UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
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: 8/31/24
Item 1. Reports to Stockholders.
| a.) | The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-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.
| | |
Franklin Templeton SMACS: Series EAdvisor Classtrue | |
| Annual Shareholder Report | August 31, 2024 |
|
This annual shareholder report contains important information about Franklin Templeton SMACS: Series E for the period September 1, 2023, to August 31, 2024.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at (800) DIAL BEN/342-5236.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
| | |
Fund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment* |
Franklin Templeton SMACS: Series E1 | $0 | 0.00% |
| * | Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
| 1 | Does not reflect the effect of fees and expenses associated with a separately managed account, or a management fee or other operating expenses of the Fund. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended August 31, 2024, Franklin Templeton SMACS: Series E returned 17.78%. The Fund compares its performance to the MSCI USA High Dividend Yield Index, which returned 19.47% for the same period.
| |
Top contributors to performance: |
| ↑ | Financials, information technology (IT), and consumer staples sectors led absolute returns. |
| ↑ | Citigroup and US Bancorp added value within the financials sector, while Oracle contributed within IT. |
| ↑ | Overweight allocation to the financials sector assisted relative returns, as did an underweight allocation and selection within the consumer staples and health care sectors. |
| |
Top detractors from performance: |
| ↓ | In terms of individual issuers, Bristol-Myers Squibb hindered performance within the health care sector. Intel and Albemarle detracted from performance within the IT and materials sectors, respectively. |
| ↓ | Relative returns were weakened by selection within the IT and industrials sectors, as well as an overweight allocation to materials. |
| ↓ | No sectors detracted from absolute returns. |
Use of derivatives and the impact on performance:
The Fund used equity-linked notes (ELNs) and equity call options. ELNs contributed to Fund performance during the period, while equity calls were a slight detractor.
| Franklin Templeton SMACS: Series E | PAGE 1 | 3001-ATSR-1024 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares, or the effect of fees and expenses borne by investors at the separately managed account level.
VALUE OF A $10,000 INVESTMENT – Franklin Templeton SMACS: Series E 6/3/2019 — 8/31/2024
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended August 31, 2024
| | | |
| | 1 Year | 5 Year | Since Inception
(6/3/2019) |
Franklin Templeton SMACS: Series E | 17.78 | 11.79 | 12.72 |
Russell 3000 Index | 26.14 | 15.19 | 15.84 |
MSCI USA High Dividend Yield Index | 19.47 | 9.74 | 10.37 |
Performance figures do not reflect the effect of fees and expenses associated with a separately managed account or a management fee or other operating expenses of the Fund, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
For current month-end performance, please call Franklin Templeton at (800) DIAL BEN/342-5236 or visit https://www.franklintempleton.com/investments/options/mutual-funds.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of August 31, 2024)
| |
Total Net Assets | $217,931,584 |
Total Number of Portfolio Holdings* | 117 |
Total Management Fee Paid | $0 |
Portfolio Turnover Rate | 93.40% |
| * | Does not include derivatives, except purchased options, if any. |
| Franklin Templeton SMACS: Series E | PAGE 2 | 3001-ATSR-1024 |
WHAT DID THE FUND INVEST IN? (as of August 31, 2024)
Portfolio Composition* (% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
The Fund’s disclosure was revised to reflect that the Fund may invest up to 10% of its assets in corporate debt securities.
Consequently, credit risk, high-yield debt securities risk, interest rate risk and prepayment risk were added as additional risks for the Fund.
This is a summary of changes to the Fund since September 1, 2023. For more complete information, you may review the Fund’s current prospectus and any applicable supplements and the Fund’s next prospectus, which we expect to be available by January 1, 2025,
at https://www.franklintempleton.com/regulatory-fund-documents or upon request at (800) DIAL BEN/342-5236 or prospectus@franklintempleton.com.
| |
| WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND? |
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its: |
| • prospectus • proxy voting information • financial information • holdings • tax information |
| Franklin Templeton SMACS: Series E | PAGE 3 | 3001-ATSR-1024 |
10731109211430114355159071873610640129211719114908171082158010654110121376413173141951695822.413.712.09.88.98.68.27.94.43.60.5
| | |
Franklin Templeton SMACS: Series IAdvisor Classtrue | |
| Annual Shareholder Report | August 31, 2024 |
|
This annual shareholder report contains important information about Franklin Templeton SMACS: Series I for the period September 1, 2023, to August 31, 2024.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at (800) DIAL BEN/342-5236.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
| | |
Fund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment* |
Franklin Templeton SMACS: Series I1 | $0 | 0.00% |
| * | Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
| 1 | Does not reflect the effect of fees and expenses associated with a separately managed account, or a management fee or other operating expenses of the Fund. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended August 31, 2024, Franklin Templeton SMACS: Series I returned 12.71%. The Fund compares its performance to the Bloomberg High Yield Very Liquid Index and the 50% Bloomberg High Yield Very Liquid Index and 50% Bloomberg U.S. Corporate Index, which returned 12.54% and 10.93%, respectively, for the same period.
| |
Top contributors to performance: |
| ↑ | Health care, consumer discretionary, and industrials sectors led returns during the period. |
| ↑ | Community Health Systems and Tenet Healthcare contributed within health care, while Ford Motor added value within the consumer discretionary sector. |
| ↑ | Relative performance benefited from selection within the communication services, information technology, and industrials sectors. |
| |
Top detractors from performance: |
| ↓ | On an individual issuer basis, Ardagh and First Quantum Minerals hindered performance within the materials sector. At period-end, the Fund no longer held a position in First Quantum Minerals. Multiplan also detracted from returns within health care. |
| ↓ | Selection and an underweight allocation to the consumer discretionary sector weakened relative returns, as did an overweight allocation to the materials sector. |
| ↓ | No sectors detracted materially from returns during the period. |
Use of derivatives and the impact on performance:
The Fund used equity linked notes (ELNs) and U.S. Treasury (UST) futures. ELNs contributed to Fund performance, while UST futures detracted.
| Franklin Templeton SMACS: Series I | PAGE 1 | 3003-ATSR-1024 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares, or the effect of fees and expenses borne by investors at the separately managed account level.
VALUE OF A $10,000 INVESTMENT – Franklin Templeton SMACS: Series I 6/3/2019 — 8/31/2024
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended August 31, 2024
| | | |
| | 1 Year | 5 Year | Since Inception
(6/3/2019) |
Franklin Templeton SMACS: Series I | 12.71 | 3.28 | 3.56 |
Bloomberg U.S. Aggregate Index | 7.30 | -0.04 | 0.67 |
Bloomberg High Yield Very Liquid Index | 12.54 | 3.91 | 4.45 |
50% Bloomberg High Yield Very Liquid Index and 50% Bloomberg U.S. Corporate Index | 10.93 | 2.33 | 3.14 |
Performance figures do not reflect the effect of fees and expenses associated with a separately managed account or a management fee or other operating expenses of the Fund, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
For current month-end performance, please call Franklin Templeton at (800) DIAL BEN/342-5236 or visit https://www.franklintempleton.com/investments/options/mutual-funds.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of August 31, 2024)
| |
Total Net Assets | $373,874,306 |
Total Number of Portfolio Holdings* | 152 |
Total Management Fee Paid | $0 |
Portfolio Turnover Rate | 16.69% |
| * | Does not include derivatives, except purchased options, if any. |
| Franklin Templeton SMACS: Series I | PAGE 2 | 3003-ATSR-1024 |
WHAT DID THE FUND INVEST IN? (as of August 31, 2024)
Portfolio Composition* (% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
| |
| WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND? |
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its: |
| • prospectus • proxy voting information • financial information • holdings • tax information |
| Franklin Templeton SMACS: Series I | PAGE 3 | 3003-ATSR-1024 |
1022597631137299081065912013104111108511075980096831039010359107871173310409111531255210493111111173610202106141177524.213.413.111.210.38.56.95.24.02.30.30.6
| | |
Franklin Templeton SMACS: Series CHAdvisor Classtrue | |
| Annual Shareholder Report | August 31, 2024 |
|
This annual shareholder report contains important information about Franklin Templeton SMACS: Series CH for the period September 1, 2023, to August 31, 2024.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at (800) DIAL BEN/342-5236.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
| | |
Fund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment* |
Franklin Templeton SMACS: Series CH1 | $0 | 0.00% |
| * | Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
| 1 | Does not reflect the effect of fees and expenses associated with a separately managed account, or a management fee or other operating expenses of the Fund. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended August 31, 2024, Franklin Templeton SMACS: Series CH returned 10.75%. The Fund compares its performance to the Bloomberg Municipal Bond California Exempt Index, which returned 5.63% for the same period.
| |
Top contributors to performance: |
| ↑ | The Fund outperformed its benchmark primarily due to its tilt toward lower-rated or non-rated securities, exposure to special assessment, multi-family housing and continuing care retirement center bonds. |
| ↑ | While overall duration positioning hurt returns, as noted below, an overweight to bonds with five years to maturity lifted results. |
| |
Top detractors from performance: |
| ↓ | Overall yield curve positioning detracted from returns, primarily driven by an underweight to bonds with 30 years to maturity as yields declined across the curve. |
| ↓ | Holdings of workforce housing-, special tax- and airport-related securities curbed relative results. |
| Franklin Templeton SMACS: Series CH | PAGE 1 | 3000-ATSR-1024 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares, or the effect of fees and expenses borne by investors at the separately managed account level.
VALUE OF A $10,000 INVESTMENT – Franklin Templeton SMACS: Series CH 6/3/2019 — 8/31/2024
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended August 31, 2024
| | | |
| | 1 Year | 5 Year | Since Inception
(6/3/2019) |
Franklin Templeton SMACS: Series CH | 10.75 | 1.62 | 2.13 |
Bloomberg Municipal Bond Index | 6.09 | 1.02 | 1.49 |
Bloomberg Municipal Bond California Exempt Index | 5.63 | 0.96 | 1.44 |
Performance figures do not reflect the effect of fees and expenses associated with a separately managed account or a management fee or other operating expenses of the Fund, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
For current month-end performance, please call Franklin Templeton at (800) DIAL BEN/342-5236 or visit https://www.franklintempleton.com/investments/options/mutual-funds.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of August 31, 2024)
| |
Total Net Assets | $22,909,504 |
Total Number of Portfolio Holdings* | 50 |
Total Management Fee Paid | $0 |
Portfolio Turnover Rate | 38.97% |
| * | Does not include derivatives, except purchased options, if any. |
| Franklin Templeton SMACS: Series CH | PAGE 2 | 3000-ATSR-1024 |
WHAT DID THE FUND INVEST IN? (as of August 31, 2024)
Portfolio Composition* (% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
| |
| WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND? |
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its: |
| • prospectus • proxy voting information • financial information • holdings • tax information |
| Franklin Templeton SMACS: Series CH | PAGE 3 | 3000-ATSR-1024 |
1030610332114409997100821116910277106101097010023101941081510282106291092910004102111078661.613.39.78.16.20.60.5
| | |
Franklin Templeton SMACS: Series HAdvisor Classtrue | |
| Annual Shareholder Report | August 31, 2024 |
|
This annual shareholder report contains important information about Franklin Templeton SMACS: Series H for the period September 1, 2023, to August 31, 2024.
You can find additional information about the Fund at https://www.franklintempleton.com/regulatory-fund-documents. You can also request this information by contacting us at (800) DIAL BEN/342-5236.
This report describes changes to the Fund that occurred during the reporting period.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR? (based on a hypothetical $10,000 investment)
| | |
Fund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment* |
Franklin Templeton SMACS: Series H1 | $0 | 0.00% |
| * | Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
| 1 | Does not reflect the effect of fees and expenses associated with a separately managed account, or a management fee or other operating expenses of the Fund. |
HOW DID THE FUND PERFORM LAST YEAR AND WHAT AFFECTED ITS PERFORMANCE?
For the twelve months ended August 31, 2024. Franklin Templeton SMACS: Series H returned 11.79%. The Fund compares its performance to the Bloomberg Municipal Bond Index, which returned 6.09% for the same period.
| |
Top contributors to performance: |
| ↑ | The Fund outperformed its benchmark, aided by its exposure to bonds with no external credit rating and BBB rated securities. Positions in continuing care retirement center- and hospital-related issues benefited relative returns, as did holdings of refunded securities. |
| ↑ | Yield curve positioning supported relative returns, helped by an overweight to bonds with 10 or more years to maturity as muni yields decline across the curve. |
| |
Top detractors from performance: |
| ↓ | The Fund’s positions in the special assessment and tobacco sectors detracted from relative performance. |
| ↓ | While duration positioning overall was accretive to returns, an underweight to bonds with two to five years to maturity was a drag on results. |
| Franklin Templeton SMACS: Series H | PAGE 1 | 3002-ATSR-1024 |
HOW DID THE FUND PERFORM OVER THE LAST 10 YEARS?
The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares, or the effect of fees and expenses borne by investors at the separately managed account level.
VALUE OF A $10,000 INVESTMENT – Franklin Templeton SMACS: Series H 6/3/2019 — 8/31/2024
AVERAGE ANNUAL TOTAL RETURNS (%) Period Ended August 31, 2024
| | | |
| | 1 Year | 5 Year | Since Inception
(6/3/2019) |
Franklin Templeton SMACS: Series H | 11.79 | 2.39 | 2.54 |
Bloomberg Municipal Bond Index | 6.09 | 1.02 | 1.49 |
Performance figures do not reflect the effect of fees and expenses associated with a separately managed account or a management fee or other operating expenses of the Fund, which if reflected, would reduce performance of the Fund.
Fund performance figures may reflect fee waivers and/or expense reimbursements, without which the performance would have been lower.
For current month-end performance, please call Franklin Templeton at (800) DIAL BEN/342-5236 or visit https://www.franklintempleton.com/investments/options/mutual-funds.
Important data provider notices and terms available at www.franklintempletondatasources.com.
KEY FUND STATISTICS (as of August 31, 2024)
| |
Total Net Assets | $12,653,060 |
Total Number of Portfolio Holdings* | 90 |
Total Management Fee Paid | $0 |
Portfolio Turnover Rate | 42.17% |
| * | Does not include derivatives, except purchased options, if any. |
| Franklin Templeton SMACS: Series H | PAGE 2 | 3002-ATSR-1024 |
WHAT DID THE FUND INVEST IN? (as of August 31, 2024)
Portfolio Composition* (% of Total Investments)
| * | Does not include derivatives, except purchased options, if any. |
HOW HAS THE FUND CHANGED?
The Fund’s disclosure has been clarified to reflect that, although the Fund tries to invest all of its assets in securities that pay interest free from federal income taxes, including the federal alternative minimum tax, it is possible that the Fund may invest in securities that pay interest subject to federal or state income taxes (subject to its 20% limit on such investments), which could increase a shareholder’s tax liability.
This is a summary of a change to the Fund since September 1, 2023. For more complete information, you may review the Fund’s current prospectus and any applicable supplements and the Fund’s next prospectus, which we expect to be available by January 1, 2025,
at https://www.franklintempleton.com/regulatory-fund-documents or upon request at (800) DIAL BEN/342-5236 or prospectus@franklintempleton.com.
| |
| WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND? |
Additional information is available on https://www.franklintempleton.com/regulatory-fund-documents, including its: |
| • prospectus • proxy voting information • financial information • holdings • tax information |
| Franklin Templeton SMACS: Series H | PAGE 3 | 3002-ATSR-1024 |
1013110102113009964101991140410277106101097010023101941081538.913.012.412.18.74.33.82.32.11.50.80.1
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 19(a) (1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a) (1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is Mary C. Choksi, and she is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $132,272 for the fiscal year ended August 31, 2024, and $122,833 for the fiscal year ended August 31, 2023.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $140,000 for the fiscal year ended August 31, 2024, and $70,000 for the fiscal year ended August 31, 2023. The services for which these fees were paid included global access to tax platform International Tax View.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant, not reported in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended August 31, 2024, and $160 for the fiscal year ended August 31, 2023. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $163,638 for the fiscal year ended August 31, 2024 and $94,715 for the fiscal year ended August 31, 2023. The services for which these fees were paid included professional fees in connection with SOC 1 reports, professional services relating to the readiness assessment over Greenhouse Gas Emissions and Energy, fees in connection with license for accounting and business knowledge platform Viewpoint and professional fees relating to security counts.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $303,638 for the fiscal year ended August 31, 2024, and $164,875 for the fiscal year ended August 31, 2023.
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
(i) N/A
(j) N/A
Item 5. Audit Committee of Listed Registrants. N/A
Item 6. Schedule of Investments.
(a) Please see schedule of investments contained in the Financial Statements and Financial Highlights included under Item 7 of this Form N-CSR.
