UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06243
Franklin Strategic Series
(Exact name of registrant as specified in charter)
_One Franklin Parkway, San Mateo, Ca 94403-1906
(Address of principal executive offices) (Zip code)
(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)
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
Date of fiscal year end: 8/31
Date of reporting period: 2/28/21
Item 1. Reports to Stockholders.
a.)
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)
b.)
A copy of the notice transmitted to shareholders in reliance on Rule 30e-3 under the 1940 Act that contains disclosures specified by paragraph (c)(3) of that rule is included in the Annual Report. Not Applicable.
Your
Fund’s
Expenses
Franklin
Templeton
SMACS:
Series
CH
1
franklintempleton.com
Semiannual
Report
Shareholders
of
mutual
funds
incur
ongoing
costs,
such
as
management
fees
(if
any),
custodian
fees
and
other
Fund
expenses,
which
are
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
the
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.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
Fund
costs
only
and
do
not
reflect
any
program
fees
that
you
may
pay.
Therefore,
the
table
is
useful
in
comparing
ongoing
costs
of
investing
in
the
Fund
only,
and
will
not
help
you
determine
the
relative
total
costs
of
participating
in
any
one
investment
program.
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.”
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
Ending
Account
Value
2/
28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
a
Annualized
Expense
Ratio
2
$1,000
$1,053.67
$0.00
$1,024.80
$0.00
0.00%
Your
Fund’s
Expenses
Franklin
Templeton
SMACS:
Series
E
2
franklintempleton.com
Semiannual
Report
Shareholders
of
mutual
funds
incur
ongoing
costs,
such
as
management
fees
(if
any),
custodian
fees
and
other
Fund
expenses,
which
are
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
the
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.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
Fund
costs
only
and
do
not
reflect
any
program
fees
that
you
may
pay.
Therefore,
the
table
is
useful
in
comparing
ongoing
costs
of
investing
in
the
Fund
only,
and
will
not
help
you
determine
the
relative
total
costs
of
participating
in
any
one
investment
program.
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.”
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
Ending
Account
Value
2/2
8/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
a
Annualized
Expense
Ratio
2
$1,000
$1,123.50
$0.00
$1,024.80
$0.00
0.00%
Your
Fund’s
Expenses
Franklin
Templeton
SMACS:
Series
H
3
franklintempleton.com
Semiannual
Report
Shareholders
of
mutual
funds
incur
ongoing
costs,
such
as
management
fees
(if
any),
custodian
fees
and
other
Fund
expenses,
which
are
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
the
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.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
Fund
costs
only
and
do
not
reflect
any
program
fees
that
you
may
pay.
Therefore,
the
table
is
useful
in
comparing
ongoing
costs
of
investing
in
the
Fund
only,
and
will
not
help
you
determine
the
relative
total
costs
of
participating
in
any
one
investment
program.
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.”
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acq
uired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
a
Annualized
Expense
Ratio
2
$1,000
$1,059.63
$0.00
$1,024.80
$0.00
0.00%
Your
Fund’s
Expenses
Franklin
Templeton
SMACS:
Series
I
4
franklintempleton.com
Semiannual
Report
Shareholders
of
mutual
funds
incur
ongoing
costs,
such
as
management
fees
(if
any),
custodian
fees
and
other
Fund
expenses,
which
are
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
the
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.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
Fund
costs
only
and
do
not
reflect
any
program
fees
that
you
may
pay.
Therefore,
the
table
is
useful
in
comparing
ongoing
costs
of
investing
in
the
Fund
only,
and
will
not
help
you
determine
the
relative
total
costs
of
participating
in
any
one
investment
program.
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.”
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
181/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Beginning
Account
Value
9/1/20
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
Ending
Account
Value
2/28/21
Expenses
Paid
During
Period
9/1/20–2/28/21
1,
2
a
Annualized
Expense
Ratio
2
$1,000
$1,116.51
$0.00
$1,024.80
$0.00
0.00%
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
CH
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
5
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
a
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
..........................................
$9.82
$10.26
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
..................................................
0.18
0.33
0.05
Net
realized
and
unrealized
gains
(losses)
....................................
0.35
(0.31)
0.26
Total
from
investment
operations
.............................................
0.53
0.02
0.31
Less
distributions
from:
Net
investment
income
...................................................
(0.17)
(0.33)
(0.05)
Net
realized
gains
......................................................
—
(0.13)
—
Total
distributions
........................................................
(0.17)
(0.46)
(0.05)
Net
asset
value,
end
of
period
...............................................
$10.18
$9.82
$10.26
Total
return
d
............................................................
5.37%
0.25%
3.06%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...............................
2.69%
4.23%
3.74%
Expenses
net
of
waiver
and
payments
by
affiliates
................................
—%
f
—%
f
—%
Net
investment
income
....................................................
3.54%
3.38%
1.87%
Supplemental
data
Net
assets,
end
of
period
(000’s)
.............................................
$3,093
$2,986
$4,028
Portfolio
turnover
rate
.....................................................
2.80%
51.23%
18.11%
a
For
the
period
June
3,
2019
(commencement
of
operations)
to
August
31,
2019.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Strategic
Series
Statement
of
Investments
(unaudited),
February
28,
2021
Franklin
Templeton
SMACS:
Series
CH
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
s
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
99.5%
California
99.5%
a
California
Community
Housing
Agency
,
Revenue
,
144A,
2019
A
,
5
%
,
4/01/49
......
$
200,000
$
225,602
California
County
Tobacco
Securitization
Agency
,
Gold
Country
Settlement
Funding
Corp.
,
Revenue
,
2020
B-1
,
Refunding
,
4
%
,
6/01/49
........................
100,000
108,218
California
Municipal
Finance
Authority
,
a
Claremont
Graduate
University,
Revenue,
144A,
2020
B,
Refunding,
5%,
10/01/49
.
125,000
141,419
Congregational
Home
Obligated
Group
(The),
Revenue,
2019,
Refunding,
5%,
11/15/39
.......................................................
130,000
148,599
California
Statewide
Communities
Development
Authority
,
Special
Assessment,
2019
C,
5%,
9/02/49
...............................
125,000
143,275
Special
Assessment,
2020
A,
4%,
9/02/50
...............................
100,000
106,297
Community
Facilities
District
No.
2016-02,
Special
Tax,
2019,
5%,
9/01/39
.......
100,000
116,721
a
Loma
Linda
University
Medical
Center
Obligated
Group,
Revenue,
144A,
2018
A,
5.5%,
12/01/58
..................................................
