STATEMENT OF ADDITIONAL INFORMATION FRANKLIN TEMPLETON ETF TRUST August 1, 2021 Ticker: Ticker: Contents Franklin FTSE Australia ETF FLAU Franklin FTSE Russia ETF FLRU Franklin FTSE Brazil ETF FLBR Franklin FTSE Saudi Arabia ETF FLSA Franklin FTSE Canada ETF FLCA Franklin FTSE South Africa ETF FLZA General Description of the Trust and Franklin FTSE China ETF FLCH Franklin FTSE South Korea ETF FLKR the Fund...........................................................2 Franklin FTSE France ETF FLFR Franklin FTSE Switzerland ETF FLSW Franklin FTSE Germany ETF FLGR Franklin FTSE Taiwan ETF FLTW Exchange Listing and Trading .........................2 Franklin FTSE Hong Kong ETF FLHK Franklin FTSE United Kingdom ETF FLGB Franklin FTSE India ETF FLIN Franklin FTSE Asia ex Japan ETF FLAX Goals, Strategies and Risks.............................3 Franklin FTSE Italy ETF FLIY Franklin FTSE Europe ETF FLEE Franklin FTSE Japan ETF FLJP Franklin FTSE Europe Hedged ETF FLEH Officers and Trustees.....................................34 Franklin FTSE Latin America ETF FLLA Franklin FTSE Japan Hedged ETF FLJH Franklin FTSE Mexico ETF FLMX Fair Valuation.................................................38 Exchange: NYSE Arca, Inc. Proxy Voting Policies and Procedures...........39 Management and Other Services ..................39 This Statement of Additional Information (SAI) is not a prospectus. It contains information in addition to the information in the Funds' (hereafter “the Fund”) Portfolio Transactions ....................................45 prospectus. The Fund's prospectus, dated August 1, 2021, which we may amend from Distributions and Taxes .................................46 time to time, contains the basic information you should know before investing in the Fund. You should read this SAI together with the Fund's prospectus. Organization, Voting Rights and Principal Holders and Additional Information The audited financial statements and Report of Independent Registered Public Concerning the Trust .....................................57 Accounting Firm in the Fund's Annual Report to shareholders, for the fiscal year ended Creation and Redemption of Creation Units ..62 March 31, 2021, are incorporated by reference (are legally a part of this SAI). The Underwriter .............................................69 For a free copy of the current prospectus or annual report, contact your investment representative or call (800) DIAL BEN/342-5236. Miscellaneous Information .............................70 Appendix A.....................................................71 ETFs, annuities, and other investment products: • are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government; • are not deposits or obligations of, or guaranteed or endorsed by, any bank; and • are subject to investment risks, including the possible loss of principal. P.O. Box 997151 Sacramento, CA 95899-7151 Individual investors should contact their financial advisor or broker dealer representative for more information about Franklin Templeton ETFs. Financial Professionals should call (800) DIAL BEN®/342-5236. 1 ETF5 SAI 08/21 General Description of the Trust and the Fund a national securities exchange. Shares of the Fund are traded in the secondary market and elsewhere at market prices that The Fund, except for the Franklin FTSE Japan ETF, Franklin may be at, above or below the Fund’s NAV. Shares of the FTSE Asia ex Japan ETF, Franklin FTSE Europe ETF, Fund are redeemable only in Creation Units, and generally in Franklin FTSE Europe Hedged ETF, Franklin FTSE Japan exchange for portfolio securities, assets or other positions and Hedged ETF and Franklin FTSE Latin America ETF, is a non- a Cash Component (other than the Cash Fund, which diversified series of Franklin Templeton ETF Trust (Trust), an generally redeems Creation Units of its shares solely for open-end management investment company. The Franklin cash). Creation Units typically are a specified number of FTSE Japan ETF, Franklin FTSE Asia ex Japan ETF, shares. Franklin FTSE Europe ETF, Franklin FTSE Europe Hedged The Trust reserves the right to permit or require that creations ETF, Franklin FTSE Japan Hedged ETF and Franklin FTSE and redemptions of shares are effected fully or partially in Latin America ETF are diversified series of the Trust. The cash. Shares may be issued in advance of receipt of Deposit Franklin FTSE Asia ex Japan ETF and Franklin FTSE Latin Securities, subject to various conditions, including a America ETF intend to be diversified in approximately the requirement to maintain with the Trust a cash deposit equal to same proportion as their corresponding Underlying Index is at least 105% and up to 115%, which percentage the Trust diversified. The Franklin