(b) N/A
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Franklin
Strategic
Series
Financial
Statements
and
Other
Important
Information
Annual
|
August
31,
2024
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Financial
Statements
and
Other
Important
Information—Annual
Financial
Highlights
and
Schedules
of
Investments
2
Financial
Statements
26
Notes
to
Financial
Statements
30
Report
of
Independent
Registered
Public
Accounting
Firm
44
Tax
Information
45
Changes
In
and
Disagreements
with
Accountants
46
Results
of
Meeting(s)
of
Shareholders
46
Remuneration
Paid
to
Directors,
Officers
and
Others
46
Board
Approval
of
Management
and
Subadvisory
Agreements
46
Financial
Highlights
Franklin
Templeton
SMACS:
Series
CH
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
Year
Ended
August
31,
2024
2023
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$8.52
$8.85
$10.51
$9.82
$10.26
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.45
0.39
0.36
0.35
0.33
Net
realized
and
unrealized
gains
(losses)
...........
0.43
(0.32)
(1.66)
0.69
(0.31)
Total
from
investment
operations
....................
0.88
0.07
(1.30)
1.04
0.02
Less
distributions
from:
Net
investment
income
..........................
(0.44)
(0.40)
(0.36)
(0.35)
(0.33)
Net
realized
gains
.............................
—
—
—
—
(0.13)
Total
distributions
...............................
(0.44)
(0.40)
(0.36)
(0.35)
(0.46)
Net
asset
value,
end
of
year
.......................
$8.96
$8.52
$8.85
$10.51
$9.82
Total
return
....................................
10.75%
0.85%
(12.61)%
10.75%
0.25%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.50%
2.48%
2.37%
3.11%
4.23%
Expenses
net
of
waiver
and
payments
by
affiliates
c
......
—%
—%
—%
—%
—%
Net
investment
income
...........................
5.27%
4.56%
3.71%
3.44%
3.38%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$22,910
$3,898
$2,957
$3,512
$2,986
Portfolio
turnover
rate
............................
38.97%
45.25%
5.65%
2.74%
51.23%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Schedule
of
Investments,
August
31,
2024
Franklin
Templeton
SMACS:
Series
CH
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
1.0%
Diversified
Consumer
Services
1.0%
Grand
Canyon
University
,
Secured
Note
,
5.125
%
,
10/01/28
....................
$
250,000
$
231,581
Total
Corporate
Bonds
(Cost
$
228,097
)
........................................
231,581
Municipal
Bonds
97.9%
California
96.8%
Alameda
Community
Facilities
District
,
City
of
Alameda
Community
Facilities
District
No.
22-1
,
Special
Tax
,
2023
,
5
%
,
9/01/53
................................
125,000
129,212
Beaumont
Unified
School
District
,
Community
Facilities
District
No.
2020-1
Improvement
Area
No.
2
,
Special
Tax
,
2023
,
5
%
,
9/01/53
....................
150,000
155,054
a
California
Community
Choice
Financing
Authority
,
Revenue
,
2023
C
,
Mandatory
Put
,
5.25
%
,
10/01/31
...................................................
1,000,000
1,073,404
b
California
Community
Housing
Agency
,
Annadel
Apartments
,
Revenue
,
144A,
2019
A
,
5
%
,
4/01/49
..................
1,200,000
1,038,432
Mira
Vista
Hills
Apartments
,
Revenue
,
144A,
2021
A
,
4
%
,
2/01/56
.............
300,000
181,859
Serenity
at
Larkspur
Apartments
,
Revenue
,
144A,
2020
A
,
5
%
,
2/01/50
.........
1,000,000
760,397
Twin
Creek
Apartments
,
Revenue,
Senior
Lien
,
144A,
2022
A-2
,
Zero
Cpn.,
8/01/65
1,250,000
53,349
California
Educational
Facilities
Authority
,
St.
Mary's
College
of
California
,
Revenue
,
2023
A
,
Refunding
,
5.5
%
,
10/01/53
....................................
1,000,000
1,068,154
California
Health
Facilities
Financing
Authority
,
Episcopal
Communities
&
Services
for
Seniors
Obligated
Group
,
Revenue
,
2024
B
,
5.25
%
,
11/15/53
.................
200,000
212,367
a
,b
California
Infrastructure
&
Economic
Development
Bank
,
DesertXpress
Enterprises
LLC
,
Revenue
,
144A,
2020
A-4
,
Mandatory
Put
,
8
%
,
8/15/25
.................
200,000
201,915
California
Municipal
Finance
Authority
,
BOLD
Program
,
Special
Tax
,
2022
B
,
Refunding
,
6
%
,
9/01/52
................
150,000
162,131
BOLD
Program
,
Special
Tax
,
2022
C
,
6.25
%
,
9/01/52
.......................
150,000
162,521
BOLD
Program
,
Special
Tax
,
2022
D
,
6.125
%
,
9/01/52
......................
150,000
161,699
BOLD
Program
,
Special
Tax
,
2023
A
,
5.5
%
,
9/01/53
........................
100,000
107,379
BOLD
Program
,
Special
Tax
,
2023
C
,
5.25
%
,
9/01/53
.......................
1,000,000
1,055,456
BOLD
Program
,
Special
Tax
,
2024
A
,
5
%
,
9/01/48
.........................
100,000
102,882
b
Claremont
Graduate
University
,
Revenue
,
144A,
2020
B
,
Refunding
,
5
%
,
10/01/49
.
125,000
123,586
Community
Facilities
District
No.
2021-6
Improvement
Area
No.
2
,
Special
Tax
,
2022
,
6
%
,
9/01/52
....................................................
150,000
160,876
Community
Facilities
District
No.
2023-5
Area
No.
1
,
Special
Tax
,
2023
,
5.8
%
,
9/01/53
........................................................
1,000,000
1,090,967
b
IH
Parkside
Fairfield
LLC
,
Revenue
,
144A,
2023
B
,
Zero
Cpn.,
9/01/43
..........
250,000
179,447
b
St.
Mary
and
All
Angels
Christian
Church
,
Revenue
,
144A,
2024
A
,
5.75
%
,
5/01/54
.
200,000
208,279
b
Westside
Neighborhood
School
,
Revenue
,
144A,
2024
,
6.375
%
,
6/15/64
........
250,000
270,864
b
,c
,d
California
Pollution
Control
Financing
Authority
,
Rialto
Bioenergy
Facility
LLC
,
Revenue
,
144A,
2018
,
7.5
%
,
12/01/40
..................................
75,000
14,263
b
California
Public
Finance
Authority
,
Kendal
at
Sonoma
Obligated
Group
,
Revenue
,
144A,
2021
A
,
Refunding
,
5
%
,
11/15/46
.................................
1,250,000
1,190,334
b
California
School
Finance
Authority
,
Orange
County
Educational
Arts
Academy
,
Revenue
,
144A,
2023
A
,
Refunding
,
5.875
%
,
6/01/53
.......................
100,000
102,831
California
Statewide
Communities
Development
Authority
,
Special
Tax
,
2023
A
,
5.25
%
,
9/01/51
...................................
100,000
105,853
Community
Facilities
District
No.
2021-1
,
Special
Tax
,
2023
,
5
%
,
9/01/53
........
150,000
156,925
Community
Facilities
District
No.
2022-03
,
Special
Tax
,
2023
,
5
%
,
9/01/53
.......
150,000
155,232
Community
Facilities
District
No.
2022-07
Improvement
Area
No.
1
,
Special
Tax
,
2023
,
5
%
,
9/01/53
................................................
150,000
156,132
e
Community
Facilities
District
No.
2024-9
,
Special
Tax
,
2024
,
5
%
,
9/01/54
........
100,000
102,022
Community
Infrastructure
Program
Assessment
District
No.
20-02
,
Special
Assessment
,
2023
,
5.75
%
,
9/02/53
...................................
1,000,000
1,061,725
b
Loma
Linda
University
Medical
Center
Obligated
Group
,
Revenue
,
144A,
2016
A
,
5.25
%
,
12/01/56
.................................................
250,000
252,872
b
NCCD-Hooper
Street
LLC
,
Revenue
,
144A,
2019
,
5.25
%
,
7/01/49
.............
100,000
101,653
b
NCCD-Hooper
Street
LLC
,
Revenue
,
144A,
2019
,
5.25
%
,
7/01/52
.............
200,000
203,049
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
CH
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
California
(continued)
Chino
Community
Facilities
District
,
Community
Facilities
District
No.
2021-1
,
Special
Tax
,
2023
,
5.625
%
,
9/01/53
..........................................
$
1,000,000
$
1,081,308
b
City
&
County
of
San
Francisco
,
Community
Facilities
District
No.
2016-1
Improvement
Area
2
,
Special
Tax
,
144A,
2023
A
,
5.25
%
,
9/01/48
............................................
965,000
1,019,876
District
No.
2020-1
Shoreline
Tax
Zone
1
,
Special
Tax
,
144A,
2023
C
,
5.75
%
,
9/01/53
1,500,000
1,625,918
City
of
Dublin
,
Community
Facilities
District
No.
2015-1
Improvement
Area
No.
5
,
Special
Tax
,
2023
,
5.375
%
,
9/01/51
....................................
1,250,000
1,311,361
City
of
Lake
Elsinore
,
Community
Facilities
District
No.
2006-8
,
Special
Tax
,
2023
,
5
%
,
9/01/53
.........................................................
150,000
155,054
City
of
Rancho
Cordova
,
Arista
Del
Sol
Community
Facilities
District
No.
2022-1
Improvement
Area
No.
1
,
Special
Tax
,
2023
,
5.375
%
,
9/01/53
.................
200,000
211,729
b
CSCDA
Community
Improvement
Authority
,
CTR
City
Anaheim
,
Revenue
,
144A,
2020
A
,
5
%
,
1/01/54
....................
400,000
359,249
Dublin
,
Revenue
,
144A,
2021
B
,
4
%
,
2/01/57
.............................
140,000
109,091
Galt
Community
Facilities
District
,
City
of
Galt
Community
Facilities
District
No.
2020-2
Improvement
Area
No.
1
,
Special
Tax
,
2023
A
,
6
%
,
9/01/53
..................
1,500,000
1,618,180
Golden
State
Tobacco
Securitization
Corp.
,
Revenue
,
2022
A-1
,
Refunding
,
5
%
,
6/01/51
.........................................................
100,000
103,868
Orange
County
Community
Facilities
District
,
Community
Facilities
District
No.
2023-1
,
Special
Tax
,
2023
A
,
5.5
%
,
8/15/53
....................................
1,000,000
1,077,906
River
Islands
Public
Financing
Authority
,
Community
Facilities
District
2023-1
Area
No.
1
,
Special
Tax
,
2023
,
5.625
%
,
9/01/53
..................................
1,000,000
1,065,430
Washington
Township
Health
Care
District
,
Revenue
,
2023
A
,
5.75
%
,
7/01/48
......
150,000
164,959
22,167,050
Florida
0.5%
a
,b
Florida
Development
Finance
Corp.
,
AAF
Operations
Holdings
LLC
,
Revenue
,
144A,
2024
,
Refunding
,
Mandatory
Put
,
12
%
,
7/15/28
...........................
100,000
106,751
U.S.
Territories
0.6%
Puerto
Rico
0.6%
GDB
Debt
Recovery
Authority
of
Puerto
Rico
,
7.5
%
,
8/20/40
...................
146,877
143,205
Total
Municipal
Bonds
(Cost
$
20,862,702
)
......................................
22,417,006
Total
Long
Term
Investments
(Cost
$
21,090,799
)
................................
22,648,587
a
a
a
a
a
a
Total
Investments
(Cost
$
21,090,799
)
98.9
%
....................................
$22,648,587
Other
Assets,
less
Liabilities
1.1
%
.............................................
260,917
Net
Assets
100.0%
...........................................................
$22,909,504
See
A
bbreviations
on
page
43
.
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
August
31,
2024,
the
aggregate
value
of
these
securities
was
$8,104,015,
representing
35.4%
of
net
assets.
c
Fair
valued
using
significant
unobservable
inputs.
See
Note
11
regarding
fair
value
measurements.
d
Defaulted
security
or
security
for
which
income
has
been
deemed
uncollectible.
See
Note
7.
e
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
Financial
Highlights
Franklin
Templeton
SMACS:
Series
E
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
Year
Ended
August
31,
2024
2023
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$11.56
$11.29
$12.77
$10.15
$10.69
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.37
0.42
0.37
0.35
0.36
Net
realized
and
unrealized
gains
(losses)
...........
1.60
0.75
(0.31)
2.72
(0.19)
Total
from
investment
operations
....................
1.97
1.17
0.06
3.07
0.17
Less
distributions
from:
Net
investment
income
..........................
(0.76)
(0.72)
(0.83)
(0.45)
(0.49)
Net
realized
gains
.............................
—
(0.18)
(0.71)
—
(0.22)
Tax
return
of
capital
............................
—
(—)
c
—
—
—
Total
distributions
...............................
(0.76)
(0.90)
(1.54)
(0.45)
(0.71)
Net
asset
value,
end
of
year
.......................
$12.77
$11.56
$11.29
$12.77
$10.15
Total
return
....................................
17.78%
10.81%
0.38%
30.95%
1.77%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.10%
0.27%
1.36%
2.19%
2.85%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
—%
d
—%
—%
d
—%
d
Net
investment
income
...........................
3.12%
3.70%
3.11%
3.05%
3.48%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$217,932
$61,992
$12,863
$5,155
$3,847
Portfolio
turnover
rate
............................
93.40%
123.80%
117.70%
49.90%
58.50%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Schedule
of
Investments,
August
31,
2024
Franklin
Templeton
SMACS:
Series
E
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
48.6%
Aerospace
&
Defense
1.4%
Lockheed
Martin
Corp.
...............................
United
States
2,500
$
1,420,250
Northrop
Grumman
Corp.
.............................
United
States
2,000
1,046,420
RTX
Corp.
........................................
United
States
3,998
493,113
2,959,783
Air
Freight
&
Logistics
0.6%
United
Parcel
Service,
Inc.,
B
..........................
United
States
10,000
1,285,500
Banks
3.1%
Fifth
Third
Bancorp
..................................
United
States
27,000
1,152,630
Truist
Financial
Corp.
................................
United
States
45,000
2,000,700
US
Bancorp
.......................................
United
States
76,480
3,612,150
6,765,480
Beverages
3.3%
Coca-Cola
Co.
(The)
.................................
United
States
65,000
4,710,550
PepsiCo,
Inc.
......................................
United
States
15,000
2,593,200
7,303,750
Biotechnology
3.9%
AbbVie,
Inc.
.......................................
United
States
35,000
6,870,850
Amgen,
Inc.
.......................................
United
States
5,000
1,669,150
8,540,000
Building
Products
0.7%
Johnson
Controls
International
plc
.......................
United
States
20,000
1,457,000
Chemicals
3.5%
Air
Products
and
Chemicals,
Inc.
........................
United
States
25,000
6,971,250
LyondellBasell
Industries
NV,
A
.........................
United
States
7,000
690,900
7,662,150
Communications
Equipment
1.2%
Cisco
Systems,
Inc.
.................................
United
States
53,000
2,678,620
Electric
Utilities
2.7%
American
Electric
Power
Co.,
Inc.
.......................
United
States
35,000
3,509,800
Xcel
Energy,
Inc.
....................................
United
States
40,000
2,449,200
5,959,000
Health
Care
Equipment
&
Supplies
2.0%
Abbott
Laboratories
..................................
United
States
20,000
2,265,400
Medtronic
plc
......................................
United
States
22,740
2,014,309
4,279,709
Health
Care
Providers
&
Services
0.7%
CVS
Health
Corp.
...................................
United
States
25,000
1,431,000
Hotels,
Restaurants
&
Leisure
1.1%
McDonald's
Corp.
...................................
United
States
8,000
2,309,280
Household
Products
1.2%
Procter
&
Gamble
Co.
(The)
...........................
United
States
15,000
2,573,100
Industrial
Conglomerates
0.5%
Honeywell
International,
Inc.
...........................
United
States
5,100
1,060,341
IT
Services
0.9%
a
International
Business
Machines
Corp.
...................
United
States
10,000
2,021,300
Machinery
1.0%
Caterpillar,
Inc.
.....................................
United
States
6,000
2,136,600
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
E
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Metals
&
Mining
2.1%
Fortescue
Ltd.
......................................
Australia
175,000
$
2,155,591
Fortescue
Ltd.,
ADR
.................................
Australia
45,000
1,111,050
Freeport-McMoRan,
Inc.
..............................
United
States
30,000
1,328,400
4,595,041
Oil,
Gas
&
Consumable
Fuels
5.6%
Chevron
Corp.
.....................................
United
States
15,000
2,219,250
ConocoPhillips
.....................................
United
States
48,000
5,461,920
Shell
plc,
ADR
......................................
United
States
30,000
2,149,800
TotalEnergies
SE,
ADR
...............................
