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)
Alison Baur, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
Date of fiscal year end: 8/31
Date of reporting period: 2/28/23
Item 1. Reports to Stockholders.
a.)
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)
b.)
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
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
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
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
9/1/22
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
a
Net
Annualized
Expense
Ratio
2
$1,000
$991.00
$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
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
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
9/1/22
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
a
Net
Annualized
Expense
Ratio
2
$1,000
$1,077.20
$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
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
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
9/1/22
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
a
Net
Annualized
Expense
Ratio
2
$1,000
$987.40
$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
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
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
9/1/22
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
Ending
Account
Value
2/28/23
Expenses
Paid
During
Period
9/1/22–2/28/23
1,2
a
Net
Annualized
Expense
Ratio
2
$1,000
$1,039.60
$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,
2023
(unaudited)
Year
Ended
August
31,
Year
Ended
August
31,
2019
a
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.................
$8.85
$10.51
$9.82
$10.26
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
.........................
0.19
0.36
0.35
0.33
0.05
Net
realized
and
unrealized
gains
(losses)
...........
(0.27)
(1.66)
0.69
(0.31)
0.26
Total
from
investment
operations
....................
(0.08)
(1.30)
1.04
0.02
0.31
Less
distributions
from:
Net
investment
income
..........................
(0.19)
(0.36)
(0.35)
(0.33)
(0.05)
Net
realized
gains
.............................
—
—
—
(0.13)
—
Total
distributions
...............................
(0.19)
(0.36)
(0.35)
(0.46)
(0.05)
Net
asset
value,
end
of
period
......................
$8.58
$8.85
$10.51
$9.82
$10.26
Total
return
d
...................................
(0.90)%
(12.61)%
10.75%
0.25%
3.06%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
......
2.58%
2.37%
3.11%
4.23%
3.74%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
f
—%
f
—%
f
—%
f
—%
Net
investment
income
...........................
4.41%
3.71%
3.44%
3.38%
1.87%
Supplemental
data
Net
assets,
end
of
period
(000’s)
....................
$3,129
$2,957
$3,512
$2,986
$4,028
Portfolio
turnover
rate
............................
35.26
%
5.65%
2.74%
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
Schedule
of
Investments
(unaudited),
February
28,
2023
Franklin
Templeton
SMACS:
Series
CH
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
96.3%
California
96.3%
Alameda
Community
Facilities
District
,
City
of
Alameda
Community
Facilities
District
No.
22-1
,
Special
Tax
,
2023
,
5
%
,
9/01/53
................................
$
125,000
$
118,119
a
California
Community
Choice
Financing
Authority
,
Revenue
,
2023
C
,
Mandatory
Put
,
5.25
%
,
10/01/31
...................................................
150,000
156,186
b
California
Community
Housing
Agency
,
Annadel
Apartments
,
Revenue
,
144A,
2019
A
,
5
%
,
4/01/49
......................................................
200,000
173,082
California
County
Tobacco
Securitization
Agency
,
Gold
Country
Settlement
Funding
Corp.
,
Revenue
,
2020
B-1
,
Refunding
,
4
%
,
6/01/49
........................
55,000
54,413
California
Municipal
Finance
Authority
,
Special
Tax,
2022
B,
Refunding,
6%,
9/01/52
.............................
150,000
152,890
Special
Tax,
2022
C,
6.25%,
9/01/52
...................................
150,000
150,917
Special
Tax,
2022
D,
6.125%,
9/01/52
..................................
150,000
154,249
Caritas
Corp.
(The),
Revenue,
2021
B,
Refunding,
4%,
8/15/56
...............
115,000
95,453
b
Claremont
Graduate
University,
Revenue,
144A,
2020
B,
Refunding,
5%,
10/01/49
.
125,000
111,991
Community
Facilities
District
No.
2021-6
Improvement
Area
No.
2,
Special
Tax,
2022,
6%,
9/01/52
....................................................
150,000
154,774
Congregational
Homes,
Inc.
Obligated
Group,
Revenue,
2019,
Refunding,
5%,
11/15/39
.......................................................
130,000
122,540
b
California
Pollution
Control
Financing
Authority
,
Rialto
Bioenergy
Facility
LLC
,
Revenue
,
144A,
2018
,
7.5
%
,
12/01/40
..................................
75,000
50,250
California
Statewide
Communities
Development
Authority
,
Special
Assessment,
2019
C,
5%,
9/02/49
...............................
125,000
126,232
Community
Facilities
District
No.
2016-02,
Special
Tax,
2019,
5%,
9/01/39
.......
100,000
103,509
Community
Facilities
District
No.
2022-07
Improvement
Area
No.
1,
Special
Tax,
2023,
5%,
9/01/53
................................................
150,000
142,389
b
Loma
Linda
University
Medical
Center
Obligated
Group,
Revenue,
144A,
2016
A,
5.25%,
12/01/56
.................................................
250,000
235,737
b
NCCD-Hooper
Street
LLC,
Revenue,
144A,
2019,
5.25%,
7/01/49
.............
100,000
87,973
b
NCCD-Hooper
Street
LLC,
Revenue,
144A,
2019,
5.25%,
7/01/52
.............
200,000
173,965
City
of
Rancho
Cordova
,
Grantline
208
Community
Facilities
District
No.
2018-1
,
Special
Tax
,
2019
,
5
%
,
9/01/49
.......................................
75,000
76,031
City
of
Roseville
,
SVSP
Westpark-Federico
Community
Facilities
District
No.
1
,
Special
Tax
,
2019
,
5
%
,
9/01/49
.............................................
125,000
126,858
b
CSCDA
Community
Improvement
Authority
,
Dublin
,
Revenue
,
144A,
2021
B
,
4
%
,
2/01/57
.........................................................
140,000
101,025
Foothill-Eastern
Transportation
Corridor
Agency
,
Revenue
,
2013
B-2
,
Refunding
,
3.5
%
,
1/15/53
.........................................................
140,000
112,621
Tobacco
Securitization
Authority
of
Southern
California
,
San
Diego
County
Tobacco
Asset
Securitization
Corp.
,
Revenue
,
2019
B-1
,
Refunding
,
5
%
,
6/01/48
.........
115,000
116,569
Upland
Community
Facilities
District
,
City
of
Upland
Community
Facilities
District
No.
2015-1
,
Special
Tax
,
2019
A
,
4
%
,
9/01/49
................................
135,000
117,231
3,015,004
Total
Municipal
Bonds
(Cost
$3,314,072)
.......................................
3,015,004
a
a
a
a
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
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CH
(continued)
franklintempleton.com
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part
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financial
statements.
Semiannual
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7
Short
Term
Investments
3.2%
a
a
Principal
Amount
a
Value
Municipal
Bonds
3.2%
California
3.2%
c
Southern
California
Public
Power
Authority
,
Revenue
,
2020-3
,
Refunding
,
LOC
US
Bank
NA
,
Daily
VRDN
and
Put
,
1.65
%
,
7/01/36
...........................
$
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
$3,414,072)
99.5%
.....................................
$3,115,004
Other
Assets,
less
Liabilities
0.5%
.............................................
14,344
Net
Assets
100.0%
...........................................................
$3,129,348
See
A
bbreviations
on
page
39
.
a
The
maturity
date
shown
represents
the
mandatory
put
date.
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,
2023,
the
aggregate
value
of
these
securities
was
$934,023,
representing
29.8%
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.
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E
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The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
8
a
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
Year
Ended
August
31,
2019
a
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.................
$11.29
$12.77
$10.15
$10.69
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
.........................
0.18
0.37
0.35
0.36
0.10
Net
realized
and
unrealized
gains
(losses)
...........
0.67
(0.31)
2.72
(0.19)
0.63
Total
from
investment
operations
....................
0.85
0.06
3.07
0.17
0.73
Less
distributions
from:
Net
investment
income
..........................
(0.31)
(0.83)
(0.45)
(0.49)
(0.04)
Net
realized
gains
.............................
(0.18)
(0.71)
—
(0.22)
—
Total
distributions
...............................
(0.49)
(1.54)
(0.45)
(0.71)
(0.04)
Net
asset
value,
end
of
period
......................
$11.65
$11.29
$12.77
$10.15
$10.69
Total
return
d
...................................
7.72%
0.38%
30.95%
1.77%
7.31%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
......
0.34%
1.36%
2.19%
2.85%
4.76%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
f
—%
—%
f
—%
f
—%
Net
investment
income
...........................
3.08%
3.11%
3.05%
3.48%
4.11%
Supplemental
data
Net
assets,
end
of
period
(000’s)
....................
$29,247
$12,863
$5,155
$3,847
$3,959
Portfolio
turnover
rate
............................
64.11
%
117.70%
49.90%
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
Schedule
of
Investments
(unaudited),
February
28,
2023
Franklin
Templeton
SMACS:
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E
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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
52.5%
Banks
7.7%
Citigroup,
Inc.
........................................
United
States
8,800
$
446,072
Truist
Financial
Corp.
..................................
United
States
12,500
586,875
US
Bancorp
.........................................
United
States
18,000
859,140
Wells
Fargo
&
Co.
.....................................
United
States
8,000
374,160
2,266,247
Communications
Equipment
4.6%
Cisco
Systems,
Inc.
...................................
United
States
28,000
1,355,760
Containers
&
Packaging
1.9%
a
International
Paper
Co.
.................................
United
States
15,000
545,850
Industrial
Conglomerates
3.6%
Honeywell
International,
Inc.
.............................
United
States
2,300
440,404
Siemens
AG
.........................................
Germany
4,000
609,568
1,049,972
Metals
&
Mining
5.1%
Freeport-McMoRan,
Inc.
................................
United
States
17,023
697,432
Rio
Tinto
plc,
ADR
.....................................
Australia
11,500
801,895
1,499,327
Multiline
Retail
4.4%
Target
Corp.
.........................................
United
States
7,700
1,297,450
Oil,
Gas
&
Consumable
Fuels
6.2%
BP
plc,
ADR
.........................................
