FRANKLIN REAL ESTATE SECURITIES TRUST, N-30D, 1998-06-17

FRANKLIN REAL ESTATE SECURITIES TRUST
N-30D, 1998-06-17

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Annual
Report

April 30, 1998

Franklin Real Estate Securities Fund

Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.

Matt Avery
Portfolio Manager
Franklin Real Estate
Securities Fund

Contents

Shareholder Letter

Shareholder Letter ........................................... 1
Performance Summary
Class I ..................................................... 5
Class II .................................................... 8
Advisor Class ............................................... 11
Financial Highlights &
Statement of Investments ..................................... 14
Financial Statements ......................................... 20
Notes to
Financial Statements ......................................... 23
Independent
Auditors' Report ............................................. 27
Tax Designation .............................................. 28

Equity real estate investment trusts (REITs) are real estate companies that own
and manage income-producing properties such as apartments or hotels. The income,
primarily rent from these properties, is generally passed on to investors in the
form of dividends. These companies provide experienced property management teams
and generally concentrate on a specific geo-graphic region and property type.

You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 17 of
this report.

Your Fund's Objective: Franklin Real Estate Securities Fund seeks to maximize
total return by investing in securities of companies in the real estate
industry, primarily equity real estate investment trusts (REITs).

Dear Shareholder:

We are pleased to bring you this annual report of Franklin Real Estate
Securities Fund, which covers the fiscal year ended April 30, 1998.

Although the U.S. real estate industry benefited from strong demand for
residential and commercial space, the performance of real estate stocks was
mixed during this period. Many real estate companies reported strong increases
in cash flow from operations, and stock prices of many home builders and larger,
growth-oriented REITs appreciated significantly during most of 1997. In 1998,
homebuilding stocks continued to appreciate, but stock prices of REITs lagged,
in part, due to proposed changes in the tax treatment of "paired-share" REITs.
These unique REITs, which combine a property and operating company within the
same entity for tax purposes, comprise only a small proportion of all REITs and,
at the end of the reporting period, about 7% of the fund's total net assets.
However, concerns about the possibility of these tax changes impacted investor
sentiment toward the entire REIT sector. Within this environment, the fund's
Class I shares provided a +17.96% one-year cumulative total return, as discussed
in the Performance Summary on page 5. This outperformed the fund's benchmark,
the unmanaged Wilshire Real Estate Securities Index, which produced a +16.85%
total return for the same period.

GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT

As we have discussed in prior shareholder reports, the fund focuses on property
types and geographic regions with strong supply and demand fundamentals, while
attempting to identify management teams capable of adding value through
intensive property management and capital markets experience. Accordingly, we
maintained the majority of the fund's investments in hotel, apartment, office
and industrial companies where we anticipate the strongest cash flow growth and
attractive stock valuations.

At the end of the reporting period, the hotel sector was the fund's largest
property-type weighting, representing 18.8% of total net assets. Two of the
fund's largest positions, Starwood Lodging Trust and Patriot American
Hospitality, Inc., are hotel REITs with the unique "paired-share" tax structure
mentioned previously. Although their stocks weakened during the period, due
partly to expected changes in their future tax structure, in our opinion, these
two companies retained their excellent growth prospects and compelling
valuations under any REIT structure.

The apartment sector, the fund's second largest property-type weighting (15.2%
of total net assets on April 30, 1998) experienced rapid consolidation during
the reporting period. In fact, over half the fund's apartment companies
announced or completed mergers, which we believe should lower overall operating
and financing costs. While supply and demand fundamentals were near equilibrium
in this sector, we believed that valuations were attractive relative to other
sectors and that these companies should experience steady cash flow growth in
the future.

In the office and industrial sectors, we added several new positions, including
AMB Property Corp., Mack-Cali Realty Corp., and Cabot Industrial Trust. These
firms' existing properties, coupled with their attractive acquisition
opportunities, appeared to offer excellent long-term growth potential. During
the reporting period, we sold our holdings in Weeks Corp., an industrial REIT,
which we believed was vulnerable to new construction in the Atlanta market. As a
result, the office sector represented 12.2% of total net assets, while the
industrial sector represented 11.9% on April 30, 1998. The fund's home building
and manufactured homes sectors appreciated significantly over the past year due
to lower interest rates and record levels of home buying nationwide.
Consequently, the valuations of home builder stocks approached historically high
levels, leading us to sell the fund's positions in NVR Inc., Beazer Homes, and
U.S. Home Corp.

REITs continue to increase in capitalization and diversity and, given the
combination of strong growth and favorable valuations for these stocks, we are
excited about prospects for investment in REITs. We will continue to focus on
top quality real estate companies that are creating significant cash flow growth
and shareholder value. A variety of U.S. corporations are forming new REITS,
and, with our experienced team of equity and credit analysts who can assist in
evaluating their merits, we are well-positioned to take advantage of this
growing market.

GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Of course, there are special risks involved with investing in a non-diversified
fund concentrating in real estate securities, such as declines in the value of
real estate and increased susceptibility to adverse economic or regulatory
developments. These risks are discussed in the fund's prospectus.

Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.

We appreciate your participation in Franklin Real Estate Securities Fund and
welcome your comments or suggestions. Sincerely,

Matt Avery
Portfolio Manager
Franklin Real Estate Securities Fund

Performance Summary

Class I

Franklin Real Estate Securities Fund - Class I provided a +17.96% one-year
cumulative total return for the period ended April 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the initial sales charge. We
always maintain a long-term perspective when managing the fund, and encourage
shareholders to view their investments in a similar manner. As you can see from
the table on page 7, the fund's Class I shares delivered a +100.65% cumulative
total return since inception on January 3, 1994.

The fund's share price, as measured by net asset value, increased $2.22, from
$15.44 on April 30, 1997, to $17.66 on April 30, 1998. During the reporting
period, shareholders received per-share distributions totaling 44.1 cents
($0.4410) in dividend income and 10.9 cents ($0.1090) in capital gains, of which
7.69 cents ($0.0769) represented short-term gains and 3.21 cents ($0.0321)
represented long-term gains. Distributions will vary depending on income earned
by the fund and any profits realized from the sale of securities in the
portfolio, as well as the level of the fund's operating expenses.