France
35,000
2,415,000
12,245,970
Pharmaceuticals
4.0%
Merck
&
Co.,
Inc.
...................................
United
States
45,000
5,330,250
Pfizer,
Inc.
.........................................
United
States
115,000
3,336,150
8,666,400
Semiconductors
&
Semiconductor
Equipment
3.7%
Analog
Devices,
Inc.
.................................
United
States
15,000
3,522,600
Broadcom,
Inc.
.....................................
United
States
20,000
3,256,400
Microchip
Technology,
Inc.
............................
United
States
15,000
1,232,400
8,011,400
Software
1.6%
Oracle
Corp.
.......................................
United
States
25,000
3,532,250
Specialty
Retail
1.8%
Home
Depot,
Inc.
(The)
...............................
United
States
10,899
4,016,282
Tobacco
2.0%
Philip
Morris
International,
Inc.
.........................
United
States
35,000
4,315,150
Total
Common
Stocks
(Cost
$91,614,995)
....................................
105,805,106
b
Equity-Linked
Securities
43.5%
Aerospace
&
Defense
1.8%
c
Barclays
Bank
plc
into
Northrop
Grumman
Corp.,
144A,
7%,
11/08/24
........................................
United
States
1,800
942,941
c
BNP
Paribas
Issuance
BV
into
Northrop
Grumman
Corp.,
144A,
7.5%,
9/10/24
....................................
United
States
2,000
882,825
c
Merrill
Lynch
International
&
Co.
CV
into
RTX
Corp.,
144A,
7.5%,
10/02/24
........................................
United
States
12,000
1,037,237
c
Wells
Fargo
Bank
NA
into
Boeing
Co.
(The),
144A,
9%,
6/17/25
United
States
6,300
1,119,112
3,982,115
Air
Freight
&
Logistics
0.3%
c
J.P.
Morgan
Structured
Products
BV
into
United
Parcel
Service,
Inc.,
144A,
9%,
10/22/24
............................
United
States
5,500
728,233
Banks
2.3%
c
BNP
Paribas
Issuance
BV
into
Bank
of
America
Corp.,
144A,
8.5%,
2/26/25
....................................
United
States
35,000
1,274,466
c
JPMorgan
Chase
Bank
NA
into
Truist
Financial
Corp.,
144A,
9.5%,
3/02/26
....................................
United
States
12,000
525,827
c
Merrill
Lynch
International
&
Co.
CV
into
Fifth
Third
Bancorp,
144A,
10%,
3/10/25
................................
United
States
12,000
465,307
c
Royal
Bank
of
Canada
into
Citigroup,
Inc.,
144A,
8.5%,
8/27/25
.
United
States
13,000
801,698
c
Royal
Bank
of
Canada
into
Truist
Financial
Corp.,
144A,
8.5%,
8/04/25
.........................................
United
States
24,000
1,061,841
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
E
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
b
Equity-Linked
Securities
(continued)
Banks
(continued)
c
Wells
Fargo
Bank
NA
into
Citigroup,
Inc.,
144A,
10%,
2/25/25
..
United
States
13,000
$
772,880
4,902,019
Biotechnology
0.3%
c
Barclays
Bank
plc
into
Amgen,
Inc.,
144A,
8%,
9/20/24
.......
United
States
2,100
617,139
Broadline
Retail
0.6%
c
Goldman
Sachs
International
Bank
into
Amazon.com,
Inc.,
144A,
9%,
11/20/24
.....................................
United
States
10,000
1,318,705
Building
Products
1.4%
c
J.P.
Morgan
Structured
Products
BV
into
Johnson
Controls
International
plc,
144A,
8%,
9/09/24
....................
United
States
15,000
1,021,208
c
Wells
Fargo
Bank
NA
into
Johnson
Controls
International
plc,
144A,
9%,
12/10/24
................................
United
States
35,000
2,056,134
3,077,342
Capital
Markets
1.5%
c
Goldman
Sachs
International
Bank
into
Morgan
Stanley,
144A,
9%,
12/24/24
.....................................
United
States
2,300
227,130
c
Merrill
Lynch
International
&
Co.
CV
into
Charles
Schwab
Corp.
(The),
144A,
9%,
2/25/25
............................
United
States
32,000
2,065,486
c
Merrill
Lynch
International
&
Co.
CV
into
Morgan
Stanley,
144A,
9%,
7/14/25
......................................
United
States
10,000
1,019,688
3,312,304
Chemicals
0.8%
c
Barclays
Bank
plc
into
Air
Products
and
Chemicals,
Inc.,
144A,
8.5%,
3/10/25
....................................
United
States
7,000
1,790,272
Communications
Equipment
1.0%
c
Royal
Bank
of
Canada
into
Cisco
Systems,
Inc.,
144A,
8%,
9/17/25
.........................................
United
States
15,000
755,427
c
UBS
AG
into
Cisco
Systems,
Inc.,
144A,
8%,
6/10/25
........
United
States
30,000
1,524,870
2,280,297
Consumer
Staples
Distribution
&
Retail
0.9%
c
Barclays
Bank
plc
into
Target
Corp.,
144A,
8.5%,
10/08/24
....
United
States
5,800
855,443
c
UBS
AG
into
Target
Corp.,
144A,
10%,
9/15/25
.............
United
States
7,300
1,093,574
1,949,017
Containers
&
Packaging
1.2%
c
BNP
Paribas
SA
into
International
Paper
Co.,
144A,
9%,
10/20/25
United
States
26,000
1,270,286
c
Mizuho
Markets
Cayman
LP
into
International
Paper
Co.,
144A,
10%,
1/22/25
.....................................
United
States
30,000
1,255,100
2,525,386
Electric
Utilities
1.7%
c
Mizuho
Markets
Cayman
LP
into
NextEra
Energy,
Inc.,
144A,
9%,
4/08/25
.........................................
United
States
24,000
1,688,193
c
Wells
Fargo
Bank
NA
into
NextEra
Energy,
Inc.,
144A,
8%,
5/20/25
.........................................
United
States
25,000
1,907,728
3,595,921
Ground
Transportation
0.2%
c
Merrill
Lynch
BV
into
Union
Pacific
Corp.,
144A,
8%,
11/05/24
..
United
States
1,800
427,434
Health
Care
Providers
&
Services
0.3%
c
Wells
Fargo
Bank
NA
into
UnitedHealth
Group,
Inc.,
144A,
7%,
7/14/25
.........................................
United
States
1,300
686,123
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
E
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Country
Shares
a
Value
a
a
a
a
a
a
b
Equity-Linked
Securities
(continued)
Hotels,
Restaurants
&
Leisure
0.1%
c
Wells
Fargo
Bank
NA
into
Starbucks
Corp.,
144A,
8%,
3/04/25
.
United
States
3,000
$
287,453
Insurance
1.0%
c
BNP
Paribas
Issuance
BV
into
MetLife,
Inc.,
144A,
9%,
10/23/24
United
States
6,800
485,657
c
JPMorgan
Chase
Bank
NA
into
MetLife,
Inc.,
144A,
8%,
3/25/25
United
States
23,000
1,724,331
2,209,988
Interactive
Media
&
Services
2.5%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Alphabet,
Inc.,
144A,
8.5%,
8/20/25
....................................
United
States
14,000
2,354,952
c
JPMorgan
Chase
Bank
NA
into
Alphabet,
Inc.,
144A,
8%,
3/18/25
United
States
15,000
2,209,383
c
JPMorgan
Chase
Bank
NA
into
Alphabet,
Inc.,
144A,
8%,
3/28/25
United
States
6,000
924,769
5,489,104
IT
Services
1.6%
c
Barclays
Bank
plc
into
International
Business
Machines
Corp.,
144A,
8.5%,
6/09/25
...............................
United
States
9,500
1,815,790
c
UBS
AG
into
International
Business
Machines
Corp.,
144A,
8%,
8/27/25
.........................................
United
States
8,000
1,587,132
3,402,922
Media
1.9%
c
BNP
Paribas
Issuance
BV
into
Comcast
Corp.,
144A,
8%,
1/15/25
United
States
32,000
1,291,839
c
J.P.
Morgan
Structured
Products
BV
into
Comcast
Corp.,
144A,
8%,
9/12/24
......................................
United
States
3,000
121,480
c
JPMorgan
Chase
Bank
NA
into
Comcast
Corp.,
144A,
8.5%,
9/02/25
.........................................
United
States
70,000
2,767,252
4,180,571
Metals
&
Mining
4.2%
c
BNP
Paribas
Issuance
BV
into
Freeport-McMoRan,
Inc.,
144A,
10%,
8/12/25
.....................................
United
States
52,600
2,354,745
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Freeport-McMoRan,
Inc.,
144A,
10%,
5/20/25
............................
United
States
29,000
1,341,074
c
Mizuho
Markets
Cayman
LP
into
Barrick
Gold
Corp.,
144A,
9%,
7/01/25
.........................................
Canada
55,000
1,018,890
c
Mizuho
Markets
Cayman
LP
into
Barrick
Gold
Corp.,
144A,
10%,
8/21/25
.........................................
Canada
50,000
989,181
c
Mizuho
Markets
Cayman
LP
into
Freeport-McMoRan,
Inc.,
144A,
11%,
12/10/24
....................................
United
States
9,600
414,532
c
Royal
Bank
of
Canada
into
Freeport-McMoRan,
Inc.,
144A,
10%,
7/08/25
.........................................
United
States
13,700
639,524
c
UBS
AG
into
Newmont
Corp.,
144A,
11%,
1/16/25
...........
United
States
50,000
2,298,852
9,056,798
Multi-Utilities
0.7%
c
Wells
Fargo
Bank
NA
into
Dominion
Energy,
Inc.,
144A,
9%,
1/10/25
.........................................
United
States
26,000
1,429,856
Oil,
Gas
&
Consumable
Fuels
4.2%
c
BNP
Paribas
Issuance
BV
into
BP
plc,
144A,
8.5%,
5/15/25
....
United
States
48,000
1,667,767
c
BNP
Paribas
Issuance
BV
into
Exxon
Mobil
Corp.,
144A,
8.5%,
4/01/25
.........................................
United
States
9,000
1,060,239
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Exxon
Mobil
Corp.,
144A,
9%,
3/12/25
.................................
United
States
19,000
2,137,996
c
J.P.
Morgan
Structured
Products
BV
into
Exxon
Mobil
Corp.,
144A,
9%,
9/24/24
.................................
United
States
2,300
276,389
c
Royal
Bank
of
Canada
into
Shell
plc,
144A,
8%,
4/28/25
......
United
States
55,000
4,019,703
9,162,094
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
E
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
b
Equity-Linked
Securities
(continued)
Pharmaceuticals
0.8%
c
Mizuho
Markets
Cayman
LP
into
Bristol-Myers
Squibb
Co.,
144A,
9.5%,
5/08/25
....................................
United
States
37,000
$
1,834,515
Semiconductors
&
Semiconductor
Equipment
6.9%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Analog
Devices,
Inc.,
144A,
9%,
7/08/25
.................................
United
States
6,200
1,457,636
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Intel
Corp.,
144A,
10%,
10/03/24
....................................
United
States
1,600
36,758
c
Goldman
Sachs
International
Bank
into
Texas
Instruments,
Inc.,
144A,
9%,
11/10/25
................................
United
States
8,000
1,421,326
c
Mizuho
Markets
Cayman
LP
into
Microchip
Technology,
Inc.,
144A,
10%,
11/12/24
...............................
United
States
9,000
737,820
c
Mizuho
Markets
Cayman
LP
into
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
144A,
10%,
10/22/24
.............
Taiwan
9,000
898,254
c
Morgan
Stanley
Finance
II
Ltd.
into
Microchip
Technology,
Inc.,
144A,
10%,
3/03/25
................................
United
States
11,500
958,178
c
National
Bank
of
Canada
into
Broadcom,
Inc.,
144A,
11.5%,
5/13/25
.........................................
United
States
3,000
4,083,159
c
Royal
Bank
of
Canada
into
Microchip
Technology,
Inc.,
144A,
10%,
4/01/25
.....................................
United
States
16,000
1,373,354
c
Royal
Bank
of
Canada
into
Texas
Instruments,
Inc.,
144A,
8%,
6/11/25
.........................................
United
States
8,000
1,703,526
c
UBS
AG
into
Intel
Corp.,
144A,
10%,
7/29/25
...............
United
States
32,000
787,831
c
Wells
Fargo
Bank
NA
into
Broadcom,
Inc.,
144A,
9.5%,
8/20/25
.
United
States
10,000
1,613,675
15,071,517
Software
3.3%
c
Barclays
Bank
plc
into
Oracle
Corp.,
144A,
8.5%,
2/05/25
.....
United
States
13,000
1,538,129
c
Merrill
Lynch
BV
into
Microsoft
Corp,
144A,
7.5%,
10/06/25
....
United
States
5,000
2,109,102
c
Mizuho
Markets
Cayman
LP
into
Oracle
Corp.,
144A,
8.5%,
2/10/25
.........................................
United
States
7,000
870,463
c
Societe
Generale
SA
into
Workday,
Inc.,
144A,
9%,
11/13/24
...
United
States
7,400
1,813,937
c
UBS
AG
into
Oracle
Corp.,
144A,
9%,
6/10/25
..............
United
States
5,800
778,055
7,109,686
Technology
Hardware,
Storage
&
Peripherals
2.0%
c
Barclays
Bank
plc
into
Dell
Technologies
Inc,
144A,
12%,
9/03/25
United
States
18,000
2,045,844
c
UBS
AG
into
Apple,
Inc.,
144A,
7%,
4/02/25
...............
United
States
12,635
2,418,063
4,463,907
Total
Equity-Linked
Securities
(Cost
$89,944,177)
.............................
94,890,718
Convertible
Preferred
Stocks
5.8%
Chemicals
1.9%
Albemarle
Corp.,
7.25%
..............................
United
States
100,000
4,276,000
Electric
Utilities
3.9%
NextEra
Energy,
Inc.,
7.299%
..........................
United
States
160,000
8,468,800
Total
Convertible
Preferred
Stocks
(Cost
$12,345,531)
.........................
12,744,800
Principal
Amount
*
Corporate
Bonds
1.5%
Tobacco
0.8%
BAT
Capital
Corp.
,
Senior
Bond
,
6.421
%
,
8/02/33
...........
United
Kingdom
1,500,000
1,627,338
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
E
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
See
A
bbreviations
on
page
43
.
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Trading
Companies
&
Distributors
0.7%
c
United
Rentals
North
America,
Inc.
,
Senior
Secured
Note
,
144A,
6
%
,
12/15/29
.....................................
United
States
1,500,000
$
1,535,292
Total
Corporate
Bonds
(Cost
$3,075,477)
.....................................
3,162,630
Total
Long
Term
Investments
(Cost
$196,980,180)
.............................
216,603,254
a
Short
Term
Investments
0.5%
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
0.5%
d,e
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.982%
..
United
States
1,129,213
1,129,213
Total
Money
Market
Funds
(Cost
$1,129,213)
.................................
1,129,213
Total
Short
Term
Investments
(Cost
$1,129,213
)
...............................
1,129,213
a
Total
Investments
(Cost
$198,109,393)
99.9%
.................................
$217,732,467
Options
Written
(0.1)%
(128,000)
Other
Assets,
less
Liabilities
0.2%
...........................................
327,117
Net
Assets
100.0%
.........................................................
$217,931,584
a
a
a
Number
of
Contracts
Notional
Amount
#
f
Options
Written
(0.1)%
Calls
-
Exchange-Traded
Equity
Options
International
Business
Machines
Corp.,
September
Strike
Price
$190.00,
Expires
9/20/24
............................
100
2,021,300
(128,000)
(128,000)
Total
Options
Written
(Premiums
received
$27,282)
...........................
$
(128,000)
#
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.
a
A
portion
or
all
of
the
security
is
held
in
connection
with
written
option
contracts
open
at
year
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
August
31,
2024,
the
aggregate
value
of
these
securities
was
$96,426,010,
representing
44.2%
of
net
assets.
d
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
e
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
f
See
Note
1(d)
regarding
written
options.
Financial
Highlights
Franklin
Templeton
SMACS:
Series
H
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
Year
Ended
August
31,
2024
2023
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$8.86
$9.03
$10.57
$9.75
$10.09
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.48
0.38
0.31
0.32
0.30
Net
realized
and
unrealized
gains
(losses)
...........
0.53
(0.18)
(1.54)
0.82
(0.34)
Total
from
investment
operations
....................
1.01
0.20
(1.23)
1.14
(0.04)
Less
distributions
from:
Net
investment
income
..........................
(0.46)
(0.37)
(0.31)
(0.32)
(0.30)
Net
asset
value,
end
of
year
.......................
$9.41
$8.86
$9.03
$10.57
$9.75
Total
return
....................................
