Franklin Strategic Series N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

             Investment Company Act file number 811-06243

Franklin Strategic Series

(Exact name of registrant as specified in charter)

_One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices)    (Zip code)

_Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)

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

Date of fiscal year end: 4/30

Date of reporting period: 10/31/20

Item 1. Reports to Stockholders.

SEMIANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Strategic

Series

October

31,

2020

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-Mid

Cap

Growth

Fund

Internet

Delivery

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Fund

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Unless

You

Request

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Copies

:

Effective

January

1,

2021,

as

permitted

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the

SEC,

paper

copies

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the

Fund’s

shareholder

reports

will

no

longer

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sent

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mail,

unless

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specifically

request

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the

Fund

or

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financial

intermediary.

Instead,

the

reports

will

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made

available

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franklintempleton.com

Not

part

of

the

semiannual

report

1

Shareholder

Letter

Dear

Shareholder:

During

the

six

months

ended

October

31,

2020,

first-

and

second-quarter

2020

data

reported

during

the

period

indicated

that

the

U.S.

economy

contracted

in

response

to

the

novel

coronavirus

(COVID-19)

pandemic.

In

the

third

quarter,

the

economy

recovered

substantially

based

on

increased

business

and

residential

investment

and

consumer

spending.

Before

the

reporting

period,

the

U.S.

Federal

Reserve

(Fed),

in

its

efforts

to

support

U.S.

economic

activity,

lowered

the

federal

funds

rate

twice

in

March

2020

and

implemented

broad

quantitative

easing

measures

to

support

credit

markets.

During

the

reporting

period,

the

Fed

held

its

key

rate

unchanged

at

0.25%,

but

continued

quantitative

easing

and

adjusted

its

policy

in

August

2020

to

allow

more

flexibility

to

keep

interest

rates

low,

while

maintaining

a

2%

average

inflation

target.

U.S.

equity

prices

rose

considerably

during

the

period,

helped

by

monetary

and

fiscal

actions

and

optimism

about

the

economy,

which

propelled

valuations

to

all-time

highs

in

September

before

stocks

trended

lower

amid

renewed

investor

concerns.

In

this

environment,

U.S.

stocks,

as

measured

by

the

Standard

&

Poor’s

®

500

Index,

posted

a

strong

positive

total

return

for

the

six-month

period.

We

are

committed

to

our

long-term

perspective

and

disciplined

investment

approach

as

we

conduct

a

rigorous,

fundamental

analysis

of

securities

with

a

regular

emphasis

on

investment

risk

management.

We

believe

active,

professional

investment

management

serves

investors

well.

We

also

recognize

the

important

role

of

financial

advisors

in

today’s

markets

and

encourage

investors

to

continue

to

seek

their

advice.

Amid

changing

markets

and

economic

conditions,

we

are

confident

investors

with

a

well-diversified

portfolio

and

a

patient,

long-term

outlook

should

be

well-positioned

for

the

years

ahead.

In

addition,

Franklin

Strategic

Series’

semiannual

report

includes

more

detail

about

prevailing

conditions

and

a

discussion

about

investment

decisions

during

the

period.

All

securities

markets

fluctuate,

as

do

mutual

fund

share

prices.

We

thank

you

for

investing

with

Franklin

Templeton,

welcome

your

questions

and

comments,

and

look

forward

to

serving

your

future

investment

needs.

Sincerely,

Edward

Perks,

CFA

President

and

Chief

Executive

Officer

–

Investment

Management

Franklin

Strategic

Series

This

letter

reflects

our

analysis

and

opinions

as

of

October

31,

2020

,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Semiannual

Report

2

Contents

Semiannual

Report

Economic

and

Market

Overview

3

Franklin

Growth

Opportunities

Fund

4

Franklin

Small

Cap

Growth

Fund

9

Franklin

Small-Mid

Cap

Growth

Fund

14

Financial

Highlights

and

Statements

of

Investments

20

Financial

Statements

50

Notes

to

Financial

Statements

55

Shareholder

Information

79

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Semiannual

Report

SEMIANNUAL

REPORT

Economic

and

Market

Overview

U.S.

equities,

as

measured

by

the

Standard

&

Poor’s

500

Index

(S&P

500

®

),

advanced

significantly

during

the

six

months

ended

October

31,

2020,

as

markets

continued

to

recover

from

the

disruption

caused

by

the

novel

coronavirus

(COVID-19)

pandemic.

The

nascent

equity

market

recovery

that

began

in

late

March

gained

momentum

during

the

period,

supported

by

monetary

and

fiscal

measures,

which

drove

stocks,

as

measured

by

the

S&P

500,

to

all-time

price

highs

in

early

September,

before

retreating

in

the

period’s

final

months.

The

U.S.

Federal

Reserve

(Fed)

continued

its

efforts

to

support

the

U.S.

economy

by

maintaining

the

federal

funds

target

rate

at

a

range

of

0.00%–0.25%,

expanding

quantitative

easing

measures

aimed

at

ensuring

credit

flows

to

borrowers

and

supporting

credit

markets

with

unlimited

amounts

of

bond

purchasing.

Furthermore,

the

Fed

signaled

that

interest

rates

would

potentially

remain

low,

even

if

inflation

persistently

exceeded

the

Fed’s

2%

target.

Pandemic-related

restrictions

implemented

prior

to

the

period

caused

stiff

economic

headwinds.

The

longest

U.S.

economic

expansion

in

history

ended

in

February

2020,

according

to

the

National

Bureau

of

Economic

Research,

and

the

country

slipped

into

a

deep

recession

with

second-

quarter

2020

gross

domestic

product

(GDP)

posting

a

record

annualized

decline.

Optimism

about

an

economic

rebound

amid

the

government’s

fiscal

and

monetary

stimulus,

along

with

rising

retail

sales

and

resilient

consumer

spending,

drove

a

sharp

equity

rally

throughout

much

of

the

summer.

Improving

economic

activity

led

third-quarter

GDP

to

expand

at

a

record

annualized

pace,

while

declining

jobless

claims

drove

the

unemployment

rate

from

a

pandemic

high

of

14.7%

in

April

to

6.9%

in

October.

1

Optimism

about

treatments

and

potential

vaccines

for

COVID-19

also

supported

stock

prices.

However,

stocks

declined

in

the

period’s

last

two

months

amid

investor

concerns

that

the

economic

recovery

was

stalling,

as

new

job

growth

slowed

and

unemployment

claims

remained

high.

Concerns

that

possible

new

restrictions

due

to

rising

COVID-19

cases

could

disrupt

the

economic

recovery,

the

government’s

lack

of

consensus

about

additional

stimulus

and

uncertainties

surrounding

the

upcoming

presidential

election

also

tempered

investor

enthusiasm.

The

foregoing

information

reflects

our

analysis

and

opinions

as

of

October

31,

2020.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

1.

Source:

Bureau

of

Labor

Statistics.

4

franklintempleton.com

Semiannual

Report

Franklin

Growth

Opportunities

Fund

This

semiannual

report

for

Franklin

Growth

Opportunities

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

capital

appreciation.

Under

normal

conditions,

the

Fund

invests

predominantly

in

equity

securities

of

companies

demonstrating

accelerating

growth,

increasing

profitability,

or

above-average

growth

or

growth

potential

as

compared

with

the

overall

economy.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+24.75%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

Fund’s

narrow

benchmark,

the

Russell

3000

®

Growth

Index,

which

measures

performance

of

those

Russell

3000

®

Index

companies

with

relatively

higher

price-to-book

ratios

and

higher

forecasted

growth

rates,

posted

a

+21.85%

total

return.

1

The

Fund’s

broad

benchmark,

the

Standard

&

Poor’s

500

Index

(S&P

500),

which

tracks

the

broad

U.S.

stock

market,

posted

a

+13.29%

total

return.

1

You

can

find

the

Fund’s

long-term

performance

data

in

the

Performance

Summary

beginning

on

page

6

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Investment

Strategy

We

use

fundamental,

bottom-up

research

to

seek

companies

meeting

our

criteria

of

growth

potential,

quality

and

valuation.

In

seeking

sustainable

growth

characteristics,

we

look

for

companies

we

believe

can

produce

sustainable

earnings

and

cash

flow

growth,

evaluating

the

long-term

market

opportunity

and

competitive

structure

of

an

industry

to

target

leaders

and

emerging

leaders.

We

define

quality

companies

as

those

with

strong

and

improving

competitive

positions

in

attractive

markets.

We

also

believe

important

attributes

of

quality

are

experienced

and

talented

management

teams

as

well

as

financial

strength

reflected

in

the

capital

structure,

gross

and

operating

margins,

free

cash

flow

generation

and

returns

on

capital

employed.

Our

valuation

analysis

includes

a

range

of

potential

outcomes

based

on

an

assessment

of

multiple

scenarios.

In

assessing

value,

we

consider

whether

security

prices

fully

reflect

the

balance

of

the

sustainable

growth

opportunities

relative

to

business

and

financial

risks.

Manager’s

Discussion

During

the

six

months

under

review,

all

sectors

represented

in

the

Fund’s

portfolio

posted

positive

returns

and

contributed

to

absolute

performance.

Relative

to

the

Russell

3000

®

Growth

Index,

key

contributors

to

the

Fund’s

performance

included

stock

selection

in

the

health

care,

information

technology

(IT)

and

consumer

discretionary

sectors.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Software

20.2%

IT

Services

13.3%

Internet

&

Direct

Marketing

Retail

10.0%

Health

Care

Equipment

&

Supplies

7.0%

Professional

Services

5.1%

Capital

Markets

5.1%

Technology

Hardware,

Storage

&

Peripherals

3.7%

Semiconductors

&

Semiconductor

Equipment

3.6%

Interactive

Media

&

Services

3.4%

Equity

Real

Estate

Investment

Trusts

(REITs)

2.9%

Health

Care

Providers

&

Services

2.6%

Biotechnology

2.2%

Health

Care

Technology

2.1%

Automobiles

1.9%

Pharmaceuticals

1.7%

Industrial

Conglomerates

1.6%

Wireless

Telecommunication

Services

1.3%

Food

Products

1.3%

Chemicals

1.2%

Beverages

1.1%

Commercial

Services

&

Supplies

1.1%

Other

7.4%

Short-Term

Investments

&

Other

Net

Assets

0.2%

1.

Source:

Morningstar.

Frank

Russell

Company

is

the

source

and

owner

of

the

trademarks,

service

marks

and

copyrights

related

to

the

Russell

Indexes.

Russell

®

is

a

trademark

of

Frank

Russell

Company.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

25

.

Franklin

Growth

Opportunities

Fund

5

franklintempleton.com

Semiannual

Report

Within

health

care,

the

development

of

a

novel

coronavirus

(COVID-19)

vaccine

candidate

bolstered

the

shares

of

vaccine

developer

Novavax.

In

the

IT

sector,

communications

software

and

cloud-based

platform

company

Twilio,

cloud-based

software

solutions

firm

Bill.com

Holdings

and

cloud

computing

solutions

provider

ServiceNow

were

leading

contributors

to

relative

returns.

The

pandemic

has

increased

demand

for

Twilio’s

digital

communication

services

from

telehealth,

online

education,

remote

customer

care

and

food

delivery

companies,

among

others.

Bill.com

Holdings

generated

solid

subscription

and

transaction

growth,

and

its

subscription

base

continued

to

improve

as

the

pandemic

accelerated

adoption

of

its

platform.

Other

notable

relative

contributors

included

positions

in

at-

home

fitness

platform

Peloton

Interactive,

which

saw

a

surge

in

demand

for

its

at-home,

connected

fitness

products.

In

contrast,

key

detractors

from

the

Fund’s

relative

performance

included

overweightings

in

the

real

estate

and

financials

sectors.

Within

real

estate,

SBA

Communications,

a

real

estate

investment

trust

that

provides

wireless

communication

towers,

underperformed

the

index,

and

an

overweighting

hurt

relative

results.

We

believe

the

company

is

an

attractive

long-term

investment

opportunity

given

the

tower

industry’s

strong

barriers

to

entry

and

increasing

mobile

carrier

spending

on

5G

network

upgrades.

In

the

financials

sector,

our

position

in

investment

decision

support

tools

provider

MSCI

hindered

relative

results.

Other

key

relative

detractors

included

our

positions

in

electronic

products

company

Apple,

electronic

vehicle

manufacturer

Tesla

and

payment

solutions

company

Mastercard.

An

underweighting

in

the

strong-performing

shares

of

Apple

detracted

from

relative

performance.

Apple

has

seen

strong

demand

for

its

products

as

consumers

required

more

devices

at

home

to

support

streaming

needs

for

work,

school

and

entertainment

during

the

pandemic.

An

underweighting

in

Tesla

hurt

relative

results,

as

the

company

generated

strong

vehicle

sales.

Mastercard

experienced

weakness

in

cross-border

transactions.

We

believe

the

positive

trend

in

digital

payments

will

continue

and

likely

be

strengthened

by

the

pandemic.

Thank

you

for

your

continued

participation

in

Franklin

Growth

Opportunities

Fund.

We

look

forward

to

serving

your

future

investment

needs.

Grant

Bowers

Sara

Araghi,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020

,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Top

10

Holdings

10/31/20

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Amazon.com,

Inc.

9.1%

Internet

&

Direct

Marketing

Retail,

United

States

Microsoft

Corp.

5.5%

Software,

United

States

Apple,

Inc.

3.7%

Technology

Hardware,

Storage

&

Peripherals,

United

States

Mastercard

,

Inc.

3.7%

IT

Services,

United

States

ServiceNow

,

Inc.

3.2%

Software,

United

States

Visa,

Inc.

3.0%

IT

Services,

United

States

SBA

Communications

Corp.

2.5%

Equity

Real

Estate

Investment

Trusts

(REITs),

United

States

CoStar

Group,

Inc.

2.4%

Professional

Services,

United

States

Alphabet,

Inc.

2.3%

Interactive

Media

&

Services,

United

States

Veeva

Systems,

Inc.

2.1%

Health

Care

Technology,

United

States

Performance

Summary

as

of

October

31,

2020

Franklin

Growth

Opportunities

Fund

6

franklintempleton.com

Semiannual

Report

The

performance

table

does

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

A

3

6-Month

+24.75%

+17.93%

1-Year

+34.89%

+27.47%

5-Year

+106.65%

+14.32%

10-Year

+289.94%

+13.93%

Advisor

6-Month

+24.91%

+24.91%

1-Year

+35.24%

+35.24%

5-Year

+109.21%

+15.91%

10-Year

+300.49%

+14.88%

See

page

7

for

Performance

Summary

footnotes.

Franklin

Growth

Opportunities

Fund

Performance

Summary

7

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Growth

stock

prices

reflect

projections

of

future

earnings

or

revenues,

and

can,

therefore,

fall

dramatically

if

the

company

fails

to

meet

those

projections.

To

the

extent

the

Fund

focuses

on

particular

countries,

regions,

industries,

sectors

or

types

of

invest-

ment

from

time

to

time,

it

may

be

subject

to

greater

risks

of

adverse

developments

in

such

areas

of

focus

than

a

fund

that

invests

in

a

wider

variety

of

countries,

regions,

industries,

sectors

or

investments.

Smaller,

midsized

and

relatively

new

or

unseasoned

companies

can

be

particularly

sensitive

to

changing

economic

conditions,

and

their

prospects

for

growth

are

less

certain

than

those

of

larger,

more

established

companies.

Historically,

these

securities

have

experienced

more

price

volatility

than

larger-company

stocks,

especially

over

the

short

term.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

diseases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

4

Share

Class

A

0.95%

Advisor

0.70%

Your

Fund’s

Expenses

Franklin

Growth

Opportunities

Fund

8

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.

50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,247.48

$5.18

$1,020.60

$4.66

0.92%

C

$1,000

$1,242.65

$9.41

$1,016.82

$8.46

1.67%

R

$1,000

$1,245.98

$6.55

$1,019.37

$5.89

1.16%

R6

$1,000

$1,249.72

$3.26

$1,022.31

$2.93

0.58%

Advisor

$1,000

$1,249.14

$3.77

$1,021.85

$3.39

0.67%

9

franklintempleton.com

Semiannual

Report

Franklin

Small

Cap

Growth

Fund

This

annual

report

for

Franklin

Small

Cap

Growth

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

long-term

capital

growth.

Under

normal

market

conditions,

the

Fund

invests

at

least

80%

of

its

net

assets

in

the

equity

securities

of

small-cap

companies.

For

this

Fund,

small-cap

companies

are

those

with

market

capitalizations

not

exceeding

$1.5

billion

or

the

highest

market

capitalization

in

the

Russell

2000

®

Index,

whichever

is

greater,

at

the

time

of

purchase.

1

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+32.63%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

Russell

2000

®

Growth

Index,

which

measures

performance

of

small-cap

companies

with

relatively

higher

price-to-book

ratios

and

higher

forecasted

growth

rates,

posted

a

+22.72%

total

return.

2

The

Standard

&

Poor’s

500

Index

(S&P

500),

which

tracks

the

broad

U.S.

stock

market,

posted

a

+13.29%

total

return.

2

You

can

find

the

Fund’s

long-term

performance

data

in

the

Performance

Summary

beginning

on

page

11

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Investment

Strategy

We

use

fundamental,

bottom-up

research

to

seek

companies

meeting

our

criteria

of

growth

potential,

quality

and

valuation.

In

seeking

sustainable

growth

characteristics,

we

look

for

companies

we

believe

can

produce

sustainable

earnings

and

cash

flow

growth,

evaluating

the

long-term

market

opportunity

and

competitive

structure

of

an

industry.

We

define

quality

companies

as

those

with

strong

and

improving

competitive

positions

in

attractive

markets.

We

also

believe

important

attributes

of

quality

are

experienced

and

talented

management

teams

as

well

as

financial

strength

reflected

in

the

capital

structure,

gross

and

operating

margins,

free

cash

flow

generation

and

returns

on

capital

employed.

Our

valuation

analysis

includes

a

range

of

potential

outcomes

based

on

an

assessment

of

multiple

scenarios.

In

assessing

value,

we

consider

whether

security

prices

fully

reflect

the

balance

of

the

sustainable

growth

opportunities

relative

to

business

and

financial

risks.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Biotechnology

11.1%

Software

9.5%

Specialty

Retail

6.8%

Health

Care

Equipment

&

Supplies

6.4%

IT

Services

5.8%

Aerospace

&

Defense

5.4%

Semiconductors

&

Semiconductor

Equipment

5.4%

Hotels,

Restaurants

&

Leisure

5.1%

Health

Care

Technology

3.1%

Pharmaceuticals

3.0%

Capital

Markets

3.0%

Banks

2.4%

Commercial

Services

&

Supplies

2.3%

Airlines

2.3%

Household

Durables

2.2%

Food

Products

2.1%

Trading

Companies

&

Distributors

2.1%

Construction

&

Engineering

2.0%

Communications

Equipment

1.9%

Automobiles

1.7%

Health

Care

Providers

&

Services

1.7%

Food

&

Staples

Retailing

1.5%

Equity

Real

Estate

Investment

Trusts

(REITs)

1.3%

Textiles,

Apparel

&

Luxury

Goods

1.3%

Life

Sciences

Tools

&

Services

1.3%

Machinery

1.2%

Chemicals

1.2%

Insurance

1.2%

Other

3.4%

Short-Term

Investments

&

Other

Net

Assets

2.3%

1.

The

Russell

2000

Index

is

market

capitalization

weighted

and

measures

performance

of

the

2,000

smallest

companies

in

the

Russell

3000

Index,

which

represent

a

small

amount

of

the

total

market

capitalization

of

the

Russell

3000

Index.

2.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

35

.

Franklin

Small

Cap

Growth

Fund

10

franklintempleton.com

Semiannual

Report

Manager’s

Discussion

During

the

six

months

under

review,

all

sectors

represented

in

the

Fund’s

portfolio

posted

positive

returns

and

contributed

to

absolute

performance.

Relative

to

the

Russell

2000

®

Growth

Index,

key

contributors

to

the

Fund’s

performance

included

stock

selection

in

the

information

technology

(IT)

sector,

stock

selection

and

an

overweighting

in

the

consumer

discretionary

sector,

and

stock

selection

and

an

underweighting

in

the

health

care

sector.

In

the

IT

sector,

our

off-benchmark

investment

in

web-

building

platform

Wix.com

(not

held

at

period-end)

bolstered

relative

results.

The

company’s

web

services

have

become

increasingly

important

as

more

people

access

the

cloud

to

work

remotely

during

the

novel

coronavirus

(COVID-19)

pandemic.

Our

off-benchmark

positions

in

cloud-based

internet

security

platform

Zscaler

(not

held

at

period-end)

and

web

performance

and

security

company

Cloudflare

also

aided

relative

results.

Within

consumer

discretionary,

our

off-benchmark

positions

in

online

sports-betting

company

DraftKings

and

at-home

fitness

platform

Peloton

Interactive

(not

held

at

period-end)

helped

relative

results.

DraftKings’

share

price

reached

record

highs

amid

positive

news

flow

that

included

the

announcement

of

an

exclusive

agreement

with

a

major

sports

media

company

to

provide

fantasy

sports

information.

Peloton

Interactive

benefited

from

a

surge

in

demand

for

its

at-home,

connected

fitness

products.

In

the

health

care

sector,

our

positions

in

digital

health

care

provider

Livongo

Health

(not

held

at

period-end)

and

vaccine

developer

Novavax

supported

relative

performance.

Livongo

Health’s

share

price

surged

as

COVID-19

social

distancing

measures

drove

up

demand

for

the

company’s

remote

monitoring

services.

The

share

price

of

Novavax

rose

as

the

company

developed

a

COVID-19

vaccine

candidate.

In

contrast,

key

detractors

from

the

Fund’s

relative

performance

included

stock

selection

in

the

industrials

sector.

Within

the

sector,

our

position

in

Mercury

Systems,

a

technology

company

that

serves

the

aerospace

and

defense

industry,

hurt

relative

results.

Other

key

relative

detractors

included

satellite

communications

company

ViaSat

(not

part

of

the

index),

biopharmaceutical

firms

Reata

Pharmaceuticals

and

Global

Blood

Therapeutics,

medical

device

manufacturer

Integer

Holdings,

and

education

services

provider

Grand

Canyon

Education

(not

part

of

the

index).

ViaSat

was

negatively

affected

by

emerging

competition

and

the

economic

impact

associated

with

the

pandemic.

Reata

Pharmaceuticals

was

advised

by

the

U.S.

Food

and

Drug

Administration

to

conduct

a

second

trial

of

its

treatment

for

a

rare

neurological

disorder,

causing

a

delay

in

the

launch

of

the

therapy,

which

hurt

its

stock.

Shares

of

Global

Blood

Therapeutics

were

pressured

by

investor

concerns

about

the

sales

growth

trajectory

of

its

sickle

cell

disease

treatment.

Thank

you

for

your

continued

participation

in

Franklin

Small

Cap

Growth

Fund.

We

look

forward

to

serving

your

future

investment

needs.

Michael

P.

McCarthy,

CFA

Bradley

T.

Carris,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020

,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Top

10

Holdings

10/31/20

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Lattice

Semiconductor

Corp.

1.9%

Semiconductors

&

Semiconductor

Equipment,

United

States

Proterra,

Inc.

1.7%

Automobiles,

United

States

Cubic

Corp.

1.7%

Aerospace

&

Defense,

United

States

Allegiant

Travel

Co.

1.7%

Airlines,

United

States

DraftKings,

Inc.

1.6%

Hotels,

Restaurants

&

Leisure,

United

States

Iovance

Biotherapeutics,

Inc.

1.5%

Biotechnology,

United

States

Arcosa,

Inc.

1.3%

Construction

&

Engineering,

United

States

Penumbra,

Inc.

1.3%

Health

Care

Equipment

&

Supplies,

United

States

Rexford

Industrial

Realty,

Inc.

1.3%

Equity

Real

Estate

Investment

Trusts

(REITs),

United

States

LiveRamp

Holdings,

Inc.

1.3%

IT

Services,

United

States

Performance

Summary

as

of

October

31,

2020

Franklin

Small

Cap

Growth

Fund

11

franklintempleton.com

Semiannual

Report

The

performance

table

does

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

A

4

6-Month

+32.63%

+25.31%

1-Year

+24.27%

+17.44%

5-Year

+100.89%

+13.68%

10-Year

+267.85%

+13.27%

Advisor

6-Month

+32.75%

+32.75%

1-Year

+24.58%

+24.58%

5-Year

+103.29%

+15.25%

10-Year

+277.83%

+14.22%

See

page

12

for

Performance

Summary

footnotes.

Franklin

Small

Cap

Growth

Fund

Performance

Summary

12

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Smaller,

midsized

and

relatively

new

or

unseasoned

companies

can

be

particularly

sensitive

to

changing

economic

conditions,

and

their

prospects

for

growth

are

less

certain

than

those

of

larger,

more

established

companies.

Historically,

these

securities

have

experienced

more

price

volatility

than

larger-company

stocks,

especially

over

the

short

term.

Growth

stock

prices

reflect

projections

of

future

earnings

or

revenues,

and

can,

therefore,

fall

dramatically

if

the

company

fails

to

meet

those

projections.

To

the

extent

the

Fund

focuses

on

particular

countries,

regions,

industries,

sectors

or

types

of

investment

from

time

to

time,

it

may

be

subject

to

greater

risks

of

adverse

developments

in

such

areas

of

focus

than

a

fund

that

invests

in

a

wider

variety

of

countries,

regions,

industries,

sectors

or

investments.

From

time

to

time,

the

trading

market

for

a

particular

security

or

type

of

secu-

rity

in

which

the

Fund

invests

may

become

less

liquid

or

even

illiquid.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

diseases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

a

fee

waiver

associated

with

any

investment

it

makes

in

a

Franklin

Templeton

money

fund

and/or

other

Franklin

Templeton

fund,

contractually

guaranteed

through

8/31/21.

Fund

investment

results

reflect

the

fee

waiver;

without

this

waiver,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

5

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

A

1.07%

1.08%

Advisor

0.82%

0.83%

Your

Fund’s

Expenses

Franklin

Small

Cap

Growth

Fund

13

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.

50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,326.26

$6.19

$1,019.89

$5.37

1.06%

C

$1,000

$1,321.31

$10.56

$1,016.11

$9.17

1.81%

R

$1,000

$1,324.23

$7.65

$1,018.63

$6.64

1.31%

R6

$1,000

$1,328.90

$3.76

$1,021.98

$3.26

0.64%

Advisor

$1,000

$1,327.54

$4.73

$1,021.14

$4.11

0.81%

14

franklintempleton.com

Semiannual

Report

Franklin

Small-Mid

Cap

Growth

Fund

This

semiannual

report

for

Franklin

Small-Mid

Cap

Growth

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

long-term

capital

growth.

Under

normal

market

conditions,

the

Fund

invests

at

least

80%

of

its

net

assets

in

the

equity

securities

of

small-cap

and

mid-

cap

companies.

For

this

Fund,

small-cap

companies

are

companies

within

the

market

capitalization

range

of

companies

in

the

Russell

2500

™

Index

at

the

time

of

purchase,

and

mid-cap

companies

are

companies

within

the

market

capitalization

range

of

companies

in

the

Russell

Midcap

®

Index

at

the

time

of

purchase.

1

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+35.37%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

Russell

Midcap

®

Growth

Index,

which

measures

performance

of

those

Russell

Midcap

®

Index

companies

with

relatively

higher

price-to-book

ratios

and

higher

forecasted

growth

rates,

posted

a

+23.33%

total

return.

2

Also

in

comparison,

the

Standard

&

Poor’s

500

Index

(S&P

500),

which

tracks

the

broad

U.S.

stock

market,

posted

a

+13.29%

total

return.

2

You

can

find

the

Fund’s

long-term

performance

data

in

the

Performance

Summary

beginning

on

page

17

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Investment

Strategy

We

use

fundamental,

bottom-up

research

to

seek

companies

meeting

our

criteria

of

growth

potential,

quality

and

valuation.

In

seeking

sustainable

growth

characteristics,

we

look

for

companies

we

believe

can

produce

sustainable

earnings

and

cash

flow

growth,

evaluating

the

long-term

market

opportunity

and

competitive

structure

of

an

industry

to

target

leaders

and

emerging

leaders.

We

define

quality

companies

as

those

with

strong

and

improving

competitive

positions

in

attractive

markets.

We

also

believe

important

attributes

of

quality

are

experienced

and

talented

management

teams

as

well

as

financial

strength

reflected

in

the

capital

structure,

gross

and

operating

margins,

free

cash

flow

generation

and

returns

on

capital

employed.

Our

valuation

analysis

includes

a

range

of

potential

outcomes

based

on

an

assessment

of

multiple

scenarios.

In

assessing

value,

we

consider

whether

security

prices

fully

reflect

the

balance

of

the

sustainable

growth

opportunities

relative

to

business

and

financial

risks.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Software

15.9%

IT

Services

11.4%

Semiconductors

&

Semiconductor

Equipment

6.6%

Health

Care

Equipment

&

Supplies

6.3%

Hotels,

Restaurants

&

Leisure

5.1%

Professional

Services

4.9%

Capital

Markets

4.4%

Biotechnology

3.8%

Life

Sciences

Tools

&

Services

3.6%

Entertainment

2.8%

Specialty

Retail

2.7%

Health

Care

Technology

2.6%

Electronic

Equipment,

Instruments

&

Components

2.4%

Interactive

Media

&

Services

2.4%

Machinery

2.2%

Health

Care

Providers

&

Services

2.1%

Pharmaceuticals

2.0%

Equity

Real

Estate

Investment

Trusts

(REITs)

1.9%

Internet

&

Direct

Marketing

Retail

1.4%

Road

&

Rail

1.3%

Containers

&

Packaging

1.2%

Textiles,

Apparel

&

Luxury

Goods

1.1%

Aerospace

&

Defense

1.1%

Commercial

Services

&

Supplies

1.1%

Other

6.7%

Short-Term

Investments

&

Other

Net

Assets

3.0%

1.

The

Russell

2500

Index

is

market

capitalization

weighted

and

measures

performance

of

the

2,500

smallest

companies

in

the

Russell

3000

Index,

which

represent

a

modest

amount

of

the

Russell

3000

Index’s

total

market

capitalization.

The

Russell

Midcap

Index

is

market

capitalization

weighted

and

measures

performance

of

the

smallest

companies

in

the

Russell

1000

Index,

which

represent

a

modest

amount

of

the

Russell

1000

Index’s

total

market

capitalization.

2.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

45

.

Franklin

Small-Mid

Cap

Growth

Fund

15

franklintempleton.com

Semiannual

Report

Manager’s

Discussion

During

the

six

months

under

review,

all

sectors

represented

in

the

Fund’s

portfolio

posted

positive

returns

and

contributed

to

absolute

performance.

Relative

to

the

Russell

Midcap

®

Growth

Index,

key

contributors

included

stock

selection

and

a

slight

underweighting

in

the

information

technology

(IT)

sector,

stock

selection

and

an

overweighting

in

the

consumer

discretionary

sector,

and

stock

selection

in

the

communication

services

sector.

Within

IT,

our

investments

in

communications

software

and

cloud-based

platform

company

Twilio

and

cloud-

based

electronic

signature

solutions

provider

DocuSign

were

leading

contributors

to

relative

returns.

The

novel

coronavirus

(COVID-19)

pandemic

has

increased

demand

for

Twilio’s

digital

communication

services

from

telehealth,

online

education,

remote

customer

care

and

food

delivery

companies,

among

others.

DocuSign’s

stock

benefited

from

subscription

revenue

and

billings

growth.

While

the

company

is

benefiting

from

work-from-home

trends

in

the

near

term,

we

believe

that

in

the

long

term

the

company

can

potentially

benefit

from

the

large

market

for

the

digital

transformation

of

documents

that

require

e-signatures.

In

the

consumer

discretionary

sector,

our

positions

in

online

sports-betting

company

DraftKings

(not

part

of

the

index)

and

at-home

fitness

platform

Peloton

Interactive

aided

relative

results.

DraftKings’

share

price

reached

record

highs

amid

positive

news

flow

that

included

the

announcement

of

an

exclusive

agreement

with

a

major

sports

media

company

to

provide

fantasy

sports

information.

Peloton

Interactive

benefited

from

a

surge

in

demand

for

the

company’s

at-

home,

connected

fitness

products.

In

the

communication

services

sector,

photo-sharing

website

Pinterest

supported

relative

results.

In

contrast,

key

detractors

from

the

Fund’s

relative

performance

included

stock

selection

in

the

industrials

and

real

estate

sectors.

In

the

industrials

sector,

Mercury

Systems,

a

technology

company

that

serves

the

aerospace

and

defense

industry,

faced

pandemic-related

supply-side

challenges

and

concerns

about

the

federal

government’s

defense

budget.

However,

we

believe

the

company

is

well-positioned

as

a

leading

independent

and

trusted

supplier

of

microelectronics

to

the

aerospace

and

defense

industry.

In

the

real

estate

sector,

SBA

Communications,

a

real

estate

investment

trust

that

provides

wireless

communication

towers,

underperformed

the

index,

and

an

overweighting

hurt

relative

results.

We

believe

the

company

is

an

attractive

long-term

investment

opportunity

given

the

tower

industry’s

strong

barriers

to

entry

and

increasing

mobile

carrier

spending

on

5G

network

upgrades.

Other

key

relative

detractors

included

our

positions

in

biopharmaceutical

firm

Reata

Pharmaceuticals

and

technology

solutions

and

payment

processing

services

company

Jack

Henry

&

Associates.

Reata

Pharmaceuticals

was

advised

by

the

U.S.

Food

and

Drug

Administration

to

conduct

a

second

trial

of

its

treatment

for

a

rare

neurological

disorder,

causing

a

delay

in

the

launch

of

the

therapy,

which

hurt

its

stock.

Thank

you

for

your

continued

participation

in

Franklin

Small-

Mid

Cap

Growth

Fund.

We

look

forward

to

serving

your

future

investment

needs.

John

P.

Scandalios

Michael

P.

McCarthy,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020

,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

Top

10

Holdings

10/31/20

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Twilio

,

Inc.

2.8%

IT

Services,

United

States

Synopsys,

Inc.

2.3%

Software,

United

States

DocuSign,

Inc.

2.2%

Software,

United

States

CoStar

Group,

Inc.

2.2%

Professional

Services,

United

States

IDEXX

Laboratories,

Inc.

2.0%

Health

Care

Equipment

&

Supplies,

United

States

Mettler

-Toledo

International,

Inc.

1.8%

Life

Sciences

Tools

&

Services,

United

States

Verisk

Analytics,

Inc.

1.8%

Professional

Services,

United

States

DraftKings

,

Inc.

1.7%

Hotels,

Restaurants

&

Leisure,

United

States

Black

Knight,

Inc.

1.7%

IT

Services,

United

States

Veeva

Systems,

Inc.

1.7%

Health

Care

Technology,

United

States

Franklin

Small-Mid

Cap

Growth

Fund

16

franklintempleton.com

Semiannual

Report

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

October

31,

2020

Franklin

Small-Mid

Cap

Growth

Fund

17

franklintempleton.com

Semiannual

Report

The

performance

table

does

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

A

4

6-Month

+35.37%

+27.92%

1-Year

+41.47%

+33.70%

5-Year

+106.42%

+14.30%

10-Year

+263.25%

+13.13%

Advisor

6-Month

+35.51%

+35.51%

1-Year

+41.89%

+41.89%

5-Year

+109.01%

+15.89%

10-Year

+272.40%

+14.05%

See

page

18

for

Performance

Summary

footnotes.

Franklin

Small-Mid

Cap

Growth

Fund

Performance

Summary

18

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Growth

stock

prices

reflect

projections

of

future

earnings

or

revenues,

and

can,

therefore,

fall

dramatically

if

the

company

fails

to

meet

those

projections.

Smaller,

midsized

and

relatively

new

or

unseasoned

companies

can

be

particularly

sensitive

to

changing

economic

conditions,

and

their

prospects

for

growth

are

less

certain

than

those

of

larger,

more

established

companies.

Historically,

these

securities

have

experienced

more

price

volatility

than

larger-company

stocks,

especially

over

the

short

term.

To

the

extent

the

Fund

focuses

on

particular

countries,

regions,

industries,

sectors

or

types

of

investment

from

time

to

time,

it

may

be

subject

to

greater

risks

of

adverse

developments

in

such

areas

of

focus

than

a

fund

that

invests

in

a

wider

variety

of

countries,

regions,

industries,

sectors

or

investments.

From

time

to

time,

the

trading

market

for

a

particular

security

or

type

of

security

in

which

the

Fund

invests

may

become

less

liquid

or

even

illiquid.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

diseases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

a

fee

waiver

associated

with

any

investment

it

makes

in

a

Franklin

Templeton

money

fund

and/or

other

Franklin

Templeton

fund,

contractually

guaranteed

through

8/31/21.

Fund

investment

results

reflect

the

fee

waiver;

without

this

waiver,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

5

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

A

0.88%

0.89%

Advisor

0.63%

0.64%

Your

Fund’s

Expenses

Franklin

Small-Mid

Cap

Growth

Fund

19

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.

50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,353.66

$5.10

$1,020.87

$4.38

0.86%

C

$1,000

$1,348.79

$9.52

$1,017.10

$8.18

1.61%

R

$1,000

$1,352.20

$6.51

$1,019.67

$5.59

1.10%

R6

$1,000

$1,355.87

$2.91

$1,022.74

$2.49

0.49%

Advisor

$1,000

$1,355.10

$3.62

$1,022.13

$3.11

0.61%

Franklin

Strategic

Series

Financial

Highlights

Franklin

Growth

Opportunities

Fund

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$39.60

$39.57

$38.58

$34.81

$30.40

$33.13

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.12)

(0.14)

(0.13)

(0.10)

(0.09)

(0.19)

Net

realized

and

unrealized

gains

(losses)

9.92

3.59

5.29

7.03

5.14

(1.88)

Total

from

investment

operations

........

9.80

3.45

5.16

6.93

5.05

(2.07)

Less

distributions

from:

Net

realized

gains

.................

—

(3.42)

(4.17)

(3.16)

(0.64)

(0.66)

Net

asset

value,

end

of

period

..........

$49.40

$39.60

$39.57

$38.58

$34.81

$30.40

Total

return

c

.......................

24.75%

8.90%

15.91%

20.43%

16.88%

(6.36)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.92%

0.95%

0.94%

1.02%

1.05%

1.11%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.92%

e,f

0.95%

e,f

0.94%

e,f

0.99%

e

0.97%

e

1.10%

Net

investment

(loss)

................

(0.51)%

(0.35)%

(0.32)%

(0.27)%

(0.30)%

(0.58)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$3,538,712

$2,883,392

$2,819,007

$2,428,175

$2,272,831

$548,871

Portfolio

turnover

rate

................

10.54%

19.47%

24.21%

22.68%

47.75%

25.56%

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

repurchas-

es

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

21

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$31.61

$32.47

$32.67

$30.12

$26.59

$29.27

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.24)

(0.35)

(0.35)

(0.33)

(0.29)

(0.37)

Net

realized

and

unrealized

gains

(losses)

7.91

2.91

4.32

6.04

4.46

(1.65)

Total

from

investment

operations

........

7.67

2.56

3.97

5.71

4.17

(2.02)

Less

distributions

from:

Net

realized

gains

.................

—

(3.42)

(4.17)

(3.16)

(0.64)

(0.66)

Net

asset

value,

end

of

period

..........

$39.28

$31.61

$32.47

$32.67

$30.12

$26.59

Total

return

c

.......................

24.26%

8.10%

15.10%

19.53%

15.98%

(7.03)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.67%

1.70%

1.69%

1.77%

1.80%

1.85%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.67%

e,f

1.70%

e,f

1.69%

e,f

1.74%

e

1.72%

e

1.84%

Net

investment

(loss)

................

(1.25)%

(1.10)%

(1.07)%

(1.02)%

(1.05)%

(1.32)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$247,145

$216,757

$244,574

$400,295

$390,123

$137,882

Portfolio

turnover

rate

................

10.54%

19.47%

24.21%

22.68%

47.75%

25.56%

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

repurchas-

es

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

..

$37.32

$37.57

$36.93

$33.52

$29.37

$32.10

Income

from

investment

operations

a

:

Net

investment

(loss)

b

...........

(0.17)

(0.22)

(0.21)

(0.18)

(0.17)

(0.26)

Net

realized

and

unrealized

gains

(losses)

....................

9.35

3.39

5.02

6.75

4.96

(1.81)

Total

from

investment

operations

.....

9.18

3.17

4.81

6.57

4.79

(2.07)

Less

distributions

from:

Net

realized

gains

..............

—

(3.42)

(4.17)

(3.16)

(0.64)

(0.66)

Net

asset

value,

end

of

period

.......

$46.50

$37.32

$37.57

$36.93

$33.52

$29.37

Total

return

c

....................

24.60%

8.64%

15.66%

20.14%

16.62%

(6.60)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

...................

1.16%

1.20%

1.19%

1.27%

1.30%

1.35%

Expenses

net

of

waiver

and

payments

by

affiliates

...................

1.16%

e,f

1.20%

e,f

1.19%

e,f

1.24%

e

1.22%

e

1.34%

Net

investment

(loss)

.............

(0.75)%

(0.60)%

(0.57)%

(0.52)%

(0.55)%

(0.82)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

.....

$36,270

$31,060

$37,105

$36,582

$50,429

$39,786

Portfolio

turnover

rate

.............

10.54%

19.47%

24.21%

22.68%

47.75%

25.56%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

23

In

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$43.97

$43.42

$41.78

$37.30

$32.39

$35.09

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.04)

0.01

0.01

0.07

0.05

(0.05)

Net

realized

and

unrealized

gains

(losses)

11.02

3.96

5.80

7.57

5.50

(1.99)

Total

from

investment

operations

........

10.98

3.97

5.81

7.64

5.55

(2.04)

Less

distributions

from:

Net

realized

gains

.................

—

(3.42)

(4.17)

(3.16)

(0.64)

(0.66)

Net

asset

value,

end

of

period

..........

$54.95

$43.97

$43.42

$41.78

$37.30

$32.39

Total

return

c

.......................

24.97%

9.34%

16.26%

20.98%

17.42%

(5.94)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.58%

0.59%

0.59%

0.58%

0.59%

0.67%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.58%

e,f

0.59%

e,f

0.58%

e

0.55%

e

0.51%

e

0.66%

Net

investment

income

(loss)

..........

(0.17)%

0.01%

0.04%

0.17%

0.16%

(0.14)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$464,198

$383,208

$418,174

$369,688

$291,825

$235,620

Portfolio

turnover

rate

................

10.54%

19.47%

24.21%

22.68%

47.75%

25.56%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$43.31

$42.87

$41.34

$37.02

$32.20

$34.96

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.07)

(0.04)

(0.03)

(0.01)

(0.02)

(0.11)

Net

realized

and

unrealized

gains

(losses)

10.86

3.90

5.73

7.49

5.48

(1.99)

Total

from

investment

operations

........

10.79

3.86

5.70

7.48

5.46

(2.10)

Less

distributions

from:

Net

realized

gains

.................

—

(3.42)

(4.17)

(3.16)

(0.64)

(0.66)

Net

asset

value,

end

of

period

..........

$54.10

$43.31

$42.87

$41.34

$37.02

$32.20

Total

return

c

.......................

24.91%

9.20%

16.16%

20.71%

17.21%

(6.11)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.67%

0.70%

0.69%

0.77%

0.80%

0.85%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.67%

e,f

0.70%

e,f

0.69%

e,f

0.74%

e

0.72%

e

0.84%

Net

investment

(loss)

................

(0.25)%

(0.10)%

(0.07)%

(0.02)%

(0.05)%

(0.32)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$536,204

$467,727

$506,964

$583,509

$537,193

$256,377

Portfolio

turnover

rate

................

10.54%

19.47%

24.21%

22.68%

47.75%

25.56%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Statement

of

Investments

(unaudited),

October

31,

2020

Franklin

Growth

Opportunities

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

25

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

95.2%

Auto

Components

0.4%

Aptiv

plc

............................................

United

States

193,320

$

18,653,447

Automobiles

0.7%

a

Tesla,

Inc.

...........................................

United

States

82,105

31,860,024

a

Beverages

1.1%

Constellation

Brands,

Inc.,

A

.............................

United

States

161,588

26,699,185

a

Monster

Beverage

Corp.

................................

United

States

338,906

25,950,033

52,649,218

Biotechnology

2.2%

a

Deciphera

Pharmaceuticals,

Inc.

..........................

United

States

172,150

9,996,751

a

Heron

Therapeutics,

Inc.

................................

United

States

2,189,291

35,707,336

a

Novavax

,

Inc.

........................................

United

States

414,775

33,476,490

a

PTC

Therapeutics,

Inc.

.................................

United

States

477,403

24,915,663

104,096,240

Capital

Markets

5.1%

a

Dragoneer

Growth

Opportunities

Corp.

.....................

United

States

1,112,700

13,018,590

Intercontinental

Exchange,

Inc.

...........................

United

States

502,148

47,402,771

MarketAxess

Holdings,

Inc.

..............................

United

States

87,543

47,172,546

MSCI,

Inc.

...........................................

United

States

213,698

74,760,108

S&P

Global,

Inc.

......................................

United

States

200,171

64,601,187

246,955,202

Chemicals

1.2%

Ecolab,

Inc.

..........................................

United

States

126,472

23,218,995

Linde

plc

............................................

United

Kingdom

160,557

35,377,129

58,596,124

Commercial

Services

&

Supplies

0.8%

a,b,c

Legalzoom.com,

Inc.

...................................

United

States

1,673,284

22,391,396

Republic

Services,

Inc.

.................................

United

States

158,671

13,990,022

36,381,418

Entertainment

0.5%

Walt

Disney

Co.

(The)

..................................

United

States

195,942

23,757,968

Equity

Real

Estate

Investment

Trusts

(REITs)

2.9%

American

Tower

Corp.

..................................

United

States

92,470

21,235,735

SBA

Communications

Corp.

.............................

United

States

415,242

120,573,820

141,809,555

Food

Products

1.3%

a

Freshpet

,

Inc.

........................................

United

States

212,775

24,362,737

Lamb

Weston

Holdings,

Inc.

.............................

United

States

258,057

16,373,717

a

Nomad

Foods

Ltd.

....................................

United

Kingdom

874,298

21,201,727

61,938,181

Health

Care

Equipment

&

Supplies

7.0%

Danaher

Corp.

.......................................

United

States

282,961

64,950,868

a

Edwards

Lifesciences

Corp.

.............................

United

States

599,068

42,947,185

a

IDEXX

Laboratories,

Inc.

................................

United

States

100,841

42,839,274

a

Intuitive

Surgical,

Inc.

..................................

United

States

54,140

36,115,711

a

Nevro

Corp.

.........................................

United

States

345,493

51,551,010

West

Pharmaceutical

Services,

Inc.

........................

United

States

363,072

98,780,999

337,185,047

Health

Care

Providers

&

Services

2.1%

a

Guardant

Health,

Inc.

..................................

United

States

170,094

18,142,226

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

26

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Health

Care

Providers

&

Services

(continued)

UnitedHealth

Group,

Inc.

................................

United

States

280,118

$

85,475,207

103,617,433

Health

Care

Technology

2.1%

a

Veeva

Systems,

Inc.,

A

.................................

United

States

375,387

101,373,259

a

Hotels,

Restaurants

&

Leisure

1.0%

a

Chipotle

Mexican

Grill,

Inc.

..............................

United

States

39,938

47,984,708

a

Industrial

Conglomerates

1.6%

Honeywell

International,

Inc.

.............................

United

States

200,615

33,091,444

Roper

Technologies,

Inc.

................................

United

States

123,763

45,958,153

79,049,597

Insurance

0.1%

a

Root,

Inc.,

A

.........................................

United

States

108,300

2,595,951

a

Interactive

Media

&

Services

3.4%

a

Alphabet,

Inc.,

C

......................................

United

States

69,737

113,044,374

a

Facebook,

Inc.,

A

.....................................

United

States

146,069

38,432,215

a,d

ZoomInfo

Technologies,

Inc.,

A

...........................

United

States

302,278

11,483,541

162,960,130

Internet

&

Direct

Marketing

Retail

9.6%

a

Amazon.com,

Inc.

.....................................

United

States

144,019

437,263,287

a

Booking

Holdings,

Inc.

.................................

United

States

7,746

12,567,885

b,c

Marqeta

,

Inc.

.........................................

United

States

1,196,245

10,919,384

460,750,556

IT

Services

13.0%

a

Black

Knight,

Inc.

.....................................

United

States

368,592

32,417,666

Mastercard

,

Inc.,

A

....................................

United

States

619,925

178,935,152

a

Okta

,

Inc.

...........................................

United

States

96,161

20,177,463

a

PayPal

Holdings,

Inc.

..................................

United

States

475,661

88,534,782

a

Shopify,

Inc.,

A

.......................................

Canada

43,685

40,427,410

a

Snowflake,

Inc.,

A

.....................................

United

States

135,760

33,942,715

a

Twilio

,

Inc.,

A

.........................................

United

States

309,357

86,301,322

Visa,

Inc.,

A

..........................................

United

States

802,292

145,784,479

626,520,989

Leisure

Products

0.6%

a

Peloton

Interactive,

Inc.,

A

...............................

United

States

255,728

28,183,783

a

Life

Sciences

Tools

&

Services

1.0%

a

Illumina,

Inc.

.........................................

United

States

69,033

20,205,959

a,e

Wuxi

Biologics

Cayman,

Inc.,

144A,

Reg

S

..................

China

931,394

27,001,112

47,207,071

Media

0.9%

a

Liberty

Broadband

Corp.,

C

..............................

United

States

319,240

45,239,500

a

Pharmaceuticals

1.7%

AstraZeneca

plc,

ADR

..................................

United

Kingdom

663,092

33,260,695

a

Catalent

,

Inc.

........................................

United

States

202,153

17,742,969

a,d

GW

Pharmaceuticals

plc,

ADR

...........................

United

Kingdom

49,491

4,454,685

a

Reata

Pharmaceuticals,

Inc.,

A

...........................

United

States

114,500

13,363,295

Royalty

Pharma

plc,

A

..................................

United

States

325,046

11,929,188

80,750,832

Professional

Services

5.1%

a

CoStar

Group,

Inc.

....................................

United

States

142,484

117,351,247

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

27

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Professional

Services

(continued)

a

Dun

&

Bradstreet

Holdings,

Inc.

...........................

United

States

225,091

$

5,816,351

IHS

Markit

Ltd.

.......................................

United

States

364,969

29,515,043

TransUnion

..........................................

United

States

230,933

18,396,123

Verisk

Analytics,

Inc.

...................................

United

States

428,140

76,196,076

247,274,840

Road

&

Rail

0.9%

Union

Pacific

Corp.

....................................

United

States

253,106

44,847,852

Semiconductors

&

Semiconductor

Equipment

3.6%

Analog

Devices,

Inc.

...................................

United

States

256,344

30,384,454

Monolithic

Power

Systems,

Inc.

...........................

United

States

194,459

62,149,097

NVIDIA

Corp.

........................................

United

States

161,594

81,016,768

173,550,319

Software

19.1%

a

Adobe,

Inc.

..........................................

United

States

226,042

101,063,378

a

Atlassian

Corp.

plc,

A

..................................

United

States

80,156

15,359,493

a

Autodesk,

Inc.

........................................

United

States

71,892

16,933,442

a

Avalara,

Inc.

.........................................

United

States

38,000

5,663,900

a,b,c,f

Avidxchange

,

Inc.

.....................................

United

States

255,039

12,499,971

a

Bill.com

Holdings,

Inc.

..................................

United

States

675,454

67,545,400

a

DocuSign,

Inc.

.......................................

United

States

156,746

31,701,878

a,d

Duck

Creek

Technologies,

Inc.

...........................

United

States

19,500

845,715

Intuit,

Inc.

...........................................

United

States

68,134

21,440,407

Microsoft

Corp.

.......................................

United

States

1,304,965

264,216,263

a

Paycom

Software,

Inc.

.................................

United

States

34,754

12,653,584

a

PTC,

Inc.

...........................................

United

States

284,951

23,901,690

a

salesforce.com,

Inc.

...................................

United

States

236,006

54,817,114

a

ServiceNow

,

Inc.

......................................

United

States

311,127

154,807,461

a

Synopsys,

Inc.

.......................................

United

States

175,774

37,591,028

a

Tyler

Technologies,

Inc.

.................................

United

States

73,116

28,104,328

a

Workday,

Inc.,

A

......................................

United

States

129,999

27,315,390

a

Zendesk

,

Inc.

........................................

United

States

185,645

20,595,456

a

Zoom

Video

Communications,

Inc.,

A

......................

United

States

52,971

24,414,864

921,470,762

Specialty

Retail

0.2%

a

Burlington

Stores,

Inc.

..................................

United

States

51,461

9,961,820

a

Technology

Hardware,

Storage

&

Peripherals

3.7%

Apple,

Inc.

..........................................

United

States

1,657,148

180,397,131

Textiles,

Apparel

&

Luxury

Goods

1.0%

b,c

Figs,

Inc.

............................................

United

States

230,802

17,756,521

NIKE,

Inc.,

B

.........................................

United

States

264,968

31,817,358

49,573,879

Wireless

Telecommunication

Services

1.3%

a

T-Mobile

US,

Inc.

.....................................

United

States

574,057

62,899,425

a

Total

Common

Stocks

(Cost

$1,749,041,159)

....................................

4,590,092,261

Preferred

Stocks

4.6%

Airlines

0.4%

a,b,c

Wheels

Up

Partners

LLC,

D

.............................

United

States

5,028,735

20,826,898

a

Automobiles

1.2%

a,b,c,e

Proterra

,

Inc.,

144A,

5

..................................

United

States

2,362,202

35,150,615

a,b,c,e

Proterra

,

Inc.,

144A,

6

..................................

United

States

596,775

8,880,277

a,b,c

Proterra

,

Inc.,

7

.......................................

United

States

780,667

11,616,672

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

28

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Preferred

Stocks

(continued)

Automobiles

(continued)

a,b,c

Proterra

,

Inc.,

8

.......................................

United

States

289,016

$

4,300,686

59,948,250

Commercial

Services

&

Supplies

0.3%

a,b,c

Optoro

,

Inc.,

E

.......................................

United

States

509,182

13,113,596

a

Food

&

Staples

Retailing

0.4%

a,b,c

Sweetgreen

,

Inc.,

H

...................................

United

States

928,488

14,767,846

a,b,c

Sweetgreen

,

Inc.,

I

....................................

United

States

100,835

1,781,490

16,549,336

Health

Care

Providers

&

Services

0.5%

a,b,c

Tempus

Labs,

Inc.,

F

...................................

United

States

504,854

17,772,425

a,b,c

Tempus

Labs,

Inc.,

G

..................................

United

States

126,131

5,090,745

22,863,170

Internet

&

Direct

Marketing

Retail

0.4%

a,b,c

Fanatics,

Inc.,

E

......................................

United

States

920,577

15,767,643

a,b,c

Marqeta

,

Inc.,

A

.......................................

United

States

181,494

2,087,181

a,b,c

Marqeta

,

Inc.,

B

......................................

United

States

19,136

229,632

18,084,456

IT

Services

0.3%

a,b,c

HashiCorp

,

Inc.,

E

.....................................

United

States

207,551

14,792,293

a

Software

1.1%

a,b,c

ClearMotion

,

Inc.,

C

...................................

United

States

2,610,594

6,809,870

a,b,c

ClearMotion

,

Inc.,

D

...................................

United

States

3,698,772

10,567,181

a,b,c

Confluent,

Inc.,

E

.....................................

United

States

642,459

9,616,776

a,b,c

Gitlab

,

Inc.,

E

........................................

United

States

201,294

8,051,760

a,b,c,f

Talkdesk

,

Inc.,

C

......................................

United

States

1,753,060

11,517,955

a,b,c

Tanium,

Inc.,

G

.......................................

United

States

805,800

8,336,143

54,899,685

Total

Preferred

Stocks

(Cost

$155,692,404)

.....................................

221,077,684

Total

Long

Term

Investments

(Cost

$1,904,733,563)

.............................

4,811,169,945

a

Short

Term

Investments

0.4%

a

a

Country

Shares

a

Value

a

Money

Market

Funds

0.2%

g,h

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

12,036,647

12,036,647

Total

Money

Market

Funds

(Cost

$12,036,647)

..................................

12,036,647

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Growth

Opportunities

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

29

s

Short

Term

Investments

(continued)

a

a

Country

Shares

a

Value

a

a

a

a

a

a

i

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

0.2%

Money

Market

Funds

0.2%

g,h

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

7,852,835

$

7,852,835

Total

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

(Cost

$7,852,835)

............................................................

7,852,835

Total

Short

Term

Investments

(Cost

$19,889,482

)

................................

19,889,482

a

Total

Investments

(Cost

$1,924,623,045)

100.2%

................................

$4,831,059,427

Other

Assets,

less

Liabilities

(0.2)

%

...........................................

(8,531,155)

Net

Assets

100.0%

...........................................................

$4,822,528,272

See

Abbreviations

on

page

78

.

a

Non

-income

producing.

b

Fair

valued

using

significant

unobservable

inputs.

See

Note

11

regarding

fair

value

measurements.

c

See

Note

8

regarding

restricted

securities.

d

A

portion

or

all

of

the

security

is

on

loan

at

October

31,

2020.

See

Note

1

(

c

)

e

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

October

31,

2020,

the

aggregate

value

of

these

securities

was

$71,032,004,

representing

1.5%

of

net

assets.

f

See

Note

9

regarding

holdings

of

5%

voting

securities.

g

See

Note

3

(

f

)

regarding

investments

in

affiliated

management

investment

companies.

h

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

i

See

Note

1

(

c

)

regarding

securities

on

loan.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small

Cap

Growth

Fund

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

30

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$18.85

$21.46

$23.01

$19.60

$16.37

$18.83

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.08)

(0.11)

(0.15)

(0.13)

(0.11)

(0.08)

Net

realized

and

unrealized

gains

(losses)

6.23

(1.07)

2.86

3.96

3.34

(2.03)

Total

from

investment

operations

........

6.15

(1.18)

2.71

3.83

3.23

(2.11)

Less

distributions

from:

Net

realized

gains

.................

—

(1.43)

(4.26)

(0.42)

—

(0.35)

Net

asset

value,

end

of

period

..........

$25.00

$18.85

$21.46

$23.01

$19.60

$16.37

Total

return

c

.......................

32.63%

(6.25)%

16.06%

19.71%

19.73%

(11.28)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.06%

1.07%

1.07%

1.11%

1.10%

1.13%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.06%

e,f

1.06%

e

1.06%

e

1.10%

e

1.08%

e

1.11%

e

Net

investment

(loss)

................

(0.71)%

(0.51)%

(0.68)%

(0.61)%

(0.61)%

(0.44)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$917,328

$686,791

$713,442

$665,251

$719,752

$792,072

Portfolio

turnover

rate

................

25.32%

35.29%

42.10%

29.82%

29.93%

43.99%

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

repurchas-

es

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

31

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$14.69

$17.15

$19.41

$16.71

$14.07

$16.36

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.13)

(0.21)

(0.28)

(0.25)

(0.21)

(0.18)

Net

realized

and

unrealized

gains

(losses)

4.85

(0.82)

2.28

3.37

2.85

(1.76)

Total

from

investment

operations

........

4.72

(1.03)

2.00

3.12

2.64

(1.94)

Less

distributions

from:

Net

realized

gains

.................

—

(1.43)

(4.26)

(0.42)

—

(0.35)

Net

asset

value,

end

of

period

..........

$19.41

$14.69

$17.15

$19.41

$16.71

$14.07

Total

return

c

.......................

32.13%

(6.97)%

15.31%

18.79%

18.76%

(11.95)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.81%

1.82%

1.82%

1.86%

1.85%

1.88%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.81%

e,f

1.81%

e

1.81%

e

1.85%

e

1.83%

e

1.86%

e

Net

investment

(loss)

................

(1.46)%

(1.26)%

(1.43)%

(1.36)%

(1.36)%

(1.19)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$74,106

$66,269

$90,513

$132,116

$142,539

$157,175

Portfolio

turnover

rate

................

25.32%

35.29%

42.10%

29.82%

29.93%

43.99%

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

repurchas-

es

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

32

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$17.58

$20.15

$21.93

$18.74

$15.70

$18.11

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.11)

(0.15)

(0.20)

(0.17)

(0.15)

(0.12)

Net

realized

and

unrealized

gains

(losses)

5.81

(0.99)

2.68

3.78

3.19

(1.94)

Total

from

investment

operations

........

5.70

(1.14)

2.48

3.61

3.04

(2.06)

Less

distributions

from:

Net

realized

gains

.................

—

(1.43)

(4.26)

(0.42)

—

(0.35)

Net

asset

value,

end

of

period

..........

$23.28

$17.58

$20.15

$21.93

$18.74

$15.70

Total

return

c

.......................

32.42%

(6.47)%

15.78%

19.37%

19.36%

(11.46)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.31%

1.32%

1.32%

1.36%

1.35%

1.38%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.31%

e,f

1.31%

e

1.31%

e

1.35%

e

1.33%

e

1.36%

e

Net

investment

(loss)

................

(0.96)%

(0.76)%

(0.93)%

(0.86)%

(0.86)%

(0.69)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$66,585

$54,369

$74,634

$71,398

$79,995

$79,929

Portfolio

turnover

rate

................

25.32%

35.29%

42.10%

29.82%

29.93%

43.99%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

33

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$21.07

$23.73

$24.88

$21.06

$17.52

$20.02

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.04)

(0.02)

(0.07)

(0.03)

(0.03)

0.01

Net

realized

and

unrealized

gains

(losses)

6.97

(1.21)

3.18

4.27

3.57

(2.16)

Total

from

investment

operations

........