The graph on page 6 compares the performance of Franklin Real Estate Securities
Fund - Class I since inception with that of the unmanaged Standard & Poor's(R)
500 (S&P 500(R)) Stock Index and the Wilshire Real Estate Securities Index.
The S&P 500 is a domestic broad market index consisting of 500 widely held
common stocks in a variety of industries, whereas the Wilshire index represents
publicly traded real estate securities, including both REITs and Real Estate
Operating Companies. Of course, such unmanaged indices have inherent performance
differentials over any fund. They do not pay management fees to cover salaries
of securities analysts or portfolio managers, or pay commissions or market
spreads to buy and sell securities. Unlike an index, mutual funds are never 100%
invested because they need cash on hand to redeem shares. In addition, the
performance shown for the fund includes the maximum initial sales charge, all
fund expenses and account fees. If operating expenses such as the fund's had
been applied to the indices, their performance would have been lower. Please
remember that an index is simply a measure of performance, and one cannot invest
in it directly.

GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Class I
Periods ended 4/30/98
Since
Inception
1-Year 3-Year (1/3/94)
Cumulative Total Return1 17.96% 84.63% 100.65%
Average Annual Total Return2 12.64% 20.80% 16.25%
Value of $10,000 Investment3 $11,264 $17,630 $19,165

4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return4 -0.48% 24.25% 25.97% 17.96%

1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 4.5% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the sales charge.
4. One-year total return represents the change in value of an investment over
the periods ended on the specified dates and does not include the sales charge.
All calculations assume reinvestment of dividends and capital gains, if any, at
net asset value. Since markets can go down as well as up, investment return and
principal value will fluctuate with market conditions, and you may have a gain
or loss when you sell your shares. Past expense reductions by the fund's manager
increased total returns.
Franklin Real Estate Securities Fund - Class I paid distributions derived from
long-term capital gains of 3.21 cents ($0.0321) per share in December 1997. The
fund hereby designates such distributions as capital gain dividends per Section
852(b)(3) of the Internal Revenue Code.

Class II

Franklin Real Estate Securities Fund - Class II provided a +17.07% one-year
cumulative total return for the period ended April 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include sales charges. We always
maintain a long-term perspective when managing the fund, and encourage
shareholders to view their investments in a similar manner. As you can see from
the table on page 10, the fund's Class II shares delivered a +80.21% cumulative
total return since inception on May 1, 1995.

The fund's share price, as measured by net asset value, increased $2.14, from
$15.26 on April 30, 1997, to $17.40 on April 30, 1998. During the reporting
period, shareholders received per-share distributions totaling 35.42 cents
($0.3542) in dividend income and 10.9 cents ($0.1090) in capital gains, of which
7.69 cents ($0.0769) represented short-term gains and 3.21 cents ($0.0321)
represented long-term gains. Distributions will vary depending on income earned
by the fund and any profits realized from the sale of securities in the
portfolio, as well as the level of the fund's operating expenses.

The graph on page 10 compares the performance of Franklin Real Estate Securities
Fund - Class II since inception with that of the unmanaged Standard & Poor's 500
(S&P 500) Stock Index and the Wilshire Real Estate Securities Index. The S&P 500
is a domestic broad market index consisting of 500 widely held common stocks in
a variety of industries, whereas the Wilshire index represents publicly traded
real estate securities, including both REITs and Real Estate Operating
Companies. Of course, such unmanaged indices have inherent performance
differentials over any fund. They do not pay management fees to cover salaries
of securities analysts or portfolio managers, or pay commissions or market
spreads to buy and sell securities. Unlike an index, mutual funds are never 100%
invested because they need cash on hand to redeem shares. In addition, the
performance shown for the fund includes sales charges, all fund expenses and
account fees. If operating expenses such as the fund's had been applied to the
indices, their performance would have been lower. Please remember that an index
is simply a measure of performance, and one cannot invest in it directly.

GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Class II
Periods ended 4/30/98 Since
Inception
1-Year (5/1/95)
Cumulative Total Return1 17.07% 80.21%
Average Annual Total Return2 14.94% 21.29%
Value of $10,000 Investment3 $11,494 $17,836

1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and 1.0% contingent deferred sales charge applicable to shares redeemed
within 18 months of investment.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include sales charges.
All calculations assume reinvestment of dividends and capital gains, if any.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares. Past expense reductions by the fund's manager increased total
return.

Franklin Real Estate Securities Fund - Class II paid distributions derived from
long-term capital gains of 3.21 cents ($0.0321) per share in December 1997. The
fund hereby designates such distributions as capital gain dividends per Section
852(b)(3) of the Internal Revenue Code.

Advisor Class

Franklin Real Estate Securities Fund - Advisor Class provided a +18.35% one-year
cumulative total return for the period ended April 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains.

The fund's share price, as measured by net asset value, increased $2.25, from
$15.45 on April 30, 1997, to $17.70 on April 30, 1998. During the reporting
period, shareholders received per-share distributions totaling 47.22 cents
($0.4722) in dividend income and 10.9 cents ($0.1090) in capital gains, of which
7.69 cents ($0.0769) represented short-term gains and 3.21 cents ($0.0321)
represented long-term gains. Distributions will vary depending on income earned
by the fund and any profits realized from the sale of securities in the
portfolio, as well as the level of the fund's operating expenses.

The graph on page 12 compares the performance of Franklin Real Estate Securities
Fund - Advisor Class since inception with that of the unmanaged Standard &
Poor's 500 (S&P 500) Stock Index and the Wilshire Real Estate Securities Index.
The S&P 500 is a domestic broad market index consisting of 500 widely held
common stocks in a variety of industries, whereas the Wilshire index represents
publicly traded real estate securities, including both REITs and Real Estate
Operating Companies. Of course, such unmanaged indices have inherent performance
differentials over any fund. They do not pay management fees to cover salaries
of securities analysts or portfolio managers, or pay commissions or market
spreads to buy and sell securities. Unlike an index, mutual funds are never 100%
invested because they need cash on hand to redeem shares. In addition, the
performance shown for the fund includes all fund expenses and account fees. If
operating expenses such as the fund's had been applied to the indices, their
performance would have been lower. Please remember that an index is simply a
measure of performance, and one cannot invest in it directly.

GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT

Advisor Class
Periods ended 4/30/98
Since
Inception
of The Fund
1-Year* 3-Year* (1/3/94)*
Cumulative Total Return1 18.35% 85.36% 101.45%
Average Annual Total Return1 18.35% 22.84% 17.60%
Value of $10,000 Investment2 $11,835 $18,536 $20,145

4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return*,3 -0.48% 24.25% 26.05% 18.35%

*Effective January 2, 1997, the fund began selling Advisor Class shares to
certain eligible investors as described in the prospectus. This share class does
not have sales charges or Rule 12b-1 plans. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Class I expenses, including Rule 12b-1 fees;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable only to
that class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was 19.51%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the indicated periods.
2. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated.
3. One-year total return represents the change in value of an investment over
the periods ended on the specified dates.
All calculations assume reinvestment of dividends and capital gains, if any.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares. Past expense reductions by the fund's manager increased total
return.
Franklin Real Estate Securities Fund - Advisor Class paid distributions derived
from long-term capital gains of 3.21 cents ($0.0321) per share in December 1997.
The fund hereby designates such distributions as capital gain dividends per
Section 852(b)(3) of the Internal Revenue Code.

Franklin Real Estate Securities Trust
Franklin Real Estate Securities Fund
Financial Highlights

Class I
-----------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------
1998 19975 1996 1995 19942
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year.......... $15.44 $12.64 $10.58 $10.92 $10.00
-----------------------------------------------------------------------
Income from investment operations:
Net investment income...................... .63 .49 .43 .39 .06
Net realized and unrealized gains (losses). 2.14 2.77 2.10 (.45) .86
-----------------------------------------------------------------------
Total from investment operations............ 2.77 3.26 2.53 (.06) .92
-----------------------------------------------------------------------
Less distributions from:
Net investment income...................... (.48) (.36) (.47) (.28) -
Net realized gains......................... (.07) (.10) - - -
-----------------------------------------------------------------------
Total distributions......................... (.55) (.46) (.47) (.28) -
-----------------------------------------------------------------------
Net asset value, end of year................ $17.66 $15.44 $12.64 $10.58 $10.92
=======================================================================
Total return+............................... 17.96% 25.97% 24.25% (.48%) 9.20%

Ratios/supplemental data
Net assets, end of year (000's)............. $330,030 $153,520 $33,634 $16,694 $5,634
Ratios to average net assets:
Expenses................................... 1.00% .98% .67% .25% .25%1
Expenses excluding waiver and
payments by affiliate...................... 1.03% 1.09% 1.24% 1.40% 2.91%1
Net investment income...................... 3.50% 3.88% 4.38% 4.86% 3.19%1
Portfolio turnover rate..................... 6.10% 6.80% 14.40% 3.74% -
Average commission rate paid++.............. $.0583 $.0576 $.0575 $ - $ -

</TABLE>
+Total return does not reflect sales commissions or the contingent deferred
sales charges, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
++Relates to purchases and sales of equity securities. Prior to fiscal year end
1996, disclosure of average commission rate was not required.
1Annualized.
2For the period January 3, 1994 (effective date) to April 30, 1994.
5For the period ending April 30, 1997, per share amounts have been calculated
using the daily average shares outstanding.

Class II
------------------------------------------
Year Ended April 30,
------------------------------------------
1998 19975 19963
------------------------------------------
<S> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year........................ $15.26 $12.56 $10.58
------------------------------------------
Income from investment operations:
Net investment income.................................... .45 .43 .44
Net realized and unrealized gains........................ 2.15 2.68 2.00
------------------------------------------
Total from investment operations.......................... 2.60 3.11 2.44
------------------------------------------
Less distributions from:
Net investment income.................................... (.39) (.31) (.46)
Net realized gains....................................... (.07) (.10) -
------------------------------------------
Total distributions....................................... (.46) (.41) (.46)
------------------------------------------
Net asset value, end of year.............................. $17.40 $15.26 $12.56
==========================================

Total return+............................................. 17.07% 24.94% 23.21%

Ratios/supplemental data
Net assets, end of year (000's)........................... $137,048 $58,540 $6,282
Ratios to average net assets:
Expenses................................................. 1.75% 1.75% 1.41%
Expenses excluding waiver and payments by affiliate...... 1.78% 1.86% 1.98%
Net investment income.................................... 2.77% 2.92% 3.65%
Portfolio turnover rate................................... 6.10% 6.80% 14.40%
Average commission rate paid++............................ $.0583 $.0576 $.0575

</TABLE>

+Total return does not reflect sales commissions or the contingent deferred
sales charges, and is not annualized.
++Relates to purchases and sales of equity securities.
3Effective date of Class II shares was May 1, 1995.
5For the period ending April 30, 1997, per share amounts have been calculated
using the daily average shares outstanding.

Advisor Class
-----------------------------------
Year Ended April 30,
-----------------------------------
1998 19974,5
-----------------------------------
<S> <C> <C>

Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of period ......................... $15.45 $15.30
-----------------------------------
Income from investment operations:
Net investment income........................................ .52 .18
Net realized and unrealized gains (losses)................... 2.31 (.03)
-----------------------------------
Total from investment operations.............................. 2.83 .15
-----------------------------------
Less distributions from:
Net investment income........................................ (.51) -
Net realized gains........................................... (.07) -
-----------------------------------
Total distributions........................................... (.58) -
-----------------------------------
Net asset value, end of year.................................. $17.70 $15.45
===================================

Total return+................................................. 18.35% .98%

Ratios/supplemental data
Net assets, end of year (000's)............................... $8,929 $625
Ratios to average net assets:
Expenses..................................................... .75% .75%1
Expenses excluding waiver and payments by affiliate.......... .78% .86%1
Net investment income........................................ 3.97% 3.44%1
Portfolio turnover rate....................................... 6.10% 6.80%
Average commission rate paid++................................ $.0583 $.0576

</TABLE>
+Total return does not reflect sales commissions or the contingent deferred
sales charges, and is not annualized.
++Relates to purchases and sales of equity securities.
1Annualized.
4For the period January 2, 1997 (effective date) to April 30, 1997.
5For the period ending April 30, 1997, per share amounts have been calculated
using the daily average shares outstanding.
<TABLE>
<CAPTION>