11.79%
2.36%
c
(11.82)%
c
11.88%
c
(0.28)%
c
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.85%
1.88%
2.51%
3.44%
3.91%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
d
—%
—%
d
—%
d
—%
d
Net
investment
income
...........................
5.33%
4.34%
3.14%
3.16%
3.10%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$12,653
$10,059
$3,019
$3,187
$2,941
Portfolio
turnover
rate
............................
42.17%
11.82%
6.89%
5.37%
4.93%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Total
return
excluding
payments
by
Advisers
for
acquired
fund
fees
and
expenses
is
2.25%
for
the
year
ended
August
31,
2023,
(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.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Schedule
of
Investments,
August
31,
2024
Franklin
Templeton
SMACS:
Series
H
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Shares
a
Value
a
Management
Investment
Companies
3.3%
Capital
Markets
3.3%
a
Franklin
Dynamic
Municipal
Bond
ETF
...................................
17,000
$
421,260
Total
Management
Investment
Companies
(Cost
$
403,766
)
.......................
421,260
Principal
Amount
a
a
a
a
Corporate
Bonds
1.9%
Diversified
Consumer
Services
1.9%
Grand
Canyon
University
,
Secured
Note
,
5.125
%
,
10/01/28
....................
$
250,000
231,581
Total
Corporate
Bonds
(Cost
$
228,097
)
........................................
231,581
Municipal
Bonds
91.9%
Alabama
4.1%
Homewood
Educational
Building
Authority
,
CHF
-
Horizons
II
LLC
,
Revenue
,
2024
C
,
5
%
,
10/01/56
.....................................................
300,000
306,537
MidCity
Improvement
District
,
Assessment
Area
,
Special
Assessment
,
2022
,
4.5
%
,
11/01/42
................
150,000
127,653
Assessment
Area
,
Special
Assessment
,
2022
,
4.75
%
,
11/01/49
...............
100,000
84,137
518,327
Arizona
1.2%
b
Sierra
Vista
Industrial
Development
Authority
,
American
Leadership
Academy,
Inc.
,
Revenue
,
144A,
2023
,
5.75
%
,
6/15/58
..................................
150,000
153,836
Arkansas
1.3%
Arkansas
Development
Finance
Authority
,
United
States
Steel
Corp.
,
Revenue
,
2023
,
5.7
%
,
5/01/53
....................................................
150,000
160,058
California
10.0%
c
California
Community
Choice
Financing
Authority
,
Revenue
,
2023
C
,
Mandatory
Put
,
5.25
%
,
10/01/31
...................................................
130,000
139,543
b
California
Community
Housing
Agency
,
Arbors
Apartments
,
Revenue
,
144A,
2020
A
,
5
%
,
8/01/50
....................
125,000
123,208
Aster
Apartments
,
Revenue,
Junior
Lien
,
144A,
2021
A-2
,
4
%
,
2/01/43
..........
130,000
119,904
Fountains
at
Emerald
Park
,
Revenue,
Junior
Lien
,
144A,
2021
A-2
,
4
%
,
8/01/46
...
195,000
169,680
Verdant
at
Green
Valley
Apartments
,
Revenue
,
144A,
2019
A
,
5
%
,
8/01/49
.......
105,000
101,010
b
California
Municipal
Finance
Authority
,
IH
Parkside
Fairfield
LLC
,
Revenue
,
144A,
2023
B
,
Zero
Cpn.,
9/01/43
...............................................
150,000
107,668
b
CMFA
Special
Finance
Agency
,
Solana
at
Grand
,
Revenue,
Junior
Lien
,
144A,
2021
A-2
,
4
%
,
8/01/45
..................................................
100,000
84,921
b
CMFA
Special
Finance
Agency
VIII
,
Elan
Huntington
Beach
,
Revenue,
Junior
Lien
,
144A,
2021
A-2
,
4
%
,
8/01/47
.........................................
125,000
111,349
b
CMFA
Special
Finance
Agency
XII
,
Allure
Apartments
,
Revenue
,
144A,
2022
A-2
,
4.375
%
,
8/01/49
...................................................
100,000
84,596
b
CSCDA
Community
Improvement
Authority
,
Renaissance
at
City
Center
,
Revenue
,
144A,
2020
A
,
5
%
,
7/01/51
.............
110,000
108,711
Waterscape
Apartments
,
Revenue
,
144A,
2021
B
,
4
%
,
9/01/46
................
135,000
115,500
1,266,090
Colorado
0.7%
Colorado
Health
Facilities
Authority
,
Christian
Living
Neighborhoods
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
4
%
,
1/01/38
.................................
100,000
93,591
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
H
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
Florida
22.6%
Avenir
Community
Development
District
,
Parcel
A-18
,
Special
Assessment
,
2024
A
,
6
%
,
5/01/55
......................................................
$
100,000
$
101,898
b
Florida
Development
Finance
Corp.
,
c
AAF
Operations
Holdings
LLC
,
Revenue
,
144A,
2024
,
Refunding
,
Mandatory
Put
,
12
%
,
7/15/28
...................................................
100,000
106,750
Mayflower
Retirement
Center,
Inc.
Obligated
Group
,
Revenue
,
144A,
2021
A
,
Refunding
,
4
%
,
6/01/55
............................................
100,000
75,117
Hammock
Oaks
Community
Development
District
,
Assessment
Area
2
,
Special
Assessment
,
2024
,
5.85
%
,
5/01/44
....................................
125,000
127,980
Kindred
Community
Development
District
II
,
Special
Assessment
,
2021
,
3.125
%
,
5/01/41
.........................................................
100,000
87,867
Lakeside
Preserve
Community
Development
District
,
Special
Assessment
,
2023
,
6.375
%
,
5/01/54
...................................................
100,000
106,449
Marion
Ranch
Community
Development
District
,
Special
Assessment
,
2024
,
5.7
%
,
5/01/44
.........................................................
100,000
102,198
North
AR-1
Pasco
Community
Development
District
,
Assessment
Area
3
,
Special
Assessment
,
2023
,
6
%
,
5/01/54
.......................................
100,000
103,688
North
Loop
Community
Development
District
,
Special
Assessment
,
2023
,
6.625
%
,
5/01/54
.........................................................
130,000
141,343
Palermo
Community
Development
District
,
Special
Assessment
,
2023
,
5
%
,
6/15/43
..
100,000
102,059
Palm
Coast
Park
Community
Development
District
,
Special
Assessment
,
2023
,
5.6
%
,
5/01/53
.........................................................
100,000
103,255
Parker
Pointe
Community
Development
District
,
Special
Assessment
,
2024
,
5.5
%
,
5/01/44
.........................................................
100,000
101,443
Preserve
at
Savannah
Lakes
Community
Development
District
,
Assessment
Area
1
,
Special
Assessment
,
2024
,
5.45
%
,
5/01/44
..............................
100,000
102,491
Prosperity
Lakes
Community
Development
District
,
Assessment
Area
1
,
Special
Assessment
,
2023
,
6.125
%
,
12/15/53
...................................
160,000
169,444
Quail
Roost
Community
Development
District
,
Expansion
Area
,
Special
Assessment
,
2021
,
4
%
,
12/15/51
................................................
70,000
61,335
Ridge
at
Apopka
Community
Development
District
,
Parcel
2
,
Special
Assessment
,
2023
,
5.75
%
,
5/01/53
...............................................
100,000
102,666
River
Hall
Community
Development
District
,
Assessment
Area
4
,
Special
Assessment
,
2023
A
,
6.5
%
,
5/01/54
..............................................
105,000
112,378
Savanna
Lakes
Community
Development
District
,
Assessment
Area
2
,
Special
Assessment
,
2024
,
5.5
%
,
6/15/54
.....................................
135,000
135,844
Sawgrass
Village
Community
Development
District
,
Assessment
Area
1
,
Special
Assessment
,
2023
,
5.75
%
,
5/01/53
...............
100,000
102,735
Assessment
Area
2
,
Special
Assessment
,
2023
,
6.375
%
,
11/01/53
.............
155,000
164,597
b
Seaton
Creek
Reserve
Community
Development
District
,
Assessment
Area
1
,
Special
Assessment
,
144A,
2023
,
5.5
%
,
6/15/53
................................
100,000
103,295
Seminole
Palms
Community
Development
District
,
Special
Assessment
,
2023
,
5.5
%
,
5/01/43
.........................................................
100,000
103,686
Stonegate
Preserve
Community
Development
District
,
Special
Assessment
,
2023
,
6.125
%
,
12/15/53
..................................................
150,000
158,404
Twisted
Oaks
Pointe
Community
Development
District
,
Assessment
Area
1
,
Special
Assessment
,
2023
,
5.375
%
,
5/01/43
..............
100,000
102,461
Assessment
Area
2
,
Special
Assessment
,
2023
,
6.125
%
,
5/01/54
..............
75,000
78,378
Westwood
of
Pasco
Community
Development
District
,
Assessments
,
Special
Assessment
,
2023
,
5.625
%
,
5/01/53
...................................
100,000
103,207
2,860,968
Indiana
1.0%
Indianapolis
Local
Public
Improvement
Bond
Bank
,
Revenue,
Senior
Lien
,
2023
E
,
6.125
%
,
3/01/57
...................................................
110,000
121,661
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
H
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
Iowa
3.0%
Iowa
Finance
Authority
,
Iowa
Fertilizer
Co.
LLC
,
Revenue
,
2022
,
Pre-Refunded
,
5
%
,
12/01/50
..........
$
235,000
$
273,312
Lifespace
Communities,
Inc.
Obligated
Group
,
Revenue
,
2016
A
,
5
%
,
5/15/36
....
100,000
100,526
373,838
Louisiana
4.0%
Calcasieu
Parish
Memorial
Hospital
Service
District
,
Southwest
Louisiana
Healthcare
System
Obligated
Group
,
Revenue
,
2019
,
Refunding
,
5
%
,
12/01/39
............
100,000
98,366
b
Louisiana
Local
Government
Environmental
Facilities
&
Community
Development
Authority
,
Parish
of
St.
Martin
,
Revenue
,
144A,
2019
,
4.4
%
,
11/01/44
...........
135,000
135,861
Louisiana
Public
Facilities
Authority
,
Calcasieu
Bridge
Partners
LLC
,
Revenue,
Senior
Lien
,
2024
,
5.5
%
,
9/01/59
...........................................
255,000
275,557
509,784
Maryland
2.8%
Maryland
Economic
Development
Corp.
,
Morgan
View
&
Thurgood
Marshall
Student
Housing
,
Revenue
,
2020
,
4.25
%
,
7/01/50
................................
170,000
161,215
b
Town
of
La
Plata
,
Heritage
Green
Special
Taxing
District
,
Special
Tax
,
144A,
2023
A
,
6.5
%
,
2/15/53
....................................................
190,000
194,799
356,014
Michigan
0.9%
City
of
Detroit
,
GO
,
2023
C
,
6
%
,
5/01/43
..................................
100,000
115,567
Minnesota
0.8%
City
of
Apple
Valley
,
PHS
Apple
Valley
Senior
Housing,
Inc.
,
Revenue
,
2021
,
4
%
,
9/01/36
.........................................................
105,000
102,650
Nevada
1.6%
Henderson
Local
Improvement
Districts
,
Local
Improvement
District
No.
T-22
,
Special
Assessment
,
2023
,
5.25
%
,
3/01/53
....................................
100,000
100,042
c
State
of
Nevada
Department
of
Business
&
Industry
,
DesertXpress
Enterprises
LLC
,
Revenue
,
2020
A-4
,
Mandatory
Put
,
8.125
%
,
8/15/25
.......................
100,000
100,957
200,999
New
Hampshire
2.1%
New
Hampshire
Business
Finance
Authority
,
Presbyterian
Homes
Obligated
Group
,
Revenue
,
2023
A
,
5.25
%
,
7/01/48
.....................................
250,000
265,458
New
York
4.7%
New
York
Transportation
Development
Corp.
,
Delta
Air
Lines,
Inc.
,
Revenue
,
2020
,
4
%
,
10/01/30
.........................
100,000
100,018
Delta
Air
Lines,
Inc.
,
Revenue
,
2020
,
4.375
%
,
10/01/45
.....................
400,000
385,309
b
Oneida
Indian
Nation
of
New
York
,
Revenue
,
144A,
2024
B
,
6
%
,
9/01/43
..........
100,000
110,190
595,517
Ohio
3.4%
Buckeye
Tobacco
Settlement
Financing
Authority
,
Revenue,
Senior
Lien
,
2020
B-2
,
2
,
Refunding
,
5
%
,
6/01/55
.............................................
200,000
184,121
Ohio
Housing
Finance
Agency
,
Revenue
,
2023
C
,
8
%
,
8/01/34
.................
100,000
103,971
Summit
County
Development
Finance
Authority
,
UAkronPark,
Inc.
,
Revenue
,
2023
,
6
%
,
12/01/58
........................................................
125,000
137,651
425,743
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
H
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
Pennsylvania
1.8%
Berks
County
Industrial
Development
Authority
,
Tower
Health
Obligated
Group
,
Revenue
,
2017
,
Refunding
,
4
%
,
11/01/50
................................
$
115,000
$
83,433
Berks
County
Municipal
Authority
(The)
,
Tower
Health
Obligated
Group
,
Revenue
,
2012
A
,
5
%
,
11/01/44
...................................................
55,000
39,902
Philadelphia
Authority
for
Industrial
Development
,
St.
Joseph's
University
,
Revenue
,
2022
,
5.5
%
,
11/01/60
...............................................
90,000
97,600
220,935
Texas
8.8%
b
Arlington
Higher
Education
Finance
Corp.
,
BASIS
Texas
Charter
Schools,
Inc.
,
Revenue
,
144A,
2024
,
4.875
%
,
6/15/59
.................................
100,000
99,909
b
City
of
Anna
,
Woods
at
Lindsey
Place
(The)
Public
Improvement
District
Area
1
,
Special
Assessment
,
144A,
2023
,
5.875
%
,
9/15/53
.........................
116,000
119,156
b
City
of
Celina
,
Pravin
Public
Improvement
District
,
Special
Assessment
,
144A,
2023
,
6.75
%
,
9/01/53
...................................................
100,000
102,271
b
City
of
Fate
,
Williamsburg
Public
Improvement
District
No.
1
Phase
3B
,
Special
Assessment
,
144A,
2023
,
5.375
%
,
8/15/53
...............................
100,000
101,106
b
City
of
Hutto
,
Emory
Crossing
Public
Improvement
District
Improvement
Area
No.
2
,
Special
Assessment
,
144A,
2023
,
5.625
%
,
9/01/58
.........................
115,000
118,018
b
City
of
Kyle
,
Southwest
Kyle
Public
Improvement
District
No.
1
Improvement
Area
No.
2
,
Special
Assessment
,
144A,
2023
,
6.75
%
,
9/01/48
........................
100,000
106,404
b
City
of
Tomball
,
Raburn
Reserve
Public
Improvement
District
Area
No.
2
,
Special
Assessment
,
144A,
2023
,
5.75
%
,
9/15/52
...............................
112,000
114,366
b
County
of
Hays
,
La
Cima
Public
Improvement
District
,
Special
Assessment
,
144A,
2020
,
3.25
%
,
9/15/30
...............................................
100,000
91,559
New
Hope
Cultural
Education
Facilities
Finance
Corp.
,
NCCD-College
Station
Properties
LLC
,
Revenue
,
A
,
5
%
,
7/01/47
..............
50,000
48,938
Quality
Senior
Housing
Foundation
of
East
Texas,
Inc.
,
Revenue
,
2019
A-1
,
5
%
,
12/01/39
.......................................................
85,000
85,695
Quality
Senior
Housing
Foundation
of
East
Texas,
Inc.
,
Revenue,
Second
Tier
,
2019
B
,
5.5
%
,
12/01/54
................................................
85,000
85,376
Walden
Pond
Fresh
Water
Supply
District
,
GO
,
2022
,
6.25
%
,
9/01/47
............
45,000
46,283
1,119,081
Washington
1.7%
Washington
State
Housing
Finance
Commission
,
Eastside
Retirement
Association
Obligated
Group
,
Revenue
,
2023
A
,
Refunding
,
5
%
,
7/01/48
........................................................
120,000
125,040
b
Presbyterian
Retirement
Communities
Northwest
Obligated
Group
,
Revenue
,
144A,
2019
A
,
5
%
,
1/01/55
..............................................
100,000
88,247
213,287
Wisconsin
4.1%
Public
Finance
Authority
,
b
Friends
Homes
Obligated
Group
,
Revenue
,
144A,
2019
,
Refunding
,
5
%
,
9/01/49
..
125,000
121,015
RED
River
Valley
Alliance
LLC
,
Revenue
,
2021
,
4
%
,
9/30/51
.................
345,000
298,560
Wisconsin
Health
&
Educational
Facilities
Authority
,
PHW
Menomonee
Falls,
Inc.
