580

Net asset value and maximum offering price per share		$8.03			$8.18			$9.70			$9.98

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations

for the year ended October 31, 2019


	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund^a
Investment income:
Dividends:
Unaffiliated issuers	$	—		$	—		$	2,221,038		$	1,068,558
Controlled affiliates (Note 3f and 10)		—			—			—			4,611,173
Non-controlled affiliates (Note 3f and 10)		618,630			10,443,691			3,914,220			5,312,169
Interest:
Non-controlled affiliates (Note 10)		—			4,180,654			—			—
Unaffiliated issuers:
Paydown gain (loss)		(9,541,450	)		—			(4,392,881	)		(5,165,606	)
Paid in cash		29,188,711			170,607,694			110,788,500			167,021,793

Total investment income		20,265,891			185,232,039			112,530,877			172,848,087

Expenses:
Management fees (Note 3a)		3,789,053			15,511,047			14,985,816			20,500,201
Distribution fees: (Note 3c)
Class A		1,003,786			3,037,149			4,090,044			7,210,403
Class A1		97,124			—			—			—
Class C		712,479			2,425,643			860,796			1,543,947
Class R		—			—			1			112,034
Transfer agent fees: (Note 3e)
Class A		579,254			1,378,220			2,504,193			4,204,681
Class A1		134,174			—			—			—
Class C		158,126			423,441			202,422			346,306
Class R		—			—			—			32,734
Class R6		20,505			28,569			245,491			130,250
Advisor Class		169,550			1,583,133			360,138			1,089,880
Custodian fees (Note 4)		6,169			22,427			41,965			53,460
Reports to shareholders		93,491			228,127			308,682			548,602
Registration and filing fees		132,434			158,878			261,040			248,068
Professional fees		65,833			148,909			108,376			150,947
Trustees’ fees and expenses		8,960			38,428			33,620			47,460
Marketplace lending fees (Note 1k)		—			—			284,274			—
Other		199,100			88,580			371,098			307,641

Total expenses		7,170,038			25,072,551			24,657,956			36,526,614
Expense reductions (Note 4)		(42	)		(24,337	)		(25,608	)		(63,440	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(119,880	)		(1,017,693	)		(7,892,413	)		(1,623,073	)

Net expenses		7,050,116			24,030,521			16,739,935			34,840,101

Net investment income		13,215,775			161,201,518			95,790,942			138,007,986

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		—			(60,055,757	)		2,298,360			45,981,056
Non-controlled affiliates (Note 3f and 10)		—			(11,830,078	)		(1,828,483	)		(2,565,076	)
Foreign currency transactions		—			—			1,212,257			645,835
Forward exchange contracts		—			—			2,986,966			8,135,522
Futures contracts		—			—			435,648			53,987,564
Swap contracts		—			(637,127	)		6,249,850			3,857,619



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations(continued)

for the year ended October 31, 2019


	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund^a
Capital gain distributions from management investment companies:
Non-controlled affiliates (Note 3f)	$	—	$	—		$	—		$	129,196

Net realized gain (loss)		—		(72,522,962	)		11,354,598			110,171,716

Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		2,476,828		(95,917,654	)		13,626,983			161,822,246
Controlled affiliates (Note 3f and 10)		—		—			—			10,964,807
Non-controlled affiliates (Note 3f and 10)		—		(15,929,829	)		(2,681,397	)		(906,458	)
Translation of other assets and liabilities denominated in foreign currencies		—		—			(145,338	)		(591,138	)
Forward exchange contracts		—		—			(892,430	)		(3,162,825	)
Futures contracts		—		—			(745,594	)		(4,304,163	)
Swap contracts		—		403,994			767,137			(1,261,243	)
Change in FT Subsidiary deferred tax benefit (Note 1h)		—		—			—			(35,885	)
Change in deferred taxes on unrealized appreciation		—		—			—			(2,835	)

Net change in unrealized appreciation (depreciation)		2,476,828		(111,443,489	)		9,929,361			162,522,506

Net realized and unrealized gain (loss)		2,476,828		(183,966,451	)		21,283,959			272,694,222

Net increase (decrease) in net assets resulting from operations	$	15,692,603	$	(22,764,933	)	$	117,074,901		$	410,702,208

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Year Ended October 31,						Year Ended October 31,
	2019			2018			2019			2018
Increase (decrease) in net assets:
Operations:
Net investment income	$	13,215,775		$	9,344,342		$	161,201,518		$	164,172,813
Net realized gain (loss)		—			(7,313	)		(72,522,962	)		(36,441,542	)
Net change in unrealized appreciation (depreciation)		2,476,828			(4,194,916	)		(111,443,489	)		(17,257,402	)

Net increase (decrease) in net assets resulting from operations		15,692,603			5,142,113			(22,764,933	)		110,473,869

Distributions to shareholders:
Class A		(12,001,795	)		(10,399,916	)		(64,119,132	)		(57,420,220	)
Class A1		(2,915,661	)		(2,680,182	)		—			—
Class C		(2,843,324	)		(3,179,693	)		(18,210,835	)		(21,410,984	)
Class R6		(1,199,781	)		(749,735	)		(3,994,879	)		(6,632,500	)
Advisor Class		(3,815,385	)		(3,615,201	)		(77,201,443	)		(78,812,669	)

Total distributions to shareholders		(22,775,946	)		(20,624,727	)		(163,526,289	)		(164,276,373	)

Capital share transactions: (Note 2)
Class A		(21,579,949	)		(65,465,520	)		(220,170,584	)		1,323,344
Class A1		(13,138,172	)		(18,641,058	)		—			—
Class C		(40,864,972	)		(60,178,017	)		(119,511,218	)		(104,757,060	)
Class R6		(3,739,246	)		34,338,586			(118,338,106	)		13,923,525
Advisor Class		(7,695,018	)		(69,446,005	)		(802,269,979	)		96,300,188

Total capital share transactions		(87,017,357	)		(179,392,014	)		(1,260,289,887	)		6,789,997

Net increase (decrease) in net assets		(94,100,700	)		(194,874,628	)		(1,446,581,109	)		(47,012,507	)
Net assets:
Beginning of year		794,584,656			989,459,284			3,668,907,822			3,715,920,329

End of year	$	700,483,956		$	794,584,656		$	2,222,326,713		$	3,668,907,822



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets(continued)


	Franklin Low Duration Total Return Fund						Franklin Total Return Fund^a
	Year Ended October 31,						Year Ended October 31,
	2019			2018			2019			2018
Increase (decrease) in net assets:
Operations:
Net investment income	$	95,790,942		$	69,340,190		$	138,007,986		$	128,163,399
Net realized gain (loss)		11,354,598			(21,567,956	)		110,171,716			(95,199,341	)
Net change in unrealized appreciation (depreciation)		9,929,361			(29,608,008	)		162,522,506			(141,895,358	)


Net increase (decrease) in net assets resulting from operations		117,074,901			18,164,226			410,702,208			(108,931,300	)

Distributions to shareholders:
Class A		(52,306,023	)		(44,054,661	)		(92,537,289	)		(84,620,684	)
Class C		(3,709,440	)		(4,116,896	)		(6,711,287	)		(8,070,593	)
Class R		(7	)		—			(667,734	)		(821,725	)
Class R6		(38,208,441	)		(29,893,839	)		(15,990,733	)		(13,679,438	)
Advisor Class		(8,102,666	)		(7,005,174	)		(25,772,639	)		(19,582,562	)
Distributions to shareholders from tax return of capital:
Class A		—			—			—			(1,864,025	)
Class C		—			—			—			(173,121	)
Class R		—			—			—			(17,375	)
Class R6		—			—			—			(312,827	)
Advisor Class		—			—			—			(438,993	)


Total distributions to shareholders		(102,326,577	)		(85,070,570	)		(141,679,682	)		(129,581,343	)


Capital share transactions: (Note 2)
Class A		123,680,413			16,141,095			479,864,224			(228,420,356	)
Class C		4,489,729			(40,573,740	)		(21,014,946	)		(93,634,238	)
Class R		18,305			—			(3,811,785	)		(11,028,558	)
Class R6		(19,707,867	)		447,306,561			22,963,552			55,069,872
Advisor Class		38,827,472			(209,104,674	)		196,798,568			60,100,000


Total capital share transactions		147,308,052			213,769,242			674,799,613			(217,913,280	)

Net increase (decrease) in net assets		162,056,376			146,862,898			943,822,139			(456,425,923	)
Net assets:
Beginning of year		2,861,979,522			2,715,116,624			4,081,901,017			4,538,326,940

End of year	$	3,024,035,898		$	2,861,979,522		$	5,025,723,156		$	4,081,901,017

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Notes to Financial Statements

1. Organization and Significant Accounting Policies

Franklin Investors Securities Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting of eight separate funds, four of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The classes of shares offered within each of the Funds are indicated below. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

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

Franklin Adjustable U.S. Government Securities Fund

Class A, Class C, Class R6 & Advisor Class

Franklin Floating Rate Daily Access Fund

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

Franklin Low Duration Total Return Fund

Franklin Total Return Fund

Effective October 15, 2019, Franklin Low Duration Total Return Fund began offering a new class of shares, Class R.

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

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

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

Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to



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NOTES TO FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies(continued)

a. Financial Instrument Valuation(continued)

determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

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

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

b. Foreign Currency Translation

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

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

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



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NOTES TO FINANCIAL STATEMENTS

c. Joint Repurchase Agreement

Certain or all Funds enter into a joint repurchase agreement whereby their uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on theirpro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Funds’ custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Funds, certain MRAs may permit thenon-defaulting party to net andclose-out all transactions, if any, traded under such agreements. The Funds may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Funds in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Funds at year end, as indicated in the Statements of Investments, had been entered into on October 31, 2019.

d. Securities Purchased on a When-Issued or Delayed Delivery and TBA Basis

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

e. Derivative Financial Instruments

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

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Funds to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives thenon-defaulting party the right to net andclose-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities.



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NOTES TO FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies(continued)

e. Derivative Financial Instruments(continued)

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

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

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

Certain or all Funds entered into credit default swap contracts primarily to manage and/or gain exposure to credit risk. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. These agreements may be privately negotiated in theover-the-counter market (OTC credit default swaps) or may be

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

Certain or all Funds entered into OTC cross currency swap contracts primarily to manage and/or gain exposure to certain foreign currencies. A cross currency swap is an agreement between the Fund and a counterparty to exchange cash flows (determined using either a fixed or floating rate) based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the opening of the contract. Cross currency swaps may require the exchange of notional amounts at the opening and/or closing of the contract. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized. Upfront payments and receipts are reflected in the Statements of Assets and Liabilities and represent compensating factors between stated terms of the cross currency swap contract and prevailing market conditions (interest rate spreads and other



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relevant factors). These upfront payments and receipts are amortized over the term of the contract as a realized gain or loss in the Statements of Operations.

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

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

Certain or all Funds entered into OTC total return swap contracts primarily to manage and/or gain exposure to credit and other market risks of an underlying instrument such as a stock, bond, index or basket of securities or indices. A total return swap is an agreement between the Fund and a counterparty to exchange a return linked to an underlying instrument for a floating or fixed rate payment, both based

upon a notional amount. Over the term of the contract, contractually required payments to be paid or received are accrued daily and recorded as unrealized appreciation or depreciation until the payments are made, at which time they are recognized as realized gain or loss.

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

See Note 9 regarding other derivative information.

f. Restricted Cash

At October 31, 2019, certain or all Funds held restricted cash in connection with investments in certain derivative securities. Restricted cash is held in a segregated account with the Fund’s custodian and is reflected in the Statements of Assets and Liabilities.

g. Loan Participation Notes

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

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

Franklin Total Return Fund invests in certain financial instruments through its investment in FT Subsidiary. FT Subsidiary is a Delaware Corporation, is a wholly-owned



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1. Organization and Significant Accounting Policies(continued)

h. Investments in FT Holdings Corporation I (FT Subsidiary)(continued)

subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At October 31, 2019, FT Subsidiary’s investment, Turtle Bay Resort, as well as any other assets and liabilities of the FT Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities.

At October 31, 2019, FT Subsidiary, which is a tax paying entity, recognized an unrealized loss on its Turtle Bay investment. An estimated deferred tax asset based on such unrealized loss is reflected as FT Subsidiary deferred tax benefit in the Consolidated Statement of Assets and Liabilities. The estimated benefit was calculated using a federal rate of 21%. When the Turtle Bay investment liquidates, FT Subsidiary will recognize a capital loss which can be carried-back to offset prior year capital gains, resulting in a tax refund which will relieve the deferred tax asset.

The financial statements have been consolidated and include the accounts of the Fund and FT Subsidiary. All intercompany transactions and balances have been eliminated. At October 31, 2019, the net assets of FT Subsidiary were $5,162,239, representing 0.1% of the Fund’s consolidated net assets. The Fund’s investment in FT Subsidiary is limited to 25% of consolidated assets.

i. Mortgage Dollar Rolls

Certain or all Funds enter into mortgage dollar rolls, typically on a TBA basis. Mortgage dollar rolls are agreements between the Fund and a financial institution where the Fund sells (or buys) mortgage-backed securities for delivery on a specified date and simultaneously contracts to repurchase (or sell) substantially similar (same type, coupon, and maturity) securities at a future date and at a predetermined price. Gains or losses are realized on the initial sale, and the difference between the repurchase price and the sale price is recorded as an unrealized gain or loss to the Fund upon entering into the mortgage dollar roll. In addition, the Fund may invest the cash proceeds that are received from the initial sale. During the period between the sale and repurchase, the Fund is not entitled to principal and interest paid on the mortgage backed securities. Transactions in

mortgage dollar rolls are accounted for as purchases and sales and may result in an increase to the Fund’s portfolio turnover rate. The risks of mortgage dollar roll transactions include the potential inability of the counterparty to fulfill its obligations.

j. 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. On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced its intention to cease sustaining LIBOR after 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. As such, the potential effect of a transition away from LIBOR on the Fund or the Fund’s investments that use or may use a floating rate based on LIBOR cannot yet be determined.

k. Marketplace Lending

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



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When the Fund invests in these loans, it usually purchases all rights, title and interest in the loans pursuant to a loan purchase agreement directly from the platform. The platform or a third-party servicer typically continues to service the loans, collecting payments and distributing them to the Fund, less any servicing fees assessed. The servicer is typically responsible for taking actions against a borrower in the event of a default on the loan. Servicing fees, along with other administration fees, are included in marketplace lending fees in the Statements of Operations. The Fund, as an investor in a loan, would be entitled to receive payment only from the borrower and would not be able to recover any deficiency from the platform, except under very narrow circumstances. The loans in which the Fund may invest are unsecured.

l. Income and Deferred Taxes

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

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

Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of October 31, 2019, 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.

m. 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 and realized gain distributions are recorded on theex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Dividends from net investment income are normally declared daily; these dividends may be reinvested or paid monthly to shareholders. Distributions from realized capital gains and other distributions, if any, are recorded on theex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

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

Net investment income, excluding class specific expenses, is allocated daily to each class of shares based upon the relative value of the settled shares of each class. Realized and unrealized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured



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1. Organization and Significant Accounting Policies(continued)

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

by an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income in the Statements of Operations.

n. 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.

o. 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 October 31, 2019, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:


	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Shares			Amount			Shares			Amount
Class A Shares:

Year ended October 31, 2019

Shares sold^a		18,451,688		$	148,737,677			24,396,121		$	207,005,295

Shares issued in reinvestment of distributions		1,420,216			11,437,638			7,091,086			59,838,783

Shares redeemed		(22,545,484	)		(181,755,264	)		(57,649,550	)		(487,014,662	)

Net increase (decrease)		(2,673,580	)	$	(21,579,949	)		(26,162,343	)	$	(220,170,584	)


Year ended October 31, 2018

Shares sold^a		12,980,707		$	105,938,933			40,041,598		$	350,572,136

Shares issued in reinvestment of distributions		1,209,703			9,874,447			6,091,861			53,389,454

Shares redeemed		(22,167,585	)		(181,278,900	)		(45,866,654	)		(402,638,246	)

Net increase (decrease)		(7,977,175	)	$	(65,465,520	)		266,805		$	1,323,344



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	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund
	Shares			Amount			Shares			Amount

Class A1 Shares:
Year ended October 31, 2019
Shares sold		644,638		$	5,198,030
Shares issued in reinvestment of distributions		341,392			2,748,361
Shares redeemed		(2,617,010	)		(21,084,563	)

Net increase (decrease)		(1,630,980	)	$	(13,138,172	)

Year ended October 31, 2018
Shares sold		748,665		$	6,097,241
Shares issued in reinvestment of distributions		309,106			2,522,673
Shares redeemed		(3,331,933	)		(27,260,972	)

Net increase (decrease)		(2,274,162	)	$	(18,641,058	)


Class C Shares:
Year ended October 31, 2019
Shares sold		2,141,425		$	17,258,372			4,867,026		$	41,398,389
Shares issued in reinvestment of distributions		328,535			2,643,522			2,007,653			16,956,492
Shares redeemed^a		(7,551,249	)		(60,766,866	)		(21,042,279	)		(177,866,099)

Net increase (decrease)		(5,081,289	)	$	(40,864,972	)		(14,167,600	)	$	(119,511,218)

Year ended October 31, 2018
Shares sold		1,531,585		$	12,510,001			9,725,663		$	85,257,879
Shares issued in reinvestment of distributions		364,009			2,969,738			2,281,358			19,996,858
Shares redeemed^a		(9,275,058	)		(75,657,756	)		(23,980,411	)		(210,011,797)

Net increase (decrease)		(7,379,464	)	$	(60,178,017	)		(11,973,390	)	$	(104,757,060)


Class R6 Shares:
Year ended October 31, 2019
Shares sold		1,808,708		$	14,620,360			6,237,102		$	53,203,518
Shares issued in reinvestment of distributions		148,766			1,199,760			449,623			3,806,996
Shares redeemed		(2,423,068	)		(19,559,366	)		(20,715,643	)		(175,348,620)

Net increase (decrease)		(465,594	)	$	(3,739,246	)		(14,028,918	)	$	(118,338,106)

Year ended October 31, 2018
Shares sold		5,030,194		$	41,324,507			4,483,095		$	39,317,573
Shares issued in reinvestment of distributions		91,803			749,678			746,119			6,539,786
Shares redeemed		(945,757	)		(7,735,599	)		(3,642,765	)		(31,933,834)

Net increase (decrease)		4,176,240		$	34,338,586			1,586,449		$	13,923,525



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2. Shares of Beneficial Interest(continued)


	Franklin Adjustable U.S. Government Securities Fund						Franklin Floating Rate Daily Access Fund

	Shares			Amount			Shares			Amount
Advisor Class Shares:
Year ended October 31, 2019
Shares sold		9,661,245		$	78,040,579			49,968,193		$	425,681,497
Shares issued in reinvestment of distributions		409,290			3,300,024			5,583,560			47,203,015
Shares redeemed		(11,037,539	)		(89,035,621	)		(150,952,054	)		(1,275,154,491	)

Net increase (decrease)		(967,004	)	$	(7,695,018	)		(95,400,301	)	$	(802,269,979	)

Year ended October 31, 2018
Shares sold		8,026,624		$	65,714,269			72,581,582		$	636,947,305
Shares issued in reinvestment of distributions		386,115			3,155,976			5,110,153			44,798,000
Shares redeemed		(16,879,585	)		(138,316,250	)		(66,685,337	)		(585,445,117	)

Net increase (decrease)		(8,466,846	)	$	(69,446,005	)		11,006,398		$	96,300,188


^aMay include a portion of Class C shares that were automatically converted to Class A.
	Franklin Low Duration Total Return Fund						Franklin Total Return Fund

	Shares			Amount			Shares			Amount
Class A Shares:
Year ended October 31, 2019
Shares sold^a		79,629,462		$	767,009,943			100,587,834		$	983,059,322
Shares issued in reinvestment of distributions		4,538,511			43,788,521			9,364,951			90,862,421
Shares redeemed		(71,313,399	)		(687,118,051	)		(61,650,157	)		(594,057,519	)


Net increase (decrease)		12,854,574		$	123,680,413			48,302,628		$	479,864,224

Year ended October 31, 2018
Shares sold^a		45,754,362		$	443,188,528			46,213,804		$	442,391,448
Shares issued in reinvestment of distributions		3,715,625			35,982,102			8,890,356			85,021,536
Shares redeemed		(47,715,588	)		(463,029,535	)		(78,958,900	)		(755,833,340	)


Net increase (decrease)		1,754,399		$	16,141,095			(23,854,740	)	$	(228,420,356	)

Class C Shares:
Year ended October 31, 2019
Shares sold		5,751,967		$	55,153,027			5,400,892		$	52,080,169
Shares issued in reinvestment of distributions		330,448			3,174,573			655,873			6,311,021
Shares redeemed^a		(5,611,766	)		(53,837,871	)		(8,294,058	)		(79,406,136	)


Net increase (decrease)		470,649		$	4,489,729			(2,237,293	)	$	(21,014,946	)

Year ended October 31, 2018
Shares sold		3,413,048		$	32,944,334			3,654,316		$	34,887,774
Shares issued in reinvestment of distributions		360,095			3,473,725			817,226			7,767,582
Shares redeemed^a		(7,985,724	)		(76,991,799	)		(14,440,705	)		(136,289,594	)


Net increase (decrease)		(4,212,581	)	$	(40,573,740	)		(9,969,163	)	$	(93,634,238	)



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	Franklin Low Duration Total Return Fund						Franklin Total Return Fund
	Shares			Amount			Shares			Amount
Class R Shares:
Year ended October 31, 2019
Shares sold		1,897		$	18,305			333,857		$	3,227,561
Shares issued in reinvestment of distributions		—			—			65,347			630,599
Shares redeemed		—			—			(797,352	)		(7,669,945	)


Net increase (decrease)		1,897		$	18,305			(398,148	)	$	(3,811,785	)

Year ended October 31, 2018
Shares sold								492,019		$	4,681,884
Shares issued in reinvestment of distributions								82,563			787,630
Shares redeemed								(1,736,019	)		(16,498,072	)


Net increase (decrease)								(1,161,437	)	$	(11,028,558	)

Class R6 Shares:
Year ended October 31, 2019
Shares sold		48,117,630		$	466,169,000			11,319,959		$	110,557,913
Shares issued in reinvestment of distributions		3,421,634			33,223,142			1,474,135			14,399,466
Shares redeemed		(53,573,761	)		(519,100,009	)		(10,523,386	)		(101,993,827	)


Net increase (decrease)		(2,034,497	)	$	(19,707,867	)		2,270,708		$	22,963,552

Year ended October 31, 2018
Shares sold		70,752,923		$	691,874,381			16,699,247		$	161,014,195
Shares issued in reinvestment of distributions		2,699,247			26,294,764			1,317,931			12,670,874
Shares redeemed		(27,828,421	)		(270,862,584	)		(12,370,887	)		(118,615,197	)


Net increase (decrease)		45,623,749		$	447,306,561			5,646,291		$	55,069,872

Advisor Class Shares:
Year ended October 31, 2019
Shares sold		18,103,769		$	175,348,265			45,881,218		$	444,031,555
Shares issued in reinvestment of distributions		730,667			7,086,653			2,450,870			23,965,092
Shares redeemed		(14,823,774	)		(143,607,446	)		(28,072,302	)		(271,198,079	)


Net increase (decrease)		4,010,662		$	38,827,472			20,259,786		$	196,798,568

Year ended October 31, 2018
Shares sold		12,420,216		$	121,011,438			22,751,004		$	220,031,575
Shares issued in reinvestment of distributions		625,164			6,089,056			1,828,038			17,566,461
Shares redeemed		(34,195,050	)		(336,205,168	)		(18,489,847	)		(177,498,036	)


Net increase (decrease)		(21,149,670	)	$	(209,104,674	)		6,089,195		$	60,100,000

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



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3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Institutional, LLC (FT Institutional)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

Franklin Adjustable U.S. Government Securities Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


Annualized Fee Rate		Net Assets
0.500%		Up to and including $5 billion
0.440%		Over $5 billion, up to and including $10 billion
0.410%		Over $10 billion, up to and including $15 billion
0.380%		In excess of $15 billion

Franklin Floating Rate Daily Access Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


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



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


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

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

For the year ended October 31, 2019, each Fund’s gross effective investment management fee rate based on average daily net assets was as follows:


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


0.500%	0.508%	0.488%	0.472%

b. Administrative Fees

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

c. Distribution Fees

The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A and A1 reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. Under the Class A and A1 reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.



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3. Transactions with Affiliates(continued)

c. Distribution Fees(continued)

The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:


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

Reimbursement Plans:

Class A		0.25%		0.25%		0.25%		0.25%

Class A1		0.10%		—%		—%		—%

Compensation Plans:

Class C		0.65%		0.65%		0.65%		0.65%

Class R		—		—		0.50%		0.50%

d. Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Funds. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Funds of the following commission transactions related to the sales and redemptions of the Funds’ shares for the year:


	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Sales charges retained net of commissions paid to unaffiliated brokers/dealers		$10,197		$27,771		$46,959		$214,752

CDSC retained		$16,631		$42,216		$43,091		$ 19,187

Effective March 1, 2019, certain front-end sales charges on Class A and A1 shares, if any, were lowered. Further details are disclosed in the Funds’ Prospectus.