6.93

(1.23)

3.11

4.24

3.54

(2.15)

Less

distributions

from:

Net

realized

gains

.................

—

(1.43)

(4.26)

(0.42)

—

(0.35)

Net

asset

value,

end

of

period

..........

$28.00

$21.07

$23.73

$24.88

$21.06

$17.52

Total

return

c

.......................

32.89%

(5.86)%

16.50%

20.23%

20.21%

(10.81)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.66%

0.67%

0.67%

0.65%

0.63%

0.63%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.64%

e

0.64%

e

0.64%

e

0.63%

e

0.61%

e

0.61%

e

Net

investment

(loss)

................

(0.30)%

(0.09)%

(0.26)%

(0.14)%

(0.14)%

(0.06)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$1,498,046

$1,136,759

$1,084,442

$935,509

$858,972

$846,724

Portfolio

turnover

rate

................

25.32%

35.29%

42.10%

29.82%

29.93%

43.99%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

34

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$20.70

$23.37

$24.61

$20.88

$17.41

$19.94

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.06)

(0.06)

(0.10)

(0.08)

(0.07)

(0.04)

Net

realized

and

unrealized

gains

(losses)

6.84

(1.18)

3.12

4.23

3.54

(2.14)

Total

from

investment

operations

........

6.78

(1.24)

3.02

4.15

3.47

(2.18)

Less

distributions

from:

Net

realized

gains

.................

—

(1.43)

(4.26)

(0.42)

—

(0.35)

Net

asset

value,

end

of

period

..........

$27.48

$20.70

$23.37

$24.61

$20.88

$17.41

Total

return

c

.......................

32.75%

(5.99)%

16.30%

19.97%

19.93%

(11.06)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.81%

0.82%

0.82%

0.86%

0.85%

0.88%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.81%

e,f

0.81%

e

0.81%

e

0.85%

e

0.83%

e

0.86%

e

Net

investment

(loss)

................

(0.46)%

(0.26)%

(0.43)%

(0.36)%

(0.36)%

(0.19)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$560,193

$428,155

$725,622

$713,135

$805,661

$850,975

Portfolio

turnover

rate

................

25.32%

35.29%

42.10%

29.82%

29.93%

43.99%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Statement

of

Investments

(unaudited),

October

31,

2020

Franklin

Small

Cap

Growth

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

35

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

92.6%

Aerospace

&

Defense

5.4%

a

Axon

Enterprise,

Inc.

...................................

United

States

243,100

$

24,042,590

BWX

Technologies,

Inc.

................................

United

States

572,600

31,498,726

Cubic

Corp.

.........................................

United

States

914,300

54,044,273

a

Kratos

Defense

&

Security

Solutions,

Inc.

...................

United

States

1,708,764

32,278,552

a

Mercury

Systems,

Inc.

..................................

United

States

401,116

27,628,870

169,493,011

Airlines

1.7%

Allegiant

Travel

Co.

....................................

United

States

393,248

52,994,100

Banks

2.4%

a

Metropolitan

Bank

Holding

Corp.

..........................

United

States

283,954

8,504,421

Pinnacle

Financial

Partners,

Inc.

..........................

United

States

563,004

25,779,953

TCF

Financial

Corp.

...................................

United

States

580,723

15,801,473

Western

Alliance

Bancorp

...............................

United

States

569,500

23,463,400

73,549,247

Biotechnology

11.1%

a

Alector

,

Inc.

..........................................

United

States

796,500

7,495,065

a

Argenx

SE,

ADR

......................................

Netherlands

75,300

18,684,189

a

Ascendis

Pharma

A/S,

ADR

.............................

Denmark

178,900

29,223,315

a

Blueprint

Medicines

Corp.

...............................

United

States

203,800

20,844,664

a

Deciphera

Pharmaceuticals,

Inc.

..........................

United

States

507,400

29,464,718

a

Dyne

Therapeutics,

Inc.

................................

United

States

217,900

4,506,172

a

Emergent

BioSolutions

,

Inc.

.............................

United

States

359,000

32,299,230

a

Global

Blood

Therapeutics,

Inc.

...........................

United

States

488,700

25,842,456

a

Heron

Therapeutics,

Inc.

................................

United

States

1,775,508

28,958,535

a

Insmed

,

Inc.

.........................................

United

States

673,400

22,181,796

a

Iovance

Biotherapeutics

,

Inc.

.............................

United

States

1,340,500

47,829,040

a

Legend

Biotech

Corp.,

ADR

.............................

United

States

227,800

5,893,186

a

Novavax

,

Inc.

........................................

United

States

105,400

8,506,834

a

PTC

Therapeutics,

Inc.

.................................

United

States

753,100

39,304,289

a,b

Sutro

Biopharma,

Inc.

..................................

United

States

355,536

4,572,193

a,b

Taysha

Gene

Therapies,

Inc.

.............................

United

States

372,000

7,737,600

a

Trillium

Therapeutics,

Inc.

...............................

Canada

530,400

6,603,480

a

Twist

Bioscience

Corp.

.................................

United

States

94,562

7,247,232

347,193,994

Capital

Markets

3.0%

Ares

Management

Corp.

................................

United

States

415,800

17,588,340

Artisan

Partners

Asset

Management,

Inc.,

A

.................

United

States

132,572

5,310,835

Evercore

,

Inc.,

A

......................................

United

States

301,000

23,941,540

Houlihan

Lokey

,

Inc.

...................................

United

States

606,300

38,015,010

a

StepStone

Group,

Inc.,

A

................................

United

States

284,720

7,320,151

92,175,876

Chemicals

1.2%

a

Ingevity

Corp.

........................................

United

States

684,686

37,575,568

a

Commercial

Services

&

Supplies

1.9%

Healthcare

Services

Group,

Inc.

..........................

United

States

822,800

18,825,664

a,c,d

Legalzoom.com,

Inc.

...................................

United

States

1,431,280

19,152,970

US

Ecology,

Inc.

......................................

United

States

648,376

19,788,435

57,767,069

Communications

Equipment

1.9%

a

ViaSat

,

Inc.

..........................................

United

States

940,283

31,875,594

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

36

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Communications

Equipment

(continued)

a

Viavi

Solutions,

Inc.

....................................

United

States

2,253,900

$

27,835,665

59,711,259

Construction

&

Engineering

2.0%

Arcosa

,

Inc.

.........................................

United

States

903,800

41,728,446

Granite

Construction,

Inc.

...............................

United

States

1,049,543

20,266,675

61,995,121

Consumer

Finance

0.8%

a

PRA

Group,

Inc.

......................................

United

States

775,900

26,481,467

a

Diversified

Consumer

Services

1.0%

a

Grand

Canyon

Education,

Inc.

............................

United

States

392,300

30,744,551

a

Electronic

Equipment,

Instruments

&

Components

0.4%

a

Vontier

Corp.

.........................................

United

States

393,500

11,309,190

a

Equity

Real

Estate

Investment

Trusts

(REITs)

1.3%

Rexford

Industrial

Realty,

Inc.

............................

United

States

897,100

41,679,266

Food

&

Staples

Retailing

1.3%

a

Grocery

Outlet

Holding

Corp.

............................

United

States

899,500

39,595,990

a

Food

Products

2.1%

a

Hostess

Brands,

Inc.

...................................

United

States

1,147,600

14,505,664

a

Nomad

Foods

Ltd.

....................................

United

Kingdom

1,088,500

26,396,125

a

Simply

Good

Foods

Co.

(The)

............................

United

States

1,385,500

26,047,400

66,949,189

Health

Care

Equipment

&

Supplies

6.4%

a

CryoPort

,

Inc.

........................................

United

States

217,800

8,742,492

a

Haemonetics

Corp.

....................................

United

States

201,900

20,410,071

a

Inari

Medical,

Inc.

.....................................

United

States

115,900

7,672,580

a

Integer

Holdings

Corp.

.................................

United

States

521,400

30,475,830

a

iRhythm

Technologies,

Inc.

..............................

United

States

193,597

40,936,085

a

Neogen

Corp.

........................................

United

States

165,466

11,539,599

a

Nevro

Corp.

.........................................

United

States

204,300

30,483,603

a

Outset

Medical,

Inc.

...................................

United

States

18,100

841,107

a

Penumbra,

Inc.

.......................................

United

States

159,700

41,686,491

a

Pulmonx

Corp.

.......................................

United

States

185,400

7,797,924

200,585,782

Health

Care

Providers

&

Services

1.7%

a

1Life

Healthcare,

Inc.

..................................

United

States

675,200

19,047,392

a

HealthEquity

,

Inc.

.....................................

United

States

473,016

24,355,594

a,b

Oak

Street

Health,

Inc.

.................................

United

States

206,500

9,827,335

53,230,321

Health

Care

Technology

3.1%

a,b

Accolade,

Inc.

........................................

United

States

300,835

10,535,242

a

Inspire

Medical

Systems,

Inc.

............................

United

States

300,444

35,882,027

a

Phreesia

,

Inc.

........................................

United

States

984,982

36,414,784

a,b

Tabula

Rasa

HealthCare,

Inc.

............................

United

States

378,800

13,083,752

95,915,805

Hotels,

Restaurants

&

Leisure

5.1%

a,b

DraftKings

,

Inc.,

A

.....................................

United

States

1,366,400

48,370,560

Extended

Stay

America,

Inc.

.............................

United

States

2,116,100

24,017,735

Red

Rock

Resorts,

Inc.,

A

...............................

United

States

856,600

16,378,192

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

37

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Hotels,

Restaurants

&

Leisure

(continued)

Texas

Roadhouse,

Inc.

.................................

United

States

428,100

$

29,979,843

Wingstop

,

Inc.

........................................

United

States

332,729

38,706,365

157,452,695

Household

Durables

2.2%

a

M/I

Homes,

Inc.

.......................................

United

States

976,546

39,960,262

a

TRI

Pointe

Group,

Inc.

.................................

United

States

1,670,300

27,443,029

67,403,291

Insurance

1.2%

James

River

Group

Holdings

Ltd.

.........................

United

States

380,500

17,780,765

a,b

Selectquote

,

Inc.

......................................

United

States

1,062,500

18,296,250

36,077,015

Internet

&

Direct

Marketing

Retail

0.3%

c,d

Marqeta

,

Inc.

.........................................

United

States

1,199,415

10,948,320

IT

Services

5.8%

a

LiveRamp

Holdings,

Inc.

................................

United

States

628,100

41,511,129

ManTech

International

Corp.,

A

...........................

United

States

334,500

21,702,360

c,d,e

Paya

Holdings,

Inc.

....................................

United

States

2,000,000

21,940,000

a

Repay

Holdings

Corp.

..................................

United

States

1,331,900

30,007,707

Science

Applications

International

Corp.

....................

United

States

445,500

34,022,835

a

Shift4

Payments,

Inc.,

A

................................

United

States

379,100

19,299,981

a

USA

Technologies,

Inc.

.................................

United

States

1,344,300

11,171,133

179,655,145

Life

Sciences

Tools

&

Services

1.3%

a

NeoGenomics

,

Inc.

....................................

United

States

1,017,300

39,908,679

a

Machinery

1.2%

Kennametal,

Inc.

......................................

United

States

1,256,200

38,942,200

Personal

Products

0.7%

a

BellRing

Brands,

Inc.,

A

.................................

United

States

1,261,200

23,067,348

a

Pharmaceuticals

3.0%

a

Collegium

Pharmaceutical,

Inc.

...........................

United

States

758,300

13,520,489

a

GW

Pharmaceuticals

plc,

ADR

...........................

United

Kingdom

322,500

29,028,225

a

Reata

Pharmaceuticals,

Inc.,

A

...........................

United

States

202,174

23,595,728

a

Revance

Therapeutics,

Inc.

..............................

United

States

1,095,257

28,345,251

94,489,693

Semiconductors

&

Semiconductor

Equipment

5.4%

a

Allegro

MicroSystems

,

Inc.

..............................

United

States

502,600

9,197,580

a

Lattice

Semiconductor

Corp.

.............................

United

States

1,706,900

59,570,810

a

Onto

Innovation,

Inc.

...................................

United

States

857,309

27,493,900

a

Semtech

Corp.

.......................................

United

States

717,500

39,383,575

a

Silicon

Laboratories,

Inc.

................................

United

States

311,100

31,875,306

167,521,171

Software

8.5%

a

Alteryx,

Inc.,

A

........................................

United

States

177,400

22,237,090

a

Avalara,

Inc.

.........................................

United

States

230,846

34,407,596

a

Bill.com

Holdings,

Inc.

..................................

United

States

135,708

13,570,800

a

Cloudflare

,

Inc.,

A

.....................................

United

States

279,400

14,520,418

a

Datto

Holding

Corp.

...................................

United

States

240,000

6,840,000

a

Duck

Creek

Technologies,

Inc.

...........................

United

States

277,269

12,025,157

a

Envestnet

,

Inc.

.......................................

United

States

388,122

29,784,482

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

38

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Software

(continued)

a

HubSpot

,

Inc.

........................................

United

States

117,629

$

34,120,644

a

Paylocity

Holding

Corp.

.................................

United

States

204,532

37,944,777

a

Pluralsight

,

Inc.,

A

.....................................

United

States

189,900

2,981,430

a

Q2

Holdings,

Inc.

.....................................

United

States

335,500

30,611,020

a

Zendesk

,

Inc.

........................................

United

States

222,864

24,724,532

263,767,946

Specialty

Retail

6.3%

American

Eagle

Outfitters,

Inc.

...........................

United

States

2,609,800

35,780,358

a

Boot

Barn

Holdings,

Inc.

................................

United

States

1,119,460

35,845,109

a

Five

Below,

Inc.

.......................................

United

States

277,200

36,961,848

Lithia

Motors,

Inc.,

A

...................................

United

States

153,426

35,222,007

a

RH

................................................

United

States

55,500

18,605,265

a

Sportsman's

Warehouse

Holdings,

Inc.

.....................

United

States

1,184,700

15,424,794

a

Urban

Outfitters,

Inc.

...................................

United

States

797,800

17,822,852

195,662,233

Textiles,

Apparel

&

Luxury

Goods

0.8%

Steven

Madden

Ltd.

...................................

United

States

1,082,650

25,994,427

Trading

Companies

&

Distributors

2.1%

a

Beacon

Roofing

Supply,

Inc.

.............................

United

States

1,043,200

32,026,240

a

Univar

Solutions,

Inc.

..................................

United

States

2,024,132

33,580,350

65,606,590

Total

Common

Stocks

(Cost

$2,013,998,516)

....................................

2,885,443,559

Preferred

Stocks

5.1%

Airlines

0.6%

a,c,d

Wheels

Up

Partners

LLC,

D

.............................

United

States

4,310,344

17,851,626

a

Auto

Components

0.2%

a,c,d

Tula

eTechnology

,

Inc.

..................................

United

States

361,111

—

a,c,d

Tula

eTechnology

,

Inc.,

E

...............................

United

States

3,611,111

6,919,423

6,919,423

Automobiles

1.7%

a,c,d,f

Proterra

,

Inc.,

144A,

5

..................................

United

States

1,787,047

26,592,053

a,c,d,f

Proterra

,

Inc.,

144A,

6

..................................

United

States

1,310,834

19,505,792

a,c,d

Proterra

,

Inc.,

7

.......................................

United

States

536,367

7,981,379

54,079,224

Commercial

Services

&

Supplies

0.4%

a,c,d

Optoro

,

Inc.,

E

.......................................

United

States

508,130

13,086,502

a

Food

&

Staples

Retailing

0.2%

a,c,d

Sweetgreen

,

Inc.,

H

...................................

United

States

383,435

6,098,635

a,c,d

Sweetgreen

,

Inc.,

I

....................................

United

States

41,641

735,687

6,834,322

Software

1.0%

a,c,d

Alkami

Technology,

Inc.,

F

...............................

United

States

343,750

5,500,000

a,c,d

ClearMotion

,

Inc.,

D

...................................

United

States

3,698,772

10,567,181

a,c,d,f

Smule

,

Inc.,

144A,

G

...................................

United

States

1,542,673

10,412,764

a,c,d,f

Smule

,

Inc.,

144A,

H

...................................

United

States

352,675

2,809,136

29,289,081

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

39

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Preferred

Stocks

(continued)

Specialty

Retail

0.5%

a,c,d,f

Rent

the

Runway,

Inc.,

144A,

F

...........................

United

States

596,471

$

12,797,090

a,c,d

Rent

the

Runway,

Inc.,

G

................................

United

States

203,515

3,606,110

16,403,200

Textiles,

Apparel

&

Luxury

Goods

0.5%

a,c,d

Allbirds

,

Inc.,

E

.......................................

United

States

1,297,305

14,999,998

a

Total

Preferred

Stocks

(Cost

$117,907,767)

.....................................

159,463,376

Total

Long

Term

Investments

(Cost

$2,131,906,283)

.............................

3,044,906,935

a

Short

Term

Investments

4.3%

a

a

Country

Shares

a

Value

a

Money

Market

Funds

2.9%

g,h

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

89,112,859

89,112,859

Total

Money

Market

Funds

(Cost

$89,112,859)

..................................

89,112,859

a

a

a

a

a

i

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

1.4%

Money

Market

Funds

1.4%

g,h

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

44,598,925

44,598,925

Total

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

(Cost

$44,598,925)

...........................................................

44,598,925

Total

Short

Term

Investments

(Cost

$133,711,784

)

...............................

133,711,784

a

Total

Investments

(Cost

$

2,265,618,067)

102.0%

................................

$3,178,618,719

Other

Assets,

less

Liabilities

(2

.0

)

%

...........................................

(62,360,583)

Net

Assets

100.0%

...........................................................

$3,116,258,136

See

Abbreviations

on

page

78

.

a

Non-income

producing.

b

A

portion

or

all

of

the

security

is

on

loan

at

October

31,

2020.

See

Note

1(c)

c

Fair

valued

using

significant

unobservable

inputs.

See

Note

11

regarding

fair

value

measurements.

d

See

Note

8

regarding

restricted

securities.

e

See

Note

9

regarding

holdings

of

5%

voting

securities.

f

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

October

31,

2020,

the

aggregate

value

of

these

securities

was

$72,116,835,

representing

2.3%

of

net

assets.

g

See

Note

3(f)

regarding

investments

in

affiliated

management

investment

companies.

h

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

i

See

Note

1(c)

regarding

securities

on

loan.

Franklin

Strategic

Series

Financial

Highlights

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Small-Mid

Cap

Growth

Fund

franklintempleton.com

Semiannual

Report

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accompanying

notes

are

an

integral

part

of

these

financial

statements.

40

0

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$32.15

$37.17

$36.07

$34.35

$31.84

$38.38

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.10)

(0.07)

(0.09)

(0.15)

(0.11)

(0.03)

c

Net

realized

and

unrealized

gains

(losses)

11.47

1.24

5.33

4.97

4.73

(3.37)

Total

from

investment

operations

........

11.37

1.17

5.24

4.82

4.62

(3.40)

Less

distributions

from:

Net

realized

gains

.................

—

(6.19)

(4.14)

(3.10)

(2.11)

(3.14)

Net

asset

value,

end

of

period

..........

$43.52

$32.15

$37.17

$36.07

$34.35

$31.84

Total

return

d

.......................

35.37%

2.97%

17.43%

14.28%

15.01%

(9.02)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.86%

0.88%

0.88%

1.02%

0.95%

0.96%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.86%

f,g

0.87%

f

0.87%

f

1.00%

f

0.94%

f

0.95%

f

Net

investment

(loss)

................

(0.51)%

(0.21)%

(0.25)%

(0.41)%

(0.34)%

(0.08)%

c

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$3,377,036

$2,515,801

$2,684,131

$2,262,471

$2,303,113

$2,231,822

Portfolio

turnover

rate

................

28.27%

52.98%

54.28%

38.35%

35.46%

38.72%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

(0.38)%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

41

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$19.41

$24.98

$25.84

$25.59

$24.40

$30.43

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.15)

(0.22)

(0.26)

(0.31)

(0.27)

(0.23)

c

Net

realized

and

unrealized

gains

(losses)

6.92

0.84

3.54

3.66

3.57

(2.66)

Total

from

investment

operations

........

6.77

0.62

3.28

3.35

3.30

(2.89)

Less

distributions

from:

Net

realized

gains

.................

—

(6.19)

(4.14)

(3.10)

(2.11)

(3.14)

Net

asset

value,

end

of

period

..........

$26.18

$19.41

$24.98

$25.84

$25.59

$24.40

Total

return

d

.......................

34.88%

2.14%

16.68%

13.39%

14.15%

(9.72)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.61%

1.63%

1.63%

1.77%

1.70%

1.71%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.61%

f,g

1.62%

f

1.62%

f

1.75%

f

1.69%

f

1.70%

f

Net

investment

(loss)

................

(1.26)%

(0.96)%

(1.00)%

(1.16)%

(1.09)%

(0.83)%

c

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$170,066

$138,940

$173,334

$334,769

$371,262

$377,024

Portfolio

turnover

rate

................

28.27%

52.98%

54.28%

38.35%

35.46%

38.72%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

(1.13)%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

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accompanying

notes

are

an

integral

part

of

these

financial

statements.

42

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$28.45

$33.66

$33.15

$31.87

$29.75

$36.18

Income

from

investment

operations

a

:

Net

investment

(loss)

b

..............

(0.13)

(0.14)

(0.16)

(0.22)

(0.18)

(0.11)

c

Net

realized

and

unrealized

gains

(losses)

10.15

1.12

4.81

4.60

4.41

(3.18)

Total

from

investment

operations

........

10.02

0.98

4.65

4.38

4.23

(3.29)

Less

distributions

from:

Net

realized

gains

.................

—

(6.19)

(4.14)

(3.10)

(2.11)

(3.14)

Net

asset

value,

end

of

period

..........

$38.47

$28.45

$33.66

$33.15

$31.87

$29.75

Total

return

d

.......................

35.22%

2.69%

17.17%

14.00%

14.70%

(9.24)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.10%

1.12%

1.12%

1.26%

1.19%

1.21%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.10%

f,g

1.11%

f

1.11%

f

1.24%

f

1.18%

f

1.20%

f

Net

investment

(loss)

................

(0.75

)%

(0.45)%

(0.49)%

(0.65)%

(0.58)%

(0.33)%

c

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$50,717

$40,997

$50,721

$70,692

$81,864

$86,989

Portfolio

turnover

rate

................

28.27%

52.98%

54.28%

38.35%

35.46%

38.72%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

(0.63)%.

d

Total

return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

43

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$37.12

$41.83

$39.91

$37.51

$34.43

$41.04

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.03)

0.07

0.05

0.05

0.05

0.15

c

Net

realized

and

unrealized

gains

(losses)

13.24

1.41

6.01

5.45

5.14

(3.62)

Total

from

investment

operations

........

13.21

1.48

6.06

5.50

5.19

(3.47)

Less

distributions

from:

Net

realized

gains

.................

—

(6.19)

(4.14)

(3.10)

(2.11)

(3.14)

Net

asset

value,

end

of

period

..........

$50.33

$37.12

$41.83

$39.91

$37.51

$34.43

Total

return

d

.......................

35.59%

3.40%

17.82%

14.90%

15.51%

(8.54)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.52%

0.52%

0.52%

0.50%

0.48%

0.48%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.49%

f

0.48%

f

0.49%

f

0.47%

f

0.47%

f

0.47%

f

Net

investment

income

(loss)

..........

(0.14)%

0.18%

0.13%

0.12%

0.13%

0.40%

c

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$365,950

$224,341

$259,053

$275,835

$222,577

$242,237

Portfolio

turnover

rate

................

28.27%

52.98%

54.28%

38.35%

35.46%

38.72%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.10%.

d

Total

return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

44

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$36.30

$41.09

$39.33

$37.11

$34.15

$40.83

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.06)

0.02

0.01

(0.06)

(0.03)

0.06

c

Net

realized

and

unrealized

gains

(losses)

12.95

1.38

5.89

5.38

5.10

(3.60)

Total

from

investment

operations

........

12.89

1.40

5.90

5.32

5.07

(3.54)

Less

distributions

from:

Net

realized

gains

.................

—

(6.19)

(4.14)

(3.10)

(2.11)

(3.14)

Net

asset

value,

end

of

period

..........

$49.19

$36.30

$41.09

$39.33

$37.11

$34.15

Total

return

d

.......................

35.51%

3.26%

17.67%

14.57%

15.28%

(8.79)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.61%

0.63%

0.63%

0.77%

0.70%

0.71%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.61%

f,g

0.62%

f

0.62%

f

0.75%

f

0.69%

f

0.70%

f

Net

investment

income

(loss)

..........

(0.26)%

0.04%

—%

(0.16)%

(0.09)%

0.17%

c

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$440,443

$302,329

$355,141

$520,842

$584,840

$551,176

Portfolio

turnover

rate

................

28.27%

52.98%

54.28%

38.35%

35.46%

38.72%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

(0.13)%.

d

Total

return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Statement

of

Investments

(unaudited),

October

31,

2020

Franklin

Small-Mid

Cap

Growth

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

45

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

95.7%

Aerospace

&

Defense

1.1%

a

Axon

Enterprise,

Inc.

...................................

United

States

87,500

$

8,653,750

a

Kratos

Defense

&

Security

Solutions,

Inc.

...................

United

States

561,600

10,608,624

a

Mercury

Systems,

Inc.

..................................

United

States

433,000

29,825,040

49,087,414

Airlines

0.4%

Southwest

Airlines

Co.

.................................

United

States

470,000

18,579,100

Banks

0.4%

TCF

Financial

Corp.

...................................

United

States

651,300

17,721,873

Biotechnology

3.8%

a

Deciphera

Pharmaceuticals,

Inc.

..........................

United

States

369,500

21,456,865

a

Global

Blood

Therapeutics,

Inc.

...........................

United

States

477,000

25,223,760

a

Heron

Therapeutics,

Inc.

................................

United

States

1,274,000

20,778,940

a

Iovance

Biotherapeutics

,

Inc.

.............................

United

States

1,096,000

39,105,280

a

Novavax

,

Inc.

........................................

United

States

88,200

7,118,622

a

PTC

Therapeutics,

Inc.

.................................

United

States

433,000

22,598,270

a

Seagen

,

Inc.

.........................................

United

States

184,000

30,691,200

166,972,937

Capital

Markets

4.4%

Ares

Management

Corp.

................................

United

States

829,000

35,066,700

MarketAxess

Holdings,

Inc.

..............................

United

States

112,900

60,836,165

MSCI,

Inc.

...........................................

United

States

159,000

55,624,560

Tradeweb

Markets,

Inc.,

A

...............................

United

States

748,600

40,783,728

192,311,153

Chemicals

0.4%

a

Ingevity

Corp.

........................................

United

States

354,780

19,470,326

a

Commercial

Services

&

Supplies

1.1%

Republic

Services,

Inc.

.................................

United

States

529,000

46,641,930

Communications

Equipment

0.2%

a

ViaSat

,

Inc.

..........................................

United

States

274,050

9,290,295

a

Construction

Materials

0.9%

Martin

Marietta

Materials,

Inc.

............................

United

States

144,000

38,354,400

Containers

&

Packaging

1.2%

Ball

Corp.

...........................................

United

States

595,000

52,955,000

Electronic

Equipment,

Instruments

&

Components

2.4%

Amphenol

Corp.,

A

....................................

United

States

451,000

50,890,840

a

Keysight

Technologies,

Inc.

..............................

United

States

516,500

54,165,355

105,056,195

Entertainment

2.8%

a

Roku,

Inc.

...........................................

United

States

260,278

52,680,267

a

Spotify

Technology

SA

..................................

United

States

139,500

33,464,655

a

Zynga,

Inc.,

A

........................................

United

States

4,040,000

36,319,600

122,464,522

Equity

Real

Estate

Investment

Trusts

(REITs)

1.9%

SBA

Communications

Corp.

.............................

United

States

241,500

70,124,355

Terreno

Realty

Corp.

...................................

United

States

238,500

13,422,780

83,547,135

Food

&

Staples

Retailing

0.4%

a

Grocery

Outlet

Holding

Corp.

............................

United

States

425,000

18,708,500

a

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

46

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Health

Care

Equipment

&

Supplies

6.3%

a

DexCom

,

Inc.

........................................

United

States

86,314

$

27,584,228

a

IDEXX

Laboratories,

Inc.

................................

United

States

210,500

89,424,610

a

Inari

Medical,

Inc.

.....................................

United

States

138,000

9,135,600

a

Insulet

Corp.

.........................................

United

States

78,200

17,379,950

a

iRhythm

Technologies,

Inc.

..............................

United

States

130,050

27,499,073

a

Penumbra,

Inc.

.......................................

United

States

237,247

61,928,584

Teleflex,

Inc.

.........................................

United

States

140,000

44,552,200

277,504,245

Health

Care

Providers

&

Services

2.1%

a

Guardant

Health,

Inc.

..................................

United

States

483,500

51,570,110

a

HealthEquity

,

Inc.

.....................................

United

States

483,700

24,905,713

a,b

Oak

Street

Health,

Inc.

.................................

United

States

351,200

16,713,608

93,189,431

Health

Care

Technology

2.6%

a

American

Well

Corp.,

A

.................................

United

States

147,600

3,809,556

a,c

Livongo

Health,

Inc.

...................................

United

States

267,300

34,116,654

a

Teladoc

Health,

Inc.

...................................

United

States

11,840

2,326,086

a

Veeva

Systems,

Inc.,

A

.................................

United

States

274,000

73,993,700

114,245,996

Hotels,

Restaurants

&

Leisure

5.1%

a

Chipotle

Mexican

Grill,

Inc.

..............................

United

States

32,800

39,408,544

Domino's

Pizza,

Inc.

...................................

United

States

85,500

32,346,360

a

DraftKings

,

Inc.,

A

.....................................

United

States

2,173,158

76,929,793

Vail

Resorts,

Inc.

......................................

United

States

199,500

46,291,980

Wingstop

,

Inc.

........................................

United

States

266,500

31,001,945

225,978,622

Household

Durables

1.0%

a

NVR,

Inc.

...........................................

United

States

10,900

43,088,681

a

Household

Products

0.9%

Church

&

Dwight

Co.,

Inc.

...............................

United

States

455,600

40,270,484

Interactive

Media

&

Services

2.4%

a

Match

Group,

Inc.

.....................................

United

States

345,859

40,389,414

a

Pinterest,

Inc.,

A

......................................

United

States

1,088,400

64,161,180

104,550,594

Internet

&

Direct

Marketing

Retail

1.1%

Expedia

Group,

Inc.

...................................

United

States

266,100

25,053,315

c,d

Marqeta

,

Inc.

.........................................

United

States

1,070,236

9,769,168

a

Wayfair,

Inc.,

A

.......................................

United

States

59,200

14,683,376

49,505,859

IT

Services

11.4%

a,b

BigCommerce

Holdings,

Inc.,

1

...........................

United

States

238,100

17,476,540

a

Black

Knight,

Inc.

.....................................

United

States

853,000

75,021,350

Booz

Allen

Hamilton

Holding

Corp.

........................

United

States

413,200

32,436,200

a

EPAM

Systems,

Inc.

...................................

United

States

133,500

41,244,825

a

GoDaddy

,

Inc.,

A

......................................

United

States

565,300

39,989,322

Jack

Henry

&

Associates,

Inc.

............................

United

States

319,500

47,365,875

a,e

Nuvei

Corp.,

144A,

Reg

S

...............................

Canada

117,900

4,381,164

a

Okta

,

Inc.

...........................................

United

States

331,500

69,558,645

a

Shift4

Payments,

Inc.,

A

................................

United

States

368,300

18,750,153

a

Twilio

,

Inc.,

A

.........................................

United

States

434,200

121,128,774

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

47

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

IT

Services

(continued)

a

Wix.com

Ltd.

.........................................

Israel

145,500

$

35,985,060

503,337,908

Leisure

Products

0.5%

a

Peloton

Interactive,

Inc.,

A

...............................

United

States

185,200

20,410,892

a

Life

Sciences

Tools

&

Services

3.6%

a

10X

Genomics,

Inc.,

A

..................................

United

States

260,000

35,594,000

Bio-

Techne

Corp.

.....................................

United

States

170,200

42,960,182

a

Mettler

-Toledo

International,

Inc.

..........................

United

States

80,900

80,730,919

159,285,101

Machinery

2.2%

Fortive

Corp.

.........................................

United

States

574,500

35,389,200

IDEX

Corp.

..........................................

United

States

177,000

30,159,030

Stanley

Black

&

Decker,

Inc.

.............................

United

States

180,500

29,999,100

95,547,330

Personal

Products

0.4%

a

BellRing

Brands,

Inc.,

A

.................................

United

States

1,074,300

19,648,947

a

Pharmaceuticals

2.0%

a,b

GW

Pharmaceuticals

plc,

ADR

...........................

United

Kingdom

224,200

20,180,242

a

Horizon

Therapeutics

plc

................................

United

States

589,000

44,133,770

a

Reata

Pharmaceuticals,

Inc.,

A

...........................

United

States

211,200

24,649,152

88,963,164

Professional

Services

4.9%

a

CoStar

Group,

Inc.

....................................

United

States

116,800

96,197,648

TransUnion

..........................................

United

States

482,000

38,396,120

Verisk

Analytics,

Inc.

...................................

United

States

452,000

80,442,440

215,036,208

Road

&

Rail

1.3%

Kansas

City

Southern

..................................

United

States

163,000

28,710,820

Old

Dominion

Freight

Line,

Inc.

...........................

United

States

150,150

28,584,056

57,294,876

Semiconductors

&

Semiconductor

Equipment

6.4%

a

Allegro

MicroSystems

,

Inc.

..............................

United

States

716,500

13,111,950

Entegris

,

Inc.

.........................................

United

States

194,000

14,505,380

KLA

Corp.

...........................................

United

States

260,500

51,365,390

a

Lattice

Semiconductor

Corp.

.............................

United

States

1,322,214

46,145,269

Microchip

Technology,

Inc.

..............................

United

States

240,000

25,219,200

Monolithic

Power

Systems,

Inc.

...........................

United

States

125,500

40,109,800

NXP

Semiconductors

NV

...............................

Netherlands

182,000

24,591,840

a

Semtech

Corp.

.......................................

United

States

467,963

25,686,489

a

SiTime

Corp.

.........................................

United

States

496,000

41,411,040

282,146,358

Software

15.8%

a

Alteryx,

Inc.,

A

........................................

United

States

321,700

40,325,095

a

ANSYS,

Inc.

.........................................

United

States

219,500

66,809,215

a

Atlassian

Corp.

plc,

A

..................................

United

States

221,000

42,348,020

a

Avalara,

Inc.

.........................................

United

States

272,500

40,616,125

a

Bentley

Systems,

Inc.,

B

................................

United

States

63,500

2,226,310

a

Bill.com

Holdings,

Inc.

..................................

United

States

446,233

44,623,300

a

Cloudflare

,

Inc.,

A

.....................................

United

States

882,400

45,858,328

a

DocuSign,

Inc.

.......................................

United

States

481,700

97,423,825

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

48

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Software

(continued)

a,b

Duck

Creek

Technologies,

Inc.

...........................

United

States

205,800

$

8,925,546

a

HubSpot

,

Inc.

........................................

United

States

45,100

13,082,157

a

Lightspeed

POS,

Inc.

..................................

Canada

714,400

22,882,232

a

Paylocity

Holding

Corp.

.................................

United

States

383,000

71,054,160

a

Q2

Holdings,

Inc.

.....................................

United

States

342,000

31,204,080

a

Synopsys,

Inc.

.......................................

United

States

480,500

102,759,730

a

Zendesk

,

Inc.

........................................

United

States

574,000

63,679,560

693,817,683

Specialty

Retail

2.7%

a

Burlington

Stores,

Inc.

..................................

United

States

254,000

49,169,320

a

Five

Below,

Inc.

.......................................

United

States

278,500

37,135,190

Tractor

Supply

Co.

....................................

United

States

228,000

30,371,880

116,676,390

Textiles,

Apparel

&

Luxury

Goods

0.9%

Levi

Strauss

&

Co.,

A

..................................

United

States

1,460,000

23,038,800

VF

Corp.

............................................

United

States

265,700

17,855,040

40,893,840

Trading

Companies

&

Distributors

0.7%

Fastenal

Co.

.........................................

United

States

744,000

32,163,120

Total

Common

Stocks

(Cost

$2,604,801,812)

....................................

4,214,716,509

Preferred

Stocks

1.3%

Automobiles

0.5%

a,c,d,e

Proterra

,

Inc.,

144A,

5

..................................

United

States

1,416,913

21,084,294

a

Internet

&

Direct

Marketing

Retail

0.3%

a,c,d

Fanatics,

Inc.,

E

......................................

United

States

775,014

13,274,440

a

Semiconductors

&

Semiconductor

Equipment

0.2%

a,c,d

Phononic

Devices,

Inc.,

F

...............................

United

States

2,970,061

5,912,774

a

Software

0.1%

a,c,d

Alkami

Technology,

Inc.,

F

...............................

United

States

405,100

6,481,600

a

Textiles,

Apparel

&

Luxury

Goods

0.2%

a,c,d

Allbirds

,

Inc.,

E

.......................................

United

States

772,477

8,931,711

a

Total

Preferred

Stocks

(Cost

$43,449,215)

......................................

55,684,819

Warrants

Warrants

0.0%

†

Semiconductors

&

Semiconductor

Equipment

0.0%

†

a,c,d

Phononic

Devices,

Inc.,

12/01/29

.........................

United

States

511,298

1,127,996

Total

Warrants

(Cost

$47)

.....................................................

1,127,996

Principal

Amount

*

f,g

Senior

Floating

Rate

Interests

0.0%

c,d,h

Phononic

,

Inc.,

Term

Loan,

A,

12%,

PIK,

(1-month

USD

LIBOR;

3-month

USD

LIBOR),

1/17/24

..........................

United

States

523,663

480,267

Franklin

Strategic

Series

Statement

of

Investments

(unaudited)

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

49

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

f,g

Senior

Floating

Rate

Interests

(continued)

Semiconductors

&

Semiconductor

Equipment

(continued)

c,d,h

Phononic

,

Inc.,

Term

Loan

Advance,

B,

12%,

PIK,

(1-month

USD

LIBOR),

7/31/26

.....................................

United

States

107,694

$

97,377

577,644

a

a

a

a

a

a

Total

Senior

Floating

Rate

Interests

(Cost

$619,395)

.............................

577,644

Total

Long

Term

Investments

(Cost

$2,648,870,469)

.............................

4,272,106,968

a

Short

Term

Investments

4.4%

a

a

Country

Shares

a

Value

a

Money

Market

Funds

3.5%

i,j

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

153,680,493

153,680,493

Total

Money

Market

Funds

(Cost

$153,680,493)

.................................

153,680,493

a

a

a

a

a

k

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

0.9%

Money

Market

Funds

0.9%

i,j

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

41,659,325

41,659,325

Total

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

(Cost

$41,659,325)

...........................................................

41,659,325

Total

Short

Term

Investments

(Cost

$195,339,818

)

...............................

195,339,818

a

Total

Investments

(Cost

$2,844,210,287)

101.4%

................................

$4,467,446,786

Other

Assets,

less

Liabilities

(1.4)%

...........................................

(63,234,628)

Net

Assets

100.0%

...........................................................

$4,404,212,158

See

Abbreviations

on

page

78

.

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

†

Rounds

to

less

than

0.1%

of

net

assets.

a

Non-income

producing.

b

A

portion

or

all

of

the

security

is

on

loan

at

October

31,

2020.

See

Note

1(c)

c

Fair

valued

using

significant

unobservable

inputs.

See

Note

11

regarding

fair

value

measurements.

d

See

Note

8

regarding

restricted

securities.

e

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

October

31,

2020,

the

aggregate

value

of

these

securities

was

$25,465,458,

representing

0.6%

of

net

assets.

f

See

Note

1(d)

regarding

senior

floating

rate

interests.

g

The

coupon

rate

shown

represents

the

rate

at

period

end.

h

Income

may

be

received

in

additional

securities

and/or

cash.

i

See

Note

3(f)

regarding

investments

in

affiliated

management

investment

companies.

j

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

k

See

Note

1(c)

regarding

securities

on

loan.

Franklin

Strategic

Series

Financial

Statements

Statements

of

Assets

and

Liabilities

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

50

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

.................................

$1,880,715,637

$2,111,906,283

$2,648,870,469

Cost

-

Non-controlled

affiliates

(Note

3

f

and

9

)

..................

43,907,408

153,711,784

195,339,818

Value

-

Unaffiliated

issuers

(Includes

securities

loaned

$7,580,943,

$41,401,258

and

$39,009,128

respectively)

...................

$4,787,152,019

$3,022,966,935

$4,272,106,968

Value

-

Non-controlled

affiliates

(Note

3

f

and

9

)

.................

43,907,408

155,651,784

195,339,818

Cash

..................................................

44,586

—

—

Receivables:

Investment

securities

sold

.................................

3,713,057

7,251,227

3,991,478

Capital

shares

sold

......................................

4,149,691

3,971,491

7,610,467

Dividends

and

interest

...................................

316,552

28,903

450,020

Other

assets

............................................

1,474

963

1,213

Total

assets

........................................

4,839,284,787

3,189,871,303

4,479,499,964

Liabilities:

Payables:

Investment

securities

purchased

............................

—

20,749,320

21,723,495

Capital

shares

redeemed

.................................

4,654,146

5,564,053

8,053,122

Management

fees

.......................................

2,309,956

1,669,373

1,706,462

Distribution

fees

........................................

1,027,250

294,921

918,615

Transfer

agent

fees

......................................

779,001

655,457

1,027,425

Payable

upon

return

of

securities

loaned

.......................

7,852,835

44,598,950

41,659,325

Accrued

expenses

and

other

liabilities

.........................

133,327

81,093

199,362

Total

liabilities

.......................................

16,756,515

73,613,167

75,287,806

Net

assets,

at

value

...............................

$4,822,528,272

$3,116,258,136

$4,404,212,158

Net

assets

consist

of:

Paid-in

capital

...........................................

$1,630,707,868

$1,842,533,148

$2,347,786,778

Total

distributable

earnings

(losses)

...........................

3,191,820,404

1,273,724,988

2,056,425,380

Net

assets,

at

value

...............................

$4,822,528,272

$3,116,258,136

$4,404,212,158

Franklin

Strategic

Series

Financial

Statements

Statements

of

Assets

and

Liabilities

(continued)

October

31,

2020

(unaudited)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

51

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Class

A:

Net

assets,

at

value

.....................................

$3,538,711,615

$917,327,835

$3,377,035,884

Shares

outstanding

......................................

71,638,419

36,697,927

77,600,378

Net

asset

value

per

share

a

................................

$49.40

$25.00

$43.52

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50

%

)

..............................................

$52.28

$26.46

$46.05

Class

C:

Net

assets,

at

value

.....................................

$247,145,434

$74,105,743

$170,066,466

Shares

outstanding

......................................

6,291,643

3,817,537

6,496,799

Net

asset

value

and

maximum

offering

price

per

share

a

...........

$39.28

$19.41

$26.18

Class

R:

Net

assets,

at

value

.....................................

$36,269,834

$66,585,219

$50,717,390

Shares

outstanding

......................................

780,011

2,860,228

1,318,468

Net

asset

value

and

maximum

offering

price

per

share

...........

$46.50

$23.28

$38.47

Class

R6:

Net

assets,

at

value

.....................................

$464,197,888

$1,498,046,323

$365,949,686

Shares

outstanding

......................................

8,448,007

53,497,701

7,270,601

Net

asset

value

and

maximum

offering

price

per

share

...........

$54.95

$28.00

$50.33

Advisor

Class:

Net

assets,

at

value

.....................................

$536,203,501

$560,193,016

$440,442,732

Shares

outstanding

......................................

9,910,887

20,383,671

8,953,499

Net

asset

value

and

maximum

offering

price

per

share

...........

$54.10

$27.48

$49.19

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Strategic

Series

Financial

Statements

Statements

of

Operations

for

the

six

months

ended

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

52

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$–,

$–

and

$20,475,

respectively)

Unaffiliated

issuers

......................................

$9,579,073

$4,648,975

$6,686,765

Interest:

Unaffiliated

issuers:

Payment-in-kind

.......................................

—

—

25,308

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

...................

90,872

414,169

564,112

Total

investment

income

.................................

9,669,945

5,063,144

7,276,185

Expenses:

Management

fees

(Note

3

a

)

.................................

12,715,620

9,019,590

9,294,214

Distribution

fees:

(Note

3c

)

Class

A

..............................................

4,322,386

1,076,496

3,936,782

Class

C

..............................................

1,256,632

381,360

837,115

Class

R

..............................................

89,995

162,017

122,663

Transfer

agent

fees:

(Note

3e

)

Class

A

..............................................

2,013,801

800,449

2,215,923

Class

C

..............................................

146,539

70,967

117,899

Class

R

..............................................

21,302

60,278

35,263

Class

R6

.............................................

56,961

249,927

68,359

Advisor

Class

..........................................

313,534

501,787

284,217

Custodian

fees

(Note

4

)

....................................

17,934

20,557

15,393

Reports

to

shareholders

....................................

137,997

82,985

164,439

Registration

and

filing

fees

..................................

78,440

61,772

77,953

Professional

fees

.........................................

45,408

51,888

45,510

Trustees'

fees

and

expenses

................................

24,270

16,296

21,482

Other

..................................................

39,826

26,939

37,630

Total

expenses

.......................................

21,280,645

12,583,308

17,274,842

Expense

reductions

(Note

4

)

.............................

(13,747)

(5,845)

(190)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

............

(46,344)

(189,048)

(112,377)

Net

expenses

.......................................

21,220,554

12,388,415

17,162,275

Net

investment

income

(loss)

..........................

(11,550,609)

(7,325,271)

(9,886,090)

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

....................................

272,905,209

399,725,237

396,253,720

Foreign

currency

transactions

..............................

—

—

(28,985)

Net

realized

gain

(loss)

................................

272,905,209

399,725,237

396,224,735

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

....................................

717,752,487

382,722,251

755,152,518

Non-controlled

affiliates

(Note

3

f

and

9

)

.....................

—

1,940,000

—

Net

change

in

unrealized

appreciation

(depreciation)

..........

717,752,487

384,662,251

755,152,518

Net

realized

and

unrealized

gain

(loss)

..........................

990,657,696

784,387,488

1,151,377,253

Net

increase

(decrease)

in

net

assets

resulting

from

operations

........

$979,107,087

$777,062,217

$1,141,491,163

Franklin

Strategic

Series

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

53

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

(loss)

.......

$(11,550,609)

$(12,850,118)

$(7,325,271)

$(7,894,136)

Net

realized

gain

(loss)

............

272,905,209

133,545,617

399,725,237

17,675,243

Net

change

in

unrealized

appreciation

(depreciation)

.................

717,752,487

214,046,447

384,662,251

(167,481,598)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

.

979,107,087

334,741,946

777,062,217

(157,700,491)

Distributions

to

shareholders:

Class

A

........................

—

(237,578,955)

—

(48,340,636)

Class

C

........................

—

(22,239,105)

—

(6,520,298)

Class

R

........................

—

(2,892,923)

—

(4,473,797)

Class

R6

.......................

—

(28,916,895)

—

(64,617,144)

Advisor

Class

...................

—

(38,146,343)

—

(40,149,307)

Total

distributions

to

shareholders

.....

—

(329,774,221)

—

(164,101,182)

Capital

share

transactions:

(Note

2

)

Class

A

........................

(57,315,736)

62,785,864

5,873,981

68,255,158

Class

C

........................

(21,957,738)

(22,481,948)

(12,652,828)

(12,115,565)

Class

R

........................

(2,393,908)

(5,745,243)

(5,010,461)

(11,347,524)

Class

R6

.......................

(10,931,645)

(39,007,657)

(11,250,885)

198,501,453

Advisor

Class

...................

(46,122,989)

(44,198,935)

(10,105,648)

(237,802,378)

Total

capital

share

transactions

.......

(138,722,016)

(48,647,919)

(33,145,841)

5,491,144

Net

increase

(decrease)

in

net

assets

.....................

840,385,071

(43,680,194)

743,916,376

(316,310,529)

Net

assets:

Beginning

of

period

................

3,982,143,201

4,025,823,395

2,372,341,760

2,688,652,289

End

of

period

.....................

$4,822,528,272

$3,982,143,201

$3,116,258,136

$2,372,341,760

Franklin

Strategic

Series

Financial

Statements

Statements

of

Changes

in

Net

Assets

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

54

Franklin

Small-Mid

Cap

Growth

Fund

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

(loss)

............................................

$(9,886,090)

$(6,543,509)

Net

realized

gain

(loss)

.................................................

396,224,735

192,334,944

Net

change

in

unrealized

appreciation

(depreciation)

...........................

755,152,518

(99,401,303)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

1,141,491,163

86,390,132

Distributions

to

shareholders:

Class

A

.............................................................

—

(425,921,425)

Class

C

.............................................................

—

(36,725,001)

Class

R

.............................................................

—

(8,320,703)

Class

R6

............................................................

—

(36,761,924)

Advisor

Class

........................................................

—

(46,972,961)

Total

distributions

to

shareholders

..........................................

—

(554,702,014)

Capital

share

transactions:

(Note

2

)

Class

A

.............................................................

(25,831,938)

190,363,531

Class

C

.............................................................

(16,330,110)

(152,558)

Class

R

.............................................................

(4,432,621)

(2,601,164)

Class

R6

............................................................

60,639,288

(3,283,468)

Advisor

Class

........................................................

26,269,237

(15,986,912)

Total

capital

share

transactions

............................................

40,313,856

168,339,429

Net

increase

(decrease)

in

net

assets

...................................

1,181,805,019

(299,972,453)

Net

assets:

Beginning

of

period

.....................................................

3,222,407,139

3,522,379,592

End

of

period

..........................................................

$4,404,212,158

$3,222,407,139

Franklin

Strategic

Series

55

franklintempleton.com

Semiannual

Report

Notes

to

Financial

Statements

(unaudited)

1.

Organization

and

Significant

Accounting

Policies

Franklin

Strategic

Series (Trust)

is

registered

under

the

Investment

Company

Act

of

1940

(1940

Act)

as

an

open-

end

management

investment

company,

consisting

of

ten

separate

funds, three

of

which

are

included

in

this

report

(Funds)

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

The

Funds

offer five classes

of

shares: Class

A,

Class

C,

Class

R,

Class

R6,

and

Advisor

Class. Class

C

shares

automatically

convert

to

Class

A

shares

after

they

have

been

held

for

10

years.

Each

class

of

shares

may

differ

by

its initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees.

The

following

summarizes

the Funds'

significant

accounting

policies. 

a.

Financial

Instrument

Valuation 

The Funds'

investments

in

financial

instruments

are

carried

at

fair

value

daily.

Fair

value

is

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

on

the

measurement

date.

The Funds calculate the

net

asset

value

(NAV)

per

share

each

business

day

as

of

4

p.m.

Eastern

time

or

the

regularly

scheduled

close

of

the

New

York

Stock

Exchange

(NYSE),

whichever

is

earlier.

Under

compliance

policies

and

procedures

approved

by

the

Trust's

Board

of

Trustees

(the

Board),

the

Funds' administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Funds

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

listed

on

an

exchange

or

on

the

NASDAQ

National

Market

System

are

valued

at

the

last

quoted

sale

price

or

the

official

closing

price of

the

day,

respectively.

Foreign

equity

securities

are

valued

as

of

the

close

of

trading

on

the

foreign

stock

exchange

on

which

the

security

is

primarily

traded,

or

as

of

4

p.m.

Eastern

time.

The

value

is

then

converted

into

its

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

day

that

the

value

of

the

security

is

determined.

Over-the-counter

(OTC)

securities

are

valued

within

the

range

of

the

most

recent

quoted

bid

and

ask

prices.

Securities

that

trade

in

multiple

markets

or

on

multiple

exchanges

are

valued

according

to

the

broadest

and

most

representative

market.

Certain

equity

securities

are

valued

based

upon

fundamental

characteristics

or

relationships

to

similar

securities. 

Debt

securities

generally

trade

in

the

OTC

market

rather

than

on

a

securities

exchange.

The

Funds'

pricing

services

use

multiple

valuation

techniques

to

determine

fair

value.

In

instances

where

sufficient

market

activity

exists,

the

pricing

services

may

utilize

a

market-based

approach

through

which

quotes

from

market

makers

are

used

to

determine

fair

value.

In

instances

where

sufficient

market

activity

may

not

exist

or

is

limited,

the

pricing

services

also

utilize

proprietary

valuation

models

which

may

consider

market

characteristics

such

as

benchmark

yield

curves,

credit

spreads,

estimated

default

rates,

anticipated

market

interest

rate

volatility,

coupon

rates,

anticipated

timing

of

principal

repayments,

underlying

collateral,

and

other

unique

security

features

in

order

to

estimate

the

relevant

cash

flows,

which

are

then

discounted

to

calculate

the

fair

value.

Securities

denominated

in

a

foreign

currency

are

converted

into

their

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

date

that

the

values

of

the

foreign

debt

securities

are

determined.

Investments

in open-end mutual

funds

are

valued

at

the

closing

NAV.

The

Funds

have

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the

Funds

primarily

employ

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Funds'

business

day.

Occasionally,

events

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

56

franklintempleton.com

Semiannual

Report

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Funds.

As

a

result,

differences

may

arise

between

the

value

of

the

Funds'

portfolio

securities

as

determined

at

the

foreign

market

close

and

the

latest

indications

of

value

at

4

p.m.

Eastern

time.

The

VC

monitors

price

movements

for

significant

events

following

the

close

of

trading

in

foreign

stock

markets

through

a

series

of

country

specific

market

proxies

(such

as

baskets

of

American

Depositary

Receipts,

futures

contracts

and

exchange

traded

funds).

These

price

movements

are

measured

against

established

trigger

thresholds

for

each

specific

market

proxy

to

assist

in

determining

if

an

event

has

occurred

that

may

call

into

question

the

reliability

of

the

values

of

the

foreign

securities

held

by

the

Funds.

If

such

an

event

occurs,

the

securities

may

be

valued

using

fair

value

procedures,

which

may

include

the

use

of

independent

pricing

services.

When

the

last

day

of

the

reporting

period

is

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

Lending

Certain

or

all

Funds

participate

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the

Funds,

and/or

a

joint

repurchase

agreement

in

the

Statements

of

Assets

and

Liabilities.

The

Fund

may

receive

income

from

the

investment

of

cash

collateral,

in

addition

to

lending

fees

and

rebates

paid

by

the

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/or

third-

party

vendor,

is

reported

separately

in

the

Statements

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

57

franklintempleton.com

Semiannual

Report

d.

Senior

Floating

Rate

Interests

Certain

or

all

Funds

invest

in

senior

secured

corporate

loans

that

pay

interest

at

rates

which

are

periodically

reset

by

reference

to

a

base

lending

rate

plus

a

spread.

These

base

lending

rates

are

generally

the

prime

rate

offered

by

a

designated

U.S.

bank

or

the

London

InterBank

Offered

Rate

(LIBOR).

Senior

secured

corporate

loans

often

require

prepayment

of

principal

from

excess

cash

flows

or

at

the

discretion

of

the

borrower.

As

a

result,

actual

maturity

may

be

substantially

less

than

the

stated

maturity.

Senior

secured

corporate

loans

in

which

the

Funds

invest

are

generally

readily

marketable,

but

may

be

subject

to

certain

restrictions

on

resale.

On

July

27,

2017,

the

United

Kingdom's

Financial

Conduct

Authority

announced

its

intention

to

cease

sustaining

LIBOR

after

2021.

There

remains

uncertainty

regarding

the

future

utilization

of

LIBOR

and

the

nature

of

any

replacement

rate.

As

such,

the

potential

effect

of

a

transition

away

from

LIBOR

on

the

Fund

or

the

Fund's

investments

that

use

or

may

use

a

floating

rate

based

on

LIBOR

cannot

yet

be

determined.

e.

Income

and

Deferred

Taxes

It

is each

Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. Each

Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and

excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The

Funds

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which

the

Funds

invest.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Funds

invest.

When

a

capital

gain

tax

is

determined

to

apply,

certain

or

all

Funds

record

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

Each

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

October

31,

2020, 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. 

f.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

Dividend

income

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.

Distributions

to shareholders

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.

Realized

and

unrealized

gains

and

losses

and

net

investment

income,

excluding

class

specific

expenses,

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

net

assets

of

each

class.

Differences

in

per

share

distributions

by

class

are

generally

due

to

differences

in

class

specific

expenses.

g.

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

1.

Organization

and

Significant

Accounting

Policies

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

58

franklintempleton.com

Semiannual

Report

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.

h.

Guarantees

and

Indemnifications

Under

the

Trust's

organizational

documents,

its

officers

and

trustees

are

indemnified

by

the

Trust

against

certain

liabilities

arising

out

of

the

performance

of

their

duties

to

the

Trust.

Additionally,

in

the

normal

course

of

business,

the

Trust,

on

behalf

of

the

Funds,

enters

into

contracts

with

service

providers

that

contain

general

indemnification

clauses.

The

Trust's

maximum

exposure

under

these

arrangements

is

unknown

as

this

would

involve

future

claims

that

may

be

made

against

the

Trust

that

have

not

yet

occurred.

Currently,

the

Trust

expects

the

risk

of

loss

to

be

remote.

2.

Shares

of

Beneficial

Interest

At

October

31,

2020,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Funds'

shares

were

as

follows:

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Shares

Amount

Shares

Amount

Class

A

Class

A

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

a

...................................

4,760,414

$226,500,701

4,345,330

$101,385,199

Shares

redeemed

...............................

(5,943,862)

(283,816,437)

(4,084,220)

(95,511,218)

Net

increase

(decrease)

..........................

(1,183,448)

$(57,315,736)

261,110

$5,873,981

Year

ended

April

30,

2020

Shares

sold

a

...................................

9,010,676

$350,593,688

9,570,599

$191,507,079

Shares

issued

in

reinvestment

of

distributions

..........

5,700,998

220,628,503

2,179,464

46,378,986

Shares

redeemed

...............................

(13,139,219)

(508,436,327)

(8,559,848)

(169,630,907)

Net

increase

(decrease)

..........................

1,572,455

$62,785,864

3,190,215

$68,255,158

Class

C

Class

C

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

651,003

$24,474,252

179,748

$3,291,440

Shares

redeemed

a

..............................

(1,216,963)

(46,431,990)

(872,530)

(15,944,268)

Net

increase

(decrease)

..........................

(565,960)

$(21,957,738)

(692,782)

$(12,652,828)

Year

ended

April

30,

2020

Shares

sold

...................................

1,293,129

$40,701,483

568,029

$8,922,309

Shares

issued

in

reinvestment

of

distributions

..........

702,780

21,772,176

377,981

6,285,830

Shares

redeemed

a

..............................

(2,670,750)

(84,955,607)

(1,712,157)

(27,323,704)

Net

increase

(decrease)

..........................

(674,841)

$(22,481,948)

(766,147)

$(12,115,565)

Class

R

1.

Organization

and

Significant

Accounting

Policies

(continued)

g.

Accounting

Estimates

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

59

franklintempleton.com

Semiannual

Report

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Shares

Amount

Shares

Amount

Class

R

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

98,310

$4,384,865

319,511

$6,919,530

Shares

redeemed

...............................

(150,606)

(6,778,773)

(552,595)

(11,929,991)

Net

increase

(decrease)

..........................

(52,296)

$(2,393,908)

(233,084)

$(5,010,461)

Year

ended

April

30,

2020

Shares

sold

...................................

153,696

$5,674,779

629,374

$11,840,906

Shares

issued

in

reinvestment

of

distributions

..........

77,840

2,841,942

224,509

4,458,744

Shares

redeemed

...............................

(386,976)

(14,261,964)

(1,464,103)

(27,647,174)

Net

increase

(decrease)

..........................

(155,440)

$(5,745,243)

(610,220)

$(11,347,524)

Class

R6

Class

R6

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

819,532

$43,702,564

6,355,370

$166,510,351

Shares

redeemed

...............................

(1,086,960)

(54,634,209)

(6,806,827)

(177,761,236)

Net

increase

(decrease)

..........................

(267,428)

$(10,931,645)

(451,457)

$(11,250,885)

Year

ended

April

30,

2020

Shares

sold

...................................

1,145,175

$48,845,021

19,214,024

$441,200,848

Shares

issued

in

reinvestment

of

distributions

..........

497,757

21,363,741

2,403,945

57,093,695

Shares

redeemed

...............................

(2,557,431)

(109,216,419)

(13,369,234)

(299,793,090)

Net

increase

(decrease)

..........................

(914,499)

$(39,007,657)

8,248,735

$198,501,453

Advisor

Class

Advisor

Class

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

612,690

$31,825,996

3,897,277

$99,333,329

Shares

redeemed

...............................

(1,500,687)

(77,948,985)

(4,200,120)

(109,438,977)

Net

increase

(decrease)

..........................

(887,997)

$(46,122,989)

(302,843)

$(10,105,648)

Year

ended

April

30,

2020

Shares

sold

...................................

1,896,594

$77,753,071

5,254,643

$114,830,032

Shares

issued

in

reinvestment

of

distributions

..........

881,490

37,286,998

1,514,761

35,354,523

Shares

redeemed

...............................

(3,804,471)

(159,239,004)

(17,129,278)

(387,986,933)

Net

increase

(decrease)

..........................

(1,026,387)

$(44,198,935)

(10,359,874)

$(237,802,378)

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

60

franklintempleton.com

Semiannual

Report

Franklin

Small-Mid

Cap

Growth

Fund

Shares

Amount

Class

A

Class

A

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

a

...................................

5,664,146

$228,791,175

Shares

redeemed

...............................

(6,310,771)

(254,623,113)

Net

increase

(decrease)

..........................

(646,625)

$(25,831,938)

Year

ended

April

30,

2020

Shares

sold

a

...................................

10,129,339

$347,408,925

Shares

issued

in

reinvestment

of

distributions

..........