Statement of Investments, April 30, 1998
SHARES VALUE
<S> <C> <C>
a Common Stocks 91.3%
Equity REIT - Apartments 15.2%
Amli Residential Properties Trust ................................... 145,000 $ 3,325,938
Bay Apartment Communities, Inc. ..................................... 110,000 4,070,000
Camden Property Trust ............................................... 340,074 9,968,412
Equity Residential Properties Trust ................................. 275,000 13,509,375
Gables Residential Trust ............................................ 160,000 4,360,000
Irvine Apartment Communities, Inc. .................................. 150,000 4,584,375
Post Properties, Inc. ............................................... 240,000 9,795,000
Security Capital Atlantic, Inc. ..................................... 350,000 7,721,875
Security Capital Pacific Trust ...................................... 300,000 6,712,500
Smith, Charles E. Residential Realty, Inc. .......................... 125,000 3,875,000
Summit Properties, Inc. ............................................. 205,300 4,195,819
---------------
72,118,294
---------------
Equity REIT - Health Care 3.3%
Alexandria Real Estate Equities, Inc. ............................... 75,000 2,470,313
Health Care Property Investors, Inc. ................................ 114,300 3,857,625
Nationwide Health Properties, Inc. .................................. 180,000 4,230,000
Omega Healthcare Investors, Inc. .................................... 135,000 4,691,250
---------------
15,249,188
---------------
Equity REIT - Hotels 12.4%
FelCor Suite Hotels, Inc. ........................................... 425,000 14,875,000
Innkeepers USA Trust ................................................ 410,000 6,201,250
Patriot American Hospitality, Inc. .................................. 575,000 14,518,750
Starwood Lodging Trust .............................................. 375,000 18,820,313
Winston Hotels, Inc. ................................................ 370,000 4,601,875
---------------
59,017,188
---------------
Equity REIT - Industrial 11.9%
AMB Property Corp. .................................................. 160,000 3,680,000
Cabot Industrial Trust .............................................. 225,000 5,090,625
Duke Realty Investment, Inc. ........................................ 410,000 9,763,125
Liberty Property Trust .............................................. 380,000 9,713,750
Meridian Industrial Trust, Inc. ..................................... 330,000 7,631,250
Security Capital Industrial Trust ................................... 420,000 10,263,750
Spieker Properties, Inc. ............................................ 260,000 10,302,500
---------------
56,445,000
---------------
Equity REIT - Mixed Property Type 4.4%
Colonial Properties Trust ........................................... 283,300 8,410,469
Glenborough Realty Trust, Inc. ...................................... 475,000 12,735,938
---------------
21,146,407
---------------
Equity REIT - Office 12.2%
Arden Realty Group, Inc. ............................................ 425,000 11,926,563
Crescent Real Estate Equities, Co. .................................. 400,000 13,650,000
Equity Office Properties Trust ...................................... 340,000 9,668,750
Highwoods Properties, Inc. .......................................... 310,000 10,540,000
Mack-Cali Realty Corp. .............................................. 275,000 $ 10,329,688
SL Green Realty Corp. ............................................... 43,000 1,032,000
Tower Realty Trust, Inc. ............................................ 30,500 720,563
---------------
57,867,564
---------------
Equity REIT - Residential Communities 2.5%
Manufactured Home Communities, Inc. ................................. 170,000 4,292,500
Sun Communities, Inc. ............................................... 220,000 7,700,000
---------------
11,992,500
---------------
Equity REIT - Retail - Community Centers 7.5%
Burnham Pacific Properties, Inc. .................................... 382,500 5,402,813
Developers Diversified Realty Corp. ................................. 140,000 5,556,250
Kimco Realty Corp. .................................................. 270,000 10,006,875
c Pacific Retail Trust ................................................ 640,499 8,326,487
Vornado Realty Trust ................................................ 161,000 6,450,063
---------------
35,742,488
---------------
Equity REIT - Retail - Regional Malls 5.9%
Simon DeBartolo Group, Inc. ......................................... 375,000 12,351,563
The Macerich Co. .................................................... 295,000 8,278,438
The Mills Corp. ..................................................... 290,000 7,231,875
---------------
27,861,876
---------------
Equity REIT - Storage 5.6%
Public Storage, Inc. ................................................ 372,000 11,439,000
Storage Trust Realty ................................................ 440,000 10,670,000
Storage USA, Inc. ................................................... 140,000 5,302,500
---------------
27,411,500
---------------
Home Builders 1.2%
Cavalier Homes, Inc. ................................................ 104,000 1,248,000
Clayton Homes, Inc. ................................................. 150,000 3,009,375
a Southern Energy Homes, Inc. ............................................ 120,000 1,327,500
---------------
5,584,875
---------------
Hotels 6.4%
a Candlewood Hotel Co., Inc. .......................................... 385,000 2,887,500
a CapStar Hotel Co. ................................................... 392,000 12,593,000
a Host Marriott Corp. ................................................. 500,000 9,718,750
a Prime Hospitality Corp. ............................................. 250,000 5,171,875
---------------
30,371,125
---------------
Miscellaneous ....................................................... 310,523
---------------

Mixed Property Type 2.8%
a Crescent Operating, Inc. ............................................ 16,000 $ 350,000
a Security Capital Group, Inc. ........................................ 175,000 5,293,750
a Security Capital Group Warrants ..................................... 50,909 143,182
Security Capital US Realty .......................................... 300,000 3,930,000
Trammell Crow Co. ................................................... 82,900 2,196,850
Vail Resorts, Inc. .................................................. 54,100 1,582,425
---------------
13,496,207
---------------
Total Long Term Investments (Cost $393,500,277)...................... 434,614,735
---------------
PRINCIPAL
AMOUNT
-----------
b Repurchase Agreement 8.8%
Joint Repurchase Agreement, 5.487%, 5/01/98,
(Maturity Value $41,920,093) (Cost $41,913,704)...........................$41,913,704 41,913,704
BancAmerica Robertson Stephens
Barclays Capital Group, Inc.
Bear, Stearns & Co., Inc.
BT Alex Brown, Inc.
Chase Securities, Inc.
Donaldson, Lufkin & Jenrette Securities Corp.
Dresdner Kleinwort Benson, North America, L.L.C.
Greenwich Capital Markets, Inc.
Lehman Brothers, Inc.
Paribas Corp.
SBC Warburg Dillon Read, Inc.
UBS Securities, L.L.C.
Collateralized by U.S. Treasury Bills & Notes
Total Investments (Cost $435,413,981) 100.1% ........................ 476,528,439
Other Assets, less Liabilities (.1%) ................................ (520,772)
---------------
Net Assets 100.0% ................................................... $476,007,667
===============
</TABLE>
PORTFOLIO ABBREVIATIONS:
L.L.C. - Limited Liability Corp.
REIT - Real Estate Investment Trust

aNon-income producing.
bInvestment is through participation in a joint account with other funds managed
by the investment advisor. At April 30, 1998, all repurchase agreements had been
entered into on that date.
cSee Note 6 regarding restricted securities.