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 October 31, 2019, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:


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

Transfer agent fees		$524,726		$1,330,594		$1,090,527		$2,361,718



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f. Investments in Affiliated Management Investment Companies

Certain or all Funds invest in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Funds are waived on assets invested in the affiliated management investment companies, as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the year ended October 31, 2019, investments in affiliated management investment companies were as follows:


	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		Dividend Income
Franklin Adjustable U.S. Government Securities Fund
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	18,732,898	$	140,421,885	$	(124,102,035	)	$	—		$	—		$	35,052,748			35,052,748	$	618,630

Franklin Floating Rate Daily Access Fund
Non-Controlled Affiliates
Franklin Floating Rate Income Fund^a	$	64,272,450	$	—	$	—		$	—		$	(7,726,369	)	$	56,546,081			6,837,495	$	4,711,834
Franklin Lower Tier Floating Rate Fund		64,398,391		—		(57,966,627	)^b		(11,845,737	)		5,413,973			—	^c		—		2,769,898
Institutional Fiduciary Trust Money Market Portfolio, 1.56%		219,846,906		855,308,136		(971,196,765	)		—			—			103,958,277			103,958,277		2,961,959

Total Affiliated Securities	$	348,517,747	$	855,308,136	$	(1,029,163,392	)	$	(11,845,737	)	$	(2,312,396	)	$	160,504,358				$	10,443,691

Franklin Low Duration Total Return Fund
Non-Controlled Affiliates
Franklin Floating Rate Income Fund^a	$	22,459,491	$	—	$	—		$	—		$	(2,699,917	)	$	19,759,574			2,389,308	$	1,646,512
Franklin Lower Tier Floating Rate Fund		18,122,357		—		(16,312,394	)^b		(1,828,483	)		18,520			—	^c		—		779,477
Institutional Fiduciary Trust Money Market Portfolio, 1.56%		58,057,813		1,201,251,861		(1,151,268,634	)		—			—			108,041,040			108,041,040		1,488,231

Total Affiliated Securities	$	98,639,661	$	1,201,251,861	$	(1,167,581,028	)	$	(1,828,483	)	$	(2,681,397	)	$	127,800,614				$	3,914,220

Franklin Total Return Fund
Controlled Affiliates
Franklin Liberty Investment Grade Corporate ETF	$	9,218,000	$	349,439,313	$	—		$	—		$	11,303,662		$	369,960,975			14,415,000	$	3,599,762
Franklin Liberty Senior Loan ETF		7,548,483		15,521,063		—			—			(338,855	)		22,730,691			914,900		1,011,411

Total Controlled Affiliates	$	16,766,483	$	364,960,376	$	—		$	—		$	10,964,807		$	392,691,666				$	4,611,173

Non-Controlled Affiliates
Franklin Flexible Alpha Bond Fund, Class R6	$	99,287,894	$	—	$	(98,880,977	)	$	(1,119,023	)	$	712,106		$	—	^c		—	$	2,010,732	^d
Franklin Floating Rate Income Fund^a		17,759,516		—		(2,835,600	)		(482,801	)		(1,628,320	)		12,812,795			1,549,310		1,298,047
Franklin Lower Tier Floating Rate Fund		9,546,927		—		(8,593,431	)^b		(963,252	)		9,756			—	^c		—		410,632



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3. Transactions with Affiliates(continued)

f. Investments in Affiliated Management Investment Companies(continued)


	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		Dividend Income

Franklin Total Return Fund(continued)

Non-Controlled Affiliates(continued)

Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	39,095,058	$	2,129,714,267	$	(1,795,181,565	)	$	—		$	—		$	373,627,760		373,627,760	$	1,721,954


Total Non-Controlled Affiliates	$	165,689,395	$	2,129,714,267	$	(1,905,491,573	)	$	(2,565,076	)	$	(906,458	)	$	386,440,555			$	5,441,365


Total Affiliated Securities	$	182,455,878	$	2,494,674,643	$	(1,905,491,573	)	$	(2,565,076	)	$	10,058,349		$	779,132,221			$	10,052,538

^aEffective May 31, 2019, Franklin Middle Tier Floating Rate Fund was renamed Franklin Floating Rate Income Fund.

^bThe Fund sold shares of the affiliate through an in-kind transfer of common stocks and other equity interests, corporate bonds and senior floating rate interests securities and cash. See Note 6.

^cAs of October 31, 2019, no longer held by the fund.

^dDividend income includes any capital gain distributions received from underlying funds, and are presented in corresponding line item in the Statement of Operations.

g. Waiver and Expense Reimbursements

Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by Franklin Low Duration Total Return Fund and Franklin Total Return Fund so that the expenses (excluding distribution fees and acquired fund fees and expenses and certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) for Class A, Class C, Class R and Advisor Class of the Funds do not exceed 0.44% and 0.60%, respectively, and for Class R6 do not exceed 0.30% and 0.49%, respectively, based on the average net assets of each class until February 28, 2021 and February 29, 2020 respectively. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.

Prior to March 1, 2019, expenses (excluding certain fees and expenses as previously disclosed) for Franklin Total Return Fund for Class A, Class C, Class R and Advisor Class were limited to 0.63% and for Franklin Low Duration Total Return Fund expenses for Class R6 were limited to 0.29% based on the average net assets of each class.

For Franklin Adjustable U.S. Government Fund and Franklin Floating Rate Daily Access Fund, Investor Services has 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 February 29, 2020.

Prior to March 1, 2019, for Franklin Floating Rate Daily Access Fund the Class R6 transfer agent fees were limited to 0.02% based on the average net assets of the class.

h. Other Affiliated Transactions

At October 31, 2019, one or more of the funds in Franklin Fund Allocator Series owned 15.1% of Franklin Low Duration Total Return Fund outstanding shares.

4. Expense Offset Arrangement

The Funds have entered into an arrangement with their custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ custodian expenses. During the year ended October 31, 2019, the custodian fees were reduced as noted in the Statements of Operations.



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5. Income Taxes

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

At October 31, 2019, the capital loss carryforwards were as follows:


	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund
Capital loss carryforwards not subject to expiration:
Short term	$	23,092,600	$	20,570,518	$	32,417,165	$	30,224,308
Long term		104,891,205		239,462,365		81,065,745		91,879,023

Total capital loss carryforwards	$	127,983,805	$	260,032,883	$	113,482,910	$	122,103,331

During the year ended October 31, 2019, the Franklin Total Return Fund utilized $76,739,506 of capital loss carryforwards.

On October 31, 2019, the following Funds had expired capital loss carryforwards, which were reclassified to paid-in capital.

Franklin

Adjustable

U.S. Government

Securities Fund

Franklin

Floating Rate

Daily Access

Fund

Franklin

Low Duration

Total Return

Fund

$21,934,756

10,282,409

5,327,487

The tax character of distributions paid during the years ended October 31, 2019 and 2018, was as follows:


	Franklin Adjustable U.S.				Franklin Floating Rate
	Government Securities Fund				Daily Access Fund
	2019		2018		2019		2018
Distributions paid from:
Ordinary income	$	22,775,946	$	20,624,727	$	163,526,289	$	164,276,373


	Franklin Low Duration Total Return Fund				Franklin Total Return Fund
	2019		2018		2019		2018
Distributions paid from:
Ordinary income	$	102,326,577	$	85,070,570	$	141,679,682	$	129,581,343
Return of capital		—		—		—		2,794,205

	$	102,326,577	$	85,070,570	$	141,679,682	$	132,375,548



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5. Income Taxes(continued)

At October 31, 2019, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:


	Franklin Adjustable U.S. Government Securities Fund			Franklin Floating Rate Daily Access Fund			Franklin Low Duration Total Return Fund			Franklin Total Return Fund
Cost of investments	$	696,409,054		$	2,386,375,580		$	3,044,936,125		$	5,532,337,509


Unrealized appreciation	$	3,733,804		$	17,998,275		$	30,648,087		$	138,919,203
Unrealized depreciation		(4,043,817	)		(184,261,084	)		(57,845,275	)		(92,854,612	)


Net unrealized appreciation (depreciation)	$	(310,013	)	$	(166,262,809	)	$	(27,197,188	)	$	46,064,591


Distributable earnings:
Undistributed ordinary income	$	138,891		$	994,033		$	10,399,949		$	22,225,994

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

6. Investment Transactions

Purchases and sales of investments (excluding short term securities and in-kind transactions) for the year ended October 31, 2019, were as follows:


	Franklin Adjustable U.S. Government Securities Fund		Franklin Floating Rate Daily Access Fund^a		Franklin Low Duration Total Return Fund^b		Franklin Total Return Fund^c
Purchases	$	90,754,949	$	670,461,184	$	1,634,278,128	$	8,518,996,889
Sales	$	202,332,588	$	1,711,301,798	$	1,539,266,462	$	7,782,931,144

^aPurchases and sales of investments excludes in-kind transactions of $48,327,921 and $57,966,627, respectively. See Note 3(f).

^bPurchases and sales of investments excludes in-kind transactions of $13,599,965 and $16,312,394, respectively. See Note 3(f).

^cPurchases and sales of investments excludes in-kind transactions of $7,164,514 and $8,593,432, respectively. See Note 3(f).

7. Credit Risk and Defaulted Securities

At October 31, 2019, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund and Franklin Total Return Fund had 78.8% and 11.3% and 11.8%, respectively, of their portfolio invested in high yield securities, senior secured floating rate loans, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.

Certain or all Funds held defaulted securities and/or other securities for which the income has been deemed uncollectible. At October 31, 2019, the aggregate value of these securities for Franklin Low Duration Total Return Fund and Franklin Total Return Fund represents less than 0.1% of each Fund’s net assets. The Funds discontinue accruing income on securities for which income has been deemed uncollectible and provide an estimate for losses on interest receivable. The securities have been identified in the accompanying Statements of Investments.



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8. Restricted Securities

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

At October 31, 2019, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:


Principal Amount/ Shares/ Units		Issuer	Acquisition Date		Cost		Value
	Franklin Floating Rate Daily Access Fund
	1,219,956	^aAppvion Operations Inc.		6/14/18 - 4/12/19	$	12,791,766	$	16,265,063
	170,300	^bRemington Outdoor Co. Inc., Litigation Units		5/16/18 - 4/12/19		—		—

		Total Restricted Securities(Value is 0.7% of Net Assets)			$	12,791,766	$	16,265,063

	Franklin Low Duration Total Return Fund
	24,739	^cAppvion Operations Inc.		4/12/19	$	334,607	$	329,838
	12,326,925	^dK2016470219 South Africa Ltd., A		4/15/13 - 2/01/17		92,078		8,155
	1,226,701	^dK2016470219 South Africa Ltd., B		2/01/17		911		812
	16,078	^eRemington Outdoor Co. Inc., Litigation Units		5/16/18 - 4/12/19		—		—

		Total Restricted Securities(Value is 0.0%^†of Net Assets)			$	427,596	$	338,805

	Franklin Total Return Fund
	13,033	^fAppvion Operations Inc.		4/12/19	$	176,272	$	173,760
	28,762,824	^gK2016470219 South Africa Ltd., A		4/15/13 - 2/01/17		221,469		19,029
	2,862,311	^gK2016470219 South Africa Ltd., B		2/01/17		2,125		1,894
	4,897	^hRemington Outdoor Co. Inc., Litigation Units		4/12/19		—		—

		Total Restricted Securities(Value is 0.0%^†of Net Assets)			$	399,866	$	194,683

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

^aThe Fund also invests in unrestricted securities of the issuer, valued at $45,636,106 as of October 31, 2019.

^bThe Fund also invests in unrestricted securities of the issuer, valued at $1,808,932 as of October 31, 2019.

^cThe Fund also invests in unrestricted securities of the issuer, valued at $564,625 as of October 31, 2019

^dThe Fund also invests in unrestricted securities of the issuer, valued at $2,280 as of October 31, 2019.

^eThe Fund also invests in unrestricted securities of the issuer, valued at $170,787 as of October 31, 2019.

^fThe Fund also invests in unrestricted securities of the issuer, valued at $297,447 as of October 31, 2019.

^gThe Fund also invests in unrestricted securities of the issuer, valued at $5,321 as of October 31, 2019.

^hThe Fund also invests in unrestricted securities of the issuer, valued at $52,019 as of October 31, 2019.



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9. Other Derivative Information

At October 31, 2019, investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:


	Asset Derivatives				Liability Derivatives


Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Assets and Liabilities Location	Fair Value			Statements of Assets and Liabilities Location	Fair Value

Franklin Floating Rate Daily Access Fund

Credit contracts	Variation margin on centrally cleared swap contracts	$	—		Variation margin on centrally cleared swap contracts	$	369,172	^a


Franklin Low Duration Total Return Fund

Interest rate contracts	Variation margin on futures contracts	$	1,100,287	^a	Variation margin on futures contracts	$	2,331,833	^a

	Variation margin on centrally cleared swap contracts		—		Variation margin on centrally cleared swap contracts		878,075	^a

	Unrealized appreciation on OTC swap contracts		178,393		Unrealized depreciation on OTC swap contracts		58,069

Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		1,075,028		Unrealized depreciation on OTC forward exchange contracts		1,435,330

Credit contracts	Variation margin on centrally cleared swap contracts		536,882	^a	Variation margin on centrally cleared swap contracts		—

	OTC swap contracts (upfront payments)		808,826		OTC swap contracts (upfront receipts)		8,110,471

	Unrealized appreciation on OTC swap contracts		1,262,220		Unrealized depreciation on OTC swap contracts		1,925,736

Inflation contracts	Variation margin on centrally cleared swap contracts		—		Variation margin on centrally cleared swap contracts		390,377	^a


Totals		$	4,961,636			$	15,129,891


Franklin Total Return Fund

Interest rate contracts	Variation margin on futures contracts	$	663,563	^a	Variation margin on futures contracts	$	14,318,590	^a

	Variation margin on centrally cleared swap contracts		—		Variation margin on centrally cleared swap contracts		1,253,144	^a



	Unrealized appreciation on OTC swap contracts		173,508		Unrealized depreciation on OTC swap contracts		248,149

Foreign exchange contracts	Unrealized appreciation on OTC forward exchange contracts		2,423,861		Unrealized depreciation on OTC forward exchange contracts		4,432,397

Credit contracts	Variation margin on centrally cleared swap contracts		43,257	^a	Variation margin on centrally cleared swap contracts		—

	OTC swap contracts (upfront payments)		1,781,811		OTC swap contracts (upfront receipts)		17,180,107

	Unrealized appreciation on OTC swap contracts		3,064,812		Unrealized depreciation on OTC swap contracts		3,961,054

Inflation contracts	Variation margin on centrally cleared swap contracts		—		Variation margin on centrally cleared swap contracts		416,659	^a

	Unrealized appreciation on OTC swap contracts		181,988		Unrealized depreciation on OTC swap contracts		—

Value recovery instruments	Investments in securities, at value		446,532	^b


Totals		$	8,779,332			$	41,810,100



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^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts and centrally cleared swap contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at year end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

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

For the year ended October 31, 2019, the effect of derivative contracts in the Statements of Operations was as follows:


Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Operations Location	Net Realized Gain (Loss) for the Year			Statements of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Year

	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Franklin Floating Rate Daily Access Fund

Credit contracts	Swap contracts	$	(637,127	)	Swap contracts	$	403,994
Franklin Low Duration Total Return Fund

Interest rate contracts	Futures contracts	$	435,648		Futures contracts	$	(745,594	)

	Swap contracts		3,778,342		Swap contracts		332,991

Foreign exchange contracts	Forward exchange contracts		2,986,966		Forward exchange contracts		(892,430	)

Credit contracts	Swap contracts		2,471,514		Swap contracts		1,352,368

Inflation contracts	Swap contracts		(6	)	Swap contracts		(918,222	)


Totals		$	9,672,464			$	(870,887	)

Franklin Total Return Fund

Interest rate contracts	Futures contracts	$	53,987,564		Futures contracts	$	(4,304,163	)

	Swap contracts		1,268,739		Swap contracts		(2,861,804	)

Foreign exchange contracts	Forward exchange contracts		8,135,522		Forward exchange contracts		(3,162,825	)

Credit contracts	Swap contracts		2,588,886		Swap contracts		3,655,435

Inflation contracts	Swap contracts		(6	)	Swap contracts		(2,054,874	)

Value recovery instruments	Investments		—		Investments		202,062	^a


Totals		$	65,980,705			$	(8,526,169	)

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

For the year ended October 31, 2019, the average month end notional amount of futures contracts, options and swap contracts, and the average month end contract value for forward exchange contracts, and average month end fair value of VRI, were as follows:


	Franklin Floating Rate Daily Access Fund		Franklin Low Duration Total Return Fund		Franklin Total Return Fund

Futures Contracts	$	—	$	751,922,256	$	1,108,682,978

Swap contracts		45,180,615		480,534,131		652,496,233

Forward exchange contracts		—		118,539,714		311,874,474

VRI		—		—		333,915



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9. Other Derivative Information(continued)

At October 31, 2019, the Funds’ OTC derivative assets and liabilities are as follows:


	Gross Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities
	Assets^a		Liabilities^a

Derivatives
Franklin Low Duration
Total Return Fund
Forward exchange contracts		$1,075,028		$ 1,435,330
Swap contracts		2,249,439		10,094,276

Total		$3,324,467		$11,529,606
Franklin Total
Return Fund
Forward exchange contracts		2,423,861		4,432,397
Swap contracts		5,202,119		21,389,310

Total		$7,625,980		$25,821,707

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.

At October 31, 2019, OTC derivative assets, which may be offset against OTC derivative liabilities and collateral received from the counterparty, are as follows:


			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Received		Cash Collateral Received^a			Net Amount (Not less than zero)

Franklin Low Duration Total Return Fund
Counterparty
BNDP		$ 78,108		$ (18,404	)		$ —		$ —			$ 59,704
BZWS		201,489		(201,489	)		—		—			—
CITI		1,191,911		(1,191,911	)		—		—			—
DBAB		—		—			—		—			—
FBCO		19,666		—			—		—			19,666
GSCO		104,720		(35,480	)		—		(69,240	)		—
JPHQ		1,545,158		(1,545,158	)		—		—			—
MSCO		183,415		—			—		—			183,415

Total		$3,324,467		$(2,992,442	)		$ —		$(69,240	)		$262,785



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			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Received^a,b			Cash Collateral Received			Net Amount (Not less than zero)

Franklin Total Return Fund
Counterparty
BNDP		$ 170,382		$ (42,331	)		$(128,051	)		$ —			$ —
BZWS		528,218		(528,218	)		—			—			—
CITI		2,489,625		(2,489,625	)		—			—			—
DBAB		311,755		(9,824	)		(301,931	)		—			—
FBCO		127,826		—			—			(120,000	)		7,826
GSCO		290,451		—			—			(260,000	)		30,451
JPHQ		3,229,254		(3,229,254	)		—			—			—
MSCO		478,469		—			—			(70,000	)		408,469

Total		$7,625,980		$(6,299,252	)		$(429,982	)		$(450,000	)		$446,746

At October 31, 2019, OTC derivative liabilities, which may be offset against OTC derivative assets and collateral pledged to the counterparty, are as follows:
			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged			Cash Collateral Pledged^a			Net Amount (Not less than zero)

Franklin Low Duration Total Return Fund
Counterparty
BNDP		$ 18,404		$ (18,404	)		$ —			$ —			$ —
BZWS		575,414		(201,489	)		—			(370,000	)		3,925
CITI		7,145,518		(1,191,911	)		—			(5,850,000	)		103,607
DBAB		15,185		—			—			—			15,185
FBCO		—		—			—			—			—
GSCO		35,480		(35,480	)		—			—			—
JPHQ		3,739,605		(1,545,158	)		—			(2,194,447	)		—
MSCO		—		—			—			—			—

Total		$11,529,606		$(2,992,442	)		$ —			$(8,414,447	)		$122,717



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9. Other Derivative Information(continued)


			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledged		Cash Collateral Pledged			Net Amount (Not less than zero)

Franklin Total Return Fund
Counterparty
BNDP		$ 42,331		$ (42,331	)		$ —		$ —			$ —
BZWS		954,656		(528,218	)		—		(410,000	)		16,438
CITI		15,978,816		(2,489,625	)		—		(13,220,000	)		269,191
DBAB		9,824		(9,824	)		—		—			—
FBCO		—		—			—		—			—
GSCO		—		—			—		—			—
JPHQ		8,836,080		(3,229,254	)		—		(5,490,000	)		116,826
MSCO		—		—			—		—			—

Total		$25,821,707		$(6,299,252	)		$ —		$(19,120,000	)		$402,455

^aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

^bAt October 31, 2019, the Fund received U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

See Note 1(e) regarding derivative financial instruments.

See Abbreviations on page 165.

10. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the year ended October 31, 2019, investments in “affiliated companies” were as follows:


Name of Issuer		Value at Beginning of Year	Purchases	^a	Sales	Realized Gain (Loss)	Net Change in Unrealized Appreciation (Depreciation)			Value at End of Year	Number of Shares/ Units Held at End of Year		Investment Income

Franklin Floating Rate Daily Access Fund
Non-Controlled Affiliates

												Dividends
Appvion Operations Inc.	$	11,581,914	$1,189,036		$ —	$ —	$ 3,494,113		$	16,265,063	1,219,956		$ —
Remington Outdoor Co. Inc.		18,876,774	447,384		—	—	(17,515,226	)		1,808,932	1,808,932		—
Remington Outdoor Co. Inc., Litigation Units		—	—		—	—	—			—	170,300		—


	$	30,458,688	$1,636,420		$ —	$ —	$(14,021,113	)	$	18,073,995			$ —



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Name of Issuer		Value at Beginning of Year		Purchases	^a		Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Value at End of Year	Number of Shares/ Units Held at End of Year		Investment Income

Franklin Floating Rate Daily Access Fund(continued)
Non-Controlled Affiliates(continued)

																	Interest
Appvion Operations Inc., Term Loan, 6/15/26	$	53,498,450	$	2,031,391		$	(10,313,074	)^b	$	15,659	$	403,680		$	45,636,106	45,184,263	$	4,180,654

Total Affiliated Securities(Value is 2.9% of Net Assets)	$	83,957,138		$3,667,811		$	(10,313,074	)		$15,659		$(13,617,433	)	$	63,710,101			$4,180,654

^aPurchases were the result of an in-kind transfer of securities.

^bMay include accretion, amortization, partnership adjustments, and/or other cost basis adjustments.

11. Upcoming Acquisitions/Mergers

On July 17, 2019, the Board for Franklin Investors Securities Trust approved a proposal to reorganize Franklin Real Return Fund with and into Franklin Total Return Fund, subject to approval by the shareholders of Franklin Real Return Fund.

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 billion (Global Credit Facility) which matures on February 7, 2020. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Funds shall, in addition to interest charged on any borrowings made by the Funds and other costs incurred by the Funds, pay their share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon their relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the year ended October 31, 2019, the Funds did not use the Global Credit Facility.

13. Fair Value Measurements

The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:

•

Level 1 – quoted prices in active markets for identical financial instruments

•

Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)

•

Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.



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13. Fair Value Measurements(continued)

A summary of inputs used as of October 31, 2019, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total

Franklin Adjustable U.S. Government Securities Fund
Assets:
Investments in Securities:^a
Mortgage-Backed Securities	$	—	$	651,600,061	$	—		$	651,600,061
Short Term Investments		35,052,748		9,446,232		—			44,498,980


Total Investments in Securities	$	35,052,748	$	661,046,293	$	—		$	696,099,041

Franklin Floating Rate Daily Access Fund
Assets:
Investments in Securities:^a
Equity Investments:^b
Diversified Support Services	$	—	$	—	$	1,808,932		$	1,808,932
Forest Products		—		—		16,265,063			16,265,063
Oil & Gas Exploration & Production		—		9,304,727		—			9,304,727
All Other Equity Investments		56,546,081		—		—			56,546,081
Corporate Bonds		—		19,514,042		—			19,514,042
Senior Floating Rate Interests:
Personal Products		—		2,705,400		61,403,599			64,108,999
All Other Senior Floating Rate Interests		—		1,754,039,571		—			1,754,039,571
Asset-Backed Securities		—		195,919,781		—			195,919,781
Escrows and Litigation Trusts		—		—		—	^c		—
Short Term Investments		103,958,277		—		—			103,958,277


Total Investments in Securities	$	160,504,358	$	1,981,483,521	$	79,477,594		$	2,221,465,473

Liabilities:
Other Financial Instruments:
Swap Contracts	$	—	$	369,172	$	—		$	369,172



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	Level 1		Level 2		Level 3			Total


Franklin Low Duration Total Return Fund
Assets:
Investments in Securities:^a
Equity Investments:^b
Commercial & Professional Services	$	—	$	—	$	170,787		$	170,787
Energy		41,414		—		4,511	^c		45,925
Materials		20,561		—		329,838			350,399
Retailing		—		—		8,967			8,967
All Other Equity Investments		56,265,464		—		—			56,265,464
Corporate Bonds:
Retailing		—		30,825,666		2,280			30,827,946
All Other Corporate Bonds		—		645,756,147		—			645,756,147
Senior Floating Rate Interests:
Household & Personal Products		—		—		3,233,528			3,233,528
All Other Senior Floating Rate Interests		—		71,230,030		—			71,230,030
Marketplace Loans		—		—		24,471,922			24,471,922
Foreign Government and Agency Securities		—		146,244,899		—			146,244,899
U.S. Government and Agency Securities		—		362,945,784		—			362,945,784
Asset-Backed Securities and Commercial Mortgage-Backed Securities		—		1,407,284,840		—			1,407,284,840
Mortgage-Backed Securities		—		81,023,056		—			81,023,056
Municipal Bonds		—		87,437,749		—			87,437,749
Escrows and Litigation Trusts		—		—		—	^c		—
Short Term Investments		108,041,040		2,030,000		—			110,071,040

Total Investments in Securities	$	164,368,479	$	2,834,778,171	$	28,221,833		$	3,027,368,483

Other Financial Instruments:
Futures Contracts	$	1,100,287	$	—	$	—		$	1,100,287
Forward Exchange Contracts		—		1,075,028		—			1,075,028
Swap Contracts		—		1,977,495		—			1,977,495

Total Other Financial Instruments	$	1,100,287	$	3,052,523	$	—		$	4,152,810


Liabilities:
Other Financial Instruments:
Futures Contracts	$	2,331,833	$	—	$	—		$	2,331,833
Forward Exchange Contracts		—		1,435,330		—			1,435,330
Swap Contracts		—		3,252,257		—			3,252,257

Total Other Financial Instruments	$	2,331,833	$	4,687,587	$	—		$	7,019,420



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13. Fair Value Measurements (continued)


	Level 1		Level 2		Level 3			Total


Franklin Total Return Fund
Assets:
Investments in Securities:^a
Equity Investments:^b
Commercial & Professional Services	$	—	$	—	$	52,019		$	52,019
Consumer Services		—		—		34,113			34,113
Energy		184,136		—		10,552	^c		194,688
Materials		103,087		—		173,760			276,847
Retailing		—		—		20,923			20,923
All Other Equity Investments		408,042,431		—		—			408,042,431
Corporate Bonds:
Retailing		—		19,046,360		5,321			19,051,681
All Other Corporate Bonds		—		745,170,910		—			745,170,910
Senior Floating Rate Interests:
Household & Personal Products		—		—		1,703,435			1,703,435
All Other Senior Floating Rate Interests		—		137,321,538		—			137,321,538
Marketplace Loans		—		—		1,560,709			1,560,709
Foreign Government and Agency Securities		—		294,284,173		—			294,284,173
U.S. Government and Agency Securities		—		668,347,791		—			668,347,791
Asset-Backed Securities and Commercial
Mortgage-Backed Securities:
Banks		—		37,083,499		10,010			37,093,509
All Other Asset-Backed Securities and
Commercial Mortgage-Backed Securities		—		1,410,682,137		—			1,410,682,137
Mortgage-Backed Securities		—		1,352,312,148		—			1,352,312,148
Municipal Bonds		—		163,099,399		—			163,099,399
Escrows and Litigation Trusts		—		—		—	^c		—
Short Term Investments		373,627,760		—		—			373,627,760

Total Investments in Securities	$	781,957,414	$	4,827,347,955	$	3,570,842		$	5,612,876,211

Other Financial Instruments:
Futures Contracts	$	663,563	$	—	$	—		$	663,563
Forward Exchange Contracts		—		2,423,861		—			2,423,861
Swap Contracts		—		3,463,565		—			3,463,565

Total Other Financial Instruments	$	663,563	$	5,887,426	$	—		$	6,550,989


Liabilities:
Other Financial Instruments:
Futures Contracts	$	14,318,590	$	—	$	—		$	14,318,590
Forward Exchange Contracts		—		4,432,397		—			4,432,397
Swap Contracts		—		5,879,006		—			5,879,006

Total Other Financial Instruments	$	14,318,590	$	10,311,403	$	—		$	24,629,993

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

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

^cIncludes securities determined to have no value at October 31, 2019.