United
Kingdom
23,000
910,800
Chevron
Corp.
.......................................
United
States
800
128,616
Shell
plc,
ADR
........................................
Netherlands
4,300
261,311
TotalEnergies
SE,
ADR
.................................
France
8,500
526,235
1,826,962
Pharmaceuticals
4.1%
Bristol-Myers
Squibb
Co.
................................
United
States
12,000
827,520
Roche
Holding
AG,
ADR
................................
United
States
10,000
360,500
1,188,020
Semiconductors
&
Semiconductor
Equipment
8.5%
Analog
Devices,
Inc.
...................................
United
States
3,000
550,410
Broadcom,
Inc.
.......................................
United
States
2,900
1,723,440
Intel
Corp.
...........................................
United
States
8,000
199,440
2,473,290
Specialty
Retail
3.6%
Home
Depot,
Inc.
(The)
.................................
United
States
3,500
1,037,890
Tobacco
2.8%
Philip
Morris
International,
Inc.
...........................
United
States
8,300
807,590
Total
Common
Stocks
(Cost
$14,400,100)
......................................
15,348,358
b
Equity-Linked
Securities
37.8%
Aerospace
&
Defense
1.1%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Northrop
Grumman
Corp.,
144A,
7.5%,
10/06/23
...........................
United
States
400
191,006
c
Mizuho
Markets
Cayman
LP
into
Lockheed
Martin
Corp.,
144A,
9%,
11/07/23
..........................................
United
States
300
142,706
333,712
Franklin
Strategic
Series
Schedule
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
a
a
Country
Shares
a
Value
a
a
a
a
a
a
b
Equity-Linked
Securities
(continued)
Airlines
0.5%
c
BNP
Paribas
Issuance
BV
into
Delta
Air
Lines,
Inc.,
144A,
10%,
7/12/23
...........................................
United
States
3,800
$
151,340
Automobiles
1.9%
c
Barclays
Bank
plc
into
Ford
Motor
Co,
144A,
12%,
2/09/24
......
United
States
44,500
551,025
Banks
4.5%
c
Barclays
Bank
plc
into
JPMorgan
Chase
&
Co.,
144A,
8%,
9/08/23
United
States
2,500
341,919
c
J.P.
Morgan
Structured
Products
BV
into
Bank
of
America
Corp.,
144A,
9.5%,
5/12/23
.................................
United
States
1,600
55,801
c
JPMorgan
Chase
Bank
NA
into
Bank
of
America
Corp,
144A,
9%,
2/02/24
...........................................
United
States
7,100
240,236
c
National
Bank
of
Canada
into
Truist
Financial
Corp.,
144A,
9%,
10/10/23
..........................................
United
States
10,000
480,996
c
Royal
Bank
of
Canada
into
Bank
of
America
Corp.,
144A,
8.5%,
8/14/23
...........................................
United
States
6,100
210,320
1,329,272
Biotechnology
4.6%
c,d
BNP
Paribas
Issuance
BV
into
AbbVie,
Inc.,
144A,
8%,
3/12/24
...
United
States
4,500
695,455
c
Goldman
Sachs
International
Bank
into
AbbVie,
Inc.,
144A,
8.5%,
2/06/24
...........................................
United
States
4,300
657,228
1,352,683
Capital
Markets
0.8%
c
UBS
AG
into
Charles
Schwab
Corp.
(The),
144A,
10%,
6/16/23
...
United
States
3,000
218,670
Chemicals
2.5%
c
Credit
Suisse
AG
into
Air
Products
and
Chemicals,
Inc.,
144A,
8.5%,
5/15/23
...........................................
United
States
240
63,431
c
JPMorgan
Chase
Bank
NA
into
LyondellBasell
Industries
NV,
144A,
11%,
1/22/24
.......................................
United
States
7,000
662,944
726,375
Electric
Utilities
0.8%
c
National
Bank
of
Canada
into
NextEra
Energy,
Inc.,
144A,
8.5%,
12/05/23
..........................................
United
States
3,000
222,422
Health
Care
Equipment
&
Supplies
0.3%
c
Barclays
Bank
plc
into
Medtronic
plc,
144A,
8%,
3/10/23
........
United
States
1,000
84,849
Industrial
Conglomerates
0.4%
c
Goldman
Sachs
International
Bank
into
Honeywell
International,
Inc.,
144A,
8.5%,
4/04/23
.................................
United
States
600
116,906
Insurance
0.8%
c
Royal
Bank
of
Canada
into
MetLife,
Inc.,
144A,
9%,
9/22/23
.....
United
States
2,400
170,647
c
Royal
Bank
of
Canada
into
MetLife,
Inc.,
144A,
10%,
5/19/23
....
United
States
1,000
71,411
242,058
Interactive
Media
&
Services
0.3%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Alphabet,
Inc.,
144A,
9%,
6/22/23
........................................
United
States
50
94,422
Internet
&
Direct
Marketing
Retail
0.3%
c
Credit
Suisse
AG
into
Amazon.com,
Inc.,
144A,
10%,
6/30/23
....
United
States
900
90,103
IT
Services
1.0%
c
UBS
AG
into
Fidelity
National
Information
Services,
Inc.,
144A,
10%,
10/19/23
..........................................
United
States
4,500
302,828
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
E
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
11
a
a
Country
Shares
a
Value
a
a
a
a
a
a
b
Equity-Linked
Securities
(continued)
Machinery
1.9%
c
National
Bank
of
Canada
into
Cummins
Inc,
144A,
8.5%,
2/13/24
.
United
States
2,300
$
568,452
Media
0.5%
c
BNP
Paribas
Issuance
BV
into
Comcast
Corp.,
144A,
8.5%,
8/10/23
United
States
3,485
133,165
Metals
&
Mining
2.5%
c
Goldman
Sachs
International
Bank
into
Newmont
Corp.,
144A,
10%,
7/05/23
...........................................
United
States
2,900
132,444
c
Royal
Bank
of
Canada
into
Barrick
Gold
Corp.,
144A,
11%,
3/07/24
Canada
35,000
603,292
735,736
Oil,
Gas
&
Consumable
Fuels
2.6%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Exxon
Mobil
Corp,
144A,
9.5%,
2/22/24
......................................
United
States
3,200
357,047
c
Merrill
Lynch
International
&
Co.
CV
into
Chevron
Corp.,
144A,
10%,
12/04/23
..........................................
United
States
2,400
404,180
761,227
Pharmaceuticals
1.0%
c
Mizuho
Markets
Cayman
LP
into
Bristol-Myers
Squibb
Co.,
144A,
8.5%,
12/04/23
.....................................
United
States
1,500
110,095
c
Societe
Generale
SA
into
Pfizer,
Inc.,
144A,
8.5%,
6/09/23
......
United
States
4,000
169,415
279,510
Road
&
Rail
2.5%
c
UBS
AG
into
Union
Pacific
Corp.,
144A,
8%,
3/13/24
...........
United
States
3,600
730,001
Semiconductors
&
Semiconductor
Equipment
5.2%
c
Barclays
Bank
plc
into
Texas
Instruments,
Inc.,
144A,
9%,
10/10/23
United
States
1,900
325,353
c
Goldman
Sachs
International
Bank
into
Intel
Corp.,
144A,
10%,
8/09/23
...........................................
United
States
7,500
195,596
c
Merrill
Lynch
International
&
Co.
CV
into
Broadcom,
Inc.,
144A,
10%,
12/05/23
..........................................
United
States
365
200,114
c
Mizuho
Markets
Cayman
LP
into
Microchip
Technology,
Inc.,
144A,
10%,
6/26/23
.......................................
United
States
2,700
213,426
c
Mizuho
Markets
Cayman
LP
into
Microchip
Technology,
Inc.,
144A,
10%,
11/03/23
......................................
United
States
5,600
415,293
c
Royal
Bank
of
Canada
into
Analog
Devices,
Inc.,
144A,
10%,
5/19/23
United
States
1,000
172,091
1,521,873
Software
0.8%
c
Mizuho
Markets
Cayman
LP
into
Workday,
Inc.,
144A,
10%,
8/03/23
United
States
1,400
236,654
Specialty
Retail
1.0%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Home
Depot,
Inc.
(The),
144A,
8.5%,
6/12/24
.................................
United
States
900
280,213
Total
Equity-Linked
Securities
(Cost
$11,135,193)
...............................
11,063,496
Convertible
Preferred
Stocks
5.5%
Capital
Markets
1.4%
KKR
Group
Co.,
Inc.,
6%,
C
.............................
United
States
6,000
402,060
Electric
Utilities
4.1%
American
Electric
Power
Co.,
Inc.,
6.125%
..................
United
States
9,300
458,583
NextEra
Energy,
Inc.,
6.926%
............................
United
States
17,000
761,600
1,220,183
Total
Convertible
Preferred
Stocks
(Cost
$1,620,495)
............................
1,622,243
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
E
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
See
A
bbreviations
on
page
39
.
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
4.9%
Banks
1.6%
PNC
Financial
Services
Group,
Inc.
(The)
,
Senior
Bond
,
6.037%
to
10/27/32,
FRN
thereafter
,
10/28/33
.......................
United
States
450,000
$
467,994
Equity
Real
Estate
Investment
Trusts
(REITs)
1.4%
c
VICI
Properties
LP
/
VICI
Note
Co.,
Inc.
,
Senior
Bond
,
144A,
4.625
%
,
12/01/29
..........................................
United
States
450,000
403,626
Hotels,
Restaurants
&
Leisure
0.5%
Expedia
Group,
Inc.
,
Senior
Note
,
3.25
%
,
2/15/30
.............
United
States
175,000
147,707
Trading
Companies
&
Distributors
1.4%
c
United
Rentals
North
America,
Inc.
,
Senior
Secured
Note
,
144A,
6
%
,
12/15/29
..........................................
United
States
400,000
400,530
Total
Corporate
Bonds
(Cost
$1,413,309)
.......................................