,
Revenue
,
2024
,
6.125
%
,
10/01/59
.....................................
100,000
103,373
522,948
U.S.
Territories
11.3%
District
of
Columbia
2.0%
District
of
Columbia
,
International
School
Obligated
Group
,
Revenue
,
2019
,
5
%
,
7/01/49
............
140,000
142,739
Plenary
Infrastructure
DC
LLC
,
Revenue
,
2022
A
,
5.5
%
,
8/31/33
..............
100,000
114,668
257,407
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
H
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Principal
Amount
a
Value
a
a
a
a
a
Municipal
Bonds
(continued)
U.S.
Territories
(continued)
Puerto
Rico
9.3%
Commonwealth
of
Puerto
Rico
,
GO
,
2022
A-1
,
4
%
,
7/01/41
..........................................
$
181,382
$
172,396
GO
,
2022
A-1
,
4
%
,
7/01/46
..........................................
314,000
291,560
GDB
Debt
Recovery
Authority
of
Puerto
Rico
,
7.5
%
,
8/20/40
...................
91,798
89,503
Puerto
Rico
Sales
Tax
Financing
Corp.
,
Sales
Tax
,
Revenue
,
A-1
,
5
%
,
7/01/58
.....
622,000
624,751
1,178,210
Total
U.S.
Territories
....................................................................
1,435,617
Total
Municipal
Bonds
(Cost
$
11,085,078
)
......................................
11,631,969
Total
Long
Term
Investments
(Cost
$
11,716,941
)
................................
12,284,810
a
a
a
a
a
a
Total
Investments
(Cost
$
11,716,941
)
97.1
%
....................................
$12,284,810
Other
Assets,
less
Liabilities
2.9
%
.............................................
368,250
Net
Assets
100.0%
...........................................................
$12,653,060
See
A
bbreviations
on
page
43
.
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
August
31,
2024,
the
aggregate
value
of
these
securities
was
$3,068,446,
representing
24.3%
of
net
assets.
c
The
maturity
date
shown
represents
the
mandatory
put
date.
Financial
Highlights
Franklin
Templeton
SMACS:
Series
I
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
Year
Ended
August
31,
2024
2023
2022
2021
2020
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.78
$7.83
$9.73
$8.95
$10.12
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.61
0.64
0.65
0.66
0.64
Net
realized
and
unrealized
gains
(losses)
...........
0.33
(0.07)
(1.85)
0.78
(1.10)
Total
from
investment
operations
....................
0.94
0.57
(1.20)
1.44
(0.46)
Less
distributions
from:
Net
investment
income
..........................
(0.61)
(0.62)
(0.70)
(0.66)
(0.71)
Tax
return
of
capital
............................
—
(—)
c
(—)
c
—
—
Total
distributions
...............................
(0.61)
(0.62)
(0.70)
(0.66)
(0.71)
Net
asset
value,
end
of
year
.......................
$8.11
$7.78
$7.83
$9.73
$8.95
Total
return
....................................
12.71%
7.57%
(12.87)%
16.48%
(4.51)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.08%
0.20%
1.27%
3.10%
3.55%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
—%
—%
d
—%
—%
d
—%
d
Net
investment
income
...........................
7.81%
8.24%
7.72%
7.01%
6.98%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$373,874
$109,051
$19,910
$3,699
$3,506
Portfolio
turnover
rate
............................
16.69%
27.73%
30.22%
32.50%
43.24%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Schedule
of
Investments,
August
31,
2024
Franklin
Templeton
SMACS:
Series
I
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Shares
a
Value
a
Common
Stocks
0.5%
Banks
0.5%
Bank
of
America
Corp.
...............................................
45,000
$
1,833,750
Pharmaceuticals
0.0%
†
a
Endo,
Inc.
.........................................................
4,647
125,469
a
Total
Common
Stocks
(Cost
$
1,322,760
)
.......................................
1,959,219
a
b
Equity-Linked
Securities
2.1%
Banks
0.6%
c
BNP
Paribas
Issuance
BV
into
Bank
of
America
Corp.
,
144A,
8.5
%
,
2/26/25
.......
28,800
1,048,703
c
Royal
Bank
of
Canada
into
Citigroup,
Inc.
,
144A,
10
%
,
10/15/24
................
27,000
1,291,415
2,340,118
Hotels,
Restaurants
&
Leisure
0.4%
c
Wells
Fargo
Bank
NA
into
Starbucks
Corp.
,
144A,
8
%
,
3/04/25
.................
17,500
1,676,810
Insurance
0.3%
c
BNP
Paribas
Issuance
BV
into
MetLife,
Inc.
,
144A,
9
%
,
10/23/24
................
15,000
1,071,302
Metals
&
Mining
0.3%
c
Citigroup
Global
Markets
Holdings,
Inc.
into
Freeport-McMoRan,
Inc.
,
144A,
10
%
,
5/20/25
.........................................................
22,000
1,017,366
Pharmaceuticals
0.5%
c
BNP
Paribas
SA
into
Pfizer,
Inc.
,
144A,
10.5
%
,
7/23/25
.......................
58,000
1,702,853
Total
Equity-Linked
Securities
(Cost
$
7,429,450
)
................................
7,808,449
Principal
Amount
a
a
a
a
Corporate
Bonds
89.8%
Aerospace
&
Defense
2.6%
Boeing
Co.
(The)
,
c
Senior
Bond
,
144A,
6.528
%
,
5/01/34
...................................
$
2,000,000
2,119,538
Senior
Note
,
5.15
%
,
5/01/30
.........................................
99,000
98,783
c
Bombardier,
Inc.
,
Senior
Note
,
144A,
8.75
%
,
11/15/30
........................
1,500,000
1,637,633
c
TransDigm,
Inc.
,
Senior
Secured
Note
,
144A,
6.75
%
,
8/15/28
..............................
1,500,000
1,544,097
Senior
Secured
Note
,
144A,
6.875
%
,
12/15/30
............................
1,500,000
1,567,870
Senior
Secured
Note
,
144A,
6.625
%
,
3/01/32
.............................
2,500,000
2,603,050
9,570,971
Automobile
Components
0.7%
c
Dornoch
Debt
Merger
Sub,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
10/15/29
...........
1,500,000
1,268,990
Goodyear
Tire
&
Rubber
Co.
(The)
,
Senior
Note
,
5.25
%
,
7/15/31
................
1,500,000
1,361,853
2,630,843
Automobiles
1.6%
Ford
Motor
Co.
,
Senior
Bond
,
6.1
%
,
8/19/32
...............................
6,000,000
6,168,729
Banks
2.1%
Bank
of
America
Corp.
,
Sub.
Bond
,
5.425%
to
8/14/34,
FRN
thereafter
,
8/15/35
.....
1,000,000
1,002,549
Barclays
plc
,
Senior
Bond
,
5.746%
to
8/08/32,
FRN
thereafter
,
8/09/33
....................
1,400,000
1,448,772
Senior
Bond
,
6.692%
to
9/12/33,
FRN
thereafter
,
9/13/34
....................
1,500,000
1,645,055
Sub.
Bond
,
7.119%
to
6/26/33,
FRN
thereafter
,
6/27/34
.....................
1,500,000
1,646,717
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Banks
(continued)
Fifth
Third
Bancorp
,
Senior
Note
,
6.339%
to
7/26/28,
FRN
thereafter
,
7/27/29
......
$
350,000
$
368,101
Fifth
Third
Bank
NA
,
Senior
Note
,
5.852%
to
10/26/24,
FRN
thereafter
,
10/27/25
....
250,000
249,998
Wells
Fargo
&
Co.
,
Senior
Bond
,
6.491%
to
10/22/33,
FRN
thereafter
,
10/23/34
.....
1,500,000
1,652,982
8,014,174
Building
Products
1.3%
c
AmeriTex
HoldCo
Intermediate
LLC
,
Senior
Secured
Note
,
144A,
10.25
%
,
10/15/28
.
2,000,000
2,130,270
c
Camelot
Return
Merger
Sub,
Inc.
,
Senior
Secured
Note
,
144A,
8.75
%
,
8/01/28
.....
800,000
794,532
c
EMRLD
Borrower
LP
/
Emerald
Co-Issuer,
Inc.
,
Senior
Secured
Note
,
144A,
6.625
%
,
12/15/30
........................................................
2,000,000
2,050,568
4,975,370
Capital
Markets
0.7%
Charles
Schwab
Corp.
(The)
,
Senior
Note
,
5.643%
to
5/18/28,
FRN
thereafter
,
5/19/29
500,000
517,486
Morgan
Stanley
,
Senior
Bond
,
6.627%
to
10/31/33,
FRN
thereafter
,
11/01/34
..................
1,000,000
1,116,030
Sub.
Bond
,
5.948%
to
1/18/33,
FRN
thereafter
,
1/19/38
.....................
1,000,000
1,036,193
2,669,709
Chemicals
2.1%
Celanese
US
Holdings
LLC
,
Senior
Note
,
6.55
%
,
11/15/30
....................
1,000,000
1,072,888
c
Rain
Carbon,
Inc.
,
Senior
Secured
Note
,
144A,
12.25
%
,
9/01/29
................
2,000,000
2,142,953
c
SCIH
Salt
Holdings,
Inc.
,
Senior
Note
,
144A,
6.625
%
,
5/01/29
....................................
4,000,000
3,831,861
Senior
Secured
Note
,
144A,
4.875
%
,
5/01/28
.............................
1,000,000
953,925
8,001,627
Commercial
Services
&
Supplies
1.6%
c
Allied
Universal
Holdco
LLC
,
Senior
Secured
Note
,
144A,
7.875
%
,
2/15/31
........
1,000,000
1,016,139
c
APX
Group,
Inc.
,
Senior
Secured
Note
,
144A,
6.75
%
,
2/15/27
..................
5,000,000
5,014,950
6,031,089
Communications
Equipment
3.9%
c
CommScope
LLC
,
Senior
Note
,
144A,
8.25
%
,
3/01/27
.....................................
5,000,000
4,183,439
Senior
Secured
Note
,
144A,
6
%
,
3/01/26
................................
4,000,000
3,855,000
c
CommScope
Technologies
LLC
,
Senior
Note
,
144A,
6
%
,
6/15/25
................
7,000,000
6,715,030
14,753,469
Consumer
Finance
1.7%
AerCap
Ireland
Capital
DAC
/
AerCap
Global
Aviation
Trust
,
Senior
Bond
,
5.3
%
,
1/19/34
.........................................................
1,500,000
1,519,903
Ford
Motor
Credit
Co.
LLC
,
Senior
Bond
,
5.113
%
,
5/03/29
........................................
1,000,000
990,423
Senior
Note
,
7.35
%
,
3/06/30
.........................................
3,000,000
3,249,745
c
Macquarie
Airfinance
Holdings
Ltd.
,
Senior
Note
,
144A,
6.4
%
,
3/26/29
............
750,000
781,002
6,541,073
Containers
&
Packaging
5.6%
c
Ardagh
Metal
Packaging
Finance
USA
LLC
/
Ardagh
Metal
Packaging
Finance
plc
,
Senior
Note
,
144A,
4
%
,
9/01/29
.......................................
2,500,000
2,160,926
c
Ardagh
Packaging
Finance
plc
/
Ardagh
Holdings
USA,
Inc.
,
Senior
Note
,
144A,
5.25
%
,
8/15/27
.....................................
9,000,000
5,423,672
Senior
Secured
Note
,
144A,
4.125
%
,
8/15/26
.............................
4,000,000
3,454,963
c
Mauser
Packaging
Solutions
Holding
Co.
,
Secured
Note
,
144A,
9.25
%
,
4/15/27
...................................
6,000,000
6,100,536
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Containers
&
Packaging
(continued)
c
Mauser
Packaging
Solutions
Holding
Co.,
(continued)
Senior
Secured
Note
,
144A,
7.875
%
,
4/15/27
.............................
$
3,500,000
$
3,623,130
20,763,227
Diversified
REITs
0.2%
c
VICI
Properties
LP
/
VICI
Note
Co.,
Inc.
,
Senior
Bond
,
144A,
4.625
%
,
12/01/29
.....
750,000
730,232
Diversified
Telecommunication
Services
1.6%
c
CCO
Holdings
LLC
/
CCO
Holdings
Capital
Corp.
,
Senior
Bond
,
144A,
5.125
%
,
5/01/27
6,000,000
5,885,192
Electric
Utilities
3.6%
c
NRG
Energy,
Inc.
,
Senior
Secured
Bond
,
144A,
7
%
,
3/15/33
...................
3,000,000
3,302,757
Pacific
Gas
and
Electric
Co.
,
Senior
Bond
,
6.4
%
,
6/15/33
.....................
3,000,000
3,207,772
PG&E
Corp.
,
Senior
Secured
Note
,
5
%
,
7/01/28
............................
500,000
490,141
c
Vistra
Operations
Co.
LLC
,
Senior
Note
,
144A,
6.875
%
,
4/15/32
....................................
4,000,000
4,157,372
Senior
Secured
Bond
,
144A,
6.95
%
,
10/15/33
............................
2,000,000
2,223,256
13,381,298
Electrical
Equipment
0.2%
Regal
Rexnord
Corp.
,
Senior
Note
,
6.05
%
,
4/15/28
..........................
750,000
775,308
Energy
Equipment
&
Services
1.2%
c
Weatherford
International
Ltd.
,
Senior
Note
,
144A,
8.625
%
,
4/30/30
..............
4,500,000
4,674,137
Entertainment
0.6%
c
Netflix,
Inc.
,
Senior
Bond
,
144A,
5.375
%
,
11/15/29
..........................
2,000,000
2,088,929
Food
Products
0.9%
JBS
USA
Holding
Lux
SARL
/
JBS
USA
Food
Co.
/
JBS
Lux
Co.
SARL
,
Senior
Note
,
5.75
%
,
4/01/33
...................................................
800,000
819,427
c
Post
Holdings,
Inc.
,
Senior
Bond
,
144A,
5.5
%
,
12/15/29
....................................
500,000
492,515
Senior
Secured
Note
,
144A,
6.25
%
,
2/15/32
..............................
2,000,000
2,053,522
3,365,464
Ground
Transportation
0.2%
c
Ashtead
Capital,
Inc.
,
Senior
Bond
,
144A,
5.95
%
,
10/15/33
....................
750,000
778,621
Health
Care
Equipment
&
Supplies
2.3%
c
Bausch
+
Lomb
Corp.
,
Senior
Secured
Note
,
144A,
8.375
%
,
10/01/28
............
3,000,000
3,154,396
c
Medline
Borrower
LP
,
Senior
Note
,
144A,
5.25
%
,
10/01/29
....................................
3,500,000
3,440,156
Senior
Secured
Note
,
144A,
3.875
%
,
4/01/29
.............................
2,000,000
1,890,746
8,485,298
Health
Care
Providers
&
Services
17.3%
c
CHS/Community
Health
Systems,
Inc.
,
Secured
Note
,
144A,
6.125
%
,
4/01/30
..................................
4,000,000
3,171,060
Senior
Note
,
144A,
6.875
%
,
4/01/28
....................................
4,080,000
3,223,706
Senior
Secured
Note
,
144A,
5.625
%
,
3/15/27
.............................
5,000,000
4,843,360
Senior
Secured
Note
,
144A,
8
%
,
12/15/27
...............................
9,500,000
9,525,517
Senior
Secured
Note
,
144A,
10.875
%
,
1/15/32
............................
9,000,000
9,753,939
CVS
Health
Corp.
,
Senior
Bond
,
5.25
%
,
2/21/33
............................
50,000
50,321
c
DaVita,
Inc.
,
Senior
Bond
,
144A,
3.75
%
,
2/15/31
....................................
6,000,000
5,344,688
Senior
Note
,
144A,
6.875
%
,
9/01/32
....................................
2,000,000
2,047,396
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Health
Care
Providers
&
Services
(continued)
c
Kedrion
SpA
,
Senior
Secured
Note
,
144A,
6.5
%
,
9/01/29
......................
$
1,000,000
$
942,474
c
MPH
Acquisition
Holdings
LLC
,
Senior
Secured
Note
,
144A,
5.5
%
,
9/01/28
........
3,000,000
2,214,455
Tenet
Healthcare
Corp.
,
Senior
Note
,
6.125
%
,
10/01/28
........................................
6,500,000
6,517,972
Senior
Secured
Note
,
6.125
%
,
6/15/30
..................................
6,500,000
6,606,873
Senior
Secured
Note
,
6.75
%
,
5/15/31
...................................
10,000,000
10,377,410
64,619,171
Hotels,
Restaurants
&
Leisure
9.1%
c
Caesars
Entertainment,
Inc.
,
Senior
Note
,
144A,
8.125
%
,
7/01/27
....................................