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A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the year. At October 31, 2019, the reconciliation of assets, is as follows:


	Balance at Beginning of Year			Purchases			Sales		Transfer Into(Out of) Level 3		Cost Basis Adjustments^a		Net Realized Gain (Loss)		Net Unrealized Appreciation (Depreciation)				Balance at End of Year			Net Change in Unrealized Appreciation (Depreciation) on Assets Held at Year End

Franklin Floating Rate Daily Access Fund
Assets:
Investments in Securities:																		��
Equity Investments:^b
Diversified Support Services	$	18,876,774		$	447,384	^d	$	—	$	—	$	—	$	—	$	(17,515,226	)		$	1,808,932		$	(17,515,226	)
Forest Products		11,581,914			1,189,036	^d		—		—		—		—		3,494,113				16,265,063			3,494,113
Senior Floating Rate Interests:
Personal Products		45,928,772			11,146,386	^d		—		—		4,261,188		—		67,253				61,403,599			67,253
Escrows and Litigation Trusts		—	^c		—	^c,d		—		—		—		—		—				—	^c		—

Total Investments in Securities	$	76,387,460		$	12,782,806		$	—	$	—	$	4,261,188	$	—	$	(13,953,860	)		$	79,477,594		$	(13,953,860	)

^aMay include accretion, amortization, partnership adjustments, and/or other cost basis adjustments.

^bIncludes common stocks and other equity interests.

^cIncludes securities determined to have no value.

^dIncludes securities received as a result of an in-kind transfer.



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13. Fair Value Measurements(continued)

Significant unobservable valuation inputs for material Level 3 financial instruments and impact to fair value as a result of changes in unobservable valuation inputs as of October 31, 2019, are as follows:

Description

Fair Value at

End of Year

Valuation Technique

Unobservable Input

Amount/Range

(Weighted

Average^a)

Impact to Fair

Value if Input

Increases^b

Franklin Floating Rate Daily Access Fund

Assets:

Investments in Securities:

Equity Investments:

Forest Products

16,265,063

Discounted cash flow

Weighted average cost of capital

17.7%

Decrease^c

Total unlevered free cashflows

$162.0 mil

Increase^c

Discount for lack of marketability

20.0%

Decrease^d

Long term growth

0.0%

Increase

Senior Floating Rate

Interests:

Personal Products

61,403,599

Discounted cash flow

Discount rate

10.8% - 13.3%
(12.8%)

Decrease^c

Free cash flow

$15.9 - $65.3 mil

Increase^d

(54.5) mil

All Other Investments^e

1,808,932

Total

79,477,594

^aWeighted based on the relative fair value of the financial instruments.

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

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

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

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

^fIncludes securities determined to have no value at October 31, 2019.

14. Subsequent Events

The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure, except for the following:

On December 6, 2019, Franklin Low Duration Total Return Fund (Surviving Fund), pursuant to a plan of reorganization approved on October 18, 2019, by shareholders of Franklin Flexible Alpha Bond Fund (Acquired Fund), a series of Franklin Strategic Series, acquired 100% of the Acquired Fund’s net assets, primarily made up of investment securities, through a tax-free exchange of shares of the Surviving Fund for the net assets of the Acquired Fund. Capital losses obtained by the Surviving Fund may be carried over to offset future capital gains, subject to certain limitations.



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NOTES TO FINANCIAL STATEMENTS

Abbreviations


Counterparty		Currency		Selected Portfolio

BNDP	BNP Paribas SA	BRL	Brazilian Real	AGMC	Assured Guaranty Municipal Corp.
BZWS	Barclays Bank PLC	CNY	Chinese Yuan	ARM	Adjustable Rate Mortgage
CITI	Citigroup, Inc.	COP	Colombian Peso	BZDIOVRA	Brazil Cetip DI Interbank Deposit Rate
DBAB	Deutsche Bank AG	DKK	Danish Krone	CLO	Collateralized Loan Obligation
FBCO	Credit Suisse Group AG	DOP	Dominican Peso	CME	Chicago Mercantile Exchange
GSCO	The Goldman Sachs Group, Inc.	EUR	Euro	CMT	Constant Maturity Treasury Index
JPHQ	JP Morgan Chase & Co.	JPY	Japanese Yen	CNRR	China Reverse Repo Rate
MSCO	Morgan Stanley	USD	United States Dollar	COF	Cost of Funds
		UYU	Uruguayan Peso	CPI	Consumer Price Index
		ZAR	South Africa C Rand	ETF	Exchange Traded Fund
				FRN	Floating Rate Note
				GDP	Gross Domestic Product
				GO	General Obligation
				IO	Interest Only
				LIBOR	London InterBank Offered Rate
				MBS	Mortgage-Backed Security
				PIK	Payment-In-Kind
				RDA	Redevelopment Agency/Authority
				REIT	Real Estate Investment Trust
				SF	Single Family
				T-Bill	Treasury Bill
				T-Note	Treasury Note
				VRI	Value Recovery Instruments


Index

CDX.NA.HY.Series number		CDX North America High Yield Index
CDX.NA.IG.Series number		CDX North America Investment Grade Index
MCDX.NA.Series number		MCDX North America Index



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Report of Independent Registered Public Accounting Firm

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

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Adjustable U.S. Government Securities Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund, and Franklin Total Return Fund (the “Funds”) as of October 31, 2019, the related statements of operations for the year ended October 31, 2019, the statements of changes in net assets for each of the two years in the period ended October 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended October 31, 2019 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

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

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

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

San Francisco, California

December 17, 2019

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



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Tax Information (unaudited)

Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended October 31, 2019:


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

$22,297,697	$	153,191,126		$90,477,655	$	123,612,966



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Board Members and Officers

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


Independent Board Members
Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Harris J. Ashton (1932) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1986	135	Bar-S Foods (meat packing company) (1981-2010).

Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).

Terrence J. Checki (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2017	114	Hess Corporation (exploration of oil and gas) (2014-present).

Principal Occupation During at Least the Past 5 Years: Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999-present); member of the Board of Trustees of the Economic Club of New York (2013-present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; andformerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee (1995-2014); and Visiting Fellow at the Council on Foreign Relations (2014).

Mary C. Choksi (1950) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2014	135	Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present).

Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987–2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987).

Edith E. Holiday (1952) One Franklin Parkway San Mateo, CA 94403-1906	Lead Independent Trustee	Since 1998 and Lead Independent Trustee since March 2019	135	Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013).
Principal Occupation During at Least the Past 5 Years: Director or Trustee of various companies and trusts; andformerly, 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).



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Independent Board Members(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

J. Michael Luttig (1954) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2009	135	Boeing Capital Corporation (aircraft financing) (2006-2013).

Principal Occupation During at Least the Past 5 Years: Executive Vice President, Counselor and Senior Advisor to Boeing Chairman and Board of Directors, The Boeing Company (aerospace company) (May 2019); andformerly, General Counsel and member of the Executive Council, The Boeing Company (2006-2019) and Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).

Larry D. Thompson (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	135	The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012).
Principal Occupation During at Least the Past 5 Years: Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); andformerly, 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).

Interested Board Members and Officers
Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2013	147	None

Principal Occupation During at Least the Past 5 Years: Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 39 of the investment companies in Franklin Templeton; Vice Chairman, Investment Company Institute; andformerly, President, Franklin Resources, Inc. (1994-2015).

**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906	Chairman of the Board, Trustee and Vice President	Chairman of the Board since 2013, Trustee since 1987 and Vice President since 1986	135	None

Principal Occupation During at Least the Past 5 Years: Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; 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.

Reema Agarwal (1974) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since April 2019	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Senior Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton.



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Interested Board Members and Officers(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2012	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton.

Gaston Gardey (1967) One Franklin Parkway San Mateo, CA 94403-1906	Treasurer, Chief Financial Officer and Chief Accounting Officer	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years: Treasurer, U.S. Fund Administration & Reporting and officer of 24 of the investment companies in Franklin Templeton.

Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton; Vice President and Secretary, Franklin Resources, Inc.; and officer of 41 of the investment companies in Franklin Templeton.

Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906	Vice President and Co- Secretary	Vice President since 2009 and Co-Secretary since January 2019	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton.

Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906	Chief Executive Officer – Finance and Administration	Since 2017	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017).

Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906	Vice President –AML Compliance	Since 2016	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton.



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Interested Board Members and Officers(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2013	Not Applicable	Not Applicable
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 41 of the investment companies in Franklin Templeton.

Edward D. Perks (1970) One Franklin Parkway San Mateo, CA 94403-1906	President and Chief Executive Officer – Investment Management	Since December 2018	Not Applicable	Not Applicable

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).

Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Chief Compliance Officer	Since 2013	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Director, Global Compliance, Franklin Templeton; Vice President, Franklin Templeton Companies, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Senior Associate General Counsel, Franklin Templeton (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013).

Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2015	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton.

Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2005	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years: General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton.

Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President and Co- Secretary	Vice President since 2011 and Co-Secretary since January 2019	Not Applicable	Not Applicable

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 41 of the investment companies in Franklin Templeton.

*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 officer and director and major shareholder of Resources.

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

Note 2: Effective March 12, 2019, John B. Wilson ceased to be a trustee of the Trust.



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Note 3: 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 currently serves as a director of Avis Budget Group, Inc. (2007-present) 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.



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Shareholder Information

Proxy Voting Policies and Procedures

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

Quarterly Statement of Investments

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



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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 Investors Securities Trust

Investment Manager	Subadvisor	Distributor	Shareholder Services
Franklin Advisers, Inc.	Franklin Templeton	Franklin Templeton	(800) 632-2301
	Institutional, LLC	Distributors, Inc.
		(800) DIAL BEN^® /342-5236
		franklintempleton.com


© 2019 Franklin Templeton Investments. All rights reserved.		FIST2 A 12/19

LOGO


		Franklin Convertible Securities Fund

		Franklin Equity Income Fund

		Franklin Managed Income Fund *Formerly, Franklin Balanced Fund*

Franklin Real Return Fund

SHAREHOLDER LETTER

Dear Shareholder:

During the 12 months ended October 31, 2019, the U.S. economy continued to grow, but at a more moderate pace mainly due to concerns about trade. The U.S. Federal Reserve (Fed) raised the federal funds rate by 0.25% at its December 2018 meeting, increasing the rate from 2.25% to 2.50%, but lowered it by 0.25% at each of its July, September and October 2019 meetings, resulting in a rate of 1.75% byperiod-end. The Fed cited muted inflation pressures and the potential effects of global trade tensions on economic growth as rationale for easing the rate. The10-year U.S. Treasury yield began the period at 3.15% and decreased to 1.69% atperiod-end.

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.

with a well-diversified portfolio and a patient, long-term outlook should be well positioned for the years ahead.

Franklin Investors Securities Trust’s annual report, covering Franklin Convertible Securities Fund, Franklin Equity Income Fund, Franklin Managed Income Fund and Franklin Real Return Fund, includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.

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

Sincerely,

LOGO

Rupert H. Johnson, Jr.

Chairman

Franklin Investors Securities Trust

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

Not FDIC Insured | May Lose Value | No Bank Guarantee



franklintempleton.com	Not part of the annual report	1

Contents



Annual Report

Economic and Market Overview			3

Franklin Convertible Securities Fund			4

Franklin Equity Income Fund			11

Franklin Managed Income Fund			18

Franklin Real Return Fund			27

Financial Highlights and Statements of Investments			33

Financial Statements			68

Notes to Financial Statements			74

Report of Independent Registered Public Accounting Firm			92

Tax Information			93

Board Members and Officers			94

Shareholder Information			99



Visitfranklintempleton.comfor fund updates, to access your account, or to find helpful financial planning tools.



2	Annual Report	franklintempleton.com

ANNUAL REPORT

Economic and Market Overview

U.S. equity markets overall rose during the period, benefiting from upbeat economic data and U.S. corporate earnings, the Fed’s 2019 interest-rate cuts and investor optimism about further monetary easing. However, markets reflected concerns about tighter regulation of technology companies, the Fed’s December 2018 rate increase, U.S. political uncertainties (including the impeachment inquiry into President Donald Trump), geopolitical tensions in certain regions, and the impact of U.S. trade disputes with China and other trading partners on global growth and corporate earnings. These concerns were partly alleviated at certain points during the period by occasional easing of trade tensions and optimism about a potential U.S.-China trade deal. The broad U.S. stock market, as measured by the Standard & Poor’s 500 Index (S&P 500), recovered from heightened volatility in December 2018 as well as May and August 2019,

reaching newall-time highs in October amid a number of better-than-expected corporate earnings reports, investor optimism about a potential phase one of the U.S.-China trade agreement and the Fed’s third successive rate cut. Overall, the S&P 500 posted a +14.33% total return for the12-month period.²

1. Source: Bureau of Labor Statistics

2. Source: Morningstar.

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



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Franklin Convertible Securities Fund

This annual report for Franklin Convertible Securities Fund covers the fiscal year ended October 31, 2019. The Fund closed to new investors with limited exceptions on August 29, 2018. Existing investors may continue to purchase additional shares of the Fund.

Your Fund’s Goal and Main Investments

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

Performance Overview

For the 12 months under review, the Fund’s Class A shares posted a +13.84% cumulative total return. In comparison, the Fund’s benchmark, the ICE BofA Merrill Lynch (BofAML) All Alternatives U.S. Convertibles Index, which tracks the domestic convertible securities market, posted a +14.66% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 7.

Investment Strategy

When choosing convertible securities for the Fund, we attempt to maintain a balance in the portfolio between the equity and debt characteristics of convertible securities with an emphasis on the equity features. We also consider the company’s long-term earnings, asset value and cash flow potential. By investing in convertible securities, the Fund seeks the opportunity to participate in the capital appreciation of underlying stocks, while at the same time relying on the fixed income aspect of the convertible securities to provide current income and reduced price volatility, which can limit the risk of loss in a down equity

Portfolio Composition

Based on Total Net Assets as of 10/31/19

LOGO

market. Some of the convertible securities in which the Fund may invest have been structured to provide enhanced yield, increased equity exposure or enhanced downside protection. These securities typically provide a benefit to the issuer in exchange for the enhanced features, such as a conversion premium that is paid by the Fund. We may invest in convertible securities of companies of any capitalization size, but we generally seek to make the portfolio representative of the entire convertible securities market.

Manager’s Discussion

The information technology (IT), consumer discretionary and utilities sectors contributed most to Fund performance during the period. Among a number of IT positions that contributed notably to performance, the Fund’s holdings of convertible bonds issued by enterprise-grade identity management services provider Okta, software hosting services provider Atlassian and enterprise IT management software provider ServiceNow were top contributors. Okta issued lower fiscal-year 2020 earnings guidance due to anticipated investments related to its acquisition of Azuqua (not a Fund holding) and efforts to capture new cloud customers. However, shares of Okta benefited from better-than-expected revenue and financial results during the period, and we believe the company’s larger number of third-party, niche integrations, better reliability and growing platform of identity solutions may give it an advantage over competitors. Shares of Atlassian were propelled by higher-than-ever fiscal 2019 revenue and a record number of customers for its cloud platform automation products, including Trello and Jira.

1. Source: Morningstar.

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 37.



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FRANKLIN CONVERTIBLE SECURITIES FUND

Top 10 Holdings

10/31/19


Company *Sector/Industry*	% of Total Net Assets

Microchip Technology Inc. Information Technology		2.4%
Sempra Energy Utilities		2.3%
RH ConsumerDiscretionary		2.1%
Insulet Corp. Health Care		2.1%
Viavi Solutions Inc. Information Technology		2.1%
Illumina Inc. Health Care		2.0%
Broadcom Inc. Information Technology		2.0%
DocuSign Inc. InformationTechnology		2.0%
DexCom Inc. Health Care		2.0%
Okta Inc. Information Technology		2.0%

In consumer discretionary, our holdings of convertible bonds issued bye-commerce company Etsy and online commerce platform provider MercadoLibre contributed to performance. Shares of Etsy advanced as the company raised fees and improved its site functionality and sellers experienced increased business growth and exposure. In utilities, our holdings of a security convertible into shares of electric and gas utilities holding company Sempra Energy contributed to performance. In other sectors, our holdings of convertible preferred stocks issued by diabetes medical device company Insulet also aided performance.

In contrast, the materials and energy sectors detracted from Fund performance. In the materials and energy sectors, our holdings in convertible preferred stocks issued by manufacturer International Flavors & Fragrances and convertible bonds issued by oil and gas services company Oil States International detracted from performance. Shares of International Flavors & Fragrances declined based on concerns about the company’s investigation of its Frutarom business acquired last year and disappointing quarterly results.

In other sectors, our holdings in convertible bonds issued by commercial-stage biopharmaceutical companies Sarepta

Therapeutics and Clovis Oncology (not held atperiod-end) and credit card payment processing solutions company Square also hindered performance. Biotechnology company valuations suffered during the period as key U.S. politicians, including presidential candidates, pushed for drug pricing reform. Sarepta’s stock price fell after U.S. Food and Drug Administration regulators raised concerns over two of the company’s important drug candidates aimed at treating Duchenne muscular dystrophy. Clovis reported net losses due to higher selling and research and development expenses and a regulatory settlement.

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


		Alan E. Muschott, CFA

		Matthew D. Quinlan
		Eric Webster, CFA Portfolio Management Team

CFA^® is a trademark owned by CFA Institute.



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FRANKLIN CONVERTIBLE SECURITIES FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹

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, visitfranklintempleton.com.


Share Class	Cumulative Total Return²			Average Annual Total Return³
A⁴
1-Year		+13.84	%	+7.59%

5-Year		+55.41	%	+7.99%

10-Year		+182.18	%	+10.31%

Advisor
1-Year		+14.18	%	+14.18%

5-Year		+57.36	%	+9.49%

10-Year		+189.24	%	+11.21%


	Distribution			30-Day Standardized Yield⁶

Share Class		Rate	⁵		(with fee waiver)	(without fee waiver)

A		1.94%			1.39%	1.39%


Advisor		2.29%			1.73%	1.73%

See page 9 for Performance Summary footnotes.



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FRANKLIN CONVERTIBLE SECURITIES FUND

PERFORMANCE SUMMARY

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 9 for Performance Summary footnotes.



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FRANKLIN CONVERTIBLE SECURITIES FUND

PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class	Net Investment Income		Long-Term Capital Gain		Total

A		$0.4535		$0.7531		$1.2066

C		$0.2793		$0.7531		$1.0324

R6		$0.5306		$0.7531		$1.2837

Advisor		$0.5079		$0.7531		$1.2610

Total Annual Operating Expenses⁸


Share Class	With Fee Waiver		Without Fee Waiver
A		0.85%		0.87%
Advisor		0.60%		0.62%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Convertible securities are subject to the risks of stocks when the underlying stock price is high relative to the conversion price (because more of the security’s value resides in the conversion feature) and debt securities when the underlying stock price is low relative to the conversion price (because the conversion feature is less valuable). A convertible security is not as sensitive to interest rate changes as a similarnon-convertible debt security, and generally has less potential for gain or loss than the underlying stock. The Fund may invest in high-yielding, fixed income securities. High yields reflect the higher credit risk associated with these lower-rated securities and, in some cases, the lower market prices for these instruments. Interest rate movements may affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. The Fund may also invest in foreign securities, which involve special risks, including political uncertainty and currency volatility. The Fund’s prospectus also includes a description of the main investment risks.

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 returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

5. Distribution rate is based on an annualization of the respective class’s past four quarterly dividends and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

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

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



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FRANKLIN CONVERTIBLE SECURITIES FUND

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Net Annualized Expense Ratio²

A	$1,000	$997.90	$4.18	$1,021.02	$4.23	0.83%
C	$1,000	$994.00	$7.94	$1,017.24	$8.03	1.58%
R6	$1,000	$999.70	$2.47	$1,022.74	$2.50	0.49%
Advisor	$1,000	$999.20	$2.92	$1,022.28	$2.96	0.58%

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



10	Annual Report	franklintempleton.com

Franklin Equity Income Fund

This annual report for Franklin Equity Income Fund covers the fiscal year ended October 31, 2019.

Your Fund’s Goal and Main Investments

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

Performance Overview

For the 12 months under review, the Fund’s Class A shares posted a +12.73% cumulative total return. In comparison, the Fund’s benchmark, the Standard & Poor’s 500 Index (S&P 500), which tracks the broad U.S. stock market, posted a +14.33% total return.¹ The Fund’s peers, as measured by the Lipper Equity Income Funds Classification Average, which consists of funds chosen by Lipper that seek relatively high current income and growth of income by investing at least 60% of their portfolios in stocks, posted a +10.90% total return.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 14.

Investment Strategy

Portfolio Composition

Based on Total Net Assets as of 10/31/19

LOGO

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

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

1. Source: Morningstar.

2. Source: Lipper, a Thomson Reuters Company. For the12-month period ended 10/31/19, this category consisted of 535 funds. Lipper calculations do not include sales charges, or expense subsidization by a fund’s manager. The Fund’s performance relative to the average may have differed if these and other factors had been considered. The indexes are unmanaged and include reinvestment of any income or distributions. They do not include any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.

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

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

The SOI begins on page 46.



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FRANKLIN EQUITY INCOME FUND

Manager’s Discussion

The information technology (IT), consumer staples and financials sectors contributed most to Fund performance during the period. Within IT, software and services firm Microsoft, a notable contributor, is a beneficiary of strong sales execution, a positive enterprise IT spending environment, its status as a critical partner to IT departments in this time of digital transformation, and a large installed base that is successfully moving to higher-value cloud andService-as-a-Software deployments. The company saw sustained strength in its enterprise cloud computing platform Azure, solid growth in its traditional server products and particularly strong growth in commercial bookings. Furthermore, the company continued to expand gross profit margins and control operational expenses.

In consumer staples, branded consumer packaged goods manufacturer Procter & Gamble (P&G) and beverage manufacturer PepsiCo were notable contributors. P&G’s product portfolio management and investment efforts have helped drive strong growth, and the stock rallied as more progress appears likely in the coming years, in our view. Recent quarterly sales increases have been among the fastest in over a decade. P&G has overcome headwinds, including cost increases, negative foreign currency moves and aggressive competition, to increase the breadth of its sales and achieve growth that easily surpassed consensus expectations and prior company guidance. In financials, leading banking companies JPMorgan Chase and Bank of America were top contributors. In other sectors, shares of NextEra Energy and Xcel Energy were boosted in recent months along with some other utilities as interest rates declined and investors sought less-cyclical stocks, underscoring the sector’s traditional role as a haven during times of market and economic uncertainty.

In contrast, the energy, materials and real estate sectors detracted from performance. In energy, Occidental Petroleum and Exxon Mobil hindered results. Shares of Occidental fell with oil prices during the period and its valuation was not helped by its leveraged acquisition of Anadarko Petroleum, which was not viewed as favorable by some investors. In materials, shares of manufacturer International Flavors & Fragrances (not held atperiod-end) declined based on concerns about the company’s investigation of its Frutarom business acquired last year and disappointing quarterly results. In the real estate sector, real estate investment trust Host Hotels and Resorts hurt performance.

In other sectors, industrial, safety and consumer technology products manufacturer 3M; health care products manufacturer Pfizer; and diversified financial services

Top 10 Holdings

10/31/19


Company *Sector/Industry*		% of Total Net Assets

JPMorgan Chase & Co. Financials		4.3%

Microsoft Corp. Information Technology		3.5%

Bank of America Corp. Financials		3.1%

The Procter & Gamble Co. Consumer Staples		2.7%

NextEra Energy Inc. Utilities		2.4%

The Coca-Cola Co. Consumer Staples		2.3%

Chevron Corp. Energy		2.3%

PepsiCo Inc. Consumer Staples		2.3%

Morgan Stanley Financials		2.3%

BB&T Corp. Financials		2.2%

company Wells Fargo were key detractors. The stock price of 3M was hurt by disappointing sales results due to slow growth in key end markets.



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FRANKLIN EQUITY INCOME FUND

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


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



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FRANKLIN EQUITY INCOME FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹

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, visitfranklintempleton.com.


Share Class	Cumulative Total Return²	Average Annual Total Return³

A⁴

1-Year	+12.73%	+6.51%

5-Year	+48.90%	+7.07%

10-Year	+190.10%	+10.61%

Advisor

1-Year	+13.04%	+13.04%

5-Year	+50.76%	+8.56%

10-Year	+197.51%	+11.52%


	Distribution			30-Day Standardized Yield⁶
Share Class		Rate	⁵		(with fee waiver)	�� (without fee waiver)

A		2.20%			1.67%	1.67%

Advisor		2.56%			2.02%	2.02%

See page 16 for Performance Summary footnotes.



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FRANKLIN EQUITY INCOME FUND

PERFORMANCE SUMMARY

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

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 16 for Performance Summary footnotes.



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FRANKLIN EQUITY INCOME FUND

PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class	Net Investment Income	Long-Term Capital Gain	Total

A	$0.5766	$0.9957	$1.5723

C	$0.3759	$0.9957	$1.3716

R	$0.5174	$0.9957	$1.5131

R6	$0.6587	$0.9957	$1.6544

Advisor	$0.6396	$0.9957	$1.6353

Total Annual Operating Expenses¹⁰
Share Class	With Fee Waiver	Without Fee Waiver
A	0.84%	0.85%
Advisor	0.59%	0.60%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Convertible securities are subject to the risks of stocks when the underlying stock price is high relative to the conversion price and debt securities when the underlying stock price is low relative to the conversion price. The Fund’s investment in foreign securities also involves special risks, including currency fluctuations and economic as well as political uncertainty. The Fund’s prospectus also includes a description of the main investment risks.

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. Distribution rate is based on an annualization of the respective class’s current quarterly dividend and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

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

8. Source: Lipper, a Thomson Reuters Company. The Lipper Equity Income Funds Classification Average is an equally weighted average calculation of performance figures for all funds within the Lipper Equity Income Funds classification in the LipperOpen-End underlying funds universe. Lipper Equity Income Funds seek relatively high current income and growth of income through investing 60% or more of their portfolios in equities. For theone-year period ended 10/31/19, there were 535 funds in this category. Lipper calculations do not include sales charges or expense subsidization by a fund’s manager. The Fund’s performance relative to the average may have differed if these or other factors had been considered.