1,419,857
Total
Long
Term
Investments
(Cost
$28,569,097)
................................
29,453,954
a
Short
Term
Investments
0.5%
a
a
Country
Shares
a
Value
a
a
a
Money
Market
Funds
0.5%
e,f
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.204%
....
United
States
132,674
132,674
Total
Money
Market
Funds
(Cost
$132,674)
.....................................
132,674
Total
Short
Term
Investments
(Cost
$132,674
)
..................................
132,674
a
Total
Investments
(Cost
$28,701,771)
101.2%
...................................
$29,586,628
Options
Written
(0.0)%
†
......................................................
(6,750)
Other
Assets,
less
Liabilities
(1.2)%
...........................................
(332,600)
Net
Assets
100.0%
...........................................................
$29,247,278
Number
of
Contracts
Notional
Amount
#
a
a
a
g
Options
Written
(0.0)%
†
Calls
-
Exchange-Traded
Equity
Options
International
Paper
Co.,
June
Strike
Price
$42.50,
Expires
6/16/23
150
545,850
(6,750)
(6,750)
Total
Options
Written
(Premiums
received
$17,322)
.............................
$
(6,750)
#
Notional
amount
is
the
number
of
contracts
multiplied
by
contract
size,
and
may
be
multiplied
by
the
underlying
price.
May
include
currency
units,
bushels,
shares,
pounds,
barrels
or
other
units.
Currency
units
are
stated
in
U.S.
dollars
unless
otherwise
indicated.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
A
portion
or
all
of
the
security
is
held
in
connection
with
written
option
contracts
open
at
period
end.
b
See
Note
1(e)
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,
2023,
the
aggregate
value
of
these
securities
was
$11,867,652,
representing
40.6%
of
net
assets.
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
E
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
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financial
statements.
Semiannual
Report
13
d
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
e
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
f
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
g
See
Note
1(d)
regarding
written
options.
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
H
franklintempleton.com
Semiannual
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The
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notes
are
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statements.
14
a
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
Year
Ended
August
31,
2019
a
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.................
$9.03
$10.57
$9.75
$10.09
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
.........................
0.17
0.31
0.32
0.30
0.04
Net
realized
and
unrealized
gains
(losses)
...........
(0.29)
(1.54)
0.82
(0.34)
0.09
Total
from
investment
operations
....................
(0.12)
(1.23)
1.14
(0.04)
0.13
Less
distributions
from:
Net
investment
income
..........................
(0.17)
(0.31)
(0.32)
(0.30)
(0.04)
Net
asset
value,
end
of
period
......................
$8.74
$9.03
$10.57
$9.75
$10.09
Total
return
d
...................................
(1.26)%
(11.82)%
e
11.88%
e
(0.28)%
e
1.31%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
......
2.54%
2.51%
3.44%
3.91%
3.85%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
g
—%
g
—%
g
—%
g
—%
Net
investment
income
...........................
4.00%
3.14%
3.16%
3.10%
1.69%
Supplemental
data
Net
assets,
end
of
period
(000’s)
....................
$3,155
$3,019
$3,187
$2,941
$3,042
Portfolio
turnover
rate
............................
2.38%
6.89%
5.37%
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
(11.90)%
for
the
year
ended
August
31,
2022,
11.78%
for
the
year
ended
August
31,
2021
and
(0.38)%
for
the
year
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
Schedule
of
Investments
(unaudited),
February
28,
2023
Franklin
Templeton
SMACS:
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H
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accompanying
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Semiannual
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15
a
a
Shares
a
Value
a
Management
Investment
Companies
26.1%
Capital
Markets
26.1%
a
Franklin
Dynamic
Municipal
Bond
ETF
...................................
35,000
$
824,425
Total
Management
Investment
Companies
(Cost
$889,963)
.......................
824,425
Principal
Amount
a
a
a
a
Municipal
Bonds
73.3%
California
3.5%
Tobacco
Securitization
Authority
of
Southern
California
,
San
Diego
County
Tobacco
Asset
Securitization
Corp.
,
Revenue
,
2019
B-1
,
Refunding
,
5
%
,
6/01/48
.........
$
110,000
111,500
Colorado
7.8%
Colorado
Health
Facilities
Authority
,
Christian
Living
Neighborhoods
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
4
%
,
1/01/38
.................................
100,000
77,791
Denver
Health
&
Hospital
Authority
,
Revenue
,
2019
A
,
Refunding
,
4
%
,
12/01/37
....
100,000
90,010
Hunters
Overlook
Metropolitan
District
No.
5
,
GO
,
2019
A
,
5
%
,
12/01/39
..........
81,000
76,579
244,380
Connecticut
2.9%
b
Steel
Point
Infrastructure
Improvement
District
,
Tax
Allocation
,
144A,
2021
,
4
%
,
4/01/31
100,000
92,348
Florida
12.4%
Cross
Creek
North
Community
Development
District
,
Special
Assessment
,
2022
,
4.5
%
,
5/01/52
.........................................................
125,000
105,028
Kindred
Community
Development
District
II
,
Special
Assessment
,
2021
,
3.125
%
,
5/01/41
.........................................................
100,000
72,931
Palermo
Community
Development
District
,
Special
Assessment
,
2023
,
5
%
,
6/15/43
..
100,000
96,290
Quail
Roost
Community
Development
District
,
Expansion
Area
,
Special
Assessment
,
2021
,
4
%
,
12/15/51
................................................
75,000
57,418
Windward
Community
Development
District
,
Special
Assessment
,
2020
A-1
,
3
%
,
5/01/25
.........................................................
60,000
58,070
389,737
Indiana
3.3%
Indiana
Finance
Authority
,
Marian
University,
Inc.
,
Revenue
,
2019
A
,
5
%
,
9/15/39
...
100,000
102,213
Louisiana
6.9%
Calcasieu
Parish
Memorial
Hospital
Service
District
,
Southwest
Louisiana
Healthcare
System
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
5
%
,
12/01/39
............
100,000
92,770
b
Louisiana
Local
Government
Environmental
Facilities
&
Community
Development
Authority
,
Parish
of
St.
Martin
,
Revenue
,
144A,
2019
,
4.4
%
,
11/01/44
...........
135,000
126,043
218,813
Maryland
2.5%
b
City
of
Baltimore
,
Harbor
Point
Special
Taxing
District
,
Tax
Allocation,
Senior
Lien
,
144A,
2019
A
,
Refunding
,
3.5
%
,
6/01/39
................................
100,000
80,089
Minnesota
2.9%
City
of
Apple
Valley
,
PHS
Apple
Valley
Senior
Housing,
Inc.
,
Revenue
,
2021
,
4
%
,
9/01/36
.........................................................
105,000
92,607
New
York
3.1%
New
York
Transportation
Development
Corp.
,
Delta
Air
Lines,
Inc.
,
Revenue
,
2020
,
4
%
,
10/01/30
........................................................
100,000
97,460
Ohio
2.9%
Buckeye
Tobacco
Settlement
Financing
Authority
,
Revenue,
Senior
Lien
,
2020
B-2
,
2
,
Refunding
,
5
%
,
6/01/55
.............................................
100,000
90,944
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
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SMACS:
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H
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The
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of
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statements.
16
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
Pennsylvania
3.2%
b
Allentown
Neighborhood
Improvement
Zone
Development
Authority
,
Revenue
,
144A,
2017
,
5
%
,
5/01/32
.................................................
$
100,000
$
101,322
Texas
6.1%
b
County
of
Hays
,
La
Cima
Public
Improvement
District
,
Special
Assessment
,
144A,
2020
,
3.25
%
,
9/15/30
...............................................
100,000
86,403
b
New
Hope
Cultural
Education
Facilities
Finance
Corp.
,
CityScape
Schools,
Inc.
,
Revenue
,
144A,
2019
A
,
5
%
,
8/15/39
...................................
110,000
106,756
193,159
Washington
2.4%
b
Washington
State
Housing
Finance
Commission
,
Presbyterian
Retirement
Communities
Northwest
Obligated
Group
,
Revenue
,
144A,
2019
A
,
5
%
,
1/01/49
...
100,000
76,251
Wisconsin
3.5%
b
Public
Finance
Authority
,
Friends
Homes
Obligated
Group
,
Revenue
,
144A,
2019
,
Refunding
,
5
%
,
9/01/49
.............................................
125,000
109,714
U.S.
Territories
9.9%
District
of
Columbia
4.4%
District
of
Columbia
,
International
School
Obligated
Group
,
Revenue
,
2019
,
5
%
,
7/01/49
......................................................
140,000
137,544
Puerto
Rico
5.5%
Commonwealth
of
Puerto
Rico
,
GO
,
2022
A-1
,
4
%
,
7/01/46
....................
100,000
79,630
Puerto
Rico
Sales
Tax
Financing
Corp.
,
Sales
Tax
,
Revenue
,
A-1
,
5
%
,
7/01/58
.....
100,000
92,780
172,410
Total
U.S.
Territories
....................................................................
309,954
Total
Municipal
Bonds
(Cost
$2,646,082)
.......................................
2,310,491
Total
Long
Term
Investments
(Cost
$3,536,045)
.................................
3,134,916
a
a
a
a
a
a
Total
Investments
(Cost
$3,536,045)
99.4%
.....................................
$3,134,916
Other
Assets,
less
Liabilities
0.6%
.............................................
19,788
Net
Assets
100.0%
...........................................................
$3,154,704
See
Abbreviations
on
page
39
.
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,
2023,
the
aggregate
value
of
these
securities
was
$778,926,
representing
24.7%
of
net
assets.
Franklin
Strategic
Series
Financial
Highlights
Franklin
Templeton
SMACS:
Series
I
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
17
a
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
Year
Ended
August
31,
2019
a
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.................
$7.83
$9.73
$8.95
$10.12
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
.........................
0.33
0.65
0.66
0.64
0.19
Net
realized
and
unrealized
gains
(losses)
...........
