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SUMMARY PROSPECTUS
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Franklin Intelligent Machines ETF
Franklin Templeton ETF Trust
January 24, 2020
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Ticker:
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Exchange:
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IQM
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Cboe Stock Exchange, Inc.
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Before you invest, you may want to review the Fund's prospectus, which contains more information about the Fund and its risks.
You can find the Funds prospectus, statement of additional information, reports to shareholders and other information
about the Fund online at www.franklintempleton.com/prospectus. You can also get this information at no cost by calling (800)
DIAL BEN/342-5236 or by sending an e-mail request to prospectus@franklintempleton.com. The Fund's prospectus and statement of additional information, both dated January 24, 2020, as may be supplemented, are all incorporated by reference into this Summary Prospectus.
Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Funds shareholder reports will no longer be
sent by mail, unless you specifically request them from 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 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 to let the financial intermediary know of your request. Your election to receive reports in paper will
apply to all funds held with your financial intermediary.
Franklin Intelligent Machines ETF
Investment Goal
Capital appreciation.
Fees and Expenses of the Fund
The following table describes the fees and expenses that you will incur if you own shares of the Fund. You may also incur
usual and customary brokerage commissions when buying or selling shares of the Fund, which are not reflected in the Example
that follows.
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
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Franklin Intelligent Machines ETF
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Management fees
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0.50%
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Distribution and service (12b-1) fees
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None
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Other expenses1
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0.27%
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Total annual Fund operating expenses
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0.77%
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Fee waiver and/or expense reimbursement2
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-0.27%
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Total annual Fund operating expenses after fee waiver and/or expense reimbursement2
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0.50%
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1. Other expenses are based on estimated amounts for the current fiscal year.
2. The investment manager has contractually agreed to waive or assume certain expenses so that total annual Fund operating expenses
(including acquired fund fees and expenses, but excluding certain non-routine expenses) for the Fund do not exceed 0.50% until
July 31, 2021. Contractual fee waiver and/or expense reimbursement agreements may not be changed or terminated during the
time period set forth above.
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds.
The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at
the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. The Example reflects adjustments made to the Funds operating expenses due to the fee waivers
and/or expense reimbursements by management for the 1 Year numbers only. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
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1 Year
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3 Years
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Franklin Intelligent Machines ETF
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$ 51
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$ 219
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the
Fund's performance.
Principal Investment Strategies
Under normal market conditions, the Fund invests at least 80% of its net assets in equity securities of companies that are
relevant to the Funds investment theme of intelligent machines. The Fund invests predominantly in common stock.
Companies relevant to the Funds investment theme of intelligent machines are those that the investment manager believes
are substantially focused on and/or are expected to substantially benefit from the ongoing technology-driven transformation
of products, software, systems and machinery as well as product design, manufacture, logistics, distribution and maintenance,
including through developments in artificial intelligence. These companies may include those that develop, produce, manufacture,
design, maintain and deliver products or services with new capabilities previously unavailable in the marketplace.
The Fund's investment theme of intelligent machines is intended to capture companies that the investment manager believes
represent the next phase of technological evolution, including companies that provide new systems, logistics solutions, methods,
processes, products or services based on physical applications of new technologies and technological innovation. Such companies
include those the investment manager believes are well-positioned to benefit from intelligent design (e.g., simulation software
and computer-aided design or "CAD" software), intelligent production (e.g., advancements in manufacturing or factory automation
capabilities), intelligent products (e.g., robotic-assisted technologies, tools and services) and intelligent predictive maintenance
(e.g., industrial software solutions and services).
In pursuing the Funds investment theme, the investment manager may invest in companies in any economic sector or of
any market capitalization and may invest in companies both inside and outside of the United States, including those in developing
or emerging markets. Although the Fund may invest across economic sectors, it expects to have significant positions in particular
sectors including technology. The Fund is a non-diversified fund, which means it generally invests a greater proportion
of its assets in the securities of one or more issuers and invests overall in a smaller number of issuers than a diversified
fund.
In selecting companies that the investment manager believes are relevant to the Funds investment theme of intelligent
machines, the investment manager seeks to identify, using its own fundamental, bottom-up research and analysis,
companies positioned to capitalize on disruptive innovation in or that are enabling the further development of the intelligent
machines theme in the markets in which they operate. The investment managers internal research and analysis leverages
insights from diverse sources, including external research, to develop and refine its investment theme and identify and take
advantage of trends that have ramifications for individual companies or entire industries. The investment manager also evaluates
market segments, products, services and business models positioned to benefit significantly from disruptive innovations in
intelligent products, design, manufacturing and/or predictive maintenance relative to broad securities markets, and seeks
to identify the primary beneficiaries of new trends or developments in physical applications of these innovations to select
investments for the Fund.
