Correspondence 0001741773-24-002852 from Franklin California Tax Free Income Fund (CIK 0000225375)
Franklin California Tax Free Income Fund (CIK 0000225375)
Date: July 12, 2024 · CIK: 0000225375 · Accession: 0001741773-24-002852
AI Filing Summary & Sentiment
Letter
VIA EDGAR 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 Ms. Fettig:
On behalf of the Funds, the following are the responses to the U.S. Securities and Exchange Commission (“SEC”) Staff’s comments conveyed telephonically or via e-mail on August 22, 2023, September 18, 2023, and January 26, 2024, regarding various filings made by the Funds with the SEC on Forms N-17f-2, N-CSR and N-CEN as well as corresponding disclosures made in their prospectuses filed as part of their registration statements on Form N-1A. References made to a Fund number, or to a Fund’s shareholder report on Form N-CSR or annual report on Form N-CEN, refer to the Funds and relevant reporting periods reviewed by the Staff as listed on the Appendix, unless otherwise specified. Each comment is summarized below, followed by the applicable Funds’ response to the comment.
1. Comment: With respect to the Form N-17f-2 filings of Funds 114 to 116 (each series of the registrant Franklin Value Investors Trust) dated August 25, 2021, it appears that the filings include the report of the independent registered public accounting firm but not the other information required by Form N-17f-2.
Response: The corresponding filings have been amended and re-filed on September 18, 2023 in response to the Staff’s comment.
2. Comment: With respect to the Form N-17f-2 filings of Fund 118 (Templeton Dragon Fund, Inc.), it appears that a filing may have been missed for the examination period ended October 31, 2020.
Response: The relevant filing was made on September 14, 2023 in response to the Staff’s comment.
3. Comment: With respect to Rule 35d-1 of the Investment Company Act of 1940 (the “1940 Act”) (i.e., the Names Rule) as it relates to Fund 102 (Franklin Mutual Global Discovery VIP Fund), please explain in its registration statement on Form N-1A how the
Fund intends to invest globally. For example, please see the corresponding registration statement disclosure for Fund 28 (Franklin Mutual Global Discovery Fund).
FRANKLIN TEMPLETON
Ms. Fettig July 12, 2024
Page 2
Response: While Rule 35d-1 does not relate to the term “global” in a fund’s name, in its next annual update to its registration statement, Fund 102 will include disclosure similar to the disclosure currently included in the registration statement for Fund 28 regarding the Fund’s intent to invest globally.
4. Comment: With respect to Fund 69 (Franklin FTSE Latin America ETF), please consider including principal risk disclosure on geographic focus specific to Brazil in its registration statement given the Fund’s significant exposure to that country.
Response: The Fund notes that a “Regional—Brazilian Securities” risk is included in the Item 9 Principal Risks section of the Fund’s prospectus. In response to this comment, the Fund will consider whether it is appropriate to add risk disclosure specific to investments in Brazil in the Fund Summary section of the prospectus in connection with the next annual registration statement update depending on the level of exposure to Brazil at that time.
5. Comment: With respect to Fund 27 (Franklin Mutual Financial Services Fund), please consider including principal risk disclosure on banks in its registration statement given the Fund’s significant exposure to banks.
Response: The Fund currently has risk disclosure related to investing in financial services companies generally, which applies to banks as well as other financial services companies. The Fund will, however, review the disclosure in connection with its next registration statement annual update to confirm that all principal risks related to investments in banks are disclosed in the Fund’s prospectus.
6. Comment: With respect to Fund 95 (Franklin Ultra Short Bond ETF), please explain how the Fund meets the diversification requirements of the 1940 Act, as it appears that individual holdings representing more than five percent of total net assets (“five percent holdings”) are collectively greater than 25% of total net assets (i.e., the Fund appears to be operating as “non-diversified”).
Response: We note that the cause of such diversification exceedance was the result of redemption activity and not due to additional purchases of five percent holdings while such holdings collectively represented greater than 25% of the portfolio. The Fund’s investments in five percent holdings were collectively reduced to below 25% in July 2023.
7. Comment: The Staff notes that certain Funds are identified in their prospectuses as non-diversified but appear to be operating as diversified Funds. If any of such Funds have operated as diversified for a continuous three-year period, please confirm in correspondence that the Funds will receive shareholder approval prior to changing their status back to a non-diversified Fund. This comment applies to Fund 51 (Franklin
Disruptive Commerce ETF), Fund 78 (Franklin Genomic Advancements ETF), Fund 80 (Franklin Intelligent Machines ETF), and Fund 118.