250,000
293,317
a
NCCD-Hooper
Street
LLC,
Revenue,
144A,
2019,
5.25%,
7/01/49
.............
100,000
108,408
a
NCCD-Hooper
Street
LLC,
Revenue,
144A,
2019,
5.25%,
7/01/52
.............
200,000
216,374
City
of
Dublin
,
Community
Facilities
District
No.
2015-1
,
Special
Tax
,
2019
,
5
%
,
9/01/49
130,000
146,786
City
of
Rancho
Cordova
,
Grantline
208
Community
Facilities
District
No.
2018-1
,
Special
Tax
,
2019
,
5
%
,
9/01/49
.......................................
100,000
112,583
City
of
Roseville
,
SVSP
Westpark-Federico
Community
Facilities
District
No.
1,
Special
Tax,
2019,
5%,
9/01/49
........................................................
125,000
140,116
Villages
at
Sierra
Vista
Community
Facilities
District
No.
1,
Special
Tax,
2019,
5%,
9/01/49
........................................................
130,000
146,430
City
of
Santa
Paula
,
Harvest
Community
Facilities
District
No.
1
,
Special
Tax
,
2020
,
4
%
,
9/01/50
......................................................
125,000
132,240
City
of
Tracy
,
Community
Facilities
District
No.
2016-01
,
Special
Tax
,
2018
,
5
%
,
9/01/48
.........................................................
110,000
122,271
City
of
Upland
,
Community
Facilities
District
No.
2015-1
,
Special
Tax
,
2019
A
,
4
%
,
9/01/49
.........................................................
185,000
199,955
Folsom
Ranch
Financing
Authority
,
City
of
Folsom
Community
Facilities
District
No.
19
,
Special
Tax
,
2019
,
5
%
,
9/01/49
.......................................
100,000
113,903
Foothill-Eastern
Transportation
Corridor
Agency
,
Revenue
,
2013
B-2
,
Refunding
,
3.5
%
,
1/15/53
.........................................................
190,000
207,170
Tobacco
Securitization
Authority
of
Southern
California
,
San
Diego
County
Tobacco
Asset
Securitization
Corp.
,
Revenue
,
2019
B-1
,
Refunding
,
5
%
,
6/01/48
.........
125,000
149,274
3,078,958
Total
Municipal
Bonds
(Cost
$2,964,062)
.......................................
3,078,958
a
a
a
a
a
Total
Investments
(Cost
$2,964,062)
99.5%
.....................................
$3,078,958
Other
Assets,
less
Liabilities
0.5%
.............................................
13,949
Net
Assets
100.0%
...........................................................
$3,092,907
See
Abbreviations
on
page
30
.
a
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$985,120,
representing
31.9%
of
net
assets.
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
E
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
7
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
a
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
..........................................
$10.15
$10.69
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
..................................................
0.16
0.36
0.10
Net
realized
and
unrealized
gains
(losses)
....................................
1.08
(0.19)
0.63
Total
from
investment
operations
.............................................
1.24
0.17
0.73
Less
distributions
from:
Net
investment
income
...................................................
(0.21)
(0.49)
(0.04)
Net
realized
gains
......................................................
—
(0.22)
—
Total
distributions
........................................................
(0.21)
(0.71)
(0.04)
Net
asset
value,
end
of
period
...............................................
$11.18
$10.15
$10.69
Total
return
d
............................................................
12.35%
1.77%
7.31%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...............................
2.15%
2.85%
4.76%
Expenses
net
of
waiver
and
payments
by
affiliates
................................
—%
f
—%
f
—%
Net
investment
income
....................................................
3.07%
3.48%
4.11%
Supplemental
data
Net
assets,
end
of
period
(000’s)
.............................................
$4,477
$3,847
$3,959
Portfolio
turnover
rate
.....................................................
19.97%
58.50%
16.33%
a
For
the
period
June
3,
2019
(commencement
of
operations)
to
August
31,
2019.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Strategic
Series
Statement
of
Investments
(unaudited),
February
28,
2021
Franklin
Templeton
SMACS:
Series
E
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
8
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
77.7%
Aerospace
&
Defense
2.2%
General
Dynamics
Corp.
................................
United
States
600
$
98,082
Banks
4.3%
Bank
of
America
Corp.
.................................
United
States
3,000
104,130
JPMorgan
Chase
&
Co.
.................................
United
States
600
88,302
192,432
Beverages
3.9%
PepsiCo,
Inc.
........................................
United
States
1,350
174,407
Communications
Equipment
2.0%
Cisco
Systems,
Inc.
...................................
United
States
2,000
89,740
Diversified
Telecommunication
Services
2.1%
BCE,
Inc.
...........................................
Canada
2,150
91,950
Electric
Utilities
9.0%
Duke
Energy
Corp.
....................................
United
States
2,000
171,180
Edison
International
...................................
United
States
1,500
80,985
Exelon
Corp.
.........................................
United
States
1,000
38,600
Southern
Co.
(The)
....................................
United
States
2,000
113,440
404,205
Energy
Equipment
&
Services
1.1%
Baker
Hughes
Co.
.....................................
United
States
2,000
48,960
Equity
Real
Estate
Investment
Trusts
(REITs)
1.1%
Host
Hotels
&
Resorts,
Inc.
..............................
United
States
3,000
49,770
Health
Care
Providers
&
Services
4.7%
CVS
Health
Corp.
.....................................
United
States
3,065
208,818
Insurance
2.6%
MetLife,
Inc.
.........................................
United
States
2,000
115,200
Interactive
Media
&
Services
3.2%
a
Alphabet,
Inc.,
A
......................................
United
States
70
141,534
IT
Services
2.1%
International
Business
Machines
Corp.
.....................
United
States
808
96,095
Media
1.5%
Comcast
Corp.,
A
.....................................
United
States
1,300
68,536
Metals
&
Mining
3.5%
Rio
Tinto
plc,
ADR
.....................................
Australia
1,800
157,320
Multiline
Retail
4.9%
Target
Corp.
.........................................
United
States
1,200
220,128
Multi-Utilities
3.1%
Dominion
Energy,
Inc.
..................................
United
States
1,400
95,648
DTE
Energy
Co.
......................................
United
States
350
41,202
136,850
Oil,
Gas
&
Consumable
Fuels
1.9%
TOTAL
SE,
ADR
......................................
France
1,800
83,520
Pharmaceuticals
10.2%
AstraZeneca
plc,
ADR
..................................
United
Kingdom
3,300
159,654
Bristol-Myers
Squibb
Co.
................................
United
States
3,100
190,123
Merck
&
Co.,
Inc.
.....................................