12,415,749

403,511,847

Shares

redeemed

...............................

(16,517,051)

(560,557,241)

Net

increase

(decrease)

..........................

6,028,037

$190,363,531

Class

C

Class

C

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

587,311

$14,189,401

Shares

redeemed

a

..............................

(1,247,469)

(30,519,511)

Net

increase

(decrease)

..........................

(660,158)

$(16,330,110)

Year

ended

April

30,

2020

Shares

sold

...................................

923,627

$20,355,427

Shares

issued

in

reinvestment

of

distributions

..........

1,836,941

36,150,992

Shares

redeemed

a

..............................

(2,541,653)

(56,658,977)

Net

increase

(decrease)

..........................

218,915

$(152,558)

Class

R

Class

R

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

201,470

$7,360,368

Shares

redeemed

...............................

(323,780)

(11,792,989)

Net

increase

(decrease)

..........................

(122,310)

$(4,432,621)

Year

ended

April

30,

2020

Shares

sold

...................................

266,016

$8,098,504

Shares

issued

in

reinvestment

of

distributions

..........

285,909

8,231,336

Shares

redeemed

...............................

(618,220)

(18,931,004)

Net

increase

(decrease)

..........................

(66,295)

$(2,601,164)

Class

R6

Class

R6

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

2,205,271

$106,305,783

Shares

redeemed

...............................

(978,786)

(45,666,495)

Net

increase

(decrease)

..........................

1,226,485

$60,639,288

Year

ended

April

30,

2020

Shares

sold

...................................

1,909,281

$74,347,388

Shares

issued

in

reinvestment

of

distributions

..........

888,615

33,287,500

Shares

redeemed

...............................

(2,947,420)

(110,918,356)

Net

increase

(decrease)

..........................

(149,524)

$(3,283,468)

Advisor

Class

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

61

franklintempleton.com

Semiannual

Report

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Trust

are

also

officers

and/or

directors

of

the

following

subsidiaries:

a.

Management

Fees

Franklin

Growth

Opportunities

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

Franklin

Small-Mid

Cap

Growth

Fund

Shares

Amount

Advisor

Class

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

1,570,581

$70,064,095

Shares

redeemed

...............................

(946,055)

(43,794,858)

Net

increase

(decrease)

..........................

624,526

$26,269,237

Year

ended

April

30,

2020

Shares

sold

...................................

1,829,927

$68,814,106

Shares

issued

in

reinvestment

of

distributions

..........

1,212,081

44,434,905

Shares

redeemed

...............................

(3,356,267)

(129,235,923)

Net

increase

(decrease)

..........................

(314,259)

$(15,986,912)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Advisers,

Inc.

(Advisers)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Templeton

Distributors,

Inc.

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.700%

Up

to

and

including

$500

million

0.600%

Over

$500

million,

up

to

and

including

$1

billion

0.550%

Over

$1

billion,

up

to

and

including

$1.5

billion

0.500%

Over

$1.5

billion,

up

to

and

including

$6.5

billion

0.475%

Over

$6.5

billion,

up

to

and

including

$11.5

billion

0.450%

Over

$11.5

billion,

up

to

and

including

$16.5

billion

0.440%

Over

$16.5

billion,

up

to

and

including

$19

billion

0.430%

Over

$19

billion,

up

to

and

including

$21.5

billion

0.420%

In

excess

of

$21.5

billion

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

62

franklintempleton.com

Semiannual

Report

Franklin

Small

Cap

Growth

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

Franklin

Small-Mid

Cap

Growth

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

period

ended

October

31,

2020,

each

Fund's

annualized

gross

effective

investment

management

fee

rate

based

on

average

daily

net

assets

was

as

follows:

b.

Administrative

Fees

Under

an

agreement

with

Advisers,

FT

Services

provides

administrative

services

to

the

Funds.

The

fee

is

paid

by

Advisers

based

on

each

of

the

Fund’s

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Funds.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Funds’

Class

A

reimbursement

distribution

plans,

the

Funds

reimburse

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of each

Fund's

shares

up

to

the

maximum

annual

plan

rate.

Under

the

Class

A

reimbursement

distribution

plans,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Funds’

Class

C

and

R

compensation

distribution

plans,

Annualized

Fee

Rate

Net

Assets

0.750%

Up

to

and

including

$500

million

0.650%

Over

$500

million,

up

to

and

including

$1

billion

0.600%

Over

$1

billion,

up

to

and

including

$1.5

billion

0.550%

Over

$1.5

billion,

up

to

and

including

$6.5

billion

0.525%

Over

$6.5

billion,

up

to

and

including

$11.5

billion

0.500%

Over

$11.5

billion,

up

to

and

including

$16.5

billion

0.490%

Over

$16.5

billion,

up

to

and

including

$19

billion

0.480%

Over

$19

billion,

up

to

and

including

$21.5

billion

0.470%

In

excess

of

$21.5

billion

Annualized

Fee

Rate

Net

Assets

0.625%

Up

to

and

including

$100

million

0.500%

Over

$100

million,

up

to

and

including

$250

million

0.450%

Over

$250

million,

up

to

and

including

$7.5

billion

0.440%

Over

$7.5

billion,

up

to

and

including

$10

billion

0.430%

Over

$10

billion,

up

to

and

including

$12.5

billion

0.420%

Over

$12.5

billion,

up

to

and

including

$15

billion

0.400%

In

excess

of

$15

billion

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Gross

effective

investment

management

fee

rate

........

0.537%

0.609%

0.455%

3.

Transactions

with

Affiliates

(continued)

a.

Management

Fees

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

63

franklintempleton.com

Semiannual

Report

the

Funds

pay

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

each

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31

for

each

Fund.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

For

Franklin

Growth

Opportunities

Fund

and

Franklin

Small

Cap

Growth

Fund,

the

Board

has

set

the

current

rate

at

0.25%

per

year

for

Class

A

shares

until

further

notice

and

approval

by

the

Board.

d.

Sales

Charges/Underwriting

Agreements

Front-end

sales

charges

and

contingent

deferred

sales

charges

(CDSC)

do

not

represent

expenses

of

the

Funds.

These

charges

are

deducted

from

the

proceeds

of

sales

of

fund

shares

prior

to

investment

or

from

redemption

proceeds

prior

to

remittance,

as

applicable.

Distributors

has

advised

the

Funds

of

the

following

commission

transactions

related

to

the

sales

and

redemptions

of

the

Funds'

shares

for

the

period:

e.

Transfer

Agent

Fees

Each

class

of

shares

pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class

reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

period

ended

October

31,

2020,

the

Funds

paid

transfer

agent

fees

as

noted

in

the

Statements

of

Operations

of

which

the

following

amounts

were

retained

by

Investor

Services:

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Reimbursement

Plans:

Class

A

...............................

0.35%

0.35%

0.25%

Compensation

Plans:

Class

C

...............................

1.00%

1.00%

1.00%

Class

R

...............................

0.50%

0.50%

0.50%

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..................

$224,882

$83,676

$211,686

CDSC

retained

...........................

$12,723

$7,977

$11,272

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Transfer

agent

fees

........................

$1,051,698

$738,735

$929,882

3.

Transactions

with

Affiliates

(continued)

c.

Distribution

Fees

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

64

franklintempleton.com

Semiannual

Report

f.

Investments

in

Affiliated

Management

Investment

Companies

Certain

or

all

Funds

invest

in

one

or

more

affiliated

management

investment

companies

for

purposes

other

than

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Funds

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statements

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

period

ended

October

31,

2020,

investments

in

affiliated

management

investment

companies

were

as

follows:

a

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

a

a

a

a

a

a

a

a

a

Franklin

Growth

Opportunities

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$47,687,960

$421,482,200

$(457,133,513)

$—

$—

$12,036,647

12,036,647

$—

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$9,585,975

$329,028,545

$(330,761,685)

$

—

$

—

$7,852,835

7,852,835

$—

Total

Affiliated

Securities

....

$57,273,935

$750,510,745

$(787,895,198)

$—

$—

$19,889,482

$—

Franklin

Small

Cap

Growth

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$74,538,382

$395,089,612

$(380,515,135)

$—

$—

$89,112,859

89,112,859

$—

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$34,288,350

$285,073,313

$(274,762,738)

—

—

$44,598,925

44,598,925

$—

Total

Affiliated

Securities

....

$108,826,732

$680,162,925

$(655,277,873)

$—

$—

$133,711,784

$—

Franklin

Small-Mid

Cap

Growth

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$52,245,134

$542,685,062

$(441,249,703)

$—

$—

$153,680,493

153,680,493

$—

3.

Transactions

with

Affiliates

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

65

franklintempleton.com

Semiannual

Report

g.

Waiver

and

Expense

Reimbursements

For

Franklin

Growth

Opportunities

Fund,

Franklin

Small

Cap

Growth

Fund

and

Franklin

Small-Mid

Cap

Growth

Fund,

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

August

31,

2021.

4.

Expense

Offset

Arrangement

The

Funds

have entered

into

an

arrangement

with

their

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Funds'

custodian

expenses. During

the period

ended

October

31,

2020 the

custodian

fees

were

reduced

as

noted

in

the

Statements

of

Operations.

5.

Income

Taxes

For

tax

purposes,

the

Funds

may

elect

to

defer

any

portion

of

a

post-October

capital

loss

or

late-year

ordinary

loss

to

the

first

day

of

the

following

fiscal

year.

At

April

30,

2020,

the

deferred

losses

were

as

follows:

At

October

31,

2020,

the

cost

of

investments

and

net

unrealized

appreciation

(depreciation)

for

income

tax

purposes

were

as

follows:

a

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$14,660,525

$162,807,673

$(135,808,873)

$

—

$

—

$41,659,325

41,659,325

$—

Total

Affiliated

Securities

....

$66,905,659

$705,492,735

$(577,058,576)

$—

$—

$195,339,818

$—

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

1

1

1

1

Post-October

capital

losses

................

$

—

$

16,223,354

$

46,315,087

Late-year

ordinary

losses

..................

5,136,150

3,339,517

2,637,568

3.

Transactions

with

Affiliates

(continued)

f.

Investments

in

Affiliated

Management

Investment

Companies

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

66

franklintempleton.com

Semiannual

Report

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatment

of

wash

sales.

6.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

period

ended

October

31,

2020,

were

as

follows:

7. Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the

Funds, their ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and their ability

to

achieve their investment

objectives.

8.

Restricted

Securities

Certain

or

all

Funds

invest

in

securities

that

are

restricted

under

the

Securities

Act

of

1933

(1933

Act).

Restricted

securities

are

often

purchased

in

private

placement

transactions,

and

cannot

be

sold

without

prior

registration

unless

the

sale

is

pursuant

to

an

exemption

under

the

1933

Act.

Disposal

of

these

securities

may

require

greater

effort

and

expense,

and

prompt

sale

at

an

acceptable

price

may

be

difficult.

The

Funds

may

have

registration

rights

for

restricted

securities.

The

issuer

generally

incurs

all

registration

costs.

At

October

31,

2020,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

a

a

a

a

Cost

of

investments

.......................

$1,924,623,045

$2,264,512,642

$2,844,210,287

Unrealized

appreciation

.....................

$2,916,405,332

$1,042,077,851

$1,689,060,491

Unrealized

depreciation

.....................

(9,968,951)

(129,077,198)

(65,823,992)

Net

unrealized

appreciation

(depreciation)

.......

$2,906,436,381

$913,000,653

$1,623,236,499

Franklin

Growth

Opportunities

Fund

Franklin

Small

Cap

Growth

Fund

Franklin

Small-

Mid

Cap

Growth

Fund

Purchases

..............................

$488,569,019

$708,354,578

$1,105,050,448

Sales

..................................

$613,006,518

$748,332,892

$1,164,380,944

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Growth

Opportunities

Fund

255,039

Avidxchange

,

Inc.

............................

7/31/20

$

12,499,971

$

12,499,971

2,610,594

ClearMotion

,

Inc.,

C

..........................

11/06/17

5,499,999

6,809,870

3,698,772

ClearMotion

,

Inc.,

D

..........................

12/21/18

10,000,000

10,567,181

642,459

Confluent,

Inc.,

E

............................

4/13/20

9,616,776

9,616,776

920,577

Fanatics,

Inc.,

E

.............................

8/13/20

15,916,776

15,767,643

5.

Income

Taxes

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

67

franklintempleton.com

Semiannual

Report

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Growth

Opportunities

Fund

(continued)

230,802

Figs,

Inc.

..................................

10/23/20

$

17,756,521

$

17,756,521

201,294

Gitlab

,

Inc.,

E

...............................

9/11/19

3,749,986

8,051,760

207,551

HashiCorp

,

Inc.,

E

...........................

3/06/20

12,004,812

14,792,293

1,673,284

Legalzoom.com,

Inc

..........................

7/20/18

16,479,338

22,391,396

1,196,245

Marqeta

,

Inc.

...............................

8/20/20

10,353,396

10,919,384

181,494

Marqeta

,

Inc.,

A

.............................

10/09/20

2,172,357

2,087,181

19,136

Marqeta

,

Inc.,

B

.............................

10/21/20

229,632

229,632

509,182

Optoro

,

Inc.,

E

..............................

7/24/18

10,020,702

13,113,596

2,362,202

Proterra

,

Inc.,

144A,

5

........................

9/21/16

-

1/13/17

11,896,616

35,150,615

596,775

Proterra

,

Inc.,

144A,

6

........................

6/07/17

3,306,052

8,880,277

780,667

Proterra

,

Inc.,

7

.............................

5/21/18

-

9/18/18

5,094,960

11,616,672

289,016

Proterra

,

Inc.,

8

.............................

8/02/19

1,996,378

4,300,686

928,488

Sweetgreen

,

Inc.,

H

..........................

11/09/18

12,107,484

14,767,846

100,835

Sweetgreen

,

Inc.,

I

...........................

9/16/19

1,724,278

1,781,490

1,753,060

Talkdesk

,

Inc.,

C

............................

7/15/20

11,517,955

11,517,955

805,800

Tanium,

Inc.,

G

..............................

9/14/15

4,000,233

8,336,143

504,854

Tempus

Labs,

Inc.,

F

.........................

5/29/19

12,499,983

17,772,425

126,131

Tempus

Labs,

Inc.,

G

.........................

2/06/20

4,837,427

5,090,745

5,028,735

Wheels

Up

Partners

LLC,

D

....................

5/16/19

-

8/02/19

17,499,998

20,826,898

Total

Restricted

Securities

(Value

is

5.89%

of

Net

Assets)

.............

$212,781,630

$284,644,956

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Small

Cap

Growth

Fund

343,750

Alkami

Technology,

Inc.,

F

.....................

9/24/20

$

5,500,000

$

5,500,000

1,297,305

Allbirds

,

Inc.,

E

..............................

9/22/20

14,999,998

14,999,998

3,698,772

ClearMotion

,

Inc.,

D

..........................

12/21/18

10,000,000

10,567,181

1,431,280

Legalzoom.com,

Inc

..........................

7/20/18

14,095,961

19,152,970

1,199,415

Marqeta

,

Inc.

...............................

8/20/20

10,000,003

10,948,320

508,130

Optoro

,

Inc.,

E

..............................

7/24/18

9,999,998

13,086,502

2,000,000

Paya

Holdings,

Inc.

..........................

10/16/20

20,000,000

21,940,000

1,787,047

Proterra

,

Inc.,

144A,

5

........................

9/21/16

-

1/13/17

8,999,998

26,592,053

1,310,834

Proterra

,

Inc.,

144A,

6

........................

6/07/17

-

1/02/18

7,261,842

19,505,792

536,367

Proterra

,

Inc.,

7

.............................

5/21/18

3,500,556

7,981,379

596,471

Rent

the

Runway,

Inc.,

144A,

F

.................

3/21/19

13,333,328

12,797,090

203,515

Rent

the

Runway,

Inc.,

G

......................

4/30/20

3,000,006

3,606,110

1,542,673

Smule

,

Inc.,

144A,

G

.........................

5/31/16

11,099,995

10,412,764

352,675

Smule

,

Inc.,

144A,

H

.........................

4/27/17

2,999,995

2,809,136

383,435

Sweetgreen

,

Inc.,

H

..........................

11/09/18

4,999,993

6,098,635

41,641

Sweetgreen

,

Inc.,

I

...........................

9/16/19

712,061

735,687

361,111

Tula

eTechnology

,

Inc.

........................

11/01/18

—

—

3,611,111

Tula

Technology,

Inc.,

E

.......................

9/08/17

6,500,000

6,919,423

8.

Restricted

Securities

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

68

franklintempleton.com

Semiannual

Report

9.

Holdings

of

5%

Voting

Securities

of

Portfolio

Companies

The

1940

Act

defines

"affiliated

companies"

to

include

investments

in

portfolio

companies

in

which

a

fund

owns

5%

or

more

of

the

outstanding

voting

securities.

During

the

period

ended

October

31,

2020,

investments

in

“affiliated

companies”

were

as

follows:

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Small

Cap

Growth

Fund

(continued)

4,310,344

Wheels

Up

Partners

LLC,

D

....................

5/16/19

-

8/02/19

$

14,999,997

$

17,851,626

Total

Restricted

Securities

(Value

is

6.78%

of

Net

Assets)

.............

$162,003,731

$211,504,666

Principal

Amount

*

/

Shares

/

Warrants

Issuer

Acquisition

Date

Cost

Value

Franklin

Small-Mid

Cap

Growth

Fund

405,100

Alkami

Technology,

Inc.,

F

.....................

9/24/20

$

6,481,600

$

6,481,600

772,477

Allbirds

,

Inc.,

E

..............................

9/22/20

8,931,711

8,931,711

775,014

Fanatics,

Inc.,

E

.............................

8/13/20

13,399,992

13,274,440

1,070,236

Marqeta

,

Inc.

...............................

8/20/20

8,922,985

9,769,168

511,298

Phononic

Devices,

Inc.,

12/01/29

................

1/17/20

47

1,127,996

2,970,061

Phononic

Devices,

Inc.,

F

......................

6/06/19

7,499,998

5,912,774

523,663

Phononic

Devices,

Inc.,

Term

Loan,

A,

12%,

PIK,

1/17/24

..................................

1/21/20

513,890

480,267

107,694

Phononic

,

Inc.,

Term

Loan

Advance,

B,

12%,

PIK,

7/31/26

..................................

8/25/20

105,505

97,377

1,416,913

Proterra

,

Inc.,

144A,

5

........................

9/21/16

7,135,914

21,084,294

Total

Restricted

Securities

(Value

is

1.52%

of

Net

Assets)

.............

$52,991,642

$67,159,627

*

In

U.S.

dollars

unless

otherwise

indicated.

8.

Restricted

Securities

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

69

franklintempleton.com

Semiannual

Report

10.

Credit

Facility

The

Funds,

together

with

other

U.S.

registered

and

foreign

investment

funds

(collectively,

Borrowers),

managed

by

Franklin

Templeton,

are

borrowers

in

a

joint

syndicated

senior

unsecured

credit

facility

totaling

$2

billion

(Global

Credit

Facility)

which

matures

on

February

5,

2021.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests. 

Under

the

terms

of

the

Global

Credit

Facility,

the

Funds

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Funds

and

other

costs

incurred

by

the

Funds,

pay

their

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

their

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statements

of

Operations.

During

the

period

ended

October

31,

2020,

the Funds

did

not

use

the

Global

Credit

Facility.

11.

Fair

Value

Measurements

The Funds

follow

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Funds'

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the Funds' financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

Level

2

–

other

significant

observable

inputs

(including

quoted

prices

for

similar

financial

instruments,

interest

rates,

prepayment

speed,

credit

risk,

etc.)

Level

3

–

significant

unobservable

inputs

(including

the Funds'

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

Franklin

Growth

Opportunities

Fund

Non-Controlled

Affiliates

Dividends

Avidxchange

,

Inc.

........

$

—

$

12,499,971

$

—

$

—

$

—

$

12,499,971

255,039

$

—

Talkdesk

,

Inc.,

C

.........

—

11,517,955

—

—

—

11,517,955

1,753,060

—

Total

Affiliated

Securities

(Value

is

0.5%

*

of

Net

Assets)

$—

$24,017,926

$—

—

—

$24,017,926

$—

Franklin

Small

Cap

Growth

Fund

Non-Controlled

Affiliates

Dividends

Paya

Holdings,

Inc.

.......

—

20,000,000

a

—

—

1,940,000

21,940,000

2,000,000

—

Total

Affiliated

Securities

(Value

is

0.7%

*

of

Net

Assets)

$—

$20,000,000

$—

—

1,940,000

$21,940,000

$—

a

May

include

accretion,

amortization,

partnership

adjustments,

and/or

corporate

actions.

9.

Holdings

of

5%

Voting

Securities

of

Portfolio

Companies

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

70

franklintempleton.com

Semiannual

Report

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

October

31,

2020,

in

valuing

the

Funds’

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Growth

Opportunities

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Auto

Components

......................

$

18,653,447

$

—

$

—

$

18,653,447

Automobiles

..........................

31,860,024

—

—

31,860,024

Beverages

...........................

52,649,218

—

—

52,649,218

Biotechnology

.........................

104,096,240

—

—

104,096,240

Capital

Markets

........................

246,955,202

—

—

246,955,202

Chemicals

...........................

58,596,124

—

—

58,596,124

Commercial

Services

&

Supplies

...........

13,990,022

—

22,391,396

36,381,418

Entertainment

.........................

23,757,968

—

—

23,757,968

Equity

Real

Estate

Investment

Trusts

(REITs)

.

141,809,555

—

—

141,809,555

Food

Products

........................

61,938,181

—

—

61,938,181

Health

Care

Equipment

&

Supplies

.........

337,185,047

—

—

337,185,047

Health

Care

Providers

&

Services

..........

103,617,433

—

—

103,617,433

Health

Care

Technology

.................

101,373,259

—

—

101,373,259

Hotels,

Restaurants

&

Leisure

.............

47,984,708

—

—

47,984,708

Industrial

Conglomerates

................

79,049,597

—

—

79,049,597

Insurance

............................

2,595,951

—

—

2,595,951

Interactive

Media

&

Services

..............

162,960,130

—

—

162,960,130

Internet

&

Direct

Marketing

Retail

..........

449,831,172

—

10,919,384

460,750,556

IT

Services

...........................

626,520,989

—

—

626,520,989

Leisure

Products

.......................

28,183,783

—

—

28,183,783

Life

Sciences

Tools

&

Services

............

20,205,959

27,001,112

—

47,207,071

Media

...............................

45,239,500

—

—

45,239,500

Pharmaceuticals

.......................

80,750,832

—

—

80,750,832

Professional

Services

...................

247,274,840

—

—

247,274,840

Road

&

Rail

..........................

44,847,852

—

—

44,847,852

Semiconductors

&

Semiconductor

Equipment

.

173,550,319

—

—

173,550,319

Software

.............................

908,970,791

—

12,499,971

921,470,762

Specialty

Retail

........................

9,961,820

—

—

9,961,820

Technology

Hardware,

Storage

&

Peripherals

.

180,397,131

—

—

180,397,131

Textiles,

Apparel

&

Luxury

Goods

..........

31,817,358

—

17,756,521

49,573,879

Wireless

Telecommunication

Services

.......

62,899,425

—

—

62,899,425

Preferred

Stocks

........................

—

—

221,077,684

221,077,684

Short

Term

Investments

...................

19,889,482

—

—

19,889,482

Total

Investments

in

Securities

...........

$4,519,413,359

$27,001,112

$284,644,956

$4,831,059,427

Franklin

Small

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

169,493,011

—

—

169,493,011

Airlines

..............................

52,994,100

—

—

52,994,100

Banks

...............................

73,549,247

—

—

73,549,247

Biotechnology

.........................

347,193,994

—

—

347,193,994

Capital

Markets

........................

92,175,876

—

—

92,175,876

Chemicals

...........................

37,575,568

—

—

37,575,568

Commercial

Services

&

Supplies

...........

38,614,099

—

19,152,970

57,767,069

Communications

Equipment

..............

59,711,259

—

—

59,711,259

Construction

&

Engineering

...............

61,995,121

—

—

61,995,121

Consumer

Finance

.....................

26,481,467

—

—

26,481,467

Diversified

Consumer

Services

............

30,744,551

—

—

30,744,551

9.

Holdings

of

5%

Voting

Securities

of

Portfolio

Companies

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

71

franklintempleton.com

Semiannual

Report

Level

1

Level

2

Level

3

Total

Franklin

Small

Cap

Growth

Fund

(continued)

Assets:

Investments

in

Securities:

Common

Stocks:

Electronic

Equipment,

Instruments

&

Components

........................

$

11,309,190

$

—

$

—

$

11,309,190

Equity

Real

Estate

Investment

Trusts

(REITs)

.

41,679,266

—

—

41,679,266

Food

&

Staples

Retailing

.................

39,595,990

—

—

39,595,990

Food

Products

........................

66,949,189

—

—

66,949,189

Health

Care

Equipment

&

Supplies

.........

200,585,782

—

—

200,585,782

Health

Care

Providers

&

Services

..........

53,230,321

—

—

53,230,321

Health

Care

Technology

.................

95,915,805

—

—

95,915,805

Hotels,

Restaurants

&

Leisure

.............

157,452,695

—

—

157,452,695

Household

Durables

....................

67,403,291

—

—

67,403,291

Insurance

............................

36,077,015

—

—

36,077,015

Internet

&

Direct

Marketing

Retail

..........

—

—

10,948,320

10,948,320

IT

Services

...........................

157,715,145

—

21,940,000

179,655,145

Life

Sciences

Tools

&

Services

............

39,908,679

—

—

39,908,679

Machinery

............................

38,942,200

—

—

38,942,200

Personal

Products

.....................

23,067,348

—

—

23,067,348

Pharmaceuticals

.......................

94,489,693

—

—

94,489,693

Semiconductors

&

Semiconductor

Equipment

.

167,521,171

—

—

167,521,171

Software

.............................

263,767,946

—

—

263,767,946

Specialty

Retail

........................

195,662,233

—

—

195,662,233

Textiles,

Apparel

&

Luxury

Goods

..........

25,994,427

—

—

25,994,427

Trading

Companies

&

Distributors

..........

65,606,590

—

—

65,606,590

Preferred

Stocks

........................

—

—

159,463,376

a

159,463,376

Short

Term

Investments

...................

133,711,784

—

—

133,711,784

Total

Investments

in

Securities

...........

$2,967,114,053

$—

$211,504,666

$3,178,618,719

Franklin

Small-Mid

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

49,087,414

—

—

49,087,414

Airlines

..............................

18,579,100

—

—

18,579,100

Banks

...............................

17,721,873

—

—

17,721,873

Biotechnology

.........................

166,972,937

—

—

166,972,9,37

Capital

Markets

........................

192,311,153

—

—

192,311,153

Chemicals

...........................

19,470,326

—

—

19,470,326

Commercial

Services

&

Supplies

...........

46,641,930

—

—

46,641,930

Communications

Equipment

..............

9,290,295

—

—

9,290,295

Construction

Materials

..................

38,354,400

—

—

38,354,400

Containers

&

Packaging

.................

52,955,000

—

—

52,955,000

Electronic

Equipment,

Instruments

&

Components

........................

105,056,195

—

—

105,056,195

Entertainment

.........................

122,464,522

—

—

122,464,522

Equity

Real

Estate

Investment

Trusts

(REITs)

.

83,547,135

—

—

83,547,135

Food

&

Staples

Retailing

.................

18,708,500

—

—

18,708,500

Health

Care

Equipment

&

Supplies

.........

277,504,245

—

—

277,504,245

Health

Care

Providers

&

Services

..........

93,189,431

—

—

93,189,431

Health

Care

Technology

.................

80,129,342

—

34,116,654

114,245,996

Hotels,

Restaurants

&

Leisure

.............

225,978,622

—

—

225,978,622

Household

Durables

....................

43,088,681

—

—

43,088,681

Household

Products

....................

40,270,484

—

—

40,270,484

Interactive

Media

&

Services

..............

104,550,594

—

—

104,550,594

Internet

&

Direct

Marketing

Retail

..........

39,736,691

—

9,769,168

49,505,859

IT

Services

...........................

503,337,908

—

—

503,337,908

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

72

franklintempleton.com

Semiannual

Report

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 period.

At

October

31,

2020,

the

reconciliation is

as follows:

Level

1

Level

2

Level

3

Total

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

Assets:

Investments

in

Securities:

Common

Stocks:

Leisure

Products

.......................

$

20,410,892

$

—

$

—

$

20,410,892

Life

Sciences

Tools

&

Services

............

159,285,101

—

—

159,285,101

Machinery

............................

95,547,330

—

—

95,547,330

Personal

Products

.....................

19,648,947

—

—

19,648,947

Pharmaceuticals

.......................

88,963,164

—

—

88,963,164

Professional

Services

...................

215,036,208

—

—

215,036,208

Road

&

Rail

..........................

57,294,876

—

—

57,294,876

Semiconductors

&

Semiconductor

Equipment

.

282,146,358

—

—

282,146,358

Software

.............................

693,817,683

—

—

693,817,683

Specialty

Retail

........................

116,676,390

—

—

116,676,390

Textiles,

Apparel

&

Luxury

Goods

..........

40,893,840

—

—

40,893,840

Trading

Companies

&

Distributors

..........

32,163,120

—

—

32,163,120

Preferred

Stocks

........................

—

—

55,684,819

55,684,819

Warrants

..............................

—

—

1,127,996

1,127,996

Senior

Floating

Rate

Interests

...............

—

—

577,644

577,644

Short

Term

Investments

...................

195,339,818

—

—

195,339,818

Total

Investments

in

Securities

...........

$4,366,170,505

$—

$101,276,281

$4,467,446,786

a

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

a

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

b

Net

Realized

Gain

(Loss)

Net

Unr

ealized

Appreciatio

n

(

Depreciation

)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Growth

Opportunities

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Commercial

Services

&

Supplies

........

$

20,046,660

$

—

$

—

$

—

$

—

$

—

$

—

$

2,344,736

$

22,391,396

$

2,344,736

Internet

&

Direct

Marketing

Retail

...

—

10,353,395

—

—

—

—

—

565,989

10,919,384

565,989

Software

..........

43,653,245

12,499,971

—

—

(52,300,561)

—

—

8,647,316

12,499,971

8,647,316

Textiles,

Apparel

&

Luxury

Goods

.........

—

17,756,521

—

—

—

—

—

—

17,756,521

—

Preferred

Stocks

:

Airlines

..........

17,193,220

—

—

—

—

—

—

3,633,678

20,826,898

3,633,678

Automobiles

.......

33,649,056

—

—

—

—

—

—

26,299,194

59,948,250

26,299,194

Commercial

Services

&

Supplies

........

13,293,475

—

—

—

—

—

—

(179,879)

13,113,596

(179,879)

Food

&

Staples

Retailing

15,056,118

—

—

—

—

—

—

1,493,218

16,549,336

1,493,218

Health

Care

Providers

&

Services

........

20,693,106

—

—

—

—

—

—

2,170,064

22,863,170

2,170,064

Internet

&

Direct

Marketing

Retail

...

—

18,318,765

—

—

—

—

—

(234,309)

18,084,456

(234,309)

IT

Services

........

12,004,812

—

—

—

—

—

—

2,787,481

14,792,293

2,787,481

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

73

franklintempleton.com

Semiannual

Report

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

a

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

b

Net

Realized

Gain

(Loss)

Net

Unrealized

Appreciation

(Depreciation)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Growth

Opportunities

Fund

(continued)

Assets:

Investments

in

Securities:

Preferred

Stocks:

Software

..........

$

38,260,725

$

11,517,955

$

—

$

—

$

—

$

—

$

—

$

5,121,005

$

54,899,685

$

5,121,005

Total

Investments

in

Securities

.

$213,850,417

$70,446,607

$—

$—

$(52,300,561)

$—

$—

$52,648,493

$284,644,956

$52,648,493

Franklin

Small

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Commercial

Services

&

Supplies

........

17,147,349

—

—

—

—

—

—

2,005,621

19,152,970

2,005,621

Hotels,

Restaurants

&

Leisure

.........

60,602,791

—

(74,522,452)

—

—

—

47,970,632

(34,050,971)

—

—

Internet

&

Direct

Marketing

Retail

...

—

10,000,003

—

—

—

—

—

948,317

10,948,320

948,317

IT

Services

........

—

20,000,000

—

—

—

—

—

1,940,000

21,940,000

1,940,000

Warrants

:

Hotels,

Restaurants

&

Leisure

.........

637,467

—

(1,551,306)

—

—

—

1,551,301

(637,462)

—

—

Preferred

Stocks

:

Airlines

..........

14,737,045

—

—

—

—

—

—

3,114,581

17,851,626

3,114,581

Auto

Components

....

7,165,798

c

—

—

—

—

—

—

(246,375)

6,919,423

c

(246,375)

Automobiles

.......

30,354,762

—

—

—

—

—

—

23,724,462

54,079,224

23,724,462

Commercial

Services

&

Supplies

........

13,266,009

—

—

—

—

—

—

(179,507)

13,086,502

(179,507)

Food

&

Staples

Retailing

6,217,673

—

—

—

—

—

—

616,649

6,834,322

616,649

Software

..........

23,409,805

5,500,000

—

—

—

—

—

379,276

29,289,081

379,276

Specialty

Retail

.....

14,399,688

—

—

—

—

—

—

2,003,512

16,403,200

2,003,512

Textiles,

Apparel

&

Luxury

Goods

.........

—

14,999,998

—

—

—

—

—

—

14,999,998

—

Escrows

and

Litigation

Trusts

...........

—

c

—

—

c

—

—

—

—

—

—

—

Total

Investments

in

Securities

.

$187,938,387

$50,500,001

$(76,073,758)

$—

$—

$—

$49,521,933

$(381,897)

$211,504,666

$34,306,536

Franklin

Small-Mid

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Health

Care

Technology

—

2,877,086

(2,019,803)

33,339,500

—

—

1,709,746

(1,789,875)

34,116,654

(1,789,875)

Hotels,

Restaurants

&

Leisure

.........

48,788,058

c

—

(42,128,919)

—

—

—

20,809,223

(27,468,362)

—

—

Internet

&

Direct

Marketing

Retail

...

—

8,922,986

—

—

—

—

—

846,182

9,769,168

846,182

Warrants

:

Hotels,

Restaurants

&

Leisure

.........

140,884

—

(1,034,479)

—

—

—

973,870

(80,275)

—

—

Semiconductors

&

Semiconductor

Equipment

.......

628,432

—

—

—

—

—

—

499,564

1,127,996

499,564

Preferred

Stocks

:

Automobiles

.......

11,834,651

—

—

—

—

—

—

9,249,644

21,084,29

5

9,249,644

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

74

franklintempleton.com

Semiannual

Report

Significant

unobservable

valuation

inputs

for

material

Level

3 assets

and/or

liabilities and

impact

to

fair

value

as

a

result

of

changes

in

unobservable

valuation

inputs

as

of

October

31,

2020,

are

as

follows:

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

a

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

b

Net

Realized

Gain

(Loss)

Net

Unrealized

Appreciation

(Depreciation)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Small-Mid

Cap

Growth

Fund

(continued)

Assets:

Investments

in

Securities:

Preferred

Stocks:

Internet

&

Direct

Marketing

Retail

...

$

—

$

13,399,992

$

—

$

—

$

—

$

—

$

—

$

(125,552)

$

13,274,440

$

(125,552)

Semiconductors

&

Semiconductor

Equipment

.......

3,875,755

—

—

—

—

—

—

2,037,018

5,912,77

3

2,037,018

Software

..........

23,281,742

6,481,600

—

—

(27,893,645)

—

—

4,611,903

6,481,600

—

Textiles,

Apparel

&

Luxury

Goods

.........

—

8,931,711

—

—

—

—

—

—

8,931,711

—

Senior

Floating

Rate

Interests

:

Semiconductors

&

Semiconductor

Equipment

.......

394,282

138,23

2

—

—

—

231

—

44,899

577,644

44,899

Escrows

and

Litigation

Trusts

...........

—

c

—

—

c

—

—

—

—

—

—

—

Total

Investments

in

Securities

.

$88,943,804

$40,751,607

$(45,183,201)

$33,339,500

$(27,893,645)

$231

$23,492,839

$(12,174,854)

$101,276,281

$10,761,880

a

Transferred

into

level

3

as

a

result

of

the

unavailability

of

a

quoted

market

price

in

an

active

market

for

identical

securities

or

as

a

result

of

the

unreliability

of

the

foreign

exchange

rate

and

other

significant

observable

valuation

inputs.

May

include

amounts

related

to

a

corporate

action.

b

May

include

accretion,

amortization,

partnership

adjustments,

and/or

other

cost

basis

adjustments.

c

Includes

securities

determined

to

have

no

value.

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Franklin

Growth

Opportunities

Fund

Assets:

Investments

in

Securities:

Common

Stock:

Commercial

Services

and

Supplies

..................

$22,391,396

Discounted

cash

flow

Discount

for

lack

of

marketability

9.3%

Decrease

c

Discount

rate

11.4%

Decrease

d

Long

term

growth

rate

4.0%

Increase

d

Preferred

Stocks:

Airlines

...............

20,826,898

Discounted

cash

flow

Discount

for

lack

of

marketability

13.2%

Decrease

c

Discount

rate

10.6%

Decrease

d

Long

term

growth

rate

3.0%

Increase

c

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

75

franklintempleton.com

Semiannual

Report

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Automobiles

............

55,647,564

Discounted

cash

flow

Discount

for

lack

of

marketability

11.1%

Decrease

c

Discount

rate

11.4%

Decrease

Terminal

Multiple

23.5x

Increase

Market

comparables

EV

/

revenue

10.8x

Increase

c

Commercial

Services

&

Supplies

..................

13,113,596

Discounted

cash

flow

Discount

for

lack

of

marketability

9.5%

Decrease

c

Discount

rate

19.6%

Decrease

C

Long

term

growth

rate

5.0%

Increase

Food

&

Staples

Retailing

..

14,767,846

Discounted

cash

flow

Discount

for

lack

of

marketability

8.1%

Decrease

Discount

rate

12.4%

Decrease

Terminal

Multiple

32.5x

Increase

c

Market

comparables

EV

/

revenue

4.1x

Increase

c

Health

Care

Providers

&

Services

..................

22,863,170

Discounted

cash

flow

Discount

for

lack

of

marketability

10.0%

Decrease

Discount

rate

9.4%

Decrease

d

Long

term

growth

rate

5.0%

Increase

c

Internet

&

Direct

Marketing

Retail

....................

15,767,643

Market

comparables

EV

/

EBITA

multiple

28.2x

Increase

c

EV

/

revenue

multiple

3.2x

Increase

c

Discount

for

lack

of

marketability

15.5%

Decrease

c

IT

Services

............

14,792,293

Discounted

cash

flow

Discount

for

lack

of

marketability

12.3%

Decrease

c

EV

/

revenue

23.1x

–

31.2x

(27.2x)

Increase

Software

..............

25,713,194

Discounted

cash

flow

Discount

for

lack

of

marketability

13.0%

-

18.8%

(16.9%)

Decrease

c

Discount

rate

9.0%

-

10.7%

(10.1%)

Decrease

c

Long

term

growth

rate

2.0%

Increase

Terminal

Multiple

26.9x

Increase

d

All

Other

Investments

.........

78,761,356

e 

Total

.......................

$284,644,956

Franklin

Small

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stock:

Commercial

Services

and

Supplies

..................

$19,152,970

Discounted

cash

flow

Discount

for

lack

of

marketability

9.3%

Decrease

c

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

76

franklintempleton.com

Semiannual

Report

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Discount

rate

11.4%

Decrease

d

Long

term

growth

rate

4.0%

Increase

d

Preferred

Stocks:

Airlines

...............

17,851,626

Discounted

cash

flow

Discount

for

lack

of

marketability

13.2%

Decrease

c

Discount

rate

10.6%

Decrease

d

Long

term

growth

rate

3.0%

Increase

c

Auto

Components

.......

6,919,423

Market

comparables

EV

/

EBITDA

multiple

17.5x

-

22.2x

(20.6x)

Increase

EV

/

revenue

multiple

12.3x

Decrease

Discount

for

lack

of

marketability

8.4%

Increase

c

Automobiles

............

54,079,224

Discounted

cash

flow

Discount

for

lack

of

marketability

11.1%

Decrease

c

Discount

rate

11.4%

Decrease

Terminal

Multiple

23.5x

Increase

Market

comparables

EV

/

revenue

10.8x

Increase

c

Commercial

Services

&

Supplies

..................

13,086,502

Discounted

cash

flow

Discount

for

lack

of

marketability

9.5%

Decrease

c

Discount

rate

19.6%

Decrease

C

Long

term

growth

rate

5.0%

Increase

Food

&

Staples

Retailing

..

6,098,635

Discounted

cash

flow

Discount

for

lack

of

marketability

8.1%

Decrease

Discount

rate

12.4%

Decrease

Terminal

Multiple

32.5x

Increase

c

Market

comparables

EV

/

revenue

4.1%

Increase

c

Software

...............

20,979,945

Discounted

cash

flow

Discount

for

lack

of

marketability

18.8

Decrease

c

Discount

rate

10.7

Decrease

c

Long

term

growth

rate

2.0%

Increase

Market

comparables

Discount

for

lack

of

marketability

6.2%

Decrease

c

EV

/

revenue

3.4x

Increase

Specialty

Retail

.........

16,403,200

Discounted

cash

flow

Discount

for

lack

of

marketability

16.7%

Decrease

c

Discount

rate

13.6%

Decrease

d

Long

term

growth

rate

4.0%

Increase

c

All

Other

Investments

............

56,933,141

e.f 

Total

.........................

$211,504,666

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

77

franklintempleton.com

Semiannual

Report

12.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

The

amendments

in

the

ASU

provides

optional

temporary

financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

(LIBOR)

and

other

interbank-offered

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Franklin

Small-Mid

Cap

Growth

Fund

Assets:

Investments

in

Securities:

Common

Stock:

Internet

&

Direct

Marketing

Retail

.....................

$13,274,440

Market

comparables

EV

/

EBITDA

multiple

28.2x

Increase

c

EV

/

revenue

multiple

3.2x

Increase

c

Discount

for

lack

of

marketability

15.5%

Decrease

c

Preferred

Stocks:

Automobiles

............

21,084,294

Discounted

cash

flow

Discount

for

lack

of

marketability

11.1%

Decrease

c

Discount

rate

11.4%

Decrease

Terminal

multiple

23.5x

Increase

Market

comparables

EV

/

revenue

10.8x

Increase

c

Semiconductors

&

Semiconductor

Equipment

.....

$5,912,774

Discounted

cash

flow

Discount

rate

16.3%

Decrease

Discount

for

lack

of

marketability

14.6%

Decrease

c

Terminal

multiple

18.0x

Increase

Market

comparables

EV

/

revenue

6.4x

–

6.9x

(6.7x)

Increase

All

Other

Investments

..........

61,004,773

e 

Total

.......................

$101,276,281

a

Weighted

based

on

the

relative

fair

value

of

the

financial

instruments.

b

Represents

the

directional

change

in

the

fair

value

that

would

result

from

a

significant

and

reasonable

increase

in

the

corresponding

input.

A

significant

and

reasonable

decrease

in

the

input

would

have

the

opposite

effect.

Significant

impacts,

if

any,

to

fair

value

and/or

net

assets

have

been

indicated.

c

Represents

a

significant

impact

to

fair

value

but

not

net

assets.

d

Represents

a

significant

impact

to

fair

value

and

net

assets.

e

Includes

fair

value

of

immaterial

assets

and/or

liabilities

developed

using

various

valuation

techniques

and

unobservable

inputs.

May

also

include

values

derived

using

private

transaction

prices

or

non-public

third

party

pricing

information

which

is

unobservable.

f

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

Abbreviations

List

EBITDA

-

Earnings

before

interest,

taxes,

depreciation

and

amortization

EV

-

Enterprise

value

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

(unaudited)

78

franklintempleton.com

Semiannual

Report

based

reference

rates

as

of

the

end

of

2021.

The

ASU

is

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

this

ASU

will

not

have

a

material

impact

on

the

financial

statements.

13.

Subsequent

Events

The

Funds

have

evaluated

subsequent

events

through

the

issuance

of

the

financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

Selected

Portfolio

ADR

American

Depositary

Receipts

LIBOR

London

Inter-Bank

Offered

Rate

PIK

Payment-In-Kind

Currency

USD

United

States

Dollar

12.

New

Accounting

Pronouncements

(continued)

Franklin

Strategic

Series

Shareholder

Information

79

franklintempleton.com

Semiannual

Report

Liquidity

Risk

Management

Program

–

Funds

no

HLIM

Each

of

the

Funds

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund���s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Funds’

Board

of

Trustees

approved

the

appointment

of

the

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

as

the

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

Investment

Compliance,

Investment

Operations,

Valuation

Committee

and

Product

Management

groups.

In

assessing

and

managing

each

Fund’s

liquidity

risk,

the

ILC

considers,

as

relevant,

a

variety

of

factors,

including

the

Fund’s

investment

strategy

and

the

liquidity

of

its

portfolio

investments

during

both

normal

and

reasonably

foreseeable

stressed

conditions;

its

short

and

long-term

cash

flow

projections;

and

its

cash

holdings

and

access

to

other

funding

sources

including

the

Funds’

interfund

lending

facility

and

line

of

credit.

Classification

of

the

Fund’s

portfolio

holdings

in

the

four

liquidity

categories

is

based

on

the

number

of

days

it

is

reasonably

expected

to

take

to

convert

the

investment

to

cash

(for

Highly

Liquid

and

Moderately

Liquid

holdings)

or

sell

or

dispose

of

the

investment

(for

Less

Liquid

and

Illiquid

investments),

in

current

market

conditions

without

significantly

changing

the

investment’s

market

value.

Each

Fund

primarily

holds

liquid

assets

that

are

defined

under

the

Liquidity

Rule

as

"Highly

Liquid

Investments,"

and

therefore

is

not

required

to

establish

an

HLIM.

Highly

Liquid

Investments

are

defined

as

cash

and

any

investment

reasonably

expected

to

be

convertible

to

cash

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current

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conditions

in

three

business

days

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without

the

conversion

to

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significantly

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the

market

value

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the

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At

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the

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held

in

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the

adequacy

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effectiveness

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the

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2018

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2019.

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report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

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Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

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investors’

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the

Fund.

At

the

same

time,

the

Program

Administrator

also

presented

the

Fund

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of

Trustees

an

update

on

liquidity

during

the

first

quarter

of

2020

in

relation

to

the

COVID-19

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1

Shareholder

Letter

Dear

Shareholder:

During

the

six

months

ended

October

31,

2020,

first-

and

second-quarter

2020

data

reported

during

the

period

indicated

that

the

U.S.

economy

contracted

in

response

to

the

novel

coronavirus

(COVID-19)

pandemic.

In

the

third

quarter,

the

economy

recovered

substantially

based

on

increased

business

and

residential

investment

and

consumer

spending.

Before

the

reporting

period,

the

U.S.

Federal

Reserve

(Fed),

in

its

efforts

to

support

U.S.

economic

activity,

lowered

the

federal

funds

rate

twice

in

March

2020

and

implemented

broad

quantitative

easing

measures

to

support

credit

markets.

During

the

reporting

period,

the

Fed

held

its

key

rate

unchanged

at

0.25%,

but

continued

quantitative

easing

and

adjusted

its

policy

in

August

2020

to

allow

more

flexibility

to

keep

interest

rates

low,

while

maintaining

a

2%

average

inflation

target.

U.S.

equity

prices

rose

considerably

during

the

period,

helped

by

monetary

and

fiscal

actions

and

optimism

about

the

economy,

which

propelled

valuations

to

all-time

highs

in

September

before

stocks

trended

lower

amid

renewed

investor

concerns.

In

this

environment,

U.S.

stocks,

as

measured

by

the

Standard

&

Poor’s

®

500

Index,

posted

a

strong

positive

total

return

for

the

six-month

period.

We

are

committed

to

our

long-term

perspective

and

disciplined

investment

approach

as

we

conduct

a

rigorous,

fundamental

analysis

of

securities

with

a

regular

emphasis

on

investment

risk

management.

We

believe

active,

professional

investment

management

serves

investors

well.

We

also

recognize

the

important

role

of

financial

advisors

in

today’s

markets

and

encourage

investors

to

continue

to

seek

their

advice.

Amid

changing

markets

and

economic

conditions,

we

are

confident

investors

with

a

well-diversified

portfolio

and

a

patient,

long-term

outlook

should

be

well-positioned

for

the

years

ahead.

In

addition,

Franklin

Strategic

Series

semiannual

report

includes

more

detail

about

prevailing

conditions

and

a

discussion

about

investment

decisions

during

the

period.

All

securities

markets

fluctuate,

as

do

mutual

fund

share

prices.

We

thank

you

for

investing

with

Franklin

Templeton,

welcome

your

questions

and

comments,

and

look

forward

to

serving

your

future

investment

needs.

Sincerely,

Edward

Perks,

CFA

President

and

Chief

Executive

Officer

–

Investment

Management

Franklin

Strategic

Series

This

letter

reflects

our

analysis

and

opinions

as

of

October

31,

2020

,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Semiannual

Report

2

Contents

Semiannual

Report

Economic

and

Market

Overview

....................

3

Franklin

Biotechnology

Discovery

Fund

..............

4

Franklin

Natural

Resources

Fund

...................

10

Financial

Highlights

and

Statements

of

Investments

...

16

Financial

Statements

.............................

30

Notes

to

Financial

Statements

.....................

34

Shareholder

Information

..........................

47

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Semiannual

Report

SEMIANNUAL

REPORT

Economic

and

Market

Overview

U.S.

equities,

as

measured

by

the

Standard

&

Poor’s

500

Index

(S&P

500

®

),

advanced

significantly

during

the

six

months

ended

October

31,

2020,

as

markets

continued

to

recover

from

the

disruption

caused

by

the

novel

coronavirus

(COVID-19)

pandemic.

The

nascent

equity

market

recovery

that

began

in

late

March

gained

momentum

during

the

period,

supported

by

monetary

and

fiscal

measures,

which

drove

stocks,

as

measured

by

the

S&P

500,

to

all-time

price

highs

in

early

September,

before

retreating

in

the

period’s

final

months.

The

U.S.

Federal

Reserve

(Fed)

continued

its

efforts

to

support

the

U.S.

economy

by

maintaining

the

federal

funds

target

rate

at

a

range

of

0.00%–0.25%,

expanding

quantitative

easing

measures

aimed

at

ensuring

credit

flows

to

borrowers

and

supporting

credit

markets

with

unlimited

amounts

of

bond

purchasing.

Furthermore,

the

Fed

signaled

that

interest

rates

would

potentially

remain

low,

even

if

inflation

persistently

exceeded

the

Fed’s

2%

target.

Pandemic-related

restrictions

implemented

prior

to

the

period

caused

stiff

economic

headwinds.

The

longest

U.S.

economic

expansion

in

history

ended

in

February

2020,

according

to

the

National

Bureau

of

Economic

Research,

and

the

country

slipped

into

a

deep

recession

with

second-

quarter

2020

gross

domestic

product

(GDP)

posting

a

record

annualized

decline.

Optimism

about

an

economic

rebound

amid

the

government’s

fiscal

and

monetary

stimulus,

along

with

rising

retail

sales

and

resilient

consumer

spending,

drove

a

sharp

equity

rally

throughout

much

of

the

summer.

Improving

economic

activity

led

third-quarter

GDP

to

expand

at

a

record

annualized

pace,

while

declining

jobless

claims

drove

the

unemployment

rate

from

a

pandemic

high

of

14.7%

in

April

to

6.9%

in

October.

1

Optimism

about

treatments

and

potential

vaccines

for

COVID-19

also

supported

stock

prices.

However,

stocks

declined

in

the

period’s

last

two

months

amid

investor

concerns

that

the

economic

recovery

was

stalling,

as

new

job

growth

slowed

and

unemployment

claims

remained

high.

Concerns

that

possible

new

restrictions

due

to

rising

COVID-19

cases

could

disrupt

the

economic

recovery,

the

government’s

lack

of

consensus

about

additional

stimulus

and

uncertainties

surrounding

the

upcoming

presidential

election

also

tempered

investor

enthusiasm.

The

foregoing

information

reflects

our

analysis

and

opinions

as

of

October

31,

2020.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

1.

Source:

Bureau

of

Labor

Statistics.

4

franklintempleton.com

Semiannual

Report

Franklin

Biotechnology

Discovery

Fund

This

semiannual

report

for

Franklin

Biotechnology

Discovery

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

capital

appreciation.

The

Fund

invests

at

least

80%

of

its

net

assets

in

securities

of

biotechnology

companies

and

discovery

research

firms

located

in

the

U.S.

and

other

countries.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+12.54%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

NASDAQ

Biotechnology

Index

®

,

which

tracks

U.S.

and

international-based

biotechnology

stocks,

posted

a

+5.34%

total

return.

1

Also

in

comparison,

the

Standard

&

Poor’s

500

Index

(S&P

500),

which

is

a

broad

measure

of

the

U.S.

stock

market,

posted

a

+13.29%

total

return.

1

You

can

find

the

Fund’s

long-term

performance

data

in

the

Performance

Summary

beginning

on

page

7

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Investment

Strategy

We

are

research-driven,

fundamental

investors,

pursuing

a

growth

strategy.

As

bottom-up

investors

focusing

primarily

on

individual

securities,

we

choose

companies

that

have

identifiable

drivers

of

future

earnings

growth

and

that

present,

in

our

opinion,

the

best

trade-off

between

potential

earnings

growth,

business

and

financial

risk,

and

valuation.

Also,

in

seeking

sustainable

growth

characteristics,

we

look

for

companies

that

we

believe

can

produce

sustainable

earnings

growth

and

cash

flow

growth

or

the

potential

to

generate

income.

We

rely

on

a

team

of

analysts

to

help

provide

in-depth

industry

expertise

and

use

both

qualitative

and

quantitative

analysis

to

evaluate

companies

for

distinct

and

sustainable

competitive

advantages

likely

to

lead

to

growth

in

earnings

and/or

share

price.

Competitive

advantages,

such

as

a

particular

product

niche,

proven

technology,

sound

financial

position

and

strong

management,

are

all

factors

we

believe

may

contribute

to

strong

growth

potential.

Manager’s

Discussion

During

the

six

months

under

review,

the

biotechnology

industry

experienced

relatively

low

levels

of

volatility.

However,

please

keep

in

mind

that

volatility

is

not

uncommon

in

the

biotechnology

industry,

and

we

seek

to

take

advantage

of

short-term

volatility

by

initiating

positions

or

adding

to

existing

holdings

in

companies

we

believe

are

undervalued.

The

Fund’s

absolute

returns

were

boosted

by

a

considerable

rally

across

biotechnology

holdings,

which

made

up

a

majority

of

the

portfolio.

The

Fund

began

the

period

with

an

elevated

cash

position,

most

of

which

was

deployed

into

new

or

additional

purchases

of

biotechnology

and

pharmaceutical

stocks.

Company-specific

successes

tied

to

clinical

trials,

product

launches,

and

merger-and-acquisition

(M&A)

activity

had

a

dramatic

positive

impact

on

the

equity

values

of

numerous

holdings,

including

vaccine

developer

Novavax.

The

company’s

share

continued

rising

steeply

through

July

as

the

company

appeared

closer

to

producing

a

COVID-19

vaccine,

which

has

attracted

substantial

U.S.

government

funding.

The

company’s

history

of

developing

effective

vaccines

for

the

seasonal

flu,

malaria,

Ebola

and

other

diseases

made

it

a

leading

candidate,

in

our

view,

to

produce

the

first

COVID-19

vaccine.

In

August,

the

company

began

to

give

back

some

of

its

robust

summer

gains

due

to

intensifying

competition

in

the

COVID-19

vaccine

development

race,

a

trend

that

continued

through

period-end

as

investors

concluded

that

some

of

Novavax’s

competitors

were

more

likely

to

be

first

to

market.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Biotechnology

80.0%

Pharmaceuticals

11.7%

Life

Sciences

Tools

&

Services

3.6%

Capital

Markets

1.1%

Other

0.1%

Short-Term

Investments

&

Other

Net

Assets

3.5%

1.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

20

.

Franklin

Biotechnology

Discovery

Fund

5

franklintempleton.com

Semiannual

Report

Forte

Therapeutics

also

contributed

to

absolute

returns.

The

clinical-stage

biopharmaceutical

company,

which

focuses

on

skin

diseases,

made

significant

gains

following

its

mid-June

initial

public

offering.

The

company

also

settled

its

previously

announced

merger

with

cancer

Tocagen,

a

developer

of

cancer

treatments.

We

believe

the

merger

is

a

transformative

event

that

will

provide

the

opportunity

to

achieve

significant

growth

as

it

continues

to

advance

its

clinical

program

for

a

live

biotherapeutic

for

the

treatment

of

inflammatory

skin

diseases.

Forte

presents

an

attractive

business

opportunity

with

a

unique

product

pipeline

that

has

considerable

market

potential,

as

well

as

significant

value-driving

clinical

milestones.

In

particular,

there

is

a

genuine

unmet

need

for

safe

and

effective

eczema

therapies

for

children,

which

Forte

is

developing.

The

company

also

provided

an

upbeat

second-quarter

update

as

it

successfully

concluded

its

merger

with

Tocagen

and

otherwise

continued

to

grow

its

development

capabilities

while

improving

business

operations.

The

single

most

positive

influence

on

absolute

returns

came

from

our

comparatively

larger

position

in

Immunomedics

(not

held

at

period-end).

Immunomedics

is

a

commercial-

stage

biotechnology

firm

focused

on

the

discovery

and

development

of

antibody

drug

conjugate

drugs

for

cancer.

Their

lead

drug,

Trodelvy,

is

approved

to

treat

multiple

types

of

breast

cancer

and

is

in

development

to

treat

bladder,

ovarian,

uterine

and

other

cancers.

We

were

positive

on

Trodelvy’s

commercial

prospects

across

different

cancer

types

and

had

viewed

the

Immunomedics

as

a

likely

M&A

target,

which

came

to

fruition

in

mid-September

when

Gilead

Sciences

(also

a

Fund

holding)

agreed

to

acquire

the

company.

Similar

to

Gilead

management’s

view,

we

believe

Trodelvy’s

launch

to

treat

triple

negative

breast

cancer

(TNBC)

will

exceed

expectations

and

become

the

new

standard

of

care

due

its

strong

clinical

profile

and

the

high

unmet

need

for

new

TNBC

therapies.

Furthermore,

we

believe

the

upcoming

clinical

trial

readout

for

other

breast

cancer

types

will

be

encouraging

and

enable

label

expansion

to

even

larger

markets.

Other

key

contributors

in

the

biotechnology

industry

included

Argenx,

Mirati

Therapeutics,

Insmed,

Fate

Therapeutics

and

CRISPR

Therapeutics

in

the

biotechnology

industry.

In

pharmaceuticals

Horizon

Pharma

contributed

as

well.

In

contrast,

the

pharmaceuticals

industry

slightly

detracted

from

absolute

returns.

The

most

substantial

detractors

were

Reata

Pharmaceuticals

and

Aerie

Pharmaceuticals

(not

held

at

period-end),

the

latter

of

which

specializes

in

ophthalmic

drugs

for

glaucoma

and

other

eye

diseases.

Biopharmaceutical

developer

Reata,

which

focuses

on

oral

antioxidative

and

anti-inflammatory

drugs

for

rare

kidney

and

neurological

diseases,

lost

share

price

after

receiving

mixed

feedback

from

the

U.S.

Food

and

Drug

Administration

(FDA)

on

their

ability

to

file

two

drugs—bardoxolone

and

omaveloxolone—for

regulatory

review.

While

the

feedback

on

bardoxolone

was

positive,

the

FDA’s

request

for

additional

data

on

omaveloxolone

was

a

negative

surprise.

We

continue

to

believe

that

omaveloxolone

is

a

game-changing

drug

for

Friedreich’s

Ataxia,

a

rare

genetic

disease,

and

that

it

will

eventually

receive

FDA

approval,

but

it

remains

unclear

how

long

the

delay

will

extend.

That

said,

we

view

bardoxolone

as

the

key

value

driver

for

the

stock,

and

we

continue

to

expect

a

positive

regulatory

outcome

for

bardoxolone’s

first

indication

in

Alport

Syndrome,

a

kidney

disease.

Other

notable

detractors

were

found

in

biotechnology.

The

Fund

had

substantial

positions

in

Gilead

Sciences,

Vertex

Pharmaceuticals

and

Biogen,

all

of

which

posted

declines.

Gilead’s

drug

remdesivir

was

the

first

to

be

granted

an

emergency

use

authorization

by

the

FDA

as

a

treatment

for

COVID-19,

but

this

leading-role

success

was

not

enough

to

lift

the

share

price

over

the

semiannual

period.

Gilead’s

share

value

declined

from

that

early-May

approval,

though

it

was

eventually

used

to

treat

U.S.

president

Donald

Trump’s

coronavirus

symptoms

in

October,

and

was

still

generating

Top

10

Holdings

10/31/20

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Gilead

Sciences,

Inc.

6.6%

Biotechnology,

United

States

Regeneron

Pharmaceuticals,

Inc.

6.3%

Biotechnology,

United

States

Vertex

Pharmaceuticals,

Inc.

5.3%

Biotechnology,

United

States

Amgen,

Inc.

5.2%

Biotechnology,

United

States

Iovance

Biotherapeutics

,

Inc.

4.0%

Biotechnology,

United

States

Illumina,

Inc.

3.6%

Life

Sciences

Tools

&

Services,

United

States

Horizon

Therapeutics

plc

3.1%

Pharmaceuticals,

United

States

Biogen,

Inc.

3.0%

Biotechnology,

United

States

PTC

Therapeutics,

Inc.