FRANKLIN TEMPLETON
Ms. Fettig July 12, 2024
Page 3
Response: We confirm that such Funds have not operated as diversified for a continuous three-year period, but rather have operated as non-diversified from time-to-time over the period. Pursuant to the Allied Capital SEC No-Action Letter (pub. avail. Jan. 3, 1989), if any of such Funds were to operate in a diversified manner continuously for a three-year period, we confirm that the Fund(s) would seek shareholder approval prior to changing its operating status back to non-diversified.
8. Comment: The prospectuses for Fund 12 (Franklin LifeSmart 2045 Retirement Target Fund) and Fund 13 (Franklin LifeSmart 2050 Retirement Target Fund) state that no more than 25% of the Fund’s assets may be invested in any one underlying fund, with certain exceptions (the “25% limitation”). It appears that Funds 12 and 13 are invested more than 25% in the Franklin U.S. Core Equity (IU) Fund series of Franklin Fund Allocator Series (the “Equity Fund”), which is not a fund included in such exceptions. Please explain how such investments comply with the Funds’ prospectus limitations.
Response: Funds 12 and 13 exceeded the 25% limitation initially due to market appreciation of their holdings in the Equity Fund. While the Funds did not make active investments in the Equity Fund that caused them to exceed the 25% limitation, in March 2023 it was discovered that the dividends received by the Funds from the Equity Fund had been automatically reinvested into the Equity Fund. Once discovered, the Funds elected to receive cash distributions so that the reinvested dividends would not continue to increase the Funds’ concentration in the Equity Fund, which was already over the 25% limitation due to market movements. In addition to making such election, the Funds’ investment manager also sold some of each Fund’s holdings in the Equity Fund on March 24, 2023 and replaced it with Fund 89 (Franklin U.S. Equity Index ETF) to reduce the Funds’ exposure to the Equity Fund to less than 25%.
9. Comment: With respect to the Form N-CSR filings for Fund 2 (Franklin Short Duration U.S. Government ETF) and Funds 51 to 95 (each series of the registrant Franklin Templeton ETF Trust; together with Fund 2, the “ETFs”), Item 5 (Audit Committee of Listed Registrants) was marked “not applicable,” but it appears that such information is required.
Response: We acknowledge the Staff’s comment and note that such Item will be responded to going forward with respect to the ETFs.
10. Comment: With respect to Item 27(b)(7) of Form N-1A (Management’s Discussion of Fund Performance) (the “MDFP”), please explain why the Fund’s average annual total return charts are only presented for certain share classes. This comment applies to each Fund other than the ETFs.
Response: The currently effective Item 27(b)(7) of Form N-1A (Management’s Discussion of Fund Performance) is silent with respect to whether the performance for
each class needs to be included in the average annual total return charts. The aforementioned Funds (as well as other large fund complexes) have historically taken the position that only the oldest share class is required to be shown in the average annual total return charts. However, such Funds’ shareholder reports are in the process of being revamped in light of the new tailored shareholder report rules described in Tailored Shareholder Reports for Mutual Funds and Exchange-Traded Funds, Release No. IC-34731 (October 26, 2022), and, under those rules, each class’ performance will be shown in separate class-specific shareholder reports.
FRANKLIN TEMPLETON
Ms. Fettig July 12, 2024 Page 4
11. Comment: With respect to Fund 16 (Franklin LifeSmart Retirement Income Fund) and Fund 23 (Franklin Managed Income Fund), each of which employ a managed distribution policy, please provide in future filings the disclosure required by Item 27(b)(7)(iii) of Form N-1A. This Item addresses, among other things, the effect of any policy or practice of maintaining a specified level of distributions to shareholders.
Response: We acknowledge the Staff’s comment and will address such disclosure in future filings, as applicable.
12. Comment: With respect to the MDFP for each ETF that is designed to provide investment results that closely correspond with an underlying index, it appears that the underlying index is presented as the required “appropriate broad-based securities market index.” Please explain why utilizing the underlying index in this fashion is appropriate. See, e.g., Release No. IC-34731 (commenting on the definition of an appropriate broad-based securities market index). This comment applies to Funds 53, 55-77, 82, 88-90, and 92-93 (collectively, the “Index ETFs”).
Response: The Index ETFs believe that the primary benchmark indexes utilized by each Fund for performance comparison purposes are appropriate broad-based securities market indexes based on the currently effective requirements of Instruction 5 to Item 27(b)(7) of Form N-1A. The Index ETFs are re-evaluating such indexes in conjunction with preparing for compliance with the SEC’s rule and form amendments for shareholder reports described in Release No. IC-34731.