4,000,000
4,087,620
Senior
Note
,
144A,
4.625
%
,
10/15/29
...................................
1,000,000
946,534
Senior
Secured
Note
,
144A,
7
%
,
2/15/30
................................
1,500,000
1,554,492
c
Carnival
Corp.
,
Senior
Note
,
144A,
10.5
%
,
6/01/30
..........................
8,500,000
9,232,020
c
Fertitta
Entertainment
LLC
/
Fertitta
Entertainment
Finance
Co.,
Inc.
,
Senior
Note
,
144A,
6.75
%
,
1/15/30
.....................................
4,000,000
3,601,993
Senior
Secured
Note
,
144A,
4.625
%
,
1/15/29
.............................
1,000,000
936,198
c
Royal
Caribbean
Cruises
Ltd.
,
Senior
Note
,
144A,
5.5
%
,
4/01/28
................
1,000,000
1,008,348
c
Wynn
Las
Vegas
LLC
/
Wynn
Las
Vegas
Capital
Corp.
,
Senior
Bond
,
144A,
5.25
%
,
5/15/27
.........................................................
6,500,000
6,460,832
c
Wynn
Macau
Ltd.
,
Senior
Note
,
144A,
5.625
%
,
8/26/28
.......................
2,500,000
2,390,094
c
Wynn
Resorts
Finance
LLC
/
Wynn
Resorts
Capital
Corp.
,
Senior
Note
,
144A,
7.125
%
,
2/15/31
.........................................................
3,500,000
3,716,856
33,934,987
Household
Durables
0.4%
Shea
Homes
LP
/
Shea
Homes
Funding
Corp.
,
Senior
Note
,
4.75
%
,
4/01/29
.......
1,500,000
1,450,440
Household
Products
0.4%
c
Energizer
Holdings,
Inc.
,
Senior
Note
,
144A,
6.5
%
,
12/31/27
...................
1,500,000
1,522,086
Independent
Power
and
Renewable
Electricity
Producers
3.2%
c
Calpine
Corp.
,
Senior
Note
,
144A,
4.625
%
,
2/01/29
..........................
6,000,000
5,727,943
c
,d
Vistra
Corp.
,
Junior
Sub.
Bond
,
144A,
8%
to
10/14/26,
FRN
thereafter
,
Perpetual
....
6,000,000
6,209,226
11,937,169
Machinery
0.1%
c
TK
Elevator
US
Newco,
Inc.
,
Senior
Secured
Note
,
144A,
5.25
%
,
7/15/27
.........
200,000
197,042
Media
1.8%
c
Clear
Channel
Outdoor
Holdings,
Inc.
,
Senior
Note
,
144A,
7.5
%
,
6/01/29
.....................................
300,000
253,191
Senior
Secured
Note
,
144A,
5.125
%
,
8/15/27
.............................
1,000,000
977,722
Senior
Secured
Note
,
144A,
9
%
,
9/15/28
................................
2,000,000
2,127,786
c
Stagwell
Global
LLC
,
Senior
Note
,
144A,
5.625
%
,
8/15/29
.....................
200,000
189,769
c
Univision
Communications,
Inc.
,
Senior
Secured
Note
,
144A,
6.625
%
,
6/01/27
.....
3,250,000
3,219,767
6,768,235
Metals
&
Mining
2.1%
c
Alcoa
Nederland
Holding
BV
,
Senior
Note
,
144A,
4.125
%
,
3/31/29
...............
750,000
715,303
ArcelorMittal
SA
,
Senior
Bond
,
6.8
%
,
11/29/32
..............................
1,500,000
1,642,701
c
Cleveland-Cliffs,
Inc.
,
Senior
Bond
,
144A,
4.875
%
,
3/01/31
....................
150,000
137,904
c
FMG
Resources
August
2006
Pty.
Ltd.
,
Senior
Bond
,
144A,
4.375
%
,
4/01/31
...................................
800,000
734,685
Senior
Bond
,
144A,
6.125
%
,
4/15/32
...................................
4,000,000
3,999,176
c
Mineral
Resources
Ltd.
,
Senior
Note
,
144A,
8.5
%
,
5/01/30
....................
550,000
572,421
7,802,190
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Oil,
Gas
&
Consumable
Fuels
7.1%
c
Calumet
Specialty
Products
Partners
LP
/
Calumet
Finance
Corp.
,
Senior
Note
,
144A,
11
%
,
4/15/25
......................................
$
880,000
$
884,250
Senior
Note
,
144A,
8.125
%
,
1/15/27
....................................
4,000,000
3,873,798
Senior
Note
,
144A,
9.75
%
,
7/15/28
.....................................
3,000,000
2,952,124
Senior
Secured
Note
,
144A,
9.25
%
,
7/15/29
..............................
3,000,000
3,092,460
Cheniere
Corpus
Christi
Holdings
LLC
,
Senior
Secured
Note
,
3.7
%
,
11/15/29
......
1,500,000
1,428,241
c
CITGO
Petroleum
Corp.
,
Senior
Secured
Note
,
144A,
7
%
,
6/15/25
................................
300,000
300,742
Senior
Secured
Note
,
144A,
6.375
%
,
6/15/26
.............................
1,000,000
1,008,432
c
Civitas
Resources,
Inc.
,
Senior
Note
,
144A,
8.75
%
,
7/01/31
....................
750,000
810,320
Energy
Transfer
LP
,
Senior
Bond
,
6.55
%
,
12/01/33
..........................
500,000
547,133
c
Hilcorp
Energy
I
LP
/
Hilcorp
Finance
Co.
,
Senior
Note
,
144A,
6
%
,
4/15/30
........
1,000,000
995,484
Kinder
Morgan,
Inc.
,
Senior
Bond
,
5.2
%
,
6/01/33
............................
1,500,000
1,504,281
c
Matador
Resources
Co.
,
Senior
Note
,
144A,
6.5
%
,
4/15/32
....................
1,000,000
1,015,665
Occidental
Petroleum
Corp.
,
Senior
Note
,
8.875
%
,
7/15/30
....................
2,500,000
2,950,460
c
Venture
Global
LNG,
Inc.
,
Senior
Secured
Note
,
144A,
8.125
%
,
6/01/28
..........
3,000,000
3,143,976
Williams
Cos.,
Inc.
(The)
,
Senior
Bond
,
5.65
%
,
3/15/33
.......................
2,000,000
2,078,244
26,585,610
Passenger
Airlines
6.7%
c
,e
American
Airlines
Group,
Inc.
,
Senior
Secured
Note
,
144A,
PIK,
10.75
%
,
2/15/26
...
5,000,000
5,257,615
c
American
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
8.5
%
,
5/15/29
..............
3,000,000
3,120,858
American
Airlines,
Inc.
/
AAdvantage
Loyalty
IP
Ltd.
,
c
Senior
Secured
Note
,
144A,
5.5
%
,
4/20/26
...............................
2,333,333
2,323,105
c
Delta
Air
Lines,
Inc.
/
SkyMiles
IP
Ltd.
,
Senior
Secured
Note
,
144A,
4.75
%
,
10/20/28
.
5,500,000
5,448,517
c
JetBlue
Airways
Corp.
/
JetBlue
Loyalty
LP
,
Senior
Secured
Note
,
144A,
9.875
%
,
9/20/31
.........................................................
3,000,000
2,966,986
c
Mileage
Plus
Holdings
LLC
/
Mileage
Plus
Intellectual
Property
Assets
Ltd.
,
Senior
Secured
Note
,
144A,
6.5
%
,
6/20/27
....................................
2,100,000
2,120,884
c
United
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
4.625
%
,
4/15/29
...............
4,000,000
3,810,323
25,048,288
Pharmaceuticals
3.6%
c
1375209
BC
Ltd.
,
Senior
Secured
Note
,
144A,
9
%
,
1/30/28
....................
7,000,000
6,816,907
c
Bausch
Health
Cos.,
Inc.
,
Senior
Secured
Note
,
144A,
5.5
%
,
11/01/25
............
3,000,000
2,891,250
c
Endo
Finance
Holdings,
Inc.
,
Senior
Secured
Note
,
144A,
8.5
%
,
4/15/31
..........
2,000,000
2,126,061
Teva
Pharmaceutical
Finance
Netherlands
III
BV
,
Senior
Note
,
8.125
%
,
9/15/31
....
1,500,000
1,718,472
13,552,690
Semiconductors
&
Semiconductor
Equipment
0.1%
Micron
Technology,
Inc.
,
Senior
Bond
,
5.875
%
,
2/09/33
.......................
200,000
210,567
Software
1.1%
c
Cloud
Software
Group,
Inc.
,
Senior
Secured
Note
,
144A,
6.5
%
,
3/31/29
...........
2,000,000
1,972,878
c
McAfee
Corp.
,
Senior
Note
,
144A,
7.375
%
,
2/15/30
..........................
2,000,000
1,920,245
Workday,
Inc.
,
Senior
Bond
,
3.8
%
,
4/01/32
................................
150,000
140,791
4,033,914
Specialized
REITs
0.1%
American
Tower
Corp.
,
Senior
Note
,
4.05
%
,
3/15/32
.........................
250,000
236,861
Specialty
Retail
0.0%
†
Lowe's
Cos.,
Inc.
,
Senior
Bond
,
5
%
,
4/15/33
...............................
60,000
61,033
Technology
Hardware,
Storage
&
Peripherals
0.0%
†
HP,
Inc.
,
Senior
Bond
,
5.5
%
,
1/15/33
.....................................
99,000
102,438
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
a
a
Principal
Amount
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Textiles,
Apparel
&
Luxury
Goods
0.6%
c
Hanesbrands,
Inc.
,
Senior
Note
,
144A,
9
%
,
2/15/31
..........................
$
2,000,000
$
2,152,172
Tobacco
1.0%
BAT
Capital
Corp.
,
Senior
Bond
,
7.75
%
,
10/19/32
........................................
500,000
584,154
Senior
Bond
,
6.421
%
,
8/02/33
........................................
2,000,000
2,169,783
Senior
Note
,
3.557
%
,
8/15/27
.........................................
950,000
926,928
3,680,865
Trading
Companies
&
Distributors
0.4%
c
United
Rentals
North
America,
Inc.
,
Senior
Secured
Note
,
144A,
6
%
,
12/15/29
.....
1,500,000
1,535,292
Total
Corporate
Bonds
(Cost
$
324,240,347
)
.....................................
335,715,810
Mortgage-Backed
Securities
4.9%
Federal
Home
Loan
Mortgage
Corp.
(FHLMC)
Fixed
Rate
3.1%
FHLMC
Pool,
30
Year
,
5
%,
5/01/53
......................................
1,670,102
1,659,457
FHLMC
Pool,
30
Year
,
5.5
%,
7/01/53
.....................................
6,206,445
6,253,399
FHLMC
Pool,
30
Year
,
5.5
%,
11/01/53
....................................
851,021
857,053
FHLMC
Pool,
30
Year
,
6
%,
6/01/53
......................................
2,839,481
2,893,666
11,663,575
Federal
National
Mortgage
Association
(FNMA)
Fixed
Rate
1.8%
FNMA,
30
Year
,
5
%,
5/01/53
...........................................
1,668,630
1,657,994
FNMA,
30
Year
,
5
%,
11/01/53
..........................................
5,057,036
5,022,355
6,680,349
Total
Mortgage-Backed
Securities
(Cost
$
17,966,181
)
............................
18,343,924
Shares
Escrows
and
Litigation
Trusts
0.0%
a
,f
Par
Pharmaceutical,
Inc.,
Escrow
Account
.................................
300,000
—
Total
Escrows
and
Litigation
Trusts
(Cost
$
–
)
...................................
—
Total
Long
Term
Investments
(Cost
$
350,958,738
)
...............................
363,827,402
a
a
a
a
a
Short
Term
Investments
0.6%
a
Money
Market
Funds
0.6%
g,h
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio
,
4.982
%
..................
2,116,283
2,116,283
Total
Money
Market
Funds
(Cost
$
2,116,283
)
...................................
2,116,283
Total
Short
Term
Investments
(Cost
$
2,116,283
)
.................................
2,116,283
a
Total
Investments
(Cost
$
353,075,021
)
97.9
%
...................................
$365,943,685
Other
Assets,
less
Liabilities
2.1
%
.............................................
7,930,621
Net
Assets
100.0%
...........................................................
$373,874,306
Franklin
Strategic
Series
Schedule
of
Investments
Franklin
Templeton
SMACS:
Series
I
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
At
August
31,
2024
,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1
(
d
).
See
Note
9
regarding
other
derivative
information.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Non-income
producing.
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
August
31,
2024,
the
aggregate
value
of
these
securities
was
$271,780,301,
representing
72.7%
of
net
assets.
d
Perpetual
security
with
no
stated
maturity
date.
e
Income
may
be
received
in
additional
securities
and/or
cash.
f
Fair
valued
using
significant
unobservable
inputs.
See
Note
11
regarding
fair
value
measurements.
g
See
Note
3(d)
regarding
investments
in
affiliated
management
investment
companies.
h
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
Ultra
Bonds
......................
Long
100
$
13,193,750
12/19/24
$
(
225,182
)
Total
Futures
Contracts
......................................................................
$(225,182)
*As
of
period
end.
See
Abbreviations
on
page
43
.
Franklin
Strategic
Series
Financial
Statements
Statements
of
Assets
and
Liabilities
August
31,
2024
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
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
................
$21,090,799
$196,980,180
$11,313,175
$350,958,738
Cost
-
Non-controlled
affiliates
(Note
3
d
)
.....
—
1,129,213
403,766
2,116,283
Value
-
Unaffiliated
issuers
...............
$22,648,587
$216,603,254
$11,863,550
$363,827,402
Value
-
Non-controlled
affiliates
(Note
3
d
)
....
—
1,129,213
421,260
2,116,283
Cash
.................................
11,610
—
80,704
—
Receivables:
Capital
shares
sold
.....................
—
769,403
183,667
1,421,302
Dividends
and
interest
..................
471,177
675,337
160,831
6,087,702
Affiliates
.............................
10,890
22,639
10,579
40,691
Deposits
with
brokers
for:
Futures
contracts
.....................
—
—
—
550,000
Total
assets
.......................
23,142,264
219,199,846
12,720,591
374,043,380
Liabilities:
Payables:
Investment
securities
purchased
...........
101,966
1,107,788
—
—
Capital
shares
redeemed
................
16,576
18,015
1,863
36,998
Transfer
agent
fees
.....................
399
5,774
618
9,175
Professional
fees
......................
7,822
5,982
7,873
16,536
Trustees'
fees
and
expenses
..............
6
—
2
3
Distributions
to
shareholders
..............
101,444
129
53,684
296
Variation
margin
on
futures
contracts
........
—
—
—
103,125
Options
written,
at
value
(premiums
received
$
–
,
$
27,282
,
$
–
and
$
–
,
respectively)
............
—
128,000
—
—
Accrued
expenses
and
other
liabilities
........
4,547
2,574
3,491
2,941
Total
liabilities
......................
232,760
1,268,262
67,531
169,074
Net
assets,
at
value
..............
$22,909,504
$217,931,584
$12,653,060
$373,874,306
Net
assets
consist
of:
Paid-in
capital
..........................
$21,438,511
$200,145,051
$12,275,719
$361,980,930
Total
distributable
earnings
(losses)
..........
1,470,993
17,786,533
377,341
11,893,376
Net
assets,
at
value
..............
$22,909,504
$217,931,584
$12,653,060
$373,874,306
Shares
outstanding
......................
2,558,178
17,061,773
1,344,906
46,118,973
Net
asset
value
per
share
a
.................
$8.96
$12.77
$9.41
$8.11
a
Net
asset
value
per
share
may
not
recalculate
due
to
rounding.
Franklin
Strategic
Series
Financial
Statements
Statements
of
Operations
for
the
year
ended
August
31,
2024
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
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
$–,
$130,876,
$–
and
$–,
respectively)
Unaffiliated
issuers
.....................
$—
$3,730,311
$—
$32,400
Non-controlled
affiliates
(Note
3
d
)
..........
—
123,246
33,584
195,879
Interest:
Unaffiliated
issuers
.....................
1,008,621
354,855
580,063
18,366,115
Other
income
a
..........................
—
8,603
2,402
13,260
Total
investment
income
................
1,008,621
4,217,015
616,049
18,607,654
Expenses:
Transfer
agent
fees
(Note
3
c
)
...............
2,545
29,582
1,953
46,959
Custodian
fees
(Note
4
)
...................
944
—
972
—
Reports
to
shareholders
fees
...............
2,163
2,122
1,509
2,114
Registration
and
filing
fees
.................
21,718
33,405
22,012
46,580
Professional
fees
........................
55,115
51,337
53,185
78,344
Trustees'
fees
and
expenses
...............
452
1,561
382
2,547
Pricing
fees
............................