Financial Statements

Statement of Assets and Liabilities
April 30, 1998

Assets:
<S> <C>
Investments in securities, at value (cost $435,413,981)........................ $476,528,439
Cash........................................................................... 58,840
Receivables:
Investment securities sold.................................................... 379,301
Capital shares sold........................................................... 1,988,039
Dividends and interest........................................................ 983,613
Other assets................................................................... 900
---------------
Total assets.............................................................. 479,939,132
---------------
Liabilities:
Payables:
Investment securities purchased............................................... 1,773,405
Capital shares redeemed....................................................... 991,039
Affiliates.................................................................... 970,555
Shareholders.................................................................. 130,087
Other liabilities.............................................................. 66,379
---------------
Total liabilities......................................................... 3,931,465
---------------
Net assets, at value.................................................... $476,007,667
===============
Net assets consist of:
Undistributed net investment income............................................ $ 3,385,018
Net unrealized appreciation.................................................... 41,114,458
Accumulated net realized gain.................................................. 5,278,245
Capital shares................................................................. 426,229,946
---------------
Net assets, at value.................................................... $476,007,667
===============
Class I:
Net asset value per share ($330,030,476 O 18,691,415 shares outstanding)*...... $17.66
---------------
Maximum offering price per share ($17.66 O 95.50%)............................. $18.49
---------------
Class II:
Net asset value per share ($137,048,075 O 7,874,091 shares outstanding)*....... $17.40
---------------
Maximum offering price per share ($17.40 O 99.00%)............................. $17.58
---------------
Advisor Class:
Net asset value and maximum offering price per share
($8,929,116 O 504,539 shares outstanding)...................................... $17.70
---------------

</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.

Statement of Operations
for the year ended April 30, 1998

<S> <C> <C>
Investment income:

Dividends ............................................................ $14,357,684
Interest ............................................................. 2,133,921
-------------
Total investment income ......................................... $16,491,605
Expenses:
Management fees (Note 3) ............................................. 1,896,157
Distribution fees (Note 3)
Class I ............................................................. 650,043
Class II ............................................................ 1,014,134
Transfer agent fees (Note 3) ......................................... 658,077
Custodian fees ....................................................... 5,598
Reports to shareholders .............................................. 88,628
Registration and filing fees ......................................... 167,336
Professional fees .................................................... 24,233
Other ................................................................ 22,775
-------------
Total expenses .................................................. 4,526,981
Expenses waived/paid by affiliate (Note 3) ...................... (121,617)
--------------
Net expenses ................................................... 4,405,364
--------------
Net investment income ......................................... 12,086,241
--------------
Realized and unrealized gains:
Net realized gain from investments ................................... 5,825,033
Net unrealized appreciation on investments ........................... 25,890,441
--------------
Net realized and unrealized gain ...................................... 31,715,474
--------------
Net increase in net assets resulting from operations .................. $43,801,715
==============

</TABLE>
Statement of Changes in Net Assets
for the years ended April 30, 1998 and 1997

1998 1997
----------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................................$ 12,086,241 $ 3,809,230
Net realized gain from investments................................... 5,825,033 1,537,098
Net unrealized appreciation on investments........................... 25,890,441 11,595,001
----------------------------------
Net increase in net assets resulting from operations............. 43,801,715 16,941,329
Distributions to shareholders from:
Net investment income:
Class I.............................................................. (7,706,827) (1,977,490)
Class II............................................................. (2,502,034) (553,996)
Advisor Class........................................................ (143,706) -
Net realized gains:
Class I.............................................................. (1,048,010) (549,503)
Class II............................................................. (414,593) (176,830)
Advisor Class........................................................ (18,349) -
----------------------------------
Total distributions to shareholders....................................(11,833,519) (3,257,819)
Capital share transactions (Note 2)
Class I.............................................................. 153,188,550 109,014,691
Class II............................................................. 69,878,349 49,442,137
Advisor Class........................................................ 8,287,762 628,137
----------------------------------
Total capital share transactions...................................... 231,354,661 159,084,965
----------------------------------
Net increase in net assets....................................... 263,322,857 172,768,475
Net assets:
Beginning of year..................................................... 212,684,810 39,916,335
----------------------------------
End of year...........................................................$476,007,667 $212,684,810
==================================
Undistributed net investment income included in net assets:
End of year...........................................................$ 3,385,018 $ 1,651,344
==================================

</TABLE>
Notes to Financial Statements

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Real Estate Securities Fund (the Fund) is a separate, non-diversified
series of Franklin Real Estate Securities Trust (the Trust), which is an
open-end investment company registered under the Investment Company of 1940. The
Fund seeks total return.

The following summarizes the Fund's significant accounting policies.

a. Security Valuation:

Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Restricted securities and securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.

b. Income Taxes:

No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all of its taxable income.

c. 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. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.

Distributions received by the Fund from securities may be a return of capital
(ROC). Such distributions reduce the cost basis of the securities, and any
distributions in excess of the cost basis are recognized as capital gains.

Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.

d. Accounting Estimates:

The preparation of financial statements in accordance with generally accepted
accounting principles 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 expense during the reporting
period. Actual results could differ from those estimates.

2. SHARES OF BENEFICIAL INTEREST

The Fund offers three classes of shares: Class I, Class II and Advisor Class.
The shares have the same rights except for their initial sales load,
distribution fees, voting rights on matters affecting a single class and the
exchange privilege of each class.