13. Comment: With respect to Fund 61 (Franklin FTSE Eurozone ETF) and Fund 68 (Franklin FTSE Japan Hedged ETF), it appears that each Fund utilizes derivatives as part of its principal investment strategies, and that such strategies affected the Funds’ performance. Please explain why derivatives were not discussed as part of the MDFP.
Response: We can confirm that the Funds utilized derivatives during the reporting period. Going forward, the Funds will consider the utilization of derivatives during the reporting period and the corresponding impact on the Funds’ performance will be addressed in the MDFP, as applicable.
14. Comment: With respect to Fund 2, the MDFP states that the Fund used options, but it did not appear that there was any activity with respect to options during the reporting period.
FRANKLIN TEMPLETON
Ms. Fettig July 12, 2024
Page 5
Response: We can confirm that the Fund did not utilize options during the reporting period. Going forward, the Fund will confirm the accuracy of such disclosure in connection with preparation of the MDFP.
15. Comment: With respect to Fund 100 (Franklin Income VIP Fund), the MDFP states that the Fund did not use any derivatives during the reporting period, but it appears that the Fund utilized futures contracts as disclosed on the Statement of Operations.
Response: We can confirm that the Fund did utilize derivatives during the reporting period. However, such activity had an immaterial impact on Fund performance for the period. The description of derivatives activity for the reporting period will be addressed going forward, as applicable.
16. Comment: With respect to the MDFP for Funds 7 to 16 (the “Franklin LifeSmart Retirement Funds”), please consider whether a discussion as to whether the investment manager for a Fund employed the neutral or defensive glide path (as described in the prospectus) during the reporting period would be relevant to investors.
Response: We note that the target date Funds (i.e., Funds 7 to 15) include “Investment Strategy” disclosure that notes that the investment manager uses the neutral glide path under normal market conditions and describes the circumstances under which the manager may employ a defensive glide path. Consistent with historical practice, the investment manager will address changes in the glide path warranting discussion and the corresponding impact on Fund performance in the MDFP. For example, please see the annual shareholder report for Fund 7 (Franklin LifeSmart 2020 Retirement Target Fund) for the reporting period ended December 31, 2020, which described the shift from the neutral to the defensive glide path under “Manager’s Discussion.”
We note that Fund 16 does not employ a glide path, but the Fund’s asset allocation strategy is described in its prospectus and under “Investment Strategy” in the annual shareholder report.
17. Comment: With respect to Funds that have significant investments in derivatives and where a graphical representation of portfolio holdings is included in the MDFP, please consider disclosing (as applicable) whether or not such chart includes the Fund’s derivatives exposure.
Response: We acknowledge the Staff’s comment and will consider disclosing such information in future shareholder reports, as applicable.
18. Comment: With respect to the Schedules of Investments for Funds that invest in derivatives where one stream of the cash flows (i.e., “leg”) is based on a variable rate, please disclose in future filings the end of reporting period interest rate or the reference rate to provide shareholders with the ability to translate the rate. Please see Fund 22 (Franklin Low Duration Total Return Fund) and Fund 24 (Franklin Total Return Fund) as examples of Funds holding such investments. In connection with your response, please
see Rule 12-12, Footnote 4 of Regulation S-X and SEC Staff guidance as conveyed to the AICPA Investment Companies Expert Panel (“Expert Panel”) in February 2018.
FRANKLIN TEMPLETON
Ms. Fettig July 12, 2024 Page 6
Response: We have considered the Staff’s comment and will disclose in future filings the end of reporting period interest rate or the reference rate to provide shareholders with the ability to translate the rate. We anticipate that such disclosure will be included in shareholder reports, as applicable, beginning with the reporting period ended December 31, 2023.
19. Comment: It appears that certain ETFs disclose Level 3 investments in the fair value hierarchy table in the Notes to Financial Statements (each, a “Note” and collectively, “Notes”) that are not identified as such on the Schedule of Investments. For example, please see Fund 55 (Franklin FTSE Asia ex Japan ETF), Fund 61, Fund 77 (Franklin FTSE United Kingdom ETF), and Fund 78.
Response: We acknowledge the Staff’s comment and can confirm that such disclosure will be corrected going forward, as applicable.