United
States
1,500
108,930
458,707
Franklin
Strategic
Series
Statement
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
E
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
9
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Semiconductors
&
Semiconductor
Equipment
7.1%
Analog
Devices,
Inc.
...................................
United
States
650
$
101,283
Texas
Instruments,
Inc.
.................................
United
States
1,265
217,921
319,204
Specialty
Retail
3.5%
Home
Depot,
Inc.
(The)
.................................
United
States
600
155,004
Tobacco
3.7%
Philip
Morris
International,
Inc.
...........................
United
States
2,000
168,040
Total
Common
Stocks
(Cost
$2,946,288)
.......................................
3,478,502
b
Equity-Linked
Securities
13.4%
Automobiles
2.6%
c
National
Bank
of
Canada
into
General
Motors
Co.,
144A,
10%,
1/26/22
...........................................
United
States
2,500
117,976
Capital
Markets
2.5%
c
UBS
AG
into
Morgan
Stanley,
144A,
8.5%,
2/11/22
............
United
States
1,500
111,986
Energy
Equipment
&
Services
3.1%
c
Royal
Bank
of
Canada
into
Schlumberger
NV,
144A,
10%,
3/01/22
United
States
5,000
136,832
Internet
&
Direct
Marketing
Retail
2.9%
c
JPMorgan
Chase
Bank
NA
into
Amazon.com,
Inc.,
144A,
Reg
S,
9.5%,
12/07/21
.....................................
United
States
40
127,129
Road
&
Rail
2.3%
c
Goldman
Sachs
International
Bank
into
Union
Pacific
Corp.,
144A,
8%,
2/09/22
........................................
United
States
500
104,519
Total
Equity-Linked
Securities
(Cost
$585,318)
..................................
598,442
Convertible
Preferred
Stocks
5.7%
Electric
Utilities
2.3%
American
Electric
Power
Co.,
Inc.,
6.125%
..................
United
States
2,300
102,833
Semiconductors
&
Semiconductor
Equipment
3.4%
Broadcom,
Inc.,
8%,
A
..................................
United
States
100
151,181
Total
Convertible
Preferred
Stocks
(Cost
$212,594)
..............................
254,014
Preferred
Stocks
3.0%
Banks
3.0%
Citigroup,
Inc.,
6.875%,
K
...............................
United
States
5,000
136,800
Total
Preferred
Stocks
(Cost
$137,118)
.........................................
136,800
Total
Long
Term
Investments
(Cost
$3,881,318)
.................................
4,467,758
a
Franklin
Strategic
Series
Statement
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
E
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
10
Short
Term
Investments
0.8%
a
a
Country
Shares
a
Value
a
Money
Market
Funds
0.8%
d,e
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
........
United
States
36,754
$
36,754
Total
Money
Market
Funds
(Cost
$36,754)
......................................
36,754
Total
Short
Term
Investments
(Cost
$36,754
)
...................................
36,754
a
Total
Investments
(Cost
$3,918,072)
100.6%
....................................
$4,504,512
Other
Assets,
less
Liabilities
(0.6)%
...........................................
(27,026)
Net
Assets
100.0%
...........................................................
$4,477,486
See
Abbreviations
on
page
30
.
a
Non-income
producing.
b
See
Note
1(b)
regarding
equity-linked
securities.
c
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$598,442,
representing
13.4%
of
net
assets.
d
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
e
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
H
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
11
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
a
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
..........................................
$9.75
$10.09
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
..................................................
0.16
0.30
0.04
Net
realized
and
unrealized
gains
(losses)
....................................
0.42
(0.34)
0.09
Total
from
investment
operations
.............................................
0.58
(0.04)
0.13
Less
distributions
from:
Net
investment
income
...................................................
(0.16)
(0.30)
(0.04)
Net
asset
value,
end
of
period
...............................................
$10.17
$9.75
$10.09
Total
return
d
............................................................
5.96%
(0.28)%
e
1.31%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
...............................
3.26%
3.91%
3.85%
Expenses
net
of
waiver
and
payments
by
affiliates
................................
—%
g
—%
g
—%
Net
investment
income
....................................................
3.21%
3.10%
1.69%
Supplemental
data
Net
assets,
end
of
period
(000’s)
.............................................
$3,068
$2,941
$3,042
Portfolio
turnover
rate
.....................................................
5.41%
4.93%
—%
a
For
the
period
June
3,
2019
(commencement
of
operations)
to
August
31,
2019.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Total
return
excluding
payments
by
Advisers
for
acquired
fund
fees
and
expenses
is
(0.38)%
for
the
ye
ar
ended
August
31,
2020.
See
Note
3e.
f
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Strategic
Series
Statement
of
Investments
(unaudited),
February
28,
2021
Franklin
Templeton
SMACS:
Series
H
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Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
a
Shares
a
Value
a
Management
Investment
Companies
29.9%
Capital
Markets
29.9%
a
Franklin
Liberty
Federal
Intermediate
Tax-Free
Bond
Opportunities
ETF
..........
35,000
$
917,525
Total
Management
Investment
Companies
(Cost
$889,963)
.......................
917,525
Principal
Amount
a
a
a
a
Municipal
Bonds
65.5%
California
4.9%
Tobacco
Securitization
Authority
of
Southern
California
,
San
Diego
County
Tobacco
Asset
Securitization
Corp.
,
Revenue
,
2019
B-1
,
Refunding
,
5
%
,
6/01/48
.........
$
125,000
149,274
Colorado
19.0%
Colorado
Health
Facilities
Authority
,
Christian
Living
Neighborhoods
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
4
%
,
1/01/38
.................................
100,000
102,773
Denver
Health
&
Hospital
Authority
,
Revenue
,
2019
A
,
Refunding
,
4
%
,
12/01/37
....
100,000
114,053
Hunters
Overlook
Metropolitan
District
No.
5
,
GO
,
2019
A
,
5
%
,
12/01/39
..........
150,000
161,550
Village
at
Dry
Creek
Metropolitan
District
No.
2
(The)
,
GO
,
2019
,
4.375
%
,
12/01/44
..
200,000
206,100
584,476
Florida
2.0%
Windward
Community
Development
District
,
Special
Assessment
,
2020
A1
,
3
%
,
5/01/25
.........................................................
60,000
60,718
Indiana
3.8%
Indiana
Finance
Authority
,
Marian
University,
Inc.
,
Revenue
,
2019
A
,
5
%
,
9/15/39
...
100,000
117,275
Louisiana
8.1%
Calcasieu
Parish
Memorial
Hospital
Service
District
,
Southwest
Louisiana
Healthcare
System
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
5
%
,
12/01/39
............