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

10. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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



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FRANKLIN EQUITY INCOME FUND

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual		Hypothetical
		(actual return after expenses)		(5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Net Annualized Expense Ratio²

A	$1,000	$1,039.30	$4.42	$1,020.87	$4.38	0.86%
C	$1,000	$1,035.30	$8.26	$1,017.09	$8.19	1.61%
R	$1,000	$1,038.50	$5.65	$1,019.66	$5.60	1.10%
R6	$1,000	$1,041.30	$2.62	$1,022.63	$2.60	0.51%
Advisor	$1,000	$1,041.00	$3.14	$1,022.13	$3.11	0.61%

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



franklintempleton.com	Annual Report	17

Franklin Managed Income Fund

Formerly, Franklin Balanced Fund

This annual report for Franklin Managed Income Fund covers the fiscal year ended October 31, 2019. Effective March 1, 2019, Franklin Balanced Fund repositioned to become an income strategy and changed its name to Franklin Managed Income Fund.

Your Fund’s Goal and Main Investments

The Fund seeks to maximize income to support monthly distributions, while maintaining the prospects for capital appreciation by investing, under normal market conditions, in a diversified portfolio of stocks (substantially dividend paying) and debt securities. The Fund normally invests at least 25% of its total assets in debt securities, including bonds, notes, debentures and money market securities, and at least 25% of its total assets in equity securities, primarily common and preferred stock.

Portfolio Composition*

10/31/19


		% of Total Net Assets

Stocks		47.5%
Common Stocks		32.6%
Equity-Linked Securities		11.7%
Convertible Preferred Stocks		1.4%
Management Investment Companies		1.0%
Preferred Stocks		0.4%
Options Purchased		0.4%

Bonds		43.6%
Corporate Bonds		34.1%
U.S. Government and Agency Securities		8.0%
Mortgage-Backed Securities		1.1%
Convertible Bonds		0.4%

Short-Term Investments & Other Net Assets**		8.9%

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

Performance Overview

For the 12 months under review, the Fund’s Class A shares posted a cumulative total return of +12.64%. In comparison, the Fund’s new primary benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, which tracks the U.S.

investment-grade, taxable bond market, posted a +11.51% total return.¹ The Fund’s new secondary benchmark, the blended 25% ICE BofA Merrill Lynch (BofAML) U.S. Corporate & High Yield Index, 25% Bloomberg Barclays U.S. Aggregate Bond Index and 50% MSCI USA High Dividend Yield Index (Blended Benchmark), which is a combination of leading stock and bond indexes, posted a +12.72% total return.² The ICE BofAML U.S. Corporate & High Yield Index tracks the performance of U.S. dollar-denominated investment-grade corporate debt publicly issued in the U.S. domestic market, and below investment grade, but not in default, U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by credit rating agencies Moody’s and Standard & Poor’s. The MSCI USA High Dividend Yield Index is designed to reflect the performance of equities in the MSCI USA Index (excluding REITs) with higher dividend income and quality characteristics than average dividend yields that are both sustainable and persistent. The Bloomberg Barclays U.S. Aggregate Bond Index is replacing the Standard & Poor’s 500 Index (S&P 500) as the Fund’s primary benchmark. The investment manager believes the composition of the Bloomberg Barclays U.S. Aggregate Bond Index represents securities that align more closely with the markets in which the Fund invests. For the same reason, the Fund is adding the Blended Benchmark as a secondary benchmark. The Fund’s prior primary and current third benchmark, the S&P 500, which is a broad measure of U.S. stock performance, posted a +14.33% total return.¹ You can find the Fund’s long-term performance data in the Performance Summary beginning on page 22.

Investment Strategy

We apply abottom-up approach to investing in individual securities. We will assess the market price of a company’s

1. Source: Morningstar.

2. Source: FactSet. The Blended Benchmark was calculated internally and rebalanced monthly.

The indexes are unmanaged and include reinvestment of any income or distributions. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.

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

The SOI begins on page 55.



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FRANKLIN MANAGED INCOME FUND

securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio, profit margins and liquidation value. In determining an optimal mix of equity and fixed income investments for the Fund, we assess changing economic, market and industry conditions. The Fund seeks income by investing in a combination of corporate, agency and government bonds issued in the U.S. and other countries, as well as common stocks in any market capitalization and convertible securities. The Fund seeks capital appreciation by investing in equity securities and convertible securities of companies from a variety of industries. We may, from time to time, use for various purposes equity-related derivatives, including call and put options and futures on equity securities and equity indexes, options on equity index futures, as well as interest-rate, currency and credit-related derivatives. These purposes include enhancing Fund returns, increasing liquidity, gaining exposure to particular instruments or markets in more efficient or less expensive ways and/or hedging risks. The use of such derivative transactions may allow the Fund to obtain net long or short exposures to selected securities, markets, interest rates, countries, currencies, credits or durations.

What are put and call options?

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

What is a future?

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

What is duration?

Manager’s Discussion

Consistent with the Fund’s long-term strategy of investing across asset classes to seek to generate attractive income while seeking opportunities for capital appreciation, performance was supported by healthy diversification and double-digit total returns from both equity and fixed income holdings.

Dividend Distributions*

11/1/18–10/31/19


	Dividend per Share (cents)
Month	Class A		Class C		Class R		Class R6		Advisor Class
November		3.00		2.25		2.74		3.34	3.25
December		3.00		2.27		2.75		3.32	3.24
January		3.00		2.27		2.75		3.32	3.24
February		3.00		2.27		2.75		3.32	3.24
March		3.58		2.87		3.34		3.90	3.82
April		3.58		2.87		3.34		3.90	3.82
May		3.58		2.87		3.34		3.90	3.82
June		3.58		2.87		3.34		3.90	3.82
July		3.58		2.87		3.34		3.90	3.82
August		3.58		2.87		3.34		3.90	3.82
September		3.58		2.87		3.34		3.90	3.82
October		3.58		2.87		3.34		3.90	3.82
Total		40.64		32.02		37.71		44.50	43.53

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

During the 12 months under review, the Fund’s asset mix shifted toward a somewhat more cautious positioning to reflect uncertainty related to the slowdown in global economic activity, trade tensions, rising recession probability and weakening corporate earnings growth. Our actions and movements in equity and fixed income markets resulted in a decline in equity holdings from 56.2% to 47.5% of total net assets, and a rise in fixed income holdings from 39.2% to 43.6%. Our cash position increased from 4.6% to 8.9% of total net assets. The flexibility to use market volatility to invest in different asset classes remains a core strategy of the Fund.

Equities advanced largely based on optimism related to the U.S. Federal Reserve’s pivot from raising short-term interest rates at the start of the period, which was partially responsible for triggering a significant fourth-quarter 2018 selloff, to reversing course and cutting short-term rates several times while committing to a sustained period of monetary policy accommodation. Additionally, equities



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FRANKLIN MANAGED INCOME FUND

Top Five Equity Holdings

10/31/19


Company *Sector/Industry*		% of Total Net Assets
Intel Corp. Information Technology		2.1%
JPMorgan Chase & Co. Financials		2.1%
Apple Inc. Information Technology		1.9%
Broadcom Inc. Information Technology		1.7%
Texas Instruments Inc. Information Technology		1.6%

advanced toward the end of the period on the prospects for a phase 1 trade deal between the U.S. and China. For the time being, it appears an escalation of trade tensions and additional tariffs that would likely further curtail growth and threaten corporate profitability is less likely, in our view.

The Fund’s equity holdings in the information technology (IT), consumer staples, utilities and health care sectors led returns, but strength was broad-based as almost all equity sectors contributed to performance. Within the IT sector, our investments in semiconductor companies, including Analog Devices, Texas Instruments, Broadcom and Intel, benefited performance as corporate results continued to impress despite concerns around trade tensions disrupting their businesses. Microsoft was another key contributor as it experienced sustained strength in its enterprise cloud computing platform Azure, solid growth in its traditional server products and particularly strong growth in commercial bookings.

In consumer staples, Procter & Gamble was another top contributor as restructuring and investment efforts have helped drive strong growth, and the stock rallied as management gave details on the latest business expansion drivers. Nestle, PepsiCo and Coca-Cola were other sector contributors. The Fund’s focus on volatility management also contributed to performance as equity index put option positions were able to offset some of the broader equity market declines during the period, which benefited Fund returns.

Within health care, pharmaceuticals companies Astra-Zeneca, Bristol-Myers Squibb and AbbVie, and pharmacy services provider CVS Health helped performance. AstraZeneca reported robustsecond-and third-quarter 2019 earnings results and upgraded its sales guidance for two consecutive quarters, driving its shares to a record U.S. price.

Conversely, the Fund’s energy sector holdings dominated the detractors list for the12-month period, including Occidental Petroleum, Exxon Mobil and Chesapeake Energy. Shares of Occidental fell with oil prices during the period and its valuation was not helped by its leveraged acquisition of Anadarko Petroleum, which was not viewed favorably by some investors. In other sectors, Apple, FedEx International (not held atperiod-end) and Philip Morris International (not held atperiod-end) also detracted from performance.

Fixed income markets were supported by the significant decline in long-term interest rates during the period. After a period of short-term interest rate normalization, the Fed pivoted toward easing to offset the effects of a broad global slowdown and rising uncertainty related to trade policy going forward. The decline in market expectations for inflation also aided the rally in rates, which helped bolster long-duration fixed income holdings. Although showing select areas of distress in lower-rated corporate credit, overall yield spreads of investment-grade corporate bonds over U.S. Treasuries of comparable maturities remained near cycle lows, providing a favorable backdrop for strong total returns. In addition to the strong contribution from the Fund’s holdings of U.S. Treasuries, select corporate issuers posted attractive gains, including Capital One, CVS Health, Charter Communications³, NIKE and Citigroup. Energy holdings were among leading detractors, including Chesapeake Energy, Oceaneering International (not held atperiod-end) and Nabors Industries.

3. CCO Holdings/CCO Holdings Capital (Charter Communications subsidiaries) in the SOI. Charter Communications Operating Capital (also a Charter Communications subsidiary) was not held atperiod-end.

See franklintempletondatasources.com for additional data provider information.



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FRANKLIN MANAGED INCOME FUND

Top Five Fixed Income Holdings

10/31/19


Company *Sector/Industry*		% of Total Net Assets
U.S. Treasury Note Financials		8.0%
Capital One Financial Corp. Financials		1.2%
Morgan Stanley Financials		0.9%
Cigna Corp. Health Care		0.9%
CHS/Community Health Systems Inc. Health Care		0.9%

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

LOGO

Edward D. Perks, CFA

Brendan Circle, CFA

Todd Brighton, CFA

Alan E. Muschott, CFA

Shawn Lyons, CFA

Portfolio Management Team



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FRANKLIN MANAGED INCOME FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹

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, visitfranklintempleton.com.


Share Class	Cumulative Total Return²		Average Annual Total Return³

A⁴

1-Year		+12.64%	+6.47%


5-Year		+33.67%	+4.78%


10-Year		+127.37%	+7.95%


Advisor

1-Year		+12.96%	+12.96%


5-Year		+35.50%	+6.26%


10-Year		+134.04%	+8.88%


	Distribution		30-Day Standardized Yield⁶
Share Class	Rate⁵		(with fee waiver)	(without fee waiver)

A		3.17%	1.79%	1.79%

Advisor		3.57%	2.14%	2.14%

See page 25 for Performance Summary footnotes.



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PERFORMANCE SUMMARY

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

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

Class A(11/1/09–10/31/19)

LOGO

Advisor Class(11/1/09–10/31/19)

LOGO

See page 25 for Performance Summary footnotes.



franklintempleton.com	Annual Report	23

FRANKLIN MANAGED INCOME FUND

PERFORMANCE SUMMARY

Net Asset Value


Share Class(Symbol)	10/31/19		10/31/18		Change
A(FBLAX)		$ 12.80		$ 11.89		+$0.91
C(FBMCX)		$ 12.67		$ 11.78		+$0.89
R(FBFQX)		$ 12.84		$ 11.92		+$0.92
R6(FBFRX)		$ 12.85		$ 11.93		+$0.92
Advisor(FBFZX)		$ 12.84		$ 11.92		+$0.92

Distributions(11/1/18–10/31/19)

Share Class	Net Investment Income		Long-Term Capital Gain		Total
A		$0.4064		$0.1418		$0.5482
C		$0.3202		$0.1418		$0.4620
R		$0.3771		$0.1418		$0.5189
R6		$0.4450		$0.1418		$0.5868
Advisor		$0.4353		$0.1418		$0.5771

Total Annual Operating Expenses⁹

Share Class	With Fee Waiver		Without Fee Waiver
A		0.93%		0.96%
Advisor		0.68%		0.71%

See page 25 for Performance Summary footnotes.



24	Annual Report	franklintempleton.com

FRANKLIN MANAGED INCOME FUND

PERFORMANCE SUMMARY

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. The Fund’s share price and yield will be affected by interest rate movements. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s prospectus also includes a description of the main investment risks.

The Fund is not guaranteed to achieve its investment goal of making monthly distributions, while maintaining prospects for capital appreciation nor is there any guarantee that the Fund will provide sufficient income at or through the investor’s retirement. In addition, some of its distributions may be treated in part as a return of capital, which will decrease shareholders’ cost basis in the Fund and affect the amount of any capital gain or loss that they realize when selling or exchanging fund shares. The annual payout rate may be adjusted higher or lower from year to year and could vary substantially over time. It is possible for the Fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under the managed distribution policy. Investors who hold the Fund within atax-advantaged retirement account should consult their tax advisors to discuss tax consequences of receiving cash distributions. In addition, use of the Fund or election of the option to receive distribution payments in cash may be restricted in certain retirement plans by the terms of the governing plan documents and/or the discretion of the plan administrator. Investors are strongly advised to consult with their financial advisor for assistance before selecting the appropriate fund, based on their goals and personal situations, including time horizon, retirement income needs, risk tolerance and tax bracket.

1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 2/29/20. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. As of March 1, 2019, the Fund changed its name from Franklin Balanced Fund in connection with changes to its strategies including, among other things, the addition of an income generation strategy to support the Fund’s managed distribution policy.

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.

5. Distribution rate is based on an annualization of the respective class’s October dividend and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

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

8. FactSet. The Blended Benchmark (25% ICE BofAML U.S. Corporate & High Yield Index, 25% Bloomberg Barclays U.S. Aggregate Bond Index and 50% MSCI USA High Dividend Yield Index) is a combination of leading stock and bond indexes. The ICE BofAML U.S. Corporate & High Yield Index tracks the performance of U.S. dollar-denominated investment-grade corporate debt publicly issued in the U.S. domestic market, and below investment grade, but not in default, U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by credit rating agencies Moody’s and S&P. The MSCI USA High Dividend Yield Index is designed to reflect the performance of equities in the MSCI USA Index (excluding REITs) with higher dividend income and quality characteristics than average dividend yields that are both sustainable and persistent.

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



franklintempleton.com	Annual Report	25

FRANKLIN MANAGED INCOME FUND

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 5/1/19	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Ending Account Value 10/31/19	Expenses Paid During Period 5/1/19–10/31/19^1,²	Net Annualized Expense Ratio²

A	$1,000	$1,045.90	$4.64	$1,020.67	$4.58	0.90%
C	$1,000	$1,042.00	$8.49	$1,016.89	$8.39	1.65%
R	$1,000	$1,044.60	$5.93	$1,019.41	$5.85	1.15%
R6	$1,000	$1,048.20	$2.99	$1,022.28	$2.96	0.58%
Advisor	$1,000	$1,047.80	$3.36	$1,021.93	$3.31	0.65%

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



26	Annual Report	franklintempleton.com

Franklin Real Return Fund

This annual report for Franklin Real Return Fund covers the fiscal year ended October 31, 2019. As previously communicated, shareholders approved the reorganization of Franklin Real Return Fund into Franklin Total Return Fund effective January 31, 2020. The Fund closed to new investors with limited exceptions on August 27, 2019. Existing investors may continue to purchase additional shares of the Fund.

Your Fund’s Goal and Main Investments

The Fund seeks total return that exceeds the rate of inflation over an economic cycle. Under normal market conditions, the Fund seeks to allocate assets among investments to achieve the highest level of real return (total return less the rate of inflation) consistent with an acceptable level of risk. The Fund shifts its investments among the following general asset classes and at any given time may have a substantial amount of its asset in any one class: inflation-indexed securities and investment-grade fixed income securities issued by governments, corporations and municipal issuers; equity securities with high correlation to broad measures of inflation; andnon-dollar denominated inflation-indexed securities.

Portfolio Composition*

Based on Total Net Assets as of 10/31/19

LOGO

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

Performance Overview

For the 12 months under review, the Fund’s Class A shares posted a +2.80% cumulative total return. In comparison, the Bloomberg Barclays U.S. TIPS Index, which tracks the universe of inflation-protected notes issued by the U.S. Treasury that have at least one year to final maturity, posted a +8.96% total return.¹ Also for comparison, the Consumer Price Index for All Urban Consumers -Non-Seasonally Adjusted(CPI-NSA), a measure of the average change in prices of all goods and services purchased for consumption by urban householders, rose 1.8% for the same period.² You can find the Fund’s long-term performance data in the Performance Summary beginning on page 29.

Investment Strategy

The Fund uses an active asset allocation strategy to try to achieve its goal of total return that exceeds the rate of inflation over an economic cycle by allocating its assets among securities in various market sectors based on our assessment of changing economic, global market, industry and issuer conditions. When making our investment decisions, we use atop-down analysis of macroeconomic trends combined with abottom-up fundamental analysis of market sectors, industries and issuers to try to take advantage of varying sector reactions to economic events. We will evaluate such criteria as country risk, business cycles, yield curves and values between and within markets.

What is the yield curve?

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

1. Source: Morningstar.

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.

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

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

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

The SOI begins on page 66.



franklintempleton.com	Annual Report	27

FRANKLIN REAL RETURN FUND

Manager’s Discussion

Atperiod-end, nearly three quarters of total net assets were invested in Treasury Inflation-Protected Securities (TIPS). For diversification, we also allocated the Fund’s assets to natural resources common stocks, management investment companies that provide exposure to real estate investment trusts (REITS) and infrastructure equities, and repurchase agreements and other short-term investments. We employed anon-U.S. dollar strategy to help hedge against potential U.S. dollar weakness versus certain currencies and concentrated our TIPS holdings in shorter maturities.

Dividend Distributions*

11/1/18–10/31/19


	Dividend per Share (cents)
Month	Class A		Class C		Class R6		Advisor Class
November		1.04		0.26		1.73		1.48
December		2.28		1.98		2.59		2.47
January		1.08		0.78		1.38		1.26
February		1.49		1.18		1.81		1.69
March**		—		—		—		—
April		1.36		1.04		1.68		1.56
May		2.09		1.77		2.42		2.25
June		2.29		2.00		2.59		2.47
July		0.71		0.34		1.09		0.94
August		0.66		0.35		1.00		0.87
September		1.06		0.72		1.38		1.25
October**		—		—		—		—
Total		14.06		10.42		17.67		16.24

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

During the period, we increased the Fund’s allocations to natural resources equities and REITs. In contrast, we slightly decreased the Fund’s allocation to TIPS. The Fund’s heaviest allocations were in TIPS and natural resources equities. The Fund’s investments in TIPS, REITS and infrastructure helped results. In contrast, the Fund’s investments in natural resources equities and a commodities fund (not held atperiod-end) hindered Fund performance.

Thank you for your participation in Franklin Real Return Fund. It has been a pleasure serving your investment needs.

LOGO

Kent Burns, CFA




		David Yuen, CFA

		Portfolio Management Team



28	Annual Report	franklintempleton.com

FRANKLIN REAL RETURN FUND

Performance Summary as of October 31, 2019

Performance as of 10/31/19¹

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, visitfranklintempleton.com.


	Cumulative			Average Annual
Share Class		Total Return	²		Total Return	³


A⁴

1-Year		+2.80%			-1.06%


5-Year		+0.04%			-0.76%


10-Year		+13.48%			+0.88%


Advisor

1-Year		+3.12%			+3.12%


5-Year		+1.34%			+0.27%


10-Year		+16.39%			+1.53%


	Distribution			30-Day Standardized Yield⁶
Share Class		Rate	⁵	(with fee waiver)	(without fee waiver)

A		0.00%		1.87%	1.54%

Advisor		0.00%		2.21%	1.85%

See page 31 for Performance Summary footnotes.



franklintempleton.com	Annual Report	29

FRANKLIN REAL RETURN FUND

PERFORMANCE SUMMARY

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

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

Class A (11/1/09–10/31/19)

LOGO

Advisor Class (11/1/09–10/31/19)

LOGO

See page 31 for Performance Summary footnotes.



30	Annual Report	franklintempleton.com

FRANKLIN REAL RETURN FUND

PERFORMANCE SUMMARY

Distributions(11/1/18–10/31/19)


Share Class		Net Investment Income
A		$0.1406
C		$0.1042
R6		$0.1767
Advisor		$0.1624

Total Annual Operating Expenses⁹


Share Class	With Fee Waiver		Without Fee Waiver
A		0.89%	1.19%
Advisor		0.64%	0.94%

Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.

All investments involve risks, including possible loss of principal. Interest rate movements will affect the Fund’s share price and yield. Bond prices generally move in the opposite direction of interest rates. As prices of bonds in a fund adjust to a rise in interest rates, the Fund’s share price may decline. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s prospectus also includes a description of the main investment risks.

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.

5. Distribution rate is based on an annualization of the respective class’s October dividend and the maximum offering price (NAV for Advisor Class) per share on 10/31/19.

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

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

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



franklintempleton.com	Annual Report	31

FRANKLIN REAL RETURN FUND

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
			Expenses		Expenses	Net
	Beginning	Ending	Paid During	Ending	Paid During	Annualized
Share	Account	Account	Period	Account	Period	Expense
Class	Value 5/1/19	Value 10/31/19	5/1/19–10/31/19^1,²	Value 10/31/19	5/1/19–10/31/19^1,²	Ratio²

A	$1,000	$1,000.80	$4.34	$1,020.87	$4.38	0.86%
C	$1,000	$ 999.20	$6.35	$1,018.85	$6.41	1.26%
R6	$1,000	$1,003.50	$2.22	$1,022.99	$2.24	0.44%
Advisor	$1,000	$1,002.80	$3.08	$1,022.13	$3.11	0.61%

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



32	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Convertible Securities Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015
Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$20.65			$20.68			$18.24			$18.00			$18.97

Income from investment operations^a:

Net investment income^b		0.21			0.16			0.27			0.25			0.24

Net realized and unrealized gains (losses)		2.47			1.35			2.98			0.85			(0.14	)


Total from investment operations		2.68			1.51			3.25			1.10			0.10


Less distributions from:

Net investment income		(0.45	)		(0.49	)		(0.47	)		(0.50	)		(0.39	)

Net realized gains		(0.75	)		(1.05	)		(0.34	)		(0.36	)		(0.68	)


Total distributions		(1.20	)		(1.54	)		(0.81	)		(0.86	)		(1.07	)


Net asset value, end of year		$22.13			$20.65			$20.68			$18.24			$18.00


Total return^c		13.84%			7.65%			18.39%			6.41%			0.66%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.85%			0.86%			0.85%			0.86%			0.86%

Expenses net of waiver and payments by affiliates^d		0.83%			0.84%			0.84%			0.85%			0.86%	^e

Net investment income		0.97%			0.76%			1.39%			1.44%			1.33%

Supplemental data

Net assets, end of year (000’s)		$1,169,928			$1,153,875			$815,491			$768,553			$818,082

Portfolio turnover rate		26.83%			35.90%			27.24%			28.03%			17.30%

^bBased on average daily shares outstanding.