(0.03)
(1.85)
0.78
(1.10)
0.04
Total
from
investment
operations
....................
0.30
(1.20)
1.44
(0.46)
0.23
Less
distributions
from:
Net
investment
income
..........................
(0.31)
(0.70)
(0.66)
(0.71)
(0.11)
Tax
return
of
capital
............................
—
(—)
d
—
—
—
Net
asset
value,
end
of
period
......................
$7.82
$7.83
$9.73
$8.95
$10.12
Total
return
e
...................................
3.96%
(12.87)%
16.48%
(4.51)%
2.25%
Ratios
to
average
net
assets
f
Expenses
before
waiver
and
payments
by
affiliates
......
0.27%
1.27%
3.10%
3.55%
5.96%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
g
—%
—%
g
—%
g
—%
Net
investment
income
...........................
8.60%
7.72%
7.01%
6.98%
7.61%
Supplemental
data
Net
assets,
end
of
period
(000’s)
....................
$49,311
$19,910
$3,699
$3,506
$3,774
Portfolio
turnover
rate
............................
34.10
%
30.22%
32.50%
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
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Amount
rounds
to
less
than
$0.01
per
share.
e
Total
return
is
not
annualized
for
periods
less
than
one
year.
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
Schedule
of
Investments
(unaudited),
February
28,
2023
Franklin
Templeton
SMACS:
Series
I
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
97.4%
Aerospace
&
Defense
2.6%
a
Bombardier,
Inc.
,
Senior
Bond
,
144A,
7.5
%
,
3/15/25
.........................
$
150,000
$
150,034
TransDigm,
Inc.
,
Senior
Note,
6.375%,
6/15/26
.........................................
750,000
728,114
a,b
Senior
Secured
Note,
144A,
6.75%,
8/15/28
..............................
400,000
398,500
1,276,648
Airlines
2.9%
a
American
Airlines
Inc/AAdvantage
Loyalty
IP
Ltd.
,
Senior
Secured
Note
,
144A,
5.5
%
,
4/20/26
.........................................................
700,000
682,002
a
Delta
Air
Lines,
Inc.
/
SkyMiles
IP
Ltd.
,
Senior
Secured
Note
,
144A,
4.75
%
,
10/20/28
.
400,000
380,240
a
United
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
4.625
%
,
4/15/29
...............
400,000
354,974
1,417,216
Auto
Components
1.9%
American
Axle
&
Manufacturing,
Inc.
,
Senior
Note
,
5
%
,
10/01/29
................
100,000
80,785
a
Dornoch
Debt
Merger
Sub,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
10/15/29
...........
200,000
151,250
Goodyear
Tire
&
Rubber
Co.
(The)
,
Senior
Note
,
5.25
%
,
7/15/31
................
850,000
724,752
956,787
Automobiles
2.6%
Ford
Motor
Co.
,
Senior
Bond
,
6.1
%
,
8/19/32
...............................
1,400,000
1,305,103
Banks
1.5%
Barclays
plc
,
Senior
Bond
,
5.746%
to
8/08/32,
FRN
thereafter
,
8/09/33
...........
750,000
723,873
Building
Products
0.4%
a
Camelot
Return
Merger
Sub,
Inc.
,
Senior
Secured
Note
,
144A,
8.75
%
,
8/01/28
.....
200,000
190,279
Capital
Markets
0.2%
a
Coinbase
Global,
Inc.
,
Senior
Bond
,
144A,
3.625
%
,
10/01/31
..................
125,000
75,505
Chemicals
2.4%
a
Consolidated
Energy
Finance
SA
,
Senior
Note
,
144A,
5.625
%
,
10/15/28
..........
300,000
256,847
Olin
Corp.
,
Senior
Bond
,
5
%
,
2/01/30
....................................
100,000
91,111
a
Rain
CII
Carbon
LLC
/
CII
Carbon
Corp.
,
Secured
Note
,
144A,
7.25
%
,
4/01/25
.....
200,000
190,609
a
SCIH
Salt
Holdings,
Inc.
,
Senior
Note,
144A,
6.625%,
5/01/29
....................................
300,000
243,970
Senior
Secured
Note,
144A,
4.875%,
5/01/28
.............................
375,000
324,600
a
Vibrantz
Technologies,
Inc.
,
Senior
Note
,
144A,
9
%
,
2/15/30
...................
100,000
77,591
1,184,728
Commercial
Services
&
Supplies
1.1%
a
ADT
Security
Corp.
(The)
,
Senior
Secured
Note
,
144A,
4.125
%
,
8/01/29
..........
100,000
86,149
a
APX
Group,
Inc.
,
Senior
Secured
Note
,
144A,
6.75
%
,
2/15/27
..................
450,000
432,498
518,647
Communications
Equipment
4.2%
a
CommScope
Technologies
LLC
,
Senior
Note
,
144A,
6
%
,
6/15/25
................
1,500,000
1,439,029
a
CommScope,
Inc.
,
Senior
Note,
144A,
8.25%,
3/01/27
.....................................
150,000
127,664
Senior
Secured
Note,
144A,
6%,
3/01/26
................................
500,000
482,246
2,048,939
Consumer
Finance
2.5%
Ford
Motor
Credit
Co.
LLC
,
Senior
Bond,
5.113%,
5/03/29
........................................
800,000
732,000
Senior
Note,
7.35%,
3/06/30
.........................................
250,000
253,457
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
I
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
19
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Consumer
Finance
(continued)
OneMain
Finance
Corp.
,
Senior
Bond
,
5.375
%
,
11/15/29
......................
$
300,000
$
253,056
1,238,513
Containers
&
Packaging
5.5%
a
Ardagh
Packaging
Finance
plc
/
Ardagh
Holdings
USA,
Inc.
,
Senior
Note
,
144A,
5.25
%
,
8/15/27
.........................................................
900,000
740,389
a
Mauser
Packaging
Solutions
Holding
Co.
,
Secured
Note,
144A,
9.25%,
4/15/27
...................................
1,500,000
1,411,650
Senior
Secured
Note,
144A,
7.875%,
8/15/26
.............................
450,000
453,231
a
Pactiv
Evergreen
Group
Issuer,
Inc./Pactiv
Evergreen
Group
Issuer
LLC
,
Senior
Secured
Note
,
144A,
4
%
,
10/15/27
.....................................
100,000
87,325
2,692,595
Diversified
Telecommunication
Services
1.1%
a
Altice
France
SA
,
Senior
Secured
Note
,
144A,
5.125
%
,
7/15/29
.................
200,000
155,206
a
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp.
,
Senior
Bond
,
144A,
5.125
%
,
5/01/27
400,000
370,522
525,728
Electric
Utilities
1.6%
a
NRG
Energy,
Inc.
,
Senior
Note
,
144A,
3.375
%
,
2/15/29
.......................
250,000
203,286
Pacific
Gas
and
Electric
Co.
,
Senior
Bond
,
4.55
%
,
7/01/30
....................
200,000
180,808
PG&E
Corp.
,
Senior
Secured
Note
,
5
%
,
7/01/28
............................
200,000
182,834
a
Vistra
Operations
Co.
LLC
,
Senior
Note
,
144A,
5
%
,
7/31/27
....................
250,000
232,500
799,428
Electrical
Equipment
0.5%
a
Regal
Rexnord
Corp.
,
Senior
Note
,
144A,
6.05
%
,
4/15/28
.....................
250,000
244,580
Energy
Equipment
&
Services
1.8%
a
Weatherford
International
Ltd.
,
Senior
Note,
144A,
8.625%,
4/30/30
....................................
700,000
699,871
Senior
Secured
Note,
144A,
6.5%,
9/15/28
...............................
200,000
196,708
896,579
Entertainment
1.0%
a
Netflix,
Inc.
,
Senior
Bond
,
144A,
5.375
%
,
11/15/29
..........................
500,000
492,610
Equity
Real
Estate
Investment
Trusts
(REITs)
2.4%
American
Tower
Corp.
,
Senior
Note
,
4.05
%
,
3/15/32
.........................
250,000
222,827
a
Iron
Mountain,
Inc.
,
Senior
Bond
,
144A,
5.25
%
,
7/15/30
.......................
100,000
87,314
MPT
Operating
Partnership
LP
/
MPT
Finance
Corp.
,
Senior
Bond
,
5
%
,
10/15/27
...
700,000
574,975
Service
Properties
Trust
,
Senior
Note
,
4.35
%
,
10/01/24
.......................
300,000
287,479
1,172,595
Food
Products
0.8%
a
JBS
USA
LUX
SA
/
JBS
USA
Food
Co.
/
JBS
USA
Finance,
Inc.
,
Senior
Bond
,
144A,
5.75
%
,
4/01/33
...................................................
225,000
210,424
a
Post
Holdings,
Inc.
,
Senior
Bond
,
144A,
5.5
%
,
12/15/29
......................
200,000
183,271
393,695
Health
Care
Equipment
&
Supplies
1.9%
a
Medline
Borrower
LP
,
Senior
Note,
144A,
5.25%,
10/01/29
....................................
850,000
698,683
Senior
Secured
Note,
144A,
3.875%,
4/01/29
.............................
300,000
250,313
948,996
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
I
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Health
Care
Providers
&
Services
19.1%
a
CHS/Community
Health
Systems,
Inc.
,
Secured
Note,
144A,
6.125%,
4/01/30
..................................
$
1,124,000
$
771,233
Senior
Note,
144A,
6.875%,
4/01/28
....................................
425,000
289,006
Senior
Secured
Note,
144A,
8%,
3/15/26
................................
2,850,000
2,782,255
Senior
Secured
Note,
144A,
8%,
12/15/27
...............................
1,900,000
1,844,919
CVS
Health
Corp.
,
Senior
Bond
,
5.25
%
,
2/21/33
............................
50,000
49,244
a
DaVita,
Inc.
,
Senior
Bond
,
144A,
3.75
%
,
2/15/31
............................