100,000
107,968
b
Louisiana
Local
Government
Environmental
Facilities
&
Community
Development
Authority
,
Parish
of
St.
Martin
,
Revenue
,
144A,
2019
,
4.4
%
,
11/01/44
...........
135,000
141,434
249,402
Maryland
3.3%
b
City
of
Baltimore
,
Harbor
Point
Special
Taxing
District
,
Tax
Allocation,
Senior
Lien
,
144A,
2019
A
,
Refunding
,
3.5
%
,
6/01/39
................................
100,000
101,181
Pennsylvania
3.8%
b
Allentown
Neighborhood
Improvement
Zone
Development
Authority
,
Revenue
,
144A,
2017
,
Refunding
,
5
%
,
5/01/32
........................................
100,000
115,183
Texas
7.3%
b
County
of
Hays
,
La
Cima
Public
Improvement
District
,
Special
Assessment
,
144A,
2020
,
3.25
%
,
9/15/30
...............................................
100,000
104,254
b
New
Hope
Cultural
Education
Facilities
Finance
Corp.
,
Cityscape
Schools,
Inc.
,
Revenue
,
144A,
2019
A
,
5
%
,
8/15/39
...................................
110,000
121,324
225,578
Washington
3.6%
b
Washington
State
Housing
Finance
Commission
,
Presbyterian
Retirement
Communities
Northwest
Obligated
Group
,
Revenue
,
144A,
2019A
,
5
%
,
1/01/49
...
100,000
109,365
Wisconsin
4.5%
b
Public
Finance
Authority
,
Friends
Homes
Obligated
Group
,
Revenue
,
144A,
2019
,
Refunding
,
5
%
,
9/01/49
.............................................
125,000
139,341
Franklin
Strategic
Series
Statement
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
H
(continued)
franklintempleton.com
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accompanying
notes
are
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integral
part
of
these
financial
statements.
Semiannual
Report
13
s
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
U.S.
Territories
5.2%
District
of
Columbia
5.2%
District
of
Columbia,
International
School
Obligated
Group,
Revenue,
2019,
5%,
7/01/49
.........................................................
$
140,000
$
159,249
Total
Municipal
Bonds
(Cost
$1,946,008)
.......................................
2,011,042
Total
Long
Term
Investments
(Cost
$2,835,971)
.................................
2,928,567
a
a
a
a
a
Short
Term
Investments
3.3%
Municipal
Bonds
3.3%
New
York
3.3%
c
Metropolitan
Transportation
Authority
,
Dedicated
Tax
Fund
,
Revenue
,
2008A-1
,
Refunding
,
LOC
TD
Bank
NA
,
Daily
VRDN
and
Put
,
0.03
%
,
11/01/31
...........
100,000
100,000
Total
Municipal
Bonds
(Cost
$100,000)
.........................................
100,000
Total
Short
Term
Investments
(Cost
$100,000
)
..................................
100,000
a
Total
Investments
(Cost
$2,935,971)
98.7%
.....................................
$3,028,567
Other
Assets,
less
Liabilities
1.3%
.............................................
39,856
Net
Assets
100.0%
...........................................................
$3,068,423
See
Abbreviations
on
page
30
.
a
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$832,082,
representing
27.1%
of
net
assets.
c
Variable
rate
demand
notes
(VRDNs)
are
obligations
which
contain
a
floating
or
variable
interest
rate
adjustment
formula
and
an
unconditional
right
of
demand
to
receive
payment
of
the
principal
balance
plus
accrued
interest
at
specified
dates.
Unless
otherwise
noted,
the
coupon
rate
is
determined
based
on
factors
including
supply
and
demand,
underlying
credit,
tax
treatment,
and
current
short
term
rates.
The
coupon
rate
shown
represents
the
rate
at
period
end.
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
I
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Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
0
a
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Year
Ended
August
31,
2019
a
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
..........................................
$8.95
$10.12
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
..................................................
0.32
0.64
0.19
Net
realized
and
unrealized
gains
(losses)
....................................
0.70
(1.10)
0.04
Total
from
investment
operations
.............................................
1.02
(0.46)
0.23
Less
distributions
from:
Net
investment
income
...................................................
(0.32)
(0.71)
(0.11)
Net
asset
value,
end
of
period
...............................................
$9.65
$8.95
$10.12
Total
return
d
............................................................
11.65%
(4.51)%
2.25%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
...............................
2.94%
3.55%
5.96%
Expenses
net
of
waiver
and
payments
by
affiliates
................................
—%
f
—%
f
—%
Net
investment
income
....................................................
7.04%
6.98%
7.61%
Supplemental
data
Net
assets,
end
of
period
(000’s)
.............................................
$3,626
$3,506
$3,774
Portfolio
turnover
rate
.....................................................
12.90%
43.24%
—%
a
For
the
period
June
3,
2019
(commencement
of
operations)
to
August
31,
2019.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
incom
e
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Strategic
Series
Statement
of
Investments
(unaudited),
February
28,
2021
Franklin
Templeton
SMACS:
Series
I
franklintempleton.com
The
accompanying
notes
are
an
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part
of
these
financial
statements.
Semiannual
Report
15
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
85.1%
Automobiles
6.6%
Ford
Motor
Co.
,
Senior
Note
,
9
%
,
4/22/25
.................................
$
100,000
$
121,106
General
Motors
Co.
,
Senior
Note
,
6.125
%
,
10/01/25
.........................
100,000
119,119
240,225
Communications
Equipment
1.3%
a
CommScope
Technologies
LLC
,
Senior
Note
,
144A,
6
%
,
6/15/25
................
47,000
47,855
Containers
&
Packaging
3.0%
a
Mauser
Packaging
Solutions
Holding
Co.
,
Senior
Note
,
144A,
7.25
%
,
4/15/25
......
110,000
108,833
Diversified
Financial
Services
2.1%
a
MPH
Acquisition
Holdings
LLC
,
Senior
Note
,
144A,
5.75
%
,
11/01/28
.............
75,000
74,531
Energy
Equipment
&
Services
4.3%
a
Weatherford
International
Ltd.
,
144A,
8.75
%
,
9/01/24
........................
150,000
157,736
Entertainment
2.4%
Netflix,
Inc.
,
Senior
Bond
,
4.875
%
,
4/15/28
................................
75,000
85,506
Equity
Real
Estate
Investment
Trusts
(REITs)
1.6%
a
Iron
Mountain,
Inc.
,
Senior
Note
,
144A,
4.875
%
,
9/15/27
......................
