SEC Company Response from Franklin Alternative Strategies Funds (CIK 0001535538) — Dec 29, 2025
Franklin Alternative Strategies Funds (CIK 0001535538)
Date: Dec. 29, 2025 · CIK: 0001535538 · Accession: 0001655589-25-000293
AI Filing Summary & Sentiment
File numbers found in text: 811-00537, 811-01700, 811-02605, 811-02781, 811-03143, 811-04267, 811-04356, 811-04787, 811-04892, 811-04894, 811-04985, 811-05569, 811-06243, 811-06481, 811-07038, 811-07288, 811-08226, 811-10157, 811-22641
Letter
One Franklin Parkway San Mateo, CA 94403-1906 Tel 800.632.2350 www.franklintempleton.com December 29, 2025 VIA EDGAR David Manion U.S. Securities and Exchange Commission Division of Investment Management 100 F Street, NE Washington, DC 20549-8626
Subject: Franklin Templeton Funds (the “Funds”) (as listed on the attached Appendix)
Dear Mr. Manion:
On behalf of the Funds, the following are the responses to the U.S. Securities and Exchange Commission (“SEC”) Staff’s comments conveyed telephonically on April 17, 2025, regarding filings made by the Funds with the SEC on Form N-CSR. References made to the Funds’ shareholder reports on Form N-CSR refer to the corresponding reporting periods reviewed by the Staff as listed on the Appendix. Each comment is summarized below, followed by the applicable Fund’s response to the comment.
1. Comment: With respect to Franklin Universal Trust’s annual shareholder report on Form N-CSR (the “FUT Report”), the Staff notes that certain marketplace loans listed on the Schedule of Investments have no value or are valued at a significantly small fraction of the principal amount (i.e., the par value). Please discuss whether such loans are in default and indicate in future financial statements when a loan held by the Fund is in default.
Response: Certain of such marketplace loans were delinquent on payment. With respect to the reporting cycle ended August 31, 2025, the Fund has identified on the Schedule of Investments any marketplace loans that are considered in default for purposes of U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).
2. Comment: In the Schedule of Investments of the FUT Report, the Staff notes that certain marketplace loans appear to be impaired based on their disclosed valuation (i.e., 10% or less of their par value). The cost to collect such loans may be greater than their fair value. (For example, certain marketplace loans listed on the Schedule of Investments have a modest principal amount and are valued at less than 10% of that amount.) Please explain whether the costs to collect have been considered in the valuation of such marketplace loans. In addition, please indicate who would bear the costs of collecting these loans (e.g., the Fund or the servicing agent).
Response: The valuation of such marketplace loans (i.e., charged-off loans) reflected the recovery amount expected to be received by the Fund, which is net of the applicable collection cost. The recovery of unsecured charged-off loans are realized mainly through debt sales and collections made by the servicer. Given that the disclosed valuation of such loans is net of collection cost, the Fund is effectively bearing the cost of the collection.
3. Comment: With respect to the annual shareholder report of the Franklin California High Yield Municipal Fund series of Franklin Municipal Securities Trust, the Staff notes that such Fund is holding escrow certificates (i.e., securities representing interests in securities placed in an escrow account) with no disclosed cost. Please explain how these certificates were acquired by the Fund, the accounting treatment of such certificates, and how value was assigned. In connection with such discussion, please include specific references to U.S. GAAP.
Response: The escrow securities referenced in the annual shareholder report were acquired by the Fund pursuant to a restructuring plan and related agreements associated with the Fund’s participation as a bondholder in the court-supervised restructuring of the Puerto Rico Electric Power Authority (“PREPA”). These securities were not acquired via open-market purchases or direct investment. Instead, they represented the Fund’s right to reimbursement of documented legal and professional fees, subject to court approval and other specified conditions. The fair value of the escrow securities position was immaterial to the Fund.
Mr. Manion December 29, 2025 Page 2
Upon further review and analysis, the Fund has determined that the potential reimbursement associated with the escrow securities constituted a contingent claim rather than an investment security subject to valuation. In accordance with ASC Topic 450 (Contingencies), such a claim should not be recognized as an asset (i.e., a gain) until the contingency has been resolved and the realization has occurred or is virtually assured. Accordingly, the Fund has concluded that the escrow securities should not have been recorded as assets of the Fund and no fair value should have been assigned. As a result, the Fund has removed these positions from its accounting records (effective as of October 1, 2025) and has updated its internal procedures to ensure that similar items are evaluated and assessed under ASC Topic 450 in future reporting periods, as applicable.