7,479
7,967
12,660
5,067
Other
.................................
5,326
6,153
5,247
8,296
Total
expenses
......................
95,742
132,127
97,920
189,907
Expense
reductions
(Note
4
)
............
(22)
—
(30)
—
Expenses
waived/paid
by
affiliates
(Note
3
d
and
3
e
)
...........................
(95,720)
(132,127)
(97,890)
(189,907)
Net
expenses
......................
—
—
—
—
Net
investment
income
.............
1,008,621
4,217,015
616,049
18,607,654
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
...................
113,039
3,609,672
(90,061)
553,817
Non-controlled
affiliates
(Note
3
d
)
........
—
—
(38,864)
—
Written
options
........................
—
(110,227)
—
—
Foreign
currency
transactions
.............
—
(9,332)
—
—
Futures
contracts
......................
—
—
—
1,695,997
Net
realized
gain
(loss)
...............
113,039
3,490,113
(128,925)
2,249,814
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
...................
1,841,890
18,315,733
811,623
12,998,045
Non-controlled
affiliates
(Note
3
d
)
........
—
—
80,925
—
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
........
—
2,206
—
—
Written
options
........................
—
(96,685)
—
—
Futures
contracts
......................
—
—
—
(539,183)
Net
change
in
unrealized
appreciation
(depreciation)
......................
1,841,890
18,221,254
892,548
12,458,862
Net
realized
and
unrealized
gain
(loss)
.........
1,954,929
21,711,367
763,623
14,708,676
Net
increase
(decrease)
in
net
assets
resulting
from
operations
...............................
$2,963,550
$25,928,382
$1,379,672
$33,316,330
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
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Year
Ended
August
31,
2024
Year
Ended
August
31,
2023
Year
Ended
August
31,
2024
Year
Ended
August
31,
2023
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$1,008,621
$140,568
$4,217,015
$1,119,443
Net
realized
gain
(loss)
............
113,039
(188,037)
3,490,113
527,589
Net
change
in
unrealized
appreciation
(depreciation)
.................
1,841,890
60,122
18,221,254
1,429,417
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
2,963,550
12,653
25,928,382
3,076,449
Distributions
to
shareholders
.........
(999,563)
(143,020)
(8,954,982)
(2,405,013)
Distributions
to
shareholders
from
tax
return
of
capital
..................
—
—
—
(13,510)
Total
distributions
to
shareholders
.....
(999,563)
(143,020)
(8,954,982)
(2,418,523)
Capital
share
transactions
(Note
2
)
.....
17,047,897
1,070,558
138,966,409
48,470,400
Net
increase
(decrease)
in
net
assets
.....................
19,011,884
940,191
155,939,809
49,128,326
Net
assets:
Beginning
of
year
..................
3,897,620
2,957,429
61,991,775
12,863,449
End
of
year
......................
$22,909,504
$3,897,620
$217,931,584
$61,991,775
Franklin
Strategic
Series
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Year
Ended
August
31,
2024
Year
Ended
August
31,
2023
Year
Ended
August
31,
2024
Year
Ended
August
31,
2023
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$616,049
$173,976
$18,607,654
$4,285,289
Net
realized
gain
(loss)
............
(128,925)
(54,946)
2,249,814
(1,852,936)
Net
change
in
unrealized
appreciation
(depreciation)
.................
892,548
(23,870)
12,458,862
1,597,840
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
1,379,672
95,160
33,316,330
4,030,193
Distributions
to
shareholders
.........
(591,419)
(173,185)
(19,258,918)
(4,306,631)
Distributions
to
shareholders
from
tax
return
of
capital
..................
—
—
—
(9,367)
Total
distributions
to
shareholders
.....
(591,419)
(173,185)
(19,258,918)
(4,315,998)
Capital
share
transactions
(Note
2
)
.....
1,805,810
7,118,274
250,765,768
89,426,896
Net
increase
(decrease)
in
net
assets
.....................
2,594,063
7,040,249
264,823,180
89,141,091
Net
assets:
Beginning
of
year
..................
10,058,997
3,018,748
109,051,126
19,910,035
End
of
year
......................
$12,653,060
$10,058,997
$373,874,306
$109,051,126
Notes
to
Financial
Statements
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 Funds
follow
the
accounting
and
reporting
guidance
in
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standards
Codification
Topic
946,
Financial
Services
–
Investment
Companies
(ASC
946)
and
apply
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
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Funds'
business
day.
Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Funds'
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Funds'
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2024,
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
When-Issued,
Forward
Commitment or
Delayed
Delivery
Basis
Certain
or
all
Funds
may
purchase
securities
on
a
when-
issued,
forward
commitment
or
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
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.
At
August
31,
2024,
Franklin
Templeton
SMACS:
Series
CH,
Franklin
Templeton
SMACS:
Series
E
and
Franklin
Templeton
SMACS:
Series
H
had
no
futures
contracts.
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.
At
August
31,
2024
, Franklin
Templeton
SMACS:
Series
CH,
Franklin
Templeton
SMACS:
Series
H
and
Franklin
Templeton
SMACS:
Series
I
had
no
option
contracts.
See
Note
9 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
August
31,
2024, each
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests.
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Derivative
Financial
Instruments
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
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
(including
interest
income
from
payment-in-kind
securities,
if
any)
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Paydown
gains
and
losses
are
recorded as
an
adjustment
to
interest
income.
Dividend
income
is
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
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.
1.
Organization
and
Significant
Accounting
Policies
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
2.
Shares
of
Beneficial
Interest
At
August
31,
2024,
there
were
an
unlimited
number
of
shares
authorized
(without
par value).
Transactions
in
the
Funds'
shares
were
as
follows:
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.
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Shares
Amount
Shares
Amount
Class
A
Year
ended
August
31,
2024
Shares
sold
...................................
2,515,268
$20,611,055
13,297,447
$158,010,193
Shares
redeemed
...............................
(414,471)
(3,563,158)
(1,599,105)
(19,043,784)
Net
increase
(decrease)
..........................
2,100,797
$17,047,897
11,698,342
$138,966,409
Year
ended
August
31,
2023
Shares
sold
...................................
233,719
$2,028,783
4,860,019
$55,681,889
Shares
issued
in
reinvestment
of
distributions
..........
343
2,864
15,103
174,229
Shares
redeemed
...............................
(110,936)
(961,089)
(650,882)
(7,385,718)
Net
increase
(decrease)
..........................
123,126
$1,070,558
4,224,240
$48,470,400
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Shares
Amount
Shares
Amount
Class
A
Year
ended
August
31,
2024
Shares
sold
...................................
743,279
$6,665,954
36,341,570
$283,974,624
Shares
redeemed
...............................
(533,815)
(4,860,144)
(4,247,905)
(33,208,856)
Net
increase
(decrease)
..........................
209,464
$1,805,810
32,093,665
$250,765,768
Year
ended
August
31,
2023
Shares
sold
...................................
800,313
$7,112,553
12,772,496
$99,507,840
Shares
issued
in
reinvestment
of
distributions
..........
662
5,721
35,418
274,618
Shares
redeemed
...............................
—
—
(1,324,698)
(10,355,562)
Net
increase
(decrease)
..........................
800,975
$7,118,274
11,483,216
$89,426,896
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
Franklin
Strategic
Series
Notes
to
Financial
Statements
b.
Administrative
Fees
Under
an
agreement
with
Advisers,
FT
Services
provides
administrative
services
to
the
Funds
and
is
not
paid
by
the
Funds
for
the services.
c.
Transfer
Agent
Fees
The
Funds pay
transfer
agent
fees,
calculated
monthly
and
paid
monthly, to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations. Effective
October
1,
2023,
the
fees
are based
on
a
fixed
margin
earned
by
Investor
Services
and
are allocated
to
the Funds
based
upon
relative
assets
and
relative
transactions.
Prior
to
October
1,
2023,
the
fees
were
based
on
an
annualized
asset
based
fee
of
0.016%
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
year
ended
August
31,
2024,
the Funds
paid
transfer
agent
fees
as
noted
in
the
Statements of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
d.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
in
one
or
more
affiliated
management
investment
companies.
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. Advisers
has
contractually
agreed
to
reimburse
expenses
of
the
Funds
in
an
amount
equal
to
fees
indirectly
borne
by
the
Funds
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations.
During
the year
ended
August
31,
2024,
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
........................
$2,545
$29,582
$1,919
$45,711
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Franklin
Templeton
SMACS:
Series
E
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.982%
$1,232,610
$111,020,662
$(111,124,059)
$—
$—
$1,129,213
1,129,213
$123,246
Total
Affiliated
Securities
...
$1,232,610
$111,020,662
$(111,124,059)
$—
$—
$1,129,213
$123,246
Franklin
Templeton
SMACS:
Series
H
Non-Controlled
Affiliates
Dividends
Franklin
Dynamic
Municipal
Bond
ETF
...................
$823,989
$355,454
$(800,244)
$(38,864)
$80,925
$421,260
17,000
$33,584
Total
Affiliated
Securities
...
$823,989
$355,454
$(800,244)
$(38,864)
$80,925
$421,260
$33,584
3.
Transactions
with
Affiliates
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
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
of
each
class
until
December
31,
2024.
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 year
ended
August
31,
2024,
are
reflected
as
other
income
in
the
Statements
of
Operations.
f.
Other
Affiliated
Transactions
At
August
31,
2024,
Franklin
Resources,
Inc.
owned
a
percentage
of
the
Funds’
outstanding
shares
as
follows:
g.
Interfund
Transactions
Certain
or
all
Funds
engaged
in
purchases
and
sales
of
investments
with
funds
or
other
accounts
that
have
common
investment
managers
(or
affiliated
investment
managers),
directors,
trustees
or
officers.
These
purchases,
sales
and
the
related
net
realized
gains
(losses),
if
any,
for
the
year
ended
August
31,
2024,
were
as
follows:
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
Franklin
Templeton
SMACS:
Series
I
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.982%
$2,191,463
$180,976,470
$(181,051,650)
$—
$—
$2,116,283
2,116,283
$195,879
Total
Affiliated
Securities
...
$2,191,463
$180,976,470
$(181,051,650)
$—
$—
$2,116,283
$195,879
Shares
Percentage
of
Outstanding
Shares
Franklin
Templeton
SMACS:
Series
CH
Franklin
Resources,
Inc.
158,482
6.2%
Franklin
Templeton
SMACS:
Series
H
Franklin
Resources,
Inc.
246,703
18.3%
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
H
Purchases
..............................
$10,410,717
$4,455,000
Sales
..................................
$5,775,000
$4,155,000
Net
Realized
Gains
(Losses)
.................
$—
$—
3.
Transactions
with
Affiliates
(continued)
d.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
4.
Expense
Offset
Arrangement
Franklin
Templeton
SMACS:
Series
CH
and
Franklin
Templeton
SMACS:
Series
H
have
entered
into
an
arrangement
with
their
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Funds'
custodian
expenses.
During
the
year
ended
August
31,
2024,
the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
5.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
August
31,
2024,
the
capital
loss
carryforwards
were
as
follows:
During
the
year
ended August
31,
2024,
the
utilized
capital
loss
carryforwards
were
as
follows:
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2024
and
2023
,
was
as
follows:
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
.............................
$
—
$
792,255
$
20,097
$
643,984
Long
term
.............................
92,656
—
176,901
—
Total
capital
loss
carryforwards
............
$92,656
$792,255
$196,998
$643,984
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Capital
loss
utilized
carryforwards
....
$114,584
$1,780
$1,311,108
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
2024
2023
2024
2023
Distributions
paid
from:
Ordinary
income
........................
$15,566
$147
$8,954,982
$2,057,469
Tax
exempt
income
......................
983,997
142,873
—
—
Long
term
capital
gain
....................
—
—
—
347,544
Return
of
capital
.........................
—
—
—
13,510
$999,563
$143,020
$8,954,982
$2,418,523
Franklin
Strategic
Series
Notes
to
Financial
Statements
At
August
31,
2024,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation),
undistributed
tax
exempt
income
and
undistributed
ordinary
income 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,
derivative
financial
instruments
and
equity-linked
securities.
6.
Investment
Transactions
Purchases
and
sales
of
investments
and
ETFs
(excluding
short
term
securities)
for
the
year
ended
August
31,
2024,
were
as
follows:
7.
Credit
Risk
and
Defaulted
Securities
At
August
31,
2024, 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
H
Franklin
Templeton
SMACS:
Series
I
2024
2023
2024
2023
Distributions
paid
from:
Ordinary
income
........................
$18,417
$1,660
$19,258,918
$4,306,631
Tax
exempt
income
......................
573,002
171,525
—
—
Return
of
capital
.........................
—
—
—
9,367
$591,419
$173,185
$19,258,918
$4,315,998
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
.......................
$21,088,635
$199,027,950
$11,702,864
$353,202,346
Unrealized
appreciation
.....................
$1,705,787
$20,908,202
$653,518
$15,009,824
Unrealized
depreciation
.....................
(145,835)
(2,331,685)
(71,572)
(2,493,667)
Net
unrealized
appreciation
(depreciation)
.......
$1,559,952
$18,576,517
$581,946
$12,516,157
Distributable
earnings:
Undistributed
ordinary
income
................
$—
$—
$—
$21,499
Undistributed
tax
exempt
income
..............
105,141
—
46,079
—
Total
distributable
earnings
..................
$105,141
$—
$46,079
$21,499
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Purchases
..............................
$24,411,026
$262,657,272
$7,395,324
$279,603,070
Sales
..................................
$7,099,552
$124,982,523
$4,726,264
$38,505,250
Franklin
Strategic
Series
Notes
to
Financial
Statements
Franklin
Templeton
SMACS:
Series
CH held
a defaulted
security
and/or
other
securities
for
which
the
income
has
been
deemed
uncollectible.
At
August
31,
2024,
the
value
of
this
security represents
less
than
0.1% of
the
Fund's net
assets.
The
Fund
discontinues
accruing
income
on
securities
for
which
income
has
been
deemed
uncollectible
and
provides
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
and
U.S.
territories.
Such
concentration
may
subject
the
Fund
to
risks
associated
with
industrial
or
regional
matters,
and
economic,
political
or
legal
developments
occurring
within California
and
U.S.
territories. 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.
Other
Derivative
Information
At
August
31,
2024,
investments
in
derivative
contracts
are
reflected
in
the
Statements
of
Assets
and
Liabilities
as
follows:
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
year
end
is
separately
reported
within
the
Statements
of
Assets
and
Liabilities.
Prior
variation
margin
movements
were
recorded
to
cash
upon
receipt
or
payment.
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
Credit
risk
.....................................
59.3%
48.3%
74.2%
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
$
128,000
Total
....................
$—
$128,000
Franklin
Templeton
SMACS:
Series
I
Interest
rate
contracts
.......
Variation
margin
on
futures
contracts
—
Variation
margin
on
futures
contracts
225,182
a
Total
....................
$—
$225,182
7.
Credit
Risk
and
Defaulted
Securities
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
For
the
year
ended
August
31,
2024,
the
effect
of
derivative
contracts
in
the
Statements
of
Operations
was
as
follows:
For
the
year
ended
August
31,
2024,
the
average
month
end
notional
amount
of
futures
contracts
and
options
were
as
follows:
See
Note
1(d) regarding
derivative
financial
instruments.
10.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
January
31,
2025.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Funds
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Funds
and
other
costs
incurred
by
the
Funds,
pay
their
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
their
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statements
of
Operations.
During
the
year ended
August
31,
2024,
the
Funds
did
not
use
the
Global
Credit
Facility.
11.
Fair
Value
Measurements
The Funds
follow
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Funds'
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the Funds' financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Franklin
Templeton
SMACS:
Series
E
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Equity
contracts
..............
Written
options
$(110,227)
Written
options
$(96,685)
Total
.......................
$(110,227)
$(96,685)
Franklin
Templeton
SMACS:
Series
I
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Interest
rate
contracts
..........
Futures
contracts
1,695,997
Futures
contracts
(539,183)
Total
.......................
$1,695,997
$(539,183)
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
I
Futures
contracts
..........................
$
–
$
28,086,012
Options
..................................
45,115
–
9.
Other
Derivative
Information
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
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
August
31,
2024,
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
Corporate
Bonds
........................
$
—
$
231,581
$
—
$
231,581
Municipal
Bonds
:
California
.............................
—
22,152,787
14,263
22,167,050
Florida
...............................
—
106,751
—
106,751
U.S.
Territories
..........................
Puerto
Rico
...........................
—
143,205
—
143,205
Total
Investments
in
Securities
...........
$—
$22,634,324
$14,263
$22,648,587
Franklin
Templeton
SMACS:
Series
E
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
2,959,783
—
—
2,959,783
Air
Freight
&
Logistics
...................
1,285,500
—
—
1,285,500
Banks
...............................
6,765,480
—
—
6,765,480
Beverages
...........................