At April 30, 1998, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:

Year Ended Year Ended
April 30, 1998 April 30, 1997
---------------------------------------------------------------
Shares Amount Shares Amount
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Class I
Shares sold ................................ 13,583,071 $238,264,244 10,056,249 $151,008,579
Shares issued in reinvestment of distributions 443,395 7,781,587 149,042 2,193,888
Shares redeemed ............................ (5,277,774) (92,857,281) (2,923,144) (44,187,776)
---------------------------------------------------------------
Net increase ............................... 8,748,692 $153,188,550 7,282,147 $109,014,691
===============================================================

Shares Amount Shares Amount
---------------------------------------------------------------
Class II
Shares sold ................................ 4,882,257 $ 84,464,637 3,439,134 $ 51,025,015
Shares issued in reinvestment of distributions 147,303 2,554,233 42,697 622,945
Shares redeemed ............................ (990,554) (17,140,521) (147,017) (2,205,823)
---------------------------------------------------------------
Net increase ............................... 4,039,006 $ 69,878,349 3,334,814 $ 49,442,137
===============================================================

Period Ended
April 30, 1997*
---------------------------------------------------------------
Shares Amount Shares Amount
---------------------------------------------------------------
Advisor Class
Shares sold ................................ 517,824 $ 9,252,101 57,886 $ 909,753
Shares issued in reinvestment of distributions 9,090 159,714 - -
Shares redeemed ............................ (62,790) (1,124,053) (17,471) (281,616)
---------------------------------------------------------------
Net increase ............................... 464,124 $ 8,287,762 40,415 $ 628,137
===============================================================

</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.

3. TRANSACTIONS WITH AFFILIATES

Certain officers and trustees of the Fund are also officers and/or trustees of
Franklin Advisers, Inc. (Advisers), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors) and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Fund's
investment manager, administrative manager, principal underwriter and transfer
agent, respectively.

The Fund pays an investment management fee to Advisers based on the average net
assets of the Fund as follows: Annualized

Fee Rate Average Daily Net Assets
.625% First $100 million
.500% Over $100 million, up to and including $250 million
.450% Over $250 million

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

Advisers agreed in advance to waive management fees for the Fund, as noted in
the Statement of Operations.

The Fund reimburses Distributors up to .25% and 1.00% per year of the average
daily net assets of Class I and Class II, respectively, for costs incurred in
marketing the Fund's shares.

Distributors paid net commissions on sales of Fund shares, and received
contingent deferred sales charges for the period of $697,812 and $14,796,
respectively.

The Fund paid transfer agent fees of $658,077, of which $379,391 was paid to
Investor Services.

4. INCOME TAXES

At April 30, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $435,413,981 was as follows:

Unrealized appreciation..................... 43,087,248
Unrealized depreciation..................... (1,972,790)
---------------
Net unrealized appreciation................. $ 41,114,458
===============

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the
period ended April 30, 1998 aggregated $227,754,179 and $20,365,347,
respectively.

6. RESTRICTED SECURITIES

The Fund may purchase securities through a private offering that generally
cannot be sold to the public without prior registration under the Securities Act
of 1933. The costs of registering such securities are paid by the issuer. At
April 30, 1998, the Fund held the following restricted securities representing
1.7% of the Fund's net assets:

Shares Issuer Acquisition Date Cost Value
640,499 Pacific Retail Trust 8/30/96 $7,615,379 $8,326,487

7. LENDING OF PORTFOLIO SECURITIES

The Fund loans securities to certain brokers for which it receives cash
collateral against the loaned securities in an amount equal to at least 102% of
the market value of the loaned securities. Net interest income from the
investment of the cash collateral received was $326,628 for the year ended April
30, 1998. At April 30, 1998, there were no loaned securities outstanding.

Independent Auditors' Report

To the Shareholders and Board of Trustees
of Franklin Real Estate Securities Trust:

We have audited the accompanying statement of assets and liabilities of the
Franklin Real Estate Securities Trust, including the statement of investments,
as of April 30, 1998, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Franklin Real Estate Securities Trust as of April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the periods presented, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.
San Francisco, California
June 3, 1998

Tax Information

Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates the following amounts as capital gain dividends for the fiscal year
ended April 30, 1998:

28% Rate Gain .............................. $2,927,726
25% Rate Gain .............................. 61,850
20% Rate Gain .............................. 2,328,526
Total ...................................... $5,318,102

Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
.15% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended April 30, 1998.

Franklin Real Estate Securities Fund
Annual Report
April 30, 1998

APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S - T)

[PIE CHART]

GRAPHIC MATERIAL (1)

This chart shows in pie format the U.S. geographic allocation of holdings of
Franklin Real Estate Securities Fund, based on total net assets as of April
30, 1998.

National 39.4%
Southeast 17.0%
Southwest 12.3%
Northwest 8.6%
Northeast 8.3%
Midwest 5.7%
Cash & Equivalents 8.7%

[SECTOR BREAKDOWN]

GRAPHIC MATERIAL (2)

This chart shows in bar format the property-type allocation of holdings of
Franklin Real Estate Securities Fund, based on total net assets as of April
30, 1998.

Hotels 18.8%
Apartments 15.2%
Office 12.2%
Industrial 11.9%
Retail Community Centers 7.5%
Retail Regional Malls 5.9%
Storage 5.6%
Health Care 3.3%
Residential Communities 2.5%
Home Builders 1.2%
Other/Mix 7.2%
Cash & Equivalents 8.7%

[TOP HOLDINGS]

GRAPHIC MATERIAL (3)

This chart lists the top ten holdings, including industry, of Franklin Real
Estate Securities Fund, based on total net assets as of April 30, 1998.

Starwood Lodging Trust, Hotels 4.0%
FelCor Suite Hotels, Inc., Hotels 3.1%
Patriot American Hospitality, Inc., Hotels 3.1%
Crescent Real Estate Equities Co., Office 2.9%
Equity Residential Properties Trust, Apartments 2.8%
Glenborough Realty Trust, Inc., Mix 2.7%
CapStar Hotel Co., Hotels 2.6%
Simon DeBartolo Group, Inc., Retail - Regional Malls 2.6%
Arden Realty Group, Inc., Office 2.5%
Public Storage, Inc., Storage 2.4%

[INDEX CHARTS]

GRAPHIC MATERIAL (4)

The following line graph compares the performance of Franklin Real Estate
Securities Fund's Class I shares with the Standard & Poor's 500 Stock Index
(S&P 500) and the Wilshire Real Estate Securities Index based on a $10,000
investment from 1/3/94 to 4/30/98.