55,000
57,497
Food
Products
3.2%
a
Post
Holdings,
Inc.
,
Senior
Bond
,
144A,
5.625
%
,
1/15/28
.....................
110,000
115,676
Health
Care
Providers
&
Services
28.7%
a
CHS/Community
Health
Systems,
Inc.
,
Senior
Note,
144A,
6.875%,
4/01/28
....................................
425,000
378,515
Senior
Secured
Note,
144A,
8%,
3/15/26
................................
150,000
160,305
Senior
Secured
Note,
144A,
8%,
12/15/27
...............................
174,000
191,074
Tenet
Healthcare
Corp.
,
Senior
Note
,
7
%
,
8/01/25
...........................
300,000
311,040
1,040,934
Hotels,
Restaurants
&
Leisure
5.2%
a
Golden
Nugget,
Inc.
,
Senior
Note
,
144A,
6.75
%
,
10/15/24
.....................
55,000
55,997
a
Vail
Resorts,
Inc.
,
Senior
Note
,
144A,
6.25
%
,
5/15/25
........................
50,000
53,457
a
Wynn
Las
Vegas
LLC
/
Wynn
Las
Vegas
Capital
Corp.
,
Senior
Bond
,
144A,
5.5
%
,
3/01/25
.........................................................
75,000
79,594
189,048
Media
6.2%
DISH
DBS
Corp.
,
Senior
Note
,
5.875
%
,
7/15/22
............................
110,000
114,805
a
Univision
Communications,
Inc.
,
Senior
Secured
Note
,
144A,
5.125
%
,
2/15/25
.....
110,000
110,311
225,116
Metals
&
Mining
3.2%
a
Cleveland-Cliffs,
Inc.
,
Senior
Secured
Note
,
144A,
9.875
%
,
10/17/25
.............
100,000
117,000
Oil,
Gas
&
Consumable
Fuels
6.0%
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note,
7.75%,
4/15/23
.........................................
110,000
107,101
a
Senior
Note,
144A,
11%,
4/15/25
......................................
50,000
50,744
Occidental
Petroleum
Corp.
,
Senior
Note
,
8
%
,
7/15/25
.......................
50,000
58,125
215,970
Pharmaceuticals
8.3%
a
Bausch
Health
Cos.,
Inc.
,
Senior
Bond
,
144A,
6.125
%
,
4/15/25
.................
180,000
184,493
a
Par
Pharmaceutical,
Inc.
,
Senior
Secured
Note
,
144A,
7.5
%
,
4/01/27
.............
110,000
118,394
302,887
Franklin
Strategic
Series
Statement
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
I
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Trading
Companies
&
Distributors
1.5%
a
WESCO
Distribution,
Inc.
,
Senior
Note
,
144A,
7.125
%
,
6/15/25
.................
$
50,000
$
54,173
Wireless
Telecommunication
Services
1.5%
Sprint
Communications,
Inc.
,
Senior
Note
,
6
%
,
11/15/22
......................
50,000
53,506
Total
Corporate
Bonds
(Cost
$2,786,669)
.......................................
3,086,493
Asset-Backed
Securities
3.0%
Airlines
3.0%
United
Airlines
Pass-Through
Trust
,
2020-1
,
A
,
5.875
%
,
10/15/27
...............
97,583
109,846
Total
Asset-Backed
Securities
(Cost
$97,583)
...................................
109,846
Mortgage-Backed
Securities
6.7%
Government
National
Mortgage
Association
(GNMA)
Fixed
Rate
6.7%
GNMA
II,
Single-family,
30
Year,
3%,
7/20/50
...............................
126,022
131,319
GNMA
II,
Single-family,
30
Year,
3%,
10/20/50
..............................
107,285
112,791
244,110
Total
Mortgage-Backed
Securities
(Cost
$247,217)
..............................
244,110
Shares
Escrows
and
Litigation
Trusts
3.0%
a
Chesapeake
Energy
Corp.,
Escrow
Account
,
144A
..........................
100,000
106,939
Total
Escrows
and
Litigation
Trusts
(Cost
$100,000)
.............................
106,939
Total
Long
Term
Investments
(Cost
$3,231,469)
.................................
3,547,388
a
a
a
a
a
Short
Term
Investments
1.6%
a
Money
Market
Funds
1.6%
b,c
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
......................
57,903
57,903
Total
Money
Market
Funds
(Cost
$57,903)
......................................
57,903
Total
Short
Term
Investments
(Cost
$57,903
)
...................................
57,903
a
Total
Investments
(Cost
$3,289,372)
99.4%
.....................................
$3,605,291
Other
Assets,
less
Liabilities
0.6%
.............................................
20,927
Net
Assets
100.0%
...........................................................
$3,626,218
See
Abbreviations
on
page
30
.
a
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
February
28,
2021,
the
aggregate
value
of
these
securities
was
$2,223,124,
representing
61.3%
of
net
assets.
b
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
c
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Franklin
Strategic
Series
Financial
Statements
Statements
of
Assets
and
Liabilities
February
28,
2021
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
17
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
................
$2,964,062
$3,881,318
$2,046,008
$3,231,469
Cost
-
Non-controlled
affiliates
(Note
3
d)
.....
—
36,754
889,963
57,903
Value
-
Unaffiliated
issuers
...............
$3,078,958
$4,467,758
$2,111,042
$3,547,388
Value
-
Non-controlled
affiliates
(Note
3d)
....
—
36,754
917,525
57,903
Cash
.................................
40,061
—
69,177
—
Receivables:
Dividends
and
interest
..................
49,066
9,750
23,698
69,248
Affiliates
.............................
—
544
941
—
Other
assets
...........................
6
5
6
7
Total
assets
.......................
3,168,091
4,514,811
3,122,389
3,674,546
Liabilities:
Payables:
Transfer
agent
fees
.....................
—
68
24
5
Registration
and
filing
fees
...............
4,445
6,758
6,649
6,767
Professional
fees
......................
43,667
29,938
35,803
40,143
Affiliates
.............................
14,036
—
—
869
Distributions
to
shareholders
..............
8,884
—
7,794
—
Accrued
expenses
and
other
liabilities
........
4,152
561
3,696
544
Total
liabilities
......................
75,184
37,325
53,966
48,328
Net
assets,
at
value
..............
$3,092,907
$4,477,486
$3,068,423
$3,626,218
Net
assets
consist
of:
Paid-in
capital
..........................
$3,000,000
$4,065,547
$3,000,000
$3,791,508
Total
distributable
earnings
(losses)
..........
92,907
411,939
68,423
(165,290)
Net
assets,
at
value
..............