7,303,750
—
—
7,303,750
Biotechnology
.........................
8,540,000
—
—
8,540,000
Building
Products
......................
1,457,000
—
—
1,457,000
Chemicals
...........................
7,662,150
—
—
7,662,150
Communications
Equipment
..............
2,678,620
—
—
2,678,620
Electric
Utilities
........................
5,959,000
—
—
5,959,000
Health
Care
Equipment
&
Supplies
.........
4,279,709
—
—
4,279,709
Health
Care
Providers
&
Services
..........
1,431,000
—
—
1,431,000
Hotels,
Restaurants
&
Leisure
.............
2,309,280
—
—
2,309,280
Household
Products
....................
2,573,100
—
—
2,573,100
Industrial
Conglomerates
................
1,060,341
—
—
1,060,341
IT
Services
...........................
2,021,300
—
—
2,021,300
Machinery
............................
2,136,600
—
—
2,136,600
Metals
&
Mining
.......................
2,439,450
2,155,591
—
4,595,041
Oil,
Gas
&
Consumable
Fuels
.............
12,245,970
—
—
12,245,970
Pharmaceuticals
.......................
8,666,400
—
—
8,666,400
Semiconductors
&
Semiconductor
Equipment
.
8,011,400
—
—
8,011,400
Software
.............................
3,532,250
—
—
3,532,250
Specialty
Retail
........................
4,016,282
—
—
4,016,282
Tobacco
.............................
4,315,150
—
—
4,315,150
Equity-Linked
Securities
...................
—
94,890,718
—
94,890,718
Convertible
Preferred
Stocks
................
12,744,800
—
—
12,744,800
Corporate
Bonds
........................
—
3,162,630
—
3,162,630
Short
Term
Investments
...................
1,129,213
—
—
1,129,213
Total
Investments
in
Securities
...........
$117,523,528
$100,208,939
b
$—
$217,732,467
11.
Fair
Value
Measurements
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
beginning
and/or
end
of
the year.
12.
Subsequent
Events
The
Funds
have
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Level
1
Level
2
Level
3
Total
Franklin
Templeton
SMACS:
Series
E
(continued)
Liabilities:
Other
Financial
Instruments:
Options
Written
..........................
$128,000
$—
$—
$128,000
Total
Other
Financial
Instruments
.........
$128,000
$—
$—
$128,000
Franklin
Templeton
SMACS:
Series
H
Assets:
Investments
in
Securities:
a
Management
Investment
Companies
.........
$
421,260
$
—
$
—
$
421,260
Corporate
Bonds
........................
—
231,581
—
231,581
Municipal
Bonds
.........................
—
11,631,969
—
11,631,969
Total
Investments
in
Securities
...........
$421,260
$11,863,550
$—
$12,284,810
Franklin
Templeton
SMACS:
Series
I
Assets:
Investments
in
Securities:
a
Common
Stocks
.........................
1,959,219
—
—
1,959,219
Equity-Linked
Securities
...................
—
7,808,449
—
7,808,449
Corporate
Bonds
........................
—
335,715,810
—
335,715,810
Mortgage-Backed
Securities
................
—
18,343,924
—
18,343,924
Escrows
and
Litigation
Trusts
...............
—
—
—
c
—
Short
Term
Investments
...................
2,116,283
—
—
2,116,283
Total
Investments
in
Securities
...........
$4,075,502
$361,868,183
$—
$365,943,685
Liabilities:
Other
Financial
Instruments:
Futures
Contracts
........................
$225,182
$—
$—
$225,182
Total
Other
Financial
Instruments
.........
$225,182
$—
$—
$225,182
a
For
detailed
categories,
see
the
accompanying
Schedule
of
Investments.
b
Includes
foreign
securities
valued
at
$2,155,591,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
c
Includes
financial
instruments
determined
to
have
no
value.
11.
Fair
Value
Measurements
(continued)
Franklin
Strategic
Series
Notes
to
Financial
Statements
Abbreviations
Selected
Portfolio
ADR
American
Depositary
Receipt
ETF
Exchange-Traded
Fund
FHLMC
Federal
Home
Loan
Mortgage
Corp.
FNMA
Federal
National
Mortgage
Association
FRN
Floating
Rate
Note
GO
General
Obligation
PIK
Payment-In-Kind
REIT
Real
Estate
Investment
Trust
Report
of
Independent
Registered
Public
Accounting
Firm
To
the
Board
of
Trustees
of
Franklin
Strategic
Series
and
Shareholders
of
Franklin
Templeton
SMACS:
Series
CH,
Franklin
Templeton
SMACS:
Series
E,
Franklin
Templeton
SMACS:
Series
H
and
Franklin
Templeton
SMACS:
Series
I
Opinions
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities,
including
the
schedules
of
investments,
of
Franklin
Templeton
SMACS:
Series
CH,
Franklin
Templeton
SMACS:
Series
E,
Franklin
Templeton
SMACS:
Series
H
and
Franklin
Templeton
SMACS:
Series
I
(four
of
the
funds
constituting
Franklin
Strategic
Series,
hereafter
collectively
referred
to
as
the
"Funds")
as
of
August
31,
2024,
the
related
statements
of
operations
for
the
year
ended
August
31,
2024,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2024,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2024
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
each
of
the
Funds
as
of
August
31,
2024,
the
results
of
each
of
their
operations
for
the
year
then
ended,
the
changes
in
each
of
their
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2024
and
each
of
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2024
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinions
These
financial
statements
are
the
responsibility
of
the
Funds’
management.
Our
responsibility
is
to
express
an
opinion
on
the
Funds’
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Funds
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2024
by
correspondence
with
the
custodian,
transfer
agent
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.
/s/PricewaterhouseCoopers
LLP
San
Francisco,
California
October
22,
2024
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Tax
Information
(unaudited)
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Funds
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during their
fiscal
year.
The
Funds
below
hereby
report
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
August
31,
2024:
Pursuant
to:
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
—
$1,909,587
—
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
—
$2,637,668
—
Exempt-Interest
Dividends
Distributed
§852(b)(5)(A)
$983,997
—
$573,002
Section
163(j)
Interest
Dividends
Earned
§163(j)
—
$350,077
—
Pursuant
to:
Franklin
Templeton
SMACS:
Series
I
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$32,400
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$32,400
Section
163(j)
Interest
Dividends
Earned
§163(j)
$18,211,892
FRANKLIN
STRATEGIC
SERIES
Franklin
Templeton
SMACS:
Series
CH
Franklin
Templeton
SMACS:
Series
E
Franklin
Templeton
SMACS:
Series
H
Franklin
Templeton
SMACS:
Series
I
(each
a
Fund)
At
an
in-person
meeting
held
on
April
16,
2024
(Meeting),
the
Board
of
Trustees
(Board)
of
Franklin
Strategic
Series
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Franklin
Advisers,
Inc.
(Manager)
and
the
Trust,
on
behalf
of
each
Fund
(each
a
Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
each
Management
Agreement.
Although
the
Management
Agreements
for
the
Funds
were
considered
at
the
same
Board
meeting,
the
Board
considered
the
information
provided
to
it
about
the
Funds
together
and
with
respect
to
each
Fund
separately
as
the
Board
deemed
appropriate.
In
considering
the
continuation
of
each
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Trustees
held
a
virtual
contract
renewal
meeting
at
which
the
Independent
Trustees
first
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters,
and
then
met
with
management
to
request
additional
information
that
the
Independent
Trustees
reviewed
and
considered
prior
to
and
at
the
Meeting.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
each
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
each
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
each
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
each
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
Changes
In
and
Disagreements
with
Accountants
For
the
period
covered
by
this
report
Not
applicable.
Results
of
Meeting(s)
of
Shareholders
For
the
period
covered
by
this
report
Not
applicable.
Remuneration
Paid
to
Directors,
Officers
and
Others
For
the
period
covered
by
this
report
Refer
to
the
financial
statements
included
herein.
Board
Approval
of
Management
and
Subadvisory
Agreements
For
the
period
covered
by
this
report
In
approving
the
continuance
of
each
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined,
through
the
exercise
of
its
business
judgment,
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
the
Management
Agreement
is
in
the
best
interests
of
the
applicable
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
each
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Funds
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-party
servicing
arrangements.
The
Board
acknowledged
the
ongoing
integration
of
the
Putnam
family
of
funds
into
the
FT
family
of
funds
and
management’s
continued
development
of
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
including
various
regulatory
initiatives
and
continuing
geopolitical
concerns.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
continued
reassessment
of
the
fund
offerings
in
response
to
FT
acquisitions
and
the
market
environment,
as
well
as
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Funds
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
technological
innovation
and
advancement,
including
its
initiative
to
create
a
new
enterprise-wide
artificial
intelligence
platform.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
each
Fund
over
various
time
periods
ended
December
31,
2023.
The
Board
noted
that
each
Fund
commenced
operations
on
June
3,
2019,
and
thus
had
been
in
operation
for
less
than
five
years.
The
Board
considered
the
performance
returns
for
each
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
each
Fund’s
performance
results
is
below.
Franklin
Templeton
SMACS:
Series
CH
-
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
California
municipal
debt
funds.
The
Board
noted
that
the
Fund’s
annualized
income
return
for
the
one-
and
three-year
periods
was
above
the
median
and
in
the
first
quintile
(best)
of
its
Performance
Universe.
The
Board
also
noted
that
the
Fund’s
annualized
total
return
for
the
one-
and
three-year
periods
was
below
the
median
of
its
Performance
Universe.
The
Board
further
noted
management’s
view
regarding
the
income-related
attributes
of
the
Fund
(e.g.,
a
fund’s
investment
objective)
as
set
forth
in
the
Fund’s
registration
statement
and
that
the
evaluation
of
the
Fund’s
performance
relative
to
its
peers
on
an
income
return
basis
was
appropriate
given
these
attributes.
The
Board
also
noted
that,
although
below
the
median,
the
Fund’s
annualized
total
return
for
the
one-year
period
was
5.73%.
The
Board
concluded
that
the
Fund’s
performance
was
acceptable.
Franklin
Templeton
SMACS:
Series
E
and
Franklin
Templeton
SMACS:
Series
H
-
The
Performance
Universe
for
the
Franklin
Templeton
SMACS:
Series
E
included
the
Fund
and
all
retail
and
institutional
equity
income
funds.
The
Performance
Universe
for
the
Franklin
Templeton
SMACS:
Series
H
included
the
Fund
and
all
retail
and
institutional
high
yield
municipal
debt
funds.
The
Board
noted
that
the
Funds’
annualized
income
returns
for
the
one-
and
three-year
periods
were
above
the
medians
of
their
respective
Performance
Universes
and
for
the
Franklin
Templeton
SMACS:
Series
E
was
in
the
first
quintile
(best).
The
Board
also
noted
that
the
Funds’
annualized
total
returns
for
the
one-
and
three-year
periods
were
above
the
medians
of
their
respective
Performance
Universes
and
for
the
Franklin
Templeton
SMACS:
Series
H
was
in
the
first
quintile
(best).
The
Board
further
noted
management’s
view
regarding
the
income-related
attributes
of
each
Fund
(e.g.,
fund
investment
objective)
as
set
forth
in
each
Fund’s
registration
statement
and
that
the
evaluation
of
each
Fund’s
performance
relative
to
its
peers
on
an
income
return
basis
was
appropriate
given
its
attributes.
The
Board
concluded
that
the
Fund’s
performance
was
satisfactory.
Franklin
Templeton
SMACS:
Series
I
-
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
short
high
yield
funds.
The
Board
noted
that
the
Fund’s
annualized
income
return
for
the
one-
and
three-year
periods
was
above
the
median
and
in
the
first
quintile
(best)
of
its
Performance
Universe.
The
Board
also
noted
that
the
Fund’s
annualized
total
return
for
the
one-year
period
was
above
the
median
of
its
Performance
Universe,
but
for
the
three-year
period
was
below
the
median
of
its
Performance
Universe.
The
Board
further
noted
management’s
view
regarding
the
income-related
attributes
of
the
Fund
(e.g.,
a
fund’s
investment
objective)
as
set
forth
in
the
Fund’s
registration
statement
and
that
the
evaluation
of
the
Fund’s
performance
relative
to
its
peers
on
an
income
return
basis
was
appropriate
given
these
attributes.
The
Board
concluded
that
the
Fund’s
performance
was
satisfactory.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
each
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-management
fees.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
actual
management
fee
rate
(Management
Rate),
of
each
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
or
semi-annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for
(i)
Class
A1,
Class
S,
Class
Z,
Class
B,
Investor
Class
and
Fund
Class
shares
for
other
funds
in
the
Franklin
Templeton
SMACS:
Series
CH
Expense
Group
with
multiple
classes
of
shares;
(ii)
Investor
Class,
Retail
Class
and
Class
II
shares
for
other
funds
in
the
Franklin
Templeton
SMACS:
Series
E
Expense
Group
with
multiple
classes
of
shares;
(iii)
Class
S,
Class
Z,
Member
Class
and
Investor
Class
shares
for
other
funds
in
the
Franklin
Templeton
SMACS:
Series
H
Expense
Group
with
multiple
classes
of
shares;
and
(iv)
Class
I,
Class
P,
Investor
Class,
and
Open
Class
and
Retail
Class
shares
for
other
funds
in
the
Franklin
Templeton
SMACS:
Series
I
Expense
Group
with
multiple
classes
of
shares.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
The
Expense
Group
for
the
Franklin
Templeton
SMACS:
Series
CH
included
the
Fund
and
10
other
California
municipal
debt
funds.
The
Expense
Group
for
the
Franklin
Templeton
SMACS:
Series
E
included
the
Fund
and
11
other
equity
income
funds.
The
Expense
Group
for
the
Franklin
Templeton
SMACS:
Series
H
included
the
Fund
and
eight
other
high
yield
municipal
debt
funds.
The
Expense
Group
for
the
Franklin
Templeton
SMACS:
Series
I
included
the
Fund,
one
other
short
high
yield
fund
and
13
high
yield
funds.
The
Board
noted
that
the
actual
total
expense
ratios
for
the
Funds
were
below
the
medians
and
in
the
first
quintile
(least
expensive)
of
their
respective
Expense
Groups.
The
Board
also
noted
that
the
Manager
provides
general
investment
management
and
administrative
services
to
each
Fund
for
a
zero
management
fee.
The
Board
also
noted
that
each
Fund’s
actual
total
expense
ratio
reflected
an
expense
cap
on
operating
expenses.
The
Board
further
noted
that
the
Manager
assumes
certain
expenses
incurred
by
each
Fund
(including
acquired
fund
fees
and
expenses,
but
excluding
certain
non-routine
expenses,
such
as
those
relating
to
litigation,
indemnification,
reorganizations
and
liquidations)
so
that
total
annual
fund
operating
expenses
do
not
exceed
0.00%.
The
Board
concluded
that
each
Fund’s
zero
contractual
management
fee
is
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
each
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
by
the
Manager
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2023,
being
the
most
recent
fiscal
year-end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Funds’
profitability
report
presentations
from
prior
years.
The
Board
also
noted
that
an
independent
registered
public
accounting
firm
has
been
engaged
by
the
Manager
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Funds’
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
each
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
management’s
outsourcing
of
certain
operations,
which
effort
has
required
considerable
up-front
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Funds,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
each
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
each
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
each
Fund
grows
larger
and
whether
each
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
In
connection
with
this
review,
the
Board
noted
that
because
each
Fund
pays
a
zero
management
fee,
the
consideration
of
possible
economies
of
scale
in
the
future
was
not
relevant.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
each
Management
Agreement
for
an
additional
one-year
period.
©
2024
Franklin
Templeton.
All
rights
reserved.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
The information is disclosed as part of the Financial Statements included in Item 7 of this Form N-CSR.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A
Item 13. Portfolio Managers of Closed-End Management Investment Companies. N/A
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A
Item 15. 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 16. 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 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Company N/A
Item 18. Recovery of Erroneously Awarded Compensation.
(a) N/A
(b) N/A
Item 19. Exhibits.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Christopher Kings, Chief Executive Officer - Finance and Administration, and Jeffrey White, Chief Financial Officer, Chief Accounting Officer and Treasurer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Christopher Kings, Chief Executive Officer - Finance and Administration, and Jeffrey White, 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/ CHRISTOPHER KINGS | |
| | Christopher Kings | |
| | Chief Executive Officer - Finance and Administration | |
| | | |
| Date | October 31, 2024 | |
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/ CHRISTOPHER KINGS | |
| | Christopher Kings | |
| | Chief Executive Officer - Finance and Administration | |
| | | |
| Date | October 31, 2024 | |
| By | /s/ JEFFREY WHITE | |
| | Jeffrey White | |
| | Chief Financial Officer, Chief Accounting Officer and Treasurer | |
| | | |
| Date | October 31, 2024 | |