We believe that we have responded fully to each of the Staff’s comments as set forth above. However, should you have any further questions or require any further information, please do not hesitate to contact the undersigned at 916-463-1966, or, in his absence, Jeffrey White at 916-463-4396.
Very truly yours,
/s/CHRISTOPHER KINGS
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CORRESP 1 filename1.htm One Franklin Parkway San Mateo, CA 94403-1906 Tel 800.632.2350 www.franklintempleton.com December 29, 2025 VIA EDGAR David Manion U.S. Securities and Exchange Commission Division of Investment Management 100 F Street, NE Washington, DC 20549-8626 Subject: Franklin Templeton Funds (the “Funds”) (as listed on the attached Appendix) Dear Mr. Manion: On behalf of the Funds, the following are the responses to the U.S. Securities and Exchange Commission (“SEC”) Staff’s comments conveyed telephonically on April 17, 2025, regarding filings made by the Funds with the SEC on Form N-CSR. References made to the Funds’ shareholder reports on Form N-CSR refer to the corresponding reporting periods reviewed by the Staff as listed on the Appendix. Each comment is summarized below, followed by the applicable Fund’s response to the comment. 1. Comment: With respect to Franklin Universal Trust’s annual shareholder report on Form N-CSR (the “FUT Report”), the Staff notes that certain marketplace loans listed on the Schedule of Investments have no value or are valued at a significantly small fraction of the principal amount (i.e., the par value). Please discuss whether such loans are in default and indicate in future financial statements when a loan held by the Fund is in default. Response: Certain of such marketplace loans were delinquent on payment. With respect to the reporting cycle ended August 31, 2025, the Fund has identified on the Schedule of Investments any marketplace loans that are considered in default for purposes of U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). 2. Comment: In the Schedule of Investments of the FUT Report, the Staff notes that certain marketplace loans appear to be impaired based on their disclosed valuation (i.e., 10% or less of their par value). The cost to collect such loans may be greater than their fair value. (For example, certain marketplace loans listed on the Schedule of Investments have a modest principal amount and are valued at less than 10% of that amount.) Please explain whether the costs to collect have been considered in the valuation of such marketplace loans. In addition, please indicate who would bear the costs of collecting these loans (e.g., the Fund or the servicing agent). Response: The valuation of such marketplace loans (i.e., charged-off loans) reflected the recovery amount expected to be received by the Fund, which is net of the applicable collection cost. The recovery of unsecured charged-off loans are realized mainly through debt sales and collections made by the servicer. Given that the disclosed valuation of such loans is net of collection cost, the Fund is effectively bearing the cost of the collection. 3. Comment: With respect to the annual shareholder report of the Franklin California High Yield Municipal Fund series of Franklin Municipal Securities Trust, the Staff notes that such Fund is holding escrow certificates (i.e., securities representing interests in securities placed in an escrow account) with no disclosed cost. Please explain how these certificates were acquired by the Fund, the accounting treatment of such certificates, and how value was assigned. In connection with such discussion, please include specific references to U.S. GAAP. Response: The escrow securities referenced in the annual shareholder report were acquired by the Fund pursuant to a restructuring plan and related agreements associated with the Fund’s participation as a bondholder in the court-supervised restructuring of the Puerto Rico Electric Power Authority (“PREPA”). These securities were not acquired via open-market purchases or direct investment. Instead, they represented the Fund’s right to reimbursement of documented legal and professional fees, subject to court approval and other specified conditions. The fair value of the escrow