$3,092,907
$4,477,486
$3,068,423
$3,626,218
Shares
outstanding
......................
303,978
400,593
301,587
375,833
Net
asset
value
per
share
.................
$10.18
$11.18
$10.17
$9.65
Franklin
Strategic
Series
Financial
Statements
Statements
of
Operations
for
the
six
months
ended
February
28,
2021
(unaudited)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$–,
$669,
$–
and
$–,
respectively)
Unaffiliated
issuers
.....................
$—
$61,703
$—
$—
Non-controlled
affiliates
(Note
3d)
..........
—
—
10,579
—
Interest:
Unaffiliated
issuers
.....................
53,657
2,226
36,266
122,053
Other
income
a
..........................
—
153
1,428
802
Total
investment
income
................
53,657
64,082
48,273
122,855
Expenses:
Transfer
agent
fees
(Note
3
c
)
...............
289
429
271
345
Custodian
fees
(Note
4
)
...................
10
618
13
506
Reports
to
shareholders
...................
3,024
3,391
3,464
3,850
Registration
and
filing
fees
.................
10,532
12,769
12,653
12,778
Professional
fees
........................
22,799
25,152
28,349
31,271
Trustees'
fees
and
expenses
...............
1,175
1,177
1,175
1,176
Other
.................................
2,912
1,495
3,032
1,418
Total
expenses
......................
40,741
45,031
48,957
51,344
Expense
reductions
(Note
4
)
............
(10)
(1)
(13)
(1)
Expenses
waived/paid
by
affiliates
(Note
3
d
and
3
e
)
...........................
(40,731)
(45,030)
(48,944)
(51,343)
Net
expenses
......................
—
—
—
—
Net
investment
income
.............
53,657
64,082
48,273
122,855
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
...................
1,403
76,274
(2,872)
17,156
Non-controlled
affiliates
(Note
3d)
........
—
—
522
—
Foreign
currency
transactions
.............
—
(52)
—
—
Net
realized
gain
(loss)
...............
1,403
76,222
(2,350)
17,156
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
...................
105,794
352,227
107,749
243,855
Non-controlled
affiliates
(Note
3d)
........
—
—
21,862
—
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
........
—
90
—
—
Net
change
in
unrealized
appreciation
(depreciation)
......................
105,794
352,317
129,611
243,855
Net
realized
and
unrealized
gain
(loss)
.........
107,197
428,539
127,261
261,011
Net
increase
(decrease)
in
net
assets
resulting
from
operations
...............................
$160,854
$492,621
$175,534
$383,866
a
Other
income
includes
payments
by
Advisers
for
acquired
fund
fees
and
expenses
(See
Note
3e)
Franklin
Strategic
Series
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
19
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$53,657
$103,540
$64,082
$133,340
Net
realized
gain
(loss)
............
1,403
5,974
76,222
(149,085)
Net
change
in
unrealized
appreciation
(depreciation)
.................
105,794
(109,686)
352,317
82,177
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
160,854
(172)
492,621
66,432
Distributions
to
shareholders
.........
(53,460)
(141,823)
(80,775)
(266,656)
Capital
share
transactions
(Note
2
)
.....
—
(900,000)
218,437
88,257
Net
increase
(decrease)
in
net
assets
.....................
107,394
(1,041,995)
630,283
(111,967)
Net
assets:
Beginning
of
period
................
2,985,513
4,027,508
3,847,203
3,959,170
End
of
period
.....................
$3,092,907
$2,985,513
$4,477,486
$3,847,203
Franklin
Strategic
Series
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Six
Months
Ended
February
28,
2021
(unaudited)
Year
Ended
August
31,
2020
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$48,273
$91,042
$122,855
$245,057
Net
realized
gain
(loss)
............
(2,350)
(21,887)
17,156
(501,515)
Net
change
in
unrealized
appreciation
(depreciation)
.................
129,611
(78,102)
243,855
88,770
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
175,534
(8,947)
383,866
(167,688)
Distributions
to
shareholders
.........
(48,264)
(92,173)
(121,433)
(268,376)
Capital
share
transactions
(Note
2
)
.....
—
—
(142,688)
168,706
Net
increase
(decrease)
in
net
assets
.....................
127,270
(101,120)
119,745
(267,358)
Net
assets:
Beginning
of
period
................
2,941,153
3,042,273
3,506,473
3,773,831
End
of
period
.....................
$3,068,423
$2,941,153
$3,626,218
$3,506,473
Franklin
Strategic
Series
21
franklintempleton.com
Semiannual
Report
Notes
to
Financial
Statements
(unaudited)
1.
Organization
and
Significant
Accounting
Policies
Franklin
Strategic
Series (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-
end
management
investment
company,
consisting
of
eleven
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
following
summarizes
the Funds'
significant
accounting
policies.
a.
Financial
Instrument
Valuation
The Funds'
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The Funds calculate the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Under
compliance
policies
and
procedures
approved
by
the
Trust’s
Board
of
Trustees
(the
Board),
the
Funds' administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities
and
exchange
traded
funds
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.
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
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
Funds.
As
a
result,
differences
may
arise
between
the
value
of
the
Funds'
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
22
franklintempleton.com
Semiannual
Report
pricing
service
may
be
used
to
adjust
the
value
of
the
Funds'
securities
to
the
latest
indications
of
fair
value
at
4
p.m
Eastern
time.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Funds'
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Funds'
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Funds
for
financial
reporting
purposes.
b.
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.
c.
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
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
February
28,
2021, each
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests.
d.
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.
Dividend
income
is
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Fund.
Dividends
from
net
investment
income
are
normally
declared
daily;
these
dividends
may
be
reinvested
or
paid
monthly
to
shareholders
for
Franklin
Templeton
SMACS:
Series
CH
and
Franklin
Templeton
SMACS:
Series
H,
and
recorded
on
ex-dividend
date
for
Franklin
Templeton
SMACS:
Series
E
and
Franklin
Templeton
SMACS:
Series
I.
Distributions
from
realized
capital
gains
and
other
distributions,
if
any,
are
recorded
on
the
ex-dividend
date.
Distributable
earnings
are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings
recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent
differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
23
franklintempleton.com
Semiannual
Report
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
e.
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.
f.
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
February
28,
2021,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Franklin
Templeton
SMACS:
Series
CH
a
Franklin
Templeton
SMACS:
Series
E
Shares
Amount
Shares
Amount
Class
A
Six
Months
ended
February
28,
2021
Shares
sold
...................................
—
$—
18,686
$189,286
Shares
issued
in
reinvestment
of
distributions
..........