3.0%

Biotechnology,

United

States

GW

Pharmaceuticals

plc

2.9%

Pharmaceuticals,

United

Kingdom

Franklin

Biotechnology

Discovery

Fund

6

franklintempleton.com

Semiannual

Report

significant

sales.

Investors

began

to

overlook

remdesivir

as

the

promise

around

a

vaccine

gathered

steam,

leaving

Gilead

in

what

some

investors

saw

as

a

more

minor

role

for

the

next

phase

of

COVID-19

treatment

and

prevention.

Worries

over

its

hepatitis

C

business,

which

was

shrinking

well

before

the

pandemic,

were

a

secondary

influence

in

the

selloff.

Furthermore,

the

pandemic

appeared

to

suppress

the

sales

of

other

select

drugs

in

Gilead’s

lineup

due

to

patient-access

setbacks

under

government-mandated

social

distancing

restrictions,

while

the

company

also

faced

competition

from

generic

drugmakers

which

created

headwinds

for

its

pulmonary

hypertension

drug

and

angina

drug.

Our

smaller

positions

in

Global

Blood

Therapeutics

and

Constellation

Pharmaceuticals

(not

held

at

period-end)

also

suffered

significant

declines

within

the

biotechnology

industry.

Thank

you

for

your

continued

participation

in

Franklin

Biotechnology

Discovery

Fund.

We

look

forward

to

serving

your

future

investment

needs.

Evan

McCulloch,

CFA

Lead

Portfolio

Manager

Wendy

Lam,

Ph.D.

Akiva

Felt

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

October

31,

2020

Franklin

Biotechnology

Discovery

Fund

7

franklintempleton.com

Semiannual

Report

The

performance

table

does

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

A

4

6-Month

+12.54%

+6.36%

1-Year

+28.04%

+21.00%

5-Year

+30.22%

+4.24%

10-Year

+344.88%

+15.44%

Advisor

6-Month

+12.68%

+12.69%

1-Year

+28.37%

+28.37%

5-Year

+31.85%

+5.68%

10-Year

+356.75%

+16.40%

See

page

8

for

Performance

Summary

footnotes.

Franklin

Biotechnology

Discovery

Fund

Performance

Summary

8

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

The

Fund

is

a

nondiversified

fund

that

concentrates

in

a

single

sector,

which

involves

risks

such

as

patent

considerations,

product

liability,

government

regulatory

requirements,

and

regulatory

approval

for

new

drugs

and

medical

products.

Biotechnol-

ogy

companies

often

are

small

and/or

relatively

new.

Smaller

companies

can

be

particularly

sensitive

to

changes

in

economic

conditions

and

have

less

certain

growth

prospects

than

larger,

more

established

companies

and

can

be

volatile,

especially

over

the

short

term.

The

Fund

may

also

invest

in

foreign

companies,

which

involve

special

risks,

including

currency

fluctuations

and

political

uncertainty.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

dis-

eases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

a

fee

waiver

associated

with

any

investment

it

makes

in

a

Franklin

Templeton

money

fund

and/or

other

Franklin

Templeton

fund,

contractually

guaranteed

through

8/31/21.

Fund

investment

results

reflect

the

fee

waiver;

without

this

reduction,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

5

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

A

1.03%

1.05%

Advisor

0.78%

0.80%

Your

Fund’s

Expenses

Franklin

Biotechnology

Discovery

Fund

9

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.

50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,125.53

$5.21

$1,020.31

$4.95

0.97%

C

$1,000

$1,121.33

$9.20

$1,016.54

$8.74

1.72%

R6

$1,000

$1,127.46

$3.39

$1,022.01

$3.23

0.63%

Advisor

$1,000

$1,126.92

$3.87

$1,021.56

$3.68

0.72%

10

franklintempleton.com

Semiannual

Report

Franklin

Natural

Resources

Fund

This

semiannual

report

for

Franklin

Natural

Resources

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

to

provide

high

total

return.

Total

return

consists

of

capital

appreciation

and

current

dividend

and

interest

income.

Under

normal

market

conditions,

the

Fund

invests

at

least

80%

of

its

net

assets

in

equity

and

debt

securities

of

companies

that

own,

produce,

refine,

process,

transport

or

market

natural

resources,

as

well

as

those

that

provide

related

services.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

-4.56%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

Standard

&

Poor’s

(S&P

®

)

North

American

Natural

Resources

Sector

Index,

which

tracks

companies

involved

in

industries

such

as

mining,

energy,

timber

and

forestry

services,

and

the

production

of

pulp

and

paper,

posted

a

-6.58%

total

return.

1

Also

in

comparison,

the

Standard

&

Poor’s

500

Index

(S&P

500),

which

is

a

broad

measure

of

the

U.S.

stock

market,

posted

a

+13.29%

total

return.

1

Please

note

index

performance

information

is

provided

for

reference

and

we

do

not

attempt

to

track

any

index

but

rather

undertake

investments

on

the

basis

of

fundamental

research.

The

Fund’s

strategy,

which

focuses

on

companies

with

higher

long-term

growth

potential,

differs

from

the

natural

resources

index’s

large

weighting

in

income-oriented

companies

that

we

believe

typically

provide

more

limited

opportunities

for

growth.

This

difference

may

occasionally

lead

to

wide

performance

discrepancies,

especially

in

periods

when

investors

focus

on

short-term

safety

and

yield

or,

conversely,

when

investors

focus

more

heavily

on

companies

with

stronger

growth

prospects

and

greater

commodity

price

leverage.

You

can

find

the

Fund’s

long-term

performance

data

in

the

Performance

Summary

beginning

on

page

13

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Investment

Strategy

We

are

research-driven,

fundamental

investors,

pursuing

a

growth

strategy.

As

bottom-up

investors

focusing

primarily

on

individual

securities,

we

choose

companies

that

have

identifiable

drivers

of

future

earnings

growth

and

that

present,

in

our

opinion,

the

best

trade-off

between

potential

earnings

growth,

business

and

financial

risk,

and

valuation.

Also,

in

seeking

sustainable

growth

characteristics,

we

look

for

companies

that

we

believe

can

produce

sustainable

earnings

growth

and

cash

flow

growth

or

the

potential

to

generate

income.

We

rely

on

a

team

of

analysts

to

help

provide

in-depth

industry

expertise

and

use

both

qualitative

and

quantitative

analysis

to

evaluate

companies

for

distinct

and

sustainable

competitive

advantages

likely

to

lead

to

growth

in

earnings

and/or

share

price.

Competitive

advantages,

such

as

a

particular

product

niche,

proven

technology,

sound

financial

position

and

strong

management,

are

all

factors

we

believe

may

contribute

to

strong

growth

potential.

Sector

Overview

Global

commodity

prices

rose

during

the

six

months

ended

October

31,

2020.

Energy

and

industrial

metals

benefited

from

increased

economic

activity

following

the

lifting

of

the

most

restrictive

lockdowns

put

in

place

to

contain

the

novel

coronavirus

(COVID-19)

pandemic.

The

economic

recovery

in

China,

the

world’s

largest

consumer

of

many

raw

materials,

has

played

an

important

role

in

lifting

commodity

prices.

Precious

metals

also

rose

in

value

as

many

investors

sought

perceived

safe-haven

assets.

Geographic

Composition

10/31/20

%

of

Total

Net

Assets

North

America

75.3%

Europe

9.0%

Australia

&

New

Zealand

6.9%

Latin

America

&

Caribbean

5.7%

Middle East & Africa

2.5%

Short-Term

Investments

&

Other

Net

Assets

0.6%

1.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

27

.

Franklin

Natural

Resources

Fund

11

franklintempleton.com

Semiannual

Report

Crude

oil

prices

rose

significantly

during

the

period

after

reaching

historically

low

levels

in

early

2020.

Prices

increased

significantly

in

May

and

June

due

to

increased

demand

from

a

recovering

Chinese

economy

along

with

production

curtailments

by

the

Organization

of

the

Petroleum

Exporting

Countries

and

certain

non-member

countries.

Some

of

these

gains

were

given

back

late

in

the

period

due

to

weakening

adherence

to

the

production

cuts

by

certain

countries,

anticipation

of

renewed

COVID-19

lockdowns

in

Europe

and

the

U.S.,

and

reduced

expectations

for

oil

demand

in

the

remaining

months

of

2020

and

into

2021.

U.S.

natural

gas

prices

also

rose

significantly

during

the

period,

despite

some

volatility.

Prices

were

supported

by

recovering

exports

of

liquified

natural

gas

(LNG),

decreased

gas

drilling

in

the

U.S.

and

a

faster-than-expected

recovery

in

demand

from

U.S.

businesses

after

the

most

restrictive

COVID-19-related

lockdowns

were

lifted.

Prices

were

held

in

check

by

relatively

mild

summer

weather,

which

reduced

electricity

demand

for

air

conditioning,

and

high

inventory

levels.

Prices

rose

in

October,

however,

due

to

investor

expectations

that

heating

demand

in

the

coming

winter

may

reduce

inventories.

Precious

metals

prices

increased

as

well

during

the

period.

The

price

of

gold

continued

its

relatively

steady,

long-term

upward

trend,

despite

some

volatility.

Demand

increased

as

many

investors

sought

perceived-safe

havens

out

of

fear

that

equities

would

decline

due

to

economic

lockdowns

and

inflationary

pressures

from

aggressive

monetary

and

fiscal

stimulus

measures.

COVID-19-related

mine

closures

hampered

production,

further

supporting

prices.

Silver

prices

rose

significantly

for

similar

reasons,

along

with

the

metal’s

application

in

infrastructure

and

green

energy

construction,

which

some

analysts

expected

to

increase

in

the

U.S.

following

the

presidential

election.

Platinum

and

palladium

prices

also

increased.

Palladium,

a

key

component

in

pollution-control

devices

for

automobiles,

benefited

from

a

recovery

in

car

sales

in

China

and

elsewhere.

Industrial

metal

prices

also

rose

during

the

period.

Copper

benefited

from

decreased

supply

due

to

pandemic-related

mine

closures

in

Chile

and

demand

from

China.

Iron

ore

prices

also

rose

as

a

result

of

decreased

supply

due

to

mine

closures,

particularly

in

Brazil,

and

demand

from

China,

where

steel

producers

ramped

up

output

to

meet

the

needs

of

the

country’s

large

construction

and

manufacturing

sectors.

Manager’s

Discussion

Natural

resources

equities

declined

during

the

period,

hurt

by

the

ongoing

COVID-19

pandemic

and

government

efforts

to

contain

the

spread

of

the

virus.

Oil

companies

have

been

hit

particularly

hard

by

public

health

measures

severely

restricting

mobility

and

business

activity,

which

have

decreased

fuel

demand.

Political

uncertainty

around

the

U.S.

presidential

election

has

also

hurt

the

energy

sector,

with

investors

concerned

about

the

impact

of

a

Joe

Biden

administration,

which

could

be

relatively

more

antagonistic

toward

U.S.

oil

and

gas

producers

and

favorable

to

renewable

energy.

The

production

cut

agreement

between

OPEC

and

other

oil

producing

non-member

countries

did

allow

a

partial

recovery

among

energy

equities,

and

the

sector

stands

to

benefit

greatly

from

the

anticipated

development

of

a

vaccine,

which

would

hopefully

allow

global

economic

activity

to

normalize.

Mining

equities,

in

contrast,

performed

well

during

the

period.

China’s

economic

recovery,

partially

stoked

by

government

stimulus,

stimulated

rising

demand

for

industrial

metals.

Low

fuel

costs,

supply

curtailments

and

declining

inventories

further

benefited

mining

companies.

In

this

environment,

overweightings

in

the

diversified

metals

and

mining

and

copper

industries

contributed

to

relative

performance.

U.K-based

BHP

Group

and

Australia-based

Rio

Tinto

were

significant

contributors

in

the

former,

while

Chile-based

Antofagasta

and

Canada-based

Lundin

Mining

contributed

in

the

latter.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Oil

&

Gas

Exploration

&

Production

20.2%

Integrated

Oil

&

Gas

14.9%

Gold

12.8%

Oil

&

Gas

Equipment

&

Services

9.7%

Diversified

Metals

&

Mining

9.1%

Copper

7.9%

Oil

&

Gas

Storage

&

Transportation

7.5%

Oil

&

Gas

Refining

&

Marketing

5.3%

Industrial

Gases

2.3%

Fertilizers

&

Agricultural

Chemicals

1.5%

Construction

Materials

1.1%

Packaged

Foods

&

Meats

1.1%

Other

6.0%

Short-Term

Investments

&

Other

Net

Assets

0.6%

Franklin

Natural

Resources

Fund

12

franklintempleton.com

Semiannual

Report

An

underweighting

in

the

integrated

oil

and

gas

industry

helped

relative

performance

as

well.

Underweighted

positions

in

Exxon

Mobil

and

Chevron

were

significant

relative

contributors

in

the

industry,

which

was

hurt

by

soft

demand

for

transportation

fuels

and

LNG.

Elsewhere,

off-benchmark

positions

in

fertilizer

and

agriculture

and

industrial

gases

also

contributed

to

relative

results.

In

contrast,

underweighted

allocation

in

paper

packaging

and

a

lack

of

holdings

in

metal

and

glass

containers

hurt

relative

results

as

these

industries

proved

to

be

relatively

insulated

from

the

pandemic’s

economic

effects.

An

underweighting

in

gold,

which

included

a

lack

of

positions

in

multiple

major

gold

miners,

also

hurt

relative

results.

Gold

equities

performed

well

on

an

absolute

basis

as

investors

sought

safe

havens

from

low

interest

rates,

a

weakening

dollar

and

growing

inflation

concerns.

Elsewhere,

other

relative

detractors

included

a

lack

of

position

in

a

major

construction

materials

firm

along

with

positions

in

U.K.

oil

services

firm

TechnipFMC

and

U.S.

oil

and

gas

exploration

firm

Concho

Resources.

It

is

important

to

recognize

the

effect

of

currency

movements

on

the

Fund’s

performance.

In

general,

if

the

value

of

the

U.S.

dollar

goes

up

compared

with

a

foreign

currency,

an

investment

traded

in

that

foreign

currency

will

go

down

in

value

because

it

will

be

worth

fewer

U.S.

dollars.

This

can

have

a

negative

effect

on

Fund

performance.

Conversely,

when

the

U.S.

dollar

weakens

in

relation

to

a

foreign

currency,

an

investment

traded

in

that

foreign

currency

will

increase

in

value,

which

can

contribute

to

Fund

performance.

For

the

six

months

ended

October

31,

2020,

the

U.S.

dollar

declined

in

value

relative

to

most

currencies.

As

a

result,

the

Fund’s

performance

was

positively

affected

by

the

portfolio’s

significant

investment

in

securities

with

non-U.S.

currency

exposure.

However,

one

cannot

expect

the

same

result

in

future

periods.

Whether

the

U.S.

dollar

goes

up

or

weakens

compared

with

foreign

currencies,

company-specific

factors

may

offset

the

effects

of

the

currency

movements

on

the

value

of

individual

investments

and,

possibly,

the

Fund’s

performance

overall.

Thank

you

for

your

continued

participation

in

Franklin

Natural

Resources

Fund.

We

look

forward

to

serving

your

future

investment

needs.

Frederick

G.

Fromm,

CFA

Matthew

J.

Adams,

CFA

Stephen

M.

Land,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020

,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Top

10

Holdings

10/31/20

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Chevron

Corp.

4.1%

Oil,

Gas

&

Consumable

Fuels,

United

States

Barrick

Gold

Corp.

4.0%

Metals

&

Mining,

Canada

BHP

Group

plc

3.9%

Metals

&

Mining,

Australia

Cabot

Oil

&

Gas

Corp.

3.9%

Oil,

Gas

&

Consumable

Fuels,

United

States

Newmont

Corp.

3.9%

Metals

&

Mining,

United

States

Antofagasta

plc

3.1%

Metals

&

Mining,

Chile

TOTAL

SE

3.0%

Oil,

Gas

&

Consumable

Fuels,

France

Exxon

Mobil

Corp.

3.0%

Oil,

Gas

&

Consumable

Fuels,

United

States

ConocoPhillips

2.7%

Oil,

Gas

&

Consumable

Fuels,

United

States

Williams

Cos.,

Inc.

(The)

2.7%

Oil,

Gas

&

Consumable

Fuels,

United

States

Performance

Summary

as

of

October

31,

2020

Franklin

Natural

Resources

Fund

13

franklintempleton.com

Semiannual

Report

The

performance

table

does

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

A

3

6-Month

-4.56

%

-9.86%

1-Year

-32.34%

-36.07%

5-Year

-42.13%

-11.37%

10-Year

-58.48%

-8.93%

Advisor

6-Month

-4.47%

-4.54%

1-Year

-32.20%

-32.20%

5-Year

-41.42%

-10.14%

10-Year

-57.35%

-8.17%

See

page

14

for

Performance

Summary

footnotes.

Franklin

Natural

Resources

Fund

Performance

Summary

14

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Investing

in

a

fund

concentrating

in

the

natural

resources

sector

involves

special

risks,

includ-

ing

increased

susceptibility

to

adverse

economic

and

regulatory

developments

affecting

the

sector.

Growth

stock

prices

may

fall

dramatically

if

the

company

fails

to

meet

projections

of

earnings

or

revenue;

their

prices

may

be

more

volatile

than

other

securities,

particularly

over

the

short

term.

Smaller

companies

can

be

particularly

sensitive

to

changes

in

economic

conditions

and

have

less

certain

growth

prospects

than

larger,

more

established

companies

and

can

be

volatile,

especially

over

the

short

term.

The

Fund

may

also

invest

in

foreign

companies,

which

involve

special

risks,

including

currency

fluctuations

and

political

uncertainty.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

diseases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

4

Share

Class

A

1.17%

Advisor

0.92%

Your

Fund’s

Expenses

Franklin

Natural

Resources

Fund

15

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.

50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$953.71

$6.32

$1,018.73

$6.53

1.28%

C

$1,000

$950.23

$10.00

$1,014.95

$10.33

2.03%

R6

$1,000

$956.94

$3.62

$1,021.50

$3.74

0.7

3%

Advisor

$1,000

$954.64

$5.10

$1,019.99

$5.27

1.03%

Franklin

Strategic

Series

Financial

Highlights

Franklin

Biotechnology

Discovery

Fund

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

.

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$150.48

$138.85

$146.14

$147.22

$128.19

$182.30

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.53)

(0.69)

(0.99)

(0.80)

(0.79)

(0.94)

Net

realized

and

unrealized

gains

(losses)

19.40

26.48

(1.75)

3.32

25.75

(39.39)

Total

from

investment

operations

........

18.87

25.79

(2.74)

2.52

24.96

(40.33)

Less

distributions

from:

Net

investment

income

..............

—

—

—

—

(1.73)

—

Net

realized

gains

.................

—

(14.16)

(4.55)

(3.60)

(4.20)

(13.78)

Total

distributions

...................

—

(14.16)

(4.55)

(3.60)

(5.93)

(13.78)

Net

asset

value,

end

of

period

..........

$169.35

$150.48

$138.85

$146.14

$147.22

$128.19

Total

return

c

.......................

12.54%

18.52%

(1.60)%

1.69%

20.02%

(23.55)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.98%

1.03%

1.02%

1.05%

1.04%

0.99%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

0.97%

1.01%

1.00%

1.03%

1.02%

0.98%

Net

investment

income

(loss)

..........

(0.62)%

(0.49)%

(0.67)%

(0.53)%

(0.58)%

(0.56)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$1,077,405

$960,305

$924,611

$1,081,883

$1,176,687

$1,074,903

Portfolio

turnover

rate

................

24.20

%

32.92%

28.62%

26.95%

34.12%

22.13%

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Biotechnology

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

17

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$143.00

$133.51

$141.75

$143.98

$125.99

$180.67

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(1.12)

(1.70)

(2.03)

(1.90)

(1.81)

(2.11)

Net

realized

and

unrealized

gains

(losses)

18.45

25.35

(1.66)

3.27

25.29

(38.79)

Total

from

investment

operations

........

17.33

23.65

(3.69)

1.37

23.48

(40.90)

Less

distributions

from:

Net

investment

income

..............

—

—

—

—

(1.29)

—

Net

realized

gains

.................

—

(14.16)

(4.55)

(3.60)

(4.20)

(13.78)

Total

distributions

...................

—

(14.16)

(4.55)

(3.60)

(5.49)

(13.78)

Net

asset

value,

end

of

period

..........

$160.33

$143.00

$133.51

$141.75

$143.98

$125.99

Total

return

c

.......................

12.12%

17.62%

(2.33)%

0.93%

19.14%

(24.09)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.73%

1.78%

1.77%

1.80%

1.79%

1.71%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

1.72%

1.76%

1.75%

1.78%

1.77%

1.70%

Net

investment

income

(loss)

..........

(1.37)%

(1.24)%

(1.42)%

(1.28)%

(1.33)%

(1.28)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$57,507

$48,363

$46,508

$58,433

$53,935

$17,562

Portfolio

turnover

rate

................

24.20%

32.92%

28.62%

26.95%

34.12%

22.13%

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Biotechnology

Discovery

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$156.99

$143.83

$150.65

$151.03

$131.37

$185.75

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.25)

(0.18)

(0.46)

(0.17)

(0.25)

(0.32)

Net

realized

and

unrealized

gains

(losses)

20.24

27.50

(1.81)

3.39

26.41

(40.28)

Total

from

investment

operations

........

19.99

27.32

(2.27)

3.22

26.16

(40.60)

Less

distributions

from:

Net

investment

income

..............

—

—

—

—

(2.30)

—

Net

realized

gains

.................

—

(14.16)

(4.55)

(3.60)

(4.20)

(13.78)

Total

distributions

...................

—

(14.16)

(4.55)

(3.60)

(6.50)

(13.78)

Net

asset

value,

end

of

period

..........

$176.98

$156.99

$143.83

$150.65

$151.03

$131.37

Total

return

c

.......................

12.73%

18.95%

(1.24)%

2.11%

20.50%

(23.24)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.70%

0.74%

0.70%

0.65%

0.63%

0.60%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

0.63%

0.64%

0.63%

0.61%

0.61%

0.59%

Net

investment

income

(loss)

..........

(0.28)%

(0.12)%

(0.30)%

(0.11)%

(0.17)%

(0.17)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$10,677

$9,484

$6,164

$8,307

$8,891

$5,568

Portfolio

turnover

rate

................

24.20%

32.92%

28.62%

26.95%

34.12%

22.13%

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Biotechnology

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

19

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$155.30

$142.56

$149.54

$150.20

$130.67

$185.12

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

........

(0.33)

(0.34)

(0.63)

(0.45)

(0.46)

(0.55)

Net

realized

and

unrealized

gains

(losses)

20.02

27.24

(1.80)

3.39

26.27

(40.12)

Total

from

investment

operations

........

19.69

26.90

(2.43)

2.94

25.81

(40.67)

Less

distributions

from:

Net

investment

income

..............

—

—

—

—

(2.08)

—

Net

realized

gains

.................

—

(14.16)

(4.55)

(3.60)

(4.20)

(13.78)

Total

distributions

...................

—

(14.16)

(4.55)

(3.60)

(6.28)

(13.78)

Net

asset

value,

end

of

period

..........

$174.99

$155.30

$142.56

$149.54

$150.20

$130.67

Total

return

c

.......................

12.68%

18.82%

(1.36)%

1.94%

20.32%

(23.36)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.73%

0.78%

0.77%

0.80%

0.79%

0.75%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

0.72%

0.76%

0.75%

0.78%

0.77%

0.74%

Net

investment

income

(loss)

..........

(0.37)%

(0.24)%

(0.42)%

(0.28)%

(0.33)%

(0.32)%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$194,840

$159,348

$153,874

$180,219

$159,894

$93,263

Portfolio

turnover

rate

................

24.20%

32.92%

28.62%

26.95%

34.12%

22.13%

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Statement

of

Investments,

October

31,

2020

Franklin

Biotechnology

Discovery

Fund

franklintempleton.com

Semiannual

Report

20

2

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

96.4%

Biotechnology

80.0%

a

89bio,

Inc.

...........................................

United

States

284,400

$

6,586,704

a

ACADIA

Pharmaceuticals,

Inc.

...........................

United

States

294,600

13,684,170

a

Acceleron

Pharma,

Inc.

.................................

United

States

158,700

16,596,846

a,b

ADMA

Biologics,

Inc.

...................................

United

States

437,264

870,155

a,b

Akouos

,

Inc.

.........................................

United

States

157,600

3,059,016

a

Albireo

Pharma,

Inc.

...................................

United

States

102,400

3,231,744

a

Alector

,

Inc.

..........................................

United

States

331,600

3,120,356

a

Alexion

Pharmaceuticals,

Inc.

............................

United

States

260,000

29,936,400

a

Alnylam

Pharmaceuticals,

Inc.

............................

United

States

52,300

6,431,331

a

ALX

Oncology

Holdings,

Inc.

.............................

United

States

86,100

3,401,811

Amgen,

Inc.

.........................................

United

States

318,700

69,138,778

a,b

Applied

Molecular

Transport,

Inc.

.........................

United

States

59,800

1,757,522

a

Applied

Therapeutics,

Inc.

...............................

United

States

154,857

2,519,523

a

Arcus

Biosciences,

Inc.

.................................

United

States

311,000

6,779,800

a

Argenx

SE,

ADR

......................................

Netherlands

57,325

14,224,052

a

Ascendis

Pharma

A/S,

ADR

.............................

Denmark

214,400

35,022,240

a

Assembly

Biosciences,

Inc.

..............................

United

States

381,295

5,620,288

a

Athenex

,

Inc.

.........................................

United

States

406,200

4,630,680

a

Autolus

Therapeutics

plc,

ADR

...........................

United

Kingdom

232,430

2,512,568

a

Biogen,

Inc.

.........................................

United

States

159,875

40,299,691

a

BioMarin

Pharmaceutical,

Inc.

............................

United

States

142,456

10,603,000

a

Black

Diamond

Therapeutics,

Inc.

.........................

United

States

127,800

4,026,978

a

Bluebird

Bio,

Inc.

......................................

United

States

30,900

1,597,839

a

Blueprint

Medicines

Corp.

...............................

United

States

117,200

11,987,216

a,b

Bridgebio

Pharma,

Inc.

.................................

United

States

118,800

4,559,544

a

Cardiff

Oncology,

Inc.

..................................

United

States

174,312

2,757,616

a

Codiak

Biosciences,

Inc.

................................

United

States

107,500

926,650

a

CRISPR

Therapeutics

AG

...............................

Switzerland

166,314

15,270,952

a

Deciphera

Pharmaceuticals,

Inc.

..........................

United

States

572,854

33,265,632

c,d

Dyne

Therapeutics,

Inc.

................................

United

States

115,139

2,172,481

a

Dyne

Therapeutics,

Inc.

................................

United

States

100,400

2,076,272

a,b

Equillium

,

Inc.

........................................

United

States

294,800

1,871,980

a

Fate

Therapeutics,

Inc.

.................................

United

States

456,793

20,281,609

a

Forte

Biosciences,

Inc.

.................................

United

States

445,464

16,998,906

Gilead

Sciences,

Inc.

..................................

United

States

1,511,900

87,916,985

a

Global

Blood

Therapeutics,

Inc.

...........................

United

States

391,500

20,702,520

a

Gossamer

Bio,

Inc.

....................................

United

States

361,833

3,003,214

a

Heron

Therapeutics,

Inc.

................................

United

States

1,739,677

28,374,132

a,b

Inhibrx

,

Inc.

..........................................

United

States

84,100

1,433,064

a

Insmed

,

Inc.

.........................................

United

States

890,600

29,336,364

c,d

Intarcia

Therapeutics,

Inc.,

DD

...........................

United

States

80,195

—

a

Iovance

Biotherapeutics

,

Inc.

.............................

United

States

1,502,101

53,594,964

a

iTeos

Therapeutics,

Inc.

................................

United

States

36,700

835,659

a

KalVista

Pharmaceuticals,

Inc.

...........................

United

States

103,300

1,777,793

a

Kezar

Life

Sciences,

Inc.

................................

United

States

853,550

4,370,176

a

Kronos

Bio,

Inc.

......................................

United

States

82,400

2,314,616

a

Legend

Biotech

Corp.,

ADR

.............................

United

States

196,800

5,091,216

a

LogicBio

Therapeutics,

Inc.

..............................

United

States

661,200

3,649,824

c,d

Metacrine

,

Inc.

.......................................

United

States

260,919

2,163,123

a

Metacrine

,

Inc.

.......................................

United

States

251,900

2,292,290

a

Mirati

Therapeutics,

Inc.

................................

United

States

108,715

23,606,375

a

Neurocrine

Biosciences,

Inc.

.............................

United

States

163,800

16,162,146

a,b

Nkarta

,

Inc.

..........................................

United

States

238,955

6,860,398

a

Novavax

,

Inc.

........................................

United

States

360,800

29,120,168

a

PMV

Pharmaceuticals,

Inc.

..............................

United

States

83,100

2,912,655

a

Praxis

Precision

Medicines,

Inc.

..........................

United

States

103,600

3,626,000

a

Protara

Therapeutics,

Inc.

...............................

United

States

145,500

2,610,270

a

PTC

Therapeutics,

Inc.

.................................

United

States

765,900

39,972,321

Franklin

Strategic

Series

Statement

of

Investments

Franklin

Biotechnology

Discovery

Fund

franklintempleton.com

Semiannual

Report

21

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Biotechnology

(continued)

a

Regeneron

Pharmaceuticals,

Inc.

.........................

United

States

154,909

$

84,202,336

a,b

Repare

Therapeutics,

Inc.

...............................

Canada

38,100

1,029,843

a

REVOLUTION

Medicines,

Inc.

...........................

United

States

148,900

4,495,291

a

Rocket

Pharmaceuticals,

Inc.

............................

United

States

467,071

13,049,964

a

Sage

Therapeutics,

Inc.

................................

United

States

101,070

7,416,517

a

Sarepta

Therapeutics,

Inc.

..............................

United

States

65,400

8,888,514

a

Scholar

Rock

Holding

Corp.

.............................

United

States

41,500

1,614,350

a

Seagen

,

Inc.

.........................................

United

States

234,900

39,181,320

a

Sutro

Biopharma,

Inc.

..................................

United

States

155,900

2,004,874

c,d

Taysha

Gene

Therapies,

Inc.

.............................

United

States

138,156

2,623,877

a

Taysha

Gene

Therapies,

Inc.

.............................

United

States

166,100

3,454,880

a

Trillium

Therapeutics,

Inc.

...............................

Canada

952,690

11,860,991

a

Ultragenyx

Pharmaceutical,

Inc.

..........................

United

States

162,100

16,291,050

a

Vaxcyte

,

Inc.

.........................................

United

States

172,000

6,427,640

a

Vertex

Pharmaceuticals,

Inc.

.............................

United

States

343,100

71,488,316

a,b

Viela

Bio,

Inc.

........................................

United

States

138,300

4,413,153

a

Zentalis

Pharmaceuticals,

Inc.

............................

United

States

135,700

5,372,363

a

Zymeworks

,

Inc.

......................................

Canada

471,320

18,438,039

1,071,799,941

Capital

Markets

1.1%

a

ARYA

Sciences

Acquisition

Corp.

III

.......................

United

States

212,500

2,176,000

a

FS

Development

Corp.,

A

...............................

United

States

211,300

2,113,000

a

Health

Sciences

Acquisitions

Corp.

2

.......................

United

States

171,600

1,873,872

a

Panacea

Acquisition

Corp.

..............................

United

States

345,800

3,665,480

a

Therapeutics

Acquisition

Corp.,

A

.........................

United

States

429,800

5,673,360

15,501,712

Life

Sciences

Tools

&

Services

3.6%

a

Illumina,

Inc.

.........................................

United

States

165,000

48,295,500

a

Pharmaceuticals

11.7%

a

Athira

Pharma,

Inc.

....................................

United

States

168,664

3,046,072

c,d

Athira

Pharma,

Inc.

....................................

United

States

407,548

6,580,931

a

Collegium

Pharmaceutical,

Inc.

...........................

United

States

345,350

6,157,590

a,b

EyePoint

Pharmaceuticals,

Inc.

...........................

United

States

5,923,300

2,215,907

a

GW

Pharmaceuticals

plc,

ADR

...........................

United

Kingdom

437,300

39,361,373

a

Horizon

Therapeutics

plc

................................

United

States

545,749

40,892,973

a,b

Pliant

Therapeutics,

Inc.

................................

United

States

149,100

3,223,542

a

Reata

Pharmaceuticals,

Inc.,

A

...........................

United

States

251,200

29,317,552

a,b

Relmada

Therapeutics,

Inc.

..............................

United

States

91,266

2,822,857

a

Revance

Therapeutics,

Inc.

..............................

United

States

275,500

7,129,940

Royalty

Pharma

plc,

A

..................................

United

States

150,300

5,516,010

a,b

VYNE

Therapeutics,

Inc.

................................

United

States

2,882,600

4,612,160

a

Zogenix

,

Inc.

.........................................

United

States

276,583

5,896,750

156,773,657

Total

Common

Stocks

(Cost

$776,137,647)

.....................................

1,292,370,810

Escrows

and

Litigation

Trusts

0.1%

c

True

North

Therapeutics,

Inc.,

Escrow

Account

...............

United

States

759,880

1,005,744

Total

Escrows

and

Litigation

Trusts

(Cost

$2,090,611)

...........................

1,005,744

Total

Long

Term

Investments

(Cost

$778,228,258)

...............................

1,293,376,554

a

Franklin

Strategic

Series

Statement

of

Investments

Franklin

Biotechnology

Discovery

Fund

franklintempleton.com

Semiannual

Report

22

See

Abbreviations

on

page

46

.

Short

Term

Investments

5.6%

a

a

Country

Shares

a

Value

a

Money

Market

Funds

3.9%

e,f

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

51,932,000

$

51,932,000

Total

Money

Market

Funds

(Cost

$51,932,000)

..................................

51,932,000

a

a

a

a

a

g

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

1.7%

Money

Market

Funds

1.7%

e,f

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio

...........

United

States

22,593,784

22,593,784

Total

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

(Cost

$22,593,784)

...........................................................

22,593,784

Total

Short

Term

Investments

(Cost

$74,525,784

)

................................

74,525,784

a

Total

Investments

(Cost

$852,754,042)

102.1%

..................................

$1,367,902,338

Other

Assets,

less

Liabilities

(2.1)%

...........................................

(27,473,620)

Net

Assets

100.0%

...........................................................

$1,340,428,718

a

Non-income

producing.

b

A

portion

or

all

of

the

security

is

on

loan

at

October

31,

2020.

See

Note

1(c)

c

Fair

valued

using

significant

unobservable

inputs.

See

Note

11

regarding

fair

value

measurements.

d

See

Note

9

regarding

restricted

securities.

e

See

Note

3(f)

regarding

investments

in

affiliated

management

investment

companies.

f

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

g

See

Note

1(c)

regarding

securities

on

loan.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Natural

Resources

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

23

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$13.60

$23.58

$27.96

$25.11

$25.02

$31.46

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.14

0.34

0.31

0.39

c

0.20

0.29

Net

realized

and

unrealized

gains

(losses)

(0.76)

(9.96)

(4.20)

2.77

0.17

(6.55)

Total

from

investment

operations

........

(0.62)

(9.62)

(3.89)

3.16

0.37

(6.26)

Less

distributions

from:

Net

investment

income

..............

—

(0.36)

(0.49)

(0.31)

(0.28)

(0.18)

Net

asset

value,

end

of

period

..........

$12.98

$13.60

$23.58

$27.96

$25.11

$25.02

Total

return

d

.......................

(4.56

)%

(41.30)%

(13.69)%

12.74%

1.37%

(19.80)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.29%

1.17%

1.03%

1.13%

1.06%

1.14%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.28%

f

1.17%

f,g

1.03%

f,g

1.13%

f,g

1.05%

f

1.13%

Net

investment

income

...............

1.91%

1.75%

1.21%

1.56%

c

0.79%

1.22%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$111,479

$123,467

$247,362

$344,695

$398,703

$461,596

Portfolio

turnover

rate

................

29.17%

25.60%

29.83%

29.98%

29.74%

35.77%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.16

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.91%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Natural

Resources

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$13.25

$22.82

$27.17

$24.28

$24.25

$30.46

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.08

0.19

0.11

0.20

c

0.01

0.11

Net

realized

and

unrealized

gains

(losses)

(0.73)

(9.70)

(4.07)

2.69

0.15

(6.31)

Total

from

investment

operations

........

(0.65)

(9.51)

(3.96)

2.89

0.16

(6.20)

Less

distributions

from:

Net

investment

income

..............

—

(0.06)

(0.39)

—

(0.13)

(0.01)

Net

asset

value,

end

of

period

..........

$12.60

$13.25

$22.82

$27.17

$24.28

$24.25

Total

return

d

.......................

(4.91)%

(41.71)%

(14.37)%

11.90%

0.63%

(20.37)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

2.04%

1.92%

1.78%

1.88%

1.81%

1.87%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

2.03%

f

1.92%

f,g

1.78%

f,g

1.88%

f,g

1.80%

f

1.86%

Net

investment

income

...............

1.16%

2.00%

0.46%

0.81%

c

0.04%

0.49%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$19,232

$23,391

$49,620

$83,814

$96,835

$107,724

Portfolio

turnover

rate

................

29.17%

25.60%

29.83%

29.98%

29.74%

35.77%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.16

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.16%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Natural

Resources

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

25

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$14.63

$25.22

$29.79

$26.87

$26.73

$33.62

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.19

0.54

0.45

0.57

c

0.47

0.51

Net

realized

and

unrealized

gains

(losses)

(0.82)

(10.76)

(4.49)

2.95

0.04

(7.06)

Total

from

investment

operations

........

(0.63)

(10.22)

(4.04)

3.52

0.51

(6.55)

Less

distributions

from:

Net

investment

income

..............

—

(0.37)

(0.53)

(0.60)

(0.37)

(0.34)

Net

asset

value,

end

of

period

..........

$14.00

$14.63

$25.22

$29.79

$26.87

$26.73

Total

return

d

.......................

(4.31)%

(41.02)%

(13.31)%

13.37%

1.89%

(19.31)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.92%

0.72%

0.62%

0.64%

0.83%

0.60%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

0.73%

f

0.66%

f

0.59%

f

0.57%

f

0.54%

f

0.55%

Net

investment

income

...............

2.47%

2.26%

1.65%

2.12%

c

1.30%

1.80%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$894

$839

$15,627

$15,866

$218

$15

Portfolio

turnover

rate

................

29.17%

25.60%

29.83%

29.98%

29.74%

35.77%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.16

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.47%.

d

Total

Return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Financial

Highlights

Franklin

Natural

Resources

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

26

In

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$14.54

$25.20

$29.80

$26.81

$26.71

$26.71

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.17

0.41

0.40

0.49

c

0.29

0.36

Net

realized

and

unrealized

gains

(losses)

(0.82)

(10.64)

(4.49)

2.95

0.17

(7.00)

Total

from

investment

operations

........

(0.65)

(10.23)

(4.09)

3.44

0.46

(6.64)

Less

distributions

from:

Net

investment

income

..............

—

(0.43)

(0.51)

(0.45)

(0.36)

(0.28)

Net

asset

value,

end

of

period

..........

$13.89

$14.54

$25.20

$29.80

$26.81

$26.71

Total

return

d

.......................

(4.47)%

(41.15)%

(13.50)%

13.04%

1.64%

(19.60)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.04%

0.92%

0.78%

0.88%

0.81%

0.87%

Expenses

net

of

waiver

and

payments

by

affiliates

..........................

1.03%

f

0.92%

f,g

0.78%

f,g

0.88%

f,g

0.80%

f

0.86%

Net

investment

income

...............

2.17%

2.00%

1.46%

1.81%

c

1.04%

1.49%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$25,482

$28,334

$62,639

$78,443

$94,070

$90,185

Portfolio

turnover

rate

................

29.17%

25.60%

29.83%

29.98%

29.74%

35.77%

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

repurchas-

es

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

Net

investment

income

per

share

includes

approximately

$0.16

per

share

related

to

income

received

in

the

form

of

special

dividends

in

connection

with

certain

Fund

hold-

ings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.16%.

d

Total

Return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Strategic

Series

Statement

of

Investments,

October

31,

2020

Franklin

Natural

Resources

Fund

franklintempleton.com

Semiannual

Report

27

a

a

Country

Shares

a

Value

a

Common

Stocks

99.4%

Agricultural

Products

0.4%

a

Darling

Ingredients,

Inc.

................................

United

States

15,000

$

645,000

a

Application

Software

0.4%

a

Aspen

Technology,

Inc.

.................................

United

States

6,300

691,803

a

Construction

Materials

1.1%

Martin

Marietta

Materials,

Inc.

............................

United

States

6,700

1,784,545

Copper

7.9%

Antofagasta

plc

.......................................

Chile

362,400

4,831,753

First

Quantum

Minerals

Ltd.

.............................

Zambia

121,600

1,397,460

Freeport-McMoRan,

Inc.

................................

United

States

169,900

2,946,066

a

Imperial

Metals

Corp.

..................................

Canada

181,600

413,037

Lundin

Mining

Corp.

...................................

Chile

447,200

2,702,267

12,290,583

Diversified

Chemicals

0.3%

Huntsman

Corp.

......................................

United

States

22,400

544,096

Diversified

Metals

&

Mining

9.1%

Anglo

American

plc

....................................

South

Africa

104,000

2,439,890

BHP

Group

plc,

ADR

...................................

Australia

159,600

6,203,652

a

Glencore

plc

.........................................

Australia

569,200

1,148,078

Rio

Tinto

plc,

ADR

.....................................

Australia

55,600

3,156,412

Teck

Resources

Ltd.,

B

.................................

Canada

104,100

1,367,874

14,315,906

Electrical

Components

&

Equipment

0.1%

a

Array

Technologies,

Inc.

................................

United

States

6,500

239,525

a

Environmental

&

Facilities

Services

0.8%

US

Ecology,

Inc.

......................................

United

States

39,500

1,205,540

Fertilizers

&

Agricultural

Chemicals

1.5%

Corteva

,

Inc.

.........................................

United

States

35,900

1,183,982

Nutrien

Ltd.

..........................................

Canada

26,900

1,094,292

2,278,274

Gold

12.8%

Agnico

Eagle

Mines

Ltd.

................................

Canada

21,100

1,670,483

Alamos

Gold,

Inc.,

A

...................................

Canada

272,300

2,487,533

B2Gold

Corp.

........................................

Canada

305,000

1,962,055

Barrick

Gold

Corp.

....................................

Canada

232,291

6,209,138

Newcrest

Mining

Ltd.

...................................

Australia

20,200

418,897

Newmont

Corp.

.......................................

United

States

96,915

6,090,139

a

SSR

Mining,

Inc.

......................................

Canada

72,200

1,336,422

20,174,667

Heavy

Electrical

Equipment

0.5%

a

TPI

Composites,

Inc.

...................................

United

States

21,500

712,080

a

Industrial

Gases

2.3%

Air

Products

and

Chemicals,

Inc.

..........................

United

States

6,200

1,712,688

Linde

plc

............................................

United

Kingdom

8,500

1,872,890

3,585,578

Integrated

Oil

&

Gas

14.9%

Chevron

Corp.

.......................................

United

States

92,900

6,456,550

Exxon

Mobil

Corp.

.....................................

United

States

145,200

4,736,424

Occidental

Petroleum

Corp.

.............................

United

States

154,700

1,412,411

Franklin

Strategic

Series

Statement

of

Investments

Franklin

Natural

Resources

Fund

franklintempleton.com

Semiannual

Report

28

a

a

Country

Shares

a

Value

a

Common

Stocks

(continued)

Integrated

Oil

&

Gas

(continued)

Royal

Dutch

Shell

plc,

ADR,

A

............................

Netherlands

84,821

$

2,167,177

Suncor

Energy,

Inc.

....................................

Canada

348,100

3,927,296

TOTAL

SE,

ADR

......................................

France

157,410

4,774,245

23,474,103

Oil

&

Gas

Drilling

0.8%

Helmerich

&

Payne,

Inc.

................................

United

States

55,400

823,798

Patterson-UTI

Energy,

Inc.

..............................

United

States

177,200

453,632

1,277,430

Oil

&

Gas

Equipment

&

Services

9.7%

Baker

Hughes

Co.

.....................................

United

States

126,600

1,869,882

Cactus,

Inc.,

A

........................................

United

States

45,800

778,600

a

ChampionX

Corp.

.....................................

United

States

169,300

1,477,989

Halliburton

Co.

.......................................

United

States

119,735

1,444,004

Liberty

Oilfield

Services,

Inc.,

A

...........................

United

States

142,300

950,564

a

NexTier

Oilfield

Solutions,

Inc.

............................

United

States

403,422

762,468

a

Nine

Energy

Service,

Inc.

...............................

United

States

278,226

297,702

a

Oceaneering

International,

Inc.

...........................

United

States

143,900

587,112

a

Oil

States

International,

Inc.

.............................

United

States

201,966

502,895

a

Ranger

Energy

Services,

Inc.

............................

United

States

169,957

416,395

Schlumberger

NV

.....................................

United

States

208,147

3,109,716

Schoeller-Bleckmann

Oilfield

Equipment

AG

.................

Austria

32,500

787,618

a

Select

Energy

Services,

Inc.,

A

...........................

United

States

291,519

880,387

TechnipFMC

plc

......................................

United

Kingdom

245,900

1,359,827

15,225,159

Oil

&

Gas

Exploration

&

Production

20.2%

Cabot

Oil

&

Gas

Corp.

.................................

United

States

343,616

6,112,929

a

Cairn

Energy

plc

......................................

United

Kingdom

748,125

1,347,026

Canadian

Natural

Resources

Ltd.

.........................

Canada

161,100

2,563,669

Concho

Resources,

Inc.

................................

United

States

88,357

3,667,699

ConocoPhillips

.......................................

United

States

148,492

4,249,841

EOG

Resources,

Inc.

..................................

United

States

112,500

3,852,000

EQT

Corp.

..........................................

United

States

53,700

813,018

Hess

Corp.

..........................................

United

States

65,000

2,419,300

Parsley

Energy,

Inc.,

A

.................................

United

States

156,810

1,569,668

Pioneer

Natural

Resources

Co.

...........................

United

States

33,624

2,675,125

a

WPX

Energy,

Inc.

.....................................

United

States

530,300

2,444,683

31,714,958

Oil

&

Gas

Refining

&

Marketing

5.3%

Marathon

Petroleum

Corp.

..............................

United

States

93,300

2,752,350

New

Fortress

Energy,

Inc.

...............................

United

States

18,100

653,953

Phillips

66

...........................................

United

States

52,200

2,435,652

Valero

Energy

Corp.

...................................

United

States

66,900

2,583,009

8,424,964

Oil

&

Gas

Storage

&

Transportation

7.5%

Enbridge,

Inc.

........................................

Canada

60,247

1,660,407

Kinder

Morgan,

Inc.

....................................

United

States

98,100

1,167,390

ONEOK,

Inc.

.........................................

United

States

24,900

722,100

Targa

Resources

Corp.

.................................

United

States

83,500

1,340,175

TC

Energy

Corp.

......................................

Canada

63,400

2,501,764

Williams

Cos.,

Inc.

(The)

................................

United

States

218,600

4,194,934

11,586,770

Franklin

Strategic

Series

Statement

of

Investments

Franklin

Natural

Resources

Fund

franklintempleton.com

Semiannual

Report

29

See

Abbreviations

on

page

46

.

a

a

Country

Shares

a

Value

a

Common

Stocks

(continued)

Packaged

Foods

&

Meats

1.1%

a

Nomad

Foods

Ltd.

....................................

United

Kingdom

71,100

$

1,724,175

a

Paper

Packaging

0.7%

Packaging

Corp.

of

America

.............................

United

States

9,000

1,030,410

Semiconductor

Equipment

0.3%

a

SolarEdge

Technologies,

Inc.

............................

United

States

1,700

438,073

a

Steel

0.9%

Vale

SA,

ADR

........................................

Brazil

139,000

1,469,230

Trading

Companies

&

Distributors

0.8%

a

Univar

Solutions,

Inc.

..................................

United

States

73,800

1,224,342

a

Total

Common

Stocks

(Cost

$177,326,720)

.....................................

156,057,211

Warrants

a

a

a

a

a

Warrants

0.0%

†

Integrated

Oil

&

Gas

0.0%

†

a

Occidental

Petroleum

Corp.

,

8/03/27

.......................

United

States

17,900

44,213

Total

Warrants

(Cost

$88,605)

.................................................

44,213

Total

Long

Term

Investments

(Cost

$177,415,325)

...............................

156,101,424

a

Short

Term

Investments

0.9%

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Money

Market

Funds

0.9%

b,c

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

1,355,057

1,355,057

Total

Money

Market

Funds

(Cost

$1,355,057)

...................................

1,355,057

Total

Short

Term

Investments

(Cost

$1,355,057

)

.................................

1,355,057

a

Total

Investments

(Cost

$178,770,382)

100.3%

..................................

$157,456,481

Other

Assets,

less

Liabilities

(0.3)%

...........................................

(369,154)

Net

Assets

100.0%

...........................................................

$157,087,327

†

Rounds

to

less

than

0.1%

of

net

assets.

a

Non-income

producing.

b

See

Note

3(f)

regarding

investments

in

affiliated

management

investment

companies.

c

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

Franklin

Strategic

Series

Financial

Statements

Statements

of

Assets

and

Liabilities

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

30

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

..................................................

$778,228,258

$177,415,325

Cost

-

Non-controlled

affiliates

(Note

3

f

)

.......................................

74,525,784

1,355,057

Value

-

Unaffiliated

issuers

(Includes

securities

loaned

$19,879,848

and

$—

respectively)

.

$1,293,376,554

$156,101,424

Value

-

Non-controlled

affiliates

(Note

3

f

)

.......................................

74,525,784

1,355,057

Foreign

currency,

at

value

(cost

$–

and

$32,766

respectively)

.........................

—

32,766

Receivables:

Investment

securities

sold

..................................................

13,224,092

522,213

Capital

shares

sold

.......................................................

1,260,390

146,576

Dividends

and

interest

....................................................

43,863

182,098

Other

assets

.............................................................

1,102

80

Total

assets

.........................................................

1,382,431,785

158,340,214

Liabilities:

Payables:

Investment

securities

purchased

.............................................

16,768,457

296,392

Capital

shares

redeemed

..................................................

1,342,266

680,354

Management

fees

........................................................

724,343

82,382

Distribution

fees

.........................................................

291,022

42,196

Transfer

agent

fees

.......................................................

212,823

95,802

Trustees'

fees

and

expenses

................................................

—

704

Funds

advanced

by

custodian

................................................

147

—

Payable

upon

return

of

securities

loaned

........................................

22,593,784

—

Accrued

expenses

and

other

liabilities

..........................................

70,225

55,057

Total

liabilities

........................................................

42,003,067

1,252,887

Net

assets,

at

value

................................................

$1,340,428,718

$157,087,327

Net

assets

consist

of:

Paid-in

capital

............................................................

$633,381,321

$408,097,119

Total

distributable

earnings

(losses)

............................................

707,047,397

(251,009,792)

Net

assets,

at

value

................................................

$1,340,428,718

$157,087,327

Franklin

Strategic

Series

Financial

Statements

Statements

of

Assets

and

Liabilities

(continued)

October

31,

2020

(unaudited)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

31

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Class

A:

Net

assets,

at

value

......................................................

$1,077,405,411

$111,479,437

Shares

outstanding

.......................................................

6,361,875

8,591,061

Net

asset

value

per

share

a

.................................................

$169.35

$12.98

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%

and

94.50%,

respectively)

............................................................

$179.21

$13.74

Class

C:

Net

assets,

at

value

......................................................

$57,506,758

$19,231,655

Shares

outstanding

.......................................................

358,678

1,526,819

Net

asset

value

and

maximum

offering

price

per

share

a

............................

$160.33

$12.60

Class

R6:

Net

assets,

at

value

......................................................

$10,676,640

$894,190

Shares

outstanding

.......................................................

60,326

63,891

Net

asset

value

and

maximum

offering

price

per

share

............................

$176.98

$14.00

Advisor

Class:

Net

assets,

at

value

......................................................

$194,839,909

$25,482,045

Shares

outstanding

.......................................................

1,113,404

1,834,318

Net

asset

value

and

maximum

offering

price

per

share

............................

$174.99

$13.89

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Strategic

Series

Financial

Statements

Statements

of

Operations

for

the

period

ended

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

32

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$108,154

and

$–

respectively)

Unaffiliated

issuers

.......................................................

$2,130,090

$2,914,710

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

....................................

270,354

1,061

Total

investment

income

..................................................

2,400,444

2,915,771

Expenses:

Management

fees

(Note

3

a

)

..................................................

4,010,944

519,048

Distribution

fees:

(Note

3c

)

Class

A

...............................................................

1,375,071

160,427

Class

C

...............................................................

288,342

118,431

Transfer

agent

fees:

(Note

3e

)

Class

A

...............................................................

656,117

211,882

Class

C

...............................................................

34,363

39,089

Class

R6

..............................................................

4,498

1,033

Advisor

Class

...........................................................

119,167

48,395

Custodian

fees

(Note

4

)

.....................................................

20,319

6,123

Reports

to

shareholders

.....................................................

40,727

17,208

Registration

and

filing

fees

...................................................

86,910

63,552

Professional

fees

..........................................................

29,795

29,030

Trustees'

fees

and

expenses

.................................................

7,057

1,912

Other

...................................................................

14,271

8,139

Total

expenses

........................................................

6,687,581

1,224,269

Expense

reductions

(Note

4

)

..............................................

(2,411)

(247)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

.............................

(77,212)

(3,334)

Net

expenses

........................................................

6,607,958

1,220,688

Net

investment

income

(loss)

...........................................

(4,207,514)

1,695,083

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

.....................................................

150,712,041

(39,567,005)

Foreign

currency

transactions

...............................................

—

(95,049)

Net

realized

gain

(loss)

.................................................

150,712,041

(39,662,054)

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

.....................................................

3,038,198

28,680,830

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

.............

—

2,172,507

Net

change

in

unrealized

appreciation

(depreciation)

...........................

3,038,198

30,853,337

Net

realized

and

unrealized

gain

(loss)

...........................................

153,750,239

(8,808,717)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

.........................

$149,542,725

$(7,113,634)

Franklin

Strategic

Series

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

33

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

(loss)

.......

$(4,207,514)

$(5,334,586)

$1,695,083

$4,504,278

Net

realized

gain

(loss)

............

150,712,041

96,628,087

(39,662,054)

(39,172,430)

Net

change

in

unrealized

appreciation

(depreciation)

.................

3,038,198

98,772,198

30,853,337

(90,505,249)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

.

149,542,725

190,065,699

(7,113,634)

(125,173,401)

Distributions

to

shareholders:

Class

A

........................

—

(85,259,141)

—

(3,164,483)

Class

C

........................

—

(4,306,918)

—

(111,347)

Class

R6

.......................

—

(645,173)

—

(13,751)

Advisor

Class

...................

—

(13,979,384)

—

(833,185)

Total

distributions

to

shareholders

.....

—

(104,190,616)

—

(4,122,766)

Capital

share

transactions:

(Note

2

)

Class

A

........................

(4,162,643)

(34,210,659)

(6,839,162)

(34,646,355)

Class

C

........................

3,289,955

(1,170,193)

(3,392,460)

(9,393,999)

Class

R6

.......................

38,024

2,793,619

97,889

(12,686,535)

Advisor

Class

...................

14,221,105

(6,945,668)

(1,695,745)

(13,195,013)

Total

capital

share

transactions

.......

13,386,441

(39,532,901)

(11,829,478)

(69,921,902)

Net

increase

(decrease)

in

net

assets

.....................

162,929,166

46,342,182

(18,943,112)

(199,218,069)

Net

assets:

Beginning

of

period

................

1,177,499,552

1,131,157,370

176,030,439

375,248,508

End

of

period

.....................

$1,340,428,718

$1,177,499,552

$157,087,327

$176,030,439

Franklin

Strategic

Series

Notes

to

Financial

Statements

34

franklintempleton.com

Semiannual

Report

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, two

of

which

are

included

in

this

report

(Funds)

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

The

Funds

offer four classes

of

shares: Class A,

Class

C,

Class R6

and

Advisor

Class. Each

class

of

shares

may

differ

by

its initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees.

The

following

summarizes

the Funds'

significant

accounting

policies. 

a.

Financial

Instrument

Valuation 

The Funds'

investments

in

financial

instruments

are

carried

at

fair

value

daily.

Fair

value

is

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

on

the

measurement

date.

The Funds calculate the

net

asset

value

(NAV)

per

share

each

business

day

as

of

4

p.m.

Eastern

time

or

the

regularly

scheduled

close

of

the

New

York

Stock

Exchange

(NYSE),

whichever

is

earlier.

Under

compliance

policies

and

procedures

approved

by

the

Trust's

Board

of

Trustees

(the

Board),

the

Funds' administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Funds

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

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. 

Investments

in open-end mutual

funds

are

valued

at

the

closing

NAV.

The

Funds

have

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the

Funds

primarily

employ

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Funds'

business

day.

Occasionally,

events

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

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'

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

At

October

31,

2020,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy.

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

Franklin

Strategic

Series

Notes

to

Financial

Statements

35

franklintempleton.com

Semiannual

Report

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

Lending

Certain

or

all

Funds

participate

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the

Funds,

and/or

uninvested

cash

as

included

in

due

from

custodian

in

the

Statements

of

Assets

and

Liabilities.

The

Fund

may

receive

income

from

the

investment

of

cash

collateral,

in

addition

to

lending

fees

and

rebates

paid

by

the

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/or

third-party

vendor,

is

reported

separately

in

the

Statements

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

October

31,

2020,

the

Franklin

Natural

Resources

Fund

had

no

securities

on

loan.

d.

Income

and

Deferred

Taxes

It

is each

Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. Each

Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and

excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The

Funds

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which

the

Funds

invest.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Funds

invest.

When

a

capital

gain

tax

is

determined

to

apply,

certain

or

all

Funds

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

36

franklintempleton.com

Semiannual

Report

record

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

Each

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

October

31,

2020, 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. 

e.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

Dividend

income

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.

Distributions

to shareholders

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.

Realized

and

unrealized

gains

and

losses

and

net

investment

income,

excluding

class

specific

expenses,

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

net

assets

of

each

class.

Differences

in

per

share

distributions

by

class

are

generally

due

to

differences

in

class

specific

expenses.

f.

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.

g.

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)

d.

Income

and

Deferred

Taxes

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

37

franklintempleton.com

Semiannual

Report

2.

Shares

of

Beneficial

Interest

At

October

31,

2020,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Funds'

shares

were

as

follows:

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Shares

Amount

Shares

Amount

Class

A

Class

A

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

a

...................................

509,123

$86,238,376

934,461

$13,376,715

Shares

redeemed

...............................

(528,848)

(90,401,019)

(1,420,631)

(20,215,877)

Net

increase

(decrease)

..........................

(19,725)

$(4,162,643)

(486,170)

$(6,839,162)

Year

ended

April

30,

2020

Shares

sold

a

...................................

790,060

$113,642,349

2,038,606

$29,732,882

Shares

issued

in

reinvestment

of

distributions

..........

537,057

81,305,070

148,428

3,105,113

Shares

redeemed

...............................

(1,604,682)

(229,158,078)

(3,601,621)

(67,484,350)

Net

increase

(decrease)

..........................

(277,565)

$(34,210,659)

(1,414,587)

$(34,646,355)

Class

C

Class

C

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

67,499

$10,902,353

151,039

$2,032,901

Shares

issued

in

reinvestment

of

distributions

..........

—

—

—

—

Shares

redeemed

a

..............................

(47,025)

(7,612,398)

(389,150)

(5,425,361)

Net

increase

(decrease)

..........................

20,474

$3,289,955

(238,111)

$(3,392,460)

Year

ended

April

30,

2020

Shares

sold

...................................

66,779

$9,196,211

417,343

$5,926,617

Shares

issued

in

reinvestment

of

distributions

..........

29,739

4,290,371

5,386

110,099

Shares

redeemed

a

..............................

(106,671)

(14,656,775)

(831,954)

(15,430,715)

Net

increase

(decrease)

..........................

(10,153)

$(1,170,193)

(409,225)

$(9,393,999)

Class

R6

Class

R6

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

16,535

$2,949,115

13,919

$212,696

Shares

redeemed

...............................

(16,617)

(2,911,091)

(7,363)

(114,807)

Net

increase

(decrease)

..........................

(82)

$38,024

6,556

$97,889

Year

ended

April

30,

2020

Shares

sold

...................................

35,149

$5,389,737

96,853

$2,098,343

Shares

issued

in

reinvestment

of

distributions

..........

4,090

645,154

613

13,751

Shares

redeemed

...............................

(21,691)

(3,241,272)

(659,867)

(14,798,629)

Net

increase

(decrease)

..........................

17,548

$2,793,619

(562,401)

$(12,686,535)

Advisor

Class

Franklin

Strategic

Series

Notes

to

Financial

Statements

38

franklintempleton.com

Semiannual

Report

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Trust

are

also

officers

and/or

directors

of

the

following

subsidiaries:

a.

Management

Fees

Franklin

Biotechnology

Discovery

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Shares

Amount

Shares

Amount

Advisor

Class

Shares:

Six

Months

ended

October

31,

2020

Shares

sold

...................................

291,878

$50,830,801

401,424

$6,176,865

Shares

redeemed

...............................

(204,548)

(36,609,696)

(515,280)

(7,872,610)

Net

increase

(decrease)

..........................

87,330

$14,221,105

(113,856)

$(1,695,745)

Year

ended

April

30,

2020

Shares

sold

...................................

256,733

$38,219,541

849,335

$14,059,870

Shares

issued

in

reinvestment

of

distributions

..........

80,467

12,560,088

36,902

824,379

Shares

redeemed

...............................