The investment manager may seek to sell a security if: (i) the security reaches its valuation target; (ii) the security reaches
its position size limit in the Funds portfolio; (iii) the securitys fundamentals deteriorate; (iv) there are adverse
policy changes that could affect the securitys outlook; or (v) better investment opportunities become available.
The Fund is an actively managed ETF that does not seek to replicate the performance of a specified index.
Principal Risks
You could lose money by investing in the Fund. ETF shares are not deposits or obligations of, or guaranteed or endorsed by,
any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency
of the U.S. government. The Fund is subject to the principal risks noted below, any of which may adversely affect the Funds
net asset value (NAV), trading price, yield, total return and ability to meet its investment goal. Unlike many ETFs, the Fund
is not an index-based ETF.
Thematic Investing The Funds investment strategies incorporate the identification of thematic investment opportunities and its performance
may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops
in an unexpected manner. Performance may also be negatively impacted if the securities selected for the Funds portfolios
do not benefit from the development of the Funds investment theme. The Funds thematic investments will also subject
the Fund to growth style investing risks. Growth stock prices reflect projections of future earnings or revenues, and can,
therefore, fall dramatically if the company fails to meet those projections. Growth stocks may be more expensive relative
to their current earnings or assets compared to value or other stocks, and if earnings growth expectations moderate, their
valuations may return to more typical norms, causing their stock prices to fall. Prices of these companies securities
may be more volatile than other securities, particularly over the short term.
Market The market values of securities or other investments owned by the Fund will go up or down, sometimes rapidly or unpredictably.
The market value of a security or other investment may be reduced by market activity or other results of supply and demand
unrelated to the issuer. This is a basic risk associated with all investments. When there are more sellers than buyers, prices
tend to fall. Likewise, when there are more buyers than sellers, prices tend to rise.
Stock prices tend to go up and down more dramatically than those of debt securities. A slower-growth or recessionary economic
environment could have an adverse effect on the prices of the various stocks held by the Fund.
Focus To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time
to time, the Fund 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.
Companies operating within the technology sector may be affected by worldwide technological developments, the success of their
products and services (which may be outdated quickly), anticipated products or services that are delayed or cancelled, and
investor perception of the company and/or its products or services. These companies typically face intense competition and
potentially rapid product obsolescence. They may also have limited product lines, markets, financial resources or personnel.
Technology companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment
of those rights. There can be no assurance these companies will be able to successfully protect their intellectual property
to prevent the misappropriation of their technology, or that competitors will not develop technology that is substantially
similar or superior to such companies technology. These companies typically engage in significant amounts of spending
on research and development, and there is no guarantee that the products or services produced by these companies will be successful.
Technology companies are also potential targets for cyberattacks, which can have a materially adverse impact on the performance
of these companies. In addition, companies operating within the technology sector may develop and/or utilize artificial intelligence.
Artificial intelligence technology could face increasing regulatory scrutiny in the future, which may limit the development
of this technology and impede the growth of companies that develop and/or utilize this technology. Similarly, the collection
of data from consumers and other sources could face increased scrutiny as regulators consider how the data is collected, stored,
safeguarded and used. The customers and/or suppliers of technology companies may be concentrated in a particular country,
region or industry. Any adverse event affecting one of these countries, regions or industries could have a negative impact
on these companies.
Smaller and Mid-Capitalization Companies Securities issued by smaller and mid-capitalization companies may be more volatile in price than those of larger companies,
involve substantial risks and should be considered speculative. Such risks may include greater sensitivity to economic conditions,
less certain growth prospects, and lack of depth of management and funds for growth and development. They may also have limited
product lines or be developing or marketing new products or services for which markets are not yet established and may never
become established. In addition, smaller and mid-capitalization companies may be particularly affected by interest rate increases,
as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any
loans.
Foreign Securities (non-U.S.) Investing in foreign securities typically involves more risks than investing in U.S. securities, and includes risks associated
with: (i) internal and external political and economic developments e.g., the political, economic and social policies
and structures of some foreign countries may be less stable and more volatile than those in the U.S. or some foreign countries
may be subject to trading restrictions or economic sanctions; (ii) trading practices e.g., government supervision and
regulation of foreign securities and currency markets, trading systems and brokers may be less than in the U.S.; (iii) availability
of information e.g., foreign issuers may not be subject to the same disclosure, accounting and financial reporting
standards and practices as U.S. issuers; (iv) limited markets e.g., the securities of certain foreign issuers may be
less liquid (harder to sell) and more volatile; and (v) currency exchange rate fluctuations and policies (e.g., fluctuations
may negatively affect investments denominated in foreign currencies and any income received or expenses paid by the Fund in
that foreign currency). The risks of foreign investments may be greater in developing or emerging market countries.