1,100,000
831,750
a
MPH
Acquisition
Holdings
LLC
,
Senior
Secured
Note
,
144A,
5.5
%
,
9/01/28
........
900,000
682,942
Tenet
Healthcare
Corp.
,
Senior
Note,
6.125%,
10/01/28
........................................
1,650,000
1,527,735
a
Senior
Secured
Note,
144A,
6.125%,
6/15/30
.............................
650,000
620,040
9,399,124
Health
Care
Technology
0.2%
a
AthenaHealth
Group,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
2/15/30
...................
100,000
79,220
Hotels,
Restaurants
&
Leisure
7.9%
a
Caesars
Entertainment,
Inc.
,
Senior
Note,
144A,
8.125%,
7/01/27
....................................
250,000
252,727
Senior
Note,
144A,
4.625%,
10/15/29
...................................
600,000
513,726
Senior
Secured
Note,
144A,
7%,
2/15/30
................................
250,000
252,169
a
Carnival
Corp.
,
Senior
Note
,
144A,
10.5
%
,
6/01/30
..........................
700,000
678,563
a
Fertitta
Entertainment
LLC
/
Fertitta
Entertainment
Finance
Co.,
Inc.
,
Senior
Note
,
144A,
6.75
%
,
1/15/30
...............................................
600,000
498,006
a
Penn
Entertainment,
Inc.
,
Senior
Note
,
144A,
4.125
%
,
7/01/29
.................
100,000
81,246
a
Wynn
Las
Vegas
LLC
/
Wynn
Las
Vegas
Capital
Corp.
,
Senior
Bond
,
144A,
5.25
%
,
5/15/27
.........................................................
1,750,000
1,631,521
3,907,958
Household
Durables
0.9%
Shea
Homes
LP
/
Shea
Homes
Funding
Corp.
,
Senior
Note
,
4.75
%
,
4/01/29
.......
500,000
439,200
Household
Products
0.2%
a
Energizer
Holdings,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
12/31/27
...................
100,000
96,093
Independent
Power
and
Renewable
Electricity
Producers
1.6%
a
Calpine
Corp.
,
Senior
Note
,
144A,
4.625
%
,
2/01/29
..........................
450,000
380,324
a,c
Vistra
Corp.
,
Junior
Sub.
Bond
,
144A,
8%
to
10/14/26,
FRN
thereafter
,
Perpetual
....
450,000
432,493
812,817
Machinery
0.5%
a
Roller
Bearing
Co.
of
America,
Inc.
,
Senior
Note
,
144A,
4.375
%
,
10/15/29
.........
100,000
86,560
a
TK
Elevator
U.S.
Newco,
Inc.
,
Senior
Secured
Note
,
144A,
5.25
%
,
7/15/27
........
200,000
181,398
267,958
Media
7.9%
a
Clear
Channel
Outdoor
Holdings,
Inc.
,
Senior
Note,
144A,
7.5%,
6/01/29
.....................................
300,000
243,282
Senior
Secured
Note,
144A,
5.125%,
8/15/27
.............................
500,000
446,727
CSC
Holdings
LLC
,
Senior
Bond,
5.25%,
6/01/24
.........................................
400,000
387,936
a
Senior
Bond,
144A,
5.5%,
4/15/27
.....................................
400,000
348,378
a
Directv
Financing
LLC
/
Directv
Financing
Co-Obligor,
Inc.
,
Senior
Secured
Note
,
144A,
5.875
%
,
8/15/27
...................................................
200,000
179,037
DISH
DBS
Corp.
,
Senior
Note,
5%,
3/15/23
............................................
600,000
599,040
Senior
Note,
5.875%,
11/15/24
........................................
700,000
656,488
Senior
Note,
7.75%,
7/01/26
.........................................
200,000
155,451
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
I
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
21
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Media
(continued)
a
Univision
Communications,
Inc.
,
Senior
Secured
Note
,
144A,
6.625
%
,
6/01/27
.....
$
950,000
$
902,871
3,919,210
Metals
&
Mining
3.4%
ArcelorMittal
SA
,
Senior
Bond
,
6.8
%
,
11/29/32
..............................
400,000
405,300
a
Cleveland-Cliffs,
Inc.
,
Senior
Bond
,
144A,
4.875
%
,
3/01/31
....................
150,000
136,712
a
First
Quantum
Minerals
Ltd.
,
Senior
Note
,
144A,
6.875
%
,
3/01/26
...............
400,000
382,000
a
FMG
Resources
August
2006
Pty.
Ltd.
,
Senior
Bond
,
144A,
4.375
%
,
4/01/31
.......
800,000
675,909
a
Mineral
Resources
Ltd.
,
Senior
Note
,
144A,
8.5
%
,
5/01/30
....................
100,000
100,248
1,700,169
Oil,
Gas
&
Consumable
Fuels
3.7%
a
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note,
144A,
11%,
4/15/25
......................................
600,000
622,680
Senior
Note,
144A,
8.125%,
1/15/27
....................................
450,000
440,552
Cheniere
Corpus
Christi
Holdings
LLC
,
Senior
Secured
Note
,
3.7
%
,
11/15/29
......
50,000
45,075
a
Ches
apeake
Energy
Corp.
,
Senior
Note
,
144A,
5.875
%
,
2/01/29
................
100,000
93,640
a
CITGO
Petroleum
Corp.
,
Senior
Secured
Note
,
144A,
7
%
,
6/15/25
..............
300,000
295,644
a
Hilcorp
Energy
I
LP
/
Hilcorp
Finance
Co.
,
Senior
Note
,
144A,
6
%
,
4/15/30
........
100,000
90,857
a
Kinetik
Holdings
LP
,
Senior
Note
,
144A,
5.875
%
,
6/15/30
......................
200,000
185,149
Williams
Cos.,
Inc.
(The)
,
Senior
Bond
,
5.65
%
,
3/15/33
.......................
50,000
50,008
1,823,605
Personal
Products
0.6%
a
BellRing
Brands,
Inc.
,
Senior
Note
,
144A,
7
%
,
3/15/30
.......................
100,000
99,014
GSK
Consumer
Healthcare
Capital
US
LLC
,
Senior
Note
,
3.625
%
,
3/24/32
........
250,000
218,534
317,548
Pharmaceuticals
7.2%
a
1375209
BC
Ltd.
,
Senior
Secured
Note
,
144A,
9
%
,
1/30/28
....................
2,000,000
1,998,760
a
Bausch
Health
Cos.,
Inc.
,
Senior
Secured
Note
,
144A,
5.5
%
,
11/01/25
............
1,500,000
1,306,275
a,d
Par
Pharmaceutical,
Inc.
,
Senior
Secured
Note
,
144A,
7.5
%
,
4/01/27
.............
300,000
226,125
3,531,160
Semiconductors
&
Semiconductor
Equipment
0.4%
Micron
Technology,
Inc.
,
Senior
Bond
,
5.875
%
,
2/09/33
.......................
200,000
193,902
Software
2.0%
a
Cloud
Software
Group
Holdings,
Inc.
,
Senior
Secured
Note
,
144A,
6.5
%
,
3/31/29
...
600,000
520,359
a
McAfee
Corp.
,
Senior
Note
,
144A,
7.375
%
,
2/15/30
..........................
275,000
218,269
a
Rocket
Software,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
2/15/29
......................
150,000
122,920
Workday,
Inc.
,
Senior
Bond
,
3.8
%
,
4/01/32
................................
150,000
132,139
993,687
Specialty
Retail
0.1%
Lowe's
Cos.,
Inc.
,
Senior
Bond
,
5
%
,
4/15/33
...............................
60,000
57,784
Textiles,
Apparel
&
Luxury
Goods
0.5%
a
Hanesbrands,
Inc.
,
Senior
Note
,
144A,
9
%
,
2/15/31
..........................
250,000
253,112
Tobacco
1.3%
BAT
Capital
Corp.
,
Senior
Note
,
3.557
%
,
8/15/27
...........................
700,000
637,971
Trading
Companies
&
Distributors
1.0%
United
Rentals
North
America,
Inc.
,
Senior
Bond
,
5.25
%
,
1/15/30
...............
500,000
471,908
Total
Corporate
Bonds
(Cost
$48,033,105)
......................................
48,005,470
a
a
a
a
Franklin
Strategic
Series
Schedule
of
Investments
(unaudited)
Franklin
Templeton
SMACS:
Series
I
(continued)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
At
February
28,
2023,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1(d).
*
As
of
period
end.
See
Abbreviations
on
page
39.
Short
Term
Investments
1.4%
a
a
Shares
a
Value
a
Money
Market
Funds
1.4%
e,f
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.204%
..................
691,022
$
691,022
Total
Money
Market
Funds
(Cost
$691,022)
.....................................
691,022
Total
Short
Term
Investments
(Cost
$691,022
)
..................................
691,022
a
Total
Investments
(Cost
$48,724,127)
98.8%
....................................
$48,696,492
Other
Assets,
less
Liabilities
1.2%
.............................................
614,302
Net
Assets
100.0%
...........................................................
$49,310,794
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,
2023,
the
aggregate
value
of
these
securities
was
$35,636,581,
representing
72.3%
of
net
assets.
b
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
c
Perpetual
security
with
no
stated
maturity
date.
d
See
Note
7
regarding
credit
risk
and
defaulted
securities.
e
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
f
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Interest
rate
contracts
U.S.
Treasury
10
Year
Notes
....................
Long
45
$
5,024,531
6/21/23
$
(4,595)
Total
Futures
Contracts
......................................................................
$(4,595)
Franklin
Strategic
Series
Financial
Statements
Statements
of
Assets
and
Liabilities
Februaury
28,
2023
(unaudited)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Semiannual
Report
23
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
................
$3,414,072
$28,569,097
$2,646,082
$48,033,105
Cost
-
Non-controlled
affiliates
(Note
3
d
)
.....
—
132,674
889,963
691,022
Value
-
Unaffiliated
issuers
...............