(390,486)

(57,725,297)

(1,423,757)

(28,079,262)

Net

increase

(decrease)

..........................

(53,286)

$(6,945,668)

(537,520)

$(13,195,013)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Advisers,

Inc.

(Advisers)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Templeton

Distributors,

Inc.

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.775%

Up

to

and

including

$100

million

0.650%

Over

$100

million,

up

to

and

including

$200

million

0.635%

Over

$200

million,

up

to

and

including

$250

million

0.585%

Over

$250

million,

up

to

and

including

$700

million

0.550%

Over

$700

billion,

up

to

and

including

$1.2

billion

0.525%

Over

$1.2

billion,

up

to

and

including

$7.5

billion

0.515%

Over

$7.5

billion,

up

to

and

including

$10

billion

0.505%

Over

$10

billion,

up

to

and

including

$12.5

billion

0.495%

Over

$12.5

billion,

up

to

and

including

$15

billion

0.475%

In

excess

of

$15

billion

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

39

franklintempleton.com

Semiannual

Report

Franklin

Natural

Resources

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

period

ended

October

31,

2020,

each

Fund's

annualized

gross

effective

investment

management

fee

rate

based

on

average

daily

net

assets

was

as

follows:

b.

Administrative

Fees

Under

an

agreement

with

Advisers,

FT

Services

provides

administrative

services

to

the

Funds.

The

fee

is

paid

by

Advisers

based

on

the

Funds’

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Funds.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Funds’

Class

A

reimbursement

distribution

plans,

the

Funds

reimburse

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of each

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

Under

the

Class

A

reimbursement

distribution

plans,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Funds’

Class

C

compensation

distribution

plans,

the

Funds

pay

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

each

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31

for

each

Fund.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

The

Board

has

set

the

current

rate

at

0.25%

per

year

for

Class

A

shares

until

further

notice

and

approval

by

the

Board.

Annualized

Fee

Rate

Net

Assets

0.625%

Up

to

and

including

$100

million

0.500%

Over

$100

million,

up

to

and

including

$250

million

0.450%

Over

$250

million,

up

to

and

including

$7.5

billion

0.440%

Over

$7.5

billion,

up

to

and

including

$10

billion

0.430%

Over

$10

billion,

up

to

and

including

$12.5

billion

0.420%

Over

$12.5

billion,

up

to

and

including

$15

billion

0.400%

In

excess

of

$15

billion

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Gross

effective

investment

management

fee

rate

........

0.585%

0.569%

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Reimbursement

Plans:

Class

A

...............................

0.35%

0.35%

Class

C

...............................

1.00%

1.00%

3.

Transactions

with

Affiliates

(continued)

a.

Management

Fees

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

40

franklintempleton.com

Semiannual

Report

d.

Sales

Charges/Underwriting

Agreements

Front-end

sales

charges

and

contingent

deferred

sales

charges

(CDSC)

do

not

represent

expenses

of

the

Funds.

These

charges

are

deducted

from

the

proceeds

of

sales

of

fund

shares

prior

to

investment

or

from

redemption

proceeds

prior

to

remittance,

as

applicable.

Distributors

has

advised

the

Funds

of

the

following

commission

transactions

related

to

the

sales

and

redemptions

of

the

Funds'

shares

for

the

period:

e.

Transfer

Agent

Fees

Each

class

of

shares

pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class

reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

period

ended

October

31,

2020,

the

Funds

paid

transfer

agent

fees

as

noted

in

the

Statements

of

Operations

of

which

the

following

amounts

were

retained

by

Investor

Services:

f.

Investments

in

Affiliated

Management

Investment

Companies

Certain

or

all

Funds

invest

in

one

or

more

affiliated

management

investment

companies

for

purposes

other

than

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Funds

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statements

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

period

ended

October

31,

2020,

investments

in

affiliated

management

investment

companies

were

as

follows:

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..................

$119,309

$15,316

CDSC

retained

...........................

$6,237

$805

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Transfer

agent

fees

........................

$321,452

$113,479

a

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

a

a

a

a

a

a

a

a

a

Franklin

Biotechnology

Discovery

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$102,836,782

$222,983,926

$(273,888,708)

$—

$—

$51,932,000

51,932,000

$—

3.

Transactions

with

Affiliates

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

41

franklintempleton.com

Semiannual

Report

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

August

31,

2021.

4.

Expense

Offset

Arrangement

The

Funds

have entered

into

an

arrangement

with

their

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Funds'

custodian

expenses. During

the period

ended

October

31,

2020 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

April

30,

2020,

the

capital

loss

carryforwards

were

as

follows:

For

tax

purposes,

the

Funds

may

elect

to

defer

any

portion

of

a

post-October

capital

loss

or

late-year

ordinary

loss

to

the

first

day

of

the

following

fiscal

year.

At

April

30,

2020,

Franklin

Biotechnology

Discovery

Fund

deferred

losses

of

$2,197,521.

a

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

a

a

a

a

a

a

a

a

a

Franklin

Biotechnology

Discovery

Fund

(continued)

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$39,742,135

$207,482,022

$(224,630,373)

$

—

$

—

$22,593,784

22,593,784

$—

Total

Affiliated

Securities

....

$142,578,917

$430,465,948

$(498,519,081)

$—

$—

$74,525,784

$—

Franklin

Natural

Resources

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$6,778,486

$23,957,526

$(29,380,955)

$—

$—

$1,355,057

1,355,057

$—

Total

Affiliated

Securities

....

$6,778,486

$23,957,526

$(29,380,955)

$—

$—

$1,355,057

$—

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

1

1

1

Capital

loss

carryforwards

not

subject

to

expiration:

Short

term

.............................

$

—

$

15,911,665

Long

term

.............................

—

174,175,055

Total

capital

loss

carryforwards

............

$—

$190,086,720

3.

Transactions

with

Affiliates

(continued)

f.

Investments

in

Affiliated

Management

Investment

Companies

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

42

franklintempleton.com

Semiannual

Report

At

October

31,

2020,

the

cost

of

investments

and

net

unrealized

appreciation

(depreciation)

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatment

of

wash

sales.

6.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

period

ended

October

31,

2020,

were

as

follows:

7.

Concentration

of

Risk

Investing

in

foreign

securities

may

include

certain

risks

and

considerations

not

typically

associated

with

investing

in

U.S.

securities,

such

as

fluctuating

currency

values

and

changing

local,

regional

and

global

economic,

political

and

social

conditions,

which

may

result

in

greater

market

volatility.

Current

political

and

financial

uncertainty

surrounding

the

European

Union

may

increase

market

volatility

and

the

economic

risk

of

investing

in

securities

in

Europe.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

8.

Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the

Funds, their ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and their ability

to

achieve their investment

objectives.

9.

Restricted

Securities

Certain

or

all

Funds

invest

in

securities

that

are

restricted

under

the

Securities

Act

of

1933

(1933

Act).

Restricted

securities

are

often

purchased

in

private

placement

transactions,

and

cannot

be

sold

without

prior

registration

unless

the

sale

is

pursuant

to

an

exemption

under

the

1933

Act.

Disposal

of

these

securities

may

require

greater

effort

and

expense,

and

prompt

sale

at

an

acceptable

price

may

be

difficult.

The

Funds

may

have

registration

rights

for

restricted

securities.

The

issuer

generally

incurs

all

registration

costs.

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

a

a

a

Cost

of

investments

.......................

$852,754,042

$178,770,382

Unrealized

appreciation

.....................

$560,377,725

$23,665,438

Unrealized

depreciation

.....................

(45,229,429)

(44,979,339)

Net

unrealized

appreciation

(depreciation)

.......

$515,148,296

$(21,313,901)

Franklin

Biotechnology

Discovery

Fund

Franklin

Natural

Resources

Fund

Purchases

..............................

$368,552,426

$50,342,115

Sales

..................................

$305,755,220

$54,142,685

5.

Income

Taxes

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

43

franklintempleton.com

Semiannual

Report

At

October

31,

2020,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

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

billion

(Global

Credit

Facility)

which

matures

on

February

5,

2021.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Under

the

terms

of

the

Global

Credit

Facility,

the

Funds

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Funds

and

other

costs

incurred

by

the

Funds,

pay

their

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

their

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statements

of

Operations.

During

the

period

ended

October

31,

2020,

the Funds

did

not

use

the

Global

Credit

Facility.

11.

Fair

Value

Measurements

The Funds

follow

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Funds'

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the Funds' financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

Level

2

–

other

significant

observable

inputs

(including

quoted

prices

for

similar

financial

instruments,

interest

rates,

prepayment

speed,

credit

risk,

etc.)

Level

3

–

significant

unobservable

inputs

(including

the Funds'

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Biotechnology

Discovery

Fund

407,548

a

Athira

Pharma

Inc

...........................

5/29/20

$

2,976,236

$

6,580,931

115,139

b

Dyne

Therapeutics

Inc

........................

8/07/20

1,073,538

2,172,481

80,195

Intarcia

Therapeutics

Inc

......................

3/26/14

2,597,516

—

260,919

c

Metacrine

Inc

...............................

6/04/18

2,821,056

2,163,123

138,156

d

Taysha

Gene

Therapies

Inc

....................

7/28/20

2,155,719

2,623,877

Total

Restricted

Securities

(Value

is

1.00%

of

Net

Assets)

.............

$11,624,065

$13,540,412

a

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$3,046,072

as

of

October

31,

2020.

b

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$2,076,272

as

of

October

31,

2020.

c

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$2,292,290

as

of

October

31,

2020.

d

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$3,454,880

as

of

October

31,

2020.

9.

Restricted

Securities

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

44

franklintempleton.com

Semiannual

Report

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

October

31,

2020,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

55

Level

1

Level

2

Level

3

Total

Franklin

Biotechnology

Discovery

Fund

Assets:

Investments

in

Securities:

a

Common

Stocks

:

Biotechnology

.........................

$

1,064,840,460

$

—

$

6,959,481

b

$

1,071,799,941

Capital

Markets

........................

15,501,712

—

—

15,501,712

Life

Sciences

Tools

&

Services

............

48,295,500

—

—

48,295,500

Pharmaceuticals

.......................

150,192,726

—

6,580,931

156,773,657

Escrows

and

Litigation

Trusts

...............

—

—

1,005,744

1,005,744

Short

Term

Investments

...................

74,525,784

—

—

74,525,784

Total

Investments

in

Securities

...........

$1,353,356,182

$—

$14,546,156

$1,367,902,338

Level

1

Level

2

Level

3

Total

Franklin

Natural

Resources

Fund

Assets:

Investments

in

Securities:

a

Common

Stocks

:

Agricultural

Products

....................

$

645,000

$

—

$

—

$

645,000

Application

Software

....................

691,803

—

—

691,803

Construction

Materials

..................

1,784,545

—

—

1,784,545

Copper

..............................

7,458,830

4,831,753

—

12,290,583

Diversified

Chemicals

...................

544,096

—

—

544,096

Diversified

Metals

&

Mining

...............

10,727,938

3,587,968

—

14,315,906

Electrical

Components

&

Equipment

........

239,525

—

—

239,525

Environmental

&

Facilities

Services

.........

1,205,540

—

—

1,205,540

Fertilizers

&

Agricultural

Chemicals

.........

2,278,274

—

—

2,278,274

Gold

................................

19,755,770

418,897

—

20,174,667

Heavy

Electrical

Equipment

..............

712,080

—

—

712,080

Industrial

Gases

.......................

3,585,578

—

—

3,585,578

Integrated

Oil

&

Gas

....................

23,474,103

—

—

23,474,103

Oil

&

Gas

Drilling

......................

1,277,430

—

—

1,277,430

Oil

&

Gas

Equipment

&

Services

...........

14,437,541

787,618

—

15,225,159

Oil

&

Gas

Exploration

&

Production

.........

31,714,958

—

—

31,714,958

Oil

&

Gas

Refining

&

Marketing

............

8,424,964

—

—

8,424,964

Oil

&

Gas

Storage

&

Transportation

.........

11,586,770

—

—

11,586,770

Packaged

Foods

&

Meats

................

1,724,175

—

—

1,724,175

Paper

Packaging

......................

1,030,410

—

—

1,030,410

Semiconductor

Equipment

...............

438,073

—

—

438,073

Steel

................................

1,469,230

—

—

1,469,230

Trading

Companies

&

Distributors

..........

1,224,342

—

—

1,224,342

Warrants

..............................

44,213

—

—

44,213

Short

Term

Investments

...................

1,355,057

—

—

1,355,057

Total

Investments

in

Securities

...........

$147,830,245

$9,626,236

$—

$157,456,481

a

For

detailed

categories,

see

the

accompanying

Statement

of

Investments.

b

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

45

franklintempleton.com

Semiannual

Report

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 period.

At

October

31,

2020,

the

reconciliation is

as follows:

Significant

unobservable

valuation

inputs

for

material

Level

3 assets

and/or

liabilities and

impact

to

fair

value

as

a

result

of

changes

in

unobservable

valuation

inputs

as

of

October

31,

2020,

are

as

follows:

a

Weighted

based

on

the

relative

fair

value

of

the

financial

instruments.

b

Represents

the

directional

change

in

the

fair

value

that

would

result

from

a

significant

and

reasonable

increase

in

the

corresponding

input.

A

significant

and

reasonable

decrease

in

the

input

would

have

the

opposite

effect.

Significant

impacts,

if

any,

to

fair

value

and/or

net

assets

have

been

indicated.

c

Represents

a

significant

impact

to

fair

value

but

not

net

assets.

d

Includes

fair

value

of

immaterial

assets

and/or

liabilities

developed

using

various

valuation

techniques

and

unobservable

inputs.

May

also

include

values

derived

using

private

transaction

prices

or

non-public

third

party

pricing

information

which

is

unobservable.

e

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

a

Net

Realized

Gain

(Loss)

Net

Unr

ealized

Appreciatio

n

(

Depreciation

)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Biotechnology

Discovery

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Biotechnology

......

$

2,747,737

$

6,050,313

$

—

$

—

$

—

$

—

$

982,488

$

6,959,481

$

982,488

Pharmaceuticals

....

—

2,976,236

—

—

—

—

—

3,604,695

6,580,931

3,604,695

Escrows

and

Litigation

Trusts

...........

958,814

—

—

—

—

—

—

46,930

1,005,744

46,930

Total

Investments

in

Securities

$3,706,551

$9,026,549

$—

$—

—

—

4,634,113

$14,546,156

4,634,113

a

May

include

accretion,

amortization,

partnership

adjustments,

and/or

other

cost

basis

adjustments.

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Franklin

Biotechnology

Discovery

Fund

Assets:

Investments

in

Securities:

Common

Stocks:

Biotechnology

............

$6,959,481

Market

comparables

Discount

for

lack

of

marketability

8.7%

-

8.9%

(8.8%)

Decrease

Pharmaceuticals

..........

6,580,931

Market

comparables

Discount

for

lack

of

marketability

10.6%

Decrease

c

All

other

Investments

..........

1,005,744

d.e

Total

.......................

$14,546,156

11.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Financial

Statements

46

franklintempleton.com

Semiannual

Report

12.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

The

amendments

in

the

ASU

provides

optional

temporary

financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

and

other

interbank-offered

based

reference

rates

as

of

the

end

of

2021.

The

ASU

is

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022. Management

has

reviewed

the

requirements

and

believes

the

adoption

of

this

ASU

will

not

have

a

material

impact

on

the

financial

statements.

13.

Subsequent

Events

The

Funds

have

evaluated

subsequent

events

through

the

issuance

of

the

financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

Selected

Portfolio

ADR

American

Depositary

Receipt

Franklin

Strategic

Series

Shareholder

Information

47

franklintempleton.com

Semiannual

Report

Liquidity

Risk

Management

Program

–

Funds

no

HLIM

Each

of

the

Funds

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund’s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Funds’

Board

of

Trustees

approved

the

appointment

of

the

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

as

the

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

Investment

Compliance,

Investment

Operations,

Valuation

Committee

and

Product

Management

groups.

In

assessing

and

managing

each

Fund’s

liquidity

risk,

the

ILC

considers,

as

relevant,

a

variety

of

factors,

including

the

Fund’s

investment

strategy

and

the

liquidity

of

its

portfolio

investments

during

both

normal

and

reasonably

foreseeable

stressed

conditions;

its

short

and

long-term

cash

flow

projections;

and

its

cash

holdings

and

access

to

other

funding

sources

including

the

Funds’

interfund

lending

facility

and

line

of

credit.

Classification

of

the

Fund’s

portfolio

holdings

in

the

four

liquidity

categories

is

based

on

the

number

of

days

it

is

reasonably

expected

to

take

to

convert

the

investment

to

cash

(for

Highly

Liquid

and

Moderately

Liquid

holdings)

or

sell

or

dispose

of

the

investment

(for

Less

Liquid

and

Illiquid

investments),

in

current

market

conditions

without

significantly

changing

the

investment’s

market

value.

Each

Fund

primarily

holds

liquid

assets

that

are

defined

under

the

Liquidity

Rule

as

"Highly

Liquid

Investments,"

and

therefore

is

not

required

to

establish

an

HLIM.

Highly

Liquid

Investments

are

defined

as

cash

and

any

investment

reasonably

expected

to

be

convertible

to

cash

in

current

market

conditions

in

three

business

days

or

less

without

the

conversion

to

cash

significantly

changing

the

market

value

of

the

investment.

At

meetings

of

the

Funds’

Board

of

Trustees

held

in

May

2020,

the

Program

Administrator

provided

a

written

report

to

the

Board

addressing

the

adequacy

and

effectiveness

of

the

program

during

the

period

December

1,

2018

to

December

31,

2019.

The

Program

Administrator

report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

Liquid

Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

At

the

same

time,

the

Program

Administrator

also

presented

the

Fund

Board

of

Trustees

an

update

on

liquidity

during

the

first

quarter

of

2020

in

relation

to

the

COVID-19

pandemic.

Proxy

Voting

Policies

and

Procedures

The

Trust’s

investment

manager

has

established

Proxy

Voting

Policies

and

Procedures

(Policies)

that

the

Trust

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities.

Shareholders

may

view

the

Trust’s

complete

Policies

online

at

franklintempleton.com.

Alternatively,

shareholders

may

request

copies

of

the

Policies

free

of

charge

by

calling

the

Proxy

Group

collect

at

(954)

527-

7678

or

by

sending

a

written

request

to:

Franklin

Templeton

Companies,

LLC,

300

S.E.

2nd

Street,

Fort

Lauderdale,

FL

33301,

Attention:

Proxy

Group.

Copies

of

the

Trust’s

Franklin

Strategic

Series

Shareholder

Information

48

franklintempleton.com

Semiannual

Report

proxy

voting

records

are

also

made

available

online

at

franklintempleton.com

and

posted

on

the

U.S.

Securities

and

Exchange

Commission’s

website

at

sec.gov

and

reflect

the

most

recent

12-month

period

ended

June

30.

Quarterly

Statement

of

Investments

The

Trust

files

a

complete

statement

of

investments

with

the

U.S.

Securities

and

Exchange

Commission

for

the

first

and

third

quarters

for

each

fiscal

year

as

an

exhibit

to

its

report

on

Form

N-PORT.

Shareholders

may

view

the

filed

Form

N-PORT

by

visiting

the

Commission’s

website

at

sec.

gov.

The

filed

form

may

also

be

viewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

DC.

Information

regarding

the

operations

of

the

Public

Reference

Room

may

be

obtained

by

calling

(800)

SEC-0330.

Householding

of

Reports

and

Prospectuses

You

will

receive

each

Fund’s

financial

reports

every

six

months

as

well

as

an

annual

updated

summary

prospectus

(prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

FSS2

S

12/20

©

2020

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Seminnual

Report

and

Shareholder

Letter

Franklin

Strategic

Series

Investment

Manager

Distributor

Shareholder

Services

Franklin

Advisers,

Inc.

Franklin

Templeton

Distributors,

Inc.

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

Semiannual

Report

and

Shareholder

Letter

Franklin

Strategic

Income

Fund

A

Series

of

Franklin

Strategic

Series

October

31,

2020

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Internet

Delivery

of

Fund

Reports

Unless

You

Request

Paper

Copies

:

Effective

January

1,

2021,

as

permitted

by

the

SEC,

paper

copies

of

the

Fund’s

shareholder

reports

will

no

longer

be

sent

by

mail,

unless

you

specifically

request

them

from

the

Fund

or

your

financial

intermediary.

Instead,

the

reports

will

be

made

available

on

a

website,

and

you

will

be

notified

by

mail

each

time

a

report

is

posted

and

provided

with

a

website

link

to

access

the

report.

If

you

already

elected

to

receive

shareholder

reports

electronically,

you

will

not

be

affected

by

this

change

and

you

need

not

take

any

action.

If

you

have

not

signed

up

for

electronic

delivery,

we

would

encourage

you

to

join

fellow

shareholders

who

have.

You

may

elect

to

receive

shareholder

reports

and

other

communications

electronically

from

the

Fund

by

calling

(800)

632-2301

or

by

contacting

your

financial

intermediary.

You

may

elect

to

continue

to

receive

paper

copies

of

all

your

future

shareholder

reports

free

of

charge

by

contacting

your

financial

intermediary

or,

if

you

invest

directly

with

a

Fund,

calling

(800)

632-2301

to

let

the

Fund

know

of

your

request.

Your

election

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receive

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Guarantee

franklintempleton.com

Not

part

of

the

semiannual

report

1

Shareholder

Letter

Dear

Shareholder:

During

the

six

months

ended

October

31,

2020,

first-

and

second-quarter

2020

data

reported

during

the

period

indicated

that

the

U.S.

economy

contracted

in

response

to

the

novel

coronavirus

(COVID-19)

pandemic.

In

the

third

quarter,

the

economy

recovered

substantially

based

on

increased

business

and

residential

investment

and

consumer

spending.

Before

the

reporting

period,

the

U.S.

Federal

Reserve

(Fed),

in

its

efforts

to

support

U.S.

economic

activity,

lowered

the

federal

funds

rate

twice

in

March

2020

and

implemented

broad

quantitative

easing

measures

to

support

credit

markets.

During

the

reporting

period,

the

Fed

held

its

key

rate

unchanged

at

0.25%,

but

continued

quantitative

easing

and

adjusted

its

policy

in

August

2020

to

allow

more

flexibility

to

keep

interest

rates

low,

while

maintaining

a

2%

average

inflation

target.

U.S.

equity

prices

rose

considerably

during

the

period,

helped

by

monetary

and

fiscal

actions

and

optimism

about

the

economy,

which

propelled

valuations

to

all-time

highs

in

September

before

stocks

trended

lower

amid

renewed

investor

concerns.

In

this

environment,

investment-grade

bonds,

as

measured

by

the

Bloomberg

Barclays

U.S.

Aggregate

Bond

Index,

posted

a

positive

total

return

for

the

six-month

period.

We

are

committed

to

our

long-term

perspective

and

disciplined

investment

approach

as

we

conduct

a

rigorous,

fundamental

analysis

of

securities

with

a

regular

emphasis

on

investment

risk

management.

We

believe

active,

professional

investment

management

serves

investors

well.

We

also

recognize

the

important

role

of

financial

advisors

in

today’s

markets

and

encourage

investors

to

continue

to

seek

their

advice.

Amid

changing

markets

and

economic

conditions,

we

are

confident

investors

with

a

well-diversified

portfolio

and

a

patient,

long-term

outlook

should

be

well-positioned

for

the

years

ahead.

In

addition,

Franklin

Strategic

Series’

semiannual

report

includes

more

detail

about

prevailing

conditions

and

a

discussion

about

investment

decisions

during

the

period.

All

securities

markets

fluctuate,

as

do

mutual

fund

share

prices.

We

thank

you

for

investing

with

Franklin

Templeton,

welcome

your

questions

and

comments,

and

look

forward

to

serving

your

future

investment

needs.

Sincerely,

Edward

Perks,

CFA

President

and

Chief

Executive

Officer

–

Investment

Management

Franklin

Strategic

Series

This

letter

reflects

our

analysis

and

opinions

as

of

October

31,

2020

,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Semiannual

Report

2

Contents

Semiannual

Report

Franklin

Strategic

Income

Fund

3

Performance

Summary

6

Your

Fund’s

Expenses

8

Consolidated

Financial

Highlights

and

Consolidated

Statement

of

Investments

9

Consolidated

Financial

Statements

44

Notes

to

Consolidated

Financial

Statements

48

Shareholder

Information

70

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Semiannual

Report

SEMIANNUAL

REPORT

Franklin

Strategic

Income

Fund

This

semiannual

report

for

Franklin

Strategic

Income

Fund

covers

the

period

ended

October

31,

2020

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

to

earn

a

high

level

of

current

income.

A

secondary

goal

is

capital

appreciation

over

the

long

term.

The

Fund

uses

an

active

asset

allocation

process

and

under

normal

market

conditions

invests

at

least

65%

of

its

assets

in

U.S.

and

foreign

debt

securities,

including

those

in

emerging

markets.

The

Fund

may

invest

in

all

varieties

of

fixed,

variable

and

floating

rate

income

securities,

including

bonds,

U.S.

and

foreign

government

and

agency

securities,

corporate

loans

(and

loan

participations),

mortgage-backed

securities

and

other

asset-backed

securities.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+8.38%

cumulative

total

return

for

the

six

months

under

review.

In

comparison,

the

Bloomberg

Barclays

U.S.

Aggregate

Bond

Index,

which

represents

the

U.S.

investment-grade

fixed

rate

taxable

bond

market,

posted

a

+1.27%

total

return.

1

The

Lipper

Multi-Sector

Income

Funds

Classification

Average,

which

consists

of

funds

chosen

by

Lipper

that

seek

current

income

by

allocating

assets

among

different

fixed

income

securities

sectors,

with

a

significant

portion

rated

below

investment

grade,

posted

a

+7.86%

total

return.

2

You

can

find

more

of

the

Fund’s

performance

data

in

the

Performance

Summary

beginning

on

page

6

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Economic

and

Market

Overview

The

U.S.

bond

market,

as

measured

by

the

Bloomberg

Barclays

U.S.

Aggregate

Bond

Index,

posted

modest

total

returns

during

the

six

months

ended

October

31,

2020,

as

markets

adjusted

to

the

disruption

caused

by

the

novel

coronavirus

(COVID-19)

pandemic.

Prior

to

the

period,

investor

flight

to

perceived

safety

had

driven

the

10-year

U.S.

Treasury

yield

(which

move

inversely

to

price)

to

intraday

record

lows,

while

corporate

bond

yields

increased,

reflecting

increased

credit

risk

amid

widespread

economic

disruption.

Throughout

the

reporting

period,

however,

U.S.

Federal

Reserve

(Fed)

support

and

the

gradual

reopening

of

the

economy

reduced

many

investors’

concerns

about

solvency,

and

corporate

bonds

rebounded

significantly.

This

advance

was

tempered

somewhat

in

late

August,

as

the

rebounding

economy

and

a

change

in

the

Fed’s

long-

standing

inflation

policy

led

yields

on

most

bonds

to

rise.

The

Fed

maintained

the

federal

funds

target

rate

at

a

range

of

0.00%–0.25%

and

continued

its

program

of

unlimited,

open-ended

purchasing

of

government-backed

and

corporate

bonds

to

help

keep

markets

functioning,

significantly

expanding

its

balance

sheet.

Furthermore,

the

Fed

signaled

that

interest

rates

would

potentially

remain

low,

even

if

inflation

persistently

exceeded

the

Fed’s

2%

target.

U.S.

Treasury

bonds,

as

measured

by

the

Bloomberg

Barclays

U.S.

Treasury

Index,

declined

slightly

during

the

period.

The

10-year

U.S.

Treasury

yield

recovered

from

a

new

record

closing

low

in

early

August

2020

and

rose

slightly

for

the

period,

remaining

historically

low

despite

the

widening

U.S.

federal

budget

deficit

and

a

massive

increase

in

issuance.

Mortgage-backed

securities

(MBS),

as

measured

by

the

Bloomberg

Barclays

MBS

Index,

ended

the

period

relatively

flat

despite

Fed

support,

as

lower

interest

rates

led

to

accelerated

prepayments

from

mortgage

refinancing.

U.S.

corporate

bond

performance

varied

based

on

credit

rating,

reflecting

the

recovery

of

credit

markets

following

the

initial

COVID-19

shock.

As

Fed

support

tempered

many

investors’

concerns

about

credit

quality,

prices

for

corporate

bonds

rebounded,

particularly

for

the

lower-rated

segment.

1.

Source:

Morningstar.

2.

Source:

Lipper,

a

Thomson

Reuters

Company.

For

the

six-month

period

ended

10/31/20,

this

category

consisted

of

351

funds.

Lipper

calculations

do

not

include

sales

charges

or

expense

subsidization

by

a

fund’s

manager.

Fund

performance

relative

to

the

average

may

have

differed

if

these

or

other

factors

had

been

considered.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Consolidated

Statement

of

Investments

(SOI).

The

Consolidated

SOI

begins

on

page

14

.

Franklin

Strategic

Income

Fund

4

franklintempleton.com

Semiannual

Report

Consequently,

high-yield

corporate

bonds,

as

represented

by

the

Bloomberg

Barclays

U.S.

Corporate

High

Yield

Bond

Index,

advanced

significantly.

Investment-grade

corporate

bonds,

as

represented

by

the

Bloomberg

Barclays

U.S.

Corporate

Bond

Index,

also

posted

solid

performance.

Investment

Strategy

We

use

an

active

asset

allocation

strategy

to

try

to

achieve

the

Fund’s

investment

goals.

We

employ

a

top-down

analysis

of

macroeconomic

trends

combined

with

a

bottom-

up

fundamental

analysis

of

market

sectors,

industries

and

issuers

to

try

to

take

advantage

of

varying

sector

reactions

to

economic

events.

We

regularly

enter

into

various

currency-

related

transactions

involving

derivative

instruments,

including

currency

and

cross

currency

forwards,

currency

swaps,

currency

and

currency

index

futures

contracts

and

currency

options.

We

may

also

enter

into

interest-rate

and

credit-related

transactions

involving

derivative

instruments,

including

interest-rate,

fixed

income

total

return

and

credit

default

swaps

and

interest

rate

and/or

bond

futures

contracts.

Manager’s

Discussion

During

the

six-month

period,

financial

markets

were

volatile

but

recovered

from

the

sharp

decline

experienced

earlier

in

the

year

as

a

Fed

backstop

for

credit

markets

bolstered

investor

confidence.

Amid

signs

of

economic

progress,

investors

weighed

the

generally

positive

data

against

rising

COVID-19

cases,

lack

of

progress

on

fiscal

stimulus

negotiations

and

uncertainty

leading

up

to

the

presidential

election,

which

exacerbated

market

volatility.

Despite

the

heightened

state

of

market

uncertainty,

fixed

income

spreads

still

managed

to

end

the

period

largely

narrower.

In

this

environment,

most

fixed

income

sectors

posted

positive

total

returns

and

outpaced

similar

maturity

U.S.

Treasuries

which

underperformed

with

negative

total

returns.

The

Fund’s

largest

allocations

were

in

high

yield

(HY)

and

investment-grade

(IG)

corporate

bonds,

which

were

the

primary

contributors

to

performance.

Additionally,

senior

secured

floating-rate

bank

loans

and

collateralized

loan

obligation

exposure

benefited

absolute

results.

We

increased

our

HY

exposure

over

the

period.

The

sector

offers

what

we

consider

an

interesting

juxtaposition

between

average

valuations

and

a

challenging

economic

backdrop,

and

while

we

believe

volatility

could

remain

elevated

in

the

near-term,

the

technical

environment

has

remained

generally

supportive

and

we

view

HY

as

an

attractive

asset

class

in

the

continued

low-rate

environment.

We

also

slightly

increased

our

IG

exposure

while

paring

senior

secured

floating-rate

loan

exposure.

While

we

remain

generally

positive

on

the

IG

corporate

bond

sector,

the

opportunity

set

has

become

less

compelling

to

us

given

tighter

valuations

and

continued

near-term

economic

and

policy

uncertainty,

particularly

as

COVID-19

cases

have

surged.

Our

allocation

to

non-agency

residential

mortgage-backed

securities

(RMBS)

also

added

to

portfolio

returns

as

markets

continue

to

recover

from

the

distressed

levels

seen

in

the

first

quarter.

A

majority

of

RMBS

exposure

in

the

portfolio

is

in

credit

risk

transfer

securities

(CRTs).

We

believe

RMBS

issuance

should

remain

light

for

2020,

particularly

in

CRTs

and

we

continue

to

believe

we

could

see

an

overall

strong

housing

market,

supported

by

limited

home

supply

coupled

with

strong

demand

and

historically

low

mortgage

rates.

We

pared

exposure

amid

strength

in

the

market

over

the

period.

Sovereign

emerging

markets

securities

and

Treasury

Inflation

Protected-Securities

(TIPS)

performance

contributed

to

returns.

We

reduced

TIPS

exposure

over

the

period

as

inflation

expectations

have

continued

to

recover

since

their

March

lows.

Foreign

currency

exposure

detracted

from

performance

as

gains

mainly

from

our

long

Japanese

yen,

South

African

rand

and

Mexican

peso

positions

were

offset

by

negative

returns

mainly

from

our

short

Australian

dollar,

Singapore

dollar

and

Canadian

dollar

positions.

Portfolio

Composition

10/31/20

%

of

Total

Net

Assets

Corporate

Bonds

46.4%

Asset-Backed

Securities

19.7%

Foreign

Government

and

Agency

Securities

14.3%

Mortgage-Backed

Securities

7.7%

U.S.

Government

and

Agency

Securities

4.3%

Senior

Floating

Rate

Interests

4.1%

Management

Investment

Companies

2.8%

Municipal

Bonds

1.6%

Other

1.0%

Short-Term

Investments

&

Other

Net

Assets

(1.9)%

Franklin

Strategic

Income

Fund

5

franklintempleton.com

Semiannual

Report

Thank

you

for

your

participation

in

Franklin

Strategic

Income

Fund.

We

look

forward

to

continuing

to

serve

your

investment

needs.

Sonal

Desai,

Ph.D.

Co-Lead

Portfolio

Manager

Patricia

O’Connor,

CFA

Co-Lead

Portfolio

Manager

William

Chong,

CFA,

FRM

Co-Lead

Portfolio

Manager

David

Yuen,

CFA,

FRM

Co-Lead

Portfolio

Manager

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

October

31,

2020

,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

October

31,

2020

Franklin

Strategic

Income

Fund

6

franklintempleton.com

Semiannual

Report

The

performance

tables

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

10/31/20

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

3.75%

and

the

minimum

is

0%.

Class

A

:

3.75%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

A

4

6-Month

+8.38%

+4.29%

1-Year

+0.44%

-3.30%

5-Year

+16.17%

+2.26%

10-Year

+38.36%

+2.90%

Advisor

6-Month

+8.51%

+8.51%

1-Year

+0.69%

+0.69%

5-Year

+17.61%

+3.30%

10-Year

+41.81%

+3.56%

30-Day

Standardized

Yield

6

Share

Class

Distribution

Rate

5

(with

fee

waiver)

(without

fee

waiver)

A

4.37%

2.71%

2.69%

Advisor

4.82%

3.06%

3.04%

See

page

7

for

Performance

Summary

footnotes.

Franklin

Strategic

Income

Fund

Performance

Summary

7

franklintempleton.com

Semiannual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Bond

prices

generally

move

in

the

opposite

direction

of

interest

rates.

Thus,

as

prices

of

bonds

in

the

Fund

adjust

to

a

rise

in

interest

rates,

the

Fund’s

share

price

may

decline.

Changes

in

the

financial

strength

of

a

bond

issuer

or

in

a

bond’s

credit

rating

may

affect

its

value.

High

yields

reflect

the

higher

credit

risks

associated

with

certain

lower

rated

securities

held

in

the

portfolio.

Floating-rate

loans

and

high-yield

corporate

bonds

are

rated

below

investment

grade

and

are

subject

to

greater

risk

of

default,

which

could

result

in

loss

of

principal—a

risk

that

may

be

heightened

in

a

slowing

economy.

The

risks

of

foreign

securities

include

currency

fluctuations

and

political

uncertainty.

Investments

in

developing

markets

involve

heightened

risks

related

to

the

same

factors,

in

addition

to

those

associated

with

their

relatively

small

size

and

lesser

liquidity.

Investing

in

derivative

securities

and

the

use

of

foreign

currency

techniques

involve

special

risks

as

such

may

not

achieve

the

anticipated

benefits

and/or

may

result

in

losses

to

the

Fund.

Unexpected

events

and

their

aftermaths,

such

as

the

spread

of

deadly

diseases;

natural,

environmental

or

man-made

disasters;

financial,

political

or

social

disruptions;

terrorism

and

war;

and

other

tragedies

or

catastrophes,

can

cause

investor

fear

and

panic,

which

can

adversely

affect

the

economies

of

many

companies,

sectors,

nations,

regions

and

the

market

in

general,

in

ways

that

cannot

necessarily

be

foreseen.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

a

fee

waiver

associated

with

any

investment

it

makes

in

a

Franklin

Templeton

money

fund

and/or

other

Franklin

Templeton

fund,

contractually

guaranteed

through

8/31/21.

Fund

investment

results

reflect

the

fee

waiver;

without

this

waiver,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

3/1/19,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

4.25%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

3.75%.

5.

Distribution

rate

is

based

on

the

sum

of

the

respective

class’s

dividend

distributions

over

the

past

six

months

and

the

maximum

offering

price

(NAV

for

Advisor

Class)

per

share

on

10/31/20.

6.

The

Fund’s

30-day

standardized

yield

is

calculated

over

a

trailing

30-day

period

using

the

yield

to

maturity

on

bonds

and/or

the

dividends

accrued

on

stocks.

It

may

not

equal

the

Fund’s

actual

income

distribution

rate,

which

reflects

the

Fund’s

past

dividends

paid

to

shareholders.

7.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Consolidated

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(5/1/20–10/31/20)

Share

Class

Net

Investment

Income

A

$0.1745

C

$0.1546

R

$0.1628

R6

$0.1920

Advisor

$0.1861

Total

Annual

Operating

Expenses

7

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

A

0.88%

0.90%

Advisor

0.63%

0.65%

Your

Fund’s

Expenses

Franklin

Strategic

Income

Fund

8

franklintempleton.com

Semiannual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

5/1/20

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

Ending

Account

Value

10/31/20

Expenses

Paid

During

Period

5/1/20–10/31/20

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,083.80

$4.47

$1,020.91

$4.34

0.86%

C

$1,000

$1,081.46

$6.58

$1,018.89

$6.38

1.26%

R

$1,000

$1,082.81

$5.87

$1,019.57

$5.69

1.11%

R6

$1,000

$1,085.75

$2.70

$1,022.62

$2.62

0.51%

Advisor

$1,000

$1,085.06

$3.17

$1,022.16

$3.08

0.61

%

Franklin

Strategic

Series

Consolidated

Financial

Highlights

Franklin

Strategic

Income

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

9

2

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$8.67

$9.61

$9.61

$9.84

$9.32

$10.04

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.24

0.38

0.42

0.39

0.39

0.42

Net

realized

and

unrealized

gains

(losses)

0.48

(0.90)

—

c

(0.32)

0.30

(0.74)

Total

from

investment

operations

........

0.72

(0.52)

0.42

0.07

0.69

(0.32)

Less

distributions

from:

Net

investment

income

and

net

foreign

currency

gains

....................

(0.17)

(0.42)

(0.42)

(0.30)

(0.17)

(0.40)

Net

asset

value,

end

of

period

..........

$9.22

$8.67

$9.61

$9.61

$9.84

$9.32

Total

return

d

.......................

8.38%

(5.72)%

4.52%

0.64%

7.50%

(3.14)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.87%

0.88%

0.89%

0.90%

0.88%

0.88%

Expenses

net

of

waiver

and

payments

by

affiliates

f

..........................

0.86%

0.86%

0.84%

0.85%

0.82%

0.84%

Net

investment

income

...............

5.13%

4.01%

4.39%

3.93%

4.08%

4.44%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$2,837,732

$2,686,523

$3,131,799

$3,291,002

$3,833,786

$4,500,752

Portfolio

turnover

rate

................

69.48%

118.64%

116.21%

g

115.94%

140.83%

88.04%

Portfolio

turnover

rate

excluding

mortgage

dollar

rolls

h

........................

34.18%

86.69%

39.01%

g

47.40%

87.33%

48.33%

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

repurchas-

es

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

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

h

See

Note

1(j)

regarding

mortgage

dollar

rolls.

Franklin

Strategic

Series

Consolidated

Financial

Highlights

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

10

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$8.67

$9.61

$9.60

$9.84

$9.31

$10.04

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.22

0.34

0.38

0.35

0.35

0.38

Net

realized

and

unrealized

gains

(losses)

0.48

(0.90)

0.01

(0.33)

0.31

(0.75)

Total

from

investment

operations

........

0.70

(0.56)

0.39

0.02

0.66

(0.37)

Less

distributions

from:

Net

investment

income

and

net

foreign

currency

gains

....................

(0.15)

(0.38)

(0.38)

(0.26)

(0.13)

(0.36)

Net

asset

value,

end

of

period

..........

$9.22

$8.67

$9.61

$9.60

$9.84

$9.31

Total

return

c

.......................

8.15%

(6.11)%

4.19%

0.14%

7.19%

(3.64)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.27%

1.28%

1.29%

1.30%

1.28%

1.28%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

1.26%

1.26%

1.24%

1.25%

1.22%

1.24%

Net

investment

income

...............

4.71%

3.61%

3.99%

3.53%

3.68%

4.04%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$448,600

$518,795

$716,327

$1,078,890

$1,385,981

$1,645,852

Portfolio

turnover

rate

................

69.48%

118.64%

116.21%

f

115.94%

140.83%

88.04%

Portfolio

turnover

rate

excluding

mortgage

dollar

rolls

g

........................

34.18%

86.69%

39.01%

f

47.40%

87.33%

48.33%

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

repurchas-

es

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

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable,

and

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

g

See

Note

1(j)

regarding

mortgage

dollar

rolls.

Franklin

Strategic

Series

Consolidated

Financial

Highlights

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

11

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$8.63

$9.57

$9.57

$9.81

$9.28

$10.01

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.22

0.36

0.39

0.36

0.37

0.39

Net

realized

and

unrealized

gains

(losses)

0.49

(0.91)

0.01

(0.33)

0.31

(0.74)

Total

from

investment

operations

........

0.71

(0.55)

0.40

0.03

0.68

(0.35)

Less

distributions

from:

Net

investment

income

and

net

foreign

currency

gains

....................

(0.16)

(0.39)

(0.40)

(0.27)

(0.15)

(0.38)

Net

asset

value,

end

of

period

..........

$9.18

$8.63

$9.57

$9.57

$9.81

$9.28

Total

return

c

.......................

8.28%

(5.98)%

4.28%

0.29%

7.38%

(3.50)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

1.12%

1.13%

1.14%

1.15%

1.13%

1.13%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

1.12%

f

1.11%

1.09%

1.10%

1.07%

1.09%

Net

investment

income

...............

4.88%

3.76%

4.14%

3.68%

3.83%

4.19%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$62,764

$62,063

$85,458

$105,692

$146,552

$181,671

Portfolio

turnover

rate

................

69.48%

118.64%

116.21%

g

115.94%

140.83%

88.04%

Portfolio

turnover

rate

excluding

mortgage

dollar

rolls

h

........................

34.18%

86.69%

39.01%

g

47.04%

87.33%

48.33%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

h

See

Note

1(j)

regarding

mortgage

dollar

rolls.

Franklin

Strategic

Series

Consolidated

Financial

Highlights

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$8.68

$9.63

$9.62

$9.86

$9.33

$10.05

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.25

0.43

0.45

0.43

0.43

0.46

Net

realized

and

unrealized

gains

(losses)

0.49

(0.93)

0.02

(0.34)

0.31

(0.74)

Total

from

investment

operations

........

0.74

(0.50)

0.47

0.09

0.74

(0.28)

Less

distributions

from:

Net

investment

income

and

net

foreign

currency

gains

....................

(0.19)

(0.45)

(0.46)

(0.33)

(0.21)

(0.44)

Net

asset

value,

end

of

period

..........

$9.23

$8.68

$9.63

$9.62

$9.86

$9.33

Total

return

c

.......................

8.58%

(5.46)%

5.03%

0.95%

8.03%

(2.76)%

Ratios

to

average

net

assets

d

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.54%

0.52%

0.51%

0.50%

0.48%

0.49%

Expenses

net

of

waiver

and

payments

by

affiliates

e

..........................

0.52%

0.49%

0.45%

0.45%

0.42%

0.45%

Net

investment

income

...............

5.48%

4.38%

4.78%

4.33%

4.48%

4.83%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$126,054

$133,575

$307,287

$433,068

$369,106

$286,503

Portfolio

turnover

rate

................

69.48%

118.64%

116.21%

f

115.94%

140.83%

88.04%

Portfolio

turnover

rate

excluding

mortgage

dollar

rolls

g

........................

34.18%

86.69%

39.01%

f

47.40%

87.33%

48.33%

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

repurchas-

es

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

is

not

annualized

for

periods

less

than

one

year.

d

Ratios

are

annualized

for

periods

less

than

one

year.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

g

See

Note

1(j)

regarding

mortgage

dollar

rolls.

Franklin

Strategic

Series

Consolidated

Financial

Highlights

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

13

a

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

2019

2018

2017

2016

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

period)

Net

asset

value,

beginning

of

period

.....

$8.68

$9.62

$9.62

$9.85

$9.33

$10.05

Income

from

investment

operations

a

:

Net

investment

income

b

.............

0.25

0.40

0.44

0.41

0.42

0.44

Net

realized

and

unrealized

gains

(losses)

0.49

(0.90)

—

c

(0.32)

0.30

(0.74)

Total

from

investment

operations

........

0.74

(0.50)

0.44

0.09

0.72

(0.30)

Less

distributions

from:

Net

investment

income

and

net

foreign

currency

gains

....................

(0.19)

(0.44)

(0.44)

(0.32)

(0.20)

(0.42)

Net

asset

value,

end

of

period

..........

$9.23

$8.68

$9.62

$9.62

$9.85

$9.33

Total

return

d

.......................

8.51%

(5.47)%

4.88%

0.79%

7.76%

(2.89)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

..........................

0.62%

0.63%

0.64%

0.65%

0.63%

0.63%

Expenses

net

of

waiver

and

payments

by

affiliates

f

..........................

0.61%

0.61%

0.59%

0.60%

0.57%

0.59%

Net

investment

income

...............

5.37%

4.26%

4.64%

4.18%

4.33%

4.69%

Supplemental

data

Net

assets,

end

of

period

(000’s)

........

$508,743

$517,522

$608,317

$933,747

$1,070,103

$904,899

Portfolio

turnover

rate

................

69.48%

118.64%

116.21%

g

115.94%

140.83%

88.04%

Portfolio

turnover

rate

excluding

mortgage

dollar

rolls

h

........................

34.18%

86.69%

39.01%

g

47.40%

87.33%

48.33%

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

repurchas-

es

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

Total

return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

h

See

Note

1(j)

regarding

mortgage

dollar

rolls.

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited),

October

31,

2020

Franklin

Strategic

Income

Fund

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

0.2%

Aerospace

&

Defense

0.0%

a,b,c

Remington

Outdoor

Co.,

Inc.

.............................

United

States

1,322,439

$

—

b

Energy

Equipment

&

Services

0.0%

†

b

Weatherford

International

plc

.............................

United

States

151,545

316,729

b

Entertainment

0.0%

†

d

AMC

Entertainment

Holdings,

Inc.

.........................

United

States

14,125

33,335

Hotels,

Restaurants

&

Leisure

0.0%

†

a,b,e

Turtle

Bay

Resort

LLC

..................................

United

States

5,579,939

122,759

b

Machinery

0.1%

a,b

Birch

Permian

Holdings,

Inc.

.............................

United

States

46,176

230,880

a,b

Birch

Permian

Holdings,

Inc.

.............................

United

States

359,948

1,754,746

1,985,626

Media

0.0%

†

b

Clear

Channel

Outdoor

Holdings,

Inc.

......................

United

States

285,564

255,294

b

iHeartMedia

,

Inc.,

A

....................................

United

States

115,084

945,991

a,b

iHeartMedia

,

Inc.,

B

...................................

United

States

1,941

14,838

1,216,123

Multiline

Retail

0.0%

a,b,f

K2016470219

South

Africa

Ltd.,

A

.........................

South

Africa

125,940,079

—

a,b,f

K2016470219

South

Africa

Ltd.,

B

.........................

South

Africa

12,532,821

—

—

Oil,

Gas

&

Consumable

Fuels

0.0%

†

Amplify

Energy

Corp.

..................................

United

States

5,288

3,439

Riviera

Resources,

Inc.

.................................

United

States

84,462

25,718

29,157

Paper

&

Forest

Products

0.1%

a,b,f

Appvion

Operations,

Inc.

................................

United

States

331,326

4,917,645

Verso

Corp.,

A

........................................

United

States

38,905

302,681

5,220,326

Road

&

Rail

0.0%

a

Onsite

Rental

Group

Operations

Pty.

Ltd.

...................

Australia

2,551,511

—

Specialty

Retail

0.0%

†

Party

City

Holdings,

Inc.

................................

United

States

117,385

233,596

Total

Common

Stocks

(Cost

$40,124,717)

......................................

9,157,651

Management

Investment

Companies

2.8%

Capital

Markets

2.8%

g

Franklin

Floating

Rate

Income

Fund

.......................

United

States

15,243,687

110,821,608

Total

Management

Investment

Companies

(Cost

$152,217,419)

...................

110,821,608

Warrants

Warrants

0.0%

†

Diversified

Financial

Services

0.0%

a,b

Chaparral

Energy,

Inc.,

10/01/24

..........................

United

States

18

—

—

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

15

a

a

Country

Warrants

a

Value

a

a

a

a

a

a

Warrants

(continued)

Media

0.0%

†

b

iHeartMedia

,

Inc.,

5/01/39

...............................

United

States

1

$

9

Oil,

Gas

&

Consumable

Fuels

0.0%

†

a,b

Battalion

Oil

Corp.,

A,

10/08/22

...........................

United

States

10,639

84

a,b

Battalion

Oil

Corp.,

B,

10/08/22

...........................

United

States

13,300

43

a,b

Battalion

Oil

Corp.,

C,

10/08/22

...........................

United

States

17,100

17

144

Paper

&

Forest

Products

0.0%

†

b

Verso

Corp.,

7/25/23

...................................

United

States

4,095

2,109

Software

&

Services

0.0%

†

a,b

WorkCapital

BSD

SARL,

2/13/26

..........................

Brazil

6,000,000

750,000

Total

Warrants

(Cost

$750,023)

................................................

752,262

Principal

Amount

*

Convertible

Bonds

0.0%

†

Wireless

Telecommunication

Services

0.0%

†

h,i,j

Digicel

Group

0.5

Ltd.

,

Sub.

Bond

,

144A,

PIK,

7

%

,

Perpetual

.....

Bermuda

599,324

80,293

Total

Convertible

Bonds

(Cost

$106,476)

.......................................

80,293

Corporate

Bonds

46.4%

Aerospace

&

Defense

0.1%

j

TransDigm

,

Inc.

,

Senior

Secured

Note

,

144A,

6.25

%

,

3/15/26

....

United

States

5,000,000

5,218,775

Air

Freight

&

Logistics

0.2%

FedEx

Corp.

,

Senior

Bond

,

4.05

%

,

2/15/48

..................

United

States

1,200,000

1,381,602

United

Parcel

Service,

Inc.

,

Senior

Bond

,

5.3

%

,

4/01/50

........

United

States

5,400,000

7,774,330

9,155,932

Airlines

0.3%

j

Delta

Air

Lines,

Inc.

/

SkyMiles

IP

Ltd.

,

Senior

Secured

Note

,

144A,

4.5

%

,

10/20/25

.....................................

United

States

10,400,000

10,563,571

Auto

Components

0.7%

j

Allison

Transmission,

Inc.

,

Senior

Bond

,

144A,

5.875

%

,

6/01/29

..

United

States

7,000,000

7,652,715

Dana,

Inc.

,

Senior

Note

,

5.625

%

,

6/15/28

...................

United

States

12,400,000

13,036,554

Goodyear

Tire

&

Rubber

Co.

(The)

,

Senior

Note

,

4.875

%

,

3/15/27

.

United

States

9,000,000

8,750,295

29,439,564

Banks

2.1%

j

Akbank

T.A.S.

,

Senior

Note

,

144A,

5.125

%

,

3/31/25

...........

Turkey

12,400,000

11,490,956

Bank

of

America

Corp.

,

Senior

Bond,

3.248%,

10/21/27

.........................

United

States

5,000,000

5,518,063

Senior

Note,

3.5%,

4/19/26

............................

United

States

5,800,000

6,504,162

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Banks

(continued)

j

BDO

Unibank

,

Inc.

,

Senior

Note

,

Reg

S,

2.95

%

,

3/06/23

........

Philippines

1,550,000

$

1,611,709

j

BNP

Paribas

SA

,

Senior

Note

,

144A,

2.219%

to

6/09/25,

FRN

thereafter

,

6/09/26

...................................

France

4,400,000

4,554,634

j

China

Construction

Bank

Corp.

,

Sub.

Note

,

Reg

S,

4.25%

to

2/27/24,

FRN

thereafter

,

2/27/29

...............................

China

8,000,000

8,547,910

i

Comerica,

Inc.

,

Junior

Sub.

Bond

,

5.625%

to

10/01/25,

FRN

thereafter

,

Perpetual

.................................

United

States

3,000,000

3,210,000

HSBC

Holdings

plc

,

Senior

Bond,

2.848%

to

6/04/30,

FRN

thereafter,

6/04/31

.....

United

Kingdom

8,300,000

8,590,395

Senior

Bond,

2.357%

to

8/18/30,

FRN

thereafter,

8/18/31

.....

United

Kingdom

2,900,000

2,882,316

Industrial

&

Commercial

Bank

of

China

Ltd.

,

Senior

Note

,

3.538

%

,

11/08/27

..........................................

China

8,500,000

9,366,830

JPMorgan

Chase

&

Co.

,

Senior

Bond

,

2.522%

to

4/22/30,

FRN

thereafter

,

4/22/31

...................................

United

States

9,400,000

9,918,390

Lloyds

Banking

Group

plc

,

Senior

Note

,

3.87%

to

7/09/24,

FRN

thereafter

,

7/09/25

...................................

United

Kingdom

1,600,000

1,746,588

SVB

Financial

Group

,

Senior

Note

,

3.125

%

,

6/05/30

...........

United

States

2,700,000

2,952,736

Wells

Fargo

&

Co.

,

Senior

Note

,

2.188%

to

4/30/25,

FRN

thereafter

,

4/30/26

...........................................

United

States

7,700,000

8,013,665

84,908,354

Beverages

0.5%

Anheuser-Busch

InBev

Worldwide,

Inc.

,

Senior

Bond

,

3.5

%

,

6/01/30

Belgium

16,400,000

18,533,383

Biotechnology

0.6%

j

AbbVie,

Inc.

,

Senior

Note,

144A,

3.8%,

3/15/25

.......................

United

States

8,000,000

8,892,407

Senior

Note,

144A,

2.95%,

11/21/26

.....................

United

States

5,900,000

6,447,642

Senior

Note,

144A,

3.2%,

11/21/29

......................

United

States

6,000,000

6,627,692

21,967,741

Building

Products

0.7%

j

Carrier

Global

Corp.

,

Senior

Note

,

144A,

2.722

%

,

2/15/30

.......

United

States

16,000,000

16,751,185

j

Cornerstone

Building

Brands,

Inc.

,

Senior

Note

,

144A,

8

%

,

4/15/26

United

States

9,000,000

9,371,250

26,122,435

Capital

Markets

1.0%

Goldman

Sachs

Group,

Inc.

(The)

,

Senior

Note

,

3.75

%

,

2/25/26

..

United

States

15,000,000

16,875,070

Morgan

Stanley

,

Senior

Bond,

3.591%

to

7/22/27,

FRN

thereafter,

7/22/28

.....

United

States

10,000,000

11,253,137

Senior

Note,

3.875%,

1/27/26

..........................

United

States

10,000,000

11,359,172

39,487,379

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

17

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Chemicals

2.8%

j

Alpek

SAB

de

CV

,

Senior

Note

,

144A,

4.25

%

,

9/18/29

..........

Mexico

8,000,000

$

8,219,920

h,j

Anagram

International,

Inc.

/

Anagram

Holdings

LLC

,

Secured

Note

,

144A,

PIK,

10

%

,

8/15/26

..............................

United

States

623,545

513,385

j

Braskem

Netherlands

Finance

BV

,

Senior

Bond

,

144A,

4.5

%

,

1/31/30

...........................................

Brazil

12,400,000

11,467,520

j

CNAC

HK

Finbridge

Co.

Ltd.

,

Senior

Note

,

Reg

S,

4.875

%

,

3/14/25

China

7,800,000

8,608,865

EI

du

Pont

de

Nemours

and

Co.

,

Senior

Bond

,

2.3

%

,

7/15/30

....

United

States

14,500,000

15,167,004

j

Element

Solutions,

Inc.

,

Senior

Note

,

144A,

3.875

%

,

9/01/28

.....

United

States

7,000,000

6,925,625

j

Gates

Global

LLC

/

Gates

Corp.

,

Senior

Note

,

144A,

6.25

%

,

1/15/26

United

States

12,500,000

12,864,625

j

Ingevity

Corp.

,

Senior

Note

,

144A,

3.875

%

,

11/01/28

...........

United

States

3,900,000

3,966,593

j

Neon

Holdings,

Inc.

,

Senior

Secured

Note

,

144A,

10.125

%

,

4/01/26

United

States

5,000,000

5,312,500

Olin

Corp.

,

Senior

Bond

,

5.125

%

,

9/15/27

...................

United

States

9,000,000

9,146,250

j

SABIC

Capital

II

BV

,

Senior

Note

,

144A,

4.5

%

,

10/10/28

........

Saudi

Arabia

5,500,000

6,494,659

j

Syngenta

Finance

NV

,

Senior

Note

,

144A,

4.892

%

,

4/24/25

......

Switzerland

8,000,000

8,677,670

j

TPC

Group,

Inc.

,

Senior

Secured

Note

,

144A,

10.5

%

,

8/01/24

....

United

States

11,000,000

9,206,780

Westlake

Chemical

Corp.

,

Senior

Note

,

3.375

%

,

6/15/30

........

United

States

2,500,000

2,681,936

j

Yara

International

ASA

,

Senior

Note

,

144A,

3.148

%

,

6/04/30

.....

Brazil

1,400,000

1,493,303

110,746,635

Commercial

Services

&

Supplies

0.4%

j

Prime

Security

Services

Borrower

LLC

/

Prime

Finance,

Inc.

,

Senior

Secured

Note

,

144A,

3.375

%

,

8/31/27

....................

United

States

13,000,000

12,561,250

RELX

Capital,

Inc.

,

Senior

Note

,

3

%

,

5/22/30

................

United

Kingdom

1,500,000

1,621,657

14,182,907

Communications

Equipment

0.3%

j

CommScope

Technologies

LLC

,

Senior

Note

,

144A,

6

%

,

6/15/25

..

United

States

12,652,000

12,560,020

Construction

&

Engineering

0.0%

†

j

Rutas

2

and

7

Finance

Ltd.

,

Senior

Secured

Bond

,

144A,

Zero

Cpn

.,

9/30/36

...........................................

United

States

1,200,000

846,000

Construction

Materials

0.3%

j

Cemex

SAB

de

CV

,

Senior

Secured

Bond

,

144A,

5.7

%

,

1/11/25

...

Mexico

13,000,000

13,364,000

Consumer

Finance

0.6%

j

FirstCash

,

Inc.

,

Senior

Note

,

144A,

4.625

%

,

9/01/28

...........

United

States

12,700,000

12,914,313

OneMain

Finance

Corp.

,

Senior

Bond,

5.375%,

11/15/29

.........................

United

States

3,300,000

3,399,000

Senior

Note,

6.625%,

1/15/28

..........................

United

States

5,700,000

6,243,210

22,556,523

Containers

&

Packaging

1.7%

j

Ardagh

Packaging

Finance

plc

/

Ardagh

Holdings

USA,

Inc.

,

Senior

Note,

144A,

6%,

2/15/25

........................

United

States

3,167,000

3,277,053

Senior

Note,

144A,

5.25%,

8/15/27

......................

United

States

3,700,000

3,813,627

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Containers

&

Packaging

(continued)

Bemis

Co.,

Inc.

,

Senior

Note

,

2.63

%

,

6/19/30

................

United

States

2,100,000

$

2,202,478

Crown

Americas

LLC

/

Crown

Americas

Capital

Corp.

VI

,

Senior

Note

,

4.75

%

,

2/01/26

.................................

United

States

7,100,000

7,391,526

j

Mauser

Packaging

Solutions

Holding

Co.

,

Senior

Note

,

144A,

7.25

%

,

4/15/25

...........................................

United

States

15,000,000

14,489,250

j

Owens-Brockway

Glass

Container,

Inc.

,

Senior

Note

,

144A,

5.875

%

,

8/15/23

...........................................

United

States

10,000,000

10,540,000

j

Reynolds

Group

Issuer,

Inc.

/

Reynolds

Group

Issuer

LLC

/

Reynolds

Group

Issuer

Luxembourg

SA

,

Senior

Secured

Note,

144A,

5.125%,

7/15/23

..............

United

States

484,000

490,292

Senior

Secured

Note,

144A,

4%,

10/15/27

.................

United

States

4,600,000

4,674,750

j

Sealed

Air

Corp.

,

Senior

Note,

144A,

4.875%,

12/01/22

....................

United

States

4,000,000

4,217,500

Senior

Note,

144A,

5.125%,

12/01/24

....................

United

States

11,300,000

12,366,438

WRKCo

,

Inc.