Non-Diversification Because the Fund is non-diversified, it may be more sensitive to economic, business, political or other changes affecting
individual issuers or investments than a diversified fund, which may result in greater fluctuation in the value of the Funds
shares and greater risk of loss.
Management The Fund will be subject to management risk because it will be an actively managed investment portfolio. The Fund's investment
manager applies investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee
that these decisions will produce the desired results.
Market Trading The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from
trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. Any
of these factors, among others, may lead to the Funds shares trading at a premium or discount to NAV. Thus, you may
pay more (or less) than NAV when you buy shares of the Fund in the secondary market, and you may receive less (or more) than
NAV when you sell those shares in the secondary market. The investment manager cannot predict whether shares will trade above
(premium), below (discount) or at NAV.
International Closed Market Trading To the extent that the underlying securities held by the Fund trade on an exchange that is closed when the securities exchange
on which the Fund shares list and trade is open, there may be market uncertainty about the stale security pricing (i.e., the
last quote from its closed foreign market) resulting in premiums or discounts to NAV that may be greater than those experienced
by other ETFs.
Authorized Participant Concentration Only an authorized participant (Authorized Participant) may engage in creation or redemption transactions directly with the
Fund. The Fund has a limited number of institutions that act as Authorized Participants. To the extent that these institutions
exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other Authorized
Participant is able to step forward to create or redeem Creation Units (as defined below), Fund shares may trade at a discount
to NAV and possibly face trading halts and/or delisting. This risk may be more pronounced in volatile markets, potentially
where there are significant redemptions in ETFs generally.
Small Fund When the Fund's size is small, the Fund may experience low trading volume and wide bid/ask spreads. In addition, the Fund
may face the risk of being delisted if the Fund does not meet certain conditions of the listing exchange.
Large Shareholder Certain shareholders, including other funds or accounts advised by the investment manager or an affiliate of the investment
manager, may from time to time own a substantial amount of the Fund's shares. In addition, a third party investor, the investment
manager or an affiliate of the investment manager, an authorized participant, a lead market maker, or another entity may invest
in the Fund and hold its investment for a limited period of time solely to facilitate commencement of the Fund or to facilitate
the Fund's achieving a specified size or scale. There can be no assurance that any large shareholder would not redeem its
investment, that the size of the Fund would be maintained at such levels or that the Fund would continue to meet applicable
listing requirements. Redemptions by large shareholders could have a significant negative impact on the Fund. In addition,
transactions by large shareholders may account for a large percentage of the trading volume on the listing exchange and may,
therefore, have a material upward or downward effect on the market price of the shares.
Performance
Because the Fund is new, it has no performance history. Once the Fund has commenced operations, you can obtain updated performance
information at franklintempleton.com or by calling (800) DIAL BEN/342-5236. The Fund's past performance (before and after
taxes) is not necessarily an indication of how the Fund will perform in the future.
Investment Manager
Franklin Advisers, Inc. (Advisers)
Portfolio Managers
Matthew J. Moberg, CPA Vice President of Advisers and lead portfolio manager of the Fund since inception (2020).
Joyce Lin, CFA Research Analyst of Advisers and portfolio manager of the Fund since inception (2020).
Purchase and Sale of Fund Shares
The Fund is an ETF. Fund shares may only be purchased and sold on a national securities exchange through a broker-dealer.
The price of Fund shares is based on market price, and because ETF shares trade at market prices rather than NAV, shares may
trade at a price greater than NAV (a premium) or less than NAV (a discount). The Fund issues or redeems shares that have been
aggregated into blocks of 50,000 shares or multiples thereof (Creation Units) to Authorized Participants who have entered
into agreements with the Funds distributor, Franklin Templeton Distributors, Inc. The Fund will generally issue or redeem
Creation Units in return for a basket of securities (and an amount of cash) that the Fund specifies each day.
Taxes
The Funds distributions are generally taxable to you as ordinary income, capital gains, or some combination of both,
unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account, in
which case your distributions would generally be taxed when withdrawn from the tax-deferred account.
Payments to Broker-Dealers and
Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the investment
manager or other related companies may pay the intermediary for certain Fund-related activities, including those that are
designed to make the intermediary more knowledgeable about exchange traded products, such as the Fund, as well as for marketing,
education or other initiatives related to the sale or promotion of Fund shares. These payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediarys website for more information.
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Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906
franklintempleton.com
Franklin Intelligent Machines ETF
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Investment Company Act file #811-23124
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© 2020 Franklin Templeton. All rights reserved.
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IQM PSUM 01/20
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00239373
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