$3,115,004
$29,453,954
$2,310,491
$48,005,470
Value
-
Non-controlled
affiliates
(Note
3
d
)
....
—
132,674
824,425
691,022
Cash
.................................
86,542
810
35,201
—
Foreign
currency,
at
value
(cost
$–,
$115,
$–
and
$–
respectively)
.........................
—
115
—
—
Receivables:
Investment
securities
sold
................
—
398,477
—
—
Capital
shares
sold
.....................
—
305,388
—
552,950
Dividends
and
interest
..................
42,996
95,670
31,135
838,539
Affiliates
.............................
120
9,301
8,467
6,731
Deposits
with
brokers
for:
Futures
contracts
.....................
—
—
—
87,750
Variation
margin
on
futures
contracts
........
—
—
—
2,109
Total
assets
.......................
3,244,662
30,396,389
3,209,719
50,184,571
Liabilities:
Payables:
Investment
securities
purchased
...........
—
1,062,440
—
756,487
Capital
shares
redeemed
................
52,235
29,542
—
53,564
Transfer
agent
fees
.....................
—
—
37
118
Registration
and
filing
fees
...............
10,374
10,805
10,394
10,259
Professional
fees
......................
31,818
24,692
32,376
32,641
Trustees'
fees
and
expenses
..............
9
45
8
3
Distributions
to
shareholders
..............
11,167
—
8,679
—
Options
written,
at
value
(premiums
received
$–,
$17,322,
$–
and
$–
respectively)
............
—
6,750
—
—
Accrued
expenses
and
other
liabilities
........
9,711
14,837
3,521
20,705
Total
liabilities
......................
115,314
1,149,111
55,015
873,777
Net
assets,
at
value
..............
$3,129,348
$29,247,278
$3,154,704
$49,310,794
Net
assets
consist
of:
Paid-in
capital
..........................
$3,595,043
$28,358,321
$3,589,297
$50,862,115
Total
distributable
earnings
(losses)
..........
(465,695)
888,957
(434,593)
(1,551,321)
Net
assets,
at
value
..............
$3,129,348
$29,247,278
$3,154,704
$49,310,794
Shares
outstanding
......................
364,673
2,511,094
361,048
6,306,424
Net
asset
value
per
share
.................
$8.58
$11.65
$8.74
$7.82
Franklin
Strategic
Series
Financial
Statements
Statements
of
Operations
for
the
six
months
ended
February
28,
2023
(unaudited)
franklintempleton.com
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
24
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
$–,
$7,476,
$–
and
$–,
respectively)
Unaffiliated
issuers
.....................
$—
$300,978
$—
$—
Non-controlled
affiliates
(Note
3
d
)
..........
—
7,801
13,604
10,963
Interest:
Unaffiliated
issuers
.....................
63,213
16,560
43,634
1,462,034
Other
income
a
..........................
—
291
1,211
388
Total
investment
income
................
63,213
325,630
58,449
1,473,385
Expenses:
Transfer
agent
fees
(Note
3
c
)
...............
271
2,127
267
3,210
Custodian
fees
(Note
4
)
...................
9
—
6
—
Reports
to
shareholders
fees
...............
(4,231)
(7,284)
(4,205)
(1,021)
Registration
and
filing
fees
.................
10,239
10,377
10,064
10,610
Professional
fees
........................
26,220
25,531
26,281
30,007
Trustees'
fees
and
expenses
...............
24
151
26
174
Pricing
fees
............................
2,237
410
2,038
710
Other
.................................
2,286
4,315
2,675
2,398
Total
expenses
......................
37,055
35,627
37,152
46,088
Expense
reductions
(Note
4
)
............
(7)
(3)
(3)
(2)
Expenses
waived/paid
by
affiliates
(Note
3
d
and
3
e
)
...........................
(37,048)
(35,624)
(37,149)
(46,086)
Net
expenses
......................
—
—
—
—
Net
investment
income
.............
63,213
325,630
58,449
1,473,385
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
...................
(148,632)
655,205
(3,204)
(1,017,628)
Written
options
........................
—
(256,034)
—
—
Foreign
currency
transactions
.............
—
(2,191)
—
—
Futures
contracts
......................
—
—
—
(34,137)
Net
realized
gain
(loss)
...............
(148,632)
396,980
(3,204)
(1,051,765)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
...................
45,156
1,033,069
(91,745)
1,385,585
Non-controlled
affiliates
(Note
3
d
)
........
—
—
(8,575)
—
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
........
—
115
—
—
Written
options
........................
—
(11,897)
—
—
Futures
contracts
......................
—
—
—
(4,595)
Net
change
in
unrealized
appreciation
(depreciation)
......................
45,156
1,021,287
(100,320)
1,380,990
Net
realized
and
unrealized
gain
(loss)
.........
(103,476)
1,418,267
(103,524)
329,225
Net
increase
(decrease)
in
net
assets
resulting
from
operations
...............................
$(40,263)
$1,743,897
$(45,075)
$1,802,610
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
25
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
2022
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
2022
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$63,213
$120,134
$325,630
$198,328
Net
realized
gain
(loss)
............
(148,632)
2,385
396,980
628,328
Net
change
in
unrealized
appreciation
(depreciation)
.................
45,156
(557,781)
1,021,287
(1,024,475)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(40,263)
(435,262)
1,743,897
(197,819)
Distributions
to
shareholders
.........
(62,804)
(119,277)
(989,898)
(719,084)
Capital
share
transactions
(Note
2
)
.....
274,986
—
15,629,830
8,625,707
Net
increase
(decrease)
in
net
assets
.....................
171,919
(554,539)
16,383,829
7,708,804
Net
assets:
Beginning
of
period
................
2,957,429
3,511,968
12,863,449
5,154,645
End
of
period
.....................
$3,129,348
$2,957,429
$29,247,278
$12,863,449
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.
26
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
2022
Six
Months
Ended
February
28,
2023
(unaudited)
Year
Ended
August
31,
2022
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$58,449
$102,838
$1,473,385
$544,969
Net
realized
gain
(loss)
............
(3,204)
(1,603)
(1,051,765)
20,526
Net
change
in
unrealized
appreciation
(depreciation)
.................
(100,320)
(512,063)
1,380,990
(1,744,313)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(45,075)
(410,828)
1,802,610
(1,178,818)
Distributions
to
shareholders
.........
(58,201)
(102,739)
(1,470,509)
(568,499)
Distributions
to
shareholders
from
tax
return
of
capital
..................
—
—
—
(4,176)
Total
distributions
to
shareholders
.....
(58,201)
(102,739)
(1,470,509)
(572,675)
Capital
share
transactions
(Note
2
)
.....
239,232
345,191
29,068,658
17,962,708
Net
increase
(decrease)
in
net
assets
.....................
135,956
(168,376)
29,400,759
16,211,215
Net
assets:
Beginning
of
period
................
3,018,748
3,187,124
19,910,035
3,698,820
End
of
period
.....................
$3,154,704
$3,018,748
$49,310,794
$19,910,035
Franklin
Strategic
Series
27
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
ten
separate
funds, four
of
which
are
included
in
this
report
(Funds).
The
Trust
follows
the
accounting
and
reporting
guidance
in
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standards
Codification
Topic
946,
Financial
Services
–
Investment
Companies
(ASC
946)
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP),
including,
but
not
limited
to,
ASC
946.
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
Board
has
designated
the
Funds’
investment
manager
as
the
valuation
designee
and
has
responsibility
for
oversight
of
valuation.
The
investment
manager
is
assisted
by
the
Funds'
administrator
in
performing
this
responsibility,
including
leading
the
cross-
functional
Valuation
Committee
(VC).
The
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities,
exchange
traded
funds,
and
derivative
financial
instruments
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-
counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities.
Debt
securities
generally
trade
in
the
OTC
market
rather
than
on
a
securities
exchange.
The
Funds'
pricing
services
use
multiple
valuation
techniques
to
determine
fair
value.
In
instances
where
sufficient
market
activity
exists,
the
pricing
services
may
utilize
a
market-based
approach
through
which
quotes
from
market
makers
are
used
to
determine
fair
value.
In
instances
where
sufficient
market
activity
may
not
exist
or
is
limited,
the
pricing
services
also
utilize
proprietary
valuation
models
which
may
consider
market
characteristics
such
as
benchmark
yield
curves,
credit
spreads,
estimated
default
rates,
anticipated
market
interest
rate
volatility,
coupon
rates,
anticipated
timing
of
principal
repayments,
underlying
collateral,
and
other
unique
security
features
in
order
to
estimate
the
relevant
cash
flows,
which
are
then
discounted
to
calculate
the
fair
value.
Investments
in open-end mutual
funds
are
valued
at
the
closing
NAV.
Certain
derivative
financial
instruments
trade
in
the
OTC
market.
The
Funds' pricing
services
use
various
techniques
including
industry
standard
option
pricing
models
and
proprietary
discounted
cash
flow
models
to
determine
the
fair
value
of
those
instruments.
The
Funds' net
benefit
or
obligation
under
the
derivative
contract,
as
measured
by
the
fair
value
of
the
contract,
is
included
in
net
assets.
The
Funds
have
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the
Funds
primarily
employ
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
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.
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
28
franklintempleton.com
Semiannual
Report
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Funds'
business
day.
Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
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
pricing
service
may
be
used
to
adjust
the
value
of
the
Funds'
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
February
28,
2023,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
within
the
fair
value
hierarchy
(referred
to
as
“market
level
fair
value”).
See
the
Fair
Value
Measurements
note
for
more
information.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Funds'
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Funds'
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Funds
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Funds
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Funds
do
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Statements
of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
Securities
Purchased
on
a
Delayed
Delivery
Basis
Certain
or
all
Funds
purchase
securities
on
a
delayed
delivery
basis,
with
payment
and
delivery
scheduled
for
a
future
date.
These
transactions
are
subject
to
market
fluctuations
and
are
subject
to
the
risk
that
the
value
at
delivery
may
be
more
or
less
than
the
trade
date
purchase
price.