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

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

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



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	33

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015
Class C

Per share operating performance (for a share outstanding throughout the year)

Net asset value, beginning of year		$20.31			$20.37			$17.98			$17.75			$18.73

Income from investment operations^a:

Net investment income^b		0.04			(—	)^c		0.12			0.12			0.11

Net realized and unrealized gains (losses)		2.45			1.33			2.93			0.84			(0.16	)

Total from investment operations		2.49			1.33			3.05			0.96			(0.05	)

Less distributions from:

Net investment income		(0.28	)		(0.34	)		(0.32	)		(0.37	)		(0.25	)

Net realized gains		(0.75	)		(1.05	)		(0.34	)		(0.36	)		(0.68	)

Total distributions		(1.03	)		(1.39	)		(0.66	)		(0.73	)		(0.93	)

Net asset value, end of year		$21.77			$20.31			$20.37			$17.98			$17.75

Total return^d		13.03%			6.84%			17.49%			5.65%			(0.15)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.60%			1.61%			1.60%			1.61%			1.61%

Expenses net of waiver and payments by affiliates^e		1.58%			1.59%			1.59%			1.60%			1.61%	^f

Net investment income		0.22%			0.01%			0.64%			0.69%			0.58%

Supplemental data

Net assets, end of year (000’s)		$256,075			$299,716			$303,243			$293,038			$311,951

Portfolio turnover rate		26.83%			35.90%			27.24%			28.03%			17.30%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015
Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$20.78			$20.79			$18.33			$18.09			$18.99


Income from investment operations^a:

Net investment income^b		0.28			0.24			0.34			0.33			0.30

Net realized and unrealized gains (losses)		2.50			1.36			3.00			0.84			(0.14	)


Total from investment operations		2.78			1.60			3.34			1.17			0.16


Less distributions from:

Net investment income		(0.53	)		(0.56	)		(0.54	)		(0.57	)		(0.38	)

Net realized gains		(0.75	)		(1.05	)		(0.34	)		(0.36	)		(0.68	)


Total distributions		(1.28	)		(1.61	)		(0.88	)		(0.93	)		(1.06	)


Net asset value, end of year		$22.28			$20.78			$20.79			$18.33			$18.09


Total return		14.26%			8.07%			18.84%			6.78%			0.99%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.54%			0.55%			0.49%			0.50%			0.50%

Expenses net of waiver and payments by affiliates^c		0.49%			0.49%			0.48%			0.49%			0.50%	^d

Net investment income		1.31%			1.11%			1.75%			1.80%			1.69%

Supplemental data

Net assets, end of year (000’s)		$51,791			$57,824			$22,950			$7,154			$5

Portfolio turnover rate		26.83%			35.90%			27.24%			28.03%			17.30%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Convertible Securities Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015
Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$20.65			$20.68			$18.24			$18.00			$18.98


Income from investment operations^a:

Net investment income^b		0.26			0.21			0.32			0.30			0.29

Net realized and unrealized gains (losses)		2.49			1.35			2.98			0.85			(0.15	)


Total from investment operations		2.75			1.56			3.30			1.15			0.14


Less distributions from:

Net investment income		(0.51	)		(0.54	)		(0.52	)		(0.55	)		(0.44	)

Net realized gains		(0.75	)		(1.05	)		(0.34	)		(0.36	)		(0.68	)


Total distributions		(1.26	)		(1.59	)		(0.86	)		(0.91	)		(1.12	)


Net asset value, end of year		$22.14			$20.65			$20.68			$18.24			$18.00


Total return		14.18%			7.91%			18.69%			6.68%			0.87%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.60%			0.61%			0.60%			0.61%			0.61%

Expenses net of waiver and payments by affiliates^c		0.58%			0.59%			0.59%			0.60%			0.61%	^d

Net investment income		1.22%			1.01%			1.64%			1.69%			1.58%

Supplemental data

Net assets, end of year (000’s)		$2,379,435			$2,189,462			$1,542,254			$1,080,346			$899,441

Portfolio turnover rate		26.83%			35.90%			27.24%			28.03%			17.30%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Convertible Securities Fund


	Country		Shares			Value
Convertible Preferred Stocks 20.3%
Consumer Staples 1.7%
Bunge Ltd., 4.875%, cvt. pfd.		United States		630,000		$	63,956,088


Health Care 4.8%
Avantor Inc., 6.25%, cvt. pfd., A		United States		820,000			42,648,200
Becton Dickinson and Co., 6.125%, cvt. pfd., A		United States		1,120,000			69,081,600
Change Healthcare Inc., 6.00%, cvt. pfd.		United States		300,000			15,159,000
Danaher Corp., 4.75%, cvt. pfd., A		United States		54,000			59,957,275


							186,846,075


Industrials 3.8%
Fortive Corp., 5.00%, cvt. pfd., A		United States		34,350			30,933,893
Rexnord Corp., 5.75%, cvt. pfd.		United States		1,017,500			56,786,675
Stanley Black & Decker Inc., 5.375%, cvt. pfd.		United States		592,000			60,348,480


							148,069,048


Information Technology 2.0%
Broadcom Inc., 8.00%, cvt. pfd., A		United States		71,100			77,002,722


Materials 1.5%
International Flavors & Fragrances Inc., 6.00%, cvt. pfd.		United States		1,192,242			55,761,158


Utilities 6.5%
American Electric Power Co. Inc., 6.125%, cvt. pfd.		United States		440,000			24,195,600
Aqua America Inc., 6.00%, cvt. pfd.		United States		770,000			46,392,500
^aDTE Energy Co., 6.25%, cvt. pfd.		United States		800,000			40,624,000
Sempra Energy, 6.00%, cvt. pfd., A		United States		567,500			65,847,025
Sempra Energy, 6.75%, cvt. pfd., B		United States		206,000			23,935,140
South Jersey Industries Inc., 7.25%, cvt. pfd.		United States		360,000			18,360,000
The Southern Co., 6.75%, cvt. pfd.		United States		550,000			29,238,000


							248,592,265


Total Convertible Preferred Stocks (Cost $748,475,501)							780,227,356


				Principal Amount	*
Convertible Bonds 78.2%
Communication Services 10.4%
DISH Network Corp., cvt., senior bond, 3.375%, 8/15/26		United States	$	45,900,000			43,034,061
^biQIYI Inc.,
cvt., senior note, 144A, 3.75%, 12/01/23		China		43,500,000			44,644,443
cvt., senior note, 144A, 2.00%, 4/01/25		China		26,000,000			23,547,242
^bLiberty Interactive LLC, cvt., senior bond, 144A, 1.75%, 9/30/46		United States		37,000,000			52,495,157
Liberty Media Corp.,
cvt., senior bond, 2.25%, 9/30/46		United States		39,000,000			22,630,211
cvt., senior note, 1.375%, 10/15/23		United States		21,200,000			26,804,009
^bSnap Inc., cvt., senior note, 144A, 0.75%, 8/01/26		United States		59,000,000			59,780,570
Weibo Corp., cvt., senior note, 1.25%, 11/15/22		China		78,000,000			73,210,020
Zillow Group Inc.,
cvt., senior note, 2.00%, 12/01/21		United States		34,500,000			34,977,706
cvt., senior note, 1.50%, 7/01/23		United States		23,500,000			20,954,560


							402,077,979



franklintempleton.com	Annual Report	37

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund(continued)


		Country		Principal Amount	*		Value

Convertible Bonds(continued)
Consumer Discretionary 10.0%
Booking Holdings Inc., cvt., senior note, 0.35%, 6/15/20		United States	$	35,000,000		$	54,580,651
Etsy Inc., cvt., senior note, zero cpn., 3/01/23		United States		40,000,000			56,750,000
MercadoLibre Inc., cvt., senior note, 2.00%, 8/15/28		Argentina		50,000,000			70,909,200
^bPinduoduo Inc., cvt., senior note, 144A, zero cpn., 10/01/24		China		44,000,000			51,293,722
RH,
^bcvt., senior note, 144A, zero cpn., 9/15/24		United States		24,000,000			25,135,654
cvt., senior note, zero cpn., 6/15/23		United States		52,500,000			59,391,132
Wayfair Inc.,
cvt., senior note, 0.375%, 9/01/22		United States		19,000,000			20,134,424
^bcvt., senior note, 144A, 1.125%, 11/01/24		United States		22,000,000			22,518,212
^bcvt., senior note, 144A, 1.00%, 8/15/26		United States		28,000,000			25,036,860

							385,749,855
	��
Energy 0.6%
Oil States International Inc., cvt., senior note, 1.50%, 2/15/23		United States		28,000,000			23,842,616

Financials 2.0%
^bAXA SA, cvt., senior note, 144A, 7.25%, 5/15/21		France		71,500,000			74,562,345

Health Care 14.9%
^bAssertio Therapeutics Inc., cvt., senior note, 144A, 5.00%, 8/15/24		United States		8,400,000			5,562,229
BioMarin Pharmaceutical Inc., cvt., senior sub. note, 1.50%, 10/15/20		United States		28,200,000			29,668,089
Dermira Inc., cvt., senior note, 3.00%, 5/15/22		United States		41,120,000			34,283,800
^bDexCom Inc., cvt., senior note, 144A, 0.75%, 12/01/23		United States		64,000,000			76,642,618
Illumina Inc.,
cvt., senior note, 0.50%, 6/15/21		United States		32,500,000			42,414,015
cvt., senior note, zero cpn., 8/15/23		United States		32,750,000			35,564,960
Insulet Corp.,
cvt., senior note, 1.375%, 11/15/24		United States		36,300,000			60,416,812
^bcvt., senior note, 144A, 0.375%, 9/01/26		United States		22,000,000			21,133,750
Intercept Pharmaceuticals Inc., cvt., senior note, 2.00%, 5/15/26		United States		21,000,000			19,722,264
Jazz Investments I Ltd.,
cvt., senior note, 1.875%, 8/15/21		United States		35,000,000			35,043,292
cvt., senior note, 1.50%, 8/15/24		United States		39,750,000			38,204,386
Neurocrine Biosciences Inc., cvt., senior note, 2.25%, 5/15/24		United States		44,750,000			65,421,097
Novavax Inc., cvt., senior note, 3.75%, 2/01/23		United States		29,000,000			11,976,785
NuVasive Inc., cvt., senior note, 2.25%, 3/15/21		United States		12,000,000			15,101,277
^bPTC Therapeutics Inc., cvt., senior note, 144A, 1.50%, 9/15/26		United States		40,000,000			41,754,932
Sarepta Therapeutics Inc., cvt., senior note, 1.50%, 11/15/24		United States		30,250,000			42,732,336

							575,642,642

Industrials 1.0%
^bFortive Corp., cvt., senior note, 144A, 0.875%, 2/15/22		United States		40,270,000			39,830,138

Information Technology 38.1%
^bAlteryx Inc.,
cvt., senior note, 144A, 0.50%, 8/01/24		United States		8,000,000			7,418,014
cvt., senior note, 144A, 1.00%, 8/01/26		United States		8,000,000			7,252,064



38	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund(continued)


	Country		Principal Amount	*		Value
Convertible Bonds(continued)
Information Technology(continued)
Atlassian Inc., cvt., senior note, 0.625%, 5/01/23	United States	$	43,000,000		$	68,417,685
^bBlackline Inc., cvt., senior note, 144A, 0.125%, 8/01/24	United States		9,500,000			9,066,900
^bCoupa Software Inc., cvt., senior note, 144A, 0.125%, 6/15/25	United States		21,000,000			23,849,997
DocuSign Inc., cvt., senior note, 0.50%, 9/15/23	United States		65,000,000			76,655,938
Envestnet Inc., cvt., senior note, 1.75%, 6/01/23	United States		51,500,000			58,369,706
Guidewire Software Inc., cvt., senior note, 1.25%, 3/15/25	United States		49,000,000			58,686,863
HubSpot Inc., cvt., senior note, 0.25%, 6/01/22	United States		38,875,000			66,589,937
Inphi Corp., cvt., senior note, 0.75%, 9/01/21	United States		9,600,000			13,272,165
Intel Corp., cvt., junior sub. bond, 3.25%, 8/01/39	United States		8,000,000			22,301,200
Microchip Technology Inc., cvt., 1.625%, 2/15/27	United States		69,250,000			90,827,173
New Relic Inc., cvt., senior note, 0.50%, 5/01/23	United States		24,000,000			23,126,395
NXP Semiconductors NV, cvt., senior note, 1.00%, 12/01/19	Netherlands		55,000,000			60,468,235
^bOkta Inc., cvt., senior note, 144A, 0.125%, 9/01/25	United States		80,000,000			76,104,331
Palo Alto Networks Inc., cvt., senior note, 0.75%, 7/01/23	United States		53,000,000			58,563,032
^bPluralsight Inc., cvt., senior note, 144A, 0.375%, 3/01/24	United States		39,000,000			34,317,270
Q2 Holdings Inc., cvt., senior note, 0.75%, 2/15/23	United States		32,000,000			44,001,093
RealPage Inc., cvt., senior note, 1.50%, 11/15/22	United States		40,850,000			62,622,618
ServiceNow Inc., cvt., senior note, zero cpn., 6/01/22	United States		40,000,000			75,031,032
Silicon Laboratories Inc., cvt., senior note, 1.375%, 3/01/22	United States		53,700,000			68,060,230
Splunk Inc., cvt., senior note, 1.125%, 9/15/25	United States		22,500,000			25,019,773
Square Inc., cvt., senior note, 0.50%, 5/15/23	United States		65,000,000			71,937,645
Twilio Inc., cvt., senior note, 0.25%, 6/01/23	United States		37,500,000			57,083,392
Viavi Solutions Inc.,
cvt., senior note, 1.75%, 6/01/23	United States		40,969,000			53,364,255
cvt., senior note, 1.00%, 3/01/24	United States		20,000,000			26,875,000
Wix.com Ltd., cvt., senior note, zero cpn., 7/01/23	Israel		56,500,000			64,533,170
Workday Inc., cvt., senior note, 0.25%, 10/01/22	United States		57,500,000			73,415,695
^bWorkiva Inc., cvt., senior note, 144A, 1.125%, 8/15/26	United States		22,000,000			19,851,179
Zendesk Inc., cvt., senior note, 0.25%, 3/15/23	United States		56,500,000			73,711,728

						1,470,793,715

Materials 1.2%
Cemex SAB de CV, cvt., sub. note, 3.72%, 3/15/20	Mexico		44,250,000			44,363,795

Total Convertible Bonds (Cost $2,650,978,125)						3,016,863,085


		Shares
Escrows and Litigation Trusts (Cost $22,362) 0.0%
^a,cMotors Liquidation Co., Escrow Account	United States		376,200			—

Total Investments before Short Term Investments (Cost $3,399,475,988)						3,797,090,441



franklintempleton.com	Annual Report	39

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Convertible Securities Fund(continued)


	Country		Shares		Value


Short Term Investments (Cost $89,909,657) 2.3%

Money Market Funds 2.3%
^d,eInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		89,909,657	$	89,909,657


Total Investments (Cost $3,489,385,645) 100.8%						3,887,000,098

Other Assets, less Liabilities (0.8)%						(29,770,514	)


Net Assets 100.0%					$	3,857,229,584

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

^aNon-income producing.

^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At October 31, 2019, the aggregate value of these securities was $741,797,627, representing 19.2% of net assets.

^cFair valued using significant unobservable inputs. See Note 11 regarding fair value measurements.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Equity Income Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$24.86			$25.06			$22.50			$22.99			$23.93


Income from investment operations^a:

Net investment income^b		0.46			0.42			0.48			0.47			0.55

Net realized and unrealized gains (losses)		2.49			0.58			3.55			0.24			0.26


Total from investment operations		2.95			1.00			4.03			0.71			0.81


Less distributions from:

Net investment income		(0.58	)		(0.57	)		(0.58	)		(0.60	)		(0.69)

Net realized gains		(1.00	)		(0.63	)		(0.89	)		(0.60	)		(1.06)


Total distributions		(1.58	)		(1.20	)		(1.47	)		(1.20	)		(1.75)


Net asset value, end of year		$26.23			$24.86			$25.06			$22.50			$22.99


Total return^c		12.73%			3.98%			18.55%			3.31%			3.72%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.86%			0.85%			0.86%			0.87%			0.86%

Expenses net of waiver and payments by affiliates^d		0.85%			0.84%			0.86%	^e		0.87%	^e		0.86%	^e

Net investment income		1.85%			1.66%			2.02%			2.13%			2.37%

Supplemental data

Net assets, end of year (000’s)		$2,017,910			$1,752,181			$1,753,135			$1,700,712			$1,790,392

Portfolio turnover rate		23.23%			28.40%			27.18%			50.05%			34.09%

^bBased on average daily shares outstanding.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$24.64			$24.86			$22.32			$22.85			$23.79


Income from investment operations^a:

Net investment income^b		0.28			0.26			0.30			0.30			0.37

Net realized and unrealized gains (losses)		2.47			0.53			3.54			0.23			0.27


Total from investment operations		2.75			0.79			3.84			0.53			0.64


Less distributions from:

Net investment income		(0.38	)		(0.38	)		(0.41	)		(0.46	)		(0.52	)

Net realized gains		(1.00	)		(0.63	)		(0.89	)		(0.60	)		(1.06	)


Total distributions		(1.38	)		(1.01	)		(1.30	)		(1.06	)		(1.58	)


Net asset value, end of year		$26.01			$24.64			$24.86			$22.32			$22.85


Total return^c		11.91%			3.16%			17.73%			2.51%			2.96%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.61%			1.60%			1.61%			1.62%			1.61%

Expenses net of waiver and payments by affiliates^d		1.60%			1.59%			1.61%	^e		1.62%	^e		1.61%	^e

Net investment income		1.10%			0.91%			1.27%			1.38%			1.62%

Supplemental data

Net assets, end of year (000’s)		$208,734			$204,402			$267,450			$257,156			$250,347

Portfolio turnover rate		23.23%			28.40%			27.18%			50.05%			34.09%

^bBased on average daily shares outstanding.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$24.85			$25.05			$22.49			$22.99			$23.93


Income from investment operations^a:

Net investment income^b		0.41			0.36			0.42			0.41			0.50

Net realized and unrealized gains (losses)		2.49			0.58			3.56			0.24			0.25


Total from investment operations		2.90			0.94			3.98			0.65			0.75


Less distributions from:

Net investment income		(0.52	)		(0.51	)		(0.53	)		(0.55	)		(0.63	)

Net realized gains		(1.00	)		(0.63	)		(0.89	)		(0.60	)		(1.06	)


Total distributions		(1.52	)		(1.14	)		(1.42	)		(1.15	)		(1.69	)


Net asset value, end of year		$26.23			$24.85			$25.05			$22.49			$22.99


Total return		12.50%			3.75%			18.29%			3.05%			3.45%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.09%			1.08%			1.09%			1.11%			1.11%

Expenses net of waiver and payments by affiliates^c		1.08%			1.07%			1.09%	^d		1.11%	^d		1.11%	^d

Net investment income		1.62%			1.43%			1.79%			1.89%			2.12%

Supplemental data

Net assets, end of year (000’s)		$7,284			$6,750			$7,074			$6,395			$6,265

Portfolio turnover rate		23.23%			28.40%			27.18%			50.05%			34.09%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$24.91			$25.11			$22.54			$23.01			$23.95


Income from investment operations^a:

Net investment income^b		0.54			0.50			0.56			0.43			0.63

Net realized and unrealized gains (losses)		2.50			0.59			3.57			0.37			0.27


Total from investment operations		3.04			1.09			4.13			0.80			0.90


Less distributions from:

Net investment income		(0.66	)		(0.66	)		(0.67	)		(0.67	)		(0.78	)

Net realized gains		(1.00	)		(0.63	)		(0.89	)		(0.60	)		(1.06	)


Total distributions		(1.66	)		(1.29	)		(1.56	)		(1.27	)		(1.84	)


Net asset value, end of year		$26.29			$24.91			$25.11			$22.54			$23.01


Total return		13.12%			4.35%			19.00%			3.72%			4.10%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.53%			0.52%			0.49%			0.49%			2.89%

Expenses net of waiver and payments by affiliates^c		0.51%			0.50%			0.49%	^d		0.49%	^d		0.48%

Net investment income		2.19%			2.00%			2.39%			2.51%			2.75%

Supplemental data

Net assets, end of year (000’s)		$96,406			$81,171			$12,728			$10,537			$6

Portfolio turnover rate		23.23%			28.40%			27.18%			50.05%			34.09%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Equity Income Fund(continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$24.90			$25.10			$22.53			$23.02			$23.96

Income from investment operations^a:

Net investment income^b		0.50			0.46			0.50			0.45			0.60

Net realized and unrealized gains (losses)		2.51			0.60			3.60			0.31			0.27

Total from investment operations		3.01			1.06			4.10			0.76			0.87

Less distributions from:

Net investment income		(0.64	)		(0.63	)		(0.64	)		(0.65	)		(0.75	)

Net realized gains		(1.00	)		(0.63	)		(0.89	)		(0.60	)		(1.06	)

Total distributions		(1.64	)		(1.26	)		(1.53	)		(1.25	)		(1.81	)

Net asset value, end of year		$26.27			$24.90			$25.10			$22.53			$23.02

Total return		13.04%			4.22%			18.88%			3.53%			3.98%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.61%			0.60%			0.61%			0.62%			0.61%

Expenses net of waiver and payments by affiliates^c		0.60%			0.59%			0.61%	^d		0.62%	^d		0.61%	^d

Net investment income		2.10%			1.91%			2.27%			2.38%			2.62%

Supplemental data

Net assets, end of year (000’s)		$173,739			$109,435			$147,681			$80,422			$34,577

Portfolio turnover rate		23.23%			28.40%			27.18%			50.05%			34.09%

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Equity Income Fund


	Country		Shares		Value
Common Stocks 84.8%
Communication Services 5.0%
Comcast Corp., A		United States		860,000	$	38,545,200
Rogers Communications Inc., B		Canada		350,000		16,481,500
TELUS Corp.		Canada		470,000		16,725,788
Verizon Communications Inc.		United States		875,000		52,911,250

						124,663,738

Consumer Discretionary 3.6%
Lowe’s Cos. Inc.		United States		151,000		16,853,110
McDonald’s Corp.		United States		180,000		35,406,000
Target Corp.		United States		220,000		23,520,200
Tractor Supply Co.		United States		155,000		14,728,100

						90,507,410

Consumer Staples 11.0%
The Coca-Cola Co.		United States		1,075,000		58,512,250
Nestle SA		Switzerland		190,000		20,285,671
PepsiCo Inc.		United States		415,000		56,925,550
The Procter & Gamble Co.		United States		546,500		68,044,715
Unilever NV, N.Y. shs		United Kingdom		450,000		26,658,000
Walmart Inc.		United States		380,000		44,558,800

						274,984,986

Energy 7.7%
Chevron Corp.		United States		500,000		58,070,000
Exxon Mobil Corp.		United States		455,934		30,807,460
Occidental Petroleum Corp.		United States		537,000		21,748,500
ONEOK Inc.		United States		250,000		17,457,500
Royal Dutch Shell PLC, A, ADR		United Kingdom		600,000		34,782,000
Suncor Energy Inc.		Canada		1,035,000		30,729,150

						193,594,610

Financials 16.2%
Arthur J. Gallagher & Co.		United States		210,000		19,156,200
Bank of America Corp.		United States		1,679,708		52,524,469
BB&T Corp.		United States		1,050,000		55,702,500
BlackRock Inc.		United States		39,500		18,237,150
JPMorgan Chase & Co.		United States		866,000		108,180,720
MetLife Inc.		United States		810,000		37,899,900
Morgan Stanley		United States		1,225,000		56,411,250
U.S. Bancorp		United States		555,000		31,646,100
Wells Fargo & Co.		United States		525,000		27,105,750

						406,864,039

Health Care 10.9%
Baxter International Inc.		United States		380,000		29,146,000
Eli Lilly & Co.		United States		55,000		6,267,250
HCA Holdings Inc.		United States		120,000		16,024,800
Johnson & Johnson.		United States		400,000		52,816,000
Medtronic PLC		United States		455,000		49,549,500
Merck & Co. Inc.		United States		455,000		39,430,300



46	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Equity Income Fund(continued)


	Country		Shares		Value

Common Stocks(continued)
Health Care(continued)
Pfizer Inc.		United States		1,184,300	$	45,441,591
UnitedHealth Group Inc.		United States		140,500		35,504,350

						274,179,791

Industrials 11.4%
3M Co.		United States		167,500		27,635,825
Emerson Electric Co.		United States		381,000		26,727,150
Illinois Tool Works Inc.		United States		82,500		13,907,850
Lockheed Martin Corp.		United States		95,000		35,784,600
Norfolk Southern Corp.		United States		216,000		39,312,000
Raytheon Co.		United States		215,000		45,625,150
Republic Services Inc.		United States		498,500		43,623,735
Stanley Black & Decker Inc.		United States		95,780		14,494,388
United Technologies Corp.		United States		260,000		37,330,800

						284,441,498

Information Technology 8.8%
Analog Devices Inc.		United States		176,000		18,766,880
Apple Inc.		United States		130,000		32,338,800
Cisco Systems Inc.		United States		629,233		29,894,860
Intel Corp.		United States		328,402		18,564,565
Microsoft Corp.		United States		500,000		71,685,000
Oracle Corp.		United States		340,000		18,526,600
Texas Instruments Inc.		United States		250,000		29,497,500

						219,274,205

Materials 1.3%
BASF SE		Germany		87,500		6,658,481
Dow Inc.		United States		160,000		8,078,400
DuPont de Nemours Inc.		United States		138,333		9,117,528
International Paper Co.		United States		175,000		7,644,000

						31,498,409

Real Estate 2.8%
Equity Residential		United States		300,000		26,598,000
Host Hotels & Resorts Inc.		United States		1,525,000		24,994,750
Prologis Inc.		United States		215,000		18,868,400

						70,461,150

Utilities 6.1%
Duke Energy Corp.		United States		500,000		47,130,000
NextEra Energy Inc.		United States		255,300		60,848,202
Xcel Energy Inc.		United States		723,500		45,949,485

						153,927,687

Total Common Stocks (Cost $1,443,490,738)						2,124,397,523



franklintempleton.com	Annual Report	47

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Equity Income Fund(continued)


	Country		Shares		Value
^aEquity-Linked Securities 9.0%
Consumer Discretionary 3.5%
^bCitigroup Global Markets Holdings Inc. into Amazon.com Inc., 6.50%, 144A		United States		17,500	$	31,075,144
^bJPMorgan Chase Bank NA into The TJX Cos. Inc., 5.50%, 144A		United States		326,000		18,574,196
^bRoyal Bank of Canada into Lowe’s Cos. Inc., 7.00%, 144A		United States		115,000		12,815,029
^bWells Fargo Bank National Assn. into Dollar General Corp., 6.50%, 144A		United States		205,000		25,299,758

						87,764,127

Energy 0.6%
^bCitigroup Global Markets Holdings Inc. into Occidental Petroleum Corp., 8.00%, 144A		United States		250,000		14,404,227


Financials 1.8%
^bCredit Suisse AG into Bank of America Corp., 7.00%, 144A		United States		850,000		26,266,131
^bGoldman Sachs International into The Charles Schwab Corp., 7.00%, 144A		United States		436,000		17,951,764

						44,217,895

Health Care 0.7%
^bGoldman Sachs International into HCA Holdings Inc., 6.00%, 144A		United States		140,200		18,980,648


Information Technology 2.4%
^bBarclays Bank PLC into Broadcom Inc., 10.00%, 144A		United States		67,000		19,913,683
^bBarclays Bank PLC into Microsoft Corp., 6.50%, 144A		United States		110,000		15,593,932
^bGoldman Sachs International into Intel Corp., 8.00%, 144A		United States		230,000		12,650,636
^bMerrill Lynch International & Co. CV into Cisco System Inc., 7.00%, 144A		United States		225,000		10,952,125

						59,110,376

Total Equity-Linked Securities (Cost $212,583,202)						224,477,273


Convertible Preferred Stocks 3.6%

Health Care 1.7%
Becton Dickinson and Co., 6.125%, cvt. pfd., A		United States		700,000		43,176,000


Industrials 0.5%
Fortive Corp., 5.00%, cvt. pfd., A		United States		13,250		11,932,287


Information Technology 0.5%
Broadcom Inc., 8.00%, cvt. pfd., A		United States		12,400		13,429,448


Utilities 0.9%
Aqua America Inc., 6.00%, cvt. pfd.		United States		370,000		22,292,500


Total Convertible Preferred Stocks (Cost $84,719,755)						90,830,235


Total Investments before Short Term Investments (Cost $1,740,793,695)						2,439,705,031



48	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Equity Income Fund(continued)


	Country		Shares		Value

Short Term Investments (Cost $69,588,667) 2.8%

Money Market Funds 2.8%
^c,dInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		69,588,667	$	69,588,667


Total Investments (Cost $1,810,382,362) 100.2%						2,509,293,698
Other Assets, less Liabilities (0.2)%						(5,221,897	)


Net Assets 100.0%					$	2,504,071,801

See Abbreviations on page 91.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Managed Income Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class A

Per share operating performance (for a share outstanding throughout the year)

Net asset value, beginning of year		$11.89			$12.36			$11.65			$11.40			$11.86

Income from investment operations^a:

Net investment income^b		0.29			0.27			0.33			0.30			0.30

Net realized and unrealized gains (losses)		1.17			(0.16	)		0.91			0.31			(0.24	)

Total from investment operations		1.46			0.11			1.24			0.61			0.06

Less distributions from:

Net investment income		(0.41	)		(0.38	)		(0.36	)		(0.36	)		(0.36	)

Net realized gains		(0.14	)		(0.20	)		(0.17	)		(—	)^c		(0.16	)

Total distributions		(0.55	)		(0.58	)		(0.53	)		(0.36	)		(0.52	)