,

Senior

Bond

,

3

%

,

6/15/33

....................

United

States

3,600,000

3,836,396

67,299,310

Distributors

0.1%

j

Resideo

Funding,

Inc.

,

Senior

Note

,

144A,

6.125

%

,

11/01/26

.....

United

States

5,000,000

4,837,500

Diversified

Financial

Services

0.4%

k

Cia

Securitizadora

de

Creditos

Financeiros

Vert-Fintech

,

12

,

Senior

Secured

Note

,

FRN

,

5.96

%

,

(

BZDIOVRA

+

5.75

%

),

2/14/24

....

Brazil

11,513,000

BRL

2,262,669

j

MPH

Acquisition

Holdings

LLC

,

Senior

Note

,

144A,

5.75

%

,

11/01/28

United

States

13,000,000

12,756,250

15,018,919

Diversified

Telecommunication

Services

1.4%

j

Altice

France

Holding

SA

,

Senior

Note

,

144A,

6

%

,

2/15/28

......

Luxembourg

9,100,000

8,745,100

j

Altice

France

SA

,

Senior

Secured

Note

,

144A,

5.5

%

,

1/15/28

....

France

2,500,000

2,535,937

AT&T,

Inc.

,

Senior

Note,

2.95%,

7/15/26

...........................

United

States

6,000,000

6,542,009

Senior

Note,

2.3%,

6/01/27

............................

United

States

2,900,000

3,013,480

Bell

Canada,

Inc.

,

Senior

Bond

,

4.464

%

,

4/01/48

..............

Canada

1,400,000

1,747,163

j

CCO

Holdings

LLC

/

CCO

Holdings

Capital

Corp.

,

Senior

Bond,

144A,

5.375%,

5/01/25

.....................

United

States

13,000,000

13,367,250

Senior

Bond,

144A,

4.5%,

8/15/30

.......................

United

States

2,000,000

2,080,010

Senior

Bond,

144A,

4.5%,

5/01/32

.......................

United

States

10,000,000

10,337,500

TELUS

Corp.

,

Senior

Bond

,

4.6

%

,

11/16/48

..................

Canada

1,000,000

1,240,750

j

Virgin

Media

Secured

Finance

plc

,

Senior

Secured

Bond

,

144A,

4.5

%

,

8/15/30

......................................

United

Kingdom

5,600,000

5,696,600

55,305,799

Electric

Utilities

2.3%

j

CGNPC

International

Ltd.

,

Senior

Note

,

Reg

S,

3.75

%

,

12/11/27

..

China

3,289,000

3,623,590

Duke

Energy

Corp.

,

Senior

Bond,

2.45%,

6/01/30

...........................

United

States

3,800,000

3,978,388

Senior

Bond,

3.75%,

9/01/46

...........................

United

States

1,600,000

1,801,763

Exelon

Corp.

,

Senior

Bond,

4.05%,

4/15/30

...........................

United

States

13,400,000

15,516,997

Senior

Bond,

4.45%,

4/15/46

...........................

United

States

1,400,000

1,696,612

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

19

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Electric

Utilities

(continued)

Southern

Co.

(The)

,

Senior

Bond

,

3.25

%

,

7/01/26

.............

United

States

24,200,000

$

26,951,810

j

State

Grid

Overseas

Investment

2016

Ltd.

,

Senior

Note

,

144A,

3.5

%

,

5/04/27

...........................................

China

15,800,000

17,569,207

j

Three

Gorges

Finance

I

Cayman

Islands

Ltd.

,

Senior

Note

,

144A,

3.15

%

,

6/02/26

.....................................

China

12,800,000

13,868,800

j

TNB

Global

Ventures

Capital

Bhd.

,

Senior

Note

,

Reg

S,

3.244

%

,

10/19/26

..........................................

Malaysia

3,775,000

4,064,411

Virginia

Electric

and

Power

Co.

,

Senior

Bond

,

6.35

%

,

11/30/37

...

United

States

820,000

1,209,998

90,281,576

Electronic

Equipment,

Instruments

&

Components

0.8%

CDW

LLC

/

CDW

Finance

Corp.

,

Senior

Note

,

3.25

%

,

2/15/29

....

United

States

10,000,000

10,000,000

Flex

Ltd.

,

Senior

Note,

3.75%,

2/01/26

...........................

United

States

12,300,000

13,471,064

Senior

Note,

4.875%,

5/12/30

..........................

United

States

7,100,000

8,218,624

FLIR

Systems,

Inc.

,

Senior

Note

,

2.5

%

,

8/01/30

...............

United

States

2,100,000

2,166,497

33,856,185

Energy

Equipment

&

Services

0.2%

Baker

Hughes

a

GE

Co.

LLC

/

Baker

Hughes

Co-Obligor,

Inc.

,

Senior

Note

,

4.486

%

,

5/01/30

...........................

United

States

700,000

794,589

j

Nabors

Industries

Ltd.

,

Senior

Note

,

144A,

7.25

%

,

1/15/26

......

United

States

6,000,000

2,351,250

j

Schlumberger

Holdings

Corp.

,

Senior

Note

,

144A,

3.9

%

,

5/17/28

..

United

States

3,800,000

4,062,222

j

Weatherford

International

Ltd.

,

Senior

Note

,

144A,

11

%

,

12/01/24

.

United

States

4,591,000

2,727,697

9,935,758

Entertainment

0.9%

j

AMC

Entertainment

Holdings,

Inc.

,

h

Secured

Note,

144A,

PIK,

12%,

6/15/26

..................

United

States

4,791,000

162,894

Senior

Secured

Note,

144A,

10.5%,

4/24/26

...............

United

States

565,000

290,975

j

Live

Nation

Entertainment,

Inc.

,

Senior

Note

,

144A,

4.75

%

,

10/15/27

United

States

4,400,000

4,054,886

Netflix,

Inc.

,

Senior

Bond

,

4.375

%

,

11/15/26

.................

United

States

11,800,000

12,830,803

Walt

Disney

Co.

(The)

,

Senior

Note

,

2.2

%

,

1/13/28

............

United

States

4,800,000

5,020,326

j

WMG

Acquisition

Corp.

,

Senior

Secured

Bond

,

144A,

3

%

,

2/15/31

.

United

States

12,100,000

11,525,250

33,885,134

Equity

Real

Estate

Investment

Trusts

(REITs)

1.0%

AvalonBay

Communities,

Inc.

,

Senior

Bond

,

2.45

%

,

1/15/31

.....

United

States

4,500,000

4,755,736

MPT

Operating

Partnership

LP

/

MPT

Finance

Corp.

,

Senior

Bond,

5.25%,

8/01/26

...........................

United

States

4,200,000

4,368,000

Senior

Bond,

5%,

10/15/27

............................

United

States

5,700,000

5,974,882

j

Park

Intermediate

Holdings

LLC

/

PK

Domestic

Property

LLC

/

PK

Finance

Co-Issuer

,

Senior

Secured

Note

,

144A,

5.875

%

,

10/01/28

United

States

8,600,000

8,444,125

j

SBA

Communications

Corp.

,

Senior

Note

,

144A,

3.875

%

,

2/15/27

.

United

States

9,000,000

9,157,500

j

VICI

Properties

LP

/

VICI

Note

Co.,

Inc.

,

Senior

Bond,

144A,

4.125%,

8/15/30

.....................

United

States

1,300,000

1,317,875

Senior

Note,

144A,

3.75%,

2/15/27

......................

United

States

7,500,000

7,531,650

41,549,768

Food

&

Staples

Retailing

0.2%

j

Cencosud

SA

,

Senior

Note

,

144A,

4.375

%

,

7/17/27

............

Chile

8,700,000

9,442,951

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Food

Products

1.1%

B&G

Foods,

Inc.

,

Senior

Note

,

5.25

%

,

9/15/27

...............

United

States

9,000,000

$

9,323,460

j

China

Mengniu

Dairy

Co.

Ltd.

,

Senior

Note

,

Reg

S,

4.25

%

,

8/07/23

China

392,000

420,748

j

Chobani

LLC

/

Chobani

Finance

Corp.,

Inc.

,

Senior

Secured

Note

,

144A,

4.625

%

,

11/15/28

...............................

United

States

5,000,000

5,029,000

j

Kraft

Heinz

Foods

Co.

,

Senior

Bond,

144A,

4.25%,

3/01/31

......................

United

States

2,000,000

2,171,161

Senior

Note,

144A,

3.875%,

5/15/27

.....................

United

States

11,500,000

12,171,231

j

MHP

Lux

SA

,

Senior

Note

,

144A,

6.95

%

,

4/03/26

.............

Ukraine

8,000,000

8,060,800

j

Post

Holdings,

Inc.

,

Senior

Bond

,

144A,

4.625

%

,

4/15/30

.......

United

States

6,700,000

6,884,250

44,060,650

Gas

Utilities

0.1%

Piedmont

Natural

Gas

Co.,

Inc.

,

Senior

Bond

,

3.35

%

,

6/01/50

....

United

States

2,800,000

2,988,646

Health

Care

Providers

&

Services

1.2%

Anthem,

Inc.

,

Senior

Bond,

2.25%,

5/15/30

...........................

United

States

3,650,000

3,763,876

Senior

Bond,

3.7%,

9/15/49

............................

United

States

1,400,000

1,584,397

Centene

Corp.

,

j

Senior

Note,

144A,

5.375%,

6/01/26

.....................

United

States

7,600,000

8,006,296

Senior

Note,

4.25%,

12/15/27

..........................

United

States

3,000,000

3,164,445

Senior

Note,

4.625%,

12/15/29

.........................

United

States

2,300,000

2,507,069

Senior

Note,

3.375%,

2/15/30

..........................

United

States

1,400,000

1,456,329

CHS/Community

Health

Systems,

Inc.

,

Senior

Secured

Note

,

6.25

%

,

3/31/23

...........................................

United

States

8,000,000

7,940,000

Cigna

Corp.

,

Senior

Bond

,

4.9

%

,

12/15/48

...................

United

States

1,200,000

1,546,310

CVS

Health

Corp.

,

Senior

Bond

,

4.3

%

,

3/25/28

...............

United

States

5,800,000

6,725,740

HCA,

Inc.

,

Senior

Bond

,

5.875

%

,

2/15/26

...................

United

States

3,000,000

3,393,750

Orlando

Health

Obligated

Group

,

3.777

%

,

10/01/28

............

United

States

3,870,000

4,309,210

Quest

Diagnostics,

Inc.

,

Senior

Bond

,

2.8

%

,

6/30/31

...........

United

States

2,100,000

2,248,090

46,645,512

Hotels,

Restaurants

&

Leisure

1.7%

j

1011778

BC

ULC

/

New

Red

Finance,

Inc.

,

Secured

Bond,

144A,

4%,

10/15/30

......................

Canada

9,000,000

8,955,000

Secured

Note,

144A,

5%,

10/15/25

......................

Canada

3,880,000

3,978,358

j

Caesars

Entertainment,

Inc.

,

Senior

Secured

Note

,

144A,

6.25

%

,

7/01/25

...........................................

United

States

3,700,000

3,803,600

j

Caesars

Resort

Collection

LLC

/

CRC

Finco

,

Inc.

,

Senior

Secured

Note

,

144A,

5.75

%

,

7/01/25

............................

United

States

1,500,000

1,540,320

j

Golden

Nugget,

Inc.

,

Senior

Note

,

144A,

6.75

%

,

10/15/24

.......

United

States

13,200,000

11,193,864

j

International

Game

Technology

plc

,

Senior

Secured

Note

,

144A,

5.25

%

,

1/15/29

.....................................

United

States

13,000,000

12,890,865

j

KFC

Holding

Co./Pizza

Hut

Holdings

LLC/Taco

Bell

of

America

LLC

,

Senior

Note

,

144A,

5.25

%

,

6/01/26

.......................

United

States

5,100,000

5,279,520

MGM

Resorts

International

,

Senior

Note

,

4.75

%

,

10/15/28

.......

United

States

10,000,000

9,793,750

j

Wynn

Las

Vegas

LLC

/

Wynn

Las

Vegas

Capital

Corp.

,

Senior

Bond

,

144A,

5.5

%

,

3/01/25

.................................

United

States

9,800,000

9,401,875

66,837,152

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

21

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Household

Durables

0.8%

KB

Home

,

Senior

Bond,

7.5%,

9/15/22

............................

United

States

5,000,000

$

5,469,925

Senior

Note,

7%,

12/15/21

............................

United

States

5,000,000

5,209,375

Mohawk

Industries,

Inc.

,

Senior

Note

,

3.625

%

,

5/15/30

.........

United

States

14,300,000

15,538,126

j

Williams

Scotsman

International,

Inc.

,

Senior

Secured

Note

,

144A,

4.625

%

,

8/15/28

.....................................

United

States

7,500,000

7,637,063

33,854,489

Household

Products

0.3%

j

Energizer

Holdings,

Inc.

,

Senior

Note

,

144A,

4.375

%

,

3/31/29

....

United

States

8,500,000

8,593,500

j

Kimberly-Clark

de

Mexico

SAB

de

CV

,

Senior

Bond

,

144A,

2.431

%

,

7/01/31

...........................................

Mexico

2,200,000

2,231,625

j

Spectrum

Brands,

Inc.

,

Senior

Bond

,

144A,

5.5

%

,

7/15/30

.......

United

States

2,300,000

2,465,312

13,290,437

Independent

Power

and

Renewable

Electricity

Producers

1.6%

j

Calpine

Corp.

,

Senior

Bond,

144A,

5%,

2/01/31

........................

United

States

4,300,000

4,396,535

Senior

Note,

144A,

5.125%,

3/15/28

.....................

United

States

4,000,000

4,130,080

Senior

Note,

144A,

4.625%,

2/01/29

.....................

United

States

6,500,000

6,572,865

Clearway

Energy

Operating

LLC

,

Senior

Note

,

5.75

%

,

10/15/25

..

United

States

12,800,000

13,432,000

j

Colbun

SA

,

Senior

Note,

144A,

3.95%,

10/11/27

.....................

Chile

7,500,000

8,328,825

Senior

Note,

144A,

3.15%,

3/06/30

......................

Chile

2,900,000

3,036,010

j

InterGen

NV

,

Senior

Secured

Bond

,

144A,

7

%

,

6/30/23

.........

Netherlands

10,900,000

10,341,375

j

Talen

Energy

Supply

LLC

,

Senior

Note,

144A,

10.5%,

1/15/26

......................

United

States

3,000,000

2,085,000

Senior

Secured

Note,

144A,

7.25%,

5/15/27

...............

United

States

10,800,000

10,840,500

63,163,190

Insurance

1.0%

Aflac,

Inc.

,

Senior

Note

,

3.6

%

,

4/01/30

.....................

United

States

12,000,000

13,917,073

j

Alliant

Holdings

Intermediate

LLC

/

Alliant

Holdings

Co-Issuer

,

Senior

Note

,

144A,

6.75

%

,

10/15/27

...........................

United

States

2,000,000

2,103,380

Arch

Capital

Group

Ltd.

,

Senior

Bond

,

3.635

%

,

6/30/50

.........

United

States

10,000,000

10,791,539

j

Five

Corners

Funding

Trust

II

,

Senior

Note

,

144A,

2.85

%

,

5/15/30

.

United

States

9,100,000

9,795,084

Willis

North

America,

Inc.

,

Senior

Note

,

2.95

%

,

9/15/29

.........

United

States

3,500,000

3,813,935

40,421,011

Interactive

Media

&

Services

0.4%

j

Tencent

Holdings

Ltd.

,

Senior

Note

,

144A,

2.39

%

,

6/03/30

.......

China

17,100,000

17,310,722

Internet

&

Direct

Marketing

Retail

0.3%

JD.com,

Inc.

,

Senior

Note

,

3.375

%

,

1/14/30

..................

China

12,200,000

13,160,456

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

IT

Services

0.9%

j

Cablevision

Lightpath

LLC

,

Senior

Secured

Note

,

144A,

3.875

%

,

9/15/27

...........................................

United

States

9,200,000

$

9,142,500

Fiserv,

Inc.

,

Senior

Bond

,

2.65

%

,

6/01/30

...................

United

States

6,300,000

6,694,204

j

Gartner,

Inc.

,

Senior

Note

,

144A,

4.5

%

,

7/01/28

...............

United

States

7,000,000

7,316,470

j

Presidio

Holdings,

Inc.

,

Senior

Secured

Note

,

144A,

4.875

%

,

2/01/27

United

States

12,000,000

12,339,360

35,492,534

Machinery

0.6%

j

Manitowoc

Co.,

Inc.

(The)

,

Secured

Note

,

144A,

9

%

,

4/01/26

....

United

States

7,000,000

7,198,345

j

Navistar

International

Corp.

,

Senior

Note

,

144A,

6.625

%

,

11/01/25

United

States

3,300,000

3,416,160

j

Vertical

US

Newco,

Inc.

,

Senior

Secured

Note

,

144A,

5.25

%

,

7/15/27

Germany

9,000,000

9,279,675

Westinghouse

Air

Brake

Technologies

Corp.

,

Senior

Note

,

3.2

%

,

6/15/25

...........................................

United

States

1,900,000

2,026,032

21,920,212

Marine

0.3%

j

ICTSI

Treasury

BV

,

Senior

Note

,

Reg

S,

4.625

%

,

1/16/23

.......

Philippines

12,000,000

12,612,180

Media

2.9%

j

Altice

Financing

SA

,

Senior

Secured

Bond

,

144A,

7.5

%

,

5/15/26

..

Luxembourg

4,000,000

4,180,000

Charter

Communications

Operating

LLC

/

Charter

Communications

Operating

Capital

,

Senior

Secured

Bond

,

2.8

%

,

4/01/31

.......

United

States

16,300,000

16,834,640

j

Clear

Channel

International

BV

,

Senior

Secured

Note

,

144A,

6.625

%

,

8/01/25

.....................................

United

States

1,300,000

1,324,375

Clear

Channel

Worldwide

Holdings,

Inc.

,

Senior

Note,

9.25%,

2/15/24

...........................

United

States

10,362,000

8,993,957

j

Senior

Secured

Note,

144A,

5.125%,

8/15/27

..............

United

States

3,200,000

3,108,000

Comcast

Corp.

,

Senior

Bond

,

4.75

%

,

3/01/44

................

United

States

1,400,000

1,843,489

j

CSC

Holdings

LLC

,

Senior

Note

,

144A,

5.5

%

,

5/15/26

..........

United

States

16,000,000

16,640,000

j

Diamond

Sports

Group

LLC

/

Diamond

Sports

Finance

Co.

,

Senior

Note,

144A,

6.625%,

8/15/27

.....................

United

States

4,500,000

1,873,125

Senior

Secured

Note,

144A,

5.375%,

8/15/26

..............

United

States

4,300,000

2,512,812

DISH

DBS

Corp.

,

Senior

Note,

5%,

3/15/23

.............................

United

States

3,500,000

3,517,500

Senior

Note,

5.875%,

11/15/24

.........................

United

States

6,100,000

6,145,750

Senior

Note,

7.375%,

7/01/28

..........................

United

States

3,600,000

3,631,500

Fox

Corp.

,

Senior

Note

,

3.5

%

,

4/08/30

.....................

United

States

4,000,000

4,480,825

j

Gray

Television,

Inc.

,

Senior

Note

,

144A,

4.75

%

,

10/15/30

.......

United

States

10,300,000

10,171,250

iHeartCommunications

,

Inc.

,

Senior

Note

,

8.375

%

,

5/01/27

......

United

States

1,199,371

1,171,863

j

Nexstar

Broadcasting,

Inc.

,

Senior

Note

,

144A,

4.75

%

,

11/01/28

..

United

States

8,000,000

8,075,000

j

Sinclair

Television

Group,

Inc.

,

Senior

Bond

,

144A,

5.5

%

,

3/01/30

.

United

States

3,900,000

3,672,981

j

Univision

Communications,

Inc.

,

Senior

Secured

Note

,

144A,

5.125

%

,

2/15/25

.....................................

United

States

16,000,000

15,750,000

113,927,067

Metals

&

Mining

0.9%

j

CSN

Islands

XI

Corp.

,

Senior

Note

,

144A,

6.75

%

,

1/28/28

.......

Brazil

8,000,000

7,887,920

j

FMG

Resources

August

2006

Pty.

Ltd.

,

Senior

Note

,

144A,

5.125

%

,

5/15/24

...........................................

Australia

7,700,000

8,252,552

j

Novelis

Corp.

,

Senior

Bond

,

144A,

5.875

%

,

9/30/26

...........

United

States

14,000,000

14,463,820

j

SunCoke

Energy

Partners

LP

/

SunCoke

Energy

Partners

Finance

Corp.

,

Senior

Note

,

144A,

7.5

%

,

6/15/25

..................

United

States

4,400,000

3,946,250

34,550,542

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

23

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Multiline

Retail

0.1%

Dollar

Tree,

Inc.

,

Senior

Bond

,

4.2

%

,

5/15/28

.................

United

States

1,700,000

$

1,989,308

a,h,j

K2016470219

South

Africa

Ltd.

,

Senior

Secured

Note

,

144A,

PIK,

3

%

,

12/31/22

.......................................

South

Africa

10,283,232

—

a,h,j

K2016470260

South

Africa

Ltd.

,

Senior

Secured

Note

,

144A,

PIK,

25

%

,

12/31/22

......................................

South

Africa

3,001,471

15,007

2,004,315

Multi-Utilities

0.2%

Dominion

Energy,

Inc.

,

C

,

Senior

Note

,

3.375

%

,

4/01/30

........

United

States

8,500,000

9,579,330

Oil,

Gas

&

Consumable

Fuels

4.5%

j

Aker

BP

ASA

,

Senior

Bond,

144A,

4%,

1/15/31

........................

Norway

4,400,000

4,312,186

Senior

Note,

144A,

4.75%,

6/15/24

......................

Norway

5,900,000

6,069,010

Apache

Corp.

,

Senior

Note,

4.625%,

11/15/25

.........................

United

States

5,600,000

5,327,000

Senior

Note,

4.875%,

11/15/27

.........................

United

States

5,000,000

4,700,000

Canadian

Natural

Resources

Ltd.

,

Senior

Bond

,

2.95

%

,

7/15/30

..

Canada

3,700,000

3,628,671

Cenovus

Energy,

Inc.

,

Senior

Note

,

5.375

%

,

7/15/25

...........

Canada

11,900,000

12,552,016

Cheniere

Corpus

Christi

Holdings

LLC

,

Senior

Secured

Note

,

5.875

%

,

3/31/25

.....................................

United

States

6,400,000

7,249,358

Cheniere

Energy

Partners

LP

,

Senior

Secured

Note

,

5.25

%

,

10/01/25

..........................................

United

States

11,900,000

12,126,100

Comstock

Resources,

Inc.

,

Senior

Note

,

9.75

%

,

8/15/26

........

United

States

6,500,000

6,857,500

j

CVR

Energy,

Inc.

,

Senior

Note

,

144A,

5.25

%

,

2/15/25

..........

United

States

5,000,000

3,653,125

Energy

Transfer

Operating

LP

,

Senior

Note

,

4.05

%

,

3/15/25

......

United

States

1,300,000

1,367,995

EnLink

Midstream

LLC

,

Senior

Bond

,

5.375

%

,

6/01/29

.........

United

States

10,900,000

9,352,200

h,j

EnQuest

plc

,

Senior

Note

,

144A,

Reg

S,

PIK,

7

%

,

10/15/23

......

United

Kingdom

10,664,175

5,670,083

Enterprise

Products

Operating

LLC

,

Senior

Bond

,

4.8

%

,

2/01/49

..

United

States

1,200,000

1,390,771

EOG

Resources,

Inc.

,

Senior

Note

,

4.375

%

,

4/15/30

...........

United

States

1,000,000

1,177,182

Exxon

Mobil

Corp.

,

Senior

Bond

,

2.61

%

,

10/15/30

.............

United

States

4,700,000

4,991,116

j

Martin

Midstream

Partners

LP

/

Martin

Midstream

Finance

Corp.

,

Secured

Note,

144A,

11.5%,

2/28/25

.....................

United

States

16,387,122

14,953,249

Senior

Secured

Note,

144A,

10%,

2/29/24

.................

United

States

3,608,495

3,653,601

MPLX

LP

,

Senior

Note

,

2.65

%

,

8/15/30

.....................

United

States

15,000,000

14,454,767

Occidental

Petroleum

Corp.

,

Senior

Bond,

6.45%,

9/15/36

...........................

United

States

5,000,000

4,057,500

Senior

Note,

8.875%,

7/15/30

..........................

United

States

6,800,000

6,668,250

j

Rattler

Midstream

LP

,

Senior

Note

,

144A,

5.625

%

,

7/15/25

......

United

States

8,200,000

8,440,875

j

Sabine

Pass

Liquefaction

LLC

,

Senior

Secured

Note

,

144A,

4.5

%

,

5/15/30

...........................................

United

States

10,000,000

11,191,234

j

Seven

Generations

Energy

Ltd.

,

Senior

Note

,

144A,

5.375

%

,

9/30/25

Canada

1,700,000

1,624,103

Sunoco

LP

/

Sunoco

Finance

Corp.

,

Senior

Note

,

4.875

%

,

1/15/23

United

States

5,900,000

5,965,755

Williams

Cos.,

Inc.

(The)

,

Senior

Bond

,

3.5

%

,

11/15/30

.........

United

States

16,400,000

17,618,608

179,052,255

Paper

&

Forest

Products

0.1%

Suzano

Austria

GmbH

,

Senior

Bond

,

3.75

%

,

1/15/31

...........

Brazil

3,700,000

3,814,145

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Pharmaceuticals

1.0%

j

Bausch

Health

Americas,

Inc.

,

Senior

Note

,

144A,

8.5

%

,

1/31/27

..

United

States

5,000,000

$

5,474,175

j

Bausch

Health

Cos.,

Inc.

,

Senior

Bond

,

144A,

6.125

%

,

4/15/25

...

United

States

3,100,000

3,189,900

j

Bayer

US

Finance

II

LLC

,

Senior

Bond

,

144A,

4.375

%

,

12/15/28

..

Germany

11,700,000

13,485,827

j

Endo

Dac

/

Endo

Finance

LLC

/

Endo

Finco

,

Inc.

,

Secured

Note,

144A,

9.5%,

7/31/27

......................

United

States

6,580,000

7,070,769

Senior

Note,

144A,

6%,

6/30/28

........................

United

States

6,537,000

5,056,370

j

Par

Pharmaceutical,

Inc.

,

Senior

Secured

Note

,

144A,

7.5

%

,

4/01/27

United

States

1,716,000

1,821,208

j

Royalty

Pharma

plc

,

Senior

Bond

,

144A,

3.3

%

,

9/02/40

.........

United

States

5,300,000

5,202,097

41,300,346

Real

Estate

Management

&

Development

0.7%

j

China

Overseas

Finance

Cayman

VI

Ltd.

,

Senior

Note

,

Reg

S,

5.95

%

,

5/08/24

.....................................

China

7,500,000

8,581,013

j

Five

Point

Operating

Co.

LP

/

Five

Point

Capital

Corp.

,

Senior

Note

,

144A,

7.875

%

,

11/15/25

...............................

United

States

8,000,000

8,015,000

j

Howard

Hughes

Corp.

(The)

,

Senior

Note

,

144A,

5.375

%

,

8/01/28

.

United

States

10,000,000

10,081,250

26,677,263

Road

&

Rail

1.3%

Burlington

Northern

Santa

Fe

LLC

,

Senior

Bond

,

4.15

%

,

4/01/45

..

United

States

3,600,000

4,391,448

CSX

Corp.

,

Senior

Bond

,

4.1

%

,

3/15/44

....................

United

States

1,600,000

1,887,228

j

DAE

Funding

LLC

,

Senior

Note,

144A,

4.5%,

8/01/22

.......................

United

Arab

Emirates

2,000,000

2,015,000

Senior

Note,

144A,

5%,

8/01/24

........................

United

Arab

Emirates

14,000,000

14,026,250

j

Kazakhstan

Temir

Zholy

Finance

BV

,

Senior

Bond

,

144A,

6.95

%

,

7/10/42

...........................................

Kazakhstan

17,300,000

23,765,529

a,h

Onsite

Rental

Group

Operations

Pty.

Ltd.

,

PIK,

6.1

%

,

10/26/23

...

Australia

4,655,176

4,101,072

50,186,527

Semiconductors

&

Semiconductor

Equipment

0.3%

j

ON

Semiconductor

Corp.

,

Senior

Note

,

144A,

3.875

%

,

9/01/28

...

United

States

12,900,000

13,141,875

Software

0.3%

j

Blackboard,

Inc.

,

Secured

Note

,

144A,

10.375

%

,

11/15/24

.......

United

States

4,200,000

4,255,125

j

NortonLifeLock

,

Inc.

,

Senior

Note

,

144A,

5

%

,

4/15/25

..........

United

States

7,500,000

7,657,200

11,912,325

Specialty

Retail

0.4%

AutoNation,

Inc.

,

Senior

Bond

,

4.75

%

,

6/01/30

...............

United

States

1,900,000

2,228,957

L

Brands,

Inc.

,

Senior

Bond,

5.25%,

2/01/28

...........................

United

States

5,500,000

5,427,812

j

Senior

Note,

144A,

6.625%,

10/01/30

....................

United

States

1,600,000

1,683,000

j

Lithia

Motors,

Inc.

,

Senior

Bond

,

144A,

4.375

%

,

1/15/31

........

United

States

5,000,000

5,171,875

j,k

Party

City

Holdings,

Inc.

,

Senior

Secured

Note

,

144A,

FRN

,

5.75

%

,

(

6-month

USD

LIBOR

+

5

%

),

7/15/25

.....................

United

States

1,153,545

813,249

15,324,893

Textiles,

Apparel

&

Luxury

Goods

0.3%

j

Hanesbrands,

Inc.

,

Senior

Bond

,

144A,

4.875

%

,

5/15/26

........

United

States

10,000,000

10,827,800

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

25

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Corporate

Bonds

(continued)

Thrifts

&

Mortgage

Finance

1.1%

MGIC

Investment

Corp.

,

Senior

Note

,

5.25

%

,

8/15/28

..........

United

States

7,000,000

$

7,205,625

j

PennyMac

Financial

Services,

Inc.

,

Senior

Note

,

144A,

5.375

%

,

10/15/25

..........................................

United

States

11,500,000

11,740,925

j

Quicken

Loans

LLC

/

Quicken

Loans

Co-Issuer,

Inc.

,

Senior

Bond,

144A,

3.875%,

3/01/31

.....................

United

States

4,600,000

4,536,750

Senior

Note,

144A,

3.625%,

3/01/29

.....................

United

States

8,100,000

7,993,688

j

United

Shore

Financial

Services

LLC

,

Senior

Note

,

144A,

5.5

%

,

11/15/25

..........................................

United

States

11,400,000

11,553,330

43,030,318

Tobacco

0.5%

Altria

Group,

Inc.

,

Senior

Note

,

3.4

%

,

5/06/30

................

United

States

12,400,000

13,478,052

BAT

Capital

Corp.

,

Senior

Bond,

4.54%,

8/15/47

...........................

United

Kingdom

600,000

629,995

Senior

Note,

3.557%,

8/15/27

..........................

United

Kingdom

2,700,000

2,912,979

j

Imperial

Brands

Finance

plc

,

Senior

Note

,

144A,

3.875

%

,

7/26/29

.

United

Kingdom

2,200,000

2,423,592

Reynolds

American,

Inc.

,

Senior

Note

,

4.45

%

,

6/12/25

..........

United

Kingdom

1,900,000

2,147,413

21,592,031

Trading

Companies

&

Distributors

0.7%

j

Beacon

Roofing

Supply,

Inc.

,

Senior

Note

,

144A,

4.875

%

,

11/01/25

United

States

12,000,000

11,793,780

j

Herc

Holdings,

Inc.

,

Senior

Note

,

144A,

5.5

%

,

7/15/27

..........

United

States

5,300,000

5,459,000

j

WESCO

Distribution,

Inc.

,

Senior

Note,

144A,

7.125%,

6/15/25

.....................

United

States

4,700,000

5,070,477

Senior

Note,

144A,

7.25%,

6/15/28

......................

United

States

5,500,000

6,028,523

28,351,780

Wireless

Telecommunication

Services

1.2%

h,j

Digicel

Group

0.5

Ltd.

,

Senior

Note

,

144A,

PIK,

8

%

,

4/01/25

.....

Bermuda

1,107,585

368,949

Hughes

Satellite

Systems

Corp.

,

Senior

Note

,

6.625

%

,

8/01/26

...

United

States

8,000,000

8,693,480

Sprint

Communications,

Inc.

,

Senior

Note

,

6

%

,

11/15/22

........

United

States

10,000,000

10,716,200

T-Mobile

USA,

Inc.

,

Senior

Note,

5.125%,

4/15/25

..........................

United

States

6,000,000

6,168,690

j

Senior

Secured

Bond,

144A,

3.3%,

2/15/51

................

United

States

4,800,000

4,642,368

j

Senior

Secured

Note,

144A,

3.875%,

4/15/30

..............

United

States

13,400,000

15,069,774

j

Vmed

O2

UK

Financing

I

plc

,

Senior

Secured

Bond

,

144A,

4.25

%

,

1/31/31

...........................................

United

Kingdom

3,400,000

3,408,500

49,067,961

Total

Corporate

Bonds

(Cost

$1,847,118,640)

...................................

1,847,164,083

k,l

Senior

Floating

Rate

Interests

4.1%

Aerospace

&

Defense

0.0%

†

h

Alloy

FinCo

Ltd.,

Facility

Term

Loan,

B,

0.5%,

PIK,

(3-month

USD

LIBOR

+

0.5%),

3/06/25

...............................

Jersey

2,938,441

780,656

Airlines

0.0%

†

Delta

Air

Lines,

Inc.

/

SkyMiles

IP

Ltd.,

Initial

Term

Loan,

4.75%,

(6-month

USD

LIBOR

+

3.75%),

10/20/27

.................

United

States

568,379

567,313

JetBlue

Airways

Corp.,

Term

Loan,

6.25%,

(3-month

USD

LIBOR

+

5.25%),

6/17/24

.....................................

United

States

235,574

234,931

802,244

a

a

a

a

a

a

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

26

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

k,l

Senior

Floating

Rate

Interests

(continued)

Auto

Components

0.1%

Adient

US

LLC,

Initial

Term

Loan,

4.422%,

(3-month

USD

LIBOR

+

4.25%;

1-month

USD

LIBOR

+

4.25%),

5/06/24

.............

United

States

4,680,849

$

4,624,679

m

Highline

Aftermarket

Acquisition

LLC,

First

Lien,

Term

Loan,

TBD,

10/20/27

..........................................

United

States

228,432

223,577

4,848,256

a

a

a

a

a

a

Automobiles

0.0%

†

Thor

Industries,

Inc.,

Initial

USD

Term

Loan,

3.938%,

(1-month

USD

LIBOR

+

3.75%),

2/01/26

..............................

United

States

1,780,712

1,771,808

Biotechnology

0.1%

Grifols

Worldwide

Operations

Ltd.,

Dollar

Term

Loan,

B,

2.094%,

(1-

week

USD

LIBOR

+

2%),

11/15/27

.......................

Ireland

2,230,154

2,179,006

Capital

Markets

0.0%

†

Russell

Investments

US

Institutional

Holdco,

Inc.,

Initial

Term

Loan,

3.75%,

(3-month

USD

LIBOR

+

2.75%),

6/01/23

.............

United

States

630,769

626,959

Chemicals

0.0%

†

Axalta

Coating

Systems

Dutch

Holding

B

BV

(Axalta

Coating

Systems

U.S.

Holdings,

Inc.),

Dollar

Term

Loan,

B3,

1.97%,

(3-month

USD

LIBOR

+

1.75%),

6/01/24

..................

Netherlands

1,887,232

1,836,117

Commercial

Services

&

Supplies

0.1%

Harsco

Corp.,

Term

Loan,

B2,

3.25%,

(1-month

USD

LIBOR

+

2.25%),

12/06/24

....................................

United

States

2,040,990

2,035,030

Prime

Security

Services

Borrower

LLC,

First

Lien,

2019

Refinancing

Term

Loan,

B1,

4.25%,

(3-month

USD

LIBOR

+

3.25%;

1-month

USD

LIBOR

+

3.25%),

9/23/26

..........................

United

States

2,493,087

2,465,227

4,500,257

a

a

a

a

a

a

Containers

&

Packaging

0.0%

†

Berry

Global,

Inc.,

Term

Loan,

Y,

2.147%,

(1-month

USD

LIBOR

+

2%),

7/01/26

.......................................

United

States

1,484,944

1,439,853

Diversified

Financial

Services

0.1%

First

Eagle

Holdings,

Inc.,

2020

Refinancing

Term

Loan,

2.72%,

(3-month

USD

LIBOR

+

2.5%),

2/01/27

...................

United

States

2,069,786

2,015,599

Jefferies

Finance

LLC,

2020

Term

Loan,

4.5%,

(1-month

USD

LIBOR

+

3.75%),

9/30/27

...................................

United

States

801,473

794,460

2,810,059

a

a

a

a

a

a

Electric

Utilities

0.0%

†

EFS

Cogen

Holdings

I

LLC,

Term

Loan,

4.5%,

(3-month

USD

LIBOR

+

3.5%),

10/01/27

...................................

United

States

1,160,000

1,152,930

Entertainment

0.0%

†

Diamond

Sports

Group

LLC,

Term

Loan,

3.4%,

(1-month

USD

LIBOR

+

3.25%),

8/24/26

..............................

United

States

2,970,000

1,862,442

Food

&

Staples

Retailing

0.1%

Aramark

Intermediate

HoldCo

Corp.,

U.S.

Term

Loan,

B4,

1.898%,

(1-month

USD

LIBOR

+

1.75%),

1/15/27

..................

United

States

3,880,500

3,726,502

Food

Products

0.3%

B&G

Foods,

Inc.,

Term

Loan,

B4,

2.648%,

(1-month

USD

LIBOR

+

2.5%),

10/10/26

.....................................

United

States

689,010

686,340

CSM

Bakery

Solutions

Ltd.,

Second

Lien,

Term

Loan,

11%,

(3-month

USD

LIBOR

+

10%),

7/05/21

...........................

United

States

7,846,051

7,511,721

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

27

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

k,l

Senior

Floating

Rate

Interests

(continued)

Food

Products

(continued)

JBS

USA

Lux

SA,

New

Term

Loan,

2.148%,

(1-month

USD

LIBOR

+

2%),

5/01/26

.......................................

Luxembourg

2,243,128

$

2,194,643

10,392,704

a

a

a

a

a

a

Health

Care

Providers

&

Services

0.1%

m,n

CNT

Holdings

I

Corp.,

First

Lien,

Term

Loan

Facility,

TBD,

10/16/27

United

States

116,829

115,685

DaVita,

Inc.,

Term

Loan,

B1,

1.898%,

(1-month

USD

LIBOR

+

1.75%),

8/12/26

.....................................

United

States

1,985,000

1,945,300

n

Navicure

,

Inc.,

First

Lien,

Initial

Term

Loan,

4.148%,

(1-month

USD

LIBOR

+

4%),

10/22/26

...............................

United

States

520,000

508,516

2,569,501

a

a

a

a

a

a

Hotels,

Restaurants

&

Leisure

0.1%

Caesars

Resort

Collection

LLC,

Term

Loan

,

B,

2.898%,

(1-month

USD

LIBOR

+

2.75%),

12/23/24

.........

United

States

2,977,041

2,799,669

B1,

4.649%,

(1-month

USD

LIBOR

+

4.5%),

7/21/25

..........

United

States

114,883

111,544

2,911,213

a

a

a

a

a

a

Household

Products

1.0%

a

FGI

Operating

Co.

LLC,

Last

Out

Initial

Term

Loan,

13%,

(3-month

USD

LIBOR

+

10%;

3-month

USD

LIBOR

+

11%),

5/17/21

.....

United

States

28,662,305

28,662,305

a,h,o

FGI

Operating

Co.

LLC,

Term

Loan,

PIK,

(3-month

USD

LIBOR

+

11%),

5/16/22

......................................

United

States

15,104,489

9,828,738

38,491,043

a

a

a

a

a

a

IT

Services

0.4%

Aventiv

Technologies

LLC,

First

Lien,

Initial

Term

Loan,

5.5%,

(3-month

USD

LIBOR

+

4.5%),

11/01/24

..................

United

States

2,462,025

2,073,419

Aventiv

Technologies

LLC,

Second

Lien,

Initial

Term

Loan,

9.25%,

(6-month

USD

LIBOR

+

8.25%),

11/01/25

..................

United

States

7,588,688

4,766,189

m,n

Barracuda

Networks,

Inc.,

Term

Loan,

TBD,

2/12/25

...........

United

States

377,855

372,187

n

Milano

Acquisition

Corp.,

Term

Loan,

B,

4.75%,

(3-month

USD

LIBOR

+

4%),

10/01/27

...............................

United

States

330,000

325,326

Pitney

Bowes,

Inc.,

Incremental

Term

Loan,

B,

5.65%,

(1-month

USD

LIBOR

+

5.5%),

1/07/25

...............................

United

States

3,654,399

3,612,830

WEX,

Inc.,

Term

Loan,

B3,

2.398%,

(1-month

USD

LIBOR

+

2.25%),

5/15/26

...........................................

United

States

4,108,167

3,974,652

15,124,603

a

a

a

a

a

a

Leisure

Products

0.1%

NASCAR

Holdings

LLC,

Initial

Term

Loan,

2.902%,

(1-month

USD

LIBOR

+

2.75%),

10/19/26

.............................

United

States

3,108,741

3,032,421

Machinery

0.1%

Altra

Industrial

Motion

Corp.,

Term

Loan,

2.148%,

(1-month

USD

LIBOR

+

2%),

10/01/25

...............................

United

States

2,126,255

2,090,045

Navistar,

Inc.,

Term

Loan,

B,

3.65%,

(1-month

USD

LIBOR

+

3.5%),

11/06/24

..........................................

United

States

1,497,026

1,486,173

3,576,218

a

a

a

a

a

a

Media

0.1%

CSC

Holdings

LLC,

March

2017

Refinancing

Term

Loan,

2.398%,

(1-month

USD

LIBOR

+

2.25%),

7/17/25

..................

United

States

987,212

955,745

Gray

Television,

Inc.,

Term

Loan,

C,

2.649%,

(1-month

USD

LIBOR

+

2.5%),

1/02/26

......................................

United

States

339,690

331,538

Nexstar

Broadcasting,

Inc.,

Term

Loan,

B4,

2.899%,

(1-month

USD

LIBOR

+

2.75%),

9/18/26

..............................

United

States

958,343

936,301

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

28

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

k,l

Senior

Floating

Rate

Interests

(continued)

Media

(continued)

m,n

Virgin

Media

Bristol

LLC,

Term

Loan,

Q,

TBD,

1/31/29

..........

United

States

1,888,138

$

1,855,096

4,078,680

a

a

a

a

a

a

Multiline

Retail

0.0%

†

Harbor

Freight

Tools

USA,

Inc.,

Initial

Term

Loan

(2020),

4%,

(1-month

USD

LIBOR

+

3.25%),

10/19/27

.................

United

States

1,867,139

1,843,688

Oil,

Gas

&

Consumable

Fuels

0.3%

Buckeye

Partners

LP,

Initial

Term

Loan,

2.897%,

(1-month

USD

LIBOR

+

2.75%),

11/01/26

.............................

United

States

1,561,587

1,536,492

n,p

Fieldwood

Energy

LLC,

Debtor-in-possession

Facility

Term

Loan,

3.675%,

(1-month

USD

LIBOR;

1-month

USD

LIBOR

+

8.75%),

8/04/21

...........................................

United

States

386,753

388,687

o

Fieldwood

Energy

LLC,

First

Lien,

Closing

Date

Term

Loan,

(3-month

USD

LIBOR

+

5.25%),

4/11/22

..........................

United

States

32,439,645

7,136,722

UTEX

Industries,

Inc.,

Debtor-in-possession

Term

Loan,

10%,

(1-month

USD

LIBOR

+

9%),

2/08/21

.....................

United

States

137,013

137,698

o

UTEX

Industries,

Inc.,

First

Lien,

Initial

Term

Loan,

(3-month

USD

LIBOR

+

5%),

5/21/21

................................

United

States

2,138,576

658,682

o

UTEX

Industries,

Inc.,

Second

Lien,

Initial

Term

Loan,

(3-month

USD

LIBOR

+

7.25%),

5/20/22

..............................

United

States

955,410

23,885

9,882,166

a

a

a

a

a

a

Paper

&

Forest

Products

0.1%

Appvion

Operations,

Inc.,

Term

Loan,

7%,

(3-month

USD

LIBOR

+

6%),

6/12/26

.......................................

United

States

4,823,297

4,738,889

Pharmaceuticals

0.1%

Catalent

Pharma

Solutions,

Inc.,

Dollar

Term

Loan,

B2,

3.25%,

(1-month

USD

LIBOR

+

2.25%),

5/18/26

..................

United

States

2,162,734

2,157,782

Real

Estate

Management

&

Development

0.1%

Cushman

&

Wakefield

U.S.

Borrower

LLC,

Replacement

Term

Loan,

2.898%,

(1-month

USD

LIBOR

+

2.75%),

8/21/25

............

United

States

3,165,351

3,038,737

Road

&

Rail

0.2%

Avis

Budget

Car

Rental

LLC,

New

Term

Loan,

B,

2.4%,

(1-month

USD

LIBOR

+

2.25%),

8/06/27

..........................

United

States

1,666,401

1,509,134

a

Onsite

Rental

Group

Operations

Pty.

Ltd.,

Term

Loan,

B,

5.5%,

(1-month

USD

LIBOR

+

4.5%),

10/26/22

..................

Australia

3,404,855

3,129,152

Ventia

Midco

Pty.

Ltd.,

2017

Refinancing

USD

Term

Loan,

B,

5%,

(3-month

USD

LIBOR

+

4%),

5/21/26

.....................

Australia

2,283,412

2,254,869

6,893,155

a

a

a

a

a

a

Semiconductors

&

Semiconductor

Equipment

0.1%

ON

Semiconductor

Corp.,

2019

New

Replacement

Term

Loan,

B4,

2.148%,

(1-month

USD

LIBOR

+

2%),

9/19/26

..............

United

States

1,980,000

1,941,113

Software

0.5%

Aristocrat

Leisure

Ltd.,

Term

Loan,

B3,

1.959%,

(3-month

USD

LIBOR

+

1.75%),

10/19/24

.............................

Australia

1,000,348

976,340

n

Mitchell

International,

Inc.,

First

Lien,

Amendment

No.

2

New

Term

Loan

Facility,

4.75%,

(1-month

USD

LIBOR

+

4.25%),

11/29/24

.

United

States

410,000

398,520

a

WorkCapital

BSD

SARL,

Term

Loan,

16.254%,

(1-month

USD

LIBOR

+

16%),

11/02/22

..............................

United

States

20,000,000

19,911,128

21,285,988

a

a

a

a

a

a

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

29

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

k,l

Senior

Floating

Rate

Interests

(continued)

Technology

Hardware,

Storage

&

Peripherals

0.0%

†

m

Amentum

Government

Services

Holdings

LLC,

Incremental

Term

Loan,

TBD,

1/29/27

..................................

United

States

330,000

$

323,813

Cardtronics

USA,

Inc.,

Initial

Term

Loan,

5%,

(1-month

USD

LIBOR

+

4%),

6/29/27

.......................................

United

States

1,005,179

1,006,435

1,330,248

a

a

a

a

a

a

Total

Senior

Floating

Rate

Interests

(Cost

$206,974,996)

.........................

161,625,238

q

Marketplace

Loans

0.2%

Diversified

Financial

Services

0.2%

a

Lending

Club

-

LCX

PM,

8.46%

-

20.74%,

9/04/23

-

10/22/25

.....

United

States

2,147,066

2,146,500

a

Lending

Club

-

LCX,

6.46%

-

28.8%,

5/31/22

-

3/17/25

.........

United

States

4,020,853

3,694,034

a

Upgrade,

14.19%

-

30.51%,

11/05/22

-

2/20/25

...............

United

States

2,026,999

1,802,543

7,643,077

a

a

a

a

a

a

Total

Marketplace

Loans

(Cost

$8,194,918)

.....................................

7,643,077

r

Loan

Participations

and

Assignments

0.5%

b,j

Russian

Railways

Via

RZD

Capital

plc,

Senior

Note,

Reg

S,

5.7%,

4/05/22

...........................................

Russia

17,600,000

18,699,014

Total

Loan

Participations

and

Assignments

(Cost

$18,158,659)

...................

18,699,014

Foreign

Government

and

Agency

Securities

14.3%

j

African

Export-Import

Bank

(The)

,

Senior

Note

,

144A,

3.994

%

,

9/21/29

...........................................

Supranational

s

19,100,000

19,749,400

j

Angola

Government

Bond

,

Senior

Note

,

144A,

8.25

%

,

5/09/28

...

Angola

28,800,000

22,738,320

j

Banque

Centrale

de

Tunisie

,

Senior

Note

,

Reg

S,

5.625

%

,

2/17/24

Tunisia

24,800,000

EUR

24,903,313

j

Banque

Ouest

Africaine

de

Developpement

,

Senior

Note

,

144A,

5

%

,

7/27/27

...........................................

Supranational

s

11,500,000

12,374,000

j

Belarus

Government

Bond

,

Senior

Note,

144A,

7.625%,

6/29/27

......................

Belarus

11,400,000

11,346,420

Senior

Bond,

144A,

6.2%,

2/28/30

.......................

Belarus

12,300,000

11,659,219

Brazil

Notas

do

Tesouro

Nacional

,

10%,

1/01/23

.......................................

Brazil

34,402,000

BRL

6,580,791

t

Index

Linked,

6%,

5/15/23

.............................

Brazil

65,409,448

BRL

12,809,480

Colombia

Government

Bond

,

Senior

Bond,

3.875%,

4/25/27

..........................

Colombia

14,000,000

15,187,340

Senior

Bond,

9.85%,

6/28/27

...........................

Colombia

55,750,000,000

COP

18,701,641

Senior

Bond,

4.5%,

3/15/29

............................

Colombia

2,800,000

3,152,968

Senior

Bond,

5%,

6/15/45

.............................

Colombia

20,700,000

24,110,325

j

Dominican

Republic

Government

Bond

,

Senior

Note

,

144A,

8.9

%

,

2/15/23

...........................................

Dominican

Republic

838,300,000

DOP

14,508,727

Ecopetrol

SA

,

Senior

Bond

,

4.125

%

,

1/16/25

.................

Colombia

8,200,000

8,612,050

i,j

Electricite

de

France

SA

,

Junior

Sub.

Bond,

144A,

5.25%

to

1/29/23,

FRN

thereafter,

Perpetual

..........................................

France

25,000,000

25,927,250

Junior

Sub.

Bond,

144A,

5.625%

to

1/22/24,

FRN

thereafter,

Perpetual

..........................................

France

5,000,000

5,253,475

Equinor

ASA

,

Senior

Note

,

2.375

%

,

5/22/30

.................

Norway

7,000,000

7,287,483

j

Export-Import

Bank

of

India

,

Senior

Note

,

144A,

3.875

%

,

2/01/28

.

India

16,000,000

16,890,080

j

Gabon

Government

Bond

,

144A,

6.375%,

12/12/24

...............................

Gabon

10,443,918

9,977,858

Senior

Bond,

144A,

6.625%,

2/06/31

.....................

Gabon

17,150,000

15,362,831

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

30

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Foreign

Government

and

Agency

Securities

(continued)

Indonesia

Government

Bond

,

FR34,

12.8%,

6/15/21

................................

Indonesia

129,210,000,000

IDR

$

9,353,921

FR39,

11.75%,

8/15/23

...............................

Indonesia

29,150,000,000

IDR

2,347,248

FR44,

10%,

9/15/24

..................................

Indonesia

8,340,000,000

IDR

662,239

FR56,

8.375%,

9/15/26

...............................

Indonesia

363,988,000,000

IDR

27,750,196

j

Senior

Bond,

144A,

4.35%,

1/08/27

......................

Indonesia

8,100,000

9,283,693

j

Senior

Note,

144A,

3.85%,

7/18/27

.......................

Indonesia

22,000,000

24,666,398

j

Iraq

Government

Bond

,

Senior

Bond

,

144A,

5.8

%

,

1/15/28

......

Iraq

25,687,500

22,220,921

j

Israel

Electric

Corp.

Ltd.

,

Senior

Secured

Bond

,

144A,

Reg

S,

4.25

%

,

8/14/28

...........................................

Israel

9,200,000

10,581,242

j

Kazakhstan

Government

Bond

,

Senior

Bond

,

144A,

4.875

%

,

10/14/44

..........................................

Kazakhstan

17,700,000

23,539,938

Mexico

Government

Bond

,

Senior

Note,

4.15%,

3/28/27

...........................

Mexico

32,700,000

36,480,937

Senior

Note,

3.75%,

1/11/28

............................

Mexico

4,000,000

4,336,660

j

Panama

Notas

del

Tesoro

,

Senior

Note

,

144A,

3.75

%

,

4/17/26

...

Panama

6,400,000

6,933,536

Peru

Government

Bond

,

Senior

Bond

,

6.55

%

,

3/14/37

..........

Peru

8,600,000

13,044,437

j

Russia

Government

Bond

,

Senior

Note,

144A,

4.875%,

9/16/23

......................

Russia

6,800,000

7,457,560

Senior

Note,

Reg

S,

4.75%,

5/27/26

......................

Russia

12,000,000

13,739,400

South

Africa

Government

Bond

,

Senior

Bond

,

7

%

,

2/28/31

......

South

Africa

365,000,000

ZAR

18,373,574

j

Turkiye

Vakiflar

Bankasi

TAO

,

Covered

Note

,

Reg

S,

2.375

%

,

5/04/21

...........................................

Turkey

3,900,000

EUR

4,499,900

j

Ukraine

Government

Bond

,

Senior

Note,

144A,

7.75%,

9/01/23

.......................

Ukraine

4,355,000

4,542,465

Senior

Note,

144A,

7.75%,

9/01/24

.......................

Ukraine

4,355,000

4,518,792

Senior

Bond,

144A,

7.375%,

9/25/32

.....................

Ukraine

6,000,000

5,774,520

u

VRI,

GDP

Linked

Security,

Senior

Bond,

144A,

Reg

S,

5/31/40

..

Ukraine

9,990,000

8,685,606

t

Uruguay

Government

Bond

,

Index

Linked,

Senior

Bond

,

3.7

%

,

6/26/37

...........................................

Uruguay

918,721,097

UYU

23,886,749

Total

Foreign

Government

and

Agency

Securities

(Cost

$599,478,482)

............

569,812,903

U.S.

Government

and

Agency

Securities

4.3%

U.S.

Treasury

Bonds

,

7.125%,

2/15/23

.....................................

United

States

3,000,000

3,477,188

6.25%,

8/15/23

.....................................

United

States

4,000,000

4,675,000

6.875%,

8/15/25

.....................................

United

States

1,000,000

1,308,828

U.S.

Treasury

Notes

,

1.5%,

11/30/21

......................................

United

States

30,000,000

30,440,625

t

0.625%,

1/15/24

.....................................

United

States

22,950,000

27,031,797

t

0.125%,

7/15/24

.....................................

United

States

38,840,000

44,708,049

0.25%,

6/30/25

.....................................

United

States

41,000,000

40,807,813

t

0.375%,

7/15/25

.....................................

United

States

17,700,000

20,907,154

Total

U.S.

Government

and

Agency

Securities

(Cost

$166,890,947)

................

173,356,454

Asset-Backed

Securities

19.7%

Capital

Markets

0.1%

v

Merrill

Lynch

Mortgage

Investors

Trust

,

2005-A6

,

2A3

,

FRN

,

0.529

%

,

(

1-month

USD

LIBOR

+

0.38

%

),

8/25/35

..................

United

States

352,979

354,021

j,v

Mountain

View

CLO

XIV

Ltd.

,

2019-1A

,

C

,

144A,

FRN

,

3.137

%

,

(

3-month

USD

LIBOR

+

2.9

%

),

4/15/29

...................

United

States

4,500,000

4,410,075

4,764,096

a

A

a

a

a

a

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

31

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Asset-Backed

Securities

(continued)

Consumer

Finance

0.5%

v

Citibank

Credit

Card

Issuance

Trust

,

2017-A7

,

A7

,

FRN

,

0.51

%

,

(

1-month

USD

LIBOR

+

0.37

%

),

8/08/24

..................

United

States

20,069,000

$

20,165,977

Diversified

Financial

Services

10.3%

j,v

AMMC

CLO

XI

Ltd.

,

2012-11A,

BR2,

144A,

FRN,

1.814%,

(3-month

USD

LIBOR

+

1.6%),

4/30/31

......................................

United

States

3,000,000

2,917,150

2012-11A,

CR2,

144A,

FRN,

2.114%,

(3-month

USD

LIBOR

+

1.9%),

4/30/31

......................................

United

States

1,000,000

912,442

j,v

Antares

CLO

Ltd.

,

2018-1A

,

B

,

144A,

FRN

,

1.868

%

,

(

3-month

USD

LIBOR

+

1.65

%

),

4/20/31

..............................

United

States

17,500,000

16,462,498

j,v

Ares

L

CLO

Ltd.

,

2018-50A

,

B

,

144A,

FRN

,

1.937

%

,

(

3-month

USD

LIBOR

+

1.7

%

),

1/15/32

...............................

United

States

15,700,000

15,417,102

j,v

Ares

LII

CLO

Ltd.

,

2019-52A,

A2,

144A,

FRN,

1.866%,

(3-month

USD

LIBOR

+

1.65%),

4/22/31

.....................................

United

States

2,522,358

2,513,304

2019-52A,

C,

144A,

FRN,

2.896%,

(3-month

USD

LIBOR

+

2.68%),

4/22/31

.....................................

United

States

1,000,000

994,259

j,v

BCC

Middle

Market

CLO

LLC

,

2018-1A

,

A2

,

144A,

FRN

,

2.368

%

,

(

3-month

USD

LIBOR

+

2.15

%

),

10/20/30

.................

United

States

6,300,000

6,016,020

j,v

BlueMountain

CLO

Ltd.

,

2012-2A,

BR2,

144A,

FRN,

1.703%,

(3-month

USD

LIBOR

+

1.45%),

11/20/28

....................................

United

States

6,710,000

6,561,654

2012-2A,

CR2,

144A,

FRN,

2.253%,

(3-month

USD

LIBOR

+

2%),

11/20/28

..........................................

United

States

2,730,000

2,615,892

2014-2A,

CR2,

144A,

FRN,

2.418%,

(3-month

USD

LIBOR

+

2.2%),

10/20/30

.....................................

United

States

3,800,000

3,702,152

2016-3A,

CR,

144A,

FRN,

2.48%,

(3-month

USD

LIBOR

+

2.2%),

11/15/30

..........................................

United

States

300,000

289,641

2018-1A,

D,

144A,

FRN,

3.264%,

(3-month

USD

LIBOR

+

3.05%),

7/30/30

...........................................

United

States

5,000,000

4,383,893

j,v

BlueMountain

Fuji

EUR

CLO

V

DAC

,

5A

,

B

,

144A,

FRN

,

1.55

%

,

(

3-month

EURIBOR

+

1.55

%

),

1/15/33

....................

Ireland

6,200,000

EUR

7,106,797

j,v

BlueMountain

Fuji

US

CLO

III

Ltd.

,

2017-3A

,

C

,

144A,

FRN

,

1.937

%

,

(

3-month

USD

LIBOR

+

1.7

%

),

1/15/30

...................

United

States

1,250,000

1,176,621

j

BRAVO

Residential

Funding

Trust

,

2019-1,

A1C,

144A,

3.5%,

3/25/58

.......................

United

States

7,204,496

7,451,356

w

2019-2,

A3,

144A,

FRN,

3.5%,

10/25/44

...................

United

States

8,552,159

9,049,034

j,v

Burnham

Park

CLO

Ltd.

,

2016-1A

,

BR

,

144A,

FRN

,

1.718

%

,

(

3-month

USD

LIBOR

+

1.5

%

),

10/20/29

..................

United

States

3,500,000

3,423,135

j,v

Buttermilk

Park

CLO

Ltd.

,

2018-1A

,

C

,

144A,

FRN

,

2.337

%

,

(

3-month

USD

LIBOR

+

2.1

%

),

10/15/31

..................

United

States

9,730,950

9,454,712

j,v

Carlyle

Global

Market

Strategies

CLO

Ltd.

,

2013-3A,

BR,

144A,

FRN,

1.937%,

(3-month

USD

LIBOR

+

1.7%),

10/15/30

..........................................

United

States

300,000

281,640

2014-2RA,

B,

144A,

FRN,

2.105%,

(3-month

USD

LIBOR

+

1.825%),

5/15/31

....................................

United

States

580,000

547,651

2014-4RA,

C,

144A,

FRN,

3.137%,

(3-month

USD

LIBOR

+

2.9%),

7/15/30

...........................................

United

States

3,000,000

2,586,333

j,v

Carlyle

GMS

Finance

MM

CLO

LLC

,

2015-1A

,

A2R

,

144A,

FRN

,

2.437

%

,

(

3-month

USD

LIBOR

+

2.2

%

),

10/15/31

............

United

States

12,000,000

11,630,311

j,v

Catamaran

CLO

Ltd.

,

2014-2A

,

BR

,

144A,

FRN

,

3.168

%

,

(

3-month

USD

LIBOR

+

2.95

%

),

10/18/26

.........................

United

States

11,770,000

11,638,351

j

CF

Hippolyta

LLC

,

2020-1

,

A1

,

144A,

1.69

%

,

7/15/60

..........

United

States

4,234,866

4,290,343

j,k,w

CIM

Trust

,

2019-INV1,

A1,

144A,

FRN,

4%,

2/25/49

..................