Although
the
Funds
will
generally
purchase
these
securities
with
the
intention
of
holding
the
securities,
they
may
sell
the
securities
before
the
settlement
date.
d.
Derivative
Financial
Instruments
Certain
or
all
Funds
invested
in
derivative
financial
instruments
in
order
to
manage
risk
or
gain
exposure
to
various
other
investments
or
markets.
Derivatives
are
financial
contracts
based
on
an
underlying
or
notional
amount,
require
no
initial
investment
or
an
initial
net
investment
that
is
smaller
than
would
normally
be
required
to
have
a
similar
response
to
changes
in
market
factors,
and
require
or
permit
net
settlement.
Derivatives
contain
various
risks
including
the
potential
inability
of
the
counterparty
to
fulfill
their
obligations
under
the
terms
of
the
contract,
the
potential
for
an
illiquid
secondary
market,
and/or
the
potential
for
market
movements
which
expose
the
Fund
to
gains
or
losses
in
excess
of
the
amounts
shown
in
the
Statements
of
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
29
franklintempleton.com
Semiannual
Report
Assets
and
Liabilities.
Realized
gain
and
loss
and
unrealized
appreciation
and
depreciation
on
these
contracts
for
the
period
are
included
in
the
Statements
of
Operations.
Collateral
requirements
differ
by
type
of
derivative.
Collateral
or
initial
margin
requirements
are
set
by
the
broker
or
exchange
clearing
house
for
exchange
traded
and
centrally
cleared
derivatives.
Initial
margin
deposited
is
held
at
the
exchange
and
can
be
in
the
form
of
cash
and/or
securities.
Certain
or
all
Funds
entered
into
exchange
traded
futures
contracts
primarily
to
manage
and/or
gain
exposure
to
interest
rate
risk.
A
futures
contract
is
an
agreement
between
the
Fund
and
a
counterparty
to
buy
or
sell
an
asset
at
a
specified
price
on
a
future
date.
Required
initial
margins
are
pledged
by
the
Fund,
and
the
daily
change
in
fair
value
is
accounted
for
as
a
variation
margin
payable
or
receivable
in
the
Statements
of
Assets
and
Liabilities.
Certain
or
all
Funds
purchased
or
wrote
exchange
traded
option
contracts
primarily
to
manage
and/or
gain
exposure
to
equity
price
risk.
An
option
is
a
contract
entitling
the
holder
to
purchase
or
sell
a
specific
amount
of
shares
or
units
of
an
asset
or
notional
amount
of
a
swap
(swaption),
at
a
specified
price.
When
an
option
is
purchased
or
written,
an
amount
equal
to
the
premium
paid
or
received
is
recorded
as
an
asset
or
liability,
respectively.
Upon
exercise
of
an
option,
the
acquisition
cost
or
sales
proceeds
of
the
underlying
investment
is
adjusted
by
any
premium
received
or
paid.
Upon
expiration
of
an
option,
any
premium
received
or
paid
is
recorded
as
a
realized
gain
or
loss.
Upon
closing
an
option
other
than
through
expiration
or
exercise,
the
difference
between
the
premium
received
or
paid
and
the
cost
to
close
the
position
is
recorded
as
a
realized
gain
or
loss.
See
Note
11
regarding
other
derivative
information.
e.
Equity-Linked
Securities
Certain
or
all
Funds
invest in
equity-linked
securities.
Equity-linked
securities
are
hybrid
financial
instruments
that
generally
combine
both
debt
and
equity
characteristics
into
a
single
note
form.
Income
received
from
equity-linked
securities
is
recorded
as
realized
gains
in
the
Statements
of
Operations
and
may
be
based
on
the
performance
of
an
underlying
equity
security,
an
equity
index,
or
an
option
position.
The
risks
of
investing
in
equity-linked
securities
include
unfavorable
price
movements
in
the
underlying
security
and
the
credit
risk
of
the
issuing
financial
institution.
There
may
be
no
guarantee
of
a
return
of
principal
with
equity-linked
securities
and
the
appreciation
potential
may
be
limited.
Equity-linked
securities
may
be
more
volatile
and
less
liquid
than
other
investments
held
by
the
Funds.
f.
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,
2023, 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.
g.
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Derivative
Financial
Instruments
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
30
franklintempleton.com
Semiannual
Report
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Funds.
Dividends
from
net
investment
income
are
normally
declared
daily;
these
dividends
may
be
reinvested
or
paid
monthly
to
shareholders
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
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
h.
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.
i.
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,
2023,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Funds'
shares
were
as
follows:
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Shares
Amount
Shares
Amount
Class
A
Six
Months
ended
February
28,
2023
Shares
sold
...................................
80,246
$706,847
1,468,483
$16,716,478
Shares
issued
in
reinvestment
of
distributions
..........
343
2,864
15,164
174,940
Shares
redeemed
...............................
(50,171)
(434,725)
(111,744)
(1,261,588)
Net
increase
(decrease)
..........................
30,418
$274,986
1,371,903
$15,629,830
Year
ended
August
31,
2022
Shares
sold
...................................
—
$—
877,040
$10,332,454
Shares
issued
in
reinvestment
of
distributions
..........
1,126
10,804
16,452
195,270
Shares
redeemed
...............................
(1,126)
(10,804)
(157,973)
(1,902,017)
Net
increase
(decrease)
..........................
—
$—
735,519
$8,625,707
1.
Organization
and
Significant
Accounting
Policies
(continued)
g.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
31
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.
Effective
October
1,
2022,
the
fees
are
based
on
an
annualized
asset
based
fee
of
0.016%
plus
a
reduced
transaction
based
fee.
Prior
to
October
1,
2022,
the
fees
were
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,
2023,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Shares
Amount
Shares
Amount
Class
A
Six
Months
ended
February
28,
2023
Shares
sold
...................................
25,919
$233,511
4,045,671
$31,238,873
Shares
issued
in
reinvestment
of
distributions
..........
662
5,721
35,561
275,730
Shares
redeemed
...............................
—
—
(316,900)
(2,445,945)
Net
increase
(decrease)
..........................
26,581
$239,232
3,764,332
$29,068,658
Year
ended
August
31,
2022
Shares
sold
...................................
31,885
$335,526
2,283,528
$18,935,129
Shares
issued
in
reinvestment
of
distributions
..........
995
9,665
14,268
126,042
Shares
redeemed
...............................
—
—
(136,030)
(1,098,463)
Net
increase
(decrease)
..........................
32,880
$345,191
2,161,766
$17,962,708
Subsidiary
Affiliation
Franklin
Advisers,
Inc.
(Advisers)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
32
franklintempleton.com
Semiannual
Report
d.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Funds
do
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Funds
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
period
ended
February
28,
2023,
investments
in
affiliated
management
investment
companies
were
as
follows:
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Transfer
agent
fees
........................
$271
$2,127
$267
$3,210
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,
4.204%
$
321,782
$
12,206,098
$
(12,395,206)
$
—
$
—
$
132,674
132,674
$
7,801
Total
Affiliated
Securities
...
$321,782
$12,206,098
$(12,395,206)
$—
$—
$132,674
$7,801
Franklin
Templeton
SMACS:
Series
H
Non-Controlled
Affiliates
Dividends
Franklin
Dynamic
Municipal
Bond
ETF
...................
$
833,000
$
—
$
—
$
—
$
(8,575)
$
824,425
35,000
$
13,604
Total
Affiliated
Securities
...
$833,000
$—
$—
$—
$(8,575)
$824,425
$13,604
Franklin
Templeton
SMACS:
Series
I
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.204%
$
686,333
$
17,147,689
$
(17,143,000)
$
—
$
—
$
691,022
691,022
$
10,963
Total
Affiliated
Securities
...
$686,333
$17,147,689
$(17,143,000)
$—
$—
$691,022
$10,963
3.
Transactions
with
Affiliates
(continued)
c.
Transfer
Agent
Fees
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
33
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,
2023.
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,
2023,
are
reflected
as
other
income
in
the
Statements
of
Operations.
f.
Other
Affiliated
Transactions
At
February
28,
2023,
Franklin
Advisers,
Inc.
and
Franklin
Resources,
Inc.
owned
a
percentage
of
the
Funds’
outstanding
shares
as
follows:
g.
Interfund
Transactions
Franklin
Templeton
SMACS:
Series
CH
engaged
in
purchases
and
sales
of
investments
with
funds
or
other
accounts
that
have
common
investment
managers
(or
affiliated
investment
managers),
directors,
trustees
or
officers.
During
the
period
ended
February
28,
2023,
these
purchase
and
sale
transactions
aggregated
$243,431
and
$250,351,
respectively,
with
net
realized
losses
of
$25,879.
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,
2023,
the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
Shares
Percentage
of
Outstanding
Shares
a
Franklin
Templeton
SMACS:
Series
CH
Franklin
Resources,
Inc.
303,978
83.4%
Franklin
Templeton
SMACS:
Series
E
Franklin
Resources,
Inc.
250,000
10.0%
Franklin
Templeton
SMACS:
Series
H
Franklin
Resources,
Inc.
301,587
83.5%
a
Investment
activities
of
significant
shareholders
could
have
a
material
impact
on
the
Fund.
3.
Transactions
with
Affiliates
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
34
franklintempleton.com
Semiannual
Report
5.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
August
31,
2022,
the
capital
loss
carryforwards
were
as
follows:
At
February
28,
2023,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation)
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
bond
discounts
and
premiums,
corporate
actions,
equity-linked
securities
and
wash
sales.
6.
Investment
Transactions
Purchases
and
sales
of
investments
and
ETFs
(excluding
short
term
securities)
for
the
period
ended
February
28,
2023,
were
as
follows:
7.