FRANKLIN REAL WILSHIRE
DATE ESTATE S&P 500 REAL S&P 500 Wilshire
SECURITIES FUND - EST. SECS. Real Est.
CLASS I INDEX
- - --------------------------------------------------------------------------------
1/3/94 $9,551 $10,000 $10,000
1/31/94 $9,790 $10,340 $10,300 3.40% 3.00%
2/28/94 $10,334 $10,060 $10,721 -2.71% 4.09%
3/31/94 $10,201 $9,621 $10,225 -4.36% -4.63%
4/30/94 $10,430 $9,744 $10,339 1.28% 1.12%
5/31/94 $10,621 $9,904 $10,554 1.64% 2.08%
6/30/94 $10,392 $9,661 $10,347 -2.45% -1.97%
7/31/94 $10,382 $9,978 $10,370 3.28% 0.23%
8/31/94 $10,401 $10,387 $10,363 4.10% -0.07%
9/30/94 $10,267 $10,134 $10,190 -2.44% -1.67%
10/31/94 $9,943 $10,362 $9,817 2.25% -3.66%
11/30/94 $9,589 $9,985 $9,433 -3.64% -3.91%
12/31/94 $10,468 $10,133 $10,164 1.48% 7.75%
1/31/95 $10,125 $10,395 $9,836 2.59% -3.23%
2/28/95 $10,302 $10,800 $10,144 3.90% 3.13%
3/31/95 $10,400 $11,119 $10,203 2.95% 0.58%
4/30/95 $10,380 $11,446 $10,129 2.94% -0.72%
5/31/95 $10,782 $11,904 $10,464 4.00% 3.31%
6/30/95 $10,969 $12,180 $10,647 2.32% 1.74%
7/31/95 $11,214 $12,584 $10,818 3.32% 1.61%
8/31/95 $11,459 $12,616 $10,950 0.25% 1.22%
9/30/95 $11,773 $13,148 $11,151 4.22% 1.84%
10/31/95 $11,538 $13,101 $10,806 -0.36% -3.10%
11/30/95 $11,714 $13,676 $10,918 4.39% 1.04%
12/31/95 $12,356 $13,940 $11,551 1.93% 5.80%
1/31/96 $12,673 $14,414 $11,711 3.40% 1.38%
2/29/96 $12,836 $14,548 $11,943 0.93% 1.98%
3/31/96 $12,856 $14,688 $12,039 0.96% 0.81%
4/30/96 $12,897 $14,904 $12,094 1.47% 0.45%
5/31/96 $13,203 $15,288 $12,363 2.58% 2.23%
6/30/96 $13,336 $15,346 $12,611 0.38% 2.00%
7/31/96 $13,264 $14,668 $12,498 -4.42% -0.89%
8/31/96 $13,887 $14,977 $13,029 2.11% 4.25%
9/30/96 $14,295 $15,821 $13,355 5.63% 2.50%
10/31/96 $14,581 $16,257 $13,717 2.76% 2.71%
11/30/96 $15,040 $17,486 $14,286 7.56% 4.15%
12/31/96 $16,373 $17,140 $15,811 -1.98% 10.67%
1/31/97 $16,583 $18,211 $16,037 6.25% 1.43%
2/28/97 $16,562 $18,353 $16,046 0.78% 0.06%
3/31/97 $16,667 $17,599 $16,101 -4.11% 0.34%
4/30/97 $16,246 $18,650 $15,581 5.97% -3.23%
5/31/97 $16,825 $19,785 $16,045 6.09% 2.98%
6/30/97 $17,572 $20,672 $16,841 4.48% 4.96%
7/31/97 $18,025 $22,317 $17,395 7.96% 3.29%
8/31/97 $17,962 $21,068 $17,266 -5.60% -0.74%
9/30/97 $19,593 $22,222 $18,969 5.48% 9.86%
10/31/97 $18,909 $21,480 $18,163 -3.34% -4.25%
11/30/97 $19,298 $22,474 $18,528 4.63% 2.01%
12/31/97 $19,631 $22,861 $18,941 1.72% 2.23%
1/31/98 $19,425 $23,115 $18,674 1.11% -1.41%
2/28/98 $19,262 $24,781 $18,435 7.21% -1.28%
3/31/98 $19,707 $26,050 $18,798 5.12% 1.97%
4/30/98 $19,165 $26,313 $18,206 1.01% -3.15%

[INDEX CHARTS]

GRAPHIC MATERIAL (5)

The following line graph compares the performance of Franklin Real Estate
Securities Fund's Class II shares with the Standard & Poor's 500 Stock Index
(S&P 500) and the Wilshire Real Estate Securities Index based on a $10,000
investment from 5/1/95 to 4/30/98.