—
—
2,794
29,151
Net
increase
(decrease)
..........................
—
$—
21,480
$218,437
Year
ended
August
31,
2020
Shares
issued
in
reinvestment
of
distributions
..........
—
$—
8,650
$88,257
Shares
redeemed
...............................
(88,495)
(900,000)
—
—
Net
increase
(decrease)
..........................
(88,495)
$(900,000)
8,650
$88,257
Franklin
Templeton
SMACS:
Series
H
b
Franklin
Templeton
SMACS:
Series
I
Shares
Amount
Shares
Amount
Class
A
Six
Months
ended
February
28,
2021
Shares
issued
in
reinvestment
of
distributions
..........
—
$—
4,542
$41,431
Shares
redeemed
...............................
—
—
(20,526)
(184,119)
Net
increase
(decrease)
..........................
—
$—
(15,984)
$(142,688)
Year
ended
August
31,
2020
Shares
sold
...................................
—
$—
9,063
$77,130
Shares
issued
in
reinvestment
of
distributions
..........
—
—
9,998
91,576
Net
increase
(decrease)
..........................
—
$—
19,061
$168,706
a
For
the
period
ended
February
28,
2021
there
were
no
capital
share
transactions
recorded.
b
For
the
period
ended
February
28,
2021
and
for
the
year
ended
August
31,
2020
there
were
no
capital
share
transactions
recorded.
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
24
franklintempleton.com
Semiannual
Report
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
Advisers
provides
investment
management
services
to
the
Funds.
The
Funds
do
not
pay
a
fee
for
these
services.
b.
Administrative
Fees
Under
an
agreement
with
Advisers,
FT
Services
provides
administrative
services
to
the
Funds.
The
Funds
do
not
pay
a
fee
for
these
services.
c.
Transfer
Agent
Fees
The
Funds
pay
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,
the
Funds
reimburse
Investor
Services
for
out
of
pocket
expenses
incurred
and
reimburses
shareholder
servicing
fees
paid
to
third
parties.
For
the
period
ended
February
28,
2021,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
d.
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.
Advisers
has
contractually
agreed
to
reimburse
expenses
of
the
Funds
in
an
amount
equal
to
fees
indirectly
borne
by
the
Funds
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations.
During
the period
ended
February
28,
2021,
investments
in
affiliated
management
investment
companies
were
as
follows:
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
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Transfer
agent
fees
........................
$289
$429
$271
$345
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
25
franklintempleton.com
Semiannual
Report
e.
Waiver
and
Expense
Reimbursements
Advisers
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
the
Funds
so
that
the
operating expenses
(excluding
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
and
acquired
fund
fees
and
expenses
of
the
Funds
do
not
exceed
0.00%,
based
on
the
average
net
assets
until
December
31,
2021.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Funds’
fiscal
year
end.
Acquired
fund
fees
and
expenses
are
indirect
expenses,
and
therefore
Advisers
may
make
payments,
if
necessary,
to
the
Funds
to
offset
these
estimated
indirect
expenses.
Payments
by
Advisers
for
the period
ended
February
28,
2021,
are
reflected
as
other
income
in
the
Statements
of
Operations.
aa
Value
at
Beginning
of
Period
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Period
Number
of
Shares
Held
at
End
of
Period
Investment
Income
a
a
a
a
a
a
a
a
Franklin
Templeton
SMACS:
Series
E
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$165,509
$914,636
$(1,043,391)
$—
$—
$36,754
36,754
$—
Total
Affiliated
Securities
....
$165,509
$914,636
$(1,043,391)
$—
$—
$36,754
$—
Franklin
Templeton
SMACS:
Series
H
Non-Controlled
Affiliates
Dividends
Franklin
Liberty
Federal
Intermediate
Tax-Free
Bond
Opportunities
ETF
..........
$1,022,800
$—
$(127,659)
$522
$21,862
$917,525
35,000
$10,579
Total
Affiliated
Securities
....
$1,022,800
$—
$(127,659)
$522
$21,862
$917,525
$10,579
Franklin
Templeton
SMACS:
Series
I
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
0%
.........
$159,307
$428,904
$(530,308)
$—
$—
$57,903
57,903
$—
Total
Affiliated
Securities
....
$159,307
$428,904
$(530,308)
$—
$—
$57,903
$—
3.
Transactions
with
Affiliates
(continued)
d.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
26
franklintempleton.com
Semiannual
Report
f.
Other
Affiliated
Transactions
At
February
28,
2021,
Franklin
Advisers,
Inc.
and
Franklin
Resources,
Inc.
owned
a
percentage
of
the
Funds’
outstanding
shares
as
follows:
4.
Expense
Offset
Arrangement
The
Funds
have entered
into
an
arrangement
with
their
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Funds'
custodian
expenses.
During
the period
ended
February
28,
2021 the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
5.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
August
31,
2020,
the
capital
loss
carryforwards
were
as
follows:
For
tax
purposes,
the
Funds
may
elect
to
defer
any
portion
of
a
post-October
capital
loss
or
late-year
ordinary
loss
to
the
first
day
of
the
following
fiscal
year.
At
August
31,
2020,
Franklin
Templeton
SMACS:
Series
CH
and
Franklin
Templeton
SMACS:
Series
E
had
deferred
post-October
capital
losses
of
$23,901
and
$251,034,
respectively.
At
February
28,
2021,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Shares
Percentage
of
Outstanding
Shares
a
Franklin
Templeton
SMACS:
Series
CH
Franklin
Resources,
Inc.
303,978
100.0%
Franklin
Templeton
SMACS:
Series
E
Franklin
Advisers,
Inc.
150,593
37.6%
Franklin
Resources,
Inc.
250,000
62.4%
Franklin
Templeton
SMACS:
Series
H
Franklin
Resources,
Inc.
301,587
100.0%
Franklin
Templeton
SMACS:
Series
I
Franklin
Advisers,
Inc.
125,833
33.5%
Franklin
Resources,
Inc.
250,000
66.5%
a
Investment
activities
of
significant
shareholders
could
have
a
material
impact
on
the
Fund.
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
1
1
1
1
1
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
.............................
$
—
$
—
$
21,887
$
516,283
3.
Transactions
with
Affiliates
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
27
franklintempleton.com
Semiannual
Report
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
perpetual
bonds
and
bond
discounts
and
premiums.
6.
Investment
Transactions
Purchases
and
sales
of
investments
and
ETFs
(excluding
short
term
securities)
for
the
period
ended
February
28,
2021,
were
as
follows:
7.