20. Comment: With respect to Fund 59 (Franklin FTSE China ETF), it appears that the total amount of Level 3 investments disclosed in the fair value hierarchy table does not reconcile with the Level 3 investments
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CORRESP 1 filename1.htm One Franklin Parkway San Mateo, CA 94403-1906 tel 800.632.2350 franklintempleton.com July 12, 2024 VIA EDGAR Christina DiAngelo Fettig 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 Ms. Fettig: On behalf of the Funds, the following are the responses to the U.S. Securities and Exchange Commission (“SEC”) Staff’s comments conveyed telephonically or via e-mail on August 22, 2023, September 18, 2023, and January 26, 2024, regarding various filings made by the Funds with the SEC on Forms N-17f-2, N-CSR and N-CEN as well as corresponding disclosures made in their prospectuses filed as part of their registration statements on Form N-1A. References made to a Fund number, or to a Fund’s shareholder report on Form N-CSR or annual report on Form N-CEN, refer to the Funds and relevant reporting periods reviewed by the Staff as listed on the Appendix, unless otherwise specified. Each comment is summarized below, followed by the applicable Funds’ response to the comment. 1. Comment: With respect to the Form N-17f-2 filings of Funds 114 to 116 (each series of the registrant Franklin Value Investors Trust) dated August 25, 2021, it appears that the filings include the report of the independent registered public accounting firm but not the other information required by Form N-17f-2. Response: The corresponding filings have been amended and re-filed on September 18, 2023 in response to the Staff’s comment. 2. Comment: With respect to the Form N-17f-2 filings of Fund 118 (Templeton Dragon Fund, Inc.), it appears that a filing may have been missed for the examination period ended October 31, 2020. Response: The relevant filing was made on September 14, 2023 in response to the Staff’s comment. 3. Comment: With respect to Rule 35d-1 of the Investment Company Act of 1940 (the “1940 Act”) (i.e., the Names Rule) as it relates to Fund 102 (Franklin Mutual Global Discovery VIP Fund), please explain in its registration statement on Form N-1A how the Fund intends to invest globally. For example, please see the corresponding registration statement disclosure for Fund 28 (Franklin Mutual Global Discovery Fund). FRANKLIN TEMPLETON Ms. Fettig July 12, 2024 Page 2 Response: While Rule 35d-1 does not relate to the term “global” in a fund’s name, in its next annual update to its registration statement, Fund 102 will include disclosure similar to the disclosure currently included in the registration statement for Fund 28 regarding the Fund’s intent to invest globally. 4. Comment: With respect to Fund 69 (Franklin FTSE Latin America ETF), please consider including principal risk disclosure on geographic focus specific to Brazil in its registration statement given the Fund’s significant exposure to that country. Response: The Fund notes that a “Regional—Brazilian Securities” risk is included in the Item 9 Principal Risks section of the Fund’s prospectus. In response to this comment, the Fund will consider whether it is appropriate to add risk disclosure specific to investments in Brazil in the Fund Summary section of the prospectus in connection with the next annual registration statement update depending on the level of exposure to Brazil at that time. 5. Comment: With respect to Fund 27 (Franklin Mutual Financial Services Fund), please consider including principal risk disclosure on banks in its registration statement given the Fund’s significant exposure to banks. Response: The Fund currently has risk disclosure related to investing in financial services companies generally, which applies to banks as well as other financial services companies. The Fund will, however, review the disclosure in connection with its next registration statement annual update to confirm that all principal risks related to investments in banks are disclosed in the Fund’s prospectus. 6. Comment: With respect to Fund 95 (Franklin Ultra Short Bond ETF), please explain how the Fund meets the diversification requirements of the 1940 Act, as it appears that individual holdings representing more than five percent of total net assets (“five percent holdings”) are collectively greater than 25% of total net assets (i.e., the Fund appears to be operating as “non-diversified”). Response: We note that the cause of such diversification exceedance was the result of redemption activity and not due to additional purchases of five percent holdings while such holdings collectively represented greater than 25% of the portfolio. The Fund’s investments in five percent holdings were collectively reduced to below 25% in July 2023. 