securities position was immaterial to the Fund. Mr. Manion December 29, 2025 Page 2 Upon further review and analysis, the Fund has determined that the potential reimbursement associated with the escrow securities constituted a contingent claim rather than an investment security subject to valuation. In accordance with ASC Topic 450 (Contingencies), such a claim should not be recognized as an asset (i.e., a gain) until the contingency has been resolved and the realization has occurred or is virtually assured. Accordingly, the Fund has concluded that the escrow securities should not have been recorded as assets of the Fund and no fair value should have been assigned. As a result, the Fund has removed these positions from its accounting records (effective as of October 1, 2025) and has updated its internal procedures to ensure that similar items are evaluated and assessed under ASC Topic 450 in future reporting periods, as applicable. We believe that we have responded fully to each of the Staff’s comments as set forth above. However, should you have any further questions or require any further information, please do not hesitate to contact the undersigned at 916-463-1966, or, in his absence, Jeffrey White at 916-463-4396. Very truly yours, /s/CHRISTOPHER KINGS Christopher Kings Senior Vice President, Global Fund Administration & Oversight Franklin Templeton On behalf of the Funds listed in the attached Appendix Appendix Funds and Fiscal Year Ends Reviewed by SEC Staff Fund # File # Registrant Name Series ID Series Name FYE Reviewed 1 811-22641 Franklin Alternative Strategies Funds S000042023 K2 Alternative Strategies Fund 5/31/2024 2 811-02605 Franklin U.S. Government Money Fund S000006859 Franklin U.S. Government Money Fund 6/30/2024 3 811-04267 Institutional Fiduciary Trust S000007358 Money Market Portfolio 6/30/2024 4 811-04356 Franklin California Tax Free Trust S000006719 Franklin California Intermediate-Term Tax-Free Income Fund 6/30/2024 5 811-07038 Money Market Portfolios S000007450 The U.S. Government Money Market Portfolio 6/30/2024 6 811-01700 Franklin Gold & Precious Metals Fund S000006839 Franklin Gold & Precious Metals Fund 7/31/2024 7 811-10157 Franklin Global Trust S000012347 Franklin Emerging Market Debt Opportunities Fund 7/31/2024 8 811-10157 Franklin Global Trust S000022425 Franklin International Growth Fund 7/31/2024 9 811-02781 Templeton Funds S000008745 Templeton World Fund 8/31/2024 10 811-02781 Templeton Funds S000008746 Templeton Foreign Fund 8/31/2024 11 811-03143 Templeton Global Smaller Companies Fund S000008758 Templeton Global Smaller Companies Fund 8/31/2024 12 811-04892 Templeton Growth Fund Inc S000008759 Templeton Growth Fund, Inc. 8/31/2024 13 811-04985 Templeton Emerging Markets Fund CEF0014434 Templeton Emerging Markets Fund 8/31/2024 14 811-05569 Franklin Universal Trust CEF0014022 Franklin Universal Trust 8/31/2024 15 811-06243 Franklin Strategic Series S000065648 Franklin Templeton SMACS: Series CH 8/31/2024 16 811-06243 Franklin Strategic Series S000065649 Franklin Templeton SMACS: Series E 8/31/2024 17 811-06243 Franklin Strategic Series S000065650 Franklin Templeton SMACS: Series H 8/31/2024 18 811-06243 Franklin Strategic Series S000065651 Franklin Templeton SMACS: Series I 8/31/2024 19 811-08226 Templeton Global Investment Trust S000068644 Franklin Templeton SMACS: Series EM 8/31/2024 20 811-00537 Franklin Custodian Funds S000006754 FRANKLIN DYNATECH FUND 9/30/2024 21 811-00537 Franklin Custodian Funds S000006755 Franklin Growth Fund 9/30/2024 22 811-00537 Franklin Custodian Funds S000006756 Franklin Income Fund 9/30/2024 23 811-00537 Franklin Custodian Funds S000006757 Franklin U.S. Government Securities Fund 9/30/2024 24 811-00537 Franklin Custodian Funds S000006758 Franklin Utilities Fund 9/30/2024 25 811-04787 Franklin New York Tax Free Trust S000006871 Franklin New York Intermediate-Term Tax-Free Income Fund 9/30/2024 26 811-04894 Franklin Managed Trust S000006858 Franklin Rising Dividends Fund 9/30/2024 27 811-07288 Franklin Strategic Mortgage Portfolio S000006875 Franklin Strategic Mortgage Portfolio 9/30/2024 28 811-06481 Franklin Municipal Securities Trust S000006860 Franklin California High Yield Municipal Fund 2/29/2024