Credit Risk
and
Defaulted
Securities
At February
28,
2023,
certain
or all
Funds
had
a
portion
of
their
portfolio
invested
in high
yield,
or
other
securities
rated
below
investment
grade
as
determined
by
Nationally
Recognized
Statistical
Credit
Ratings
Organizations
and/or
internally,
by
investment
management
and
unrated
securities.
These
securities
may
be
more
sensitive
to
economic
conditions
causing
greater
price
volatility
and
are
potentially
subject
to
a
greater
risk
of
loss
due
to
default
than
higher
rated
securities.
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
.............................
$
20,114
$
—
$
21,887
$
467,585
a
Long
term
.............................
—
—
3,952
—
Total
capital
loss
carryforwards
............
$20,114
$—
$25,839
$467,585
a
Includes
$467,585
which
may
be
carried
over
to
offset
future
capital
gains,
subject
to
certain
limitations
.
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
.......................
$3,412,147
$28,773,303
$3,535,572
$48,723,539
Unrealized
appreciation
.....................
$28,391
$1,690,724
$5,353
$762,724
Unrealized
depreciation
.....................
(325,534)
(884,149)
(406,009)
(794,366)
Net
unrealized
appreciation
(depreciation)
.......
$(297,143)
$806,575
$(400,656)
$(31,642)
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Purchases
..............................
$1,261,020
$29,145,793
$388,056
$39,497,331
Sales
..................................
$1,000,099
$13,603,997
$69,000
$11,320,075
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
35
franklintempleton.com
Semiannual
Report
Franklin
Templeton
SMACS:
Series
I
held
a
defaulted
security
and/or
other
securities
for
which
the
income
has
been
deemed
uncollectible.
At
February
28,
2023,
the
value
of
this
security
was
$226,125,
representing
0.5%
of
the
Fund's
net
assets.
The
Fund
discontinues
accruing
income
on
securities
for
which
income
has
been
deemed
uncollectible
and
provide
an
estimate
for
losses
on
interest
receivable.
The
security
has
been
identified
in
the
accompanying
Schedule
of
Investments.
8.
Concentration
of
Risk
Franklin
Templeton
SMACS:
Series
CH
invests
a
large
percentage
of
its
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.
Geopolitical
Risk
On
February
24,
2022,
Russia
engaged
in
military
actions
in
the
sovereign
territory
of
Ukraine.
The
current
political
and
financial
uncertainty
surrounding
Russia
and
Ukraine
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
these
countries
and
may
also
cause
uncertainty
for
the
global
economy
and
broader
financial
markets.
The
ultimate
fallout
and
long-term
impact
from
these
events
are
not
known.
The
Funds
will
continue
to
assess
the
impact
on
valuations
and
liquidity
and
will
take
any
potential
actions
needed
in
accordance
with
procedures
approved
by
the
Board.
10.
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.
11.
Other
Derivative
Information
At
February
28,
2023,
investments
in
derivative
contracts
are
reflected
in
the
Statements
of
Assets
and
Liabilities
as
follows:
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Credit
risk
.....................................
66.2%
33.0%
87.9%
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Franklin
Templeton
SMACS:
Series
E
Equity
contracts
...........
Investments
in
securities,
at
value
$
—
Options
written,
at
value
$
6,750
Total
....................
$—
$6,750
7.
Credit Risk
and
Defaulted
Securities
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
36
franklintempleton.com
Semiannual
Report
a
This
amount
reflects
the
cumulative
appreciation
(depreciation)
of
futures
contracts
as
reported
in
the
Schedule
of
Investments.
Only
the
variation
m
argin
receivable/payable
at
period
end
is
separately
reported
within
the
Statements
of
Assets
and
Liabilities.
Prior
variation
margin
movements
were
recorded
to
cash
upon
receipt
or
payment.
For
the
period
ended
February
28,
2023,
the
effect
of
derivative
contracts
in
the
Statements
of
Operations
was
as
follows:
For
the period
ended
February
28,
2023,
the
average
month
end
notional
amount
of
futures
contracts
and
options
were
as
follows:
See
Note
1(d) regarding
derivative
financial
instruments.
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Franklin
Templeton
SMACS:
Series
I
Interest
rate
contracts
.......
Variation
margin
on
futures
contracts
$
—
Variation
margin
on
futures
contracts
$
4,595
a
Total
....................
$—
$4,595
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Period
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Period
Franklin
Templeton
SMACS:
Series
E
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Equity
Contracts
..............
Written
options
(256,034)
Written
options
(11,897)
Total
.......................
$(256,034)
$(11,897)
Franklin
Templeton
SMACS:
Series
I
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Interest
rate
contracts
..........
Futures
contracts
(34,137)
Futures
contracts
(4,595)
Total
.......................
$(34,137)
$(4,595)
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
I
Futures
contracts
.........................
$—
$1,748,433
Option
s
.................................
55,914
—
11.
Other
Derivative
Information
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
37
franklintempleton.com
Semiannual
Report
12.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
2,
2024.
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,
2023,
the
Funds
did
not
use
the
Global
Credit
Facility.
13.
Fair
Value
Measurements
The Funds
follow
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Funds'
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the Funds' financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the Funds'
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
February
28,
2023,
in
valuing
the
Funds'
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Franklin
Templeton
SMACS:
Series
CH
Assets:
Investments
in
Securities:
a
Municipal
Bonds
.........................
$
—
$
3,015,004
$
—
$
3,015,004
Short
Term
Investments
...................
—
100,000
—
100,000
Total
Investments
in
Securities
...........
$—
$3,115,004
$—
$3,115,004
Franklin
Templeton
SMACS:
Series
E
Assets:
Investments
in
Securities:
Common
Stocks
:
Banks
...............................
2,266,247
—
—
2,266,247
Communications
Equipment
..............
1,355,760
—
—
1,355,760
Containers
&
Packaging
.................
545,850
—
—
545,850
Industrial
Conglomerates
................
440,404
609,568
—
1,049,972
Metals
&
Mining
.......................
1,499,327
—
—
1,499,327
Multiline
Retail
........................
1,297,450
—
—
1,297,450
Oil,
Gas
&
Consumable
Fuels
.............
1,826,962
—
—
1,826,962
Pharmaceuticals
.......................
1,188,020
—
—
1,188,020
Semiconductors
&
Semiconductor
Equipment
.
2,473,290
—
—
2,473,290
Specialty
Retail
........................
1,037,890
—
—
1,037,890
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
38
franklintempleton.com
Semiannual
Report
14.
New
Accounting
Pronouncements
In June
2022,
the FASB
issued
Accounting
Standards
Update
(ASU)
No.
2022-03,
Fair
Value
Measurement
(Topic
820)
–
Fair
Value
Measurement
of
Equity
Securities
Subject
to
Contractual
Sale
Restrictions.
The
amendments
in
the
ASU
clarify
that
a
contractual
restriction
on
the
sale
of
an
equity
security
is
not
considered
part
of
the
unit
of
account
of
the
equity
security
and,
therefore,
should
not
be
considered
in
measuring
fair
value.
The
ASU
is
effective
for
interim
and
annual
reporting
periods
beginning
after
December
15,
2023,
with
the
option
of
early
adoption.
Management
has
reviewed
the
requirements
and
believes
that
the
adoption
of
the
ASU
will
not
have
a
material
impact
on
the
financial
statements.
15.
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
E
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Tobacco
.............................
$
807,590
$
—
$
—
$
807,590
Equity-Linked
Securities
...................
—
11,063,496
—
11,063,496
Convertible
Preferred
Stocks
................
1,622,243
—
—
1,622,243
Corporate
Bonds
........................
—
1,419,857
—
1,419,857
Short
Term
Investments
...................
132,674
—
—
132,674
Total
Investments
in
Securities
...........
$16,493,707
$13,092,921
b
$—
$29,586,628
Liabilities:
Other
Financial
Instruments:
Options
written
..........................
$
6,750
$
—
$
—
$
6,750
Total
Other
Financial
Instruments
.........
$6,750
$—
$—
$6,750
Franklin
Templeton
SMACS:
Series
H
Assets:
Investments
in
Securities:
a
Management
Investment
Companies
.........
824,425
—
—
824,425
Municipal
Bonds
.........................
—
2,310,491
—
2,310,491
Total
Investments
in
Securities
...........
$824,425
$2,310,491
$—
$3,134,916
Franklin
Templeton
SMACS:
Series
I
Assets:
Investments
in
Securities:
a
Corporate
Bonds
........................
—
47,911,830
—
47,911,830
Escrows
and
Litigation
Trusts
...............
—
93,640
—
93,640
Short
Term
Investments
...................
691,022
—
—
691,022
Total
Investments
in
Securities
...........
$691,022
$48,005,470
$—
$48,696,492
Liabilities:
Other
Financial
Instruments:
Futures
contracts
........................
$
4,595
$
—
$
—
$
4,595
Total
Other
Financial
Instruments
.........
$4,595
$—
$—
$4,595
a
For
detailed
categories,
see
the
accompanying
Schedule
of
Investments.
b
Includes
foreign
securities
valued
at
$609,568,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
13.
Fair
Value
Measurements
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
(unaudited)
39
franklintempleton.com
Semiannual
Report
Abbreviations
Selected
Portfolio
ADR
American
Depositary
Receipt
ETF
Exchange-Traded
Fund
FRN
Floating
Rate
Note
GO
General
Obligation
LOC
Letter
of
Credit
Franklin
Strategic
Series
Shareholder
Information
40
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
Schedule
of
Investments
The
Trust
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.
gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
or
receive
notice
of
the
availability
of,
each
Fund’s
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
(to
the
extent
received
by
mail)
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/
summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
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 Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
(a)(2)(1) There were no written solicitations to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons.
(a)(2)(2) There was no change in the Registrant’s independent public accountant during the period covered by the report.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN STRATEGIC SERIES
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
Chief Executive Officer - Finance and Administration
Date April 26, 2023
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 26, 2023
By S\CHRISTOPHER KINGS______________________
Christopher Kings
Chief Financial Officer, Chief Accounting Officer and Treasurer
Date April 26, 2023