Credit
Risk
At
February
28,
2021,
the
Franklin
Templeton
SMACS:
Series
CH,
Franklin
Templeton
SMACS:
Series
H
and
Franklin
Templeton
SMACS:
Series
I
had
80.1%,
44.0%
and
82.3%,
respectively,
of
their
portfolio
invested
in
high
yield,
or
other
securities
rated
below
investment
grade
and
unrated
securities
as
determined
by
Nationally
Recognized
Statistical
Credit
Ratings
Organization
and/or
internally,
by
investment
management.
These
securities
may
be
more
sensitive
to
economic
conditions
causing
greater
price
volatility
and
are
potentially
subject
to
a
greater
risk
of
loss
due
to
default
than
higher
rated
securities.
8.
Concentration
of
Risk
Franklin
Templeton
SMACS:
Series
CH
invests
a
large
percentage
of
their
total
assets
in
obligations
of
issuers
within
California.
Such
concentration
may
subject
the
Fund
to
risks
associated
with
industrial
or
regional
matters,
and
economic,
political
or
legal
developments
occurring
within
California.
In
addition,
investments
in
these
securities
are
sensitive
to
interest
rate
changes
and
credit
risk
of
the
issuer
and
may
subject
the
Fund
to
increased
market
volatility.
The
market
for
these
investments
may
be
limited,
which
may
make
them
difficult
to
buy
or
sell.
9. Novel
Coronavirus
Pandemic
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the
Funds, their ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and their ability
to
achieve their investment
objectives.
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
a
a
a
a
a
Cost
of
investments
.......................
$2,963,528
$3,918,626
$2,935,905
$3,291,594
Unrealized
appreciation
.....................
$119,914
$681,393
$102,255
$319,026
Unrealized
depreciation
.....................
(4,484)
(95,507)
(9,593)
(5,329)
Net
unrealized
appreciation
(depreciation)
.......
$115,430
$585,886
$92,662
$313,697
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Purchases
..............................
$107,942
$1,174,324
$160,000
$439,448
Sales
..................................
$85,187
$812,461
$238,665
$447,009
5.
Income
Taxes
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
28
franklintempleton.com
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Report
10.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
4,
2022.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Funds
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Funds
and
other
costs
incurred
by
the
Funds,
pay
their
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
their
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statements
of
Operations.
During
the
period ended
February
28,
2021,
the
Funds
did
not
use
the
Global
Credit
Facility.
11.
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)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
29
franklintempleton.com
Semiannual
Report
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
February
28,
2021,
in
valuing
the
Funds'
assets
carried
at
fair
value,
is
as
follows:
12.
New
Accounting
Pronouncements
In
March
2020,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2020-
04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
The
amendments
in
the
ASU
provides
optional
temporary
financial
reporting
relief
from
the
effect
of
certain
types
of
contract
modifications
due
to
the
planned
discontinuation
of
the
London
Interbank
Offered
Rate
(LIBOR)
and
other
interbank-offered
based
reference
rates
as
of
the
end
of
2021.
The
ASU
is
effective
for
certain
reference
rate-related
contract
modifications
that
occur
during
the
period
March
12,
2020
through
December
31,
2022. Management
has
reviewed
the
requirements
and
believes
the
adoption
of
this
ASU
will
not
have
a
material
impact
on
the
financial
statements.
13.
Subsequent
Events
The
Funds
have
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Level
1
Level
2
Level
3
Total
Franklin
Templeton
SMACS:
Series
CH
Assets:
Investments
in
Securities:
Municipal
Bonds
.........................
$
—
$
3,078,958
$
—
$
3,078,958
Total
Investments
in
Securities
...........
$—
$3,078,958
$—
$3,078,958
Franklin
Templeton
SMACS:
Series
E
Assets:
Investments
in
Securities:
a
Common
Stocks
........................
3,478,502
—
—
3,478,502
Equity-Linked
Securities
...................
—
598,442
—
598,442
Convertible
Preferred
Stocks
...............
254,014
—
—
254,014
Preferred
Stocks
........................
136,800
—
—
136,800
Short
Term
Investments
...................
36,754
—
—
36,754
Total
Investments
in
Securities
...........
$3,906,070
$598,442
$—
$4,504,512
Franklin
Templeton
SMACS:
Series
H
Assets:
Investments
in
Securities:
Management
Investment
Companies
.........
917,525
—
—
917,525
Municipal
Bonds
.........................
—
2,011,042
—
2,011,042
Short
Term
Investments
...................
—
100,000
—
100,000
Total
Investments
in
Securities
...........
$917,525
$2,111,042
$—
$3,028,567
Franklin
Templeton
SMACS:
Series
I
Assets:
Investments
in
Securities:
a
Corporate
Bonds
........................
—
3,086,493
—
3,086,493
Asset-Backed
Securities
..................
—
109,846
—
109,846
Mortgage-Backed
Securities
................
—
244,110
—
244,110
Escrows
and
Litigation
Trusts
...............
—
106,939
—
106,939
Short
Term
Investments
...................
57,903
—
—
57,903
Total
Investments
in
Securities
...........
$57,903
$3,547,388
$—
$3,605,291
a
For
detailed
categories,
see
the
accompanying
Statement
of
Investments.
11.
Fair
Value
Measurements
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
30
franklintempleton.com
Semiannual
Report
Abbreviations
Selected
Portfolio
ADR
American
Depositary
Receipt
ETF
Exchange-Traded
Fund
GNMA
Government
National
Mortgage
Association
GO
General
Obligation
LOC
Letter
of
Credit
Franklin
Strategic
Series
Shareholder
Information
31
franklintempleton.com
Semiannual
Report
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.
Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is Mary C. Choksi and she is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4.
Principal Accountant Fees and Services.
N/A
Item 5. Audit Committee
of Listed Registrants. N/A
Item 6. Schedule of Investments. N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A
Item 8. Portfolio Managers of Closed-End Management Investment Companies. N/A
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers. N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a)
Evaluation of Disclosure Controls and Procedures
.
The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b)
Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company. N/A
Item 13. Exhibits.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, 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 Robert G. Kubilis, 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 STRATEGIC SERIES
By _S\Matthew T. Hinkle ______________________
Matthew T. Hinkle
Chief Executive Officer – Finance and Administration
Date April 23, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By _S\Matthew T. Hinkle ______________________
Matthew T. Hinkle
Chief Executive Officer – Finance and Administration
Date April 23, 2021
By _S\Robert G. Kubilis________________________
Robert G. Kubilis
Chief Financial Officer and Chief Accounting Officer
Date April 23, 2021