FTSE Asia ex Japan ETF and the may change from time to time, of the market value of the Franklin FTSE Latin America ETF may become "non- omitted Deposit Securities. See the “Creation and diversified," as defined in the Investment Company Act of Redemption of Creation Units” section of this SAI. 1940 (1940 Act), solely as a result of a change in relative Transaction fees and other costs associated with creations or market capitalization or index weighting of one or more redemptions that include a cash portion may be higher than constituents of their corresponding Underlying Index. A "non- the transaction fees and other costs associated with in-kind diversified" fund generally invests a greater proportion of its creations or redemptions. In all cases, transaction fees will be assets in the securities of one or more issuers and invests limited in accordance with the requirements of SEC rules and overall in a smaller number of issuers than a diversified fund. regulations applicable to management investment companies Shareholder approval will not be sought if the Franklin FTSE offering redeemable securities. Asia ex Japan ETF and Franklin FTSE Latin America ETF become non-diversified due solely to a change in the relative market capitalization or index weighting of one or more Exchange Listing and Trading constituents of their corresponding Underlying Index. The Trust was organized as a Delaware statutory trust effective A discussion of exchange listing and trading matters October 9, 2015 and is registered with the U.S. Securities and associated with an investment in the Fund is contained in the Exchange Commission (SEC). “Shareholder Information” section of the Fund’s prospectus. The discussion below supplements, and should be read in The Fund’s investment goal is to seek to provide investment conjunction with, that section of the prospectus. results that closely correspond, before fees and expenses, to the performance of the Fund’s underlying index (the Shares of the Fund are listed for trading, and trade throughout “Underlying Index”). The Fund’s investment manager is the day, on the Listing Exchange and in other secondary Franklin Advisory Services, LLC (Advisory Services). Advisory markets. Shares of the Fund may also be listed on certain Services is a wholly owned subsidiary of Franklin Resources, non-U.S. exchanges. There can be no assurance that the Inc. (Resources), a publicly owned company engaged in the requirements of the Listing Exchange necessary to maintain financial services industry through its subsidiaries. the listing of shares of the Fund will continue to be met. The Listing Exchange may, but is not required to, remove the The Fund offers and issues shares at their net asset value per shares of the Fund from listing if (i) following the initial 12- share (NAV) only in aggregations of a specified number of month period beginning upon the commencement of trading shares (Creation Unit), generally in exchange for a of Fund shares, there are fewer than 50 beneficial owners of designated portfolio of securities, assets or other positions shares of the Fund, (ii) the value of the Underlying Index on (including any portion of such securities, assets or other which the Fund is based is no longer calculated or available, positions for which cash may be substituted) included in its (iii) the Fund is no longer eligible to operate in reliance on Underlying Index (Deposit Securities), together with the Rule 6c-11 under the 1940 Act, (iv) the Fund fails to meet deposit of a specified cash payment (Cash Component) certain continued listing standards of the Exchange, or (v) any (other than Franklin FTSE Brazil ETF, Franklin FTSE India other event shall occur or condition shall exist that, in the ETF, Franklin FTSE Saudi Arabia ETF, Franklin FTSE South opinion of the Listing Exchange, makes further dealings on Korea ETF and Franklin FTSE Taiwan ETF (collectively, the the Listing Exchange inadvisable. The Listing Exchange will “Cash Fund”), which generally offer Creation Units of their also remove shares of the Fund from listing and trading upon shares solely for cash). Shares of the Fund are listed for termination of the Fund. trading on NYSE Arca, Inc. (Listing Exchange or NYSE Arca), 2 As in the case of other publicly traded securities, when you of a similar transaction in which the notional amount of the buy or sell shares through a broker, you will incur a brokerage forwards sold represents the new month-end value of the commission determined by that broker. non-U.S. dollar denominated securities included in the Hedged Underlying Index. No adjustment to the hedge is The Trust reserves the right to adjust the share prices of the made during the month to account for changes in