United

States

7,616,826

7,909,159

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

32

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Asset-Backed

Securities

(continued)

Diversified

Financial

Services

(continued)

j,k,w

CIM

Trust,

(continued)

2019-INV2,

A3,

144A,

FRN,

4%,

5/25/49

..................

United

States

9,801,167

$

10,138,578

j,v

Cole

Park

CLO

Ltd.

,

2015-1A

,

BR

,

144A,

FRN

,

1.818

%

,

(

3-month

USD

LIBOR

+

1.6

%

),

10/20/28

..........................

United

States

3,530,000

3,469,071

j,k,w

Consumer

Loan

Underlying

Bond

Certificate

Issuer

Trust

I

,

2018-14,

PT,

144A,

FRN,

9.91%,

9/16/41

..................

United

States

1,787,531

1,689,559

2018-29,

PT,

144A,

FRN,

28.565%,

12/15/43

...............

United

States

1,304,596

1,090,489

2019-26,

PT,

144A,

FRN,

20.123%,

8/15/44

................

United

States

5,054,975

4,307,534

2019-31,

PT,

144A,

FRN,

19.138%,

9/15/44

................

United

States

4,612,870

3,952,531

2019-37,

PT,

144A,

FRN,

20.068%,

10/17/44

...............

United

States

4,747,020

4,207,236

2019-42,

PT,

144A,

FRN,

19.334%,

11/15/44

...............

United

States

5,128,246

4,426,734

2019-51,

PT,

144A,

FRN,

17.231%,

1/15/45

................

United

States

5,557,832

4,838,663

2019-52,

PT,

144A,

FRN,

17.6%,

1/15/45

..................

United

States

5,522,395

4,845,489

2019-S1,

PT,

144A,

FRN,

15.295%,

4/15/44

................

United

States

3,576,536

3,004,915

2019-S2,

PT,

144A,

FRN,

15.2%,

5/16/44

..................

United

States

2,684,525

2,240,213

2019-S3,

PT,

144A,

FRN,

14.692%,

6/15/44

................

United

States

3,500,697

2,952,643

2019-S4,

PT,

144A,

FRN,

12.487%,

8/15/44

................

United

States

4,033,809

3,419,550

2019-S5,

PT,

144A,

FRN,

13.461%,

9/15/44

................

United

States

3,859,218

3,449,892

2019-S6,

PT,

144A,

FRN,

11.881%,

10/17/44

...............

United

States

3,835,533

3,301,012

2019-S7,

PT,

144A,

FRN,

11.349%,

12/15/44

...............

United

States

3,355,259

2,917,990

2019-S8,

PT,

144A,

FRN,

10.753%,

1/15/45

................

United

States

4,111,285

3,565,808

2020-2,

PT,

144A,

FRN,

17.326%,

3/15/45

.................

United

States

5,434,651

4,700,441

2020-7,

PT,

144A,

FRN,

17.023%,

4/17/45

.................

United

States

3,440,361

2,991,188

w

CWABS

Asset-Backed

Certificates

Trust

,

2005-11

,

AF4

,

FRN

,

5.21

%

,

3/25/34

...........................................

United

States

627,882

630,874

j,v

Dryden

38

Senior

Loan

Fund

,

2015-38A

,

CR

,

144A,

FRN

,

2.237

%

,

(

3-month

USD

LIBOR

+

2

%

),

7/15/30

.....................

United

States

7,186,000

6,945,318

j,v

Dryden

42

Senior

Loan

Fund

,

2016-42A

,

DR

,

144A,

FRN

,

3.167

%

,

(

3-month

USD

LIBOR

+

2.93

%

),

7/15/30

..................

United

States

8,400,000

7,793,724

j,v

Dryden

55

CLO

Ltd.

,

2018-55A

,

D

,

144A,

FRN

,

3.087

%

,

(

3-month

USD

LIBOR

+

2.85

%

),

4/15/31

..........................

United

States

3,000,000

2,668,167

j,v

Eaton

Vance

CLO

Ltd.

,

2014-1RA

,

C

,

144A,

FRN

,

2.337

%

,

(

3-month

USD

LIBOR

+

2.1

%

),

7/15/30

...........................

United

States

1,972,575

1,917,865

j,v

Galaxy

XVIII

CLO

Ltd.

,

2018-28A

,

C

,

144A,

FRN

,

2.187

%

,

(

3-month

USD

LIBOR

+

1.95

%

),

7/15/31

..........................

United

States

3,070,000

2,951,642

j,v

Galaxy

XXVII

CLO

Ltd.

,

2018-27A

,

C

,

144A,

FRN

,

2.08

%

,

(

3-month

USD

LIBOR

+

1.8

%

),

5/16/31

...........................

United

States

3,600,000

3,460,609

j,v

HPS

Loan

Management

Ltd.

,

13A-18

,

C

,

144A,

FRN

,

2.387

%

,

(

3-month

USD

LIBOR

+

2.15

%

),

10/15/30

.................

United

States

4,950,000

4,776,920

j,v

LCM

XVI

LP

,

16A

,

BR2

,

144A,

FRN

,

1.987

%

,

(

3-month

USD

LIBOR

+

1.75

%

),

10/15/31

..................................

United

States

13,525,832

13,354,763

j,v

LCM

XVII

LP

,

17A,

BRR,

144A,

FRN,

1.837%,

(3-month

USD

LIBOR

+

1.6%),

10/15/31

..........................................

United

States

4,590,000

4,450,717

17A,

CRR,

144A,

FRN,

2.337%,

(3-month

USD

LIBOR

+

2.1%),

10/15/31

..........................................

United

States

4,240,000

4,071,039

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

33

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Asset-Backed

Securities

(continued)

Diversified

Financial

Services

(continued)

j,v

LCM

XVIII

LP

,

18A

,

DR

,

144A,

FRN

,

3.018

%

,

(

3-month

USD

LIBOR

+

2.8

%

),

4/20/31

....................................

United

States

6,860,000

$

5,986,588

j,v

Madison

Park

Euro

Funding

VIII

DAC

,

8A

,

BRN

,

144A,

FRN

,

1.7

%

,

(

3-month

EURIBOR

+

1.7

%

),

4/15/32

.....................

Ireland

4,100,000

EUR

4,746,447

j,w

Mill

City

Mortgage

Loan

Trust

,

2018-4

,

A1B

,

144A,

FRN

,

3.5

%

,

4/25/66

...........................................

United

States

15,221,926

16,164,860

j,v

Neuberger

Berman

CLO

XVIII

Ltd.

,

2014-18A

,

CR2

,

144A,

FRN

,

3.209

%

,

(

3-month

USD

LIBOR

+

3

%

),

10/21/30

.............

United

States

500,000

449,520

j,v

Neuberger

Berman

CLO

XXII

Ltd.

,

2016-22A

,

CR

,

144A,

FRN

,

2.418

%

,

(

3-month

USD

LIBOR

+

2.2

%

),

10/17/30

............

United

States

2,129,630

2,076,421

j,v

NZCG

Funding

Ltd.

,

2015-1A

,

A2R

,

144A,

FRN

,

1.784

%

,

(

3-month

USD

LIBOR

+

1.55

%

),

2/26/31

..........................

United

States

15,500,000

15,237,146

j,v

Octagon

Investment

Partners

28

Ltd.

,

2016-1A,

A2R,

144A,

FRN,

1.665%,

(3-month

USD

LIBOR

+

1.45%),

10/24/30

....................................

United

States

5,000,000

4,924,494

2016-1A,

BR,

144A,

FRN,

2.015%,

(3-month

USD

LIBOR

+

1.8%),

10/24/30

..........................................

United

States

3,914,730

3,862,056

j,v

Octagon

Investment

Partners

36

Ltd.

,

2018-1A

,

A1

,

144A,

FRN

,

1.207

%

,

(

3-month

USD

LIBOR

+

0.97

%

),

4/15/31

............

United

States

7,475,000

7,368,505

j,v

Octagon

Investment

Partners

37

Ltd.

,

2018-2A

,

C

,

144A,

FRN

,

3.065

%

,

(

3-month

USD

LIBOR

+

2.85

%

),

7/25/30

............

United

States

4,000,000

3,684,607

j,v

Octagon

Investment

Partners

38

Ltd.

,

2018-1A

,

C

,

144A,

FRN

,

3.168

%

,

(

3-month

USD

LIBOR

+

2.95

%

),

7/20/30

............

United

States

5,000,000

4,598,620

j,v

Octagon

Investment

Partners

XVI

Ltd.

,

2013-1A

,

DR

,

144A,

FRN

,

3.218

%

,

(

3-month

USD

LIBOR

+

3

%

),

7/17/30

..............

United

States

6,000,000

5,416,476

j,v

Octagon

Investment

Partners

XXIII

Ltd.

,

2015-1A

,

BR

,

144A,

FRN

,

1.437

%

,

(

3-month

USD

LIBOR

+

1.2

%

),

7/15/27

.............

United

States

4,590,000

4,469,736

v

Opteum

Mortgage

Acceptance

Corp.

,

2005-4

,

1APT

,

FRN

,

0.459

%

,

(

1-month

USD

LIBOR

+

0.31

%

),

11/25/35

..................

United

States

950,529

954,672

j,k,w

Prosper

Pass-Thru

Trust

III

,

2020-PT1,

A,

144A,

FRN,

8.796%,

3/15/26

.................

United

States

3,500,511

3,433,396

2020-PT2,

A,

144A,

FRN,

9.444%,

4/15/26

.................

United

States

3,801,819

3,733,453

2020-PT3,

A,

144A,

FRN,

7.183%,

5/15/26

.................

United

States

1,040,229

1,055,622

j,k,w

Provident

Funding

Mortgage

Trust

,

2019-1,

A2,

144A,

FRN,

3%,

12/25/49

....................

United

States

6,024,189

6,215,054

2020-1,

A3,

144A,

FRN,

3%,

2/25/50

.....................

United

States

5,564,889

5,669,376

j,v

Strata

CLO

I

Ltd.

,

2018-1A

,

B

,

144A,

FRN

,

2.437

%

,

(

3-month

USD

LIBOR

+

2.2

%

),

1/15/31

...............................

United

States

14,100,000

13,359,628

j,k

Upgrade

Master

Pass-Thru

Trust

,

w

2019-PT1,

A,

144A,

FRN,

12.429%,

6/15/25

................

United

States

2,028,960

1,825,080

2019-PT2,

A,

144A,

7.727%,

2/15/26

.....................

United

States

2,950,813

2,893,648

j,v

Voya

CLO

Ltd.

,

2013-2A,

A2AR,

144A,

FRN,

1.615%,

(3-month

USD

LIBOR

+

1.4%),

4/25/31

......................................

United

States

2,200,000

2,127,889

2013-2A,

BR,

144A,

FRN,

2.065%,

(3-month

USD

LIBOR

+

1.85%),

4/25/31

.....................................

United

States

5,770,000

5,507,004

2014-1A,

CR2,

144A,

FRN,

3.018%,

(3-month

USD

LIBOR

+

2.8%),

4/18/31

......................................

United

States

8,000,000

6,990,365

2015-2A,

BR,

144A,

FRN,

1.709%,

(3-month

USD

LIBOR

+

1.5%),

7/23/27

...........................................

United

States

9,290,000

9,148,273

2016-1A,

BR,

144A,

FRN,

2.018%,

(3-month

USD

LIBOR

+

1.8%),

1/20/31

...........................................

United

States

590,000

563,414

410,324,974

a

a

a

a

a

a

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

34

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Asset-Backed

Securities

(continued)

Thrifts

&

Mortgage

Finance

8.8%

v

FHLMC

Structured

Agency

Credit

Risk

Debt

Notes

,

2013-DN2,

M2,

FRN,

4.399%,

(1-month

USD

LIBOR

+

4.25%),

11/25/23

..........................................

United

States

9,290,229

$

8,557,630

2014-DN1,

M2,

FRN,

2.349%,

(1-month

USD

LIBOR

+

2.2%),

2/25/24

...........................................

United

States

870,135

871,204

2014-DN2,

M3,

FRN,

3.749%,

(1-month

USD

LIBOR

+

3.6%),

4/25/24

...........................................

United

States

18,523,984

17,577,709

2014-DN3,

M3,

FRN,

4.149%,

(1-month

USD

LIBOR

+

4%),

8/25/24

...........................................

United

States

720,337

728,636

2014-DN4,

M3,

FRN,

4.699%,

(1-month

USD

LIBOR

+

4.55%),

10/25/24

..........................................

United

States

8,595,791

8,765,722

2014-HQ1,

M3,

FRN,

4.249%,

(1-month

USD

LIBOR

+

4.1%),

8/25/24

...........................................

United

States

1,609,999

1,631,851

2014-HQ2,

M2,

FRN,

2.349%,

(1-month

USD

LIBOR

+

2.2%),

9/25/24

...........................................

United

States

1,365,538

1,366,209

2014-HQ3,

M3,

FRN,

4.899%,

(1-month

USD

LIBOR

+

4.75%),

10/25/24

..........................................

United

States

3,005,844

3,049,722

2015-DNA1,

M3,

FRN,

3.449%,

(1-month

USD

LIBOR

+

3.3%),

10/25/27

..........................................

United

States

2,559,798

2,645,345

2015-DNA3,

M3,

FRN,

4.849%,

(1-month

USD

LIBOR

+

4.7%),

4/25/28

...........................................

United

States

17,296,896

18,094,978

2015-HQ1,

M3,

FRN,

3.949%,

(1-month

USD

LIBOR

+

3.8%),

3/25/25

...........................................

United

States

1,485,220

1,489,559

2015-HQA1,

M3,

FRN,

4.849%,

(1-month

USD

LIBOR

+

4.7%),

3/25/28

...........................................

United

States

13,874,756

14,458,758

2016-DNA2,

M3,

FRN,

4.799%,

(1-month

USD

LIBOR

+

4.65%),

10/25/28

..........................................

United

States

12,505,853

13,044,403

2017-DNA1,

M2,

FRN,

3.399%,

(1-month

USD

LIBOR

+

3.25%),

7/25/29

...........................................

United

States

7,063,901

7,296,751

2017-DNA2,

M2,

FRN,

3.599%,

(1-month

USD

LIBOR

+

3.45%),

10/25/29

..........................................

United

States

5,868,312

6,058,653

2017-DNA3,

M2,

FRN,

2.649%,

(1-month

USD

LIBOR

+

2.5%),

3/25/30

...........................................

United

States

26,312,269

26,714,336

2017-HQA1,

M2,

FRN,

3.699%,

(1-month

USD

LIBOR

+

3.55%),

8/25/29

...........................................

United

States

24,183,120

24,699,510

2017-HQA2,

M2,

FRN,

2.799%,

(1-month

USD

LIBOR

+

2.65%),

12/25/29

..........................................

United

States

2,692,653

2,686,497

v

FNMA

Connecticut

Avenue

Securities

,

2013-C01,

M2,

FRN,

5.399%,

(1-month

USD

LIBOR

+

5.25%),

10/25/23

..........................................

United

States

10,677,235

10,584,620

2014-C01,

M2,

FRN,

4.549%,

(1-month

USD

LIBOR

+

4.4%),

1/25/24

...........................................

United

States

12,847,195

12,227,014

2014-C02,

1M2,

FRN,

2.749%,

(1-month

USD

LIBOR

+

2.6%),

5/25/24

...........................................

United

States

10,632,949

9,407,080

2014-C03,

1M2,

FRN,

3.149%,

(1-month

USD

LIBOR

+

3%),

7/25/24

...........................................

United

States

22,954,534

20,446,671

2014-C03,

2M2,

FRN,

3.049%,

(1-month

USD

LIBOR

+

2.9%),

7/25/24

...........................................

United

States

2,624,077

2,621,927

2015-C01,

1M2,

FRN,

4.449%,

(1-month

USD

LIBOR

+

4.3%),

2/25/25

...........................................

United

States

5,111,514

5,209,534

2015-C01,

2M2,

FRN,

4.699%,

(1-month

USD

LIBOR

+

4.55%),

2/25/25

...........................................

United

States

3,767,209

3,827,137

2015-C02,

1M2,

FRN,

4.149%,

(1-month

USD

LIBOR

+

4%),

5/25/25

...........................................

United

States

15,057,464

15,227,307

2015-C02,

2M2,

FRN,

4.149%,

(1-month

USD

LIBOR

+

4%),

5/25/25

...........................................

United

States

5,282,646

5,369,745

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

35

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Asset-Backed

Securities

(continued)

Thrifts

&

Mortgage

Finance

(continued)

v

FNMA

Connecticut

Avenue

Securities,

(continued)

2015-C03,

1M2,

FRN,

5.149%,

(1-month

USD

LIBOR

+

5%),

7/25/25

...........................................

United

States

17,910,787

$

18,303,726

2015-C03,

2M2,

FRN,

5.149%,

(1-month

USD

LIBOR

+

5%),

7/25/25

...........................................

United

States

6,565,385

6,737,591

2016-C02,

1M2,

FRN,

6.149%,

(1-month

USD

LIBOR

+

6%),

9/25/28

...........................................

United

States

5,396,756

5,696,580

2016-C04,

1M2,

FRN,

4.399%,

(1-month

USD

LIBOR

+

4.25%),

1/25/29

...........................................

United

States

6,560,179

6,806,195

2016-C05,

2M2,

FRN,

4.599%,

(1-month

USD

LIBOR

+

4.45%),

1/25/29

...........................................

United

States

3,651,837

3,789,380

2016-C06,

1M2,

FRN,

4.399%,

(1-month

USD

LIBOR

+

4.25%),

4/25/29

...........................................

United

States

1,663,422

1,726,829

2016-C07,

2M2,

FRN,

4.499%,

(1-month

USD

LIBOR

+

4.35%),

5/25/29

...........................................

United

States

2,551,991

2,665,099

2017-C01,

1M2,

FRN,

3.699%,

(1-month

USD

LIBOR

+

3.55%),

7/25/29

...........................................

United

States

16,152,108

16,665,994

2017-C03,

1M2,

FRN,

3.149%,

(1-month

USD

LIBOR

+

3%),

10/25/29

..........................................

United

States

22,828,778

23,092,363

2017-C04,

2M2,

FRN,

2.999%,

(1-month

USD

LIBOR

+

2.85%),

11/25/29

..........................................

United

States

6,141,829

6,163,853

2017-C05,

1M2,

FRN,

2.349%,

(1-month

USD

LIBOR

+

2.2%),

1/25/30

...........................................

United

States

15,464,270

15,336,681

351,642,799

a

a

a

a

a

a

Total

Asset-Backed

Securities

(Cost

$833,992,434)

..............................

786,897,846

Commercial

Mortgage-Backed

Securities

0.1%

Diversified

Financial

Services

0.1%

w

Commercial

Mortgage

Trust

,

2006-GG7

,

AJ

,

FRN

,

6.012

%

,

7/10/38

United

States

2,421,618

2,180,061

v

MortgageIT

Trust

,

2004-1

,

A2

,

FRN

,

1.049

%

,

(

1-month

USD

LIBOR

+

0.9

%

),

11/25/34

....................................

United

States

1,297,363

1,332,470

3,512,531

a

a

a

a

a

a

Total

Commercial

Mortgage-Backed

Securities

(Cost

$3,590,200)

.................

3,512,531

Mortgage-Backed

Securities

7.7%

x

Federal

Home

Loan

Mortgage

Corp.

(FHLMC)

Adjustable

Rate

0.0%

†

FHLMC,

3.848%,

(1-year

CMT

T-Note

+/-

MBS

Margin),

1/01/33

..

United

States

10,504

10,507

Federal

Home

Loan

Mortgage

Corp.

(FHLMC)

Fixed

Rate

0.0%

†

FHLMC

Gold

Pools,

15

Year,

5%,

7/01/22

...................

United

States

16,347

17,259

FHLMC

Gold

Pools,

20

Year,

5%,

5/01/27

-

5/01/30

............

United

States

240,340

266,658

FHLMC

Gold

Pools,

20

Year,

6.5%,

10/01/21

.................

United

States

847

945

FHLMC

Gold

Pools,

20

Year,

7%,

9/01/21

...................

United

States

874

887

FHLMC

Gold

Pools,

30

Year,

4.5%,

10/01/40

.................

United

States

99,716

112,201

FHLMC

Gold

Pools,

30

Year,

5%,

3/01/34

-

2/01/38

............

United

States

524,571

594,085

FHLMC

Gold

Pools,

30

Year,

5.5%,

6/01/33

-

6/01/36

..........

United

States

615,471

708,582

FHLMC

Gold

Pools,

30

Year,

6%,

6/01/33

-

6/01/37

............

United

States

233,501

266,521

FHLMC

Gold

Pools,

30

Year,

6.5%,

12/01/25

-

6/01/36

.........

United

States

78,097

90,439

FHLMC

Gold

Pools,

30

Year,

7%,

4/01/28

-

8/01/32

............

United

States

13,305

14,129

FHLMC

Gold

Pools,

30

Year,

7.5%,

1/01/26

-

1/01/31

..........

United

States

3,920

4,704

FHLMC

Gold

Pools,

30

Year,

8%,

11/01/25

-

1/01/26

...........

United

States

57

57

FHLMC

Gold

Pools,

30

Year,

9%,

12/01/24

..................

United

States

41

45

2,076,512

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

36

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Mortgage-Backed

Securities

(continued)

x

Federal

National

Mortgage

Association

(FNMA)

Adjustable

Rate

0.0%

†

FNMA,

3.2%,

(1-year

CMT

T-Note

+/-

MBS

Margin),

12/01/34

....

United

States

91,556

$

93,865

Federal

National

Mortgage

Association

(FNMA)

Fixed

Rate

6.6%

FNMA,

15

Year,

2.5%,

7/01/27

...........................

United

States

176,409

183,672

FNMA,

15

Year,

5.5%,

3/01/21

-

4/01/22

....................

United

States

5,658

5,690

FNMA,

20

Year,

4.5%,

3/01/28

...........................

United

States

53,973

58,295

FNMA,

20

Year,

5%,

9/01/23

-

6/01/31

......................

United

States

302,731

335,149

FNMA,

30

Year,

3%,

9/01/48

-

9/01/50

......................

United

States

30,412,928

32,029,239

FNMA,

30

Year,

4.5%,

2/01/41

...........................

United

States

282,774

318,246

FNMA,

30

Year,

5%,

10/01/35

............................

United

States

561,539

647,747

FNMA,

30

Year,

5.5%,

9/01/33

-

12/01/35

...................

United

States

793,946

920,362

FNMA,

30

Year,

6%,

6/01/34

-

5/01/38

......................

United

States

1,763,581

2,025,972

FNMA,

30

Year,

6.5%,

3/01/28

-

10/01/37

...................

United

States

239,076

279,311

FNMA,

30

Year,

7.5%,

10/01/29

...........................

United

States

4,091

4,781

FNMA,

30

Year,

8%,

1/01/25

-

5/01/26

......................

United

States

1,816

2,031

y

FNMA,

Single-family,

15

Year,

1.5%,

11/25/35

................

United

States

15,823,000

16,150,586

y

FNMA,

Single-family,

15

Year,

2%,

11/25/35

.................

United

States

46,650,000

48,373,863

y

FNMA,

Single-family,

30

Year,

2%,

11/25/50

.................

United

States

52,496,000

54,126,246

y

FNMA,

Single-family,

30

Year,

2.5%,

11/25/50

................

United

States

102,832,000

107,150,140

262,611,330

Government

National

Mortgage

Association

(GNMA)

Fixed

Rate

1.1%

GNMA

I,

30

Year,

8%,

2/15/25

............................

United

States

26

28

GNMA

I,

Single-family,

30

Year,

5%,

6/15/34

-

7/15/34

..........

United

States

89,734

103,133

GNMA

I,

Single-family,

30

Year,

5.5%,

2/15/33

-

6/15/36

........

United

States

274,085

312,332

GNMA

I,

Single-family,

30

Year,

6%,

8/15/36

.................

United

States

19,008

22,714

GNMA

I,

Single-family,

30

Year,

6.5%,

2/15/29

-

3/15/32

........

United

States

34,364

37,927

GNMA

I,

Single-family,

30

Year,

7%,

11/15/27

-

5/15/28

.........

United

States

5,207

5,252

GNMA

I,

Single-family,

30

Year,

7.5%,

9/15/23

-

5/15/27

........

United

States

526

545

GNMA

I,

Single-family,

30

Year,

8%,

7/15/26

-

9/15/27

..........

United

States

2,603

2,712

GNMA

I,

Single-family,

30

Year,

8.5%,

8/15/24

................

United

States

36

37

GNMA

I,

Single-family,

30

Year,

9%,

1/15/25

.................

United

States

139

140

GNMA

I,

Single-family,

30

Year,

9.5%,

6/15/25

................

United

States

312

313

y

GNMA

II,

Single-family,

30

Year,

2%,

11/15/50

................

United

States

20,751,000

21,538,079

y

GNMA

II,

Single-family,

30

Year,

2.5%,

11/15/50

..............

United

States

20,554,000

21,527,103

GNMA

II,

Single-family,

30

Year,

5%,

9/20/33

-

11/20/33

.........

United

States

146,376

166,619

GNMA

II,

Single-family,

30

Year,

5.5%,

6/20/34

...............

United

States

74,876

88,847

GNMA

II,

Single-family,

30

Year,

6%,

11/20/34

................

United

States

78,026

90,750

GNMA

II,

Single-family,

30

Year,

6.5%,

7/20/28

-

12/20/31

.......

United

States

42,475

49,528

GNMA

II,

Single-family,

30

Year,

7.5%,

4/20/32

...............

United

States

14,489

16,793

43,962,852

Total

Mortgage-Backed

Securities

(Cost

$307,301,265)

...........................

308,755,066

Municipal

Bonds

1.6%

California

0.3%

City

of

San

Francisco,

Public

Utilities

Commission

Water,

Revenue,

2019

A,

Refunding,

3.473%,

11/01/43

.....................

United

States

2,310,000

2,423,675

San

Bernardino

Community

College

District,

GO,

2019

A-1,

3.271%,

8/01/39

...........................................

United

States

2,160,000

2,306,124

San

Diego

County

Regional

Transportation

Commission,

Revenue,

2019

A,

Refunding,

3.248%,

4/01/48

.....................

United

States

2,360,000

2,422,658

San

Jose

Redevelopment

Agency

Successor

Agency,

Tax

Allocation,

Senior

Lien,

2017A-T,

Refunding,

3.25%,

8/01/29

............

United

States

5,675,000

6,091,942

13,244,399

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

37

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

Municipal

Bonds

(continued)

Colorado

0.1%

Metro

Wastewater

Reclamation

District,

Revenue,

2019

B,

Refunding,

3.158%,

4/01/41

............................

United

States

4,880,000

$

5,123,415

Hawaii

0.0%

†

City

&

County

Honolulu,

Wastewater

System,

Revenue,

2019

B,

Refunding,

2.585%,

7/01/28

............................

United

States

1,180,000

1,253,809

Massachusetts

0.1%

Massachusetts

School

Building

Authority,

Revenue,

2019

B,

Refunding,

3.395%,

10/15/40

...........................

United

States

2,905,000

3,034,127

New

Jersey

0.1%

New

Jersey

Transportation

Trust

Fund

Authority,

Revenue,

2019

B,

Refunding,

4.131%,

6/15/42

............................

United

States

3,535,000

3,310,068

New

York

0.2%

z

Metropolitan

Transportation

Authority,

Revenue,

2020

E,

Refunding,

4%,

11/15/45

.......................................

United

States

3,265,000

3,283,741

New

York

State

Dormitory

Authority,

State

University

of

New

York,

Revenue,

2019B,

Refunding,

3.142%,

7/01/43

..............

United

States

3,145,000

3,266,649

6,550,390

Ohio

0.1%

State

of

Ohio,

Cleveland

Clinic

Health

System

Obligated

Group,

Revenue,

2019G,

Refunding,

3.276%,

1/01/42

..............

United

States

1,975,000

2,136,061

Oregon

0.1%

State

of

Oregon,

Department

of

Transportation,

Revenue,

Senior

Lien,

2019

B,

Refunding,

3.168%,

11/15/38

................

United

States

3,930,000

4,231,667

Pennsylvania

0.1%

University

of

Pittsburgh-of

the

Commonwealth

System

of

Higher

Education,

Revenue,

2017

C,

Refunding,

3.005%,

9/15/41

.....

United

States

5,500,000

5,714,225

Texas

0.3%

City

of

Austin,

Electric

Utility,

Revenue,

2008,

Refunding,

AGMC

Insured,

6.262%,

11/15/32

.............................

United

States

310,000

396,940

State

of

Texas,

GO,

2019,

Refunding,

3.211%,

4/01/44

.........

United

States

5,895,000

6,271,042

Texas

State

University

System

,

Revenue,

2019

B,

Refunding,

2.938%,

3/15/33

..............

United

States

2,315,000

2,499,042

Revenue,

2019

B,

Refunding,

3.289%,

3/15/40

..............

United

States

1,965,000

2,109,742

11,276,766

Utah

0.2%

Salt

Lake

City

Corp.,

Revenue,

2019B,

Refunding,

3.102%,

4/01/38

United

States

2,750,000

2,928,062

Utah

Transit

Authority,

Revenue,

Senior

Lien,

2019

B,

Refunding,

3.443%,

12/15/42

....................................

United

States

3,930,000

4,031,866

6,959,928

Total

Municipal

Bonds

(Cost

$59,973,937)

......................................

62,834,855

Shares/Units

Escrows

and

Litigation

Trusts

0.0%

†

a

Millennium

Corporate

Claim

Trust,

Escrow

Account

............

United

States

8,736,450

—

a

Millennium

Lender

Claim

Trust,

Escrow

Account

..............

United

States

8,736,450

—

a,c,f

Remington

Outdoor

Co.,

Inc.,

Litigation

Units

.................

United

States

124,500

—

b

Sanchez

Energy

Corp.,

Escrow

Account

....................

United

States

6,000,000

60,000

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

38

a

a

Country

Shares/Units

a

Value

a

a

a

a

a

a

Escrows

and

Litigation

Trusts

(continued)

a,b

Vistra

Energy

Corp.,

Escrow

Account

......................

United

States

30,000,000

$

45,000

Total

Escrows

and

Litigation

Trusts

(Cost

$869,132)

.............................

105,000

Total

Long

Term

Investments

(Cost

$4,245,742,245)

.............................

4,061,217,881

a

Short

Term

Investments

3.2%

a

a

Principal

Amount

*

a

Value

a

a

a

a

a

a

Repurchase

Agreements

1.9%

aa

Joint

Repurchase

Agreement,

0.058%,

11/02/20

(Maturity

Value

$75,752,118)

BNP

Paribas

Securities

Corp.

(Maturity

Value

$40,866,753)

Deutsche

Bank

Securities,

Inc.

(Maturity

Value

$18,538,815)

HSBC

Securities

(USA),

Inc.

(Maturity

Value

$16,346,550)

Collateralized

by

U.S.

Government

Agency

Securities,

3.5%

-

5%,

9/20/45

-

3/20/50;

U.S.

Treasury

Bonds,

7.13%

-

8.13%,

2/15/21

-

11/15/24;

U.S.

Treasury

Bond,

Index

Linked,

2.38%,

1/15/25;

U.S.

Treasury

Note,

1.63%,

2/20/46;

and

U.S.

Treasury

Note,

Index

Linked,

0.13%,

4/15/21

(valued

at

$77,272,881)

.............

75,751,755

75,751,755

Total

Repurchase

Agreements

(Cost

$75,751,755)

...............................

75,751,755

Country

Shares

a

Money

Market

Funds

1.3%

g,bb

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

51,931,261

51,931,261

Total

Money

Market

Funds

(Cost

$51,931,261)

..................................

51,931,261

cc

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

0.0%

†

a

a

a

a

a

Money

Market

Funds

0.0%

†

g,bb

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

........

United

States

27,000

27,000

Principal

Amount

*

Repurchase

Agreements

0.0%

†

aa

Joint

Repurchase

Agreement,

BNP

Paribas

SA,

0.07%,

11/02/20

(Maturity

Value

$7,958)

Collateralized

by

U.S.

Treasury

Bonds,

6.875%

-

8.125%,

5/15/21

-

8/15/25;

U.S.

Treasury

Notes,

0.25%

-

3%,

2/15/21

-

9/30/25,

U.S.

Treasury

Note,

Index

Linked,

1.125%,

1/15/21;

and

U.S.

Treasury

Bill,

Discount

Note,

3/25/21

(valued

at

$8,117)

..............

7,958

7,958

Total

Investments

from

Cash

Collateral

Received

for

Loaned

Securities

(Cost

$34,958)

...............................................................

34,958

Total

Short

Term

Investments

(Cost

$127,717,974

)

...............................

127,717,974

a

Total

Investments

(Cost

$4,373,460,219)

105.1%

................................

$4,188,935,855

Other

Assets,

less

Liabilities

(5.1)%

...........................................

(205,043,581)

Net

Assets

100.0%

...........................................................

$3,983,892,274

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

†

Rounds

to

less

than

0.1%

of

net

assets.

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

39

a

Fair

valued

using

significant

unobservable

inputs.

See

Note

14

regarding

fair

value

measurements.

b

Non-income

producing.

c

See

Note

12

regarding

holdings

of

5%

voting

securities.

d

A

portion

or

all

of

the

security

is

on

loan

at

October

31,

2020.

See

Note

1(e)

e

The

security

is

owned

by

FT

Holdings

Corp.

II,

a

wholly-owned

subsidiary

of

the

Fund.

See

Note

1(h).

f

See

Note

9

regarding

restricted

securities.

g

See

Note

3(f)

regarding

investments

in

affiliated

management

investment

companies.

h

Income

may

be

received

in

additional

securities

and/or

cash.

i

Perpetual

security

with

no

stated

maturity

date.

j

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

October

31,

2020,

the

aggregate

value

of

these

securities

was

$1,881,035,668,

representing

47.2%

of

net

assets.

k

The

coupon

rate

shown

represents

the

rate

at

period

end.

l

See

Note

1(k)

regarding

senior

floating

rate

interests.

m

A

portion

or

all

of

the

security

represents

an

unsettled

loan

commitment.

The

coupon

rate

is

to-be

determined

(TBD)

at

the

time

of

the

settlement

and

will

be

based

upon

a

reference

index/floor

plus

a

spread.

n

A

portion

or

all

of

the

security

purchased

on

a

delayed

delivery

basis.

See

Note

1(k).

o

See

Note

7

regarding

defaulted

securities.

p

See

Note

10

regarding

unfunded

loan

commitments.

q

See

Note

1(i)

regarding

Marketplace

Lending.

r

See

Note

1(g)

regarding

loan

participations

and

assignments.

s

A

supranational

organization

is

an

entity

formed

by

two

or

more

central

governments

through

international

treaties.

t

Principal

amount

of

security

is

adjusted

for

inflation.

See

Note

1(m).

u

The

principal

represents

the

notional

amount.

See

Note

1(d)

regarding

value

recovery

instruments.

v

The

coupon

rate

shown

represents

the

rate

inclusive

of

any

caps

or

floors,

if

applicable,

in

effect

at

period

end.

w

Adjustable

rate

security

with

an

interest

rate

that

is

not

based

on

a

published

reference

index

and

spread.  The

rate

is

based

on

the

structure

of

the

agreement

and

current

market

conditions.

The

coupon

rate

shown

represents

the

rate

at

period

end.

x

Adjustable

Rate

Mortgage-Backed

Security

(ARM);

the

rate

shown

is

the

effective

rate

at

period

end.

ARM

rates

are

not

based

on

a

published

reference

rate

and

spread,

but

instead

pass-through

weighted

average

interest

income

inclusive

of

any

caps

or

floors,

if

applicable,

from

the

underlying

mortgage

loans

in

which

the

majority

of

mortgages

pay

interest

based

on

the

index

shown

at

their

designated

reset

dates

plus

a

spread,

less

the

applicable

servicing

and

guaranty

fee

(MBS

margin).

y

Security

purchased

on

a

to-be-announced

(TBA)

basis.

See

Note

1(d).

z

Security

purchased

on

a

when-issued

basis.

See

Note

1(d).

aa

See

Note

1(c)

regarding

joint

repurchase

agreement.

bb

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

cc

See

Note

1(e)

regarding

securities

on

loan.

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

40

At

October

31,

2020,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(f). 

At

October

31,

2020,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

f

). 

At

October

31,

2020,

the

Fund

had

the

following credit

default

swap

contracts outstanding.

See

Note

1

(

f

). 

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Interest

rate

contracts

Australia

3

Year

Bonds

........................

Long

1,173

$

96,841,491

12/15/20

$

386,755

Canada

10

Year

Bonds

........................

Long

135

15,305,810

12/18/20

(88,397)

U.S.

Treasury

10

Year

Notes

....................

Long

234

32,343,188

12/21/20

(194,102)

U.S.

Treasury

5

Year

Notes

.....................

Long

1,002

125,852,766

12/31/20

(222,350)

U.S.

Treasury

Ultra

Bonds

......................

Long

136

29,240,000

12/21/20

(1,074,453)

Total

Futures

Contracts

......................................................................

$(1,192,547)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

Brazilian

Real

......

JPHQ

Buy

3,778,007

671,646

11/09/20

$

—

$

(13,284)

Brazilian

Real

......

JPHQ

Sell

3,778,007

707,128

11/09/20

48,766

—

Japanese

Yen

......

JPHQ

Buy

1,080,000,000

10,224,174

11/12/20

91,589

—

Singapore

Dollar

....

JPHQ

Sell

56,900,000

41,439,381

11/12/20

—

(215,267)

South

African

Rand

..

JPHQ

Buy

65,000,000

3,631,894

11/16/20

355,934

—

Brazilian

Real

......

JPHQ

Sell

119,495,000

21,711,757

11/30/20

904,867

—

Indonesian

Rupiah

..

JPHQ

Sell

190,000,000,000

12,367,376

11/30/20

—

(468,644)

Australian

Dollar

....

JPHQ

Sell

19,000,000

13,826,338

12/07/20

468,901

—

Canadian

Dollar

....

JPHQ

Sell

28,000,000

21,292,776

12/14/20

270,689

—

Euro

.............

JPHQ

Buy

21,738,000

25,654,753

12/14/20

—

(313,560)

Euro

.............

JPHQ

Sell

56,000,000

66,230,640

12/14/20

948,334

—

Japanese

Yen

......

JPHQ

Buy

4,000,000,000

37,708,101

12/14/20

516,494

—

Mexican

Peso

......

JPHQ

Buy

297,700,000

14,004,640

12/21/20

—

(46,686)

Canadian

Dollar

....

JPHQ

Sell

8,500,000

6,403,978

1/11/21

21,056

—

Turkish

Lira

........

JPHQ

Buy

62,000,000

7,769,423

1/11/21

—

(627,348)

Mexican

Peso

......

JPHQ

Buy

181,500,000

8,444,276

1/19/21

37,690

—

Australian

Dollar

....

DBAB

Sell

3,000,000

2,121,060

1/25/21

11,433

—

Australian

Dollar

....

JPHQ

Sell

52,000,000

36,767,510

1/25/21

200,643

—

Brazilian

Real

......

JPHQ

Sell

3,778,007

669,919

2/08/21

13,679

—

Canadian

Dollar

....

JPHQ

Sell

23,800,000

18,159,552

2/25/21

286,245

—

Japanese

Yen

......

JPHQ

Buy

4,850,000,000

46,061,395

2/25/21

337,498

—

Total

Forward

Exchange

Contracts

...................................................

$4,513,818

$(1,684,789)

Net

unrealized

appreciation

(depreciation)

............................................

$2,829,029

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

41

At

October

31,

2020,

the

Fund

had

the

following cross-currency

swap

contracts outstanding.

See

Note

1

(

f

). 

Credit

Default

Swap

Contracts

Description

Periodic

Payment

Rate

Received

(Paid)

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Amount

(a)

Value

Unamortized

Upfront

Payments

(Receipts)

Unrealized

Appreciation

(Depreciation)

Rating

(b)

Centrally

Cleared

Swap

Contracts

Contracts

to

Sell

Protection

(c)(d)

Traded

Index

CDX.NA.HY.35

.....

5.00%

Quarterly

12/20/25

$

76,000,000

$

3,067,541

$

4,821,724

$

(1,754,183)

Non-

Investment

Grade

Total

Centrally

Cleared

Swap

Contracts

.....................................

$3,067,541

$4,821,724

$(1,754,183)

OTC

Swap

Contracts

Contracts

to

Buy

Protection

(c)

Single

Name

Ally

Financial,

Inc.

...

(5.00)%

Quarterly

JPHQ

12/20/24

19,800,000

(3,270,389)

(3,059,973)

(210,416)

Italy

Government

Bond

(1.00)%

Quarterly

BZWS

6/20/23

14,200,000

(176,321)

81,499

(257,820)

Contracts

to

Sell

Protection

(c)(d)

Single

Name

Italy

Government

Bond

1.00%

Quarterly

BZWS

6/20/23

14,200,000

88,694

(357,386)

446,080

NR

Traded

Index

(e)

BNP

Paribas

Bespoke

Rodez2

Index,

Mezzanine

Tranche

5-7%

..........

3.20%

Quarterly

BNDP

12/20/20

3,300,000

(65,407)

—

(65,407)

Non-

Investment

Grade

(e)

Citibank

Bespoke

Palma

Index,

Mezzanine

Tranche

5-7%

..........

2.30%

Quarterly

CITI

6/20/21

6,700,000

(168,050)

—

(168,050)

Non-

Investment

Grade

(e)

Citibank

Bespoke

Phoenix

Index,

Mezzanine

Tranche

5-7%

..........

2.90%

Quarterly

CITI

12/20/21

8,500,000

(685,937)

—

(685,937)

Non-

Investment

Grade

MCDX.NA.31

......

1.00%

Quarterly

CITI

12/20/23

23,060,000

(135,982)

146,325

(282,307)

Investment

Grade

(e)

Morgan

Stanley

Bespoke

Pecan

Index,

Mezzanine

Tranche

5-10%

...

4.10%

Quarterly

MSCO

12/20/21

9,000,000

(2,336,379)

—

(2,336,379)

Non-

Investment

Grade

(e)

Morgan

Stanley

Bespoke

Pecan

Index,

Mezzanine

Tranche

5-10%

...

3.98%

Quarterly

MSCO

12/20/21

9,000,000

(2,348,153)

—

(2,348,153)

Non-

Investment

Grade

Total

OTC

Swap

Contracts

..............................................

$(9,097,924)

$(3,189,535)

$(5,908,389)

Total

Credit

Default

Swap

Contracts

....................................

$(6,030,383)

$

1,632,189

$(7,662,572)

(a)

In

U.S.

dollars

unless

otherwise

indicated.

For

contracts

to

sell

protection,

the

notional

amount

is

equal

to

the

maximum

potential

amount

of

the

future

payments

and

no

recourse

provisions

have

been

entered

into

in

association

with

the

contracts.

(b)

Based

on

Standard

and

Poor's

(S&P)

Rating

for

single

name

swaps

and

internal

ratings

for

index

swaps.

Internal

ratings

based

on

mapping

into

equivalent

ratings

from

external

vendors.

(c)

Performance

triggers

for

settlement

of

contract

include

default,

bankruptcy

or

restructuring

for

single

name

swaps,

and

failure

to

pay

or

bankruptcy

of

the

underlying

securities

for

traded

index

swaps.

(d)

The

fund

enters

contracts

to

sell

protection

to

create

a

long

credit

position.

(e)

Represents

a

custom

index

comprised

of

a

basket

of

underlying

instruments.

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

42

At

October

31,

2020,

the

Fund

had

the

following

interest

rate

swap

contracts

outstanding.

See

Note

1(f). 

At

October

31,

2020,

the

Fund

had

the

following inflation index

swap

contracts outstanding.

See

Note

1

(

f

). 

At

October

31,

2020,

the

Fund

had

the

following total

return swap

contracts

outstanding.

See

Note

1(f). 

Cross-Currency

Swap

Contracts

Description

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Amount

Value/

Unrealized

Appreciation

(Depreciation)

aA

aaa

aaa

aaa

OTC

Swap

Contracts

Receive

Floating

3-month

USD

LIBOR

+

2.87%

.....

Quarterly

3,834,600

USD

Pay

Fixed

2.5%

.............................

Annual

CITI

5/04/21

3,300,000

EUR

$

(31,625)

Total

Cross

Currency

Swap

Contracts

...........................................................

$(31,625)

Interest

Rate

Swap

Contracts

Description

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Amount

*

Value

Unamortized

Upfront

Payments

(Receipts)

Unrealized

Appreciation

(Depreciation)

aa

aa

aa

aa

Centrally

Cleared

Swap

Contracts

Receive

Floating

1.956%

Semi-Annual

Pay

Fixed

3-month

CAD

BA

..............

Semi-Annual

7/17/29

55,000,000

CAD

$

3,299,734

$

—

$

3,299,734

Receive

Floating

1.232%

Semi-Annual

Pay

Fixed

6-month

AUD

BBR

.............

Semi-Annual

9/06/29

55,000,000

AUD

1,943,336

—

1,943,336

Total

Interest

Rate

Swap

Contracts

...............................

$5,243,070

$

—

$5,243,070

*

In

U.S.

dollars

unless

otherwise

indicated.

Inflation

Index

Swap

Contracts

Description

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Amount

Value

Unamortized

Upfront

Payments

(Receipts)

Unrealized

Appreciation

(Depreciation)

Centrally

Cleared

Swap

Contracts

Receive

variable

change

  in

USA

CPI-U

........

At

Maturity

Pay

Fixed

1.913%

.....

At

Maturity

1/14/29

$

34,600,000

$

(313,768)

$

—

$

(313,768)

Receive

variable

change

  in

USA

CPI-U

........

At

Maturity

Pay

Fixed

1.943%

.....

At

Maturity

1/15/29

46,900,000

(564,833)

—

(564,833)

Total

Inflation

Index

Swap

Contracts

..................................

$(878,601)

$—

$(878,601)

Franklin

Strategic

Series

Consolidated

Statement

of

Investments

(unaudited)

Franklin

Strategic

Income

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Semiannual

Report

43

See

Abbreviations

on

page

69

.

Total

Return

Swap

Contracts

Underlying

Instruments

Financing

Rate

Payment

Frequency

Counter-

party

Maturity

Date

Notional

Value

*

Value/

Unrealized

Appreciation

(Depreciation)

OTC

Swap

Contracts

Long

(a)

Markit

iBoxx

USD

Liquid

Leveraged

Loans

Total

Return

Index

...........................

3-month

USD

LIBOR

Quarterly

GSCO

12/21/20

23,600,000

$

(297,253)

Total

Return

Swap

Contracts

....................................................................

$(297,253)

*

In

U.S.

dollars

unless

otherwise

indicated.

(a)

The

Fund

receives

the

total

return

on

the

underlying

instrument

and

pays

a

variable

financing

rate.

Franklin

Strategic

Series

Consolidated

Financial

Statements

Consolidated

Statement

of

Assets

and

Liabilities

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

consolidated

financial

statements.

44

Franklin

Strategic

Income

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$4,091,838,717

Cost

-

Controlled

affiliates

(Note

3

f

and

12

)

......................................................

152,217,419

Cost

-

Non-controlled

affiliates

(Note

3

f

and

12

)

...................................................

53,644,370

Cost

-

Unaffiliated

repurchase

agreements

......................................................

75,759,713

Value

-

Unaffiliated

issuers

(Includes

securities

loaned

$

30,000

)

......................................

$3,950,396,273

Value

-

Controlled

affiliates

(Note

3

f

and

12

)

.....................................................

110,821,608

Value

-

Non-controlled

affiliates

(Note

3

f

and

12

)

..................................................

51,958,261

Value

-

Unaffiliated

repurchase

agreements

......................................................

75,759,713

Cash

....................................................................................

20,388,227

Receivables:

Investment

securities

sold

...................................................................

39,670,551

Capital

shares

sold

........................................................................

2,792,066

Dividends

and

interest

.....................................................................

36,093,876

Deposits

with

brokers

for:

OTC

derivative

contracts

..................................................................

15,841,972

TBA

transactions

........................................................................

330,000

Futures

contracts

........................................................................

3,304,135

Centrally

cleared

swap

contracts

............................................................

7,696,627

OTC

swap

contracts

(upfront

payments

$

5,049,604

)

.................................................

227,824

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

4,513,818

Unrealized

appreciation

on

OTC

swap

contracts

....................................................

446,080

Unrealized

appreciation

on

unfunded

loan

commitments

..............................................

122,307

FT

Subsidiary

deferred

tax

benefit

(Note

1

h

)

.......................................................

402,876

Other

assets

..............................................................................

1,552

Total

assets

..........................................................................

4,320,767,766

Liabilities:

Payables:

Investment

securities

purchased

..............................................................

312,578,021

Capital

shares

redeemed

...................................................................

6,870,062

Management

fees

.........................................................................

1,505,546

Distribution

fees

..........................................................................

880,492

Transfer

agent

fees

........................................................................

544,010

Distributions

to

shareholders

.................................................................

609,560

Variation

margin

on

futures

contracts

...........................................................

186,465

Variation

margin

on

centrally

cleared

swap

contracts

...............................................

1,144,770

OTC

swap

contracts

(upfront

receipts

$

3,417,379

)

..................................................

3,417,359

Unrealized

depreciation

on

OTC

swap

contracts

....................................................

6,683,347

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

1,684,789

Payable

upon

return

of

securities

loaned

.........................................................

34,958

Deferred

tax

...............................................................................

211,953

Accrued

expenses

and

other

liabilities

...........................................................

524,160

Total

liabilities

.........................................................................

336,875,492

Net

assets,

at

value

.................................................................

$3,983,892,274

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$4,792,879,456

Total

distributable

earnings

(losses)

.............................................................

(808,987,182)

Net

assets,

at

value

.................................................................

$3,983,892,274

Franklin

Strategic

Series

Consolidated

Financial

Statements

Consolidated

Statement

of

Assets

and

Liabilities

(continued)

October

31,

2020

(unaudited)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

consolidated

financial

statements.

Semiannual

Report

45

Franklin

Strategic

Income

Fund

Class

A:

Net

assets,

at

value

.......................................................................

$2,837,732,207

Shares

outstanding

........................................................................

307,909,999

Net

asset

value

per

share

a

..................................................................

$9.22

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

96

.25

%

)

................................

$9.58

Class

C:

Net

assets,

at

value

.......................................................................

$448,599,926

Shares

outstanding

........................................................................

48,665,691

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$9.22

Class

R:

Net

assets,

at

value

.......................................................................

$62,763,573

Shares

outstanding

........................................................................

6,838,939

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$9.18

Class

R6:

Net

assets,

at

value

.......................................................................

$126,053,559

Shares

outstanding

........................................................................

13,657,823

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$9.23

Advisor

Class:

Net

assets,

at

value

.......................................................................

$508,743,009

Shares

outstanding

........................................................................

55,133,697

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$9.23

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Strategic

Series

Financial

Statements

Consolidated

Statement

of

Operations

for

the

six

months

ended

October

31,

2020

(unaudited)

franklintempleton.com

Semiannual

Report

The

accompanying

notes

are

an

integral

part

of

these

consolidated

financial

statements.

46

Franklin

Strategic

Income

Fund

Investment

income:

Dividends:

Unaffiliated

issuers

........................................................................

$3,710,350

Controlled

affiliates

(Note

3

f

and

12

)

...........................................................

661,683

Interest:

(net

of

foreign

taxes

$125,635)

Unaffiliated

issuers

........................................................................

117,575,409

Total

investment

income

...................................................................

121,947,442

Expenses:

Management

fees

(Note

3

a

)

...................................................................

9,312,201

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

3,567,437

    Class

C

................................................................................

1,618,366

    Class

R

................................................................................

160,985

Transfer

agent

fees:

(Note

3e

)

    Class

A

................................................................................

1,815,646

    Class

C

................................................................................

317,466

    Class

R

................................................................................

41,110

    Class

R6

...............................................................................

30,628

    Advisor

Class

............................................................................

337,963

Custodian

fees

(Note

4

)

......................................................................

69,440

Reports

to

shareholders

......................................................................

238,229

Registration

and

filing

fees

....................................................................

84,728

Professional

fees

...........................................................................

72,779

Marketplace

lending

fees

(Note

1i)

..............................................................

215,319

Other

....................................................................................

138,682

Total

expenses

.........................................................................

18,020,979

Expense

reductions

(Note

4

)

...............................................................

(116,588)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(343,251)

Net

expenses

.........................................................................

17,561,140

Net

investment

income

................................................................

104,386,302

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

(33,586,141)

Foreign

currency

transactions

................................................................

(3,927,507)

Forward

exchange

contracts

.................................................................

(19,884,494)

Futures

contracts

.........................................................................

4,608,297

TBA

sale

commitments

.....................................................................

574,777

Swap

contracts

...........................................................................

(25,195,175)

Net

realized

gain

(loss)

..................................................................

(77,410,243)

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

244,425,250

Controlled

affiliates

(Note

3

f

)

...............................................................

2,743,864

Non-controlled

affiliates

(Note

3

f

and

12

)

......................................................

(661,219)

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(935,907)

Forward

exchange

contracts

.................................................................

6,255,398

Futures

contracts

.........................................................................

(4,409,398)

Swap

contracts

...........................................................................

47,791,427

Change

in

deferred

taxes

on

unrealized

appreciation

...............................................

(95,981)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

295,113,434

Net

realized

and

unrealized

gain

(loss)

............................................................

217,703,191

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$322,089,493

Franklin

Strategic

Series

Consolidated

Financial

Statements

Consolidated

Statement

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

consolidated

financial

statements.

Semiannual

Report

47

Franklin

Strategic

Income

Fund

Six

Months

Ended

October

31,

2020

(unaudited)

Year

Ended

April

30,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$104,386,302

$182,627,278

Net

realized

gain

(loss)

.................................................

(77,410,243)

(42,550,243)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

295,113,434

(382,746,373)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

322,089,493

(242,669,338)

Distributions

to

shareholders:

Class

A

.............................................................

(53,891,254)

(133,707,047)

Class

C

.............................................................

(8,181,509)

(25,071,873)

Class

R

.............................................................

(1,140,995)

(3,171,248)

Class

R6

............................................................

(2,634,805)

(9,963,217)

Advisor

Class

........................................................

(10,585,354)

(26,896,542)

Total

distributions

to

shareholders

..........................................

(76,433,917)

(198,809,927)

Capital

share

transactions:

(Note

2

)

Class

A

.............................................................

(17,489,095)

(141,906,067)

Class

C

.............................................................

(102,792,212)

(138,604,206)

Class

R

.............................................................

(3,205,513)

(16,035,134)

Class

R6

............................................................

(15,127,948)

(159,106,633)

Advisor

Class

........................................................

(41,626,726)

(33,579,296)

Total

capital

share

transactions

............................................

(180,241,494)

(489,231,336)

Net

increase

(decrease)

in

net

assets

...................................

65,414,082

(930,710,601)

Net

assets:

Beginning

of

period

.....................................................

3,918,478,192

4,849,188,793

End

of

period

..........................................................

$3,983,892,274

$3,918,478,192

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

Franklin

Strategic

Income

Fund

48

franklintempleton.com

Semiannual

Report

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

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

Franklin

Strategic

Income

Fund

(Fund)

is

included

in

this

report.

The

Fund

offers five

classes

of

shares:

Class A,

Class C,

Class R,

Class R6

and

Advisor

Class. Class

C

shares

automatically

convert

to

Class

A

shares

after

they

have

been

held

for

10

years.

Each

class

of

shares

may

differ

by

its

initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees. 

The

following

summarizes

the Fund's

significant

accounting

policies.

a.

Financial

Instrument

Valuation 

The

Fund's

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

Fund

calculates

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 Fund's

administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Fund

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

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

Fund's

pricing

services

use

multiple

valuation

techniques

to

determine

fair

value.

In

instances

where

sufficient

market

activity

exists,

the

pricing

services

may

utilize

a

market-based

approach

through

which

quotes

from

market

makers

are

used

to

determine

fair

value.

In

instances

where

sufficient

market

activity

may

not

exist

or

is

limited,

the

pricing

services

also

utilize

proprietary

valuation

models

which

may

consider

market

characteristics

such

as

benchmark

yield

curves,

credit

spreads,

estimated

default

rates,

anticipated

market

interest

rate

volatility,

coupon

rates,

anticipated

timing

of

principal

repayments,

underlying

collateral,

and

other

unique

security

features

in

order

to

estimate

the

relevant

cash

flows,

which

are

then

discounted

to

calculate

the

fair

value.

Securities

denominated

in

a

foreign

currency

are

converted

into

their

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

date

that

the

values

of

the

foreign

debt

securities

are

determined. 

Investments

in 

open-end mutual

funds

are

valued

at

the

closing

NAV.

Investments

in

repurchase

agreements

are

valued

at

cost,

which

approximates

fair

value.

Certain

derivative

financial

instruments

are

centrally

cleared

or

trade

in

the

OTC

market.

The

Fund's

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

Fund's

net

benefit

or

obligation

under

the

derivative

contract,

as

measured

by

the

fair

value

of

the

contract,

is

included

in

net

assets.

The

Fund

has

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the Fund

primarily

employs

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

49

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Fund's

business

day.

Occasionally,

events

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Fund.

As

a

result,

differences

may

arise

between

the

value

of

the

Fund's

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

Fund's

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

At

October

31,

2020,certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy.

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

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

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

Fund

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

Fund

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

Fund

does

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

Consolidated

Statement 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.

Joint

Repurchase

Agreement

The

Fund

enters

into

a

joint

repurchase

agreement

whereby

its

uninvested

cash

balance

is

deposited

into

a

joint

cash

account

with

other

funds

managed

by

the

investment

manager

or

an

affiliate

of

the

investment

manager

and

is

used

to

invest

in

one

or

more

repurchase

agreements.

The

value

and

face

amount

of

the

joint

repurchase

agreement

are

allocated

to

the

funds

based

on

their

pro-rata

interest.

A

repurchase

agreement

is

accounted

for

as

a

loan

by

the

Fund

to

the

seller,

collateralized

by

securities

which

are

delivered

to

the

Fund's

custodian.

The

fair

value,

including

accrued

interest,

of

the

initial

collateralization

is

required

to

be

at

least

102%

of

the

dollar

amount

invested

by

the

funds,

with

the

value

of

the

underlying

securities

marked

to

market

daily

to

maintain

coverage

of

at

least

100%.

Repurchase

agreements

are

subject

to

the

terms

of

Master

Repurchase

Agreements

(MRAs)

with

approved

counterparties

(sellers).

The

MRAs

contain

various

provisions,

including

but

not

limited

to

events

of

default

and

maintenance

of

collateral

for

repurchase

agreements.

In

the

event

of

default

by

either

the

seller

or

the

Fund,

certain

MRAs

may

permit

the

non-

defaulting

party

to

net

and

close-out

all

transactions,

if

any,

traded

under

such

agreements.

The

Fund

may

sell

securities

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

50

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

it

holds

as

collateral

and

apply

the

proceeds

towards

the

repurchase

price

and

any

other

amounts

owed

by

the

seller

to

the

Fund

in

the

event

of

default

by

the

seller.

This

could

involve

costs

or

delays

in

addition

to

a

loss

on

the

securities

if

their

value

falls

below

the

repurchase

price

owed

by

the

seller.

The

joint

repurchase

agreement

held

by

the Fund

at

period

end,

as

indicated

in

the

Consolidated

Statement

of

Investments,

had

been

entered

into

on

October

30,

2020.

d.

Securities

Purchased

on

Delayed

Delivery

and

TBA

Basis

The

Fund

purchases

securities

on

a

when-issued

or

delayed

delivery

and

to-be-announced

(TBA)

basis,

with

payment

and

delivery

scheduled

for

a

future

date.

These

transactions

are

subject

to

market

fluctuations

and

are

subject

to

the

risk

that

the

value

at

delivery

may

be

more

or

less

than

the

trade

date

purchase

price.

Although

the

Fund

will

generally

purchase

these

securities

with

the

intention

of

holding

the

securities,

it

may

sell

the

securities

before

the

settlement

date.

Sufficient

assets

have

been

segregated

for

these

securities

and

collateral

has

been

pledged

and/or

received

for

open

TBA

trades.

e.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

and/or

a

joint

repurchase

agreement

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

The

Fund

may

receive

income

from

the

investment

of

cash

collateral,

in

addition

to

lending

fees

and

rebates

paid

by

the

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/or

third-party

vendor,

is

reported

separately

in

the

Consolidated

Statement

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

f.

Derivative

Financial

Instruments

The

Fund

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 Consolidated

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the Consolidated

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

with

certain

counterparties.

These

agreements

contain

various

provisions,

including

but

not

limited

to

collateral

requirements,

events

of

default,

or

early

termination.

Termination

events

applicable

to

the

counterparty

include

certain

deteriorations

in

the

credit

quality

of

the

counterparty.

Termination

events

applicable

to

the Fund

include

failure

of

the

Fund

to

maintain

certain

net

asset

levels

and/

or

limit

the

decline

in

net

assets

over

various

periods

of

time.

In

the

event

of

default

or

early

termination,

the

ISDA

master

agreement

gives

the

non-defaulting

party

the

right

to

net

and

close-out

all

transactions

traded,

whether

or

not

arising

under

the

ISDA

agreement,

to

one

net

amount

payable

by

one

counterparty

to

the

other.

However,

absent

an

event

of

default

or

early

termination,

OTC

derivative

assets

and

liabilities

are

presented

gross

and

not

offset

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

Early

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Joint

Repurchase

Agreement

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

51

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

termination

by

the

counterparty

may

result

in

an

immediate

payment

by

the

Fund

of

any

net

liability

owed

to

that

counterparty

under

the

ISDA

agreement.

Collateral

requirements

differ

by

type

of

derivative.

Collateral

or

initial

margin

requirements

are

set

by

the

broker

or

exchange

clearing

house

for

exchange

traded

and

centrally

cleared

derivatives.