FRANKLIN REAL WILSHIRE
DATE ESTATE S&P 500 REAL S&P 500 Wilshire
SECURITIES FUND - EST. SEC. Real Est.
CLASS II INDEX
- - --------------------------------------------------------------------------------
5/1/95 $9,897 $10,000 $10,000
5/31/95 $10,262 $10,400 $10,331 4.00% 3.31%
6/30/95 $10,439 $10,641 $10,511 2.32% 1.74%
7/31/95 $10,654 $10,995 $10,680 3.32% 1.61%
8/31/95 $10,888 $11,022 $10,810 0.25% 1.22%
9/30/95 $11,178 $11,487 $11,009 4.22% 1.84%
10/31/95 $10,953 $11,446 $10,668 -0.36% -3.10%
11/30/95 $11,103 $11,948 $10,779 4.39% 1.04%
12/31/95 $11,709 $12,179 $11,404 1.93% 5.80%
1/31/96 $11,991 $12,593 $11,561 3.40% 1.38%
2/29/96 $12,146 $12,710 $11,790 0.93% 1.98%
3/31/96 $12,165 $12,832 $11,886 0.96% 0.81%
4/30/96 $12,194 $13,021 $11,939 1.47% 0.45%
5/31/96 $12,476 $13,357 $12,206 2.58% 2.23%
6/30/96 $12,583 $13,407 $12,450 0.38% 2.00%
7/31/96 $12,515 $12,815 $12,339 -4.42% -0.89%
8/31/96 $13,088 $13,085 $12,863 2.11% 4.25%
9/30/96 $13,466 $13,822 $13,185 5.63% 2.50%
10/31/96 $13,728 $14,203 $13,542 2.76% 2.71%
11/30/96 $14,156 $15,277 $14,104 7.56% 4.15%
12/31/96 $15,395 $14,975 $15,609 -1.98% 10.67%
1/31/97 $15,585 $15,911 $15,832 6.25% 1.43%
2/28/97 $15,555 $16,035 $15,842 0.78% 0.06%
3/31/97 $15,635 $15,376 $15,896 -4.11% 0.34%
4/30/97 $15,236 $16,294 $15,382 5.97% -3.23%
5/31/97 $15,775 $17,286 $15,841 6.09% 2.98%
6/30/97 $16,464 $18,060 $16,626 4.48% 4.96%
7/31/97 $16,873 $19,498 $17,173 7.96% 3.29%
8/31/97 $16,803 $18,406 $17,046 -5.60% -0.74%
9/30/97 $18,321 $19,415 $18,727 5.48% 9.86%
10/31/97 $17,672 $18,766 $17,931 -3.34% -4.25%
11/30/97 $18,021 $19,635 $18,291 4.63% 2.01%
12/31/97 $18,328 $19,973 $18,699 1.72% 2.23%
1/31/98 $18,113 $20,195 $18,436 1.11% -1.41%
2/28/98 $17,959 $21,651 $18,200 7.21% -1.28%
3/31/98 $18,359 $22,759 $18,558 5.12% 1.97%
4/30/98 $17,836 $22,989 $17,974 1.01% -3.15%

[INDEX CHARTS]

GRAPHIC MATERIAL (6)

The following line graph compares the performance of Franklin Real Estate
Securities Fund's Advisor Class shares with the Standard & Poor's 500 Stock
Index (S&P 500) and the Wilshire Real Estate Securities Index based on a
$10,000 investment from 1/3/94 to 4/30/98.

FRANKLIN REAL
ESTATE WILSHIRE
DATE SECURITIES FUND - S&P 500 REAL S&P 500 Wilshire
ADVISOR CLASS EST. SECS. Real Est.
INDEX
- - --------------------------------------------------------------------------------
1/3/94 $10,000 $10,000 $10,000
1/31/94 $10,250 $10,340 $10,300 3.40% 3.00%
2/28/94 $10,820 $10,060 $10,721 -2.71% 4.09%
3/31/94 $10,680 $9,621 $10,225 -4.36% -4.63%
4/30/94 $10,920 $9,744 $10,339 1.28% 1.12%
5/31/94 $11,120 $9,904 $10,554 1.64% 2.08%
6/30/94 $10,880 $9,661 $10,347 -2.45% -1.97%
7/31/94 $10,870 $9,978 $10,370 3.28% 0.23%
8/31/94 $10,890 $10,387 $10,363 4.10% -0.07%
9/30/94 $10,750 $10,134 $10,190 -2.44% -1.67%
10/31/94 $10,410 $10,362 $9,817 2.25% -3.66%
11/30/94 $10,040 $9,985 $9,433 -3.64% -3.91%
12/31/94 $10,960 $10,133 $10,164 1.48% 7.75%
1/31/95 $10,601 $10,395 $9,836 2.59% -3.23%
2/28/95 $10,786 $10,800 $10,144 3.90% 3.13%
3/31/95 $10,888 $11,119 $10,203 2.95% 0.58%
4/30/95 $10,868 $11,446 $10,129 2.94% -0.72%
5/31/95 $11,289 $11,904 $10,464 4.00% 3.31%
6/30/95 $11,484 $12,180 $10,647 2.32% 1.74%
7/31/95 $11,741 $12,584 $10,818 3.32% 1.61%
8/31/95 $11,998 $12,616 $10,950 0.25% 1.22%
9/30/95 $12,327 $13,148 $11,151 4.22% 1.84%
10/31/95 $12,080 $13,101 $10,806 -0.36% -3.10%
11/30/95 $12,265 $13,676 $10,918 4.39% 1.04%
12/31/95 $12,937 $13,940 $11,551 1.93% 5.80%
1/31/96 $13,268 $14,414 $11,711 3.40% 1.38%
2/29/96 $13,439 $14,548 $11,943 0.93% 1.98%
3/31/96 $13,461 $14,688 $12,039 0.96% 0.81%
4/30/96 $13,503 $14,904 $12,094 1.47% 0.45%
5/31/96 $13,824 $15,288 $12,363 2.58% 2.23%
6/30/96 $13,963 $15,346 $12,611 0.38% 2.00%
7/31/96 $13,888 $14,668 $12,498 -4.42% -0.89%
8/31/96 $14,540 $14,977 $13,029 2.11% 4.25%
9/30/96 $14,967 $15,821 $13,355 5.63% 2.50%
10/31/96 $15,266 $16,257 $13,717 2.76% 2.71%
11/30/96 $15,747 $17,486 $14,286 7.56% 4.15%
12/31/96 $17,142 $17,140 $15,811 -1.98% 10.67%
1/31/97 $17,363 $18,211 $16,037 6.25% 1.43%
2/28/97 $17,352 $18,353 $16,046 0.78% 0.06%
3/31/97 $17,462 $17,599 $16,101 -4.11% 0.34%
4/30/97 $17,021 $18,650 $15,581 5.97% -3.23%
5/31/97 $17,638 $19,785 $16,045 6.09% 2.98%
6/30/97 $18,420 $20,672 $16,841 4.48% 4.96%
7/31/97 $18,905 $22,317 $17,395 7.96% 3.29%
8/31/97 $18,839 $21,068 $17,266 -5.60% -0.74%
9/30/97 $20,546 $22,222 $18,969 5.48% 9.86%
10/31/97 $19,841 $21,480 $18,163 -3.34% -4.25%
11/30/97 $20,260 $22,474 $18,528 4.63% 2.01%
12/31/97 $20,611 $22,861 $18,941 1.72% 2.23%
1/31/98 $20,407 $23,115 $18,674 1.11% -1.41%
2/28/98 $20,236 $24,781 $18,435 7.21% -1.28%
3/31/98 $20,703 $26,050 $18,798 5.12% 1.97%
4/30/98 $20,145 $26,313 $18,206 1.01% -3.15%