Net asset value, end of year		$12.80			$11.89			$12.36			$11.65			$11.40

Total return^d		12.64%			0.89%			10.88%			5.54%			0.51%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.96%			1.02%			1.02%			1.02%			1.06%

Expenses net of waiver and payments by affiliates^e		0.94%			1.01%			1.00%			1.01%			1.06%	^f

Net investment income		2.36%			2.22%			2.72%			2.62%			2.56%

Supplemental data

Net assets, end of year (000’s)		$2,966,899			$2,586,246			$2,646,599			$2,532,459			$2,371,133

Portfolio turnover rate		53.02%			63.64%			34.99%			46.03%			69.23%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Managed Income Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$11.78			$12.25			$11.55			$11.31			$11.77


Income from investment operations^a:

Net investment income^b		0.20			0.19			0.24			0.21			0.21

Net realized and unrealized gains (losses)		1.15			(0.17	)		0.90			0.31			(0.23	)


Total from investment operations		1.35			0.02			1.14			0.52			(0.02	)


Less distributions from:

Net investment income		(0.32	)		(0.29	)		(0.27	)		(0.28	)		(0.28	)

Net realized gains		(0.14	)		(0.20	)		(0.17	)		(—	)^c		(0.16	)


Total distributions		(0.46	)		(0.49	)		(0.44	)		(0.28	)		(0.44	)


Net asset value, end of year		$12.67			$11.78			$12.25			$11.55			$11.31


Total return^d		11.79%			0.14%			10.06%			4.73%			(0.20)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.71%			1.76%			1.77%			1.77%			1.77%

Expenses net of waiver and payments by affiliates^e		1.69%			1.75%			1.75%			1.76%			1.77%	^f

Net investment income		1.61%			1.48%			1.97%			1.87%			1.85%

Supplemental data

Net assets, end of year (000’s)		$491,751			$493,762			$633,108			$630,110			$563,419

Portfolio turnover rate		53.02%			63.64%			34.99%			46.03%			69.23%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Managed Income Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$11.92			$12.39			$11.67			$11.42			$11.89


Income from investment operations^a:

Net investment income^b		0.26			0.26			0.30			0.27			0.27

Net realized and unrealized gains (losses)		1.18			(0.18	)		0.92			0.32			(0.24	)


Total from investment operations		1.44			0.08			1.22			0.59			0.03


Less distributions from:

Net investment income		(0.38	)		(0.35	)		(0.33	)		(0.34	)		(0.34	)

Net realized gains		(0.14	)		(0.20	)		(0.17	)		(—	)^c		(0.16	)


Total distributions		(0.52	)		(0.55	)		(0.50	)		(0.34	)		(0.50	)


Net asset value, end of year		$12.84			$11.92			$12.39			$11.67			$11.42


Total return		12.43%			0.63%			10.66%			5.28%			0.21%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.21%			1.27%			1.27%			1.27%			1.27%

Expenses net of waiver and payments by affiliates^d		1.19%			1.26%			1.25%			1.26%			1.27%	^e

Net investment income		2.11%			1.97%			2.47%			2.37%			2.35%

Supplemental data

Net assets, end of year (000’s)		$4,081			$3,371			$4,763			$4,482			$4,699

Portfolio turnover rate		53.02%			63.64%			34.99%			46.03%			69.23%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Managed Income Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$11.93			$12.39			$11.67			$11.42			$11.89


Income from investment operations^a:

Net investment income^b		0.33			0.31			0.41			0.34			0.35

Net realized and unrealized gains (losses)		1.18			(0.14	)		0.88			0.31			(0.25	)


Total from investment operations		1.51			0.17			1.29			0.65			0.10


Less distributions from:

Net investment income		(0.45	)		(0.43	)		(0.40	)		(0.40	)		(0.41	)

Net realized gains		(0.14	)		(0.20	)		(0.17	)		(—	)^c		(0.16	)


Total distributions		(0.59	)		(0.63	)		(0.57	)		(0.40	)		(0.57	)


Net asset value, end of year		$12.85			$11.93			$12.39			$11.67			$11.42


Total return		13.14%			1.23%			11.33%			5.90%			0.81%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.63%			0.68%			0.71%			0.73%			0.70%

Expenses net of waiver and payments by affiliates^d		0.61%			0.66%			0.64%			0.66%			0.67%

Net investment income		2.69%			2.56%			3.08%			2.97%			2.95%

Supplemental data

Net assets, end of year (000’s)		$159,877			$138,923			$342			$233			$221

Portfolio turnover rate		53.02%			63.64%			34.99%			46.03%			69.23%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Managed Income Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$11.92			$12.39			$11.67			$11.42			$11.88


Income from investment operations^a:

Net investment income^b		0.32			0.30			0.35			0.29			0.33

Net realized and unrealized gains (losses)		1.18			(0.16	)		0.93			0.35			(0.24	)


Total from investment operations		1.50			0.14			1.28			0.64			0.09


Less distributions from:

Net investment income		(0.44	)		(0.41	)		(0.39	)		(0.39	)		(0.39	)

Net realized gains		(0.14	)		(0.20	)		(0.17	)		(—	)^c		(0.16	)


Total distributions		(0.58	)		(0.61	)		(0.56	)		(0.39	)		(0.55	)


Net asset value, end of year		$12.84			$11.92			$12.39			$11.67			$11.42


Total return		12.96%			1.14%			11.21%			5.79%			0.81%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.71%			0.77%			0.77%			0.77%			0.77%

Expenses net of waiver and payments by affiliates^d		0.69%			0.76%			0.75%			0.76%			0.77%	^e

Net investment income		2.61%			2.47%			2.97%			2.87%			2.85%

Supplemental data

Net assets, end of year (000’s)		$180,882			$124,265			$243,674			$138,111			$54,881

Portfolio turnover rate		53.02%			63.64%			34.99%			46.03%			69.23%

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Managed Income Fund


	Country	Shares		Value
Common Stocks 32.6%
Communication Services 2.9%
^aAT&T Inc.	United States		1,000,000	$	38,490,000
Verizon Communications Inc.	United States		850,000		51,399,500
Vodafone Group PLC	United Kingdom		10,000,000		20,390,384

					110,279,884

Consumer Discretionary 0.6%
Ford Motor Co.	United States		2,500,000		21,475,000

Consumer Staples 3.0%
^aThe Coca-Cola Co.	United States		650,200		35,390,386
Nestle SA	Switzerland		500,000		53,250,000
^aPepsiCo Inc.	United States		187,200		25,678,224

					114,318,610

Energy 3.5%
Chevron Corp.	United States		400,000		46,456,000
Exxon Mobil Corp.	United States		550,000		37,163,500
Occidental Petroleum Corp.	United States		450,000		18,225,000
Royal Dutch Shell PLC, A, ADR	United Kingdom		545,000		31,593,650

					133,438,150

Financials 6.3%
Bank of America Corp.	United States		1,496,715		46,802,278
Barclays PLC	United Kingdom		5,000,000		10,868,826
JPMorgan Chase & Co.	United States		500,000		62,460,000
Morgan Stanley	United States		875,000		40,293,750
The Toronto-Dominion Bank	Canada		415,000		23,684,050
Wells Fargo & Co.	United States		1,100,000		56,793,000

					240,901,904

Health Care 6.9%
AbbVie Inc.	United States		500,000		39,775,000
AstraZeneca PLC, ADR	United Kingdom		1,100,000		53,933,000
^aBristol-Myers Squibb Co.	United States		1,000,000		57,370,000
^aCVS Health Corp.	United States		470,000		31,203,300
Johnson & Johnson	United States		280,000		36,971,200
Pfizer Inc.	United States		1,150,000		44,125,500

					263,378,000

Industrials 4.0%
^a3M Co.	United States		200,000		32,998,000
^aGeneral Dynamics Corp.	United States		150,000		26,520,000
^aNorthrop Grumman Corp.	United States		105,000		37,010,400
Raytheon Co.	United States		260,000		55,174,600

					151,703,000

Information Technology 3.3%
^aAnalog Devices Inc.	United States		350,000		37,320,500
^aIntel Corp.	United States		685,000		38,723,050
^aInternational Business Machines Corp.	United States		200,000		26,746,000



franklintempleton.com	Annual Report	55

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Managed Income Fund(continued)


	Country	Shares		Value
Common Stocks(continued)
Information Technology(continued)
^aTexas Instruments Inc.	United States		197,000	$	23,244,030

					126,033,580

Real Estate 0.7%
Host Hotels & Resorts Inc.	United States		1,500,000		24,585,000

Utilities 1.4%
Dominion Energy Inc.	United States		528,200		43,602,910
Sempra Energy	United States		59,000		8,526,090

					52,129,000

Total Common Stocks (Cost $950,209,993)					1,238,242,128


Management Investment Companies (Cost $36,607,500) 1.0%
Financials 1.0%
^bFranklin Liberty U.S. Low Volatility ETF	United States		1,000,000		36,596,800

^cEquity-Linked Securities 11.7%
Communication Services 0.5%
^dGoldman Sachs International into Alphabet Inc., 7.00%, A, 144A	United States		15,000		17,945,184

Consumer Discretionary 1.5%
^dCitigroup Global Markets Holdings Inc. into Amazon.com Inc., 9.00%, 144A	United States		20,000		36,295,601
^dJPMorgan Chase Bank NA into Target Corp., 9.00%, 144A	United States		190,000		20,453,601

					56,749,202

Financials 0.8%
^dBarclays Bank PLC into The Charles Schwab Corp., 6.00%, 144A	United States		755,000		31,397,646

Health Care 0.6%
^dUBS AG London into CVS Health Corp., 8.50%, 144A	United States		350,000		22,621,026

Information Technology 8.3%
^dBarclays Bank PLC into Broadcom Inc., 10.00%, 144A	United States		130,000		38,638,489
^dCitigroup Global Markets Holdings Inc. into Cisco Systems Inc., 7.00%, 144A	United States		743,000		36,746,565
^dJPMorgan Chase Bank NA into Apple Inc., 7.00%, 144A	United States		320,000		70,450,296
^dMerrill Lynch International & Co. C.V. into Microsoft Corp., 6.00%, 144A	United States		340,000		47,126,840
^dRoyal Bank of Canada into Intel Corp., 8.00%, 144A	United States		800,000		41,268,744
^dWells Fargo Bank National Assn. into NVIDIA Corp., 10.00%, 144A	United States		260,000		45,442,056
^dWells Fargo Bank National Assn. into Texas Instruments Inc., 7.50%, 144A	United States		300,000		36,051,099

					315,724,089

Total Equity-Linked Securities (Cost $427,086,825)					444,437,147

Convertible Preferred Stocks 1.4%
Information Technology 0.7%
Broadcom Inc., 8.00%, cvt. pfd., A	United States		25,000		27,075,500

Utilities 0.7%
Sempra Energy, 6.00%, cvt. pfd., A	United States		100,000		11,603,000
The Southern Co., 6.75%, cvt. pfd.	United States		280,000		14,884,800

					26,487,800

Total Convertible Preferred Stocks (Cost $49,227,000)					53,563,300



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STATEMENT OF INVESTMENTS

Franklin Managed Income Fund (continued)


	Country	Shares			Value
Preferred Stocks (Cost $15,000,000) 0.4%
Financials 0.4%
JPMorgan Chase & Co., 6.00%, pfd., EE, 6/01/67	United States		600,000		$	17,094,000


			Principal Amount	*
Convertible Bonds (Cost $19,132,330) 0.4%
Energy 0.4%
Chesapeake Energy Corp., cvt., senior note, 5.50%, 9/15/26	United States	$	27,500,000			15,451,562

Corporate Bonds 34.1%
Communication Services 2.2%
^dCCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 144A, 5.125%, 5/01/27	United States		15,000,000			15,843,750
DISH DBS Corp., senior bond, 5.875%, 7/15/22	United States		12,000,000			12,594,720
^dSirius XM Radio Inc., senior bond, 144A, 5.375%, 4/15/25	United States		15,000,000			15,656,250
Sprint Corp., senior note, 7.625%, 2/15/25	United States		10,000,000			11,012,500
^dSprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC, senior secured bond, first lien, 144A, 4.738%, 9/20/29	United States		25,000,000			26,656,500

						81,763,720

Consumer Discretionary 2.5%
Dollar General Corp., senior bond, 3.875%, 4/15/27	United States		10,000,000			10,780,465
Dollar Tree Inc., senior note, 4.00%, 5/15/25	United States		15,000,000			16,144,305
Ford Motor Credit Co. LLC, senior note, 5.113%, 5/03/29	United States		25,000,000			25,337,057
Las Vegas Sands Corp., senior bond, 3.90%, 8/08/29	United States		10,000,000			10,316,391
NIKE Inc., senior bond, 2.375%, 11/01/26	United States		20,000,000			20,509,756
^dWynn Las Vegas LLC/Wynn Las Vegas Capital Corp., senior bond, 144A, 5.50%, 3/01/25	United States		10,000,000			10,650,000

						93,737,974

Consumer Staples 3.9%
Anheuser-Busch Cos. LLC/InBev Worldwide Inc., senior bond, 4.90%, 2/01/46	Belgium		10,000,000			11,957,338
BAT Capital Corp., senior note, 3.557%, 8/15/27	United Kingdom		15,000,000			15,128,901
The Clorox Co., senior bond, 3.10%, 10/01/27	United States		15,000,000			15,754,066
Costco Wholesale Corp., senior note, 2.75%, 5/18/24	United States		15,000,000			15,583,389
Kraft Heinz Foods Co., senior bond, 3.00%, 6/01/26	United States		15,000,000			14,961,186
The Procter & Gamble Co., senior note, 2.70%, 2/02/26	United States		25,000,000			26,059,749
Reynolds American Inc., senior note, 4.45%, 6/12/25	United Kingdom		15,000,000			16,111,528
Tyson Foods Inc., senior bond, 3.95%, 8/15/24	United States		12,100,000			12,995,499
Walmart Inc., senior bond, 3.25%, 7/08/29	United States		20,000,000			21,660,133

						150,211,789

Energy 1.8%
^dCalumet Specialty Products Partners LP/Calumet Finance Corp., senior note, 144A, 11.00%, 4/15/25	United States		20,000,000			20,200,000
Nabors Industries Inc., senior note, 5.50%, 1/15/23	United States		25,000,000			21,250,000
The Williams Cos. Inc.,
senior note, 3.60%, 3/15/22	United States		15,000,000			15,440,309
senior note, 4.55%, 6/24/24	United States		10,000,000			10,795,844

						67,686,153



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STATEMENT OF INVESTMENTS

Franklin Managed Income Fund(continued)


	Country		Principal Amount	*		Value
Corporate Bonds(continued)
Financials 8.2%
Bank of America Corp.,
senior bond, 3.419% to 12/20/27, FRN thereafter, 12/20/28	United States	$	15,000,000		$	15,728,517
sub. bond, 4.183%, 11/25/27	United States		10,000,000			10,840,513
Barclays PLC, senior note, 3.65%, 3/16/25	United Kingdom		15,000,000			15,583,875
^eBB&T Corp., junior sub. bond, 4.80% to 9/01/24, FRN thereafter, Perpetual	United States		25,000,000			25,518,750
BBVA USA, sub. note, 3.875%, 4/10/25	United States		15,000,000			15,830,234
Capital One Financial Corp.,
senior bond, 3.80%, 1/31/28	United States		20,000,000			21,287,652
senior note, 3.75%, 3/09/27	United States		10,000,000			10,630,907
sub. note, 3.75%, 7/28/26	United States		10,000,000			10,570,201
Citigroup Inc., sub. bond, 4.125%, 7/25/28	United States		20,000,000			21,682,040
The Goldman Sachs Group Inc., senior note, 3.50%, 11/16/26	United States		15,000,000			15,652,723
HSBC Holdings PLC, senior note, 4.292% to 9/12/25, FRN thereafter, 9/12/26	United Kingdom		20,000,000			21,671,300
^e,fJPMorgan Chase & Co., junior sub. bond, V, FRN, 5.419%, (3-month USD LIBOR + 3.32%), Perpetual	United States		15,000,000			15,112,500
^dLiberty Mutual Group Inc., senior note, 144A, 4.95%, 5/01/22	United States		7,100,000			7,549,145
Morgan Stanley,
senior note, 3.125%, 1/23/23	United States		20,000,000			20,588,592
senior sub. bond, 4.35%, 9/08/26	United States		15,000,000			16,357,230
Navient Corp., senior note, 6.125%, 3/25/24	United States		15,000,000			15,742,710
^ePNC Financial Services Group Inc., junior sub. note, 4.85% to 6/01/23, FRN thereafter, Perpetual	United States		12,000,000			12,392,640
Prudential Financial Inc., junior sub. bond, 5.70% to 9/15/28, FRN thereafter, 9/15/48	United States		20,000,000			22,728,400
^eWells Fargo & Co., junior sub. bond, 5.875% to 6/15/25, FRN thereafter, Perpetual	United States		15,000,000			16,625,325

						312,093,254

Health Care 6.9%
Anthem Inc., senior bond, 3.65%, 12/01/27	United States		10,000,000			10,587,127
^dBausch Health Cos. Inc.,
senior bond, 144A, 6.125%, 4/15/25	United States		6,300,000			6,555,937
senior note, 144A, 5.875%, 5/15/23	United States		3,207,000			3,265,528
senior secured note, first lien, 144A, 5.50%, 11/01/25	United States		10,000,000			10,487,600
^dBayer U.S. Finance II LLC, senior note, 144A, 4.25%, 12/15/25	Germany		15,000,000			16,121,202
Biogen Inc., senior note, 3.625%, 9/15/22	United States		10,000,000			10,454,571
^dBristol-Myers Squibb Co.,
senior bond, 144A, 3.40%, 7/26/29	United States		10,000,000			10,769,769
senior bond, 144A, 4.25%, 10/26/49	United States		10,000,000			11,730,940
CHS/Community Health Systems Inc.,
^dsenior secured note, 144A, 8.00%, 3/15/26	United States		10,000,000			9,800,000
senior secured note, first lien, 6.25%, 3/31/23	United States		25,000,000			24,453,125
Cigna Corp.,
senior note, 3.75%, 7/15/23	United States		20,000,000			20,978,273
^dsenior note, 144A, 3.40%, 3/01/27	United States		15,000,000			15,488,547
CVS Health Corp.,
senior bond, 5.05%, 3/25/48	United States		15,000,000			17,209,817
senior note, 3.875%, 7/20/25	United States		15,000,000			15,960,801



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Managed Income Fund(continued)


	Country		Principal Amount	*		Value
Corporate Bonds(continued)
Health Care(continued)
Edwards Lifesciences Corp., senior note, 4.30%, 6/15/28	United States	$	9,700,000		$	10,956,230
HCA Inc., senior note, 5.375%, 9/01/26	United States		25,000,000			27,312,500
Mylan Inc., senior bond, 4.55%, 4/15/28	United States		19,000,000			20,384,150
Tenet Healthcare Corp., senior secured note, first lien, 4.625%, 7/15/24	United States		20,000,000			20,650,000


						263,166,117

Industrials 2.1%
^dAshtead Capital Inc., secured note, second lien, 144A, 4.125%, 8/15/25	United Kingdom		21,000,000			21,525,000
CNH Industrial NV, senior bond, 3.85%, 11/15/27	United Kingdom		15,000,000			15,656,625
Lockheed Martin Corp., senior bond, 3.55%, 1/15/26	United States		20,000,000			21,629,718
United Rentals North America Inc., senior note, 4.625%, 10/15/25	United States		20,000,000			20,500,000


						79,311,343

Information Technology 2.2%
^dCommScope Technologies LLC, senior bond, 144A, 5.00%, 3/15/27	United States		20,000,000			16,450,000
^dDell International LLC/EMC Corp., senior secured note, first lien, 144A, 4.42%, 6/15/21	United States		18,000,000			18,599,019
Fiserv Inc., senior bond, 4.20%, 10/01/28	United States		20,000,000			22,275,714
Microchip Technology Inc., senior secured note, 4.333%, 6/01/23	United States		15,000,000			15,885,154
Xilinx Inc., senior note, 2.95%, 6/01/24	United States		11,000,000			11,382,101


						84,591,988

Materials 1.4%
DuPont de Nemours Inc., senior note, 4.493%, 11/15/25	United States		20,000,000			22,152,424
Freeport-McMoRan Inc., senior bond, 5.25%, 9/01/29	United States		10,000,000			10,203,000
^dSyngenta Finance NV, senior note, 144A, 5.182%, 4/24/28	Switzerland		20,000,000			21,213,540


						53,568,964

Real Estate 1.8%
American Tower Corp., senior bond, 3.375%, 10/15/26	United States		15,000,000			15,620,518
Healthpeak Properties Inc., senior bond, 3.875%, 8/15/24	United States		21,700,000			23,288,376
Prologis LP, senior note, 4.25%, 8/15/23	United States		12,000,000			12,958,563
Realty Income Corp., senior bond, 3.875%, 7/15/24	United States		15,000,000			16,097,773


						67,965,230

Utilities 1.1%
Duke Energy Corp., senior bond, 3.15%, 8/15/27	United States		20,000,000			20,847,575
^dVistra Operations Co. LLC, senior secured bond, first lien, 144A, 4.30%, 7/15/29	United States		20,000,000			20,806,363

						41,653,938


Total Corporate Bonds (Cost $1,216,976,799)						1,295,750,470


U.S. Government and Agency Securities 8.0%
U.S. Treasury Note,
2.25%, 3/31/20	United States		100,000,000			100,269,531
2.75%, 9/30/20	United States		100,000,000			101,025,391
2.75%, 9/15/21	United States		50,000,000			51,105,469
2.875%, 10/31/23	United States		50,000,000			52,616,211


Total U.S. Government and Agency Securities (Cost $299,823,313)						305,016,602



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FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Managed Income Fund(continued)


		Country		Principal Amount	*		Value
Mortgage-Backed Securities 1.1%
Federal Home Loan Mortgage Corp. (FHLMC) Fixed Rate 0.1%
FHLMC 30 Year, 4.00%, 10/01/49		United States	$	2,234,766		$	2,323,952

Federal National Mortgage Association (FNMA) Fixed Rate 0.2%
FNMA 30 Year, 4.00%, 6/01/49		United States		7,027,056			7,304,009

Government National Mortgage Association (GNMA) Fixed Rate 0.8%
GNMA II SF 30 Year, 3.50%, 9/20/49		United States		19,279,789			20,052,933
GNMA II SF 30 Year, 4.00%, 9/20/49		United States		9,789,975			10,257,732

Total Mortgage-Backed Securities (Cost $39,884,902)							39,938,626


		Number of Contracts		Notional Amount	^*

Options Purchased 0.4%
Puts - Exchange-Traded
SPDR S&P 500 ETF Trust, December Strike Price $290.00, Expires 12/20/19		10,000		1,000,000			2,410,000
SPDR S&P 500 ETF Trust, June Strike Price $300.00, Expires 6/19/20		10,000		1,000,000			14,200,000

Total Options Purchased (Cost $28,140,769)							16,610,000

Total Investments before Short Term Investments (Cost $3,082,089,431)							3,462,700,635


	Country		Shares

Short Term Investments (Cost $331,668,940) 8.7%

Money Market Funds 8.7%
^b,gInstitutional Fiduciary Trust Money Market Portfolio, 1.56%		United States		331,668,940			331,668,940


Total Investments (Cost $3,413,758,371) 99.8%							3,794,369,575
Options Written (0.1)%							(5,208,470	)
Other Assets, less Liabilities 0.3%							14,329,220


Net Assets 100.0%						$	3,803,490,325


	Number of Contracts		Notional Amount

^hOptions Written (0.1)%
Calls - Exchange-Traded
3M Co., January Strike Price $185.00, Expires 1/17/20		2,000		200,000			(104,000	)
Analog Devices Inc., December Strike Price $125.00, Expires 12/20/19		3,500		350,000			(105,000	)
AT&T Inc., November Strike Price $40.00, Expires 11/15/19		10,000		1,000,000			(60,000	)
Bristol-Myers Squibb Co., December Strike Price $55.00, Expires 12/20/19		10,000		1,000,000			(3,320,000	)
The Coca-Cola Co., January Strike Price $57.50, Expires 1/17/20		6,500		650,000			(169,000	)
CVS Health Corp., November Strike Price $70.00, Expires 11/15/19		3,000		300,000			(165,000	)
General Dynamics Corp., January Strike Price $200.00, Expires 1/17/20		1,500		150,000			(52,500	)
Intel Corp., January Strike Price $60.00, Expires 1/17/20		6,850		685,000			(548,000	)



60	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Managed Income Fund(continued)


	Number of Contracts		Notional Amount		Value

^hOptions Written(continued)
Calls - Exchange-Traded(continued)
International Business Machines Corp., January Strike Price $155.00, Expires 1/17/20		2,000		200,000	$	(22,000	)
Northrop Grumman Corp., November Strike Price $400.00, Expires 11/15/19		1,050		105,000		(3,150	)
PepsiCo Inc., January Strike Price $145.00, Expires 1/17/20		1,870		187,000		(102,850	)
Texas Instruments Inc., November Strike Price $140.00, Expires 11/15/19		1,970		197,000		(1,970	)

						(4,653,470	)


Puts - Exchange-Traded
General Dynamics Corp., January Strike Price $160.00, Expires 1/17/20		1,000		100,000		(190,000	)
SPDR S&P 500 ETF Trust, December Strike Price $250.00, Expires 12/20/19		5,000		500,000		(135,000	)
SPDR S&P 500 ETF Trust, December Strike Price $260.00, Expires 12/20/19		5,000		500,000		(230,000	)

						(555,000	)

Total Options Written (Premiums received $10,367,474)					$	(5,208,470	)

See Abbreviations on page 91.

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

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

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

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

^dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At October 31, 2019, the aggregate value of these securities was $723,806,237, representing 19.0% of net assets.

^ePerpetual security with no stated maturity date.

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

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

^hSee Note 1(d) regarding written options.



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FRANKLIN INVESTORS SECURITIES TRUST

Financial Highlights

Franklin Real Return Fund


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class A

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$9.75			$10.14			$10.09			$9.92			$10.66


Income from investment operations^a:

Net investment income^b		0.16			0.19			0.17			0.12			0.05

Net realized and unrealized gains (losses)		0.11			(0.25	)		0.01			0.15			(0.72	)


Total from investment operations		0.27			(0.06	)		0.18			0.27			(0.67	)


Less distributions from:

Net investment income		(0.14	)		(0.33	)		(0.13	)		(0.09	)		(0.07	)

Tax return of capital		—			—			—			(0.01	)		—


Total distributions		(0.14	)		(0.33	)		(0.13	)		(0.10	)		(0.07	)


Net asset value, end of year		$9.88			$9.75			$10.14			$10.09			$9.92


Total return^c		2.80%			(0.69	)%		1.77%			2.77%			(6.32)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.17%			1.16%			1.17%			1.12%			1.10%

Expenses net of waiver and payments by affiliates^d		0.87%			0.90%			0.90%			0.90%			0.90%

Net investment income		1.66%			1.92%			1.69%			1.18%			0.43%

Supplemental data

Net assets, end of year (000’s)		$113,358			$132,772			$146,866			$161,541			$185,743

Portfolio turnover rate		35.41%			27.83%			32.44%			31.82%			26.57%

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

^bBased on average daily shares outstanding.