7. Comment: The Staff notes that certain Funds are identified in their prospectuses as non-diversified but appear to be operating as diversified Funds. If any of such Funds have operated as diversified for a continuous three-year period, please confirm in correspondence that the Funds will receive shareholder approval prior to changing their status back to a non-diversified Fund. This comment applies to Fund 51 (Franklin Disruptive Commerce ETF), Fund 78 (Franklin Genomic Advancements ETF), Fund 80 (Franklin Intelligent Machines ETF), and Fund 118. FRANKLIN TEMPLETON Ms. Fettig July 12, 2024 Page 3 Response: We confirm that such Funds have not operated as diversified for a continuous three-year period, but rather have operated as non-diversified from time-to-time over the period. Pursuant to the Allied Capital SEC No-Action Letter (pub. avail. Jan. 3, 1989), if any of such Funds were to operate in a diversified manner continuously for a three-year period, we confirm that the Fund(s) would seek shareholder approval prior to changing its operating status back to non-diversified. 8. Comment: The prospectuses for Fund 12 (Franklin LifeSmart 2045 Retirement Target Fund) and Fund 13 (Franklin LifeSmart 2050 Retirement Target Fund) state that no more than 25% of the Fund’s assets may be invested in any one underlying fund, with certain exceptions (the “25% limitation”). It appears that Funds 12 and 13 are invested more than 25% in the Franklin U.S. Core Equity (IU) Fund series of Franklin Fund Allocator Series (the “Equity Fund”), which is not a fund included in such exceptions. Please explain how such investments comply with the Funds’ prospectus limitations. Response: Funds 12 and 13 exceeded the 25% limitation initially due to market appreciation of their holdings in the Equity Fund. While the Funds did not make active investments in the Equity Fund that caused them to exceed the 25% limitation, in March 2023 it was discovered that the dividends received by the Funds from the Equity Fund had been automatically reinvested into the Equity Fund. Once discovered, the Funds elected to receive cash distributions so that the reinvested dividends would not continue to increase the Funds’ concentration in the Equity Fund, which was already over the 25% limitation due to market movements. In addition to making such election, the Funds’ investment manager also sold some of each Fund’s holdings in the Equity Fund on March 24, 2023 and replaced it with Fund 89 (Franklin U.S. Equity Index ETF) to reduce the Funds’ exposure to the Equity Fund to less than 25%. 9. Comment: With respect to the Form N-CSR filings for Fund 2 (Franklin Short Duration U.S. Government ETF) and Funds 51 to 95 (each series of the registrant Franklin Templeton ETF Trust; together with Fund 2, the “ETFs”), Item 5 (Audit Committee of Listed Registrants) was marked “not applicable,” but it appears that such information is required. Response: We acknowledge the Staff’s comment and note that such Item will be responded to going forward with respect to the ETFs. 10. Comment: With respect to Item 27(b)(7) of Form N-1A (Management’s Discussion of Fund Performance) (the “MDFP”), please explain why the Fund’s average annual total return charts are only presented for certain share classes. This comment applies to each Fund other than the ETFs. Response: The currently effective Item 27(b)(7) of Form N-1A (Management’s Discussion of Fund Performance) is silent with respect to whether the performance for each class needs to be included in the average annual total return charts. The aforementioned Funds (as well as other large fund complexes) have historically taken the position that only the oldest share class is required to be shown in the average annual total return charts. However, such Funds’ shareholder reports are in the process of being revamped in light of the new tailored shareholder report rules described in Tailored Shareholder Reports for Mutual Funds and Exchange-Traded Funds, Release No. IC-34731 (October 26, 2022), and, under those rules, each class’ performance will be shown in separate class-specific shareholder reports. FRANKLIN TEMPLETON Ms. Fettig July 12, 2024 Page 4 11. Comment: With respect to Fund 16 (Franklin LifeSmart Retirement Income Fund) and Fund 23 (Franklin Managed Income Fund), each of which employ a managed distribution policy, please provide in future filings the disclosure required by Item 27(b)(7)(iii) of Form N-1A. This Item addresses, among other things, the effect of any policy or practice of maintaining a specified level of distributions to shareholders. Response: We acknowledge the Staff’s comment and will address such disclosure in future filings, as applicable. 12. Comment: With respect to the MDFP for each ETF that is designed to provide investment results that closely correspond with an underlying index, it appears that the underlying index is presented as the required “appropriate broad-based securities market index.” Please explain why utilizing the underlying index in this fashion is appropriate. See, e.g., Release No. IC-34731 (commenting on the definition of an appropriate broad-based securities market index). This comment applies to Funds 53, 55-77, 82, 88-90, and 92-93 (collectively, the “Index ETFs”). Response: The Index ETFs believe that the primary benchmark indexes utilized by each Fund for performance comparison purposes are appropriate broad-based securities market indexes based on the currently effective requirements of Instruction 5 to Item 27(b)(7) of Form N-1A. The Index ETFs are re-evaluating such indexes in conjunction with preparing for compliance with the SEC’s rule and form amendments for shareholder reports described in Release No. IC-34731. 