Initial

margin

deposited

is

held

at

the

exchange

and

can

be

in

the

form

of

cash

and/or

securities.

For

OTC

derivatives

traded

under

an

ISDA

master

agreement,

posting

of

collateral

is

required

by

either

the

Fund

or

the

applicable

counterparty

if

the

total

net

exposure

of

all

OTC

derivatives

with

the

applicable

counterparty

exceeds

the

minimum

transfer

amount,

which

typically

ranges

from

$100,000

to

$250,000,

and

can

vary

depending

on

the

counterparty

and

the

type

of

the

agreement.

Generally,

collateral

is

determined

at

the

close

of

Fund

business

each

day

and

any

additional

collateral

required

due

to

changes

in

derivative

values

may

be

delivered

by

the

Fund

or

the

counterparty

the

next

business

day,

or

within

a

few

business

days.

Collateral

pledged

and/or

received

by

the

Fund

for

OTC

derivatives,

if

any,

is

held

in

segregated

accounts

with

the

Fund's

custodian/counterparty

broker

and

can

be

in

the

form

of

cash

and/or

securities.

Unrestricted

cash

may

be

invested

according

to

the

Fund's

investment

objectives.

To

the

extent

that

the

amounts

due

to

the

Fund

from

its

counterparties

are

not

subject

to

collateralization

or

are

not

fully

collateralized,

the

Fund

bears

the

risk

of

loss

from

counterparty

non-performance.

The

Fund

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

Consolidated

Statement

of

Assets

and

Liabilities.

The

Fund

entered

into

OTC

forward

exchange

contracts

primarily

to

manage

and/or

gain

exposure

to

certain

foreign

currencies.

A

forward

exchange

contract

is

an

agreement

between

the

Fund

and

a

counterparty

to

buy

or

sell

a

foreign

currency

at

a

specific

exchange

rate

on

a

future

date.

The

Fund

entered

into

credit

default

swap

contracts

primarily

to

manage

and/or

gain

exposure

to

credit

risk.

A

credit

default

swap

is

an

agreement

between

the

Fund

and

a

counterparty

whereby

the

buyer

of

the

contract

receives

credit

protection

and

the

seller

of

the

contract

guarantees

the

credit

worthiness

of

a

referenced

debt

obligation.

These

agreements

may

be

privately

negotiated

in

the

over-the-

counter

market

(OTC

credit

default

swaps)

or

may

be

executed

in

a

multilateral

trade

facility

platform,

such

as

a

registered

exchange

(centrally

cleared

credit

default

swaps).

The

underlying

referenced

debt

obligation

may

be

a

single

issuer

of

corporate

or

sovereign

debt,

a

credit

index,

a

basket

of

issuers

or

indices,

or

a

tranche

of

a

credit

index

or

basket

of

issuers

or

indices.

In

the

event

of

a

default

of

the

underlying

referenced

debt

obligation,

the

buyer

is

entitled

to

receive

the

notional

amount

of

the

credit

default

swap

contract

from

the

seller

in

exchange

for

the

referenced

debt

obligation,

a

net

settlement

amount

equal

to

the

notional

amount

of

the

credit

default

swap

less

the

recovery

value

of

the

referenced

debt

obligation,

or

other

agreed

upon

amount.

For

centrally

cleared

credit

default

swaps,

required

initial

margins

are

pledged

by

the

Fund,

and

the

daily

change

in

fair

value

is

accounted

for

as

a

variation

margin

payable

or

receivable

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

Over

the

term

of

the

contract,

the

buyer

pays

the

seller

a

periodic

stream

of

payments,

provided

that

no

event

of

default

has

occurred.

Such

periodic

payments

are

accrued

daily

as

an

unrealized

appreciation

or

depreciation

until

the

payments

are

made,

at

which

time

they

are

realized.

Upfront

payments

and

receipts

are

reflected

in

the Consolidated

Statement

of

Assets

and

Liabilities

and

represent

compensating

factors

between

stated

terms

of

the

credit

default

swap

agreement

and

prevailing

market

conditions

(credit

spreads

and

other

relevant

factors).

These

upfront

payments

and

receipts

are

amortized

over

the

term

of

the

contract

as

a

realized

gain

or

loss

in

the Consolidated

Statement

of

Operations.

The

Fund

entered

into

OTC

cross

currency

swap

contracts

primarily

to

manage

and/or

gain

exposure

to

interest

rate

risk

and

certain

foreign

currencies.

A

cross

currency

swap

is

an

agreement

between

the

Fund

and

a

counterparty

to

exchange

cash

flows

(determined

using

either

a

fixed

or

floating

rate)

based

on

the

notional

amounts

of

two

different

currencies.

The

notional

amounts

are

typically

determined

based

on

the

spot

exchange

rates

at

the

opening

of

the

contract.

Cross

currency

swaps

may

require

the

exchange

of

notional

amounts

at

the

opening

and/or

closing

of

the

contract.

Over

the

term

of

the

contract,

contractually

required

1.

Organization

and

Significant

Accounting

Policies

(continued)

f.

Derivative

Financial

Instruments

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

52

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

payments

to

be

paid

and

to

be

received

are

accrued

daily

and

recorded

as

unrealized

depreciation

and

appreciation

until

the

payments

are

made,

at

which

time

they

are

realized.

Upfront

payments

and

receipts

are

reflected

in

the

Consolidated

Statement

of

Assets

and

Liabilities

and

represent

compensating

factors

between

stated

terms

of

the

cross

currency

swap

contract

and

prevailing

market

conditions

(interest

rate

spreads

and

other

relevant

factors).

These

upfront

payments

and

receipts

are

amortized

over

the

term

of

the

contract

as

a

realized

gain

or

loss

in

the

Consolidated

Statement

of

Operations.

The

Fund

entered

into

inflation

index

swap

contracts

primarily

to

manage

and/or

gain

exposure

to

inflation

risk.

An

inflation

index

swap

is

an

agreement

between

the

Fund

and

a

counterparty

to

exchange

cash

flows

whereby

one

party

makes

payments

based

on

the

percentage

change

in

an

index

that

serves

as

a

measure

of

inflation

and

the

other

party

makes

a

regular

payment

based

on

a

compounded

fixed

rate,

applied

to

a

notional

amount.

These

agreements

may

be

privately

negotiated

in

the

over-the-counter

market

(OTC

inflation

index

swap)

or

may

be

executed

on

a

registered

exchange

(centrally

cleared

inflation

index

swap).

For

centrally

cleared

inflation

index

swaps,

required

initial

margins

are

pledged

by

the

Fund,

and

the

daily

change

in

fair

value

is

accounted

for

as

a

variation

margin

payable

or

receivable.

Over

the

term

of

the

contract,

contractually

required

payments

to

be

paid

and

to

be

received

are

accrued

daily

and

recorded

as

unrealized

depreciation

and

appreciation

until

the

payments

are

made,

at

which

time

they

are

realized.

Typically,

an

inflation

index

swap

has

payment

obligations

netted

and

exchanged

upon

maturity.

The

Fund

entered

into

interest

rate

swap

contracts

primarily

to

manage

interest

rate

risk.

An

interest

rate

swap

is

an

agreement

between

the

Fund

and

a

counterparty

to

exchange

cash

flows

based

on

the

difference

between

two

interest

rates,

applied

to

a

notional

amount.

These

agreements

may

be

privately

negotiated

in

the

over-the-

counter

market

(OTC

interest

rate

swaps)

or

may

be

executed

on

a

registered

exchange

(centrally

cleared

interest

rate

swaps).

For

centrally

cleared

interest

rate

swaps,

required

initial

margins

are

pledged

by

the

Fund,

and

the

daily

change

in

fair

value

is

accounted

for

as

a

variation

margin

payable

or

receivable

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

Over

the

term

of

the

contract,

contractually

required

payments

to

be

paid

and

to

be

received

are

accrued

daily

and

recorded

as

unrealized

depreciation

and

appreciation

until

the

payments

are

made,

at

which

time

they

are

realized.

The

Fund

entered

into

OTC

total

return

swap

contracts

primarily

to

manage

and/or

gain

exposure

to

the

interest

rate

risk

of

an

underlying

instrument

such

as

a

stock,

bond,

index

or

basket

of

securities

or

indices.

A

total

return

swap

is

an

agreement

between

the

Fund

and

a

counterparty

to

exchange

a

return

linked

to

an

underlying

instrument

for

a

floating

or

fixed

rate

payment,

both

based

upon

a

notional

amount.

Over

the

term

of

the

contract,

contractually

required

payments

to

be

paid

or

received

are

accrued

daily

and

recorded

as

unrealized

appreciation

or

depreciation

until

the

payments

are

made,

at

which

time

they

are

recognized

as

realized

gain

or

loss.

The

Fund

purchased

or

wrote

exchange

traded

and/or

OTC

option

contracts

primarily

to

manage

and/or

gain

exposure

to

interest

rate,

foreign

exchange

rate

and

credit

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.

The

Fund

invests

in

value

recovery

instruments

(VRI)

primarily

to

gain

exposure

to

economic

growth.

Periodic

payments

from

VRI

are

dependent

on

established

benchmarks

for

underlying

variables.

VRI

has

a

notional

amount,

which

is

used

to

calculate

amounts

of

payments

to

holders.

Payments

are

recorded

upon

receipt

as

realized

gains

in

the

Consolidated

Statement

of

Operations.

The

risks

of

investing

in

VRI

include

growth

risk,

liquidity,

and

the

potential

loss

of

investment.

See

Note

11 regarding

other

derivative

information.

1.

Organization

and

Significant

Accounting

Policies

(continued)

f.

Derivative

Financial

Instruments

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

53

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

g.

Loan

Participation

Notes

The

Fund

invests

in

loan

participation

notes

(Participations).

Participations

are

loans

originally

issued

to

a

borrower

by

one

or

more

financial

institutions

(the

Lender)

and

subsequently

sold

to

other

investors,

such

as

the Fund.

Participations

typically

result

in

the

Fund

having

a

contractual

relationship

only

with

the

Lender

and

not

with

the

borrower.

The

Fund

has

the

right

to

receive

from

the

Lender

any

payments

of

principal,

interest

and

fees

which

the

Lender

received

from

the

borrower.

The

Fund

generally

has

no

rights

to

either

enforce

compliance

by

the

borrower

with

the

terms

of

the

loan

agreement

or

to

any

collateral

relating

to

the

original

loan.

As

a

result,

the Fund

assumes

the

credit

risk

of

both

the

borrower

and

the

Lender

that

is

selling

the

Participation.

The

Participations

may

also

involve

interest

rate

risk

and

liquidity

risk,

including

the

potential

default

or

insolvency

of

the

borrower

and/or

the

Lender.

h.

FT

Holdings

Corporation

II

(FT

Subsidiary)

The

Fund

invests

in

certain

financial

instruments

through

its

investment

in

FT

Subsidiary.

FT

Subsidiary

is

a

Delaware

Corporation,

is

a

wholly-owned

subsidiary

of

the

Fund,

and

is

able

to

invest

in

certain

financial

instruments

consistent

with

the

investment

objective

of

the

Fund.

At

October

31,

2020,

FT

Subsidiary’s

investment,

Turtle

Bay

Resort,

as

well

as

any

other

assets

and

liabilities

of

FT

Subsidiary

are

reflected

in

the

Fund’s

Consolidated

Statement

of

Investments

and

Consolidated

Statement

of

Assets

and

Liabilities.

At

October

31,

2020,

FT

Subsidiary,

which

is

a

tax

paying

entity,

recognized

an

unrealized

loss

on

its

Turtle

Bay

investment.

An

estimated

deferred

tax

asset

based

on

such

unrealized

loss

is

reflected

as

FT

Subsidiary

deferred

tax

benefit

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

The

estimated

benefit

was

calculated

using

a

federal

rate

of

21%.

When

the

Turtle

Bay

investment

liquidates,

FT

Subsidiary

will

recognize

a

capital

loss

which

can

be

carried-back

to

offset

prior

year

capital

gains,

resulting

in

a

tax

refund

which

will

relieve

the

deferred

tax

asset.

The

financial

statements

have

been

consolidated

and

include

the

accounts

of

the

Fund

and

FT

Subsidiary.

All

intercompany

transactions

and

balances

have

been

eliminated.

At

October

31,

2020,

the

net

assets

of

FT

Subsidiary

were

$18,474,750,

representing

less

than

1%

of

the

Fund’s

consolidated

net

assets.

The

Fund’s

investment

in

FT

Subsidiary

is

limited

to

25%

of

consolidated

assets.

i.

Marketplace

Lending

The

Fund

invests

in

loans

obtained

through

marketplace

lending.

Marketplace

lending,

sometimes

referred

to

as

peer-to-peer

lending,

is

a

method

of

financing

in

which

a

platform

facilitates

the

borrowing

and

lending

of

money.

It

is

considered

an

alternative

to

more

traditional

forms

of

debt

financing.

Prospective

borrowers

are

required

to

provide

certain

financial

information

to

the

platform,

including,

but

not

limited

to,

the

intended

purpose

of

the

loan,

income,

employment

information,

credit

score,

debt-to-income

ratio,

credit

history

(including

defaults

and

delinquencies)

and

home

ownership

status.

Based

on

this

and

other

information,

the

platform

assigns

its

own

credit

rating

to

the

borrower

and

sets

the

interest

rate

for

the

requested

loan.

The

platform

then

posts

the

borrowing

requests

online,

giving

investors

the

opportunity

to

purchase

the

loans

based

on

factors

such

as

the

interest

rates

and

expected

yields

of

the

loans,

the

borrower

background

data,

and

the

credit

rating

assigned

by

the

platform.

When

the

Fund

invests

in

these

loans,

it

usually

purchases

all

rights,

title

and

interest

in

the

loans

pursuant

to

a

loan

purchase

agreement

directly

from

the

platform.

The

platform

or

a

third-party

servicer

typically

continues

to

service

the

loans,

collecting

payments

and

distributing

them

to

the

Fund,

less

any

servicing

fees

assessed.

The

servicer

is

typically

responsible

for

taking

actions

against

a

borrower

in

the

event

of

a

default

on

the

loan.

Servicing

fees,

along

with

other

administration

fees,

are

included

in

marketplace

lending

fees

in

the

Statement

of

Operations.

The Fund,

as

an

investor

in

a

loan,

would

be

entitled

to

receive

payment

only

from

the

borrower

and

would

not

be

able

to

recover

any

deficiency

from

the

platform,

except

under

very

narrow

circumstances.

The

loans

in

which

the

Fund

may

invest

are

unsecured.

j.

Mortgage

Dollar

Rolls

The

Fund

enters

into

mortgage

dollar

rolls,

typically

on

a

TBA

basis.

Mortgage

dollar

rolls

are

agreements

between

the

Fund

and

a

financial

institution

where

the

Fund

sells

(or

buys)

mortgage-backed

securities

for

delivery

on

a

specified

date

and

simultaneously

contracts

to

repurchase

(or

sell)

substantially

similar

(same

type,

coupon,

and

maturity)

securities

at

a

future

date

and

at

a

predetermined

price.

Gains

or

losses

are

realized

on

the

initial

sale,

and

1.

Organization

and

Significant

Accounting

Policies

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

54

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

the

difference

between

the

repurchase

price

and

the

sale

price

is

recorded

as

an

unrealized

gain

or

loss

to

the

Fund

upon

entering

into

the

mortgage

dollar

roll.

In

addition,

the

Fund

may

invest

the

cash

proceeds

that

are

received

from

the

initial

sale.

During

the

period

between

the

sale

and

repurchase,

the

Fund

is

not

entitled

to

principal

and

interest

paid

on

the

mortgage

backed

securities.

Transactions

in

mortgage

dollar

rolls

are

accounted

for

as

purchases

and

sales

and

may

result

in

an

increase

to

the

Fund's

portfolio

turnover

rate.

The

risks

of

mortgage

dollar

roll

transactions

include

the

potential

inability

of

the

counterparty

to

fulfill

its

obligations.

k.

Senior

Floating

Rate

Interests

The

Fund

invests

in

senior

secured

corporate

loans

that

pay

interest

at

rates

which

are

periodically

reset

by

reference

to

a

base

lending

rate

plus

a

spread.

These

base

lending

rates

are

generally

the

prime

rate

offered

by

a

designated

U.S.

bank

or

the

London

InterBank

Offered

Rate

(LIBOR).

Senior

secured

corporate

loans

often

require

prepayment

of

principal

from

excess

cash

flows

or

at

the

discretion

of

the

borrower.

As

a

result,

actual

maturity

may

be

substantially

less

than

the

stated

maturity.

Senior

secured

corporate

loans

in

which

the Fund

invests

are

generally

readily

marketable,

but

may

be

subject

to

certain

restrictions

on

resale.

On

July

27,

2017,

the

United

Kingdom's

Financial

Conduct

Authority

announced

its

intention

to

cease

sustaining

LIBOR

after

2021.

There

remains

uncertainty

regarding

the

future

utilization

of

LIBOR

and

the

nature

of

any

replacement

rate.

As

such,

the

potential

effect

of

a

transition

away

from

LIBOR

on

the

Fund

or

the

Fund's

investments

that

use

or

may

use

a

floating

rate

based

on

LIBOR

cannot

yet

be

determined.

l.

Income

and

Deferred

Taxes

It

is the Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. The Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The Fund

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

it

invests.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Fund

invests.

When

a

capital

gain

tax

is

determined

to

apply,

the

Fund

records

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

October

31,

2020,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

consolidated

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

m.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

Amortization

of

premium

and

accretion

of

discount

on

debt

securities

are

included

in

interest

income.

Paydown

gains

and

losses

are

recorded

as

an

adjustment

to

interest

income.

Facility

fees

are

recognized

as

income

over

the

expected

term

of

the

loan.

Dividend

income

is

recorded

on

the

ex-dividend

date

except

for

certain

dividends

from

securities

where

the

dividend

rate

is

not

available.

In

such

cases,

the

dividend

is

recorded

as

soon

as

the

information

is

received

by

the

Fund.

Distributions

to shareholders

are

recorded

on

the

ex-dividend

date.

Distributable

earnings

are

determined

according

to

income

tax

regulations

(tax

basis)

and

may

differ

from

earnings

recorded

in

accordance

with

U.S.

GAAP.

These

differences

may

be

permanent

or

temporary.

Permanent

differences

are

reclassified

among

capital

accounts

to

reflect

their

tax

character.

These

reclassifications

have

no

impact

on

net

assets

or

the

results

of

operations.

Temporary

differences

are

not

reclassified,

as

they

may

reverse

in

subsequent

periods.

Common

expenses

incurred

by

the

Trust

are

allocated

among

the

Funds

based

on

the

ratio

of

net

assets

of

each

Fund

to

the

combined

net

assets

of

the

Trust

or

based

on

the

ratio

of

number

of

shareholders

of

each

Fund

to

the

1.

Organization

and

Significant

Accounting

Policies

(continued)

j.

Mortgage

Dollar

Rolls

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

55

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

combined

number

of

shareholders

of

the

Trust.

Fund

specific

expenses

are

charged

directly

to

the

Fund

that

incurred

the

expense.

Realized

and

unrealized

gains

and

losses

and

net

investment

income,

excluding

class

specific

expenses,

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

net

assets

of

each

class.

Differences

in

per

share

distributions

by

class

are

generally

due

to

differences

in

class

specific

expenses.

Inflation-indexed

bonds

are

adjusted

for

inflation

through

periodic

increases

or

decreases

in

the

security's

interest

accruals,

face

amount,

or

principal

redemption

value,

by

amounts

corresponding

to

the

rate

of

inflation

as

measured

by

an

index.

Any

increase

or

decrease

in

the

face

amount

or

principal

redemption

value

will

be

included

as

interest

income

in

the

Consolidated

Statement

of

Operations.

n.

Accounting

Estimates

The

preparation

of

financial

statements

in

accordance

with

U.S.

GAAP

requires

management

to

make

estimates

and

assumptions

that

affect

the

reported

amounts

of

assets

and

liabilities

at

the

date

of

the

financial

statements

and

the

amounts

of

income

and

expenses

during

the

reporting

period.

Actual

results

could

differ

from

those

estimates.

o.

Guarantees

and

Indemnifications

Under

the

Trust's

organizational

documents,

its

officers

and

trustees

are

indemnified

by

the

Trust

against

certain

liabilities

arising

out

of

the

performance

of

their

duties

to

the

Trust.

Additionally,

in

the

normal

course

of

business,

the

Trust,

on

behalf

of

the

Fund,

enters

into

contracts

with

service

providers

that

contain

general

indemnification

clauses.

The

Trust's

maximum

exposure

under

these

arrangements

is

unknown

as

this

would

involve

future

claims

that

may

be

made

against

the

Trust

that

have

not

yet

occurred.

Currently,

the

Trust

expects

the

risk

of

loss

to

be

remote.

2.

Shares

of

Beneficial

Interest

At

October

31,

2020,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

Six

Months

Ended

October

31,

2020

Year

Ended

April

30,

2020

Shares

Amount

Shares

Amount

Class

A

Shares:

Shares

sold

a

...................................

23,510,485

$216,617,390

51,808,122

$493,501,422

Shares

issued

in

reinvestment

of

distributions

..........

5,547,015

50,959,567

13,278,919

125,575,767

Shares

redeemed

...............................

(31,059,888)

(285,066,052)

(80,974,998)

(760,983,256)

Net

increase

(decrease)

..........................

(2,002,388)

$(17,489,095)

(15,887,957)

$(141,906,067)

Class

C

Shares:

Shares

sold

...................................

2,311,887

$21,342,609

7,181,894

$68,377,407

Shares

issued

in

reinvestment

of

distributions

..........

845,987

7,767,359

2,436,459

23,072,271

Shares

redeemed

a

..............................

(14,338,133)

(131,902,180)

(24,298,180)

(230,053,884)

Net

increase

(decrease)

..........................

(11,180,259)

$(102,792,212)

(14,679,827)

$(138,604,206)

Class

R

Shares:

Shares

sold

...................................

788,602

$7,201,344

1,421,183

$13,393,410

Shares

issued

in

reinvestment

of

distributions

..........

123,452

1,128,991

332,487

3,136,111

Shares

redeemed

...............................

(1,262,310)

(11,535,848)

(3,490,157)

(32,564,655)

Net

increase

(decrease)

..........................

(350,256)

$(3,205,513)

(1,736,487)

$(16,035,134)

1.

Organization

and

Significant

Accounting

Policies

(continued)

m.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

56

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

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

The

Fund

pays

an

investment

management

fee

to

Advisers

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

period

ended

October

31,

2020,

the

annualized

gross

effective

investment

management

fee

rate

was

0.457%

of

the

Fund’s

average

daily

net

assets. 

Six

Months

Ended

October

31,

2020

Year

Ended

April

30,

2020

Shares

Amount

Shares

Amount

Class

R6

Shares:

Shares

sold

...................................

1,670,937

$15,367,313

5,527,397

$52,655,227

Shares

issued

in

reinvestment

of

distributions

..........

248,391

2,284,739

958,906

9,140,302

Shares

redeemed

...............................

(3,646,150)

(32,780,000)

(23,024,591)

(220,902,162)

Net

increase

(decrease)

..........................

(1,726,822)

$(15,127,948)

(16,538,288)

$(159,106,633)

Advisor

Class

Shares:

Shares

sold

...................................

6,566,998

$59,993,059

16,576,637

$155,346,108

Shares

issued

in

reinvestment

of

distributions

..........

1,090,749

10,028,606

2,676,518

25,356,333

Shares

redeemed

...............................

(12,152,454)

(111,648,391)

(22,833,202)

(214,281,737)

Net

increase

(decrease)

..........................

(4,494,707)

$(41,626,726)

(3,580,047)

$(33,579,296)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Advisers,

Inc.

(Advisers)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Templeton

Distributors,

Inc.

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.625%

Up

to

and

including

$100

million

0.500%

Over

$100

million,

up

to

and

including

$250

million

0.450%

Over

$250

million,

up

to

and

including

$7.5

billion

0.440%

Over

$7.5

billion,

up

to

and

including

$10

billion

0.430%

Over

$10

billion,

up

to

and

including

$12.5

billion

0.420%

Over

$12.5

billion,

up

to

and

including

$15

billion

0.400%

Over

$15

billion,

up

to

and

including

$17.5

billion

0.380%

Over

$17.5

billion,

up

to

and

including

$20

billion

0.360%

Over

$20

billion,

up

to

and

including

$35

billion

0.355%

Over

$35

billion,

up

to

and

including

$50

billion

0.350%

In

excess

of

$50

billion

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

57

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

b.

Administrative

Fees

Under

an

agreement

with

Advisers,

FT

Services

provides

administrative

services

to

the

Fund.

The

fee

is

paid

by

Advisers

based

on

the

Fund’s

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Fund.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Fund’s

Class A reimbursement

distribution

plan,

the

Fund

reimburses

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate.

Under

the

Class

A

reimbursement

distribution

plan,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Fund’s

Class C

and

R

compensation

distribution

plans,

the

Fund

pays

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

d.

Sales

Charges/Underwriting

Agreements

Front-end

sales

charges

and

contingent

deferred

sales

charges

(CDSC)

do

not

represent

expenses

of

the

Fund.

These

charges

are

deducted

from

the

proceeds

of

sales

of

Fund

shares

prior

to

investment

or

from

redemption

proceeds

prior

to

remittance,

as

applicable.

Distributors

has

advised

the

Fund

of

the

following

commission

transactions

related

to

the

sales

and

redemptions

of

the

Fund's

shares

for

the

period:

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

period

ended

October

31,

2020,

the

Fund

paid

transfer

agent

fees

of

$2,542,813,

of

which $1,237,154

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies

for

purposes

other

than

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Consolidated

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

period

ended

October

31,

2020,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

Class

A

....................................................................................

0.25%

Class

C

....................................................................................

0.65%

Class

R

....................................................................................

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$44,525

CDSC

retained

..............................................................................

$46,110

3.

Transactions

with

Affiliates

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

58

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

August

31,

2021.

h.

Interfund

Transactions

The

Fund

engaged

in

purchases

and

sales

of

investments

with

funds

or

other

accounts

that

have

common

investment

managers

(or

affiliated

investment

managers),

directors,

trustees

or

officers.

During

the

period

ended

October

31,

2020,

these

purchase

and

sale

transactions

aggregated

$0,and

$40,633,306,

respectively.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

period

ended

October

31,

2020,

the

custodian

fees

were

reduced

as

noted

in

the

Consolidated

Statement

of

Operations. 

5.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

At

April

30,

2020,

the

capital

loss

carryforwards

were

as

follows:

A

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares

Held

at

End

of

Period

Investment

Income

A

a

a

a

a

a

a

a

a

Franklin

Strategic

Income

Fund

Non-Controlled

Affiliates

Dividends

Franklin

Floating

Rate

Income

Fund

$108,077,744

$—

$—

$—

$2,743,864

$110,821,608

15,243,687

$661,683

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$51,021,802

$35,429,868

$(34,520,409)

$—

$—

$51,931,261

51,931,261

$—

Total

Non-Controlled

Affiliates

$159,099,546

$35,429,868

$(34,520,409)

$

—

$

2,743,864

$162,752,869

$

661,683

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0%

.........

$—

$48,000

$(21,000)

$

—

$

—

$27,000

27,000

$—

Total

Affiliated

Securities

....

$159,099,546

$35,477,868

$(34,541,409)

$—

$2,743,864

$162,779,869

$661,683

Capital

loss

carryforwards

not

subject

to

expiration:

Short

term

................................................................................

$52,700,821

Long

term

................................................................................

513,263,033

Total

capital

loss

carryforwards

...............................................................

$565,963,854

3.

Transactions

with

Affiliates

(continued)

f.

Investments

in

Affiliated

Management

Investment

Companies

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

59

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

At

October

31,

2020,

the

cost

of

investments

and

net

unrealized

appreciation

(depreciation)

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

foreign

currency

transactions,

paydown

losses,

bond

discounts

and

premiums

and

swaps.

6.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

period

ended

October

31,

2020,

aggregated

$6,488,043,743

and

$6,715,175,583,

respectively.

At

October

31,

2020,

in

connection

with

securities

lending

transactions,

the

Fund

loaned

equity

investments

and

received

$34,958

of

cash

collateral.

The

gross

amount

of

recognized

liability

for

such

transactions

is

included

in

payable

upon

return

of

securities

loaned

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

The

agreements

can

be

terminated

at

any

time.

7.

Credit Risk

and

Defaulted

Securities

At

October

31,

2020,

the

Fund

had

42.0%

of

its

portfolio

invested

in

high

yield,

senior

secured

floating

rate

loans,

or

other

securities

rated

below

investment

grade

and

unrated

securities,

if

any.

These

securities

may

be

more

sensitive

to

economic

conditions

causing

greater

price

volatility

and

are

potentially

subject

to

a

greater

risk

of

loss

due

to

default

than

higher

rated

securities.

The

Fund

held

defaulted

securities

and/or

other

securities

for

which

the

income

has

been

deemed

uncollectible.

At

October

31,

2020,

the

aggregate

value

of

these

securities

was

$1,648,027,

representing

0.4%

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

securities

have

been

identified

in

the

accompanying

Consolidated

Statement

of

Investments.

8.

Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the Fund, its ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and its ability

to

achieve its investment

objectives.

9.

Restricted

Securities

The

Fund

invests

in

securities

that

are

restricted

under

the

Securities

Act

of

1933

(1933

Act).

Restricted

securities

are

often

purchased

in

private

placement

transactions,

and

cannot

be

sold

without

prior

registration

unless

the

sale

is

pursuant

to

an

exemption

under

the

1933

Act.

Disposal

of

these

securities

may

require

greater

effort

and

expense,

and

prompt

sale

at

an

acceptable

price

may

be

difficult.

The Fund

may

have

registration

rights

for

restricted

securities.

The

issuer

generally

incurs

all

registration

costs.

Cost

of

investments

..........................................................................

$4,402,203,775

Unrealized

appreciation

........................................................................

$19,578,377

Unrealized

depreciation

........................................................................

(213,382,705)

Net

unrealized

appreciation

(depreciation)

..........................................................

$(193,804,327)

5.

Income

Taxes

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

60

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

At

October

31,

2020,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

10.

Unfunded

Loan

Commitments

The

Fund

enters

into

certain

credit

agreements,

all

or

a

portion

of

which

may

be

unfunded.

The Fund

is

obligated

to

fund

these

loan

commitments

at

the

borrowers’

discretion.

Unfunded

loan

commitments

and

funded

portions

of

credit

agreements

are

marked

to

market

daily

and

any

unrealized

appreciation

or

depreciation

is

included

in

the

Consolidated

Statement

of

Assets

and

Liabilities

and

the

Consolidated

Statement

of

Operations.

Funded

portions

of

credit

agreements

are

presented

in

the

Consolidated Statement

of

Investments.

At

October

31,

2020,

unfunded

commitments

were

as

follows:

11.

Other

Derivative

Information

At

October

31,

2020,

investments

in

derivative

contracts

are

reflected

in

the

Consolidated

Statement of

Assets

and

Liabilities

as

follows:

Principal

Amount

/

Shares

/

Units

Issuer

Acquisition

Date

Cost

Value

Franklin

Strategic

Income

Fund

331,326

a

Appvion

Operations,

Inc.

......................

4/12/19

$

4,481,262

$

4,917,645

125,940,079

b

K2016470219

South

Africa

Ltd.,

A

...............

2/08/13-2/01/17

977,123

—

12,532,821

b

K2016470219

South

Africa

Ltd.,

B

...............

2/01/17

9,307

—

124,500

Remington

Outdoor

Co.,

Inc.,

Litigation

Units

.......

4/12/19

—

—

Total

Restricted

Securities

(Value

is

0.12%

of

Net

Assets)

.............

$5,467,692

$4,917,645

a

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$4,738,889

as

of

October

31,

2020.

b

The

Fund

also

invests

in

unrestricted

securities

of

the

issuer,

valued

at

$15,007

as

of

October

31,

2020.

Borrower

Unfunded

Commitment

Franklin

Strategic

Income

Fund

Fieldwood

Energy

LLC

$3,480,774

UTEX

Industries,

Inc

95,909

$3,576,683

Asset

Derivatives

Liability

Derivatives

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Consolidated

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Consolidated

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Franklin

Strategic

Income

Fund

Interest

rate

contracts

.......

Variation

margin

on

futures

contracts

$

386,755

a

Variation

margin

on

futures

contracts

$

1,579,302

a

Variation

margin

on

centrally

cleared

swap

contracts

5,243,070

b

Variation

margin

on

centrally

cleared

swap

contracts

—

b

9.

Restricted

Securities

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

61

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

For

the

period

ended

October

31,

2020,

the

effect

of

derivative

contracts

in

the

Consolidated

Statement

of

Operations

was

as

follows:

Asset

Derivatives

Liability

Derivatives

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Consolidated

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Consolidated

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Franklin

Strategic

Income

Fund

(continued)

Unrealized

appreciation

on

OTC

swap

contracts

$

—

Unrealized

depreciation

on

OTC

swap

contracts

$

31,625

Foreign

exchange

contracts

..

Unrealized

appreciation

on

OTC

forward

exchange

contracts

4,513,818

Unrealized

depreciation

on

OTC

forward

exchange

contracts

1,684,789

Credit

contracts

............

Variation

margin

on

centrally

cleared

swap

contracts

—

Variation

margin

on

centrally

cleared

swap

contracts

1,754,183

b

OTC

swap

contracts

(upfront

payments)

227,824

OTC

swap

contracts

(upfront

receipts)

3,417,359

Unrealized

appreciation

on

OTC

swap

contracts

446,080

Unrealized

depreciation

on

OTC

swap

contracts

6,651,722

Inflation

contracts

..........

Variation

margin

on

centrally

cleared

swap

contracts

—

Variation

margin

on

centrally

cleared

swap

contracts

878,601

b

Value

recovery

instruments

...

Investments

in

securities,

at

value

8,685,606

c

Investments

in

securities,

at

value

—

Total

....................

$19,503,153

$15,997,581

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Consolidated

Statement

of

Investments.

Only

the

variation

margin

receivable/payable

at

period

end

is

separately

reported

within

the

Consolidated

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

b

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

centrally

cleared

swap

contracts

as

reported

in

the

Consolidated

Statement

of

Investments.

Only

the

variation

margin

receivable/payable

at

period

end

is

separately

reported

within

the

Consolidated

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

C

VRI

are

included

in

investments

in

securities,

at

value

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

11.

Other

Derivative

Information

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

62

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

For

the period

ended

October

31,

2020,

the

average

month

end

notional

amount

of

futures

contracts

and

swap

contracts,

the

average

month

end

contract

value

for

forward

exchange

contracts

and

average

month

end

fair

value

of

VRI

were

as

follows:

At

October

31,

2020,

the

Fund's

OTC

derivative

assets

and

liabilities

are

as

follows:

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Consolidated

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Period

Consolidated

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Period

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Franklin

Strategic

Income

Fund

Interest

rate

contracts

.......

Futures

contracts

$4,608,297

Futures

contracts

$(4,409,398)

Swap

contracts

(6,139,210)

Swap

contracts

71,601

Foreign

exchange

contracts

..

Forward

exchange

contracts

(19,884,494)

Forward

exchange

contracts

6,255,398

Credit

contracts

............

Swaps

contracts

(19,055,965)

Swap

contracts

34,844,430

Inflation

contracts

..........

Swap

contracts

—

Swap

contracts

12,875,396

Value

recovery

instruments

Investments

—

Investments

$1,252,876

a

Total

....................

$(40,471,372)

$50,890,303

a

Purchased

option

contracts

and

VRI

are

included

in

net

reailzed

gain

(loss)

from

investments

and

net

change

in

unreailized

appreciation

(depreciation)

on

investments

in

the

Consolidated

Statement

of

Operations.

Franklin

Strategic

Income

Fund

Futures

contracts

.........................

$582,282,228

Swap

Contracts

..........................

504,915,455

Forward

exchange

contracts

.................

841,382,986

VRI

....................................

8,790,415

Gross

Amounts

of

Assets

and

Liabilities

Presented

in

the

Consolidated

Statement

of

Assets

and

Liabilities

Assets

a

Liabilities

a

Derivatives

Franklin

Strategic

Income

Fund

Forward

exchange

contracts

.............................

$

4,513,818

$

1,684,789

Swap

contracts

.......................................

673,904

10,100,706

Total

.............................................

$5,187,722

$11,785,495

a

Absent

an

event

of

default

or

early

termination,

OTC

derivative

assets

and

liabilities

are

presented

gross

and

not

offset

in

the

Consolidated

Statement

of

Assets

and

Liabilities.

11.

Other

Derivative

Information

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

63

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

At

October

31,

2020,

OTC

derivative

assets,

which

may

be

offset

against

OTC

derivative

assets

and

collateral

pledged

to

the

counterparty,

are

as

follows:

At

October

31,

2020,

OTC

derivative

liabilities,

which

may

be

offset

against

OTC

derivative

liabilities

and

collateral

received

from

the

counterparty,

are

as

follows:

Amounts

Not

Offset

in

the

Consolidated

Statement

of

Assets

and

Liabilities

Gross

Amounts

of

Assets

Presented

in

the

Consolidated

Statement

of

Assets

and

Liabilities

Financial

Instruments

Available

for

Offset

Financial

Instruments

Collateral

Received

Cash

Collateral

Received

Net

Amount

(Not

less

than

zero)

Franklin

Strategic

Income

Fund

Counterparty

BNDP

...................

$—

$—

$—

$—

$—

BNY

—

—

—

—

—

BZWS

...................

527,579

(527,579)

—

—

—

CITI

.....................

146,325

(146,325)

—

—

—

DBAB

...................

11,433

—

—

—

11,433

GSCO

...................

—

—

—

—

—

JPHQ

...................

4,502,385

(4,502,386)

—

—

—

MSCO

...................

—

—

—

—

—

Total

...................

$5,187,722

$(5,176,290)

$

—

$—

$11,433

$

1

Amounts

Not

Offset

in

the

Consolidated

Statement

of

Assets

and

Liabilities

Gross

Amounts

of

Liabilities

Presented

in

the

Consolidated

Statement

of

Assets

and

Liabilities

Financial

Instruments

Available

for

Offset

Financial

Instruments

Collateral

Pledged

a

Cash

Collateral

Pledged

a

Net

Amount

(Not

less

than

zero)

Franklin

Strategic

Income

Fund

Counterparty

BNDP

...................

$65,407

$—

$—

$(65,407)

$—

BNY

—

—

—

—

—

BZWS

...................

615,207

(527,579)

—

(87,627)

—

CITI

.....................

1,167,918

(146,325)

—

(1,021,594)

—

DBAB

...................

—

—

—

—

—

GSCO

...................

297,253

—

—

(230,000)

67,253

JPHQ

...................

4,955,178

(4,502,386)

—

(452,793)

—

MSCO

...................

4,684,532

—

—

(4,684,532)

—

Total

...................

$11,785,495

$(5,176,290)

$—

$(6,541,953)

$67,253

11.

Other

Derivative

Information

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

64

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

See

Note

1(f)

regarding

derivative

financial

instruments. 

See

Abbreviations

on

page

69

.

12.

Holdings

of

5%

Voting

Securities

of

Portfolio

Companies

The

1940

Act

defines

"affiliated

companies"

to

include

investments

in

portfolio

companies

in

which

a

fund

owns

5%

or

more

of

the

outstanding

voting

securities.

During

the

period

ended

October

31,

2020,

investments

in

“affiliated

companies”

were

as

follows:

13.

Credit

Facility

The

Fund,

together

with

other

U.S.

registered

and

foreign

investment

funds

(collectively,

Borrowers),

managed

by

Franklin

Templeton,

are

borrowers

in

a

joint

syndicated

senior

unsecured

credit

facility

totaling

$2

billion

(Global

Credit

Facility)

which

matures

on

February

5,

2021.

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

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

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

Consolidated

Statement

of

Operations.

During

the

period

ended

October

31,

2020,

the Fund

did

not

use

the

Global

Credit

Facility.

14.

Fair

Value

Measurements

The

Fund

follows

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Fund's

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the

Fund's financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

a

In

some

instances,

the

collateral

amounts

disclosed

in

the

table

above

were

adjusted

due

to

the

requirement

to

limit

collateral

amounts

to

avoid

of

over

collateralization.  Actual

collateral

received

and/or

pledged

may

be

more

than

the

amounts

disclosed

herein.

Value

at

Beginning

of

Period

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Period

Number

of

Shares/Principal

Amount

Held

at

End

of

Period

Investment

Income

Franklin

Strategic

Income

Fund

Non-Controlled

Affiliates

Dividends

Remington

Outdoor

Co.,

Inc.

.

$

661,219

$

—

$

—

$

—

$

(661,219)

$

—

1,322,439

$

—

Remington

Outdoor

Co.,

Inc.,

Litigation

Units

.........

—

—

—

—

—

—

124,500

—

Total

Affiliated

Securities

(Value

is

—%

of

Net

Assets)

$661,219

$—

$—

—

(661,219)

$—

$—

11.

Other

Derivative

Information

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

65

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

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

Fund's

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

October

31,

2020,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Strategic

Income

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

—

$

—

$

—

a

$

—

Energy

Equipment

&

Services

.............

316,729

—

—

316,729

Entertainment

.........................

33,335

—

—

33,335

Hotels,

Restaurants

&

Leisure

.............

—

—

122,759

122,759

Machinery

............................

—

—

1,985,626

1,985,626

Media

...............................

1,201,285

—

14,838

1,216,123

Multiline

Retail

........................

—

—

—

a

—

Oil,

Gas

&

Consumable

Fuels

.............

29,157

—

—

29,157

Paper

&

Forest

Products

.................

302,681

—

4,917,645

5,220,326

Road

&

Rail

..........................

—

—

—

a

—

Specialty

Retail

........................

233,596

—

—

233,596

Management

Investment

Companies

.........

110,821,608

—

—

110,821,608

Warrants

:

Diversified

Financial

Services

.............

—

—

—

a

—

Media

...............................

9

—

—

9

Oil,

Gas

&

Consumable

Fuels

.............

—

—

144

144

Paper

&

Forest

Products

.................

—

2,109

—

2,109

Software

&

Services

....................

—

—

750,000

750,000

Convertible

Bonds

.......................

—

80,293

—

80,293

Corporate

Bonds

:

Aerospace

&

Defense

...................

—

5,218,775

—

5,218,775

Air

Freight

&

Logistics

...................

—

9,155,932

—

9,155,932

Airlines

..............................

—

10,563,571

—

10,563,571

Auto

Components

......................

—

29,439,564

—

29,439,564

Banks

...............................

—

84,908,354

—

84,908,354

Beverages

...........................

—

18,533,383

—

18,533,383

Biotechnology

.........................

—

21,967,741

—

21,967,741

Building

Products

......................

—

26,122,435

—

26,122,435

Capital

Markets

........................

—

39,487,379

—

39,487,379

Chemicals

...........................

—

110,746,635

—

110,746,635

Commercial

Services

&

Supplies

...........

—

14,182,907

—

14,182,907

Communications

Equipment

..............

—

12,560,020

—

12,560,020

Construction

&

Engineering

...............

—

846,000

—

846,000

Construction

Materials

..................

—

13,364,000

—

13,364,000

Consumer

Finance

.....................

—

22,556,523

—

22,556,523

Containers

&

Packaging

.................

—

67,299,310

—

67,299,310

Distributors

...........................

—

4,837,500

—

4,837,500

Diversified

Financial

Services

.............

—

15,018,919

—

15,018,919

Diversified

Telecommunication

Services

.....

—

55,305,799

—

55,305,799

Electric

Utilities

........................

—

90,281,576

—

90,281,576

Electronic

Equipment,

Instruments

&

Components

........................

—

33,856,185

—

33,856,185

14.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

66

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

Level

1

Level

2

Level

3

Total

Franklin

Strategic

Income

Fund

(continued)

Assets:

Investments

in

Securities:

Corporate

Bonds:

Energy

Equipment

&

Services

.............

$

—

$

9,935,758

$

—

$

9,935,758

Entertainment

.........................

—

33,885,134

—

33,885,134

Equity

Real

Estate

Investment

Trusts

(REITs)

.

—

41,549,768

—

41,549,768

Food

&

Staples

Retailing

.................

—

9,442,951

—

9,442,951

Food

Products

........................

—

44,060,650

—

44,060,650

Gas

Utilities

..........................

—

2,988,646

—

2,988,646

Health

Care

Providers

&

Services

..........

—

46,645,512

—

46,645,512

Hotels,

Restaurants

&

Leisure

.............

—

66,837,152

—

66,837,152

Household

Durables

....................

—

33,854,489

—

33,854,489

Household

Products

....................

—

13,290,437

—

13,290,437

Independent

Power

and

Renewable

Electricity

Producers

..........................

—

63,163,190

—

63,163,190

Insurance

............................

—

40,421,011

—

40,421,011

Interactive

Media

&

Services

..............

—

17,310,722

—

17,310,722

Internet

&

Direct

Marketing

Retail

..........

—

13,160,456

—

13,160,456

IT

Services

...........................

—

35,492,534

—

35,492,534

Machinery

............................

—

21,920,212

—

21,920,212

Marine

..............................

—

12,612,180

—

12,612,180

Media

...............................

—

113,927,067

—

113,927,067

Metals

&

Mining

.......................

—

34,550,542

—

34,550,542

Multiline

Retail

........................

—

1,989,308

15,007

a

2,004,315

Multi-Utilities

..........................

—

9,579,330

—

9,579,330

Oil,

Gas

&

Consumable

Fuels

.............

—

179,052,255

—

179,052,255

Paper

&

Forest

Products

.................

—

3,814,145

—

3,814,145

Pharmaceuticals

.......................

—

41,300,346

—

41,300,346

Real

Estate

Management

&

Development

....

—

26,677,263

—

26,677,263

Road

&

Rail

..........................

—

46,085,455

4,101,072

50,186,527

Semiconductors

&

Semiconductor

Equipment

.

—

13,141,875

—

13,141,875

Software

.............................

—

11,912,325

—

11,912,325

Specialty

Retail

........................

—

15,324,893

—

15,324,893

Textiles,

Apparel

&

Luxury

Goods

..........

—

10,827,800

—

10,827,800

Thrifts

&

Mortgage

Finance

...............

—

43,030,318

—

43,030,318

Tobacco

.............................

—

21,592,031

—

21,592,031

Trading

Companies

&

Distributors

..........

—

28,351,780

—

28,351,780

Wireless

Telecommunication

Services

.......

—

49,067,961

—

49,067,961

Senior

Floating

Rate

Interests

...............

—

100,093,915

61,531,323

161,625,238

Marketplace

Loans

......................

—

—

7,643,077

7,643,077

Loan

Participations

and

Assignments

.........

—

18,699,014

—

18,699,014

Foreign

Government

and

Agency

Securities

....

—

569,812,903

—

569,812,903

U.S.

Government

and

Agency

Securities

.......

—

173,356,454

—

173,356,454

Asset-Backed

Securities

..................

—

786,897,846

—

786,897,846

Commercial

Mortgage-Backed

Securities

......

—

3,512,531

—

3,512,531

Mortgage-Backed

Securities

................

—

308,755,066

—

308,755,066

Municipal

Bonds

.........................

—

62,834,855

—

62,834,855

Escrows

and

Litigation

Trusts

...............

—

60,000

45,000

a

105,000

Short

Term

Investments

...................

51,958,261

75,759,713

—

127,717,974

Total

Investments

in

Securities

...........

$164,896,661

$3,942,912,703

$81,126,491

$4,188,935,855

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

4,513,818

$

—

$

4,513,818

Futures

contracts

........................

386,755

—

—

386,755

Swap

contracts

.........................

—

5,689,150

—

5,689,150

Unfunded

Loan

Commitments

..............

—

122,307

—

122,307

Total

Other

Financial

Instruments

.........

$386,755

$10,325,275

$—

$10,712,030

14.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

67

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

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

period.

At October

31,

2020,

the

reconciliation

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Strategic

Income

Fund

(continued)

Liabilities:

Other

Financial

Instruments:

Forward

exchange

contracts

................

—

1,684,789

—

1,684,789

Futures

contracts

........................

1,579,302

—

—

1,579,302

Swap

contracts

..........................

—

9,316,131

—

9,316,131

Total

Other

Financial

Instruments

.........

$1,579,302

$11,000,920

$—

$12,580,222

a

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

a

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

b

Net

Realized

Gain

(Loss)

Net

Unr

ealized

Appreciatio

n

(

Depreciation

)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Strategic

Income

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

.

$

—

$

—

$

—

$

661,220

$

—

$

—

$

—

$

(661,220)

$

—

$

(661,220)

Hotels,

Restaurants

&

Leisure

.........

122,759

—

—

—

—

—

—

—

122,759

—

Machinery

.........

1,985,626

—

—

—

—

—

—

—

1,985,626

—

Media

...........

11,582

—

—

—

—

—

—

3,256

14,838

3,256

Multiline

Retail

......

—

—

—

—

—

—

—

—

—

—

Paper

&

Forest

Products

6,144,820

—

—

—

—

—

—

(1,227,175)

4,917,645

(1,227,175)

Road

&

Rail

.......

—

—

—

—

—

—

—

—

—

—

Warrants

:

Diversified

Financial

Services

........

—

—

—

—

—

—

—

—

—

—

Oil,

Gas

&

Consumable

Fuels

..........

119,805

—

—

—

—

—

—

(119,661)

144

(119,661)

Software

&

Services

..

750,000

—

—

—

—

—

—

—

750,000

—

Corporate

Bonds

:

Diversified

Financial

Services

........

121,350

—

—

—

—

(1,498,232)

—

1,376,882

—

—

Multiline

Retail

......

24,852

1,667

—

—

—

(1,036,687)

—

1,025,175

15,007

1,025,175

Road

&

Rail

.......

3,404,098

—

—

—

—

264,424

—

432,550

4,101,072

432,550

Senior

Floating

Rate

Interests

:

Household

Products

..

41,728,693

—

—

—

—

8,607

—

(3,246,257)

38,491,043

(3,246,257)

Road

&

Rail

.......

—

—

—

2,855,822

—

4,185

—

269,145

3,129,152

269,145

Software

..........

19,604,573

—

—

—

—

83,997

—

222,558

19,911,128

222,558

Marketplace

Loans

:

Diversified

Financial

Services

........

6,389,054

2,879,455

1,160,476

3,764,246

—

(389,937)

(10,685)

(6,149,532)

7,643,077

(6,129,743)

Commercial

Mortgage-

Backed

Securities

:

Thrifts

&

Mortgage

Finance

........

8,697,031

—

—

—

(10,835,111)

—

—

2,138,080

—

—

Asset-Backed

Securities

:

Diversified

Financial

Services

........

5,585,223

—

—

—

(5,116,944)

(258,337)

—

(209,942)

—

—

14.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

68

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

Significant

unobservable

valuation

inputs

for

material

Level

3 assets

and/or

liabilities and

impact

to

fair

value

as

a

result

of

changes

in

unobservable

valuation

inputs

as

of

October

31,

2020,

are

as

follows:

Balance

at

Beginning

of

Period

Purchases

Sales

Transfer

Into

Level

3

a

Transfer

Out

of

Level

3

Cost

Basis

Adjust-

ments

b

Net

Realized

Gain

(Loss)

Net

Unrealized

Appreciation

(Depreciation)

Balance

at

End

of

Period

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Period

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Strategic

Income

Fund

(continued)

Assets:

Investments

in

Securities:

Escrows

and

Litigation

Trusts

...........

$

—

c

$

—

$

—

$

60,000

$

—

$

—

$

—

$

(15,000)

$

45,000

$

(15,000)

Total

Investments

in

Securities

.

$94,689,466

$2,881,122

$1,160,476

$7,341,288

$(15,952,055)

$(2,821,980)

$(10,685)

$(6,161,141)

$81,126,491

$(9,446,372)

a

Transferred

into

Level

3

as

a

result

of

the

unavailability

of

a

quoted

market

price

in

an

active

market

for

identical

securities

and

other

significant

observable

valuation

inputs.

b

May

include

accretion,

amortization,

partnership

adjustments,

and/or

other

cost

basis

adjustments.

c

Includes

securities

determined

to

have

no

value.

Description

Fair

Value

at

End

of

Period

Valuation

Technique

Unobservable

Inputs

Amount

/

Range

(Weighted

Average)

Impact

to

Fair

Value

if

Input

Increases

a

Franklin

Strategic

Income

Fund

Assets:

Investments

in

Securities:

Common

Stocks:

Paper

&

Forest

Products

....

$4,917,645

Discounted

cash

flow

Weighted

average

cost

of

capital

20.5%

Decrease

b

Unlevered

free

cash

flows

$141.4

mil

Increase

Discount

for

lack

of

marketability

20.0%

Decrease

b

Long

term

growth

0.0%

Increase

Corporate

Bonds:

Road

&

Rail

.............

4,101,072

Discounted

cash

flow

Discount

rate

15.8%

Decrease

b

Free

cash

flow

$4.5

mil

Increase

b

Senior

Floating

Rate

Interests:

Household

...............

38,491,043

Recovery

value

Asset

value

estimate

$220.0

mil

Increase

b

Software

19,911,128 

Discounted

cash

flow

Discount

rate

18.2%

Decrease

......................

Free

cash

flow

$22.6

mil

Increase

b

All

other

Investments

..........

13,705,603

c,d

Total

.......................

$81,126,491

a

Represents

the

directional

change

in

the

fair

value

that

would

result

from

a

significant

and

reasonable

increase

in

the

corresponding

input.

A

significant

and

reasonable

decrease

in

the

input

would

have

the

opposite

effect.

Significant

impacts,

if

any,

to

fair

value

and/or

net

assets

have

been

indicated.

b

Represents

a

significant

impact

to

fair

value

but

not

net

assets.

c

Includes

fair

value

of

immaterial

assets

and/or

liabilities

developed

using

various

valuation

techniques

and

unobservable

inputs.

May

also

include

values

derived

using

private

transaction

prices

or

non-public

third

party

pricing

information

which

is

unobservable.

14.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Notes

to

Consolidated

Financial

Statements

(unaudited)

69

franklintempleton.com

Semiannual

Report

Franklin

Strategic

Income

Fund

(continued)

15.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

The

amendments

in

the

ASU

provides

optional

temporary

financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

and

other

interbank-offered

based

reference

rates

as

of

the

end

of

2021.

The

ASU

is

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022. Management

has

reviewed

the

requirements

and

believes

the

adoption

of

this

ASU

will

not

have

a

material

impact

on

the

consolidated

financial

statements.

16.

Subsequent

Events

The

Fund

has

evaluated

subsequent

events

through

the

issuance

of

the financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

d

Includes

securities

determined

to

have

no

value

at

October

31,

2020.

Counterparty

DBAB

Deutsche

Bank

AG

JPHQ

JP

Morgan

Chase

Bank,

N.A.

Selected

Portfolio

AGMC

Assured

Guaranty

Municipal

Corp.

BA

Banker's

Acceptance

BBR

Bank

of

England

Base

Rate

BZDIOVRA

Brazil

Inter-Bank

Deposit

Rate

CLO

Collateralized

Loan

Obligation

CMT

Constant

Monthly

U.S.

Treasury

Securities

Yield

Curve

Rate

Index

CVR

Contingent

Voting

Rights

EURIBOR

Euro

Inter-Bank

Offer

Rate

FHLMC

Federal

Home

Loan

Mortgage

Corp.

FNMA

Federal

National

Mortgage

Association

FRN

Floating

Rate

Note

GDP

Gross

Domestic

Product

GNMA

Government

National

Mortgage

Association

GO

General

Obligation

LIBOR

London

Inter-Bank

Offered

Rate

MBS

Mortgage-Backed

Security

PIK

Payment-In-Kind

SOFR

Secured

Overnight

Financing

Rate

TBD

To

Be

Determined

T-Note

Treasury

Note

VRI

Value

Recovery

Instrument

Currency

AUD

Australian

Dollar

BRL

Brazilian

Real

CAD

Canadian

Dollar

COP

Colombian

Peso

DOP

Dominican

Peso

EUR

Euro

IDR

Indonesian

Rupiah

USD

United

States

Dollar

UYU

Uruguayan

Peso

ZAR

South

African

Rand

14.

Fair

Value

Measurements

(continued)

Franklin

Strategic

Series

Shareholder

Information

70

franklintempleton.com

Semiannual

Report

Liquidity

Risk

Management

Program

–

Funds

no

HLIM

Each

of

the

Funds

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund’s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Funds’

Board

of

Trustees

approved

the

appointment

of

the

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

as

the

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

Investment

Compliance,

Investment

Operations,

Valuation

Committee

and

Product

Management

groups.

In

assessing

and

managing

each

Fund’s

liquidity

risk,

the

ILC

considers,

as

relevant,

a

variety

of

factors,

including

the

Fund’s

investment

strategy

and

the

liquidity

of

its

portfolio

investments

during

both

normal

and

reasonably

foreseeable

stressed

conditions;

its

short

and

long-term

cash

flow

projections;

and

its

cash

holdings

and

access

to

other

funding

sources

including

the

Funds’

interfund

lending

facility

and

line

of

credit.

Classification

of

the

Fund’s

portfolio

holdings

in

the

four

liquidity

categories

is

based

on

the

number

of

days

it

is

reasonably

expected

to

take

to

convert

the

investment

to

cash

(for

Highly

Liquid

and

Moderately

Liquid

holdings)

or

sell

or

dispose

of

the

investment

(for

Less

Liquid

and

Illiquid

investments),

in

current

market

conditions

without

significantly

changing

the

investment’s

market

value.

Each

Fund

primarily

holds

liquid

assets

that

are

defined

under

the

Liquidity

Rule

as

"Highly

Liquid

Investments,"

and

therefore

is

not

required

to

establish

an

HLIM.

Highly

Liquid

Investments

are

defined

as

cash

and

any

investment

reasonably

expected

to

be

convertible

to

cash

in

current

market

conditions

in

three

business

days

or

less

without

the

conversion

to

cash

significantly

changing

the

market

value

of

the

investment.

At

meetings

of

the

Funds’

Board

of

Trustees

held

in

May

2020,

the

Program

Administrator

provided

a

written

report

to

the

Board

addressing

the

adequacy

and

effectiveness

of

the

program

during

the

period

December

1,

2018

to

December

31,

2019.

The

Program

Administrator

report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

Liquid

Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

At

the

same

time,

the

Program

Administrator

also

presented

the

Fund

Board

of

Trustees

an

update

on

liquidity

during

the

first

quarter

of

2020

in

relation

to

the

COVID-19

pandemic.

Proxy

Voting

Policies

and

Procedures

The

Fund’s

investment

manager

has

established

Proxy

Voting

Policies

and

Procedures

(Policies)

that

the

Fund

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities.

Shareholders

may

view

the

Fund’s

complete

Policies

online

at

franklintempleton.com.

Alternatively,

shareholders

may

request

copies

of

the

Policies

free

of

charge

by

calling

the

Proxy

Group

collect

at

(954)

527-

7678

or

by

sending

a

written

request

to:

Franklin

Templeton

Companies,

LLC,

300

S.E.

2nd

Street,

Fort

Lauderdale,

FL

33301,

Attention:

Proxy

Group.

Copies

of

the

Fund’s

Franklin

Strategic

Series

Shareholder

Information

71

franklintempleton.com

Semiannual

Report

proxy

voting

records

are

also

made

available

online

at

franklintempleton.com

and

posted

on

the

U.S.

Securities

and

Exchange

Commission’s

website

at

sec.gov

and

reflect

the

most

recent

12-month

period

ended

June

30.

Quarterly

Statement

of

Investments

The

Trust,

on

behalf

of

the

Fund,

files

a

complete

statement

of

investments

with

the

U.S.

Securities

and

Exchange

Commission

for

the

first

and

third

quarters

for

each

fiscal

year

as

an

exhibit

to

its

report

on

Form

N-PORT.

Shareholders

may

view

the

filed

Form

N-PORT

by

visiting

the

Commission’s

website

at

sec.gov.

The

filed

form

may

also

be

viewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

DC.

Information

regarding

the

operations

of

the

Public

Reference

Room

may

be

obtained

by

calling

(800)

SEC-0330.

Householding

of

Reports

and

Prospectuses

You

will

receive

the

Fund’s

financial

reports

every

six

months

as

well

as

an

annual

updated

summary

prospectus

(prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

194

S

12/20

©

2020

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Semiannual

Report

and

Shareholder

Letter

Franklin

Strategic

Income

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Advisers,

Inc.

Franklin

Templeton

Distributors,

Inc.

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer. 

(c) N/A

(d) N/A

(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3. Audit Committee Financial Expert.

(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.

(2) The audit committee financial expert is Mary C. Choksi and she is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.

Item 4.

Principal Accountant Fees and Services.

N/A

Item 5. Audit Committee

 

of Listed Registrants. N/A

Item 6. Schedule of Investments. N/A

Item 7.  Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A

Item 8.  Portfolio Managers of Closed-End Management Investment Companies. N/A

Item 9.  Purchases of Equity Securities by Closed-End Management Investment Company and

Affiliated Purchasers. N/A

Item 10.  Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a)

  Evaluation of Disclosure Controls and Procedures. 

The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b)   Changes in Internal Controls

. 

During the period covered by this report, a third-party service provider commenced performing certain accounting and administrative services for the Registrant that are subject to Franklin Templeton’s oversight.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company. N/A

Item 13. Exhibits.

(a) (1) Code of Ethics

Code of Ethics

(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

Section 302

(b)   Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

Section 906

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN

STRATEGIC SERIES

By S\MATTHEW T. HINKLE________________________

Matthew T. Hinkle

Chief Executive Officer – Finance and Administration

Date December 28, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By S\MATTHEW T. HINKLE________________________

Matthew T. Hinkle

Chief Executive Officer – Finance and Administration

Date December 28, 2020

By S\GASTON GARDEY__________________________

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

Date December 28, 2020