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

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class C

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$9.64			$10.03			$10.00			$9.82			$10.59


Income from investment operations^a:

Net investment income^b		0.12			0.15			0.13			0.08			—	^c

Net realized and unrealized gains (losses)		0.11			(0.25	)		—	^c		0.16			(0.71	)


Total from investment operations		0.23			(0.10	)		0.13			0.24			(0.71	)


Less distributions from:

Net investment income		(0.10	)		(0.29	)		(0.10	)		(0.05	)		(0.06	)

Tax return of capital		—			—			—			(0.01	)		—


Total distributions		(0.10	)		(0.29	)		(0.10	)		(0.06	)		(0.06	)


Net asset value, end of year		$9.77			$9.64			$10.03			$10.00			$9.82


Total return^d		2.44%			(1.06	)%		1.30%			2.44%			(6.70)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		1.57%			1.56%			1.57%			1.52%			1.50%

Expenses net of waiver and payments by affiliates^e		1.27%			1.30%			1.30%			1.30%			1.30%

Net investment income		1.26%			1.52%			1.29%			0.78%			0.04%

Supplemental data

Net assets, end of year (000’s)		$17,344			$24,685			$33,844			$39,568			$48,084

Portfolio turnover rate		35.41%			27.83%			32.44%			31.82%			26.57%

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

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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

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



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Class R6

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$9.81			$10.19			$10.15			$9.98			$10.68


Income from investment operations^a:

Net investment income^b		0.21			0.22			0.22			0.16			0.10

Net realized and unrealized gains (losses)		0.11			(0.24	)		(0.01	)		0.16			(0.72	)


Total from investment operations		0.32			(0.02	)		0.21			0.32			(0.62	)


Less distributions from:

Net investment income		(0.18	)		(0.36	)		(0.17	)		(0.14	)		(0.08	)

Tax return of capital		—			—			—			(0.01	)		—


Total distributions		(0.18	)		(0.36	)		(0.17	)		(0.15	)		(0.08	)


Net asset value, end of year		$9.95			$9.81			$10.19			$10.15			$9.98


Total return		3.26%			(0.21	)%		2.09%			3.25%			(5.87)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.80%			0.81%			0.72%			0.71%			0.71%

Expenses net of waiver and payments by affiliates^c		0.46%			0.49%			0.49%			0.50%			0.50%

Net investment income		2.07%			2.33%			2.11%			1.58%			0.83%

Supplemental data

Net assets, end of year (000’s)		$11,940			$14,475			$5,727			$5,326			$1,730

Portfolio turnover rate		35.41%			27.83%			32.44%			31.82%			26.57%

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

^bBased on average daily shares outstanding.

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



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL HIGHLIGHTS

Franklin Real Return Fund (continued)


	Year Ended October 31,
	2019			2018			2017			2016			2015

Advisor Class

Per share operating performance
(for a share outstanding throughout the year)

Net asset value, beginning of year		$9.79			$10.18			$10.13			$9.96			$10.68


Income from investment operations^a:

Net investment income^b		0.18			0.23			0.20			0.14			0.05

Net realized and unrealized gains (losses)		0.12			(0.27	)		—	^c		0.16			(0.70	)


Total from investment operations		0.30			(0.04	)		0.20			0.30			(0.65	)


Less distributions from:

Net investment income		(0.16	)		(0.35	)		(0.15	)		(0.12	)		(0.07	)

Tax return of capital		—			—			—			(0.01	)		—


Total distributions		(0.16	)		(0.35	)		(0.15	)		(0.13	)		(0.07	)


Net asset value, end of year		$9.93			$9.79			$10.18			$10.13			$9.96


Total return		3.12%			(0.47	)%		2.03%			3.04%			(6.08)%

Ratios to average net assets

Expenses before waiver and payments by affiliates		0.92%			0.91%			0.92%			0.87%			0.85%

Expenses net of waiver and payments by affiliates^d		0.62%			0.65%			0.65%			0.65%			0.65%

Net investment income		1.91%			2.17%			1.94%			1.43%			0.68%

Supplemental data

Net assets, end of year (000’s)		$9,603			$19,703			$40,077			$35,215			$37,758

Portfolio turnover rate		35.41%			27.83%			32.44%			31.82%			26.57%

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

^bBased on average daily shares outstanding.

^cAmount rounds to less than $0.01 per share.

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



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	65

FRANKLIN INVESTORS SECURITIES TRUST

Statement of Investments, October 31, 2019

Franklin Real Return Fund


	Country		Shares		Value
Common Stocks 10.5%
Energy 5.3%
Canadian Natural Resources Ltd.		Canada		33,700	$	849,914
Chevron Corp.		United States		13,700		1,591,117
Exxon Mobil Corp.		United States		15,277		1,032,267
Halliburton Co.		United States		33,300		641,025
Noble Energy Inc.		United States		27,400		527,724
Occidental Petroleum Corp.		United States		25,153		1,018,696
Pioneer Natural Resources Co.		United States		4,700		578,194
Royal Dutch Shell PLC, A, ADR		United Kingdom		19,800		1,147,806
Schlumberger Ltd.		United States		20,850		681,587


						8,068,330

Materials 5.2%
BHP Group PLC, ADR.		United Kingdom		32,700		1,387,134
Corteva Inc.		United States		8,866		233,885
Dow Inc.		United States		8,866		447,644
DuPont de Nemours Inc.		United States		8,866		584,358
Freeport-McMoRan Inc.		United States		53,046		520,912
Newmont Goldcorp Corp.		United States		33,324		1,323,963
Nucor Corp.		United States		21,000		1,130,850
Nutrien Ltd.		Canada		19,624		937,831
Rio Tinto PLC, ADR		Australia		27,700		1,440,677


						8,007,254


Total Common Stocks (Cost $18,038,585)						16,075,584


Management Investment Companies 10.6%

Diversified Financials 10.6%
iShares Global Infrastructure ETF		United States		95,000		4,481,150
SPDR Dow Jones REIT ETF		United States		109,700		11,598,581


Total Management Investment Companies (Cost $9,329,164)						16,079,731


			Principal Amount
U.S. Government and Agency Securities 73.8%
^aU.S. Treasury Note,
Index Linked, 1.375%, 1/15/20		United States	$	2,372,837		2,373,023
Index Linked, 0.125%, 4/15/20		United States		10,407,797		10,352,913
Index Linked, 1.25%, 7/15/20		United States		9,411,304		9,480,970
Index Linked, 0.125%, 4/15/21		United States		12,556,919		12,462,468
Index Linked, 0.625%, 7/15/21		United States		7,171,403		7,220,665
Index Linked, 0.125%, 1/15/22		United States		7,027,919		6,982,785
Index Linked, 0.125%, 4/15/22		United States		22,153,889		21,984,532
Index Linked, 0.125%, 7/15/22		United States		6,917,034		6,906,978
Index Linked, 0.125%, 1/15/23		United States		7,002,443		6,962,353
Index Linked, 0.625%, 1/15/24		United States		8,246,618		8,384,557
Index Linked, 0.125%, 7/15/24		United States		8,643,935		8,652,552



66	Annual Report	franklintempleton.com

FRANKLIN INVESTORS SECURITIES TRUST

STATEMENT OF INVESTMENTS

Franklin Real Return Fund(continued)

Country

Principal
Amount

Value

U.S. Government and Agency Securities(continued)

^aU.S. Treasury Note, (continued)

Index Linked, 0.25%, 1/15/25

United States

10,506,964

10,544,101

Total U.S. Government and Agency Securities
(Cost $111,798,437)

112,307,897

Total Investments before Short Term Investments
(Cost $139,166,186)

144,463,212

Short Term Investments (Cost $7,981,406) 5.2%

Repurchase Agreements 5.2%

^bJoint Repurchase Agreement, 1.722%, 11/01/19 (Maturity Value $7,981,787)

BNP Paribas Securities Corp. (Maturity Value $5,650,068)

Deutsche Bank Securities Inc. (Maturity Value $1,390,028)

HSBC Securities (USA) Inc. (Maturity Value $941,691)

Collateralized by U.S. Government Agency Securities, 5.00%, 10/20/48;^cU.S. Treasury Bills, 12/03/19 - 12/10/19; and U.S. Treasury Notes, 1.625% - 1.875%, 3/15/20 - 4/30/22 (valued at $8,141,182)

United States

7,981,406

Total Investments (Cost $147,147,592) 100.1%

152,444,618

Other Assets, less Liabilities (0.1)%

(199,613

)

Net Assets 100.0%

152,245,005

See Abbreviations on page 91.

^aPrincipal amount of security is adjusted for inflation. See Note 1(h).

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

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



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	67

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities

October 31, 2019


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund
Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	3,399,475,988	$	1,740,793,695	$	3,045,481,931	$	139,166,186
Cost - Controlled affiliates (Note 3f)		—		—		36,607,500		—
Cost - Non-controlled affiliates (Note 3f)		89,909,657		69,588,667		331,668,940		—
Cost - Unaffiliated repurchase agreements		—		—		—		7,981,406


Value - Unaffiliated issuers	$	3,797,090,441	$	2,439,705,031	$	3,426,103,835	$	144,463,212
Value - Controlled affiliates (Note 3f)		—		—		36,596,800		—
Value - Non-controlled affiliates (Note 3f)		89,909,657		69,588,667		331,668,940		—
Value - Unaffiliated repurchase agreements		—		—		—		7,981,406
Cash		—		246,660		198,264		—
Foreign currency, at value (cost $—, $—, $— and $79,350, respectively)		—		—		—		79,394
Receivables:
Investment securities sold		—		2,816,052		—		—
Capital shares sold		3,638,604		9,546,681		5,078,641		72,199
Dividends and interest		13,902,899		2,906,937		18,334,843		119,527
European Union tax reclaims		—		63,855		88,846		—
Other assets		1,146		696		1,094		59

Total assets		3,904,542,747		2,524,874,579		3,818,071,263		152,715,797

Liabilities:
Payables:
Investment securities purchased		40,000,000		15,907,741		—		—
Capital shares redeemed		4,408,392		2,746,900		5,889,578		294,488
Management fees		1,441,185		944,252		1,688,256		34,081
Distribution fees		469,907		598,035		1,040,713		34,067
Transfer agent fees		788,114		452,098		527,704		31,452
Professional fees		59,991		46,683		65,697		43,771
Options written, at value (premiums received $—, $—, $10,367,474 and $—, respectively)		—		—		5,208,470		—
Accrued expenses and other liabilities		145,574		107,069		160,520		32,933

Total liabilities		47,313,163		20,802,778		14,580,938		470,792

Net assets, at value	$	3,857,229,584	$	2,504,071,801	$	3,803,490,325	$	152,245,005


Net assets consist of:
Paid-in capital	$	3,202,104,249	$	1,725,963,367	$	3,279,222,498	$	178,348,018
Total distributable earnings (loss)		655,125,335		778,108,434		524,267,827		(26,103,013	)

Net assets, at value	$	3,857,229,584	$	2,504,071,801	$	3,803,490,325	$	152,245,005



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Assets and Liabilities(continued)

October 31, 2019


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund
Class A:
Net assets, at value	$	1,169,927,961	$	2,017,910,044	$	2,966,899,403	$	113,358,267


Shares outstanding		52,866,205		76,937,970		231,730,378		11,470,554


Net asset value per share^a		$22.13		$26.23		$12.80		$9.88


Maximum offering price per share (net asset value per share ÷ 94.50%, 94.50%, 94.50% and 96.25%, respectively)		$23.42		$27.76		$13.54		$10.26

Class C:
Net assets, at value	$	256,075,132	$	208,733,838	$	491,751,432	$	17,343,564


Shares outstanding		11,762,976		8,026,169		38,799,229		1,774,815


Net asset value and maximum offering price per share^a		$21.77		$26.01		$12.67		$9.77

Class R:
Net assets, at value			$	7,283,663	$	4,080,893

Shares outstanding				277,670		317,855

Net asset value and maximum offering price per share				$26.23		$12.84
Class R6:
Net assets, at value	$	51,791,422	$	96,405,674	$	159,877,086	$	11,940,061


Shares outstanding		2,324,951		3,667,530		12,446,592		1,200,116


Net asset value and maximum offering price per share		$22.28		$26.29		$12.85		$9.95

Advisor Class:

Net assets, at value	$	2,379,435,069	$	173,738,582	$	180,881,511	$	9,603,113


Shares outstanding		107,480,292		6,612,377		14,091,775		967,277


Net asset value and maximum offering price per share		$22.14		$26.27		$12.84		$9.93

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



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	69

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations

for the year ended October 31, 2019


	Franklin Convertible Securities Fund			Franklin Equity Income Fund			Franklin Managed Income Fund			Franklin Real Return Fund
Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers		$ 30,577,922			$61,578,114			$ 46,774,308			$ 1,341,185
Non-controlled affiliates (Note 3f)		2,673,614			777,035			3,230,705			504,877
Interest:
Unaffiliated issuers:
Inflation principal adjustments		—			—			—			2,192,434
Paid in cash		35,958,229			—			68,056,004			435,226
Income from securities loaned:
Unaffiliated issuers (net of fees and rebates)		—			—			785			—
Non-controlled affiliates (Note 3f)		—			—			993			—


Total investment income		69,209,765			62,355,149			118,062,795			4,473,722

Expenses:
Management fees (Note 3a)		17,556,232			10,703,178			20,531,667			1,104,670
Distribution fees: (Note 3c)
Class A		2,945,158			4,658,795			6,907,412			315,511
Class C		2,872,849			2,063,809			5,009,434			138,196
Class R		—			34,218			19,506			—
Transfer agent fees: (Note 3e)
Class A		1,464,936			2,314,350			2,952,360			226,974
Class C		356,647			255,959			535,141			38,215
Class R		—			8,862			4,174			—
Class R6		34,909			33,906			47,534			8,022
Advisor Class		2,874,274			175,784			168,649			27,758
Custodian fees (Note 4)		31,743			26,759			42,192			2,173
Reports to shareholders		315,259			176,028			235,529			32,523
Registration and filing fees		186,919			175,396			179,452			70,677
Professional fees		76,072			75,249			166,015			59,111
Trustees’ fees and expenses		44,034			25,575			39,520			2,153
Other		69,778			50,089			86,042			31,187


Total expenses		28,828,810			20,777,957			36,924,627			2,057,170
Expense reductions (Note 4)		(14,034	)		(4,641	)		(49,298	)		(755	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(499,886	)		(149,239	)		(557,058	)		(526,810	)


Net expenses		28,314,890			20,624,077			36,318,271			1,529,605


Net investment income		40,894,875			41,731,072			81,744,524			2,944,117

Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		324,390,042			91,531,662			208,129,556			(2,559,436	)
Controlled affiliates (Note 3f)		—			—			(8,591,145	)		—
Non-controlled affiliates (Note 3f)		—			—			—			(1,271,716	)
Written options		—			—			10,555,397			—
Foreign currency transactions		—			3,840			(292,105	)		(1,484	)
Capital gain distributions from management investment companies:
Controlled affiliates (Note 3f)		—			—			4,386,856			—


Net realized gain (loss)		324,390,042			91,535,502			214,188,559			(3,832,636	)



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

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Operations (continued)

for the year ended October 31, 2019


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		$115,337,070		$146,775,826		$124,502,934		$5,850,394
Controlled affiliates (Note 3f)		—		—		3,643,550		—
Non-controlled affiliates (Note 3f)		—		—		—		191,492
Translation of other assets and liabilities denominated in foreign currencies		—		13,072		3,087		285
Written options		—		—		3,141,875		—

Net change in unrealized appreciation (depreciation)		115,337,070		146,788,898		131,291,446		6,042,171


Net realized and unrealized gain (loss)		439,727,112		238,324,400		345,480,005		2,209,535

Net increase (decrease) in net assets resulting from operations		$480,621,987		$280,055,472		$427,224,529		$5,153,652


*Foreign taxes withheld on dividends		$	—			$	1,071,552			$	1,146,364			$	19,652



franklintempleton.com	The accompanying notes are an integral part of these financial statements. \| Annual Report	71

FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets


	Franklin Convertible Securities Fund						Franklin Equity Income Fund

	Year Ended October 31,						Year Ended October 31,

	2019			2018			2019			2018

Increase (decrease) in net assets:
Operations:
Net investment income	$	40,894,875		$	25,909,414		$	41,731,072		$	35,094,167
Net realized gain (loss)		324,390,042			245,578,005			91,535,502			106,911,824
Net change in unrealized appreciation (depreciation)		115,337,070			(102,999,826	)		146,788,898			(57,133,702	)

Net increase (decrease) in net assets resulting from operations		480,621,987			168,487,593			280,055,472			84,872,289

Distributions to shareholders:
Class A		(66,139,328	)		(63,608,374	)		(113,557,485	)		(82,499,588	)
Class C		(14,733,353	)		(21,106,601	)		(11,317,759	)		(10,790,019	)
Class R		—			—			(419,288	)		(315,650	)
Class R6		(3,516,561	)		(2,162,200	)		(5,532,461	)		(3,914,155	)
Advisor Class		(131,568,983	)		(124,290,867	)		(8,002,666	)		(4,738,259	)

Total distributions to shareholders		(215,958,225	)		(211,168,042	)		(138,829,659	)		(102,257,671	)

Capital share transactions: (Note 2)
Class A		(66,639,987	)		344,731,206			152,902,721			13,100,601
Class C		(64,918,362	)		(1,890,826	)		(7,886,644	)		(61,548,993	)
Class R		—			—			93,237			(272,949	)
Class R6		(9,724,781	)		35,475,394			9,835,991			69,294,512
Advisor Class		32,971,457			681,304,202			53,962,771			(37,318,550	)

Total capital share transactions		(108,311,673	)		1,059,619,976			208,908,076			(16,745,379	)

Net increase (decrease) in net assets		156,352,089			1,016,939,527			350,133,889			(34,130,761	)
Net assets:
Beginning of year		3,700,877,495			2,683,937,968			2,153,937,912			2,188,068,673

End of year	$	3,857,229,584		$	3,700,877,495		$	2,504,071,801		$	2,153,937,912



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FRANKLIN INVESTORS SECURITIES TRUST

FINANCIAL STATEMENTS

Statements of Changes in Net Assets(continued)


	Franklin Managed Income Fund						Franklin Real Return Fund

	Year Ended October 31,						Year Ended October 31,

	2019			2018			2019			2018

Increase (decrease) in net assets:
Operations:
Net investment income	$	81,744,524		$	73,691,923		$	2,944,117		$	3,896,092
Net realized gain (loss)		214,188,559			38,766,320			(3,832,636	)		4,314,310
Net change in unrealized appreciation (depreciation)		131,291,446			(83,381,646	)		6,042,171			(9,287,071	)

Net increase (decrease) in net assets resulting from operations		427,224,529			29,076,597			5,153,652			(1,076,669	)

Distributions to shareholders:
Class A		(122,327,719	)		(124,779,231	)		(1,815,361	)		(4,501,773	)
Class C		(19,053,022	)		(24,853,963	)		(229,717	)		(905,045	)
Class R		(160,782	)		(205,981	)		—			—
Class R6		(6,990,241	)		(6,906,404	)		(247,375	)		(372,274	)
Advisor Class		(7,106,607	)		(6,100,753	)		(254,048	)		(829,402	)

Total distributions to shareholders		(155,638,371	)		(162,846,332	)		(2,546,501	)		(6,608,494	)

Capital share transactions: (Note 2)
Class A		170,733,085			40,700,401			(21,240,102	)		(8,760,975	)
Class C		(39,706,617	)		(116,913,479	)		(7,647,853	)		(8,013,165	)
Class R		422,350			(1,229,264	)		—			—
Class R6		9,808,027			144,466,333			(2,740,402	)		9,265,304
Advisor Class		44,080,423			(115,174,213	)		(10,368,871	)		(19,684,992	)

Total capital share transactions		185,337,268			(48,150,222	)		(41,997,228	)		(27,193,828	)

Net increase (decrease) in net assets		456,923,426			(181,919,957	)		(39,390,077	)		(34,878,991	)
Net assets:
Beginning of year		3,346,566,899			3,528,486,856			191,635,082			226,514,073

End of year	$	3,803,490,325		$	3,346,566,899		$	152,245,005		$	191,635,082



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

FRANKLIN INVESTORS SECURITIES TRUST

Notes to Financial Statements

1. Organization and Significant Accounting Policies

Franklin Investors Securities Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of eight separate funds, four of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees. Franklin Convertible Securities Fund was closed to new investors with limited exceptions effective at the close of market on August 29, 2018. Franklin Real Return Fund was closed to new investors with limited exceptions effective at the close of market August 27, 2019.

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

Franklin Managed Income Fund

Franklin Equity Income Fund

Class A, Class C, Class R6 & Advisor Class

Franklin Convertible Securities Fund

Franklin Real Return Fund

Effective March 1, 2019, Franklin Balanced Fund was renamed Franklin Managed Income Fund.

The following summarizes the Funds’ significant accounting policies.

a. Financial Instrument Valuation

independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

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

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

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

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



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

b. Foreign Currency Translation

c. Joint Repurchase Agreement



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1. Organization and Significant Accounting Policies(continued)

c. Joint Repurchase Agreement(continued)

be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Funds, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Funds may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Funds in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Funds at year end, as indicated in the Statements of Investments, had been entered into on October 31, 2019.

d. Derivative Financial Instruments

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

See Note 8 regarding other derivative information.

e. 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.

f. Securities Lending

Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Funds, and/or a joint repurchase agreement. The Fund may receive



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income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statements of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At October 31, 2019, the Funds had no securities on loan.

g. Income and Deferred Taxes

As a result of several court cases, in certain countries across the European Union, certain or all Funds filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statements of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statements of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims

received by the Funds, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

h. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income and capital gain distributions by Underlying Funds are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date. The Franklin Managed Income Fund employs a managed distribution policy. Under this policy, the fund will distribute level monthly distributions in any given year regardless of the performance of the fund; however, the twelfth monthly payment may be greater than the initially anticipated amount if additional income or capital gains are required to be distributed. These distributions may include income and capital gains generated by the Fund, as well as a possible return of capital component, if necessary, to meet the annual distribution rate. The annual payout rate may be adjusted higher or lower from year to year in response to market conditions. 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



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1. Organization and Significant Accounting Policies(continued)

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

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.

Realized and unrealized gains and losses and net investment income, excluding class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.

Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by

amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as inflation principal adjustments in the Statements of Operations.

i. Accounting Estimates

j. Guarantees and Indemnifications

2. Shares of Beneficial Interest

At October 31, 2019, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:


	Franklin Convertible Securities Fund						Franklin Equity Income Fund
	Shares			Amount			Shares			Amount

Class A Shares:
Year ended October 31, 2019
Shares sold^a		6,419,478		$	138,547,580			12,618,566		$	311,210,362
Shares issued in reinvestment of distributions		3,246,558			63,366,459			4,757,293			111,013,154
Shares redeemed		(12,685,094	)		(268,554,026	)		(10,930,597	)		(269,320,795	)

Net increase (decrease)		(3,019,058	)	$	(66,639,987	)		6,445,262		$	152,902,721

Year ended October 31, 2018
Shares sold^a		28,565,417		$	600,371,738			8,522,436		$	215,600,707
Shares issued in reinvestment of distributions		3,028,430			60,507,562			3,204,198			80,643,785
Shares redeemed		(15,150,859	)		(316,148,094	)		(11,186,923	)		(283,143,891	)

Net increase (decrease)		16,442,988		$	344,731,206			539,711		$	13,100,601



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	Franklin Convertible Securities Fund						Franklin Equity Income Fund

	Shares			Amount			Shares			Amount

Class C Shares:
Year ended October 31, 2019
Shares sold		840,031		$	17,694,676			1,754,938		$	42,669,455
Shares issued in reinvestment of distributions		685,031			13,012,703			476,082			10,958,143
Shares redeemed^a		(4,516,464	)		(95,625,741	)		(2,499,030	)		(61,514,242	)


Net increase (decrease)		(2,991,402	)	$	(64,918,362	)		(268,010	)	$	(7,886,644	)


Year ended October 31, 2018
Shares sold		5,832,864		$	120,961,542			1,755,701		$	44,156,220
Shares issued in reinvestment of distributions		963,682			18,860,854			419,604			10,474,658
Shares redeemed^a		(6,928,441	)		(141,713,222	)		(4,640,390	)		(116,179,871	)


Net increase (decrease)		(131,895	)	$	(1,890,826	)		(2,465,085	)	$	(61,548,993	)


Class R Shares:
Year ended October 31, 2019
Shares sold								44,565		$	1,076,955
Shares issued in reinvestment of distributions								16,690			388,732
Shares redeemed								(55,202	)		(1,372,450	)


Net increase (decrease)								6,053		$	93,237


Year ended October 31, 2018
Shares sold								41,575		$	1,049,280
Shares issued in reinvestment of distributions								11,318			284,867
Shares redeemed								(63,625	)		(1,607,096	)

Net increase (decrease)								(10,732	)	$	(272,949	)


Class R6 Shares:
Year ended October 31, 2019
Shares sold		865,814		$	18,678,428			958,941		$	23,746,953
Shares issued in reinvestment of distributions		178,341			3,515,052			187,558			4,394,439
Shares redeemed		(1,502,089	)		(31,918,261	)		(738,112	)		(18,305,401	)

Net increase (decrease)		(457,934	)	$	(9,724,781	)		408,387		$	9,835,991


Year ended October 31, 2018
Shares sold		2,814,780		$	59,072,073			3,474,912		$	87,644,288
Shares issued in reinvestment of distributions		106,403			2,160,058			126,940			3,202,571
Shares redeemed		(1,242,069	)		(25,756,737	)		(849,554	)		(21,552,347	)

Net increase (decrease)		1,679,114		$	35,475,394			2,752,298		$	69,294,512



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2. Shares of Beneficial Interest(continued)


	Franklin Convertible Securities Fund						Franklin Equity Income Fund
	Shares			Amount			Shares			Amount
Advisor Class Shares:
Year ended October 31, 2019
Shares sold		31,898,944		$	682,438,950			3,482,614		$	85,115,695
Shares issued in reinvestment of distributions		5,813,623			113,983,447			310,395			7,308,854
Shares redeemed		(36,235,757	)		(763,450,940	)		(1,575,590	)		(38,461,778	)

Net increase (decrease)		1,476,810		$	32,971,457			2,217,419		$	53,962,771

Year ended October 31, 2018
Shares sold		71,119,463		$	1,499,743,371			1,666,939		$	42,390,161
Shares issued in reinvestment of distributions		5,499,134			109,979,709			167,247			4,221,565
Shares redeemed		(45,190,202	)		(928,418,878	)		(3,322,517	)		(83,930,276	)

Net increase (decrease)		31,428,395		$	681,304,202			(1,488,331	)	$	(37,318,550	)

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

	Franklin Managed Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount
Class A Shares:
Year ended October 31, 2019
Shares sold^a		39,624,179		$	481,294,589			1,958,164		$	19,166,723
Shares issued in reinvestment of distributions		9,892,242			119,363,850			181,785			1,782,297
Shares redeemed		(35,313,277	)		(429,925,354	)		(4,293,664	)		(42,189,122	)

Net increase (decrease)		14,203,144		$	170,733,085			(2,153,715	)	$	(21,240,102	)

Year ended October 31, 2018
Shares sold^a		31,254,193		$	380,495,174			2,394,029		$	23,972,212
Shares issued in reinvestment of distributions		9,972,235			121,740,304			437,971			4,406,173
Shares redeemed		(37,826,274	)		(461,535,077	)		(3,697,499	)		(37,139,360	)

Net increase (decrease)		3,400,154		$	40,700,401			(865,499	)	$	(8,760,975	)

Class C Shares:
Year ended October 31, 2019
Shares sold		6,705,072		$	79,963,632			149,775		$	1,453,938
Shares issued in reinvestment of distributions		1,528,493			18,200,268			22,954			222,413
Shares redeemed^a		(11,352,596	)		(137,870,517	)		(958,563	)		(9,324,204	)

Net increase (decrease)		(3,119,031	)	$	(39,706,617	)		(785,834	)	$	(7,647,853	)

Year ended October 31, 2018
Shares sold		5,331,825		$	64,522,420			384,940		$	3,821,041
Shares issued in reinvestment of distributions		1,966,557			23,818,011			88,631			882,650
Shares redeemed^a		(17,061,942	)		(205,253,910	)		(1,285,936	)		(12,716,856	)
Net increase (decrease)		(9,763,560	)	$	(116,913,479	)		(812,365	)	$	(8,013,165	)



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	Franklin Managed Income Fund						Franklin Real Return Fund
	Shares			Amount			Shares			Amount

Class R Shares:
Year ended October 31, 2019
Shares sold		79,143		$	961,918
Shares issued in reinvestment of distributions		13,269			160,596
Shares redeemed		(57,333	)		(700,164	)

Net increase (decrease)		35,079		$	422,350

Year ended October 31, 2018
Shares sold		52,561		$	644,571
Shares issued in reinvestment of distributions		16,814			205,981
Shares redeemed		(170,975	)		(2,079,816	)

Net increase (decrease)		(101,600	)	$	(1,229,264	)

Class R6 Shares:
Year ended October 31, 2019
Shares sold		2,981,043		$	36,633,670			380,431		$	3,758,860
Shares issued in reinvestment of distributions		576,916			6,987,353			18,370			181,182
Shares redeemed		(2,761,099	)		(33,812,996	)		(674,873	)		(6,680,444	)

Net increase (decrease)		796,860		$	9,808,027			(276,072	)	$	(2,740,402	)

Year ended October 31, 2018
Shares sold		14,240,369		$	176,497,963			1,199,559		$	12,138,483
Shares issued in reinvestment of distributions		564,301			6,905,816			26,854			271,471
Shares redeemed		(3,182,549	)		(38,937,446	)		(312,145	)		(3,144,650	)

Net increase (decrease)		11,622,121		$	144,466,333			914,268		$	9,265,304

Advisor Class Shares:
Year ended October 31, 2019
Shares sold		6,300,058		$	76,396,303			382,594		$	3,772,637
Shares issued in reinvestment of distributions		504,313			6,125,151			25,740			253,013
Shares redeemed		(3,140,172	)		(38,441,031	)		(1,454,147	)		(14,394,521	)

Net increase (decrease)		3,664,199		$	44,080,423			(1,045,813	)	$	(10,368,871	)

Year ended October 31, 2018
Shares sold		3,903,537		$	47,754,786			1,354,135		$	13,625,198
Shares issued in reinvestment of distributions		413,056			5,051,434			79,839			806,460
Shares redeemed		(13,562,421	)		(167,980,433	)		(3,358,885	)		(34,116,650	)

Net increase (decrease)		(9,245,828	)	$	(115,174,213	)		(1,924,911	)	$	(19,684,992	)

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



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3. Transactions with Affiliates


Subsidiary		Affiliation
Franklin Advisers, Inc. (Advisers)		Investment manager
Franklin Templeton Services, LLC (FT Services)		Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)		Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)		Transfer agent

a. Management Fees

Effective March 1, 2019, the Franklin Managed Income 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
0.620%		Up to and including $250 million
0.595%		Over $250 million, up to and including $500 million
0.570%		Over $500 million, up to and including $1 billion
0.545%		Over $1 billion, up to and including $2.5 billion
0.520%		Over $2.5 billion, up to and including $5 billion
0.495%		Over $5 billion, up to and including $10 billion
0.470%		Over $10 billion, up to and including $15 billion
0.445%		Over $15 billion, up to and including $20 billion
0.420%		In excess of $20 billion

Prior to March 1, 2019, the Franklin Managed Income Fund paid fees to Advisers based on the average daily net assets of the Fund as follows:


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



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Franklin Convertible Securities Fund and Franklin Equity Income Fund pay an investment management fee to Advisers based on the month-end net assets of each of the Funds as follows:


Annualized Fee Rate		Net Assets
0.625%		Up to and including $100 million
0.500%		Over $100 million, up to and including $250 million
0.450%		Over $250 million, up to and including $7.5 billion
0.440%		Over $7.5 billion, up to and including $10 billion
0.430%		Over $10 billion, up to and including $12.5 billion
0.420%		Over $12.5 billion, up to and including $15 billion
0.400%		Over $15 billion, up to and including $17.5 billion
0.380%		Over $17.5 billion, up to and including $20 billion
0.360%		Over $20 billion, up to and including $35 billion
0.355%		Over $35 billion, up to and including $50 billion
0.350%		In excess of $50 billion

Franklin Real Return Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:


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

For the year ended October 31, 2019, each Fund’s gross effective investment management fee rate based on average daily net assets was as follows:

Franklin

Convertible

Securities Fund

Franklin Equity

Income Fund

Franklin Managed
Income Fund

Franklin Real

Return Fund

0.458%

0.464%

0.574%

0.625%

b. Administrative Fees



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3. Transactions with Affiliates(continued)

c. Distribution Fees

The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds’ Class A reimbursement distribution plans, the Funds reimburse Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. Under the Class A reimbursement distribution plans, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds’ Class C and R compensation distribution plans, the Funds pay Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31 for each Fund.

The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund

Reimbursement Plans:

Class A		0.25%		0.25%		0.35%		0.25%

Compensation Plans:

Class C		1.00%		1.00%		1.00%		0.65%

Class R		—		0.50%		0.50%		—

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

d. Sales Charges/Underwriting Agreements


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund
Sales charges retained net of commissions paid to unaffiliated brokers/dealers		$68,084		$355,632		$534,845		$2,878
CDSC retained		$48,941		$ 13,576		$ 24,468		$ 790

Effective March 1, 2019, certain front-end sales charges on Class A were lowered for Franklin Real Return Fund. Further details are disclosed in the Funds’ Prospectus.

e. Transfer Agent Fees



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For the year ended October 31, 2019, the Funds paid transfer agent fees as noted in the Statements of Operations of which the following amounts were retained by Investor Services:


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund

Transfer agent fees		$1,306,047		$1,007,964		$1,537,459		$153,149

f. Investments in Affiliated Management Investment Companies


	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 Convertible Securities Fund

Non-Controlled Affiliates
																				Dividends
Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	163,242,682	$	891,386,105	$	(964,719,130	)	$	—		$	—		$	89,909,657			89,909,657		$2,673,614

Franklin Equity Income Fund

Non-Controlled Affiliates
																				Dividends
Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	70,527,817	$	440,294,825	$	(441,233,975	)	$	—		$	—		$	69,588,667			69,588,667		$ 777,035

Franklin Managed Income Fund

Controlled Affiliates
																				Dividends

Franklin FTSE Europe Hedged ETF	$	32,123,250	$	—	$	(29,576,550	)	$	(4,136,075	)	$	1,589,375		$	—	^a		—		$2,829,290	^b

Franklin FTSE Japan Hedged ETF		30,808,000		—		(28,417,805	)		(4,455,070	)		2,064,875			—	^a		—		1,557,566	^b

Franklin Liberty U.S. Low Volatility ETF		—		36,607,500		—			—			(10,700	)		36,596,800			1,000,000		—
Total Controlled Affiliates	$	62,931,250	$	36,607,500	$	(57,994,355	)	$	(8,591,145	)	$	3,643,550		$	36,596,800					$4,386,856

Non-Controlled Affiliates
																				Dividends
Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	126,683,009	$	1,656,589,160	$	(1,451,603,229	)	$	—		$	—		$	331,668,940			331,668,940		$3,230,705



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NOTES TO FINANCIAL STATEMENTS

3. Transactions with Affiliates(continued)

f. Investments in Affiliated Management Investment Companies(continued)


	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 Managed Income Fund(continued)

Non-Controlled Affiliates(continued)
																			Income from securities loaned

Institutional Fiduciary Trust Money Market Portfolio, 1.56%	$	—	$	582,000	$	(582,000	)	$	—		$	—	$	—			—		$ 993

TotalNon-Controlled Affiliates	$	126,683,009	$	1,657,171,160	$	(1,452,185,229	)	$	—		$	—	$	331,668,940					$3,231,698

Total Affiliated Securities	$	189,614,259	$	1,693,778,660	$	(1,510,179,584	)	$	(8,591,145	)	$	3,643,550	$	368,265,740					$7,618,554

Franklin Real Return Fund

Non-Controlled Affiliates

																			Dividends

Franklin Pelagos Commodities, Class R6	$	5,808,508	$	504,877	$	(5,233,161	)	$	(1,271,716	)	$	191,492	$	—	^a		—		$ 504,877

^aAs of October 31, 2019, no longer held by the fund.

^bDividend income includes capital gain distributions received, if any, from underlying funds, and are presented in corresponding line item in the Statement of Operations.

g. Waiver and Expense Reimbursements

Effective March 1, 2019, Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by Franklin Managed Income Fund so that the expenses (including acquired fund fees and expenses but excluding distribution fees, and certainnon-routine expenses or costs such as those relating to litigation, indemnification, reorganizations, and liquidations) for Class A, Class C, Class R, Advisor Class and for Class R6 of the Fund do not exceed 0.68% and 0.60% respectively, based on the average net assets of each class until February 29, 2020.

Advisers and Investor Services have contractually agreed in advance to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by Franklin Real Return Fund so that the expenses (excluding distribution fees, acquired fund fees and expenses, and certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) for Class A, Class C, Advisor Class and for Class R6 of the Fund do not exceed 0.60% and 0.44% respectively, based on the average net assets of each class until February 29, 2020. Prior to March 1, 2019 , expenses (excluding certain fees and expenses as previously disclosed) for Class A, Class C, Advisor Class were limited to 0.65%, and for Class R6 were limited to 0.49% based on the average net assets of each class.

Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.

For Franklin Convertible Securities Fund and Franklin Equity Income Fund, Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% based on the average net assets of the class until February 29, 2020.



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NOTES TO FINANCIAL STATEMENTS

h. Interfund Transactions

Franklin Managed Income Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the year ended October 31, 2019, these purchase and sale transactions aggregated $0 and $11,512,500, respectively.

4. Expense Offset Arrangement

5. Income Taxes

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

At October 31, 2019, the capital loss carryforwards were as follows:


	Franklin Real Return Fund
Capital loss carryforwards not subject to expiration:
Short term		$ 1,105,810
Long term		32,425,869


Total capital loss carryforwards		$33,531,679

The tax character of distributions paid during the years ended October 31, 2019 and 2018, was as follows:


	Franklin Convertible Securities Fund				Franklin Equity Income Fund

	2019		2018		2019		2018
Distributions paid from:
Ordinary income	$	120,285,792	$	102,614,199	$	51,918,486	$	48,204,970
Long term capital gain		95,672,433		108,553,843		86,911,173		54,052,701


	$	215,958,225	$	211,168,042	$	138,829,659	$	102,257,671


	Franklin Managed Income Fund				Franklin Real Return Fund

	2019		2018		2019		2018
Distributions paid from:
Ordinary income	$	115,713,153	$	119,167,099	$	2,546,501	$	6,608,494
Long term capital gain		39,925,218		43,679,233		—		—


	$	155,638,371	$	162,846,332	$	2,546,501	$	6,608,494



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NOTES TO FINANCIAL STATEMENTS

5. Income Taxes(continued)

At October 31, 2019, 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 Convertible Securities Fund				Franklin Equity Income Fund				Franklin Managed Income Fund				Franklin Real Return Fund

Cost of investments		$	3,520,523,855			$	1,813,104,636			$	3,406,123,528			$	147,437,947

Unrealized appreciation		$	492,578,155			$	723,630,602			$	439,801,226			$	9,970,869

Unrealized depreciation			(126,101,912	)			(27,441,540	)			(56,763,649	)			(4,964,198	)

Net unrealized appreciation (depreciation)		$	366,476,243			$	696,189,062			$	383,037,577			$	5,006,671

Distributable earnings:

Undistributed ordinary income		$	99,362,107			$	4,704,910			$	28,202,842			$	2,421,057

Undistributed long term capital gains			189,246,596				72,860,716				116,031,806				—

Total distributable earnings		$	288,608,703			$	77,565,626			$	144,234,648			$	2,421,057

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums and equity-linked securities.

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

6. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the year ended October 31, 2019, were as follows:


	Franklin Convertible Securities Fund		Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund
Purchases		$ 992,595,344		$650,283,553		$1,824,404,562		$58,439,077
Sales		$1,163,763,934		$527,066,700		$1,787,670,583		$96,913,406

7. Credit Risk

At October 31, 2019, Franklin Convertible Securities Fund and Franklin Managed Income Fund had 76.0% and 7.6%, respectively, of their portfolio invested in high yield securities, senior secured floating rate loans, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.



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8. Other Derivative Information

At October 31, 2019, investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:

Asset Derivatives

Liability Derivatives

Derivative Contracts

Not Accounted for as

Hedging Instruments

Statements of

Assets and Liabilities

Location

Fair Value

Statements of

Assets and Liabilities

Location

Fair Value

Franklin Managed Income Fund

Equity contracts

Investments in securities, at value

$16,610,000

Options written, at value

$5,208,470

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

For the year ended October 31, 2019, the effect of derivative contracts in the Statements of Operations was as follows:


Derivative Contracts Not Accounted for as Hedging Instruments	Statements of Operations Location	Net Realized Gain (Loss) for the Year			Statements of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Year

	Net realized gain (loss) from:				Net change in unrealized
					appreciation (depreciation) on:
Franklin Managed Income Fund
Equity contracts	Investments		$54,866,682	^a	Investments	$(36,050,683)^a
	Written options		10,555,397		Written options	3,141,875

Totals			$65,422,079			$(32,908,808)

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

For the year ended October 31, 2019, the average month end notional amount of options contracts represented 5,850,300 shares.

See Note 1(d) regarding derivative financial instruments.

9. Upcoming Acquisitions/Reorganization

On July 17, 2019, the Board of Trustees of Franklin Investors Securities Trust approved a proposal to reorganize Franklin Real Return Fund with and into Franklin Total Return Fund, subject to approval by the shareholders of Franklin Real Return Fund.

10. Credit Facility



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10. Credit Facility(continued)

all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statements of Operations. During the year ended October 31, 2019, the Funds did not use the Global Credit Facility

11. Fair Value Measurements

•

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 October 31, 2019, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:


	Level 1		Level 2		Level 3			Total
Franklin Convertible Securities Fund
Assets:
Investments in Securities:^a
Equity Investments^b	$	780,227,356	$	—	$	—		$	780,227,356
Convertible Bonds		—		3,016,863,085		—			3,016,863,085
Escrows and Litigation Trusts		—		—		—	^c		—
Short Term Investments		89,909,657		—		—			89,909,657


Total Investments in Securities	$	870,137,013	$	3,016,863,085	$	—		$	3,887,000,098


Franklin Equity Income Fund
Assets:
Investments in Securities:^a
Equity Investments^b	$	2,215,227,758	$	—	$	—		$	2,215,227,758
Equity-Linked Securities		—		224,477,273		—			224,477,273
Short Term Investments		69,588,667		—		—			69,588,667


Total Investments in Securities	$	2,284,816,425	$	224,477,273	$	—		$	2,509,293,698



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	Level 1		Level 2		Level 3		Total
Franklin Managed Income Fund
Assets:
Investments in Securities:^a
Equity Investments^b	$	1,345,496,228	$	—	$	—	$	1,345,496,228
Equity-Linked Securities		—		444,437,147		—		444,437,147
Convertible Bonds		—		15,451,562		—		15,451,562
Corporate Bonds		—		1,295,750,470		—		1,295,750,470
U.S. Government and Agency Securities		—		305,016,602		—		305,016,602
Mortgage-Backed Securities		—		39,938,626		—		39,938,626
Options Purchased		16,610,000		—		—		16,610,000
Short Term Investments		331,668,940		—		—		331,668,940


Total Investments in Securities	$	1,693,775,168	$	2,100,594,407	$	—	$	3,794,369,575


Liabilities:
Other Financial Instruments:
Options Written	$	5,208,470	$	—	$	—	$	5,208,470


Franklin Real Return Fund
Assets:
Investments in Securities:^a
Equity Investments	$	32,155,315	$	—	$	—	$	32,155,315
U.S. Government and Agency Securities		—		112,307,897		—		112,307,897
Short Term Investments		—		7,981,406		—		7,981,406


Total Investments in Securities	$	32,155,315	$	120,289,303	$	—	$	152,444,618

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

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

^cIncludes securities determined to have no value at October 31, 2019.

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

12. Subsequent Events

The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure other than those already disclosed in the financial statements.

Abbreviations


Currency		Counterparty

USD	United States Dollar	ADR	American Depositary Receipt
		ETF	Exchange Traded Fund
		FRN	Floating Rate Note
		REIT	Real Estate Investment Trust
		SPDR	S&P Depositary Receipt



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Report of Independent Registered Public Accounting Firm

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

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Convertible Securities Fund, Franklin Equity Income Fund, Franklin Managed Income Fund, and Franklin Real Return Fund (the “Funds”) as of October 31, 2019, the related statements of operations for the year ended October 31, 2019, the statements of changes in net assets for each of the two years in the period ended October 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended October 31, 2019 and each of the financial highlights for each of the five years in the period ended October 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

PricewaterhouseCoopers LLP

San Francisco, California

December 17, 2019

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



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Tax Information (unaudited)

Under Section 852(b)(3)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as long term capital gain dividends for the fiscal year ended October 31, 2019:


Franklin Convertible Securities Fund	Franklin Equity Income Fund		Franklin Managed Income Fund


$126,072,412		$91,689,606		$49,684,072

Under Section 871(k)(2)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as short term capital gain dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended October 31, 2019:


Franklin Convertible Securities Fund	Franklin Managed Income Fund


$36,701,091		$3,242,808

Under Section 854(b)(1)(A) of the Internal Revenue Code, the Funds hereby report the following percentage amounts of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended October 31, 2019:


Franklin Convertible Securities Fund	Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund


5.53%		99.86%		30.48%		13.10%

Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended October 31, 2019:


Franklin Convertible Securities Fund	Franklin Equity Income Fund		Franklin Managed Income Fund		Franklin Real Return Fund


$9,723,388		$58,198,638		$43,660,145		$851,654

Distributions, including qualified dividend income, paid during calendar year 2019 will be reported to shareholders on Form1099-DIV bymid-February 2020. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.

Franklin

Convertible

Securities Fund

$17,181,474



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Board Members and Officers

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

Independent Board Members


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Harris J. Ashton (1932) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 1986	135	Bar-S Foods (meat packing company) (1981-2010).

Principal Occupation During at Least the Past 5 Years:
Director of various companies; andformerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).

Terrence J. Checki (1945)One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2017	114	Hess Corporation (exploration of oil and gas) (2014-present).

Principal Occupation During at Least the Past 5 Years:
Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999-present); member of the Board of Trustees of the Economic Club of New York (2013-present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; andformerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee (1995-2014); and Visiting Fellow at the Council on Foreign Relations (2014).

Mary C. Choksi (1950) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2014	135	Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present).

Principal Occupation During at Least the Past 5 Years:
Director of various companies; andformerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987–2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987).

Edith E. Holiday (1952) One Franklin Parkway San Mateo, CA 94403-1906	Lead Independent Trustee	Since 1998 and Lead Independent Trustee since March 2019	135	Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013).

Principal Occupation During at Least the Past 5 Years:
Director or Trustee of various companies and trusts; andformerly, 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).



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Independent Board Members(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

J. Michael Luttig (1954) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2009	135	Boeing Capital Corporation (aircraft financing) (2006-2013).

Principal Occupation During at Least the Past 5 Years:
Executive Vice President, Counselor and Senior Advisor to Boeing Chairman and Board of Directors, The Boeing Company (aerospace company) (May 2019); andformerly, General Counsel and member of the Executive Council, The Boeing Company (2006-2019) and Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006).

Larry D. Thompson (1945) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2007	135	The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012).

Principal Occupation During at Least the Past 5 Years:
Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); andformerly, 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).
Interested Board Members and Officers
Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906	Trustee	Since 2013	147	None

Principal Occupation During at Least the Past 5 Years:
Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 39 of the investment companies in Franklin Templeton; Vice Chairman, Investment Company Institute; andformerly, President, Franklin Resources, Inc. (1994-2015).

**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906	Chairman of the Board, Trustee and Vice President	Chairman of the Board since 2013, Trustee since 1987 and Vice President since 1986	135	None

Principal Occupation During at Least the Past 5 Years:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; 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.

Reema Agarwal (1974) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since April 2019	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Advisers, Inc.; and officer of two of the investment companies in Franklin Templeton.



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Interested Board Members and Officers(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2012	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton.

Gaston Gardey (1967) One Franklin Parkway San Mateo, CA 94403-1906	Treasurer, Chief Financial Officer and Chief Accounting Officer	Since 2009	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Treasurer, U.S. Fund Administration & Reporting and officer of 24 of the investment companies in Franklin Templeton.

Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2009	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton; Vice President and Secretary, Franklin Resources, Inc.; and officer of 41 of the investment companies in Franklin Templeton.

Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906	Vice President and Co- Secretary	Vice President since 2009 andCo-Secretary since January 2019	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton.

Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906	Chief Executive Officer – Finance and Administration	Since 2017	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017).

Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906	Vice President –AML Compliance	Since 2016	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton.



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Interested Board Members and Officers(continued)


Name, Year of Birth and Address	Position	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Board Member*	Other Directorships Held During at Least the Past 5 Years

Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President	Since 2013	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Senior Associate General Counsel, Franklin Templeton; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 41 of the investment companies in Franklin Templeton.

Edward D. Perks (1970) One Franklin Parkway San Mateo, CA 94403-1906	President and Chief Executive Officer – Investment Management	Since December 2018	Not Applicable	Not Applicable

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).

Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Chief Compliance Officer	Since 2013	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Director, Global Compliance, Franklin Templeton; Vice President, Franklin Templeton Companies, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Senior Associate General Counsel, Franklin Templeton (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013).

Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2015	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton.

Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906	Vice President	Since 2005	Not Applicable	Not Applicable

Principal Occupation During at Least the Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton.

Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923	Vice President and Co- Secretary	Vice President since 2011 andCo-Secretary since January 2019	Not Applicable	Not Applicable

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 41 of the investment companies in Franklin Templeton.



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**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: Effective March 12, 2019, John B. Wilson ceased to be a trustee of the Trust.

Note 3: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.



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Shareholder Information

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954)527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on FormN-PORT. Shareholders may view the filed FormN-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 each Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800)632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.



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Annual Report and Shareholder Letter
Franklin Investors Securities Trust
Investment Manager	Distributor	Shareholder Services
Franklin Advisers, Inc.	Franklin Templeton Distributors, Inc.	(800)632-2301
	(800) DIAL BEN^®/342-5236
	franklintempleton.com


© 2019 Franklin Templeton Investments. All rights reserved.		FIST1 A 12/19

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.

(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 $448,298 for the fiscal year ended October 31, 2019 and $458,104 for the fiscal year ended October 31, 2018.

(b) Audit-Related Fees

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of Item 4.

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $190,000 for the fiscal year ended October 31, 2019 and $194,500 for the fiscal year ended October 31, 2018. The services for which these fees were paid included tax compliance services related to year end, professional fees in connection with tax treatment of equipment lease transactions, professional fees in connection with an Indonesia withholding tax refund claim and tax consulting services related to the operating agreement and term sheet for the launch of a new fund.

(d) All Other Fees

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended October 31, 2019 and $7,209 for the fiscal year ended October 31, 2018. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $160,144 for the fiscal year ended October 31, 2019 and $61,500 for the fiscal year ended October 31, 2018. The services for which

these fees were paid included valuation services related to fair value engagement, the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures, benchmarking services in connection with the ICI TA survey, account maintenance project and assets under management certification.

(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 allnon-audit related services to be provided to the Fund by the auditors;

(iii) pre-approval of allnon-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 thenon-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 committeepre-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 bepre-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 Rule2-01 of regulationS-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregatenon-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 $350,144 for the fiscal year ended October 31, 2019 and $263,209 for the fiscal year ended October 31, 2018.

(h) The registrant’s audit committee of the board has considered whether the provision ofnon-audit services that were rendered to the registrant’s investment adviser (not including anysub-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 notpre-approved

pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-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 forClosed-End Management Investment Companies. N/A

Item 8.

Portfolio Managers ofClosed-End Management Investment Companies. N/A

Item 9.

Purchases of Equity Securities byClosed-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 FormN-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 forClosed-End Management Investment Company. N/A

Item 13.

Exhibits.

(a) (1) Code of Ethics

(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


FRANKLIN INVESTORS SECURITIES TRUST

By		S\ MATTHEW T. HINKLE
		Matthew T. Hinkle
		Chief Executive Officer - Finance and Administration
Date		December 31, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By		S\ MATTHEW T. HINKLE
		Matthew T. Hinkle
		Chief Executive Officer - Finance and Administration
Date		December 31, 2019

By		S\ GASTON GARDEY
		Gaston Gardey
		Chief Financial Officer and Chief Accounting Officer
Date		December 31, 2019

Share Class

With Fee
Waiver

Without Fee
Waiver

Advisor