13. Comment: With respect to Fund 61 (Franklin FTSE Eurozone ETF) and Fund 68 (Franklin FTSE Japan Hedged ETF), it appears that each Fund utilizes derivatives as part of its principal investment strategies, and that such strategies affected the Funds’ performance. Please explain why derivatives were not discussed as part of the MDFP. Response: We can confirm that the Funds utilized derivatives during the reporting period. Going forward, the Funds will consider the utilization of derivatives during the reporting period and the corresponding impact on the Funds’ performance will be addressed in the MDFP, as applicable. 14. Comment: With respect to Fund 2, the MDFP states that the Fund used options, but it did not appear that there was any activity with respect to options during the reporting period. FRANKLIN TEMPLETON Ms. Fettig July 12, 2024 Page 5 Response: We can confirm that the Fund did not utilize options during the reporting period. Going forward, the Fund will confirm the accuracy of such disclosure in connection with preparation of the MDFP. 15. Comment: With respect to Fund 100 (Franklin Income VIP Fund), the MDFP states that the Fund did not use any derivatives during the reporting period, but it appears that the Fund utilized futures contracts as disclosed on the Statement of Operations. Response: We can confirm that the Fund did utilize derivatives during the reporting period. However, such activity had an immaterial impact on Fund performance for the period. The description of derivatives activity for the reporting period will be addressed going forward, as applicable. 16. Comment: With respect to the MDFP for Funds 7 to 16 (the “Franklin LifeSmart Retirement Funds”), please consider whether a discussion as to whether the investment manager for a Fund employed the neutral or defensive glide path (as described in the prospectus) during the reporting period would be relevant to investors. Response: We note that the target date Funds (i.e., Funds 7 to 15) include “Investment Strategy” disclosure that notes that the investment manager uses the neutral glide path under normal market conditions and describes the circumstances under which the manager may employ a defensive glide path. Consistent with historical practice, the investment manager will address changes in the glide path warranting discussion and the corresponding impact on Fund performance in the MDFP. For example, please see the annual shareholder report for Fund 7 (Franklin LifeSmart 2020 Retirement Target Fund) for the reporting period ended December 31, 2020, which described the shift from the neutral to the defensive glide path under “Manager’s Discussion.” We note that Fund 16 does not employ a glide path, but the Fund’s asset allocation strategy is described in its prospectus and under “Investment Strategy” in the annual shareholder report. 17. Comment: With respect to Funds that have significant investments in derivatives and where a graphical representation of portfolio holdings is included in the MDFP, please consider disclosing (as applicable) whether or not such chart includes the Fund’s derivatives exposure. Response: We acknowledge the Staff’s comment and will consider disclosing such information in future shareholder reports, as applicable. 18. Comment: With respect to the Schedules of Investments for Funds that invest in derivatives where one stream of the cash flows (i.e., “leg”) is based on a variable rate, please disclose in future filings the end of reporting period interest rate or the reference rate to provide shareholders with the ability to translate the rate. Please see Fund 22 (Franklin Low Duration Total Return Fund) and Fund 24 (Franklin Total Return Fund) as examples of Funds holding such investments. In connection with your response, please see Rule 12-12, Footnote 4 of Regulation S-X and SEC Staff guidance as conveyed to the AICPA Investment Companies Expert Panel (“Expert Panel”) in February 2018. FRANKLIN TEMPLETON Ms. Fettig July 12, 2024 Page 6 Response: We have considered the Staff’s comment and will disclose in future filings the end of reporting period interest rate or the reference rate to provide shareholders with the ability to translate the rate. We anticipate that such disclosure will be included in shareholder reports, as applicable, beginning with the reporting period ended December 31, 2023. 19. Comment: It appears that certain ETFs disclose Level 3 investments in the fair value hierarchy table in the Notes to Financial Statements (each, a “Note” and collectively, “Notes”) that are not identified as such on the Schedule of Investments. For example, please see Fund 55 (Franklin FTSE Asia ex Japan ETF), Fund 61, Fund 77 (Franklin FTSE United Kingdom ETF), and Fund 78. Response: We acknowledge the Staff’s comment and can confirm that such disclosure will be corrected going forward, as applicable. 20. Comment: With respect to Fund 59 (Franklin FTSE China ETF), it appears that the total amount of Level 3 investments disclosed in the fair value hierarchy table does not reconcile with the Level 3 investments